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Maternity Services

7.16 pm

Mr. Jamie Reed (Copeland) (Lab): I present a petition of more than 10,000 signatures from the people of Copeland and west Cumbria concerning the provision of consultant-led maternity services at West Cumberland hospital in Whitehaven.

At the weekend, I was privileged to march through the streets of the town alongside 4,000 men, women and children in a demonstration supporting the retention of services at the hospital as part of the “Save our Services” campaign organised by The Whitehaven News. The campaign is to save all our services, but maternity services are particularly important given the number of other services that their presence underpins. The House may expect further petitions in due course.

Local health authorities have recently undertaken a review of maternity services in north Cumbria, which led to fear, anger and anxiety throughout the area about the prospect of all services being centralised in Carlisle. Most importantly, however, that fear is due to the fact that West Cumberland hospital is more than42 miles from Cumberland infirmary in Carlisle and is badly served by poor roads and public transport provision, so much so that much of Copeland is even further away. Millom is 70 miles away, Egremont and Seascale are 50 miles away and Ravenglass and Eskdale are nearly 60 miles away.

We are a special case. What works in Kensington does not work in west Cumbria. One size does not fit all. As the borough that holds the world’s largest concentration of radioactive material on a single site, we clearly deserve special attention.

The choice of women in west Cumbria is to give birth in a fully operating consultant, obstetrician and gynaecologist-led maternity unit at West Cumberland hospital. It is my belief and that of my constituents that that is non-negotiable.

The petition states:

To lie upon the Table.

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7.18 pm

Ms Katy Clark (North Ayrshire and Arran) (Lab): It is with great pleasure that I present a petition collected by a number of my constituents affected by the collapse of Farepak. They have collected almost 2,500 signatures on the streets of Ayrshire.

The petition asks that the Government do everything they can to make sure that those throughout the country who through no fault of their own have been adversely affected by the Farepak collapse are given compensation, and that such a thing will never happen again.

The petition states:

To lie upon the Table.

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Motion made, and Question proposed, That this House do now adjourn. —[Huw Irranca-Davies.]

7.19 pm

Anne Snelgrove (South Swindon) (Lab): The reality of 150,000 families—savers with the Christmas savings company Farepak, based in my constituency, which collapsed in October—coping with Christmas on around a sixth of their planned budget is just a week away.

In my first Adjournment debate on 7 November, I set out three complementary principles for the future of Farepak savers: to work for immediate relief for the savers; to secure an explanation and justice for the savers; and to get better regulation of the voucher industry. I am very grateful for being granted this debate, as it is time to look back at what has been promised, what has been delivered and what we can do to ensure that this never happens again.

The Minister took action and we now have a £6.8 million fund paying out to savers, hampers being delivered and an investigation into the disaster under way. May I take this opportunity to thank my right hon. Friend and his private office for setting up the response fund, for their tireless work in promoting the fund and for their leverage in persuading companies to contribute? I am proud of what has been achieved nationally, but also locally in my constituency.

The way the community in Swindon has come together to support Farepak victims has been a beacon to others. Through an initiative that came out of my meeting with Farepak agents on 17 October, customers were offered emergency loans by Swindon’s credit unions in time for Christmas.

Mr. Michael Wills (North Swindon) (Lab): Will my hon. Friend give way?

Anne Snelgrove: I would be delighted to give way to my honourable parliamentary neighbour and friend.

Mr. Wills: I congratulate my hon. Friend on securing this debate. I would like to express the thanks of all my constituents for the admirable work that she has done to bring relief and justice for all the Farepak savers. It has been an exemplary instance of how Parliament can work effectively for constituents. We are very grateful to my hon. Friend. Does she agree that one good thing that might come out of this terrible situation is that it can encourage many people to see that a good and secure way of saving is with credit unions? My hon. Friend has done sterling work with constituents, and so have I. Is there a way in which we can build on this to encourage more people to save with credit unions?

Anne Snelgrove: I thank my hon. Friend, who is absolutely right. If there is a silver lining to the Farepak debacle, it is the fact that credit unions have increased massively. As a result of the work that I, my hon. Friend and other Members have done, more people are signed up with credit unions than ever before, which is excellent.

Other initiatives in my constituency include a Christmas party for the children of families affected by
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the Farepak collapse, including those in my hon. Friend’s constituency. It is organised by our local paper, the Swindon Advertiser—and we reckon that it is going to be a cracker! Farepak agents in Swindon are concerned that they have not yet received any vouchers from the Farepak response fund. None has reached Swindon, and I hope that the Minister will be able to confirm that all is going to plan and that every effort is being made.

As well as some 600 children in Swindon being affected, 90 staff lost their jobs at the Farepak headquarters and they must not be forgotten either. Even if no one had lost a penny in all of this, the loss of 90 jobs is a devastating blow at Christmas. I have been talking to some of the staff. In the past, they went to any length to make sure that Christmas was delivered to their customers—and the collapse of the company was shattering for each of them. To provide an example, on 19 October 2004, 400,000 gift vouchers were sorted and dispatched by people in my constituency. That gives an idea of the scale of the operations. The company's founder, Bob Johnson, was a huge public figure in Swindon—much loved and respected. He and his staff raised thousands of pounds for charity. If he were alive today, he would be deeply shocked at what has happened.

Of course, the Government will meet Farepak employees’ entitlement to statutory redundancy pay, arrears of pay, holiday pay and money in lieu of notice. Thankfully, Swindon has the highest employment rate in the south-west, so I hope that when the dust settles as many Farepak employees as possible will be back in work.

Why, with such a fantastic work force, should a successful business, such as Farepak, collapse in the first place? Each day, the outrage grows, as we know more and more about what went wrong at Farepak. We know that, as far back as February 2006, when Choice Gift Vouchers Ltd—a firm that Farepak relied on for credit—went into administration, Farepak’s parent company, EHR, was in big trouble. I have with me the Kleeneze plc annual report for 2005—the directors’ report from the group that included Farepak.

Mr. Jim Devine (Livingston) (Lab): I, too, congratulate my hon. Friend on securing the debate. I have received a letter from Cameron Fyfe of Ross Harper—a very prominent firm of solicitors in Scotland—who tells me that it is possible to sue EHR’s directors personally and that, if that is unsuccessful, there is another way for Farepak victims to seek a court action against the directors. Suzi Hall, who has been central to the Unfarepak campaign, has agreed to take part in the test case. Would my hon. Friend join me in congratulating Suzi on the work that she has done and in wishing that initiative success?

Anne Snelgrove: I thank my hon. Friend and congratulate him on his work. Suzi Hall has indeed done excellent work with I very much hope that some of my constituents can also get reparation from the directors.

The Kleeneze plc annual report provides the evidence that, even after the writing was on the wall for Farepak, directors were lining their pockets with £1 million in dividends. Page 25 shows that the EHR board voted to
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pay out a directors’ dividend in 2005. In February 2006, they were up against their overdraft and clearly could not afford to pay back Farepak customers and the bank. But in March 2006, they went ahead with the planned dividend payout of £1 million—money that the company simply could not afford.

The main villains in this pantomime benefited substantially. The Gilodi-Johnson family were the main beneficiaries, although Sir Clive Thompson, chairman of Kleeneze plc, enjoyed a £20,000 bonus. Now I learn from Sky News that another beneficiary, William Rollason, who was chief executive of the parent company, is being sued in Australia for negligence and breach of director’s duty. Interestingly, he is an old colleague of the right hon. Member for Witney (Mr. Cameron), from his days in public relations. I hope that the right hon. Gentleman can tell us where Mr. Rollason is hiding out, if he is still on his Christmas card list. The directors were paying themselves with Farepak savers’ money, while the fate of the company had already been sealed—and that was just the beginning.

I support the campaigners, such as Suzi, who picketed the annual Christmas drinks party of HBOS in the bitter cold on Monday. HBOS has said that some customers might take their business away from the group, and I can understand that decision. Many hon. Members have signed the early-day motion that calls for such action. The evidence keeps mounting, and I hope that the evidence will help us to achieve justice.

I am grateful to my right hon. Friend the Minister for telling the House that the Department of Trade and Industry has launched an investigation to discover what lessons can be learned from Farepak’s collapse and that he will look at whether we can change the law to give consumers additional protection. This complex issue will require some time to get right, so I am not calling on him to deal with it immediately, but I should like to ask him what progress he has made and when he expects to give us some answers for the future.

A good deal more comment has come from the House saying that something ought to be done, rather than what should be done. The options that have come forward are regulation by the FSA, insurance bonding, controls on internal parent company loans and lending, and encouraging people to stop using such clubs. If there is one single thing that could be shouted from the rooftops as a result of this episode it is that section 75 protection under consumer credit legislation for people who pay with cards has worked. The banks pick up the bill, which is all the more appropriate if we believe that banks do not always lend wisely to start with. That is why I start with the section 75 protection and will now move on to what improvements can be made to protect customers.

There is a wide variety of organisations that accept deposits for goods in advance. We are talking about everything from magazine subscriptions to holidays, soft furnishings, football season tickets, double glazing and kitchen units. Consumers are exposed to a potential Farepak-style loss every time they pay for goods or services and do not receive them immediately. Much of the focus of financial regulation relates to the
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way in which information is presented, the content of that information and the process by which products are sold.

That may be one aspect of what the FSA could regulate, but as well as mis-selling, the issue at Farepak was solvency. It is generally perceived that there is a public interest benefit in not letting banks become insolvent, because of the effect that that would have on the economy at large. Other sectors of the economy receive no such protection. I suggest that rules like those that cover the information contained on credit card statements—the health warnings box—could be applied to hamper or voucher contracts. The contracts could say something like, “Your money is not guaranteed.”

Attention should be given to finding a definition so that firms such as Farepak and the Park Group can be identified and treated differently from other companies. Perhaps laws could be passed that affect only Hamper Industry Trade Association members. At present, HITA is simply a trade body, but it could be upgraded. It is very much in the interests of remaining operators to have the sector regulated in some way to restore faith in the product. Thus, I believe that there is an open door here for scrutiny and review.

On insurance bonding, we know that the industry had a bond of £100,000, but that was simply a commitment of good intent by each member and was never intended as compensation. There are models for using insurance to limit financial risk—the airlines’ ATOL, or air travel organiser’s licence, scheme being the most obvious. The voucher business is a very low margin business and expensive insurance requirements could make it uneconomic. However, we should investigate a more comprehensive bond scheme for Hamper Industry Trade Association members.

Turning to controls on internal parent companies, and loans and lending, it seems pretty clear that HBOS’s actions determined the timing of the failure, as well as perhaps its likelihood. There has been much talk of ring-fencing, and I believe that it should be considered with regard to hamper companies.

Lastly, there is the option of encouraging people to stop using these clubs. I am grateful to the Economic Secretary to the Treasury for lending his expertise to the consideration of this issue and asking the chair of the financial inclusion taskforce to look into why people opt to use hamper schemes and similar vehicles. I am sure that the report will find that there is more to attract savers to a voucher scheme than the financial aspects. The network for such schemes is often based around family and friends. The schemes offer social inclusion, as well as financial inclusion. This sector is not motivated by interest earned on deposits, or tax breaks. With voucher schemes, people can see what they are saving for, and they cannot spend what they have saved until the vouchers are delivered in October, before Christmas.

I talked to Claire Whyley from the National Consumer Council today and I am pleased to announce that it has funding from the Joseph Rowntree Trust for a group of organisations, led by the personal finance research centre, to develop a model of not-for-profit doorstep lending. If successful, that
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model could also be used to provide a safe and secure model of cash-collected saving for people on low incomes. I congratulate the partners and ask the Minister to look closely at the model that they produce. The National Consumer Council also agrees that we should not rush, because we need to get the legislation right for that small group of savers on low incomes.

In closing, the fact that the House—and particularly Mr. Speaker—has taken so much interest in this matter demonstrates that the people who saved with Farepak have not been forgotten. Far from it—their plight has touched the whole House. Along with our friends in the media, who helped us to run such a good campaign, we hope that we have been able to do as much as possible so that those people can have a very happy Christmas.

7.34 pm

The Minister for Trade (Mr. Ian McCartney): I congratulate my hon. Friend the Member for South Swindon (Anne Snelgrove) and her colleagues who are with her this evening on obtaining a further debate on this issue. Since the devastating collapse of Farepak, my hon. Friend has resisted grandstanding on this matter. She has worked with me to highlight the plight of the victims and, more importantly in the short term, has taken practical measures to ensure that they are helped.

I know that Mr. Speaker himself is keenly interested in what is happening. He has apologised to me personally for not being able to be present for the debate. I thank him for that, and I know that you are also interested in the matter, Madam Deputy Speaker. Indeed, the situation has touched most hon. Members because of the range of individuals and communities throughout the country who have been affected by the collapse.

I said in the Westminster Hall debate on 7 November that this was one of the areas in which Members of Parliament could really make a difference. Although Ministers are not technically responsible for every single company that collapses—nor can they be—there are occasions when one’s instinct should take one to the right place, and when rather than playing safe and washing one’s hands of a situation, one should take responsibility to try to help out. That is why I have tried to keep the House up to date on developments through my answers to written and oral questions, the written statement of 30 November and the letter that I sent to all hon. Members on 7 December. I welcome this opportunity to report on what has happened so far and to take stock.

When I heard of the collapse, I immediately contacted the administrators to assess the extent of the problem caused by the company going into administration. It was apparent that more than 100,000 people had lost out, and lost out seriously. The estimate of the administrators was that only a few pennies in the pound were likely to be recovered and that, with the best will in the world, it would still take months to get to the point of a payment. The outlook for the families and the prospects for their Christmases were bleak indeed.

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