Business committee grills Cable on Forgemasters

This afternoon saw the Business select committee grill Vince Cable on the government’s decision to withdraw an £80 million loan to Sheffield Forgemasters.

Our guest writer is Rachel Reeves MP (Labour, Leeds West)

This afternoon saw the business, innovation and skills select committee hold a special session on the government’s decision to withdraw an £80 million loan to Sheffield Forgemasters.

The loan, cancelled in June, was described before the election by Nick Clegg as “just the sort of thing we should be doing”. The government has struggled to set out why the loan was cancelled – with the Sheffield MP incorrectly stating in front of the House of Commons that the directors were unwilling to dilute their shareholding.

Business secretary Vince Cable appeared in front of the committee, and tried to justify the government’s position. Without specific figures to hand, he continued to state that the loan was unaffordable, refusing to reveal the calculations made on the project’s value for money.

The loan to Sheffield Forgemasters would have created 400 jobs and several hundred more in the supply chain. They would have been high skilled, high tech jobs in nuclear energy, one of the key low carbon industries of the future.

Only one place in the world can do what Sheffield Forgemasters is attempting, and that’s in Japan. The industry is looking for a European base. After this government cancelled the loan, those jobs will go overseas – where governments want to support, not crush, their manufacturing industries.

The business secretary stated that the effect on Yorkshire’s economy was a separate factor to the affordability of the loan, which was the only one of 22 business department projects which faced the axe. It was one of 24 government projects cancelled or postponed out of 241 reviewed at the time. Those 241 projects were worth a combined £34 billion, and those that were cancelled £2bn. To say therefore that the £80m loan, which would have been paid back with interest, was unaffordable is disingenuous.

This was yet another opportunity lost for this government to describe a sustainable strategy for growth.

In this challenging economic environment, we all know that private sector loans to SMEs are not readily available. In the case of Forgemasters, the benefits of the loan would be felt across the industry, and would involve significant capital expenditure. This is exactly where the government should be stepping in – with strategic support for projects which cannot be secured through market mechanisms alone.

I sincerely hope that the government reconsiders this decision: strategic support for projects which offer genuine value for money should be at the heart of any business secretary’s role. And it is not just Sheffield Forgemasters that will lose out because of this – Sheffield, the steel industry and the civil nuclear supply chain will suffer as well.

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31 Responses to “Business committee grills Cable on Forgemasters”

  1. Shamik Das

    Business committee grills Cable on Forgemasters: http://bit.ly/al4EGr – @_RachelReeves_ writes exclusively for @leftfootfwd

  2. Shamik Das

    @bryonyvk Brilliant piece! http://bit.ly/al4EGr Drinks on me next time you're in London! (And a #FF tomorrow!) xx

  3. Claire Spencer

    Glad that @_RachelReeves_ is defending sensible investments into our future: http://s.coop/4al Great @leftfootfwd piece. #forgemasters

  4. yorkierosie

    RT @leftfootfwd: Business committee grills Cable on Forgemasters: http://bit.ly/al4EGr by @_RachelReeves_

  5. Adam Aaronovich

    RT @thedancingflea: Glad that @_RachelReeves_ is defending sensible investments into our future: http://s.coop/4al Great @leftfootfwd piece. #forgemasters

  6. Bryony Victoria King

    RT @shamikdas: Business committee grills Cable on Forgemasters: http://bit.ly/al4EGr – @_RachelReeves_ writes exclusively for @leftfootfwd

  7. Bryony Victoria King

    RT @thedancingflea: Glad that @_RachelReeves_ is defending sensible investments into our future: http://s.coop/4al Great @leftfootfwd pi …

  8. Adam Lent

    Business committee grills Cable on Forgemasters | Left Foot Forward http://bit.ly/bfc0HG

  9. Jordan Hall

    RT @leftfootfwd: Business committee grills Cable on Forgemasters: http://bit.ly/al4EGr by @_RachelReeves_

  10. jeff marks

    if the loan was a good idea and it would have definitely been paid back with interest, then private investors would have supplied it. you only have to remember british leyland to realise government is terrible when it comes to industry.

    in fact government seems to be terrible at everything is gets involved with. let’s get rid of it.

  11. Kevin Richards

    Time to stand up and be counted or held to account – RT @leftfootfwd: Business committee grills Cable on Forgemasters http://bit.ly/cRqpDJ

  12. Frances Alexander

    Business committee grills Cable on Forgemasters | Left Foot Forward: This afternoon saw the Business select commit… http://bit.ly/cTGt8G

  13. Lily Ma

    Business committee grills Cable on Forgemasters | Left Foot Forward: This afternoon saw the Business select commit… http://bit.ly/bNDldF

  14. kitmane

    Business committee grills Cable on Forgemasters | Left Foot Forward: This afternoon saw the Business select commit… http://bit.ly/bNEp56

  15. Sharon Jones

    Business committee grills Cable on Forgemasters | Left Foot Forward: This afternoon saw the Business select commit… http://bit.ly/bBWtsj

  16. gisselle

    Business committee grills Cable on Forgemasters | Left Foot Forward: This afternoon saw the Business select commit… http://bit.ly/9YbYDq

  17. mike

    Forgemasters
    thats why Lib Dems will lose Sheffield within months
    and why Clegg will lose his seat

    roll on Lord Lord Clegg

  18. Mr. Sensible

    Geoff, as Rachel says in her article private sector lones do not always seem to be available.

    Cable seems to have talked a lot about how the banks are not lending at the moment…

    Is this really what Cable et al meant by rebalancing the economy?

    I fully agree with you on this Rachel; this is yet another example of government investment supporting private industry, with in this case a lone which as you say would be paid back over a period.

  19. Mr Jabberwock

    Rachel. Could I ask a simple question – can you set out the rules that you would apply to government provision of credit to a business. Feel free to set out terms that would apply and whether you think it should generate a profit or a loss.

  20. Onye Akpala

    Business committee grills Cable on Forgemasters | Left Foot Forward http://bit.ly/ajTbK5

  21. Rachel Reeves

    RT @leftfootfwd: Business committee grills Cable on Forgemasters: http://bit.ly/al4EGr by @_RachelReeves_

  22. Rachel Reeves

    Ed Miliband visiting Sheffield Forgemasters today – hope he saw the BiS evidence session with Cable yesterday http://bit.ly/al4EGr

  23. yorkierosie

    RT @_RachelReeves_: Ed Miliband visiting Sheffield Forgemasters today – hope he saw the BiS evidence session with Cable yesterday http://bit.ly/al4EGr

  24. Mike Blakeney

    RT @_RachelReeves_: Ed Miliband visiting Sheffield Forgemasters today – hope he saw the BiS evidence session with Cable yesterday http://bit.ly/al4EGr

  25. diana smith

    RT @_RachelReeves_: Ed Miliband visiting Sheffield Forgemasters today – hope he saw the BiS evidence session with Cable yesterday http://bit.ly/al4EGr

  26. Mags W

    RT @_RachelReeves_: Ed Miliband visiting Sheffield Forgemasters today – hope he saw the BiS evidence session with Cable yesterday http://bit.ly/al4EGr

  27. Andrew Griffiths

    RT @_RachelReeves_: Ed Miliband visiting Sheffield Forgemasters today – hope he saw the BiS evidence session with Cable yesterday http://bit.ly/al4EGr

  28. Mike Thomas

    There was a business that exported over £1bn of product and had a £6bn turnover, provided jobs for 30,000 workers and also had a potential tie-up with a Chinese manufacturer to take their product to the Chinese market.

    They needed a £110m loan to cover operating costs in the medium terms and guarantees to their pension fund.

    Did Labour step in then? No. They prematurely wound up the firm because it coincided with the 2005 General Election.

    The Forgemasters loan was precisely the same in reverse. A grasp for votes.

    Labour had no industrial policy until six months before the 2010 election. Up until then, 1,500,000 jobs were lost in British manufacturing. More than the 1980s deindustrialisation under Thatcher as Labour poured all their attention into Banking services since 1997.

    Please save your crocodile tears, they don’t wash. Labour deserted manufacturing in the UK well before Forgemasters.

  29. Clegg faces lose-lose situation over Forgemasters | Left Foot Forward

    […] with the Conservatives was his ‘original sin’. Furthermore, the deputy PM discusses the scrapping of the loan to Sheffield Forgemasters, in a city where a third of its employees work in the public sector and […]

  30. Government may yet see sense and throw a lifeline to Bombardier | Left Foot Forward

    […] spelling out its commitment to support UK manufacturing. If the withdrawal of funding from Sheffield Forgemasters had previously raised doubts about this commitment, the Thameslink decision confirmed […]

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