Taxpayers have been hit hardest by the collapse of carmaker MG Rover, according to the Public Accounts Committee.

The influential all-party group said Rover's decline could end up costing the public sector more than £600m with taxpayers already hit with a £270m bill from its operations from 2000 to 2005.

The PAC said the £600m figure included a government loan that would have to be written off as well as a £500m hole in Rover's pension scheme.

‘The damage to the local economy would have been even greater without the efforts made by local agencies to help the local economy diversify in the years before the collapse of the company,’ PAC chairman Edward Leigh said.