Keir Starmer is stepping in to seize control of British Steel to stop its Chinese owner shutting the Scunthorpe plant in an unprecedented move that paves the way for likely nationalisation.
The prime minister was granted a recall of parliament on Saturday, with MPs set to debate emergency laws that will give the business secretary, Jonathan Reynolds, the power to direct the company.
When the legislation is passed, Reynolds will be able to order the company to buy the raw materials to keep two blast furnaces going at the plant and the taxpayer will take on the costs of the purchases. The company’s owner, Jingye, has said it is losing about £700,000 a day.
The issue of nationalisation will be dealt with separately and is not certain to happen, but senior sources said it was the likely outcome and the government would look at potential private sector partners for a transfer of ownership and co-investment.
The company declined to comment and it remains unclear how Jingye will respond to being directed by the UK government.
Government sources said generous offers had been made to the Chinese company that any rational actor would have accepted, and that the UK was taking action to keep the furnaces going in order to continue talks about the next steps. Once they had been allowed to stop, the furnaces would be impossible to restart.
Speaking on Friday, Starmer said the “future of British steel hangs in the balance” and he would not stand by while the last blast furnaces in the UK were closed, shutting an essential industry.
The GMB union said the move looked like “the first step in the process” of nationalisation, saying it was the only way to save the UK steel industry.
“The business secretary must be given huge praise for acting decisively to safeguard this vital industry and the thousands of jobs that rely on it,” the union said.
A No 10 spokesperson said: “The prime minister has been clear, his government will always act in the national interest. All actions we take are in the name of British industry, British jobs and for British workers.
“Tomorrow, parliament will be recalled to debate the steel industry (special measures) bill. The bill provides the government with the power to direct steel companies in England, which we will use to protect the Scunthorpe site. It enables the UK government to preserve capability and ensure public safety. It also ensures all options remain viable for the future of the plant and the livelihoods it supports.
“We have been negotiating with British Steel’s owners in good faith ever since coming to office. We have always been clear there is a bright future for steel in the UK. All options remain on the table.”
The Commons will sit at 11am, with MPs called back from Easter recess to discuss putting the assets under public control. The government will aim to get emergency legislation through the Commons and Lords in one day of sitting.
Labour MPs have been told to tell their whips where they are and to make all efforts to return to Westminster to ensure the passage of the legislation.
This week government sources said nationalising British Steel was not easy, and would be a measure of last resort.
The last time parliament was recalled during recess was in 2021, when Afghanistan had to be evacuated during the Taliban takeover. It is also the first recall of parliament on a Saturday since 1982.
One MP said the move was “going down extremely badly” with colleagues who had been given no warning about the need to return to Westminster, when it had been known for weeks that British Steel was in trouble.
Some opposition parties were also furious that other industrial plants in trouble had not been given the same treatment from the government. Plaid Cymru said “the people of Wales would not forget” that the steel plant at Port Talbot was allowed to close its blast furnaces and convert to electric arc production, while the SNP highlighted the different treatment for Grangemouth – Scotland’s only oil refinery, which could close. Government sources said those plants were facing different situations.
The Conservative leader, Kemi Badenoch, said the government had “bungled” the negotiations with British Steel.
“They must have seen this coming for a while,” she said. “Instead of addressing it earlier in the week when parliament was sitting, their incompetence has led to a last-minute recall of parliament.”
British Steel makes the vast majority of UK rail track and the government has been seeking a deal to keep the plant open.
The industry will be hit by a 25% tariff on steel exports to the US imposed by Donald Trump but the government has insisted British Steel’s problems are not related to this.
Talks with Jingye’s chair, Li Ganpo, had dragged on for three days after the government offered to buy raw materials to keep the plant running for the next few weeks while trying to find a longer-term solution.
Scunthorpe is the last remaining steelworks capable of making steel from iron ore and so is seen by some people as strategically important for the UK. However, Jingye last month said it planned to close the plant’s two blast furnaces, putting 2,700 jobs at risk. It has since refused to pay for new raw materials, with coal and iron ore deliveries to Immingham port not yet paid for.
The government had offered £500m in financial support to switch the blast furnaces to cleaner electric arc furnaces, but Jingye had requested much more.
Talks this week are thought to have stalled when Jingye balked at the conditions attached to the offer to pay for new raw materials. The delays in reaching an agreement had caused increasing alarm among workers, who feared at least one blast furnace might be forced to close as soon as next week, leading to job losses.
