A government initiative launched nearly a year ago to help the car industry with the promise of £2.3bn of loan guarantees has failed to produce a single loan, according to a critical report on Tuesday.

MPs on the business, innovation and skills committee condemned the scheme as a “wasted opportunity” to support the manufacturing industry during the recession and warned that the business department was running out of time to make it a success.

The programme was announced by Lord Mandelson in January in a bid to support investment in low-carbon skills and technology in the car sector. The business secretary had touted the scheme as a “route” to securing long-term jobs in a more balanced UK economy.

It promised to offer access to loans and loan guarantees totalling £2.3bn, including £1.3bn from the European Investment Bank.

Simon Fraser, the most senior civil servant in the business department, had told the committee there had been “no shortage of negotiations” with car companies and that “although we have not got the money out of the door at the moment, there is activity around the scheme’’.

Mr Fraser, permanent secretary, explained the delay by saying negotiations were complex and it would not “just put taxpayers’ money behind any old agreement’’.

The business department has been in discussions with 20 companies over projects which in theory could reach a value of £2bn.

In its report, however, the committee said that “the absence of a single loan or loan guarantee from a scheme which was heralded as ’a further £2.3bn package of loan guarantees’ is disappointing’’.

One loan had been offered to Tata Motors’ European arm to produce electric vehicles but the company had subsequently rejected the loan. Jaguar Land Rover – also owned by Tata – had rejected an offer of a loan guarantee.

”The scheme seems to have been a wasted opportunity to support this important manufacturing sector during the recession”, said Peter Luff, the Conservative MP who chairs the committee.

“It is up to the government to prove us wrong, but they must ensure that funds are released to companies very quickly. It is late in the day for this to happen so the government must act soon.”

The Society of Motor Manufacturers and Traders said the delays in accessing support were ”frustrating’’.

The car scheme was just one of several initiatives by the government to stave off the impact of the recession on business and the housing market. They have proved a mixed bag, as the FT reported last month.

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