A prominent Labour figure has advised the UK government to reject any demands for compensation from China over the nationalization of British Steel, asserting the company holds no intrinsic value.
Clive Betts MP, deputy chairman of the Public Accounts Committee, stated that Beijing-based steel group Jingye, the former owner of British Steel, has threatened international arbitration after the government took control of the company. Jingye has characterized the takeover as an "exortion and flagrant violation of international law."
Betts argued that British Steel is a "loss-making entity" and therefore cannot be considered valuable. He suggested that the government's decision to seek an "independent assessor" was a necessary step to appease Chinese interests, but emphasized that the UK "must not be seen to pay anything for this."
His remarks follow similar sentiments from Mike Warburton, a former tax director at Grant Thornton, who described any payment for the company as "madness," citing hundreds of millions of pounds in losses that render the business "worth nothing."
The UK government took emergency management control of British Steel in April of last year, with legislation passed to prevent the closure of its blast furnaces in Scunthorpe. The company, which operates the country's only remaining facilities for producing virgin steel, was fully nationalized on July 16.
Jingye expressed outrage following the nationalization, threatening legal action against the UK government and British Steel's management. The company posted on WeChat, accusing ministers of disregarding its investment and harming the UK's credibility with international investors.
China's foreign ministry has also called for "mutually acceptable" compensation, warning that the UK's handling of the matter would influence Chinese investors' perceptions of the UK investment environment.
The Department for Business and Trade announced that draft regulations for compensation will be released in the autumn. These regulations will outline the process, under which an independent valuer will determine if any payment is due.