The Green Party politician today expressed concerns that Twinings' parent company Associated British Foods (ABF) side-stepped a legal requirement that EU funds only be used for regeneration rather than relocation, by applying for the award via a small Polish subsidiary.
Since jobs at Twinings facilities in South Shields and Andover will be lost as a result of the move to the new €43m (£36.4m) facility in Swardierz, Taylor told FoodManufacture.co.uk that the award of around £10.1m set a worrying precedent.
"These funds are intended for genuine regeneration, not simply relocating jobs from one member state to another. There are good examples of new EU investment which help build communities, but instead this deal risks dismantling them.
"I do not believe taxpayers’ money should have been used to bolster the profits of an already successful company like ABF.”
Pressing EC for action
Since small to medium enterprises (SMEs) such as Twinings’ Polish subsidiary applying for ERDF funding do not have to provide assurances that monies are being used for regeneration rather than relocation – only large firms need to provide such undertakings – Taylor says that ABF optimised its chances of a grant award.
"In my view this grant was wrong, and should never have been agreed. I believe there is a strong moral case for Twinings to repay this money. They have a good reputation in the UK and should seek to protect it.
"In Parliament I will raise this as a special item in the Regional Development Committee on November 30, and continue to chase the European Commission to take action, but so far it seems the rules have been effectively side-stepped."
Although he agreed that regeneration was badly needed in certain parts of the EU, Taylor said that in this case the award, “gives ammunition to critics who say the EU is not serving the interests of the people it represents”.
MPs express concern
Taylor’s comments were prompted by a full response from the EU Commission (EC) to a letter he wrote in September, querying the outcome of a formal investigation into whether Twinings had provided guarantees that funds would not be misused.
Last Friday EC commissioner Johannes Hahn replied saying that he had asked the Polish minister for regional development to “look into this matter and to ensure that all applicable rules concerning the granting of assistance have been and will be respected in this case,” after which the EC will decide whether to investigate further.
Hahn’s letter said that Twinings established its Polish subsidiary in 2008, with its shares bought by ABF Overseas in December 2009. It added that, when the subsidiary applied for EU funding, “it was still considered an SME, despite the company meeting the headcount and financial threshold for…a large enterprise”.
According to the letter this was because under EU Regulations, “the company will only become a large enterprise once the headcount and financial thresholds have been exceeded for two consecutive accounting periods, i.e. at the start of 2011.”
Widespread condemnation of the grant award led 13 UK MPs to sign an early day motion in Westminster on November 16, urging ministers to “make immediate and firm representation about this use of UK taxpayers’ money to lure British industries to transfer to other EU countries with consequent loss of jobs and trade”.