HC Deb 10 May 1973 vol 856 cc858-80

8.53 p.m.

Mr. Arthur Palmer (Bristol, Central)

I wish to raise tonight the isue of the closure of an important factory and business in my constituency. This firm is called today by the modern title of BDR Machines. That is an up-to-date name for what is known usually, with a touch of affection in Bristol, as Dolman's.

This business of BDR Machines is in the heart of the old industrial part of the city. It is a firm with a certain history. It was founded by a pioneer in the making of automatic vending machines, Mr. Harry Dolman, who is now retired from active business. Mr. Dolman was very much a pioneer. In the early days the company in the main made vending machines which were then new ingenious devices. More recently the company moved successfully—or it was thought to be successfully—into other fields of manufacture of automatic machinery, making machines for factory packaging and for automatic marking. The company has indeed deployed a whole range of special skills and learned very high respect for the good work done by its employees, I think it could be said that that Brecknell Dolman and Rogers had a wide reputation at home and abroad for the high quality of its products.

Until fairly recently then the prosperity of the company, so far as one could judge, was not in doubt. It employed designers, technicians, many skilled craftsmen and administrative grades. I know the factory well and have spoken there especially at election times. No one to my knowledge suggested that the company was not prosperous. I have evidence for the fact that it had a long order book for orders from both well-known companies in this country and from users in overseas markets. So much was the future prosperity of the company taken for granted that, although I do not know all the details, when with the passing of time Mr. Dolman and some associated with him decided to retire from active industrial life the company was sold to the Vokes Group.

That was in 1969, not very long ago. I assume that the Vokes Group was anxious to buy a going concern with a high reputation. There was much talk at that time of the new opportunities and increase in employment that the amalgamation with the Vokes Group would bring to the Dolman factory. In 1972 the Vokes Group in turn was taken over by that large industrial combine, Thomas Tilling. But then to the amazement of everyone in Bristol, where the firm is very well known, and in spite of protests by the employees and trade unions, this year the decision was taken, presumably at the top level of the Tilling Group, to abandon the business altogether.

At one time the company employed 1,600. That number was already run down, and this action entailed approximately 500 redundancies. The closure will presumably be fairly gradual, but it is intended to close the factory and to abandon the business. Among the 500 employees now to be displaced are many who have given the whole of their working lives to building up the business. Some worked in it from its early foundation.

The news came, as I say, as a surprise. It amazed most of us in view of how the company had always been, in terms of this century, in a modern line of business in the manufacture of automatic vending and other contemporary machines. This kind of modern machinery which saves time and labour is in enormous demand, one would have thought, both here and abroad. No so long ago BDR machines was quoted as the kind of company that would find new scope with Britain's entry into the EEC. In other words, to put the position into modern economic parlance, the company's occupation with vending machines and automatic packaging machines was to be in a growth area of business.

I do not think it could seriously be said that the quality of the product was not right. In his letter to me on 10th April, the Minister said: Every encouragement will be given to ensure, as far as possible, that BDR expertise is utilised by British industry. How it is to be utilised when the company is to be abandoned and broken up, I am not clear. But the Minister and the Department are in no doubt about the quality of the product.

Therefore I, the workers at the factory, the trade unions and those of my constituents to whom I have spoken fail to understand why in these circumstances the undertaking is to be consigned to the industrial scrapheap marked "No longer required." According to a notice sent to employees and the trade unions by the management of the Tilling Group, the main reason is the failure of the company under its new management to secure satisfactory sales volume for our range of products in a poor national market". I am puzzled to learn that there is a poor national market for products of this kind. Perhaps the Minister would throw some light on this. The company goes on to say that it is against a background of continually increasing costs.

I wrote to Mr. Aubrey Jones. He has been through many incarnations in his time but these days is a director of Thomas Tilling. He was well known to the House at one time, a former Conservative Minister and subsequently Chairman of the Labour Government's Prices and Incomes Board. I wrote to Mr. Jones, because he is an industrial director with considerable public and political experience, thinking that he more than some people in industry would understand the social implications of a closure of this kind. He replied sympathetically, of course, but enclosing a letter from Mr. Meaney who is managing director, I believe, of the Voke's group within the Tilling combine.

When it came to his reason for the closure, Mr. Meaney did not mince words. He put the blame, fairly or otherwise, on the original owners. He said that they had rashly embarked on a costly decimalisation programme. I have his letter here with me. He said: The principal reason for the transition from profits in Mr. Dolman's day to losses in the Voke's era appears to be that at the time of acquisition Voke's were not aware of the large and continuing problems of decimal conversion of the vending machine range". If that were so, it does not speak very well for the Voke's accountants that this company was taken over without, apparently, adequate investigation of the future costs that would be incurred by decimalisation adaptation.

Those are two views of reasons for the closure. Another view is that of the trade unions. I think it can be said— my right hon. Friend the Member for Bristol, South-East (Mr. Benn) will agree with me, I am sure—that the trade unions, a wide group of which have members in the factory, have played a most constructive rôle throughout the business. They have been reasonable, they have been understanding and they have certainly done their utmost on behalf of their members to see, as far as they can, that adequate compensation for loss of employment is paid. Whether it really is adequate is doubtful, but the unions have certainly done their best to ensure for their displaced members the maximum compensation that the company will grant.

Since we have a little more time than is usual for an Adjournment debate, I should like to quote in aid Mr. Aubrey Jones. He said: As an individual"— I do not know whether that has any significance; I will not suggest it has— I never really like the idea of companies closing works and passing on the resulting responsibility for coping with those made redundant to a governmental authority. It would be nice if the company could reabsorb the workers displaced in the same area. Unfortunately however Tillings have no other activities in the Bristol district, and I am afraid I have no alternative course of action to suggest. Though this is primarily a matter for negotiation between the unions and the management, and the unions have done their utmost in view of what Mr. Aubrey Jones says in his letter to me, I would have thought that this great combine should have been far more generous in the matter of severance terms than it has been.

Apart, however, from the question of the terms of severance, the unions have their own point of view to express, and have expressed it, on the reasons for the closure. The trade unions and many employees at the plant allege that the company has been badly managed since the acquisition by the Vokes Group, and that the assets have been run down and dissipated in the interests of a so-called rationalisation by the larger group. In short, the unions allege that there has been asset-stripping, that the company has been ill managed and has been the victim of an ill-conceived, badly carried out rationalisation by people at a very great distance.

In an adjournment debate it is not possible to cover adequately the whole of a complex situation of this kind. In my judgment, however, there are disquieting features of the two takeovers which should be investigated, and I use that word advisedly because it is not my own. In his letter to me of 10th April the Under-Secretary said that subsequent to the take-over of BDR, several disquieting situations were uncovered that would have posed difficult future problems irrespective of the ownership of the Company. When he replies to the debate, the hon. Gentleman ought to say what those disquieting features were.

The Government themselves have an indirect interest in a situation of this kind where an enterprise is abandoned. Nowadays there are investment grants and training grants. In other words, it is possible that in the Vokes combination, and perhaps subsequently in the Tilling combination, investment grants were given because, although the Bristol area would not, I think, qualify for such a grant, there is a factory at Burnley. Certainly there will have been training grants. Is this public money lost or is any of it recovered? I shall be obliged if the hon. Gentleman deals with that point.

Behind this story of the destruction of a thriving local enterprise by financial amalgamation there is a much larger moral and social issue. It arises not only in relation to BDR Machines in Bristol but wherever there are amalgamations followed by subsequent closures. Should it continue to be possible for decisions of this kind to be taken purely on financial or investment grounds in the interests of alleged rationalisation without consideration for the great stake of the employee in an undertaking to which many have given their working lives? Should not their interests equally be considered with those of the shareholders? Should they not have a right to offer an opinion about whether an amalgamation should take place?

Those who defend the so-called free enterprise system must remember that when a situation of this kind occurs, with its social consequences, questions about the right of the employees to have a say on whether an amalgamation should occur will be asked increasingly in the future. In any case it is not obvious that greater efficiency always comes to British industry from such amalgamations. There is no guarantee. Indeed, at times it can be shown that an amalagation or alleged rationalisation does not result in any greater productivity and efficiency but produces the opposite result.

In this connection I end by quoting from a letter which was sent to me by someone I have never met. He is a retired management employee of BDR Machines. He says in his letter: Since I retired I have had time to think, and I now believe Vokes never meant to make BDR "go" but were more interested in buying the assets of the company for capital gain. Unfortunately they did not have the brains in their organisation even to do this, and the people sent to advise us would have found it difficult to hold down jobs as office boys at BDR Ltd.

9.18 p.m.

Mr. Martin McLaren (Bristol, North-West)

I am glad that the hon. Member for Bristol, Central (Mr. Palmer) has found the opportunity to raise this matter. Everybone in Bristol is sorry about the closure of the famous engineering firm called BDR or, as Bristolians know it better, Bricknell, Dolman and Rogers. As the hon. Member for Bristol, Central said, Mr. Harry Dolman was the moving spirit. By all accounts he is a brilliant engineer. He designed, for instance, the ticket machines which are in everyday use in London Transport stations. He is well known for other activities, including the chairmanship of Bristol City Football Club.

There are some redeeming features in this sad story. First, generous redundancy terms have been negotiated for those who are to be displaced. The skilled engineers who form a large part of the work force are not expected to find difficulty, in present conditions, in finding other satisfactory employment. That is largely because of the policies of my right hon. Friend the Chancellor of the Exchequer in promoting the growth of the economy. Only today I was speaking to the Department of Employment at Bristol. The Department was telling me that employers are already going to it and asking when the can engage some of the people working at BDR, which is to close down in June.

I understand that a good many people have found other employment already. I do not think that many will find difficulty. I know that there is a problem for the older men in their late 50s. However, I know that the Department of Employment will give every assistance that it can. I am sure that my hon. Friend, when he comes to reply, will corroborate that. The truth is that whether under the system of private ownership or under a system of public control some firms or units of production will flourish and grow and others will decline.

I agree with the hon. Member for Bristol, Central that the trouble at BDR was that the order book became seriously reduced and that was why the firm incurred heavy losses, eventally leading to the closure planned for next month. If a firm is losing a lot of money, sooner or later it has to pull down the shutters. It would be a mistake to look at this as a plot by Vokes or by Thomas Tilling. I am sure that they are very sorry about the way in which matters have turned out, and they themselves have lost all the capital with which they originally bought the firm.

Mr. Palmer

Does the hon. Gentleman suggest that it is a coincidence that the losses started immediately after the amaglamation? The company was doing very well before.

Mr. McLaren

I understand that at the time the company was bought by Vokes profits were about £400,000 a year and that the decline started from that time, although I do not have detailed figures with me. It may be, as the hon. Gentleman suggested, that it was a blow to the firm to lose Mr. Dolman's services and that those who replaced him may not have been so expert in that form of business.

Let us look for a moment at analogous cases in the public sector. How many collieries have been closed down by the National Coal Board merely because they were no longer economic? Immediately after the war the Government made great efforts to grow groundnuts in East Africa. They failed, they incurred heavy losses and the project was closed down. Those who worked for them no doubt had to find jobs elsewhere. In such cases it is surely better that the economic resources, including the skilled manpower, should be redirected into more profitable channels. These examples from the public sector show that it is foolish to say that there is in private enterprise an inherent tendency towards failure. On the contrary, private enterprise in Bristol is busy and prosperous.

I should like to sound an optimistic note and say again that, while we all greatly sympathise with the anxieties which these events must inevitably have caused to the work force, nearly all the people concerned should easily be able to find other jobs. Indeed, many of them have already done so.

9.24 p.m.

Mr. Anthony Wedgwood Benn (Bristol, South-East)

I congratulate, my hon. Friend the Member for Bristol, Central (Mr. Palmer) on his persistence in raising the problem of Brecknell, Dolman and Rogers. I am glad that the hon. Member for Bristol, North-West (Mr. McLaren) joined in the debate. He will not misunderstand me, I hope, if I say that I thought his speech was disappointing.

In Bristol many of the 1,700 highly skilled workers have lost their employment in a firm which was producing goods— butter packing equipment, for example, and equipment that was affected by decimalisation—which this country needs. As criticism is often made in our debates on industrial matters about alleged failures on the part of trade unions, I put on record that in my view the collapse of BDR reflects on the management of that company under its various ownerships. This is a case where thoroughly bad management has brought a famous com- pany to its knees and those involved in it to a position of redundancy.

I welcome the debate because I believe that in the case of BDR there are lessons to be learned by the community and it involves a sufficient number of people to be of wider interest than merely in the city of Bristol itself. The shop stewards working there, whom I have met on a number of occasions apart from my visit as a Minister and the full-time officials, whom I have met with my hon. Friends the Members for Bristol, Central (Mr. Palmer) and Bristol, South (Mr. Michael Cocks), regard the closure of BDR, the way the men have been treated by the management and the way the case has been dealt with by the Government as a peculiarly bad example not only of management but of Government response. Without wanting to be unnecessarily controversial at this late hour in an Adjournment debate, I must put this on record because I regard the case of BDR as highly unsatisfactory.

I have been in correspondence, as has my hon. Friend—he referred to his correspondence with Aubrey Jones and Ministers—with the Department of Trade and Industry. I wrote most recently on 2nd April to the Secretary of State for Trade and Industry personally demanding that there should be an inquiry by the Government into this firm. I had previously written on 12th March. I have received replies not from the Secretary of State but from other Ministers in that Department.

As we have a little time, I want now to draw attention to some of the unsatisfactory features of this matter. The first point concerns the way in which the employees were treated regarding their redundancy. Once they had been told that the firm was to close, under very heavy pressure from the management they were more or less obliged to accept terms which, as my hon. Friend said, could certainly have been improved upon. But at that late stage, due to other arrangements made by the management, some of them found that even the arrangements which they had accepted under protest were to be varied and others, when many of them had been considering their future, were to find themselves denied the opportunity of making a change and obtaining redundancy pay because some employment under certain circumstances was to remain for them. That point mattered much to the union and should have mattered much to the Government. That was my first reason for asking for an inquiry.

My second reason for asking for an inquiry—this bears more directly on the Minister's responsibilities—was to find out whether there had been adequate disclosure by Vokes, and subsequently by Tillings, in the transactions that took place.

I have received a letter, signed by the Under-Secretary who is to reply to the debate, on page 2 of which he said: Your reference to the degree of disclosure during the two transactions, first by Vokes and subsequently by Tillings, has been discussed with both parties. In both cases the takeover operation was necessarily to some extent at arm's length and both parties have admitted that the seriousness of the situation at BDR Machines only became clear after the takeover. That is a polite Civil Service and ministerial way of saying that two people bought what turned out to be pigs in a poke. If a transaction has occurred, as the Minister now confirms in his letter, with disclosure that concealed from the purchaser the seriousness of the situation, without regard, for the moment, to the rights or problems of the workers, it requires an inquiry. The Minister made it absolutely clear in his reply that it was only after the takeover that the seriousness of the situation became apparent.

The next point which I raised with the Minister was that which my hon. Friend dealt with very delicately and which is now known as asset stripping. This is where a firm buys another firm not to keep it in business but to get rid of its assets for some capital gain for its own purpose. In my letter to the Minister I asked for information as to whether the machines that were sold by Vokes were machines that were necessary in order to keep the company going. I asked because one test of asset stripping is if a firm buys another firm and sells the tools that the other firm actually requires in order to keep in business.

The Minister's reply is in my opinion unsatisfactory. He says: On the question of sales of BDR machine tools, I understand that those sold consisted of old, worn and obsolete machines. Other machines in good condition were transferred to the Vokes Group factory at Guildford and Burnley, as part of an overall production rationalisation programme, for which new machines were also purchased. Though this programme was not altogether successful, it was at the time compatible with the continuing operation of BDR. To use the phrase compatible with the continuing operation of the firm might be only to say that it could be just kept ticking over even if machines are sold. This is quite different from keeping all machines necessary for the continual health of that firm. Undoubtedly, the workers in the firm believe the sale of the machine tool which took place was part of a deliberate rundown.

I also received a question about the extent of Government investment through BDR, through investment grants and training grants. I raised this advisedly because the workers involved had raised it with me. I got a reply from the Minister which I know is the normal reply. I have often signed this sort of letter myself in which similar things were stated, but in these circumstances the reply which I recived was not adequate. The reply read: As you know, it is not the normal policy of this Department to disclose the amount of investment grant paid to individual companies. I know that Governments do not disclose dealings with individual firms. However, you will wish to note that when some of the assets in question were transferred to Vokes Ltd. at Burnley, the company complied with the Department's requirement and signed an undertaking that the assets would continue to be used in a qualifying industrial process. It is the Department's policy not to pay extra grant when assets which have already attracted grant at the standard area rate are transferred to a development area. The point at issue here is that when these machines tools were transferred to Burnley they were still used in the industrial use in which they had qualified for the grant. With the Burnley factory closing and the Government involvement having been in the purchase of the tools in the first place, there is a Government interest in this company which ought to be accepted.

I can also use parliamentary privilege properly in order to explain why I raised the question of training grants with the Minister. In the opinion of the employees in the factory, the training grants were not properly used for the purposes for which they appeared to have been obtained. I cannot confirm or deny this. I can only report it as I should do, for that is what has been said.

I received this reply: The Department of Employment have been helping Voices Limited with the cost of training additional employees at Burnley and Earby. These grants were given under the scheme which assists with the basic skills training of expanding firms in Development and Intermediate areas, but as they only relate to those employees recruited from assisted areas, grants will not have been paid in respect of any workers transferred from Bristol. I am afraid that I do not regard that as a wholly satisfactory answer to my question.

Finally, the Minister said: The review of the situation we have carried out leads us to support the view that there are no grounds for mounting an official inquiry into this case, which is a purely commercial operation. It is a matter of regret that the Vokes management were unable to make a success of this firm following takeover, despite their efforts at reorganisation. We have found no evidence of asset stripping. On the contrary, our information is that the closure of BDR will cost the present owners more than the realisation of its assets. That is not a complete answer either.

This was not a purely commercial operation based on proper disclosure at the point of takeover, and that is admitted by the Minister. Also, of course, the question of whether the owners have burned their fingers may be an incidental consequence of their bad management, but it does not follow that they were not intending to make some profit from asset stripping. The Minister finishes by expressing sympathy for those personally affected by the closure.

The reason why I am speaking in this debate is not only to put on record my view that the Government should now have an inquiry, but also to try to draw some lessons from this episode. In my opinion, the need for further disclosure applies not only to one firm acquiring the assets of another; there must nowadays be an acceptance of the principle of much greater disclosure to the workers involved. That is the point that my hon. Friend has properly emphasised.

It is absolutely monstrous that 1,700 workers who had been in what was acknowledged to be a successful firm should find that the firm changes hands not only with inadequate disclosure to the purchasers but with inadquate disclosure to them so that at that early stage when what came to light the workers would have known about it. I say candidly to the Minister that the days have long since passed when workers can be given sympathy when things fail but are told practically nothing until the point of failure.

My second point stems from the first and is a general lesson. In my opinion, the level of skill and the sense of responsibility of the workers at BDR would have enabled them to correct the losses and failures of management in that company if they had been allowed to know in time what was wrong—but they were not. This is where the whole question of the development of industrial democracy finds a direct relevance to people's prospects of earning a living and retaining their employment. I am glad that the TUC is now coming forward with firm proposals, or at any rate is discussing proposals, which will call for a sharing of management power with workers on a substantial scale.

My third point has been touched on by my hon. Friend: indeed, he properly laid great emphasis on it. The day has long since passed when workers can find their firms sold over their heads without any rights in the matter. I know that we have accepted for a long period that the worker was a man who waited for the manager to tell him what he was to do: participation meant that the manager told him a bit earlier than perhaps he legally had to do.

But these 1,700 men have seen a great Bristol firm transferred twice without any information to them, and they have had no rights in the matter at all. It is not fair to blame BDR, Vokes or Tilling for this. This is a defect in our law.

The Minister will, I hope, tonight instigate an inquiry, for which there is an overwhelming case, and will also indicate the Government's thinking on fundamental amendments to the Companies Act when that comes forward in the new Session. Only then can we get away from the sort of serfdom that, candidly, is involved in the application of the present law and move towards a period when this country recognises that those who create wealth and work in industry have a prime right to be consulted when the means by which they earn their living are so gravely affected as has happened in the tragic case of BDR.

9.39 p.m.

The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant)

I also want to congratulate the hon. Member for Bristol, Central (Mr. Palmer) on having secured this debate, thereby allowing us to discuss the problems of BDR Machines Limited.

Following the right hon. Member for Bristol, South-East (Mr. Benn) I do not want to be controversial, but he said that he was disappointed with the speech of my hon. Friend the Member for Bristol, North-West (Mr. McLaren). I do not agree with that, but I had some disappointment with the speech of the right hon. Gentleman himself.

Before I cease to be controversial, may I say that the right hon. Member's speech contained a substantial element of humbug, because one would have thought from it that redundancies had never occurred under the previous Government of which he was a member, whereas his Government, and he in particular, presided over probably the greatest redundancies the public sector has ever seen.

The right hon. Gentleman gave the impression that on every occasion a firm in the private sector had redundancies during the time of the previous Government there was an immediate inquiry, but there is not a shred of evidence of that.

The right hon. Gentleman also used the occasion to embark belatedly upon a great philosophical contemplation of the reform of company law in this country. When he and his administration had the opportunity to reform company law, they manifestly failed to do it. I happened to be a member of the Committee when in Opposition which dealt with that Bill. I recall also all the time I have been in Parliament in opposition advocating the cause of wider share ownership and the spread of the wealth of our companies in this land, and a remarkably frosty reception I always got from the previous Labour Government.

I sympathise with the employees who will lose their jobs as a result of this closure. I understand that the local officials of the Department of Employment are in touch with the firm, and I am glad to say that there is reasonable hope that the employees concerned will be placed in alternative jobs without too much difficulty.

I was glad that my hon. Friend the Member for Bristol, North-West dealt with this. The level of unemployment in the Bristol area has fallen by almost 20 per cent. in the last year, and the current rate of 3.1 per cent. approximates to the national average, and the downward trend has been maintained almost consistently throughout that period.

I have every hope that it will continue in line with the economic growth which the country as a whole is now enjoying as a result of the Government's policies. I am supported in this view by the number of job vacancies that are notified to the Department of Employment, which have risen from 2,420 in April 1972 to 5,374 in April 1973. This represents only a portion of the actual vacancies, as witness the local Press in the area, which carries a daily average of 50 columns of advertising for employees.

Therefore, I think that the general picture is not one of depression at all. It is right that I should say so and should not allow alarm and despondency to descend on what is a prosperous and growing area. Officials of my Department have had extensive discussions in this matter with both Vokes and Thomas Tilling Ltd and we have been given all the facts and figures for which we asked. The Vokes takeover of BDR in 1969 did not come within the scope of the Monopolies and Mergers Act 1965 and did not, therefore, require the prior approval of the President of the Board of Trade in the previous Government. That is a matter of law. I may say a word further on that later.

Although Vokes carried out an appraisal of BDR before making its agreed bid, it says that it was not able to do this as deeply as it would have wished. Vokes claims that BDR, being a public quoted company, could not without breach of confidence reveal to Vokes more information than had been made known to the BDR shareholders. Vokes considered that the BDR management acted correctly and I am advised that there is no question of Vokes having been deceived by BDR. Vokes took a commercial risk based on the available information, but it was not until it was in charge that it realised that it had not identified many problem which it now believes contained the seeds of the firm's subsequent troubles.

Mr. Palmer

In this analysis of what went wrong, will the Minister say something about the decimalisation programme?

Mr. Grant

I will come to the question of decimalisation in a moment.

I was about to say that BDR under Vokes' control lost money on converting existing vending machines to take decimal coins, and incurred heavy expenditure on research and development on new products such as butter-packing machines, for which the market subsequently proved to be limited or nonexistent. Its dependence on cigarette vending machinery exposed it to a shortage of demand which it could not fill when one of its main tobacco customers—Imperial Tobacco—decided to withdraw from owning vending machinery. My officials are satisfied that Vokes made stout but unavailing efforts to restore BDR to profitable trading.

I should clearly state the figures for losses as we understand them. For the eight months to 30th March 1970—I ask the hon. Gentleman to note that date, because the takeover was only in 1969— the losses were £329,000. In the next 12 months they were £268,000, and for the 12 months after that the loss was £451,000. The estimated loss for the 12 months to 30th March 1973 was £400,000.

The decline in demand meant that by the latter half of 1972 BDR was faced with a continuing loss of £400,000 per annum, which Vokes could no longer afford to bear. Vokes carried out a review of the orders which it expected to receive in the following five years, which showed an average annual output of only £1¼ million, about £1 million less per annum than would be required to maintain a profitable operation with 500 employees.

Vokes claims that some of the reasons why more orders could not be got were that certain designs were by then out of date; a major customer for vending machines had abandoned vending and it could not find anyone else to take his place; the manufacture of a range of special machines for one customer had been taken over by that customer; and some machines had only a limited market, which had largely been met.

Moreover, the reduction in capital investment by butter packers did not help, nor did the need to concentrate a significant proportion of BDR's research and development and manufacturing effort on problems connected with decimal conversion of existing vending machines.

Vokes therefore decided to try to sell BDR. In this connection I should explain that Vokes had taken its decision but not implemented it before Tilling appeared on the scene. After Tilling had taken over Vokes, towards the end of 1972, Tilling held its own inquiry, which confirmed the Vokes decision.

No one could be persuaded to take over BDR as a whole, although some firms were interested in parts of the business. Vokes thereupon decided to notify its intention to close the business. It issued notices on 2nd March 1973 to the trade unions, customers and the Press to make sure that all parties were treated equally. In this Vokes claims to have followed the code of practice under the Industrial Relations Act 1971.

Thereafter there were negotiations. Tough and hard bargaining went on, but eventually Vokes successfully negotiated redundancy terms with the trade unions. About 500 employees at Bristol and 80 service engineers spread throughout the country are affected. The agreed redundancy terms will give each qualified employee full redundancy pay under the provisions of the Redundancy Payments Acts, plus also an ex gratia payment of 50 per cent. and payment in lieu of notice.

The closure of BDR is scheduled to be completed by the end of June 1973 and will certainly entail a loss of £1.6 million which will fall to Thomas Tilling Ltd. to finance. Vokes could not otherwise have found the money to pay such generous redundancy terms.

I make a general observation here in answer to something raised in the debate. It is only right and proper, in the interests of the employees, that there should be generous terms. Of course, inevitably there must be change in the industrial structure of our society. But I have always believed, and it has always been my policy and genuine belief, that this must be mitigated by generosity on behalf of those who have the power to give it to those so affected.

Mr. Palmer

Does the hon. Gentleman really think these redundancy terms are generous?

Mr. Grant

I think I can say so. I can cite considerably worse terms in my experience. I can certainly say that there are many examples which are far worse than that. The important thing is that they have been reached after hard, straightforward negotiation. They are considerably more satisfactory than some examples I have found in going round the country.

The hon. Member for Bristol, Central asked why employees who have given their working lives to an enterprise should be at the mercy of takeovers. I have a great deal of sympathy for that point of view. It is, of course, one of the reasons for having a redundancy fund —so that employees can be given some measure of compensation where the loss of their job is due to no fault of their own. In the present case, Vokes has made strenuous efforts to make a success of the business. It and Tilling have tried hard to find a buyer for BDR as a going concern. When they failed to find a buyer, they gave priority to those bidders for parts of BDR who offered the prospect of continuing employment in the area. They have shown a reasonable sense of social responsibility in that respect.

On the question of monopolies and mergers, the House and hon. Members will have noted that this merger did not come within the scope of the legislation, but, as a result of the Fair Trading Bill which is now passing through the House, assuming that the Bill passes into law, there will be a substantial tightening up of the procedure in that respect.

It has been suggested by both the right hon. Member for Bristol, South-East and the hon. Member for Bristol, Central that my Department should hold a formal inquiry into the circumstances of the closure. Under the provisions of the Companies Act 1967 we would have power to do so only if there were misfeasance —that is to say, conduct by the officers of the company which led to the company having claims against officers for the loss sustained. That is a very different thing indeed from possible defects in disclosure, either because the law is inadequate concerning disclosure or because there was a civil defect which could give rise to a course of action. That is a different thing from a finding of misfeasance by officers of the company, and certainly this does not apply in this case. There is, in our judgment, no basis on which we could initiate an inquiry under the Companies Act.

Mr. Benn

I appreciate the attention which the Minister is giving to this question of holding an inquiry. May I ask three questions? First, not being a lawyer, the exact meaning of "misfeasance" escapes me. I am not suggesting that any illegal act in this sense has occurred. Secondly, can the behaviour of the directors be properly assessed without an inquiry? Thirdly, is it possible for the Department to hold a more informal inquiry at any rate to see whether such an assumption might be made, and on the basis of that then be able better to tell whether a further and more formal inquiry was required?

Mr. Grant

On the latter point, we have in effect been having informal inquiries because my officials have been looking into the facts, discussing these and collecting information from those concerned with the transaction. It is because of this that we believe that there is no prima facie case to warrant an inquiry under the Companies Act.

It is a long time since I was a lawyer, so I hesitate to give a precise definition of misfeasance. It is something which is perhaps not quite a criminal act but is an act of misconduct. I can only suggest that we both study the definition. I am speaking now without the benefit of legal advice from within the Department, and it would be wrong for me to give my own definition.

Both the hon. Member and his right hon. Friend expressed concern that asset-stripping might have been involved. As the right hon. Gentleman will realise, "asset-stripping" is a slightly emotive phrase. I hope he will not mind if I say that it seems to be asset-stripping when he is in Opposition and rationalisation when he is in Government. The information I have shows that in the course of attempting to rationalise production and reduce unit costs Vokes sold some old BDR machinery and transferred some good machines to Guildford and Burnley. The sale of the scrap machines by competitive tender brought in £3,000, while the book value of the good machines was £75,000. A sum of £78,000 in cash was transferred to BDR in payment for these machines, and Vokes invested a further £500,000 in machinery for use in its workshops in support of this programme.

When demand for BDR products declined and working capital was difficult to raise Vokes decided to sell the Bristol factory by competitive tender, for £400,000 as it turned out, and lease back half of it for a period of five years at an annual rental of £16,000. All this seems to reflect prudent management in a difficult situation rather than asset-stripping. By the end of the day the whole operation will have involved a loss of £6.8 million consisting of £5.2 million initial purchase price and £1.6 million closure costs.

I turn now to the issue of training grants. It is true that the Department of Employment advised us that training grants have not been paid for any workers transferred from Bristol. The right hon. Gentleman made the rather sweeping statement—I do not blame him because he was acting on information—that in some way there had been misuse of these grants. If he can return to his correspondents and ask them to supply precise evidence, my Department or the Department of Employment will gladly look into it.

The same is true with investment grant payments. Our investment grant division has said that where some of the assets in question were transferred to Vokes at Burnley the company complied with the Department's requirements and signed the undertaking to which I referred to the effect that the assets would continue to be used in a qualified industrial process. It is certainly the Department's policy not to pay extra grant when assets which have already attracted grant at the standard area rate are transferred to a development area. This is a policy which we inherited from the previous Government.

Mr. Benn

I was not suggesting that there was a difference. May I ask about the disclosure of the amount of money involved in a particular firm? I can see the case for this rule when a firm is trading. When a firm has closed and its books are therefore closed, is there any reason why the Minister should not tell the House how much public money went into it—BDR in this case—in the form of investment grants?

Mr. Grant

It has never been the practice of other administrations so to do. I will apply my mind to that question further and give it some consideration.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Joplin.]

Mr. Grant

I want to assure the House that we have made no change in the practice which has gone on under successive administrations.

This has been a longer debate than some of us had anticipated. I deeply regret the serious misfortunes which have dogged BDR since 1969 after its remarkable history before that, but I support, and all our evidence supports, what was said by my hon. Friend the Member for Bristol, North-West, that they are all due in our judgment to commercial vicissitudes on which it would not be appropriate for me to comment or to seek to apportion blame. I feel it would be much more helpful if my Department were to continue its efforts in co-operation with the Vokes management to ensure that as far as possible the sale of BDR should take place in such a way as to continue employment in the area. To that end, I understand that a number of firms are actively interested in acquiring parts of the business. We are keeping in touch with developments, and we have invited Vokes to take full advantage of our knowledge and experience. We are exploring the possibility of other British firms taking over part or all of BDR's capacity.

We are concerned that as much experience as possible should remain in the United Kingdom. We must be prepared for some attractive offers from overseas competitors for certain sections of the business. The latest position is that six sections of BDR have been sold, subject to contract, and one section remains unsold. I therefore repeat that the full resources of my Department and of the Department of Employment are available to help in this unfortunate situation: but I hope we may all co-operate and be careful that anything we say does not in any way jeopardise the possibility of further sales. I am confident that the unfortunate people in the hon. Gentleman's constituency who have been innocently affected by this state of affairs will very soon be able to be placed in other employement.

Question put and agreed to.

Adjourned accordingly at two minutes past Ten o'clock.