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The business secretary has declined to guarantee that British Steel will be able to secure enough raw materials in time to keep the Scunthorpe blast furnaces going.
Jonathan Reynolds said he would not “make my situation or the nation’s situation more difficult” by commenting on specific commercial details, the day after taking emergency powers to gain control of the Scunthorpe site.
If the blast furnaces run out of raw materials, they can never be turned back on.
Preventing that from happening was the primary reason for the Government recalling Parliament on Saturday to pass emergency legislation to keep the site open.
Reynolds told the BBC’s Sunday With Laura Kuenssberg: “If we hadn’t acted, the blast furnaces were gone, steel production in the UK, primary steel producing, would have gone.
“So we’ve given ourselves the opportunity, we are in control of the site, my officials are on site right now to give us a chance to do that.”
Reynolds also said the Government had decided to take emergency action when it learned that British Steel’s Chinese owners, Jingye, had not only stopped ordering more raw materials, but begun selling off the supplies it already had.
The company had also rejected an offer of support in the region of £500m, instead demanding more than twice that figure with few guarantees the blast furnaces would stay open.
In the Commons on Saturday, Reynolds said Jingye had not been negotiating “in good faith”, while on Sunday he suggested it had not been acting “rationally”.
He suggested the company’s ultimate plan had been to close the blast furnaces, but keep hold of the more profitable steel mills and supply them by importing steel from China.
But he declined to accuse the company of deliberately sabotaging the business at the behest of the Chinese Communist Party (CCP).
Jingye has links to the CCP, as do all major Chinese companies, but Reynolds said he was “not accusing the Chinese state of being directly behind this”.
He told Sky News’s Sunday Morning With Trevor Phillips: “I actually think they will understand why we could not accept the proposition that was put to us, in terms of losing that essential national capacity.
“I’m not alleging some sort of foreign influence.”
But he did agree there is now a “high trust bar” to bringing Chinese investment into the UK, and said he would not have allowed a Chinese company to invest in the “sensitive” steel sector.
Reform UK leader Nigel Farage, however, told the BBC he is “100 per cent certain” the CCP had ordered Jingye to buy British Steel in order to close the business, but provided no evidence, saying it is only “intuition”.
Jingye agreed to buy British Steel in 2019 when Boris Johnson was prime minister.
Government accused of having ‘no plan’
Andrew Griffith, the shadow business secretary who at the time had been Johnson’s chief business adviser, said on Sunday Jingye had been “the only bidder”.
Having taken control of British Steel, ministers remain hopeful they can find a private company to invest in the business given the cost of modernising the Scunthorpe plant could run into the billions.
But there are currently no private investors willing to take the company on, and Reynolds has acknowledged nationalisation was “the likely option”.
In the meantime, he told Sky News the Government expects to lose money running British Steel, with the last set of accounts showing annual losses of £233m.
Reynolds said he believed that figure “can be improved upon”, and said the public should compare the cost to “the option of spending a lot more money to reach a deal that would have seen a lot of job losses and Jingye remain as a partner”.
He added: “Or the cost of the complete collapse of British Steel, easily over £1bn in terms of the need to respond from Government, to remediate the land, to look after the workforce.”
The Government expects the cost of running British Steel to be met from a £2.5bn steel fund it announced at last year’s budget, meaning it will not have to borrow more money.
Griffith described the plan as a “botched nationalisation” that revealed “the Government have no plan”.
He said: “The Government said their preference is to find a commercial partner, but do they think that is likely, after Labour have attacked business with a £25bn jobs tax and are bringing forward a Bill to create the most hostile environment for employers since the 1970s.
“Conservatives like Martin Vickers MP and Teesside Mayor Ben Houchen have been warning about the issues at Scunthorpe, but they were ignored by the Labour Government. Now the business secretary says there is only a ‘chance’ to keep the furnaces burning, showing they have acted too late.
“The Labour Government have landed themselves in a steel crisis entirely of their own making. They’ve made poor decisions and let the unions dictate their actions.”
By Christopher McKeon and Helen William, PA
