EU state aid rules 'no excuse' for government failure to level up UK, says TUC

By agency reporter
October 26, 2020

The TUC has called on the government to stop using EU state aid rules as an excuse for its “repeated” failure to invest in jobs and industries in held-back parts of the country.

The criticism comes as the union body releases analysis which shows how progressive state intervention in support of jobs, businesses and inclusive growth is compatible with both the current state aid rules and a future trade relationship based on a level playing field.

The TUC says there are wide-ranging examples of how the UK and other European countries have used state intervention to support industries and protect decent jobs under the current set of rules. Those examples include that in 2012 when the government bowed to Unite and TUC pressure on the Ellesmere Port Vauxhall plant threatened with closure, which led the then business secretary Vince Cable effectively injecting state aid under the budget heading of ‘skills’.

The TUC says too often the UK “hides behind” state aid rules, pointing out that in 2018, Britain spent just 0.34 per cent of GDP on state aid, compared to 1.45 per cent in Germany and 0.79 per cent in France. The TUC also says that the UK has repeatedly, and wrongly, used the EU rules as an excuse not to step in to help Britain’s under-pressure steel sector. It added that so far, the Chancellor has been reluctant to provide sector-specific support for industries facing tough times due to the pandemic.

The future of the state aid regime is currently being negotiated and as of yet, it is unclear what shape it will take. It has been identified as one of the key stumbling blocks to a deal being agreed. The TUC says this should not delay investment and that there is an urgent need for government to intervene in the economy now with targeted sectoral investment to save jobs and businesses.

The TUC has set out five principles which should guide the development of the UK’s post Brexit state aid regime:

  • Support decent jobs through social clauses in public procurement to drive up employment, labour standards, skills and environmental outcomes.
  • Achieve accountability through transparency to ensure citizens and elected representatives have easy access to information on who runs which parts of our public services and where taxpayer money is being spent.
  • Use strategic funds in support of regional development, decent work and employment standards with a key role and voice for devolved authorities and social partners, including trade unions.
  • Target support for industries and companies and their long-term development, with conditions attached in support of decent jobs, contributions to the UK economy and tax base – including taking equity shares on a ‘something-for-something’ basis.
  • Help us get a good trade deal that benefits jobs and communities by maintaining a ‘level playing field’ with the EU

TUC General Secretary Frances O’Grady said: “The prime minister keeps saying he wants to ‘level up’ the country. Now he must put his money where his mouth is. There’s no excuse for the repeated failure to invest in jobs and industries in parts of the country that need it most. Ministers must stop hiding behind state aid rules. Investment in hard-hit sectors is urgently needed but the government seems content to sit on its hands while the fate of millions of jobs and livelihoods hangs in the balance. Instead of pointing the finger at the EU, the government must invest in industries like aviation, retail, the arts and hospitality that are all in dire need of targeted help.”

On the status of negotiations with the EU, O'Grady said: “The prime minister is playing poker with people’s jobs and livelihoods by threatening to walk away from negotiations. A no deal outcome – or a bad deal that doesn’t safeguard jobs and workers’ rights – would be a betrayal of working people and would push us further into the depths of an unemployment crisis.

“Our message is clear. Get back around the negotiating table and agree a good trading deal with the EU that protects jobs, workers’ rights and the Good Friday Agreement.”

* Read the analysis Levelling up the UK: the role of state aid here

* Trades Union Congress https://www.tuc.org.uk/

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