Name: Claire Donovan
Date: 22 July 2009
BRIEFING FOR EMPLOYERS
TITLE:The Automotive Industry in the UK – House of Commons Business and Enterprise Committee report on support for the industry
- MAIN POINTS (cont):
- The Government should be pragmatic and support current automotive products as well as low carbon vehicles – thus enabling companies to survive into the low carbon era..
- The Committee is amazed that Jaguar Land Rover is still waiting for a decision on its funding, as the premium car industry is likely to be the source of many low carbon transition innovations
- The government has worked well with the industry, including the supply chain, in introducing the AAP, but the delay in actual funding release is disappointing.
- The Scrappage Scheme is proving effective and is welcome.
- The Government must clarify its intentions in its support for automotive finance.
- The Committee recommends the ProAct scheme in Wales as a model for schemes which address both short time working and improving skills.
- The Government must also take a strategic view of areas such as taxation, environmental targets and support measures.
- There is a danger that the apparent current lack of strategic view will result in competitor countries gaining an advantage.
- The government must be SEEN to have a strategic view, acting with more urgency and consistency than it has done so far, in order to address the perception of a lack of a coherent and supporting policy of support for the industry.
- NEXT STEPS
- The Government usually responds to Select Committee reports in about two months. There is no particular indication that government will respond more quickly to this one, despite the immediate difficulties being faced by the industry. The Government may decide it is more politic to wait for while, to enable more of the elements to be introduced, and funding of the AAP to have flowed through to companies.
OBJECTIVE: to inform Semta’s employers regarding the content and likely impact of the report.
SUMMARY: The Business and Enterprise Select Committee inquiry into the effectiveness of the Automotive Assistance Programme (AAP) and other automotive industry support measures has found that the government is committed to the future of the industry, but that support measures are slow to impact on industry, and that too many companies are excluded due to restrictive eligibility criteria.
SEMTA VIEW: In Semta’s evidence to the inquiry, we highlighted the fact that the eligibility criteria meant that small firms were excluded. We are delighted that one of the key recommendations of the Committee was a lowering of the loan guarantee threshold to enable smaller firms to benefit from the Programme. We also recommended that the government implement industry support holistically, integrating and considering the impact of other schemes wherever possible. The Committee similarly calls for a clear coherent strategy, to maximise impact.
BACKGROUND: The Business and Enterprise Committee launched a short inquiry into the effectiveness of the Automotive Assistance Programme and other forms of government support in March 2009. The Committee asked for evidence relating to eligibility criteria, impact of the Programme, and other measures which might be of benefit.
- MAIN POINTS:
- Following evidence from a range of stakeholders the Committee came to the following conclusions and recommendations:
- The long term future of the UK automotive industry depends on Government taking the right action now to sustain it.
- AAP support should also be available not only for low carbon technology projects, but also for other innovative technologies, such as those relating to safety.
- The loan guarantee threshold for AAP should be reduced from £5m to £1m, closing the gap between AAP and the Enterprise Guarantee Scheme. There should also be no lower limit on the direct loans which the government may make in exceptional circumstances.
Sources: Committee report, Semta’s evidence to the Committee - http://www.semta.org.uk/employers/skills_policy/select_committees/automotive_assistance_programm.aspx