Downing Street Years - Margaret Thatcher [71]
Michael Edwardes and the BL Board held their nerve and faced down the union threat. The strikers were told that unless they returned to work by Wednesday 23 April they would be dismissed. But much as I admired BL’s tenacity, I was becoming increasingly unhappy about the Board’s commercial approach. In particular, there was strong resistance from the Board to selling all or part of the company, though this took the form of obstruction rather than declared hostility.
For example, there was fierce initial resistance to my suggestion of engaging an independent financial adviser to advise on the disposal of the company’s assets. It was argued that such an appointment would undermine confidence in the company’s future. It was even suggested that these were matters for management, not government. I could not accept this. Government was the major shareholder in BL and it was right that the shareholder should have a say as to when and how the company’s assets should be sold. In fact, such an adviser was in due course appointed, with Michael Edwardes’s acquiescence.
On Wednesday 21 May Michael Edwardes and two of his colleagues came to a working dinner at No. 10. On the Government side, Geoffrey Howe and Keith Joseph, Robin Ibbs the head of the CPRS, and my private secretary were also present. Michael Edwardes said that BL faced a worse trading environment than when the 1980 Plan was prepared. It would be able to live within its agreed cash limit for 1980 but the £130 million limit provisionally decided for 1981 and the assumption that no government funding would be necessary thereafter were, he said, unrealistic. He claimed to have high hopes of collaboration with a German manufacturer, but that the prospects for selling most parts of the business in the near future were not encouraging. Only Land Rover would fetch a good price at that time, but to sell it separately would leave the rest of the business seriously weakened. Other parts of BL might be sold in a year or two as the recovery programme proceeded. It was obvious where all this was leading: BL was about to present us with yet another demand for taxpayers’ money, and probably for a huge amount.
In reply, I acknowledged that BL had achieved a great deal. But I stressed my anxiety about the endless demands for extra money. I said that BL had failed to meet the targets set out in its Plan. There could be no presumption that any additional money would be provided.
As the summer wore on it became clear that the company’s financial position was deteriorating even further. Michael Edwardes bombarded us with complaints. He was upset about Japanese imports. He drew attention to the (undoubtedly real) difficulties of exporting to Spain because of that country’s high tariffs, while they nevertheless exported their cars freely to us. He worried about the level of sterling. But none of this could disguise the fact that things were going badly wrong at BL and that the Board seemed unable to turn things round. The company lost £93.4 million before interest and tax in the first half-year compared with a profit of £47.7 million for the same period the previous year. Michael Edwardes tried to get the Government to agree to fund