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”
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: https://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…
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.
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….