Outlook: No more aid, please

GREAT NEWS! Nissan is to invest pounds 223m on a fifth model at its Sunderland car plant, safeguarding 1,000 jobs, and all because the lady loves to hand out regional selective assistance (RSA). It is debatable how big a part the pounds 5m bung from Patricia Hewitt really played but the Trade and Industry Secretary herself is in no doubt it was instrumental. Goodness, there must be a general election in the offing.

As it happens, the Nissan sweetener is precisely the kind of state aid that would be banned in future if Europe's new Competition Commissioner, Neelie Kroes, gets her way. She wants the aid budget re-directed from well-heeled multinationals in wealthy states to small companies in poorer ones.

There is a strong case to be made for abolishing subsidies altogether. A bad investment does not become a good one simply because the taxpayers of one country are prepared to subsidise it more heavily than those in another. But as long as EU member states have aid budgets to play with then this beggar-thy-neighbour mentality will remain.

Next up for RSA is likely to be MG Rover, which would like some state aid to oil the wheels of its Chinese rescue deal. MG Rover is just as entitled to seek government support for Longbridge as Nissan is for Sunderland, even if the Phoenix four that run it in the manner of a private fiefdom would seem a less deserving cause. They had better get a move on before Ms Kroes sticks her spanner in the wheel.

jeremy.warner@independent.co.uk

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