DEPARTMENT FOR
BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (2009/18)
issued by COI News Distribution Service. 27 January 2009
The Government
today announced a package of measures aimed at freeing up lending
of more than £2bn for the automotive industry.
The automotive industry employs nearly one million people from
manufacturing to retailing and contributes £10bn added value to
the economy. It is a major contributor to research and
development, and supports a supply chain and technology benefits
for the wider manufacturing industry in the UK.
The elements of support that have been announced:
* Guarantees to unlock loans of up to £1.3bn European Investment
Bank (EIB) guarantees for investment in lower carbon initiatives
* Loans or loan guarantees to support of up to £1bn of lending
for lower carbon initiatives for non-EIB backed projects
* Increased funding for training of employees under 'Train
to Gain'
* Mervyn Davies, the new Trade and Investment Minister, tasked to
draw up a plan for improving access to finance for
manufacturers' finance arms.
Business Secretary Peter Mandelson said:
"Britain needs an economy with less financial engineering
and more real engineering. The car industry can and should be a
vibrant part of that future.
"The steps we are taking today will help companies speed
their way to becoming greener, more innovative and more
productive. This is the route to securing jobs for the long term
as we build a more balanced economy for Britain's future."
The measures include plans to agree a temporary framework with
the European Commission to provide loan guarantees to UK
automotive manufacturers and large UK automotive suppliers. These
will be targeted at initiatives to reduce emissions and energy consumption.
The Government has already taken a series of actions to unblock
bank lending to SME and mid-sized companies. Today's
assistance will apply to projects over £5m from UK based vehicle
manufacturers and automotive parts suppliers with an annual
turnover of £25m or more.
Applications will be assessed on a case-by-case basis. The
Government is committed to ensuring that anything backed by the scheme:
* Offers value for money to taxpayer;
* Enables us to green Britain's economic recovery
* Delivers significant innovation in processes or technologies
for the long-term
* Supports jobs and skills in Britain
The scheme will help ensure that major new low-carbon investment
projects in the UK automotive sector are not abandoned or located
outside of the UK because companies are temporarily unable to
access sufficient funding from traditional sources of finance.
Today's announcement also includes a commitment from the
Department of Innovation, Universities and Skills that automotive
employers will be able to access high quality skills support - and
funding to help pay for training - through the Train to Gain
service. If there is the demand from the industry, the Department
of Innovation, Universities and Skills Secretary will boost the
funding to support new training to £100 million from its present
£65 million. This offers real help to people - including workers
in SMEs in the automotive supply chain.
The £50 million Economic Challenge Investment Fund being
announced separately today by the Higher Education Funding Council
also creates new opportunities for automotive employers looking to
tap into academic expertise in improving business performance.
This recognises the value of skills and knowledge that exists in
the auto industry and the need to develop Britain's
capabilities in efficient, low carbon processes and technologies.
The UK already has a lean, competitive and highly skilled
automotive workforce and this training funding will help keep the
workforce at the forefront of skills and innovation.
Peter Mandelson also invited Regional Development Agencies to
work with the Technology Strategy Board to bring forward a further
step change in programmes for research and development into
cleaner engines, lighter cars, plug-in hybrids and components for
electric vehicles, building on the £110 million of support for
research and development that was announced last September.
Notes to Editors
1. The Framework, which is subject to clearance by the European
Commission, will be consistent with new temporary State aid
measures announced by the Commission on 17 December 2008.
2. No date for the commencement of loans and loan guarantees
under the framework has yet been set since it is dependent on
Commission clearance, but we aim to start work with the Commission
at once. In bringing forward its temporary State aid procedures
for helping companies access finance, the Commission has made
clear that it will aim swiftly to process Member State applications.
3. UK-based manufacturers of construction equipment (such as
diggers and bulldozers) and suppliers that meet the criteria of
the framework will be eligible to apply.
4. The package of measures announced today will enable lending of
over £2bn over the next two years.
5. The assessment criteria will be finalised when they are
cleared with the European Union, but are likely to include:
* Value for money to taxpayer;
* Compliance with State aid
rules;
* Viability of companies
* Tied to R&D or
capital expenditure within the UK;
* Evidence of having
exhausted private sector sources;
* Repayable within 2
years
* Further UK objectives on low carbon/green technology