Government drafts legislation to fully nationalise British Steel amid cost warnings

Officials are reportedly drafting legislation to fully nationalise British Steel, a move anticipated to be announced in the King's speech this week. The government action seeks to safeguard Britain's last two blast furnaces and protect approximately 3,500 jobs at the Scunthorpe plant. This development follows the state takeover of the loss-making business from its Chinese owner, Jingye, which occurred last April after the company moved to shut down the site.

The urgency of the situation is underscored by financial data from the National Audit Office, which estimates the cost of keeping British Steel operational has risen to £377m. Without intervention, these costs could exceed £1.5bn by 2028 if current rates continue. The plant remains critical to national infrastructure, supplying about 95 per cent of Network Rail's track, while the blast furnaces allow metal to be produced from scratch rather than relying on scrap.

While the announcement is expected in the King's speech, specific legislative details remain unconfirmed as the document is still being finalised. A government spokesperson stated that discussions with Jingye are ongoing to agree a pragmatic solution, with no conclusion or decision yet reached. Despite the reported drafting of nationalisation laws, there remains a possibility the government will seek a private buyer instead.

Potential candidates for acquisition have emerged, including Miami-based retail investor Michael Flacks, who declared himself very interested in February. Additionally, Sev.en Global Investments, the owner of the UK's largest electric steelworks, suggested the government find a single buyer for British Steel and Speciality Steel UK to create the country's biggest steelmaker.

The company's history reflects the complexities of the UK steel sector. Originally formed in 1967 under Harold Wilson's Labour government, it was privatised and broken up by Margaret Thatcher's administration before being acquired by Greybull Capital in 2016. Following insolvency in 2019, Jingye purchased the business in March 2020 but failed to secure agreements for new electric arc furnaces, leading to the threat of closing the blast furnaces in April 2025.

British Steel continues to support tens of thousands of jobs in the extended supply chain, making its preservation a key policy objective. The government maintains that safeguarding UK steelmaking is a priority, though the final outcome of negotiations between the state and Jingye remains undetermined.