Government to introduce legislation which would give it the option to nationalise British Steel, subject to public interest test being met.

Primary legislation would give Government a route to safeguard UK steelmaking capacity and avoid sudden halt of production at Scunthorpe, while it considers options for British Steel to help deliver on government’s Steel Strategy ambitions.

Move strengthens economic resilience and backs Government’s long‑term ambition for a resilient, modern UK steel sector.

British Steel could be back in Government hands for the first time since being sold off in 1988, thanks to powers that will be included in new legislation to be set out in the Kings Speech on Wednesday (13 May).

The new powers would be subject to public interest tests, and if used to nationalise British Steel, they would boost national security while giving stability to workers at Scunthorpe, and British Steel’s suppliers and customers.

The move comes after government took control of the Scunthorpe steelworks in April last year, voting on emergency legislation after British Steel’s owners Jingye confirmed plans to close the blast furnaces.

Since then, the government said it had “not been possible to agree a commercial sale” with the current owner and government “does not believe” an agreement could be reached which would deliver acceptable value for money for taxpayers.

It believes by introducing legislation to provide a route to public ownership is the “appropriate next step”, while recognising that any decision to use the powers in the Bill would be subject to the Bill’s public interest test being met.

The public interest test considers factors including national security, maintaining critical national infrastructure and supporting the economy.

The announcement follows the launch of the government’s Steel Strategy in March, which set out its long‑term plan to revitalise the UK steel sector and bolster economic resilience by meeting up to 50% of UK steel demand domestically.

Prime Minister Keir Starmer said: “Steel is strategically important to our economy and our national resilience. That’s why we acted last year to avoid a sudden halt to production at Scunthorpe, protecting workers and the community that depend on the site, and why we’re now bringing forward legislation to give us options to protect Britain’s steelmaking capability.

“This is what an activist state looks like – taking decisions in the national interest. This Bill would allow us to take action if we need to, while we continue rebuilding our steel sector.”

Industry  has welcomed the decision trade association for the UK steel industry, UK Steel,  calling the move a “decisive step” to secure the future of a strategically vital part of the steel supply chain.

Gareth Stace, director-general of UK Steel, said:  “This provides vital certainty for the workforce, the company’s customers and the wider supply chain at a critical moment. Steel is a foundation industry and a recognised strategic national asset. Maintaining domestic production capability for British Steel’s products is essential not only for economic growth but also for our national security and resilience.  

“Nationalisation is not an end goal. This must now be the beginning of a clear and credible long-term plan for British Steel. We need to see a detailed investment strategy that supports a managed transition to low-carbon steelmaking, and broader action to tackle the sky-high energy prices in the UK, which are undermining the competitiveness of the steel industry.   

“With the right backing and a supportive policy environment, the UK steel sector can be competitive, support thousands of high-quality jobs, and play a central role in delivering the UK’s industrial and decarbonisation ambitions.”