EC subsidy ruling lifts Swan hopes

HOPES OF finding a buyer for the Swan Hunter warship yard on Tyneside received a huge boost yesterday after European Commission officials decided that the yard is eligible once more for commercial shipbuilding subsidies, writes Michael Harrison.

The decision, due to be rubber-stamped at the weekly meeting of the Commission next Tuesday, opens the way for the yard to apply for subsidies worth up to 9 per cent from the Shipbuilding Intervention Fund.

Potential bidders, led by the German company Bremer Vulkan, have made it clear that their interest depends on the yard being allowed access to intervention funding. The only hope of rescuing the yard, which went into receivership in May and has since cut 1,000 jobs, lies in its winning new orders.

Swan Hunter has been barred from receiving subsidies since it was designated a warship yard on privatisation. This will be the first time that the Commission has agreed to re-designate a yard.

However, the precise amount of subsidy allowed will be determined by the Government. Stephen Byers, the Labour MP for Wallsend, said last night: 'The European Commission has shown its commitment to shipbuilding on Merseyside. It is now up to the UK government to do likewise.'