Govt ‘irresponsible’ over MG Rover briefing

By Alex Stevenson

Members of the press should not have been briefed that crucial talks between collapsing carmaker MG Rover and a Chinese firm which could have rescued it had “stalled”, a report has found.

The independent inquiry into the demise of MGRG, which made MG and Rover cars, criticises the government for giving the impression talks had reached a crisis point.

MGRG went into administration in April 2005 after talks with Shanghai Automotive Industry Corporation (SAIC) collapsed.

Today’s report, which took four years to complete, makes it clear that MGRG’s directors were “justified” in holding out hopes a deal could have been completed in April.

On April 5th it emerged in the press that talks had “stalled”. It says the “likelihood” is a special advisor in the former Department of Trade and Industry was responsible for the unattributable quote.

Government figures had been aware of the status of talks because ministers were considering providing a bridging loan to cover the transaction.

The report stated: “While, in the event, MGRG would have gone into administration in April 2005 with or without the press reports of the period, we consider that telling the press, without consulting the group, that the talks had ‘stalled’ was irresponsible.

It added: “We question whether it was appropriate for the government, unattributably, to brief the press even in the terms of that note without consulting, or even informing, the group.”

Downing Street appeared initially unwilling to recognise the criticism, pointing out the government had “cooperated fully” with this investigation.

Gordon Brown’s spokesman did make clear: “The prime minister always expects high standards from special advisors.”

Business secretary Peter Mandelson pointed out the report made clear the briefing made “no material difference” to the outcome.

“We, the government of the time, really cared about the future of this company, of this workforce – that’s why we tried so hard to get BMW to sell it off to its new owners,” he said.

Representatives for the Phoenix Four – who each received £9 million in payment from MGRG despite leading it to ultimate failure – have vigorously defended their case.

In a statement the Four said the report was a “witchhunt” and “whitewash”.