Cable's test adds new uncertainty for Forgemasters

A review ordered by the coalition into the money continues as MPs and unions demand clarity over the Government's plans.

The loan was granted by Labour shortly before the election to turn the firm into a world leader in manufacturing components for nuclear power stations.

Shadow Business Secretary Pat McFadden defended the loan in the House of Commons yesterday, but in his first major speech Mr Cable warned: "My general approach going forward will be supporting enterprise, but rarely selecting individual enterprises for support."

His comments raise fresh uncertainty over the loan despite intense pressure on the Government to stand by the commitment, with Forgemasters already spending significant amounts of its own money carrying out preparatory work.

New Sheffield Central MP Paul Blomfield yesterday insisted it had been subject to rigorous scrutiny and the review was causing "unnecessary uncertainty".

Mr McFadden denied suggestions the loan was "agreed in a hurry" and said it was not only support for one firm but "about our ambition to secure a national capability for the United Kingdom in making key components for the nuclear supply chain which is set to grow throughout the world in the coming years".

He added: "Do you accept that if the damaging uncertainty over not only this but other important projects such as the electric car at Nissan and the automotive assistance to Ford is not resolved soon then all the Government's talk about supporting a lower carbon economy will be seen as nothing more than rhetoric with their actions going in entirely the opposite direction?"

But Mr Cable said agreements reached under Gordon Brown were of "variable quality" and must be judged on the criteria of value for money and affordability.

"There is also the basic question of affordability. We have inherited the situation in which there is a very serious financial problem and all of these projects have to be judged against whether there is money available for it."

Sheffield MPs have sent a joint letter to Mr Cable asking for clarity on the situation, and Unite leader Derek Simpson, who was born in the city, has made a personal plea to Deputy Prime Minister Nick Clegg, MP for Sheffield Hallam, to use his influence to support the company.

"Failure to support Sheffield Forgemasters would be a colossal error of judgement," he said.

"Nick Clegg spent much of the election campaign talking about Sheffield and the need to support jobs in the area. If he is as proud of Sheffield as I am he will use his influence to do everything possible to support this very special company."