PMQs: Clegg rejects criticism over Forgemasters loan

Nick Clegg has rejected demands from Labour to reconsider the "ludicrous" decision to deny an £80m loan to Sheffield Forgemasters.

In rowdy Commons question time exchanges on 21 July 2010, shadow justice secretary Jack Straw repeatedly attacked the deputy prime minister over the decision and urged him to think again.

Mr Clegg was standing in for David Cameron, who is in New York as part of his official state visit to the US, for the final prime minister's question session before the summer break.

Mr Straw said: "He told the House on June 22 that the government had denied a loan to Sheffield Forgemasters because the owners didn't want to dilute their own shareholding in the company.

"But we now know that in private he admitted to the chief executive of the company that 'you made clear to me your own willingness to dilute your equity share'."

"Will he now correct this error?" he demanded of the deputy prime minister.

But Mr Clegg said the problem was "simply one of affordability".

He claimed Labour former business secretary Lord Mandelson "was writing out cheques to companies like Forgemasters, which he knew would bounce".

Mr Clegg concluded: "That was what was wrong - to pretend there could be assistance for a great company like Sheffield Forgemasters when, as the former chief secretary to the Treasury said, there was no money left."

Mr Straw said Mr Clegg had "preached the importance of open and transparent politics" but couldn't bring himself to correct the record of something that was "plainly wrong".