Parliament has cleared the way for the government to take British Steel into public ownership. The Commons approved a set of House of Lords amendments to the Steel Industry (Nationalisation) Bill on Tuesday, and deputy speaker Judith Cummins told MPs the next day that the bill had received royal assent and was now law.
Here’s what that means in plain terms. Ministers now hold the legal power to take over steel companies when they judge it necessary in the public interest. The Department for Business and Trade said the Steel Act exists to protect “a foundation industry that supports our critical national infrastructure, economy and defence,” and that the government is “strongly minded to use these powers in relation to British Steel.”
The company’s Chinese owner, Jingye, never agreed to a deal. Talks with the government on a funding package to modernise operations dragged on for the better part of a year and failed. According to the government, Jingye then weighed cutting back production at Scunthorpe sharply, or closing it, which would have left the UK without large-scale primary steelmaking.
Why Scunthorpe
Scunthorpe is home to the country’s last two working blast furnaces for making steel from raw materials. Parliament had already acted once. Earlier this year it met in a rare emergency Saturday session to pass powers letting the government direct operations at the site, and those powers stopped Jingye from shutting the furnaces. The company stayed in private hands, though.
In May the government announced it would nationalise British Steel. Business Secretary Peter Kyle said he had “decided to nationalise the business to secure Britain’s steelmaking capability and maintain production in the national interest.”
British Steel has named a new interim management team to steady operations and draw up a long-term plan that can pay its own way. Interim Chief Executive Allan Bell called it “a momentous day for British Steel, but also for Britain and UK manufacturing.” The government says the move protects thousands of jobs at the plant and across its supply chain.
Politics and compensation
Energy minister Chris McDonald told MPs the government was “acting decisively and with a purpose in the national interest.” Shadow business secretary Andrew Griffith disagreed. “Nationalisation is a bad idea,” he argued, and he put the blame for steel’s troubles on Energy Secretary Ed Miliband’s “addiction to ruinously high energy prices.”
North Lincolnshire Council leader Rob Waltham called the news “really welcome” because it “gives a certain future for steel-making in Scunthorpe.” He added a warning. “You don’t build much without steel, you don’t deliver much without steel and, certainly, you don’t defend yourself without steel,” he said, but “the government will never have enough money to invest in what we will need to make sure we’ve got a sustainable steel industry going forward.”
Money is the open question. Jingye says it has begun seeking compensation, and it had earlier claimed the business was losing £700,000 a day. The government has said it could limit or refuse any payment. An independent valuer will decide whether Jingye is owed anything for the compulsory acquisition.
Sources
- British Steel nationalisation bill passed by Parliament
- UK takes over British Steel to Safeguard the Nation’s Last Blast Furnaces
