British Steel is costing taxpayers around £1.3 million a day to keep operating, more than a year after emergency government intervention prevented the closure of its Scunthorpe blast furnaces.
The Public Accounts Committee says the intervention succeeded in averting an immediate crisis and preserving the UK's remaining primary steelmaking capability. It also found that British Steel remains structurally unprofitable and that the Department for Business and Trade still cannot set out the business model, decarbonisation route or total public cost needed to put the company on a sustainable footing.
By 18 June 2026, government had provided £555 million in working capital, including money for raw materials and wages. Spending had previously been expected to reach £642 million by the end of June, including adviser costs. The committee said the department could not provide even indicative estimates of future expenditure, including the cost of transforming British Steel or how long it might remain in public ownership.
The National Audit Office had already recorded £377 million of spending in the first nine months of intervention, including £359 million for British Steel's operating costs and £15 million for advisers. It found no clear end date and warned that costs would continue rising until the intervention ended.
The PAC says that, if spending continued at the rate examined by the NAO, support could exceed £1.5 billion in 2028. That estimate comes before any major transformation of the plant, compensation arising from nationalisation or eventual exit costs.
Government intervened in April 2025 after British Steel's then owner, Jingye, announced plans that could have led to the closure of Scunthorpe's blast furnaces. The furnaces are the last remaining operational blast furnaces in the UK, and British Steel supplies major customers including Network Rail. The NAO found that the department moved quickly to prevent what it considered an imminent disorderly closure, avoiding immediate job losses and disruption to important supply chains.
British Steel is still making a loss in its current configuration. The department told MPs that it had not yet decided how to make the company profitable and did not yet have a transition project in place for replacing the blast furnaces with electric arc furnaces. A new board appointed in July is now responsible for developing a transformation plan.
Production has also remained below plan. The PAC says output was behind target in nearly every week after the intervention began and considerably below the site's capacity, with outages partly linked to health and safety concerns and poor maintenance under the previous owner.
The public funding is classed as debt to the Crown, but there is no formal loan agreement, and the committee says it is not apparent that British Steel will be able to repay it.
Around £95 million of DBT underspends was redirected to British Steel in 2025/26, including unallocated funding from other departmental projects. Most of the department's support for British Steel that year came instead from the Treasury reserve. The department told MPs that the intervention would create further pressure on its budget in future.
The same uncertainty reaches into the government's wider steel policy.
The steel strategy published in March aims to raise the share of UK steel demand met by domestic production from 30 per cent in 2024 to between 40 and 50 per cent. That is not an unprecedented level: government figures show domestic producers typically supplied between 40 and 50 per cent of UK demand between 2010 and 2020.
The strategy does not set a deadline for returning to that level or state how many tonnes of domestic production would be required. The PAC has asked government to add both a tonnage target and a timetable.
Government identifies steel as important to defence, transport, energy and other critical infrastructure, while global steelmaking overcapacity is forecast by the OECD to reach 721 million tonnes by 2027. UK crude steel production has fallen by more than half over the past decade.
The government has committed up to £2.5 billion to support the wider steel sector, principally through the National Wealth Fund. When the PAC asked how much of that commitment remained once British Steel was taken into account, the department acknowledged that much of it would be spent at Scunthorpe but could not give a precise figure.
The committee's assessment is that the April 2025 intervention "bought time rather than providing a solution." More than a year later, the department has not provided Parliament with a credible plan showing the future production model, preferred decarbonisation route, timetable, funding sources and route to financial sustainability.
The PAC has asked the department to publish that plan and provide an estimate of the total cost, including future operations, advisers, investment and transformation spending, together with an assessment of how much of the money already advanced is likely to be recovered.
Until then, taxpayers are funding British Steel at around £1.3 million a day without an indicative estimate of the final bill.