British taxpayers have injected more than £400 million into Sheffield Forgemasters, the historic steelmaker and defence contractor, just three and a half years after the company was brought into public ownership — burning through a decade’s worth of planned investment in record time.
The Ministry of Defence confirmed this weekend that a total of £403 million in state aid has now been funnelled into the lossmaking company since Boris Johnson’s government nationalised it in August 2021. The sum was originally intended to be spread over ten years to 2031, but has been fully allocated in little more than a third of that time — averaging £300,000 a day, or £169,000 a year for each of the company’s 640 employees.
Despite the mounting costs, the MoD has staunchly defended the investment, calling Forgemasters a “shining light of UK industry” and pointing to the firm’s critical role in national defence, particularly in supporting the UK and Australia’s SSN-AUKUS nuclear submarine programme.
Forgemasters, based in Sheffield, produces high-grade cast steel components used in nuclear-powered submarines, including parts for nuclear-grade defence systems that no other UK company can supply. The firm was acquired by the government in 2021 after a long period of financial turmoil and a failed attempt by a Chinese state-owned firm to purchase it in 2015 — a deal ultimately blocked over national security concerns.
At the time of nationalisation, Johnson’s government argued the buyout was “the best value for money for the taxpayer due to the unique capabilities and circumstances” of the firm.
However, Forgemasters has continued to operate at a loss, posting pre-tax losses of £4 million to £5 million annually since entering public ownership. Revenues have remained flat, and the company has not returned to profitability despite the heavy government backing.
The level of state aid has surged under the new Labour administration, with £160 million invested since July 2024 alone.
Forgemasters traces its origins back to the 1750s, but the company’s modern incarnation emerged during the Thatcher era, when it was spun out of British Steel during privatisation. It has been no stranger to controversy. In 1990, it was embroiled in the so-called “supergun affair”, linked to weapons exports to Iraq. In the 2000s, it supplied rolled steel to Russian metals giant Severstal, owned by sanctioned oligarch Alexei Mordashov.
After years of decline, the company narrowly avoided bankruptcy in 2020, after a £30 million loan from Wells Fargo nearly brought the business to collapse. The government stepped in the following year with a full nationalisation package.
The MoD insists that the government’s financial support is about safeguarding vital sovereign defence capability — especially amid rising geopolitical tensions and the development of the SSN-AUKUS submarine fleet, described as the most powerful attack submarines ever operated by the Royal Navy.
“The company manufactures specialist steel parts used in critical defence programmes,” the MoD said in a statement. “This government will support Sheffield Forgemasters to improve its capacity to meet defence needs and continue to review company performance.”
Nonetheless, the extraordinary burn rate of taxpayer funds — well ahead of schedule — raises questions over the government’s oversight, financial strategy, and long-term plan for one of Britain’s most strategically important, yet financially troubled, industrial firms.
While few question the importance of Forgemasters’ work for national defence, the mounting costs will likely fuel debate over how — and how much — the taxpayer should be expected to subsidise Britain’s industrial base in the name of strategic resilience.
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Taxpayer support for Sheffield Forgemasters hits £400m just 3.5 years after nationalisation