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Cable puts brake on aid for car industry

Update:04-08-2016
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Vince Cable, business secretary, yesterday said the car industry was no longer in an "emergency" situation, warning manufacturers that they could no longer count on direct government support.

In a sign of the tightening fiscal climate, Mr Cable also said the government had not yet decided whether to offer subsidies, worth up to £5,000 a car, promised by Gordon Brown's government from 2011 for early buyers of low-emission vehicles.

"We don't want to go around the country waving a chequebook," Mr Cable told the Financial Times on his way to Toyota's production launch of its Auris HSD hybrid petrol-electric car in Burnaston, Derbyshire.

Although his comments were aimed at the car industry, Mr Cable made it clear he would only give direct grants to individual companies in exceptional circumstances, focusing instead on creating a better climate for business through lower taxes and promoting training.

His approach contrasts with that of Peter Mandelson, former business secretary, whose industrial activism often included grants and loans to companies, including carmakers.

While the former government had been "handling an emergency" - giving rise to direct aid such as the recently ended scrappage scheme - the coalition would focus on other

measures.

"We're moving away out of an emergency time, and support will come in more indirect ways," said Mr Cable. "Not in direct support for companies - we don't have the funding to do that, and it isn't good policy anyway."

He said GM had not yet approached the government about a grant to produce the Ampera in the UK. He indicated, however, that such "projects shouldn't depend on government support".

GM wants to build the Opel/Vauxhall Ampera, which will go on sale late in 2011, at its plant in Ellesmere Port, Merseyside. While the US carmaker might also build the extended-range electric car in Germany, its UK plant is more productive. GM expects Britain to be Europe's biggest market for the car.

"Our natural view would be that this is a good, economic project," Mr Cable said of GM's plans for the car. "I am not closing the door to conversations, but we can't give money to every company that asks for it."

The coalition government this month approved a grant for Nissan and a loan guarantee for Ford Motor agreed with the previous Labour government to support investments in new technology.

Mr Cable said that the government had not yet decided whether to extend subsidies for electric and plug-in hybrid cars that GM, Nissan and other carmakers say are essential if the UK hopes to become a centre for low-carbon vehicle production.