LDV: The last dregs of supping up time at the last chance saloon? Yet the firm can still pull this off if Gordon puts his money where his mouth is.

Meanwhile everyone at LDV has quite literally been pulling out all the stops to keep the firm afloat. A management buyout (MBO) team has worked frantically to try to save the firm and is asking the government for a bridging loan to get it through the point where Mahindra (or one of the other firms interested in buying LDV) can complete due diligence. Workers have scoured the country in LDV vans looking for sales and the firm now has a bulging order book to the tune of £5 million.

Erik Eberhardson, the industrialist seeking to buy LDV from GAZ, had originally asked for a government loan of £20m to £30m, but has cut that request to £4m to £5m now it has found potential investors. This represents the £1 million or so a week that the firm needs to keep going to complete due diligence and to put the new investor in place.

BERR officials are said to be looking at whether the investors really are serious about putting money into the Washwood Heath plant to restart production and to deliver on plans to develop new green electric vans.

In this case, the bridging loan could pave the way effectively to a joint venture between the MBO and the foreign investor.

The ball would seem to be firmly in the government's court. Without the loan, the factory will close and LDV will go into administration. That would undoubtedly lead to a 'lift and shift' of the operation out to an emerging economy like India, Russia or China, and the end of van production here in Birmingham, plus a knock on effect on suppliers who may well pull out of the UK as well.

The £4m or £5m is peanuts compared to the billions spent bailing out the banking system. And while BERR has stated that it's up to GAZ to help LDV, it's clear that Deripaska and GAZ have run out of road. BERR have also repeated that the firm hasn't made a profit in several years.

That rather misses the point in that over the last few years some £700m has been invested in the award winning Maxus van range (a healthy asset and not a toxic one) which could provide the platform for the proposed switch into environmentally friendly green electric vans. The latter is a rapidly growing market especially in the depot-to-depot market in urban areas. Overseas this has been supported by tax breaks - something the government here could do to help LDV and Modec in Coventry.

As battery life improves and the recharging infrastructure in urban areas develops, this market will undoubtedly grow. LDV could be at the forefront of that green new deal if the government can actually understand what is happening. Put simply, there is a new market unfolding here, and LDV have effectively said to the government: "put your money where your mouth is" when you talk about a low carbon future.

Two other points need stressing.

Firstly, BERR keeps referring to the government's obligation to the taxpayer. That's absolutely right, but they need to be doing their sums properly in weighing this up. LDV contributed around £7 million in 2008 (not exactly a great year) in PAYE and National Insurance to the government coffers.

You could treble that by adding in the supply chain and dealer network. OK, some of those firms and people might get other jobs and hence still pay NI and PAYE if LDV does close, but even a conservative estimate suggests that the government picks up a useful £15 million a year from LDV's operations. Add in some £50 million in purchasing and £50 million in exports and you can see the value of LDV to the economy and the government.

We also know from our research on the collapse of MG Rover that quality jobs matter and that three years on workers were earning £5600 a year less in real terms than when they were at MG Rover. The Rover Task Force cost the government £120 to £150 million in picking up the pieces. And in this case, the LDV plant is in one of the most deprived areas of Birmingham. Many workers will struggle to move on.

Secondly, the government might rightly be concerned that a foreign bidder would shift production overseas. In that case the £5 million bridging loan could be converted to an equity stake with golden share that would prevent this happening. It's time for BERR to think out-of-the-box, both in terms of where the market is going, and how LDV can get there.

The future's bright, the future's green. Wake up, BERR.

Footnote: LDV employs some 850 staff, but since it stopped producing vans in December, only white-collar staff have come into work. The company supports several thousand other jobs at dealerships and in the supply chain. LDV has so far managed to avoid administration thanks to cash transfers from GAZ but that cash has now run out. A £1m national insurance demand last week from Customs and Revenue has compounded the fragile situation.

End of the road, or a new beginning?

1993 LDV's parent, Leyland DAF, goes bankrupt. Managers buy out LDV for around £8m with backing from venture capitalists 3i.

2000 Daewoo, LDV's South Korean partner, goes bust, delaying launch of its jointly developed new van range, the Maxus.

2001 Volkswagen in discussion on a 50 per cent stake, but talks stall.

2004 Maxus van launched to critical acclaim, winning the Professional Van and Light Truck Magazine "Van of the Year 2005" and many awards since, including "Van of the Year", "Minibus of the Year" and "Combi of the Year".

2005 Sun Capital Partners, a US investor, buys LDV out of a pre-pack administration. 3i sell out their stake.

2006 GAZ, the Russian auto group, buys LDV from Sun Capital.

December 2008 LDV suspends production as the double whammy of recession and credit crunch bite.

February 2009 MBO team asks the government for a loan of £20m to £30m to restart production.

March 2009 Loan request cut to 4-5 million as GAZ say there is no more cash but LDV talks to possible foreign investors. Mahindra emerges as possible buyer...

Professor David Bailey works at the Birmingham Business School and is Chair of the Regional Studies Association. John Clancy is a former Birmingham City Councilllor for Hodge Hill, venture capital solicitor and runs two SMEs including MediaFuturesAlert.com