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Twinings loses €12m Polish factory grant

By Ben Bouckley , 02-Jun-2011

The European Commission (EC) has confirmed that it has cancelled Twinings application for a €12m (£10.6m) grant to build a new factory in Poland, where the new site will eventually cost up to 392 UK jobs.

Keith Taylor, Green MEP for Southeast England, who recently received a letter from Commissioner Johannes Hahn stating that no money would be paid, said: "I've been challenging this grant for over a year now. Today's decision to cancel it is a victory for Twinings staff who've lost their jobs and the campaigners who supported them."

263 UK jobs will soon be lost when Associated British Foods (ABF) subsidiary Twinings transfers tea processing operations from North Shields to a controversial Polish site, while 129 staff began leaving positions in Andover from April as the firm streamlines its UK operations into their site.

In Hahn's letter, seen by FoodManufacture.co.uk, he wrote: "The Commission informed the Polish authorities that, in case of violation of structural fund rules, the Commission will recover sums unduly paid.

"However, the Commission does not have to recover any grant from Twinings because, according to the latest information received on May 20 from the Polish authorities, no funding has been handed over to Twinings."

EC disagrees with Poland

Hahn added that, although the Polish authorities considered that Twinings' Polish subsidiary - which applied for the European Regional Development Fund money - was a small to medium-sized enterprise (SME) at the time of the application, and therefore qualified for redevelopment funds, (rather than relocation awards that are explicitly forbidden under EU law) the EC disagreed.

"The Commission has informed the Polish authorities that it does not agree and considers that the managing authority has failed to insist upon an assurance of non-location of a large enterprise as required," Hahn wrote.

"Consequently, the Polish authorities requested the assurance from Twinings. As far as the Commission is concerned, the Polish authorities have not received a reply from Twinings. In these circumstances, the Commission considers that no grant can be paid to Twinings."

Welcoming the news, Taylor said: “EU regeneration cash should be used for genuine regeneration, and not simply for corporations to move jobs to lower wage economies and then get tax-payers to foot the bill.”

“That Twinings decided to move was entirely their own decision, taken for commercial reasons, and it is deeply regrettable that jobs have been lost.

“That they very nearly got the taxpayer to fund part of their relocation tells me there is a loophole in EU regulations that needs closing to stop this happening again.”

Pressure on Commission

Peter Millward, who recently lost his job at Twinings' Andover site, welcomed the "aboslutely wonderful news", and said he didn't doubt the EC had acted because of intense local campaign and media pressure since Twinings first announced its transfer plans in November 2009.

He said: "The €45m (£29.2m) odd that Twinings (and ABF) has spent on the factory in Poland is probably a drop in the ocean for them. But this is about more than just that. Companies in the UK and across Europe will look at this decision and decide not to relocate abroad because they won't get a grant. So we've potentially saved thousands of jobs. The only bitter regret is that we haven't saved the jobs here."

Taylor said that he was still trying to persuade the UK government and Andover MP, Sir George Young, to apply for EU funding via the Globalisation Adjustment Fund (GAF), which helps redundant workers with targeted funds for retraining and self-employment. “The funds are there, but sadly no application has yet been made,” he said.

Stephen Hughes MEP told this publication in March that any decision by the Department for Work & Pensions (DWP) not to apply would be "criminally stupid" , after the EC said it would welcome any application, and given recent claims by the likes of Poland, the Czech Republic and Ireland.

The DWP said that no application had previously been made by the UK government because Jobcentre Plus provides a similar suite of services, an assertion that Hughes and Taylor dispute.

Twinings presses on

A Twinings spokesman said: “We can confirm that we have been notified that Twinings Poland does not meet the criteria for an OPIE grant. As previously stated, our investment plan was not reliant upon receiving any grant and the project continues.

He added that Twinings applied for the grant, "because we considered that we did satisfy the conditions, but accept that the decision as to eligibility lies with the relevant authorities".

“Our decision to build a new factory in Poland was not based on receiving any external funding. It is normal practice for businesses to review potential available grants and where relevant apply for them if they support the development of their business.

“It is important to stress that Twinings remains committed to the UK, and more than 90% of the tea British customers drink will continue to be produced here in the UK. Twinings is also investing £6m in its Andover facility."

FoodManufacture.co.uk first broke the news that Twinings had applied for ERDF funding back in July 2010, after the EC sent a written reply to former Green MEP for Southeast England Caroline Lucas.