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British Steel has been taken into public ownership, with ministers arguing the only alternative was to let the country’s last producer of virgin steel go bust. For the thousands of smaller firms that rely on Scunthorpe’s output, the move ends years of uncertainty, but leaves taxpayers footing a running bill of about £1.3 million a day.
The government said nationalisation would protect jobs and safeguard “a vital national capability”. The Scunthorpe works employs roughly 2,700 people and supports many more businesses across north Lincolnshire and the wider supply chain.
It follows Wednesday’s vote in Parliament to pass legislation allowing the steel industry to be brought into public ownership where a public interest test is met, completing the public ownership plan Sir Keir Starmer confirmed in May.
The government had already taken control of day-to-day operations last year. But with China’s Jingye Group still the legal owner, ministers had limited freedom to decide the plant’s future. Full ownership removes that constraint while keeping the blast furnaces lit.
Business Secretary Peter Kyle told the BBC the government would need to cover running costs “for the immediate future”, with an independent assessor to determine whether Jingye, which is seeking compensation, should be paid based on the value of the company.
“But let me be really clear, there is an alternative here – that we let this business go bust,” he said. “If that business disappears, we will lose the ability for primary steel production in our country, we will become entirely dependent on global supply.”
The economics are stark. Jingye previously said the business was losing £700,000 a day, while a March report from the National Audit Office found the site was costing the government about £1.3 million a day, with no set budget, repayment schedule or end date.
Why pay it? Scunthorpe’s furnaces are the UK’s last source of virgin steel, made directly from iron ore. Lose them and Britain becomes the only G7 economy unable to produce it. Blast furnaces are designed to run continuously, and the remaining pair are elderly: Queen Anne opened in 1954, Queen Bess has been in blast since 1938. Once cooled, restarting them would have been financially prohibitive.
That matters well beyond north Lincolnshire. The plant makes grades of steel produced nowhere else in the country, much of it destined for Network Rail and the construction industry. An abrupt shutdown would have forced fabricators, builders and engineering firms onto imports, and jeopardised the redundancy reversal that followed plans to cut up to 2,700 jobs when the furnaces faced closure.
Customers seem relieved. Simon Boyd, managing director of Reid Steel, a Dorset structural steel manufacturer that buys thousands of tonnes from British Steel each year, said nationalisation “had to be done”. He told the BBC’s Today programme that Jingye had been “sabotaging the infrastructure” and the government “had to step in”.
Boyd said ministers would need to invest heavily and would not see a return for 10 to 20 years, but the company “now belongs to the British people”. A sale to private investors would have needed government support anyway, he added, and past deals have been seen to “benefit the private companies and not the British people”.
Unions agree: MPs were told last month that the cost of not saving Scunthorpe would have been “unfathomable”.
For SME steel buyers, the immediate message is continuity of supply. The longer game is less settled. Ministers still want all domestic steel made in cheaper, cleaner electric arc furnaces, and are unlikely to remain owners of a business costing more than a million pounds a day any longer than they must. Scunthorpe stays open until alternatives exist, not indefinitely.
