Press Comment : HMG tried to shift blame for EIB loan delay on to Tata
Howard Wheeldon, Birmingham Post, 28th July, 2009
Birmingham-born Analyst Howard Wheeldon points the finger at the Government in the latest round of posturing over the future of Jaguar Land Rover.
I am indebted to the Birmingham Post last week for the following: Taken from a letter dated July 16 2009 from Business Secretary, Lord Mandelson to Ravi Kant, Tata Motors Vice-Chairman – “As we discussed, I am concerned at the lack of pace on the Tata side in considering negotiations on possible UK Government support to Jaguar Land Rover.”
I should go on to list other embarrassing innuendo contained into the no-doubt deliberately ‘leaked’ Mandelson letter but I will save you further frustration preferring in this case to leave it to your imagination! Clearly, the somewhat ridiculous and unnecessary letter and what subsequently followed was an attempt by the Government to shift the pressure of blame for delay sorting the Jaguar Land Rover European Investment Bank (EIB) loan guarantee request away from the Government and back on to Tata Motors’ management.
Note, though, that the sudden burst of enthusiasm on the part of Mandelson and the Government team came directly following criticism from other MPs. Indeed, it is quite possible that the leaking of this letter to the Coventry Telegraph last week may have been primarily aimed at JLR workers and Midlands-based votes hoping to convince them that it is Tata that has been holding up agreement rather than Lord Mandelson. If so, what rubbish this is and how typical of this particular Government!
Whatever, I am left in no doubt that this latest attempt by Mandelson to walk away from the heavy responsibility it has to JLR and its workforce in attempting to sort out what is essentially a simple matter that comes at no cost and very minimal risk to the British taxpayer has completely failed in its objective.
Whatever, I am left in no doubt that this latest attempt by Mandelson to walk away from the heavy responsibility it has to JLR and its workforce in attempting to sort out what is essentially a simple matter that comes at no cost and very minimal risk to the British taxpayer has completely failed in its objective.” Howard Wheeldon, Senior Strategist, BGC Partners
Reading through the leaked Government letter and being well aware that it is the British Government that has completely failed to get its act together on the JLR guarantee support issue debate – and noting, too, the likely inevitable destruction of trust from a Tata management perspective – these latest bully boy tactics are nothing short of a second insult and humiliation to the Indian-based company that bought JLR last year.
The letter was a follow up to what the (then) Department for Business, Enterprise and Regulatory Reform (BERR) would have us believe was a revised second offer to the company in response to a request for UK Government assistance in guarantees that had its origins no less than ten months ago.
As a response to the Tata request for the British Government to guarantee a £340 million EIB loan it probably reads very little differently to the first although it is just possible that it did move the matter on a touch. However, even if subsequent negotiations have made some progress please don’t think that the Government has changed its mind in being prepared to guarantee more that the £175 million contained in the original offer against the requested £340 million agreed EIB loan offer.
The leaking of this letter needs to be explained and will clearly have further dented trust between Tata and the British Government – leaving Mandelson’s request to speed up talks looking rather absurd.” Howard Wheeldon, Senior Strategist, BGC Partners
I can confirm none of this but I am led to believe that the timing limit of any proposed Government guarantee is set to remain at just six months although it is just possible that the ridiculous 15 per cent up-front charge has been dropped.
That Lord Mandelson had also had the cheek to go on television last week calling on Tata to quicken the pace of talks had not escaped my notice. Bad enough though this was, far worse was the fact that together with the leaked letter it effectively breached an agreement with Tata Motors to negotiate in private. The leaking of this letter needs to be explained and will clearly have further dented trust between Tata and the British Government – leaving Mandelson’s request to speed up talks looking rather absurd. However, whilst the official line of the Government is to push the onus for delay on to Tata and to suggest in public that the Government has a duty to protect taxpayers I am increasingly of the view that beneath the surface there is a softening of the Government’s position.
Given the criticism this does not surprise me. I am reliably told that the Government is seeking that the JLR issue should be resolved quickly and that, while intending to retain some broad principles of the original offer, we should expect larger sticking points to soon be removed. My guess is that, given removal of the most onerous of the original terms, Tata Motors would likely then accept a better-than-nothing deal with the British Government – maybe over the next ten to 15 days.
[Source: Birmingham Post]
[Editor’s Note: Howard Wheeldon is Senior Strategist at broker BGC Partners.]