The government’s effort to keep British Steel operating is coming under renewed scrutiny after the Public Accounts Committee warned that ministers have not produced a credible route to make the company financially sustainable.
British Steel entered public ownership in July, following intervention by ministers 15 months earlier to prevent the closure of its Scunthorpe works and the loss of around 4,000 jobs.
But the cost of supporting the business has risen sharply. The company is now estimated to require £1.3m every day to continue operating, with the total bill for taxpayers potentially reaching £1.5bn by 2028.
No sustainable business model
The committee said the Department for Business and Trade had failed to provide ministers with even broad estimates of the company’s final cost or how long the support would be needed.
Clive Betts, the committee’s deputy chair, said nationalising British Steel had been a defensible decision, but stressed that saving the company was only the first step.
“This was just the beginning. Having brought British Steel onto the taxpayers’ books, it is now up to government to explain its plan for its future.”
According to Betts, ministers had not been able to explain how the business would become viable once public funding was removed.
“The reality is that British Steel is unable to wash its own face, and government is now in charge of making sure it gets on to a sustainable financial footing for the future.”
The committee said the government needed to set out a clear plan covering the company’s intended production model, its role in the wider UK economy, a decarbonisation strategy and the funding required to achieve those objectives.
It also called for a timetable for reaching financial sustainability, including the expected costs, sources of funding and the conditions under which support would be reduced or withdrawn.
A growing burden on taxpayers
By mid-June, the government had spent £555m on salaries and raw materials. That figure excludes the cost of external advisers and other support.
The Public Accounts Committee said the level of funding was “startling” and warned that taxpayers remained exposed to significant and increasing uncertainty.
“Taxpayers remain exposed to significant and growing costs and uncertainty – it is not clear whether the money will ever be recovered.”
British Steel’s rescue has also raised questions about how much financial support can be directed towards one company while other parts of the industry face their own pressures.
The committee said ministers must provide assurances that funding for British Steel will not come at the expense of wider steelmakers and the supply chains on which they depend.
Intervention extends across the sector
The criticism emerged only days after Labour nationalised Yorkshire-based Speciality Steel UK, Britain’s third-biggest metal producer, in a move intended to protect 1,300 jobs.
Business Secretary Jonathan Reynolds said the government did not intervene in private companies lightly, but argued that the decision was necessary to protect the country’s heavy industrial base.
British Steel had already received substantial government support before its formal nationalisation. In 2025, ministers stepped in to prevent the closure of its Scunthorpe operation and the loss of approximately 4,000 jobs.
After taking ownership, the government appointed new executives to stabilise the company and assess whether it could return to long-term profitability.
For now, however, the committee says those efforts have not produced a convincing explanation of how British Steel will compete, decarbonise or generate sufficient revenue to cover its costs.
Jingye seeks compensation
The dispute has also added tension to relations between the UK and China. Jingye, British Steel’s former owner, argues that it was owed almost £1bn when the company was nationalised.
The Chinese group has begun a formal process under an international treaty seeking compensation from the UK government.
China’s government has said it is “strongly dissatisfied” with the situation, while the dispute is likely to remain a sensitive issue for ministers as they try to restore confidence in the domestic steel industry.
Why it Matters
British Steel sits at the intersection of jobs, industrial strategy and national security. If the government cannot demonstrate a credible path to financial sustainability, it risks draining public funds from a strategic business without resolving the underlying problems that made intervention necessary. At the same time, continued support for British Steel must be balanced against the needs of other steel producers, decarbonisation targets and the wider supply chains that depend on them.
