The Conservative party has urged the National Audit Office, the spending watchdog, to investigate the UK government’s handling of the collapse of MG Rover two months ago, the Daily Telegraph reported on Friday.

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The NAO reportedly said Sir John Bourne, comptroller and auditor general, was considering an investigation into the car maker, which called in administrators on April 8, and will make his decision within the next week.


The paper noted that, earlier this week, Alan Johnson, trade and industry secretary, ordered a full-scale DTI inquiry into the finances of the company.


According to the Daily Telegraph, the NAO will focus on ministers’ justification for spending public money during the crisis, including a £6.5 million “loan” to pay for the wages of 6,100 workers at the Longbridge plant when there was little chance of a joint venture to rescue the company.


The paper said that letters sent to the DTI in late March and early April show that officials were warned three times that there was little chance of the deal with Shanghai Automotive Industry Corporation, yet Patricia Hewitt, the then trade and industry secretary, still sanctioned the £6.5 million.

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A NAO spokesman told the Daily Telegraph: “We are looking at the possibility of looking at the DTI aid package, because it is public money. Sir John Bourne has not yet given a final go ahead.”


David Willetts, the Tories’ trade and industry spokesman, told the paper: “By addressing legitimate questions about the DTI’s actions and advice, it could fill a potential gap in the official DTI probe.”


According to the Daily Telegraph, he said any inquiry should include the decision in May 2000 by Stephen Byers, Ms Hewitt’s predecessor, to back a bid by a group of four local businessmen, dubbed the Phoenix Four, to buy MG Rover, ahead of a more realistic offer from Alchemy Partners, a venture capitalist.