In 1976, night-shift steelworkers at Templeborough – then the world’s largest electric arc plant – broke a production record. A letter from Prime Minister Jim Callaghan awaited them, hailing the shift a triumph for the state-owned plant and for Britain. It might be back to the future after Sir Keir Starmer greeted Scunthorpe workers this weekend, to mark his government taking control of British Steel from its Chinese owners.
The UK has stumbled – or rather been dragged – back into industrial policy. After decades of laissez‑faire hand-wringing, the looming closure of Britain’s last blast furnaces forced the business secretary’s hand. Nationalisation, a word redolent of postwar statecraft, is back on the table. And rightly so.
Britain’s policymakers are waking up to the fact that strategic sovereignty isn’t a quaint 1945 idea – it’s the key to energy transition, secure supply chains and a functioning economy. Steel is also about political memory, local identity and who gets a future. That question has long been answered unevenly – and steel regions are where the consequences land hardest. Chris McDonald, Labour MP for Stockton North and former chief executive of the UK’s steel innovation centre, told MPs global steel isn’t a free market – it’s shaped by state power. France backs its industry with procurement. Germany subsidises energy. China hands out cash. The US blocks foreign rivals. The UK’s mistake has been to outsource industrial policy to the market.
The steel industry accounts for around 8% of global greenhouse gas emissions. To reduce that requires moving to electric steel mills that produce about 80% less carbon compared to a blast furnace. But this greener form of steel production relies on two key inputs: recycled scrap for most applications and DRI (direct reduced iron) – iron with minimal impurities – for aerospace or medical uses. Pharmaceutically pure steel may sound niche – until you’re replacing a knee. Surgical implants demand extreme purity, zero toxicity and total corrosion resistance.
If the UK wants low-carbon steel, it needs a plan for virgin iron. But that means building DRI plants, greener supply chains and long-term access to high‑purity iron ore – none of which Britain currently produces. It’s a rude awakening for a country that bet on the market to deliver. The Swedes, as it happens, did not make that bet. They built a ecosystem of state-owned mining, steel and green energy firms, and delivered fossil-free steel to Volvo in 2021 – with subsidies, strategy and shared purpose. Germany and Austria are following suit. Meanwhile, the UK parliament has only just decided it’s OK to intervene.
The Scunthorpe takeover concedes what should have been obvious: steel is a national asset, not just another market failure. But the roadmap is missing. Green-powered DRI plants are the likely next step, feeding electric arc furnaces. But these slash steel employment by 80%. The real challenge? Shifting workers fast enough to green jobs before the old ones vanish. The government’s forthcoming steel strategy must do more than tinker. It must forge the future. Less than 10% of global iron ore reserves are currently suitable for DRI. Analysts suggest there needs to be a tenfold rise in DR-grade supply to meet a 2050 net zero target. Better to get ahead now than play catch-up later. Britain must resist the allure of short-term fixes and think like a country that still makes things – and wants to keep doing so.
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