British Steel – Still On the Brink

News yesterday of British Steel’s High Court decision to put the firm officially in the hands of the government's receiver to take charge of business is ringing in everyone’s ears this morning. Although the business is reported to be continuing to trade and its staff currently remain employed (as happened with Carillion) Twitter feeds have reported cleaners put on short hours and told to go home early. Such is one immediate effect of the uncertainty and, let’s hope, not the beginning of far wider, and more devastating loss.

The forced liquidation of British Steel not only puts its whole supply chain at risk, reported to affect 20,000 people, but also the customer chain. Network Rail procures 95% of its steel requirements from British Steel and has been upping its order book in recent months to support the manufacturer. Should operations cease, that will put a hefty supply-and-demand situation into effect on the global steel market.

In terms of the supply chain, the SME trades, particularly in the towns surrounding the steel works, will be impacted greatly should trading cease. The reliance on contracts with large customers to support business is again brought to the fore.

Insider Media Ltd this morning quoted Nic Dakin, chair of the All-Party Parliamentary Group on Steel and Scunthorpe MP, as calling on the government and stakeholders to find a way forward for the business. "It's in the public interest and in the interests of taxpayers to ensure this business survives," he said. "Government must take the necessary steps to ensure its future … The IPPR's analysis stating that the collapse of British Steel could lead to £2.8bn in lost wages over a decade and a cost on the government of £1.1bn is clear evidence of why the government must do all they can do to protect the steel works and the future of communities such as the one I am privileged to represent.”

Business secretary Greg Clark said - "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."

With (the too recent) memories, for some of us, of the devastation caused by the closure of Corby Steelworks, Redcar and Ravenscraig, let’s hope this is not history repeating itself and that he succeeds – as the FT reports: “while administrations have to wrap up within 10 weeks, a compulsory liquidation is not time-bound, reducing the immediate pressure to find a new investor. Nor is creditor approval needed for final decisions.”

We keep our fingers crossed for the tens of thousands of workers, whether at the sites, in the supply chain or local communities, although we fear it will take more than Spend Matters’ gesture of good luck!

 

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