Mandelson announces aid of £1.3bn in loans for auto industry
Business Secretary Lord Mandelson today 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 will 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.
New trade and investment minister Mervyn Davies will also draw up a plan to improve the car companies' financing arms' access to funding.
Lord Mandelson said: "Today's measures will provide a specific boost to the industry, providing real help and laying the foundations of its reinvention for a low carbon future."
Unite has been calling for aid worth 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.
Lord Mandelson said he recognised the Government needed to do more to help the car industry tackle the recession.
Mr Woodley said the Government's announcement would come as a "massive disappointment" to the tens of thousands of workers in the industry.
"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."
Mr Woodley said 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."
The Society of Motor Manufacturers and Traders, which will meet Lord Mandelson to discuss the package tomorrow, said it was an "important announcement" which recognised the strategic contribution of the motor industry.
Chief executive Paul Everitt said: "We look forward to discussing the substance of the announcement with Lord Mandelson."
