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27 Jun 2019

De La Rue Cuts Jobs after Post-Brexit Blue Passport Work Awarded Abroad

Amidst the rhetoric of Brexit breathing new life into the British economy, facts indicating a very different story continue to emerge on a daily basis. Regardless of whether Brexit happens or not or if there is a deal involved or not, the evidence shows the British economy is on a downward trajectory.

The latest victims of Brexit uncertainty are banknote makers De La Rue, a Gateshead-based security printing firm that has been established for almost two centuries. The firm was hit hard just over a year ago when it failed to win a £450m government contract to produce blue post-Brexit passports – ironically awarded to a French-Dutch conglomerate.

In the months following the devastating blow, which also amounts to a slap in the face for one of Britain’s most prestigious private companies, De La Rue has struggled to stay afloat. Through the months the firm has issued a number of profit warnings and also seen its chief executive quit as it scrambled to fill the void.

De La Rue Cut Jobs at Gateshead Plant as Profits Nosedive

On Monday, it was announced that De La Rue’s chairman Philip Rogerson and another senior director were leaving. The company’s troubles have not been aided by Venezuela’s financial and political crisis that has seen US sanctions hit the country’s ability to pay its currency contract. De La Rue’s full year results, which saw profits dive by 74%, included an £18m charge linked to Venezuela.

Commenting on the proposed cuts to the Gateshead plant, a De La Rue spokesperson commented: “As the world’s largest commercial banknote printer, we regularly review our operational footprint to ensure it meets global demand.

“We are currently in the final stages of a footprint restructuring programme that was announced in 2015 to ensure our business continues to be competitive on a global scale. As part of that programme we are proposing to shut one of the print lines in Gateshead and are currently consulting with all parties concerned on this proposal.”

Government Decision to Award Blue Passports Outside UK “Short-Sighted”

The Unite union said the job cuts were on top of 100 passport-printing jobs due to go in the next few months and claimed there was a link to the loss of the UK passport contract. National officer, Louisa Bull, said: “The government’s short-sighted and blinkered decision to award the printing of post-Brexit UK passports, worth £490m, to French-Dutch firm Gemalto seriously undermined the financial viability of the Gateshead operation.”

She added: “This is devastating news for the workforce, their families and also for the north east economy which can ill-afford to lose such skilled jobs.”

The burgundy passport, in use since 1988, will revert to its original blue and gold colour from October 2019. When the £490m contract went to Franco-Dutch firm Gemalto, De La Rue appealed against the decision, however, they were unsuccessful in reversing the government’s decision.

No Accountability for Government’s Decision

Last year, pro-Brexit former cabinet minister Priti Patel said the decision to hand the new contract to a foreign firm was “disgraceful” and “perverse”. “First it was established that we did not have to leave the EU to have blue passports. Now we learn that the passports will be printed by a foreign company.”

Under EU procurement rules, the Home Office had been required to throw open the bidding process to European firms. However, it added that passports did not have to be made in the UK and 20% of blank passport books are currently produced in Europe.

At the time, a spokeswoman for the Home Office said: “The chosen company demonstrated that they will be best able to meet the needs of our passport service with a high quality and secure product at the best value for money for our customers and the taxpayer.”

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