Trade unions have urged the new government to uphold pledges of loans to manufacturing companies made by Labour as fears grew they could be axed as spending is cut.
Among the companies which could be affected is heavy engineering firm Sheffield Forgemasters, which was promised an £80 million loan by Lord Mandelson.
Forgemasters intends to use the money to help pay for a forging press that would enable it to produce ultra-large components for new nuclear reactors.
Carmaker Ford, meanwhile, was pledged £380 million in loan guarantees by Labour as part of an investment programme in environmentally-friendly engines which could safeguard 3,000 jobs at its plants in Dagenham, Southampton and Bridgend, south Wales.
Trade union Unite said it had written to Vince Cable, the new business secretary, last week to voice its concerns that loans offered to engineering firms under the last administration would be axed. The union is particularly concerned about the Forgemasters loan. Unite said failure to grant it could cost thousands of jobs and jeopardise Britain’s preparations to build a new generation of nuclear power stations.
The forging press would put the company in a select group of manufacturers around the world capable of producing the largest nuclear components such as pressure vessels.
The new government recently announced that it was reviewing all spending pledges made by Labour since the beginning of the year. Derek Simpson, Unite joint general secretary, said that failure to support Sheffield Forgemasters would be a “colossal error of judgement”. He said: “The company is unique, there is not another company in the world that has its skills and expertise. Britain needs companies like Sheffield Forgemasters if we are to meet our low carbon energy needs and build a modern, advanced manufacturing base.
“The uncertainty that the review of this loan and other loans is creating could cost the UK thousands of jobs if there is not a quick and positive decision by the new coalition government.”
Simpson called on Deputy Prime Minister Nick Clegg, whose constituency is in Sheffield, to back the loan. “If he is as proud of Sheffield as I am he will use his influence to do everything possible to support this very special company.”