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MG Rover

It is a pleasure to appear before you, Mr. Sheridan, I believe for the first time. I thank my hon. Friend the Member for Birmingham, Northfield (Richard Burden) for calling this debate. I know that he has worked assiduously for many years on matters concerning the Longbridge site, first in 2000 when this story began, through 2005 and in the years since. I welcome my hon. Friend the Member for Birmingham, Hall Green (Steve McCabe), who has worked with my hon. Friend the Member for Birmingham, Northfield on these matters. Whenever a redundancy situation occurs in any of the communities that we represent, it is extremely serious, so back in 2000 when BMW was about to divest itself of its interests in the Longbridge site, it was entirely understandable and explicable that the community as a whole took the steps that it did. The hard work that was done and the public support at the time for the Phoenix consortium are evident from the report. It is against that backcloth that we have to consider subsequent events and the actions of members of the Phoenix consortium. The collapse of MG Rover in 2005 reverberated not just through communities in the west midlands but across the United Kingdom. More than 6,000 people lost their jobs, individual employees and families were hit extremely hard, many creditors were left with unpaid bills—the total was £1.3 billion—a major UK car manufacturer went into liquidation and many suppliers lost a key customer. The west midlands region was dealt a body blow, and I am sure that the impact is still being felt today. It was important and absolutely right that the Government set up an independent inquiry to find out what led to the collapse. Those who were affected need to know the truth about what happened, because there have been many allegations and ill-informed rumours. The report sets out in great detail—more than 800 pages, as my hon. Friend said—the extremely complex history of events leading up to what happened in 2000 and in subsequent years. The report is important as a point of reference for people. The story is complicated and the report contains a great deal of detail, but it is there for the public to see. The inspectors painstakingly studied a complex structure of 33 companies that made up the MG Rover Group and its parent, Phoenix Venture Holdings. They also looked closely at the role played by certain directors. When a company controlled by John Towers and his fellow directors bought MG Rover from BMW in 2000, they were welcomed by the workers, the suppliers and the local community because it appeared that they would save jobs and the business, but it is evident from the report that, from the outset—it was true throughout—they needed a joint venture partner to ensure the long-term survival of the business. Although there were several attempts to find a partner, five years later they had not signed one up, and losses were accumulating, car sales were falling and insolvency loomed. However, it is clear that throughout that five-year period of such difficulty for the company, the Phoenix directors were prospering. The so-called Phoenix four had spent considerable time and effort designing projects to shift assets away from MG Rover to other companies in the group owned by them, instead of using the money to support car manufacturing. The report details not the tens of thousands or hundreds of thousands but the millions that were paid to the individuals concerned. The inspectors found that during those five years, the directors took""unreasonably large, financial rewards, totalling tens of millions of pounds."" Inspections of that kind take time and invariably cost considerable sums—in this case, £16.3 million. That is why they are so rarely deployed. The inquiry was complex and has clearly cost more than anyone would have liked. I take on board what my hon. Friend the Member for Birmingham, Northfield said about the time that the inquiry took, and its cost. However, it was important that the inquiry be independent. The difficulty from the Government's point of view was that interference at any stage in the conduct of the inquiry would have led to allegations that they were seeking to intervene in the inquiry in some improper way. Certainly any interference by the Government once the inquiry had been set up would have been entirely inappropriate, but there are lessons to be learned from the situation. The position and the terms of reference of the inquiry at the time that it was set up should, perhaps, be looked at for the future. In addition to setting out the story, the inspectors also suggested that changes should be considered to financial reporting standards and guidance to increase transparency. The aim would be to help users of company reports and accounts better to understand a company's financial position, including the value of assets. The Financial Reporting Council is looking carefully at the lessons from this case. Work is under way to bring legal proceedings against the relevant directors with a view to seeking their disqualification by the court, or their offering to undertake not to be involved in the management of companies for a period of time. My hon. Friend referred to the trust fund. I took questions in the House when the report was released so I know that it is a matter of profound concern to everyone—to Members and, more widely, the west midlands community. The reason the trust fund was set up in the first place—at the time of the collapse of the company—was to assist a west midlands community that had been dealt a body blow, and to dispel concerns that were being expressed about what had happened before that. We all know that, until now, the trust fund has simply not delivered in any respect. The justification that has been provided for the trust fund's not delivering is that we were awaiting the outcome of the inspection report. The report is now available. If there is to be no distribution or investment in the trust fund, we need to know why that should be so at this stage, because the community has had to deal with the consequences for almost five years. Individuals have had to rebuild their lives and the community has had to rebuild itself during that period. It is about time that the commitment given voluntarily in 2005 is lived up to by those who gave it. We ask no more than that individuals follow the lines that they outlined in 2005 and make a commitment to the community in material terms, not just in words. I note closely what my hon. Friend said about MGR Capital. The evidence we have is that funds are available in MGR Capital—it is outside the remit of MG Rover itself and outside the remit and control of the liquidator, but money is there. If those who had influence in MG Rover in 2005 and when the trust fund was set up, and who now have influence relating to MGR Capital, want to live up to the expectations that they created, they should use available funds to support the community that my hon. Friends in the Chamber represent. That is a moral obligation on them. I say to my hon. Friend the Member for Birmingham, Northfield that I will do anything that I can both in respect of that moral obligation and to support exploration of whether any legal obligation is involved that would enable action to be taken. I will look into that on behalf of my hon. Friend and his constituents in the west midlands. The community has had to move on. Important regeneration work is going on there. The Longbridge area action plan is designed to redevelop the MG Rover site, and my hon. Friend has been working on it with his parliamentary colleagues for a number of years. The total project cost is £66 million, with direct Government funding from the Learning and Skills Council of just under £54 million. In particular, the new Bournville college will deliver a much-needed boost for the Longbridge area with the creation of a first-class learning environment on a par with other LSC capital schemes. The community is rebuilding, but those who have benefited to the tune of millions of pounds from the sad story of MG Rover's collapse, which has been set out in so much detail, need to support the community from which they have benefited. I call on them to do everything that they can to support the community and to deliver on the promises they gave when MG Rover collapsed in 2005. Sitting suspended.