Recommendations & Conclusions
14 items
1
Conclusion
Fourth Report - Liberty Steel and the f…
Acknowledged
The corporate structure and governance of GFG Alliance companies resulted in no formal oversight or accountability of the decisions taken by Sanjeev Gupta. Mr Gupta put members of his staff in an unacceptable position by employing them with job titles associated with traditional executive functions in well run companies, without …
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The corporate structure and governance of GFG Alliance companies resulted in no formal oversight or accountability of the decisions taken by Sanjeev Gupta. Mr Gupta put members of his staff in an unacceptable position by employing them with job titles associated with traditional executive functions in well run companies, without giving them the required access to information or decision-making powers necessary for them to perform their duties. It is unclear why Mr Gupta opted to structure his companies in this unusual and, given the scale of his operations, unacceptable way.
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Government response AI summary
The government agrees that complex corporate structures should not be a legal barrier to proper scrutiny of companies like the GFG Alliance, while noting it does not wish to restrict business structuring.
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Department for Business and Trade
2
Recommendation
Fourth Report - Liberty Steel and the f…
Acknowledged
We recommend that Ministers reflect on the systemic risks to UK industry posed by such unusual corporate structures and, if deemed necessary, bring forward amendments to the Companies Act. (Paragraph 29) Audit
Government response AI summary
The government acknowledges that complex corporate structures should not hinder scrutiny but states it does not wish to restrict the ability of businesses to structure themselves, without committing to bringing forward amendments to the Companies Act.
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Department for Business and Trade
3
Conclusion
Fourth Report - Liberty Steel and the f…
Acknowledged
We were not reassured by the evidence presented by King & King and note the legal restrictions placed upon Mr Patel, and other auditors who had previously audited GFG Alliance companies, by Sanjeev Gupta.
Government response AI summary
The government acknowledges that complex corporate structures should not be a legal barrier to scrutiny but expresses a desire not to restrict business structuring, without committing to specific actions.
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Department for Business and Trade
10
Conclusion
Fourth Report - Liberty Steel and the f…
Acknowledged
We note the recent developments within GFG Alliance and Liberty Steel UK and welcome the injection of capital at Liberty Steel’s Rotherham plant. However, we note that once again Sanjeev Gupta has decided to set up an additional corporate entity to provide financial support to Liberty Steel UK companies without …
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We note the recent developments within GFG Alliance and Liberty Steel UK and welcome the injection of capital at Liberty Steel’s Rotherham plant. However, we note that once again Sanjeev Gupta has decided to set up an additional corporate entity to provide financial support to Liberty Steel UK companies without clear reporting and decision making on the source and terms of use of that funding.
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Government response AI summary
The government, via BEIS and the FRC, acknowledged the public interest in the issues of opaque funding at Liberty Steel, outlining the FRC's investigative remit and procedures for handling such cases, noting the specific entities are not usually within FRC's scope but can be reclaimed.
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Department for Business and Trade
17
Conclusion
Fourth Report - Liberty Steel and the f…
Acknowledged
We did not receive evidence that the use of circular trading between companies is a systemic issue, but note the potential criminal liability associated with the worst examples of financial engineering between businesses. Despite repeated reassurances from GFG Alliance, we remain unconvinced by Sanjeev Gupta’s attempts to re- structure and …
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We did not receive evidence that the use of circular trading between companies is a systemic issue, but note the potential criminal liability associated with the worst examples of financial engineering between businesses. Despite repeated reassurances from GFG Alliance, we remain unconvinced by Sanjeev Gupta’s attempts to re- structure and re-finance his businesses. We are not satisfied that Sanjeev Gupta is adequately addressing the many fundamental issues and concerns associated with the corporate governance, leadership, transparency, funding and operations of his businesses and remained concerned that this poses a threat to the long-term prospects of Liberty Steel UK. (Paragraph 87) Coronavirus Large Business Interruption Loans Scheme
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Government response AI summary
The government notes that the International Accounting Standards Board has proposed amendments to reporting supply chain finance, which the UK Endorsement Board and Financial Reporting Council will consider for adoption. The government also states it will continue to closely monitor Liberty Steel UK's restructuring and …
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Department for Business and Trade
18
Conclusion
Fourth Report - Liberty Steel and the f…
Acknowledged
We note that concerns were raised by HM Treasury and shared with BEIS about GFG Alliance and Wyelands Bank during the accreditation process of Greensill Capital to the CLBIL scheme.
Government response AI summary
The government welcomes the Committee's acknowledgment that BEIS acted properly and the British Business Bank operated independently, implicitly addressing the noted concerns about GFG Alliance and Wyelands Bank.
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Department for Business and Trade
19
Conclusion
Fourth Report - Liberty Steel and the f…
Acknowledged
We recognise that the subsequent level of interest from the BEIS Department about the accreditation of Greensill Capital was “unusual” but we are confident that this did not impact the approval process and the British Business Bank’s decision remained independent. Given the potential impact of the financial position of Greensill …
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We recognise that the subsequent level of interest from the BEIS Department about the accreditation of Greensill Capital was “unusual” but we are confident that this did not impact the approval process and the British Business Bank’s decision remained independent. Given the potential impact of the financial position of Greensill Capital on Liberty Steel’s UK operations, we acknowledge the due diligence of both the Secretary of State and his officials in monitoring the accreditation process closely was entirely proper.
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Government response AI summary
The government welcomes the Committee’s acknowledgment that BEIS acted properly and that the British Business Bank operated independently in the Greensill Capital accreditation process.
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Department for Business and Trade
34
Conclusion
Fourth Report - Liberty Steel and the f…
Acknowledged
There is a clear lack of direction with respect to the future of the nation’s blast furnaces both within the Government and in industry. A range of options exist for the decarbonisation of primary steelmaking, including carbon capture and storage (CCS), hydrogen, or a mixture of technologies running in parallel. …
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There is a clear lack of direction with respect to the future of the nation’s blast furnaces both within the Government and in industry. A range of options exist for the decarbonisation of primary steelmaking, including carbon capture and storage (CCS), hydrogen, or a mixture of technologies running in parallel. It will ultimately be for the sector and each individual business, with its own unique sites and products, to work out which technology is optimal for them. However, to enable these decisions industry requires certainty from Government on infrastructure and wider system changes.
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Government response AI summary
The government acknowledges the sector's decarbonisation plans, stating that the optimal route is a commercial decision for individual companies, and points to existing support mechanisms in the Net Zero Strategy.
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Department for Business and Trade
35
Recommendation
Fourth Report - Liberty Steel and the f…
Acknowledged
We found broad agreement that the UK should retain a primary steelmaking capacity rather than push its emissions and business abroad, a point recognised in the Government’s own Industrial Decarbonisation Strategy. However, if the Government is serious about its emissions targets and given that the nation’s blast Liberty Steel and …
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We found broad agreement that the UK should retain a primary steelmaking capacity rather than push its emissions and business abroad, a point recognised in the Government’s own Industrial Decarbonisation Strategy. However, if the Government is serious about its emissions targets and given that the nation’s blast Liberty Steel and the Future of the UK Steel Industry 67 furnaces will soon need to be replaced, if the UK is to retain its primary steelmaking capacity then key decisions and certainty are needed imminently. The Government’s Industrial Decarbonisation strategy has so far failed to provide this certainty and the Government must step up its efforts to provide industry with direction and a supportive policy environment to enable it to transition to a low carbon future.
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Government response AI summary
The government states it is working with the steel sector to understand decarbonisation plans and highlights existing support through the Net Zero Strategy. It emphasizes that the optimal decarbonisation route is a commercial decision for companies, without committing to new specific actions to provide immediate …
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Department for Business and Trade
36
Recommendation
Fourth Report - Liberty Steel and the f…
Acknowledged
We identified enthusiasm from many witnesses for the use of hydrogen direct reduced iron as a technology well-suited to decarbonising the UK steel industry. However, as with other potential solutions, it is a technology that remains untested at scale. A pilot of hydrogen-based steel production in the UK would help …
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We identified enthusiasm from many witnesses for the use of hydrogen direct reduced iron as a technology well-suited to decarbonising the UK steel industry. However, as with other potential solutions, it is a technology that remains untested at scale. A pilot of hydrogen-based steel production in the UK would help to inform future decisions on decarbonisation; create initial capability; develop UK-based expertise; and facilitate a switch to hydrogen once the technology is proven.
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Government response AI summary
The government states it is working with the sector to understand decarbonisation investment plans, noting that the optimal route is a commercial decision for companies, and points to existing support in the Net Zero Strategy for which the steel sector can bid, without committing to …
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Department for Business and Trade
39
Recommendation
Fourth Report - Liberty Steel and the f…
Acknowledged
Many of the challenges facing the UK steel industry today are long-running and have led to crises in the past. Without fundamental reform of energy pricing and a clear decarbonisation strategy, the sector will fail to attract much needed investment and continue on a path of accelerating decline. The Government’s …
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Many of the challenges facing the UK steel industry today are long-running and have led to crises in the past. Without fundamental reform of energy pricing and a clear decarbonisation strategy, the sector will fail to attract much needed investment and continue on a path of accelerating decline. The Government’s rhetoric on the strategic importance of the sector must be matched by supportive policy.
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Government response AI summary
The government acknowledged the pressures faced by businesses due to rising energy prices and stated that extensive engagement with industry continues, but did not commit to fundamental reform of energy pricing or a clear decarbonisation strategy.
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Department for Business and Trade
40
Conclusion
Fourth Report - Liberty Steel and the f…
Acknowledged
A successful transition to net zero will be dependent on addressing the wider challenges and opportunities facing the UK steel industry. These issues will need to be tackled as part of a broader, strategic approach to decarbonisation.
Government response AI summary
The government acknowledged pressures from energy prices and noted ongoing engagement with industry but did not specifically commit to a broader, strategic approach to decarbonisation for the steel industry as suggested.
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Department for Business and Trade
41
Recommendation
Fourth Report - Liberty Steel and the f…
Acknowledged
The steel industry has faced a number of crises in recent years but action to support the sector has been taken on a mostly ad hoc, reactive basis. The sector cannot continue to lurch from crisis to crisis and action is needed now if the UK is to retain a …
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The steel industry has faced a number of crises in recent years but action to support the sector has been taken on a mostly ad hoc, reactive basis. The sector cannot continue to lurch from crisis to crisis and action is needed now if the UK is to retain a resilient and competitive domestic industry. Decarbonisation presents a unique opportunity to realign the sector but this will require a comprehensive, joined- up policy framework to remove barriers to transformation and enable critical investment decisions. (Paragraph 208) 68 Liberty Steel and the Future of the UK Steel Industry
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Government response AI summary
The government recognises the pressures on businesses due to energy prices and states that extensive engagement with industry is continuing across government.
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Department for Business and Trade
42
Recommendation
Fourth Report - Liberty Steel and the f…
Acknowledged
We call on Ministers to establish a new Sector Deal for the steel industry. The Sector Deal should address long-running challenges to the sector’s competitiveness as part of a cohesive plan for decarbonising the industry. It should set out a range of supportive policies to assist this transition and a …
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We call on Ministers to establish a new Sector Deal for the steel industry. The Sector Deal should address long-running challenges to the sector’s competitiveness as part of a cohesive plan for decarbonising the industry. It should set out a range of supportive policies to assist this transition and a clear roadmap for how the industry will decarbonise in line with the Government’s target to cut emissions by 78% by 2035 and reach net zero by 2050. This Sector Deal should be developed in response to the Steel Council’s report later this year and announced no later than Summer 2022. (Paragraph 209) Liberty Steel and the Future of the UK Steel Industry 69
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Government response AI summary
The government recognizes the pressures on businesses and ongoing engagement with the industry but does not commit to establishing a new Sector Deal for the steel industry or providing a decarbonisation roadmap as recommended.
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Department for Business and Trade