Trade Union (Deduction of Union Subscriptions from Wages in the Public Sector) Regulations 2023
(4 months, 1 week ago)
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Baroness Neville-Rolfe
That the Grand Committee do consider the Trade Union (Deduction of Union Subscriptions from Wages in the Public Sector) Regulations 2023.
Relevant document: 3rd Report from the Secondary Legislation Scrutiny Committee
The Minister of State, Cabinet Office (Baroness Neville-Rolfe) (Con)
My Lords, the regulations are known as the check-off regulations and stem from Section 15 of the Trade Union Act 2016. This is the last secondary legislation to be brought into force as part of that Act; each aimed at modernising industrial relations in the UK. I am pleased to take this final piece of legislation through, as I had the honour of taking the Act through the House some years ago.
The regulations define a relevant public sector employer for the purposes of Section 15 of the Trade Union Act. That provision requires relevant public sector employers, which allow employees to pay union subscriptions directly through payroll, to charge trade unions a cost substantially equivalent to the cost that they incur for providing the service. In addition, public sector employers must be satisfied that there is an alternative way of union members paying their subscriptions aside from check-off, such as through direct debit.
Should employers not be able to secure payment substantially equivalent to the costs of providing check-off, or should there not be an alternative payment available to employees, employers must cease to provide check-off. The Government believe that this will ensure that check-off services are provided by public sector employers only where there is no cost burden to the taxpayer and to guarantee members have choices about subscription payment methods.
The regulations will not come into force until a reasonable transition period has taken place to allow everyone adequate time to make arrangements to comply with the regulations. To this end, they will come into force on 9 May 2024, six months after laying. This is a generous transition period, considering that the regulations were previously due to be laid in 2017. Therefore, employers have had a significant awareness of the impending changes.
The Government have also provided to the House the Explanatory Memorandum and a full impact assessment, and we will publish guidance on GOV.UK to be issued to public sector employers to help them to familiarise themselves and comply with the regulations.
I will remind noble Lords why the Act’s reforms to check-off in the public sector are significant. The Government are committed to the responsible and transparent use of taxpayers’ money and so believe that the administration of payment of union subscriptions for public sector workers should not be carried out at the expense of the taxpayer.
During the passage of the Trade Union Act 2016, the House debated the original drafting of Section 15 at length. It suggested that check-off services should not be provided by public sector organisations on behalf of their unions, owing to the cost burden on the taxpayer. However, through the legislative scrutiny and amendments made in this House, Section 15 of the Act was revised to no longer require public sector employers to remove check-off services, but rather that the costs associated with doing so should be recharged to trade unions and alternative options should be available to trade union members. The Government were grateful for the scrutiny of the House in refining the provision and continue to believe that this strikes a fair and appropriate balance between providing value for money and fostering good and modern industrial relations in the UK.
The regulations will apply across the public sector to those bodies listed in the Schedule. There was significant engagement in this House on the organisations in scope, resulting in the Government considering the ONS definition of “public authority” too broad. As a result, the Government decided to use the list of bodies from the Freedom of Information Act and its Scottish equivalent as the starting point to define the scope of the regulations, making it clear that the intention was to include only organisations that are funded wholly or mainly from public funds.
Of that list, the Government have removed organisations that do not routinely employ staff, are an advisory body or expert panel, are funded by a levy on a finite or discrete group, or are predominantly commercially focused, to ensure that the scope is proportionate to the aims of the regulations.
The Cabinet Office has also engaged each Secretary of State on the proposed scope, seeking their confirmation that the regulations capture all bodies necessary to deliver the policy aim. In addition, a two-week consultation was undertaken with the Scottish Government to ensure that Scottish bodies were appropriately captured.
The check-off regulations will deliver benefits to the taxpayer. The impact assessment has identified that the intervention will equate to a present benefit saving of approximately £1.5 million per year and just over £12 million over the next 10 years. These benefits arise as the regulations seek to alleviate the burden for public sector employers that offer check-off services but do not yet charge trade unions for the cost of administering them.
I wish to be clear that the regulations we are considering stem from the Trade Union Act 2016, which was introduced, as noble Lords will remember, as a 2015 manifesto commitment. Despite delays owing to other government priorities relevant to the UK’s exit from the European Union and the coronavirus pandemic, this has been a long-term ambition of the Government in our aim to modernise industrial relations in the UK.
The purpose of these regulations is to deliver value for money for the taxpayer and choice for individuals in a balanced way that reflects the discussion in this Committee. They do just that, and I beg to move.
Lord Wallace of Saltaire (LD)
My Lords, I have seen many Chekhov plays; this is not half as enjoyable an “Enterprise”.
This SI comes here under an Act of 1992, as amended in 2016. The House of Commons briefing on it reminds me that the Conservatives tried it on in 2014 but were blocked by the Liberal Democrats in the coalition. So they brought it back later and it is to come into force in May, a maximum of six months before the next election in the dying days of this dying Government.
The instrument is extraordinary in the sense that it goes through a list of more than 200 bodies, some of which are in any sense autonomous public bodies. I used to work for several universities and I note that they are caught up in the scheme—but, then, so are the Crofting Commission, the Highlands and Islands Enterprise, the Gaelic Media Service, Historic Environment Scotland and even the Scottish Road Works Commissioner. I assume that this must all be compatible with the conventions of the devolution settlement. I note also that, in terms of local government in England, Together for Children—it is based in Sunderland—Slough Children First and the Sandwell Children’s Trust are brought under this umbrella as well. The total amount of public money that this careful enumeration of all these subordinate bodies will save is estimated to be £1.5 million a year.
As I read this SI over the weekend, I thought of the principles that are at stake here: limited government; government that should be as local as possible in order to be as close to the people as possible; and that government should have respect for the importance of autonomous institutions in civil society. These are principles that Liberals and Conservatives used to share, when Harold Macmillan was Prime Minister and Conservatives still read Edmund Burke rather than Ayn Rand and Friedrich von Hayek. This statutory instrument is illiberal and unconservative. Such a degree of detailed centralisation and interference in civil society used to be called socialism. Edmund Burke used to talk about the importance of local communities, little platoons and self-government. This instrument is much more in the style of authoritarian populism, like those right-wing Republicans in the United States who believe that the free market is all that matters rather than a free society.
One of the things that horrified me most as I read the Explanatory Memorandum and the impact assessment were the 40 or 50 references to the TaxPayers’ Alliance as a prime source of evidence for the arguments made. I am sure that the Minister is familiar with the TaxPayers’ Alliance. It was founded by Matthew Elliott after a period in Washington attached to Americans for Tax Reform; that was founded by Grover Norquist, who once famously said:
“I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub”—
tax cuts at all costs and to hell with the public sector.
The undue influence of American Republicans on the Conservative Party, the flow of funds to right-wing think tanks, in particular those based in 55 Tufton Street such as the TaxPayers’ Alliance, and the links with hard-right think tanks here are part of what seems to many of us to be going wrong with the Conservative Party. I rather suspect that the Minister, whom I offer the compliment of thinking of as a one-nation Conservative, probably quietly shares a view.
The impact assessment does say that the savings to His Majesty’s Government will be at £1.5 million a year, and it estimates the cost to the trade unions at about £13 million a year, thus enforcing significant increases in membership fees. It also says:
“Costs to public sector employers may include some loss of goodwill with employees and trade unions”.
Well, that is much less important, is it not? It seems to me that that matters. After all, the Government’s relationship with civil servants and public sector workers has deteriorated steadily over recent years. We have seen that in the recent strikes and in the loss of a number of first-class civil servants; I know that some of those with whom I most enjoyed working when I was in Government have now left or taken leave. That raises problems about the quality of how we are governed.
The impact assessment also says:
“The policy will engender taxpayer faith that the Government is spending their money responsibly”.
Well, taxpayers’ faith in the Government spending their money responsibly is currently having to cope with the Government’s failures to deal with the Covid effort and to enquire into that, and with the revelation yesterday that the noble Baroness, Lady Mone, admits to having made £60 million in profit from Covid contracts, rather larger than the £1.5 million we have spent here. I suggest this will not engender much additional taxpayer faith.
The Minister herself said that the Government are committed to the transparency of public expenditure. I hope that is true, and that we will see, as we go further into the question of how much government waste there was on Covid contracts, that the Government are actually committed to transparency rather than to a continuing cover-up.
The Minister will note that there have been changes in the nature of trade unions over the last 40 years. There are fewer manual workers and more professionals—public service professionals above all. The majority of trade union members now have degrees. They are civil servants, doctors, nurses, researchers and teachers. They used to be part of the core vote of the Conservative Party, and I suggest to the Minister that they are an important part of that vote, which the Conservatives have lost and will not regain unless they alter their attitude to the public sector.
The bias against public service and the public sector as such, which we have seen on the right wing of the Conservative Party, is one of the most unattractive dimensions of this dying Government, holding down their salaries and wages while allowing private sector pay to soar. Ministerial treatment of civil servants as if they were servants, and the well-evidenced examples of bullying of civil servants by Ministers, have been a problem in which civil servants need unions to defend them and look after their interests. The public sector does need unions to protect them and good civil servants are vital to the quality of British government.
I find very little to like in this SI; if Labour had wished to move a regret Motion, the Liberal Democrats would certainly have supported it. The only good thing to be said for it is that it will take effect only in the last months of this Government, and I suspect that any Government that come in afterwards will quietly stop its implementation.
Lord Davies of Brixton (Lab)
I just ask the Minister: are the Government still attached to the role that the Conservative Party has traditionally seen for trade unions in maintaining social harmony? Do they see trade unions as an essential component of a harmonious society, by providing a platform for workers to express their concerns and negotiate with employers, thereby contributing to social cohesion and stability?
Baroness Chapman of Darlington (Lab)
It is a pleasure to follow the noble Lord, Lord Wallace, and my noble friend Lord Davies; they made some very good points that I would have made myself. I will not repeat what the noble Lord, Lord Wallace, said in terms of advice to the Conservative Party; I suspect that the Minister will, as he said, have secretly agreed with some of it. It is sad what has happened to the Tory Party. It is sad that the Government have picked what is, in the scheme of things, such a minor issue—for goodness’ sake, what is happening with our public services?—when to pretend that it will somehow restore the faith of the British taxpayer is laughable. Certainly, no one in the Committee this afternoon is buying it. This is a classic case of getting the facts to fit an argument that the Government want to have.
We know that for some reason Conservative Governments tend to want to limit check-off, whereas we on these Benches see it as more of a positive and helpful thing in supporting good industrial relations, as my noble friend Lord Davies said. I would have thought that these things, small scale as they are—although I will go on in a minute to talk about some of the data, or the lack of it, that the Government are choosing to rely on to make their case—ought to be resolved locally. Local managers and trade union officials resolve things all day, every day. That is the norm.
There are occasions that we all know about where the Government have chosen to get themselves involved or to pick a fight. We have seen what has happened in the NHS. Far be it from me to give the Government advice on good industrial relations, but they need to take some advice from somewhere because there are disputes that have been going on for far too long that are having a direct impact, for example, on patient care in the NHS, where the Government have been far from helpful.
It is striking that the Government admit that they do not have reliable information on the extent of the use of check-off by government departments and are relying on estimates, most heavily, as the noble Lord, Lord Wallace, said, those from the TaxPayers’ Alliance report of 2014. This is interesting because it claims that only 22% of those offering check-off were reimbursed by trade unions. At the moment, as we know, it is already possible to be reimbursed, but when it asked the same question of local councils, the LGA found that 67% were reimbursed. There is no attempt within the report provided by the Government to explain this difference. I think we can all come up with our own explanation of why these two organisations might have come to very different outcomes, but it is extraordinary that a policy change such as this, which could have some negative repercussions, is being based on such wide-ranging estimates. Given that we do not have accurate information about how many people use check-off or how many organisations are already reimbursed, it is impossible to know what the financial impact of the changes that the Government are implementing will be when taken against the potential damage to good will.
A number of questions arise from this. On devolution, which the noble Lord, Lord Wallace referred to, my reading is that these regulations will apply to England, Wales and Scotland. We know that many public services are devolved. I think I am right that industrial relations more widely are a reserved power, but the Minister will correct me. For example, obviously much negotiation goes on between the Senedd and public services in Wales, so why is it that this measure will be mandated from Whitehall? I have not asked the Welsh Government—perhaps I should have done—what their attitude to this is, but I am assuming that the Minister has had conversations with her counterpart in Cardiff. Can she let us know the Senedd’s view on this issue?
The estimated savings are bizarre and do not seem to take account of the diversity of services within the public sector in terms of the rates of trade union membership, the use of check-off and the rate of reimbursement. Big assumptions are being made about the standardisation of involvement in check-off. No justifications for them are provided.
Employers are required to assure themselves that the reimbursement amount is—this is the phrase the Government use—“substantially equivalent”. I am not clear what that means. We accept that a cost of check-off exists. That cost is then calculated, that money is to be reimbursed by the relevant trade union and that amount is to be substantially equivalent. I am interested in that choice of words, as I would have thought the Government’s aim would be better reflected by use of the term “full cost recovery”. I have heard “substantially equivalent” used for medical devices and sometimes in maritime situations, but I do not understand why it and not an alternative phrase has been used here. Perhaps the Minister could explain.
It seems very strange that on page 8 of the impact assessment, in its analysis and evidence, the Government rely on the TaxPayers’ Alliance’s assertion that 90% of public sector bodies use check-off to justify the need to act but later, on page 26 of the same document, when estimating the cost of implementation, the Government repeatedly assert BEIS data that states that 56% of public bodies offer check-off. Can the Minister explain why the document relies on different figures for the same thing to support action? One overestimates the need and the other underestimates the cost. This does not seem a very sensible way of making policy. If there is no accurate information, perhaps the Government should say so or perhaps go out to consultation to get some more accurate data.
It is fascinating to read in the Explanatory Memorandum that the Government did not think that consultation would be helpful because
“the principles of this provision were debated extensively in Parliament … in 2016”.
This is a bit shabby. I follow our proceedings very carefully, as I am sure do the noble Lord, Lord Wallace, and my noble friend Lord Davies. To say that because we had an extensive debate in Parliament in 2016 there is now no further need to seek advice, comment or consult more widely is quite extraordinary. It perhaps overemphasises the interest which people outside the House take in our proceedings. There has been no opportunity for the main partners in this endeavour to share their thoughts because, the Government say, they did so seven years ago. That is not good enough.
The guidance to employers is not available, so we are not able to assure ourselves that employers will be given sufficient advice to make calculations about the cost, agree reimbursement and assess this “substantially equivalent” phrase. None of that is available to us for this debate and it would have helped to have sight of it. If we had examined the guidance, it would have helped us to assess how much care—I think that is the right phrase—the Government are taking on this. On the face of it, it appears that Ministers are reaching for this policy for reasons of political positioning or because they are seeking some sort of wedge issue rather than because of genuine concern about the practical impact. They do not know how widespread check-off is, how many individuals are involved or how many public bodies are affected. They therefore cannot possibly know what, if any, impact this will have in savings to the taxpayer.
This is not a good way to carry on. We expect better of the Government when they ask us to agree this sort of thing. I will listen carefully to what the Minister says, but I put on record our dissatisfaction with the way that the impact assessment is written and its reliance on different data sources. This slapdash approach is because the Government are hell-bent on getting this done without considering some of the issues that I raised as carefully as they ought to.
Baroness Neville-Rolfe (Con)
My Lords, I am grateful to the noble Lord, Lord Wallace of Saltaire, and the noble Baroness, Lady Chapman of Darlington, for their contributions to the debate and the good questions that they have asked. I should perhaps start with the noble Lord’s description of the wide-ranging nature of the list. I agree that it is wide-ranging, and that is necessary. However, I am sorry that in a sense he criticised the impact assessment. I was pleased that there was an impact assessment. He and I and other Members of the House have been proponents of the use of impact assessments because they allow the sort of questions that we are asking today, and they are not always used. Obviously, I point out in relation to the costs of check-off that direct debit is an alternative.
The noble Lord asked a number of technical questions on the estimates, as did the noble Baroness. The easiest thing for me to do is to look at them in Hansard and write to them in answer, but I will make two points. First, I understand that the guidance should be online from tomorrow. I am sorry that it is not available today. The normal course of events—the Commons starting on this first and then us getting it—has perhaps meant that we have not had the benefit of the guidance, but I will write and send the link to it because that would be helpful. I also agree with him about the changing nature of trade union membership. He will remember very well that I worked at Tesco, a trade-unionised company, and spent a lot of time working with the union in growing the company. Personally, I work very well with civil servants and their unions. We need to minimise costs, however, which is one reason behind the changes that we are discussing today.
Perhaps I should pick up the noble Baroness’s point about consultation. As she said, the regulations stem from the 2016 Act, which was consulted on as a whole. During the debates on the then Bill, the current policy position on the check-off regulations was set out, which was to charge trade unions a reasonable cost and to ensure that there was access to an alternative method of paying union subscriptions. That was an agreed compromise instead of requiring public sector employers to remove check-off altogether. It is important to repeat that background.
The Government have upheld the commitments that they made to engage, rather than consult, with affected bodies. That has included four consultations with government departments and the Scottish Government on the schedule of scope. The Cabinet Office has also engaged trade unions’ workforce policy leads and some employers on the impact assessment and for views on the guidance. There is no single source of information of cost of check-off to the taxpayer. That is one reason why the TaxPayers’ Alliance report was used, but we have supplemented it with more recent data from the BEIS management and well-being practices survey. We also conducted consultation with employers in each of the public sector workforces, including the NHS, local government, police forces, maintained schools and academies and the Civil Service. I acknowledge that a lot of this is anecdotal, but it has provided some more recent data as a comparison and means of testing the assumptions made in the two reports. However, as I promised, I will look at the points that the noble Lord made.
Lord Wallace of Saltaire (LD)
Just to add, the disgust with which we saw the depth of dependence on the TaxPayers’ Alliance relates to the position of this body, which received an E—the bottom range—from Who Funds You? for the opaqueness of its funding. It is clear that some of its funding comes from very right-wing bodies in the United States; it has held public, open conferences with, I believe, the Heritage Foundation. It seems deeply improper for the Government to depend so heavily on such a very partisan think tank. The Tufton Street group in particular is doing its best to pull the Conservative Party very much to the right, against its former traditional conservatism.
Baroness Neville-Rolfe (Con)
I cannot just accept that, I have to say; I believe that views from all different directions can be valuable in debate, and that includes the TaxPayers’ Alliance. I explained why it had done some work in this area. It was used in these estimates—entirely transparently—and we have also taken data from other sources. I nevertheless thank the noble Lord for his comments.
Baroness Chapman of Darlington (Lab)
The point is that the TaxPayers’ Alliance is a campaigning organisation. Our concern is not that it is included at all; the Minister is quite right in what she said about a range of sources and perspectives. But given that there is a lack of data, which the Minister has acknowledged, it seems a little odd that it is relied upon quite as much as it is. You do not need to make any assertions about some of the estimates that the TaxPayers’ Alliance is making to pursue the policy. It seems a bit strange that it is included.
My attention was drawn to this by what is on page 23 of the impact assessment. There is a little table that lists probable estimates of savings to the public sector. It just seems strange that—to take the Civil Service, as the first example—the high estimate of savings is £149,000, the low estimate is £1,500, and the most probable estimate is £11,500. Then, however, there are local authorities, for example, with a high estimate of £161,500, a low estimate of £91,000 and a most probable estimate of £161,500. It just is not clear how some of these figures have been reached. Are the Government treating the TaxPayers’ Alliance evidence with equal weight to a survey conducted by the LGA, for example? That would seem a strange thing to do without further inquiry or more critical analysis. Maybe this is a point to make to officials behind the Minister rather than the Minister herself, but it is not really what we would expect in this kind of document.
Baroness Neville-Rolfe (Con)
I commend officials for producing a detailed impact assessment and I will not renege on that. I also think that the TaxPayers’ Alliance is a perfectly respectable source. Obviously, every think tank has different people working for it; some people are excellent at estimates and some are not. I have already said to the noble Baroness that I will go away and look in a little more detail at the estimates. This impact assessment was not written by me personally, of course, but I will take it away and have a look. I commend the use of different sources of data and data standards. The noble Baroness probably knows that that is what I would want, but I will of course take a look.
Perhaps I can move on and just try to answer one or two of the questions about devolution. Matters of industrial relations are clearly reserved and there is no obligation for the UK Government to consult with the devolved Administrations. However, the Scottish Government were consulted on the scope of the regulations to ensure that they capture all public bodies that are wholly or mainly funded by the taxpayer. Wales is not in scope as a result of the Trade Union (Wales) Act 2017. The Government will take action to bring Wales into scope at the earliest possible opportunity.
I should mention that the TUC has been engaging with us on, and had input into, the guidance. I noticed its flash new logo on its writing paper. This also included engagement with employers in the public sector, so I hope that that provides some reassurance.
In conclusion, I am confident that the regulations provide a fair and appropriate intervention and capture an appropriate scope to meet the policy aim. They allow check-off to continue, as was agreed during the passage of the Trade Union Act 2016. They represent a reasonable direction of travel and continue to support productive industrial relations in the UK—which, Members may recall, was my experience during my past career at Tesco. To return to the point that the noble Lord made, of course the trade unions have a role to play in our society, so I am delighted to have this opportunity to be at the Dispatch Box today to put to bed the last of the regulations relating to that Act. I hope that colleagues will join me in agreeing the regulations, which I commend to the Committee.