Labour has called on the government to “consider all options” including the nationalisation of Liberty steel, if the struggling steelmaker goes into administration following the collapse of its main financial backer Greensill Capital.
London-based Greensill Capital announced earlier this month that it has filed for administration, due to “severe financial distress”, caused in part by loan defaults from CFG Alliance, the parent company of Liberty Steel owned by Sanjeev Gupta.
Liberty Steel employs approximately 5,000 people in the UK and supports many more jobs through supply lines.
The firm has 11 sites around the country, many in economically deprived areas, which will be hit particularly hard by job losses.
What is the government doing about Liberty Steel?
Responding to an urgent question about the future of the firm, business secretary Kwasi Kwarteng said it would not be appropriate to comment on “commercially sensitive matters” but that the department is following developments with Greensill Capital and Liberty Steel “very closely”.
The question was tabled by Labour MP for Manchester Central, Lucy Powell MP, who said it is in the best interests of the country as well as Liberty steel workers “to know if the government will step in” if the firm is unable to find financial support.
Ms Powell asked the secretary of state to “confirm he is considering all options, from immediate support if due diligence is met to public ownership should the business fall into administration”.
She argued that Liberty Steel businesses are viable due to recent investment, and also said that nationalisation “could be the best value for money option,” citing the government’s sale of British Steel.
Responding to Ms Powell, the business secretary said the government’s infrastructure plans will require “around 5 million tonnes” of steel over the next decade.
He said: “It is absolutely a commitment of mine as secretary of state to ensure that we have a viable steel industry in this country.”
Sarah Champion, Labour MP for Rotherham, where more than 1000 jobs rely on the Liberty Steel plant, asked the government to “commit to all government procurement projects using steel” to use British steel.
Speaking after she tabled the question in Parliament, Lucy Powell said: “Labour called for a Plan B on Liberty Steel, yet workers, customers and suppliers will have had no reassurances from the Business Secretary.
“It’s in our national interest for all options to be on the table because domestic steelmaking is a cornerstone of our national security and economic prosperity.”
What will happen to Liberty Steel staff?
Following the announcement that Greensill Capital was going into administration, Mr Gupta reportedly instructed bosses across the GFC Alliance group to hold off on spending while new loans were negotiated.
A significant number of staff from the Rotherham and Stocksbridge plants have been placed on furlough until at least 14 April.There are concerns that these and many more workers may not return to their jobs at all if Liberty Steel can’t secure financing and the government fails to step in.
Boris Johnson has previously expressed his support for workers at Liberty Steel in light of the recent financing concerns relating to Greensill Capital.
At Prime Minister’s Questions this week, Mr Johnson said he shares “very much the anxiety of families of steelworkers who work in Liberty Steel”.
He said: “We will do everything we can to ensure that we continue with British jobs producing British steel.”
“All the things we are doing across the country, they will call for millions and millions of tons of British steel.”
Who is Sanjeev Gupta?
Liberty Steel is part of the Liberty House Group, which Sanjeev Gupta founded in 1922.
Mr Gupta was born in India, the son of successful industrialist Parduman K Gupta, who ran a number of businesses including Victors Cycles.
Sanjeev Gupta was educated in the UK, attending St Edmund’s School in Canterbury before going on to study economics at Trinity College, Cambridge.
Liberty House Group is part of a broad coalition of businesses owned by the Gupta family, GFG Alliance, which collectively employs more than 35,000 people in the steel, mining and trading industries.