HC Deb 13 April 1978 vol 947 cc528-30W
Mr. Ashley

asked the Secretary of State for Prices and Consumer Protection what discussions he had with Spillers bakery about the proposed closure of its bakeries; what other parties were present; what issues were discussed; what conclusions were reached; and if he will make a statement.

Mr. Hattersley

On 20th March Spillers warned the Bank of England of the grave financial position it was facing as a result of sustained heavy losses in baking. Spillers feared the imminent collapse of its whole baking operation—with the loss of 13,000 jobs—and repercussions on its milling activity and consequent danger to the company's whole work force of 29,000 employees. This information was given to the Bank in absolute confidence, as the company believed that disclosure would precipitate the crisis and the collapse it feared. Two days later, my Department, the Treasury and the Ministry of Agriculture, Fisheries and Food were told of Spillers' crisis.

Spillers told the Bank—and later repeated to the Government—that the only prospect of saving any of the jobs in baking was the sale of 13 bread bakeries to Ranks Hovis McDougall Limited (RHM) and Associated British Foods Limited (ABF). Such a sale would save 5,100 jobs, but there would still be 6,370 full-time and 1,620 part-time workers made redundant in the bakeries which were not acquired by RHM and ABF.

RHM and ABF told the Government that they would not buy any of the 13 Spillers' bakeries if their transfer was subject to a reference to the Monopolies and Mergers Commission as the uncertainty that such a reference would create might make the viable operation of the bakeries impossible during the next few months. The Director-General of Fair Trading—carrying out his statutory responsibilities—examined the financial status of Spillers and advised me both on the facts of Spillers' submission and the action I should take.

On 4th April I saw—together with my right hon. Friend the Secretary of State for Scotland and my hon. Friend the Minister of State at MAFF—the chairman of Spillers. Owing to parliamentary duties my right hon. Friend the Secretary of State for Employment was unable to attend but he and the other interested departments were represented by officials. Our initial hope was to delay the closures and sales until the necessary notice had been given to the trade unions concerned and until the Government had considered other options. The company repeated its conviction that delay would result in the immediate collapse of its baking interests and that immediate consultations with the trade unions could only result in a public admission of its financial position and a loss of business which would prevent the bakery sales and the protection of employment within them.

Later that afternoon we saw directors of RHM and ABF who insisted that unless they were assured of unhindered purchase they would not acquire the 13 bakeries. After discussion, they gave assurances that, if no merger reference was made, they would keep open the 13 bakeries for at least a year and would expect to recruit over 2,000 extra staff in addition to those employed in the acquired bakeries.

After taking into account both the advice of the Director General of Fair Trading and the evidence obtained during our consultations with the industry, my colleagues and I came to the conclusion that a reference to the Monopolies and Mergers Commission could only result in the transfer of the 13 bakeries being abandoned and 5,100 redundancies being made which would not come about if the sale went ahead. We therefore decided that—despite strong arguments to the contrary—the proposed transfers should not be referred to the Monopolies and Mergers Commission. We were reinforced in this view by the knowledge that the £15.5 million paid to Spillers by other baking companies would be used to compensate redundant workers. I told the chairman of Spillers my decision on 7th April.

It is obviously unsatisfactory that the Government should have been placed in the position, at short notice and when there had been no prior consulation with unions or others concerned, of having to choose between saving as many jobs as possible and having a full investigation of mergers which raise important issues of public interest. But we believe that if we had made a merger reference, which would have required the transfer of the bakeries to be delayed, the results for employment would have been much worse. We therefore consider that we had no alternative but to take the decision that we did.