Automotive Industry

Part of Women and Equality – in the House of Commons at 3:32 pm on 27th January 2009.

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Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform, Economic Secretary (Economic and Business), HM Treasury 3:32 pm, 27th January 2009

The hon. Gentleman is right to say that the first priority is to stabilise the financial system. That is exactly what the Government did when we recapitalised the banks and made our announcements last Monday. I do not think anyone could seriously disagree with the proposition that a major banking crisis would have a devastating effect on all our economies. It is also right to have an activist industrial policy that is set within a clear framework. First, we ensure the stability of the financial system; then we ensure that the economy gets the stimulus it needs during these difficult times; then we get credit flowing in the economy, set out a clear policy framework for taking action rather than doing nothing, while at the same time rebalancing the public finances over the medium term. That is exactly what we are doing. We need to look into where there is a case for Government intervention to ensure that we put in place the right sort of bridges to the future that will get us through the difficult economic times we face at the moment.

John Thurso asked what was new in all this. The fact that we are guaranteeing the EIB loans so that they apply above the £200 million level is new, and it is important that we are doing this. As I say, it unlocks round about £1.3 billion of lending through the EIB. Also new is the fact that we are supporting up to £1 billion of loans through the guarantees that we are providing. That will support a number of companies in the automotive supply chain. As for mechanisms, we look into these on a case-by-case basis. It will be for companies with a turnover of more than £25 million; below that level, they can go through the enterprise finance guarantee scheme. We will also be looking at companies that are investing in green R and D, plant and capital equipment. We believe that those are the right sort of policy responses.

Again, I characterise our position, which is taking measured and appropriate policy responses— [Interruption.] Unlike the hon. Member for Caithness, Sutherland and Easter Ross and his party, Conservative Members do not seem to want to do anything—or if they say they do, they do not want to will the means to do so, because they are against the fiscal stimulus that is so needed in our economy today.

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