Press Comment : Time for the Phoenix Four to pay the MGR Trust Fund
David Bailey, Birmingham Post, 3rd March, 2011
A number of former MG Rover workers recently met with representatives of the Phoenix Four to see whether there will be a payment into the workers’ Trust Fund. That payment is long overdue.
It’s almost six years since MG Rover went bust, leading to the loss of 6,300 jobs at Longbridge and several thousand more in the supply chain. Workers were dumped on the dole and many struggled to find work, often at much lower wages than at MG Rover. Suppliers were owed hundreds of millions and got just a penny in the pound for what they were owed.
Described at the time as the ‘unacceptable face of capitalism’, the Phoenix Four made a pledge to help the workers. In particular, they promised – without any qualifications or conditions – to put money raised from selling off the remaining assets of Phoenix Venture Holdings (PVH) into a trust fund for former MG Rover workers. Six years on and the ex-workers are still waiting.
Let’s remember that the Phoenix Directors – who risked just £60,000 each of their own money to get their hands on the Longbridge operations, extracted some £42 million in salaries, benefits, bonus payments and contributions to a trust fund in Guernsey in the five years they ran the firm. Nice work if you can get it.
Furthermore, as the 2009 DBIS Inquiry Report and our paper in the Cambridge Journal of Regions, Economy and Society recently showed, the Directors tried to extract even more.
Meanwhile, we do know that many ex-MG Rover workers have lost out. Our work funded by the Economic and Social Research Council showed that 3 years after the closure some 90% of ex workers were back in work, but were earning on average £5600 less than at MG Rover.
We also think that, since 2008, some of these workers will have lost their jobs again in the downturn. Workers that we interviewed talked of how their families had struggled financially since the closure.
Let’s be clear that there will be no lottery win for the ex-workers. In a letter to Richard Burden MP back in April 2010, John Towers said that “through our efforts in the PVH asset realisation process we built up £12.5 million in an HBOS account that should be available to transfer into the Longbridge Trust”.
That works out at just £2000 per worker. It won’t change their lives or cover the debts that many have built up, but would help a little, and would be an important gesture both in helping ex-workers draw a line under the affair and in the Phoenix Four actually doing the right thing.
Northfield MP Richard Burden said nearly a year ago, the workers “see it as unfinished business, as a commitment that was made to them and which should be honoured. I agree with them about that”.
For years now, the Phoenix Four have claimed that they have been unable to make the payment for various reasons – the BIS Inquiry, a possible SFO Inquiry, and the most recently the claim by HBOS.
These protestations by the Four are irrelevant. They made a clear commitment six years ago to help the MG Rover workers. No buts, no ifs. A clear commitment. And at the time they made that clear commitment they knew that MG Rover had entered into a cross guarantee deal with HBOS. That shouldn’t now be put forward as an impediment to coughing up some money.
Let’s therefore hope that the Four can now tell the workers that they have unlocked the funds from asset sales that they committed to the ex-workers and can make the payment – if that money can’t be accessed for technical reasons, then it’s time the Phoenix Four dip into their own deep pockets that they were so eager to fill before the firm went bust.
Time to cough up, chaps.
[Source: Birmingham Post]
[Editor’s Note: Professor David Bailey works at Coventry University Business School.]