Government to guarantee £1.5bn JLR loan after cyber shutdown
- Published
The government will underwrite a £1.5bn loan guarantee to Jaguar Land Rover (JLR) in a bid to support its suppliers as a cyber attack continues to halt production at the car maker.
Business Secretary Peter Kyle said the loan, from a commercial bank, would protect jobs in the West Midlands, Merseyside and across the UK.
The manufacturer has been forced to suspend production for weeks after being targeted by hackers at the end of August.
There have been growing concerns some suppliers, mostly small businesses, could go bust due to the prolonged shutdown. The company operates the largest supply chain in the UK automotive sector, employing around 150,000 people.
It is hoped the loan will give suppliers some certainty as the shutdown continues.
The government will underwrite the loan through the Export Development Guarantee (EDG), a financial support mechanism aimed at helping UK companies who sell overseas.
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.
No cars have been built this month, and the company has stopped placing orders with its 700 suppliers.
A parliamentary committee said some small suppliers had told them they had, at most, one week left before they ran out of cash.
The halt in operations is thought to be costing JLR itself at least £50m per week.
The manufacturer, owned by India's Tata Motors, typically builds about 1,000 cars a day at its three factories in Solihull and Wolverhampton in the West Midlands, and Halewood in Merseyside.
Kyle said: "Following our decisive action, this loan guarantee will help support the supply chain and protect skilled jobs in the West Midlands, Merseyside and throughout the UK."
Chancellor Rachel Reeves said: "Today we are protecting thousands of those jobs with up to £1.5bn in additional private finance, helping them support their supply chain and protect a vital part of the British car industry."
Shadow business secretary Andrew Griffith welcomed the government's support but said it "took too long to get there" and called on Labour to form a cyber reinsurance scheme to protect British businesses from state-backed actors.
Liberal Democrat business spokesperson Sarah Olney also praised the move but said the government had been "too slow to act", adding it should also be prepared to provide a furlough scheme for affected workers if required.
Union Unite, representing thousands at JLR and in the supply chain, described the government support as an "important first step".
"The money provided must now be used to ensure job guarantees and to also protect skills and pay in JLR and its supply chain," said general secretary Sharon Graham.
JLR was hit by a cyber-attack on 31 August. A group calling itself Scattered Lapsus$ Hunters has claimed responsibility for the hack.
It was also behind a number of high-profile attacks on retailers earlier this year, including Marks & Spencer and Co-op.
JLR workers have been told to stay home since 1 September, with no firm return date provided.
About 30,000 people are directly employed at the company's plants.
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 underway, and we will continue to provide regular updates to our colleagues, retailers and suppliers."