Over 3,000 British Steel workers in Scunthorpe face redundancy after the company went into administration on Wednesday.
The company, owned by private equity group Greybull Capital, could go bankrupt if it isn’t saved. This would devastate many more workers in the Lincolnshire town—where 20,000 jobs are linked to the industry.
A further 800 jobs are at risk at Teesside in the North East and smaller sites in Cumbria and North Yorkshire.
Labour and the Unite and GMB unions have raised calls for nationalisation if the Tories fail to find a private buyer for the firm.
Unite assistant general secretary Steve Turner said, “We are in continuing dialogue with British Steel and the government.
“But we are very clear that if a deal cannot be struck to secure the long-term future of the steelmaker under private ownership the government must bring it under public control in the national interest.”
Greybull had asked for an emergency state loan of around £30 million. It said this was to help it through a slump in orders that it blamed on uncertainty over Brexit.
The Tories said it would be “illegal” to give such state aid to a company. Prime minister Theresa May said, “We can only act within the law and it is clear that it would be unlawful to provide a guarantee or loan on the terms requested by the company.”
However Greg Clark, the business secretary, approved an earlier £120 million loan to British Steel just weeks ago to allow the company to meet an EU environmental bill.
Tim Roache, GMB general secretary 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.”
Former City minister Lord Myners accused Greybull of avoiding tax through its ownership structure for British Steel which includes a Jersey-based entity that loans the company money.
"We know with British Steel it has already taken large management fees out of the company, which have been paid into an offshore company, and it has also lent a lot of money from offshore lenders to British Steel.
"This means that the interest payments on those related party loans are set off against the taxable profits of British Steel, whilst the interest accumulates offshore tax free."
The British steel industry has been slowly melted down for profit since the end of the Second World War
Private investors are now fighting over the scraps.
The multinational Tata Steel sold part of the business to Greybull capital during the last major steel industry crisis in 2016. The Scunthorpe plant only cost Greybull £1—but came at a terrific cost to workers’ pensions
Greybull specialises in buying ailing companies, cutting costs and making profits.
Several of its recent investments have ended in collapse. It was the owner of Monarch airlines that went bust in 2017, forcing the government to arrange the return of 110,000 stranded tourists at an estimated cost to the taxpayer of £60 million. It was also among backers of the buyout of electrical retailer Comet, whose failure in 2012 caused 7,000 job losses.
Even if another buyer is found, the bosses will try to make the business more profitable with another barrage of attacks on workers’ jobs, terms and conditions and pensions.
The Scunthorpe steel plant and British Steel’s other sites should be nationalised immediately—whether or not it breaks the EU’s free market rules
Labour and the unions should demand that whole of the steel industry is brought into public ownership and produces for social need, not profit. All the major transport and infrastructure projects needed to decarbonise the economy require steel.
To save jobs requires a real fight—not further negotiations with the Tories and bosses who’ve presided over the slow death of the industry. The unions should organise resistance including such tactics as an occupation of the plant to force nationalisation.