Leading article: Help for Jaguar could set an expensive precedent

Ministers would have to explain why the car company is a special case

Related Topics

With job losses mounting, the Business Secretary, Lord Mandelson, has confirmed that the Government is considering a request for state help from the car company Jaguar Land Rover. Any assistance, it is being emphasised, would not be a bailout as such, rather a two-year bridging loan to the tune of £1bn – sufficient to tide the firm over difficult credit conditions. Such caveats, though, do not make the decision any easier or less sensitive.

There are many questions that need to be asked here. Let's start with the obvious. Is the minister who has been talking to Jaguar Land Rover by any chance the same Lord Mandelson who played the uncompromising free-marketeer in relation to another, rather bigger, company in recent difficulties. Commenting on Woolworths' decision to close all its remaining shops, with the loss of 27,000 jobs, he said its fate served as a warning to other established high-street names. Woolworths, he said, was a company "that did not... change with the times in the way you need to in an increasingly competitive marketplace". Does this not sound just a little reminiscent of Jaguar Land Rover, especially to those about to be laid off by Woolworths?

There are differences, of course. The retail sector, Woolworths included, is scattered throughout the land. The majority of employees will not be highly paid or highly skilled. They may have a chance of another job – although it will not be easy as vacancies everywhere contract. Jaguar Land Rover, although it employs fewer people than Woolworths, has workers whose skills are not easily transferable. Its plants are concentrated in the West Midlands and Merseyside, and its closure could blight a region – a region, moreover, with several marginal constituencies that Labour could lose.

Among the arguments for helping Jaguar Land Rover, the party political one is by far the least sustainable. But nor should emotion govern the decision. Both the Jaguar and Land Rover marques hold a special place in British hearts. Something would be lost if they were no more. But the cruel truth is that Jaguar, if not Land Rover, may be ill-equipped to survive ever more rigorous competition. With appeals for state aid bound to multiply in coming months, the considerations for granting it must be primarily commercial and secondarily social. The Government must be convinced it is not throwing good money after bad.

That Jaguar Land Rover is now foreign-owned makes the decision additionally sensitive. It could be argued that the Indian company, Tata, should have had some idea of what it was taking on, as well as the trend in market conditions, when it bought the company for a knock-down price in June. Might this not be a case of a wealthy foreign company holding British jobs to ransom in the hope of minimising its losses?

Trading conditions are exceptionally difficult across the global car industry. But construction, retailing and services are also facing acute problems in Britain. Is there something intrinsically different about car-making that makes it a special case? After much wrangling, the US Congress decided there was not. But George Bush may decide to advance the money anyway.

The last word on Jaguar Land Rover rests with Gordon Brown. As Chancellor during the failed effort to rescue MG Rover three years ago, he should be well acquainted with the perils that can flow from loans advanced unwisely. His motto should be: creditor, beware.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Junior Web Designer - Client Liaison

£6 per hour: Recruitment Genius: This is an exciting opportunity to join a gro...

Recruitment Genius: Service Delivery Manager

Negotiable: Recruitment Genius: A Service Delivery Manager is required to join...

Recruitment Genius: Massage Therapist / Sports Therapist

£12000 - £24000 per annum: Recruitment Genius: A opportunity has arisen for a ...

Ashdown Group: Practice Accountant - Bournemouth - £38,000

£32000 - £38000 per annum: Ashdown Group: A successful accountancy practice in...

Day In a Page

Read Next

Riyadh is setting itself up as region’s policeman

Lina Khatib
Ed Miliband and David Cameron  

Cameron and Miliband should have faith in their bolder policies

Ian Birrell
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor