Steel loan axe row fails to die down

As Downing Street sought to draw a line under the controversy about Tory donor Andrew Cook's intervention – rejecting any suggestion of wrongdoing – MPs said a thorough investigation was necessary to get to the bottom of mounting questions over the decision to scrap funding for the iconic company.

The decision was already been shrouded in confusion after Ministers initially claimed the loan was axed because it was unaffordable, then because it had only been offered because the management had refused to dilute their control and seek private finance. The latter has since been proved inaccurate, prompting Ministers to return to insisting it is unaffordable.

Shadow Education Secretary and MP for Morley and Outwood Ed Balls said: "This is very murky indeed and needs to be investigated. Ministers must come to Parliament to answer questions about what happened."

Shadow Energy Secretary and Doncaster North MP Ed Miliband said an independent panel should consider whether the loan should be restored.

"It is extraordinary that a top Tory donor has been lobbying the Government against the Forgemasters loan," he said. "The public must know whether there has been a conflict of interest."

Shadow Foreign Secretary David Miliband also urged the Tories and Liberal Democrats to "come clean" over their reasoning. A host of Labour MPs from the region – led by Clive Betts and Angela Smith who obtained the emails revealing Mr Cook's lobbying on Wednesday night – criticised the scrapping of the loan.

Shadow Leader of the Commons Rosie Winterton, the Doncaster Central MP, yesterday demanded Ministers answer a series of questions before the House of Commons breaks up for the summer on Tuesday.

Meanwhile Mr Cook, chairman of Sheffield-based William Cook Holdings who has given at least 750,000 to the Tories in donations and flights since David Cameron became leader, also faced questions after admitting he had offered funding to Forgemasters.

He said he had felt it right to inform Ministers of his legal advice suggesting the loan was illegal under European Union laws on state aid, although he has stressed his company is not a competitor of Forgemasters.

Describing himself as a "vocal campaigner against the misuse of public funds to support private business", he said it was "no surprise that I am strongly opposed to the previous government's hand-out to Forgemasters, particularly when I had already offered, as a local businessman, to help supply the funding they needed".

But that sparked a fresh round of questions from Labour MPs as whether officials had helped, "were involved in encouraging or negotiating any deal between Andrew Cook and Sheffield Forgemasters, in what seems like a takeover bid for the company".

Downing Street insisted there was no need for an inquiry or investigation and there had been no wrong doing.

Business Minister Mark Prisk, whom Mr Cook had emailed, told MPs he was only concerned with "making sure that the matter is dealt with equally" when receiving representations.