The UK government must set out a credible long-term plan for British Steel rather than continuing to support the company with public money, MPs have warned, as the cost of running the nationalised business reaches £1.3mn a day.
The Public Accounts Committee said the Scunthorpe steelworks had already received more than £600mn in public funding before being brought into public ownership in July. Government spending was estimated to have reached £642mn by June, while the plant continues to incur daily costs with no clear end date.
The committee said ministers had been unable to provide a viable business model or decarbonisation pathway for the site, which contains Britain’s last remaining blast furnaces.
Clive Betts, deputy chair of the PAC, said the nationalisation had secured a strategically important industrial asset but had not addressed the underlying financial problem.
“The reality is that British Steel is unable to wash its own face, and Government is now in charge of making sure it gets onto a sustainable financial footing for the future,” he said.
The plant was taken into public ownership after its previous Chinese owner, Jingye, threatened to shut the blast furnaces. Emergency legislation was used to secure control, with ministers arguing that allowing the company to fail would leave Britain dependent on imported primary steel.
The PAC said the intervention had been necessary but represented only the beginning of the process.
Mr Betts said: “Government moved swiftly to save British Steel – all well and good, and our Committee, of course, welcomes this action as a means of safeguarding a critical part of our national infrastructure and security.
“But this was just the beginning. Having brought British Steel onto the taxpayers’ books, it is now up to government to explain its plan for its 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 committee also questioned whether the funding committed to British Steel could constrain support for the wider sector, including a £2.5bn government commitment.
Following the planned acquisition of Speciality Steel UK, Mr Betts called for “assurances that the startling levels of funding British Steel is currently receiving do not come at the expense of the wider sector”.
He said: “The recent move from the government to acquire Speciality Steel emphasises the point that government can’t spend all its money supporting British Steel, when clearly there will be a need to support other parts of the industry.
“We have seen admirable short-term support from the government in steel on a number of fronts, but in the long-term, our report must serve as a challenge to the administration as we ask once again: what’s the plan?”
Gareth Stace, director general of UK Steel, said work was under way to secure the plant’s future and pointed to the recent appointment of Alan Lovell as chair.
“The Government was absolutely right to step in and secure British Steel, safeguarding strategically important steelmaking capability, thousands of jobs and vital supply chains,” he said.
The government said securing the future of UK steel was in the “national interest”, adding that taxpayer value for money would remain central to decisions over the site.
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