It's all over for Rover

A GOVERNMENT support package worth £150m was announced this afternoon as hopes of saving MG Rover were finally dashed. Hours after the Chinese announced they would not make an offer for the company, the administrators began the job of sending redundancy letters to 5,000 of the 6,100-strong workforce.

Partners at Pricewaterhouse- Coopers said 600 workers will stay on to complete cars on the production line and a further 450 at Powertrain, the company's engines business, will be kept on until its future becomes clear.

The administrators said the Longbridge plant will be mothballed and discussions will continue with companies that have expressed an interest in buying parts of the business. At a packed Press conference in Birmingham this afternoon, PWC partner Tony Lomas said there had been more than 70 expressions of interest, but none with any cash to envisage a sale of MG Rover as a going concern.

'We will now explore the break-up of the business and mothball the plant so that we have time to go back to SAIC and see if they have any interest in the plant and, if so, what it is. This recognises the fact that they have acquired some intellectual property here already.'

The political fallout from the company's collapse was underlined as Tony Blair and Gordon Brown cancelled their election engagements and headed for Birmingham as confirmation came that MG Rover has reached the end of the road.

The Prime Minister said the Government would provide a £150m support package for suppliers, dealerships and employees. Standing alongside Mr Blair, the Chancellor told reporters the package would be made up of more than £60m to help diversify industry in the area and to support the supply chain. There would be another £50m to fund the retraining and re-skilling of workers made redundant. Another £40m would be ploughed into statutory redundancy payments.

In addition, said Mr Brown, around £40m of previously announced money will help with the construction of a new industrial park in the region. On top of that the Government was in discussions with the European Union about additional help. Mr Brown said pension protection arrangements, which came into effect this month for members of final-salary company schemes, would also come into play.

And Mr Blair added that the Government was also examining the question of Rover cars bought by the company's employees, in some cases involving finance deals.

Earlier, union leaders said the outstanding debt on some of these deals was greater than the amount many employees would receive in redundancy payments.