Controversy has continued to rage over the recent cancellation of an £80million Government loan to steel manufacturer Sheffield Forgemasters.
The loan was withdrawn by the Coalition earlier this month, with Deputy Prime Minister Nick Clegg saying that there was no money for such investment.
However members of the Labour party allege that Andrew Cook, a major Tory donor in Yorkshire and Chairman of William Cook Cast Products, had pressured the government to cancel the loan as he wanted to invest in Forgemasters himself.
Mr Cook sent an email to Conservative Business Minister Mark Prisk in May, warning that the Forgemasters loan may be illegal under EU law.
At the time Mr Cook claimed that “Sheffield Forgemasters is not a competitor of my business.”
However he admitted in a statement issued this week that “It is no surprise that I am strongly opposed to the previous government’s handout to Forgemasters, particularly when I had already offered as a local businessman to help supply the funding they needed.
“My only intention was to highlight the illegal use of taxpayers’ money by the previous Labour government.”
Labour MPs have claimed that Mr Cook’s desire to invest in Forgemasters show he was attempting to take over the business.
Sheffield South East Labour MP Clive Betts read Mr Cook’s email to the Commons on Wednesday, saying that it showed a clear conflict of interest.
“When ministers took the decision … were they aware of Andrew Cook’s objections?
“Were they aware that Mr Cook was a major donor to the Tory party?
“Importantly, were they aware of his conflict of interest and that he was expressing an interest in personally investing in the company?”
Nick Clegg told BBC Radio Sheffield that the Labour claims were all false.
“It’s constant muck-raking from Labour MPs who won’t live up to their own responsibility in making a number of promises with money they didn’t have.”
Sheffield Central MP Paul Blomfield said he thought the whole affair was “shameful.”
“After the Tory-Lib Dem government scrapped the £80million loan to Forgemasters, Nick Clegg said he would work with the company to find a different way forward.
“He then failed to meet them as promised.
“This is a shameful breach of trust with Forgemasters and the people of Sheffield, who have lost out on new manufacturing jobs and investment.”
Shadow Energy Secretary Ed Miliband is calling for an inquiry into what took place after Downing Street refused to say whether the Prime Minister had seen Mr Cook’s email.
“The Government’s handling of the cancelled loan to Sheffield Forgemasters has been a complete disaster.
“It is extraordinary that a top Tory donor has been lobbying the Government against the Forgemasters loan.
“We need a proper investigation.”
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