Committee calls for urgent action on automotive assistance scheme

• Report: The creation of the Department for Business, Innovation and Skills and the Departmental Annual Report 2008–09
• Business, Innovation and Skills Committee

The Committee welcomes the creation of the new Department which brings under one roof the business and further and higher education sectors. The Committee believes this could deliver significant potential benefits.

It also welcomes the fact that the Department has lowered the limit of the Automotive Assistance Scheme from £5 million to £1 million, in line with its recommendation made in July.

However, the Committee is deeply concerned that not a single loan or loan guarantee has been made under the programme.

It calls on the Government to expedite its negotiations, and prove to the Committee and the automotive industry that the Automotive Assistance Programme can provide tangible benefits to companies in the sector.

Peter Luff, Committee Chairman commented:

"Locating the further and higher education sectors and the business sector in a single Government Department is a positive move. In the real world the two sectors rely on each other, and this relationship is now mirrored in Whitehall.

"We hope that the Department is now given the time to deliver the benefits that should flow from this change.

"Unfortunately, we cannot be as positive about the Government’s Automotive Assistance Programme. When it was announced in January it represented a genuine opportunity to help the automotive industry.

"But it is now December and not a single loan or loan guarantee has been made. The scheme seems to have been a wasted opportunity to support this important manufacturing sector during the recession.

"It is up to the Government to prove us wrong, but they must ensure that funds are released to companies very quickly. It is late in the day for this to happen, so the Government must act soon."