It is only a Whitehall whisper at the moment, but the idea is starting to gain traction in government — to resurrect the National Enterprise Board (NEB). Set up under Labour in the 1970s, its aim was to pump-prime industry and act as a holding company for the government’s stakes in business.

It’s becoming clear within government that as the economy stumbles into an ever more challenging environment, it will not just be the banks that will need state support. So, too, could large parts of industry, and as my colleague Dominic O’Connell today reports, the car industry is now knocking on the government’s door for state aid. And as the car manufacturers are being hurt, hundreds of automotive suppliers also face seeing their businesses collapse.

It is dawning on senior Whitehall figures that just because the government will own stakes in banks including Royal Bank of Scotland, Lloyds TSB and HBOS, that does not mean it can force them to write uncommercial business. These banks will be required to help small businesses that are in trouble, but this will not extend to bailing them out.

Such help may have to come from a state bank that could be run under the auspices of the NEB.

To find out what it did you have to hark back to the 1970s when it rescued companies like Ferranti, the British electronics and defence company, which was facing a severe financial crisis. The board also created Celltech, the biotech group which later became an independent company.

If this idea is pursued, it would not have to stick rigidly to what the NEB did. Twenty-five years ago Labour proposed to create a national investment bank. It was listed in its manifesto but was never enacted. The bank would have used government money, some of which was syphoned from North Sea oil revenues, into large-scale industrial projects.

It’s all loose thinking at the moment, but it does give you a sense of the scale of the potential problems that government thinks it could face.

Another variation of this state support was the National Economic Development Council — set up by Prime Minister Harold Macmillan in 1962 to improve the competitiveness of UK industry. It was closed in the 1980s by Margaret Thatcher.

In whatever shape state help does come, every government around the world is conscious that some tough and potentially expensive decisions will have to be made in the coming months.

Dunstone’s cute call

THE decision last May by Charles Dunstone, Carphone Warehouse’s chief executive, to sell half his retail business to America's Best Buy for more than £1 billion is looking cuter by the month.

The deal allowed Dunstone to pay down debt leaving Carphone virtually ungeared, and had the deal been offered today, with the current state of the US retail market, Best Buy would not be able to justify paying that kind of money. And since that deal Carphone’s market value has slumped to £1.3 billion with the vast bulk of this value now tied up in its telecoms business. This week Dunstone will confirm he is looking at a demerger. What that means in effect is that he is looking at all the options, and thanks to the Best Buy deal they are a lot better than they could have been. But visibility on future trading, especially on the retail side, is grim.

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