Richard Lambert, the CBI Director-General, risked the wrath of Britain's biggest industry yesterday when he said that UK carmakers should not receive large American-style bailouts.

His comments come after the Society of Motor Manufacturers and Traders (SMMT) petitioned the Government for a range of support, including loans to the industry.  Fears are growing for the future of Vauxhall's Ellesmere Port plant because its parent, General Motors, could go under next month. The unions have called for £13 billion in state support for the industry.

Mr Lambert said: “I don't think any of us want to get into a world where the Government is deciding which sectors are going to flourish and which sectors are not. I remember that from the Seventies. Our job as an industry-wide body is to say let's get the markets working, let's not have government creating new channels of bureaucracy and political intervention. In the long term, it is not something we would all welcome.”

Mr Lambert is concerned about the knock-on effect if the big three US carmakers receive large bailouts and there is pressure for reciprocal action in Europe and the UK. He said: “I think it would be a bad outcome. There are lots of other sectors in a bad way. If you did that to the motor industry, what about the housebuilders? If you look at the housebuilders, what about the white-goods sector?”
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The CBI chief did concede that other countries could put the British and European industries “in a place that they needed a short-term cushion to rebalance themselves”.

Acea, the European car industry trade body, has called for a €40 billion (£33 billion) fund, a call backed by President Sarkozy of France and Silvio Berlusconi, Italy's Prime Minister.

Unions in Britain want the Government to make £13 billion available across the car industry. It is thought that Ellesmere Port alone could need an instant award of £250 million if GM falls into bankruptcy.

Tony Woodley, joint general secretary of Unite, said: “UK car companies are productive and some of the best performers in Europe. Just as our Government has called for a global solution to correct the faults in the finance sector, so it is right that our Government acts to insulate the UK car companies while the problems within their US parent companies are tackled.”

Paul Everitt, chief executive of the SMMT, said: “The UK motor industry is seeking a package of support that helps stimulate demand and addresses a fundamental market failure. It will help sustain vital industrial capability and avoid unnecessary social and economic damage. The SMMT has argued strongly and consistently for measures to restore consumer confidence and boost demand. It is important that government does provide the right signals about the attractiveness of the UK economy for global automotive firms.”

Car production figures for last month, due out today, are expected to underline the industry's poor state, reflecting a move by all carmakers to short-time working.

Mr Lambert also said that cashflow problems, which have hit small firms hard, were spreading across industry and that there was increasing worry about bank finance. He said: “There is a concern we will see a number of companies having their accounts qualified because they won't be able to say with confidence that they will be able to get bank finance. It is all serious stuff.”