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MG Rover

I echo the congratulations to the hon. Member for Birmingham, Northfield (Richard Burden) on securing the debate, and on the eloquent and sincere way in which he introduced it. It is a shame that we have to discuss the topic in an Adjournment debate in Westminster Hall, as it should have been the subject of a statement by the Secretary of State soon after the House returned. This was probably the biggest economic and industrial issue affecting the country while Parliament was dissolved for the general election, and it is shocking that the Secretary of State did not come to the Dispatch Box to set out clearly what had happened and give the House a chance to question him on it. As we have seen from today's debate, there has been a catalogue of mistakes that go back over many years and have resulted in the terrible tragedy that we see before us. Although hon. Members have spoken from different perspectives, what has come across is the fact that they are all speaking with a genuine interest in their constituents—people who were employees of Rover or whose livelihood depended on it—and with a tremendous commitment to their communities. Above all, the issue is tragic for the work force, who have lost their livelihood and find that their pensions are under threat. As my hon. Friend the Member for Meriden (Mrs. Spelman) said, it is tragic for those who have already retired and now face tremendous insecurity, as they do not know how their pensions will be paid. It is a tragedy, too, for the creditors and dealers, some of whom will be driven out of business. A number have already closed down, and it is likely that others will follow—people who did nothing other than their best to sell Rover cars. Of course we welcome the rescue package, but we would be grateful if the Minister could clarify whether all the money is new money or whether it has been diverted from other funding packages that were already in place in Birmingham and the west midlands more generally, or elsewhere. I also endorse the call from the hon. Member for North Norfolk (Norman Lamb) that the Financial Reporting Council report should be published. When it was handed over to the Secretary of State, it was made clear that it contained issues that the Department of Trade and Industry would want to address. The House should see exactly what Sir Bryan Nicholson's report concluded, so that we can understand fully what more needs to be assessed. We welcome the decision to have a full investigation, but the inquiry must also consider the actions of the DTI and to what extent they might have contributed to the closure of Rover. After all, it is only just over a year ago that the former Secretary of State defended the £31 million bonuses paid to the Phoenix four, in words that bear repeating:"““I am very pleased with Rover's performance. There were very big risks involved in starting up Rover again when it looked as if it would be the end of the road . . . Company directors who take big risks and achieve big successes deserve big rewards.””" Would the Minister care to endorse those words today, or has she changed the Department's mind from paying tribute to John Towers and his colleagues in such a fulsome way? The report needs to consider historically what happened when Phoenix took over. As has been explained today, we want to know the detail of why the Phoenix solution was preferred to Alchemy. We also need to know why the BMW pension fund was not ring-fenced, so that the people who were entitled to expect that they would benefit from it can understand why the money is not available. The main issue that the investigation should look into is the handling of the situation as it moved towards its final stages. It is my understanding that in the early hours of Tuesday 5 April, directors of MG Rover and solicitors were meeting at Longbridge. When they finished that meeting, they believed that they had an agreement for the £100 million loan. It is also my understanding that the then Secretary of State had cleared time in her diary later that Tuesday to announce formally that the £100 million loan had been agreed. It is also clear that the DTI press office briefed the media earlier in the week that the loan was almost in the bag. The press coverage that resulted from that actually made matters worse: it increased the pressure on the company as more creditors came forward seeking to be paid. What happened to change the Government's mind on the loan between the early hours of Tuesday 5 April and the Secretary of State's decision later that day to cancel the formal announcement of the loan package? Will the Minister confirm that the Government changed the nature of the loan that they were prepared to provide, and it became a loan for two months rather than six months? Will she confirm that when that was made clear to Shanghai Automotive Industry Corporation, it backed out of the deal because that was not acceptable? Will the Minister also confirm that at about 9 o'clock on Thursday 7 April, PricewaterhouseCoopers was informed of the likelihood that it would be called in, not as a receiver, but to advise the company on its situation? Will she confirm that just one hour later, the Secretary of State announced on national television that MG Rover had entered administration? In the words of John Duckers, the business editor of The Birmingham Post,"““No one is suggesting that MG Rover might have necessarily been saved, but, it is maintained, the Government chose when it was to go down—not the company's chairman, Mr Towers.””" What happened during that hour? Which other parties had been informed of the insolvency before the Secretary of State declared it on national television? Will the Minister publish a report, or even better a transcript, of the discussions that took place that Thursday evening between the Secretary of State, or other DTI Ministers and officials, and senior Rover management? Is not it the case that Mr. Towers told the then Secretary of State, ““If the loan is not agreed, we will have to call in the receivers,”” not, ““We are calling in the receivers””? That is a fundamental difference. As the Minister will be aware, the Secretary of State's announcement would in any case have brought about the collapse of Rover, because by Friday morning, the demands from creditors had made receivership inevitable. Finally, does the Minister understand the cynicism of people such as John Duckers, who believe that it suited the Government's purpose to bring forward the closure of the company so that it happened in the early stages of the election campaign, not in the middle or final stages? To counter those suspicions, will she arrange for the internal documents from the DTI, the Treasury and No. 10 to be made public so that the full process and the timings can be understood? This is one of the biggest industrial disasters of recent years. Of course, massive responsibility lies in the hands of the directors of Phoenix Venture Holdings, but the Government's hands are not clean either. Nothing less than a full inquiry into the role of the company and Ministers, with all the findings made public, will reassure MG Rover's former employers and its creditors that the Government acted in the company's best interests. I urge the Minister to agree to that demand today.