David Wighton: Business Editor’s commentary
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A couple of months ago Richard Lambert was calling for an industrial route map for Britain, raising suspicions about possible dirigiste tendencies.
But yesterday, the head of the CBI made clear the limits of that route map and in particular the lack of space on it for the car industry. While carmakers around the world are calling on their governments for bailouts, Mr Lambert is urging Downing Street to resist appeals for special treatment.
The Society of Motor Manufacturers and Traders (SMMT) this week asked the Government for a range of measures including loans. The trade body is coordinating the industry’s response to the economic crisis although the picture is very mixed among the various companies.
Few think that Toyota, which today starts production of the new Avensis in Derby, will be holding out the begging bowl. But fears hang over Vauxhall because its parent, General Motors, has cautioned that it could run out of money within weeks. Vauxhall’s German cousin, Opel, has already asked the German Government for cash should its lifeline from GM be cut and has secured an offer of €500 million.
Other European countries are signalling their readiness to back the motor industry. Both France’s President Sarkozy and Italy’s Prime Minister, Silvio Berlusconi, are supporting the idea of a European fund. But Mr Lambert insists that it is not the government’s job to single out particular sectors for special treatment and points to the dismal record of British government attempts to pick winners.
Efforts to support the car industry in the 1970s were particularly unsuccessful as British Leyland lurched from disaster to disaster. The SMMT and its members would argue vigorously that things are very different in today’s tougher, leaner, more global world.
But the last big government involvement in the car industry came only eight years ago when Stephen Byers, then Industry Secretary, balked at private equity plans to scale back Rover cars. He helped to engineer a more politically acceptable solution by assembling a rival bid with a band of local businessmen with union backing.
Three years after the subsequent collapse of MG Rover, an investigation into what went wrong is still continuing. But it was hardly an advertisement for government intervention.
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No way should these foreign firms get bailed out at the British taxpayers expense. The Government withdrew a bridging loan for MG Rover (a British company then) at the 11th hour in 2005 when a merger with SAIC seemed on the cards. Vauxhall and the rest of the motor industry is now in foreign hands.
Simon Robinson, Burnley, England