Other ministers warned the Chancellor that failure to provide financial support to a Chinese-owned British steel plant would result in the creation of thousands of jobs across the country.
Grant Shapps, business secretary, and Michael Gove, development secretary, urge Jeremy Hunt to consider a £300m grant to keep British Steel’s Scunthorpe blast furnaces running.
British Steel’s parent company Jingye claims the plant is losing £1m a day and has announced it will shut down one of its two blast furnaces as early as next month.
Mr Hunt was told by Cabinet colleagues that British Steel would not have a “viable business” without taxpayer support, Sky News reported.
In a letter to Sky News, the ministers warned: “The closure of one blast furnace would be a stepping stone to the closure of another … leading to a highly unstable business model dependent on Chinese steel imports.”
He warns the government could spend up to £1bn closing factories if the company doesn’t get support.
“The local economic impact from the closure of both blast furnaces is estimated at $360 million.
Currently, the plant employs almost 4,000 people. The closure of one blast furnace, one in four in the UK, would result in an immediate loss of 1,700 jobs. Thousands of manufacturing jobs in the UK will also be at risk.
The closure will be the final blow to UK industrial capacity and make companies more dependent on imported steel.
A subsidy to Jingye, which bought the Scunthorpe plant in 2019, could provoke MPs to say the Chinese government has invested billions in steel production, leaving Beijing now dominating global steel production led by the US and China. are accused of selling metal products below cost and undermining the position of local producers.
It also comes at a time of rising diplomatic tensions between China and the UK. Rishi Sunak warned in his Christmas Eve speech that Beijing’s authoritarian crackdown meant the “so-called golden era” of diplomacy between the two countries was over.
Negotiations between the government and British Steel began last autumn. The rising cost of energy has led to a rapid increase in losses. Tata Steel, which operates two blast furnaces at its Ebbw Vale plant in South Wales, has also applied for public funding and is in talks.
The community, the steelworkers’ union, urged the Chancellor to listen to his colleagues. Britain needs a strong and resilient steel industry and Scunthorpe’s future must be secured.
“The pandemic and the war in Ukraine have shown us that for essential goods such as steel, the UK cannot rely on fragile international supply chains.
“The chancellor must listen to his cabinet colleagues and act decisively to protect thousands of jobs and the UK’s strategically important steel industry.”
A spokesman for the Department of Business, Energy and Industrial Strategy said: “The Government is committed to ensuring a sustainable and competitive future for the UK steel sector and we are working closely with industry to achieve this.
“We understand that companies, including steel producers, are feeling the impact of high global energy prices. That’s why we announced the Electricity Bill Assistance Scheme to help cut costs. This is in addition to the extensive support we have provided across the steel sector in support of over £800 million worth of energy costs since 2013.”
The Ministry of Finance asked for comment.
Source: I News
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