Trade Union Bill

Lord Burns Excerpts

Wednesday 16th March 2016 Lords Chamber

Moved by

[Lord Burns]

9: Clause 10, page 6, leave out lines 5 to 42 and insert—
“(1) A person who, after the transition period, joins a trade union that has a political fund at the time the person joins shall, on the trade union membership form (whether paper or electronic), be asked whether or not the person wishes to contribute to the political fund, and informed that the decision shall not affect any other aspects of the person’s membership.
(2) It shall be unlawful to require a person who joins a trade union after the transition period to make a contribution to any political fund of that trade union if the person has not given to the trade union notice—
(a) on the membership form (whether paper or electronic), or(b) in accordance with subsection (6),of the person’s willingness to contribute to that fund.
(3) It shall be unlawful for any trade union which does not have in force a political resolution under section 73 (political resolution) at the end of the transition period, but which subsequently passes a political resolution under that section, to require a member of the trade union to make a contribution to the political fund if the member has not given notice to the trade union in accordance with subsection (6) of the member’s willingness to contribute to that fund.
(4) A member of a trade union who contributes to a political fund but wishes to cease contributing to that political fund shall give notice to that effect to the trade union in accordance with subsection (6).
(5) A member of a trade union who gives notice under subsection (4) shall, after the end of the period of one month beginning with the day on which it is given, no longer be required to contribute to the political fund.
(6) Notice under subsection (2), (3) or (4) may be given to a trade union by being delivered—
(a) to the head office of the trade union, or(b) to a branch office of the trade union,in person, by any authorised agent, by post, or by electronic means.
(7) The Certification Officer shall, within six months of section 10 of the Trade Union Act 2016 coming into force, issue a code of practice which must set out the minimum level of communications which trade unions with political funds must have every year with political fund contributors about their right to cease contributing to the political fund.
(8) The Certification Officer must monitor the compliance of trade unions with political funds with the code of practice issued under subsection (7), and shall in their annual report under section 258 (annual report and accounts) set out their findings.
(9) In this Act “contributor”, in relation to the political fund of a trade union, means a member who makes a contribution to the political fund and has not given notice to the trade union under subsection (4).
(10) In this section “the transition period” means the period to be specified by the Secretary of State in regulations made by statutory instrument following consultation with the Certification Officer and all trade unions which have a political fund.
(11) The period to be specified by the Secretary of State under subsection (10) shall be no less than 12 months, and shall start on the day on which section 10 of the Trade Union Act 2016 comes into force.
(12) A statutory instrument containing regulations under subsection (10) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”

[Lord Burns (CB)]

My Lords, the purpose of Amendment 9 and of Amendment 10, which is consequential, is to put into legislation the majority recommendations of the Select Committee on Trade Union Political Funds and Political Party Funding. I remind noble Lords that the only difference between members of the committee was the extent to which these amendments should apply to existing trade union members. Otherwise, they reflect the unanimous view of the committee.

Bearing in mind that we had a useful debate on the committee’s report last Wednesday, I will try to avoid going into this in too much detail today. This part of the Bill deals, as noble Lords know, with the political funds which unions must set up if they wish to spend money on political causes. In summary, Clause 10 as drafted will require unions to move away from the current opt-out system for union members’ contributions to political funds and introduce an opt-in system. In other words, members would only pay the political levy if they actually chose to do so. Once the transition period is over, a guillotine comes down after which any union member who has failed to opt in will automatically be opted out.

On the basis of the evidence we heard, the committee unanimously concluded that the introduction of this opt-in process could have a sizeable negative effect on the numbers of union members participating in political funds, contrary to the conclusion of the impact assessment for the Bill. The committee also agreed that the negative effect would be exacerbated by the detail of Clause 10, which gives a short transition period of three months, does not allow opt-in by electronic means and requires opt-ins to be renewed every five years.

It seems to me that, by any measure, this is a harsh regime which will, in turn, have an impact upon Labour Party funds. During 2014, Labour Party-affiliated unions raised £22 million in political funds. Of this, £10 million—just under half—was given to the Labour Party in a combination of affiliation fees and donations. If the Government’s proposals were to go ahead, the committee concluded that there would be a significant reduction in those payments to the Labour Party overall.

I explained during the debate last Wednesday that the committee faced a dilemma. On the one hand, as I have just explained, the effect of Clause 10 in its current form would likely be a significant reduction in the funding of the Labour Party. On the other hand, the Conservative Party made a manifesto commitment to ensure that trade unions use a transparent opt-in process for union subscriptions. So to some extent the Government can claim a democratic mandate for introducing an opt-in process for subscriptions to political funds. I say “to some extent”, because the manifesto commitment is very loosely worded. It refers to union subscriptions rather than to political funds and it does not promise the precise system set out in Clause 10. I am satisfied that my amendments, which introduce the principle of opt-in and will, over time, lead to all members being subject to the opt-in system, are consistent with and fulfil the Conservative Party’s manifesto commitment in this respect.

The committee’s report and these amendments attempt to ease the tension between the desirability of proceeding in an even-handed way on political funding and allowing the Government to honour their manifesto commitment. Amendment 9 sets out in subsections (1) and (2) that opt-in should be applied to new members after a transition period of at least 12 months, which will allow trade unions to make the required changes to their rule books. Subsections (10) and (12) specify that the exact length of the transition period shall be set by affirmative instrument after the Secretary of State has consulted the unions and the Certification Officer.

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[Viscount Hailsham (Con)]

The noble Lord advances pragmatic arguments in respect of existing contributors, but what is the argument of principle? Given that the Government may be persuaded to introduce a generous transition period, why should existing contributors be denied the opportunity to opt in, which gives them some benefits?

[Lord Burns]

I do not propose at all that they should be denied the opportunity to opt in. The issue that is being challenged here is whether, having being asked to opt in and having failed to reply, they are automatically deemed to have opted out. That is the big difference. The question is: where is the inertia pressure? Under the current proposals in Clause 10, if someone fails to return the form that asks them to opt in or opt out, they are automatically deemed to have opted out. It is not a matter of principle because I have sought to argue that, over time, everyone will be subject to this proposal; it is just a question of how long it takes.

It is true that, at the moment, the power of inertia works in favour of the unions. That is reflected in the fact that only 11% of members make the effort to opt out of the political fund. But seeking to apply opt-in to existing members over anything other than a very long transition period will work against the unions because people have busy lives and the political levy is very small.

In the debate last week, a number of noble Lords implied that one benefit of an opt-in system was that existing members who did not opt in would be, by definition, demonstrating that they did not wish to contribute to the political fund. My argument, however, is that it is not as simple as that. As I have already said, although some people may well be exercising an active choice not to contribute, I suspect that the majority would not be exercising any choice at all. It would be extremely harsh to impose a strict guillotine date after which existing union members who had failed to opt in would automatically be opted out. It would also be out of line with policy in other sectors.

As an example, I return again to the Financial Conduct Authority’s proposed policies on general insurance add-ons and its suggestion that organisations that have sold products on an opt-out basis in the past need only,

“take reasonable steps to obtain active and express consent for the renewal of add-on products”.

Reasonable steps are said to include writing to customers at their next renewal date to remind them of their right to opt out of products, something that my amendments would achieve in respect of political funds. Unlike the existing Clause 10, the Financial Conduct Authority does not suggest a cut-off or guillotine date and, if this is the case for financial service companies, I really cannot see any reason why it should not also be the case for union subscriptions.

I have already mentioned the requirement to remind existing contributors to political funds annually of their right to cease contributing. I would hope that, in practice, unions would also take advantage of this communication to seek to persuade as many of their existing members as possible to take a positive choice to opt in, even though it would not be a requirement at this stage.

To summarise, if the opt-in were extended to existing members as proposed in Clause 10, even with an extended transition period, the result would be a significant negative effect on union and Labour Party funding. This would give us a wider political problem. The committee came to the view that, while there is no formal convention that all reform of party funding must take place by consensus, history shows that Governments of both main parties have acted with a degree of restraint and that, generally, this is desirable.

These amendments seek to ease the problem; in my view, they enable the Government to meet their manifesto commitment through gradually increasing the number of union members subject to the opt-in system and, at the same time, enable them to act with the restraint that is desirable in the field of party funding. I beg to move.

[Lord Cormack]

My Lords, I was very glad to add my name to the amendment of the noble Lord, Lord Burns, because it seeks to translate into the Bill the substance of that admirable report that we debated in some detail a week ago. I said then that I had had my misgivings about whether it was right to establish a Select Committee with a very strict timetable; I also said that my initial reaction had been wrong, because the committee did an exceptionally diligent and thorough job and produced a very coherent and convincing report.

I have made plain all along my misgivings about these two clauses because of what I believed was their inherent—though, I am glad to accept, unintended—unfairness. I was gently chided last week by a colleague for wearing a red tie; I deliberately wear a blue one today because I believe that in what I say I am being entirely true to one-nation Conservatism and not in any way reneging on party commitments. I say to my noble friends on this side of the House, as I have before, that if our party and its philosophy stand for anything it is for fairness and choice. I believe that one should do to others as one would wish to be done by and I do not wish to be party to a move that would seriously disadvantage one of the great parties of this country, particularly at a time when it is going through its own special problems, which I hope will soon be over. But what the noble Lord, Lord Burns, is suggesting is fair and consistent with the recommendations of his report. There were two alternatives in paragraph 142 and, effectively, we are advancing paragraph 142(a), which was the majority choice of the committee. Clearly, paragraph 142(b), which advocates a long transitional period, is also worthy of consideration.

This is a sensible, modest proposal that the noble Lord, Lord Burns, is advancing and it deserves support in all parts of the House. It in no way invalidates the manifesto commitments of my party, which were somewhat loosely worded, as the noble Lord, Lord Burns, has made plain, and I do not think it damages in any way what the Government are seeking to do. The noble Lord, Lord Burns, has made it plain that he believes, as I do, that opt-in is the better solution. But we do not have to advance on that at such a pace that we seriously disadvantage one of the great parties of the realm and unbalance our democracy in the process. I very much hope that this modest amendment can be accepted by my noble friend the Minister without a Division but if a Division is called, my name is on the amendment and my vote will be with my name.

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[Baroness Neville-Rolfe]

Well, I believe that manifesto commitments are important. This is an important and clear manifesto commitment. If I may continue, I will seek to respond to points that noble Lords have made.

The noble Earl, Lord Kinnoull, spoke about union membership turnover. I cannot accept his argument that we should not allow existing members to be covered because, over time, all individuals would be covered. Obviously, turnover is faster in some industries than others. I know and am very fond of USDAW, which represents shop workers, where turnover is high, but the noble Earl’s approach would deliver a two-tier position, while moving to opt-in is what we have a democratic mandate to implement.

I turn to three key elements of the noble Lord’s amendment: that new union members would be required to make an active opt-in choice; giving a new role for the Certification Officer; and—perhaps most important of all, because several people have mentioned them—the transition and communication arrangements.

On the treatment of new members, I can of course support the introduction of an opt-in requirement. The amendment would achieve this by giving new members a clear choice on the application form. It is appropriate to make this choice clear at the point of joining. It is the point at which a member is making their first financial commitment to the union, and they should be told what the commitment covers in sufficient detail to make an informed choice. The amendment also provides that new members should be informed that their decision will not impact unfavourably on any other aspect of their membership. I believe that is also an important measure to support making an informed decision.

Turning to the proposed new role for the Certification Officer, I appreciate that the amendment tries to enhance information for union members about their right to opt out of a political fund. We are in favour of better communication, but I believe that we are past the point of trying to make the current opt-out work better. We tried that in 1984, and I agree with the points made by my noble friend Lord Maude of Horsham. We presented evidence, which the Select Committee appeared to concur with, that the current approach has not operated with enough transparency. Even for new members, the amendment would not require that they should ever again have to opt in while they remained with the union.

I also believe the proposal to expand the remit of the Certification Officer to set out a code governing union communications is inappropriate. We heard concerns during Committee about the new burdens we are placing on the Certification Officer, and I do not believe that expanding his role is necessary or sensible.

I want to move on to the proposals for transition and electronic communications, on which I believe there is more consensus in the House, and about which I have indicated on previous occasions that I am open-minded. I have listened carefully to the issues raised regarding transition and the fact that members should be able to make their choice electronically.

There are two different transition periods: first, the period between Royal Assent and when Clause 10 applies to trade unions, which is important to allow unions time to prepare by, for example, changing their rulebooks; secondly, the period, mentioned in the Bill, for existing members to opt in under the new arrangements. The noble Lord, Lord Burns, expressed concern about what he called a “guillotine”—members automatically being opted out after three months. I have said that I am in listening mode on the implementation of this clause. As I have explained, I need to consider how each period of transition is delivered, but I think, together, they provide a good opportunity.

The amendment in the name of the noble Lord, Lord Burns, would also make electronic communications an accepted mode of communication between unions and their members on political fund provisions. I recognise the force of the argument made by the noble Baroness, Lady Drake, and others in favour of the use of email and electronic communications, and I have said that I would reflect further on this.

We note that the amendment tabled by the noble Lord, Lord Burns, gives the Certification Officer a role in relation to transition arrangements as well as annual communications. We will continue to engage with the Certification Officer, whom I intend to meet before Third Reading. We all agree that the transition must be done in a way that is successful for unions and for their members.

If noble Lords are prepared to accept my wider arguments on the case for opt-in applying to existing members, I would like to bring back for consideration before the Bill leaves this House provisions on a more generous transition period, as proposed by my noble friend Lord Hailsham and others, and on electronic communications. The Bill will, we believe, secure consistency and equity across all members of unions with political funds. The default position will be that all members will be able to exercise a positive choice. This will improve transparency, choice and debate within a union of how political funds are spent. I therefore ask the noble Lord to withdraw his amendment.

[Lord Burns]

My Lords, I am grateful for all the contributions to this debate. I am not surprised that so much of it has concentrated on the issue of the opting in of existing members versus the opting in of new members. I understand the concern about that, but there is an enormously important practical issue at stake here: how do you get existing members to exercise an informed choice? It is clear that that choice can be forced in respect of new members because people have to fill in a membership form on which you ask them the question. When it comes to persuading existing members to respond to mailshots, it is actually very difficult, as anyone who has ever been involved in trying to run an exercise of this type will know. The response rates are typically very low. As the noble Earl, Lord Kinnoull, said, the average payment we are talking about here is £4.80 a year, which is not exactly the sort of thing that gets people leaping out of their chairs, having reminded themselves they should be filling in a form.

Those of us who have been involved with financial services, as I tried to make clear in my earlier remarks, know full well that this is a problem for the industry. The emphasis is put on new buyers and what happens at the sales point. It is much more relaxed about what happens to those people who have previously bought a product, as long as they are reminded of what their rights are.

I deny that this is a wrecking amendment. Over time, I have argued, increasing numbers of people will come into these arrangements. In some areas it may be slow, but in the end it will happen. I am grateful to the Minister for her response about the transition issue and electronic communications, which is very welcome, but I am sorry that there has not been more movement on this point. I believe that my amendment meets the manifesto commitment. Nowhere in that commitment is any distinction made between new members and existing members. I believe that what I have proposed is proportionate and avoids the trap of being drawn into a war on political funding, which I also believe is very important.

I shall only say this once: there is no one who is more surprised than me to find myself in this position today on this particular subject. Having said that, I wish to test the opinion of the House.

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Moved by

[Lord Burns]

10: Clause 10, page 7, line 16, leave out subsections (3) to (5)

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Moved by

[Lord Burns]

13: Clause 11, page 7, leave out lines 35 to 42 and insert—
“(2) The union’s return for that year under section 32 shall include such information as may be specified by the Secretary of State in regulations made by statutory instrument, following consultation with the Certification Officer.
(2A) A statutory instrument containing regulations under subsection (2) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”

[Lord Burns]

My Lords, this amendment also relates to the Select Committee. Clause 11 will require unions with political funds to provide much more detail of their political expenditure in their annual returns to the Certification Officer who oversees trade union administration. There was some confusion in Committee about exactly what the clause requires and about the significance of the £2,000 threshold, so it may be worth examining the detail of the clause.

The clause will require any union which spends more than a total of £2,000 per year from its political fund to declare the recipient, amount and nature of every payment, no matter how small. I repeat, there is no de minimis; the £2,000 is not a declaration threshold for each individual payment. It is also worth saying that the £2,000 figure is so low as to be almost meaningless: the 2014-15 annual report of the Certification Officer shows that all but two unions with political funds will be caught by the clause, and the two that will not be are tiny—the National Association of Colliery Overmen, Deputies and Shotfirers and the Association of Revenue and Customs. If the limit were £50,000 a year, a further five small unions would be excluded.

While the Select Committee received much less evidence on this clause than on Clause 10, we were concerned by the Certification Officer’s predictions of the amount of extra work that it would cause for both unions and the Certification Officer himself. In the debate last week I used an example to illustrate the potential bureaucracy which the clause will involve, and I repeat it: in principle, this clause, coupled with Section 72(1) and (2) of the 1992 Act, will mean that a union will have to declare the reimbursement of a bus fare to one of its members who attends a Labour Party conference, including the name of the member and the amount of the bus fare.

So while the committee agreed that union members were entitled to more detail about the political expenditure of their unions, and transparency is important here, we also believed that the details of the clause needed to be looked at again. Accordingly, we proposed that the Government should, before the Bill completes its passage, consult the Certification Officer and come back with revised proposals which better balance accountability and proportionality. Amendment 13 seeks to implement this recommendation: it retains the general requirement in the Bill for unions to provide more information in their annual returns, but it also requires the Secretary of State to consult the Certification Officer before specifying the detail of the scheme in an affirmative instrument. This will enable both Houses to satisfy themselves that the final scheme is proportionate. I reiterate that this amendment simply enables the Government to think again about the detail. I beg to move.

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[Baroness Neville-Rolfe]

I am just checking whether, if I withdraw my amendment, I can then retable it if, after consideration, that seems appropriate. I understand that if I make my intentions clear—which sounds like a good principle—I can bring it back. I will certainly withdraw it today and look at the provision in the way that I have suggested. But I give notice that I will return to it because it is an important provision that tries to respond to the concerns of the Delegated Powers and Regulatory Reform Committee, on which I know the noble Lord serves.

I have said that I will reflect further on the technical reporting requirements to ensure that they do what we intend. I have set out why I do not believe that a further review of reporting requirements on top of the excellent work done by the Select Committee is necessary and I have agreed to hold the government amendment over to Third Reading. In the circumstances, I hope that noble Lords will not press their amendments.

[Lord Burns]

I fear that I am even more confused than I was when I started. I fully understand why the Minister says that it was never the intention to do what I described might happen with this bus ticket. But I am not clear what she is suggesting that the Government will do about this, given my interpretation of this clause. I have checked this many times. We have been through all sorts of procedures to try to find out whether it really says what we think it says, and no one has yet come forward and said to me, “No, that’s not what it says. Our legal advice is that it says something different”. So I assume from the noble Baroness’s remarks that she will come back to this and suggest amendments that will make sure that the lack of intention, as it were, is corrected.

[Baroness Neville-Rolfe]

My Lords, I can confirm that.

[Lord Burns]

I thank her very much. On that basis, I beg leave to withdraw the amendment.

Amendment 13 withdrawn.