Clegg defends Forgemasters loan cancellation

Nick Clegg has defended the decision to cancel a proposed £80 million loan to Sheffield Forgemasters, saying it was not the Government's role to support firms that would not give up shares in order to secure private investment.

Liberal Democrat Mr Clegg, who represents the Sheffield Hallam constituency, also said he was meeting the firm's bosses later this week.

On Monday, David Cameron described the proposed loan - cancelled last week as the Government axed £2 billion of projects agreed in the last months of the Labour administration - as a "not very well thought-through piece of financial engineering".

Fears have been raised that withdrawing the funds, which were intended to boost the nuclear supply chain, will result in Britain losing business to Japan and South Korea.

During Commons question time, Labour MP Alun Michael (Cardiff South and Penarth) attacked Mr Clegg over the decision. He told the Deputy Prime Minister: "Don't last week's cuts in support for young people and Sheffield Forgemasters demonstrate that you are powerless within Government?"

Mr Clegg hit back: "As a Sheffield MP I suspect I know Sheffield Forgemasters a lot better than you. I am meeting the chairman and chief executive this Friday in Sheffield again, and I spoke to the chairman last week.

"Let's be clear - this is an outstanding company. The new owners have been quite open about why they sought a government loan. They sought a government loan because as they have publicly stated, they felt the terms they were receiving from banks were not good enough and because they didn't want to dilute their own shareholding in the company.

"Do I think it is the role of government to help out owners of companies who do not want to dilute their own shareholdings? No I don't. Every member of this House would be able to identify companies which are struggling more than Sheffield Forgemasters who would also like to receive a government loan.

"To support manufacturing we must support skills, we must invest in infrastructure and we must get the banks lending. That is what we will do, that is what you failed to do."

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