- Wednesday, October 05, 2022
By: Pramod Thomas
BRITAIN’s opposition party has asked the government to step in to save Liberty Steel before it collapses to save thousands of supply chain jobs and millions of pounds.
Labour party drew parallels between Liberty Steel and British Steel, which collapsed before being bought by Chinese firm Jingye, reported the BBC.
According to the Labour, the government’s decision to wait until British Steel was insolvent cost the company’s supply chain £500m in unpaid bills.
British Steel was run on government life support by the Official Receiver for five months at an additional cost of £500m to the taxpayer before being sold to Jingye for £50m.
Liberty Steel and its parent firm GFG Alliance have been in distress since its main financial backer Greensill Capital went bust in early March. However, the government has pledged to preserve the company in some form.
“Labour is calling on ministers to intervene early before liquidation to save workers jobs, terms and conditions, and give customers and suppliers confidence that orders will be fulfilled, bills paid, and domestic steelmaking capacity will be safeguarded,” shadow minister for business and consumers Lucy Powell told the BBC.
Recently, the government stated that it continues to engage closely with Liberty Steel and the industry.
“This is not a straightforward situation. Greensill’s spectacular and rapid disintegration, despite the controversial efforts of former prime minister David Cameron to lobby on its behalf, have left a complicated Greensill carcass for administrators to pick through,” the Labour said.
Invoices issued by Liberty and GFG, which were bought by Greensill for a discount and then sold on to investors, have left many of them billions out of pocket.
Swiss bank Credit Suisse, whose customers indirectly bought the invoices, have issued claims for billions against companies in the GFG group for repayment.
Liberty Steel owner Sanjeev Gupta was once known as the saviour of steel as he rescued many loss making steel plants across the UK. Gupta bought a £42m house in London before asking the UK government for a £170m taxpayer bailout.
According to the BBC, the lobbying efforts of Cameron and the access of his banker boss Lex Greensill to Number 10, government departments and the senior ranks of the civil service has provoked widespread outrage and charges of cronyism.
Gupta’s Liberty and other GFG companies employ 5,000 workers and they are waiting to see if he can find another financier to replace Greensill.
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