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21 Apr 2009 : Column 150

Hazel Blears: My hon. Friend has a very impressive record in being prepared to say sometimes difficult things on this agenda and I am proud of her for doing that. She will know that the National Muslim Women’s Advisory Group is comprised of feisty, challenging women from all over the country, and they are absolutely determined that they will take their rightful place in the governance of mosques and the leadership of community organisations. My hon. Friend also makes the point that such values should be reflected in the groups that we sponsor and support through our funding. She is absolutely right.

Tim Farron (Westmorland and Lonsdale) (LD): Given that national parks are in effect local authorities by a different name and have power over the lives of thousands of British people, does the Secretary of State agree that at least some members of those national parks ought to be directly democratically elected?

Hazel Blears: The hon. Gentleman will know that I am quite a fan of direct elections, and I am certainly keen to ensure that there is as much democracy as possible in our political system. I have never believed that direct democracy is somehow challenging to other organisations. Having said that, I am sure that there will be debate about membership of the national parks organisations. I will certainly examine the issue to see whether it is possible to have more direct democracy in those organisations.

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Insolvency (Provision of Information to Employment Agencies)

Motion for leave to introduce a Bill (Standing Order No. 23)

3.31 pm

Phil Wilson (Sedgefield) (Lab): I beg to move,

At a time of global recession, and its effect on our economy and our people, this Bill aims to improve the relationship between insolvency practitioners and employment agencies, especially Jobcentre Plus. At present, when a company goes into liquidation there is no duty on the administrator to inform Jobcentre Plus of redundancies. I believe that to be wrong.

To be fair, some administrators inform Jobcentre Plus and allow access, but not on all occasions. Employees should have access to the help Jobcentre Plus can offer as soon as possible, and it should not be denied. My Bill calls for a requirement to be placed on administrators to inform Jobcentre Plus of a redundancy situation as soon as possible, and invite the agency to meet those facing unemployment when the company is going into liquidation. It is all about putting people first in difficult times.

Earlier this year, Jobcentre Plus was informed by a company in my constituency that it was going into liquidation. The company informed the redundancy manager at Jobcentre Plus of the insolvency practitioner involved. A series of phone calls took place between the redundancy manager and the practitioner, in which the Jobcentre Plus representative requested access to the employees to issue redundancy packs. The practitioner said they did not want Jobcentre Plus on the site in case it inflamed the situation.

The redundancy manager was on standby to go to the factory because information had been received that the administrator was holding a meeting with staff on that day. The redundancy manager called the administrator on several occasions only to be told that the meeting had taken place at 8 o’clock that morning and that 175 staff had been made redundant, the majority of whom had been sent home. On hearing that, the redundancy manager immediately went to the site in question and managed to catch between 15 and 20 staff. Redundancy information packs were issued to them and the administrator gave an assurance that it would send the remaining packs to the rest of the work force. When I heard that, the words “stable doors” and “horses bolting” came to mind.

The majority of staff at the factory had not been made aware before they left the site of the support and services available to them. Many of those made unemployed had worked for more than 20 years and were unaware of the processes and conditions for claiming benefit; nor were they aware of the redundancy support available to them through the rapid response service. Jobcentre Plus was left with the task of trying to identify those customers as they made claims for benefit.

In another part of the north-east, another company went into liquidation. Staff were not even able to get on to the site to clear their personal effects, as the gates
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were locked. Jobcentre Plus found out the name of the administrator only through the pages of the local newspaper, and the insolvency practitioner could not help because the staff had all gone home. However, Jobcentre Plus tells me that on other occasions elsewhere in the region it has received excellent support from administrators. They hold joint meetings with employees to talk them through the situation and set out how they can be helped through redundancy. On occasion, redundancy information packs have even been delivered by hand. Those are obviously examples of good practice; if a redundancy situation arises, that is how we would like it to be handled.

We need to iron out the inconsistencies across the piece, not only among insolvency practitioners, but perhaps at the Jobcentre Plus and Insolvency Service end, too. Between April 2008 and March 2009, there were 3,555 redundancies in County Durham. Of those, 513 were caused by company liquidations. Nationally, the figure stands at over 112,000. I want all those people to be treated the same—with respect, not as another commodity that needs to be sorted out, like a piece of machinery left on the site. We are talking about human beings, many with families, all with hopes and aspirations. The Bill will, I believe, go some way towards ensuring that they are treated with dignity.

How would such a Bill work in practice? It would oblige the insolvency practitioner to inform Jobcentre Plus of the situation as soon as possible, but before the liquidation is announced, where there are more than 20 employees involved. There will be an obligation on the administrator to work with Jobcentre Plus to prepare employees for redundancy. The employment service can then act in the most professional way possible and use its expertise to help the employees through the most difficult of times.

Those words and sentiments may be fine, but we need to provide further assistance to insolvency practitioners, Jobcentre Plus and the Insolvency Service. Their relationship needs to be better co-ordinated on the ground. That is why I have already met, both separately and jointly, Jobcentre Plus and R3, the insolvency practitioners’ trade body. I intend to meet the Insolvency Service soon. The Department for Work and Pensions needs to provide R3 with hotline telephone numbers, so that administrators have one point of contact in a region. R3 needs to inform Jobcentre Plus of its major practitioners, so that high-level contact can be maintained at all times. The DWP should issue a rapid-response toolkit to insolvency practitioners, so that they can fully engage with the employees and Jobcentre Plus.

It is to the credit of Jobcentre Plus, the Insolvency Service and R3 that they are ready to look at the problem and to try to resolve it. R3 has assured me that it will work closely with Jobcentre Plus to ensure that people who face redundancy are offered the support and advice that they need. My right hon. Friend the Minister for Employment Relations and Postal Affairs has offered me the opportunity to meet the Insolvency Service to discuss the best way of ensuring that insolvency practitioners are aware of their responsibilities and act on them. I know that he has already written to insolvency practitioners, through the Insolvency Service, about the matter.

The main players—the DWP, the Department for Business, Enterprise and Regulatory Reform and insolvency practitioners—are nearing the same page, but I want to
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see them on the same page; that is why the Bill is important. I want the sentiments that I have set out to be put into action. A code of conduct needs to be drawn up, and there should be regular meetings between the partners to ensure that the code of conduct is implemented by all parties. The trade unions agree with the move, too. There must be a role for them in the process, so that the whole architecture of the Bill is based on partnership. I welcome my right hon. Friend’s assurance that his Department will look into introducing trade unions into that partnership.

I believe fundamentally that the Bill would close a loophole—an important loophole at that—in the Government’s approach to helping the unemployed back into work. It is a well-known fact that the sooner someone who is out of work contacts Jobcentre Plus, the sooner they can access work. Today, as a result of the Government’s proactive approach to getting people off the dole, 75 per cent. of those out of work still find a job within 6 months. By comparing my experience of this global recession with my experience of the home-grown recessions of the ’80s and ’90s, I hope to give extra impetus to the passage of the Bill, and give the Government confidence that our approach, which is to help those who are out of work, instead of leaving them to their own devices, is right. Doing nothing is not an option.

Unemployment in Sedgefield went up from 1,077 in February last year to 2,456 in February this year. The rate of increase has been rapid, but started from a low base. Even with that rate of increase, the present situation does not compare with the recession of the early ’90s, and especially not with that of the 1980s. In January 1986, unemployment in Sedgefield hit 5,346. Of those people, more than 2,000 had been out of work for 12 months or more. Today, only 70 people in Sedgefield have been out of work for 12 months or more. The last time unemployment in Sedgefield was about 2,500 was in 1996. Almost 600 of those people—more than one in five—had been out of work for over 12 months.

Every person made unemployed is not only an economic tragedy but, more importantly, a personal tragedy for
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the individual and family concerned. That is why the Government have learned the lessons of the 1980s and 1990s. People who find themselves unemployed cannot be left behind. That is why access to Jobcentre Plus is imperative. In February some 250,000 people left jobseeker’s allowance and found another job. This proves three things to me: people have better skills sets than they once did, Jobcentre Plus is doing its job by finding jobs for people, and the Government’s economic strategy is beginning to work.

The response that I have received from Ministers, Jobcentre Plus, R3 and others to the issues outlined in my Bill prove that the Government are not complacent and are putting hard-working families at the centre of their actions. My Bill will build on the Government’s proactive approach, and will go some way towards ensuring that those made redundant have the earliest possible access to the services provided by Jobcentre Plus. The Government are doing their best to treat those out of work with dignity. The Bill proposes to do the same.

Question put and agreed to.


That Phil Wilson, Mr. John Heppell, Jim Dowd, Mary Creagh, Dr. Roberta Blackman-Woods, Mr. Jamie Reed, Mr. Kevin Barron, Mr. Ian McCartney, Tony Lloyd, Mrs. Sharon Hodgson, Andrew Miller and Mr. Frank Doran present the Bill.

Phil Wilson accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 16 October and to be printed (Bill 84).

Industry and Exports (financial support) Bill (programme) (no. 2)

Ordered ,

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Industry and Exports (Financial Support) Bill

Considered in Committee

[Sir Alan Haselhurst in the Chair]

Clause 1

Increase in limit on selective financial assistance for industry

Question proposed, That the clause stand part of the Bill.

3.43 pm

Mr. Mark Prisk (Hertford and Stortford) (Con): I welcome you to the Chair, Sir Alan, for the Committee stage of our proceedings.

Clause 1 amends the cumulative limit on the financial support for business under section 8 of the Industrial Development Act 1982. I accept that, as such, it does not authorise actual expenditure, but can the Minister confirm that authorisation for the orders involved, under the new wording, will be made by affirmative resolution? Furthermore, does he accept that it would be good practice that when each order is submitted for debate, it should be accompanied by a detailed update as to the range of schemes involved and their current funding levels?

At present, the Government publish only an annual report, which is often unrelated to the issuing of the orders in question. It would be more helpful if we in the House had the chance to consider the current schemes at the time when we debate the Government’s request to increase their funding limits. I would be grateful if the Minister would consider that carefully and make a specific response in his reply to the debate, should he catch the Chairman’s eye.

On Second Reading the Minister cited as one of the main reasons for moving to a higher limit of £12 billion the Government’s wish to switch away from grants and to increase the proportion of support in the form of loans and loan guarantees. Will he therefore tell us what proportion of the current £6 billion is in grants and what proportion is in loans and loan guarantees?

Overall, the Opposition agree that loans and loan guarantees are often a better form of business support than grants. After all, money for loans can be recycled, but loans are also treated differently by their recipients. When I ran my business a few years ago, I was also a mentor for the Prince’s Youth Business Trust, helping young people to start up businesses. I saw then how the provision of loans motivated a start-up firm far more than a grant did. It is not that surprising; one is far more likely to try to maximise the value of funding if one knows that the money has to be paid back, than if one knows that it has been gifted.

On the whole, therefore, the Opposition support a shift in the balance of financial support. However, it would be helpful, not least in considering the clause, to understand better the current balance. Indeed, of the future £12 billion, and the potential £16 billion that the
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Government expect the Bill to cover, what proportion do they expect to take the form of a loan over the next five years?

Further, the Minister on Second Reading failed to inform us of the balance of the schemes and their exact proportion of the total. He mentioned a list of different schemes, and we have debated them on numerous occasions, but he has not told us which are the most important. So, in reply to this debate, will he tell us the five most important schemes by value under the clause, their current value and by how much he expects their value to increase with the new total of £12 billion? That will enable us better to understand the direct impact not only on small, medium and large enterprises, but on different business sectors, which I know he is keen to be seen to support.

Finally, on clause 1, the Minister mentioned on Second Reading that the Bill’s remit includes funds for the post office network, and I am delighted to see the Minister for Employment Relations and Postal Affairs in the Chamber. Will the Under-Secretary of State for Business, Enterprise and Regulatory Reform, the Minister responsible for the Bill, tell us how much has already been allocated to the scheme, and how much has been paid out to date?

Lorely Burt (Solihull) (LD): I shall be brief, Sir Alan, as most of what I want to say will come towards the end of our proceedings.

On Second Reading, the Minister described a wide range of schemes that the legislation will cover, and the Liberal Democrats, too, welcome the emphasis moving from grants to loans and loan guarantees, because it creates a fairer playing field for industry generally and should constitute better value for money for the taxpayer. We welcome also the increase to £12 billion and the potential increase to £16 billion.

We appreciate that to elicit the loan guarantees, companies must undertake proper due diligence. However, hon. Members in all parts of the House have criticised the fact that the release of funds to companies, especially to small companies that are not seeking to borrow vast sums, is taking an inordinately long time. Will the Minister comment on the steps that are being taken to expedite the due diligence? The Government quite properly require it, but it can slow things up and is putting small businesses, in particular, which need help fast, beyond the reach of the schemes that were designed to help them.

The Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform (Ian Pearson): Clause 1 is essential to enable the section 8 power of the Industrial Development Act 1982 to continue to be used to give financial assistance to industry for the purposes specified in that Act. It is necessary to continue to strengthen the provision of support for businesses so that they come through stronger from the current global economic downturn. The Bill seeks to amend the cumulative limit on financial assistance that may be provided under section 8 to an initial ceiling of £12 billion, which can be increased by four orders of up to £1 billion each to make an overall limit of £16 billion. We have proposed the £12 billion limit as it restores the ceiling to more or less the same proportion of GDP as was the case when the original Act came into force.

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