Fourth Report - Liberty Steel and the future of the UK steel Industry
Select Committee
Business and Trade Committee
HC 821
5 November 2021
Government response
Eighth Special Report - Liberty Steel and the Future of the UK Steel Industry: Government Response to the Committee’s Fourth Report · published 20 Jan 2022
Recommendations & Conclusions
23 results
5
Conclusion
Not Addressed
Para 49
We found it utterly unconvincing, and do not believe that King & King had the...
Conclusion
We found it utterly unconvincing, and do not believe that King & King had the capacity, expertise, or resources to audit the accounts of multiple large GFG Alliance and Liberty Steel UK companies representing over £2.5 billion of revenue.
Government Response Summary
The government response consists only of a title and page reference, providing no substantive engagement with the committee's finding regarding King & King's auditing capacity.
Department for Business and Trade
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6
Conclusion
Not Addressed
Para 50
The reputation of Liberty Steel UK has been threatened by the poor audit and accounting...
Conclusion
The reputation of Liberty Steel UK has been threatened by the poor audit and accounting practices of GFG Alliance, including the changing of accounting deadlines and its inability to produce consolidated accounts. As these accounts are yet to be published …
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Government Response Summary
The government's response is only a title and does not address the committee's conclusion regarding Liberty Steel UK's poor audit and accounting practices.
Department for Business and Trade
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7
Recommendation
Not Addressed
We recommend that the Financial Reporting Council, as the competent authority for audit in the...
Recommendation
We recommend that the Financial Reporting Council, as the competent authority for audit in the UK, refer this case to the relevant Recognised Supervisory Body, the Institute of Chartered Accountants for England and Wales, to investigate King & King under …
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Government Response Summary
The government's response is only a title and does not address the recommendation for the Financial Reporting Council to refer the case of King & King for investigation.
Department for Business and Trade
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8
Conclusion
Not Addressed
Para 56
We commend the Government’s decision to reject GFG Alliance’s request for £170 million of financial...
Conclusion
We commend the Government’s decision to reject GFG Alliance’s request for £170 million of financial support in March 2021. The Secretary of State was correct to be cautious about providing a large grant to a group of companies with a …
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Government Response Summary
The government's response text was merely a header, effectively not addressing the committee's commendation of its decision to reject GFG Alliance's request for financial support.
Department for Business and Trade
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9
Recommendation
Not Addressed
Para 57
In light of the Greensill Capital collapse and subsequent financial hardship of GFG Alliance and...
Recommendation
In light of the Greensill Capital collapse and subsequent financial hardship of GFG Alliance and Liberty Steel UK, we urge the Government to give consideration to formalising the fit and proper person test for private company directors within any future …
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Government Response Summary
The government's response outlined the FRC's investigative remit regarding audit matters, but did not address the specific recommendation to consider formalising a 'fit and proper person test' for private company directors within any future steel sector deal.
Department for Business and Trade
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11
Recommendation
Not Addressed
Para 61
We would welcome the Insolvency Service considering whether, on the basis of the evidence we...
Recommendation
We would welcome the Insolvency Service considering whether, on the basis of the evidence we have received, Sanjeev Gupta may have acted in breach of his fiduciary duties as a company director in the United Kingdom.
Government Response Summary
The government response consists only of a title and page reference, providing no substantive engagement with the committee's recommendation for the Insolvency Service to consider potential breaches of fiduciary duties.
Department for Business and Trade
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12
Conclusion
Not Addressed
More broadly, we believe that until Mr Gupta restructures his GFG Alliance companies into a...
Conclusion
More broadly, we believe that until Mr Gupta restructures his GFG Alliance companies into a more acceptable corporate structure and publishes consolidated accounts that are adequately audited, that he fails to fulfil the criteria that we believe should be applied …
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Government Response Summary
The government provided only a title for its response, completely failing to address the conclusion regarding Mr. Gupta's suitability for government support until GFG Alliance is restructured and audited accounts are published.
Department for Business and Trade
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13
Conclusion
Not Addressed
Para 78
The way in which future, or prospective, receivables operated between GFG Alliance and Greensill Capital...
Conclusion
The way in which future, or prospective, receivables operated between GFG Alliance and Greensill Capital is disputed by both parties. We note that several claims have been made about the use of future receivables and their relation to “suspect invoices” …
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Government Response Summary
The government response expresses gratitude for the committee's agreement on not providing a grant to GFG Alliance, but does not address the observations regarding disputed future receivables or the Serious Fraud Office's investigation.
Department for Business and Trade
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14
Conclusion
Not Addressed
Para 79
Steel is a foundational industry in the UK and in need of significant structural reform.
Conclusion
Steel is a foundational industry in the UK and in need of significant structural reform. The use of high-risk financial funding practices, such as future receivables lending, that Greensill Capital and GFG Alliance engaged in are barriers to such reforms. …
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Government Response Summary
The government response expresses gratitude for the committee's agreement on not providing a grant to GFG Alliance, but does not address the concerns about high-risk financial practices undermining the steel industry.
Department for Business and Trade
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15
Recommendation
Not Addressed
Para 80
We recommend that the Financial Conduct Authority and HM Treasury investigate the use of, and...
Recommendation
We recommend that the Financial Conduct Authority and HM Treasury investigate the use of, and accounting rules for, future or prospective receivables.
Government Response Summary
The government's response thanks the Committee for agreement on the inappropriateness of a grant to GFG Alliance, without addressing the recommendation to investigate accounting rules for future or prospective receivables.
Department for Business and Trade
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16
Conclusion
Not Addressed
GFG Alliance’s reported engagement in circular trading, or REPO structures, exacerbated a concentration risk to...
Conclusion
GFG Alliance’s reported engagement in circular trading, or REPO structures, exacerbated a concentration risk to Greensill Capital by raising large amounts of working capital against invoices created to raise finance instead of selling steel to genuine customers. (Paragraph 86) 64 …
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Government Response Summary
The government's response thanks the Committee for agreement on the inappropriateness of a grant to GFG Alliance, without addressing the conclusion regarding GFG Alliance's circular trading practices.
Department for Business and Trade
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20
Conclusion
Not Addressed
However, the collapse of Greensill Capital and its impact on Liberty Steel UK highlights the...
Conclusion
However, the collapse of Greensill Capital and its impact on Liberty Steel UK highlights the fragility of the sector in the UK more generally and raises far reaching and fundamental questions for the Government to consider in terms of how …
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Government Response Summary
The government response consists only of a title and page reference, providing no substantive engagement with the committee's observations or questions.
Department for Business and Trade
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21
Recommendation
Not Addressed
Para 115
High electricity prices are hindering the ability of UK steel producers to compete on the...
Recommendation
High electricity prices are hindering the ability of UK steel producers to compete on the international market and are a deterrent to inward investment. If the Government is serious about decarbonising the steel industry, it must first recognise the severity …
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Government Response Summary
The government response consists only of a title and page reference, providing no substantive engagement with the committee's recommendation to address high electricity prices.
Department for Business and Trade
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22
Recommendation
Not Addressed
Para 119
UK steel producers were already facing some of the highest electricity prices in Europe prior...
Recommendation
UK steel producers were already facing some of the highest electricity prices in Europe prior to recent rises in the wholesale price of gas. Soaring gas prices have since transformed what was a long-standing problem into an immediate crisis. We …
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Government Response Summary
The government's response was entirely unrelated to the recommendation, instead discussing the International Accounting Standards Board's project on supply chain finance.
Department for Business and Trade
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23
Recommendation
Not Addressed
Para 125
We recognise that decisions on how and whether to compensate industry for the costs of...
Recommendation
We recognise that decisions on how and whether to compensate industry for the costs of electricity will, by necessity, have implications for consumers and other network users. However, it is clear that current electricity costs for UK steel Liberty Steel …
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Government Response Summary
The government's response discusses the IASB's project on supply chain finance and proposed accounting amendments, which does not address the committee's call for further support to reduce electricity costs for the steel industry.
Department for Business and Trade
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24
Recommendation
Not Addressed
Para 126
If additional support is not forthcoming, high electricity prices will continue to have a pernicious...
Recommendation
If additional support is not forthcoming, high electricity prices will continue to have a pernicious effect on the UK steel industry, resulting in long-term decline and future crises. The Government should set out, following a consultation with industry, what support …
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Government Response Summary
The government's response was entirely unrelated to the recommendation, instead discussing the International Accounting Standards Board's project on supply chain finance.
Department for Business and Trade
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25
Conclusion
Not Addressed
Para 131
When implemented, the Targeted Charging Review has the potential to burden UK steel producers with...
Conclusion
When implemented, the Targeted Charging Review has the potential to burden UK steel producers with costs exceeding relief provided to the sector as an energy intensive industry. We note that despite this decision having a potentially significant impact on UK …
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Government Response Summary
The government's response discusses the IASB's project on supply chain finance and proposed accounting amendments, which does not address the committee's concerns about the Targeted Charging Review or Ofgem.
Department for Business and Trade
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30
Recommendation
Not Addressed
Para 147
A requirement should be set for all Government projects, including steel contracts awarded by the...
Recommendation
A requirement should be set for all Government projects, including steel contracts awarded by the Contracts for Difference scheme and Highways England, to fully report on the value and origin of their steel requirements.
Government Response Summary
The government's response provided no content to address the recommendation for a requirement for all government projects to report on the value and origin of their steel requirements.
Department for Business and Trade
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31
Recommendation
Not Addressed
Decisive action should be taken to ensure that UK steel producers do not miss out...
Recommendation
Decisive action should be taken to ensure that UK steel producers do not miss out on the Government’s ambitious infrastructure programme. Setting minimum UK steel content targets for major public projects would serve as an important first step to improving …
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Government Response Summary
The government's response is boilerplate text about BEIS and the British Business Bank, failing to address the recommendation to introduce minimum UK steel content targets for major public projects.
Department for Business and Trade
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32
Conclusion
Not Addressed
Para 158
Given that global steel markets continue to be heavily distorted by state subsidisation and that...
Conclusion
Given that global steel markets continue to be heavily distorted by state subsidisation and that the EU and the US continue to apply tariffs on imported steel, the UK requires a response from Government regarding potential trade divergence towards UK …
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Government Response Summary
The government's response is boilerplate text about BEIS and the British Business Bank, failing to address the conclusion about global steel market distortions and the need for a government response to trade divergence.
Department for Business and Trade
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33
Recommendation
Not Addressed
We share the concerns expressed to us that the Trade Remedies Authority’s recommendation to revoke...
Recommendation
We share the concerns expressed to us that the Trade Remedies Authority’s recommendation to revoke safeguards on nine categories of steel imports was not based on an open dialogue with industry and had therefore missed the wider impact its decision …
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Government Response Summary
The government welcomed the committee's acknowledgment of BEIS and the British Business Bank's proper and independent actions, but did not address the recommendation for the Trade Remedies Authority to ensure future recommendations are informed by open dialogue with industry.
Department for Business and Trade
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37
Recommendation
Not Addressed
Para 186
The Government should commit to a pilot of hydrogen-based steel production in the UK as...
Recommendation
The Government should commit to a pilot of hydrogen-based steel production in the UK as part of its industrial decarbonisation strategy. Funding for the project should be sought in partnership with interested steel businesses or backed in part by the …
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Government Response Summary
The government's response addresses general concerns about high gas and electricity prices and ongoing industry engagement, completely failing to address the recommendation for a pilot of hydrogen-based steel production.
Department for Business and Trade
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38
Recommendation
Not Addressed
Previously used steel, also known as scrap, will play a central role in efforts to...
Recommendation
Previously used steel, also known as scrap, will play a central role in efforts to decarbonise the UK steel industry. The high availability of scrap in the UK represents a valuable resource which is under-utilised, and a range of measures …
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Government Response Summary
The government's response acknowledged energy price pressures and general industry engagement but did not address the recommendation for Ministers from BEIS and DEFRA to work with the UK Steel Council to optimise steel recycling in the UK.
Department for Business and Trade
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