4,500 jobs may go as firms cut back

THE GOVERNMENT was accused of mismanaging the economy yesterday after 4,500 jobs across the country were lost or put under threat. The car, textile, oil and insurance sectors suffered as the losses hit factories and offices from Teesside to the Sussex coast.

The biggest blow was at Rover, the car maker, where up to 3,000 jobs will be lost as part of a deal that has secured the long-term future of the giant factory at Longbridge in the West Midlands. Rover and the unions sealed a deal on more flexible working practices, which will lead to job losses but end weeks of speculation that Longbridge was set to close.

The fine print has not been finalised but the future of Longbridge, its 14,000 workers and pounds 1.5bn of investment in Rover by BMW, its parent company, looks secure. Union leaders were last night consulting local representatives about details of the deal. The package will have to be put to a ballot of all 39,000 workers, which could take a week to complete. The job losses will be carried out through natural wastage and voluntary redundancies. Management and unions signed a deal in 1991 that guaranteed no compulsory redundancies.

"Rover Group and trade unions have reached an agreement in principle on key issues surrounding employment cost savings and working time flexibility." the statement said.

The leaders at the main unions, the T&G, MSF and the AEEU, welcomed the deal. Bill Morris, T&G general secretary, said: "The investment commitment that has been made will now be honoured and fully implemented."

Elsewhere, Dewhirst, which makes shirts for Marks & Spencer, is closing factories in Redcar on Teesside and Stoke-on-Trent with the loss of 600 jobs. Insurer Royal & Sun Alliance is closing two customer service centres at Horsham and Brighton in Sussex, axing 300 staff. Another 180 jobs are to go at the London headquarters of Lasmo, the oil and gas company. Detergent maker Lever Brothers announced 150 job cuts at plants in Merseyside and Cheshire.

Meanwhile, 400 jobs could be under threat at the last deep coal mine in Wales, Hirwaun, in the Cynon Valley, if planning permission is refused to extend a waste tip.

Peter Mandelson, Trade and Industry Secretary, said the Rover announcement was "great news" for the West Midlands and the country. "It is what the Government has been working for since the beginning. Of course the company is not out of the woods yet, but the basis is there now to create a strong, successful company."

John Redwood, shadow trade secretary, expressed relief at the news but blamed the Government for causing the "crisis".

"Labour's made it too dear to make things in Britain. ... Everyone in manufacturing is finding the conditions tough and it is largely the Government that has done the damage." Rover's profitability was hit this year by the high pound, interest rates, business taxes and the cost of employing people, which, Mr Redwood said, the Government had increased for companies.

"It's a poor Christmas present for Rover workers that they either lose their jobs or their overtime payments. It's no good Peter Mandelson criticising Rover management when similar problems exist for all manufacturers."

David Chidgey, Liberal Democrat trade spokesman, said: "Our manufacturers cannot be competitive until the Government makes a commitment to the euro, bringing down the level of interest rates and the pound at a stroke."

The only good news was in Norwich, where a call centre for KLM, the Dutch airline, will provide employment for up to 600 people.