A great way to shred £40bn
It's all so long ago now. But as Tyler recalls it, Labour didn't actually manage to pick any winners during the 70s.
Take Inmos, a computer chip maker funded by Labour's neo-Stalinist National Enterprise Board. That was supposedly going to catapult us forward into the white heat of a hi-tech industrial doobry.
Inmos ended up costing taxpayers over £211m (about £1.5bn in today's terms) and never making a profit (although in fairness it was finally flogged off by Thatch at a loss only running into tens of millions - call it £0.5bn today).
In similar white hot vein, there was ICL, Cambridge Instruments, NEXOS... well that's what it says down here, anyway. You've perhaps never heard of them because most were only ever kept going by government contracts, and have long since gone phut.
Actually, even their government contracts were only awarded for stuff nobody cared about - when Tyler worked at HM Treasury in the late 70s, and the IMF was insisting we make a proper effort to stay on top of the spinning dials, the office computer had to be American because the ICL offering wasn't deemed capable of
Then there was the motorbike manufacturer that produced temperamental bikes nobody wanted to buy... or was that later? Then there was... umm... ah... well, surely there was something else... ah yes - of course - Roll Royce.
Rolls Royce was the great success story of 70's government intervention. When it blew up over-reaching on the RB211 jet engine development, Heath nationalised it. But it did go on to prosper, and when it was privatised again in 1987, taxpayers copped £1.4bn... except that takes no account of all the loan capital we'd supplied in the interim - net net it was probably a wash.
Virtually everything else turned into a money-pit. And the money-pit to end all money-pits was the car industry.
It is reckoned that BL alone cost taxpayers nearly £3bn in direct subsidy (1975-1988) - in today's terms that's £15-20bn (plus the final £250m sting in the tail we blogged here).
And the overall cost was even higher than that, because for years UK car prices were kept artificially high in order to protect BL. That was done via a "gentlemens agreement" with the Japanese manufacturers, under which their exports to the UK were restricted. Over the years that probably doubled the support costs - ie an overall bill in today's terms of £30-40 bn. And that leaves out the support to all the other manufacturers, such as the Rootes/Chrysler disaster.
So here we are again: a Labour government about to bail out the car industry; a Labour government about to pour billions more of our cash into that same old money pit.
To be honest, we can't really improve on this excellent defence of taxpayers' interests by Martin Vander Weyer. As he says:
"The car industry around the world is overdue for a shake-out, in which model ranges and production levels may have to be drastically cut – and major investments made in new technologies for the 21st century. In the next wave, fewer cars will be built in high-wage economies, and more built in China, India, Turkey and Latin America. The only western factories that prosper will be those that are extremely efficient and at the cutting edge of technology, both in terms of what goes into cars and how they are put together...
Ford invested billions in modernisation [at Jaguar] but could not make it a consistently profitable business. It needs another wave of investment to make its model range greener and to bring its image up to date..."
And jobs? When BL was bailed out in the 70s, it employed over 150,000 directly, and over half a million more indirectly. But now, Jaguar/Land Rover only employ 15,000 directly, and at most, 60,000 indirectly. The bulk of the 800,000 employed in the motor industry overall (including the garage biz) would not be affected if the company went under.
So why is it one rule for the evil banks and another for honest manufacturers?
It isn't. The only reason we're bailing out the banks is that they are vital infrastructure for a modern economy in a way that motor manufacturers aren't. We most definitely aren't protecting banking jobs - so far this year its reckoned that 65,000 jobs have gone in financial services, and the pain most certainly ain't over yet.
And there's one other important point. We're already giving massive support to our car manufacturers, via the 25% fall in sterling. That's a big boost to their competitiveness - good - but as we've blogged ad nauseam, it costs the rest of us a packet.
It's back to the 70s alright. We'd better just hope Labour don't manage to collect too many lame ducks before the creditors call time.