THE Government has been urged to mount a £1 billion-plus bail-out of the credit crunch-hit car industry.

Lord Kumar Bhattacharyya, head of Warwick Manufacturing Group, said the move was urgently needed if major retrenchment and savage cuts in research and development were to be avoided.

He has called for a new national recognition that manufacturing matters.

Jaguar, Land Rover, BMW and Toyota revealed volume cutbacks, noted Lord Bhattacharyya. He said: “What is the Government doing to help the manufacturing sector? It has announced various modest initiatives on things like skills and training, it has dusted down the old fund to preserve jobs at the time of the Rover collapse, but I believe much more needs to happen. We have seen huge sums committed to bailing out the banks and financial services.

“Yet throughout the world manufacturing has taken a hit. Not down to any fault of its own but because it has been caught in the backlash from the crisis.

“It was right for the Government to support the financial sector. It acted promptly. But what about manufacturing?”

A lot of people were still employed in the sector and Britain had to be very serious about the impact being felt.

The UK car industry had done everything right; it was highly competitive.

But it was suffering – production had been trimmed and there were problems exporting to the US. For major manufacturers and the supply chain things were very tough.

Lord Bhattacharyya said: “I believe in West Midlands manufacturing – it still employs huge numbers. Normally under these circumstances R&D is cut to a bare minimum, and at the same time there is retrenchment. What is absolutely crucial is product development does not suffer. We already lag far behind many of our competitors on R&D.

“Companies need to be in a good position when the upturn comes. In the past the products have not been there so we have missed out. That must not happen again. On this workers and employers are united.”

Governments were offering big backing to help car industries – the French, the Germans and the Americans were all looking to provide aid. “Our Government must follow suit,” said Lord Bhattacharyya. “The UK car industry needs a bail-out in excess of £1 billion. It is not asking for charity; it requires low cost loans that can be paid back. And it is vital this happens sooner rather than later. Much of the West Midlands is still reliant on manufacturing. And we should be glad about that.

“Given the mess the service sector is in, we in Britain desperately need to re-invent manufacturing.

“These days parts of Britainhave hardly any manufacturing – the likes of the South East and South West.

“What is left is concentrated in the West Midlands and the North East.

“Once government seemed only to care about our service culture. We took our eye off manufacturing – at all levels it was perceived to be a waste of time. It was not a fashionable sector.”