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An offer Jag can refuse

Robert Peston | 19:18 UK time, Wednesday, 6 May 2009

The Business Department has made an offer to Jaguar Land Rover that it rather hopes will be refused.

Last Friday it said it would provide the carmaker with a guarantee for a short term loan of £175m from the European Investment Bank.

What was described by officials as the government's "final offer" has been designed to help the carmaker fill a hole in its finances between now and the end of the year, to help it over the credit-crunch hump (so to speak).

Separate from that, the Government is also considering providing much more substantial longer term financial help, so long as Jaguar furnishes it with a business plan that makes sense.

But here's the thing.

Because Jaguar is owned by the giant Indian conglomerate, Tata, ministers are not persuaded it really needs the money.

So it has imposed very onerous terms on the short term money - such as a 15 per cent fee, a requirement that the government appoint a new chairman, and influence over Jag's employment and investment plans.

Broadly what ministers are saying to Tata is: "we think you have deep enough pockets to support Jaguar Land Rover on your own; but we may be wrong, so we're going to make you pay an arm and a leg to test you".

Some may think it's odd that after six months of negotiations, there's still apparently very little trust between the government and Tata.

And if Tata doesn't take the loan on these terms - and tonight I'm told it's minded to reject the offer - the hard-balling ministers may feel vindicated.

Except that Tata may choose to conserve cash by sacking a fair number of Jaguar's 14,500 employees and significantly reducing more than £500m of annual investment in research and technology that's pretty valuable to the UK.

Which would make the controversial loan rather pricier - for the nation.


  • Comment number 1.

    blimey strike a light I'm gobsmacked! it's a car industry story from Robert and he's so pleased that he's posted it twice!

    ahem, anyway, hardly a surprise there is no trust between Tata and HMG when Mandelson is the main negotiator!

    making the wrong move on both Jaguar and the Post Office in the same month would look very reckless

  • Comment number 2.

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

  • Comment number 3.

    It's high stakes poker with the car industry at the moment. The government has called Tata's bluff.

    I wonder what woud happen if Tata raised by threaten to shut one of their three Jaguar LandRover factories.

    Castle Bromwich shutting with 5,500 job losses would be a great "win" for Labour as it borders two labour marginals in Erdington and Birmingham Hodge Hill which has an open LDV factory, or at least for this week anyway. As Hodge Hill already has the highest unemployment in the UK another load of job losses this wouldn't be popular.

    Solihull is another marginal target for the Tories and closing Hailwood would be very unpopular on Merseyside.

    Expect a government climb down within a week.

  • Comment number 4.

    Does this mean the perennial bailouts to rebranded-british-leyland have taken a new twist? One day a government will be firm (or broke) enough to draw a line under that chronic lame duck, and let the much-talked-about supply chain divert its energies and future investment to something for which there's a market.

  • Comment number 5.

    If Jaguar wants a loan, it should forget the government and try Mephistopheles instead.

  • Comment number 6.



  • Comment number 7.

    Well done, Mandy, (for once).

    How much support is the Indian Government going to give a UK company that employs Indians. Answer: nada.

    I say Mandy for PM with his unique brand of Realpolitick. He's just what Labour need - the only trouble is finding a safe seat for him or could we just go back to a Henry VIII style Parliament and have a Lord to rule over us.

  • Comment number 8.

    I'm of the opinion that actually the Govt would be very happy if Tata shut all the Jaguar LandRover factories and shifted all its production overseas. The Treasury and its chums in the City have been intent on deindustrialising the UK for a long time. Brown is only interested in reflating the credit bubble.

  • Comment number 9.

    Of course they are playing a hand at poker and hoping Tata have a better hand than it is making out. The terms being offered are no different to any private finance from an investor, they would look for this repayment and install a member of the board. Is it right they do it with Jaguar Land Rover ? when the banks sit there going gimme more gimme more ? you tell me

    btw noticed on the same article the building in Sheffield will have a giant slide in it paid for by Tax Payers, but open only to the businesses who reside in the building. The manager let slip that "common purpose" would be able to get in , so it looks like unless I have taken the wrong definition you have a free ticket to ride :)

  • Comment number 10.

    Stupidity from the government here. Yes Tata is a huge company, but it is suffering as much as any other as nearly all it's seperate businesses are making losses in this climate.

    We are not just talking about a few car factories here and 5000 jobs if Jaguar is moved out of the UK, we are talking tens of thousands more in engineering and manufacturing companies that supply Jaguar, including another arm of Tata in the form of the Corus Steel works in South Wales and the North East. Jaguar/Land Rover is near unique business in the UK in that it will almost certainly continue to source materials from within the UK rather than look abroad for cheaper alternatives.

  • Comment number 11.

    From and as of the time stamp of this message

    "The BBC's business editor Robert Peston said Jaguar views the proposal as backdoor privatisation - and is minded to turn the offer down."

    Shouldn't that be backdoor nationalisation, considering that Land Rover & Jaguar are already privately owned companies?!... :-)

  • Comment number 12.

    It seems to me that we are looking at the wrong issues here.With the breakup of GM europe and the potential of a takeover of all the opel/vauxhall plants (who can produce small "greener cars ")we should be trying to ensure the GM plants in Britain are not sacrificed in any "restructuring " The German goverment is talking to all potential buyers of GM europe to ensure the German plants remain open but it appears that the UK goverment is playing no part in these talks.If we are honest the days of gas guzzling Jags and Land Rovers must be limited.

  • Comment number 13.

    ahhh you've pulled my comment #2; I really did mean the corridors of the Houses of Westminster, and the other connotation would be exceedingly crude; they do have a lot of corridors there in Westminster and they are used for briefings........

    I'm beginning to like this blog again

  • Comment number 14.


    "If we are honest the days of gas guzzling Jags and Land Rovers must be limited."

    In the case of Land Rover, I hope not, not all LRs are sold to be 'Chelsea Tractors' you know - many do the work that would otherwise have to be done by an even more 'gas guzzling' real tractor...

  • Comment number 15.


    Why should the days of Jags and Land Rovers be limited?

    These companies will evolve and their designs improve and change and their cars will use different fuels...

  • Comment number 16.

    Since Jaguar is a part of a much larger business conglomerate it is not unreasonable for, ministers, to believe that the parent company TATA should be able to find £174m to fill the holes in Jaguar's coffers until the end of the year.

    If TATA is unable or unwilling to do so over the short term, perhaps because they feel the UK government should help them to protect UK jobs, then TATA must understand that under present circumstances, ministers, have an obligation to protect, as best they can, UK taxpayers money that is being used for such purposes.

    Likewise if the UK government is considering providing much more substantial longer term finacial help to a private company such as TATA then, ministers, are duty bound to ask that company (TATA) to furnish them with a business plan that is both sensible and viable and to the government and to have someone in charge to oversee that the plan is being adhered to and the taxpayers money is being properly used, for the purpose it was intended.

  • Comment number 17.

    Everything I read talks about 15,000 workers and the factories in UK. How will the collapse of Jaguar Land Rover affect the Land Rover Experience Division and their driving centres / schools? I believe these are nationwide. Would these remain open or would these employees also be affected. What about Jaguar Land Rover North America? I belive it is a subsidiary, couldn't other countries, like the US also step in to help?

  • Comment number 18.

    If the government is the lender of last resort you can expect certain factors

    Especially when the Government is having difficulty selling it's gilts, even when it is using QE money to buy them.

    Tata is not a UK business, and presumably not subject to UK taxation, as Tata can repatriate profits whilst leaving losses behind

  • Comment number 19.


    "What about Jaguar Land Rover North America? I belive it is a subsidiary, couldn't other countries, like the US also step in to help"

    I think the USA have enough problems with GM and Chrysler etc!

  • Comment number 20.

    I am surprised this hopeless government has not fallen for Tata's line. Irrespective of the money pumped in, Tata in time will reduce the UK workforce, as India is a cheaper centre and many believe the Indians are cleverer and more hard working than the average native here - well done Labour for insisting on conditions.

  • Comment number 21.

    #14 and #15

    Why do we think that Jag/LandRover will go on to build vehicles to compete with companies like VW , Mini, Toyota and even Opel who all have developments in hand to produce electric and other fuel greener cars.As for Land Rover. from what I have seen the 4wheel drives vehicles in Africa and other developing areas which were Land Rovers are now nearly all Toyotas and Nissans!
    Sorry as I am to see the demise of yet more iconic British brands and all the jobs that go with them I am afraid the they are destined to go the way of Rover !

  • Comment number 22.

    TATA STEEL ALONE, i.e "part" of the TATA conglomerate made almost 3.5 BILLION (US Dollars) EBITDA and almost 2 Billion NET AFTER TAX.

    The whole groups results would take me more effort than I can muster, but a quick check of the vehicles division, tea companies etc would seem to suggest that TATA prob have more in the tea caddy/petty cah tin than they are asking off us.

    So hardball is what it is, as to shipping JLR out to India, where do people think JLR's markets are?

    What proportion of JLR's value is in the "Good will" that is still associated with British products?

    Talk to any Gujerati millionaire and their wives about how much British gear is bought over here and shipped out to India.

    I realise that for some of you only bad news about Britain is allowed, but try a little research and a touch of reality.

    I am often reminded on this blog of my old militant tendency friends for whom any bad financial news or industrial unrest or the pound slipping or nhs failure or indeed any bad news was welcomed as a sign that the "SYSTEM" was crumbling.

    On here it would seem that you would welcome thousands of deaths from swine flu if it meant the evil spawn of satan and stalin known as the "BROWN" monster got the blame and was burned alive.

    Good news must really spoil your days.

  • Comment number 23.

    Frankly this is nothing new, in fact ford and GM have done it for years and its called Blackmail. The threaten to close down plant in the Government's back yard and the Government stumps up. Lets have a look at this. The chances are that somewhere in the mix is Mittal who'se steel they are almost certainly using since he owns chorus. I believe he has very strong contacts in the Government. If LandRover and Jag go then Mittal has a strong case to close the chorus plants here. Tata bought the consortium for 1.2 Billion after the Government had effectively stripped out Rover to be asset stripped by the Chinese and it was'nt just a threat to BMW was it? LDV is owned by Depripaska who is also waiting for a Government handout. Is there a pattern emerging here? The Government is determined that we loose our engineering base and it has had two bites of the cherry. Firstly BL in the 70's and 80's and now this lot.Oh and that bit about cutting engine sizes for LR and Jag- is anyone really fooled by that ploy or global warming?

  • Comment number 24.

    Jaguar and Land Rover are two hugely obese drowning men clinging together for safety - that is - they are doomed.

    They have produced overweight, inefficient transports for plutocrats for generations and deserve all that the recession throws at them. They are now blackmailing the British people and I am sorry for the workers but we must have none of it! I would have made the terms even harsher! They are an engineering dead end and in consequence Peter Benjamin Mandelson, Baron Mandelson will probably bail them out with our money!

  • Comment number 25.

    Lets get this straight, Tata has no interest in the UK other than for cheap access to Europe. As soon as is practicable they will shift the entire production lines of JLR to India, they will do the same with the steel plants at Corus. Western Europe is no longer a market that they want to be involved in, China and the East are.
    Tata are just trying it on, if they seriously meant business then there is sufficient global private equity for them to turn to.
    Tell them to get stuffed and turn the empty factories into production systems that can churn out tiny cars, better designed, better engineered, cleaner burn, quicker to market to compete with the stuff that Tata are trying (but not too successfully) to market in India.
    We have better design, engineering and production skills in the UK and can outcompete a bunch of rapacious wannabes on quality, style and skill (all it takes is the will)

    UK Government, take the 175mil and spend it on helping get EU approval on UK designs.
    UK Innovation does not need subsidy, what it needs is UK Gov to wield a giant pair of scissors to the red tape and let them get on with it.

  • Comment number 26.

    Sorry, but why should taxpayers money be used to save jobs for people building cars that no one wants?

  • Comment number 27.

    Tata motors should just get rid of jaguar production and start producing those £2000 pedal cars that we hear about in newspapers ,that way Britains ten years and older fleet can be replaced at no cost to the customer with the help of the governments £2000 cash back scheme, or the tata can be given away with 5 boxes of conflakes .

    Why anyone should wish to scrap/swap a ten year old micra [£250] with a timing chain[not a belt] and 10 years of serviceable life is a conundrum ,but thats economics , labour pollytitians and reelection for you .

    Why not scrap all the new cars and give the production line workers £2000 and a fishing rod ,they can then go back to eastern europe and take 8 micras each back with them .

    And to think that the great Gordoni has recomissioned the Lord of the flies to sort this fiasco out .

  • Comment number 28.

    With Peak oil coming!

    Jaguar/Land Rover catch yourselves on, waste money on that dead duck

    I would not take one of those gas guzzler vehicles if they were giving them away, they belong in a Museum.

    Electric Vehicles are the future.

    Invest the money in producing something that can be sold in the 21st century, let the dead wood go.

  • Comment number 29.

    RE: 25 Bobrocket
    'Tell them to get stuffed and turn the empty factories into production systems that can churn out tiny cars, better designed, better engineered, cleaner burn, quicker to market to compete with the stuff that Tata are trying (but not too successfully) to market in India.
    We have better design, engineering and production skills in the UK and can outcompete a bunch of rapacious wannabes on quality, style and skill (all it takes is the will'

    And who is going to employ these great designers and engineers? It isn't just about 'the will' its about 'the money'. It may be that we do have all of the skills you mention, unfortunately there aren't any British companies that can take advantage of those skills.

  • Comment number 30.

    This is Longbridge all over again.
    Just as there the "new owners" could not lose. They (all three)were practically given the companies. None are viable, but so what, the owners will not (cannot) fail to profit. Just how many times do we fall for the "three card trick" ?
    The only reason LDV existed was because the Russian owners banked on "political expendiency" by Nu Labour, exactly as was exercised at Longbridge.
    So was/is the exact same scenario at Solihull.

    Longbridge is now rubble (I pass it frequently on the train, 20 mins from home)
    Washwood Heath will be the same within 12 months.
    Lode Lane may take longer, but the result will be just the same.
    Nobody buys the vans, did not buy the cars, will only by the 4x4s if subsidised by the CAP,or its eqivalent.

  • Comment number 31.

    # 21 & 28

    Ah, but it seems that the Land Rover tiger can change its stripes. Which makes it a harder question whether it is worth saving or not.

    Land Rover have already entered an agreement to let Liberty Electric Cars build 1,000 electric Land Rovers each year in the north-east.

    And have been working on developments of their own:

    Electric cars may be "the future", but the next step, after electric assisted petrol hybrids, is surely petrol-assist electric hybrids.

    Warren Buffet seems to think so. (

    Mind you, better town and country planning to free us from car dependency wouldn't be such a bad idea either.

  • Comment number 32.

    Is Pesto feeling OK ? 4 days solid and not 1 mention of the banks or the banking crisis - I'm beginning to miss them !. But hold on....... Barclays results are out today so expect to see a story about them this morning.....

  • Comment number 33.


    When will people stop talking about electic cars/landrovers etc as if this is a good idea? Electric cars are some of the worst poluting vechicles ever designed. Most electricity used in them comes from fossil fuel burning power stations that are at most about 38% efficient at converting chemical energy to electicity. More energy is lost in tranmission. So in the end more CO2 is generated by running electric cars than say a fuel efficient petrol engine.

    Its hardly free market economics to prop up a company that no one wants to buy the products from. Letting this one go would be an aid to reaching our CO2 reduction targets. How about some lateral thinking here, why dont we get the factories and people who work in them producing wind turbines or wave powered generators using their engineering skills to move us forward rather than maintaining a dying industry?

  • Comment number 34.

    I have a distinct feeling that HMG is being taken for a ride by Tata. Within the next six months to a year, the design software, the materials listings and the technical intellectual property (design assumptions etc) and procurement database for both Jaguar and Land Rover will be shipped off to India, together with the test facilities and the essential production-line equipment. It is cheaper to produce vehicles in India than in the UK by a factor of 100 or so. Tata would prefer to place the responsibility for breaking off negotiations on the UK government.

  • Comment number 35.

    it is ok folks...pesto was on the Today programme this morning talking about...... no not Tata but Banks!

  • Comment number 36.

    # 14

    Here Here!

  • Comment number 37.

    # 28

    I for one would not like to rely on an electric car off road.

  • Comment number 38.

    The government has to have a high degree of control if it is effectively putting money into the company. After what we have seen with Sir Fred taking taxpayers money, the government has to take steps to ensure that once this loan has been made it does not disappear overseas to the parent company for whatever use. Were it to loan on trust and the money ended up not being "used properly" then they would rightly come in for "a lot of stick".

  • Comment number 39.


    "As for Land Rover. from what I have seen the 4wheel drives vehicles in Africa and other developing areas which were Land Rovers are now nearly all Toyotas and Nissans!"

    Not because they are best though, just cheaper - some would say 'dumped'.

    Turning back to LR and its 'home' markets (the UK and EU), whilst I accept that the competition has made inroads into Land Rovers agricultural market in the UK it's not with any sense of patriotism that makes many UK farmers buy LR. Also, who says that Toyota's and Nissan's are any 'greener', all things considered, after ship them halfway around the world to Europe for example?!

  • Comment number 40.

    Why didn't HMG buy Jag / Land Rover when they had the chance.
    As a result, the intellectual property will go overseas.

    Instead our amazing Governement buy a load of worthless banks...

  • Comment number 41.

    33. peter_t_clarke

    I simply don't know how things stack up in terms of total emissions of CO2 and other "nasties". That said, I think we are talking electric cars because:

    1) It shows that so-called "hide bound dinosaurs" in the motor industry have actually been thinking laterally even before the crunch hit - and moreover, as I've posted previously, in the case of GM they probably got the big picture right in terms of going for the petrol-assist electric Chevy Volt car (aka Opel/Vauxhall ampera). It's just that Toyota's electric-assist petrol Prius brought what I regard as very intermediate-stage (and relatively expensive) technology onstream first.
    FWIW GM still seem to have confidence in their convictions:
    Alternatively, to gain that "range extension", you might want to consider a "genset trailer"

    2) Your comment about the inefficiences and transmission losses of Fossil Fuel power stations is true of the current situation. However, though I'm not a lobbyist for the nuclear industry (far from it), the current situation is set to change. And, if your power source has zero (or near zero) emissions, so too does your electric vehicle.

    3) The attraction of moving to fuels which are not controlled by "suspect foreigners" is stronger than many care to mention out loud.
    (A motive particularly strong in the US, I suspect.)

    4) With an electric car, you are free of that nagging feeling whenever you fill up that far too high a proportion of the cost is going to the government. (A motive particularly strong in Europe, I suspect.)

    5) In fact, though, the most promising area is one which is rarely touched on: the marriage of lightweight power assistance with the light weights already available with bicycle technology.
    At which stage, even the possibility of youself generating enough power to run your own vehicle seems tantalisingly within grasp - with just a little more push in current technology (supercapacitors?).

    The MPG figures such vehicles produce are too much of a leap ahead to be ignored.

    You might want to consider the Twike - with its equivalent MPG figure of around 550 mpg (

    Or the innovative use of lightweight Magnesium used in the GoCycle -

    The GoCycle, BTW, is brought to you courtesy of the Formula 1 experience of the company founder. And I hope we can all agree on the imporance of keeping such skills and know-how within these islands, whatever happens to iconic brands and models.

    Otherwise those apprentices at MercedesBenz might just be the only ones around to come up with ideas for the next world beater:

    Even if the above are not your personal cup of tea, remember that currently the main barrier stopping those who would like to buy them from doing so is simply road-licensing regulations; and that, in Germany, they've changed the legislation and seen a leap in demand.


  • Comment number 42.

    Perhaps we should suggest a bank loan to Tata

    or a Bond issue

    Perhaps the government could cut the various taxes, licence costs etc on these cars

    Perhaps it could reduce employers NI

    Perhaps ministers could renew the government fleet now diesel Jags can do about 35 miles to the gallon (though not, presumably from 10 Downing Street to the House of Commons)

    Perhaps it could do something on the export credit front since so many are exported

  • Comment number 43.

    it amuses me that jaguar land rover have this problem when they were recently given to tata and now tata wont put money into these companies.
    becoused they are based here in the uk they are classed as disposable.
    expecting the uk taxpayer to bail these companies out why not nationalize them and make them work.

  • Comment number 44.

    The Business Editor for once blogs on something other than banks! Most of the comments discuss throwing good money after bad in the car industry. So much concern over £170 M (not enough to buy the pensions for the board of a retail bank) while we can print £ 100,000 M for QE.

    I hate to keep coming back to my simple minded Adam Smith ideas. But, is this the root of our problem: we think that finance is the whole of business, when it is only a small, though important, part.

    Jaguar and Land Rover make stuff that a lot of people seem to want; they are making real wealth. Considering the investment that they have received, they do an incredible job - as a few commentators have said, Ford should not have sold its subsidiaries, it should have sold Ford. JLR design, develop and produce it in the UK with a very British identity. When banks make money, it is off the backs of the like of Jaguar and Land Rover. If they are foreign owned like so much of British manufacturing, it is thanks to the myopic preference for fast money and big numbers of our financiers and managers.

    Let us not confuse the situation of Jaguar and Land Rover with that of Vauxhall. Vauxhall has long lost any British identity and been an assembly plant of a foreign Opel design. In the plans of Fiat, it appears only as an item in a section titled cost of closure and HMG cannot change it.

    And for the contributors (BMW owners?) who talk of gas guzzling: look up the advances that Jaguar has made on that front!

  • Comment number 45.

    "Leyland re branded"
    "Dying company"

    Words of potential candidates for journalists of cheap tacky red top tabloids!

    This is a loan from the European bank, it's different.

    "It's times like these the British public are seen around the world for what they really are. The only time patriotism enters British minds is when a bag of wind is kicked about the pitch against Germans or Argentinians. British people get what they deserve, which is why we are so reliant on unstable countries like Russia and China supplying us with vital commodities such as gas, coal, electricity and raw material."

  • Comment number 46.

    #41 NoddingHomer

    Sadly the nuclear option doesn't work either. Despite rumours put about by politicians. the 1000s of tons of steel and concrete required to build the power stations and containment vessels + the mining of millions of tons of rock to produces a few tons of Uranium + purification + transport + reprocessing + storage of waste + decommissioning 25- 30 yrs later means that this option is not CO2 free.

    In addition the current versions which are being or about to be decommissioned actually never produced any net energy since they amount of energy used as described above exceeded the amount produced as electricity.

    So nuclear doesnt fly either.

    However thanks for the other notes, very interesting.

  • Comment number 47.

    This government do not want to lend any money to Jaguar Landrover if the terms are 15% interest for 6 months and on condition the government put in their own chairman and directors.

    They will be loving the comments of this blogg as it does truly seem that the British public represented here do not believe we need to innovate, design or manufacture in this country.

    No wonder there's no future.

  • Comment number 48.

    Hmm let's see if we can remember what the goverment last needed to support a car manufacturer. Oh yes Rover,they made a total utter cock of it and we had to watch while the factory went to China and then had to pay millions to support all the redundant staff who got bugger all while management stole the cash.

    Jaguar / Land Rover, decent cars, iconic brand and enormous research capitol. I'd bet my mortgage it'll all be in India by next year and we'll have to pay to watch tens of thousands of skilled workers draw the dole.

  • Comment number 49.

    If the government had steered clear when Austin and Morris first ran into difficulties, and saved all of the money wasted on the car industry rescues that have followed, and all of these savings were invested in gold bullion, and stored in the BoE, we might now be the richest country in the world, with the pound standing back at $4. Wouldn't that have been nice?

  • Comment number 50.

    Lets be honest.

    If the government had stayed out of trying to organise the car industry over the last four decades, we might still have one.

    If the government were not so committed to saving banks, bank bosses and financiers, they might be able to spare a few crumbs to help some more useful and productive activities like manufacturing, engineering, education and health.

  • Comment number 51.

    Ken, the pound won't be worth 4 cents by the time we've destroyed the remainder of our manufacturing industry.

    No future.

  • Comment number 52.

    You refuse my loan application. I raise you closing one steel foundry.

  • Comment number 53.


    "You refuse my loan application. I raise you closing one steel foundry."

    That would be a very dangerous game to play, it wouldn't be the first time that the UK steel (or car) industry became state owned never mind UK companies bringing their call centres back to the UK etc.), ultimately it's the state and government who hold both the jokers in the pack when it comes to industry owners or unions locking horns...


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