The UK government has stepped in to take over British Steel and protect its Scunthorpe plant from closure, but now faces a race against time to keep its two blast furnaces operational.
After parliament was recalled during a recess for the first time since 2021, MPs voted on Saturday (12 April) to give the government powers to take control of the Lincolnshire site and prevent it from shutting down.
UK prime minister Sir Keir Starmer said all options were on the table to “secure the future of the industry”.
The government said that the move was made to prevent the furnaces being shut down, after British Steel’s Chinese owners, Jingye, said they would do so immediately.
The government now has the power to control the company’s board, direct its workforce and order raw materials. The Department for Business and Trade said that it had instructed the UK’s management to continue running the plant.
A decision on nationalisation will reportedly take place within the next two weeks.
New and changing world
Business and trade secretary Johnathan Reynolds said that the action was a result of the UK finding itself in a “new and changing world,” and that the government had negotiated with British Steel’s owners “in good faith”:
“We will always do what is necessary to keep Britain secure at home and strong abroad.
“We are doing what previous governments have failed to, acting in the national interest to help secure UK steelmaking for the future.”
The Telegraph reported that Chinese executives were physically blocked from entering the premises at Scunthorpe. Humberside Police confirmed that officers were called after reports of a disturbance on Saturday morning, but no arrests were made.
Alasdair McDiarmid, the general secretary of Community, said:
“Community Union welcomes and wholeheartedly backs the Labour Government’s decisive action to take control of British Steel.”
Furnace race
Gareth Stace, UK Steel director general, also welcomed the move and the “decisive” action of Reynolds but said that it was “vital” for the blast furnaces to remain operational:
“If the fires go out, it is nigh on impossible for it to be brought back to life – so a solution to keep them running is time-critical.”
The Guardian reported that British Steel is now attempting to source raw materials to fuel the furnaces.
Treasury minister James Murray told BBC Radio 4’s Today programme that the government was doing “everything we can to get the raw materials in there to keep the blast furnaces going”.
‘Never again?’
Reynolds told Sky News he would not “personally bring a Chinese company into our steel sector" again, as steel was a "sensitive area" for the UK.
British Steel was purchased by Jingye in March 2020. The sale included plants in Scunthorpe, Teesside and Skinningrove, as well as a company in Cumbria and assets from the Netherlands.
Chinese foreign ministry spokesperson Lin Jian told a press conference that the UK to “treat Chinese companies fairly” and avoid turning the issue into a “political and security one”.
Jian also said that Jingye was a private Chinese company “as far as he knew”.
Unnamed sources told The Times that Jingye’s plan to shutdown the Scunthorpe furnaces was an act of “sabotage” to maintain UK reliance on Chinese steel.
Reynolds said "it might not be sabotage, it might be neglect," but added that the government had made the decision to get involved when it was clear that Jingye intended to close down the plants regardless of the financial package offered.
Former Conservative Party leader and minister, Iain Duncan-Smith, told LBC that he believed this was a deliberate plan by the Chinese to get access to the British market.
“Why would [China] want to take over what was, at that stage, an ailing or a difficult company when in fact, what they really want to do, is to rebadge their Chinese steel with a British name and then sell it into markets that they wouldn't otherwise be able to go.”
