Burton’s Foods (Moreton)

Debate between Angela Eagle and Lord Field of Birkenhead

Wednesday 26th January 2011 Commons Chamber

[Ms Angela Eagle (Wallasey) (Lab)]

I draw the attention of the House to my entry in this year’s Register of Members’ Financial Interests.

The Burton’s food factory in Moreton is the largest private sector employer in my constituency and has been a mainstay of employment in the communities of Moreton and Leasowe for well over half a century. The site currently employs 342 people on permanent contracts, but biscuit making is a seasonal activity so there is the potential for an extra 200 seasonal workers during busy production times. It is not unusual for seasonal workers to work for up to 10 months of the year. During the production peak last year, for example, 566 employees were working in the factory.

Last year the company announced a supply chain review, but only days into the new year it announced the shocking news that it intends to close down the entire site by the end of 2011 with the loss of all jobs. It wishes to outsource chocolate refining for Cadbury, a specialism long performed to a very exacting standard in Moreton, to an unspecified supplier. It plans to invest £7 million in two other sites, Llantarnam in Wales and Edinburgh, as well as consolidating its distribution operations, again to an unspecified place.

We are at the beginning of the statutory 90 days of consultation that must by law precede redundancies. The work force, their representatives and I are determined to use that period in the most constructive way that we can to try to persuade Burton’s Foods to change its mind about this disastrous decision. My first priority is to work with all interested parties to win the battle to save these jobs, which why I am so pleased that the Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk), is here to answer the debate tonight. I have given him advance notice of the questions with which I hope he can help me, so that we can give the work force the best chance of saving their jobs and avoiding the devastating effects that closure would have on the communities I represent. I shall return to those considerations, but first I want to deal with the developing situation in more detail.

I am grateful to Burton’s Foods for agreeing to make available the information on which it is basing its decision, but unfortunately it has not yet delivered on that commitment. The so-called data room that will house the information was due to be opened by Monday of this week, but the most recent information I have is that it will not be open until Thursday. That means that two weeks of the 90-day consultation period have already been wasted in waiting for the promised information to be provided. There are also serious worries that the quality, accessibility and level of detail of the data will not be good enough to facilitate a testing analysis of the company’s approach to the closure decision. I make this plea to the company: for speed and transparency, please co-operate with us and make available all the information in an easily accessible way. We aim to generate different proposals that offer a viable alternative to the decisions that the company has made in its supply chain review.

Sadly, we have been in this position before with Burton’s Foods. In 2007, the company earmarked the factory for total closure, but that was just months after the expiry of legal obligations it had agreed to in 2001 to access £4 million-worth of regional selective assistance from the regional development agency and rates rebates from the local authority. After that closure announcement, the work force were escorted off the site by security guards who had been hired specifically for the purpose. After that rather difficult beginning, we, together with the work force and their representatives, and after a successful campaign in the local community and this House, persuaded the company to change its mind. On 15 August 2007, a memorandum of understanding between the management and the Unite union, on behalf of the employees, was signed, saving manufacturing at the site and safeguarding a total of 437 jobs. In exchange for an undertaking that there would be no major restructuring on the site before May 2012, the work force accepted the proposed changes, some of which were painful, including new working practices. More painfully, there were 500 job losses despite evidence that the company’s productivity had been increasing consistently year on year.

The Moreton work force have more than delivered on their side of the deal in the MOU. They have increased their productivity still further, despite having had pay freezes in four of the past 10 years and very modest increases in the other years. They have delivered £12.7 million-worth of cost reduction to the business and have agreed major changes in working practices to achieve that transformation. Let me give two examples that illustrate the nature of their commitment.

The Moreton factory produces the Christmas selections at the high-value end of any biscuit manufacture, and have been responsible for increasing the sales of seasonal products by 16%. That is four times greater than for Burton’s main competitor and is an astonishing achievement in a tough and competitive environment. Likewise, the new Duels product, which was introduced relatively recently, was first made in Moreton and is now manufactured at the factory. The plan was for that new product to break even in 18 months, but due to the hard work and commitment of the managers and the marketing team, as well as the undoubted skills of the work force at Moreton, it has grown from nothing to a £20 million turnover business in just 12 months. None of the work force could have done any better—and what is their reward? The sack.

There are serious issues about whether the memorandum of understanding has been honoured by the company. No one is saying that conditions are anything other than tough in the £2.2 billion biscuit sector. Commodity prices have risen substantially and the retail environment makes it difficult for manufacturers to pass on extra costs to their customers. The company has changed hands in the year following a restructuring that converted into new equity £137.7 million of borrowing that had been loaded on to the company by a string of private equity owners. That has reduced the group’s interest burden to a manageable level. The previous private equity owners, Duke Street Capital, passed ownership on to a number of parties, none of which now individually has a controlling interest, but I understand that they include the Canadian Imperial Bank and Apollo Asset Management.

Although the company is clearly experiencing difficulties in the market, the 2010 annual report shows positive figures over the past year. Its turnover was up 4%. Earnings before interest, tax, depreciation and amortisation were up slightly, as was its gross profit margin. Although that was a modest performance, I note in passing that the directors’ remuneration increased by a staggering 97.5%, with a 119.9% increase for the highest paid director. That makes a startling contrast to the years of wage freezes inflicted on the work force at Moreton.

So there are tough conditions to contend with in the market. We all know that this requires an imaginative response, but I do not believe that the supply chain review is the right one. There are good grounds for believing that the production costs at the Moreton site have been overestimated, whereas the closure costs have been underestimated. There is much in the company’s figures to contest.

Since the factory opened in 1953, it has been a dominant employer in the Leasowe and Moreton area. It is not uncommon for entire families to work at the factory, sometimes with more than one generation on the production line at the same time. If the closure were to go ahead, it would be devastating for many of my constituents. It would decimate the local economy at a time when it is already fragile. The human cost cannot be overestimated.

[Mr Frank Field (Birkenhead) (Lab)]

I applaud my hon. Friend for initiating this debate and for her concentration on the impact on Wallasey, but despite the divisions between our two areas, people move over the borders from Birkenhead to work. My plea to the Minister is that he does not address only the points that my hon. Friend is making. The Government have a welfare reform programme and want people on long-term benefit to move into work. It is difficult anyway to achieve that. It is doubly difficult if the job market disappears for those wishing to make the transition.

[Ms Eagle]

My right hon. Friend is right. I shall come to that.

There are many local families who would lose more than one breadwinner and face serious hardship if the closure goes ahead. A closure would cause the local economy great difficulty. As an article in the Wirral Globe recently pointed out, many local small businesses benefit from the custom of so many employees on the site, and others, such as Abbey Supplies, deal directly with Burton’s.

My first priority is to do all I can to save those jobs. That is why I am glad that the Minister is here, listening to the debate. It is important that in parallel I work to safeguard the interests of those whom I represent, which is why I have written to the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling) seeking a meeting with him to discuss the implications for our local employment market, should the closure go ahead. However, I would prefer the Minister to work with me to stop that happening.

Any potential closure of the site would have ramifications beyond the workers and their families who work at Burton’s Foods. Two other companies, Manor Bakeries and Typhoo Tea, share the site with Burton’s. These factories between them employ 620 more people. Executives at Typhoo Tea have highlighted how any potential closure of the Burton’s factory could cause them at least £1.5 million in extra costs as they have shared agreements on electricity, gas, drainage and stock rooms. It is crucial to avoid a domino effect on the site, and I wish to know what the Government could offer in the way of support to prevent that from happening in the event of a closure going ahead.

The week before Burton’s Foods dropped the jobs bombshell on Moreton, the Prime Minister and Michael Heseltine had been visiting the docks in Wallasey. Indeed, the Prime Minister referred to that at Prime Minister’s questions today. The visit was part of their growth tour. Although the Wirral Waters development is potentially very exciting, it is a plan which by its nature cannot make progress quickly. The Government’s contention has been that the private sector will grow to fill the gap caused by the decision to cut public spending so quickly and deeply, but I am sad to report to the House that we are already experiencing public sector job cuts announced locally. Wirral borough council has decided to cut 1,100 of its employees this year—one sixth of the total—but the private sector has not filled the gap. By its announcement, Burton’s Foods has piled on the agony.

Even prior to these announcements, Wallasey was suffering high unemployment. In December, Government figures showed that 2,173 people were claiming jobseeker’s allowance. For every job vacancy, there are now 17 applicants, and that is before the job losses announced by Burton’s and the local authority have taken effect. That is why it is so important to fight to save these jobs. I implore the company to think again and work with the employees to develop an alternative proposal that can allow it to remain competitive in the market while securing jobs at the site.

I would be grateful if the Minister could lend his support by dealing with the following questions tonight. Work is going on to formulate alternative proposals that will meet the company’s requirements without closing the Moreton factory. Similar exercises have succeeded in the past, but only with active Government support. What support can the Government offer if we are able to put together a package that will convince the company to rethink its decision? What grants has the company applied for from the Scottish and Welsh Governments to support its proposals to move jobs from Moreton, and can the Minister promise to match any grant offered to secure those jobs in England? The company accounts for last year show a credit of £418,000 for

“the release of Government grants”.

Can the Minister explain what these outstanding grants are? Can he also explain what leeway, if any, the outstanding moneys may give in encouraging the company to think again?

As I have already mentioned, two other businesses remain on site, Typhoo Tea and Manor Bakeries, which employ 620 people between them. They have indicated the extra costs that they face if the Burton’s factory were to close. What support can the Minister pledge in order to prevent a domino effect, putting those jobs at risk too, if the closure were to go ahead?

The Moreton site is the only land in the area suitable for industrial development and zoned for that use. If there were a closure we would need significant public investment to ensure that it could be developed to create the potential for future jobs growth and enhance local job prospects. What support could the Department offer in those circumstances?

My constituents who work at the plant will fight for their jobs. They will not roll over, but they need the support and help of the Government to ensure that there is a level playing field in grant support in all areas of this country. We heard the Prime Minister today promise to support private sector businesses throughout the country, but particularly in Merseyside, and workers at Moreton are looking to the Government to keep the promise that the Prime Minister made earlier today and support private sector jobs and promote growth.

At a time when families in Moreton and Leasowe are desperately worried about rising unemployment, I ask the Minister to work with me to help save the Moreton site and to secure the jobs of one of Britain’s most established, dedicated and successful work forces.

Wirral University Teaching Hospital NHS Foundation Trust (Fraud)

Debate between Angela Eagle and Lord Field of Birkenhead

Wednesday 9th June 2010 Commons Chamber

[Mr Frank Field (Birkenhead) (Lab)]

May I, through you, Madam Deputy Speaker, thank Mr Speaker for allowing me this evening’s debate. It is pleasure to see you in the Chair on what I think is your first day. I believe that this is the first time that I have addressed the Minister from the Opposition Benches, and I am very pleased to do so. I assure him that it will not be the last time that we will be engaged in these conversations.

From this Adjournment debate on alleged fraud in the Wirral hospital trust, I am looking for three things. First, I am sure that I am not exceptional in the number of constituent cases about alleged fraud that I refer to the relevant authority. In every case I have passed on, whether it be to the Department for Work and Pensions or to the Department of Health, I have never had a satisfactory reply that I could then refer to my constituent. I would not disclose the information, but if I had such a reply, I could say that I had been able to read the papers and assure constituents that they were mistaken in alleging fraud. I could say that a proper investigation had been carried out and we could leave the case there. As I say, however, that has never occurred. One thing I am looking for this evening, then, is for the Government to consider the particular role in which elected representatives sometimes find themselves in handing to the Government alleged cases of fraud, yet never being able satisfactorily to report back to their constituents.

Secondly, I have tried to use the Freedom of Information Act 2000 in order to gain the information that Wirral hospital trust denied me. I was refused on the basis that disclosure of the information would provide me with sensitive personal information such as the name of the person against whom the allegations of fraud were made. However, given that everybody involved in the case knows the name of the doctor, although I have never used it in public, it seems somewhat farcical to use the Freedom of Information Act in this way to prevent my gaining access to reports that have been commissioned.

Thirdly, this saga has been going on for a long time, and I have no intention of letting go of it, so I hope that the Minister might be able to advise me on the next best steps to take to resolve the issue. Through you, Madam Deputy Speaker, I would like to remind the House of what happened.

All too long ago, one of my constituents was sitting in the surgery at their doctor’s. The doctor was engaged in a telephone conversation with one of his patients, who turned out to be a private patient. During the conversation, for reasons that I cannot possibly explain, the doctor assured the person that they had been treated as an NHS patient although they were being charged as a private patient.

I started to look into the case. I asked both the primary care trust and the hospital trust—Wirral University Teaching Hospital NHS Foundation Trust—to investigate. I had a meeting with the hospital trust at which the chairman and the senior directors were present, as well as the locally based official who was in charge of countering fraud in the health service. At that stage the doctor admitted that, as a result of an error, he had put through as NHS patients about 180 patients whom he was charging as private patients, but who were being given tests as NHS patients.

[Ms Angela Eagle (Wallasey) (Lab)]

rose—

[Mr Field]

I will give way in a moment to my good and hon. Friend from a neighbouring constituency.

The doctor admitted that that had been an error in all cases, and repaid money. I asked, through its chairman, whether the trust—on the basis of the core of cases of private patients being fed through the NHS—would examine other procedures in the hospital to establish whether any of those 180-odd patients had had scans or X-rays, and whether the doctor had again forgotten to declare that they were private patients when ticking the forms assuring the NHS that they were, in fact, NHS patients.

[Ms Eagle]

My right hon. Friend has raised an issue that affects all of us who represent constituents in the Wirral, which is served by the hospital concerned. Does he think that this individual case of fraud involving an individual doctor raises issues about conflicts of interest that may well resonate in other areas of the NHS, and does he agree, on the basis of his experience of this case, that there are general rules that all Members should consider applying more generally throughout the NHS to avoid such financial conflicts of interest?

[Mr Field]

I strongly agree, and I hope that at some stage the medical profession will give serious consideration to how the interface between the public and private sectors might be policed in the context of health.

As the fraud officer present said that it was quite reasonable to undertake the next stage of the inquiries, I left the meeting, only to find that later the chairman of the hospital trust and her senior executives had said that no such investigation would take place, and that I would not have access to their reports on this case of alleged fraud unless I was prepared to sign a document saying that after reading the information I would never use any of it in public debate. I was not prepared to sign such a gagging clause.

I appealed for access to the documents concerned under the Freedom of Information Act. Because the hospital trust is not known for its efficiency, it applied to block my appeal under the wrong section of the Act. When I appealed to the commissioner, he had to point out to the trust that if it wanted to block my original appeal it would have to use another part of the Act, which of course it then did.

I then appealed to the tribunal, which ruled that I should not have access to the document, or documents, because if I had such access I would gain sensitive personal information to which I was not entitled, such as the name of the person against whom the allegations were being made. As at every stage everyone who was in that room has known the name of the doctor concerned but none of us has made it public, it seems bizarre that it was on those grounds that I was denied access to the counter-fraud report which is alleged to have been undertaken.

Since the attempts to grapple with that individual case of fraud, the same hospital trust has had to repay more than £1 million to what was the primary care trust but is now Wirral Health, because it was found to be fiddling its accident and emergency figures. Quite how that came about and how it was decided that the fraud amounted to £1 million-plus I do not know, but that money has been repaid. I allege that there is a culture of fraud in that hospital trust, which is not being taken seriously by the chairman and the directors of the trust. I look forward to hearing what the Minister has to say.

One last point concerns the Freedom of Information Act. I am well aware that the Government have their own legislative programme, but I would be grateful if the Minister would take back the fact that there may be problems in two respects where MPs refer fraud cases to the administration for investigation. One is the one that I touched on at the beginning of my remarks. As elected representatives, we are never put in a position to report back fully to our constituents. Obviously, we deny them any sensitive personal information, but we cannot say that we have read the relevant papers and we would like to be able to assure them that their concerns about fraud are unfounded.

Secondly, I took up the case only because a constituent referred me to a case of alleged fraud. The doctor admits that somehow in 180-odd cases he happened to tick the wrong boxes, claiming the people concerned were NHS patients, rather than private patients. It seems wrong that I am denied access, as the elected representative of an area, to the counter-fraud allegations that have taken place.

There are two issues, and I would be grateful if the Minister reflected on them with his colleagues, although he may wish to comment on them in the debate. The case has dragged on for some time, but as I have said— I know the Minister is convinced of this—I am not going to let it go yet. I would be interested to hear how the Government think that we might take the case forward to a successful conclusion. I wait to hear what the Minister says.