Business leaders welcome motor industry aid package
Business leaders in the West Midlands have welcomed the Government's series of measures aimed at safeguarding the future of the UK motor industry.
Business Secretary Lord Mandelson announced a package of loans and guarantees for the "reinvention" of the British motor industry as a producer of greener vehicles.
Acknowledging the manufacturers and their suppliers were on the "front line" of the recession, he told the Lords the Government would offer guarantees to unlock £1.3 billion of loans from the European Investment Bank.
It will also offer a further £1 billion in guarantees or loans to cover investments which bring "special value" to Britain.
A further £35 million could be made available to increase funding for workers in the automotive sector and there will be a "step change" in research for greener vehicles.
Lord Kumar Bhattacharyya, the head of Warwick Manufacturing Group, welcomed the loan guarantee announcement, but said it was unlikely to solve Jaguar Land Rover’s immediate problems.
“This is money which will not be spent in the short term,” he cautioned. The £1.3 billion EIB cash was essentially a “re-packaging” of existing entitlements, while the £1 billion over and above that was more likely to be to the benefit of suppliers.
But Lord Bhattacharyya praised the emphasis on innovation and green technology, which he has long been championing.
“Hopefully funds can yet be made to Jaguar Land Rover in the future,” he argued.
West Midlands Business Council executive director James Watkins, said: “The credit guarantees for Jaguar Land Rover and the rest of the automotive sector are sorely needed.
“Jobs and prosperity across the Midlands were on the line today. Lord Mandelson has acted wisely in ensuring that auto makers can access commercial loans.
"But we would urge the Government not to turn away from the car industry if the guarantees do not work. The credit squeeze is acting in such a way that guarantees may not be enough. But that fear is for another day and we should see if the bankers respond.
“The threat of lay offs still hang over many people here in the Midlands. That is why the business community and the trade unions are united in calling for financial assistance for firms who are considering redundancies or short time working.
"This short time working assistance, which has been provided in other downturns in the UK, and where a similar scheme is currently helping Dutch workers stay in their jobs, is sorely needed and we must use every tool in our arsenal so that the Midlands can weather this downturn and come out in a stronger position when the upturn comes.”
Jerry Blackett, chief executive of Birmingham Chamber of Commerce and Industry, said: “Business in the West Midlands will welcome the much needed support package for the UK car industry.
“A total of £2.3bn from the European Investment Bank and the UK Government represents substantial support for an industry which is not asking for a bail-out but is a substantial business which needs short-term cash-flow assistance to ensure long-term success.
He said he was pleased to see the increase in funding for the Train2Gain initiative from £65 million to £100 million, which he said would increase the skills levels of employees across the automotive sector.
“We also welcome the emphasis on low-carbon technology and the policy for region development agencies to work with the technology strategy board helping to ensure that the UK car industry is more competitive in the future," he added.
“Many of our European competitors, for instance Germany and Holland, are now
