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June 5, 2011 7:19 pm
The European Commission has blocked a €12m grant to Twinings, the British teamaker, after deciding it could not rule out that the grant would be used to help subsidise the relocation of British jobs to a new plant in Poland.
Twinings, which applied for the subsidy through a Polish subsidiary R. Twining and Company, has cut about 400 jobs at two tea production facilities in the UK, at Andover, Hampshire and North Shields, and is in the process of moving part of its production to a plant in Swarzedz. The grant, applied for under the European Union’s structural funds programme, was approved by Polish authorities last year.
But the Commission said Polish authorities appeared to have contravened EU guidelines on funding. Under EU rules, Polish authorities are required to obtain confirmation that companies will use subsidies for new investments, rather than moving factories from other member states.
A joint investigation last year between the Financial Times and the UK’s Bureau of Investigative Journalism into the use of European Structural funds found that millions of euros in EU subsidies had been allocated to companies relocating plants from western to eastern Europe.
The investigation also raised questions about whether EU oversight of grants was strong enough, since EU officials rely on regional authorities to avoid funding relocations.
“Without the work that I and a number of other MEPs have done over the last year to challenge this decision it is extremely doubtful that the Commission would have looked into this case,” said MEP Keith Taylor. “To avoid this situation arising again the Commission needs to close the current loopholes and more rigorously implement their regulations.”
Johannes Hahn, commissioner for regional policy, in response to inquiries by several British MEPs sought confirmation from the Polish authorities last year that the funds would be used according to EU rules. Mr Hahn said, in a letter to Mr Taylor, that the Commission “considers that the [Polish] managing authority has failed to insist on an assurance of non-relocation of a large enterprise as required”.
The Commission said it could not comment on letters which are exchanged between it and a member state.
Poland’s ministry of regional development said on Friday that the subsidy had never been paid to R. Twining and Company. The ministry has received a response from the company, which is being analysed. The Polish government is also preparing its position on the issue, which will be presented to the European Commission.
Trade unions and workers hailed the news as a victory. “Our campaign to stop that move being subsidised by taxpayers has finally paid off,” said Peter Millward, Andover’s TUC president whose previous job at Twinings was cut as part of the company’s restructuring.
Twinings insisted that it had planned to use the funding for a new investment and not for relocation. It also said that it considered that it satisfied the relevant conditions for the grant.
“Our original proposal fully set out the nature of the project including the potential impact on employment numbers in Twinings’ facilities around the world,” the company said, adding that the Polish plant was still expected to come into full operation as planned. “Although the relevant authorities have now indicated these criteria may not be met, no formal notification has yet been received, so it is premature to speculate about any future decisions.”
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