Ministers prepare £300m ‘rescue package’ for British Steel but insist Chinese owners must protect jobs and transition to greener electric furnaces
- Ministers are understood to be preparing an investment package for British Steel
- The deal could be worth £300m amid concerns that the company could collapse
- Government is adamant the Chinese owners will have to pump money in too
Ministers are preparing a £300million rescue for British Steel – but insist the Chinese owners must protect jobs and transition to greener technology.
Chancellor Jeremy Hunt is drawing up the major package amid fears that the company could collapse.
The money would be paid in installments over the next few years if conditions are met, including switching to electric arc furnaces.
It is understood the government are determined Jingye Group – which bought the firm out of insolvency three years ago – has to make significant investment commitments in return.
The public cash could help save jobs at the company, which employs about 4,000 people directly.
It could also prevent an even bigger bill for the taxpayer should British Steel go under.
Chancellor Jeremy Hunt is drawing up the major package amid fears that British Steel could collapse
Government sources denied the package being prepared with Mr Hunt (pictured) amounted to a bailout, arguing that similar technology transition deals had been struck in other parts of the economy
The funding will be linked directly to attempts to get British Steel to decarbonise, by helping it to replace the company’s blast furnaces in Scunthorpe, Lincolnshire, with electric alternatives.
These so-called electric arc furnaces are better for the environment as they can run on renewable power. They are best used on recycled steel.
Government sources denied the package amounted to a bailout, arguing that similar technology transition deals had been struck in other parts of the economy.
The Government is set to tell British Steel about the potential deal in the coming days, according to Sky News.
The strings attached could include a promise from Jingye Group to invest at least £1billion in the company by the start of next decade.
Once a giant of UK manufacturing, British Steel has fallen on hard times in recent years.
Jingye is its third owner in four years.
But the Chinese firm has recently said it will need taxpayer funding to keep the doors open.
The British Steel plant in Scunthorpe, where new electric furnaces could be used