The government has introduced legislation to bring British Steel into public ownership, after negotiations with the company’s current owner failed to produce terms that ministers considered a responsible use of public money.
The Steel Industry (Nationalisation) Bill had its First Reading on 14 May, with its Second Reading expected in the near future when MPs will have their first opportunity to debate it. The Bill provides the government with powers to nationalise steel companies where a public interest test is met, with provisions for independently assessed compensation where those powers are used.
Parliamentary Under-Secretary of State for Business and Trade Chris McDonald said the speed of the Bill’s introduction demonstrated the government’s seriousness. “Revitalising our steel sector is a top priority for this country, and this is an important first step to safeguard our steelmaking capability which would allow us to secure the future of British Steel and explore possible options to modernise the industry. The fact this is one of the first of all the Bills announced yesterday to start its passage through Parliament shows this government is serious about securing Britain’s domestic steel production, and we’re putting it right at the top of our agenda.”
To date, the government has provided approximately £484 million in working capital for British Steel, covering raw materials and salaries, drawn from existing departmental budgets. Government officials continue to provide on-site support in Scunthorpe to maintain safe operation of the blast furnaces and monitor the use of taxpayer funds.
Gareth Stace, Director General of UK Steel, welcomed the move. “We strongly welcome the Prime Minister’s announcement to legislate for the nationalisation of British Steel. This provides vital certainty for the workforce, the company’s customers and the wider supply chain at a critical moment. Steel is a foundation industry and a recognised strategic national asset. Maintaining domestic production capability for British Steel’s products is essential not only for economic growth but also for our national security and resilience.”
The legislation builds on the government’s Steel Strategy, launched in March, which sets out a long-term plan to sustain 40 to 50 percent of domestic steel demand being met by domestic production, supporting key sectors including defence, construction, and clean energy. Steel supports around 37,000 direct jobs and more than 60,000 jobs across supply chains, though years of global overcapacity, unfair competition, and high operating costs have made it harder for UK-based producers to compete and invest.
British Steel’s Scunthorpe plant is one of the last remaining sites in the UK capable of producing virgin steel from iron ore using blast furnaces, as opposed to electric arc furnaces which recycle scrap metal. That distinction matters for certain defence and infrastructure applications where the specific properties of primary steel are required. The plant’s continued operation has been a source of political and industrial concern for several years, with its Chinese owner Jingye having previously indicated it could not sustain the losses being incurred at the site.
We have sky high energy costs compared to rivals ,hence it’s expensive to make and govt policies will continue that. If you can nationalise steel, why not an oil or gas field and use that supply for lower industrial rates Vs int market?
The prob is , these plants will need a over a billion a year in support, union demands on pay will be met when Govt folds and smoke and mirrors will see such subsidy taken from the future “3.5% budget” which will include other non defence stuff.
Unless there is clear budget dividing lines this will be used for cover other gaps.
You should go and troll somewhere else
If the UK wants to be capable of producing high grade steels for guns/armour/nuclear pressure vessels etc then we need an independent supply of steel, independent of commercial markets as much as possible. If that means public ownership for defence critical materials, then so be it. A commercial profit isn’t necessary when defence critical
British steel doesn’t make steel for those products. The government has already nationalised a steel company that does.
A commercial profit obviously isn’t necessary, but British Steel is loss making. When defence is scraping around for cash, the last thing the government should be doing is nationalising a company that loses over a million a day, with infrastructure that is nearing the end of its life.
That comes as a surprise to me, I thought that was the point of saving it, a strategic defence reason??
If not, why?
Teeside beam plant is part of deal I believe. Last plant in the UK to make steel section for buildings and also there the rail making plant in Scunthorpe
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There are alternatives to using blast furnaces to produce virgin steel.
Direct Reduced Iron process (DRI) which uses electric arc furnaces.
There is also a more recent process is Molten Oxide Electrolysis (MOE)
Right move, even though do not like Labour,
I have never known a nationalised industry to work, but I am in favour of this move. We need to be able to produce at least some of our own steel, although there are different ways in can be done. Now if we could only get mad Milliband out of the way we might have more of our own oil as well.
I was taught in a nationalised education system. I wish I could draw a logical inference from that, and if only they had privatised it maybe I could. I long for the days when there were only a handful of universities and daddy’s wealth determined which oik you could afford to pay to do your assignments for you, while you and the rest of the chaps were eating swans and doing strange things to a pig.
Sometimes, nationalisation is a good thing, even including a nationalised military.
A perfectly rational and normal comment from someone who definitely isn’t bitter, and knows the life story of every other commenter on here.
Presumably the gentleman above was referring to the primary and secondary sectors of the economy. I’m not sure anyone on here has ever said that education should be fully privatised. I don’t think even Elon Musk would suggest that.
I was, of course, talking about industry. I was chased by a Swan once and I promise you the only thing that lingers relating to a pig is the pork and the crackling. 🤔
500 million a year and rising that should be spent on something useful instead.
There are no large scale “virgin steel” production processes ready to replace blast furnaces just yet, it’s just UKs green obsession fuelling this move to arc furnaces. BS can help itself by generating some of its own power with some investment, there are hundreds of acres of wasteland on the site. Once this is sorted BS will probably switch to arc furnaces which by the way is proceeding in Port Talbot as far as one can see. Most countries need at least state support of their steel industry. The Yanks steel industry is in a complete mess. This £500million a year is misleading, the government is having to keep things running or the Chinese would just shut it down but any “profit” from the fantastic rail deals for instance will not be coming to the government….yet.
Other countries have the Direct Reduced Iron process (DRI) process, which uses electric arc furnaces Production:
Top DRI production:
India 54.8 million tonnes of DRI annually
Iran 34 million tonnes annually
Russia 8 million tonnes annually
Boston Metal (USA) is pioneering Molten Oxide Electrolysis
also Brazil, Austrialia and Finland all have made some inroads into this.
If we are going to have an efficient Nationalised Steel industry then we will need to adopt at least one of these methods.
As a higher-cost country (including wages) it’s very hard for the UK to compete on basic commodities, so IMO it’s pretty sensible to go for value-add through premium products (e.g. BS specialist rail) and vertical integration (e.g. Tata’s sheet-steel building products & pipes).
If it’s done correctly, green steel products from EAF sell at a price premium and that can add to the value stack.
Oh for centralised economic planning and production a la marxism with the added benefit that you work for the State son, so mo prime time, overtime, for you.
Energy prices linked to gas prices needs to be broken. Simples. Energy exporting connectors need to be severed. No profits on exporting and re-importing energy.
Rail needs continued renewal and ‘virgin’ rail on high speed and reprocessed rail on secondary routes; shipbuilding needs new steel and construction needs steel.
Market forces could supply this but Chinese companies are just in the market to shut down our sovereign capability and extract revenue support – give them the high port with an added foxtrot oscar.
Domestic production needs to be aligned with supply however, there will be a margin of error; lower the wages to average with a plus factor for danger but bring the pensions up to Civil Service leveks for longevity and workforce harmony.
My starter for five.
Ps. Don.t type on a Pendi at speed!!!
Err what on Earth are talking about, the UK imports 16% of its electricity supply.
The UK should build a finex plant. Uses Austrian/South Korean technology. Affordable steel that does not need large subsidies.
Duchy of Cornwall i see a bit of a joke in there you really shouldnt not in your circles how that relates certain things lurks that dungeon pal
William i realise no 1 has formed a magna carta against ye but wind so r isnt extly German
Happens like that unfortunately fight remember round heads in contrary