A worrying admission from Business Secretary Peter Kyle suggests the government’s £2.5 billion steel rescue fund may be largely spoken for before the first new furnace is even built. Kyle confirmed “hundreds of millions of pounds” from the fund have already been spent on operational bailouts.
This 2024 manifesto pledge was meant for “capital investment” to modernise the industry. However, the “slew of crises” in the global market, including the near-collapse of British Steel in April and the insolvency of Liberty Steel in August, has forced the government to use the money just “to keep operations going.”
The text states this “probably mean[s] less money for capital investment.” This is a huge understatement, as the government is now proposing its most expensive plan yet: a switch to electric arc furnaces (EAFs) at Scunthorpe, and a potential “financially dubious” hydrogen (DRI) plant on top of that.
These projects require billions in new investment, which the fund was supposed to cover. With a large, unspecified portion already “spent,” the government’s new steel strategy in December faces a massive funding gap.
Kyle remains publicly optimistic, stating he believes EAFs will be built. But the financial reality suggests the government will need to find a new pot of money, or its “clear future vision” will be dead on arrival.
