Rover aid package angers unions

THE INDEPENDENT
By Alan Jones, Industrial Correspondent, PA News

Unions today voiced anger with the European Commission over an official probe into a multi-million pound aid package for car giant Rover. Unions today voiced anger with the European Commission over an official probe into a multi-million pound aid package for car giant Rover.

The EC will next week announce an investigation into the £152 million package announced earlier this year by the Government after lengthy talks with Rover's owners, BMW. The money will safeguard 9,000 jobs at the huge factory in Longbridge, Birmingham as well as another 40,000 posts at suppliers across the country.

The Commission wants to make sure that BMW looked seriously at an alternative site for its investment, in Hungary. But unions believe the investigation, which could take six months, will damage customer confidence in Rover and slow the company's investment programme.

Tony Woodley, national officer of the Transport and General Workers Union, said the investigation was "unwarranted and unhelpful". He said: "We have a company here losing market share and it badly needs new models. Any delay in capital expenditure will make the Rover recovery more difficult."

He called on Prime Minister Tony Blair and Trade and Industry Secretary Stephen Byers to put pressure on the Commission to make sure that the grant aid is paid quickly. Duncan Simpson, national officer of the Amalgamated Engineering and Electrical Union, said the investigation must be completed as quickly as possible otherwise it could damage Rover.

To add to the unions' concerns, the head of BMW's global purchasing operations warned that Rover may cut its expenditure on components bought from British suppliers by £1.75 billion to £2 billion. This is more than half of the company's total spending in the UK - and could result in the loss of thousands of jobs.

BMW also intended to cut the number of suppliers it used in a bid to squeeze costs further. It would insist on prices coming down by a further 10% in each of the next two years, purchasing chief Wilhelm Becker said in an interview with the Financial Times.

Mr Byers said the Government would be pressing the Commission to conduct the investigation as quickly as possible. He maintained that the investigation was part of the Commission's "normal procedure" because all matters of state aid had to be considered.

"The investigation is not exceptional but we want it carried out speedily so that we can get an early resolution to this matter," Mr Byers added.