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Second Reading

Part of Trade Union Bill – in the House of Lords at 3:20 pm on 11th January 2016.

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Photo of Lord Mendelsohn Lord Mendelsohn Shadow Spokesperson (Business, Innovation and Skills) 3:20 pm, 11th January 2016

My Lords, I rise to reply on behalf of these Benches, and look forward to hearing some excellent maiden speeches in the course of this debate. I hope that my comments, or aspects of them, may find some resonance across the House. I do not think that it will not be too much of a surprise to anyone when I say that the Bill is extraordinarily partisan, vindictive and selective. It breaches legal conventions, civil liberties and settled agreements between political parties, and it reintroduces adversarialism. It clearly impinges on the capacity of the devolved authorities to manage the functions for which they have responsibility, thus fuelling the argument in favour of separation. It fails to achieve its stated purpose—not least as its analysis is poor and its measures counterproductive.

I am a businessman. I have never been a member of a trade union, but I have dealt with them, including on employment matters, where they have played a valuable and pragmatic role in dealing sensibly with issues—far more so than the intervention of lawyers. I do not come from a great trade union background in my attachment to my party; there are many with experience and wisdom who have that background, and I look forward to hearing from them in the debate today. But I have worked with trade unions, done business with them, criticised them and, some years ago, even discussed change and modernisation with a trade union. I am neither closed nor precious when it comes to considering issues around trade unions, and there is nothing like a good examination of trade unions—but this is nothing like a good examination of trade unions.

I deeply regret that the Government are yet to publish the consultation; it is unorthodox. The very serious nature of this Bill has been pointed to by a very respected body of this House already, and I am unsure how much clarity the impact assessment will provide following the Regulatory Policy Committee’s scathing criticism of the Government’s three impact assessments on thresholds, picketing and use of agency staff, which were red-flagged and deemed not fit for purpose. It is worth noting that in the previous Parliament the RPC issued just over 2,000 opinions, and there were only 14 instances in which a department proceeded to the next stage of the policy process on the basis of an impact assessment rated by the RPC as not fit for purpose—and in this case three were deemed not fit for purpose.

So why is this Bill so bad? First, in principle, it does not address the right issues. There is no evidential foundation to say that there is a significant problem that needs to be addressed by many of the measures that it has chosen—certainly compared to the rest of Europe, where we are at just over 50% of the general average loss of days taken up by strike disputes. In the 1980s, 7 million days a year were lost on average; over the past decade, the running average was around 670,000, and the numbers have been in decline steadily and consistently. In 2014, there were 151 stoppages, and most disputes where there were ballots were settled without strikes; 56% of these were in the private sector. Detailed data and research undertaken by the OECD have shown that all statistics have roughly halved in each decade since the early 1980s; reductions are steady in industry sectors and in dispute duration; and these declines are exemplary in places with high union membership and collective agreements. Low inflation has led to a reduction of the incidence of pay disputes.

So where is the evidence that there is a particular problem, and why are the Government taking a risk in acting so disproportionately? I have searched for any study or evidence that the Government could even point to, to suggest a strong public interest case. I have looked at the writings and research of economists, but they, too, cannot see the logic. In fact, a recent University of Oxford paper entitled The Benefits of Enforced Experimentation, studying the impact of the RMT Tube strike on the travelling habits of 18,000 commuters, concluded that a 48-hour stoppage was economically efficient—encouraging consumer behaviour to examine alternatives in markets where there is not perfect information, far better than the benefits of technology—and actually helped commuters in the long run, including and especially working mothers. I am not arguing in favour of conduct based on this analysis; I am just pointing out the absolute dearth of any evidence to support not just the Government’s stated figures but their measures and means to achieve their objectives.

Business support is lukewarm and detailed analysis has been negative. The Chartered Institute of Personnel and Development has said that the Bill’s plans are,

“an outdated response to the challenges of the modern workplace”.

CIPD research with employers and consultation with its own members show that employer relations with trade unions are generally good. Therefore, a more logical way forward for employers would be to build a better dialogue with their workforces and consider alternative approaches such as no-strike agreements rather than focusing on ballot thresholds.

Secondly, as a businessman, my frustration with the Bill is that it is entirely one-sided. It utterly fails to take into account the most significant driver of the working environment at the current time; that is, management—leadership. Today the major variants owe more to the role of management than to employees and nowhere is this more evident than in the public sector. I was encouraged that I seem to share the approach of the Permanent Secretary of the Minister’s department. Responding to ACAS’s excellent work on building workplace co-operation to improve productivity, he welcomed it as strongly recognising,

“the impact that good management can have”.

There is an interesting contrast here with the public sector because of course many of the disputes were identified previously in the private sector. In the UK economy, productivity gains have been the strongest in the private sector in the largest companies, particularly in areas with long-established ways of working with unions and representation; for example, in the car industry or the impressive and world-leading work between unions and management in the UK oil industry. The public sector has a significant mass of disproportionately large entities and here the productivity has been weakest.

According to the last full report of the ONS, 131 million days were lost due to sickness absence, of which 15 million were through stress, anxiety and depression. The trend line of days lost has been in decline since 2000, since partnership emerged quite strikingly. Public sector workers are still running at 2.9% of working days lost; in the private sector the figure is 1.8%. That has come down in the public sector from 4.2% and in the private sector from 2.8%. Certainly there is a fantastic opportunity here for public sector managers to see and maximise greater advantages. In managing motivation and the problems of sickness, absence, stress and depression, we can make a big difference, particularly where the public sector lags. Here is the most significant lever that could be used to make significant changes in line with the outcomes the Government profess to want, and I hope it is here that the Government will be willing to consider some helpful amendments.

Thirdly, the Bill is a great example of penny-wise and pound-foolish. For all the political bluster, it achieves little and creates in its wake a series of unenforced errors and costs. I will quantify this point later but I was once taught some very important lessons on how to manage well and avoid disputes. Do not give conflicting messages: say what you mean and act to show that you mean it. Give your employees the tools they need to do their jobs; if they cannot get the job done because they lack the tools, whose fault is it really? Learn to lead from the background: delegate authority properly and provide the instructions and tools necessary. Meet regularly with union representatives; do not cancel or avoid meetings and keep the lines of communication open. Be fair but do not give away the farm. These are probably the most significant lessons for public sector managers and especially Ministers. Manage the workforce in the public sector better and you will get better outcomes. The measures in the Bill are draconian.

Finally, the Bill is unworthy of how politics in this country should be conducted. The Government’s clear attempt to defenestrate the Labour Party’s finances does not just breach the long-standing agreement that any measures which have a bearing on the finances and capabilities of the parties should be only by agreement with all the other parties but has led to the most ludicrous denials I have ever heard. “This is not about party funding”, it is said. Is that really plausible after this has been a repeated topic of discussion during rounds of party funding discussions, and after it was discussed during the coalition but was rejected because it breached an agreed convention and because of the patently obvious impact that it would have? There might perhaps have been a scintilla of a chance of carrying this off, were it not for the punitive timetable set out in the Bill to inflict maximum damage as soon as possible.

I want to make it clear that I hold the Minister in the highest regard. She is a capable and decent Minister. I appreciate that in her role she has to perform many duties and that this is a script which comes from somewhere else. There is less dispute over the ultimate authorship of the Bill than there is with Shakespeare. Such a political calculation may be a strong indication of the future of the Chancellor but I hope that, in the traditions of this House, the Minister will be willing to see what can be done to make the Bill better in any way possible.

I want to go briefly through some of the measures that the Bill addresses and some of its problems. In relation to thresholds, are the Government really saying with conviction that they want to hear the democratic voice? If this is so, why were they so resistant to introducing any of the changes that would allow for participation to increase? All the methods which are now widely used are still resisted. If the Government are serious about the democratic voice, they will be open to allowing participation consistent with the current standards of balancing processes to be introduced.

In relation to certification officers and the Government’s wish to turn a regulator into an investigator, they are not just lowering the threshold for what investigation can be made to the lowest possible but allowing for punitive powers for costs to be applied to the union, no matter what the circumstances. Is this really the way that we want a regulator to operate?

In relation to check-off—simple payroll administration —I am absolutely astounded. I heard the argument when a Minister in the other place said that this costs the public purse £6 million. Frankly, an economist and someone who professes to have worked in a family business, which was a payroll software system business, should understand marginal cost. The marginal cost of introducing an employee is so small that in a number of organisations where the unions are willing to pay the cost of it, the cost cannot even be calculated because it is no different to adding the costs in relation to bikes, student loans and other matters. The public sector has not actually been subsidising this; it makes money from it. There are a number of organisations which charge considerable fees to trade unions so the loser on the costs will actually be the public sector, not the trade unions. The actual cost is being impaired. What has happened is that the charges made to the public sector are an actual loss in their accounts.

Most employers who use this method in the private sector consider it a major benefit. It creates information and transparency in relationships. Great companies have used it, such as GKN and Tesco, where the Minister herself was one of the people involved in the process of discussion with the trade unions to great effect. There is no case on check-off. There is less evidence for it than in a press release.

In relation to facility time, I notice the clever device to suggest that the taxpayer costs for this will be reduced from £36 million to £10 million, but how do you make a saving in government? You transfer the cost to another budget line and then do not measure it. Many of the activities that facility time was available for—negotiating with employers, representing members individually and collectively, particularly in labour disputes, performing health and safety functions, attending union training courses and performing some union functions—will still be conducted. Considerable levels of unpaid time were identified in previous research. By many factors of the time that was paid under facility time there was time conducted by the employee. Frankly, this is now no longer calculated or understood; the activities still take place and the costs now go on to the payroll. This time is used by the private sector and it should be by the public sector—to make sure that a better trained and more productive workforce is there, to help to build loyalty and reduce absence, and so that safety and efficiency, which go together, can be introduced to the public sector.

There are a variety of measures here—we are looking at all sorts of restrictions—for which we will find it extraordinary to have a sensible justification from the Government. This is not a straightforward Bill. It is transparently poor. I am aware that many noble Lords around this House have concerns, including many on the Benches opposite. It cannot be right to claim to believe in less regulation but to introduce so much just to target trade unions. It cannot be right that a Government who wish to discourage vexatious claims and to avoid incentivising claims without a just apportionment of costs can redesign a system to make that the very outcome for certification officers. Surely a Government who accept the legitimacy of police and crime commissioners with a vote of 15.1% can see the irony of their position on the democratic voice.

What concerns me is that the Bill has so little evidential foundation and operational soundness that it will undoubtedly have intended and unintended consequences that will be neither beneficial nor just for our country. For what? Is it for some satisfaction that political foes can be weakened or—as with one of my sons reading the classic novels when he was four years old—so that imaginary evils can be defeated by some dashing white knight riding to the rescue?

This is a very poor Bill and it will be the duty not just of these Benches but of the whole House to make some measured and sensible improvements. We are conscious of our role and the conventions of this House, but we will not recoil from vigorously opposing that which is wicked and unjust, and we will not shy away from suggesting improvements where we can. I have never thought that putting lipstick on a pig was a very good idea, but this Bill has made me revise my view.