Unknown: 0:00

Thank you.

Amy: 0:03

Hello and welcome again to The Bench Report. Concise summaries of debates and briefings from the benches of the UK Parliament. A new topic every episode. You're listening to Amy Anaven. Today we're looking at something pretty major for UK industry, the recent insolvency of Specialty Steel UK. Back on August 21st, the High Court issued a compulsory winding up order against Liberty Specialty Steels, LSS.

Ivan: 0:29

Which means it's now officially being liquidated. A compulsory order like that, well, it's the court forcing the company to close and sell assets.

Amy: 0:36

And the immediate worry, of course, was for the workers. Around 1,500 steel workers, mainly in Rotherham, Sheffield, and Wensbury, suddenly facing a very uncertain future.

Ivan: 0:45

Absolutely. But what was striking was how fast the government reacted after that order. Within hours, they had rapid support teams actually on the ground in those areas.

Amy: 0:53

Really? On the ground that quickly?

Ivan: 0:55

Yes. Assuring people, look, no immediate job changes. They secured the sites and crucially processed the employee payroll almost straight away.

Amy: 1:02

So practical support first.

Ivan: 1:03

Exactly. And they appointed the official receiver that's an independent official who handles insolvencies and provided funding to keep things stable for now.

Amy: 1:13

That's important context.

Ivan: 1:14

It is. And it's also key to understand this is specifically about Specialty Steel UK. Other Liberty Steel businesses like Dalzell and Hartlepool, they're carrying on as normal, unaffected.

Amy: 1:26

Okay, so that swift post-insolvency action begs the question, doesn't it? If they could move so fast then, why didn't the government step in before LSS went into liquidation?

Ivan: 1:36

Well, that's the million dollar question, isn't it? And when you look into it, LSS had some, let's say, deep-seated problems. Serious financial trouble going back to 2021.

Amy: 1:47

And I read they hadn't filed accounts for over six years.

Ivan: 1:50

That's right. Six years without filed accounts. Plus, and this is significant, there's an ongoing serious fraud office investigation into the company's director.

Amy: 1:58

SFO, what for?

Ivan: 1:59

Suspected fraud, fraudulent trading, and money laundering. So you can see how that significantly changes the picture for any potential government intervention beforehand.

Amy: 2:07

It paints a picture of considerable risk.

Ivan: 2:09

Precisely. And this is where the comparison with British Steel and Scunthorpe comes in. The government did intervene there, remember, using the Steel Industry Act 2025.

Amy: 2:18

Why the difference then?

Ivan: 2:19

Fundamentally, it's about the assets. British Steel has blast furnaces, huge, strategically vital, irreplaceable kit. LSS, on the other hand, uses electric arc furnaces.

Amy: 2:30

Which are different how in this context?

Ivan: 2:32

Well, import Certainly, the LSS electric arc furnaces hadn't actually been running since July of last year, so less immediate strategic impact if they stopped.

Amy: 2:41

Ah, okay. So the operational status mattered.

Ivan: 2:44

It did. And the government's stated position was intervening before insolvency, given the lack of financial transparency in those SFO concerns, could have exposed taxpayers to potentially, and I quote, billions of pounds in hidden costs.

Amy: 2:56

Billions. Wow. So they saw it as too big a gamble with public money.

Ivan: 3:01

Essentially, yes. A calculated decision based on risk, transparency, or lack thereof, and the specific nature of the LSS operations versus British Steel.

Amy: 3:09

Right. So despite the current situation, the government seems to think these LSS sites, Rotherham, Stocksbridge, Brinsworth, Wendlesbury, still have a future.

Ivan: 3:19

They do. They're banking on private investment finding value there. And they're pointing towards a forthcoming, quote, bold steel strategy for the whole UK sector.

Amy: 3:29

A new strategy. What's the aim?

Ivan: 3:31

The goal is a competitive, carbonized and resilient domestic steel industry. They're already making some policy shifts.

Amy: 3:38

Like what?

Ivan: 3:39

Well, a big one is tackling electricity costs. They're boosting the discount on network charges for steel makers, the supercharger discount up from 60% to 90%. And

Amy: 3:48

what does that mean in real terms?

Ivan: 3:50

It could mean maybe four pounds or five pounds relief per ton of steel produced, a direct hit to operational costs. They're also changing government buying rules procurement to prioritize UK made steel for public projects.

Amy: 4:02

Creating a home market, sort

Ivan: 4:04

of. Exactly. Plus strengthening the existing steel safeguard measures against cheap imports. And you got that separate 500 million grant for Port Talbot's move to electric arc furnaces.

Amy: 4:13

That's a fair bit of action. But it's not without criticism, is it? I mean, the opposition raises points.

Ivan: 4:18

No, it's definitely not without debate. You hear concerns that even with the discounts, overall energy costs might still be too high for UK steel to compete globally.

Amy: 4:27

And the focus on decarbonization.

Ivan: 4:30

Some argue it might be overshadowing the need for immediate economic growth within the sector. And then there's the elephant in the room, those 25 percent U.S. tariffs on U.K. steel exports that are still unresolved.

Amy: 4:42

So a lot of moving parts, policy changes on one hand, but persistent challenges like energy costs and tariffs on the other.

Ivan: 4:49

It's a complex balancing act. Can the push for greener steel coexist with ensuring the industry's short term economic health and job security, especially with these external pressures? That's the ongoing question.

Amy: 5:01

As always, find us on social media at Ben Thanks for having me.