Blow for British Steel as auditor quits after just a year

The firm responsible for auditing British Steel’s accounts has walked away from the Chinese-owned steelmaker after it was unable to verify stock worth tens of millions of pounds.

Moore Kinston Smith, which only started work with British Steel last year having stepped in for competitor Mazars after the latter departed over a row about fees, said it had been unable to “satisfy ourselves in respect of the inventory quantity of £45.8m”.

The auditors also raised concerns about a “material uncertainty” over British Steel’s ability to continue trading without support from its Chinese owner Jingye, something which the holding company is refusing to guarantee despite signing a “support letter”.

The news will be a dent to the steel producer’s hopes of securing a £600m government grant, which it sees as vital for its transition from a traditional, heavily polluting production method towards a greener ‘electric arc furnace’ model.

British Steel’s ongoing financial difficulties are said to be the major obstacle preventing it from securing the taxpayer-funded grant. In addition to its issues with auditors, the company has failed to submit its financial statements—due last September—for the year ending December 2022, while its December 2021 accounts were only filed last week.

This same issue lay at the heart of the 3,000 job cuts at Port Talbot, confirmed by Tata Steel on Friday, made despite the company getting a £500m government handout in September 2023.

British Steel said: “Our parent company has provided a support letter… to underpin our going concern. These are by their nature not legally binding, but our shareholder continues to provide all necessary financial support.”