Sheffield Forgemasters loan cancelled

Posted on 17 Jun 2010 by The Manufacturer

Government has cancelled the £80m loan set aside by the Labour government for a 15,000 tonne press as part of £8.5bn worth of spending cuts.

Recently appointed Chief Treasury Secretary David Alexander announced this morning that the loan is to be scrapped along with a host of other projects, including the Future Jobs Fund (£290m), the continuation of a scheme which offers young people guaranteed training or a job after six months unemployed (£450m), £7bn worth of search and rescue helicopters procurement through the Ministry of Defence and £1.1bn for redevelopment of the A14.

Sheffield Forgemasters was looking to use the cash to buy a 15,000 tonne press to make forgings for the largest nuclear reactors in the world. This would have given the company a unique capability in Europe and would have directed money from all over the world into the UK. In a recent article in The Manufacturer magazine, the company inferred that they are the only UK company that have the capability to house such a facility.

While chief executive Graham Honeyman said it was “a huge disappointment to all at the company,” press secretary Billy Greenhalgh told TM that the company, which employs 800 people, will now try to identify alternative sources of funding.

“We are disappointed, of course, but we are a proactive company,” he said. “The nuclear and offshore contract we have revived have generated massive interested in the UK and beyond so it is a possible another finance could step forward. The offshore division has recorded big profits this year and the company is in good shape.”

The Department for Business, Innovation and Skills has issued a statement in which it outlines which projects on its quota are to be kept. These include:

• Bristol and Bath Science Park – £2.6 million;
• International Space Innovation Centre in Harwell – £12 million;
• Discovery Research Ship – £75 million;
• National Renewable Energy Centre (NAREC) Offshore Wind Blade Test Site, Blyth – £11.5 million;
• NAREC Offshore Wind Turbine Test Site – £18.5 million;
• Offshore Wind Demonstration and Development – £12.4 million;
• Offshore Wind, Mitsubishi Collaborative R&D to support Mitsubishi and partners – £30 million;
• Support for the Post Office Network – £180 million.

Business Secretary Vince Cable said a balance has to be struck between reducing the budget deficit and supporting growth and that the Labour government had committed to spending money which it didn’t have.

“Sheffield Forgemasters is an important part of the UK’s ability to develop a civil nuclear supply chain and its specialist forging skills are in demand globally,” he said.

“However, we have to find a balance between reducing the deficit while helping the economy to grow. Against a backdrop of reduced public spending, the Government’s role is to create the right business environment and the right skills base. The Government cannot simply keep writing out cheques.

“The Government hopes the company secures private investment for this worthwhile project.”

“In the economic climate that we find ourselves in some of the commitments previously made by Government can now no longer go ahead,” he said. “This is why it is so important that there is support for skills, science and entrepreneurship through more apprenticeships, spending on gold standard science research and slashing burdensome red tape.

“It is clear that Government can not simply continue to commit money to every project, but there are other things that government can do to secure the recovery.”

The Post Office investment is being upheld because “it plays a hugely important social role,” he said.