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By Root 2647 0

the company was continuing to perform badly and wanted to take a tougher line with it. There had certainly been improvements. Productivity was up, days lost by strikes were down, losses were smaller. But the management was still poor. Moreover, the same old bromides were used to justify failure. Next year or the year after was always the time when losses would be turned to profit as long as new investment was provided by the taxpayer today. The only alternative to going along with what BL management wanted was its complete collapse which they rightly thought we could not allow. Forecasts were always being revised downwards — and then not met. UK market share hovered around 17 or 18 per cent in spite of expectations that with its new models BL would have taken 25 per cent. The company’s 1984 results were unsurprisingly much worse than predicted. The Government had to stand behind BL’s large and increasing borrowings under the so-called ‘Varley-Marshall’ assurances.

I wanted to cut back BL’s investment programme and believed that one way of doing this was to buy in engines from Honda — with which BL planned to develop its existing collaboration — rather than for Austin Rover to develop its own new engines. In spite of several attempts during the spring and summer of 1985, I did not get very far. I did not feel that the DTI was sufficiently serious and I knew that BL itself was positively hostile. In such circumstances there is little a prime minister can do — even one so well advised as I was on these matters by my Policy Unit* and outside experts.

There must, I felt, be a new management and new Chairman at BL, tighter financial discipline and, above all, a renewed drive for privatization. From October 1985 on Leon Brittan concentrated closely on all these aspects but it was privatization which increasingly took centre stage. Jaguar had already been successfully sold off. Unipart, which handled BL’s spare parts, should have been privatized too, though BL seemed to be reluctant to move ahead with this. But, most important, we had secretly been in contact with General Motors (GM) which was interested in acquiring Land Rover, including Range Rover, Freight Rover (vans) and Leyland Trucks (heavy vehicles). These negotiations too seemed to drag on and on; so I was pleased when Leon sent me on 25 November his proposals for moving ahead with the deal.

Apart from (though having a bearing upon) the price, there were three tricky questions which required attention.

First, we had to consider the consequences for jobs of the rationalization of the GM (Bedford) and BL (Leyland) truck businesses, which was undoubtedly one of the attractions for GM of their proposal. We thought that up to 3000 jobs might go: but the choice in an industry where there was great overcapacity was not between job losses and no job losses but between some jobs going and a possible collapse of one or other — or conceivably both — truck producers.

Second, we had to consider the position of the rest of BL’s operations: the volume car business of Austin Rover, which would be left to pay off the accumulated debt, and which GM had no intention themselves of taking on.

Third, the thorniest issue would be the future control of Land Rover, which GM were determined to acquire but on which public opinion would require safeguards that it should in some sense ‘stay British’.

Suddenly, however, we were facing an embarras de richesses. Before we had fully come to grips with the GM offer, code-named ‘Salton’, the still more intriguingly code-named ‘Maverick’ put in an appearance. At the end of November the Chairman of Ford of Europe came to see Leon Brittan to say that Ford were considering making an offer for Austin Rover and Unipart. The company fully recognized the political sensitivity of this and it probably also understood how much opposition to expect from BL, which would much prefer to stick with its cosier relationship with Honda. So Ford wanted the green light from the Government first. Leon Brittan, Nigel Lawson and I discussed what should be done