Should the government be prepared to take equity stakes in major companies that will struggle to survive the current crisis? That’s a question already on the table in relation to Jaguar Land Rover and Tata Steel, and likely to arise for British Airways, aero engine maker Rolls-Royce and others. We’re told Chancellor Rishi Sunak is working on a plan, called Project Birch, to bail out ‘viable companies which have exhausted all options’ and whose collapse would ‘disproportionately harm the economy’.
That means large-scale loan support first, with conversion to equity as a last resort — and to some pundits it smacks of the 1970s interventionism that left swathes of under-performing British industry addicted to state subsidy. If they’re really ‘viable’, surely these firms can find new shareholders or merger partners at home or abroad, better equipped than Whitehall to help them reshape their operations for the changed economy ahead? Well, yes, but…
When collapsing banks threatened disproportionate harm in 2008, no one argued that governments should not inject equity to prop them up. Permanent nationalisation is a proven bad idea, but state-held shares can be sold back to private investors when the time is right. Sunak’s early pledge to do ‘whatever it takes’ to support the economy is the sole aspect of this government’s crisis response that has so far stood up to scrutiny and criticism. As the avalanche of economic damage gathers force, Project Birch is, I fear, an inevitable next step.
A fortnight ago I offered a party-game choice between being marooned on a private island with Elon Musk or Richard Branson. For this week’s round: would you rather be locked in Newcastle United’s directors’ box with Mike Ashley, the club’s current owner, or Crown Prince Mohammed bin Salman of Saudi Arabia, his likely successor?
This everyday story of super-rich Premier League ownership has little to do with football, or with the power of sport — so well recognised by a previous Newcastle owner, miner’s-son-made-good Sir John Hall — to boost community morale in difficult times.