I asked a few weeks ago why the UK tax payer was being asked to loan money at a preferential rate to Santander, a Spanish bank, when it appears to me that the Spanish Government ought to be doing this. So I am equally perplexed as to why the UK taxpayer is now being asked to provide emergency loans to foreign owned car makers.
According to reports, the UK government is to provide funding to the billionaire Indian owner of Jaguar/Land Rover. Why are we bailing out billionaire Indian businessmen ?
Reports state that similar support fro the car industry has happened from governments in Sweden, France and Germany, but the reports fail to distinguish between the fact that these countries have domestically owned cars companies of their own, whereas we do not.
If Land Rover and Jaguar needs support then the government should make the loan dependent on the UK government getting a % of the shares and also a share in future profits in the company.
8 comments:
Why are we bailing out this (or any other) failing business?
Businesses fail either because they are poorly run, or their products are poor. I am about to order a new car and it will be another Audi, not a Range Rover. The reason? I believe in Audi's products, but not Range Rover's.
I doubt that you will be seeing Audi, BMW or Porsche going cap in hand to their government.
The question of bailing out this particular foreign businesses is interesting, particularly when Tata have enough money to sponsor the Ferrari F1 team.
They're owned by Tata - a company owned by a billionaire and that has off shored many UK jobs to India!
I agree Nick.
Last time I was sitting in a presentation by Tata Consultancy Services in Banglalore they were very, very proud to tell us how they and their parent company had absolutely no debt (this was 3 or 4 years ago and may have changed by now).
And the other day I heard Joan Bakewell on Any Questions say they had made £2.5 billion of profit.
If the rationale for helping out the car industry (as opposed to Woolies) is that it is a viable business then why doesn't Tata shoulder the risk? As they will certainly shoulder the reward!
It is not the nationality of the owners that matters, but the location of the jobs.
Put it another way, why should an American govt bail out jobs in Britain, even if the company is owned in America?
Multi-national companies, under a recession, usually cut deeper away from home. American money, given to GM, is to save jobs in Detroit, not Ellesmere Port.
Sweden does not have a domestically owned car industry, Volvo belongs to Ford, Saab to GM)
But you miss the point made earlier that TATA are a cash rich firm with no debts
But surely the point is made by anonymnous above that TATA has the cash already and as Jo states, TATA have a history of off shoring UK jobs anyway.
As for Sweden, their car companies are at least owned by by companies known to be in trouble (GM and FORD). TATA do no tfit in to this category.
TATA's money is in in steel and property. Both industries suffering crashes in value. TATA is rich, but not in cash, they have a cashflow problem which they can't fix by borrowing because the banks can't lend to them.
Go ahead, buy your Audi, but if every single industry in the UK closes, how do we employ our population and how do we pay our way in the world? What industries can survive the low wage competition from China and India or the investment in Germany? Banking & Finance does not look like the saviour it once was.
Mark,
You underline the folly of the UK obsession with selling itself off to the highest bidder. We have foreign owners who are happy to pull the plug because they care little for the UK.
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