HC Deb 23 July 1980 vol 989 cc725-37

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

2.15 am
Mr. Tom McNally (Stockport, South)

I am grateful to you, Mr. Deputy Speaker, and to the Minister, for staying so late, following such an important debate on the affairs of Northern Ireland. The lateness of the hour does not dim my anger and indignation at the matter that I wish to raise.

I am sure that many hon. Members when reading the Order Paper thought that I was merely raising yet another example of a factory closure, one of a litany that has littered the Order Paper over the past 12 or 15 months. Even if that were so, I should make no apology for doing so.

I shall raise a case that goes far beyond the fate of a single firm and the future of about 150 men and their families. We on this side of the House are often accused by our opponents of objecting to a form of capitalism that no longer exists, of fighting will-o'-the-wisps and creating capitalist bogeymen to frighten our supporters. Boltons Superheater and Pipe Works Limited did until a few weeks ago exist, and the behaviour of those entrusted with its future indicates that Parliament still needs to be vigilant about the rights of workers and taxpayers when the market forces, so beloved of the Secretary of State for Industry, are at work.

Before going into the details of the case it might be appropriate to state the general economic and industrial background. Stockport is a high-skill, high technology industrial town. It long ago made the adjustment to industries of the future which Ministers claim is the aim of their policy for the economy as a whole. Yet on Tuesday the roll call of the un- employed in Stockport reached over 5,500. The local district secretary of the AUEW, Mr. Bernard Regan, told me yesterday that redundancy notices were coming through his door like confetti. He estimated that in the past year in Stockport about 2,200 redundancies have been declared in the engineering industry alone.

The Minister might like to note some of the names of more than a score of companies that have declared redundancies in that period in Stockport. These include Mirlees Blackstone Ltd., diesel engineers, Simon Container Machinery Ltd., Ferodo Ltd., Fairey Engineering, Abbey Electronics and Mauldeth Engineering.

I hope that the Minister is getting the flavour of what is happening in Stockport and other centres of high skill. These are not firms of the past but firms of the future. Today I am informed that the James Mills steelworks, part of the private section, is in trouble. This is not happening because of some act of God. Time after time surveys have shown the culprits: high rates of interest, a ludicrously high exchange rate and a high rate of inflation. Each of those pressures on British industry is the result of the Government's narrow, dogmatic monetarist policy.

The cutback affects not only production but—and more seriously for the future—training and retraining programmes, and the number of apprenticeships on offer. Such facts are known throughout the North-West. Every survey from the North-West indicates that this bankers' Government are squeezing the lifeblood out of our industry. One respected North-West manufacturer, of international repute, told me that since 1978, and as a result of the Government's policies, his loss of competitiveness against his main Continental rivals was of the order of 37 per cent. Another complained of losing 30 per cent. of his trade to the Japanese in Third world markets. That is a direct result of Government policy.

Those are the industrial realities against which skilled men are operating. It is against that background of squeeze and uncertainty that, earlier this year, the workers of Boltons Superheaters and Pipe Works came to face the true nature of capitalism in the 1980s. Bolton's is a long-established, century-old Stockport firm. Some two and a half years ago. it became part of the Yorkshire engineering group valled Fairbairn Lawson. Fair-bairn Lawson later had to face severe financial difficulties. However, no one has ever claimed that Bolton's was anything but a going concern. I understand that in April this year, there was a firm order book and the company was returning a profit of about 7 per cent. on working capital. That is no mean achievement in present circumstances. Nevertheless, because of the problems of the parent group, a receiver was called in on 1 May. In this case, it was a Mr. Mackey, of Ernst and Whinney, Chiswell Street, London. He was appointed by Barclays Bank. That brought Mr. Mackey's representative, Mr. Yeardsley, on to the scene. I have not had the pleasure of meeting Mr. Yeardsley. I am told, however, that on his first visit to the works, he arrived in an Alfa Romeo. On his second visit, he arrived in a "V" registration yellow Rolls-Royce. Perhaps the Minister thinks that that is of no consequence. To the men facing job losses, it was clear that, although this Government may not need skilled engineers, receivers are doing very nicely indeed.

From a variety of extremely reliable and honourable sources, I am told that from the beginning, the receiver's representative acted in an extremely highhanded, not to say dictatorial, way. A number of workers, including the works convener were dismissed immediately and reinstated only after intervention by the engineering union district secretary and a representative of the Engineering Employers Federation. It was made clear that, although the convener would be reinstated, the redundancies stood and that more would be required.

While the members of the work force were being educated in that aspect of industrial relations, the receiver carried out another little coup, which was scarcely designed to win the hearts and minds of the men for whom he was now responsible. Bolton's had had a small works pension fund with the Colonial and Mutual, which was in the process of being wound up. The insurance company had paid a cheque to Bolton's en bloc, and Bolton's had issued cheques to the pension fund members covering periods of service of between four and 35 years. Our ever-assiduous receiver stopped those cheques. When they bounced, the fund members were told—in the words of one long-standing member of the pension fund—to take their place in the queue. Bouncing pension-fund cheques, instant dismissals, and a mood of general high-handedness caused a deputation from the work force to see me. The deputation presented the rather sad petition that I now show the Minister. It is the genuine result of shopfloor feeling. The petition said that the workers were worried and disturbed about the recent happenings in our factory". The petition asked me to investigate and rectify any abuses that may have occurred. As a result of the petition I wrote to the Secretary of State for Employment on 14 May. The key part of my letter stated: I would be grateful if you could look at the present situation at Boltons Superheater and let me have your comments as to how the Receiver is carrying out his responsibilities. In his reply the Under-Secretary of State made a statement which caused me anxiety. He said: The conduct of a receivership is not under the control of any Government Department. However, he gave me an assurance which I accepted. He said: I understand that the Receiver is aiming to dispose of the Company as a going concern and that although some redundancies have been necessary, it is hoped to be able to save the rest of the jobs. I do not imply that the Minister or his colleagues have tried to mislead me or my constituents. He must appreciate my anger and the bitterness of the work force when I tell him that last night four workers at Boltons were "keeping the place tidy" for the asset strippers to move in. Goodwill, order books and machinery have been sold. The work force has been dismissed and told in the most blatant way that they are the responsibility of the Government.

The managing director, Mr. E. G. Gray, was dismissed at a moment's notice. He was asked to hand in the keys of his company car. As one worker graphically put it, he was "sent home on a bus". As a result his farewell was by letter to the local Stockport Express. A few quotes will give the flavour. He said: During the past few years it has been considered unethical and socially unacceptable for companies to be purchased for asset stripping. Admittedly, a bank has the right to recover its debts but when it is making embarrassingly huge profits, is it right when the cost is to throw 150 people out of work? For myself, being given officially one hour's notice of termination, I had little opportunity to thank my colleagues and wish them every success in their efforts to find new jobs. I would like to do so through your columns. Thus died Boltons Superheater. It was not a big or important company, but it had a loyal work force and a caring management. I wonder whether the Minister considers it to be death by natural causes or a case of murder. Was any real effort made to save this going concern? I understand that at least two offers were made but no effort was made to maintain the morale of management or men—quite the reverse. What was the basis of the assurances given to me by the Under-Secretary of State?

Given an irresponsible receiver, does the Minister think that sufficient protection is provided by section 99 of the Employment Protection Act 1975? When a firm is literally disappearing under one's feet, an appeal to an industrial tribunal is slow and cumbersome. The receiver is in a position to make offers which the workers cannot refuse, in true Mafia style. Is not a more sensitive and immediate protection required?

Is the Minister satisfied that receivers are not under the control of any Government Department? Is he convinced that when a receiver decides to wind up and asset-strip, there is sufficient legal protection to enforce observance of agreements and procedures with the trade unions and on behalf of employers' associations?

Finally, in terms of his ministerial responsibility, is the Minister satisfied that the taxpayer is sufficiently protected from receivers who seek to create circumstances where severance pay becomes a taxpayers' responsibility under the 1978 Act? I note the Minister's answer to my question yesterday. Frankly, it does not match the facts or attitude taken in this case. Does not the Minister agree that it would deter the asset stripper if workers had a claim on a proportion of the assets realised as a first priority?

I have one final point. I understand that Mr. Gray, the managing director who I have referred to, has written to Barclays Bank pointing out that the pension fund assets were only in the company account by an accident of timing, and that to treat the members of that pension fund as unsecured creditors is unworthy and immoral. I endorse that view.

I emphasise that what I have described is not a nineteenth century fantasy but a 1980s fact. I have quoted before to this House the warning of Sir Winston Churchill to an earlier Government, more than 50 years ago, not to make finance too proud or industry too low, but that is exactly what is happening in the industrial North-West. I feel bitter that assurances were not kept. This case reveals weaknesses in the law which should be strengthened. Most of all, it brings home to me and many of my hon. Friends that the old crude, insensitive capitalism is still there and that this Government are by their policies creating the climate in which it can flourish. Fear, uncertainty and high unemployment can, so the theory goes, bring even the most skilled and well-organised workers into line. If that is the theory on which the Government are working, I assure the Minister and his colleagues that they have misjudged the British worker in this as in so much else. The British people and British workers are judging their policies for what they are. The Government are giving the stamp of approval to the law of the jungle.

2.31 am
The Under-Secretary of State for Employment (Mr. James Lester)

In spite of the lateness of the hour, I understand how seriously the hon. Member for Stockport, South (Mr. McNally) feels. Adjournment debates are read widely. I shall not follow the hon. Gentleman down the line of mafias and murders.

It may be helpful if I begin by giving the hon. Gentleman our background information about the company and the protection that exists for the workers. As the hon. Gentleman rightly says, Boltons Superheater and Pipe Works Limited is one of a group of companies, and is based at Adswood Road, Stockport, Cheshire. The company employs pipework engineers and manufactures complete steam raising plant, pipe work for power and industry plant, superheaters for all types of boilers and other allied products. Its business was carried out in two divisions—pipe work and valve manufacture. The total work force numbered 152.

The company became insolvent, and on 22 April 1980 a receiver was appointed by one of the debenture holders.

Mr. McNally

Is the Minister referring to the Stockport company or the parent company? That is relevant to the workers concerned.

Mr. Lester

As far as, I am aware, I am referring to the Stockport company. The receiver was Mr. Mackey from the firm of Ernst and Whinney, 57 Chiswell Street, London E.C.I. Almost immediately the work force and unions were told of the situation and warned that redundancies might have to occur. Within the first two weeks 26 employees were made redundant. During the following months the remaining work force was made redundant, apart from eight employees who are being retained on a caretaker basis. Meanwhile the business continued, while the receiver made strenuous efforts to sell the company as a going concern. Several enterprises showed interest, but only one made a definite offer. Unfortunately, the offer was far below that which the receiver could reasonably consider and it became necessary to sell the pipe work division and the valve division separately.

The receiver succeeded in finding purchasers on this basis. The pipe work division was sold on 26 June and at least 20 of the employees were offered employment by the new owners. The valve division was sold on 7 July 1980 and about 15 employees were offered employment by the new owners. Of the remaining employees, 80 have registered for employment at the local jobcentre. The buildings and ground not already bought are already on the market' and an auction of the remaining plant and machinery is to take place on 28 August.

There is a statutory requirement to consult the trade unions on proposed redundancies. Under section 99 of the Employment Protection Act 1975 employers are required to hold consultations on impending redundancies with the recognised union for the category of workers to be made redundant. That applies even if only one person is involved. The consultation must be carried out at the earliest opportunity, but in any event 30 days before the first dismissal is to take place, when 10 to 99 workers are to be made redundant at one establishment over a period of 30 days or less, and 90 days before the first dismissal is to take place when 100 or more are to be made redundant at one establishment over a period of 90 days or less.

The employer is required to give the union certain information, for example, a description of the employees to be made redundant, the method of selection, and so on, and to consider and reply to any representations made by the union to reduce the numbers involved or to mitigate the effects of the redundancy. If there are special circumstances where it is not reasonably practicable for the employer to meet those requirements fully, he must do all that he reasonably can to meet them.

Section 100 of the Act requires employers to notify the Secretary of State of impending redundancies involving 10 or more within the time scales that I have mentioned. Employers who do not comply with the notification can be penalised either by the Secretary of State withholding up to 10 per cent. of any redundancy rebate due or, on conviction by a magistrates' court, by a fine not exceeding £ 400.

It is the employer, in this instance a limited company, who must comply with the provisions of sections 99 and 100. The fact that, in the case of Boltons it was the receiver who initiated the dismissals does not alter that position: the company, on whose behalf the receiver acts, will remain liable to comply with the handling of redundancy provisions.

In this case, my right hon. Friend the Secretary of State received notification from the company on 30 April of 152 redundancies. That notification did not comply with the requirements under section 100 of the 1975 Act. In an insolvency it is often necessary for an employer to act with great haste, and it is not possible for the full advance notification to be given to my Department. In the circumstances of this case, which was considered by my Department, it was felt inappropriate to impose any penalty by way of reduction of rebate.

I know from correspondence with the hon. Member that what he is concerned about is the manner in which he alleges that the redundancies took place, but I understand that the receiver held consultations with the unions on the selection of the employees to be made redundant and the phasing of the redundancies. I gather that there was some disagreement over this and that the unions walked out of a meeting and picketed the premises.

Mr. McNally

The convener was the first.

Mr. Lester

He was reinstated after representations. However, the differences were resolved, and I understand that there were no further complaints from the unions. I am surprised that the hon. Member does not appear to have raised his complaints with the receiver or the company direct, since they would have been happy to have kept him informed of all developments and the steps being taken to minimise the effects of the redundancies.

Mr. McNally

The law states that this is a responsibility of the company, the receiver and the trade unions—not the Member. I had assurances from the Department of Employment and the receiver gave assurances to the trade unions. It is not for the local Member to become an amateur industrial relations officer. There must be an element of trust in these matters and I am angry because that trust has been betrayed.

Mr. Lester

Many of us who have been hon. Members for some time do not necessarily work by those rules. If a company is affected in our constituencies, we get involved, whether that is our right or not.

We have sympathy for a company such as this, the employees of which have been made redundant. As the hon. Gentleman said, the company has a history and a commitment. However, the conduct of receivership is not under the control of any Government Department. The procedure if one has complaints over receivership is to go to the head receiver. We have no knowledge of the unions wanting to make a complaint, and they have not made a complaint to the industrial tribunal, which they are entitled to do when they are not satisfied that the company has done all that it could do to meet its obligations on consultations.

If they want to do that and the union's complaint is upheld, the tribunal can make a protective award requiring the employer to pay the employees involved their normal week's pay for a specified period. This is the main safeguard against any high-handed actions on the part of an employer. Where a tribunal makes a protective award and the employer is unable to pay it by reason of insolvency, payment can be made, subject to statutory limits, out of the redundancy fund. I am not aware of any complaint having been brought by the relevant unions in this case.

Individual employees who are made redundant have other rights to safeguard their position. It might be helpful if I sketched them out. Even though a receiver has been appointed, the employees retain all the rights to which they are entitled under the Employment Protection (Consolidation) Act 1978. These include the right to notice of dismissal or pay in lieu of notice. If the employer is insolvent, notice pay may be paid by my Department, against subject to statutory limits, out of the redundancy fund. Similarly, arrears of pay and holiday pay owed by an insolvent employer may be paid out of the fund.

If there is any question of unfair selection for redundancy—and this would arise only if some employees were made redundant and not others—the individuals concerned would have the right to make a complaint to an industrial tribunal of unfair dismissal provided they had 52 weeks' service and that the complaint was received within three months of the dismissal. It would be for the tribunal to judge whether the dismissal was fair in all the circumstances and to consider whether any depature from customary or agreed procedures are justified.

Individual employees who are made redundant are also, of course, entitled to redundancy payments from their employers, depending on their age and length of service. If the company is insolvent, then, once again, payments can be made direct from the redundancy fund. In this case, the first agreed claims were submitted to my Department on 9 May. Claims have been made for holiday and notice pay and also for redundancy payments. These are being dealt with in the usual way and I am not aware of any undue delay in implementing the procedure for payment. Claims in respect of payments in lieu of notice cannot be processed until the completion of the relevant notice period, but I understand that more than 100 claims for holiday pay have so far been met.

It would not be proper for me to comment on the claims of individual employees. Nor is it my function to pass any judgment on the handling of certain redundancies, particularly when there is provision for an industrial tribunal to look into these matters. I shall of course be happy to give whatever assistance is in my power if the hon. Member wishes to write to me again on this matter, particularly on the question of the pension fund about which I have not heard previously.

On the wider question of unemployment in Stockport, I fully appreciate the hon. Gentleman's concern about this further job loss in his constituency, which is already suffering from severe unemployment. The Government are very much aware of the financial and other problems facing firms at the present time. There is no doubt that the combination of a high exchange rate and continuing inflation makes it difficult for United Kingdom companies to compete in overseas markets, and high interest rates clearly add to these problems. The Government have never pretended that busnesses do not face a difficult period in the interval between the implementation of our counter inflation policies and their effects. As we bring about economies in Government spending and as our fiscal policies take effect, the financial pressures on firms will ease.

If there is any question of unfair selection of the cutback in apprenticeships. He may not have heard on Tuesday that through our training for skills programme, designed to deal with the whole question of apprenticeships in times of recession when companies unfortunately have cut back on the key factor of training the next generation of skilled people, we are supporting in the current year 23,500 apprenticeships, a similar figure to previous years. Because of the cutback and the fact that there has not been the intake by industry that should have occurred, the Government are financing a further 1,500 apprenticeships, announced on Tuesday, bringing the total to 25,000. These are targeted in areas, such as Stockport, of high unemployment where they will do the most good.

In spite of the gloomy picture that the hon. Gentleman has painted, all is not gloom and despair, as my colleagues have found when visiting the North-West. Expansions are taking place. New projects are being set up and new jobs are being created, although not at as fast a rate as we would like. Since this Government came to office, assistance worth £ 703,000 has been offered under section 7 of the Industry Act for 11 projects in Stockport involving a total estimated investment of some £ 19.5 million. Nearly 600 jobs were associated with these projects.

During the same period £ 226.000 was offered under section 8 of the Act for a further 28 projects involving a total estimated investment of about £ 906,000. I understand that work has now started on the Greyhound industrial estate, a development which, according to one press report, will eventually create up to 5,000 new jobs.

Nevertheless, I do not underestimate the severe unemployment problems facing the Stockport area. I am only too well aware of the effects of unemployment on those concerned and on their families. But the Government believe that it is vital to hold to our course, for inflation is the chief enemy of business growth and holds back the creation of new jobs which in the end will bring down unemployment in Stockport and elsewhere in the country.

Question put and agreed to.

Adjourned accordingly at fifteen minutes to Three o'clock am.