New Labour’s Pension Debacle: Leicester and the British United Shoe Machinery Company

The millennium marked the beginning an important period of working-class struggle here in Leicester when the British United Shoe Machinery Company (BU) was controversially shut down, 101 years after its founding in 1899. At its peak in the 1960s, the BU factory employed around 4,000 people at it’s Union Works site in Leicester.

BUSM

As is too often the case, when the Leicester-based company went into receivership in October 2000, BU’s remaining 210 employees were cast aside like rubbish. It was soon revealed that the demise of the pension schemes run by British United Shoe Machinery — whose generous nature were always considered to be a mainstay of BU’s operations — had left more than 1,000 former employees with little or no pension.

This despicable attack upon the working people of Leicester was waged by what are politely (and disingenously) referred to as venture capitalists – millionaire financiers ever keen to line their own pockets at the expense of the rest of us. In this instance the leaches in question belonged to a private equity firm called Apax Partners, a firm whose then recently annointed “director in charge of leveraged buy-outs” was influencial Tory (and recent UKIP) donor Jon Moulton.

Another notable Tory financier overseeing Apax’s immense profits – stolen from their workers — was Adrian Beecroft, who joined Apax in 1984 as a Director, and in later years went on to become the company’s Chief Investment Officer. (For details of Beecroft’s maddening exploits, see “The Aston Martin fanatic fatcat who is driving workers to ruin,” Daily Mirror, May 24, 2012.)

But it was the cofounder and chairman of Apax, Sir Ronald Cohen, who is best known for his connection with the BU pensions scandal. This so-called “father” of venture capitalism happened to be a big booster of Tony Blair’s modernizing efforts that sought to undermine the working roots of the Labour movement. Hence Blair’s Labour government had no interest in pursuing justice in the case of the BU workers, who had been cast aside on Apax’s altar of profits.

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Intent on getting their pensions back, former BU workers got organised and soon began working closely with pensioners campaigner Ros Altmann. As Paul Gill, one of the leaders of the BU pensions campaign recalled:

“BUSM workers knew each other very well and on Ros’s advice, we formed a small committee and contacted as many people as possible asking them to visit or write to their MP’s. We also went to see the Leicester Mercury to tell them our story. Every month we joined other groups and went on a themed demonstration in London or at party conferences. Stationary people Kalamazoo were one of the groups affected and they had brilliant graphics designers who produced highly amusing placards. A November one, echoeing bonfire night asked ‘Pension for the Guy, Gov?’ whilst a bus hired for the Labour party conference showed 65 Poverty Street as its destination. The demonstration usually ended with a ‘Stripped of our pensions’ banner being unfurled to protect the modesty of the elderly and apparently naked protestors.

“We asked our MPs to support a Parliamentary Early Day Motion (EDM) – a backbench petition to the government calling for compensation – and the Mercury very helpfully reported what each MP said. No MP wants to get on the wrong side of their local newspaper! Ros also arranged newspaper and TV interviews and several films were made [including ITV’s ‘Money to Burn’]…

“Following a widely supported EDM and backbench revolt in 2004, MPs finally voted for protection for schemes in future. The Pension Protection Fund was established for them and the Financial Assistance Scheme was set up to help those within three years of retirement; a major disappointment as most BU people got nothing. Ros suggested we complain to the Parliamentary Ombudsman, Ann Abraham, who carried out a lengthy investigation… Her 2006 report found official information to be ‘inaccurate, incomplete, unclear and inconsistent’. In an unprecedented move, the [Labour] Government rejected it. The influential Parliamentary Administration Select Committee (PASC) which oversees the Ombudsman looked at the details, and after interviewing Bob Duncan, agreed with her…

“Ros then talked to a group of prominent human rights lawyers who agreed to take our case to a judicial review – a way of telling a government minister to think again! Unusually they did so on a no win no fee basis though the DWP said it would seek to recover all costs if it won. These were estimated at £100k.

“In February 2007, the judge found in our favour, saying that he agreed with the Ombudsman that the documents were inaccurate and misleading, and he had no doubt that this was intended.

“In March 2007, the Government announced improved FAS terms which were to be reviewed in December; ultimately a 90% payout of our pension. A BUSM group was immediately invited by Andy Reed MP to meet Pensions Minister James Purnell who explained what would happen and we made the main Midlands news on both BBC and ITV. Although it made no financial difference, the government wanted to settle the constitutional position of the Ombudsman. It once again appealed and in February 2008 once again it was told it didn’t have a case. Ministers were also told they had to provide good reasons for rejecting the ombudsman’s judgements in future.”

— Quoted in Burt McNeill, BU People: Memories of the British United Shoe Machinery Company of Leicester (2013), pp.45-6.

This was a significant victory for Leicester workers, especially in the face of the concerted resistance coming from New Labour. Thankfully at long last positive changes are now afoot within the Labour movement, marked by Jeremy Corbyn’s landslide victory to lead the Labour Party. But unfortunately, much work still needs to be done to reinstate democracy within Corbyn’s party, with most Labour MPs still firmly committed to representing the needs of the 1% super-rich rather than the 99% majority.

Such democratic problems within the Labour Party are well illustrated by the career progression of the aforementioned Pensions Minister James Purnell, who after stepping down as a Labour MP in 2010 went on to become a senior advisor for the Boston Consulting Group. This is the same multi-national firm that nurtured the career of Adrian Beecroft, such that when he left the Boston Consulting Group in 1982 to join Apax, he had already risen to the rank of worldwide vice-president at Boston Consulting (“Revealed: How Adrian Beecroft made a career out of cutting jobs,” The Independent, May 25, 2012.)

We should also remember that careerist Labour MP’s like Keith Vaz (Leicester East) had to be pressured by vocal public campaigns into fighting for justice for local workers. For instance, while other Labour MP’s were meeting with the Pensions Action Group, Vaz ignored the workers and soaked up the media limelight by showing Bollywood star Shilpa Shetty around the Houses of Parliament.

Keith Vaz ignores Leicester Pension group to show Shilpa Shetty around parliament

As Paul Gill retells events:

“After the Judicial Review we were supposed to meet all our MPs, and we’ve got photographs of us meeting all our MPs. We were all interviewed (BUSM people) on Midlands Today, and we were supposed to be meeting all our MPs. Now one MP didn’t turn up, and that was Keith Vaz, and he had got his constituent there. His constituent had got a piece of paper saying that he was supposed to meeting him, and it turned out that there had been some instance involving Shilpa Shetty and Keith had actually been taking her on a tour of the House of Commons with Tony Blair, instead of meeting a rather more important client for the Judicial Review discussion.

“Keith was interviewed on Newsnight and asked why he didn’t go to the Judicial Review demonstration and he said “I don’t go to demonstrations,” at which point I contacted the BBC and told them the situation that this was absolutely not true. The Leicester Mercury also came out with a [draft] story that we had been badly let down, which was, actually, I felt true. But that would not have done Keith’s reputation any good at all, as I was fully aware. It was actually the second time also that we had dented, or threatened to dent, Keith’s reputation.

“Anyway I told the BBC to hang on for the time being. In the meantime, Keith’s parliamentary assistant or office manager rang me up and said that Keith had been very upset and did I want to withdraw any of the comments, and so I said no. And she said, well he is trying to arrange a meeting for you with the pensions minister. Well this was of interest, as we’d been trying to get a meeting with the pensions minister – we were the only group not to have a meeting with the pensions minister and I suspect they were well aware that I would ask why no investigation of Ronnie the Rogue [Ronald Cohen] had taken place. Anyway, all of a sudden Keith had said that he was very keen to try to arrange a meeting with the pensions minster for us. And carrots being carrots I was quite happy to withdraw the stick of the bad publicity. So I was happy to say yes we would look forward to the meeting.

“Now we had our first meeting with James Purnell, a very important meeting for us for a different reason. A lot of the other pension groups had all had a certain amount of money in their kitties, and if people had reached the age of 65 then they had been paid some money as a living allowance, our lot got nothing, absolutely nothing. People like Brian Cherry had retired and had zero from their pension, absolutely nothing, and this just isn’t fair.

“What I wanted to do was to use that meeting first of all to sort out the hardship people, so I went down with Bob Duncan and other people intending to try and sort out a group of people who should get priority treatment for any payment of financial assistance. There was a big delay at the time in the administration of the financial assistance given, it could be months before you got anything. Our people deserved to be top of the queue, and James Purnell did say to me, “why should we pay you any more money when we could easily spend the money on getting extra nurses.” And what I had considered saying was that we could discuss this quite happily in-front of a television camera; and I would have said very simply that I am prepared to give up my pension if you are prepared to give up yours; but instead I told him that we had a very limited amount of time with Bob having come down from Sunderland and he had to get back the same day. The prime reason for coming down that day was to sort out the hardship people, and at the meeting we had David Taylor, Keith Vaz and Peter Soulsby. Amusingly, unless your name is Andy Reed, about three weeks later — Andy Reed had been trying for some time to get us a meeting — we had another meeting arranged. And when we had the first meeting, Andy Reed, so I am told, was less than thrilled. … In the meantime it had been announced that the Government was going to pay up a reasonable amount of money in 2007.”

BU people

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