Double £2bn investment bonus for UK motor industry

Ford and Nissan will both receive Government support towards almost 2bn of investment to develop new greener conventional engines and a new electric car.

Business Secretary Lord Mandelson said the Government had agreed to back Ford's proposed 1.5bn investment over five years for development of a new generation of environmentally friendly engines and vehicle technologies.

The Government will provide 360m in loan guarantees towards six projects through its Automotive Assistance Programme, backing a proposed loan of 450m which is being considered by the European Investment Bank.

Ford's plans will safeguard around 2,800 skilled jobs in the UK at its research and development centre at Dunton in Essex as well as its manufacturing plants in Dagenham, Essex, Southampton and Bridgend in South Wales.

Ford currently provides 29 per cent of the UK's automotive sector research and development.

The projects to be supported cover research and development for Ford's commercial vehicles such as the Transit and Connect vans and the development of low carbon emission diesel and petrol engines.

This includes investment in production facilities for new lower carbon engines in Bridgend which was also supported by the Welsh Assembly Government last year. Currently 25 per cent of all Ford engines worldwide and over half of all Ford diesel engines are made in the UK

Lord Mandelson, who will visit Ford's site in Dagenham today, said: "Ford is a major investor in research and development in the UK. Its proposals represent further significant investment in the UK. The Government stands ready and willing to support these innovative research and development projects backed by a highly skilled workforce.

It was also announced that Nissan will produce its electric car, the Leaf, at its plant in Sunderland.

Lord Mandelson said the Government would commit 20.7m under the Grant for Business Investment scheme for both the production of the car and a new battery plant at Sunderland.

This will support total investment of more than 420m by Nissan in its UK operations.

Nissan has plans to make up to 50,000 vehicles and 60,000 batteries a year which will help to safeguard and create over 550 skilled jobs at the Sunderland plant.