£50m Rover aid 'not needed'

Almost £50 million of Government aid earmarked for victims of the MG Rover collapse has not been required, new figures have revealed.

The Government made some £175.6 million available over three years for workers, suppliers and others affected by the collapse of the West Midlands car maker in April 2005.

The latest revelations, which emerged in the House of Commons yesterday, will raise once again further questions over the handling of the Rover crisis and its aftermath.

In a Commons written answer, Industry Minister Margaret Hodge yesterday said: "In the event, the impact on MG Rover's suppliers and their workforce was not as severe as had been feared and the full amount set aside was not required.

"The total amount that is now budgeted to be spent is £126.5m."

The break-down of the spending is £55m to employees in redundancy and pay in lieu of notice.

A total of £33.1m went to suppliers, £25m to companies threatened with insolvency, £9.4m on training and £4m to regional innovation and technology programmes.

An additional loan of £6.5m was provided to the company's administrators to enable them to attempt to find a "going concern" sale.

Of this £1.3m was repaid, giving a net cost of £5.2m.

MG Rover went into administration in 2005 despite a last ditch rescue attempt, which included the £6.5m from the Government, to save the plant.

About 6,000 workers lost their jobs, many employed at the Longbridge plant.

MG Rover's new owners Nanjing Automobile plan to produce up to 15,000 cars a year at the plant, but this may create fewer than 100 jobs.

Earlier this year, in a report to the Department for Trade and Industry, the Rover Task Force said its legacy of achievements included getting more than 4,000 workers back in jobs and creating training opportunities for hundreds of others.

An inspection, under the Companies Act, into the affairs of MG Rover Group, has cost almost £7 million to date.

The probe is still underway.

By Vivienne Morgan