Redundancy Packages (Ailsa-Troon Workers)
The members' business debate is on motion S1M-1489, in the name of John Scott, on non-payment of redundancy packages to Ailsa-Troon workers.
Motion debated,
That the Parliament condemns the action of the Cathelco Group, owners of Ailsa Troon shipyard, which has failed to pay 16 shipyard workers redundancy payments totalling some £300,000 due to them under the terms of their contracts; further notes that these workers had demonstrated their loyalty to the yard by remaining to complete an order after the other workers had been laid off by Cathelco, and urges the suspension of the award of any further government contracts to Cathelco companies until such a time as Cathelco honours its commitment to all its staff.
I speak in today's debate both in sorrow and in anger. I thank the 66 members who have supported the motion.
The Ailsa Company was founded by the Marquis of Ailsa in 1885. The yard's second dry dock was opened in 1899 and, after refurbishment in 1937, was extended to its present size, to accommodate ships up to 120m in length. It is the only dry dock of that size in the west of Scotland and so has strategic significance in defence terms.
To jump forward quickly, after trading through the years variously as Ferguson Brothers (Port Glasgow), as part of the Scott Lithgow group, as Ferguson Ailsa, as Ailsa-Perth Transport and as Appledore Ferguson Shipbuilders, the yard was sold in March 1996 to Cathelco of Chesterfield. It appeared that, under the name of Ailsa-Troon Ltd, the yard's future for shipbuilding was again secure.
Members may remember that 1999 was one of the yard's busiest years. It had a healthy order book and Caledonian MacBrayne was using it for its annual ferry maintenance programme. In May 1999, Alasdair Bisset, then chief executive of the yard, said:
"The yard is ideally placed to compete for repair and refit work for vehicles trading along the UK's West Coast."
At that point, Ailsa-Troon employed 287 people. In the summer of 1999, the yard was competing for contracts at home and abroad. It had a £20 million landing craft contract with the Ministry of Defence, a £5.5 million contract with CalMac for a new 50m ferry for the inner Hebrides and a full repair and refit order book. All appeared to be going well. A further boost was given to the yard in May 1999, when it became eligible for funding from the shipbuilding intervention fund. In July 1999, John Home Robertson toured the thriving yard. On 15 December 1999, Mr Bisset said:
"We are very pleased with the progress that the company has made in increasing its share of the available repair work and it will certainly be a record year for the yard."
It seems as though that was almost the kiss of death for the yard because, thereafter, despite a full order book and a huge number of buoyant press releases, things seemed to go horribly wrong. Less than a year later, the yard was closed and everyone was laid off.
On 7 June 2000, 95 staff were laid off and Cathelco talked about a downturn in the market—a gap in the order book. On 18 August 2000, the real hammer blow came, when Cathelco effectively announced the closure of the yard, with a further 70 lay-offs. It was announced at the time that around 20 people would remain to finish existing contracts.
By October 2000, just four months ago, most of the staff had been made redundant and had been given reasonable redundancy packages. However, the 16 key workers who were hand-picked and, indeed, implored to stay on by Cathelco did not, at that time, receive their redundancy packages. Instead, they were assured that, on completion of the work, they would be paid in full. Given that all their colleagues had been adequately compensated for their redundancies, those loyal men and key workers had no reason to doubt that assurance.
However, in December 2000, as the work finished, instead of being given their redundancy packages—which totalled some £300,000—the men were told that they would in effect receive no payment from Cathelco, as the yard had been put into administration by its owners. That meant that the 16 key staff would become creditors of Ailsa-Troon—not even preferred creditors, at that. I believe that that is a heinous situation. Were it not for the redundancy payment service, the men would have been left with nothing. Some of them had worked there all their life—in particular, Mr Dykes, who has spent much of his working life there since 1954.
Cross-party pleas to Cathelco to do the decent thing by those men have fallen on deaf ears. One is left with the conclusion that Ailsa-Troon was, under Cathelco's ownership, at first badly managed then desperately managed, seeking work that yielded no profit. In the final analysis, the yard has been asset-stripped. I do not at all support Cathelco's proposal to change the site from industrial to residential and leisure use.
The whole affair, as I am sure all members will agree, has left a very bad taste in Troon and in the west of Scotland. The purpose of today's debate is to try to shame Cathelco to do the decent thing by its former employees. It appears that Cathelco has not broken the law, but its actions are, for me—and I suspect for everyone else in the chamber—morally repugnant. Cathelco has e-mailed me and other members to tell us of its financial difficulties. None the less, I believe that it has a moral obligation to its employees, particularly those who, by staying at the yard, kept both Ailsa-Troon and Cathelco afloat until Cathelco management cut its ties and responsibility by putting Ailsa-Troon into administration.
In order to shame Cathelco into doing the right thing, I have also asked Tony Benn MP, in whose constituency of Chesterfield Cathelco's head office is situated, about the matter. He and I have asked Stephen Byers of the Department of Trade and Industry whether that department and the Ministry of Defence will withhold future Government contracts from the company until it pays its employees the difference between what they should have been paid and what they have received from the redundancy payment service.
Given the scale of job losses in Troon caused by the closure of the shipyard, I ask the Deputy Minister for Enterprise and Lifelong Learning and Gaelic whether he has any special plans to encourage the creation of new jobs in that part of Ayrshire to replace the 287 that were recently lost. I know that that is also a matter of concern to my colleagues. In asking him that question, I welcome yesterday's confirmation of objective 2 funding for the west of Scotland and recognise that Troon will benefit from that eventually, if not immediately. I also look forward to welcoming Wendy Alexander to Ayrshire on 28 February, when I hope she will have concrete proposals to make.
I know that other members will have points to raise and I look forward to their contributions to the debate.
I do not particularly like to be involved in discussions in Parliament on what I consider to be industrial relations matters. In normal circumstances, I would expect that such issues would have been resolved by the work force, the trade unions and the management—they should not have to be brought to the Parliament. However, the situation in Troon is now at a critical stage.
I congratulate John Scott not just on bringing the matter to the chamber but on the contribution that he has made to the debate. I do not always agree with him, but I am glad that he has been converted to the cause of socialism. I welcome him to the real world of what it can really be like for ordinary workers who are up against it when their jobs are taken from them and they have no real say.
I would not want members to think that I have not lived in the real world until now, whatever Cathy Jamieson may think.
I am sure that John Scott has lived in the real world, but many workers may feel that politicians of all persuasions who have not gone through the process of being made redundant do not understand their situation. I am glad that John Scott has been able to approach one of my Westminster colleagues, Tony Benn, a man for whom I have immense respect; I hope that Tony has given John his support.
I received a letter today from the Cathelco Group. It points out, as if this resolves the matter:
"It should . . . be noted that a significant number of the final 16 employees in Troon have been successful in getting new jobs."
Frankly, that is not good enough. If workers are made redundant, the issue is not whether they are likely to get another job; the issue is the length of time that they have worked for the company. It is their right to have received a redundancy payment. It would have been all very well if they had received the minimum redundancy payment, but what has happened, as John Scott pointed out, is that the men were asked to do a further job of work in the knowledge that they had no long-term future at the plant. I do not think that many of us would like to be in the situation of knowing that we did not have a long-term future, being asked to do a job of work and then, frankly, being dumped.
As John Scott also highlighted, there are question marks about the ulterior motives behind the situation. I want manufacturing industry in Ayrshire to continue—we do not want to lose any of it. The area around the port in Troon has been zoned for industrial use. I do not want that to be lost. The Scottish Executive has made commitments on infrastructure improvements. We want the whole area to be built up—I know that John Scott will feel strongly about that as well. If the real motive is to sell off the site to the highest bidder and there is some kind of manoeuvring to up the price so that there can be some leisure or housing development, that takes the situation even further down the heinous line than John Scott suggested.
The workers are entitled to have the good and long service that they have given recognised. It is a matter of regret that we must discuss this matter in Parliament. I hope that the minister will be able to give us a positive response, although I accept that it is not within the Scottish Executive's power to resolve the matter—it is up to the company to resolve it. Like John Scott, I hope that the company will have been shamed into action.
I congratulate John Scott on securing this members' business debate and thank him for giving me the opportunity to speak in it. I associate myself with the remarks that he and Cathy Jamieson have made.
The Ailsa-Troon shipyard provided 150 jobs to a skilled work force in Ayrshire. Now it is closed. Not only that, but the last of the work force are not even to be given the redundancy packages that they are due.
I will make three points. First, the fact that closure had been in the pipeline since March last year demonstrates that Cathelco had always intended to shut the yard. Secondly, at the time of the original takeover, the yard was in a financially viable position and still had a potentially lucrative future in Ayrshire. Thirdly, Cathelco was well aware of the financial implications of any redundancy measures.
As I said, Cathelco never had any intention of saving the shipyard. Apparently there was a buyer at the table in August 2000, but Cathelco actively discouraged him from pushing for a sale. A month before the closure, the website was replaced with one advertising and serving Cathelco's property division. Why? Because Cathelco wanted the land for other purposes. Cathelco made a submission to South Ayrshire Council for the land covered by Ailsa-Troon to be rezoned for housing and leisure. The document was compiled, I believe, in March 2000. Some in the council were aware of what was happening long before Cathelco announced publicly its plan to close the yard.
In its submission, Cathelco states that one of the reasons for the shipyard's closure was that the yard was unprofitable. John Scott has shown how the view of the company changed over a short space of time from the 1990 election campaign, when the company said—I was there—that everything was absolutely wonderful. In reality, Cathelco was planning hotels, leisure facilities, restaurants, pubs, houses and marina facilities months before the workers were aware that they were soon to be jobless.
What about the workers? All but 16 of them were given a redundancy settlement, which cost Cathelco £520,000. The final 16 were owed £300,000, which Cathelco said that it could not afford to pay and was not an issue because
"a significant number of the final 16 employees have been successful in getting new jobs."
Apart from the fact that that is not the issue, I wonder what a significant number is to these people.
The final 16 workers were the most loyal—they had been there the longest and were the most expensive to make redundant. When they were asked to stay on, Cathelco knew that it would not have enough money to pay them the redundancy money that it owed—it knew that almost 10 months earlier. This is a disgrace. I wish John Scott well in his campaign and I will do anything that I can to support him.
I compliment John Scott on securing this debate and I thank him, on behalf of people in Troon and all the workers at Ailsa-Troon, for the hard work that he has put into their interests over recent months. I, more than most, appreciate how much work he has put in.
My involvement with Ailsa-Troon goes back over the past 10 years and I have experienced the peaks and the troughs. New owners have come in and made promises that have offered hope for the yard. When Cathelco came in, I had hopes once again. I talked to the workers and management at the yard and there was a new enthusiasm—they believed that at long last more money was on the table and that there would be investment.
Those hopes and aspirations were short-lived. The way in which Ailsa-Troon has been brought to its knees is disgraceful. It was hoped that there would be additional work for Ailsa-Troon, given the developments that were to take place at Troon harbour. Many people called for those developments and gave them support because they saw advantage for Ailsa-Troon in that project; that has now been lost as well.
We should all remember the way in which Cathelco has treated the area and the work force. Cathy Jamieson talked about coming to the cause of socialism. This has nothing to do with socialism. We live in a capitalist society—whether Cathy likes it or not. We depend on good companies creating good jobs for people.
Will Mr Gallie give way?
Not just now.
Will Mr Gallie take an intervention, as he mentioned my comments?
I will come back to the member; I always do.
Our economy is dependent upon companies and people having faith in them—Cathelco has blown that apart.
I accept that Mr Gallie is not a convert to socialism, but does he agree that a positive working relationship between the trade union movement, the workers and the management is crucial in creating and keeping jobs and that, in this case, the workers have been let down?
Absolutely.
That takes me on to the point that the workers put their trust in this company. The 16 workers who continued in their roles gave their all to protect the company's interest and they did so believing that they were doing the right thing for Cathelco. They sympathised, to some degree, with the position that the company was in, but Cathelco did not deserve that trust. It cut out on its workers' interests and it stepped back from redundancy payments—I believe that wages are due to the workers for that period. It is unforgivable for a company in this country to treat its workers that way.
That has nothing to do with socialism; it has everything to do with good company practice, good management and sound industrial relations. That is the way that a company must work with people to deliver its product and to command respect. Cathelco has lost all that respect.
I go along with John Scott's plea that it should be a long time before the Government considers giving any orders to Cathelco.
I join other members in congratulating John Scott on securing this debate. I associate myself with the comments made by all the previous speakers.
This debate is not about Red John Scott or Red Phil Gallie, but about human decency and people fighting for their rights. I welcome the fact that there is a united front right across the chamber on the issue. Many members have mentioned the key points in the case. First, this operation did not have to go out of business; it was a viable business that was deliberately closed down to make a fast buck on the speculative property market in Troon, which is wealthy.
Secondly, in addition to the steps that were outlined in John Scott's motion, I hope that the local authority does not agree to any change of use of the site as long as Cathelco can benefit financially from the site. I am not making an ideological point, as the Tories did with Rolls-Royce. This is a case for public ownership of land, if ever there was one.
We must also learn two legislative lessons from the situation, both of which unfortunately relate to reserved matters. The first refers to companies going into receivership, administration or liquidation. The workers who are owed money should be preferred creditors; they should not be standing at the end of the queue. I hope that we can take the matter up with the Westminster Parliament, because it requires careful consideration.
The second major legal issue relates to redundancy law. Clearly, the company had a moral obligation to fulfil the workers' rights. That obligation has not been met but, as John Scott said, the company is not in breach of any existing law. The law therefore needs to be reviewed in this kind of situation.
I hope that, in his summing up, the minister will address the important point of the implications of this situation on the Ayr economy. Ailsa-Troon has a unique shipbuilding capacity in the west of Scotland, particularly in Ayrshire. That issue affects not just the relatively small town of Troon and the surrounding area, but the wider Ayrshire economy. As John Scott and Phil Gallie said, we hope to develop the Troon harbour area into a major growth point in Ayrshire, but Cathelco's activity has done enormous damage to those prospects. I hope that the minister will indicate what action will be taken by Scottish Enterprise Ayrshire, Scottish Enterprise and the Executive to attract alternative employment prospects to the area so that we can overcome the problems that Cathelco has created.
I thank John Scott, the local MSP, for initiating this debate on the non-payment of redundancy packages to the final 16 workers at Ailsa-Troon. It is quite clear that members of all parties care very deeply about this matter and I recognise the expertise of Alex Neil, John Scott, Cathy Jamieson, Phil Gallie and Adam Ingram, all of whom know this part of the world better than I do.
The debate has rightly focused on the highly unsatisfactory position of the 16 Ailsa-Troon workers and I support the sentiments of my fellow members regarding their fate. By holding this debate, we are further demonstrating our determination to secure the best possible outcome for them. I hope that tonight we have highlighted the shoddy treatment that has been meted out to them.
John Scott has clearly set out the facts of the case. As he said, the Cathelco Group took over Ailsa-Troon in 1996. He made some other pertinent remarks about the chronology of events, for which I am grateful. The fact is that the workers received neither the promised redundancy packages nor any moneys from the company, because it then went into administration. Although they will receive the statutory redundancy payments, those payments will amount to much less than Cathelco promised. In any language, that is clearly an injustice and I support the need to achieve a fair outcome for the employees.
Many of us agree that Cathelco's failure to pay the redundancy payments that were due under the terms of the employees' contracts was unacceptable. As members have said, to complete an order, the workers stayed on after their colleagues had been laid off. They voluntarily helped out when the company could have been sued for breach of contract. In doing so, they undoubtedly demonstrated their loyalty.
Like all members present, my priority on this issue is to secure payment for those 16 men. I will support all moves to achieve that. I note Mr Scott's efforts to do that in conjunction with Tony Benn, the MP for Chesterfield. I note also what Cathy Jamieson and, I think, Adam Ingram said about a letter from the company and that Cathy Jamieson denounced that letter's tone and content. I add my voice to that condemnation.
Unfortunately, acting on a matter that concerns a company that has gone into administration is not within my power. That, as has been noted, is a reserved matter. However, we are in close contact with colleagues in the Department of Trade and Industry about what can be done. They have confirmed what the men will receive. All 16 employees will receive the statutory minimum that the Government guarantees. They will also have a preferential claim on any moneys paid out by the firm with respect to their unpaid wages and holidays.
For any redundancy pay over and above the Government-guaranteed minimum, the men will receive a dividend in the pound from the funds realised from the sale of the company's assets. In that respect, they will be ranked equal to other unsecured traders. The administrators have advised the DTI that the workers will receive some payment, although it is unfortunately too early to say exactly what it will be.
Does the minister agree that, in the circumstances, there is a case that the directors of Cathelco should have personal liability to meet the redundancy payments?
As I said, the matter is outwith my powers and will be dealt with by my colleagues at the DTI. I respectfully urge Mr Ewing, in conjunction with the local member, to make the relevant representation to the relevant minister.
In his discussions with the DTI, which has been in touch with the administrators, has the minister been given any indication as to what the dividend might be? Can he give a ball-park figure?
I do not have that detailed information, but immediately after the debate I shall work with officials to ensure that the local member is given the information he seeks.
Will the minister confirm that if money is paid to the workers in respect of a dividend, there will be no reclaim of the statutory redundancy money that has been paid through the benefits system?
That is another question that requires a detailed answer. I shall be happy to liaise with colleagues to ensure that Phil Gallie's question is addressed in full. Both his and John Scott's questions are matters of detail and I shall do everything in my power to ensure that they receive a response as soon as possible.
Once it became clear to the Executive that redundancies could not be avoided, the Executive and Scottish Enterprise Ayrshire offered full support to those who were affected. A local response team was set up under the partnership action for continuing employment arrangements, which involved the relevant public agencies in helping everybody to find a new job. Cathelco contracted an outplacement consultant to deliver redeployment activities to the work force in the Troon shipyard.
The on-site facility opened in September and local organisations worked with the consultants to provide information and contact names for all local and national programmes of assistance. Those programmes included skillseekers, business start-ups and local business directories for speculative approaches. The local jobcentre advised the workers of relevant employment vacancies and career guidance assistance was offered through the adult guidance network. As victims of a large-scale redundancy, the workers were given immediate access to all training for work opportunities.
It is pertinent to dwell on some positive aspects of the outlook for Ayrshire. Several new initiatives have been introduced that are supported by Scottish Enterprise Ayrshire and will reduce unemployment in the area generally. The men could benefit from them. Work has started on the new £30 million Prestwick international aerospace park; Scottish Enterprise Ayrshire has made significant capital investment in the Irvine Riverside business park; and a programme is under way to provide a range of high-quality office and light industrial units. Today sees the opening of the new Ayrshire facilities of Citiraya (UK)—I apologise for my pronunciation—which is a Singaporean electronics recycling company that will create 46 new jobs over the next two years.
In conclusion, I want to comment on the final part of the motion, which urges
"the suspension of the award of any further government contracts to Cathelco companies until such a time as Cathelco honours its commitment to all its staff."
I can confirm that the Scottish Executive has not awarded any contracts to Cathelco and that it has no intention to do so. I cannot comment on the position of the Whitehall departments, but I assure members that we will make our position clear to our colleagues at Westminster.
There is clearly broad cross-party support on this issue. Today's debate sends a clear message to the company that the answer is in its hands. On behalf of all members present, I urge Cathelco to do the decent thing and give the men their due.
Meeting closed at 17:40.