MG Rover: Temporary lifeline

A government loan has averted the prospect of immediate mass redundancies at MG Rover.

On Sunday, trade and industry secretary Patricia Hewitt said she would make £6.5m available to pay wages and expenses for the coming week.

Her move allows administrators more time to continue talks with other potential investors, although hopes that full-scale production will continue at the company's Longbridge plant appear slim.

Agreement may yet be reached with the Shanghai Automotive Industry Corporation (SAIC), however.

The extra aid, however, averted the possibility of thousands of job losses being announced on the day that Labour launched the economic chapter of its manifesto.

Tony Blair told Labour's election news conference that manufacturing was "absolutely vital" for the country.

And industry minister Jacqui Smith told the BBC Radio 4 Today programme that it was worth giving the firm "a breathing space".

"We have committed, alongside the trade unions and working with the administrators, to do everything we can to find a partner, probably the Chinese, to come in to keep manufacturing production and the jobs that are so important to the area," she said.

Hewitt was on Monday in Birmingham continuing talks about how to deal with the crisis.

The first meeting of the Rover Task Force was due to take place, seeking to find ways to retrain workers facing redundancy and provide advice to firms hit by loss of business.

The group is led by Nick Paul, head of regional development agency Advantage West Midlands, and also includes CBI director general Sir Digby Jones, local election candidates Richard Burden, Tom Watson and Julie Kirkbride, and union, council and industry officials.

A 'fighting chance'

Sir Digby warned ministers it was not their job to help failed businesses.

"British governments over decades have had no success in doing that," he cautioned.

"Britain is home to more car makers than anywhere in the world. We have not got there by helping prop up lame ducks."

Tony Woodley, general secretary of the Transport and General Workers Union, told BBC Radio 4's Today programme that the extra aid meant there was a "fighting chance" of saving jobs at MG Rover.

It also emerged on Monday that the leader of Birmingham City Council, Mike Whitby, had sent a letter to the prime minister calling on all those affected by the crisis to "pull together at this time".

"Everyone has their part to play, and I am eager to work in partnership with the government in the best interests of everyone affected by this tragedy," he wrote.

Meanwhile, a statement for and on behalf of the joint administrators of the company said that losses had been running at between £20 million and £25 million per month.

"As you may know, the government has agreed over the weekend to provide funds to the administrators, which allows for further discussion with prospective purchasers," said the statement.

"The administrators are therefore not taking any immediate action on redundancies."

Talks are now set to continue with SAIC in the hopes of reaching a deal, with administrators offering to fly to China for urgent talks.

However, with cash set to run out this weekend and any meeting in China unlikely to take place until next week, there will be further pressure on the government to extend its assistance and keep the company afloat for a further week at least.