British Steel enters insolvency after failed rescue talks with government
25,000 jobs are now at risk
British Steel, who employ 5,000 people and thousands more in the supply chain, has entered insolvency after emergency funding talks with the government failed.
Those 5,000 jobs are now at risk, along with a further 20,000 jobs in the company's supply chain.
The business secretary, Greg Clark, issued a statement on Wednesday saying that the government worked 'tirelessly' in a bid to save the company following confirmation that British Steel had applied to enter an insolvency process.
Clark said: “The government has worked tirelessly with British Steel, its owner Greybull Capital and lenders to explore all potential options to secure a solution for British Steel.”
The steelmaker had sought £30m in government funding after its private equity owner Greybull Capital agreed to inject £30m. Clark said the government had been willing to act but could not agree terms with Greybull, who had initially sought £75m from the government.
He explained: “The Government can only act within the law, which requires any financial support to a steel company to be on a commercial basis. I have been advised that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made.”
Insolvency experts have labelled British Steel's demise - as the second largest steelmaker in the UK - as the "first heavyweight casualty of Brexit", according to The Independent. Brexit uncertainty resulted in the company losing 25% of orders at its Scunthorpe steelworks plant.
Unions have also warned of an "economic and industrial catastrophe" and vowed to continue fighting to save jobs at the company which was bought by Greybull for £1 in 2016.
Unite’s assistant general secretary Steve Turner, meanwhile, said that the government ministers "cannot wash their hands of the Brexit farce and ongoing uncertainty that has placed the company in difficulty".