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Sir Keir Starmer has vowed to push through “emergency legislation in one day” on Saturday to save the British Steel site at Scunthorpe, as he recalled parliament to avoid the company’s collapse and the loss of 3,500 jobs.

The prime minister said the government would take control of the plant and order its Chinese owners to keep open its blast furnaces, the last two in the UK, in a move seen as a precursor to full nationalisation.

As relations between the government and Jingye Group, the owner of British Steel, disintegrated, Starmer took the highly unusual step of recalling MPs from their Easter recess to pass the emergency law.

“We will pass emergency legislation in one day to give the business secretary the powers to do everything possible to stop the closure of these blast furnaces,” Starmer said in a statement in Downing Street.

Senior government officials claimed that Jingye, which bought British Steel in 2020, had been willing to let the two blast furnaces close down, essentially putting them out of action forever.

Jonathan Reynolds, business and trade secretary, said: “We made a generous offer of support to the company and I am deeply disappointed that we have been forced to take these measures, but Jingye have not been forthright throughout this process, and left us no choice but to act.” 

Downing Street said the emergency legislation would allow ministers to “direct steel companies in England” but for now stop short of the full nationalisation of British Steel.

However, senior Whitehall officials said this was a holding operation and that full nationalisation was now likely. One said: “One of the considerations was how quickly you can pass legislation on nationalisation.”

Number 10 officials said the emergency powers bill — which is certain to pass because of Labour’s big majority in the House of Commons — was seen as the swiftest way to keep the Scunthorpe site operating.

A government official said the new powers would be used to order new raw materials, paid for by the taxpayer, to keep the site functioning.

“This is bold action . . . it is a significant step to take but an essential one,” said another government official, who acknowledged that the state would have to put money in.

“There would be exchequer costs from any option,” the official said, noting that while nationalisation was an option, the government was still keen to find a private-sector solution.

The closure of the furnaces at Scunthorpe would leave the UK as the only G7 country unable to make steel from scratch using raw materials.

One industry figure briefed on the situation said they expected the outcome of Saturday’s emergency debate would be the “government taking control of the business and indemnifying management to act on the instruction to purchase and use raw materials”.

A full nationalisation bill was likely to follow some time after the Commons returned from its Easter recess in late April, the person said.

British Steel declined to comment.

Talks to secure a future for the steelmaker, which employs 3,500 workers across three sites, have been going on all week between ministers and Jingye.

Jingye warned last month that the company’s two remaining blast furnaces were no longer financially viable and started consultations on job losses.

The Chinese group said it had invested more than £1.2bn into the company since taking it over but that it was losing £700,000 a day, in part because of high environmental costs.

British Steel’s most recent accounts showed it had been funded mainly through debt facilities provided by its parent and had £736mn of debt outstanding at the end of December 2023.

Jingye last month rejected a £500mn taxpayer support package to help it move to greener forms of steel production.

Maintaining Britain’s steelmaking has become a major strategic priority for the government, which has put aside £2.5bn to support the sector.

Starmer’s government is also developing an industrial strategy to back key sectors, and is particularly concerned about the threat to the steel industry from US President Donald Trump’s 25 per cent global tariff on American steel and aluminium imports.

Roy Rickhuss, general secretary of the Community steel union, which represents most of the workers at Scunthorpe, welcomed the emergency sitting of parliament.

“It is in the national interest that a solution is found to secure a future for British Steel as a vital strategic business,” he said. “We can’t allow Britain to become the only G7 country without primary steelmaking capacity.”

Sharon Graham, general secretary of Unite the union, said she was “pleased that the government has listened to representations” over the future of British Steel.

“It is absolutely the right thing to do to begin the process of nationalisation.”