The coalition prepares for trouble

Peter From Maidstone

Why is there slease because the Government does not want to be in the banking business? I run a business and the Government is not offering me a preferential loan. Why should it be offering it to anyone?

The fact that a Spectator contributor believes that not lending a business tax payers money is sleazy just shows how pink the Spectator is getting.

The Givernment should not take more of a businesses profits than is absolutely required and should not be lending businesses tax payers money.

David S

Being alerted to a potentially problematic loan by a person with relevant knowledge is a good thing. the ability to do so and have one's point assessed is a cornerstone of democracy and open government. I note the comments came from a person who declared himself to be a conservative government downer is also a good thing in supporting transparency.
The challenge is to ask and discover why the loan was first made and subsequently rejected. Were the reasons either way party political or in the national interest?
On the basis of superficial data there appears to be no reason why the Government should make such a loan, but further analysis would be interesting.

Charles

The Labour Party is picking up on a technicality - arguing that the Tories mis-spoke when they said that the owners did not want to dilute.

The owners have said they would be prepared to sell 40% of the company.

This would mean that they kept 60%. Why should they be able to do this thanks to government support. Why not require them to dilute their shareholding down to 20% or even less?

They were just having their cake and eating it. It is not the business of government to give money to private businesses to support their personal wealth creation.

David Bouvier

But the CEO and 51% owner says that he didn't want to go down the private equity route because he would have to dilute the equity...

He had commercial deals on the table and didn't like the price - why on earth is the company a candidate for state cash at all.

chris as usual

Why will the banks not lend these people any money? That's what they are for. Is it too dodgy? Oh, right, let's risk some more taxpayer money, then.

Don't tell me that banks are not lending to anyone.

It isn't up to the taxpayer to 'pick winners'. If it is to save/create jobs, how much per job is this costing?

There is a lot of twaddle here about Director's shareholdings. It is their service contracts/ share options you should be looking at. That is what the Directors will be interested in.

strapworld

Well said Mr Bouvier. This is a storm in a tea cup. Labour are trying to create a situation whereby Clegg is thrown out in Sheffield.

If I were Clegg or Cameron I would just ignore this totally. There will be far more dirt to throw at Labour and their new leader when the summer break is over. Just remember that the government can now control the news as Labour did during parliamentary breaks.

The Daily Mail, edited by that great friend of Gordon Brown, really tried their worst today at Cameron and Clegg.....but failed.

Victor Southern

David Bouvier - if you carry on with good common sense postings here the myriad Richards of York will single you out, Verity will hate you from Mexico and Vulture will spill the Daily Mail on you.

Strappers, meself and some others will be on your side.

TrevorsDen

Just why should this company be requiring state cash? It was done as a political deal.

Is Forgemasters on the verge of bankruptcy? Has a single job been lost?

Why is the Spectator falling for this guff?

What is the agenda here? Quite frankly I do not see Cable as yet as its weakest point - he seemed pretty strong on the budget - but once journalist get into their own 'easy peg to hang any old story on' rut - they stick in it.

The Tories have been out of power for a while so pro-tory hacks may have forgotten that ALL govts have issues and differences. Mrs T had lots of them with her ministers (she called them 'wet' - and I'll vouch that Cable is a lot less wet than say Prior Pym or Gilmore - crikey how wet was HE?).

Get a life and get over it. Its called POWER.

Paddy

Labour are getting desperate.

If that is all they can come up with!

The coalition should completely ignore them.

At PMQ's Cameron and Clegg should just answer Labour's stupid questions with a straight yes or no - and there is no money left.

They are in power now.

Labour watch and learn.

JohnAnt

Think back to the original loan announcement. It was so patently done to create a photo-opportunity for Brown (who visited and toured there specially) and to create sympathy for Labour in advance of the election which Labour was dangling in front of the Sheffield voters. It was a party political gesture - at the taxpayers' expense.
It never made financial sense to me. Bin it. Never mind explaining - we have no money, end of.

nonny mouse

SFM's own press release says that the reason they failed to get outside investment was that they were not prepared to dilute their own shareholdings. For Labour to claim that they were prepared to do so is an absolute lie.

This is classic spin. Labour are trying to obscure the fact that they created a 150 billion deficit by criticising the government for not making a 80 million loan that appeals to Labour voters but does not make commercial sense.

I expect better reporting from the Spectator.

Fergus Pickering

And I shall be on your side too, David Bouvier, since you understand all this money stuff which I don't (and don't really want to). Understand finance? Our servants will do that for us. Yes, and make away with the cash too.

Sir Compton Valence

This is a story without legs and it will soon die - especially as MPs are dashing off with their bucket and spades any day now. It's nothing more than some silly donor huffing and puffing about how much he gave to the party. No sleaze; just ego.

David Bouvier

"chris as usual" - I assume I am purveying the twaddle you refer to.

If you do some research you will find that the company is a management buy-out and that the CEO actually owns half the company. Not service terms, options etc, HE OWNS HALF THE COMPANY.

So half the benefit - the gap between the soft loan terms and the commercial loan terms - goes to him. Several million pounds perhaps.

Now maybe there is more to it than this, but then they might want to let the public know why we should tax other people for their benefit.

Richard of York

Next sleaze story out now...Ashcroft comes back to haunt them.
BBC soon to broadcast the programme the noble Lord tried to block.
Ashcroft is sleaze writ large and the tories are coruption addicts.....nothing changes. Three sleazes in 10 weeks not bad going at this rate they will over take the whole of the last Tory govt by the end of the year.

TomTom

Nothing wrong with Government loans for strategic reasons. Neville Chamberlain as Chancellor funded Rolls-Royce PV-12 Project after 1935 - the Merlin engine. He also funded Rolls-Royce to build a factory at Crewe and sign up a network of subcontractors.

Good thing too !

Victor Southern

Richard of York

Perhaps I should remind you that it is Labour that has 5 past and present MPs facing charges for criminal conversion of funds.

Admittedly there are two Tory Peers on the same sort of charges but then again we can anticipate that several Labour Peers will shortly join them now that Jack Straw is unable to protect them.

And, how many Labour Lords was it that were offering to have legislation changed in exchange for some cash? Was it 4 or 5, I really can't remember?

Now get your haircut, lad. Short hair is better for your acne.

David Bouvier

Tom tom - I think that before the government funds a loan to Forgemasters - we need to here from him publically why he personally deserves to be enriched by the government in comparison to the commercial options he had, or what arrangements were put in place to claw back his personal benefit and to ensure that the risk to the government was reduced or eliminated.

Until the CEO gets up and explains why he and Forgemasters deserve this and why they are not unjustly enriching themselves at our expense, I regard this as nothing more than a Gordon Brown election gimmick.

Why is sad, because Forgemasters seems to be a great success story of how private equity backed entrepreneurs can succeed where big state steel can't.