Wednesday, 6 May 2009

Not exactly a ringing endorsement is it?

The perils of blogging are becoming ever clearer to me. My prediction that the Government will not intervene to save LDV is followed only days later by, wait for it, Government intervention!

Whilst I am glad that jobs will be saved, it is hard to view this as a ringing endorsement for the company. The facts are as follows: the Government will provide a short-term bridging loan of £5 million over a 30-day period while new owners Weststar get their finances in place. The key word here is loan. The Government wants its money back and quick. It’s not interested in equity (unlike with the banks) and it’s not interested in running it as a business. Labour Governments have been down this path before with a nationalised car industry, pouring more and more money into a bottomless pit, and they don’t want to go back again. Effectively the Government is saying: “This is your last chance. If you can’t make it work with Weststar, then don’t come running to us.”

One final thought. I do wonder whether political pragmatism is playing a part here. The Government is caught between a rock and a hard place. Do nothing and it effectively sacrifices half a dozen marginal Birmingham constituencies at an election which is currently scheduled for less than a year away. Jump in with both feet and it leaves itself wide open to Conservative charges of wasting public money (which we haven’t got) and a return to the dark days of the 70s and the spectre of highly unionised workforces in nationalised industries voting to strike in crowded car parks.

I don’t see Tony Woodley of the TGWU as a modern day Red Robbo, but the Government will be desperate to avoid that sort of television in our living rooms over the winter months.


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