The full nationalisation of British Steel is set to be announced in the King’s Speech next week, according to reports. The move comes 13 months after the government saved the nation's steel industry from the brink of collapse by seizing day-to-day control of the business's works in Scunthorpe last year.
However, economic control of the plant has remained in Chinese hands since then, leaving the company in what has been described as "a halfway house" that has rendered vital modernisation impossible. Business department officials are now understood to have almost finished drafting legislation for the state to fully take control, with an announcement confirming the plans expected to be included in the King’s Speech on Wednesday.
Government's Rescue Package
It was feared the sun was setting on British Steel's Scunthorpe plant in April last year, but the government saved it with a last-gasp rescue package. The Scunthorpe site is home to the UK's two remaining blast furnaces, which make iron, then steel, from scratch by combining iron ore with coking coal. The rescue package came after claims of a plot by Chinese shareholder Jingye to strip Britain of its ability to produce “virgin” steel.
The historic Bill saw the House of Commons sit on a Saturday for the first time since 1982, after Argentina's invasion of the Falkland Islands, and only the sixth time since the end of the Second World War, to enact laws giving the UK state operational control. The Bill stopped short of fully nationalising the firm but allowed the government to step in and ensure the furnaces did not "go cold".
Ongoing Discussions with Jingye
Despite the reports, Whitehall sources last night warned details of the King’s Speech are still being finalised and references to British Steel could be pulled. It was reported it is also possible an announcement could be fast-tracked. A government spokesman told the Times: “We’ve been clear that safeguarding UK steelmaking is our priority. We’re continuing discussions with Jingye to agree a pragmatic and realistic solution to secure the long-term future of the Scunthorpe site. Discussions are ongoing and no conclusion or decision has yet been reached.”
Business Secretary Jonathan Reynolds had earlier accused Jingye of failing to negotiate in good faith and suggested the firm was effectively trying to extort hundreds of millions of pounds of taxpayers' money from the government, with no conditions to stop the money being transferred to China. At the time, Mr Reynolds told MPs: "We could not, will not and never will stand idly by while heat seeps from the UK's remaining blast furnaces without planning, or respect for, the consequences. That is why I needed colleagues here today."
Mr Reynolds said the government had even offered to buy necessary raw materials for the blast furnaces, but a counter offer from Jingye demanded "excessive" support. He added: "Over the last few days it became clear Jingye's intention was to refuse to purchase sufficient raw material to keep the blast furnaces running - in fact their intention was to cancel and refuse to pay for existing orders. The company would therefore have irrevocably closed down primary steel making at British Steel."
Compensation Package
Government officials have since been in talks with Jingye over a potential compensation package in which UK taxpayers would pay Jingye for its British Steel shareholding. Jingye was reportedly demanding more than £1 billion from the government before snubbing an offer from the UK worth tens of millions of pounds in exchange for economic control of the business in March. It is unclear whether the new legislation drawn up by officials envisages compensating Jingye for its stake.
