UK spending watchdog warns over cost of funding British steel

UK Spending Watchdog Flags Big Rise in Cost of Funding British Steel

Government Support and Financial Implications for British Steel

Overview of Recent Spending

LONDON, March 16 (Reuters) - Britain has spent 377 million pounds ($500 million) funding British Steel for nine months, the country's spending watchdog said, adding there was no certainty about the duration of support and whether it would be repaid.

Background: Government Seizure and Rationale

In April 2025, the government seized operational control of British Steel from its Chinese owners, Jingye, to save the country's last remaining primary steelmaking capability and thousands of jobs.

National Audit Office Findings

Rising Costs and Budgetary Concerns

The National Audit Office said on Monday the cost of the intervention was set to rise to over half a billion pounds by June and savings would need to be made elsewhere to fund ongoing support.

Key Financial Details

• Britain's Department for Business and Trade (DBT) spent 377 million pounds between April 12 and January 31, with no budget set at the 2025 Spending Review and no end date for the invention, the NAO found.

• Ongoing operations are costing the government around 1.3 million pounds per day and the bill for support is set to reach 615 million pounds by June.

• DBT has classified the support as a loan but there is no set budget or repayment schedule, with the NAO warning that it is not apparent that British Steel will be able to repay it.

Impact and Recommendations

• NAO said while the support saved jobs and helped UK infrastructure and construction projects, "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."

Government Response

• A government spokesperson said: "Last year we protected thousands of jobs by saving British Steel from collapse, and we are determined to support British steelmaking now and for generations to come.

• "We update parliament on British Steel every four weeks, including spending, and we continue discussions with Jingye to find a pragmatic, realistic solution for its long-term future."

Additional Information

($1 = 0.7545 pounds)

(Reporting by Sarah Young, Editing by Paul Sandle)