Examination of Witnesses (Questions 20-39)
DEPARTMENT OF
TRADE AND
INDUSTRY AND
ADVANTAGE WEST
MIDLANDS
20 MARCH 2006
Q20 Mr Khan: Ms Bell has referred
to the factor which led to the bridging loan being given which
was the administration; that was the key thing. There is a huge
white elephant in the room which nobody is talking about, which
is the general election, which was 5 May which has been referred
to in press reports preceding today's hearing and after publication
of the NAO Report. Can you confirm that the factor which led you
to make a recommendation for the bridging loan was in fact the
administration, that was the key? What impact did an election
four weeks away have on your decision?
Ms Bell: The election being four
weeks away had no bearing whatsoever on the advice which I gave
to ministers. We looked first at the options on the bridging loan.
When the company went into administration we then looked at a
different situation in terms of options for bidders and what we
felt it was appropriate to do.
Q21 Mr Khan: At no stage did you
consider recommending more than one week's worth of operating
costs being given as a bridgingloan?
Ms Bell: That is correct.
Q22 Mr Khan: So at no stage did you
consider a five-week operating cost loan.
Ms Bell: No, I did not.
Q23 Mr Khan: May I move on to something
the Chairman alluded to which is something we discovered in the
context of the Report? After publication of MG Rover's accounts
of 2002, we discovered that £13 million had been transferred
to the directors' remuneration package and we subsequently discovered
that four of the companies, if I have got this right and the Chairman
will correct me if I have got it wrong, showed the directors receiving
£40 million from the business. Have I got the figures right?
Mr Alty: Yes, £40 million
is certainly a figure I recognise.
Q24 Mr Khan: Would you like to comment
on that?
Mr Alty: Sir Brian has already
commented. These were figures which were in the accounts, they
were published and there was a corporate governance regime which
required that they should be published, but of themselves they
would not necessarily provoke government action.
Sir Brian Bender: May I add one
comment? The very fact that they had this money led to one of
the conditions which was put in for the possible bridging loan,
which was that the directors themselves should contribute towards
the cost of the £110 million loan. It was in that knowledge,
that it was felt they should make a personal contribution if that
had been pursued.
Q25 Mr Khan: But not to the £6.5
million.
Sir Brian Bender: No, this is
the bridging loan which the Chairman was asking about earlier.
This is the £110 million.
Q26 Mr Khan: Except for the inspection
which has been ordered into the company, there is no other recourse
to get some of these funds back?
Sir Brian Bender: I believe that
to be the case and we shall have to see what the inspection comes
out with.
Q27 Mr Khan: When do you think they
will respond?
Sir Brian Bender: I cannot answer
that. When the inspection was set up, the Secretary of State asked
for it to be done as rapidly as possible. I would hope it will
be in the course of this calendar year, but that is in the hands
of the inspectors.
Q28 Mr Khan: So far we know £3.1
million has been spent on the investigation. Is there a cap or
limit on what they can spend?
Sir Brian Bender: There is no
cap. The expenditure would normally be front-end loaded, because
there is a more intensive work programme of amassing documentation,
but there is no cap on it.
Q29 Mr Khan: Moving on to the question
that the Chairman asked of Mr Edwards about the recovery package
and the support package, you referred to a figure of 75% as the
sort of figure we could hope to see for those 6,000 people made
redundant being able to get a job within 12 months. Where is that
figure obtained from?
Mr Edwards: I would need to ask
colleagues, but I understand it is normal in a significant redundancy
situation.
Q30 Mr Khan: When was the last time
we had 6,000 people made redundant from one employer??
Mr Edwards: That was the point
I was making in response to the Chairman. In normal circumstances,
after 12 months you would expect to see around 75% of the workforce—
Q31 Mr Khan: When was the last time
an employer had 6,000 made redundant?
Mr Edwards: I cannot answer that
question; I do not know.
Sir Brian Bender: We can provide
a note on that. We have someone from Jobcentre Plus in the back
row, if that would be helpful to you.[1]
Q32 Mr Khan: I just find it staggering
that there are five of you here, we have a redundancy of 6,000
and nobody can give me an example.
Mr Alty: There is an example in
the back of the Report which is the Corus redundancies which are
very large, but they are spread over a longer time period and
they are at a variety of sites.
Q33 Mr Khan: But they were not overnight,
were they? They were not 6,000 from one site. That is Sir Brian's
point about the reason why.
Mr Alty: No; absolutely.
Sir Brian Bender: That is correct.
Mr Alty: It is very unlikely that
there has, certainly not in recent times, been—
Q34 Mr Khan: Can I help you? What
about some of the mining redundancies back in the 1980s? Were
they of similar size?
Mr Alty: They were, but they are
not a company going bust overnight. That is what is so unusual
about this case: a company of this size going into administration.
Mr Edwards: What the task force
had to do essentially was to step in and provide a support package
to employees when the company that had employed them was no longer
there.
Q35 Mr Khan: That is the question
I am trying to lead on to. How do you then measure the success
of your support package, if you have nothing to compare it against?
Mr Edwards: The figure I quoted
was what you would normally expect to see in a redundancy situation.
There are no examples in the very near past of such a significant
scale of redundancies on a single site which I can give you. All
we have available to us is what you would normally expect to see
and the point I was making in response to the Chairman's question
was that we shall hit the norm in an abnormal situation where
the number of people being made redundant was in a single location.
It is about scale, it is about immediacy and it is about concentration;
a lot of people very quickly in a very, very tight location. Eighty-five
per cent of the people employed at Longbridge came from within
a 10- to 15-mile radius of the plant so we were facing a very,
very concentrated set of redundancies. There is no very recent
situation that I can point you to that is similar.
Q36 Mr Khan: You also cannot tell
me where the 75% comes from.
Mr Edwards: It is the figure that
Jobcentre Plus would expect to see.
Q37 Mr Khan: Where do they get it
from?
Mr Edwards: I would need to ask
them.
Q38 Mr Khan: Could somebody give
me a written note on that?
Sir Brian Bender: We can give
you a note.[2]
Q39 Mr Khan: May I ask Ms Bell what would
have happened had the £6.5 million loan, which extended life
by a week, not been given? What would have happened?
Ms Bell: The workers would have
received mass redundancy notices on the Monday morning.
1 Ev 20 Back
2
Ev 20-21 Back
| 
