Kwasi Kwarteng said on Tuesday that ministers would wait and see if Sanjeev Gupta could deliver on his promise to refinance his metals empire before deciding whether to step in.
But the business secretary left open the possibility of the government throwing a lifeline to Gupta’s British steel plants.
Speaking to MPs on the business, energy and industrial strategy select committee, Kwarteng said Gupta should be given time to secure alternative financing after the collapse of his company’s main lender, Greensill Capital.
Kwarteng added that he was in regular contact with the unions and local management at Liberty Steel, the steel operations of Gupta’s GFG Alliance. Liberty Steel is the UK’s third-largest producer, employing about 3,000 people across the country. Concerns have been mounting about the fate of Liberty’s plants since Greensill’s collapse last month.
Kwarteng defended the government’s recent decision to reject a plea by Gupta for more than £170m in emergency funding, saying there were fears the money could have been sent abroad.
“It was the Gupta Family Group that asked for the money, and it’s not the most transparent organisation. It also has assets all over the world and they employ something like 35,000 people all over the world,” he told MPs.
“If the Gupta Family Group asks the British government to give £170m of taxpayers’ money, it’s incumbent on ministers and officials to have some degree of surety that money will stay in the UK and won’t simply be dispersed among the Gupta Family Group’s other steel manufacturing assets across the world.
“As far as I could understand, we didn’t have those guarantees, it was a very opaque structure and there was a reluctance to give the group the money.”
Kwarteng admitted that there was a danger that one of the plants might close but added that he was “very keen” to see “that these assets, which are good assets, continue to operate” and that it was important for Britain to continue to have access to a domestic supply of steel.
Asked what contingency plans the government had in place in the event of a collapse, Kwarteng said it was necessary to work through Gupta’s plans for refinancing the business and examine what local management intended to do before intervening: “Let’s see if [Gupta] can refinance his businesses in the way that he said he would.”
The Financial Times disclosed last month that ministers had drawn up contingency plans to take over the running of the plants in the event of a collapse. The Treasury supported British Steel in the same way in 2019 before it was finally sold to a Chinese group.
Kwarteng was also asked about revelations by the FT last week that GFG had received loans from Greensill based on suspect invoices. The validity of a number of invoices provided by Liberty Commodities, GFG’s trading arm, to Greensill had been called into question by companies named in them.
The business secretary said the allegations were “very serious” and “essentially allegations of criminal behaviour” but added that it was not the place for a government minister to comment.