Diageo received £1m of public cash for axed Kilmarnock plant

Published on Thursday 12 November 2009 09:34

DRINKS giant Diageo was embroiled in fresh controversy today after it was revealed it received £2.6 million in public support for its Scottish operations.

• The Johnnie Walker bottling plant in Kilmarnock

The drinks firm was awarded a 1 million grant towards the expansion its Kilmarnock plant – which is now to close with the loss of 700 jobs.

Bosses received a further 1.6 million towards the cost of a new bottling line at Leven in Fife, where Diageo plans to boost its operations.

The disclosure came in response to a Freedom of Information request by Scottish Greens.

Green MSP Patrick Harvie said: "If Government is going to give grants of this sort to industry, they should support jobs, not shareholders.

"Diageo have apparently persuaded successive ministers to ignore their massive profits and to use our money to fund their redundancies.

"Scottish ministers must now promise not to squander any additional public money in this way – their predecessors were fooled twice by Diageo, and it's time to see whether any of this money can be clawed back."

Plans by Diageo to close its Johnnie Walker bottling plant in Kilmarnock with the lose of 700 jobs, and a distillery in Port Dundas, Glasgow, with the loss of a further 200, triggered an unsuccessful political campaign to persuade it to reconsider.

The job losses would be partly offset by the creation of 200 jobs at Leven.

The grants were awarded under a Government investment subsidy scheme in which payments are conditional on job targets being reached.

The Greens said the documents showed 1 million was awarded in December 1999 towards a 5 million expansion that would create 80 jobs and safeguard 405 more.

The money was paid out in three instalment between April 2002 and May 2004, and the company's obligations under the terms of the grant expired in May 2007.

Under the same "regional selective assistance" scheme, 1.636 million was paid out in three instalments between November 2002 and February 2005 towards a 12.5 million scheme to instal a new bottling line at the Leven plant.

The project was to create 71 and safeguard 180 jobs, and Diageo's obligations under the terms of that grant expired in February this year.

Mr Harvie said: "During the last administration, we now find that Scottish ministers gave huge amounts of taxpayers' money to protect jobs in Kilmarnock, jobs which will now be lost, and another substantial sum to support efforts to move those jobs to Leven.

"Joined-up government is often a bad joke, but this is seriously disconnected thinking.

"The money for Kilmarnock could have been far better spent on training and local investment, not a bodge that fell apart this quickly."