Brussels row over pounds 80m Jaguar aid

BY RUSSELL HOTTEN

A row is developing between the European Commission and the Department of Trade and Industry over delays in Brussels approving a government aid package to Jaguar.

Sources in Brussels say the DTI has been dragging its feet in replying to requests for information about the pounds 80m subsidy to the company, and the Commission may not now be in a position to approve the aid until the end of the year.

A DTI official was due to meet counterparts at the EU's competition office this week to help speed up approval, which Jaguar says is essential if it is to go ahead with a pounds 400m assembly plant.

Ford, which owns the Midlands-based luxury carmaker, had said that unless it received the money it would build a new Jaguar model, the X200, in the United States.

One critic of the DTI's handling of the affair said this weekend that the department had not fully thought through the terms of the aid, and was now having difficulty answering the Commission's questions.

Awarding the money is proving embarrassing for the DTI, and appears to be opening the floodgates for similar requests.Last week the Independent revealed that Rover group was talking to the DTI about a pounds 70m-pounds 100m package towards a pounds 300m investment in a new engine plant. But a DTI spokeswoman dismissed the criticism, saying the size of the package meant it would take time to clear Commission competition rules. "We are responding to their questions in a timely manner."

In July, when Ian Lang, president of the Board of Trade, announced Jaguar's investment in the blaze of publicity, the DTI said it expected speedy approval. The aid is divided into two tranches: pounds 48m in regional selective assistance, and pounds 32m in local authority and agency grants. It is thought the regional aid will be cleared but a question mark hangs over whether the pounds 32m breaks Commission competition rules.

A Jaguar spokesman said this weekend that the company was still confident the Commission would eventually approve the aid.