Clegg faces lose-lose situation over Forgemasters

Nick Clegg has some tough decisions to make, both on the national stage and a lot closer to home, and faces a lose-lose situation over Sheffield Forgemasters.

Six months is an eternity in politics and Nick Clegg’s career is no exception. The difference between ‘Cleggmania’ in May and the ‘great betrayal’ 0ver tuition fees in December shows how quickly things can change, however the deputy prime minister claims his current challenge has provoked more criticism than even the tuition fees u-turn.

In a city that has two universities (Sheffield and Sheffield Hallam) Mr Clegg has already taken some unpopular decisions in his constituency with the trebling of tuition fees and scrapping the education maintenance allowance, yet the cancellation of the loan to Sheffield Forgemasters may be his most difficult decision so far.

In an interview with Prospect Magazine, he describes that, in many people’s eyes, forming the coalition government 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 many more indirectly depend on state spending.

He says:

That decision has played worse in Sheffield than the tuition fees decision partly because it links into that anti-Tory feeling, the belief that northern industry was abandoned.”

When questioned on why the loan was pulled when Britain was trying to mirror Germany in growing its economy through manufacturing as opposed to financial services, he replied:

“The trouble is the money that Labour had provided came from a budget in the business department that was running on empty. The treasury and Vince Cable felt it was wrong to take the money from somewhere else. But the whole issue could be revisited.”

The loan itself was to finance a 15,000 ton press to expand further into the area of civil nuclear power. Despite it being Liberal Democrat chief secretary to the treasury Danny Alexander who took the decision to axe the loan, Mr Clegg not only failed to overrule his colleague but spoke out in support of the u-turn on the issue.

Yesterday, a report by the Business, Innovation and Skills select committee provided more bad news for Mr Clegg over Forgemasters, rejecting the justifications put forward by him for withdrawing the loan.

Mr Clegg had claimed that the loan was unaffordable and that Lord Mandelson had been:

“… writing out cheques to companies like Forgemasters, which he knew would bounce.”

Yet the committee concluded:

“We are convinced that former Ministers signed off the loan in the full knowledge that it could be funded.”

Mr Clegg had also told the Commons:

“Do I think it is the role of Government to help out owners of companies who do not want to dilute their own shareholdings? No, I do not.”

He was again contradicted by the committee, which said:

“We conclude that a dilution in equity did not represent an obstacle to providing the loan.”

The findings were described by shadow industry minister Ian Lucas as “a humiliation” for Mr Clegg, “exposing that the arguments he put forward for withdrawing the Sheffield Forgemasters loan were simply not true”; Mr Lucas called on Mr Clegg to explain himself to the House of Commons.

Next year’s local elections may provide a more coherent test of his popularity and that of his new look coalition Lib Dems. The Liberal Democrats have 41 councillors to Labour’s 40, as well as two Green and one Independent. Whilst current national polling data suggests the Liberal Democrats are unlikely to retain control of the council, the question will be how they can mitigate their losses and will be a test of how popular he is in his constituency.

As one of the most visible and leading proponents of the coalition government;s tough austerity package, he has been at the forefront of making massive cuts throughout the country. What Mr Clegg faces now is a lose-lose situation.

On the one hand, Mr Clegg can stick to his rhetoric and not grant Forgemasters a loan, greatly damaging job creation in his constituency and not providing funding in the very industry Britain should be supporting. Alternatively he can take the safer political route at home while being accused of gross hypocrisy on the national scale and trying to save his own skin.

This is one situation where looking sad and wishing things could be different will not get Mr Mr Clegg out of trouble.

18 Responses to “Clegg faces lose-lose situation over Forgemasters”

  1. Sammy Shummo

    RT @leftfootfwd: Clegg faces lose-lose situation over Forgemasters: //bit.ly/eO9bro

  2. Laurence Turner

    RT @leftfootfwd: Clegg faces lose-lose situation over Forgemasters //bit.ly/gFqmN4

  3. Éoin Clarke

    Daily Politics covered Clegg today. Andrew Neil [credible on LD resignations] did say that Clegg was down in the dumps/ depressed for want of a better expression, about his recent form in government.

    I had always timetabled August as the make or break month for Clegg. He was due a three week holiday then, and we know what the press are like for the rumour mill when the cat is away…

    Saying that, his holiday in Switzerland might well prove to be his tsar Nicholas moment… Who does that make rasputin?

  4. JoshC

    A slight correction. Forgemasters isn’t in Nick Cleggs constituency, it is in David Blunketts. Not that that matters to those of us from Sheffield, the Lib-Dem councillors are going to receive an almighty kicking in May.

  5. Ed W

    If there are any economists in the vicinity, please can they help as I struggle to understand the public finances:

    As I understand it the shifting of university funding from government to students reduces the budget deficit (public sector net borrowing) because as an accrued measure it takes into account the fact that students will eventually pay (most) of the money back. The government’s net cash requirement for this year will not fall, but this is not deemed “the deficit”. I assume the same is true for our bilateral loan to Ireland.

    How then can Clegg and Cable claim that the loan to Forgemasters is unaffordable because of our high deficit? Surely it is accounted for on the same basis as the loans above?

    Genuine questions, I don’t understand!

  6. Mr. Sensible

    How can Clegg say we could not afford it? This was a lone, which would be repaid over a set period.

  7. Ruperto

    Isn’t it bad form for an MP to lie to Commons?
    Reading the select c’tee report it is clear that Mr Clegg’s statements were (ahem) mistaken and he should apologise to the House.

  8. The Steel City

    Clegg faces lose-lose situation over Forgemasters //bit.ly/g0xwLY

  9. The Steel City

    Clegg faces lose-lose situation over Forgemasters: In a city that has two universities (Sheffield and Sheffield … //bit.ly/f7WeTS

  10. Kevin Richards

    Nick Cleggs on a political suicide missionRT @leftfootfwd: Clegg faces lose-lose situation over Forgemasters //bit.ly/gFqmN4

  11. Anon E Mouse

    Eoin Clarke – Your whole remarks are based on speculation and therefore irrelevant.

    Whether or not Clegg is fed up/happy/whatever is really not important. You say Clegg will have a bad August which is just your opinion and you make the assumption that he WILL go away that month – Cameron cancelled his holiday remember – then you state it may well be his “tsar Nicholas” moment.

    Finally you continue to mention Rasputin which is speculation on speculation.

    Nick Clegg will adhere to the coalition agreement until the election year. The public will have forgotten those selfish middle class kids who want the working class to pay for their education (Charlie Gilmour’s father is worth £90 million for goodness sake). The Lib Dem’s will pick up different voters who will see that a vote for them is no longer a protest vote.

    Labour will be absolutely hammered if they still have that useless dithering dud as leader.

    I’m with the Labour MP’s on this one and realise his brother or Alan Johnson would have been elected leader if the unions hadn’t cheated to get him into power.

    With the spin doctors he’s employed it seems New Labour lying and smearing it about to make a resurgence…

  12. Anon E Mouse

    Mr.Sensible – You’re like a broken record on this. If the loan was viable why don’t they go to the banks? Go now if they need the money.

    It was just an excuse for Labour to try and buy some votes – that was never Mandelson’s money to give away – it was ours not his.

    All this whole article goes to show is that Labour really don’t get it. I thought Miliband did and was just a useless dithering individual but it seems the whole of the left can’t accept they are not longer in power.

    Let me try: Labour is out of power for at least as long as the hopeless Ed Miliband is leader.

    I know it Mr.Sensible. You know it but can’t bear to accept the truth. You were wrong about Gordon Brown and you’re wrong about Sheffield Forgemasters.

    Move on dude….

  13. Richard

    “The Lib Dem’s will pick up different voters who will see that a vote for them is no longer a protest vote.”

    And

    “The public will have forgotten those selfish middle class kids who want the working class to pay for their education.”

    Pure speculation then, therefore also an irrelevence. Not to mention all those selfish middle-class kids in power whose education was paid for by the working classes.

    “With the spin doctors he’s employed it seems New Labour lying and smearing it about…”

    Reads like a perfectly accurate description of the works of Andy Coulson and co.

    “If the loan was viable why don’t they go to the banks?”

    The same could be asked of Ireland. That’s our money too, which purportedly we don’t have.

    It’s laughable how riddled with holes all your comments are, Anon E Mouse, you really do lack any intellectual rigour, falling straight into your own trap time and again.

  14. Cllr Krupesh Hirani

    Clegg in trouble in Sheffield Hallam over Forgemasters and Tuition Fees //bit.ly/gFqmN4

  15. Clegg in a lose-lose situation « atthegrapevine

    […] The Forgemasters issue has hit Nick Clegg right where it hurts, right in the constituency. Writing for Left Foot Forward Chris Tarquini examins Nick Cleggs fresh challenge. Read it HERE […]

  16. Anon E Mouse

    Richard – (You don’t know if I’m playing devils advocate btw)

    1. Eoin Clarks seems to think that Clegg is in trouble in August. I disagree. Five years from now this country will be transformed, the coffers full from privatisations (why has no one on the left made something of this) and a pre election give-away will combine with the feelgood factor after the Royal wedding and the Olympics.

    2. The students may vote for Labour but the Lib Dem’s will pick up ex Labour voters after they realise Ed Miliband is a hopeless dud and vote for Clegg. A week is a long time in politics. Five years is a lifetime.

    3. Students will realise that the new system is far fairer than the existing one when they pay nothing up front. Why should a shelf stacker pay to educate Eric Claptons daughter?

    4. Damian McBride and Derek Draper were a pair of disgusting Labour smear merchants, employed in Downing Street by Gordon Brown. That again is a FACT unlike your typical New Labour smear against Coulson, one based on no evidence. Are you saying that David Camerons buddy, the coke head Tom Baldwin, is any different Richard? (I subscribe to the Times and have not missed any political column for 15 years – remember I voted Labour my whole life pre Gordon Brown)

    5. To compare a privately owned COMPANY in the UK with one of our major trading COUNTRIES, Ireland, regarding loans is absolutely bonkers. Why should governments not let privately owned companies go to the banks? Ireland couldn’t. Plus the interest rate is high making the investment a good one.

    You may consider that my comments lack intellectual rigour Richard but I consider yours lack any honesty or common sense. You don’t like the fact your boy, the dithering Ed Miliband, has been rumbled and like the Labour MP’s I agree his brother or Alan Johnson should have got the job.

    PS: If you’re the “Richard” from this link: //www.leftfootforward.org/2010/12/council-cuts-eric-pickles-meddle-and-populism-bill/comment-page-1/#comment-77557

    I’m still waiting to see which “avoidable wars” the Tories took us into…

  17. Mr. Sensible

    “If the loan was viable why don’t they go to the banks? Go now if they need the money.”

    Mr Mouse, these are the same banks who Vince Cable (yes, the minister responsible for this decision) has said are not lending to viable enterprises.

    Is Vince Cable right with that, or not?

    And on Coulson, I’m not sure we’ve seen the last of that one yet.

    If there were other things going on, I can’t believe that Coulson would know nothing about it, unless he was very bad at his job.

  18. Anon E Mouse

    Mr.Sensible – If Vince Cable is right or wrong is not the issue. This company expects the government to lend it money because it does not want to dilute it’s shareholdings.

    Why should governments with no money left (according to the last Labour treasurer – and he should know) be money lenders?

    Banks should be bankers. Governments should be governors….

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