The events of this weekend have all the ingredients of a Netflix thriller: The Battle of Scunthorpe — how plucky Brits fought to keep their steel mills running.
It is movie gold dust: chisel-jawed steelmen protecting their Lincolnshire furnaces; police swooping on the Chinese overlords; officers guarding ports to prevent the baddies shipping the goods back to Beijing.
But for all the justified demonisation of the Chinese executives’ behaviour, there is another filmic moment that should be front and centre in the story. At 11am on March 20 — days before the government’s doomed talks with Jingye to keep the blast furnaces open, a series of explosions shook the east Nottinghamshire countryside.
With tragic gracefulness, the 190-metre chimney stack at Cottam power station collapsed in a plume of brick dust:
It was the irreversible end of one of Britain’s last coal-fired power stations, a process of industrial demolition that has left the UK with the highest energy costs in Europe.
Make no mistake, the crises ripping through Britain’s industrial behemoths — the deaths of Port Talbot and Redcar’s steelworks, the closure of Grangemouth’s oil refinery, the struggles of Staffordshire’s ceramics plants — all trace back to that one factor: the high price of British electricity. By killing off cheap, coal-fired electricity generation, successive governments focused on meeting net-zero emissions targets have crippled energy-intensive manufacturers.
In the five years to the end of last year, the cost of power for industrial businesses jumped 124 per cent, according to government figures. UK electricity is 50 per cent more expensive than in Germany and France, and four times as costly as in the US.
Simon French, chief economist at Panmure Liberum, who grew up near the Scunthorpe works, says the decision to switch off coal has been a big policy failure. “It’s the result of a lost decade of industrial strategy,” he said.
Successive governments, he adds, have not “codified” what products are so important to the country that the taxpayer should be willing to back them up. “For me,” he said, “There are three things: energy, semiconductors and steel. Get those right and you address the principal objectives of national security.”
Britain did not always have this sense of drift. In the early 1970s, steel manufacturing employed more than 300,000 people, producing somewhere in the order of 28 million tonnes of steel a year. The industry had been nationalised by Harold Wilson’s Labour government, pulling together the 14 private companies that made the bulk of production under the name British Steel. But rising energy prices, overcapacity and recession meant it struggled with heavy losses.
Margaret Thatcher’s government slashed costs, closing the Consett, Corby and Shotton steelworks, halving production, before privatising it in 1988.
Tony Lodge, energy analyst at the free market Centre for Policy Studies think tank, recalls British Steel was in good shape when ministers prepared the sale: “There was a genuine belief back then that the private sector could grow it. It had been invested in and was efficient. Sadly, what actually happened was a process of asset stripping and offshoring.”
British Steel merged with Holland’s Koninklijke Hoogovens in 1999 and was renamed Corus Group, before undergoing plant closures, new owners and splits.
Today, UK steelmakers produce 5.6 million tonnes a year and employ 37,000 people. Having once been a king in the court of global steelmakers, Britain makes only 0.3 per cent of the world total, compared with China’s one billion tonnes, or 54 per cent, and the EU’s 7 per cent.
It is figures like this that explain some of the reluctance of previous Conservative administrations to support steel. Why spend taxpayers’ money trying to keep alive these relics from the industrial past, say the free market-minded.
Lodge said: “The Tories are split. Either they’re saying, ‘We should be the neoliberal party’, or they’re of the view, ‘We have to be more fleet of foot and defend our key national assets’.”
Historically, the party was also divided over how Britain should behave towards China. The George Osborne-David Cameron era embraced Beijing as a trustworthy sugardaddy. But, prompted by a sceptical Washington wary of President Xi’s expansionism, that excitement rapidly moved to fear.
Theresa May ejected Huawei from Britain’s telecoms infrastructure, China was kicked out of the Sizewell B nuclear power project and the Chinese tech company Nexperia was ordered to sell its majority stake in the UK’s biggest microchip factory.
The behaviour of Jingye, Scunthorpe’s owners, does nothing to soothe concerns that Chinese companies are opaque at best — policy tools of Xi’s politburo at worst.
Jingye was not simply trying to shut the Scunthorpe plant — it was reportedly preparing to profit by moving Britain’s rail production to China. As well as making rails, Scunthorpe’s blast furnaces are a big supplier of the steel that goes into buildings and the girders that help bed windmills into the sea. In other words, two of the key drivers of the future economy.
That said, there will be questions over what message an effective seizure by politicians of a private company owned by foreign investors will send to the world. Rachel Reeves has declared Britain “open for business” in the hope of drumming up billions of investment to boost the flagging economy.
So far, such deep-pocketed funds seem relatively unworried. Executives at one of the biggest Canadian investment funds and officials in Qatar — a huge investor in the UK — made clear their continued confidence in Britain. One Qatari source said: “We invest in Britain for ten, 15 years or more. This would not put us off at all.”
However, the government’s action will exact a toll on the economy as Reeves begins planning her June spending review just as the steelworks requires bailing out. French said: “This was the right thing to do, but it is going to cost the country for a long time if it goes down the route of public ownership. So, what is she going to stop to fund this? Will it mean fewer schools, fewer prisons?”
Scunthorpe could, however, increase in value over the years if the government finds a way of reducing energy prices. Britain’s exit from the EU means it should be easier to subsidise the electricity bills of heavy industries — a demand factory owners have been making for years. And if plans to accelerate renewable energy come to fruition, such subsidies might only be needed for a decade or so, as the nation basks in Ed Miliband’s paradise of free, green power.
Ironically, Scunthorpe is close to the vast Hornsea and Dogger Bank wind farms in the North Sea. It is a big if, but if the storage capacity and infrastructure can be built to capture enough electricity to keep Scunthorpe running, its energy bills could one day be cheaper than Europe’s.
Besides, not all nationalised enterprises are a drain on government coffers. Sheffield Forgemasters, maker of steel parts for Britain’s nuclear submarines, was nationalised in 2021 and has secured new orders since from the UK and US military.
Lodge argues that the Scunthorpe site is so big it could be extended to make hulls for navy ships. For that to happen, it would require serious taxpayer investment at a time when Trump’s tariffs and Britain’s sickly economy mean there is no spare cash in the tin.
It might all turn out all right in the end, but a finale in this movie with a glorious future for British Steel feels a little far-fetched for now.
