Trade Unions (Political Funds) Reform

– in the House of Commons at 12:31 pm on 15th June 2004.

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Photo of John Mann John Mann Labour, Bassetlaw 12:31 pm, 15th June 2004

I beg to move,

That leave be given to bring in a Bill to limit the requirement to re-ballot on the maintenance of trade union political funds to a total of three consecutive ballots.

I thank hon. Members who have signed various early-day motions that I have tabled on this subject over the past year. I note the absence of Liberal Democrat and nationalist Members both from the Chamber and from the signatures on many of my EDMs. My hon. Friends will not be surprised by the omission of the signatures of Conservative Members.

It is somewhat ironic that the Liberal Democrats and the nationalists choose not to back this proposal. The trade unions that have been most affected in practical terms by the requirement to ballot on a trade union political fund are the civil service and teaching unions, which have repeatedly felt somewhat constrained in their ability to be involved in the political process and have faced dilemmas and quandaries about whether to have a political fund. It would be irrational and unfair to assume that if those unions currently had a large political fund, they would choose not to direct it in favour of a political party, but to attack on behalf of their members—positively, negatively or in whatever way they choose—the Government of the day. From 1984 to 1997, they would have had more ability to attack the then Conservative Government, but if they had had less restriction on their freedom to be involved politically over the past seven years, they would undoubtedly have chosen to express their concerns about the current Government.

Trade unions have been involved in political activity since their creation and, for the past century, have faced regulation on how to operate politically through a requirement for a separate political fund, unlike companies and wealthy individuals. The genesis of that relates to an example that involves the Leeds Labour party, which was established in 1901. A member of my family, who was a shop steward in an engineering works, was one of the founding members. His employer told him that it was perfectly acceptable for him to be involved industrially as a union shop steward, but that if he chose to join the new Labour party he would neither be promoted nor have security of employment. By the time political funds were introduced, he had spent three years unable to work in any engineering company in Leeds solely because of the decision to be involved politically. Those who wished power in this country to be weighted heavily and indiscriminately in favour of a specific set of people knew exactly what they were doing.

The development of political funds enabled Members of Parliament, who were initially unpaid, to be put forward, elected and live while they were Members. The 1933 Hastings agreement legitimised the process by creating a system of sponsorship. As Members of Parliament began to be paid a living wage, union support became entirely electoral.

In 1984, the unions were picked out for special attention. That was nothing to do with individual rights because contracting out from the political fund was always possible and in some unions, especially white collar unions, it was common. The Tories hoped to cut off Labour's source of income, leaving them with their wealthy backers. They underestimated trade unionists. Ballot after ballot in 1984–85 and in 1994–95 reaffirmed the right to a political fund by huge majorities in every Labour-affiliated union.

Since then, the Nolan and the Neill committees were set up and the sleaze of Tory money began to be regulated. Cash for questions and nights in the Ritz hotel led to demands for action on transparency. We now have a parliamentary and a legal framework for political donations. That is right and proper but it creates an anomaly.

Union money has always been transparent. It is published and accountable. Now it is doubly transparent and accountable due to political party and MP requirements to declare any donations. Why, on top of that, should there be a red-tape burden of bureaucracy and regulation, forcing the waste of unnecessary regulation and expense on the unions? In recent months, Amicus, the print union, the Transport and General Workers Union and others have won ballots by huge majorities. Even the fence sitters must accept that the transparency laws work. Why one law for the rich individual, for company donations and for the Wheelers and the Ecclestones, but two for the unions?

My Bill provides that enough is enough: three times and you are out. I cannot imagine a more modest proposal. Once three ballots have succeeded, let us cut back the unnecessary red tape and burden of regulation. Let us have one rule for all. I commend the Bill to the House.

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Home Affairs) 12:38 pm, 15th June 2004

I oppose the Bill. A trade union that wishes to spend money on party political activities must set up a separate political fund for financing any such expenditure. Trade unions must comply with specific statutory requirements in setting up and running such funds and union members have rights in relation to the requirements. For example, no member is obliged to contribute to a union's political fund. The Trade Union Act 1984, which is now the Trade Union Reform and Employment Relations Consolidation Act 1992, made it a legal requirement for unions to reballot their members every 10 years to keep a political fund in operation.

An explanation of how a trade union political fund should be set up is provided by Microsoft, on its very helpful online site for small business customers. It says:

"To set up a political fund, a union must first ballot its members to adopt 'political objects' as a union objective.

The rules for conducting that ballot must be adopted as rules of the union and approved by the Certification Officer for Trade Unions and Employers' Associations before the ballot takes place. Approval will only be given if the political fund ballot rules meet certain requirements. In particular, entitlement to vote must be given to every member of the union, the ballot must be held by post, and the ballot must be conducted and supervised by an independent scrutineer.

Once a political fund is established, a trade union must adopt 'political fund rules', and these must be approved by the Certification Officer. These rules must safeguard the rights of members by permitting individual members to contract out of contributing to the political fund" and providing

"that contributing to the political fund shall not be made a condition for admission to the union."

So what are the unions saying about the proposal of John Mann? [Hon. Members: "They like it."] Oh, they do like it; indeed they do. According to the trade union co-ordinating committee, there has so far been no evidence of union members wanting to lose their political funds. In the 1980s, 83 per cent. of them voted yes; in the 1990s, the yes vote was 82 per cent. Currently, 35 unions representing 4.5 million members have political funds. Many of them have recently had, or are soon due to have, ballots.

In April 2003, the communications union Connect voted by 81 per cent. to 19 per cent. to keep its fund, in a turnout of 38 per cent. Also in 2003, Amicus voted to retain its fund, with a yes vote of 71 per cent. At the TUC conference in September 2003, 20 unions joined up to launch the trade union co-ordinating committee, combining their resources in fighting political fund ballots. The TUC argument is that the unions are happy with the political funds and that we should leave them to get on with it, on the assumption that, despite there regularly being turnouts of less than 50 per cent. in these ballots, most union members who have voted have supported continued political activity when asked.

I would suggest, however, that that argument is deeply flawed for three reasons. First, it has been shown that many union members want to vote on whether their union gets involved in political campaigning. Only this year, an attempt by some members of the National Union of Journalists to set up a political fund was voted down in a secret ballot, with 53 per cent. of the vote going against the proposal. It has been suggested that that would have been enough to head off a schism, because several high-profile members had threatened to resign if the fund were instituted.

Union members, including the former NUJ president, now the Minister for Europe, Mr. MacShane, and media figures such as Jon Snow and Jeremy Paxman had all expressed concern that the fund would prejudice the union's proud political independence. The NUJ had argued that all money in the fund would be used to finance campaigning on behalf of NUJ members, and not to support political parties. That proposal was defeated.

The second reason is that, under legislation introduced by this Labour Government, companies now need to approve political donations. Not only that, but they need to ballot their members on the matter annually rather than once a decade. So I would suggest that, rather than making things easier for the unions by cancelling their once-in-a-decade vote, we need to equalise the position with companies by making unions vote on their political donations annually, as companies currently have to.

The third reason is the changing nature of political funding in this country. As we saw in the Employment Relations Bill, which is now making its way through the other place, the Government are proposing to set up a so-called modernisation fund involving an uncapped amount of money. The Government say that it could be up to £10 million, but it could be three or four times that amount because the Bill currently makes no provision in that regard, although I hope that it will do. That money will be given to unions for so-called modernisation proposals—things that I would have thought their membership subscriptions should be paying for anyway. Even if those funds are not going to be used for political activity, they will certainly leave the unions with more money that could be used in that way. Again, therefore, given the way in which the Government propose to change the law, it is even more important that union members have the right to say how unions should be able to spend their money in terms of politics.

We should also note the changing nature of the Labour party's funding. It has a collapsing membership, its base of new Labour entrepreneurs is rapidly disappearing, and it is becoming increasingly dependent on trade union funding, which, I believe, was some £6.5 million last year. The Labour party is not becoming less dependent on union funding, but a lot more dependent on it. In fact, it is becoming almost totally dependent on trade union funding. I do not see that as a reason for getting rid of union members' ability to vote on political funding but as a reason for giving them more rights as to how their union funds are spent.

As Labour becomes more reliant on such funding, the hon. Member for Bassetlaw asks for less answerability and more opaqueness, when there should be more accountability, more openness and annual debates, as companies must now have. The Employment Relations Bill ratchets up union rights significantly. This would be another attempt to ratchet up those rights even further, but this time to the detriment of union members, who should be given more rights to decide on their funds, not less, as proposed by this Bill, which I oppose.

Question put, pursuant to Standing Order No. 23 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—

The House divided: Ayes 136, Noes 98.

Division number 196 Trade Unions (Political Funds) Reform

Aye: 136 MPs

No: 98 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Question accordingly agreed to.

Bill ordered to be brought in by John Mann, Angela Eagle, Helen Jones, Mr. Lindsay Hoyle, Mr. Parmjit Dhanda, David Winnick, Tony Lloyd, Geraldine Smith, Mr. David Crausby, Brian White, David Taylor and Mr. Bill Tynan.