Government loan could help Rover

About 6,000 are employed at Rover in Longbridge, Birmingham

The government is offering a bridging loan to help MG Rover secure a deal with its Chinese partner and safeguard thousands of jobs in the West Midlands.

UK trade officials are in talks with the state-owned Shanghai Automotive Industrial Corporation (SAIC) which could invest up to £1bn in MG Rover.

The Department of Trade and Industry (DTI) would not say how much the government was prepared to offer.

Unions at the Longbridge plant in Birmingham welcomed the news.

The TGWU said the development would help the car manufacturer stay in business until the Chinese deal was completed.

Chinese cash

Chancellor Gordon Brown has already vowed to do everything possible to secure a tie-up between MG Rover and SAIC, which unions believe is the only way Rover's future will be secured.

Under the proposed venture, the Chinese company would inject cash into Rover to help it develop new models and in return SAIC would secure ownership rights to Rover's more advanced technology.

A DTI spokeswoman said: "Throughout this process the government has done all it can to help support the joint venture between MG Rover and SAIC.

"A team of DTI officials is in China this weekend holding discussions with SAIC. We are also in touch with the Chinese government.

The Longbridge story 1905 Herbert Austin moves in 1910 Workforce reaches 1,000 1922 Austin Seven introduced 1946 Millionth car produced 1959 Mini launched 1968 BMC merges with Leyland 1980 Metro production begins 1988 Sold to British Aerospace 1994 Taken over by BMW 2000 Bought by consortium for £10

"If it appears that a commercial deal will be agreed, both MG Rover and SAIC are aware that the government would consider the option of providing a bridging loan facility to that deal. No formal decision has been made."

The government was also considering a package of support and financial assistance for the workers, their families and local communities if the deal does not go ahead, the department added.

Tony Woodley, general secretary of the TGWU, said he welcomed the DTI comments."This is the right move for MG Rover, for the Midlands and for manufacturing industry as a whole," he said.

"It will help keep MG Rover in business until the Is are dotted and the Ts are crossed on the deal with Shanghai Automotive."

MG Rover employs about 6,000 workers at Longbridge but thousands more rely on the company for their jobs, working in local service industries in the West Midlands.

The company was bought for £10 from German car maker BMW in 2000 by a consortium of West Midlands businessmen led by John Towers.