Orders of the Day — John Haig Whisky (Markinch)

– in the House of Commons at 2:28 pm on 4th March 1983.

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Motion made and Question proposed, That this House do now adjourn—[Mr. Brooke.]

Photo of Mr Willie Hamilton Mr Willie Hamilton , Central Fife 2:32 pm, 4th March 1983

I should like to state at the outset of this adjournment debate that I am surprised and angry that no Scottish Minister is present for a debate that concerns directly several hundred Scottish workers.

On Tuesday 1 February I had the sad experience of meeting a group of working men and women who faced a future on the dole queue. They were the shop stewards representing the 500 hourly paid workers at the John Haig Whisky bottling factory at Markinch in Fife. Markinch is a small, nice community. It has depended heavily on the whisky bottling plant for most of the past 100 years. Now, 340 of those workers are to be made redundant. Another 220 of them are to be transferred to a more modern bottling plant at Banbeath in Leven.

The management of the factory—it was, in fact, a Mr. Noble—gave me a civil one-hour interview. Although courteous, he made it brutally clear that the decision to close the plant had been taken by top management and was irrevocable. The decline in business had resulted in overcapacity and therefore the Markinch plant had to close. It was out of date, old fashioned and incapable of being modernised. There are no alternative jobs for the 340 redundant men and women. It is a devastating blow to the local community.

I have learnt of the workers' views on the redundancy terms proposed by Distillers, which is the holding company of John Haig. I raised the matter with Mr. Noble, but he was clearly in no position to do other than assert that the terms were twice as generous as the basic state scheme and that they had already been accepted by Distillers' workers in England. I know that the Minister has been in contact with Distillers—indeed, he has been briefed by it—and knows whether that statement is accurate. It probably is.

We hear a great deal about the power of trade unions, the need to cut them down to size, and the need to make them more democratic. The Prime Minister, through her villainous mouthpiece the Secretary of State for Employment, hurls a torrent of abuse at the unions, accusing them of greed and of pricing themselves out of jobs. However true that might be—and there is not much truth in it—that has not happened at Markinch. Whatever else might be blamed, I have figures to prove that it could never be said that the workers at Markinch priced themselves out of the market, through greedy wage demands.

As I listened to the Markinch workers, I realised how powerless they were in the face of the might of the faceless men at the top of Distillers. There is no nonsense—Distillers moves about those men and women as though they were on a cheeseboard. If they no longer serve the purposes of the shareholders, they go out on their necks. There is no question of democracy or justice, and even less of generosity and humanity in the way that the workers have been treated.

If any company could afford to be more generous and humane, it must be Distillers. The House of Commons Library research department has provided me with figures which show that, during the past three years, Distillers' profits were £548.4 million—an average of more than £180 million for each year—on a turnover of about £1,000 million. The profit on Scotch whisky alone in 1982 was £151·4 million on a turnover of £533·3 million. At a time when firms are going bankrupt almost every day, there is no possibility of that happening to Distillers.

That company recently announced that it is to close 11 of its 45 malt distilleries and two of its dark grain plants, all of which are in Scotland. The closures will be effective from the end of May. It is the first time that Distillers has shut down a plant since the 1930s. It will mean another 530 redundancies in small communities throughout Scotland, which is of no consolation to my constituents in Fife.

I have received several letters revealing the meanness of the redundancy terms offered. One comes from a 49-year-old man in Kirkaldy, who has worked at Haig for 10 years. He has been offered redundancy pay of £3,584. He has 16 years of working life remaining, and he may never work again. Jobs are at a premium in this part of Scotland. It is a damning indictment of an economic system that allows that to happen. If that man spends £70 a week, the redundancy payment will last about a year, and then he will be out on his neck.

The second example is of a man in Glenrothes. He is a fitter by trade, 48 years old, who has been with Haigh for only five years. His redundancy pay is 12 weeks' wages. Under the statutory scheme, it would be 7½ weeks' pay, so in that respect Distillers are generous. He says in his letter: There is virtually no work to be had in this area. It is very depressing to be forced on to the dole queue. He is 48 years old, and he has the prospect of nearly 20 years without a job.

The third case is of a Glenrothes man, a supervisor engineer, who has put in 19 years' service. He is 48 years old. His redundancy pay is £6,300. He says in his letter: These redundancy payments are poor in comparison with the majority of other companies. There is also the case of a man in Windygates in my constituency. He is a maintenance engineer, who has been 45 years with the company, and he is getting 59 weeks' pay in redundancy, or £7,600 in cash. He is in his early sixties, and he has no hope of further work. He says in his letter: Smaller groups pay a lot more money so DCL should play the game and give their workers a far better deal". There is another case in Buckhaven of a 59-year-old who has been 14 years with the company, and his redundancy payment is £5,376. He says: I should be compensated by more than twice the Government's scheme by a company which makes £180 million profit a year. No doubt the Minister will say that the terms offered are twice as generous as the basic terms provided in the 1965 Act and in the subsequent Employment Protection (Consolidation) Act 1978. However, the firm gets back from the taxpayer 41 per cent. of what it pays out up to that statutory minimum. The firm claimed to have been generous. It is not all that generous, when one compares it to other firms. I shall name those companies in a moment.

The redundancy payments scheme became compulsory in 1965. The amounts of money that have been poured out under the scheme are a measure of the way in which the Government are running the economy. In 1979, the amount paid out in statutory redundancy payments was £221–7 million. By 1982, it was £802·9 million. That is some measure of the rocketing unemployment during the past four years.

Official studies show that most large organisations pay more than the statutory minimum, going up to hundreds of thousands of pounds for redundant executives. One reads in the newspapers about the golden handshakes that are given to managers and managing directors. They are not the pittances that these workers are getting in Markinch. The official figures also show—I have obtained this information from the Library—that one in 12 recipients of additional increments do better than employees of Distillers in Markinch. I could give examples of firms that have been much more generous: Blue Circle Industries, Cadbury Schweppes, Rolls-Royce, International Harvester, Ferodo, Taylor Instruments Ltd, John Temple, Molins, Wiggin Alloys, Commercial Union, Ford, and BSC, to name but a dozen.

Cadbury Schweppes' redundancy pay is based on years of service. Up to the age of 40, people who have been employed for 10 years receive two weeks' pay for each year of service; between the ages of 40 and 55, three weeks' pay for each year of service; and for those aged 56 and over, four weeks' pay for each year of service. Therefore, by the standards of the most reputable, enlightened and profitable companies, the terms offered by Distillers to the workers at Markinch, far from being generous, are unacceptably mean and shortsighted.

They are mean because of the company's great profitability. It could easily afford much more. They are shortsighted because the policy could sour industrial relations for many years to come. Distillers, more than any company, depends on the good will of Scottish workers up and down the country. They are one of the most loyal and conscientious work forces in the United Kingdom, if not in the world. Distillers' petty meanness over redundancy payments could seriously jeopardise that loyalty and put at risk its good industrial relations.

The Minister will probably shrug his shoulders and say that the matter has nothing to do with him and that it is entirely for the employers and the trade unions. He might even think privately—certainly the Prime Minister does—that there should be no statutory minimum requirement at all for redundancy payments. The opposite view should prevail. We are witnessing today a profound and challenging new industrial revolution, where more and more sophisticated goods are being produced by fewer and fewer workers. There is no sign of any let-up in the number of workers being declared redundant through no fault of their own and regardless of wage or skill.

In the first industrial revolution in the good old Victorian days to which the Prime Minister looks back with nostalgia, there was no such provision as redundancy payments. Men were thrown out on their necks and left to fend for themselves as best they could; thrown away like a pair of old boots. That unacceptable face of capitalism has been scrubbed a little cleaner although it is still grubby and only a little less unacceptable.

It will be left to the next Labour Government to bring that redundancy payments legislation up to date, making it more humane and generous to workers who are the victims of circumstances that have nothing to do with their negligence or anything like that. The Labour Government will make the scheme much more generous and humane, to compel companies such as Distillers to behave in a more civilised manner than it has behaved in Fife. I hope that the Minister will make representations along those lines to the firm.

Photo of Mr Harry Ewing Mr Harry Ewing , Stirling Falkirk and Grangemouth 2:47 pm, 4th March 1983

I should like briefly to join my hon. Friend the Member for Fife, Central (Mr. Hamilton) by first placing on the record our regret and, to a certain extent, our disgust that a Minister from the Scottish Office has not seen fit to attend the debate. We are not criticising the Minister who will reply to the debate because we know him to be a responsible and sympathetic Minister in such matters. However, I should have thought that a matter concerning the Scottish whisky industry places an obligation, certainly on the junior Minister, the hon. Member for Edinburgh, North (Mr. Fletcher) who is responsible for industry in Scotland, to be here to listen to my hon. Friend's Adjournment debate.

The Distillers' bottling and blending plant at Markinch in my hon. Friend's constituency has been in the town for over 100 years. Indeed, the building dominates the landscape of Markinch. It will be a sad day for the town when, in the not too distant future, that plant closes down.

I mention that the bottling and blending plant has been in the town for over 100 years to emphasise that the profits have been accrued through a lifetime of service by whole families. In return for a lifetime of service DCL is abrogating its social responsibility to return decent redundancy payments to the people who have sustained the company at Markinch for over a century. It is nothing short of a scandal that the redundancy payments are so pitiful. A number of employees will be transferred to the new bottling and blending plant built some years ago at Leven. A number of jobs will, therefore, be rescued.

The problem at Markinch is symptomatic of what is happening to the whole of the Scotch whisky industry. DCL is to close 11 bottling and blending plants in the not too distant future. Other companies in Scotland have been running down and closing malt distilleries and bottling and blending plants, particularly in the past year. Part of the reason is the economic recession brought about by the Government's economic policies. It is also due to the amount of bulk whisky being exported from Scotland and bottled under licence in America, Japan and other countries. It is now in competition with whisky bottled anti blended in Scotland. The whisky industry in Scotland should now adopt the same approach to the bottling and export of whisky as the French do to the bottling and exporting of brandy.

I do not expect the Minister to respond to that point today, but I hope that he will write to me. I am grateful to my hon. Friend the Member for Fife, Central and the Minister for allowing me a few minutes to take part in the debate.

Photo of Mr Michael Alison Mr Michael Alison , Barkston Ash 2:52 pm, 4th March 1983

I hope that I shall be excused for galloping at a fair speed because I want to get as much as I can on the record.

The blending and bottling establishment owned by John Haig and Co Ltd at Markinch has been operating since 1877. The present bottling hall is over 45 years old. Since the bottling hall was built it has been progressively improved as Haig's international business expanded, but further modernisation is simply not practicable. The size and design of the premises means they cannot be adapted to accomodate the up-to-date production techniques so necessary to maintain the company's cost effectiveness in the face of a fluctuating and unfavourable world wines and spirits market.

Production is therefore being shifted to a large modern plant, some six miles away at Leven. This plant offers the high-speed automatic line facilities that Markinch lacks.

The move will inevitably lead to redundancies among Markinch's 571-strong work force, and the company regrets this as much as I do. However, alternative employment at Leven will save 231 jobs. Needless to say, those jobs will be very much more secure in a modern, competitive plant than they could be in an old-fashioned one such as Markinch. A letter from one of the company's employees that the hon. Member for Fife, Central (Mr. Hamilton) forwarded to the Prime Minister shows that even the work force recognises that the Markinch plant is out of date.

The hon. Gentleman's attack focused on the level of redundancy compensation being offered to the other 340 workers. I must make it clear straight away that it is not for the Government to press firms to offer redundancy money above and beyond the level required by employment legislation. Perhaps I could briefly summarise the obligations that the law lays on employers when redundancies occur, and what my Department and the Manpower Services Commission can do to help.

All employers must notify my Department at least 30 days in advance of redundancies involving 10 or more employees. Section 100 of the Employment Protection Act 1975 requires 90 days' advance warning where the redundancy involves 100 or more employees. This is intended to allow Government and other bodies to consider any suitable measures to avert the redundancy or reduce its size—for example, industrial grants or support under the temporary short-time working compensation scheme. Failing this the advance warning helps the employment, training, and benefit offices to organise their service to help the redundant employees.

The John Haig management notified my Department on 3 February that these redundancies would be taking effect from 3 May. The notification fulfilled the statutory requirements, and I am pleased to say that staff from the local jobcentre and benefit office have already visited the Markinch plant to take advance registrations and make known local job vacancies and training opportunities. While I would not for one moment minimise the human impact of redundancy described so graphically by the hon. Member for Fife, Central and possible unemployment, the jobs picture is not all gloom. There are 49 vacancies notified to Glenrothes jobcentre, the local employment office for Markinch, currently unfilled, and 198 unfilled vacancies in the Kirkaldy travel-to-work area. As hon. Members know, notified vacancies account for only about one third of existing job opportunities. More importantly, between March 1982 and February 1983 the employment service placed 2,109 people in employment in the Glenrothes employment area and 5,205 in the Kirkaldy travel-to-work area, and of course, many other people will have found employment on their own behalf.

Both hon. Gentlemen also referred to the need for a modern basic structure of technology-based industries to take over from some of these older factories. I am sure that they will have been pleased to hear, as I was, of the proposed £10 million investment by Applied Computer Techniques in a new factory at Glenrothes where it is hoped to employ some 400 people by the end of next year.

Returning to the employer's redundancy obligations, section 99 of the 1975 Act requires him to consult representatives of recognised trade unions at the earliest opportunity, and at least within the same time limits that apply to notifying my Department. I understand that John Haig started consulting its unions about the redundancy proposals on 28 January, so in this respect, too, it has fully met its legal obligations.

I shall not give all the details of how the redundancy payments are calculated and computed or which individuals of different ages and periods of service might be eligible. It is probably sufficient to say that the maximum statutory entitlement under the Act is therefore £4,200, although the current average payment is around £1,300. I am sure that the hon. Gentleman appreciates that the scheme has always had bipartisan support within the House over the years as well as being generally accepted by both sides of industry. Here too, there is no question but that the company will fully honour its statutory obligations.

Of course, the state scheme provides only a minimum entitlement. It is open to any management, either on its own initiative or under a negotiated agreement, to offer ex gratia payments to top up the amount required by law. That is entirely a matter for the commercial judgment of the firm concerned, and it is here that the hon. Gentleman places me in some difficulty.

John Haig has a redundancy agreement that was negotiated in 1981 with the Transport and General Workers Union and the General, Municipal, Boilermakers and Allied Trade Union to provide for compensation of double the amounts payable under the statutory scheme, and a separate scheme for other workers. It is not for me to say whether the company could afford to be more generous. According to my Department's information, only about one third of private sector employers improve on the statutory terms. The company that the hon. Gentlemen criticises is paying well above the minimum, and is doing so under a negotiated agreement. That is a matter for the firm concerned, not me.

I should like also to take up the hon. Gentleman's bland assumption that the only call on the resources of a profitable company is its payments to its workers, though of course they are a large element. In any whisky firm, excise duty and the cost of materials and services must be deducted from the company's income. Then, some of what is left must go to pay interest on any borrowed money, dividends to shareholders and taxes on any profit to the Government. At the end of the day the company might also hope to retain some money to support future growth.

I must emphasise that employees of the Distillers group, as they have access to the information, will know that, in spite of the allegedly large profit to which the hon. Member for Fife, Central, referred, the value added on a current cost accounting basis one has to compute it in those terms these days as everything has to be replaced at current cost—was insufficient to finance new investment in addition to all the other calls on its resources.

I hope that the hon. Members for Fife, Central and for Stirling, Falkirk and Grangemouth (Mr. Ewing) will appreciate from what I have said that it would not be right for the Government or the House to join the hon. Member for Fife, Central in his condemnation of the redundancy arrangements at John Haig. They are negotiated, agreed, well over the average and, I believe, not ungenerous. I take note of the points made by the hon. Member for Fife, Central and I shall write to him on them.

Question put and agreed to.

Adjourned accordingly at one minute past Three o' clock.