Comment: Flybe rescue hints at a worrying return to interventionism

It seems the red Tories have overrun Downing Street.

Previous true blue administrations would never have stepped in to prop up a private company — especially one like Flybe that’s been badly run and gets into financial straits every few years.

Yet here is Grant Shapps paraded on air, declaring the vast tax deferral — more than £100 million by some reckoning — is worth it to help the regions.

And all because Boris Johnson wants to show his new voters in Labour’s northern heartlands that he’s good for his election promises.

The injustice for other airlines shouts loudly. British Airways’ owner IAG has gone through huge job losses, capacity reductions and complex takeovers to create a financially secure business. What did Flybe do? Spent its 2010 float proceeds on an expansion campaign that did little but fill planemakers’ pockets and destroy shareholder value.

No wonder Willie Walsh has blown a gasket.

There will be more regional businesses facing financial difficulties in the not-too-distant future — who’ll give me odds on the pension-laden Port Talbot steelworks?

Other electioneering promises outside the South East will need funding, too; Teesside’s Tory mayor is campaigning to bring back steel-making at a cost of hundreds of millions.

Now the precedent has been set with Flybe, such demands for handouts from the structurally doomed may be hard to resist.

Little wonder free-market Tories are distinctly uncomfortable today. Once it’s freed from the shackles of European state aid rules, this could end up being the most interventionist government since the 1970s.