Challenging market conditions, tariffs from China, and rising costs for cleaner/lower-carbon production are all driving this decision. Jingye, the Chinese state-owned conglomerate that purchased the company, has since announced massive layoffs. The Scunthorpe site, which employs about 2,700 people today, will be hit hard by these cuts. Tata’s Jingye is incurring huge financial losses, it is said losing nearly £700,000 a day. In response, the UK government has announced emergency legislation that would allow it to keep the plant running.
British Steel has faced an ongoing battle to stay afloat despite over £1.2 billion of investments by Jingye. It is great to see the UK government increasing its support for innovative industry. They have pledged £500 million to assist in replacing conventional blast furnaces with energy-efficient electric arc furnaces. This transition not only seeks to reduce the environmental footprint of steel production but to maintain workers’ jobs and their local economies.
To address the urgent situation, the UK government has proposed an emergency law that would grant it the authority to order essential raw materials needed to keep the plant’s two blast furnaces operational. Local government officials claim Jingye’s been bad-faith actors. This conviction has driven the recent effort to negotiate a good faith agreement that can ensure the long-term future of the plant.
In an unusual move, Parliament has had to be recalled from its Easter break. We know they are moving fast to ensure this emergency legislation passes. This marks only the 35th time since 1948 that the House of Commons has been recalled during a scheduled break. The most recent time was in August of 2021 when debate focused on the US exit from Afghanistan.
Employee unions at British Steel welcomed the British government’s intervention. They argue that this new plan would give relief to workers in the short term as a longer-term solution to the crisis is hammered out.
“Jobs, investment, growth, our economic and national security are all on the line,” – Sir Keir Starmer
Industry Minister Sarah Jones underlined the government’s belief that private investment should complement public funding. This is the best way to secure a sustainable future for British Steel. The urgency of the matter has drawn attention from various political leaders, with Liberal Democrat leader Sir Ed Davey stating that “nothing should be off the table in this matter of national security.” He stressed the importance of a long-term strategy for making sure domestic steel production is green and sustainable.
“An opportunity to come forward with a serious plan for the sustainable future of domestic steel production,” – Sir Ed Davey
The GMB union echoed similar sentiments, asserting that immediate action is critical for safeguarding what they describe as “the only way to save the UK steel industry.” Meanwhile, Nigel Farage remarked on the significance of the situation, calling it “the only option we have to save this vital strategic asset.”
Policy debates are just starting to take place, but emergency action is already being taken. Both steel industry and local community stakeholders are optimistic that they will be able to work it out and preserve jobs while shoring up an industry that has been battered by crises after crises in recent years.
“The only sure way to secure this strategically important sector,” – The Green Party of England and Wales