British Steel censured over 800 job cuts plan amid state aid talks

The UK government on Thursday criticised plans by British Steel to cut more than 800 jobs at its main site in eastern England as “disappointing”, while urging it to continue talks over a £300mn state aid package.

“It is very disappointing that British Steel has chosen to take this step for its employees while negotiations with government are ongoing,” said Nusrat Ghani, business minister.

“I would encourage the company to continue discussions with us to reach a solution,” she added, noting that ministers had “put forward a generous package of support”, which combined with shareholder action, will put the company on a sustainable and decarbonised footing.

The government last month offered a combined package of around £600mn to British Steel and Tata Steel UK, which owns Port Talbot in Wales, to upgrade their blast furnaces to electric arc models with lower carbon emissions.

The offer was contingent on both companies pledging green investment and to protect current jobs up to 2030. However, industry experts have described the support offered as little more than “sticking plaster”.

Grant Shapps, business secretary, wrote to Li Huiming, chief executive of China’s Jingye, which has owned British Steel since 2020, earlier this week after learning of the proposed job cuts.

Shapps said it would be “unhelpful” for the company to make the redundancies when negotiations were continuing in good faith over potential state grants.

While ministers had “gone a huge distance” with the offer, “physically it is just not enough,” said Chris McDonald, chief executive of the Materials Processing Institute, an industry research group, which estimates that the sector needs around £6bn to go green.

British Steel on Thursday confirmed that it was examining laying off more than 800 workers, most of them at its main Scunthorpe site in Lincolnshire.

Union officials were told on Wednesday that the company’s coke ovens and 300 related jobs are under review, while uncertainty remains over the future of another 600-900 posts across their operations. The company employs about 4,000 across three sites.

“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,” the company said on Thursday.

British Steel had invested £330mn in capital projects during the first three years of ownership under Jingye, the company added, but said it was facing “significant challenges because of the economic slowdown, rising inflation and exceptionally high energy prices”.

Union officials, however, were damning of the proposed cuts. There was “no real substance” behind the review, said Alun Davies, national officer for steel at the Community union.

The company, he said, had failed to put forward a business plan detailing where most of the potential job cuts would fall. It would also struggle to operate safely with such a reduced number of staff.

“It is a false economy. Anything they save they will have to pay on overtime,” he added.

Holly Mumby-Croft, Conservative MP for Scunthorpe, said: “This is not a way to behave, it sends entirely the wrong message and breaches the spirit of the negotiations.”