HC Deb 14 December 1979 vol 975 cc1825-38

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

4.9 pm

Mr. Eric Ogden (Liverpool, West Derby)

I ask the Minister and the House to move their attention from the problems of small businesses in general to those of a much larger concern in particular, that of Meccano.

I must first thank you, Mr. Deputy Speaker, for the opportunity to raise in this brief debate some of the problems, fears and questions which have been asked but not answered in the two weeks since the managers of Airfix Industries announced, in an action of almost incredible ineptitude and bad judgment, the closure at less than one hour's notice of the Meccano factory at Binns Road, Liverpool.

You know, Mr. Deputy Speaker, for you must listen to more Adjournment debates than any hon. Member, that these debates are a right and a privilege by which a Member of Parliament may raise in the High Court of Parliament the needs and the hopes of any of his constituents and seek redress of grievance, and that he may be answered by one or other of Her Majesty's Ministers. You also know that usually an Adjournment debate is principally between one hon. Member and one Minister.

I have offered part of my time in this debate to the Conservative Members of Parliament for the Liverpool constituencies of Wavertree (Mr. Steen) and Garston (Mr. Thornton). They have not been able to take up that offer, and it is for them to explain to their constituents, especially those in the Meccano factory, why they are not able to be here. I offered part of my time to the Liberal Member for Liverpool, Edge Hill (Mr. Alton). I am grateful that he agreed to share part of my time in this debate.

With your approval, Mr. Deputy Speaker, we shall share perhaps 10 minutes between us to make our points to the Minister, let him have his full 15 minutes to reply, and then, by leave of the House, come back to make our comments on his reply.

My offer was an example of the way in which Liverpool Members of Parliament—Labour, Conservative and Liberal—have worked on parallel lines without losing their own political or individual identities in a common aim to secure continuing employment of good workers from Liverpool and many parts of Merseyside in the production of world-famous toys and products at Meccano, Binns Road.

One or two voices in Liverpool have been raised in criticism of this all-party approach. My answer is that anything I have done has been after full discussion with the shop stewards, union officers and the workers of Meccano and with their full knowledge, consent, agreement and support. What is good enough for those inside the factory ought to be good enough for my critics outside.

The Meccano factory at Binns Road, Liverpool, is in the Edge Hill constituency, and the hon. Member for Edge Hill has shown a very real concern and made every effort to help in every way that he can. He and I differ on many matters. That is probably known in this House and certainly it is known in Liverpool. But we have worked closely together in the past two weeks and, although the hon. Gentleman did not involve Labour Members in the discussions with the Airfix managers in the early days of the present dispute, he has involved us in his deputation to the Under-Secretary of State for Industry and in his other actions in support of continuing employment at the Binns Road factory. The hon. Gentleman can speak for himself, and in most of the comments that he proposes to make he can speak for me as well. I hope that the Minister will have the good sense to listen carefully to him.

My own involvement with the workers and management of Meccano goes back over many years. My parliamentary agent happens to work there, which is a great advantage both for the company and for me. Many of my constituents are there. But my real involvement was particularly close during the period between 1974 to 1979 when my late colleague Sir Arthur Irvine, the former Member for Edge Hill, was at times unwell and when I took on some of his duties and held discussions with the management of Meccano and the Department of Employment and secured massive financial help for the company in terms of regional employment subsidies, regional grants and regional aid of all kinds—taxpayers'money provided on the basis of reorganisation but also on the basis of a plan for continuing and viable production.

As a consequence, my first question to the Minister seeks to discover how much Government aid has gone to Airfix Industries, how much Government aid has gone direct to Meccano over the past five years, and what happened to the viability plans of 1972, 1973 and 1974.

It is not my intention to take up time in this debate telling the Minister what he knows already, or ought to know. We expect that he will have been well briefed by the Department of Employment and by the Department of Health and Social Security. But will he say what notice, if any, was given to the Department of Employment officers in Liverpool and to the North-West regional officers of the Department of Employment of the company's decision to issue dismissal notices from 4 pm on Friday 30 November and to close the factory doors at 5 pm the same day?

I was informed by friends at the factory of this unique new initiative in good industrial relations at 20 minutes past four the same day by telephone. I telephoned Airfix Industries in London immediately and, although I could not speak to Mr. Ralph Ehrman, and perhaps for good reasons he could not telephone me back straight away, to his credit he contacted me before 5 o'clock. I am grateful that he did.

As the Minister will know, Airfix is very much a one-man managed company, or, perhaps in tribute to Mr. Sinnaglia, a two-man managed company. It is easy but unwise to depict Ralph Ehrman as a sort of unthinking villain. He may be hard and determined. But he told me that he accepted that the closure was being done in a harsh manner. He said that his company had no choice. He told me specifically that his company would honour all its commitments to workers at the Meccano factory with regard to wages, redundancy payments. pensions and in every other way. That was his commitment to me directly at the time the factory closure was being instituted. But that commitment does not seem to have been passed down the line to the local managers at Meccano.

I should like the Minister to say what consultations the Department of Employment has had with Airfix managers since 1 December. To what are the workers entitled? What is the Department of Employment doing to ensure that workers' rights in regard to wages, redundancies, pensions and all other matters are being carried through and obligations honoured?

The Department of Health and Social Security is also involved. When the Minister met the deputation on 12 December, we raised with him the need to help workers' families who were in need because wages were being paid only in part. Workers had no other means. In one case, there had been an offer of 20p subsistence allowance from the local office of the DHSS. We suggested that in a unique situation the DHSS could, and should, provide temporary help while the situation was clarified. Those who were helped could be asked to agree to repay if it was later proved to have been other than money to which they were entitled. Our call was for temporary aid on a temporary basis.

The same day, the Minister received a letter from the Under-Secretary of State for Health and Social Security—a Merseyside Member—which he was courteous enough to pass on to Merseyside Members involved. The letter stated that the DHSS had been told by the Department of Employment that The Department of Employment have accepted that the employer has no intention of reopening the factory and that the men's employment therefore has been terminated". That also meant that the women's employment there had been terminated. The Department of Employment wasted no time in making the wrong decision for the wrong reason. The DHSS has also accepted that decision—an equally wrong decision, in my opinion, equally at the wrong time.

When all these decisions were being taken in the Department of Employment and in the Department of Health and Social Security, where was the Under-Secretary of State for Industry? Where were the two Ministers of State? Where was the Secretary of State? Where were they when Government decisions and Government Departments were accepting that the factory was closed? The Under-Secretary gave no indicaton that he or his officers in that Department, at that date, had accepted that the factory had closed and would stay closed.

The deputation met the Under-Secretary at noon on Wednesday 12 December. He listened with great care and attention. He told us that he had not met Airfix management or asked to meet them up to that date—that is, from 1 to 12 December. That was an honest but, frankly, amazing admission. He promised to seek such a meeting. Has he done so? With what result? He promised to investigate ways in which good customers of Meccano could get the goods they needed out of the factory. If this meant paying a third party to hold the goods while the legal position was clarified, that would have been helpful. What has the Minister been able to do?

We asked the Minister to request Airfix managers to hold off the pressures they were putting on the workers in the factory. This involved disconnection of telephones and the threat of disconnection of gas and electricity. That would be dangerous in the factory. What has the Minister been able to do?

I discovered only today that my letters from this place, on official stationery, addressed to workers in the Meccano factory have been intercepted by Airfix managers and held. They had not been passed on to the workers and had not been passed back to the Post Office. The personal intervention of the head postmaster in Liverpool, Mr. Webb, who has been very helpful, was needed. He contacted Airfix, informing it that it had letters to which it had no right. He asked for their return or that they should be passed on.

Interference with anyone's mail is a serious offence. Interference with the mail passing between a Member of Parliament and his constituency is a very serious offence. The Bar of the House has witnessed these scenes before. Will the Minister suggest to Airfix that it should be more helpful?

The Minister promised to ask the National Enterprise Board and its Mer- seyside board what help it could provide to secure continued production. The Minister was most courteous. He gave no easy answers, but at that time there was no suggestion from anyone on the official side that they accepted the closure of the factory.

We know the Government with whom we have to deal. We are not asking them to change their political beliefs and philosophy, but we want them to use money which would have to go into industry or be spent on unemployment benefits and redundancy pay. We are asking for help with time.

Meccano at Binns Road, Liverpool is a good but antiquated factory. Parts of it should be in a museum and not a modern production plant. It has had a great deal of taxpayers' help over the years. Its products are still in demand and could be in greater demand. The management accepts that the factory has not had great industrial problems and that the workers are responsible.

All British toy makers have had their share of problems, but none has acted like Airfix. The Minister knows the problems and the many proposals put to him. We know and he knows that no Government can answer all the questions or solve all the problems all the time, but he has power to help. How much help will his Government allow him to give?

4.21 pm
Mr. David Alton (Liverpool, Edge Hill)

First, I thank the hon. Member for Liverpool, West Derby (Mr. Ogden) for agreeing to my participation in this debate. I, too, made a request to your Office, Mr. Speaker, for an Adjournment debate and would have been happy to share it, because this matter transcends party politics. It is a matter of great regret on Merseyside that further jobs are likely to be lost.

This is a sordid story. On Friday 30 November it was decided, literally at half an hour's notice, to tell people, some of whom had worked for the firm for 30 or 40 years, that there would be no more work for them and that they need not bother coming in the following day. That was three weeks before Chirstmas, when, psychologically, it would be difficult for people to find alternative work, apart from the fact that little is available.

Immediately afterwards, I contacted the directors of Meccano and met the management there the following morning at 9 o'clock. Following that, I met the board of Airfix on Wednesday 12 December, and again on 14 December. We discussed ways in which something might be salvaged from the wreckage, but I cannot say that the company's attitude was terribly helpful.

The management did a great disservice to the workers at Meccano simply by telling them that they were to be unemployed and without giving them their statutory right of 90 days' notice, which might have acted as a breathing space and undone some of the damage which was to be done by the immediate, coldhearted and callous closure of this company.

Meccano is a household name and a respected brand. Both Meccano and Dinky toys have been manufactured on this site for many years. It would be possible to have a viable concern on the Binns Road site, for someone to take the firm over and make it pay.

There are several problems with which the Minister needs to deal. First, he must answer the questions relating to the breaking of the law. The statutory 90 days' notice was not given. If he had wished, he would have been entitled at that stage to call Airfix into his office. Although I am grateful to the Minister for the speed of the meeting that he arranged with us, I wonder why his Department did not act earlier and immediately demand an explanation from Airfix before it embarked on this course.

Does the Minister intend to take action under the Redundancy Payments Act, under which he can reduce the rebate payable to Airfix Industries and take action through the courts against the company? Secondly, the hon. Member for West Derby mentioned the role of the Department of Employment in all this, so I do not need to dwell on it.

However, I want particularly to draw the Minister's attention to the serious implications for Merseyside of yet another factory closure. Virtually every day another headline in another paper announces more closures. Just two days ago, the Liverpool Daily Post carried the headline Girling shock: 400 jobs may go". On the same day, it had the following story: Knowsley factory boss Brian Hildebrandt…is calling an emergency board meeting at the weekend to discuss closing the Ulapalm Garment Factory on Knowsley Industry Estate". The loss of 180 jobs at the Ford car plant at Halewood was reported as Asian trade declined. There was a report of the loss of 200 jobs at the GEC-English Electric domestic appliances plant on the East Lancashire Road. About 450 jobs—one-third of the staff—will be lost as a result of reorganisation of the Rock-ware glass factory at St. Helens.

So the story goes on. The chances of a general labourer on Merseyside getting a job are 222 to one against—very long odds indeed. There are 86,356 people—11.4 per cent. of the population of Merseyside—out of work. In Liverpool, 41,901 men and 17,570 women are unemployed.

Compared with other parts of the United Kingdom, there are about 25 people on Merseyside chasing every job compared with the figure of 5.8 people for every one job in the United Kingdom as a whole. In Wales 9.7 people chase each vacancy, and in Scotland the figure is 8.4. The unemployment-vacancy ratio more accurately reflects the prospects for employment in an area. It can be seen that there are 25 people chasing every job on Merseyside compared with a figure of six nationally. That demonstrates more eloquently than anything I can say the seriousness of further redundancies at Meccano.

For that reason, the Minister should consult his colleagues in the Department of Industry and examine the possibility of appointing a Minister for Merseyside who might investigate and deal with problems there. I note that grants have been paid to firms like Meccano and in some ways firms have received a blank cheque. In answer to my questions on 10 December, the Minister admitted that a further grant of £787,000 had been offered to Meccano in March 1978 and a certificate of viability was signed in May 1979. For that reason, I hope that the Minister will tell us what changed in the company between the time that the certificate of viability was signed and the time when it was decided to close the company down.

The board of Airfix has shown about as much compassion as a twentieth century Scrooge in its sacking of a dedicated and loyal work force without any consideration for its future welfare. I am sure that the Minister has listened to these points. My time is running out, and I must leave him time to reply. I am grateful that this debate has been possible.

4.27 pm
The Under-Secretary of State for Industry (Mr. David Mitchell)

I am grateful to the hon. Members for Liverpool, West Derby (Mr. Ogden) and Liverpool, Edge Hill (Mr. Alton) for the constructive way in which they have dealt with matters this afternoon. When they brought a delegation from Meccano's work force to see me earlier this week, they were able to give me some advance notice of the matters that they wished to raise today. In return, I hope that some of what I shall say will clarify the present position.

I fully accept that the hon. Member for West Derby, when speaking of the concern felt in Liverpool about the sequence of events and the tragic closure of a factory which adds to unemployment, speaks not only for the Labour Party but for all parties on Merseyside. The hon. Member asked whether I would listen carefully to what was said not only by him but by others. He asked that I should take notice of correspondence that I have received.

I have, of course, listened carefully and I fully share the concern of hon. Members over the loss of 943 jobs in an area where unemployment is already very high. It appears that the company acted in a regrettable manner in not giving the statutory 90 days' notice of closure and not discussing the redundancies with the trade unions as required under the Employment Protection Act.

I met a delegation on Wednesday. This included members of the Meccano work force and trade union representatives as well as hon. Members. I shall be meeting the senior managers of the parent company, Airfix Industries, on Monday 17 December in response to a specific request by hon. Members. My colleagues in the Department of Employment are also discussing the matter with the company.

I understand that Meccano has incurred losses since 1974–running recently at more than £1 million a year. Because of these continuing losses, Airfix announced to the work force on 30 November its intention to close the factory that afternoon. As far as I am aware, the only advance warning given to the Government was on that same afternoon when a director of Airfix informed my hon. Friend the Minister of State that the closure was to take place. The Department of Employment apparently received the formal notification of the redundancy from Meccano Ltd. on 3 December. I understand that the Department has made urgent inquiries of the company for a satisfactory explanation of why the company failed to give the statutory 90 days' advance notice of redundancy.

If the company is unable to show that there were acceptable special circumstances and that Meccano did all it could to comply with the Employment Protection Act, there is provision in the legislation for my right hon. Friend the Secretary of State for Employment to impose on the employer a penalty of up to 10 per cent. of the redundancy rebate or a fine of up to £400. But it would be wrong for me to speculate further on this issue while the Department of Employment is looking into the facts.

To complete the legal position, an employer is required under the Act to discuss with recognised trade unions impending redundancies involving 100 or more workers 90 days in advance of the redundancy date. If the union believes that a company has failed to comply with its obligation, its remedy is to complain to an industrial tribunal, which has power to make a protective award to a maximum of 90 days' pay. I understand that the Airfix management has now offered the work force 90 days' pay in lieu of notice but that this offer was rejected because of the conditions attached to it. The 90-day provision involves not only pay but consultation on the circumstances and on whether anything can be done to alter or improve them.

I turn to the question of past Government assistance to Meccano. The company has received some £229,000 under section 7 of the Industry Act, £967,000 in temporary employment subsidy and about £708,000 in regional development grants in the last five years. This is a substantial sum, and I can understand hon. Members' concern to know how that money has been used by the company.

As hon. Members are aware, regional development grants are payable automatically for expenditure on qualifying assets within the assisted areas. I am not aware of any suggestion that Meccano has received RDGs to which it was not properly entitled. Moreover, there is provision for the grant to be recovered, in whole or in part, if the assets cease to be used by the company within four years. In the case of Meccano, a proportion of the regional development grant will be recoverable depending on the use to which the grant-aided assets are put.

If the assets are disposed of for use on other quaifying premises, the Department can consider waiving recovery provided the transferee gives an undertaking to comply with the conditions for the remainder of the four-year period. Also, if the use of grant-aided assets is temporarily suspended, recovery action may be deferred in order to determine whether the assets will be brought back into use in the near future. That is important in view of hon. Members' representations.

Meccano Limited applied for the temporary employment subsidy, with the backing of the trade unions, on 4 February 1977 in order to prevent the closure of the Binns Road factory, which was notified to the then Secretary of State for Employment as due to take place during May 1977. The application was approved and the £967,000 was paid in subsidy between 5 March 1977 and 5 August 1978.

The TES scheme was introduced by the previous Government as one of several special measures to assist in combating unemployment. It was a condition of the scheme that payments are made to preserve jobs which are at immediate risk of redundancy, and payments continue only for as long as the jobs remain at risk. It had always been hoped that when payment of the subsidy ended, the company's business would have recovered sufficiently to enable the workers concerned to be retained in employment. However, it has never been a condition of the scheme that jobs must be maintained after subsidy ceases, and where jobs are subsequently lost the question of repayment does not arise.

The Department of Employment is satisfied that TES played an important part in keeping the factory open during this period and that the aims and purposes of the scheme were fulfilled.

Finally, on the question of the section 7 assistance, I have looked into these payments and am fully satisfied that they were properly made.

The company applied to the Department in 1975 for assistance with a project to launch a new range of toys. A grant of £37,000 was offered for this project, of which £19,000 was paid. However no subsequent claims were submitted due to difficulties with the project and a consequent reduction in employment.

In February 1978, Meccano was offered a further grant of £787,500 to modernise the factory and machinery at Binns Road and to preserve 750 out of the 1,150 jobs there. The project, grant payments and job losses were to be phased over four years from 1979 to 1982. The first payment of this grant—£210,000–was made in accordance with the conditions set down in the original offer. Officials not only received a certificate from the company and its accountant that the required amount of capital expenditure had taken place to satisfy the conditions of the most recent offer but also asked for and received an assurance in writing from the chairman of Airfix that the project would proceed in the form envisaged when the offer was made before any payment was made. In the light of this, it would not have been reasonable for the Department to withhold the payment of the grant, especially as hon. Members have informed me that the company was still installing machinery and engaging staff until a week before the closure.

Moreover, I am sure in my own mind that if the company had not received this Government assistance in the past the closure would have happened before now. Thus, this public money has been entirely properly spent in helping the continuation of employment at the factory.

I am conscious that hon. Members have asked me a number of questions, and I am anvious to cover as many of them as I can.

In addition to the general measures which I have outlined, there are a number of specific ways in which the Government can help the redundant employees of Meccano.

All the facilities of the Manpower Services Commission, through its employment services and training services divisions, will be available to those made redundant who are seeking employment or training for a new skill. A wide range of training facilities is available to Meccano workers under the training opportunities scheme through local skill-centres and colleges and almost 1,000 training places in employers establishments. Training in a variety of trades and skills is available.

The hon. Member for Edge Hill asked me about the 90-day requirement, and I think that I have dealt with that. When the deputation came to see me—both hon. Members were present—I was asked about the payment of social security and unemployment benefit. I undertook that I would raise that matter the same day with the Ministers in the Department of Health and Social Security. I did so, and I am glad to be able to say that I got a reply which I personally brought to the letter board for hon. Members. I have despatched copies of that letter to the trade union and to the senior trade union representative involved with the company—

The Question having been proposed after Four o'clock 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-one minutes to Five o'clock.