Joined up government? The Government's love-hate relationship with the British car industry

The Government have announced plans to assist the British car industry, the Times reports that car chiefs say they need more. Unfortunately, not so long ago they were announcing plans to put in place crippling new taxes on already overtaxed motorists, particularly on the owners of larger cars.  Those larger cars are exactly the kind made by firms like Jaguar Land Rover, a firm ministers have been particularly keen to assist.


At the TaxPayers' Alliance we don't want to see the British motor industry go out of business, but we'd rather the Government focussed on letting British consumers save marques like Jaguar the old fashioned way - by buying their cars.


Here is a short piece I wrote for the Scotsman on this subject, similar arguments apply to many of the firms that will benefit from the new bail out:


"India’s Tata motors has agreed to inject tens of millions of pounds into Jaguar. Hopefully, this will give the company breathing room and avoid the need for taxpayers’ money to be committed, once again, to help a private company.


There shouldn’t be any need for taxpayers to step in to help out just because Jaguar is having a bad year. If the firm is to be able to exist in the long term it needs to be able to deal with boom and bust years. Jaguar and Land Rover are both luxury marques and demand will fluctuate with economic conditions.


Tata is a big company; it is India’s biggest car maker with revenues of $8.8 billion in 2007-08. If it wants the prestige and, in good times, healthy returns that come with owning luxury marques then it will have to put money into Jaguar Land Rover to keep it afloat when conditions are tough. We absolutely shouldn’t set the precedent that a major foreign multinational can play heads I win, tails you lose with the British taxpayer.


If the Government want to help the company it should rethink some recent policies that clearly make it harder for people to keep Jaguar and Land Rover in business the old fashioned way – by buying their cars. Plans for eye-watering increases in Vehicle Excise Duty on big cars may have been delayed but they will still be alarming potential buyers. Increases in Fuel Duty are disproportionate – charging motorists far more than is justified by the need to build and repair roads or the potential contribution of motoring to global warming. Emissions standards are being tightened extremely fast and it is hard for smaller manufacturers like Jaguar Land Rover to keep up. Taxpayer subsidies won’t help companies that have built their brands around making large, prestigious cars.


If the Government want to tax and regulate people out of buying luxury cars then they should be honest with the public that such a move is sending Jaguar Land Rover the way of the dodo. Bashing Land Rovers and Jaguars one minute, and then bailing out the company that makes them the next, is either muddled thinking or playing dishonest politics at the taxpayers’ expense."

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