Ministers 'fully transparent' on £586m Lochaber deal but fail to confirm number of jobs created

Ministers have claimed they have been “up front” and “transparent” around details of the half-a-billion-pound deal with a metal magnate that helped fund the purchase of a smelter near Fort William.

Richard Lochhead, minister for just transition, was asked by MSPs for additional information around the £586 million guarantee provided to GFG Alliance to help purchase the Lochaber smelter.

The questions come after an extensive two-year transparency battle between the Financial Times and the Scottish Government over the disclosure of the full value of the guarantee.

Hide Ad
Hide Ad

Ministers have been accused of “dodgy deals”, amid concerns around meetings between former rural economy secretary Fergus Ewing and Sanjeev Gupta, head of GFG Alliance.

Sanjeev Gupta of GFG Alliance with First Minister Nicola Sturgeon.

The deal was due to see the construction of an aluminium alloy wheels plant next to the smelter and the creation of around 2,000 jobs, but the plans were scrapped and replaced with a £94m aluminium recycling plant, which is still yet to be built.

Willie Rennie, the former Liberal Democrat leader, accused the government of a “shocking track record” around industrial intervention, while Labour’s Daniel Johnson and the Conservatives’ Jamie Halcro-Johnson questioned the extent of the government’s transparency.

The Tory MSP said workers had experienced “real uncertainty” over recent years and asked whether expansion plans at the site had been shared with the government and how many jobs were now expected to be delivered.

He said: “Thousands of new jobs were promised as part of the proposals that supported the Scottish Government guarantee to GFG Alliance, but those plans were then amended and so far only a small fraction have been created.

"Last month the Financial Times revealed the struggle it had to uncover the full financial exposure of the Scottish Government to GFG’s operations.

"Legitimate concerns have been raised about the transparency of these deals and even over what the Scottish Government’s own expectations now are for jobs at the site.”

Mr Lochhead said GFG’s investment plan had been “impacted by a number of factors” such as a drop in UK car construction, but defended the government’s record on transparency.

Hide Ad
Hide Ad

He said: “It was the Scottish Government's intervention and negotiations with the group that did lead to the jobs being safeguarded in the first place.

“As for transparency, it’s been in the public domain for some time the number of steps in relation to parliamentary committees and other publications where all the information that is not commercially sensitive has been in the public domain and therefore we have been transparent.”

Mr Johnson, Labour’s finance spokesperson, asked Mr Lochhead whether the deal was signed off by the Cabinet.

He said: “I think it is safe to say that the government has been less than forthcoming in its transparency on this.

"At its heart this deal is a £500m guarantee given by the Scottish Government, underwritten by Scottish taxpayers between Sanjeev Gupta and his father’s firm.

"How on earth did that get through Scottish Government due diligence and was it signed off by the Cabinet?”

Mr Lochhead did not answer the latter, but said all meetings with the company were “registered properly”, adding: “There has been transparency and the Scottish Government has been up front with Parliament.”

Hide Ad
Hide Ad

The net value of the guarantee is at £286m, while GFG Alliance value the smelter’s assets at £438m.

A message from the Editor:

Thank you for reading this article. We're more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers.

If you haven't already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription.



Want to join the conversation? Please or to comment on this article.