Now taxpayer picks up £2.3bn tab to bail-out car industry

In the latest example of Labour throwing money at the failing economy, the Government announced plans today to pump billions of our money into the ailing auto sector.

Business Secretary Lord Mandelson denied the Government was offering a "bail out" as he announced loans of up to £1.3 billion from the European Investment Bank and a further £1 billion to fund green-friendly vehicles - in a desperate attempt to reverse a huge slump in car buying.

The industry is in disarray with thousands of jobs already axed and a number of plants on extended shutdowns because of the drop in sales.

Leading car firms including Honda, Nissan and Jaguar Land Rover are among those which have been hit.

Lord Mandelson said today’s measures offered a “significant boost” to the industry but he denied the Government was offering a “bail out” or a “blank cheque”.

Announcing the bail-out he said: “The automotive industry - with its near one million employees from manufacturing to retailing and £10 billion worth of added value to the economy - is in the front line of the downturn, with output falling faster and further than any other sector since the summer.”

And he added that the health of the sector was “vital to the strength of manufacturing in Britain” and action was needed to “prevent an irreversible loss of capacity, skills and technology”.

But the Tories instantly dismissed the package of support for Britain’s car industry as “pretty small beer” by the Tories.

Shadow Business Secretary Kenneth Clarke, making his first Commons appearance since his return to the front bench, said the proposals were not ambitious enough and were a reflection that the country could not afford to underwrite large-scale assistance for the industry.

Mr Clarke said: “I have to say I’m slightly disappointed. I thought the Secretary of State who I am shadowing would produce some new ideas, some dynamite.

“He has been trailing a massive programme of support for the automotive industry - unfortunately the minister has the task of producing pretty small beer here.'

And union members were also unhappy with the plans.

Mr Woodley, joint leader of Unite, said it would come as a “massive disappointment” to the tens of thousands of workers in the industry.

He said: “Two billion pounds sounds like a lot of money but at least half of this will be taken up by Vauxhall and Jaguar Land Rover alone, leaving little or nothing for the hundreds of component companies.

“This is a fraction of the support being given by almost every other government in Europe.”

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