Company bosses want state aid to pay redundancy costs
Feb 9 2009 By Alun Thorne
Midland engineering bosses want to use Government cash earmarked for reviving the car industry to pay for making their workforces redundant.
The request for state-sponsored redundancy packages was made at a break-out session at the high-profile automotive summit organised by the Birmingham Post, held at the ICC last week.
One boss of a castings firm in Staffordshire employing 250 workers said: “I can no longer afford to carry on paying my workers, but nor can I afford to make them redundant.
“I need this Government cash to pay for the redundancy of some workers to enable our business to survive.”
The boss, who asked not to be named when challenged about his financial predicament, added: “I’m quite happy for this to be credit. I’ll pay it back in 12 or 18 months when things are looking good again.”
But another boss of an engineering firm disagreed, and said: “I’m not talking loans here, I can’t afford more debt, I’m talking about a subsidy.
“The Government has to understand that we need some of this money to pay for redundancies because we are caught between a rock and a hard place if we do not shed workers.
“If they pay it, we might be able to survive. If they don’t, we’ll end up going under and all the workers will only get statutory redundancy pay.”
Northfield Labour MP Richard Burden, who was present at the break-out session when the controversial calls were made, said: “This is a complicated situation but it’s an issue that needs looking into. I think we need to look at the whole issue, where there is a need for temporary employee subsidies.
“The idea of the state stepping in and providing payments for redundancies is something that I would want to think through.
“But we do need to look at some kind of temporary employee or wage subsidy as a support for the car industry – this could retain skills which are really necessary for the industry.”
And John Lamb, spokesman for Birmingham Chamber of Commerce and Industry, said: “We would be in favour of anything that preserves business and jobs. If the Government is giving loans, provided it is monitored, it would be down to the business to use it as they see fit.”
He urged companies facing wage bill problems in the current downturn to seek advice by contacting organisations such as Business Link and Advantage West Midlands.
The Auto Industry Summit, that was supported by the Birmingham Chamber, Marketing Birmingham, Birmingham City Council and the NEC Group, saw almost 200 delegates hear Jaguar Land Rover boss David Smith, Tony Woodley from Unite and David Bailey from Birmingham Business School outline the desperate needs of the car making sector during the current credit crunch and downturn in consumer spending.
A 10 point survival plan was drawn up following the event which was delivered to Business Secretary Lord Mandelson when he attended the CBI’s Manufacturing Dinner in Birmingham last Thursday.
In his speech at the event, Lord Mandelson offered a glimmer of hope for the sector, reiterating the government’s support for the sector as well as admitting that the government was looking at European plans to introduce financial sweetners for trading in old cars in a bid to stimulate consumer demand.