Mandelson's brinkmanship with Tatas hurts JLR loan guarantees

The UK government's blow-hot, blow-cold attitiude towards Tata Motors over the British government underwriting the £340-million European Investment Bank loan passed in April to Jaguar Land Rover for making low-emission cars, (See: Tata's JLR receives £340 million from EIB) has taken a new turn with business secretary Lord Mandelson shifting the onus on to Tata Motors for delaying the loan proposal.

The UK government's pressure on Tatas, the parent company of JLR, comes after it announced last week the need to axe 300 workers at its Merseyside plant, cease production of its Jaguar X-Type car, known popularly as the Baby Jag, by the end of the year and introduce a three-week shutdown at its plants in the UK. (See: Jaguar axes 300 jobs, stop X-Type production)

After being critisised by the UK Parliamen'ts Business and Enterprise committee last week for not having concluded the negotiations with JLR based on a House of Commons select committee report on government help for the automobile industry, Lord Mandelson, told Sky News, "Having been told there was great urgency, we have made proposals and offers and now we are waiting for a response…..if the situation is so urgent, I think Tata need to quicken the pace of their response."

Rating JLR as a ''first-rate company with many strengths and a good future," he said that it was up to Tatas, with whom he once shared a good rapport, to respond quickly to the governments new proposal.

Although the business secretary as usual, did not disclose the terms of the new proposal, the UK media has said that the British government has dropped its insistence on putting its own representative as the chairman of JLR but has maintained that it still wants to have control on the company's future business plans.

In May, Tata Motors rejected the UK government's humiliating pre-conditions for underwriting just £175 million of the £340-million EIB loan for a 15-per cent upfront fee, for only six months as opposed to the original three years charge (See: Tata Motors rejects Jaguar Land Rover loan guarantee terms).