1bn for Green Cars

Business Secretary Lord Mandelson has outlined a package of government support for the UK car industry potentially worth up to £2.3bn.

The package includes a scheme to unlock £1.3bn of loans from the European Investment Bank for car manufacturers and major suppliers.

He said the government would also guarantee up to £1bn of further loans to fund investment in green cars, adding that the measures would boost the industry and lay “the foundations of its reinvention for a low carbon future”.

But he said there would be “no blank cheque” and any schemes supported had to provide jobs, develop new technology and processes for the long term and provide value for money.

Regional development agencies and the Technology Strategy Board are to be invited to bring forward new research and development programmes for cleaner engines, lighter cars and “plug-in hybrids”.

He also said spending on skills training for employees would be boosted to £100m from its current £65m, if there was demand from the industry.

The car industry had to change to succeed in the “new world” and had to be cleaner and greener, Lord Mandelson said.

Following his statement, Lord Mandelson made reference to a self financing scrappage scheme that would encourage motorists to dispose of older and more polluting vehicles, in favour of newer vehicles.

Paul Everitt, SMMT chief executive, responded by saying “This is an important announcement that recognises the strategic contribution of the motor industry and follows action in other EU member states, the US and Japan. The UK motor industry is productive and globally competitive with a long-term future at the heart of the low carbon agenda. We look forward to discussing the substance of the announcement at our meeting with Lord Mandelson tomorrow.”

There are 27 car and CV manufacturers operating in the UK, 1.75m cars and commercial vehicles are produced each year, generating £51b turnover and providing 800,000 UK jobs. The average new car CO2 emissions have fallen 13% in the last decade and new diesel cars emit 95% less soot from the tailpipe than those made 15 years ago.