Cable calls time on state backing for car industry
Tuesday 29 June 2010
The car industry in the UK can no longer rely on direct state support, the Business Secretary warned yesterday, adding that the sector was no longer facing the crisis that threatened to cripple it a year ago.
Vince Cable used a visit to Burnaston, Derbyshire, where Toyota was launching its new hybrid car, the Auris, to warn that the Government would no longer provide blank cheques for the car industry.
MrCable, the former Liberal Democrat Treasury spokesman, said that aid in the future would be focused on areas such as greater deregulation, tax reform and additional training grants for apprenticeships.
The Business Secretary also suggested that any bid for support from General Motors (GM), for the development of its planned Ampera electric car, which the company is planning to build at its Ellesmere Port plant in Merseyside, was likely to be rejected.
The company, which last year asked forhelp from a number of governments in the form of loan guarantees to support its flagging European business, hasnotyet asked the new Government for help.
Aspokeswoman for the Department for Business, Innovation and Skills yesterday refused to categorically rule out state aid for GM, but stressed that help for the car industry would be “more intelligent in the future”.
MrCable said that while the Ampera project was attractive, he stressed that such projects “should not depend on Government support”.
The new administration is thought to consider specific support for the car industry, which was approved by Mr Cable’s predecessor, Lord Mandelson, as too expensive and contradictory to its policy of reducing the budget deficit and public spending.
Earlier this month, the Government did approve a loan guarantee for Ford and a grant for Japanese carmaker Nissan. Both deals had been agreed with the previous Labour government.
Mr Cable’s comments will worry those in the car industry, which has only recently begun to report better trading conditions after a miserable 2009. A number of economists, not least those in the new Office for Budget Responsibility, have predicted lower growth than had previously been estimated, and an uptick in the unemployment figures, which would put pressure on the fragile industry. However, MrCable was adamant yesterday that the car industry will beweaned off the safety net of government backing.
General Motors, which makes Vauxhall cars in the UK and the Opel marque in Europe, did not return calls yesterday, but in recent weeks it has signalled that it is in better shape than a year ago, when its US parent company filed for Chapter 11 bankruptcy protection and moved to sell its European operations.
It later decided against a sale, despite asking for support in the form of loan guarantees worth €1.8bn (£1.45bn), from the British, German, Spanish, Polish, Austrian and Belgian governments.
Earlier this month, the group withdrew its request for the guarantees to help it raise crucial financing from the debt markets.
GM’s poor credit rating would have meant that borrowing the money without public sector support would have been prohibitively expensive. When GMwithdrew the request it hinted that it had become frustrated by the slow progress of the discussions with a number of administrations.
Themove came just a week after the German government refused to back €1.1bn of loans, arguing that the company’s fortunes had improved sufficiently in recent months to render such a guarantee unnecessary.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...