Britain's biggest bioethanol plant will shut without state rescue, says AB Foods
Britain's largest bioethanol plant will close by September unless the government agrees to a rescue package, its owner Associated British Foods has said, blaming the UK's trade deal with America.
ABF, majority owned by the investment vehicle of the billionaire Weston family, said that it had begun consultation with the more than 160 employees at its Vivergo site in Hull 'to effect an orderly wind-down'.
It said it had stopped buying wheat, used to make fuel at the plant, on June 11 and would close it down before September 13 'unless the government is able to provide both short-term funding of Vivergo's losses and a longer-term solution'.
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Bioethanol is blended with fossil fuels to make E10 petrol. ABF and the German-owned sugars giant Ensus, which operates Britain's other large bioethanol plant on Teesside, have together been lobbying the government for tens of millions of pounds in taxpayer subsidies to save their loss-making sites.
Ensus has also threatened the 'imminent' closure of its plant, which employs more than a hundred people and also supplies carbon dioxide for use in hospitals and food production.
The companies had already been struggling to compete against cheap imports from America, which left the Vivergo plant losing about £3 million a month. ABF said this situation had been 'made significantly worse by the UK's trade deal with the US, which will allow tariff-free US ethanol into the UK'.
American bioethanol producers already benefit from lower costs for the crops and energy they use. Imports from the US are subject to 19 per cent tariffs but the UK-US trade deal unexpectedly agreed to remove these tariffs on 1.4 billion litres of bioethanol each year, roughly equal to total UK demand.
ABF said that it had 'engaged in extensive discussions with the government to find a financial and regulatory solution that would enable Vivergo to operate on a profitable and sustainable basis' but that its 'extended deadline' for the government to find a solution had passed on Wednesday.
It said that the government had now 'committed to formal negotiations to reach a sustainable solution', recognising 'the strategic importance of a domestic ethanol supply', but that it had begun the wind-down process because the outcome of the negotiations was uncertain.
Jonathan Reynolds, the business secretary, told The Times: 'We're willing to engage with them and potentially put government money into a restructure, to make sure they've got a strong future.
'We have met many times, we've engaged consultants, so we're well into the process. So I really do regret Vivergo's decision to start consultations to let the workforce go and close the plant. I think that's premature because we're in good-faith negotiations with them.'
AB Foods, the owner of Primark, is majority-owned by Wittington Investments, in which the Weston family have a stake. Wittington Investments is majority-owned by the Garfield Weston Foundation, a charitable trust, and minority-owned by the Weston family. Guy, George, Alannah and Galen Weston and family were placed sixth this year on The Sunday Times Rich List with an approximate net worth of £17.7 billion.
A spokesman for the business department said: 'We recognise this is a concerning time for workers and their families and it is disappointing to see this announcement after we entered into negotiations with the company on financial support yesterday.
'We will continue to take proactive steps to address the long-standing challenges the company faces and remain committed to working closely with them throughout this period to present a plan for a way forward that protects supply chains, jobs and livelihoods.'
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