British Steel draws up plan for 800 job losses amid government funding talks

Published

2 years ago

February 1, 2023

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Britain’s second-biggest steel producer has been drawing up secret plans to axe hundreds of jobs even as it continues talks with ministers about £300m of taxpayer funding that would partly depend on decade-long employment guarantees.

Sky News has learnt that British Steel has been discussing launching a consultation on around 800 redundancies, principally focused on the Scunthorpe plant in north Lincolnshire where the company is based.

One industry insider said there was a possibility that trade union officials could be briefed on the proposals as early as Wednesday, although there remained a possibility that their disclosure could be delayed pending the outcome of negotiations with the government.

The planned cuts would arise from the closure of coke ovens, although Scunthorpe’s two blast furnaces and other mills within the Chinese-owned group would continue to operate, the insider said.

Any redundancy proposals would be certain to draw a sharp response from the government given that its offer of £300m of state support is partly predicated upon providing jobs guarantees lasting for a decade.

A source suggested job cuts would “complicate” the talks between the two sides.

Last week, Sky News revealed that British Steel and larger rival Tata Steel would be required to guarantee thousands of jobs until 2033 in return for £600m of government support to help decarbonise the industry.

Grant Shapps, the business secretary, has told the companies that the proportion of their workforces that would need to be secured would be determined after further discussions.

A six-month moratorium on redundancies is another one of the conditions of the government offer.

The taxpayer funding is to be linked to the replacement of blast furnaces at the company’s sites with greener electric arc furnaces.

Jingye Group, British Steel’s owner, would be obliged to invest at least £1bn in the business by 2030, with Tata Steel expected to be asked for a similar commitment.

The decision to grant the state aid is not without controversy, given British Steel’s Chinese ownership and doubts about its adherence to financial commitments made when it bought the business out of insolvency proceedings in 2020.

In a letter to Jeremy Hunt, the chancellor, in December, Mr Shapps and Michael Gove, the levelling-up secretary, warned that British Steel’s demise could cost the government up to £1bn in decommissioning and other liabilities.

They cautioned Mr Hunt that British Steel “does not have a viable business without government support”.

“Closing one blast furnace would be a stepping-stone to closure of the second blast furnace, resulting in a highly unstable business model dependent on Chinese steel imports,” Mr Shapps and Mr Gove wrote.

“Given the magnitude of the liabilities due to fall on HMG in the event of blast furnace closure, and following the PM’s steer, we would like officials to test whether net Government support in the region of £300m for British Steel could prevent closure, protect jobs and create a cleaner viable long-term future for steel production in the United Kingdom.”

They also argued that retaining sovereignty over steel production was critical to the UK economy.

“Every other G20 nation has maintained domestic steel production and, while we do not think that this should come at any cost, we do believe it is in HMG’s interest to offer well-designed and targeted funding which unlocks private investment, achieves a good outcome for taxpayers, and enables transformed , decarbonised and viable domestic steel production to continue in the UK in the long-term,” Mr Shapps and Mr Gove wrote.

“We do not want to become reliant on steel sources elsewhere in the same way that energy security has become self-evidently important.

The fate of British Steel, which was bought by Jingye out of an insolvency process just under three years ago, has become increasingly unclear in recent months as the current owners have indicated that they would not maintain its operations without taxpayer funding.

British Steel employs about 4,000 people, with thousands more jobs in its supply chain dependent upon the company.

Tata Steel employs substantially more people in the UK, including more than 4,000 at its Port Talbot steelworks in Wales.

According to last month’s letter, British Steel had already informed the government that it could close one of the Scunthorpe blast furnaces as soon as next month, with the loss of 1,700 jobs.

This would be “followed by the second blast furnace closing later in 2023, creating cumulative direct job losses of around 3,000”, Mr Shapps and Mr Gove wrote.

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 Boris Johnson, the then prime minister, as assuring the future of steel production in Britain’s industrial heartlands.

British Steel and the Department for Business, Energy and Industrial Strategy have been contacted for comment.

Business

Starmer’s search for football watchdog chair goes into extra-time

Published

6 hours ago

April 12, 2025

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Starmer's search for football watchdog chair goes into extra-time

The appointment of the inaugural chair of English football’s new watchdog has been thrown into fresh uncertainty after Whitehall officials resumed contact with applicants who did not make it onto a final shortlist.

Sky News has learnt that the preferred candidate to chair the Independent Football Regulator (IFR) is now “unlikely” to be drawn from a group of three contenders interviewed months ago.

The search process has not been officially reopened, and insiders said the £130,000-a-year post was not expected to be readvertised.

They acknowledged, however, that a shortlist including former Aston Villa Football Club chief executive Christian Purslow would probably not produce the chosen candidate.

Sky News revealed in recent weeks that the other contenders were Sanjay Bhandari, who chairs the anti-racism football charity Kick It Out, and Professor Sir Ian Kennedy, who chaired the new parliamentary watchdog established after the MPs expenses scandal.

The delay to the appointment of the IFR’s inaugural chair will do little to dampen recent speculation that Sir Keir Starmer wants to pare back the powers of the football regulator amid a broader clampdown on Britain’s economic watchdogs.

Both 10 Downing Street and the Department for Culture, Media and Sport (DCMS) have sought to dismiss the speculation, with insiders insisting that the IFR will be established as originally envisaged.

The establishment of the regulator, which will be based in Manchester, is among the principal elements of legislation progressing through parliament.

The Football Governance Bill has just completed its journey through the House of Lords and will be introduced in the Commons shortly, according to a DCMS spokesman.

The establishment of the regulator, which was conceived by the previous Conservative government in the wake of the furore over the failed European Super League project, has triggered deep unrest in English football.

Steve Parish, the chairman of Premier League side Crystal Palace, told a recent sports industry conference that the watchdog “wants to interfere in all of the things we don’t need them to interfere in and help with none of the things we actually need help with”.

“We have a problem that we’re constantly being told that we’re not a business and [that] we’re part of the fabric of communities,” he is reported to have said.

“At the same time, we’re… being treated to the nth degree like a business.”

Interviews for the chair of the football regulator took place in November, with a previous recruitment process curtailed by the calling of last year’s general election.

Lisa Nandy, the culture secretary, will sign off on the appointment of a preferred candidate, with the chosen individual expected to face a pre-appointment hearing in front of the Commons culture, media and sport select committee.

It forms part of a process that represents the most fundamental shake-up in the oversight of English football in the game’s history.

The establishment of the body comes with the top tier of the professional game gripped by civil war, with Abu Dhabi-owned Manchester City at the centre of a number of legal cases over its financial dealings.

The government has dropped a previous stipulation that the regulator should have regard to British foreign and trade policy when determining the appropriateness of a new club owner.

“We do not comment on speculation,” the DCMS said when asked about the process to recruit a chair of the football watchdog.

“No appointment has been made and the recruitment process for [IFR] chair is ongoing.”

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MPs to debate emergency law to keep British Steel open as prime minister warns national security ‘on the line’

Published

15 hours ago

April 12, 2025

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MPs to debate emergency law to keep British Steel open as prime minister warns national security 'on the line'

MPs will today debate emergency laws to save British Steel after the prime minister warned the country’s “economic and national security is on the line”.

Sir Keir Starmer said the future of the company’s Scunthorpe plant – which employs about 3,500 people – “hangs in the balance” after its owner said the cost of running it was unsustainable.

The prime minister said legislation would be passed in one day to allow the government to “take control of the plant and preserve all viable options”.

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MPs and Lords are being summoned from their Easter recess to debate the move and will sit from 11am.

The last time parliament was recalled was on 18 August 2021 to debate the situation in Afghanistan.

The government has been considering nationalising British Steel after Jingye, the Chinese owner, cancelled future orders for iron ore, coal and other raw materials needed to keep the blast furnaces running.

The furnaces are the last in the UK capable of making virgin steel.

Jingye last month rejected a £500m state rescue package – raising fresh doubts about the Lincolnshire plant and fears it could close in the coming days.

The steel from the plant is used in the rail network and the construction and automotive industries. Without it, Britain would be reliant on imports at a time of trade wars and geopolitical instability.

In a statement on Friday, Sir Keir said: “I will always act in the national interest to protect British jobs and British workers.

“This afternoon, the future of British Steel hangs in the balance. Jobs, investment, growth, our economic and national security are all on the line.”

The prime minister said steel was “part of our national story, part of the pride and heritage of this nation” and “essential for our future”.

He said the emergency law would give the business secretary powers to do “everything possible to stop the closure of these blast furnaces”.

This includes the power to direct the company’s board and workforce. It will also ensure it can order the raw materials to keep the furnaces running and ensure staff are paid.

Chancellor Rachel Reeves said the government was “taking action to save British steel production and protect British jobs”, while Business Secretary Jonathan Reynolds said the owner had left the government with “no choice”.

Mr Reynolds said Jingye had confirmed plans to close the Scunthorpe furnaces immediately despite months of talks and the offer of £500m of co-investment.

The company said it had invested £1.2bn since taking over in 2020, but that the plant is losing £700,000 a day.

Conservative leader Kemi Badenoch said the government had landed itself in a “steel crisis entirely of their own making”.

She said when she was business secretary, she had negotiated a plan with British Steel “to limit job losses and keep the plant running”.

Ms Badenoch said the government had “bungled the negotiations, insisting on a Scunthorpe-only deal that the company has deemed unviable”.

She added: “Keir Starmer should have seen this coming. But instead of addressing it earlier in the week when parliament was sitting, their incompetence has led to a last-minute recall of parliament.”

The Unite union said the prime minister’s recalling of parliament was “absolutely the right thing to do to begin the process of nationalisation”.

While the government hasn’t confirmed those plans, the chancellor also said earlier this week that “all options” are on the table.

Sky News understands accountancy firm EY is being lined up to play a role in a nationalisation process.

The government’s intervention over British Steel comes six months after the last blast furnace was closed at Port Talbot in Wales.

Plaid Cymru has questioned why the government didn’t take similar action there.

The party’s Westminster leader, Liz Saville Roberts, said: “Parliament is being recalled to debate the nationalisation of Scunthorpe steelworks.

“But when global market forces devastated Welsh livelihoods in Port Talbot, Labour dismissed Plaid Cymru’s calls for nationalisation as ‘pipe dreams’.”

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MPs to debate emergency legislation to keep British Steel open as ‘security is on the line’

Published

21 hours ago

April 11, 2025

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Sir Keir Starmer has said the government will debate emergency legislation on Saturday to keep the British Steel plant in Scunthorpe open as “our economic and national security is on the line”.

The prime minister added that “the future of British Steel hangs in the balance” and legislation will be passed tomorrow to allow the government to “take control of the plant and preserve all viable options” for it.

MPs and Lords are being summoned back from Easter recess to Westminster to debate draft legislation on the plans, and will sit from 11am on Saturday.

The government had been actively considering nationalising British Steel after Jingye, its Chinese owner in Scunthorpe, cancelled future orders for the iron ore, coal and other raw materials needed to keep the last blast furnaces in the UK running.

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Jingye also rejected a £500m state rescue package in a move which raised fresh doubts about the 3,500 jobs at the Lincolnshire plant – with it feared the site would be forced to close as early as next week.

The steel from the plant is used in the rail network and the construction and automotive industries. Without the plant, Britain would be reliant on imports at a time of trade wars and geopolitical instability.

In a short statement delivered from Downing Street this evening, Sir Keir said: “I will always act in the national interest to protect British jobs and British workers.

“This afternoon, the future of British Steel hangs in the balance.

“Jobs, investment, growth, our economic and national security are all on the line.”

‘A new era of global instability’

The prime minister added he has been to the site in Scunthorpe and met the steelworkers there.

He said he understands how “important steel is” to the “whole country” and continued: “It’s part of our national story, Part of the pride and heritage of this nation.

“And I’ll tell you this, it is essential for our future.

“[The government’s] plan for change means we need more steel, not less. So we will act with urgency… This situation and our response is unique.

“While it is true that we’re facing a new era of global instability, our concerns about this plant and negotiations to protect it have been running for years.”

Sir Keir said parliament will be recalled for a “Saturday sitting” and will “pass emergency legislation” in “one day” to give the business secretary the powers to do “everything possible to stop the closure of these blast furnaces”.

He added: “We will keep all options on the table. Our future is in our hands.”

Chancellor Rachel Reeves posted on X after the statement that the government is “taking action to save British steel production and protect British jobs”.

“We are securing Britain’s future,” she added.

Tory leader criticises Starmer

Business Secretary Jonathan Reynolds said this evening the Chinese owner of British steel has left the government with “no choice” but to act.

Jingye had confirmed plans to close the blast furnaces at Scunthorpe immediately despite months of talks and the offer of £500m of co-investment from the UK government, Mr Reynolds added in a statement.

It came as Conservative leader Kemi Badenoch said the government has landed itself in a “steel crisis entirely of their own making”.

“As business secretary, I negotiated a modernisation plan with British Steel to limit job losses and keep the plant running, including introducing an electric arc furnace in Teesside, similar to what we did with Tata at Port Talbot steelworks.

“However, the union-led Labour government have bungled the negotiations, insisting on a Scunthorpe-only deal that the company has deemed unviable. Keir Starmer should have seen this coming. But instead of addressing it earlier in the week when parliament was sitting, their incompetence has led to a last-minute recall of parliament.”

She added the government’s attempts to find a solution to the crisis are inevitably “going to cost taxpayers a lot of money”.

Meanwhile, the Unite union welcomed Sir Keir’s announcement by saying it is “absolutely the right thing to do to begin the process of nationalisation”.

The government has not confirmed plans to nationalise the company, but like the prime minister this evening, Chancellor Rachel Reeves said earlier this week that “all options” are on the table.

Unite general secretary Sharon Graham said this evening: “I am pleased that the government has listened to representations by Unite and other steel unions over the future of British Steel.

“Ministers could not have allowed a foundation industry to go under with the loss of more than 3,000 jobs and key skills… Discussions have been positive and whilst a longer-term plan needs to be developed, this gives workers the reprieve we have been asking for.”

‘When it was Wales, they mocked’

The government’s intervention over British Steel comes six months after the last blast furnace was closed at Port Talbot in Wales.

Welsh political party Plaid Cymru has questioned why the government did not take similar action to save that steelworks.

The party’s Westminster leader Liz Saville Roberts MP said: “Parliament is being recalled [on Saturday] to debate the nationalisation of Scunthorpe steelworks.

“But when global market forces devastated Welsh livelihoods in Port Talbot, Labour dismissed Plaid Cymru’s calls for nationalisation as ‘pipe dreams’.

“In a real emergency, governments step up to defend their strategic interests. Plaid Cymru recognised the importance of Welsh steelmaking. Labour chose to look the other way.

“When it was Wales, they mocked. Now it’s England, they act.

“Labour has taken Wales for granted for far too long – and the people of Wales won’t forget it.”