The government’s claim to have provided major financial support to Jaguar Land Rover (JLR) has already come under scrutiny after it was revealed that the carmaker did not draw down any of the $1.5 billion loan facility guaranteed by the government.
The revelation sparked fury among providers who accused ministers of misleading the public for their intervention following a major cybaker scandal to close all its schools for more than a month.
The attack, which began on 1 September, crippled JLR’s main computer systems and halted production across the UK. The company was able to resume limited production in early October and expects full production to resume in early December.
Liam Byrne, Chairman of Parliament’s Parliamentary Select Committee, has written to Business Secretary Peter Kyle seeking clarification as to what money has gone to suppliers.
Providers have privately expressed frustration at Government documents, which appeared to suggest that clergy had offered emergency cash. One of the parties told the Guardian: “In a way, the government played a blinder with everyone who thinks they are taking out jlr.”
While Jlr has launched its support program to pay suppliers upfront, the program is funded entirely from existing cash houses, not government-backed debt.
On the eve of the Labor Conference at the end of September, Peter Kyle announced that the finance that exports the UK – the Export Credit Mecer – will guarantee that the £ 1.5 billion loaned to jlr, covering 80 percent of any possible default.
The package, Klele said, was designed to “support jlr’s Supply Chain which is heavily impacted by closures”. He told the audience days later that he ‘announced 1.5 thousand in support – a huge amount of money to help a very important company.’
However, Ukef’s own chief executive was interviewed and warned ministers that the guarantee was ‘out of its appetite for risk’. Multiple industry sources have told the Financial Times and the Guardian that JLR only officially became aware of the loan facility this month – and has already pulled out of it.
The closure caused widespread disruption across the used car industry, which was already struggling from weak demand and low marriages. Many suppliers are forced to lay off workers or stop production to save money.
Many component makers operate on 60-day payment terms, meaning the worst impact on cashflow began to hit this week – two months after JLR production was halted.
Stephen Morley, President of the Confederation of British Metalworking (CBM), said while the recovery was faster than feared, the financial pressure on small firms remained severe:
“From September 1, it doesn’t matter where you pay, there are no sales on the invoice. Come November 1, most of the invoices will be.”
Morley said that while Tier 1 suppliers – those contracted directly to JLR – have received payments, small Tier 2 and small 3 firms are still struggling to access funds as funds are slowly filtered through the supply chain.
A government spokesperson defended its response, saying: “We acted quickly and decided to put support in place of jlr with a loan guarantee at a difficult moment to stabilize the situation.”
The authorities added that the ministers ‘continue to work in partnership with JLR, industry and major banks to look after the supply chain during this difficult time’.
Despite that service being confirmed, providers say the episode highlights a wider weakness in the UK’s industrial crisis response – with a symbolic political symbol outshining tangible financial relief.
Meanwhile, JLR’s unused loan facility stands as a testament to the company’s financial woes and the government’s narrative of intervention – a reminder that after Britain’s biggest car ban in years, the promised support delivered is not the same.
