UK subsidies for Airbus makes mockery of ‘greenest government ever’ claim

Comment from Jubilee Debt Campaign, WWF-UK and Jubilee Scotland on the annual report of the Export Credits Guarantee Department.

Dodgy Deals

The release of the annual report of the UK’s Export Credits Guarantee Department (ECGD) today shows that last year alone the UK backed £1.8 billion of loans to foreign airlines to buy planes from manufacturer Airbus.[1] Despite the Government’s claim to be the greenest government ever, their support for Airbus is not even assessed by the Government for its environmental impact.

New research released today contradicts the Government’s claims that they are helping to replace old planes with more efficient technology. In reality, of 30 airlines which ECGD has supported in the previous three years, 27 (90%) are expanding their operations. In such cases, new planes are bought as additions to the fleet rather than as replacements while campaigners claim that making such planes cheaper means more are bought, and the amount of emissions increases.[2]

Support for Airbus rose from £500 million in 2007/08 to £2 billion in 2009/10 and £1.8 billion in 2010/11. Subsidies for one company Airbus make-up 61 per cent of ECGD backed loans in 2010/11, and brings the total liability of the government for plane loans to £5.8 billion. It is estimated that 40 per cent of aircraft exports are now financed by government backed loans.

Margaret Ounsley from WWF-UK said:

“While WWF-UK supports Lord Green’s aim to develop the ECGD beyond its traditional support for Airbus, aviation and petrochemicals, there is little sign in this report of much movement. Obviously this reflects last years exports, but we are hoping that next year’s report will show significant movement on delivering the Coalition’s ambition of using the ECGD to grow small and medium size enterprises, and nurture our nascent green industries.”

Nick Dearden from Jubilee Debt Campaign said:

“We understand the paramount need to support jobs and business in the UK, especially in time of recession. But providing subsidies to airlines based in other rich countries is neither a good use of money nor is it helping combat climate change. The coalition agreement promised to stop using these subsidies to support so-called ‘dirty’ fossil fuels. But it appears aviation is exempt from this promise.”[3]

“The most incredible aspect of the support is that aviation is not even assessed for its environmental impact. None of this is consistent with a British Government which proclaims itself the ‘greenest’ in history.” 

One project in 2010/11 was a £113 million government backed loan to the United Arab Emirates armed forces to buy Airbus aircraft. No assessment of either the environmental or social impact of this loan was made.

A key concern of anti-poverty campaigners is the creation of ‘Third World debt’ when customers default on payment. Indonesia is one of the biggest debtors to the UK Government and it is believed that part of its debt relates to a sale of planes to Garuda Airlines in 2000. The airline defaulted on its loan as a result of the Asian financial crisis in 1997 and 1998.

James Picardo, Campaign Director, Jubilee Scotland, said:

“The Coalition government has already made a great deal of noise about its commitment to international development and the environment. If it wants these words to be taken seriously it needs to take urgent steps to reform the ECGD, a dinosaur department which still relies on carbon intensive industry and collecting the bad debts of the past.”

The ECGD appears not to have supported exports of any renewable energy or other low carbon technology in 2010/11.

ENDS

For more information contact: Tim Jones, Jubilee Debt Campaign, 07817 628196

NOTES:

[1] The ECGD annual report is available here

[2] For example, in the last three years, Abu Dhabi based Etihad Airways has had £121 million worth of loans backed by ECGD in order to buy Airbus aircraft. In July 2008, they said: “This Airbus aircraft order is another major step forward in our journey and will enable us to continue our exciting expansion plans by adding new destinations to our growing global network and fulfil our aspirations of bringing Abu Dhabi to the world. Australian airline Qantas has received £188 million in ECGD backed loans to buy Airbus planes in the last few years. In 2008, Qantas Chief Executive Geoff Dixon said purchases of Airbus aircraft would allow “aggressive growth for Jetstar and enable it to establish new international bases in Darwin and Perth”.

[3] The Coalition Agreement says: “We will ensure that UK Trade and Investment and the Export Credits Guarantee Department become champions for British companies that develop and export innovative green technologies around the world, instead of supporting investment in dirty fossil-fuel energy production.”

[4] When an airline wants to buy a plane, it may choose to finance the deal by borrowing from a bank. The bank pays the aircraft maker, and then charges the loan to the airline. The ECGD often guarantees the bank loan, saying that if the airline defaults on its payments, ECGD will repay the bank. ECGD may then try to reclaim any assets from the airline, such as claiming ownership of the plane. The aircraft maker pays an insurance premium to ECGD in order to get its support.

[5]. Jubilee Debt Campaign’s briefing ‘How the UK government’s Export Credits Guarantee Department subsidises airlines’ is available here

Countries

Share this article

Share This