Who now runs British Steel? “Who knows?” asks Sir John Redwood in a hard-hitting critique
The verdict on a constitutional revolution producing a lawyer’s dream of litigious eternity
Montage © Facts4EU.Org 2025
Anyone who has been a director of a business and who watched the emergency Saturday recall debate in Parliament about the steel crisis would surely have been at a loss to understand an array of issues raised but not answered by the Government’s new Act of Parliament, rushed through both Houses in one day.
Credit: British Steel - Sir Keir Starmer with Allan Bell (new interim CEO) and Lisa Coulson (new interim Chief Commercial Officer)
The hours of debate only raised more questions than they answered. Few politicians – and most certainly not the Business Secretary who now seemingly runs British Steel at Scunthorpe – have had any experience of running a business. Fewer still have experience of steel and rolling mills. Facts4EU happens to know one who does: the Rt Hon Sir John Redwood was Chairman of a large, publicly-quoted industrial group, so we asked him for his views on Saturday’s debacle in Westminster.
British Steel: a precipitate Act, management chaos, and unaffordable energy and losses?
A personal view by Sir John Redwood, for Brexit Facts4EU.Org
On Saturday (12 Apr 2025), in crisis over the closure of the UK's last remaining blast furnaces, the government recalled Parliament from recess. They drove the Steel Industry (special measures) Act through both the Commons and the Lords during a single Saturday sitting.
How did they get into this situation?
The government inherited the policy of closing UK blast furnaces whilst planning investment in steel recycling on the same sites. The government wanted to do this as part of its decarbonisation drive. It meant substantial subsidies to the owners of the steel works to commit to electric arc recycling plants. It meant a gap between closure of the blast furnaces and construction and opening of the new plants when the UK would need to rely mainly on imports.
The last government agreed such a deal for Port Talbot. This government wished to continue the negotiations to do the same at Scunthorpe whilst wanting to change the terms. They were warned that maybe the Chinese owners were going for early closure anyway as they claimed they were incurring unacceptably heavy losses.
In early April the Unions warned that the company was running down stocks of coal and raw materials, not ordering to sustain furnace activity. This led the government to intervene to try to keep the furnaces firing.
The Act
The Act does not nationalise the plant or provide for transfer of ownership. Instead it gives wide ranging powers to the Secretary of State for Business to intervene without owning the company if he thinks the company is not using its assets properly. He can demand information, appoint and remove employees, order and pay for supplies, make loans, issue instructions to managers and act on behalf of the company. All this overrides company law and raises issues about the conduct and powers of the owners and Directors who may disagree with the government actions.
The immediate future
The Secretary of State has already exercised his powers and is reported to be securing supplies of coal and raw materials. He has instructed the staff to keep the furnaces working and he should be able to achieve that aim. There will then be issues over who pays the bills.
The Act says the bills - if paid for by the government - should become debts of the company. The company remains responsible for the losses but may be reluctant to pay for purchases and wages when it wished to curtail them by closures.
The Business plan
The government has not produced a Business Plan to accompany its interventions. It will need to draw one up with managers of the company that it trusts. It will need to control the losses and increase the sales of product.
The company has said it is losing £700,000 a day. Clearly a Business Plan based on keeping the blast furnaces burning will produce some revenues and continuing costs. A Plan based on an electric arc furnace would mean no revenues and a large capital cost to build it in the next few years. Once up and running the business would then need to try to get customers back, lost when they closed the blast furnaces. Electricity to run arc furnaces is a lot dearer than fossil fuel to run blast furnaces, so this would dramatically affect running costs.
Net Zero targets
The government has planned to eliminate most of the fossil fuel used in industry, hence the steel plans. If the government now wants to keep blast furnace steel it needs to adjust its net zero plans. Many high energy-using businesses are facing closures from dear energy, so they may well want a change of policy if steel is granted one.
The longer term choice
The government has to face the reality that if it wants to keep the capacity to make new steel in the UK it needs to change its net zero policy. It needs to change energy policy to get energy prices down. Recycled steel does not meet all specifications. Making steel is an important part of national security given the importance of steel in the making naval vessels, military vehicles and weapons.
UK productivity has been weak because we are exporting so many of our capital intensive industries. Importing the steel, gas, oil products, ceramics, paper, glass and other energy intensive products we need means more world CO2 to make and transport the imports. It also means fewer well-paid jobs, less tax revenue, and lower productivity at home.
- By the Rt Hon Sir John Redwood
Observations
Firstly, we are grateful to the Rt Hon Sir John Redwood for his thoughts on the current debacle unfolding over the Scunthorpe steelworks.
Those on the Facts4EU team with experience at director level watched in some disbelief as the government rolled out its plans for British Steel and its remaining blast furnaces. To describe the government’s response as being hasty and ill-conceived would be generous. We can see nothing but trouble ahead – and considerable costs being incurred which the taxpayer will ultimately and inevitably face.
The Chinese will walk away happy in the end – and many hundreds of millions of pounds richer – and the best that can be said for the British is that we may retain a limited steelmaking capacity, but at a disproportionate cost.
In amongst all of this is the nightmare of Mr Ed Miliband’s extremist Net Zero policies. Once again he was planning a yawning industrial gap - this time between steelmaking using fossil power and an eventual arc-based and highly expensive electricity-powered version.
Perhaps if there is one silver lining, this affair may provide one more nail in the coffin of that gentleman’s plans to destroy the industrial fabric of Britain and impoverish most of its population.
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[ Sources: The Rt Hon Sir John Redwood ] Politicians and journalists can contact us for details, as ever.
Brexit Facts4EU.Org, Tues 15 Apr 2025
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