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Insolvency (Provision of Information to Employment Agencies)

Volume 491: debated on Tuesday 21 April 2009

Motion for leave to introduce a Bill (Standing Order No. 23)

I beg to move,

That leave be given to bring in a Bill to require insolvency practitioners to provide information regarding redundancies to employment agencies when a company goes into administration within a specified period; and for connected purposes.

At a time of global recession, and its effect on our economy and our people, this Bill aims to improve the relationship between insolvency practitioners and employment agencies, especially Jobcentre Plus. At present, when a company goes into liquidation there is no duty on the administrator to inform Jobcentre Plus of redundancies. I believe that to be wrong.

To be fair, some administrators inform Jobcentre Plus and allow access, but not on all occasions. Employees should have access to the help Jobcentre Plus can offer as soon as possible, and it should not be denied. My Bill calls for a requirement to be placed on administrators to inform Jobcentre Plus of a redundancy situation as soon as possible, and invite the agency to meet those facing unemployment when the company is going into liquidation. It is all about putting people first in difficult times.

Earlier this year, Jobcentre Plus was informed by a company in my constituency that it was going into liquidation. The company informed the redundancy manager at Jobcentre Plus of the insolvency practitioner involved. A series of phone calls took place between the redundancy manager and the practitioner, in which the Jobcentre Plus representative requested access to the employees to issue redundancy packs. The practitioner said they did not want Jobcentre Plus on the site in case it inflamed the situation.

The redundancy manager was on standby to go to the factory because information had been received that the administrator was holding a meeting with staff on that day. The redundancy manager called the administrator on several occasions only to be told that the meeting had taken place at 8 o’clock that morning and that 175 staff had been made redundant, the majority of whom had been sent home. On hearing that, the redundancy manager immediately went to the site in question and managed to catch between 15 and 20 staff. Redundancy information packs were issued to them and the administrator gave an assurance that it would send the remaining packs to the rest of the work force. When I heard that, the words “stable doors” and “horses bolting” came to mind.

The majority of staff at the factory had not been made aware before they left the site of the support and services available to them. Many of those made unemployed had worked for more than 20 years and were unaware of the processes and conditions for claiming benefit; nor were they aware of the redundancy support available to them through the rapid response service. Jobcentre Plus was left with the task of trying to identify those customers as they made claims for benefit.

In another part of the north-east, another company went into liquidation. Staff were not even able to get on to the site to clear their personal effects, as the gates were locked. Jobcentre Plus found out the name of the administrator only through the pages of the local newspaper, and the insolvency practitioner could not help because the staff had all gone home. However, Jobcentre Plus tells me that on other occasions elsewhere in the region it has received excellent support from administrators. They hold joint meetings with employees to talk them through the situation and set out how they can be helped through redundancy. On occasion, redundancy information packs have even been delivered by hand. Those are obviously examples of good practice; if a redundancy situation arises, that is how we would like it to be handled.

We need to iron out the inconsistencies across the piece, not only among insolvency practitioners, but perhaps at the Jobcentre Plus and Insolvency Service end, too. Between April 2008 and March 2009, there were 3,555 redundancies in County Durham. Of those, 513 were caused by company liquidations. Nationally, the figure stands at over 112,000. I want all those people to be treated the same—with respect, not as another commodity that needs to be sorted out, like a piece of machinery left on the site. We are talking about human beings, many with families, all with hopes and aspirations. The Bill will, I believe, go some way towards ensuring that they are treated with dignity.

How would such a Bill work in practice? It would oblige the insolvency practitioner to inform Jobcentre Plus of the situation as soon as possible, but before the liquidation is announced, where there are more than 20 employees involved. There will be an obligation on the administrator to work with Jobcentre Plus to prepare employees for redundancy. The employment service can then act in the most professional way possible and use its expertise to help the employees through the most difficult of times.

Those words and sentiments may be fine, but we need to provide further assistance to insolvency practitioners, Jobcentre Plus and the Insolvency Service. Their relationship needs to be better co-ordinated on the ground. That is why I have already met, both separately and jointly, Jobcentre Plus and R3, the insolvency practitioners’ trade body. I intend to meet the Insolvency Service soon. The Department for Work and Pensions needs to provide R3 with hotline telephone numbers, so that administrators have one point of contact in a region. R3 needs to inform Jobcentre Plus of its major practitioners, so that high-level contact can be maintained at all times. The DWP should issue a rapid-response toolkit to insolvency practitioners, so that they can fully engage with the employees and Jobcentre Plus.

It is to the credit of Jobcentre Plus, the Insolvency Service and R3 that they are ready to look at the problem and to try to resolve it. R3 has assured me that it will work closely with Jobcentre Plus to ensure that people who face redundancy are offered the support and advice that they need. My right hon. Friend the Minister for Employment Relations and Postal Affairs has offered me the opportunity to meet the Insolvency Service to discuss the best way of ensuring that insolvency practitioners are aware of their responsibilities and act on them. I know that he has already written to insolvency practitioners, through the Insolvency Service, about the matter.

The main players—the DWP, the Department for Business, Enterprise and Regulatory Reform and insolvency practitioners—are nearing the same page, but I want to see them on the same page; that is why the Bill is important. I want the sentiments that I have set out to be put into action. A code of conduct needs to be drawn up, and there should be regular meetings between the partners to ensure that the code of conduct is implemented by all parties. The trade unions agree with the move, too. There must be a role for them in the process, so that the whole architecture of the Bill is based on partnership. I welcome my right hon. Friend’s assurance that his Department will look into introducing trade unions into that partnership.

I believe fundamentally that the Bill would close a loophole—an important loophole at that—in the Government’s approach to helping the unemployed back into work. It is a well-known fact that the sooner someone who is out of work contacts Jobcentre Plus, the sooner they can access work. Today, as a result of the Government’s proactive approach to getting people off the dole, 75 per cent. of those out of work still find a job within 6 months. By comparing my experience of this global recession with my experience of the home-grown recessions of the ’80s and ’90s, I hope to give extra impetus to the passage of the Bill, and give the Government confidence that our approach, which is to help those who are out of work, instead of leaving them to their own devices, is right. Doing nothing is not an option.

Unemployment in Sedgefield went up from 1,077 in February last year to 2,456 in February this year. The rate of increase has been rapid, but started from a low base. Even with that rate of increase, the present situation does not compare with the recession of the early ’90s, and especially not with that of the 1980s. In January 1986, unemployment in Sedgefield hit 5,346. Of those people, more than 2,000 had been out of work for 12 months or more. Today, only 70 people in Sedgefield have been out of work for 12 months or more. The last time unemployment in Sedgefield was about 2,500 was in 1996. Almost 600 of those people—more than one in five—had been out of work for over 12 months.

Every person made unemployed is not only an economic tragedy but, more importantly, a personal tragedy for the individual and family concerned. That is why the Government have learned the lessons of the 1980s and 1990s. People who find themselves unemployed cannot be left behind. That is why access to Jobcentre Plus is imperative. In February some 250,000 people left jobseeker’s allowance and found another job. This proves three things to me: people have better skills sets than they once did, Jobcentre Plus is doing its job by finding jobs for people, and the Government’s economic strategy is beginning to work.

The response that I have received from Ministers, Jobcentre Plus, R3 and others to the issues outlined in my Bill prove that the Government are not complacent and are putting hard-working families at the centre of their actions. My Bill will build on the Government’s proactive approach, and will go some way towards ensuring that those made redundant have the earliest possible access to the services provided by Jobcentre Plus. The Government are doing their best to treat those out of work with dignity. The Bill proposes to do the same.

Question put and agreed to.


That Phil Wilson, Mr. John Heppell, Jim Dowd, Mary Creagh, Dr. Roberta Blackman-Woods, Mr. Jamie Reed, Mr. Kevin Barron, Mr. Ian McCartney, Tony Lloyd, Mrs. Sharon Hodgson, Andrew Miller and Mr. Frank Doran present the Bill.

Phil Wilson accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 16 October and to be printed (Bill 84).

Industry and Exports (financial support) Bill (programme) (no. 2)


That the Order of 16 March 2009 (Industry and Exports (Financial Support) Bill (Programme)) be varied as follows:

1. Paragraphs 3 and 4 of the Order shall be omitted.

2. Proceedings in Committee, any proceedings on consideration and proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at 7.00 pm at this day’s sitting.—(Ian Pearson.)