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House of Lords Hansard
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Trade Union Bill
19 April 2016
Volume 771

Report (2nd Day)

Relevant document: 1st Report from the Joint Committee on Human Rights

Moved by

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That the Bill be now considered further on Report.

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My Lords, if the House will give me leave, I wish to clarify the Government’s position on the first policy—check-off—that the House will consider this afternoon. I have been a Member of your Lordships’ House for a little under a year. One of the many lessons I have learned is that when Ministers stand at this Dispatch Box and face cannons to the right of them, cannons to the left of them, cannons in front of them—and maybe even behind them—it is usually best to pause and to ask the reason why. Uncomfortable though this may be, it is nothing like as uncomfortable as charging on.

I have met, as has my noble friend, a number of your Lordships to discuss the clause on check-off, and I think it only fair to say that many of your Lordships do not support the Government’s contention that the measure we are debating will modernise the relationship between a trade union member and his or her trade union. I fear that my trying to convince your Lordships of our case this afternoon may simply add grist to the mill of those who see this measure as a means of undermining the trade unions themselves. That is certainly not—and never has been—the Government’s intention. Trade unions play a crucial role in companies, organisations and communities across the country. Furthermore, arguments have been made with considerable vim and vigour that by ending check-off and moving to direct debit those on low pay—especially those who have payday loans—might have to cease being trade union members, or have to pay extra bank charges. Again, that is not our intention, and never has been.

To show that the Government mean this and to avoid further acrimony on this issue, the Government will support the principles behind the amendment from the noble Lord, Lord Balfe. Amendment 21 would allow check-off to remain where there is an agreement with the employer to provide check-off. It sets out how the administration of this will be paid for and allows that employees can pay by another means should they wish. This amendment ticks three boxes: cost, which will be borne by the unions, not taxpayers; consistency across all sectors; and control, as individuals would be able to choose how to pay their union. However, the Government have one misgiving. We genuinely understand the noble Lord’s wish to ensure that only the specific costs required to administer check-off are charged to the trade union. I want to ensure that we would not expect to see undue costs applied at financial detriment to the trade union.

However, the Government do not feel it appropriate for this role to be undertaken by the Certification Officer—we will debate that role in due course—and we have therefore accepted the principle of allowing check-off to continue where the union meets the costs. I therefore ask my noble friend Lord Balfe not to press his amendment and to allow the Government to bring back an amendment at Third Reading for consideration by this House.

I would like briefly to touch upon one other aspect of Clause 14—its scope. We have produced a clear list of bodies, taking as our starting point the Freedom of Information Act, and we will share this list as part of draft regulations prior to the Third Reading of the Bill in this House.

As to organisations which may be in scope in the future, legitimate concerns have been raised about this clause, and Clause 12 relating to facility time, applying to organisations only partly funded by public funds. To address this, I shall not move Amendment 21A but will bring back an amendment at Third Reading that would allow only those bodies mainly—I emphasise “mainly”—funded by public funds to be added to the provisions of this Bill, and that would be via the affirmative process. This will apply to both Clause 12 and Clause 14.

Finally, the noble Baroness, Lady Hayter, raised an important concern regarding the impact of the clause’s scope on charities, and the Government share her concern. Where organisations are what the general public would consider to be charities—such as Oxfam or others doing valuable charitable work funded by the public purse—it is not our intention to include them within the scope of the Bill. I am working closely with officials and with the noble Baroness to find a way in which such charities can be assured that they will not be included.

Before I sit down, I thank the noble Lord, Lord Mendelsohn, and the noble Baroness, Lady Hayter, as well as my noble friend Lord Balfe, for their good-spirited engagement on this issue, and I hope that we have found a resting place on which we can agree.

Motion agreed.

Clause 14: Prohibition on deduction of union subscriptions from wages in public sector

Amendment 21

Moved by

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21: Clause 14, page 11, line 15, at end insert “unless there exists an agreement between the employer and a trade union which provides for—

(a) the remittance by the employer to the trade union of those deductions;(b) the making of a payment by the trade union to the employer in respect of that remittance; and(c) the option for a worker to pay their subscriptions by other means.(1A) Costs charged to a trade union under subsection (1) must be judged to be reasonable by the Certification Officer.”

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My Lords, I was delighted to tear up the speech that I was going to make, and I am delighted to begin by thanking the noble Lord for his statement. What we have seen in the last few weeks is this House at its best. I remember that when I was introduced here I had a briefing from a very wise lady on our side, although I will not say who. She said, “Richard, the difference between this place and the other place is that here you have to win arguments in order to win votes”. The Minister alluded to the fact that possibly the Government did not feel that they had won this argument and I fully agree with him.

I should like to mention a couple of facts. In this country we have a very odd view of the unions. They are not comprised of people who go to work every day looking for a strike; basically they have come out of the Victorian benefit societies and are some of the best examples of working-class solidarity. However, as time has progressed—particularly in the last 20 or 30 years—they have also attained a very heavy top layer of professional workers. Many people are quite surprised when I remind them that the British Medical Association is a trade union. There are many other trade unions whose members are highly paid professional workers, but at the same time there are many trade unions whose members are very low-paid workers, and those are the people who would have been hurt by this clause.

Perhaps I may just mention some figures, and I am largely using those from UNISON, although obviously other unions are affected by this provision. If you join UNISON, you not only get industrial cover, which generally does not matter because people do not go on strike, but you also get—and this matters—death and accident benefits, and legal advice, which is often very good in helping to resolve industrial disputes. We must all have met a person who has said, “I’m not putting up with this. I’m going to take them to an industrial tribunal”. Then the union representative will quietly say, “Look, calm down a bit. You haven’t quite got a case, but we can give you some good legal advice and help you deal with the problems you’ve got”.

There is another reason why this was seen as inopportune. UNISON has supplied me with a list of 30 different kinds of deductions that are made from the wages of workers. I will go through just the main 10: charitable donations; additional voluntary contributions to a pension; bicycle loans—a government scheme, incidentally; childcare vouchers—another government scheme; credit union payments, which are quite common; in some jobs, uniform and equipment purchase; healthcare schemes—it is surprising how many unions deduct money from wages for private healthcare, and not just for Bupa but the many other smaller private healthcare firms, often originating in the trade union movement; car parking; and, finally, the thing that is deducted from wages that many people would love to see banned, student loans—that is the way that the Government get their money back. There are plenty of things deducted from wages.

I will mention the case of UNISON. It is a union of low-paid workers. The monthly average subscription is £1.43 a week, and the average worker earns £15,000 a year. That is the average; in other words, most people earn less than that. This union deduction is crucial to their well-being. As such, I am delighted to hear what the Minister has said. I think that possibly, as the debate has developed, these facts have come more to the fore. As I said, the union movement is a very wide one and it is very easy to see some parts of it and think, “Oh well, they can do a direct debit—it is not hard for a doctor to have a direct debit”. But when you look across the whole waterfront, you see that this is a very important part of it. As such, at the appropriate moment, I will be delighted to withdraw my amendment. But for now, I beg to move.

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My Lords, I rise to speak to this amendment and in doing so declare my interests as chairman of King’s College Hospital and president of the Local Government Association. I am very grateful to the noble Lord, Lord Balfe, for moving this amendment. He has been a constant companion during the Committee stage of the Bill and I have learned a great deal of trade union history from him that I did not previously know about.

Like the noble Lord, Lord Balfe, I am in the equally happy position of finding that the speech I wrote over the weekend is now entirely redundant. I think we are all agreed about the importance of the role of trade unions in this country. They are a part of British life. It was clear to anyone who looked at the detail that the Government’s proposals on check-off stood to do considerable damage both to the unions themselves and to their members and potential members. Like the noble Lord, Lord Balfe, I was particularly concerned about the impact on low-paid, mostly female workers who stood to lose out on the protection and benefits of trade union membership.

It is worth bearing in mind that the impact of this proposal was likely to be felt by more than 21,000 public sector organisations. Given its impact, I think many noble Lords felt that the arguments in favour of it were—to put it mildly—not convincing. Take just one example: modernisation. Again, as the noble Lord, Lord Balfe, has said, there are many examples of payroll deductions continuing. It appears that only the trade unions and their members were going to be route marched to modernity on this issue. It was absolutely right that the members should have the choice between payroll deduction and direct debit. In a situation where the unions had signalled clearly that they were willing to pay the costs, it felt to me that the last credible argument on this issue had fallen away.

I am delighted that Ministers have listened on this issue and changed their view. I hope that we can see equal progress on some of the other contentious issues in the Bill, and I look forward to seeing the wording at Third Reading.

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My Lords, mine is the third name on this amendment and I am delighted to intervene. I am also delighted that I did not write a speech at the weekend. I am extremely grateful to my noble friend the Minister for what he said and for the way in which the Government have engaged in constructive dialogue and listened to the voice of the House.

The words that I have used constantly in my contributions to this debate in Committee and earlier on Report have been “choice” and “fairness”. Had we kept the Bill as it was, those principles, which are fundamental to one-nation Toryism, would have been violated. I am extremely glad that I can pay tribute to an institution of state—the trade unions—that I have always admired, which have a vital, constructive and continuing role to play in our society and in our economy. It would have been a great mistake for this House and this Parliament, in the wake of a general election and promises and pledges genuinely made, if we had we violated the principles of choice and fairness.

Personally, I have some doubt about the need for this Bill at all, but at least now we are on the way to having a Bill that is unexceptionable and can be accepted in all parts of the House. As my noble friend Lord Balfe said, it is an example of your Lordships’ House at its best. My noble friend talked about cannon to the right of him, cannon to the left and cannon in front. A noble Lord interjected that there were also cannon behind him. Well, as one of the cannon behind him I am very glad to pay him and my noble friend Lady Neville-Rolfe an unstinted expression of admiration for the way in which they have listened and reacted. I hope that before the Bill has gone on to the statute book we will have seen the amendments that we passed at an earlier stage accepted in another place and going through on the nod in this House. I hope that we will then have diffused all the potentially damaging aspects of the Bill. Let us hope that is how it ends.

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I can get extremely angry about some things in this House. One thing I get angry about is when the obvious does not seem to be obvious quickly enough, so it is a great pleasure to say to my noble friend that this did become obvious quickly enough. That is very good.

However, I hope that we will not use this word “modernise” too often. I cannot understand why it is a more modern system to give money to the banks for a direct debit than to have it so much more conveniently done on the check-off system. There is nothing non-modern about the check-off system and I never understood why that argument was used. The crucial issue about all this is to enter into the lives and ways of living of the people who are affected by the legislation that we pass. I do not think that I could let this go by without pointing out that it was this House, with all the criticisms that are made of it, that more readily and clearly saw what the effect of this would be. Not only should Ministers take considerable comfort and credit for the changes that they have made, this House ought to take credit for the fact that this is what we are best at—saying, “I am not thinking about the politics or the arguments. I am just thinking about how this affects the people who will be involved in this particular Act”.

Earlier today I had to say to one of my noble friends, rather toughly, that I am unhappy about some of the supposed restrictions on how people should use government grants. The reason for that is that I try to enter into people’s minds, and I am not at all sure that I understand how you make the sort of distinctions which the Government are seeking to make. I could not understand why people could not use this system rather than another and I am thrilled that the Government have taken that on board. They have done so very generously and I pay considerable credit to them and to my noble friend Lord Balfe; throughout these debates he has shown understanding and clarity, and we are all indebted to him.

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My Lords, I welcome the words of the noble Lord, Lord Bridges. Like the noble Lord, Lord Kerslake, my speech is redundant, which is really good news, and I fully associate myself with his remarks.

The Government should not have brought this provision forward at all and I fear that it reflects the tribal nature of the historical relationship between the two main parties. Such tribalism is not edifying or appropriate today where we see the best relationships between employers and trade unions in partnerships that promote productivity, prosperity and peace. So I would like to say well done to the noble Baroness, Lady Neville-Rolfe; it cannot have been easy to achieve what she has pulled off.

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My Lords, I add my comments in support of what has been said. I had a feeling that the noble Baroness, Lady Neville-Rolfe, the noble Lord, Lord Bridges of Headley, and the other Ministers associated with this Bill would be in listening mode, bearing in mind the contents of the debates hitherto.

My shock and dismay at the original text of this Bill was enormous and I think that was shared by people in all parts of the House. The Bill did not look properly constructed nor did it utilise non-extreme ideology to deal with any modernisation necessities for trade unions—some of which one doubts. In January I received a very interesting briefing from the FDA, an association of professional managers and others, which is not in any way known for extremism. In relation to the reference of the noble Lord, Lord Balfe, to trade union members dreaming about causing industrial action as they go to work in the morning, the FDA says:

“Much of the portrayed justification for change relates to an utterly refutable assumption that trade unions call for industrial action on a regular basis and without cause. FDA members only embark on industrial action as a last resort. As a union with an almost 100 year history we have held national industrial action only once, yet it is a fundamental right for all working people to have the option to take industrial action and we strongly oppose moves to deny workers this right”.

In a way the same rights intrinsically belong to check-off and I sincerely ask Ministers to be in listening mode for other parts of this Bill, so that it can be improved if they insist on it carrying on—people have quite rightly indicated that there is probably no need for this Bill but since the Government are perhaps psychologically committed to seeing it progress I ask that they do that. In the mean time, my sense of shock has diminished. I did not write a speech over the weekend because I thought there might be some progress and I warmly thank the Ministers for their reaction today.

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My Lords, at the risk of contributing to this lordly love-in, I want to refer to an additional reason why I very much welcome the statement made by the noble Lord, Lord Bridges, about the opportunity to think again between now and Third Reading. Clause 14 relies hugely on secondary legislation—on regulations—including new subsection (3), which would have been the subject of government Amendment 21A. As we all too often recognise in this House, the devil is in the detail, and that is particularly so in this Bill.

I draw the Minister’s attention and that of the noble Baroness to the letter she sent to the Delegated Powers and Regulatory Reform Committee, on which I serve, on 2 February, in which she said:

“I will also be making draft regulations available during the passage of the Bill”.

To my knowledge—I may have missed it—we certainly do not have a comprehensive list of the draft regulations. I very much hope that between now and Third Reading we may see those draft regulations in fulfilment of that promise.

While I am on this point, I note also that the Minister just referred to Clause 12, which raises a similar issue, which he said he would address between now and Third Reading. Clause 12, as he and the noble Baroness will recall, caused some controversy in Committee in your Lordships’ House and raises similar issues, to which the Minister referred in his original contribution this afternoon. In Clauses 12 and 14 there is a variation of process between the affirmative and negative procedures. Even if it is not possible this afternoon, I hope the Minister or his noble friend will explain to the House why there is variation between the two clauses, which would otherwise seem very similar. As noble Lords will recognise, this matter is extremely important to the House because it gives us that wider opportunity, when the time comes, to challenge, question and debate the exact nature of the regulations.

The Bill, like many in the current Session, is seen as one for which regulations are unduly important. They have been, to some extent, skeletal Bills. Therefore, I hope the Minister will be able to indicate this afternoon that between now and Third Reading we will see those draft regulations. In the mean time, if he cannot explain the difference in process between Clauses 12 and 14, perhaps he could make a note that we will need that explanation at Third Reading.

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My Lords, we, too, welcome the Government’s announcement today on check-off. I understand that the Minister also has some issues to report to the House on further developments on facility time. I look forward to that.

On check-off, the Government heeded warnings from across the House on the arbitrary and unfair nature of their original proposals and the dire consequences that would have resulted across the NHS, local authorities, schools and universities from a blanket ban on check-off in the public sector. I also thank Ministers for the recent constructive and conciliatory spirit of the discussions with us on today’s Report stage issues and on the facility time cap. For all the last-minute, going-to-the-wire nature of those discussions, and bearing in mind that the amendment in its original form was tabled in the Commons as long ago as November, the movement to the current position is welcome.

As the Minister would expect, we look forward to receiving the revised amendments from the Government on both check-off and facility time to be tabled at Third Reading. We of course reserve our position subject to satisfying ourselves that the revised text meets the terms of the proposed changes. My noble friend Lord Collins will respond on issues relating to the Certification Officer’s role and power under that group of amendments.

I should like to believe that, as a result of our detailed deliberations in this House, particularly on check-off, the Government’s change of heart represents one small step towards Ministers having a better understanding and appreciation of how the current check-off system works and is valued by employers, trade unions and trade union members as part of a modern industrial relations framework in today’s public services. If it also heralds a better appreciation in the future of the importance of trade union members having the same choice as staff in the voluntary and private sectors in the light of their work, personal circumstances and financial situation, so much the better. The overwhelming consensus in all sections of this House is that public sector employers should be able to continue to make local decisions on operating check-off in the light of local needs and priorities, with trade unions meeting the administrative costs. We knew even before Committee that the unions had already agreed to do this.

Perhaps most of all, it is good to see that listening mode, which the Government have said they are in during the course of the Bill, has finally led to significant movement, rather than on just a few measures that, although welcome, have not so far—until now—impacted on the core of the Bill.

There are a couple of other issues. On Amendment 21A we also welcome the clarification from the Minister on the scope of Clauses 12 to 14 of the Bill. We were deeply concerned that private or voluntary sector service companies, such as charities and residential care homes, providing outsourced public services, could fall under the scope of the Bill. The clarification that these clauses apply only to companies performing a function of a public nature and mainly funded from public funds addresses this concern, and we welcome the Minister’s announcement that he is going to withdraw Amendment 28 and come back with a revised wording.

The Minister also knows, however, having mentioned this, that we retain some questions about the application of the requirement to charities that receive funding from public services. We hope that this can all be clarified at Third Reading, as we judge that the Government do not want to meddle with the good management of independent charities. We trust that agreement can be reached: otherwise, we may need to revisit the issue.

Noble Lords will also recall, shortly before the Committee consideration of Clause 14, the so-called skeleton regulations that were published by the Government on the scope of the Bill. This was obviously a hastily cobbled together, out-of-date document that did not represent the Government’s finest legislative hour. Ministers subsequently admitted that they found it hard to define which bodies were going to be covered, given that many of the organisations contained in the skeleton had long been either culled or merged. Can the Minister confirm that these skeletons are now well and truly buried and that the Government do not intend to resurrect them in connection with any part of the Bill?

Check-off is trusted by trade union members. It helps them manage their finances. As noble Lords have stressed, thousands of low-paid members across the public sector who need the choice to opt for check-off will be greatly relieved that it is to continue and that they will not stand to lose their eligibility for workplace representation and key trade union benefits such as those detailed so fully in Committee by the noble Lord, Lord Balfe, including professional indemnity insurance and legal representation for accidents at work and on employment issues. Just as important is that public sector employers will now be able to continue to operate check-off and enter into new voluntary check-off agreements with trade unions in the light of their local needs and priorities.

We on these Benches are most grateful for the support that has been received from across the House on these crucial issues and we look forward to making positive progress at Third Reading.

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My Lords, I apologise to those who have had to edit their speeches so quickly and spent time over the weekend to no avail. In response to the points on charities made by the noble Baroness, I completely agree, and we will seek to address this point. As regards the point made by the noble Lord, Lord Dykes, about further consultation and what the noble Baroness, Lady Wheeler, said about facility time, she is right. We have made further progress on the reserve power to cap facility time.

Obviously, we are not discussing Clause 12 today, but I will update noble Lords on where we are. Our commitment is to engage the cap only on the basis of evidence from the transparency measure. Our proposal is that the power will not be exercised at all before there are at least two years of data from the bodies subject to the reporting requirement. Following this, should a particular employer’s facility time be significantly above the levels of those of comparable organisations, the Minister will send and publish a letter to the employer drawing attention to the concerns. The employer will have the opportunity to set out the reasons for the level of facility time. The employer will always have a year to make progress in relation to their facility time levels. Nothing would be done until a third set of reporting data was published. If there is insufficient progress, the Minister will then be at liberty to exercise the reserve power and make regulations to cap facility time for that employer or those employers. Our intention is to set out the key elements of the arrangements for triggering a cap in Clause 13 when we introduce it.

As regards the point made by the noble Lord, Lord Tyler, on delegated powers, I absolutely hear what the noble Lord is saying. The substance of regulations will be available before Third Reading. I very much hope, therefore, that the skeletons will be well and truly buried. On that point, I would like to thank your Lordships for the comments that were made this afternoon.

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This has been a very pleasant little debate. The noble Lord, Lord Kerslake, reminded me that I did not declare my interests, which are to be found in the register. I thank all the people who have contributed to the debate, in particular my noble friend Lord Cormack. When I was first appointed by the Prime Minister as the Conservative Party envoy to the trade union movement, I was met with much suspicion within the party. My noble friend was one of the first people to welcome me and point out the work that he has done over many years with unions, including with USDAW and on Sunday trading and other things. I appreciate the support that I have had from him and from many other noble Lords.

I also appreciate the support and briefings that I have had from UNISON, Prospect and the TUC. Several million low-paid workers depend on check-off. UNISON has more than 7,000 agreements in the public sector and a further two-and-a-bit thousand in the private sector. This is not a very small thing but a major part of low-paid workers’ security. I am pleased that we have secured this. I thank the Minister—he is not only a noble Lord but a noble Minister today—for this and I am happy to withdraw the amendment.

Amendment 21 withdrawn.

Amendments 21A and 22 not moved.

Amendment 23 had been withdrawn from the Marshalled List.

Schedule 1: Certification Officer: investigatory powers: Schedule to be inserted into the 1992 Act

Amendment 23A

Moved by

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23A: Schedule 1, page 19, line 45, leave out from “If” to “that” in line 46 and insert “the Certification Officer has reasonable grounds to suspect”

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My Lords, there has been a lot of very helpful and constructive discussion with noble Lords opposite and on the government Benches. We have made a lot of progress on the Bill this week, as the noble Baroness, Lady Wheeler, said so truthfully. I thank in particular my noble friend Lord Bridges for his pivotal role and for setting out some of the changes that we propose to make that reflect that dialogue. We will come on to discuss others.

I turn to why the Government are strengthening the Certification Officer. The Government have a manifesto commitment to reform the role of the Certification Officer and there is a public interest in properly regulated trade unions. This group of amendments includes government and other amendments, so I shall start by addressing the government amendments. Once the noble Lord, Lord Collins, has spoken to his amendments and others have added their views to the debate I shall respond on the whole group.

Much was made in Committee about the Bill giving the Certification Officer the same powers to investigate for all breaches that he currently has for financial matters and will shortly have for the register of members. This would enable him to act without having a complaint from a member, including on matters that he might discover in the course of his duties. It would also enable him to respond to matters brought to his attention—I suppose I should say to her attention for the future—by third parties, although he is not bound to consider these. This is a wholly reasonable power for a regulator.

We have heard concerns that the Certification Officer may receive vexatious complaints and that this could increase his workload and costs. I want to provide reassurance here. The Certification Officer, as a public authority, is required to act reasonably. We would not expect him or her to spend much time looking into representations from third parties that are groundless or vexatious. The Certification Officer cannot appoint an inspector to investigate a union on a whim. He can make inquiries, but can appoint an inspector only where there are circumstances suggesting that a union has not complied with its duties.

The inspector will usually be a member of his own staff, or may be an external inspector. I recognise that there are concerns about the enhanced investigatory powers and the appointment of inspectors. That is why government Amendment 23A provides for a higher threshold for the appointment of inspectors in relation to the investigatory powers proposed in the Bill. The Certification Officer will be able to appoint an inspector only where he or she has reasonable grounds to suspect that a union has failed to comply with a duty. This is on top of two safeguards already in the Bill. He or she will be able to request documents only where there is good reason to do so and will be required to give a union the opportunity to make representations before taking any enforcement action.

The noble Lord, Lord Mendelsohn, raised concerns in Committee about the right of appeal to the Employment Appeal Tribunal in relation to the European Convention of Human Rights. I believe that I can address these important concerns. Government Amendment 31E provides for appeals against the Certification Officer’s decision on points of fact as well as the appeal on points of law. This will provide greater judicial oversight of the Certification Officer’s decisions. Unions will have a greater right of appeal to an independent tribunal and this will meet the concerns expressed by the Equality and Human Rights Commission.

Finally, technical Amendments 31B, 31C and 31D will ensure that there is flexibility to charge a different amount of levy from federated trade unions as distinct from trade unions. This mirrors the approach in the Bill regarding federated employer associations and employer associations.

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My Lords, I believe that the Government have got it wrong on the proposals for a new role for the Certification Officer. The Government are creating legislation affecting our legal rights in inverse proportion to the need for it. Thousands of people are deprived of access to justice because of the Government’s cuts to legal aid and slamming costs on to employment tribunal applications, yet here we have no complaints, no build-up of steam, no demand whatever and the Government decide that something is up. They create a complex and expensive role for the new-look Certification Officer when there is no evidence that it is necessary.

This is supposed to be a deregulating Government; however, they are setting up this bureaucratic role for the Certification Officer and making the trade unions pay for it. This will politicise the role, and there is still much confusion of roles. Will the CO be judge, jury or executioner? How will the Government clarify this to avoid judicial review? The sheer amount of information that trade unions will be asked to give is disproportionate and will tie up resources which should be used to protect members.

The cost to the trade unions is unreasonable. If, as the Government say, there is a need to ratchet up the role, then it should be paid for from the public purse. I believe firmly that the Certification Officer should be able to initiate investigations only when a union member has made a complaint. Failing this, there must be additional safeguards to protect members’ right to privacy and the right of trade unions to organise their internal democratic affairs without unjustified interference.

The Government are putting out mixed signals to justify the proposed ban on check-off, which we thought we were facing today, on the basis that employers should not be involved in what should be a direct relationship between unions and their members. In contrast, in the same Bill employers are invited to play a direct and active role in influencing enforcement action taken by the CO on key democratic decisions within unions.

The new role could damage employment relations—for instance, if an employer attempts to interfere in the election of a general secretary, or in challenging proposed strike action, and union members will be less likely to trust the Certification Officer to handle complaints fairly. It is important that the new Certification Officer should be required to consult interested parties, including the TUC and unions, on future enforcement strategies. That would be consistent with good practice and transparency. It might even be advisable to require the CO to establish consultative committees for trade unions and employers’ associations. Their views would be sought before issuing guidance or setting enforcement strategies. Where the CO disagrees with the views of the consultative committee or committees, he should be required to provide a written response explaining and justifying the difference of opinion. This might seem to be too much detail but this is a quasi-judicial post and proposed changes should have been much more carefully thought through than this.

We have seen a succession of these Bills which, as the noble Lord, Lord Tyler, said, have a skeletal element. I argue they are so naked that even the Windmill Theatre would have been embarrassed. I understand that the Select Committee, under the excellent chairmanship of the noble Lord, Lord Burns, was very impressed by the current Certification Officer, David Cockburn. He embodies all that is good about public service. The fact that there was no headline news does not mean that a problem was buried; it means that the role was performed in an exemplary manner. We should thank him for all he has done, not impose this Eton mess of a package.

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My Lords, I welcome the Government’s recognition that, as drafted, the Bill could give rise to vexatious complaints which the Certification Officer would be required to investigate. Government Amendment 23A will give greater discretion to the Certification Officer so that he or she needs to investigate only where they have reasonable grounds to suspect a breach. I hope this will not be the only concession today with regard to the Certification Officer because, notwithstanding the concessions the Minister has set out, the Bill’s clauses and schedules relating to the Certification Officer remain obnoxious. They represent an unwarranted interference in the activities of free trade unions and make trade unions pay for the privilege of having this unnecessary regulation.

It is surprising, to say the least, that a Government who purport to champion deregulation are so ready to reverse their position when it comes to trade unions. What happened to the Government’s one-in, one-out rule on regulations, which I think later became the one-in, two-out rule? I hope the Minister will tell us which regulations are being removed from trade unions to meet that commitment. However, I doubt that will happen because we have asked the Minister repeatedly for an answer to that question throughout the passage of this Bill. I hope I am wrong, but I suspect that I will get no answer again today, not through any fault of the Minister but for the simple reason that there is none.

Not content with imposing yet more regulation on trade unions, the Government have also determined that the trade unions must pay for it. The imposition of the levy is just one regrettable clause in a highly regrettable and unnecessary Bill. However, it is a particularly symbolic one as it demonstrates the Government’s lack of awareness of the role of trade unions. As the noble Lord, Lord Balfe, rightly pointed out, trade unions are not composed of people who go to work every day plotting revolution, but rather of people who come together to protect their rights in the workforce and ensure proper representation. However, the Government do not seem to see it that way.

We have repeatedly asked the Minister to explain which comparable organisations are subject to a levy to pay for this sort of regulation by the state. The examples which we were given at earlier stages in the progress of the Bill, such as the Financial Conduct Authority, are just not comparable. The FCA regulates profit-making organisations, many of which pose systemic risks to our economy, many of which have routinely flouted the spirit—and sometimes the letter—of the law, and some of which have been bailed out by taxpayers to the tune of billions of pounds. By contrast, trade unions are representative, democratic organisations, already tightly regulated by law, which play a critical role in our democracy.

However, the Government do not seem to see trade unions in that light. They do not see them as contributors to our democracy or as defenders of the rights of people with less power than themselves; they see them simply as opponents of their party’s interest and as organisations to be regulated, levied and constrained. There is no other explanation for the decision to impose a levy in this way. No such levy exists for the only really comparable organisation, which is the Electoral Commission. The Conservative Party does not fund investigations by the Electoral Commission into the manner in which it operates, but the trade unions must pay for the partisan regulation that the Conservatives impose on them. It is unjustifiable.

Amendment 31A, which the noble Lord, Lord Collins, will speak to, would at least help ameliorate the impact of the levy. It would prevent a partisan direction being given by the Secretary of State to the Certification Officer and ensure that the officer would only have to investigate complaints made by non-trade unionists if they could demonstrate that they had suffered detriment. That seems to be a very sensible change to Schedule 2. Together, those changes would help ensure that the Certification Officer, who has operated effectively as a regulator to date, is not turned into an overbearing regulator subject to political direction. I very much hope that, in her response, the Minister will be able to address the points made in that amendment and give some more concessions on the Bill.

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My Lords, I, too, thank the Minister for introducing her amendments at this stage. They are critical, in the light of some of our debates in Committee. I repeat what my noble friend Lady Donaghy said: where is the evidence for the requirement for this change of role? I repeat what I said in Committee: the Certification Officer has played a vital role in securing and ensuring that the rights of trade union members are upheld in their union. As the noble Lord, Lord Bridges, said, it is—or should be—about the rights of those individual members. The sad fact is that the proposals in the Bill in relation to the powers of the Certification Officer are changing that role from a quasi-judicial officer who adjudicates on disputes between unions and their members to a full enforcement agency, with wide-ranging powers to intervene in the internal, democratic decisions of trade unions. This would not be at the behest of individual members but, possibly, at the behest of employers and other campaign groups, even though no union member has complained. This completely changes the role of the Certification Officer.

We have repeatedly spoken about evidence. This brings me to another point, about the sanctions or fines which the Government intend to allow the Certification Officer to impose. In my 35 years of dealing with the Certification Officer, and having read every single annual report over the past 35 years, I have not seen one case where the Certification Office has given an order that has not been complied with. Of course, that related to union rules, but what we are now seeing is this role moving into industrial relations, because it will deal with industrial action. It is moving into membership registers and the details of membership information, which, again, could be subject to complaints from others rather than just simply members querying their own records.

In Committee, many noble Lords, including the noble Lord, Lord Pannick—and I am pleased to see him in his place—raised this issue in the context of freedom of association and the very clear impact that it might have on our ability to meet the test of the European Convention on Human Rights. While many noble Lords will support other elements of the Bill in relation to, perhaps, the industrial action ballots—and there might be reasons for the Government saying that there needs to be a legitimate mandate on a particular industrial action ballot—what the Government are doing here is fundamentally intervening in the right of the freedom of association. For me, the real test of any democratic society is that right of freedom of association. You can have many democratic constitutions that are not upheld and are challenged by free organisations, and that test could be failed in this context because we are appearing to say that the state has the right to say how a union agrees its constitution and determines its democratic structure. It will be tested at regular intervals by complaints other than those of the individual members, so it will not be upholding the rights of the individual member of a union.

The Equality and Human Rights Commission has warned that the Certification Officer’s ability to instigate complaints as far as investigating and adjudicating them compromises the impartiality. I welcome the Government’s amendment to allow for appeals on all decisions of the Certification Officer to the EAT. I welcome that very much: it addresses not only our concerns, but those of the Equality and Human Rights Commission. I am pleased with that, but as my noble friend Lady Donaghy has said, this is actually imposing even greater regulation and greater costs—because all of these things will impose a cost—and it will certainly increase the involvement of the law and lawyers in the role and running of trade unions. With the greatest respect to noble and learned Lords, and the noble Lord, Lord Pannick, I do not think that it is a good idea that lawyers interfere with the democratic organisation of working people. It is for them to determine their own structures.

That comes back to the point made by my noble friend: the role of the Certification Officer is being changed from upholding the rights of trade union members. It is being changed and politicised. It becomes political because the Certification Officer will be responsible for implementing some of the policies of the Government. The evidence—and this has been mentioned by my noble friend and other noble Lords—of the current Certification Officer to the Select Committee was incredibly important on this. Even though the Government have now tabled an amendment regarding the trigger for investigations, which I welcome, his greatest fear was that if he cannot establish that he has properly considered a complaint, any complainant—it would not be a member of the union but, possibly, an employer—may seek judicial review. I hope that the Minister can assure us that her amendment will mitigate adequately against that risk, which the existing Certification Officer identified, about whether he considers investigating a complaint.

This turning of the Certification Officer into a more political role leads to the issues that I have raised in my amendment today. As noble Lords have raised it in the debate, I hope that the Minister can give full reassurance on this. It is about the independence of the Certification Officer and the way that the Certification Officer is appointed. I know that some of these issues cannot be addressed in the Bill. However, I hope that she will make explicit some of the assurances that she has given me and my colleagues—my noble friends on the Bill team—about how that appointment will meet proper public appointments processes and how the independence of the CO can be guaranteed, particularly from Governments determining what they do or do not like when it comes to industrial relations. As I have said, the “reasonable grounds” process which the Minister has put into government Amendment 23A will address some of those concerns, but I would like her to give those assurances, including on the appeal to the EAT.

I want to come on to costs, which have been raised in the debate, because there is a tendency somehow to separate them. We have heard noble Lords talk about tax. In fact, in an earlier debate we heard that charities should not expend money that comes from the taxpayer on campaigning, yet this Government see union money as somehow not linked to those union contributions made by millions of ordinary working people. Those union contributions, which we have talked about, are made by low-paid workers paying £1 a week. Even the so-called impact assessment that was published said that the additional costs of this extension to the Certification Officer’s powers—at a time when we are trying to cut the cost of regulation and the state—will be an increase of £1.9 million a year. I hope that the Minister can assure me on some of these issues because she needs to understand that that cost will come out of the pockets of ordinary working people who are contributing £1 or £2 a week. It is not some big corporation that is making a profit doing this or some monopoly that has been given the power to make money at the expense of the consumer; it is ordinary working people.

I want the Minister to give some clear assurances about the power to impose the levy: about how trade unions will be properly consulted on it, and how its costs are to be properly measured and limited. I would like her to do so particularly as it relates to the cost of investigation, because these new powers result in powers to appoint internal investigators. I hope that she can give us some assurance about where those costs for those external investigators will come from.

We have made huge progress on this issue, but I regret that the Government are continuing to push, particularly with the imposition of penalties. Over the past 35 years, there is no evidence of the need for them. There has not been a single occasion when the Certification Officer has made an order that has not been complied with. I am sorry to bang on for so long on this issue, but it is about fundamental rights of association and of freedom of association and about concern about the state interfering in the free organisation of trade unions in this country. I look forward to hearing the Minister’s response.

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My Lords, I shall not bang on, but I want to make one or two points. The noble Lord, Lord Collins of Highbury, has made a very powerful case. The noble Baroness, Lady Neville-Rolfe, and my noble friend Lord Bridges have shown that they are in listening and receptive mood, for which we are all genuinely grateful. I say to the Minister who is about to reply to this debate that when she is prescribing or proscribing it is very important that we have a flexible structure in which we can have widespread confidence, that is not overcostly and that it cannot have levelled at it the charge of overregulation. From what I have heard and seen, there is a danger that the suggested amendments to the role of the Certification Officer are moving too far in the direction of proscription, prescription and overregulation. I hope that my noble friend will indicate that she would be happy to have detailed conversations between now and Third Reading with the noble Lord, Lord Collins of Highbury, and others who have a lifetime of experience in these fields so that we can get a mechanism that is acceptable and adaptable as circumstances change.

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I thank noble Lords. This has been an important follow-up to a series of debates and meetings outside the Chamber that we have had—to reply to my noble friend Lord Cormack—on the important issue of the Certification Officer and the linked issues, because the Certification Officer runs like a rainbow through the Bill. I also recognise that most trade unions work within the regulatory framework most of the time. We are a deregulatory Government—noble Lords know that, and I am unapologetic about it—but let me be clear: some trade unions break the law. Our reforms provide the Certification Officer with the right tools to ensure effective regulation. Equally, they ensure proportionate regulation, which is an important point given the concerns raised about bureaucracy by the noble Baroness, Lady Donaghy, the noble Lord, Lord Oates, and my noble friend Lord Cormack.

Let me give an example: the case of Mr Dooley v the Union of Construction, Allied Trades and Technicians—UCATT. I am sure the noble Lord, Lord Collins, will know the case. The Certification Officer determined that the union had breached its statutory duty to ballot all its eligible members during the 2009 general secretary election. He also observed other issues relating to the union’s membership register, but he was unable to investigate further as no complaint had been received. This seems to be the wrong situation, and it is that sort of situation we are seeking to change, but we have also listened, as I promised we would when we started Committee stage in this House.

We agree that the Certification Officer, like any other regulator, is and should be independent. However, it is fair to say that noble Lords are seeking a greater assurance. I therefore intend to bring forward at Third Reading an amendment to confirm the Certification Officer’s freedom from ministerial direction. I also confirm that the Certification Officer will follow OCPA appointment procedures.

The noble Baroness, Lady Donaghy, suggested that the Certification Officer might consult on his enforcement strategy. Clearly, he needs to have the ability and space to respond to the information that he receives and to decide the right way forward. He is of course independent, and it is an independent matter whether he investigates and what his approach is to an investigation. That is really a matter for him.

I turn to human rights. Subsection (3)(c) of the new section in Amendment 31A is about compliance with the requirements of the European Convention on Human Rights. The Certification Officer, as a public authority, is already required to act in a way that is compatible with the European convention. We do not need to legislate to require someone to comply with the law, and I am happy to say that again today. However, we listened carefully, as I promised we would, particularly to concerns that appeals on a point of law were not sufficient reassurance. That is why the Government have tabled Amendment 31E, which I have already discussed, allowing appeals on points of fact as well as on points of law. I am grateful to the noble Lord, Lord Collins, for his comments. As he said, this seems to meet the outstanding concerns.

Subsections (3) to (5) of the amendment concern the Certification Officer’s powers to regulate. The Certification Officer has important statutory duties, which are approved by Parliament. However, the current system relies on union members bringing complaints to him—for example, about the conduct of elections. Complaints in relation to other statutory duties are made less often, but that does not mean that there is no problem. Union members may simply be unaware that they can complain, and that is why we need a responsive and diligent regulator. As I have said, he needs to be able to respond proactively if he becomes aware of a breach. This is in line with regulators in other areas.

Now and in future, the Certification Officer must consider the union member’s complaint and make a decision, but the Certification Officer will not be bound to consider representations from third parties. Instead, he will be free to decide what inquiries to make and whether to launch an investigation. I understand the desire for further reassurance that the Certification Officer is not sidetracked into spurious and resource-intensive activity, with costs passed on to the unions via the levy. That is why government Amendment 23A increases the threshold for the appointment of inspectors to circumstances where there are reasonable grounds to suspect that a union has failed to comply with the duty. This provides a sensible additional control on the actions of the Certification Officer, while not unduly restricting his powers to investigate.

The noble Lord, Lord Collins, asked whether, if the Certification Officer does not investigate a complaint, he can be judicially reviewed. Of course the answer has to be potentially yes, because judicial review applies in these kinds of areas of law. However, provided that the Certification Officer has acted reasonably in deciding not to investigate, there is no reason why his decision should be successfully challenged. Deciding whether or not to investigate a potential issue is the sort of assessment that regulators make all the time.

That brings me on to subsections (6) to (8) of the new section in the amendment, which propose that regulations for the levy should provide for a review by an independent panel. The noble Baroness, Lady Donaghy, has raised concerns about costs, as have the noble Lord, Lord Oates, and my noble friend Lord Cormack. I understand the concern about how activities of the changed Certification Officer might result in costs for the unions. To demonstrate that my value-for-money and deregulatory heart is in the right place, I am ready to propose an alternative solution. This is not a matter for Third Reading because it concerns the way in which we exercise the power to make regulations on the levy, but I want to explain some of our thinking on that because I believe it will help to reassure noble Lords.

Specifically, we intend that the levy will recover only part of the costs for the Certification Officer. It is an important feature of Clause 18 that there must be consultation with organisations such as the TUC and ACAS before we make the regulations. This consultation will include detail about which expenses will be funded from the levy and which will be borne by the taxpayer. However, given the concerns that have been raised by a number of noble Lords, we will specifically propose excluding from recovery by the levy the cost of external inspectors. That would mean that trade unions would not bear the full costs of their regulation at all, and specifically they would not bear the most variable element of the Certification Officer’s costs. This addresses concern about the cost to unions from the potential for third parties being vexatious. It changes the incentive structure and brings in the power of the Treasury to ensure that public money is handled in an effective way that achieves value for money.

The Bill also provides for regulations to set the minimum and maximum penalties according to the size of the organisation and the type of breach. I can say today that we will consult unions and relevant stakeholders on these proposals before making a final decision about how the power will be exercised.

There are now numerous safeguards around the Certification Officer. I will come back at Third Reading to ensure that the Certification Officer is free from ministerial direction. I have made a number of changes, which represent an improvement and which will make things better, and I invite the noble Lord not to move Amendment 31A.

Amendment 23A agreed.

Amendments 24 to 31 had been withdrawn from the Marshalled List.

Schedule 2: Certification Officer: exercise of powers without application etc

Amendment 31A not moved.

Clause 18: Power to impose levy

Amendments 31B to 31D

Moved by

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31B: Clause 18, page 15, leave out line 26 and insert—

“( ) a federated trade union,( ) a trade union that is not a federated trade union,”

31C: Clause 18, page 15, leave out line 32 and insert—

“( ) functions in relation to federated trade unions,( ) functions in relation to trade unions that are not federated trade unions,”

31D: Clause 18, page 16, line 6, at end insert—

““federated trade union” has the same meaning as in section 118;”

Amendments 31B to 31D agreed.

Amendment 31E

Moved by

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31E: After Clause 18, insert the following new Clause—

“Rights of appeal not limited to questions of law

In each of the following provisions of the 1992 Act, for “on any question of law arising” substitute “on any question arising”—(a) section 45D (appeal from Certification Officer on question arising in proceedings etc under section 24B, 24C, 25, 31, 32ZC or 45C); (b) section 56A (appeal from Certification Officer on question arising in proceedings etc under section 55);(c) section 95 (appeal from Certification Officer on question arising in proceedings etc under Chapter 6 of Part 1);(d) section 104 (appeal from Certification Officer on question arising in proceedings etc under section 103);(e) section 108C (appeals from Certification Officer on question arising in proceedings etc under Chapter 7A of Part 1).”

Amendment 31E agreed.

Amendment 31F

Moved by

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31F: After Clause 18, 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—“(1A) 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 have due regard to the establishment of mechanisms via trade unions that encourage and enable effective employee engagement in industrial relations.””

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My Lords, the Minister will have noticed the slight but significant change of wording in this amendment. Despite my cogent and—I thought—very persuasive argument when I moved my amendment in Committee, I clearly failed to move the Government Front Bench. The Government’s argument was that currently there are a variety of ways in which employers can and do engage with the workforce. Quite so—there is no disagreement between us on that. The noble Earl, Lord Courtown, said:

“It is not right that we restrict how employee engagement can happen”.—[Official Report, 25/2/16; col. 462.]

Nothing in my previous amendment nor in this amendment would or could restrict ways in which employee engagement can take place. Indeed, the thinking behind the amendment is to encourage involvement, participation and voice, and for a thousand flowers to bloom. The amendment asks that employers are encouraged,

“to have due regard to … mechanisms”—

in other words, to establish systems which suit themselves and the workforce.

Back in 2009, David MacLeod and Nita Clarke, director of the Involvement and Participation Association, in which I declare an interest as a member of the board, produced a report for the then Secretary of State for Business, Innovation and Skills entitled Engaging for Success. A number of subsequent events took place. In March 2011, the Prime Minister, David Cameron, gave his backing to the newly established independent employee engagement task force during its launch at No. 10 Downing Street. In November 2012, 43 CEOs, from a wide range of organisations, signed a letter inviting UK businesses to embed employee engagement in the ways in which they work and quantified the loss to the UK from low levels of employee engagement.

Later that month, 300 practitioners gathered in the Queen Elizabeth II Conference Centre. In May 2013 the job design and engagement White Paper was published and in May 2014 the well-being and engagement White Paper was published. By August 2015 more than 600,000 visits had been made to the EFS website—around 27,000 a month—and 1.4 million hits had been made on the EFS pages. There has been lots of interest and lots of activity. Then just last month a White Paper on further evidence was published showing, via new sector case studies, the links between employee engagement and business performance.

When I spoke in Committee I mentioned the report produced by the IPA entitled Involvement and Productivity—The Missing Piece of the Puzzle?. I remind your Lordships’ House that the report examined the evidence from large surveys, behavioural experiments, academic studies and employers themselves and went on to show that, when employees have a voice in the decision-making process over their jobs and the wider organisation, productivity is higher.

We have a lot of government activity and support, right up to the level of Prime Minister. We have a large, wide-ranging and supportive group of employers involved and a report demonstrating the link between employee engagement and improved productivity. What’s not to like? The amendment calls on the Government to reiterate their support and to give this initiative—which they are on record as being supportive of—a formal boost.

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My Lords, when I spoke in Committee I made reference to the Minister behaving like Stonewall Jackson. I was concerned in making that analogy because I pointed out to the Committee that he was eventually shot by his own side. I was mightily relieved today that, when all the cannons were turned on the Minister, the Government made a number of sensible suggestions in the interests of her welfare.

As we come to this debate, we can relax a little and look at how industrial relations affect industry and employment in this country. I hope that we can spend a moment away from the adversarial side of industrial relations and look at the more positive aspects. It is not that I do not respect the need for collective bargaining but I see the benefits of employee participation and working with trade unions as important elements of our democracy. It is sad that in industry generally we have often relied far too much on overseas companies and foreign management to bring in new techniques for our managers and employees and benefit from. There are some notable examples, particularly John Lewis and Marks & Spencer, but I have to say that in these days when customer service, quality and value-added products and services are so important all these aspects of employment require direct employee engagement.

I am reminded of my own experience in the 1970s in a WEA class of shop stewards from the Morris Cowley plant who I had to teach the economics of the car industry. It was not an easy task at that time, particularly as they were cynically suspicious of me and I was warning them of the coming threat to them and their jobs from Japan, which had reached America and was about to become very dominant in Europe. The Morris Marina was the car those employees made at the time and I remember using the words of Gerald Ratner to describe their product.

At that point, there was uproar in the class. The people who made the rear door panels and the electrics and those who worked in the paint shop came to an amazing defence of their product. I was quite astonished. They took real pride in their product and in what they did in that plant, despite its huge complexities and difficulties at that time. Throughout the rest of my career, I have always thought what an opportunity was missed by British management in the British motor industry at that time by failing to engage with its staff. It was only when we had the foreign management of Nissan, Jaguar Land Rover, Toyota and Honda that we started to make real progress in those sectors.

The lesson I learned from that is that it is a two-sided equation. Not only do you need modernised trade unions but you need very good management skills and stable industrial relations arrangements. You also need not only a commitment from unions on wages and benefits but a commitment to the companies that the employees work in. From that comes an interest in job opportunities, skills training, promotion and engagement.

This is a very important issue. This Government are failing on productivity, as did the last Government. They should take the excellent suggestion from the noble Baroness, Lady Prosser, and engage in this matter. I was amazed when she mentioned that so many papers were published by the previous Government. I do not even remember them and certainly cannot remember reading any of them. That is a sadness and an indictment that we have not taken this issue seriously.

Therefore, I welcome this debate and I hope that the Government will take up the noble Baroness’s suggestion—if not by accepting the amendment then by their deeds and practices in the future.

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My Lords, I congratulate my noble friend Lady Prosser on tabling this amendment and on the very elegant adjustment to the amendment, which I think addresses some of the Government’s concerns. In keeping with the approach of the noble Lord, Lord Bridges, and the noble Earl, Lord Courtown, I hope that on this they will be even more in listening mode and that we might be able to make some changes on this. However, we are very grateful for what they have done thus far today.

The amendment raises an issue that I have been particularly exercised about during the passage of the Bill. I am not, and never have been, a trade unionist and I have never been a member of a trade union. I am a businessman and have been involved in business for most of my life when I have not been involved in politics. One area of the Bill that has always concerned me is that there has been a complete lack of appreciation of the significance of the function and role of management. These things are tremendously important, and the amendment provides an important message that I hope the Government will be able to find ways to reinforce. The message is that engagement between management and employees is a key lever in making a difference in companies and a key mechanism of performance.

Much of the Bill addresses the problems of yesteryear, but I hope that we can start addressing the problems of the future, including how we optimise our performance in all areas, especially in business. Other places have made leaps and bounds in their public sector organisations and private sector companies through effective business process redesign, and it worries me hugely that we have not done as well here because we do not engage with employees as well as other places have shown is possible. In that area, we have a huge amount to do. That is why this sort of provision and process is important. We cannot forget the role of good management and good leadership in being able to make the sorts of changes that we want.

When we look at our public services and at the sorts of companies and adaptabilities that we want, we have to recognise that there is a massive role for management and leadership. I have never known of employees not wanting to engage with their management and leadership, and, apart from in the depths of some disputes, I have never known of trade unions not wishing to engage with management and leaders. But I have known far too many examples of when the management and leadership of companies have not taken that opportunity or not done it well enough. It would be very encouraging if the Government were to do something to ensure that people understood the importance of effective employee engagement and effective work with trade unions, which can make a huge difference to our country.

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My Lords, I rise very briefly to congratulate the noble Baroness, Lady Prosser, on her proposed new clause. I hope that it will be fully and enthusiastically accepted in this debate today. This is a great opportunity to try to put right some of the deficiencies and weaknesses that we see even now in modern industrial relations in Britain, despite attempts at improvement from time to time.

The tragedy of the “them” and “us” disease—the two nations in industrial relations: the bosses and the employees—is still very strong. Incidentally, although this is not part of the Bill, the very fact that the highly paid executives who run companies are paying themselves far too much in comparison with what people earn on the shop floor is a very dangerous element that contributes to the anger and resentment that is felt in the great divide between the shop floor and the director’s boardroom. It is a great tragedy that, given the modernisation that we expected, with foreign companies coming in and all that the Japanese and Koreans have done to create a new, more modern system, we have not yet made sufficient progress. However, we are beginning to.

I remember vividly that when I was a Member of Parliament for Harrow, more than 30 years ago, I visited within eight weeks the Volkswagen works in Wolfsburg in Germany and British Leyland. British Leyland was going through one of its perpetual crises, mainly because of not the unions but the failure of management to engage their employees and to liaise with them properly. As you can imagine—I am not making this up—the meeting at the Wolfsburg Volkswagen works, one of the biggest motor works in Germany and the world in those days, started at 7.30 am. There was breakfast for an hour and a half, which was black coffee and black bread, and then a tour of the factory for two and a half hours. We then had an early lunch in the canteen, with the employees, directors and bosses eating at the same tables.

Some weeks later, I went to the British Leyland meeting, which, in contrast, started at 11.30 am. It was a half-hour visit to the factory, which was not very long, and we were told that we must make progress but could ask questions later. There was an hour of gin and tonics in the boardroom with the director—a very agreeable English habit that we have—and then a sumptuous lunch in the directors’ dining room, miles away from the workers’ canteen. That was a long time ago and I think that things have improved in many enterprises, so I should not decry that. But it is still not enough. There is still a sinister division between employees and employers in this country, and the pay gap is really menacing for the future of British society and its equilibrium. It has to be tackled one way or another—but that is not, of course, part of this Bill.

I very much agree with the remarks of the noble Lord, Lord Stoneham, and thank him for them. He has experience both of the corporate world and of assisting in trade union activities. He cast a warning about these matters, as did the noble Lord, Lord Mendelsohn. So the Government, having been in listening mode on some specific amendments to earlier aspects of the Bill, have a great opportunity now to re-educate some of their ministerial colleagues about these matters, because the “them” and “us” doctrine is deeply embedded among many Conservative Ministers still. That is a great tragedy for this country and does impede our efforts. We helped the Germans have a much healthier system when we were there as the occupying power after the war. What a great irony that was. So now we have an opportunity for Ministers to respond to these matters. This may be a very general matter and not a specific, technical amendment, but it is a very important new clause. I hope that the Government will respond very positively.

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My Lords, I am very grateful for this opportunity to consider wider aspects of industrial relations in the Trade Union Bill. This conversation builds on the valuable debate initiated by the noble Lord, Lord Foulkes, last November, which I found extremely useful. The knowledge and expertise in this House is, as usual, impressive. I always agree with the noble Lord, Lord Mendelsohn, on the role of good management and the need to engage and inspire employees.

I thank the noble Lord, Lord Dykes, for joining the debate. He is right to mention the importance of appropriate executive remuneration. His tales of Germany reminded me of my time on a German board. But we need to bear in mind that the UK’s growth and dynamism have been greater than Germany’s in recent years. That matters to millions of employees and families right across our country.

I am very grateful to the noble Baroness, Lady Prosser, for bringing her amendment back again and to my noble friend Lord Courtown for the work that he has done with her on this important matter. The Government recognise the value of good employee engagement. We know that it contributes to improved productivity and business growth. Indeed, as a personnel director many years ago in the Civil Service and more recently from my first-hand experience through links with USDAW when I was at Tesco, I have definitely seen the benefits. I am grateful for the work on employee engagement by my department and others and am pleased that businesses are now more aware of its importance. In 2015, the CBI employment trends survey highlighted that a top priority for business in the coming year was better employee engagement to foster productive workplaces.

As the noble Baroness, Lady Prosser, has already told us, there has been a lot of activity. The Prime Minister launched the employee engagement task force in 2011. One of its main achievements has been the development of an employee engagement community, which has promoted the benefits and various approaches to employee engagement. The task force comprised a wide range of businesses, including entrepreneurs and HR professionals. In addition, ACAS has produced an online productivity tool to allow employers to look at which of the seven levers of productivity are most important. There is a range of guidance on each element, one of which is a “strong employee voice”. I am sure that the noble Baroness, Lady Donaghy, would commend ACAS’s work in this area, and support the work of her successor there, Sir Brendan Barber, in this matter. These initiatives and others have shown that employers want flexibility to decide how best to engage with their employees, and while unions play an important role, they are not the only mechanism for effective engagement.

This new clause would require the Secretary of State to issue a code of practice that would require all employers to establish a mechanism of employee engagement via trade unions. From my experience, I believe that a prescriptive approach would be ineffective. For small businesses and sectors that are not heavily unionised, having unions as the only mechanism for employee engagement would also be a practical challenge. While I do not believe that we should limit choice, I do agree that the role of employee engagement in positive industrial relations should be highlighted when we come to explain the changes to the industrial relations landscape brought about by the Trade Union Bill.

To pick up on what the noble Lord, Lord Stoneham, said, it struck me that there have been a lot of moves forward, but those initiatives do not have the salience that they need. I would be happy to commit my department to bring together interested parties to discuss not only existing work on employee engagement but how we can raise awareness of its importance as part of the changes that we bring in with the Bill—and how that can link in to the ongoing issue of productivity, which has been a priority for my department ever since the productivity plan we published last July. I hope that I have shown that the Government value the role of employee engagement and I ask the noble Baroness to withdraw her amendment.

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I am grateful to the Minister for that response and I am heartened by it. I have just a couple of points. The new amendment does not mention a code of practice. That was removed in the change on the basis that we wanted to ensure that we did not back the Government Front Bench into too much of a corner on this but we could leave open a way for proper discussion.

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I should have said that. The powers are not the problem here; it is about what we do, in intent and communication, which is why I gave the noble Baroness the response that I did.

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I thank the Minister for that.

Secondly, employee engagement, and the mechanisms to bring it about, must of course take place in workplaces, whether or not they are unionised. That is the whole point. The evidence shows, and I think the Minister agrees, that there is a lot of good will and activity taking place, but there are always employers and organisations that are reluctant to get on the front foot. That is why we are looking for a little bit more of a push from the Government. I am grateful for the Minister’s suggestion that we can continue to discuss this matter to find ways of taking it forward. On that basis, I beg leave to withdraw my amendment.

Amendment 31F withdrawn.

Clause 21: Extent

Amendment 32

Moved by

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32: Clause 21, page 16, line 30, at end insert “, subject to subsection (2).

(2) This Act does not affect public bodies in Wales.”

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My Lords, to many, it may seem that we do not need to debate the issue of the disapplication of this Bill to public services in Wales because we have gained those valuable concessions from the Government, particularly on facility time and check-off. I thank the Minster very much for listening to us and heeding our warnings and advice on that very important issue. However, it is important to stress a principle here, and that is what I want to discuss. We think that the Government have overstepped the mark on a matter of principle in that they should respect the devolution settlement of the UK. They tried to impose these measures on Wales without having the right or the powers to do so. We would just like to give a warning today not to try to overstep that mark again. We think that they were wrong to do it; it was a power grab and a mistake.

The Welsh Government, supported by a massive majority in the Senedd, have argued that public services are devolved and that their organisation should therefore be managed by Wales. By contrast, the UK Tory Government argued that employment is a reserved matter and is therefore their call. The situation in Scotland is different as it does not have a reserved model of government but a conferred one and the lines are more blurred in terms of who has the powers.

Today, the Labour Party launched its manifesto for the Assembly elections in Wales. It clearly states that,

“we will repeal sections of the UK Government’s regressive Trade Union legislation in devolved areas”.

It is there in black and white. Had these issues been pursued, the Welsh Government would have taken steps to overturn a measure which they believe is in their remit.

I am sure that noble Lords noted that I was very restrained in Committee and did not—for fear of further embarrassing the Government—refer to the leaked letter which came into our hands. In that letter—I was quite good then but the game is over now, so I can refer to it—the matter of whether the UK Government had the ability to legislate in this area in relation to Wales was discussed. I remind the Minister that the letter said that, according to advice from First Treasury Counsel, the Government have a,

“weak case in relation to Wales”.

The Government had a weak case and it is still a weak case. I hope they will respect their own policies in relation to devolution. In the draft Wales Bill, written by this Government, it is stated that,

“it is recognised that the Parliament of the United Kingdom will not normally legislate with regard to devolved matters without the consent of the Assembly”.

I hope they will heed their own words and respect the devolution settlement for Wales.

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My Lords, I added my name to this amendment and I am glad to associate myself with almost everything the noble Baroness, Lady Morgan, said. I shall make an exception for the Labour manifesto, which has at long last appeared, and I contrast its rather thin guise with the 190 pages that Plaid Cymru has put forward—be that as it may. However, I welcome the progress that has been made in recent days, and particularly this afternoon, with regard to the Government’s movement on these important matters. I hope it is an indication of a more positive approach to these issues and an avoidance of the unnecessary involvement of legislation in matters that should not have legislation.

Turning to the amendment, clearly the Government of Wales have relationships with employees in Wales directly, through their own responsibilities, and indirectly, with regard to such bodies as the health authorities and the local authorities in Wales. We have a saying in Wales: you can lead the workforce through hell and high water but once you start driving them, woe betide. There is a different industrial climate and it is a climate that begs a co-operative approach, as opposed to a top-down approach. Because of that difference, it is very important that the legislature at Westminster does not involve itself unless it is really necessary—and I cannot see why it would be necessary in such matters.

It would be good if the Minister could indicate from the Dispatch Box today that the Government take this on board and are particularly sensitive to the questions that have arisen from the disputes between Westminster and the National Assembly—between the Government of Wales and the Government at Westminster—over the interpretation of legislation. The last thing we want is for that sort of dispute to lead to difficulties in working between the workforces and the Government.

In concluding, I draw the Minister’s attention to the fact that we do not have a strike by junior doctors in Wales because there is an understanding between the employer and the doctors. It is an approach that I commend to Westminster and I urge the Minister to take note of this amendment and its implications.

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My Lords, I frequently disagree with the way the Welsh Government operate but I defend totally their right to do so under the devolution settlement. If anything is within their rights, it must be their relationship with their employees.

Since the Agricultural Wages (Wales) Bill judgment by the Supreme Court, which occurred when I was a Minister in the Wales Office, it has been clear that the Government would not win on the issue at stake in this part of the Bill. The Welsh devolution settlement was simply much broader than we had all assumed, and that applied to the Welsh Government as well as to the Government here in Westminster. The new Bill, which is in draft form but will be extensively rewritten and I very much hope will come back next year, will probably provide much more certainty. However, we are working with the situation we are in now, with all its uncertainties and faults.

I say to the Government today, from my party: I have added my name to the amendment because we believe that the Government were well overstepping the mark on this issue. The Government must treat devolution with respect and not grudgingly. I regret that the concessions here have been made at the last minute, when the Government have their back against the wall. They should have seen reason a long time ago. However, for all that, I am very grateful that the Government have conceded on this issue.

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My Lords, I say to the noble Lord, Lord Wigley, that on election manifestos it is quality, not quantity, of words that counts in the end. In supporting this amendment, I refer to the Members’ register, where I have declared an interest. I also remind the House, as did my noble friend Lady Morgan, that the Welsh Assembly, on a legislative consent Motion, voted against by 43 votes to 13—13 Conservatives—making very clear the Assembly’s view on the principle here. They were voting not so much on the detail of the matters that we have been discussing in this House on this Bill but on the principle of the Government’s seeking to override the devolution settlement under which devolved public services are devolved, as well as other services, such as agriculture.

That brings me to the question of the Supreme Court judgment in 2014, to which the noble Baroness, Lady Randerson, referred. That was very clear. Their Lordships made crystal clear their view that even though employment law was a reserved matter, nevertheless, in the operation of those services devolved to Wales—in this case, agriculture and the agricultural wages Bill that the Welsh Assembly had passed—that was a matter proper to the Welsh Assembly to legislate upon. The Supreme Court upheld that. I have seen legal opinions by an eminent QC, commissioned by the Wales TUC. I also know that the Welsh Government have had strong legal advice. Should it be necessary—it may still be—to go to the Supreme Court to challenge the UK Government’s position on the principle involved, the Welsh Government would probably win.

As I said to the Minister earlier when speaking on the Enterprise Bill, at stake here is the principle of devolution. Where services and matters are devolved, that should be a matter for the Welsh Government and the Welsh Assembly to legislate upon, not for this Parliament.

I dealt with these issues in great detail on Second Reading on 11 January and also in Committee on 8 February, so I will not detain the House further with those detailed arguments. I would just caution that the future of the United Kingdom is at stake. We know that the Scottish Government want to take Scotland out of the United Kingdom. It does not do any service to those of us who believe in the importance of retaining the United Kingdom, for all the benefits that it brings us in making us stronger together rather than weaker apart, to undermine by the back door the devolution settlement in a way that, I fear and regret, the Government have been doing on this Bill.

I ask the Minister to reflect further and maybe come to an understanding with the Welsh Government and their Public Services Minister, Leighton Andrews, in particular. I know that the First Minister, Carwyn Jones, has written to the Prime Minister about the way that this will work in future. The new Wales Bill—which we understand will introduce a reserved powers model, although it has been hugely controversial—may resolve this matter, but it may not, as we saw with the Supreme Court judgment. I think that we must tread very carefully on this ground, and I regret that, on this occasion, in this Bill, the Government have not done so.

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My Lords, I support my noble friend Lord Hain and other noble Lords who have spoken on this amendment. I urge the Ministers, who appear to be in a very gracious mood this afternoon, to extend this graciousness to this particular aspect of the Bill. Otherwise, it seems to me that what we are doing is actually legislating for future conflict between the devolved Administrations, in this case Wales, and the United Kingdom Government.

My noble friend Lord Hain has mentioned how the Agricultural Wages Board situation some years ago went to the Supreme Court. When he and I held the offices of Secretary of State for Wales and for Northern Ireland, we decided, as a Government, that the best way we could resolve disputes between the new devolved Governments and the United Kingdom Government was through discussion and dialogue. We therefore had interministerial conferences, joint ministerial governance and all sorts of committees that met to iron out differences of opinion between the Governments of Wales, of Northern Ireland, of Scotland and of the United Kingdom.

The last thing we should be doing is going to the Supreme Court on issues that need not go there. On this issue, it seems to me self-evident that, although employment law is indeed a British matter, the effects on public services are devolved matters. If the Supreme Court goes the same way that it did on the Agricultural Wages Board, the chances are that the Government will lose. So what on earth is the point of making laws that we know will bring about constitutional differences? It is utterly pointless.

I hope that when the Government reflect on these issues in the next week or two, they will be able to come back to the House and indicate that this is unnecessary. They have been extremely generous today on check-off. We understand that the facility time provisions might be changed as well. There is not much left in terms of what the Welsh Government asked—although I think they also talked about the 40% threshold—but the issue is not particularly about the details of the Bill, but where this country goes in respecting the devolved Administrations.

I agree again with my noble friend Lord Hain when he said that we are in danger of breaking up. In my view, and that of my party, the best way to avoid the break-up of the United Kingdom is to ensure that we have effective devolved Governments that work together with the United Kingdom Government for the benefit of the people of all our nations and regions.

I also agree with the noble Lord, Lord Wigley, who mentioned that we have a different way of doing things in Wales. Yes, there is no junior doctors’ strike there; there is a social contract between trade unions, the Government, local authorities and others in Wales that works well. Indeed, my noble friend Lady Prosser referred in the previous group of amendments to a civilised and sensible way we can deal with each other. So far as this matter is concerned, the civilised and sensible way is to drop the legislation and move forward in the spirit of the concessions that the Government have made this afternoon.

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My Lords, we have had a relatively lengthy discussion, both in Committee and this evening, about the territorial reach of the Bill. We have thought about Wales, the home of my grandfather—although I do not think that that is quite a declaration of interest. I hope that we have made it clear today, clause by clause, that we are listening carefully to concerns raised by noble Lords. I heard what the noble Baroness, Lady Morgan, said about the helpfulness of the changes on facility time and check-off relating to the concerns about Wales. I congratulate her on the launch of her manifesto today—a good reason for speaking.

I am sorry to disappoint the noble Baroness as we never comment on leaked letters, but we had a discussion in Committee about the point raised by the noble Lord, Lord Hain, and about the Supreme Court judgment in the Agricultural Sector (Wales) Bill, which considered the competence of the Welsh Government where multiple subjects were at play. Of course, the court held that the Welsh Assembly had competence as the case concerned a situation where the devolved matter of agriculture was specifically in play. By contrast, this Bill is concerned with industrial relations, which is solely a reserved matter.

There are other cases that I will not go into at this moment, but the key point is that we cannot ignore the fundamental and well-established principle that there should be a unified system of law for certain matters. Employment and industrial relations law is one important example that has to apply consistently across Great Britain. Devolution of these matters, which is the effect of this penultimate amendment we are looking at, could lead to the differential treatment of workers and the development of a two-tier system, making it more difficult for workers to move freely within the labour market. That, of course, is why employment law is reserved in Scotland, and not conferred in Wales. The importance of having this single regime has been reconfirmed in the context of the Scotland Act which received Royal Assent recently.

The noble Lord, Lord Hain, sought, in our earlier discussion on the Enterprise Bill to look at the devolution of exit payments and suggested that our treatment of those was inconsistent with our treatment of the Trade Union Bill, to which we have now turned our attention. This is not correct. The Government of Wales Act 2006, which I referred to earlier, gives legislative competence to the Welsh Government for pensions and compensation payments to specific employers and for specific purposes. This is why the Welsh Assembly has regulation-making powers in relation to exit payments in the Enterprise Bill. In contrast, the Trade Union Bill is about employment and industrial relations law, which is not conferred on the Welsh Government—it is a wholly reserved matter, as I have said. The benefits it will bring should apply across the whole of Great Britain.

I appreciate that not all noble Lords share my assessment—hence this amendment—but I cannot accept that the way forward is to exclude certain public bodies outside England from specific provisions of the Bill. That would extend devolution by the back door and undermine discussions in the context of the Scotland Act and the draft Wales Bill. Parliament has put in place provisions for revising the devolution settlements. It would not be appropriate for this Bill, or others unrelated to constitutional devolution matters, to determine the boundaries of devolution in isolation. We are here today not to debate and amend the devolution settlements but to deliver our manifesto commitment for industrial relations and employment law.

In response to the noble Baroness, Lady Randerson, we do treat devolution with respect, as noble Lords can see, in many different ways, but I cannot agree with her or with the noble Lord, Lord Murphy, about the way forward on this amendment. Can we just consider the hugely significant impact of the amendment on the Bill? Under the amendment, none of the Bill’s provisions would apply to any public body in Wales, regardless of whether the public body were devolved. That would mean that neither the 50% turnout threshold nor the 40% support threshold for important public services would apply to industrial action ballots in Welsh schools or Welsh hospitals. The threshold provisions in the Bill ensure that strike action only happens where there is a strong and positive mandate. That is as important, it seems to me, in Cardiff and Wrexham as it is in London or Glasgow.

This amendment would also mean that ballot papers for industrial action in the DVLA or the Border Force in Wales would not be required to contain a summary of the matters in dispute, despite the fact that both bodies are responsible for matters that are solely reserved. Not only would this amendment therefore undermine the devolution settlement with Wales, and the principle that employment matters should be reserved, but there could also be unintended consequences, as I have highlighted. Where bodies have premises in Wales, there would have to be two different sets of rules for different workers by virtue of where they were located.

If the House were to approve the amendment today, it would set a precedent that future employment and industrial relations legislation would not apply to public bodies in Wales. We could anticipate a time when individual rights, such as protections from unfair dismissal, would not affect public bodies in Wales. I am sure that that is not what anybody wants, but we have to look at the implications of making a change in an area which is clearly reserved. Of course, we will continue to talk about the delivery of devolution in the weeks and months ahead, but I hope that I have explained our position clearly this evening.

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The Minister has been very generous this afternoon, but I fear that her generosity is now straying into dangerous territory. I am very concerned. May I point out that when Welsh Ministers start to read the text of the Minister’s reply, they will find that she is digging herself into a deeper hole in this matter? Some of what she has said is very contentious on the interpretation of the devolution settlement for which I was largely responsible in the Government of Wales Act 2006, as Secretary of State. I am very concerned, if I may so, in the gentlest way possible, that she is reading from a civil servant’s script that is seeking to get back some of the powers and responsibilities that have already been devolved.

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I thank the noble Lord. I am certainly not seeking to make any changes. I said in response to a point made by a colleague that it was important to respect the devolution settlement. I am trying to explain that this is a reserved area and that if you change that there are implications of the kind that I outlined. That is why we feel strongly that this needs to be a national measure. It fits in well with the unified system that is needed for certain matters and takes account of the fact that employment and industrial relations law is reserved. Of course, as we discussed earlier in relation to the Enterprise Bill, there are particular detailed provisions—apprenticeships are a good example—where I completely understand that the Welsh Government create their own rules. What I am trying to do on this Bill is to make sure that we do not move into constitutional areas which are not appropriate for today’s debate. I have also tried to explain that there is a risk of things being unworkable. I consider that the amendment has far-ranging implications which I cannot accept. I ask the noble Baroness to withdraw her amendment.

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My Lords, before the noble Baroness sits down, I simply raise the issue to which she referred in relation to employment law being reserved. This was what we thought was the case prior to the Agricultural Wages Board Supreme Court judgment. I am sure noble Lords can see that this is not as simple as it sounds, because agricultural wages were found to be an issue that was devolved to the Welsh Government. They are perilously close to employment law, are they not? I cannot see the difference between them. The truth of the matter is that the Supreme Court judgment determined that if something was not specified in the Government of Wales Act—

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My Lords, I ask the noble Baroness to give way. She knows as well as I do that this is Report stage of the Bill, and she can question the Minister on a material part of the Bill but she cannot make another speech.

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If the noble Baroness has finished, I shall move on. I am glad the Minister said that she has listened to our concerns. However, I am a bit disappointed by what she said this afternoon. I do not want to go on for too long as I know that we want to move on. However, the fact is that the conferred model is far more complicated than she made out. It is not the same as the Scottish model. The courts have said that it is different. There is already differential treatment between the way that workers—

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With the leave of the House, I remind the noble Baroness that we are on Report. She is not asking a short question but rather making a speech.

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It is her amendment.

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I apologise. I came in late.

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The noble Lord should have been here when we were discussing this earlier, but there we go. It is important to note that there is differential treatment at the moment between workers in Wales and workers in England. To give noble Lords an example, every worker in the Welsh health service receives a living wage. That is a differential. Things are already different. The cat is out of the bag and you cannot put it back. That is the situation and it is important that it is respected. The Minister cannot possibly have any idea how health boards are managed in Wales as they are devolved. How can you say how much time they should have—or whether they should have any time at all—to discuss trade union matters?

We are not suffering a doctors’ strike in Wales because we allow facility time to happen. The trade union movement and the managers of hospitals have made it absolutely clear that they think this would be a retrograde step that would lead to worse industrial relations.

I am disappointed that the Government have not quite understood the constitutional issues within the amendment, but this is a day to celebrate. We have won major concessions from the Government today and I do not want to end on a negative note. We will come back to fighting the devolution corner and discussing the constitution of the United Kingdom. I want to celebrate the fact that we have had major concessions today and we are very grateful for them. I beg leave to withdraw the amendment.

Amendment 32 withdrawn.

Clause 22: Commencement

Amendments 33 and 34 not moved.

House adjourned at 6.16 pm.