Mandelson spares Byers’ blushes over Rover

July 6, 2009

REUTERS– Neil Collins is a Reuters columnist. The views expressed are his own –

At the very least, it’s frightfully convenient for the British government to call in the Serious Fraud Office to look into MG Rover, a former carmaker. Whether there’s a shocking crime or not, it suits Peter Mandelson, the Business Secretary, to organise a further delay before this gory case is finally closed.

It took BDO Stoy Hayward’s partner Gervase MacGregor 16 million pounds and four years to report on a case which looked open and shut at the time. Whatever exciting new detail he has unearthed, this attempt to smear the so-called Phoenix Four is little more than political treachery.

The Four, as John Towers and his three cronies were immediately dubbed, saw an opportunity. They might have genuinely believed they could make a go of a business where even BMW had failed, but few others did. BMW gifted them the company, added 427 million pounds and the (uncomfortably large) stock of unsold cars, and gratefully walked away.

The cash allowed Towers & Co to pretend that a sub-scale business, producing unattractive, high-cost models in an industry with chronic overcapacity could be made viable. When the money ran out, five years later, the plant had to close.

On what we know so far Towers & Co, who helped themselves to over 40 million pounds during their tenure, are guilty of little more than greed. In 2000, the Trade Secretary was Stephen Byers, a man with an impressive record of errors. The Rover unions were obsessed with preserving jobs in the face of the facts, and between them and Towers, Byers was bamboozled into awarding it to the incompetents. Since little public money was involved, it looked like an easy decision.

The only alternative (barring complete closure) was put forward by Jon Moulton, who proposed selling off most of the site and continuing to make MG sports cars, the only niche of MG Rover with any value. He was swiftly tarred by the unions as an asset-stripper, and the Phoenix Four took the wheel.

The real tragedy here is not that Labour made such an obviously stupid decision, but that it blighted the lives of thousands of Rover workers. BMW’s 427 million pounds was there to fund generous redundancy terms for them. By the time the money was needed, it was gone, and the workers were five years older, less able to find a career elsewhere. A study nearly two years on found that almost a quarter of them were not in regular employment, despite a two million pound support package from the government.

There is a common theme running through this dispiriting affair. At every turn, the government has acted so as to minimise its own embarrassment, so perhaps we should not be surprised to see Mandelson’s spoiling tactics continuing this baleful process.
(Edited by David Evans)

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