 | This article needs to beupdated. Please help update this article to reflect recent events or newly available information.(May 2021) |
Project Birch is theBritish government's bailout plan to help save companies that are critical to the British economy during theCOVID-19 pandemic. It was announced in May 2020. As of September 2020, only one company has qualified for help.[1]
The Treasury said that support would be given to "viable companies which have exhausted all options", whose failure would "disproportionately harm the economy".[2] It aims to step in to support sectors of the economy most affected by the pandemic and to reduce job losses,[3] but will only assist companies as a "last resort".[4] Whilst the scheme was more likely to involve loans, it was also discussed as including stakes being bought in companies,[5] though theChancellor of the Exchequer,Rishi Sunak, was understood to be reticent about this.[3] He said instead that companies would be required to make formal pledges related toexecutive compensation, employment,greenhouse gases and tax.[6]
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.[4]
Car manufacturers includingAston Martin andJaguar Land Rover looked into government funding, with the latter in talks for a potential £1 billion loan.[7] Taxpayers may potentially have held stakes in the company as a result of the discussions,[8] before theFinancial Times reported that the talks with the company had ended.[1] They also reported that talks withTata Steel had ended;[1] the steelmaking company's UK business had asked for £500 million in government support.[3]
The airlineVirgin Atlantic 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 airlineLoganair also asked for help.[7]
The first, and so far only,[1] company to receive a loan through the scheme wasCelsa Steel UK, which was provided with a £30 million bailout. The company, which is the UK's largest steelrebar manufacturer, was given a series of legally-binding conditions to adhere to, and told that the money was to be repaid in full.[9]
TheShadow Chancellor of the Exchequer,Anneliese Dodds, said that the support should focus on maintaining employment, and that companies receiving support should be "prevented from engaging inshare buybacks anddividend payments".[2]
The importance of support for key businesses was commented on by theInstitute of Directors' chief economist who warned of theknock-on effect that key business failures could have on the supply chain.[2]
Unite the Union welcomed the news of the scheme and said that it could prevent "a tsunami of job losses" from affecting communities.[7]
By September 2020, only one company had been helped by the scheme, which led theShadow Secretary of State for Business, Energy and Industrial Strategy,Ed Miliband, 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".[7]
Outside the United Kingdom, financial support schemes have been carried out by other governments. The largest German airline,Lufthansa, said on 29 June that it would receive a £8.1 billion bailout from theGerman government. As well as this, theFrench government presented loans and loan guarantees worth £6.31 billion toAir France–KLM.[7]
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