The Daily Telegraph newspaper reported on Monday that the UK government is understood to have offered to pay the wages of thousands of MG Rover workers at Longbridge from the public purse for at least four weeks to give the administrator time to secure the future of the Birmingham car plant.

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The paper said the move, if agreed by administrator PricewaterhouseCoopers, is likely to be seen as a cynical stunt by opposition political parties because it would help the Labour government put off the political fall-out of thousands of job losses in the Midlands until after the May 5 general election.


The Daily Telegraph said the offer, which would cost about £5 million a week, was made by officials from the department of trade and industry and the treasury over the weekend.


One source told the paper: “The government are prepared to provide money to keep staff from getting redundancy until after May 5. That was the plan between the DTI and the treasury that was put to the administrator.” The money would be “a loan to keep the factory open” because the carmaker could run out of cash to pay wages as soon as Tuesday.


Noting that MG Rover collapsed into administration after talks with Shanghai Automotive Industry Corporation failed and MG Rover was unable to agree a £100 million bridging loan with the DTI, the Daily Telegraph reported that other sources had said the extra cash would smooth a deal in which the Chinese would take on the plant as a “short term, high cost manufacturing unit” shorn of liabilities, including the £67 million deficit in the pension fund.

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The paper said Shanghai Automotive is the only realistic buyer after confirming on Sunday that it had bought the intellectual property rights for the Rover 25, 45, 75 and K-series engine for £67 million in November – a different buyer would only be able to make these models with SAIC’s permission.


The Daily Telegraph said the Liberal Democrat political party’s Lord Oakeshott has called for the new pensions regulator to make the so-called Phoenix Four, the four men who bought MG Rover for £10 in May 2000 and then made well over £30 million for themselves, “personally liable” for MG Rover’s £67 million pension deficit.


However, the newspaper added that, under the rules, the four men are liable for the deficit only if there has been mismanagement of the fund – a spokesman for the regulator told the Daily Telegraph that so far there was no evidence of this, though officials will look into it.


UK chancellor [finance minister] Gordon Brown has also held out the possibility of an inquiry into the way MG Rover has been run, the Daily Telegraph added.