MG ROVER’S battle for survival dramatically ended last night when the independent car maker called in the receivers, threatening up to 20,000 jobs in the West Midlands.

The announcement was made at a brief but tense press conference by Patricia Hewitt, the Trade and Industry Secretary, and Tony Woodley, leader of the Transport and General Workers Union.

Ms Hewitt said that the company’s board had decided to call in the receivers, adding: “This is a devastating blow to all those involved — the workers and their families, the company’s suppliers and the wider community. Our thoughts are with them.” She added that the Government and trade unions would now work with the administrator to try to secure car manufacturing at the company’s Longbridge plant.

Details of a support package will be announced today but the Government has made clear that it will offer help to retrain workers who are laid off.

The collapse came after MG Rover had halted production when many suppliers refused to continue to supply components and after a long fight to secure a rescue deal with the Chinese manufacturer Shanghai Automotive Industry Corporation (SAIC).

Asked if the decision meant the end of car manufacturing at Longbridge after 100 years, Ms Hewitt replied: “We have done everything possible, the Prime Minister, the Chancellor, myself. We sent a team of officials to Shanghai last week, to try to ensure the success of this deal, and we have through, Customs and Excise, extended help of £25 million through a VAT deferral to the company.”

Mr Woodley said that Tony Blair had spoken for 25 minutes with a senior figure in the Chinese Government on Wednesday evening. The Government could not have done more, he said.

“I am absolutely devastated,” he said. “My members have had a pretty difficult time over the past five years but we always thought MG Rover would find a partner. Up to three days ago, I still believed that SAIC would be that partner. This is an absolute disaster.”

However a statement by MG Rover last night suggested that the calling in of receivers had not been finalised. The company said: “The board of MG Rover has asked PWC to accept engagement to advise the board of directors on the current position at the company. The management is committed to working closely with the trade unions, the DTI and the West Midlands agencies who can provide support.”

The crisis could not have come at a worse time for Labour, which has been campaigning hard on the economy all week and is defending six marginal seats in the West Midlands in next month’s election.

The Tories called the news a tragedy for the workforce. Stephen O’Brien, the Shadow Industry Secretary, said: “This is a deeply depressing day for so many people in the West Midlands and indeed for the country as a whole. It is a tragedy for the 6,100 workers in the Longbridge factory and the thousands of others who work for MG Rover’s suppliers.”

Receivers will investigate what parts of the business can be sold. But leading car makers having shown no interest and it is unlikely that any part of it will survive, although the MG brand may still be valuable.

The end comes after mounting concerns at SAIC about Rover’s finances. Banking sources said that they had only seen the financial books in the past few weeks.

The Government had offered a £100 million bridging loan to help the talks but the offer was only available if a joint venture deal could be reached.

A banking source close to the Chinese company highlighted potential problems with the pensions scheme, saying: “No state-owned company is going to get involved where there could be a black hole.”

It is thought that more than 75 suppliers had stopped delivering goods to Rover because they had either not been paid or feared that there would be no payments. That decision made it impossible to carry on producing cars.

One supplier, Wagon, which makes car doors, said that it was owed £900,000 and had had to act to protect its own interests. MG Rover employs 6,100 people at Longbridge and supports at least another 12,000 jobs in components companies and the local economy.

Senior Labour figures said that they had made huge efforts over the past five years to make sure that the scores of companies supplying MG Rover had diversified.

The company’s collapse is grim news for Labour, given the number of marginal seats in the West Midlands.

Birmingham Northfield, site of the Longbridge plant, is a safe Labour seat but two others are increasingly vulnerable. Gisela Stuart is defending a 4,698 majority in Birmingham Edgbaston where her support has been eaten away by university voters who opposed war in Iraq. Birmingham Yardley is also vulnerable.

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