Economy and City Link: Coventry

Debate between Geoffrey Robinson and Jo Swinson

Friday 23rd January 2015 Commons Chamber

[Jo Swinson]

Indeed, and individuals will be in different circumstances. As I said, for some people being self-employed works well depending on their circumstances, but the difficulty comes if that is used effectively to mask what is an employee-employer relationship. In addition to any concerns the Treasury might have, there are also issues about workers’ rights.

[Mr Robinson]

The point my hon. Friend and I are making is that those people are not allowed to work for anyone else. Generally, someone who is self-employed has the right to work at other places and build up other contracts. They can do other things and offload their risk. However, when they are obliged by their contract not to do that, we must consider that in the light of employment law.

[Jo Swinson]

I am not a lawyer so I will not give legal advice, but employment tribunals can consider the facts of any case in front of them. It is not simply what is declared in a written contract that determines the nature of an employment relationship; it is also about the facts of the case. Employment tribunals are able to interpret a case based on whether there is mutuality of obligation, and in previous employment tribunals, judgments on exclusivity clauses have been used to demonstrate that kind of relationship. I will not pronounce on any individual case, but there is flexibility in the employment law system for employment tribunals to consider individual facts. Because there is uncertainty about different types of employment—some of that is related to growth in zero-hours contracts and we are legislating to prevent the kind of exclusivity clause that has been outlined—we are undertaking that employment status review. I do not suggest that the solution is straightforward or simple, because a wide range of issues are being considered. Employment law and status have developed over many decades, and that review is an important piece of work.

The hon. Member for Coventry South mentioned the importance of quality jobs. Positive employment figures are a great good news story, but as the economy recovers we want to encourage employers to ensure that the jobs they create are quality jobs, and that where they can afford to they do not pay just the basic minimum wage. That safeguard and safety net is rightly there as a protection for the most vulnerable people in our labour market, but the minimum wage should not be a target. Responsible companies that are profitable and doing well generally want to pay above the minimum wage, and the Government encourage them strongly to do so.

On an investigation into City Link, the process after any company fails is that we ask whether it has been managed correctly, which is fair. We need to establish the full facts before coming to a judgment, as the hon. Member for Coventry North West (Mr Robinson) said. As a result, the administrators have a legal duty to report confidentially to the Secretary of State within six months of their appointment on the conduct of the directors. We are trying to reduce that time in legislation to three months. It is important to point out that we do not expect a report to take six months; they are often done earlier than that. Insolvency Service investigators are currently in contact with the administrators and expect to be able to identify any matters that should be investigated well before that final six-month deadline.

When the necessary information has been received from the administrators, the Insolvency Service is in a position to consider whether there are any grounds for bringing disqualification proceedings against the directors. The administrators’ view is a relevant consideration, although ultimately the assessment of whether grounds for the disqualification of directors exist will be based on the Insolvency Service’s independent view and conclusions. A director can be disqualified for anything between two and 15 years. It is important to set out that process. We need to wait for the information. On a point of clarity for the hon. Gentleman, the report that is produced on the directors’ conduct by the administrator is produced confidentially to the Secretary of State. That will be assessed by the Insolvency Service. On that basis, it will then decide whether further action should be taken.

We have discussed the importance of City Link, but the hon. Member for Coventry South set out wider issues in Coventry’s economy. We are dealing with the damaging City Link situation, but it is worth recognising that there is a lot to welcome in the local economy in Coventry and Warwickshire. It is one of the higher-performing local enterprise partnerships in terms of investment and jobs created through foreign direct investment. It is an important location for firms experiencing employment and growth. Last weekend, Newcross Healthcare Solutions announced plans to open a new base at the Middlemarch business park, where City Link was based, which will create 100 new permanent jobs.

Others have chosen Coventry recently, such as LeanNova Engineering, which is creating 60 jobs, and Sitel UK, which is set to create around 300 new jobs, with potentially more to follow. They sit alongside high-profile names such as Capita and Bupa, which are expanding within Coventry. That builds on Coventry’s major manufacturing and engineering base, including such major employers as Tata, Jaguar Land Rover, Aston Martin, BMW, Rolls-Royce and Alstom.

It is not just the Government and I who see signs of encouragement. Coventry’s success was highlighted in a Centre for Cities report published this week, which notes that Coventry has outperformed its west midlands counterparts over the past decade, achieving an 8% increase in jobs and a 22% increase in business stock, which is a third higher than the national average. It has the second-fastest growth in private sector jobs among UK cities. I appreciate the concern about other companies mentioned in the debate, but there are none the less reasons for optimism in the Coventry economy.