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Automotive assistance scheme has stalled

publication date: Jul 1, 2009
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author/source: Robin Roberts
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A flagship UK Government scheme to help the car industry survive the recession has yet to pay out a single penny, despite the threat of job losses at Jaguar, Land Rover and Vauxhall.
The £2.3 billion Automotive Assistance Programme (AAP) was launched in a blaze of publicity on March 11, when ministers predicted it would aid more than 100 carmakers and suppliers. The Government said at the time the scheme would provide ‘real help now'. Yet three months on, the AAP has yet to pay out a penny according to media reports.

 MPs on the House of Commons Business Committee were told earlier this month that just four applications were ‘close to approval', with no predicted date for the first payment.

Asked about the loans made, Ian Gregory, director of the automotive sector at the Department for Business, Industry and Skills, said: "It's a round number - it's none. I can't pretend to be anything other than disappointed."

Insiders blamed the lack of payouts on Government bureaucracy. The committee heard that similar schemes in France and Germany had been paying out for some time.

A Chinese firm's bid to buy General Motors' up-for-sale Hummer car brand will be blocked on environmental grounds, according to Chinese state radio.

Sichuan Tengzhong Heavy Industrial Machinery emerged as the surprise buyer for the brand earlier this year. But China National Radio said Hummer was at odds with the country's planning agency's attempts to decrease pollution from Chinese manufacturers.

There are also US media reports that GM is close to signing two possible deals for its GM Europe arm amid concerns its preferred deal with Canada's Magna company may be unravelling. The bankrupt American car maker would like to have a choice to play off one suitor against another.

The AAP, the brainchild of ­Business Secretary Lord Mandelson, was designed to use £2.3bn of Government loans and guarantees to unlock £1.3bn in loans from the European Investment Bank for investment in ‘greener' vehicles.

One of the four applications has been made by Jaguar, which employs 14,500 in the West Midlands and Merseyside. The union Unite told MPs Jaguar remained in ‘serious financial difficulty' because of the Government's failure to act.
  

          


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