Can the UK Steel Industry Be Saved? Examining the Struggle to Secure a National Asset
Introduction
The Steel industry was once a symbol of industrial might and national pride and the beating heart of Britain’s industrial revolution. At its peak, the UK was the world’s fifth-largest steel producer, with towns like Scunthorpe and Port Talbot flourishing around the sector. However, the UK steel industry now stands at a crossroads.
The British government has intervened to take control of British Steel after its Chinese owner, Jingye Group, announced plans to shut down the last two blast furnaces at the company’s flagship Scunthorpe site. The decision threatens not only 3,500 jobs but the very foundation of domestic steelmaking in the UK.
The decline of UK steel is not a sudden event, but the result of multiple compounding factors. After decades of decline, mounting financial losses, and fierce global competition, the question now being asked is: does UK steel still have a future?
Understanding the reasons for decline
- Structural decline: UK steel production has fallen 73% since 1990, even as UK manufacturing has grown overall by 60%.
- High energy costs: Electricity prices are around 50% higher than in France or Germany, hurting competitiveness.
- Global overcapacity: The rise of China as a steel superpower has upended the global market. Chinese producers now account for 27 of the top 50 steel companies worldwide, flooding international markets with cheap steel. China now dominates global steel supply, producing more than it needs and depressing prices.
- Tariff shocks: US tariffs (e.g., Trump’s 25%) dealt further blows to UK exporters, who sent £400m worth of steel to the US in 2023.
- Underinvestment: While competitors have modernised, many UK facilities remain reliant on outdated, carbon-intensive methods. Investment in greener, more efficient alternatives, such as electric arc furnaces or hydrogen steelmaking has lagged behind competition. Chronic lack of investment in modernising facilities or transitioning to green steel production
Why Scunthorpe Matters
- Scunthorpe, in north Lincolnshire, is one of the last industrial heartlands still dependent on steel. It’s home to 3,500 jobs, with steelmaking still forming 4% of local employment.
- If the Scunthorpe blast furnaces close, the UK would become the only G20 nation without the capability to produce steel from raw materials. This has profound implications for defence, infrastructure, and energy projects. Producing Steel still matters!!
- Local areas like Scunthorpe and Neath Port Talbot are among the last steel-reliant regions in the UK, with job losses in these communities posing major socio-economic risks.
Nationalisation: A Lifeline or a Stopgap?
- The government stepping in to take control signals that steel is viewed as strategically vital, not just economically, but geopolitically (supply chain resilience, defence, infrastructure).
- But can nationalisation reverse the tide of global competitive disadvantages? That likely depends on:
- Investment in decarbonised production (e.g., electric arc furnaces, hydrogen)
- Energy cost reform to level the playing field
- A long-term industrial strategy that supports domestic steel use (e.g., public procurement in green infrastructure, defence)
Does UK Steel Have a Long-Term Future?
It’s possible but only if the government and private sector:
- Treat steel as a national strategic asset
- Transition to low-carbon production methods
- Mitigate the cost disparities with European peers
- Leverage post-Brexit freedoms to shape procurement and trade policy in favour of domestic steel
For the move to succeed in the long term, it must be coupled with:
- Massive investment in decarbonised production, such as electric arc furnaces and green hydrogen.
- Reform of energy pricing, to reduce the cost gap with European competitors.
- Industrial policy support, including domestic procurement rules that favour UK-made steel in public projects.
- Strategic alignment with climate goals, enabling the UK to lead in green steel and sustainable manufacturing.
Otherwise, without radical action, nationalisation could be a short-term fix to delay an inevitable decline.
Brief Summary
Steel remains critical to the UK’s economic and strategic future and is vital for building transport infrastructure, offshore wind farms, electric vehicles, and national defence to name just a few. But rescuing the sector will require more than just short-term bailouts. It calls for a bold industrial strategy that balances economic competitiveness with climate commitments.
The current crisis could be a turning point. If the government acts decisively, it has a chance not only to preserve a vital industry but to reinvent it for the 21st century. If not, the furnaces at Scunthorpe may go cold and with them, the last embers of England’s steelmaking legacy.
A Brief History of Steel in the UK
Steel’s story begins nearly 4,000 years ago in the Iron Age. As a stronger and more reliable alternative to bronze, it revolutionized tools and weaponry. Over the centuries, steel’s importance grew—today, it’s found in over 65% of major appliances and dominates industries from construction to transport.
The modern steel industry was born in 1856 when Henry Bessemer introduced a method using oxygen to reduce carbon in iron, making steel production faster and cheaper.
During the 19th century, the UK became the world leader in steel, with Sheffield earning the nickname “Steel City.” The introduction of the Bessemer and Open Hearth processes cut costs and boosted production. However, by the late 1800s, global competition—especially from the U.S.—led to a decline in the UK’s dominance.
In recent years, the UK steel industry has struggled due to cheap imports, especially from China, and limited government support. Major producers like Tata Steel have cut thousands of jobs, pushing the sector into further uncertainty.
Steel also shaped the landscape of British estates. From the 15th century, wrought iron railings became popular, especially during the Victorian era, when estate fencing added elegance and security to large properties and city homes alike.
Types of Steel
Steel is categorized by composition:
- Carbon Steel – The most common, used in general construction.
- Alloy Steel – Contains elements like nickel or chromium for added strength and durability.
- Stainless Steel – Highly corrosion-resistant, ideal for medical and food-related uses.
- Tool Steel – Extremely durable, used in cutting and drilling equipment.
Despite current challenges, steel remains a cornerstone of modern industry and heritage in the UK.