Diageo may be in line for taxpayer millions after closure cost revealed

DIAGEO appeared to be in line for a major injection of public funds last night after John Swinney revealed the closure of its Johnnie Walker bottling plant in Kilmarnock would cost the local economy £15.5 million each year.

The prospect of the Scottish Government offering a substantial amount of taxpayers' money to the drinks giant in an attempt to save hundreds of Diageo jobs came closer on the eve of a crucial meeting between the company and the finance secretary.

Last night, the Scottish Government refused to disclose how much taxpayers' money would be put on the table when Mr Swinney meets Diageo executives in Edinburgh today.

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But the scale of the economic devastation Mr Swinney said would result from the loss of 700 jobs in Kilmarnock has fuelled speculation the Scottish Government was preparing to offer a hefty package.

In a statement to the Scottish Parliament, the finance secretary said 15.5 million would be lost from the local economy.

Mr Swinney said an independent survey conducted by EKOS for Scottish Enterprise and East Ayrshire Council suggested the cost to the public sector for every job lost would be between 10,000 and 20,000 per year.

In addition to the 700 Kilmarnock jobs, Diageo also intends to shed a further 200 with the closure of its Port Dundas distillery in Glasgow. However, the restructuring will mean the creation of 400 jobs in Leven in Fife as part of a 100 million investment that will see the expansion of its packaging plant there.

Diageo's plans have caused outrage amongst ministers, trades unions and local politicians, who have formed a government-backed task force.

The task force, led by Mr Swinney, will today present an alternative business case to Bryan Donaghey, the managing director of Diageo Scotland, and David Gosnell, managing director of Diageo Global Supply.

A government cash incentive is expected to be part of their proposals.

Privately, Diageo believe the public money would be better spent on regenerating the affected areas by encouraging new business rather than attempting to persuade the company to stay there against its will.

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Diageo also has reservations about how their rivals in the whisky industry will react to a such a large multinational company receiving money from the state.

After Diageo announced profits of 2.02 billion last week, Mr Gosnell publicly questioned whether it was appropriate for the Scottish Government to be offering public money to a firm which had not requested assistance.

The strength of opposition to the company's plans was made clear at Holyrood yesterday when protesters descended on the parliament.

"It has been very hard going in Kilmarnock and Port Dundas," said Jim McGhee, senior shop steward for Unite.

"Just when we seem to get positive news with the campaign, we get put down by the management who just say that Diageo is going to go ahead with their proposals and they are not going to change their minds."

Yesterday, a statement from Diageo said "Our overall priority remains the ongoing consultation with our employees and supporting them during this difficult time."