Peter Jackson column

Apr 7 2005 By Peter Jackson, The Journal

There seem to be certain recurrent themes to life, certain things that come round with the regularity of Halley's Comet, though with much greater frequency.

Among these I number: General Elections, new Dr Whos, the creation of one-stop-shops for business advice, and, of course, talks to prevent the collapse of MG Rover.

Actually, it's not always been MG Rover - it could be Austin Rover, or Leyland or British Leyland. Unlike Dr Who, it's the name that changes, while the physical form largely remains the same.

As I write, MG Rover and the Shanghai Automotive Industry Corporation, SAIC, remain committed to clinching a deal which will secure the British car maker's future.

The proposal is that SAIC, which has already invested £67m in the UK company, should take a 75pc stake in a new joint venture which will control MG Rover.

However, despite a £100m bridging loan from HMG, there are fears that Rover's finances have deteriorated over recent months and the Chinese are seeking some form of guarantees of the company's financial stability.

So it looks as though a deal, which the two sides have been discussing for about six months, might fail at the last minute.

I doubt it somehow. If I was advising SAIC or the Phoenix consortium which owns Rover and which, reportedly, is being asked to put more money into the company, I would tell them to just sit tight and wait for the British Government to come up with the readies.

I would explain to them that if SAIC walked away from the deal, there is a high risk that MG Rover could be forced into administration.

I would further point out that the UK is only four weeks away from a General Election (I might have to provide a lot of background explanation for the Chinese on this one).

I would go on to describe how the company has 6,000 staff in Longbridge and that thousands of other West Midlands jobs are dependent on its continued existence.

Finally, I would explain that these jobs are in constituencies which have a tendency to decide the fate of General Elections and that there is not a snowball in hell's chance that Messrs Blair or Brown are going to let something so untoward happen.

In fact, I don't think SAIC or Phoenix, or a five-year-old child, need my advice on this one.