Confusion grows over Blair's Rover role

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The Independent Online

Tony Blair stepped into the Rover crisis last night amid growing confusion over whether the Government would act to secure its future.

As the Prime Minister promised in a statement to keep pace with events each day, Stephen Byers, the Secretary of State for Trade and Industry, left his home in Newcastle upon Tyne looking strained and without speaking to reporters.

Mr Blair's intervention was a sign of growing anxiety among ministers about the potential loss of thousands of manufacturing jobs in the Midlands. He failed to offer anything concrete, asserting only that he had asked Mr Byers to keep him personally in touch with developments and promising that he would do all he could. But he gave no assurance that the Government would back a bid for the firm with cash.

Mr Blair said: "At the end of the day it has to be a commercial decision for BMW and any potential bidder. We will continue to work night and day to secure the best interests of the workers, their families and the West Midlands." He added that both Mr Byers and David Blunkett, the Secretary of State for Education and Employment, had shown a determination to protect the Rover workers and others who would be hit by BMW's decision to pull out.

The Phoenix consortium, the only potential buyer left in the race, was last night preparing for talks which were due to begin in earnest this morning. The group, headed by the former Rover executive John Towers, spent yesterday examining a huge amount of detailed information provided after the collapse on Thursday of talks between BMW and the Alchemy venture capitalist group. A source close to the Phoenix team said that "bold and ambitious" plans were being drawn up to try to save as many jobs as possible among the 10,000 at Longbridge. However, there was confusion last night over what state aid might be available to the consortium, which was said to be seeking a total of around £700m to buy the company.

While it seemed the Government might be prepared to offer Phoenix a sum similar to the £150m already promised to BMW to develop the new R30 car in Britain, it was not clear whether such a move would be allowed under European Commission rules.

The package was automatically cancelled when the German company announced its intention to sell Rover.

Phoenix had not made a formal request for Government backing last night.

Any request for state aid would have to be cleared by the European Commission, which objected to the BMW package on the basis that that the car might equally have been built in Hungary. However, the Department of Trade and Industry spelt out a series of criteria for any new package which seemed at first glance to fit Phoenix's requirements.

The group would need to show that private investment in Rover could not go ahead without support, that its bid would help an EU-assisted area such as the West Midlands and that it would provide both regional and national benefit, a DTI spokeswoman said.

It would also need to show that Rover was a viable company in the long term - a possible sticking-point for the bidders. However, a BMW spokesman cast doubt on whether a bid could be backed by grants. "I don't think they can support Phoenix with government money," he said.

The Conservatives accused the Government of failing to answer specific questions on aid. Angela Browning, the party's trade and industry spokeswoman, said that Mr Blair had rushed to reassure voters in advance of Thursday's local election without having anything concrete to offer. "What we are seeing is a sort of sticking-plaster approach, with everybody trying to sound concerned but not committing themselves to anything," she said.

Union leaders said that they planned to visit Munich this week to back the Phoenix bid. Sir Ken Jackson, the general secretary of the Amalgamated Engineering and Electrical Union, said the "mood music" about Phoenix from BMW's Munich headquarters had become more positive since the Alchemy negotiations collapsed.