Fury over delays to corporate aid package

GKN adds to motor sector job losses as rescue funding proves impossible to access

Nearly 500 more jobs were lost in the UK’s battered car industry yesterday, but not a single company has yet managed to access funding through the Government’s £2.3bn rescue package announced three weeks ago.

GKN, the components maker, is to axe a further 564 positions in the UK. Some 473 of them are in its automotive business, reducing it by nearly a third, and two plants – one in Hamstead, one in Walsall – are to close. The company, which has already cut 2,800 jobs worldwide, blamed a “dramatic and sustained reduction in customer orders”.

Coming a day after BMW laid off 850 workers at its Mini factory, the GKN announcement adds to the sense of an industry in a tailspin. Two businesses in the sector are going under every week in the West Midlands alone, putting about 1,000 people out of work, according to the Birmingham Chamber of Commerce.

But despite the high-profile launch of a loan-guarantee scheme by Lord Mandelson, the Business Secretary, at the end of January, funding will not be available for weeks. “The whole process is a waste of time,” a senior executive at one component supplier said. “The Government is long on spin, but short on delivery – I don’t know anybody who has got anything, anywhere.”

The Department for Business says no cash has been forthcoming because the proposals are yet to be cleared by the European Commission.

But companies are still required by putative lenders to spend tens of thousands of pounds on fees for third-party verification of their applications. One West Midlands firm has been charged £67,000 so far by the accountants insisted upon by the high-street bank approached for a loan after the launch |of the Mandelson scheme. Lenders are also asking for personal liability from directors to underwrite the 25 per cent not guaranteed by the Government under the proposed plan.

“Why announce something that is not there, and encourage people to spend both time and money trying to access a fund that does not exist?” Rachel Eade, at the Birmingham Chamber of Commerce, said. “It is just using smoke and mirrors to give false hope.”

Although the scheme was announced in January, the application to the European Commission was not submitted until Monday. A decision is still not expected for some weeks.

Lord Mandelson, addressing the Council for Foreign Relations in New York yesterday, pleaded for time for governments to address an economic situation for which there are “no precedents”. “While governments need to take time to plan carefully, they are accused of dragging their feet,” he said. “While, inevitably, measures cannot take effect immediately, there is a demand for instant delivery.”

But the car industry may not have time to wait. Calls began in November for rapid assistance to offset falling consumer spending and restricted finance. Even when January’s loan guarantees are working, they will only apply to “green” development plans, not to working capital requirements.

The industry needs measures to avoid short-term redundancies, and the concomitant loss of skills, say firms throughout the supply chain. Neil Barlow, at the Northwest Automotive Alliance, said: “People are questioning whether we will have an automotive industry in the future if we don’t do something now.”

peopleGerman paper published pictures of 18-month-old daughter
Arts and Entertainment
'A voice untroubled by time': Kate Bush
musicKate Bush set to re-enter album charts after first conerts in 35 years
Life and Style
Arts and Entertainment
Robin Williams' life story will be told in a biography written by a New York Times reporter
arts + ents
Life and Style
food + drink
Life and Style
ebooksAn evocation of the conflict through the eyes of those who lived through it
Roger Federer is greeted by Michael Jordan following his victory over Marinko Matosevic
tennisRoger Federer gets Michael Jordan's applause following tweener shot in win over Marinko Matosevic
peopleJustin Bieber accuses paparazzi of acting 'recklessly' after car crash
Arts and Entertainment
Oppressive atmosphere: the cast of 'Tyrant'
tvIntroducing Tyrant, one of the most hotly anticipated dramas of the year
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Client Services Executive / Account Executive - SW London

£23000 - £26000 per annum: Ashdown Group: Account Executive / Client Services ...

PA to CEO / Executive Secretary

£36000 - £38000 per annum: Ashdown Group: Executive PA to CEO & Executive Dire...

Generalist HR Administrator, Tunbridge Wells, Kent - £28,000.

£25000 - £28000 per annum: Ashdown Group: Generalist HR Administrator - Tunbri...

Senior C# Developer (.NET, C#, JMS, TDD, Web API, MVC, integrat

£45000 - £75000 per annum + benefits+bonus+package: Harrington Starr: Senior C...

Day In a Page

Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?
Rachael Lander interview: From strung out to playing strings

From strung out to playing strings

Award-winning cellist Rachael Lander’s career was almost destroyed by the alcohol she drank to fight stage fright. Now she’s playing with Elbow and Ellie Goulding
The science of saturated fat: A big fat surprise about nutrition?

A big fat surprise about nutrition?

The science linking saturated fats to heart disease and other health issues has never been sound. Nina Teicholz looks at how governments started advising incorrectly on diets
Emmys 2014 review: Can they genuinely compete with the Oscars

Can they genuinely compete with the Oscars?

The recent Emmy Awards are certainly glamorous, but they can't beat their movie cousins
On the road to nowhere: A Routemaster trip to remember

On the road to nowhere

A Routemaster trip to remember
Hotel India: Mumbai's Taj Mahal Palace leaves its darker days behind

Hotel India

Mumbai's Taj Mahal Palace leaves its darker days behind
10 best pencil cases

Back to school: 10 best pencil cases

Whether it’s their first day at school, uni or a new project, treat the student in your life to some smart stationery
Arsenal vs Besiktas Champions League qualifier: Gunners know battle with Turks is a season-defining fixture

Arsenal know battle with Besiktas is a season-defining fixture

Arsene Wenger admits his below-strength side will have to improve on last week’s show to pass tough test
Pete Jenson: Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought

Pete Jenson: A Different League

Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought
This guitar riff has been voted greatest of all time

The Greatest Guitar Riff of all time

Whole Lotta Votes from Radio 2 listeners
Britain’s superstar ballerina

Britain’s superstar ballerina

Alicia Markova danced... every night of the week and twice on Saturdays
Berlin's Furrie invasion

Berlin's Furrie invasion

2000 fans attended Eurofeurence
‘It was a tidal wave of terror’

‘It was a tidal wave of terror’

Driven to the edge by postpartum psychosis