Employee Consultation Rights Bill

– in the House of Commons at 1:53 pm on 6 April 2001.

Alert me about debates like this

Order for Second Reading read.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North 2:14, 6 April 2001

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

I am pleased to have this opportunity, brief though it may be, to introduce my Bill. Such opportunities are rare, and some hon. Members have spent decades in the House without being successful in the ballot. I am aware that I am privileged and fortunate, especially as I was drawn only 17th.

The Bill proposes consultation rights for employees on large business issues that affect them. There is a pressing need for such rights to be written into law, which has been reinforced by recent events in Luton, the north of which I have the honour to represent.

Before dealing with the specifics, I want to set out the background to my decision to introduce the Bill. It represents a significant step for me on a long road: an adult lifetime spent trying to defend and advance the interests of working people. About 32 years ago, I became a member of staff at the economic department of the Trades Union Congress. At that time, the industrial relations environment was very different from what it is now.

In 1969, employee interests were represented almost entirely by trade unions, which is still the case today, but the unions then operated within a framework of legal immunities developed over a long period stretching back to the 19th century, and born of many decades of political struggle and industrial conflict. The system of industrial relations that had evolved was essentially bilateral, oppositional and sometimes confrontational. It was a very British way of doing things, represented at its best perhaps in this very Chamber. That way has much to commend it, and it would be a great disservice to democracy if the oppositional essence of our parliamentary system were to be lost.

In the 1960s, however, our system of industrial relations was being questioned, and not only by Government and employers. The Donovan commission in 1968 recommended that the system of collective bargaining should be extended and that the TUC and the trade unions should become more positively involved in the broader economic issues affecting companies and public corporations. Donovan led to the establishment of a number of industry committees of the TUC. The TUC also had an essential role in NEDDY—the National Economic Development Council—and its range of economic development committees, regrettably swept away by a Conservative Government.

At that time, the terms "industrial democracy", "worker participation" and even "workers' control" entered, or re-entered, the language of trade unionism and political debate on the left. The Institute for Workers Control, a radical left-wing organisation, had revived syndicalist ideas from a much earlier age. By the mid-1970s, the TUC was giving careful consideration to the case for industrial democracy, and looking with interest at other models of industrial relations—notably, the system of Mitbestimmung, or co-determination, which had developed in post-war West Germany.

The 1970s Labour Government established the Bullock commission of inquiry, which published its milestone report on industrial democracy in 1977. Jack Jones, the then general secretary of the Transport and General Workers Union, was instrumental in pushing the TUC towards a new acceptance of industrial democracy, ably supported and encouraged by my noble Friend, recently elevated, Lord David Lea. Both were TUC members of the Bullock commission.

Many trade unionists, however, myself included, were not comfortable with the new ideas. Sceptics were concerned that, by becoming involved with managers in joint decision making, they could become compromised and less free to defend their members' interests in a robust and forthright manner. Many managers and employers were also nervous about the prospect of workers and trade unionists having a consultative role in decisions that had until then been considered straightforward management prerogatives.

The collaborative approach of the Germans was viewed with some dubiety and suspicion by many in Britain, on both sides of the industrial divide. For the trade unions in the 1970s, accepting temporary pay restraint to help a Labour Government in a period of extreme economic difficulty for the country was one thing, but sitting around the table with managers in co-operative mode, debating and participating in decisions about the future direction of the company was for some a step too far.

At that time, trade union membership and strength were at an historic high, and the trade unions' relations with Government were closer than at any time before or since. Why should a system be questioned that appeared to be working so well and that had brought enormous benefits to trade unions and to millions of workers throughout the country?

Attempts to shackle the unions—as it was perceived—had been beaten off, and the balance of power between workers and employers had been evened up. To many in the trade union movement, the drive to industrial democracy was unnecessary and inappropriate, and could undermine what seemed to be a strong position. The unions looked forward to a future in which the economic crisis of the 1970s had passed and they could return to their preferred system of free collective bargaining.

On the other side of industry, employers were unenthusiastic about the apparent strength of the unions and their closeness to Government, although they welcomed the pay restraint negotiated as part of the Labour Government's social contract. Employers were also nervous about talk of industrial democracy and worker participation. Having trade union representatives in the boardroom discussing the company's future plans, with access to financial information, was not a prospect that they relished. The possibility of being required by law to divulge privileged company information to workers, well beyond what was required in company annual reports, was not greeted with unbridled joy in the boardrooms of Britain. There were a few progressive and enlightened employers who saw that involving workers more closely in company decision making could be very beneficial, but there were the exceptions rather than the rule.

What neither trade unionists nor employers foresaw was the political and economic whirlwinds of the 1980s and 1990s, two decades in which trade union and workers' rights were blown away by mass unemployment and legislative attack. Trade union membership plummeted. Employees' bargaining power ebbed away and employers were put thoroughly back in the driving seat by a series of right-wing Conservative Governments beyond anyone's imagining in the 1960s and 1970s.

Since 1997, our Government have made most welcome progress in restoring trade union rights, although it is my view that we still have a long way to go in that direction. My Bill could be one significant step on the road to restoring a fairer balance between the powers and interests of workers and employers.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I apologise to the House but as I am so short of time, I will not take interventions.

For myself, I have come to realise the limitations of the simple confrontational model of industrial relations by which he have set so much store in previous generations. It is right that employees and their representatives take an intelligent interest in decision making within the companies, corporations and authorities in which they work. To do this, they must have information and they must be consulted, and there must be effective institutional arrangements within which consultation and discussion can take place. Employees must have access to company information, especially about future plans affecting employee interests and, above all, about their job security. Without such rights, what happened at Vauxhall Motors in Luton last year can and will happen again.

Hon. Members will recall the anger of workers at Vauxhall in Luton at the end of last year at hearing the news of the closure of the Luton plant from the local radio. General Motors' decision to close the Vauxhall car plant in Luton came out of the blue and stunned the whole town. The announcement was leaked to the press before the workers had an inkling that their jobs were to go. I myself received a telephone call from the BBC's "The World At One", asking for my comments on the closure decision several hours before the workers at the plant were formally told.

The anger among the work force—and, indeed, among the whole local community—was intense and understandable. The way in which the decision was announced was no way to treat working people anywhere, and certainly not in a modern democracy. Over 3,300 workers were to be laid off; there were to be 2,000 redundancies, with 1,300 transferred to a sister company, IBC. The decision to end Vauxhall car production by 2002 had been taken by the parent company, General Motors, at either its Detroit or Zurich offices, but the first news in Luton was received via the local media.

It is upsetting enough to be told of the loss of jobs by one's own employer, but to hear it from a third party is wholly unacceptable. The wave of anger that went through the Luton plant was demonstrated on our TV news programmes in the subsequent days. I myself was outside the company offices in Luton when the managing director addressed a large crowd of Vauxhall workers demonstrating their anger.

I should say at this point that GM also announced redundancies at other European plants where there is already a duty to consult the work force. However, this did not and does not justify the company's treatment of workers either in this country or in the rest of Europe

Now is not the time to go into all the reasons why GM decided to close the Luton plant, much as I might wish to. One of the reasons must be that, despite Government progress in turning the tide of anti-trade union legislation enacted by the previous Conservative Governments, it remains easier, cheaper and quicker to make employees redundant in the UK than elsewhere in the European Union. That is not just a personal view, but that of the TUC, which is quite categorical in its assessment, and it is shared by workers at Vauxhall. The TUC believes that one reason for this is that, elsewhere, employers are under a much greater obligation to inform their work forces about business plans and difficulties.

The Vauxhall announcement was not an isolated case of unilateral decisions being announced by employers. Everyone will recall the announcement by BMW on the sale of the Rover Longbridge plant to Alchemy. Some 9,000 employees learned of the proposal and the implied redundancies from their televisions, radios or newspapers. Ultimately, the Phoenix consortium counter-offer was successful and saved many jobs. I am not sure that I share the Industrial Society's view that the original BMW announcement changed the course of British employment relations history and "served as a watershed". However, the society's view that BMW's duplicitous treatment of its UK workforce … was entirely legal is widely held.

There are other examples. The May 1996 merger of Royal Insurance and Sun Alliance was notable not only for the scale of job losses, but for the suddenness of the announcement. The first workers heard of the loss of 5,000 jobs was when the merger was announced as a fait accompli; the term "Rice Krispie redundancies" entered the vocabulary of industrial relations, as workers heard news of their fate over breakfast.

It is to seek to avoid such events in future that I am proposing my Bill. Workers should have a right in law to information and consultation about possible changes in company operations, and rights to be consulted on company plans.

British industrial relations have a long, honourable and distinctive tradition. That tradition is evolving—not static, with fixed attitudes between employers and employees. It could be argued that consultation between the work force of large companies and their employees is not typical of the British approach to collective bargaining, but both sides of industry recognise that circumstances change, not least because of the influence of the European Union.

Many trade unionists still look back to the days when they were immune from civil action by employers over the commercial consequences of strikes. Those rights were established in law early in the 20th century and arose from the Osborne judgment. Hon. Members will recall that the Osborne judgment ruled that trade unions were legal bodies that could be sued for the commercial consequences of strikes. The Trade Disputes Act 1906 reverses to the decision giving legal protection to strikers and their unions.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I am sorry. I am not taking interventions for reasons that I have explained.

Realistically, that position, which lasted until the election of the 1979 Conservative Government, is unlikely to return in the foreseeable future, much as some of us might want that. The TUC and others now look to employee involvement in employer decision making harnessed to the benefit of workers. The world has changed, and the TUC's view of the way forward for workers has also evolved.

Consultation of the work force is already required in certain circumstances under the legislation enacted by both Conservative and Labour Governments. It is not a new idea. Consultation is already obligatory in a number of situations. On the surface, it seems that the extent of consultation is widespread in the British economy. According to ACAS: Many organisations are increasingly adopting consultation as an integral part of their day-to-day management processes and, as a result, are consulting directly with employees as well as indirectly through employee representatives. However, the extent of consultation is actually limited and, sadly, diminishing. That view is backed by what is claimed to be the largest work force survey in the world—the workplace employment relations survey sponsored by the Department of Trade and Industry. That covers 3,000 workplaces, and includes questionnaires from 30,000 employees. The survey found that, the larger the organisation, the more likely it is to have a joint consultative committee. It also showed that consultation has declined over the past 20 years. That is hardly surprising. During the period of the successive Conservative Governments, employment rights were systematically whittled away, and as a consequence employees were less likely to insist on being consulted for fear of losing their jobs.

I welcome the recent initiative of my right hon. Friend the Secretary of State for Trade and Industry to consult both the major social partners on areas for increased consultation. My right hon. Friend was deeply concerned about the effect of the Vauxhall closure announcement on the work force. That decision was made in the face of an earlier negotiated agreement that proposed maintaining production at Luton with a new vehicle to replace the Vectra. I hope that my Bill is pushing at an open door as far as the Government are concerned.

The TUC recently launched its Partnership Institute. The aim of the institute is to identify and promote best practice in workplace partnerships, and develop those relationships that will improve productivity and workplace performance and enhance the quality of working life. The institute has been made possible partly by the DTI's partnership at work fund. Such initiatives will enable partnership working to develop. My Bill seeks to ensure that that happens.

The Bill would cover the public and the private sectors. I was pleased to learn that Unison, by which I was employed for many years, found in a survey that better consultation with staff and unions helps to motivate staff to work better and thus provide improved services. I should perhaps declare an interest, in that I still have close ties with Unison, as well as with my own union, the GMB, and my former employer, the TUC.

The purpose of the Bill is to require employers with more than 50 employees to inform and consult employees on major decisions that affect their organisation. I do not deceive myself that my proposals will meet with no opposition, but I believe that the arguments against it are diminishing and the barriers reducing. Some will say that the voluntary approach is the best way and that regulation is not necessary. I have three responses to that view.

First, regulation in employment is a helpful trend necessary to limit the vagaries of the unfettered market. Secondly, as I hope I have made clear, the benefits of consultation are enough to justify regulation. Finally, my Bill regulates only when the voluntary approach has failed. In effect, it proposes a floor of rights, in the same way as the Government's Employment Relations Act 1999 does in other areas. I have great pleasure in commending my Bill to the House.

Photo of Eric Forth Eric Forth Conservative, Bromley and Chislehurst 2:29, 6 April 2001

When the hon. Member for Luton, North (Mr. Hopkins) began his garbled, pre-written presentation, there were only 16 minutes—

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


It being half-pest Two o'clock, the debate stood adjourned.

Debate to be resumed on Friday 15 June.