So, is bailing out Jaguar an urgent necessity or a dangerous precedent? According to the papers this morning, Business ministers – marshalled, of course, by Peter Mandelson – are veering towards the former viewpoint, while the Treasury veers towards the latter. If so, I’m with HMT on this one. Although Mandy warned yesterday that the Government doesn’t have an “open chequebook”, the framework he’s created – i.e. as Robert Peston puts it, “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” – implies that countless other companies will be able to make demands for taxpayers’ cash, and at a time when the public finances are hardly in great shape.
But even if other requests for public money are turned down, a Jaguar bailout would still prompt a series of awkward questions. Why is Jaguar getting bailed out when other companies aren’t (e.g. Woolworths)? What if Jaguar needs more money? Are we on the path to another British Leyland? etc. etc. The answers could be more awkward still. In its take on all this, the Inpedendent includes the following snippet:
“Ministers are also conscious of several marginal parliamentary seats in the West Midlands [where most of Jaguar’s operations are based]. Seven constituencies – including Redditch, held by the Home Secretary, Jacqui Smith – would fall to the Conservatives with a swing of 5 per cent. Another three would be captured by David Cameron if the swing is 10 per cent.” Party politics entering into the equation? Nah, couldn’t possibly..
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