The pattern is familiar: a new Labour government takes office and quickly finds itself launching emergency rescue packages for key industries on the brink of collapse. This time, it’s British Steel—where the new business secretary has argued for the legal authority to take control of the company from its Chinese owner, Jingye, to save up to 3,500 jobs and preserve the UK’s strategic steelmaking capacity.
This moment echoes others in British industrial history, including efforts in the 1970s to rescue iconic manufacturers, reflecting a recurring issue: the UK’s financial and ownership systems often fail to support innovation and long-term industrial health. Instead, companies face a cycle of underinvestment, neglect, and eventual crisis. British Steel’s current situation is a striking example of this long-standing failure.
The steelmaker has never benefited from a coherent, supportive financial ecosystem or an industrial strategy focused on value creation. Even during periods of public ownership, it was often treated as an inconvenient expense, rather than a strategic asset. In contrast, countries like China and Japan have systematically built industrial powerhouses by aligning state-backed investment with long-term planning and innovation.
China, in particular, has pushed aggressively into green industrial development. With a state-controlled banking system and strict capital controls, it funnels vast amounts of credit into strategic sectors like steel and renewables. This approach has enabled China to become the world’s largest steel producer—accounting for half of global output—largely by shifting to electric arc furnace (EAF) steelmaking powered by renewable energy.
Electric arc furnaces require massive amounts of electricity, ideally cheap and sustainable. China has made rapid progress here: renewables already power 40% of its grid, with plans to double that by 2030. Provinces like Hebei, where Jingye is based, are aligning their steel industries with this shift, as outlined in China’s latest five-year plan. British Steel’s Scunthorpe plant, reliant on older methods and more expensive fossil fuels, no longer fits that model.
When Jingye acquired British Steel in 2020, there was still hope that the UK’s then-bipartisan commitment to green energy would support the investment needed to modernize operations. But since then, political support for renewables has faltered. In some circles, cheap clean energy has been ridiculed or dismissed as “woke,” and energy pricing continues to favor expensive fossil-fuel sources due to outdated policy design.
Compounding the challenge, international trade tensions—particularly tariffs introduced under the Trump administration—have pressured Chinese exporters like Jingye. Facing their own mounting debts and economic uncertainty, Chinese firms must prioritize survival over foreign investments. In this context, British Steel’s fate was likely sealed long before the current crisis hit headlines.
The UK government may now have powers to intervene directly in British Steel’s operations, but this alone won’t secure the industry’s future. To remain a steel-producing nation, Britain must rethink its industrial and energy strategies. This means accelerating investment in EAF technology, restructuring energy pricing to reflect the true cost advantage of renewables, and ensuring domestic demand supports local producers.
New ownership structures could also help. A combination of the national wealth fund, British Business Bank, and UK pension and insurance funds could anchor British Steel’s future, offering stable, long-term backing rather than short-term profit motives. Public-private collaboration should be designed not to rescue failing firms for their own sake, but to build a sustainable, competitive industrial base.
Signs of change are beginning to emerge. The UK now has institutions such as the national wealth fund and British Business Bank. Financial leaders are increasingly acknowledging the link between a strong national economy and the health of the financial sector. Discussions are already underway for a new agreement in which pension funds would invest a greater share in British innovation and industrial growth.
Crucially, the government appears committed to a formal industrial strategy and a review of how energy is priced in the UK—key steps if British industry is to compete globally.
The long-standing free-market approach, which tolerated deindustrialization and left manufacturing to sink or swim, is being reassessed. Market failures are an accepted part of capitalism—but only if they are balanced by innovation and new successes. That requires an economic system built to nurture them.
British Steel must be part of that new economy, not a relic of an outdated one. The opportunity is real—if the commitment follows.
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