Multinationals slammed for UK job cuts after taking cheap Covid loans
The UK government has defended giving billions of pounds in concessional loans to multinational companies to help them weather the pandemic, though some have subsequently cut thousands of jobs between them across the country.
Labor and opposition unions have condemned the behavior of companies, including BASF, the German chemicals group, which closed a factory in the UK and moved work to France despite receiving a billion pounds sterling of the Bank of England’s Covid Corporate Finance Facility – the largest corporate payout. .
The facility, established in April, has loaned more than £ 33 billion to 232 companies, including 51 always due to a handset £ 12.5 billion.
When some announced that they were going pay dividends to shareholders after taking the money, the government introduced new rules in May that prevented borrowers from paying dividends or bonuses – but these only applied to companies that had taken out the loans after that date or who had not previously committed to pay them. Companies must repay the facility after 12 months.
More than half of the current recipients have cut jobs in the UK, including Japanese automaker Nissan, US cruise line Royal Caribbean Group and Australian engineering firm Worley.
In January, BASF told Ineos, the chemical company that operates its HMD (Hexamethylenediamine) plant near Middlesbrough in north-east England that it would close, resulting in the loss of 90 permanent jobs and 300 subcontractors. It transfers the production of the plastic component to France.
Ghost commercial secretary Ed Miliband condemned the movement. “It looks like the government has poured out £ 1bn of taxpayer money without asking questions. Taxpayers and Teesside workers will rightly see this as economic negligence on the part of the government, ”he told the Financial Times.
“Why has the government not obtained job guarantees for such a large sum? Have they had any discussions with the company on these issues? The commercial secretary must explain himself.
“The Labor Party has always said that when it comes to these big payments we should support business, but in return business has a responsibility to workers and to taxpayers. “
BASF, which employs 700 people in the UK, said the plant suspended production last year as it researched alternative sources of HMD. “We have made the decision in favor of alternative supply concepts and therefore propose not to restart the plant.”
He said he would repay the facility loan in March.
Many other companies that have withdrawn money from the program have already repaid or are considering repaying before the deadline in April and May. Any extension or new facility would mean having to restrict their dividend and management payments.
Politicians have slammed the program for allowing companies with large foreign owners to hand over millions to shareholders and management while benefiting from cheap UK Covid-19 loans.
Spaniard Iberdrola, owner of Scottish Power, has paid dividends and operated the facility for cash, as have Japanese carmaker Honda and US energy group Baker Hughes.
At the same time, BASF has committed to pay its next dividend in May. Walgreens Boots Alliance has paid dividends throughout the year, most recently last month, after taking out a facility loan before the ban was imposed.
Foreign-owned companies also point out that while UK operations have been hit hard by the pandemic, dividends reflect the global outlook for multinationals with better performing operations elsewhere.
Multinational companies that have already repaid loans include ABB, Johnson Controls, Akzo Nobel, Chemring, Telefónica Europe, Chanel and CNH Industrial.
The Treasury said companies had to prove that they were “making a substantial contribution to the UK economy” to access the program.
“It directly supports some of the UK’s biggest companies – directly responsible for almost 2.5 million UK jobs,” he said. “We expect all businesses that have obtained loans to use them in a manner consistent with this goal.”