Chancellor Jeremy Hunt to hand British Steel a £300m lifeline
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After China’s threat to shut down Britain’s blast furnace, Chancellor Jeremy Hunt hands British Steel a £300 million lifeline
- The government will pay the support package in installments over the coming years
- Cash designed to offset thousands of job losses in the UK’s industrial heartland
- Money linked to project to replace blast furnaces with electric arc furnaces
Jeremy Hunt is about to hand British Steel a £300 million lifeline in a bid to save thousands of jobs.
The Chancellor is expected to tell the UK’s second largest steelmaker within days that the government will pay the bailout in installments over the next few years.
The money is intended to offset thousands of job losses in the UK’s industrial heartlands and is linked to a project to replace British Steel’s blast furnaces with a greener electric arc furnace.
Warming: The Chancellor is expected to tell the UK’s second largest steelmaker within days that the government will pay the aid package in installments over the next few years
It comes after the Scunthorpe-based company, which was bailed out in 2020 by Chinese group Jingye, said earlier this month it would close one of the site’s two blast furnaces within weeks if it failed to receive state aid. Funding will depend on Jingye’s commitment to protect jobs and invest at least £1 billion in the group by 2030, according to Sky News, which first reported the story. Experts fear that if British Steel closes one furnace, the other could follow later this year. There are only four blast furnaces left in the whole of the UK.
The Chancellor has been considering for several months whether to provide funding to British Steel, which employs around 4,500 people.
In December, Business Secretary Grant Shapps and Leveling Up Secretary Michael Gove both urged Hunt to raise the money to keep the blast furnaces running.
In a letter, they said the company “has no viable business without government support.”
Tata Steel, which operates the UK’s other two blast furnaces, has also struggled for government funding to switch to green electric arc furnaces. Tata could also receive taxpayer support, the Financial Times reported last night, but the company declined to comment.
Jingye’s need for cash surprised many in the City and Whitehall.
British Steel’s bailout in early 2020 was controversial, but the deal was sealed when Jingye insisted it pump money into the group. A presentation given at the time, seen by The Mail on Sunday, said: ‘Need money? No problem! Jingye is here to invest.’
Last week, Liberty Steel, run by controversial metals magnate Sanjeev Gupta, said it would cut up to 440 jobs in the UK and cut production over high energy costs.
Liberty employs approximately 2,350 people at 11 sites. The 440 jobs surveyed are almost a fifth of the workforce. Alun Davies, national official of the Community Steelworkers Union, described the announcement as a ‘body blow’ for the workers, while the Unite union said it would fight tooth and nail for every job.
The UK steel industry has long complained that it faces higher energy prices than steel companies in France and Germany.
And the price of carbon credits — certificates that companies buy to enable them to emit greenhouse gases — has also skyrocketed.
These put an additional burden on a sector that has been struggling for several years. It faces fierce competition from cheap imports, especially from China, which yields more than 1 billion tons per year. The UK employs 34,500 people in the steel industry and produces about 7 million tonnes a year.
A British Steel spokesperson said: ‘Jingye is committed to our long-term future, but we also demand that the government provide the necessary support, policies and frameworks to support our commitment to becoming a clean, green and sustainable company. to support.’
The Department for Business, Energy and Industrial Strategy (Beis) said the government ‘recognizes the vital role steel plays in the UK economy’.