Baroness Neville-Rolfe
Main Page: Baroness Neville-Rolfe (Conservative - Life peer)Trade Union Bill
Baroness Neville-Rolfe Excerpts(8 years, 9 months ago)
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Lord Ouseley (CB)
My Lords, I want to make a very short contribution. The noble Lord, Lord Mendelsohn, has said virtually everything I was going to say, far better than I would be able to, and I am pleased about that. However, it is important to stress that Clause 15 represents an affront to fairness, justice and proportionality.
The Certification Officer’s independence, impartiality and integrity will be compromised by Clause 15. The new expansive investigatory powers and sanctions being vested in the Certification Officer, from the position of reasonableness, as we have heard, would in effect be likely to result in uncontrolled, unaccountable and non-independent interventions in trade unions’ reasonable and legitimate activities. There is no evidential basis to suggest that the expansion of powers is justified.
I will not repeat the assessment by the Equality and Human Rights Commission, which has been alluded to already, with regard to contraventions of the European Convention on Human Rights. I would like to reiterate one point raised by the noble Lord, Lord Mendelsohn, about Clause 15 and related schedules being relevant to the UK’s other legal obligations, particularly the International Labour Organization’s Convention 87 on the Freedom of Association and Protection of the Right to Organise. Will the Minister please indicate how the Government intend to respond to the ILO committee of experts’ request that the Government review a number of provisions in the Bill and provide comments on the proposals to extend the powers of the Certification Officer?
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills and Department for Culture, Media and Sport (Baroness Neville-Rolfe) (Con)
My Lords, the sore throat that I have been keeping at bay all week overwhelmed me earlier so I apologise to the House. I thank the noble Baroness, Lady Donaghy, for what I think I should call solidarity because she presented me with some Fisherman’s Friends so that I can get through the rest of today. I also congratulate my noble friend Lord Courtown on his interesting contribution to the Committee’s proceedings, and all noble Lords who have spoken in this important debate.
In our manifesto, we said that we would reform the role of the Certification Officer and we are doing just that with, it is fair to say, a great deal of scrutiny in this House. The Certification Officer has responsibility to consider complaints relating to important union processes. It is vital that we have confidence that those processes are conducted properly. For example, the Certification Officer can consider complaints in relation to union leadership elections, union mergers or the accuracy of trade union membership registers—which matter a lot if there is a ballot—or to ensuring the removal from a union office of a person who has been convicted of certain financial offences.
I would argue that there is a legitimate public interest in trade unions running their affairs according to what is required of them. It is not always the case that union members will know their union’s regulatory duties. That is why a responsive and diligent regulator is necessary. I hope that is agreed.
Lord Collins of Highbury
If I may interrupt, it is a shame that the noble Lord, Lord Forsyth, is not here because it is important to remember that the reforms of the 1980s, if I am to believe him, were about ensuring that trade unions were representative of and controlled by their members. That is what those reforms were about. I am happy to place it on record that I do not want to see us ever go back on some of those laws. It is a real shame that the Minister is confusing those obligations of a free association, which are to be guaranteed, and then saying that there are other interests which need to be regulated. Can we not go back to what Margaret Thatcher said and ensure that we have free and fair trade unions, controlled by their members?
Baroness Neville-Rolfe
My Lords, I do not think that I have a great deal to add on that point now but I have some observations which, with the noble Lord’s agreement, I will move on to. Before doing so, I will comment on the question which the noble Baroness, Lady Donaghy, rightly asked about whether we got the impact assessment wrong. My understanding is that it was not a mistake. The point is that the public in general have an interest in good regulation—in employers, in employees, in families and in the wider public. That is perhaps what we should have said. We are scrutinising this but I am not seeking to change the impact assessment, which has obviously been looked at carefully in the usual way.
Of course the provisions in the Bill have to be proportionate and give effective regulation. As I see it, we are bringing the current powers of the Certification Officer up to date with the accepted normal situation in other sectors. I shall leave the financial services sector on one side, because I want to get through the debate this evening, but perhaps I could give some other examples. There is the Information Commissioner’s Office and the Groceries Code Adjudicator, which has been mentioned. The Charity Commission, the Electoral Commission, the Gambling Commission, Ofcom, the Food Standards Agency, the Environment Agency, Natural England, and Ofwat—it is a long list—can all consider representations from third parties and undertake investigations if appropriate.
I am not sure whether I agree with the noble Lords, Lord Mendelsohn and Lord Oates, on the subject of the costs. The Certification Officer has given views on the potential costs necessary to undertake the new regulatory function and I understand that his comments were consistent with the estimates we have set out in the Bill’s impact assessment. I think he said, rightly in my view, “I do not want to employ rafts of people only for them to be underused. I want to see what happens and increase numbers as appropriate”. My understanding is that we agree that the annual cost will be around £2 million. However, to respond to the point made by the noble Lord, Lord Oates, although I can confirm that the Certification Officer was not consulted before the Bill entered Parliament, we have engaged with him and will continue to do so as we move towards implementing the reform. As the noble Lord, Lord Stoneham, suggested, we want to continue a tradition of good compliance.
Lord Stoneham of Droxford
I am very reluctant to test the Minister’s voice, as I understand it is wavering a little, but she is proposing to increase the regulator’s costs by four times, and yet we are only going to see a modest increase in complaints. Is that a good use of money?
Baroness Neville-Rolfe
I think so. It is important that we have an up-to-date regulator. The £2 million that I mentioned is the upper end of the range in the impact assessment. Obviously, we do not know the figure for certain, and as we have said, we are going to continue to consult the Certification Office. Under a later amendment, we will come on to discuss the levy that will meet the cost.
Amendment 117A seeks to establish a separate independent adjudication panel whose decision will be required before the Certification Officer is able to exercise his powers under Clauses 15, 16 and 17 of this Bill. As I have already explained, it is common for regulators to make proactive investigations or to have the power to initiate investigations and then decide to take enforcement action where a breach of rules or statutory requirements is found—the point that was made about judge and jury. There are various regulatory models in the UK: many regulators—for example, the Information Commissioner, the Charities Commission and the Groceries Code Adjudicator—have internal processes for ensuring fair decision-making. They do not, however, have their decisions made by an entirely separate body that oversees their work.
In view of the Certification Officer’s independence—I emphasise to the noble Baroness, Lady Donaghy, that this will be an independent regulator, not a political appointment—it is only right and proper that procedures for investigations and decisions will be up to the Certification Officer. The Certification Officer has in fact recently referred to his early thinking on how best to manage his functions in the light of the requirements in the Bill. A range of different models is used by regulators, and we will have further discussions about the implementation processes with his office. The union will also of course have the opportunity to make representations to the Certification Officer before any decision is made. There will continue to be a right of appeal to the Employment Appeal Tribunal.
The noble Lords, Lord Mendelsohn and Lord Ouseley, asked whether the reforms were in breach of international obligations under the ECHR or ILO. It is important to be clear what the powers will be. The Certification Officer will be able to investigate and to determine whether there has been a breach, and then take enforcement. The decisions are then appealable, as I have said, to an independent tribunal. This is standard for regulators, and it has been established that this framework is compatible with Article 6 of the ECHR.
I am very grateful for the work of the noble Baroness, Lady O’Neill, on human rights, both in this House and more generally in the country. She asked whether Article 11, the freedom of association provision, might be breached. The Government do not think that effective and proportionate regulation infringes Article 11 rights, and our reforms do not interfere with the right to join trade unions. Having said that, I have listened carefully to the points about the oversight of the Certification Officer’s decisions, and I would like to reflect on them in the light of discussion.
The noble Lord, Lord Mendelsohn, asked about access to sensitive data. He was concerned that the Certification Officer would have quite a bit of sensitive data—a concern close to my heart. As I have said, the CO is independent from Ministers; the Government will not be able to see any sensitive data that he or she may hold. When handling data, the CO and his or her inspectors will need to comply with the provisions of the Data Protection Act. Any inspector whom the Certification Officer appoints will have a duty of confidentiality. The CO is also under a statutory duty to act consistently with rights conferred by the ECHR, as I have already said. Those are important provisions.
I come finally to the question that a number of noble Lords, including the noble Lord, Lord Oates, have raised about the risk of vexatious complaints using the new power. We are extending the potential to make complaints for members only to third parties. Concerns have also been raised that the Certification Officer might feel duty bound to examine all complaints, which could be very costly. I do not see it like that. Let me first reassure noble Lords that the obligations on concerns from third parties are different from those relating to union members. So while currently the Certification Officer must make inquiries following a complaint from a trade union member, he or she will be under no such obligation with concerns from third parties. He or she will be able to exercise judgment based on the evidence presented as to whether there are sufficient grounds for further investigation. The Certification Officer will remain independent, with responsibility for delivering against the statutory objectives. As I said, his or her enforcement decisions will remain subject to appeal.
Lord Oates
Has the noble Baroness consulted the Certification Officer in this respect? The evidence that he gave to the Select Committee does not suggest that his view is in line with hers. He was certainly concerned about judicial review if he did not investigate third-party complaints properly.
Baroness Neville-Rolfe
As I have said, we are planning ongoing discussions with the Certification Officer, and it will be sensible to revisit that point. But this is the way that we see it in the light of practice in other regulatory areas. I add, if I have not said it already, that enforcement decisions will remain subject to appeal. I suppose that that was the point the noble Lord was making—we have to be careful with systems of appeal.
The Certification Officer reports on the complaints he or she considers in an annual report, which is submitted to Parliament. His or her activity and decisions can therefore be the subject of public scrutiny.
The setting up of a separate body to oversee the Certification Officer’s work would, I believe, create additional costs and increase legislative complexity. It could slow down action, allow genuine complaints to go on for longer without being addressed, which is the last thing we want, and go too far in the regulatory direction—noble Lords will be glad to hear me say that.
We will be discussing the levy on a later amendment, but—to respond briefly to the noble Baroness, Lady Donaghy—there is no intention to penalise anyone. The system simply has to recover the costs of its constituent expenses. The Bill provides scope for regulations to provide for different amounts to be charged. This will be deployed if the proportion of functions provided by the Certification Officer to certain organisations is different. That is proportionate and fair, and in line with Treasury guidance. Whether the regulations will specify that different amounts are to be charged in these circumstances will be subject to the outcome of consultation, which seems the right approach. I believe that setting up an entirely separate body to oversee the Certification Officer’s work would be unnecessary.
I have managed to get through my speech without another Fisherman’s Friend, and I ask the noble Lord to withdraw the amendment.
Lord Mendelsohn
My Lords, let me deal first with the two chinks of light. The first was that the Minister said that the Government will look at the arrangements where the Certification Officer absorbs all the investigatory and adjudication roles. Secondly, her case against having someone to look independently at adjudications as a means of oversight—the case against the enforcement of human rights—was that it was too regulatory. That breaches the principle that she is espousing in the first place. I do not think that the case has been made for regulation, and I do not really understand the architecture for the regulator. I do not understand the model or where we are going on this. I do not think the Minister has made a case for where there are comparable institutions or why, just because this impacts on the public realm, this is a proportionate role and one with any appropriate objectives.
The noble Lord, Lord Flight, tried to make a case for regulation—bizarre as I felt it was. We believe in better regulation—sometimes less, sometimes more— but there has to be a case for it, and there is not for this measure. The point about why this is different from general consumer or other rights matters was extremely well made by the noble Baroness, Lady O’Neill, who has made it before. We are dealing with fundamental rights, which are vastly different to the other sorts of rights that the noble Lord was addressing. I do not think that the Government have taken that point on board at all.
I am very concerned about this extension, because it cuts to the heart of our debate. It is not really about members who are not getting the right service and ensuring that unions are operating properly within the rules. We just have to read the impact assessment, which, it is now apparent, was written long after the Bill was published, without consulting any expert and with no real evidence. It identifies, as does the Bill, the particular areas that it covers as: political fund rules, political fund ballots and expenditure on political objectives. Then there are the areas that the Minister was prepared to address: union mergers, internal elections and other such things. It is absolutely clear that this is targeted at political matters.
The Minister has not addressed the warnings that came from the Certification Officer. In his same evidence to the Select Committee—we could almost recite his entire evidence and ask the Minister to respond to it—he talked about the growing uncertainty caused by the legislation:
“In my experience, uncertainty gives way to litigation, and there are a number of issues that could give rise to uncertainty. It is not only members who can complain to me about these things; anyone can raise them with me. Given the political nature of the subject matter, which is likely to be highly contentious, and the fact that what is reported to me is likely to be forensically examined, I can see many more issues being brought to me about what is reported”.
The nature of trying to open up all political matters provides a completely different sense of what the Government want the Certification Officer to do. It is about the regulation of people’s free right and ability to join together and have political views, and they want third parties to be able to intervene on them. That is wrong.
The noble Lord, Lord Stoneham, made exactly the right point about the cases raised in the Certification Officer’s report. There were 19 complaints, and four declarations were made that a union had breached or threatened to breach its rules. What were those issues? The cases of note that the Certification Officer addresses are: case 1, union disciplinary procedures; case 2, internal disciplinary procedures; case 3, the elections for general secretary and issues relating to members in long-term arrears; case 4, internal disciplinary procedures; case 5, internal disciplinary procedures; and case 6, a removal from office of an official. All of a sudden, every third party is now going to have a chance to raise issues on every political matter. That is just not credible.
Baroness Neville-Rolfe
My Lords, I have dealt with the issue of vexatious claims. Whenever you try to modernise a regulator—and this is a regulator, albeit not the Financial Conduct Authority—the people who are regulated obviously have concerns. We are debating those concerns, but that does not mean to say that the extra regulation we are bringing in, which does not seem nearly as wide-ranging as everybody is suggesting, is unnecessary. Noble Lords should remember that the accuracy of trade union membership registers affects the results of ballots and other very important things. These matter to the economy.
Lord Mendelsohn
I accept the last point, but the report itself demonstrates that there are no problems with that. What is the case for any additional intervention? Can the Minister present me with evidence of any particular case or circumstance—anything, a report or a press cutting? I shall go on for a bit longer to give her the chance to respond on that point.
Lord Mendelsohn
That is another extremely good point from the noble Lord, Lord Stoneham.
Baroness Neville-Rolfe
The truth is that at the moment the only people who can complain are the members. We are not hiding the fact that there is a change here, so you might have extra complaints, but I think that that is right if we are going to get this regulatory area correct, because of the wider point I was making. I have to say, I do not think we are going to agree on this issue. I look forward to hearing the noble Lord’s final comments, as we have a number of other amendments to move on to.
Lord Mendelsohn
I thank the Minister for asking me to hurry up, but I am going to take my time in addressing this, because this is our main opportunity to deal with the major points of principle—although, as I said, we will get on to some more technical matters. She has not made a case or provided evidence, and it is worth continuing to probe these issues. The evidence is there in the Certification Officer’s comments that at this stage, in their obligations to collate that material and in the penalties and breaches available, unions are not transgressing and there is no such case. That is a very important principle. She raised a series of issues, and I am very happy to receive a letter establishing that they warrant the grounds on which the regulation of penalties on such measures can be extended, and include political matters. The key point is that it is not just about the regulation of those matters; she is trying to regulate the ability to have a political view together, and to associate. That is the fundamental difference. It is not about regulating other things or about the ability of a board of directors to have a particular view; it is just about trade unions. That is fundamental and really important.
Turning finally to the important issue of costs, the Minister is not on the same page as the Certification Officer, but I will be happy to receive a letter about that, as I am sure other noble Lords will be. The impact assessment refers to the great benefits—including the fine revenue and the levy revenue, although it does not give a figure for the investigation cost levied on trade unions—and identifies extra costs that are much lower than those identified by the Certification Officer: much lower even than if you established the nature of the cases and the type of evidence she is now expecting unions to pay to assemble, to their detriment. It is very important that she understands that my fundamental problem with how the cost-benefit analysis is presented is that at the very end it says, under benefits, that members of the public will benefit from a strongly regulated regime. Members of the unions will not—they will be burdened by the shackles of cost and by a greater interference from vexatious claims, and probably ministerial interference or direction from the Certification Officer. It is not clear that there is a public benefit at all. We will certainly come back to this issue on Report, and I ask her to think again very carefully about it. I beg leave to withdraw the amendment.
Baroness Donaghy
My Lords, I have one point about the impact assessment that relates to the previous issue, but I think it better if I write to the Minister rather than take up a lot of time. I am quite concerned that a market failure argument is used. I understand about union behaviour and imperfect information between employees and trade unions, but I do not understand the point about imperfect information between employers and trade unions. That is not the role of the Certification Officer. If it is intended that it will be in future, it puts the whole industrial relations scene on a very different level, but I will drop the Minister a line about my concern.
Baroness Donaghy
I shall speak also to Amendments 102, 103 and 105. Amendment 101 goes over some of the ground that we have already covered. It would restrict the power to require the production of documents to the Certification Officer and his or her staff. Amendment 102 would require a complaint to be made by a union member and for the Certification Officer reasonably to believe there was evidence of a breach of an obligation before he or she initiated an investigation. Amendment 103 would require a person investigating a breach of an obligation by a union to be a member of the staff of the Certification Officer and not “other persons” as vaguely written in the Bill. Amendment 105 would require the interim report of the person investigating a breach of an obligation by a union to be sent to the union concerned, which is a new point and, if anything, represents the one improvement in the whole area of the schedule.
The concern is that the Certification Officer and inspectors will have wide-ranging powers to demand the production of union documents and access to membership records, members’ names and addresses and correspondence between a member and their union, even though no union member has raised a complaint about the union’s practices. I am also seriously concerned that the evidence threshold that needs to be met before these wide-ranging powers are triggered is very low. The CO will be able to demand access to documents if he or she thinks there is good reason to do so. The CO would not need to have substantial evidence demonstrating that the union has breached any statutory obligations. Requests for union documentation would not be limited to union head offices, and the CO and any appointed inspectors would also be able to approach branch offices and regional offices to request documents.
These powers represent a serious violation of union members’ rights to privacy, as protected by Article 6 of the European Convention on Human Rights, as has already been said. Many individuals do not want their employer or, indeed, the state to know that they are a member of a union for fear of victimisation or blacklisting which, as my noble friend Lord Mendelsohn said, unfortunately still exists today. The Bill may therefore deter individuals joining unions and benefiting from effective representation at work. This will undermine the right to freedom of association. I know that the Minister has said that this information will be confidential to the Certification Officer, but that is not necessarily the perception that will be held by individual union members, who will fear that the information may get out to the public, particularly if they find out that the complaint or investigation has been initiated by a national newspaper or a political party. Perceptions are extremely important on that. It is not surprising that, as the noble Lord, Lord Ouseley, has already referred to, the ILO committee of experts has called on the Government to account for their proposal to increase the powers of the Certification Officer.
I hope the Minister will understand that it is quite important from the point of view of the standing of the Certification Officer that any complaints are confined to union members. I do not think there is a case for any external inquiries. If anyone in the public thinks that there is some illegality going on in the unions, there are different ways of investigating that which have nothing to do with employment relations. I beg to move.
Baroness Neville-Rolfe
My Lords, I thank noble Lords for these amendments. In considering them it is important to reflect first on the approach and safeguards that already operate with regard to the Certification Officer’s current power to investigate a union’s financial affairs and how they will continue to operate after these reforms are adopted. In response to the final point that was made, I agree that impartiality is critical. As with all regulators, that is an absolutely essential point and it is possible to get into a terrible mess, so I assure the House that the Certification Officer’s impartiality will continue.
As I have already said, the Certification Officer will continue to be under no obligation to undertake an investigation. They will remain independent, subject to delivering against the statutory objectives. His or her judgments will remain subject to appeal, where he can be challenged through an independent process for the conclusions he or she reaches. In exercising the current powers to appoint an inspector, the Certification Officer needs to be satisfied that there were circumstances suggesting a breach. That will continue after the reforms.
When we reflect on how the current system works we see that the Certification Officer has acted proportionately and only when satisfied that the relevant tests have been met. There is no reason to believe that they or their successors would act any differently in future, and there is certainly no evidence to suggest that a more onerous test for these powers is necessary.
It is also important to reflect on the nature of the investigatory powers which, as I have said, are very similar to the Certification Officer’s long-standing powers to investigate financial affairs. That includes the power to appoint an inspector who is not a member of the officer’s staff. That approach has been in place for a long time, so we are continuing with that long-standing approach.
Before I comment on one or two of the other amendments I will just respond to the point made by the noble Baroness, Lady Donaghy, on the potential breach of Article 8. The investigatory powers will give the Certification Officer access to members’ information. Access to such information may be needed to determine whether there has been a breach of relevant obligations—I am sure the noble Baroness would agree with that. I made two key points in response to the question on data and data confidentiality, which she picked up in her comments about the need for confidentiality and to obey the Data Protection Act—although I note her comment about how people might feel, which is always a fair point. However, the key issue is that the Certification Officer will be under a statutory duty to act consistently with rights conferred by the European Convention on Human Rights, including Article 8, so we have to set it up in a way that does that.
Amendments 101 and 103 aim to restrict inspection activities and Amendments 102 and 104 place controls on the appointment of inspectors, which the noble Lord, Lord Oates, was concerned about. We envisage that most inspections will be carried out by the Certification Officer or their staff. However, the reforms allow the Certification Officer to bring in additional resources, as the noble Lord said, or, perhaps more importantly, specialist knowledge should an investigation prove very technical or complex. This approach is not new. This flexibility has been used rarely, specifically to supplement auditing skills in relation to investigations into a union’s financial affairs, and it seems appropriate to bring in such skills. It will give the Certification Officer flexibility in choosing an appropriate inspector to deal with investigations swiftly and effectively. This is common among other regulators, including smaller ones. For example, the Office of the Regulator of Community Interest Companies and the Charity Commission can appoint outside people to conduct or help with an inquiry if that makes sense.
Finally, Amendment 105 allows unions the opportunity to see an inspector’s interim or other reports before a final report is compiled. I am not sure that there has been much debate about this. I believe that this would be unhelpful for unions. Any investigation is likely to give a union several chances to state its case to the inspector before a report is finalised. Furthermore, requiring the inspector to provide interim or other copies of his or her report will serve only to slow down the inspection process.
I assure the Committee that the law will continue to require that a union must always have an opportunity to make representations to the Certification Officer before any enforcement decision is made following an investigation. That seems to me very important. As we have discussed, a union also has a right of appeal against any decision to issue an enforcement order.
I hope that some of that explanation is helpful and that the noble Baroness will feel able to withdraw the amendment.
Baroness Donaghy
I could make a number of points. I think the Minister has underestimated the issue of the perception of the individual member who finds himself or herself in the middle of all this. I think that just having an assurance that there will be confidentiality and that the objectivity of the Certification Officer will remain the same will be a bit more difficult to accept in the context that 99.5% of the cost of the levy will be met by the trade unions.
Incidentally, I may well have got that figure wrong. Apparently I was wrong in referring earlier to 26p. I should have referred to a cost of £26 per employer organisation, so I put that on the record and apologise. However, I am certain that 99.5% of the levy cost will go to the trade unions. That does not look like a fair allocation and, in the context of that unfairness, it will be difficult for people to think that they will be treated fairly.
In the light of the time of day and the fact that we have given this matter a good airing, I beg leave to withdraw my amendment.
Baroness Neville-Rolfe
I start by responding to the noble Lord’s questions. On cost, I thought that that aspect of the impact assessment was quite helpful and clear, but I will look through it myself in the light of the questions that the noble Lord has asked and drop him a line. I will copy it to others who are interested, in all the nooks and crannies of this House, which I think is what we agreed on our previous day in Committee.
I also think that I went into some detail on the last amendment about how I saw judicial review and how the Certification Officer would need to act when looking at external, third-party complaints. But again, I will look at what I said, see if there is anything useful that I can add and cover that in the same letter.
The amendments seek to retain the current position by preventing the Certification Officer from making inquiries or taking enforcement action unless a complaint is received from a member in relation to two specific obligations—the duty to secure positions not held by certain offenders and a failure to comply with political ballot rules. As I have explained, the current system is reliant purely on complaints from union members. This relies on union members being aware of all the obligations on their union and of any failures to comply with them. Enabling the Certification Officer to consider potential failures without having to wait for a complaint from a member will enable him or her to take action should information on serious matters come to light, regardless of the source. That is consistent with our reform towards a more responsive and diligent regulator.
The noble Lord, Lord Stoneham, asked what the Certification Officer had said about these reforms. The Certification Officer set out how he might deal with the reforms and how they could be implemented when speaking to the committee.
Lord Stoneham of Droxford
Did he say that they were needed? That is the key issue that we need to know.
Baroness Neville-Rolfe
I am not clear whether there is yet a Hansard record of what he said.
Lord Stoneham of Droxford
I thought that the Minister said that, although the Government did not initially consult the Certification Officer, they had now done so. He has, it is perfectly true, appeared before the Select Committee and made certain views known, but I would have thought that it would be helpful for the Government to ask him his views, why he thinks reform is necessary and what powers he wants.
Baroness Neville-Rolfe
As far as I know, he has not given a view on that either in the committee or elsewhere. We consulted him on the implementation of proposals which obviously the Government have set out and believe to be necessary.
Like other noble Lords, I hope that the powers we are discussing under this amendment rarely need to be used because that would indicate compliance, which must be the goal of any good regulatory system. However, in the circumstances of failure coming to light, the Government strongly believe that the Certification Officer should be able to respond. It is important that we have a consistent and credible approach for all the reasons that we discussed earlier. I hope that these comments have been helpful and that the noble Lord will feel able to withdraw his amendment.
Lord Stoneham of Droxford
I thank the Minister for her reply. We have had a long debate on various aspects of the role of the Certification Officer. I shall withdraw the amendment, but I am sure that we will return to this on Report.
Lord Mendelsohn
I want to raise a couple of quick questions which I hope that the Minister will be able to respond to. I am speaking in support of the amendments and to seek clarity on some of the questions which have been raised by my noble friend Lady Donaghy in her amendments. We have debated provisions that place in our view an unnecessary burden and level of regulation on trade unions. Clause 6 places an obligation on unions to report to the Certification Officer in their annual return the details of any industrial action taken, while Clause 11 places an even heftier duty on unions to include details of political expenditure exceeding £2,000 in their annual returns.
Clause 16 gives the Certification Officer quite a bite to ensure that unions abide by these obligations. The Certification Officer will now be able to declare an “enforcement order” against any union which does not follow these measures. Noble Lords will recall how earlier in Committee we debated the concerns expressed by smaller unions that would not have the resources to comply adequately with such regulation. Will the Minister consider any allowances or safeguards where small unions genuinely do not have the manpower to abide by these provisions?
This clause further enhances the role of the Certification Officer by giving the office the same consideration that a court would be given. New subsection (12) indicates that:
“An enforcement order made by the Certification Officer … may be enforced by the Officer in the same way as an order of the court”.
This seems a little extreme and I would be grateful for any examples the Minister could provide on similar bodies which have the powers of the court.
I should like to make a brief comment in relation to Amendment 109, which would remove new subsection (13). The central argument for doing so is because it just does not make sense. I would be grateful if the Minister could explain it to me.
Baroness Neville-Rolfe
My Lords, I thank the noble Baroness, Lady Donaghy, for her commendable honesty. I will seek to provide some reassurance on this, which is essentially a technical discussion. I think that there is a reasonable explanation; let us see how it goes.
In the current legislation a union member—so it is a member—can apply to the court to ensure that a union complies with an order of the Certification Officer. That is a long-standing provision of the current legislation, which we heard about. However, to reflect the Certification Officer’s investigation powers we thought it would be helpful when drafting the legislation to remove any doubt that his own orders may also be enforced, as an order of the court, by the Certification Officer. In doing so, the drafting of the Bill reiterates the existing rights of the applicant member and other members mentioned in relevant sections of the current legislation. The words in Clause 17 that the noble Baroness seeks to amend simply refer to those existing provisions. I do not have any examples, but I will see whether we can find one. The main example is that that is existing practice, but I will look at other regulators and add it to my letter.
I am sure that noble Lords would agree that, if the Certification Officer had found that a union was not compliant with its obligations and it did not rectify the situation, it must be right that a union member should continue to be able to take action to protect their interests.
I hope that that provides some reassurance and that the noble Baroness will feel able to withdraw the amendment.
Lord Collins of Highbury
I need clarity on this. Currently, where the Certification Officer publishes a decision and an enforcement order, the member can go to a court; having been before the CO on many occasions I am aware of the process. Is the noble Baroness saying that the CO will now be able to see enforcement through the courts on his own?
Baroness Neville-Rolfe
My Lords, my understanding is that the orders of Certification Officers are already enforceable as an order of the court under the 1992 Act, so we are just continuing that position.
Lord Mendelsohn
To clarify, the Bill gives over the powers of the Certification Officer. His order can be enforced without going to court.
Baroness Neville-Rolfe
I do not think that that is right, but perhaps I can write and clarify in the follow-up if I do not receive advice quickly.
On small unions, details of the application of financial penalties, including the maximum level of penalties available to the Certification Officer, will be set out in regulations. Of course, they will be subject to the affirmative resolution procedure, as we discussed. In setting maximum amounts in the regulations it will be possible to take into account the type of breach and the size of the union.
I will write to confirm that the answer to the noble Lord’s point is no and that it requires an application to the court.
Baroness Donaghy
I thank the noble Baroness for her reply—I think. The best thing for me to do at this stage is say that I will look at Hansard, because I am not entirely clear. The negatives have become so negative that I am not quite sure how many stages it has got through and what it actually means. At this stage, I will withdraw the amendment, but I may follow it up if I do not understand the reply.
Baroness Neville-Rolfe
As this is a technical point where there does not seem to be much difference between us, we can always have a discussion on what it means and involve the officials who drafted the provisions, who I think were trying to repeat an existing provision.
Lord Dykes (Non-Afl)
I rise to intervene briefly, having listened carefully all afternoon to our exchanges. I thank the noble Lord, Lord Stoneham, for his remarks, and I fully support both this and the previous set of amendments. The more one thinks about this obnoxious, sad little Bill—well, it is a fairly big Bill, I suppose—the more one has deep misgivings about it.
I do not mean to embarrass the Minister, but I genuinely thank her for being a listening Minister on this occasion, and for listening very carefully. It is obvious that the Bill has been contrived, through the interstices of the central office apparatus of the party in power, to produce something that does not reflect the reality of modern trade union/employer relations. I cannot think of any examples, in respect of our exchanges on Clause 16 onwards, where employers have asked for anything in this field. That is fairly telling. Normally, Governments respond to legitimate lobbies, but that has not happened on this occasion.
I look back—it is a long way—to when I first entered the House of Commons in 1970 and the nightmare of the Heath Government, the National Industrial Relations Court, the Official Solicitor being called on to adjudicate, the dockers on strike, and all the rest of it. That all arose from anti-trade union legislation built on principles of prejudice, dislike and antagonism, rather than genuine constructive industrial relations—the kind of thing we see routinely in Germany and other civilised European countries where there is a much more balanced picture.
Given that the Minister has been a patient listener, and given that an expectation is building up that we will return on Report, which, if my memory serves me right, will be on 14 March, to lots of these fundamental points, I ask her, at this late stage in the Committee—we only have a short time to go before we conclude this four-day Committee stage—to indicate that she will come back with modern modifications to reduce the onerous and extreme extra bureaucracy being placed on the Certification Officer’s activities. They are not necessary and have not been requested by anybody, least of all the professionals in that department. I ask that she listen to these correct objections.
I am glad that the Liberal Democrats have been involved in objecting, and not just the Labour party, which is the main expert on industrial relations. It shows the authority of the genuine overall opposition—including on these Benches—to these really undesirable measures in a Bill that is widely unpopular among the people observing it. It is a pity that many are not bothering to observe it; they should be, because it is one of the worst examples of the Government’s illegitimate use of a so-called mandate based on 24% of the electorate. It is nowhere near a genuine majority of people in this country. People want proper, modern, civilised industrial relations that do not oppress trade union members.
I thank the Minister for her patience. She has the chance to indicate, either in her reply today or on another occasion, that, when the time comes, the Government will respond and make sure there is a definite change in the text of these clauses.
Baroness Neville-Rolfe
I thank Lord Mendelsohn for the amendment. This short debate has raised an important question about the proportionality of penalties for breaches in this area, and I want to emphasise the seriousness with which we should all view the requirements and obligations on unions. The impact assessment helps us to have a useful discussion in this House. It reflects conventions—I do not always agree with the conventions, as I am sure noble Lords opposite will remember, but penalty estimates are one bit of good practice that is rightly included when these assessments are prepared. I emphasise that it is not a target. It is about encouraging good compliance, including as a deterrent, and creating and maintaining public confidence by removing those unfit for union office and ensuring accurate trade union registers. Union leadership elections or political fund rules and ballots should all be carried out according to due process. Any irregularities, quite rightly, would raise concerns and damage confidence among not only union members but employers and the wider public.
We intend that the maximum penalty would vary according to the seriousness of the breach. This is a normal approach among regulators. Within this maximum, the Certification Officer may also set a lower penalty, depending on the circumstances of the case. In a number of areas that the Certification Officer regulates, he is currently limited to being able to make an order requiring the union to correct a breach. There is nothing to sanction a union that has failed to comply with a requirement, no matter how significant the failure. The additional option of a financial penalty being applied will ensure that appropriate sanctions are available as a remedy and a deterrent, as I have said.
Lord Stoneham of Droxford
Is the Minister going to give an example of where due process has not been followed which justifies extending enforcement powers?
Baroness Neville-Rolfe
The honest answer is: not this evening. Obviously, we are making the regulator more responsive. We are making some changes, and one of the things you look at when you review regulators is what the appropriate penalty regime is, and that is what I am proposing.
Lord Stoneham of Droxford
But normally when you reform a process, it is because something is not being enforced properly. I ask again: is there an example of where due process has not been followed?
Baroness Neville-Rolfe
I do not know the answer this evening. I am not sure I am going to give way on this point. We are setting up a modern regulator and a modern regulator needs appropriate penalties. We can argue about the exact detail of the penalties and I am going to come on to say something of a listening kind.
The range of the penalties that we propose mirrors that available to bodies that I see some parallel with, such as the Electoral Commission, which has a maximum of £20,000 in relation to the civil penalties that it can impose; I think it does criminal penalties as well. The national minimum wage regime also provides for penalties of up to £20,000 per worker. Our general approach is that a strong civil sanctions regime is an effective way of ensuring rapid compliance. That is why we do not think that the amendment, which seeks to reduce the fine to £5,000, would be sufficient.
We want to get this right. As the noble Lord, Lord Dykes, said, we are trying to listen during Committee. Obviously, we will consider and reflect on the debate in the House before bringing forward further details, particularly of the application of these penalties and how they would work. I ask the noble Lord to withdraw the amendment.
Lord Mendelsohn
I thank the Minister for that reply. I think the noble Lord, Lord Stoneham, has really put his finger on it. The issue here, which we think is of considerable concern, is that there is no evidence that actions are not complied with or such orders are not dealt with adequately. It is certainly true to say that the Government are extending this significantly and placing potentially terrible burdens on smaller organisations, which may have tremendous problems with them.
As we move to Report, the Government have to make a better case than they have made thus far. They say that it is important to restore public confidence. I think this is setting people up for a fall and that is not how you instil public confidence. To me, it is more like the action of a bully and I regret it. I hope the Government come back with a much better justification.
Baroness Neville-Rolfe
I have already said in a previous discussion that we very much understand the point about small unions. I reiterate that. In the interests of brevity, I have not repeated it under this heading. We are looking to get the detail of this right and look forward to further discussions on the subject.
Lord Balfe (Con)
My Lords, I will make a couple of points about new Section 257A(4) in Clause 18, which covers the amount of the levy. They could have been made at various points, but they are probably as well made here as anywhere else. Before I start, can the Minister confirm that the various letters and information mentioned today will be sent to all noble Lords who have taken part in this debate?
Baroness Neville-Rolfe
The noble Lord will be aware that I have already said, in promising letters, that I will ensure that they go to the nooks and crannies of the Chamber, which I think would include those involved in the debate today. We will of course take a careful look at the list.
Lord Balfe
I will not admit to whether I am a nook or a cranny, but I thank the noble Baroness for that.
The impact assessment says that the Secretary of State is,
“to be given a power to make affirmative regulations … The regulations will include a requirement for the Secretary of State to consult trade unions and employer associations on how the fees should be calculated”.
Could the Minister give us any indication about what level of consultation of trade unions will take place?
The impact assessment then says in paragraph 287:
“They will also limit the fees to cost recovery, and provide that the membership size of trade unions … may be taken into account when the fees are calculated”.
This is obviously quite important, and I will come back to it in a minute. It then goes on to say, in paragraph 294:
“The change to the operations of the Certification Officer will not change the costs faced by compliant unions”.
I am not sure I understand that, because if the costs are going to go up, that must surely change the fees, because they will have to go up to meet them. In paragraph 295, the assessment repeats what it says in paragraph 287:
“The mechanism in which the levy will be calculated will be consulted on with trade unions and employer associations”.
Can the Minister give us some idea of how that will take place?
A little further on, paragraph 297 says that,
“secondary legislation will set out how the levy will operate in more detail … a further impact assessment will be needed for the secondary legislation”.
Could the Minister give us some idea as to where we are with that impact assessment? Is it in process and will it be produced after the legislation is adopted? What will happen?
Finally, paragraph 299 says:
“The design of the levy will consider the inclusion of specified criteria such as the number of members or amount of income an organisation has”.
I have raised this privately with the Minister, but make no secret of the fact that a number of these smaller unions are concerned at the impact this levy will have on them. Particular concern has been raised with me by a number of the smaller unions about the difference in costs that could be incurred because a large union with a political fund—for example, Unite—could end up costing the regulator a lot more to regulate than a smaller union without a political fund, such as the British Dental Association.
I am sure that the Minister cannot say anything tonight, but I would like her to agree, in working out how the levy is to be apportioned, to look, first, at giving due regard to these smaller unions—hopefully some sort of graded system will be introduced. Secondly, will consideration at least be given in the consultation to the fact that unions that have chosen to have a political fund, which is of course regulated separately, should pay an extra part of the levy so that, in other words, the levy for the supervision of the political fund will not be placed on unions that do not have a political fund?
I know that these are rather small and technical points, but they are quite vital to small trade unions. If you are looking at a fourfold increase in costs, and these costs being placed on the unions for the first time, coming on top of other costs that they have recently had placed on them, this is a serious financial burden for the smaller unions in the TUC. Many of those smaller unions, which represent important professional subgroups within the population, play an extremely important part. Some people will say that they can always be taken over by big unions but that, to my mind, is not the solution. The smaller unions of this country play an extraordinarily important part in safeguarding the pay and conditions and bringing the detailed knowledge to bear for important groups of largely, I confess, highly professional workers. They do a valuable job, and in constituting this levy and working out where it falls, I hope that the Minister can assure us that due regard will be given to the points I have raised.
Lord Mendelsohn
My Lords, Clause 18 gives the Secretary of State power to make affirmative regulations to provide for trade unions and employers’ associations to pay a levy to the Certification Officer. The amendments in this group attempt to remove any ambiguity over how a levy would be imposed on the trade unions and limit vast increases in the cost of the Certification Officer. These are probing amendments to try to establish where we are. I must say that the powerful speech by the noble Lord, Lord Oates, was significant, and I share his sentiments.
The impact assessment on the levy states that membership size and income will be taken into account, without giving any detail of how it will be calculated and how the costs will be shared between unions. As matters stand, there is no indication as to how the levy might be applied in practice: whether larger unions would have to pay more than small unions, how it would work, what the impact would be on union finances or how the future of the Certification Officer’s resources is established. All those areas are far too ambiguous.
The Bill also fails to require either the Government or the Certification Officer to consult stakeholders before determining the level of the levy. By contrast, in an area of which I am aware, the Financial Conduct Authority’s board is under a statutory duty to consult key stakeholders on fees policy and rates. Indeed, it carries out two consultations: one on policy changes and one relating to fee rates. The amendments simply ask the Certification Officer to carry out the same level of consultation with trade unions and employers’ associations before determining any levy.
I raise this matter because there has to be some operating mechanism and some sense of how it will operate. There must be a view on what should be the limits in any year of the Certification Officer’s growth and how they will be applied. If circumstances require additional staff, does that have to conform to pre-agreed boundaries? How are we to ensure that this onerous system remains logical and can be applied in any manner that can be described as fair? The Bill must give adequate protection to trade unions that the costs will not continue to spiral in the same way as they tend to in a variety of other places.
The amendments are necessary to inform trade unions how any level will be calculated and at what cost. Without a guarantee that stakeholders will be consulted on the setting of the levy or limit to future costs, the trade unions will be very much in the dark over how much the Certification Officer will cost initially and in future. What is being presented to the trade unions is an endless bill and the potential for the Certification Officer to run up an expensive tab. This is not a deal which you or I would enter into willingly, and is one which all trade unions and employers’ associations should be protected against, not least because it is their members who bear the brunt of it.
I am trying to clarify the position. The Minister is held in very high regard in the House, and rightly so. Frequently in this House, we have exchanges where we can disagree on a variety of matters either on the application—how something will work—or the foundation or principles behind it. I am not of a trade union background. I am a businessman, I have never been a member of a trade union, but I sit on the Opposition Benches, so it is entirely logical that someone might say: “You are likely to say that, are you not?”. During Second Reading and in Committee on the Bill, we have heard contributions which I hope have given the Government a sense that it is time to pause and reflect very carefully on what has been said.
The noble Lord, Lord Dykes, made a very interesting intervention. There is a certain mood attached to this Bill. The Bill is not worthy of where we are, and I am more than aware that the Minister on previous occasions has been very flexible and thoughtful in considering contributions from this House. I am also aware that there are difficulties in trying to convince those in another place that there is any reason, rationale or desire to make any changes, and that just as a bit of political yah boo sucks they continue in that fashion. I dearly hope that the Minister can use her good offices to convince others. Frankly, over the entirety of this period we have seen the flaws in this Bill and we know that it does nothing for trade unions, employers, our economy or our public services. It also does very little for our politics, and I hope that there is a chance that at the end of this Committee stage the Minister will give us some comfort that we might see some changes on Report, and that it will not be a continuation of an appalling form of politics that we should eschew.
Baroness Neville-Rolfe
My Lords, I thank all noble Lords who have been engaged in this very long debate today. On the final point that the noble Lord made, clearly, this Bill brings together a number of provisions that were promised in our manifesto, on which we were elected last year. There are important changes here but, as I said at Second Reading, and as I have reiterated over these four days in Committee, we are listening. We may be able to make some changes—this is very much a listening part of the process.
This clause provides a regulation-making power to enable the Certification Officer to charge a levy to recover the cost of his or her expenses. It is only fair that the cost of the regulatory functions provided by the Certification Officer fall on those who are regulated rather than on the taxpayer. We are, of course, applying this reform to employers’ associations as well as trade unions.
Lord Oates
Could the Minister explain why it is right in the case of the trade unions and not in the case of the Electoral Commission and political parties?
Baroness Neville-Rolfe
My Lords, government is not always logical, and while some regulators receive public funding many do not. In fact, increasingly few regulatory areas are paid for by government. We do not think it appropriate for the costs to fall on the taxpayer. We are going to set out our proposals. The clause requires consultation with relevant organisations, such as the TUC and ACAS, before making regulations. We will ensure that there is consultation, so we can achieve a levy that is proportionate and appropriate. I would envisage a consultation document, which can go to those concerned; that is always the sort of approach I favour in the areas where I have responsibility. An impact assessment will be published, as has been said, and the normal process is to publish that with the draft regulations, which of course will come before this House in due course, setting out the arrangements for the levy. We should also ensure that ACAS and the trade unions have a reasonable period of time in which to consider the detailed proposals, particularly in the light of the discussion taking place today.
This legislation is about trade union reform, and I do not think that the point about political parties, which I know is made with great vehemence by the noble Lord, Lord Oates, is a matter for this legislation.
It is important—and perhaps I can explain technically—that the Bill does not prescribe the amount. The Certification Officer needs to decide each year how much he or she needs to be charging to cover the cost of performing the functions for that year, adhering to the framework that is prescribed in regulations made under the Bill. It is common for legislation that introduces a levy or fees to require that the detail be set either in regulations or by the relevant regulator. This is standard practice and recognises that it is simply not possible to be too prescriptive in the primary legislation.
It is right that we do not attempt to limit the flexibility the Bill currently provides to apply one or more of these parameters until there has been proper statutory consultation. Let me give an example. We recognise that trade unions can vary greatly in size. Smaller unions and employer associations may require less of the Certification Officer’s time and resources, as my noble friend Lord Balfe said. We want the scope to be able to consider whether those who use more of the officer’s time should bear more of the cost, thereby reducing the amount of levy payable by smaller organisations. My noble friend Lord Balfe asked me to look at a point about political funds, and we can certainly consider that as part of the consultation. We will consider very carefully during the statutory consultation whether the amount of levy payable should be proportionate to the trade union or employer association’s income. It should take into account affordability for the smallest unions.
Amendments 118 to 121 seek to change that magic word, which the noble Lord, Lord Mendelsohn, knows so well, “may” to “must”, so that all the potential criteria in the Bill would have to be applied in setting the framework for the levy—I am afraid my sore throat is getting going again. That limits the flexibility to ensure that the power operates effectively, which is particularly important as we have a statutory duty first to consult.
On Amendment 121A, I appreciate noble Lords’ desire for there to be some control over the amount, but there are safeguards that act to control the amount of investigation that the Certification Officer could undertake. Most importantly, he will be able to investigate only where there is good reason to do so. Third parties have no statutory right to complain. The changes allow the Certification Officer to investigate in respect of information he receives that may be from a third party.
The officer has had the power to launch investigations into a union’s financial affairs for many years, and it has not been suggested that it has been used disproportionately. He or she will also be required to report annually on the amount levied and how it was determined. These reports are laid before both Houses. By way of further safeguards: the amount of the levy will be limited to cost recovery; unions and employer associations will be consulted before the framework for the levy is determined; and regulations to enable the Certification Officer to charge the levy will be subject to the affirmative procedure, allowing a full debate in Parliament, which I much look forward to. In these circumstances, I ask the noble Baroness to withdraw her amendment.
Baroness Donaghy
I am glad the Minister’s voice just about held out. I appreciate the points that she made. I will say only that this is creating a power to create a levy, with which I do not agree. It is increasing the costs of the whole exercise and then cynically passing them on to the trade unions. I say “the trade unions” advisedly because, although the Minister said that this will affect employers as well, I do not think I got my figures wrong when I said that they will be paying 0.5% and the unions will pay 99.5%—I am grateful to the Minister for nodding on that.
I do not see that my may/must amendments limit flexibility. I see the transparency which has been promoted by the Front Bench of the Government through all four days in Committee. It is important that people know where they stand. They will not know where they stand because the flesh will appear in the statutory instrument. Yet again we have important policy items waiting for a statutory instrument. It is not good enough just to say that there will be an impact assessment to accompany that statutory instrument; we all know that there are attempts to downgrade our powers to properly debate statutory instruments. Time will pass and everyone will look totally amazed when this side leaps up and down with indignation about the content of that statutory instrument. I give notice now that I probably will be leaping up and down.
I just hope, again, that the consultation will be adequate and that all relevant parties will be consulted, but I strongly believe that it is a very poor change for the role of the Certification Officer to become a tax collector as well as adjudicator, investigator and all the other things that he, or in future she, may have to do. It is a backward step and I very much regret it. In the circumstances, though, I beg leave to withdraw my amendment.