Committee publication · Correspondence · 28 October 2025
Letter from the Secretary of State relating to the laon gurantee through UK Export Finance to Jaguar Land Rover, 13 October 2025
From: Business and Trade Sub-Committee on Economic Security, Arms and Export Controls
Inquiry: UK economic security
Summary
Secretary of State Peter Kyle responds to the Business and Trade Committee's inquiry into the £1.5 billion government-backed loan guarantee to Jaguar Land Rover through UK Export Finance. The letter explains the guarantee's rationale, commercial terms, and expected benefits for the automotive supply chain, defending the decision to support JLR directly rather than individual suppliers.
Key findings
- The £1.5 billion guarantee reflects JLR's status as a major exporter supporting 34,000 direct UK jobs and 120,000 in its supply chain; JLR's strong financial track record and working capital needs justified the support level.
- The guarantee is a risk-sharing product with commercial pricing: banks cover £300m uncovered risk; UKEF applies hurdle-rate calculations to ensure appropriate remuneration and covers administrative costs.
- JLR was chosen as guarantee recipient over supplier-by-supplier scheme because it offers faster liquidity support; supporting suppliers directly would require lengthy due diligence and many smaller businesses might not meet UKEF's credit risk criteria.
- UKEF does not have sufficient familiarity with JLR's supply chain to direct deployment of loan proceeds; JLR will work constructively with suppliers as production restarts.
- Government measures success by job protection (34,000 direct, 120,000 in supply chain) and export earnings preservation; the guarantee generates Treasury returns through premiums and is not direct expenditure.
Tone
ProceduralTopics
Key actors
Peter Kyle, Liam Byrne, Jaguar Land Rover, UK Export Finance (UKEF), Tata Motors, Department for Business and Trade
Notable line
“The government recognised that the economic cost of allowing JLR's supply chain to collapse would far exceed the risk of this guarantee”
Key Quotes
“JLR is a major exporter and employer, supporting around 34,000 UK jobs directly, and a further 120,000 in its supply chain.”
“Providing a guarantee for a commercial loan to JLR is the quickest route to increase the company's liquidity.”
“The EDG product is neither a grant nor a subsidy, and it does not provide concessional financing terms.”
“UKEF does not have sufficient familiarity with JLR's supply chain to feel confident in directing the company where to deploy the commercial loan proceeds in their supply chain …”
Source · parliament.uk record ↗