The decline and fall of MG Rover cost the British taxpayer £270m, and the bill for the private sector, including former employees, could top £600m, according to a report out today.

The biggest factor is an estimated £500m deficit on the company's pension scheme, which may have to be funded by the business-financed Pension Protection Fund, according to a report from parliament's public accounts committee.

It acknowledged that the impact of the collapse in April last year could have been more serious, but is critical of some aspects of the Department of Trade and Industry's response as MG Rover slid towards administration.

"The closure, 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 employees," according to the committee chairman, Edward Leigh.

"But serious gaps in its planning were exposed ... It 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 rapidly developing situation."

The committee calculated that, as well as the pension fund deficit, the private sector lost£109m owed to UK-based suppliers. The burden on the public purse included £90m for diversifying the West Midlands economy after MG Rover's sale by BMW to the Phoenix consortium; £55m redundancy pay; £66m helping suppliers and the community cope, and £25m spent on retraining.