Liberty Steel and the Future of the UK Steel Industry
The BEIS Committee is holding an inquiry into Liberty Steel and the Future of the UK Steel Industry.
On 8 March 2021, the supply chain finance firm Greensill Capital collapsed into administration after months of speculation about its financial viability. Greensill was the principal financial backer of GFG Alliance, owner of Liberty Steel, which is the third largest steel manufacturer in the UK. The collapse of Greensill puts 5,000 jobs at risk at Liberty Steel and other firms.
UK taxpayers are reported to be exposed to more than £1bn of debt from the collapse of Greensill via three Government guarantees, including a state-backed coronavirus lending scheme, which enabled Greensill to advance hundreds of millions of pounds to companies linked to GFG Alliance.
On 28 March 2021, the Government rejected a request for £170m in financial support from Mr Gupta for Liberty Steel due to concerns over GFG Alliance's opaque accounting procedures. This raises questions about the effectiveness of auditing and corporate governance regulations, and about the risks posed to UK industry by high-risk financing methods.
The UK steel industry has faced serious challenges for many years, particularly due to the excess of steel on the international market which has depressed prices, and which resulted in plant closures and staff lay-offs during the 2015/16 steel industry crisis. The sector is also grappling with the Government's ambitious target of 2035 to achieve net zero emissions in relation to steel production.