New clause 5 - Provision of money for trade union modernisation

Employment Relations Bill – in a Public Bill Committee at 12:00 pm on 26th February 2004.

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'(1) Before section 117 of the 1992 Act (and before the cross-heading immediately preceding that section) insert—

''Union modernisation

116A Provision of money for union modernisation

(1) The Secretary of State may provide money to a trade union to enable or assist it to do any or all of the following—

(a) improve the carrying out of any of its existing functions;

(b) prepare to carry out any new function;

(c) increase the range of services it offers to persons who are or may become members of it;

(d) prepare for an amalgamation or the transfer of any or all of its engagements;

(e) ballot its members (whether as a result of a requirement imposed by this Act or otherwise).

(2) No money shall be provided to a trade union under this section unless at the time when the money is provided the union has a certificate of independence.

(3) Money may be provided in such a way as the Secretary of State thinks fit (whether as grants or otherwise) and on such terms as he thinks fit (whether as to repayment or otherwise).''

(2) In section 118 of that Act (federated trade unions), after subsection (7) add—

''(8) In the application of section 116A to a federated trade union, subsection (2) of that section shall be omitted.'''.—[Mr. Sutcliffe.]

Brought up, and read the First time.

Photo of Eric Forth Eric Forth Conservative, Bromley and Chislehurst

With this it will be convenient to discuss Government amendment No. 58.

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

Good afternoon, Mr. Forth. We tabled this important new clause on 10 February, at which time I made a parliamentary written statement about it. I hope that members of the Committee consider that they have had adequate time to study both the new clause and the additional information about it. New clause 5 provides a power for the Secretary of State to spend money on modernising trade unions. We intend to use that enabling power to establish a union modernisation fund.

We are still many months—at least a year—from launching the fund. Much preparatory work has first to be undertaken. It is our intention to draw up the detailed arrangements and rules for the fund by the autumn. We will then publish them for consultation by the end of the year. As usual, we will invite comments from all interested parties—unions, employers and

others—during the public consultations. As at least three months will be set aside for consultations, it is likely that the fund in its final form will not be up and running until the 2005–06 financial year. I freely admit that we are at an early point in the process. I look forward to working with interested parties to finalise the coverage, operational rules and procedures for the fund.

That said, the case for establishing the fund is clear and convincing. Unions are key labour market institutions, which represent more than 7 million workers: about a third of the work force. Trade unionists are present in the majority of workplaces that employ 25 or more people. They are more concentrated in the public sector than in private sector organisations, but nearly half of all trade union members work in the private sector. Trade unions remain mass organisations of continuing significance. They play vital roles in assisting their members and contribute in many unsung ways to productive employment relations throughout the economy.

That said, unions have been in decline for some years. Membership levels have fallen, although they have stabilised during the last three years or so. There has been a consequent reduction in the number of full-time and lay officials. Many unions have retrenched, cutting costs to match declining incomes. Some have merged.

Unions have shown remarkable resilience, despite the pressures on them. Many have taken steps to provide a wider range of services to their members. They have reshaped themselves to appeal to workers in the expanding parts of the labour market, and have recognised the changing needs of business in moving towards partnership working and the flexible deployment of labour. In short, unions are modernising themselves. The TUC, for example, has redesigned its educational services to unions, and it has established the TUC Partnership Institute to encourage new approaches to employment relations.

However, it is incontestable that the pace of change is too slow. All parts of society lose out as a result. Workers do not receive all the quality services that they need. Equally, employers do not benefit from working with well trained and well supported representatives. There is evidence that union involvement contributes to the development of high-performance workplaces that involve and engage their staff, have sound human resource systems, and therefore have a motivated and productive work force. The economy loses out on the general benefits, better training and improved health and safety, with which effectively unionised workplaces are also typically associated.

We believe that the time is right to inject state funding into unions to stimulate the processes of modernisation. Like other organisations, unions deserve and need help to adjust to changing markets. Employers recognise that, and have generally welcomed the new fund. The CBI says that business would support union modernisation, and the Engineering Employers Federation considers that the proposed uses of the fund will be largely acceptable.

Of course, employers would be concerned if the fund supported industrial action or recruitment, but it will not. In our judgment, a lot can be achieved if we make about £5 million to £10 million available, which would be spent over several years.

I turn to the shape of the new clause. It works by inserting proposed new section 116A into the Trade Union and Labour Relations (Consolidation) Act 1992. It defines the recipients of the support as independent trade unions and federations of trade unions. That means that non-independent trade unions—organisations that often depend on financial support from employers—will be ineligible for assistance from the fund. Of course, virtually all union members belong to independent unions.

I expect that hon. Members will be most interested in the precise purposes to which the fund will be put. Five broad categories of purpose are set out in paragraphs (a) to (e) of subsection (1) of new section 116A. All are connected to the theme of modernisation, although none uses the term ''modernisation'' explicitly. That has no sinister significance. Modernisation is a broad term and was not considered to be defined tightly enough for this statutory purpose.

I hope that it will help the Committee if I go through each of the five categories of support. Paragraph (a) provides for funds to be used to ''improve'' the carrying-out of any existing union function. Under that heading, we would envisage support being given to unions to reassess their internal efficiency, possibly by using outside consultants. There remains much scope for unions to streamline their operations, using new management methods to achieve productivity gains and a better deployment of their limited resources.

Paragraph (b) provides for the fund to be used to enable unions to prepare for carrying out new functions. We would particularly want to assist the way in which modern unions seek to widen their dialogue with employers. The Bill, through the information and consultation provisions in clause 31, provides some legal underpinning to the development of such a wider dialogue. Unions will need to equip their representatives and members to make best use of that new opportunity through training in company accounts and corporate strategies.

Paragraph (c) covers assistance to increase the range of union services to current and future members. We see that being used mainly to widen the ability of unions to meet the needs of young, female and ethnic minority workers, who have traditionally been less involved in union affairs. That could involve delivering services in new forms relevant to our increasingly diverse labour market.

Paragraph (d) provides for support to assist the merging of unions. As I said, financial and other pressures have prompted a series of union mergers in the past decade. However, there may be scope for further merger activity to simplify union structures and to align them with changing labour markets. The

fund could help unions to employ consultants to assess the implications of merger options.

Paragraph (e) deals with the funding of ballots and elections in unions. As with public elections, the turnout for union ballots is often low. We would be interested in using the fund to help to finance innovative ideas or pilot projects designed to increase the numbers participating in ballots. That dovetails with the power in clause 41 to widen the range of methods that unions can employ in statutory elections. If we used that power to allow, say, internet voting for those purposes, we would like to use the fund to gear unions up to use the new method of voting. Of course, state support for union balloting is not new. The previous Government spent more than £24 million between 1981 and 1996 in financing the costs of union elections, strike ballots and other forms of statutory balloting.

I have tried to give examples, under those five headings, of the kind of projects that the fund could support but, of course, at this early stage, I cannot give a definitive list of all the types of project. That will depend on the outcome of our detailed consultations. However, we are clear that the fund will be unsuitable for some types of project. It might assist the Committee if I mentioned some of the things that we do not foresee the fund supporting.

The focus of the fund is on supporting innovative working by unions or their contemplation of major strategic decisions. It follows that we are not interested in funding the day-to-day work of unions, where there is no change in approach. That would be a straight subsidy and there would be no knock-on benefits to that union or, through a demonstration effect, to other unions in encouraging positive adjustment. It also follows that the fund would not be used to fund the day-to-day recruitment of union members. Such initiatives by unions are often linked to campaigns for recognition. It would be inappropriate for the Government to take a role in what might become a contentious issue between a union and an employer.

It follows that the fund will not be used to support unions in their collective bargaining with particular employers. Again, that would intrude into the delicate relations between a union and an employer. The fund will not be used to finance the political work of unions. That is a contentious area, and the Government wish to avoid any suggestion that unions could use the fund to finance directly political donations to the Labour party or any other political party. Finally, the fund will not duplicate other types of state or European Union funding for unions. In other words, the fund should be used to provide funding that is additional to that found elsewhere, and that finances additional activities for unions that would otherwise not have occurred.

New clause 5 gives no suggestion of the way in which the fund will be managed or administered. I imagine that hon. Members would like some idea of our thinking on those matters. I envisage that it will operate on similar lines to the successful partnership at work fund. If so, unions will be asked to bid

periodically for funding, and their applications would be assessed against clear selection criteria. The process would be overseen by an independent supervisory body that could advise Ministers on the ranking of projects and, more generally, on the fund's overall operation. We would from the outset develop a clear evaluation strategy to measure the effects of the fund, examining in particular whether the fund is achieving its stated objectives.

There is considerable work to be done before the fund is ready for introduction. We are committed to detailed consultation before our plans are finalised. However, I am convinced that a fund is needed. We want modern unions, and we want them to be properly structured and efficiently run. We want them to be outward-looking, to accept new challenges, to develop wider dialogue with employers and to meet the needs of our diverse labour force.

Amendment No. 58 is consequential on new clause 5. It changes the long title of the Bill to ensure that it fully encompasses the uses to which the fund will be put. I commend new clause 5 and amendment No. 58 for inclusion in the Bill.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister 3:15 pm, 26th February 2004

I welcome you to the Committee, Mr. Forth.

We have had a debate on the Floor of the House on the money resolution, and I am grateful to the Minister for setting out exactly what the fund will do. The Bill's essence was based on consensus and consultation between parties. I praise the Minister and his team at the Department of Trade and Industry for the work that has been put into that.

However, I have grave reservations about using the Bill as something on which to hang a number of extra measures. We will in due course discuss another new clause that concerns racism and infiltration by extremist organisations. I think that that is a fair use to which to put the Bill, but if the Government are to set up a union modernisation fund, that should have been part of the discussions and deliberations that took place going back two years at least.

What representations has the Minister received from the trade unions? We on the Conservative Benches are sympathetic to trade unions; in many ways, we are pro-trade unions, and we want them to modernise. As he said, the TUC runs an excellent education programme. I also accept the need to assimilate modernisation. He says that the pace of change has been much too slow and he wants employers to be able to work with modern union organisations. That is all very well, but I am concerned that that is completely one-sided. Employers may well want trade unions to modernise, but do not the trade unions want the employers' organisations to modernise too? However, there is no question of money going to employers' organisations. If the previous Conservative Government had introduced a fund to give money to the CBI, the Engineering Employers Federation and the Institute of Directors, there would have been an outcry. People would have said that if those organisations were doing their job properly they would have introduced all the measures contained in the Bill.

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

We need to kill this one from the start. Employers' organisation such as the CBI, the EEF and others receive money from the Government for projects that they become involved with. They have received large amounts of money over many years, and it is right and proper that they do. The money for unions might be used for union consultants to look at their structures. The CBI, the EEF and others have also had money from the Government to look at their structures.

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

I do not doubt that. Of course, there are funds for both unions and employers' organisations, and they can apply to the European Union for certain pots of money, but we are talking about a specific fund that is dedicated to giving money to the trade unions.

Two points concern me a great deal. First, there is no ceiling on the fund. New section 116A states:

''The Secretary of State may provide money to a trade union'',

but there is no ceiling. The Minister said in his statement that he envisages that the amount will be between £5 million and £10 million in total, with expenditure spread over several years, probably beginning in 2005. Why is there no more specific information?

Substantial amounts of money are washing around the DTI. We know, for example, how much has been spent on the urban post office renewal scheme—£400-odd million. We know how much money there is in the various pots to grant aid to industry. It would be easy for some of that money to be diverted into this fund, because there is no ceiling on it. If the Minister is so confident and clear in his mind about how the money will be spent and about what the money is needed for, why is there no ceiling? Would it not be fairer to taxpayers if there were a ceiling?

I am grateful to the Minister for going in detail through the measures and the activities that the money can be used to finance. However, new section 116A(3) in the new clause states:

''Money may be provided in such a way as the Secretary of State thinks fit''—

perhaps as the Minister thinks fit. He may well think it fit to spend money on all sorts of things. He has talked about improving and carrying out existing functions, such as bringing in external consultants to carry out new functions. The new clause is very widely drafted, contains little detail and is open to abuse.

The Minister clearly told the Committee that the fund will not be used to support the day-to-day work of the trade unions, will not impact directly on collective bargaining, and will not be used to support projects that could be funded by other Government programmes. We know that many trade unions have substantial amounts of money. Now, come on, surely he must realise that it would be as easy as anything for the Government to sit back and watch a union simply divert money away from one part of its organisation to another, so that money from the modernisation fund would indirectly be being used for exactly the things that he said it cannot be.

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

I am sure that none of the trade unions that I am planning to meet in the near future would dream of such behaviour, but it would be possible.

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

I am saying that the provision is not specific. It is casually drafted. There is huge scope for abuse. The hon. Member for Gordon (Malcolm Bruce) made an excellent, telling contribution when we debated the money resolution on the Floor of the House. He was spot on when he said that the Labour party currently receives roughly £6 million a year from the trade unions. If the unions are serious about modernising—if they really do need to modernise—could not that £6 million be put to better use helping with that modernisation, not going to the Labour party?

Photo of Michael Jabez Foster Michael Jabez Foster Labour, Hastings and Rye

Does that not apply to industry generally? When substantial contributions are made by businesses to the Conservative party—rather more than the amount going to the Labour party to which reference has been made—does that suggest that they should not be the beneficiary of Government grants and so on that might be substituted for the money that they give to the Tory party?

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

That is different. Businesses are answerable to their shareholders, and shareholders can stop the money going through. Most businesses now ask their shareholders whether the money should be paid. It is a matter of choice. I accept the hon. Gentleman's point, but we are talking about a modernisation fund and a new pot of money. There is substantial uncertainty and great scope for abuse. As the Minister said, there are employers' organisations that expect to be able to deal with modern trade unions. Yes, there are, but why have those organisations not been treated even-handedly? Why did the Government not think, for example, of spending a pound on employers' organisations for every pound spent on the trade unions?

The Conservative party is not in favour of increasing public expenditure any further on such projects—[Interruption.]

Photo of Eric Forth Eric Forth Conservative, Bromley and Chislehurst

Order. Mr. Stewart, you cannot avoid your vow of silence by making repeated sedentary interventions. You may wish to catch my eye, but I would rather you kept your sedentaries not only to the minimum, but to zero.

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

Thank you for your ruling, Mr. Forth. I was listening with interest to you, but as you were speaking, there were so many sedentary interventions and that was telling.

We are not in favour of increasing public expenditure unnecessarily at a time when public finances are under great pressure. At present, the Chancellor of the Exchequer is under a lot of pressure. He will have either to cut back on various public expenditure schemes or put up taxes. The children's fund is an example of expenditure that is under pressure. It is having swingeing cuts made to its budget with the result that there will be many disadvantaged

children in my constituency who are autistic, dyspraxic or young offenders who will have the schemes that they rely on for support cut.

Only the other day, we heard that Marines training in the Arctic circle did not have proper equipment. There is pressure on the Government's finances, yet they are coming up with a fund that is unlimited. Surely when public expenditure is being squeezed, the Government should at least put a ceiling on the fund.

Photo of Jon Cruddas Jon Cruddas Labour, Dagenham 3:30 pm, 26th February 2004

Just for clarity, is the hon. Gentleman in principle against the state providing finances for independent trade unions for whatever purpose, or against the scale of the proposed financial transfers involved? I am not sure whether he holds a position of principle or whether he does not like the open-ended nature of the transaction.

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

Let me clarify the matter. As the Minister said, the last Conservative Government made money available for the trade unions. There was an education scheme and a scheme to help with secret ballots. Over time, a substantial amount of money went into them. There are precedents for such action. We are saying that the trade unions are well-run organisations. If they are doing their job properly, they will be undertaking such matters anyway. We are not convinced by the argument put to the trade unions by the Government. We have not seen any evidence of what the trade unions had to say. Where are the minutes of the representations and conversations that took place? Is there currently a compelling need for the trade unions to have public money to do things like having external consultations, communicating better with their members and increasing their membership?

We are not totally against this in principle. What we are saying is that public finances are very tight and now is not the time to give money to trade unions or employers' organisations. If the Government are going to give money to the trade unions for this purpose some of it should go to employers' organisations on an even-handed basis. However, our view is simple; we do not think that any money should be spent, because Government finances are under great pressure.

We need to take a close look at the draft rules and procedures for the fund. Why have the Government not yet published them? Surely that suggests that they have been in an awful rush? If this had been part of the whole consensus-building process while the Bill was taking shape, they could have got the rules and procedures in place. The Bill has been published, and there was not a murmur from the Minister on Second Reading about a modernisation fund, but all of a sudden there was a leak in The Times. Then he turned up looking rather sheepish and furtive and gave a nod and a wink to some of his Back Benchers who were obviously delighted that there would be a union modernisation fund. There were smiles all round on the Labour Benches. On the Conservative Benches, there was a sense of disbelief.

If the Minister had been doing his job properly, he would have had those rules and procedures up his sleeve—they would already be in place. He said:

''It is likely these rules and procedures will draw on the example of the partnership at work fund''—[Official Report, 10 February 2004; Vol. 417, c. 67WS.]

The Minister does a lot of ''envisaging'' and often uses words such as ''probably'' and ''likely''. We need more information before we can vote in favour of this.

My hon. Friend the Member for Eddisbury (Mr. O'Brien) rightly pointed out on Second Reading that we were concerned that the Bill would be a Christmas tree on which various baubles would be hung. We do not feel that this is a good use of public money. In the absence of a convincing argument by the Minister, we feel that, as my hon. Friend the Member for Sutton Coldfield (Mr. Mitchell) said, this is a bung to the trade unions. This is open to abuse. It is not a good use of public money. Therefore, we will vote against it.

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

The Minister's speech contained a lot of good and useful constructive information about how this was going to be done. In many ways I and my hon. Friend the Member for Weston-super-Mare (Brian Cotter) could accept that what the Minister described as the purpose of the fund has a great deal of merit, and it would receive practical support. However, like the hon. Member for North-West Norfolk (Mr. Bellingham), I am not convinced that extra money should be voted for it.

Secondly, what the Minister said is not the same as what the new clause says. We are often correctly encouraged to vote according to the words on the official document rather than the speeches of the Minister—you hold very directly to that, Mr. Forth. Although the precedent is that ministerial speeches can be interpreted in a court of law, they do not have the same standing as what is in a Bill.

I do not wish to disparage the advisers, but I have to say that the new clause is either very well or very badly drafted. It is well drafted if the Government have not quite worked out what they want to do and want the maximum scope and flexibility to do whatever they finally decide to do, and it is badly drafted for those of us who are reasonably impressed by the Minister's intentions and would like the clause to be drawn up in a way that represents those intentions rather than something else. That is the practical difficulty that we are facing.

The debate on the Floor of House was old-fashioned in character. The atmosphere was confrontational; it was almost one of class war. However, I do not think that we are in that situation. The Government must have a care. I am not saying that they should not do this. The principle is not disputed. There is nothing that says that a Government should not in principle give money to trade unions for specific purposes. However, they have to have good reason. Without in any way being disparaging, I think that there is a problem for a Government run by the Labour party, which has a particular relationship with the trade union movement. That does not mean that money should not be given or that that is not legitimate. However, I suggest, with genuine respect for Labour Members,

that it is a problem for a Government with that relationship.

Indeed, as the hon. Member for Hastings and Rye (Mr. Foster) said, in a different context the Conservatives in government have had such a problem. I well recall Lord King's comment when British Airways stopped its payments to the Conservative party on the grounds that it was not getting value for money from the Conservative Government. In such circumstances, if British Airways were to ask a Government for a tax change or a subsidy, that Government, faced with that demand against the background of that comment, would be embarrassed and compromised. That does not mean that such things are corrupt and wrong, but it raises questions about the relationships in the minds of ordinary voters. I am not saying that they are not right and legitimate, but we have a responsibility to be careful and to ensure that the proper arm's-length arrangements are established.

In his explanation, the Minister demonstrated clearly that he did not wish the funds to be misused; that they were added-value funds to deliver things that the trade unions needed to do. However, the trade unions fall into the same category as many other organisations. Should the state provide the funds or should the trade unions find them from their own resources? There are many legitimate organisations that would wish money to come from the state to help them modernise, extend and improve their services. Such organisations would recognise that there was not much point in asking the Government because they would get the raspberry before any meeting had taken place.

In an earlier debate in this Committee, my hon. Friend the Member for Weston-super-Mare and I discussed the merits of works councils and asked the Government to do more to promote them. Arguably, we could have asked why there was not a fund to help employers and employees to set up works councils. The same criteria would apply; I might have asked whether that was justified. Although I voted against the money resolution, its passing does facilitate the tabling of such an amendment at a later stage. That might be forthcoming.

This is not a debate in which to try to score cheap points. There is a genuine concern. The Government have to have a relationship with the trade unions, and need to be careful. The Minister's stated intentions are pretty acceptable. He maintains that the consultation process has been clear; it has not been clear that employers' organisations are comfortable with it. The way in which that has happened has been unfortunate. I have received no representations for or against it, presumably because of the timing and the wording of the new clause.

The Minister made it clear that there are many things that the money should not be used for, but the new clause does not guarantee that at all. After all, the first part of it states:

''The Secretary of State may provide money to a trade union to enable or assist it to do any or all of the following—

(a) improve the carrying out of any of its existing functions''.

That completely destroys the Minister's case. Whatever his intention, the law will allow that money to be used for any purpose, including substituting money that might be used for other purposes. That is not an outrageous accusation; it is what the Bill will state.

Photo of Michael Jabez Foster Michael Jabez Foster Labour, Hastings and Rye

Does it not leave the Minister the discretion to decide whether that is sensible? He is not under an obligation to give money for wrongful purposes, but simply has discretion.

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 not trying to be legalistic; we are debating a clause that would amend a Bill, a piece of legislation. The hon. Gentleman is a lawyer and he knows how much room he can create in any piece of legislation. The new clause gives a lot of room for manoeuvre. Bills are designed to define and constrain Government activity, to be specific and to have a purpose and an outcome. I broadly accept what the Minister states is the objective. I do not have a major problem with it; indeed I can see the merit of it. I have, however, a problem with whether extra money should be voted for it. I agree with the hon. Member for North-West Norfolk that perhaps resources could be found from within the Department's budget.

The wording that we are being asked to accept into the Bill does not reflect what the Minister said, but is much more widely drawn. I believe that it would be in the Government's interests to draw it more tightly so that they could put on the face of the Bill the caveats, exceptions and constraints that he put in his speech. I would urge him to follow what he would tell us to do, if it were an Opposition new clause: take it away, think about it and come back with a better drafted and tightened format, which could be more widely accepted and reflects the stated intentions of the Government.

The difficulty I have is that the Minister is an honourable man whom I genuinely trust. It has been said that he could be replaced and that his words are not law. His words are not law, but the new clause would be law. He has an obligation to demonstrate the integrity of what he says, by agreeing that it should be drawn in such a way that much more closely reflects his own explanation of what the fund is for. If that were the case I, and my hon. Friend the Member for Weston-super-Mare, would be more comfortable with it. As it stands, we cannot support it.

Photo of Eleanor Laing Eleanor Laing Conservative, Epping Forest

With permission, Mr. Forth, I should like to begin by apologising for the fact that this is my first appearance in Committee. That is not through any negligence or a lack of interest or sense of duty towards the examination of this Bill, but merely because it was not up to me, but up to the Committee of Selection. I have been serving on another Committee, just down the Corridor, which has sat at exactly the same times as this Committee. I am genuinely sorry that I have not been able to come here before now. That does not mean, however, that I have not taken an interest or paid attention to what has being going on here. I am very pleased that I can be here this afternoon, because this is a crucial new clause that has been sprung on us.

The hon. Member for Gordon and my hon. Friend the Member for North-West Norfolk have been very gentle and polite in their asseverations on new clause 5. I would find it difficult to be gentle and polite because I am astounded—that is a parliamentary term, and I would not dream of using stronger language than that—at the wide powers that the Government have taken or wish to take to themselves in this new clause. It is the most amazingly transparent piece of party political advantage I have ever seen, in examining any Bill before this House.

Photo of Mrs Anne Picking Mrs Anne Picking Labour, East Lothian 3:45 pm, 26th February 2004

Would the hon. Lady also be astounded by the previous Conservative Government who almost crippled the trade unions of this country, when they instructed them to get their members to rejoin the union to which they were already affiliated, thereby cutting all their resources? Would she be astounded by the unfairness of that?

Photo of Eleanor Laing Eleanor Laing Conservative, Epping Forest

No, I was not astounded by that at the time. It was a very reasonable step forward in the modernisation of the union movement. There are parts of this Bill and parts of this new clause that maintain that correct Government support for the modernisation and bringing up to date of the trade union organisation. Parts of the new clause are excellent, and no reasonable person could object to them. New section 116A (1) (d) says that money may be given by the Government to enable a trade union to

''prepare for an amalgamation or the transfer of any or all of its engagements;''

That is fair enough. That is part of a genuine modernisation process. If the Government propose that that is a worthy cause for taxpayers' money, I for one—speaking only for myself and not for Front-Bench Conservative Members—would agree. The proposal is perfectly reasonable, as is new section 116A(1)(e), which is about giving money to help a union to

''ballot its members (whether as a result of a requirement imposed by this Act or otherwise).''

That is absolutely fair; I would not object at all.

However, new section 116A(1)(c) suggests that taxpayers' money should be used to allow a union to

''increase the range of services it offers to persons who are or may become members of it''.

That seems inherently unfair. Trade unions are important and worthwhile organisations. Let me put on the record right now that I am not denigrating trade unions, which do a very important job. However, it cannot be fair that someone who is a member of a trade union gets taxpayers' money by virtue of new section 116A(1)(c) for legal representation, for example, which trade unions do very well for their members. It is a good service, which is properly provided by the unions for members. I understand that members pay union dues in order to fund the union so that such services might be available should they need them. That is perfectly reasonable and fair, but it is not fair that someone who is a member of a union gets legal representation paid for by taxpayers' money when someone else in a similar position who is not a member does not.

Perhaps that is not what the Minister had in mind in this part of the new clause. It seems a genuine move away from equality and fairness to use taxpayers' money for services to the population that depend on whether a person is a member of a union. That is just one way in which the new clause is unfair.

My second concern is with new section 116A(3). It states:

''Money may be provided in such a way as the Secretary of State thinks fit . . . and on such terms as he thinks fit''.

Never have I seen a more widely drafted proposal in a Bill that purports to use taxpayers' money in a fair and orderly manner. There is absolutely no attempt by the Government or the Minister to explain why taxpayers' money should be used in such a way. The Minister said—I listened to him very carefully—that the money that would go to unions by virtue of the new clause would not be used for political purposes. If that is the case, why does new section 116A(1)(c) not say so?

The Minister gave a verbal assurance to the Committee, and as the hon. Member for Gordon said, this particular Minister on this particular day is undoubtedly utterly trustworthy. I am sure that he means what he says, but that is absolutely no guarantee to the taxpayer that the money that will go to trade unions will not be used for political purposes.

Photo of Jon Cruddas Jon Cruddas Labour, Dagenham

Does not the hon. Lady accept that there is no need to proscribe in law the use of trade union funds for political action? The operation of political funds and the political fund ballots that precipitate the use of them is tightly circumscribed by the law. I appreciate the political objectives that lie behind her comments, but they are not relevant to the operation of the proposed fund or to the political activities of trade unions, which are tightly circumscribed at present.

Photo of Eleanor Laing Eleanor Laing Conservative, Epping Forest

I appreciate the point that the hon. Gentleman makes, and he is of course technically correct. Nevertheless, if the Minister really wants to reassure Parliament and the taxpayers, who are represented by all of us, that money that comes to the trade unions by virtue of the new clause will not be used for political purposes, why does it not say so in the Bill? We—sorry, not we; I cannot speak as ''we''—I am looking for an assurance from the Minister, on behalf of the taxpayers whom I represent, that such money will not be used for political purposes, because it would be simply unfair if it were.

Even if I had that assurance, I do not think that my concerns on behalf of my taxpaying constituents would be satisfied. However one interprets what is in new clause 5, new section 116A(1)(a) states that money may be given by the Secretary of State to a trade union to

''improve the carrying out of . . . its existing functions''.

Let us think about how money comes into and out of the trade unions—and indeed almost every other organisation. I am not suggesting for one moment that there is any reputable trade union that does not have good accounting practices. I know that they are all very well regulated, and that there are good and

trustworthy people with good purposes running the trade unions.

Photo of Eleanor Laing Eleanor Laing Conservative, Epping Forest

I am glad that the hon. Gentleman agrees; he knows more about the matter than I do.

I am not casting aspersions on the honour of anyone in any trade union organisation. I am looking at the exact words of the new clause. It is our duty, as a Committee scrutinising the Government's proposals, to ensure that anything that we pass has been properly examined. Unless the Minister gives us exact answers to our questions, the Bill will not have been properly scrutinised.

Under new clause 5, or new section 116A, money would come into the trade union from the Secretary of State by virtue of an incredibly wide power. The new section says:

''as the Secretary of State thinks fit . . . and on such terms as he thinks fit''.

The money comes into the trade union and is used, quite properly, under new section 116(1)(a), to

''improve the carrying out of any of its existing functions''.

If the carrying out of those existing functions is improved by the new money, does that not free up other resources in the union? There is no earmarking of the resources thus liberated by new clause 5. That money can most certainly be used by the union—quite properly, under the law—for whatever purposes the union cares to use it. That surely includes donations to the Labour party or any other political movement.

Photo of Jon Cruddas Jon Cruddas Labour, Dagenham

This is a fascinating point. As I understand it, the hon. Lady is saying that help given by the state to increase the efficiency of the trade union movement economically and its role in civil society should be resisted because, if we made the trade unions more efficient, they could gain extra money that could be used for purposes with which she does not agree. Is that her basic thesis? Is she saying that the less efficient the organisation, the better, because it then has less money to distribute between its priorities?

Photo of Eleanor Laing Eleanor Laing Conservative, Epping Forest

Not at all. I am glad that the hon. Gentleman asked me that question, so that I can clarify the point. It is, of course, in the interests of everyone, especially the members of the trade unions, to have efficient organisation. As I said at the outset, it is quite proper that the Government should give taxpayers' money to the unions to improve certain functions: for example, ballots, amalgamations, modernisation and so on. That is perfectly proper and I would not object to it. However, there can be no doubt that if more money is coming in from the taxpayer to the trade unions, other funds will be liberated perhaps because of greater efficiency or a different structure. Those liberated funds can then be given to a political party, and it is unlikely to be my party. New clause 5 will therefore indirectly give taxpayers' money to the political purposes of the Labour party.

Photo of Mr Bill Tynan Mr Bill Tynan Labour, Hamilton South

I rise to be helpful. Every trade union has a political fund ballot, which the previous Conservative Government decided had to be set up.

All members of the union have to be balloted, and then a fund is set up. That fund cannot be used for anything else. It is specific and separate from all other funds. Money cannot come from any other parts of the union into that political fund; only the contribution that is made by the members, which they have agreed to through a ballot, can be put into a political fund.

Photo of Eleanor Laing Eleanor Laing Conservative, Epping Forest

I thank the hon. Gentleman for that information, which I understand. He is correct that the previous excellent Conservative Government introduced that system, and that is proper. I am sure that he will have administered funds in the right way and according to the law that he has set out. However, will the Minister tell us why we cannot have that assurance in the Bill?

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

Because it is not necessary, for the reasons that my hon. Friend the Member for Hamilton, South (Mr. Tynan) has outlined. We have an existing legal position on the use of political funds. No substitution can take place.

Photo of Eleanor Laing Eleanor Laing Conservative, Epping Forest

I appreciate that the Minister is doing his best according to his brief, and that the legal advice that he will have received says that including the assurance in the Bill is not necessary. However, there is no harm in a belt-and-braces approach, and I must tell the Committee that the perception among taxpayers in my constituency is that the Government are giving taxpayers' money to trade unions by allowing them to liberate other funds, which they can give to the Labour party.

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

We are entering some interesting concerns. It may be that the Government are genuinely convinced that the law totally covers the situation—and I appreciate how well drawn up it is. However, perhaps hon. Members should be concerned that trade unions have a subscription as well as an invitation to make a political fund. If money has been saved from within the trade union, it can go to its members and say, ''We can now reduce your subscription by this much,'' while also saying, ''It would be helpful if we increased the political contribution.'' Those would be two separate decisions that would be made on different days of the year, but they would amount to a transfer of money to the political fund. If the Government are absolutely satisfied that the law is watertight, it behoves them to make that absolutely clear. The hon. Lady is right that if we include that in the Bill, we will all be reassured.

Photo of Eleanor Laing Eleanor Laing Conservative, Epping Forest

The hon. Gentleman is absolutely right. That is precisely my point. Those who are administering the trade union may do so with the utmost honour, integrity and attention to legal detail, which I am sure is true in all cases—I am not casting aspersions. I am also sure that union members honestly donate to the political fund and pay their subscription in another way for which they get a service. I am sure that that is all carried out honourably, but if the Government have nothing to be afraid of, why not state in the Bill the principle that that money must not be used as a political donation?

Photo of Mr Bill Tynan Mr Bill Tynan Labour, Hamilton South 4:00 pm, 26th February 2004

To be perfectly clear, if a union decides that each member will contribute, say, 10p, that is the only money that can be put into the fund. If it reduces the contribution to 8p, the fund reduces. The situation is simple: the members make a contribution and that creates the fund. It may be reduced if the union decides not to ask its members to pay as much, or it may ask them to pay more. The fund is separate and enshrined in law by Conservative Governments.

The unions reacted against that because we did not do the same thing for shareholders of major companies, who were able to contribute to the Conservative party. There was no responsibility and no discussion with the shareholders.

Photo of Eleanor Laing Eleanor Laing Conservative, Epping Forest

Or indeed—I take the hon. Gentleman's point—large companies that contribute to the Labour party, or any other political party or organisation.

Nevertheless, as the hon. Member for Gordon said, if under new section 116A(1)(c) in new clause 5 taxpayers' money becomes available to the trade unions which succeeds in increasing

''the range of services it offers to persons who are or may become members of it'',

that, inadvertently or otherwise, liberates some money from the pocket of the member, who does not then have to pay towards a service that is now provided by the union or by some other means. Other money then becomes available from within that organisation. That means that taxpayers' money is going indirectly to the Labour party.

Photo of Eric Forth Eric Forth Conservative, Bromley and Chislehurst

Order. Before we go any further, I must point out that although I am as much in favour of probing and dialogue as the next man, the hon. Lady has made her point forcefully and repeatedly. We have got as far as we can with that argument. I invite her to conclude that part of her remarks and move on to another point.

Photo of Eleanor Laing Eleanor Laing Conservative, Epping Forest

Thank you, Mr. Forth.

I have taken up a lot of the Committee's time and I have deliberately given way many times because it is a vital matter that needs to be probed. The Minister will undoubtedly answer those questions when he sums up.

The new clause as drafted is almost cheeky in its transparency and the way in which it will facilitate the giving of taxpayers' money to a political organisation, be it the Labour party or any other. It is outrageous. It would be reasonable of the Minister to take the new clause away, amend it and print in the Bill the assurance that he has given us verbally.

Photo of Mr Bill Tynan Mr Bill Tynan Labour, Hamilton South

I should have welcomed you to the Chair before, Mr. Forth. I am sure that you will observe the proceedings with the keenness that I would expect from you.

I make no complaint about the hon. Lady not attending any previous sittings. I always believed that she was gentle and polite, and I am sorry that she feels so angry about the proposal that she deviates from her normal placid nature. In those circumstances, we will

make real progress if we can reach some accord on the new clause.

Many allegations have been made—that the clause is cheeky in part, and blatant in its political connotations and in what it is giving to the Labour party. I could go through a host of those allegations, but I want to concentrate on the fact that we are talking about the modernisation of the trade unions, which is something that Conservative Governments welcomed. They promoted such action vigorously. It seems today that we have turned the clock back to such an extent that we are now reverting to type: defence of the trade unions is being expressed by those on the Labour Benches and condemnation of the trade unions is being expressed by the Liberal Democrats and the Conservatives.

Malcolm Bruce indicated dissent.

Photo of Mr Bill Tynan Mr Bill Tynan Labour, Hamilton South

The hon. Gentleman shakes his head, but his contribution to the debate on the money resolution made it clear that he believes that the new clause is a bribe to the trade unions.

Reference has been made to amounts of between £5 million and £10 million. Is the hon. Member for North-West Norfolk saying that, if the amount of money concerned were capped, he would be happy with the new clause, or does he disagree in principle with any money being given for modernisation of the trade unions?

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

We do not disagree in principle with public funds going to organisations if the Government can make a strong case for that. As the Minister said, there has obviously been a precedent. However, as things stand at present, such action is unlimited and we do not believe that a case has been made for modernisation.

Photo of Mr Bill Tynan Mr Bill Tynan Labour, Hamilton South

That clarifies the situation in respect of the trade unions. Let me make the point about the small firms loan guarantee scheme that I tried to make during our short discussion on the money resolution. It is obvious that we want to help small firms and to encourage their growth. I am talking about 83,000 loans, for which a total of £3 billion has been provided. There is also bad debt provision of £116 million over 10 years. That is a substantial amount of money to assist businesses, and I am sure that they will use it in different ways. They will modernise, allow their funds to be used in other ways, develop technology and ensure that they become competitive, which I am sure everyone would welcome. There are also tax credits to encourage research and development in small companies, which, in 2002–03, received £4 million. We gave £31 million to British Trade International for its running operations in 2002–03, and we gave £18 million to the Small Business Service.

Let us consider contributing towards the modernisation of the trade unions which is necessary if we want to develop a proper relationship between trade unions and companies. Companies and personnel management teams often have better resources than trade unions. It is right that we support modernisation of the trade unions, so that people can understand the direction in which a

company wants to go and assist in that. We could all support such an admirable proposal. Intrinsic within it is the delivery of services to trade unions and their members.

Photo of Jim Sheridan Jim Sheridan Labour, West Renfrewshire

Given recent contributions, is my hon. Friend missing the modest contributions from the hon. Member for Huntingdon (Mr. Djanogly)? Accusations have been made concerning complaints made about taxpayers' money helping to fund trade unions and, subsequently, the Labour party. Is my hon. Friend picking up the same message in his constituency? If not, why not?

Photo of Mr Bill Tynan Mr Bill Tynan Labour, Hamilton South

I do not think that my hon. Friend would expect me to say that I have picked up ill feeling. We are to have a discussion over the coming months. We are putting in place a structure and funding, and we shall develop the purposes for which it will be used. There will be opportunities within that discussion to sort out the nuts and bolts of the scheme and to ensure that the fears raised by Opposition Members come to nothing. We can therefore reach some conclusion about what that modernisation money will be used for.

I could understand the concerns of Opposition spokespersons if they felt that the money would be used to give sustenance to the Labour party. I do not think that there is any chance of that. I have explained, in interventions, that the Labour party's funding is enshrined in law and that individuals who are in trade unions can withdraw from the political fund and pay nothing. There are many issues raised with regard to the provision about which we can reassure Opposition Members.

It is important that we examine the points that have been made. I agree wholeheartedly that the modernisation fund should not be used to fund the Labour party, but I am convinced that it will not. The problem is that we have not convinced the Opposition of that. We are creating new technology. Some unions are poor; their funds are very restricted. If we can give them support to bring them into the 21st century, we will be doing a service to this country.

I can understand the concerns that have been expressed, but I would reassure hon. Members. The debate will continue for several months, and it is in its infancy. Between £5 million and £10 million is a small amount to ensure that trade unions are able to compete. I would hope that we will rid ourselves of our prejudice on the matter—because prejudice is what we currently have. I witnessed the anger in the Chamber this afternoon, and that anger has to a degree been translated into this discussion. I am happy to support consensus, and I hope that the Opposition are reassured.

I am sure that the Minister will cover the issues that have been raised, but my view is that we should not have so much fear. Trade unions are not that bad; they should not be treated as some kind of bogeyman, which is how discussions have developed this afternoon. I hope that, under the circumstances, we can reach an accord and support the new clause.

Photo of Mrs Anne Picking Mrs Anne Picking Labour, East Lothian

The point about taxpayers' money and the political funds being diverted has not yet been

concluded. The test case for the issue concerns Unison, the union that I belong to and of which I was the national president. Three unions came together—NALGO, NUPE and COHSE. The latter two were affiliated to the Labour party, and they paid funds into it because their members had made that decision, whereas NALGO did not. In order for them to amalgamate, two political funds had to be set up, one in which the members chose to belong to the Labour party affiliated political fund, and another in which the members chose to belong to a general political fund. There are two separate amounts of money. The general political fund is a percentage that goes to all political parties, because some branches support the Liberal Democrats and some even support the Conservatives—not very many, as hon. Members can imagine. NALGO had a tradition of that. The two separate political funds must be administered strictly. If they were not, and there was any evidence that we were given money against the law, we could have our funds sequestrated.

Photo of Eleanor Laing Eleanor Laing Conservative, Epping Forest

I wonder whether the hon. Lady is aware that there is a strong and active movement of Conservative trade unionists, whose leading member, Tom Peet, sadly died last week. It is perhaps not appropriate to pay tribute to him now, but if I could try your patience for one moment, Mr. Forth, I would like to do so. He did a lot of work for many years for Conservative trade unionists.

I appreciate the point made by the hon. Lady, which shows how much we all appreciate the work of the unions.

Photo of Mrs Anne Picking Mrs Anne Picking Labour, East Lothian

I thank the hon. Lady for that. She is right to place that important point on record.

I agree with my hon. Friend the Member for Hamilton, South that there should be consensus on the issue. The message that we should be sending out to the trade unions is that all the political parties support their work. By not supporting the new clause, we would send out the wrong message.

Photo of Jon Cruddas Jon Cruddas Labour, Dagenham 4:15 pm, 26th February 2004

I will be brief, because most of the points that I wanted to raise were covered by my hon. Friend the Member for Hamilton, South, who summed up many of the issues.

It seems from our debate on the money resolution and the discussions in Committee this afternoon that there are two major concerns for the Opposition. The first is the idea that the provisions could somehow be used to bolster the political activities of trade unions and subsidise political activity. I hope that it would reassure them if the Government clarified the legal position surrounding the operation of trade union political funds, which was accurately described earlier. I can see why the Opposition raised that point, politically; but it seems so off the mark in terms of how the proposed fund will operate that I hope that clarification will neutralise their genuine concerns. I think that the Minister recognises that there are genuine concerns. If the fund were used for such purposes, it would be against the Bill's objectives for

modern trade unions to be agents for economic change making positive economic contributions.

The second concern is the ambiguity about what the fund might be used for. As the Minister said, there will be a lot of discussion over the coming period about honing the details of how the fund will operate and what it might be used for. I remember that certain considerations were raised when the partnership fund was introduced in the Employment Relations Act 1999. There were wild concerns that that was a form of political chicanery to ensure that trade unions were enhanced politically and industrially. It was feared that the fund would undermine our economic growth, and so on. The operation of the partnership fund has ruled out such concerns. When we consider that fund as a precursor of how this fund might work, the outlook is positive. I hope that that issue, too, can be neutralised in dialogue over the coming period.

Opposition Members made the clear point that they were not, in principle, against the state helping trade unions to modernise, because that is in the interests of our economy. At least that is what I understood the position to be; that was undoubtedly the attitude of the Liberals and, I think, some Conservatives, too. That seems to be the real discussion that we need to have. For my sins, I was reading through a number of the 17 research projects that have come out of the Economic and Social Research Council's future of work programme. The conclusions were quite clear: first, the trade unions are changing dramatically; secondly, there is a close correlation between efficient workplaces and organised workplaces, and the trade unions are key modernising agents for future economic prosperity. That is the underlying assumption in the new clause, and that is why I think that it is so welcome.

The other reason that the new clause needs to be included is the increasing demands on the trade unions, not least because of the Labour Government. We have talked about the role of the TUC, the partnership working around the framework for trade union recognition, and the partnership framework developed around information consultation.

From looking at some of the branches operating in my borough of Barking and Dagenham, I can say that the pressures on the trade union movement are immense, and it does not have the necessary skills or infrastructure to deal with them. For example, it is doing radical work with union learning representatives and to boost numeracy and literacy skills among the borough's labour force, and everyone would commend that. Also, the work that it is doing on the skills agenda more generally and on pension strategy is most welcome.

The basic organisation and recruitment needed to satisfy and operate big branches that are 2,000-strong plus is considerable, and unions have to do so on resources that have, in terms of physical labour, been dramatically reduced. They have had to cut their labour forces substantially, and they are not producing and investing enough in the technology that can help them to make their contribution, not just socially, in representing people at work or in education and training, but economically, so that they can tackle the

long-term structural problems in this country associated with low skills, wages and productivity. That is the key reason why this new clause is so welcome. It could have a radical agenda that should be supported by anyone who is interested in our economic success.

I agree with the underlying assumption that the trade union movement is a key agent for our future economic prosperity. I know that that is counterintuitive to many involved in this debate, given the recent industrial and political history of our country. However, many political parties have embarked on a modernising journey, and I hope that they will continue on it. If they do so, their supporters will be able fully to take on board some of the consequences of this argument. Competition on the basis of low wages, low skills, deregulation and the undermining of the institutions and infrastructures of labour market regulation might produce short-term economic gains. However, the downward spiral of disinvestment, de-industrialisation and low wages is no recipe for our long-term economic survival. That is why this new clause is so welcome, and I congratulate the Minister on tabling it.

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

This has been an excellent, emotion-filled debate. People have strong feelings about the issues that the new clause addresses. We are politicians, and we enjoy the jobs of politics, such as scrutinising Bills in Committee. I have had the privilege of doing that in opposition as well as in government. If an opportunity comes along to steal a political march, we take it. The debate on the money resolution on the Floor of the House involved parliamentary colleagues who had not been privy to the Committee's discussions about what we are trying to achieve, and people were making political points and trying to score political goals. However, the contributions from Committee members of all parties have been about taking things forward rather than backwards.

The good news about our parliamentary procedure is that all the stages that we go through are on the record. The public get the opportunity to measure our contributions on the issues of the day. The people who read the Hansard record of the debate on the money resolution will see that its spirit is different from that of this Committee. We have tried to have a modern approach.

Committee members have talked about the need to recognise the challenges that the country faces in European and global competition, the demographic changes that are taking place, and the need for good employers to make sure that they retain staff—they must offer good employment conditions and use good practices. I hope that our discussion on the union modernisation fund can return to that level.

The hon. Member for Epping Forest (Mrs. Laing) made a point about the breadth of the new clause, and I understand it. We were missing the hon. Member for Huntingdon, but the hon. Lady made the type of contribution that fulfils his role.

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

I agree.

The hon. Lady expressed her genuine feelings about the new clause. She said that she was astonished, and I think she reached outrage at one point. However, she then said, ''Regardless of what the Minister says, I do not agree with this and I will not support it.'' I will therefore find it difficult to convince her of the detail of what we are trying to achieve.

Why is the new clause so wide in scope? My hon. Friend the Member for Dagenham (Jon Cruddas) made the point about the Employment Relations Act 1999 giving the Secretary of State the same power. It is an enabling power. If I had come along and said, ''This is the scheme, these are its rules and regulations and we, the Government, have decided that that is how it will be,'' the argument from the Opposition would have been, ''Well, you did not consult anybody about it. Why have you done what you have?''

We prefer to do things a different way. As my hon. Friend the Member for Hamilton, South said, we are a long way off what the scheme will look like at the end. We have developed it in the same way that we used information and consultation to change attitudes. As I said on the Floor of the House, I expect that some unions will have a dig at the Government and ask, ''Why are you talking about modernisation? Why should you be able to tell us what modernisation should mean to us?'' As my hon. Friend the Member for Dagenham said, we are looking to the future to ensure the economic welfare of this country.

I am proud to be part of a Government with an employment situation such as we have in the UK. There are more people in work now than ever before. We have a wonderful opportunity to bring institutions together through information and consultation; for example, the framework document and working with the CBI, the TUC and other bodies to turn things around. We do not have the adversarial employment relations of 10 years ago because people are looking to the future. We could lose those conditions, however. My hon. Friend outlined the pressures on unions because of the number of things that we ask them to do.

There will be consensus about the rules and the way that the scheme unfolds. Such issues will be agreed through consultation and discussion groups. I outlined in my opening remarks how the fund will be used, but I did not want to be prescriptive. I do not want to set the rules at this stage, because we will be consulting over the coming period.

My hon. Friend the Member for Hamilton, South made a point about the political funds. I understand that there is a political element. Had we been in opposition, we would have made the same points if the debate had been about money going to an organisation that favoured the Conservative party. He discussed ballot rules and the fact that how people engage in or opt out of political activities is clearly set out in regulations. The new clause is not about money going to the Labour party.

Photo of Mr John Lyons Mr John Lyons Labour, Strathkelvin and Bearsden

Does my hon. Friend agree that an additional guarantee is that trade unions may have Conservative, Liberal Democrat, Scottish Nationalist

and Scottish Socialist members? They will guarantee that the trade unions do not do anything unlawful with political funds, and that will be a constraint.

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

Trade unions that are not affiliated with the Labour party will bid for funds, and there are many such unions.

I understand the political point that has been made. The hon. Member for Epping Forest said that the perception among the public would be that the Government will give money to the trade unions and the trade unions will give it to Labour. That perception will exist if she gives that message to her constituents. That is why we should think about where we are heading and move into the future.

The hon. Member for North-West Norfolk asked how the fund came about and what representations were made, given that nothing was mentioned about it during the consultation period. Following the consultation, we looked at other issues in the Bill under the information and consultation directive. Since I became a Minister in June last year, I have had many discussions, as new Ministers rightly do, with all sorts of organisations: employers' organisations, trade unions and others. The things that kept coming through to me during those conversations and in the information and consultation seminars was the need for modernisation; the need for an examination of how people approach their work, or the work ethic; the need to consider how organisations structure themselves; and the need to look at how the UK competes in the EU and global economies. Sir Bill Connor, the general secretary of the Union of Shop, Distributive and Allied Workers, said in one of the meetings that the trade unions had to reorganise, modernise and become more aware of the world in which they operated. He said that union modernisation was needed.

The TUC itself has been restructuring and reorganising, and examining how it feels about its organisation. It has brought in external consultants to examine it as an organisation and the outside world's perception of it. The spirit of the fund is based on that, and we shall give enabling powers to the Secretary of State. We are dealing with figures—I accept that they are rough at this stage—of between £5 million and £10 million, to be provided over two to three years. We are not writing a blank cheque; that would not be possible. There will be a bidding process, and match funding could be required if that is the way that the rules develop. I think that hon. Members should approach the matter in that spirit.

The union learning reps have been a tremendous success thanks to the amount of money that was invested: over £20 million. The partnership fund has been a tremendous success. The DTI gives support to small businesses and a variety of organisations, as outlined by my hon. Friend the Member for Hamilton, South. It is right to create that important development and it is the right time to do it. It will maintain the

UK's position at the forefront of world economies by ensuring that we keep people in work and give our companies the opportunity to be the high-performance workplaces we shall need in the future.

I ask hon. Members to put aside their prejudices, to acknowledge the spirit of the enabling arrangements for the Secretary of State and to be involved in the consultation that will take place. We shall have a fund that will benefit trade unions and the country as a whole.

Question put, That the clause be read a Second time:—

The Committee divided: Ayes 9, Noes 4.

Question accordingly agreed to.

Clause read a Second Time, and added to the Bill.