Owners of the British Steel announced on Tuesday that the company could go into administration if the government fails to provide the desperately-needed loan later in the day.
Some 5,000 workers are directly employed by British Steel in Scunthorpe, in the north of England while 20,000 more across Britain rely on its supply chain, Presstv Reported.
A government minister told the parliament that it will do its utmost to protect the jobs. Andrew Stephenson, a junior business minister, stopped short of saying whether the government would grant the loan to Greybull Capital which owns the British Steel.
A source told Reuters news agency that the government was reluctant to pay the loan as it feared the owners could leave the steel manufacturing company and use the cash elsewhere.
“Greybull could walk out with millions because they secured all their loans against the assets. At the holding level, Greybull are the only creditor. The government wants Greybull out before putting money into the business,” he said.
Opposition Labour party leader Jeremy Corbyn criticized the way the government has been handling the industries like British Steel, saying it had a duty to save the company.
“The government must act to secure the long term future of the steelworks - protecting people’s livelihoods and the community,” said Corbyn.
Experts believe the potential closure of British Steel could be linked to the general uncertainty about Britain’s withdrawal from the European Union which has affected business and industries across the country since a referendum in 2016 in which Britons voted to leave the EU.
Reports earlier this month indicated that the company had been receiving fewer orders mainly due to Brexit as customers were fearful of increased tariffs.
Brexit has caused many foreign businesses to either close their offices in Britain or move a significant part of their assets to other EU countries.
Japanese carmaker Honda said last week that it had finalized plans for closure of its factory in Swindon, in southwest England, leaving some 3,500 people jobless by 2021.