Business Secretary Jonathan Reynolds has said it is “likely” that British Steel will be nationalised.

It comes after he appeared to row back on his claim that he would not bring a Chinese company into the steel sector again after the government had to urgently step in to save the British Steel plant in Scunthorpe.

Mr Reynolds, speaking to reporters in the Lincolnshire town, said that nationalisation was the “likely option at this stage”.

He added: “What we are now going to do, having secured both control of the site and the supply of raw materials, so the blast furnaces won’t close in a matter of days, is work on the future.

“We’ve got the ownership question, which is pressing.

“I was clear when I gave the speech in parliament – we know there is a limited lifespan of the blast furnaces, and we know that what we need for the future is a private sector partner to come in and work with us on that transformation and co-fund that transformation.”

Reynolds rows back

Mr Reynolds said he would look at Chinese firms “in a different way” following the race to save British Steel, but did not rule out their involvement completely.

The comments were at odds with his previous remarks to Sky News’ Sunday Morning With Trevor Phillips, when he said he would not “personally bring a Chinese company into our steel sector” again, describing steel as a “sensitive area” in the UK.

The government has taken over British Steel’s Scunthorpe plant, the last in the UK capable of producing virgin steel, after talks with its Chinese owners, Jingye, broke down.

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The company recently cancelled orders for supplies of the raw materials needed to keep the blast furnaces running, sparking a race against time to keep it operational.

Materials secured by the government arrived at the site on Tuesday, but questions remain about the long-term future of British Steel and whether it will be fully nationalised or the private sector will get involved.

Earlier on Tuesday, industry minister Sarah Jones said she is “not ruling out” the possibility of another Chinese partner.

She said having a pragmatic relationship with Beijing, the world’s second-biggest economy, is still important and stringent tests would apply “to a Chinese company as they would to any other company”.

Asked for clarity on his position during a visit to the port of Immingham, where materials from two ships are being unloaded and transported to the plant, Mr Reynolds said: “I think we’ve got to recognise that steel is a sensitive sector.

“A lot of the issues in the global economy with steel come from production and dumping of steel products… so I think you would look at a Chinese firm in a different way.

“But I’m really keen to stress the action we’ve taken here was to step in because it was one specific company that I thought wasn’t acting in the UK’s national interest, and we had to take the action we did.”

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The materials that arrived on Tuesday, including coking coal and iron, are enough to keep the furnaces running for weeks, the Department for Business and Trade said.

They are needed because if the furnaces cool down too much, the molten iron solidifies and blocks the furnaces, making it extremely difficult and expensive to restart them.

‘Chinese ownership truly dreadful’

Opposition politicians have accused China of sabotage to increase reliance on its steel products, and want the country to be prevented from future dealings not only with steel but any UK national infrastructure.

Veteran Tory MP Sir Iain Duncan Smith said the government needs to define which industries are “strategic” – and prevent China from being allowed to invest in such sectors.

Liberal Democrats foreign affairs spokesperson Calum Miller said reverting to Chinese ownership would be like finding “your house ransacked and then leaving your doors unlocked”.

Reform UK leader Nigel Farage took the same position, saying the thought the government “could even contemplate another Chinese owner of British steel is truly dreadful”, and that he would not have China “in our nuclear program, anywhere near our telecoms or anything else”.

“They are not our friends,” he added.

Number 10 said on Monday that it was not aware of any “sabotage” at the plant and there is no block on Chinese companies.

The Chinese embassy has urged the British government not to “politicise” the situation by “linking it to security issues”, saying it is “an objective fact that British steel companies have generally encountered difficulties in recent years”.

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Jingye reported losses of around £700k a day at Scunthorpe, which will now come at a cost to the taxpayer after emergency legislation on Saturday allowed the government to take it over.

During Tuesday morning’s interview round, Ms Jones said the government had offered Jingye money in return for investment and “we think that there is a model there that we could replicate with another private sector company”.

But she said there “isn’t another private sector company there waiting in the wings” currently, and that it may be a “national solution” that is needed.

She said “all of the options” were expensive but that it would have cost more to the taxpayer to allow the site to shut.

A YouGov poll shows the majority of the public (61%) support the government’s decision to nationalise British Steel.

It was Margaret Thatcher who famously said that in politics, the unexpected always happens.

And the latest evidence for that is a series of bizarre twists in the political fallout over Scunthorpe steelworks and China.

First, the business secretary, Jonathan Reynolds, has unexpectedly performed a shock U-turn on Chinese involvement in steel.

And second, those sworn Brexit enemies the Liberal Democrats and Reform UK have agreed on one thing: they want nothing to do with China.

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So is Mr Reynolds’ U-turn the result of being nobbled by Number 10? It certainly looks like it, given what appeared to be a Downing Street slap-down on Monday.

On Sunday, he told Sir Trevor Phillips on Sky News: “I wouldn’t personally bring a Chinese company into our steel sector.”

Pressed by Sir Trevor, he said: “I wouldn’t, no. I think steel is a very sensitive area.”

He even accused David Cameron – who famously took the Chinese president for a pint in a pub – and George Osborne of being “far too naive” about China.

And when Sir Trevor said: “There’s a high trust bar now, isn’t there?” Mr Reynolds replied: “Yes, we’ve got to recognise that.”

Two days later, pressed on his Sky News interview during a visit to Immingham docks, he said: “In this case, our difference of opinion on the future was with a specific company.

“I know there’s a lot of interest in the wider UK-China relationship, understandably so. But this was about this company.”

And he added: “I’m really keen to stress the action we’ve taken here was to step in because it was one specific company…”

So that’s clear then? Or is it? What’s changed?

What changed is that on Monday, Number 10 insisted there was no block on China from essential industries, even steel.

The prime minister’s spokesman said: “We already a have a rigorous regime for assessing any involvement in critical infrastructure. That includes looking at the role of China in our supply chains and investment infrastructure.”

Got that, Mr Reynolds? He has now, obviously.

Nigel Farage hasn’t. “The very thought the government could even contemplate another Chinese owner of British Steel is truly dreadful,” the Reform UK leader declared while campaigning in Durham.

“There’s no such thing as a private company in China. They’re all effectively under the control of the Chinese Communist Party. Clearly, the government has learned nothing if they’re prepared to say this.

“I would go further. I wouldn’t have China in our nuclear programme, anywhere near our telecoms or anything else. They are not our friends.”

Guess who agrees with that? “Giving another Chinese firm ownership of British Steel would be like coming home to find your house ransacked and then leaving your doors unlocked!” said an outraged Lib Dem MP, Calum Miller.

No doubt, the Lib Dems are outraged by China’s refusal to allow their MP Wera Hobhouse being denied entry into Hong Kong to visit her newborn grandson. And who can blame them?

Mr Farage also spoke about visiting the Scunthorpe blast furnaces last week, claiming: “Not, by the way, an out-of-character thing for me to do, because I worked for 22 years in the metals business before getting involved in politics.”

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Really? The metals business? Well, Mr Farage certainly has some brass neck. He was, in fact, a commodities trader in the City of London. OK, so presumably those commodities did include metal.

And what of the government? Despite Mr Reynolds accusing Mr Cameron and Mr Osborne of naivety, Sir Keir Starmer’s senior ministers have actively wooed China too.

Rachel Reeves, the chancellor, visited China in January to promote “new opportunities” for investment. Ed Miliband, the energy secretary, signed up to close ties with China on energy during a visit last month and Douglas Alexander, the trade minister, has been in China this week.

Yet former Tory leader Sir Iain Duncan Smith has insisted ministers must ban China from critical infrastructure and claimed former Labour prime minister Clement Attlee “would be turning in his grave”.

And what of Margaret Thatcher and her famous quote? Well, it was the Iron Lady herself who privatised British Steel in the 1980s – and opened the door to Chinese involvement.

When JD Vance puts a positive spin on something… that’s a win.

The US vice president speaks his mind. He relishes in the shock factor.

And so his encouraging words about a “trade deal” with the UK will have pleased British officials both here in Washington and in London.

Speaking to UnHerd, Vance said: “I think there’s a good chance that, yes, we’ll come to a great agreement that’s in the best interest of both countries.”

Behind the scenes, for many weeks – since well before Donald Trump‘s ‘Liberation Day’ nearly two weeks ago – British trade negotiators led by the UK’s ambassador to the US, Lord Mandelson, have been negotiating as best they could with the US administration.

Their engagement with officials close to Mr Trump has facilitated ministerial meetings and White House-Downing Street phone calls.

I am told the UK is “now in the deal space”. Another source told me the UK was “in the foothills” of a deal. But it has not been straightforward, and there is some distance to go.

Despite the absence of a trade deficit with the US, and notwithstanding the fondness the president has for the UK, Britain was still dealt a 10% tariff plus 25% on cars.

Prior to Trump’s Liberation Day, there had been some hope that the UK would achieve some sort of deal to avoid them. But it was clear quite quickly that Mr Trump needed his ‘moment’.

Many foreign diplomats, including the British, negotiating on their countries’ behalf, were also struggling to achieve substantive negotiations because even those close to the president were not clear on his views, his choices and where he would ‘land’ on issues.

This, incidentally, is an issue that can be applied to many aspects of this Trump administration. “It’s always quite speculative,” one European diplomat said to me.

The clamour for engagement

The challenge since Liberation Day has been to re-engage the White House with the offers already laid out over the past few months. Many countries have been doing this. You can imagine the clamour for engagement.

A key question is whether the baseline tariff of 10% (applied to Britain – and now to everyone else following the 90-day pause) is negotiable. Mr Vance’s language seems to suggest it is.

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A deal then between the UK and the US may be “in the foothills”. Watch for a deal with Australia too soon.

But to call it a ‘trade deal’ with the UK would be misleading. It’s an ‘economic deal’ to reduce the tariffs. It is, however, a large step forward for the UK, which has been trying to engage America in closer trade alignment since Brexit.

Questions remain

The details of any deal will be fascinating, and it is where the controversy will be. Will the UK reduce its trade barriers on US vehicles? Will this impact UK road safety standards?

Will the UK make it easier for US farmers to sell in the UK? And if so, what will struggling UK farmers make of this? Will UK food standards (currently aligned with the EU) need to be lowered?

The desired ‘landing zone’ here for the UK would be improved market access for American farmers, but only in areas where the US meets UK standards.

Watch too for a deal on digital services. At the moment, the UK taxes here hit US tech companies.

So we’re in the foothills, but there is a climb ahead still, and on an untrodden, unpredictable path.