Administration and Insolvency

Ian Lavery Excerpts

Wednesday 27th November 2013 Commons Chamber

[Steve Rotheram]

I could not agree more with my hon. Friend, because that is exactly the scenario that I am painting with this company. Trigon was a viable, profitable company with a short-term cash-flow problem that could not get a bail-out from the banks, which, we should not forget, are owned by the people of this country, who rely on those companies to provide them with suitable jobs.

We must ensure that there is a chance, as in the case of Trigon, where a factory was at the heart of one of the most economically deprived areas in the UK—that is true of Liverpool, Walton and there are areas of social deprivation in my hon. Friend’s constituency too—that other bids are considered that would keep people in work and maintain UK production.

Liverpool city council has been successful in attracting new industries to our city. In north Liverpool, we continue to work to attract inward investment and businesses, and do all that we can to ensure that our workers are in full-time employment, but that is incongruous if the net result is that we haemorrhage jobs from profitable companies, which we give to asset strippers to break up, and sell brand names for products that are manufactured abroad, then import the same products back into the country.

[Ian Lavery (Wansbeck) (Lab)]

Was there any opportunity for the company to access moneys from the Government to prevent that situation in my hon. Friend’s constituency?

[Steve Rotheram]

The Secretary of State and the Department—I spoke to some officials—were as helpful as they possibly could be. If we had had a longer lead-in period or the company was in administration for a longer period there might well have been investment or pots of money—local enterprise partnership moneys, for instance, or regional growth moneys—that could have been used. Unfortunately, things happened very quickly and it was not possible to access moneys to ensure that the shortfall of £1.2 million was covered.

If the Minister is not willing to hear my request for a mandatory requirement for administrators to consider the social consequences of each bid, will she not consider the requirement in regard to the consequences for UK industries? That is not protectionism but pragmatism. We simply cannot afford to do nothing and watch good British businesses suffer. For instance, since the global financial crisis, the impact on the retail industry has been severe. According to the Centre for Retail Research in Nottingham, in its update entitled “Who’s Gone Bust in Retail 2010-13”, since the global financial crash, 249 medium and large-sized retail businesses have failed financially, affecting more than 22,100 stores and close to 250,000 employees. We all know the names of those companies—most of them are household names, but they have become infamous for going out of business.

Not all of those companies were profit-making enterprises in the way Trigon was, but undoubtedly some businesses were wound up that produced a short-term return for asset strippers but that, in the long term, could have been kept alive, and there was no consideration of the long-term social consequences for everyone affected by closure. In other words, I contend that some creditors will have done well out of these administrations, but the workers, the local communities and the economics of the area will have suffered most from their failure, and we must do more to protect society and British industry.

In conclusion, I expect that the Minister might try to explain that this is a very complex area of law and that it would be difficult to introduce changes as there would undoubtedly be knock-on consequences. I do genuinely understand the problems of best intentions—I spoke to the Secretary of State about this—and the law of unintended consequences, but I am sure the hon. Lady will agree that it would be wrong not to look at what could be done to improve current legislation. The status quo is not good enough.