Byers did not see BMW indicate and now his reputation is dented

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The Independent Online

Stephen byers was fighting to salvage his reputation yesterday after the Department of Trade and Industry was wrong footed for the second time in two weeks.

The Secretary of State for Trade and Industry brushed aside Tory demands for his resignation but there was no concealing the frustration in government ranks at the fact that his department was unaware of the Rover sell-off by BMW to the venture capital company Alchemy.

When news of the sell-off first emerged on Tuesday night, the department was assuring the media that BMW did not intend to dispose of Rover in its entirety and that only some subsidiary parts were likely to be involved.

The department was talking about aid packages last week to help Belfast shipbuilder Harland & Wolff secure the contract to build a new Cunard liner - and so avert 1,800 redundancies - apparently unaware that at the same time, the deal for it to be built in France was being signed.

In both cases, the deals that the department seemed to miss were absolutely crucial to the economies of the regions. In Belfast, in particular, there were implications for the fragile peace process.

Alastair Campbell, the Prime Minister's spokesman, stressed yesterday that Tony Blair had confidence in Mr Byers. "Absolutely," he said, adding, "There is always a desire to blame somebody. Some will want to blame Stephen Byers."

Mr Campbell maintained that BMW kept Mr Byers and the Government in the dark about Alchemy's involvement until the Government uncovered the link itself. He refused to say how it found out about Alchemy, but he was clearly irritated by BMW's clandestine operations.

The bright, bespectacled Mr Byers, 46, had been seen as a Blairite rising star, with a quick command of his brief, but the unexpected problems of office have tarnished his image. Shares in Mr Byers have been selling at a discount in Westminster, while stock in Alan Milburn has retained support in spite of the troubles at the Department of Health.

Mr Byers is engaging and well liked, but has been carved up at times by his own colleagues. When he was due to announce the 10p increase in the minimum wage, Mr Byers was upstaged by Gordon Brown, the Chancellor. The DTI has rarely been a political graveyard, but the department has suddenly looked as accident prone as the Home Office.

Mr Byers's friends said last night that he would overcome this week's difficulties, and that he remained popular with backbenchers. Some said there was little more that he could do when BMW decided to deal behind the Government's back.

Other, more battle-tested ministers may have been more cautious in raising hopes for the future of the long-troubled Longbridge plant.

Mr Byers told MPs yesterday that the turning-point in the Rover saga was the scale of the escalating losses for BMW. Faced with losses totalling £1.2bn, some members of the supervisory board forced a U-turn on BMW for which Mr Byers could not be blamed.

His problem now, however, is to prevent the débâcle over BMW turning into a disaster. The worrying factor for Mr Blair is that Rover casts a shadow over many important Midlands constituencies which turned to New Labour from the Tories at the last election.