British Steel is on the verge of administration within 48 hours unless a £30m rescue deal can be agreed with the government.
If additional funding cannot be secured 4,000 British Steel jobs would be put at risk along with a further 20,000 in its supply chain.
Union leaders held crunch talks with the Business Secretary Greg Clark on Tuesday, with administrators EY expected to be called in as soon as Wednesday if a deal is not reached.
In answer to an urgent question in the House of Commons on Tuesday, the government acknowledged that speculation about British Steel’s future was creating uncertainty for workers but declined to clarify what support may or may not be in place.
“We cannot comment on details at this stage,” Andrew Stephenson told the Commons, adding that the government would “continue to do whatever is within our power to support the steel sector”.
British Steel had asked for a package of support to tackle “Brexit-related” issues, raising fears for its future.
A collapse would hit workers at British Steel’s main plant in Scunthorpe as well as sites in Cumbria, Teesside, Cumbria and North Yorkshire. Nationalisation or a management buyout are also understood to be under consideration.
British Steel’s lenders, as well as shareholder Greybull Capital have agreed to put extra money into the company, according to Sky News.
The company is requesting £30m of government funding to allow it to continue, down from £75m previously.
Labour MP, Rachel Reeves, chair of the Commons Business Committee, accused the government of presiding over the decline of the British steel industry.
Ms Reeves pointed to: “The closure of Redcar in 2016, the lack of assurances from Greybull when they took over British Steel, the chaotic handling of Brexit and the failure to agree a sector deal which they have been crying out for.”
Last week British Steel announced it had the backing of its key stakeholders and that operations would continue as normal.
It said on Thursday: “We are pleased to confirm that we have the required liquidity while we work towards a permanent solution.”
A Unite spokesperson said: “We would urge Greybull to reach a deal with the Government. Thousands of jobs depend on the outcome.
“And we will be speaking with the Government first thing in the morning.”
In a statement, the Department for Business, Energy and Industrial Strategy (BEIS) said: “As the business department, we are in regular conversation with a wide range of companies.”
Why is British Steel in trouble?
It has been struggling with falling orders from European customers which it says are linked to uncertainty around tariffs on steel after Brexit.
Steel makers have also been damaged by an escalating trade war between the US and China which has weakened
Problems go back further however. In June 2016, just weeks before the referendum, Greybull Capital bought was then part of Indian conglomerate Tata for £1.
Greybull, a London-based private equity firm which specialises in buying up companies in financial distress, claimed it would revive the company’s proud history.
Sajid Javid, business secretary at the time, hailed the deal as securing a “sustainable future for world-class steel making in this country”.
The unit was renamed British Steel and it has struggled ever since, prompting additional scrutiny of Greybull’s role.
In September, 400 job cuts were announced to “secure a sustainable future”.
Who are British Steel owners Greybull Capital?
Greybull is a private equity fund based in Knightsbridge which invests money for two rich families, the Perlhagens of Sweden who made their fortune from pharmaceuticals; and Turkey’s Meyohases.
The UK government is said to be dissatisfied by Greybull’s unwillingness to put up money to safeguard the future of British Steel.
If British Steel were to collapse it would add to a list of failures presided over by Greybull.
In 2017, Monarch Airlines went bust while under Greybull management, leading to more than 1,800 job losses and 85,000 repatriation flights for passengers at a cost to the taxpayer of £40.5m.
It later emerged that Greybull had struck deals with aircraft maker Boeing to insulate itself from heavy losses.
Greybull also bought Morrisons’ My Local convenience store chain and Rileys snooker halls, both of which later failed.
What might happen to British Steel workers?
GMB national officer Ross Murdoch said: “Given this latest speculation, these are understandably extremely difficult times for our members.”
“Yesterday the government, alongside trade unions and employers, signed a UK Steel Charter at Westminster. They must now put their money where their mouth is.
“GMB calls on the government and Greybull to redouble efforts to save this proud steelworks and the highly skilled jobs.”
The shadow minister for steel, Gill Furniss, called on the government to intervene, saying the UK steel industry was critical to the UK’s manufacturing base and strategically important to UK industry.
“Administration would be devastating for the thousands of workers and their families who rely on this key industry in a part of the country which has not had enough support and investment from government over decades,” she said.