Government has to decide 'whether country has a British steel industry' as wrangling continues over £300m subsidy to Scunthorpe steelworks

Chancellor Jeremy Hunt has been urged by Business Secretary Grant Shapps and Levelling Up Secretary Michael Gove to keep the two blast furnaces running at the site which produces virtually all the UK’s rail tracks.

The steelworks, which was bought out of receivership by the Chinese firm Jingye in 2019 with the Government’s backing, employs 4,000 people, and supports another 16,000 in the supply chain.

Multi-union chairman Paul McBean said if they go down to one blast furnace at Scunthorpe, it “won’t be long before it all closes”.

The only two other blast furnaces in the country are at Port Talbot, in Wales.

Mr McBean said negotiations had been going on since August and the “very impatient” Chinese owners were not used to “our slow Government” and “are not going to wait much longer”. “While they (politicians) are disagreeing we flounder on,” he said.

In a scenario where the UK – like Ukraine – found itself almost overnight having to arm to defend itself, the country could find itself without anyone willing to sell it steel, he said.

The Community Union representative said soaring energy prices meant the company is paying nearly £1m a day for electricity, with the cost going up ten-fold since 2021. Carbon credits, which they thought would be scrapped after leaving the EU, is costing just short of £150m a year.

Meanwhile installing an electric arc furnace and a hybrid to meet the Government’s legally binding climate change targets will cost £2bn. But the Government, Mr McBean said, won’t help pay for the transition and nor will customers, when they can source steel from countries like China, Turkey, Iran and Brazil.

He said: “There’s talk of going down to one furnace but it’s not practical as you have fixed costs. It is an integrated works and everything relies on everything else.

"You’d have to massively import more natural gas if a furnace closes. They think you can get rid of a quarter of the workforce, but you can’t, they are involved in the whole process.

"If they close us – and Port Talbot is in the same boat – we will be virtually the only industrialised country in the world that doesn’t produce its own steel. If you look at Germany they gave £8.5bn to their steel industry to help it go green, France gave £2.2bn. We are the only country being told to go green and (with) no help.”

In the letter Gove and Shapps warned that British Steel “does not have a viable business without government support”.

They added: “Closing one blast furnace would be a stepping stone to closure of the second blast furnace, resulting in a highly unstable business model dependent on Chinese steel imports.”

The Government has said it is committed to securing a “sustainable and competitive” future for the steel sector. It is providing energy bill relief for businesses on top of energy cost support worth £800m since 2013. Scunthorpe Conservative MP Holly Mumby-Croft was approached for comment.