Even by political standards, the UK government’s response to snatch British Steel into public ownership was lightning fast. They achieved this feat thanks to an emergency legislation process that lasted less than one day. This new legislation provides Business Secretary Jonathan Reynolds with extraordinary powers to take control of Scunthorpe plant’s day-to-day operations. He’ll be on the frontlines, managing workers to keep production flowing while anxiety over the facility’s long-term viability increases.
Indeed, the legislation sailed through Parliament in both the House of Commons and House of Lords. It has — at long last – just received Royal Assent. The urgency behind this move stems from British Steel’s owner, Jingye, a Chinese company that acquired the business in 2020. The UK government intervened to prevent Jingye from shutting the two key blast furnaces. These furnaces are central to the UK’s primary steel production.
To sweeten the deal, the UK government said it would continue to buy the raw materials necessary to operate the blast furnaces. Jingye rejected the offer. This is why the company has announced its intention to cancel all existing orders without paying and go back on payment. This decision jeopardizes the future of steel production in the region.
In light of these unfortunate circumstances, the government is in the process of nationalizing the Scunthorpe plant. This facility is a huge employer, and it currently employs about 2,700 workers. In a statement to Members of Parliament (MPs), Business Secretary Reynolds confirmed that nationalisation is the only realistic option going forward.
“We are acting to protect the jobs of thousands of workers, and all options are on the table to secure the future of the industry,” – Jonathan Reynolds.
The market value of British Steel is, in practice, £0. In return, the government has assured shareholders that they will be compensated with fair market rates in the event of nationalisation. These include the home secretary and we understand that government officials have already gone on site to take direct control of operations at the Scunthorpe plant.
The legislation only applies to England. One major Scottish oil refinery is in exactly the same predicament, at risk of closing down. Environmental justice and civil rights advocates alike have condemned this one-sided intervention. They especially draw attention to the Government’s failure to act to save the Tata Steel works in Port Talbot.
“It is a bitter day for the people of Port Talbot,” – Liz Saville Roberts.
The broader social and economic consequences of the government’s decision are being felt strongly in communities that depend on steelworks production. Local resident Rob Barroclough emphasized the significance of the industry to families, stating, “Our family, like many others, is built around the steelworks. Who knows… my boys might end up working there one day if it can be saved.”
Reynolds expressed a commitment to revitalizing the industry, asserting its historical importance to the nation. “Our industry is the pride of our history – and I want it to be our future, too.”
As implementation moves from the private sector to the control of governments, UK officials have a difficult road before them. Yet, they still need to avoid unproductive negotiation posturing with Jingye while keeping production rolling. Labour leader Sir Keir Starmer acknowledged the efforts of those on the ground: “You are the people who have kept this going.”
HM government remains in active discussion to find a sustainable long term solution, both for British Steels and its workers. Simultaneously, it is responding to broader fears about the sustainability of the UK’s steel sector.