British Steel is set to be brought into public ownership after the prime minister announced plans for the Government to take full control of the company.
Sir Keir Starmer said legislation would be introduced this week to give ministers the power to take “full ownership of British Steel”, subject to a public interest test.
The announcement follows the Government’s decision in April last year to seize control of British Steel’s Scunthorpe steelworks from its Chinese owner, Jingye. Ministers stepped in at the time to prevent the possible closure of the site’s blast furnaces.
Speaking after Labour’s poor election results and amid speculation over his leadership, Sir Keir said the Government had held talks with Jingye, but a commercial sale had not been possible.
“Public ownership is in the public interest,” he said.
He also said he would prove his “doubters” wrong, adding that for the British people, “change cannot come quickly enough”.
Why Scunthorpe matters
The Scunthorpe site is strategically important because it contains the UK’s remaining capability to produce virgin steel.
Virgin steel is made by extracting iron from its original source before purifying and treating it. It is used in major construction and infrastructure projects, including buildings, railways and other nationally significant schemes.
The Government intervened last year after talks with Jingye broke down. Ministers accused the company of preparing to switch off the blast furnaces. If the furnaces had been starved of fuel and allowed to go out, restarting them would have been extremely difficult and costly.
That would have left the UK without domestic virgin steelmaking capacity.
The public interest test required for full Government ownership is expected to consider national security, the protection of critical national infrastructure and the wider economic case.
Industry welcomes certainty
The steelmaking industry welcomed the move, saying it would provide much-needed clarity for British Steel’s workforce and customers.
Gareth Stace, director-general of UK Steel, said the announcement offered “vital certainty” for the company’s 2,700 workers and for businesses that rely on its products.
He said maintaining domestic production capability was important not only for economic growth, but also for national security and resilience.
However, Stace warned that nationalisation should not be seen as the end of the process. He said it must mark the start of a clear, credible long-term plan for British Steel, supported by an investment strategy.
Until now, the Government had stopped short of full public ownership while it searched for private investors for the plant. That option now appears to be exhausted.
Unions also backed the announcement. In a joint statement, Community general secretary Roy Rickhuss and Unite general secretary Sharon Graham said they “fully support” the decision to nationalise. They said British Steel had a strong future, with a skilled workforce producing strategically important steel for rail and infrastructure.
They also called on the Government to ensure that UK steel is used in Government-funded projects.
Charlotte Brumpton-Childs, national secretary of the GMB union, said it was right for the Government to do everything in its power to secure British Steel’s long-term future.
Cost questions remain
The move will raise further questions about the cost of keeping British Steel operating.
Before the Government stepped in last year, Jingye said the Scunthorpe site was losing £700,000 a day and was no longer financially sustainable. The BBC understands that the Government is now spending about £1 million a day to keep the loss-making business running.
In March, the National Audit Office said the current Government supervision regime had already cost around £377m. That money has been used to fund operations, pay workers and buy raw materials at Scunthorpe.
The spending watchdog warned that, if current levels of support continued, the cost could exceed £1.5 billion by 2028, depending on future policy decisions.
The Government has not yet confirmed the cost of full nationalisation. After legislation is passed, an independent valuation is expected to assess the business and determine whether any compensation is due to Jingye.
This would not be the first time British Steel has come under public control. After the company collapsed in 2019, the Insolvency Service ran it for nine months at a cost of £600m.
The latest announcement provides workers and customers with greater short-term certainty. The longer-term question is whether the Government can turn that intervention into a sustainable future for steelmaking in Scunthorpe.
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