A LUXURY new model for Knowsley’s Halewood car plant is a step closer, after the Government pledged £27m towards its development.

Business Secretary Lord Mandelson yesterday announced the cash for the car giant to develop its new green car range at Halewood.

The company is aiming to invest £400m for the new model, based on its acclaimed LRX concept, which will guarantee jobs at the plant which employs 2,000 staff who currently build the Jaguar X-Type and Freelander models.

X-Type is believed to have a lifespan up to 2010, so the LRX would make a fitting replacement, although Land Rover stressed that the final decision on whether to proceed with the new model will not be made until later this year.

The LRX would be the smallest, lightest and most efficient Range Rover ever.

The government cash is from the Grant for Investment scheme and is on top of £2.3bn in assistance which was the subject of a London summit yesterday explaining how auto industry leaders can access the funding.

Lord Mandelson said: "This project aims to design and build a greener car in the UK, safeguarding vital skills and technologies.

"It will secure production and employment at the Halewood facility and maintain the design capability for Jaguar Land Rover (JLR) in the UK.

"This is an important investment for the future, and we are delighted to be able to offer this grant support."