Government risked ‘throwing good money after bad’ in steel talks – Reeves

The Government risked “throwing good money after bad” in its negotiations over the Scunthorpe steelworks, the Chancellor has said.

Taking questions about whether ministers would bring the North Lincolnshire steelworks into public ownership, Rachel Reeves pledged that the Government would “play a big role” in its future.

MPs gathered in Westminster last weekend, when Parliament was recalled from recess on a Saturday for the first time since the Falklands War in 1982.

They passed the Steel Industry (Special Measures) Act, which gives the Government powers to tell steel companies in England that they must keep facilities open, with criminal penalties for executives if they fail to comply.

The Government had previously been in talks with British Steel’s owner Jingye, amid efforts to keep the Scunthorpe blast furnaces open after the Chinese company unveiled plans to close them.

Earlier on Thursday, Conservative Party leader Kemi Badenoch said the Labour Government might be “too close” to Beijing.

Asked how long the Government would “wait before nationalising British Steel”, the Chancellor told broadcasters: “It was really important on Saturday in that emergency sitting of Parliament that we took control of the company to ensure that we could bring in the raw materials to keep the blast furnaces running.

“And I’ve had the opportunity to talk to the British management team, workers and the three different trade unions represented here to talk about the future.

“We now have that control. We’re bringing in those raw materials, and I am certain – and the workers and the management team are certain – that there is a bright future for the steelworks here in Scunthorpe, and the whole community.”

Speaking in Scunthorpe, Ms Reeves added: “At the moment we have control of the company.

“There is no time limit on that, so we are able now to act as the management team and work with the management team here.

“Nothing is off the table.

“We did previously try to negotiate with the owner. That was not successful; it would have been throwing good money after bad.

“It was the right thing to do to take control of this company, and nothing now is off the table as we look for a new future, not with the previous owners, but a new future with new investment here in Scunthorpe.

“And of course, Government are going to play a big role in that.”

Alun Davies, the Community trade union’s national secretary for steel, praised the Government, which he said “understands, appreciates and stands with our steel industry”.

He said: “Our members at British Steel were grateful for the opportunity to meet the Chancellor today and expressed their thanks for the Government’s recent actions to secure the future of the Scunthorpe steelworks.

“We know that without the Chancellor’s support, safeguarding the site would not have been possible.

“In her discussions with our reps and officials, the Chancellor reiterated the Government’s support for the workforce at British Steel and the sector more widely, emphasising that steel is essential to her vision for economic growth and industrial renewal across the UK.”

On the local election campaign trail on the outskirts of Ely, Cambridgeshire, Mrs Badenoch called for a “proper plan and a proper strategy” for dealing with China.

She told the PA news agency: “I worry that this current Government is too close to it.

“I think (trade minister) Douglas Alexander has been out there trying to get, you know, investment on green tech at a time when we’re trying to get China out of steel, for example, and out of critical national infrastructure.”

Asked what a “proper plan” is, Mrs Badenoch replied it would be “one where citizens being picked up in this country, being kept in all sorts of random prisons that the Chinese embassy has set up, we need to really crack down on that”.

She added: “We need to look again at the investments that Chinese companies are making, how many of them are actually really at the behest of the Chinese government, how much are they getting involved in national infrastructure across the board.”

In a statement posted to X, formerly Twitter, British Steel thanked “the UK Government and politicians across the political divide for their support”.

It read: “Wednesday saw vital raw materials unloaded at Immingham, before bringing them to British Steel’s blast furnaces as Scunthorpe.

“Given just a week ago the future of the steelworks stood in the balance, it has been remarkable to see the country rally around the last remaining blast furnaces.

“Following a challenging time for the business, we have hope for the future of steelmaking in Scunthorpe given the strategic importance of rail and construction steel products which are vital to support the UK’s infrastructure projects which contribute to our growing economy.

“For over half a century, British Steel has been monumental in supporting our country’s industry.

“There is a bright future for steel in Scunthorpe.”