Mandelson announces support package for the Automotive Industry
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Issued 27 Jan 2009 15:40
The Government today announced a package of measures aimed at freeing up
lending of more than £2bn for the automotive industry.
The automotive industry employs nearly one million people from manufacturing
to retailing and contributes £10bn added value to the economy. It is a major
contributor to research and development, and supports a supply chain and
technology benefits for the wider manufacturing industry in the UK.
The elements of support that have been announced:
- Guarantees to unlock loans of up to £1.3bn European Investment Bank (EIB)
guarantees for investment in lower carbon initiatives
- Loans or loan guarantees to support of up to £1bn of lending for lower
carbon initiatives for non-EIB backed projects
- Increased funding for training of employees under 'Train to Gain'
- Mervyn Davies, the new Trade and Investment Minister, tasked to draw up a
plan for improving access to finance for manufacturers' finance arms.
Business Secretary Peter Mandelson said:
"Britain needs an economy with less financial engineering and more real
engineering. The car industry can and should be a vibrant part of that future.
"The steps we are taking today 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 as we build a more balanced economy for
The measures include plans to agree a temporary framework with the European
Commission to provide loan guarantees to UK automotive manufacturers and large
UK automotive suppliers. These will be targeted at initiatives to reduce
emissions and energy consumption.
The Government has already taken a series of actions to unblock bank lending
to SME and mid-sized companies. Today's assistance will apply 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. The Government is
committed to ensuring that anything backed by the scheme:
- Offers value for money to taxpayer;
- Enables us to green Britain's economic recovery
- Delivers significant innovation in processes or technologies for the
- Supports jobs and skills in Britain
The scheme will help ensure that major new low-carbon investment projects in
the UK automotive sector are not abandoned or located outside of the UK because
companies are temporarily unable to access sufficient funding from traditional
sources of finance.
Today's announcement also includes a commitment from the Department of
Innovation, Universities and Skills that automotive employers will be able to
access high quality skills support - and funding to help pay for training -
through the Train to Gain service. If there is the demand from the industry, the
Department of Innovation, Universities and Skills Secretary will boost the
funding to support new training to £100 million from its present £65 million.
This offers real help to people - including workers in SMEs in the automotive
The £50 million Economic Challenge Investment Fund being announced separately
today by the Higher Education Funding Council also creates new opportunities for
automotive employers looking to tap into academic expertise in improving
This recognises the value of skills and knowledge that exists in the auto
industry and the need to develop Britain's capabilities in efficient, low carbon
processes and technologies.
The UK already has a lean, competitive and highly skilled automotive
workforce and this training funding will help keep the workforce at the
forefront of skills and innovation.
Peter Mandelson also invited Regional Development Agencies to work with the
Technology Strategy Board to bring forward a further step change in programmes
for research and development into cleaner engines, lighter cars, plug-in hybrids
and components for electric vehicles, building on the £110 million of support
for research and development that was announced last September.
1. The Framework, which is subject to clearance by the European Commission,
will be consistent with new temporary State aid measures announced by the
Commission on 17 December 2008.
2. No date for the commencement of loans and loan guarantees under the
framework has yet been set since it is dependent on Commission clearance, but we
aim to start work with the Commission at once. In bringing forward its temporary
State aid procedures for helping companies access finance, the Commission has
made clear that it will aim swiftly to process Member State applications.
3. UK-based manufacturers of construction equipment (such as diggers and
bulldozers) and suppliers that meet the criteria of the framework will be
eligible to apply.
4. The package of measures announced today will enable lending of over £2bn
over the next two years.
5. The assessment criteria will be finalised when they are cleared with the
European Union, but are likely to include:
- Value for money to taxpayer;
- Compliance with State aid rules;
- Viability of companies
- Tied to R&D or capital expenditure within the UK;
- Evidence of having exhausted private sector sources;
- Repayable within 2 years
- Further UK objectives on low carbon/green technology
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Article Published/Sorted/Amended on Scopulus 2009-01-27 17:02:04 in Business Articles