MSPs demand new subsidy regime to save jobs
BiFab collapsed last month after a failure to raise funds (pic: Terry Murden)
A committee of Scottish MSPs has called for a new post-Brexit subsidy regime to allow British firms to compete against cheap foreign labour.
A report on the collapse of the Fife-based engineering company Burntisland Fabrications (BiFab) says EU state aid rules may have disadvantaged the company “to the benefit of state-owned and subsidised enterprises in Europe and the far and near East.”
BiFab collapsed last year when it lost out on a £30 million contract to build eight turbine jackets for the £2 billion Neart na Gaoithe (NnG) wind farm project off the east coast. The Scottish and UK governments said the EU’s regulations prevented them providing a guarantee to BiFab.
In a report published today the Economy, Energy and Fair Work Committee says Britain’s withdrawal from the EU is an opportunity to rewrite the subsidy rules to protect jobs.
It calls for “any future subsidy regime – now that the UK has left the EU – to ensure UK manufacturing jobs are given a fair opportunity to compete with low-wage economies”.
The committee repeats earlier criticism of the company’s owner DF Barnes and the Scottish government for failing to share information on their plans and decision making around BiFab.
It described the failure of the company as a “huge blow” to workers and local communities and a “concerning reflection” of the ability of Scottish businesses to benefit from the growing offshore wind industry.
The Scottish government invested almost £40 million of public money in BiFab since 2017 before converting that investment to an equity stake in the company, as well as providing a separate loan facility of £15 million to support working capital and allow the company to tender for contracts.
But it was not enough to win the contract that would have secured its future.
The committee said that despite repeated requests, neither party shared the pre-acquisition business plan.
Committee convener, Gordon Lindhurst, said: “The failure of BiFab is a huge blow for workers and communities in Burntisland, Methil and Arnish. It is also a concerning reflection of the ability of the Scottish supply chain to benefit from the growth of offshore wind. It is now vital that the administrators find a buyer to secure the future of the company.
“The committee is extremely concerned by the lack of transparency on the part of both DF Barnes and the Scottish Government over their decision making and use of public funds. Both cited the pre-acquisition business plan as corroboration of their position, but despite repeated requests neither shared this business plan with the inquiry.
Gordon Lindhurst: ‘huge blow’
“The evidence to our inquiry indicated that, for a number of reasons including financial viability and state aid rules, neither DF Barnes nor the Scottish Government felt able to provide the finance required to secure the vital contracts BiFab needed to avoid administration.
“The financial loss to the public purse of BiFab failing as a company demonstrates the need for greater accountability and transparency, and for the Government to set out its overarching policy on strategic investment in failing companies.”
The committee, which also looked into the offshore wind sector in Scotland and its supply chain, expressed its disappointment that neither SSE Renewables or EDF Renewables had awarded recent contracts to BiFab – decisions that were significant factors in the administration of the company.
In its report the committee said all reasonable steps should be taken to support a robust and competitive local supply chain for offshore wind, and it urged the UK Government to fully consider all options available to it to balance investment in offshore wind, energy prices, and local supply chain benefits.
This should include exploring the possibility of increased contractual requirements to demonstrate that consideration has been given to local supply chains, requirements of fair work policies and pay, and wider environmental factors.
MSPs noted that the UK Government is considering changes to the “Contract for Difference” (CfD) process and recommended that as part of this work it explores how environmental factors and fair work requirements, including labour costs and conditions, could be considered in bidding for contracts across the UK.
Mr Lindhurst added: “We heard evidence that Scotland has missed opportunities to economically benefit from growth in the offshore wind sector. The committee believes that it is essential for the Scottish Government to prioritise areas where there will be job opportunities and economic benefits in the future.
“Both the UK and Scottish Governments have set ambitious targets for the development of floating offshore wind. That ambition must be matched with a clear strategy on how targets will be met whilst maximising opportunity for Scottish content.”