THE UK Government “expects to lose money” running British Steel, the Business Secretary has said.
On Saturday, MPs passed an emergency bill that stopped the company’s Chinese owners, Jingye, from closing blast furnaces at its Scunthorpe plant.
The Steel Industry (Special Measures) Bill gives the Government the power to instruct steel companies in England to keep facilities open, with criminal penalties for executives if they fail to comply.
The SNP’s Westminster leader Stephen Flynn probed the UK Government during the debate on why it was willing to save British Steel, but not intervene and nationalise the Grangemouth refinery.
And now, Jonathan Reynolds has told of the looming losses following the move. He also declined to guarantee that British Steel will be able to secure enough raw materials in time to keep the Scunthorpe blast furnaces going.
If the blast furnaces run out of raw materials, they can never be turned back on.
Speaking to Sky News, Reynolds said: “The losses, the annual losses, net losses, in the last set of accounts were £233m. Actually, that can be improved upon, but I am accepting your point that we would expect to lose money on this.
“I would ask the public to compare that to the option of spending a lot more money to reach a deal that would have seen a lot of job losses and Jingye remain as a partner.
“Or the cost of the complete collapse of British Steel, easily over £1bn in terms of the need to respond from government, to remediate the land, to look after the workforce.”
Keeping the blast furnaces going was the primary reason for the UK Government recalling Parliament on Saturday to pass emergency legislation to keep the site open.
Reynolds told the BBC’s Sunday With Laura Kuenssberg: “If we hadn’t acted, the blast furnaces were gone, steel production in the UK, primary steel producing, would have gone.
“So we’ve given ourselves the opportunity, we are in control of the site, my officials are on site right now to give us a chance to do that.”
Reynolds also said the UK Government had decided to take emergency action when it learned that owners Jingye had not only stopped ordering more raw materials but begun selling off the supplies it already had.
The company had also rejected an offer of support in the region of £500 million, instead demanding more than twice that figure with few guarantees the blast furnaces would stay open.
In the Commons on Saturday, Reynolds said Jingye had not been negotiating “in good faith”, while on Sunday he suggested it had not been acting “rationally”.
He suggested the company’s ultimate plan had been to close the blast furnaces, but keep hold of the more profitable steel mills and supply them by importing steel from China.
Jingye has links to the CCP, as do all major Chinese companies, but Reynolds said he was “not accusing the Chinese state of being directly behind this”.
During the Saturday debate, the SNP’s Flynn raised the issue of Grangemouth but Reynolds said it was “not a comparable situation”.
Flynn later told MPs "Westminster is only interested in Westminster", and questioned why Grangemouth, smelters in Lochaber, or the Dalzell steelworks were not included in the bill.
