British Steel has confirmed it has entered into preliminary talks with unions about cost cutting, with hundreds of roles understood to be at risk.
The blow came as a minister confirmed support offers had been made with negotiations ongoing, rapping owner Jingye Group for how it was conducting its business with the latest move. The statement release immediately followed an urgent question from Scunthorpe MP Holly Mumby-Croft, granted its airing in the House of Commons today.
British Steel has refused to give any figures, but between 300 and 1,200 jobs have been flagged, with 800 pinpointed in early reports. The majority, if not all, are understood to focus on Scunthorpe.
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Following a day of intense speculation, a British Steel spokesperson said: “Steel is vital to modern economies and with demand expected to grow over the coming decades, British Steel has a vital role to play in ensuring the UK has its own supply of high-quality steel. To make sure we can deliver the steel Britain requires, we’re undergoing the biggest transformation in our 130-year history.
Highlighting “unprecedented” investment, with the £330 million reiterated in the first three years of ownership, the statement continued: “Jingye is committed to our long-term future but decarbonisation is a major challenge for our business and, like most companies, we’re facing significant challenges because of the economic slowdown, rising inflation and exceptionally high energy prices. For example, last year our energy bill rose by £120 million while we’ve also faced an increase of over £70 million in our annual carbon costs.
“We have taken action to reduce costs within our control; however, steelmaking in the UK remains uncompetitive when compared to other international steelmakers. Our energy costs, carbon costs and labour costs are some of the highest across the world, which are factors that we cannot influence directly.”
This led to the talks starting with government last summer, for which it said it was “extremely grateful for its support”. “It’s important we have the correct policies and frameworks in place to back our drive to become a clean, green and sustainable company and we’re continuing to discuss this with the government,” it said. “We are committed to working together and to making the home-made steel Britain needs for generations to come.
“Unfortunately, like many other businesses we are reluctantly having to consider cost cutting in light of the global recession and increased costs. We have discussed this in preliminary talks with the trade unions in which we shared the challenges we face. We look forward to working closely with them to ensure a long-term safe and sustainable future for the company, thousands of employees and many more in people in our supply chain.”
Following Ms Mumby-Croft's application in Westminster this morning, Business Minister Nusrat Ghani was called to the despatch box.
She told how a “generous package of support which we believe combined with shareholder action would put British Steel on a sustainable and decarbonised footprint” had been offered, including a £120 million grant under ‘exceptional’ Regional Growth Fund money, UK export finance to help with new export contracts and access to pots worth more than £1 billion for strategic long-term decarbonisation work.
It comes on top of recent extended steel safeguards and industry-wide electricity price compensation worth £800 million over the past decade.
On the latest move, Ms Ghani said it was “not the way to do business”, describing it as “peculiar,” adding that with “substantial amounts of taxpayers' money” involved “of course government would want some assurances and a link to jobs”.
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