British Steel Daily Losses Double Under Government Control to £1.3 Million
Losses at state-run British Steel have skyrocketed to an alarming £1.3 million per day, according to a damning new report from the National Audit Office. This figure represents almost double the daily losses recorded under previous Chinese management, highlighting the severe financial strain of the government's intervention.
Mounting Taxpayer Costs and Uncertain Future
The NAO's investigation reveals that £377 million has been spent between the government's emergency takeover in April last year and January this year. This bailout, classified as a loan by the Department for Business and Trade, shows no signs of abating. Auditors warn that costs could continue to accumulate, potentially reaching a staggering £1.5 billion by 2028 if current trends persist.
Operations are currently running without a set budget, repayment schedule, or definitive end date, creating significant uncertainty for taxpayers. Furthermore, a formal agreement to compensate former Chinese owner Jingye and transfer full ownership of the company and its assets remains unresolved.
Emergency Takeover to Save Jobs and National Infrastructure
The government rushed to assume public control of British Steel in April under emergency legislation, recalling MPs to Parliament on a Saturday. This drastic action was taken after Jingye announced plans to close the Scunthorpe site, home to Britain's last remaining blast furnaces, where it claimed losses were running at £700,000 daily.
The NAO report confirms that closure would have resulted in the loss of 3,200 jobs at Scunthorpe and severely impacted major customers in the supply chain, including critical infrastructure projects and Network Rail. The government argued that keeping the blast furnaces operational was vital for national security, ensuring Britain retains the capacity to produce its own virgin steel.
Breakdown of Expenditure and Industry Challenges
The £377 million spent to maintain operations includes:
- £359 million allocated to the company for essential operating activities such as raw materials, payroll, and other costs.
- £15 million paid to external advisers.
- An additional £274 million of public money was spent up to early December, equating to approximately £1 million per day at that stage.
Since the takeover, losses have intensified as British Steel struggles to compete with cheap Chinese imports and faces the threat of European trade tariffs. The industry is further hampered by the highest energy costs in Europe, exacerbated by global events, alongside a 25% US tariff and potential EU import charges.
Political Criticism and Calls for Strategic Clarity
Gareth Davies, head of the NAO, acknowledged the government's swift action prevented immediate closure and massive job losses. However, he emphasised the trade-off: "the significant cost of maintaining operations, and uncertainty over how long this will continue." He urged the Department for Business and Trade to learn from this experience to be better prepared for any future interventions.
The report's publication coincides with growing frustration within the steel industry over the government's delayed strategy for the sector, originally promised by last autumn. Shadow business secretary Andrew Griffith accused ministers of leaving the industry in "limbo" and being "incapable of delivering a timely plan." Meanwhile, Conservatives have previously criticised the nationalisation as "botched," noting taxpayers are propping up a firm whose assets, including the Scunthorpe furnaces, are still technically owned by the Chinese company.
With taxpayer spending projected to hit £615 million by June and the potential to exceed £1.5 billion in 2028, the future of British Steel remains a costly and unresolved challenge for the government and the public purse.
