Analysis: British Steel facing a crisis within a crisis
Jasper Jolly
Blast furnaces have been making steel in Britain for 300 years, ever since they helped start the Industrial Revolution. This weekend, parliament will sit for the first Saturday in decades as it tries to keep the last two furnaces running for a bit longer.
Keir Starmer has recalled MPs to discuss emergency powers to direct steel companies, including British Steel’s Scunthorpe steelworks, to “preserve capability and ensure public safety”. The move would be short of nationalisation, but it would give the government more influence on the steel industry than at any point since Margaret Thatcher.
The government is scrambling to save Scunthorpe after its Chinese owner, Jingye Steel Group, last month said it was considering closing it, with the likely loss of 2,700 jobs. Starmer and the business secretary, Jonathan Reynolds, hope to keep the plant running for the next few weeks while they work out the longer-term plan, with nationalisation one option.
British Steel is facing a crisis within a crisis: in the short term – the next week or so – it needs materials, including iron pellets and coking coal, or else it faces the prospect of the furnaces cooling beyond easy or affordable recovery. Customers would flee, making job losses inevitable.
People with knowledge of this week’s talks between the UK government and Jingye said it appeared that the government had run out of patience with the Chinese company’s negotiating. The government had offered to buy the raw materials to keep the blast furnaces running in the short term but that offer was not taken up. Parliament may be able to avert the short-term crisis on Saturday.
Key events
Rowena Mason
British Steel makes the vast majority of UK rail track and the government has been seeking a deal to keep the plant open.
The industry will be hit by a 25% tariff on steel exports to the US imposed by Donald Trump but the government has insisted British Steel’s problems are not related to this.
Talks with Jingye’s chair, Li Ganpo, had dragged on for three days after the government offered to buy raw materials to keep the plant running for the next few weeks while trying to find a longer-term solution.
Scunthorpe is the last remaining steelworks capable of making steel from iron ore and so is seen by some people as strategically important for the UK. However, Jingye last month said it planned to close the plant’s two blast furnaces, putting 2,700 jobs at risk. It has since refused to pay for new raw materials, with coal and iron ore deliveries to Immingham port not yet paid for.
The government had offered £500m in financial support to switch the blast furnaces to cleaner electric arc furnaces, but Jingye had requested much more.
Talks this week are thought to have stalled when Jingye balked at the conditions attached to the offer to pay for new raw materials. The delays in reaching an agreement had caused increasing alarm among workers, who feared at least one blast furnace might be forced to close as soon as next week, leading to job losses.
Scunthorpe’s blast furnaces would have closed within days if the government had not recalled parliament to pass emergency legislation, the industry minister has said.
Sarah Jones told GB News:
Without the raw materials, it’s only a matter of time before the blast furnace is inoperable.”
Asked whether this would have happened within days, she said: “Yes.”
It’s been a busy morning for Sarah Jones, who is now on BBC Breakfast.
Asked whether the government had received any private offers for the company’s Scunthorpe plant, Sarah Jones said:
There is not at the moment, to answer your question, a private company that is there willing to invest at this point.
Asked how the situation in Scunthorpe is different from the steel works in Port Talbot, Jones said there was a private company willing to invest in the latter.
When we came into government, there was a deal on the table with Tata Steel in Port Talbot.
We negotiated in 10 weeks a much better deal, but there was a private company willing to invest, who are now investing.
We have maintained 5,000 jobs on the site and there will be a future for that site with an electric arc furnace. There is no such deal on the table at the moment (for Scunthorpe), that’s what is different.
The other difference is that these are the last blast furnaces making primary steel that we have in this country, and also what is different of course is that the world is changing.
As we have seen with the prime minister’s support for our defence industry in recent times, we need to ensure as a country we have sovereign capability to make steel, and that is what we are securing today.
Taking control of British Steel would come at no extra cost to the taxpayer, minister claims
The industry minister has said there would be “no extra costs” for the taxpayer as a result of taking control of British Steel’s Scunthorpe site, beyond the £2.5 billion already budgeted for supporting the industry.
Sarah Jones said:
We are hoping that the company will co-operate with what we are asking them to do, we hope that we will give them a notice and they will continue.
If they do not, we will step in. Now the company will be liable for any costs that we incur, and we will seek to get that money back.
But let me be really clear on the finances. We have a fund which we put into our manifesto because we have been committed to steel for the duration.
She added:
We have the £2.5 billion fund for steel which we had in our manifesto, that we will use if necessary, so there will be no extra costs to the Exchequer that we don’t already have in our plans.
MPs must support bill or accept end of primary steel making in UK, says minister
We’ve got more from industry minister Sarah Jones, who has said MPs face a choice between passing the government’s steel bill and seeing the end of primary steel making in the UK.
She told Sky News:
If blast furnaces are closed in an unplanned way, they can never be reopened, the steel just solidifies in those furnaces and nothing can be done.
So the choice that is facing MPs today is do we want to take back control, to give the business secretary the power to act as a company director and to instruct the company to ensure we get the raw materials and we keep the blast furnaces operating, or do we want to see the end of primary steel making in this country and the loss of jobs?
That is the choice that is on the table today.
British Steel owner Jingye was not negotiating “in good faith” about saving the blast furnaces at Scunthorpe, the industry minister has said.
Sarah Jones told Sky News:
We have been negotiating with the owners of British Steel to try and secure a way forward. We made a very generous offer to them, which has been rejected.
We have been acting throughout this period in good faith, but we believe that in recent times the company have not been acting in good faith.
This problem has now become existential because the company have refused to bring in the raw materials that we need to keep the blast furnaces operating.
Analysis: British Steel facing a crisis within a crisis
Jasper Jolly
Blast furnaces have been making steel in Britain for 300 years, ever since they helped start the Industrial Revolution. This weekend, parliament will sit for the first Saturday in decades as it tries to keep the last two furnaces running for a bit longer.
Keir Starmer has recalled MPs to discuss emergency powers to direct steel companies, including British Steel’s Scunthorpe steelworks, to “preserve capability and ensure public safety”. The move would be short of nationalisation, but it would give the government more influence on the steel industry than at any point since Margaret Thatcher.
The government is scrambling to save Scunthorpe after its Chinese owner, Jingye Steel Group, last month said it was considering closing it, with the likely loss of 2,700 jobs. Starmer and the business secretary, Jonathan Reynolds, hope to keep the plant running for the next few weeks while they work out the longer-term plan, with nationalisation one option.
British Steel is facing a crisis within a crisis: in the short term – the next week or so – it needs materials, including iron pellets and coking coal, or else it faces the prospect of the furnaces cooling beyond easy or affordable recovery. Customers would flee, making job losses inevitable.
People with knowledge of this week’s talks between the UK government and Jingye said it appeared that the government had run out of patience with the Chinese company’s negotiating. The government had offered to buy the raw materials to keep the blast furnaces running in the short term but that offer was not taken up. Parliament may be able to avert the short-term crisis on Saturday.
What have opposition parties said about today’s debate?
Some opposition parties were also furious that other industrial plants in trouble had not been given the same treatment from the government. Plaid Cymru said “the people of Wales would not forget” that the steel plant at Port Talbot was allowed to close its blast furnaces and convert to electric arc production, while the SNP highlighted the different treatment for Grangemouth – Scotland’s only oil refinery, which could close. Government sources said those plants were facing different situations.
The Conservative leader, Kemi Badenoch, said the government had “bungled” the negotiations with British Steel.
“They must have seen this coming for a while,” she said. “Instead of addressing it earlier in the week when parliament was sitting, their incompetence has led to a last-minute recall of parliament.”
The Green Party has said it will support any bid to nationalise British Steel.
Green MP Ellie Chowns said nationalisation was “the only sure way to secure this strategically important sector so vital to national security and British jobs”.
Rowena Mason
The last time parliament was recalled during recess was in 2021, when Afghanistan had to be evacuated during the Taliban takeover. It is also the first recall of parliament on a Saturday since 1982.
One MP said the move was “going down extremely badly” with colleagues who had been given no warning about the need to return to Westminster, when it had been known for weeks that British Steel was in trouble.
Speaking on Friday, Starmer said the “future of British steel hangs in the balance” and he would not stand by while the last blast furnaces in the UK were closed, shutting an essential industry. He said:
We will pass emergency legislation in one day to give the Business Secretary the powers to do everything possible to stop the closure of these blast furnaces.
A No 10 spokesperson said:
The prime minister has been clear, his government will always act in the national interest. All actions we take are in the name of British industry, British jobs and for British workers.
Tomorrow (Saturday), parliament will be recalled to debate the steel industry (special measures) bill. The bill provides the government with the power to direct steel companies in England, which we will use to protect the Scunthorpe site. It enables the UK government to preserve capability and ensure public safety. It also ensures all options remain viable for the future of the plant and the livelihoods it supports.
We have been negotiating with British Steel’s owners in good faith ever since coming to office. We have always been clear there is a bright future for steel in the UK. All options remain on the table.
Will British Steel be nationalised?
Rowena Mason
When the legislation is passed, Jonathan Reynolds will be able to order the company to buy the raw materials to keep two blast furnaces going at the plant and the taxpayer will take on the costs of the purchases. The company’s owner, Jingye, has said it is losing about £700,000 a day.
The issue of nationalisation will be dealt with separately and is not certain to happen, but senior sources said it was the likely outcome and the government would look at potential private sector partners for a transfer of ownership and co-investment.
The company declined to comment and it remains unclear how Jingye will respond to being directed by the UK government.
Government sources said generous offers had been made to the Chinese company that any rational actor would have accepted, and that the UK was taking action to keep the furnaces going in order to continue talks about the next steps. Once they had been allowed to stop, the furnaces would be impossible to restart.
MPs to debate emergency legislation to save British Steel
Good morning and welcome to a slightly unusual Saturday edition of our politics live blog.
Keir Starmer is stepping in to seize control of British Steel to stop its Chinese owner shutting the Scunthorpe plant in an unprecedented move that paves the way for likely nationalisation.
The prime minister was granted a recall of parliament on Saturday, with MPs set to debate emergency laws that will give the business secretary, Jonathan Reynolds, the power to direct the company.
The Commons will sit at 11am, with MPs called back from Easter recess to discuss putting the assets under public control. The government will aim to get emergency legislation through the Commons and Lords in one day of sitting.
We’ll cover the debate live while also bringing you analysis and other political updates throughout the day.
