The problem for the government over yesterday's announcement was that it had been hyped up since October as the answer to all of the industry's problems.Following the American announcement on their industry,the speculation had exceeded all reasonable expectations.
Mandleson's proposals had a number of constraint's placed upon them before they could be agreed.Firstly the government was limited in the amount of state aid that could be given by EC regulation.
Secondly the growing pressure on public finances would have meant that any additional borrowing would have broaden the calls that teh country was going bankrupt.Mandleson was at pains in the Lords to repeat that this was not additional funding but cash that the chancellor has already allowed for.
Thirdly critics would have said what distinguishes the car indutry from any other.The Government is already seeing signs that continued pumping of money into the banks is turned the electorate's opinion.This would have added to the criticisms and in addition other industries would have said well why not is then?
Peter Mandleson is to meet the,by all accounts this morning,disappointed car industry leaders and unions later today.
Writing in the Times Carl Mortished says that
compared with the £600 billion package of loan guarantees made available to the banks, it looks more like a thimbleful.
Britain's motor industry will get access to £2.3 billion in loans, a fraction of the $17 billion US scheme and less than half what is promised across the Channel, where the bailout will include equity capital rather than just loans.
That seems to be the general consensus this morning but as the FT says
Peter Mandelson will hope to secure a more enthusiastic response when he meets the motor industry on Wednesday. The business secretary can argue that he has fought the sector’s corner, persuading the Treasury to agree the UK’s first support package for a non-financial sector in this recession.
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