Clause 13.—{INDUSTRIAL ESTATE COMPANIES.) (Hansard, 9 December 1959)

§ Mr. Page
I want to refer to subsection (2) in order to ascertain whether there is to be continuity of employment and of employees' rights when the Management Corporations take over the industrial estate companies. It is a sort of statutory take-over bid, and whenever this has occurred in previous Statutes, or almost whenever this has occurred, we have made certain that the employees' rights are maintained, that the new body taking over does observe its obligations towards employees of the taken over body or else pays compensation.
This is a principle which has been recognised for very many years—I think for about a century—in legislation, and we have had recent examples of it in the New Towns Act, 1946, when new towns took over gas and electricity undertakings, and we had an example of it in the Local Government Compensation Regulations in 1948, when rating functions were taken over by the local authorities. Perhaps even more similar to this type of Clause are the Orders under the Water Act, 1945, under which the companies taking over have recognised the rights of the employees, their grades they have reached, their pension rights and their superannuation rights.
682 I am not sure whether Clause 13 sufficiently recognises that obligation which I think should fall upon the Management Corporations. I imagine that the corporations, although only three as compared with the five trading estates, will be carrying out almost exactly the same job and will require almost exactly the same staff. Perhaps my question on this is superfluous and they will naturally take over the staff. Perhaps, too, they are under an obligation, if one reads subsection (2) aright, to take over the staff and observe the obligations towards it, because it says: … all property, rights and liabilities of any company to which this section applies shall at the commencement of this Act vest in the Management Corporation … I presume, therefore, that the company's liabilities towards its servants and its officers would be taken over by the Management Corporations. Perhaps my right hon. Friend can give me that assurance.
The liabilities mentioned in the subsection are the liabilities of the company. In many cases pensions and superannuation funds are not vested in the employing company but in trustees. Perhaps I am being a little legalistic in interpreting these words, but the liabilities of the trustees of a pension fund would not be covered, as I read the subsection. I believe that this applies to the Wales and Monmouth Trading Estate, where there are certain particular provisions about the pension fund which I very much doubt would come under this subsection. I should like to have my right hon. Friend's assurance that the Management Corporations will observe not only the grades reached by the employees whom they take over but also the pension and superannuation rights gained by them.

§ Mr. Maudling
I am glad that my hon. Friend the Member for Crosby (Mr. Page) has raised these two points, and I should like to make the position clear.
Clause 13 (2), to which he refers, provides that all the rights and liabilities of an industrial estate company shall vest in the relevant corporation. This includes liabilities to its employees. Therefore, all the employees of the company will be entitled, as against the appropriate corporation, to whatever rights they had under their contract of service with the estate company. 683 There is a difficulty about pensions, because in all but one case the pension funds are managed by trustees. We are examining the pension schemes which the companies have been running and we shall ensure that the rights of the officers concerned will not be adversely affected by the Bill. If it is found necessary, I will table an appropriate Amendment at a later stage to cover this.

§ Mr. Loughlin
I am grateful to the hon. Member for Crosby (Mr. Page) for raising this matter. It is obvious that we must be concerned about these people who are likely to lose their jobs, particularly because we are attempting to deal with unemployment. But I was rather surprised at the reply from the President of the Board of Trade. He did not deal in toto with the points raised by the hon. Member. He referred to the corporations taking over the responsibilities and liabilities of the old trading estate companies, and he added that the corporations would pursue something of the same nature and degree of activities as were pursued by the old companies. But an examination of the duties to be imposed and the powers to be conferred upon the corporations will show that they are far more limited than the functions carried out by the companies.
The point on which I should like some clarification is whether it will be necessary for these corporations to employ the same number of staff as the old estate companies employed because of the limitation of the functions in relation one to another. If it is true that the degree of activity of the corporations is going to be less—the President of the Board of Trade and I were somewhat in agreement over what I said a short time ago might be some confusion on this issue—then obviously a smaller total number of staff will be required by the three corporations as against the five estate companies.
The hon. Gentleman raised the question not merely of the liabilities as employers, but asked what would happen as far as compensation for loss of jobs was concerned in the event of there not being sufficient work for the total staff employed by the companies that are now to go out of being. I know that we expect them to undertake certain local 684 activities of a voluntary kind, but in the sense that we know them at present they will cease to exist. Consequently, a problem may arise in that less staff will be required.
I ask the President of the Board of Trade to devote some attention to this possibility of unemployment arising among these staffs and to the degree of compensation that he is prepared to offer the people so affected.

§ Mr. Maudling
It would certainly be paradoxical if one of the effects of the Bill was that of creating a serious unemployment problem. I am confident that will not arise. I would expect the great majority of the existing staff to carry on with the new corporations. I am not sure that the volume of work done by the staff will necessarily decrease. I would have thought that the staff had been largely engaged in the management functions, which continue, whereas the promotional functions would have been primarily followed up by members of the companies' boards themselves. I would not have thought that the change of functions would affect the staff numbers to any great extent. If, as we expect, we expand our activities, there will be more for the staff to do. I do not think that in total there will be very much difference.
We must face the fact that if there are only three bodies instead of more there will be fewer jobs at the top. On the other hand, the top jobs will be top jobs within a bigger organisation. One cannot give a guarantee that everyone will continue to be employed or continue in the same rank, but I would not have expected that there would be any great difficulty arising. As I said earlier, all the contractual rights of the people concerned will be transferred automatically.

§ Mr. Loughlin
I really am concerned about this matter, because there may be a possibility of some people becoming unemployed. Will the right hon. Gentleman give an assurance that, in the event of some people becoming redundant, he will see that they get adequate compensation?

§ Mr. Maudling
I do not think I have any power to do that. I do not think that one could give an undertaking of that kind. I am sure that the new corporations will do all they can to employ 685 all the staff of the existing companies. I do not think I can go so far as to make statutory provision for compensation.