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A £1.5billion loan guarantee scheme has been unveiled to stop the collapse of companies in Jaguar Land Rover’s supply chain as the motoring giant wrestles with the impact of cyber attack. A loan from a commercial bank will be paid back over five years, strengthening JLR’s cash reserves so it can support suppliers affected by its shutdown.

The loan will be backed by a guarantee provided by export credit agency UK Export Finance (UKEF). Business and Trade Secretary Peter Kyle said: “This cyber attack was not only an assault on an iconic British brand, but on our world-leading automotive sector and the men and women whose livelihoods depend on it. Following our decisive action, this loan guarantee will help support the supply chain and protect skilled jobs in the West Midlands, Merseyside and throughout the UK.”

Chancellor Rachel Reeves said: “Jaguar Land Rover is an iconic British company which employs tens of thousands of people – a jewel in the crown of our economy.

“Today we are protecting thousands of those jobs with up to £1.5billion in additional private finance, helping them support their supply chain and protect a vital part of the British car industry.”

JLR has plants in Solihull and Wolverhampton in the West Midlands, as well as Halewood in Merseyside, and employs 34,000 directly in the UK. But its supply chain – the largest in the automotive sector – provides jobs for about 120,000 people.

Richard Parker, the Mayor of the West Midlands, welcomed the intervention, saying: “This support is vital to the West Midlands – it will keep people in work, protect the smaller firms that rely on JLR and give our region the stability it needs while production is paused. I’ll keep working hard with ministers and industry to safeguard jobs and make sure our world-class automotive sector comes through this stronger.”

Under an “export development guarantee”, UKEF covers up to 80% of the risk on loans to companies which export from the UK. In July, it announced a £1billion guarantee for Ford to help it manufacture electrified vehicles.

Shadow Business and Trade Secretary Andrew Griffith said: “It is welcome to see that the Jaguar Land Rover supply chain – an important capability in our country that creates and supports thousands of automotive jobs – is finally being supported by the Government with loan guarantees in precisely the way we suggested.

“Ministers have got to the right place but took too long to get there. Labour must also pick up our suggestion of a cyber reinsurance scheme to protect British businesses from state-backed actors in an increasingly dangerous world.

“Britain’s firms and manufacturers deserve a government that is not distracted by scandals and infighting and that understands business.”