Mr Henry Bellingham (North West Norfolk, Conservative)

I beg to move amendment No. 1, in

clause 4, page 4, line 5, leave out 'compatible with' and insert 'conducive to'.

''Appropriate bargaining unit'' in the title of the clause refers to the unit of employees within a firm or group of companies that forms the bargaining unit for the purposes of the legislation. Our reason for wishing to substitute the words ''conducive to'' for ''compatible with'' is simple. Compatibility with effective management is too passive a formulation and ''conducive to'' is more positive. If we consider the role of management in the business and its right to create wealth, for the purposes of what the Central Arbitration Committee must take into account, the words ''conducive to'' are stronger and clearer than the words ''compatible with''. That is the essence of the amendment.

Mr Michael Jabez Foster (Hastings & Rye, Labour)

Is it not a problem that the word ''conducive'' is subjective and therefore likely to lead to all sorts of disagreements, whereas ''compatible'' is objective and therefore easier to understand?

Mr Henry Bellingham (North West Norfolk, Conservative)

I do not necessarily accept that; it is a debating point. However, I accept that our amendment would make it slightly fairer to management when it came to sorting out one small aspect of the equation. We are suggesting a change to a point of detail in a part of the Bill that is concerned with how the management structure in a particular company is able to run the business.

Let me also touch on amendment No. 16, which is grouped with—

Mr George Stevenson (Stoke-on-Trent South, Labour)

Order. That is a separate amendment.

Mr Henry Bellingham (North West Norfolk, Conservative)

In that case, I have finished.

Mr Jonathan Djanogly (Huntingdon, Conservative)

In getting down to the nitty-gritty of the Bill, I have found it one of the harder ones to contend with, because only two of its clauses are stand-alone provisions. Otherwise, it relates to other legislation—the Trade Union and Labour Relations (Consolidation) Act

1992, the Employment Rights Act 1996, the Employment Relations Act 1999, the minimum wage legislation and so forth—and it is impossible to consider the Bill without referring to that legislation.

I was struck by the fact that there have been some 25 pieces of pro-union legislation, and this adds to them. The clause and part 1 make more changes, invariably in favour of the unions. I should like to ask the Minister about a matter that comes up throughout the Bill. I would appreciate it if we could address it in the early stages, rather than have it as an ongoing issue. Where did the proposals, including that dealt with in amendment No. 1, come from? Did the Government carry out a review of the changes that would be necessary to existing legislation, or did they ask the unions—

Mr George Stevenson (Stoke-on-Trent South, Labour)

Order. I am a little worried that this is becoming a Second Reading debate or perhaps a clause stand part debate. Will the hon. Gentleman refer to the specific wording of the amendment?

Mr Jonathan Djanogly (Huntingdon, Conservative)

I thank you, Mr. Stevenson, for your comments, which I respect, but this is an important issue, which will come up throughout our proceedings, so I thought that it might be appropriate—

Mr George Stevenson (Stoke-on-Trent South, Labour)

Order. I respect what the hon. Gentleman says, and I shall try to reflect that in my comments, but I really would like him to get back to the amendment.

Mr Jonathan Djanogly (Huntingdon, Conservative)

I shall, although I hope that the Minister has taken my point on board.

Clause 4 relates to the appropriate bargaining unit in cases where the parties have failed to reach agreement. I support amendment No. 1. Management's primary concern is the effective running of the company. It must be allowed to manage the units of labour, and that goes to the heart of the problem with much of the legislation, which is stultifying and ties down the units of labour. That makes management harder than it should be, by working against the adaptable allocation of labour. Perhaps the question that was posed earlier could be turned round, and the Minister could give examples of what compatibility means in this context.

Mr Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations, Competition and Consumers), Department of Trade and Industry; Bradford South, Labour)

I thank the hon. Member for North-West Norfolk for moving the amendment in the spirit in which he did. The backdrop to the Bill is the 1999 Act; indeed, the Bill is a response to the way in which the Act is working. We said that we would review the Act after three years, and have done so. The review is an important document, and I suggest that those who want to contribute to the debate read it and take note of the consultation that we held to seek clarification on the many issues before us.

Mr Jonathan Djanogly (Huntingdon, Conservative)

This is an early point at which to raise the issue, and I appreciate the Minister spending time on it, but can he explain where the impetus for the changes came from during the consultation? Very few, if any, of the changes in the Bill favour companies.

Mr Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations, Competition and Consumers), Department of Trade and Industry; Bradford South, Labour)

If the hon. Gentleman reads the consultation document and sees how different organisations responded, he will find that there was a fair balance as regards the way in which the previous legislation was working. We need to clarify certain issues, so that it works even better.

Clause 4 deals with the way in which the Central Arbitration Committee reaches decisions on bargaining units. Determining the bargaining unit is, of course, a key stage in the statutory procedure, and the union and the employer are usually very interested in making their views on the issue known to the CAC.

The existing statutory procedure sets out a list of criteria that the CAC must take into account when assessing the appropriateness of bargaining units. Those criteria are set out again in new paragraphs 19B(2) and (3), and the description of them has not changed in any way. The need for bargaining units

''to be compatible with effective management''

is the most important of those criteria, and the others come into play only to the extent that they do not conflict with it.

We have been very encouraged by the way in which this part of the statutory procedure has worked in practice, and the CAC and the parties have found it to be workable and fair. Importantly, decisions about bargaining units have been taken quite quickly. The process has rarely led to significant delays, which is a great achievement, given the issue's potential complexity.

There is no need to make significant changes to this part of the statutory procedure—that was one of the findings of our review of the 1999 Act. Clause 4 merely sets out in greater detail, and in the interests of clarity, the processes that the CAC must follow when determining bargaining units—it does not change those processes.

The amendment would make a much more radical change by altering the wording of the key ''effective management'' criterion. That criterion already has a predominant position, and the amendment would elevate its status further. That is clearly the motivation of the hon. Member for North-West Norfolk. We see no reason why the balance should be changed; the statutory procedure has worked very well. The carefully crafted formula lists the main criteria, respects the genuine interests of the employer, and ensures that bargaining units respect the need for effective management. If the union's proposed bargaining unit were to undermine effective management, it should be replaced by one that is compatible.

I understand why the hon. Member for North-West Norfolk tabled the amendment, but I do not think that it would be right to change things at this stage. I hope that he will reflect on the matter, as the system works well. There is no case for the amendment. It would create an imbalance in key parts of the procedure and would produce uncertain effects. Therefore, I ask him to withdraw it.

Mr Henry Bellingham (North West Norfolk, Conservative)

I am grateful to the Minister for that explanation. I do not entirely agree with it, but he has put forward a reasonably convincing case. We would like to return to this point either on Report or when the Bill goes to another place. With that in mind, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr Henry Bellingham (North West Norfolk, Conservative)

I beg to move amendment No. 16, in

clause 4, page 4, line 22, at end insert—

'19BA If more than 25 per cent. of the workers in a bargaining unit determined by the CAC do not wish to be represented by the union, they shall retain the right to negotiate separately from that union.'.

Mr George Stevenson (Stoke-on-Trent South, Labour)

With this it will be convenient to discuss the following:

Amendment No. 17, in

clause 5, page 4, line 24, leave out '19B' and insert '19BA'.

Mr Henry Bellingham (North West Norfolk, Conservative)

Amendment No. 17 is consequential to amendment No. 16, so there is no need to discuss it in any detail. Amendment No. 16 goes to the core of individual choice and the freedom of employees to do what they feel is right for them when a certain number of them do not particularly want to be represented by a union.

It is important to consider the background. For a trade union's application to the CAC to succeed, 10 per cent. of employees in the bargaining unit must be members and the CAC must be satisfied that the majority of employees are likely to favour recognition. If there is a ballot, there needs to be a majority of those who vote, plus 40 per cent. of those entitled to vote. That is straightforward. The amendment would mean that, once recognition had been established, if 25 per cent. of employees did not wish to be represented by the union, they should retain the right to negotiate separately. That goes to the core of the rights of individuals in a company.

The essence of any successful business is to have a happy, cordial relationship between managers, employers and employees. My experience of business—before I returned to this House, I had substantial experience of business—is that the relationship between management and employees is vital. Keeping people happy, motivated, absorbed and involved is vital to the conduct of a business. If a company has a hard core of employees who are not satisfied with the situation, and who wish not to be represented by that union, it would be in everyone's interests—

Mr John Lyons (Strathkelvin & Bearsden, Labour)

Will the hon. Gentleman give way?

Mr Henry Bellingham (North West Norfolk, Conservative)

I am going to sit down in a moment, so it may be better if the hon. Gentleman makes a separate speech.

We are going to the core of individual rights. I hope that members of the Committee will bear that in mind. The amendment is straightforward. I do not intend to

detain the Committee with unnecessary verbiage. I intend to be brief, short, sharp and to the point. With that in mind, I shall sit down.

Mr John Lyons (Strathkelvin & Bearsden, Labour)

What the hon. Gentleman suggests would be a managerial nightmare. An organisation might have three or four bargaining units but, if the amendment were accepted, there would also have to be a shadow bargaining unit if there were trade union recognition. That would be impossible to manage. Managers throughout the country will be holding their heads in horror at the possibility of having to negotiate with a recognised trade union as well as a shadow bargaining unit.

Mr Jonathan Djanogly (Huntingdon, Conservative)

I support my hon. Friend the Member for North-West Norfolk. It would be beneficial to introduce that right for a certain percentage of workers. The amendment suggests that 25 per cent. of workers who do not want to be represented by the union should have the right to negotiate separately from that union.

Several hon. Members rose—

Mr Jonathan Djanogly (Huntingdon, Conservative)

I give way to the Minister.

Mr Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations, Competition and Consumers), Department of Trade and Industry; Bradford South, Labour)

I hope that I will not pre-empt my hon. Friends' questions. Would that principle also apply to a group of workers who wanted to maintain union recognition? Would that group have the same opportunity?

Mr Jonathan Djanogly (Huntingdon, Conservative)

The amendment addresses individual rights, not just management rights and union rights.

Mr Bill Tynan (Hamilton South, Labour)

Will the hon. Gentleman give way?

Mr Jonathan Djanogly (Huntingdon, Conservative)

No, I will continue on my course. An individual has the right to be a member of a union. That does not stop. The hon. Member for Strathkelvin and Bearsden (Mr. Lyons) spoke about a shower of bargaining units. However, what the amendment suggests already applies in most of the private sector. Individuals negotiate their terms with their employers. To say that business will come to grief and collapse because the company and the unions do not get together and wrap things up for everyone is a non sequitur.

Mr Michael Jabez Foster (Hastings & Rye, Labour)

I presume that the hon. Gentleman is suggesting not that individuals should have an individual negotiating right, but that they should have a collective right if 25 per cent. determine it, thus, in effect, creating alternative bargaining units in a single organisation.

Mr Jonathan Djanogly (Huntingdon, Conservative)

I am, indeed, suggesting that. Individuals should have the right to get together to maintain a bargaining position, whether or not they are represented by a union. Indeed, existing legislation gives them such a right. A company that is about to merge and has to consult its employees must help them to put together a form of bargaining unit if there is no trade union. I have a problem not with that, but with individuals being forced into collective bargaining against their will—a separate issue.

What Government Members are talking about is the old fashioned, get-back-to- the-1950s wrap-up, with management and the unions sorting things out together. I am not saying that that will not work in certain circumstances, especially in the larger, perhaps older industries. Circumstances are different. I maintain, however, that individual rights should be taken on board. This legislation ignores individual rights.

Mr Bill Tynan (Hamilton South, Labour)

If we are protecting individual rights, and if an individual has the right not to belong to a trade union—a right that we support—surely that endorses the fact that the individual right exists. With regard to the collective unit for bargaining, does the hon. Gentleman believe that 25 per cent. or more would set up individual bargaining, and that that would be the best way for the employer to deal with an issue?

Mr Jonathan Djanogly (Huntingdon, Conservative)

People have the right to get together to bargain in whichever way they wish. That is a human right, which the legislation should recognise but does not.

Mr Peter Atkinson (Hexham, Conservative)

The problem that we will have in the debate is that many Government Members, as my hon. Friend rightly says, are still fixated on the 1960s and on the days of huge industries and individual companies employing many thousands of people. The reality for most businesses is quite different. Most employ a few dozen people.

Mr Jonathan Djanogly (Huntingdon, Conservative)

The reality is that the people of this country do not realise what rights have been given back to the unions. If they did—I hope they will—they would react against it. I thank my hon. Friend for reiterating that fact.

We maintain that people have individual rights within the collective bargaining regime that the Government are so keen to maintain and to build upon. The question is: at what point should individuals have the right to be heard? The suggested figure of 25 per cent. may be too high. It was included as a conciliatory figure in order to create a balance, but it can be debated. I ask the Government to consider it, because we live in a different age from that being dealt with by the Bill.

Mr Michael Jabez Foster (Hastings & Rye, Labour)

What is being suggested is a threshold of 25 per cent. for collective bargaining. The individual threshold is now one, in the sense that the individuals have the right to choose not to be a member of a union.

Mr Jonathan Djanogly (Huntingdon, Conservative)

I do not suggest 25 per cent. for collective bargaining. I am saying that, if there is to be collective bargaining, the voices of the minority of workers who do not want to be involved should not be dismissed.

Mr Michael Jabez Foster (Hastings & Rye, Labour)

As I see it, the Government seek to maintain the present position, which is that individual rights are wholly maintained for those who do not wish to be part of the collective bargaining unit. People have the absolute right not to be part of the union. It may

be extremely unwise to take that view, but it is a matter of conscience; it is a personal choice. The law is well established, and no change is intended under the Bill.

Mr Jonathan Djanogly (Huntingdon, Conservative)

I do not think that that is correct. People have a right not to be a member of a union, but surely they do not have the right to avoid the collective bargaining arrangements. Perhaps I am wrong.

Mr Michael Jabez Foster (Hastings & Rye, Labour)

People certainly do not have the right to change the collective bargaining arrangements. The individual contract is a matter for negotiation, but it cannot be contrary to or in opposition to the collective rights that have been negotiated. However, the amendment, with its threshold of 25 per cent., would result in the most dangerous outcome. Even if the union—the majority—has decided on a different course of action, the 25 per cent. could thwart the rights of the majority. In a democracy, the majority should not impose on the rights of the individual, but the majority should none the less have their way. That is what the Bill provides. To impose a 25 per cent. threshold to effective alternative bargaining would not only cause chaos but be unfair.

Mr Malcolm Bruce (Shadow Secretary of State for Trade & Industry, Trade & Industry; Gordon, Liberal Democrat)

I oppose the amendment. If only with its rhetoric, the Conservative party seems to be looking back to the dear, dead days of the 1960s. Conservative Members appear to want to reintroduce the potential to be confrontational and divisive. I am trying to imagine a possible scenario. A bargaining situation has been established, to which the majority of workers have agreed, but a substantial minority then say that they want to negotiate different arrangements. The idea that those workers will happily go on working side by side in the same environment with two different bargaining arrangements is nonsense. I cannot imagine that any responsible or sensible employer would regard that as conducive—the word used in amendment No. 1—to good management or good industrial relations.

I take the point made by the hon. Member for Hexham (Mr. Atkinson) that the structure of the labour market has changed radically over the past 20 to 30 years, and that as a result union membership declined and is only just beginning to recover. Indeed, smaller work places operate with a different dynamic. Later in the Bill, we shall be trying to define an appropriate size. In that context, the amendment seems inappropriate.

Mr Jonathan Djanogly (Huntingdon, Conservative)

The hon. Gentleman talks as though everyone is happily involved in unions, that all companies talk happily with the unions and that what we propose is regressive. I hasten to remind him that only a tiny minority of people in the private sector are members of unions. The Bill is about enabling the unions to get in and represent the workers.

Mr Malcolm Bruce (Shadow Secretary of State for Trade & Industry, Trade & Industry; Gordon, Liberal Democrat)

The Bill is about the giving the unions the right to get in and represent workers, but it does not impose on workers the obligation to join a

union. I have been in the House for just over 20 years, and I voted for most of the Conservative reforms in the 1980s because they democratised unions that had become over-powerful and which abused their power. I would not support the Bill if I thought that it reversed the beneficial effects of those reforms. However, I believe that it is a genuine attempt to tidy things up and to get the balance right.

Conservative Members should consider carefully whether their approach suggests a party with a genuine interest in good, constructive industrial relations or one that is trying to load the dice so that bad management—we know that there are bad managers—can exploit a work force who have no effective power. We are trying to ensure that responsible managements and responsible unions—as well as individuals who do not want to be part of their arrangements—can operate peacefully and constructively, but the amendment would help to achieve that.

Mr Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations, Competition and Consumers), Department of Trade and Industry; Bradford South, Labour)

I am grateful to those who have spoken. Labour Members and the hon. Member for Gordon outlined the objections to the amendments; these objections go to the root of our attempts to achieve a good balance in industrial relations. The context is that the world is changing in terms of demographics, organisation and the challenge of global competition and we need modern, effective and high-productivity workplaces.

We must ask who is living in a time warp. Industrial relations today are a matter of ensuring that people work together as productively as possible, that there is no exploitation and that businesses do well, but the amendments show a fundamental distrust of that way forward. The Government have technical concerns with the construction of the amendments. Leaving that aside, the hon. Member for Huntingdon (Mr. Djanogly) dismissed the point about what would happen with de-recognition to people who wanted to stay in a recognised union.

The amendments are dangerous—that is the word—and we hope that the hon. Gentleman will, on reflection, not press them.

Mr Henry Bellingham (North West Norfolk, Conservative)

We have had a good, short debate. The only point that has not been made is that if the union that is recognised does its job properly and looks after its members, there will be no need to overturn that work. However, in the interests of maintaining the spirit of the Committee, and in the hope that we shall return to the issue, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 ordered to stand part of the Bill.

Clause 2 ordered to stand of the Bill.