Around 5,000 workers at MG Rover are to be made redundant following the devastating collapse of talks to secure a rescue deal, it was announced this afternoon.

Administrators said letters would be posted tomorrow to workers at the huge plant in Birmingham setting out redundancy arrangements and that the Longbridge plant would be mothballed.

PricewaterhouseCoopers said more than 70 expressions of interest had been made from firms interested in parts of MG Rover, but none had been prepared to to put forward funding.

The administrators made the announcement after Shanghai Automotive Industry Corporation ruled out any rescue deal.

SAIC told the UK Government that there was no hope of reviving investment talks, whose break down led to MG Rover being placed in administration a week ago.

PwC’s Ian Powell said: "SAIC had concluded that MG Rover and Powertrain could not emerge from this process in a state that would justify their investing in it."

This afternoon, the Prime Minister, Tony Blair, and Chancellor Gordon Brown arrived in Birmingham, after cancelling election campaigning, in order to attend a meeting with local regeneration officials. They were expected to announce a £150 million package to assist the redundant workers.

As the workers left the Longbridge plant with their possessions at lunchtime, possibly for the last time, Patricia Hewitt, the Trade and Industry Secretary, said that the situation is "a tragedy for Rover and their workforce, but it is not a statement on the car industry in Britain".

"Steps are now being taken to formally notify employees who will be affected," Mr Powell added.

The administrators said 600 Longbridge staff would help to complete about 1,000 half-made cars.

About 400 staff would be retained at the company’s Powertrain engine plant and 25 at MG Sport and Racing.

While PwC said that it had received "a number" of inquiries into MG Rover besides SAIC, "none of these is capable of resulting in a sale of the complete business".

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