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Car Companies (Government Support)

Volume 448: debated on Monday 3 July 2006

To ask the Secretary of State for Trade and Industry what (a) funding, (b) tax incentives and (c) other financial support the Government have provided to (i) Peugeot, (ii) LTI vehicles, (iii) British-owned automotive producers and (iv) overseas automotive producers over the last 10 years. (79759)

The main source of Government finance provided to the automotive industry in recent years has been regional selective assistance (RSA), which in England was supplanted by Selective Finance for Investment in England (SFIE) in 2004. Since 2000, around £150 million has been paid in grants to a wide range of vehicle manufacturers and component suppliers, nearly £100 million of which was paid to vehicle makers. Grants are only available to companies in assisted areas, but the scheme does not discriminate as to nationality of the parent company.

In 1998, Peugeot was offered a £2 million RSA grant towards the cost of investment to add a third shift at a time of strong demand for its 206 model. This project created 900 jobs, and the grant has been paid in full. In November 2004, the company was offered a £14.4 million grant in support of 207 manufacture, but the project did not proceed.

LTI has not been in receipt of RSA or SFI finance.

The Government also offer various forms of technology grant from which companies in the automotive sector have benefited. At various times, both Peugeot Citroen and LTI have participated in consortia which have received grants, but accurate figures on individual shares of consortium funding are not available to DTI. That said, supported projects have included the Efficient-C project (involving PSA Peugeot Citroen, QinetiQ and Ricardo) and the LTI ‘e-Mercury’ electric vehicle. The latter was subsequently spun out as a stand-alone project. The independent company Modec now runs this project, and production commences in Coventry later this year.

The principal source of specific automotive industry-related funding is the Automotive Innovation and Growth Team (AIGT) suite of initiatives, including Supply Chain Groups, Automotive Academy and Centres of Excellence, against which a total commitment of £45 million has been made. Again, these do not discriminate as to nationality of ownership, although direct funding is available only to UK-based companies and organisations.

Tax incentives such as

R&D tax credits, to encourage greater R&D spending in order to promote investment in innovation,

R&D allowances for capital expenditure on research and development, and enhanced rates of Industrial Buildings Allowances for qualifying enterprise zone expenditure

are available to all companies in the UK irrespective of their ownership or the specific industrial sector in which they operate. The amounts by which individual companies have benefited from such measures are not a matter of public record and no breakdown would be available distinguishing between companies on the basis of their ownership.

To ask the Secretary of State for Trade and Industry on what date the grant to Peugeot for investment in its plant at Ryton in Coventry was offered; and what terms and conditions were attached to that grant. (80849)

[holding answer 28 June 2006]: In November 2004, a grant of £14.4 million was offered to Peugeot for manufacture of the 207 at Ryton, but the project did not proceed.

The terms and conditions of the grant are confidential between the Government and Peugeot.

To ask the Secretary of State for Trade and Industry what the (a) dates and (b) amounts were of each (i) grant and (ii) loan offered to Peugeot by the Government in each of the last 10 years; and what terms and conditions were attached. (80850)

[holding answer 28 June 2006]: In 1998, Peugeot was offered a regional selective assistance grant of £2 million towards the cost of investment to add a third shift at a time of strong demand for their 206 model. In November 2004, a further grant of £14.4 million was offered to Peugeot for manufacture of the 207 at Ryton, but the project did not proceed.

The terms and conditions of the grants are confidential between the Government and Peugeot.

No loans have been offered to the company.