Posted by News Express | 22 May 2019 | 329 times
British Steel has collapsed, putting more than 4,000 jobs directly at risk and threatening a further 20,000 in the company’s supply chain.
The company has been put into compulsory liquidation after talks broke down between the government and British Steel’s private equity owners Greybull Capital.
Greg Clark, the business secretary, said the government had worked “tirelessly” to try to save the company but had no remaining legal options to provide financial support.
Insolvency experts labelled British Steel’s demise as the “first heavyweight casualty of Brexit” and warned of a “tsunami effect” that would result in taxpayers footing a significant bill.
Unions said the company’s collapse was an “economic and industrial catastrophe” and vowed to continue fighting to save jobs at the company, which was bought by Greybull for £1 in 2016.
Tim Roache, general secretary of the GMB union, described the news as “devastating” for thousands of workers at British Steel’s Scunthorpe plant and across the UK.
“Consecutive UK governments have failed to protect our proud steel heritage, and now this prime minister is overseeing its demise,” he said.
“Ministers should have been ready to make use of all the options – including nationalisation – in order to save British Steel but they either don’t care or wouldn’t take off their ideological blinkers to save hard working people and communities.
“GMB demands urgent reassurances on what the future holds for the thousands of British Steel workers and their families.”
The government’s official receiver has now taken control of British Steel with accountancy firm EY acting as special manager.
British Steel employs around 3,000 people in Scunthorpe and 800 on Teesside and in northeastern England; the rest of its workforce is outside the UK.
As of Wednesday, none of those jobs had gone and all * *staff will continue to be paid.
MP Anna Turley, who represents the Redcar constituency in Teesside, tweeted: “This is absolutely gutting. So many people have given everything to try & make British Steel a success.”
The government lent British Steel £120m last month so it could pay a carbon emissions bill and avoid a fine from the European Union.
But Greybull had asked for another £75m, later reduced to £30m, saying it needed the cash to deal with “Brexit-related” issues. (AFP)
Government has responsibility to bail out British Steel, says SNP’s Ian Blackford
The business secretary said the government had proved its willingness to act but could not legally provide any further support.
“The government can only act within the law, which requires any financial support to a steel company to be on a commercial basis,” Mr Clark said.
“I have been advised that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made.”
He acknowledged that it would be a “deeply worrying” time for workers and local communities close to British Steel’s plants.
Mr Clark added: “In the days and weeks ahead, I will be working with the official receiver and a British Steel support group of management, trade unions, companies in the supply chain and local communities, to pursue remorselessly every possible step to secure the future of the valuable operations in sites at Scunthorpe, Skinningrove and on Teesside.”
Eyes will now turn to the role of British Steel’s private equity owners who have been at the helm of a number of companies that have gone bust in recent years.
Greybull has been paid £9m in management fees and more than £33m in interest since taking over British Steel in June 2016, weeks before the EU referendum.
Former City minister Lord Myners accused Greybull of avoiding tax through an ownership structure, which includes a Jersey-based entity that loaned British Steel money at 9.6 per cent interest.
He told the BBC’s Today programme: “We know with British Steel it’s already taken large management fees out of the company, which have been paid into an offshore company, and it’s also lent a lot of money from offshore lenders to British Steel. ( Agency Report)
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