Whilst the Phoenix Four – via their media spokesperson – engage in an a somewhat unseemly public spat over who was responsible for the collapse of MG Rover four years ago with the loss of 6,300 jobs at Longbridge and several thousand more in the wider economy, we need to remember who really lost out here. I doubt if it was the Phoenix Four, who did rather well out of the whole affair – after all their remuneration, pensions and other benefits ran into the millions.
Rather, it is the workers and their families, who deserve some answers as to what went so wrong at MG Rover under Phoenix’s stewardship.
Lord Mandelson’s statement earlier this week that the Serious Fraud Office (SFO) is to investigate the circumstances surrounding the collapse MG Rover back in 2005 did genuinely come as a surprise in that if there were grounds for calling in the SFO, one wonders why it wasn’t done much earlier.
However, Mandelson was acting on the advice of government lawyers, and I don’t buy the argument that is an attempt to kick the report into ‘the long grass’ as some on the Tory benches have claimed. In fact, the government has attracted a lot of political flack for doing this.
If, as some suspect, the inquiry report does contain criticism of the government, then politically it would make sense to get it out into the open now so that it’s forgotten by the time of the next election. The government instead have asked the SFO to look at the facts.
If there is the possibility of a prosecution then the SFO needs to be given the time to look at this without their efforts being potentially prejudiced. Hopefully the SFO can act quickly so that one way or another the next steps become clearer. What is important is that (a) workers get answers soon (they’ve been waiting for four years) and (b) the money locked up in bank accounts can be released to the MG Rover Trust Fund.
None of this is to say that the government isn’t beyond criticism; hopefully the Department of Business report will pick up on this.
However, it probably won’t be the kind of criticism that the Phoenix Four have been levelling at the government over the last week. Rather, the government could well get flack for intervening to pay Rover workers’ wages for a week back in 2005 to see whether a Shanghai deal could be salvaged, a point which Ken Clarke makes in today’s Post.
Actually, there is a deeper and more profound criticism of the government in the failure – or non existence – of their industrial policy. It was clear to many analysts that MG Rover was running out of time back in 2002/3 when it was flogging off key assets such as land, its finance arm and parts division in an increasingly desperate attempt to keep going, and still had failed to find a partner.
Government help at that point may have helped the firm in getting to Shanghai earlier, yet such proactive intervention has not been seen part of government industrial policy – nor did Phoenix appear to be asking for such help back in 2002/3 (perhaps they could correct me on this if I’m wrong).
That lack of a coherent industrial policy can be seen again today in the ongoing crisis affecting the industry. Whilst the government has rightly introduced a scrappage scheme, and announced a £2.3 billion auto support package last January, not a single penny has yet reached any auto producer in the UK. Nor has any support for car finance arms been forthcoming, unlike in the US, Japan and France.
As Ken Clarke rightly points out in today’s Post, “support should be given to the credit arm of the companies to enable them to offer good terms for hire purchase schemes and loans. Lord Mandelson at one time supported that but couldn’t get the Treasury to agree… what we have seen is for months is that he’s talked about helping the car industry and produced nothing.”
Above all, though, it is the MG Rover workers and their families (and indeed today’s LDV workers) who need to be remembered. As our Economic and Social Research Council funded research has shown (see here for recent Post coverage of this), the human toll of the firm’s collapse has been profound.
The need for workers to change occupation to find employment resulted in significant pay cuts, with average pay falling by £5,640 per year in real terms. Two-thirds of workers suffered wage falls while a third reported an increase in their salaries. People who found work in four sectors – wholesale and retail, real estate and business services, education and health and social work – took average cuts of more than £6,000 in annual income.
Our work shows that nearly a quarter of workers surveyed were in debt or dipping into savings while 36 per cent said they were “just about able” to manage on their incomes. And judged against national levels, it appears that the ex-Rover workers moved into jobs with lower levels of autonomy, challenge and skill use, and fewer opportunities for progression than other workers in the UK.
It is important to note as well that many workers had worked at Rover for a very long time, some even all their life, and the closure came as a real shock. Our interviews indicate that while some were ready to move on almost immediately, others needed more time to adjust. Many had never been unemployed. They did not know how to write a CV or how to behave during a job interview.
A majority found the experience of going to the Job Centre very difficult. Many reported high levels of stress and anxiety during the first year after the closure. Support from family, friends and ex-colleagues was critical – in fact, 70 per cent of workers reported finding their current job through personal networks or initiative.
Despite all of this, thanks to much personal initiative and a huge effort by government agencies to pick up the pieces, 90% of ex MG Rover workers were back in work a year ago. Yet for some that remains a precarious situation, with many having had more than one job since Longbridge closed. Some will also have lost jobs again in the recession.
These are the real victims of this sorry story, and we need to bear this in mind in the future in backing high quality manufacturing jobs and R&D in the future – starting with JLR.
PS The Phoenix Four’s criticisms of Lord Bhattacharyya are well wide of the mark. He is a distinguished industry expert who has done much to support manufacturing in the Midlands.