Tuesday, 27 January 2009

The latest Mandelson madness

Today we witnessed a quite bizarre policy announcement by Lord Mandelson. It was leaked to the BBC as a major initiative in the battle against recession and reported as such by Robert Peston, the government's leakee-in-chief. In his blog he painted a picture of the government giving massive guarantees for bank lending to car manufacturers, something he had to qualify with an addition to his blog after the announcement was actually made. Lord Mandelson's plan is to seek to support research into and development of motor vehicles powered by non-oil based fuels and to pay grants to assist in the cost of retraining some employees of motor manufacturers who are expected to lose their jobs. It was all dressed-up in, the now customary, green guff. I have been wracking my so-called brain to see what this measure can do to help ease the enormous problems motor manufacturers are bound to face over the next few years. The most persuasive answer is: virtually nothing.

No one should be in any doubt that the pincer movement of recession and eco-fascism will hit motor manufacturing very hard. During poor Gordon's doomed boom people replaced their cars sooner than they would otherwise have done because credit was readily available to allow them to do so, now they will hold on to them longer thereby reducing long-term demand for new vehicles. There was little domestic demand for cars over ten years old and those not exported were scrapped when many of them had years of useful life remaining. Now, far more will be driven until they can be driven no longer - just as was the case not very many years ago. At the same time the increased cost of running a car (caused by pandering to the eco-fascists) will cause people to drive less, thereby lengthening the useable life of their vehicle. Green wibble will also force people out of cars and onto public transport, bicycles and donkeys; thereby further reducing the demand for both new and second-hand cars.

Demand for the goods produced by motor manufacturers will, therefore, suffer a massive fall during the recession and has no chance at all of recovering to pre-recession levels because of the continuing kowtowing to selfish greenie bigots. Either we face that fact or we don't. If we do, the proper role of government is to avoid subsidising a failing industry and to make fair provision for retraining and education courses for those unfortunate enough to lose their jobs. If we don't, there would be an argument for trying to keep manufacturing capacity in place pending an upturn (an extremely weak argument, but an argument nonetheless).

The production of non-oil-powered motor vehicles is, in my view, an admirable aim. At the moment we are at the mercy of the OPEC cartel and, as we saw last year, it is possible for petrol and diesel prices to go through the roof in a short space of time. Our government is not prepared to help in such a situation because it has painted itself into a corner using two different but equally wet paints. First it is dependent on the enormous tax revenues from motor fuel and secondly it is committed to nutty greenery which will not allow a reduction in those taxes even if they wanted to make one. So, if we can find a way of replacing oil-fueled cars with something else we would at least free ourselves from the OPEC stranglehold. Unless, of course, they run off electricity generated using oil or gas in which case we are out of the frying pan and into the fire with the added threat of Mr Putin having a say once UK produced gas is insufficient to meet demand.

There are currently available some rather sweet little electric cars with a maximum range of, I believe, thirty or forty miles before you need to unplug the kettle and plug in the car. It is clear that they are forerunners of the replacement for the internal combustion engine but we are clearly years away from this new technology being able to produce vehicles of a sufficient size and with a sufficient range to replace existing cars. In the meantime it seems fair to infer that many will be priced out of having their own car.

When reading Lord Mandelson's speech the question that came to my alleged mind is something I mentioned in my last missive: what is the plan? What is the strategy? Why is he throwing bags of our money at research into non-oil motor vehicles? There can only be one sensible reason - to bring forward the day such cars can be produced in large numbers. So, he wants us to be able to travel in our own vehicles. Thank you Lord Mandelson. And in the meantime what steps are he and his government taking to keep us travelling in our own vehicles? Ah, yes, they are making it more expensive year-on-year and telling everyone to get out of their cars and onto buses and trains. Yet another example of this government pulling in two directions at once.

And what of the current manufacturers? They have seen the writing on the wall for some time. They know the days of the internal combustion engine are numbered and have been looking into alternatives, spending countless millions on research and development so that they can still be in business when old technology gives way to new. Why, then, is the government pumping extra money into this now for no apparent return? Do they fear that the drop in demand for new cars will be so severe that major manufacturers will be forced out of business? Maybe, but even if some are forced out of business others will remain and they will pick up the research and pay for it themselves because the forces operating against existing technology will not go away.

It is usually safe to work from the presumption that any domestic policy put forward by Lord Mandelson is designed with one end only in mind, to keep the Labour Party in power. I know this is one of my constant themes, but it is so important that I feel justified in repeating it: government that governs for itself and not for the people will always harm the people. Only a tiny handful of jobs will be preserved or created by this measure yet Lord Mandelson clearly hoped he would appear to be acting to protect the jobs of thousands of workers in the many marginal constituencies housing car makers and component suppliers.

He didn't step in to save 30,000 retail jobs when Woolworths went under because they were spread all over the country. But when some of the constituencies in which sitting Labour MPs have small majorities might be hit by a particular industry going through hard times he feels he must appear to be doing something. It really is so dishonest, so party political and so contrary to the responsibilities of the government for the UK as a whole that I can only hope it backfires. We cannot reasonably expect Rolls Royce government but one of the worlds most developed countries should be able to expect Saab government at the very least. We seem to have a Lada.

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