Prisk signs off Ford's £360m green loan deal

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The Independent Online

The Government yesterday signed off the £360m loan guarantee central to Ford's £450m loan from the European Investment Bank to develop next-generation environmentally friendly cars.

The Business Minister, Mark Prisk, was at Ford's technical centre at Dunton in Essex yesterday to officially close the deal supporting Ford's £1.5bn five-year green technology investment plan in the UK. The move will help safeguard 2,800 jobs at Dunton and Ford's three factories at Dagenham in East London, at Southampton, and at Bridgend in South Wales.

"Ford's investment of £1.5bn over the next five years is a great opportunity to take the lead in developing low carbon manufacturing," Mr Prisk said.

"This backing from the Government will help to ensure the long-term success of manufacturing in the UK and make sure we are at the forefront of new technologies."

The loan guarantee comes under the £2.3bn Automotive Assistance Programme (AAP) launched by then-Business Secretary Lord Mandelson in January 2009. The AAP was put together to help car companies fund research and development programmes focused on green automotive technologies.

But despite much fanfare, Ford's is the only scheme to secure any support through the initiative.

Lengthy and increasingly fractious talks with Jaguar Land Rover ended in failure because the company refused to accept the Government's demands for a say in strategy discussions. And a putative €300m (£250m) agreement with GM – agreed just weeks before the general election – was dissolved last month when the group, which owns Vauxhall in the UK, decided it no longer needed the money.

The Ford loan guarantee is going ahead having passed unscathed through the Government's review of all spending commitments made by the last government since the start of the year. And although the Government says the undisclosed number of requests still in the pipeline will still be considered, the AAP has been closed to new applicants.

Ford's £1.5bn investment programme includes work on petrol engines at Bridgend, on advanced engines for next generation commercial vans to be built in Southampton, and on super-green diesel engines being developed in Dagenham. The engineering for all of Ford Europe's power trains at Dunston will also benefit from the extra investment.

An early priority will be the development of the 1.6-litre "ecoboost" petrol engine. The aim is for a whole set of engines producing the same power and torque from a smaller engine running on about 20 per cent less fuel. The 2-litre version is already commercially available in new Mondeo, S-Max and Galaxy models. But the 1.6-litre being built at Bridgend will go into the new C-Max and Grand C-Max models to be launched this autumn. It will also go into the next generation Focus, which is coming next year.

"This European Investment Bank loan, and the loan guarantee from the UK Government, will help to unlock up to £1.5bn in low-carbon and environmentally friendly engine and vehicle technology investment over the next five years," Joe Greenwell, the chairman of Ford UK, said. "This is a testament to the skills and capabilities of our UK workforce and demonstrates the scale of our commitment to Britain."

Simon Brooks, at the EIB, said: "A new generation of low-emission engines and more fuel-efficient vehicles will develop new skills and innovation across the UK and these new vehicles will make a significant contribution to combating climate change."