PENKETH TANNERY (CLOSING) (Hansard, 21 May 1958)

§ Mr. Frederick Lee (Newton)

I apologise for delaying the House a little longer at this late hour and I am grateful to the Parliamentary Secretary for attending. I have a most important constituency matter to put to the Parliamentary Secretary, and I hope that he will give me a sympathetic reply now and sympathetic consideration to those matters to which he cannot reply tonight.

In the village of Penketh, there is the Penketh Tannery Company Limited, which has decided to go into voluntary liquidation. This firm is the only large firm in the village. It employs a substantial number of people, about 270 in all, who are now to lose their jobs.

This is an old-established firm which has been in existence for about eighty years. Most of the employees have been there since they were young men, many 1460 of them going there direct from school. Naturally, it will be most difficult for them to get employment once the tannery has closed.

The directors of the company have said that because the sole leather trade is in a bad way, and they have had continuing losses, they will recommend to the shareholders that they should put the company into voluntary liquidation. That is to be done at a meeting which is to take place on 25th June, and unless we can get something done in the meantime, liquidation will take place then.

The shareholders are also advised not to sell their shares, since it is said that it is virtually certain that they will receive not less than the nominal value. The strange thing is that since the announcement of voluntary liquidation the shares have rocketed from 3s. 9d. to 7s. It would appear that in this day and age it is a better thing to go into voluntary liquidation than to have a fire.

The issue to which I wish to draw the Parliamentary Secretary's attention, however, is that although that has been done for the shareholders the employees are to be given two weeks' wages, at the basic rates, and no other type of compensation at all. The firm has paid a 4 per cent. tax-free dividend, plus a 2½ per cent. interim dividend, and it has very considerable reserves, which may be the reason why the shares rocketed suddenly on the announcement of liquidation.

I know that this firm has sustained a working loss over the year, but so have many others. The whole basis of the credit squeeze and high interest rates has that effect on the working results, over a period of twelve months, of quite a lot of small firms. I therefore ask the Government—perhaps the Board of Trade is the appropriate Department—diligently to inquire into the reason why the firm considers it necessary to go into voluntary liquidation at this stage.

I know that the tanning industry is in some trouble, because compositions of various types and rubber are replacing leather in footwear and driving belts used in factories, but I should have thought that it was advisable for the Government to examine this industry to discover where, precisely, it is going, in the light of the fact that many firms are deciding to go into liquidation.

1461 I suggest that the Government should consider the needs of the industry and study the programme outlined in the case of the cotton industry, which is similar. There, the trade unions have put forward proposals which would enable the Government to play a leading part in rationalising the industry. In this case, it might enable the tannery industry to function on a better basis.

I want to ask the hon. Member whether he does not agree that private enterprise has a responsibility not only to its shareholders, who have invested money, but to those who have invested their lives in it. I ask him whether he will ensure that the Board of Trade will consider holding a public inquiry into the affairs of the company. I also ask his right hon. Friend and himself to remember that this village of Penketh is in the vicinity of the American air base, at Burtonwood, which we have now been told will dismiss 800 people this year, many of whom come from the area with which I have been dealing, in which the tannery is the only alternative industry. There is, therefore, likely to be considerable redundancy.

On the other side, there is the Warrington area, but many firms there have decleared short-time working, and there is precious little prospect of my constituents being able to get work there. I know that about 30 people who were already redundant have obtained employment with two other firms in the area, but both those firms refuse to employ people over the age of 45, and many of the people affected have had no other employment than in the tannery since they were boys. They are now men of middle-age or above, and there is not the slightest hope of their being able to obtain work, because of their age.

A further complication is that the firm has a large number of tied houses, with about 80 of its employees' families living in them. If the firm goes into voluntary liquidation, it is difficult to know what will be the future of some of my constituents. I take it that these houses will be sold and it may be that the new owners will want to live in them, or to put some other tenants in them. Some of the houses are occupied by the widows of former employees.

All this is causing great apprehension among these people and I am sure that 1462 the hon. Gentleman, who, I know, sympathises with such cases, will appreciate how sincere are their feelings in this matter. For those reasons, I felt it necessary to bring this matter to the attention of the Ministry and to do so before what I can only describe as a tragedy for some of my constituents actually occurs.

I ask that the Board of Trade investigate the financial background of this company, which I believe to be perfectly sound, to try to ascertain why, because a temporary loss has been incurred, it should go into voluntary liquidation. The resources of the company are sound and its going into liquidation will result in hardship to 270 of my constituents.

If, after such an inquiry, it is found that the employers cannot be prevailed upon to keep this firm going, I ask that efforts be made by the Board of Trade to get other people to take over the factory, which is in first-class condition. The plant is modern and a short time ago it was regarded as one of the most modern tanneries in Britain. We understand that there are other people who are interested in the factory and I should be grateful if the hon. Gentleman could say whether he knows of any possible future employers.

No real basis of compensation has been offered to the employees who have been displaced, except a week's wages at the minimum rate, which amounts to about £15. No matter what we may think politically about nationalisation or private enterprise, I should have thought that we had passed the stage where work-people were considered as chattels and could be dispensed with because of a temporary loss. If that kind of thing is to happen, especially in places live in the area of the Warrington emment, we shall find a soured and embittered atmosphere growing up in our villages which will be detrimental to the prospects of increasing production.

I will not go into other details, owing to the lateness of the hour. I hope that the hon. Gentleman will tell me that the Government are alive to this problem and that his Ministry will do all that is possible to place the redundant workmen. I hope that he is able to give me some information about the future of 1463 the property in which some of my constituents are living so that they may have some assurance of continued tenancy. I repeat that I desire an investigation to be carried out. I do not believe that the real reason for the liquidation has been disclosed, and that is why I have raised this matter tonight.

§ The Parliamentary Secretary to the Ministry of Labour and National Service (Mr. Richard Wood)

I am grateful to the hon. Member for Newton (Mr. F. Lee) for having given me a chance of trying to explain what our view is about this matter. I understand that this firm to which he has drawn attention is one of the largest manufacturers of leather soles in the country. As he pointed out, like other such manufacturers, this firm has recently been experiencing competition from substitute materials. As the hon. Member rightly told us, it is its intention, at the end of June, to suggest to a meeting of shareholders that the factory should close.

I understand that the intention of the firm is to run down the employment in the factory over a period of six to nine months—which I think is an important point—and that it intends to give at least two weeks' notice to its employees. The hon. Member also pointed out that 20 or 30 of the employees had lost their jobs. Twenty have been placed by my Department in jobs in the Warrington area and another 8 or 10 have independently found other jobs. All these finished work at the factory on 16th May. They were given two weeks' pay instead of notice and started their other work three days after they terminated work at the factory. I understand that no further discharges are contemplated for the next few weeks.

The hon. Member, naturally, was very concerned with an immensely important matter, the future tenure of the 80 families in the company's houses. I cannot give any information on that, because, as he will appreciate, that is very much a matter for the company. Naturally, I hope that everything will be done to try to ease the difficulties or any possible hardship those families may be fearing at the moment.

I should like to say something about the general employment situation in the 1464 Warrington area because, obviously, this, strictly from the point of view of my Department, is a very important factor. I understand that about two-thirds of these workers at the Penketh Tannery live in the area of the Warrington employment exchange and that most of the remainder live in the Widnes area. In Warrington, out of a total insured population of 62,000 there is a percentage of unemployment of 1.7 per cent., which as the hon. Member will know, is considerably below the national average, as I am glad to say it has been for several years. Until recently there was in Warrington a shortage of most kinds of workers, but it is true that the employment situation at present is a little more difficult. On the other hand, I do not think that we should be pessimistic about the future.

Since March, 1957, I understand that civilian employment at Burtonwood has fallen by nearly 1,000. It is true that there are likely to be more discharges there and at the Admiralty depot. The number now unemployed whose last employment was in Government service, however, is only 55. Therefore, experience seems to show that in this area workers who lose jobs, whether at Burtonwood or other places, seem to find other work without very much difficulty. I very much hope that that will continue.

The hon. Gentleman raised the question of possible action by the Board of Trade in this area but, as I have been saying, the present employment situation in the Warrington area would not justify special action at present by the Board of Trade to encourage industrialists to set up there, because, as he will know—and I have no doubt that he had experience of this when he was in another capacity—this is not the first example of this kind of situation.

In the Isle of Wight, as he will remember, about 500 people lost their jobs at the end of January of this year. All but 60 of them had found work by a week ago. Again, at Blackpool, out of 2,600 who lost their jobs between February and October, 1957, about 1,300 went straight into other jobs and there have never been more than 150 of them unemployed at any one time. Those are two examples of redundancies being absorbed, and in areas where the unemployment figure was above 5 per cent., as compared with an unemployment figure in Warrington of only 1.7 per cent.

1465 It is, of course, impossible to know at present just what will be the effect of the declining employment at Penketh, to which he has drawn attention, on the local level of employment in the Warrington area. I can certainly assure him with the greatest readiness that my right hon. Friend will watch this situation extremely closely.

I cannot give the hon. Member the information for which he asked about the availability of premises in this area in which he is interested which will be suitable for industrial use. I understand that, at the Penketh Tanning Company, the arrangements for the disposal of the plant, machinery and buildings have not yet been decided, but I have the assurance of my right hon. Friend the President of the Board of Trade that he will watch this very carefully. He has authorised me to say that if circumstances required it, the Board of Trade would certainly do all it could to draw the attention of suitable firms to whatever facilities may be available, including any existing premises that might be appropriate for industrial use.

The hon. Gentleman asked particularly whether the Board of Trade would be willing to undertake an inquiry into this matter. I understand that this proposed meeting at the end of June will, as he has said, vote the company into voluntary liquidation. As I expect he knows, the decision voluntarily to liquidate a company is one which shareholders must reach by a resolution passed by a majority of not less than three-quarters of the shareholders who are entitled to vote at a general meeting which has been called for the purpose in accordance with Section 278 of the Companies Act, 1948. I 1466 am advised that as long as those requirements are complied with the Board of Trade has no right to intervene.

It is certainly true that a company's affairs may be investigated under Sections 164 and 165 of the 1948 Act, if there are circumstances which suggest that the business has been conducted with an attempt to defraud, or that the persons connected with its formation or with the management of its affairs have been guilty of fraud, or if information about the company's affairs has been withheld from members. No application for such an investigation has been received in this case, and there is no evidence before the Board of Trade which would support the appointment of an inspector to carry out such an investigation.

I hope that I have made clear, as I have tried to do, that the responsibilities in the matter which the hon. Member has raised seem to me to be divided between the company, the Board of Trade and my Department. As far I can see, the firm has not acted, and will not act, beyond its rights. The hon. Member knows very well the views of my right hon. Friend about the obligations which he feels that the employers should always observe. My right hon. Friends certainly recognise their responsibilities in this matter.

I have given an undertaking to the hon. Member on behalf of the President of the Board of Trade. As for my Department, I assure the hon. Member that my officers in the Warrington area will take every step they possibly can to try to find jobs for any workers who may lose their jobs in that area.