The government “can’t give any guarantees” that it will support UK steel workers should Liberty Steel collapse as a result of financing issues linked to Greensill Capital.
Speaking to the Business, Energy and Industrial Strategy Committee, business secretary Kwasi Kwarteng said he hasn’t been in contact with Liberty Steel boss Sanjeev Gupta.
The secretary of state also said the government turned down Mr Gupta’s firm’s recent loan request due to concerns the money would not remain in the UK.
Liberty Steel is part of GFG Alliance, the parent company of many businesses owned by the Gupta family, which Mr Kwarteng described as “not the most transparent organisation”.
He said: “It was the Gupta Family Group (GFG) that asked for the money, and if you look into the GFG it’s not the most transparent organisation.
“If the GFG asks the British government to give £170m of taxpayers’ money it’s incumbent on ministers and officials to be sure that money will stay in the UK, and won’t simply be dispersed across the GFG’s other steel manufacturing assets across the world.
He added: “As far as I understand it, we didn’t have those guarantees”.
Asked by the Conservative MP for Rugby, Mark Pawsey, whether there is a risk that jobs will be lost if the government fails to act, Mr Kwarteng said there is “always that danger,” but the financial problems in the wider group mean the government can’t provide the money.
He said: “What we can’t do is simply give taxpayers money to companies which are very opaque, with assets all over the world and with liabilities that nobody seems to have gotten to the bottom of. That would be very irresponsible.”
Asked whether he or the department is in contact with Mr Gupta, the secretary of state said he has been in contact with unions and local management, but he “hasn’t had any conversations with Sanjeev Gupta”.
Conservative MP for North East Bedfordshire, Richard Fuller, quizzed the business secretary on the government’s contingencies, should Liberty Steel go under.
‘No guarantees’ from government
Mr Kwarteng said: “In other instances we’ve managed to keep companies going, but what has to happen is that Mr Gupta has to work through his plans.
“Ahead of any government intervention or otherwise I’m very keen that plans of local management and Mr Gupta are worked through, let’s see if he can refinance his businesses in the way he said he would.”
Pressed again on whether the government will “stand behind” Liberty Steel workers, by the MP for Bristol West, Darren Jones, Mr Kwarteng said the government “can’t give any guarantees”.
He said: “I can’t give any guarantees, but my own view is that these are good assets, there are good competent people who are managing them, a good talented, passionate and focussed workforce that can make it work.
“It is a patient game unfortunately, perhaps, but it needs to be worked out.”
Speaking to NationalWorld, Labour’s Shadow Secretary of State for Business, Energy and Industrial Strategy, Ed Miliband MP said:
“Maintaining domestic steelmaking production at Liberty plants is vital to local communities across the North, Midlands and Wales, to our economic prosperity and national security.
“That’s why Labour has called for the government to have a Plan B, with all options on the table, should the company fail to find the refinancing it needs to survive.
“Labour believes a strong domestic steel industry is also vital to our country. Steel communities have played a proud role in our country’s industrial success.
"Yet we’ve had 10 years of betrayal from the Conservatives who have sat on the sidelines rather than set out a strategic plan to champion industry and help it thrive.
He added: “Ministers must bring forward an ambitious plan to green the industry and safeguard its future, so that British steel provides the foundations for economic recovery from the pandemic and the building blocks for a prosperous, cleaner, greener future.”