Full nationalisation of British Steel is now the ‘most likely option’, the Business Secretary said today.
Jonathan Reynolds admitted that while his ‘preference’ is to find a commercial partner to run the industry, the state could well have to take responsibility.
Touring broadcast studios, he also delivered a stark message that Chinese businesses will face a ‘high trust bar’ to get involved in the UK economy in future – suggesting core sectors will be protected.
Mr Reynolds said that ‘as a country we’ve got it wrong in the past’ on relations with Beijing, swiping that the David Cameron and George Osborne era had been ‘far too naïve’.
The comments came after the government used a rare Saturday sitting of Parliament yesterday to push through emergency legislation effectively taking control of British Steel.
Mr Reynolds has ordered Chinese owners Jingye to keep the Scunthorpe plant going after talks broke down.
But Tories have argued that Ed Miliband’s Net Zero policies are to blame for the collapse, requiring fuel to be shipped in from abroad rather than produced in the UK.
There were also widespread calls during the debates in Parliament for a much tougher line on Chinese control over industries.
Mr Reynolds acknowledged that the government will lose money running British Steel, but argued that allowing it to collapse would have cost £1billion.
Jonathan Reynolds admitted that while his ‘preference’ is to find a commercial partner to run the industry, the state could well have to take responsibility
Just hours before the legislation passed, executives from Chinese owners Jingye apparently attempted to enter the plant but were blocked by British Steel workers until police arrived and forced them to leave
Mr Reynolds has now ordered Chinese owners Jingye to keep the Scunthorpe plant (file picture) going after talks broke down
He told Sky News’ Sunday Morning With Trevor Phillips: ‘The losses, the annual losses, net losses, in the last set of accounts were £233 million. Actually, that can be improved upon, but I am accepting your point that we would expect to lose money on this.
‘I would ask the public to compare that to the option of spending a lot more money to reach a deal that would have seen a lot of job losses and Jingye remain as a partner.
‘Or the cost of the complete collapse of British Steel, easily over £1 billion in terms of the need to respond from Government, to remediate the land, to look after the workforce.’
Mr Reynolds insisted that, as money had already been set aside for the steel industry at the budget, the Government would not need to borrow more as a result of the takeover.
He added: ‘To be absolutely frank, I think supporting British Steel at this time, in that way, is better than spending a greater deal of money on the complete loss of the business or in a transition deal.’
Asked whether the Government could trust Chinese firms after Jingye’s handling of British Steel, Mr Reynolds said it would depend on the sector.
He said: ‘I think we have got to be clear about what is the sort of sector where, actually, we can promote and co-operate, and ones frankly where we can’t. I wouldn’t personally bring a Chinese company into our steel sector.’
He added: ‘I think steel is a very sensitive area. I don’t know when the Boris Johnson government did this, what the situation was, but it’s a sensitive area.’
Mr Reynolds declined to comment on other sectors, such as nuclear power, where he would be unwilling to see Chinese investment.
But asked whether there was a ‘high trust bar’ for dealing with firms from the country, he said: ‘Yes, we have got to recognise that.’
Mr Reynolds said the company had rejected an offer in the region of £500million and effectively asked for double that amount.
He also suggested that the firm’s ultimate plan had been to close the blast furnaces and import steel from China to supply British Steel’s more profitable steel mills.
But he denied that the Chinese Communist Party had been directing Jingye’s decisions.
Keir Starmer and steel workers on a visit to Scunthorpe yesterday
He said: ‘To run a major Chinese industrial company, there are always direct links to the Chinese Communist Party. You wouldn’t be allowed to run a company in China without that kind of thing.
‘I’m not accusing the Chinese state of being directly behind this. I actually think they will understand why we could not accept the proposition that was put to us, in terms of losing that essential national capacity. So I’m not alleging some sort of foreign influence.’
Mr Reynolds rejected criticism that the government had doomed the steel industry by blocking a coal mine in Cumbria.
He insisted that would not have produced ‘material that we could have used at British Steel’ without a wider…
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