Employment Rights Bill

Baroness Finn Excerpts

Committee stage
Tuesday 10th June 2025 Lords Chamber

[Baroness Finn (Con)]

My Lords, I speak in support of the amendment tabled by the noble Lord, Lord Burns. I apologise that I was not able to speak at Second Reading, but I did have the pleasure of working on the Trade Union Act in 2016. I well remember the setting up of the Select Committee on Trade Union Political Funds and Political Party Funding. Its report forced the requirement for new members to opt in to the political fund following its recommendations.

The committee was brilliantly chaired by the noble Lord, Lord Burns. I know that phrases such as “showed the best of this House” can sometimes be overused, but in this instance it was absolutely the case. It reported, I think, in five weeks. The secretariat was absolutely magnificent. The most important thing was that it was a cross-party committee and produced a cross-party consensus on the recommendations in all but one area, which I will return to.

One of the key considerations, and the one that is pertinent to this amendment, was the Conservative Party’s manifesto commitment that, in future, union members would be asked to opt in to contributing to their political fund, rather than just being given the opportunity of opting out. At the time, most members of a union with a political fund paid a political levy into the fund unless they took the active decision to opt out of doing so. I remember that the Select Committee spent a long time debating this. I hear the noble Lord, Lord Prentis, who said that this was the established practice for 60 years, but there was quite a strong debate. My noble friend Lord King felt that the King-Murray agreement had not been met in full with the requirements to report opting out.

The report produced some very helpful conclusions. One of the most relevant to today’s debate was that no one challenged the principle of moving from opt-out to opt-in. There were differences of opinion about how and when to make the move and, critically, whether it should apply to existing members, but the report basically accepted the principle. The Labour Party had some understandable concerns. It was fearful that a move to opt-in would mean that many union members would decide not to contribute to the political fund and that such a move was fundamentally unfair.

However, when Sir Nick Clegg appeared before the Committee, he said:

“I regard political opinion, affiliation and support as a sovereign decision for an individual citizen”.


He was, of course, completely right. Opt-in is supported because people should not be assumed to support any proposition, organisation, product or service, simply because they have failed, often through inertia, to say no. Companies have been rightly pilloried when they have assumed that the customer has signed up to something because they failed to tick a box or to see the small print. If a trade union member decides that he or she does not wish to contribute to a political fund, that is their decision; they should have the opportunity to actively choose to do so.

The behavioural experts consulted by the committee gave some powerful evidence about the impact of inertia on human behaviour. At the time, the power of inertia benefited the unions because only 11% of their members made the effort to opt out of the political fund. Under the then Government’s proposals, inertia would work against the unions. Human nature meant it would be extremely difficult to persuade existing members to make an active choice about whether to opt in. Indeed, Dr David Halpern of the Behavioural Insights Team said that analogous situations led him to expect a fall of 20% to 30% in political fund participation rates.

That brought us on to the second consideration, which was that the move to opt in for existing members would have an impact on the funding of one particular party, the Labour Party. On balance, the committee concluded that there would be a significant reduction in union payments to the Labour Party. The committee agreed that one way of easing this dilemma would be to distinguish between the requirements for new members and those for existing members of trade unions. For new members, it was unanimously agreed that opt-in was the correct way forward. Across many different walks of life, it is increasingly recognised that people should be asked to exercise an active choice and that organisations should not rely on inertia. The recommendation that, after a minimum transition period of 12 months, anyone joining a union with a political fund should pay the political levy only if they have actively chosen to do so was subsequently incorporated into the Trade Union Act 2016. It is that consensus that the Labour Party is seeking to undo today with this Bill.

This was not the case in the treatment of existing members. The fear was not of existing members choosing to opt out rather than opt in, but that they would simply choose to make no choice at all. I recall many heated discussions about whether the opt-in system should be extended to existing members, perhaps on a longer transition period than for new members, or whether existing contributors should not be included in the Act—option two. This was because it was feared that extending the opt-in to existing members would have a significant negative effect on union and Labour Party funding, even with an extended transition period. I well recall those discussions. The noble Lord, Lord Burns, talks about considerable unhappiness on our Benches, and he is not understating the case: when the second option was chosen, there were howls of “Bad faith!” It was at a critical juncture in the Brexit referendum period.

I rather subscribe to the view of Sir Winston Churchill:

“It has become a well-established custom that matters affecting the interests of rival parties should not be settled by the imposition of the will of one side over the other, but by an agreement reached either between the leaders of the main parties or by conferences under the impartial guidance of Mr Speaker”.—[Official Report, Commons, 16/2/1948; cols. 859-60.]


Paragraph 115 of the Select Committee report stated:

“If any government were to use its majority unilaterally to inflict significant damage on the finances of opposition parties, it would risk starting a tit-for-tat conflict which could harm parliamentary democracy”.


So, while it is wrong for a Government to use their power to undermine their opponents, it is also wrong for a Government to act in a way that leaves it open to question whether they are acting in the interests of the country as a whole or the interests of their own party.

The Labour Party’s dependence on trade union funds means that a policy could potentially be seen to be up for sale. Just as I had sympathy at the time with the need not to inflict damage on the finances of an opposition party, I find myself now more than a little bothered that the Labour Benches are seeking to unwind the unanimously agreed principle of opt-in so that their own party’s finances will be improved. I am sure that they would not wish to be accused of the abuse of entrusted power for private gain, but that is the effect of Clause 59. It is for this reason, and because of the compelling and universal arguments in favour of opt-in, that I have added my name in support of this amendment from the noble Lord, Lord Burns.

[Baroness O'Grady of Upper Holloway (Lab)]

I am sorry to do this to the noble Baroness, Lady Finn, on her birthday, but she was in a very key position in government for some time, so it would be helpful if, first, she could confirm, on the issue of ballot turnouts, that the previous Government, over their 14 years, received repeated representations from trade unions to enjoy the same rights that political parties enjoy to safe and secure balloting in a bid to boost democratic turnout in ballots, so that we would be able to encourage and engage more members in ballots. What we got, I think, was a review and a promise of a pilot that was never seen again.

Secondly, comparisons were made between trade union membership and subscriptions to commercial services, whereas, of course, membership of a democratic organisation which exists to defend your rights is not the same as a subscription to a for-profit service.

Finally, because we have heard a lot in this debate about balance, can the noble Baroness confirm whether the previous Government ever considered shareholders having the right to veto political donations by companies? I have never even heard of a shareholder’s right to opt out, never mind a requirement that they should opt in before a political donation is made by a company.

[Baroness Finn (Con)]

My Lords, I thank the noble Baroness for her intervention. I cannot speak to the balloting, et cetera, which is out of the scope of this amendment. I can say that shareholders in companies are able to vote at their company’s AGM.

I did not pay tribute in my speech—and I apologise to the noble Lord, Lord Prentis—to the brilliant political campaigns that were run by UNISON when I was in government. They were remarkable, and my support for opt-in does not diminish my admiration for them.

--- Later in debate ---

[Baroness Finn (Con)]

I thank the noble Lord for giving way. I just make the point that all political donations have to be transparently declared. My noble friend sitting next to me can explain more, as treasurer of the Conservative Party, but they are all declared.

[Lord Monks (Lab)]

I look forward to that degree of clarity in Conservative Party funding. We could all be enlightened by the explanation that I believe is about to come. We are talking about an amount of—

Watchdogs (Industry and Regulators Committee Report)

Baroness Finn Excerpts

Monday 9th September 2024 Lords Chamber

[Baroness Finn (Con)]

My Lords, I congratulate the noble Lord, Lord Hollick, on the work of his committee in producing such a comprehensive and insightful report. It has brought into focus an important issue that has a huge impact on the wider public. Many years ago, I worked at the Financial Services Authority at its foundation.

A common refrain from commentators, frustrated with democratic politics, is, “Things would be so much better if only experts were in charge”. However, I suggest that the proliferation of regulators throughout the United Kingdom has tested that theory, and the committee’s report provides ample evidence of the trade-offs inherent in delegating matters to regulators.

As many in this House will know, decision-making in government consists of an endless flow of problems. These problems, almost without exception, involve distributional trade-offs between competing voices in society, each of whom has a legitimate claim on public resources. Every decision creates winners and losers: those who stand to gain or suffer from the effects of public policy. That is why I welcome the committee’s recommendation that, where decisions necessarily involve distributional trade-offs, there should be some facility for regulators to seek guidance from the Government as to how to proceed. There is a good case for making that facility more formal.

The only plausible qualification for taking distributional decisions is democratic consent. Accountability to the electorate is the only effective deterrent for decision-makers to resist the temptation to serve factional interests over wider public interests. Since 2008, the Bank of England has engaged in almost £1 trillion-worth of quantitative easing. In evidence to the Economic Affairs Committee of this House, Bank officials stated that they “hope”—their word—that the effect of this stimulus would be to inflate existing asset prices, making asset-holders richer and thus prompting them to spend more money. That is a distributional decision, the consequences of which impact on us all, and one which Parliament played no role in authorising. I therefore also welcome the committee’s recommendation that the accountability of regulators to Parliament must be strengthened, although I doubt whether the committee’s recommendation for yet another statutory body will enhance that accountability.

The power of regulators is supposedly curtailed by their having clearly defined statutory duties that limit their freedom of manoeuvre. I fully agree with the committee’s finding that many regulators today suffer from a proliferation of conflicting statutory duties that read more like shopping lists than legal direction. However, when a regulator catastrophically fails to exercise its statutory duties, there are seldom any consequences. The 2008 financial crisis was unambiguous evidence of the failure of the institutions responsible for supervising the financial services sector, yet the central culprit of that failure—the Financial Services Authority—was simply rebranded, with some of its responsibilities moved down the street to the central bank. The bulk of its personnel did not change, nor did their working practices. The very culture that gave rise to such failure was left to fester, and the FCA can often seem to take a greater interest in the diversity of the board members of those it regulates than it does in the macroeconomic risks arising in the financial services sector.

The report also makes a number of recommendations about the appointments to regulators’ boards, including the timeliness of such appointments. This is an entirely fair criticism, but, having had some experience of such appointments inside government, I highlight that the data about these important appointments is often woeful. In the then BIS department, it took officials almost six months to pull together the data on upcoming appointments. This is important in the appointments to regulators’ boards, since those who are most qualified to undertake these roles will almost certainly have conflicts of interest and will need to be approached in good time and, often, persuaded to apply. They are not the sort of people who will check the public appointments website, so it is vital that the departments give such appointments the attention that they deserve, with officials of appropriate seniority in charge.

I close by emphasising that regulators, with few exceptions, seem to have fallen prey to the temptation of governing not in the wider public interest but in the factional interest of those they apparently exist to regulate. A different incantation of statutory words cannot resolve this. The only answer, as the noble Lord, Lord Hollick emphasised, is for our democratic decision-makers to play a more meaningful role in the regulation of the British economy.