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Public Bodies (Abolition of British Shipbuilders) Order 2013

Volume 742: debated on Tuesday 8 January 2013

Considered in Grand Committee

Moved By

That the Grand Committee do report to the House that it has considered the Public Bodies (Abolition of British Shipbuilders) Order 2013.

Relevant documents: 14th Report from the Secondary Legislation Scrutiny Committee, 11th Report from the Joint Committee on Statutory Instruments.

My Lords, I start by reassuring your Lordships that while this order will abolish British Shipbuilders as a public corporation, its liabilities will transfer to the Secretary of State for Business, Innovation and Skills. On this basis, there will be no impact on the ability of British Shipbuilders’ former employees to claim legal compensation for industrial diseases suffered as a result of their employment with British Shipbuilders.

British Shipbuilders was constituted by the Aircraft and Shipbuilding Industries Act 1977. British Shipbuilders owned and managed large parts of the UK shipbuilding industry. British Shipbuilders privatised all its active shipbuilding subsidiaries, initially through the privatisation of the war shipbuilding yards in 1985 and 1986, and subsequently through the sale of the merchant yards and the one remaining engine manufacturer.

British Shipbuilders is no longer a trading enterprise and does not have any funds of its own. It exists mainly to meet residual liabilities to its former employees. This legal responsibility is funded in total by the Department for Business, Innovation and Skills. Funding these residual liabilities currently costs the department about £7 million a year in health-related compensation payments. These payments are mainly as a result of asbestos-related diseases.

British Shipbuilders was considered as part of the Government’s public bodies reform programme and our commitment to reduce the number and cost of quangos. British Shipbuilders does not perform the functions for which it was originally created and does not need to remain a public corporation. The Government therefore put forward a proposal to abolish it using the powers of the Public Bodies Act, which received Royal Assent in December 2011.

The Department for Business, Innovation and Skills launched a consultation in February last year on the proposal to wind up British Shipbuilders and transfer its property, rights and liabilities to the Secretary of State for Business, Innovation and Skills. The department received four responses to the consultation, none of which objected to the proposal but two of which wanted reassurance that the transfer would not impact on the ability of former employees to make legal compensation claims for industrial diseases suffered as a result of their employment with British Shipbuilders. The department confirmed that the transfer would have no impact on the ability of former employees to claim legal compensation for industrial diseases suffered as a result of their employment with British Shipbuilders. An impact assessment in relation to the abolition of British Shipbuilders was not carried out as the savings from the abolition will amount to around £15,000 per year. This saving will reflect the reduced need for company secretarial services post abolition.

A firm of solicitors is contracted to manage all industrial disease compensation claims of British Shipbuilders. A separate company is contracted to deal with pension services, which involves investigating and handling unrecorded claims from former employees. These contracts will be transferred to the department immediately prior to abolition.

As required by the Public Bodies Act, the Government have obtained the consent of Welsh Ministers for this order. We are also in the process of seeking consent from the Northern Ireland Assembly and the Scottish Parliament. We understand that the Northern Ireland Assembly and the Scottish Parliament will consider this order over the coming weeks.

Following the abolition of British Shipbuilders, the department will be responsible for the contracts that deal with the industrial disease claims and pension queries. Post abolition, future compensation claims will be paid directly by the department and will be included in the department’s annual accounts. For these reasons, I beg to move that the Committee do consider the order.

My Lords, I welcome the Minister’s assurances on any outstanding compensation or pension claims. I do not think I need to make any further comments in these circumstances. I am not establishing a precedent for any other debate, but we can start the new year on a happy note.

My Lords, I thank the noble Lord, Lord Young of Norwood Green, for considering the order so briefly, which is appropriate in these circumstances. British Shipbuilders is effectively a shell company, with its main remaining function to act as a vehicle through which the long-term disease liabilities of former employees are managed. As British Shipbuilders has no funds of its own for this purpose, it is completely dependent on the financial backing of the Department for Business, Innovation and Skills. As I have already mentioned, the abolition of British Shipbuilders will not impact on the ability of former employees to claim legal compensation. After the consideration against the criteria set out in the Public Bodies Act, the Government have concluded that British Shipbuilders does not need to be a public corporation in order for the Government to meet its residual liabilities. Abolishing British Shipbuilders as a corporation will avoid the need for it to function as a shell company, employ a company secretary and produce an annual report and financial accounts. I thank the noble Lord for his contribution to the debate and commend the order to the Committee.

Motion agreed.