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The Bench Report
UK Steel Crisis: British Steel's Future, Government Intervention & Nationalisation
Today we analyse the critical situation of British Steel, facing significant losses and plans to close its Scunthorpe blast furnaces, threatening 2,700 jobs. In response, Parliament passed the Steel Industry (Special Measures) Act 2025, empowering the government to intervene and potentially take control to ensure continued operations. While nationalisation is a "likely option", £100 million in public funds has already been provided to keep the plant running.
Key Takeaways:
- British Steel, owned by Jingye Group, faced £700,000 daily losses, leading to plans to close blast furnaces in Scunthorpe, endangering 2,700 jobs.
- The Steel Industry (Special Measures) Act 2025, passed April 12, 2025, allows government to direct or take control of at-risk steel companies in England to maintain operations.
- £100 million in working capital has been provided to British Steel from public funds since April 2025.
- Nationalisation is a "likely option," though private investment is still sought. Compensation's market value could be "effectively zero".
- MPs argue for retaining UK's virgin steelmaking capacity for strategic importance.
Definitions:
- Nationalisation: Government acquisition and control of a private industry, usually requiring an Act of Parliament and compensation.
- Steel Industry (Special Measures) Act 2025: UK emergency law enabling government to intervene in at-risk English steel businesses to maintain operations.
- Virgin Steelmaking: Steel production from raw iron ore, seen as crucial for high-grade steels and industrial sovereignty.
Discussion: How does the government's intervention in British Steel reflect a balance between economic stability, job preservation, and the principles of free markets?
Source: British Steel and government special measures
Research Briefing
23 June, 2025
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Contains Parliamentary information repurposed under the Open Parliament Licence v3.0.
Hello and welcome again to The Bench Report. You're listening to Amy and Ivan. Today we're looking at the critical situation around British steel and the UK government's pretty swift actions recently to try and secure its future. It's quite a complex story, isn't it? It involves strategic industry, jobs, government stepping in.
SPEAKER_00:It really does. British Steel, well, it's been owned by the Chinese company Jingyi Group since 2020. And they operate the UK's last two blast furnaces, which are up in Scunthorpe.
SPEAKER_01:Those blast furnaces seem key here. What were the financial problems British Steel was facing? How bad did it
SPEAKER_00:get? Well, Jingyi had this plan, see? Closed the blast furnaces for decarbonization. They talked about investing. 1.25 billion into electric arc furnaces instead, but the existing furnaces, they were reportedly costing the company something like 700,000 pounds a day.
SPEAKER_01:700,000 pounds every day. That's quite something.
SPEAKER_00:It is. And that fed into a 205 million operating loss reported for 2023. So pretty significant losses.
SPEAKER_01:So closing them while maybe looking necessary on the balance sheet must have had a huge human cost.
SPEAKER_00:That's exactly it. When they announced the closure plans, back in March 2025, it put up to 2,700 jobs at risk. That's out of a workforce of about 3,500 people, so a very large proportion.
SPEAKER_01:That's a massive number of livelihoods affected. And I understand this goes beyond just the job numbers. There's a wider strategic concern for the UK.
SPEAKER_00:Absolutely. You had MPs across parties emphasizing the need to keep primary steelmaking capacity here, virgin steelmaking using iron ore. It's about industrial sovereignty, really. For certain high-grade steels, defense applications, critical infrastructure. You need that primary production. You can't just rely on recycling scrap and electric furnaces for everything.
SPEAKER_01:And if Scunthorpe's blast furnaces closed?
SPEAKER_00:The UK would be the only G7 nation without that primary steelmaking capability. We'd be completely reliant on imports for those crucial materials.
SPEAKER_01:That certainly explains the urgency. So the government acted fast.
SPEAKER_00:Very fast. Parliament pushed through the Steel Industry Special Measures Act 2025. It passed on April 12th with cross-party support. It was emergency legislation specifically aimed at keeping those British steel blast furnaces running, preventing an immediate shutdown.
SPEAKER_01:Emergency legislation. What kind of powers does that actually give the government? Can they really just step in?
SPEAKER_00:Yes, they can. The act gives the Secretary of State powers to intervene directly. They can direct the company or even take control of steel businesses in England that are at risk of closure. That includes ensuring they get raw materials, making sure staff wages are paid, essentially keeping the lights on and the plant operational.
SPEAKER_01:And has the government actually put money in since the act passed?
SPEAKER_00:They have. As of June 20th, about 100 million in working capital had been provided to British Steel just to keep things ticking over day to day, paying suppliers, wages, that sort of thing.
SPEAKER_01:So 100 million already in. Where does this leave British Steel long term? The government says nationalization isn't the main aim, but it's been termed a likely option. What's the thinking there?
SPEAKER_00:Well, the official line is still that they'd prefer to find private co-investment. for a long-term transformation you know potentially funding those electric arc furnaces But the issue of compensation, if they do nationalize, is tricky. Jonathan Reynolds, the Secretary of State, actually said back in April that the market value of British Steel is effectively zero.
SPEAKER_01:Effectively zero. That's quite a statement.
SPEAKER_00:It is. And it raises questions about compensation. There's even been some discussion, though it's controversial, about potential legislation to cancel British Steel's debt to Jingji, which is thought to be around one billion pounds, as maybe an alternative to a full takeover.
SPEAKER_01:canceling debt. That sounds legally complex. Despite all this uncertainty, though, have there been any positive signs since the government intervened? Any green shoots?
SPEAKER_00:Actually, yes, there have been a few. British Steel has apparently increased its output recently, and perhaps more surprisingly, they're actually recruiting, looking for about 180 extra staff across their different sites.
SPEAKER_01:Recruiting? That's interesting. What about securing future business?
SPEAKER_00:That's probably the biggest positive news. In June, Network Rail awarded British Steel a new long-term supply contract. It's worth about 500 million. It means they'll be supplying tens of thousands of tons of rail each year from Scunthorpe for the next five to eight years. Secures their role as a key supplier there.
SPEAKER_01:So some stability from that network rail contract to make you think, though, given these emergency powers, the funding that effectively zero valuation. How might this change things going forward? Could this set a precedent for how the UK government views the balance between private ownership and strategic sectors and the national interest? What does it mean for investment in other vital areas? Something to consider.
