Car makers' rescue unveiled

Car manufacturers

Struggling car makers and suppliers are to be offered government loans as part of new plans to help the industry weather the economic downturn.

In measures announced by the business secretary, Lord Mandelson, in the House of Lords, car manufacturers whose sales have dried up will be offered guaranteed loans by the Treasury.

Around one million jobs are reliant on the British car industry, and the sector contributes £10 billion to the economy. Many people have already lost their jobs, been put on reduced hours or encouraged to take sabbaticals.

Mandelson said the car industry was "no lame duck" and this was no "bail-out".

"[Car makers] are at the frontline of the downturn and have seen output fall further and faster than any other sector since the summer," he added.

Measures include the government unlocking loans up to £1.3 billion from the European Investment Bank, plus guarantees for up to £1 billion of lending or loans to cover investment in "worthwhile" areas. Research into how car makers can be "cleaner and greener" will also be bolstered with new government funding.

"The automotive industry must change to succeed in this new economic world by being cleaner and greener," said Mandelson.

Commentators say the government needs to confirm how the measures will be paid for and how quickly the initiatives will be introduced. In addition, critics have called for more details about how the industry will reward taxpayers (including its customers) for the rescue measures.