Peter Mandelson said at the weekend that there would be “no blank cheque” for industries suffering from the credit crunch.
But he sounded a little disingenuous when he claimed: “I don’t expect such a queue to form and one will not be welcomed.”
He and other ministers are aware that after the multi-billion pound bailout of the banks there would be a stream of delegations from other sectors.
So far we have had last week’s summit with the car manufacturers (including General Motors, Nissan and Jaguar Land Rover), echoing the US bail-out of the Big Three in Detroit.
This morning we revealed that Corus is seeking state aid to pay thousands of workers to stay at home as it tries to cut back production by 30 per cent by the spring.
And there are other industries getting out the begging bowl. You may have missed this story about the biotech industry lobbying for state aid. Half a billion pounds of it. (Sir Christopher Evans, the colourful British biotech entrepreneur, said: “The sector desperately needs large sums in investment. We are looking down a deep, dark pit. What we do or don’t do in 2009 is going to change our industry for ever.”)
The construction industry has begged for help. Retailers are no doubt next in the queue as Woolworths and MFI collapse, triggering fears of thousands more job cuts. And I could name other industries in cyclical – as well as structural – decline (newspapers spring to mind).
The problem for the government is that prioritising these demands is the mother of all dilemmas; even if the money was available, which it is not. As a result, every mass redundancy is likely to prompt resentment from those – and the families of those – affected. Will taxpayers start to contrast the swift action to deal with the banking meltdown (seen as crucial to the functioning of the economy) with the lack of real action elsewhere?
Looking back through some of Lord Mandelson’s quotes I couldn’t help being reminded of John Maples – the Tory MP who got into trouble for saying the recession needed to run its course.
Here is what Maples said: “The recession has to take its course— [ Interruption. ] Just listen. Bad debts have to be written off, bad investments have to be written off and people and businesses need to repair their balance sheets. The Prime Minister knows that, even if some of his Back Benchers do not. If that does not happen, there will not be a solid base for recovery.”
Mandelson would argue that the government will provide help where possible – in contrast to the non-interventionist views held by some traditional Tories.
But here is what he said in a Sunday Times interview: “Those that have invested and lent money to businesses have the first responsibility and self-interest in helping firms survive. Businesses faced with trouble will need to look at restructuring, debt will need to be rescheduled and sometimes debt will need to be swapped for equity…We will not be supporting companies with flawed business plans and companies with no prospect of recovery.”