The UK government is exploring nationalisation as a potential solution for British Steel’s ongoing challenges, as stated by Business Secretary Jonathan Reynolds. This move comes in response to the company’s owners’ discussions about shutting down operations, a scenario that would significantly impact thousands of jobs.

Emergency Parliamentary Recall

In a rare action, parliament was recalled for an emergency session on a Saturday to debate and pass a bill aimed at preserving the country’s steel production capabilities.

Reynolds emphasized that this decision was not taken lightly, highlighting the gravity of the situation. He described the legislative measure as a “proportionate and necessary” step to ensure the viability of primary steelmaking in the UK. The bill received unanimous support, with MPs voting in favor, and it was enacted into law shortly thereafter.

Political Reactions

Prime Minister Sir Keir Starmer engaged with steel workers in Scunthorpe post-debate, underlining the importance of the steel industry to the UK economy. Despite the bill’s broad political backing, Starmer faced criticism from Conservative Party members who argued that his government mishandled negotiations with Jingye, the Chinese owner of British Steel.

Kemi Badenoch, the Tory leader, accused the government of procrastination, stating, “Their incompetence has led to a last-minute recall of parliament.” This session marks only the second time parliament has been convened on a Saturday since the Falklands War in 1982.

Key Provisions of the Legislation

The newly passed bill grants Reynolds extensive authority over any steel assets at risk of closure. Key features include:

• Government instructions for steel operations to remain active, with provisions for asset takeover if instructions are ignored.
• Powers to impose fines or imprisonment for non-compliance.
• A compensation scheme for any incurred costs by affected companies.

Nationalisation as a Long-Term Solution

While Reynolds described this emergency measure as essential, he acknowledged that the government still prefers finding a private sector solution, with nationalisation seen as a probable long-term outcome. He noted that British Steel’s market value is presently assessed at zero.

In recent discussions, it became apparent that Jingye intended to halt payment for raw material orders crucial for the operation of British Steel’s blast furnaces. This prompted the government to step in, with Reynolds revealing an offer to financially support these operational needs.

Challenges Ahead

The negotiations with Jingye, which took over the firm in 2020, have faced hurdles, especially after the company rejected a substantial support offer from the government last month. Jingye cited considerable losses of over £700,000 monthly due to competitive energy costs and tariffs as its rationale for its financial unviability.

Public Sentiment and Future Directions

Nationalisation has garnered significant public support, with recent polling indicating that approximately 60% of voters are in favor of returning British Steel to state ownership. As the government allocates £2.5 billion to bolster the steel industry, the maintenance of domestic steel production becomes a strategic priority to ensure the UK retains its manufacturing capabilities.