Government considers nationalising British Steel

The government is considering nationalising British Steel as fears grow among ministers that only days remain to secure raw materials for the company's blast furnaces in Scunthorpe.

Chancellor Rachel Reeves has sought to reassure workers at the Lincolnshire plant that the government would consider nationalisation if necessary.

Reeves spoke to trade unions over the weekend to explain the government's outlook on the steelworks' future. It is understood she told them she was acutely aware of the steel industry's strategic importance to the UK.

US President Donald Trump has levied a 25% tariff on American imports of steel.

British Steel has said its two blast furnaces in Scunthorpe are "no longer financially sustainable" and there are fears that without government support 2,700 jobs could be lost.

The firm has been owned by the Chinese company Jingye since 2020.

Jingye says it has invested more than £1.2bn into British Steel to maintain operations and claims it suffered financial losses of around £700,000 a day.

Taking questions from MPs on the Commons Liaison Committee on Tuesday, the prime minister reiterated "all options remain on the table" when it comes to potential government support.

"I'm absolutely committed to steel production in this country," he said.

He declined to provide further details, but added: "I can reassure the committee that we're doing everything we can to ensure there is a bright future for Scunthorpe."

The government has offered £500m of support to partly fund a switch from blast furnaces to what are known as electric arc furnaces.

But that has been rejected by the company.

Senior figures in Whitehall are concerned negotiations are reaching a crunch point this week, when an order for fresh raw materials needs to be placed in order to keep the blast furnaces going.

If they are turned off, it would make the site's existing vulnerability even more perilous.

The political backdrop to the arguments about the plant's future is the race to be Lincolnshire's first directly elected mayor. The election is on 1 May.

The Reform UK leader Nigel Farage and his deputy Richard Tice – himself a Lincolnshire MP - visited the works on Tuesday, with Mr Farage claiming there were "3 days to save British Steel" and the way to do that was to take it "into public ownership."

The Conservative MP for nearby Brigg and Immingham, Martin Vickers, told the Commons on Monday: "It is very obvious that Jingye has cancelled the raw material orders that are essential to keep the furnaces going; those orders were due in mid-May.

"When I was at the steelworks on Friday, I was told that unless another order for iron ore pellets could be placed this week, it would be too late."

Vickers added that "nationalisation on a temporary basis" would "provide an opportunity to rebuild the industry, hopefully secure new private sector involvement and convince the customers—most notably Network Rail, which gets 95% of its rail track from the Scunthorpe works—that supply will continue."

The Conservative frontbench has not committed the party to backing nationalisation.

The party leader, Kemi Badenoch, said "nationalisation has got to be a last resort," adding "we need steel production in this country, it is important for national resilience."

In a written statement published on Tuesday, the Business Minister Sarah Jones said: "Our priority is respecting workers, safeguarding jobs, and retaining steelmaking.

"We have been clear that the best way forward is for British Steel to continue as a commercially-run business with private investment and government acting in support.

"We call upon British Steel to accept our generous offer of financial support, and the associated conditions.

"However, no options are off the table. The government remains resolute in our desire to secure a long-term future for the Scunthorpe steelworks, retaining steel production and putting an end to the years of uncertainty."

The Liberal Democrats, the Green Party and an independent candidate are also contesting the Lincolnshire mayoral race.

You can see a full list of candidates here.

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