Ownership worries scuppered £80m loan

THE Government axed an £80m loan to steel firm Sheffield Forgemasters because of concerns about the company's set up that meant one man stood to be the main beneficiary, David Cameron has revealed.

The Prime Minister claimed the deal – which could have created several hundred jobs and made Forgemasters a world leader in manufacturing nuclear components after it was signed off by Labour Ministers shortly before the election – was "not very well thought through".

Government insiders revealed there were concerns about pumping so much public money into a company which is 49 per cent owned by one person, managing director Graham Honeyman.

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Mr Cameron made his first comments on last week's decision to cut the loan after being quizzed by a Labour MP in the House of Commons yesterday.

"I'd urge her to go and look at the shareholder structure and see who was really going to benefit from that not very well thought through piece of financial engineering," he said.

Labour MPs have responded with fury to the announcement – among 2billion of projects approved by Labour this year but cut last week as the Government seeks to reduce the deficit – which has been embarrassing for Deputy Prime Minister Nick Clegg, a Sheffield MP.

Shadow Chancellor Alistair Darling said: "We're all agreed about the need to rebalance the economy ...and we're all in favour of getting more industry in.

"That's an example where you might think that it (cutting the Forgemasters loan] was a very odd decision."