Ministers’ claims to have helped JLR in doubt as £1.5bn support left untouched | Jaguar Land Rover

Jaguar Land Rover has not withdrawn any of the £1.5bn loan facility guaranteed by the government; Suppliers have expressed anger at ministers’ claims they were shoring up the carmaker’s supply chain after a crippling attack.

Britain’s largest automotive employer was forced to close all of its wholly owned factories for more than a month from September 1 after cyber attackers took over key computer systems.

Labor MP Liam Byrne, who chairs parliament’s business select committee, wrote to business minister Peter Kyle on Friday seeking clarification on whether any money had reached JLR and whether the aid had been requested by the carmaker.

JLR’s suppliers have privately expressed anger over the government’s messaging, which praises it for helping them. An executive at One Parts Maker said: “In some ways the government played blindly thinking everyone was saving JLR. They did nothing.”

JLR was only able to restart limited production at the beginning of October. The company has since focused on increasing production and is expected to reach full production rate by the beginning of December.

The closure caused chaos in the UK automotive industry, which was already under pressure after a long period of low demand. Suppliers have laid off thousands of workers to save cash, and this month the Guardian revealed JLR’s plan to prepay for parts in a bid to quickly bring money into its supply chain after a month without orders.

JLR is on track to avoid a worst-case scenario of closure that would last until the new year. But the British Confederation of Metal Forming (CBM), a lobby group representing many of the company’s suppliers, said financial support to parts manufacturers still needed to be stepped up.

Most suppliers work with 60-day payment terms; That means some will start feeling the worst of the financial pressure next week, two months after the attack halted orders.

The crisis has led to calls from MPs for government intervention ahead of the Labor Party conference at the end of September. On the evening before the conference, Kyle announced that the government-controlled UK Export Finance (UKEF) would guarantee a £1.5bn loan, in effect promising to cover 80% of the debt if JLR defaulted.

Size of guarantee is ‘outside UKEF’s normal risk appetite’, chief executive says warned business secretary

Announcing the loan guarantee, Kyle said it “has a clear intention to also support the supply chain at JLR”. in it announcement the government said this would “strengthen JLR’s cash reserves so it can support its supply chain, which has been heavily impacted by the lockdown.”

Kyle trumpeted government intervention in his conference speech two days later. HE in question: “I’ve announced £1.5bn of support – that’s a huge amount to help a very important company.”

The Financial Times reported that JLR only officially accepted the loan under UKEF this month, with HSBC, Mitsubishi UFJ Group and NatWest acting as potential lenders. Various sources told the Guardian that none of these credit facilities went into JLR’s accounts or any of its suppliers. Instead, the automaker used its large existing cash reserves for a plan to help suppliers.

The ability to easily access a loan, even if unused, may have helped JLR marginally by reducing the risk of breaching other banking agreements. But a credit guarantee is unlikely to help suppliers.

A government spokesman said: “We acted quickly and decisively to provide support to JLR through a loan guarantee at a critical time to help the company and its supply chain stabilize the situation.

“We continue to work closely with JLR, the industry and major banks to monitor the supply chain closely during this challenging period.”

Even after JLR’s own support programme, which received no help from the government, some suppliers expressed concerns that it would take some time for payments to reach the “tiers” of the supply chain. While tier 1 suppliers typically receive cash from JLR’s program, the automaker relies on them to continue paying lower tiers.

Byrne, the Labor MP in the constituency of Birmingham, which is home to many JLR workers, also asked for more information about how the government monitors whether adequate support extends beyond tier one and why the government thinks a loan guarantee is the best option to help the supply chain.

CBM chief executive Stephen Morley said some parts makers were receiving much-needed cash flow but others further down the chain would soon begin to feel the worst of the squeeze, two months after their last bills were due.

“Starting Sept. 1, no matter when you get paid, there will be no sales to invoice,” Morley said. “Depending on your payment terms, the majority of invoices were due on November 1. This is a critical point as there is nothing to invoice.”

But he added that the recovery was generally going better than expected. He said: “JLR has done well so far, but there is work to be done.”