HC Deb 14 April 1994 vol 241 cc526-34

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

Mr. Tony Benn (Chesterfield)

On a point of order, Madam Speaker. I put it to you, respectfully, that Members of the House are not in the same position as anyone else if they are engaged in action in their own constituency. We pass Sessional Orders stating that it is a high crime and misdemeanour for anyone to interfere with witnesses to the House.

If I were a Member of Parliament in the position of my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) —with the closure of the pit—I might think it right to go there to talk to the people in the pit about the circumstances for which they have a responsibility. With great respect, Madam Speaker, will you consider carefully the possibility that, in protecting my hon. Friend, you are protecting the people who sent her—[HON. MEMBERS: "Nonsense."] The pit is being closed by the Coal Board, which is threatening the workers with a cut, and my hon. Friend is down, doing a job. I believe that the issue concerns evidence that she might wish to bring to the House next week, in which case my hon. Friend will not only be a Member of Parliament, but someone trying to bring information before the House.

Madam Speaker

We cannot claim privileges for ourselves when we are not involved in the proceedings of Parliament. However much sympathy we might have with the hon. Lady, she has chosen to take the action herself. As Speaker, I cannot take any action at this time in that respect.

We are taking time out of the Adjournment debate, and I call Mr. Jim Cunningham.

Mr. Brian Sedgemore (Hackney, South and Shoreditch)

Further to that point of order, Madam Speaker. Perhaps my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) is not carrying out parliamentary duties in the House, but a Government Department is responsible for British Coal—surely such a Department is responsible to the House and there is a chain of command. If you, Madam Speaker, are saying to hon. Members that a Department can turn a blind eye to an instruction from the chairman of the Coal Board that an hon. Member's life should be put in jeopardy, it seems that Parliament is treating itself with grave contempt.

Madam Speaker

I am not saying anything of the sort. I am saying that all of us—citizens or Members of Parliament—have to obey the law. The hon. Lady has chosen to take the action herself. If a Minister wishes to intervene, it is for him or her to do so. As Speaker of the House, the points of order are for me, and I have answered them correctly under the procedures of the House.

10.17 pm
Mr. Jim Cunningham (Coventry, South-East)

I have asked for the Adjournment debate tonight because I felt I should draw the attention of the House to one or two injustices that the work force of Matrix Churchill believe that they have suffered.

The first injustice, as the work force perceive it, is that, with the exception of their representatives, everyone else associated with the collapse of the company has been allowed to give evidence. The work force and the people in Coventry will not, and they cannot understand how, if the Scott inquiry is to arrive at a just conclusion in relation to events, the participants—the work force—cannot be allowed to give evidence. Towards that end, I have corresponded with the Prime Minister, one of the Ministers in the Department of Trade and Industry and Lord Scott. The issue has gone backwards and forwards, but a decision on it has not been taken.

It is an absolute scandal that people in senior Government positions, who gave the House undertakings that there would be no constraints on the Scott inquiry, have created a situation in which there have been de facto constraints. Thus, there are serious doubts about whether the work force will get justice from the inquiry.

Mr. Geoffrey Robinson (Coventry, North-West)

Having followed all that my hon. Friend has done on behalf of the ex-employees of Matrix Churchill, I congratulate him on initiating this important debate. Can he tell us exactly what reasons have been given for the refusal to receive representations from the ex-workers? This is at the heart of the problem.

Mr. Cunningham

The Prime Minister said that Lord Scott had adequate power and that he could decide whether the work force should give evidence. Lord Scott, on the other hand, claimed that it was a matter for the Government. It will be remembered that I raised this matter at Prime Minister's Question Time.

When we had further correspondence with Lord Scott as a result of the Prime Minister's letter, he was taking a different tack. He said that he did not have adequate resources, but, at the same time, made the point that the inquiry might go in a totally different direction. So there has been a subtle change. I wonder whether there has been a degree of collusion. I say that as I must be perfectly frank in the interests of the individuals concerned.

I do not want to prejudge the outcome of the inquiry, but the British people, and in particular the people of Coventry, are entitled to know exactly what shenanigans have been going on between the Prime Minister, Lord Scott and the Minister.

My hon. Friend the Member for Coventry, North-West (Mr. Robinson) and I, together with other Coventry Members, gave the Department of Trade and Industry a list of 10 points and asked that they be looked at. We have not received a report or any indication of whether those issues are being investigated. To the best of my knowledge, there has been no comment. That, too, makes us wonder exactly what has been happening.

Let us look at the dramatic effects on the ex-employees. Some of them have had difficulty finding jobs; some have had marriage problems; and it is alleged—I have not yet been able to verify the allegation—that one person has committed suicide. The people concerned feel that if they had been allowed to give evidence at the inquiry they could have cleared their name. There is an old saying: "You can take everything in life from me, but if you take my integrity I have nothing." This issue rankles very strongly with the work force.

The other Coventry Members and I have had a series of meetings with the workers. It emerges that they have experienced other problems. For example, some months ago there were difficulties concerning redundancy payments; there are outstanding issues in relation to pension payments; and there are unresolved matters concerning disposal of the company's assets.

In my view, the labour force has not been given satisfactory answers on those matters. That being the case, hon. Members—especially those representing Coventry constituencies—expect some pretty clear answers tonight. The issues must not be fudged. The management is listened to, and Ministers have been allowed to clear their names at the inquiry, but the labour force and its representatives have been denied such an opportunity. That is the reason for some fundamental questions. On what may the labour force be able to shed light that the Government do not want to know about? What does it know that the inquiry does not want to look at? Hon. Members probably realise that the labour force is becoming highly suspicious about the Government's motives in relation to all these issues.

It was suggested that Customs and Excise was responsible, but no doubt it would argue that it was observing the law. How could the work force sue the Customs and Excise? Even if they were to embark on that action, it would cost hundreds of thousands of pounds to get the Customs to court. I cannot think of any precedent when anyone has taken Customs and Excise to court on a major issue and won.

Mr. John Butcher (Coventry, South-West)

I congratulate the hon. Gentleman on his Adjournment debate and thank him for allowing me to intervene—I shall not abuse the opportunity.

I reassure the hon. Gentleman that I share his view that Matrix Churchill's 600 employees have not had their day to make their point. They are the real casualties of this sorry affair, but have not had a chance to make their case.

The hon. Gentleman mentioned the Customs and Excise investigation. He will know, as those who used to work for the company know, that there was a chance that the Iraqi shareholding could have been bought out and that the company had ambitious plans to proceed from that point. Unfortunately, the Customs investigation blew away that opportunity.

Given that Lord Justice Scott can define his own guidelines and was given the broadest possible remit to consider any information he wishes, the House should at the very least ask him to comment in his conclusions on the chain of events that unhappily resulted in the receivers going in and only a small number of Matrix Churchill's former workers being re-employed by the rump of that company, brigaded into another organisation. The hon. Gentleman—I hope that he is my hon. Friend in this matter —hit on a moot point in mentioning that aspect of the sequence of events.

Mr. Cunningham

I much appreciate the comments of the hon. Member for Coventry, South-West (Mr. Butcher) who, together with Labour Members representing Coventry constituencies, attended numerous meetings to reach a resolution to the problems that I outlined.

A claim for compensation of about £6 million against, I believe, the Iraqis has been submitted to the United Nations, but there is no mention of using some of that money to compensate the work force. That, again, is a little bit of chicanery. No one has taken the work force into account or considers the trauma they have suffered, but somebody has submitted a claim and will do very well out of it, thank you very much. Somebody is exploiting the situation.

I share the hope of the hon. Member for Coventry, South-West that Lord Scott will comment and will listen to those who represent Matrix Churchill's former work force. On one or two occasions, I sought a meeting with Lord Scott to clarify the situation regarding the evidence that ex-employees and their representatives could give. He rejected my offer, and I find it fairly strange that he refused to meet a Member of Parliament representing a major city which has been badly affected by the affair.

A further tragedy is that the British machine tool industry has once again been hit and its industrial base further eroded.

I hope that the Minister will give straight answers, and that he will consider instituting a separate inquiry into the issues that I have raised.

10.28 pm
Mr. Robert Ainsworth (Coventry, North-East)

I congratulate my hon. Friend on initiating this Adjournment debate, which is most important to the people of Coventry. There has been much talk for a considerable time about the issues surrounding the Matrix Churchill affair, which is at the centre of high political controversy. What people have not been talking about or been prepared to put on the table is the plight of the 600 employees of Matrix Churchill.

Matrix Churchill, as it has come to be known, was part of the machine tool heritage of Coventry. The employees of that industry—Coventry is a manufacturing city—were, in many ways, the cream with regard to the employment situation there. They were looked up to by their colleagues and comrades. They were top of the pile of manufacturing and blue collar workers. It is a proud tradition in our city which involved not only Coventry Machine Gauge and Tool, which Matrix Churchill originally was, but Alfred Herbert, Whickman and many other companies. Those people are the victims.

When we talk about justice, there are two sides to it. Up to now, people have concentrated—I hope that they continue to do so—on ensuring that justice prevails for the people who were clearly culpable with the collapse of Matrix Churchill. There is no doubt whatever that Ministers knew exactly what that company was doing, and what it was supplying, over a very long time. The Scott inquiry has proved that beyond all doubt.

Yet at a time when that company was in a position to be bought out from Iraqi ownership, and when it had a successful future, the Government allowed a Customs and Excise inquiry to go ahead, which resulted directly in the collapse of that company, in the very real danger of three of its executives going to prison, and in 600 highly skilled people in Coventry losing their jobs. There is no doubt that they have lost not only their jobs, but a lot of money, and have lost on their pension entitlement.

The other side of justice is ensuring that the victims are properly looked after and properly compensated. Two things need to happen as a result of the Scott inquiry. The first is that the perpetrators of that crime—that is what it is —should be rooted out and appropriately punished, removed from office or whatever other action is appropriate. We know who they are. That was clearly found out by the inquiry.

The second requirement is that the Government pick up their responsibilities. Up to now, the Government have said that the redundant work force of Matrix Churchill have received their statutory redundancy entitlement. That is their position and there is nothing else. Those people have lost an awful lot of money. They have suffered frozen pensions.

As my hon. Friend the Member for Coventry, South-East said, a claim is being submitted to the United Nations for compensation from the Iraqi Government. But that will be dealt with along the usual lines of the dissolving of companies. The work force will wind up the bottom of the queue, behind the banks, behind the other people who have a call on that company's assets, and will probably receive nothing out of it. If the Government were clearly culpable in the collapse of that company, they should accept their responsibility and be prepared to compensate the work force. I hope that we get an agreement in principle from the Minister tonight that they will be prepared to do that.

10.34 pm
The Parliamentary Under-Secretary of State for Technology (Mr. Patrick McLoughlin)

First, I acknowledge the deep importance of this matter to the hon. Members for Coventry, South-East (Mr. Cunningham) and for Coventry, North-East (Mr. Ainsworth), as has been shown tonight by their attendance and also that of my hon. Friend the Member for Rugby and Kenilworth (Mr. Pawsey) and the hon. Member for Warwickshire, North (Mr. O'Brien), all of whom have bearings on this case in their constituencies.

I have listened carefully to what the hon. Member for Coventry, South-East said and accept that the matter is important to the people of Coventry whom he and my hon. Friend the Member for Coventry, South-West (Mr. Butcher) represent. Many hon. Members have made representations to the Government on the matter, including the hon. Gentleman and my hon. Friend. Some of the comments tonight have been rather unfortunate in the way in which they have tried to prejudge and draw conclusions from the inquiry that was set up by the Prime Minister. Anyone who draws early conclusions without waiting for the publication of Lord Justice Scott's report does no credit to his case and will not take the argument any further forward.

The hon. Gentleman has attempted to show that the Government should pay some form of compensation above the usual redundancy payments to ex-employees. He has suggested that the already broad terms of reference of the Scott inquiry should be amended to allow Lord Justice Scott to look into this matter. Failing that, he wants us to set up possibly another inquiry to consider the additional compensation of former employees. What he has failed to clarify is any substantive case for such an inquiry.

I think that it would be useful if I first outlined some of the background to this issue. It will help us all to appreciate the real reasons for the collapse of Matrix Churchill and may help hon. Members to understand why, after careful consideration, the Government believe that there is no argument for further compensation to ex-employees.

Matrix Churchill was formerly owned by the Iraqi-controlled Technology Development Group, which I shall refer to as TDG. The flagrant violation of sovereign rights by Saddam Hussein when he ordered his troops to march into Kuwait demanded, and got, a strong and speedy diplomatic response from the entire international community. I am sure that the hon. Gentleman does not deny that we imposed sanctions on Iraq and Kuwait, in line with the rest of the United Nations, in response to a mandatory Security Council resolution. If he accepts that —I should be astonished if he did not, because the rest of his party certainly accepted sanctions at the time—he might start to understand some of the reasons why Matrix Churchill ultimately collapsed and might appreciate the efforts that the Government made on the company's behalf.

As I have said already, through TDG, Matrix Churchill was under Iraqi control. With the imposition of sanctions on Iraq and Kuwait, Matrix Churchill found itself in a difficult position. For a start, the company was over-reliant on the Iraqi market. With that market closed to it, and a downturn facing the machine tools industry as a whole, Matrix Churchill was trying to find new orders at what can only be described as a very bad time. However, before we hear calls from the Opposition Benches that that made Matrix Churchill's case extraordinary, let me refer back to my previous point about UN sanctions.

I do not recall any disquiet in the House over the imposition of sanctions. In imposing sanctions, we accept that our national trade can be, and is, affected. That is the price of upholding our international obligations in order to safeguard our national interest. I strongly believe that industry accepts that, too.

Matrix Churchill relied too heavily on one market. I am afraid that it is as simple as that. It did not suffer any more restrictions than any other company in the same position. The hon. Gentleman may wish to reflect on that and on the fact that, being an Iraqi-controlled company, Matrix Churchill could have been closed with effect from 9 August 1990. The UN Security Council resolution prohibited the delivery of goods to any person connected with Iraq or Kuwait.

In August and September of 1990, my officials made their priority the regularising of the position of the many Kuwaiti companies—

Mr. Jim Cunningham

Will the Minister give way?

Mr. McLoughlin

I am reluctant to give way and I shall tell the hon. Gentleman why. There were points of order which have left me with a very short time to reply to the debate. What I am saying is important and I want to get it on the record to be fair to the hon. Gentleman and his constituents. I ask him not to press me to give way.

Mr. Cunningham

rose—

Mr. McLoughlin

Oh, very well.

Mr. Cunningham

The Minister is making the assumption that the employees were somehow involved in the company's decisions about contracts. That is not so, but we are not trying to defend what did or did not happen in relation to Iraq—we are trying to defend the employees and they were not party to the contract.

Mr. McLoughlin

The hon. Gentleman cannot divorce the elements of the issue as easily as that.

No attempt was made to close Matrix Churchill. When, in the autumn, the Iraqi directors of TDG came to talk to officials about the possibility of disposing of Iraqi control, it was agreed that the supply of goods to Matrix Churchill would be licensed provided efforts were made to dispose of the Iraqi shareholding.

I believe that it was the Iraqi directors' original intention to sell the firm to the management. However, after learning that they were actually free to sell it to anyone, provided that it took the company completely out of Iraqi control, I understand that they talked to other potential purchasers. The details of those discussions were matters for TDG and Matrix Churchill, not for the Government, but, as the House knows, TDG eventually chose to sell the company to Automation Investment. The subsequent operation and receivership of Matrix Churchill is, I suggest, a matter for Automation Investment, not the Government.

The hon. Gentleman has rather mischievously attempted to draw a connection between the independent Customs prosecution of three former Matrix Churchill directors and the fortunes of the company. I am not going to be drawn into a discussion of the prosecution case. That is a matter properly before Lord Justice Scott, and not one on which it would be appropriate for me to express my views at this stage.

Instead, I shall point out the assistance that the Government have already given to the former employees. We have fully met our obligations to them. The Department of Employment has met the statutory redundancy payments and, under the Employment Protection (Consolidation) Act 1978, has met other debts owed by the company to the employees. I am talking primarily about arrears of pay, holiday pay and payments in lieu of notice. In all, as the hon. Gentleman is well aware —he has already had much correspondence with the Government on the subject—the Government have made payments of more than £950,000 to the former employees.

Help has not been restricted to monetary assistance. The Department of Employment has a raft of programmes to assist unemployed workers to find new jobs. Every former employee is entitled to participate in those programmes and, as the economy continues to recover, I am sure that they will start benefiting from having done so.

The hon. Gentleman suggested that the Government should amend the terms of reference of the inquiry so that Lord Justice Scott could look into the matter of compensation for the former employees. May I remind him that the inquiry already enjoys broad terms of reference, which enable Lord Justice Scott to consult the Government if he feels that they are insufficiently wide to enable him to conduct his inquiry adequately. However, he has not sought to do so. I suggest, therefore, that it would not be necessary or helpful to delay the inquiry by taking it into a new area. That would serve only to delay the report, which I am sure the hon. Gentleman would not wish to do.

I fail to see any sense in the suggestion that a separate inquiry should be convened to take up the hon. Gentleman's concerns. It remains totally unclear on what basis compensation could be sought, as should be abundantly apparent to him. Given that fact—and it would be hard to dispute it—there is no basis for instituting an inquiry.

I shall now draw the attention of the House to several key points. Matrix Churchill's exposure to the Iraqi market was a matter of its own commercial making. Of course, the company was affected by sanctions. I do not dispute that. But so, too, were other companies. Many of them survived, through remaining competitive and finding new markets. Regrettably some, such as Matrix Churchill, did not. That is not the fault of Government and it does not demand compensation.

Secondly, Lord Justice Scott has not suggested that he wants to examine the issue. Finally, and critically, no argument has been advanced as to why compensation should be paid. No one doubts that the position in which the former employees of Matrix Churchill find themselves is unfortunate.

Mr. Mike O'Brien (Warwickshire, North)

The Minister is missing a key issue. If the intervention of Customs and Excise in any way prevented a management buy-out that was on the cards, and that intervention resulted from some incompetence—that is a separate issue, which the Scott inquiry can consider—that should affect the outcome. If there was any incompetence about the way in which Departments failed to pass to each other information about what they knew, the Government are culpable. The Minister seems to be saying that there should be no investigation into whether that occurred. He is thus simply dismissing what could be a rightful and necessary claim by the workers of Matrix Churchill.

Mr. McLoughlin

I shall not repeat what I said earlier, but I dealt with that question when I was talking about Customs and Excise. The matter is properly before Lord Justice Scott, and is not one on which it would be appropriate for me to express views.

Companies can go under if they are not competitive and if they do not find markets. That is why the Department of Trade and Industry has been talking to industry and emphasising competitiveness. The debate has served to underline that point, but it has failed to find any reason why the Government should pay compensation. I suggest that that is because there is no reason.

I do not dispute the difficulties that some of the former employees of Matrix Churchill have encountered. But that is not necessarily a reason for changing the rules by which we have always abided. Indeed, we have followed the provisions of the Employment Protection (Consolidation) Act 1978, which was introduced by the Labour Government. I do not believe that a sufficient case has been made for a separate inquiry. But I take the point that there will be great interest when Lord Justice Scott finally produces his report.

Question put and agreed to.

Adjourned accordingly at sixteen minutes to Eleven o'clock.