Corporate Insolvency and Governance Bill

Baroness Blower Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 9th June 2020 Lords Chamber

[Baroness Blower (Lab) [V]]

My Lords, I have no specific interests to declare in the context of the debate, but I declare one as a lifelong trade unionist. As such, I always look at proposals from any Government in the light of how they will impact on employees and workers. There is, I am sure, a widespread fear that in the aftermath of the pandemic there is likely to be wide-scale job loss and the prospect of not a little unemployment. This prospect must focus our minds on what can be done to avoid or alleviate it.

The pandemic has brought into sharp focus the significant levels of inequality in this country. Many more people are now aware of just how little others had to live on before the pandemic, and many will look for a better and more equal society in post-Covid Britain, as well as globally. If we are to see a fairer Britain, it will be ushered in by ensuring that employees and workers have well-respected legal rights.

On the surface, this Bill is about rescuing financially distressed companies; I think we can agree that there may be a number of them. We can also agree that maintaining companies so as to maintain jobs is an important objective. However, what potentially may be enabled through the Bill’s proposed company restructuring is a situation in which companies restructure their liabilities while remaining in business, with the impact of such restructuring falling very heavily on the workforce—perhaps in particular on employees’ pensions. Can the Minister clarify what recourse an ongoing restructured business would have to the Pension Protection Fund?

Further, can the Minister explain the lack of intention in the Bill’s proposals to limit in any way executive pay and bonuses, even for a specified period? Nowhere in the Bill is there even a nod in the direction of the need to consult the workforce, much less engage in meaningful negotiations. If this legislation is in part modelled on Chapter 11, as it is popularly known in the United States, it may open the door to what has been seen in some companies in the US: the strategic use of insolvency as a means of jettisoning previously agreed collective bargaining arrangements in order to depress wages, conditions and pensions.

There is an opportunity in the Bill to legislate for the requirement to consult the workforce in any company that is genuinely facing difficulty. This would indicate a desire that restructuring should not be used in an unreasonable strategic fashion. The much-vaunted agenda of levelling up will ring hollow if legislation is not seen to take into account the voices of workers in their own futures. I congratulate the noble Lord, Lord Balfe, on his remarks in this regard and his recognition of pensions as deferred wages.

I trust that the Minister will consider favourably amendments that will be brought forward from these Benches to remedy the lacunae in the Bill.