The Government could force British Steel’s Chinese owners to sell the business for as little as 1p, Business Secretary Jonathan Reynolds has declared. He spoke in an emergency meeting of the House of Commons asking MPs to back laws giving him control of British Steel in order to prevent furnaces in Scunthorpe closing. The plant is the last remaining in the UK capable of creating “primary” or virgin steel, made directly from raw materials and the legislation was approved by the Commons before being debated by the House of Lords.

The Government is not technically nationalising British Steel, because it will not own the business which belongs to Chinese firm Jingye, despite taking control. However, Mr Reynolds said nationalisation could be the next step. He was questioned by Conservative MP David Davis, who asked: “It’s beginning to sound from what he has described that Jingye is trying to manoeuvre the Government actually into a recompensed nationalisation. Will he make plain that in the event they try and manoeuvre us into a nationalisation we’ll pay not more than a penny for it?”

Mr Reynolds replied: “To be clear, we would always in a situation where the state transfers a change of ownership to it pay the fair market value for those assets. In this case the market value is effectively zero so I take his point entirely.

“I would say the intention of Jingye has not been to engineer that situation. Their intention has been to keep the downstream mills, which colleagues will know are fundamental to our construction steel industry, and supply them from China rather than from Scunthorpe.”

Shadow Business Secretary Andrew Griffith said the Government would inevitably need to nationalise the business.

Business Secretary Jonathan Reynolds said transfer of ownership to the state “remains on the table” and may well be the “likely option” for British Steel, although noted the Government could not fund the long-term transformation of the company.

Reform UK deputy leader Richard Tice told the Commons: “Given the Secretary of State has inferred that actually the owners Jingye are not acting and have not acted in good faith, surely the right thing to do is to seize this great opportunity now this weekend and nationalise British Steel?”

Mr Reynolds replied: “I want to be clear that a transfer of ownership to the state remains on the table and it may well, at this stage, given the behaviour of the company be the likely option.

“But also our aspirations for British Steel remain a co-investment agreement with a private sector partner to secure that long-term transformation. The action I seek to take today is not a magic wand or a panacea, the state cannot fund the long-term transformation of British Steel itself nor would it want to do so.

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“But a failure to act today would prevent any more desirable outcome from even being considered and that is again why we must act today.”

Mr Reynolds described the legislation as a “proportionate and necessary step”, telling MPs: “It allows us to take control of British Steel’s blast furnaces, maintaining steel production and by extension protecting the company’s 3,500-strong workforce.

“The Bill does not transfer ownership to the Government. We’ll have to deal with this matter at a later date. I took the decision that given the exceptional nature of a recall, it would be better to limit the powers in this Bill, which are still significant, rather than introduce more complex matters of property rights and public ownership at this time.”

Conservative former minister Sir Jeremy Wright warned the Government risked “creating some considerable legal complexity” in terms of the operation of steel companies.

Mr Reynolds, in his reply, said: “I want this to be a temporary position, I do not want these powers any minute longer than is necessary but I do need these powers to rectify and save this situation.”