The Government announced a major package of help for the UK's ailing car industry today, including £1 billion of direct loans and a national strategy designed to help British manufacturers meet demand for greener, cleaner cars.
Lord Mandelson also unveiled guarantees for £1.3 billion in loans from the European Investment Bank, but the Business Secretary said that there was "no blank cheque on offer" and no operational subsidies.
"Today's measures will provide a specific boost to the industry, providing real help and laying the foundations for its reinvestion for a low-carbon future," Lord Mandelson told peers. "This industry is not a lame duck and this is no bail-out."
Lord Mandelson said that around a million people work in the UK automotive industry, for suppliers, manufacturers and dealers, contributing £10 billion in "added value" for the UK economy.
But he said that industry had fallen "further and faster" than any other during the credit crunch as the financing dries up which allows customers to buy new cars. Industry figures showed production in December last year at barely half the level of December 2007.
Of the major manufacturers, Nissan has cut 1,200 jobs at its Sunderland plant, Jaguar Land Rover has cut 450 jobs and Honda, Aston Martin and Toyota have all announced cutbacks.
The union United has been calling for aid of up to £13 billion for manufacturing, including car companies. The union’s joint leader, Tony Woodley, said that without a robust intervention from the Government the car industry was heading for a “catastrophe” with the loss of tens of thousands of jobs.
Mr Woodley said of today's package: "Two billion pounds sounds like a lot of money but at least half of this will be taken up by Vauxhall and Jaguar Land Rover alone, leaving little or nothing for the hundreds of component companies. This is a fraction of the support being given by almost every other government in Europe."
He said that the Government should double the money it had announced today, warning that the spectre of redundancy was hovering over thousands of skilled workers.
Derek Simpson, Unite’s joint leader, added that the money from Europe was "months away", adding: "There could be little left of the industry by the time it arrives. This package is too little but it is not yet too late. Ministers must leave behind the failed free markets philosophy once and for all and intervene decisively now."
Today's package echoes in some parts an auto industry rescue plan announced by President Obama this week designed to help Detroit's Big Three wean themselves off gas-guzzlers.
Lord Mandelson said a further £35 million could be made available to increase funding for retraining workers in the automotive sector and there will be a “step change” in research for greener vehicles.
The new trade and investment minister Mervyn Davies, a former top banker, will also draw up a plan to improve the car companies’ financing arms’ access to funding.
"Britain needs an economy with less financial engineering and more real engineering," Lord Mandelson said. "The car industry can and should be a vibrant part of that future."
The measures were outlined to MPs by the Business Minister Ian Pearson, but failed to impress Ken Clarke, the former Tory Chancellor recalled last week to shadow Lord Mandelson from the Commons.
After hearing details of the package, Mr Clarke told MPs: “I have to say I’m slightly disappointed. I thought the Secretary of State who I am shadowing would produce some new ideas, some dynamite. He has been trailing a massive programme of support for the automotive industry - unfortunately the minister has the task of producing pretty small beer here.
“Is it the case that the Secretary of State has not produced a bail-out because the Treasury has finally won an argument inside the Government and explained to him that they can’t afford the kind of
support for the industry that was being trailed?”
Mr Clarke also accused the Government of being “behind the curve, too late” in its plans, and said it was a “constitutional outrage” that Lord Mandelson’s statement in the Upper House had been repeated in the Commons by a junior minister.
source: the london times
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