Car industry help to be unveiled

Business Secretary Lord Mandelson is to outline a package of government support for the UK car industry in a statement at 1505 GMT to the House of Lords.

Ministers have faced calls to bail-out car makers whose sales have slumped as consumer credit has dried up.

Lord Mandelson is expected to unveil a scheme aimed at increasing the availability of loans to car buyers.

Downing Street said the measures included long and short term support but were not a "bail-out".

Under the government's plan, it is thought loans could be provided to the finance arms of the big car makers but critics say this will mainly benefit overseas firms, who supply 80% of Britain's cars.

'Anti-recession strategy'

The measures could also include cash to train car workers, help for car parts suppliers and grants for "green" research and development.

Prime Minister Gordon Brown's official spokesman denied it was a "bail-out" but said action was vital to get a sector with "a strong future" through the immediate difficulties caused by the recession.

The spokesman said: "Lord Mandelson and the Department have been making clear that, in our view, the car industry is a sector with a strong future.

"So not only are we in a position to provide some support to help them get through this difficult period but also, and this will be a very important part of the announcement, this is about how we provide the right support for them in the future."

Asked if it would include a cash injection, he said: "This is not a bail-out."

But he said it involved money set aside last year as part of the government's anti-recession strategy.

"Provision was set aside at the pre-Budget report for a number of subsequent interventions and we will be allocating some of that provision.

"This is helping what the government believes are fundamentally sound companies get through a difficult period."

Lord Mandelson will set out the assistance package ahead of a meeting with car industry representatives on Wednesday.

Source: BBC News