British Steel plan lacks credibility, MPs say

British Steel plan lacks credibility, MPs say

British Steel was brought into public ownership in July after years of uncertainty about its future.

MPs have said the government has no credible plan for British Steel’s future.

A report from the Public Accounts Committee (PAC) said the Department for Business, Innovation, Science and Trade (DBIST) had not explained how British Steel, which operates its main plant in Scunthorpe and has sites in Teeside, would return to profitability.

MPs also warned that steel tariffs could force companies out of business or push them to relocate overseas.

A DBIST spokesperson said the department welcomed the report and would examine its recommendations, adding that securing the long-term future of the UK steel sector "was in the national interest".

The report, published on Friday, said the government could not give clear estimates of the total cost of nationalisation.

It had forecast costs of £642m by 30 June this year, but the government later said the figure had been only £555m.

In April last year, the government passed emergency legislation to take control of British Steel after reports that then-owner Jingye was planning to shut down two blast furnaces in Scunthorpe.

The Steel Industry (Nationalisation) Bill became law in July, bringing the company into public ownership.

The government then released its steel strategy in March this year, including an aim for 50% of steel used in the UK to be made in Britain.

The strategy confirmed electric arc furnaces as the future of British steelmaking, replacing traditional blast furnaces, which led to job losses at steelworks including Port Talbot.

It also noted that British Steel’s 4,052 workers face uncertainty, and said the steel strategy remains vague about when the 50% target will be reached.

The report said: "Without a credible long-term plan, uncertainty and costs for workers, industry and taxpayers will continue to increase."

It also raised concerns that the new tariff regime, introduced in an effort to boost British Steel production and use, could cause smaller businesses to fail.

From July, Britain cut the tariff-free quota for steel importers by 51% to stop the UK becoming a "global dumping ground".

It also raised import taxes on steel entering the UK above certain levels from 25% to 50%. However, firms said some steels they need would be affected by the tariffs, but cannot be sourced in the UK.

The PAC said: "This risks steel manufacturers having to pay tariffs on types of steel that they cannot avoid importing.

"There is a risk that businesses reliant on these products will face higher costs, which could result in smaller firms going out of business or companies moving production overseas."

The PAC said the government needed to establish a "formal route" for steel companies to raise concerns about the new tariff regime.

The DBIST spokesperson said: "Taxpayer value for money remains a central consideration in our assessment of the future of the site and we are also backing the communities that rely on it through our steel strategy to build a sustainable, competitive and decarbonised steel sector for the years ahead."