RBS to launch 'tooling' fund to boost car components industry

This creates a Catch-22 situation that risks sending tooling work abroad to countries where finance is more easily obtainable – as well as failing to capitalise on Britain’s booming auto industry, which saw output rise by 1.3pc to 1.6m vehicles last year and has doubled exports to almost £25bn over the past decade.

Richard Hill, head of automotive at RBS, said: “When a supplier receives the good news that they have won a contract, invariably they are given a requirement to fund making the tooling.

“This can be restrictive as sometimes they don’thave the working capital to fund it as well as other requirements.

“The difficulty suppliers have in raising finance comes from this structure because the tooling cannot be counted as an asset.”

Producing tooling can range from £30,000 to £1m, according to Mr Hill, who has been working with the UK Automotive Council for two years to come up with RBS’s tooling financing package, which takes into account tooling’s unusual ownership.

The SMMT estimates the UK auto industry currently has a £3bn requirement for new tooling as Britain’s resurgent car sector struggles to meet demand and launches new models.

“We’re now seeing a recognition in the banking sector that the auto sector is worthy of investment and we’re beginning to see the lending shackles come off,” said Mr Hawes.

At the moment about a third of the parts used to produce cars built in the UK come from British companies, compared with almost two-thirds for German-built cars.

Mr Hawes said the “prize” would be to get the ratio in

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