One factor which might encourage retention in the UK, as a great piece in the Post noted two weeks ago (click here), is LDV's Special Vehicles Operation which makes tailored vans for customers such as the Royal Mail on the track without the added delay and cost of converting finished vehicles.

Yet as the piece also rightly points out, "if a better offer comes from someone planning to rip out the Maxus presses and tooling and shift it all abroad that's what will happen... The job of the administrators is to claw back as much money as they can for the preferential creditors. They are not paid to have consciences, no matter how much they, as individuals, might want a happy outcome for LDV, its 850 employees, its suppliers and Birmingham.

This raises the wider question of whether the UK actually has the right institutional arrangements in place for dealing with these situations (NB this is not meant to question the professionalism and skill of the PwC team appointed as administrators here).

The point here is that there is no evaluation of the public interest in the UK's administration process in terms of jobs and economic development. If someone comes along and offers more cash for a lift and shift of LDV, that's what we'll see, whether or not that best for UK PLC and the wider society.

A similar situation arose four years ago when MG Rover went into administration. Nanjing offered most money for MG Rover's assets, and proceeded to ship most of them out to China. Yet Nanjing was a small player with limited resources and it had never innovated and brought a new car to market. Its JV with Fiat had performed badly and it offered little genuine prospect for a return of production and R&D back to Longbridge as had been promised.

It was only when the Chinese government banged (state-owned) heads together, forcing a merger of SAIC and Nanjing, did things start to look brighter for MG at Longbridge. The point is that it was always clear that Shanghai offered the best hope from an economic development and jobs point of view, as the unions rightly pointed out at the time, yet this was specifically not an issue that the administrators could look at.

We need to look at whether the administrators - who are court appointed officers - can be vested with a different set of responsibilities, which captures the public interest dimension.

More generally, a number of reforms could be contemplated, as we have blogged on before - see here.

Such moves might form the basis for how we treat 'business deaths' or 'near deaths' in the UK that allows for better, strategic, longer-term decisions to be made.

In LDV's case, by 'strategic' we can again highlight the fact that over the last few years some £600m has been invested in the award winning Maxus van range which could provide an ideal platform for the proposed switch into environmentally friendly green electric vans. The electric can market is growing rapidly, especially in the depot-to-depot market in urban areas. The electric Maxus is already developed and ready to roll, and LDV owns the intellectual property rights to the electric version.

In addition we need to remember that:
Sterling's depreciation improves LDV's position regarding export markets.
LDV owns the intellectual property rights and production facilities for the Maxus van in diesel and electric form.
LDV contributed around £7 million in 2008 in PAYE and National Insurance to government revenues. You could treble that by adding in the supply chain and dealer network; even a conservative estimate suggests that the government picks up £15+ million a year from LDV's operations. Add in £50+ million in purchasing and £50+ million in exports and the value of LDV to the economy and government becomes clear.
Our research on the collapse of MG Rover shows that quality jobs matter; 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 £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.

All in all, we need a review of how well the administration process works and whether we can learn from procedures elsewhere, such as 'Chapter 11' in the US. The danger is that without such a change, we will continue to lose potentially viable economic activity which might otherwise be saved.

Professor David Bailey works at Coventry University Business School.