Loan For Tyre Giant Under Threat From Government Spending Cuts

Fri, 21 May 2010

Nearly £4 million worth of government funding for tyre manufacturer Michelin could be scrapped by government plans to cut spending in order to reduce the nation’s huge budget deficit.

The new coalition government has confirmed it will review all spending projects that were agreed after January 1 and decide if they represent value for money .

This includes a loan of up to £3.9 million that was awarded to Michelin back in February. The Stoke-based business had planned on putting the money towards its £20 million modernisation plans, which it said would enable it to operate in the area for years to come.

Any financial support that the government provides to industry is usually indirect, meaning it goes through various regional development agencies across the UK such as Advantage West Midlands (AWM).

But speaking after a tour of luxury carmaker Bentley in Crewe yesterday, new Business Secretary Vince Cable said that the agencies' budgets would be cut and significant changes would be made to their structures.

Peter Snelling, head of communications at Michelin’s Stoke office, said: "It's a critical grant we are talking about for proper capital investment . We would be exceedingly disappointed if there were to be questions raised."

"The conversations we had with AWM and the Government certainly gave us the indication that it had been budgeted for and approved."
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