A STEEL company has pledged to pay the £19.1m it owes to a North-East council in full by the end of next month, The Northern Echo has learned.

SSI UK, which owns the former British Steel plant at Redcar, owes the amount in business rates to Redcar & Cleveland Council, which met today (Tuesday, February 25) to discuss its budget plans for the coming year.

The Northern Echo understands that SSI UK, with backing from its parent company in Thailand, has pledged to repay the debt in three instalments, with the third and final being handed over before the end of this financial year, March 31.

The payment of the debt is believed to be crucial to the council balancing its books for the year.

While the council's cabinet did not mention SSI by name at its meeting today or discuss the exact amount owed, they spoke of the “large company” which owed business rates.

Councillor Mark Hannon said: “The amount of investment we are getting off the back of that is quite substantial and that is the real issue – we have to try to balance things.

“If we collect that debt too rigorously we face the closing of that industry and losing all that employment and I don’t envy anyone to try and recover that.”

SSI has pumped hundreds of millions of pounds into the Redcar steelworks.

It relit the steel furnace in April 2012 – but has still to make a profit due to rising raw materials costs, the heavy costs of restarting production, and falling steel prices.

The company has now made five million tonnes of steel slab since it restarted production in 2012, with the milestone being reached late on Saturday.

Councillors spoke of their regret that 150 jobs had to be cut from the council in the past year due to budget cuts from central government, but they praised its human resources department for managing to reduce compulsory redundancies to just 20.

The council must cut £19.4m from its budget over the next three years and £33.8m by 2020. It has already cut about £32m in the last three years.

Of £6m the council had invested in Icelandic banks before the collapse at the start of the credit crunch, £5m had been clawed back from administrators, Councillor Norman Pickthall, the Cabinet member for finance, said.