The government has indicated it could block a controversial payout to the owner of British Steel, in what would be a dramatic intervention to protect national interests. Sources close to the Department for Business and Trade say ministers are examining legal options to prevent a large dividend from being paid to the Indian conglomerate that owns the struggling steelmaker.
The move, if enacted, would mark a significant shift in the UK's approach to foreign ownership of critical industries. It comes amid growing unease over the financial health of British Steel, which employs 4,000 workers in Scunthorpe and elsewhere. The company has been loss-making for years and has received hundreds of millions of pounds in government loans and subsidies.
Union leaders welcomed the news but warned that more was needed to secure the long-term future of the industry. 'This is a step in the right direction,' said Roy Rickhuss, general secretary of the Community union. 'The government cannot stand by while a foreign owner extracts value from a company that has been propped up by the British taxpayer.'
Business Secretary Kemi Badenoch is said to be 'minded' to use powers under the National Security and Investment Act to scrutinise any large payouts. That legislation, introduced in 2022, allows the government to intervene in deals that could threaten national security. The decision to block a dividend would be unprecedented and could trigger a diplomatic row with India.
British Steel's parent company, Jingye Group, has faced criticism for the level of debt it has loaded onto the UK business. The company has said it remains committed to the UK and is investing in greener technologies. But the government has lost patience, according to insiders, and wants to see evidence of long-term commitment rather than short-term financial engineering.
For workers on the shop floor, the news brings a glimmer of hope. John, a steelworker in Scunthorpe who asked not to be named, said: 'We hear a lot about big plans but see little change. If the government is serious about protecting jobs, they need to act now. People are worried about their mortgages and their kids' futures.'
The potential blocking of the payout comes as ministers prepare to unveil a new strategy for the steel industry, which could include a carbon border tax and more state aid for green steelmaking. Labour has accused the Conservatives of 'dithering' over the sector's future, while the Liberal Democrats have called for full nationalisation.
Any move to block the dividend would require a complex legal process and could face a challenge in the courts. But with a general election looming, the government is keen to be seen as taking decisive action to preserve British manufacturing. The cost-of-living crisis has put household finances under immense strain, and protecting well-paid jobs is a political priority.
Yet questions remain over the long-term viability of British Steel without major restructuring. The global steel market is oversupplied, energy costs remain high, and the transition to green steelmaking requires huge investment. The government's intervention, while welcome to unions, may only be a temporary fix.
As one insider put it: 'This is about sending a message that the UK will not be a fire sale for foreign owners who don't play by the rules. But it also highlights just how precarious the situation has become. Blocking a dividend is one thing; building a competitive steel industry is another.'
