4 Looking to the future
32. It is clear that the loan in its existing form
will not be reinstated. However, Ministers have made a number
of statements in which they have expressed the Government's willingness
to explore other avenues of support for Sheffield Forgemasters.
David Gauke MP, the Exchequer Secretary, stated in a written answer
in June that:
Officials from the Department for Business [Innovation
and Skills] are working with Sheffield Forgemasters to explore
the possibility of raising private funding for this worthwhile
project that does not make the existing shareholders worse off.[40]
33. The Secretary of State for Business, Innovation
and Skills also confirmed to the House that his officials were
"working to try to help achieve a private sector solution".[41]
He said that the possibility of a loan guarantee for Forgemasters
had been considered, but was not pursued. A key obstacle was that
no commercial lender could be found who would provide the repayment
holiday until the new press was operational.[42]
34. This appraisal of the situation was reiterated
by Sheffield Forgemasters. In a press release, the company confirmed
that discussions with the Department on alternative funding sources
had taken place but that "strenuous efforts" had gone
into finding a solution. However the board concluded that:
Without support along the lines of the withdrawn
conditional loan offer, there is no easily available private sector
alternative funding structure which is both economically viable
for the Company and fair to existing shareholders, having regard
to the time and money they have invested in Sheffield Forgemasters
since the buyout in 2005.[43]
35. That said, the Secretary of State restated Government
support for the company and that his Department was:
Ready to work closely with the company as it
pursues its ambitions and we are willing to look carefully at
all proposals, as we would for any project, when the future availability
of public funds becomes clearer after the completion of the spending
review.[44]
36. Of possible greater interest was the fact that
the Deputy Prime Minister stated that "the issue was the
lack of affordability in this year's current Budget" which
has left open the possibility of support in subsequent years.[45]
37. The Secretary of State also offered some comfort
by confirming that the Government would consider a new application
of funds from Sheffield Forgemasters. When he was asked "if
Sheffield Forgemasters were to make a fresh application, would
it be entertained?" the Secretary of State responded:
Yes, it would be entertained. We have various
mechanisms available, and if it satisfies the various conditions
and it is affordable, we will certainly look at it".[46]
38. Two avenues appear to offer potential solutions,
the Regional Growth Fund and the Green Investment Bank. The Government
has recently established the Regional Growth Fund which the Secretary
of State told us would operate as an avenue for support for business:
The fund would be open to private companies,
or public-private partnerships, in all areas of the country. It
will be directed at encouraging private sector enterprise by providing
support for projects with significant potential to aid economic
growth and creating additional and sustainable private sector
employment. [47]
At the time of his evidence the Department was consulting
on the best means of allocating money from the Fund.[48]
39. There may also be an opportunity to revive the
loan through the Business Growth Fund, a £1.5 billion fund
established as a result of the British Bankers' Association's
Business Finance Taskforce.
40. We welcome the fact that the Department has
continued to consider other avenues for funding for Sheffield
Forgemasters even if those discussions have not come to a successful
conclusion. The establishment of such a large press would have
enabled the United Kingdom to take a significant lead in this
important industry. For that reason we urge the Government to
continue in its efforts to secure funding for this project—whether
by public or private funds—so that an opportunity to take
a lead in this important industry is not lost. Therefore, we welcome
the undertaking given to us by the Secretary of State that he
would "entertain" a fresh loan application from Sheffield
Forgemasters. Should the company make a further application, we
would expect the Secretary of State to honour that undertaking.
40 HC Deb, 30 June 2010, col 582W Back
41
HC Deb, 8 July 2010 col 505 Back
42
Q 3 Back
43
www.sheffieldforgemasters.com/news/2010/07/joint-funding-statement-by-sheffield-forgemasters-and-hm-government Back
44
HC Deb, 27 July 2010, col 80WS Back
45
HC Deb, 27 July 2010, col 851 Back
46
Q 71 Back
47
Ev 14 Back
48
Ev 14 Back
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