HC Deb 26 January 1977 vol 924 cc1664-74

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

11.52 p.m.

Mr. Max Madden (Sowerby)

The year 1977 has been dubbed the "year of the beaver". Before it started, many people warned of the lost production resulting from the long Christmas and New Year holiday. Large numbers of people never cease arguing that people would rather be employed than unemployed. All this has a bitter ring to the workers at the Moderna blanket manufacturing plant at Mytholmroyd in my constituency, which was bought by Sona Consultants Ltd. in November last year. Within days of the purchase, Sona declared that Moderna was to close and that its 332 employees were to become redundant. Since November the vast majority of the workers have been given no work, and they are reduced to playing cards, table tennis and dominoes all day long. Orders have not been accepted, work has been put out to sub-contract and raw materials have not been taken in.

Moderna was sold to Sona by Bond Worth Ltd. for an undisclosed sum. It was said by Bond Worth, whose major shareholder is Courtaulds, to be a major loss-maker. Sona is believed to have paid a substantial sum for Moderna.

Since taking over Moderna, Sona has talked about plans to re-equip and reemploy, at some future date, a substantially smaller work force. More recently it has talked about re-employing more employees after re-equipment.

While its plans appear to be uncertain and contradictory, I am advised that Sona has not applied to the Department of Industry, with which it has had two meetings, for any finance to help in re-equipment or reorganisation. Nor has it applied to the Department of Employment for temporary employment subsidy.

Little is known about Sona Consultants Ltd. within the textile industry. The firm was registered in the United Kingdom in 1975, and it has yet to file its first financial accounts. Its three directors—two called Shah and a Mr. Bowe—all live in the same block of flats in Gloucester Road, London, SW7. It has a nominal share capital of £500,000 and has issued just two subscriber shares.

Sona has clear links with Mountain Securities Ltd., which manufactures blankets in Greece, Africa and, it is believed, Italy, and which bid unsuccessfully for Moderna in 1975, when it was bought by Bond Worth. A Mr. S. M. Jaffer, believed to be a former secretary of Sona Consultants, is secretary of Mountain Securities and lives in the same Gloucester Road flats as Messrs. Shah and Bowe. Mr. Bowe is also a director of Pidrap Ltd., which deals in land and property, and a Mr. F. M. Jaffer is secretary of Pidrap Ltd., which was formed in 1975. It has an authorised capital of £100 and has issued £2 of shares. It is known that Sona recently bought another mill in Huddersfield which was in liquidation—Job Beaumont Mills. Its assets are believed to be in the process of disposal.

These matters, coming at a time when there has been mounting concern among workers about Moderna, have obviously given rise to considerable anxiety and bitterness. Such were the suspicion and fears of Moderna workers that over Christmas and the New Year, assisted by their trade union, the National Union of Dyers, Bleachers and Textile Workers, they picketed the gates around the clock for 10 days to ensure that no equipment was removed. Since then the workers, who have set up a Save Moderna Action Committee, have campaigned against the closure, which they believe to be totally unjustified on commercial, economic and social grounds.

The workers' cause has met with considerable local support, including that of the Calderdale District Council and the West Yorkshire County Council, both of which have expressed deep concern at the economic consequences of the closure of Moderna and have highlighted the most serious consequences it would have for efforts being made to try to maintain employment and increase the industrial capacity of the area.

The opposition of Moderna workers to the closure is not only the natural reaction of workers who see their jobs disappearing through forces and events outside their control. It is heightened by their conviction, based on professional judgment and long experience at Moderna, that the firm can be viable and successful within a short period. They certainly believe that it could become profitable within two years, given limited modernisation, competent senior management and a real will to make the undertaking successful and improve its sales performance.

Extremely detailed figures have been presented to Ministers and there has been a series of meetings between the representatives of the action committee, the union and me. I should like to take this opportunity of thanking my right hon. Friends in the Departments of Industry, Employment, Trade and Prices and Consumer Protection for readily agreeing to meet me and others to discuss these mattters.

The case presented by the action committee is extremely impressive. It is well argued and well presented, with sales forecasts and financial figures which give a clear impression that, given support, the firm could continue and prosper.

If Moderna closes, it will be followed by other closures which have been announced in the last fortnight and which would add 400,000 further redundancies to the 332 announced at Moderna. That would have a serious impact on local employment. It is difficult to be precise but it has been estimated that if these closures occur unemployment throughout Calderdale will rise by 1 per cent. and that male unemployment in Hebden Bridge will increase to 22 per cent.

Such redundancies would be a hammer blow in an area which in recent years has been grappling with the problems of the decline in the textile industry. I am glad to see in the Chamber my hon. Friend the Member for Rossendale (Mr. Noble), who has done so much over the last three years to bring these matters to the attention of the House. Such redundancies would be a severe blow also to the urgent efforts being made to regenerate the industrial base in West Yorkshire, and Calderdale in particular, and would do nothing to stem the population decline of recent decades.

Moderna workers see no acceptable reason for their firm to close or their jobs to be lost. In the case which it presented to the Minister, the workers' action committee said: We cannot accept that Sona are intending to close down and reopen the company at a later date. One wonders how a company with an authorised capital of £500,000 can afford to pay a reputed packet for a company having the debts which exist at Moderna. One further wonders how a company in the textile trade, reputed for its competitiveness, can contemplate running an order book down to nil and opening again in the hope of regaining its lost markets. We are convinced this is some financial exercise best known to the architects, whoever they may be. Moderna workers have been striving to persuade the Sona management to change its mind about the closure and the wholesale redundancies, or, if that is impossible, to sell to enable production to be continued and employment to be safeguarded.

I suggest the possibility of the National Enterprise Board coming together with the local authorities at district and/or county level in a joint venture to continue production in a bid to protect employment—a vital rôle of the NEB. I understand that the Calderdale District Council is closely involved in negotiations to acquire the plant of another firm in my constituency which is faced with closure. This presents a good opportunity for the NEB to become involved with the local authority. This is something which should receive the most urgent attention of Ministers to see whether a joint venture approach is possible with Moderna.

Moderna workers fear that if the plant closes in March, when the redundancy notices expire, the firm will never reopen and that high-quality Moderna blankets, known nationally and internationally, will be replaced by imported blankets. They also fear that those blankets will be distributed under the Moderna label nationally and internationally. According to the Trade Descriptions Act 1972, all that is required is, and I quote from a letter from the Department of Prices and Consumer Protection, a conspicuous indication of the country of manufacture to be shown". There are fears that the plant, assets and stocks will be sold and that the gates of Moderna will never reopen, certainly not for manufacturing purposes. The inability of trade union and employees' representatives to obtain information from Sona representatives since they acquired the firm in November last year is particularly worrying. Questions about the future, the present, and the financial position of the company have gone largely unanswered. This has done nothing to allay the great anxieties in the minds of workers.

As the days pass and March draws nearer, Moderna workers and their families are becoming more anxious about the future. They are looking for clear commitments and answers. They are looking to the Government for action, because they believe that their problems today are other workers' problems tomorrow. They realise that only by Government intervention can employment be protected and industrial capacity and manufacturing industry be increased in order to create wealth and prosperity for the nation.

A number of questions have been put to me by the workers and trade union representatives, and I put them to my hon. Friend the Minister. Does he believe that the Government have the power to intervene in this situation? It is an extremely complicated situation made more complex by financial considerations, by matters of United Kingdom company registration and by historical circumstances. Will the Minister spell out in detail the powers that his Department has to intervene? Will he press the National Enterprise Board and the local authorities to get together as a matter of urgency to persuade Sona to sell?

What can the Government do to stop this long-established firm from dying and its workers from increasing the numbers on the unemployment scrap-heap? There are those who think that industrial democracy is a cosy academic subjectan industrial chess game. But Moderna is a living argument for workers being given greater powers to determine their industrial destinies and their own livelihoods. Moderna is what the debate on industrial democracy is all about. The workers see themselves as innocent victims of takeovers, financial manoeuvrings and four managing directors of the firm. When they ask questions they are given the run-around. This is industrial reality in my constituency and, I am sure, in many other constituencies throughout the United Kingdom. We on this side of the House are looking to industrial democracy to reverse the balance of power which has been weighted in favour of owners and managers for too long.

The proposed closure of Moderna poses a threat which I hope the Government will overcome. I hope that the Minister will give some information and reassurance about this worrying situation. I believe that this is not a unique state of affairs. In many areas in the country there will be situations which reflect the extremely limited powers of the Government and of the Department of Industry in particular. There are some who would have us believe that those powers are considerable. My experience, having had extensive discussions with four Government Departments, exposes a weakness in industrial relations from the point of view of intervention.

I look forward to the Minister's reply, which I hope will show an appreciation of the weakness of those powers. I hope that there will be better progress towards securing greater powers to enable us to intervene to protect employment in industry.

12.11 a.m.

The Under-Secretary of State for Industry (Mr. Bob Cryer)

I congratulate my hon. Friend the Member for Sowerby (Mr. Madden) on obtaining this Adjournment debate. He has been an excellent example of a Member who has been diligent in putting forward the interests of the working men and women he represents. He is certainly a textbook example of what a Member can do in rasing important issues that affect his constituency.

My hon. Friend raised a number of questions which I shall attempt to answer. He has voiced his disquiet and serious concern about the decision of the new owners of Moderna (Witney) Ltd. to close the factory at Mytholmroyd temporarily and issue redundancy notices to the whole of the work force. These issues concern Government Departments other than my own, and in responding to the matters which my hon. Friend has put before the House I shall have to refer to the powers available to the Departments of Employment, Trade and Prices and Consumer Protection as well as my own under the relevant legislation.

I need to emphasise at the outset that I or my ministerial colleagues can act only in accordance with the statute, and in respect of a number of the actions which my hon. Friend has proposed we might take the Government have no power to act in the way he wishes. For example, we have no power to require the sale of shares in companies registered in the United Kingdom by United Kingdom citizens.

My hon. Friend referred to other impending closures in his constituency. He has written to my Department about all these and the meeting he has asked for will be held as soon as a date has been agreed and these matters can be gone into in detail at that meeting. In all these cases, unfortunately, it is the textile industry which is affected. The textiles and clothing industries have had a very difficult time in 1974 and 1975 and, although there has been some improvement in certain sectors, the situation is still a difficult one in many respects and, therefore, continues to be given serious attention in my Department and by my colleagues in other Government Departments.

Negotiations are currently in train which, we hope, will strengthen the Multi-fibre Arrangement. The Department of Industry and the Department of Trade are taking a lead in this policy.

I wish to concentrate on the immediate organisation of the firm. Ownership of Moderna changed in 1974 and again at the end of November 1976. It was in financial difficulties when it changed hands in 1974, and the situation became worse in 1975 and 1976. Problems existed in most of the textile industry in 1974 and 1975, but in addition the blanket manufacturing sector has been faced by a major change in the demand for its products due to the growing competition from Continental quilts or duvets. This change in consumer choice, many more consumers preferring Continental quilts to blankets, has hit all blanket manufacturers. In addressing ourselves to the problem of Moderna, it is necessary to recognise that there has been some change in demand. There is, in consequence, increased competition between existing manufacturers for a smaller market and continuing competition from quilts. It follows that a manufacturer of blankets has to be highly efficient to be competitive in these conditions, and the future prospects of Moderna will clearly depend on its competitiveness.

The company, in its letter to the dyers' and bleachers' union of 18th January, said: We feel that the longterm survival of the company is closely associatted with its export success. The company has thus said what it is aiming to do. It also said in the same letter that a fully detailed project which is demonstrably viable is in preparation. Until it has completed it, it is not possible to reach any conclusions, but it seem clear that it is necessary for some changes to take place.

The trade union representatives who visit the Department fully understand that some changes are desirable and have put forward a number of practical ideas to that effect. My hon. Friend mentioned the detailed figures that were presented and the detailed case that was outlined. It was on that basis—a mature, considered survey of the company—that the trade union put forward its claim that the company could be made viable.

There have been consultations with the union concerning redundancies. Under the Employment Protection Act 1975, as my hon. Friend pointed out, there is a 90-day period of notice, and that is being undertaken at the moment. It is worth mentioning in this context that before the Labour Government came into office and before that Act was passed there was no such protective provision for the arbitrary dismissal of employees.

The company notified the Secretary of State for Employment on 14th December 1976 of its intention to make 332 people redundant between 18th March and 17th June 1977. If the unions concerned are not satisfied with the extent or nature of the consultations under Section 99 of the Employment Protection Act, it is open to them to seek the help of the independent Advisory, Conciliation and Arbitration Service and ultimately to complain to an industrial tribunal. There have been meetings between the unions and the company and there has been an exchange of letters. It is for the unions in the light of these exchanges and any future meetings to decide whether or when to call on the help of the ACAS. While that arrangement is in existence, time is moving on and the weeks to the day when the first redundancies will take place are becoming fewer.

A question was raised by my hon. Friend as to whether Moderna was being taken over by foreign interests. There is a clear answer to that. The new owners of Moderna are a company registered in the United Kingdom and the directors of that company are resident in the United Kingdom. The other companies with which the owners of Moderna are said to be associated are also companies registered in the United Kingdom. The Companies Acts do not require directors of companies registered in the United Kingdom to state directorships they may hold in companies not registered in the United Kingdom. The situation as disclosed in the registration details which are kept by the Companies Registration Office therefore do not show that there has been a transfer of control to non-residents.

Concern was expressed by my hon. Friend that a company with an issued capital of two £1 shares can take over a firm, announce its closure and place 300 jobs in the balance. That background can hardly provide reassurance for those who have raised doubts.

My hon. Friend also raised a point about whether the factory might become merely a distribution centre for blankets made elsewhere. The company's letter of 18th January to the National Union of Dyers, Bleachers and Textile Workers clearly implies that the factory at Mytholmroyd is intended to manufacture blankets and associated products. As long as a company undertakes activities in accordance within the objects clause of its memorandum, it satisfies the companies legislation. There are no powers under the Industry Act 1972 over a company which changes its activities within the framework of its memorandum. The Industry Act 1972 operates in relation to any assistance given to a company under the various provisions of that Act. Moderna has not received any assistance from my Department. It has not, up to now, made an application for assistance, but it has expressed an intention to do so.

Once an application has been made and assistance is approved, that assistance is given for the specific purposes set out in the application. If for any reason that intended purpose is changed or abandoned, those terms of the assistance come into operation which may provide for repayment of all or part of the assistance in certain circumstances. These provisions ensure that once assistance is given it is used only for its intended purpose, but they do not give me powers to prevent a company from changing its activities or to end an activity in which it is engaged.

That clearly demonstrates the limited nature of the Government's powers in relation to the private sector, contrary to Opposition claims that the Government have too many powers. I have no doubt that my hon. Friends below the Gangway feel strongly that the Government need more powers and that they have too few in their armoury.

The position of the workers has not been enhanced and their confidence in the future has not been improved by their previous experience when, in January 1976, an announcement was made in not dissimilar circumstances that jobs were safe at two mills. It was said that the company had no intention of closing the remaining Sowerby Bridge, Willow Hall and West End Mills, but on 26th May the Willow Hall and West End Mills were closed. The workers clearly have some justification for looking critically at these matters.

I urge the consultants to carry out as soon as possible their expressed intention of applying to the Department for assistance, bearing in mind the need for the application to be competently made. They have indicated in their letter to the union an intention to manufacture blankets at Mytholmroyd and to start production there.

Mr. Madden

Will my hon. Friend confirm that the intention to which he refers is not the basis on which discussions have taken place with his Departrnent? Our information is that, up to now, discussions have taken place on the basis of a different form of production.

Mr. Cryer

A different form of production has been referred to, but the form mentioned in the letter to the union was not excluded when the consultants met the regional representatives and the terms of assistance were explained.

A workers' co-operative would be in the same position as any other applicant as regards assistance under the provisions of the Industry Act 1972. When I met union officials and representatives of the workers' action committee on 13th January, I handed over to them the guidelines which apply to all applicants alike.

The Question having been proposed after Ten o'clock on Wednesday evening, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty-two minutes past Twelve o'clock.