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Programme highlights Tuesday, 13 February, 2001, 15:05 GMT
Government saves Rolls Royce jobs
A Rolls Royce aircraft engine
The government is investing in Rolls Royce engine manufacture
Rolls Royce is celebrating a huge Government investment of a quarter of a billion pounds.

The money will go towards developing new aero-engines which have already attracted 12 billion of orders. New versions of the Trent engine are being developed for Boeing and Airbus.

The new money, which comes in the form of a repayable loan, will safeguard 7,000 jobs at Rolls-Royce's Derby plant.

Government intervenes

Ministers insist that the loan has not broken any international rules on aid for private-sector companies: in particular, the Civil Aviation Act allows a country to support its domestic aero-industry.


It's correct to say Rolls Royce has potential and steel does not

Peter Koenig

Whether competitors like Pratt and Whitney in the United States agree remains to be seen.

But the timing is certainly interesting. A few hours after the news broke, ministers were unveiling a Competitiveness White Paper that is - according to the pre-publicity - supposed to steer a way between large-scale intervention and uncontrolled market forces.

Rolls-Royce is clear proof that intervention is alive and well.

The Government argues that it's worthwhile, not just because it will protect 7,000 jobs, but also because taxpayers will get a commercial return on their money.

It is still - to use an old-fashioned phrase - an attempt to 'pick winners' with public money.


It is a loan, it will be repaid, it will be repaid with a premium

Sir Ken Jackson
Sir Ken Jackson, General Secretary of the Amalgamated Engineering and Electrical Union, told the World at One that he was delighted with the news from Rolls-Royce.

But how could Government support in Derby be squared with the failure to prevent job losses at the steel company Corus, and Vauxhall Motors at Luton?

Sir Ken said that, in both cases, discussions were continuing. The important thing was that there was a level playing field in aerospace industries - other countries supported their industries, so Britain should do the same.

However, the journalist and writer Peter Koenig told the programme that there were real risks in the Government's approach.

He said that although the government seemed to be "backing a winner" with Rolls Royce and it made sense to invest in industries with potential, problems would arise if it was thought to be inconsistent when dealing with threatened industries.

 WATCH/LISTEN
 ON THIS STORY
Sir Ken Jackson
"I'm very pleased with what's happened with Rolls Royce"
Peter Koenig
"In the long run the government's running a risk"
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