Project Birch – the government’s plan to bail out any strategically important firm which gets into trouble – has been backed by both unions and businesses.
Any firm whose failure would ‘disproportionally harm the economy’ could be in line for a bail out as Chancellor Rishi Sunak lays plans for the taxpayer to come to the rescue and save the firms from going under.
Under Project Bush the government would step in and support the companies ‘as a last resort’ to prevent a wave of job losses in sectors which have been hardest hit in the lockdown.
Britain’s biggest union – Unite – welcomed the news that a rescue plan was ‘finally taking shape’ and added: “There is no more time to lose if we are to prevent a tsunami of job losses from sweeping through communities this summer.”
It is understood that the government is in talks with multiple companies over potential state aid with airlines and aerospace suppliers saying they are under particularly heavy pressure after ‘ lockdown closed the skies’.
Virgin Atlantic have just announced plans to cut 3,200 jobs and have asked the government for a £500 million emergency loan so they can keep going.
Jet engine manufacturer Rolls Royce is also in talks with officials.
The government has refused to comment on whether or not the firms it helps would be partly nationalised by asking them for equity stakes in return for the help.
A source close to the negotiations has said equity stakes would be acceptable as ‘a last resort’ for companies which could borrow no more on their own behalf.
Exhausted all options
A Treasury spokesman said: “In exceptional circumstances, where a viable company has exhausted all options and its failure would disproportionately harm the economy, we may consider support on a ‘last resort’ basis.
“As the British public would expect, we are putting in place sensible contingency planning and any such support would be on terms that protect the taxpayer.”
Shadow chancellor, Anneliese Dodds, said: “Support must be focused on retaining and increasing employment.
It must also build value for our country – with companies receiving support prevented from engaging in share buybacks and dividend payments.
And it must be in line with our commitments on climate and the natural environment.”
Steve Turner, assistant general secretary for manufacturing at Unite, said: “It’s very welcome news that a rescue plan for UK plc is finally taking shape.
There is no more time to lose if we are to prevent a tsunami of job losses from sweeping through communities this summer.”
Tej Parikh, chief economist at the Institute of Directors, which represents company bosses, said: “If key firms do fail it could have a knock-on impact on businesses throughout the supply chain, so it’s important for the government to consider plans to support them, based on economic impact.”
But he cautioned: “Deciding who receives investment won’t be straightforward, while many firms will be less than keen to cede decision-making to a state body.”