Car unions demand British bail-out as Bush unveils £11bn rescue package for U.S. firms

Tens of thousands of jobs are at risk unless the motor industry receives financial aid from the Government ‘within days’, a union leader warned.

The comments by Derek Simpson of Unite put Prime Minister Gordon Brown under renewed pressure to help the industry in the wake of a U.S. decision to provide billions of dollars in loans to its own troubled carmakers.

President George Bush said allowing the Big Three - Ford, Chrysler and General Motors - to fail would not be ‘a responsible course of action’.

Troubled: Jobs at factories like Jaguar's Castle Bromwich plant, above, are at risk unless a rescue deal is agreed 'within days', a union leader warned



American car firms will get £11.5billion ($13.4billion) in short-term financing from a £472billion Wall Street bail-out, followed by another £2.7billion later.

A British Government offer of assistance is also said to be imminent, with Jaguar set to be handed an emergency loan before Christmas.

Lord Bhattacharyya, a Labour peer and industrial expert, told the Financial Times he was confident the Government would arrange ‘fairly soon’ a package of loans to help the sector and was discussing it already.

The package being discussed, he thought, amounted to £667 million to help Jaguar Land Rover in addition to an unspecified sum for other car companies.

Mr Simpson, joint leader of the Unite union, urged the Treasury not to delay any longer in providing short-term financial assistance to the UK industry.

‘Government must establish a strategic funding mechanism for the car industry within days, not weeks,’ he said.

George Bush leaves the Roosevelt Room in the White House after speaking about the failing U.S. car industry

‘It is simply no good bailing out the banks if the banks won’t then bail out business.

‘Only action by the Treasury in the next few days will safeguard the tens of thousands of jobs and the many communities across the country depending on car manufacturing for their livelihoods.

‘For their sake and the sake of our manufacturing base we do not have the luxury of pondering on intervention for weeks or months. Intervention must come this side of Christmas.’

He said that what was being asked for was ‘not a handout’ but access to strategic funding for a key economic sector.

‘By providing short-term loans, repayable with interest, the Treasury could instantly restore some liquidity to this system and save the tens of thousands of skilled jobs that are at this moment hanging by a thread.’

A employee looks over Dodge Ram trucks parked in a holding lot in Warren, Michigan. Chrysler is closing its 30 North American manufacturing plants until at least January 19

Mr Simpson said the UK motor industry was world-class, having undergone a massive modernisation process in recent times.

‘But it has been hit hard by the global credit crunch - the market has simply seized up. Make no mistake, failure to support the car industry now will have severe, damaging ramifications for the rest of our manufacturing base,’ he added.

But Mr Brown yesterday told his final news conference of 2008 that no promise of support had been offered to firms in the UK.

He said: ‘Different industries will have different problems at this time. There is a problem about consumer demand in the car industry.

‘We, of course, talk to the larger companies in our country regularly. But I’ve got no announcement or decision to make about what we can do.

‘These are issues that will be debated over the next period of time, but there is no promise that we've made of any support.’

Unite has been pressing for a £13billion strategic support package from the Government, similar to support provided by the German, French and Swedish governments.

Bush attending the unveiling of his portrait by Robert Anderson at the National Portrait Gallery in Washington

Mr Simpson’s comments were backed by the head of the Confederation of British Industry (CBI), who said ministers needed to act with ‘urgency’ to save an industry that is ‘vital to our future’.

With 800,000 jobs reliant on car-making in the UK, director-general Richard Lambert said taxpayers could afford to provide short-term loans for ailing firms.

Mr Lambert said: ‘The whole industry needs access to credit and I think this is something the Government could do and should do with urgency.

‘This is not money that’s being given away, it’s money that will be repaid.’

Business Secretary Lord Mandelson has warned that the Government does not have an ‘open chequebook’ to help struggling companies.

Figures from the Society of Motor Manufacturers and Traders this week showed production slumped by a third last month.

The number of cars built in factories in the UK was 97,604, down by 33 cer cent on November last year, while commercial vehicle production fell by 50 cer cent.