Speciality Steel UK: Insolvency

Lindsay Hoyle Excerpts

Tuesday 2nd September 2025 Commons Chamber

[The Minister for Industry (Sarah Jones)]

I would like to make a statement regarding the insolvency of Speciality Steel UK Ltd, which is part of the Liberty Steel Group. Hon. Members will have seen that the High Court granted a compulsory winding-up order against Liberty Speciality Steels on 21 August, and the company has now entered liquidation.

First and foremost, let me say this: the Government stand with the affected steelworkers in Rotherham, in Sheffield and in Wednesbury. We stand with their families and the communities, who will undoubtedly be worried at this difficult time. I would like to reassure them and all those employed by Liberty Speciality Steels that we are standing by with our rapid response teams to give immediate support on the ground if required, that we are working with the trade unions and the South Yorkshire Mayor, and that we are working with the councils and hon. Members from affected constituencies to offer all the help we can.

I also want to stress that there will be no immediate changes to the current operation of the business, including to employees’ jobs. Following the appointment of special managers, the company’s sites have been secured and employee payroll processed within 24 hours. Other Liberty Steel companies outside Speciality Steel, such as Liberty Dalzell and Liberty Hartlepool, are not affected by this action.

Following the company’s liquidation, the official receiver has been appointed as liquidator by the court. Hon. Members will know that the official receiver operates independently of Government, with a statutory duty to act in the best interests of creditors.

Yesterday, I laid a departmental minute notifying the House of the contingent liabilities associated with this intervention. I regret that, due to the liquidation taking place during recess, we have not been able to follow the usual notice period of 14 parliamentary sitting days. However, a copy of the departmental minute will be placed in the Libraries of both Houses. In addition, the Government have agreed to funding for the official receiver, who will now stabilise operations. The official receiver will gather company information and report to us on the likely next steps, including options for the company’s business and sites. The total costs will depend on market conditions and the strategy adopted by the official receiver. However, that will be subject to close scrutiny by my Department and the Insolvency Service.

As the House will be aware, the company has faced severe financial and operational difficulties since 2021. Liberty Speciality Steels had failed to file accounts for over six years—a failure that has led to a separate prosecution by Companies House of its parent company. I am sure that the official receiver will want to gain a better understanding of the company’s business and the conduct of its directors leading up to the liquidation. I also inform the House that the director of the company is currently under investigation by the Serious Fraud Office for suspected fraud, fraudulent trading and money laundering. Given that, I am sure hon. Members will agree that it would have been wholly inappropriate for the Government to enter into commercial arrangements with the company.

This Government will always take difficult decisions when they are in the national interest. That is why, in April, we acted to prevent the pre-emptive closure of the blast furnaces at British Steel in Scunthorpe. In the case of Liberty Steel, the lack of transparency, the legal and financial risks and the complete absence of reliable corporate information meant we had no credible route to act before insolvency. It is worth noting that Liberty Speciality Steels uses electric arc furnace technology that can be powered up or down as needed—although it should be noted that those furnaces have not been operating since July of last year. That was the situation this Government inherited.

The circumstances in Scunthorpe were fundamentally different. British Steel operates the UK’s last remaining blast furnaces—assets that, once shut down, cannot simply be restarted. Allowing those blast furnaces to be closed pre-emptively would have removed our ability to make strategic choices about the future of steelmaking in Scunthorpe, and that was not a position this Government were prepared to accept. Scunthorpe was therefore a truly exceptional situation and that is why we took the unprecedented step of implementing the Steel Industry (Special Measures) Act 2025 to maintain the safe operation of the blast furnaces.

The situation with Liberty Speciality Steels is not comparable. The company was issued with a winding-up order by the High Court due to longstanding financial issues. Spending taxpayers’ money on a company operating in such a way would have exposed taxpayers to hundreds of millions—potentially billions—of pounds in hidden costs.

With all that said, I very much believe that the steelmaking sites in Rotherham, Stocksbridge, Brinsworth and Wednesbury have a future. I am keen to see them return to production, but that has to be achieved through private investment by an owner who can invest in the workforce and in the future of the business so that they put it on a long-term, sustainable footing. We know that the business environment has not been good enough for the UK’s steel industry, which is why we have already made substantial changes to secure a stronger future for it. I will say more about the steps that we have taken shortly.

In the case of Liberty Speciality Steels, it goes without saying that the company’s hardworking employees are key to turning the sites around. Their skills and expertise will be essential in delivering that brighter future. However, in its current state, producing only minimal volumes of steel and with many employees still on furlough, we know that some tough choices lie ahead. It is now for the official receiver to determine the next steps in the insolvency process. But let me be clear: this Government will stand by this workforce and do all we can to support them through this period of uncertainty.

Despite the challenges facing the steel sector today after years of neglect under the previous Government, we believe that this industry will bounce back and grow stronger tomorrow. This Government are doing everything we can to make that happen. We are pressing ahead with a bold steel strategy for the UK, set to be published later this year. That strategy will set out our vision for a competitive, decarbonised and resilient domestic steel industry. Our approach is clear: we want the UK steel sector to thrive, with strong private investment and commercially sustainable operations at its core.

Under our new industrial strategy, we have already announced some major policy changes to increase the future viability of the steel industry. We are reducing electricity costs for steel producers by increasing network charge discounts through the supercharger from 60% to 90%. We are changing Government procurement rules via the publication of a new steel public procurement notice to ensure that UK-made steel is considered for all public projects. We are also strengthening current steel safeguard measures, ensuring that UK steel producers will not be undercut while still ensuring that the UK has a steady and reliable supply.

Hon. Members will know that we have also secured a much-improved deal for the workers of Port Talbot—something the Opposition repeatedly said could never be achieved—and we delivered it alongside a £500 million grant to support the transition to low-carbon electric arc furnace production. I was proud to attend the groundbreaking event for this in July with the chair of Tata Group. We will continue to work hand in hand with this vital British industry to ensure its long-term success.

Let there be no doubt that, for Liberty Speciality Steels, we will pursue every option to keep steelmaking in Rotherham, Sheffield, South Yorkshire and the west midlands. We will offer all possible support to the independent official receiver on the all-important next phase, and we will continue to work with hon. Members across the House to ensure that the UK remains a proud steelmaking country now and for many years to come. I commend this statement to the House.

[Mr Speaker]

I call the shadow Minister.

[Gareth Davies (Grantham and Bourne) (Con)]

I am grateful to the Minister for giving me advance sight of her statement today, but here we are again: another day, another Government takeover of a key British manufacturing plant, another 1,500 jobs—1,500 people—facing an incredibly uncertain future, and the prospect of significant job losses alongside the wider economic impact across supply chains and in aerospace, defence and power generation that would result from the collapse of this specialist steelworks.

Despite so many warm words about the steel industry, despite so many Labour promises to the people who have worked their whole lives in that industry, and despite the impression of superiority while in opposition, this Labour Government are failing British industry. They are failing to provide certainty of policy and the economic growth that they said was their central mission, and they are failing to get a grip on the issues that affect thousands of working people’s lives. The Minister says she wants to provide certainty to the steel industry and the people who work in it. She says that we can expect a bold steel strategy for the UK, but where is it? The Government are not new any more; they have been in power for a year now, and there is still no clarity on this supposedly bold strategy.

The British steel industry faces a fierce dual set of pressures: new 25% US tariffs and continued high energy costs. We all know that the energy costs in this country are too high, yet they have been driven only higher by this Government’s ideological obsession with prioritising decarbonisation over economic growth. Back in May, Liberty Steel warned that it faced significant challenges due to soaring energy costs, but instead of focusing on tackling the underlying causes of expensive energy, the Energy Secretary is backing windmills while leaving Britain’s oil and gas industry in the doldrums. He is leaving our amazing British oil and gas—our greatest energy source—trapped under the North sea. This is economic illiteracy aimed at satisfying their own green obsessions. From steel to chemicals to cars, builders and makers across Britain are paying the price of this Government’s socialist green agenda, and it is their workers and investors who will lose out.

On tariffs, despite the economic prosperity deal agreed by the Prime Minister and President Trump, the agreement’s provisions lowering US tariffs on UK-produced steel and steel derivative products have still not come into effect. The Government have repeatedly avoided answering questions in this House on when the agreement will come into effect. We heard no mention whatsoever of it in the statement today or in the note yesterday, so I ask again: when will the provisions lowering US tariffs on UK steel come into effect?

Of course, even if those provisions do eventually come to fruition, steelworkers should beware of this Government, who have overpromised and under-delivered before, with devastating impacts for workers. Just look at Jaguar Land Rover. The Prime Minister looked workers dead in the eyes and promised that he would protect their industry and save their jobs. He then used those workers as a Labour propaganda photo opportunity across television and the front pages when the UK-US deal was announced, but little over two months later, Jaguar Land Rover announced it was cutting 500 jobs. The very same workers who were promised everything by the Prime Minister were left out in the cold by this Labour Government’s inability to secure a better trading relationship with our closest ally.

Let us today try to get some clarity on what exactly this Minister has done and will do for the British workers impacted at Liberty Steel. First, she announced that the Government had agreed to funding the official receiver and that total—

[Mr Speaker]

Order—[Interruption.] No, it’s no use nodding at me. I have not gone over time; it is the shadow Minister himself. I am sure he is now coming to a conclusion.

[Gareth Davies]

I am, Mr Speaker. Although I have lots of questions, I will ask just two very quick ones, if that is okay.

[Mr Speaker]

You must ask them now, otherwise I am going to stop you.

[Gareth Davies]

I will, Mr Speaker.

What is the budget for the official receiver? The Minister has not laid out any costs. She has said that it is related to market conditions but has not set out any estimates. She knows that the Treasury will have approved estimates, so please will she set those out? The Government have made the National Wealth Fund allocate £2.5 billion to British Steel. Can she assure us that they will follow the investment allocation that assures its operational independence—

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[Mr Speaker]

Order. Please, it is not acceptable on either side of the House to take advantage of the Back Benchers who want to get in. You have a set amount of time. If the Minister can stick to it, I expect the shadow Minister to do so. If the Minister goes over time, I do then grant time the other way. Please do not do this again.

Let us come to the Chair of the Select Committee.

[Liam Byrne (Birmingham Hodge Hill and Solihull North) (Lab)]

Thank you very much, Mr Speaker—

[Mr Speaker]

Order. The Minister needs to respond. It’s been that long that I had forgotten.

[Sarah Jones]

Thank you, Mr Speaker. I shall just explain to the shadow Minister how the system works. The Government have not taken over control. That is not the process of the official receiver. The official receiver was appointed following a court case which began in 2024. It has been a very long and arduous case.

The hon. Gentleman will hopefully understand that I cannot set out the cost of the official receiver at this point because the official receiver has only just begun his work. It is very early days and we cannot be specific. We know the numbers will be in the millions, as opposed to anything more substantial, because the company is not operating in and of itself. What we are doing is ensuring that the salaries are paid, which I hope the whole House would agree is the right thing to do. Companies will be coming forward and expressing an interest in buying parts of the company, and it will be for the official receiver to look at that and see what process we should go through, but I cannot give the hon. Gentleman the actual numbers on that. I hope the whole House will understand why not.

On the shadow Minister’s wider point, if this Government had not intervened, thousands of people would have lost their livelihoods in Scunthorpe; that is a fact. If this Government had not intervened, we would not have had a better deal for the workers in Port Talbot, we would not have been there supporting them in the transition, and we would not be there supporting the building of the electric arc furnace, which began back in July.

The shadow Minister asked what this Government have already done. We have already changed the rules on procurement. I have worked closely with colleagues in the Cabinet Office on that to ensure that where Government are spending money, we are spending on British business where we can—something his Government failed to do. On energy prices, we have committed to lowering prices through the reduction in costs that will come from the expansion of the super-charger—something his Government failed to do. We are working on a bold strategy, which we will publish this year, that will build on that. Whether on trade protections—on which we have already taken measures—our scrap policy, R&D, jobs, apprenticeships or skills, we will have a bold strategy because we believe in steel, unlike the previous Government, who said that manufacturing is a Victorian pursuit best left to the Chinese. We do not agree with that approach.

[Mr Speaker]

I will try again: I call the Chair of the Select Committee.

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[Sarah Jones]

I thank my right hon. Friend for those helpful questions. He reminded me that the shadow Minister had asked about the US. Of course, we are in a position where the world has tariffs of 50% on steel and aluminium; we have 25%. We are working with our US counterparts to reach a conclusion to those negotiations. My right hon. Friend will know that the President is due to come to the UK and, of course, we will be doing all we can to get that negotiation concluded at pace.

My right hon. Friend asked about energy costs. We are seeking to ensure that there is a viable steel industry into the future and that those companies currently talking to the official receiver about wanting to take over and invest in Liberty can do so in a way that will make them money. On the charges we are reducing—the 60% to 90% super-charger extension for network charge relief—to give an example, it will mean about £4 to £5 relief per tonne of steel produced. We know that Liberty is not producing what it can at the moment, but two or three years ago it would have been producing about 300 tonnes of steel per year, so it would have saved up to £1.5 million on its energy costs. That is a substantial reduction and something that I am sure he will welcome.

On the liabilities, of course we want to be as honest, open and transparent with the House as we possibly can. A lot of the liabilities are with the creditors at the moment. We want to come to the House as soon as we can to ensure that we are setting out the costs that we incur. My right hon. Friend is right that the steel strategy this year needs to be bold, and we will of course look to the work that his Committee has done to help us in that.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Sarah Olney (Richmond Park) (LD)]

May I start by associating the Liberal Democrats with the Minister’s remarks in support of the employees, families and communities who are affected by this latest development? We welcome the Minister’s coming to the House today to provide some clarity.

Steel is a sector of huge strategic importance for our country. It provides vital materials for our national infrastructure, from defence to renewable energy, and it creates thousands of jobs across the UK. The neglect of the steel industry in recent years is just another part of the previous Government’s disastrous legacy. With Putin’s barbaric war in Europe and Donald Trump’s damaging tariffs causing economic turmoil, securing the future of steel production in this country is more important than ever. That is why the Liberal Democrats firmly believe that nothing should be off the table in supporting this critical sector.

For too long, our steel industry has been neglected. The Conservative Government oversaw a string of near collapses and last-minute deals. They scrapped the industrial strategy, which is so vital to our manufacturers, and put in place new trade barriers, which constrained our exporters. In the light of this latest insolvency, will the Minister set out what actions the Government are taking to set our steel industry on a truly sustainable footing? What reassurance can the Government provide that job losses can be avoided in the future? What progress has been made in bringing down industrial electricity prices through the measures announced in the industrial strategy? What are the Government doing to press President Trump to finally drop his damaging 25% tariffs on our steel exports? Finally, what steps are the Government taking to treat steel as the nationally strategic asset that it is, ensuring that more British-made steel is used to power our national infrastructure and other major projects here in the UK?

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[Chris Law (Dundee Central) (SNP)]

The Minister was right to come here today to make a statement on such an important part of the national infrastructure. It is just a shame that no Minister has ever made a statement in this House on Grangemouth. We have now learned that the Chancellor met INEOS chair Jim Ratcliffe just three weeks ago—just three weeks before Petroineos Grangemouth closed—but she did not do so much as raise the refinery with him. In her statement, the Minister said: “the Government stand with the affected steelworkers in Rotherham, in Sheffield and in Wednesbury. We stand with their families”. That is quite right; so do we in the SNP. But why have this Labour Government never stood with the workers of Grangemouth?

[Mr Speaker]

It is up to the Minister to answer that question if she wants to, but the statement is about steel, rather than petroleum.

[Sarah Jones]

Thank you, Mr Speaker. I will just say that we have very much stood with the workers of Grangemouth. We are investing, through the National Wealth Fund, £200 million to support that development. I have had multiple conversations, and the hon. Gentleman and I have spoken multiple times in this place, about how we will support industry in Grangemouth to transition and grow, and provide significant support to workers where they lose jobs. I fundamentally disagree with the picture that he paints.