Steel-ing the spotlight: The fallout of British Steel

After rejecting a £500 million state rescue package, there was no returning to the negotiation table. The tense stand-off with Chinese firm Jingye, British Steel’s parent company, resulted in Parliament being recalled on Saturday to discuss the continued viability of British Steel. Citing daily financial losses of £700,000, Jingye stated the two blast furnaces were “no longer financially sustainable.”

This rare occurrence, marking the first weekend recall since 1982, resulted in emergency legislation approving ministers to place British Steel under temporary state control. Today, the Government confirmed that coking coal and iron ore will be delivered from the United States to keep the Scunthorpe plant's blast furnaces running for the coming weeks. The furnaces, nicknamed Queen Anne and Queen Bess, will not yet face the guillotine.

The rhetoric has been highly contentious, to say the least. Whilst Conservative MP Sir Christopher Chope characterised Jingye as causing “industrial sabotage,” Shadow Business Secretary Andrew Griffith MP accused Energy Secretary Ed Miliband of “nauseating hypocrisy” blaming net zero and the subsequent price of energy for the steel industry's decline.

Reform UK has been particularly vocal on this issue, as expected. The Sun splashed “Britain is broken” across its front pages today with the local elections fast approaching, referring to a recent opinion poll. Notably, this is also the first part of Reform’s slogan. In some ways, a semi-endorsement of Reform UK by the red top, which had previously backed Labour, does not bode well for Labour’s ‘low-key’ election campaigns.

Beyond the local elections, Wales must not go unnoticed. Plaid Cymru’s Liz Saville-Roberts stated that while Scunthorpe gets security, Port Talbot “gets a pittance.” As Port Talbot was refused nationalisation just six months ago, Reform UK has greater ammunition against the Labour Party for the upcoming 2026 Senedd elections. Recent polling suggests a three-way split between Welsh Labour, Plaid, and Reform UK, and the issue of steel has now become a political football.

Already under pressure from President Trump's 25% levy on all steel imports, the Government has made it clear that nationalisation is a real possibility. Now, questions abound about what this means for net zero and the current high electricity costs in energy-intensive industries. The Times and FT suggested that the biggest loser of the British Steel debacle could be Energy Secretary Ed Miliband and his 2030 clean power ambitions.

Senior parliamentarians have also urged Ministers to review the security implications of Chinese investment and supply chains following concerns around Jingye, and the Inter-Parliamentary Alliance for China has called for the “strategic disentanglement of UK critical infrastructure from the Chinese state.” Yet, de-risking supply chains must coexist with growth and net zero, and the focus should remain on the longevity of the energy industry.

Instead of fixating on blaming net zero for the steel industry's decline, it is crucial to view this as an inflection point for how we will power energy-intensive industries in the future. As the government will now focus on transitioning the Scunthorpe plant to one that uses electric arc furnaces (EAFS), the crisis has brought forward a decision about what type of steel industry the UK needs.

Even with the more environmentally friendly EAFs, steelmaking remains energy-intensive and will require continued investment and coordinated energy usage thinking. As the UK still sees the highest energy costs in the world, the focus now needs to remain on the price disparity, which is driven by wholesale energy prices and acutely exposed to fluctuations in gas prices.

A recent Confederation of British Industry (CBI) analysis showed that the net-zero economy grew by 10% in 2024. It generated £83 billion in gross value added, underlining that economic growth and climate action can go hand in hand. Squaring that circle to deliver clean energy in the long term and lowering industry bills in the immediate future is now paramount.