Sir Keir Starmer has confirmed that British Steel will be taken fully public, ending months of speculation about the future of the loss-making Scunthorpe plant and drawing a line under difficult negotiations with its Chinese owner, Jingye.
In a speech designed in part to end the emerging leadership challenge after Labour’s devastating local election results, the prime minister told supporters that emergency legislation would be introduced in Parliament this week to give ministers the powers needed to take “full ownership” of the business, subject to a public interest test.
“Public ownership will help society,” said Sir Keir, adding that he aims to prove his “skeptics” wrong and that, in British society, “change cannot come fast enough.”
The decision marks a major change in approach. Whitehall had previously eschewed full privatization, preferring to pay private investors while keeping the explosive furnace burning through the emergency management regime. That regime was imposed last April after the government seized control of the Scunthorpe site amid growing concerns that Jingye was preparing to shut down the furnace, a move that would end the United Kingdom’s ability to produce so-called virgin steel.
Virgin steel, which is smelted from steel instead of recycled scrap, is the grade used in heavy infrastructure projects, from new railway lines to large-scale construction. Restarting a blast furnace when cold is both technically prohibitive and extraordinarily expensive, and losing that in-house capability has been viewed in Westminster as a strategic red line.
Negotiations with Jingye, the prime minister confirmed, failed to produce a workable agreement. “Commercial sales weren’t possible, and now they can’t meet public scrutiny,” he said.
The response from the steel industry was swift and broadly supportive. Gareth Stace, director general of trade association UK Steel, said the announcement provides “significant reassurance” to Scunthorpe’s 2,700 employees, as well as customers who rely on British Steel for rail, structural components and specialty products.
“Maintaining domestic manufacturing capacity for British Steel products is important not only for economic growth but also for our national security and resilience,” said Stace.
However, he was clear that nationalization alone would not be enough. “It is not the end goal,” he warned, urging ministers to use this period as “the start of a clear and credible long-term plan for British Steel,” backed by a sound investment strategy.
Unions echoed that sentiment. In a joint statement, Roy Rickhuss, general secretary of the Civil Society union, and Sharon Graham of Unite said they “fully support” nationalisation, arguing that British Steel “has a bright future, with world-class highly skilled workers making vital steel for the UK’s strategic rail and infrastructure.” The pair also pressed the Treasury to authorize government-funded projects to source British-made steel – a long-term demand for the domestic industry.
Charlotte Brumpton-Childs, national secretary of the GMB Union, said it was “right for the government to do everything it can to secure its long-term future.”
The Exchequer’s bill to fund the company is already looking very exciting. The National Audit Office reported in March that £377 million was spent in just nine months to fund operations, wages and supplies at Scunthorpe. If the current rate of spending continues, the NAO warned, the figure could exceed £1.5 billion by 2028, “depending on policy decisions that may be taken in the future.”
The BBC understands that the government is currently spending £1 million a day to keep businesses running. Jingye, for his part, said the place was making £700,000 a day and was no longer commercially viable before the ministers intervened.
There is no official figure set for the cost of full nationalization. Officials say an independent valuation of the business will be conducted once the law is in place, and any compensation Jingye will receive will be determined based on that.
This is not the first time the government has intervened. The Insolvency Service ran British Steel for nine months following its collapse in 2019, at a cost to the taxpayer of around £600m, before its sale to Jingye.
For supply chain SMEs, manufacturers, hauliers and engineering companies clustered around Scunthorpe and across the wider Humber industrial corridor, the announcement removes the immediate threat of catastrophic closure. Many of these businesses operate on tight margins and would have struggled to survive the loss of their main customer.
The broader question, however, is whether public ownership can deliver the improvements that successive private owners have failed to fund. De-carbonising basic steelmaking, replacing aging blast furnaces with electric arc technology, and securing long-term reliable contracts with British infrastructure projects will all require financial commitments of billions, not millions.
The public interest assessment required to complete the takeover will weigh national security, the protection of critical national infrastructure and broader economic considerations. In all three of these cases, the government seems to have concluded that this case of intervention cannot be answered.
