RBS motor brands may go under the hammer

Talks in Brussels between troubled banking group RBS and the EU have raised the prospect that the group's major motoring brands Direct Line, Churchill insurance and Green Flag will have to be sold off.

The RBS insurance arm is Britain's largest car insurance provider, second largest general insurer and employs 18,000 people.

This week the European Commission has been ruling on measures banks must take to offset the advantage of state backing they have received, focussing mainly on forced asset sales.

Earlier, Northern Rock and Lloyds TSB were the subject of invasive EU competition rulings that ordered Northern Rock to be split in two and Lloyds TSB to dispose of significant parts of its high street network.

RBS was one of the worst affected by the credit crunch and was propped up by over £20bn of public backing.

Now 70%-owned by the taxpayer, RBS executives have been in Brussels this week thrashing out a settlement with EU competition chiefs.

According to Sky News, EU Competition Commissioner, Neelie Kroes, has said that the only way the EU will be satisfied with the extent of state backing for RBS will be if the bank sells off its insurance arm.

As well as Direct Line, Churchill and Green Flag, the group includes the Privilege brand and broker insurance provider NIG.

RBS mooted disposing of its insurance arm back in February, in order to raise sufficient money to avoid a government takeover.

But the sell off was abandoned after it became clear the amount raised would be billions of pounds less than RBS was hoping for.

At the time, RBS chief exec Stephen Hester said: "Given RBS's broader considerations, it was important to test the market for this business, which has demonstrated that a sale on terms currently available would destroy value for RBS shareholders."

Together, the group's thousands of employees and millions of customers in Britain are unlikely to welcome the new instability the EU is forcing on the companies.

Talks are set to continue after the weekend.

Car emissions are wrong target

Following on from the previous post, an interesting contribution on the EU's plans to enforce excessively strict emissions limits for cars has come from Roger Helmer, the 'straight-talking' Conservative MEP.

Making the potential damage the plans could do to Britain's sports and executive car-makers even more galling, it turns out they're far from the most effective action that could be taken.

That's according to the body EU Commission itself set up to study technologies to combat climate change.

Helmer highlights that the cost of the EU's car emissions proposals has been calculated to be between €132 and €233 per ton of CO2 they will save.

However, the European Climate Change Panel has established a series of cost effective measures that could more than achieve the EU's emissions targets for less than €20 per ton.

So for the EU to be obsessing over car emissions is not just economically damaging and threatening tens of thousands of British car industry jobs, but also incredibly wasteful and inefficient.

Bad choices

Of course, some will say that cost is not such a big consideration, given the importance they place on the task of tackling climate change. But this overlooks the reality that there is only so much money available to spend on such measures.

Helmer puts it like this: if you have €200 to spend on the environment, would you rather stop one ton of CO2 with auto legislation, or 10 tons through more efficient projects?

Strangely the EU is going for the first option when, in reality, energy conservation is a less high-profile but much more cost effective approach.

More EU hypocrisy

But what caps it all is the EU's on-going hypocrisy.

All the while they're preaching about climate change and (in institutions beyond meaningful democratic control) making harsh laws that will have very personal implications for many of us, MEPs continue their monthly circus of travelling between two EU 'parliament' buildings ... one in Brussels, and one in Strasbourg.

Keeping the EU 'parliament' on one site in Brussels would not just save a handy €200 million (£142m) a year, but also 90,000 tons of CO2!

So howabout the EU busies itself with reducing the emissions resulting from its own excessive behaviour first, before dreaming up hugely damaging and expensive other ways to cut emissions.

Squabbles continue over car emissions targets

The wrangling between EU institutions continues over the setting of medium and long-term emissions limits for cars.

The outcome could have very serious implications for Britain's executive, sports and off-road car makers, and the tens of thousands of people they employ - both directly and indirectly.

In a European Parliament resolution of 24 October 2007, MEPs responded to the EU Commission's aspiration to set an average emissions limit of 120g/km of CO2 by 2012.

This limit would require car-makers to reduce average emissions to 130g/km CO2 through improved vehicle technology, with the further 10g/km reduction permitted to come from use of alternative fuels, improved tyres etc.

However, in their response, MEPs demanded a more stringent emissions limit, albeit conceding an extended deadline by three years. They want average emissions reduced to 125g/km of CO2 by 2015, to be achieved through technological changes alone.

EU's "kneejerk" timescale

Bearing in mind that average car emissions last year were 160g/km of CO2, such dramatic reductions in the space of a few years are extremely ambitious targets and have been described by the Society of Motor Manufacturers and Traders as a "kneejerk" response that doesn't give the car industry time to plan.

Biting back at the European 'Parliament', the Commission has struck a note of defiance.

Spokeswoman Barbara Helfferich said the EU would stick by its targets for overall fleet-wide averages of 120g/km by 2012 and aimed to come forward with the proposals for legislation by the end of the year.

"We have done our homework and we think the industry will be able to afford these measures," Helfferich says.


Kelly's noises off

Most recently, Ruth Kelly - the Transport Secretary - has intervened in the debate. In an interview in The Times, she says that she will urge the European Union to adopt an even tougher target of 100g of CO2 per kilometre for the average new car, but wants the compliance deadline extended further to between 2020 and 2025.

Kelly also said she would seek exemptions from the limits for elements of Britain's car industry which produced relatively small numbers of high-emission cars.

Time will tell how successful she ends up being. In truth, our Transport Secretrary has been reduced to the status of chief lobbyist to the real decision-makers, which will be the EU institutions.

Being brought forward as an environmental measure, this issue will ultimately be decided by majority voting. So if our elected government minister isn't given what she wants, there's nothing she or anyone will be able to do about it anyway. She'll get out-voted, and we'll have to impose the law regardless.


Predictable outcome

How this sorry saga will end is already all too predictable.

I'll stick my neck out and predict that Kelly will not get the deadline extended as far as she wants. Neither will she get Britain's specialist car makers permanently excluded from the limits.

What she may get, as a face-saving gesture, is some kind of temporary derogation from the limits for Britain. This will basically be a stay of execution for Britain's specialist car industry, as it isn't likely companies such as Rolls Royce, Bentley or Aston Martin will be able to comply with the average emissions limit in their model range in any likely extended term, nor have the kind of money necessary to develop technology that will bring about such a rapid cut in the emissions of their products.

So not only will large sections of our industry and tens of thousands of workers very likely suffer due to a blinkered obsession with the dodgy science apparently linking CO2 emissions to global warming, but their fate will be decided by people sitting in Brussels that none of us can hold accountable for their decisions in any meaningful way.

Hardly good for prosperity, nor what most people would understand by the idea of living in a democracy.

EU chief's hypocrisy on car emissions

The president of the EU Commission, José Manuel Barroso, has been forced to defend himself against charges of hypocrisy for owning a so-called 'gas-guzzling' 4x4.

While driving a 4x4 is not an activity that someone can come under fire for on this blog, the problem lies in Barroso's abject double standards.

For himself, he chooses the safety, style and driving experience of a 4x4.

But at work heading the European Commission, he piously lectures us all about the urgency of cutting car emissions. Worse, he busies himself making excessive laws aimed at forcing the rest of us who aren't paid out of an apparently bottomless pit of taxpayers' money into tiny city cars, by steadily making anything else unaffordable.

Barroso, who owns a Volkswagen Touareg, said: "I have never spoken of myself as an example to anybody - today's moralistic approach is not mine."

But this is more than a tad rich, coming from the head of a body that, despite its democratic illegitimacy, constantly makes moral choices in a wide range of policy areas and enforces them on us all through EU-wide laws.

Barroso's VW 4x4 emits an above-average level of CO2 of 356 g/km - well above a 130g limit Brussels is seeking to impose on the car industry by 2012. Taken as a whole, the EU Commission's car fleet of 85 vehicles has an average emissions level of more than 258g/km.

Are they doing anything about that? So why should we make sacrifices in our choices?

'Collective action' EU-style

In response to the hypocrisy charge, Mr Barroso bizarrely insisted that fighting climate change was about "collective action" and voiced concern that a focus on an individual's CO2 usage could be a "slippery slope".

Yet most people would understand the simple idea that 'collective action' actually results from the choices of large numbers of individuals.

And few are likely to heed 'encouragements' to make certain perceived pro-environment choices when those doing the encouraging (or more accurately in this case, enforcing through EU law) don't take their own words seriously enough to act on them.

Euro corporatism exposed

Actually Barroso's response provides a chilling exposé of the corporatist mindset of those running the EU, in which 'collective action' comprised of individuals acting in common (for example, in voting for those who govern them) plays no part.

Rather, collective action EU-style is derived through the interaction of bodies taken to speak on behalf of groups of individuals. We individuals ourselves are expected to just do what the annointed 'collective' says.

Hence Barroso's idea that there's no need to focus on individuals, or being remotely credible in front of us.

Certainly, with such a 'don't drive what I do, drive what I say' mindset in evidence at the top of the EU and no appreciation of there being a problem in such an attitude, it's no wonder the EU-led way in which its member countries are increasingly governed is being described as 'neo-feudal'.