Phil Gyford

Writing

Sunday 3 April 2005

PreviousIndexNext I don't understand

From yesterday’s Guardian business section come two stories that demonstrate I either have no understanding of how business and government works, or there’s something very wrong in the world:

MG Rover’s directors have made £40 million out of a business that’s losing money. Apparently they “saved” the business, but even so, it seems bizarre and brazen. At least it looks like the government isn’t going to bail them out entirely.

Second, in an article about the un-loved Go-Ahead losing its franchise to run the Thameslink train line we hear that the service has “a satisfaction rating among passengers of 68% — the worst in the country” and “is officially 102.5% full during rush hours”. The following sentence then says: “It is among the most profitable lines on the national network, providing the Treasury with a surplus of £41m last year.” Double take. I’m sorry? The government’s making that much money out of a train service that doesn’t work? Ah, yes, privatisation’s obviously working for someone then.

Comments

Surely Tony Blair had the right idea about Rover the first time -- use taxpayers' money to help the affected workers directly, not to prop up their millionaire bosses who have already proved they can't run the company profitably. I certainly hope this latest 'loan' will remain just that.

Posted by Laura Brown on 11 April 2005, 3:55 pm | Link

I think what you don't understand about the Rover situation is that it's nothing to do with business. It's simply about four greedy individuals who have stripped cash out of a going concern to feather their own nests.

As you will not doubt be aware by now, far from saving the company they have destroyed it an along with it the livelihood of thousands of wokers.

Posted by Doug Clinton on 20 April 2005, 3:47 pm | Link

Yeah, I realise that, of course. I just don't understand why it's not more of an outrage in the business pages. The directors talk about taking a risk and reaping the rewards for doing so... well, rewards would be fair enough if they'd made a success of the whole plan, but a company going into administration doesn't sound like success to me.

Posted by Phil on 20 April 2005, 6:18 pm | Link

I guess it says more about the attitudes of businessmen than the laws of economics.

Posted by Doug Clinton on 21 April 2005, 5:15 pm | Link