Losses at last blast furnaces near twice level when state took over

Losses at state-run British Steel have now soared to £1.3m a day - almost double the level they reached under Chinese management, government auditors have revealed.

The damning new figures were published in a report by the National Audit Office, which found £377m was spent between the government takeover last April and January this year.

And it emerged the bailout, classified as a loan by the Department for Business and Trade, could continue to mount, potentially totalling £1.5bn by 2028.

British Steel’s Chinese owners Jingye had wanted to close the Scunthorpe site, which houses Britain's last blast furnaces, claiming it was losing £700,000 a day.

But the plant was rushed into public control in April under emergency legislation that saw MPs recalled to Parliament on a Saturday. 

Since then losses have mounted as British Steel struggles to compete with cheap Chinese imports and the threat of European trade tariffs.

Up to early December, the amount of public money spent had totalled £274m, or £1m a day.

Now the NAO has revealed ongoing operations are costing around £1.3 million a day, with no set budget, repayment schedule, or end date.

A deal is also yet to be struck to compensate Jingye and formally take ownership of the company and its assets.

Audit bosses called on the government to ‘learn from’ the experience and be ‘better prepared’ for any future interventions.

Gareth Davies, head of the NAO, said: ‘DBT was able to act quickly to save British Steel's Scunthorpe furnaces from closure, avoiding heavy job losses and serious impacts on major UK infrastructure and construction projects.

‘However, the trade-off is the significant cost of maintaining operations, and uncertainty over how long this will continue.

‘DBT should learn from this experience to be better prepared for future interventions.’

State intervention came after Jingye, the owner of British Steel, and DBT had been in talks around transitioning to electric arc furnaces between 2022 and 2025, but had not reached an agreement.

In March 2025, Jingye announced it was losing £700,000 a day due to challenging market conditions, tariffs, and high environmental costs, and was considering the closure of the blast furnaces.

This would have led to the loss of 3,200 jobs at Scunthorpe and affected customers in the supply chain, such as Network Rail, said the report.

As well as the £377 million to keep British Steel operating, £15 million was spent on advisers and £359 million to the company for operating activities such as paying for raw materials, payroll, and other costs.

Taxpayer spending is expected to reach £615 million by June and if it continues at current rates, it could exceed £1.5 billion in 2028, said the NAO.

The revelation comes as figures in the steel industry are angered by the Government's delay in publishing a strategy that will detail support for the sector over the rest of the decade.

Former business secretary Jonathan Reynolds had planned to release the document by last autumn.

Even before the Iran war sent energy prices soaring, trade body UK Steel said current difficulties pose an 'existential threat' to the industry, which already had the highest energy costs in Europe.

Further blows include 25 per cent US tariffs and potential import charges by the EU.

Leading steel industry boss Sir Andrew Cook, chairman of William Cook Holdings, believes costs have ballooned at Scunthorpe for reasons including green levies plus bad management.

He told the Daily Mail: ‘Net Zero costs are undoubtedly an element of this, plus sloppy management, which goes hand in hand with state control.

‘Lack of purchasing capability and muscle is definitely going to be there, plus the fact the suppliers took advantage of us whereas the (former) Chinese owners would have been well capable of supplying from their own network.’

Sir Andrew added the current Gulf crisis due to the US-Israel war with Iran will have affected the cost of shipping, pushing up prices of bulk commodities.

Meanwhile, he attacked the ‘lunacy’ of ministers for not giving contracts to British Steel for ideological reasons.

These include a £5m contract for the state-backed Net Zero Teesside gas fired power station, handed to a Chinese firm because the steel was being made in an electric arc furnace rather than a blast furnace – when there is no absolute guarantee over how Chinese electricity will be generated.

British Steel was an unsuccessful bidder for the contract.

Sir Andrew called for the implementation of a ‘seven point plan’ and £0.5bn of Government funding - the amount ministers previously offered Jingye - to stop the Scunthorpe blast furnaces haemorrhaging more taxpayers’ cash.

He said the government needs to appoint an independent boss with complete autonomy and no political interference.

A deal should then be finalised to remove Jingye from ownership and a ‘shopping list’ of efficiency improvements to plant and machinery drawn up.

Focus should also shift towards improving the market by only allowing Chinese steel to be used as a last resort.

If British suppliers are unavailable, then firms should buy from Europe and, after that, from elsewhere.

British-made steel should be used for taxpayer-funded projects where possible and all Net Zero taxes and charges should be axed.

Tories have previously branded the nationalisation of British Steel 'botched' - as the taxpayer has to prop up the firm when its sites, including the country's last blast furnaces at Scunthorpe, are still owned by the Chinese.

Shadow business secretary Andrew Griffith accused ministers of leaving the industry in 'limbo' and being 'incapable of delivering a timely plan'.