Investigation into the government’s intervention in British Steel’s Scunthorpe site

Investigation into the government’s intervention in British Steel’s Scunthorpe site - NAO report

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Investigation into the government’s intervention in British Steel’s Scunthorpe site

Report – Value for money

Date16 Mar 2026

DepartmentsDepartment for Business & Trade

Background to the report

Steel is used in construction, defence, manufacturing and transportation. The UK steel industry has faced challenges from high energy costs, excess supply in the global market, and the need to decarbonise steel production. The government has long monitored these challenges and has taken steps to support the industry, for example by cutting energy costs for businesses, issuing guidance for the public sector to procure domestically where possible, and providing grant funding for decarbonisation initiatives. Despite long-term declines in output and employment in the steel sector, the UK has an active industry, with producers operating various types of steelworks in sites across the UK.
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British Steel has a production capacity of three million tonnes per year. It employed 4,052 permanent staff as at 31 January 2026, and its products are used in sectors including rail, construction and engineering. Key customers include Network Rail; British Steel currently supplies 80% of Network Rail’s steel requirements under a £500 million contract. British Steel’s integrated steelworks site at Scunthorpe, Lincolnshire, has the last remaining operational blast furnaces in the UK, which make primary steel using imported raw materials. Integrated processes on site use the main product (steel) and by-products (energy) from the blast furnaces to produce products such as rail tracks and wire rod.
Transition from blast to electric arc furnaces was a key matter of discussion between the government and Jingye Group (Jingye), the owner of British Steel, between 2023 and 2025. There were several rounds of engagement and proposals for the transition, but none were mutually acceptable. In March 2025, Jingye announced it was losing £700,000 a day due to challenging market conditions, tariffs, and high environmental costs, and said it would launch a consultation on the closure of its blast furnaces – a process that is costly and complicated to reverse. The government, led by DBT, intervened to prevent what it considered would be an imminent and disorderly closure of the blast furnaces.

Scope of the report

This investigation examines the government’s 2025 intervention in British
Steel’s Scunthorpe site, led by DBT. It focuses on:

the wider context and background of the intervention

events leading up to the intervention

the current operations, costs, and risks

future considerations

This investigation does not evaluate the value for money of this intervention or compare the effectiveness of this intervention with other government interventions in the steel sector or more broadly.

Conclusions

DBT moved quickly to prevent the disorderly closure of blast furnaces which it considered was imminent, and to avoid potential job losses and the likely economic shock if primary steelmaking had stopped in Scunthorpe. DBT’s engagement with the sector meant that it had an understanding of the likely impact, both locally and on key supply chains.

The government has spent £377 million on its intervention so far, with no clear end date. The intervention has not stabilised the company’s finances, and costs will continue to increase until the intervention has ended. Using emergency measures to intervene comes with risks and DBT intervened without a clear exit strategy.

A year on, DBT is considering options for the longer-term future of British Steel. It recognises that transition or transformation of British Steel will come at a cost, and decisions need to be made quickly to prevent further costs. DBT needs to ensure the approach is aligned with its forthcoming steel strategy and ministerial objectives for the sector as a whole.

DBT should use the learning from this intervention to help it be prepared for future economic shocks (both in steel and other sectors), such as taking a strategic approach when it needs to respond quickly, supporting the resilience of supply chains, and balancing the risks and cost pressures on other government objectives.

The government should ensure that its new steel strategy minimises the need for further emergency interventions by addressing the risks to a viable domestic supply of steel that meets the UK’s strategic requirements.

Downloads

Report - Investigation into the government’s intervention in British Steel’s Scunthorpe site

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Summary - Investigation into the government’s intervention in British Steel’s Scunthorpe site

(.pdf — 133 KB)

ePub - Investigation into the government’s intervention in British Steel’s Scunthorpe site

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Press release

View press release

(16 Mar 2026)

Related work

Monitoring and responding to companies in distresslessons learned
(27 Oct 2023)

Supporting the UK’s priority industry sectors
(12 Mar 2025)

Department for Business and Trade 2024-25
(18 Dec 2025)

Publication details

ISBN978-1-78604-666-6 [
Buy a hard copy of this report
]

HC1736, 2024-26

Topics

Business and industry
Commercial and financial management
Financial sustainability
Risk and resilience
Risk management

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