Britishvolt on the brink as £100m of government funding yet to materialise, Sky News understands
The company behind a planned battery gigafactory to help power the UK’s electric car future is on the brink of collapse because £100m of promised government funding is yet to be paid, a source has told Sky News.
It was revealed in January that Britishvolt’s plans for the site in Northumberland had secured financial backing from the Automotive Transformation Fund (ATF), which was established to help bolster the transition to electric vehicles.
The £3.8bn project was also supported by £1.7bn of private funding.
However, much of that was dependent on the government support not only being agreed – but paid.
It is understood that the company, which employs about 300 staff, has found it difficult to get an answer over the apparent delay which has forced it to seek cash elsewhere in recent months at a time of turmoil on financial markets.
The Financial Times reported on Monday that the company could slide into insolvency later in the day.
The ATF funds are conditional on certain criteria being met.
In response to a request for a statement, a Department for Business, Energy and Industrial Strategy spokesperson told Sky News: “We are determined to ensure the UK remains one of the best locations in the world for automotive manufacturing as we transition to electric vehicles, while ensuring taxpayer money is used responsibly and provides best-value.
“We do not comment on speculation or the commercial affairs of private companies.”
A Britishvolt statement read: “We are aware of market speculation. We are actively working on several potential scenarios that offer the required stability.
“We have no further comment at this time.”
A collapse of Britishvolt could mean car manufacturers looking abroad for battery supplies. File pic
The company has faced uncertainty in recent months, with co-founder Orral Nadjari leaving the firm in July.
It has been hunting further funding to bolster its development ahead of the start of production, which was scheduled for 2024 ahead of the 2030 ban on the sale of new diesel and petrol-powered cars to combat climate change.
Britishvolt intends to manufacture power cells for 300,000 electric vehicle battery packs a year at the planned factory, eventually employing 3,000 people, on the site of the former coal-fired Blyth Power Station.
Labour said the government was clearly to blame for the company’s financial troubles.
Shadow business secretary Jonathan Reynolds said: “This disastrous news is a further reminder that the economic crisis made in Downing Street is costing jobs and investment.
“It is a sight that has become all too familiar – businesses going under, jobs being lost and investment in the industries of the future going abroad rather than the UK.
“The blame here lies with a Conservative government that has run Britain’s economy down over 12 years, failed to back growing industries as other countries have and has completely failed to grow our economy.”
A trio of property giants has lodged a protest against a radical financial restructuring that will see Cineworld imposing steep rent cuts on its landlords.
Sky News has learnt that British Land, Landsec and Legal & General Investment Management all voted against the cinema operator’s restructuring plan this week.
Cineworld has confirmed plans to close six of its UK multiplexes, but documents circulated to creditors show almost 50 others are in categories requiring landlords to agree to revised rent deals in order to ensure their long-term viability.
Although they carry significant influence in the commercial property sector, the trio’s protest will have no impact on the outcome of the company’s proposals, since its owners are now also among its largest creditors, meaning they can effectively force the deal through.
According to documents sent to creditors during the summer, 33 sites – categorised as Class B – “require a reduction of rent to ERV [Estimated Rental Value] Rent in order to place the sites on a viable long-term footing”.
A further 38 of Cineworld’s cinemas would be unaffected, while another 16 Class C1 and C2 leases require reductions to either turnover rent or zero rent in order to render them financially viable.
The documents added that the company did not have sufficient funding to meet a quarterly rent bill on June 24 of £15.9m.
“The UK group did not have sufficient liquidity to make the June 2024 Rent Payment and required further funding from the US Group to meet this liquidity need.
“Absent this funding, the UK Group would have been insolvent on a cashflow basis.”
Cineworld is being advised by AlixPartners.
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Other cinema operators are now poised to step in to take over some of Cineworld’s sites.
The company trades from more than 100 locations in Britain, including at the Picturehouse chain, and employs thousands of people.
Cineworld grew under the leadership of the Greidinger family into a global giant of the industry, acquiring chains including Regal in the US in 2018 and the British company of the same name four years earlier.
Its multibillion-dollar debt mountain led it into crisis, though, and forced the company into Chapter 11 bankruptcy protection in 2022.
It delisted from the London Stock Exchange last August, having seen its share price collapse amid fears for its survival.
Cineworld also operates in central and Eastern Europe, Israel and the US.
A long-running measure of consumer confidence has slumped to levels last seen at the start of the year following warnings of “tough choices” ahead in the looming budget.
GfK’s Consumer Confidence Index fell seven points in September to minus 20, with significant drops in predictions for personal finances and the general economy over the coming year.
The report’s authors suggested it was “not encouraging news” for the new government, which has made growing the economy its top priority.
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But within weeks of taking the post of chancellor, Rachel Reeves – followed by prime minister Sir Keir Starmer – moved to warn of a legacy £22bn “black hole” in the public finances and said it would result in a painful budget on 30 October.
Among measures already taken include cuts to winter fuel payments, leaving up to 10 million pensioners up to £300 worse off, and inflation-busting public sector pay settlements.
Tax rises and spending cuts are widely expected in next month’s statement to MPs though The Times reported on Friday that a decision by the Bank of England to slow a programme of loss-making bond sales would leave Ms Reeves £10bn better off than she had anticipated.
It added that she was still expected to push forward with her budget plans anyway as a signal of her commitment to fiscal discipline.
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Chancellor: ‘One budget not enough’
The latest snapshot on the public finances, released by the Office for National Statistics (ONS) on Friday showed net borrowing of £13.7bn during August.
Its chief economist, Grant Fitzner, said: “Borrowing was up by over £3bn last month on 2023’s figure, and was the third highest August borrowing on record.
“Central government tax receipts grew strongly, but this was outweighed by higher expenditure, largely driven by benefits uprating and higher spending on public services due to increased running costs and pay.”
Consumer spending accounts for around 60% of the UK economy.
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Data released separately on Friday showed a 1% rise in retail sales volumes during August in the wake of weakness, mostly blamed on poor weather, over the previous couple of months.
The ONS said that the increase was driven by supermarket sales, as demand for BBQ food and drinks rose due to the arrival of some sunshine over the key holiday month.
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UK economy flatlines again
It also credited discounting by clothing retailers.
The data chimes with the latest updates from big retailers, including Next and B&Q’s owner, which have spoken of weak demand for so-called big ticket items such as home furnishings and kitchens respectively.
GfK’s closely-watched survey showed expectations for the general economy over the next 12 months fell by 12 points to -27, while the forecast for personal finances was down nine points to -3.
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Commenting on its key measures, including the headline figure, consumer insights director at GfK Neil Bellamy said: “These three measures are key forward-looking indicators so despite stable inflation and the prospect of further cuts in the base interest rate, this is not encouraging news for the UK’s new government.”
He added: “Strong consumer confidence matters because it underpins economic growth and is a significant driver of shoppers’ willingness to spend.
“Following the withdrawal of the winter fuel payments, and clear warnings of further difficult decisions to come on tax, spending and welfare, consumers are nervously awaiting the budget decisions on October 30.”
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