The nationalization of British Steel could cost the British government billions of pounds

£419 million in taxpayer funds has already been spent to support the business

The full nationalization of the troubled British Steel will cost taxpayers billions of pounds and will be “extremely expensive” for the British government, according to Politico.

According to a report by the National Audit Office, since taking control of the Scunthorpe facility 11 months ago, taxpayers have already spent £419 million to support the company. At the current rate, spending on British Steel could exceed £1.5 billion by 2028. Thus, a transition to full nationalization could become “extremely burdensome for the budget,” notes a senior representative of the steel industry.

British Steel will require even more funds if a decision is made to modernize the outdated plant in Scunthorpe and transform it into a modern facility with electric arc furnaces. Such a project would cost at least £1 billion and take at least five years to complete. In the absence of a private buyer, these costs would also fall on taxpayers.

Industry representatives see an opportunity to attract investors in this scenario if the government assumes British Steel’s obligations and merges it with Specialty Steel UK (SSUK), which already operates electric arc furnaces. This became possible after the government took control of the assets of the former Liberty Steel Group, which announced its liquidation last year.

Currently, Liberty owns the largest electric arc furnace, and there is stable demand for products for the aerospace, defense, and oil and gas sectors. In his view, it would be advisable to consolidate these capacities into a single asset. He also added: when it comes to national security, the state needs its own specialty steel for the production of military products.

As a reminder, the UK government plans to introduce a bill to Parliament that would grant it the right to place British Steel under state control, subject to a public interest test.

As reported by GMK Center, last April the government took control of British Steel to prevent the closure of the last two blast furnaces in the UK. Over nine months (from April 12, 2025, to January 31, 2026), the British government spent £377 million ($499 million) to keep the British Steel plant in Scunthorpe operational. The National Audit Office (NAO) reported that the company’s current operations cost the Department for Business and Trade approximately £1.3 million per day.