Trade Union Bill — Motion

– in the House of Lords at 3:30 pm on 20 January 2016.

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Moved by Baroness Smith of Basildon

That it is desirable that a Select Committee be appointed to consider the impact of Clauses 10 and 11 of the Trade Union Bill in relation to the Committee on Standards in Public Life’s report, Political Party Finance: Ending the Big Donor Culture, and the necessity of urgent new legislation to balance those provisions with the other recommendations made in the committee’s report; and that the committee do report by 29 February.

Photo of Baroness Smith of Basildon Baroness Smith of Basildon Shadow Leader of the House of Lords 3:37, 20 January 2016

My Lords, as a House, our scrutiny role appears to have excited some interest in recent months, with our powers and limitations becoming more widely known and understood—and, indeed, facing scrutiny. So I want to be crystal clear about what my Motion is intended to do, but also what it does not do.

Noble Lords will be aware that Clauses 10 and 11 of the Trade Union Bill are deeply controversial. These two clauses basically deal with how trade unions raise and spend their members’ money for political purposes. The Government contend that this has no direct bearing on political party funding—specifically, Labour Party funding—but both we on this side of the House and the trade unions contend that it does.

I am not seeking today to make the case one way or the other, but I am seeking a way through that will allow us to consider the Bill in the normal way and, at the same time, provide for a Select Committee to examine this specific point. The noble Lord, Lord Tyler, made a similar proposal about a Select Committee in his excellent speech at Second Reading.

The merit of our approach is that it will take the political argument on the clauses away from the debates on the Bill during the normal Committee stage. It will ensure that the issues other than those in those two clauses, Clauses 10 and 11, receive proper and full consideration, without being clouded by what is a very specific party-political point. Select Committees of your Lordships’ House are highly regarded. Such a committee could take evidence, including from those who have independent expertise to assess any potential impact of the Government’s proposals on party-political funding. It would examine the Government’s proposals in the light of the recommendations of the Committee on Standards in Public Life in relation to party-political funding, a committee now chaired by the noble Lord, Lord Bew. Our approach would not prevent any of our other committees from reporting on this Bill, and a Select Committee could make recommendations and offer advice as to whether legislation could be improved.

What the Motion does not do is in any way to seek to hinder, delay or impede the passage of the Bill. I have suggested 29 February as a time limit for the Select Committee to report back, as that would allow time for consideration and for any findings to be taken into account on Report. I appreciate that the Minister and the Government do not share our concerns, but the BIS Minister, Nick Boles, responded to a Written Question by saying:

“The proposals in the Bill are not about party funding … Therefore no assessment has been made in relation to the impact on the finances of any political party”.

In answer to a similar Question, the noble Baroness, Lady Neville-Rolfe, the Minister in this House, responded:

“There has been no assessment. However, the proposals in the Bill are not about party funding”.

Many noble Lords will have seen her letter circulated yesterday, which reiterated the same points at some length. I wish that I could accept those assurances, but we believe that the Government are wrong or, at the very least, in denial about the consequences of Clauses 10 and 11.

Let us be precise: our genuinely held concern is that this aspect of the Bill will have a significant impact on the resources of one major political party—my party, the Labour Party. In doing so, that will both disrupt the political balance in the UK and have a damaging effect on the electoral process and on our democracy. Any examination of this issue by your Lordships’ House should be evidence based rather than reliant on opinion—even if they are the opinions of the Minister or myself. We should examine the facts and the detail. The problem is that, even when we eventually receive the long-promised impact assessment—and I find it extraordinary that the Bill has gone this far before we even get one—there will be no consideration of any impact on party-political funding. It will not even look at it as a potential unintended consequence.

The Committee on Standards in Public Life, then chaired by Sir Christopher Kelly, sought to reach a political consensus on this vexed issue in its 2011 report, Political Party Finance—Ending the Big Donor Culture. That committee made four recommendations, only one of which has found its way into any legislative proposals from the Government—this one, the one on trade union funding. The noble Lord, Lord Bew, who now chairs the committee, wrote this week that:

“The committee made a similar recommendation but as part of an overall package of measures”.

He quoted from that report, saying:

“Failure to resist the temptation to implement some parts, while rejecting others, would upset the balance we have sought to achieve”.

Photo of Lord Robathan Lord Robathan Conservative

The noble Baroness is talking about party-political funding, but I thought that we were discussing the Trade Union Bill. Is she not being perhaps a bit sensitive to the idea that trade unionists wish to subscribe only to the Labour Party? Actually, the political funds might easily go to any other party that they wish.

Photo of Baroness Smith of Basildon Baroness Smith of Basildon Shadow Leader of the House of Lords

I would entirely agree with the noble Lord’s final point. As I said, the clause looks at how trade unions collect and spend the money from their members on party-political issues. But it might be helpful to him if he took care to listen to the point that I am making—he says that he is all ears, so let us see if he proves it—which is that the Committee on Standards in Public Life made four recommendations on party-political funding, and only one of those is proposed by the Government in this Bill. The others are being ignored. When we look at such issues, they are sensitive. The noble Lord is quite right—I am sensitive about my party funding, and I am sure that he is equally sensitive about his. But we have to look at this in the round, and consensus is always sought on this issue. That point was made very well by the committee, which was very clear, saying:

“Both as a matter of principle and to support its sustainability, the regulatory regime must be fair to all political parties, and widely believed to be so”.

By rejecting out of hand, as the Government have, that there is any such impact on political funding and despite it being so similar to the committee recommendation, the Government are seeking to avoid proper examination and consideration of any such potential impact. I have to say to the Minister that just saying, “It isn’t so”, is not enough. Across this House noble Lords will hold different views about how political parties receive their funding, whether from trade unions, businesses or donors, but whatever our views, I hope we agree that it would be totally wrong for any Government of any colour to use their power to attack the funding of other political parties, especially the Official Opposition.

There is a precedent for such a Select Committee, although I should inform noble Lords that the precedent goes much further than what I am proposing. In 2004, the now retired Lord Lloyd of Berwick successfully moved a Motion for a Select Committee to examine proposals on the entire Constitutional Reform Bill, over which I am sure noble Lords who were here at the time will remember there was some controversy. The Select Committee delayed the progress of the Bill Committee. This Motion proposes something significantly narrower: a very focused, timed-limited Select Committee on the impact of just two clauses. It will not delay the consideration of the Bill. By being so focused, it can be undertaken in a reasonable timescale. I think the noble Lord, Lord Strathclyde, has proved how prompt we can be when we set our minds to it without losing out on quality.

There is clearly a fundamental difference of opinion between the Government and us. We are never going to deal with that by seeing who can shout the loudest, and we should not try to. Surely it makes sense to take a step back and ensure a separate, careful, civilised, evidence-based consideration of just those two clauses by a Select Committee of your Lordships’ House. I hope that my explanation has clarified the purpose, objective, wisdom and reasonableness of our Motion. I beg to move.

Photo of Lord Tyler Lord Tyler Liberal Democrat Lords Spokesperson (Constitutional and Political Reform) 3:45, 20 January 2016

My Lords, I shall try to be reasonably brief because, as the noble Baroness said, I referred to a number of these issues at Second Reading last week.

Since then, I have been struck by the number of Members on the Cross Benches and the Conservative Benches who have agreed that this is the right time to look at the wider issue of party funding. Indeed, it is probably the only opportunity that we will get in this Parliament. I therefore very much welcome the initiative by the noble Baroness, Lady Smith, to bring the idea back before the House this afternoon in prime time, and I hope that we will be successful today.

The Trade Union Bill before the House is deliberately very tightly drawn. The Minister told us repeatedly at Second Reading that it is not about party funding and, as the noble Baroness said, we have all received a letter from her which makes that point yet again. However, I refer the House to the Conservative Party manifesto which contained a two-part promise not only to make this change in this Bill but to reinitiate cross-party discussions about party funding, so this is part of the general package to which the manifesto referred. By making a tight Long Title to the Bill, without even the usual provision of “connected purposes”, the Government are able to advance changes to the way in which individuals contribute to the Labour Party through union political funds and to ward off any amendments to the Bill about the way in which such provisions might apply to other parties and other action on the issue.

Most of the big money goes to the Conservative Party. It took 59% of all party-political donations by individuals in the 12 months leading up to the previous election. Even once trade union donations are taken into account, the Conservatives attracted £2 in every £5 donated to all political parties put together. We now know that the cash was spent—in avalanches—in target seats, in marginal constituencies, in the 2015 general election. Jim Messina, the Conservatives’ own election adviser from the US, told the Spectator just a few days ago that he thinks the party spent £30 million in the run-up to the poll last year. I suspect that the Conservative treasurer may have recalculated that in the final returns to the Electoral Commission, since the legal limit is £19 million.

As it happens, quite coincidentally, the figures are out today from the Electoral Commission, and they repay very careful analysis. Michael Crick of BBC2, who I think is acknowledged to be an expert in these matters, comments:

“those are the OFFICIAL national party spending figures. I don’t believe them”.

Nor do I. They do not include Conservative candidates’ own expenditure. He then highlights “unsolicited material to voters” costing £4 million. As a recipient in a target marginal seat, I can confirm that, yes, we were all receiving unsolicited mail of that nature. And then it is identified in the Electoral Commission figures published today that £2.4 million was paid to Mr—as he was then—Lynton Crosby, and £369,000 was paid to that very same Jim Messina. Presumably, his opinion on the amount that has been spent by the party is worth paying for.

Having deployed those funds to win a narrow majority in the other place, the Government are now plainly set on redefining the rules of the political game to entrench their own power, perhaps permanently. The Bill must be set against the overall picture of changes secured by Conservatives in the past few months and years. There were arguments over boundary changes. We then saw in the House at the end of last year Ministers nipping through provisions to wipe nearly 2 million people off the electoral register just in time for the boundary-change calculations. We saw last week how the Government are now challenging, with as yet no parliamentary process, even the power of your Lordships’ House. Now with this measure, presented as a technical change to make union members’ donations to political funds more transparent, we have an extraordinary attempt to fully stymie an already hobbled Opposition.

It is extraordinary that we need this Motion, but it is absolutely right to refer us back to the recommendations of the Committee on Standards in Public Life, which examined in detail a whole suite of issues on party funding five years ago. Its work built on that of Sir Hayden Phillips in the review that was commissioned by the then Labour Government. Sadly, no progress was made following the Phillips report because no consensus could be reached on the twin matters of altering principally Conservative funding by way of individual donations on the one hand and altering principally Labour funding by way of restrictions on the way in which trade union political funds work on the other.

We have now an opportunity to look again at a comprehensive package, balanced to affect the major parties in roughly equal measure. The CSPL arrived at such a package in 2011, and that should have been implemented by the coalition Government. It is one of my biggest regrets that no progress was made and the nettle was not grasped then in a fair and equitable way. We cannot turn the clock back, but what we can and should make progress on now, in the first year of this Parliament, is a fundamental package of party- funding reform. It was promised in the Conservative manifesto as well as in those of Labour and the Liberal Democrats.

As the noble Baroness has made clear, a Select Committee of your Lordships’ House seems to be an ideal catalyst for implementing those commitments, and of course it could make very good use of the evidence that the CSPL amassed. Last week the noble Lord, Lord Bew, who chairs the CSPL, made it clear that there is still some work to do in updating the calculations and judgments that his committee made in 2011, and surely a Select Committee is the most effective way to do that. His contribution to the debate last week and that of the noble Lord, Lord Kerslake, are essential reading, particularly perhaps for their colleagues on the Cross Benches, because they were particularly significant.

The Select Committee could look carefully at the partisan effects of the Trade Union Bill and could make recommendations for progress on balancing the provision of a donation cap. It could also review fully, in the light of Electoral Commission evidence, the operation of the current law on constituency spending. As my noble friend Lord Rennard pointed out last week, the spirit of the law on constituency spending limits is being abused—no doubt by all parties—even if its letter is still observed.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Conservative

Does the noble Lord not think that his credibility in arguing for fairness and balance and non-partisan behaviour in respect of constituencies would be greatly enhanced if the Liberals had not voted to prevent the boundary changes going through in time for the general election?

Photo of Lord Tyler Lord Tyler Liberal Democrat Lords Spokesperson (Constitutional and Political Reform)

It is quite irrelevant. What is absolutely clear—and I think I will have the noble Lord, Lord Forsyth, with me on this—is that all parties now do not respect the constituency limits that he and I had to observe years ago when we stood as candidates. We were told, were we not, by our lawyers and our agents, that were we to spend one penny more over the limit for a constituency, we would be in trouble. Indeed, last year all parties swamped marginal, targeted constituencies with money from outside which, as long as it did not mention the name of the candidate, was completely outwith the constituency limits. I think the noble Lord and I would agree that what was set in motion by the 1883 Act, which limited how you could buy a constituency, is now not worth the paper it is written on. We need to look at that again, and it is important that it should be effectively considered by a good cross-party Select Committee of your Lordships’ House.

Spending on material of that nature hugely exceeds the constituency limits, and it is clear from the figures published today that the Conservative Party, and no doubt the other parties, made huge use of that just last year. Voters do not get to vote nationally in our system. Every voter in a constituency votes for their own constituency MP, and therefore material distributed in those constituencies by parties contesting the election is just constituency campaigning. The law needs to reflect that point.

The Motion today sets out an ambitious timetable for the committee, seeking a report by 29 February. I support that, because foot-dragging is the enemy of progress in this issue, perhaps more than any other. No sooner are proposals produced than people start saying, “It’s too close to the next election to do anything”, so it is urgent that this issue is looked at now. The committee might choose to make a first report by 29 February, which could then of course be seen in the light of progress with the Trade Union Bill through your Lordships’ House. This timetable, however, must enable it to work constructively and fully with the Committee on Standards in Public Life to bring forward renewed proposals for comprehensive reform.

If anyone still doubts that the clauses in the Trade Union Bill will entrench the invidious iniquity in the UK’s party funding arrangements or that there is a dangerous arms race in spending, they need only consult the figures the Electoral Commission has published today, which speak eloquently to both. Ministerial claims in the debates hitherto and in the letter sent to us that the Bill may not adversely affect Labour’s income are either charmingly naive or stark-staring mendacious. Perhaps they think we are naive. Either way, balancing provisions for the rest of party funding are urgently needed, so my noble friends and I will strongly support this Motion in the Lobbies this afternoon.

Photo of Lord Cormack Lord Cormack Conservative 4:00, 20 January 2016

My Lords, the noble Lord, Lord Tyler, has a good way with words. In fact, however, he demolished the argument in favour of the Motion before us today. I speak as one who has very real sympathy with the noble Baroness and her colleagues in regarding the Bill as being significantly deficient. If ever a Bill needed the constructive attention and detailed scrutiny of your Lordships’ House, it is this Bill. But the problem with the ostensibly very sensible proposal of the noble Baroness is time. That was hinted at in the concluding words of the noble Lord, Lord Tyler.

I say to the noble Baroness that there is a better way forward. I believe there should be not a committee of this House, but a Joint Committee of both Houses to look at political party funding. It could not conceivably report within five or six weeks; there are a whole lot of issues to be examined. Of course, it need not sit indefinitely, and a reasonable timeframe would be to say that it had to report by the end of May or June. The work done by the committee of the noble Lord, Lord Bew, is not absolutely complete, although I agree with the general thrust of his committee’s arguments. It is wrong to single out one political party if we are looking at the funding of parties in this country. Frankly, to suggest that the Bill is not singling out a political party is disingenuous.

I joined the Conservative Party and have been a proud member of it for some 60 years, because I always thought it was a party of fairness. I am a one-nation Conservative, and I do not believe that this Bill marches well with what I understand as one-nation conservatism. I believe, very strongly, that we need reform on the trade union front. I have no objection to looking carefully at ballot arrangements; although, as colleagues mentioned last week, when we are doing that we have to bear in mind the enormous popularity of police commissioner elections—and our failure to invalidate those because they did not cross a threshold. But that is not the subject of this afternoon’s debate. Here, we are looking at funding, and I believe that the best way forward, frankly, is to proceed with this Bill and to seek to amend it where appropriate. It would not be entirely inappropriate to have an amendment that delayed the implementation of this part of it until there is a more comprehensive agreement on political party funding. That would be a measured, sensible and very fair approach to this issue, in the tradition of one-nation conservatism.

The Bill cries out for your Lordships’ attention, however, and I hope that that attention will not, in any part of your Lordships’ House, be overtly partisan. The trade unions have a very important part to play in our economy. There were times when they exceeded their powers and authority, and there are those in the trade union movement today who would do that again. But that is not what we are talking about. We are talking about trying to have a fair construct which deals with the position of the trade unions in this first part of the 21st century. It is not unreasonable to say that people should make a conscious decision before they make a contribution to a political party. But I think it quite wrong to single out one particular party and its main source of funding, particularly at a time when we have also decided, in our wisdom—or lack of it—that Short money needs looking at.

We have to examine this matter in the round, so I say to the noble Baroness, who made a very good and persuasive speech, that I cannot support her this afternoon because, bearing in mind the complexity of the subject, I do not think that the timetable that she has put before your Lordships’ House is reasonable or practical. I think we should get on with this Bill; in the best tradition of your Lordships’ House, seek to amend it; perhaps consider whether there is merit in implementing certain sections of it at different times; and try to persuade the powers that be that there should indeed be a Joint Committee of both Houses—as your Lordships know, I believe passionately in the supremacy of the elected House—to look at the whole issue of party funding and to try to come to a fair and equitable solution which applies, as what I would call the Bew recommendations apply, to all parties and, so far as possible, in all circumstances.

This afternoon’s Motion is not the way forward but there are great issues to debate as the Bill proceeds through your Lordships’ House.

Photo of Lord Bew Lord Bew Crossbench

My Lords, the debate this afternoon—not on the Bill as a whole but on the Motion—revolves around two opposing truths. The Opposition, I think quite correctly, claim that the 2011 report of the

Committee on Standards in Public Life,

Political Party Finance: Ending the Big Donor Culture

, which has already been referred to many times, has to be taken in the round and that the idea that you can extract one element from it is an entire misreading of the logic and structure of the report. That I have no doubt about—it has to be taken in the round. The committee makes it clear numerous times in the report that that is its view. To take one element, whether it be the role of trade unions or of business in party funding, and to deal with it separately is not in the spirit of that report. That has to be conceded. I have been sitting late at night reading the report from many different angles over the last few days, as noble Lords may imagine, and I can see no other possible reading of it.

On the other hand, the Government say that they have never claimed to be implementing the report. It is worth remembering that it was published with two dissenting minutes raising substantial matters—one from Dame Margaret Beckett from the Labour Party and the other from Oliver Heald, the Conservative Party representative on the committee. I say in passing that the Conservative dissenting minute, which raised a number of substantial and serious points, does not challenge the idea that the issue should be dealt with in the round. It absolutely accepts that point. None the less, the Government do not claim to be implementing the report. Indeed, if we are talking about the element that we are dealing with today—the role of trade unions—I accept that the Government’s proposals are quite distinct from the proposal in the report from both trade unions. So the Government are not even cherry picking; they have a different agenda, which they are pursuing. It is being debated and the issues are to be put before the people in the country. So there are two competing truths here, neither of which it is possible to dispute, and it is very difficult to see an easy way through.

On the terms of the Motion—the noble Lord, Lord Tyler, has already hinted at this, and certainly the noble Lord, Lord Cormack, has done so—I feel that there really is a question over what can be done in five weeks. Since the publication of the report, there has been a very scratchy history of progress or non-progress. Indeed, if we go back to Sir Hayden Phillips’s report of 2007, we see, again, that there has been no real progress. So why do we suddenly believe that an issue that characteristically we have been stuck on in this country will be resolved in five weeks? I find it hard to believe that that can possibly be the case. There is a serious issue there. It does not mean that the concerns that have been raised are not serious, but there is a really serious issue about the terms of this resolution and its practicality.

I also feel a certain frustration with the idea that suddenly progress can be made. After the general election, I wrote to all the parties about their manifesto statements in this area. Only one party, the Conservative Party replied. It was not a particularly encouraging reply and I can recall no other replies. But that fact alone makes me think that we will not make great progress on this in five weeks. I would regard it as a huge achievement if even one of the issues could be resolved. For example, in Dame Margaret Beckett’s dissenting minute she argues that the Co-operative

Party and its arrangements are implicitly treated unfairly in our report. I would regard the sorting out of that, which is one tiny element of a massive structure of problems, as a huge achievement within five weeks, so I am sceptical about the timing implied by this resolution.

I have a comment and a word of warning to all the parties in our system. One thing that is happening is that, almost unconsciously, the conception of Parliament as involving the representation and management of interests is changing. That conception was widely held for a long period in our history, whether those interests be trade union, labour or business interests. We are now moving towards a conception of Parliament as being about the fostering of individual human rights. Those who support the Bill will actually say that certain provisions are designed to enhance the human rights and freedom of choice of trade union members. I understand that that is a possible argument. But matters will not stop here. We are a different place in the way that these matters are now discussed and it is impossible that wider questions about big donor culture and the role of business will go away. Many senior Conservatives have implicitly and explicitly accepted that, as the noble Lord, Lord Cormack, has done in his speech. They have expressed their concern about that matter. That is so important because it goes to the heart of perceptions of trust in modern British politics and the inherent difficulty that my committee has with respect to these perceptions of trust.

The noble Baroness, Lady O’Neill, has rightly reminded us several times that we should not be too obsessed with public opinion polls about the level of trust in Members of Parliament and that what really matters is the actual level of trustworthiness. She is absolutely right to say that many of these polls should be taken with a pinch of salt. We have no reason to believe anything other than what my predecessor Lord Nolan said 20 years ago—that standards are not actually in decline in our Parliament or our public service. I would go further today. There is every reason to believe that standards are actually higher, as a result of the recommendations made by Lord Nolan, the much greater transparency that there now is in our public life, the role of IPSA in dealing with issues around MPs’ expenses and the fact that we have in this country the most transparent system for party donations in the OECD. Now that I have said that, some Member of Parliament will be in the papers having done something rather foolish in the next three or four days. None the less, there is no real reason to believe anything other than that Lord Nolan was right and that the many reforms that have been made in terms of transparency have improved the situation.

However, we are in a position where 80% of members of the public believe that people give money to political parties because they expect a tangible reward, such as being made a Peer, and 80% of the public believe that they will not accept party funding. Today’s poll from the Electoral Reform Society has only 77% of the public believing that people give money to political parties expecting a peerage. We can be reassured by that 3% drop in cynicism, but I am not particularly reassured.

There is a huge difficulty in making progress on this because 80% of the public also say that it is a very important part of the proposal made by the Committee on Standards in Public Life that there should be some system of state funding for political parties, but the £25 million envisaged at the moment is something the public will not accept. That is absolutely the case. It is why I am doubtful about taking five weeks to make progress. We are stuck with these issues because they are really difficult, but we cannot evade them—this is the point I am trying to argue with as much vigour as I can. A recent book entitled Ethics and Integrity in British Politics by Nicholas Allen and Sarah Birch, published by the Cambridge University Press, points out that 87% of the public believe that standards are lower than they once were. As I have said, I do not really think that there is strong evidence for that. The use of Lord Acton’s famous quotation that power corrupts and absolute power corrupts absolutely has now become a credible cliché although it has been completely stripped of the precise meaning he gave it in 1887 to deal with the cruel abuses of power that he was talking about. It has now become a kind of journalistic mantra which creates a problem, and indeed research by the Edelman Trust supports that. It backs up our own report on comparative perceptions of the political class in Europe, which showed that 3% of the Dutch and 3% of the British have actually had experience of corruption, but only 49% of Dutch people believe that it is widespread in their society while 69% of British people believe it to be so. We have a malaise in public opinion that goes well beyond anyone’s empirical experience.

But precisely because these things exist, it means that the issues focused on by the Committee on Standards in Public Life, party funding being one of them, have to be faced up to; they cannot be allowed to drift. The Edelman Trust argues that countries with better figures than ours on these matters have a better attitude towards economic innovation and progress. That may or may not be so, but it is still the case that the pride of this country requires that we face up to these issues, acknowledging that many reforms have been made which have not provoked a positive echo in the form of real changes in public opinion.

It is quite correct to say that the details of the committee’s report should not be fetishised, but it is a serious, intellectual and morally formed document. It makes an attempt to achieve something which in its broader terms might lead to a cross-party consensus. I absolutely believe that the points made in the dissenting minutes by both Dame Margaret Beckett and Sir Oliver Heald, thus by both the Labour and the Conservative parties, will have to be debated in any restructured document that emerges. We support the need for reform and we very much hope that both the Government and the Opposition will not forget about these matters when the story of this Bill is over.

Photo of Lord Kerslake Lord Kerslake Crossbench 4:15, 20 January 2016

My Lords, I spoke at length on this Bill at Second Reading so I will keep my remarks today short. Many noble Lords were kind enough to give me feedback about my speech, and I have to say that it is easy to make a good speech when you feel passionately about the issues involved. For me, this is absolutely an issue of the utmost constitutional seriousness that should be of concern to those who are in any political party, or indeed, like myself, are not in a political party at all. What we are debating today is of crucial importance to anyone who believes in an open, plural democracy.

My sense is that, like the noble Lord, Lord Cormack, who argued the point very well, I would prefer us not to act on this part of the legislation until the full conversation has happened. That is a compelling argument which I support. Where I think the proposal adds value is that it can and should look at the impact of what is being proposed here, and that is made clear in the Motion before us today. It is both possible and credible to do that in the time available. That is why I support the amendment.

We have what is often called cognitive dissonance here between two different and competing positions. We may be keen to smoke while also being aware of the health impacts of smoking. We have a proposition that these clauses have no impact, and that they are related to the trade unions and have nothing to do with political parties. Yet we know that the practical effect on one political party would be devastating. We have to reconcile and resolve those issues and have them debated in a committee where they can be balanced against the wider issues. The noble Lord, Lord Bew, spoke very powerfully and I absolutely concur with his wider thesis. But there is a useful job to be done here, which is to have a proper conversation and debate about impact in this wider debate of party funding. I will support the Motion.

Photo of Baroness Burt of Solihull Baroness Burt of Solihull Liberal Democrat Lords Spokesperson (Business, Innovation and Skills)

My Lords, I am conscious of the House’s time this afternoon, so I will be brief. The purpose of this Motion is to convene a separate committee to consider Clauses 10 and 11 of the Trade Union Bill, because its practical outcome is all about political party funding. The Government can say that the Bill is not about political funding but it patently is. It has the practical effect of further unbalancing the playing field in favour of the Conservative Party by practically reducing the access to funds for the Labour Party.

If we look at the report on the Committee of Standards in Public Life, the opt-in was the quid pro quo for Labour to be considered alongside the reduction in maximum donation of £10,000, which would, it thought, roughly equate to a similar reduction in Conservative funding. But after the analysis that the noble Lord, Lord Tyler, treated us to, that perhaps is a little optimistic.

To my mind, two points follow. First, the Conservatives seem to misunderstand the role of trade unions in this country. They are as much a part of our functioning democracy as the courts, political parties and the dual-chamber system, which is also under attack, as are the freedom of information changes which the Government are also currently trying to push through. The Labour Party can be accused of many things, including exceeding powers, as the noble Lord, Lord Cormack, has mentioned, but someone, as well as the

Liberal Democrats, must constitute an opposition in a functioning democracy, and Labour, frankly, is in a weak enough state already.

Secondly, if the Government have already taken away Labour’s bargaining chip in any future negotiations on party funding, what incentive is there for the Conservatives to ever return to the negotiating table? It is a win-lose situation and happy days for them. The winning advantage that they will get will enable them to stay in power for the foreseeable future.

At Second Reading, I said that one of the roles of this House is to ensure fair play and a level playing field. This section of the Bill risks that, so a Select Committee is the right approach. I urge noble Lords from all sides of the House to support it.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Conservative

My Lords, I was not planning to speak on this matter but I have been provoked. I do not know what I think about this because I am in two minds. First, this is a manifesto commitment. This House is not expected to oppose Conservative Party manifesto commitments. However, the manifesto commitment is in two parts—it is about a review of funding, and this is only one part. I had to deal with this when I was a Minister of State in the Department of Employment in 1992.

In 1982, my noble friend Lord Tebbit dealt with the matter very well. The issue then on opting out or opting in was that people were not able to choose whether they wished to subscribe to the political fund and many were not aware that there was a political fund. In 1982—I hope that my memory is correct— my noble friend Lord Tebbit and Lady Thatcher’s Government decided that the fairest way to deal with this was to have a regular ballot every 10 years to establish whether there should be a political fund and that people should be able to opt out if they wished, thus preserving individual freedom.

In 1992, 10 years on, we looked at this again and we had some employment legislation which was a little controversial. It included abolishing wages councils and one or two other things like that. The debate in the Conservative Party and the Government at the time was that we should change the law and make a requirement to opt in. I decided that we should not do that and the Government took that view. I decided that we should do so not for any reasons about party political funding, but because I thought that it would be unfair to the Labour Party, reduce its funding and inevitably start a debate about state funding of political parties, to which I am totally opposed. The day we put our hands in the pocket of the taxpayers to pay for our party political campaigning is the day when a bigger gap will open up between us and the electorate.

It would be a great mistake if we moved away from the system that we have—I take the point raised by the noble Lord, Lord Tyler, about the importance of controlling expenditure in constituencies—and the need for political parties to raise their funds by getting members on the ground and in the constituencies. A culture that enables one or two very rich people to bankroll one party, or three or four trade unions to bankroll another, encourages the loss of that grass- roots support that is so desperately needed at present.

As I say, I am in two minds. I hope that my noble friend will be able to answer this in responding to the debate on the Motion: what is the problem that we are trying to solve? What has gone wrong with the trade union political funds and the system established in 1992? I have seen the letter that my noble friend wrote to all of us. Is it that we think that people are being lent on not to opt out of the political levy? Is it, as she said in her letter, that we think that people are not aware that they have the right to opt out of the political fund? If that is the case, is it not possible for the trade unions to come forward with proposals on a voluntary basis that would establish that whatever these deficiencies are would be put right? I know that they have done so.

We are provoking a confrontation that will do none of us any good and certainly will not do the political system any good. I say to the noble Baroness, who I have enormous respect for, on the idea that we can sort this out in five weeks: this will be a bean-feast for the media to have a go at all political parties and their funding.

Photo of Baroness Smith of Basildon Baroness Smith of Basildon Shadow Leader of the House of Lords

If I might briefly assist the House in looking at this issue, I am not for one moment suggesting that, in the five weeks or so to the end of February, the Select Committee would be able to look at all issues of party funding. That is not the purpose of my Motion. It is on one specific point: that, on the issues that the Committee would be deciding and voting on, there should be a parallel process to inform its deliberations. No one would dream that it could do it in five weeks—if we cannot do it five or 10 years, we will not do it in five weeks. It is specific on the point of what the committee will be debating.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Conservative

The noble Baroness is very smart and clever and that is exactly the right answer to give to my point, but I am trying to make bricks here. She may be correct in saying that the terms of reference for the committee and its functions could be limited to that period of time, but that will not affect what goes on in the outside world. We will have a great old row about party funding and we will not be in a position to get agreement between the political parties. We all know that it was about setting a limit. The trade unions think that the limit should not apply to them, the Labour Party is so dependent on the trade unions that they will not want to do that, and the same on our side. We know where the differences are. I hope that these might be resolved in the future, but I do not think that the noble Baroness’s Motion is the right way to do that. I agree with my noble friend Lord Cormack that the proper way to do this is in consideration of the Bill.

I hope that my friends on the Front Bench will recognise that this will take away funding from the Labour Party at a time when the Labour Party is perhaps not at its strongest. I have no brief to build up the Labour Party, but our parliamentary system depends on having a strong and effective Opposition. The Short money is supposed to enable the Opposition to operate in Parliament; it is nothing to do with party politics as such and is being cut, so that makes it harder for them to operate. At the same time, to attack the funding is, I think, misguided because I know what will happen. The people will say, “Well, let’s have a look at the Tory Party. How can we inflict this there?”, and we will get into a war of mutual destruction. I do not think that would help enhance the reputation of Parliament or of the political parties. Therefore, the best possible outcome would be not to pass the noble Baroness’s Motion and for the Government to think again about whether there is a way to meet our manifesto commitment and, at the same time, reach a deal with the trade unions which enables whatever the problem is that the Government perceive makes it necessary to do this to be resolved.

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe The Parliamentary Under-Secretary of State for Culture, Media and Sport, The Parliamentary Under-Secretary of State for Business, Innovation and Skills 4:30, 20 January 2016

My Lords, I thank the Leader of the Opposition for introducing her Motion and I have listened very carefully to the arguments for appointing a Select Committee to consider Clauses 10 and 11 of the Trade Union Bill. However, I ask the House to bear with me as I set out the Government’s position that these clauses relate to trade union reform and not to party funding reform.

The Trade Union Bill is just that: it is about trade unions, and it introduces a number of reforms based on the 2015 Conservative election manifesto, as my noble friend Lord Forsyth explained so eloquently. I believe that most uncommitted observers would regard these reforms as unexceptional. They represent proportionate reform based on a clear manifesto commitment, which includes a transparent opt-in process for union subscriptions.

However, I must deal first with the confusion which has surfaced—namely, the difference between contributions to trade unions’ political funds and trade unions’ funding of political parties. The Bill requires members of trade unions explicitly to opt in to a political fund. That is not the same as requiring opt-in to union donations made to a political party. Political funds are used for all sorts of campaigns, some of which are not at all party political.

Let me explain the problem that Clause 10 seeks to address. Under current trade union legislation, union members have the choice to opt out of contributing to a union’s political fund. However, that choice is on too many occasions difficult to exercise, and not made clear to individuals. So, to reply to my noble friend Lord Forsyth, we want to end that unfairness and provide full transparency by allowing union members an active opt-in to the political fund. I look forward to discussing that in Committee.

This Motion has been brought to consider Clauses 10 and 11 in the light of the 2011 report of the Committee on Standards in Public Life. Of course, the noble Lord, Lord Tyler, also sought to bring forward a Motion on party funding at Second Reading based on the same report. However, Recommendation 4 of the report specifically addressed a cap on affiliation fees to a political party, not how the contributions are made to political funds of trade unions. The latter did not, in fact, form part of the recommendations of the

CSPL report, as the report related to party funding, and party funding is not a matter for this Bill. It is a separate matter that has been the subject of a large number of reports over many years. The recommendations in the 2011 report of the Committee on Standards in Public Life were not accepted by the two major political parties, as we heard, including the party of the noble Baroness, Lady Smith. It would be peculiar for a Select Committee on political party funding to be set up based on a report that does not command cross-party consensus. As the noble Lord, Lord Bew, suggested, a lack of party consensus is at the heart of the problem. Therefore, it would be difficult to make any progress in five weeks, as he said.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Conservative

Can my noble friend give us some examples of where people have been prevented from opting out of the political fund and explain the extent of the problem? Can she also explain why this cannot be achieved by some kind of agreement of a code of conduct with the trade unions?

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe The Parliamentary Under-Secretary of State for Culture, Media and Sport, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

My Lords, this is a Motion on procedure and I was not planning to go into the detail, but I will certainly write to my noble friend and other noble Lords and we can discuss in Committee the sort of examples that he is talking about.

As we made clear in our manifesto, we will seek to secure an agreement on party funding reform. Indeed, it is open to the committee of the noble Lord, Lord Bew, to take this work forward in the light of updated data but, I repeat, such work is entirely separate to the passage of the clauses in this Bill, which relate to trade unions and not to party funding discussions. The noble Lord, Lord Tyler, and other noble Lords have made a number of interesting points today, which I will not seek to reply to, as this Bill is not about party funding. I recognise, of course, that some noble Lords feel strongly about the Bill, but all institutions need modernisation and that is what the Bill is about.

The noble Baroness, Lady Smith, has suggested that the House is underinformed about the Bill. I find this difficult to believe, given the marathon debate that we had at Second Reading. The measures in the Bill are rooted in the manifesto, for which we won a majority of support in the election. They are supported by members of the public, whose interests as parents, patients and commuters the Government were elected to defend. The measures secured clear majorities at all stages of the Bill in the elected Chamber. They had the benefit of extensive scrutiny in the other place, including in oral evidence from key stakeholders in Committee.

Furthermore, I am looking forward to a comprehensive debate shortly in a Committee of the whole House. Even my noble friend Lord Cormack, with whom I do not always see eye to eye, seemed to think that the Bill should be considered in Committee, in the best traditions of this House. That is because a primary purpose of this House is to scrutinise and improve legislation. Today’s Motion will not improve the effectiveness of that scrutiny; indeed, it would shift the focus of scrutiny to party funding and away from the central purpose of the Bill, which is trade union reform.

To address the specific concern raised by the noble Baroness, Lady Smith, I am pleased to confirm that we will publish impact assessments on the Bill tomorrow. I will personally ensure that copies reach the noble Baroness and the noble Lord, Lord Mendelsohn, once they are published.

Photo of Lord Rooker Lord Rooker Labour

Would the Minister please address the points made by the noble Lord, Lord Kerslake?

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe The Parliamentary Under-Secretary of State for Culture, Media and Sport, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

My Lords, as I said, I have listened to the debate and we will all reflect further—as we do when we have important debates of this type—but I would like to conclude on this Motion.

Photo of Lord Rennard Lord Rennard Liberal Democrat

Can the Minister tell us why these impact assessments could not have been published yesterday so that we could have considered them when considering this Motion?

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe The Parliamentary Under-Secretary of State for Culture, Media and Sport, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

My Lords, I promised in a meeting that they would be published before Committee stage and I have delivered on that promise. I have arranged for them to be published tomorrow, which will give plenty of time before Committee starts on 8 February. I look forward to discussing them with noble Lords across the House.

In conclusion, this Bill seeks to modernise the relationship between trade unions and their members and to redress the balance between the rights of trade unions and the rights of the general public, whose lives, as I have said before, are often disrupted by strikes. Clauses 10 and 11 embrace the good democratic values of choice, transparency and responsibility. I look forward to full scrutiny of the Bill in this House.

This Bill is a package of measures and it is disappointing that the party opposite has chosen to misinterpret our intentions. As I have demonstrated, Clauses 10 and 11 are quite distinct from the report of the Committee on Standards in Public Life mentioned in the Motion and relating to party-political funding. We would merely be adding confusion if we established a Select Committee.

Our reforms in the Bill look at how trade union members choose to contribute to trade union political funds. We are not looking at how trade unions fund political parties. Opt-ins and opt-outs for trade union political funds have always been a matter for trade union legislation. Party funding and its regulation have always been a matter for party funding legislation. Party funding is rightly outside the scope of the Bill and I call on the House to reject the Motion.

Photo of Baroness Smith of Basildon Baroness Smith of Basildon Shadow Leader of the House of Lords

My Lords, I thought the Minister was making quite a good fist of it until she said that we had misinterpreted the intention of the Bill. I thank all noble Lords who have contributed to today’s debate. That has been very helpful.

It may assist the House if I very briefly make it absolutely clear what my Motion seeks to do. The noble Lord, Lord Kerslake, hit the nail on the head when he said it was about the impact of the legislation, not the intention. The Minister says that the impact assessment will be published tomorrow. That is great but it would not have informed this debate at all, I say to the noble Lord, Lord Rennard, because there is nothing in there about any impact that the Bill may have on party-political funding.

We strayed a long way from the specifics of my Motion. My Motion is quite clear. It is not about party funding as a whole; it is not about the Trade Union Bill as a whole. It is very specifically about the two clauses in the Bill over which there is a clear difference, as noble Lords have heard, between the Minister and this side of the House—between the Government and I was going to say the Opposition but I think it is much more widespread than that—about whether those clauses will have an impact on political funding.

The Minister reminded us of the Conservative manifesto. The noble Lord, Lord Forsyth, was quite right to challenge on this—I apologise for citing him again. The Conservative Party manifesto says, on page 49:

“In the next Parliament, we will legislate to ensure trade unions use a transparent opt-in process for subscriptions to political parties”,

but now she tells us it is nothing at all to do with political parties. Is the manifesto right or is she? The manifesto goes on:

“We will continue to seek agreement on a comprehensive package of party funding reform”.

I entirely agree but that is not what is in the Bill. The Bill looks at what the Committee on Standards in Public Life says and picks one area. The noble Lord, Lord Bew, was quite clear that one of the recommendations is reflected—I am not saying it is exactly the same—in these proposals.

I particularly thank the noble Lord, Lord Cormack, for his contribution—wise words, as usual. I remind him how narrow and specific our Motion is. He says that he would much rather not have the clauses implemented. That could be debated by the Committee on the Bill when we get to those clauses. What I am proposing today is the opportunity to inform the debate on those clauses on one specific point; otherwise, the debate on those clauses will be clouded by the debate on whether or not there is an impact on party-political funding, although I entirely accept the point about what was in the manifesto about the opt-in or opt-out. I am seeking to remove that party-political element from the debate and debate the specifics of that in a Select Committee in order to then inform the Committee.

Photo of Lord Cormack Lord Cormack Conservative

Does the noble Baroness not appreciate the points made by the noble Lord, Lord Bew, as well as by me, that the timescale is wholly unrealistic? A committee has to be set up. It then has to meet. It has to decide precisely on its remit. It has an order to report back by Monday 29 February. That is just unrealistic.

Photo of Baroness Smith of Basildon Baroness Smith of Basildon Shadow Leader of the House of Lords

I understand the point the noble Lord is making but I respectfully say to him that he is wrong. The timescale of this is dictated by the timescale that the Government have set to debate the Bill. These issues have to be debated in that timescale because that is the timescale the Government have set for conclusion of the Bill. With due respect to both noble Lords—I think the noble Lord, Lord Bew, made this point—this committee does not address the far wider issues of party funding. Both noble Lords are absolutely right: it could not do so in that timescale. But what it can do is inform the Committee that will be discussing the Bill as a whole in the timescale set down by the Government. It is purely to inform. If we do not have the committee that I am suggesting, those issues will be discussed in the same timeframe but without the external information provided by the Select Committee.

The key thing here is not what the Minister or I think. It is about an assessment of what the impact will be—a forensic assessment of whether it will have that impact. The Minister says no, and I say yes. Who is right? I do not think that we can reach a conclusion on that here, but a Select Committee could look into that impact and it can inform our deliberations on the Bill.

I apologise for citing the noble Lord, Lord Forsyth, again but he gave reasons for not voting for my Motion. I say to him that there were reasons for not bringing forward the Bill in the first place because those clauses are so deeply flawed. For the Government to produce an impact assessment which does not even address one of the major issues of controversy that is causing concern across your Lordships’ House is an absolute disgrace. I have heard the Minister but I do not think that she made her points very well and I beg to test the opinion of the House.

Division on Baroness Smith of Basildon’s Motion

Contents 327; Not-Contents 234.

Baroness Smith of Basildon’s Motion agreed.

Division number 1 Trade Union Bill — Motion

Aye: 325 Members of the House of Lords

No: 232 Members of the House of Lords

Aye: A-Z by last name

Tellers

No: A-Z by last name

Tellers