1 Introduction
Background
1. On 17 March 2010, the previous Government announced
that it would be providing a loan of £80 million out of the
Strategic Investment Fund and the Low Carbon Fund to Sheffield
Forgemasters, a private company which specialises in a broad range
of heavy steel forgings and steel castings.[1]
The loan would facilitate the development of a 15,000 tonne press
to make large components for the civil nuclear industry. Announcing
the loan, Lord Mandelson, the then Secretary of State for Business,
Innovation and Skills said that:
Forgemasters makes heavy-forged castings for
advanced engineering projects - especially in the civil nuclear
supply chain. There are just one or two other companies in the
world with the kind of capability the new forge will provide and
the accreditation needed to supply the global nuclear industry
- and no others in Europe.[2]
2. The loan was the result of lengthy discussions
between the Department and the company which began with an initial
application for Government support from Sheffield Forgemasters
in September 2008.[3]
3. When it came into office, the Coalition Government
undertook a review of all spending commitments made by the previous
Government in the period between January 2010 and the General
Election. 217 projects were submitted to the Treasury for re-approval,
including the £80 million loan to Sheffield Forgemasters.
On 17 June 2010, Danny Alexander MP, the Chief Secretary to the
Treasury, announced to the House the outcome of that review. Twelve
of the 217 projects were cancelled, and a further 12 projects
were suspended.[4] The
loan to Sheffield Forgemasters was one of the twelve projects
which were cancelled.
4. The cancellation of the loan attracted significant
interest both in the House and in the media with accusations being
levelled at both the current Government and the previous Government
over the handling of the loan. We wrote to the Secretary of State
to get a clearer picture of the arrangement of the loan and the
rationale underpinning its withdrawal. The Secretary of State
replied on 28 July, and gave oral evidence before us on 14 October.
This evidence is appended to our Report.
1 www.sheffieldforgemasters.com Back
2
webarchive.nationalarchives.gov.uk/+/http://www.bis.gov.uk/news/speeches/mandelson-ninj-conference Back
3
HC Deb, 29 June 2010, col 539-40W Back
4
HC Deb, 17 June 2010, col 1040 Back
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