Clause 34 — Information and Consultation: Great Britain

Employment Relations Bill – in the House of Commons at 9:15 pm on 29 March 2004.

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Photo of Mr Brian Cotter Mr Brian Cotter Shadow Minister (Trade & Industry), Trade & Industry, Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson 9:15, 29 March 2004

I beg to move amendment No. 3, in page 30, line 9, at end insert

(1A) The Secretary of State shall consult such persons as he considers appropriate on the establishment of works councils as an arrangement suitable for informing and consulting employees and shall publish the responses received pursuant to those consultations, together with guidance on best practice for works councils, before making the regulations referred to in subsection (1).'.

I wish to mark a card for this amendment, which the Liberal Democrats consider extremely important. As the Minister will know from discussions in Committee, we consider that works councils are important not only for employees, but for employers, in ensuring that companies are run well and with the full co-operation and help of their employees. In view of the lateness of the hour, I say to the Minister that I hope that he has taken on board our arguments and that he will accept that we have a valid argument and at least recognise that the works council approach has merit and is worth consideration.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

There are two aspects to the amendment. On the consultation aspect, the implementation of the information and consultation directive has been the result of extensive consultation, as the hon. Gentleman knows. The amendment would impose a statutory requirement not only when the regulations are made initially, but whenever they may be amended in future, which would not be desirable. The Department already follows Cabinet Office guidelines on public consultation and publishes the results of such consultations, so a statutory obligation would not improve things in practice.

In the case of the information and consultation regulations, we are well aware that the implementation of the directive represents a particularly significant landmark in UK industrial relations, so it is very important that we approach the implementation in a positive and constructive manner. For the first step, we published the discussion document in July 2002, and we held a series a round-table discussions up and down the country with a wide range of individual businesses and their representatives, unions and employment experts, to discuss how best to approach implementation of the directive in the UK. Building on that initial consultation, the Government held discussions with the CBI, the TUC and a range of other organisations about the details of implementation.

An agreed framework for implementing the directive was published on 7 July 2003, together with draft legislation, on which we invited comments, and a further series of round-table discussions were held around the country with a similar mix of experts. I attended five of those discussions myself, other Ministers were present at other events, and copies of the responses to the two consultations are available in the Department of Trade and Industry library. The responses indicate strong and broad support for our approach to implementation, and since the second consultation closed in November officials have been working with a range of stakeholders to refine and improve the regulations. We intend to publish a Government response to the consultation before the summer.

I am grateful to Brian Cotter for raising guidance. The Government have always intended that regulations should be accompanied by guidance. We know that it is very important to all the parties who will be affected by the Bill that guidance is available in advance of the legislation coming into force. We therefore intend to publish draft guidance that will explain how key concepts in the legislation are intended to work in practice. In addition, ACAS will produce best practice guidance that is designed to help information and consultation practitioners get to grips with some of the main issues involved in setting up and running information and consultation procedures. In those circumstances, and notwithstanding what the hon. Member for Weston-super-Mare has said about the importance of works councils, which may be included in the consultation process, I ask him to withdraw the amendment.

Photo of Mr Brian Cotter Mr Brian Cotter Shadow Minister (Trade & Industry), Trade & Industry, Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson

I thank the Minister for his answer. We still feel that works councils are important, but, in the light of his comments, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

I beg to move amendment No. 1, in page 41, line 5, leave out Clause 46.

Conservative Members are not against union modernisation, and we are certainly not against trade unions in fact, we are making a real effort to reach out to them. As I pointed out earlier, the Minister got wind of a meeting that my hon. Friend Mr. O'Brien and I had the other day with Mr. Brendan Barber. The meeting was constructive, and we have a great deal in common.

The Minister has said on a number of occasions that the unions have shown remarkable resilience. They are modernising, but the key point is whether the state should fund the process. The Chancellor made it clear in his Budget that the country's finances are fully stretched borrowing is soaring and a black hole is opening up but the Government still spend our money with irresponsible abandon. The original budget for the Scottish Parliament was £44 million, but the cost is now more than £400 million, and there are also the Electoral Commission, the supreme court and now the modernisation fund.

Our concern is that there is no ceiling or limit on the money for the modernisation fund. Clause 116A states:

"The Secretary of State may provide money".

The Minister has stated that the sum will be between £5 million and £10 million over several years, but the commitment is open-ended.

Furthermore, the Minister said in Committee that the money may be spent only on specific items, and the clause mentions various items and initiatives that it can be used for. Clause 116A(3) states:

"Money may be provided in such a way as the Secretary of State thinks fit".

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

The hon. Gentleman will surely remember the partnership fund and the working partnership fund, which his party supported. We have set out the union modernisation fund in exactly the same way as the partnership fund.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

The DTI partnership fund discusses match funding, but there is no match funding in the Bill. If the Minister were following the rules of the partnership fund, the unions would have to put up a pound for every pound the Government put up.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

Just to be clear, we followed not the rules of the fund, but the way in which it was introduced.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

We are still not satisfied. There should be an equal pool of money. We do not want clause 46 to go ahead, but, if it does, it should be even-handed. Many employer organisations want to modernise, reach out to their members and introduce new ways of communicating and dealing with their members, but there is no money for them. The clause is in no way even-handed: it is completely one-sided. The Minister has said on many occasions that the essence of the Bill is even-handedness, but this provision is not even-handed; it is biased and unnecessary. How do we know that the money is not a sop or a bung to the trade unions? That is why we tabled the amendment to delete the clause.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

Mr. Bellingham set out three concerns: first, the way in which the money might be spent; secondly, the amount of money, there being no cap; and, thirdly, the lack of even-handedness. It surprises me that he did not table an amendment to that effect instead of one that would delete clause 46 altogether. That suggests to me that his true motives are not those that he specified and that he has another agenda to do down the unions.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

To answer the hon. Gentleman's last point, the reason such an amendment was not tabled is that the Government inserted the provision in Committee at the last minute, so we had no alternative.

I am grateful to be able to speak on this bung clause the sort of law that most people would not believe could be introduced. It is unbelievable that the Government are not saying how much they will give to the unions. Will it be £5 million or £10 million? Presumably £6.4 million would be the benchmark, as that is the amount that the unions provided to the Labour party last year.

Photo of John Mann John Mann Labour, Bassetlaw

The money that unions give as donations is governed by their political fund ballot rules. Is the hon. Gentleman aware of those rules?

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

I am indeed.

Do unions need modernisation in the first place? They probably do. In January, ASLEF wrote to 40 of its employees listing penalties, including the sack if they went on strike, and derecognition of the GMB union. It looks as though ASLEF does need a bit of modernisation. Last year, the GMB had its own problems. A leaked report shows that 60 employment tribunal cases lodged against the GMB cost it some £4 million. They included cases of sexual harassment, bullying, discrimination, and unfair dismissal; and it had a £19 million deficit in its employee pension fund to boot no wonder The Guardian reported that it must rank among the worst employers in Britain. Unions probably do need a bit of modernisation, but the question is: should the taxpayer pay for it? My answer would be no.

Photo of John Mann John Mann Labour, Bassetlaw

I appreciate that Mr. Djanogly is rather too young to recall some of the activities of previous Governments, but it may help him if I remind him of the moneys given in the late 1980s by the Department of Trade and Industry under Lord Tebbit for the modernisation of trade unions. The hon. Gentleman may also be interested to know that from 1979 to 1992, under successive Governments, the education Department gave money for the modernisation of trade unions.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

During the course of the Conservative Administrations, well over £20 million was given to the trade unions for specific ring-fenced items such as running secret ballots, but this money is completely open-ended.

Photo of John Mann John Mann Labour, Bassetlaw

The hon. Gentleman is not too young, but again he gets it wrong. When I applied for money from those two Departments and from others such as the Department of Employment, there was no ring-fencing. The forms were absolutely clear that it was money for modernisation. This is a fine tradition, and I back the proposal.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs) 9:30, 29 March 2004

I am pleased that we reached the amendment because the discussion demonstrates again the Conservative party's prejudice against trade unions. Conservative Members talk about being pro-trade union. They have held two meetings with Brendan Barber, and I am pleased that they have got into dialogue but I wonder whether they spoke to the unions about modernisation.

Conservative Members' attitude is unsurprising but deeply disappointing because the Bill has tried to foster a new mood of co-operation and a culture change. However, we have the same old Tories saying the same old things about trade unions. I tried to give assurances and explanations in Committee, and I believed that Opposition Members agreed with me about the structure that we were trying to achieve. That certainly applied to Liberal Democrat Members, who opposed the money resolution but accepted some of the points that I made about the culture.

Some trade unions have amalgamated for a variety of reasons. We require a modern approach to employment relations, and that means that trade unions must have the skills to deal with the modern environment. The idea that the money will be used for donations to trade unions is not correct. The suggestion that the money is a bung is simply untrue and part of the scare stories that Conservative Members have presented.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

Will my hon. Friend clarify a point that Mr. Djanogly made? He appeared to suggest that Conservative Members had not had time to table a reasoned amendment to clause 46 commensurate with their views of it.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

I am grateful to my hon. Friend for raising that point. From day one of the Committee proceedings, Mr. Djanogly attacked the trade union movement in any way that he saw fit. He stuck to the employers without speaking to them. If he had spoken to them, he would realise that they are impressed by the new culture that the Government are introducing. There is a framework agreement on information and consultation.

The law on political forums is contained in the Trade Union and Labour Relations (Consolidation) Act 1992, which was tightly drawn. Neither the clause that we are considering nor any provisions in our previous Bill have changed that legal framework. Unions cannot spend money on political objects, including donations to political parties, unless they have established a separate political fund for that purpose. They are prevented by law from using money from their general fund for such purposes. I therefore ask the hon. Member for North-West Norfolk to apologise for describing the money as a bung.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

I shall not apologise because the Minister said that approximately £6 million would be paid to the unions for modernisation. Would not it be better if the £6 million that the trade unions pay the Labour party were used for that modernisation?

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

I do not understand the hon. Gentleman's point. It is clear that we are entering a new era of employment relations.

I must apologise to the House because I made a slip of the tongue in the debate on the money resolution when I said that employers' organisations, especially the EEF, had received money for structural changes. That was not correct, and I apologise for it. They had received money for projects. Indeed, £500 million has gone into developing business projects, and that is right. It is a commendable exercise by the Government to enhance and develop business and its activities.

However, we also need to tackle the other side of the equation. As I said earlier, the number of amalgamations between unions has meant that they have experienced a reduction in numbers. It is important that union officials can understand company balance sheets and work out the issues that affect the future of companies, especially, for example, the information and consultation directive.

It is vital to approach the matter in an adult and consensual way and for the fund to be set up in the same way as the partnership fund. It is also vital that there should be much consultation in the summer with employers and employers' organisations. Their representatives will sit on bodies to determine the allocation of the funds in the same way as happened with the partnership fund. The yah-boo-sucks politics of Conservative Members shows that they do not want to have a serious look at the fund; they simply want to scaremonger. They do not support the need for modernisation. They have approached the issues in this part of the Bill in a very negative way, and have not understood the opportunities that exist for a modern approach to employment relations by ensuring that both unions and employers have the same capabilities, and that the highly productive, high-performance workplaces that we want can be achieved. We are going through a critical period of global competition, and the union modernisation fund will be a positive step towards ensuring that trade unions

It being three hours after the commencement of proceedings on consideration of the Bill, Mr. Speaker, pursuant to Order [25 March], put forthwith the Question already proposed from the Chair.

The House divided: Ayes 157, Noes 315.

Division number 114 Employment Relations Bill — Clause 34 — Information and Consultation: Great Britain

Aye: 157 MPs

No: 315 MPs

Aye: A-Z by last name

Tellers

No: A-Z by last name

Tellers

Question accordingly negatived.

Order for Third Reading read.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry 9:51, 29 March 2004

I beg to move, That the Bill be now read the Third time.

I shall begin by drawing attention to the Register of Members' Interests. Like all my hon. Friends, I am proud to be a member of a trade union. I am also proud of the fact that in Britain today there are more people in work than ever before 28 million. We have slashed long-term adult unemployment to below 140,000. In 1986, it stood at nearly 1.5 million. We have slashed long-term youth unemployment to about 20,000. Back in 1986, 300,000 young people were on the dole. We have lower unemployment rates than any other G7 economy, and in the last seven years 1.8 million new jobs have been created in our economy, seven out of 10 in the private sector. That has confounded all our critics, including Conservative Members who said that our policies to re-regulate the labour market would be a disaster for jobs. The opposite has proved to be the case, and the measures that we introduced in our first term are working well. We are building on those measures in the Bill.

Photo of John Redwood John Redwood Conservative, Wokingham

Can the Secretary of State tell us what has happened to manufacturing jobs since the Government took office? Does that not demonstrate just how much damage some of their regulations have caused?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

That is a bit much, coming from a former Minister in a Conservative Government who devastated manufacturing industry and manufacturing jobs in constituencies up and down the country and did not give a toss for the workers who were thrown out of work. I regret to say that, in many sectors, manufacturing employment has continued to fall. As the right hon. Gentleman is no doubt aware, there has been a global downturn, which has made life for manufacturing exporters exceedingly difficult. I am glad to say, however and I hope that the right hon. Gentleman welcomes this that manufacturing is now turning the corner. With a strong and stable economy, historically low interest rates, specific measures such as investment assistance and our wonderful Manufacturing Advisory Service, we are helping more manufacturing companies to become competitive. The right hon. Gentleman's party failed to provide such help.

Getting people into work is essential, especially after the unemployment created by the Conservative party, but far more is needed in the modern world. We must have the conditions that will create more good jobs, better jobs and better workplaces. We know that the best businesses in our country operate on the basis of partnership between management and the work force partnership with a recognised trade union where there is one, but partnership in every case. Among the most important of the Bill's provisions are the measures on information and consultation. They give effect to the information and consultation directive but do so in a way that suits our particular circumstances in the United Kingdom. Our provisions on information and consultation will help to create, in larger workplaces, a culture of partnership in which employees are informed, involved and committed to the success of their business.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

What the Secretary of State says is not reflected in the Bill. The fact is that under the Bill, all that information and consultation is to be done by statutory instrument. She has not said how consultation or the directive will be put into effect, and if she would like to say now how that will happen, I should be grateful.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

The hon. Gentleman must surely notice that the Bill provides precisely the statutory authority that will bring information and consultation into effect and, in so doing, will end the absolute scandal that too many members of our work force have had to put up with: that of hearing from the radio in the morning, or, as in one notorious case, by text message to their mobile phone, that they are to lose their job. We will not put up with that. We have worked with the CBI and the TUC to agree a framework for the implementation of the information and consultation directive, and I very much welcome the fact that Digby Jones has said on that:

"We have reached this agreement . . . through constructive dialogue and discussion. It's exactly the spirit in which we all want new rules on information and consultation to operate in workplaces across Britain."

That approach with the social partners is a model of the approach already being used by the best businesses, which we want more of our businesses to adopt. I pay tribute to the work of both those organisations in reaching that agreement.

I also express my gratitude to hon. Members for their close interest in the Bill and the energy that they have displayed during its passage.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

There have been many constructive contributions, and I had the pleasure of reading the contributions that the hon. Gentleman made in Committee. I pay tribute to him for the spirit in which he moved, and then withdrew, several amendments. I also pay tribute to the Under-Secretary of State for Trade and Industry, my hon. Friend Mr. Sutcliffe for the excellent work that he has done in shepherding the Bill through.

We have had an extensive consultation process on the Bill, and we will continue to listen, particularly as we finalise some of the clauses that we have added more recently. We have never lost sight of the need to keep the costs to business to a minimum, and nothing that we have added to the Bill during its passage will add significantly to those costs.

I shall highlight the changes that we have made to the Bill since its introduction. First, we are absolutely clear that we will not tolerate intimidation or bullying by employers or, indeed, by trade unions during recognition ballots. We will not have in Britain the kind of union-busting tactics that I am afraid have become all too commonplace in the United States. They are, fortunately, rare in our country, but we have listened to concerns raised during the Bill's passage, and we have responded with the new clauses, moved by my hon. Friend the Under-Secretary, that have been added today.

Secondly, we are not prepared to allow racists to hide behind membership of a political party to infiltrate trade union ranks. Clauses now in the Bill provide greater scope, quite properly, and in a way that complies with the Human Rights Act 1998, to root out that pernicious element and to exclude and expel it from trade union membership.

Thirdly, we will not allow rogue employers or, indeed, trade unions to flout the rules on lawfully organised industrial action. I promised on Second Reading that we would look closely at the Friction Dynamics case. That case was not only unusual but, fortunately, unique, and as a result of our consideration of the experience of the Transport and General Workers Union members at Friction Dynamics we have now tightened the legal definitions so that we will not see a repeat of employees being locked out of their workplace while the employer pays little more than lip service if it can even be called that to their statutory obligations. Again, we have strengthened the Bill in that respect.

Fourthly, we recognise the valuable role of modern trade unions in the modern workplace. They play a crucial role in helping to raise productivity, skills levels and the quality of our businesses' output. They can be partners with business in creating high performance, high productivity workplaces. Those are the only kind of workplaces that have a long-term future in an increasingly competitive global environment.

The modernisation fund that we have just debated on Report will give trade unions targeted funding to help them keep up in the rapidly changing labour market, and to make step changes in the way in which they work. I want to add my assurances to those that my hon. Friend the Member for Bradford, South has given both this evening and in Committee: this is not money for trade union recruitment, or money that can be used for industrial action. Nor can it be used for the political purposes covered by the political funds, which are entirely separate, separately constituted by law, and cannot receive money from a trade union general fund.

As my hon. Friend said, we shall of course consult fully on the plans for the fund, in order to ensure a robust set of rules, proper procedures and accountability, and so on. We will draw on the excellent existing model of the partnership at work fund, through which an independent advisory board makes recommendations on bids for money. We will not pre-judge the consultation process, but that model certainly provides a transparent and accountable method of allocating funds. The modernisation fund will account for between £5 million and £10 million, spread over several years. It will help trade unions to plan better for the long term, to think more strategically and to contribute better to our long-term economic success as a multiracial and diverse society.

The Bill takes another important step towards accomplishing our vision of full and fulfilling employment, and it reinforces the framework of fair standards at work that we have established over the past five years. It builds on the vital achievements of the national minimum wage, which was recently increased again, protection for part-time workers, paid paternity leave, the doubling of the length of maternity leave, the new rights to family friendly working, and the trade union recognition to which I have referred. It also leaves untouched the fundamentals of the trade union recognition system that we put in place in our first term: the small firms threshold, the voting threshold and the voluntary agreements.

We consulted extensively on those arrangements before the enactment of the Employment Relations Act 1999, and we know from our review that they are working. They have significantly increased, and are continuing to increase, the number of workplaces and workers covered by collective agreements, thereby helping to protect those workers, and helping even more importantly to create the partnership at work that I spoke of earlier. Business and employees are happy with them, and the number of stoppages at work due to labour disputes is at a record low. There were a mere 133 stoppages in 2003 the lowest figure since records began in 1920. I cannot go back quite as far as 200 years, as my right hon. Friend the Chancellor did recently, but it is a pretty good record, given the history of industrial relations in our country.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

That record sounds excellent until one considers the number of unofficial days off for last year. On doing so, 2003 turns into the worst year since 1997.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I notice that the hon. Gentleman does not make a comparison with the number of days lost under the Conservatives, especially in respect of the Royal Mail, for which I have a particular responsibility. Industrial relations are continuing to improve, despite all the scare stories from the Opposition at the time of the 1999 Act. We know that, crucial to success in a competitive global economy is the ability of Government, business, employees and their trade unions to work together on skills in high-performance workplaces and to ensure that we sustain the economic stability that has underpinned the extraordinary achievement on employment that we have delivered.

I believe that it is an excellent Bill and I commend it to the House.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry 10:05, 29 March 2004

I draw the House's attention to my entry in the Register of Members' Interests. I should also like to say that I draw on many years of experience in manufacturing industry, working positively and constructively with all those in the business in which I was engaged including union members, union officials, individual employees and employers. It gives me great pleasure to thank my hon. Friends the Members for Huntingdon (Mr. Djanogly), for Epping Forest (Mrs. Laing) and for Hexham (Mr. Atkinson), who served so diligently in Committee, and I pay tribute to the extraordinary hard work and scrutinising effectiveness of my hon. Friend Mr. Bellingham.

There are real and urgent problems facing British industry today, and it is against that background that we must debate Third Reading. Productivity has halved since 1997, the total trade deficit rose to an unprecedented £18.8 billion last year and the British Chambers of Commerce informs us that the cost of regulation has shot up by an astonishing £9 billion in the last 12 months alone. The annual cost of poor skills amounts to an estimated further £10 billion.

In that context, it speaks volumes about the priorities of the Government and the Secretary of State that we are not debating any of those vital issues, but another Employment Relations Bill, for which there is scant demand, least of all from those engaged at all levels working in British business. We know that there is little demand because the Bill arose from a Government-commissioned review of the Employment Relations Act 1999. According to the regulatory impact assessment published alongside the Bill,

"The main conclusions of the review are that the legislation is generally working well".

If the Government's own conclusion is that the current legislation is working well, is it not strange that they have decided to use primary legislation essentially to fine-tune an Act passed just four years earlier?

The Employment Relations Bill that we are debating today is not the Bill that we saw on Second Reading. It is not the Bill whose tepid endorsement from the CBI and others was based on relief at its basic insubstantiality and on what it did not contain rather than what it did. We voted against it on Second Reading because it was an unnecessary Bill in its own terms.

Precisely as I predicted in my Second Reading speech, the Bill has turned out to be a Christmas tree an unadorned framework on which interest groups, specifically the unions, have been invited to hang their favourite baubles. Precisely because that was my original suspicion, I asked the Secretary of State on Second Reading whether she would

"assure the House that additional measures will not be introduced by Government amendment, or conceded by them, with the exception of those that she has already flagged and on which we have had a constructive exchange" [Hansard, 14 January 2004; Vol. 416, c. 832.]

Let me place on record, before Labour Members attempt to make any potentially mischievous or even grossly misrepresentative points, that what was then flagged was the Government amendment introduced after Second Reading, which resulted in what is now clause 28, dealing with the exclusion and expulsion from trade unions of racists. We said then that we would consider that positively, particularly when we had a chance to explore the detail, because Conservative Members are equally determined to root out racism. However, the clause does not refer to the British National party, only to "a political party" and to "excluded conduct" of an individual. That could have been achieved either through union rules or, failing that, by a statutory instrument brought under the authority of the 1999 Act. It does not justify the Government in bringing in wholly new primary legislation.

The Secretary of State refused to give me the guarantee that I sought on introducing or conceding additional measures. Instead, we have seen a host of late amendments, a great many of which were tabled just five days ago in a deliberate attempt to downgrade the House's opportunities for scrutiny and for outside organisations such as the CBI, the British Chambers of Commerce, the Engineering Employers Federation, the Federation of Small Businesses, the Forum of Private Business and many others.

Let me say to all those who study the record if asked, those who worked with me when I worked within a large unionised industry, would confirm it that I am not, nor have ever been, anti-trade unions or anti-trade unionists.

Because this is a short debate, I have time to focus only on the most scandalous of the late amendments the Government's bung to the unions. The regulatory impact assessment accompanying the Bill states that the quantified benefit to the unions is between £75,000 and £108,000. The RIA was signed off on 3 December 2003. On 10 February 2004, the Minister for Employment Relations, Competition and Consumers announced that he was tabling a new clause that would

"make funds available to independent trade unions and federations of trade unions to modernise their operations."

He also said that he envisaged that

" the size of the fund would be in the region of £5 million–£10 million in total, with expenditure spread over several years, probably beginning in 2005–06." [Hansard, 10 February 2004; Vol. 417, c. 67WS.]

That happens to coincide with what we understand to be the £5 million to £10 million that the unions, from the hard-won earnings of trade unionists, give to the Labour party. Such a fundamental alteration to the Bill, so vaguely phrased and coming after the signing off of the RIA, constitutes a total abuse of the parliamentary process.

Furthermore, it is evident that the Government have proposed this measure at great, uncapped cost to the taxpayer, having given no thought to the nature, structure, mandate or time limit of the so-called union modernisation fund.

Photo of John Redwood John Redwood Conservative, Wokingham

Will my hon. Friend comment on how wide-ranging clause 46 is? As I understand it, the money can be applied for any existing purpose or any new, unspecified purpose. It could not be any wider.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

My right hon. Friend puts his finger on the inadequate opportunity that the House has had to scrutinise the proposal. The proposal is vague, it was introduced after Second Reading and I am sure that the other place will wish to scrutinise it with great care and consideration.

If I am wrong in what I have said, I invite the Secretary of State to intervene to correct me. Would she care to clarify the expenditure limit of the fund? Or will she confirm that effectively it has none? What is the time limit of the fund? Or will she have to confirm that it has none? As the Government know, it is not possible to amend a new clause in Committee. Why are the Government so reticent about providing a clear and accountable definition? Is it all part of the Government's embarrassed desire to avoid spelling out the extent of the bung?

Photo of Mr Archie Norman Mr Archie Norman Conservative, Tunbridge Wells

Does my hon. Friend also accept that this case is a clear illustration of the need for some form of external, objective audit of regulatory impact assessments? It is a classic case of the regulators assessing their own performance, being vague and, in this instance, virtually negligent in so doing.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

My hon. Friend anticipates my tribute to his ten-minute Bill on the issue, to which the Government have paid no attention. It would ensure a degree of independence and impartiality so that the Government could not up the benefits of a Bill but seek to diminish the costs.

What is the justification for subsidising union modernisation but not a charity or voluntary organisation? Come to think of it, what is the Secretary of State's definition of modernisation, besides its habitual use by new Labour to mask yet again its absence of principle? It defines everything it sees as rotten so that it can justify the use of precious parliamentary time on it as necessary and useful. What processes will the Secretary of State put in place to ensure that the unlimited quantity of money goes exclusively towards the purposes of modernisation, whatever they may be? I am not surprised that we have heard no satisfactory answers to any of those questions. What is clear is that the only calculation that the Government have made is a cost-benefit analysis of throwing a sop to their friends and paymasters in an attempt to tame them ahead of the general election. That is the real regulatory impact assessment at the front of ministerial minds, not the version that they have provided for display in the Library.

I note that the Government have made great play of the support of the CBI for the Bill. However, the CBI has made clear its views on the union modernisation fund, which was of course introduced after Second Reading and after it had given its approval to the contents of the Bill. The CBI believes that

"the Government should not subsidise inefficient unions or union recruitment campaigns through its proposed union modernisation fund."

The Minister attempted to suggest that such purposes have been excluded, but the Government have not defined what is included. Lack of precise definition is part of the problem. The CBI also says:

"It is disappointing that the Government has taken this step given the low incidence of union membership in both the private and public sectors."

That gives rise to the question of how much information the Government provided about the amendment and how much consultation took place between the Government and the CBI. Was it about as much as the Chancellor provided for the civil servants he summarily dismissed in his Budget address?

The Secretary of State has rightly expressed her opposition to employees being sacked by text message, but what about a Government desperate to stay on-message on tackling public sector waste, which the Chancellor has now admitted amounts to £20 billion of taxpayers' money? I invite the Secretary of State to have a quiet word with her right hon. Friend the Chancellor about the importance of leading by example in a "no surprises" culture in the workplace. Does she not feel even a tiny pang of conscience, given her Under-Secretary's edict? On 2 December, in a DTI press release, he said:

"I want to see an end to the climate where people only hear out of the blue about job losses from the media, or by text message. I want to see a "no surprises" culture at work where employers and employees discuss common ground and find solutions to mutual problems."

Only yesterday, however, we learned in The Sunday Telegraph that the Government are to slash or relocate at least 1,500 jobs in an overhaul of the Department of Trade and Industry. It reported:

The headcount at the DTI's headquarters will be reduced by a third, with about 650 jobs cut and around 850 relocated to the regions."

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I hope that the hon. Gentleman will accept that we have been talking to our trade unions for several months about our plans to make our work force more efficient and to relocate some of our jobs.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

It may be of some comfort to know that a fairly Chancellor-led surprise announcement was actually in train and that there were discussions with what the Secretary of State calls "our trade unions" rather than "the trade unions", which would be a more proper way of putting it. That is important.

Despite the Secretary of State's attempt to reassure us, it is equally important that, when the Government issue announcements about job cuts in the public sector, including the way that they slip out news about sackings from her own Department, they should be judged by their deeds. At the very least, they should adopt for their Departments the standards that she seeks to impose through the Bill on other employers, especially those in the private sector who are risk takers as opposed to the non-wealth-creating public sector [Interruption.] Labour Members hate hearing that. They do not like to be rumbled, because the Bill is an effort to dress up something to do with their electoral advantage, as they define it, rather than a true concern for good business, good employment and good, safe jobs.

The other highly flawed provision in the Bill is the incorporation of the information and consultation directive in UK law. In that regard, I refer again to the regulatory impact assessment published in conjunction with the Bill. Incidentally, I make no apologies for my repeated references to the impact of regulation. On the Opposition Benches, we take that very seriously indeed, although I confess that I would have more faith in the reliability of RIAs if even one burdensome regulation had been aborted as a result of that procedure. I asked the Secretary of State about that in a written question, but she relied on her Cabinet Office colleague, who declined to give even one such example. The Minister for the Cabinet Office stated:

"There are no cross-government figures on the number of RIAs that resulted in decisions not to proceed with new regulations." [Hansard, 2 February 2004; Vol. 417, c. 715W.]

Even the tentative quantification of the RIA cannot disguise the fact that the one-off costs to business of implementing the measure will be £45 million and that the recurring annual costs will be £46 million. This single measure alone accounts for more than 75 per cent. of the recurring regulatory costs of the entire Employment Relations Act 1999, which was itself a costly piece of legislation for British business. I hope that the Secretary of State will reconsider the belief, which she expressed on Second Reading, that the costs of the Bill to employers are broadly "insignificant". In her speech this evening, she said that the amendments subsequently proposed would not add a significant cost to businesses.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I am puzzled. I understand that the hon. Gentleman is against the union modernisation fund; that is a clear dividing line. But is he also telling the House that he is against the information and consultation provisions?

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

Perhaps the Secretary of State should hold her breath. I am just about to develop why the Government have chosen to implement the information and consultation directive in a form much broader than was sought in respect of its imposition on this country. As the director general of the CBI has noted, the directive is

"a poor piece of EU legislation".

The fact that the Government lack the will and the influence in Brussels to refine an evidently crude directive at its inception is therefore regrettable, as is their lack of a requirement for a full regulatory impact assessment of that or any other EU regulation while it is being drawn up despite the fact that it is at that stage that the Government can do most to influence a directive's nature and outcome. Theirs is an oddly relaxed attitude, given that about 40 per cent. of UK regulations that originate in Brussels are more costly to British business than those that originate in this place.

Even more galling is the way in which the Government manage to make the worst of a bad situation by transcribing burdensome directives into UK law with disproportionate zeal. There is no reason why the information and consultation directive should not have been introduced via a statutory instrument indeed, it is unusual to introduce such a directive by primary legislation and to give the Secretary of State significant powers to

"make any provision which appears . . . to be necessary or expedient".

Why have the Government taken such wide-ranging powers when they did not want the directive in the first place? Lord Sainsbury of Turville a DTI Minister is on the record as saying that

"a general framework for informing and consulting employees in the European Community . . . is difficult to reconcile with subsidiarity and would cut across member state traditions to no benefit." [Hansard, House of Lords, 5 March 2001; Vol. 623, c. WA 14.]

If the Government are capable of so vigorously to the tune of £45 million a year gold-plating legislation of which they do not even approve, it is terrifying to consider how they implement regulation that they endorse. That goes some way to explaining the BCC figure I mentioned earlier that the cost of regulation on British business has rocketed by £9 billion in the past 12 months alone.

What began as a non-Bill has ended up as a stealth Bill, which will serve to strengthen the unions' power and the Labour party's purported links to them, and to weaken both British business and Parliament. It is an abuse of taxpayers' money and of the scrutiny procedures of this House. One of the few positive notes that can be struck is that it represents a powerful and definitive argument for the two excellent ten-minute Bills recently presented by Back-Bench Members of the official Opposition, my hon. Friends the Members for Huntingdon and for Tunbridge Wells (Mr. Norman).

The Bill presented by my hon. Friend the Member for Huntingdon was designed to eradicate precisely the thoughtless bureaucratic gold-plating of EU directives that the Bill embodies in relation to the information and consultation directive. The European Communities (Deregulation) Bill declares that provisions of regulations will not have to be enforced if it can be proved that they will impose higher compliance costs or a heavier sanction for failure to comply than in other EU member states. That is a constructive and commendable approach to over-burdensome EU regulation, and any Government interested in our British national interest should take my hon. Friend's Bill seriously.

Photo of John Bercow John Bercow Shadow Secretary of State for International Development

My hon. Friend is delivering a racy and intoxicating speech to which I hope I can add. Does he agree that it is most regrettable that the pioneering stance on sunset regulation adopted by Mr. Byers when he was Secretary of State for Trade and Industry, as reflected in the Electronic Communications Act 2000, has since been abandoned and the Government are now adopting a tepid and reactionary attitude that fails to give the proper opportunity to minimise regulation in the way that the example of the United States teaches us is beneficial to industry and commerce?

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I am grateful to my hon. Friend. It is nice to know that a speech can be intoxicating, although I assure the House that, at this stage of the day, I have not had the benefit of anything intoxicating to help me along. More important, he can be reassured that a presumption in favour of sunset clauses is a plank in the official Opposition's proposals to aid the British economy and British business, and that presumption will not be ditched for the sake of expediency.

The Government ignored the Bill presented by my hon. Friend the Member for Huntingdon. Yet again, they displayed their indifference to the needs of British business. With reference to the disgraceful way in which the union modernisation fund was announced, it is clear that the suggestion made by my hon. Friend the Member for Tunbridge Wells of a system of post-implementation audits for RIAs, as set out in his Regulatory Impact Assessments (Audits) Bill, would prevent Ministers from getting away with the shameful practice of signing off RIAs, only to table amendments later that impose potentially vast additional costs on the taxpayer. Indeed, my hon. Friend also provided for the fact that those who promote a Bill and who argue in favour of its benefits cannot be expected to be trusted to be impartial about the costs. Again, there was no squeak of interest from the Secretary of State or her Government colleagues. I know that my colleagues in the other place will be interested in pursuing all these points.

As presented on Second Reading, the Bill was unnecessary. Now, as predicted by the Opposition and feared by British business, it has become costly, nannying, preachy and burdensome. It is highly unlikely that it will influence a few bad employers. It will increase burdens on already good employers and give comfort to the few bad unions. The Bill is a product of the distorted priorities of those who sponsored it a Government who are desperate to curry favour with their paymaster unions and a Department that is structurally indifferent to the flexible and fair needs of British business and wealth-creating small businesses, especially those employing fewer than 50 people. Above all, it is not even-handed between employer and employee. Had we been able to debate amendment No. 7, I know that that issue would have been taken seriously in another place. It is appropriately known as the Miller amendment.

It is no accident that the resource budget for employment relations of the Department of Trade and Industry has more than tripled since 1998, while the allocation for innovation has fallen by 7 per cent. over the same period. It is a matter of fact that the Secretary of State, like her Department, is on the side of the regulators and against enterprising British entrepreneurs and innovators. Unless and until there is a re-evaluation of the purpose and priorities of the Department, I believe that businesses will continue to suffer. The Bill is the latest in a litany of measures that the Government have introduced to burden British business. Unless it is defeated this evening I urge my colleagues and all other Members to join me in the No Lobby it will sit as another glaring indictment on the charge sheet against this Labour Government and this Secretary of State.

Photo of Jim Sheridan Jim Sheridan Labour, West Renfrewshire 10:26, 29 March 2004

It is unfortunate that, once again, those who spoke from the Front Benches took most of the time that was allocated to an important debate.

As a long-standing member of the Transport and General Workers Union, I am proud of the Government for introducing legislation that protects and enhances the role of trade unions. I would argue that another term of Conservative government would have sounded the death knell for trade unions. In that event, we would have been talking today about the reinvigoration of trade unions instead of helping them to expand.

The T and G was much involved in my education and assisted me in getting to this place, for which I am extremely grateful. Many Labour Members have experience of working through the trade union movement and in so doing getting their education. There is an argument that we need more people of the same background and experience in the House if it is to be representative of the work force.

The most chilling comment that I heard during the debate came from Mr. Bellingham, the Opposition Front-Bench spokesman. He said that employees' performance could be affected if they had to attend trade union meetings.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

I was making the point that when more than one member of staff went consistently to meetings perhaps three, four, five or six meetings that could affect performance, particularly in relation to health and safety.

Photo of Jim Sheridan Jim Sheridan Labour, West Renfrewshire

I thank the hon. Gentleman, but it was chilling to hear him say that the performance of employees could be affected if they had to attend a trade union meeting. Many members of the Labour party have experience of attending trade union meetings and of being discriminated against because they did so. Many of them are still on the dole as a result of being blacklisted. They are still looking for a job. In some instances, that is the result of the legislation that the Tory Government brought in.

Not much mention has been made of the foot soldiers in the trade union movement shop stewards. There are young shop stewards, and I have in mind particularly the young females in the trade union movement, which is trying to encourage more women to become representatives. That is something that the Labour party would welcome.

I would put employers into three categories. There is the progressive employer who has nothing to fear from the Bill. The company that I have recently left is already engaged in consulting and helping trade unions, especially with training. It offers resources to help shop stewards to be trained. It recognises that that adds value to the company and helps to increase productivity. There is no problem with that.

Secondly, there are negative employers who wish to take advantage of inexperienced young shop stewards. They keep them waiting in corridors. They misinform them and treat them as idiots. Finally, there is the altruistic employer, whose attitude is, "If you do what you're told, if you're a good boy or a good girl, you'll be here for ever. Just do what I tell you." In my experience of working with the trade unions, I have never yet met a bad employer. I look forward to the day when I do.

On the modernisation fund, it is only right that trade unions should be given money to enable employees to negotiate on a level playing field with employers.

Photo of Mrs Anne Picking Mrs Anne Picking Labour, East Lothian

On the money going to modernise trade unions, I am sure that my hon. Friend will agree that it is no surprise to us that the Tories were against that. They are always anti-union and always will be. Is he as surprised as I am that the Liberal Democrats and the Scottish nationalists, who claim to be friends of the trade union movement, abstained or voted against it?

Photo of Jim Sheridan Jim Sheridan Labour, West Renfrewshire

My hon. Friend makes a good point. As a former president of Unison, the public services union, she knows what she is talking about. She is right. In my area, Renfrewshire, the Liberals claim to be the allies of the trade unions, but when it comes to giving the trade unions the resources to do the job, what do the Liberals do? They vote against it. The SNP say they stand up for Scotland. Where were they when it came to resources for the trade unions? They were not here. They could not be bothered to turn up. That explains why the people of Scotland should reject the nationalists, and why people throughout Britain should reject the Liberals.

Negotiations on pensions are complex, as are negotiations on health and safety. It is important that we have proper health and safety legislation that shop stewards and health and safety representatives are aware of and can deal with. We need people to know what employment law is about and how to relate that to the members. The same applies to company law. I know that many on the Opposition Benches do not understand why shop stewards should be involved with company law. They would rather keep that for the lawyers and the courtrooms. On redundancy packages and productivity pay, why should people not receive the best advice?

It would be remiss of me not to mention gangmasters. In that connection I pay tribute to the hon. Member for North-West Norfolk for his assistance and for recognising that legislation is needed to stop people being exploited by unscrupulous gangmasters, especially in agriculture. A private Member's Bill is going through the House and I hope that, with the support of hon. Members of all parties, it will become law.

We have tried voluntary codes and we have tried free markets, but they have not worked, so we need to try something else. Legislation is not a panacea for all the inequalities in the workplace, but it will go a long way towards stopping them. Effective employment legislation is needed particularly in agriculture, where current practice is nothing more than modern slavery and should be outlawed at every level. In addition to effective legislation, we need ministerial responsibility and financial resources to deal with unscrupulous employers.

Photo of Jim Sheridan Jim Sheridan Labour, West Renfrewshire

My nipples are about to explode in anticipation of what the hon. Gentleman has to say.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

Does not the hon. Gentleman recognise that the Bill is about squashing individual rights? We have the bosses getting together with the unions, and it is back to the 1950s. The people who suffer are individuals who want to have their own say.

Photo of Jim Sheridan Jim Sheridan Labour, West Renfrewshire

The Bill is about affording people the right to decent work and to dignity at work. When I spent time with the hon. Gentleman in Committee, it was nostalgic to hear him talk about trade unions, particularly when he talked about the 70s, 80s and 90s. Perhaps he was not around at that time, and he was basing his comments on what his parents or somebody else has told him. It was definitely nostalgic to listen to him talk about trade unions, his knowledge of which is somewhat limited.

It being four hours after the commencement of proceedings on consideration of the Bill, Mr. Deputy Speaker, pursuant to Order [25 March], put forthwith the Question already proposed from the Chair

The House divided: Ayes 331, Noes 134.

Division number 115 Employment Relations Bill — Clause 34 — Information and Consultation: Great Britain

Aye: 331 MPs

No: 134 MPs

Aye: A-Z by last name

Tellers

No: A-Z by last name

Tellers

Question accordingly agreed to.

Bill read the Third time, and passed, with amendments.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

On a point of order, Mr. Deputy Speaker. As you know, the time constraints meant that you were not able to call me in the debate on Third Reading. I make no complaint about that I appreciate the rules of the House. However, that means that, in relation to a programmed debate, our reasons for supporting a Bill and our qualifications are not on the record. Secondly, I wonder whether you and/or Mr. Speaker could review the speaking rules for programmed and timetabled Bills to ensure that all major opinions in the House are properly heard.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

I sympathise with the circumstances in which the hon. Gentleman found himself. The Chair always nurses the hope on occasions when time is limited that hon. Members will somehow share out the time in a way that satisfies all points of view. Sometimes the Chair's hopes are not fulfilled.

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

Further to that point of order, Mr. Deputy Speaker. Would it not be useful on such occasions if the party that complained did not support the programme motion?

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

The hon. Gentleman should not try to draw the Chair into a matter of debate. DELEGATED LEGISLATION

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

With the leave of the House, I shall put together motions 3 and 4.

Motion made, and Question put forthwith, pursuant to Delegated Legislation">Standing Order No. 118(6) (Standing Committees on Delegated Legislation),