Ministers faced demands for urgent action to support car and
car parts manufacturers following a meeting with the industry last Wednesday,
as
The Japanese company’s move, due to take effect on April 1,
is an indication of the wider problems that the car and car parts industries
face. Sharp falls in demand caused by a
lack of loans from banks and employment uncertainty are forcing car companies
to cut production and jobs.
“The big risk is that we end up destroying one of the few
world-class manufacturing sectors that we have here in the UK, not for the next
four or five years but for good,” said Paul Everitt, the chief executive of the
Society of Motor Manufacturers and Traders, when speaking to the Financial
Times.
Ian Pearson, the business minister, set up a meeting of car
makers, car supply companies and banks to encourage them to apply for aid under
the scheme.
One attendee said after the event that “realistically, it
will be one to three months” before loans start to be made under the scheme,
first announced back in January, which could amount to a six month wait for an
industry that needs immediate financial help.
Lord Mandelson, the business secretary, unveiled a £27m
government grant for Jaguar Land Rover to coincide with Wednesday’s summit. The
funding, designed to support a £400m project to develop a new, greener Land
Rover vehicle, has been agreed under the business investment scheme. It was
“not at all” a form of covert bail-out for the company, the government
insisted.
The industry on Wednesday welcomed the government’s
commitment to the £2.5bn R&D package. But it said the scheme would not be a
substitute for necessary short-term support measures.
The British Chambers of Commerce said: “There has been much talk about helping the industry but we now need to see action.”
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