JAGUAR Land Rover is set to axe vital research and development work because the company cannot afford it, MPs were told.
Six months after the Government announced a scheme to help struggling car makers get a loan, not a penny has been provided to any manufacturer, they heard.
Speaking to the Commons Business and Enterprise Committee, the civil servant in charge of the scheme, Ian Gregory, said he was “disappointed” that no money had been allocated.
“Nobody is more frustrated than me that we haven’t actually made any guarantees, or loans, under the scheme,” he said. “That’s what I’m here to do.”
Dave Osborne, Unite union’s national officer for the automotive sector, said: “With the lack of progress on this, JLR are now in a position where some of their investments, because of the lack of cash, are in serious jeopardy.”
Business minister Ian Lucas also gave evidence to the inquiry, and he was asked by the committee chairman, Peter Luff MP, why it had taken so long to come to an agreement with JLR.
He said: “It is hugely important, and clearly it is of great concern to everyone who works there. I am saddened that there are issues that are commercially confidential relating to that individual company that are being discussed at the moment.”
In January, the Business Secretary, Lord Mandelson, announced plans for a £2.3 billion support scheme, called the Automotive Assistance Scheme.
Vehicle manufacturers were invited to apply for loans from the European Investment Bank, guaranteed by the Treasury. The Government would also lend up to £1 billion itself.
The Society of Motor Manufacturers had warned that firms such as JLR were in dire trouble because the banking crisis had cut their supply of credit.
In April, there was heartening news for JLR when the Government announced it had agreed guarantees allowing the company to borrow £340 million from the European bank. But it emerged that ministers had imposed conditions that JLR’s Indian owners could not accept, such as the right to choose the chairman.