Government mulls financial support for supply chain firms

Ministers are considering stepping in to support Jaguar Land Rover’s suppliers after the carmaker was forced to suspend production after a cyber-attack.

The attack at the end of August meant JLR was forced to shut down its IT networks. Its factories remain suspended until next month at the earliest.

Fears are growing that some suppliers, in particular the smaller firms who solely rely on JLR’s business, could go bust without support.

One idea being explored is the government buying the component parts the suppliers build, to keep them in business until JLR’s production lines are up and running again.

If the government were to step in, it is believed to be the first time that a company received help as a result of a cyber-attack, although such attacks are a relatively new phenomenon.

JLR, which is owned by India’s Tata Motors, would normally expect to build more than 1,000 cars a day at its three factories in Solihull and Wolverhampton in West Midlands, and Halewood in Merseyside.

However, workers were sent home following the hack – which first came to light on 1 September – with no firm return date.

An investigation is under way into the attack, which is believed to be costing the company at least £50m a week in lost production.

JLR confirmed this week that its factories will not resume operations until at least 1 October, with earlier reports suggesting the disruption could last into November.

Unions have called for a Covid-style furlough scheme, but ministers have ruled this out given its likely cost, sources have told the BBC.

While the purchase and stockpiling of car parts by the government is an option on the table, this would present considerable logistical challenges.

JLR’s manufacturing process relies on the right part arriving at the right place, at the right time.

However, industry experts agree doing nothing risks firms in the supply chain, which employs tens of thousands of workers, facing bankruptcy.

Another option being considered is providing government-backed loans to suppliers, though this is understood to be unpopular with suppliers.

Speaking to BBC Radio 4’s Today programme, former Conservative mayor of the West Midlands, Andy Street, said the companies in JLR’s supply chain had been “very successful” and he supported offering them government-backed loans.

“I would argue if you think of the total income that JLR and its supply chain put into the Exchequer, this is a good deal for the Exchequer,” he said.

The firm also has large factories in Slovakia and China, as well as a smaller facility in India, which have also been affected by the shutdown.

The Business and Trade Select Committee is due to meet on Thursday afternoon to hear testimonies from businesses in JLR’s supply chain because of deep concern for some of these businesses to remain viable.

This evidence will be shared with the government afterwards.

Senior government figures are concerned about a pattern of cyber-attacks on UK institutions and businesses, such as the British Library, Marks & Spencer, and the Co-op.

A group calling itself Scattered Lapsus$ Hunters has claimed responsibility for the hack on JLR, Marks & Spencer, and Co-op.

On Thursday, Co-op reported that the cyber-attack it suffered earlier this year cost it at least £206m in lost revenues.

Since the attack on JLR, the carmaker has been receiving support from the National Cyber Security Centre and the National Crime Agency.

About 30,000 people are directly employed at the company’s plants with a further 100,000 working in the firm’s supply chain.

On Tuesday, the business secretary and industry minister visited the West Midlands for the first time since the incident to meet JLR and the firms in its supply chain.

Speaking during the visit to JLR’s roof supplier, Webasto, in Sutton Coldfield, Industry Minister Chris McDonald said it was “really important that we don’t impose solutions on businesses but that we work with them”.

The Department for Business and Trade said ministers had discussed “the impacts of the cyber-incident and how JLR can work towards restarting production”.

In its most recent statement, JLR said: “Our focus remains on supporting our customers, suppliers, colleagues, and our retailers, who remain open.”

Additional reporting by Pritti Mistry