Peter Mandelson responds to memo from Auto Industry Summit
the automotive sector and others including the TUC and the Federation of Small Businesses. We are urgently assessing the contribution these proposals could make to providing real help for the industry and the people who work in it.
6. Credit insurance
We understand the problems faced by those companies relying on credit insurance. The Government needs to consider whether there is a potential intervention that would allow businesses breathing space to reach new arrangements with lenders and suppliers; while also protecting the interests of the taxpayer. My department continues to look very carefully at these issues and is in discussions with credit insurance providers.
7. Consumers
Working closely with the SMMT – the car industry’s trade body – Trade and Investment Minister Lord Davies is engaged in talks with the Bank of England and other financial institutions to explore possible ways of the car industry finance arms getting more access to credit.
8. “Green” tax relief
The automotive sector has put proposals for a scrappage scheme to BERR and we are considering these. The proposals are potentially costly for the taxpayer and they need careful examination. But we are working closely with the industry to assess the costs and evidence on impact.
9. Integration
Government understands the need for a comprehensive approach to the issues facing the whole industry from manufacturers to supplier to retailers. This is exactly why we are supporting business with a wide range of initiatives which do link together. For example, the Enterprise Finance Guarantee is open to companies with a turnover of up to £25m, which is why the lower limit for the AAP was chosen as £25m and above.
The Asset Purchase Facility is a Bank of England fund of up to £50 billion to buy up high quality corporate bonds and other assets to support our monetary policy objectives. The Bank, in consultation with HM Treasury, is considering whether to expand the range of assets covered by the scheme and this may lead to certain types of automotive-loan backed securities becoming eligible.
10. The future
Britain’s car industry needs to be greener. It needs to produce more, cleaner and fuel efficient vehicles using innovative technologies to produce them. That is why our industry loan and guarantee scheme will back greening the industry. The projects we expect it to support include those which contribute towards meeting environmental and energy efficiency targets, reducing fuel consumption, reducing carbon dioxide (CO2) emissions and achieving higher environmental protection standards, and projects that introduce key technologies to the sector.
I am also expecting a report from the industry-led New Automotive Innovation and Growth Team (NAIGT) in Spring 2009. The NAIGT has been working to develop a long term vision and an integrated national strategy for the UK automotive sector which Government and industry can share. Areas considered by NAIGT and its working groups have included business environment, supply chain development and low carbon product development/infrastructure.
Conclusion
Finally I would like to reiterate the importance that the UK Government places on the automotive sector and that we are determined that the sector will continue to play a significant role in the future of UK manufacturing and the development of lower carbon transport.
PETER MANDELSON
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