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May 31, 2012

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Labour vows to stamp out ‘phoenix firm’ abuse

A legal loophole that allows firms to evade justice in the event of a person for whom they have responsibility being killed at work will be closed, if Labour returns to power.

The commitment to stop the practice of firms facing prosecution under health and safety law from going into administration and then resuming business under a similar trading name – known as phoenix firms – was made earlier this week by Shadow Business secretary Chuka Ummuna during a speech in Scarborough.

Addressing attendees at the conference of construction union UCATT, Mr Ummuna said: “Business has responsibilities, but government does too. It is wrong that this Government is prepared to stand by while rogue businesses exploit loopholes in the law to evade justice when their malpractice leads to deaths at work.”

Earlier this year, Labour MP and UCATT member Luciana Berger introduced a parliamentary Bill in an effort to stop such subterfuge. The Bill sought to give health and safety inspectors the power to apply for a court order to freeze the assets, or parts thereof, of a firm under investigation following a death, or serious injury at work. However, it did not gain enough support for it to become law.

Added Mr Ummuna: “When workers are injured or killed at work, employers must be held accountable. They should not be able to get out of an investigation by claiming bankruptcy. The Bill would have stopped this, but it didn’t pass.

“So, I give this commitment: the next Labour government will legislate to prevent this abuse. It puts the lives of workers at risk; it is irresponsible; it is wrong – we will stop it.”

Ms Berger’s campaign was prompted, in part, by the death of a member of her Liverpool Wavertree constituency in 2007. The firm prosecuted over the incident was in administration by the time the case reached the courts, and was fined just £4500. The judge, however, suggested a fine of £300,000 would have been considered if the firm had been solvent.

Following the pledge from Mr Ummuna, UCATT general secretary Steve Murphy said a change in the law is essential to protect workers and ensure safe working practices in construction.

“Bereaved families also deserve justice,” he added: “It is bad enough for them to lose a loved one, but the law to allow those responsible to escape justice is a grievous insult.”

Lawyer Alison Gray, from Dickinson Dees, spoke on this issue at the SHP Legal Arena, at Safety & Health Expo earlier this month. To watch part of her talk, visit

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11 years ago

Why wasn’t this dealt with when Labour were in power?
Meanwhile, back in the real world, the coalition forces that are currently occupying parliment won’t be doing anything about this issue either – so don’t get your hopes up either way!

It’s such a shame that the press is owned by phoenix supporters, who won’t report on these criminal scroungers who evade the consequenses of HSE Law. Do the sums; how much does it cost the state to process a prosecution and support a victim for life?

11 years ago

It’s a shame that Labour did not address this issue when they were in power for 12 years!