Thousands of jobs are in “danger” at Liberty Steel, Business Secretary Kwasi Kwarteng admitted today as he urged the firm’s boss to save the company.
Mr Kwarteng called on Sanjeev Gupta, who runs Liberty’s parent firm the Gupta Family Group, to deliver on promises to find new funds for its 11 British plants, which employ 3,000 workers.
But the Cabinet Minister left the door open to throwing Liberty a lifeline if Mr Gupta’s plans flop.
Mr Kwarteng also defended rejecting a plea for a £170million Government bailout – saying the cash could have been sent offshore rather than pumped into the UK mills.
He told the Commons Business Select Committee “It was the Gupta Family Group that asked for the money, and it’s not the most transparent organisation.
“It also has assets all over the world and they employ something like 35,000 people all over the world.
“If the Gupta Family Group asks the British Government to give £170m of taxpayers’ money, it’s incumbent on ministers and officials to have some degree of surety that money will stay in the UK and won’t simply be dispersed among the Gupta Family Group’s other steel manufacturing assets across the world.
“As far as I could understand, we didn’t have those guarantees, it was a very opaque structure and there was a reluctance to give the Group the money.”
Liberty’s main lender was Greensill Capital which collapsed earlier this year, engulfing its senior adviser, former Prime Minister David Cameron, in a lobbying row.
That forced GFG to seek other funds – and has placed 3,000 steel jobs in the UK in jeopardy.
GFG asked the Government for the bailout amid revelations it owed creditors billions of pounds.
Mr Kwarteng hinted that if the application had come from Liberty rather than GFG, it might have succeeded.
“I’m not saying they would or wouldn’t,” he told MPs.
“We were presented with a situation in which a very complicated company … made a specific request for £170m from the British Government.
“As officials and ministers we have a responsibility to taxpayers not to simply sign off £170m without any knowledge of where that money might eventually go.
“We had no idea where this money might end up.”
He added: “The idea that we would sign a cheque for this Group for £170m I think would be very irresponsible.”
Unions and MPs have urged the Government to save Liberty, including nationalising the company if necessary.
Mr Kwarteng resisted promising to step in and urged Mr Gupta to find alternative cash.
“What I won’t rush to do into is giving any guarantees at this committee or any other forum,” he said.
“Let’s see if he can refinance his businesses in the way that he said he would.”
Conseravtive MP Mark Pawsey feared there was “a danger we might lose one of these plants or some of these jobs if we are not able to take effective action quickly”.
Mr Kwarteng admitted “there is always that danger”. But he insisted he wanted Liberty to survive.
The Business Secretary said: “I am very keen to see that these assets, which are good assets, continue to operate.
“But we can’t strip Liberty Steel in this instance now from the wider Group under which it sits.”
Liberty previously said it was “working on solutions to provide additional working capital facilities to replace the funding gap left by Greensill”.