Government withdraws investment for UK car industry

Business Secretary Vince Cable has warned that the UK’s car industry will not receive any further funding from the Government.

Mr Cable was speaking at a conference in London organised by trade body, the Society of Motor Manufacturers and Traders (SMMT).

However, he said the industry is “incredibly important to the UK economy” and insisted that “we’re not walking away from the industry”.

At the conference, he said: “Our starting point is very clear. We’ve moved on from the era of subsidies. We just have to be realistic about what’s affordable.”

His comments come after the former Government introduced the scrappage scheme – a £400 million initiative which paid drivers of cars at least 10 years old £2,000 off the price of a new vehicle.

The £2,000 grant was made up of £1,000 from the Government and £1,000 from the carmaker.

The scheme proved extremely popular and resulted in a rise in car production and sales and gave a much-needed boost to the industry.

The scheme, which was launched in May 2009, expired earlier this year.

However, measures to reduce emissions from cars and to help transform the UK into a low carbon economy, are still under review, according to Cable.

Meanwhile, Paul Everitt, SMMT’s chief executive, added: “We’re not saying ‘give money for this, give money for that’, but we are calling for the government to offer strategic support.”

The withdrawal of financial support for the industry comes just a week after Chancellor George Osborne unveiled tough austerity measures to deal with Britain’s record deficit of £155 billion.

Discuss this in the Finance Markets forums

Story link: Government withdraws investment for UK car industry