Birmingham MP urges Brown to take a stake in struggling carmakers

Mar 9 2009 by Jonathan Walker, Birmingham Post

The Government should take a stake in struggling carmakers, according to a Birmingham MP.

Richard Burden (Lab Northfield), Chairman of the Parliamentary All-Party Motor Group, said Ministers would be able to authorise state aid for businesses which were partly state-owned, because they would feel more confident that the taxpayer would get the money back.

He insisted he was not calling for a return to old-fashioned nationalisation of British industry.

Much of Britain’s automotive sector was nationalised when the Government effectively took over British Leyland, which included West Midlands carmakers Jaguar and Rover, in 1975.

Jaguar was privatised in 1984, while Rover, the forerunner of today’s Land Rover business, was sold to British Aerospace in 1988.

Jaguar-Land Rover, now run as a single business, has requested government support to help it get through the recession and safeguard the future of plants in Solihull and Castle Bromwich, ­Birmingham.

But critics have accused Business Secretary Lord Mandelson of being too slow to respond to requests for credit guarantees.

Mr Burden defended the Government’s record, but admitted he also believed it needed to take faster action.

He said: “I want to see more done, and I want things to move more quickly.

“But I don’t agree with those who claim that nothing is happening.”

The Government had made more than 400 loans available to help small businesses, and allowed 66,000 businesses to defer tax payments, he said.

“There isn’t some kind of silver bullet that would solve the problems businesses are facing. You can point to what other countries are doing, but the motor industry in those countries are also facing serious problems.

“So I don’t play the blame game but there is more we could do.”

He added: “If taxpayers’ money is being spent, people want to be assured that the money is being spent wisely.

“But that has to be balanced again the need to make funding available quickly.

“That is why I think the Government should be prepared to take a seat on the board of the companies involved, and in some cases take an equity stake. This is not because anybody wants to see old-style nationalisation. Equally, we shouldn’t rule it out for ideological reasons either.

“The point is that we need to get the support into businesses quickly. We need to think creatively about how we get the support in quickly while still safeguarding the interests of the taxpayer.”

Mr Burden said he wanted to see more progress made on supporting vehicle ­finance businesses, which supply credit to customers, and on introducing a scrappage scheme, which allows buyers to trade in old vehicles and receive a discount on new, environmentally-friendly models.

He also called on ministers to expand “wage-supported training”, in which the Government subsidises the salaries of workers who take part in training ­because there is no work for them to do, but still keep their jobs.

“The Government is going to have to spend this money anyway. The question is whether we spent it on boosting skills training and retaining people in the ­industry, or whether we spend it on benefits when people have lost their jobs and help finding them new employment.”