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3 Nov 2009 : Column 223WH—continued
Mr. Benyon: The chief constable wrote to Mr. Fidler only when I wrote to her. Does the Minister not agree that it is a strange way of doing things to tell the contract manager to terminate the contract, not giving any reason why and not giving any reason to the MP concerned until I contacted her and she approached Mr. Fidler?
Mr. Alan Campbell: I suppose we can conclude that however frustrated the hon. Gentleman is about the process, there was a written response. I shall go on to how he might want to seek redress if he is not satisfied when he reflects upon how the whole process has been handled.
Of course, as the chief constable made clear, Mr. Fidler may wish to seek redress on the matter by obtaining legal advice. I understand the limitations that individuals might have in doing that, but nevertheless the option remains available. At the end of the day, this is a contractual matter; it is not a matter that the Home Office can get involved with in the way that the hon. Gentleman seems to be requesting.
I want briefly to explain the limited role that the Home Office has in the important business of the removal, storage and disposal of vehicles on police instructions. The removal and recovery of vehicles from roads or any land in the open air by contractors acting for the police is an important day-to-day activity in all forces. The Government and the police value the work of the contracted recovery operators who remove vehicles on police instructions. However, the precise arrangements adopted by police forces for the safe recovery of vehicles, including the engagement of contractors, either directly or through managing agents, to carry out that work are an operational matter for individual chief officers of police. The Home Office has no remit to become involved in such commercial and contractual matters and it certainly cannot comment on the individual circumstances of a particular case.
I want to reiterate that if the hon. Gentleman's constituent is seeking redress on the issue of termination of the contract and the circumstances that prevailed, he should pursue a legal route. Ministers cannot become involved in the issue and it would not be appropriate for Ministers to comment on the way in which particular individual allegations are investigated by the police or on the decisions that followed from those investigations. Those are matters for chief officers.
There is a due process. If the hon. Gentleman believes that due process has not been followed and if, having complained to the police-I understand that he has done so and that the investigations have been looked at-he remains unhappy with their response, his constituent may wish to refer the case to the Independent Police Complaints Commission. I know that the hon. Gentleman will be disappointed.
Mr. Benyon:
I am grateful to the Minister for responding to the debate, and I understand the limitations on him and the Home Office. I should like to put on the record again that I have a very good working relationship with the chief constable; I hope that good relationship continues after today. However, the purpose of MPs, every now and again, is to stand up for people whom we feel have been brow-beaten by a large organisation, particularly if it is a public one. There must be a method whereby
ordinary Members of the House can represent their constituents on issues such as this if they feel that an injustice has been done, rather than individuals having to go through the courts themselves.
Mr. Campbell: I understand that. Standing up for people is a key part of what Members do. The hon. Gentleman is doing that, and there is some force in his argument. Whether the issue concerns public organisations or not, active and committed Members of Parliament such as him have a right to raise these matters. However, it is not for Ministers to second-guess decisions or to comment on procedures if the responsibility for those procedures, and for their investigation, lies elsewhere. If he and his constituent are not satisfied about the way in which the contractual aspects of this case have been dealt with, a proper and independent view of the matter could be gained by taking it to court.
Let me address the hon. Gentleman's concern about police forces. I am delighted that he has full confidence in his chief constable, as do I, and I am quite sure that their respect for each other's role will ensure that his decision to pursue a matter that has her force at the centre will make no difference to their relationship. I repeat that it is not for Ministers to second-guess or to investigate individual matters such as these. The hon. Gentleman or his constituent may wish to raise the matter with the Independent Police Complaints Commission and get its view. That is one of the responsibilities that we have given that body.
I understand that having raised the matter in the House, the hon. Gentleman will be disappointed by the response, but I hope that he will appreciate the limitations on us and the need to be cautious and not overstep our responsibilities. Some of his comments have raised issues about the policy framework in which certain decisions are made. If he feels it would benefit him, I shall be pleased to meet him to discuss those policy matters, with reflection on this case. However, that offer is placed within the strict limitations of what is available to Ministers, and the same will apply to any advice that I can offer him.
12.52 pm
MG Rover
1 pm
Richard Burden (Birmingham, Northfield) (Lab): I am grateful for the opportunity to raise with the Minister the results of the investigation into the affairs of Phoenix Venture Holdings Group, MG Rover Group and 33 other companies. I am pleased to be joined by my hon. Friend the Member for Birmingham, Hall Green (Steve McCabe), who has taken a close interest in the issue, and I know that many other hon. Members with constituencies in Birmingham or the west midlands who cannot be here today are concerned about the issue.
The investigation was commissioned in 2005 by the then Secretary of State for Trade and Industry, my right hon. Friend the Member for Kingston upon Hull, West and Hessle (Alan Johnson), soon after the collapse of MG Rover Group at Longbridge in my constituency. The investigation was headed by Gervaise MacGregor and Guy Newey QC. It had been set up under section 432(c) of the Companies Act 1985 and had a wide range of powers and a high degree of independence, both of which were important for its credibility.
The inquiry certainly had to look at some highly complex issues, but I am not alone in questioning why it took more than four years to report and cost around £16 million. I ask my hon. Friend the Minister to consider how we can ensure that future comparable inquiries will be neither excessively costly, nor so long drawn out, without compromising their independence or thoroughness.
Some have suggested that much of what is in the inspectors' report had already been said or alleged before. There is something in that, but it does not alter the fact that the their findings are significant. The report's 830 pages meticulously catalogue how the companies associated with MG Rover were structured and then restructured and how money was moved around between 2000 and 2005. The report is damning of the actions of the directors of Phoenix Venture Holdings, the so-called Phoenix four, during that time. That they paid themselves a lot of money during their stewardship of MG Rover was well know a long time before the report. I was one of those who asked questions about some of those things years ago, and my criticism at that time of the Phoenix four's largesse towards themselves is on the record.
However, what is devastating about this report for the Phoenix four is not what it reveals about the amounts they paid themselves, or that they saw considerable personal gain as a desirable or justifiable consequence of building a successful company, but that personal gain-some would say greed-was their central objective from the start of the Phoenix takeover of Longbridge. That objective took precedence over the interests of MG Rover as a car maker and the interests of the employees, from whose efforts the Phoenix four benefited.
I do not have time to go through all the report's findings, or even most of them, but I will offer a flavour of some of the things it contains. It provides evidence that from the word go at least some members of the Phoenix consortium were seeking to make around £75 million for themselves, not from engineering cars, but from engineering company finances. They did not reach that target, but they got a long way towards it.
The report shows how losses were locked into the car-making business with profits going elsewhere. Despite what was claimed at the time, many of those profits were not recycled back to support the car manufacturing business.
The Phoenix four made sure that their own stakeholdings in the business brought them significant personal remuneration and the power to make decisions. The shares they distributed to their employees, however, brought neither income, nor influence over company decisions. The Phoenix directors still awarded themselves millions for their own sacrifice in making those employee shares available.
Phoenix invented a range of money-spinning schemes, which some people might call scams. The names were sometimes bizarre, like Project Patto or Project Lisa, and sometimes the names spoke volumes in themselves, such as with Project Aircraft. Not all of those schemes saw the light of day, but all seemed designed principally for personal or corporate gain. Phoenix Venture Holdings' advisers, such as Deloitte and, to some extent, Eversheds, helped to design some of those schemes, and the millions they got in fees for their trouble raises important ethical questions. Perhaps even bigger ethical issues are raised by the report's revelation that one Phoenix director, Peter Beale, chose to install a programme called "Evidence Eliminator" on his computer the day after the investigation was announced in 2005.
I would like to say a little more about one project, Project Platinum, which established MGR Capital, the vehicle through which the former BMW loan book for Rover was acquired during the Phoenix years. Acquiring that loan book was the right thing to do for MG Rover as a car company, but there are and always have been real questions about why MGR Capital was set up outside the Phoenix group of companies. The result, of course, was that when the money finally came in it would be shared between members of the Phoenix consortium and their partners at Halifax Bank of Scotland, rather than ploughed back into investment in MG Rover. I and others questioned the Phoenix directors about MGR Capital as long ago as 2003. It was also one of the subjects on which the inspectors suggest that I, and Parliament itself, received misleading replies and information from one or more of the directors.
Therefore, I welcome the decision of the Business, Innovation and Skills Committee to invite the Phoenix directors back to Parliament to explain these things. The Phoenix four should accept that invitation. It is not good enough for them simply to rubbish the inspectors' report through their PR firm without answering the report's central charges. If the Phoenix four have answers, we all deserve to hear them, and we deserve to hear them in public and on the record.
I was never one who joined in the backstairs briefings against Phoenix Venture Holdings even before it signed the deal with BMW to take over Longbridge. Indeed, I criticised some of those responsible for those briefings because they never seemed worried that their words might not only highlight genuine concerns about the conduct of a bunch of directors but destabilise the future of MG Rover itself, threatening the livelihoods of the thousands of MG Rover workers, from those on the shop floor to senior managers, who were genuinely
trying to make a go of the company, a company that was so important to manufacturing in the west midlands as a whole.
Let us not forget that in the circumstances we faced in Longbridge when BMW pulled out in 2000 it was not wrong to ask BMW to consider alternatives alongside the deal it was proposing to do with Alchemy Partners. It was certainly not wrong to back the only alternative in town when negotiations between BMW and Alchemy broke down on 28 April 2000 and Longbridge faced the real prospect of closure, with the likely loss of over 20,000 jobs in the west midlands and beyond.
Perhaps the Phoenix four are all resigned to going down in history as greedy, but I am sure that they would also want to be remembered for genuinely trying to build a future for car-making at Longbridge and, when that failed, finally doing the right thing by all those who worked for them. They do not have much credibility left, but for what remains of that credibility, and because it is the right thing to do, I ask the Phoenix directors to agree to the following. First, there should be no more delays in putting money into the trust fund they set up for their former employees. They say that there are still all kinds of procedural impediments causing delays nearly five years on from the closure. That may be the case, but I say bluntly that that is their problem. They made sure that there were no impediments when they paid themselves millions each to insulate themselves from the consequences of company failure. They now have a responsibility to their employees which they should honour without delay.
The second thing concerns MGR Capital. It is unclear where the wind-up of MGR Capital is up to, but there are reports that there could be proceeds of between £16 million and £22 million. My understanding of the structure of the company is that the money could be shared by HBOS and members of the Phoenix consortium. I say no to that. Let the proceeds from MGR Capital be at least one positive legacy of the Phoenix years. I say to the Phoenix consortium that it should put part of its share of MGR Capital's profits towards the trust fund for its former employees and the rest of it into a community development trust so that local people can have a direct say in, and direct benefit from, redevelopment of the Longbridge site and the surrounding area.
And HBOS, the Phoenix consortium's partner in MGR Capital, should show that the banking sector itself is recognising some social responsibility by investing its profits from MGR Capital in the venture, too. Those things are unfinished business. They are things that could still happen, and I ask my hon. Friend the Minister to do what he can to make them happen.
1.12 pm
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Ian Lucas): It is a pleasure to appear before you, Mr. Sheridan, I believe for the first time. I thank my hon. Friend the Member for Birmingham, Northfield (Richard Burden) for calling this debate. I know that he has worked assiduously for many years on matters concerning the Longbridge site, first in 2000 when this story began, through 2005 and in the years since. I welcome my hon. Friend the Member for Birmingham, Hall Green (Steve McCabe), who has worked with my hon. Friend the Member for Birmingham, Northfield on these matters.
Whenever a redundancy situation occurs in any of the communities that we represent, it is extremely serious, so back in 2000 when BMW was about to divest itself of its interests in the Longbridge site, it was entirely understandable and explicable that the community as a whole took the steps that it did. The hard work that was done and the public support at the time for the Phoenix consortium are evident from the report. It is against that backcloth that we have to consider subsequent events and the actions of members of the Phoenix consortium.
The collapse of MG Rover in 2005 reverberated not just through communities in the west midlands but across the United Kingdom. More than 6,000 people lost their jobs, individual employees and families were hit extremely hard, many creditors were left with unpaid bills-the total was £1.3 billion-a major UK car manufacturer went into liquidation and many suppliers lost a key customer. The west midlands region was dealt a body blow, and I am sure that the impact is still being felt today.
It was important and absolutely right that the Government set up an independent inquiry to find out what led to the collapse. Those who were affected need to know the truth about what happened, because there have been many allegations and ill-informed rumours. The report sets out in great detail-more than 800 pages, as my hon. Friend said-the extremely complex history of events leading up to what happened in 2000 and in subsequent years. The report is important as a point of reference for people. The story is complicated and the report contains a great deal of detail, but it is there for the public to see. The inspectors painstakingly studied a complex structure of 33 companies that made up the MG Rover Group and its parent, Phoenix Venture Holdings. They also looked closely at the role played by certain directors.
When a company controlled by John Towers and his fellow directors bought MG Rover from BMW in 2000, they were welcomed by the workers, the suppliers and the local community because it appeared that they would save jobs and the business, but it is evident from the report that, from the outset-it was true throughout-they needed a joint venture partner to ensure the long-term survival of the business. Although there were several attempts to find a partner, five years later they had not signed one up, and losses were accumulating, car sales were falling and insolvency loomed.
However, it is clear that throughout that five-year period of such difficulty for the company, the Phoenix directors were prospering. The so-called Phoenix four had spent considerable time and effort designing projects to shift assets away from MG Rover to other companies in the group owned by them, instead of using the money to support car manufacturing. The report details not the tens of thousands or hundreds of thousands but the millions that were paid to the individuals concerned. The inspectors found that during those five years, the directors took
"unreasonably large, financial rewards, totalling tens of millions of pounds."
Inspections of that kind take time and invariably cost considerable sums-in this case, £16.3 million. That is why they are so rarely deployed. The inquiry was complex
and has clearly cost more than anyone would have liked. I take on board what my hon. Friend the Member for Birmingham, Northfield said about the time that the inquiry took, and its cost. However, it was important that the inquiry be independent. The difficulty from the Government's point of view was that interference at any stage in the conduct of the inquiry would have led to allegations that they were seeking to intervene in the inquiry in some improper way. Certainly any interference by the Government once the inquiry had been set up would have been entirely inappropriate, but there are lessons to be learned from the situation. The position and the terms of reference of the inquiry at the time that it was set up should, perhaps, be looked at for the future.
In addition to setting out the story, the inspectors also suggested that changes should be considered to financial reporting standards and guidance to increase transparency. The aim would be to help users of company reports and accounts better to understand a company's financial position, including the value of assets. The Financial Reporting Council is looking carefully at the lessons from this case. Work is under way to bring legal proceedings against the relevant directors with a view to seeking their disqualification by the court, or their offering to undertake not to be involved in the management of companies for a period of time.
My hon. Friend referred to the trust fund. I took questions in the House when the report was released so I know that it is a matter of profound concern to everyone-to Members and, more widely, the west midlands community. The reason the trust fund was set up in the first place-at the time of the collapse of the company-was to assist a west midlands community that had been dealt a body blow, and to dispel concerns that were being expressed about what had happened before that.
We all know that, until now, the trust fund has simply not delivered in any respect. The justification that has been provided for the trust fund's not delivering is that we were awaiting the outcome of the inspection report. The report is now available. If there is to be no distribution or investment in the trust fund, we need to know why that should be so at this stage, because the community has had to deal with the consequences for almost five years. Individuals have had to rebuild their lives and the community has had to rebuild itself during that period. It is about time that the commitment given voluntarily in 2005 is lived up to by those who gave it. We ask no more than that individuals follow the lines that they outlined in 2005 and make a commitment to the community in material terms, not just in words.
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