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By Root 3038 0

at a meeting on the afternoon of Wednesday 4 December. There was no doubt in our minds of the political difficulties involved. Although Ford said that they intended to keep the main BL and Ford plants open there would be opposition from MPs fearful of job losses in the areas affected. Ford’s productivity was worse than BL’s, their newest models were not selling well and they were worried about Japanese penetration of their European markets. There might be problems about collaboration with Honda on which BL had come to depend. There were possible criticisms as regards the effect on competition in car manufacture. But for all that the Ford offer was certainly worth pursuing. Some people would say that once successful negotiations had taken place with Ford and GM we would have disposed of Britain’s own car-making capacity at a stroke. But others would welcome the privatization, which would end the drain on the public purse and secure a viable future for the car industry in Britain. So contacts with Ford went ahead.

Whether we could have succeeded in pushing through this ambitious privatization programme in a more favourable political climate must be a matter of speculation. But it could not have come at a worse time. To Paul Channon’s horror — and mine — at the start of February the weekend press was full of details of what was planned. BL had almost certainly leaked it when we were at our most vulnerable as a result of the Westland affair. On Monday 3 February Paul Channon had to confirm these contacts in an emergency statement to the House. All hope of confidential commercial discussion had been destroyed. Irrationality swept through the debate.

Paul had an almost impossible task, which, however, he undertook with great courage and skill. A kind of pseudo-patriotic hysteria swept politics and the media. Ted Heath talked of our responding to the efforts of workers and management at BL by saying, ‘now we will sell you out to the Americans.’ Not even the Cabinet was immune. Norman Fowler, whose constituency was affected by BL, let it be known that he was fighting the deal. When the Norman Fowlers of this world believe that they can afford to rebel, you know that things are bad.

I chaired an extremely difficult meeting of the Cabinet on Thursday 6 February in the course of which it became clear to me that there was no way in which the Ford deal could be put through. In these circumstances it was essential to limit the damage and try to press ahead with the negotiations with GM. Paul Channon told the House that afternoon that in order to end the uncertainty we would not pursue the possibility of the sale of Austin Rover to Ford. It was humiliating and did less than justice to Ford, which had provided so many jobs in Britain. But in politics you have to know when to cut your losses.

The question now was whether, having relieved the immediate pressure, we could still strike a satisfactory deal with GM. I saw Paul after his statement and said that we must push ahead as fast as possible with this and the sale of Unipart. Now the news was out, however, we were faced with a rash of alternative bids. Few of them were serious and all of them were an embarrassment rather than a help at this late stage. Most politically sensitive was the proposal for a management buy-out of Land Rover. GM remained — in our and BL’s view — by far the best option because that company was interested in all, not just some, divisions; because of its financial strength; and because of the access to its distribution network.

On Wednesday 19 February I set up a small ministerial group — what John Biffen would have called a ‘balanced ticket’ — to consider this increasingly complex and difficult matter. The main members were Willie Whitelaw, Nigel Lawson, Norman Tebbit, Peter Walker, John Biffen, Norman Fowler and of course Paul Channon. Paul remained in charge of the detailed negotiations with GM. These carried on well into March. Sometimes it looked as if we could gain a sufficient undertaking from GM as regards control of Land Rover. We had had to harden