MPs vote to save British Steel Scunthorpe blast furnaces

In a rare move Parliament was recalled to pass emergency legislation and keep the two blast furnaces at Scunthorpe alight.

That’s after talks between the UK government and the Chinese company Jingye, which owns British Steel, collapsed.

The Steel Industry Special Measures Bill gives the government effective control over the company, though some believe it’s an opportunity to renationalise the steel industry in the UK.

On last minute planes, trains and tubes, MPs scrambled back from their breaks to Westminster, summoned to swap the sunshine for this rare Saturday sitting. Are you going to save the steel industry? Is it time to nationalize British steel? The prime minister’s efforts to save Scumthorp, the UK’s last primary steel maker, sparked today’s attempt to pass legislation in a single day, which will grant the government sweeping powers to block the steel plant Chinese owners Jing from closing down its two blast furnaces. We meet under exceptional circumstances to take exceptional action in what are exceptional times. There was broad agreement on what the government’s trying to do, if not the way they’re doing it. The truth is that the government has made a total pig’s breakfast of this whole arrangement. The fact of the matter is anyone who has been paying any attention to this story over the past few months has known this was coming down the track. Talks with Jingier to keep the furnaces going have broken down. It rejected an offer of500 million pounds from ministers last month after warning operations were no longer financially viable. Over the last few days, it became clear that the intention of Jinger was to refuse to purchase sufficient raw materials to keep the blast furnaces running. In fact, their intention was to cancel and refuse to pay for existing orders. The company would therefore have irrevocably and unilaterally closed down primary steel making at British steel. Today’s emergency measures were not about nationalizing British steel but could be a step towards this. I think there’s an opportunity Secretary of State uh Mr. Deputy Speaker to go further to be bold, be courageous, show your coahones. Let’s nationalize British Steel and make British Steel great again. The new bill will allow the government to force steel companies in England to keep the fires burning and use taxpayers money to supply the materials, protecting thousands of jobs. The government was challenged on why emergency action like this wasn’t taken for the last blast furnace at Port Talbert in Wales or for Scotland’s last oil refinery. Many minds right now will be very much focused on the situation in Grangemouth where we know that hundreds of jobs are going to be lost directly. Thousands of jobs in the supply chain now were I to bring forward a similar bill in respect of Scotland’s only oil refinery. Would the Labor party back it? It is not a comparable situation and the behavior of the company is not comparable to the situation in this case. Within hours, MPs had voted to pass the government’s bill and Kier Starmer had raced north to Skunthorp in this town forged from steel. A warm welcome from workers whose livelihoods are on the line. those blast fences will stay on, and I’m really pleased to be able to come here and deliver that news uh to you. Today’s decision keeps the flames of hope alive here, but it is a reprieve rather than a rescue. Katherine Samson there. Now, earlier as the new steel bill raced its way into law, I spoke to the former Conservative Minister David Davis and asked him whether the ultimate trade-off was now between nationalization or scunthought just going bust. The harsh truth is that something like nationalization was probably going to prove necessary uh because the behavior of the Chinese company Jingi is uh well they’re playing hard ball to put it mildly and that you have to say was done on the watch of the conservative party wasn’t you sold out our British steel industry to China. There’s nothing particularly unusual in that. Some of our own side objected to it. Uh Ian Duncan Smith was one. There were there were others too. Did you? I yes I did but I didn’t make a lot of noise whereas Ian did. But this the simple truth is the circumstance now is very different. I mean back then we were in a world with free trade where we could reasonably expect to get all our supplies whether it’s energy or coal or or steel itself uh from a variety of sources. All of a sudden, post Ukraine, post Putin, post Trump, the world is not a free trade world anymore, and the rules and requirements are very different. Uh, and that’s all happened on this government’s watch. That’s not their fault, but it’s happened on this government’s watch, and they have to respond to it. Let me clutch a straw of optimism. Going forward, government gets in, gets the investment in, gets electric car furnaces, maybe hydrogen technology. Suddenly Skunkthorp becomes a a brand leader, a world leader on an industry which is going green. It’s changing and that then becomes viable and somebody wants to buy it. Any chance? Well, it’s pretty you’re quite right to call it optimistic. The simple truth at the moment is uh got problems for a variety of reasons. The principle one is the sheer cost of energy. Um, uh, energy in this country costs more than any of our competitors, more than France, uh, more than Germany, uh, a lot more than America, and a lot more than China. Uh and so if we want to keep the industry in this country, we’ve got to find a way of altering our environmental, our energy and our industrial policy to make places like scanthorp work to make we have labor parties leading the field on that in terms of international governments in the push for renewables. Well, with greatest respect, we haven’t. I mean, the the Labour party’s policies have made our energy the most expensive. Now, I’m not here to criticize it particularly today cuz I’m trying to help them get this resolved, but it will not be resolved by nationalization. This uh this business uh lost 400 million pounds last year, is losing about 250 million this year. We’ve got to get it back onto a basis where it’s commercially viable. Uh now you if the technology comes you talk about hydrogen and other technologies obviously arc furnaces for for recycling steel but for for new steel for virgin steel you you still we still haven’t got the technology yet if it comes great fantastic and we’ll hopefully have our foot in the door but it hasn’t arrived yet and the problem is we are the least competitive in the world because of our energy costs and we have to put that right. Well, what would you do, David? To do one thing to bring down those gas energy costs because that’s what it is. Well, I I I think I think you have that’s what you have to do. You have to alter the pricing of of energy in this country. At the moment, it’s priced extraordinarily high. What happens at the moment is that the energy cost is so high when it’s not just for steel. The energy cost is so high we drive businesses abroad. If skull closed, and god forbid that it does, but let let’s hope it doesn’t. uh if skunt talk close that business will go to China and China makes the most polluting steel in the world. So, we’ve got to devise a strategy that actually does something to save the planet, actually does something to cut carbon. Uh, and at the moment, our strategy is not the one that’s working. Other other strategies in Europe, other strategies elsewhere in the world are working. Perhaps we should copy that. David Davies, thanks very much indeed. Pleasure. Now, Scum Thorp is the last plant left making so-called virgin steel. That’s from iron ore instead of recycling scrap. And the need for steeling construction and major defense projects now underlines the importance of that plant not least in Skunthorp itself like Corby Concept Motherwell and Redka defined by its steel making past. Francis Reed has spent the day in the town as steel workers reflect on a time of uncertainty around their futures. Save our steel. Save our steel. A town built on pride. Pride in its steel. And united together in support of each other. Save us. They’ve gathered ahead of watching their beloved Skunthorp United. It’s fighting to remain at the top of the Northern League as its supporters fight to retain their livelihoods. Skunthorp fans support the Steel Works. The Steelworks supports Sconey. Without the steel works, this town dies. Simple as. You work there? Yes. I’m nice tonight and that’s why I’m drinking lemonade. To be quite honest, the community is behind the steel industry. A lot of people have worked in the industry. A lot of people still work in the industry and it’s a community. It’s a family business quite frankly. My dad worked at Steelworks. I’ve got two sons that work on Steelworks. It’s a generation thing. It’s about getting the kids employment when they grow up. Quinn is one of them. He’s 10 and wants to follow in his father’s footsteps. My dad goes to visit customers like the steals, stuff like that. And you’d like to do that when you’re older? Yeah. And how would you feel if that wasn’t an option anymore? I’d be quite annoyed. Like it’s not fair. They’re in parliament right now while you guys are here. What’s the message that you’re all sending? Do it. Get on with it and do it. While it’s not full nationalization, it’s a massive step in the right direction. Um yeah, it’s it’s a good day. It’s good day for British Steel. A good day for the lads that work there. In the center of Skunthor, reminders of steel are everywhere you go. Generally unemployment has fallen slightly in North Lincolnshire, but with British Steel its biggest employer. This is a town very conscious of its vulnerability. If it wasn’t saved, the town will probably die on its feet, which it’s already started doing any by the number of empty shops around. But it’s not going to be a very good outcome if it’s not safe. I think it would completely kind of become almost like a I’m gonna say like a ghost town almost for people who have been here for generations. And to see that disappear is just so sad. And history would suggest places like this find it very difficult to absorb the shock. For Skunthorp, this is all about survival. Survival for the town, survival for the livelihoods of the people that live here. But there are of course places right across the UK that have experienced different versions of this roller coaster before like Port Talbert in South Wales and like Redker on T-side. Deals for the latter unsuccessful in the end. The blast furnace was demolished just a couple of years ago. Decades of steel making gone in a plume of [Applause] smoke. On the pitch, you’d normally expect more rivalry. But today, Scunthorp are playing Spymore. And so at Halime, solidarity between supporters. County Durham has also seen its own fair share of crippling industry decline. We want justice. We want justice. In Skunthorp, families ardently hope not to go the same way and that the government’s actions today will provide a buffer to protect their industry and their way of life. Because this community helped build the world on its steel, now buffeted by world events, it’s desperate not to be abandoned. Well, earlier I spoke to Carrie Bone, who’s the European steel editor at the industrial research group, which provides market data on commodities such as steel. I asked her why it’s important to keep the blast furnaces burning in Skunthorp for now. These assets are very old. They are from decades ago. So therefore, if they were to go offline, you probably wouldn’t get them back online again. And that’s where the issue is is where the government has stepped in. It’s not like they could let them fall into bankruptcy or insolvement and then afterwards try and work out what they’re going to do with the assets because by that point it’s too late. The assets have become redundant. So it’s the timing here is is the most important thing. Those last senators need to keep going until there’s a solution found. Whatever that solution is, the trouble is getting there. It costs an enormous amount of money and it involves a lot of job losses. 2,800 in the in the the switching off of the furnaces and put towards um that’s just inevitable from what you’re saying. I think when you’re discussing the British steel jobes which is around similar numbers that would be if the blast furnaces were you know switched off now whilst the construction of electric arc furnaces are ongoing which would take two or three years. What the unions wanted is for the blast furnaces to keep running whilst the electric arc furnaces are constructed so that those jobs were were kept in place. And all the while the Chinese are sitting there out east producing colossal amounts of relatively ultra cheap steel. How do we compete with that? Be it a blast furnace for the next few years at skunthorp electric arc or indeed hydrogen. Cheaper energy is one of the main issues here. The UK pays more than double energy costs than some European countries, if not massively, times that for elsewhere in the globe. The UK, unfortunately, is uncompetitive because of how the market is currently structured. And the UK, it it imports, you know, as much as twothirds of it still for its UK consumption. There should be more done by the government to increase domestic procurement. you know, Ministry of Defense, for example, they want to have higher defense spending. Utilizing and procuring domestic steel would would help demand, it would help costs. It would really support the industry more. So, you’re saying that in terms of the need for virgin steel, the blast furnace technology, well, it’s it’s it’s going to become more and more marginal. And the push to electric arc furnaces and possibly hydrogen as well is just so big that we’ve all got to go with it. In the UK, we we’ve been importing in the iron ore, the coke and the coal when actually we’ve got an abundance of domestic recycled steel as scrap that we could utilize in the electric art furnaces which would help us to become a much more competitive in the industry. So in the UK and and in Europe as well, most of the steel companies are transitioning away from blast furnaces. Many have their retirement dates already set to move to electric arc furnaces. And actually British Steel already has planning permission for its electric arc furnaces. And as we know, Tata still has the planning permission and construction has started on theirs.