Mandelson announces automotive support package

Business Secretary Peter Mandelson (pictureed) 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 up to £1bn of lending for lower carbon initiatives for non-EIB backed projects * Increased funding for training of employees under 'Train to Gain' * the promise of a plan for improving access to finance for manufacturers' finance arms. Steve Radley, chief economist at the manufacturers’ organisation EEF said it was a long awaited package that recognised the unique circumstances affecting one of manufacturing’s key sectors. “It will also provide a degree of certainty for their important supply networks which are also integral to other manufacturing sectors,” he went on. “The next step has to include short term measures to help companies hold on to workers. While addition funding for training will help secure the skills manufacturing will need for the eventual recovery, this should be linked to more flexible support for companies implementing short time working to tide them through this difficult period.” Mandelson said that Britain needed “an economy with less financial engineering and more real engineering”. He continued: "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 automotivemanufacturers and large UK automotive suppliers. These will be targeted at initiatives to reduce emissions and energy consumption. The Government said it had 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. The scheme would help ensure that major new low-carbon investment projects in the UK automotive sector were not abandoned or located outside of the UK because companies were temporarily unable to access sufficient funding from traditional sources of finance. Today's announcement also included 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. 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.