The UK government has taken control of British Steel, placing the company into public ownership in a move aimed at safeguarding the nation's steelmaking capacity. The decision secures the future of the Scunthorpe steelworks, which employs approximately 2,700 people and supports numerous other industries in the region.

The future of the steelworks has been uncertain for several years, with the government previously seeking private investors. The nationalisation follows a period of governmental control initiated last year after the Chinese firm Jingye Group, which previously owned British Steel, flagged potential closure of its blast furnaces.

Prime Minister Sir Keir Starmer stated that the decision protects skilled jobs and a vital national capability. Business Secretary Peter Kyle emphasized that the focus is now on stabilizing the business, supporting its communities, and building a sustainable, decarbonized steel sector. The government will need to cover immediate running costs while an independent assessor determines any compensation for Jingye.

This action was enabled by legislation passed on Wednesday, allowing the government to nationalize steel companies when deemed necessary in the public interest. The Department for Business and Trade confirmed that the powers would be used for British Steel, citing its importance for critical national infrastructure, the economy, and defence.

Jingye Group has indicated it is seeking compensation for the nationalisation, having previously reported the business was losing approximately £700,000 per day. However, the UK government has stated it may limit or refuse such compensation.

In March, a report by the National Audit Office noted that the Scunthorpe steelworks was costing the government around £1.3 million per day. The government's intervention aims to prevent the loss of primary steel production in the UK, which would lead to complete reliance on global supply chains.

If the blast furnaces had been shut down, the UK would have lost its capacity for primary steel production. The government's intervention aims to prevent this scenario and maintain a foundational industry crucial for national resilience.

The Steel Act provides the government with the authority to nationalize steel companies when deemed essential for public interest, particularly for industries supporting critical national infrastructure, the economy, and defence.