Nicola Sturgeon defended her backing for the GFG Alliance, which owns Liberty Steel, after she was pressed at First Minister’s Questions on Thursday by Willie Rennie about the potential collapse of Mr Gupta’s firm, which has lost its financial backer after Greensill Capital was placed into administration. Mr Gupta has said that he is seeking alternative finance.
The Scottish Liberal Democrat leader demanded to know what had happened to the 2,000 jobs and a new factory promised when GFG took over the aluminium smelter and power station in Lochaber in 2016 and “received a Scottish Government guarantee worth £575 million”.
Ms Sturgeon said the government was in regular contact with GFG Alliance “both at Lochaber as well as the Dalzell steel plant and at group level overall”.
She said: “The original investment plan for Fort William was impacted by a sharp fall in UK automative output. The business brought forward new investment plans totalling £94m and we continue to liaise with them about the challenges they face and the steps they need to take to make sure they deliver on those commitments.”
A series of securities over the assets of GFG Alliance at Lochaber had been put in place, Ms Sturgeon said, including the smelter, power station and land holdings, and there were “a series of other protections in support of the guarantee”.
"There have been serious difficulties posed for companies, individuals, the public sector because of Covid, and we need to work through those and recognise and resolve those,” she said.
“But had the government not worked to try and facilitate GFG becoming the owners of the smelter at Lochaber, that smelter would have closed and we would not have been able to protect any jobs there and give any hope for the future.”
However, Mr Rennie said Ms Sturgeon had claimed in 2016 the deal was “boom time” for Lochaber. He pointed to other government-backed businesses in financial trouble, including Bifab.
"How much money has been lost to this?” he asked.
“How can it be right a company uses a 30-year government financial guarantee to make profits, but fails to deliver the jobs it promised?”
Ms Sturgeon said the only alternative for government to working with companies was to “let these places go the wall there and then, and there would be no jobs or hope for the future”.
She said: "That’s not the kind of passive, stand back, wash-our-hands-of-problems government this is.”
Scottish Labour's Daniel Johnson urged the First Minister to reveal the financial risk for the Scottish Government should GFG collapse and asked if Audit Scotland would “look at how the guarantees were put together”.
Ms Sturgeon said commercial confidentiality prevented her from disclosing the details, but “a full detailed process was followed, which culminated in the guarantee being approved by the finance committee with parties from across this chamber”.
She said Audit Scotland was "free to look at whatever it thinks it ought”, adding: “I won’t apologise for trying to save jobs and give an economic future to places like Dalzell and Lochaber.”