Government guarantees Jaguar Land Rover £1.5bn loan
The UK government will underwrite a £1.5bn loan guarantee to Jaguar Land Rover (JLR) in a bid to support its suppliers as cyber-attacks continue to halt production.
Business Secretary, Peter Kyle said the loan, from a commercial bank, would project jobs across the UK, in particular in the West Midlands and Merseyside.
The manufacturer has been forced to suspend production since being targeted by hackers at the end of August, and concerns are mounting that some suppliers, including small businesses, could go bust due to the shutdown.
Approximately 30,000 people are directly employed at the company’s UK plants, while roughly 100,000 people work for firms in the supply chain.
Kyle said: “This cyber attack was not only an assault on an iconic British brand, but on our world-leading automotive sector and the men and women whose livelihoods depend on it.”
“Following our decisive action, this loan guarantee will help support the supply chain and protect skilled jobs.”
The decision comes after Kyle admitted the government was looking at “energetic and creative ways” to save firms.
The government will underwrite the loan through the Export Development Guarantee (EDG), a financial support mechanism aimed at assisting UK companies who sell overseas.
Supporting suppliers
The loan is believed to be the first time that a company has received help from the government as a result of a cyber attack, and aims to give suppliers certainty, as production is not expected to resume at JLR‘s UK facilities until 1 October at the earliest.
The loan will be paid back by JLR over five years, in an effort to boost the firm’s cash reserves as it makes a “backlog of payments” to its suppliers.
The company has stopped placing orders with its 700 suppliers, with some smaller suppliers telling a parliamentary committee that they had, at most, one week left before they ran out of cash.
Around a quarter of firms supplying parts to JLR have already paused work or laid off staff, according to the industry bod the Society of Motor Manufacturers and Traders.
Meanwhile, the stall in operations is though to be costing JLR itself at least £50m per week.
Chancellor Rachel Reeves said: “Jaguar Land Rover is an iconic British company which employs tens of thousands of people.”
“We are protecting thousand of these jobs…helping support their supply chain and protect a vital part of the British car industry.”
Government help took to long
Shadow business secretary Andrew Griffith welcomed the government’s move but said “it took to long to get there.”
He said: “Labour must now also pick up our suggestion of a cyber reinsurance scheme to protect British businesses from state backed actors in an increasingly dangerous world.”
“Britain’s firms and manufacturers deserve a government that is not distracted by scandals and infighting and that understands business.”
Meanwhile, union Unite, which represents thousands at both JLR and in the supply chain described the move as an “important first step”.
JLR was hit by a cyber attack at the end of August, with the group claiming responsibility for the hack also behind a string of high-profile attacks earlier in the year including Marks and Spencer and Co-Op.
A JLR spokesperson said: “Our teams continue to work around the clock alongside cybersecurity specialists, the NCSC and law enforcement to ensure we restart in a safe and secure manner.
“The foundational work of our recovery programme is firmly under way, and we will continue to provide regular updates to our colleagues, retailers and suppliers.”