Rover seeks grant aid of pounds 70m

Rover Group is seeking between pounds 70m and pounds 100m in grant aid as the price for building a new engine plant in Britain, according to sources at the London Motor Show.

The bulk of the money would come from the British government, though Rover is also talking to officials at the European Commission about getting regional aid from Brussels.

If built in the UK, the new plant is likely to be located near Rover's existing facilities in the Midlands and would qualify for aid under the government's regeneration schemes.

However, Rover's neighbour, Jaguar, ran into problems with the EC, which is investigating the legitimacy of some of the pounds 80m given by the Government towards building a pounds 400m manufacturing site in Birmingham. Executives at rival companies predicted at the time that the Jaguar aid would open the floodgates.

Now BMW says that unless it gets substantial assistance it will build the plant in Germany or Austria. Both the German and Austrian governments are offering aid.

The engine plant, which may involve investment of pounds 300m-pounds 400m and give a significant boost to employment, would build two-litre engines for a new mid-range Rover, but would also export to BMW's German assembly plants.

Rover, which hopes that BMW will make a decision before the end of the year, believes the Department of Trade and Industry is keen to provide the money.

The investment would be another vote of confidence in the UK motor industry, following a number of recent announcements by car companies that they intend to expand operations. This week Ford said it was investing pounds 340m to double capacity at its engine plant at Bridgend, South Wales. The company received pounds 10m in aid.

Yesterday Richard Parham, managing director of Peugeot UK, said he was extremely hopeful that the company's Coventry plant would be chosen to build the new 206 series, successor to the 205.

The plant currently produces only the 304, and has seen output rates rise from 1,600 to 2,250 cars a week since July 1994, with a 10 per cent cut in manpower. Peugeot's French parent believes that these productivity improvements should be rewarded with a new model.

Also yesterday, General Motors said it may decide within the next 12 months whether to begin production of the Corsa at Vauxhall. Charlie Golden, Vauxhall's chief, said: "It is the only major car that we sell in the UK market but do not produce."

Both Peugeot and Vauxhall strongly hinted that they would also apply for government aid.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before