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Business Secretary Lord Mandelson has outlined a package of government support for the UK car industry potentially worth up to £2.3bn.

The package includes a scheme to unlock £1.3bn of loans from Europe for car manufacturers and major suppliers.

He said the government would also guarantee up to £1bn of further loans.

But shadow business secretary Ken Clarke said the European loans were announced last year and called the whole package "pretty small beer".

Outlining the measures in the House of Lords, Lord Mandelson said the automotive industry was vital to British manufacturing and at the heart of many regional economies but was "in the frontline of the downturn".

'Low carbon future'

He said the measures would boost the industry and lay "the foundations of its reinvention for a low carbon future".

They include guarantees to unlock loans of up to £1.3bn from the European Investment Bank and another £1bn in loans to fund investment in green-friendly vehicles.

But he said there would be "no blank cheque" and any schemes supported had to provide jobs, develop new technology and processes for the long term and provide value for money.

Regional development agencies and the Technology Strategy Board are to be invited to bring forward new research and development programmes into cleaner engines, lighter cars and "plug-in hybrids".

He also said spending on skills training for employees would be boosted to £100m from its current £65m, if there was demand from the industry.

And trade and investment minister Mervyn Davies had been asked to draw up plans to improve access to additional funding for car companies' financing arms.

The car industry had to change to succeed in the "new world" and had to be cleaner and greener, Lord Mandelson said.

"This industry is not a lame duck and this is no bail out," he added. Source