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Paulie • 1 year ago

WHY?

This makes no sense, and also Burnham and Leese getting involved proves that they don't actually care about the TC employees and just want to secure a few cheap and easy political points. There is nothing meaningful that they can do or bring to the table and even if Labour were in power - there would be little they could do/have done.

The Government had to turn down the funding request from TC for a few reasons...

1. This wasn't a loan request or a short-term lending deal, this was a request for £200m of free cash with no promise or requirement for this to be paid back. Why should the UK taxpayer give free money to an insolvent business, especially considering that the new primary shareholder would have then been a Chinese Business

2. If the original and current shareholders in TC were happy to write off Billions in shares and bonds rather than find another measly £200m (measly in relative terms) then this should tell you about how bad this deal actually is/was.

3. Even after this investment there would still be material concerns that the business could continue to remain solvent, this last minute £200m request was the bare minimum that the bank felt that the businesses needed to retain in order to get through the winter trading - which of course would have been down on previous years anyway.

4. We're still in Europe - Governments are not allowed to provide funds to businesses as its against European law, its classed as state aid - which is completely illegal and we have many times in the past as a country objected when other countries have attempted to do this in their own territories. The german government seem to have managed to find a way to invest temporarily in Condor, however this is as fully refundable load, payable on demand - so very different.

5. What about other businesses - hundreds of businesses of all shapes and sizes go out of business every month in the UK - do any of those businesses better deserve this kind of government investment and funding? What makes TC (a privately held company) any better or more deserving than any other business?

6. The business model of TC didn't work and even in a new world funding scenario, still wouldn't. There would have still remained a channel mix problem, a product problem, a under-investment problem, a high-street problem - none of this would have changed, the only difference would be a free-er cash position, but still no remaining funds for future investment and to fix the critical issues. Nothing would have changed and the business would have ground to another halt a few months down the line.

What is actually quite perverse about the Burnham/Labour angle to this story is that if we were already out of Europe, there could have been an argument made to say that the UK Government could have bypassed the state-aid rules and also potentially even made an investment in TC as part of a Brexit transition deal, as the brexit turmoil could be argued was partly concerning for TC and aided its demise.

Given the Labour position on Brexit has been to frustrate rather than support the process, I could argue that they have partly been responsible for creating a false-positive environment that has allowed TC to fail more rapidly and easier than it otherwise would have on an earlier Brexit.