British Steel’s Chinese owners wanted to keep control of four mills even though it planned to shut the Scunthorpe blast furnaces. Business Secretary Jonathan Reynolds said Jingye was determined to close the Scunthorpe steel works, risking thousands of jobs, and had stopped buying raw materials.

Reform UK leader Nigel Farage revealed he believes the Chinese company bought it so they could close it. And Mr Reynolds effectively ruled out Chinese companies from involvement in Britain’s steel industry in the future. One of the mills Jingye wanted to keep control of supplies Network Rail with 95% of its steel.

Interviewed on Sky News' Sunday Morning with Trevor Phillips, Mr Reynolds insisted: “I was negotiating in good faith, and believed that they were.

“We were quite far apart to be clear. We made a substantial offer that was comparable to the work we did with Tata.”

Mr Phillips interjected: “This half a billion you offered them?”

Mr Reynolds replied: “Yes, effectively. Their request was for more than double that.

“I had never, until fairly recently, had it put to me by them the option that they would wish to retain four very important mills – Network Rail gets 95% of its needs from one of those mills, for instance – but lose the blast furnace and supply direct from China.”

Mr Phillips said in response: “Jingye is said to be strongly influenced by the Chinese Communist Party, you yourself used some very bright language about the company.

“This morning, you have said, more or less, they were extortionists.

“Do you detect the hand of the Chinese Government, or the Chinese Communist Party?”

Mr Reynolds said: “I’m not accusing the Chinese state of being directly behind this. I actually think they will understand why we could not accept the proposition that was put to us, in terms of losing that essential national capacity.”

There is now a "high trust bar" for Chinese companies controlling UK businesses, the Business Secretary has said.

Asked whether the Government could trust Chinese firms after Jingye's handling of British Steel, Jonathan Reynolds told Mr Phillips it would depend on which sectors they operated in.

He said: "I think we have got to be clear about what is the sort of sector where, actually, we can promote and co-operate, and ones frankly where we can't. I wouldn't personally bring a Chinese company into our steel sector."

He added: "I think steel is a very sensitive area. I don't know when the Boris Johnson government did this, what the situation was, but it's a sensitive area."

Mr Reynolds declined to comment on other sectors, such as nuclear power, where he would be unwilling to see Chinese investment.

But asked whether there was a "high trust bar" for dealing with firms from the country, he said: "Yes, we have got to recognise that."

Reform UK leader Nigel Farage accused the Chinese Communist Party of deliberately sabotaging British Steel.

Mr Farage told the BBC's Sunday With Laura Kuenssberg: "This is a big strategic decision by the CCP."

Asked for his evidence to support that claim, he said: "You can call it intuition if you like.

"I am 100% certain they bought British Steel to close British Steel."

Mr Reynolds admitted the Government expects to lose money running British Steel, but allowing it to collapse would have cost £1 billion.

He told Trevor Phillips: "The losses, the annual losses, net losses, in the last set of accounts were £233 million. Actually, that can be improved upon, but I am accepting your point that we would expect to lose money on this.

"I would ask the public to compare that to the option of spending a lot more money to reach a deal that would have seen a lot of job losses and Jingye remain as a partner.

"Or the cost of the complete collapse of British Steel, easily over £1 billion in terms of the need to respond from Government, to remediate the land, to look after the workforce."

Mr Reynolds insisted that, as money had already been set aside for the steel industry in the Budget, the Government would not need to borrow more as a result of the takeover.

He added: "To be absolutely frank, I think supporting British Steel at this time, in that way, is better than spending a greater deal of money on the complete loss of the business or in a transition deal."

MPs and peers had approved emergency legislation without opposition, giving Mr Reynolds the power to require British Steel to keep the Scunthorpe plant going after talks with its Chinese owner, Jingye, broke down.

In a highly unusual step, the Government had recalled Parliament from its Easter recess at short notice, fearing that the blast furnaces could be irrevocably closed within days without urgent action.

Prime Minister Sir Keir Starmer said the Government had "stepped in to save British Steel", adding: "We are acting to protect the jobs of thousands of workers, and all options are on the table to secure the future of the industry."

Saturday's legislation stopped short of fully nationalising British Steel, instead allowing Mr Reynolds to instruct the company to maintain the blast furnaces, keep staff employed and continue to purchase the raw materials needed to make steel, with criminal penalties for executives if they refuse.

Although ministers still hope to secure private sector investment to save the plant, there are currently no companies offering to take it on and Mr Reynolds conceded to MPs that public ownership was "the likely option".

Mr Reynolds said the emergency legislation was a "proportionate and necessary step", adding he wanted it to be a "temporary position" with the powers not lasting "any minute longer than is necessary".

The Government has been in negotiation with Jingye on the future of the Scunthorpe plant since it came to power last year, taking on the long-running talks between the company and the previous government.