Britain will look at Chinese steel investment differently in future, says minister

Thank you for joining us for today’s British Steel live blog. 

The British Steel workforce at Scunthorpe is breathing a “huge sigh of relief” after raw materials were secured to keep the plant’s two blast furnaces burning, a union leader has said. 

GMB national officer for steel Charlotte Brumpton-Childs said it was a “huge step” forward. 

Speaking outside the plant in North Lincolnshire, she said: “When we were stood here talking last week, there was real uncertainty about whether we would be able to maintain the blast furnaces beyond May.

“I think the whole workforce here are breathing a huge sigh of relief seeing that coke come off the shipment.”

Ms Brumpton-Childs said the long-term strategy for the site could include a hydrogen DRI facility – an alternative method of making virgin steel to blast furnaces, which could cost a billion pounds to establish.

But she said the short-term aims of the GMB were to secure the withdrawal of the current threats of redundancy, maintain blast furnace operations and look at the possibility of bringing electric arc furnace technology to Scunthorpe.

She said that “we need to start getting into the meat of that discussion with the Government now”.

Sir Iain Duncan Smith said the Government needed to define which industries were “strategic” and prevent China from being involved with them.  

The former leader of the Conservative Party told the PA news agency: “The Government now needs to define which of its industries and areas are strategic.

“Personally I think the whole net zero project is an energy project, therefore is strategic including therefore the nuclear industries.

“Steel and steelmaking are a strategic industry, all the arms manufacturers are strategic industries, and anything to do with water and various other areas, they’re all strategic industries.”

He later added: “I don’t particularly think we should be letting China invest in our infrastructure or anything else like that, but I think the base bottom line is we must define now what are strategic industries, and once we have defined that China certainly can’t be involved in any of that.”

Jonathan Reynolds said any Chinese bid to take over British Steel would be looked at “in a different way” after the Government was forced to seize control from the Chinese company Jingye.

Sarah Jones, the industry minister, said on Tuesday morning that the Government was not ruling out another Chinese owner for British Steel.

But Mr Reynolds suggested any bid from a Chinese firm would be subject to greater scrutiny.

He told broadcasters during a visit to the Immingham Dock close to the Scunthorpe plant: “In this case, our difference of opinion on the future was with a specific company.

“I know there’s a lot of interest in the wider UK-China relationship, understandably so, but this was about this company.

“I think we’ve got to recognise that steel is a sensitive sector. It’s a sensitive sector around the world, and a lot of the issues in the global economy with steel come from over-production and dumping of steel products, and that does come from China.

“So I think you would look at a Chinese firm in a different way but I’m really keen to stress the action we’ve taken here was to step in, because it was one specific company that I felt wasn’t acting in the UK’s national interest, and we had to take the action we did.”

Jonathan Reynolds said the “employment footprint” at British Steel could change in the future as he appeared to concede that some jobs could be lost.

Asked if he could guarantee that there would be no job losses, the Business and Trade Secretary said: “What we need for the long term future of British Steel is that private sector partner to work with us as a government on a transformation programme. That might be new technology, new facilities, that might have a different employment footprint. 

“The staff here absolutely know that. They know they need a long term future. These blast furnaces have given this country nearly a century of service in one case so they know they need the future and that might be a different model, different technology.

“What they didn’t want was the unplanned, uncontrolled shutdown of the blast furnaces, with thousands of job losses and no plan in place for the future.

“And by what we have been able to do… is secure the possibility of that better future and I for one am confident that we have made the right decision to support the people here.” 

Jonathan Reynolds said the Government believed the financial performance of British Steel could be improved. 

The Business and Trade Secretary, speaking to broadcasters at Immingham Dock close to the plant at Scunthorpe, said: “I am delighted that after an incredible cross-government effort we have secured the raw materials we need to keep the blast furnaces going and I want to say a huge thank you to all the staff at British Steel, all the people who have been involved in really, really pulling out the stops to make sure we got that continuity of supply. 

“Yes, supporting British Steel is the right thing to do, recalling Parliament to take back control of the situation, to make sure the blast furnaces weren’t lost in an unplanned way with all the consequences that would come from that. 

“I believe we can improve on the financial performance that we have seen. But I have said from the beginning that the kind of support we are now putting in place for British Steel is better value for the country, better value for the taxpayer, than offering hundreds of millions of pounds for significant job losses in a way we weren’t quite confident that transformation programme would deliver what we needed for the future or potentially being here today talking to you about thousands of people having lost their job, with a cost to the exchequer to support those people at well over £1 billion.” 

Nigel Farage said China should not be involved in any of the UK’s critical national infrastructure. 

“We have allowed China to get so deep inside our critical infrastructure, so deep inside our universities and elsewhere – and it is the Tories what done it but it’s Labour that are continuing with it – and we need a completely different rethink,” the leader of Reform UK said. 

“And you know what? If that means less investment from China then, frankly, so be it. I don’t want China in our nuclear industry. I don’t want China in our telecoms. I don’t want China in any of our critical infrastructure.

“They have increasingly, over the last decade, become a nation that is not a friend of ours in any way. So the answer to your question is, we’ll live with it and we’ll find alternatives.”

Sarah Jones, the minister for industry, made clear this morning that the Government is not ruling out another Chinese owner for British Steel (see the post below at 08.08). 

Telegraph readers have been reacting to her remarks in the comments section of today’s live blog: 

A former British Steel manager has said he is sure Net Zero “will still be a threat” to the steel industry.

Bill Penn, 70, who worked for the company for more than 20 years, also said the jury was “still out” on whether a steel industry will continue to survive over the next ten years.

Mr Penn, who went on to be a consultant who specialised in steel production after leaving the firm in the late nineties, said: “There’s been a lot in the media about the push to green and it’s a whole debate on its own but steel plants need electricity to operate.”

When asked if Net Zero was a threat to the industry, he said: “I am sure it will be a threat.”

The retired consultant said he “applauded” the Government for keeping British Steel open, but said there were still “a lot of challenges ahead”, including high electricity prices and Chinese products being dumped in the market.

“The government has kept it open and I applaud the government for doing this but there’s still a big challenge ahead - how are we going to stop losing £700,000 a day,” he said.

When asked if he thought the UK steel industry would continue to exist over the next decade, he said: “The answer to that for now is that the jury is still out, because what they’ve got to do is work out how they can bring this back to break even or back into profit- and the only way to do that is to look at the electricity costs look at stopping all the other steel being dumped into the market.”

Nigel Farage claimed the Government’s decision to step in and save British Steel was triggered by a fear of the rise of Reform UK in Labour’s heartlands.

The leader of Reform UK told local elections event in County Durham: “I don’t believe there would have been a Saturday sitting of Parliament if Richard Tice and I had not been up to Scunthorpe and been greeted the way we were by those workers, especially in the local [Wetherspoons] afterwards. 

“They actually felt there was someone speaking up for them. They actually felt there was somebody on their side. 

“And that I think is why Labour did what they did. Where we go from here I don’t know.”

British Steel said it now has “great hope” about its future as “vital” raw materials to keep two blast furnaces at its Scunthorpe site burning were set to arrive.

The company said in a statement: “Today, we are pleased to confirm that vital raw materials are being unloaded at our port facility, Immingham Bulk Terminal. They will then be transported to our headquarters in Scunthorpe to support our iron and steelmaking operations.

“Other raw materials are also on their way. While this remains a challenging period for British Steel colleagues, we now have great hope.

“We’d like to thank the UK Government, our customers, suppliers and industry peers for their unflinching support. And above all, we’d like to recognise the incredible efforts of our employees – the finest steelmakers in the world.”

The Liberal Democrats said the Government must rule out any future Chinese ownership of British Steel. 

Sarah Jones, the industry minister, suggested on Tuesday morning that another Chinese firm could run the business in future after the Government seized control from Jingye (see the post below at 08.08). 

Calum Miller, the Lib Dems’ foreign affairs spokesman, said: “Giving another Chinese firm ownership of British Steel would be like coming home to find your house ransacked and then leaving your doors unlocked. 

“Domestic steel production is absolutely vital to our national security and to put that at risk again would be completely unacceptable. 

“The Government should rule out any Chinese firms’ future involvement in the ownership of British Steel - and certainly until it has completed and published its China audit. The stakes are simply too high.”

More than half of British adults believe the Government should try to reduce Chinese involvement in the UK economy, according to a new More in Common poll. 

Some 54 per cent of respondents to a survey conducted between April 11-14 said they wanted Beijing’s role to be reduced. 

Just 9 per cent said the Government should try to increase Chinese involvement in the British economy and 20 per cent said ministers should not intervene either way. Some 18 per cent were unsure.   

Luke Tryl, executive director at More in Common UK, said the British Steel crisis “plays into broader public concern about Chinese involvement in matters of critical national interest”. 

“Our polling shows a public desire for limiting Chinese investment in areas like defence, infrastructure, and public services,” he said. 

“The Government may find its desire to improve its relations for the sake of growth runs into a public who blame the Chinese authorities for the mess in Scunthorpe and who increasingly want to get China out of important bits of the UK economy.”

A third generation British Steel worker said he was more concerned about the potential loss of steel production in the UK than losing his own job. 

The office worker said his father and grandfather both previously worked at the Scunthorpe site.

However he, himself, is an office worker.

Commenting on the recent events, he said: “I guess the UK having control over it [British Steel] is not a bad thing, is it - there are definitely worse outcomes.”

The worker, who lives near the plant, said: “I’m not too fussed about my circumstance - it’s more the UK having steel production, that’s the main thing you know.

“So if I lost my job there’s more jobs, but if we lost steel - then that would have been an issue.”

A majority of British adults support nationalising British Steel, a new poll conducted by More in Common has found.

The survey, conducted between April 11-14, revealed 54 per cent of people said the Government should nationalise the Scunthorpe steelworks.

Just 14 per cent said British Steel should not be nationalised while a third - 32 per cent - were unsure.

The Government took control of the firm at the weekend but has said its preference in the long term would be for another private company to step in.

However, full nationalisation is an option that is on the table if no private bidder can be found.

Luke Tryl, executive director at More in Common UK, said: “The Government’s decision to step in and take control of steel production in Scunthorpe clearly chimes with public opinion. Support for nationalising British Steel outweighs opposition by four-to-one, and Brits tend to think that it is worth spending taxpayers’ money to keep the furnaces running.

“While views on nationalisation usually split along party lines, there’s strong cross-party support for bringing British Steel into public ownership, with majorities across the political spectrum in favour.”

At British Steel’s plant in Scunthorpe today, staff braved heavy rain to come to work.

Few were willing to talk yet one health and safety worker said the mood remained uncertain.

The worker, who had been employed by British Steel for several years, said: “You never know what’s going to happen until it happens. I’m just carrying on doing my job and seeing what happens.”

The worker said he didn’t know anything about the coal arriving at the plant and that staff such as himself were not told of any details. 

However, he said staff were “more optimistic” than they were before.

“You never know,” he added. “You don’t know what is happening. I can’t make any difference, all I can do is just carry on and it’s a case of - I think they [the Government] are trying to save it, but this is way out of my league.”

When asked about morale he said: “It’s better than it was before, but people still just don’t really know what is going to happen. We just have to get on.”

Sarah Jones said the Government will apply “stringent tests” when assessing if a Chinese firm would be permitted to take over the Scunthorpe steelworks.

She told LBC: “On any important infrastructure there would be stringent tests – and I would look at each case in point – and we would look at the stringent tests that we have in place. I’m not going to second guess where the Secretary of State or others might choose to make decisions.

“But the point on China, I think it is important. It’s the second biggest economy in the world. It’s our fourth largest trading partner, and hundreds of thousands of jobs in the UK rely on that trade that we do with China, and that’s really important and we will continue to have that pragmatic relationship with them.

“But of course, when it comes to infrastructure, we will make sure on a case-by-case basis, that we are not letting anything get in the way of our national security and that we are applying those stringent tests.”

A trade union leader said he was “not convinced it was sabotage” of the Scunthorpe steel works by Chinese firm Jingye.

Roy Rickhuss, general secretary of the Community union, told Sky News: “I think there was a culture issue. I don’t think they understood how to work with trade unions. Companies come and go, governments come and go. What stays constant is the workforce. I don’t think they got that.

“The steel industry has always been built of strong industrial relationships. That just wasn’t there with the Chinese. I don’t think they knew how to work with us.

“I’m not convinced it was sabotage. There was an element of incompetence. Up to half of the losses could have been avoided.

“They tried to push the Government into giving them a billion pound plus, and the way they thought they could put pressure on the Government was to run the furnaces down and get the government to blink.”

Funding to support British Steel into the future is “all within the existing fiscal envelope”, industry minister Sarah Jones has said.

Asked when the taxpayer may need to provide additional funding above current departmental budgets, she told Times Radio: “We have been really clear on steel that securing the future of the site in Scunthorpe is not just important for the 2,700 people who work there, but also because we know that demand for steel in the UK is growing. We know there’s a market there.

“We need more steel for the 1.5 million homes that we want to build, for the clean energy, for the railway, for Heathrow, I could go on.

“So we know that there is an industry there that we need to support, but that can be viable into the future.

“What we set out in the manifesto was a £2.5 billion investment in steel in the UK through our plan for steel, so we have a fund that we want to use to make sure the steel industry can thrive well into the future, and that is all within the existing fiscal envelope and Government departmental rules.”

Tom Tugendhat said the UK must focus on how it can generate greater levels of investment at home rather than opting for the “short term fix” of turning to China for funding. 

The Tory former security minister said the UK needed to make its decisions in relation to dealings with China “on the basis of what they have told us”.  

Asked how a country that is “short of money” should balance economic needs with national security concerns, Mr Tugendhat told the BBC: “China has set out what it is doing and it claims to be an emerging market in WTO terms which it clearly is no longer and so we find ourselves in a slightly odd position where the rules of international trade apply less stringently to China and that creates a very un-level playing field. 

“So rebalancing that is incredibly important. But a lot of this is down to our own problems as well. 

“The fact that we are trying to run a capitalist economy without any capital, we have eroded our own savings industry over the last 30 to 40 years and we have made it much, much harder to raise money domestically, it is really a huge amount of what we are seeing here. 

“The short term fix has been to turn to China and, by the way, to other countries as well. But the reality is we have to be much more focused on what we can generate at home. 

“The reality is China has set out what they are trying to do and they have set out very clearly in documents… it has explained very clearly what the government is aiming to do, with a country of 1.4 billion people it has to explain it publicly, and what we have to do is make our own decisions on the basis of what they have told us.”  

The British Steel crisis has sparked calls to exclude Chinese firms from the UK’s critical national infrastructure, such as nuclear plants and high-tech engineering.

But China warned against such a move on Monday as it urged the Government not to “politicise” the current situation. 

Beijing said the UK must “treat Chinese businesses that have invested and operate in the UK fairly and justly, [and] protect their legitimate and lawful rights and interests”.

Lin Jian, a spokesman for China’s foreign minister, said the UK should “avoid politicising trade co-operation or linking it to security issues, so as not to impact the confidence of Chinese enterprises in going to the UK”. 

You can read the full story on China’s response here. 

Raw materials secured by the Government will be transported to British Steel’s Scunthorpe plant on Tuesday to keep its two blast furnaces burning.

British Steel staff and civil servants have been in a race against time in recent days to get the coking coal and iron ore to the site before supplies ran out.

Jonathan Reynolds, the Business and Trade Secretary, is due to visit the port in Immingham, North Lincolnshire, as supplies from two ships are unloaded and transported to the plant.

The materials, sent from the US, are enough to keep the furnaces running for weeks, the Department for Business and Trade said, adding that they have been paid for out of its existing budget.

It comes after Downing Street said the Government was “confident” it would be able to secure the products necessary to keep the site running, and that work was ongoing to get a “steady pipeline” of materials.

All of the options relating to the future of British Steel are expensive, the minister for industry said. 

Asked how much nationalisation could cost, Sarah Jones told Sky News: “All of these options are of course expensive. As we know, if we had allowed the site to close, if we had allowed those people to lose their jobs, the cost of remediating the site, the cost of closing it, the cost would have been over £1 billion. 

“What we set out in the manifesto because we knew that we wanted to make sure that steel in this country had a future, what we set out in the manifesto was a £2.5 billion fund for steel which is what we will be using for our steel plan and that is what we would use to invest.” 

It was suggested to Ms Jones that nationalising the Scunthorpe plant would likely cost multiple billions of pounds. 

She said: “Yes, we are talking lots of funding, absolutely, and that is why we are being really careful to do this correctly because we don’t want to be spending taxpayers’ money in a way that would be in any way wasteful and that is why our preference is for a private sector partner to come in.” 

British Steel is now in a “steady state” after major question marks about its short term future, the minister for industry said. 

Sarah Jones said the Government taking control of the Scunthorpe plant meant it was now “much more secure”. 

She said the Government hoped a private company could be found to take on the firm for the long term but nationalisation may ultimately be where ministers end up. Ms Jones said there was not currently a private company “waiting in the wings”. 

Asked if nationalisation was the likely next step, she told Sky News: “It may be. We had negotiated what we thought was a really good deal with Jingye. 

“We had offered some funding from government in return for investment from them and we think that there is a model there that we could replicate with another private sector company. 
“At the moment there isn’t another private sector company there waiting in the wings. We would have to have the conversation. 
“So what we have done with the emergency intervention now to secure those raw materials is to make sure we have the time now to have those conversations with the private sector to work up what potential solutions there could be into the future. 

“But for the time being we know that the raw materials are there so we have got the continuation, we have got new leadership there in British Steel, we have paid the costs of the raw materials, so we are in a steady state now, we are much more secure. 

“But of course we do have to look to the future and look at what possibilities there may be and it might be that it is a national solution, it might be that it is a private solution.” 

A minister said the Government was not ruling out another Chinese company owning British Steel despite the fact her boss said only days ago that he did not want to see another company from China involved with the firm. 

Sarah Jones, the minister for industry, suggested all options remained on the table for the future of British Steel. 

But Jonathan Reynolds, the Business and Trade Secretary, said on Sunday: “I wouldn’t personally bring a Chinese company into our steel sector.” 

Asked if she was ruling out another Chinese partner for the company after negotiations with current owner Jingye broke down, Ms Jones told Sky News: “We have had conversations that have been in good faith with Jingye up to recent times and recently obviously we know that has broken down. 

“The relationship with China is a really important one and it is really key that I say that. The second largest economy in the world, our fourth largest trading partner, hundreds of thousands of jobs in the UK rely on that relationship.” 

Asked again if there could be another Chinese partner, she said: “Whenever we look at any investment there are stringent tests that have to be met and they would apply to a Chinese company as they would to any other company.   

“ So of course we will be careful, we will make sure we do the right thing, security is the number one issue and when we are looking at critical infrastructure it is very important. 

“But we have a trading relationship with China and that will continue to be the case.”  

Asked if the Government was ruling out the possibility of another Chinese partner, she said: “Well, we are not at the moment. I am not going to say yes or no to anything that isn’t at the moment on the table or being looked at. 

“Whatever the future for Scunthorpe, we want to make sure we can keep primary steel-making, we can keep steel making in our country and we can grow that industry, not see the continued decline that we have had over recent years.”