Takeovers and Mergers (Employment Protection) (Hansard, 10 May 1988)

§ Mr. Doug Hoyle (Warrington, North)

I beg to move, That leave be given to bring in a Bill to require consultation by employers with employees before any takeovers and mergers of companies.

It is appropriate that I should bring this proposed Bill before the House, particularly after the debate on Rowntree. My hon. Friend the Member for Bradford, South (Mr. Cryer) complained that the answers about Rowntree were given by the monkey rather than by the organ grinder. I notice that the Chancellor of the Duchy of Lancaster has departed, although this is a Bill about takeovers and mergers and employees' rights. So the monkey is not even here to listen to what I have to say about my Bill. The employees—there were 500,000 of them last year who were affected by it—will take note of the absence from the Front Bench of the Chancellor of the Duchy of Lancaster on a matter as important as this.

The Government rely solely on competition when considering takeovers and mergers. Competition, when protecting British companies, is like having an igloo in the Sahara. By allowing mergers and takeovers to continue unbridled, the Government have created a casino capitalism which is good for the predator, the speculator and the insider trader—although they came a little unstuck over the Guinness and Distillers takeover—but which is bad for Britain, for the economy, for employment and for the consumer.

For instance, last year, expenditure on takeovers and mergers was £15.4 billion. Takeovers affected 500,000 jobs, yet, there was only £10 billion investment in manufacturing industry in the United Kingdom. That figure was still 10 per cent. below the 1979 figure. Overseas investment, which is close to the Government's heart, represented 17.8 billion. There is something wrong in the portals of the City if people can find money for takeovers, mergers and overseas investment, but cannot find money for investment in this country.

Let us consider some of the mergers that have been contemplated. For example, there was the attempted takeover by BTR, which was a rusty bucket company, and of Pilkington's, one of our few world leaders in flat glass, which spent money on research and development and had its headquarters and plants in the United Kingdom; indeed, it had its headquarters in my region. That takeover was prevented only by the opposition of the employees, the trade unions and the local authorities in that area. There was no support from the Secretary of State for Trade and Industry, who refused to refer it to the Monopolies and Mergers Commission.

There has been another recent takeover attempt in my constituency—the bid by Blue Circle Cement for Birmid Qualcast, which is one of the last of our producers of consumer durables and a world leader in the manufacture of cookers and lawn mowers. That company saw off the foreign competition, yet it could have been taken over by Blue Circle, which has no expertise in the manufacture of consumer durables. That takeover was prevented only by a recount of votes, involving a few thousand votes out of many millions, yet the company could have found itself with management that has no expertise in engineering.

162 We have already discussed this afternoon the attempted takeover of Rowntree by Nestle. A hostile bid could not take place in Switzerland because of the legislation, but the foreign predator may come over here and take over a successful company. It wants to do that because it has not been able to get into Europe. It wants to buy the brand names and close down many of the plants. It is also disgraceful that the bid for Cadbury by General Cinema has not been referred to the Monopolies and Mergers Commission. Once again, one of our leading companies faces the possibility of a foreign takeover.

I am concerned about the employees. The views of shareholders, even absentee shareholders, are taken into account. The views of the "hands off" financial institutions are taken into account, although they may have shares in both companies. However, the views of the company employees are not taken into account, yet those people have built up the company, created the wealth of the company. Their future and that of their families lies with the company. They are sold off with the company like cattle. It is time that that ceased.

That is why I am seeking to introduce this Bill. The employees or the trade unions representing the employees should be consulted at least 30 days before a bid is finalised. In addition, the company making the bid should justify that bid to the employees and the trade unions. The company should state its future plans, its future employment prospects and what will happen to the plants of the company that is being taken over. It must say whether it will remain a United Kingdom company, whether it will carry out research and development in this country and whether it will conduct sales from this country. An application by the employees or the trade unions for a meeting with one or both companies should be granted within 14 days, as of right. If the companies fail to comply with those conditions, the Secretary of State would block the bid.

I am asking for nothing outrageous. This is an extremely modest Bill. Similar conditions already apply in the Netherlands, where employees are consulted in this way before any bid can go ahead. The Government's consideration of such bids, purely on the basis of competition, is far too narrow. What about the consumer interest and the national interest? What about the effect on the manufacturing base of this country? All those criteria should be taken into account before any bid is allowed.

I wish to make this country less of a haven for the predator, the speculator and the insider trader. I want to protect the employee, the consumer and Britain's manufacturing base. Above all, I want the national interest to be taken into account. I have pleasure in presenting the Bill.