Business View: The politics of Phoenix meets the legacy of Leyland

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The Independent Online

While it is pretty bad luck for the 5,000 let go by MG Rover on Friday, and pretty bleak for the 1,100 left, they do have a couple of advantages. For one, there are lots of marginal constituencies within tooting distance of the Longbridge plant. And for another, we are in the midst of an election. After all, when NatWest made three times as many people redundant following the Royal Bank of Scotland takeover, no Cabinet ministers rushed to Lothbury, no interest-free loan was offered to keep these poor bankers in jobs and no support package was put in place for them and their families.

Indeed, if you are to be hard-hearted, the planned redevelopment of the Longbridge site by St Modwen Properties promises to create around 10,000 jobs. That's 3,500 more employed voters come the 2009 election. But that'll be when Gordon Brown or Alan Milburn is trying to be re-elected as prime minister, Lord Blair of Sedgefield is off running the European Commission or the UN, and British-owned volume car makers are consigned to his-tory along with large-scale coal mining and small grocers.

The battle to save MG Rover has been a political one, with the ailing car maker taking on some totemic status as if were an emblem of our great industrial past. Of course it isn't. It is a legacy of the ailing mishmash that used to be called British Leyland, which had been stripped of its prize assets, such as Land Rover and the Mini plant at Cowley, and was left as a rump that had been starved of investment.

Car makers are like sharks - if they don't keep going forward, they die. The lack of investment at Longbridge, at a time when the directors were doing very nicely thank you, was fatal. The success of the BMW Mini shows what a great car British workers can produce if they are backed with hard cash.

The Rover 75 may be a good car, but it is becoming as dated as last year's poncho. With the blame game getting into full swing, the Phoenix Four will be slated for feathering their nests. But their real failure was not to secure fresh investment early enough into MG Rover.

M&S: the new MG?

When I was a kid, people would drive proudly in their Rovers or Austin Princesses or Vauxhall Vivas with stickers saying "buy British best". They would buy their underwear and blouses at Marks & Spencer, and their medicines and cosmetics at Boots. But, apart from a small rump who might vote for Robert Kilroy-Silk, no one thinks that way today. Britishness is no longer a unique selling point.

This begs a question about the future for the Middle England brands that have been with us for so long. Boots is one that has severely suffered from what might be called brand attrition. Having treated (if that is the word) customers to a confused and dowdy offer, Boots has lost so much ground on the likes of Superdrug and the supermarkets that you wonder if the well-meaning Richard Baker can get it back to anywhere near its former status.

Marks & Spencer's position is also looking critical. It is increasingly being caught in the middle ground as the fashion market goes either ultra chic or ultra cheap. People mix and match £150 jeans with T-shirts from Primark or Cherokee at Tesco. St Michael can't get a look in. Stuart Rose has about two seasons of fashions to sort this out, or else M&S faces becoming the MG Rover of the high street.

Capita can't lose

I trust Rod Aldridge, chief executive of Capita, will be voting Labour. His company has been one of the biggest beneficiaries of the public- private partnership revolution. And it is about to cash in big time if Labour get back in.

According to analysts at Morgan Stanley, the Gershon review into public services promises to be a bonanza for Capita. It assumes Gershon will target an annual £100bn of government expenditure, saving £22bn.

This leaves £78bn of net expenditure, a 10th of which will be outsourced. Capita has around a 20 per cent share of the outsourcing market, so this will net it £1.6bn of extra sales. It current turnover is £1.3bn.

Mind you, the Tories want to save even more. A ballot box dilemma for Rod, methinks.