Labour fears over threat to £80m steel firm loan

The money would fund a giant new forging press and make the company one a world leader in the manufacturing of parts for a new generation of nuclear power stations.

But, along with major transport schemes across the region, it is among the projects signed off since January 1 which new Ministers are re-examining, and some initiatives likely to face the axe.

Senior Labour figures are so concerned that the Forgemasters loan has been discussed at the very top level of the party.

In an exclusive interview with the Yorkshire Post, Ms Harman said: "I think if the Government doesn't recognise that they've got a really important role to play in supporting industry then that will be an absolute disgrace.

"There has been a lot of discussion, including at Shadow Cabinet, about the importance of Sheffield Forgemasters. We're in no doubt about the importance of it.

"We've got to keep our industrial base, that's where the jobs of the future will come from. It would be madness to cut the loan, it's cutting our future growth."

Yesterday both Ed Miliband, Shadow Energy and Climate Change Secretary, and Sheffield Brightside and Hillsborough MP David Blunkett raised their concerns about the threat to the loan in the House of Commons.

Mr Blunkett said it was vital for the "continuing uncertainty" to be lifted immediately and for the loan to go ahead. The company is already spending significant sums of its own money in carrying out preparatory work in anticipation of the funding, and has made clear it would be stunned to have the cash withdrawn.

"There can be no excuse for the continuing delay in confirming backing for a programme that will bring not only jobs to Sheffield, but much needed earnings to the United Kingdom," said Mr Blunkett.

Mr Miliband, MP for Doncaster North, said it would be "the worst short-termism" to cut recent spending such as the Forgemasters loan

Energy and Climate Change Secretary Chris Huhne said the Government was looking at all contracts signed off since the beginning of the year and this would be completed in due course.