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Ministers are urging the chancellor to provide £300m of taxpayers’ money to avert the closure of British Steel’s two blast furnaces – a move that would trigger the loss of thousands of industrial jobs in northern England.
Sky News has learnt that Grant Shapps, the business secretary, and Michael Gove, the levelling-up secretary, wrote to Jeremy Hunt this month to warn that the demise of British Steel could cost the government up to £1bn in decommissioning and other liabilities.
In their letter, a copy of which has been seen by Sky News, Mr Hunt was asked to consider the economic case for supporting both British Steel, which is owned by a Chinese conglomerate, and the wider UK steel industry.
“Every other G20 nation has maintained domestic steel production and, while we do not think that this should come at any cost, we do believe it is in HMG’s interest to offer well-designed and targeted funding which unlocks private investment, achieves a good outcome for taxpayers, and enables transformed, decarbonised and viable domestic steel production to continue in the UK in the long-term,” Mr Shapps and Mr Gove wrote.
“We do not want to become reliant on steel sources elsewhere in the same way that energy security has become self-evidently important.
“Moreover, our steel requirement will increase by 20% due to large domestic infrastructure projects already committed to in the UK.”
One industry source briefed on the discussions in Whitehall said the chancellor had instructed Treasury officials to scrutinise the request.
The letter to Mr Hunt warned that British Steel “does not have a viable business without government support”.
“Closing one blast furnace would be a stepping-stone to closure of the second blast furnace, resulting in a highly unstable business model dependent on Chinese steel imports,” Mr Shapps and Mr Gove wrote.
“The local…
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