Mandy races to Vauxhall workers' rescue

No compulsory redundancies at Vauxhall, after Magna, Merkel and Mandelson strike a deal.

Last Updated: 06 Nov 2012

After Canadian car parts group Magna took over GM’s European business earlier this year, there were widespread fears that, thanks to the efforts of chancellor Angela Merkel, Germany was going to get the best of the deal. Jobs over here, said the Jonahs, would be sacrificed to save jobs over there.

Now Business seccy Lord Mandelson has lent his considerable influence to the debate, writing a no-doubt strongly worded letter to EU Competition Commissioner Neelie Kroes claiming that such a cosy little deal on redundancies would be contrary to EU law.

This isn’t to say that there won’t still be some losses here: up to 600 jobs could still go at Vauxhall’s Luton and Ellesmere Port factories through voluntary redundancy. But that’s only half the number that some feared, and none of them compulsory.

Magna has committed to producing around 148,000 cars a day at Ellesmere Port, including the new Astra compact, due for release in 2016. As for the Luton plant, its future is looking a little more uncertain beyond 2013, although Magna says rather vaguely that it will seek ‘any other possibility to build vehicles’ there. In return, the Unite union has agreed to a two-year pay freeze – a sensible compromise, we think you will agree.

Mandy now has to tackle negotiations over his side of the bargain - how much Britain will contribute to the pot to help keep Opel/Vauxhall afloat. 'We now have a much better outcome than we originally had, but we still have some way to go in agreeing the financing of this and that’s what talks will be continuing about,’ he hedged today. It has been suggested that the German government will be looking for a contribution of up to £400m in loan guarantees – that’s a lot of dosh for a government as cash-strapped as our is right now.

On the face of it, it looks like a pretty good deal for the UK and Mandy. It’s certainly good news for the workers whose jobs have been saved. But we can’t help wondering just how big a concession has really been secured here, and how carefully the whole thing has been stage-managed to make it look like more of a winner for UK plc than it might turn out to be.

Because until we know how much this ‘rescue’ deal is going to cost us, it’s hard to say whether we’re getting value for taxpayers’ money or not…


In today's bulletin:
Last chance saloon for Punch as losses soar
Mandy races to Vauxhall workers rescue
Tesco's Sir Terry wants to fix our schools
Work/life balance good for the bank balance
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