Government bails out British Steel with £100m loan

British Steel, which has major sites in Scunthorpe and Rotherham, has received a government loan of £100m to pay its EU carbon bill.

Business Secretary Greg Clark backed the UK’s second-biggest steel manufacturer, according to Sky News.

It was reported that the company had asked for emergency assistance in paying its bill to the EU environment scheme, which aims to cut carbon emissions. Under the scheme, industrial polluters can use their allocated credits to pay a kind of tax on the previous year’s emissions.

British Steel however has already used last year’s allotment to fund working capital requirements. It sells most of the 2.8bn tonnes of steel it produces each year to Europe, making the current Brexit situation a cause for concern for the company.

The funding has reportedly been used to acquire carbon credits on behalf of the company, before they are transferred to the regulators. British companies are being blocked out of EU regulations on carbon emissions trading systems due to the stalemate over the country’s exit from the EU.

British Steel has apparently signed a deal to pay back the loan on commercial terms over the next few months, although this unusual move will see the Department for Business, Energy and Industrial Strategy face criticism over lending public money to a privately traded company.

British Steel employs 5,000 people across the UK and is owned by Greybull Capital, who acquired it from Tata Steel in 2016.