Rover: DTI money saves firm - for a week

THE Government has agreed to provide a £6.5m loan to keep MG Rover afloat for another week. The money will give the business a seven-day extension while an attempt is made to salvage a last-minute deal with a possible Chinese buyer.

But no new cars will be produced at the company's Longbridge plant as suppliers are refusing to provide parts. And the prospects for the company still look very gloomy.

Staff at Longbridge will attend a mass meeting today to hear more from union leaders about the attempt to rescue the company and lift it out of administration.

Trade and Industry Secretary Patricia Hewitt said the £6.5m loan was to avoid job losses for now. Union leaders said they were 'hopeful' of a possible rescue deal with Shanghai Automotive, the Chinese car company which pulled out of talks with Rover on Friday after apparently discovering the true extent of pension liabilities and other financial problems at the company.

Administrators from the accountancy firm PricewaterhouseCoopers were locked in talks with officials from the DTI, union leaders and company managers over the weekend to try to revive the proposed partnership between MG Rover and SAIC.

The Department of Trade and Industry said the Government was prepared to go the extra mile to save the company. But the looming General Election threatens to turn the Rover collapse into a political crisis after Conservative leader Michael Howard accused the Government of getting involved at 'far too late a stage'.

Although 6,000 people work on the production line at Longbridge in Birmingham, as many as 15,000 others in the components industries rely on Rover for their livelihoods. Several key Rover suppliers have already laid off staff, with engineering companies throughout the Midlands and south Wales cutting back despite a £40m support package made available by the Government on Friday.