The Bank of England will come under pressure today to help the ailing car industry after BMW’s decision to cut 850 jobs at its Mini plant near Oxford.

Lord Davies of Abersoch, the new Trade Minister and former banker, will try to broker a deal to allow the carmakers’ finance arms to access the Bank’s £50 billion liquidity scheme.

Mervyn King, the Governor of the Bank of England, is opposed to the idea of finance companies getting credit direct from the Bank. His argument is that the companies are not banks because they do not take deposits from savers and therefore cannot be treated in the same way. Ministers are sympathetic to his views but do not want them to stand in the way of a viable scheme. The industry is desperate for car finance deals because showrooms and factories are full of unsold vehicles, crushing the need for fresh production.

The urgency grew after BMW gave 850 workers only an hour’s notice that they were to lose their jobs. Other flashpoints are likely to come in the next couple of weeks. Vauxhall is due to announce cost-cutting measures soon and Toyota is meeting staff representatives this week.

Agency staff at the huge BMW factory in Cowley vented their anger on union leaders, pelting them with fruit. Unions attacked BMW, accusing the company of using workers as “cannon fodder” and called on the Government to intervene to give immediate rights to agency workers, who can be laid off without notice and in general do not have the right to claim unfair dismissal, nor to receive a redundancy payment. The Government has signed up to a European directive giving them the same rights as full-time employees after 12 weeks of work, but has yet to set out legislation or announce a start date.

Tony Woodley, joint general secretary of Unite, said: “Targeting agency workers who have no rights to redundancy pay is blatant opportunism on BMW’s part.”

BMW’s use of agency workers is the highest in the British car industry. They typically make up 30 per cent of the workforce and have been used for several years almost exclusively at weekends. In Germany BMW’s temporary workers account for only 1.3 per cent of the workforce.

Lord Davies is to explore with Bank officials the idea of a bank or banks effectively taking over the role of the finance companies, enabling buyers to go direct to them for loans. This plan has been widely known for some weeks but little has actually happened and Lord Davies is hoping to break this deadlock soon. He will be talking to banks in the coming week and will meet the Society of Motor Manufacturers and Traders (SMMT) as soon as possible to take the ideas further. Car industry representatives met Lord Mandelson, the Business Secretary, last month to discuss the operation of a £2.3 billion rescue package of loan guarantees.

The SMMT pressed further yesterday for a scrappage tax to stimulate demand, whereby the Government would offer a £2,000 incentive towards a new car for cars over nine years old to be scrapped.

News of the job losses at Cowley was delivered to agency workers as they finished their weekend shifts. Awaiting them when they returned home were letters from their employment companies, giving them a week’s notice.

Roger Fretis, 26, from Cowley, said: “I’ve been paying money to the union and asking what is going to happen with my job. Then an hour before the end they round us up and say we are going. No redundancy, nothing, just an hour’s notice.”

John Cunningham, who has worked at the factory for more than two years, said: “I feel betrayed. They’ve planned this for months and we’ve only just been told — one hour’s notice. We’ve been given a week’s pay for an enforced week off, which I suppose is a week’s notice.”

A meeting soon after 6am at the plant descended into chaos as furious workers hurled oranges and apples from their packed lunches at union representatives. Others took out their anger on new Minis, scratching bonnets with keys, smashing up dashboards and hiding ignition keys.

BMW has been in talks with unions for weeks over changes to shift patterns, which until yesterday entailed three shifts seven days a week. The Cowley factory will not produce cars this week in response to the dip in motor sales. It built 230,000 vehicles last year.

Most workers were employed through two agencies, Manpower and Right4staff. Both said that they were doing their best to redeploy the men.

All but 90 of the agency workers among the 4,300 employees at the Mini plant in Cowley lost their jobs. Many blamed union leaders.

Adam Mason, 30, who lives in Cowley, said: “Clearly someone knew this was going to happen. People were very angry in there. Where has the union been all this time? Why did I bother paying my subscription? They did nothing for us.”

Bernard Moss, the union convenor who negotiated with BMW bosses, said that he could not have done any more. “I don’t blame them [workers] for blaming us,” he said. “We had a rough time at the meeting. I would have been the same.”

BMW said: “While Mini has been weathering the economic downturn, it is not immune from the challenges of the current situation. Against this backdrop, the company felt that a review of its shift patterns was necessary.”

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