British Steel is to go into administration, putting some 5,000 UK jobs at risk and endangering 20,000 roles in its supply chain.
The company’s owner, Greybull Capital, had been in rescue talks with the government in the hope that it could secure a loan.
The government’s Official Receiver will now take control of the company as part of the insolvency process, while accounting firm EY will take on the role of ‘special manager’, which involves it trying to find a buyer for the business.
British Steel’s main plant is at Scunthorpe, but it also has sites in Teesside, Cumbria and North Yorkshire – it is the UK’s second largest steel company.
It’s estimated that around 3,000 of the jobs to be lost are in Scunthorpe, another 800 on Teeside, while the rest are in France, the Netherlands and global sales offices.
British Steel’s financial woes have been linked to a slump in orders from European customers who are uncertain about the Brexit process.
Unions and Labour called this week for the government to renationalise the business in order to protect jobs.
Labour leader Jeremy Corbyn said that, if an agreement could not be struck to save British Steel, “the government must act to take a public stake in the company to secure the long-term future of the steelworks and protect people’s livelihoods and communities”.
GMB general secretary Tim Roache said the insolvency announcement was “devastating news”.
“Ministers should have been ready to make use of all the options – including nationalisation – in order to save British Steel but they either don’t care or wouldn’t take off their ideological blinkers to save hard working people and communities,” he said.
“GMB demands urgent reassurances on what the future holds for the thousands of British Steel workers and their families.”
The British Steel brand was revived in 2016 when private equity firm Greybull Capital bought out Tata Steel’s European Long Products business for just £1, saving around 5,000 jobs at the time.
One of its biggest customers is Network Rail, 95% of whose rails are produced at the company’s Scunthorpe plant.
The news about British Steel comes the day after celebrity chef Jamie Oliver’s restaurant business, which includes Jamie’s Italian, Fifteen and Barbecoa, went into administration with the loss of 1,000 jobs.