UK government nationalises British Steel to protect jobs and primary production capacity

The British government has officially taken the steelmaker British Steel into public ownership, 15 years after launching an intervention to prevent the closure of its production facilities in Scunthorpe and the loss of 4,000 jobs.

Prime Minister Keir Starmer stated that the takeover of the plant from its Chinese owner, Jingye Group, was necessary for the national interest, marking one of the final major acts of his premiership after the Steel Industry Nationalisation Act received royal assent.

The Labour government had called an extraordinary session of parliament in April last year to prevent the closure of British Steel, following threats by Jingye Group to pull out without taking action to preserve the blast furnaces in Lincolnshire.

Without this intervention, the UK’s last remaining facility producing primary steel from iron ore would have been forced to cease operations.

The company has since been under the management of government officials, despite opposition from Jingye Group. However, the Chinese company retained its economic equity stake until the nationalisation decision was finalised.

Government officials announced that an independent evaluator will be appointed to determine whether any compensation will be paid.

For its part, Jingye Group maintained in its UK financial reports and on its WeChat social media account that British Steel is a valuable asset deserving of high compensation, even though the group was prepared to halt operations.

According to a report by The Guardian newspaper, Prime Minister Starmer said in a statement on the matter:

“British Steel is part of the fabric of our nation and a cornerstone of Britain’s industrial strength. This decision secures the future of steelmaking in the UK, protects skilled workforces, and preserves our vital national capability. This government will always act in the national interest to support British industry, strengthen our economy, and ensure the sectors we rely on continue to thrive in the future.”

In a statement, the government noted that despite extensive negotiations, no agreement could be reached with Jingye Group that would both secure the future of the company and protect the interests of taxpayers.

Trade unions representing steelworkers welcomed the move to protect employment.

Alasdair McDiarmid, Assistant General Secretary of the Community union, expressed gratitude for the nationalisation decision, noting that it would help protect thousands of jobs and preserve the steelmaking capability upon which the economy and national security depend.

Explaining the grounds for nationalising the Scunthorpe facility, Business Secretary Peter Kyle said, “If this plant were to disappear, we would become dependent on international markets and the supply of other nations for the type of production used in our railways and construction sector.”

When asked by Times Radio whether the blast furnaces would continue primary steel production in the long term, Kyle said: “In the future, this will be a decision to be made by the business itself and the government. However, the core objective of our steel strategy is to transition to green steel. In the long term, primary demand is in this area, and I want this facility to deliver the modern production required by the companies and organisations that purchase steel.”

This nationalisation decision will not be the final challenge for Andy Burnham, who is expected to take over the premiership next week, and the incoming government.

British Steel’s aging blast furnaces must be replaced, and the decarbonisation plan, which involves installing electric arc furnaces to reduce environmental pollution, is projected to cost more than £1 billion.

Gareth Stace, Director General of the industry body UK Steel, emphasised that British Steel is the only British manufacturer producing long products, such as rails and beams, which are critical to the country’s industrial resilience, national security, and future economic growth.

“Bringing British Steel into public ownership is the right step,” Stace said. “The priority for the new government taking office next week must be to implement a long-term plan that will return the company to commercial viability, secure investment in modern low-carbon steel production, and create the competitive business environment needed for the sector to thrive.”