Response to MG Rover inquiry


The long awaited report of the independent inquiry into the collapse of MG Rover has finally been published today.

Like most other people, I have found it frustrating that we have had to wait over four years for this inquiry to be completed and astonishing that it has cost around £16m. I have always supported publication of its findings and I am relieved that today we can finally see what is in it.

A copy of the report’s conclusion is available online here.

It is a damning report that raises some very important questions about the conduct of the Phoenix Directors, the payment of unreasonable financial rewards and the structuring of the company.

The fact that the Phoenix Directors paid themselves large amounts of money is nothing new. That was known some five or six years ago and a number of people including me spoke out about our concerns at the time. However, the report raises some serious questions about the way the company was structured and says that this led to unreasonably large financial rewards being taken by the Directors.

The report also makes the charge that when I and others raised questions about the structure of the company – including the way MGR Capital was kept outside of the MGR Group – and the remuneration of the Directors, at least some of the responses we received were misleading. If true, this is very serious. Not only will they have misled me as the local MP – but they will also have misled my constituents and their own employees. That is unacceptable.

The report also alleges that one of the Phoenix Four gave misleading answers to a committee of the House of Commons, of which I was a member. Again, if this is true, it is very serious and the Phoenix Directors must answer to that.

The Phoenix Directors have attacked this report today – calling it a ‘whitewash’ and a ‘witch hunt’. They are entitled to their own views on this – but that does not absolve them of their responsibility to answer the questions about their conduct that the report raises. I certainly want to know whether or not they gave misleading responses to questions I have asked.

I feel particularly strongly about all of this because when BMW suddenly pulled out of Longbridge in 2000 I, amongst many others, was looking for a solution that would safeguard jobs at the plant. Let’s remember that when Phoenix took over MG Rover the choice was not between Phoenix and another bid – the negotiations between BMW and the rival bidder had already broken down. The choice was between Phoenix and closure. Faced with that choice, I still think it was right to support the principles that the Phoenix bid put forward – to minimise job losses and stabilise the company in the short-term and to look for a partner that would allow MG Rover to be sustainable in the long-term. As a result of MG Rover staying in operation, workers were employed for a further five years, eventual job losses in 2005 are estimated to have been less than 10,000 rather than the loss of upwards of 20,000 jobs anticipated in 2000, and time was made available for the West Midlands economy to restructure and diversify.

I’m sure that the Phoenix Four want to be remembered as people who genuinely tried to save jobs at the Longbridge plant – even if that venture ultimately proved unsuccessful. This is yet another reason why they must answer the serious allegations put forward in the report. If they are not able to do that and the charges against them are well founded then their reputations will remain damaged – and sadly they will only have themselves to blame.

Because the report makes some serious charges, it’s also going to be difficult to draw a line under this in the way many of us had hoped. But there are things that can be done to help the former workers and the local community to move on.

The first of those is the trust fund for former workers. I hope the publication of this report will speed up the money that the Directors promised back in 2005. They have said that it could still take several months more before former workers receive anything from the trust fund. My appeal to the Phoenix Directors is to get on with it as quickly as possible. Their former employees deserve no less.

Another is to look at how the profits of MGR Capital could be best used to leave a positive legacy at Longbridge. The report raises questions about the structuring of MGR Capital. This is an issue I raised with the Phoenix Directors back in 2003 and the report alleges that this is one of the areas where I and other MPs were misled by the Directors. As I understand it there are up to £22m of proceeds from MGR Capital available and negotiations are ongoing between HBOS and the Phoenix Directors about where the profits should go following the wind-up of the company.

We need to remember where MGR Capital came from as a company. Obviously HBOS would expect a reasonable return on its investment – but why can’t some of MGR Capital’s final profits still be reinvested in things like the regeneration of the Longbridge site and community development in South West Birmingham? Or in a contribution to the trust fund set up for former MG Rover workers? Or in boosting the modernisation of automotive SMEs in the West Midlands, many of which were also hit by MG Rover’s collapse? Ring fencing and reinvesting profits from MGR Capital in any or all of these things would make sense. It would make a difference and it would mean that the wind-up of the company left a positive legacy rather than a sour taste.

Drawing a line under the past should not mean forgetting the massive contribution which Longbridge made to motor manufacturing in Birmingham for a hundred years. It was the home of the mini and so many other iconic cars. That is not a heritage to be ashamed of. Celebrating that heritage today means looking to the future. With the new MG Motor company on site, car making can still be part of Longbridge’s future – but it can also be a centre for innovation well beyond the automotive industry. A major redevelopment of the Longbridge site is underway and it is important that everyone gets behind it to provide the jobs and opportunities that local people deserve now and in the future.

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Richard Burden

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I was Labour Member of Parliament for Birmingham Northfield between 1992 and 2019 and a former Shadow Transport Minister. I now chair Healthwatch in Birmingham and Solihull, and the West Midlands Board of Remembering Srebrenica. I also work as a public affairs consultant. I am an effective community advocate and stakeholder alliance builder with a passion for human rights. I am a trustee of the Balfour Project charity and of Citizens Advice Birmingham, and a former Chair of Medical Aid for Palestinians.

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