A long-awaited deal to seal Government guarantees over a crucial £340 million European Investment Bank loan for Jaguar Land Rover is finally within sight.
More than three months of negotiations over the Government stamp of approval for the Euro loan are said to be drawing to a close with an agreement on the horizon, it has emerged.
Hopes of a potential deal rose just days after Business Secretary Lord Mandelson urged JLR parent group Tata to “quicken the pace” of negotiations over the loan, which will help the loss-making car firm through the automotive sector’s worst recession for 40 years.
Tata recently announced losses for JLR of £281 million for the first ten months under the Indian group’s ownership as the downturn led to a dramatic slump in sales.
Tata Motors vice-chairman Ravi Kant has warned that further job cuts, to add to the 2,000 already shed, and “plant shutdowns” were likely to offset the continuing losses.
But a well-placed source said yesterday that the Government talks were at last close to a breakthrough following weeks of lengthy negotiations.
“It’s fair to say that a deal on JLR is edging closer. We are talking about weeks, not months now, maybe within the next two weeks,” he said. “The Government appears to have dropped their most contentious demands, including board representation and a veto on major decisions. It appears that, on those contentious issues, there is more of an alignment. It is a changing scenario and that has probably been down to the pressure put on by the Select Committee and other MPs.”
The source said the announcement that 300 jobs were being lost at Halewood following the end of production of the X-Type “appeared to have concentrated the minds of the Government.”
Last week Lord Mandelson said: “I am waiting for the owners, Tata Motors, to come back and make their response to the offer of financial support the Government has made. Jaguar Land Rover know that, were they to reach the point where they needed Government assistance, they could say so and we will be there. That point has not been reached.”
But the source criticised the Government for “publishing details of negotiations that were supposed to be confidential”.
He claimed even the European Investment Bank had become “fed up with the Government’s stalling tactics. The Government is living on a different planet. There appears to be a view that, as Tata is an Indian company, they might take the money and run.
That is insulting and shows a complete lack of trust.”