Public Bodies (Abolition of British Shipbuilders) Order 2013

Debate between Lord Gardiner of Kimble and Lord Young of Norwood Green

Tuesday 8th January 2013 Grand Committee

[Lord Gardiner of Kimble]

My Lords, I start by reassuring your Lordships that while this order will abolish British Shipbuilders as a public corporation, its liabilities will transfer to the Secretary of State for Business, Innovation and Skills. On this basis, there will be no impact on the ability of British Shipbuilders’ former employees to claim legal compensation for industrial diseases suffered as a result of their employment with British Shipbuilders.

British Shipbuilders was constituted by the Aircraft and Shipbuilding Industries Act 1977. British Shipbuilders owned and managed large parts of the UK shipbuilding industry. British Shipbuilders privatised all its active shipbuilding subsidiaries, initially through the privatisation of the war shipbuilding yards in 1985 and 1986, and subsequently through the sale of the merchant yards and the one remaining engine manufacturer.

British Shipbuilders is no longer a trading enterprise and does not have any funds of its own. It exists mainly to meet residual liabilities to its former employees. This legal responsibility is funded in total by the Department for Business, Innovation and Skills. Funding these residual liabilities currently costs the department about £7 million a year in health-related compensation payments. These payments are mainly as a result of asbestos-related diseases.

British Shipbuilders was considered as part of the Government’s public bodies reform programme and our commitment to reduce the number and cost of quangos. British Shipbuilders does not perform the functions for which it was originally created and does not need to remain a public corporation. The Government therefore put forward a proposal to abolish it using the powers of the Public Bodies Act, which received Royal Assent in December 2011.

The Department for Business, Innovation and Skills launched a consultation in February last year on the proposal to wind up British Shipbuilders and transfer its property, rights and liabilities to the Secretary of State for Business, Innovation and Skills. The department received four responses to the consultation, none of which objected to the proposal but two of which wanted reassurance that the transfer would not impact on the ability of former employees to make legal compensation claims for industrial diseases suffered as a result of their employment with British Shipbuilders. The department confirmed that the transfer would have no impact on the ability of former employees to claim legal compensation for industrial diseases suffered as a result of their employment with British Shipbuilders. An impact assessment in relation to the abolition of British Shipbuilders was not carried out as the savings from the abolition will amount to around £15,000 per year. This saving will reflect the reduced need for company secretarial services post abolition.

A firm of solicitors is contracted to manage all industrial disease compensation claims of British Shipbuilders. A separate company is contracted to deal with pension services, which involves investigating and handling unrecorded claims from former employees. These contracts will be transferred to the department immediately prior to abolition.

As required by the Public Bodies Act, the Government have obtained the consent of Welsh Ministers for this order. We are also in the process of seeking consent from the Northern Ireland Assembly and the Scottish Parliament. We understand that the Northern Ireland Assembly and the Scottish Parliament will consider this order over the coming weeks.

Following the abolition of British Shipbuilders, the department will be responsible for the contracts that deal with the industrial disease claims and pension queries. Post abolition, future compensation claims will be paid directly by the department and will be included in the department’s annual accounts. For these reasons, I beg to move that the Committee do consider the order.

[Lord Young of Norwood Green]

My Lords, I welcome the Minister’s assurances on any outstanding compensation or pension claims. I do not think I need to make any further comments in these circumstances. I am not establishing a precedent for any other debate, but we can start the new year on a happy note.

[Lord Gardiner of Kimble]

My Lords, I thank the noble Lord, Lord Young of Norwood Green, for considering the order so briefly, which is appropriate in these circumstances. British Shipbuilders is effectively a shell company, with its main remaining function to act as a vehicle through which the long-term disease liabilities of former employees are managed. As British Shipbuilders has no funds of its own for this purpose, it is completely dependent on the financial backing of the Department for Business, Innovation and Skills. As I have already mentioned, the abolition of British Shipbuilders will not impact on the ability of former employees to claim legal compensation. After the consideration against the criteria set out in the Public Bodies Act, the Government have concluded that British Shipbuilders does not need to be a public corporation in order for the Government to meet its residual liabilities. Abolishing British Shipbuilders as a corporation will avoid the need for it to function as a shell company, employ a company secretary and produce an annual report and financial accounts. I thank the noble Lord for his contribution to the debate and commend the order to the Committee.

Public Bodies (Abolition of the Aircraft and Shipbuilding Industries Arbitration Tribunal) Order 2013

Debate between Lord Gardiner of Kimble and Lord Young of Norwood Green

Tuesday 8th January 2013 Grand Committee

[Lord Young of Norwood Green]

I know that because it was not so long ago that there was a programme on Radio 4 relating to it. However, the noble Lord, Lord Jones, was right to give us that historical context and to set the scene.

I have read the report from the committee. There was some concern about the consultation, but I think that in the end it was prepared to accept that it was sufficient, so I have no further comments to make.

[Lord Gardiner of Kimble]

My Lords, I thank the noble Lords, Lord Jones and Lord Young of Norwood Green. I particularly thank the noble Lord, Lord Jones, because he put into a fine historical context some of the dilemmas of that part of our industrial history. I took on board the point about manufacturing. One of the challenges that we have had in this country is that we have not thought as much as we should have about how we ensure that there is a British manufacturing base. I particularly took on board the noble Lord’s point about aircraft.

There is good news on motor vehicles, where we are now beginning to see some very good statistics on the production of vehicles. In fact, if my memory serves me right from a briefing a few months ago, we are now manufacturing more cars than we are importing. It is a great accolade to the management and the workforce for working so well together that we have these successes.

However, returning to the job in hand in regard to the Aircraft and Shipbuilding Industries Arbitration Tribunal, as I have said, it has been defunct for more than 30 years and has no assets, employees or further cases to consider. After consideration against the conditions set out in the Public Bodies Act the Government have rightly concluded—and noble Lords on all sides of the Committee have agreed—that the tribunal no longer needs to exist and that abolishing it would tidy up the regulatory landscape. It is for those reasons that I commend the order to the Committee.