Clause 356
Company Law Reform Bill [Lords]
4:45 pm
James Brokenshire (Hornchurch, Conservative)
I beg to move amendmentNo. 219, in clause 356, page 159, line 30, leave out subsection (1) and insert—
‘(1) Subject to the exemptions in subsection (5), a trade union is a political organisation for the purposes of this Part.'.
John Bercow (Buckingham, Conservative)
With this it will be convenient to discuss amendment No. 220, in clause 356, page 159, line 33, at end insert—
‘(3) In addition to the other requirements set out in this Part, a donation may only be made to a trade union if such trade union currently has in force a political resolution authorising the trade union to apply its funds in the furtherance of political objects and such political resolution authorised donations or expenditure under one or more of the following heads—
(a) donations to political parties or independent election candidates;
(b) donations to political organisations other than political parties; or
(c) political expenditure
in each case up to a specified amount in the period for which the resolution has effect.
(4) For the purposes of subsection (3), “political expenditure” shall have the meaning set out in the Trade Union and Labour Relations (Consolidation) Act 1992 (c.52) and “political resolution” shall have the meaning set out in the Trade Union and Labour Relations (Consolidation) Act 1992 (c.52) save that the reference in section 73(3) of that act to “ten years” shall be deemed to be “four years”.
(5) A donation to a trade union shall not be a political donation for the purposes of this Part to the extent that it is made—
(a) to provide or facilitate the provision of education and training of employees of a relevant company;
(b) to assist the trade union in representing employees of a relevant company;
(c) to assist the trade union in consulting with and meeting employees of a relevant company;
(d) to facilitate the investigation of any matter relating to the terms and conditions of any employee of a relevant company;
(e) to assist or to facilitate negotiations between the trade union and a relevant company and any of its representatives in connection with any complaint or dispute between the company and its employees (or any of them); or
(f) to otherwise promote good employment relations between a relevant company and its employees.
For this purpose a relevant company includes the company by which the donation was made, any holding company of the company by which the donation was made, any subsidiary of such holding company or any subsidiary of the company by which the donation was made.'.
James Brokenshire (Hornchurch, Conservative)
We now turn to the treatment of trade unions for the purpose of the Bill. As I understand it, the exemption incorporated in this clause is that trade unions are not to be regarded as political organisations for the purposes of the Bill. The exemption is based on uncertainty about whether the provision of company rooms for trade union meetings, the use of company vehicles by trade union officials and paid time off to trade union officials could be construed as a political donation requiring an appropriate shareholder approval.
It is entirely appropriate for companies to support trade unions. Trade unions play an extremely important role in representing and supporting employees and their interests in a range of fields, whether pay and conditions, safety, resolving disputes when an employee may have been treated inappropriately by their employer or supporting employees who have been injured at work or contracted illnesses as a consequence of their work-based activities. They also undertake the essential role of supporting the personal development, education and training of their members and generally promoting good working practice. Companies should be able to facilitate such activities and it is right that the Bill should seek to ensure that such support can be provided without the need for a cumbersome approval process. I am concerned that excluding trade unions from the definition of “political organisation” would go much further than that.
The history of trade unions is inextricably linked to political activity, and the connection is maintained today. The comments of the chairman of the Labour party, the right hon. Member for Salford (Hazel Blears), are germane. She spoke to the BBC on 18 June on the issue of party funding and defended trade union backing of the Labour party. She said:
“There is a view that trade union donations include affiliation. I think there is a very strong argument that affiliation fees are actually the aggregate membership of millions of people who want their trade unions to be collecting for us in the way they have been for over a hundred years.”
She added:
“There is a lack of understanding about the way in which certainly our party is a federal organisation of different kinds of membership and that organisations are members in themselves.”
That line of argument seems to affirm that trade unions, or at least some of them, are an important structural part of the Labour party—a political party. From the conceptual perspective, therefore, I find it extraordinary for the Government to state in the Bill that it is impossible for a trade union to be regarded as a political organisation, when the chairman of the Labour party appears at the same time to be saying that unions are an integral part of the party’s political superstructure.
The current wording of the clause would make it entirely possible for a company to make a donation to a trade union that is then passed directly on to a political party of whatever colour. Such a donation would be exempt from the protections afforded to shareholders even though it might have been made in the knowledge that it was to be used by a political organisation. It would thereby bypass the protections that would otherwise cover such a situation.
Kitty Ussher (Burnley, Labour)
What is the hon. Gentleman’s response to the TUC, which says that if a trade union accepts a donation from an employer for such a purpose it will lose its certificate of independence, which it is desirable to have?
James Brokenshire (Hornchurch, Conservative)
It is interesting that the hon. Lady refers to the status of a trade union following the TUC’s representations to the Better Regulation Task Force, which said:
“It is often forgotten that trade unions are employers themselves and businesses. As such they experience the same problems as other businesses of keeping up with employment law changes.”
It therefore draws direct parallels between companies and trade unions. That is why amendment No. 219 would delete subsection (1), but only on the basis of exemptions that would be granted under proposed new subsection (5), which would be inserted by amendment No. 220.
The comments of the right hon. Member for Salford also drew a distinction between affiliation fees and political donations made by a trade union, seeing the former as being collected almost on behalf of the party, unlike the more general donations that a trade union might make. That leads us to the other aspects of the additional wording proposed in amendment No. 220.
Kitty Ussher (Burnley, Labour)
With due respect, although it is of course true that trade unions are employers, I am not sure that the hon. Gentleman answered my question. No trade union would want to be a post box for a donation from a company to a political party because it would lose its certificate of independence.
James Brokenshire (Hornchurch, Conservative)
There is still an argument for displacement and room for doubt on the matter. The fact that the TUC holds that view does not detract from the more general line of argument that I am adopting and the need for clarity. However, the hon. Lady correctly highlights the issue of how funds are used and how funds that go from, say, a corporate organisation to another organisation might be appropriately treated. That leads on quite directly to the second part of the amendments.
Jonathan Djanogly (Shadow Solicitor General (Also Shadow Minister for Trade and Industry), Law Officers (Assist the Home Affairs Team); Huntingdon, Conservative)
I must ask the basic question. If £1 comes in from a company for educational purposes, presumably that is £1 that the union will not have to spend itself and £1 that it could provide for political purposes.
James Brokenshire (Hornchurch, Conservative)
That is a fair point in the displacement argument, hence the reason for ensuring that proper and appropriate protections cover such a situation.
Kitty Ussher (Burnley, Labour)
Does the hon. Gentleman not agree, with regard to answering the intervention from the hon. Member for Huntingdon, that it is ultra vires for trade unions to make any sort of transfer from their general account to their political account?
James Brokenshire (Hornchurch, Conservative)
I still take the view of my hon. Friend the Member for Huntingdon in terms of the displacement argument. There is still a risk that money will be used in the manner that he highlighted.
Hon. Members will be aware that the legislation on trade union funds is now in sections 71 to 96 of the Trade Union and Labour Relations (Consolidation) Act 1992, the history of which dates back to the Trade Union Act 1913. That established the concept of a union having to establish a political fund, with the ability of an individual member to contract out of a political levy. The Trade Union Act 1984 extended the ambit of the legislation to cover “political objects”. Under the current legislation, political fund review ballots must be held every 10 years to ensure that members wish their political funds to continue.
There are clear parallels with the provisions before us in the context of companies, with unions being required to obtain the consent of individual members in respect of the use of funds for political activities. The Department of Trade and Industry said in its consultation document, “Review of Employment Relations Act 1999”, in the context of any possible reform of the arrangements:
“The Government understands the case for reform. However, these ballots serve an important democratic function and ensure that union members can at regular intervals collectively authorise their union’s involvement in political activities.”
That is right, and the same logic applies to the approval mechanism set out in part 14 of the Bill if a company wishes to make a political donation or to incur political expenditure, so that the members of the company—its shareholders—are given the right to approve the use of company funds for political purposes.
I believe that there should be more broadly equivalent treatment in terms of the permissions required by both companies and trade unions in relation to political donations and expenditure generally, but that wider debate would not be in order in the context of the Bill. However, amendmentNo. 220 would provide that if a company wished to make a donation to a trade union other than for the purposes set out in subsection (5), it would need to be satisfied that the relevant union had obtained an approval from its members that was similar to the one the company would have obtained from its members. The amendment would harmonise the approval regime between companies and trade unions in relation to political donations and expenditure, at least in so far as funds are received from companies.
It is right that a company should have to seek the approval of its members to make a donation to, or to incur expenditure for, a trade union in its wider political capacity. It is right that a company should be able to support unions in their essential role in promoting the interests of the employees of the relevant company without unnecessary burdens. It is also right that a union should require the consent of its members to apply the funds given to it for wider political purposes, just as a company would be so required, with a resolution at least every four years.
Our amendment would give effect to that approach and would be an important step forward in terms of creating equivalent treatment between companies and trade unions in the context of political activity. Both have members, who should be protected in the same way.
Paul Farrelly (Newcastle-under-Lyme, Labour)
The intention behind the Conservative attack on trade unions through the requirement to stage repeated ballots was well known and it has been roundly defeated, because in almost every instance members of trade unions have voted in favour of keeping political funds. The contortions, convolutions and hypothetical fantasies that the hon. Gentleman is now outlining seem to be yet another attack by the Conservative Front Bench on trade unions across the board.
James Brokenshire (Hornchurch, Conservative)
Not at all. This is not an attack on trade unions. The amendment that we have tabled reflects the importance and value of the work undertaken by trade unions by recognising all their work on education and training, representing employees, consulting employers and the relevant company and facilitating good industrial relations. All of those are recognised in the amendment and would not require any special consent from either the company or the union. The amendments properly reflect that while drawing direct parallels, as the Government’s own Better Regulation Task Force recognised the similarity of companies and trade unions in many respects.
Debate adjourned.—[Steve McCabe.]