Sheffield’s Forgemasters gets compensation after £80m loan cancelled

Forgemasters - Ladle of molten steel.
Forgemasters - Ladle of molten steel.
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STEEL firm Forgemasters has received an undisclosed sum of compensation from the Government over the withdrawal of its £80 million loan.

The Brightside company was handed the money, which The Star understands to be in the tens of thousands of pounds, to cover management costs incurred on developing plans for a new 15,000-tonne press to manufacture parts for nuclear power stations.

Cancellation of the loan, promised in the dying days of Gordon Brown’s Labour Government, was one of the first controversial decisions made by the coalition.

Deputy Prime Minister and Sheffield Hallam MP Nick Clegg said the decision was made due to insufficient funds to cover the loan and, unlike other cuts, it did not mean job losses or service reductions.

Peter Birtles, director at Sheffield Forgemasters, said: “We continue working closely with the Government to seek avenues forward on the funding issue for a 15,000-tonne press and have been compensated by the treasury for work we invested in our original funding proposal.

“The detailed business environment regarding the press has changed substantially since the project was first conceived almost three years ago and considerable, comprehensive work will have to be repeated before a new application can be made.

“This will cover all relevant issues including supply, market demand, hardware costs, availability and the UK’s development of a civil nuclear power programme.”

Sheffield Central Labour MP Paul Blomfield said: “This is recognition of the wrong that has been done to Forgemasters but, unfortunately, it cannot undo the damage done.

“The priority now is looking to the future and supporting Forgemasters to develop its business.”

A spokesman for the Department for Business, Innovation and Skills, said: “It is right the Government compensated Forgemasters for costs incurred when the offer of support was withdrawn.

“This money was paid at the end of the last financial year.

“Forgemasters is a special case because the company incurred costs when the Government made the company a conditional offer of support which was then withdrawn.”