UK Government Lacks Plan for British Steel Amid Significant Losses

Ministers have failed to develop a credible strategy for the turnaround of British Steel, with the company accumulating losses exceeding £500 million since its nationalization, according to a critical report from the House of Commons public accounts committee.

The cross-party committee stated that the government is "unable to articulate" a business plan for the troubled firm, which was taken into public ownership over a year ago. The report highlights that British Steel is currently losing approximately £1.3 million per day. Since the government took control, more than £500 million of taxpayer money has been lost.

Clive Betts, deputy chairman of the committee and a Labour MP, described the "startling levels of funding" as unsustainable given the broader needs of the steel sector. He acknowledged that the decision to nationalize the firm, thereby preventing its closure, was understandable due to the importance of protecting "a critical part of our national infrastructure and security."

However, Betts added, "Having brought British Steel onto the taxpayers’ books, it is now up the government to explain its plan for the future. Unfortunately, beyond simply propping up the company with public money, the government was not able to outline such a plan to our inquiry. The reality is that British Steel is unable to wash its face and government is now in charge of making sure it gets onto a sustainable footing."

Ministers assumed control of the company's Scunthorpe steelworks in April of the previous year after negotiations with its Chinese owners, Jingye, broke down. At the time, Jingye indicated the plant was incurring daily losses of £700,000 and was no longer viable. The company was formally nationalized in July of last year.

By mid-June of this year, the government had provided the firm with £555 million to cover operational costs such as raw materials and wages. The committee noted that ministers were "unable to provide even indicative estimates" of the final financial burden on taxpayers, opting instead to "continue to fund it without a clear end in sight."

The report also raised concerns that tariffs implemented to shield British Steel from foreign competition are now negatively impacting other sectors of the economy. Evidence presented to the committee suggested that these tariffs could lead to the bankruptcy of some British engineering firms that rely on steel products unavailable domestically. MPs have called for an end to government complacency regarding small businesses being forced out of operation due to the steel tariff regime.

Separately, another House of Commons committee has urged ministers to take control of the debt-ridden water company Thames Water. A report from the Commons environment committee recommended rejecting a £10 billion rescue proposal from creditors, arguing it does not prioritize the interests of the public, the company, or the environment. The committee suggested creditors aim to "extract immediate value from Thames Water, not steer it to long-term success" and advocated for the company to be placed into a state-controlled "special administration" regime.

The Department for Business, Industry and Trade stated that the nationalization of British Steel was merely the "first step" toward securing its long-term future. A spokesperson asserted that "Taxpayer value for money remains a central consideration in our assessment of the future of the site, and we are also backing the communities that rely on it through our steel strategy to build a sustainable, competitive and decarbonised steel sector for the years ahead."