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Clause 17 - Power to impose levy

Trade Union Bill – in a Public Bill Committee at 11:15 am on 27th October 2015.

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Section 254(6) of the 1992 Act is spent: it depends on section 115 of that Act, which has been repealed. The reference to section 254(6) in the new section inserted by clause 17(1) was included in error, and this amendment removes it. Amendment 97 repeals section 254(6) itself and the reference to it in section 254(5A).

Photo of Alan Meale Alan Meale Labour, Mansfield

With this it will be convenient to discuss Government amendment 97.

Photo of Nicholas Boles Nicholas Boles The Minister for Universities and Science, Minister of State (Department for Business, Innovation and Skills) (Jointly with the Department for Education)

Clause 17 inserts new section 257A into the Trade Union and Labour Relations (Consolidation) Act 1992, to provide the Secretary of State with the power to make regulations requiring the certification officer to charge a levy on trade unions and employer associations to recover the cost of the certification officer’s expenses. New subsection 257A(3) sets out the sorts of expenses that the regulations might specify are recoverable by the levy; this includes payments made by ACAS under section 256(6).

The payments under section 256(6) were intended to enable the certification officer to make payments towards expenditure in connection with secret ballots. However, the provision to make those payments—section 115 of the 1992 Act—was repealed more than 20 years ago by the Trade Union Reform and Employment Rights Act 1993. That in turn means that section 256(6) is not required—in fact, it should have been repealed when section 115 was repealed back in 1993. Amendment 95 corrects that oversight and repeals section 256(6). Amendment 97 completes that tidying up. It removes reference to those sums being included in the expenses of the certification officer that the regulations could require the levy to recover. I commend Government amendment 95 to the Committee.

Photo of Stephen Doughty Stephen Doughty Shadow Minister (Business, Innovation and Skills)

I accept the Minister’s point about the two Government amendments being technical in nature, so we do not intend to oppose them, but I do want to explain briefly our concern about clause 17.

As we have discussed at length, the Bill imposes significant new administrative obligations on unions in a range of matters. They face a major increase in regulation that the Government simply would not apply to other sectors in society—certainly not to business. They will also be expected to pay for the pleasure of the enforcement of the new obligations.

As discussed, clause 17 contains a power permitting the Government to levy a charge on trade unions to cover the running costs of the certification officer, which currently stand at approximately £1 million but are expected to rise. I suspect that they will rise under the new regime, given the wide expansion of powers. The levy looks set to apply to employers’ organisations—I hope the Minister can clarify this point—including the Engineering Employers’ Federation, the Electrical Contractors’ Association, the Federation of Master Builders and the National Farmers Union. The measure will apply not only to trade unions but to a whole range of employers’ organisations.

We understand that the Government are consulting on how much should be levied, but, like on so many areas of the Bill, they have not published their consultation responses, so we are in the dark on this matter. We are expected to vote on the Bill without knowing what will happen. Will the Minister explain a little more about how the levy is expected to work, whom it will be levied on and whether it will apply to the organisations I mentioned? What level can we expect it to be at? Will it rise in the future? What provisions will there be to review it? How will it be put into operation? It is not acceptable that a Committee considering matters of this nature is making its decisions largely in the dark.

Photo of Nicholas Boles Nicholas Boles The Minister for Universities and Science, Minister of State (Department for Business, Innovation and Skills) (Jointly with the Department for Education)

Trade unions and employer associations, like many other organisations, should be regulated. Proportionate regulation helps to improve confidence in the way such institutions are run, which can only be a good thing. It is only fair that the cost of such regulation falls not on the taxpayer, but on those who are regulated. I note that the previous Labour Government introduced an almost identical provision, which I believe all members of the Committee support, in the financial services industry, whereby the costs of financial regulation and the regulator fall on the members of that industry.

Photo of James Cartlidge James Cartlidge Conservative, South Suffolk

I ran a small financial services business and remember paying high fees, which went up steeply, to the Financial Services Authority. I recall no consultation, about which we were unhappy, but the key issue was that the regulator failed rather substantially in the credit crunch. If such payments are made here, can we have assurances that we will have a good quality system for all those affected?

Photo of Nicholas Boles Nicholas Boles The Minister for Universities and Science, Minister of State (Department for Business, Innovation and Skills) (Jointly with the Department for Education)

I am certainly trying my best to ensure that the regulation of trade unions is more effective than the regulation of the financial services industry preceding the 2008 crash. I do not think that the risks are as great, and I have been the first to point out that it is unlikely that the trade unions, which mostly do an excellent job, will crash the economy in the way that the under-regulated financial services industry did under the previous Labour Government. Sir Alan, I think you are going to say that I am moving away from the point, so I will return to it.

The clause enables regulations to be made so that the certification officer can charge a levy on trade unions and employer associations.

Photo of Nicholas Boles Nicholas Boles The Minister for Universities and Science, Minister of State (Department for Business, Innovation and Skills) (Jointly with the Department for Education)

I am going to make some progress.

It is important to understand that employer associations are also subject to the levy. The Bill does not prescribe the amount of the levy because the certification officer is independent. It is for the certification officer to decide each year how much they need to charge to cover the costs of performing their functions. We have taken the approach of providing a regulation-making power, rather than setting out in the Bill exactly how the certification officer is to determine the amount of the levy, because the Bill expands the certification officer’s role. It is only once this new expanded role is established that it will be possible to determine precisely how the regime should work. Having said that, we also recognise that Parliament and those directly affected rightly expect to see how the regime will work when Parliament is being asked to agree the detail of the legislation. That is why the Bill sets out specific parameters for the content of the regulations. It is also why the regulations will be subject to the affirmative procedure. The clause also requires consultation before any regulations are made.

To meet our objective of cost recovery, the levy must be enough to cover the cost of the certification officer’s functions, but it cannot be any more than the certification officer needs. The certification officer cannot make a profit from their activities, nor undertake spurious activities to generate funds. That is only right as the certification officer is an independent public appointment and not a commercial enterprise.

Photo of Stephen Doughty Stephen Doughty Shadow Minister (Business, Innovation and Skills)

I can understand the need for the certification officer to have a role in identifying the costs of their operations, but the Minister and the Government must have a ballpark figure. Are we expecting a doubling of the £1 million figure or an increase by a factor of 10? What sort of ballpark are we in? The people affected by the levy need to have an idea, remembering that it will apply not only to trade unions, but to the employer associations that I have listed.

Photo of Nicholas Boles Nicholas Boles The Minister for Universities and Science, Minister of State (Department for Business, Innovation and Skills) (Jointly with the Department for Education)

The hon. Gentleman is entitled to speculate on any figure he likes, but we are going to leave it to the independent certification officer to assess the additional requirement and to set an appropriate levy.

We recognise that trade unions can vary greatly in size and that employers associations are often small, meaning that the size of the regulatory functions provided by the certification officer to such organisations may vary greatly. Smaller unions and employer associations may require less of the certification officer’s time and resources.

Photo of Jo Stevens Jo Stevens Labour, Cardiff Central

I am pleased to hear that clarification about employers organisations. Will the Minister tell us whether federated employers organisations, such as the CBI, will be covered by the measure?

Photo of Nicholas Boles Nicholas Boles The Minister for Universities and Science, Minister of State (Department for Business, Innovation and Skills) (Jointly with the Department for Education)

My understanding is that federated employers associations will not be covered, but all other employers associations will be.

We want to be able to consider whether organisations that use more of the certification officer’s time should bear more of the cost. We will need to consult before determining whether that is the right way to proceed and will only take that approach if we find during consultation that it costs more for the certification officer to regulate larger organisations that it does for smaller ones.

Let me conclude by summarising the safeguards in the Bill on the way the levy is to operate: the amount of the levy will be limited to covering the cost of the certification officer functions; ACAS, unions and employer associations will be consulted before regulations are made; the regulations will be subject to the affirmative procedure, allowing a full debate in Parliament before  they are brought into force; and the certification officer will be required to report annually on the amount levied and how that was determined, which will be published and laid before both Houses, ensuring transparency.

Question put, That the amendment be made.

The Committee divided: Ayes 10, Noes 2.

Division number 38 Decision Time — Clause 17 - Power to impose levy

Aye: 10 MPs

No: 2 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly agreed to.

Amendment 95 agreed to.

Photo of Alan Meale Alan Meale Labour, Mansfield

Order. Mr Stephens asked a question about EVEL earlier on, so I want to clarify that the EVEL procedures are invoked by the Speaker. The certification process takes place before the Second Reading of Bills or before something is considered as a statutory instrument, so Bills in Committee are not eligible for the use of EVEL procedures. I hope that that is helpful.

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.