Politics: success, but not as we know it

By Richard North - April 14, 2025

The one thing which has emerged from the steel crisis that has dominated the headlines over the past few days is a graphic illustration of how badly governed we are in the UK, the recent events also giving us some indications as to where the fault lines lie.

What is currently of interest is that, now that the steel industry is in the headlines, we are being assailed by ponderous editorials from the “quality” press, pontificating on the shape of the future industry and the measures which need to be taken to secure a healthy industry.

Typical of these offerings is the Sunday Times editorial which rubs the headline, “Scunthorpe had to be saved. Now to rescue steelmaking”, with the sub-head telling us: “The potential chaos in global supply chains, triggered by President Trump’s trade war, makes self-sufficiency even more important”.

The first assertion in the headline is actually debatable. The two remining blast furnaces on the site date back to the early 1950s, making them 70 years old, and well past their prime. I have seen estimates that suggest their working life is now only about five years, after which they will no longer be a viable proposition – if, indeed they last that long.

That would point to the rescue of the plant being a very short-term event and if the plan is to replace the existing integrated plant with Electric Arc Furnaces (EAFs) – in order the produce “green” steel – we are also aware that the network operator is saying that it will be unable to provide sufficient power for at least seven years.

There is no secret about this. The delay was flagged up in The Times on 5 October last year when it ran a piece headed: “British Steel ‘green’ plan hit by electricity shortage”, the sub-head adding the detail that the company had been told by the National Grid that the necessary connection for electric arc furnace production would not be ready until 2032.

Even at that time, it was clear that the closure of the one operational blast furnace was being considered, with the paper reporting that, in the absence of a electricity power connection, Jingye, the Chinese owners of British Steel, would need to import semi-finished steel for manufacturing in the UK, as a stop-gap measure.

The concern then being expressed was that these interim measures would then become permanent, and that the two planned EAFs – one in Scunthorpe and another in British Steel’s mothballed Teesside plant – will never be built.

It was also noted that British Steel was losing an estimated £800,000 a day keeping the blast furnaces running at Scunthorpe – albeit that it seems only one was fully operational.

Thus, seven months ago, the writing was on the wall yet, despite the implications of The Times piece, a brief search fails to show any further reporting in the popular press, with only a brief mention in the technical press, such as Energy Live News, on 7 October. No alarm bells were set ringing.

In fact, though, the technical press was reporting worrying news a month earlier, this coming from Argus Media on 13 September, telling us that the rolling mills at Scunthorpe might not continue operating if the last blast furnace (BF) closed.

Those rolling lines were powered by gas captured from the BF process and it appeared that then recent furnace stability problems and the subsequent lack of gas meant the company had only been able to operate some lines intermittently.

The company was then reported to be running only one of the two remaining blast furnaces, fed with stocked raw materials, whence a source observed: “If they shut the last blast furnace and import semis they would have to put some liquid gas solution in place and modify the reheat furnaces to be able to run on this different gas supply”.

This would require significant investment without which rail production – for the railway network – would cease. As this was one of the more profitable businesses in the group, some market participants are gearing up for Jingye “to walk away”.

With that, some eight months ago, we got to hear that executives from British Steel, and local politicians, were visiting China for discussions with Jingye, in anticipation that a decision on the blast furnaces “could be made in the next few weeks, with them both potentially closing before Christmas”.

This, though, was not the first time that warning had been sounded. On 23 August, the Guardian ran a piece headed: “Thousands of British Steel jobs could go by Christmas, union warns”, telling us: “GMB fears closure of Scunthorpe blast furnaces may be brought forward and urges consultation with employees”.

Here, though, tucked into the piece was the writing on the wall as British Steel referred ominously to “production issues” and reduced imports of raw materials, stating that the company was “working to restore production levels from our ageing blast furnaces”.

As to the government response, that was effectively delivered in a debate in the Commons, ostensibly on the Port Talbot steelworks, on 11 September.

It was than that business secretary Jonathan Reynolds – star of the current crisis – referred to MPs’ concerns about keeping the blast furnaces open at Scunthorpe.

“That is of course my preference”, he said, “but I need a business partner – a company that is willing to do that. I do not think that it would be reasonable to spend the very considerable sum of money that we have pledged on subsidising short-term losses rather than on the ability to deliver new things”.

With that, he added that he had wanted to “build the future alongside operating what we currently have”, but that was no longer possible. “I am heavily constrained in my options”, he asserted, “but I am still doing everything that I can to get a deal for the workforce, and to ensure that there is a business there that commands the support of its customers to transition in the future”.

To all intents and purposes, Reynolds at that point was throwing the Scunthorpe plant under the proverbial bus. His main concern, he had told MPs was his government’s “ambition for a new UK-wide steel strategy – one that equips our steelmaking industry with the right support not just to adapt but to thrive in the new green economy”.

By November, the government was engaged in talks with Jingye “to avert closure” of its sites and walking away from the operation.

One option on the table, which would be the most expensive, said the Financial Times would be for the government to subsidise British Steel to keep the blast furnaces open until the electric arc furnaces are completed. “The money is now available and it is one of our options”, said one government figure, who described a figure of £2 billion as a theoretical upper limit rather than a working assumption inside government.

Some figures involved in the negotiations, we were told, were puzzled that there had not yet been a rescue deal given the generous offer on the table. “The Chinese are refusing to accept it for some unknown reason…. which suggests a geopolitical issue,” said one. “Jonathan Reynolds gets it, and he’s made an offer nobody can complain about, he’s doing all he can to keep it [production] going”.

But no reference was made to the delays in connecting new plant to the electricity supply, the technical difficulties of keeping the ageing blast furnaces running and the investment required to keep the rolling mills working in the event of the last blast furnace ceasing to operate.

It was then that the drama seemed to lose touch with reality, with the Guardian on 3 December exclusively reporting that ministers were considering renationalising British Steel if the rescue plan failed, in a last-ditch attempt to save thousands of UK jobs.

Christmas came and went, with the plant still operating, whence the government – apparently ignoring the still imminent prospect of Scunthorpe closing – published on 7 January for the “next steps” in the steel strategy. It  was left to industry minister Sarah Jones to declare that “Steel has for too long been a neglected industry in this country”, with her belief that “steel should and could become a positive story”.

So “positive” was the minister, though, that her glad tidings were confined to a written statement, with no debate.

Days later, alarming news came via the Financial Times claiming that British Steel had been “forced to close one of its two blast furnaces at Scunthorpe last year after using the wrong kind of coal”. This had triggered fears among some government officials that British Steel might be trying to sabotage its own lossmaking plant, but ministers had been reassured that the shutdown was down to “a management blunder”.

With “active discussions” with government continuing, the consultation on the steel strategy was finally published, on 24 February, also announced by way of a written statement.

“Steel is essential for a modern economy, underpinning sectors from construction to advanced manufacturing and driving growth”, wrote the hapless Sarah Jones, telling us that her government was “committed to rebuilding the UK steel sector and securing the future of the industry”.

The strategy or “The Plan for Steel” would “establish a clear and ambitious long-term vision for the steel industry and set out the actions needed to get there”. Backed by a fund of £2.5 billion, it would potentially benefit regions across the UK – such as Scunthorpe, Rotherham, Redcar, Yorkshire and Port Talbot.

The cash would be “spent on initiatives that will give the industry a long future, such as supporting the transition to electric arc furnaces, or other improvements in UK capabilities” but not, apparently, on subsidising loss-making processes.

With no debate, and no great urgency being expressed by the minister, the event passed almost completely without notice, with absolutely no coverage in the popular media, and almost nothing in the technical press.

To what extent the messages impacted on Jingye, we have no means of knowing, but there were decidedly mixed signals. But it took until two weeks ago for the talks to break down when it seems that only £500 million was on the table, a sum not even close to covering the company’s losses.

And so the government let the crisis run to the wire, recalling parliament last Saturday to rescue a plant that is barely operational, which will have to close down soon because the ancient machinery can no longer function. Inevitably, there will be a prolonged gap before production can resume with an EAF, if indeed that ever happens – which seems increasingly unlikely.

If this is success, one wonders what failure would look like.