Ministers reject pledge call on £80m loan for Forgemasters

Labour Shadow Business Secretary Pat McFadden called on the Government to end the "damaging uncertainty" caused by a review being carried out into aid for industry, including the Forgemasters loan, which was approved by Labour shortly before the general election.

But while Business Secretary Vince Cable confirmed loan guarantees of 360m to Ford and of 270m to General Motors Vauxhall would go ahead, he made no such pledge to the Sheffield firm, which needs the support to become a world leader in manufacturing components for nuclear power stations.

He accused the previous Labour government of signing up to a significant number of projects before the election and said it was right and proper to re-examine those decisions to make sure they were good value for money.

His comments echoed the Prime Minister who earlier promised that projects which were "good value for money" and in line with the Government's aims "will go ahead".

David Cameron told MPs that inspection of the strategic investment fund had revealed more than two-thirds of the projects promised money were in marginal Labour seats.

"So it is right to examine these, but let me say to you – proper grants, properly made for proper reasons will go ahead," he said. "But fiddled grants for political reasons shouldn't do."

Sheffield Forgemasters has already spent considerable sums of its own money carrying out preparatory work for the loan, which would fund one of the world's biggest presses.

South Yorkshire MPs have launched a fierce lobbying campaign to save the loan.

Mr McFadden said the Forgemasters loan was made to give Britain a "national capability" in the nuclear supply chain, and warned there was "damaging uncertainty" over it.