Scottish minister refuses to answer question on state aid advice around Lochaber guarantee

The Scottish Government refused to answer whether it received advice that its £586 million deal with GFG Alliance to save the Lochaber smelter may have breached state aid rules.

The Scotsman reported the Government was advised the deal may breach EU state aid rules.

Sources with intimate knowledge of the Government’s transaction with the conglomerate owned by Sanjeev Gupta said ministers were advised the deal may have breached the strict rules.

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Ministers have previously admitted a separate deal to save the Dalzell steelworks, which saw a back-to-back sale of the plant from Tata Steel to GFG Alliance, did breach state aid rules.

During general questions on Thursday, Scottish Conservative MSP Jamie Halcro-Johnston asked the Government to confirm whether advice had been received warning of a potential state aid breach in the Lochaber deal.

He said: “In recent weeks a national newspaper [The Scotsman] reported sources alleging that the Scottish Government had been given advice that their deal with GFG group for the management of the Lochaber smelter could be in breach of state aid rules.

"While the Scottish Government asserted that the arrangements are not in breach of rules, it did not address the core point, whether or not advice had been received to that effect and a risk highlighted.

"Can the minister give a clear answer on that point? Did the Scottish Government receive advice at any stage that arrangements made with the GFG group may violate state aid rules or otherwise create a legal risk for this Government in its management of the facilities in Lochaber, and if so, why was that advice ignored?”

The deal between the Scottish Government and GFG Alliance has been questioned by MSPs.

Business minister Ivan McKee refused to answer the question.

He stated: "The Lochaber guarantee is complaint with EU state aid rules and was approved by the Scottish Parliament finance and constitution committee.

"The Scottish Government received independent advice in 2016 showing that the fee charge to GFG is on market terms and that the transaction overall is state aid compliant.

"The guarantee is complaint with EU state aid rules, contains no subsidy, and therefore did not require EU approval.

"The actions taken by this Government have, of course, ensured that the operation in Lochaber continues to operate and provide jobs to people locally.”

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