Grant
Shapps, the new business secretary, will try to persuade Jingye Group
executives on Monday not to proceed with moves that could trigger thousands of
industrial job losses, Sky News learns.
Grant Shapps, the new business
secretary, will hold crunch talks next week with the owners of Britain's
second-biggest steel producer, amid dwindling hopes that a government aid
package will prevent thousands of job losses.
Sky News has learnt that Mr
Shapps will speak to Jingye Group executives on Monday in an attempt to
persuade the Chinese company not to close one of the two blast furnaces at
British Steel's Scunthorpe base.
Insiders said this weekend that
Jingye, which took control of an insolvent British Steel in 2020, had become
increasingly pessimistic since Rishi Sunak became
prime minister that the government will agree to the provision of substantial
taxpayer funding.
One source said that British
Steel had begun placing orders for equipment that would be required in order to
permanently close one of Scunthorpe's blast furnaces.
Such a move would entail as many
as 2,000 redundancies at the company, the source added, in what would be a
further blow to Britain's industrial manufacturing capability.
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Mr Sunak is expected to strike a more bearish tone towards requests for
government money to prop up struggling companies than his short-lived
predecessor in Downing Street, Liz Truss.
Jacob Rees-Mogg, who
lasted just weeks as business secretary under Ms Truss, opened formal talks with
Jingye last month about the provision of hundreds of millions of pounds of
funding to help British Steel decarbonise.
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Last month, a Whitehall insider
told Sky News that talks were "underway with the steel sector, including
British Steel and Tata, to secure the sector's long-term future".
British Steel employs about 4,000
people, with thousands more jobs in its supply chain dependent upon the
company.
The Department for Business,
Energy and Industrial Strategy (BEIS) declined to comment on Saturday, while a
British Steel spokesman said: "We are continuing formal talks with the UK
Government to help us overcome the global challenges we currently face.
"The government understands
the significant impact the economic slowdown, rising inflation and
exceptionally high energy and carbon prices are having on businesses like ours
and we look forward to working together to build a sustainable future."
Industrial consumers of energy
have complained for months that soaring prices are imperilling their ability to
continue operating.
The request for financial support
from Jingye poses a political headache for ministers, given the scale of the
potential job losses which might result from a refusal to provide taxpayer aid.
An agreement to provide
substantial taxpayer funding to a Chinese-owned business, however, would
inevitably provoke outrage among Tory critics of Beijing.