Rover: EU promises £70m aid

BRUSSELS today gave the go-ahead to release European Union funding worth up to an extra £70m to help soften the blow of redundancies at the Longbridge plant in the West Midlands.

In a letter to Trade Secretary Patricia Hewitt, EU Regional Policy Commissioner Danuta Hubner said EU aid already set aside for regeneration in the region could be redirected to target the thousands left jobless by the collapse. The West Midlands has €890m (£609m) earmarked from Europe's 'structural funds' for aid to poorer regions from 2000 to 2006.

A European Commission spokesman said up to €50m is estimated to be left over for the period and could be mobilised 'within weeks'. That would be matched by the Treasury, potentially doubling the £150m aid package already floated by the Government.

A crisis meeting of the Government task force on MG Rover, which includes CBI boss Sir Digby Jones, was held yesterday in a bid to speed up help for 200 car dealerships hit by the carmaker's collapse.

The meeting came after it emerged that 11 dealerships owned by Phoenix had also gone into administration. The administrators have written to MG Rover suppliers, asking them to estimate how much money they are owed by the failed Longbridge business.

Phoenix Venture Motors employed 427 people in 11 new and used car showrooms based in the Midlands, North West and South of England. It has been placed in the hands of PricewaterhouseCoopers which is also handling the administration of MG Rover, engine maker Powertrain and MG Sport and Racing.

Support services group McLellan said 55 of its workers at Longbridge would be made redundant at a cost of about £400,000.