BMW demands pounds 200m to keep Mini in Britain

BMW IS considering moving production of Rover's new Mini to Hungary unless the Government agrees to a pounds 200m aid package for the Longbridge plant in Birmingham.

Several sites in Hungary are understood to have been examined by BMW executives as an alternative to keeping the Mini in the UK. Another possibility is to produce the car in Poland or the Czech Republic.

News of the threat to production of the Mini came as Rover was poised to announce a deal on flexible working with its 39,000-strong manual workforce.

The agreement, expected to be announced on Monday, will involve up to 3,000 job losses and save the company pounds 150m a year. It will mean an end to overtime payments - currently costing Rover about pounds 50m a year - and the introduction of "working time accounts".

Rover is also abolishing holiday bonuses, worth about pounds 200 per worker each year, and management bonuses. In return, the working week will be cut from 37 to 35 hours and Longbridge will stay open.

The job cuts will cost Rover about pounds 60m and will mean payments averaging pounds 20,000 for those who volunteer to take redundancy. The 3,000 job losses are higher than expected. Last month, BMW indicated it was seeking 2,400 job cuts.