I will not waste the Grand Committee’s time with regard to adjournments in the event of Divisions because, it being a Thursday, there will not be any Divisions.

Clause 11 [Offences: mode of trial and penalties]:

On Question, Whether Clause 11 shall stand part of the Bill?

I would like to continue with my probing of this part of the Bill. Clause 11 markedly increases the penalties for offences under Section 31 of the National Minimum Wage Act 1998. Whereas before there was only a summary offence with a top level fine of £5,000, now there is an additional possibility of an unlimited fine from a Crown Court.

The Government’s consultation document on national minimum wage enforcement states that these new provisions will expect enforcement officers to issue penalties in almost all cases of underpayment. This will be a noticeable difference from the current regime, where I believe only two cases last year led to a penalty notice. Can the Minister explain what is preventing the compliance officers issuing more penalty notices now? Where in the Bill are the new provisions that will lead to such a drastic improvement in enforcement procedures?

I would also like to probe the necessity for the criminal offence. The consultation document states that only 3 per cent of cases of non-compliance would have incurred a penalty above £5,000 even on the new calculation of penalty arrears. Presumably it is to deter this 3 per cent in future that the Government have introduced the unlimited fine. How many times was the full £5,000 fine that the magistrates’ courts could levy under current legislation actually levied? If they are going to argue the need for an increased deterrent, presumably they have explored the full extent of their current powers. If not, it would seem more reasonable to assume that the lack of deterrent is a result of compliance officers not issuing penalty notices which were well within their power to levy, rather than the ability of offenders to avoid the Crown Court.

I hope the Minister will provide some conclusive statistics showing that current penalties are stretched to the limit. If not, I fail to see what possible reason there can be for implementing this clause.

I wish to resist the noble Baroness’s opposition to the Question, particularly because research suggests that the current regime is far from satisfactory and that more needs to be done by way of enforcement of the minimum wage, particularly the enforcement of arrears and non-payment of arrears.

The research was carried out by Geoff White of the University of Greenwich and Richard Croucher of the Cranfield School of Management. I have given the Minister notice of their work and I am sure his advisers will have knowledge of it. That survey suggests that something more needs to be invented by way of an enforcement agency. The Revenue does not have sufficient resources to follow up non-payment of the minimum wage and, in particular, non-payment of arrears. I take the opportunity to put that on record and hope that the Minister will resist the noble Baroness’s arguments.

Welcome back. I hope that the changes that we are introducing in the Bill show how seriously we consider non-compliance with the national minimum wage. As well as considering how we needed to strengthen the enforcement regime with penalties under the civil law, we also considered whether the sanctions for criminal offences under the National Minimum Wage Act 1998 were sufficient, or whether they needed to be enhanced in line with the penalties imposed for non-compliance.

Clause 9 provides that the maximum financial penalty that can be imposed for non-compliance with the national minimum wage by way of a statutory notice of underpayment is £5,000. Currently, criminal offences under the National Minimum Wage Act 1998 can be tried only in the magistrates’ court, where the maximum fine that can be imposed is £5,000. However, there is no such limit on the fine which can be imposed by the Crown Court. In those rare cases where the criminality involved makes it appropriate, it is important that the potential fine available to a criminal court when sentencing for an offence under the Act is greater than the maximum penalty which can be imposed by a notice of underpayment. I say to the noble Baroness, Lady Wilcox, that there is a distinction between the two—non-compliance and greater criminality—for underpayment.

Without the possibility of the Crown Court imposing an unlimited fine, there may be a perverse incentive for a criminally minded employer to prefer prosecution because the outcome is likely to be less serious from a purely financial point of view. We cannot have the criminality side being out of kilter with the penalty for a civil breach. We do not believe that the sentencing powers available to magistrates would be suitable in the most serious and exceptional cases where employers refuse or contrive not to pay the national minimum wage and do not co-operate with a compliance officer’s investigations. That is where the distinction to which the noble Baroness referred is highlighted. For example, where an employer owes Her Majesty’s Revenue and Customs £50,000, say, in deliberately evaded tax, the maximum penalty available is seven years in prison or an unlimited fine. However, where an employer owes his workers £50,000 by deliberately underpaying the national minimum wage, the maximum penalty currently available is £5,000. The courts should be able to deal with the deliberate exploitation of the low-paid more strongly than at present.

In addition, the strengthening of the investigative powers of Her Majesty’s Revenue and Customs proposed in Clause 12—which we shall discuss shortly—could not be used if the national minimum wage offences remained triable only as summary offences. The power to impose an unlimited fine for criminal offences under the National Minimum Wage Act means that rogue employers could be fined to the total extent of any profits gained from underpaying of the national minimum wage, and ensures that the balance of the enforcement spectrum is preserved.

At the moment, notices are issued only when an employer does not comply with a civil enforcement notice, not a criminal one. Clause 9 replaces that with a notice of underpayment that applies the penalty for non-compliance with the national minimum wage. The criminal prosecution regime is totally separate from the civil one and, as required in Clause 9, will apply only in the small minority of cases where there is criminal conduct. The specific answer to the noble Baroness’s question is two.

I did not wish to speak until I had heard what the Minister was going to say. How grateful we are that he is not in the Caribbean or somewhere, because some rather important amendments require his attention.

This business of the minimum wage has become a kind of mantra—a tiny one, not of great importance—in the Bill. I wonder whether it should be there at all, particularly having listened to the speech about criminality. The Bill is not about putting people in prison, or keeping them out of it. I support my noble friend in opposing the clause.

The thrust of my argument is that we have to get the—I hope, rarely pursued—criminality provisions in kilter with the current, successfully working civil aspect of the National Minimum Wage Act. By the way, I was not in the Caribbean, but Saudi Arabia. I got back yesterday morning, and I am off to Thailand next week.

There have been two criminal prosecutions, both successful. The first prosecution was against Teresa Aguda, sole director of Rascals Day Nursery. Ms Aguda pleaded guilty before Walthamstow magistrates’ court in August last year to a single offence of obstruction, contrary to Section 31(5)(a) of the NMW Act. She was fined £2,500 and ordered to pay costs of £500—this was for a criminal, not a civil, offence. The second case was against Torbay Council. The council pleaded guilty before Torquay magistrates’ court on 1 October 2007 to a single offence of neglecting to furnish information contrary to Section 31(5)(b) of the Act. The council was fined £1,000 and ordered to pay costs of £500. The Act is trying to bring into sync the civil side, where the financial aspect is taken more seriously, and the criminal side, which has fallen behind.

I thank the Minister for his reply. The noble Lord, Lord Wedderburn, threw me slightly, because I did not know whether he was answering for the Government or whether I should wait for the Minister. The Minister has not repeated what the noble Lord, Lord Wedderburn, said. I would like clarification from one or both of them. Was the noble Lord, Lord Wedderburn, saying that the Revenue does not have the resources to pursue the cases? If it does not, that must be the answer to the question about why so few penalties were imposed. It would not be a question then of the ability of the offenders to avoid the Crown Court, but one of not having the people to carry out their duties properly. If that is the case, why does one not just make sure that one has the right amount of people to do the right job and leave it as it is?

I cannot answer the noble Baroness’s question to me. My stress was not so much on the penalties for what is plainly a criminal offence as on the worker, who needs to have their arrears paid to them. I support the Bill—of course, there must be heavier penalties and better enforcement through criminal procedures—but I asked that the Minister tell us what more can be done to enforce payment of lost wages to the worker.

For the record and for the noble Baroness, Lady Wilcox, I should say that the Minister is replying on behalf of the Government. There will be confusion if the noble Baroness raises the question of whether my noble friend Lord Wedderburn has become a member of the Government.

I thank the noble Baroness for that most helpful steer. If she had had the pleasure of being in the earlier days in Committee in this Room she would have found that the informality has led to all sorts of conversations. I want to be very sure that I am getting the official view. I have to remember all the time that the Minister is not a member of the Labour Party, and I am therefore not sure if I am hearing the Government’s view or his.

Shame!

If anybody is to shout “Shame” for that, it would be me, but I move on. I was going to say that my noble friend Lord Wedderburn does not speak for the Government. He knows that, and I know that. As far as I am concerned, there is sufficient resource for Her Majesty's Revenue and Customs to enforce the new regime. BERR, HMRC and the RCPO are working through the details to ensure that the penalty regime will be a success. Her Majesty's Revenue and Customs has already recruited an additional 20 people this year, and we are working with it to establish the best process to allow it to work effectively operationally.

HMRC has been hampered by its inability to investigate some alleged national minimum wage offences to a criminal standard of proof—that is why we need these two distinctions—as it does not have the necessary coercive powers. The issue is not that it does not have the people or the resources, but that it does not have the power to take a case to a criminal court. It has therefore been difficult to prosecute an employer unless employees are willing to testify. That has been problematic because of the vulnerability of some of those employees, and HMRC has been forced to abandon some potential prosecutions as a result. The situation has led to the problem, not a lack of resource. I sincerely hope that the noble Baroness, Lady Wilcox, is certain that I am speaking for the Government.

Clause 11 agreed to.

Clause 12 [Powers to investigate criminal offences]:

On Question, Whether Clause 12 shall stand part of the Bill?

Like my probing stand part debate on Clause 10, this debate is to explore whether it is necessary to endow HMRC compliance officers with such extensive powers. As noble Lords know, the recent changes that saw Her Majesty’s Customs and Excise and the Inland Revenue formed into one organisation have led to a complex array of different powers for HMRC officers investigating different areas of their remit. The Commissioners for Revenue and Customs Act 2005 was right to ring-fence what powers HMRC inherited from its predecessors. However, it is noticeable that only three years later the Government are attempting to extend those powers into a new area. PACE powers, which are set out in the Police and Criminal Evidence Act 1984, are considerable. They were extended to HMRC’s fiscal functions by the Finance Act 2007. This small Bill extends them beyond that. I believe that this is the first time that such extensive powers of investigation and enforcement have been awarded to HMRC outside fiscal areas. Can the Minister confirm that when he responds?

Do the Government have any plans for adding to this regime any other matters that HMRC currently enforces with a lighter touch? I am aware that these provisions have been widely welcomed by outside lobby groups, but in this House we have the privilege of being more immune to the pressures of short-term expediency than might be the case elsewhere. Such large increases in powers should not be passed without scrutiny and should certainly not be welcomed without a real body of evidence to show that the new powers are both necessary and proportionate. I hope that the Minister will be able to reassure the Committee that there is a very real need for this massive extension of investigative power and that this is not the start of an inexorable expansion of HMRC’s powers over more and more matters.

I support my noble friend. On this occasion, I do not have to hear what the Minister says. If one looks at the Long Title, one sees that the Bill has absolutely nothing to do with the criminal law. I know that the noble Lord has to alter the Title for one of his amendments, but surely he does not have to—

Has the noble Lord omitted to notice that the Long Title says,

“to make provision about the enforcement of minimum wages legislation”?

That legislation is the National Minimum Wage Act 1998, if I am not mistaken, which includes criminal proceedings.

I should be very careful not to trespass into too many arguments with other sides of the Committee. This clause has nothing to do with what the Bill is about. As I said before, the Bill has nothing to do with criminal offences—it should have nothing to do with that at all—and I object to it on those grounds.

A substantial chunk of the Bill is headed “National minimum wage”. As my noble friend Lord Wedderburn has quoted, the middle of the Long Title says,

“to make provision about the enforcement of minimum wages legislation”.

No one can deny that “enforcement” may include criminal offences and the detailed provisions of the Bill make it clear that they do. I fear that the noble Lord, Lord Campbell of Alloway, with all his experience, has missed a trick on that.

One often reads in newspapers about my purported or suggested, and highly erroneous, views on the national minimum wage. It is always said that I was against it when it came in. I was not actually at the CBI when it came in, as I often say. I was not asked for my opinion, and if I had been, I would have said that it is a very good thing, but only if set at the appropriate level.

The dignity of work is what is important, and the right to have a safety net. What damages the economy is if the minimum wage is set too high or if one vested interest gets its way in an unbalanced manner. I have never been against the minimum wage, but I have been against it being set at too high a level. Why do I repeat that? Because to be successful it needs, as with all legislation, to win the respect of those whom it affects. In that respect a successful implementation has to have, on the one side, the proper level and, on the other side, the ability to enforce it. Very few people flout the legislation, but when it is flouted the people who are hurt are the employees. The Committee will notice that I do not use the word “workers” as I do not understand why that word should be attached to one group of people who contribute to the economy and not to another. Not only do employees suffer from the flouting of the legislation, but so do all the very good employers in the country who behave themselves, but who see others down the road in a competitive environment not behaving themselves. They deserve protection from equality enforcement, as do the employees who are also being ripped off. At the end of the day, a system of regulation or law cannot work if you cannot resort to the enforcement of criminality.

It is important that Her Majesty’s Revenue and Customs has the power to investigate effectively allegations that offences have been committed under the Act, particularly the most serious offence of refusing or wilfully neglecting to pay the national minimum wage.

During the early years of national minimum wage enforcement, non-compliance was dealt with by civil sanctions, such as enforcement notices, rather than by prosecution of the offences under the Act. That worked well but, over time, a tougher line was needed to deal with those—I repeat, there are few—who continue to flout the law. The then DTI agreed a policy on national minimum wage enforcement and prosecutions with HMRC and the Revenue and Customs Prosecutions Office in May 2006. Additional resources were then allocated so that appropriate cases could be investigated with a view to prosecution.

However, we are concerned that HMRC is being hampered in its ability to obtain evidence of any criminal offence—

This is very important. As the Minister knows, the Revenue already has pretty extensive powers. I remember when with other colleagues I was taking the Child Support Act—dare I mention it?—through the House many years ago, and we tried to give similar powers to child support officers as the Revenue already had. It was pointed out that those powers were very excessive indeed, but historically the Revenue and Customs had always had those powers. The noble Lord is trying to extend the powers that the Revenue has in terms of entering properties without magistrates’ consent, and all that. Would not existing powers that, for example, the Inland Revenue used to have, which were slightly less than those the Customs and Excise had, be more appropriate?

I am very grateful to the noble Lord, Lord Henley, for using his crystal ball. If he had sat down for one more moment I would have got to precisely that point. Let me take the Committee to Leicester, to an employee who was threatened with excommunication from her own community if she continued to assist Her Majesty’s Revenue and Customs with its inquiries. HMRC, with its current powers, could do nothing without her testimony. Somehow it had to get to the powers the Bill seeks. It had to be able to use those powers to get the evidence because, frankly, for very shameful but nevertheless real practical reasons on the ground, it was not going to get the help it needed from the employee in question. I repeat: if we are going to get good-quality employers to understand that this is important for them as much as it is for employees, HMRC needs those additional powers.

The noble Lord, Lord Henley, asked whether the powers will be used often. I very much doubt it, but they have to be in the box of tools available.

Based on investigations conducted so far, securing employee testimony in these areas is problematic. Employees face intimidation, physical threats and loss of employment, and in some cases they simply cannot afford the risk. What is the point of having this type of legislation if, at the end of the day, the very people it is designed to protect are the very people who cannot avail themselves of that protection? That is why there have been so few actions and why so many potential prosecutions have been abandoned, not because of a lack of resource and not because these new powers would end up increasing them.

The noble Baroness, Lady Wilcox, raised a valid point. I am grateful she raised it because I also feel that it is a worry. She asked whether this was the thin end of the wedge—the slippery slope—and something where we will give the taxman the right to get a foot into the door and then end up seeing the whole body go through the door for other stuff. I assure her and the Committee that we have no plans whatever to increase the powers of Her Majesty’s Revenue and Customs in respect of any other non-fiscal function.

Each case for additional powers must be taken on its own individual merits. Coercive powers in PACE can be used only in respect of indictable offences. Therefore, if the relevant legislation provides for summary-only offences, it will not be possible to apply these powers. For example, Her Majesty’s Revenue and Customs could not use PACE powers in respect of its enforcement of the statutory adoption, maternity—again, I can cover the ground mentioned by the noble Lord, Lord Henley—paternity or sick-pay provisions excluded from the Finance Act, because those provisions do not include an indictable offence.

Enforcement of the national minimum wage would be improved if Her Majesty’s Revenue and Customs had the additional powers in Clause 12. As I said in an earlier answer, HMRC has often been forced to abandon potential prosecutions because it has been reliant on evidence that it just cannot get. I stand here as someone who believes that the provisions should be set at a level that can be used as a tool in a modernised economy; therefore, we must have the ability to enforce that so that respect is obtained in the employer community as well.

The national minimum wage is a matter for considerable debate in this Bill in many respects, although I shall not go into that. My worry is that the criminal procedure should be changed by a civil Bill. This is an Employment Bill, and that is my objection. I wanted to make that plain in view of what has been said by noble Lords on the Benches opposite—perhaps I should not say that because they are all on the same Benches.

I thank the Minister, particularly for his reassurance that the Government have no plans to expand these powers over more and more matters. I liked the picture of the toolkit that he described, and I can understand how he sees that working. It is hoped that toolkits are used to repair doors and not necessarily to break them down.

Clause 12 agreed to.

Clause 13 agreed to.

moved Amendment No. 24AA:

Is Amendment No. 24AA basically about a tax issue? We all remember the Mallalieu case of the black clothing, and how it was ruled that she could not claim for it. The phrase “has actually incurred” will benefit the volunteer as against HMRC—I was going to say Inland Revenue.

I am glad that the noble Baroness raised this. When I was trying to get my mind around it the other day, I went all the way back to my tax law at university to think about it. The distinction between expenses allowable for self-employment and those for employment is the word “necessarily”. I tried to transpose that into the application here. This is not about tax law, but about what is or is not caught under an employer’s obligation under the National Minimum Wage Act. So if something was transposed into the national minimum wage that, in the minds of the noble Baroness and myself, would not have been incurred necessarily and was therefore not allowable under Schedule E taxation, it would be deemed remuneration for the purposes of the calculation of the national minimum wage. It would have nothing to do with the Revenue. It would be caught under that method of calculation. The employer would therefore be caught by the National Minimum Wage Act 1998.

Now that word is being moved so that, although this type of expenditure would not be necessarily incurred—so it would be caught under Schedule E taxation and not allowable—here, and only in NMW terms, not Revenue terms, it will be deemed not to be remuneration. Therefore the employer does not get caught, is more minded to take on the voluntary worker and, in certain situations such as childcare, the voluntary worker can now do it. We leave them outside the NMW. If that was inside the HMRC but not the NMW environment, it would still fall foul of Schedule E and not be allowable because it was not incurred necessarily. What is important is not the taxation application, but the “necessarily” principle of taxation.

The Government deserve to be congratulated on thinking this one out so that, without triggering the national minimum wage legislation, expenses rather wider than those incurred during the performance of duties are covered. These expenses are “to enable the worker”—I am sorry the Government let that word slip through; I shall say “the employee”—“to perform his duties”. As the Minister has explained, this would cover travel to and from work, some refreshment and childcare so long as the expenses are reasonably incurred.

My only question for the Minister is why accommodation expenses which are incurred in order to enable the worker to perform his duties, and are reasonably so incurred, are not covered as well. It might be in the practicalities that accommodation expenses of even the most modest kind would inevitably be considerable compared with mere travel on the bus or the cost of lunch. Can the Minister explain why in no circumstances could expenses for accommodation necessary to do the voluntary job be covered by the amendment?

I endorse everything that my noble friend Lord Borrie said and we congratulate the Government on this move forward. However, society moves as fast even as House of Lords Grand Committees. What may need increasingly to be provided is not accommodation but accommodation expenses. This will apply often to young voluntary workers. We all know how difficult it is for young people to find anywhere to live in London, and the same is true of some other cities. Will the Government keep under active review the paragraph that excludes accommodation expenses?

Perhaps I may allay the fears of my noble friends Lord Wedderburn and Lord Borrie by making the following distinction. As noble Lords know, Section 44(1)(b) of the NMWA states that a voluntary organisation can provide accommodation directly for the voluntary worker. That means not only that the young persons to whom my noble friend rightly referred—it would help society if many more younger people got into the world of voluntary work—have a roof over their head which would not fall foul of the new clause, which is excellent, but that they would not have to make the up-front payment and find the dosh to pay an advance on rent, which is no bad thing. If that voluntary worker was not in directly provided accommodation and had to attend a conference, for instance, or had to go away from their locality of normal work, obviously any attendant hotel costs or other accommodation expenses would be reimbursed. Although they might not necessarily be caught for the purposes of other legislation, they would be caught by this clause.

We do not consider the reimbursement of enabling expenses to extend to the cost of rent per se because jobs should not emerge in the voluntary sector which could attract the vulnerable by offering significant remuneration or what is seen as a benefit and leave them in a position that is more than neutral. If their situation is enhanced, other sectors in society will ask why they are getting something different from anybody else. The clause is not trying to inhibit the young especially from getting into the world of voluntary work—quite the opposite: it is trying to ensure that we achieve a neutral position for those people vis-à-vis their employer and not bring even more legislation down on their heads.

To some extent, the Minister has tried to clarify the position on accommodation but I am less clear now than I was before he stood up. No doubt that is due to me more than it is to the Minister. He mentioned the relevant section of the National Minimum Wage Act. If it states what he said it does on accommodation, it seems to be at odds with the amendment. I do not understand how the two are compatible. I was concerned as to how accommodation, such as hotel accommodation, would be covered in the case of a trade show or conference that a voluntary worker was attending. The Minister has cleared that up: that would not fall foul of the new clause. But if accommodation expenses are excluded, how does that sit with what he said was in the National Minimum Wage Act?

New subsection (1A)(b) states that the expenses must be “reasonably so incurred”. Will the Minister clarify who will determine what is reasonable? In the light of his earlier remarks, I suggest that it would not be HMRC but its National Minimum Wage Inspectorate.

Perhaps I may write to noble Lords on why there is a distinction between reimbursement of rental expenditure, which will not fall into the safety net, and direct accommodation provided, which will. That would provide the clarity that noble Lords seek. It would be better than my carrying on telling them what I believe is the distinction and some noble Lords saying that they do not understand it. We could then move on. I will undertake to do that now.

I am at pains to point out that we are trying to get people into a neutral position so that the voluntary organisations and those who work for them are no worse off because of the implementation of the national minimum wage legislation. Regulation is to be avoided at all costs but, when it has to apply, let us at least not fall foul of the law of unintended consequences. That is what the amendment seeks to achieve.

Can the Minister answer the other point that I raised about who would decide the test of reasonableness?

I am so sorry; I forgot. The test of reasonableness will ultimately be decided by a judge in a tribunal somewhere and will go through two or three hurdles on the way: first, common sense; secondly, the inspectorate, rightly; thirdly, probably someone from HMRC in some form of inquiry; and, lastly, anyone who disagrees with the test of reasonableness has every right to go to an adjudicator or a tribunal to understand what it is.

I am delighted to respond to these government amendments, which we welcome. They are good news for both voluntary organisations and those who wish to volunteer. There have been mutterings on my side as to whether their Lordships are volunteers as well, but possibly they are not.

I am glad that the Government are taking steps to clear up any confusion about what expenses are allowable and that they are expanding them to reflect more accurately the difficulties and costs that a voluntary worker can incur. There are many expenses that might deter a potential volunteer worker from participating fully, as the Minister mentioned, such as childcare and travel expenses.

The advantages that charities and other eligible organisations bring to those whom they help and to the communities in which they work are of course of enormous importance and, I hope, widely appreciated. The benefits that a voluntary worker will enjoy, especially if he is otherwise unemployed or unable to partake in paid employment, are only starting to be appreciated by many but are also remarkable. Voluntary work should be encouraged if at all possible and I hope that the amendments will allow more people to participate fully.

However, I draw the noble Lord’s attention to an adjustment that the Department for Work and Pensions made two years ago when attention was drawn to the effect that volunteering expenses had on state benefits. It was pointed out that many beneficiaries of jobseeker’s allowance and incapacity benefit should be actively encouraged to seek voluntary work. As I mentioned, such work has a proven effect on a person’s self-confidence and health, and can give them valuable experience and training before they become immersed in the world of paid employment.

On 9 October 2006, therefore, the Department for Work and Pensions announced that meal expenses and so on would not affect benefits, and so recipients could work towards re-entering the job market without fear of being penalised. Today, the Minister has repeated what the Department for Work and Pensions said two years ago. Therefore, the question is: why on earth has it taken two years for a lesson that one department learnt to be taught to another? The situations are practically identical. However, we are delighted to support the amendments.

On Question, amendment agreed to.

moved Amendment No. 24B:

My noble friend Lady Turner suggests that I add my voice to hers. We are talking about thousands of seafarers and their employers. Many of them are very good employers, but we are talking about the floor below which the bad employers should not be allowed to fall. My noble friend has read Section 40 of the National Minimum Wage Act which states that on a ship registered in UK the seafarer must be paid the national minimum wage unless the employer is wholly outside the UK or the seafarer is not ordinarily resident in the United Kingdom. At first glance I found myself unable to support this amendment, even though I knew that the union, the TUC and various honourable friends in another place support it. However, having read the ingenious opinion of learned counsel and taken account of the slave wages that are paid to Filipinos and other foreigners on ships, I have concluded that we should press this upon the Government.

Since the object of Committee stage is to expound the reasons that the Government should consider, I shall put to the Committee the reasons that persuaded me that I should support the amendment. First, British seafarers on a British ship who work wholly outside United Kingdom waters can legally be paid slave wages. That is wrong. Secondly, foreign seafarers on a British ship with no place of residence in the UK can work cheek by jowl with British seafarers and be paid even worse slave wages, far below the national minimum wage; that happens. Unfortunately, I have been on such a ship. I learnt the details of the Filipino crew. My wife and I were astonished and appalled.

Your Lordships will note that I have used the words “British territorial waters” not “internal waters” which, as my noble friend said, is in the guide issued by the DTI, which I imagine is now part of the Department for Business, Enterprise and Regulatory Reform. The guide issued by the Government through that ministry is completely fabricated. It says that workers, to get the minimum wage, have to work within the “internal waters”. Where do they get “internal waters” from? It is a fantasy—a nightmare concocted by the DTI.

The words “internal waters” are used when Parliament means to limit the application of its law, as in the Territorial Sea Act 1987. The national minimum wage does not refer to either territorial or internal waters. The normal principles of international law and the sea would suggest that the test is territorial waters, not internal waters. Just because someone happens to work on a ferry going to the Isle of Wight, and no further than that, that is used. It is a fabrication. The DTI has no authority, and no source to cite to say why they use the internal waters test. So the amendment uses territorial waters, which, as my noble friend said, is 12 nautical miles from the coast.

The national minimum wage should apply on British ships in British territorial waters. That is the first objective of the amendment. It is in line with the Disability Discrimination Act and other anti-discrimination Acts, which protect workers in their area of occupation within territorial waters, if not beyond in some cases.

The amendment faces a problem. It will be raised no doubt by lawyers and advisers to the Minister. It is a real problem, which is what worried me at first. We must understand that British law cannot be made applicable worldwide. You cannot do that; you are making law within your own jurisdiction. That was made clear by the Judicial Committee of the House of Lords in 2006 in the case of Lawson v Serco, usually referred to as the Serco case, especially by the speech of the noble and learned Lord, Lord Hoffmann, who in paragraphs 34 to 40 in the Industrial Relations Law Reports makes clear that the application of our law must be restricted to the area either within Britain or within British territorial waters or otherwise sufficiently strongly rooted in their relationship with the United Kingdom.

I make a point here that the Employment Relations Act 1999 repealed what was a clear statutory provision in Section 196 of the Employment Rights Act, which limited the application of British law in that way. Most commentators have agreed that after that repeal, for reasons which totally eluded me then and are mysterious to me now, United Kingdom judges were left, as authors have agreed, in what might be called a void, to set their own limits to United Kingdom laws and prevent its application worldwide outside the United Kingdom. Lawson v Serco makes it clear that the connection with the United Kingdom must be very strong. But, if noble Lords read the speech of the noble and learned Lord, Lord Hoffmann, they will see at paragraph 38 that he says that a foreign correspondent permanently on the staff of a British newspaper, who is posted to Peking—I hope that Hansard will put “(sic)” after “Peking” because the noble and learned Lord was not up to speed with Beijing—who lives there for years can still be an employee of the newspaper and could make a claim for unfair dismissal, even though he spends all his time in Peking, under domestic British law because the link would be sufficiently strong.

The spirit of their Lordships’ judgment in the Serco case must mean that British seafarers on board British ships must be paid the national minimum wage. The same logic must surely mean that any seafarer on a ship flagged—that is, registered—in the UK must be paid the national minimum wage whilst working in British territorial waters.

This is where the new issue arises. A seafarer working on a British registered ship cannot be given worldwide rights but rights within British territorial waters. That is precisely the point raised by paragraph (b) of the amendment. Learned counsel’s opinion faced up to the problem and made it clear that the national minimum wage should be calculated as a proportion of the time an individual is employed to work on board any ship at any time it is within United Kingdom territorial waters. The amendment proposes what logic suggested to learned counsel—namely, that the national minimum wage should be applied proportionately to what is done on a British ship within British territorial waters and what is done outside.

That would be a new form of jurisprudence applicable in the national minimum wage area, but I ask the Committee to notice that the National Minimum Wage Act 1998, by being silent on its applicability—unlike various other statutes—invites the courts to make some sensible law which is in accord with the rules suggested in Lawson and Serco by your Lordships’ judicial committee in 2006.

As my noble friend has said, it has been reported that the Chamber of Shipping, the employers, threatens that any such amendment to slave wages for foreign seafarers will be met by industrial action by the owners and a massive flagging out—the removal of the British flag from their ships—so that they can put up some other convenient flag instead. Paying the national minimum wage in this way, they say—and we must take account of this argument—would remove their competitiveness. I do not believe that this threat of industrial action by the owners should be taken seriously. First, as my noble friend has said, they would lose their tax concessions, which are now quite substantial. I wonder whether they would take action in the face of that. Secondly, as a matter of principle, industrial action of that kind would infringe the balance of social justice and the flexibility of competitiveness to which our Government are already committed. They are also committed to the Commission’s notion of “flexicurity”, which means flexibility for management in the competitiveness of the labour market and security for workers, as a balance in a modern social society.

Flexicurity is now the buzz word of European law and of employment lawyers in comparative work. I refer the Committee to the recent Green Paper from the Commission on the modernisation of labour law and subsequent documents to that Green Paper. To avoid our domestic legislation having worldwide effect—it will not have it anyway, but to avoid appearing to give it worldwide effect—the amendment ingeniously drafts a line which would confine the national minimum wage to applications within British territorial waters, where the Royal Navy and the Inland Revenue can rule, but excludes hours worked in foreign parts by foreign seafarers while giving them, quite properly, the national minimum wage within our waters. This is a compromise—one could have gone much further—fully in keeping with your Lordships’ Judicial Committee in the Serco case. Indeed, it is arguably less favourable to seafarers, especially foreign seafarers, in certain respects.

I am not criticising the amendment but adding my voice for the Government to use this debate to consider carefully for Report whether they will not give us something like this to achieve greater justice for seafarers, both in our waters and on British ships, in relation to the national minimum wage.

Clearly, the amendment raises an important issue and the Government need to consider the representations that have been made. Rather like the noble Lord, Lord Wedderburn, when I first read this I found some difficulty with the concept of how it would operate. However, a good case has been made in one respect: if employers register their ships in the United Kingdom, with all the advantages that come from that, I find it difficult to argue why they should not have to observe the obligations that come with it.

I have difficulty with the second aspect of the amendment. I have listened carefully to the tour de force of the noble Lord, Lord Wedderburn, through the opinions of the members of the Judicial Committee of the House of Lords, but I find it difficult to understand the practicalities. When a ship registered in Belize, let us say, takes on employees, mariners, and negotiations take place in regard to their salary for the year, month, two months or for however long they are taken on, is it suggested that when that ship arrives at Liverpool to take on or deposit containers and spends two days in port, inspectors from the appropriate government body will come on board and say, “What are you paying your staff? You are here for two days; therefore two-365ths of the income of your staff has to move up to the minimum wage”. Is that what is suggested? If so, have the proponents of the amendment carried out an estimate of the cost of enforcement?

I take the point that we should not give in to threats from the owners of ships registered in Belize—I do not know why I picked Belize—of strike action or withdrawing their services from UK ports, but I worry about the practicalities. When the Government consider this between the Committee stage and Report—clearly a number of the Minister’s noble friends are not going to leave this alone and will come back to it on Report—the practicalities of that second aspect need to be looked at.

We do not support the amendment of the noble Lord, Lord Rosser, moved by the noble Baroness, Lady Turner, and I hope the Minister will join me in not doing so.

The amendment would extend the application of the national minimum wage dramatically and entirely inappropriately. Proposed new paragraph (a) would extend its application to all sailors employed on a UK-registered ship. Such a measure is the equivalent of insisting that every UK company with a factory or office abroad must employ local workers at above the minimum wage regardless of the differences in local wage rates or costs of living. Perhaps I may ask the noble Baroness why the noble Lord, Lord Rosser, has decided that only UK shipping cannot take advantage of the widely differing labour costs around the world. It cannot be the close proximity of workers on different wages. There are many corporate offices where expatriates are paid on a different scale to those hired locally despite doing jobs of a similar nature or status. Does he then intend to table amendments on Report including, for example, UK manufacturing firms as well?

I was waiting for the noble Baroness to finish that part of her speech. Perhaps I may intervene. Does she think that in the eyes of our law there should be any floor to what foreign seafarers in our waters can be paid? Does she think that they can be paid slave wages? I can assure her that many foreign seafarers are.

I am not sure that I like the word “slave”. I come from Plymouth—a seafaring city—so perhaps I know as much about seafarers as many in this Room.

Foreign seafarers working on UK-registered ships are, as noble Lords know, already protected by the Race Relations Act. This ensures that they are paid a fair wage related to the cost of living in their home country. Under this Act, foreign sailors frequently earn wages which, although below the national minimum wage in the UK, are on a par with highly trained professionals at home. Of course, while on board ship, they enjoy exactly the same standards as UK sailors, subject to all the protections of UK employment law.

Proposed new paragraph (a) in the amendment would not only provide much meaningful benefit for foreign sailors but would inflict a terrible cost on the UK shipping industry. The Chamber of Shipping estimates that as many as 300 UK-registered ships would be put at risk by having to pay these above-market wages.

Proposed new paragraph (b) goes even further. Every ship, no matter where it is registered or what crew it is manned with, is to recalculate its wages for the time spent within UK territorial waters. Such a provision is simply not lawful. Each ship is subject to the employment law of its flag state. How could it be otherwise? How does the noble Lord suggest the UK would ensure that foreign companies pay their foreign sailors what he thinks they should?

Debate on the development of maritime policy is of course ongoing and is being participated in at many levels, both nationally and in Europe. All are agreed that any future steps need to be both considered and responsible, weighing any benefits against the possible impact on UK employment and competitiveness; and of course they must be feasible. I am afraid that the amendment is none of these.

It seems as though the noble Baroness was reading directly from what the Chamber of Shipping has been saying to us and, in effect, neglecting to take account of the tax concessions that it gets. This is an empty threat because the Chamber of Shipping would have to take into account the substantial advantages that it has and whether it would be worth while losing those tax privileges. I do not think it would take such action. I will not give in to threats such as this.

The noble Baroness may object to the words “slave labour” but that is what it is. How can one justify people doing the same job on the same ship but being paid different rates of pay?

I am very pleased that when my noble friend outlined the amendment she said that it should apply to territorial and not inland waters because it would not apply at all if that were the case. This is an anomaly that we should put right. I am sure that my noble friend who is to reply—we are good friends—will see that we are seeking justice in what we are putting forward.

We are talking here about UK-registered ships and that is what the reply from the Chamber of Shipping says. We are trying to put right an anomaly that has existed for far too long. Let us get rid of absurd wages that set one person against another; let us put everyone on an equal footing. I hope that my noble friend will give a positive reply to the points that we have made.

Rhetoric will not resolve this serious problem. Talking about slave labour is not a useful way to approach it.

What does the noble Lord think £1.50 per hour is if it is not slave labour?

I repeat: to speak of slave labour is not a reasonable way in which to approach this problem. If the noble Lord wishes—

What is it then?

I declare an interest as a recent employee of the International Labour Organisation. I refer all Members of the Committee to the report of the International Labour Organisation covering the maritime industry in conjunction with the International Maritime Organisation. There they will see that there are what can only be described as slave conditions on many ships of the developing world. Many complaints are made against the Governments of those countries. The conditions cannot be described as other than slave conditions.

I thought that I was allowed to address the Grand Committee for another moment. I retain my view that this is not the way to approach an employment problem. I accept what has been said about what the Appellate Committee said—I am fully aware of it—but it does not have any special impact on what we are discussing; I accept that it should be on the basis of territorial waters; I accept quite a few things that have been said. But I will not accept that people who are paid a wage twice or three times that which they would receive in their own countries because they happen to be under a British flag in territorial waters are slave labour. If that is the Committee’s approach, I would rather say no more on it today. However, I will have a lot more to say on Report.

I had not intended to intrude on this issue. I only do so because the noble Baroness, Lady Wilcox, referred to the Race Relations Act. I should know the answer to this question—I was one of the Act’s architects—but I do not. On the basis of the brief she was given, the noble Baroness said that the Race Relations Act would apply to employment and terms and conditions on foreign ships outside the territorial waters of this country. I remember that there was an exemption excluding the Race Relations Act from foreign ships and from employment outside our territorial waters but I cannot remember, for which I apologise, whether or not that exclusion was in turn removed.

I mention this only because it was raised by the noble Baroness and because, as those Members of the Committee interested in the history of this will remember, there was an ignominious history of what were called Lascars—Asian seamen—being treated appallingly badly a long time ago, not only in their wages but even in their living conditions. They were kept in tiny boxes on boats and were therefore discriminated against on the basis of race. I would not expect the Minister’s advisers to know the answer now, but I hope that the answer could be given before Report.

I have also been searching through the 3,000 pages of the guide to employment law for that point, and I have not found it. However, in the union brief—I have checked it—I found that, during the course of the then Race Relations Bill, the Minister for Shipping stated that it would apply in territorial waters and possibly even beyond, especially on British ships. So a lacuna has been left in the anti-discrimination law as there is authority that sex discrimination will apply beyond territorial waters. I, too, hope that a clear document can be put in the Library by the Minister’s advisers settling the issue of the extent of the anti-discrimination law. Whatever the answer, it will be found that it is way beyond internal waters. It is, as I said, a nightmare concocted by the DTI.

The noble Lord, Lord Lester, raised the point that I have been searching to answer about the precise area of application of the discrimination laws. Whatever it is, it is certainly within the area to which this amendment would make the national minimum wage apply.

The answer to the question could be found in 10 minutes. I am trapped here, but if someone would look at the Race Relations Act 1976, as amended by the Race Relations (Amendment) Act 2000, the answer will be there. I cannot go and look it up myself, but if someone else can, they will have answer.

Should not the noble Lord, Lord Wedderburn, consider what happened many years ago and whether ships should continue under the British flag or go to Belize, Libya, Nigeria or wherever? One has to have a realistic approach to this problem. If that is forgotten, it could be the end of our industry.

I have listened to the past few moments with great interest from many different angles. First, I thank the noble Baroness, Lady Turner, for putting the case so lucidly. While I appreciate her arguments, I regret that we cannot accept the amendment as drafted, although I hope that in the next few minutes she will constructively receive some of my remarks so that we can take the argument forward from here.

Perhaps it is worth reminding ourselves who is eligible in this area. Under the current legislation, resident and non-resident seafarers are entitled to the minimum wage while they are in the United Kingdom’s internal waters—and for the satisfaction of my noble friend Lord Wedderburn, I shall come back to that definition in a moment. A seafarer on a UK-registered ship anywhere in the world is entitled to the minimum wage unless his employment is wholly outside the United Kingdom or he is not ordinarily resident in the United Kingdom. The amendment would extend the scope of the minimum wage in a number of ways. It would make all workers on UK-registered ships eligible for the national minimum wage. That would include those who are not presently eligible became they work wholly outside the United Kingdom at all times as long as they are not ordinarily resident in the UK. An important point is that it would also catch all ships from wherever in the world travelling through UK territorial waters, regardless of their flag or origin.

If that was the intention of my noble friends in their amendment, I have two things to say in answer. First, the noble Lord, Lord Razzall, knocked the nail straight on the head by saying that that may be laudable for a traditional seafaring nation with fabulous values such as this country. But how we go about policing it, even if we were to spend a fortune of taxpayers’ money, is beyond me—that might be for another debate. Secondly, it was never the intention of minimum wage legislation to extend the rights to employees who have no link with the United Kingdom, or never stay in or even visit the United Kingdom. Extending this legislation to all those working on UK-registered ships or foreign-flagged ships in UK territorial waters may mean that we capture employees who have nothing whatever to do with this country.

The amendment would have damaging consequences for the UK’s own merchant fleet. The noble Baroness, Lady Wilcox, may well have been reading material from one lobbying organisation; I am quite prepared to listen to that in the same way as I, rightly, listen to that type of submission from the TUC or anybody else. Surely that is what this debate is about, and neither side should be criticised for it. When I was at the CBI, people often asked why our merchant fleet had diminished so much. The basic answer was the applicable taxation regime. Various tax concessions were then granted so that we could build up our merchant fleet one more time, which, for a nation of the maritime reputation that we have enjoyed in the world—maritime activity is one way of extending our values around the world—is excellent. The noble Lord, Lord Hoyle, was right that if companies wish to enjoy a more favourable tax regime from a country with these values, they have to accept the other side as well. In that respect, I can see where noble Lords are going.

I ask noble Lords to stop using the word “slave”. The wages that some companies under other flags pay are derisory and disgraceful but, just as I no longer like to hear words such as “bosses”, “workers” in industry, and all that stuff that comes from another age, so I no longer like to hear “slave”, which is an emotional word which does nothing to resolve this difficult situation.

The Minister said that workers who come from a foreign country and do not work in the UK have no connection with the UK and are not entitled to the floor provided by the national minimum wage. When he says “in the United Kingdom”, does he include ships within territorial waters? Why should a ship that is all the time in our territorial waters and simply goes to Cherbourg for new provisions because they are cheaper there not be part of “in the United Kingdom”? Let the Minister define “in the United Kingdom”. Humpty Dumpty said: “The meaning of the word is what I choose it to mean—no more and no less”. My meaning is “in the UK or in its territorial waters”. Is that the Minister’s?

I am grateful to my noble friend Lord Wedderburn for asking me a question I was just about to come to. One of the risks of going straight down the path of telling every UK-flagged ship is that we will have flagging out, because they operate outside the United Kingdom. I accept that that is in one way similarly alarmist and we must not submit to that. But there would be an element of it, and we must understand what that would do. For instance, on a UK ship which currently pays more than the flags of others—albeit perhaps not the minimum wage—we would be consigning some of the workers to even lower wages and more disgraceful conditions. That would happen, be the people referred to earlier Portuguese or Filipino.

We must ensure that, in trying to deal with a difficult problem and enhance the promulgation of our employment values on ships, we do not end up consigning some people to an even worse employed existence. I am not saying for a moment that we should turn around and say that we should do nothing because they might flag out. I am merely saying that I would like a little work done on seeing where the risk lies and what we are talking about in terms of values, numbers and geographical operations. That would be worthy of a little work. That is probably bad news for the people behind me, but probably a good thing to do.

Before concluding, I shall deal with two or three specific points on one or two of the excellent issues raised. I found this debate extremely useful because I have learnt more about it from listening to Members of the Committee. My noble friend Lord Wedderburn asked, and asked again in his intervention, what I call the United Kingdom, what “territorial waters” are and what this amazing phrase “internal waters” is, which he rightly says seemed to arrive out of the ether at some point in drafting. The legislation was drawn in an attempt to capture those working in the United Kingdom. “Internal waters” are covered by the national minimum wage rules. They are all the waters and waterways on the landward side of a baseline from which territorial seas are measured. “Internal waters” means everything on the inside of the baseline of a territorial sea. It includes waterways such as rivers, canals and, sometimes, the waters within small bays.

There is,

“the right of innocent passage”,

through the territorial sea under the United Nations Convention on the Law of the Sea 1982, or UNCLOS. All foreign vessels have no right of innocent passage within internal waters. The lack of a right to innocent passage is the key difference between internal waters and the territorial sea. UNCLOS sets the limits of the territorial sea. Article 3 says that every state has the right to establish the breadth of its territorial sea up to a limit not exceeding 12 nautical miles. Article 5 states that the normal baseline for measuring the breadth of the territorial sea is the low water-line along the coast. So the baseline is on the other side of the gap between the low water-line on the coast and perhaps 12 miles out.

Internal waters as defined include, for the United Kingdom, the sea between the Scottish mainland and the Inner and Outer Hebrides, the Firth of Forth, the Humber, the Wash, the Thames Estuary, the Solent and the Bristol Channel. They do not include the waters between the mainland and the Scillies, Lundy, the Smalls, the Pentland Firth, the sea—as my noble friend mentioned—between the Shetlands and Scotland, or the sea between England and the Farne Islands. With slightly greater comprehensibility, nor do they include the sea between the mainland and the Channel Islands or the Isle of Man, because they are not part of the United Kingdom.

Speaking personally, if I was employed on a ferry going between the United Kingdom mainland and the Outer Hebrides, I would find it difficult to understand why I was being treated differently from someone working on a ferry, perhaps for the same company, operating between the United Kingdom mainland and the Shetland Islands. If there is one thing about the national minimum wage, as I said on a debate on another amendment, it is that it must be respected in all respects if it is going to work. There is some work to be done there.

To address the very important point made by the noble Lord, Lord Lester of Herne Hill, about the Race Relations Act, I should say that I understand that the Department for Transport has consulted on proposed amendments to Section 9 of the Race Relations Act as amended, so it is considering the way forward. The Government are committed to amending Section 9 to bring it into line with European Community law on the freedom of movement of workers. The amendment to the Race Relations Act is different in that it comes within European requirements but it does not deal directly with the function of the minimum levels of pay because the National Minimum Wage Act is not a European issue. It is under consideration but we are not sure whether it affects the NMWA. That is a work in progress. I undertake to get back to the noble Lord, Lord Lester, with a more detailed answer. Perhaps we could meet to discuss it, which would be useful.

Will the Minister answer one question? My simple mind is slightly bemused because he said that European law requires a change in the Race Relations Act as amended in 2000. Would he put in the Library the source of that European Union law? I want to know what article of which directive or regulation requires the change. I would like to be instructed and educated by the noble Lord.

I am sorry but my attention was diverted, so for clarification would the noble Lord repeat to which section of the Race Relations Act 1976 as amended he is referring?

As I understood the noble Lord, he mentioned Section 2(9) and later he said Section 9, but some parts of those sections that I have just been looking at have to be reconsidered because of binding European Union law. Binding European Union law must be in a directive or a regulation. I want to know which regulation or directive it is and which article it is. He may not have it with him—I am not trying to catch him out—but it could be put in the Library.

I understand.

I thank the Minister for what he has said. I would welcome the chance to discuss this. There are some things of which one cannot be certain and on which one needs to be silent, so I am about to be silent. I understand the Minister’s answer. Not only is looking at the EU legislation and fitting it in with our own complicated, but the issue about wages is complicated because we do not have an equal pay Act based on race but on gender, whereas the Race Relations Act applies to alternate conditions, and so on. Without prolonging matters now, it would be excellent if we could sit down with officials and the Minister to see where we are.

I assure the noble Lord and my noble friend that I will get back to them both with details of exactly which provision we are talking about. The more difficult issue is that at the moment we are considering amending domestic legislation to achieve compatibility with European legislation and, at the same time, confusingly—this might be my ignorant interpretation—we are trying to deal with domestic legislation in the Race Relations Act applying to another piece of domestic legislation, the National Minimum Wage Act, under the umbrella of European law. That is how I see it, but I might be wrong. That consultation is taking place as we speak, and if my noble friend Lord Wedderburn joins in as well, perhaps I shall learn more about it and that can be shared.

Perhaps I can close by bringing the matter together. We have three competing issues. One is that the Government have worked so hard to get this great maritime nation flagged up again—to get a critical mass of UK-flagged shipping—achieved mainly by a more benevolent fiscal environment. It is absolutely right and proper that the values that have pertained in this country for so long now apply so that those benefits can also be shared to ensure fairness for those who work under those flags. That is right and I say to my noble friends who have raised that point on this amendment that there is work to be done to satisfy that wish.

Secondly, the National Minimum Wage Act was never designed to deal with someone who is not and has no intention of being operational in the United Kingdom or in territorial or inland waters, as defined. Within that it is very important to deal with this clear conflict between someone working on a ferry to Orkney and someone working on a ferry to Shetland. I undertake to do some work on that and return to your Lordships.

Thirdly, if this amendment goes through, how on earth will we actually apply this legislation to a foreign-flag ship, employing a completely foreign-flag crew and spending two days in Felixstowe five times a year? Whether that is fair is one issue; whether that is enforceable is debatable; and whether we can actually then get the owner up before the beak to ensure that he pays correctly, frankly, is probably impossible.

The Minister has just put a question and has conceded that in government thinking there is no distinction for this purpose between inland waters and territorial waters, so what is the object of a further esoteric exercise of examination? What would it be to discover?

I can, I hope, deal with that very quickly and say something that will satisfy my noble friends. The object is fairness. If I were working on one ferry line to Orkney I would not understand why my mate working on a ferry line to Shetland should be entirely different from me. I think that a meeting, or at least some correspondence between us, to try to get to the bottom of that would be very worth while. If that means that we have to start again from the beginning and start tearing up an understanding of territorial, internal and inland, so be it. I hope we do not have to. I hope that we can achieve some common sense in that. Let us work on that outside this Chamber. That does not mean I am suddenly saying that somebody who spends his entire life on a British-flag ship operating between Auckland and Sydney, and who frankly has no connection with this country at all, should shelter under a piece of legislation for which that was never intended.

I thank my noble friend for his response. In some ways I found it very helpful; in other ways I was a bit disappointed. I am prepared to accept that this is a very complex situation. Indeed, I bring to the attention of Members of the Committee what the counsel said when drafting the amendment:

“Plainly the suggested amendments contained within this document are intended to provide an indication of what might be done to address the concerns that arise … and it may be that some form of standard method of calculation of entitlement would be necessary for non-UK … ships who go in and out of UK waters”.

However, she says in her opinion that this is “not an insurmountable obstacle”. She just thought it was possible to come to terms with that difficulty, which has been mentioned by a number of noble Lords who have spoken in the debate.

I am gratified to learn that the position of an individual employed on a ferry travelling between the mainland and the Shetlands, and the difference if he is travelling between Scotland and the Hebrides, is accepted as anomalous and needing some attention. I would be very happy to co-operate in further discussions if that is deemed necessary. I am sure that the RMT would be very happy to enter into discussions over these concerns—I think most people who have spoken in the debate have accepted that there are legitimate concerns—about the anomalies in the payment of the national minimum wage.

I am sorry that the word “slave” gave rise to some objections, but to me and my noble friends some of the rates paid to individuals working on UK-registered ships when they were not resident seemed incredibly low. Even if they come from countries where they are not paid very much normally, their rates seem desperately low when compared with the people receiving the minimum wage for doing exactly the same job. The union has legitimate concerns about that. That is why it wanted the kind of text that we put before the Committee.

A number of the issues raised strike me as too complex for me, but the Minister endeavoured to deal with the race relations issue, which was raised by the noble Lord, Lord Lester, and in one of the papers I had from the union. I am gratified to learn that it is receiving consideration from the Government at the moment. I will look with interest at the text of the debate. I am grateful to all noble Lords who participated. I think it is accepted that the union has a case here. It may not be dealt with adequately in the wording we put forward, but there is an anomalous situation that the union has been trying to deal with for a number of years. It has the support of the TUC in attempting to get a more reasonable text. I hope that later on, perhaps in further discussion of the Bill, we shall arrive at a text that is suitable for everybody. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clauses 14 and 15 agreed to.

moved Amendment No. 25:

I listened with interest to my noble friend Lady Gardner as she spoke to the amendment. I do not think anyone can doubt that it is right for her to call to the Minister’s attention the vulnerability of those who unexpectedly find themselves unemployed. I am sure he will be sympathetic to that concern, given that much of the Bill seeks to increase the penalties on those who exploit vulnerable workers. I hope the Minister will make sure that if outplacement operations are indeed covered by the 1973 Act, the relevant provisions are implemented effectively and enforced vigorously.

I am grateful to the noble Baroness, Lady Gardner, for so eloquently reading out the remarks of the noble Lord, Lord James of Blackheath. It took me back a while when he listed the three successful outplacement exercises in which he was intimately involved. In the first—the closure of the British Shoe Corporation, which was owned by Sears—I was a lawyer on the other side. That was many years ago but my mind went back to that time.

The noble Lord, Lord James, has submitted a list of a number of outplacement agencies where the Employment Agency Standards Inspectorate is involved. Will the noble Baroness assure him that those agencies are being investigated? We will keep him informed of how that goes on.

I assure the noble Baronesses, Lady Wilcox and Lady Gardner, that any agency that takes fees for work-finding services from jobseekers commits a criminal offence. Training or advice on CVs, for instance, can be provided for a fee as long as they are not related to the work-finding service. The work-seeking services cannot be made conditional on the individual paying the fee; they have to be additional and transparent. Perhaps the noble Baroness would like to give me details of the talent agencies to which she referred. They merit investigation, and I shall do my best to ensure that it takes place.

The Government support the intention behind the amendments. It is essential that there are penalties strong enough to ensure that an effective deterrent is in place for those agencies which charge illegal fees for finding work. It is equally important that, where agencies are permitted to charge for other services, the charges are transparent to users, and that the agency workers who use those services should have clear information about the terms on which they can withdraw from such services and exactly that for which they are charged.

The amendment would increase the penalty for the offence of seeking or receiving fees for work-finding to a minimum fine of £10,000 for each and every separate offence. It would also require contracts with agencies to provide particular services such as interview or curriculum vitae training to specify what is provided and the level of fee for terminations. We need to understand that two distinct things are being covered by one suggested amendment.

We acknowledge the keen interest that the noble Lord, Lord James, has taken in the operations of outplacement agencies in particular, but do not consider that the amendment is the best way to address those issues. That does not mean that we do not support the case for the latter part of the amendment; that is, the transparency and understanding of what is charged for and the terms on which people can withdraw.

The Government share the view implicit in the amendment that the current maximum penalty of £5,000 is in some cases inadequate, especially where the agency in question is highly profitable. That is why Clause 14 makes provision for certain offences against the Employment Agencies Act 1973 to be triable either on indictment in the Crown Court or summarily by the magistrates’ court, as at present. These offences include that of seeking or receiving fees for work-finding services. They do not apply in the entertainment and modelling sectors, where agencies are allowed to charge in certain circumstances. That is the crux of the matter surrounding talent agencies, to which the noble Baroness referred. We will have to look at that again. Sometimes, agency fees there are important; sometimes, they will flout the law. The maximum penalty for cases tried in the Crown Court is an unlimited fine. It goes past the £5,000 maximum. A minimum of £10,000 would be irrelevant if it reached the Crown Court. It should be at the discretion of the court to determine the level of the fine; it should not be set in statute, with a base minimum. That is where we have problems with the amendment.

The Government consider that the most appropriate way of addressing serious offences of this nature is to ensure that they are tried in the Crown Court, where the penalties available are commensurate with the seriousness or frequency of the offence. There would then be no need for stating a fine in legislation. That is surely preferable to fettering the discretion of the magistrates’ court.

Once the Bill has become law, the most serious offences under the Employment Agencies Act will be tried on indictment in the Crown Court. It therefore follows that those offences tried in the magistrates’ court, while still serious, are not as extreme in terms of level of non-compliance or abuse of agency workers. To set a minimum fine of £10,000 for any offence, as the amendment proposes, would be a most unusual step under English law. I am sure that the noble Lord, Lord James, has never come across that in his former life; nor have I in mine.

I thank the Minister for that very detailed reply, which my noble friend Lord James will read with great interest. I know that he will consider all the points raised, many of which were very interesting. The noble Lord is right that the minimum figure of £10,000, which is double the previous maximum, is rather a big jump. However, I think that it shows how strong the feelings of my noble friend Lord James are on this issue and how badly he feels some people are being treated. I shall leave the matter at this stage and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 26:

I offer a brief word of support for my noble friend in moving the amendment on behalf of our mutual noble friend Lord James. We have a great deal of sympathy for their concern about young people employed in this sort of work. Obviously, for a great many young people of this sort, whether they are at university or whatever, short-term flexible employment is a godsend. It is a marvellous way of earning money in the holidays. However, there obviously has to be a degree of protection for them, particularly in the sorts of cases that my noble friend cites. We therefore very much look forward to hearing from the Minister what the Government feel about the ideas behind the amendment. My noble friend might then want to take it further at a later stage.

I add my congratulations to the noble Baroness not only on her amendment but on the examples that she gave and the spirit in which she moved the amendment. My mind turned to the history of British employment protection legislation, beginning with the chimney sweeps in 1803 and going on to the Factories Acts of the 1830s and later, which especially provided protection for young women whose hair got entangled in the new machinery into which industrial society had moved. In a sense, her examples are a historical postscript to that era in our own times, when workers, especially young workers, have the benefit of the Health and Safety at Work etc. Act and volumes of regulations which exist but do not cover many of the situations which the noble Baroness described.

However, I should be grateful if the noble Baroness could deal with one question in her response to the debate. In speaking about certain aspects, she said that no employee can be allowed to remain in a certain place. I looked again at proposed new subsection (4)(d) in the amendment, which speaks of,

“adequate and secure transport back to the place from which the employee was collected”.

The noble Baroness will remember that when, in a previous Grand Committee sitting, we moved amendments from this side of the Committee concerning agency workers, we proposed that the notion of an agency worker becoming an employee of the user should become a standard presumption, certainly in any fixed employment agency relations. In her response, can she say who is the employer when she talks of the employee? Is she saying that the agency becomes an employer? That would normally be rejected in the contract that the agency makes with the worker. Does she accept in these amendments the still rather general notion that the presumption should be that the worker becomes an employee, in legal terms, of the end user who becomes, in legal terms, the employer? In that sense, the amendment would support the approach that we suggested in earlier sittings should be general in our law.

Without doubt, the Government support the intention behind the amendment. It is essential that there is appropriate protection for vulnerable agency workers. However, existing employment agency legislation already covers most—not all—of the proposals in the amendment. It seeks to provide a proper balance between the interests of agency workers, the companies that hire them and the agencies themselves. Regulation 20(b) of the Conduct of Employment Agencies and Employment Businesses Regulations 2003—otherwise known as the conduct regulations—already requires the employment agency to make all reasonable practical inquiries prior to the placement to ensure that it would not be detrimental to the interests of the work-seeker to work in the position offered by the hirer. Indeed, that is the case for all placements, not just where a number of staff will work on a single contract.

I assure noble Lords that the Employment Agencies Act already prohibits employment agencies requesting or receiving fees for work-finding services—with a few exceptions, as we discussed earlier. The provision is therefore unnecessary. Regulation 14 of the conduct regulations already requires agencies and employment businesses to agree terms with the work-seeker, including terms of remuneration and conditions of termination.

The amendment proposes that the employment agency should provide the agency worker with terms setting out arrangements for transportation back to the place from which the employee was collected, and that it should provide adequate and secure transport back to the place from which the worker was collected. However, Regulation 24(4) of the conduct regulations already provides that the employment agency must arrange free travel or pay for the return journey at the end of the work assignment where the agency or employment business has arranged free travel or payment of fares for the worker to the place of work.

The proposal that the employment agency should provide arrangements to ensure that illicit substances are excluded from the place of work and from any staff accommodation duplicates existing legislation on illicit substances and is therefore unnecessary. Comprehensive legislation prohibiting certain substances is already in place. It would not be appropriate to replicate it in employment legislation or impose such a duty on an agency.

I turn now to the aspects of the amendment which are not covered by existing employment agency legislation. There is no specific provision regarding expectations of sober and reasonable behaviour of the employee. The term “reasonable behaviour” is not defined in the amendment, perhaps because the noble Lord, Lord James, understands how difficult it would be to do so. In any event, agency workers’ assignments can be ended for any reason at any time, and they do not have access to unfair dismissal procedures. It is therefore unnecessary to add such provision to the Bill.

The amendment also proposes 24-hour supervision of every place where agency staff are accommodated and where a number of temporary workers are engaged on the same assignment. Agencies are already required to make all reasonable practical inquiries to ensure that it would not be detrimental to the interests of the work-seeker to work in the position offered by the hirer. Any extension of that would be impractical, excessively burdensome and probably unenforceable. In considering any new legislative burden, the Government must take carefully into consideration its impact on those affected, particularly small businesses. Most employment agencies are small businesses. The cost burden on agencies of 24-hour supervision would mean that this kind of bulk assignment would be uneconomic to most and would therefore force up the cost of supplying agency workers. It would not be in anyone’s best interests.

In practical terms, the provision would mean the agency supervising the accommodation premises during periods when it was empty—that is, during work hours. The costs would be considerable, especially where the accommodation was located some way from where the agency was based. I have seen no evidence to suggest that the scale of the issue, balanced against the excessive burdens that such a measure would impose, justifies such a measure. In fact, the burden of enforcing such legislation could divert valuable resources away from focusing on the areas where we are aware of abuses, which need to be wiped out as quickly as possible. That is where resources should go.

I turn to the proposal for parental consent. Under Regulations 24(7) and (8) of the conduct regulations, parental consent is required for individuals under the age of 18 where an assignment requires them to live away from home. The intention behind this legislative measure is clear. However, the amendment goes further by requiring parental consent for all assignments employing individuals under the age of 18 where a number of temporary workers are engaged on the same assignment. Where young people cannot get such consent from their parents, I presume that they would be precluded from taking up work. If that is what the amendment means, perhaps I may ask what one does with people under the age of 18 who are married. Do they still have to go and ask Mum and Dad? What about those for whom access to parents is impossible? We have to get young people into work and use the agency worker’s environment to introduce them to the world of work, not preclude them from taking up work because they do not want to ask their parents. The Government do not agree that there is a need for this extension. It would only add to the cost of employing young people and reduce opportunities—and it would act against the people whom we are trying to help.

It is interesting that the noble Lord, Lord James—the author of the Conservative Party’s opus on getting rid of red tape—is submitting an amendment that would add to the mountain of red tape in this area. I thank the noble Baroness for raising the issue. I hope that, having listened to this response, she will be prepared to withdraw the amendment.

I thank the noble Lord, Lord Wedderburn, for his comments. I am not sure exactly what my noble friend Lord James intended “employee” to mean. I accept the noble Lord’s view that the employer is the person, not the agency. The agency is just the middleman. The relationship is between the employee and the person who is the “end user”, as he expressed it. I will accept that, and I imagine that my noble friend will also.

We hear all the time about young people who have problems, although some young people love a wild occasion and nothing worries them. I think that my noble friend was concerned about a young person who, as part of a group, goes to a place that he believes will be perfectly harmless but finds himself miles from where he started, is stuck and is unable to get out of the situation. In other words, he is faced with a situation that he never imagined he would have to face. I am sure that that was my noble friend’s motivation. His real concern is about the duty of care.

I thought that the Minister made very practical points about how to get parental consent. Everyone now worries that parents have no control over their children. That really is worrying. I understand the difficulties that people have with the practicalities, but I think that the onus remains on society to have a duty of care to young people. This matter needs more consideration. One needs to look into exactly the type of case that he was talking about and at when the cases are settled legally.

I thought that the Minister’s concerns about the statutory instrument passed in December were very interesting. This matter should certainly be looked at and, if it is found that there are deficiencies in it, as he believes there are, then they should be looked at. The Bill would provide an opportunity to remedy any defect in that instrument.

I am very grateful for the Minister’s comments, which my noble friend Lord James will be able to read in great detail. If my noble friend brings the amendment back, he will do so himself, which will be a sight easier for me. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 16 agreed to.

moved Amendment No. 26A:

I apologise for missing 10 minutes of the debate when I had to leave the Room. However, the noble Lord now asks the key question. He and I have known one another in and out of court since 1979. He will know that the objective of the Bill, the Government and the TUC is to implement the judgment of the court at Strasbourg in the ASLEF case. I hesitate to read too much of it. I suspect that the noble Lord, Lord Lester, will read some of it and, if he does, I will be happy to read any part which he does not—especially paragraphs 37 to 40.

If the noble Lord, Lord Campbell of Alloway, agrees that we must bring our law into conformity with the judgment of the court at Strasbourg, especially in regard to paragraphs 37 to 44, that is surely the point before us as legislators. I hasten to add that the Government would be wise to relax their stern approach to that implementation, but that is another issue which I suspect does not arise from the noble Lord’s amendment.

I thank the noble Lord for his intervention. I am somewhat relieved because I thought it would be more abrasive than it was. On this issue it looks as though the noble Lord, Lord Wedderburn, and I, who have opposed each other over the years in all courts up to the Appellate Committee, are not so far apart on where the interests of the rank and file of the trade union movement lie. The Committee will be glad that there is not much more to hear because this is a matter of fundamental principle that will have to be resolved by the House on Report. One has to accept that the Strasbourg court granted the application on the grounds of the facts and circumstances of the case: that there was no hint of error in the expulsion procedures of the union. It decided, in terms, that the employment tribunal was in violation of Article 11—why?—because no proper balance had been struck between the freedoms of the trade unions and those of the members.

The devil is in the complex detail of the redrafted Clause 17 under option B to amend Section 174 of the 1992 Act, contrary to its original intention. That will still retain a distorted, loaded balance in favour of the trade union movement against the individual rights of the membership. In those circumstances, if this amendment were to commend itself to the Committee, or in due course to the House, clearly Clause 17 would be otiose because the essence of the freedom of the balance that has to be struck is put in simple English in the form of this amendment. I beg to move.

I shall make a tiny speech on this amendment explaining why I oppose it, but I shall have to make a longer speech on my own amendment and on the clause stand part. There is nothing worse than becoming the Committee’s legal bore, which I shall try not to do. I shall deal with this extremely briefly and to the point.

Everyone would agree that there is an obligation on the United Kingdom to comply with the judgment of the Strasbourg court in the ASLEF case. Article 46 of the convention says that we have an obligation to abide by the judgments of the court. Therefore, the question is simply: how do we do that? To comply with the judgment there has to be amending legislation. The Government are perfectly right to consult on how that is to be done. The Human Rights Act already obliges every tribunal and court in interpreting legislation to act in a way that is in accordance with the right to freedom of association in Article 11 of the convention. It already obliges every court and tribunal to strike a fair balance in the way that this amendment suggests.

I will deal with this when I oppose Amendment No. 27. I shall not weary your Lordships by replying to every point that was made because I shall be dealing with them in due course. The noble Lord said that I leave the question open, but it is an open question. That is the whole essence of it. It has to be dealt with on a balance of the facts in each case. That is the fundamental question. I shall come back to the details later. I apologise again for having intervened.

I was not going to speak but, having listened to the noble Lord with rapt attention because of his knowledge of these matters, I know that he is trying to strike a fair balance between the individual and the trade unions. When the European Court of Human Rights considered the matter it took into account the balance between the individual and the union when reaching its judgment. That is important. It found that our legislation does not meet what was required and needs to be amended. That is the real issue. I am grateful to the noble Lord for bringing this to our attention.

I think the Minister will find that this is a warm-up to further debates we will have today, on another day in Committee and on Report so that we can finally resolve this question. In their paper the Government put forward two options: option A, which is the Bill, and option B, which is, in effect, what is proposed by the noble Lord, Lord Lester of Herne Hill. There is also option C, which was put forward by my noble friend Lord Campbell, to strike out the clause on the basis that there is no obligation to follow the decision of the European Court of Human Rights because the judgment is not binding.

We want to hear the Minister’s response to my noble friend’s amendment. We will then want to listen to what the noble Lord, Lord Lester, has to say about his amendment in which he puts forward what is, in effect, option B. Obviously at a later stage the House will have to make a decision about the correct approach.

I suspect that the noble Lord, Lord Campbell of Alloway, has tabled this amendment in order to stimulate the general debate about Clause 17 and the European judgment that underpins it, to which the noble Lord, Lord Henley, has just referred. I shall therefore start the proceedings on behalf of the Government by discussing the rationale and the principles behind the whole of Clause 17.

I remind noble Lords that we considered these issues recently during the passage of the Employment Relations Bill in 2004. As a result, the House agreed significant amendments to Sections 174 and 176 of the Trade Union and Labour Relations (Consolidation) Act 1992. Those changes made it clear that it was lawful for trade unions to exclude or expel individuals on the grounds of their political party activities. At that time, we thought we had struck the right balance between the relevant rights within the European Convention on Human Rights. We were wrong in that assessment, as the judgment by the European Court of Human Rights in the ASLEF v UK case has since shown. In essence, the court believes that British unions should be freer than now to exclude and expel on the grounds not of political party activity, which we thought we had covered, but of political party membership alone.

The amendment refers to the need to balance conflicting rights. That, of course, is exactly what the European Court of Human Rights was asked to determine. It unequivocally stated that our law currently struck the wrong balance between the rights of a union and those of a member expelled on grounds of membership of the BNP. The court held that greater weight should be accorded to the rights of the union and its members to determine their own admission rules.

As we know, this judgment arose from the decision by ASLEF to expel Mr Lee, a BNP member. In examining the human rights issues in this case, the European Court paid due consideration to,

“the importance of safeguarding … individual rights”.

However, in paragraph 50 of the judgment, the court stated that it was,

“not persuaded … that the measure of expulsion impinged in any significant way on Mr Lee’s exercise of freedom of expression or his lawful political activities. Nor is it apparent that Mr Lee suffered any particular detriment, save loss of membership itself in the union”.

In this country, employment is not contingent on union membership. Also, collective agreements cover both union and non-union members alike, so the possession of a union card does not affect pay or other terms and conditions of employment in the UK. The European judgment is clear: there are no ifs or buts. We are therefore obliged to make the consequential changes to our law, and that is what Clause 17 seeks to do.

Further, the amendment would create legal uncertainty. It is not clear who should strike the balance to which it refers. Is it the union or the courts or is it both? The amendment is not linked to any other provision in trade union law, so it is far from clear what the enforcement mechanism or the sanctions are. The amendment refers to “expulsion” alone; it therefore does not deal with the issue of “exclusion”.

In addition, the amendment would change the way that our law interacts with the European Convention on Human Rights. At the moment, the Human Rights Act 1998 provides for the incorporation of the European convention into our legal framework. It would represent a major departure to introduce this additional reference to the European convention—and just one of the rights under that convention—within employment law. I see no case for doing so.

Before I close, perhaps I may deal with two specific points raised by the noble Lord, Lord Campbell of Alloway. First, he asked why the trade union movement opposed ASLEF’s application to the European Court of Human Rights. Factually, it did not oppose it. In fact, some unions gave financial support to ASLEF in making the complaint to the European court.

Secondly, the noble Lord asked what the other option was on which we consulted and why we rejected it. The other option was to permit exclusion or expulsion for membership of a political party, provided that such membership was incompatible with the union rules or an objective of the union and the union’s decision to expel or exclude was taken in accordance with the proper procedure of the union’s rules.

The Government rejected that option because it would needlessly complicate the law and would lead to greater uncertainty. Also the option contained a redundant element because the acts of a trade union are always open to challenge if they conflict with the union’s own rules. Given the absolute lack of evidence for this threat of abuse, this would be a clear instance of unnecessary over-regulation. The option may also produce some unfortunate side-effects, including the opportunity for vexatious litigation by politically motivated extremists.

I am perfectly aware that this is just the beginning of a detailed debate on the whole of Clause 17, with its many aspects. At this point I ask the noble Lord, Lord Campbell of Alloway, to withdraw his amendment. I respect where he is taking us and I know that this matter will be discussed for some time to come.

I am obliged to all noble Lords who have spoken, including the noble Lord, Lord Lester of Herne Hill. I am afraid I am not able to withdraw the amendment. Without going into a form of argument with the Minister, I cannot accept his explanation about why this application by ASLEF was opposed. That is not a crucial matter but it may be a very important matter when one has to consider why the Government went for option A, then for option B, and now they are still at it. Why? The two are related and at some time there will have to be a better explanation, with respect, than the one given just now.

Perhaps I could tell the noble Lord that if—

Are you withdrawing it?

No, I am not withdrawing it. Oh! Yes, I have to. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 17 [Exclusion or expulsion from trade union for membership of political party]:

moved Amendment No. 27:

We have not heard about this with the rule books before. If it is to be a serious contribution, will the noble Lord provide us on Report with information about how the books were changed, when they were changed and what they state? I accept what the noble Lord says, but I have to know the details.

I do not think that the noble Lord understands what I am trying to say. It is my fault, I am sure. What I am saying is that unions are autonomous organisations. They have very important autonomy and independence. It is very important that that is respected. What they do with their rule book is a matter for them and their members. It is not the business of government to intervene and tell them what to put in their rule books. If they want the privilege of excluding people on the basis of mere membership of a political party, that obviously is a serious matter.

Although I use the easy target of the BNP, it could just as well be the Liberal Democrats, an animal rights party or the Green Party. The Government talk about mainstream parties. I hope they regard my party as mainstream, but I am not sure whether they regard the Green Party or some new party as mainstream, so one has to be a bit careful about dealing only with what is called mainstream.

Let me take the easy position of the BNP because no one here would have much sympathy for it. Suppose the trade union movement considers that the BNP is so obnoxious in its practices, such as those that were indulged in in relation to Lee, for example, that it wished to have protection and to exclude or expel solely on the ground of membership of that party. My amendment would require it—Members of the Committee may not think this is sufficient but I think it is just about sufficient—first, to have a rule book in order, with which it will comply in deciding to exclude or expel. If it does not want to do that it does not have to, but if it does not, it will not have the protection of the law. Secondly, the exclusion or expulsion should not prejudice the individual’s livelihood or conditions of employment.

The Minister has pointed out that we no longer have the closed shop. That is absolutely true, and thank goodness it is. However, the Minister as a former employer—organisation representative—will know that it is possible for unions to put pressure on employers to act in a particular way that will adversely affect the livelihood of the individual. The other safeguard that I have written in is that that abuse should not be capable of happening. Provided a union keeps its own house in order with its own rule book, applies the rule book properly, and does not go to an employer through the back door, saying, “This chap is a fascist so sack him”, it would be acting lawfully under my amendment. If we do not have my amendment—

I—

Perhaps I could just finish explaining. I will then certainly sit down. If one does not have my amendment and just leaves it to the government position, what then would be the position? Or suppose one takes the position that is being advocated when we say that Clause 17 should not stand part? Let us just inspect those alternatives. If one said that Clause 17 should not stand part, the inevitable consequence would be that we would be in breach of the judgment in the ASLEF case. That is why we must have Clause 17 in some form.

I—

Let me just finish. In fairness, I have to try to explain this first, and then I can be shot down. If on the other hand, we have Clause 17 as it stands, with no safeguards, the only safeguard would be the safeguards at common law. I promise everybody here that the BNP, which specialises in milking for damages in claims of this kind, would go before the courts here and in Strasbourg. My object is to minimise the risk of litigation and maximise the certainty of the law.

I will now of course give way to the noble Lord, Lord Wedderburn.

I am most grateful to the noble Lord. He proceeded on to another point. First, I want to say to him that my spirit is with the beginning of his amendment. Let us look at the amendment and ask him a question. Paragraph (a) of proposed new subsection (4C) is precisely in terms of paragraph 39 and subsequent paragraphs of the judgment. Proposed new paragraph (b), however, might provoke the question: which parts of the judgment does it support? We are agreed that the Act is not simply satisfying our spirit but is satisfying implementing the judgment. It may not be convenient for the noble Lord to tell me now, but at any time he is able, I would like to know what general principles of human rights law are at stake. I understand that they could be argued very strongly. Is there anywhere in the judgment something which supports proposed new paragraph (b)? I think I know what he is going to rely on, but we ought to have it on the record.

I was not going to deal with this, and am therefore particularly grateful for the opportunity to do so; it is right that I should.

In the form in which I first tried to draft this, I had some language at the end about the union not acting arbitrarily or capriciously. That was very broad and a bit vague. I therefore tried to narrow it to the only form of abuse of a dominant position—or trade union muscle power—that really matters to the individual. I am not suggesting that the way I have tried to do it is the only way. However, to answer the noble Lord, Lord Wedderburn, I say that in the court’s judgment the question is decided on the basis of facts. The court says that Mr Lee did not suffer,

“any particular detriment, save loss of membership itself in the union”.

That is true. It says in paragraph 50 that he lost nothing,

“in terms of his livelihood or in his conditions of employment”.

It is clearly saying that it might have had to come to a different conclusion if real detriment had been suffered by Mr Lee. That is the first point.

The judgment goes on to say:

“The Court has taken account of the fact that membership of a trade union is often regarded, in particular due to the trade union movement’s historical background, as a fundamental safeguard for workers against employers’ abuse and it has some sympathy with the notion that any worker should be able to join a trade union”.

It then deals with that in a way favourable to the Government’s position:

“However … ASLEF represents all workers in the collective bargaining context and there is nothing to suggest in the present case that Mr Lee is at any individual risk of, or is unprotected from, any arbitrary or unlawful action by his employer”.

The answer of the noble Lord, Lord Wedderburn, is that that paragraph indicates that—

I—

The noble Lord, Lord Wedderburn, will have plenty of opportunity to reply to this in a moment. Can I just get it out and not keep having to sit down?

I—

If the noble Lord, Lord Wedderburn, will be patient for a moment, I am trying to explain a complicated thing in a simple way. I am trying to explain that ASLEF, in this case, succeeded because of the overreach in the legislation, but the court was careful to say that the individual would suffer no detriment other than loss of membership. My amendment is intended to—and there may be other ways of doing this—deal with that class of detriment.

There is one thing wrong with my amendment—

The noble Lord, Lord Wedderburn, keeps making faces at me. If he will please just wait for a moment.

That is his normal physiognomy.

Is it important that there be safeguards against abuse. A trade union is not the Garrick Club or any normal private association. I remember the noble Lord, Lord Bach, referring to various private bodies, but a trade union is not like a normal private body. That is why it is so important, why we all support trade unions and why there must be a balance with some remedies and safeguards. I think that the Government will be sympathetic to the need for some safeguards. The question is: what safeguards? The Government are saying that the safeguards are in the common law and the courts and that the individual can always go to court, but that is not a very happy outcome for trade unions. We go back to the old days when I was young and when Lord Denning was the only safeguard in the Court of Appeal in cases involving alleged abuses of trade union power. I should like to keep this as far as possible away from the courts—whether it is the European court or the English courts—and the way to do that is to write in proportionate and limited safeguards. We should not reject the whole of Clause 17, which would put us in further breach of the convention—we cannot, and should not, do that—but equally we should not have option A with no safeguards.

Therefore, my search, as one would expect of a Liberal Democrat, is for a compromise—a moderate, sensible, common-sense compromise. I want to avoid a lot of union bashing in the Chamber and in the other place. Surely we can find a sensible way to go forward or reach agreement on this. It may well be that how I have tried to do it is not good enough—I am perfectly open to other ideas—but that is what I am trying to do and I have tried to explain it without legal gobbledegook. However, I have plenty of legal gobbledegook if anyone wants to have it. I beg to move.

Perhaps I may ask the noble Lord, Lord Lester, one question, although I am afraid it involves a legal principle. We are talking about law and therefore we should talk as lawyers. The first principle that one teaches a law student, and which one was taught oneself, is that a case is authority for its principle and ratio decidendi, not for its facts. The facts of this case are not part of its ratio. Therefore, surely the noble Lord agrees that, much though I too should like to see sensible wording which limits this judgment, the judges have not given him any wording. He has therefore put in his own words, which are rather good because they are almost as narrow as you can get. However, I plead with the noble Lord to consider that they could be even narrower. He has included,

“in accordance with the union’s rules”.

That is agreed, because the court makes a precise equation between religious bodies, a voluntary political party and a trade union as voluntary bodies. We agree on that and it is sensible to put it in the rules, but it is beyond that that we must agree on a word or two. I plead with the noble Lord to reconsider his further paragraph and perhaps to engage in discussions with the Government so that the wording is in accordance with the ratio, and not merely the facts, of the case.

Perhaps I may answer the question, especially as it comes from a noble Lord who tried to teach me the law of contract and uses words such as “ratio” in relation to the Strasbourg court. The one thing that I do a lot of is argue in front of that court and read its judgments. I assure the noble Lord that we are not engaged in looking for the ratio in the way that he is doing and as one would do for traditional English judgments. If one looks at the whole reasoning process, one will find what I have just said, which is that the court, as its ratio—if one wants to put it in that narrow way—decided that, as the individual did not suffer any detriment other than loss of membership and there was no evidence of arbitrary or capricious conduct of a wider kind, on the facts of that case the legislation was too broad.

In answer to the comment of the noble Lord, Lord Wedderburn, about my choosing words, the Government have correctly interpreted the judgments—it is not just me who has done so. In option B, which is what my amendment tries to do, they say:

“The special category of conduct relating to political party membership and activities … should be retained but the rights not to be excluded or expelled for such conduct should be significantly amended. The amendment would refer”—

as mine does—

“to the limited conditions under which it would remain unlawful for the trade union to exclude or expel an individual on the grounds of their political party membership or activities. Those conditions would specify that the union’s decision would be unlawful unless the political party membership or activity concerned was incompatible with a rule or objective of the union, and the decision to expel or exclude was taken in accordance with union rules or established procedures”.

That is the first limb of what I have done in the amendment. However, the Government have not dealt with oppression and detriment, which is what I have sought to do narrowly.

The weakness of the amendment is that it does not prohibit the employer acting arbitrarily as well, for which it could be criticised. However, it deals with the vice of putting pressure on the employer behind the scenes. That is what I have sought to do. What I do not want to do is to leave the clause open to oppositionist, aggressive, anti-union interpretation, which is not the object; the object is to deal with this matter and avoid litigation. I am convinced that if one leaves the clause as the Government have done, the BNP will exploit it. It will say, “This does not go far enough”; it will take another case; it will go through the English courts; it will go back to Strasbourg. That is something that I wish to stop, in the interests of trade unions.

I was surprised to hear that the noble Lord, Lord Lester, has been in touch with the TUC, because, according to the information that I have received from it, it is not in favour of the amendment. In particular, it is opposed to proposed new subsection (4C)(b), which states that,

“exclusion or expulsion does not prejudice the individual’s livelihood”.

It points out that we no longer have closed-shop agreements in this country—we did once; we do not now. This is not a matter for unions. Unions have no power to alter or prejudice an individual’s livelihood any more, although they might once have had. The TUC is totally opposed to the wording in the amendment on that basis. A number of views have been expressed about the text of the legislation. I have said that I would prefer people to be excluded on the basis of activity rather than membership of a political party, which has its problems. On the other hand, if faced with a choice between the amendment and the proposed legislation, I would have to support the legislation as it stands.

Perhaps I may clarify one thing for the noble Baroness. When I said that I had seen the TUC and the Government, I did not say that either of them had agreed with me, which of course they had not. As the noble Baroness should know, the TUC position has been to oppose any safeguards, which it said in the consultation. With that, I do not agree. We had a spirited disagreement. I could answer the points in due course.

An individual member may now appeal to the certification officer, as many of them do, if they feel that the rules of the union have been unfairly exercised against them. There is no need for concern about individuals being unfairly dealt with under the terms of the Bill if it becomes law, because there are methods which individuals can use, and frequently do.

I did not expect to be supported by the present attitude of the TUC, but I want to make it perfectly plain that the noble Lord, Lord Lester, who has dragged union bashing and anti-unionism into the debate, can give it up as far as I am concerned because it simply does not apply. It does not enhance his argument, and his argument is not acceptable to the TUC. I gather that, in any event, the noble Lord, Lord Wedderburn, has made the point that this has got to be kept open and cannot be drafted in a very specific way. The Strasbourg court could have found the other way if the proceedings had been unfair or there had been some tremendous disadvantage to the worker. It could have found the other way for 101 other reasons on the facts of that case. That is why the noble Lord, Lord Wedderburn, is in on the essence of what I am trying to do. You cannot draft tight; you have to set out a principle that, of itself, allows a totally fair decision on the balance of the facts of the case. I am very comforted—and I need a bit of comfort at times—to know that the TUC does not think that what I am proposing is totally dotty.

I agree with the noble Lord, Lord Campbell of Alloway. We often agree on issues. He has told me that he has represented trade unions in many cases, so he is speaking from experience. I know that the noble Lord, Lord Lester, is trying to achieve a balance. We all want to achieve a balance that is fair on both sides. I say to the noble Lord, Lord Lester, that a trade union could not have anything to do with the terms and conditions of employment—he said it could go behind the scenes and get rid of them. However, if a judgment was based on that, the other side could not guarantee that that had not happened. Is the noble Lord taking the right approach? I ask him, with all his legal experience, whether there is any way that the union could influence the terms and conditions of employment, which are a matter for the employer rather than the union?

I intervene to say how grateful the Committee is for the brevity with which the noble Lord, Lord Lester, introduced his amendment. He described himself as an optimist by nature, but I think the optimists on this occasion are the Government in trying to get the Bill through its Committee stage in two days. It looks as though we are approaching a fourth day to finish it off. I think the noble Lord would agree that we are not going to finish it tonight if we want to finish by six, which seems to be the rule.

In my submission, the judgment of the European Court of Human Rights is not binding. We do not have to legislate on this. Therefore, our preferred position would be that Clause 17 does not stand part of the Bill. That is something that we would wish to pursue at a later stage. I accept that, as the noble Lord, Lord Lester, put it, there are different, conflicting rights under the convention; in particular, the conflict between Articles 10 and 11: the freedom of expression and the freedom of association. In our view, and certainly in the proud history of this country, freedom of speech is possibly the most important one at this stage. Therefore, in due course, we would want to support, as I made clear, the deletion of this clause. Failing that, going back to the options put before us by the Government in their consultation document, we think that option B, proposed by the noble Lord, Lord Lester, is preferable. If we cannot strike out Clause 17, we would consider very strongly supporting the amendment in the name of the noble Lord, Lord Lester, rather than what is proposed by the Government.

I welcome the involvement of the noble Lord, Lord Lester of Herne Hill, in the debate. He is not only an authority on human rights law, but he is also an authority whom I have followed for many years. He is motivated by a desire to ensure that our law complies with the European Convention on Human Rights and by a desire to ensure that the rights of individuals are properly protected. I can assure him that Her Majesty’s Government share those desires completely. The noble Lord believes that extra statutory safeguards are needed. Later I shall turn to the way in which he has constructed those safeguards. I shall also say something about the overall argument for new safeguards. I hope he agrees with me that the important safeguards that currently exist are unaffected by Clause 17.

The noble Lord mentioned the 1970s when the only safeguard was running down to the Strand when you knew that Lord Denning was sitting in the Court of Appeal. I—being a tad younger—sat at the feet of all three noble Lords present who specialise in law. At that time, I was at University College, London. We would be sitting at the top of Southampton Row and, if we heard that Tom Denning was about to sit in the Strand, we would all leave the lecture room, no matter what was on, run down Southampton Row, pile into the public gallery and listen to what some saw as the only safeguard of an individual’s rights at that time. The noble Lord brought back memories of a very informative time of my life.

Existing or former union members today are still able to go to the courts or the certification officer to challenge whether the union's decision in any case is in accordance with its rules, be they procedural or substantive. Arbitrary acts can therefore be effectively challenged. Previous cases have mainly involved a union's decision to expel a person, so the safeguards deal with the main types of case which could possibly arise. I guess the current safeguards apply to virtually all cases, but, of course, not all. I am grateful and happy that we are not in those dark days of 1970 again.

The case for extra statutory safeguards rests on the belief that abuse will occur. But where is the evidence that such abuse is an actual practical issue? In those few cases where trade unions have acted against individuals on the grounds of their party membership, it has generally involved political extremists, either of the left or, more recently, of the far right. Does the noble Lord have any examples where arbitrary acts have been taken by trade unions to expel or exclude individuals for belonging to any mainstream political party? I think not.

In addition, it is essential to study closely the court's decision in deciding whether further safeguards, which must inevitably limit union autonomy, are needed. The court unequivocally stated that the collective rights of the trade union must take precedence in the UK’s conditions. In our circumstances, the loss of union membership does not affect the right to work because the closed shop is unlawful. In our system of employment relations, where bargaining units cover both union and non-union members alike, a person's terms and conditions of employment are not affected by the loss of union membership.

The noble Lord argues that the safeguards are needed in order to comply with the convention, but, on a close reading of the judgment, we believe there is a stronger case to suggest that his amendment would actually have the opposite effect. His approach would expose the UK to the real risk of further adverse judgments by the court. There are therefore good reasons why extra safeguards should not be introduced. Why complicate the law if there is no problem to address? Why create new statutory safeguards when safeguards already exist? I believe that there is a real danger that the approach favoured by the noble Lord might result in excessive regulation and a breach of the European convention, which would indeed be again exploited by the extremists. Indeed, it could be justly criticised as gold-plating.

Oh!

I thought the noble Baroness might enjoy that one.

The amendment would undoubtedly complicate the law. It would retain the existing wording of Sections 174 and 176, both of which are already complicated in their construction. Moreover, the noble Lord’s amendment would actually add new wording to Section 174. Its effect would be to set additional statutory conditions regulating the ability of trade unions to expel or exclude a person for “protected conduct” and, indeed, for any form of conduct.

The European court’s judgment was about the need to give greater autonomy to trade unions. I fear that this amendment may limit that autonomy further. For example, proposed new subsection (4C) sets new conditions on a trade union when it excludes or expels a person for any form of conduct, be it “protected conduct” or non-protected conduct. The union’s actions must be in accordance with its “rules or established procedures”, and the exclusion or expulsion must not,

“prejudice the individual's livelihood or conditions of employment”.

There are several problems with that wording. First, what does it precisely mean? At the very least it will give rise to debate and legal wrangling, more delay and costly legal intervention. What does “established procedures” mean? What would,

“prejudice a person's livelihood or conditions of employment”?

Indeed, could any form of detriment, however minor, constitute “prejudice”? Where “prejudice” would occur, an expulsion or exclusion is always unlawful, whatever the conduct in question. For example, where a union member assaults a union official, the union could not lawfully expel that person if some “prejudice”—which could have a wide meaning—occurs as a result. The noble Lord’s amendment therefore introduces an extra limitation on current union freedoms.

The noble Lord’s amendment also changes the definition of “protected conduct”. It would make it unlawful for a trade union to expel or exclude a person based on membership of a political party unless the individual concerned was a member of a party whose “values and ideals” were incompatible with the “rules or objectives” of the union. Again, what does “values and ideals” actually mean? Is this extra wording sufficiently clear to avoid unnecessary, but presumably predictable, legal challenge, dispute, delay and cost?

In adding these extra restrictions on trade unions’ freedom to determine their membership, the amendment would produce some uncomfortable consequences, including—the noble Lord referred to this—the opportunity for vexatious litigation. It would enable the BNP, in particular, to challenge trade union decisions.

I apologise, but I want to intervene for a constructive purpose. In view of what was said by the noble Lord, Lord Wedderburn, in one context, the noble Baroness, Lady Turner, about the TUC in another context, and the noble Lord, Lord Hoyle, will the Minister be good enough to make his own inquiries of the TUC before we return? It would be very helpful. I merely put that forward as a constructive proposal.

I assure the noble Lord, Lord Campbell of Alloway, that I will make those inquiries. I will ask for information to get a fair picture and a fair balance.

I recognise that Clause 17 has raised concerns. Of course it has. I guess it has raised concerns in people who do not know the whole picture; it certainly has raised concerns on all sides of the Committee. I will address those concerns in more detail during the stand part debate that follows. I accept, however, that the noble Lord has raised some important points about the convention and the case for some form of extra statutory safeguard. The Government will reflect on those arguments and those of other noble Lords. I make it clear that we understand the spirit behind the amendment. While we now invite the noble Lord to withdraw his amendment, we do not diminish it in any way and we hope that further consideration can take place. We would listen to more counter-arguments. Hopefully, we can achieve a satisfactory resolution before Report.

I am grateful to all noble Lords for their helpful contributions to the debate. Of course, I am greatly heartened by the contribution of the noble Lord, Lord Henley, because it seems that that will concentrate minds as much as anything. The fact that it is likely that both opposition parties will be taking a common position if the Government do not budge will, I hope, concentrate ministerial minds on finding a solution to this important question.

Secondly, I met the trade union officials and we appreciated our dialogue. None of the points made was that of the noble Baroness, Lady Turner, about the certification officer. The certification officer has no power to deal with employees who are excluded from trade unions. That was one reason why that would not work, as we explained to the TUC. The TUC also argued that the common law and the contract of membership provide effective safeguards for individuals. However, that is exactly the position I wish to avoid. Although I revere the late Lord Denning, I must say some of his judgments were deeply reactionary and, on one or two occasions, even sexist. Therefore, although I loved the man and many things about him, I would not like to have to rely upon him, or his children or grandchildren in the courts, for safeguards. I speak as somebody who has acted both for and against trade unions, including a great case against the noble Lord, Lord Wedderburn, that he may remember. The judge in question went to Ascot during the long vacation instead of focusing on what we were dealing with. There are serious limitations in using the common law as the safeguard, as the TUC quaintly now seems to want to do. I want to do away with that.

So far as the noble Lord, Lord Henley, is concerned, it is important to understand, as Conservative Governments have well understood, that Article 46 of the European convention obliges the United Kingdom to give effect to a binding judgment. It is therefore no use saying, “We do not like the judgment, so we are not bound by it”. We are bound by it under international law, and would be in real trouble in the Committee of Ministers of the Council of Europe if, for the first time in our history with the convention, we did not comply. That is why the stand part debate is a waste of time. We must have legislation to comply with the judgment. The question is what it should say.

The Minister, who is very kind, was a bit unkind in criticising the wording of my amendment, the first part of which came from his own option B. The words are: “Those conditions would specify”—blah, blah, blah—that it was,

“incompatible with a rule or objective of the union, and the decision to exclude or expel was taken in accordance with union rules or established procedures”.

I just took the Government’s words and put them into my amendment. However, parliamentary counsel can no doubt do better than that. All I am asking is for parliamentary counsel to be instructed between now and Report to come up with a wording which satisfies him or her and the Government, and can be put to and discussed by us so that we can all reach agreement.

I am an optimist. This is not gold-plating; it is ridiculous to suggest that it is. The Government are taking away safeguards agreed by a Conservative Government and Labour Opposition that were regarded as necessary and are now to be watered down. If the Bill stands as it is, the Government are leaving it to the BNP to litigate on whether the abolition of all safeguards is compatible with the convention. That is why it is dotty to leave it as it is, and why the noble Lord, Lord Morris of Handsworth, was right to describe it as “barking”—with respect to the inhabitants of Barking.

For all of those reasons, I withdraw with a sense of optimism—but this is not the last word. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

This may be convenient moment for the Committee to adjourn.

The Committee stands adjourned.

The Committee adjourned at 6 pm.