A MANAGEMENT buy out at the Cammell Laird shipyard on Tyneside could be doomed to failure.

The buy-out team, led by managing director David Skentelbery, has won support from local venture capitalists, but can't get the Government to come forward with aid to make the proposed bid a reality.

The problem is believed to lie with the European Unions competition rules, which would not allow the state intervention to help the troubled shipbuilder.

Receivers PriceWaterhouseCoopers are looking for bids for the Tyneside and Teesside operations of Cammell Laird.

So far four bidders have expressed an interest, including the MBO team.

The MBO wants to buy Cammell Laird as a going concern, but is believed to need at least £800m in Regional Selective Assistance (RSA) grants from the Government to help it ride out a difficult period following the purchase, while it seeks to build up a decent order book.

A DTI spokesman said it would be working with the receivers to secure the future for all Cammell Laird's operations, but was not yet in a position to decide on any RSA help.

Cammell Laird went into receivership in April following the cancellation of a £50m repair order for Italian cruise firm Costa Crociere.