Keeping car workers employed would give value for any Government aid

Keeping employees in high-value jobs at carmakers such as Jaguar Land Rover will be cheaper for the country in the long-term than the cost of any aid they need to survive the recession and credit squeeze, a senior industry figure has said.

Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders, was speaking as trade figures showed that sales of new cars in the UK fell by more than 11 per cent last year.

Mr Everitt is leading industry calls for the Government to ease the pressure on carmakers, their component suppliers and retailers by giving them access to credit that is currently denied them by banks which have received a £37 billion bail-out but which are still refusing to restore normal lending volumes to manufacturers and consumers.

The SMMT began talks with the Government in November and are due to meet ministers again before the end of this month.

But with the industry facing a growing cash flow and liquidity crisis, the threat of widespread job losses is growing daily.

And with other European countries providing aid to their national automotive industries, the need for the UK government to follow suit is growing, Mr Everitt said.

“To my mind keeping people in high-value jobs is much more effective and cheaper from the taxpayers’ perspective, particularly now that the economy is in recession.

“Other nations are ensuring that key industries such as automotive get the support they need. The longer we have to wait the more difficult it becomes.

“But it is better to get the right result even if it takes a little longer.”

Economist Howard Archer of forecasting group IHS Global Insight said the sales figures give “further clear evidence that consumers are becoming increasingly reluctant to spend, particularly on major costly items”.

“Consumers face sharply rising unemployment, muted income growth, very tight credit conditions, plunging house prices, sharply lower equity prices, increased debt levels and hits to their pensions.

“On top of this, some are retrenching out of choice, reflecting deep concerns about the economy and jobs.”