British Steel returns to government after China negotiations ‘break down’
MPs have approved government plans to take control of British Steel’s blast furnaces in Scunthorpe and save them from closure.
In a rare move, parliament was recalled from its Easter break and MPs sat in the House of Commons all day on Saturday to get the emergency legislation over the line.
The recall came after negotiations with British Steel’s Chinese owners, Jingye, appeared to break down.
The company has stopped buying enough raw materials to keep the blast furnace going, with business secretary Jonathan Reynolds accusing them of failing to negotiate ‘in good faith’.
British Steel is the last primary steel-making facility in the UK, and its operation is essential to protect the UK’s steel-making ability and the 3,500 employees who work there.
The emergency legislation is not a full nationalisation of British Steel, with ministers remaining hopeful that private investment will save the plant.
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Why is British Steel in trouble?
Jingye says British Steel’s blast furnaces are ‘no longer financially sustainable’ due to difficult market conditions, the introduction of US President Donald Trump’s new tariffs, and higher environmental costs.
British Steel put forward a £2billion business plan which would see the company move to electric arc furnace steel-making instead of using blast furnacing.
The company was offered £500million from the government to keep it going, the BBC reports – but British Steel was expecting the government to fund half of their plan.
Who owns British Steel?
Chinese firm Jingye is the current owner of British Steel.
It took ownership in 2020, when the site fell into administration and Jingye bought it out of insolvency.
The company says it has invested more than £1.2billion into British Steel since then, and claims it has lost about £700,000 a day.
Has British Steel been nationalised before?
Yes, British Steel was nationalised in 1967, however it was sold back to the private sector in 1988.
Does anyone else produce steel in the UK?
There are several other companies which produce steel in the UK, according to industry group UK Steel.
This includes TATA Steel, whose Port Talbot plant was forced to close its blast furnaces last year.
Eventually its furnaces will be replaced with electric arc furnaces in an attempt to make the industry more eco-friendly.
The new law, now it has received royal assent, will give the government the power to instruct British Steel to keep the plant open.
Mr Reynolds told MPs: ‘We could not, will not and never will stand idly by while heat seeps from the UK’s remaining blast furnaces without any planning, any due process or any respect for the consequences.
‘And that is why I needed colleagues here today.’
After the emergency legislation passed, prime minister Keir Starmer met with British Steel workers near Scunthorpe.
He told them: ‘You are the people who have kept this going.
‘You and your colleagues for years have been the backbone of British Steel, and it’s really important that we recognise that.
‘And I felt it was really important today, having been in parliament this morning, to come straight up here to see you face to face to have that discussion with you.
‘Because this shouldn’t be a remove thing that’s happening down in Westminster, in parliament, it should be something that’s living and breathing. It’s your jobs, your lives, your communities, your families.’
It comes as workers at the Scunthorpe plant prevented Jingye executives from entering key parts of the steelworks earlier today.
Police were called and forced the executives to leave.
Humberside Police said: ‘Officers were in attendance at British Steel in Scunthorpe at 8.30am this morning following a suspected breach of the peace.
‘Upon attending, conducting checks and speaking to individuals in the area, there were no concerns raised and no arrests were made.’
Shadow business secretary Andrew Griffith criticised the legislation, saying the government was seeking a ‘blank cheque’, while Tory leader Kemi Badenoch claimed Labour had ‘botched’ a deal she had negotiated with British Steel while business secretary.
She was unable to provide details of the deal, saying negotiations were still ongoing when last year’s election was called, but added it ‘would have succeeded better’ than Mr Reynolds’s plan.
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