Gordon Brown warned that there are still “issues to be resolved” before the Government can decide whether to offer financial support to Jaguar Land Rover, as he visited Birmingham to highlight efforts to help struggling businesses during the recession.
The Prime Minister also stressed that the “first responsibility” for ensuring the carmaker was successful lay with its Indian owner, Tata Group.
But he pledged to work with Jaguar Land Rover and ensure British carmakers had “a very strong future” as he responded to the Birmingham Post’s campaign to win Government backing for the firms.
The Post has joined forces with four other regional daily newspapers to call on the Government to provide urgently-needed bridging loans to the carmaker during the credit crunch.
The banking crisis means Jaguar Land Rover is struggling to obtain the credit which the automotive industry depends on. The business is believed to have asked the Government for bridging loans of around a billion pounds - which would be paid back to the Treasury.
The majority of Jaguar Land Rover’s 16,000 staff are based in Birmingham and Solihull. It also has a major plant in Merseyside.
Many thousands of jobs in the supply chain across the West Midlands and the UK as a whole depend on the business.
Jaguar Land Rover has privately complained about the delay in making a decision, after motor industry representatives first raised concerns about finance with the Government in September.
But meeting Post editor Marc Reeves, Mr Brown said no decision had been made on what type of help might be available.
He said: “We are in discussions with the Tata Group. I think it’s fair to say that when you have these discussions a number of issues arise, and they’ve got to be resolved.
“We are aware of the issues affecting directly Jaguar Land Rover, because we have been talking to the Tata group itself and these talks are continuing.
“Obviously the first responsibilty is with the company itself. It is a worldwide company, it is in a position to raise finance. Equally, however, we want to work with Jaguar Land Rover in solving any problems they have.”
Asked when a decision would be made on whether to provide bridging loans, he said: “I can’t say that. What I can say is that discussions and talks are taking place, and have been taking place.”
Mr Brown insisted: “I recognise the importance of the car industry, both to this great manufacturing region, which is at the heart of manufacturing in Britain, and to the future of the whole of Britain. I recognise the great technology that exists here.”
He highlighted Jaguar Land Rover’s investment in research and development in the UK, saying: “I know that Jaguar Land Rover is a very important part of the research future of this region and this country. And I also recognise the skills of the workforce.
“You are dealing with a global banking crisis. It has affected every country around the world. It has affected the supply of credit and loan finance and working capital for business.
“What we have been talking to Jaguar Land Rover about before Christmas and subsequently, is what we can do to help them through this difficult period.
“We are going to continue talks, not just with Jaguar Land Rover but with the motor manufacturers as a whole.
“We are determined to do what we can to help, but I don’t think we are in a position where we have been asked to put up a particular sum.
“This is part of a discussion we are having with the company.”
The Prime Minister said he saw a bright future for the automotive industry in the UK, despite the difficulties afflicting Jaguar Land Rover and the dramatic announcement this week that Nissan is to axe 1,200 jobs in Sunderland.
“We know that there has been a decline in car purchases in the country. We’ve got to face up to the fact that sales of cars have gone down.
“The question however is, can we support the development of an industry that has got a great future, and that’s what we want to be able to do.
“I believe the standard of the models produced in Britain and the technology that companies have is very good indeed, and I believe the car industry has a very strong future.
“So we will do what we can, recognising however that he first responsibility lies with the company itself, which is in charge of its own affairs.”
He ruled out any repeat of the nationalisation of the banks, which left the Government with shares in RBS/Nat West and Lloyds/TSB, saying: “It’s important that we recognise that Tata is the owner of the company.
“We’ve got no desire to do anything other than support the existing ownership of the company in making the decisions that are necessary.”
Following his conversation with the Birmingham Post, Mr Brown visited local employer Specialist Computer Centre in Sparkhill, to hear first hand how businesses were coping with the recession and highlight Government efforts to help.
He said: “This is one of the great manufacturing and industrial centres in the whole of the world. We are determined to do everything we can to be of support.
“That’s why I am visiting Birmingham today, that’s why I’m going to meet a company which is expanding in difficult circumstances.
“And that’s why we introduced a proposal which will be very good for the Midlands that there will be apprenticeships this year despite the difficult economic circumstances.”