Boris Johnson is said to be taking a personal interest in the fate of Liberty Steel, the empire run by Sanjeev Gupta which is on the brink following the collapse of financial backer Greensill Capital.
And so he should. The future of Liberty is the first serious test of his ambition to ‘level up’ the country, but also of the new rules around state aid.
As the PM has claimed in the past, having the flexibility to decide on which industries could receive state aid was deemed to be one of the Brexit benefits.
Hopes: Prime Minister Boris Johnson is said to be taking a personal interest in the fate of Liberty Steel, which is on the brink following the collapse of financial backer Greensill Capital
The French government has already said it will support Liberty’s Hayange and Ascoval’s steel works, despite the EU’s state aid rules.
Johnson should do the same with Liberty. The group is not only a significant employer but its steel-making is of strategic importance to the country, all the more so today as global supply chains have crumbled under the pandemic and tankers get stuck in the Suez Canal.
It employs 5,000 workers at 12 steel and aluminium plants in some of the poorer parts of the country, including massive steel works in Newport in South Wales, Rotherham, the North East and in Scotland. (Another 35,000 are employed around the world.) If any of these British plants were to close, thousands of people stand to lose their jobs directly.
Their closure would have a ripple effect on wider supply chains and bring havoc to local communities.
As one steelworker put it: ‘If the steel works shuts, it will destroy Rotherham.’
Yet the core business, according to GFG Alliance, Liberty’s parent company, is said to be strong and benefiting from robust markets in steel, aluminium and iron ore.
However, parts of the business are suffering due to the impact of Covid-19 on other key industries which Liberty supplies to.
As well as being a liquid steel producer and running steel rolling mills, Liberty makes products for the automotive, construction, mining and aerospace industries.
The Government was right to turn down Gupta’s request for a £170million bailout to fund working capital and cover future short-term losses.
Kwasi Kwarteng, the Business Secretary, has legitimate concerns about the opaque nature of Gupta’s sprawling conglomerate.
Instead, ministers suggest they may wait until Liberty files for compulsory liquidation, and then step in with a rescue package to keep it going until a buyer or buyers can be found.
But this could be a messy and prolonged process. Surely far better to step in now? Such a positive move would give workers the security they need, but also provide management with the confidence they need to continue working.
What’s more, they should keep Gupta and his top managers on to work unpaid to help unravel the complex web of companies.
The GMB’s national officer Ross Murdoch, who met with Kwarteng yesterday, hopes to persuade ministers to look at his union’s Plan B which covers all options – including nationalisation – to keep the industry going and jobs safe.
Murdoch tells me that if the PM is serious about rebuilding the UK economy post Covid and Brexit, then backing such an integral industry is vital.
He’s right. The best way for Johnson to level up will be to don his hi-viz jacket and hot foot it to meet Murdoch at one of the Liberty plants and put his name to a rescue plan.
Deliveroo’s bankers have been forced to take a chunk out of the takeaway giant.
They have dropped the price of shares in Deliveroo’s IPO to between £3.90 and £4.10, valuing it at up to £7.8billion.
That’s £1billion less than Deliveroo was hoping for and the blame is being put on volatile market conditions.
This is nonsense. It’s obviously a response to the outcry from investors who say they will shun the float because of workers’ rights, but also the share ownership structure.
Founder Will Shu will have over 50 per cent of voting rights (and net about £530million) and fund managers are – quite correctly – worried about these new dual class rules.
What’s amusing is how fund managers are dressing up concerns about the low pay of the firm’s riders – some are alleged to be paid less than £2 an hour – under the trendy ESG labels.
What they are really saying is that they fear the entire business model is under pressure because eventually Deliveroo will have to start paying proper wages, just as Uber has been forced to do.
If that is the case, will it ever make a profit? No wonder they are staying away.
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