'Uncharted territory', Mandelson unveils £20bn plan
Updated on 14 January 2009
A £20bn rescue package to try and stop British businesses going bust was unveiled by government today.
Business Secretary Lord Mandelson said the UK was in "unique times and uncharted territory" as he revealed the taxpayer-funded bail out plans, which follow an earlier scheme to rescue British banks.
Lord Mandelson, who conceded yesterday that firms faced a "very difficult" credit climate, announced that government will underwrite part of loans to small and medium-sized businesses worth a total of more than £20 billion over the next two years.
It will guarantee loans, currently unavailable from banks, to companies with a turnover of up to £500m. It will also guarantee £1bn of £1.3bn in loans to small firms with a turnover of up to £25m.
Mandelson said: "We are talking about a very major programme to bring new working capital into existence. I am absolutely confident that they will produce real results for UK companies."
The announcement came as a new raft of job losses or redundancy warnings were detailed yesterday, including:
- the threat of 400 cuts at Nottingham City Council
- up to 200 through the closure of a distribution site for high street giant Argos; and
- the threat of more than 230 redundancies after administrators said they were seeking a buyer for failed clutch manufacturer AP Driveline, based in Leamington Spa.
Shadow chancellor George Osborne said government appeared to be offering a belated version of the £50bn loans guarantee scheme floated by the Tories several weeks ago.
"Let us hope that they will properly implement this Conservative policy rather than a pale imitation, or else they run the risk of repeating the mistakes of their expensive temporary VAT cut and achieving nothing," he said.
Liberal Democrat Treasury spokesman Vince Cable said: "Government should stop messing around with stunts and wheezes and ensure that the banks owned or part-owned by taxpayers operate as state banks maintaining lending for the economy."
