Mandelson in London on Monday. (Reuters)

London, Jan. 28: Lord (Peter) Mandelson, the business secretary, last night announced that the government would provide financial help worth £2.3 billion (Rs 161 billion) to Britain’s beleaguered car industry but it was still not clear how much of this would go to the Tata-owned Jaguar Land Rover group.

The government is to offer loans of up to £1.3 billion (Rs 91 billion) from the European Investment Bank as well as guarantees of support of up to a further £1 billion (Rs 70 billion) for lending and loans where appropriate.

Mandelson, who is back in London after heading a 100-strong British trade delegation to India — the first since the Mumbai massacre — was impressed when shown round the Tata plant in Pune where he and other senior UK car industry experts made their acquaintance with the Nano.

There is general expectation that Mandelson will do something to help Jaguar Land Rover. But no one, least of all Ratan Tata, is opening a bottle of Bollinger just yet.

Although Mandelson has not provided a breakdown of how taxpayers’ money will be distributed, a spokesperson for Jaguar Land Rover said: “We are encouraged that the government has taken this step. We look forward to meeting with government, alongside our colleagues in the SMMT (Society of Motor Manufacturers and Traders), to go through the detail.”

He added: “Through this move the government has recognised the strategic economic importance of the car industry in the UK as a major provider of high-skilled jobs and a significant contributor to our balance of trade. The specific nature of the challenge we face is that credit has dried up at the same time as demand evaporated, but it is absolutely critical for the future competitiveness of this country that we have a strong and highly-skilled engineering and manufacturing workforce in place to drive green technology innovation.”

After the SMMT meeting with the government, David Smith, CEO of Jaguar Land Rover, said: “We see long-term benefit in the package that the government announced, which clearly recognises the strategic importance of the car industry for the future and supports Jaguar Land Rover’s position as the UK’s largest automotive employer, exporter and driver of Research and Development.”

The focus, Smith added, “must now be on addressing the specific and urgent challenges faced by the industry” and to “secure quick access to commercial credit, including European Investment Bank funding, which is vitally important to Jaguar Land Rover and our supply chain”.

Today, the business secretary was meeting representatives of Britain’s car manufacturers and unions who say that £2.3 billion, though welcome, is not nearly enough to take the industry through its present troubles.

The unions calculate that help worth £13 billion is required if massive job losses are to be avoided.

Unite joint leader Tony Woodley, speaking for the biggest union, said: “£2 billion sounds like a lot of money but at least half of this will be taken up by Vauxhall and Jaguar Land Rover alone, leaving little or nothing for the hundreds of component companies. This is a fraction of the support being given by almost every other government in Europe.”

But Woodley, it seems, has spoken out of turn.

One of the UK’s leading industry experts, the IIT-Kharagpur-educated Lord (Sushantha Kumar) Bhattacharyya, who heads the Warwick Manufacturing Group, told The Telegraph: “£2.3 billion is a very good start but there is a lot to do. Hopefully, he will also help Jaguar Land Rover. But this money is not for JLR.”

Bhattacharyya explained: “JLR has asked for working capital of £500 million from the government. After Mandelson’s announcement, it can apply for money for R&D into green technology but there is an upper limit of £50 million.”

However, “since the government has now agreed to guarantee loans from the European Central Bank, Jaguar Land Rover can make a separate application for £400 million for R&D. The government will guarantee this loan”, he emphasised.

It is widely recognised that Jaguar represents the best in British engineering and that the company has invested heavily in making cars of the future. Bhattacharyya estimates that the group employs 16,000 people directly, another 80,000 in the components and supply chain, and 300,000-400,000 in the distribution and garage network.

Mandelson said last night that he was increasing funding for the training of car workers as well as moves to “reinvent” the industry for a greener, low-carbon future.

“This industry is not a lame duck and I am not proposing a bailout,” Mandelson said. “It has been transformed over the past decade. Productivity has risen, catching up and overtaking both France and Sweden.”

He stressed: “In Britain, we have some of the world’s most productive car plants. For the future, Britain needs an economy with less financial engineering and more real engineering. The car industry can and should be a vibrant part of that future.”

It will be Ratan Tata’s hope that the R&D done by Jaguar and Land Rover, especially in the field of green technology, will also benefit automobile manufacturing in India. That is probably why he bought two of Britain’s most celebrated icons in the first place.