The government are working with the official receiver and a British Steel support group to secure operations at Scunthorpe and others. © AFP/Getty Images
The government are working with the official receiver and a British Steel support group to secure operations at Scunthorpe and others. © AFP/Getty Images

Price rise warning follows British Steel collapse

posted by Lucy Patchett
22 May 2019

Costs could increase following the British Steel collapse as industry will have to look abroad for specialist steel products, according to an academic.

Dr Jonathan Owens, director of the business and management programme at Salford Business School, who worked at British Steel’s Shotton plant for nine years, said the UK steel industry had been in decline for years and “this closure could cause problems for the UK".

Owens told SM British Steel is the main supplier of rails to Network Rail, along with other specialist construction products, and industry may be forced to buy steel from abroad. "That could increase costs in many sectors," he said.

Craig Knowles, marketing manager at software provider Market Dojo, said: "Not only are jobs at risk, but public transport giants such as Network Rail could feel serious repercussions as a massive 95% of their rails are supplied by British Steel.

“British Steel are the second-largest steel producer in the UK, so it’s likely most of their contracts will go to both the largest steel producer in the UK as well as others further afield.

"This is bad news for the UK economy and for businesses who will likely find that the steel is more expensive due to importing.”

Following the company's collapse into liquidation, Greg Clark, business secretary at the Department for Business, Energy & Industrial Strategy, said: “In the days and weeks ahead, I will be working with the official receiver and a British Steel support group of management, trade unions, companies in the supply chain and local communities, to pursue remorselessly every possible step to secure the future of the valuable operations in sites at Scunthorpe, Skinningrove and on Teesside.”

Talks around British Steel’s request for a government loan failed as Clark said “that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made”.

The Labour Party has called for the steel manufacturer to be nationalised. Leader Jeremy Corbyn said the government must take a public stake in the company to secure its future.

“Britain’s proud steel industry has a major role to play in ushering in a Green Industrial Revolution, securing British manufacturing for a sustainable, green future. It needs support, not a death warrant,” he added.

Meanwhile, a UK Steel Charter has been launched by industry body UK Steel which outlines new procurement steps to boost domestically-produced steel in UK infrastructure projects. The Welsh Government has signed the charter.

The union Unite has pressured the UK government to back the charter and will be writing to all the major manufacturers it works with to sign it.

Tony Brady, Unite national officer for steel, said: “We would urge the UK government to back this charter and use its buying power to put UK steel at the heart of major infrastructure projects and ensure projects like the Royal Navy’s new Fleet Solid Ships are built in the UK using UK steel.

“The need and the sense of urgency for this to happen is only heightened by the current difficulties experienced by British Steel.”

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