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Notification of Redundancy

Mr. Jim Cunningham (Coventry, South) (Lab):

I beg to move, that leave be given to bring in a Bill to make provision with regard to notices of redundancy; and for connected purposes.

I applied to present this Bill some time before last week's announcement at Peugeot, because I have thought for a long time that something should be done about companies arbitrarily announcing redundancies. We have certainly had a spate of them doing so in the west midlands over the past two or three years. Hon. Members will remember what happened at Rover, and it happened again at Rover fairly recently. Coventry had the Peugeot announcement recently and the Jaguar announcement last year, and some hon. Members will remember what happened at the Standard Motor Company about 20 years ago.

Such things have happened to us over a long period. Nevertheless, I know that the Bill will not stop redundancy as such, but that is not really the issue: the Bill will certainly make it difficult to close factories arbitrarily, and some major companies are ignoring the social consequences of such decisions not only for their employees, but for their employees' families. In fact, the labour forces at Jaguar and Peugeot were increasing quality and productivity, and they were told in return that the companies would increase investment—certainly, in Coventry—but in both instances that never happened.

Only about 18 months ago, I had an Adjournment debate in the House about whether Peugeot would take a grant offered by the Government, which never materialised. Since then, the company has played cat and mouse with not only Ministers but its employees and their families. The announcement was a bitter pill for the families, but it was a slap in the face for the labour force. Companies are effectively telling their labour forces these days that, even if they improve quality and productivity, they might be down the road in a couple of weeks or a year's time. That is not very satisfactory. My Bill therefore aims to bring UK employment legislation into line with the minimum European standards on information and consultation.

The Bill has three main points: administration, liquidation and input into investment decisions through the labour force's representatives, which can take many forms. Employees must be part of the decision-making process during the administrative phase of a company and prior to liquidation. Very often, in those circumstances, employees are not treated the same as a preferential creditor or as the taxman. They are about fourth or fifth in the pecking order, and by the time it comes to them, they find that they have a problem. In some instances, they get only statutory redundancy pay. Only when employees are part of that decision-making process will they be able to provide meaningful input into the direction of any financial decision made by the company. Consultation post liquidation is simply lip service and, frankly, ineffectual in protecting employees' jobs and pensions.

As happens in some European countries, the Bill seeks mandatory consultation with employees, preferably under the umbrella of a works committee. Strict financial penalties should be applied to companies that fail to consult, and specific waiting periods must be observed between each stage of the process. In some European countries, the law requires companies or groups with at least 300 employees, as well as smaller companies with works councils, to hold negotiations every three years, as a means of informing and consulting their employees on the company's strategy and its expected impact on employment and work force and skills planning.

Companies in the UK are obliged to provide information only on issues consequential to investment decisions. However, the information should be given in such a fashion as to allow representatives adequate time to study and to make alternative investment proposals. The Bill aims to create a level playing field for investment decisions made by companies in line with their counterparts in Europe. We cannot allow a situation to continue where companies are easily able to uproot without fulfilling all their commitments to their employees.

Over the last 20 years, Coventry has seen the closure of the Standard Motor Company, Rolls-Royce at Parkside, Massey Ferguson and Jaguar. Coventry also had some input into Rover, and now we have Peugeot to add. We have doubtless all heard about the 2,300 job losses at Peugeot by 2007, which emphasises the weakness of employment legislation. Workers at Ryton have been excluded from meaningful consultation on the future of the company, which never confirmed whether it would take up the European grant of more than £14 million.

Employees were left out of the decision-making process and were used only in a "consultative exercise"—a trend that must be reversed. That and future decisions will have an inevitable ripple effect on this country's economy. The choice is clear: we should introduce the same employment protection that other employees enjoy in Europe. Without a doubt, we need a more proactive industrial policy and stronger employment laws, which would save jobs.

The west midlands contributed £77.3 billion to our wider economy in 2003. Until we show our determination to protect jobs in the west midlands and the country more widely, we will see a significant decline in one of the UK's largest regional economic contributors. I therefore urge the House to give its wholehearted support to the Bill.

Question put and agreed to.

Bill ordered to be brought in by Mr. Jim Cunningham, Mr. Geoffrey Robinson, Mr. Brian Donohoe, Mr. Jim Devine, Mr. Bill Olner, Mr. Brian Jenkins, Jim Sheridan, Anne Moffat, Christine Russell and Mr. David Hamilton.