Labour call on coalition to offer back nuclear loan

Published on Monday 26 July 2010 19:09

LABOUR'S former business ministers yesterday urged the government to reconsider the withdrawal of an £80 million loan to a company to make parts for the nuclear industry after warning that the work could go to Japan or Korea.

Former business secretary Lord Mandelson and Labour's spokesman Pat McFadden spent an hour at the Business Department in London examining papers related to the Sheffield Forgemasters loan.

The previous Labour administration pledged the loan but it was axed by the new government as part of its drive to reduce public spending.

Lord Mandelson said reading the papers again had reminded him of the importance of the project, which he believed would have boosted the civil nuclear supply chain across the country. He rejected claims that he had written a cheque that would have bounced, saying that the loan had been agreed with the Treasury after consultations on the firm's expansion plans with independent experts.

Deputy Prime Minister Nick Clegg has rejected calls to rethink the decision, saying the problem is one of "affordability".

The government has been forced to deny that the decision was influenced by a request from a Conservative Party donor.

Mr McFadden, the shadow business secretary, said: "On looking at the papers, they make clear that the government's accusations about the decision to grant the loan to Sheffield Forgemasters are wrong.

"The papers confirm that the project had important potential benefits for the civil nuclear supply chain, that it had Treasury approval and that it was very carefully considered by the Industrial Development Advisory Board, the external body that looks at such decisions. They concluded that it represented good value for money.

"Rather than continuing with wrongful statements about the project, the government should look again at this decision."