Page last updated at 22:40 GMT, Wednesday, 11 March 2009

Mandelson says car help too slow

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Lord Mandelson says he wishes car finance talks had 'gone quicker'

Business Secretary Lord Mandelson has said he wished talks with the Treasury and Bank of England on help for car financing schemes had "gone quicker".

Discussions were making progress and went hand in hand with efforts to give the car industry a boost, he said.

He told the BBC the Bank of England and Treasury were "doing their best" but it was a "very complex area".

Car manufacturers have been lobbying for help for their finance arms - which provide people with loans to buy cars.

The credit crunch has been blamed for stopping them raising the money needed to fund new car purchases.

In January, Lord Mandelson announced a package of government support for the car industry - including a scheme to unlock 1.3bn of European loans - and a government pledge to guarantee up to 1bn of further loans.

Scrappage scheme

But he was criticised by the Conservatives for only saying that he was "looking at steps" to improve car financing arms' access to funding - he said he had asked trade minister Lord Davies to look at the issue.

Earlier, car company officials, bankers and union leaders arrived at the Department for Business to discuss the government's support package.

The meeting coincided with an announcement by Japanese car firm Toyota of cuts in production and pay at its two UK factories, which it said would help "maintain employment in this difficult period".

"I wish our discussions with the Treasury and the Bank of England - and it is the Bank of England that is in pole position on this - had gone quicker than they have
Lord Mandelson
Business Secretary

In a BBC interview Lord Mandelson said the government was "looking at" the possibilities of a car scrapping scheme - paying drivers of high polluting cars to switch to more environmentally friendly models - but no decision had been made yet on this idea.

Asked about help for financing arms of car manufacturers he told the BBC: "I wish our discussions with the Treasury and the Bank of England - and it is the Bank of England that is in pole position on this - had gone quicker than they have. I readily acknowledge that.

"The discussions are nonetheless making progress and I hope that it will be possible to help those car financing arms because that goes hand in hand with our other efforts to boost this market and give a shot in the arm for the demand for cars."

Asked if the Treasury and the Bank of England were holding things up, he said: "I wouldn't put it in that way, no, because they are our colleagues and they're doing their best to find the right area, but I can assure you this is a very complex area."

BBC political correspondent Gary O'Donoghue said it was highly unusual for a secretary of state to criticise another government department or the Bank of England and Lord Mandelson's comments would increase pressure to make some progress on help for car financing.

A Treasury spokesman told the BBC it did not regard the comments as a criticism and thought them a reasonable thing to say.



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