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DTI drove ‘news agenda’ to bring MGR down

The Department of Trade and Industry has been accused by opposition MPs of aiding the collapse of MG Rover.

Charles Hendry MP, the Tories' industry spokesman, says: "The Government proceeded to bring forward the closure of the company so that it happened at the beginning of an election campaign and not towards the end. The Government's hands are not clean on this."

Speaking in a Commons adjournment debate yesterday, John Hemming, a Liberal Democrat MP, said MG Rover's directors had agreed on December 17 that the car company was "balance sheet insolvent and dependent on the SAIC deal to carry on trading".

MG Rover's chances of success were undermined when the DTI confirmed rumours of a £100m bridging loan on April, resulting in suppliers demanding payment for parts.

He said: "It undermined the credibility of the company and increased its working capital requirements by £50m. That information should not have been made public. The DTI made the decision."

While the Chinese needed a few weeks to create an "escrow account" for the cash lifeline, the DTI ‘drove the news agenda’, first briefing journalists that talks with Shanghai Automotive had stalled on April 4 and then announcing that MG Rover had appointed receivers in a late night press conference on April 7.

Hemming added: "That announcement should not have been made by the DTI. It was a totally inappropriate thing to do for a public announcement. This deal could have been done."

Meg Munn MP, a junior DTI minister, said the Government had been monitoring MG Rover since last autumn and insisted it was inevitable that the loan would become public. She said: "The loan would have had to be decided by the European Commission. There was no prospect of it remaining secret."

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