Britannia Radio

One of my least favourite journalists, a real NewLabourite, 
nevertheless clearly has the contacts with the head honcho in the 
government. Mandelson,  So it is instructive to see the way the man 
is thinking.

Clearly they are thinking entirely short-term and quick fixes or 
'patches' on the wounds.   Politicians never have the slightest idea 
about picking industrial 'winners'.  Labour still has it in its DNA  
- the Tories have largely learned that lesson.   But nothing here is 
looking to the future beyond the next election.

In another bit of The times under the heading "Lord Mandelson fails 
to deliver" the Business editor comments  -  inter alia    - "Then 
there are the new measures on flexible workin g. One of Lord 
Mandelson's first acts was to demand a rethink on this.
Yet, faced with opposition from the likes of Harriet Harman and 
Yvette Cooper, he has backed down.
The new measures may not look onerous, but they are hardly helpful at 
a time like this.
A generous interpretation of events is that Lord Mandelson has backed 
down on these proposals to focus on more damaging measures that were 
left on the cutting room floor. "

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THE TIMES   4.12.08
What will they do when it gets really bad?

Peter Riddell: Political Briefing

The biggest worry for ministers now is what to do when, not if, a big-
name manufacturing or services company goes bust. In the 1970s the 
answer would have been vast taxpayer subsidies, almost regardless of 
the company's prospects, as we saw with car companies such as BL, 
British Shipbuilders or the Meriden motorcycle cooperative. That will 
not happen now. The word "bailout" is banished in Whitehall.

Defining what Lord Mandelson called a "more active industrial policy" 
last night is now a top priority after yesterday's Queen's Speech. To 
the surprise of some ministers, and the continued raised eyebrow 
disapproval of the Treasury, the weekly meetings of the National 
Economic Council have not been a talking shop but are the main forum 
where the recession is considered. It is more down to earth than the 
formal structure of weekly Cabinet meetings. It is also partly the 
venue: the sombre subterranean Cobra room for emergencies rather than 
the Downing Street Cabinet room.

Apart from the council, which Gordon Brown chairs, his preferred 
method of operation is via endless telephone calls. So sofa 
government has been replaced by telephone government, with similarly 
little formal procedure or papers.

The discussions tacitly assume that no Government can do much to 
alter the length or the depth of the recession. All it can do is to 
mitigate some of the impact. At a propaganda level, this comes down 
to Mr Brown's partisan claims about government action versus 
opposition inaction.

In practice, this has meant, first, the bank rescue package of mid-
October. Secondly, there have been government initiatives, reinforced 
yesterday, to reduce the scale of housing repossessions by state help 
with mortgage payments, and to encourage the banks to maintain 
lending to small and medium-sized companies. The banking problem is 
still the trickiest, given the banks' desire to rebuild their 
financial positions.

Ministers are trying to persuade them to adopt a more flexible 
attitude in not being hostile to whole sectors, such as leisure or 
automotive suppliers. The Government's preference is still for talk, 
and encouragement, not further threats. So Mervyn King's reference 
last week to further nationalisation did not go down well in Whitehall.

The next problem is nonfinancial companies, as has already happened 
in America with the pleas by the big auto makers for government aid. 
The collapse of Woolworths is a foretaste of what is expected in the 
new year. The Government is not going to save Woolies. In his Hugo 
Young lecture last night - and how the former Guardian columnist 
would have relished Lord M's return - the Business Secretary rejected 
"the failed interventionism of previous Labour governments". As a 
free trader, he is not about to embrace protectionist subsidies for 
failing companies. Rather, it is about making the best of 
globalisation, pushing further in the direction of specialisation.

He accepts that the current crisis will produce what he called "a 
consolidated financial services sector"; a retail sector accounting 
for "a smaller share of the economy"; and a slower growth of public 
service employment.

But that does not mean a hands-off approach. Lord Mandelson argued: 
"Markets will not necessarily produce all the conditions that 
maximise our potential to prosper and compete in a global economy." 
He is, however, strongly sceptical about picking winners or political 
patronage of individual companies.

What Lord Mandelson envisages is more of a sectoral approach, looking 
at areas with growth potential such as supplying low-carbon 
technology. [ie prioritise something that is a scandalous waste of 
money already -cs]  The Government, he believes, needs to coordinate 
better in backing new technology, skills, regulation and export 
promotion. Implicit is the view, also accepted by the CBI, that the 
Government has too complacently assumed over the past decade that 
financial services will be enough to see Britain through.

Yet, in the end, it will come down to individual companies. Officials 
are now looking at which companies are vulnerable, and could go 
under. Then it is a matter of identifying the right criteria for 
support, such as working in a growth sector, and having a strong 
research and development programme. Any government support could 
involve limited commercially based loans, backing for research and 
export credits, but not unlimited subsidies.

The Government is trying hard to keep up with, if not always ahead 
of, events, but these are likely to become worse for quite some time, 
presenting ministers with decisions as tough as they faced over the 
bank rescue package.
============================
OTHER NEWS STORIES
Financial Times
Merrill warns oil prices could fall to $25
Oil prices drop to near four-year low of $45

New car registrations plunge
New car registrations fell by 37 per cent in the UK last month, 
another sign of the deepening slump in the global auto industry.

The Times
House prices fall at fastest pace in 25 years
Property values plunge 16.1 per cent, surpassing declines recorded in 
Britain's last recession during the early 1990s

Tesco defections send Morrisons soaring
UK's fourth largest supermarket reveals sales up 8.1% after cash-
conscious shoppers jump ship from the market leader

Nokia cuts sales second time in three weeks
World's biggest mobile manufacturer says volumes have fallen faster 
than expected, wtih handset sales set to sink 5%

Credit Suisse adds 5,300 to banking job losses
Swiss bank will slash 11% of its workforce, following Nomura's plan 
to axe 1,000 staff and Citigroup's 52,000 job cuts

Telegraph
US job cuts mount as phone giant sheds 12,000
Corporate America is planning 18,500 further job cuts, as investors 
brace themselves for Friday's all-important jobs data

Interest rates cut: sterling recovery unlikely
Currency experts have warned that the Bank of England's decision to 
cut interest rates to 2pc is unlikely to lead to any recovery in the 
value of sterling.  [Just the opposite in fact.  The pound will drop 
further -cs]