Recommendations & Conclusions
23 items
5
Conclusion
Fourth Report - Liberty Steel and the f…
Not Addressed
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 AI 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.
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Department for Business and Trade
6
Conclusion
Fourth Report - Liberty Steel and the f…
Not Addressed
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 it is difficult to see the true financial picture of …
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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 it is difficult to see the true financial picture of Liberty Steel UK. Unless remedied, these deficiencies severely limit the potential of that firm to be viewed as a reliable partner in any long-term strategy for the UK steel industry.
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Government response AI 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.
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Department for Business and Trade
7
Recommendation
Fourth Report - Liberty Steel and the f…
Not Addressed
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 the Audit Enforcement Procedure as a matter of urgent public …
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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 the Audit Enforcement Procedure as a matter of urgent public interest. (Paragraph 51) Liberty Steel and the Future of the UK Steel Industry 63 Government rejection of funding for Liberty Steel UK
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Government response AI 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.
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Department for Business and Trade
8
Conclusion
Fourth Report - Liberty Steel and the f…
Not Addressed
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 centralised, complex and opaque governance structure.
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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 centralised, complex and opaque governance structure.
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Government response AI 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.
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Department for Business and Trade
9
Recommendation
Fourth Report - Liberty Steel and the f…
Not Addressed
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 steel sector deal.
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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 steel sector deal.
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Government response AI 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.
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Department for Business and Trade
11
Recommendation
Fourth Report - Liberty Steel and the f…
Not Addressed
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 AI 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.
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Department for Business and Trade
12
Conclusion
Fourth Report - Liberty Steel and the f…
Not Addressed
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 to define a fit and proper person for the purposes …
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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 to define a fit and proper person for the purposes of receiving any form of Government support. (Paragraph 62) Supply Chain Finance
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Government response AI 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.
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Department for Business and Trade
13
Conclusion
Fourth Report - Liberty Steel and the f…
Not Addressed
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” and welcome the Serious Fraud Office’s investigation into this matter.
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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” and welcome the Serious Fraud Office’s investigation into this matter.
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Government response AI 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.
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Department for Business and Trade
14
Conclusion
Fourth Report - Liberty Steel and the f…
Not Addressed
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. By his use of such practices Mr Gupta, the so-called …
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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. By his use of such practices Mr Gupta, the so-called “saviour of steel” is creating uncertainties that further undermine the long term viability of the steel industry in the UK.
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Government response AI 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.
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Department for Business and Trade
15
Recommendation
Fourth Report - Liberty Steel and the f…
Not Addressed
We recommend that the Financial Conduct Authority and HM Treasury investigate the use of, and accounting rules for, future or prospective receivables.
Government response AI 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.
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Department for Business and Trade
16
Conclusion
Fourth Report - Liberty Steel and the f…
Not Addressed
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 Liberty Steel and the Future of the UK Steel Industry
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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 Liberty Steel and the Future of the UK Steel Industry
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Government response AI 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.
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Department for Business and Trade
20
Conclusion
Fourth Report - Liberty Steel and the f…
Not Addressed
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 it should work with the industry to secure a sustainable, …
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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 it should work with the industry to secure a sustainable, long-term future. (Paragraph 104) Challenges and opportunities facing the UK steel industry Electricity prices
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Government response AI summary
The government response consists only of a title and page reference, providing no substantive engagement with the committee's observations or questions.
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Department for Business and Trade
21
Recommendation
Fourth Report - Liberty Steel and the f…
Not Addressed
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 of the challenge energy prices pose to steel companies in …
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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 of the challenge energy prices pose to steel companies in achieving the transition to net zero and take action to reduce these costs.
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Government response AI 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.
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Department for Business and Trade
22
Recommendation
Fourth Report - Liberty Steel and the f…
Not Addressed
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 urge the Government to support UK steel producers but note …
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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 urge the Government to support UK steel producers but note that short-term bailouts must not be at the expense of a longer-term strategy to secure a level playing field for UK steel producers with their European counterparts.
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Government response AI summary
The government's response was entirely unrelated to the recommendation, instead discussing the International Accounting Standards Board's project on supply chain finance.
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Department for Business and Trade
23
Recommendation
Fourth Report - Liberty Steel and the f…
Not Addressed
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 and the Future of the UK Steel Industry 65 producers …
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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 and the Future of the UK Steel Industry 65 producers are unsustainable. Compensation provided by the Government to the UK steel industry to date has fallen far short of the support offered to their competitors and has not translated into a meaningful reduction in the price disparity. Energy policy costs have been brought down but remain twice as high as those in France and Germany while network costs are almost ten times as high. Further support from the UK Government will be needed if the UK steel industry is to compete on a level playing field and attract investment. This issue will only become more urgent as the industry moves to decarbonise and the sector’s demand for electricity rises accordingly.
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Government response AI 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.
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Department for Business and Trade
24
Recommendation
Fourth Report - Liberty Steel and the f…
Not Addressed
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 it will offer beyond the current compensation scheme to reduce …
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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 it will offer beyond the current compensation scheme to reduce the cost of electricity for UK steel producers and bring them in line with those of their competitors. At a minimum, the price disparity should be brought down to within £1/MWh of the total cost faced by key competitors in France and Germany and the Government should track any disparity going forward to ensure it does not widen again.
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Government response AI summary
The government's response was entirely unrelated to the recommendation, instead discussing the International Accounting Standards Board's project on supply chain finance.
Read full response →
Department for Business and Trade
25
Conclusion
Fourth Report - Liberty Steel and the f…
Not Addressed
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 steel producers it has been left entirely to Ofgem without …
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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 steel producers it has been left entirely to Ofgem without the opportunity for the Government to intervene.
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Government response AI 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.
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Department for Business and Trade
30
Recommendation
Fourth Report - Liberty Steel and the f…
Not Addressed
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 AI 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.
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Department for Business and Trade
31
Recommendation
Fourth Report - Liberty Steel and the f…
Not Addressed
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 opportunities for UK steel producers. The Government should introduce minimum …
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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 opportunities for UK steel producers. The Government should introduce minimum UK steel content targets for major public projects, starting with High Speed 2. (Paragraph 151) Trade
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Government response AI 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.
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Department for Business and Trade
32
Conclusion
Fourth Report - Liberty Steel and the f…
Not Addressed
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 markets and significant injury to UK steel producers.
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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 markets and significant injury to UK steel producers.
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Government response AI 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.
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Department for Business and Trade
33
Recommendation
Fourth Report - Liberty Steel and the f…
Not Addressed
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 would have had on UK steel producers. These concerns also …
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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 would have had on UK steel producers. These concerns also appear to be shared by the UK Government as demonstrated by its decision to overrule the Trade Remedies Authority’s recommendation and grant industry more time to appeal its decision. A two-way dialogue with industry must inform future recommendations by the Trade Remedies Authority and we welcome the opportunity given to both parties to do so. (Paragraph 165) Decarbonisation
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Government response AI 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.
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Department for Business and Trade
37
Recommendation
Fourth Report - Liberty Steel and the f…
Not Addressed
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 Clean Steel Fund. The Government should further consult on the …
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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 Clean Steel Fund. The Government should further consult on the most appropriate location for the pilot which would deliver the widest benefit for industry as a whole.
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Government response AI 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.
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Department for Business and Trade
38
Recommendation
Fourth Report - Liberty Steel and the f…
Not Addressed
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 will be needed to ensure that the recycling of scrap …
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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 will be needed to ensure that the recycling of scrap is a more attractive option for UK steel producers than exporting it abroad for others to recycle. We welcome the work of the UK Steel Council in attempting to find solutions to this issue and call on Ministers from both the Department for Business, Energy and Industrial Strategy and the Department for Environment, Food and Rural Affairs (with respect to waste policy) to work with the Council to optimise steel recycling in the UK. (Paragraph 191) The future of the UK steel industry
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Government response AI 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.
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Department for Business and Trade