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Union defends millions ‘wasted’ on MG Rover

The head of the union which represented MG Rover’s workers has stood by the Government’s decision to intervene in the survival of MG Rover last year, which has cost the UK taxpayer a total of £250 million.

Tony Woodley made his statement following the publication of the National Audit Office’s report into Britain’s last mass manufacturer today. The NAO report revealed public money used to support MG Rover was likely to increase to £275m.

When MG Rover collapsed in April, the Government loaned out £6.5m to keep staff at work for an extra week.

"It would have been almost treasonable for any government not to have intervened for the survival of MG Rover. The size and importance of MG Rover, not just to the workers and their families, but to British manufacturing and the economy, meant any other response would have been irresponsible.

“Any and every government in Europe would have intervened in the circumstances, perhaps even more so than the Department of Trade and Industry did,” said Woodley.

Woodley’s views were a contrast to the NAO’s report which said the Government had not 'obtained sufficiently good value' for the £6.5m loan to the company after it went into administration.

Patricia Hewitt, who was trade and industry secretary at the time, agreed the loan on April 10 in an attempt to buy MG Rover's administrator, Price Waterhouse Coopers, more time to find a buyer or agree terms with Shanghai Automotive Industry Corporation (SAIC). The NAO report shows Hewitt approved the loan five days after SAIC informed the DTI it did not want to go ahead with a purchase.

Woodley explained the TGWU as well as others involved in MG Rover believed the SAIC deal with the manufacturer was progressing, therefore justifying the loan.

"If the deal had come off, as it almost did, and secured MG Rover's future, everyone would be singing the praises of the decision," said Woodley.

Shadow industry secretary Alan Duncan called the bridging loan ‘a total abuse’.

“It is quite clear that this £6.5m was, I think, the misuse of taxpayers' money for political purposes," he told BBC Radio 4's Today programme.

"It is quite clear that the Government was trying to use this money to buy time to delay bad news and as far as I'm concerned the Labour Party should pay it back out of the their own funds," said Duncan.

The NAO report reveals that only half of the figure - £3m - was spent on wages. Some £1.2m went on fees for PwC.

NAO report rundown of cost to public of supporting MG Rover:

  • To cushion the blow of BMW's sale in 2000: £90m

  • Direct support between May 2000 and April 2005: £5m

  • External advisers to the DTI for two months: £700,000

  • Amount written off from week-long rescue loan: £5.2m

  • Support package following MG Rover's closure: £146m

  • Lost VAT after the business stopped paying: £18m

  • Likely cost of DTI inquiry: £10m

  • NAO inquiry: £280,000

  • ESTIMATED TOTAL: £275.2m
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