Why we might have to nationalise the British car industry after Brexit

State ownership of the UK car industry might not have gone so well in the past, but needs must

Talk of PSA Peugeot-Citroen taking over GM’s European operations has prompted rumours about British government guarantees for the Vauxhall operations (Getty)

Although, perhaps scandalously, no one knows quite what the Government promised Nissan to keep their car manufacturing operations in Britain open, it is clearly something that all the carmakers would like a slice of.

The putative takeover by PSA Peugeot-Citroen of GM’s European operations has prompted similar rumours about British government guarantees for the Vauxhall operations (Astra cars at Ellesmere Port and vans and HQ jobs in Luton).

Well, if it’s good enough for Nissan and Vauxhall, surely it should also be good enough for Honda, Toyota, BMW (Mini and Rolls-Royce) and VW group (Bentley)?

And if it’s good enough for them, then why isn’t it good enough for the components makers and others that depend on the European market for their livelihood? Ford, sometimes forgotten, still make engines in Dagenham and Bridgend, though car and van making has long since gone.

Why indeed. It is also difficult to see how such inducements for car (and component) manufacturers can avoid some payment of cold, hard cash in return for a continued presence in the UK.

Now you could make the argument that that is reward enough for the UK taxpayer. We get to keep the jobs, the skills, the VAT, corporation tax, income tax and National Insurance revenues; the balance of payments benefits hugely from our car exports, and, thus, so does the value of the pound; and the supply chain amplified the benefits around the economy and the nation.

The taxpayers’ cash incentive may become quite substantial too, once these hard-headed businesses realise how desperate Theresa May is to retain this chunk of what’s left of British manufacturing industry on our shores.

Indeed, in some cases it will amount to a form of blackmail. If, just thinking out loud for a moment, Peugeot said they’d have no alternative but to shut Vauxhall’s factory in Ellesmere Port if they didn’t receive billions in state aid (now legal again, arguably), what would Greg Clark, the Business Secretary, do?

Well, if I were the Business Secretary I might decide that I wanted something tangible for my money – an equity stake in the UK arm of these businesses, and, thus, a say in what’s going on. It is, after all, what we did with the banks (RBS and Lloyds) in return for handing the cash over. That was a very good model for government-industry partnership.

By the way, it was precisely what the US government did when they rescued GM and Chrysler in the Great Recession, while Renault and VW long had a state stake, and many of the Japanese firms have had some sort of bailout over the years. So not so unusual.

Indeed, if the alternative is closure, I might even be inclined to decide on a 100 per cent equity stake in these UK assets. So the deal would be that the UK Government takes ownership of the plant, and then strikes a deal with Peugeot, or anyone else who fancies it, to make cars there.

Failing that, then Vauxhall becomes a state-owned car maker, with partnerships with other car companies to design, engineer and market the products.

Mad? Well I agree that state ownership of the UK car industry – British Leyland – didn’t go so well last time round, but needs must. As a rather sad and sentimental petrolhead, I’d love to see an “indigenous” British car manufacturers re-established, taking on the skills and investment that the other companies want to abandon.

It might make sense. It need not be some monolithic “British Motor Corporation” reborn, but a system of deals with different firms on different technologies. It need not be forced to compete with incredibly low-cost manufacture in, say, Thailand if it concentrated on the sort of high-end luxury models where the UK industry can still lead the world (and win excellent export earnings outside the EU).

As we see with Jaguar Land Rover, for example, we could also invest in the new technologies – autonomous cars, electric cars and “connectivity” – with both established auto makers and with new entrants from Tesla to Google to the emerging manufacturers in India (as with Tata and JLR), China (as Volvo do with Geely) or the ambitious Hyundai-Kia combine in South Korea. Still, it would need to be competitive.

So, yes, it could all go wrong, and I’d much rather our car industry was run by, say, the people at BMW in Munich than the Department for Business in London. But if the choice is between post-Brexit devastation and a chance for some sort of future for the car industry, then nationalisation might make a case for itself.

We might well face the challenge of being told by Europe that we can’t use state aid to prop up an ailing manufacturing concern and, thus, be faced with extra tariffs on exporting to Europe, but that still leaves open partners and markets in the rest of the world.

Mock me, if you like, as a bloke entering the circus ring in a clown car waiting for the Union Jack-painted doors to fly off and all smoke to billow out of the radiator. But how else are we going to keep a manufacturing sector alive if everyone wants to clear out?