Tony Blair yesterday promised to work “night and day” to help rescue jobs at the stricken car maker Rover, and Downing Street officials are intervening directly to win breathing space for the Phoenix consortium in its attempts to take over the Longbridge plant.
Senior officials are taking advantage of the close relations between the German chancellor, Gerhard Schröder, and Mr Blair to exert political leverage on Rover’s parent, BMW, not to shut the plant until Phoenix has had every opportunity to put together a viable offer.
In a statement yesterday Mr Blair said: “I want to reassure the people of the West Midlands that I and the government stand ready to do whatever we can for the workers at Longbridge and the region as a whole. I have asked Stephen Byers [the trade secretary] to keep me personally in touch with the developments and I am pleased that he has helped ensure that any bid from Phoenix will be given proper consideration.
“At the end of the day, it has to be a commercial decision for BMW and any potential bidder. We will continue to work night and day to secure the best interests of the workers, their families and the West Midlands.”
European Union rules on state aid necessitate lengthy examination of any government aid and a guarantee that the rescue will be viable. Brussels will also insist on a sizeable proportion of the funding for Phoenix coming from private sources, which may cause further delay.
With Phoenix executives due to hold a critical meeting today with BMW chiefs, it emerged that a No 10 aide had asked Chancellor Schröder’s office to impress upon BMW the need to give the consortium every opportunity to rescue Rover and the plant in Birmingham.
BMW warned last week that failure to strike a deal within a month would result in the liquidation of Rover.
On Friday, BMW’s favoured bidder for Rover, the Alchemy venture-capital fund, unexpectedly pulled out of talks to buy Longbridge. The fund said there was a “chasm” between itself and BMW on several financial issues, believed to include the costs of paying off redundant workers and compensating Rover dealers.
Alchemy had made it clear that it was interested only in manufacturing a relatively small number of sports saloons and would wind up Rover’s volume car activities.
Trade unions denounced Alchemy as an asset stripper, and Mr Byers called for a solution that would maintain mass production at Longbridge.
Phoenix is headed by Rover’s former chief executive, John Towers, and its backers include Rover dealers, venture capitalists and John Hemming, the software multi-millionaire and would-be Liberal Democrat mayor of Birmingham.
Mr Towers knows the bid must not rely on heavy public assistance. However, an aid package of some sort would be essential to get Longbridge back in business, possibly similar to the £152m in grants that Mr Byers was proposing to BMW before it decided to end its six-year entanglement with Rover.
Yesterday the Department of Trade and Industry confirmed that this proposal will have lapsed and that any new aid deal will need to be resubmitted to the EU for approval.
There is no “fast track” and the process could take several months.
Meanwhile sales of Rover cars soared in April amid heavy discounting. The group’s market share more than doubled to top 12%.