'Say sorry to Sheffield', Clegg urged over Forgemasters

The funding had been agreed by Labour to help the firm expand its business in the nuclear industry, but soon after taking office, the coalition Government cancelled the loan on the grounds of affordability.

Labour former minister Kevin Brennan (Cardiff W) said that as Mr Clegg was "famous for his humility" he should say sorry to the people of Sheffield.

But the Deputy Prime Minister said the loan was "not affordable under this year's budget" and accused Labour of announcing it as a "photo opportunity" days before the general election.

The exchanges in the Commons came amid reports that MPs will hold an inquiry into the circumstances surrounding the decision by the coalition to axe the loan.

Mr Brennan said: "The Deputy Prime Minister is famous for his humility.

"Following the report of the select committee and this morning's report in the Financial Times, are you now prepared to apologise for the mistake you made about Sheffield Forgemasters and join the Liberal leader of Sheffield City Council in calling for some public finance for this project?"

But Mr Clegg, standing in for David Cameron at Prime Minister's Questions, said: "The reasons, regrettably why the 80 million loan that was announced by the previous government, 11 working days before the general election, to coincide with a nice photo opportunity for the previous prime minister, the reason why that has not been able to proceed from this year's budget, is that it is not affordable under this year's budget ...

"In other words it was a promise made when the money was not available, it was a cheque written which the previous government knew would bounce.

"But we have made it very clear to Sheffield Forgemasters that we will continue to work with them to see how we could support them in the future once the budget situation becomes clearer after the comprehensive spending round."