Leaving the EU: Workers’ Rights

Paul Sweeney Excerpts

Tuesday 29th October 2019 Commons Chamber

[Andrea Leadsom]

The hon. Lady will know that what she has just said is absolutely not the case. The EU minimum standard is 20 days’ paid holiday; the UK’s is 28. There is no minimum wage in the EU; in the UK, we are moving to £10.50. Moreover, we are introducing a right of transparency from day one for all employees in respect of their employment entitlements. The UK already far exceeds the EU’s minimum standards, and there is no way that, in a free trade deal, the United Kingdom will need to—or agree to—give away anything that we think is in the interests of the UK’s workers. This Government are committed to making the UK the best place in the world in which to work.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

European standards are one thing, but another aspect of European Union law is that, once member states have established enhancements, they cannot row back from those enhancements. Why did the Government seek exemptions from compulsory arbitration if they were not intending to dilute those very enhanced standards to seek a trade deal with the United States?

[Andrea Leadsom]

I am tempted simply to refer the hon. Gentleman to what I have just said to his hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah). The United Kingdom far exceeds EU standards for workers’ rights. We intend to enhance those further, but it is for trade unions in the United Kingdom, for businesses in the United Kingdom and for this Parliament to decide on those enhancements once we have left the European Union.

British Steel

Paul Sweeney Excerpts

Wednesday 24th July 2019 Commons Chamber

[Greg Clark]

I am grateful to my hon. Friend, because she gives me the opportunity to pay tribute to Stephen Phipson, the director general of Make UK, the manufacturers’ organisation. He serves on the support group and has been present at the meetings, and he has convened a panel of suppliers and customers, to ensure that some of the uncertainty and challenges that they have faced during the insolvency of British Steel have been dealt with. Working with HMRC, the British Business Bank and the official receiver, the panel has had—as I think colleagues on the support group would accept—a positive role in providing help and reassurance to the supply chain across the country.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

The Secretary of State has acknowledged that the closure of a major steelworks is an intergenerational blight, as we have seen with the closure of Redcar and of Ravenscraig, which is still a wasteland 30 years on. It is therefore critical that we maintain long-term planning in the sector. That is aided by patient finance. Access to patient finance in this country is very poor compared with some of our peer nations, notably Germany. What will he do to improve patient finance access for the huge capital investment needed in the steel industry, in order to improve the attractiveness of British Steel to potential investors?

[Greg Clark]

The hon. Gentleman makes an excellent point. Improving the access to and availability of patient capital in this country is a focus through the industrial strategy and some of the work that the Treasury is doing, but there is more work to be done. He is right—a long-term owner of British Steel needs to have the patience required in an industry that is, and always has been, subject to the ups and downs of the economic cycle and sometimes conditions in international trade. It is often not the most stable of industries, and as I think he would agree, any owner needs to be resilient to that.

Oral Answers to Questions

Paul Sweeney Excerpts

Tuesday 16th July 2019 Commons Chamber

[Chris Skidmore]

I understand that the hon. Gentleman has a particular issue with the Scottish Secretary of State; and I am sure that he will be happy to take up some of those issues with him at Scottish questions. All I can say is that the hon. Gentleman has made a freedom of information request to the Department. The Government have replied and that is the Government’s official response.

When it comes to renewables, let us take the positives. Let us get away from the SNP’s negativity and endless griping. There are Scottish MPs on the Government side of the House who are committed to delivering positive action to the benefit of the Scottish people—putting politics and discussions of independence aside, getting down and doing the job, delivering for the people of Scotland, and ensuring that we have offshore wind, onshore wind or whatever supply is most appropriate for Scotland.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

18. Does the Minister not share my concern that, as we try to build an effective industrial base for renewables in Scotland, we are seeing—because of a change in the rules for the delivery of 60% of through- life content, instead of 60% of manufactured content—that contracts for manufacturing components have been sent to Indonesia, whereas BiFab’s yard is a mere 10 miles from a potential wind farm? What conversations has he had with the Scottish Government on these issues?

[Chris Skidmore]

Boosting local and national content is a key issue, and, taking up the point raised by the hon. Member for Salford and Eccles (Rebecca Long Bailey), the Government are determined to ensure the delivery of local green jobs. The offshore wind sector deal has obviously committed to 60% content by 2025 or 2030. I cannot remember the exact date, but I am happy to come back to the hon. Member for Glasgow North East (Mr Sweeney) on that.

It is important that, as we go forward with the contract for difference proposals, we make sure that we bring local suppliers with us. That is a key part of the Government’s industrial strategy.

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[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Stephenson)]

I agree with my hon. Friend that nuclear power has a key role to play in delivering the net zero target and acknowledge the unrivalled nuclear expertise in Copeland, which I was delighted to see on my recent visit to her constituency. We intend to publish our assessment of the feasibility of the RAB model for funding new nuclear shortly.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

T8. The St Rollox railway works in my constituency will close next Friday, with a loss of 200 jobs and ending 163 years of operation. While the Scottish Government have refused to renationalise the facility, Scottish Enterprise is actively seeking a new buyer for the site. Will the Secretary of State ensure that his Department is fully deployed to aid in that effort at all levels of Government?

Net Zero Emissions Target

Paul Sweeney Excerpts

Wednesday 12th June 2019 Commons Chamber

[Greg Clark]

I am grateful to the hon. Gentleman for conveying the support of the automotive industry, which has a crucial role to play in this transition. He is right about, and in earlier exchanges I have paid particular attention to, the importance of getting that transition right, so that it does not have unintended consequences of depriving of investment an industry that is crucial to making that change. Of course we will look at all the policy components. The plug-in grant was established and has been successful in launching an industry—or, at least, in expanding the early take-up of an industry. It was intended that it should come to an end when its budget was exhausted, but of course, through the spending review, decisions will need to be taken on how the industry can be supported in future.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

The Secretary of State was correct to refer to the important role that the Clyde shipyards played in the first industrial revolution, but of course they will also have an important role to play in the next green industrial revolution if there is an appropriate industrial strategy. That is why I am dismayed that in respect of the offshore wind sector deal that the Government announced, they buckled to the lobbying by large energy companies and diluted the requirement for 60% of manufactured content to be made in the UK down to 60% of through-life content. As a result, EDF is sending the £2 billion contract for manufacturing a wind farm off the coast of Fife to Indonesia, instead of building it in the BiFab yards that lie 10 miles away on the coast of Fife and employ 1,000 people. Will the Secretary of State address this glaring inconsistency in the offshore wind sector strategy and ensure that we maximise British manufacturing of heavy engineered products in British renewable energy projects?

[Greg Clark]

The hon. Gentleman is absolutely right that our heritage and skills in shipbuilding are now being put to use throughout the country in marine energy and offshore wind in particular, but he will acknowledge that the commitment in the sector deal was to increase UK content. That was the right ambition to establish and it was agreed between the industry and the Government, although it can of course be kept under review. We always want to see content produced in the UK, including in the very shipyards that the hon. Gentleman mentioned that were so important in our first industrial revolution.

Trade Union Access to Workplaces

Paul Sweeney Excerpts

Tuesday 4th June 2019 Westminster Hall

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

Thank you, Ms McDonagh, for allowing me to speak in this very important and timely debate. I congratulate my hon. Friend the Member for Warrington South (Faisal Rashid) on securing it and on speaking so passionately in his introductory remarks. He raised issues that resonate very strongly with me and, indeed, with the wider trade union movement across this country.

It is good to start on a positive note: trade union membership in the United Kingdom has gone up in the past year by 103,000. Now 6.35 million people are members of a trade union in the United Kingdom. However, the long-term trends still give cause for concern. Trade union membership is half of its peak in the late 1970s, when there were 12 million members of trade unions. Over that time, we have seen a 5% fall in the labour share of our economy—the share of our gross national wealth taken home by workers in wages has fallen. There is a strong correlation between the trade union organisation and collective bargaining power in our economy and the amount of wealth that workers are able to secure from the fruits of their labour.

We need to return that fundamental analysis to the heart of how we understand our economy and the relationship between working people and the owners of capital. It has been forgotten from the mainstream narrative in this country, which is about shirkers, people not working hard enough and how people need to be more flexible and sacrifice more, rather than about unity, organisation and agitation against exploitation and in favour of workers’ right to receive the fruits of their labour. The correlation is stark; it is a fact of economic history. The long-term trend in the past 40 years is a diminishing share of wealth for workers.

It would not be half as bad if that share, which workers once took home in their pay packets, was invested by companies and private capital to improve the efficiency of our economy. However, it has not been invested at all. Investment as a share of GDP has flatlined throughout that period. I wonder where that share of capital has gone. The workers are producing wealth and productivity continues to go up, but the share taken home in wages is declining. What happens to that share? It is extracted in profits by companies, which are often not based in the United Kingdom. The wealth is taken overseas, often to opaque tax havens around the world, or invested elsewhere. It is never seen by the people who produce the wealth.

That is the stark reality that we face. That is why, I would argue, having a Labour Government is so critical to restoring the collective bargaining powers in our economy, which are so essential to recapturing the share of the wealth that working people rightly deserve and produce in this country. Workers put in great innovation, productivity and effort every day in many workplaces across the United Kingdom. However, we have seen the hollowing out of their collective capacity to fight for their share of the wealth they produce.

We have seen an increase in trade union membership. Of the total UK workforce, about 23% of workers are in trade unions. However, there are regional disparities in the way trade union organisation works across the United Kingdom. Trade union membership in London and the south-east is 16% to 17% of workers, yet in Scotland, the north-west, north-east and Wales it is between 28% and 30%. There is significant regional variation. There are a number of reasons for that.

First, in areas with traditional manufacturing and labour-intensive employment, where there are large industrial employers, there seems to be more cultural recognition of trade union membership—it is an accepted fact of life. Secondly, in some regions the public sector forms a much more important share of the economy. In public sector workplaces, 52% of the workforce are trade union members, whereas in the private sector, membership is at a mere 13%. That is a huge contrast, which has evolved and become more stark in the past 40 years.

There is a significant age disparity in trade union membership, which reflects the increased casualisation of work. My hon. Friend the Member for Warrington South mentioned McDonald’s employees being exploited. Many in the retail and food sectors see that happen on a daily basis. Just 4% of 16 to 24-year-olds are members of trade unions, and 77% of trade union members are over 35. The age disparity is significant and we need to tackle it.

We need to introduce information about trade unions into our education system. When I first entered work, I was exploited by employers. I undertook unpaid trial shifts. I worked minimum-wage jobs. I was denied tips. I started in a pizzeria and then worked in a supermarket. When I started working in fruit and veg at Morrisons supermarket, we had a presentation from the USDAW official. At that time, I did not really understand what a trade union was or why it would be significant to me. Why should I give up the precious little money I was paid to a trade union when I could take it home and spend it on going out and having a good time with my pals? Believe it or not, I did have a good time. Education is required on why trade union representation is important, particularly for young people for whom exploitation has never been more critical.

[Ruth George]

I am pleased to hear that my hon. Friend had a positive experience of the USDAW official. Unfortunately, I have met too many people, young and old, who started their first job in fruit and veg in a supermarket and injured their back, often for life, because of incorrect lifting practices, and who did not have trade union representation in the workplace to support them and ensure they were lifting correctly. That happens to too many young people. I hope it did not happen to my hon. Friend.

--- Later in debate ---

[Mr Sweeney]

Believe it or not, that did not happen. I managed to survive my experience in fruit and veg largely unscathed. My hon. Friend makes an important point. People never know when they will need a trade union until they do. It is critical that people join, because it is like an insurance policy. We need to educate people in that necessity.

My first adult job was in a shipyard. It was a traditional engineering and manufacturing company—a large-scale employer—where there was significant trade union density. At that point, I joined the Unite and GMB trade unions, because they were the shipyard trade unions. They ably represent the workforce on the Clyde and are often mentioned in this place. I ran into trouble from time to time in the shipyard and my trade union was critical in helping me get through those difficult periods. If I had a dispute with my bosses or another issue, the officials were very helpful. I did not know when I would need them—when a bit of bad luck could strike. It is critical that people understand why trade union membership is so important.

[Danielle Rowley]

My hon. Friend is giving a detailed analysis and a great speech. Does he agree that there is less trade union membership in the third sector? It is often seen to be the nice sector, but it employs a lot of young people and women, and we need to encourage more trade union membership within it.

[Mr Sweeney]

I absolutely agree with my hon. Friend. She makes a good point about the gender disparity. It is interesting to note that female membership of trade unions has increased in the past year, but male membership has decreased. That does not read across the different sectors that she mentioned. It is important to recognise that issue, particularly when we look at casualisation in the workforce, which is a key driver of why workers are taking home less in their pay packets than they ought to.

Traditional collective bargaining in large-scale organisations and traditional large industrial workplaces are fragmenting, and the way people work is continually atomising. We need to adapt our trade union regulation and organisation to reflect the changing nature of our economy. The charity sector has not been penetrated by the trade union movement to the same extent. We need to tackle that. Great thought must be given to how to increase recruitment to trade unions in those non-traditional workplaces.

I will offer another view as to why trade union membership is so critical. In the past few months, I have been dealing with a major industrial dispute in my constituency. The Caley railway works, which has been around for 160 years, faces closure. From 1948 to 1995 it was part of British Rail, but it was privatised and sold off. It has been through myriad different owners, culminating in an overseas company purchasing it in an asset-stripping exercise. There are 200 people on that site, which faces closure. Thankfully, they have high trade union density—90%, which is fantastic—because the railway works was a traditional workplace. The trade union was able to swing into action immediately when the closure was announced.

In stark contrast, when the immediate closure of Jamie’s Italian was announced, the workforce were completely blindsided and had no capacity to organise and effectively agitate against that exploitation. People were told to go home with no recourse, redundancy payment or share in the liquidation of the company. With the potential closure of the Caley railway works, the trade union was able to organise to bid up the terms and conditions of severance for the workforce. The liabilities of the workforce were originally assessed as being about £700,000 to close the site. The trade union has now managed to negotiate almost £4 million from the employer to wind up the site. That is an amazing achievement, and the company has even offered to try to sell it or pay the Government to take the site off its hands, because the owners just want rid of it. That is just one example of how effective negotiation by trade unions can massively improve the hand of workers who face really difficult disputes with their employers.

I pay tribute to the tenacity of the Caley railway works workforce, who are facing the most testing conditions and were told just before Christmas—as is often the case—that they would lose their livelihoods. People have been working there for generations. Families have grown up and lived around the railway works their whole lives, to the point that in some cases people felt there was no other way out but to take their lives. The stress that the workforce have had to deal with has been absolutely appalling. I pay tribute to their tenacious work, particularly by Pat McIlvogue of Unite the union, in organising the workforce and keeping their spirits high at a really tough time. I hope the Government in Edinburgh will step in and take action to save those jobs and the workforce, because they deserve it. They deserve to have that commitment shown to them by the state.

The Government and trade unions can work in co-operation to ensure that we salvage the collective knowledge and skills of our workforce and redeploy them in the future, rather than see the industrial vandalism that has so often happened across this country, where we have seen industrial capability destroyed. With the lack of a trade union to organise, agitate and struggle against it, there has not been the fight that could have been mounted. I pay tribute to everyone in the trade union movement who has fought so hard for workers’ rights to capture a better share of workers’ efforts—in the form of labour—in wages, and to secure their rights and those of future generations who will follow in their footsteps, so that we have a prosperous society that gets a fair day’s pay for a fair day’s work.

[Chris Stephens (Glasgow South West) (SNP)]

It is a pleasure to see you in the Chair, Ms McDonagh. I congratulate the hon. Member for Warrington South (Faisal Rashid) on securing this debate and on bringing forward his ten-minute rule Bill, which I support—he has my guarantee.

It is traditional in these trade union debates to make our declarations. I declare my 20 years of trade union activity before I was elected to this place, my membership of Glasgow City Unison, and my position as chair of the Public and Commercial Services Union parliamentary group. I will in the next few days declare a settlement agreement with my former employer as a result of an equal pay claim.

I make those declarations not just to show my trade union credentials; it is obviously important to mention the trade union role in the education and personal development of workers. I have no shame in saying—I am sure I am not the only Member of Parliament present who would say this—that I would not be here without the skills, knowledge and experience I gained as a trade union representative and activist.

The hon. Member for Warrington South described the historical and present contexts. On the current context, it is very interesting that the governing party is having a leadership election—a so-called grand national, although I think the grand national is for thoroughbreds, not necessarily for people putting themselves forward for leader of the Conservative party. Many who are seeking to be the next Prime Minister have the inclination to deregulate markets—an inclination not too dissimilar to that of Donald Trump. It seems that some will argue over the next few years that the solution to a deregulated market is to deregulate it even further. It is complete and utter political nonsense.

[Mr Sweeney]

The hon. Gentleman mentions the contenders for leadership of the Conservative party. The Foreign Secretary presides over a Department that is in dispute with PCS over Interserve. The Department has essentially hived off core staff into an arm’s length company that fails even to recognise the trade union that is mentioned in employees’ contracts. Is that not shameful? The Foreign Office should act immediately to resolve the situation.

[Chris Stephens]

I agree wholeheartedly, but on this occasion the hon. Gentleman underdoes his criticism of the Foreign Office. It gave a contract to a company that will be the next Carillion, because it is in administration. It is absolutely and utterly ludicrous that the Government are giving contracts to companies that are failing.

Members including the hon. Member for Midlothian (Danielle Rowley) have mentioned the historical context and blacklisting. We know that it has been going on in the construction sector. The difference between that sector and other sectors of the economy is that people in the construction sector found the blacklist, but I know there are blacklists in other sectors. Given my trade union activity over the past 20 years, I would be very surprised if I were not on a blacklist.

We have seen the erosion of trade union rights over the past few decades. There is the anti-trade union Bill, which I will touch on; the erosion of facility time in the public sector; the publishing of that facility time, and the suggestion that it is a cost to the public purse when it is not; a public sector pay cap; and the erosion of collective bargaining. In Scotland, 81% of workers were covered by collective bargaining agreements for pay in 1979. The figure is now 23% as a result of the deregulation of markets.

The examples provided by the hon. Member for Warrington South are very alarming. As far as the Scottish National party is concerned, all workers should have the right to trade union membership and to organise as a collective trade union. Multinational companies purposefully stopping trade unions from recruiting staff is against employer best practice, and does not bode well for the prospect of positive workplace relations. These incidents can make workers feel isolated and alienated, further frustrating cohesion in the working environment.

As the hon. Gentleman said, the benefits of a trade union workforce have been consistently documented by research—not just by the TUC, but by others—that suggests members are more likely to be paid more, more likely not to be dismissed, more likely to have better leave provisions and more likely to work fewer hours of unpaid overtime. Those are important gains. Members are also more likely to find themselves in a pay and grading scheme that complies with the Equal Pay Act 1970, and trade unions have played a vital role in ensuring that employers comply with that very important piece of legislation. As the chief economist of the Bank of England has said, the weakening of trade union power in the United Kingdom has hit workers’ pay over the past few decades.

Trade unionism should be viewed as an opportunity to improve workplace relations, as trade union representatives and officials bring a vital perspective to a workplace, and do more than play a role in collective bargaining; for example, they ensure effective communication between employers and workers. Indeed, trade unions provide workers who go on to become trade union representatives with the opportunity for personal development through lifelong learning. They ensure a common footing on communication between employees and employers.

I want to highlight the great work being done by organisations such as Better Than Zero, which is highlighting some awful employment practices, particularly on zero-hour contracts and the status of workers—the bogus self-employment that is increasing in the economy. Since I support the ten-minute rule Bill introduced by the hon. Member for Warrington South, I hope that he will support mine, the Workers (Definition and Rights) Bill, because it is important that we deal with zero-hours contracts. Under my Bill, such contracts would be allowed in only one circumstance: where there is a collective agreement with an organised trade union. That would nail once and for all the view espoused by some people that workers like zero-hours contracts. Having trade unions in workplaces where there are zero-hours contracts would put that to the test.

My Bill would simplify the status of workers, because there is far too much bogus self-employment—people are finding out that they are self-employed when they thought that they were employees. It would also provide another opportunity to expose the anti-trade union Act that was passed in the last Parliament and has significantly reduced the mobilisation and organising power of trade unions. The Act has in particular impacted on facility time, which is integral to a trade union’s ability to prepare for collective bargaining. That law pits the Government and employers against trade unions and is needlessly divisive. Publishing details of facility time and its so-called cost to the public purse is frankly outrageous. The fact is that trade union reps save both time and money by improving workplace relations and enforcing best practice.

I support the hon. Gentleman’s Bill, and I hope he supports mine. It is a pleasure once again to support the trade union movement—the best partner with our society.

British Steel

Paul Sweeney Excerpts

Tuesday 21st May 2019 Commons Chamber

[Andrew Stephenson]

British Steel wrote to local MPs in the Scunthorpe area to urge them to vote for the Prime Minister’s deal. I have voted for it three times. How many times has the hon. Gentleman voted for it?

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

Primary steel making in Scotland ended in 1992 with the closure of Ravenscraig, but the two remaining secondary steel plants that process plate are heavily reliant on the Scunthorpe blast furnaces, which supply them with steel and, in turn, the shipbuilding industry in Glasgow. Not only have we seen this Government leading efforts to block action against Chinese dumping at the European Commission, but we have seen them diluting efforts to ensure maximised content for British manufactured products in renewables projects. We have seen them move the goalposts from 60% of manufactured content to 60% of through-life content. When will the Minister understand the reality of the impact that these damaging decisions are having on the British steel industry and reverse them?

[Andrew Stephenson]

We are working with the G20 global forum on steel. There are currently 46 EU trade defence measures in place to protect UK steel producers from unfair trade imports. As we move to leave the EU and operate a trade policy, the UK will continue to champion free trade, but will also take a proportionate approach to trade remedies.

British Steel: EU Emissions Trading Compliance

Paul Sweeney Excerpts

Wednesday 1st May 2019 Commons Chamber

[Greg Clark]

I mentioned—it was announced in the spring financial statement—a new industrial energy efficiency fund worth a third of a billion pounds to partner with energy-intensive businesses in changing and upgrading their technology, so that they both consume less energy, and therefore have lower costs, and also produce lower emissions. As I said to the shadow Secretary of State, since 2013 we have provided nearly £300 million to energy-intensive industries in compensation for some of the effects of high costs. However, the way forward is energy efficiency, and that is the commitment that we made and backed in the financial statement.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

I welcome this measure but, again, it is a reaction to potential failure, rather than a proper, coherent plan for the industry. That needs to be gripped robustly. Does the Minister accept that there is insufficient capacity within the European emissions trading scheme to provide free credits to companies subject to anti-competitive measures, dumping and distortions caused by firms trading outside the ETS? We need to increase the level playing field available to British Steel operating in that sphere, in which it is subject to distortions caused by firms outside the ETS.

[Greg Clark]

The hon. Gentleman is right that we need to be vigorous in our trade defence mechanisms. Steel is a sector that all Members know is subject, and has been over the years, to dumping by global competitors. Through the G20 forum in particular, at which I have represented our country, we have been vigorous in pressing for the strongest measures against anti-competitive practices such as that, and we will continue to do so in the future.

Tuition Fees: EU Students

Paul Sweeney Excerpts

Monday 29th April 2019 Commons Chamber

[Chris Skidmore]

There are currently a record 139,000 EU students at UK universities, and the number of EU applications has risen by 3.8% since 2017. It is important for us to put out a positive message rather than encouraging European students who may happen to be watching our exchanges not to apply. Of course they should apply. People say, “Erasmus will be affected, so do not apply,” but the Government have given guarantees on Erasmus, on science research funding and on 2019-20 home fee status. We will make announcements about 2020-21 before September, so that students will have the necessary knowledge when they apply.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

A 17-year-old constituent of mine came to my surgery a few weeks ago in great distress. She has lived here for 16 years, since she was one year old. She is at St Roch’s Secondary School and wants to take a place at college, but she cannot obtain student finance to do so because, according to the rules, she does not qualify within the meaning of the Immigration Act 1971. Does the Minister not recognise that that is an absurd aberration? What will he do to help my constituent?

[Chris Skidmore]

I will happily take a look at that specific issue and take it up with the Student Loans Company, which I visited in Glasgow about a month ago, and I am happy to continue our correspondence about the issue.

Post Office Network

Paul Sweeney Excerpts

Thursday 25th April 2019 Westminster Hall

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Dame Cheryl. I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows) on securing this important debate on a critical issue facing many of our constituencies and the nation as a whole.

If we reflect on the decade since the financial crash, in order to avoid wholesale collapse of the UK’s banking system, there has been increasing reliance on the post office network, but an unsustainable model is being visited upon that network. Earlier this year, I met my local postmasters—who, as my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney) pointed out, now represent 98% of post office provision—and they were concerned about the franchising model for the Crown post offices. Of the post offices in my constituency, Possilpark across the road from my constituency office is franchised to a grocery shop; Springburn is still a Crown office but has been actively advertised for franchising; Dennistoun was franchised last year and is now in a grocery store; and Millerston closed and only recently has been advertised for franchising, so that it can reopen.

I first met the chap who took over the Crown office franchise in Dennistoun during the consultation. He was very upbeat and optimistic. He is a young man, an entrepreneur, looking to make a good go of it as a small businessman. I thought that his ideas sounded interesting, and he had some impressive plans for how to lay out the new facility across the road as part of a grocery shop. When he came to see me again earlier this year, I was saddened to hear how he had been “totally conned”—his words—by how the contract was set up.

The main concern was the viability of operations because of the reduction in funding and resource. For example, postmasters now have to rent ATMs at £8,500 per year, with business rates on that. The stores’ income from these machine is only £7,500 per annum, so postmasters pay £1,000 a year to run them. That is madness from their point of view. Why on earth would they do that?

The Government have invested £1.3 billion in the post office network, but I am afraid that that money has not fed down to the franchise holders. The withdrawal of RBS entirely from my constituency was followed by the recent announcement that Santander will close its last branch in the constituency. It has said, “Don’t worry: the post office network will take up the slack,” but that network does not look too resilient, and it certainly does not look like it has a promising prospect of picking up the slack.

Banking contracts with the new post office franchises have changed. Postmasters used to receive 70p per £100 to provide banking services, but they now only receive 31p per £100, which is clearly a massive change and financially unsustainable. That has combined with the huge restrictions that have been imposed on credit unions extending their bonds so that they can bail each other out. In the past few months, my constituency has lost a credit union. Previously, other credit unions could rally around to share capital so as to avoid one union failing, but the big banking lobbies have prevented that with the current restrictions. As a Co-op MP, I see a picture in which changes to commercial banking, restrictions on co-ops and the huge undermining of the post office network have been severely detrimental to local finances. That combination has been a toxic recipe for the provision of banking services across this country.

Earnings for post office franchise holders and sub-postmasters have been eroded to such an extent that they believe that cash starvation will lead to the closure of many post office outlets. They think that post offices should go back to the model in which they were run as Crown offices. Many of them clearly cannot wait for the franchise contract to end, so that they can simply walk away from it. It is so toxic for them that they cannot wait to throw away the key and board up the premises. That is the sad situation. At the start, there was a great deal of hope, with entrepreneurs trying to make a fist of it, but they were undermined by how the contracts have worked out, which is a great tragedy.

Postmasters in my constituency believe that their ability to provide a service and employment in the area has been severely eroded, and that retail operations within the franchises are not enough to avoid closure and to survive. It is a real cliff edge. The worry is that when this phase of contracts expires, we will see a massive collapse in the post office network. This is a ticking time bomb. Unless the Minister recognises the cracks that are appearing in the structure of the system, we will see a massive failure of the post office network within the next five years. The Minister needs to be aware that a crisis is brewing in that network.

If the Minister is interested in dealing with the situation, the contracts should be renegotiated—as the sub-postmasters who saw me believe—to allow not only service provision but the ability to earn a reasonable living. That is not a great ask of Government. They just want to run a business that is genuinely sustainable, and to earn a small profit—a living—so that people are happy. That is not how it works now, because the dice are loaded against them.

The CWU, of which my hon. Friend the Member for Coatbridge, Chryston and Bellshill is a proud member, actively opposed the franchising of the Crown post offices. However, the National Federation of Sub-Postmasters was in essence bought off by Post Office Ltd—sub-postmasters were paid into, but part of the conditions of those payments was that the national federation would not undertake any activity that undermined the reputation of the Post Office and brought it into disrepute. It is a trade union in name only—it is a sham.

If the Minister is serious about proper scrutiny, sub-postmasters need to be given proper independent recognition as workers, and to be allowed to organise in proper trade union fashion. That would be a helpful measure to improve scrutiny of the system. Employees of the post office network believe that they are 39% underpaid for their efforts. Clearly, where there is under-representation of workers and organised labour, there is underpayment and exploitation, and as my local sub-postmasters illustrated to me, that is exactly what has happened.

The situation reflects the wider issues of investment in banking in this country. In 2016, public and private investment levels in the UK stood at 17% of GDP. We are ranked 24th out of the 28 EU countries, and a pathetic 118th in the world rankings. That is a shabby record for the UK, and it speaks to the wider crisis in our economic potential as a country. We need to get a grip of that urgently.

That is why I welcomed the post bank proposal released at the beginning of April, which gained great press attention and traction as a credible and costed idea that would not only ensure the sustainability of the post office network, but create a reliable high street banking facility owned and run for the public interest. It is a plan to revolutionise the banking ecosystem, and to address the serious issues that we face, by, for example, ending the failing partnership between the Post Office and the Bank of Ireland. That partnership was forged after a massive public bail-out of the bank, and a condition of it was an exit from business banking activity. As a result, the Post Office is not able to grow its market share in small and medium-sized enterprise lending, and to help the growth of local businesses, which is stifled by a lack of lending. If we combine that with the restrictions on the credit union network, we see a recipe for constraining the growth of our economy and business activity in the UK.

That issue would be a priority for the new post bank, which would be welcome news for the sub-postmasters in my constituency and many others around the country. The post bank, which would be seeded with £2.5 billion in capital, is not controversial at all. Indeed, 65% of the public support the reintegration and renationalisation of the Royal Mail and the post office network as a unified whole. The UK’s own version, Girobank, was privatised as part of the great fire sale of assets by the Tories in the 1990s, even though a fifth of people worldwide have banking services through post office networks in their respective countries.

The new model for the post office network would be larger by far than any of the existing bank and building society networks. There would be 300 branches in Scotland alone. A post bank would be embedded in local communities, and would be given a decentralised decision-making structure, and a specific mandate to support small and medium-sized enterprises and social enterprise, tackle financial exclusion and promote inclusive economic development. It would be a lending arm of the proposed new national investment bank that Labour also plans to launch, and therefore would lead to a wholesale restructuring and repositioning of the UK economy, enabling patient finance to be seeded in our communities, and enabling greater vitality in communities that have seen significant industrial and economic decline over the last 40 years.

A solution is clearly at hand that would save our post office network and provide banking services where high street banks have disappeared. It would use a new banking model that is far more sustainable and will lead to far greater stability, growth and prosperity across the United Kingdom. I urge the Minister to take those proposals seriously, if she has any serious interest in addressing the crisis facing our post office network and those who work in it.

--- Later in debate ---

[Mr Sweeney]

The additional concern is that the ATM footprint is subject to business rates, which is obviously a cost borne by the franchise holder. That is money over and above that received from Post Office Ltd, and it therefore represents a financial detriment to the franchise holder. The Minister needs to come up with a mechanism to offset that cost to the business, because otherwise it is unsustainable.

[Kelly Tolhurst]

As the hon. Gentleman knows, the Government have been working to make business rates more equitable for small businesses, and we are looking at the impact of that. Post offices will have benefited from that work. He mentions costs that he has been made aware of; if he lets me know that particular constituency issue, I am more than happy to take that forward. As I have outlined, under the Bank of Ireland agreement with the Post Office, postmasters are remunerated for, rather than being expected to pay for the privilege of, delivering that service for our communities.

On the question of cashpoints, as we are faced with bank closures, which is a problem that we all very much agree on—they have deserted our high streets—it is for the post offices to pick up the slack in some cases. That is why this Government, with the Post Office, have been negotiating strongly on the new banking framework—to get a better deal for the postmasters who are delivering services that we all rely on in our high streets and communities.

The question of accessibility in the franchise branches has been raised. Franchising means that a post office presence can be maintained in town and city centres in a way that not only makes financial sense, but ensures that services are more accessible to customers, for example through the provision of extended hours and Sunday opening. Post Office Ltd is wholeheartedly committed to ensuring that the needs of the community and its customers are met in any relocation. That is why the Post Office consultation encourages the community to share its views on all matters, including issues related to accessibility under the Disability Discrimination Act 1995.

Post Office Ltd and its franchise partners have stringent rules regarding access to post office branches, which meet all relevant legal requirements, to ensure that all customers, including those with disability or mobility issues, can access their branches. The Post Office also runs local consultations in order to engage local communities, so that they help to shape its plans. The Post Office does not seek a mandate for the franchising, but consults on practical aspects of a proposed relocation, such as service provision and accessibility.

GKN Aerospace, Kings Norton

Paul Sweeney Excerpts

Wednesday 24th April 2019 Commons Chamber

[Richard Burden]

My hon. Friend is right to mention national security. It was raised last year, and I will refer to it later in my speech, because GKN Aerospace Kings Norton manufactures windscreens, windows and other transparencies for both military and civilian aircraft.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

My hon. Friend is making an important point, because this matter is not restricted to the defence industry. Asset stripping has a wider impact across our manufacturing base, and if this Government are serious about growing this country’s industrial base and manufacturing capability, they had better get a grip on these matters and insist on statutory provision and legislation to back up the obligations on private capital to deliver in the national interest. Does he agree?

[Richard Burden]

My hon. Friend makes a good point, and I hope that we hear some strong statements from the Minister about what the Government are going to do.

Last year, not only had Melrose sought to assure the Business, Energy and Industrial Strategy Committee of its intentions, but it provided a series of similar undertakings to Ministers. In the Business Secretary’s statement to the House on 24 April, one year to the day before this debate, he declared:

“I look to the management to honour its commitments in both the spirit and the letter, and to create a strong future for GKN, its employees, its suppliers, and the industrial sectors in which it will play a major role.”—[Official Report, 24 April 2018; Vol. 639, c. 760.]

He also said:

“Melrose has also agreed to meet my officials and me every six months to provide updates on its ownership of GKN.”—[Official Report, 24 April 2018; Vol. 639, c. 759.]

In the light of all that, one might have expected Ministers to have told the company this month that, rather than close the Kings Norton site, they expected it to honour the spirit, as well as the letter, of the undertakings it had given. Instead, in a written answer to me on 16 April, I was informed that the Secretary of State had been told that the closure plan was the result of

“an internal strategic review by GKN”

and that it was

“a commercial decision for GKN Aerospace and not in contravention of the deed of covenant agreed between BEIs and Melrose.”

If Melrose has indeed been meeting the Secretary of State’s officials every six months as promised, has anything been said in those meetings about the future of the Kings Norton plant being in doubt? If so, what alternatives to closure did BEIS urge on Melrose, and what was the company’s response? If not, what on earth is the point of these six-monthly reviews if they are not expected to cover an issue as important as the closure of a plant?

Of course, BEIS is not the only Department with which Melrose entered a deed of covenant last year. The Business Secretary told the House that the Ministry of Defence had received undertakings that would

“prevent the disposal of the…business, components of a business or assets without the consent of the Government”.—[Official Report, 24 April 2018; Vol. 639, c. 759.]

The Kings Norton plant produces windscreens and windows for military as well as civilian aircraft, so can we assume that the MOD will now step in? Apparently not. A written answer from that Department on 15 April told me that, as defence work is being “moved, not stopped”, the Secretary of State for Defence would not be issuing a note of concern under the covenant.

I assume the Minister spoke to his colleagues in the MOD before this debate, so can he tell me whether GKN has made an unambiguous commitment to retain in the UK all defence-related work undertaken by the Kings Norton plant? What has GKN said about how it plans to dispose of the Kings Norton plant after closure?

No doubt the Minister will tell me about the various investments GKN has announced in its aerospace and automotive divisions at other plants in the UK, and I welcome those investments. However, the first that employees at GKN Aerospace in Kings Norton knew of the company’s plans to close their plant was when they were told on 5 April 2019. That is simply not good enough, and it is a breach of faith with what Melrose said last year.

If the company believes there is a profitability issue at Kings Norton, should not Ministers be telling it that the spirit of the undertakings given last year means that it should first discuss the situation, and the options for the future, with the trade unions representing employees before decisions are made, rather than simply informing them afterwards? When Melrose said last year that its mission is “to power” the Government’s industrial strategy to secure “the best outcomes” for employees, suppliers, customers and the wider economy, is it not reasonable to ask what assessment it has made of the impact of closing the Kings Norton plant on the local economy? My hon. Friend the Member for Coventry South (Mr Cunningham) made that point earlier. Has BEIS asked the company that question and, if so, what has been the company’s response?

I do not believe that GKN now telling the Government it has conducted a strategic review is satisfactory. Do Ministers accept the need to press the company further? How did GKN reach this decision? What alternatives have been, or still could be, considered? What, in detail, is going to happen to the defence work carried out at Kings Norton, and how does GKN plan to dispose of the asset that is the Kings Norton plant? Finally, what impact, in practice, will closing Kings Norton have on the industrial strategy in Birmingham?

Without clear and convincing answers on those points, I ask the Minister to join me and other hon. Members in saying that Melrose and GKN should think again.

--- Later in debate ---

[Andrew Stephenson]

The company has emphasised to us that it is at a very early stage in the process. It has not started formal consultation with workers, but it thought it was appropriate to set out its long-term vision for the site. I hope that the hon. Gentleman and others who meet the company will discuss alternatives to the site, and I hope that we can work together to support the 172 workers who are directly affected and those in the supply chain who will also be affected.

I fully appreciate the hon. Gentleman’s opposition to the takeover, which he set out today and in a debate in Westminster Hall on 15 March last year. I also understand the concerns that have been raised this evening by the hon. Members for Coventry South (Mr Cunningham), for Glasgow North East (Mr Sweeney) and for Strangford (Jim Shannon). However, I emphasise that mergers are an important part of our economy, and they can bring real benefits to consumers and the economy as a whole by attracting investment and promoting growth and innovation.

[Mr Sweeney]

The Minister is making a fair point about the potential for mergers and takeovers to be positive. He also mentioned foreign direct investment, but does he recognise that there are two types of foreign direct investment—developmental and dependent—and that the bulk of the FDI activity in the UK is dependent? It involves purchasing existing UK-owned assets and does not add to the overall capital stock of the economy or grow the economy in a sustainable way. Does the Minister recognise that that is a big flaw in the Government’s industrial policy? If he recognises that, perhaps he will start to deal with it.

[Andrew Stephenson]

No, I think foreign direct investment is a power for good in our economy, and we should work to attract more investment into the economy. Some of our best firms have grown through mergers and acquisitions, and we have seen huge investments in different sectors with the help of foreign direct investment. It is worth saying at this point that GKN has grown through mergers and takeovers, both here and abroad. I think the firm actually bought the site from Pilkington in 2003.

The UK’s merger regime is highly regarded around the world because of how it is designed. It is based on transparent rules that are administered consistently by expert bodies. It recognises that decisions are primarily a matter for the shareholders and restricts the role of Ministers to transactions that raise public interest concerns. As a result, the regime offers clarity for businesses and maintains investor confidence. An example of that is the independent Takeover Panel, which governs the takeover code. The code provides a robust framework to ensure that takeovers of listed companies are conducted in an orderly manner, with fair treatment of all shareholders.

On 12 January 2018, GKN announced that Melrose had made a takeover approach and the Secretary of State spoke to both parties to understand their intentions. The Government’s priority was to ensure that the national security concerns raised by the transaction were addressed. The Government completed a thorough and detailed assessment and concluded that they should not intervene under the Enterprise Act 2002.

Melrose voluntarily agreed post-offer undertakings with the Takeover Panel. As a result, for a period of five years, Melrose committed to sustain GKN’s current level of expensed research and development at 2.2% of sales; maintain a UK stock exchange listing; remain headquartered in the UK and ensure that the majority of directors are UK resident; and guarantee that both the aerospace and Driveline divisions retain the rights to the GKN name. In addition, Melrose agreed to sign a deed in favour of the Department for Business, Energy and Industrial Strategy that commits the company not to sell the core aerospace business before 1 April 2023 without the Secretary of State’s consent.