Gordon Brown ignores CBI's call for help for British car manufacturers

Gordon Brown ignored renewed calls from business leaders to save the car industry yesterday, just as America’s ailing automotive giants were offered a $17.4 billion (£11.6 billion) bailout.

The Prime Minister insisted that the responsibility to help carmakers lay with their owners, but Richard Lambert, the director-general of the CBI, said that the Government needed to provide emergency financial support.

A number of foreign carmakers, including Tata, the Indian owner of Jaguar Land Rover, have approached the Government for cash for their British subsidiaries.

Describing car manufacturers as “vital to our future”, Mr Lambert said: “The whole industry needs access to credit and I think this is something the Government could do and should do with urgency. This is not money that’s being given away, it is money that will be repaid.”

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Mr Brown said that the Government had not agreed any deals. “These are issues that will be debated over the next period of time, but there is no promise that we’ve made of any support,” he said.

Concerns for the 800,000 jobs reliant on carmaking heightened on Thursday as car production slumped by a third, according to the Society of Motor Manufacturers and Traders. Just 97,600 cars were made in Britain in November, the lowest number since 1987. Commercial vehicle production dropped by 50 per cent.

Mr Lambert’s concerns are shared by the unions. Derek Simpson, the joint leader of the Unite union, described the Government’s failure to agree a rescue package as “disappointing”.

“The urgency of the situation dictates that the Government must, however, do as it did with the banks and lose no time in intervening with vital assistance,” said Mr Simpson. “It is no good bailing out the banks if the banks won’t then bail out business.”

There was further bad news for the car industry yesterday as the bankrupt car parts manufacturer Wagon laid off almost all of its 300 staff.

The car dealership chain Lookers, which has more than 100 showrooms, warned shareholders that profits for this year would be less than half those for last year, and the upmarket London dealership HR Owen said it could make a loss this year, adding that sales of Alfa Romeos and Lamborghinis had plummeted as City bankers cut back on spending.

President Bush, with just a month left in the White House, announced that the US Government would lend $17.4 billion to General Motors and Chrylser, both of whom had warned that they might otherwise run out of money by the end of the month. The firms are expected to receive the funds by December 29.

Announcing the aid package, Mr Bush insisted that there were strict conditions connected with the loan. He said that the car companies had until the end of March to set out how they would cut costs to survive in the long term. If they failed, the loan would be called in.

Washington was scared that the collapse of General Motors and Chrysler would also cause Ford to fail, triggering the loss of about three million jobs across the US, but car experts gave warning last night that such concerns would prove unfounded.