After forcing out Rick Wagoner from his role as CEO at GM yesterday, President Obama today firmly laid the blame for the problems at Chrysler and GM firmly at the door of leaders in both firms. In comments today he stated that "it is a failure of leadership - from Washington to Detroit - that led our auto companies to this point."

Chrysler - majority owned by Cerberus - in particular appears to have failed to convince the US government that it can survive as a stand alone company.

According to a hard-hitting memo released by the Obama administration's auto industry task force yesterday, the best option for Chrysler and GM "may well require utilizing the bankruptcy code in a quick and surgical way... a structured bankruptcy... would be a tool to make it easier for General Motors and Chrysler to clear away old liabilities so they can get on a path to success.

Obama's task force has been pondering the state of the US auto industry since mid-February and now thinks that Chrysler's best hope for recovery lies in a possible tie-up with the Italian car manufacturer Fiat.

Blogged by David Bailey and John Clancy

News that Mike Whitby and Birmingham City Council have stepped in to help LDV has raised hopes that the firm can yet be saved, and in so doing safeguard thousands of jobs.

As Steve Dyson said this week in his excellent blog at the Birmingham Mail, 'what a great story it would be for Birmingham if the company is saved after his intervention. Brummies looking after Brummies, and challenging the government to step in as well'.

It should be stressed that LDV is not saved yet, but as I've pointed out in earlier blogs (see here), the firm can still pull this off if the government steps in with a bridging loan of around £4 or 5 million. This is a piffling amount compared to the billions thrown at the banks.

But why should the government act?

Blogged by David Bailey and John Clancy

It may not have made a van since December 12th, and may be hours away from falling into administration, but news that the giant Indian engineering group Mahindra & Mahindra could be a buyer of LDV raises hopes that maybe - just maybe - the ever optimistic LDV management can still pull this particular rabbit out of the hat, and in so doing save thousands of Birmingham jobs.

Mahindra, in case you haven't heard of it, has an annual turnover of some $5 billion, and was in the running to buy Jaguar Land Rover last year. It has just been named by The Times as one of three possible suitors (along with an Asian firm and a US bid) for the Washwood Heath business which Russian oligarch Oleg Deripaska is seeking to offload.

And as John Cranage in today's Post notes, Mahindra would like to make a van in India and if they could get LDV for next to nothing they would take it.

From 1 April (6 April for unincorporated businesses) companies purchasing cars with CO2 emissions below 110g/km will receive 100% tax allowance on the cost. For emissions between 110g/km and 160g/km the annual tax allowance will be 20% of the cost and above 160g/km it will only be 10% of the cost, calculated on a reducing balance basis.

Another rule that has changed is in relation to cars costing more than £12,000. At present the annual writing down allowance for such cars is limited to £3,000, but on sale the balance of any unrelieved cost is allowed. Since most expensive cars are unlikely to be kept for more than three to four years, the full cost will be allowed for tax over this period of time.

For cars purchased on or after l April (6 April for unincorporated businesses) there will be no balancing allowance; the business will simply continue to attract writing down allowance each year at either 10% or 20% rate, depending on the CO2 emissions. It will take some 11 years for the majority of the cost of the car to be written off under this new regime - even at the 20% rate!

Currently leased cars costing more than £12,000, suffer a restriction to the leasing cost based upon the cost of the car - the higher the cost, the greater the restriction.
In future the leasing restriction will be solely by reference to the CO2 emissions of the car being leased. For cars with CO2 emissions of 160g/km or less the full lease payment will be allowed for tax purposes. For those with higher emissions, there will be a 15% restriction on the allowable leasing costs.

An update on a blog post I wrote a few weeks ago after interviewing the boss of Midland-based electric van manufacturer Modec.
As the LDV saga continues to rumble on, with the 7,000 jobs depending on the firm's survival still on the line, a leading lawyer has called on the government to extend the tax breaks it offers businesses for electric and other low-emission cars to include electric vans.
Specifically he proposes that the government extend enhanced capital allowances (ECAs) to cover electric commercial vans.
ECAs enable a business to claim 100 per cent first-year capital allowances on their spending on qualifying plant and machinery.
They enable businesses to write off the whole of the capital cost of their investment against their taxable profits of the period during which they make the investment.
Tim Stocks, head of the Financial Institutions and Markets team at European law firm Taylor Wessing LLP, said: "A key plank of the proposed buyout of LDV is to turn the company into an electric van manufacturer. If the government gives a cast-iron guarantee that the Budget will extend the ECA rules to vans this should result in orders from customers who would receive the benefit of ECA's on such purchases. In this way the buyout team could secure advance orders for its new electric vans.
"This simple legislative change would eradicate the need to risk taxpayers' money, would save hundreds of British jobs and would demonstrate a real commitment to advancing the green agenda.
"As a knock on effect, it would help those businesses who purchase the new electric vans to save on tax and fuel costs."
Tax breaks for electric commercial vehicles have been a success story abroad in stimulating demand.
Coventry-based Modec recently revealed it had bulging order books for its electric vans - virtually all of which were destined for export to countries which had already introduced similar tax breaks for electric vans, such as Ireland and the US.

"We are not going to get into a battle of words with the Bank of England," stated Lord Mandelson's spokesperson... "but the recession is really hurting the economy, and it is perfectly reasonable for the Business Secretary to speak up for the needs of business during these tough times."

So it seems that the Bank of England is now 'puzzled' as to Lord Mandelson's comments. True, it is most unusual for a cabinet minister to criticise another department (HM Treasury) and even more so the Bank of the England.

The Bank's response that it isn't responsible for sector-specific support is clever but doesn't actually get them off the hook. Just about every other car manufacturing nation has done something to stimulate demand, including in many cases helping out the car firms' finance arms.

And that's where the Bank comes in. If you buy a car today you actually buy a mix of a complex physical asset plus a package of services, including usually a financing deal. With financial markets in disarray, credit has effectively dried up. No credit, no sales - or very few of them, as we are seeing now. Indeed, some 300,000 people have been turned down for a car loan in the last six months. No wonder sales have collapsed.

Lord Mandelson's comments that he wished the government had acted quicker to support the auto sector are welcome. They are the sign of someone who is genuinely listening and who is trying to get things done, in the face of a slow and cumbersome machinery of government that is cranking its way through the process far too slowly.

Yesterday he commented to the BBC that (my italics) "I wish our discussions with the Treasury and the Bank of England - and it is the Bank of England that is in pole position on this - had gone quicker than they have. I readily acknowledge that". Whilst he stopped short of openly saying that the Bank was holding things up, his comments place the responsibility for the lack of action firmly at the door of the Bank of England.

He stepped up the pressure by noting that "...discussions are nonetheless making progress and I hope that it will be possible to help those car financing arms because that goes hand in hand with our other efforts to boost this market and give a shot in the arm for the demand for cars."

It is unusual - to say the least - for a cabinet member to criticise the Bank in this way, and can be seen as a deliberate way of increasing pressure on the Bank to get on with helping car financing arms.

Much has been said in the press recently about the payments support unit which is empowered to allow tax payers to spread tax bills over a period of time.

Initially, there was no guidance on the interaction between deferred payments under the scheme and subcontractors gross payment status.

In certain circumstances non-payment of taxes can be a compliance failure under the CIS scheme which can result in the removal of gross payment status.

HMRC have now clarified the position and have confirmed formally, that anyone entering into a deferred payment scheme will be treated as compliant for the purposes of gross payment status, provided that all payments under the deferred arrangements are made strictly in accordance with any agreement reached with HMRC and provided that there are no other compliance failures which would cause gross payment status to be withdrawn.

The moral of the story here is that if you have reached agreement with HMRC to make tax payments over a deferred period you must make sure that you stick strictly to the arrangements. Failure to do so could result in loss of gross payment status and thus a deduction of 20% tax a source on any payments made to you under the scheme.

Anyone finding themselves unable to meet the payment schedule agreed with HMRC should seek professional advice.

Later on this week I will be on the panel of an event called West Midlands Attacking the Recession organised by NESTA - the National Endowment for Science, Technology and the Arts - an independent body with a mission to make the UK more innovative.
The main discussion point will be how the UK/West Midlands can maintain its innovative capacity and how can we encourage and support individuals and businesses to innovate in order to drive the economy forward.
So I'm using this blog post is an appeal for suggestions and input for that discussion from Midland companies out there on the ground that are at the forefront of innovation.
Last week I spoke to the head of NESTA Jonathan Kestenbaum ahead of the event and he told me how he believed Birmingham has what it takes to lead innovation in the UK despite the current economic downturn.
I am lucky in that the platform pages I look after - sustainable industries and creative industries - have some strong marketforces behind them, ie the twin drives towards a low carbon economy and the digital economy - and as such there is a lot less doom and gloom around than in other sectors at the moment.
We've got so much innovative capacity here in the Midlands, from OEMs like Jaguar Land Rover and Modec making electric vans in Coventry to engineering firms like Zytek in Lichfield which makes state-of-the-art parts for electric vehicles, not to mention the exciting work being done on hydrogen vehicles in our universities.
Plus the creative industries pages constantly throw up good news from the growing number of small digital firms in Birmigham that are flourishing as the drive towards digitial continues regardless of the recession.
So this is an appeal for people to flag up to me particular companies where innovative things are happenign under the radar that I might not be aware of yet in any sector - not just digital or low carbon.
It's an opportunity to blow our own trumpets about what we have here. But it's also an opportunity to consider the problems these young but growing sectors have and the kinds of problems they face in the wake of the current downturn as well as how they can best be supported.
And if anyone fancies coming along it's being held this Friday 13th March 2009 at 8 am at The Studio, 7 Cannon St, Birmingham, B25EP

This story in today's Post represents yet more bad news for the construction industry at a time when the credit crunch has seen a significant downturn and job losses in a sector that contributes 10% of the UK's GDP.

The allegation, from the Information Commissioner's Office - the government quango with the responsibility for ensuring that there is both free access to public information and adequate protection for our personal data - is that, for the past 15 years or so, a private investigator called Ian Kerr ran a business in Droitwich (with the rather anodyne name, the Consulting Association) which charged over 40 named construction companies £3,000 a year to provide (illegally-held) information on 3,213 construction workers. According to press stories, some of the 'information' was incredibly prejudicial so far as the individuals named on the database are concerned, with comments including "communist party", "ex-shop steward, definite problems, no go", "do not touch", "orchestrated strike action" and "lazy and a trouble-stirrer".

Leaving aside the legal difficulties facing Mr Kerr and the individual companies for the breaches of the Data Protection Act (the Commissioner has a history of levying fines of up to £5,000 - although its power is notionally unlimited - and individuals who can show they lost out on jobs as a result of the databse may have a claim in damages for loss of income), this is appalling PR at a time when the construction industry doesn't need it. One of the main concerns appears to be that the database was used to blacklist employees with a history of trades union activity, which, if true, doesn't speak well for the employment practices of the companies named by the Commissioner. And these included household names such as Balfour Beatty, Sir Robert McAlpine, Laing O'Rourke and Costain.

A number of companies have issued denials and Unite are threatening legal action. In the meantime, the Commissioner continues its investigations. All in all, a problem which the industry could do without.