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Last Updated: Monday, 24 July 2006, 23:11 GMT 00:11 UK
Rover collapse 'to cost UK 600m'
Former workers walk past MG Rover plant
Thousands of Rover workers remain jobless a year after its collapse
The collapse of carmaker MG Rover could end up costing the UK more than 600m ($1.1bn), MPs have said.

The public accounts committee said the figure included a government loan that would have to be written off as well as a 500m hole in Rover's pension scheme.

It added Rover's decline cost taxpayers an estimated 270m from 2000 to 2005.

A further 2,000 people still remain out of work as a result of the closure of Rover's Longbridge factory, where 6,000 people were employed.

Thousands more jobs are believed to have been lost in the area as a result of the closure as many other industries in the local economy were reliant on the firm - from parts suppliers to cafes that fed its workers.

Crisis handling

But the committee's report praised local agencies in the West Midlands for their efforts in helping the community diversify away from car manufacturing.

The Government did a good job in challenging circumstances
DTI

"The damage to the local economy would have been even greater without the efforts made by local agencies to help the local economy diversify in the years before the collapse of the company," committee chairman Edward Leigh said.

However, it criticised "serious gaps" in the way the Department of Trade and Industry (DTI) handled the crisis.

"The truth is that it [the DTI] had never managed to get close enough to the company to develop comprehensive plans for this kind of scenario and found itself trying to catch up with a rapid developing situation," Mr Leigh added.

The report added that the DTI was aware the company was in trouble as early as the year 2000 but had problems getting information about the group thanks to its "distant" relationship with owner Phoenix Venture Holdings.

'Good job'

However, the DTI said it had done a good job and managed to come up with "timely, effective contingency plans" for Rover's collapse.

"Implementing that plan has helped over 4,400 former employees back into work and helped save over 2,500 jobs in the supply chain," a DTI spokesman said.

"The government did a good job in challenging circumstances and carried out its duties fully and diligently."

The report into the cost of the collapse of the UK's last mass car producer comes a week after new owner, Chinese firm Nanjing Automobile, laid out its latest plans for the Longbridge site.

Nanjing said it would be pumping an initial 10m into reviving production of the MGF sports car at the site.

The factory is expected to turn out 15,000 cars a year, while more staff may be taken on to join its current 80-strong workforce.

But critics said the move would not mark a return to the plant's car making roots, with workers merely assembling vehicles from kits of components, supplied by Nanjing's factory in China, which is currently being built.




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See how the Rover collapse is affecting UK businesses



SEE ALSO
Nanjing puts 10m into Longbridge
17 Jul 06 |  Business

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