Government takes control of Scunthorpe plant after Chinese owner's losses mount

The government has nationalised British Steel, assuming control of the Scunthorpe steelworks in a move ministers said would protect thousands of jobs and safeguard what Business Secretary Peter Kyle described as a "vital national capability". The decision, which follows the passage of legislation through Parliament on Wednesday allowing the state to bring the steel industry into public ownership when a public interest test is met, marks the latest chapter in the troubled history of a plant that has been dogged by uncertainty for several years. The UK government had already taken operational control of the Scunthorpe site last year, though it remained under the ownership of China's Jingye Group, which limited ministers' ability to determine its future strategy. Nationalisation now gives the government both the time and the authority to decide on the plant's long-term future while keeping its blast furnaces operational.

The financial imperative for intervention has been stark. In March, the National Audit Office published a report noting that the Scunthorpe steelworks was costing the government approximately £1.3m a day, while Jingye had previously claimed the business was losing £700,000 daily. Jingye is now seeking compensation for nationalisation, though the BBC was unable to obtain a response from the company to Thursday's announcement. Mr Kyle told the BBC that the government would need to cover running costs "for the immediate future" and that an independent assessor would determine whether compensation was due to Jingye based on the company's value. "Let me be really clear, there is an alternative here - that we let this business go bust," the Business Secretary 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."

Unite general secretary Sharon Graham welcomed the nationalisation, describing it as "the first step in a journey to transform our steel industry" and calling for "serious investment on the ground across the industry to create jobs and make Britain a leading producer of green steel". The Scunthorpe plant currently employs roughly 2,700 people directly, with thousands more jobs in the supply chain dependent on its operations, making it a critical economic anchor for North Lincolnshire. The urgency of intervention was underscored by the age of the remaining furnaces—Queen Anne, which opened in 1954, and Queen Bess, which has been producing steel since 1938—both of which are approaching the end of their operational lives. Blast furnaces are designed to run continuously; allowing them to cool can cause serious damage and require extensive work to restart, with even a planned refurbishment costing tens of millions of pounds.

The government's determination to keep the furnaces operational stems from concerns that without them, the UK would become the only G7 nation unable to produce "virgin" steel directly from iron ore. While the state's long-term strategy envisages a transition to electric arc furnaces, which recycle scrap metal and are cheaper and less carbon-intensive to run, ministers do not wish to lose Scunthorpe's output prematurely. The plant produces types of steel not yet manufactured elsewhere in Britain, much of it required by Network Rail and the construction industry, and the fear had been that an abrupt closure would create disruptive supply chain gaps and render the country excessively reliant on imports. The decision to nationalise therefore buys time while alternatives are developed.

Simon Boyd, managing director of Reid Steel, a structural steel manufacturer in Dorset that purchases thousands of tonnes from British Steel annually, told the BBC's Today programme that nationalisation "had to be done". Mr Boyd claimed that Jingye had been "sabotaging the infrastructure" at the company, leaving the government with no choice but to intervene. He acknowledged that ministers would need to invest heavily in British Steel and would not see a return for 10 to 20 years, but argued that the plant "now belongs to the British people". Previous efforts to sell the business to private investors had required government support and had been seen to "benefit the private companies and not the British people", he added, suggesting that public ownership might offer a more sustainable path for the industry. Whether the government ultimately retains control of British Steel or seeks to return it to private hands remains to be seen, but for now, the blast furnaces at Scunthorpe continue to burn—at a cost ministers have deemed essential to pay.