Unfair Italian Government Aid Shifts 300 Jobs From Britain To Campania (Eastleigh Liberal Democrats)

Eastleigh Liberal Democrats <enquiries@eastleighlibdems.org.uk>

Unfair Italian Government Aid Shifts 300 Jobs From Britain To Campania

February 14, 2003 9:00 AM

Chris Huhne MEP at the Pirelli Site in Bishopstoke

Chris Huhne, the Liberal Democrat MEP for South East England, today accused the Pirelli company of getting unfair Italian government subsidies of nearly £50 million to shift more than 300 jobs from its plant near Southampton to Battipaglia near Naples in Southern Italy.

'My inquiries show that the Italian state is paying nearly half of the investment costs of an new plant extension near Naples that will take jobs away from Eastleigh in Hampshire' said Mr Huhne. 'This is outrageous job-snatching and I am dismayed that the EU Commission approved this subsidy in October 2002 shortly before the Eastleigh job cuts.'

'The Commission must insist that this money is repaid' said Mr Huhne.

'In an answer to my parliamentary question, the Italian EU Competition Commissioner Mario Monti admits that he approved the planned Italian subsidy of €74.5 million (£49.4 million) subsidy to Pirelli in Italy. Since this total investment cost was €167.4 million (£111 million), this amounts to 44 per cent of the total,' says Mr Huhne.

'It appears to fly in the face of one of the conditions of such aid. It should create new jobs in the depressed area, not merely shift jobs from another part of the European Union' said Mr Huhne. 'Given that Pirelli's subsidiary Fibre Ottiche Sud claimed to the Commission that the project would create 311 direct jobs and 108 indirect jobs in southern Italy, and that Pirelli have announced 312 job cuts in Eastleigh since March, this looks like a a straight switch. The Italian taxpayer is paying to import British jobs, which is outrageous and illegal under EU rules'.

'The Commission claims in its answer that it is not aware that Pirelli's investment in Italy constitutes a transfer of production from the United Kingdom. So I have today written to the Commissioner with the evidence of the corresponding job cuts in Eastleigh and a Pirelli press release that makes clear that it is consolidating production in Italy and I am asking him to reopen this file. He must satisfy himself as to whether the Commission took proper account of the implications for existing jobs when it approved the aid, and if so how it can justify such a abuse of public funds'.

'The EU rules against unfair state aids are designed to avoid beggar-my-neighbour side-effects. We have had great success so far in cutting such subsidies across all the EU states. However, the Italian government still spends twice as much as Britain on industrial subsidies,' said Mr Huhne.

Mr David Chidgey, the Liberal Democrat MP for Eastleigh where the job losses took place, said that the parliamentary answer to Mr Huhne confirmed his worst suspicions. 'I will be pressing Patricia Hewitt, the Secretary of State for Trade and Industry, to complain vigorously to her Italian counterpart'.

Notes to editors: Chris Huhne MEP is deputy leader of the UK Lib Dems in the European Parliament and economics spokesman for the European Liberal Democrat group. He sits on the economic and monetary affairs committee, which monitors the activities of Commissioner Monti. The full question and answer from Mr Monti together with the Commission's letter approving the state aid in October are available from Jo White (see above).

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