A bail-out for companies that finance the purchase of new cars may be considered as a means of helping the stricken auto industry.

Business Secretary Lord Mandelson has said he does not believe that carmakers themselves need help, although they are going through "a very tough period indeed".

After visiting Ford`s engine plant in Bridgend, south Wales, he said: "The motor industry is going to be a permanent part of our manufacturing base in this country, and I have seen why."

But he added: "I don't think the auto industry in the UK needs a bailout. It's not weak, but it's going through a very tough period indeed. That's why the Government has got to respond to the request of the industry to look at any options."

He had been responding to a report in The Times that extending the Bank of England's special liquidity scheme to motor-based finance firms may encourage more people to take out car loans.

He had earlier told MPs that as the looming recession worsens, the Government is looking at "appropriate" help that it might be able to offer. Talks are ongoing, he told the Commons Business and Enterprise Committee.

The Government's measures to help small and medium-sized companies included loan guarantees and a new enterprise fund to help companies struggling to access finance, as well as a £10 billion working capital scheme, securing up to £20 billion of short-term bank lending to companies with a turnover of up to £500 million.

The enterprise fund will be worth £75 million, made up of £50 million from the Government and the rest from banks and will be available for small firms which urgently needed equity.

The Government also announced an enterprise finance guarantee scheme, securing up to £1.3 billion of additional bank loans to small firms with a turnover of up to £25 million.

Gordon Brown told MPs at Prime Minister's Questions the Government was providing "real help" for businesses to deal with specific problems.

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