Page last updated at 11:03 GMT, Sunday, 21 December 2008

Mandelson plays down Jaguar deal

Lord Mandelson
Lord Mandelson has not ruled out support for 'vital' manufacturers

Business Secretary Lord Mandelson has dampened hopes of speedy state intervention to help Jaguar Land Rover.

The car maker has asked the government for financial support and its case has been backed by unions which say the industry needs aid "within days".

Labour peer Lord Bhattacharyya had suggested ministers were discussing a 667m loan package for Jaguar.

But Lord Mandelson told the Observer the state would act only as a "lender of last resort".

The firm's owner, India's Tata group, must "look to their own resources," he said.

"The government cannot be the first call for help in these circumstances," Lord Mandelson insisted.

"If there is anything the government can appropriately do for any such company, then they will have to meet - and pass - some pretty tough tests," he added.

'Not indifferent'

Prime Minister Gordon Brown has said there is "no promise of support" for Jaguar Land Rover, which has 15,000 UK employees, despite action in the US to shore up the motor industry there.

Shadow foreign secretary William Hague said the Tories would introduce a national loan guarantee scheme to help car manufacturers like Jaguar Land Rover.

But he said the government must not get into the situation where it is "picking winners" and deciding which companies are going to succeed.

Mr Hague told BBC1's The Andrew Marr Show: "If it's a case of helping with the availability of credit, that is one thing. If it is a question of the government picking winners in industry... that's entirely different.

"What businesses across the country - not just the car industry - need is our national loan guarantee scheme."

But, speaking on the same programme, former Labour leader Lord Kinnock said Mr Hague had not addressed the particular case of Jaguar Land Rover, which needed short-term support with a repayable investment.

Lord Mandelson told the Observer he was not indifferent to the plight of the car industry and that the government might be required to help companies vital to UK employment.

The Confederation of British Industry has said urgent government loans are needed to preserve 800,000 UK jobs in the car-making industry. The Unite union says tens of thousands of skilled jobs are "hanging by a thread".

And Lorely Burt, Liberal Democrat spokeswoman for business, enterprise and regulatory reform, has warned that the UK's manufacturing industry is in danger of being lost "forever" without financial support.

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