Business secretary gives instructions to British Steel after emergency law is passed to keep it operating
Good morning and welcome back to our rolling coverage of UK politics.
An emergency bill aimed at saving British Steel’s Scunthorpe plant became law yesterday after MPs and peers were recalled from recess to participate in a Saturday sitting for the first time in decades.
They had approved the emergency legislation without opposition, giving the business secretary, Jonathan Reynolds, the power to require British Steel to keep the Scunthorpe plant going after talks with its Chinese owner, Jingye, broke down.
It has, for now, prevented the imminent collapse of the steelworks and the loss of thousands of jobs.
A government source confirmed to the PA agency that Reynolds had given directions to Jingye after the sitting yesterday, but did not specify what those directions were.
Jingye had said the plant was “no longer financially sustainable” and was losing about £700,000 a day.
While there is general cross party consensus over the government’s move to take control of British Steel, the Conservatives said ministers should have acted sooner, with the shadow leader of the house Alex Burghart accusing the government of making “a total pig’s breakfast of this whole arrangement”.
Saturday’s legislation stopped short of fully nationalising British Steel, instead allowing Reynolds to instruct the company to maintain the blast furnaces, keep staff employed and continue to buy the raw materials needed to make steel, with criminal penalties for executives if they refuse.
Although ministers still hope to secure private sector investment to save the plant, there are no companies offering to take it on and the business secretary conceded to MPs that public ownership was “the likely option”.
It is Yohannes Lowe here with you today. Please do email me on yohannes.lowe@theguardian.com if you spot any typos or omissions.
Key events
For some context: Reynolds has accused British Steel’s Chinese owners, Jingye, of failing to negotiate “in good faith” after it decided to stop buying enough raw materials to keep the blast furnaces at Scunthorpe going.
Opening Saturday’s debate, Reynolds said Labour had been engaged in negotiations with Jingye since the party came to power last July, and had offered “substantial” support.
The government recently said it offered to buy the necessary raw materials for the blast furnaces but this had been met with a counter-offer from Jingye demanding “an excessive amount” of support.
Reynolds said yesterday:
Over the last few days, it became clear that the intention of Jingye was to refuse to purchase sufficient raw material to keep the blast furnaces running – in fact, their intention was to cancel and refuse to pay for existing orders.
The company would therefore have irrevocably and unilaterally closed down primary steel-making at British Steel.
All would have been lost without emergency legislation being passed – business secretary
Business secretary Jonathan Reynolds is being questioned by the BBC’s Laura Kuenssberg on her Sunday politics programme.
He said the intervention yesterday was “dramatic” but was needed to secure Britain’s “economic security” . He said if nothing was done the blast furnaces and steel production in the UK “would have gone”. His officials are on site right now, the business secretary added.
Kuenssberg pressed the minister, asking him if he was sure if he would have the supplies he needed to keep the furnaces at the plant burning. Reynolds refused to be drawn on the commercial specifics.
“Without the decisive action by the government yesterday all was lost,” Reynolds insisted.
Why does British Steel need to be rescued by the government?
My colleague Philip Inman has written a useful explainer on why British Steel – a major supplier to construction firms and Network Rail – needed to be rescued by the government and explores what the next steps may be, with nationalisation looking increasingly likely. Here is an extract from his piece:
Ministers wanted to develop an industrial strategy – that includes domestically produced steel – before allocating any cash to individual sectors. But the crisis at British Steel’s Scunthorpe plant brought forward a decision about what kind of steel industry the UK needs.
The plant, which is the last remaining maker of mass-produced virgin steel in England and makes a range of products, from girders for the building sector to train tracks, needs raw materials within the next fortnight, including iron pellets and coking coal, or else it faces the prospect of the furnaces cooling to a point where it is neither easy nor cost-effective to bring them back.
The new legislation, approved by parliament on Saturday, will prevent mass redundancies and manage a transition from blast-furnace-produced steel to electric arc furnaces, which can run on renewable energy.
Business secretary gives instructions to British Steel after emergency law is passed to keep it operating
Good morning and welcome back to our rolling coverage of UK politics.
An emergency bill aimed at saving British Steel’s Scunthorpe plant became law yesterday after MPs and peers were recalled from recess to participate in a Saturday sitting for the first time in decades.
They had approved the emergency legislation without opposition, giving the business secretary, Jonathan Reynolds, the power to require British Steel to keep the Scunthorpe plant going after talks with its Chinese owner, Jingye, broke down.
It has, for now, prevented the imminent collapse of the steelworks and the loss of thousands of jobs.
A government source confirmed to the PA agency that Reynolds had given directions to Jingye after the sitting yesterday, but did not specify what those directions were.
Jingye had said the plant was “no longer financially sustainable” and was losing about £700,000 a day.
While there is general cross party consensus over the government’s move to take control of British Steel, the Conservatives said ministers should have acted sooner, with the shadow leader of the house Alex Burghart accusing the government of making “a total pig’s breakfast of this whole arrangement”.
Saturday’s legislation stopped short of fully nationalising British Steel, instead allowing Reynolds to instruct the company to maintain the blast furnaces, keep staff employed and continue to buy the raw materials needed to make steel, with criminal penalties for executives if they refuse.
Although ministers still hope to secure private sector investment to save the plant, there are no companies offering to take it on and the business secretary conceded to MPs that public ownership was “the likely option”.
It is Yohannes Lowe here with you today. Please do email me on yohannes.lowe@theguardian.com if you spot any typos or omissions.
