British Steel set to be nationalised, Starmer says

12 minutes agoShareSaveAdd as preferred on GoogleMichael RaceBusiness reporter

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British Steel is set to be brought into public ownership, the prime minister has announced.

Sir Keir Starmer said legislation would be brought forward this week to give the government powers to take “full ownership of British Steel”, subject to a public interest test.

The move comes after the government seized control of British Steel’s Scunthorpe steelworks from its Chinese owners Jingye in April last year in order to halt the potential closure of its blast furnances.

Sir Keir said the government had held talks with Jinqye, but that a “commercial sale has not been possible, and now a public test could be met”.

“Public ownership is in the public interest”, the prime minister said in a speech.

The steelmaking industry welcomed the announcement. Gareth Stace, director-general of industry body UK Steel, said it provided “vital certainty” for the 2,700 workforce and the company’s customers.

“Maintaining domestic production capability for British Steel’s products is essential not only for economic growth but also for our national security and resilience,” he said.

However, Stace said nationalisation was “not an end goal”, and the process must be the “beginning of a clear and credible long-term plan for British Steel” along with an investment strategy.

Until now, the government had stopped short of taking British Steel back into full public ownership as it looked for potential private investors for the plant.

It seized control of the steelworks in April last year after talks with owners Jinqye collapsed amid accusations the Chinese firm was planning to switch the furnaces off.

If the furnaces had been starved of fuel and gone out, the UK would no longer have had the capability to produce so-called virgin steel, due to the process of restarting them being extremely difficult and costly.

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Virgin steel-making involves iron being extracted from its original source to be purified and treated to make all types of steel used in major construction projects, such as new buildings and railways.

This is not the first time the government has taken over British Steel, with the Insolvency Service running the company for nine months after it collapsed in 2019, at a cost of £600m

Jingye claimed the Scunthorpe site was losing £700,000 day and was no longer financially sustainable, ahead of the government stepping in last year. The current government supervision regime has cost more than £200m.