Yesterday I asked the government for an update on British Steel. Because I thought after 18 months of state control we were due a better assessment of the problems and signs of a plan on how to solve them I gave the Minister advance notice of what I would ask so he could get the precise briefing to inform us.
I asked to be told about the Business Plan. We were told that 18 months in they are still working on it. They have only recently appointed a new Chairman for the company and are waiting on his decisions. You would have thought there should have been a Business Plan in place before he arrived, and that if he wanted a change of Plan that would have come out in the interview process. There have been consultants working away to help the Ministers and civil servants for eighteen months.
I asked how long it would be before the 2 ageing blast furnaces need a shut down to carry out deep maintenance, as there are strict limits to what you can do with the furnaces continuously blazing. There is still no answer. I had asked this before as any normal business leader would know something as fundamental as this about the two key assets. If you need to stop the fires that means no new steel, no sales, no cashflow. It is a big task to shut down then restart a blast furnace.
I asked where the government had got to with plans to build an electric arc replacement plant in Scunthorpe. That was the plan the Conservative government had been working on with the previous owners, just as they put in place for South Wales. Again there was still no answer. The original Labour budget for steel was to provide grant for such new plants, not to pay the wages and fuel bills to keep existing plants from closure.The government does not deny that is the aim, which of course would mean closure of the blast furnaces and the loss of many jobs.
The one thing we learned from someone else’s follow up question was the total spend to date since the government stepped in has now reached £750 m, up from the recently reported £671 m. The government call this the provision of working capital, but it is to cover the losses and to finance stocks of finished steel it cannot sell other than at a big loss, or cannot sell at all to bring in cash.
I will also reveal soon that this is not the only steel loss maker taxpayers are paying for. The government’s steel nationalisation has runaway costs with no Plan for success.