Ford under fire over grants payment

By Press Association, Nov 6, 2012

Car giant Ford has been criticised for accepting millions of pounds from UK taxpayers in the run-up to announcing the closure of its last British assembly plant, with the loss of 1,400 jobs.

The vehicle manufacturer received cash from the regional growth fund (RGF) to help develop its Dagenham base, and was given an £80 million loan from the European Investment Bank (EIB) for its factory in Turkey, before revealing it would shut its plant at Swaythling in Southampton.

Production of Ford's Transit van will switch from Swaythling to Turkey, having been based in Southampton - the company's last UK vehicle assembly plant - for 40 years.

The Government said the regional growth fund cash helped protect jobs - and argued the money could still have been granted even if ministers knew about the plan to shut Swaythling next July. But Labour's former innovation and skills secretary John Denham, MP for Southampton Itchen, said: "It is extraordinary that a regional growth fund grant was made to Ford without the Government being aware of the wider Ford strategy.

"I think that is a weakness of the regional growth fund compared with the old regional development agency structures, which were much more likely to ensure bits of Government dealing with major companies were aware of the whole of the company's strategy. By dividing the regional growth fund into separate grants, there is no sense of engagement with the company."

Shadow business minister Iain Wright claimed it was a "huge failing of the RGF" that the money was approved without the Government knowing of the company's plans to shut Swaythling.

But Business Minister Michael Fallon claimed the RGF cash would protect hundreds of jobs: "We announced on October 19 our conditional offer of £9.3 million to support Ford's investment of £156 million into Dagenham to build an all-new engine series at the plant. That investment - and it may be of no comfort to those in the Southampton area - will safeguard some 450 jobs and create 50 new jobs while supporting many more in the supply chain and wider economy."

It emerged at the weekend that the EIB loaned Ford £80 million to invest in Turkey as part of its moves to prepare the country's economy for possible European Union membership. The money, part of which came from British taxpayers, was signed off by the EIB, whose governors include Chancellor George Osborne.

Mr Fallon backed the EIB cash, saying the loan was "not based on the cessation of production at Southampton". He added: "It is incorrect to imply the EIB loan is responsible itself for exporting jobs from the UK."

Conservative MP Caroline Nokes (Romsey and Southampton North), who led today's Westminster Hall debate, said the revelation Turkey would benefit from Swaythling's demise sparked concern and anger. She believed the firm had "a moral duty to declare its hand" before applying for cash.

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