About 13,000 workers at Jaguar Land Rover in the West Midlands are facing an anxious Christmas and New Year waiting to see if the Government comes up with a £1 billion cash lifeline to prop up the luxury brands.
Workers at Land Rover’s Lode Lane factory leave on Tuesday for a prolonged near three-week Christmas break as calls for the Government to intervene with a state-sanctioned loan intensified.
The pressure on Gordon Brown to follow the example of political leaders worldwide who have come to the rescue of their own domestic car industries was growing - but any announcement before Christmas was looking increasingly unlikely.
Demands for a Government package to help JLR battle the worst sales environment for decades increased as owners Tata agreed to pump “tens of millions” of pounds into the group to prevent a cashflow crisis.
The extra cash from Tata, which bought JLR for £1 billion this year, was seen to buy Government ministers breathing space as they consider a state-endorsed loan guarantee package.
Business Secretary Lord Mandelson has come under pressure to come up with funding for UK manufacturers following last week’s announcement of a £11.7 billion loan for American car-makers.
Unconfirmed reports have suggested that Ministers are preparing a funding package involving hundreds of millions of pounds, probably to be confirmed in the New Year.
But Lord Mandelson has already warned that the Government does not have “an open cheque-book” - and said the firm’s owners had to “look for themselves.”
A source close to JLR said much of the mounting speculation was being driven by the Government in a political game of cat and mouse between Cabinet members Lord Mandelson and Chancellor Alistair Darling.
“It’s wait and see, really. Everybody at JLR would obviously like to see the uncertainty removed as soon as possible.”
Calls by senior Unite union figures for a decision before Christmas have been strengthened by last week’s impassioned plea by Lord Bhattacharyya, head of Warwick Manufacturing Group, for Government approval of a loan guarantee scheme.
“Every other car company in Europe is getting funding - I do not see why Jaguar Land Rover should not get it,” said the industry peer. “JLR wants a loan guarantee - they do not want help in the sense of aid. This is very urgent - if they are not making cars, they have to make people redundant.”
He was backed by CBI Director-General Richard Lambert, who said the Government had to act urgently to save “an industry that is vital to our future.
“The whole industry needs access to credit and I think this is something the Government could do and should do with urgency. This is not money that is being given away, it is money that will be repaid.”
But the pleas by Lord Bhattacharyya and Mr Lambert have been stonewalled by Prime Minister Gordon Brown, who said only last Friday: “I’ve got no announcement or decision to make about what we can do. These are issues that will be debated over the next period of time, but there is no promise that we’ve made of any support.”
A total of 850 agency staff at JLR have left in the run-up to Christmas and production reduced in recent weeks in a bid to prevent stockpiling of vehicles as the consumer spending slowdown worsens.