The Brexit party has announced its first policy beyond leaving the EU: saving British Steel by turning it into a “John Lewis-style” company part-owned by the workers.

The party’s chairman, Richard Tice, unveiled the policy on Tuesday in Scunthorpe, North Lincolnshire, where 5,000 jobs are on the line after privately owned British Steel went into insolvency last month.

He proposed a “strategic national corporation, which will blend the best of private sector expertise and capital; long-term, patient state capital; as well as improving productivity through a John Lewis-style form of shared ownership for the workers”.

Quick guide What went wrong at British Steel? Show Hide What plans does Jingye have for British Steel? Jingye's financial profile is relatively opaque, but the company is expected to pledge investment worth £1bn over the next decade. A person briefed on Jingye's thinking said the company wanted to preserve as many jobs as possible, but could not say how many of the company's 4,000 workers would keep their jobs. British Steel accounts for a third of UK production, so is seen as a key national asset in many quarters.

What went wrong at British Steel? When Greybull Capital bought British Steel in 2016 it promised great things. The private equity firm pledged to invest £400m and within months it was boasting of a return to profit and a bright future ahead. Three years later it collapsed. In a letter to staff, the British Steel chief executive blamed weak market demand, high raw material prices, the weakness of sterling and uncertainty over the outcome of Brexit discussions. Who is Jingye? Jingye emerged as the most likely owner after talks with Ataer, a division of the Turkish military pension fund Oyak, fell through in October. Founded in 1988 by a former Communist party official, Li Ganpo, the Chinese conglomerate has hotel and retail interests. However, steelmaking, which it started doing in the early 1990s, is now its primary focus: its Chinese mills produce about 15m tonnes of steel a year, exporting to 80 countries. How much is Brexit to blame? It is not the only factor in the crisis, but it is important and will remain crucial even if Jingye buys British Steel. Steel contracts are typically agreed well in advance of the product being delivered. As things stand, the UK is due to leave the EU on 31 January after another delay, and the terms of that separation are yet to be agreed, meaning British Steel’s overseas customers do not know what tariffs will apply to steel they buy from the company. Sources close to the company said orders from customers in the EU and further afield had dried up as a result. Is the whole UK steel industry in trouble? The UK steel industry has been in decline for some time because of a variety of factors such as overcapacity in EU steelmaking and Chinese state-subsidised firms flooding the global market with cheap product. An industry that employed 323,000 people in 1971 now employs less than a tenth of that, at 31,900. The closure of the Redcar steelworks in 2015 was a significant blow to the sector and left the UK with only two blast furnace steelworks: Scunthorpe and the Tata Steel-owned Port Talbot in south Wales.

The idea seemed a hybrid of Conservative and Labour policy: while the Conservative government looks for a private buyer for British Steel, Jeremy Corbyn wants it to be nationalised.

Tice dismissed warnings from Gareth Stace, the director general of the trade body UK Steel, who said Brexit “will not improve the situation for the steel sector but it has the potential to cause a great deal of damage”.

Stace was an “establishment” figure, Tice claimed. “I’m afraid some of these industry lobby groups are part of the establishment and are simply wrong. What is most important to make British steel is not the tariffs, it’s the cost of business rates, it’s the cost of energy and it’s the emissions trading scheme.”

UK Steel has previously called on the government to tackle industrial electricity prices, which are twice those in France, as well as a reduction in UK business rates. According to Stace, these are “five to 10 times higher than elsewhere in the EU, perversely increasing costs for those that modernise and upgrade”.

Tice was accompanied in Scunthorpe by Simon Boyd, the managing director of Reidsteel, a structural steel company based in Dorset. He said EU regulations meant it was “easier for us to export to Mongolia than France”, drawing tuts of disapproval from the carefully vetted audience, who had each paid £2.50 to attend the press conference.

Boyd, who campaigned against the working time directive, said EU competition rules meant his firm lost a contract in Rotherham to a Portuguese firm, who benefited from significantly lower energy costs in Portugal and then came to Yorkshire and employed eastern European labourers.

Not everyone was convinced by the Brexit party’s proposal. Among those in the audience was Jim Crossman, a former chief engineer of British Steel, who went on to be chief executive of Caparo Merchant Bar (now Liberty Steel Scunthorpe), which makes steel bars.

“I’m a Brexit supporter but I am unsure they can bring this off,” he said. “The big worry I have is that while Rome is burning and the industry is reducing, the skills in the industry will leave because they are unsure if British Steel will survive … I don’t personally think there will be a private buyer who will buy the whole unit, including the blast furnaces, which need a lot of capital investment. They might strip out the better assets.”

The Brexit party polled 47% of the European parliamentary vote in North Lincolnshire, with Labour second (12.5%) and the Conservatives third (11.5%). It is contesting Thursday’s byelection in Peterborough and is beginning to develop a policy platform to fight a general election, should one be called before the UK leaves the EU.