House of Lords
Thursday 25 February 2016
Prayers—read by the Lord Bishop of Bristol.
Tax Treaties: Developing Countries
To ask Her Majesty’s Government how many tax treaties with developing countries are currently under negotiation, and what principles underpin the United Kingdom approach to those negotiations.
My Lords, the UK is currently at various stages of discussions with six countries classified by the United Nations as developing countries. The UK’s starting point in negotiations is based closely on the OECD model double taxation convention. Some developing countries prefer to follow the United Nations model, the provisions of which differ in some areas from the OECD model. The UK has agreed to adopt some of those provisions in its treaties.
My Lords, we agree in this Chamber regularly on the need to improve economic activity and tax collection in the developing world, yet tax treaties can regularly count against that objective. A new report this week by ActionAid shows that Britain has some of the most restrictive tax treaties around the world, in particular that with Malawi. That treaty was signed in 1955 by Sir Gilbert Rennie, the then governor of Northern Rhodesia and Nyasaland, and Rab Butler, the then Chancellor of the Exchequer. It is surely now time to revise that treaty, improve tax collection in Malawi and therefore improve its own economic governance.
The noble Lord is right. We want to achieve the same thing—to help those developing countries where we can. There has been a broadly bipartisan approach to this across the years. As for Malawi, this matter was addressed way back in 2010. Our aim is to have new double taxation agreements with developing countries where we can. There have been particular problems with Malawi that are not concerned with the detail of the treaty but with some of the more diplomatic issues. It is largely completed now but, as I say, there are some Foreign Office issues.
In general, it is our policy to conclude treaties with developing countries, and all new treaties that we manage to sign—these are bilateral treaties, so it takes two to tango—will include anti-abuse measures, exchange-of-information arrangements and assistance with the collection of taxes in both countries.
My Lords, given that we are preparing for the anti-corruption summit that the Prime Minister will chair in London in May, are we feeding the question of updating our tax treaties with developing countries into preparations for that? A lot of the loss to developing countries in terms of tax avoidance is filtered out through various corrupt practices. At the same time, are we considering in our relations with our own Overseas Territories pushing for greater transparency in the money that goes through the Overseas Territories, which is also closely related to this issue?
Of course, we are trying to increase transparency. As the noble Lord will know, in our presidency of the G8, we led on international anti-tax evasion measures and we continue to work with the OECD. We were the first to sign the agreement for international exchange of information. As far as the anti-corruption summit is concerned, that is certainly something we will do. One of the problems, however, is that just increasing taxes in developing countries is not a silver bullet because of corruption: the tax that is raised has to go to the right places.
My Lords, if there is one area that requires joined-up government, it is this. Of course, the Department for International Development, with its 0.7% budget, should be involved in these discussions because, as in the case of Malawi, you could be taking away with one hand and putting in with the other. Has DfID been involved in all these negotiations and will they be linked to the delivery of the sustainable development goals? Never mind the Rhodes statue—surely it is time that the Malawi agreement came falling down.
DfID is involved in the consultations that the Treasury has every year on which countries should be involved and on new taxation agreements to be brought forward. It holds discussions on which goals should be taken forward, but the department is not involved in the individual negotiation of tax treaties, which is for the experts on taxation in the Treasury. It also helps to pay for tax education in developing countries, and the Government have doubled the amount that they are prepared to spend on this through DfID. We think development aid should be controlled and administered through DfID, subject to proper governance arrangements in keeping with our development strategy.
My Lords, the Government rightly take considerable pride in having stood by their 0.7% target, and I am sure we all applaud that. We may have arguments about how it is spent, but we applaud it. However, does the Minister accept that there is real urgency about this matter because it is impossible for developing countries to make a success of their economies, and thus provide the context in which that 0.7% can be well spent, unless the strategic fiscal and financial matters are given priority?
I completely agree with the noble Lord and that is why we are actively seeking to update our tax treaties, particularly with developing countries. All modern tax treaties include anti-abuse measures and provide for an exchange of information so that we can bring them up to date and thus enable those countries to increase their tax rate, but it must be remembered that individual developing countries are also aware of the effects on investment of changing their local tax rates.
My Lords, does the Minister agree that it is particularly embarrassing that companies such as Google are using places such as Bermuda to avoid paying tax on sales in the United Kingdom, particularly since Bermuda is one of our overseas territories and not an independent country? What are the Treasury and Her Majesty’s Government doing to stop this disgraceful tax avoidance?
The Government are leading on making sure that there is international agreement on this. The noble Lord may shake his head, but we used the presidency of the G8 in 2013 to initiate the G20 and OECD Base Erosion and Profit Shifting project, which will better align the taxation of profits. As the IFS has said, it is literally impossible for one Government to do something by themselves. That is why we need international agreement to determine where tax should be paid, and we agree that it should be paid fairly in the countries where it is due.
Government Contracts: Steel Industry
To ask Her Majesty’s Government whether, when steel is required for a government contract, they will specify that it be British.
My Lords, the Government are committed to implementing measures that will address any barriers that prevent UK suppliers of steel from competing effectively for public sector contracts in line with EU legislation. All departments are now required to implement the new guidelines on how government buyers should source steel for major projects so that the true value of UK steel is taken into account in major procurement decisions.
Can the Minister explain why we did not support the proposal of the European Commission to raise the tax on imported Chinese steel to 66%, which not only would have put it in line with the United States but would have brought stability to the British steel industry and security for British steelworkers?
The initiative that the noble Lord referred to is one that we welcomed in the sense that it wished to modernise tariff proposals, but we could not accept the removal of the lesser duty rule, which ensures that unfair trade practices are addressed without imposing disproportionate costs. We have also supported other EU initiatives on wire rod, seamless pipes and tubes, and rebar, as regards Chinese dumping.
My Lords, will my noble friend confirm that far more steel is imported from other EU countries than from China, and that if the Government were to do what the noble Lord, Lord Hoyle, wishes them to do, we would have to leave the European Union?
Blow me down with a feather: my noble friend is wanting to leave the European Union. That is a surprise at quarter past 11. I am sure that he is right about his facts. The challenge at the moment is obviously Chinese steel. Chinese excess steel capacity is estimated to be roughly double the EU’s annual steel demand and 25 times the UK’s steel production. That is the real challenge we face.
My Lords, on the assumption that the Government made speedy and early representations to the European Commission regarding the dumping of Chinese steel, are they satisfied that the Commission has acted effectively and promptly to protect the British steel industry?
My Lords, there is always more that we can look towards the EU to do. For example, we are pleased that the European Commission is investigating where there is evidence that state support for steel industries is not compliant, as regards Italy and Belgium. My right honourable friend the Secretary of State for Trade and Industry was one of the signatories to the letter to the European Commission only a few weeks ago that called for further action.
My Lords, I shall follow up the remarks made by the noble Lord, Lord Forsyth—without sharing his conclusion. Will the Minister accept that some of our continental country friends seem to be better at protecting their steel industries than we are? I take the point made by other noble Lords on dumping of Chinese steel. Will he also indicate what the Government are prepared to do to meet the requests from the steel industry on energy costs?
I shall take the final point first. The Government are addressing the request for energy costs in one of the five prongs of their action to help the steel industry, which we all wish to do. As regards the EU, the noble Lord makes a valid point. I just add that, despite the widely held view that UK public procurement is more open than that of other EU member states, European Commission studies show that UK firms win more than 95% of UK contracts advertised EU-wide.
My Lords, does this Question not have wider resonance? The Government and public authorities in this country control about 40% of GDP spending. If the Government really wanted to back British industry—including British steel, which we would support—and help British workers, why will they not also ensure that our SMEs have a proper chance to bid for government contracts and require companies that are awarded government contracts to employ high-quality apprentices, as we did for the Olympics?
Those are valid observations. The public policy procurement note, which I have in front of me, makes the point that private companies should advertise through the supply chain when those contracts are available and make sure that British SMEs are able to bid for them. The contribution that companies make to apprenticeships is also highlighted in that public policy procurement note.
My Lords, is the noble Lord, Lord Razzall, not absolutely right: is it not the case that the masochistic energy policy pursued by the British Government at present leads to a carbon price floor five times the size of the carbon price in the rest of the European Union? Is that not crazy? What are the Government going to do about it?
That is slightly going beyond my ken, my Lords. As regards the energy costs that the steel industry is looking for, £100 million will be saved over the financial year and £400 million by the end of this Parliament, thanks to the action that the Government are taking to give the industry relief.
If the Chinese are found to have been dumping steel in the UK, what action will the Government take to penalise them for doing so?
Let us wait and see. These investigations are obviously under way as we speak.
My Lords, the Government recently announced that the Chinese were going to invest in Hinkley Point power station. Will a condition of that be that Chinese steel and other products are used in its construction?
That is a very good point, my Lords. Responsibility for the construction of Hinkley Point C rests with EDF rather than the Government. The project will require hundreds of thousands of tonnes of steel and EDF has made it clear that it expects a large proportion of that to come from UK companies. The construction and operation of Hinkley are expected to create 25,000 employment opportunities and aim to create 1,000 apprenticeships.
Armed Forces: Future Force 2020
To ask Her Majesty’s Government what specialist skills have been recruited into the Armed Forces as a result of the Future Force 2020 programme.
My Lords, Future Force 2020 has delivered a wide range of specialist skills and capabilities to the Armed Forces. In the Army, this includes the creation of 1st Intelligence, Surveillance and Reconnaissance Brigade and 77th Brigade, comprising integrated regular and reserve units capable of delivering specialist capabilities such as cyber, linguists and cultural experts. We continue to recruit the individuals we need with specialist skills and, through our world-class training programmes, train both new and existing service personnel to meet military requirements.
As ever, the noble Earl comes to the House displaying a sense of calm and confidence, for which he is greatly admired and respected.
Truthfully. But I have to tell him that the Government have admitted that there is a skills shortage in Britain’s Armed Forces. Indeed, they spelled out their preferred solution for solving the problem. In a debate on the Defence Reform Bill in 2013, the then Defence Secretary, Mr Hammond, said that the recruitment of reserves was intended to add specialist skills to our Armed Forces because they were easier to recruit from among the civilian workforce. Can the Minister name another country in the world that depends on civilian trained reservists to fill the skills gap in our Regular Armed Forces? Is it still the Government’s intention to pursue this policy? If it is, how is it going?
My Lords, it makes absolute sense to look to our reserves to house some of the deep specialties that the Armed Forces are looking for. It makes sense because the reserves can deliver capabilities that can be safely held at lower readiness, which provides access to skills that are best developed and maintained in the civil sector or are not practical or too costly to retain in full-time military service. A good example of that is cyber, although there are others, such as language intelligence analysts. We are seeing the success of that policy. Indeed, on recruiting reservists more generally, we are on track to achieve our targets.
My Lords, now that the recent period of high operational deployment has concluded—at least perhaps temporarily—will the Minister reassure the House that, within Future Force 2020, progress is being made towards recruiting sufficient regular and perhaps reserve medical specialists in order that the Defence Medical Services can meet their obligations in the future, and in particular that we are recruiting sufficient mental health specialists so that our serving soldiers, sailors, airmen and marines have 24/7 mental health cover?
My Lords, there are a number of pinch points in the armed services, but, broadly speaking, they are in areas where there are skills shortages in the wider economy. Medical expertise is one of those skills, but there are also areas specific to military organisations, such as logistics and intelligence. We are taking a multifaceted approach to tackling those shortages—for example, financial retention incentives, extensions and continuance of service, targeted recruitment incentives and a direct entry scheme—but there is no single bullet. I am aware that medical services represent a challenge, but one that I think we are slowly winning.
My Lords, it no doubt makes sense to leverage the private sector, especially in a fast-changing environment such as cyber, as the Minister said, but it raises a question, does it not? If we are relying on reservists, who by definition are not always available, to provide essential skills, who is providing the skills for the skills gap when they are not available?
My Lords, as I am sure the noble Lord will know, the Royal Navy and the Royal Marines have an approach whereby they tend to train those already in regular service, but there is also a reliance on reserves. It is a question of getting the balance right in each discipline.
My Lords, surely the answer to the Question from the noble Lord, Lord Touhig—about which country is making use of specialist reserves—is the United States. The National Guard makes very great use of reserves—far greater than we do.
I am grateful to my noble friend. Of course, at the moment we have a much more flexible set of arrangements to integrate regulars and reserves than we did in the past. We can call up reservists at very short notice. Cyber is, once again, a good example. It is a discipline that often allows lateral entry at a more senior rank than would be the norm for general applicants on first joining. Indeed, the Royal Marines have a cyber specialisation to provide the maritime element of the joint cyber unit. That specialisation is formed from qualified practitioners recruited from industry and academia.
My Lords, we all recognise that cyber poses a great threat to our security. Will the noble Lord tell the House how many cyber experts and trainees have been recruited to the Reserve and Regular Forces, and whether their recruitment is on target?
I am afraid that I cannot give the noble Baroness the precise figures. Broadly, recruitment to the reserves is on target, but I will have to get back to her on the specific numbers associated with cyber.
My Lords, I think that the House is signalling that it wants to hear from the Cross-Benchers.
My Lords, a skill set for which there is an ever growing need is, of course, engineering, especially nuclear engineering. Will the Minister say what progress has been made with industry to ensure a flow of that talent between industry and the services, particularly for those who have left the services and joined industry and then been brought back into the services to help out?
The noble and gallant Lord is absolutely right. On nuclear engineers, we have adopted what we call an enterprise approach, which essentially means working with the wider defence industry to better share experience and best practice and to develop career management, manning and access to the key skills that we need to create a more attractive career path for nuclear engineers. There are other elements as well. We need to have proper staged financial incentives, and we have retention incentives for those already working for the Royal Navy. There is no single answer, but I think that this is the way ahead—in particular, working closely with university and technical colleges to support the development of those skilled individuals.
My Lords, will the Minister write to the House about the recruitment of people with desperately needed modern language skills—linguistic skills—which he mentioned in his first reply? This area is neglected, but it is important that we improve our language skills in our engagement.
The noble Lord is absolutely right. It is one of the areas that has been significantly developed since the SDSR 2010, but we know that we have to do more. I would be glad to write to the noble Lord on where we are.
Public Bodies: Israel Boycotts
To ask Her Majesty’s Government what advice they have given to local authorities and other public bodies concerning boycotts of goods and services from the Israeli settlements in the West Bank.
My Lords, on 17 February, the Government published procurement guidance for public authorities on existing policy that has been in place for many years under successive Governments. The guidance makes it clear that boycotts in public procurement are inappropriate, outside where formal legal sanctions, embargos and restrictions have been put in place by the UK Government. It is not an Israel-specific policy.
Knock me down with a feather, my Lords, if I was not expecting that reply. Is the Minister aware that the Foreign Office advice of July 2015 on overseas business risks in the Occupied Palestinian Territories said:
“EU citizens and businesses should … be aware of the potential reputational implications of getting involved in economic and financial activities in … settlements”—
in the Occupied Territories, and—
“should seek … legal advice before proceeding”?
How does that equate with the advice that we received last week?
I can easily tell the noble Baroness. Paragraph 2.4 of the advice says:
“The UK Government is deeply committed to promoting our trade and business ties with Israel and strongly opposes boycotts.”
This is the Foreign Office advice, and the Cabinet Office advice sits alongside that.
Has the Minister had a chance to check what the Prime Minister said yesterday in answer to a Question about settlements? He said that,
“the first time I visited Jerusalem … and saw what has happened with the effective encirclement of East Jerusalem—occupied East Jerusalem—I found it genuinely shocking”.—[Official Report, Commons, 24/2/16; col. 297.]
Did the Prime Minister not speak for many Members of both Houses and indeed of all parties when he said this? Is it not time that we move beyond general expressions of dissatisfaction with Israeli settlement activity and took more concerted international action?
The noble Lord makes a perfectly valid point, but this is about the role of local authorities. I would gently say to him, with due respect, that local authorities should not pursue their own municipal foreign policy which contravenes international trade agreements. They should instead focus on local issues. The clue is in the name as regards local authorities.
In the light of local government guidance, could the Minister say what action the boycott movement has taken with regard to the Russian invasion of Crimea—I apologise for asking this of a Cabinet Office Minister—the Chinese occupation of Tibet, Turkey’s occupation of Northern Cyprus and the Moroccan occupation of Western Sahara?
The noble Lord raises lots of issues, but this is about boycotts being conducted by local authorities, which I would argue are counterproductive. They widen gaps in understanding, poison and polarise debate, and block opportunities for co-operation and collaboration.
My Lords, I was in Israel last week as a guest of the Israeli Government when my right honourable friend Matt Hancock announced this guidance that he was giving to local authorities. As both Israel and the United Kingdom are members of the WTO, surely it is illegal to impose these boycotts. They would actually be against the law.
My noble friend is absolutely right. Such boycotts would be open to judicial review.
Hearing what the Minister has said about boycotts, can he reassure the House on behalf of his Foreign and Commonwealth Office colleagues that we and our European partners lose no opportunity to draw the attention of the Israeli Government to the illegality of their settlement policy and the damage which it is doing to the prospect of a two-state solution, which is surely in the interests of both Israel and Palestine?
Yes, my Lords, and let me reassure the noble Lord that the Government remain completely committed to a two-state resolution to secure lasting peace in the Middle East. The best way to achieve that is by diplomacy and negotiation.
My Lords, given that the noble Baroness, Lady Anelay of St John’s, has repeatedly said at that Dispatch Box that the settlements are a contravention of international law, that we deplore them and that they should not be there, how does it follow that it is illegal or impossible for a local authority to take action in response to those repeated statements by refusing to trade with those very settlements?
My Lords, to repeat what I said at the start, the guidance merely clarifies and reminds contracting authorities of their obligations under the WTO government procurement agreement, to which the EU is a signatory, which has been in place since 1996 and which the Labour Government and the coalition Government both upheld.
My Lords, I think that the House wishes to hear from my noble friend Lady Eaton.
Thank you. Three-quarters of Palestinian exports are destined for Israel and Israeli goods account for two-thirds of the West Bank’s imports. Does the Minister agree that a boycott of West Bank goods would be detrimental to the Palestinian economy?
My Lords, I just wish to repeat what I am saying all along: this guidance is not about Israel per se. While what my noble friend says may have validity, I would say that boycotts are counter-productive and should not be taken by local authorities unless there is already a government action in place.
Privileges and Conduct Committee
Motion to Agree
That the 4th Report from the Select Committee (Investigations and members leaving the House or taking leave of absence; Guidance on participation in proceedings) (HL Paper 95) be agreed to.
My Lords, in moving the first Motion standing in my name on the Order Paper, I will also speak to the second Motion. The first part of the report of the Committee for Privileges and Conduct clarifies the position on investigating alleged breaches of the Code of Conduct. The code does not apply to former Members; nevertheless, it has been unclear whether a former Member could be investigated for an alleged breach committed when he or she was a Member of this House.
The recommendation is to make it clear in the guide to the code that such an investigation may not take place because there would be little point to it. Even if such an investigation resulted in a finding of a breach of the code, however, there would be no suitable sanctions available to the House—the reasons being that the strongest sanctions of suspension and expulsion could not be imposed on someone who was no longer a Member of the House. But colleagues will understand that the status of Members on leave of absence is different from that of former Members, because those on leave of absence may return to the House. The committee therefore recommends amending the guide to make it clear that an investigation may take place on a Member on, or seeking, leave of absence if the alleged conduct occurred when the Member was not on leave of absence.
The second part of the report relates to guidance on when a Member may participate in proceedings in which that Member has a financial interest. The current text has resulted in some uncertainty. This has sometimes meant that Members with significant expertise on a subject have been unable to participate in business in which their expertise would benefit the House or a Select Committee. The Committee for Privileges and Conduct proposes replacing this guidance with a clear statement that Members may participate in business in which they have a financial interest, but in doing so they should of course ensure that their personal interests do not conflict with their public interests. A similar change is recommended in respect of participation in Select Committee work. I beg to move.
My Lords, I am grateful to the Chairman of Committees for introducing this. It is important that, whenever we get reports from committees, there is an introduction and an explanation of why the recommendations are being made and how the issue has been considered by the committee. So much of what happens in this place is considered by committees and put through here on the nod, so that, with respect, I must say that probably the vast majority of Members know nothing about it. They do not know why it is being recommended and do not know about the initiative, motivation or background behind it. That is why it is very important not only that such things should be introduced—as this has been—but that we can have a debate and ask questions.
I have specific questions. On whose initiative was the first matter put on the agenda of the Privileges and Conduct Committee? What was the motivation behind it? Were any matters—any instances or examples—brought to the attention of the committee that made this a matter that it should have to consider?
I have similar questions in relation to the second matter. Have any matters arisen? Have there been any complaints or suggestions of problems? Have any Members with particular interests said that they are unable to participate in a debate because of their interests? We need to know why this is before us. I am not saying I disagree with it, but we need to know on whose initiative and with what motivation these matters were considered by the committee and then recommended to us today.
I would just ask for a very small clarification from the Chairman of Committees. I may be wrong, but as I understood it, he said that if a Member on leave of absence was being investigated, it would have to be for something that he or she had done while they were not on leave of absence. But it seems to me that if a Member is on leave of absence, he or she remains a Member of your Lordships’ House. Therefore, if something that was done while that person was on leave of absence needs investigating, surely it should be open to investigation.
My Lords, I am deeply concerned by the recommendation in paragraph 7 and the explanation given for that recommendation. It seems to me that this would be a very strong incentive for Members to avoid investigation by simply retiring from your Lordships’ House. The committee should have considered instead—it will be interesting to see whether it has—either a procedure which would have introduced potential sanctions on former Members who were found to have been engaged in fraudulent or other activities, or suspension of any retirement or any right to retirement for those under investigation. I think that any member of the public reading this document would be astonished that we give people a “get out of jail free” card simply because it is more convenient for us to reduce the size of the House than to maintain the standards that we set.
My Lords, I am most grateful for the opportunity to respond to these questions and will do my best. The first question asked by the noble Lord, Lord Foulkes, was about where this came from. It came from within the committee. The committee has been extremely exercised about a number of what are perceived to be gaps or misunderstandings in the current arrangements.
The noble Lord says it came from within the committee. Was it from a Member or Members on the committee—if so which Members—or from the officers?
My goodness me, my memory fails me. It came from Members; they have been looking at this whole area to see whether there are any misunderstandings or gaps. We have been much exercised—the committee has been together on this, addressing it in a serious and thorough way.
On whether there have been examples of Members who could contribute very well to the work of this House, I am advised that since the start of this Parliament, 30 Members have questioned whether their interests in the register bar them from contributing to the work of the House or one of the Select Committees. This report makes it plain that we all operate on our honour and have to ensure that, when we participate, our personal interests do not conflict with our public interests.
The Chairman of Committees refers to 30 cases. This reform slightly dilutes the current arrangements. Surely from now on it should be insufficient to say, “I wish to declare my interests as registered”. Perhaps in future when there is some ambiguity in their position, Members should be more specific and say precisely what their interests are.
My Lords, Members’ interests have to be declared other than at Question Time. It is not sufficient on other occasions simply to refer gaily to them. The noble Lord raises an interesting point, and it illustrates one of the committee’s concerns: if we try to specify what is on one side of the line and what is on the other, we get into difficulty because everyone’s circumstances are different and the subject matter is different. The report says that there is no guidance that will weaken our honour in these matters other than advising that we must ensure that our personal interests do not conflict with our public duties in this House. We have a duty to uphold that and, frankly, to be subject to scrutiny should there be questions about that in the future. Most noble Lords will recognise that in many ways this strengthens our position because it makes all of us have to fulfil our duties in this place.
The noble Lord, Lord McConnell, made a point about suspension, I think, and the difference when someone is on leave of absence.
My point was not so much about the difference in approach as about the specific approach recommended in paragraph 7. In the justification, it is explained that Members will not be investigated if they choose to retire from the House, allowing everybody in your Lordships’ House a “get out of jail free” card should they be subject to investigation.
That is absolutely right. I am very grateful for the question because further thought is being given to that precise point and I hope that it will be possible to produce a report on that matter in the very near future.
It may be unnecessary to say this, but the inference I drew from the comment of the Chairman of Committees was that, if somebody who was on leave of absence was suspected of an infringement, he or she could not be investigated if it happened while that person was on leave of absence, because a Member on leave of absence remains a Member of your Lordships’ House and can come back at any time. I should like clarification on that point.
This is an interesting area. The code relates only to parliamentary conduct, and that would have to be dealt with if a Member of the House wished to return.
I hope that the Chairman of Committees will forgive me for speaking at this stage, but I have been mulling over his comments about the difficult line between personal and financial interests, and when it is appropriate to be considered an expert. Mulling over my experience of local authority guidance on the matter—an experience I know that many Members share—in local authorities, if you have a financial interest, no matter how much expertise you have, you may not take part in proceedings. I wonder why there is such a big difference between the rules we apply to ourselves here and those imposed on local authorities.
Local authorities are dealing with immediate local planning matters, and things of that kind. Here, the House is dealing, generally speaking, particularly in its committees, with very broad, general topics that deal with national or international matters. If you interpret the register in a particular way, many Members would be excluded from a whole range of activities of the House. The committee has decided that a better way to proceed is to make it plain that we operate on our honour and that, when there are issues of the kind to which the noble Baroness referred, the individual has to decide whether those issues are of such a general nature as not to be an impediment or whether there is a personal advantage to be gained. It is the issue of a personal advantage that will be the touchstone on all these matters, if the House adopts the report. I commend the Motion.
Code of Conduct
Motion to Resolve
That the Code of Conduct for Members of the House of Lords be amended as follows:
In paragraph 15, leave out the second sentence and insert “In participating in such proceedings they should ensure that there is no conflict between their declared interests and the public interest.”
Trade Union Bill
Committee (4th Day)
Relevant documents: 15th and 20th Reports from the Delegated Powers Committee, 1st Report from the Joint Committee on Human Rights
Clause 14: Prohibition on deduction of union subscriptions from wages in public sector
92: Clause 14, page 11, line 8, leave out from beginning to end of line 8 on page 12 and insert—
“116B Deduction of union subscriptions from wages in public sector
(1) The Advisory, Conciliation and Arbitration Service shall publish a Code of Practice for the purposes of public sector employers making trade union subscription deductions from wages payable to workers to promote the need for openness and transparency.
(2) The Code of Practice shall include but shall not be limited to including—
(a) provision that all payroll deduction schemes shall give members the option to pay their subscriptions by other means;(b) reporting on the costs to employers of administering trade union subscriptions at the end of each financial year, including the percentage this represents of the employer’s total outgoing administrative and human resources costs;(c) guidance on the principles and operation of payroll deductions schemes and the administrative costs that should be charged to trade unions where payroll deduction schemes have been agreed.”
My Lords, I speak to the seven amendments in the group and the clause stand part Motion from the Labour and Liberal Democrat Front Benches. It is a large and important group, so I hope noble Lords will bear with me, as there are a lot of issues to address, including matters arising from the Minister’s last-minute publication on Monday of the skeleton regulations on facility time and check-off, and Tuesday’s debate on those and on which public sector organisations are covered by the Bill.
Our Amendment 92 is an important one with which to start this debate, because it is aimed at probing exactly what problem the Government are trying to address by implementing an arbitrary and blanket ban on public sector employers reaching voluntary agreements with trade unions to deduct union subscriptions from staff pay, often preventing the staff themselves freely and openly choosing this option for paying their subs. Ministers must be clear and concise about their concerns over the current system. What is so wrong with it that it has to be abandoned in this draconian way, and what evidence is there that justifies an established system, currently well supported and valued by employers, trade unions and their members, and recognised as forming a crucial part of local industrial relations, partnerships and frameworks, just being dropped? Unless the Government can come up with solid evidence and the objective justification called for by the Joint Committee on Human Rights, and unless they frame their arguments and comments in the context of displaying a far better understanding of the role and work of trade unions in a modern society than was so blatantly evident from Ministers throughout the Bill’s progress in the Commons, the only conclusion that can be drawn is that the main purpose of getting rid of check-off is to undermine trade unions, prevent them being able to organise in the workplace and represent their members, and attack and seriously weaken their finances. In other words, as my noble friend Lord Collins said at Second Reading, it is pure vindictiveness.
Amendment 92 is also aimed at ensuring that the check-off system remains central to partnership and staff engagement agreements between employers and unions in the public sector. It underlines the need for an ACAS code of practice to promote openness, transparency and consistency in check-off agreements. Central to the code is members having clear options on payment methods and employer costs in administering the schemes being clear and consistent across employing authorities and open to report and scrutiny. Our amendment would also make clear the open and agreed principles and criteria for assessing the admin costs of the check-off system, and for the costs to be regularly reported on and expressed as a percentage of the employer’s overall admin and HR costs.
The Government have three broad contentions for their proposals to ban check-off in the public sector. They say that check-off deductions are not modern and that everyone has a bank account, so what is the problem? They say that the relationship should be between the trade unions and the member and not involve the employer, and that the system and admin costs of deduction are a burden and should not be borne by employers or the taxpayer. If Clause 14 stands, private and voluntary sector employers will be able to continue to operate check-off, but public sector employers will not have this choice and will have their hands tied by central government—this from a Government who herald their commitments to localism and empowerment of local employers so that decisions can be made locally in the light of local circumstances and needs. We know from the debates on the earlier clauses that the Government have got themselves into a mess over this Bill in relation to the devolved national Governments. We will hear still more evidence of the mismatch between the Government’s rhetoric on this brave new world of devolution and the proposals in this Bill in the debate on Amendment 97, from my noble friends Lord Harris and Lord Beecham.
In the Cities and Local Government Devolution Bill, the noble Baroness, Lady Williams, made many bold statements about how central Government have to stop interfering in local decision-making. I quote just one of the typical examples, when she said:
“Through the decentralisation that the Bill will enable, each city will be empowered to forge its own path, to play to its own strengths and to find its own creative solutions to the particular challenges that they face”.—[Official Report, 8/6/15; cols. 652-53.]
But they do not seem to have the autonomy to decide locally and continue tried and tested industrial relations agreements and partnerships, of which check-off is a key element, which underpin the positive, everyday working relationships between employers and trade unions. No wonder not a single public sector employer has spoken up to support the Government’s check-off ban. It is very pertinent that key councils at the forefront of devolution—for example, Manchester and Sheffield—are among the many that have expressed dismay and concern. Can the Minister explain how Devo Manc is to be delivered in Manchester, for example, including closer integration between NHS and social care, at the same time as long-standing partnerships and agreements with trade unions are being dismantled, while local reps scuttle around thousands of workplaces to talk to members and get them re-signed up so that they can carry on representing them?
One thing that we keep coming back to in this Bill is the question of fairness, which is no less relevant to the proposals for banning check-off. How can it be right to single out the public sector when the private and voluntary sectors can choose to continue the schemes? Why is it right to exempt some organisations that the Government favour, such as the police and crime commissioners and chief constables, who will be allowed to decide whether they want to operate check-off, although the choice will be allowed only for police officers and not for police staff?
The impact assessment fails dismally to provide any evidence or justification for the Government’s proposed ban. It assesses just two options: do nothing, or get rid of check-off. There is nothing in between the pros or cons of the current system, how it could be improved and made consistent across employing authorities, or ensuring that trade union members continue to have choice on paying their subscriptions by the method that best suits them, in the light of their work, circumstances and financial situation, be it by check-off, direct debit or a cash-based system. Will the Minister explain why a middle way was not even considered? The impact assessment dismisses this option in two sentences on the grounds that if trade unions paid the admin the policy objectives would not be delivered. Why did the policy objectives not include all the options?
Let us also address head-on the Government’s contentions about modern employer/trade union relationships in the workplace. It is nonsense to say that check-off should not be part of a modern industrial relations partnership and framework. Check-off arrangements are not only practical; they are a demonstration by employers that they recognise trade unions and are willing to undertake collective bargaining, and demonstrate that employees, employers and trade union representatives are all working together to deliver quality services to the public. That is also true in the private sector. Private employers such as E.ON and United Utilities, the retailer Tesco and many other large companies facilitate check-off because they find that it is beneficial to positive industrial relations.
Check-off systems enable employers and unions to know their workers and to match and verify information for ballots and other arrangements. They create a transparent relationship between the employer and the union. The Government’s approach is blinkered and embedded in false assumptions and ignorance about the day-to-day work that trade unions do in the workplace. Of course, there is a deafening silence about what sanctions will be imposed on employing authorities if the Government’s ban is not carried out for whatever reason. Where is the fairness in ceasing to offer public sector members the choice that private and voluntary sector employers will have in having union subscriptions deducted from pay? Time and time again, the underlying, and false, impression put across by Ministers is that union members are shanghaied into paying via payroll. In the words of the Minister Nick Boles, they are “locked into check-off”. It is not so. They currently have the choice of payment methods, but my amendment recognises that this choice needs to be underlined and enshrined in a code of practice applicable to all partnership and check-off agreements.
Check-off is trusted by trade union members and helps them manage their finances. For unions, the starting point is not, “How can we get as many members as possible on to check-off?”. Instead, particularly for the hundreds and thousands of members in low-paid jobs, the starting point is, “What is the best system for members to enable them to maintain their membership eligibility and entitlement to key benefits?”. Bearing in mind the high percentage of low-paid trade union members across the public sector, it is a real fear that, under a direct debit or cash-only system, they will lose their eligibility for representation, key legal benefits and workplace indemnity insurance.
Public sector employees are paid through bank accounts but many members have current or savings accounts that support only cash withdrawals, not direct debits. They fear they will be overdrawn if their pay is paid in late, resulting in the direct debit being refused and bounced back or a bank charge being incurred. This is the world of the low paid, particularly those in part-time work or who have to do two jobs. They are living from day to day and week to week, but the impact assessment does not seem to be aware of them. If you are on a low income, you do not manage your bank account as easily as some of the throw-away remarks by some Ministers seem to imply. More direct debits just add to the worry about and fear of being overdrawn and not able to pay your bills. Why was no work undertaken in the impact assessment on assessing groups particularly vulnerable to the changes, such as people with disabilities and low-paid women in particular?
I referred earlier to the Joint Committee on Human Rights’ call for the Government to provide objective justification for their differential treatment in removing the contractual right of public sector workers to check-off. On the first day in Committee, the noble Lord, Lord Pannick, argued strongly that if the Government do not compromise on some of the Bill’s proposals, including check-off, they will be at much greater risk of a human rights complaint being taken seriously by the European court. I look forward to the Government’s response on that.
It is all pretty differential, unfair and arbitrary. Charities and other voluntary organisations and private sector businesses will be able to continue to operate check-off. Indeed, major charities such as the Stroke Association and Macmillan underline that give as you earn or salary sacrifice pay-deduction schemes are the easiest and simplest to use. The nonsense and unfairness of the Government’s position is underlined by Amendment 97ZA, tabled by the noble Lord, Lord Kerslake. He sets out a possible system of deduction at source for trade unions parallel to that currently operated for charities. If deduction at source is okay for charities—and, of course, we think it is—then why is a similar system not acceptable for trade union members?
There is also a list as long as your arm of deductions from pay that are currently operated by councils and authorities and other public authorities, presumably destined to continue. These are either promoted by the Government, such as pension opt-ins and the payment of additional voluntary contributions or student loan repayments, or operated by employers to help staff to manage their finances, from deductions for professional fees, council tax, credit unions, childcare, rail season ticket loans through to the repayment of bicycle loans and staff benevolent fund contributions. Trade unions are the largest voluntary organisations in this country. Where is the fairness and justification for singling out public sector trade unions?
We strongly support Amendment 94 from my noble friend Lord Lea and Amendment 95A from my noble friend Lady Donaghy, which confront the Government’s attempts to keep extending the scope of the Bill in terms of the number of public bodies covered by the check-off ban through the issue of future regulations, and to make unilateral changes to contracts of employment or collective agreements. This is not an appropriate use of secondary legislation.
Noble Lords will know that there was an extensive debate on Tuesday on the,
“funded wholly or partly from public funds”,
wording in the Bill and the so-called skeleton regulations published the day before, covering the facility time and check-off publication requirement clauses and check-off Clause 14. Both drafts were obviously hastily cobbled-together last-minute work and caused even more confusion. They extend the check-off ban even more widely than was previously thought, fail to provide clear guidance on the types of organisations that will be covered and do not help us in our role in scrutinising Clause 14 or, for that matter, Clauses 12 and 13. The Minister promised to review this whole issue and clarify it by letter and consultation. I ask her to confirm that new Section 116B(2) and (3) in Clause 14 are included in this review. Will we get another, not so skeletal draft of the regulations before Report?
Lastly, I shall deal with the third area of concern for the Government, the so-called admin burden of check-off for employers. Our amendment underlines the importance of costs being clearly identified, recorded and published, honestly and openly. No one tries to hide the cost of current agreements. Trade unions made it clear in the Commons Bill Committee that they agree that the taxpayer should not have to bear the cost, in response to an amendment from Conservative MP Jeremy Lefroy, which the Minister, Nick Boles, promised to consider further. I am grateful to the noble Lord, Lord Balfe, for his work on this issue and for bringing forward Amendment 93, which I hope the Government will accept in principle today along with our amendment. There are further considerations on who should be the body responsible for drawing up a code of practice or judging the costs judged by employers to be reasonable, but these can be further discussed before Report. The point is that if the openness and transparency of costs issue is dealt with and trade unions pay reasonable admin charges so that check-off is cost-neutral to employers and the taxpayer, what is the problem?
Before closing, I have some further comments on the impact assessment. If the Government were hoping that it would provide the evidence and balanced and reasoned arguments to meet the JCHR challenge of objective justification and the widespread criticism and concerns over this clause, they hoped in vain. How can a balanced view of risks and costs be arrived at when only two start options are considered—do nothing or end check-off? Little evidence is provided to substantiate the actual costs of the so-called admin burden on employers, which are completely exaggerated when the systems are essentially electronic data-based payroll exchanges between employer and trade unions, with usually annual electronic exchanges of amendments and updates.
The reference to there being “some” resulting loss of good will with employees and trade unions through the measures is a huge understatement. Of course there will be, as current agreements and arrangements are thrown up in the air and abandoned. Some 90% of public sector unions currently provide check-off, and millions of trade union members in thousands of workplaces will be involved in the changes to payroll systems in the rewriting of their existing collective agreements.
As the final part of this group, we support my noble friend Lady Donaghy’s Amendments 123A and 124A calling for Clause 14 to come into effect five years after the passing of the Act. This is the period of implementation that we have argued for changes to the political fund. This and check-off present huge organisational and resource challenges to trade unions to seek agreement from members for alternative pay methods and arrangements. It is a nonsense for the Government to imply that they are being generous and conciliatory by extending the implementation period from six months to a year. UNISON alone, for example, will have to reassign 80,000 members to direct debit in thousands of large and very small workplaces.
Finally, I, my noble friend Lord Collins, the noble Lord, Lord Stoneham, and the noble Baroness, Lady Burt, oppose that Clause 14 stand part of the Bill. We do not accept this clause. The debate will highlight the fundamental flaws and problems and the unfairness and injustice of singling out the public sector, its employers, trade unions and trade union members for actions which will not apply in the private and voluntary sectors. Clause 14 threatens the partnership arrangements at every level of public services in England, Scotland and Wales, including local government, emergency services, education and the NHS, undermining the positive industrial relationships built up over years between the bulk of employers across the public sector. Amendment 92 in my name and Amendment 93 in the name of the noble Lord, Lord Balfe, address stated government concerns about transparency and openness; about public sector employers having the choice of operating check-off systems and trade union members having the choice as to which method they choose to pay their subs by; and about ensuring that unions meet any reasonable admin costs for the operation of check-off so that there is no admin burden to the employer or the taxpayer. So, as I said before, what is the problem?
My Lords, I will speak in particular to Amendment 93, which is in my name, but will also make a general contribution to this debate. I start fundamentally from a belief that this is a matter for local decision. Any Government with a localism agenda should not be promoting this amendment, because it has nothing at all to do with localism.
I began my life, as I suspect many people who have a long history of trade union involvement did, as a sub-collector—someone who went round collecting subscriptions from members. I was in a monthly-paid Civil Service job and on the first two days of each month I used to go round and collect subscriptions. It was a very pleasant experience as it meant that I had about an hour and a half off on each of those days, and because we had a branch rule that you could not take money home, I also had half an hour off at the end of each day when I went over to the treasurer in another building and handed over the small amount of money I had collected. Management decided that this was not a very efficient way for its employees to behave, and in the course of the 1960s, management decided that it would be a lot easier if it had a system called check-off. I was in a very odd union branch: the chairman was a member of the Communist Party of Great Britain and the secretary was a member of the Socialist Party of Great Britain. I became the vice-chairman because the two parties could not agree on anyone, so they decided that someone young should do the job. However, our branch rigorously opposed check-off because it would break the link with members. What we meant was that it would obviate our ability to wander round the office on what in those days was known as foot patrol, because many of the members in our office had recently had experience of the Army. I notice that part of the impact assessment says that this will foster a more direct relationship with members. If you want to have people wandering around the office, fine, but I put that in by way of background because this was not fought for by the unions, but was largely asked for by management and accepted by the unions, because of course sub-collecting was a very random experience.
Let us move forward, to a tale of two unions. When I became the TU envoy for my party, we went to all the unions. Many of them were very helpful but some of the big ones were not, particularly Unite and the GMB. However, two of them were; the Minister will be very familiar with one, USDAW, whose general secretary John Hannett not only came to meet the party leader David Cameron but made it quite clear that he and USDAW did not support the Conservative Party. However, he also made it very clear that he wanted a constructive relationship with any party that might become the Government. He did not come to meet the Conservative Government; he came to meet the Conservative Opposition to benefit his members with a direct relationship. He sought a constructive attitude, which we associate with USDAW. That union is not affected by this measure because it has had some very good people looking after its personnel in the past and it has very good industrial relations.
The second union that I want to talk about is UNISON, which represents many lower-paid workers in the public sector. When we approached UNISON, it, too, made it clear that it had its political perspective—that it wished to safeguard its members. All senior members of the UNISON union met their opposite numbers in the Conservative Party prior to the election and they all came with the same message: that, whatever their political attitude, they wanted a constructive relationship with whoever were the Government of the day. There must have been a dozen meetings between UNISON and a whole raft of opposition spokespeople, as they then were. UNISON co-operated with the Government, and I think it is with great sadness that it views this clause as it is today.
If you are a member of one of the more professional unions, such as BALPA, with which I am associated, or the British Dietetic Association, you are generally in the upper ranges of the pay scale. You have direct debits and bank accounts, and you have a fundamentally middle-class lifestyle. If you are in UNISON, you are quite likely to be a lollipop lady or a swimming baths attendant or doing one of a whole range of quite underpaid jobs, struggling to manage financially from one month to the next. Your union dues are deducted at source and that genuinely helps.
Let us just look at the benefits afforded to all UNISON members. They include death and accident benefits, with an accident payment of up to £8,600; advice and support at work; a helpline that is open every weekday and until 4 pm on Saturdays; employment tribunal fees paid by the union if you have a good case to take forward; a legal assistance helpline; a debt advice helpline; and access to an approved credit union network. There is also free legal help to pursue compensation for accidents and injuries at work without a deduction of fees, which is an important point—this is a real no win, no fee arrangement. There are other things, including professional indemnity insurance for health and social care staff up to a limit of £1 million. All that comes with your union membership. It is a valuable addition and something that we should try to safeguard.
Under this provision, obviously some people would drop out. Who would drop out? They would probably be the people at the margins—ironically, probably the people least likely to vote for a strike and most likely not to return their ballot forms. So you could say that maybe the Government are doing this to promote strike action. It will make it easier to call a strike because the very members who will disappear will be those who have various difficulties.
The noble Baroness who moved the amendment gave us part of the list of deductions, but if this is about modernising relationships, I ask the Minister why it is not an amendment to the Banking Act to deal with all direct deductions. I have not recently received a letter from the Conservative Party about my monthly contribution to the Conservative Christian Fellowship. Perhaps that should be reviewed; perhaps that should be part of a “modern relationship”. But no, I have a list here, covering almost a sheet of A4 paper, of the sort of things that are deducted as salary sacrifice, including charitable donations; rail ticket loans; childcare vouchers; staff association subscriptions for staff and social sports clubs; the branch lottery, which is still, apparently, going to be allowed; the company creche; childcare holiday pay schemes; additional voluntary contributions; and, of course, student loan repayments. Perhaps student loans should no longer be deducted at source and we should modernise that relationship and let people decide whether or not they wish to repay their loan. There is a whole list, and that will stay in place.
But does it cost much? That is the next question. The answer is that it does not cost a huge amount. I have a letter from our friend the Conservative leader of the North Yorkshire County Council, of great fame having been quoted earlier this week. What does he say? He says that from North Yorkshire County Council’s position,
“the changes outlined in the legislation are not needed by us and certainly some of them are … not helpful to us locally. Clearly other authorities may not have our positive industrial relations and good working relationships and may feel the proposals are of benefit”.
Moving on to the subject at hand, in other words check-off, he says:
“The deduction … from employees via the payroll is not a process problem for us at North Yorkshire County Council. It is simply treated in the same way as payroll services provided to other organisations i.e. it is a charge for service. As you know Unison pays £7k a year which more than covers the cost and work involved in a straightforward payroll deduction managed by our payroll system with minimal effort from payroll staff … a standard feature of payroll systems and requires no development, adaptation or extra cost … provides us as an employer with valuable information on trade union membership numbers and density across our workforce”.
He goes on to say that that is of value when planning changes. It also enables the council to know with ease whether a staff group are union members. He is saying that this is no problem.
I have quoted a Conservative council leader because they may have a bit more influence with this Government than Labour council leaders in this House, but this is a common view. I have not had a single letter from an employers’ association or from a council to say that they support this—not one, not even from a Conservative counsellor. I spoke to one Conservative council leader and asked him what he thought. His response was, “Oh, anything that makes life difficult for the unions I am in favour of”. That is how he saw this: it makes life difficult for the unions. He did not see it as modernising the relationship in the workplace.
We need to look at this again. This is going to affect the poorest in society. This is not compassionate conservatism. This is going to affect the lollipop lady and the swimming baths attendant—the person at the bottom of the trade union pile; the person for whom unions, above all, were set up to help. It is a very sad day when this clause appears as part of a Bill. It does nothing whatever to improve union relations. I could be very rude about it, but I will sit down, having made my point. This is one area where, if there is a Division, I will be voting in the Lobby against my own party.
My Lords, I support the amendments in this group, particularly those in the names of the noble Lords, Lord Balfe and Lord Beecham, to which I have added my name. I will also speak to my own Amendment 97ZA.
With all the troubles that we have in the world today, I wonder—and I suspect the Minister may be in the same place—why on a cold Thursday in February we are seriously debating the removal of check-off from public sector employees. Just as it is very hard for any rational person to comprehend why we would not allow secure electronic and workplace balloting for industrial disputes, it is impossible to see why any fair person would want to remove this very basic service provided to public service employees.
I start with the cost, as the noble Lord, Lord Balfe, did. There is virtually no cost: that is very important to say. When my then Secretary of State Eric Pickles was keen to pursue this issue, he asked me to go away and find out what the cost was. I, in turn, asked my head of HR. The first response that I received was “zero”—it was literally too small to calculate. Now, as noble Lords will understand, that was not the right answer, so we looked again and came back with what was still, in the scheme of things, a very small, in fact nugatory, sum. Even if there is a cost, as we have already heard, the trade unions have signalled loud and clear that they are more than willing to cover it; indeed, arrangements exist. The cost issue simply does not stand as an argument.
The second argument is that it is outmoded in this age of direct payments. In reality, check-off is just one method of payment—one choice alongside others. I cannot understand why this Government are not in favour of giving people choice. We would not ban people from paying by cash for services if that is what they wanted to do, simply because it was outmoded in this electronic age. If the argument is that it is outmoded, why do we allow—indeed, encourage—payroll deductions for charitable purposes? My amendment today illustrates that point. We encourage it in one situation, as the noble Lord, Lord Balfe, says, but we say that it is outmoded in another. As far as I am aware, and the Minister may want to confirm this, the Government have no plans to remove payroll deductions for charitable purposes.
The third reason that has been suggested is connectivity with your employer—that this is too connected to the employer. Let us be clear that there is no connection, any more than there is a connection for a payroll deduction for other purposes. It is simply a convenient mechanism of allowing people to pay. Even if a Minister in a particular department were persuaded of the case for this change, it makes absolutely no sense whatever to dictate the same policy across the whole of the public sector. For me, that is just the Government exporting their own irrationality.
The reason why we have this proposal is, in reality, an unspoken one. The Government do not like the public sector unions and they want to make life more difficult for them. Let us be clear: this will make it harder for the unions. But as the noble Lord, Lord Balfe, said, it will make it a lot harder for their members. They will be the real losers as a result of this change. It will not be the senior civil servants in the FDA, those I dealt with, who will be inconvenienced; it will be low-paid, widely distributed staff such as cleaners. They are the ones who will lose out.
I will confess to noble Lords that in the heat of a difficult industrial dispute, the question of removing check-off is often raised by managers. My response when this was raised with me would be, “Let’s sleep on it”, and in the cold light of day it looked like what it was: petty and vindictive. It was about punishment because they had upset us, and it demeaned us as public sector leaders to think of doing it. That is how we felt about it. Whatever frustrations the trade unions brought, they were playing their legitimate role of representing their members. It seems that the Government are not doing the same thing: they have not reflected on this proposal in the cold light of day. Just as it would have demeaned us if we had moved this forward as public sector leaders in local government, so this genuinely demeans the Government. It is a malevolent absurdity: malevolent because it wilfully sets out to cause harm, and absurd because the Government repeatedly seek to defend it with arguments that simply do not bear serious examination.
In the end this is about balanced and fair government, something we should all feel incredibly passionate about. Yesterday we heard a lot about mothers and dress codes. I shall say this to the Minister: I am wearing a suit, my tie is straight and I will be more than happy to sing the national anthem, or at least the first verse, if the Government will think again about this proposal.
My Lords, I concur completely with the comments made by the noble Lords, Lord Kerslake and Lord Balfe. I personally see this as a cynical attempt on the part of the Government to cause maximum damage, difficulty and disruption to trade unions. They are seeking to take away powers from public bodies when they should be devolving more of them, and to make Great Britain a less harmonious place in which to live and work. Every ostensible reason for restricting check-off, as the noble Lord, Lord Kerslake, has already indicated, cannot be substantiated.
The issue of cost has been mooted, but as the noble Lord, Lord Balfe, said, many trade unions already cover the administrative costs of check-off. His Amendment 93 would resolve the situation as regards any which do not at the moment, certainly with regard to cost. In any case, many deductions are used as bargaining chips in negotiations between employers and employees within the whole package of benefits. It is part of the fabric of the relationship between employer, employee and trade union. So we have the irony whereby employers make deductions at source for any number of things, and we have heard about many of them already—they include charity subscriptions, bike schemes, season tickets and so on—but they will not be able to make a deduction for the most central thing in the working life of an employee.
The other fig leaf being used by the Government as an excuse is modernisation. Of course we can sign standing orders and direct debits, but is the removal of this benefit justifiable in terms of forcing trade union members to be modern? I suggest that there is a whole other reason. It stands up to scrutiny about as well as not allowing electronic voting in respect of industrial action, which is hardly an ethos of embracing modernity. It seems that we can be modern as long as it suits the Government’s purposes and damages the trade union.
Then there are the administration costs. The Government are supposed to be committed to reducing administrative costs for organisations—unless, of course, you are a trade union, when you will have to spend a huge amount of time re-signing up your members and changing the payments system all over again. As I said at Second Reading, the TaxPayers’ Alliance—not normally renowned for defending trade unions—has estimated the cost to trade unions of removing check-off at £6 million. Clearly, this will weaken trade unions and the Labour Party in their pockets. If there is one thing that the Conservative Party knows about, it is the importance of having money to spend on campaigning. Indeed, I am testament to how effective Conservative spending is, otherwise I might have been delivering this speech from green Benches, instead of red ones. I am sure that we on this side of the Chamber await with great interest the Select Committee report examining the financial implications of the Bill for democracy in this country.
Then there is the huge number of complaints that I and many colleagues from across the House have received from local authorities that are furious at having this power taken away from them. Public bodies of all kinds rely on the ability to be flexible in their negotiations with trade unions. It is part of building up good industrial relations, which are vital for the avoidance of industrial action when things get sticky. The Bill will harm good industrial relations and enhance the likelihood of industrial action. Indeed, if they were trying actively to provoke industrial action, the Government could not be doing a better job in the Bill. What happened to commitments to devolution? I thought that the idea was to give more power to local areas to run themselves, rather than take it away.
To try to see the other side of the argument, I believe that it is reasonable that members of trade unions should opt in to paying a political levy, but, with their having opted in, there is no excuse for any employer who chooses to not to be able to make deductions for their employees on anything they both mutually agree on. This is a cynical, vindictive clause, and I and my colleagues on these Benches will oppose it at the appropriate time.
My Lords, before I come to the specifics of Amendment 94, it is fair to say that these Benches echo the basic analysis of the noble Lords, Lord Balfe and Lord Kerslake, and of the noble Baroness, Lady Burt, echoing, as they do in turn, the basic analysis of my noble friend Lady Wheeler. That is what we have heard in the last three-quarters of an hour.
We are reaching a position where we can only express amazement at the sudden rush to the head of some people in the Conservative Party of an ideological position that this whole tradition, which I thought in my generation of trade unionism had become mainstream in this country, summed up in the term “social partnership”, has gone out of fashion big time. Perhaps it is not held by all members of the Conservative Party—we have heard a very distinguished exception—but it is the controlling ideology of the Conservative Party.
The Government seem to want to do everything they can to reduce trade union membership per se—thereby cutting the legs off part of the social partnership structure—by reducing their income and making their role in the workplace next to invisible, even on such questions as health and safety and training and pensions, let alone collective bargaining on pay and conditions, grievance procedures, disputes procedures and all the rest of it; in other words, everything that makes up the quality of the contract of employment. For the last 30 years we have worked to improve not just pay but the quality of the contract of employment. I put on record our thanks to the Government for stopping just short of describing us as enemies of the people.
The Government’s impact assessment implies that there is no cost to the unions in removing check-off. It is not obvious to the Government that there will be any impact on trade union income and membership. I do not know who they have talked to. Perhaps the Minister can tell us that. They do not seem to have made any inquiries. We have heard that they do not seem to have made inquiries of local authorities, much less publish them. They do not seem to have made any inquiries of any employers—not that I can find—or of trade unionists. From my own inquiries, I conclude that one might expect in the sector affected a 20% reduction—that order of magnitude—in trade union membership, and a 20% reduction in trade union income as a consequence. As has been said, this will result from all the extra administrative hurdles over which trade unions will have to jump. Trade union members will receive a form through the post. There are few things more irritating than postal forms asking you to provide bank details and so on.
I should spell out what a 20% hit will mean in figures because we have been talking about peanuts for much of the discussion on the Trade Union Bill. You do not need to be Einstein to figure out that a 20% hit will mean that a union in this sector with 100,000 members will wind up with 80,000 members. If today it has an income of £10 million a year, it will be left with one of £8 million a year. Perhaps some of the Minister’s colleagues in the Government will shed crocodile tears on hearing that, but no doubt will also greet with a look of glee this further tearing up of the social fabric. I do not know too much about crocodiles, but some other animals have long memories.
The Government are struggling to find a justification for their claim that the impact on trade unions will be minimal. They have found and incorporated into the impact assessment—no doubt after some searching—a somewhat quixotic quote from a PCS spokesman, saying that the union could end up stronger as a result of this measure. However, if you look at the PCS website, you will find that this is among scores of other quotes saying pretty much the exact opposite.
The Government claim that the check-off arrangements are an outdated practice. I will not repeat everything that has been said, but it perhaps needs underlining in a couple of sentences. As the noble Lord, Lord Balfe, and my noble friend Lady Wheeler pointed out—independent observers will surely acknowledge its validity—deductions from the payroll are an increasingly common way by which employers help their employees manage their finances. Payments for childcare, travel, charity donations, computers, the rent of bicycles—or whatever—are often made through payroll deductions.
Where does the noble Lord get his 20% figure from? What surveys has he done? Why does he think that 20%—one in five—of trade unionists would think, “Oh well, I’m not going to bother carrying on paying into the union”, if the union is giving them a valuable service?
I have talked to many unions in the public sector, and that is the sort of feedback I get. It is for the two reasons I have given, but perhaps the noble Lord needs to be reminded of what I have only just said. The first reason is the extra administrative hurdles over which the trade unions would have to jump. It does not happen by magic. It will place a huge administrative burden and cost on trade union officials, who have other things to do, such as helping with day-to-day issues. To crank all this into action, whether in the Civil Service or elsewhere, will be a huge administrative burden. As the noble Lord, Lord Kerslake, pointed out, people within the system see this as a ridiculous extra administrative burden. Secondly, people are not too keen on forms and might even blame the union for troubling them with another piece of paper or form to fill in. If I am wrong, I will naturally be relieved, but I might be wrong the wrong way round: it might be a bigger hit than 20%.
I might be able to help the noble Lord, Lord Tebbit. If he checks with the Prison Officers’ Association, he will find that it had facilities withdrawn from check-off, and it has real troubles, as I mentioned on Second Reading.
The Government imply, without ever spelling out anybody specifically, that they have support for this radical change, but the Financial Times—hardly a Labour newspaper—has reported that,
“human resources directors in the National Health Service”—
the largest employer in the country, as we know—
“including those in some of the biggest hospitals, have written to Matthew Hancock, cabinet office minister, questioning … plans to scrap the … system”.
Another letter from human resources directors reported on in the Financial Times is to the effect that the five-year plan to improve performance would actually be set back by the changes set out, on the basis that close working between managers and union representatives had been,
“recognised by health ministers as fundamental”,
to its delivery. So why go around stirring up trouble? Perhaps the noble Lord, Lord Tebbit, has a good answer.
As Dave Prentis from UNISON pointed out in oral evidence to the Commons Public Bill Committee, the unions often pay for check-off deductions by arrangement. As has been said by everyone who has touched on this topic so far, it is perhaps peanuts in the bigger scheme of things, but if that is an issue at all, the amendment which could deal with that would be one that the Government, I am sure, would now wish to support. In summarising this financial question, on the one hand we have huge costs to the trade unions, relatively speaking, both in gross loss of income and through loss of members; on the other hand, there is the huge administrative burden. If unions are offering to make payments, this is the right time to reach a consensus on that point at least. However, I might add that it is monumentally unhelpful, given the time constraints on the requirement to sign up to direct debit payments, to be faced simultaneously—and we were discussing this two days ago—with the loss of facility time at the very point of explaining these untoward changes. Inside the Government, does the left hand know what the right hand is doing?
In response, therefore, either today or in the next couple of weeks, will the Government take the opportunity to meet the employers which have a degree of independence? There is a whole range of bodies, including those whose reputation suggests that they have a considerable degree of independence—the BBC, the British Museum and so on are listed. They are not organisations, I am sure, that the Minister would wish to say should be subject to any degree of intimidation to fall into line.
I now turn to the widening of the ban to privatised companies, which is the subject of the amendment in my name and that of my noble friend Lord Monks and others. As with facility time, with the banning of check-off the Government are again giving us the spectacle of extending the net to enterprises that are not in the public sector. I draw attention to the extraordinary scope of subsection (3) of Clause 14, which inserts new Section 116B into the 1992 Act. It is there on page 11 of the Bill. You can hardly believe it, but there it is. It allows a Minister to provide by regulation that a private sector employer can be deemed to be carrying out,
“functions of a public nature”—
I do not know what the Supreme Court lawyers would make of that—and it can be caught by Clause 14. What sort of legal drafting is that? Many distinguished jurists must be turning in their graves. One is inescapably reminded of the dictum, well known to the noble Lord, Lord Cormack, of Humpty Dumpty:
“When I use a word, it means just what I choose it to mean—neither more nor less”.
That is the only way I can describe this extraordinary interpretation that public sector means private sector where the Government say it does.
As regards which companies this will apply to, by the way, we do not have a complete list. It may be wishful thinking to think that the ones we have heard specified are it. We do not know. Ministers may be having second thoughts. We do not know. Perhaps they just want to leave it all dangling there, blowing in the wind. We could be talking about air traffic control or about any of these companies. I repeat: why go about stirring up trouble and uncertainty? We could be talking about the field of nuclear decommissioning and companies such as Magnox Ltd and Sellafield Ltd. The letter from the Minister dated 22 February is not clear as to its scope: whether it is the definitive list or only a list of people within the public sector. One can only therefore assume that the examples given are not exhaustive. How do we find this out? Where can workers and unions find clarity—by guesswork? It is not exactly a model of transparency, and employers would have to err on the side of caution.
To take the example of nuclear decommissioning one stage further, this sector may have a bigger hit—
Does the noble Lord realise that he has now spoken for 18 minutes and we are still waiting for him to come to the point?
With great respect to the noble Lord, Lord Cormack, I think that many of my colleagues will think that I have made some very pertinent points. I am now on my final two or three sentences.
In the case of the nuclear decommissioning industry, because of the extra difficulty of trying to get to the members—perhaps the noble Lord, Lord Cormack, could pay some attention to this point—they are inhibited further than normal by the fact that nuclear sites are licensed with restricted access. When the noble Lord, Lord Tebbit, finishes his private conversation, he might be interested in this, but he does not tend to listen to what people are saying, and that is not new. Has that extra difficulty been thought out of adding access to people on nuclear sites, which are licensed with restricted access?
There may be agreement that my final sentence is a good point to finish this on. I hope that the Minister will comment separately on this whole exercise of defining parts of the private sector as being in the public sector, as otherwise I can describe it only as the most outlandish idea, which seems to have won first prize—as the daftest one of all—at some well-lubricated jamboree organised by the Young Conservatives equivalent of the Militant Tendency.
My Lords, perhaps I could be allowed a brief intervention—I was not making a particular point about being brief; I mean it will be brief for me. I apologise that I have not been able to take part either at Second Reading or in Committee. The Scotland Bill and the Economic Affairs Finance Bill Sub-Committee have taken me away. I wanted to make a contribution and am sorry that I was not able to in respect of Clause 10, but I support Amendment 92, in the name of the noble Baroness, Lady Wheeler, as it seems to provide a perfectly sensible way forward for the Government.
If we had a Labour Government who brought forward a Bill suggesting that employers should no longer be able to deduct private health insurance payments from people’s salaries, I wonder how we would react on these Benches. We would go absolutely mental. We would say that it was a gross intrusion and a politically motivated thing, which interfered in the relationship between employers and their employees.
The noble Lord, Lord Lea, seemed to think that there was some ideology here. I can probably be identified with ideology in the Conservative Party more closely than most. I am a strong Thatcherite and very much supported my noble friend Lord Tebbit, who is no longer in his place, in his trade union reforms, which have stood the test of time. Those reforms were about ending the closed shop, giving the trade unions back to their members and taking the trade union movement away from the extremist militants within it who had led that movement, with its very proud history, into an abyss. That is what they were about.
Although I understand the main purpose of the Bill is to ensure that minorities do not dominate the decisions of trade unions, and support that core purpose, on both check-off and the question of opting in and out of the political levy I believe the Government are going far too far.
I am sure my noble friend will agree that I could not be characterised in quite the way in which he characterised himself, but I entirely support what he is saying. I do not think that this is a proper way to behave. We ought to make it easy and simple for people to belong to a trade union, and if it is best done this way, they should be allowed to do it this way.
There we are: we have the entire spectrum of the Conservative Party in agreement on this matter. I will not make any comments about Europe, so that we may maintain that position.
As the noble Lord, Lord Kerslake, pointed out, we allow charitable deductions, and as Conservatives surely we believe in reducing the power of the state, not increasing it. What business is it of the Government or the state to decide what arrangements are made between free trade union movements and employers?
I have looked in vain to find this great cohort of employers that are against check-off. It seems to me—this is a central point that has been made in the debate—that you do not want to create a situation where there is tension between employers and trade unions, and where you perhaps end up back where we were before the 1980s, with militant people going round the workplace to collect subscriptions and to encourage people to do things which we on this side of the Chamber would not be very enthusiastic about.
I am also very concerned about another thing. We have had a debate on my noble friend Lord Strathclyde’s report on the use of secondary legislation, but here we have, in new Section 116B(3), in Clause 14:
“A Minister of the Crown may by regulations provide, in relation to a body or other person that is not a public authority but has functions of a public nature and is funded wholly or partly from public funds”—
that is quite a wide gang—
“that the body or other person is to be treated as a public authority for the purposes of this section”.
So the Government are taking unto themselves powers to be even broader in respect of something about which, as far as I can see, they have not yet made their case.
I do not want to take up much more of the Committee’s time, but will just give notice to my noble friend that, should this matter come to a Division, I will certainly not be supporting it. I suggest to my noble friend that she looks very carefully at the amendment from the noble Baroness, Lady Wheeler, and the noble Lord, Lord Collins of Highbury, which seems to me to do everything that the Government could possibly want, if there is a genuine and sincere reason for making this change. It would provide for a proper code of practice, which means that people will be aware of what they are doing.
I suppose I should have declared my interest as a director of a bank, but the point has also been made about people who do not have bank accounts. I dare say we could find noble Lords on this side of the House who have not paid their subscription to the Conservative Party because they forgot to renew it and did not have a direct debit or something of that kind—my noble friend Lord King is indicating alarm at that. It is a very simple system, which is tried and tested and about which there are no complaints.
The costs are absolutely negligible. If it is a cost argument that is driving the Government, employers could charge the cost to the trade union, as the amendment in the name of the noble Lord, Lord Balfe, who I thought made an excellent speech, suggests. But to my mind the costs to the employer are considerably less than those of having people coming round the workplace collecting subscriptions. If anything, what is being proposed will add to the burden of employers, and I thought that as Conservatives we were against adding to the burden of employers and in favour of making life as simple as possible for them.
This looks to me like something that seemed a good idea at the time, which has now got into legislation, perhaps not with the best of motives. It would be wise of the Government to take the good advice which is coming from all sides of the Chamber and drop it.
My Lords, it is quite an exceptional pleasure to follow the speeches of two distinguished Members of this House on the Conservative Benches and the intervention by the noble Lord, Lord Deben, which was pithy but very striking, if I may say so. I declare my local government interest and my interest as an unpaid consultant at a firm which, for many years, has acted for trade unions. In that capacity, I am very well aware of the help and support they give to individual members across a huge range of concerns, from employment tribunals to accident cases, and of their support for members in the workplace.
I start by referring to the other check-off—Anton Chekhov—who wrote in one of his stories:
“To advise is not to compel … You must trust and believe in people or life becomes impossible”.
That seems to me a good description of the world of industrial relations. When it comes to check-off, many councils, including Newcastle, of which I remain a member of course, charge for the service. Newcastle actually makes a profit of around £20,000, which goes into the council’s budget. To put it another way, it could be said that it reduces the cost of facility time, which we touched on in an earlier debate. Many other councils do the same. It would be quite reasonable for the Government to require unions to pay the cost of check-off—Unison has made it very clear that is has absolutely no problem with that—but it should be a matter for individual councils and public bodies, as it is for private sector companies, to decide whether or not to operate a check-off scheme.
Unison reports that it is involved with 9,334 agreements about check-off, 7,242 of them in the public sector, with the rest in the private sector and, I suppose, the voluntary sector. Interestingly, some major companies, such as E.ON and United Utilities to name but two, are perfectly happy to operate such a scheme. The proposals were not in the Tory manifesto, and appeared at the last minute as the Bill was going through in the House of Commons. It would appear that there was no consultation with employers, let alone, of course, the unions themselves. Indeed, the director of human resources at Leeds Teaching Hospitals NHS Trust—a very major trust—has written:
“Ending trade union deductions through payroll in the public sector came out of the blue”—
I do not think he is making a political reference there. He went on:
“From what I can tell there has been no consultation with employers, no engagement with trade unions, no assessment of what it may mean for employee relations or, more importantly, recent progress in partnership with trade unions … My anxiety—which I know is shared by others—is about the unintended (but in this case entirely foreseeable) consequences. Check-off… is a light touch management activity, but it does give employers a sense of their union density, particularly when dealing with multiple trade unions”—
a point made effectively by the noble Lord, Lord Balfe. He continued:
“When balloting does take place, check-off allows employers to undertake the SBET (standard British eyeball test)”,
which I had never heard of before. Quite what it means, I confess I do not know, but I assume that it means that the employer can check on the validity of a ballot in relation to union membership. Mr Royles goes on:
“Should we challenge it? All this will be more difficult if payments are made by direct debit”.
That is a big employer, of a major service, making a very telling point.
The Government suggest that payments be made by direct debit from the employee’s bank, as we have heard. Other noble Lords have said there is really no difficulty in this, and, just as much to the point, most Unison members have expressed a preference for check-off. As long as there is no cost to the employer, why should their wishes not be respected? Many employers in local government have voiced their views, including the north-eastern councils, which have collectively backed check-off. I think the Dorset police and crime commissioner—who I suspect is probably not a Labour member—has done likewise. As we have heard, the Government are reserving the position in relation to the functions of police and crime commissioners.
On Second Reading, I quoted Margaret Thatcher, who famously said that,
“for over 100 years … it has been the belief of the Conservative Party that the law should not only permit, but that it should assist, the trades unions to carry out their legitimate function of protecting their members”.
It could be argued that she rather departed from that view, although the noble Lord, Lord Forsyth, disagrees, during her period in office as Prime Minister, when she spoke of “the enemy within”. The latter view, sadly, appears to have shaped the provisions of the Bill. It is time for the Government to treat the unions as partners in the provision of public service, not as enemies, and to treat public sector and council employers as reasonable decision-makers, not subordinates requiring constant interference with, and control of, their role as managers of public services.
There is also the issue of potential legal challenge. The noble Lord, Lord Pannick, who is not in his place, wrote in the Times recently that the second area where the Bill is vulnerable to legal challenge—he had identified another issue—is Clause 14. He wrote, “It is very difficult to see the justification for such a restriction which has a very damaging effect on the efficacy of trade unions”. There must be the possibility of a legal challenge.
I suspect that there will be a broad consensus in this Committee about many of these provisions, particularly this one. I hope that the Minister will take these views back to the Government and that they will think again. An amendment was moved in the Commons by a Conservative Back-Bencher which would effectively remove the element of compulsion and leave it to employers, providing that the cost was met.
I began my speech by referring to a quotation from Chekhov. I offer three titles of his short stories which might well be applied to this Bill: “Gone Astray”, “Overdoing It” and “A Blunder”.
It is certainly no cherry orchard, is it, my Lords? I am delighted to support my noble friend Lord Balfe in particular. He made a very telling, powerful and compelling speech, and I agreed with every word. Although I have concentrated my contributions to the debates on this Bill on Clauses 10 and 11, about which I remain acutely concerned—my noble friends on the Front Bench know my intentions if the debate does not move in the right way—I share the views and intentions of my noble friend Lord Balfe when it comes to this clause.
If the Conservative Party stands for anything, it stands for choice. This clause is an unnecessary, meddlesome, bureaucratic abolition of choice, and it is not worthy of the Conservative Party. Although she is engaged in conversation, I hope that my noble friend the Minister can hear what I am saying. She has a very good track record in the field of industrial relations. She cannot, surely, believe that the deprivation of choice is something that she can champion, and I hope that she will not.
It is only about a week since an eminent world leader rebuked an aspiring world leader by telling him, effectively, that those who wish to demonstrate their credentials should build bridges rather than walls. In this clause, we are building an unnecessary wall. It is inimical to the true one-nation Conservative tradition and it is not something that any Conservative can wholeheartedly support. The speech of my noble friend Lord Forsyth of Drumlean was intervened on in a very pithy and apposite way by my noble friend Lord Deben, who said that they spanned the whole range of the Conservative Party. I stand somewhere between them on a range of issues, so I think that we pretty well span the range of opinion in the Conservative Party. If my noble friend the Minister thinks that by giving way on this clause she will be conceding to the Opposition, she will not be—she will be marching in the spirit of true one-nation, pro-choice conservatism.
I hope that when we come to Report, we will have from my noble friend a suitable amendment that will encapsulate the essence of the amendments proposed today, in particular the amendment so splendidly spoken to by my noble friend Lord Balfe, and that we will therefore be able to take away from this Bill an aspect of petty vindictiveness and spite that does nobody any favours and is wholly unnecessary. What is the point of this? The answer is that there is no point.
My Lords, I have three amendments in this group and I give my full support to the amendment of my noble friend Lady Wheeler. I believe that Clause 14 is authoritarian and represents the Government’s belief that public sector employers cannot be trusted. I shall concentrate on my Amendment 95A and try, for the sake of time, not to cover ground that has already been covered.
Clause 14 creates regulations that may,
“make consequential provision amending or otherwise modifying contracts of employment or collective agreements”.
We do not know what the finished product will look like when this Bill becomes an Act. We do not know to what extent the regulations will cover important issues of policy—this has already been referred to by the noble Lord, Lord Forsyth—or just explanatory detail, but having a clause of this kind allows the Government to change individual employment contracts and to set aside collective bargaining agreements.
These seem to be Henry VIII powers which not only cut across employer/employee relationships and agreements but reduce the public sector to an employment agency for the Government. What lies behind this proposal and how significant is it from the Minister’s point of view? Is she able to argue that this is not a highly centralist proposal? Finally, what does the Minister have in mind when it comes to the phrase,
“amending or otherwise modifying contracts of employment”?
I notice that paragraph 3 of the draft skeleton regulations—it does not get more vague than that—on the prohibition of check-off states that check-off is,
“void in so far as it purports to require the relevant public sector employer to make trade union subscription deductions from wages payable to workers”.
As has been said many times, check-off is a voluntary arrangement entered into by the employer and the employee. What is meant by “purports to require”, as I am not aware of any employer who is required to do this? I am reluctant to help the Government on this, but perhaps the phrasing in the Explanatory Note would be more accurate, as it talks about purporting,
“to give the right to have such deductions made”.
My Amendments 123A and 124A seek to delay implementation for five years. I sincerely hope that this draconian measure about check-off will not go through at all, but if it does, it will take a huge amount of time for trade unions to put their house in order. Those points have been covered very well by other noble Lords, so I will not cover them again.
However, there will be a disproportionate impact on low-paid employees and part-timers, particularly women. I fear that it is taken for granted by the Government that everyone can create monthly direct debits or standing order arrangements with their banks. As has been said, this is not the case. Banks will not be accommodating if someone has a chequered payment history or if pay is intermittent. I refer back to facility time: some members will be able to pay only by cash or cheque, and there will need to be time for trade union representatives to do the physical collection—a point I made at Second Reading. All those problems will take time to solve, which is what I am asking for.
Finally, I ask a question on the implementation of the ban on check-off. There appears to be confusion in the skeleton regulations about the implementation of the ban. In her covering letter of 22 February, the Minister refers to the ban not coming into force,
“until at least 12 months following Royal Assent of the Bill”.
However, the draft regulations suggest that the ban will come into force,
“no sooner than 12 months of being laid in draft form in both Houses”.
Although the final regulations could be laid at the same time as Royal Assent, that is not guaranteed, so the dates could be quite different. Nick Boles has previously talked about implementation,
“from commencement of the provisions on check-off”.—[Official Report, Commons, Trade Union Bill Committee, 27/10/15; col. 413.]
Will the Government clarify which date they currently support? My amendment asks for a five-year period for trade unions, their members and employers to be able to implement this without detriment. There will still be detriment to employers, of course, because they will not know who the trade union members are. That is still a vital point, even for those who think that trade unions are anathema.
In conclusion, I hope that the Government will back down. They have a marvellous opportunity, in the shape of my noble friend’s amendment, to do that with dignity.
My Lords, I am fearful of keeping noble Lords from their lunch, but I have several points that have not already been made in the debate. I agree absolutely with what the noble Lords, Lord Balfe and Lord Kerslake, said about how the Bill, particularly this clause, is designed principally to make life difficult for the unions. It is not about modernising industrial relations.
I challenge the Minister to explain some of the statements made in the impact assessment. It is extraordinary that it states:
“Removing the check off provision is not expected to have a negative impact on industrial relations”—
we have heard arguments to the contrary in this debate. It also states:
“The impact of transition on the trade unions will be minimal”.
How can that be? It further states that:
“We assume that the amount of time taken to become familiar with the proposals will be small as changes introduced in the Bill are straightforward”.
We have heard in the debate that these are complex and difficult procedures that the unions will be inveigled into if the proposals are passed.
I accept that we have moved on a long way from when union dues were collected in cash. I remember in the sector in which I worked, staff had for years been paid in cash and the father of chapel used to go around collecting dues regularly. The only problem was that he was also acting as a bookie’s runner in the plant, so the union was very grateful when the management agreed to accept check-off.
We have moved on from that, but we want union representatives to concentrate on improving industrial relations. We know that, whatever happens, there will be a huge muddle and administrative problem. No one has mentioned that we now have ballots for strikes and industrial action. The complication of not having agreed lists of who can vote in those ballots will be much more difficult in the public sector without check-off. No one has mentioned that there is a huge problem with people not cancelling direct debits when, in this case, they move jobs to different sectors and may even need to join another union. We know that those direct debits are often not cancelled.
My Lords, I point out that Baroness Williams, who has just departed from us, continued to pay dues to the Labour Party for 10 years after she had joined the Social Democratic Party, because she failed to cancel her direct debit?
I think it needs such sources of money at the moment.
Another issue that has not been raised is that a good employer wants representative unions. As someone who has been involved as a manager—I know that the unions may be suspicious of this—I liked to know who was in the union, because I wanted to know how representative the leadership of the union was in negotiations, how serious they were and how I should respond to them. That is an important point.
Another point that the Conservatives have overlooked is that, if you get unions down to a core so that they are unrepresentative, you will face very difficult decisions. I always remember Vic Feather saying, “I always look to the faces of the people at the back of a room, not the voices of the activists at the front”. If you want representative unions, you want the highest number of your employees to be members of that union. Not to upset my Labour friends, but if you go down this route, you will be handing the trade unions to the Corbynites, the less representative groups. You will have more trouble in the trade unions as a result, particularly in the public sector, than if you recognise that the rank and file—the people involved in high-turnover sectors, the cleaners—have good judgment when they have to face the decision whether to lose wages and take industrial action. Those people provide the solid support for trade unions, and you should be encouraging them. If you do not, you will end up with worse industrial relations.
I support Amendment 92. It is a good way forward, and the Government should look carefully at it. The amendments of the noble Lords, Lord Kerslake and Lord Balfe, help in the debate. We must address the fact that, once again, the Government speak devolution and then do absolutely the opposite—as in local government. The Bill, and these provisions, do not help us to modernise industrial relations.
Perhaps I can help the Minister to join the consensus on how awful the clause is by stressing one point that the noble Lord, Lord Cormack, touched on. It is about choice. There is sometimes confusion in audiences that I address about check-off. People wonder, “Is it to do with the closed shop? Is it compulsory that union subs are deducted by the employer and sent to the union?”. The answer is no: the closed shop is history, it has gone. There is no compulsion, it is voluntary. There is also sometimes confusion with the political contribution, the political levy, where there is an opt-out. If there is any inertia selling, it tends to be on the side of the opt-out system.
This is a matter of choice. When my daughter got a job in the Minister’s former company, Tesco, as a Saturday girl, she got a form in the recruitment pack that said, “Do you want to be a member of the union? If so sign here. Do you agree to have your subscription deducted from the payroll? If so sign here”. That was the system. If it is good enough for Tesco, why can it not be good enough for Manchester City Council or all the other public bodies that will be covered by this provision? Why manufacture a series of disputes about union contributions and how they are collected in a vast range of British places of employment? It is a step far too far, and I hope that the Minister will listen carefully to what is said on all sides of the House.
I put to the Minister a question that she might consider before she comes to the Box. She will have a prepared speech, and she has obviously amended her notes. But what has come out during this debate is an inconsistency in the position of those to whom the noble Lord, Lord Forsyth, referred as wishing to contribute to Bupa, and all the other organisations referred to by the noble Lord, Lord Balfe. In her reply, the Minister must address that difference in treatment, because it goes to the heart of the case. When people outside the House judge the ministerial response, they will have to do so on the basis of whether trade unions are being penalised when other organisations are not being penalised. That is what I shall look for in her contribution. If she does not address it, she will be pressed on by interventions during her wind-up.
I thank the noble Lords, Lord Balfe and Lord Kerslake, for their contributions and particularly what they said about part-time, low-paid workers in the public services—the National Health Service and local government. Throughout my lifetime I represented those workers and I know what it is like for people on those kinds of wages and in that kind of situation to handle bank accounts, standing orders and direct debits. It is very difficult, and it was heartening for me to hear noble Lords’ understanding and kind words in relation to those often forgotten and underappreciated workers.
The climate of employer relations in the public services in the 1970s was very immature and undeveloped. I was a trade union official and I would ask a local authority whether I could take a road worker to a meeting to talk about pay and conditions, but it was very difficult to get the authority to release a person to go to a meeting. When it did, the road worker would turn up with dirty hands. When I asked him why he had not washed them, he would say, “The management will give me time to come to the meeting but they will not give me time to wash my hands”. I used to take school meals women or school cleaners to meetings, and the management would be dressed appropriately, as we expect managers to dress, but the women were always required to go to meetings without time to take their overalls off and put a dress on. They would have to take part in the meetings wearing the overalls that they went to work in.
I give noble Lords those examples only to show how backward employer relations were in the 1970s. I agree with the noble Lord, Lord Forsyth, that some of the Conservative legislation helped with that, but other things happened as well in public services. The two big things that made the change were having facility time and deduction at source; they changed the landscape dramatically, because people did not have to worry about getting time off to go to a meeting or about scurrying around all the time collecting subscriptions. They started to concentrate on what the taxpayer and consumer wanted them to do—that is, improving the quality of the service through good employer relations. Today we have a fantastic employer relations situation in the public services. There is partnership and we deal with thousands of problems every day. Management and unions work together; they do not have to look over their shoulder about facility time or think about check-off—they can get on with the job of solving the many problems that have to be resolved, building good employer relations and doing the things that the taxpayers and consumers want them to do. I hope the Minister will take that point on board, listen to the excellent speeches that have been made this morning and think again about this clause.
My Lords, I approach this from a slightly different angle. I looked at the Bill for the first time with a particular interest in Clauses 10 and 11 and learned about check-off only from reading Clause 14 later. Frankly, I was surprised to see check-off still taking place, as it does not sit comfortably with many people. My noble friend Lord Balfe’s story of its history is very illuminating and extremely interesting; it explains to us why it came about, as opposed to the cash collection that predated it. Clearly, no one starting today would use a check-off system; the way everyone is moving is towards direct debit.
I have spent time trying to understand why check-off is not appropriate. One reason I discovered is that apparently in 1998 legislation came out that did not require changes in the amount paid under check-off to receive notice—whereas, of course, direct debit under the direct debit guarantee requires 10 days’ notice. So people are assured that any change to the amount paid by direct debit gets 10 days’ notice. It seems to me that unions are moving in the direction of direct debit. The Public and Commercial Services Union briefed its members on that subject, stating in its own material:
“Trade unions in general are no stranger to Direct Debit. POA members currently pay via this method after the previous Tory Government attacked their trade union rights and forced them to halt ‘check off’. The following Labour Government offered to reinstate it for them, but the POA chose to stick with Direct Debit. Many other large trade unions collect subscriptions in this way … such as Unite and GMB”.
Indeed, Unite offers incentives to people to move to direct debit; currently, it offers an incentive of £25.
Does my noble friend appreciate that some people on some very low incomes may not have bank accounts at all? If they do have bank accounts and set up direct debits, if there is not enough money in their account, they get an enormous bill from the bank because the direct debit has been disallowed. Therefore, they are very reluctant to sign up to direct debit.
I would be very interested to know the number of those people. Clearly, the numbers have changed dramatically since check-off was brought in, as the noble Lord, Lord Balfe, explained.
Yes, but we are concerned about every individual. Even if it is only a few hundred people, surely that in itself is justification for what is being argued by almost everybody in this debate.
Of course, exceptions can be made for a few hundred, if it is a few hundred, as with others. But it seems that direct debit is the direction of travel. I have nearly finished.
I am most grateful to my noble friend. I have no idea what the numbers are, but it will be more than a few hundred—and it will be the people who will lose most if they do not have the backing of their union. I appreciate that they may not move in his social circle, but there are a lot of people like that.
I am not sure the noble Lord knows my particular social circle, but I took the figure of a few hundred from my noble friend Lord Cormack. As I said, I do not know the numbers and I do not think the noble Lord knows the numbers, but it would be interesting to have them presented to us.
The point I was making was that even if it is only a tiny number, why are we doing this?
Yes, I thank the noble Lord—I have taken the point. The point that I was making was that the direction of travel, in the market and clearly by the unions, is towards direct debit, which is a direction of travel that we should encourage.
My Lords, this has been a fascinating debate, and I have begun to feel a bit sorry for the Minister, because she totally lacks any kind of support whatever. If I am allowed to say so without being out of order, I also feel very sorry for her officials in the Box and elsewhere, who have to witness the slaughter of their Minister on a completely unacceptable Bill.
I want to make just one simple point: this Bill has a significance way beyond the issue itself. This country desperately needs a strong economy. It desperately needs the most effective, harmonious, productive economic system that we can ensure. There is simply no room whatever for a culture of confrontation. We need co-operation between self-confident people who feel that they really matter and have a stake in the process. This Bill does nothing whatever to promote such a positive approach in the interests of the British economy and British society. There is no place for it. This debate has left no doubt whatever about that.
My Lords, I thank the noble Baroness, Lady Wheeler, for her clear, comprehensive and relatively succinct introduction to this enormous group. It is plain that the sense of the Committee is that there are concerns about Clause 14, for reasons that have been fully debated. However, we have looked carefully at the clause and the amendments, and I will try to explain our thinking in a clear and objective fashion.
It is important to note that check-off was introduced in a very different time when bank accounts were not common and workers were paid in cash. We are now in a modern era of online banking, where public sector workers’ wages are almost all paid directly into bank accounts and direct debit is the obvious alternative. The average consumer already has six direct debits. This is the direction of travel, as my noble friend Lord Leigh said. An advantage of moving to direct debit is that a union and its members will have a direct subscription relationship without any need for a public sector employer to be an intermediary.
It is, of course, about the public sector that we are talking, to respond to my noble friend Lord Forsyth. If we were designing a union membership payment method today from scratch, no one would choose to put the employer as an intermediary in the subscription relationship between a union and its members.
What about Tesco?
I suspect that if it was starting now, rather than 100 years ago, things would be different because of the direction of travel.
The Minister said she would be clear and objective. Will she state what evidence she has been given for saying that that would be the case?
I think we have set out clearly in our impact assessment and elsewhere the way things are going. There is clear evidence that there has been a big move to direct debits, internet banking et cetera. I do not think anyone could dispute that. As a former employer in the private sector, I was thinking that if one was setting out on this today, one would not necessarily do it in the same way.
I shall give the Minister a simple fact. She talked about Tesco. She was part of a partnership arrangement. Can she tell me how old that arrangement is and how important payroll deduction is to it? In my memory, it is relatively recent.
I think check-off existed for a number of years at Tesco, long before I arrived. We had the partnership agreement to which the noble Lord refers in the late 1990s, and I was involved in that. Check-off is part of the arrangements. In the Bill, we are not seeking to regulate the private sector; we are talking about the public sector, and there is a cost which is set out.
The Minister has been very clear about the notion that there is evidence of the direction of travel. Is she suggesting that the direction of travel—meaning that more people use internet banking, perhaps on their phones, or direct debit—is the introduction of technology, and therefore it is just the direction of travel of technology that is being raised here? There has been a massive expansion in the use of payroll deductions for a variety of things from bicycles to charitable donations. Does that indicate another direction of travel—the velocity of the things that have been introduced? What is the particular evidence that there is a direction of travel which is unique and distinct and obviates the opportunity for choice to be exercised?
The noble Lord is right in saying that the direction of travel is driven by digital change—I am not disputing that—and that a fair number of things are deducted at source. However—and I am trying to find my notes—they nearly all have tax or national insurance involved.
I remind the Minister about workplace pensions. They are a very recent auto-enrolment initiative. They do not go back to the 1990s; they go back about two years. They are based on payroll deductions. They are not old-fashioned; they are efficient. They are the way to do things. They are much cheaper than direct debit and much easier for people to handle. That is why, on a consensus basis, auto-enrolment is based on payroll deductions.
My Lords, I do not wish to be discourteous to the Committee in any way, but there have been five or six interruptions so far and the Minister has been on her feet for four minutes. If she is allowed to make just a little bit of progress, perhaps during the course of that progress she will be able to respond to some of the questions being put.
I am grateful to my noble friend. We are debating check-off in relation to Clause 4. The Public and Commercial Services Union on its website quotes a member who said of direct debit:
“It’s the easiest way of paying my union subs. You know then that it’s going to get paid because you’re not dependent on your employer taking it from your wages. I think it’s better”.
I agree with that.
Public sector employers, where they are funded by the taxpayer, have no place in shouldering the administrative burden of collecting trade union subscriptions. Even where the union pays the employer for the service, it remains the employer’s responsibility to manage the payments, and if the employer gets it wrong, it could be taken to an employment tribunal.
Unite, UNISON, GMB and PCS already accept direct debits, and some unions have already modernised their arrangements and accept only direct debit payments. Direct debits are easy to set up, and they offer excellent consumer protection. The majority of adults in the UK use them, and many organisations consider it their preferred method of receiving payments, such as utility providers who offer customers a discount if they pay in this way.
I thank my noble friend Lord Balfe for setting up a meeting with officials from some small trade unions. What struck me was that they felt that direct debit was the way forward and that some of them had already modernised their arrangements and no longer use check-off. The unions I met included the FDA, Accord, Prospect, the Association of Teachers and Lecturers, the National Association of Head Teachers, the British Dental Association and others.
Modern employment practices are seeing more fluidity in the workplace. As Prospect says:
“Many Prospect members change jobs frequently, or have periods of unemployment between contracts. If you’re moving on, you don’t have to resign your Prospect membership. We can stay with you during those times”.
At Second Reading, I said that I was in listening mode, and we have listened to some of the concerns raised about implementing this change and allowing a sufficient transition period. So to reply to the noble Baroness, Lady Donaghy, we announced in the other place that the regulations on check-off would not come into effect until 12 months after the Bill received Royal Assent. This will give unions double the time we originally proposed—a full year—to encourage their membership to move over to paying their subscriptions by direct debit. That is on top of the time unions have already had since the proposal was first announced last August. It is one of the many reasons why we do not accept the assertion that the proposal offends human rights or hinders union activity. It is about a change of subscription method over a full year and, as we see it, does not engage the European Convention on Human Rights. It is right that unions should adopt modern subscription practices to reflect the changing needs of all their members. No new entrant to the job market would expect only ever to have one employer these days. Check-off is not well suited to meeting the needs of a diverse and fluid workforce.
We heard at Second Reading that check-off benefited employees as it made sure that they ceased being a union member when they left employment, but all the large trade unions offer specific memberships for retired members, and trade union membership is not restricted to those who are still working.
Noble Lords have claimed several times that the prohibition on check-off will affect those without bank accounts. I have not seen a great deal of evidence that such public sector workers exist outside the hypotheticals—and we are talking about the public sector—but even if a few members still do not have bank accounts, I am sure that a union would be prepared to accept cash or alternative payment arrangements, although this would be very much a matter for the union. Even basic bank accounts now allow direct debits, and of course if you are online you can cancel a direct debit when you need to, which has represented progress in banking. More householders than ever now have bank accounts, and the check-off impact assessment referred to the wider Bill impact assessment that was published at the same time. The impact on union members will be minimal as they will have, as I have just said, 12 months to switch to direct debit.
I am finding difficult the suggestion that there is now some prescription that direct debit is the only method that should be used. Putting aside the issue of choice and the fact that direct debit does not appear at all in the Bill as a solution, I would like to give an example and get the Minister’s view on the following: in the Government’s evidence about the propensity of people to use payday lenders, one of the extraordinary features of those people who have very little who use payday lenders was that they remove direct debits from their bank account so as not to suffer the penalties as a consequence of it. Many of those were low-paid workers and will have been in the public sector. In those circumstances, where it is better to have this deducted at source when the money comes in rather than having an impact on their bank account where there may be a detriment, should those people not have a choice as to where and how they should be able to pay their union deductions?
My Lords, the noble Lord makes a fair point. Having said that, the growth of direct debit in lots of areas has continued. As I have said, I do not think we are ruling out a union accepting cash or alternative payment arrangements. We are trying to make a change of direction here within the public sector.
I was going on to say that we debated Clauses 12 and 13 earlier this week, and I indicated then that I would go away and think about concerns relating to which organisations would be in scope of the facility time regulations, so I will not seek to delay the Committee by trying to answer all the related questions that have been asked today in that area.
I should, however, turn to Amendments 94 and 97, both of which seek to limit the employers within scope of the regulations. Amendment 97 in particular would carve out our largest public sector employer, the NHS, plus local authorities, thus excluding large swathes of the public sector. Obviously, that would not deliver on our commitment to ban check-off. As I said earlier in the debate, we are looking at the impact of the skeleton regulations that we sent to noble Lords earlier this week.
Will the Minister explain why it is deemed necessary to impose a new arrangement on two parties, a public sector authority and a trade union, that are perfectly agreeable to operating a check-off scheme? Why is it necessary for the Government to intervene in a situation where both sides are satisfied with an arrangement, on the basis that there will be no cost to the employer? If the Government’s provision is good enough for the public sector, why are they not seeking to apply it to the private sector? What is the difference?
My Lords, the difference is that the cost falls on the public sector.
But the premise—the burden of the amendments that we are discussing—is there would be no cost to the public sector employer.
The answer is that I think the impact assessment says there is a cost of £7.2 million. I was seeking to answer the question that had been raised.
Amendment 92 would allow check-off to remain and replace the prohibition with a statutory obligation for ACAS to create a code of practice. As part of that, payment for a check-off service would be recommended as best practice. I return to the points made on earlier amendments: this would not deliver the commitment that we have made to prohibit check-off across the public sector. As it would not be a mandatory requirement, some organisations, as I think we have heard today, might choose not to do it while others might do so, and then one would have an inconsistency of application.
I am, however, grateful to my noble friend Lord Balfe for Amendment 93, which seeks to help us by allowing check-off to be retained wherever the employer is reimbursed. However, even where the service is paid for, I cannot accept that it is appropriate for a public sector employer to be the intermediary of the subscriptions relationship between a union and its members.
My Lords, I am very sorry to interrupt, as we have had a long debate. I make an appeal to the Minister: from virtually every speaker in all parts of the Committee we have heard a plea that I myself tried to put into one word, which was echoed by the noble Lord, Lord Monks: “choice”. Can she not go away and come back on Report, having reflected on the virtually unanimous opinion of those who have taken part in this debate? We are not asking her to trash a manifesto commitment—far from it. We are merely asking her to be a little bit flexible where she is insisting upon inflexibility.
I thank my noble friend for his intervention. I have said from the very beginning that we are listening during this Committee stage. Having said that, it is only right that I set out clearly the reasons why we believe that this clause is the right one and is needed, which is what I have been seeking to do. I think that I am nearly through. I am sorry that I have not been quite as succinct as the noble Baroness opposite.
Could the Minister answer this question, which I have great difficulty in understanding? Why is it permissible for check-off to exist in the case of charities, BUPA and all the organisations set out by the noble Lord, Lord Balfe, but not in the case of trade unions?
I have already sought to answer this question. Deductions for things such as pensions, childcare vouchers, Cycle to Work and all the other things that have been mentioned have tax or national insurance implications so it makes sense for them to be made through payroll. The collection of union subscriptions should be the concern of trade unions rather than of tax-funded employers. That is the difference.
It is a long time ago for me but I remember that part, if not all, of the subscription for craft unions in particular was treated for tax purposes and was declarable in terms of being alleviated—professional fees as part of a trade union subscription. Where that applies in the public sector, will it no longer apply?
I am not sure I entirely understand the point. If I may, I will reflect on it.
I am sorry—I am irritating my noble friend by intervening. I am just worried about this principle that the Government think it should be a matter of law that there should be deductions only for things which have tax implications. Does that mean we can look forward to the Government bringing forward legislation to stop people having deductions for Christmas clubs and suchlike?
I thank my noble friend. I am not making any commitments about government policy in any of these areas. I am seeking to explain that there is a difference of logic—perhaps not very effectively, but I am trying to do just that today.
I was trying to respond to the noble Baroness, Lady Donaghy, about contractual rights. Amendment 95A seeks to allow check-off to remain where employees have a contractual right or where there is a collective agreement in force which guarantees it. I do not think that that applies in many areas but there are some examples in local government. The prohibition would of course not be fully effective if we could not ensure that it applied consistently to all public sector employees. However, any modification would apply only retrospectively, from when the regulations came into force. It relates only to those very specific aspects of what has been collectively bargained. This is entirely reasonable and proportionate.
Amendments 123A and 124A seek to delay the removal of check-off so that Clause 14 would not come into force for five years. As I commented earlier, we have doubled the amount of time members would have to bring in the changes. This should be more than enough time for unions and members who have not already done so to transition to direct debit.
Finally, I turn to the comments made by the noble Lord, Lord Kerslake, and to his amendment. I am not sure that I should say this but as an ex-civil servant, I was rather shocked to hear of private exchanges between him and the recent former Minister on this matter. However, his amendment is not quite what we are looking for, because it allows for check-off effectively to be put on a statutory footing. This would prolong this method of payment, preserving the status quo and delaying the modernisation that we seek to provide, so I cannot agree to it. In fact, requiring all employers to do this could be seen to be anti-localism, in effect. It does not seem to fit the bill today.
I have covered the main amendments. We have had a long and useful debate and I am grateful for the opportunity to address some of the concerns. I ask that the amendment be withdrawn.
My Lords, I thank the Minister for her response. This has been a powerful, detailed and consensual debate. She says that she is in listening mode and I will carefully read her comments in Hansard, although I am sorry that she has not felt able to respond to the consensual nature of the debate. In fact, the only thing she has listened to is the issue concerning the implementation date, and she has not moved on that because we knew that the Government were moving implementation from six months to a year anyway. Therefore, there has not been any movement. I seriously struggle to detect any real change in the Government’s fundamental understanding of the role and work of trade unions in a modern society, or their simplistic consideration of the two options only approach in their check-off ban.
As speaker after speaker has demonstrated, the proposals are unfair, unjustified and unworkable. They have simply not been thought through. The Government have failed to address the Joint Committee on Human Rights’ call for objective justification of the proposals. The Minister simply has not addressed the arguments that have been made across the House. We have had support throughout the House: from the Lib Dems, from the Cross Benches—from my own Benches, obviously—from all noble Lords. I thank them, particularly the noble Lords opposite for the range of support and opinion that they reflect. It is a particular first for me to have such unequivocal support from the noble Lord, Lord Forsyth. His analogy regarding the Conservatives’ reaction if they sought to ban contributions to private health insurance was telling and appropriate. He mentioned the review of the noble Lord, Lord Strathclyde. I draw his attention to the debate we had on Tuesday on facility time. Clause 13 seeks reserved powers over capping facility time, which the Government say they will not use unless they have to. The Minister observed that the affirmative procedure would be used in that case. Therefore, we are in quite a bit of difficulty.
I will not go into all the arguments again. It is frustrating that the Minister has not been able to address the consensual nature of the debate, for which I am certainly very grateful. This is about fairness and justice. Amendments 92 and 93 provide the reassurances that are needed if the Government’s agenda is openness, transparency in procedures and costs and no burden on the taxpayer. If these amendments are supported in principle, the Government could succeed in achieving their objectives. They would in fact be regulating a system that regulates itself pretty well already, which is an interesting position for a Government who declare an abhorrence of red tape to be in. However, aside from that issue, if they do not support the amendments or move towards accepting them in principle, the only conclusion to draw is that they want to destroy effective trade union organisation, to prevent unions representing their members in the workplace and to attack and seriously weaken their finances. This issue is vital to the future of industrial relations, trade unions and their members, and as noble Lords across the House have said, it is about members’ choice. The Government are offering a top-down solution to a problem that does not exist. We will pursue the issues raised today with vigour and determination on Report, and with that I beg leave to withdraw the amendment.
Amendment 92 withdrawn.
Amendments 93 to 97ZA not moved.
Clause 14 agreed.
House resumed. Committee to begin again not before 3.07 pm.
Flooding: EU Solidarity Fund
My Lords, with the leave of the House I will now repeat a Statement made earlier today in the other place by the Minister of State for Local Growth and the Northern Powerhouse. The Statement is as follows.
“I want to pay tribute to all those who have in whatever way supported the many places that were flooded in December and early January. The whole House will want to recognise the enormous amount of effort that has gone into supporting households and businesses, not just in the initial response to the floods but also in the ongoing work to get residents back into homes and businesses open.
The Government recognise that the immediate priority is to respond to the urgent needs of those affected. That is why we have already provided over £200 million to help those affected by the floods to support recovery and repair. A key feature of our package of support is the Communities and Business Recovery Scheme. It is designed to provide ready support to local authorities affected by Storm Desmond and Storm Eva to in turn help individuals, small and medium-sized businesses and communities to return to normality. Additionally, it provides property level resilience grants of up to £5,000 so that people can protect their homes and businesses against future floods by putting in place resilient repairs. To date under the Communities and Business Recovery Scheme, government has paid out a total of £21 million for Storm Desmond and £26 million for Storm Eva. Further payments will follow. We are also supporting farmers with grants worth up to £20,000 to help restore damaged agricultural land and farm vehicle access, repair boundaries and carry out field drainage.
Having set out what the Government have already done, I want to turn now to what more we can do. Today, I would like to announce our intention to make an application to the European Union Solidarity Fund. The fund was set up to respond to major natural disasters and to express European solidarity with disaster-stricken regions within Europe. The fund was created as a reaction to the severe floods in central Europe in the summer of 2002. Since then, it has been used for 70 disasters covering a range of catastrophic events, including floods, forest fires, earthquakes, storms and drought. The only time the UK applied to the fund was following the flooding of 2007, which saw widespread and significant damage across large swathes of England.
Member states have 12 weeks from the start of an incident to register their intention to claim. Once we have confirmed our intent, there is time to consider with the Commission the elements of assessment. Following this process, the Commission assesses the application and, if it is accepted, proposes an amount of aid to the European Parliament. Once the appropriations become available in the EU budget, the Commission adopts a decision awarding the aid to the affected state, following which the aid is paid out in a single instalment. When the aid is paid out, the affected state is responsible for the implementation, including the selection of operations and their audit and control. Emergency measures may be financed retrospectively from day one of the disaster. The EUSF is not, and nor is it designed to be, a rapid response instrument for dealing with the effects of a natural disaster. Financial aid can be granted to the applying state only following an application and the budgetary process, which can take several months to complete”.
My Lords, that concludes the Statement.
My Lords, I thank the Minister for repeating that Statement. However, it seems perverse that the Government are only now announcing that an application is being made—four days before the deadline—when it could have been made in early December, when the first evidence of the devastation in the flood areas became apparent. During that time, communities have been left in the dark about whether an application to the fund would be made, despite the fact that it was established to respond precisely to natural disasters such as those experienced in the north and north-east of the UK.
Can the noble Baroness clarify why this unnecessary delay has occurred? Can she say what scope there is to make multiple applications to reflect the wide geographical spread of communities affected over this time? Can she guarantee that all the aid received will be channelled directly into the affected communities rather than being used to refill the Government’s coffers for the financial support already provided? Finally, can she clarify whether part of the fund will be used to assist residents who have not yet been able to return to their properties, where the need is very urgent? I look forward to her response.
My Lords, in response to the point about the time taken, thresholds have to be met and the damage assessed, so these things necessarily take time. We will be making a regional claim. I am sure that under the rules of the structural fund the money would not be able to be diverted into anything other than repairs following the flood damage, and there is no intention to do so. Therefore, I can confirm that the funds will not be used for anything other than the purposes for which they are intended. I remind the noble Baroness that back in 2007, when an application was made by the then Labour Government, they took eight weeks to signal their intention and to make the application. That was a recognition that these things take time.
My Lords, I am delighted that the Government have now decided to apply. I asked them to do so in this Chamber on two occasions—on 7 December and 14 January, when I was very grateful to the Defra Minister for the reply that I received. This scheme is yet another example of why we are better off being in Europe. The funding could make a huge difference—for example, in repairing the damage to the A591, which I know is known to many Members of this House. Its closure has been disastrous for local people, local businesses and tourism. Therefore, I ask the Minister to confirm that the inevitable time lag in receiving any funding will not delay the plans for reconstruction of the critical infrastructure and that the Government will guarantee those funds.
The noble Baroness is absolutely right about the A591 and indeed about some of the more local infrastructure repairs that need to be done. In fact, I drove up the A591 as far as I could only last week when I was in Grasmere. Work is under way to repair that road, which is vital not just for businesses but for tourism in the region. I am glad that the noble Baroness was grateful for the reply that she received. Following the floods, on a couple of occasions at this Dispatch Box I signalled that we were considering making an application, and today it is good to say that we are intending to do so.
My Lords, as a member of Cumbria County Council, perhaps I may say that the Minister’s announcement will be very welcome in the county, even if she has had to spend several months arguing with the Secretary of State for Justice that this does not represent a terrible affront to national sovereignty. It is vital that we proceed—as the Minister knows, there is a huge problem. The Government have been helpful so far but the infrastructure costs to the public sector alone amount to not many tens of millions but possibly hundreds of millions in the county of Cumbria alone. Does the Minister accept that there needs to be the quickest possible analysis of the total costs so that a proper application can be submitted and we can try to get as much of this money into the county and into other affected areas as quickly as possible?
The noble Lord is absolutely right: the devastation in Cumbria has been quite significant. He and I have talked both across the Dispatch Box and privately about the needs of Cumbria, and I hope that the flood envoy, as well as Ministers, have been useful in their visits there. The Government are doing everything they can to work with the flood-affected areas to make right the damage. However, they were very keen to make an immediate response and moved very quickly to remedy some of the immediate problems. This is a much longer-term payment—back in 2007, it took months to come through—so we need to separate the immediate recovery operation from some of the more long-term funding that will come through.
My Lords, I witnessed the Boxing Day floods from my front-room window and am aware of the damage that has been done in the Calder Valley between Brighouse and Todmorden, and beyond. Liz Truss has been to the Calder Valley and has made certain promises, particularly to Mytholmroyd, where a great wall is to be built and other work is to be carried out. Can the Minister confirm that none of those promises will be contingent on this European money, that the promises will be honoured, and that the European money that we are talking about will be used to fund other very important work that is still required?
I can confirm that any obligations or promises that the Government have made will be fulfilled. I can say that quite firmly from this Dispatch Box today. Unlike the noble Lord, I did not see the flooding from my front window on Boxing Day, but when I went up to some of the affected communities in Greater Manchester a couple of days afterwards, I saw that it was really quite devastating—the noble Lord is absolutely right about that. In fact, it is difficult to appreciate the devastation that communities feel until you actually see it for yourself.
My Lords, I warmly welcome the Minister’s statement, and I particularly warmly welcome hearing a Conservative Minister say “EU” and “solidarity” in the same breath. I accept what she said about it taking some time to put an application together, but I do not think it takes that much time to state an intent to put an application together. The Government could have come forward and provided that reassurance sooner. Can I press the Minister on the point made by my noble friend from the Dispatch Box around an assurance that this money will not be used to back-fill what the Treasury has already promised and is already spending? There must be new money from the Treasury, if new money is needed, to match the very welcome money from the European Union.
My Lords, in terms of what is expected from the European Union Solidarity Fund, the Government will fulfil their obligations under what they have already committed to. This will not be a sly way to circumvent what we have already promised, and I can confirm that a lot of the money has already gone out of the £200 million that we committed. As for the time it takes to make an application, the noble Lord will appreciate that certain thresholds have to be met. It is in analysing those thresholds that the Government know whether they can make an application. These things take time, and there was no intention of delay on our part.
My Lords, I want to place on record the appreciation of my former constituency in Keswick, a place where I have spent much of my life, for the work done by Julie Ward, the Member of the European Parliament, in pressing the Government here and working in Brussels to ensure that this process would work. She has been campaigning extensively on the very issue of this fund. Does the Minister have any idea of how much this will actually mean for areas such as the county of Cumbria? Can we have some numbers, please?
I am sorry to say that those numbers have not been finalised at this stage. I do not know the noble Lord’s colleague, but I believe him when he says that she has been working hard. In fact, Keswick is another place that I passed the other day. Perhaps, at this point, the House will indulge me in commending businesses in Keswick, Windermere and Grasmere, where I stayed, for having the grit and determination to get back up and running. Coming into Grasmere, I saw a sign that read, “Grasmere is open for business”, and it certainly was full of tourists. I congratulate people who have gone there, and also the businesses for being so warmly welcoming of tourists so quickly after such devastating events.
Question for Short Debate
To ask Her Majesty’s Government what consideration they have given to removing international students from the net migration figures by including them as non-immigrant admissions, as is done in the United States.
My Lords, in introducing this short debate I declare two interests: I am an honorary fellow of Birkbeck College and I am the treasurer of the All-Party Parliamentary University Group. I should also say that I am looking forward enormously to hearing the maiden speech of the noble Baroness, Lady Brown of Cambridge, whose very distinguished record in science, technology and universities precedes her.
Net migration figures into the United Kingdom quite rightly reflect the flow of all those who come into the United Kingdom within a certain period of time—usually a year—minus the flow of those who leave. The Office for National Statistics, which is responsible for compiling these figures, uses the UN definition of “migrant”, which includes all people who move into the country for a period of 12 months or more, regardless of the purpose or permanence of their stay. On that basis, all students coming to study in the UK for more than one year are counted as immigrants. Likewise, all those who leave at the end of their studies are counted as emigrants.
International students are of very considerable benefit to the United Kingdom. They pay fees for their university tuition and accommodation, and UUK reckons that, together with off-campus spending, each student brings something like £26,000 a year to the United Kingdom economy. Indeed, the Government reckon that export earnings from overseas students amount to currently something like £25 billion, and the Autumn Statement suggested an ambition that this should grow by 20% to £30 billion by 2020.
There are also longer-term benefits. For example, a recent study from the Department for Business, Innovation and Skills found that more than 80% of the students who had studied here retained personal and professional links and had an increased appreciation for, and trust of, the United Kingdom. In other words, that soft power is very important as well as the actual money that they bring in. For all these reasons, it is very much to the UK’s advantage to encourage as many international students as possible to come to this country.
Problems, however, arise on two scores. First, in so far as the number of students coming to this country from overseas is increasing, we would expect that over that period more would come in than would leave, and that this would be reflected as a rise in net migration. Indeed, given the 20% increase in non-EU students projected in the Autumn Statement, the estimates written into the detailed documents accompanying the Statement projected an increase of 7% in student numbers for 2016-17 and 2017-18. This would amount to an extra 20,000 students each year, adding potentially an extra 40,000 to the net migration figures over these two years.
This, in itself, would not matter, if the Government had not at the same time set themselves a target for reducing net migration to below 100,000 from its current total of more than 300,000. In pursuit of this target, the Government have been tightening up the regulations on student visas, and many universities are complaining that, far from increasing, the number of new entrants is actually falling. Indeed, according to the latest figures, there has been a drop of 3% in new entrants for courses and, in particular, the number of students from west Africa and the Indian subcontinent is down.
The universities are particularly unhappy with the regime of “credibility interviews” instituted by the Home Office since 2012, whereby students, having applied for and received their certificate of acceptance by the universities, and then having to apply for a visa, are further interviewed by Home Office officials, often by Skype, to assess whether they are bona fide students. This is far from a small, random sample; in 2014, 125,000 credibility interviews took place and the total number of entrants was 174,000. There was also a sizeable increase in the number of visa refusals.
Research by the UK Council for International Student Affairs reveals that Home Office officials are making judgments well beyond the agreed terms of such interviews, often countering the university’s own assessment of academic potential on a seemingly random and inconsistent basis. But since those who conduct the interviews are not required to keep records of their reasons for turning down a visa, there is, at present, no recourse on these judgments. The overall result, far from encouraging overseas applicants to apply to our universities, drives them into the arms of our competitors, the USA, Canada and Australia, all of which, like the UK, are seeking to increase applicants from abroad.
On the face of it, there are two wholly incompatible strands of government policy: on the one hand seeking to increase overseas student numbers and, on the other, seeking all possible ways to cut net migration numbers. Universities are keen to expand the intake of students from non-EU countries—they bring, as I have said, substantial income both to the university and to local business, and many taught graduate programmes are dependent on recruiting overseas students. But inevitably, expansion in overseas student numbers increases net migration and results in tighter and tighter controls over the issuing of student visas, with the UK appearing more and more unwelcoming to overseas students. The one policy totally contradicts the other.
Others besides me have suggested treating students as temporary migrants and separating them from the net migration figures. The Government have resisted that on three grounds. In the first place, the ONS is obliged to use the UN definition of migrant. Secondly, students, even if temporary migrants, use public services and in this sense are in no way different from other migrants. Thirdly, the International Passenger Survey suggests that many students do not return when their visas expire and are therefore not temporary migrants.
I will return to the first of those, the UN definition, in a moment, but I will deal briefly with the other two issues. Most students are young people who make relatively little demand on public services and are in any case now required to pay an NHS surcharge. As we saw earlier, far from being a burden, they contribute substantially to the UK economy and in the long run very substantially.
In relation to the IPS, there is much controversy over its validity. There are good figures because of visas and university registrations for new entrants, but although attempts are being made to collate exit records, these are as yet in their infancy, which is why reliance has to be placed on the IPS. Even the Oxford-based Migration Observatory concluded that the statistics were unreliable and that the temporariness of international students remains uncertain.
That brings me to my final point—the UN definition of migrant. I suggest that the answer is to copy the Americans. The US gets over the problem by issuing two different sets of statistics on net immigration. The first, issued by the US Census Bureau uses the same UN definition of migrant and, like the UK ONS, measures overall flows of people, including students, in and out of the country on an annual basis. The second set of statistics, produced for the Department of Homeland Security, makes the distinction between permanent immigrants and those classed as non-immigrant admissions, which includes students alongside tourists, business travellers and those involved in cultural exchanges. Canada and Australia make a similar distinction. It seems such a simple solution to a problem that has caused the Government a good deal of grief.
I end by posing two questions to the Minister. Why cannot this country be more pragmatic like the Americans and use two sets of statistics, thereby complying with the UN requirements in measuring overall migration flows, but having a sensible set of statistics on which to base their net immigration targets? Secondly, why does the Home Office think it necessary to best-guess university admissions systems and run such a heavy-handed programme of credibility interviews? Random sampling is one thing; interviewing and often in the process upsetting and putting off two-thirds of potential entrants is another. Is this really necessary?
I thank the noble Baroness for giving us the chance once again to debate this rather vexed issue. I have listened carefully to what she said and I understand the force of her arguments, but I am afraid for me they are trumped by other and wider considerations. I therefore think that the Government should resist calls to change the categorisation at this time. I will explain why.
In the year ending in March 2015, 216,000 student visas were issued—roughly the same number as in the prior year. But also in that year, 73,000 applications to extend the student visa were made and granted. One-third of the total of students asked for an extension: some to continue to study, some to work and some for family reasons. There lies my concern. This could be the beginning of a process whereby individuals who have come here as students slowly morph into becoming members of the settled population of the country.
The extent of this leakage is hotly disputed, and indeed, the excellent briefing pack from the Library for the debate today contains some important figures. Perhaps my noble friend can update us in his reply on the Government’s latest estimates of what this leakage is. Whatever the figure, an integral part of this morphing and transition is that the person becomes an immigrant, not a student, and should therefore be classified as such.
Noble Lords will have heard me before express my concern at the very rapid rate of increase in the population of this country and the implications for the entire settled population. Our population is now growing by 1,153 people per day, and of that about half comes from immigration. This is a small and increasingly crowded island. England is now more densely populated than the Netherlands. That is also why, with respect to the noble Baroness, I must say that using the example of the United States, with its massive geographical extent, is not a fair one in a debate such as this.
That takes me to my final point and a question for my noble friend. What gives this debate its edge is that we still have inadequate control over our borders. We cannot ensure that everybody who is here is entitled to be here. Though launched in 2003, the e-Borders system appears some way from completion. I understand that in the past four years, between 2011 and 2015, my noble friend’s department spent nearly £90 million on improving systems that the e-Borders system would have replaced, and information about travellers is still being processed on two systems that do not share data or analysis effectively. An update from my noble friend on the e-Borders progress would be much appreciated.
My Lords, I commend the noble Baroness, Lady Sharp, on once again championing the interests of higher education in this country. Universities and academic bodies appreciate her dedication and expertise; I speak as the president of Birkbeck in saying as much. I also look forward to the maiden speech of the noble Baroness, Lady Brown, on such an important topic.
This subject of international students being moved from immigration figures keeps on coming up. We have had debates, Written Questions and Oral Questions. Why has there been so little movement from the Government on this? There seems to be something of a tabloid-driven policy here. Statistics from the International Passenger Survey show a gap between the numbers of immigrants arriving and emigrants returning. The number hovers around 93,000 a year. What a fine UK headline that would make: bogus student immigrants come to stay. We do not want that—do we?
But such fears need to be faced. We need further data and an examination of who these overstayers are. Will the Government consider a post-study work visa? Statistics in this area are limited and the methodology crude. George Osborne told the Treasury Select Committee as much. There seems to be a tension, in that the Home Office planned to increase the amount of cash in the bank that foreign postgraduates must have before they are allowed into this country and insist that they must past tougher language tests, but reports tell me that George Osborne shot down those suggestions. He clearly has a more welcoming agenda.
Will the Government now please give some nuanced thinking as to how to turn what is a ham-fisted ruling into a success story in its own right? At this very moment, the country could use an upbeat immigration story and this could be it. Students come here bringing their wealth and skills, our universities offer them levels of study that they cannot find anywhere else and some of them, just some of them, overstay. For the most part, the vast majority of those returning home have a good story to tell of our academic standards, our outstanding university life and the nature of life in this country in general. That is a huge plus in the soft power that we exercise around the world. That success story needs to be celebrated. Can we have some plausible lateral thinking from this Government to make it so?
My Lords, I too congratulate my noble friend Lady Sharp on instituting this debate and on her powerfully argued opening speech. I declare an interest as a member of the UCL Council. Like my noble friend and the noble Baroness, Lady Bakewell, I look forward to hearing the maiden speech of the noble Baroness, Lady Brown.
The Minister knows that from these Benches we have consistently pursued issues relating to overseas students for several years now. However, the Home Office seems to be oblivious to the overwhelming arguments for excluding students from the net migration figures. Higher education is one of the most important and successful sectors for the UK, contributing £11 billion in overseas earnings, added to which are the continuing personal and professional links that are created—the soft power referred to by the noble Baroness, Lady Bakewell. The Chancellor and the Foreign Secretary, to their credit, now seem to be at odds with the Home Secretary on this issue. No wonder, because to adopt policies which reduce overseas student numbers is economic madness.
The International Passenger Survey figures are estimates. It is clear that there is no reliable measurement of net migration at all, so how can there be reliable evidence of abuse and overstaying, as alleged? Frankly, when is the Home Office going to be able to produce decent figures for net migration?
In Oral Questions last December I raised the issue of the credibility test introduced in 2013, which has led to so many visa refusals for students from countries such as Nigeria and Pakistan, to which my noble friend referred. But it appears that the Home Office does not even collect statistics on the reasons for visa removal. The Minister tried to reassure me in his response, but there is clear evidence of the overzealous application by the Home Office of the visa rules on overseas students which is potentially chilling, both in respect of applications and expiry. Even completely blameless students are now being improperly detained. I cite the arrest of Paul Hamilton, an American postdoctoral student, as a “flight risk” and the US doctoral student, Sabine Parrish, who was detained for eight hours on no grounds whatever. Will the Minister condemn these abuses? As the Times Higher Education says:
“This game makes no economic or educational sense, and will drive international applicants into the arms of US, Canadian and Australian universities”.
The number of overseas students coming here is understandably beginning to stall, in contrast to the growth in competitor countries. Our clear aim must now be to restore our attractiveness as a destination for overseas students. Along with putting other policies into place, we should, as so many have consistently called for, including my noble friend, exclude these students from the net migration figures.
My Lords, it is an honour and a privilege to join your Lordships’ House. I am looking forward to the opportunity to contribute in areas where I have expertise: engineering, universities, innovation and climate change. I am very grateful to all the staff here, especially of course the doorkeepers and the police, as well as to all noble Lords for being both welcoming, as is evidenced here today, and tolerant. I thank my supporters, the noble Lords, Lord Baker of Dorking and Lord Turner of Ecchinswell, and my mentor, the noble Baroness, Lady Deech. I must declare an interest, in that I am the vice-chancellor of Aston University in Birmingham.
We have heard from other noble Lords how international students contribute to the UK in many ways. Overseas student fees subsidise education for home students. At Aston, 18% of my student population is from overseas, providing more than 30% of my fee income. Overseas students are critical to maintaining engineering provision in UK universities. Engineering UK reports that 25% to 40% of undergraduates on engineering courses are from overseas. At Aston, half our overseas students are on science, engineering and maths courses.
The inclusion of overseas students in net migration figures—that is, within a population we are seeking to reduce—while simultaneously targeting an increase in their numbers, is illogical. It affects the behaviour of our agencies, as we have heard, and contributes to the feeling that these students are less welcome in the UK than they would be in the USA, Australia, Canada or New Zealand.
While UK employment levels have been much less sensitive to the recent recession than those of our competitors, UK productivity is falling behind. The productivity deficit is particularly associated with small and medium-sized enterprises. That is critical because SMEs account for 60% of UK jobs. Research published last week by the Enterprise Research Centre at Warwick and Aston business schools highlights the need for innovation and access to global markets in order to improve SME productivity. But there is clearly a challenge in recruiting the right people to enable this. The CBI Inspiring Growth report last year highlighted that while 40% of employers prefer graduates with technical skills, the proportion having problems recruiting scientists and engineers has more than doubled in the past two years.
I ask the Minister that the Government consider not only taking overseas students out of the net migration figures, but make it easier for companies, in particular SMEs, to recruit overseas graduates from UK universities by, for example, reducing or removing the minimum starting salary for a tier 2 visa, a restriction that does not exist in the USA, Canada, Australia or New Zealand. Data for the West Midlands suggest that average graduate starting salaries are below the minimum figure of £20,800 required for tier 2 visas, and starting salaries that are affordable for SMEs and spin-outs are often lower still. Allowing ambitious SMEs in our regions easier access to an affordable international talent pool should be part of our regional growth strategy, supporting business innovation, global reach and the health of our great universities.
My Lords, I congratulate the noble Baroness, Lady Brown of Cambridge, on her excellent maiden speech. I have known her for almost a decade, since I was the founder of the UK-India Business Council. Now she is the vice-chancellor of Aston University in Birmingham and I am the Chancellor of the University of Birmingham; we are neighbours. She has taken her title as Cambridge because she is a staunch alumna of Murray Edwards College, known in our day as New Hall, which is one of only three women-only colleges remaining in Cambridge. Her career in the field of engineering is outstanding—from working at Rolls-Royce to heading the engineering faculty at Imperial College in London, to her famous King review in 2008 on carbon emissions from road transport. Not content with being a world-renowned expert in the field of engineering and science, with awards too numerous for me to list, she is also married to Dr Colin Brown, the engineering director at the Institution of Mechanical Engineers. We look forward very much to her contributions in the years to come.
Aung San Suu Kyi, Bill Clinton, Desmond Tutu and Mahatma Gandhi all studied at UK universities. They are the finest universities on this planet along with those of the United States of America, and yet the Government continue to classify international students as immigrants when calculating the net immigration figures, as well as having a target to reduce net immigration to fewer than 100,000. Then, hypocritically, the Government say that there are no limits to international students. Logically, there is no way the Government will meet their targets unless they reduce international student numbers. They have done the right thing in closing down bogus colleges and we all agree with that, but now their policies are damaging genuine international students at our world-class universities. I see this every day in my role as president of UKCISA.
At the University of Birmingham, 20% of our student body is made up of international students and 33% of our academic staff are from overseas. BIS itself states that international students bring in more than £13 billion a year in overseas earnings, and yet, in the words of Professor Leszek Borysiewicz, vice-chancellor of the University of Cambridge,
“the potential economic gains for the UK for recruiting more overseas students are being sacrificed at the altar of political expediency”.
He went on to say that it is “ludicrous” to include overseas students in UK immigration targets. Our competitor countries do not categorise international students as immigrants. In the US they are included as non-immigration admissions, while in Australia they are reported as net temporary arrivals. In Canada they are placed in the temporary resident category. I ask the Minister this: why can we not do the same? In fact, the Prime Minister himself has said to me that he would be open to this idea.
The Government are unnecessarily creating a rod for their own back. Furthermore, our competitor countries have ambitious targets to grow international student numbers, accompanied by government action to help them do so. For example, Canada wants to double its number of international students to 450,000 by 2020. In 2014-15 the number of Indian students increased by 32% in the United States, while the number of Indian students coming to the UK has fallen drastically. Does the Minister agree that we should have specific targets to increase the number of international students?
As we have heard, removing our post-study work visa route has also been hugely damaging. An NUS survey found that 51% of students think that the Government are not welcoming towards international students. Universities UK research shows that 22% of the British public considers overseas students not to be immigrants, yet the Government keep relying on International Passenger Survey data, which are completely unreliable. I have repeatedly said that the Government need to reintroduce exit checks at our borders and that all passports, EU and non-EU, need to be scanned in and out of the country. Then, we would have proper control of our borders and we would know the international students coming in and going out.
This year I was appointed chair of the advisory board at Cambridge Judge Business School. Christoph Loch, our director, said that the Government’s current policies,
“not only are ineffective … but outright hostile and unfair toward a population of highly talented people who collectively do have an influence on the reputation of the UK in the world”.
The Government keep talking about the United Nations’ definition of migrants but, as the noble Baroness, Lady Sharp, said—I thank her for the debate—no one is suggesting that the UK should stop reporting to the UN or recording student migrant numbers. There is no reason why the UN definition should be used for the particular domestic policy objective of the net migration target. UUK, the Russell group, London First and the NUS all independently agree with what I have said. International students are not only one of our biggest export earners, but one of the strongest elements of our soft power.
The Government have sent a strong message about their intention to keep out migrants who will bring no value to the UK, but they must be equally clear that the UK still wants to attract economically valuable groups, such as genuine international students. Removing this group from the net migration target would send a clear international message that the UK is open to all the amazing benefits that international students provide to our country and to British universities, which are the jewel in our crown.
My Lords, I congratulate the noble Baroness, Lady Sharp, on securing this timely and important debate. I also congratulate the noble Baroness, Lady Brown of Cambridge, on her excellent maiden speech. I note that her PhD was on fracture mechanisms in embrittled alloy steels. I am sure we all agree that her performance was copper-bottomed and I look forward to her contributions to further debates in the House.
I declare an interest as deputy chancellor of BPP University. We attract thousands of international students each year, 96% of whom attain employment within six months of completing their studies. Some stay; some return home. Either way, Britain benefits.
The leaders of Australia, Belgium, Brunei, Botswana, Bahrain—I could go on. Those are just the As and the Bs of world leaders who have studied as international students in the United Kingdom—55 at last count. That is a good enough reason to celebrate international students coming to UK institutions.
On top of that, they bring billions for British business. We just heard from the noble Lord, Lord Bilimoria, the king of Cobra Beer. I ask my noble friend the Minister: can he imagine a curry without Cobra? Unimaginable, yet a reality had the noble Lord, Lord Bilimoria, not come to this country as an international student.
To turn to the data, the IPS statistics are mainly meaningless. That 90,000 is a nonsense number. We can know nothing from those statistics. If we are going to argue on the numbers, we need to have decent data on which to base this debate. I ask my noble friend the Minister: if the system is working and we are open for business, how is it that in the last year we have had a 10% fall in students from India coming to Britain and an 8% fall in students from Nigeria, while Canada has had an 11% increase in international students, the United States 10% and Australia 8%? If we do not get this right, the rest of the world will make a better offer and those international students will go somewhere else.
If we are to have a northern powerhouse, we need international students. If we are to revive our railways, we need international students. If we are to have fully enriched artistic, cultural leisure pursuits in this nation, international students are critical. In short, we need to get the message out there: there is good migration and there is less good migration.
In conclusion, we need to end this visa vapidity. We need counsels of prudence, not of prevention, and we need to warmly welcome the brightest and the best to come and study in Britain.
My Lords, this is far from the first time that the House has debated the Government’s policy of treating overseas students as economic migrants. Nevertheless, it is good that the noble Baroness, Lady Sharp, has brought the matter up again, and even better that my noble friend Lady Brown has joined the ranks of those who have been breaking their teeth on the Government’s policy for as long as I can remember. This issue is one of the black swans of today’s policy agenda—a policy without much support even in the Cabinet and none at all outside it. It is one with no serious justification.
I have five questions to which I would like the Minister to try to find a reply. First, does the system help the Government to reach their target of reducing overall migration to the tens of thousands? Certainly not. Since there are 180,000-plus students coming in and the number is tending to rise, it makes that target impossible to achieve.
Secondly, does it assist the Government’s policy of expanding the higher education sector’s contribution to our invisible exports, which are substantial, by attracting the brightest and the best? Certainly not, again. It discourages them. The most recent 2014-15 figures are pretty sobering, since we are losing market share to all our main competitors.
Thirdly, are students properly regarded as economic migrants? The answer to that, too, must be negative. They pay fees—often higher fees than our own students—generate employment and pump resources into towns and cities where they study, while making disproportionately small demands on the National Health Service and other benefits.
Fourthly, are we compelled to classify them in this way? No, we are not. The UN classification, to which the Home Office clings like a drowning man to the smallest of planks, is not legally binding. We already have separate statistics for students. We can submit them as the United States does and stop treating them as economic migrants.
Fifthly, does the student issue drive the general concern, which certainly does exist, about immigration? There is not the slightest evidence that it does. If you asked most people whether they regard students as economic migrants, they would look at you in great puzzlement and think that it was a pretty silly question, particularly now that the Government have clamped down on dodgy language schools.
If the Government cannot provide answers to those questions, could they please just change the policy?
My Lords, I start by thanking the noble Baroness, Lady Sharp of Guildford, for securing this Question for Short Debate. I also congratulate the noble Baroness, Lady Brown of Cambridge, on an excellent maiden speech. She brings a wealth of experience from the higher education, engineering and science fields. I hope that this is the first of very many contributions she will make to your Lordships’ House.
It is not possible in the short time that I have to do this subject justice. I find myself agreeing with almost all the remarks made by noble Lords in this debate. The UK attracts a large number of international students coming to study here for a year or more. We have some of the best universities in the world, offering fantastic courses, leading to highly sought-after qualifications. We are, though, in a very competitive marketplace and it is the duty of the Government to do everything in their power to make the UK an even more attractive destination for international students.
I am not asking the Government to change how the net migration figures are reported as this is an internationally recognised definition, but they can do more. Looking at the net migration target that they have set themselves is one example. The Government have created a conflict for themselves entirely of their own making—it does not have to be there—by wanting to boost international student numbers while reducing their net migration targets. As the noble Baroness, Lady Sharp of Guildford, said, that is wholly incompatible. I also agree with her suggestion that we should consider adopting the US system of recording these data.
The Government’s ambition for growth in this sector is not as ambitious as that of our competitors. Our visa system is more restrictive and the UK is losing out needlessly. Shortly, I am sure that the noble Lord, Lord Bates, will tell us that there is no cap on the number of bona fide international students coming to study in the UK, but the fact is that our numbers have been relatively stagnant in recent years compared to our competitors, which have seen significant growth. The United States has seen an increase of 10% and Australia 8.9% in international student numbers, in comparison to growth of 0.6% in the UK over the same period.
We need to make our system for getting international students into the UK more welcoming and streamlined like our competitors, particularly the United States of America, as the noble Baroness, Lady Brown of Cambridge, said. People need to feel more welcome. The fall by 50% in the number of Indian students coming to study in the UK is of particular concern. Surveys have shown that the general public do not perceive international students as immigrants, and they bring a significant boost to our economy measured in billions of pounds. International students who study here and have a good experience return home with a very favourable view of the UK. That is of enormous benefit to us, as my noble friend Lady Bakewell said. She rightly pointed out how important that is in terms of our soft power influence in the world.
My time is nearly up so I again thank the noble Baroness, Lady Sharp of Guildford, for enabling us to have this debate. I hope that we can return to the subject very soon as we need to keep impressing upon the Government that it is in our country’s interest that it acts on this sooner rather than later.
My Lords, I add my thanks to the noble Baroness, Lady Sharp, for securing this debate. Although we are very familiar with our respective positions as we have debated this issue so often, I suggest that there is a great deal more common ground than may at first appear. Of course, we are all grateful to the noble Baroness, Lady Sharp, for the way she introduced the debate. I listened carefully as she set out in precise terms how the current system works and the terms, methodologies and calculations used, which match the Government’s exactly, as one would expect from a distinguished academic. There is common ground on the analysis to that extent. However, there may be divergence over some of the conclusions.
The noble Baroness, Lady Brown, made an outstanding contribution to the debate in her maiden speech. More importantly, given her distinguished background in academia, particularly in science, technology and engineering, she brings an immensely valuable perspective to your Lordships’ House. We very much look forward to her further contributions.
Another area on which we can agree is that Britain is blessed with some of the greatest universities in the world. Any table will show that we have perhaps four out of 10 or six out of 20 of the top universities in the world. The UK is widely admired and respected in that field. It is not by accident therefore that we are the second largest attractor of foreign students in the world. That is a very important point for us to remember.
Nor is there any disagreement over the fact that the Government have set out in their own financial strategy that we want to see the number of students continue to increase, as was said. We have set targets for the contributions we want to see universities make because this is a great export earner. As a number of noble Lords said, the soft power that this process brings to this country is immensely valuable as we move forward. As the noble Lord, Lord Holmes, said, there is no doubt that we want to continue to attract the brightest and the best. That is common ground. We want to see an increase in foreign students—we are proud of them and we recognise their value—so where is the point of difference? I shall try distil that down to a question about whether the means by which we calculate the number of students coming into this country and those leaving this country acts as a deterrent to people thinking of coming to study here.
As regards the point touched on by the noble Lord, Lord Bilimoria, I think there is a problem. When you look at the overall statistics, there is some encouraging news. The number of overseas students coming to Russell group universities is up by 39% since 2010. However, when you break down the figures and start looking at them country by country, you see differences. You see numbers from China increasing but India’s economy is also growing strongly now and yet we see a different pattern there. We have looked at differences in the way British universities welcome these students who are effectively investing in this country, and how the latter perceive that welcome. Having discussed the matter with Jo Johnson, our Universities Minister, James Brokenshire went to India just last week with the specific purpose of busting some of the myths that surround the welcome that awaits genuine students who have the relevant qualifications and have been offered places at our world-class universities. There is a great deal to do in that regard. We need to get across the message that there is no limit on the number of students who can come to genuine universities here and that there is no limit on the number of people who can switch from tier 4 visas to tier 2 graduate programmes, particularly in the types of disciplines to which the noble Baroness, Lady Brown, referred. The level of the salary is, of course, something that we need to examine. If we want to attract the brightest and the best, then, of course, £20,800 as a starting salary is about NVQ level 3 or 4, or about A-level.
My Lords, does the Minister accept that that is above the average graduate salary in places such as the north of England?
That may be so. I would have to look into that point in relation to the north of England, and I am happy to do so. However, the point is that there is no limit on the number of graduate opportunities available. We have special programmes for PhD students and for post-doctoral study. Therefore, we need to get that message out into the wider world much more effectively that Britain welcomes these students and that a range of opportunities exists for students, post-study, to continue to work and gain experience. They can continue on tier 5 with approved internships and training programmes. Twenty-eight thousand organisations have approval to sponsor tier 2 graduate employment opportunities. There is also the PhD entrepreneur route on tier 1. There is a wealth of opportunities for these students.
The noble Lord, Lord Hannay, asked five very pertinent questions and then answered them, albeit not entirely to the Government’s satisfaction. We recognise that our country is experiencing growing pressures from inward migration and its effect on the fabric of society. As a result, we need to take steps to bring net migration down. Of course, you cannot do that simply by changing the figures. It would be very easy to change the figures and, by waving a magic wand, halve net migration. That would be very comfortable but it would not be true. Often people come to this country to study and then stay on. That is why there is a discrepancy between the figure of 117,000 coming in and 40,000 leaving. We need to understand better why we have the 77,000 discrepancy and we need to better understand the data.
The noble Lord, Lord Hodgson, asked for an update on e-borders. Exit checks, which were introduced last year, will give us a better picture of where those people are going. We will publish an update report in May on the progress of e-borders and the exit checks. That will give us greater confidence in this regard.
My Lords, we know that e-borders are not reliable. We have a migration problem with the EU as well. Why do we not institute scanning of all passports—EU and non-EU—at our borders? Then we will have total control. It is easy technology and is available right now.
We will continue to look at these things. The exit checks are the first step to something we hope will help us get a better handle on flows in and out of the country.
I am aware that there is a great deal of expertise in the House, particularly in the higher education sector. We keep debating the numbers, but I urge noble Lords to think that our message should be to sell the incredible opportunities people have when they come to study in some of the greatest universities in the world. As graduates, they will then have the opportunity to work in some of the greatest companies in world. That is a fantastic offer that we can all come together to sell.
I apologise for interrupting the Minister again, but he has time to answer a couple of questions. The two cases I mentioned were quite egregious, because neither postgraduate student had breached any visa rules. That gives Britain an enormously bad name among that community.
I am very happy to look into those two cases for the noble Lord to ensure we get this right. The message has to be clear, and we have to recognise that we have a duty to welcome people coming in to contribute to our economy and to show them the appropriate respect.
I am happy, should the noble Baroness, Lady Sharp, think it an offer worth accepting, to convene a meeting of interested peers and colleagues with our people from the Department for Business, Innovation and Skills, who have ownership of the universities sector and the tier 2 and tier 4 issues, along with people from the Home Office and immigration enforcement, to discuss how we can tackle these problems and the reasons we are not getting the right message out. We can work together to ensure that our fantastic offer on the world stage is communicated loud and clear: that people from around the world with genuine qualifications and places at great British universities are very welcome and that we are very grateful to them; that, post-study, they will have immense opportunities in this country; and that we would like them to stay and contribute, if they are qualified to do so.
We have all asked for one thing. We are all great ambassadors for British universities—we are their greatest fans—and we will continue to be, but we are asking for one thing. The Prime Minister has said he is open to the idea, and I am sure the Chancellor would be. We are asking the Government to categorise international students separately, in the way that, as we have shown, the USA, Canada and Australia do. That one move would send out a message. The Minister talked about perception. It would remove that perception once and for all. Why can the Government not do it?
The noble Lord, who knows this area inside out, knows that we looked at that very carefully. It is true that the United States separates that category out, but when it calculates net migration, it adds it back in. The United States behaves differently because it does not have a net migration target. We do, and therefore we have chosen to include students in the numbers.
Would the noble Lord not consider publishing the two statistics side by side, as the Americans do? We could have the net migration figures, but let us also have the figures excluding the students, so that the population can judge for themselves whether the targets have been met.
Given the gap in the numbers, which we do not yet fully understand, the Government are not comfortable enough to take the heat from our heels—as it were—on the immigration statistics by providing a potentially sharp change in the net migration numbers. It might give us a degree of comfort that is not borne out in reality. The better our data and intelligence, the better able we will be to say to universities, “Listen, your responsibility is not just to attract people here, to ensure they are qualified to come and to give them a great education, but to ensure that, when their time is up and their visa has expired, they go home and use that education to build another career”. There are many ways we can all work together, and I am simply extending the opportunity to continue the dialogue—I am sure it will continue on the Floor of the House, but such dialogue can sometimes be engaged in more constructively with officials from different departments off the Floor—should it be helpful to the noble Baroness. I am grateful to her for raising this matter.
Trade Union Bill
Committee (4th Day) (Continued)
97A: After Clause 14, insert the following new Clause—
“Codes of practice: employee engagement
In section 203 of the 1992 Act (issue of Codes of Practice by the Secretary of State), after subsection (1) insert—“The Codes of Practice issued by the Secretary of State for the purpose of promoting the improvement of industrial relations must encourage all employers, in both the private and public sectors, to establish mechanisms via trade unions that encourage and enable effective employee engagement in industrial relations.””
My Lords, I am pleased to speak to the amendment because it is about the only part of the Bill that strikes a truly positive note. The Bill itself is entirely negative, and the other amendments—those we have heard already and those yet to come—are designed as a damage-limitation exercise to stop the Government making a complete hash of industrial relations and complete fools of themselves.
As a trade union organiser over many years, I met many ordinary workers who had great ideas about ways to improve work processes or systems. Even the humble road sweeper—in the days when we had them—could make suggestions about bettering route arrangements, for example. I will not, however, rely simply on anecdotal points; there is ample evidence regarding the link between employee engagement and morale, and employee engagement and productivity.
The Involvement and Participation Association, in which I declare an interest as a board director, has recently produced a report entitled Involvement and Productivity—the Missing Piece of the Puzzle?, in which it looks at the influence on productivity in workplaces that have good levels of employee engagement. This is not small beer. We in this country have a very poor record on productivity. We are 17% less productive than the rest of the G7, while the average worker in France and Germany produces more in four days than does the average worker in the UK in five. The report examines evidence from large surveys, behavioural experiments, academic studies and employers themselves, and shows that when employees have a voice in the decision-making process over their jobs and the wider organisation, productivity is higher.
The report also looks at how employees feel about involvement in their workplaces. Just one in three workers felt that managers allowed them to influence, or have a say in, decisions, and employers in the UK are less likely than global competitors to encourage workplace involvement. In many EU countries, for example, solid trade union agreements run alongside works councils. Matters are not helped in the UK by the decline in collective bargaining and the fact that mechanisms for employee voices to be heard are few and far between.
A concrete example of a successful exercise may help to persuade Ministers of the sense of this case. For many years, Royal Mail was renowned for its poor industrial relations. From my six years of experience as a non-executive director of the Royal Mail holdings board, I can say categorically that the problem lay with both management and the union, neither of which for a very long time had any knowledge or experience of workplaces outside Royal Mail. However, a programme was introduced under the then chairmanship of Allan Leighton entitled Great Place to Work. This involved various strands, such as First Line Fix, which enabled local managers to take