Jacob Rees-Mogg opens talks with steel giants including British Steel and Tata after job cuts moratorium
Jacob Rees-Mogg, the business secretary, has opened formal talks with Britain’s second-biggest steel producer about a taxpayer bailout amid fears for thousands of industrial jobs.
Sky News has learnt that Mr Rees-Mogg wrote to Jingye Group, the owner of British Steel, last week, to express a willingness to negotiate over the Chinese company’s request.
A source close to the discussions said British Steel had agreed to maintain its current operations and workforce while talks with ministers were ongoing.
Earlier this month, Sky News revealed that Jingye, which bought British Steel out of insolvency in 2020, had told the government that its two blast furnaces at its Scunthorpe steelworks were unlikely to be viable without government aid.
Subsequent reports indicated that the level of support required by Jingye was likely to be in the order of £500m.
Tata Steel, meanwhile, which is the biggest player in the UK steel sector, has also requested financial help from the government.
A Whitehall insider said on Monday that talks were “underway with the steel sector, including British Steel and Tata, to secure the sector’s long-term future”.
British Steel employs about 4,000 people, with thousands more jobs in its supply chain dependent upon the company.
‘We recognise businesses feeling energy price impact’
The Department for Business, Energy and Industrial Strategy (BEIS) declined to comment on the content of Mr Rees-Mogg’s letter, although a spokesman said: “We are working across the steel sector on achieving their sustainable and competitive long-term future.
“We recognise that businesses are feeling the impact of high global energy prices, particularly steel producers, which is why we announced the Energy Bill Relief Scheme to bring down costs.
“This is in addition to extensive support we have provided to the steel sector as a whole to help with energy costs, worth more than £780m since 2013.”
Jingye is said to be prepared to make thousands of people redundant if ministers reject its request for financial support.
It would then plan to import steel from China to roll at British Steel’s UK sites, according to the insider.
Industrial consumers of energy have complained for months that soaring prices are imperilling their ability to continue operating.
The Scunthorpe plant was previously owned by Tata
Politically unpalatable menu of options for Rees-Mogg
For Mr Rees-Mogg, who took over as business secretary just weeks ago, the question of government support for a Chinese-owned company presents a politically unpalatable menu of options.
If no state funding is made available and significant numbers of jobs are axed, it would undermine a key tenet of the ‘levelling-up’ strategy that became a doctrine of Boris Johnson’s administration.
An agreement to provide substantial taxpayer funding to a Chinese-owned business, however, would almost certainly provoke outrage among Tory critics of Beijing.
China’s role in global steel production, after years of international trade rows about dumping, would make any subsidies even more contentious.
A British Steel spokesman said two weeks ago: “We are investing hundreds of millions of pounds in our long-term future but like most other companies we are facing a significant challenge because of the economic slowdown, surging inflation and exceptionally high energy and carbon prices.
“We welcome the recent announcement by the UK government to reduce energy costs for businesses and remain in dialogue with officials to ensure we compete on a level playing field with our global competitors.”
How British Steel ended up needing support
In May 2019, the Official Receiver was appointed to take control of the company after negotiations over an emergency £30m government loan fell apart.
British Steel had been formed in 2016 when India’s Tata Steel sold the business for £1 to Greybull Capital, an investment firm.
As part of the deal that secured ownership of British Steel for Jingye, the Chinese group said it would invest £1.2bn in modernising the business during the following decade.
Jingye’s purchase of the company, which completed in the spring of 2020, was hailed by Mr Johnson as assuring the long-term future of steel production in Britain’s industrial heartlands.
“The sounds of these steelworks have long echoed throughout Yorkshire and Humber and the North East,” he said.
“Today, as British Steel takes its next steps under Jingye’s leadership, we can be sure these will ring out for decades to come.”
Liberty Steel, the third-biggest player in the industry, saw a bid for £170m in state aid rejected last year by Kwasi Kwarteng, the then business secretary and the now former chancellor.
Water company United Utilities has reported hundreds of millions in profit as it seeks to further increase customer bills.
The utility serving seven million customers in the northwest of England recorded £335.7m in underlying operating profits for the first half of this year, up nearly 23% from £271.1m a year ago.
It comes as the firm has requested bills rise 32% to make them among the most expensive in England and Wales.
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The proposed average annual bill would increase to £584 by 2030 from the £443 typical yearly charge in the 2023/2024 financial year. Since April 2023 bills have been upped 6.4% and then 7.9%.
Bills hikes were behind the rise in revenue to more than £1.08bn from £975.4m in 2023.
Other ways of assessing profit were lower than the underlying operating sum. Profit before tax reached £140.6m while after tax profit topped £103.1m for the six months to the end of September 2024, both lower than a year earlier.
Boss’s pay
Bonus and benefits payments worth £1.416m were paid to two executives on top of £1.128m in base pay, according to analysis of company filings done by the Liberal Democrats.
It’s down compared with 2022/2023 when three executives were given £1.6m in base pay and £2.456m in bonuses and benefits.
Read more:
Water giant United Utilities strikes £1.8bn pension deal
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The environment
In a year of record sewage outflows into waterways the company was one of just three firms that met the Environment Agency’s top four-star performance ranking.
United Utilities in July came under investigation by water regulator Ofwat for not meeting its obligation to minimise pollution.
In response the company said at the time: “We understand and share people’s concerns about the health of the environment and the operation of wastewater systems, including combined sewer overflows.”
Pension “mega funds” will be created under government plans to increase infrastructure investment.
Reforms could “unlock £80 billion” of investment, according to Treasury plans, which say fewer but larger funds can get greater returns.
Chancellor Rachel Reeves wants to imitate the way large Canadian and Australian pension schemes work.
She said it marks “the biggest set of reforms to the pensions market in decades” ahead of providing more details in a speech at Mansion House on Thursday evening.
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Almost 90 local government pension pots will be grouped together, with defined contribution schemes merged and assets pooled together.
This is part of the government’s plan to increase economic growth through investing in infrastructure.
Pension schemes get greater returns when they reach around £20bn to £50bn as they are “better placed to invest in a wider range of assets”, according to the government.
This is backed up by evidence from Canada and Australia, the government argues – with Canada’s schemes investing four times more in infrastructure, and Australia three times more than the UK’s defined contribution schemes.
Rachel Reeves wants to reform pensions. Pic: PA
Pensions minister Emma Reynolds told Sky News larger pension schemes are able to invest “in a more diverse range of assets, including private equity, which are higher risk, but over time give a higher return”.
She said the government will not tell pension fund managers they must invest more in private equity but due to the larger scale they will be able to invest in a “broader range of assets, and that’s what we see in Canada and Australia”.
Ms Reynolds added that a Canadian teacher or an Australian professor is currently more likely to be invested in British infrastructure or British high-growth companies than a British saver, which she said is “wrong”.
The chancellor has said the changes would “unlock tens of billions of pounds of investment in business and infrastructure, boost people’s savings in retirement and drive economic growth so we can make every part of Britain better off”.
However, Tom Selby, the director of public policy at financial company AJ Bell, said: “There needs to be some caution in this push to use other people’s money to drive economic growth. It needs to be made very clear to members what is happening with their money.”
The government says the funds will be regulated by the Financial Conduct Authority and will need to “meet rigorous standards to ensure they deliver for savers”.
Read more:
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Chancellor eyes Canada-style pension reform
Reeves to woo Canadian pension funds amid ‘Big Bang’ push
Local government pensions v defined contributions
The Local Government Pension Scheme in England and Wales will manage assets worth around £500bn by 2030.
These assets are currently split across 86 different administering authorities, with local government officials and councillors managing each fund.
Under the government plans, the management of local government pensions and what they invest in will be moved from councillors and local officials to “professional fund managers”.
This will allow them to invest more in assets such as infrastructure, supporting economic growth and local investment on behalf of the 6.7 million public servants, the government said.
Defined contribution pension schemes are set to manage £800bn worth of assets by the end of the decade.
There are around 60 different multi-employer schemes, each investing savers’ money into one or more funds. The government will consult on setting a minimum size requirement for these funds.
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Businesses cautious – but pensions sector backs plans
Businesses will need to be reassured that the government’s plans are watertight following the fallout from the budget, according to the trade group the Confederation of British Industry (CBI).
The CBI’s chief economist Louise Hellem said: “While the chancellor is right to concentrate on mobilising investment, putting pension reform to work for the government’s growth mission, unlocking investment also needs competitive and profitable businesses.
“With the budget piling additional costs on firms and squeezing their headroom to invest, the government needs to work hard to regain the confidence in the UK as a place businesses and communities can succeed.
“Pension schemes will want to operate within a UK economy that is prospering.”
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But key parts of the pensions sector gave their backing to the government’s plans, including Standard Life, Royal London, Local Pensions Partnership Investments and the Pensions and Lifetime Savings Association.
Deputy Prime Minister Angela Rayner said: “This is about harnessing the untapped potential of the pensions belonging to millions of people, and using it as a force for good in boosting our economy.”
Consumer rights group Which? is suing Apple for £3bn over the way it deploys the iCloud.
If the lawsuit succeeds, around 40 million Apple customers in the UK could be entitled to a payout.
The lawsuit claims Apple, which controls iOS operating systems, has breached UK competition law by giving its iCloud storage preferential treatment, effectively “trapping” customers with Apple devices into using it.
It also claims the company overcharged those customers by stifling competition.
The rights group alleges Apple encouraged users to sign up to iCloud for storage of photos, videos and other data while simultaneously making it difficult to use alternative providers.
Which? says Apple doesn’t allow customers to store or back-up all of their phone’s data with a third-party provider, arguing this violates competition law.
The consumer rights group says once iOS users have signed up to iCloud, they then have to pay for the service once their photos, notes, messages and other data go over the free 5GB limit.
“By bringing this claim, Which? is showing big corporations like Apple that they cannot rip off UK consumers without facing repercussions,” said Which?’s chief executive Anabel Hoult.
“Taking this legal action means we can help consumers to get the redress that they are owed, deter similar behaviour in the future and create a better, more competitive market.”
Apple ‘rejects’ claims and will defend itself
Apple “rejects” the idea its customers are tied to using iCloud and told Sky News it would “vigorously” defend itself.
“Apple believes in providing our customers with choices,” a spokesperson said.
“Our users are not required to use iCloud, and many rely on a wide range of third-party alternatives for data storage. In addition, we work hard to make data transfer as easy as possible – whether it’s to iCloud or another service.
“We reject any suggestion that our iCloud practices are anti-competitive and will vigorously defend against any legal claim otherwise.”
It also said nearly half of its customers don’t use iCloud and its pricing is inline with other cloud storage providers.
Keep up with all the latest news from the UK and around the world by following Sky News
How much could UK Apple customers receive if lawsuit succeeds?
The lawsuit will represent all UK Apple customers that have used iCloud services since 1 October 2015 – any that don’t want to be included will need to opt out.
However, if consumers live abroad but are otherwise eligible – for example because they lived in UK and used the iCloud but then moved away – they can also opt in.
The consumer rights group estimates that individual consumers could be owed an average of £70, depending on how long they have been paying for the services during that period.
Apple is facing a similar lawsuit in the US, where the US Department of Justice is accusing the company of locking down its iPhone ecosystem to build a monopoly.
Apple said the lawsuit is “wrong on the facts and the law” and that it will vigorously defend against it.
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Big tech’s battles
This is the latest in a line of challenges big tech companies like Apple, Google and Samsung have faced around anti-competitive practices.
Most notably, a landmark case in the US earlier this year saw a judge rule that Google holds an illegal monopoly over the internet search market.
The company is now facing a second antitrust lawsuit, and may be forced to break up parts of its business.
Read more: Google faces threat of being broken up
File pic: Reuters
And in December last year, a judge declared Google’s Android app store a monopoly in a case brought by a private gaming company.
“Now that five companies control the whole of the internet economy, there’s a real need for people to fight back and to really put pressure on the government,” William Fitzgerald, from tech campaigning organisation The Worker Agency, told Sky News.
William Fitzgerald at Lisbon’s Web Summit, where he spoke to Sky News
“That’s why we have governments; to hold corporations accountable, to actually enforce laws.”
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