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London — Business Secretary Jonathan Reynolds is preparing for a high-stakes showdown with the Chinese owners of British Steel, amid escalating tensions over the future of the steelworks in Scunthorpe. The dispute centres around Jingye Group’s demand for a payout in the hundreds of millions from UK taxpayers as a condition for handing over control of the struggling plant.
Efforts to secure a new buyer for British Steel have hit a wall, with the government claiming that Jingye is holding up the sale by insisting on a massive financial settlement. The government took control of British Steel back in April, citing fears that Jingye might shutter the UK’s last remaining blast furnaces, potentially threatening thousands of jobs.
Despite the government’s intervention, Jingye remains the legal owner of British Steel. Ministers opted not to proceed with full nationalisation at that stage, largely because they assessed the company’s value as effectively zero. However, negotiations have continued behind closed doors between officials and Jingye, with Reynolds expected to personally join the talks in September to try to break the deadlock.
A senior official from the Department for Business and Trade told BBC News that public money has not been ruled out as part of a resolution but acknowledged that the two sides are still far apart in their valuations of the company.
“There’s a public interest in protecting taxpayers’ money, but there’s also a public interest in drawing this thing to a close,” the source said.
In a statement, a spokesperson for the business department said the government had “acted quickly to ensure the continued operation of the blast furnaces and are working with Jingye to determine the best long-term sustainable future for the site.”
Back in April, Parliament was recalled during the Easter recess — a rare Saturday sitting — to pass emergency legislation allowing the government to assume control of British Steel. At the time, Reynolds indicated that full nationalisation was likely unless Jingye voluntarily transferred ownership for a nominal sum.
But optimism around a symbolic handover was dashed earlier this summer when Jingye informed UK officials they still believed British Steel was worth several hundred million pounds.
While the government has not confirmed Jingye’s exact valuation, officials say it is in the “hundreds of millions,” a figure starkly at odds with the government’s own assessment. The standoff has also been complicated by disputes over the level of state financial support.
In March, ministers offered a rescue package worth £500 million, but Jingye turned it down, reportedly pushing for a figure closer to £1 billion. At the time, the company argued that the Scunthorpe plant was losing £700,000 per day and said it would need significantly more support to keep it afloat.
The UK government has already earmarked a £2.5 billion steel support fund and has been drawing from that to cover British Steel’s daily operating costs since assuming control in April. Despite this, ministers have reiterated that long-term public ownership is not a viable solution. They remain hopeful about eventually bringing in a new commercial partner to take over the site.
However, that ambition is currently on hold due to Jingye’s steep payout demand. A senior government source told the BBC, “We can’t bring in new ownership while this issue remains unresolved.” The source also added that negotiations were “closer to the beginning than the end,” but expressed confidence that the government would persuade Jingye to accept a “more realistic valuation.”
Not all insiders share that optimism. Another source close to the discussions suggested Jingye may not be willing to compromise, raising the likelihood that the government would have to proceed with full nationalisation through a further act of Parliament.
Such a move, however, is being treated as a last resort due to concerns over how it might be perceived by the wider business community. Ministers worry that a forced nationalisation could send the wrong signal to foreign investors about the UK’s approach to business disputes.
As it stands, British Steel’s future hangs in the balance — with the government trying to walk a fine line between protecting jobs and industry in the north of England while managing international diplomatic sensitivities and fiscal responsibility.
Jingye has so far declined to comment on the ongoing negotiations.
