Business Secretary Lord Mandelson announced this morning that he’s agreed to provide a £27m Government grant to ailing carmaker Jaguar Land Rover, to fund the production of a new, greener, vehicle. Mandelson said the cash will allow JLR to design, develop and build this new Land Rover at its Halewood plant in Merseyside (British jobs for British workers, and all that). The Government was keen to stress the ‘greener’ credentials of the new car today – but it must still be worried about opening the floodgates…
The grant, which is on top of the complicated £2.3bn Automotive Assistance Programme already announced, is coming from the ‘Grant for Business Investment’ scheme – if (like us) you haven’t heard of it, it’s apparently part of the so-called ‘Solutions for Business’ package that you can access via your local Business Link. If it gets EU approval, JLR will use the money to churn out a ‘greener’ version of its Land Rover LRX model – specific details were noticeably thin on the ground, but we’re told it will be ‘far more fuel and CO2 efficient’. So that’s all right then.
Of course, you might argue that £27m is a drop in the ocean in terms of Government spending. After all, at midday today, the Bank of England is set to launch its quantitative easing scheme, an ambitious attempt to inject £75bn of new money into the financial markets in just three months. And Mandelson was doing his best to put a positive green-wash on today’s decision, insisting that the Government was ‘fully committed to supporting the UK automotive industry as it moves to a lower carbon future’ and claiming that this was ‘an important investment for the future’.
The problem is, of course, that it sets a dangerous precedent. After all, Jaguar Land Rover is hardly the only company in difficulty at the moment. For instance, this week credit ratings agency Moody’s has published a list of all the companies it thinks might go bust in the next year (for reasons best known to itself – perhaps so it can’t be accused of being asleep at the wheel again); it includes famous names like Krispy Kreme, Readers’ Digest and Kodak (which presumably make Moody’s a Kodak bear). Why should some of these get a handout and not others?
Yesterday some unusually positive comments from Fed chief Ben Bernanke and encouraging revenue figures from Citigroup boss Vikram Pandit prompted a bit of investor optimism, with global stocks enjoying their best day in months. The rally is likely to be short-lived (the FTSE was back into negative territory this morning) but a few companies might also be feeling more optimistic now about their chances of tapping the Government’s coffers...
In today's bulletin:
Government stumps up £27m for Jaguar Land Rover
Toyota puts the brakes on pay and production
Roger Parry: Where Johnston Press went wrong
City suffers from Cattles' offal year
Do it right: Seven ways to clinch deals in a downturn