BRITISH Steel is seeking a further loan off the taxpayer of a whopping £75m as it teeters on the brink of collapse, with the entire industry hanging on by a thread.
The need for an urgent bailout comes just two weeks after it was handed £120m of taxpayers money by Tory Business Secretary, Greg Clark to meet a payment deadline from the EU.
That bridging loan was granted in order for British Steel to pay a carbon emissions bill after UK manufacturers were frozen out of an EU-wide scheme.
The news broke yesterday afternoon that MPs are secretly drawing up contingency plans for the collapse of British Steel which would mean the loss of thousands of jobs at its plant in Scunthorpe.
British Steel is among the UK’s most important manufacturers, employing about 4,500 people directly and as many as 20,000 more in its supply chain.
More than 4,000 work at the Scunthorpe site, where the company produces steel used for railways and is Network Rail’s biggest supplier.
Insolvency experts have been placed on standby in case the UK’s second-largest steel producer cannot secure the tens of millions of pounds to see it through the coming months.
KPMG, one of the big four accountancy firms, has been advising the government on the situation.
In a worst-case scenario, British Steel’s collapse could trigger the end of steel production at Scunthorpe.
The Official Receiver is said to have been notified about the ongoing situation, partly because of the significant environmental risks associated with the possible decommissioning of such a major industrial site.
The latest British Steel financial crisis comes after the proposed joint venture between Tata Steel and Thyssenkrupp collapsed.
Roy Rickhuss, General Secretary of the steelworkers’ trade union Community, said: ‘This is obviously a major development that raises as many questions as answers. It’s important that there are no knee-jerk reactions by Tata Steel in response to this development. Now is the time for calm heads and a clear focus on the future of Tata Steel Europe.
‘It’s vital that the business is kept intact and the right steps are taken to safeguard jobs and continue investment to ensure a sustainable future. Sadly, this may mean yet another period of uncertainty for steelworkers and their families.’
Ross Murdoch, the union GMB’s National Officer, said: ‘This government has a track record of sitting on its hands while UK manufacturing collapses round its ears.
‘Now is the time to take action – minsters must come out and guarantee the loan required to safeguard British Steel.
‘Thousands of UK jobs are on the line – not to mention the entire future of our proud steel industry.’
Meanwhile, Unite described Honda’s decision to press ahead with the closure of its Swindon plant by 2021 as a ‘body-blow of betrayal’.
The news comes after the carmaker said it had rejected an alternative plan for the Swindon plant which would have kept it open.
The closure of Honda Swindon threatens the livelihoods of over 15,000 direct Honda employees and more in the supply chain.
Unite national officer Des Quinn said: ‘Unite can only conclude that Honda is taking a strategic decision to retreat out of Europe in favour of protecting its North American operations and avoiding president Trump’s tariff threat on cars made in Europe.’