Labor unions set out UK state aid demands

LONDON — The government must stop “pointing the finger at the EU” over state aid and invest in industries in need of help amid the coronavirus pandemic, according to labor unions. 

The U.K. Trades Union Congress, which represents the majority of labor unions, has put together a report listing five demands for the British state aid regime once the Brexit transition period ends. 

It calls on the government to add job protection clauses in public procurement contracts, increase transparency about how taxpayer cash is spent and clinch a trade deal with the EU that maintains working standards.

“There’s no excuse for the repeated failure to invest in jobs and industries in parts of the country that need it most. Ministers must stop hiding behind state aid rules,” TUC General Secretary Frances O’Grady said. 

“Investment in hard-hit sectors is urgently needed but the government seems content to sit on its hands while the fate of millions of jobs and livelihoods hangs in the balance. Instead of pointing the finger at the EU, the government must invest in industries like aviation, retail, the arts and hospitality that are all in dire need of targeted help.”

The move from the TUC is a sign of the looming battle for influence in the U.K. over how the government uses its expected state aid powers from 2021. Britain has been tied to the EU regime while a member of the bloc, meaning the European Commission has to sign off big projects.

But historically the U.K. has doled out little in state support compared with other EU nations. It spent just 0.34 percent of GDP on state aid in 2018, compared to 1.45 percent in Germany and 0.79 percent in France.

The TUC also wants the government to use funds to support regional development with input from devolved leaders and unions, as well as impose conditions on support for firms to support jobs.

The exact nature of the British state aid regime after the transition period remains unclear, with the U.K. yet to detail what kind of regime it plans but insisting it retains full control over an independent system.

U.K. officials insist the position is one of principle about sovereignty rather than an indication that the government will begin spending vast sums on state support. “We won’t be picking winners and will remain a low subsidy regime,” an official said last month. “The U.K. position is about retaining our freedom to decide what’s best for us in our own interest. It’s a principle rather than because we want to suddenly start massive bailing out of industries.”

British chief Brexit negotiator David Frost also hinted last month that the government is preparing to compromise on its state aid demands. He told a Lords committee it could sign up to broad state aid principles with the EU and could benefit from a checking and enforcement regime to protect against possible unfair practices from the EU.

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