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10.35 pm
The Minister for Competition and Consumer Affairs (Mr. John M. Taylor): It is conventional on these occasions for the Minister to congratulate the hon. Member who has secured the Adjournment debate, but I do not think that the hon. Member for Wakefield(Mr. Hinchliffe) wishes me to use that idiom, because he has raised an issue that is clearly of concern in his constituency and others. Indeed, it is an important matter that raises the question of the proper protection of employees on the transfer of their employer and in the unfortunate case of their employer becoming insolvent.
The hon. Gentleman will understand that I was not privy to any of the arrangements and do not know where the residual liabilities lie, but there are courts and tribunals that can test those matters, and, if it is alleged that there has been behaviour of an even more serious nature, complaints can be made to the appropriate prosecuting authority.
The hon. Gentleman referred in particular to the fact that, in his view--I am sure that he expressed it in good faith and that he speaks for others, too--the administrator did not comply with the redundancy consultation legislation. I should like to reply to him right away on that point on the record, because the questions that he raises are matters on which legislation provides for a complaint to be made by a recognised trade union or other representative--they do not necessarily have to be trade unions--to an industrial tribunal, which may award compensation. I ask the hon. Gentleman to examine that possibility with those whose advice he values. It is not for me to comment on the administrator's actions. If a complaint is made, it will be for a tribunal to determine whether there has been any breach of the law.
It is always unfortunate when an employer becomes insolvent. Employees, of course, may be particularly vulnerable in such circumstances. Our law has long recognised that, and provided particular safeguards. I shall return to that issue later. Before then, and in view of the time constraints on Adjournment debates, I must ask the hon. Gentleman, in the spirit of a conversation that we had before the debate began, that if there are any points which, through a lack of time--not an absence of willingness--I do not manage to get around to, please to mention them again to me, preferably in writing, and I shall ensure that they are all properly looked into.
I understand that Homepower Retail Ltd. was a loss-making retail joint venture. It was owned by Yorkshire Electricity Group plc and East Midlands
Electricity plc. The company was acquired on 8 May 1995 by Homepower Stores Ltd., which is part of a larger group of companies headed by PowerStore Holdings Ltd.
The hon. Gentleman outlined a litany of events. I can show him the timetable of events as I understand them, and send him a written version rather than take more of the time available tonight. I dare say that we agree on some of the core facts anyway, so a second recitation of them by me will not help the hon. Gentleman or his constituents.
At the end of May, the administrators concluded that, because the industry had expressed no interest in taking on a major electrical retailer, a sale as a going concern would not be possible. Job losses on the scale that followed are always to be regretted. I am sure that we all hope that those people who have been made redundant are able to find suitable new employment quickly.
The Government have long recognised that, when a business is sold over the heads of employees, special protection may be required to ensure that their interests are protected. Such protection is provided by the Transfer of Undertakings (Protection of Employment) Regulations 1981--commonly known as the TUPE regulations.
Those regulations provide, among other things, for employees' contracts to be transferred to their new employment; for the dismissal of employees in connection with a transfer to be automatically unfair unless it is for a genuine economic, technical or organisational reason--for example, genuine redundancy that would have occurred irrespective of the transfer of the business; and for representatives of the employees to be informed and consulted about any measures to be taken in connection with the transfer. That was quite a central point of the hon. Gentleman's dissatisfaction.
The regulations provide a detailed package of measures aimed at providing protection for employees in such circumstances. It is not for me, however, to say when the regulations apply in specific cases; that is a matter for the courts and tribunals, but the proper statutory framework exists. In respect of the acquisition of Homepower, I understand that the arrangements for staff who transferred were discussed and agreed with the trade unions concerned.
I also understand that, in addition to any statutory rights that the employees had on the acquisition of Homepower Retail, employees who transferred to the new company were given a guarantee that they would receive an enhanced redundancy payment if they were made redundant within 12 months of the transfer.
I believe that there is some dispute about who is responsible for that commitment--whether it is Homepower Stores Ltd., which is now unable to meet it because it has become insolvent, or Yorkshire Electricity and East Midlands Electricity. I believe that the two electricity companies and the administrator are all strongly of the view that it was an undertaking given by the purchaser of the business.
Whatever the facts of the matter--it would not be right for me to comment further, as it was a purely commercial transaction in which the Government were not involved in any way--I fully appreciate the distress and worry felt by the employees concerned. Therefore, it may be helpful if I explain the assistance that my Department can give in such circumstances.
When an employer is insolvent, any employee who is entitled to a statutory redundancy payment may apply for payment from the national insurance fund. Payment is usually made within about six weeks and often, in a straightforward case, more quickly. I am aware that we have already received some claims from former employees of Homepower, and I can assure the House that we will make payments as quickly as possible. Indeed, I hope that the first payments will be authorised this week.
My Department can offer help with other debts owed to the former employees. There is a guarantee covering any arrears of wages, holiday and notice pay due to them and we are also able to make contributions into the resources of a pension scheme in respect of unpaid contributions due from the employer.
Unfortunately, at this stage, I am not clear what payments may be due to the employees, but I note from the hon. Gentleman's comments tonight and his early-day motion 916 that, for example, there may be an issue concerning deductions from the employees' pay in respect of union contributions that have not been paid over. We may be able to reimburse the employees, as it would count as arrears of pay.
It has been suggested that the remaining solvent companies in the PowerStore group should take responsibility for the guarantees given to the Homepower employees at the time of its acquisition. It is, of course, not unknown for a parent company to support an ailing subsidiary and, at first thought, it is rather tempting to suggest that this might be underpinned by some statutory mechanism. I am sure that the hon. Gentleman will agree, however, that the net result could be to pull down other companies in a group.
It is not unusual to have a group of companies, some of which at any particular time are flourishing, and some of which are not. If one limited company were forced to underwrite the actions of another, the effect might simply be to damage the interests of employees in the profitable parts of the group, raising questions as to why the interests of employees and others associated with those parts of the group should suffer through the actions of another company. I respectfully say that that would not make sense.
The hon. Member for Wakefield called for the establishment of an urgent inquiry into the affair. I understand that it is tempting, each time we see a situation with which we do not agree, to call for a Government inquiry. I must inform the hon. Gentleman, however, that, while the Secretary of State has powers of inquiry under the provisions of the Companies Acts 1985 and 1989, those powers may be exercised only when there is good reason to suspect fraud, misfeasance or misconduct in relation to the affairs of a limited company.
It may be part of the hon. Gentleman's allegation that such things exist. If so, I shall not, of course, stand in the way of his advancing the giving of information and the laying of due process. The powers are not intended as a substitute for, or in any way to be supportive of, the usual civil remedies available to creditors, including employees or former employees who are in dispute about their contractual entitlements.
To return to the main thrust of the debate, I think that there is substantial agreement between us that there is a need for proper protection for employees whose employer
is sold over their heads or who may be affected by corporate insolvency. We believe that we have established the proper framework through which such rights and protections may be exercised. It is a matter for the courts and tribunals to determine whether there has been any breach of the law. That is not a matter for the Government. In my experience, trade unions--the hon. Member for Wakefield has said that he is associated with one--have skills and knowledge in the general area, and I have no doubt that the hon. Gentleman will be consulting them further.
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