Find a credible plan for British Steel, ministers told as ‘startling’ costs soar
Government spending watchdog warns of price of keeping publicly owned firm in business Labour has been urged to lay out a credible plan for the future of British Steel, as the government spending watchdog warned of the “startling” costs of keeping the struggling manufacturer in business with no end in sight. British Steel was taken into public ownership in July to protect “the future of steel…
The government's spending watchdog has raised concerns over the costs associated with keeping British Steel operational, with no clear plan for its future. British Steel was nationalised in July 2022 to safeguard the steel production sector after the government stepped in to prevent the closure of its plant in Scunthorpe and protect 4,000 jobs.
However, the company's daily operational costs have risen to £1.3 million, with the total cost potentially reaching £1.5 billion by 2028. As of mid-June, the government had spent £555 million on worker salaries and raw materials, excluding external adviser fees.
The Public Accounts Committee of MPs has criticized the lack of a coherent business model for British Steel, noting that the Department for Business and Trade has not provided any estimates of the long-term costs or the timeline for the situation to improve. Business Committee Deputy Chair Clive Betts stated that while the nationalisation of British Steel was necessary, the government must now provide a clear plan for the company's future sustainability.
Betts warned that propping up the company with public funds is not enough and that the government needs to outline its strategy for a sustainable financial footing.
The committee also expressed concerns about the potential diversion of funding from other sectors and the need for assurances that the substantial financial support to British Steel does not compromise the wider industry. Labour recently nationalised Britain's third-largest steel producer, Yorkshire-based Speciality Steel UK, to protect 1,300 jobs, highlighting the government's commitment to heavy industry.
However, the Public Accounts Committee emphasized that taxpayers remain exposed to significant and growing costs, with no guarantee that the expenditure will be recovered. The committee recommended that the government publish a detailed plan for British Steel, including production models, decarbonization pathways, financial sustainability measures, expected costs, funding sources, and a timetable.
The controversy has also strained UK-China relations, with China expressing dissatisfaction over the situation.
Written by urgent.news from Guardian Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
