A van company loan – just for an election?

The decision of the government to offer a taxpayer loan for just four weeks to LDV, with no extension, is a carefully chosen time period for the lending.

Four weeks from today takes us beyond the local and European elections, avoiding embarrassing headlines about the collapse of a vehicle maker when votes have to be garnered. The unwary in the media may even do the government’s bidding, and offer us “rescue” headlines, to show the government feels the motor industry’s pain, and is on board to help them.

We should instead be asking

1. Why don’t the nationalised banks lend money to LDV? Do they think it a bad prospect?
2. Why will the deal be done in another four weeks?
3. What happens if the deal is not done in four weeks?
4. What security have taxpayers got for their £5 million?

The good news is it’s only £5 million. If it had been a bank, then it would have been a different story – huge sums for unlimited time periods. What a pity none of this bank money has produced bank finance for a company the government thinks should and can be saved!

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11 Comments

  1. Posted May 6, 2009 at 6:36 am | Permalink

    I agree.

    However, why is the interest of the taxpayer important? The Government has an election to win in 12 months time. The European elections are an important milestone. “Saving” LDV will probably play well with New Labour supporters, especially those who might be inclined next month to vote for the BNP or live in marginal constituencies in the Midlands. It will also play well with the media. I am sure, for example, the BBC will be at the head of the line to give the initiative air coverage.

    The interest of the taxpayer can easily be sacrificed if the pay back is to enhance the chances of New Labour electoral success in May 2010.

  2. Posted May 6, 2009 at 8:20 am | Permalink

    This all sounds very familiar, now where have we heard this story before ? Ah yes the loan to Rover just before the 2005 general election.

  3. Posted May 6, 2009 at 8:43 am | Permalink

    Ask Cameron to cover these points at PMQs today.

  4. Posted May 6, 2009 at 8:45 am | Permalink

    I had noticed that the elections coincide with the loan agreement.
    Therefore I am sure most other people had too.
    Nationalised banks are, of course, in a different file to the Car Industry,
    which,
    as you pointed out yesterday,
    is in a different file to
    The environment and cycling to work to avoid Global Warming.
    Look, luvvy, it is called, “joined up government”.

  5. Posted May 6, 2009 at 9:08 am | Permalink

    According to Christopher Booker and Richard North, who are usually right about such matters, there’s an aspect which isn’t being widely reported:

    http://www.telegraph.co.uk/comment/columnists/christopherbooker/4886166/How-UK-defence-firms-suffer-for-MoD-Euro-mania.html

    “… the story behind LDV’s plight, which arises from one of the greatest scandals in the murky saga of Britain’s defence procurement. In 1998, to compensate for Britain’s failure to join the euro, Tony Blair agreed with President Chirac at St Malo that we would play a central role in building a “European defence identity”, independent of the US …”

  6. Posted May 6, 2009 at 9:50 am | Permalink

    Sadly, this reminds me of the demise of MG Rover. There too, the government provided several millions to keep the company afloat a few more days. But the prospective buyers (in that case, Chinese) preferred to wait for the collapse and then pick up the company from the administrators for a song.

    Webstar would probably rather pick LDV up from the administrators too, rather than have to pay Gaz to buy a going concern. So they won’t be in any hurry to do a deal.

    My heart goes out to the workers at LDV. And at least some of that £5 million of taxpayers’ money will presumably go into their wage packets and I don’t begrudge them that.

    • Posted May 6, 2009 at 3:06 pm | Permalink

      Adam
      Your first two paragraphs sum it up perfectly.

  7. Posted May 6, 2009 at 10:44 am | Permalink

    Last week the Unite union was urging the Government to make a short term loan of £4mln-£5mln to LDV whilst takeover discussions continued. My question is why couldn’t or wouldn’t the Unite union itself make this loan from its own £250mln reserves (2007 Accounts) if LDV were such a safe candidate for such a loan?

  8. Posted May 6, 2009 at 1:40 pm | Permalink

    Well said Denis Cooperon , I was going to put up a similar post.

    LDV might have had a future if the British Government had supported it with its military trucks contract. This wasn’t as if it was a bit of charity for the LDV consortium tendering for the contract had a better product than the Man trucks we bought.

    It would seem British jobs and companies are being sacrificed at the alter of the EU to show what good Europeans we are, as if the billions we already throw at them isn’t enough.

    In addition the British political establishment seem to be intent on beggaring this country, trying to ensure every asset we have is flogged off into foreign hands and we become wholly dependent. Whether it is nuclear technology, our utilities, trucks, Post Office, its like a bloody fire sale, they are trying to make us tennants to foreign ownership in our own country.

    May be our politicans are trying to curry favour outside of the UK, an insurance policy, a bolt hole they can flee too when things really go pear shapped!

  9. Posted May 6, 2009 at 3:02 pm | Permalink

    Just a thought.
    But perhaps we need a van industry to carry all of the cash around that we have just recently printed.
    John
    Do you know if this £5 million has been secured against any of the Company’s assets.
    Or is it a short term Loan/Gift.
    Sounds a bit like the Obama plan, when he gave Chrysler and General Motors a few billion for a few weeks to sort out their problems a few weeks ago.
    Who would have thought this time last year that the Government would in a years time be asking all white van men to buy another, to keep the industry in business.
    Global warming seems to come second now !!!!!!!

  10. Posted May 6, 2009 at 9:50 pm | Permalink

    I was planning on voting tory in the euro elections. A £5million bridging loan to payday would probably change that however.

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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