Alun Thorne, Head of Business, Birmingham Post, 7th May, 2009
Two Birmingham MPs with close links to the automotive industry have refused to blame the Government amid reports that talks over a rescue package for Jaguar Land Rover had broken down.
Erdington MP Sion Simon (Lab), whose constituency includes JLR’s Castle Bromwich plant and Richard Burden (Lab Northfield), Chair of the All-Party Automotive Group in the Commons, both agreed that the interests of the taxpayer must take priority.
‘The Government has made it clear that it is committed to finding a package of support for Jaguar, and that is in no doubt,” said Mr Simon. ‘The current process is a complex and difficult process of negotiation to find the right package which protects the interests of the British taxpayer, and, crucially, which delivers the support that is needed for the business, which is so vital for the city of Birmingham, the region and the country as a whole.
‘As the constituency MP I am determined to do whatever I can to help with that, and in light of these reports I will be seeking urgent talks with Ian Pearson to seek reassurance.”
Mr Burden added: ‘In principle, it seems to me sensible that the Government might want to be involved in a business which is supported by taxpayers’ money, just as a bank might ask for equity when it invests in a business.”
Shadow Secretary of State for Transport Theresa Villiers said the break down of talks was a further example of the government’s lack of tangiable support for struggling businesses. She said: ‘I completely recognise the importance of JLR to the UK economy and its immense status in the Midlands and I think that the government has let down JLR like so many others. What we’ve been calling for is a National Loan Guarantee Scheme that will help companies through this difficult time but what we have had from this government is more months of dithering.”
If the Government thinks it can win support from Midlands’ manufacturers because of its £5 million, four-week, help for LDV while it leaves JLR to hang out to dry, it is severely mistaken. And if the Government has been engaged in some sort of brinkmanship with Tata then it has backfired in spectacular fashion.” Jerry Blackett, Chief Executive, BCI.
Responding to reports that the Government had insisted that it would only guarantee half a multi-million pound loan from the European Investment Bank and only under stringent conditions, a spokesman for the Department of Business, Enterprise and Regulatory Reform, said the onus remained with JLR owners Tata.
The spokesman said: ‘The Government wants to see JLR safely through difficult trading times and to provide stability for the company and its employees. We regard JLR as a viable company with good long term prospects
‘That is why the Government is having confidential discussions with JLR and its parent company over both short & long term financing and business plans. These negotiations are continuing The primary financing responsibility rests with the parent company, Tata. We have been actively encouraging them for the last six months to put together a long-term funding package.
‘In parallel we have been talking to banks on their behalf, have appointed financial advisers to assist and we are prepared to guarantee loans from the European investment bank on the right terms. Any government financial assistance must, of course, protect taxpayers’ money. But on this basis we are prepared to help although not on any terms.”
However, the Midlands business community has reacted with anger at the Government’s refusal to support the luxury car maker. Jerry Blackett, Chief Executive of Birmingham Chamber of Commerce and Industry (BCI), said: ‘At a time when our European competitors are investing in their auto industries, it is criminal that our own government is unable to structure a sensible deal for JLR.
‘Of course, the Tata ownership complicates things. However, Tata has already invested £1 billion and JLR is looking for bank bridging finance, not a gift.
‘If the Government thinks it can win support from Midlands’ manufacturers because of its £5 million, four-week, help for LDV while it leaves JLR to hang out to dry, it is severely mistaken. And if the Government has been engaged in some sort of brinkmanship with Tata then it has backfired in spectacular fashion.
‘JLR is symbolic of this country’s potential to grow a serious, global manufacturing business. It’s about science and R and D. It is everything the Government talks about in its policies. When are we going to see these policies put into action? Of course taxpayers’ interests need protecting. Maybe this does extend to some sort of equity stake in JLR. But what’s been suggested seems out of all proportion. It’s time for the Government to get serious about manufacturing.”
It would be an absolute disaster to think that, after all this time and given the significance of JLR to the UK economy, a formula has not been found by which the Government and Tata can agree how we could help invest in the R&D necessary to take the company forward as an important global player.” Richard Boot, West Midlands Chairman of the Institute of Directors.
West Midlands Business Council Executive Director, James Watkins, said: ‘The West Midlands automotive sector is on a roller coaster ride with sighs of relief at LDV hopefully staying in business while new problems emerge with the funding package for Jaguar Land Rover.
‘This all seems unnecessary as, at the start of 2009, Business Secretary, Lord Mandelson, gave a detailed offer to the auto firms without any ‘ifs’ or ‘buts’. Now it seems, from informed sources, that talks between Jaguar Land Rover and Ministers are back on the drawing board because of conditions proposed on Friday.
‘Help for JLR must not be seen as a bail out. This is a good company with an excellent product line with significant investment ploughed into the firm by Tata. We would not be here talking about Government help if the global credit markets had not frozen up. It is JLR that is leading on green technologies and R&D – and help from the Government and Europe would deal with this immediate issue, safeguarding around 75,000 jobs. We would urge Ministers not to throw away support for JLR.”
Richard Boot, West Midlands Chairman of the Institute of Directors, added: ‘Not being party to the negotiations one can only speculate but let’s be clear … it would be an absolute disaster to think that, after all this time and given the significance of JLR to the UK economy, a formula has not been found by which the Government and Tata can agree how we could help invest in the R&D necessary to take the company forward as an important global player.
‘For sure we shouldn’t be doing bail-outs but we have a world beater in JLR and a great opportunity presumably exists for the Government to pump prime and invest in new and exciting technology. Let’s hope a deal is done; this isn’t a game of poker and the fall out would be catastrophic.”
[Source: Birmingham Post]
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