Jaguar Land Rover could benefit from more state aid on top of the £2.3 billion package of loan guarantees announced last week, Ministers have confirmed.
Black Country MP Ian Pearson (Lab Dudley South), a Treasury and business minister, said the Government was discussing what more it could do to help the carmaker. But he also warned that the first priority was to ensure taxpayers’ money was spent responsibly.
Mr Pearson was speaking in the House of Commons after Coventry MP Jim Cunningham (Lab Coventry South) asked what the Department for Business, Enterprise and Regulatory Reform was doing to help the automotive industry.
Jaguar Land Rover, which employs thousands of people in the West Midlands, has been in talks with the Government since November over the support to help it survive the recession.
The business, owned by Indian giant Tata Group, has asked for loans or loan guarantees to replace credit which banks are no longer supplying, and support for automotive finance arms, which provide credit to customers.
The Government published a high-profile package of measures to aid the automotive industry last week, including guarantees for up to £1.3 billion in loans from the European Investment Bank as well as £1 billion in loans from other sources.
But the automotive industry says this does not go nearly far enough. Speaking at the West Midlands Auto Industry Summit this week, Jaguar Land Rover chief executive David Smith warned: “What we need now is urgent and practical action. Banks aren’t lending and consumers aren’t spending. Someone has to put oil back in the engine.”
Mr Pearson was put on the spot in the Commons as Mr Cunningham warned that Jaguar Land Rover needed support, asking: “Can he define what assistance he is actually offering?”
The Minister said: “We have been in discussions with Jaguar Land Rover for a period of time. We are certainly aware of the situation with the company.
“We have been very supportive in encouraging it to go to the European Investment Bank for finance.”
He added: “But, clearly, the company has other requests as well and we will continue to have a dialogue with them. The key thing to stress here, though, is that we are talking about taxpayers’ money.”
Conservative Business Spokesman Mark Prisk claimed the Government had been slow getting real help to the automotive industry. He said: “And yet even today, as we learn that car sales have fallen again, the industry still doesn’t have the details it needs to plan, there is no plan to help consumer demand and loans and the Government has now admitted that it hasn’t cleared its plans with the European Commission.
“Given that most of our competitors have already injected finance into their car industry, what is the problem? Don’t ministers understand the urgency or is it just incompetence?”
Mr Pearson said the Tories should welcome the measures, adding: “I expect the state aid process to take days rather than months and we will report progress on this.”