Clement Attlee. Herbert Morrison. Harold Wilson. Now, following his speech yesterday, Keir Starmer can finally join the pantheon of Labour figures who have nationalized steelmaking in Britain. In classic Starmerite fashion, however, this is subject to passing another administrative barrier, a “public interest test”. Sir Humphrey will be pleased.

This whole process has dragged on far longer than it needed to. As soon as the Government effectively seized control of the facilities at Scunthorpe last year, it was clear that either full nationalization or the collapse of the business were the only two options. Several multinationals have tried to make the business profitable and failed; no private company was going to be able to make the numbers magically add up in the face of Chinese competition. Collapse was unthinkable. The Government had dragged Parliament back for a historic Saturday sitting to pass emergency legislation to save the steel works. Had the company gone under, the embarrassment for the Prime Minister and his government would have been unbearable.

However, while avoiding embarrassment is a strong political motivation, it is not an industrial strategy. Starmer said yesterday that the aim of nationalization is to “make Britain stronger”. But how? Sadly, there is little helpful information in the speech or in the Government’s “Steel Strategy” published earlier this year.

There are two main arguments for why nationalization will make Britain stronger. The first is that it will allow the Government to directly invest in boosting production to meet the country’s growing demand for steel. The Government’s own review found that demand for steel is due to increase by two million tonnes per annum by the end of the decade. An output gap will put at risk capital projects from energy infrastructure to new housing. If Britain fails to meet its own needs, it will depend on imports at a time of geopolitical insecurity and rising costs caused by global tariffs. The value of steel imports has already risen by over £1.2 billion over the past couple of years, putting further strain on Britain’s unsustainable trade deficit.

Ironically, meeting demand and reducing the cost of imports was precisely the reason Labour nationalized steel after the Second World War. The argument has always been that the private sector would be unwilling to make the big investments required to boost production and modernize plants in an unpredictable world. Yet the Steel Strategy is hardly ambitious. It has a vague target to increase steel production to between 40-50% of projected domestic demand, a target that can be easily met because planned production puts the UK at just under 60% of domestic demand.

This apathy about boosting supply is further demonstrated by the decision to switch from traditional blast furnaces to Electric Arc Furnaces (EAFs) at Scunthorpe. Keeping the blast furnaces operating was the main reason for emergency legislation to take over British Steel last year. This is because, as the Government review has found, blast furnaces remain the best option for large-scale production of the highest-quality products, so called “virgin steel”. EAFs can produce these products, but it is unclear if they can do so in a way that is affordable and avoids risks around securing enough high-quality scrap. Nationalization is about de-risking the steel industry, yet this decision adds new problems and dependencies.

It also flies in the face of the second argument for nationalization: securing supplies of virgin steel for national defense. Although it has yet to be published, the Defence Investment Plan is likely to add even greater demand for the highest-quality steel. If Britain closes the Scunthorpe blast furnaces, the country may end up depending on imported steel for new ships, fighters and missile systems. It will be difficult for the Government to explain to taxpayers that huge sums of money have been spent for the UK to remain dependent on overseas supplies for the kit our Armed Forces need.

This indecision and muddled thinking shows how much of the debate around nationalization is preoccupied with vibes rather than substance. Resilient industrial nations require access to secure and affordable steel supplies, and nationalization should be a means to achieving this goal. Instead, the decisions taken risk leaving us with a steel industry but without a clear purpose.

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Andrew O’Brien is the former Director of Policy at the think tank Demos and currently Head of Secretariat of the Independent Commission on Neighbourhoods. He writes in a personal capacity.

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