Key facts
- British Steel is costing UK taxpayers £1.3 million per day.
- The total estimated cost to keep British Steel running could reach £1.5 billion by 2028.
- By mid-June, the government had spent £555 million on workers' salaries and raw materials.
- The public accounts committee found ministers unable to articulate a sustainable business model for British Steel.
- The former owner, Jingye, claims British Steel owed it almost £1 billion when nationalized.
- China's government expressed strong dissatisfaction with the situation.
The UK government is facing pressure to present a clear and credible plan for the future of British Steel, which it took into public ownership in July. A report from the public accounts committee highlighted the "startling" costs associated with keeping the struggling manufacturer operational, warning that taxpayers are exposed to significant and growing expenses with no clear end in sight.
British Steel is currently costing £1.3 million per day to maintain, with total estimated expenditures projected to reach as much as £1.5 billion by 2028. As of mid-June, the government had already allocated £555 million towards workers' salaries and the purchase of raw materials, excluding costs for external advisers. The committee criticized the Department for Business and Trade for failing to provide even indicative estimates of the ultimate financial burden on taxpayers or the duration of this intervention.
Following the nationalization, the government appointed new management to stabilize the business. Clive Betts, deputy chair of the committee, acknowledged the move to save the company but emphasized the need for a clear government plan beyond simply propping it up with public funds. He stated that British Steel is currently unable to sustain itself financially and that the government is responsible for ensuring its future financial stability.
This situation follows a recent move by Labour to nationalize Speciality Steel UK, another significant metal producer, to protect 1,300 jobs. Business Secretary Jonathan Reynolds defended such interventions as necessary for safeguarding heavy industry, though the public accounts committee cautioned that supporting one part of the industry should not come at the expense of others.
The committee's report also noted that the former owner, Jingye, has initiated a formal process seeking compensation from the government, claiming British Steel owed it nearly £1 billion at the time of nationalization. This development has also strained UK-China relations, with the Chinese government expressing strong dissatisfaction.