Mandelson considers auto finance plan

The government is looking at a proposal to inject liquidity into the finance arm of the motor industry, according to Business Secretary Lord Mandelson.

He was responding to a report in The Times saying more car loans could be encouraged by extending the Bank of England's special liquidity scheme to motor-based finance firms.

After a tour of a Ford engine plant in Bridgend, south Wales, Lord Mandelson said: "One of the ideas put to us is to find some way of putting fresh liquidity to the finance houses, the finance arms. We are looking at it and we will make a response in due course."

He said the government was considering how to help car makers "and what was the best use of the resources we want to put into this industry".

But he added: "I don't think the auto industry in the UK needs a bailout. It's not weak, but it's going through a very tough period indeed. That's why the government has got to respond to the request of the industry to look at any options."

Lord Mandelson said he was impressed by the advances in research and development he saw during his visit. "It [the motor industry] is going to be a permanent part of our manufacturing base in this country and I have seen why today," he said.

Earlier he told a committee of MPs that the government was continuing to look at what help it could "appropriately" offer struggling car makers during the recession.

In evidence to the Commons Business and Enterprise Committee, Lord Mandelson said talks were continuing with industry representatives over how the government could assist after a collapse in demand for new vehicles.

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