Energy Secretary Chris Huhne has denied allegations that his "prejudices" against nuclear energy contributed to the cancellation of the £80m loan to Sheffield Forgemasters to build power plant components.
Labour leadership contender Ed Miliband said the coalition's decision was based on the "short-sightedness" of a Tory party which was against state intervention and Mr Huhne's opposition to nuclear.
But at Commons question time on 1 July 2010, Mr Huhne said the decision was made because the loan was "simply unaffordable".
Shadow energy secretary Mr Miliband said the "commercial loan" to Forgemasters would have resulted in at least £110m returning to the Exchequer.
Mr Huhne replied: "The loan to Sheffield Forgemasters was not a commercial loan. If it was a commercial loan it would have been arranged through the banks and not by the government.
"It was precisely because of the public subsidy element, and the fact that the public subsidy element was not affordable, that the government decided not to proceed with it."
Mr Miliband said the money had been set aside and after a proper process the loan was judged to be good value for money.
He continued: "Isn't the truth about this that we have a combination of the short-sightedness of the Conservative Party which sees no role for the government in creating the green industries of the future and your prejudices against nuclear power?"
Mr Huhne told him: "I can assure you that my prejudices, whether they exist or not other than in your own imagination, did not enter into this decision."