The UK’s new coalition government has cancelled the £80 million loan promised to Sheffield Forgemasters by the previous government in an effort to tackle the “black-hole” in the country’s finances. The project is one of 12 that has fallen victim to £2 billion in spending cuts since the start of 2010.

Sheffield Forgemasters was told in March that it would receive an £80m loan towards building a 15,000 tonne press, one of a few in the world that would be capable of making ultra-large forgings for the nuclear industry. At the time Westinghouse agreed to make a “substantial contribution” towards the press and the Sheffield office of Lloyds Banking Group also offered funding, securing a total of £140 million.

Announcing the cuts, chief secretary to the Treasury Danny Alexander told MPs: “We have found another spending black-hole in the previous government’s plans – projects had been approved with no money in place to pay for them.”

Forgemasters chief executive Graham Honeyman said the news was “a huge disappointment to all at the company,” but he said it would now focus on exporing other avenues for funding..

“The company’s proposed business expansion plan to install a 15,000 tonne press still offers a real opportunity for the company to create new jobs in Sheffield and in the subsequent supply chain and to give a major boost to UK manufacturing industry on a global level. We have no intention of standing still and will continue to explore all avenues for business development.”

“This is terrible news for the region, as well as for the wider prospects of new nuclear build in the UK,” said Mike Graham, National Secretary of the Prospect union.

“The Forgemasters project would have provided a vital link in the supply chain, as well as many skilled jobs, by producing a 15,000 tonne press to make pressure vessels and castings for nuclear reactors.”

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