Project Birch is the
British government
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, image = HM Government logo.svg
, image_size = 220px
, image2 = Royal Coat of Arms of the United Kingdom (HM Government).svg
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, caption = Royal Arms
, date_est ...
's bailout plan for companies during the
COVID-19 pandemic
The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identified ...
. As of September 2020, only one company has qualified for help.
Description
The Treasury said that support would be given to "viable companies which have exhausted all options", whose failure would "disproportionately harm the economy".
It aims to step in to support sectors of the economy most affected by the pandemic and to reduce job losses,
but will only assist companies as a "last resort".
Whilst the scheme was more likely to involve loans, it was also discussed as including stakes being bought in companies, though the
Chancellor of the Exchequer,
Rishi Sunak
Rishi Sunak (; born 12 May 1980) is a British politician who has served as Prime Minister of the United Kingdom and Leader of the Conservative Party since October 2022. He previously held two cabinet positions under Boris Johnson, lastly as ...
, was understood to be reticent about this.
He said instead that companies would be required to make formal pledges related to
executive compensation
Executive compensation is composed of both the financial compensation (executive pay) and other non-financial benefits received by an executive from their employing firm in return for their service. It is typically a mixture of fixed salary, variab ...
, employment,
greenhouse gases
A greenhouse gas (GHG or GhG) is a gas that absorbs and emits radiant energy within the thermal infrared range, causing the greenhouse effect. The primary greenhouse gases in Earth's atmosphere are water vapor (), carbon dioxide (), meth ...
and tax.
History
There were financial schemes and packages announced by the government to support companies, such as the Coronavirus Job Retention Scheme and the Bounce Back Loan Scheme, but concerns were raised that large businesses would remain in difficulty after using options already in place.
Car manufacturers including
Aston Martin
Aston Martin Lagonda Global Holdings PLC is an English manufacturer of luxury sports cars and grand tourers. Its predecessor was founded in 1913 by Lionel Martin and Robert Bamford. Steered from 1947 by David Brown, it became associated ...
and
Jaguar Land Rover
Jaguar Land Rover Automotive PLC is the holding company of Jaguar Land Rover Limited (also known as JLR), and is a British multinational automobile manufacturer which produces luxury vehicles and sport utility vehicles. Jaguar Land Rover is ...
looked into government funding, with the latter in talks for a potential £1 billion loan.
Taxpayers may potentially have held stakes in the company as a result of the discussions, before the ''
Financial Times
The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Nikke ...
'' reported that the talks with the company had ended.
[ They also reported that talks with ]Tata Steel
Tata Steel Limited is an Indian multinational steel-making company, based in Jamshedpur, Jharkhand and headquartered in Mumbai, Maharashtra. It is a part of the Tata Group.
Formerly known as Tata Iron and Steel Company Limited (TISCO), Tata ...
had ended;[ the steelmaking company's UK business had asked for £500 million in government support.]
The airline Virgin Atlantic
Virgin Atlantic, a trading name of Virgin Atlantic Airways Limited and Virgin Atlantic International Limited, is a British airline with its head office in Crawley, England. The airline was established in 1984 as British Atlantic Airways, and ...
asked for the government to provide it with a £500 million emergency loan, saying it was planning to cut 3,000 jobs, and the Scottish-based regional airline Loganair
Loganair is a Scottish regional airline based at Glasgow Airport near Paisley, Scotland. It is the largest regional airline in the UK by passenger numbers and fleet size.
In addition to its main base at Glasgow, it has hubs at Aberdeen, Edinb ...
also asked for help.
The first, and so far only,[ company to receive a loan through the scheme was ]Celsa Steel UK
CELSA Group is a multinational group of steel companies headquartered in Spain, mainly in the industry of steel reinforcement or rebar.
History
It was formed in 1967 as the Compañía Española de Laminación. Competitors of the company include S ...
, which was provided with a £30 million bailout. The company, which is the UK's largest steel rebar
Rebar (short for reinforcing bar), known when massed as reinforcing steel or reinforcement steel, is a steel bar used as a tension device in reinforced concrete and reinforced masonry structures to strengthen and aid the concrete under tension. ...
manufacturer, was given a series of legally-binding conditions to adhere to, and told that the money was to be repaid in full.
Response
The Shadow Chancellor of the Exchequer
The Shadow Chancellor of the Exchequer in the British Parliamentary system is the member of the Shadow Cabinet who is responsible for shadowing the Chancellor of the Exchequer. The title is given at the gift of the Leader of the Opposition an ...
, Anneliese Dodds
Anneliese Jane Dodds (born 16 March 1978) is a British Labour and Co-operative politician and public policy analyst serving as Shadow Secretary of State for Women and Equalities, and Chair of the Labour Party since 2021. She was Shadow Chancel ...
, said that the support should focus on maintaining employment, and that companies receiving support should be "prevented from engaging in share buybacks
Share repurchase, also known as share buyback or stock buyback, is the re-acquisition by a company of its own shares. It represents an alternate and more flexible way (relative to dividends) of returning money to shareholders. When used in coor ...
and dividend
A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-inv ...
payments".
The importance of support for key businesses was commented on by the Institute of Directors
The Institute of Directors (IoD) is a British professional organisation for company directors, senior business leaders and entrepreneurs. It is the UK's longest running organisation for professional leaders, having been founded in 1903 and inco ...
' chief economist who warned of the knock-on effect that key business failures could have on the supply chain.
Unite the Union
Unite the Union, commonly known as Unite, is a British and Irish trade union which was formed on 1 May 2007 by the merger of Amicus and the Transport and General Workers' Union (TGWU). Unite is the second largest trade union in the UK (after ...
welcomed the news of the scheme and said that it could prevent "a tsunami of job losses" from affecting communities.
By September 2020, only one company had been helped by the scheme, which led the , Ed Miliband
Edward Samuel "Ed" Miliband (born 24 December 1969) is a British politician serving as Shadow Secretary of State for Climate Change and Net Zero since 2021. He has been the Member of Parliament (MP) for Doncaster North since 2005. Miliban ...
, to ask the government for clarifications about the scheme's progress. His colleague Dodds said of the companies seeking help, "The longer it takes to get it, the higher the risk to jobs and businesses that the government itself admits are too important to fail".
Foreign government support
Outside the United Kingdom, financial support schemes have been carried out by other governments. The largest German airline, Lufthansa
Deutsche Lufthansa AG (), commonly shortened to Lufthansa, is the flag carrier of Germany. When combined with its subsidiaries, it is the second- largest airline in Europe in terms of passengers carried. Lufthansa is one of the five founding ...
, said on 29 June that it would receive a £8.1 billion bailout from the German government
The Federal Cabinet or Federal Government (german: link=no, Bundeskabinett or ') is the chief executive body of the Federal Republic of Germany. It consists of the Federal Chancellor and cabinet ministers. The fundamentals of the cabinet's org ...
. As well as this, the French government
The Government of France (French: ''Gouvernement français''), officially the Government of the French Republic (''Gouvernement de la République française'' ), exercises executive power in France. It is composed of the Prime Minister, wh ...
presented loans and loan guarantees worth £6.31 billion to Air France–KLM
Air France–KLM S.A., also known as Air France–KLM Group, is a Franco-Dutch airline holding company incorporated under French law with its headquarters at Charles de Gaulle Airport in Tremblay-en-France, near Paris. The group has offices ...
.
See also
*
*Operation Kingfisher
Operation Kingfisher was a US Marine Corps operation that took place during the Vietnam War. The operation was carried out in the western part of "Leatherneck Square" near Con Thien, lasting from 16 July to 31 October 1967.
Prelude
Following the ...
, a government plan to support companies over the Brexit
Brexit (; a portmanteau of "British exit") was the withdrawal of the United Kingdom (UK) from the European Union (EU) at 23:00 GMT on 31 January 2020 (00:00 1 February 2020 CET).The UK also left the European Atomic Energy Community (EAE ...
transition period
References
{{COVID-19 pandemic in the United Kingdom, Crown Dependencies and British Overseas Territories
COVID-19 pandemic in the United Kingdom