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Nick Clegg's justification for the axing of a £80million steel firm loan was trashed by a letter from fellow Lib Dem Vince Cable yesterday.

The cash was supposed to fund a new press for building nuclear power plant components at Sheffield Forgemasters in Deputy Prime Minister Clegg's own constituency.

Mr Clegg suggested that the loan had not been signed off by the Treasury and would benefit only the company's shareholders.

But Business Secretary Vince Cable has stressed in a letter to a Commons committee that he was wrong on both counts.

MPs on the Business Select Committee will now review the Government's decision.

Mr Cable's letter stated that "analysis presented to the Industrial Development Advisory Board showed it was likely that the benefits of the loan would outweigh the costs".