Jaguar Land Rover may need more government help, MP says

More government assistance for Jaguar Land Rover (JLR) and its vast supply chain cannot be ruled out, a local MP has said, after the government announced it was backing a £1.5bn loan for the car maker.

Production at JLR’s facilities in the UK have been suspended for nearly a month, and there have been growing concerns that some of JLR’s supplies could collapse within a week due to the ongoing shutdown.

Liam Byrne, a West Midlands MP and chair of the Commons Business and Trade Select Committee, said it “could well be” that other support was needed beyond the loan.

He also warned that without a better government and business effort, these cyber-attacks will become more frequent.

“I don’t think we can rule out further intervention,” said Byrne, who is the MP for Birmingham Hodge Hill and Solihull North.

“It could well be that there are other instruments needed – something like a Covid-style loan for example may be needed for some suppliers, but we’ve got to make sure this first big loan package is put to work first.”

Production is not expected to resume at JLR’s facilities in Solihull and Wolverhampton in the West Midlands and Halewood in Merseyside until 1 October at the earliest, one month after production was first paused in response to the cyber-attack.

About 30,000 people are directly employed at the company’s UK plants and about 100,000 work for firms in the supply chain. Some of these firms supply parts exclusively to JLR, while others sell components to other carmakers as well.

Business Secretary Peter Kyle said the government had decided to guarantee a loan to JLR from a commercial bank to help protect jobs at the company’s UK facilities, but also with the “explicit intention” of supporting JLR’s supply chain.

Byrne, speaking on BBC Radio 4’s Sunday programme, said there would be “a lot of small print attached to these loan conditions” to ensure suppliers are helped.

“I think there are going to be a lot of contractual clauses within the loan that basically force JLR in essence to drive cash through the supply chain,” he said.

But Byrne added it remains unclear how the businesses that supply the suppliers will be assisted.

JLR is one of several UK businesses hit this year in a spate of cyber-attacks, including attacks on M&S and Co-op.

Byrne, who chairs the Commons Business and Trade Select Committee, said the committee is “sounding the warning now” that the UK’s economic security regime is “no longer fit for purpose”. He also warned many companies were not adequately defended against today’s dangers.

“Unless you remake the way the government and the private sector work together to keep our economic infrastructure safe, then we’re going to be vulnerable to the kind of attacks that have taken down JLR and M&S much more frequently in the future,” he said.

David Bailey, Professor of Business Economics at the University of Birmingham, said this should be a “complete wake-up call” to British companies.

“The reality is that this is affecting real people’s lives and it’s causing great distress, but I hope that this is very much a wake-up call for UK business to take this more seriously,” he told BBC Radio 4 on Sunday.

Tom Clougherty, executive director of the Institute of Economic Affairs, said the government underwriting a loan was “certainly preferable” to some of the other interventions suggested, but he questioned what knock-on effects the decision could have.

“Will every cyber attack now result in calls for a taxpayer bailout? Will companies be less inclined to insure themselves against such risks?” he asked.

Johnathan Dudley, head of manufacturing at Crowe UK, a company speaking to firms lower down the supply chain, told the BBC that while the loan would help, JLR had enough problems to deal with without trying to sort out getting money to the right parts of its supply chain.

Some businesses that were on the brink of collapse at the end of last week remained on the brink, “because the money isn’t out there”, he warned.

“There’s bills to pay at the end of this month,” Mr Dudley said.

Steve Morley is from the Confederation of British Metalforming, which looks after the interests of 200 manufacturing businesses – many of which supply JLR.

He welcomed the government intervention, but said more detail was urgently needed including how finances will flow through the supply chain.

“If we can make sure this funding gets distributed quickly, we have a great opportunity to protect the UK automotive supply chain…however, speed is of the essence,” he said.

Jan Jennings, from the Black Country Chamber of Commerce, said it had “considerable concerns” for smaller suppliers but was confident “they are on the government’s agenda”.