Business View: So who really stripped the UK car industry?

Jaguar and Land Rover look set to be sold by their owner, Ford. It will be the biggest disposal of a British car company since MG Rover was sold to the Phoenix Four by BMW in 2000. So let's just look at that previous deal for a minute.

There were two suitors for MG Rover. Bidder A was Alchemy Partners, a buyout group headed by Jon Moulton hat wanted to do away with mass production of Rovers and concentrate on producing MG sports cars.

Bidder B was the Phoenix Four, a team of local businessmen who promised the earth and said jingoistic things about preserving the British car industry in the face of a rival offer from a nasty asset-stripper.

The Government, harried by trade unions, waded in and backed the Phoenix Four, in the hope that the group would preserve thousands of manufacturing jobs.

The rest, as they say, is history: MG Rover was run into the ground and the sorry remnants of the Longbridge-based manufacturer were sold off for a song out of administration to Nanjing Automotive, the Chinese company.

The Phoenix Four are still the subject of a Department of Trade and Industry investigation into the collapse of the car company, and are now regarded in most quarters as nasty asset- strippers themselves.

A role for the workers?

So what lessons do we think the Government has learnt this time round? I only ask because it is looking increasingly likely that serious bidders for Land Rover and Jaguar will include several private equity buyers.

The trade unions at the car companies will not like the prospect of being owned by private equity one little bit. And given that good industrial relations will be of paramount importance to any buyer, this is a concern.

The DTI must be careful not to repeat old mistakes and opt for the bidder causing the least short-term political upheaval. But where does that leave prospective private equity buyers?

One possible solution would be to give the unions a key role in how Jaguar and Land Rover are run in the future.

We get smug at how superior the Anglo-Saxon model is to the high-cost continental model. But it is France and Germany that have thriving automotive industries, and the UK and the US that have a crumbling vehicle- manufacturing base. In Europe, these car companies are overseen by works councils that include union representation. Buyers for Jaguar and Land Rover could do well to adopt a similar corporate governance structure.

Question time

Private equity is in a complete shambles right now. Last week, the British Venture Capital Association, the trade body for the industry, said it was dispensing with the services of Peter Linthwaite, its chief executive.

On Tuesday, Mr Linthwaite had been on the receiving end of a thorough verbal battering from the Treasury Select Committee, which is investigating the role of private equity. He won't be missed by the big guns of the industry, which had grown frustrated at the BVCA's inability to deflect union criticisms.

Some of the industry's biggest names will have the chance to see if they can perform any better when they appear before the select committee this week. Regardless of how they do, it now looks a racing certainty that Gordon Brown will alter the tax regime for private equity. Partners in these firms currently pay tax at only 10 per cent thanks to lucrative capital gains relief. My guess is that Mr Brown will double it to 20 per cent to put the UK in line with the US.

To add spice to proceedings, were I in the shoes of select committee chairman John McFall, I would be sure to ask the private equity bosses whether they are domiciled in the UK, or whether they are "non-domiciled residents", who avoid paying the Inland Revenue any significant tax.

Perplexed by the payslip

For as long as I can remember, HBOS (Halifax and Bank of Scotland) has enjoyed a cast-iron grip on the UK mortgage market. Then, out of the blue last week, £1.5bn was wiped from its market capitalisation when the bank announced that a strategy to reward existing companies had backfired in a rather spectacular fashion.

Last July the bank took the decision to offer these customers the same deal as new ones when it came to remortgage time.

Unfortunately, it turns out that HBOS customers are not as loyal as the bank first thought, and many jumped ship to rivals that were offering discounts on new mortgages.

HBOS then compounded its error by saying it was "surprised" by how competitive the mortgage market actually was. Very odd.

I should admit that I have recently taken on a Halifax mortgage. The process was a long and tortuous task and involved me answering endless questions from the bank about the state of my finances.

The most galling was an enquiry as to why the salary showing on my bank statement was different from that on my payslip.

I had to write to explain that one figure was my take-home salary and the other my gross salary. Apparently there are some people in the mortgage department of HBOS who seem never to have come across tax deductions. Maybe they would be better off working for a private equity firm.

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