The measures include guarantees to unlock loans of up to £1.3 billion European Investment Bank (EIB) guarantees for investment in lower carbon initiatives and loans or loan guarantees to support of up to £1 billion of lending for lower carbon initiatives for non-EIB backed projects. Shadow Secretary of State for Business, Enterprise and Regulatory Reform Ken Clarke criticised the measures for being “small beer.”
But will the funding offer assistance to U.K. tyre manufacturers? Here’s what the small print has to say: The measures will “apply to projects over £5 million.” Crucially, the announcement specified that U.K.-based automotive parts suppliers with an annual turnover of £25 million or more could also be considered. U.K.-based manufacturers of construction equipment (such as diggers and bulldozers) and suppliers that meet the criteria of the framework will also be eligible to apply. The catch is that loan guarantees will only apply to “low carbon” projects.
No date for the commencement of loans and loan guarantees under the framework has yet been set since it is dependent on European Commission clearance.
Business Secretary Lord Peter Mandelson’s announcement of the measures follows the German government’s decision to offer motorists 2,500 euros to trade-in old cars in return for buying new. On Jan. 13, German chancellor Angela Merkel gave details of the concept as part of a 50 billion euro package of measures designed to give the country’s economy a financial stimulus.
“Britain needs an economy with less financial engineering and more real engineering. The car industry can and should be a vibrant part of that future. The measures include plans to agree a temporary framework with the European Commission to provide loan guarantees to U.K. automotive manufacturers and large U.K. automotive suppliers. These will be targeted at initiatives to reduce emissions and energy consumption,” Lord Mandelson commented.
Commenting on a meeting with the secretary of state for Business Enterprise and Regulatory Reform the day after the loan scheme was announced, SMMT chief executive Paul Everitt said: "It was a serious and constructive meeting underlining the strategic importance of the U.K. motor industry. We acknowledged the positive steps set out in yesterday’s statement and have agreed to work together to ensure that companies of all sizes are able to access the various government support schemes, including those announced yesterday. As an industry, we emphasised the lack of specific proposals to stimulate demand in the market and ease consumer credit, but have agreed to meet officials later this week to discuss technical issues holding up the ability of vehicle financing arms to get access to Bank of England funding. In addition, we will have further discussions on measures to stimulate consumer demand, including reviewing action and planned action in other EU member states." (Tyres & Accessories/Staffordshire, U.K.)
