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Orders of the Day — Reduction of Redundancy Rebates Bill

Part of the debate – in the House of Commons at 12:00 am on 7th February 1977.

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Photo of Mr Ronald Brown Mr Ronald Brown , Hackney South and Shoreditch 12:00 am, 7th February 1977

I am concerned about the way in which the 1965 Act is being implemented. Some Opposition Members have been nit-picking over this issue. I am greatly worried about the ease with which some employers turn to the Redundancy Payments Act to ease their problems.

The intention behind the 1965 Act was that where, through a change in technology or other overriding conditions within an industry, a man's job came to an end through no fault of his own, he should be recompensed financially for the loyalty he had shown to the firm over, perhaps, many years and for the fact that he had fallen on hard times until he could find another job. The object was to give him time to use his skill or to obtain fresh skills to enable him to obtain other work. Therefore, instead of driving him out of his job, it was an attempt to help him.

That scheme operated fairly well for a number of years, but from my knowledge of the furniture industry I find that employers are using this as a first resort. I recently learned of and informed the Minister, about a frightening example of a firm in the furniture industry which decided to anticipate the Chancellor's Budget in December. The employer thought it was possible—according to what he had read in the Financial Times and from other financial pundits—that VAT on the goods that his company was producing would be increased from 10 per cent. to 25 per cent. He judged that if this happened his business would be in financial trouble, so he decided to have a pre-emptive strike by issuing 90-day notices to his employees before the Budget. He anticipated that, if VAT went up in that way, he would already be half-way down the field and would not have to start the 90-day period from the date of the Budget.

That does not sound too bad until we remember that the employer was playing with men's lives and that it happened just before Christmas. It was a grossly unreasonable use of a mechanism which was designed for a different purpose. When I remonstrated with the employer, he said "We are free to do what we like. In any event, we share it with the Government. So what?"

I am not sure that reducing the proportion which an employer may claim will be a solution. Employers should not use this mechanism too quickly. I am not prepared to argue that it is the wrong principle to raise the proportion which must be paid by employers as against the proportion that the Government are paying, but I do not believe that the problems of people who have been put out of work have been properly understood.

I have a list of payments made to a number of people who have been declared redundant. It is interesting to compare these payments with those which furniture workers receive when they are declared redundant. Dr. Weiser, of Bunzl Pulp and Paper, was made redundant and got £129,000; Mr. Dowson, of the Rank Organisation, received £150,000; and Mr. Walsh, of Bexhill Urban District Council, did not do badly with ratepayers' money, because he got a little nest egg of £80,000.