Gov money5 Jun 2020 18:07
The German chemicals giant BASF has emerged as the largest recipient of the Bank of England’s Covid-19 emergency funding scheme despite only employing 834 people in Britain.
The company, which is valued at €50 billion, has borrowed £1 billion from the Bank, equivalent to nearly £1.2 million for each of its UK workers.
The Bank revealed yesterday that 53 large businesses have taken a combined £16.2 billion from the Covid Corporate Financing Facility (CCFF), which was created to tide large companies through the pandemic.
Many of the groups that have seized a lifeline from the Bank are controlled by billionaire families and overseas multinationals, including the digger maker JCB, Tottenham Hotspur Football Club and Chanel, the luxury goods giant.
The disclosures have raised questions over why the overseas corporations and wealthy individuals have been given what is effectively state aid. Other critics said the government had missed a rich opportunity to impose strict environmental targets on the airlines and oil companies that have tapped the facility.
Borrowers had to show the Bank that they had a “significant” workforce in the UK and made a “material” contribution to the economy. Users issue commercial paper with a maturity of less than a year to the Bank of England, which deposits newly created cash in their accounts. The interest rate paid on the paper, the maturity of which can range from one week to a maximum of one year, is about 0.5 per cent, ranging from 20 basis points to 60 basis points above the standard overnight index swap rate.
The CCFF is one of a number of lending programmes supported by taxpayers to inject cash into companies and prevent an unemployment crisis. However, critics said that the Bank had been “taken for a ride” by some of the borrowers.
Dame Margaret Hodge, the Labour MP and former chairwoman of the public accounts committee, said: “Protecting jobs must be a priority. But this data leaves huge question marks over whether the CCFF has been a smart use of public finance.”
Dame Margaret, 75, questioned the “vast bailouts for foreign chemical giants fossil fuel firms and defence companies” and said that the government had “missed a trick” by not demanding stakes in companies that tap support schemes or force them to reduce the carbon emissions by imposing strict targets.
JCB has tapped the scheme for £600 million. The company is controlled by the Tory peer Lord Bamford, 74, who has a personal fortune of £4.7 billion, according to the Sunday Times Rich list. In 2018 the company paid the Bamford clan a dividend of £75 million after posting record profits.
CNH Industrial, the agricultural equipment and truck maker, and Chanel, the perfume maker, have also borrowed £600 million and are controlled by billionaires. Italy’s billionaire Agnelli family is behind CNH while brothers Alain and Gerard Wertheimer control Chanel. Bayer, the German drug company, has borrowed £600 million and only has 774 employees in the UK acco
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