That the draft regulations laid before the House on 18 January be approved.

Relevant document: 6th Report from the Joint Committee on Statutory Instruments.

My Lords, now for something completely different. For a country proud of its tradition of tolerance and fairness, the blacklisting of trade unionists should be anathema. It is the sort of outdated practice we had hoped to leave behind long ago. It is underhand and unfair; it is discriminatory; and it blights people’s lives. Workers have a fundamental right to join trade unions if they wish. There is also a fundamental right for trade union representatives and other members to participate in their union's activities. Trade union representatives are the unsung heroes of the trade union movement. These volunteers provide valuable support for millions of workers and help to create safe, fair and productive workplaces. No one should lose out because of their union role.

We have long had legal protections in place to safeguard trade unionists from discrimination. These legal protections fulfil our international obligations to guarantee freedom of association, and are widely accepted as essential for good industrial relations.

For many years, it appeared that the protections were broadly sufficient. The last known blacklister—the Economic League—was exposed and its work terminated in the early 1990s. We had hoped that with its demise we had seen an end to that style of industrial relations. Sadly, that was not to be.

In March last year, a large-scale and clandestine vetting system was discovered in the construction industry, run by an organisation called The Consulting Association, or TCA. Through painstaking work, the Information Commissioner found evidence that 40 construction companies had engaged with TCA’s secret vetting system, containing details of some 3,300 people, many of whom were trade union activists. That vetting system had been systemically used to deny gainful employment to those listed.

TCA was successfully prosecuted by the commissioner for breaching data protection law, and it was shut down. Its proprietor, Mr Ian Kerr, was fined £5,000, and 15 enforcement notices were issued against TCA and some of its user construction companies to stop them collecting and using personal data for vetting purposes.

We have to ensure that that clear breach of rights can never happen again. That is why we are introducing the draft regulations. We believe that trade union blacklisting should be made expressly unlawful as a matter of principle. We should not rely on more general legislation, such as the Data Protection Act 1998, to achieve that effect. The regulations build on that legislation, extending it to ensure that we send a clear signal to employers and compilers that activities associated with such lists are wrong, damaging and unlawful. They provide clear and targeted remedies for individuals and trade unions. Blacklisting represents an aggravated form of discriminatory behaviour. In recognition of that, the employment tribunal is empowered under the regulations to award £5,000 as the minimum level of compensation, so most complainants should be able to receive higher compensation under the regulations than they would if they relied on existing protection under trade union law.

I will now briefly explain some of the other main features of these draft regulations. They are made under Section 3 of the Employment Relations Act 1999, which provides a power to introduce regulations which would prohibit the blacklisting of trade unionists. In Regulation 3, a prohibited list—the name that the regulations give to a blacklist—is tightly defined. Such lists need to contain details of trade union members or activists, and, importantly, they must also be compiled with a view to being used to discriminate in recruitment or employment on the grounds of trade union membership and activities. I stress that.

We believe that very few lists which employers or others hold would meet those criteria. For example, when the draft regulations were debated in the other place, it was asked whether the list of individuals barred or restricted from teaching or otherwise working with children and vulnerable adults would be prohibited by the regulations. That is an important, legitimate list, which is held by the Department for Children, Schools and Families and utilised for vetting and security purposes. It is possible—indeed likely—that some trade union members will be on that list. However, it will be unaffected by the regulation because the DCSF list was clearly not compiled with the purpose of discriminating on grounds of trade union membership or activity.

In Regulation 4, we provide exceptions for certain activities involving blacklists. For example, it will permit whistleblowers and lawyers to access such lists in certain circumstances. Under the regulations, there are avenues for complaint to either the employment tribunal or the court. In the latter case, the courts can exercise important order-making powers which are unavailable to the tribunal.

As our impact assessment shows, the costs of complying with the regulations are very low. Businesses and individuals should not be involved in blacklisting because, in the main, it is already unlawful under existing law. Some businesses will incur some modest costs in familiarising themselves with the regulations and checking their current listing practices. The impact assessment concludes that small businesses are much less likely to need to check lists, in part because union membership is very low in such companies. Small businesses are therefore much less likely to hold lists of trade unionists, such as lists compiled to enable trade union members to pay their union subscriptions from their earnings at source.

We must send out a strong message to all those who feel that it is acceptable to act in that corrupt and deceitful manner. We know that the vast majority of employers do not use blacklists, and the regulations do not interfere with their normal vetting practices. The draft regulations are balanced, reasonable, and robust. They have been through two periods of consultation. They have been built to complement existing protections in the area, which are found in trade union and data protection law.

The regulations have been debated in the other place and accepted, and the Joint Committee on Statutory Instruments has raised no objection to them. I strongly believe that this new piece of legislation will bring to an end the disreputable practice of blacklisting once and for all, and I therefore commend the regulations to the House.

My Lords, as my honourable friend Jonathan Djanogly made clear in the debate on these regulations in the other place on 8 February, the Conservative Party is absolutely opposed to discrimination against individuals, and discrimination on the grounds of trade union membership is no exception. In fact, it was under a Conservative Government that the Trade Union and Labour Relations (Consolidation) Act was enacted in 1992, Section 137 of which made it unlawful for employers to discriminate against individuals due to their membership of a trade union.

These regulations recognise that it is perfectly legitimate for employers to keep a list of union employees for a number of administrative reasons. However, they will increase the burden on employers because it will make it more difficult for those who hold such lists to know when their actions break the law. The same list could theoretically be kept by two employers and one could be in breach of the new regulations while the other is not. This uncertainty is likely to place further strain on the normal administrative practices of employers in dealing with workers, which necessarily involve compiling and keeping lists. There is also the risk that employers may be subject to unnecessary, perhaps vexatious, actions against them by employees for being in possession of such lists, which are, in fact, being used exclusively for legitimate purposes. For example, my honourable friend pointed out the legitimate need for an employer to know which employees are union members, so that negotiations can be had with the union on their behalf, and which are not union members and so need to be negotiated with directly. The end results of regulations such as these can only be to increase the number of wasteful employment tribunal claims.

It is already unlawful for employers to discriminate against individuals on the grounds of their trade union membership or activities. The final impact assessment on the regulations describes them as having,

“a wholly positive effect in safeguarding personal information”,

but are they really necessary? Surely better enforcement of existing legislation would have an equally positive effect.

Turning to the case of the Consulting Association, which inspired these new measures, it should be highlighted that the illegal actions were discovered not, of course, as a result of these regulations, because they were not in force, but as a result of the Information Commissioner’s existing investigative powers under the Data Protection Act. The creation of lists in relation to trade union membership is treated as sensitive personal data and is therefore covered by the Data Protection Act, which provides comprehensive protections for data subjects and imposes duties on data processors. It did not require these regulations. It is therefore difficult to see that the way to work towards solving this issue is through yet more regulation. Why would it not be more appropriate, if, indeed, it is necessary, to make improvements to the Data Protection Act to enable it to be put to more effective use in this area?

There is little or no evidence about the scale, if any, of blacklisting taking place. Indeed, the final impact assessment of the regulations describes blacklisting as,

“an unusual, and uncommon, activity”.

The Minister acknowledged that in his introductory remarks. The real problem is the covert nature of the blacklisting that takes place, which, unless I am mistaken, the regulations do not address. Legislation is already in force to tackle discrimination once it is discovered. The facts of the Consulting Association case suggest that the wrongdoers were not ignorant of the law but were keen to conceal their activities. The final impact assessment states that the objective of these regulations is to,

“give a clear signal about the unacceptability of blacklisting”.

Clearly, targeted measures would be far more useful than signals. The regulations do not create any new investigative powers, and further cases are likely to be discovered only by enforcement of the Data Protection Act. The burden on businesses is real, but currently unquantifiable, so it is completely unclear how accurately the costs to business have been measured by the Government. In July 2009, the initial impact assessment predicted costs of £526,000, but in the January 2010 impact assessment that figure was reduced by more than 50 per cent to £285,000.

The costs and burdens to businesses are twofold. First, there are the costs of them familiarising themselves with these new regulations and implementing changes. Secondly, there are costs associated with failures in compliance or in dealing with legal actions by employees where there have been alleged failures. The January 2010 impact assessment recognises but does not provide a figure for the potential additional costs where there has not or may not have been full compliance by businesses. It is estimated that 3,200 public and private sector employers will be impacted by these regulations.

It is an unfortunate time to lay this additional regulatory burden on businesses, particularly when it is demonstrably unnecessary. The fact that the Government initially postponed indefinitely implementation of these regulations suggests that they do not add anything to existing legislation. The CBI has described the measures as,

“knee-jerk reactions to one-off events”.

A further disturbing issue is the perfunctory response to feedback from the consultation process. The Government failed to address trade union concerns about the scope of these new regulations. The Union of Construction, Allied Trades and Technicians feels that there is inadequate protection under the new regulations.

In conclusion, we need a full explanation from the Minister if we are not to conclude that this is an example of yet more unnecessary, burdensome red tape at a time when the focus of all businesses should be on getting on with business without distraction from more expensive and unjustified regulation.

My Lords, I rise from these Benches to welcome the Employment Relations Act 1999 (Blacklists) Regulations 2010. The order has taken 11 years to be brought forward and we welcome the fact that the Government have decided to properly legislate on the issue only once clear evidence of its necessity has been proven. Liberal Democrats support all measures that seek to prevent discrimination on grounds of trade union membership or activities.

We would like to probe the Government on their plans for continued monitoring of this area of trade union law and on what direct consultations they held before bringing these regulations forward. We are well aware of the Consulting Association case referred to earlier, which has effectively required that these regulations are brought into force. What consultations did the Government hold before and after this case with trade unions and other employment-related bodies on these issues? What plans are there to continue to monitor their impact? What information and communication are the Government planning to make employers as a whole aware of the existence of these regulations?

My Lords, in response to the comments made by the noble Lord, Lord de Mauley, it is important that we explore the genuine concerns that he raised. In relation to legitimate lists, lists in themselves do not present a problem. It is the use to which lists are put and the abstracting of names from those lists, as we saw in the case that was put before us. It would take an employer making a decision to go down this road before there would be any danger of a prosecution under this Act.

The noble Lord, Lord de Mauley, asked why we do not amend the Data Protection Act. The problem is that it would involve changing primary legislation. We have a specific regulation-making power to prohibit blacklisting. It therefore makes sense to use this power rather than amend an Act which deals with many other matters relating to data protection. He said that there were not enough targeted measures and only signals for employers. The regulations make it clear that not only is blacklisting illegal, but set out remedies for the victims. The CBI said that this is a “knee-jerk reaction”. As the noble Lord, Lord Lee of Trafford, pointed out, we waited until we saw whether there was any need for regulations, and indeed it was nearly 11 years before a case emerged. Quite frankly, we hoped that there would not be any need for them, but it was obvious from this case that there was such a need.

We do not believe that we have underestimated the impact assessment. We think that we have it right and that for small firms there will be little or no effect and, for larger firms, little other than familiarising themselves with the provisions. We think that that is absolutely right. Good employers have nothing to fear in these regulations and they will not need to adjust their behaviour. The covert listing of personal information is already unlawful under the Data Protection Act. We have prepared guidance on the regulations for the direct.gov and BIS Business Link websites which will be posted when they come into force; indeed the draft guidance has been available on the BIS website since 12 January. The noble Lord asked what consultations had taken place. As I said, there were two rounds of consultation, the first taking place between February and May 2003 and the second between July and August 2009. A further question was put in relation to monitoring. I feel sure that we will need to monitor the impact and I am looking for inspiration from the Box. I think the answer is that we will review the regulations after two or three years and will check on any tribunal cases that arise. However, we doubt whether there is a good case for undertaking an early and formal review because of the rarity of blacklisting.

In conclusion, we firmly believe that these draft regulations are forceful enough to put a stop to this outdated practice once and for all. Some trade unions have indeed asked us to go further and make blacklisting a criminal offence, but it is worth remembering that these regulations do not exist in isolation. They operate in the context of closely related protections concerned with trade union rights and the use of personal data. It will be their combined effects which will curb blacklisting. We believe that the draft regulations are targeted, balanced and proportionate. I stress that they should not affect normal listing activity by employers so that fair and open vetting procedures can continue as before. Most businesses will be unaffected by the regulations and, as I have said, we estimate that the compliance costs will be low.