» Monday, April 4, 2005

Government Aid to MG Rover

Asked for further information on the reporting in the Sunday papers that the Permanent Secretary of the DTI was opposing a grant to Rover on the basis that it would not be money well spent, the PMOS said that as the DTI had made clear throughout this process, the Government had done all it could to support the joint venture. There was a team of DTI officials in China who were holding discussions with the SIAC, and we were in touch with the Chinese Government. If a deal was looking likely, both MG Rover and SIAC were aware that the Government would consider the option of providing a bridging loan. If the loan were to be offered, it would be provided on strict criteria to ensure the proper use of tax payers’ money, and would be fully repayable. We would comply with EU state rules over the repayment period.

Briefing took place at 11:00 | Search for related news


  1. What is wrong with our attitude to manufacturing in this country, have we totally lost the plot? Do we seriously believe that if MG Rover was called Citroen or Renault that the French government wouldn’t have stepped and ploughed money into the company, even if it contravened EEC regulations? Haven’t the Italians given substantial financial support to Fiat and imposed import protectionism for their motorcycle industry and numerous other industry sectors? Why when every other country in Europe protects their manufacturing base do we wash our hands of the problem. Without government intervention Rolls Royce Aero Engines would now be a distant memory and not the world leader in the airline industry it is today. MG Rover makes surprisingly good cars given the fact that these are developed on a shoe string budget, particularly the Rover 75, Mg ZT and MG ZF. As a nation we still buy more Volkswagens even though they are now at the bottom of the reliability league while MG Rover cars were up there with the best of the Japanese – we voluntarily sabotage our own industry and workers. Put a VW badge on any of the aforementioned cars and they would have sold like hotcakes.
    Do the Maths, allowing up to 25,000 jobs to disappear and delivering a body blow to our national car component industry, coupled with social security payments for the unemployed and the consequential drop in exports, will make a \xA3100 million bridging loan look like a drop in the ocean. My heart goes out to all the workers at Longbridge and I worry that our government ( and all the opposition parties ) believe our national economy can continue to grow and prosper through the growth of service sector.
    Perhaps we need more people in central government with more business sense and less legal knowledge.
    We still have some of the best engineers in the world – does their future now lie in working abroad because manufacturing is now a dirty word in this country? Let’s now drop the great from Great Britain and call ourselves MB ( Mediocre Britain ).

    Comment by Tony Wilson — 8 Apr 2005 on 1:04 pm | Link
  2. I totaly agree with Tony Wilson, Britain has been destroyed by petty polititians like Thatcher, Major, and Blair more interested in their own glorification than the wellbeing of British people with skills, once envied throughout the world. How much is Blair squandering in Iraq, there is never a shortage of funds to go to war, but for British people it is always the cheap option.

    Comment by Peter Fordham — 8 Apr 2005 on 4:06 pm | Link
  3. I can’t disagree more! For better or worse (usually worse) successive governments in this country have nailed their flags to the mast of the Free Market. As a result of this, we now have the largest income disparity in Europe an atomised society where people have been pitted one against the other in the name of competition. Much of the national infrastructure was almost given away, and many businessmen have lined their nests as a result. While this is not the specific story of Rover, I gather the four men at the top have taken some \xA340m out of the company, which it could clearly ill afford. It would be outrageous for yet more taxpayers’ money to be wasted propping up their greed and short-sightedness. No – if free market it is meant to be, then free market it has to be, even if it means losing long-established companies like Rover – and tough on the investors who are going to lose money – they didn’t exactly put it in in the first place out of charity…

    As for what is wrong with British manufacturing -the answer is that it is simply not up to scratch. It has consistently failed to invest as our competitors have in R&D, it has not consistently supported apprenticeships to up-skill the workforce, and it has no sense of innovation or appealing aesthetic – both essential in the modern consumer market. Just look at the experience of James Dyson to see what I mean! The reason German manufacturing has prospered is that it addressed the challenges of globalisation by taking the product up-market. German products of all kinds are immensely well-made and often beautiful to look at; the latter can also be said for Italian products, even if you have to trade up always to be sure of the quality. The French, meanwhile, have also ensured that their cars are distinctive in a quirky kind of way, and highly innovative.

    I owned a Rover 213 and 214 some years ago, which were not bad cars (basically Hondas), but regrettably British manufacturing as a whole deserves everything it has had coming. The Rovers since then have been UTTERLY DULL, lacking any outstanding build quality and aesthetically abysmal. Rover made the mistake of trying the typical British trick of trading on its ‘Heritage’ when every other car maker had realised that modernity is what most people want from their cars – and when they eventually did realise, they tried sticking a few bits of cheap orange plastic on the front to try and make it look funky, rather than actually try to develop something sleek and original. Every recent Rover I have seen has looked such a dog’s breakfast that it was embarassing. Result? Most Rovers once again are owned by retired ex-colonels in Surrey (at least those who can’t afford Mercedes or Rolls), and who themselves are a dying breed. Not worthy of my tax money, I’m afraid!

    Comment by Ian Stock — 8 Apr 2005 on 4:14 pm | Link
  4. Why should I, as a taxpayer, subsidise a failing business? Especially when its management has been systematically raping the company for years? If MG Rover was my own business and it was in the same boat, would the government bail me out? No! So why should they in this case? If MG Rover cannot compete, then it should go under just like every other business which can’t compete. Unfortunate for the employees of MG Rover, but that’s life.

    Comment by PapaLazzzaru — 8 Apr 2005 on 6:12 pm | Link
  5. In just 25 years Thatcher, Major, and Blair have decimated Britain’s Manufacturing, Mining, Farming, and Fishing industries.

    The time has come to close the Palace of Westminster, give MP’s the minimum redundancy pay, raid their pension fund, and transfer their jobs to China. We can easily get people who will work twice as hard for a bowl of rice a day, saving British Tax Payers a fortune.

    Comment by Peter Fordham — 16 Apr 2005 on 8:12 am | Link
  6. I am actually quite disgusted by the general lack of economic knowledge shown by people in the UK.
    Any government which supports private industry is shooting itself in the foot and charging tax payers for other peoples mismanagement.

    Rover went down because as anyone who knows anything about business strategy will tell you, it was "stuck in the middle" – trying to compete with far bigger and more efficient companies. If it had taken the MG-sports route and produced a smaller number of high performance cars, it may have had a chance.

    Furthermore, people are failing to realise that any money that goes from government to industry comes from YOU (the tax payer). It is taking money from YOU which you could otherwise spend on products that you ACTUALLY want. Ultimately, by taking your income and giving it to Rover, is the equivalent of MAKING you buy Rover cars – even if no one wants them. When will people begin to realise that the death of companies like this is because PEOPLE DON’T WANT THEIR PRODUCTS, and the learning mechanism for this is financial failure. Its natural selection of businesses based on them selling us what we want.

    Comment by Richard Davies — 21 Apr 2005 on 4:51 pm | Link
  7. If you take that line just consider that in 25 years the Uk has gone from being number one in almost every industry, plus number one in a National Health Service, plus the number one in Democracy to almost the bottom of the pile. Are you saying that British ability is so unwanted by the British that the country should disapear into the mire. British Leyland was the third largest car manufacturer in the world 25 years ago. Three Polititions who would not know how to build a Lego model destroyed that, Thatcher, Major and Blair, all three walk away as millionairs.

    Comment by Peter Fordham — 24 Apr 2005 on 4:35 pm | Link
  8. 25 years is a long long time in business; what happened then has no relevance to what has happened to MG Rover. Purely and simply, it was a non-competetive company that had been driven into the ground by over-greedy management with no idea of business strategy. I agree entirely with Richard Davies on that; however Peter Fordham does raise a couple of good points in that the UK is now at or near the bottom of the pile in a few different ways. But that of course is down to politicians – or in other words, bad management; same thing. That, after all, is what politicians are there for…

    Comment by PapaLazzzaru — 26 Apr 2005 on 12:17 am | Link
  9. So the very last chance of our country manufacturing a home grown make of car has been squandered. You would think Blair\x92s government might consider making amends and take up David James\x92s proposal. How unfortunate for our country that we have had a succession of right wing leaders bleeding this country dry. The government could easily step in as a guarantor for Mr James’s proposed deals. When you consider how other European governments proudly support their native car manufacturing industry. Still if the Chinese own the MG and Rover badge I expect the public will still be duped into thinking it\x92s a British car rather like our German owned Mini!

    Comment by Ben — 15 Jul 2005 on 11:19 pm | Link
  10. I agree with Mr.Fordham, the three succesive governments have sold us down the river, time after time. I would not be at all surprised if Blair and his ‘pals’ were in on the deal, investors in Rover themselves (and/or SIAC) any government aid for retooling etc is now helping the chinese compete with us and the rest of European cars. The British are the most incredibly disloyal of people, most I speak to would and gladly watch British firms go to the wall they reply with comments like "ha, well they should have made them cheaper" or "at least things will be cheaper" more or less "I’m alright jack, pull the ladder up". They are also the most hypocritical, they complain about the Germans and particularly the French yet they drive their Volks-Wagens and crappy Renaults and Citroens. Go to Italy, look at the cars they drive- nearly all Italian (and with massive dents and rust patches) and France where nearly all cars and other products are French. Visit England where they fly Chinese made England flags from their Korean, Malaysian, German, Italian, French, Slovakian, Spanish, Czech, Belgian cars, watch Big Brother on their German, Chinese, Italian TV and email on their Taiwanese laptop. And what is more they dont seem to realise that their job could be next. Not just manufacturing, Call centres, Finacial firms, even our heralded future software design is going to asia and eastern Europe and if it can’t be moved the people are shipped in to do it cheaper. What is the government doing to help, an nice side helping of training foreign students to compete with us, doing deals with romainian steel companies and giving \xA34million grants to Universities to build replicas in China. WHAT IS LEFT FOR US, THE BRITISH TO DO. WHAT IS LEFT FOR BRITAIN?????????????

    Comment by Arnie — 10 Aug 2006 on 1:04 am | Link

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