Clause 31 - Information and consultation

Employment Relations Bill – in a Public Bill Committee at 9:30 am on 24th February 2004.

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Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry 9:30 am, 24th February 2004

I beg to move amendment No. 49, in

clause 31, page 27, line 1, at end insert—

'(1A) The Secretary of State shall consult such persons as he considers appropriate on the establishment of works councils as an arrangement suitable for informing and consulting employees and shall publish the responses received pursuant to those consultations before making the regulations referred to in subsection (1).'.

We tabled the amendment because we are concerned that there has been some resistance within the United Kingdom to adopting what we regard as good labour practices that have long been established in continental Europe. The Liberal Democrats and our predecessor party have always been strong advocates of industrial democracy. Although it has improved a great deal over the past few years, we have regretted the concept of there being two sides of industry and an adversarial, confrontational approach, which did much damage to the British economy, particularly in the 1960s and 1970s.

I accept that such an approach has passed substantially, but during Committee proceedings and our debate on Second Reading we have heard examples of bad practice—to be fair, sometimes by unions and sometimes by management. The European directive requires us to make some institutional changes, which, if adopted in a positive spirit, could consolidate much better relations and set the framework for a more constructive relationship between employers and employees.

We accept entirely that the role of works councils is not a catch-all role. It will not serve all companies and institutions in every way and we would not want to impose it on companies, certainly not when employees have no desire for it and find the present arrangements adequate. Works council practice in other countries has a considerable amount to commend it. When the new European legislation comes into effect, in practice, works councils will probably start to appear in the UK and it would be helpful if the Government created a positive climate to encourage the establishment of works councils in appropriate situations, provide examples of good practice and give guidance on how they can be set up better.

In preparing for the debate, I tried to find more information about the implications of the directive and experiences elsewhere. To be honest, I wish to express a little worry that the Government, not their

predecessor Government, have been resistant to highly desirable practices about which many of their supporters would probably have expected them to be more enthusiastic. I wish to quote the Minister's predecessor. I am not saying that he made an unreasonable point; indeed, I have a high regard for him. He said that

''it was futile to try to use the law to force companies to take employees views on board''.

I find that an astonishing statement for a Labour Minister with responsibility for employment to make. He went on to say:

''For workers to be consulted genuinely—ie, we are interested in their views and their views could well influence our decision—you won't do it through regulations. You will only do it through that trust that exists in many UK companies.''

The problem is what we do when that trust does not exist. The argument is that institutions are a mechanism to build that trust. The works council approach is one of those mechanisms that has proved a useful device for bringing management and unions together, as well as employers and employees—unions are not essential for this—to improve the climate of consultation and management.

I said in my opening remarks that we regretted the two sides of industry approach. That is what we got in the reaction to the consultative document: the CBI said that it was deeply disappointed by the agreement in the Government's dossier but the TUC welcomed it, although it wished that it would go further.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

I made a point about that on Second Reading. I am unsure about whether the Government could have been more confident and assertive in encouraging the adoption of good practice.

Examples of where a good atmosphere of consultation would have led to less strife and hardship and better decisions have been well reported, so I will not dwell on them for long. The way in which BMW sold Rover was astonishing. I was a member of Trade and Industry Committee delegation that visited Rover at the time of the takeover. Undertakings that were given were breached, for example on the style of management. When we were in Munich, the management told us that it was so good to its employees that whenever any of them got married the company's habit was to pay a contribution towards the cost of the wedding reception and the bride's trousseau. That wonderful generosity in Bavaria did not fit in well with the decision to sell an acquisition without any consultation. Most of the employees at the Vauxhall plant at Luton heard about the decision to close it on the radio. There was a similar situation in south Wales when Corus decided to make 6,000 people redundant.

There is a marked contrast between what happened in those cases and what happened to Marks and Spencer when it dealt with falling profits by taking a management decision, which I have no quarrel with, to withdraw from the continent. Some people thought that that was an odd decision because the company

closed its most profitable stores. It decided for core management reasons that it needed to concentrate on its home base. It announced its intention to close those stores British-style, before consulting with the work force. In France, it was taken to court and forced to go through a longer period of consultation and a slower closure process than it had intended.

The most topical current example is the outsourcing of jobs by financial institutions to Asia, and particularly to India. I am on record as saying that it is difficult for us to object to countries with developing economies fighting for and securing jobs for their own people, particularly if we wish the working and living conditions of those countries' people to improve.

With regard to yesterday's announcement about asylum seekers and migrants, if we wish to limit the number of migrants coming to this country, we cannot object when jobs are sourced elsewhere. However, that should be done with proper timing and consultation. Many people have had concerns about companies making announcements to the press, or just giving hints about things, without having any consultations with their employees. Some of them do not go through any process of explaining the rationale behind their decision, perhaps by stressing positive dimensions such as the hope that reinvestment and savings can produce new jobs, which has sometimes subsequently been claimed to be the case, and increase their competitiveness. Some do not explain the time scale in which workers who will lose their jobs will be made redundant and how that will happen. That causes much more anxiety and unease among employees than is necessary, and than good management practice would warrant.

Photo of Jim Sheridan Jim Sheridan Labour, West Renfrewshire

The hon. Gentleman makes a good case for consultation between workers and their employers. From my experience, consultation means, ''This is the decision. Let us discuss how we are going to deliver it.'' That gives me great cause for concern. Modern management seem to consult on everything other than the final option. They will consult on how a product can best be produced and on what is wanted in the canteen. There are all sorts of consultation processes, other than on decisions to outsource or to make people redundant.

On the other question about works councils and trade unions, the hon. Gentleman seems to make the case that both are the same. Does the hon. Gentleman accept the fact that independent trade unions also have access to legal opinions and training?

Photo of Mr George Stevenson Mr George Stevenson Labour, Stoke-on-Trent South

Order. I think that the intervention is developing into a speech.

Malcolm Bruce: I do not regard the role of trade unions and of works councils as coincident. In fact, I think that they should be separate. From the studies that I have made, it seems that although it is common for trade union members and even representative shop stewards to be on works councils, they do that in a completely different persona: in most cases, as

employees in their own right and not as trade unionists. Works councils are seen as a distinctive part of the corporate structure, rather than linked to the issue of negotiations about pay and conditions. They are more about consulting the work force about the process of managing and developing the business. I agree entirely with the hon. Gentleman that simply consulting about how people are going to be sacked once that decision has been taken is not the ideal or appropriate way to go about things.

I agree that the climate has changed. There was a popular book in the 1960s, originally published under the title ''Thrusters and Sleepers in British Industry'', which analysed successes and failures in significant sectors of the economy. It concluded that one of the hallmarks of a successful business, although not the only one, was the degree to which a work force were involved in corporate decision making.

One of the unsuccessful sectors identified at that time was shipbuilding. The relationship was appalling. Ships were built next to docks and a dock labour scheme arose out of the most appalling casualisation of labour, which then became almost an abuse the other way. The consequence has been that we have very few shipyards left. Management were not prepared to recognise the dynamics of relating to their work force more constructively and flexibly. There was insufficient flexibility because there was a lack of trust and of consultation, and the business went away from the UK.

As an aside, I recall that in the book one question was about marketing. The managing director of one of the largest shipyards on the Clyde was asked about his marketing department, and he said, ''We are in the 'Yellow Pages'. If people want a ship, they can phone us.'' Not surprisingly, that shipyard closed early in the 1970s.

Jim Sheridan: As a former shipbuilding worker, I can say—I promise that I will wash my mouth out after I say this—that the fall of the shipyards, particularly in Britain, was the fault not only of management but of the workers and the trade unions, who refused to accept change when change was inevitable.

Malcolm Bruce: I agree with that. The thrust of what I am trying to say is that, if there were better institutional frameworks, that kind of divide might not—[Interruption.] Of course the hon. Gentleman is right. Let us remember Harold Wilson's Government. Barbara Castle recognised the problems in the trade union movement and tried unsuccessfully to reform it. Although Labour Members were unhappy about the reforms carried out in the Thatcher years, such reforms—or reforms, at any rate—were needed. That is why my party supported a lot of those reforms; they were necessary to make trade unions responsible and democratic. We can all accept that the climate is more constructive.

I would like the Government to consider whether they could do more to incorporate a recommendation about the role that works councils can play. Perhaps the Government could consult as they have on other aspects, and at least give some steer on what kind of practices would improve matters. I cannot accept their

argument that it is all about trust and not institutions, because the Bill is about institutional change—giving trade unions rights to represent workers and setting a framework whereby they operate. We suggest that we need more institutional mechanisms that will bring managements that might not otherwise do so to see their work forces as more active partners in the process, as key stakeholders and as principal assets. Such changes should cause managements to work on the basis, which evidence bears out, that workers are usually much more constructive, competitive and flexible when consulted. The net result is that the business benefits.

Warwick university, which has done some analysis of EU law, has the view that employers may feel that it is more efficient to establish permanent consultation mechanisms rather than relying on ad hoc arrangements, and that that could lead to the establishment of works councils. At the heart of the amendment is the question whether the Government's approach will be a soft law one or whether they will be a little more proactive than they appear to wish to be. Currently, we have nothing from the Government about any requirement for the mechanism of setting up a works council or operating one, or about whether such councils should meet monthly, annually or at all. In addition—and this point was made by the hon. Member for West Renfrewshire (Jim Sheridan)—there has been no mention of whether consultation should be before or after decisions are made. It would be helpful if the Government at least gave a clearer steer on how that could develop.

I am concerned that employers tend to react to all these things in a negative way. There have been case studies about hard-line management setting targets for work forces without consultation and getting poorer results than they were getting before the targets were set—that is a lesson for the Government about centrally set targets—then bringing in consultants, getting the two sides together, asking the work force how they can make the business more competitive and finishing up with a better production target and a lower cost per unit than their own centrally imposed targets. When the work force were asked what to do, they had a lot of information, ideas and attitudes.

One of the successes of British industry in recent years—and I say this advisedly—has been the Nissan car plant. It is not a Japanese branch factory but a truly British enterprise that uses British, European and Japanese techniques adapted for the local circumstances. One feature of the factory is a process of almost continuous consultation. Workers are actively encouraged to advise on how they can reorganise the production process more efficiently and are given incentives to do so. The suggestions box is not just a token measure that gets emptied into the shredder now and again: suggestions are read and acted on. Indeed, teams of workers are often invited to try to put together a different way of doing things. Part of that—and this was the interesting thing for me—was to try to avoid any redundancies. Workers in any given part of the factory who create a more efficient

method of production, which may reduce the work force required by two or three workers, have an undertaking that such workers will be redeployed in one way or another. In that way, the fear of working oneself out of a job has been removed.

The Government have left a hole in the measure, and I want a recognition from the Minister that it would be appropriate to be a little bolder and more ambitious. They should not be prescriptive about works councils but should include them as part of the mechanism for dealing with the European regulation, provide a framework to encourage their establishment and advise people about how much better they can be done.

One of my colleagues in the other place, Lord Sharman, has a lot of experience with a number of different companies, and has told me that he is on the boards of British and Dutch companies. He said that characteristically the annual general meeting of a British company takes about 20 minutes, and the AGM of a Dutch company takes several hours. Both shareholders and members of works councils bombard the management with questions about the financial structure, plans and development of the business. In his view, the net result is a much more positive and productive climate, where the management recognise the work force as part of the company's assets that can increase its net value. That is not always the case here, although it is argued that good companies in the UK attempt that.

This measure to introduce regulations is overdue. I accept that we cannot rush it, but we have lagged a long way behind institutions that make consultation work. The Government should not just implement the regulations using the lowest common denominator, but try to raise the game and attempt to establish something that is much more ambitious and constructive and see whether we can turn the regulation to competitive advantage.

Photo of Mr Brian Cotter Mr Brian Cotter Shadow Minister (Trade & Industry), Trade & Industry, Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson 9:45 am, 24th February 2004

I support what my hon. Friend said. He has made several of the key points that need to be made. The hon. Member for West Renfrewshire raised the fact that so often consultation comes after decisions have been made, and that is definitely to be deplored. We in this country have lagged behind for many years: with Ireland, we are at the lower end of the league in terms of implementing consultation of one sort or the other.

I was shocked when I returned from running a one-man-band business to engage in a company, of which, until recently, I was the managing director. Many years ago in my teens I was taken by the idea of works councils, and I used to write to a group in either Oxford or Cambridge—it was the nearest I got to attending one of those universities—that issued information on works councils and consultation. I was shocked to find that, when I became more involved in a slightly bigger company with between 20 and 30 employees, and became managing director, after all those years between leaving school and engaging with the company, a ''them and us'' attitude still prevailed. It was so awful in this country that when anything went wrong with the machinery, the work force used

to put their hands in their pockets and say, ''Why should we bother? If it's gurging out extrusions of the wrong shape or size, so be it. It's nothing to do with us. The management don't care about us, so why should we care about our work?''

My time in that company was all about building trust. My aim, which I hope was achieved to a reasonable extent, was to open things up with the work force by running the company in an open manner so that once people got to know me they believed what I said and the company ran better.

I would normally declare an interest on occasions such as this—I have done so ever since I have been in Parliament, for six years. I no longer have to do so, as from the end of September I am no longer managing director of my company. I have been pleased and lucky enough not just to introduce a works council but to hand over the company to the employees themselves. They have been given free shares and they now totally run the company, without my involvement, which I achieved with shareholders and the other directors—being the only working director, fortunately I was taken notice of.

I had better not give you too many details, Mr. Stevenson. I could go on at length about how that was achieved. However, the principle is there. I very much believe in this sort of approach. As I stand here today, I totally detach myself and hand the company over to the employees. That is why I feel even more keenly than my hon. Friend the Member for Gordon (Malcolm Bruce) on this issue. The way forward in this country, for small or large companies is to be open and engage with employees. When all is said and done, the greatest amount of time in our lives is spent at work. I deplore the way in which many companies are still run.

I support my hon. Friend in saying that I hope the covenant will be more proactive, more definite and have more push—like him, I respect the Minister but was surprised when he made his statement. We are looking to the Government to give some push along the way.

Photo of Jim Sheridan Jim Sheridan Labour, West Renfrewshire

I genuinely apologise, Mr. Stevenson, if my earlier intervention was somewhat longer than expected. I tried to make the main point that—certainly in my industrial experience—works councils may be the choice of some employees, but in my view they are no substitute for independent trade unions. I advocate that every company give its employees the right to an independent ballot on whether they wish to join a trade union.

My experience is that, when it comes to consultation, the shop stewards or the works representatives are usually the first to go, because they take the main negotiators out of the picture—

Photo of Jim Sheridan Jim Sheridan Labour, West Renfrewshire

Indeed. My experience of consultation is of companies in my constituency that went through a major rationalisation programme—again, with the works council. The consultation was on how to make a better product; how best to make

people better workers and produce more. However, when it came to the crunch, in terms of making people redundant, the consultation ceased. That leaves great cause for concern.

Having met the works council, members of senior management transferred all their employees to an employment agency, without any consultation. Strangely enough, the senior management who advocated that this was the best thing for the workers did not think it the best thing for themselves. They were not transferred to the employment agency, so there is an element of hypocrisy there. What struck me most of all was when I asked the senior management whether this would make the workers more productive. They quite clearly said no, it would not make the workers the slightest bit more productive than if they had stayed within the company. They were acting on the diktats from Texas or somewhere else.

It gives me cause for concern that consultation, as it stands, is a sham in this country.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

On exactly the point that the hon. Gentleman is making, over the past few years, a number of major oil companies in the North sea have effectively outsourced much of their in-house technical and financial work. They are now reaching a critical situation where these people are about to retire and they do not have any succession. At least one of the companies understands that it was a mistake and says that it should have trained up more people. The hon. Gentleman is absolutely right that consultation might well have avoided a bad decision for business as well as for employees.

Photo of Jim Sheridan Jim Sheridan Labour, West Renfrewshire

The hon. Gentleman is absolutely right. Before a decision is taken, the fundamental question that should be posed to workers in the consultation process is what they can do to turn the company around and make it more productive. There is a belief, certainly in British and American management, that the workers do not understand the complexities of the industry and therefore should not be consulted on such matters—although they are consulted on everything else. I am genuinely concerned that big employers, who outsource their employees to employment agencies, after an upturn in the business, may find that those skills are no longer there because people will have moved on. That worries me also in the sense that it then allows major companies to move out of the country under the pretence that they cannot find the labour here and have to move on to pastures new.

The regulations are to be welcomed. They are long overdue. Consultation has to begin in the workplace, with the workers' representatives. It should also begin with the trade unions, preferably on site.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs) 10:00 am, 24th February 2004

Good morning, Mr. Stevenson. The debate is important. We will talk about the details and technicalities of the amendments in a moment. Lots of important issues have been raised and I congratulate the hon. Members who have spoken for sharing their

experiences on a crucial issue facing the country regarding good industrial and employment relations: the right to information and consultation.

Conservative Members have not joined in the debates. I miss the hon. Member for Huntingdon (Mr. Djanogly) for his outlook and attitude.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

He may come through the door shortly.

This is a key element of the Bill that will help the Government achieve their aims through modern employment relations. The hon. Member for Gordon chides us on not going far enough or quickly enough. In previous debates and on Second Reading, he has had a consistent, long-standing view about the role of works councils in industrial democracy. I was tempted to talk about ''In Place of Strife'', but I shall resist. We can certainly learn the lessons from history.

This is a culture change. We should move from an adversarial position of ''us and them'', recognise where we are going with business and global competition in Europe and acknowledge the need for good employers.

Most good employers inform and consult their employees voluntarily, but there are those who do not. We must ensure that such a culture develops. I pay tribute to the hon. Member for Weston-super-Mare (Brian Cotter) for the way in which he has dealt with his company and how it has progressed. That has culminated in a transfer of shares to the employees. He should be commended for that.

Mention was made of what one of my predecessors said and how he said it. I am sad that the hon. Member for Gordon did not mention the CBI-TUC framework document. It is a first in the UK, as it gets both bodies round the table to agree a methodology and framework.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

Just for clarification, I was saying that, despite the fact that that document was produced—and I am happy to pay tribute to the way in which it was done—comments were made afterwards that retreated back to the two sides approach.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

I am grateful for the hon. Gentleman's comments. That is where the Government are at. If we are to develop the culture that we both want to see, we have to get organisations such as the TUC and the CBI to develop into those framework arrangements, not only on the major issue of information and consultation but on other issues as well. That culture is about high-performance workplaces, with highly productive work forces that are fully engaged in the development of the business and the trading needs of the company. It was important to get the terms of negotiation around information and consultation right. The framework agreement is a major step forward.

I accept that there are concerns about the pace of change, but we want the process to be voluntary and we want the culture to change. The statutory provision will exist as a backdrop, but we want the voluntary

approach to be the way forward. We wish to get away from the examples mentioned by the hon. Member for Gordon in previous debates and on Second Reading—people being sacked by text message, redundancies being announced on the radio and so on. Those practices are unforgivable, when people's livelihoods and lives are concerned. We want to get away from the ''no surprise'' culture.

The proposals are not solely concerned with redundancies either, although they are an important element when a company restructures or changes. They are concerned with how matters are taken forward for the business. The framework arrangements give us the opportunity to develop and change the culture.

The amendment is unnecessary because the powers already exist. I was asked about works councils. That is the main focus of the amendment. We are hoping through ACAS guidance to help firms and unions to understand the roles of works councils. They are one vehicle that could be used, but we are offering up a menu of opportunities for providing information and consultation. It will be for employers and employees to decide what is the best method of representation. That might or might not include trade unions—that would depend on the nature of the workplace. The framework agreement gives us opportunities on this.

Works councils play an important role. There is a change of culture in the UK in terms of how they operate. We have been consulting on their effectiveness and how they have been dealt with in the UK. There have been mixed responses, and we will publish some of them shortly. In some areas they have worked well, but in others they have not—for example, where there has been a failure to meet, or where the agenda for issues to be discussed has not been as significant as it might have been. However, works councils are one route that can be taken.

The amendment would include the requirement that works councils must be considered. That is technically unnecessary, as the powers already exist in the clause. However, I do not wish to criticise the spirit in which the hon. Member for Gordon has promoted the idea of works councils. I understand that he is trying to address issues involving works councils, and to suggest that works councils are an appropriate part of the information and consultation process.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

I thank the Minister for that constructive response. Ministers—or more particularly their advisers—tend to say that amendments are unnecessary. However, he will appreciate that they are designed to add things to legislation. That is the purpose of this amendment. I do not have his advantage of drafting assistance. We were anxious not to impose works councils—the amendment makes it clear that there is no attempt to do that—but to identify them as an option that should be actively considered.

The hon. Member for West Renfrewshire and I probably do not see eye to eye, but I want to reassure him that this is not a Trojan horse. We do not see works councils as a way of undermining the role of trade unions. We think that they are different. Works

councils deal with how a particular workplace operates. Workplaces are often unionised: where that is the case, the union will do what the union does but the works council will be slightly different. The amendment also gives some advantage to non-unionised companies by adding a statutory obligation for them to have a mechanism for consultation. We are keen to promote and develop that.

We will have to build our own mechanism—a British system that meets our cultural requirements—but we have a chequered history. I have looked at the continental examples, and some of them are good but others are bad. None of us would want to replicate what is happening in France, but countries such as Spain, Germany and the Benelux and Scandinavian nations have different but well-established mechanisms for works councils that offer lessons that if they are suitably adapted could benefit British business and industry. We have been missing that for a long time.

I am glad that the Government acknowledge that works councils may be one of the options to be developed and encouraged. The Minister's response to the amendment was predictable, but what we wanted most of all was to have a debate about this matter and to draw out the Government's attitude to it. What we have heard is welcome. We might wish to return to this, because we want to raise the profile of this approach. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Chairman: Before I call the hon. Member for Gordon to move amendment No. 48, I remind the Committee that the amendment refers to possible mechanisms that may be required to implement the directive, and not to the directive itself.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

I beg to move amendment No. 48, in

clause 31, page 27, line 42, at end insert—

'(aa) for the purpose of adopting the provisions necessary to comply with that Directive not later than 23rd March 2005 or ensuring that management and labour introduce by that date the required provisions and guarantee the results imposed by the Directive at all times;'.

The amendment was motivated only by a point of regret. The directive will be implemented in every country in the EU, with the exception of the UK and Ireland, on 23 March 2005. I am happy to acknowledge that the Government have been through a consultation process, have drawn employers and employees together, and have negotiated a delay in implementation, and that there is now an agreement. We will not press the amendment, as that would undermine the agreement, but that is no reason not to move or speak to it.

We want to put on record the regret that we should have to implement this form of consultation on the basis of a European directive that successive Governments have tried to resist—to the point where they could resist it no longer. My understanding is that the Government's argument is that we have a different

culture and tradition and we ought to do things our own way. Our experience is that it has taken us an awfully long time to get to the point where industrial relations in the UK are no longer a liability or an embarrassment as they were 20 or 30 years ago. I accept that progress has been made, but resisting such a mechanism has been part of our problem.

We would like to have believed that we were fit, ready and able to embrace the directive on the due date to the full extent, so the second part is the numbers point. My hon. Friend the Member for Weston-super-Mare and I have both put on record during debate on the Bill the understanding of the 20 or 21 employees point that the Government have sought to protect smaller companies from excessive and intrusive regulation. That is not to say that we do not think that smaller companies should adopt practices that are imposed on larger companies as a positive choice, but we do not want to add to their burdens.

In the context of the directive, we are talking about a derogation and a higher limit. We are taking several years longer, with a level of 150, whereas the whole of the rest of the EU will be talking about 50 employees on 23 March 2005—a year from now. I accept that, given the process that we have gone through, we could not expect British industry to be ready in a year's time, so I will not press the amendment.

Photo of Jon Cruddas Jon Cruddas Labour, Dagenham

Some Labour Members might share the hon. Gentleman's concerns about the speed and timing of the introduction. However, will he concede that the method developed by the Government in the framework discussions with the TUC and the CBI in terms of public policy making is a good way of consolidating and developing frameworks for British law, which are the product of negotiations and will create compromise? Even though individually we might have concerns—we have huge concerns about trade union recognition, small firms exemptions, the 40 per cent. threshold and the like—we should bear in mind the bigger picture of public policy making, and the importance of developments with the CBI and TUC.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

I am happy to accept that. The reason why we as a party support the Bill is that we believe that the Government have gone about it in a way that has genuinely tried to bridge a gap that should not exist between the characteristic two sides of industry.

One of the most depressing things that I still find in my role as shadow spokesman for the Department of Trade Industry for the Liberal Democrats is that one can write the press releases from the TUC and CBI almost word for word before one sees them. They are predictable, and we should have got beyond that.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

I do not wish to—I would not want responsibility for them. It would be refreshing if employers said one day, ''We welcome these proposals as constructive. We can take forward the best practice that already exists in British management and extend

it.'' I look forward to the day when that can be done with good grace. The hon. Member for West Renfrewshire acknowledged the failings of trade unions, and no doubt we shall have a less across-Committee discussion on new clause 4, when we might take a more strident approach. Fundamentally, it is important that we seize the opportunity to do that.

I am happy to support the Government's constructive policy-making approach coupled with the adoption of a European directive, leaving aside the fact that we have resisted it for too long. If we are required to adopt the directive, let us find the best British way in which to import it and make it work for the good of industry in the United Kingdom. We must not adopt the continental style but adapt the directive to make it work here. The amendment would put down the marker that we should be able to adopt the proposals on time along with everyone else. A deal has been negotiated, so I am happy to withdraw the amendment.

Photo of Mr George Stevenson Mr George Stevenson Labour, Stoke-on-Trent South 10:15 am, 24th February 2004

Order. Moving and withdrawing the amendment in the same breath is a first for me. I assume, however, that the hon. Gentleman has finished moving it.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

I am all for high-performance workplaces and high productivity. I accept the spirit in which the hon. Gentleman moved the amendment. As he said, my brief tells me that it is unnecessary. The style of operation for Ministers is that all amendments tabled by the Government are good and all the rest need to be opposed and are unnecessary. The Government did not resist the directive. The Committee must remember that they signed up to the social chapter, unlike our predecessors who did not want such legislation to be introduced here. The hon. Gentleman is right: modern industrial employment relations are far better now than ever before. The figures in respect of days lost and other matters show that the situation has improved tremendously.

The Bill is about shared interest and ensuring that people are productive and maintain high performance. I am grateful to my hon. Friend the Member for West Renfrewshire for his admission. It will be on the record and I am sure that his colleagues will look forward to reading it. The framework document is important. My hon. Friend the Member for Dagenham (Jon Cruddas) explained our position clearly. Although some worries exist and a culture change should be made, we are making good progress. A time scale for negotiations is important to obtain such an outcome. The hon. Member for Gordon is right about having a UK solution and our learning from experiences. He moved the amendment and withdrew it at the same time, so I ask him to do so again.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

I am up against the clock, which is my problem, not yours, Mr. Stevenson. I apologise for over-compressing the debate.

The Minister made a fair point about the time scale. I recollect that initially the Government resisted the proposal and sought derogation. Now we are in the

second term of a Labour Government, they may have more confidence. They, and especially the Prime Minister, were more interested in ensuring that new Labour's friends in business were not upset. Old Labour's friends among the employees were not given the speed of implementation that they would have wished and I am sure that the hon. Member for Dagenham understands that. For the reasons that I stated earlier, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

The Minister is right in saying that my hon. Friend the Member for Huntingdon is not with us, so his waspish, hawkish views will be missed by the Committee. He has not been banished and he will, I hope, be back this afternoon.

The EU directive sets out minimum requirements for the right to information and consultation. Apparently, the powers under the European Communities Act 1972, which are normally used to implement directives, are not considered wide enough. Will the Minister tell us why that is?

The Minister touched, as did the hon. Member for Gordon, on the CBI-TUC agreed framework and the consultation document, ''High Performance Workplaces: Informing and Consulting Employees'', which was issued last summer to seek views from a wider audience on the proposed scheme. Will the Minister tell us—he may not be able to immediately—about the response to that document and how many different organisations and companies reported in? I have read both documents—the original one was issued in July 2002, and the second in July 2003.

On employment tribunals, subsection (4)(a) provides for the regulations for employment tribunals to have the jurisdiction to resolve disputes arising from the directive. Has the Minister's Department done any research on the number of tribunal cases that we are likely to see? Hopefully, there will not be many. He will be aware of concern throughout the House at the increase in the work load of employment tribunals. Will such disputes add to that work load?

In what circumstances would ballots be held? If one looks at the clause in the round, one sees that it is very wide-ranging. The explanatory notes make it clear that subsection (4)(c) provides, inter alia, that regulations may be laid that

''make amendments to or apply similar provisions to . . . those in . . . the Employment Rights Act 1996 . . . the Employment Tribunals Act 1996'' and the Trade Union and Labour Relations (Consolidation) Act 1992. It is very wide-ranging indeed. I wonder whether it might have been better if the Department had been clearer in its approach and told us exactly what procedures and frameworks were going to be in place, rather than relying on future regulations.

I do not want to talk too much about the clause generally. If the Conservatives had been in power, we would not have signed up to the EU directive. I am a

lone voice in this Committee; I am the only person who would express that view. Obviously, there are strong arguments over the level of consultation and involvement. I agree with the hon. Member for Gordon that we have to move away from the them and us situation. He cited various cases, including BMW, Rover and Vauxhall.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

Will the hon. Gentleman give an example of how he would get both sides together if information and consultation were not a vehicle?

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

I will come on to that. I believe—and the Minister made this clear—that we have moved on a long way from the them and us situation. We are now in a global, extremely competitive economy.

The companies in my constituency that have got good industrial relations are the ones that have moved away from them and us. For example, Master Foods—which is a subsidiary of Mars UKCampbell Soup and Dow Chemical all have single status within the company: everyone who works there is an associate. Some of those companies have trade unions, but I visited Master Foods the other day and it has open plan offices. The management do not have their own parking slots. If one turns up at a certain time of the morning it does not matter whether one is on the shop floor, or one is a cleaner, a fitter or a senior marketing director, one parks where one can and one is an associate of the company.

It is interesting that since those American subsidiaries have pursued that modern approach to labour relations, employee status and trying to build trust, a number of other local firms have followed a similar example. Bespak plc and Porvair plc, which are quoted companies, have moved much more towards having single status members of the company and trying to get everybody to work together as a team. Such changes happen in thousands of small companies in this country, in many micro-businesses and increasingly in bigger companies.

We all agree with the comments made by the hon. Member for Gordon about trying to improve industrial relations. I agree with what the Minister had to say, because he wants British business to succeed. However, I would ask him about the idea of one size fits all and whether having formal frameworks in place is the right way to proceed. I want to put on record that we would not have signed up to the directive, although on the other hand I congratulate the Government—not on signing up to it, but on how they have handled the fallout from it. Having accepted the social chapter they had to move forward with the directive. I congratulate them on the way in which they have implemented it, consulting both sides of industry and business and getting the TUC and the CBI working together; on the way in which they have put in place transitional arrangements and have allowed the exemptions to be included; and on the whole spirit in which they have moved forward.

However, the jury is out. Will the measure save jobs? Will it make Britain more competitive? Will it move us more towards the European model of social and employment frameworks rather than the American model, which is more flexible and much more market-orientated? The jury is out at a time when offshoring is in the news. In Norfolk we have had some alarming cases: for example, Aviva and Norwich Union announcing that they were going to offshore a large number of jobs. It is not only manufacturing businesses that are looking to production capacity in the far east or the subcontinent; financial services and insurance companies and other companies with call centres are doing it.

This weekend, I had cause to ring up Russell and Bromley on behalf of my wife, to find out about her corporate card. I rang the number and I was put through to a call centre in India. The time in India was about 11 o'clock in the evening and I spoke to a man. There was a slight echo on the telephone, but that person was completely charming. He was delightful, and he even congratulated—

Photo of Mr George Stevenson Mr George Stevenson Labour, Stoke-on-Trent South

Order. I was listening with great interest to the hon. Gentleman's pertinent point about the competitiveness of British industry, rather than his experience of answering or using the telephone.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

I will complete the point very quickly, because it is important.

The man could not have been more charming and that is in stark contrast to when I rang directory inquiries.

Photo of Mr George Stevenson Mr George Stevenson Labour, Stoke-on-Trent South

Order. I repeat the point that I made a few seconds ago. I am sure that the hon. Gentleman will want to return to the main thrust of his argument about the competitiveness of British industry.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

British industry has to take difficult decisions. There is no question about that. People criticise the level of service that one gets from people offshore, but often one gets very high standards. I rang directory inquiries and I had an extremely rude man on the telephone. I will leave it at that. He was working in Scotland.

The jury is out on that matter. I wish the Government well. They have done their level best to implement the directive in a way that is pragmatic and sensitive to both sides. We hope that it will succeed, and deliver what the Government want.

Photo of Jon Cruddas Jon Cruddas Labour, Dagenham 10:30 am, 24th February 2004

I congratulate the Government on fostering a form of public policy making that is rational, pragmatic and delivers robust frameworks in complex, difficult territory in which there has been a long history of fraught, tense and politically volatile discussion in this country. The framework and the method of developing policy will pull the TUC and the CBI together and produce robust legislation. That is good economically, good for industrial relations and—in the way that policy is forged—good politically. However, it creates tension, because we have to accept deals or arrangements between the

TUC and CBI, certain elements of which may cause us difficulties. The same considerations regarding information and consultation applied in trade union legislation. The issue covers all the legislation in the Bill, as it did the Employment Relations Act 1999.

Notwithstanding that, we now have a positive agenda that directly meets concerns of which many of us have concrete experience. I will put my cards on the table. Between 1997 and 2000 I worked in Downing street with the trade union movement on issues concerned with individual and collective rights at work and economic restructuring, including working time regulations, national minimum wage, the Employment Relations Act and so on. From 1999 to 2000, we worked in some difficult territory during major economic restructuring in the British automotive industry: BMW pulled the plug on Rover in the west midlands; there was the case of Ford Dagenham—which was not as difficult; and there were issues concerning General Motors and Vauxhall.

I will give an insight in to why the clause is so important. Three days before the BMW and Rover story broke, I was rung by a trade union colleague to ask whether we had heard anything about a proposed massive restructuring. We had not. Three days later, the matter became public.

The worst case concerned General Motors and the Luton car plant. I was rung the night before that story broke by a union organiser to ask whether I had heard anything about an imminent announcement on plant restructuring in Luton to be issued the next day. I said that I had not. The Government were told later that night that there was to be a great announcement.

Those two examples are testimony to the need for the sort of framework proposed, especially if it is created in a robust form with CBI and TUC agreement. I welcome it. There is a litany of cases in which such a framework will safeguard against the worst elements of such behaviour, with people and their extended family finding out that there are massive job threats from the radio. That was the case in Luton. People can be reassured, because there are frameworks in place that will not allow such events to happen again. They will not find out as they are driving to work in the morning about the imminent closure of their car plant and the loss of their jobs. That caused people great concern for their own and their families' financial commitments and their short and medium-term future.

I also welcome the manner in which the proposals have been developed by the Minister and his team—corralling, coercing, nudging and keeping the parties together to provide a framework that will last and create durable labour law in this country.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

As I said at the outset, I believe this as an important clause—for the reasons that my hon. Friend has just outlined—in terms of how the bad news is delivered and how that is still a part of the way in which some companies or bodies operate.

I believe that the TUC-CBI framework document is important. The CBI, as an employers' organisation, and the TUC, as an employees' organisation, are key institutions in the framework of this country, in terms

of our citizenship. Long may that be the case. The hon. Member for North-West Norfolk (Mr. Bellingham) might have difficulty. I do not doubt his sincerity about wanting to see better industrial relations. I noticed that he did not take up the point—and the cudgels—of the hon. Member for Eddisbury (Mr. O'Brien) on Second Reading, about how we could go too far on consultation, and how it should be treated in the same way as communication. He went on quite a ramble in terms of the issues that he saw being related.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

We have a difference of opinion on who was rambling.

We did not get the hon. Gentleman's views about how to bring people together to create what we want to achieve; how to get people to change from an adversarial style to modern industrial relations because of the nature of European and global competition faced by the UK and in terms of and the things we hold dear. We are in a good position in the UK because of our high employment level. We want to maintain that and move to a higher level by making people more productive, allowing them to feel part of an organisation and understanding where it is going and what its requirements and staffing needs are. As my hon. Friend the Member for West Renfrewshire said in an earlier debate, many employees come up with good ideas as to how a company can progress. Information and consultation is not a one-way process; it can go the other way as well, with employees coming up with good information about a product or process that they may be involved with.

The clause 31 is designed to achieve a better understanding of relationships. The hon. Member for North-West Norfolk accused us of trying to have a one-size-fits-all approach. That is not the case. Clearly, in the negotiations on the framework, and how we introduce the directive, we have sought a voluntary aspect—we would prefer that to statutory provision. We want to encourage people to do things now and to build on the success of the many companies that, in conjunction with their employees, have already done what we are asking.

The hon. Gentleman asked us why we were using primary legislation, why it was not possible to implement all the agreed CBI-TUC framework under section 2(2) of the European Communities Act 1972. Clearly, the Bill gives us the opportunity to develop greater scope to make requirements relating to the framework document that has been agreed.

More than 100 companies and many unions responded to the documents that were produced in relation to high performance at workplaces. We had a number of roadshows. I attended five roadshows that brought together a variety of people, from many sectors, to look at the proposals in detail. We received broad support for the CBI-TUC framework document.

Others responded clearly in those round tables, including the Chartered Institute of Personnel and Development, the Engineering Employers Federation

and a variety of individual unions—as well as the TUC itself. Many Ministers were involved in the consultation discussions. I extend my thanks to my right hon. Friend the Minister for Industry and the Regions, and to my hon. Friends the Minister for Energy, E-Commerce and Postal Services, and the Under-Secretaries of State for Scotland and for Wales—colleagues who hosted some of the roadshows on the issues surrounding information for consultation.

The hon. Member for North-West Norfolk asked me about the role of the employment tribunal and the number of cases going there. We do not have a lot of the information, and we want to see what happens. However, we believe that it is important to provide employees with protection if they choose to take part in information consultation procedures, so that if they have problems they can complain to the tribunal.

We do not agree that the number of tribunal cases has been rising. In fact, numbers are reducing, for reasons stated earlier. Amendments to the Employment Rights Act 1996 and to the Trade Union and Labour Relations (Consolidation) Act 1992 gave protections to employee representatives in cases of unfair dismissal and detriment. Clause 31 is an important part of the Bill, and I am pleased about the quality of this debate. I genuinely hope that we will see a sea change in the culture of employment relations.

Question put and agreed to.

Clause 31 ordered to stand part of the bill.