It's not uncommon for political commentary to start with a sagacious chuckle about how history never, ho, ho, ho, repeats itself. Hang the sagacity because history may be about to. On the letters page of The Times Business News for February 2, 1980, appeared a short contribution from a young Tory MP: the first he'd ever published in a national newspaper. It was headlined “A common industrial policy - the answer for BL”...

“Sir, Is it only to me that the solution to British Leyland's problems has occurred?

The Government should lay down a minimum selling price for Leyland motor cars, pitched to ensure a profitable return on the capital invested in the industry. Should the company prove unable to dispose of all their motor cars at this price, the European Commission should intervene to purchase the unsold stock.

These unsold vehicles would be stored on Canvey Island...

I hope nobody thinks this is a ludicrous way of dealing with the marketing of a commodity.

I am, Sir,” [etc]

A useful lesson from that early venture into journalism was the dangers of sarcasm. My satire on the Common Agricultural Policy and Europe's resultant “butter mountain” was taken seriously by bemused constituents. Some agreed, saying they hoped to see the Government try it.

Well, if they're still alive they may live to. Not in quite the manner proposed, but according to the same principle: that distressed British car producers should be given government help to maintain production and prices, even if they cannot sell cars at these prices.

For that is what the Society of Motor Manufacturers and Traders is asking Lord Mandelson, the Business Secretary, to do; and despite his guarded response, there's a serious danger he will. “Every time a business fails it is our duty to act,” said Gordon Brown on Wednesday, preposterously.

And the Conservative Party looks like egging him on, calling for special credit guarantees (“not bailouts”) for car-makers. Be in no doubt: credit underwritten by a guarantor is a bailout. Full stop.

Be on your guard too against that hoary old seductress, the whisper that a “lifeline” to the industry will not be a subsidy - oh no - but an “investment” because it can be used for “restructuring”, making the industry “leaner and fitter” when economic recovery comes. The British motor industry is already lean, fit and competitive. The problem lies not with producer or product, but demand: too few people can afford new cars these days.

Before the industry, the Government and the Opposition try to throw up a smokescreen of special pleading, be very clear what is essentially being proposed: that the motor industry be offered public funds to maintain production. This is the only possible logic of the industry lobbyists' case, which is that motor manufacturing is more like banking than it is like (say) Woolworths, because it stands in a chain of metal-bashers, components-makers, dealerships, etc, who will all go under if the car-producer sinks.

Subsidy to car giants simply to mothball production until the good times return, kicks the plank from under this “like banks, we lubricate the economy” case. If lubrication is to work and the oil is to keep trickling down, car production must be maintained.

And if you've heard that term “trickle-down” (with its associated “knock-on”, “one-off” and “lifeline”) once this week, you'll have heard it a thousand times by next summer. “Lifeline” is a lobbyist's word for a bung. A lifeline is always a “one-off” until it isn't. As for knock-ons and trickle-downs, soon you'll be hearing about these from every other troubled business, large or small; because short of selling knickers from a barrow in Petticoat Lane, there's hardly any form of economic activity that does not affect the livelihoods of greater numbers than those on its immediate payroll.

Even selling pants pays the wages of the minicab driver who takes the salesperson home. The raft of interdependencies at whose centre a big car factory sits is easier to locate and to depict simply and dramatically than the equivalent raft in which (say) 400 small manufacturers of coffee mugs sit; but why would (say) £3bn spread through lines of credit to every business in Britain employing less than six people, prove less of a tonic than giving a big wodge of money to the Tata brothers or General Motors? There's one difference: big industrialists have fat lobbyists, hectoring unions, and a simple mental picture of their place in the economy, to make their case.

I don't make light of the problem. Motor manufacturing, which has just experienced a 33 per cent slump in sales, is still important in the British economy, worth more than £20bn in a good year. Some of it (but - ignore the scaremongering - not all) may never recover from a long slump. Along with Ford's residual British operations, Vauxhall (not Jaguar/Land-Rover) is probably in the most imminent danger, but Lord Mandelson will try to avoid mentioning Vauxhall (a General Motors subsidiary) until it becomes clear that no US administration is going to ask American taxpayers to bail out the economy of Ellesmere Port. Of course they won't.

Nissan's, Honda's and Toyota's British problems may be less urgent but they, along with other car-makers across the Channel, will want to know why their competitors are to be subsidised. There is a real danger of an EU bidding war - casting the rules aside - for the protection of domestic vehicle manufacturers.

It's a bidding war from which it will take nerves of steel for Government and Opposition to stand aside. But we've been through these arguments before, and not so very long ago, and I thought we'd concluded that bailouts were not the answer. Indeed the case for intelligently directed state investment in key but sclerotic and under-capitalised industry was actually stronger in the 1970s. Unfortunately the beneficiaries just soaked up the money last time. They will this time, too.

This time the problem is lack of demand. But if you want to increase demand give the money to the customer, not the supplier. That is, if you have the money. We haven't.

Gordon Brown, replying to the Archbishop of Canterbury's warning against feeding our credit-addiction, had the effrontery to compare himself with the Good Samaritan, who did not (he said) “walk by”. The Prime Minister failed to mention that the Good Samaritan used his own money to help the man fallen among thieves. Mr Brown wants ours. The better comparison is with the thieves.

That Times letter all those years ago was not wrong. We must, through all bedazzlement, hold fast to our understanding of first principles. When a market for beef is oversupplied and cash-strapped farmers beg for help, government can do one of three things: pay them to keep producing; pay them to stop producing; or leave the market to find its own level. Cars are no different from cows. And there's still plenty of space on Canvey Island.

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