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Automotive Assistance Scheme

Business, Innovation and Skills – in the House of Commons at 10:30 am on 16th July 2009.

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Photo of Sandra Gidley Sandra Gidley Shadow Health Minister 10:30 am, 16th July 2009

What assessment he has made of the rate of take-up of the automotive assistance scheme.

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Innovation and Skills), Member, Labour Party National Executive Committee

As we said at the time of its launch, the automotive assistance scheme is for long-term reinvestment in the industry, not short-term rescue funding. The Department has been in contact with about two thirds of all companies that may qualify for assistance under the scheme, resulting in 19 formal expressions of interest so far. Projects in the pipeline could involve total Government support of about £1.45 billion.

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Photo of Sandra Gidley Sandra Gidley Shadow Health Minister

I thank the Minister for that reply. There seems to have been some delay in allocating loans or guarantees under the scheme. Could the Minister clarify why that is? Is it because the conditions set out in the scheme's criteria are too strict? Clearly, the money has not yet found its way to most manufacturers.

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Innovation and Skills), Member, Labour Party National Executive Committee

As I said, it is important to understand that this scheme is about long-term reinvestment projects, not short-term rescue. The Secretary of State said at the time of its launch:

"There is no blank cheque on offer and there are no operating subsidies. We are committed to ensuring that anything backed by the scheme offers value for taxpayers' money, enables us to green Britain's economic recovery" and

"delivers significant innovation in processes".-[ Hansard, House of Lords, 27 January 2009; Vol. 707, c. 178.]

We are working through these projects with the companies concerned. I can assure the hon. Lady and the House that there is no delay on the Government's part. We are working closely with the companies concerned, but we also want to ensure that we get value for money and the long-term benefits of reinvestment for the industry concerned.

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Photo of Richard Burden Richard Burden Chair, West Midlands Regional Select Committee

I endorse what my right hon. Friend says about the automotive assistance scheme being about long-term investment in green technologies, and so on. However, that does not necessarily mean that the process of approving the money needs to be long term. There needs to be greater dispatch in bringing things to a conclusion, particularly where strategically important companies are involved that are part of the global and regional economies, one example being Jaguar Land Rover in the west midlands and in the north-west.

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Innovation and Skills), Member, Labour Party National Executive Committee

Constructive discussions between the Government and Jaguar Land Rover are continuing. The Government are keen to help, but of course the terms must be right. I assure my hon. Friend that the Government are not seeking to delay help at all, but we want to ensure that the help that we give is in line with the aims of the scheme as set out when we launched it. I remind my hon. Friend, who represents the area covering Longbridge, that only last week we were being criticised for being too ready to put Government money into the car industry. It is absolutely right that we ensure that in doing this we get appropriate value for money and do it for long-term reinvestment projects that can help to secure the long-term health of the UK automotive industry.

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Photo of Peter Luff Peter Luff Chair, Business and Enterprise Committee

I fully endorse the concerns expressed about the urgency of dealing with Jaguar Land Rover, but the supply chain in the automotive sector is also in crisis. Is the Minister able to clarify his position on closing the gap in eligibility under the enterprise finance guarantee scheme and the automotive assistance programme to help the supply chain?

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Innovation and Skills), Member, Labour Party National Executive Committee

The hon. Gentleman echoes a point that has been raised by several potential applicants under the scheme about the £5 million threshold. My officials have worked with companies in that position to help them to brigade potential projects. We want to take a flexible and helpful attitude to this; we are not in the business of turning away companies for no good reason.

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Photo of Lorely Burt Lorely Burt Shadow Minister (Business, Innovation and Skills), Chair of the Liberal Democrat Parliamentary Party

I have listened carefully to what the Minister is saying about long-term investment, but that does not mean long-term lead-in. If we look across the channel to France and Germany, and then further afield to the US and Japan, we can see that they have already delivered substantial amounts of assistance, so I do not understand why it is taking so long in the United Kingdom. For the past six months, while Parliament has been sitting, nothing has happened-not a single penny has been given to any automotive company. Now that we are going into recess, perhaps the Minister could give a guarantee about at least some funding coming through to the automotive sector-and during his holidays, perhaps he would like to pop over to France and Germany to see how they have managed to do it there when we cannot seem to do it here.

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Innovation and Skills), Member, Labour Party National Executive Committee

I have to disagree with the hon. Lady when she says that no help has been given to the automotive industry. She ignores the car scrappage scheme, which has been in place for some months and has helped to boost a significant number of sales in the UK automotive industry. That is giving real help in the short term to automotive companies. I think that it is widely recognised as being a success. This scheme is different in that it is geared towards long-term reinvestment, not only towards the short-term issues facing the car industry. We are working diligently, carefully and productively with the companies that are making applications under the scheme.

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