Government-owned Company: Provision of Indemnity
(Limited Text - Ministerial Extracts only)
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The Minister for Climate Change and Industry (Mr Nick Hurd)
On 2 October 2015 the SSI steel works in Redcar was placed into compulsory liquidation and an official receiver (OR) was appointed as liquidator. On 12 October, following no buyer for the steel works being found, the decision was taken by the official receiver to set about the hard closure of the site. Since that time the official receiver has been undertaking a protracted liquidation of SSI and, in the absence of an owner, he has been overseeing the safe and secure hard closure of the site. Government, through the Department for Business, Energy and Industrial Strategy, are currently providing an indemnity to the OR so that he can carry out his duties as liquidator of the company and ensure its ongoing safety and security.
The Department is establishing a Government company, known as the South Tees Site Company, in order to take forward the safety and security of the site from the OR. STSC will have a management team as well as a board of directors, accountable to the BEIS Secretary of State. In order to allow the board of directors and management team to carry out their duties BEIS has agreed to indemnify them against all claims, proceedings, costs—including the cost of defending proceedings—and expenses.
Over the summer recess the Department for Business, Energy and Industrial Strategy identified a need to provide the indemnities immediately. As a result the Department wrote to the Chairs of the Public Accounts Committee and the BEIS Select Committee on 2 September outlining our intention, asking for any objection to be notified within five working days. I can confirm that neither PAC nor Select Committee raised any objections to the issuing of these indemnities.
I would also like to take this opportunity to inform the House that there is an agreement in place between SSI in liquidation and STSC concerning the management of the site. BEIS has clarified to the OR that his indemnity of 2 October 2015 indemnifies him for any claims, proceedings, costs and expenses raised against or incurred by the OR as a result of a breach by STSC of the agreement.
It is not possible at this stage to accurately quantify the value of such indemnity. HMG has considered the risks of this indemnity and I believe the likelihood of such indemnities being called upon is low. The indemnity is limited to liabilities arising as a consequence of the site assessments and the current BEIS indemnity remains in place. If the liability is called upon, provision for any payment will be sought through the normal Supply procedure.
As a matter of record I have laid a departmental minute for both Houses explaining the procedure followed and containing a description of the liabilities undertaken.
[HCWS230]