Chancellor Jeremy Hunt to hand British Steel a £300m lifeline

Jeremy Hunt is poised to hand British Steel a £300m lifeline in a bid to save thousands of jobs. 

The Chancellor is expected to tell the UK’s second-biggest steel maker within days that the Government will pay the support package in instalments over the next few years. 

The cash is designed to stem 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. 

Heating up: The Chancellor is expected to tell the UK’s second-biggest steel maker within days that the Government will pay the support package in instalments over the next few years

It comes after the Scunthorpe-based company, which was rescued by Chinese group Jingye in 2020, said earlier this month it would shut one of the site’s two blast furnaces within weeks if it did not receive state help. The funding will be dependent on Jingye committing to protect jobs and invest at least £1billion in the group by 2030, according to Sky News, which first reported the story. Experts fear that if British Steel shuts down one furnace, its other one could follow suit later this year. There are just four blast furnaces left in the entire UK.

 The Chancellor has been considering whether to extend funding to British Steel, which employs around 4,500 people, for several months. 

In December, Business Secretary Grant Shapps and Levelling Up Secretary Michael Gove both urged Hunt to stump up the cash to ensure the blast furnaces could keep running. 

In a letter, they said that the company ‘does not have a viable business without government support’. 

Tata Steel, which runs the UK’s other two blast furnaces, has also been wrangling 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. 

Its rescue of British Steel in early 2020 was controversial – but the deal was sealed when Jingye insisted it would plough money into the group. A presentation given at the time, seen by The Mail on Sunday, said: ‘Need funds? 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 reduce production as it battles high energy costs. 

Liberty employs around 2,350 people at 11 sites. The 440 jobs under review are almost a fifth of its workforce. Alun Davies, Community steel workers’ union national officer, described the announcement as a ‘body blow’ to employees, while the Unite union said it would fight ‘tooth and nail’ for every job.

The UK’s steel industry has long complained it faces higher power prices than steel companies in France and Germany. 

And the price of carbon credits – certificates that firms buy to allow them to emit greenhouse gases – has also spiralled. 

These have placed additional burdens on a sector that had already been struggling for several years. It faces stiff competition from cheap imports, especially from China, which makes more than 1bn tonnes a year. The UK employs 34,500 people in the steel industry and produces around 7m tonnes a year. 

A British Steel spokesman said: ‘Jingye are committed to our long-term future but we also require the Government to provide the necessary support, policies and frameworks to back our drive to become a clean, green and sustainable company.’ 

The Department for Business, Energy and Industrial Strategy (Beis) said the Government ‘recognises the vital role that steel plays within the UK economy’. 

This post first appeared on Dailymail.co.uk