§ Mr. Bryan Gould (Dagenham)
(by private notice) asked the Secretary of State for Trade and Industry if he will refer the proposed purchase of Coles Cranes—a subsidiary of Acrow Ltd., in receivership — by the American firm of Grove Allan —a subsidiary of the Walter Kidde Group—to the Monopolies and Mergers Commission and if he will make a statement.
§ The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alexander Fletcher)
This merger falls to be considered by the Office of Fair Trading under the provision of the Fair Trading Act. The Director General of Fair Trading will advise in due course on whether it appears to qualify for investigation and whether it should be referred to the Monopolies and Mergers Commission. My right hon. Friend will then make his decision in the light of the director general's advice.
§ Mr. Gould
Is the Minister aware of the grave disquiet in Sunderland and elsewhere both at the initial failure of Acrow—which, I suppose, is simply one of the fruits of the so-called recovery that we have enjoyed during the past three years—and at the handling of the receivership subsequently, especially as it affects Coles Granes? Does he not understand that that is increasingly seen as a text book example of what is wrong with British insolvency law and practice?
I am sure that the Minister must understand that there will be considerable anger and concern about any failure to make an immediate reference to the Monopolies and Mergers Commission. Is there not the clearest possible case for such a reference, given that the two companies—Coles and Kidde, or its subsidiary Grove — have something approaching 80 per cent. of the British market? What more is required to justify a reference?
Can the Minister say whether he recognises, as his colleagues at the Ministry of Defence are on record as recognising, the defence implications of allowing this important British manufacturing capacity to pass into foreign hands? Can he confirm that his Department was closely involved with the consortium of unions, management and local authorities that was hoping to buy the firm? Was not his Department prepared to contribute a substantial sum towards that?
In those circumstances, did the Minister or his Department hear from the receiver—and, if so, when—about the American bid and the fact that he proposed to accept it? Will he comment on the receiver's failure to keep the consortium advised, as he had promised to do, so that it had no opportunity of making a counter bid?
§ Mr. Fletcher
I am sure that the hon. Gentleman is aware that the affairs of a company in receivership must be resolved between the receiver, the company and the creditors, and that is what happened. However, the hon. Gentleman is correct to say that representations were made to my colleagues and myself and that the Government proposed to back the original bid by management, in the usual way that aid is given by the Department.
As we understand the position, the bid from Kidde was on, then it was off and the way appeared to be clear for the management buy-out. Then the Kidde bid was on again at short notice at the end of last week, and was accepted 1006 by the receiver—something that he was entitled to do. It is entirely his decision as to which offer he will accept in such circumstances. Referring to the question of a possible reference to the Monopolies and Mergers Commission, I have asked my Department to ask the director general to give us his advice urgently so that the decision can be made as to whether reference will be made to the Monopolies and Mergers Commission.
§ Mr. Bob Clay (Sunderland, North)
Is the Minister aware that well over 1,000 workers have been treated in the most shameful way by the receiver? It may be that his behaviour has been legal—lawyers will determine that —but does the Minister agree that it is disgraceful for the receiver to have agreed a contract with the management-work force consortium last Tuesday, to sell the company to an American bidder on the Thursday morning, and not even to have told the management consortium until Friday night what he had done? As far as we know, he did not even tell the Department until well after he had done it.
The Minister mentioned major creditors. Barclays Bank, a major creditor, was not informed by the receiver—on his own admission. Is not this a most extraordinary way for the receiver to behave? Given the consternation that this is causing in Sunderland, the complete lack of knowledge of the Americans' intentions, and the need for the company to carry on trading, because it is viable despite the overall failure of Acrow, should not the Minister be making a decision? The new company would have 83 per cent. of the market. The Kidde corporation has been trying to sell its own subsidiary for two years. Therefore, does he not think that it is strange that it is now trying to buy another subsidiary? In those circumstances, does he not think that he should refer the matter to the Monopolies and Mergers Commission immediately?
§ Mr. Fletcher
As I said, in the first instance, it is a matter for the director general to advise my right hon. Friend as to whether a reference should be made. I hope that anyone, including hon. Members, who has any evidence on this matter which he wishes to present to the director general will do so. Hon. Members may have been made aware of a statement made jointly by Grove and by the receiver, or on their behalf, which says that it is currently envisaged that the majority of Coles' former employees based in Sunderland who were made redundant by the receiver on 23 October will be offered new employment in the future.
§ Mr. Gordon A. T. Bagier (Sunderland, South)
Does the Minister agree that it would be surprising if the prospective buyer did not make such a statement? Is the hon. Gentleman aware that he seems to have displayed a complacent attitude today? A statement is required from him either today or tomorrow on whether this matter will be referred to the Monopolies and Mergers Commission. In those circumstances, Grove may well decide that it does not want to be put under such an examination.
Does the Minister agree that, even if, as my hon. Friend the Member for Sunderland, North (Mr. Clay) said, the receiver's action has been legal, it has also been tremendously unethical? The Minister of State telexed Sunderland to the effect that he would keep in close touch with the receiver on the position. Was he advised that the receiver was selling over his head? Did he have any advance notice of that? In the telex he also said that he was aware of the regional employment position in Sunderland, but is he 1007 aware that there is a strong feeling that, whatever Grove and the Kidde corporation may have said initially, the result will be to the long-term disadvantage of the Sunderland work force? Will he take action today? Will he advise himself——
§ Mr. Bagier
Very well, Mr. Speaker. Will the Minister at least ask his right hon. Friend the Minister of State and his right hon. Friend the Minister of State for Defence Procurement to meet my hon. Friend the Member for Sunderland, North (Mr. Clay) and myself today or tomorrow at the latest?
§ Mr. Fletcher
I never refuse to meet hon. Members on such matters. I appreciate the strength of feeling in the north-east about the whole matter. Before any decision can be made about referring the matter to the Monopolies and Mergers Commission, my right hon. Friend is obliged under the terms of the Fair Trading Act 1973 to receive the advice of the Director General of Fair Trading. I have asked the director general to give us the advice urgently.
§ Mr. Paddy Ashdown (Yeovil)
In the light of the Government's much trumpeted policies in favour of management buy-outs and workers' ownership, and bearing in mind that 1,000 of the work force are in favour of the management buy-out option and that that option would result in 24 per cent. of the firm being in the hands of the work force, will the Minister say unequivocally that both he and his Government would prefer to see the management buy-out option taken rather than have the firm bought out by the Kidde corporation?
§ Mr. Fletcher
I am not in a position to say that. I did not consider the bids that were made or their detailed terms or the amount of working capital available to go into the business to keep it going as a viable concern. Those were all matters that the receiver had to judge. The decision was his. There is no point in me or anyone else in the House second-guessing decisions the details of which we know nothing or very little about.
§ Mr. Andrew F. Bennett (Denton and Reddish)
Does the Minister accept that there is great bitterness in 1008 Stockport that the banks were able to call the receiver into the group despite its good investment record and good labour relations? Does he also accept that the work force in Stockport at Coles Cranes would like to be treated in the same way as the work force at Thames Storey who were able to participate in a management buy-out? Can the Minister say anything about the possibility of retaining any jobs in Stockport as a result of this possible takeover and the possibility of a close-down by the American company?
§ Mr. Fletcher
As I have said already, there is a commitment by the new owners that the majority of those made redundant on 23 October will be employed under the new arrangements. That is as much as I can say about the deal at this stage.
§ Mr. Harry Cowans (Tyne Bridge)
The Minister took the precaution of reading out the joint statement by the receiver and the American firm. Will he assure not only the House but the work force that the jobs offered will be in Sunderland and not in Minnesota?
§ Mr. Fletcher
Judging from the words in the statement, I can give the hon. Gentleman that assurance.
§ Mr. Roland Boyes (Houghton and Washington)
Is the Minister aware that a number of his colleagues have been to the north-east and when we have complained to them about the high level of unemployment there they have replied again and again, "Why not help yourselves?" Here is a group of managers and workers in the area who are prepared to help themselves and save a number of jobs. If they owned the company, we could say that there was a long-term commitment. We do not know, of course; we have only evidence of other multinationals about their commitment to the north-east. But will the Minister comment on why he has not intervened to help the managers and workers in this case to help themselves?
§ Mr. Fletcher
Yes, I will. The position is contrary to what the hon. Gentleman suggests. My Department offered financial assistance for the management buy-out. The point is that the decision about which bid to accept was a matter for the receiver. At the end of the day he accepted a higher bid from Grove.