Labour nationalises British Steel to protect 'vital national capability' but Tories warn against 'blank cheque' for industry

By RICHARD MARSDEN, GENERAL REPORTER Published: 16:24, 16 July 2026 | Updated: 16:57, 16 July 2026 Labour’s renationalisation of British Steel went ahead today as the Tories urged the government not to write a ‘blank cheque’ for the industry. Ministers said the decision would ‘protect thousands of jobs, support industry that relies on UK made steel and helps to safeguard supply chains, major infrastructure projects and national security’. A new leadership team will be appointed ‘to focus on stabilising the business and developing a commercially sustainable, low-carbon future’. Meanwhile, an independent assessor will be appointed to determine if the company’s previous Chinese owner Jingye, which still legally owned the company until today, should receive any compensation for being stripped of the loss-making firm. The move follows the Steel Industry (Nationalisation) Act receiving Royal Assent and means the country’s last two blast furnaces at Scunthorpe, North Lincolnshire, are now formally under state ownership for the first time since privatisation in 1988. The furnaces produce 3.2 million tons of steel per year - two-thirds of current national capacity, which is used in construction and infrastructure projects and to maintain the country's railways.  But the Tories voiced concern about how much more public money will be spent on top of the £1m a day Scunthorpe has been losing since it was taken into state control last April to prevent its then Chinese owners from switching the furnaces off. Andrew Griffith, shadow business secretary, said: ‘A blank cheque from the taxpayer isn’t the answer. You can’t fix steel without ditching Labour’s ruinously high energy costs.’ The British Steel site at Scunthorpe is home to Britain's last two blast furnaces He added: ‘Ministers need to stop channelling 1970s nationalisation vibes and come up with a proper plan to stop the deindustrialisation of Britain’. Mr Griffith said no compensation should be paid to Jingye and that the company should instead be liable for eventual decommissioning costs when Scunthorpe’s ageing furnaces are eventually replaced with more modern facilities. He said: ‘The issue isn’t compensation to China. It’s whether the taxpayer should be picking up their billions of pounds of liabilities for decommissioning Scunthorpe’. Business Secretary Peter Kyle said: ‘British Steel is one of the nation’s biggest steel producers, and I’ve made the decision to nationalise the business to secure steelmaking capability and maintain production in the national interest. ‘British Steel now belongs to the British people, and our focus is on the future: stabilising the business, backing the communities that rely on it and building a sustainable, competitive and decarbonised steel sector for the years ahead.’ Speaking on BBC Radio 4’s Today programme, he said the alternative of allowing Scunthorpe – the last UK site producing virgin steel, seen as vital for defence and national infrastructure needs - to close would have left Britain ‘in hock to global markets’. He said a long-term decision on replacing the blast furnaces – potentially with another technology to produce virgin steel which could include natural gas - ‘will be a decision for this business and the government to decide going forward’. The government emphasised that steel ‘plays a vital role in the UK economy, supporting major construction projects, transport networks, energy infrastructure, defence and the delivery of our Modern Industrial Strategy’. Business and Trade Secretary Peter Kyle on a visit to Scunthorpe steelworks Mr Kyle’s department published its long-awaited Steel Strategy in March detailing plans to invest £2.5bn in the UK steel industry before the next general election in 2029. Officials have also pledged to dramatically improve procurement from British producers, aiming for ‘50% of steel used in the UK to be made in the UK’. But there is continued criticism over the impact on Britain’s steel sector from the UK’s high energy prices and green levies. The Department for Business and Trade said an independent assessor will be appointed to assess whether any compensation is payable to Jingye. A spokesperson said: ‘Draft compensation regulations will be laid in the Autumn setting out the process for compensation, under which the independent valuer would determine what, if any, is payable.’ Renationalisation of the firm, which employs 3,500 people including 2,700 at Scunthorpe, was also backed by trade unions. Community, whose General Secretary Roy Rickhuss said: ‘This new law will help to safeguard thousands of jobs, ensuring greater stability in an industry which has had to weather many storms in recent years.’ British Steel Interim CEO Allan Bell said: ‘This is a momentous day for British Steel, and everyone connected with our business – our dedicated employees, our valued customers and suppliers, and the tens of thousands of people in our supply chains and local communities.’ Gareth Stace, director general of trade body UK Steel, said: ‘Bringing British Steel into public ownership is the right move. ‘As the next government takes office next week, its priority must now be to deliver a long-term plan that restores British Steel to commercial sustainability, secures investment in modern, low-carbon steelmaking and creates the competitive business environment the sector needs to thrive.’