| Previous Section | Index | Home Page |
7.54 pm
Tony Lloyd (Manchester, Central): I congratulate my hon. Friend the Member for Liverpool, Walton (Mr. Kilfoyle) on raising this subject. It is an enormous scandal for a company to operate, and cease to operate, in such a way. The company was based in my constituency and I pay tribute to my hon. Friend the Member for Manchester, Blackley (Mr. Stringer), who also took an interest in pursuing the issues.
We must establish whether the company deliberately chose to withhold national insurance payments. That is tantamount to fraud. If that genuinely happened, we should ask serious questions about whether criminal proceedings are possible against those responsible, because they have robbed their employees. It is as simple and crude as that.
When the company went down, I asked officials in the Department of Trade and Industry to take a close interest in the matter. I hope that my hon. Friend the Minister can say exactly how the Department has stewarded the process. It is important to note that PricewaterhouseCoopers, the receivers in the case, have asked for the industrial tribunal process to be deferred. That may be in the interests of the receivers and the asset base, but it is not in the interests of the employees. Will my hon. Friend look into that to ensure that the employees are given every protection? They have received no protection or consideration from the company.
7.56 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe): I begin by expressing my good wishes for your recess, Mr. Speaker. I am sure that it will be a well-earned rest.
I congratulate my hon. Friend the Member for Liverpool, Walton (Mr. Kilfoyle) on securing the debate. I thank him for detailing the circumstances that surrounded the announcement of the redundancy of the former employees of the Accident Group, and the company's operation. I appreciate the significance of the closure for Liverpool, Walton, where First Advance Ltd., part of the group, was based. I also acknowledge the anxieties of my hon. Friend the Member for Stretford—I am sorry, I mean my hon. Friend the Member for Manchester, Central (Tony Lloyd); the reference to Manchester United threw me. I acknowledge his anxieties about the redundancies. I shall endeavour to answer the points that have been made, but the issues are serious and I want to respond to some of them in due course. I hope that my hon. Friends accept my sincerity.
I have every sympathy with the staff who worked for the companies in the Accident Group and lost their jobs. As my hon. Friend the Member for Liverpool, Walton
said, it appears that news of the administration order and the likely loss of jobs was sent by text messages and e-mails to staff before the appointment of the administrators. They planned to hold meetings at the various work sites to let staff know what was happening. However, probably as a consequence of the text messages and the e-mails, few employees turned up for work. Several members of staff received notice of the proceedings through a voicemail message, which had been prepared for those who were off site and not expected in the office.It is regrettable that staff did not receive information at the planned meetings, at which they would also have been given information about their redundancy. Whenever redundancies have to be made, it is in everyone's interests that they be handled sensitively. Too often we hear of employees discovering out of the blue—sometimes even over the radio—that they are to be dismissed. People deserve better treatment.
However, as my hon. Friend said, the administrators wrote to the staff on 30 May 2003, the day of their appointment, to explain about the administration order, the need for the redundancies and the statutory assistance available to employees from the redundancy payments section of the Insolvency Service.
My hon. Friend asked what the Government were doing for the former employees of the Accident Group. Former workers may be eligible for payments of unpaid wages, holiday pay, payment in lieu of notice and redundancy pay from the national insurance fund. All those payments are subject to statutory limits. I assure hon. Members that the redundancy payments office in Birmingham is working hard to ensure that all workers receive the full statutory amount to which they are entitled as speedily as possible. Claim forms have been issued to former employees, and most have been returned to the Birmingham redundancy payments office via the administrators.
The administrators have provided details of the group and confirmation and information about all individual former employees. By last weekend more than 1,000 employees should have received their payments. The Birmingham office aims to arrange payment for a similar number this week.
I appreciate that the limits on payments in the statute generally mean that payments do not fully cover the total amount that employees are owed by their former employers. However, my hon. Friend may be pleased to note that this Government have regularly reviewed and increased the statutory limits, most recently in February this year to £260 a week for a maximum of eight weeks. There might be some staff who have not yet lodged a claim with the redundancy payments office. Detailed information about who is entitled to payments and what and how much they are likely to be entitled to can be found on the Insolvency Service website at www.insolvency.gov.uk under "Information about redundancy matters". Alternatively, anyone who has been made redundant and needs advice or information about their entitlements or their claim can phone the redundancy payments telephone helpline on 0845 145 0004. All calls to the helpline are charged at local rates.
The administrators have a duty under the Company Directors Disqualification Act 1986 to report to the Secretary of State on the conduct of the company's directors. The report is due approximately six months after the date of the insolvency. The Secretary of State then has a discretionary power to apply to the court for a disqualification order to be made against some or all of the directors. If such an order were to be obtained, it would run for between two and 15 years, and contravention can result not only in criminal sanctions but in the director becoming personally liable for the debts of any new company to which they are subsequently appointed.
My hon. Friend the Member for Liverpool, Walton raised a point about Europe. Looking further ahead, last week we announced proposals for implementing the information and consultation directive. This is designed to promote ongoing dialogue with employees on business issues that affect them. I am pleased that we were able to agree with the CBI and the TUC a framework for implementing the directive in the UK. We hope that the new legislation will help to deliver a "no surprises" culture that will benefit not only employees but the businesses for which they work. My hon. Friend is right to say that implementation of the directive would mean that such a case could no longer arise.
I know that my hon. Friend is concerned about the activities of the Accident Group and related companies, and that there have been calls for a code of conduct for that type of business. The Government are aware of the concerns about the activities of such companies, especially in relation to some companies' marketing methods. However, provided that they and similar intermediaries act responsibly and with probity, they can expand access for people with good claims, and provide helpful claims management services to solicitors.
Any improper, misleading or dishonest conduct towards consumers—or, indeed, in respect of any other aspect of a company's business—would of course be of great concern. The marketing and sales activities need to be performed to the highest possible standards. The maximum effort needs to be made to ensure that consumers understand the nature of any agreement that they might be asked to enter into, what liabilities they might have under that agreement, and what, if anything, it will cost them.
The Department for Constitutional Affairs is working with a range of organisations including the Law Society, the Association of Personal Injury Lawyers, the General Insurance Standards Council, consumer groups and other organisations, including claims management companies, to encourage high and common standards in accident compensation, including a voluntary code of practice. There is already considerable activity in the personal injury industry to improve and set standards and to draw up codes of practice for intermediaries. There are a number of initiatives at various stages of development, demonstrating the clear desire on the part of most intermediaries to bring about a step change in behaviour.
The Government favour a voluntary approach and a degree of industry self-regulation, rather than new formal regulation. There is already regulation of most elements in the package of legal and financial services
provided by claims management companies—for example, by the Law Society, the General Council of the Bar, the General Insurance Standards Council and, from 2005, the Financial Services Authority. However, it is clear that there is a regulatory maze in relation to legal services, and the Department for Constitutional Affairs has already announced plans to review the legal services regulatory framework. The scope of this review and the mechanism for carrying it forward will be announced in the summer.Job losses are always a matter of great regret, and the Government were sorry to learn of the closure of the Accident Group. It is particularly unfortunate when redundancies occur suddenly and without prior consultation. Our proposals for implementing the information and consultation directive will do much to help to end that sort of business culture. However, as I have explained to the House, a range of measures both practical and legislative are in place to assist employees who are made redundant. They cannot, of course, completely make up for employees' loss of a job through no fault of their own. However, I am satisfied that those measures represent an appropriate response by the Government to what is bound to be a regrettable situation for all those concerned.
I undertake to look at all the issues that have arisen from the closure of the company, and at all the surrounding issues that need to be dealt with. I shall get back to my hon. Friend in due course, and I shall meet him when I can, to ensure that such an occurrence does not happen again.
Adjourned accordingly at five minutes past Eight o'clock.
| Next Section
| Index | Home Page |