THE cost of the collapse of car giant MG Rover to the private sector and former workers could top £600m, an official report has warned

The House of Commons Public Accounts Committee said the figure included an estimated deficit in the firm's pension scheme of £500 million, which may have to be met by the business-financed Pension Protection Fund.

MPs on the committee also estimated that the carmaker's decline between 2000 and 2004 and its collapse a year ago cost the taxpayer £270m.

Around 2,000 former workers and employees in firms which used to supply MG Rover with goods and services were still jobless, according to the report. The MPs praised agencies in the West Midlands for the way they helped the local economy diversify in the years before problems at the Longbridge factory worsened.

But the committee said there were "serious gaps" in the Department of Trade and Industry's planning, such as how to help sell MG Rover as a going concern once the firm went into administration.

Committee chairman Edward Leigh said: "The damage to the local economy would have been even greater without the efforts made by local agencies to help the local economy diversify in the years before the collapse of the company.

"The closure of MG Rover while a general election was under way presented the DTI with a situation fraught with risks. In some respects it rose to the occasion - for instance by arranging immediate support for former MG Rover employees.

"But serious gaps in its planning were exposed. The truth is that it had never managed to get close enough to the company to develop comprehensive plans for this kind of scenario and found itself trying to catch up with a rapid developing situation."