British Steel has officially been brought into public ownership, with the government saying the move will protect jobs and preserve “a vital national capability”.
The future of the Scunthorpe steelworks has been uncertain for years. The site employs around 2,700 people directly and supports thousands more jobs across North Lincolnshire and the wider supply chain.
Although the government took operational control of the Scunthorpe plant last year, ownership remained with China’s Jingye Group, limiting ministers’ ability to shape the site’s long-term future.
Bringing the company into public ownership gives the government time and greater control over what happens next, while ensuring the blast furnaces continue operating.
However, ministers are not expected to keep the business indefinitely. The Scunthorpe works continue to place a significant financial burden on taxpayers, with the National Audit Office reporting in March that the site was costing the government around £1.3 million a day.
The nationalisation followed Parliament’s approval on Wednesday of legislation allowing the government to take steel companies into public ownership where it meets a public interest test.
Jingye is seeking compensation following the takeover, having previously said the business was losing £700,000 a day. The BBC has not received a response from the company following Thursday’s announcement.
Business Secretary Peter Kyle said the government would cover the plant’s running costs “for the immediate future”.
He added that an independent assessor would decide whether Jingye should receive compensation based on the company’s value.
“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.”
Unite general secretary Sharon Graham welcomed the decision, describing it as “the first step in a journey to transform our steel industry”.
“We need serious investment on the ground across the industry to create jobs and make Britain a leading producer of green steel.”
Blast furnaces are designed to operate continuously. If they cool down, they can suffer serious damage, and restarting them requires extensive work that can cost tens of millions of pounds, even during planned refurbishments.
Scunthorpe’s remaining blast furnaces are among the oldest still in operation. Queen Anne began operating in 1954, while Queen Bess has been producing steel since 1938.
Both are nearing the end of their working lives, meaning restarting them after they had cooled would have been prohibitively expensive for a company already facing heavy financial losses.
The government was determined to keep the furnaces running because they are the UK’s last remaining source of “virgin”, or new, steel made directly from iron ore.
If production had stopped, the UK would have become the only G7 nation unable to produce virgin steel.
Most steel production elsewhere in Britain now relies on electric arc furnaces (EAFs), which recycle scrap metal into new steel products.
While the government’s long-term ambition is for domestic steelmaking to transition entirely to EAFs, which are cheaper to operate and produce significantly fewer carbon emissions, ministers do not want Scunthorpe’s production to end before suitable alternatives are in place.
The site produces specialist grades of steel that are not currently manufactured anywhere else in the UK, supplying key industries including Network Rail and construction.
There were concerns that losing this capability would leave the country overly dependent on imported steel and disrupt major infrastructure projects. Keeping Scunthorpe operating buys time while replacement capacity is developed.
The workforce was another major factor behind the decision. Alongside the 2,700 people directly employed at the plant, thousands more jobs depend on British Steel through its wider supply chain.
As one of North Lincolnshire’s biggest employers, the steelworks plays a crucial role in the local economy, and a sudden shutdown of the blast furnaces could have had far-reaching consequences.
Simon Boyd, managing director of Reid Steel, said nationalisation “had to be done”.
Speaking to the BBC’s Today programme, Boyd, whose company buys thousands of tonnes of steel from British Steel each year, claimed Jingye had been “sabotaging the infrastructure” and said the government “had to step in”.
He warned that substantial investment would now be needed and suggested it could take between 10 and 20 years before taxpayers saw any return.
However, he argued the company “now belongs to the British people”. He added that selling it back to private investors would likely require government support and said previous approaches had tended to “benefit the private companies and not the British people”.