Opposition members of the UK parliament have accused the Department of Trade and Industry of helping to speed up the demise of MG Rover to avoid electoral embarrassment to Labour [government] ministers, according to the Daily Telegraph.
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Charles Hendry MP, the Tories’ industry spokesman, reportedly said: “The government proceeded to bring forward the closure of the company so that it happened at the beginning of an election campaign and not towards the end. The government’s hands are not clean on this.”
The paper said John Hemming, a local Liberal Democrat MP, speaking in a Commons adjournment debate, said MG Rover’s directors had agreed on December 17 that the car company was “balance sheet insolvent and dependent on the [Chinese] SAIC deal to carry on trading”.
The MP reportedly said MG Rover’s chances of success were undermined when the DTI confirmed rumours of a £100 million bridging loan in April, resulting in suppliers demanding payment for parts.
He reportedly said: “It undermined the credibility of the company and increased its working capital requirements by £50 million. That information should not have been made public. The DTI made the decision.”
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By GlobalDataThe Daily Telegraph said that, while the Chinese needed a few weeks to create an “escrow account” for the cash lifeline, the DTI drove the news agenda, first briefing journalists that talks with Shanghai Automotive had stalled on April 4 and then announcing that MG Rover had appointed receivers in a late night press conference on April 7.
Hemming reportedly added: “That announcement should not have been made by the DTI. It was a totally inappropriate thing to do for a public announcement. This deal could have been done.”
The paper said that Richard Burden, a local MP who organised the debate, had earlier said the millions made by the four men who bought MG Rover for £10 five year ago “should now be put to work for those who have lost so much and whose needs are greater than those of the Phoenix Four”.
According to the Daily Telegraph, MP Meg Munn, a junior DTI minister, said the government had been monitoring MG Rover since last autumn and insisted it was inevitable that the loan would become public. She reportedly said: “The loan would have had to be decided by the European Commission. There was no prospect of it remaining secret.”
Patricia Hewitt, the-then trade secretary, announced that MG Rover wanted to call in the administrators after talking to its chairman John Towers, the paper added.
Munn reportedly said that 649 out of 6,100 former staff from the Birmingham-based car company had found jobs in the past two months.
More than 400 companies which used to supply MG Rover have successfully applied to the Inland Revenue to defer tax payments, worth £4.7 million, she added, according to the Daily Telegraph.
