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Government moves to take full control of British Steel
Prime Minister Sir Keir Starmer announced plans to bring British Steel into public ownership this week, following unsuccessful negotiations with its Chinese owners, Jingye. Legislation will be introduced to enable the takeover, subject to a public interest assessment.
Background to the decision
The UK government intervened in April 2025, seizing control of British Steel's Scunthorpe plant from Jingye to prevent the shutdown of its blast furnaces. Officials cited concerns that halting operations would eliminate the UK's capacity to produce virgin steel, a critical material for infrastructure projects.
Virgin steel production involves extracting and refining iron ore to create high-grade steel used in construction, railways, and other key sectors. Restarting dormant furnaces is both technically challenging and financially prohibitive.
Public interest test and financial implications
The government's decision follows months of stalled talks with Jingye, which had argued the Scunthorpe site was losing £700,000 daily. No viable private buyer emerged, prompting the shift to public ownership.
Current estimates suggest the government is spending approximately £1 million per day to sustain operations, including wages and raw material purchases. The National Audit Office (NAO) projected in March that costs could surpass £1.5 billion by 2028 if spending continues at present rates.
An independent valuation will determine any compensation owed to Jingye after the legislation passes. No official figure for the nationalisation's total cost has been disclosed.
Industry and union reactions
Gareth Stace, director-general of UK Steel, welcomed the announcement, calling it a source of "vital certainty" for the company's 2,700 employees and customers. However, he emphasised that nationalisation must be the start of a "clear, long-term strategy" for the sector, including investment plans.
"Maintaining domestic steel production is essential for economic growth, national security, and resilience,"
Gareth Stace, UK Steel
Trade unions also backed the move. Roy Rickhuss (Community union) and Sharon Graham (Unite) issued a joint statement expressing full support, highlighting the workforce's skill and the steel's strategic importance. They urged the government to ensure UK steel is used in all publicly funded projects.
Charlotte Brumpton-Childs of the GMB Union described the decision as a necessary step to secure the company's future.
Historical context
This is not the first time British Steel has been nationalised. In 2019, the Insolvency Service took over the company for nine months after its collapse, at a cost of £600 million to taxpayers.
Next steps
The legislation will be introduced this week, with the public interest test assessing factors such as national security, critical infrastructure, and economic stability. The government has not specified a timeline for completing the process.
