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Fixing the Jag

Robert Peston | 14:05 UK time, Thursday, 18 December 2008

It's pretty clear that taxpayers are about to provide financial support to Jaguar Land Rover.

That seemed to me to be the subtext of the mildly opaque statements on this given to me today by Peter Mandelson, the business secretary, in an interview.

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The car manufacturers' problem is a looming crunch on debt that needs to be refinanced.

It has told Mandelson that it can't secure the finance from the private sector in the normal way. So it's asked the government - or us as taxpayers - to fill the gap.

jaguar carsMy strong sense is that Mandelson has no doubt that Jaguar Land Rover - which employs 15,000 here - should be saved.

A good chunk of its business - though not all of it - was viable before the economy started to contract fast and car sales dropped like a stone.

And Jaguar Land Rover is responsible for a disproportionate amount of precious UK-based research and development in the automotive sector.

The main outstanding question over whether it should be propped up by us is whether its owner, Tata of India, really does lack the ability to obtain the finance elsewhere.

Tata is a huge group, with a dizzying mixture of interests all over the world. It is under financial pressure, but it remains a formidable business force.

It would plainly be wrong for taxpayers to lend to Jaguar Land Rover or to underwrite lending to the group if there were other sources of finance available, but these were somehow seen by Tata as too pricey.

British taxpayers must be the lenders of last resort - not a cheap source of funds in a world where the cost of capital has risen.

It's all very well for Peter Mandelson to insist that he would only save businesses that are of strategic importance to our economy and would be sound in a world where credit was flowing freely.

Jaguar Land Rover would tick those boxes.

But he also needs to be mindful - in advertising to the world that he dare not let too much of our relatively small manufacturing sector disappear in a recession that seems particularly horrible - that he doesn't become the lender of first resort to canny mutinationals.

Comments

Page 1 of 5

  • Comment number 1.

    Tata can sponsor Ferrari in Formula 1 but cannot stump up for two of its own subsidiaries?

    And they get rewarded for this by getting a government hand out?

    Something is very very wrong with this.

    One step futher towards bankruptcy.

  • Comment number 2.

    Correct me if I am wrong but wasn't government policy to remove Gas guzzlers from Britains roads by imposing massive tax disincentives to owning one. This collapse of Jaguar should surely be a good thing from that point of view?

  • Comment number 3.

    Why Jaguar Land Rover and not Vauxhall, Honda and Nissan?

    Is this the return of the British Motor Corporation?

    Why was Rover allowed to die, then?

    Do we need the gas guzzling vehicles produced by these factories?

    Are export markets prepared to buy these products?

    These are all valid questions that Lord Mandelson has to answer and justify.

    Let us see a structured argument supported by verifiable facts and figures.

    Beofre taxpayer money is invested the taxpayer must be allowed to see the business plan.

    What do we get for our taxpayer pounds?

    A set of wild assertions by a politician famous for spin does not constitute a commercial argument.

    Or is it really to protect jobs in Labour Midland marginals? Back to the Seventies?

  • Comment number 4.

    Yet another demonstration for mixed messages from the Government.

    In one hand they are trying to discourage us from buying environmentally unfriendly 4x4s and gas-guzzlers, whilst in the other they are using our money to prop up one of the very companies that builds them.

    What hope have we got?

  • Comment number 5.

    Yes of course a declining business (currently owned by a foreign multinational) which has been struggling for years ticks all the boxes.

  • Comment number 6.

    The Japanese banking crisis of the 1990's is well documented. Google it and you will find many interesting articles.

    The following is a very brief summary of the first part of the thesis written by one of the top bankers who worked on the crisis daily for 7 years.

    The build up to the financial crisis (and note that they recognised it as a “financial crisis” not a childishly worded substitute “credit crunch”).

    1) When the first institutions started to fail the government decided that they would not let depositors lose money as this would risk runs on banks.
    2) Shareholder capital was used in the bail outs and all management of the institutions was removed
    3) Press and public complained that failed companies should be left to rot in their own mess.
    4) By 1995 all support systems had failed, and the government resorted to using taxpayer's money to bail out the failing institutions.
    5) The government argued that by getting preference shares they would act as an investment for the taxpayer in the future.
    6) Despite point 5 the final bill for the taxpayer was 17% of GDP by the time the crisis was over
    7) 1997 the first bank failed due to over priced real estate.
    8) Government injected cash into this bank but asset depreciation was larger amount than injected cash.
    9) The bank was nationalised
    10) Unforeseen contagion effects then rippled through the real economy.
    11) Banks lost trust in each other and Japanese ‘Libor’ went up sharply
    12) Bank of Japan started injecting cash into the system since inter-bank lending had all but dried up
    13) Yamaichi bank (Japan’s 3rd largest) collapsed caused by revelation of its off-book liabilities.
    14) The whole system fell apart.

    That is a brief summary of the first pages of the report, but makes interesting reading. It does not take a yuppie with a blairite degree in bankin-n-finance to work out the similarities to the current problem in the UK and just where the future may lie. As many on this blog have said before, until the banks declare their off-book activity we haven't even started the banking crisis.

  • Comment number 7.

    If Tata can't refinance Jag - we'll have it back for a peppercorn by nationalising it. Mandy can then show us what a brilliant manager he is by making it viable in public ownership, then it can be sold into private ownership for a fat profit.

    And pigs might fly.

  • Comment number 8.

    Why not just go all out and nationalise all that's left of British industry. A straw poll of my work colleagues indicates overwhelming support for this course of action.

  • Comment number 9.

    We seem to be in the era of "Corporate Blackmail".
    Give us billions or we'll go broke and cause an unemployment disaster, of we'll ruin the economy.
    It used to be the unions that blackmailed the country.
    Now it's companies.
    Poor old Woolworths didnt have enough clout to blackmail anyone.
    Who's next?

  • Comment number 10.

    Car making by these two mainstream names is hardly cutting edge. I do not see they have anything very worthwhile to contribute to vehicle development - they are more like mini me versions of the US car industry. If Tata cannot fund them; then they should go and leave room for new and innovative automotive firms to arise in future.

    Most of the jobs at their plants are not high skilled and no more worthy of being saved, probably less, than those found in dozens of specialist small enterprises. The real talent would soon find new jobs with emergent nations' car industries like the MG Rover staff who went to China.

  • Comment number 11.

    Wait a minute, isnt Jaguar now owned by TATA?

    So what the hell are we the british taxpayer doing bailing out Another company.

    I think I will register myself and then ask for help to pay my bills

  • Comment number 12.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 13.

    On another note I suppose Mandy will now get a free jag to drive around in

  • Comment number 14.

    The Govt should receive Shares in Jaguar Land Rover equal to the value of its investment.

    Why treat them any different from the Banks?

  • Comment number 15.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 16.

    I agree. Tata sponser F1 but we sponser Jaguar/Land Rover? And what about all the small businesses going bust after paying their taxes diligently for many years. Who will help them. Their employees jobs are just as important as any others.

  • Comment number 17.

    Of course many business will suffer from any deflation, not just Housebuilders or car manufacturers.

  • Comment number 18.

    Stumping up taxpayers money for Jaguar is crazy. Has anyone done a study to find which companies would benefit most from taxpayers money? No. The only reason Jagure is chosen is that it makes the government look good.

    If the world is in recession how long will it be before anyone is ever going to buy a Jag again? For goodness sake, if the government is going to throw around money, throw it in the directon of companies that have a market.

  • Comment number 19.

    The big problem is that for many years workers have received pay rises lower than the real rate of Inflation, and have had to borrow money to make up the difference.

    Now this is all coming home to roost.

    I'm waiting for my Gas Bills etc to start to Deflate.

    Until then I will treat any talk of Deflation with great scepticism!



  • Comment number 20.

    Oh yes, and how about a nice big fat pay rise for the Public Sector?

    Say about twenty percent....

  • Comment number 21.

    Jaguar Land Rover is an Indian company.

    If it was so much in our national interest to keep as a business then it should never have been sold, or should have been nationalised before.

    15,000 jobs is not that much of significance, or it wasn't that many when MG Rover needed assistance.

  • Comment number 22.

    Ferrari? What a loan form the UK taxpayer? Strange times indeed. What next, a ticking off for Rolex?

  • Comment number 23.

    Relieving John Presscott of his cabinet and er,... 'other' duties obviously was a big mistake.

    Forinstance,since he got rid of his two government Jag's,.... the economy's completely tanked.

  • Comment number 24.

    Why bail out a manufacturer of cars that nobody wants to purchase now or in the future? Sad for the workforce, but the writing has been on the wall for some time, the era of large "Gas-Guzzlers" is firmly at an end.
    Any Government bail out will prolong the inevitable. Let the fittest survive and the weakest fall.

  • Comment number 25.

    It seems The Jaguar couldnt suvive the law of the bungle in the jungle and will be joining the fat cats that s at on the taxipayerrs mat purring for some milk from the pollytitians tryingk to save inkland parkerrs from being blotted out by deflation

  • Comment number 26.

    Seeing as there are very few truly owned British companies left and these foreign owned companies provide the work for thousands of the British people it is the right thing to do.

    As long as it is a genuine requirement and proved to be such.

    The cost of unemployment in the long term if these jobs are not saved would be astronomical.

    The jobs brought in by foreign investment in the 80's have to be protected for it is unlikely we will ever be able to attract such investment in the near future.

    New jobs cannot be created at the flick of a switch.

    This recession will end sometime so even if Britain does lag behind others we do need companies who are fit enough to step up a gear when it does.

    Unlike the VAT fiasco it will be money well spent.

  • Comment number 27.

    What I cannot understand is why someone who is unelected by the people of this country is making so many decisions on our behalf.
    Please do not try to tell me Mandelson is only there in an advisory role.
    Is his appointment morally right when we know his background.
    Who is in charge Mandelson or Brown.

  • Comment number 28.

    If they are introuble then let the Indian Government bail them out. They lorded it when they bought the Companies but now want British tax payers cash.

    Why lend to an Company who took risks and obviously overpaid for a declining asset when honest working people are loosing their houses and genuine British businesses are closing each day with not one ounce of Government support
    Typical Mendalson rubbish
    Perhaps Tata own a yatch.

  • Comment number 29.

    But surely we all trust the judgement of Lord M ?

    It seems he's in full "picking the winners" mode now. Up goes the famous cry: "The Man in Whitehall Knows Best !"

    Seriously, I am pleased to see you enter a reservation, Robert. This way of conducting government is just a lobbyists' dream.

  • Comment number 30.

    The government must not under any circumstances bail out Jag/LR.
    It is owned by Tata and they have enough to sponsor Ferrari in F1 so they can darn well support there own company.
    This is as bad as NR sponsoring Newcastle FC.

    This profligacy with taxpayers money has to stop!

    Never in the history of the world has a government been so dumb

  • Comment number 31.

    Many of you are showing your plain ignorance by describing Jags and Land Rovers as "Gas Guzzling" - the vast majority of sales of JLR sales are diesels. Compare the fuel consumption and CO2 figures for a XF diesel:

    http://www.autocar.co.uk/SpecsPrices/SpecsAndPricesEdition/Jaguar-XF-2.7D-V6-Luxury/53043/

    Or a Land Rover Freelander Diesel:

    http://www.autocar.co.uk/SpecsPrices/SpecsAndPricesEdition/Land-Rover-Freelander-2.2-TD4-S/49650/

    with

    A Ford Mondeo hatchback:

    http://www.autocar.co.uk/SpecsPrices/SpecsAndPricesEdition/Jaguar-XF-2.7D-V6-Luxury/53043/

    Yes if you look at the supercharged V8 RangeRover it has pretty appalling fuel consumption and Co2 but in reality hardly anyone buys these models. I think that BMW said recently that over 75% of it's larger cars were small-engined diesels last year.

    Figures were produced last year also that showed a mich bigger differance would be made to the UKs CO2 emissions by reducing Feista sized card consumption by 5% than by banning all large cars.

    Finally (I've nearly finished!) this is the sort of high-ticket, value added product that we should be building in the UK.

    However I'm a little suspect about the money requirements for Tata though as it about to sponsor the Ferrari F1 team - stange I thought that they had no cash!

  • Comment number 32.

    Tata have owned Corus and Jag_LR for eighteen months and run out of cash already.

    Great management!

  • Comment number 33.

    I can't understand how a multi country conglomerate should only ask us for a hand out

    Unless of course that conglomerate grew on the back of cheap credit.

    If Tata are over extended, then sell some assets or retrench. I'm sure someone else might step in to pick up a gem like Jaguar/Land Rover if the Government provided the same loan guarantees to them

  • Comment number 34.

    Why have the BBC removed from their website the news that TATA (Owners of Jag/LR) are sponsoring Ferrari in F1?

    Was it under orders from Mandy?

    Is it because of the outrage that will ensue when Mandy bails out Jag/LR effectively paying for Ferrari to compete against the British based McLaren team and Britains own Lewis Hamilton?

  • Comment number 35.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 36.

    Have I got this right.

    This is the same as getting a loan from yourself to make your own car and then getting a loan from a bank you own and lent money to so that you can buy the car from yourself.



    Is this the same as

    'Look into my eyes, not around my eyes, but into my eyes, 1, 2, 3 your under'

  • Comment number 37.

  • Comment number 38.

    The way to save Jaguar and Land Rover is for people to buy one, if no one is buying them, whats the point of saving it??
    If its too expensive to buy and run them then let the market takes its course.
    We saved the bankers, we cant save their cars too.

  • Comment number 39.

    The Govt should insist on high Interest preference Shares (just as they did with the Banks).

    Sauce for the goose sauce for the gander.

  • Comment number 40.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 41.

    This is all absurd!
    I'm angry, I'm seething, I'm ..... too mad to say much else.
    When are the bail outs going to stop.
    Tata knew the risks, they knew what the loan arrangements were in advance. If they paid a billion for a marque that's their problem, well done Ford.
    The quicker the Govt stop propping things up and let the weaker businesses fail the better position we will be in to get over it.

  • Comment number 42.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 43.

    Jaguar-LR is probably a marginal business and unlikely to be profitable for some time. Tata borrowed heavily to buy it from Ford and is now over-extended. Call Tata's bluff. If Jaguar-LR really is viable someone else will walk in and buy it.

  • Comment number 44.

    BBC dont support the Labour party
    I dont think they do
    All of us here agree
    Some might say otherwise
    Each of us should make up our own mind
    Dont you think

  • Comment number 45.

    Is it me or does Mandy look like he forgot to apply the make up

    very unflattering camera angle showing his "sheen"

  • Comment number 46.

    Jaguar LandRover is an important employer, and provider of business to suppliers, but that hardly makes it "strategic" - it makes cars, not fighter-jets! It makes sense to help the firm, but only on commercial terms; as with the support provided to the banks, any loan should carry equity rights plus hefty interest.

    If the taxpayer helps Jaguar, he is necessarily helping Tata and, indirectly, India. Nothing necessarily wrong with that, since India is a friend and trading partner; but we should attach a condition. I do not usually use capital letters in these posts but, just this once, here is the quid pro quo that we should require from India in return for this help:

    REMOVE YOUR HEFTY TARIFFS ON IMPORTED MANUFACTURED GOODS from the UK!

  • Comment number 47.

    I am sure that all 25,000 woolworths staff will be so pleased that the taxes they have paid and will continue to pay right up until the final day of work will go to help bail out anIndian owned car company while they are thrown on the scrap heap once again beggar the good old british people help the foreign owned businesses you couldnt make this government up can you see foreign owned companies helping british ones before there own I cant

  • Comment number 48.

    Reaching or at peak oil and our brainless gormless politicians are bailing out a foriegn company that produces gas guzzlers using our money???

    HAVE I MISSED SOMETHING HERE ???

    FRAUD!

  • Comment number 49.

    It's difficult to detect any consistent economic strategy from the government. Plainly it can't keep saying yes to everybody.

    But the political strategy is transparently obvious. Do whatever it takes to get re-elected. If that means bankrupting the country, so be it. If it produces a republic as a by-product of public dissatisfaction, so much the better. Mandelson is of course a former communist.

    It is a completely amoral position to adopt and he cannot complain if he himself is subject to amorality in return.

  • Comment number 50.

    Is this piece just a tester for public opinion on behalf of government?

  • Comment number 51.

    There's a strand on this subject within the Daily Politics Blog.

    If we put taxpayers money into the motor industry, surely we should own at least part of it - just as we now have a stake in some of the banks...

  • Comment number 52.

    31 scouseflyer

    Well getting a big handout in one hand balances a fun expenditure on the other. Why dont we just have the Mandelson F1 team. The honda team of 600 people are available, unless that is who Tata want to use. I do not like the smell of Tata. They tried to float (recently) a 10% paycut as a solution at Corus when they reportedly had a 40% fall in the order book. So 10% would reduce the layout liability if a large cut in the workforce had to happen but would be most unlikely to save the opertain unaltered.

  • Comment number 53.

    Before the era of cheap money from the East,;when a company wanted finance they went to the shareholders and offered them shares at a discount, a rights issue.

    Thus the company borrowed long when they needed long money.

    Then cheap and plentifull money arrived and large profits could be made by using this rather than shareholder funds.

    The problem was that this was short money and it was being used for long investment.

    In the end of course the short money dried up and the finance directors screamed at everyone that they were going to go bust unless someone, HMG for example,would let them have some cash.

    The money would be available from shareholders or investors on the right terms. Terms which may of course be unpalatable to the current owners, but better than going bust.

    If TATA do not wish to share part of their equity let them put up the money themselves. If they do not wish to put up the money let them sell the business for £1.

    If no one wants it for £1 then it is not viable and HMG should not support it.

    The last thing that should happen is that the taxpayer should be forced to support something that he would not invest in voluntarily with his own money.

  • Comment number 54.

    This is a tricky decision for the government, yes Ratan Tata should be stumping up here as well and the government should seek to take a stake in the company to ensure the money is well spent. The motor industry is strategically crucial to the economy. People in the media have been comparing this to when British Leyland was nationalized in 1975 and saying that the government shouldn't act. Well BL was a classic example of how NOT to do a bailout.

    BL had 3 divisions, the volume car business Austin-Morris, which was responsible for such automotive horrors as the Allegro, Marina and Maxi and for the crippling losses and which needed massive investment for new factories and models, the specialist car business, Jaguar, Rover and Triumph which had a good but aging product range and needed investment to replace it's current models and the truck and bus division, ditto. Had BL gone under over a million people would have lost their jobs and not even Thatcher could have permitted that! Once nationalized the government had 2 options, run down or sell off Austin-Morris and concentrate on the upmarket cars and the trucks or provide huge investment to enable the entire company to develop new products. In the end the government did neither, BL was drip fed investment which meant that it couldn't replace it's poor model range. The Austin Maestro should have been released in 1977/78 wasn't released until 1983, by which time what would have been a groundbreaking car was hopelessly outdated. The government at the time nationalized BL purely to keep people in work and didn't address the company's underlying problems. It was only when Sir Michael Edwardes was appointed Chairman in 1978 that there was any attempt to run BL on a commercial basis, but by then BL's image and sales had shrunk too low to try and be a big player in the volume car business and the future was just a sad and inevitable decline into extinction.

    I hope today's government doesn't repeat the mistakes of 30 years ago! We've precious little car industry left and we must hang on to it!

  • Comment number 55.

    Get shut of this corrupt Government. They let Woolies go and other Busnesses, but to deprive them of their big cars. Oh we'll help them out, we can't do without our 2 JAGS.

  • Comment number 56.

    If you look at the recently-published figures for new car sales, you will see that Jag LR is by no means alone in seeing volumes crash. One problem with helping Jaguar is that other firms are quite entitled, morally, to ask for equivalent help, and some are bigger (and would therefore need more funding) than Jaguar. Are we going to bail out the entire auto industry (starting with Vauxhall and Ford)? As others have said, nothing has been done to help 30,000 Woolworths employees. Admittedly, auto firms are different because of their dependent suppliers, but it remains difficult to justify treating them preferentially.

    Therefore, it is essential that taxpayers get equity in return for help. Essentially, if we save it we should own it!

  • Comment number 57.

    Every day this government does something stupid. Bail out Jaguar/Land Rover? Two once proud British companies traded first to the Germans then the Americans and now the Indians. Why did Tata buy a company it cannot afford, why was Tata allowed to buy it?
    The British taxpayer has bailed out the banks to a total cost yet to be determined. Now it's being asked to bail out a private company.
    Any money given to them will be out of this country as fast as an electronic transfer takes never to be seen again.
    Any support given should be to Nationalize Jaguar/Land Rover as soon as possible. If they can't cope lets have the company back in British hands

  • Comment number 58.

    The government should seek preference shares in Jaguar Land Rover or guarantees from Tata. Maybe 50-50 against matched funding from Tata.

    Of course Tata could just take the brand and move production to India at a fraction of UK labour costs!

  • Comment number 59.

    It would be outrageous to ask UK taxpayers worrying about their jobs and savings to bail out Indian billionaires who are only too ready to flaunt their wealth in good times. The lack of demand for these vehicles is a massive clue that we should not be subsidising their prodcuction?

  • Comment number 60.

    Tata to sponsor ferrari
    Apparently they have cash
    Tata own jag/LR
    Apparently they have no cash

    Seems pretty strange
    Tata asking mandy for money
    Of course they're vital
    Recession looming
    Your out of work

    Gordon brown saves the day
    Ordinary folk rejoice
    No need to go to work
    Everything will be paid by hmg

  • Comment number 61.

    #44

    I thought I noticed a distinct change in the attitude of the BBC towards Labour a few weeks back. Forget the exact story but they arent really toeing party line anymore.

    Also gearing up for an election perhaps?

  • Comment number 62.

    Tata must have lobbied very hard for this. Afterall, there are ££££££££ to be had cheaply. Like the investment banks who paid themselves bonuses not far from what they took from the tax payers. It is a good bet Tata has more than enough stashed away to keep Jag/Rover running.

    To up the game Tata may make a few people redundant but Tata won't let Jag/Rover close. In the unlikely event of Jag/Rover going under without handouts, I am sure there are keen buyers for the business.

    I hope Mandelson will use all his smartness and assertiveness to get the last penny worth of profit for us, the silent and hopeful tax payers. A target of at least £1bn guaranteed profit in 5 years and majority ownership would be OK.

  • Comment number 63.

    One reason Ford off-loaded Jaguar was because it was unmanageable and losing money at a vast rate.

    I suspect Tata was only interested in buying the brand, not the assets, particularly the people.

    If the taxpayer has to fund Tata to save jobs then it has to be prepared to fund forever with no return and it has to ensure that jobs and assets remain in this country.

    Remember BMC, urrgghhhh, how much did we waste on that lost cause

  • Comment number 64.

    This looks like it would be a decision driven by sentiment rather than logic

    Aside from providing the ministerial car pool, I don't understand how Jaguar-LR could be described as a strategically important business anymore, if it ever was. JLR have been losing money for years. Ford bought them and offloaded them to Tata. That was only 9 months ago? So Tata knew full-well that JLR was a money-losing but prestige brand and would need a lot of financial support.

    I suspect the govt is testing reactions with this interview with Mr Peston. Tata had $64bn turnover and $6bn profits last year so should be able to afford to support JLR for a year or two....... if they've changed their minds or developed cold feet then they should sell the company for a $ to Porsche/VW or someone else.

    Jag and LandRovers may or may not be gas-guzzlers but they definitely are expensive, heavy, luxury cars and sales will be very slow/low for the forseeable future.

    Can't see many of those Woolies employees using their redundancy pay on a down payment for a Jag or a Land-Rover, can you?

    Is the govt to bail out every single car company? Or let some go under? Vauxhall etc? And for how long? If you bail anyone out then you need equity in return. And what about all the construction companies that are about to go bust? Construction is of more strategic value so will they all be supported.

    Soon the govt coughers will be well and truly dry. A dry cough will be all that will remain of this once great country. Hack hack hack.

  • Comment number 65.

    Peter Mandelson has twice resigned from office in very dubious circumstances.
    He is man in which deceit follows him like a shadow He flirts with it like a two bit hooker.

    The fact that has been made a 'Lord' illustrates just how sick the political system is.

    I believe nothing Mandelson says, nothing at all.

    The vanity and arrogance of our political masters are driving this country into the ground. I feel already it has gone too far.

    No way should Jaguar get taxpayers money. Tata should pay.

  • Comment number 66.

    Robert - is it not good news that the government is supporting Jaguar and Range Rover. These are expensive yuppy cars, and it suggests that there will soon be a need for them again in the short term.

    If such cars are deemed to be in such demand that their production needs to be subsidised then this speaks volumes for the economic recovery that we can expect in the next 6 months.

    It seems to me that this is the turning point.

  • Comment number 67.

    At the end of this article I noticed that the words "canny mutinationals" are used. The question is was this a deliberate typo because lets face it there are some dogs out there and I suspect Tata might just be in a long line of opportunists. Is it any surprise that all of a sudden companies that were seen as sound now find themselves short of a little cash when the government has wafted the dinner bowl of bail outs under thier noses.

    It's a bit of a dogs dinner alright and no money should be offered unless a company provides full audited accounts, access to order books banking etc. Especially with mutinationals who can move profits and monies from subsiduarys with a lot more the ease than it took lassie to get home.

  • Comment number 68.

    Governments budgets cannot be compared with Company or household budgets.
    Companies can close or downsize and shed labour to increase efficiency or survive. Governments do not have this option, the shed labour still need to live and until they can again support themselves the state has too step in. I would like too know from the bloggers on here what if any is the alternative to saving jobs. The economy will inevitably pick up again, the state can then reduce its support.
    This is surely the civilised option.

  • Comment number 69.

    How about they take the money that Tata wants, and put it up as a long term loan for the company that is prepared to take over the Jag-LR plants and workers and will produce a low emission, low consumption car instead of a gas-guzzler. The terms would have to be part ownership by the British government, to be paid off in due course, and that the new company must be 100% British.

    Two birds with one stone, jobs saved and Tata thoroughly ticked off.

    I'm not usually one for protectionism, but the current government's seeming lust for bleeding our money abroad is really starting to get on my nerves.

  • Comment number 70.

    Jaguar is one company that we really do not need. Its products are for the wealthy, and it behoved those who took it over recently to have ensured that they had funds enough for any eventuality. Wrong business decision, so ask the taxpayer for support? Not with my taxes!

  • Comment number 71.

    The Government is keen enough to steal from our pension funds in the shape of equity in banks - why not take an equity stake in Jag/LR in return for injecting some cash and guaranteeing loans.

    After all Tata fleeced Ford when it acquired Jaguar/LR, and the value should have decreased since then given the drop in the market, so why shouldn't the government take advantage of the situation.

    Should the Government put this to Tata, Tata will no doubt "find" the money elsewhere very quickly.

    I'm afraid our British politicians will be out-matched very quickly by canny Indian business sense.

    Even with money guaranteed by the Government it will be only a matter of time before the essence of the operation moves to India, where costs are cheaper and there are plenty of bright people who are more hard-working.

    Should by some stretch of the imagination we gety an equity stake in the business we might be able to keep more jobs in Britain.

    Far better for the government to immediately guarantee loans to the house-building/construction sectors, where 100000's of jobs will be saved, with no danger of them migrating overseas.

  • Comment number 72.

    #52 - Glanofan

    I see that the BBC are reporting Corus staff have now accepted a 11.5% pay cut.

    I wonder how those staff will feel if the govt does bail out Jag/LR and their staff don't have to take a pay cut of this scale

    Also, I don't follow F1 racing but I suspect the Ferrari team must be thinking 'Do we really want this Tata mob sponsoring us? Everything they've touched recently seems to go mounds-up'

  • Comment number 73.

    As someone who had retired 3-years ago and has had to take some part-time employment to make ends meet, I find it unbelievable that my taxes are going to support overseas industry giants.

    I can't believe Jaguar LR can ever be made viable. Ford only purchased it for the names, after all if you had a portfolio of Ford cars wouldn't you want some 'old historic' names that smelt of old money even if they have no place in the world except for, people that can't or will not buy German or are farmers and the military that need utilitarian vehicals for their work.

    Why wasn't Worcester pottery saved?

    I'm hoping the government will provide assistance to my employer and provide a retrospective final salary pension. I can only live and work in the hope that I'm really dreaming and will wake up from this current night mare and find mt heatings bill are really at zero (taken care of by the government) and I have a nice new XF in the drive to replace my aging pedal cycle.

    I feel really sorry for the REAL hard working families that will have to clear up the borrowing. I can only send my appologies as we as the 60+ generation have allowed this to happen.

  • Comment number 74.

    This says something rather profound (albeit not novel) about globalisation. Globalisation is meant to spread risk, but in the end, we see that it is better at spreading exposure. We can now catch a cold from anywhere. And everyone is sneezing.

  • Comment number 75.

    Enough is enough. Is this proposal in response to a request from John Prescott? After all, he has two Jags, hasn't he?

  • Comment number 76.

    A number of the above need to get some of their facts straight. The government needs to bail out these companies if no other source of revenue can be found because Britain has lost almost all of its volume car manufacturers.

    British Leyland (not the British Motor Corporation) failed due to poor management, not as a total result of its nationalisation.

    Austin-Rover failed due to the country not accepting that it could make a good car after British Leyland.

    The Rover Group failed as it fell into the hands of two companies (BAe and BMW) who only made matters worse before it became MG Rover under the control of Phoenix which riddled the company in debt.

    Aston Martin Lagonda did fail but was saved by Ford and is now doing well due to its independence, so is Noble, Caterham and Ariel. All of which are small companies but they show that Britain can make cars good enough for the world.

    Jaguar Land Rover IS the last affordable British car company which makes cars in large volumes. The company is innovative and its XJ cannot be a 'gas-guzzler' as if you had seen a Top Gear report you will have seen its amazing performance in an economy run.

    Finally, Land Rover is cutting emissions from its cars. TATA also owns the old badges such as Rover, so maybe economical small cars would return if the money was available with the Rover name.

    Lastly, Honda and Nissan (which only makes dull cars) aren't British, they have workers here but its not the job of the government to keep foreign plants going. Vauxhall however, couldn't be saved by government funding anyway as its a victim of rebadging, and has been for the last 30 years under the total control of the lost cause which is General Motors.

    Rant Over

  • Comment number 77.

    Tata only paid Ford £1.5bn a few months ago and the net asset value must now be well below £1bn in today’s market.

    An injection of £1bn by the taxpayer into Jaguar Land Rover would therefore require full nationalisation. The government would then be faced with providing the necessary investment capital on top, without which the company does not have a viable future.

  • Comment number 78.

    I do feel sorry for the individuals whose jobs are under threat.

    However we need to look at the bigger picture.

    Our needs and aspirations are rapidly changing. Thrift is the new mantra, forced upon us individually and collectively and visible thrift may well become a manifestation of that.

    In the post-consumption age, there will be even less of a place for 'luxury' vehicles than there currently is. They may well become demonised and spat upon in the same way as Chelea tractors presently are.

    Studies have shown how few owners/drivers actually use a fraction of the gadgets and toys (never mind mechanical and electrical power)that are routinely built into all our vehicles. We have been seduced into believing that we 'need' them and that successive generations of 'new' models need even more embelishments.

    Perhaps in the new age, buyers will be attracted to models that boast about their reduced sophistication and easier repair and maintenance (some cars allegedly need much of the front end dismantled to change a lightbulb).

    This is a longwinded way of saying that JLR should be left to market forces. If someone sees a future for the business it will be bought at the current market valuation. If not, it will end up like Woolies.

    No public sector intervention should be contemplated, at any price.

  • Comment number 79.

    Given Mandelson's checkered history in deals of this nature, is someone shadowing him so that we can the taxpayer can be assured of the highest standards of integrity are upheld? He's not visiting an Indian Yacht anytime soon is he?

  • Comment number 80.

    Rather than give Tata a loan why not just buy Jag's and Range Rovers as company cars for senior civil servants. This will tide Jaguar over until the market recovers and be a useful stimulus for the economy as well as suitably rewarding our undervalued public sector workers. The program could be broadened to buy Aston Martin's and Rollers for key contributors in the treasury and FSA.

    I was going to suggest buying Jags and dropping them from helicopters but that probably wouldn't work.

  • Comment number 81.

    The IT industry has been hammered by work going off-shore, primarily to india and tata are one of the bigger outsourcing groups. And I've worked on govt contracts where the bulk of the work has been outsourced to india, that is my taxes are being used by my govt to send my work to india.

    Now the producer of gas-guzzling monstrosities, owned by an indian company wants to use my taxes (from the job I had to get at a reduced rate because my job had moved to india) to keep their profits up.

    Now I'm getting a little confused about exactly whose interests my govt's serving here.

    perhaps indian billionaires enjoy boat trips.



  • Comment number 82.

    On the basis that even a stopped clock is right twice a day, Mandelson said something true early in that video: the problem is "a sharp drop in demand".

    And, IMO, that's the root of it: if they could sell their cars, they'd get the private financing they want.

    But they can't.

    So, if there's little demand for their cars right now, what's the taxpayers' money going to do?

    Are we going to give them money to produce cars at pre-crunch levels... and then just leave the cars to rust?

    Or is this some sort of Keynsian notion that, if you pay a man to build a car and then pay another man to dismantle it for scrap, this "stimulates" the economy?

    Finally, if their Indian owners don't want to keep Jaguar going - and no-one else wants to buy it - they can sell the business to the UK Govt for a quid.

    (or get bailed out by the Indian government)

    The idea that the UK should give them any money just seems daft.

  • Comment number 83.

    Where are the grownups?

    For God's sake - when are we going to call time on all this nonsense? Minister's actions are plainly mad - driven purely by the desire to keep their jobs.

    Giving money to Jaguar? They're owned by a foreign company. The proper course is for the company to be bankrupted and sold for its actual value (ie the price anyone is prepared to pay for it).

    If that means selling bits off piecemeal and jobs going - tough. That's how the system works. And that's what should happen to any business that can't make a profit. It really is the only way to draw a line under a bad situation and move on.

    Businesses that don't make a profit aren't businesses at all.

    Take a lesson from the Chinese - when Rover started going down the tubes they just bought the bits that were worth anything. Very sensible of them.

    You can't preserve a company's value or add to it with subsidy. Value comes from profit. if people aren't buying what business makes - for whatever reason - then bankruptcy is nature's way of moving on.

    By continuing to pour OUR money into black holes the Government is not grasping the nettle. What are these Ministers thinking of?

    The situation will resolve itself anyway - through unstoppable market forces. All the Government can do to help is to work WITH the grain of such forces not against them.

    I wish we had a Government that would do the right thing regardless of the short term hardship it will inevitably produce - not piss about as this one is.

    No wonder Churchill is remembered with respect. Blood, sweat and tears, chaps but that's what we have to do.

    Would some grownup kindly send the kids to bed and sort the mess out.











  • Comment number 84.

    I expect that nice Mr Mandelson has a Land Rover or two at home. I'd hate for him to have trouble finding spare parts.

  • Comment number 85.

    The last time Mandy had this job he was faced with the closure of Rover. Not much was done then was it?

    That aside, as a last resort yes but provided it's in return for shares as per the bank deal. There is no point in lending money out that may not be paid back. But buying back some of our country whilst it's cheap is not such a bad idea (as long as government doesn't start to think they're capable of running any business bigger than a sweet shop).

    By the way isn't this the very same government that has declared war on this type of car & has done all in their power to close them down? What's changed?

  • Comment number 86.

    There's an American phrase which describes where the government is going with this "news" story.

    That phrase is "let's run it up the flagpole and see if anyone salutes".

    As with the PBR, the news is allowed to get into the public domain in order to test public reaction. If this blog is any guide, the public reaction will be negative, for three main reasons:

    1. Why rescue Jaguar whilst not rescuing other equally/more important employers?
    2. Why rescue a company which produces thirsty vehicles which customers do not want to buy?
    3. Why use UK taxpayers' money to bail out a foreign company?

    If my reading of the public response is right, helping Jaguar could be very unpopular.

    It seems to me that the only way this is workable, politically, would be if a large equity stake was received by HMG in return for help to the company. 'Helping' Jaguar would be a vote-loser; taking it over might play much better with the electorate.

  • Comment number 87.

    This government is showing itself to be as rotten and corrupt as any in history.

    Tata can't find money?

    The government readily giving cash to banks and big business, yet is looking to sell at least some of one of it's prize assets in Royal Mail.

    These people are taking the rise, and we should wake up to their scams and shenanigans.

    Look at PM- resigned twice in disgarce already.

    On your bike, matey-boy, and don't come round here no more.

  • Comment number 88.



    "Curiouser and curiouser" A possible "bail-out"
    by us of an Indian owned car maker so they can carry on making cars that no-one is going to buy?
    Slithy toves must be gyring and gimbling
    like crazy .
    Can't quite get my head round this latest item from the mad-house.
    Will just have to keep taking my daily fix of
    Preston - until Truth, or Robert, makes all things plain.

  • Comment number 89.

    Can't Mandy just call Tata's bluff? Let Jag go under and then nationalise or recapitalise it!

  • Comment number 90.

    Tata's long term business plan has always revolved around moving the manufacture of some or all Land Rovers to India.

    There is huge demand there for them, but the import duties on new models makes them prohibitive for most people. There is also a rising urban middle class market for cheaper Indian made Jaguars, both in India itself and throughout the rest of Asia, especially China.

    Not giving them this billion quid provides them with the excuse to shut up shop in the UK. They have enough unsold cars to meet the reduced western demand until they can commence manufacturing in India.

    This will happen in the next 5 years anyway, so we are only postponing the job losses to a time when the UK will still be in recession and they will hurt just as much.

    If there is tax payers money available to bail out manufacturing companies, can it please be reserved for British owned companies. I'm sure Tata can find the cash they need, but if they can't surely the Indian tax payer should be helping them ?

  • Comment number 91.

    Whilst on this site, I just downloaded Robert's article on the New Capitalism, which made fascinating reading. But the most extraordinary thing about the current crisis isn't the scale of the problem, or the unpredictability of the future - it's the fact that nobody seems to have noticed what's been going on.

    I'm just a jobbing scriptwriter, freelance for most of the last decade, and I KNOW that if anyone had asked me, any time in the last fifteen years, whether we were all borrowing too much, I would have replied 'you bet'. I only had to look at my doormat in the mid-90s, which was regularly covered with unsolicited offers to extend my credit. to know that the banks were following a fundamentally immoral - even criminal - business model. Here's another extraordinary thing: we have yet to punish them. If we simply insisted they paid back their bonuses and left their jobs, it wouldn't be enough. A hideously arrogant minority of greed has brought the world to its knees, and yet we still treat them as weirdly gifted individuals who are quite capable of trading their way out of the problem given enough (additional) financial support.

    If I hear one more scion of the financial services industry bleating that they needed the bonuses to recruit the right talent, I will throw a brick through my TV set. If there was any evidence of talent, they would have applied it. As it is, the only morally logical solution is to name the people who screwed up on the job - and send them to jail.

  • Comment number 92.

    I'd love to know what Tatas real motives are. The Taj Hotel that was the scene of the recent tragedy was built with a sign hanging from it stating 'No Dogs or Englishmen' in retaliation to anti Indian signs at British Hotels. Now they're buying up symbols of Britain in Tetley Tea, British Steel (Corus) and Jaguar LandRover. They've promised both Corus and Jaguar LandRover huge investment just a few months ago but are now going to the government for handouts for both businesses...
    Tata have cut production at Corus and JLR citing the global credit crunch but haven't touched Tata Steel India or Tata Motors. I also haven't heard of them going to the Indian government for handouts yet either...

  • Comment number 93.

    Dont forget these guys also own Corus and have asked for a handout to support that.
    Why should the Uk taxpayer support overseas multinationals who set their own overambitious corporate growth targets on the back of cheap money and high gearing.

    Hedge funds and private equity are just the same, high on greed and bankrrupt of any morals.

    Not that the managers of these businesses will lose their jobs, shares or the millions they have already milker or as they like to call it "added value" - just the good old UK taxpayer will be paying for the next 20 years.

    Thanks a million !

  • Comment number 94.

    The interesting thing about this resurrection of Leyland is the voting demographics of Jaguars employees.

    Only companies in marginal seats need apply.

  • Comment number 95.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 96.

    It's a disgrace that Tata can put big money in to an F1 team and yet want the British tax payers to ensure they can get loans.

    When will we ever learn in this country that we can't sell off everything to oversea's investors? The next itme to go will be the post office.

    Everything we have sold over the years has ended up making massive profits for rich investors and yet each year they want more from smaller work forces. Take a note from the french; they own their major car companies, train companies etc and the french own half of our enery production at the same time we are seeing record price increases, they have seen very little.

    Tell tat where to stick it and refuse them any money until they put the same amount in to jag as they have in to F1

  • Comment number 97.

    BMC was a different kettle of fish. Those were the halcyon days of "Red" Robbo at Birmingham always stirring the proverbial and inciting other plants to follow suit. My dad used to work at the Swindon plant, but I can never remember him striking.

  • Comment number 98.

    Re #87

    "Look at PM - resigned twice in disgrace already".


    For a second I thought you meant Gordon Brown!!



    Trust the goverment to pick and choose which industries should be saved and which should crash and burn?

    Less tea vicar!!

  • Comment number 99.

    You couldn't make it up. The capital markets says the company isn't worth the risk. It's parent company won't back it. So, as a British taxpayer I take the risk, ably (?) led by Lord Mandelson and that guy who saved the world. And, for taking the risk, the reward for me is?

  • Comment number 100.

    Here's an idea.

    Could people stop mentioning the sponsorship of Ferrari like it's a valid point?

    And if Tata are genuine about not being able to get the funds through the normal channels then they surely won't mind giving us serious equity in the company as a thank you.

    When China was investing it's currency reserves throughout the world people weren't questioning their sanity and their willingness to become involved in foreign companies, they were in awe of their financial clout and their potential gain.

    The situation is clearly not the same now, but if the company is as robust in the long term as JLR seems to be, if it keeps jobs and intellectual property in Britain, and, most importantly, if the terms of the deal are absolutely right then this might represent a good bit of business by HMG, irrespective of nationality.

 

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