Hamish McRae: The Government should remember Leyland – and beware

Share
Related Topics

If the Government is prepared to rescue Royal Bank of Scotland and Lloyds HBOS, why should it not also help Jaguar and Land Rover?

They are all huge employers; all produce services and products we need; all are inherently successful enterprises, even if they have had a few rough patches. But there was no question about helping the banks, and in the case of Lloyds and HBOS, choreographing a merger between them that would normally have been blocked on competition grounds. Tata, the new owners of Jaguar and Land Rover, are having a tougher time extracting funds from the public purse.

There is a simple answer and a more subtle one. The simple point is that had the Government not rescued and re-capitalised the banks they might have gone under. A collapse of any large bank would be so catastrophic to the whole economy that it could not be risked. Cars matter but banks matter more. By contrast Land Rover and Jaguar have the backing of a powerful Indian industrial group; they have only been acquired a few months ago; and while Tata is under pressure right now, its survival is not in question.

The more subtle answer is that the Government has created a financial lifeboat for banks that should also be a good deal for taxpayers, whereas it is terrified of being sucked into ongoing support for the car industry. The optional part-nationalisation plan, whereby banks could get funds from the state but were not obliged to if they could find other investors, is a triumph. Not only does it save the banks but the funds don't come cheap. Call them clever investments, for the Government is always banging on about the need for investment. These part-nationalisations are therefore different from Northern Rock, where the underlying business was in real trouble and taxpayers may end up out of pocket.

In the case of the car companies there is a different background, more like Northern Rock and less like the Royal Bank and Lloyds HBOS. Looking back there was the nightmare of the nationalisation of British Leyland, then its denationalisation – and the collapse of the car part of Rover. The Government absolutely does not want to be drawn into open-ended support for car companies. In any case as far as Land Rover and Jaguar are concerned the production of both types of vehicle in the UK is not in question. The success depends on the ability of Tata to make a better fist of running them than their previous owner, Ford, and there is nothing the Government can do to help it there. So while some short-term funding may make sense, the Government absolutely does not want to be sucked into the quagmire from which it thought it had escaped.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Guru Careers: Software Developer

£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

SThree: Trainee Recruitment Consultant / Resourcer

£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

Ashdown Group: UI Developer - (UI, HTML, CSS, JavaScript, AngularJS)

£25000 - £40000 per annum: Ashdown Group: UI Developer - (UI, JavaScript, HTML...

Day In a Page

Read Next
Yvette Cooper campaigning in London at the launch of Labour’s women’s manifesto  

I want the Labour Party to lead a revolution in family support

Yvette Cooper
Liz Kendall  

Labour leadership contest: 'Moderniser' is just a vague and overused label

Steve Richards
Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine