Business rebirth is always possible – with the right help

The online fashion retailer Boohoo is buying Debenhams without its stores and staff, confirming the demise of the high street. Airlines face quarantine rules that could kill international travel for many months ahead, while the cross–Channel Eurostar rail service cries out for state rescue. The travel and hospitality sectors, alongside what’s left of bricks-and–mortar retail, watch their survival chances evaporating. Amid unremitting economic mayhem, new milestones are easily taken for gravestones. But here’s an optimistic parable from half a century ago.

The bankruptcy of Rolls-Royce on 4 February 1971, crippled by a contract to supply newly developed RB211 jet engines for the US-built Lockheed TriStar aircraft, was a traumatic episode that bears comparison with today’s headlines. Edward Heath’s Conservative government, facing the collapse of a flagship defence manufacturer, was forced to reverse its previous policy of refusing to rescue ‘lame ducks’. Nationalisation of the aero-engine business gave rise, as his biographer John Campbell recalls, to ‘a good deal of public amusement’ at Heath’s expense and the beginning of the slide into the political chaos of 1974. But Rolls-Royce went on to reclaim its position as a world leader, to rejoin the private sector in 1987 — and to live long enough to face the new existential threat of the pandemic.

With hindsight, ministers did the right thing in 1971 even if they paid a political price. And the story had other heroes: Rupert Nicholson was the shrewd receiver who gave Rolls’s car division sufficient budget to launch the Corniche model and go on to independent success against the tide of the failing British car industry; Sir Stanley Hooker was the engineer who came out of retirement to lead a redesign of the RB211 that became one of the company’s most successful products of all time.

The moral for today is that business rebirth is always possible even in the worst of circumstances — but government sometimes has to be the emergency midwife.