How voting Labour could preserve the future of Waterford Wedgwood and the workers of Royal Doulton

On Tuesday 6 April, Gordon Brown set the 2010 General Election for May 6, which may well prove to be a decisive day for the workers of Waterford Wedgwood in Stoke-on-Trent.

Should the result of a hung parliament be avoided, and if the Conservative Government comes into power, any hope the company had of paying off their £134m pension fund bill via intervention from Labour’s Pension Protection Fund could collapse, after the Conservative government announced on January 12, in an interview with the Guardian from the party’s shadow minister, Nigel Waterson that they would not bail out the PPF if it ran into difficulty compensating members of collapsed defined benefit pension schemes.

Waterford Wedgwood Plc, known for its Wedgwood pottery, Royal Doulton and Waterford crystal was purchased by KPS Capital Partners in April last year, after going into administration in January 2009. However, KPS, the United States based private equity fund were not required to take on the pensions black hole due to terms of the deal, and as a result does not have to acknowledge the massive pension fund bill that has now been served to the Wedgwood Museum by the Wedgwood Group Pension Plan.

Legal complications may arise due to the trust status of the museum, and the trust is currently considering a legal challenge to the notice, however as it is linked to Waterford Wedgwood by a shared pensions fund, the Wedgwood Group Pension Plan therefore views the museum as having a judicial obligation to pay the debt.

The museum was celebrating a £100,000 Art Fund Prize in June last year, yet they now face the prospect of having to sell their prized collection, some articles of which have been described as “priceless” should legal proceedings find them obliged to acknowledge the pension fund bill.

As the surviving solvent organisation connected to Waterford Wedgwood, the award winning museum could face bankruptcy in order for the PPF to legally accept the scheme. Unless Labour stay in power after the General Election, the future of the PPF could be in doubt, and Waterford Wedgwood, who suffered over 350 job casualties as a result of administration last year, could yet face more losses if the PPF are unable to intervene after the Conservatives revealed they would not financially underpin the compensation scheme if it ever ran out of money.

Nigel Waterson, the Conservation shadows pension minister, said in January that if the party guaranteed to support the PPF then it might “produce unintended consequences and enable people to feel they could be more lax in running their pension schemes".

Waterson claims it is important for the government to have distance with the PPF, which therefore could spell danger for the future of Waterford Wedgwood Plc. Should the Conservatives come into power, and the museum face liquidation, potentially as a result of failing to acknowledge the whole pension fund bill, then the PPF would not be able to accept the debt of the company, leaving further question marks over Waterford Wedgwood’s financial situation and employees’ status.

Consequently, time could now be a priceless commodity for the workers at Waterford Wedgewood. If the legal battle between the Wedgwood museum and the WGPP is not resolved before the result of the election, it may be crucial to employees that Labour stays in power, as the PPF could be the only way the pension fund bill will be paid to its former and current employees, which in England, Ireland and subsidiaries is around 7,000 people.