Wednesday, 10 November 2010

Twinings again: ah, the 'Good Old Days'

Twinings move to Poland is old news that I've already commented on. It's in the Polish news at WP again, which seemed to be prompted by new information on subsidies, as confirmed by BBC News and Mail Online. Whilst it's always sad to see people loosing their jobs, I have no sympathy for the UK generally on this or any similar loss. "Been there, done that" - when it benefited the UK.

I worked on investment support grants (and EU funds) in the UK and major inward investments (Japanese mainly at the time) were the great prize. I remember French and German campaigns against us for stealing their jobs in similar circumstances to the Twinings move, which we dismissed as nonsense - we didn't care. I even ran a non-existent grant scheme in case an investment came along with 'exceptional national benefits' (roughly defined as being something like new technologies and new work methods eg as provided by Japanese projects). No discrimination against UK companies, of course, but my job - expected only to deal with UK companies - was basically to say 'no'. The scheme only existed to avoid EU state aid problems - fat chance.

I do not like and do not trust the (EU) Commission. This started with my first EU related job (steel production quotas) and reached it's peak on EU funding work in the UK. WP reports that "The European Commission is investigating the move to see if it breaches EU rules, which stipulate that the money must be used for new investments in Poland and not merely to cover the cost of relocation". I have heard this before. The Commission's Competition DG is actually the most competent and objective I have worked with, but cases like this can encourage the Commissioner and his politicised staff to start all the hypocrisy and doubletalk politicking that furthers their aims of driving wedges between Member States and showing that they care more than national governments. On the face of it, Twinings has decided on location of a new investment, not on relocating an existing one, so the Commission are unlikely to have anything significant to investigate. A long and in-depth investigation, with tough political statements about the seriousness of stealing jobs would not be a surprise, however. The English workers won't have a chance, of course.

Interesting also that BBC News reports that "AB Foods Chief Executive George Weston said that the decision to open the Poland site was made before the application for the grant". In the UK we had (and maybe still do have) a "minimum necessary grant" policy for UK investment grants, including those funded by EU money, and a statement like this would have eliminated any grant possibility. (Actually, it would have him saying "misquoted", "out of context", etc.) Other countries such as France had a different policy (although the Commission told us differently) and Poland was starting to follow their principles when I moved back to London and, if it has any sense, will have continued to do so. Not that media reports about investment support should be trusted, as they often turn out to cover things like training, which had different principles even in the UK. Commission State Aid rules get very complicated at this stage.

Great to see the Mail's report that "Twinings was accused of using taxpayers’ money to move British jobs to Poland". EU money received by the UK is really UK money was a great favourite of Maggie's.

Finally' I'm sad to see that the company were reported in the Telegraph back in September as saying that "A significant number of our employees have also expressed interest in the opportunity to train Polish employees at the new site in Poland". Sad? I met a group of workers from the Newcastle area in Kielce several times. They were training Polish workers after their factory was transferred there - simply shifting the existing machinery, I think. They appeared to be incredibly miserable and hated being there. I may be wrong and I may have an erroneous regional stereotyped expectation that a group of young Geordie lads sitting around a table in a pub would be enjoying themselves. However, I can imagine how horrendously depressing it might be, even though, as one said rather morosely - "at least I have a job to go back to". It would be ironic, though, if some of these volunteers were actually Polish.


Stateaidlaw said...

Good to see an informed commentary of the Twinings case.

Although I disagree with some of your assertions, Yours is the first article I have seen on this subject which correctly hones in upon State Aid being the major issue.

The comment about the decision having been made before the grant of aid is significant given the recent El-Friel case about the need for an 'incentive effect'.

Likewise I think there is hope for the workers if they can show pre-existing (rather than new) operations were moved as a result of the grant.

The major stumbling block to the Twinings campaign appears to be a lack of understanding about how to use the State Aid rules to force Twinings to change their mind.

Unfortunately this is unlikely to be the last time the United Kingdom loses out because it lacks the required expertise in State Aid law at the highest levels.

Pan Steeva said...

Even the name 'stateaidlaw' takes me back. Having looked at the El-Friel (Fri-el Acerra) case, I agree that it makes the subsidy more open to question than I thought, but from press notice reports, a cynical view can see differences as much as similarities.

I'm not sure what state aid expertise you refer to. The case is in the hands of the Commission and it is/used to be very rare for any comments they are given to do more than give them a balance of external views. In this case, it might seem the UK versus Poland, with the potential for others giving guarded weight one side or the other - the Germans often did this. However, is it in the UK interest to fight hard against a subsidy to a UK company? Expertise really comes into play after the Commission makes its judgement, when they can be taken to Court, but that's a long way away. If the CEO was not misquoted, the company will be in Poland at that time and successful UK government intervention means the UK loses both ways.

I stick by my view of the Commission's State Aid people generally being good quality, but if there is a balance of judgement to be made, which way do you think the Commission will turn? The difficult British or the friendly Poles? (See the rhetoric on the financial perspective.) Of course, the Commission could always think of the effect on their public gallery, as I believe they routinely do. It just so happens that the EP President is Jerzy Buzek, an outspoken defender of Polish interests.

I would be pleased to be completely wrong, which I think is in both the UK and Polish wider interests, but aren't Polish workers supposed to have been visiting the UK factory this week? The UK workers won't benefit from any of this.