Government denies U-turn over new Forgemasters loan

THE Government was yesterday forced to deny a U-turn after revealing it was offering a loan to steel firm Sheffield Forgemasters as part of a £950m jobs-boosting package ahead of what are expected to be more gloomy economic figures today.

Deputy Prime Minister Nick Clegg denied there had been any change of heart when he revealed a proposed loan of as much as £36m for Sheffield Forgemasters – a company that had been controversially refused an £80m loan last year amid bitter recriminations, particularly in the city Mr Clegg represents.

The Sheffield Hallam MP insisted the new loan – one of several announced from the regional growth fund yesterday – was unconnected to his own political fortunes and said the coalition Government’s efforts to rescue the public finances had created enough breathing space to support companies like Forgemasters.

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But Labour MPs in Sheffield were quick to deride Mr Clegg’s new-found support for the steel company while opposition leader Ed Miliband criticised the national injection of funding into the private sector as “too little, too late”.

Across Yorkshire and the Humber, the Government said it was backing 24 bids with as much as £143m in the second round of grants from the regional growth fund, its flagship policy to create private sector jobs in areas hard hit by public sector cuts. The money could create 3,000 jobs directly, with another 13,700 created in supply chains.

Other schemes approved include £17m for business rate discounts to companies moving into the centre of Bradford to try to boost the city’s stalled regeneration, £1.3m for road improvements in Wakefield and funding for Leeds-based keyhole-surgery equipment manufacturer Surgical Innovations.

Seven projects with the potential to create more than 10,000 jobs were pledged money from the first round of funding earlier this year, but only one has so far completed legal checks and received the money.

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Yesterday’s announcement means the entire £1.4bn fund has been allocated, but Ministers have hinted that they may try to find more.

However, critics of the scheme pointed out the fund represents significantly less spent on economic development in regions such as Yorkshire than under the previous government, and yesterday’s announcement appeared timed to pre-empt figures today that are widely expected to show almost no growth in the last quarter.

David Cameron said the spending was part of an “all-out mission” to revive the economy but Timothy Kirkhope, Conservative MEP for Yorkshire and the Humber, said he was “yet to be convinced” the growth fund would create so many jobs.

“Monies seem to be going into certain individual projects and certain businesses are benefiting for effectively job creation as opposed to a wider kind of economic infrastructure which is something which I think is still rather lacking in Yorkshire,” he added.

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Mr Clegg brushed aside the U-turn suggestions when he visited Forgemasters yesterday. He stood by the Government’s argument that the proposed £80m loan for a specialist forge for nuclear power equipment, agreed by the previous Labour administration, was simply unaffordable.

He said the company’s management had told him their priorities had changed since the Japanese nuclear disaster in March. The new loan – which the company acknowledged had not yet been detailed or finalised – will be for different equipment.

Mr Clegg insisted: “This is not about me. This is not about any politician. It’s genuinely about what we can do together – the Government and companies like Forgemasters – to restore a sense of hope and confidence and growth to the British economy.”

But Sheffield Heeley MP Meg Munn said: “The people of Sheffield will want to know why it has taken Nick Clegg 18 months to recognise the need to support local businesses and why the loan is less than half the amount the previous Government identified.”