Minister defends £1.3m-a-day Scunthorpe steel bailout but gives no clear plan

The future of British Steel's Scunthorpe plant was debated on a televised panel programme after an audience member asked whether spending £1.3 million a day to keep its blast furnaces running was a good use of taxpayers' money. The host said the site had been operated by a Chinese company before the government took it over after the owner decided it was no longer viable. The cost of keeping the operational furnaces going is £1.3 million a day.

The panel did not give a single answer. One speaker said 'Frankly, no' when asked if it was good use of money, arguing that the UK needed lower energy costs before steel making could be viable. He said energy prices are four times those in France and seven times those in the United States. He wanted a private business to run the plant again but said that was not possible under current energy costs. He also argued the government was spending money in the wrong place by not allowing more domestic energy production. At the same time, he said the UK needed the ability to cast steel for shipbuilding, tanks and national security, and that dependence on Chinese companies and Chinese technology raised risks.

Another panelist said the spending was not a good use of money but might be a necessary one. She said decisions had long been judged on economics alone, and that had become a luxury. The plant should now be seen as an insurance policy, a backup plan and a source of virgin steel, with a national strategic imperative changing the calculation. She put the cost at about £30 million a month.

A Labour government representative defended the intervention. He said a Labour government would always try to help people swim rather than sink when jobs are at risk. But he said jobs were not the only reason. He cited sovereign capability, saying the UK needed its own steel making in a dangerous and volatile world. He pointed to a new large-calibre gun barrel factory in Telford, which he said uses Forgemaster steel, and said defence jobs were spread across the country, with about 70% outside London and the south east.

The government representative also said the board was in place, the company was being stabilised and a turnaround was under way. He accepted that he could not pretend the government had all the answers or had worked everything out yet. He said it would work with trade unions and the wider industry. When pressed on the plan, he could not give a timetable beyond the current £1.3 million a day. Another speaker said a furnace cannot simply be switched back on once it goes off, calling it a national security issue as well as an important local employer.

A British Steel worker in the audience said he was unsure about the plant's future. He said staff had been through uncertainty with previous owners, but he was happy with what the government had done so far because his mortgage was still being paid. He said workers were proud and passionate and wanted the business to succeed, but they wanted a clearer plan. Asked if he had heard one from the government representative, he said: 'No.' The government representative accepted that. The debate also heard that Scunthorpe has more than 150 years of steel making history.