Emergency debate call over Forgemasters loan snub

Earlier this month, the coalition Government announced it would not advance 80m to the firm which had been promised by Gordon Brown's previous administration.

The money was supposed to help the company fund a new press to make components for the nuclear power industry, but senior Ministers said the loan was "unaffordable".

Deputy Prime Minister Nick Clegg claimed the company had only sought the public funding because the lending terms from banks were " not good enough and because they did not want to dilute their own shareholdings in the company".

And Prime Minister David Cameron told MPs there were concerns that the company's set-up meant one man stood to be the main beneficiary, its managing director Graham Honeyman.

In a twist, however, Ministers have revealed the deal would have seen the Government paid 30m in interest by the time the loan was repaid over 14 years.

Yesterday the deputy leader of Sheffield's Labour group, Bryan Lodge, called on Liberal Democrat council chiefs to hold a debate during next Wednesday's full council meeting.

Coun Lodge said: "Labour, alongside many Sheffielders, remain angry that the Forgemasters loan was cancelled by the Con-Dem Government and that a potential 200 jobs have now vanished.

"Although we all feel let down by this decision, Labour remain committed to standing up for Sheffield and fighting for Forgemasters. That's why Labour have called for this urgent debate on the future of Forgemasters, to see what we can do to help as a council.

"Unfortunately, the lobbying of Sheffield MPs that the Liberal Democrats promised to do last month never materialised, so Labour feel we need to keep on pushing for action.

Coun Lodge said the strength of feeling was demonstrated by a petition containing 5,000 names opposing the decision to scrap the loan.

Following a controversial meeting last Friday with Nick Clegg, to which Forgemasters chiefs were not invited, council leader Paul Scriven said he and his team were doing "all they could" to assist the firm.

He added: "We need to work innovatively to support the firm on a way forward. It's too early to say what that will be."