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

Jeremy Hunt is set 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 steelmaker within days that the government will pay out the support program in installments over the next few years.

The money is designed to stem thousands of job losses in industrial centers across the UK and is linked to a project to replace British Steel’s blast furnaces with a greener electric arc furnace.

Warming up: Chancellor is expected to tell the UK’s second biggest steelmaker within days that the government will pay the support program in installments over the next few years

It comes after the Scunthorpe-based company, which was bailed out by China’s Jingye Group in 2020, said earlier this month it would close one of the site’s two blast furnaces within weeks if it didn’t receive no state aid. Funding will depend on Jingye pledging 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 closes one furnace, its other could follow later this year. Only four blast furnaces remain in the whole of the UK.

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

In December, Business Secretary Grant Shapps and Upgrading Secretary Michael Gove both urged Hunt to raise the money needed to keep the blast furnaces running.

In a letter, they said the company “does not have a viable business without government support”.

Tata Steel, which operates the other two blast furnaces in the UK, has also been vying 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 money surprised many in the city and in Whitehall.

His bailout of British Steel at the start of 2020 was controversial – but the deal was sealed when Jingye insisted he would pump money into the group. A presentation given at the time, seen by The Mail on Sunday, read: ‘Need funds? No problem! Jingye is here to invest.’

Last week Liberty Steel, run by controversial metals tycoon Sanjeev Gupta, said it would cut up to 440 jobs in the UK and cut production as it battles high energy costs.

Liberty employs approximately 2,350 people at 11 locations. The 440 jobs under review represent almost a fifth of its workforce. Alun Davies, national leader of the Community Steelworkers’ Union, called the announcement a “huge blow” for employees, while the Unite union said it would fight tooth and nail for every job.

The UK steel industry has long complained of facing higher electricity prices than steel companies in France and Germany.

And the price of carbon credits – certificates companies buy to allow them to emit greenhouse gases – has also skyrocketed.

These imposed additional burdens on a sector that had already been struggling for several years. It faces fierce competition from cheap imports, especially from China, which produces more than a billion tonnes a year. The UK employs 34,500 people in the steel industry and produces around 7 million tonnes a year.

A British Steel spokesman said: “Jingye is committed to our long-term future, but we are also calling on the government to provide the necessary support, policies and frameworks to support our drive to become a clean, green company. and sustainable.”

The Department for Business, Energy and Industrial Strategy (Beis) said the government “recognizes the vital role steel plays in the UK economy”.