The government is set to fully nationalise British Steel this week, taking outright ownership of the loss-making steelmaker more than a year after it seized emergency operational control from its Chinese owner, Jingye Group.
An announcement confirming the plans is expected in the King’s Speech on Wednesday, 13 May 2026, according to the Sunday Times, though details of the speech are still being finalised. The move would end the unusual “halfway house” arrangement under which Jingye retained legal ownership while the government managed day-to-day operations at the Scunthorpe plant under the Steel Industry (Special Measures) Act 2025.
The government took the emergency step in April 2025 amid fears that Jingye was planning to shut down the site. The Chinese company had announced in March 2025 that it was losing £700,000 per day — since reported to be over £1 million daily — due to challenging market conditions, tariffs and high environmental costs. Jingye had also abandoned plans to build an electric arc furnace at Scunthorpe and another in Teesside after negotiations with the government fell through, and then sought to close the blast furnaces entirely.
Closure of the plant would have ended Britain’s primary steel-making ability. British Steel operates the last two remaining blast furnaces in the UK, which allow the metal to be made from scratch — “virgin steel” from iron ore — rather than relying on scrap processed by electric arc furnaces elsewhere in the country. Network Rail sources about 95% of its track from the plant, and in July 2025 the company secured a £500 million contract to supply over 337,000 tonnes of rail track over five years.
From emergency control to full ownership
The government’s intervention last year was a last resort to preserve the UK’s sovereign steelmaking capability. But the financial cost of keeping the business running has mounted rapidly. According to estimates from the National Audit Office, the cost of keeping British Steel afloat had risen to £377 million between 12 April 2025 and 31 January 2026, with daily costs running at around £1.3 million. By 26 March 2026, the government had provided approximately £419 million in working capital. The NAO projected that spending could reach £615 million by June 2026 and, if current rates continue, could exceed £1.5 billion by 2028.
The support has been classified as a loan, but there is no set budget, repayment schedule or end date, raising serious concerns about recoverability. The government has described the situation as unsustainable, with one official noting that the current structure leaves ministers bearing all the financial risk while Jingye retains the legal claim to the company.
Negotiations between the government and Jingye Group have been hampered by significant differences in valuation. Jingye, which bought British Steel out of insolvency in March 2020 for approximately £50 million, has reportedly demanded a substantial payment — earlier demands exceeded £1 billion — while UK offers have been rejected. The Chinese company had also pledged to invest £1.2 billion in the business over the decade following its acquisition, but by November 2022 only £156 million had been invested, with concerns raised that the capital was provided as loans rather than equity.
Financial risks mount as buyers circle
The full nationalisation would transfer all economic control — and all liabilities — to the state. Beyond the immediate working capital costs, the government would inherit the challenge of modernising an ageing plant that has struggled with high costs and international competition. British Steel was bought by private equity group Greybull Capital in 2016 but collapsed into insolvency three years later, before Jingye’s acquisition in March 2020.
Despite the financial strain, the company has attracted interest from potential buyers. Miami-based turnaround investor Michael Flacks declared himself “very” interested in acquiring British Steel in February, describing it as a “plant of national importance” with an “amazing opportunity”. His Flacks Group specialises in distressed companies and he has suggested combining British Steel with another ailing steelworks in Italy to create a large European metals group.
Earlier this month, Sev.en Global Investments, the Czech energy and investment group that owns the UK’s largest electric steelworks, proposed that the government should find a single buyer for both British Steel and Speciality Steel UK, a move it said would create the country’s biggest steelmaker. Sev.en argued that such an arrangement would require lower budgetary expenditure and offer a more stable development model. The company already plans to invest £100 million in the UK, with potential for hundreds of millions more.
The government has previously stated a preference for finding private investors to co-invest in modernisation, but the ongoing stalemate with Jingye and the accelerating financial losses have pushed ministers towards full nationalisation. The Scunthorpe plant employs around 3,500 people — with more recent figures putting the number at approximately 2,700 direct employees — and supports tens of thousands of jobs in the wider steel supply chain.
British Steel’s history echoes its earlier nationalisation: the original British Steel Corporation was formed in 1967 when Harold Wilson’s Labour government nationalised more than a dozen private companies to create one of the world’s biggest steel producers. It was privatised by Margaret Thatcher’s government in 1988 and later broken up. The company then merged with Dutch firm Koninklijke Hoogovens in 1999 to form Corus Group, which was acquired by India’s Tata Steel in 2007. Tata sold its long products division, including Scunthorpe, to Greybull Capital in 2016, which rebranded it as British Steel before it collapsed into insolvency in 2019.
A government spokesperson said: “We’ve been clear that safeguarding UK steel making 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.”
