Which industries/businesses should be bailed out by Govt?

[Dave1987]

With all the very passionate debates going on about the UK Steel industry, and the fact that some people are adamant that the Govt should be stepping in and subsidising steel production to save the jobs, I would like to discuss which businesses/industries people believe should be "bailed out" by Govt. When CityLink went bust there was an immediate call for that to be nationalised even though it wasn't a viable business.

So which industries/businesses should be taken over by Govt if they fail?

 

[Domh245]

I have a suspicion that most of the replies to this thread will be along the lines of:

Things that I care about/are relevant to me

 

[455driver]

Any that are still (properly) British owned, they shouldn't help Johnny Foreigner owned Companies because any subsidy will go straight out of this Country or they would deliberately plead poverty to get the bale out money!

 

[dakta]

My main concern is ensuring we're able to stand on our own two feet as a nation if push comes to shove.

Engineering, manufacturing, services etc.

Obviously it's questionable to bail out a business that isn't viable, but we should have some core interests we should protect quite fiercely. I'm not against international companies doing business here or investing/winning contracts over here, but we do need to protect our own as well.

 

[Moodster020]

Doing any of that is against EU competition rules.

 

[Chapeltom]

With all the very passionate debates going on about the UK Steel industry, and the fact that some people are adamant that the Govt should be stepping in and subsidising steel production to save the jobs, I would like to discuss which businesses/industries people believe should be "bailed out" by Govt. When CityLink went bust there was an immediate call for that to be nationalised even though it wasn't a viable business.

So which industries/businesses should be taken over by Govt if they fail?

Elephant in the room, state aid is against EU rules. Something no one wants to mention, and would rather avoid. So they just blame the Tories because the media can't be bothered/don't want to tell the truth about how much legislation at European level hinders our own democratically elected government.

But don't worry, everyone will blame the Tories in blind ignorance anyway.

 

[muddythefish]

Industries that are strategically and commercially vital vital to the country's economy should receive govt support in they get into temporary difficulties.

Steel, the basis for most construction projects and manufacturing outputs, is one of them.

 

[EM2]

Doing any of that is against EU competition rules.

But bailing out banks isn't? Any idea why?

 

[dakta]

I'll be honest I'm more than a touch sceptical towards the EU and so for me it's rules can dance.

 

[Johnuk123]

Elephant in the room, state aid is against EU rules. Something no one wants to mention, and would rather avoid. So they just blame the Tories because the media can't be bothered/don't want to tell the truth about how much legislation at European level hinders our own democratically elected government.

But don't worry, everyone will blame the Tories in blind ignorance anyway.

In the past as soon as anybody on here uttered the slightest criticism of the EU they would be jumped on from a great height by the usual suspects.

As the EU lurches into impotent insignificance especially regarding Germany's disastrous migrant crisis they have gone into exile.

 

[Dave1987]

We let me through something out there, Tesco, still a British business and one of the only remaining British owned supermarkets. It's in severe decline at the moment so if (and its a big if) it went bust would people be expecting the Govt to step in?
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But bailing out banks isn't? Any idea why?

The Govt bought shares, they did not "nationalise" them per say.
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Industries that are strategically and commercially vital vital to the country's economy should receive govt support in they get into temporary difficulties.

Steel, the basis for most construction projects and manufacturing outputs, is one of them.

Sorry but your argument holds no water when you consider that with all those plants going, they produce far far more steel than the country needs. To keep them all going on max output you would need to export a lot of steel. So the taxpayer would be effectively subsidising steel for other countries if all the plants were kept going in the current global economy. It isn't quite as crystal clear as you think it is. The problem the UK steel industry is facing is a strong pound and mass overproduction throughout the world so they can't export steel.

 

[EM2]

The Govt bought shares, they did not "nationalise" them per say.

OK but why is that not state aid?

 

[DarloRich]

With all the very passionate debates going on about the UK Steel industry, and the fact that some people are adamant that the Govt should be stepping in and subsidising steel production to save the jobs, I would like to discuss which businesses/industries people believe should be "bailed out" by Govt. When CityLink went bust there was an immediate call for that to be nationalised even though it wasn't a viable business.

So which industries/businesses should be taken over by Govt if they fail?

This may come as a surprise:

As a general principle I don't think government should bail out failing businesses. They can not on one hand claim that the market is king while on the other hand complain the market has dethroned them.

However the government made a decision to bail out bankers. Regardless of the semantics of how they did it they paid taxpayers money to private companies to keep them going. That sets a precedent and simply makes every failing industry ask why they are not as special as the banks.

What I do criticise is the inability of government to do anything about the fall out, about the human impact and for failing to take steps that could aid business through a sticky time. I am doubly critical when these industries are located in areas already deprived and where finding replacement work will be incredibly hard.

I also detest the lie of EU rules stopping any form of help. Our continental cousins seem to be quite happy to ignore those rules as it suits. Why cant we?

So OP which industries do you think should be offered a bail out?

 

[Dave1987]

So OP which industries do you think should be offered a bail out?

None plain and simple.

I think you are miss understanding why the Govt of the time (a Labour Govt I might add!) bought shares in the banks to keep them afloat. The banks at the time we considered 'too big to fail', and if they did fail they would have taken millions of £'s of peoples deposits with them. That is why the Bank of England now does 'stress tests' on banks to see which one would fail if 2008 happened again. Any banks that would fail are required to boost their assets to ensure they could survive another crash.

 

[Moodster020]

But bailing out banks isn't? Any idea why?

Given the fact that banks have been colluding with the EU for a long time (think the Goldman sachs scandals) i would say they're given preferential status.

Even so, the bank bailouts wasn't long-term (offloading as soon as poss). Here's the guff: http://ec.europa.eu/trade/policy/ac...ons-against-imports-into-the-eu/anti-subsidy/

 

[Pinza-C55]

My main concern is ensuring we're able to stand on our own two feet as a nation if push comes to shove.

Engineering, manufacturing, services etc.

Obviously it's questionable to bail out a business that isn't viable, but we should have some core interests we should protect quite fiercely. I'm not against international companies doing business here or investing/winning contracts over here, but we do need to protect our own as well.

UK manufacturing as a percentage of GDP = 10%

Good luck on that one.

Puerto Rico manufacturing as a percentage of GDP = 47%

http://data.worldbank.org/indicator/NV.IND.MANF.ZS

 

[muddythefish]

Sorry but your argument holds no water when you consider that with all those plants going, they produce far far more steel than the country needs. To keep them all going on max output you would need to export a lot of steel. So the taxpayer would be effectively subsidising steel for other countries if all the plants were kept going in the current global economy. It isn't quite as crystal clear as you think it is. The problem the UK steel industry is facing is a strong pound and mass overproduction throughout the world so they can't export steel.

I didn't say they should be kept going on "max output", or even kept in production when times are hard. But they should certainly not be closed down and mothballed at least for when demand picks up. And yes, it costs taxpayers money, but then it would be money well spent in the long term. It requires something more than the short term thinking we see all the time and looking past the end of your nose.

 

[DarloRich]

None plain and simple.

I think you are miss understanding why the Govt of the time (a Labour Govt I might add!) bought shares in the banks to keep them afloat. The banks at the time we considered 'too big to fail', and if they did fail they would have taken millions of £'s of peoples deposits with them. That is why the Bank of England now does 'stress tests' on banks to see which one would fail if 2008 happened again. Any banks that would fail are required to boost their assets to ensure they could survive another crash.

I know exactly why they did it. They felt there was no choice after the banksters gambled all of our money on the financial equivalent of the 3:15 at Haydock and lost meaning the entire financial system was on the brink.

Letting the banks fail would have simply dragged normal people into the mess as the system collapsed. They were right, although part of me thinks they should have said sorry chaps, your problem you sort it out.

And it doesn't matter if the government bought shares or not, it was still a massive bail out and a nationalisation in all but name which is denied to other industries that fail. The terms of the bail out were also far to weak. The government should have screwed the "casino" bankers to the floor in return for financial support to ensure it couldn't happen again and that the guilty people were punished.

It must be obvious why many people think government are happy to bail out their city chums yet not working people and why that angers so many people. Especially when the bankers are said to deserve their vast bonuses despite failing in a spectacular fashion!

Where do you stand on indirect support through, say, business rate rebates or taxation changes or development loans to aid struggling businesses? What about support after the event to those effected?

 

[dakta]

Good luck on that one.

Forgive my wishful thinking! We're doomed, just trying to stay positive.

 

[radamfi]

If the government doesn't spend money propping up businesses, that money could be used for other government spending, which could directly or indirectly create jobs or prevent jobs being cut, for example in public services or infrastructure. Or at least prevent cuts being quite as severe as they might have been.

Even if it is not spent, that money would then be used paying off the national debt, which could lead to greater ability for public spending in the future because of less money spent on interest (and therefore more potential jobs), or the money could be used for tax cutting to improve spending power, and thus create jobs or save jobs from being cut.

So it is really a question of whether bailing out a company is the best value you can get out of those £s. If you don't bail out a company, whilst those jobs would be lost, you might gain jobs elsewhere that you wouldn't have been able to create if that money had been spent on the bailout.

 

[RichmondCommu]

UK manufacturing as a percentage of GDP = 10%

Good luck on that one.

Puerto Rico manufacturing as a percentage of GDP = 47%

http://data.worldbank.org/indicator/NV.IND.MANF.ZS

One suspects much of that comes from mining minerals as opposed to actually making anything though.

 

[455driver]

I'll be honest I'm more than a touch sceptical towards the EU and so for me it's rules can dance.

I agree,
We are the only ones sticking to the rules though, everyone else just pays lip service to them, I mean it cant be a coincidence that Siemens always wins orders for DB, and Almost oops I mean Alstom always winning orders for France, yep purely coincidental!

To those who are saying we cant afford to save these industries because it would take funds away from other places, why not reduce the Foreign Aid budget, that is basically giving money away!

 

[Xenophon PCDGS]

Are there any overseas countries that could take exception to British-owned companies that trade in any sector of that country and react accordingly...or have all these now all gone into non-British ownership?

I am thinking of how Venezuela suddenly made a political decision in relatively recent times to act against foreign-owned corporations trading in that country and the manner in how that occurred?

 

[Pinza-C55]

One suspects much of that comes from mining minerals as opposed to actually making anything though.

Mining minerals is actually "industry" in a way that Costa Coffee isn't though. There's a raw product which you sell to another country for a profit.
--- old post above --- --- new post below ---

Are there any overseas countries that could take exception to British-owned companies that trade in any sector of that country and react accordingly...or have all these now all gone into non-British ownership?

I am thinking of how Venezuela suddenly made a political decision in relatively recent times to act against foreign-owned corporations trading in that country and they manner in how that occurred?

In Thailand foreign companies have to jump through hoops in order to own Thai companies or even land. Ironic in view of SSI owning Redcar steelworks.

http://www.samuiforsale.com/knowledge/thai-business-law.html

 

[Bletchleyite]

Letting the banks fail would have simply dragged normal people into the mess as the system collapsed.

Indeed, therein lies the problem. The banks did not deserve to be bailed out, but if they hadn't a complete collapse of the financial system as has occurred in places like Albania in the past may have occurred, and if it had we would have been propelled straight back into being a third-world country.

Ideally, the Government should not bail out nor nationalise any private company[1], it should instead provide quality support for those made unemployed by any such failure to get them into new employment (and if necessary providing support for the creation of such employment). But if the entire economy was at stake...

[1] I am broadly in support of railway renationalisation as an option, but I wouldn't do that by buying TOCs, I'd do it by setting up a new organisation to take over franchises.

 

[radamfi]

How are we defining "British company" in this thread? Shares in companies listed on the London Stock Exchange can be bought by anyone in any country and big shareholders are typically big institutions which could similarly be owned internationally. Even non-listed companies such as Virgin have investors and partners that are listed companies or foreign-listed or foreign-based. You also have companies that are foreign owned but are still in practical terms British based. For example, when Arriva was bought by DB, the head office remained in Sunderland.

I think you are generally only looking at small family businesses if you want a company that is totally "British".

 

[Tetchytyke]

Indeed, therein lies the problem. The banks did not deserve to be bailed out, but if they hadn't a complete collapse of the financial system as has occurred in places like Albania in the past may have occurred, and if it had we would have been propelled straight back into being a third-world country.

I think the threat of a "complete collapse of the financial system" was vastly overstated and Gordon Brown bought it hook, line and sinker. Brown had a history of doing that; the gold sale he is (rightly) vilified for happened because Goldman Sachs had gambled on the price going down and, if he hadn't dumped the gold on the market, would have lost billions.

FWIW I think life would largely have gone on, just as it did in Argentina and just as it is doing in Greece and Cyprus. I don't think investment banking is anywhere near as indispensable as the bankers like to think it is.

As for "EU rules preventing state aid", that is, quite frankly, a load of bull. There are no EU rules that prevent governments being shareholders, or even majority shareholders, in any business. Electricite de France, who have just signed a deal (with the Chinese) to build new nuclear power stations in the UK, are effectively owned by the French government (and have used the French secret service to spy on Greenpeace in the past).

I'd agree that the government couldn't just give a huge sack of cash to one steel manufacturer and not another one. But then that would never be a sensible way of resolving the situation anyway. Ineos, who we all remember threatened to close Grangemouth oil refinery unless they were given a big sack of cash, were given a £230m loan guarantee by the UK government to keep the plant open "invest in the plant", despite the fact their owner Jim Ratcliffe (personal wealth: £3.5bn) moved the company HQ out of the UK to save £100m a year in tax.

 

[DynamicSpirit]

With all the very passionate debates going on about the UK Steel industry, and the fact that some people are adamant that the Govt should be stepping in and subsidising steel production to save the jobs, I would like to discuss which businesses/industries people believe should be "bailed out" by Govt. When CityLink went bust there was an immediate call for that to be nationalised even though it wasn't a viable business.

So which industries/businesses should be taken over by Govt if they fail?

I would say that's it's not a question of picking particular industries, but a rather a question of looking at case on its merits, and saying, would allowing this industry or this business to go bust cause sufficient harm to the UK that we should rescue it. Factors that would suggest rescuing would be:

• Strategic importance to the UK (for example, if the industry lets us avoid imports from potentially unstable countries).
• Other industries depend on the failing industry (this was arguably the reason for rescuing the banks).
• The failure is due to short term circumstances which may well be different in a few years time.
• Communities depend on the industry, with little prospect for workers to be reemployed elsewhere.
• The industry does not exist to any great extent elsewhere in the UK, and re-establishing it later on would be difficult (for example, due to lost skills).

The problems at Redcar certainly seem to me to satisfy some of those conditions, which suggests there may be a case for rescuing the steel industry there. On the other hand, something like a supermarket going bust is unlikely to meet those criteria.