The Chinese firm buying British Steel will cut up to 500 jobs if it concludes the takeover, after talks with trade unions about pay and conditions.

British Steel’s unions – GMB, Unite and Community – said that they had agreed a deal over employee pay, terms and conditions but could not give their blessing to the reduction in headcount.

The proposals from China’s Jingye, which would result in a reduction in British Steel’s workforce by about 10%, will be put to the company’s 4,500 staff.

The unions acknowledged that if the sale does not go ahead, the business is likely to be broken up for parts rather than sold as a whole.

In a joint statement, they said they endorsed Jingye’s plans in principle but that the job-cut proposals will be subject to “ongoing departmental discussion at department level”.

The unions said: “This is not something that the unions could endorse. We have consistently advised that for the sale to complete and for the business to be successful under new ownership, retaining high-quality jobs with good terms and conditions would be vital.”

Jingye’s chief executive, Li Huiming, said: “We believe that this agreement lays the groundwork to provide well-paid, skilled jobs at British Steel for many years to come.

“It will pave the way for significant investment in the company that will transform the business and allow it to succeed.

“Jingye continues to make progress in securing all other necessary approvals for the transaction, which it aims to complete in the first quarter of 2020.”

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The Chinese firm’s plan to rescue British Steel from liquidation includes £1.2bn in investment to get the business, which is losing about £1m a day, back on its feet.

Despite their opposition to job cuts, the unions said concessions on staff benefits and employment terms meant that a deal was “now firmly in sight”.

Ross Murdoch, the GMB’s national officer, said: “In endorsing this package in principle, the trade unions believe they have struck the right balance between delivering cost savings and maintaining jobs with decent terms and conditions to drive the new business forward.”

The unions said that as British Steel is in liquidation any new owner could have just offered new contracts with statutory minimum terms and conditions, with no obligations to consult with unions and staff.

“But with British Steel in liquidation it is clear that if the business is to survive, change is required,” the unions said.

The government, which has provided an indemnity to fund British Steel while discussions continue, is keen to complete a sale by the end of February.

If that does not happen, the union said, special managers from accountancy EY, who are helping manage the sale process, have made it clear that the business will be broken up and sold piecemeal.

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The preference of unions and the government is for the entire business to be sold, including the Scunthorpe blast furnace steelworks where the majority of staff are employed.

Jingye still needs to reach an agreement with suppliers, while the French state has to approve the sale of the company’s plant in Hayange, near the border with Luxembourg.

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The Guardian revealed earlier this week that the government has lined up Turkey’s Cengiz Holdings, led by President Erodğan’s ally Mehmet Cengiz, as a potential fallback option.

However, Jingye remains in pole position after signing a deal in principle late last year to buy the company for about £50m.



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