After the banks have had a stupefying £500bn put at their disposal, a sum equal to a third of Britain’s entire GDP, it is not surprising that many other (and often more deserving) candidates have lined up for a Government bail-out, most notably Jaguar Land Rover. Should they get it?

Clearly all needy industrial victims of the recession cannot be given ring-fenced Government protection. The criteria for determining which industrial sectors, and which firms within those sectors, might be eligible should include the basic soundness of the business (i.e. not lame ducks) and the quality of the jobs that might otherwise be lost. MFI, which finally closed just before Xmas but was sold for £1two years ago, did not mostly have jobs that were highly skilled. Arguably, Woolworths, despite its near-100 year run and its nostalgic reputation, fell into the same category.
Jaguar is more complex. Its owner, Tata, is India’s biggest privately owned company, and it is not obvious why it should be subsidised, especially when it made profits of £440m in the last financial year. Also, Ford, Jaguar’s previous owner, invested £10bn into the company in its 19-year ownership without ever making it profitable. On the other hand, Jaguar’s product development programme amounts to half of the UK car industry’s annual research, which indicates that other car firms don’t do high-value work, or at least not in the UK. There is therefore a good case for Government assistance (not a bail-out, but offering loans or underwriting credit) to Jaguar in order to preserve high-value jobs in Britain.
But that has further implications. It requires Government after three decades of laissez faire to come forward with a new industrial policy which spells out what are the strategic objectives for Britain. Equally, Government aid should not be given without requiring an appropriate quid pro quo for any taxpayers’ money received. It is reasonable for Government to demand a stake in the enterprise, a guarantee of R&D on more environmentally sustainable transport, and a commitment that manufacturing will be based in the UK.

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