MG Rover’s collapse last year could cost the UK private sector and former workers more than GBP600m (US$1.11bn) including around GBP500m deficits in the manufacturer’s pension scheme.
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The UK government’s House of Commons Public Accounts Committee has published a report on the downfall of MG Rover, which began in 2000 following its sale by BMW, and culminated in April 2005 when Phoenix Venture Holdings Limited put the firm into administration.
The Department of Trade and Industry is still investigating the company’s affairs and said that the directors of Phoenix Venture Holdings received GBP40m from the company between 2000 and 2005.
In today’s (25 July) report, called The Closure of MG Rover, the committee said: “The Department of Trade and Industry knew in 2000 that the company was vulnerable in the longer term without a strategic industrial partner. But the department’s relationship with the company’s owners between 2000 and late 2004 was “distant” and it had difficulty obtaining information about the company’s plans. The company made a number of attempts to find a strategic partner but with only limited calls for support from the department and UK trade and investment.”
The estimated cost to the taxpayer was GBP270m, including GBP90m to modernise and diversify the West Midlands economy following the initial sale in 2000, for which the government has praised local agencies.
The committee said that 4,300 former company and supply employees have found new work, while 2,000 have not.
When the manufacturer went into administration on 8 April 2005 the department provided a GBP6.5m loan to the administrators to keep the company going for one week, GBP5.2m of which is now likely to be written off.
“In reaching this decision the department had to balance the risk that some, or all, of the loan might not be repaid against the chance that jobs could be saved and the benefits of allowing extra time for local agencies to prepare for the consequences of a closure,” the committee added.
New owners Nanjing Automobile last week (17 July) confirmed the revival of the historic MG brand with some limited assembly of an updated TF roadster at the former MG Rover factory in Longbridge, England, as well as plans to assemble a new TF coupe model in Oklahoma, through the formation of MG Motors North America.
