Orders of the Day — John Haig Whisky (Markinch)

Part of the debate – in the House of Commons at 2:52 pm on 4 March 1983.

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Photo of Mr Michael Alison Mr Michael Alison , Barkston Ash 2:52, 4 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 Hamilton) forwarded to the Prime Minister shows that even the work force recognises that the Markinch plant is out of date.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.