Mr Henry Bellingham (North West Norfolk, Conservative)

I beg to move amendment No. 34, in

clause 9, page 9, line 11, after '(2)', insert ',(2A)'.

Mr Eric Forth (Bromley & Chislehurst, Conservative)

With this it will be convenient to discuss the following:

Amendment No. 35, in

clause 9, page 9, line 14, at end insert—

'(2A) In sub-paragraph (3)(d), leave out ''5'' and insert ''14''.'.

Mr Henry Bellingham (North West Norfolk, Conservative)

Clause 9 deals with the employer's notice to end bargaining arrangements. That notice may be given if the employer believes that he, with any associated employer, employed an average of fewer than 21 workers in any period of 13 weeks, and if three years have passed since the CAC awarded recognition. The CAC must decide if such notice complies with the requirements of paragraph 99(3) of schedule A1 to the Trade Union and Labour Relations (Consolidation) Act 1992. The requirements are that the notice

''(a) identifies the bargaining arrangements,

(b) specifies the period of 13 weeks in question,

(c) states the date on which notice is given''

and—this is the requirement relevant to the amendment—

''(d) is given within the period of 5 working days starting with the day after the last day of the specified period of 13 weeks.''

We are saying that 14 should be inserted instead of five.

We are discussing small and medium-sized enterprises—for example, companies employing slightly more than 21 employees, or small manufacturing plants that we all visit in our constituencies, where the owner-manager is often under enormous pressure and strain and is reeling under the burden of substantial extra regulations on the business. The Federation of Small Businesses

recently said that most owner-managers spend at least 10 hours a week dealing with regulation and burdensome business.

Given those circumstances, and in the interests of making life easier—not trying in any way to stop unions and union members from enjoying their rights—we are considering the interests of small and medium-sized enterprises, and would like to substitute five working days for 14 working days. That is a reasonable request and I hope that the Minister will consider it. We have not had any success yet, although we have had a few nods and winks from him suggesting that he will reconsider some of our suggestions. I think that this is a reasonable and sensible suggestion and I hope that he will accept it.

Mr Jonathan Djanogly (Huntingdon, Conservative)

Clause 9 is a series of new provisions that tighten the existing ratchet in favour of the unions, generally against the interests of the company. Amendment No. 35 is a small proposed change. I am not sure whether the Minister has yet found the information that I requested this morning dealing with sizes of companies compared with the number of applications. [Interruption.]. I am pleased to see that he has, which is marvellous. I do not have time to study it on my feet but I shall do so later because I am sure that it will be mentioned again.

If a significant company has a significant human resources department, it will be used to dealing with the unions. It will be used to and well advised on union procedures. In that case, five days might be adequate. However, for smaller companies, such as that mentioned by my hon. Friend the Member for North-West Norfolk, which have 21 staff, five days is a very short time in which to comply with the procedure, and will effectively block their rights to organised derecognition.

We must return to the basic principle that, if a company has fewer than 21 employees, it does not have to have recognition. This amendment would adapt that principle. We shall come on to the three-year rule, but we are talking here about five days to make notification after the 13-week period. An average small company, without a human resources department or knowledge of union law, will probably be massively disadvantaged and outgunned by the union's huge administrative and legal representation. The provision acts as a block to companies putting derecognition in place if staff numbers drop below 21. Fourteen days would go a little way—not very far, as it is a modest proposal—towards addressing that imbalance.

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

I appreciate the spirit in which the amendments have been tabled, but I am always concerned when someone says, ''Help me a little; I am trying to help you.'' Amendments Nos. 34 and 35 are closely linked and would ensure a change to the time limit in the statutory procedure. That time limit is in paragraph 99 of schedule A1 to the 1992 Act, which deals with an employer wishing to derecognise the union or unions because employment has fallen below 21 workers.

The process begins with the employer issuing a notice to the union or unions concerned and copying it to the CAC. The notice must contain various pieces of information and specify the 13-week period when employment was on average fewer than 21 workers. The notice must be issued within five working days of the end of that period. The amendment would extend that period from five to 14 working days. It is possible that the hon. Member for North-West Norfolk was thinking in terms of calendar days, rather than working days, when he tabled the amendment, but the overall intention is to give more time to the employer to issue the notice.

I am far from convinced that that extra time is needed. Generally speaking, we are addressing a situation in which employment is falling from a point where 21 or more workers are employed to one where employment is below 21. That could be a short-lived phenomenon, but it is more likely to be longer lasting or even permanent. If so, a little slippage in the reference period should not severely affect the calculation.

For example, if an employer for some reason could not get the notice out in time for a reference period ending on March 1, he could always issue a slightly reworded notice the day after in respect of a reference period ending on March 2. In other words, it is unlikely that he would lose his ability to derecognise if a problem about the notice ever arose.

I see no obvious reason why the employer will not be able to issue the notice on time in virtually all situations. Most bargaining units are small, and we are not talking about intricate calculations. We do not agree with the case to increase the notice period from what will often be one working week to nearly three working weeks. Despite the hon. Gentleman's plea, I ask him to withdraw the amendment.

Mr Henry Bellingham (North West Norfolk, Conservative)

The Minister is convincing in his inimitable, charming way, but I do not agree about how easy it will be for an employer to reissue another notice if he does not complete the paperwork and forms in the five days. We are talking about another burden on businesses, particular SMEs, and we will continue to remind the Minister of that. However, in the light of his remarks, 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. 25, in

clause 9, page 9, line 20, leave out '3 years' and insert 'six months'.

Mr Eric Forth (Bromley & Chislehurst, Conservative)

With this it will be convenient to discuss the following:

Amendment No. 26, in

clause 9, page 10, line 5, at end insert

', and leave out ''3 years'' and insert ''six months''.'.

Mr Henry Bellingham (North West Norfolk, Conservative)

These two amendments are important. I remind the Committee that the employer may apply for a notice to end bargaining arrangements three years after the arrangements are put in place. We must also bear it in mind that clause 9 provides that

any unsuccessful application or notice to derecognise the union by the employer or a worker renders any further such applications inadmissible for three years. That means that the period could last six years.

I want to reflect on a point made by my hon. Friend the Member for Huntingdon. The key to this part of the Bill is the 21-employee limit. I do not want to repeat what was said on Second Reading, but the Conservatives praised the Government for keeping to the 21-employee limit. Small firms are often under pressure, and their priority should be to expand, so it is fair that they are exempted from the measures.

Surely the principle is that, once the number of employees falls below 21, the employer should have the right to end bargaining arrangements if he so desires. The arrangements may be working well. Relations between the employees and owner-manager or plant manager may be harmonious and the union may be surpassing expectations and doing an excellent job of collective bargaining and representing the employees. It may be a happy situation all round, and the employer may see no need to issue such a notice.However, if the employer wants to issue the notice, it would be unfair for him to have to wait for three years. That is a point of principle, which I hope that the Liberal Democrats and other Opposition parties will support. If it is right and proper that firms employing fewer than 21 people are exempt, it is wrong to ask them, whether they be individual companies or subsidiaries of a large company, to wait three years.

Mr Michael Jabez Foster (Hastings & Rye, Labour)

I am grateful to the hon. Gentleman for giving way, because I was interested to find out his view on how he would deal with a situation in which the numbers were on the cusp—perhaps 22 on one day and 19 the next. That is not unusual, particularly in industries such as tourism, where the labour force fluctuates all the time. How would he deal with that situation, without disadvantaging those who sought to be members of a union but happened to be working off-season at a given time?

Mr Henry Bellingham (North West Norfolk, Conservative)

That is a fair point. However, I believe that six months, rather than three years, is a reasonable period. Three years is a long time. If the Minister said that he was prepared to consider the amendment and to reach a compromise of perhaps a year and a half, we might be more satisfied. That would answer the point made by the hon. Gentleman about seasonal businesses in which the numbers go up in the summer, or in the winter in some cases. For example, in a packing plant in East Anglia, the number of employees might increase in the winter, because they are dealing with potato packing or carrot topping.

We feel strongly about the matter. If the principle has been established that smaller companies should be treated differently, they should not be discriminated against through the clause preventing them from going through the process for a period of three years. In fact, the period could be up to six years because, as I pointed out earlier, the clause provides that any unsuccessful application or notice to derecognise the union by the

employer renders any further such applications inadmissible for three years. The period could be extended to five or six years, and in the meantime the company's staff numbers may have decreased to nine or 10. We are discussing giving small companies—micro-businesses—the right to manage their business and to run their affairs without undue interference or burdens.

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

The hon. Gentleman tempts me to act, but not enough. We need to address the point about burdens on business. I hear that charge on many occasions from Opposition Members. Will the hon. Gentleman write to me listing the particular burdens on business that he considers to be a problem in employment relations terms? When we tried to raise the before in questions and debate, the Opposition gave no detail about which employment rights and regulations they did not want. I offer that challenge to the hon. Gentleman and, in the course of our consideration of the Bill, I am sure that he will write to me with details.

Mr Peter Atkinson (Hexham, Conservative)

The Minister raised that question in the debate on Second Reading. I am sure that all members of the Committee and, no doubt, all Members of Parliament, visit small businesses in their constituencies from time to time. All those businesses make representations about the burden of red tape. It is not individual items of red tape but its proportionality that worries them.

We do not want to abolish the Health and Safety at Work, etc. Act 1974, but businesses complain that that Act is applied disproportionately hard in relation to certain firms. It would be difficult for us to list all those things, because the question is one of proportionality. I would not have thought that we needed to tell the Minister that, because he should already know it.

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

The hon. Gentleman makes a good point, and has started making the list—no health and safety legislation.

Mr Peter Atkinson (Hexham, Conservative)

I said—Hansard will have reported it—that we do not want to abolish the Health and Safety at Work, etc. Act 1974, but that companies complain about the way in which it is enforced.

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

I understand what the hon. Gentleman says. I know that he has spoken in the House in favour of a number of issues concerned with employment rights. However, I made the general point that we are told that there is a big burden on business and that what we are trying to achieve will weaken its position.

Mr Hywel Williams (Spokesperson (Disability; Health; Social Security; Work and Pensions); Caernarfon, Plaid Cymru)

The Minister will know that the TUC has drafted a simplified procedure for recognition in small businesses, which would go a long way towards placating the concerns expressed by the hon. Member for Hexham (Mr. Atkinson) about cost and complexity. I commend such procedures and I hope that he will, too.

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

I am grateful to the hon. Gentleman for making that point. The business case for many of the provisions is sometimes missed, in that there is a general view that they are a massive burden on business. However, given the demographic changes that are taking place and issues about skills and work force retention, most good employers recognise that some of the employment rights and regulations benefit them as employers and help their businesses. I recently attended the awards for parents at work, at which the business case for flexible working and the work-life balance was made. We heard how productivity and the bottom line had increased on the basis of the flexible working arrangements that the Government introduced.

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

I have some sympathy with the amendment, but the Minister is arguing his case. The hon. Member for Hastings and Rye (Mr. Foster) made a point about businesses that are on the cusp. I am slightly concerned at the idea that a business with 22, 23 or 24 employees that has agreed to union recognition, but then drops to 19 or 20 employees will be more concerned about derecognising the union than managing the business. If the legislation works, as it does in most cases, a business will be helpful and co-operate with the union, rather than moving to derecognise it at a time when the business is clearly vulnerable. I would be slightly worried about a business that regarded derecognising the union as the most important matter that it had to address in such a situation.

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

I thank the hon. Gentleman, who has made the point forcefully that it would be disconcerting if derecognising the union were the main focus of a company whose number of employees had gone below 21. The hon. Member for North-West Norfolk helpfully raised the issue on Second Reading and will know the concern felt by Government Members about companies with fewer than 21 employees. That is why I do not want to give in on the amendments. Both would shorten the period of debarment from three years to just six months. They would mean that, if the employer failed in an attempt to derecognise a union under the statutory procedure, he or she could try again after there had been recognition for a minimum of six months, rather than three years. That would be destabilising. With the Bill, we are trying to achieve stability and to look to the future, not the past, as I say at every opportunity.

Mr Peter Atkinson (Hexham, Conservative)

The Minister gives me an opportunity to make a slightly oblique point. The assumption in the debate so far is that the employer will wish to derecognise the union. However, the employees could wish to derecognise the union, for various reasons. Perhaps they want to choose a different union. They could do so only by asking the employer to go through the process of derecognition. The long period for which the Bill provides may not be satisfactory for the employees of the company who want to change the union much more quickly.

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

The employees could still do so under the provisions. They could also stop paying their subscriptions and withdraw from membership of the union. I think that that is how they would deal with the situation.

Mr Peter Atkinson (Hexham, Conservative)

If the employees wished to change to a different union, that would be a different situation, because the recognition agreement would, I assume, be with the previous union—the one that the employees wish to leave.

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

The whole process would have to start again, with fresh recruitment by the other union. From memory, I think that there have been issues within the TUC about inter-union situations, but the employees could withdraw from membership and there would not be a problem in that respect.

This is about maintaining trust. We think that the provision safeguards companies with fewer than 21 employees that want to give the notice. To change the three-year process would create further inequalities.

Mr Jim Sheridan (West Renfrewshire, Labour)

Will my hon. Friend the Minister clarify exactly what a bargaining unit is? An unscrupulous employer—I have yet to meet one—could split the company up, so that there were fewer than 21 employees in order to circumvent employment legislation, as has happened in the transport industry. What situation would that create and what is the definition of a bargaining unit?

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

There would be an application from the union to the CAC about its definition of a bargaining unit. The discussion would at that stage be with the employer about the bargaining unit and the appropriateness. If the circumstances that my hon. Friend mentioned arose, the union would be able to complain to the CAC about the procedure and take the matter further. However, that is against the spirit of the legislation and I hope that such circumstances would not arise. Although I recognise the hon. Member for North-West Norfolk's strength of feeling on the issue, I ask him to withdraw the amendment. If he does not, I ask my hon. Friends to vote against it.

Mr Jonathan Djanogly (Huntingdon, Conservative)

I back up the incisive point that my hon. Friend the Member for Hexham made. I am not entirely sure that the Minister addressed my hon. Friend's point with the seriousness that it deserves, so I should appreciate it if he addressed it again. If workers do not want to have the union, perhaps either because they want to switch to another union or because they simply do not want the recognition agreement, why should they have to rely on the company for their derecognition? There may be a straightforward answer to that question, but I should be grateful if the Minister addressed it.

The three-year rule cements union rights no matter how low the number of employees goes. We suggest that the time limit be reduced from three years to six months. I accept that unions have a problem under the existing legislation in so far as they cannot put their views to the CAC against derecognition if the issue has come up in the past. I see no reason why the Bill should

not address that, although I note that the CAC annual report says that only one such case has been considered, so it is not as though what I describe happens every day of the week. However, instead of giving a fair balance to unions, the clause is reversing that situation. Unions are to get the representation rights that they wanted, but companies are to be far more restricted in making applications than they used to be.

Mr Jon Cruddas (Dagenham, Labour)

Does the hon. Gentleman accept that, through the forging of the legislation, a balance has been struck on all those elements? As the legislation is currently constituted—it has not changed—the union must wait to make another recognition proposal to the CAC for three years in the advent of a failed procedure. That three years is equivalent to the three years on the other side, to which the hon. Gentleman has alluded.

Mr Jonathan Djanogly (Huntingdon, Conservative)

That is not my reading of the Bill, although I may be wrong and would be grateful if the Minister addressed that.

The Minister said that he would not want the company to reapply every six months, but we know for a fact that that problem does not arise often in practice. We should also recognise that, for the most part, such circumstances will become an issue only if the company is doing badly. Companies normally do not like to get rid of staff simply to reduce the number to fewer than 21. If the number of workers falls below 21, it is likely that the company is having a hard time and looking to save itself. The flexibility that is provided for elsewhere is going to be restricted.

I return to the principle that my hon. Friend the Member for North-West Norfolk and I have maintained, which is that if the number of employees falls below 21, it should be possible to go for derecognition. Again, the provisions will restrict that. I get the feeling that the draftsman got a bit carried away on the clause, because it does not seem to recognise the reality of companies that face such difficulties.

I have had a quick look at the figures provided by the Minister. As I thought, only 15 per cent. of recognition applications are for companies with fewer than 50 employees. That probably has as much to do with unions not being bothered to recruit in smaller companies as it does with companies not wanting unions. That works both ways, but reinforces the point that one-size-fits-all legislation is not appropriate. There should be more tailored legislation, which should treat smaller companies differently from larger ones. For that reason—to do with the correct figure of six months—it would be worth while for the Minister to look again and perhaps bringing the matter back later.

Mr Jim Sheridan (West Renfrewshire, Labour)

All that goes back to the point the hon. Member for Gordon (Malcolm Bruce) made. If a company's number of employees falls to fewer than 21, it is not necessarily the direct result of people wishing to join a trade union. Three years is an adequate period

to allow a partnership relationship to bed in, and the hon. Gentleman is himself an example, in that his constituents have four or five years to make a judgement on him.

Mr Jonathan Djanogly (Huntingdon, Conservative)

It depends on the circumstances. If a company is incorporated, if people invest in it and it rapidly builds up members, if it is based on an idea and that idea does not work, the company can go downhill as rapidly as it had meant to go uphill. Circumstances dictate. In the Bill, however, there is no room for manoeuvre. It is fixed and static, and it creates rights that are not relevant to the size of the company or adaptable to circumstances.

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

The hon. Member for Huntingdon makes his case and has his beliefs. He is wrong when he says that the Bill is one size to fit all. One criticism from some of my hon. Friends is that it would be better if it were. The threshold of fewer than 21 is quite clear, and points are made about numbers below 50. That is a matter for trade unions and how they set about their business, not a matter for the Government. The whole process would be devalued if it were. We are building on the success of arrangements so far and should not start to chop and change the period of debarment. The three years runs, as my hon. Friend the Member for Dagenham pointed out, from the period of negotiation by which we got to the Employment Relations Act 1999. I think it is entirely appropriate. It would be destabilising if we went back to six months.

The hon. Member for Huntingdon made the point raised by the hon. Member for Gordon, that recognition would not be the priority for a company going down to fewer than 21 employees. The hon. Gentleman pointed out that that would probably be because the company was going through hard times and having to shed labour. It would be concentrating on the issues around that.

Mr Jonathan Djanogly (Huntingdon, Conservative)

Can the Minister quantify or describe why the arrangements have been a success so far?

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

I can say so from the general attitude in consultation on the 1999 Act from the organisations we have spoken to about how the legislation has worked. People—not all people—in the full consultation exercise accept the appropriateness of the cut-off point for under-21s, but there is the issue around recognition on the cusp, at just above 21 employees. It is a balanced position. The amendment brings in a new six month-period, which we have not discussed or consulted on, and which would set the process back.

Mr Jon Cruddas (Dagenham, Labour)

Does my hon. Friend concede that if the three-year threshold is moved down to six months, the moratorium of three years on a new trade union proposal for recognition within that bargaining unit could itself, conversely, be reduced to six months? If we reduce the thresholds from three years to six months, there will be consequential effects across some other elements of the package that was forged in 1999.

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

My hon. Friend makes the case clearly about how we got to where we are. It would be difficult and unproductive to change things.

The hon. Member for Hexham talked about how people working in companies with fewer than 21 employees who are unhappy with their union could get out of the recognition agreement if they wanted to join another union. In addition to not paying their subs and leaving the union of their own volition, they could follow a procedure in which 10 per cent. of the employees could apply to the CAC for derecognition.

My hon. Friend the Member for West Renfrewshire (Jim Sheridan) spoke about companies that would cut their work force to fewer than 21 to try to get round the legislation. In relation to the union's application to the CAC and the bargaining unit, the threshold would apply to the employer and any associated employees, which is how that problem could be dealt with.

I accept the strength of feeling of Opposition Members, but we do not agree. I ask the hon. Member for North-West Norfolk to withdraw the amendment. If he is unwilling to do so, I will ask my hon. Friends to vote against it.

Mr Henry Bellingham (North West Norfolk, Conservative)

The amendment contains an important principle, so we will press it to a vote.

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

Although my intervention made this clear, I think that the debate was a perfectly good one to have. I say that while supporting the Government on the 21 level, as I believe that that exemption is still necessary. We seem to have got into a nitpicking argument about how to deregister in a cusp situation, which is not constructive. If the Opposition press the amendment to a Division, I shall not support them.

Question put, That the amendment be made:—

The Committee divided: Ayes 3, Noes 12.

Mr Henry Bellingham (North West Norfolk, Conservative)

I beg to move amendment No. 27, in

clause 9, page 9, line 29, at end insert—

'(3) As soon as there are fewer than 10 workers employed in a company, the employer can end all bargaining arrangements at any time at 35 days' notice.'.

The amendment simply reinforces the point that we made earlier about companies whose number of employees decreases quite substantially. It makes it clear that as soon as fewer than 10 employees are

employed in a company, the employer should be able to end all bargaining arrangements at any time at 35 days' notice. That makes a great deal of sense, because we are talking not about numbers falling to 18, 19 or 15; that is, we are not talking about companies that are on the cusp. They may be seasonal businesses whose numbers fluctuate at different times of the year. We are talking about the halving of a work force, in the case of a company that is employing only 22 or 23 people.

According to the note that we received at 2.30 pm, many companies that will go through the recognition procedure will be employing 21 to 30 people. They account for 4.7 per cent. of companies. The biggest percentage—25 per cent.—employ 500 or more people. Very few companies would be affected, but it could be absolutely vital to them. When a company's staff levels are as low as 10, surely they do not want the burden of any extra administrative hardship or pressure. The amendment seeks to relieve such pressure on small companies and businesses.

The Government keep stressing their small business credentials and claim they are very proud of what they are doing for small businesses. The Minister for Small Business and Enterprise and I share a common agenda of trying to aid wealth creation and the vital role of business in our economy. He and I have shared a platform many times up and down the country talking about this issue, and I know he believes that small businesses are the lifeblood of the economy. Such businesses are absolutely crucial to our future, particularly in areas such as hi-tech, as well as in regenerating various parts of the inner cities.

The amendment is reasonable and very pro-small firm, makes a great deal of sense and will affect few companies. I remind the Committee that, according to the CAC caseload statistics, the percentage of applications from companies employing under 21 workers was 0.4 per cent., while last year there were just five cases where a ballot was held in companies with a bargaining unit of 25 workers or fewer. The vast majority of those cases concern companies with many more employees, so this amendment will affect only a small number of companies, to whom it will nevertheless be very important. I urge the amendment on the Committee.

Mr Jonathan Djanogly (Huntingdon, Conservative)

Earlier, I referred to the Government's figures and said that under 50 workers, the figure was 15 per cent. I am sorry to say that I made a mistake—the figure was actually 11 per cent. That reinforces my hon. Friend's point that, when it comes to unions applying for recognition, they do not seem to be very interested if there are fewer than 50 workers.

Going back to the legislation, I think it entirely appropriate that if there are fewer than 10 workers, employers should be able to go for derecognition. Other than that, I merely reinforce the points made by my hon. Friend.

Mr Michael Jabez Foster (Hastings & Rye, Labour)

There is a great difference between seeking recognition and being removed from recognition. The starting point, surely, is the principle that all workers should have the right to be represented by a union—but that view is the difference between our

two sides. There is a practical problem for small companies in setting up the machinery, dealing with the cost and conducting all the procedures necessary to enable individuals to be represented by a union. For that reason, I think the 21 target threshold for moving into recognition procedure is reasonable.

Unfortunately some hon. Members on the Conservative side seek to remove the union possibility at every opportunity. Yet, when it comes to moving out of recognition procedure, unless one does so as a matter of principle, what is the saving to the employer company in moving out of a system that may have been working well? That is particularly relevant at a time that may be difficult for the company—not because of the union, but perhaps because it is losing staff. Surely that is the point when the workers would find the use of the union most helpful—for example, in negotiating redundancies. I venture to say that employers would find it more useful to deal with a recognised negotiating body than with individuals. Of course the amendment allows the employer to make a choice in such a situation on 35 days' notice. As a principle, it depends at what end one is looking at. Therefore, while I support the 21 as a starting point, when one comes in the other direction, that figure does not have quite the advantages that the amendment may suggest.

Mr Jim Sheridan (West Renfrewshire, Labour)

Following on from what my good friend has just said, it is unfortunate that the hon. Member for Huntingdon has left, but I would encourage him to break out of this negativity and to take a leap into the dark. Can I share my experience of working in industry? Small and medium enterprises are the lifeblood of the country and we must do everything we can to support them. They aspire to be big companies. Some of the more successful large companies that have had to downsize have done it with the assistance and partnership of trade unions. I see the matter from the point of view of someone who has walked the walk and talked the talk. There is nothing to fear from being members of a trade union. I suggest only that we look at some of the major employers and successful companies in this country, most of which, if not all, have recognised trade unions on their premises.

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

Conservative Members are persisting with the theme of the previous amendment. At no time have they given us any practical examples of where the problem has arisen. I might be more prepared to engage in the debate if they could give us examples of companies that were inconvenienced and disadvantaged by the measure. If they could, perhaps we would take it seriously. I fear that the Conservatives, having looked for ways to reduce union recognition in the Bill, have decided to take a cut-off point.

That is a pity because there is a cross-Committee agreement, which the hon. Member for Hastings and Rye has just articulated. We understand the problems of small businesses and the difficulty of dealing with unions. Most of us accept that the 21 threshold is desirable. When one comes from the other direction,

one is talking about a company that has been through the process, has had union recognition and has worked within the framework of that union. I should have thought that in most cases it is not the union that is the problem, but the marketplace.

The reports we get are that the mechanism has worked on the whole. It can help the company to deal with these difficult problems. It may even be that, by introducing an extraneous issue about a trade union, one compromises the sense of solidarity—if I can use that expression—between management and their work force in dealing with an external problem. It behoves hon. Members who support the amendments to give some practical examples.

Mr Peter Atkinson (Hexham, Conservative)

I do not propose to give individual examples; I do not know of any. Representations that we have had from various employers' organisations, the CBI and others have expressed concerns about the matter and those are the concerns that we are quite properly articulating.

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

I do not complain about hon. Members articulating them. We are having a debate in Committee and they are perfectly proper issues to bring forward. I have also consulted various employers' organisations and I have not detected a real angst about the issue. They have some concerns. The same applies to red tape. My party and the Conservative party are actively looking for areas of regulation that could be done away with or simplified. Whenever businesses tell me that they are overburdened with regulations, I say, ''You are hitting at an open door. Tell us what it is and if we can work with them we will.'' We have published some proposals. More often than not when one gets down to it, they are most concerned about tax complications rather than individual regulations. There are regulations that could be simplified or abolished. That is fine but, in this case, without substantive evidence that there is a real practical problem, I am not persuaded.

Mr Jonathan Djanogly (Huntingdon, Conservative)

The point was made before, but it is worth reiterating, that there have only ever been five cases where the size of the bargaining unit has been zero to 25, so the hon. Gentleman is not going to find many examples of companies dropping below 21 and, if he does, they will be companies on the way out.

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

I think in a way that the hon. Gentleman makes my point, which is why we should terminate the debate. Otherwise, it is in danger of becoming a large sledgehammer to crack a possibly non-existent nut.

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

In solidarity with the hon. Member for Gordon, he has hit the nail on the head—or the nut with the sledgehammer.

All the points about small businesses are well made, and I am grateful to my hon. Friends the hon. Members for Hastings and Rye and for West Renfrewshire for their explanations. As I said, small businesses are the lifeblood of the UK and the Government are clear about the impact of

employment regulations. That is why we have introduced an annual statement on those regulations and why the Department of Trade and Industry leads across government in terms of the Better Regulation Task Force, which considers unnecessary legislation that is no longer appropriate to small businesses and other organisations.

My hon. Friend the Member for West Renfrewshire makes a point about trade union involvement. I, like him, was involved in a previous life in negotiating downsizing. That was one of the unfortunate effects of the stewardship of the last Conservative Government. There was downsizing in a range of companies in the printing industry. Companies of that size have nothing to fear. Ninety-five of the top 100 companies listed on the stock market have trade union agreements and are trade union organised. Trade unions can be a force for good. I know that the hon. Member for North-West Norfolk says that he believes that trade unions are not bad; I am not sure that that view is shared by the hon. Member for Huntingdon, after the way in which he has outlined his position today. The hon. Member for Gordon is right that this amendment is unnecessary. It would add further burdens to business. It is also technically deficient as it refers to companies rather than employers. On the matter of technicalities alone, we should not be able to accept it, because the term ''company'' is not used elsewhere in the statutory procedure. That is a trivial point concerning the drafting of the amendment but, returning to the theme of derecognition, we do not think that it is a tool that needs to be used. The statutory procedures give people the opportunity to derecognise where appropriate, so I ask the hon. Member for North-West Norfolk to withdraw the amendment.

Mr Henry Bellingham (North West Norfolk, Conservative)

The Minister has again been courteous and logical in his argument. We shall come back to the issue later because we feel strongly about it. I accept that there are some technical deficiencies in the amendment, but the principle is important. If the hon. Member for Gordon had read the representations from people such as the Engineering Employers Federation, the CBI, the Institute of Directors and British Chambers of Commerce, he would be aware of their concerns about the matter.

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

On that point, I must correct the hon. Gentleman. I do not think that those organisations mention companies with fewer than 10 staff. Their point concerns the Government's position on companies with fewer than 21 staff. I have not seen in any correspondence or heard in meetings with the organisations that the hon. Gentleman mentions any reference to companies of fewer than 10 staff.

Mr Henry Bellingham (North West Norfolk, Conservative)

I do not want to betray any confidences, but we have talked to those organisations and have gone through the Bill clause by clause with

them. They expressed various concerns to us, but we shall return to this later. Bearing that in mind, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 9 ordered to stand part of the Bill.