The British government on Thursday criticized British Steel’s plans to cut more than 800 jobs at a major site in eastern England as “disappointing”, while calling for continued talks on a £300 million state aid package.
“It is very disappointing that British Steel has chosen to take this step for an employee when negotiations with the government are active,” said Nusrat Ghani, minister of business.
“I will encourage the company to continue discussions with us to get a solution,” he added, noting that the ministers have “provided a substantial package of support”, which combined with shareholder action, will put the company on a sustainable and decarbonised footing. .
The government last month offered a combined package of around £600 million to British Steel and Tata Steel UK, which owns Port Talbot in Wales, to upgrade their blast furnaces to electric arc models with lower carbon emissions.
The offer depends on both companies promising green investments and to protect current jobs until 2030. However, industry experts describe the support offered as “sticking plaster”.
Grant Shapps, the business secretary, wrote to Li Huiming, chief executive of Jingye China, which owns British Steel from 2020, earlier this week after learning of the proposed job cuts.
Shapps said it would make “no sense” for the company to create redundancies while negotiations continue in good faith over potential state funding.
While ministers have “come a long way” with the deal, “physically it’s not enough,” said Chris McDonald, chief executive of the Materials Processing Institute, an industry research group, which estimates the sector needs around £6bn to move. green.
British Steel on Friday confirmed that they are investigating the laying off of more than 800 workers, most of them at the main Scunthorpe site in Lincolnshire.
Union officials said Wednesday that the company’s coke oven and 300 related jobs are under review, while uncertainty remains over the future of another 600-900 posts in operation. The company employs about 4,000 across three sites.
“Unfortunately, like many other businesses, we are reluctant to consider cost reductions due to the global recession and increased costs. We have discussed this in preliminary discussions with the union where we share the challenges we face,” the company said on Thursday.
British Steel has invested £330 million in capital projects in the first three years of its ownership in Jingye, the company added, but said it faced “significant challenges due to the economic slowdown, rising inflation and very high energy prices”.
Union officials, however, condemned the proposed cuts. “There is no real substance” behind the review, said Alun Davies, national steel officer at the community union.
The company, he said, failed to implement a business plan detailing the many potential job cuts. It will also struggle to operate safely with reduced staff numbers.
“It’s a false economy. Whatever you save, you have to pay overtime,” he added.
Holly Mumby-Croft, Conservative MP for Scunthorpe, said: “This is not the way to act, it sends the wrong message and violates the spirit of the negotiations.”