Row erupts after £300,000 Portsmouth shiphall cashpot is sent back to Whitehall

Data obtained by The News from the government under the Freedom of Information Act revealed engineering firm Magma Structures was to be awarded the money after it was secured by the Solent Local Enterprise Partnership.

The aim was to breathe new life into the section of the site left empty after BAE Systems’ decision in late 2013 to move shipbuilding to Scotland.

But Portchester-based Magma pulled the plug on its move and told the LEP in August last year it therefore wouldn’t spend the grant.

The cash was awarded to the region from the Regional Growth Fund – managed by the Department for Business, Energy and Industrial Strategy.

Now, it has transpired the LEP sent the unspent £300,981 fund back to Whitehall – despite Portsmouth North MP Penny Mordaunt revealing she got a ‘guarantee’ from the LEP the money would stay so another commercial operator could use it to move into the hall.

Ms Mordaunt is now seeking urgent answers from LEP leaders over the mix-up – despite the business body insisting it was ‘required’ to wire the money back.

Shipbuilding campaigners say the blunder is a ‘national disgrace’.

Ms Mordaunt said: ‘We had an agreement that the money would stay.

‘The last thing the LEP told me about the £300,000, was we had got dispensation to hang on to it, because there are a number of operators I’m talking to, which might want to come in to the yard.

‘The whole point of that money was to facilitate that.

‘It wasn’t specifically because of Magma, it was because someone was coming into the shiphall.’

She added: ‘My understanding was that we would hang on to the £300,000 and I haven’t been told otherwise.’

Gary Cook, GMB regional organiser for the Clyde shipyard, formerly involved in representing the shipbuilding industry in Portsmouth, said: ‘It’s been the worst showcase of amateur dramatics.

‘To say the people of Portsmouth have been lied to and deceived is a gross understatement.

‘It’s been one of smoke and mirrors, deception and broken promises to the highest level – it’s absolutely appalling. And now, this money has been squandered. It’s a national disgrace. I don’t believe there is any genuine intent to try and revive shipbuilding in Portsmouth.’

John Ferrett, negotiations officer for The Prospect Union, which represents city dockyard workers, said: ‘This is just another broken promise. The promise that we would get shipbuilding back in the city hasn’t materialised, the promise we would be moving new or extra businesses into the shiphall hasn’t materialised, and the promise money would be set aside to help business and to keep it in the area hasn’t materialised.

‘So it’s a string of broken promises.’

The LEP added that Solent businesses could now benefit from the new Solent Growth Fund, which is offering a total of £2m in capital funding on a ‘grant, loan, forward-funding or equity share basis’.

The bulk of the former shiphall site is now home to a minehunter repair facility, while efforts have continued to get the entire base filled with a mix of commercial work.

Richard Jones, Solent LEP head of policy, said: ‘This was a national programme and any unspent money must be returned to government.

‘Following notification from Magma Structures that it would not be proceeding with the grant-funded project, the LEP was required to return this unspent Regional Growth Fund money to government.

‘Decisions on the use of funding for any moneys returned to government from the RGF programme will be taken centrally and, therefore, the Solent LEP is not in a position to comment on the potential use of this.’

A government spokesperson was unavailable for comment.