Source: Financial Times
The UK government is taking on an increasingly interventionist role in the nation’s struggling steel industry, with taxpayers now directly supporting four of the country’s six major steel producers.
A Sector in Crisis
The latest intervention came with the collapse of Liberty Speciality Steel, part of Sanjeev Gupta’s GFG Alliance, which was wound up this week. This follows earlier state action including:
- The nationalisation of British Steel in April after its Chinese owner threatened closure.
- A £500 million subsidy to Tata Steel to support its transition to electric arc furnaces at Port Talbot.
- A £426 million recapitalisation of Sheffield Forgemasters, which has been under government ownership since 2021.
The measures highlight the scale of the challenge facing Britain’s steel industry, which is grappling with high domestic energy costs, U.S. tariffs, and global oversupply.
Liberty Speciality Steel: State-Funded Survival
Although the government does not own Liberty Speciality Steel outright, it is currently paying the wages of 1,450 employees across six sites in Rotherham and Sheffield, as well as plant operating costs and fees for restructuring advisers Teneo. The Official Receiver has taken control of the business, with Teneo empowered to manage staff, cut operations, or shutter parts of the business in pursuit of a rescue buyer.
Court filings revealed the company had an urgent £3.7 million cash need to cover staffing, and a further £6.8 million required for cash flow over the next four weeks. With the site effectively mothballed and no customer orders for three months, the government is also shouldering the restart costs.
Political and Union Response
Union leaders have welcomed the interventions, framing them as evidence of the Labour government’s commitment to steelworkers and local communities. However, they have also warned that assuming responsibility for the industry means the government must be held accountable for safeguarding jobs and securing long-term stability.
A government spokesperson confirmed that emergency funding will initially come from the Department for Business and Trade’s internal budget, though if a buyer is not found, further recourse to the National Wealth Fund—already backing the Sizewell C nuclear project—may be required.
Fragmentation and the Need for Strategy
Britain’s steel output has been in structural decline for decades, with domestic crude steel production falling to just 4 million tonnes last year, the lowest since the Great Depression. Union leaders argue that years of fragmentation have left the sector vulnerable, suggesting that consolidating Liberty Steel’s assets with British Steel could provide a more sustainable path forward.
The government has pledged to publish a long-awaited Steel Strategy later this year, delayed by recent crises and the imposition of tariffs from the United States. Industry stakeholders are pressing for a plan that goes beyond emergency bailouts to ensure the sector can compete globally and contribute to the UK’s defence and clean energy transition.
Outlook
While Cardiff’s 7 Steel and Sheffield’s Marcegaglia remain the only major UK steelworks untouched by intervention, the broader industry’s survival now rests heavily on taxpayer support. The coming Steel Strategy will be a decisive test of whether Britain can build a cohesive, competitive steel industry, or whether the sector will continue to lurch from one crisis to the next.
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IMAGE: Reuters
