THE collapse of MG Rover is a tragedy. Thousands of people in the Midlands are going to lose their jobs, and many of them are unlikely to find work again soon.

These people are angry, and they are right to be so. They have been let down by the management of Rover — the greedy Phoenix Four led by John Towers — and by the government, particularly the out-of-her-depth Patricia Hewitt, secretary of state for the Department of Trade and Industry, who chose to involve herself in the failed negotiations.

No wonder Hewitt spent most of Friday in tears. In the final few weeks of Rover’s life, she and Towers have clearly been having some mental issues. Completing a deal with China’s SAIC was always an extreme long shot.

Why would a company from the home of low-cost production want to make cars at Longbridge, an ageing plant in the middle of Birmingham that has been a headache to all its previous owners? What the Chinese really wanted was the Rover brand, the engines and what was left of Rover’s technical expertise. In earlier deals they got two out of three, and I wouldn’t be surprised if they bought whatever else they want from the administrators on the cheap.

That’s smart business, and entirely predictable. Yet despite this, there was no plan B prepared by the government or Rover. Hewitt and Towers had not even had the sense to line up an insolvency practitioner so that, if the worst came to the worst, an accountancy firm could be moved in swiftly and smoothly to keep Rover’s production lines ticking over, and therefore make them more valuable to sell to potential buyers as a going concern.

The collapse of Rover also has the makings of a scandal. Price Waterhouse Coopers has been appointed to just the two largest Phoenix companies, but they must take the time to have a look at all the subsidiaries. Allegations of asset stripping have hung round MG Rover almost since the Phoenix Four took over, and a real forensic accounting job needs to be done.

As we point out on page 5, there is a basic question about what all the money — the dowry from BMW and the proceeds from the various asset sales — was spent on. Whether the directors have performed their fiduciary duties correctly should form a big part of PWC’s work.

No investigation will be needed, however, to determine Hewitt’s fate. After this calamity, she must surely be toast as a front-line minister. She just is not up to it. But all Labour politicians need to learn once and for all that no matter how tempting and electorally pleasing it might seem, they should refrain from getting involved in bid situations.

If BMW had been allowed to choose the solution put forward by Jon Moulton’s Alchemy in 2000, as the German group wanted, MG Rover might still be around. It might not, but at least the politicians would not now be in the embarrassing position of having to apologise for a decision made five years ago. If scrapping the DTI is what it takes for this change to happen, then so be it.

Bunch of bankers

THERE are some professions, investment banking is one, that don’t shine under prolonged public exposure. Phil Purcell’s battle to keep his job at Morgan Stanley is showing why.

Eight former directors have been causing a storm, trying to oust Purcell, who they claim has damaged the bank (and naturally they are ignoring the damage their fight has inflicted). When this kicked off, it looked like the dissidents had a case.

Nobody likes Purcell. Eight years on, and mainly through lack of trying, he has failed to win over his investment bankers after Morgan Stanley’s merger with Dean Witter. Talented executives who can’t toe his line are sacked. Clients and shareholders are not impressed by the fight or by Morgan Stanley’s volte-face on selling off its credit-card business.