INQUIRY INTO THE SALE OF ROVER BY BMW TO PHOENIX AND ITS SUBSEQUENT COLLAPSE

  I should be grateful if your Select Committee inquiry into Rover would study and consider the enclosed submission from me.

  At the time of BMW's sale of Rover I was the Shadow Minister for Trade and Industry. I recall that there was active intervention in the sale from the then Secretary of State, Stephen Byers, who was reported to have spoken to the CEO of BMW on a number of occasions in order to encourage the Phoenix offer over and above the proposals made by Alchemy. Much of the detailed involvement of Mr Byers in favour of the Phoenix bid is recorded in the book "We Ain't Going Away": The Battle for Longbridge, by Carl Chinn and Stephen Dyson. Mr John Hemming (now the Lib Dem MP for Birmingham Yardley) also figures prominently in the accounts of the negotiations. Another book, "End of the Road" by Brady and Lorenz also records clear evidence of these events.

  The Alchemy proposals would have required the company to be slimmed down so as to become a niche producer. There would have been redundancies. The Secretary of State was reluctant to see any redundancies in the run-up to an Election, even though the workers would have received pay-offs of anything up to £80,000 and their pension, and that of the workers who remained employed, would have remained intact.

  As a result of Mr Byers' involvement in discussions with BMW, the Phoenix bid was favoured, and was eventually successful. Setting aside any judgement about the propriety of the ensuing conduct of the "Phoenix Four", the business model they championed for Rover was doomed from the outset. Their stewardship of the company, instead of securing the future of a smaller company and the maintenance of a properly funded pension scheme, led to the collapse of the company, the destruction of all its jobs, and the annihilation of its pension scheme.

  The evidence I wish to submit to your committee proves beyond all doubt that this was inevitable and that it was known at the time. The political judgement behind Mr Byers' approach illustrated supreme incompetence. Most investigations rely on hindsight: my submission does not.

  I, and others, predicted Rover's demise at the time, and were outspoken in saying so. Thus we had foresight, and cannot be accused of being wise after the event.

  As Shadow Minister I commissioned a full study into the finances of Rover and its likely prospects. I enclose herewith the document that records both that study and its conclusions.[39]

  It boldly predicted the collapse of the company by 2004, its timing subsequently proving mildly pessimistic because of assumptions about future investment in a production platform which in the end, by not happening, extended the life of Rover by a few months. The fundamental assumptions, though, were spot on.

  Those of us who criticise Mr Stephen Byers have been doing so on a consistent basis. We openly warned that Rover would fold. We were dismissed by him and by others: but we were 100% right.

  I therefore maintain that the then Secretary of State should be held to account by the Select Committee for pursuing an option which has led to the complete destruction of Rover and the destruction too of tens of thousands of livelihoods in the West Midlands. His track record is one of incompetence and catastrophe, and we who wish for the betterment of people in this country should not hesitate to pass judgement on his actions.