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Business secretary Jonathan Reynolds has suggested there will be a high bar for Chinese investment in Britain in the coming years after he passed emergency legislation to keep British Steel afloat.
Acknowledging the sensitivity of the steel industry to strategic national interests, Reynolds said on Sunday: “I would not personally bring a Chinese company into our steel sector.”
Asked whether there was a “high trust bar” for Chinese companies controlling UK businesses, he said: “Yes, we have got to recognise that.”
Prime Minister Sir Keir Starmer took the extraordinary step of recalling parliament on Saturday during Easter recess to pass emergency legislation allowing the UK to wrest control of British Steel from its Chinese owner, Jingye Group.
Reynolds told Sky News that whether the government could trust Chinese companies after Jingye’s handling of British Steel would depend on which sectors they operated in.
He said: “I think we have got to be clear about what is the sort of sector where, actually, we can promote and co-operate, and ones frankly where we can’t. I wouldn’t personally bring a Chinese company into our steel sector.”
He added that he was not accusing the Chinese state of being “directly behind” recent decisions taken by Jingye.
The government intervened to preserve primary steelmaking in the UK and protect 3,500 jobs. While Jingye remains the main shareholder for now, the legislation is a key step on the road to nationalisation of British Steel.
Ministers said they had to act to secure the raw materials needed to ensure the company’s two blast furnaces at its site in Scunthorpe kept working.
Officials were on Sunday working closely with British Steel’s local management to secure new cargoes of coke and iron ore to continue production, people close to the company confirmed.
The steelmaker’s local management was also considering working with other industry participants to secure raw materials. More than a dozen businesses had offered raw material support to the company over the past 24 hours, according to the people.
The company, said one of the people, was also reassessing whether it was possible to reverse the decision made by Jingye executives to idle one of the furnaces on a temporary basis.
“No options are off the table right now and the sole focus is retaining blast furnace operations,” they said.
Reynolds on Sunday said that while his preferred option would be to find a private sector partner to help finance the future transformation of British Steel, the more probable option was full nationalisation.
The intervention has led to fresh scrutiny of the former Conservative government’s decision to sell the UK’s last strategic steel group to a Chinese company in 2020.
Reform UK leader Nigel Farage said that Jingye was clearly “a bad actor” and criticised the Tories, telling the BBC on Sunday: “They effectively gave a strategic industry to a foreign opponent.”
Reform is seen as Labour’s main rival in the local elections on May 1, and Farage has sought to position his party as the principle political advocate for key industrial sectors across Britain.
Reynolds said that British Steel recorded £233mn in losses in the last financial year but that the cost of the steelmaker collapsing completely would have exceeded £1bn.
The Conservative MP for Chingford and Woodford Green, Sir Iain Duncan Smith, said on Saturday that the previous Conservative government “should never have awarded [Jingye] the contract”.
“I warned them about that,” he told MPs. “It is time for us to make sure that we deal with China at face value and do not accept the pretence that this company is private or in any way detached from its government. That is a critical point.”
