Scunthorpe steel works. Credit: wiki commons, Alan Murray-Rust
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The government is considering nationalising British Steel, as the company threatens closures that could jeopardise 2,700 jobs.
The Chinese-owned firm operates two blast furnaces at Scunthorpe. But last month, the company warned that “hugely challenging” financial circumstances – exacerbated by Donald Trump’s 25% tariffs on steel imports – would force the closure of the Lincolnshire plant.
These furnaces smelt steel for everything from railways to tanks, making them crucial for the government’s infrastructure and national security agenda.
The crisis has reached boiling point over the last few days: parent company Jingye Group and the UK government failed to agree on a package of financial support, while a shortage of raw materials reportedly needs to be resolved within 48 hours to keep the sites operational. British Steel failed to order enough coking coal and iron, and switching off the plants – a costly process – will make closure all the more likely.
On Tuesday (8 April), prime minister Keir Starmer pledged to do “everything we can to ensure there’s a bright future” for the plant. These plans reportedly include either the purchase of the raw materials or nationalisation.
“I’m absolutely committed to steel production in this country,” the PM added.
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Nationalisation is “the right course of action”, a spokesperson for the Community union – which represents the bulk of British steel workers – told Big Issue.
“These are the only remaining blast furnaces in the UK. That has real importance for national security, defence and construction. The primary steel making furnace at Scunthorpe also supplies smaller plants down the production line – without it, we would become the only G7 country without the capacity to make steel.”
“British Steel rejected a government offer last month, so this is reaching a crisis point, for the workers and for the country as a whole.”
In March, the government offered £500m of state aid to Jingye to help it switch the blast furnaces to less-polluting electric arc furnaces. The Chinese company had requested £1bn.
Privatised by Margaret Thatcher’s government in 1987, British Steel has been loss-making for many years. Jingye claims to have invested more than £1.2bn into British Steel to maintain operations and claims it suffered financial losses of around £700,000 a day.
Community conceded that the plant was loss-making, but added that the furnaces are “too important” to lose.
“We aren’t denying that it’s an expensive exercise; the government would have to be covering losses for the time being. But without the plant, we lose steel making capability. That would always be a concern – but with an increasingly belligerent Russia, that is extremely important.“
The steel plant has become a political football, with even those on the right of politics calling for nationalisation.
Reform UK leader Nigel Farage and his deputy Richard Tice visited the works on Tuesday. Farage claimed that there were “three days to save British Steel” and the way to do that was to take it “into public ownership”.
The Community spokesperson said that Farage had never previously expressed an interest in the steelworks’ future.
“Nigel Farage does not speak for Community. UK Labour is working with unions and workers to secure the best outcome for Scunthorpe. Farage… does not represent steelworker interests.”
Lord Prem Sikka, Labour Peer and emeritus professor of accounting at the University of Essex, called on the government to extend nationalisation to other industries.
“Nationalising [steel] is better than handing billions of free money to private foreign companies,” said Lord Prem Sikka, Labour Peer and emeritus professor of accounting at the University of Essex. “Can’t succeed without ending profiteering by energy, water companies. If steel can be nationalised why not water and energy.”
