National Audit Office: Government spends £377 million in 9 months to keep British Steel’s Scunthorpe site operating

• Government intervention, led by DBT, prevented closure of the last two remaining blast furnaces in the UK, preventing job losses and serious impact on industry.
• DBT spent £377 million between 12 April 2025 and 31 January 2026 to keep the site operational, with this money being classified as a loan. Ongoing operations are costing around £1.3 million a day, with no set budget, repayment schedule, or end date.  

• DBT is now considering options for the future of the site, and government's forthcoming strategy will set out its long-term objectives for the sector.  

The Department for Business and Trade (DBT) quickly intervened to save British Steel's Scunthorpe blast furnaces from closure, and has spent £377 million so far to keep the site operational with no budget set at the 2025 Spending Review, and no end date for the intervention a new report from the National Audit Office (NAO) has found.1 

Jingye, the owner of British Steel, and DBT had been in talks around transitioning to electric arc furnaces between 2022 and 2025, but had not reached an agreement.² In March 2025, Jingye announced that it was losing £700,000 per day due to challenging market conditions, tariffs, and high environmental costs, and it was considering the closure of the blast furnaces. This would have resulted in a large number of job losses at Scunthorpe and affected key customers in the supply chain, such as Network Rail. 

In April 2025, DBT intervened after assessing that timescales were critical due to stocks of raw materials running low, and there was a risk of the blast furnaces being switched off. 3 Emergency legislation - the Steel Industry (Special Measures) Act 2025 – was passed to allow DBT to issue formal instructions to British Steel to continue operating its blast furnaces. DBT acted quickly to mobilise a team on site, secure raw materials and put governance arrangements in place.  

DBT has so far spent £377 million to keep British Steel operating, including spending £15 million on advisers between 12 April 2025 and 31 January 2026, and £359 million to British Steel for operating activities such as paying for raw materials, payroll, and other operating costs. 4 Spending is expected to reach £615 million by June 2026. If spending continues at current rates, it could exceed £1.5 billion in 2028 depending on policy choices that may be taken in the future. 

DBT has no repayment schedule in place, and it is not apparent that British Steel will be able to repay the loan. 5 DBT was not allocated funding for the intervention at the Spending Review and will have to make savings elsewhere to fund part of the intervention from its existing budgets for 2025-26. 

DBT considers that the benefits of the intervention have been to ensure the continued and safe operation of the two blast furnaces at the Scunthorpe site, giving the department time to undertake a national security and economic assessment of the steel sector, and to retain primary steelmaking capability in the UK.  

DBT has been in contact with the owner, with a view to finding a way through that meets the government's aims of preserving steelmaking in Scunthorpe and enabling future discussions about investment. Longer-term, a transition plan for converting from blast to electric arc furnaces, and a wider transformation plan may be required to support the future viability of the business. 

DBT has established the Steel Programme which covers on-site management at Scunthorpe and work on future steel policy. DBT plans to publish a steel strategy which is expected to outline measures to address sector-wide challenges and attract investment. 6 The government has also previously announced a £2.5 billion commitment to the steel industry. 7  

Gareth Davies, head of the NAO, said:  

“DBT was able to act quickly to save British Steel's Scunthorpe furnaces from closure, avoiding heavy job losses and serious impacts on major UK infrastructure and construction projects. However, the trade-off is the significant cost of maintaining operations, and uncertainty over how long this will continue.” 

“DBT should learn from this experience to be better prepared for future interventions.” 
 

ENDS 

Notes to editors

1. Steel made via electric arc furnaces uses electricity to melt scrap metal. Many countries, including the UK, are moving to electric arc production due to their lower carbon emissions and use of recycled scrap material. Converting blast furnaces to electric arc furnaces is a long and costly process.
2. Blast furnaces produce steel using raw material including iron ore, coke and limestone. The process is highly energy-intensive and releases large amounts of CO2. Blast furnaces are designed to be in continuous use at high temperatures. Once a blast furnace has been turned off, it is costly and complicated to restart production.
3. Spending on EY does not include spending after 9 January 2026.
4. The loan is classified as a debt to the Crown under the Steel Industry (Special Measures) Act 2025.
5. The steel strategy is expected to set out a range of policies to create a more supportive business environment, including boosting demand, addressing trading uncertainty, reducing electricity prices, and supporting decarbonisation. Industry stakeholders the NAO spoke to said the strategy needs to address two major challenges impacting the steel sector: high electricity prices (affecting the competitiveness of British products) and uncertainty over trade restrictions. 
6. Written Ministerial Statement, made by Jonathan Reynolds, the then Secretary of State for Business and Trade on 11 September 2024, HCWS87, available online at Written statements - Written questions, answers and statements - UK Parliament