No EC demand that Twinings repay €12m Polish grant

By Ben Bouckley

- Last updated on GMT

Related tags European union Ec Twinings

No EC demand that Twinings repay €12m Polish grant
The European Commission (EC) has questioned the role played by the Polish authorities in Twinings’ application for a controversial €12m grant to build a factory that will see almost 400 UK jobs axed, but has not asked that the money be repaid.

Twinings is consolidating its UK tea production facilities in Andover, Hampshire, with 129 jobs set to go at this site this spring, while the firm’s facility in North Shields faces closure in September with the loss of 263 jobs.

The cuts follow a decision to transfer operations to a new €45m (£37.7m) factory in Poland and expand a Chinese site, with Twinings pocketing a €12m grant – part-funded by UK taxpayers and workers – to help meet the costs of the former site.

Responding to a letter from Green Keith Taylor MEP on January 14 asking if the grant contravened EU law, the EC said it “questions the approach”​ taken by the Polish authorities, in their failure to gain assurances from Twinings that the grant was intended for lawful new investment, rather than relocation of facilities from the UK to Poland.

The EC attributes this failure to the fact that the Polish authorities considered that Twinings’ subsidiary in the country was an SME (small to medium-sized enterprise) founded in 2008 when it applied for the development grant, and that such assurances were thus unnecessary.

Although employee and financial thresholds were such that the subsidiary was no longer an SME in real terms after its acquisition by Associated British Foods (which owns Twinings) in December 2009, a regulatory loophole designed to benefit startups meant that it remained so in legal terms until January 1 2011.

No request to EC for reimbursement…

Twinings’ grant was not in the ‘spirit’ of the regulation, according to the EC, but in response to Taylor’s question asking whether firm should repay the money, the Commission suggested that responsibility for any such request lies with the Polish authorities:

The Commission can confirm that, to date, there has been no request to the Commission for reimbursement of any part of the €12 million allocated to the project by the responsible authority for the operational programme ‘Innovative Economy in Poland’.” asked Keith Taylor for comment on the EC's response and a spokeswoman said: “The response isn’t particularly clear - especially the issue about whether the Polish authorities alone have the power to ask for the grant to be repaid - and that’s why my colleague in Brussels in going back to the EC to see if the payment has already been made.

“We don’t think the response takes us much further than before, and we need something more concrete. Keith is currently considering his next move, and we need to seek clarification on this point in particular, then get back with a stronger statement to the media.”

Labour Southeast Region MEP Derek Vaughan has also demanded answers to “hard questions”​ on Twinings from the EC official responsible for the funding award – Johannes Hahn – and is awaiting a personal response from the Commissioner upon it.

Speaking at the Budgetary Control Committee in December, Hahn said:“I absolutely understand the concerns of all the people in the regions affected, because Twinings was a major operator, and I can understand that people other than the employees are very upset.”

Relocation within EU acceptable?

However, Hahn suggested that on a wider European level the EC had an interest in supporting so-called ‘convergence regions’ such as Poland: “Are we talking of relocation within Europe or outside Europe?

"If I’m told that a company is relocating within Europe – rather than to China or India – then I have to use a different yardstick. It is difficult, but we are operating in a European market with competitive policies and EU consumers at large, whose interests are at stake here.”

Vaughan said: "We have been told that there are systems in place to prevent EU support in one country leading to job losses in another. Yet here is a clear example of where those rules are not working.

“We’ve now had a personal commitment from the European Commissioner to look into this issue and I will be holding him to that promise.”

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