Wednesday, 28 July 2010

Forgemasters

I see a lot of political fuss about the cancellation, by the Government, of an £80 Million loan to a company called Forgemasters. The logic behind the loan, in the lead up to the last General Election, was that Forgemasters would use the money to invest in machinery and plant to forge parts for the nuclear power industry.

One thing has puzzled me about this whole affair. If the investment in machinery was such a good commercial idea, why can't Forgemasters obtain a commercial loan or issue bonds to obtain the necessary funds? If it was not a commercially sound idea, what was the motive of the previous Labour Government in proposing the loan facility? The unelected Business Secretary of the previous government seems to be quite vocal in protesting the cancellation of the loan he granted.

Why should the current government borrow money to give Forgemasters a loan?

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