Michelin ‘will have to repay public cash if factory shuts’
MICHELIN will be forced to repay millions of pounds of public grants if it closes its Dundee factory.
The French tyre manufacturer has been handed nearly £8million of taxpayers’ money during the past seven years.
But it emerged yesterday that the company will have to pay back some of the funds if it goes ahead with plans to axe the plant with the loss of 845 jobs.
As rescue talks were launched in Dundee, the Scottish Government faced claims that its policies on tax and business rates had damaged the economy and made it more expensive for big firms such as Michelin to operate in Scotland.
Among the options to be considered is whether or not a fresh injection of public cash would help the company to ‘repurpose’ the factory.
The firm has received £1.5million of a £4.5million package agreed by Scottish Enterprise last year, which was directly tied to safeguarding 692 jobs. The quango also handed Michelin £1.1million in 2015 and £5.25million in 2011.
Scottish Enterprise confirmed that the funding would be ‘subject to recovery’ in the event of closure.
Finance Secretary Derek Mackay said: ‘My efforts right now are to avert the closure of the plant, to secure an ongoing commercial manufacturing function by Michelin at the plant.
‘There is conditionality on the Scottish Enterprise grants and we would expect them to be fulfilled. In the event that conditions are not fulfilled, it will be clawed back.
‘But the focus right now has to be the people of this city who expect me to focus on saving as many jobs as possible and ensuring there is an ongoing future for Michelin at the plant. That is what I am focused on and that is what I am trying to achieve.’
Mr Mackay said he might consider additional financial support if that would keep the factory open.
The first meeting of the Michelin Action Group, which includes representatives of the Scottish and UK Governments, Dundee City Council, trade unions and company managers, took place in Dundee yesterday.
The group has until the end of this month to put its proposals to the company.
At the weekend, the Scottish Daily Mail revealed that the factory’s business rates bill had rocketed by 39 per cent in recent years, partly down to the Government’s decision to double the rate of the ‘large business supplement’ in 2016.
This year the factory, valued at £2.2million by assessors, is due to pay £1.1million in business rates. That bill has rocketed by £312,022, or 39 per cent, in only five years, from £793,588 in 2013-14.
Over that period, the bill the firm pays for the SNP’s ‘large business supplement’ has nearly quadrupled, from £15,164 to £56,810.
Scottish Secretary David Mundell said: ‘I have a general concern that turning Scotland into the highest taxed part of the UK is not good for the economy of Scotland.
‘Whether it is business rates supplements or income tax I don’t want to see people and businesses in Scotland paying more tax than they would in other parts of the UK – I can’t see how that can possibly benefit the economy of Scotland.’
But Mr Mackay claimed the rates issue was a ‘total red herring’ and had ‘nothing to do whatsoever’ with the plant’s financial difficulties.
The UK Government yesterday confirmed that its £350million Tax Cities Deal, a funding package to support the wider Tayside economy, will be signed on November 22.
It also announced an extra £5million for Dundee’s worldleading video games industry.
Dundee City Council leader John Alexander said yesterday’s meeting was productive but the group was under no illusions about the task.
He added: ‘Michelin has been quite clear about the rationale behind its decision, around market conditions, which is something we can’t influence. What we can influence is what the future of the plant potentially looks like.’
‘It will be clawed back’