Politics at play in battle over British Steel future

IWAS not wrong a few weeks ago when I wrote here that sorting out Britain’s financially troubled steel industry would ultimately be someone other than Grant Shapps’ mess to clean up. What I didn’t anticipate then was that, just a month later, Kemi Badenoch would become the fourth business secretary in six months given the mandate to deliver a taxpayer-funded decarbonisation package.

Handing out public money appears a harder task than it should be. Officials from Badenoch’s department were due to fly to China this week to convince Jingye Group, the owner of British Steel, that a £300m grant and a substantial energy subsidy was an act of genuine benevolence on the part of the UK government.

The message does not seem to be getting through.

Hundreds of job cuts at the company’s Scunthorpe plant, with hundreds more to follow, arrived yesterday despite a moratorium on redundancies being one of the conditions of government funding. That implies the Chinese conglomerate is either playing a risky game of brinkmanship, or is so underwhelmed by the government’s offer that it is ploughing on with its own restructuring regardless.

FRESH from low-level disgruntlement about the £1.1m package handed to Chris Cummings (right), chief executive of the Investment Association (IA), a number of the trade body’s members have been in touch –this time to gripe about fee increases.

The IA’s subscription fees are based on a firm’s assets and funds under management, fixed by a committee of members and then signed off by its board. This year’s increases were, a spokeswoman points out, below headline inflation rates despite the burden on the IA to respond to an intense regulatory environment.

“British Steel has a crucial role to play in ensuring the UK has its own supply of high-quality steel. To make sure we can deliver the steel Britain requires, we’re undergoing the biggest transformation in our 130-year history,” CEO Xifeng Han said yesterday.

When Shapps and Michael Gove, the levelling up secretary, wrote to Jeremy Hunt some weeks ago to warn that, without public money, British Steel did not have a viable business, they effectively tied the Chancellor’s hands behind his back.

A similar offer has been made to Tata Steel, British Steel’s larger rival, but it is unclear whether the Indian group finds the proposal any more attractive.

Government officials may end up feeling they have played a weak hand badly.

Both Jingye and Tata look well-placed to extract more public money, with fewer binding conditions, than ministers would like.

The alternative, as they are painfully aware, would be another industrial jobs bloodbath, and that would do little for the Conservatives’ already-shaky general election prospects.

Moreover, she adds, membership has increased, with a higher percentage of full fees delivered earlier this year

“Feedback from our members demonstrates that they highly rate the support the IA provides and strongly believe that our organisation has a positive influence on policy and regulatory issues,” she says.

Nevertheless, I suspect that those who grumbled about Cummings’ pay last year will be keeping a close eye on it again in 2023, given their views on its fee hikes.