DTI handout to Rover may have been ‘political’

The National Audit Office is to investigate claims that a £6.5m government
handout to collapsed car maker Rover may have breached general election rules,
as part of its wider examination of ministers’ handling of the debacle.

The watchdog confirmed this week that it was launching an inquiry into the
use of public funds to keep Rover afloat. It conceded that the £6.5m loan,
granted to pay workers just days after the general election was called on April
5, would feature in its imminent investigation.

The loan is the centre of allegations from Conservative trade and industry
spokesman David Willetts. He has written to auditor general Sir John Bourn
demanding assurances that ‘tax payers’ money was not used for political purposes
during the election campaign’.

He claims that the £6.5m loan, confirmed by Rover’s administrators PwC on
April 11 to pay staff wages for an additional week, was granted for ‘political

Willetts said he was ‘very concerned’ about the loan and pointed out the view
of PWC ‘that it was not worthwhile putting any more of MG Rover’s money into the
company to keep it going and that any loan to MG Rover would probably not ever
be repaid’.

The subsequent loss of 6,000 workers and the damage to the West Midlands
economy are seen as a low point in Labour’s election campaign.

‘There are particularly strict rules on this and I would be very concerned if
they looked as though they were not followed in this instance,’ he said.

The NAO said its investigation will include examining the part played by the
‘Department of Trade and Industry and other public bodies in helping to support
the company in the period leading to administration’. A spokesman added: ‘We
have received David Willett’s letter and can confirm that the £6.5m is part of
the scope of our examination’.

It will also look into a £150m package of support for employees, suppliers
and others.

The DTI said the loan was to enable administrators to ‘pursue options for the
sale of the company as a going concern’.

‘Ministers took the decision that it was right to create a breathing space
for the administrators to explore the options and deal with the impact of sudden
social disruption,’ said a spokesman.

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