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By Clive Betts MP - 29th June 2010
Last Saturday, many very angry people queued outside Sheffield Town Hall to sign a petition supporting the loan to Sheffield Forgemasters that the government had just withdrawn.
Whilst there is a recognition that reductions have to be made in public expenditure in the next two to three years, they simply did not understand the rationale behind this decision. It brought back memories of the 1980s when the Thatcher government allowed the destruction of large parts of our steel and engineering industry. The fact that Forgemasters survived and is now a world leader, exporting 80 per cent of its output, simply makes people perplexed as well as annoyed.
The loan in question was worth £80m. It was to enable Sheffield Forgemasters to invest in the largest forging press in the world, to make vital parts for our replacement nuclear industry. This replacement will go ahead whether or not the Liberal Democrats like it, and without the investment at Sheffield Forgemasters, the work will instead be carried out in Japan and South Korea – the only other places in the world where this equipment exists. With the scale of nuclear investment that is likely to take place worldwide, Sheffield Forgemasters would have been ideally placed to take a large share of that export market as well.
Sheffield Forgemasters is not a failing company that needs subsidising. It is a highly successful world leader in its field, but it is a company of medium size which, in the current climate of economic uncertainty, cannot raise all the funds for this new forging press privately.
The £80m loan would have been repaid with interest. It would have complemented a similar amount of private investment, much of it inward investment from overseas. Ultimately it would have created 400 jobs at Forgemasters and in the supply chain, and would have produced extra tax receipts from workers and company profits.
The idea, therefore, that government support has been withdrawn because the money was not available is a nonsense. With the loan being repaid with interest, and taxes increased, government ultimately would have had a net return on the initial loan.
The withdrawal of support for the loan is therefore a blow to one of the leading firms in British manufacturing. It is short-sighted, in that it undermines the ultimate ability of the United Kingdom economy to recover from the current difficult economic circumstances, and it transfers jobs abroad.
It is no use the energy secretary saying the firm should look for a commercial loan. If it could have found one, it would not have come to government in the first place. It is disgraceful that no-one from government bothered to contact the firm at any time since the general election until the announcement was made.
The only logical explanation seems to be that the three people making the decision, namely the chief secretary to the Treasury, the business secretary and the energy secretary, are all Liberal Democrats and as such are anti-nuclear. It is no surprise that the chief apologist for this decision is the deputy prime minister himself.
This article is reproduced from The House Magazine.
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