UK Government announces financial package for ailing automotive industry

Materials World magazine
28 Jan 2009

A £2.3bln package of measures to help the UK automotive industry survive the current global economic crisis was unveiled by Lord Peter Mandelson, Business Secretary, on 27 January. The sector is 'in the front line of the downturn', says Mandelson, 'with output falling faster and further than any other sector'.

The key strands of the initiative are -
• Guarantees to unlock loans of up to £1.3bln from the European Investment Bank (EIB) for use in lower carbon schemes.
• Loans or loan guarantees to support lending of up to £1bln for lower carbon initiatives or non-EIB backed projects.
• Increased funding for training employees under the 'Train to Gain' scheme.
• Plans to improve funding access for manufacturers.

Assistance is available to projects over £5m from UK-based vehicle manufacturers and automotive parts suppliers with an annual turnover of £25m or more. Applications will be assessed on a case-by-case basis.

Mandelson adds, 'This industry is not a lame duck, and I am not proposing a bail-out. The steps we are taking will help companies speed their way to becoming greener, more innovative and more productive. This is the route to securing jobs for the long term'.

Plans are also afoot to expand on the £110m programme for R&D into cleaner engines, lighter cars and plug-in hybrids, announced by the UK's Technology Strategy Board last September.

Lords debate aid for automotives

The announcement by Mandelson follows a debate held in the House of Lords on 19 January on financial injections to help the automotive sector (as reported in the forthcoming February 2009 issue of Materials World).

Lord De Mauley complained that the £22bln of Government funding for SMEs announced in mid-January would do little for the major car companies in the UK, and said Government ‘dithering’ would force these firms to pack up and move elsewhere.

Other Lords called for funding to go towards smaller and cleaner car technologies. ‘Money should be used for investment and restructuring, rather than just for keeping the operation going,’ said Lord Cotter.

The UK Society of Motor Manufacturers and Traders anticipates a 700,000 drop in UK car sales compared to 2007, and manufacturers including Nissan, Jaguar Land Rover, BMW Oxford, Honda, Aston Martin and Vauxhall have all recently announced closures, redundancies or cutbacks in the UK.

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