Transport Secretary secures major rail supply deal to protect thousands of British Steel jobs

• Deal follows the Government's urgent April intervention that saved British Steel's blast furnaces from immediate closure.
• Five-year agreement delivers on the Government’s Plan for Change commitment to harness British manufacturing to rebuild Britain and deliver and the critical infrastructure that unlocks economic growth.

Thousands of British manufacturing jobs have today been secured as the Transport Secretary visited Scunthorpe to finalise a major rail steel deal between Network Rail and British Steel.

The £500 million five-year contract will see British Steel supply over 337,000 tonnes of rail track, helping cement the company's future just two months after the Government took emergency action to save the Scunthorpe plant from closure.

Visiting the historic steelworks today, Transport Secretary Heidi Alexander announced details of a landmark deal signed between Network Rail and British Steel in an agreement representing the first major public procurement since the Government's unprecedented April intervention.

This saw the Prime Minister requesting the recall of Parliament to pass emergency legislation preventing the immediate shutdown of Scunthorpe's blast furnaces, protecting vital British manufacturing jobs.

That decisive action came after British Steel's owners, Jingye Group, announced plans to shut down the site's blast furnaces and some other key steelmaking operations, despite months of negotiations and a £500 million co-investment offer from the Government.

This news complements the announcement of a new trade deal between the UK and US which, once implemented, will lower tariffs and protect thousands of jobs across key sectors, including steel. The UK was the first and is currently the only country to have secured such a deal.

The deal demonstrates progress with the Government's wider industrial strategy to strengthen domestic manufacturing and supply chains as part of the Plan for Change commitment to drive economic growth across all regions of the UK.

Transport Secretary Heidi Alexander said:

"This landmark contract truly transforms the outlook for British Steel and its dedicated workforce in Scunthorpe, building on its decades-long partnership with Network Rail to produce rail for Britain's railways.

"After taking urgent action to step in and save these historic blast furnaces from closure, we've now helped secure their long-term future by backing British Steel with meaningful Government contracts, protecting thousands of skilled manufacturing jobs in the process.

"This crucial investment in our railway infrastructure shows we are delivering on our Plan for Change commitment to raise living standards in every part of the UK and ensure economic growth is felt by working people in our proud industrial heartlands."

Business Secretary Jonathan Reynolds said:

“This is great news for British Steel and a vote of confidence in the UK’s expertise in steelmaking, which will support thousands of skilled jobs for years to come.

“Following our decisive action to step in and save steelmaking at Scunthorpe in April, this contract will give the sector the security to supply the steel we need for the infrastructure of the future, as part of our Plan for Change.”

Today's Network Rail contract, worth an estimated £500 million, will start on 1 July, providing the company with 80% of its rail needs, and builds on the Government's £2.5 billion steel fund established to revitalise UK steel production over the next five years.

It forms part of Network Rail’s rail supply contracts for the provision of almost 450,000 tonnes of rail for the next 5 years.

To ensure security of supply, Network Rail is set to award smaller contracts to some European manufacturers, who will supply specialist rail products alongside British Steel.

The contracts will see:

• British Steel supply a minimum of 337,000 tonnes of long and short rail
• A further 80-90,000 tonnes will be provided by other European manufacturers with deals expected to be announced shortly.

The strategic partnership builds on decades of collaboration between Network Rail and British Steel, whose Scunthorpe plant has been producing rail for Britain's railways since 1865.

Network Rail's Group Director for Railway Business Services, Clive Berrington, who joined the Transport Secretary for the signing ceremony, said:

“We are committed to buying British where it makes economic sense to do so and British Steel remain extremely competitive in the provision of rail and will remain our main supplier in the years ahead.”

British Steel’s Commercial Director for Rail, Craig Harvey, said: 

“We’re exceptionally proud to be extending our long-term strategic partnership with Network Rail with an agreement demonstrating British Steel’s importance to the UK’s economy and infrastructure.

“The contract represents a huge vote of confidence in UK workers and British industry, underpinning the vital role we play in ensuring millions of passengers and freight operators enjoy safe, enjoyable, and timely journeys on Britain’s railways.”