Business Secretary unable to rule out job losses at British Steel in electric transition

The Government now can direct British Steel to purchase raw materials for the blast furnaces, and Mr Reynolds admitted full nationalisation “was likely”.

The Business Secretary was at Immingham port today, as the coking coal and iron ore pellets arrived in the UK.

However, he could not guarantee that there would be no job losses going forward.

He said: “What we need for the long-term future of British Steel is that private sector partner to work with us as a Government on a transformation programme.

“That might be new technology, new facilities, that might have a different employment footprint. The staff here absolutely know that, they know they need a long-term future.”

The Government had been in talks with Jingye and the unions over the transition from the blast furnaces to EAFs, which are a more sustainable way of producing virgin steel.

The Community union backed a report which showed EAFs could be built on the site, while the blast furnaces remained on - something which the Chinese owner was clearly against.

Mr Reynolds said: “These blast furnaces have given this country nearly a century of service in one case, so they know they need the future and that might be a different model, different technology.

“What they didn’t want was the unplanned, uncontrolled shutdown of the blast furnaces with thousands of job losses and no plan in place for the future.

“And by what we’ve been able to do, working with the brilliant team here at British Steel, is to secure the possibility of that better future – and I for one am confident that we’ve made the right decision to support the people here.”

It comes as Community said the arrival of the materials is a “huge relief” after Jingye’s “disgraceful actions” risked thousands of job losses, while British Steel said it offers “great hope” for the future.

Alasdair McDiarmid, assistant general secretary, said: “Our members lost confidence in Jingye a long time ago, and recent events have proven the Chinese were never a fit and proper owner for a strategically critical business like British Steel.

“It beggars belief, but we now know Jingye were starving our furnaces of raw materials so they could end steelmaking at Scunthorpe and feed our rolling mills from their operations in China.

"Jingye’s disgraceful actions, if they had succeeded, would have cost us thousands of quality jobs and severely compromised the UK’s economic and national security.”

While Mr Reynolds suggested that bids from China for critical infrastructure would be looked at in “a different way” to those from other nations, but said that the dispute over British Steel was because of “one specific company”.

The Business Secretary previously said that he would not want to bring a Chinese firm into the steel sector again, though industry minister Sarah Jones did not rule out doing so when asked on this morning’s media round.

Speaking from Immingham, Mr Reynolds said: “In this case, our difference of opinion on the future was with a specific company.

“I know there’s a lot of interest in the wider UK-China relationship, understandably so but this was about this company.

“I think we’ve got to recognise that steel is a sensitive sector. It’s a sensitive sector around the world, and a lot of the issues in the global economy with steel come from over-production and dumping of steel products, and that does come from China.

“So I think you would look at a Chinese firm in a different way but I’m really keen to stress the action we’ve taken here was to step in, because it was one specific company that I thought wasn’t acting in the UK’s national interest, and we had to take the action we did.”

The incident has reignited discussions over London’s relationship with Beijing.

Former Conservative leader Sir Iain Duncan Smith has said that the Government needs to define which industries are “strategic” – such as steel and water – and prevent China from being allowed to invest in such sectors.

He explained: “The Government now needs to define which of its industries and areas are strategic.

“Personally I think the whole net zero project is an energy project, therefore is strategic including therefore the nuclear industries.

“Steel and steelmaking are a strategic industry, all the arms manufacturers are strategic industries, and anything to do with water and various other areas, they’re all strategic industries.”

Meanwhile, Labour MP Ian Byrne who chairs the business and trade select committee said that there should be a new “framework” for judging potential risk from foreign investors.

Mr Byrne explained: “ I just think that we’re going to need a completely new framework for understanding the good and the bad and what’s risky and what’s okay.

“Right now we just don’t have that framework available for parliament or for investors or for the business community or for UK consumers.”