Too little, but not too late

By Derek Simpson

Let me be clear: Unite welcome the assistance announced this afternoon by Lord Mandelson. But we, and Britain’s car workers, are disappointed. While we welcome any support for technological change in the future, this money from Europe is months away. There could be little left of the industry by the time it arrives. Britain needs those factories and skills there for when the economic revival comes – if they go, they are gone forever.

So this package is too little. But it is not yet too late.

Ministers must leave behind the failed free-market philosophy once and for all and intervene decisively now. The principle of government intervention to support strategically vital industries, such as the car industry, has now been established, and we will be pressing to ensure that we build on this from here on in. Let me explain why.

It used to be said in the 60s and 70s that if Ford sneezed the economy caught a cold. The car industry is just as important an indicator of the health of the economy now as it was then. Tens of thousands of jobs depend on it in every part of the country, in direct assembly, in parts manufacture and in retail. There are also the spin off jobs in communities around manufacturing plants, and of course the raw material producers like the steel and rubber industries that would also suffer if the car industry collapsed.

The snowball of the economic downturn that was started rolling by the credit crisis will swiftly become an avalanche if the government doesn’t move to stop it in its tracks. Tinkering around the edges of intervention won’t achieve anything. Millions of jobs will still be lost and millions of pounds will be wasted.

Car producers in the UK are hanging on by a thread because of a lack of credit from the banks and a dramatic fall off in demand for cars. The UK car industry has, more than any other in Europe, been through two decades of punishing rationalisation bringing massive improvements in efficiency, productivity and profitability. This is no lame duck or smokestack industry. Everyone in the industry holds the strong belief that demand will pick up again in the near future and that producers that are able to hold onto their workforce over the slump will be in a prime position to benefit from the recovery.

Other European governments are pouring huge sums of money into their domestic car industries in the hope of establishing a material advantage over counties whose governments take a free market approach. Germany and France have used similar measures over recent decades to protect industry and have enjoyed a much slower decline in manufacturing output and employment than the UK has during the same period.

There is no evidence to support a view that half-hearted support for industry will have any success at all. So Unite is urging the government to learn the lessons of past failures to support manufacturing and build on today’s programme of emergency support for strategic industries of which car production is most certainly one. We are calling for £13 billion of funds to be made available to provide interim relief for producers and to cover employment costs during the crisis period. The government must also use its stake in the banks to free up credit for consumers to kick start demand again.

Today’s announcement was a start, but it’s time for the government to do even more to take industrial policy out of neutral.

For details on the government’s plan, click here.