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Motor Industry

Volume 487: debated on Thursday 5 February 2009

5. What recent steps his Department has taken to support the motor industry; and if he will make a statement. (254312)

We have already announced support for businesses, including the automotive supply chain, through the enterprise finance guarantee and the working capital scheme, and helped to secure €8 billion for the sector through the European Investment Bank. Last week we announced a £2.3 billion package to support lending to the automotive industry, and work is under way with the European Commission to ensure that we can move forward on these measures as quickly as possible.

What progress has been made with Jaguar Land Rover in any discussions or negotiations about assistance? Can the Minister define what assistance he is offering?

We have been in discussions with Jaguar Land Rover for a period of time. We are certainly aware of the company’s situation, and we have been supportive by encouraging it to go to the European Investment Bank for finance. The measures that we announced last Tuesday will provide guarantees for any loan that JLR secures from the EIB, but the company has other requests and we will continue our dialogue with them. The key thing to stress is that we are talking about taxpayers’ money, and we need to ensure that that money is used in the most effective way possible. We will continue to do that.

The announcement of aid last week came four months after the Minister first promised to help, but even today, as we learn that car sales have fallen again, the industry still does not have the details it needs to plan. There is no plan to help with consumer demand and loans, and the Government have now admitted that they have not even cleared their plans with the European Commission. Given that most of our competitors have already injected finance into their car industry, what is the problem? Do not Ministers understand the urgency, or is it just a matter of incompetence?

The hon. Gentleman ought to welcome the fact that we have announced a £2.3 billion package of loan guarantees to the industry. May I provide some of the details that he seems studiously to ignore? We will be guaranteeing EIB loans of more than £200 million for non-investment grade companies, which we need to do to ensure that they can get access to the necessary finance, as soon as those loans are approved. We will also guarantee up to £1 billion of new lending to companies looking to borrow more than £5 million. That will sit on top of the enterprise finance guarantee scheme that we have already announced, which we have talked about this morning. We hope that it will be open for business as quickly as possible.

I expect the state aid process to take days rather than months, and we will report on its progress. In the meantime, we are contacting all the companies in the automotive supply chain with a turnover above £25 million that could take advantage of the scheme, and talking to them about their requirements. We are getting on with the process of discussing what sensible lending might be made available to them now, rather than waiting for EU state aid approval.