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Salmond could use public money to save Diageo jobs

Published: 23/07/2009

Alex Salmond

Alex Salmond


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FIRST Minister Alex Salmond said today he would not rule out the use of taxpayers' cash as part of a package to help save some of the 900 jobs set to be axed by drinks giant Diageo.


Mr Salmond stressed that the firm had committed to giving "full and proper consideration" to a business plan being developed by the Scottish Government, Scottish Enterprise, Glasgow and East Ayrshire Councils, trade unions and local MPs and MSPs.

He felt "more confident" following this morning's meeting in London with chief executive Paul Walsh than he did a couple of weeks ago, when the firm first announced proposals to shut its historic Johnnie Walker whisky bottling plant in Kilmarnock.

The Johnnie Walker closure will account for 700 of the threatened job losses in Scotland while the others will come if the Port Dundas distillery in Glasgow is closed.

Diageo argues that the redundancies would be offset by the creation of 400 jobs at its packaging plant in Leven, Fife.

Mr Salmond said he and Jack Perry, boss of Scottish Enterprise, had a "substantive meeting" with Mr Walsh at the firm's UK headquarters and claimed there would be "substantial economic advantages" for Diageo in retaining their relationship with Scotland.

At a briefing for journalists in Westminster he said: "I'm not ruling out public finance if it achieves a social objective. That is the purpose of public finance. That is what it is there for.

"There is nothing new or original about that. The only limitation is you have to conform to certain rules which we'd conform to.

"Secondly is the amount of finances available which is obviously, in these times, very scarce indeed. Public finance is there to achieve a public purpose."

Salmond: redundancy plan 'socially unacceptable'Asked if that would be hard to justify when Diageo turns over billions of pounds each year he said: "That would depend on what it was and how it was delivered. I am just not ruling it out."

Challenged that any such taxpayer-funded support would fall foul of anti-competition laws he said: "Nothing we do will fall foul of any restriction or competition laws."

Mr Salmond said: "This was a substantive meeting and Paul Walsh assured me that Diageo will give full and proper consideration to the alternative business case that is being developed and will be presented next month.

"That is extremely welcome, because engaging Diageo in this process and identifying shared objectives is vital if we are to be successful in securing a better outcome for Scotland.

"This was a constructive and positive meeting, as part of the ongoing work of the joint campaign.

"During the meeting, I reiterated that the Scottish Government and the people of Scotland regard Diageo's current proposals as socially unacceptable.

"We believe that, with goodwill on all sides, then movement is possible towards a position which would be better and more acceptable to Scottish opinion, as well as meeting Diageo's key financial objectives.

"During what is a challenging time for Scotch whisky in the international marketplace, there are substantial economic advantages for Diageo in retaining and indeed enhancing their strong and long-established relationship with Scotland, and that will form the platform of the joint campaign's alternative business case."

He added: "I am not under-rating the difficulties. We are in an extraordinarily difficult position... but I am more positive after the meeting because I accept the assurances that this is something that will be properly considered.

"I believe it should be possible to get a better outcome, to reconcile this business bottom line with the Scottish bottom line."

A Diageo spokesman said the meeting was "detailed and constructive".

He went on: "We took the opportunity to reassure the First Minister and Mr Perry that the company will listen to alternative proposals which sustain its operations and investment in Scotch and Scotland for the long-term.

"We also agreed to work closely with the consultants appointed by Scottish Enterprise to facilitate their independent assessment.

"Diageo continues to be in formal consultation with employees on its restructuring proposals and in particular their implications for Kilmarnock and Port Dundas."

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