1. the ever-brilliant House of Commons Library published British Steel and government special measures, June 23rd. Some notes.
On 12 April 2025, Parliament passed the Steel Industry (Special Measures) Act 2025, giving the Secretary of State powers to issue directions or take control of steel undertakings in England at risk of closure. This allowed the government to take control of British Steel’s operations, including securing raw materials, and maintaining blast furnace activity.
What is it costing
2. On 20 June 2025, the Minister for Industry, Sarah Jones stated that the amount of working capital provided for British Steel since passing the emergency legislation on 12 April stood at £100 million.
On 27 March 2025, announcing its plans to consult on closing the two blast furnaces at Scunthorpe, British Steel said that despite Jingye’s investment of £1.2 billion since 2020, the operation of the blast furnaces caused losses of £700,000 a day. British Steel’s costs of building an electric arc furnace have previously been estimated to exceed £1 billion.
Comment. 0.7m per day is £255m per year.
Employment.
3. The company had opened a formal consultation on “the closure of the blast furnaces, steelmaking operations and a reduction of steel rolling mill capacity in Scunthorpe”, which means a consultation with its workforce on redundancies.14 The closure of blast furnaces at Scunthorpe would put 2,700 jobs at risk out of a workforce of 3,500, according to BBC News
in UK Steel Industry: Statistics and policy we learn
"According to the latest (May 2024) UK Steel estimates, the industry employs 33,700 people and a further 42,000 in the wider supply chain."
Comment. 2,700 jobs is 8% of the whole workforce. A payment of £255m per year is £94,000 per job. There is more or less full employment in the UK at the moment. It's not clear those individuals wouldn't get another job.
Green.
4. From in UK Steel Industry: Statistics and policy we learn:
"The steel industry is a significant contributor to greenhouse gas emissions. It is responsible for 13.4% of greenhouse gas emissions from manufacturing, and 2.2% of total UK greenhouse gas emissions, while it contributes 0.1% of the UK economy and 1.0% of UK’s manufacturing output."
"Two main methods dominate steelmaking in the UK: the blast furnace and electric arc furnace method"
Tata Steel has closed its blast furnaces at Port Talbot and is investing in EAFs, as set out in more detail in section 6. Also British Steel had plans to decarbonise steelmaking at Scunthorpe by closing its blast furnaces. This together was estimated to reduce the UK’s territorial greenhouse gas emissions by 2%
However, the extent to which an EAF is green will depend on the electricity that powers it. For example, if the electricity is produced from fossil fuels, the EAF will have limited emissions savings, whereas if the electricity is produced from a mixture of technologies including some that are low carbon (as the electricity grid in the UK is) then the EAF does provide emissions reductions to the steel making process.
Comment. So if we are to decarbonise then we will have to spend on an EAF. This is estimated to be £1bn.
Energy costs
5. UK electricity prices for very large industrial consumers in the second half of 2023 were higher than for any EU member state. They were 23.04 pence per kWh which was 71% above the median price in the EU.
The main support measure for energy intensive industries’ electricity costs is a series of exemptions and compensation. The government provides compensation or exemptions to energy intensive industrial users for the indirect costs (higher electricity prices) associated with funding certain decarbonisation policies. The policies include the climate change levy, contracts for difference mechanism, renewables obligation and feed-in tariffs. The government said in November 2023 it had provided the steel sector with more than £730 million of relief since 2013 to make energy costs more competitive
Comment. So additional support comes from these exemptions.
Security
6. "With the closure of the blast furnaces at Port Talbot, and the possible closure of British Steel’s blast furnaces in Scunthorpe, and the transition to solely electric arc steelmaking, the UK would lose its primary steelmaking capacity. 150 Should that happen, the UK would be the only G20 country that does not produce its own virgin steel. This has led to some questions around national security and whether virgin steel production should be retained as a sovereign capabiliy".
"According to the Royal United Services Institute for defence and security studies, prime contractors supplying the MoD have a mixed record on the use of UK steel. The Financial Times reported the facilities at Port Talbot were not used to produce steel used in defence"
"In the Opposition Day Debate on 23 January 2024, the Secretary of State for Wales acknowledged that historically there was an issue with the quality of the steel produced in an arc furnace. Experts had reassured him, however, that it was steadily improving. He said: Tata expects an electric arc furnace to be able to supply about 90% of the products that it currently supplies through the blast furnace"
the Business and Trade committee take the view " The committee refers to evidence that blast furnaces still play a critical role in strategic and high-grade steel production, including for infrastructure construction. Keeping the Scunthorpe blast furnace open would maintain supply chains"
Comment. It's a bit obscure to me whether this steel is security necessary. And if it needs blast furnaces then it won't be very green.
Updates.
1. the New York Times reports, August 22nd 2025, "for the second time this year, the British government is set to take control of a large, ailing steel business.
The move comes after a court approved on Thursday the liquidation of the unit, called Speciality Steel UK, which is part of Liberty Steel, a metals business started by the industrials entrepreneur Sanjeev Gupta. The government is expected to guarantee pay for the nearly 1,500 employees there"
2. speaking in Parliament, we have the minister: it's not clear, but I think she is supporting the workforce on furlough.
But she then advances a new argument regarding Scunthorpe:
"It is worth noting that Liberty Speciality Steels uses electric arc furnace technology that can be powered up or down as needed"
"The circumstances in Scunthorpe were fundamentally different. British Steel operates the UK’s last remaining blast furnaces—assets that, once shut down, cannot simply be restarted. Allowing those blast furnaces to be closed pre-emptively would have removed our ability to make strategic choices about the future of steelmaking in Scunthorpe, and that was not a position this Government were prepared to accept. Scunthorpe was therefore a truly exceptional situation and that is why we took the unprecedented step of implementing the Steel Industry (Special Measures) Act 2025 to maintain the safe operation of the blast furnaces."
As for Liberty, the support seems to be for the workforce:
"The situation with Liberty Speciality Steels is not comparable. The company was issued with a winding-up order by the High Court due to longstanding financial issues. Spending taxpayers’ money on a company operating in such a way would have exposed taxpayers to hundreds of millions—potentially billions—of pounds in hidden costs."
