House of Lords (Peerage Nominations) Bill [HL]

Lord Burns Excerpts

2nd reading
Friday 18th November 2022 Lords Chamber

[Lord Burns (CB)]

My Lords, I am also delighted to support the Bill introduced by the noble Lord, Lord Norton. It proposes some very important changes to how appointments are made. It would strengthen procedures and give confidence to the public, as the noble Lord, Lord Blunkett, has mentioned.

I will comment on a few of the aspects which touch on the work of the Lord Speaker’s Committee on the Size of the House, which I chair. I take this opportunity to suggest how we could build on the useful reforms proposed in this Bill to achieve further changes in due course. The Bill proposes a limit on the size of the House, that it be no greater than the membership of the Commons. This is a crucial first step and has been a key part of the proposals of the Lord Speaker’s committee. The House of Lords is exceptional among legislative chambers in having no limit on its size and no constraint on the numbers appointed. A limit on its size would have many benefits, some of which I will mention.

Of course, it also raises other issues. First, this Bill says nothing about the transition to a level consistent with the House of Commons, and, as we know, this first step seems to be very troublesome despite the widespread support from Members of this House. Secondly, once the membership of the House has been reduced to the size of the Commons, the number of appointments cannot exceed the number of leavers. As it happens, over the past 10 years or so the numbers have stabilised—albeit at a much higher level than the Commons—with both leavers and appointments averaging around 25 a year. In no small way, this has been due to the introduction of retirements in 2014.

As the noble Lord, Lord Blunkett, also mentioned, a limit on the size of the House could rightly focus more attention on the political balance of appointments. Over the past 40 years, appointments have been made disproportionately to the party in government, while the Official Opposition have suffered in terms of refreshment. This is not addressed in the Bill, which simply says that

“no one party may have an absolute majority”.

This is not a particularly strong test. I understand the reason for driving the political imbalance of appointments, but, over time, this leads to successive leap-frogging when there is a change of government. Can anybody be in any doubt about the consequences for the size of this House if there is a change of government at the next election, unless a significant number of current Members retire?

To avoid this leap-frogging, the Lord Speaker’s committee proposed that the flow of new appointments should reflect the results of the most recent general election, taking account of both the share of votes and the share of seats. However, it also follows that, if we were to share appointments in this way, it would probably be necessary to increase the turnover of Members. The turnover of 25 a year does not give the scope that would be needed to refresh the House and provide the vacancies necessary to create room for some change in the political balance over time to reflect election results. The committee took the view that, with a limit on the size of the House, a turnover could be achieved most effectively if we were to have appointments with fixed-term lengths. An age limit, which is often proposed, would not deliver a steady flow of retirements and would affect the party groups rather differently. With a House of 600 Members, our calculations suggested, as noble Lords know, that terms of between 15 and 20 years would be required if we want to see the 30 to 40 retirements each year to provide scope for that change. This challenging arithmetic follows, if we wish to see a continuing adjustment of party strength to reflect the results of general elections.

Finally, I strongly support the suggestion that at least 20% of the House should be formed by people who are independent of any registered political party. Additionally, 20% of any appointments over the course of a Parliament should also be required to be independent. Since 2010, the proportion of appointments to the Cross Benches has been significantly below this figure. The Cross-Bench and non-aligned numbers have been inflated by people escaping from the party to which they were first appointed, and who are unlikely to pass the test of independence as set out in this Bill.

In summary, I support the Bill; however, in time, I hope it will be possible to go further, along the lines I have outlined.

Economy: The Growth Plan 2022

Lord Burns Excerpts

Monday 10th October 2022 Lords Chamber

[Lord Burns (CB)]

My Lords, the financial statement has not gone down well. I will leave it to others to address many of the details of why it went wrong, and my noble friend Lord Macpherson has done that with great clarity. I will say a few words about some of the issues facing the new Government in designing the proposed medium-term fiscal plan.

The first and most important task is to make sure that we get through the period of abnormally high energy prices without serious adverse consequences. I agree with others that the energy price cap scheme has substantial support. Capping prices has the advantage of containing some of the increase in RPI inflation we would have seen and it can be done quickly. It has an in-built mechanism to adjust the amount of subsidy to the future pattern of energy prices.

Of course, the scheme is not without problems: it dampens the incentive for households to economise on their use of energy and it is not well targeted. But the reality is that it is difficult to target vulnerable households at short notice, as the tax and benefits system is based around individuals rather than households. However, because the scheme is poorly targeted, it could be expensive—indeed, very expensive. Along with others, I must say that I find it very difficult to understand why the Government have resisted a windfall profits tax. Energy companies are experiencing a windfall and we should try to recover some of that.

At this difficult time, it is essential that fiscal policy supports the Bank of England in bringing down the rate of inflation. The Government have made it clear that they regard bringing down inflation as a job for the Bank of England. I share the view that the Bank of England is not without blame around some aspects of the present circumstances, and it has been slow to recognise the emerging inflationary pressures and to increase interest rates. But my worry is that its task of bringing down inflation will be made considerably more difficult if the Government’s fiscal policy is pulling in the opposite direction.

The proposed tax reductions next April remain a high-risk strategy until we know the size of the bill for the energy price cap scheme, so it is vital that the Government’s forthcoming medium-term fiscal plan gives dual weight to the OBR’s report on public finances and the need to support monetary policy in the job of bringing down inflation. This lesson was learned the hard way in the 1970s and it was an important driver of the MTFS introduced by the Thatcher Government in 1980.

I fully support the principle that supply-side measures play a critical role in any policy to improve growth rates, but in the circumstances I hope that they will be concentrated on those measures that do not make the task of dealing with inflation more difficult. In my view, the harm from unfunded tax cuts at this point is very likely to exceed any supply-side benefit. I do not know of any convincing argument that unfunded tax cuts ultimately pay for themselves, other than in very special circumstances of high marginal tax rates.

In these circumstances, public expenditure cuts will be difficult to find. My noble friend Lord Macpherson talked about this, and I shared his experience for many years. They could also be potentially damaging if they target those who are suffering most from the rise in energy costs and inflation in general.

This is not to question the longer-term ambition of simplifying the tax system. However, we should recognise that supply-side measures will take time; they require careful analysis and implementation. I witnessed many attempts to introduce supply-side measures. Many of them fell into considerable problems as they moved on because they were exploited by people for whom they were never intended.

Growth has been affected in all advanced countries by the combination of the financial crisis of 2008, the pandemic and the Russian invasion of Ukraine, so this is a general problem and is not unique to the UK. Higher public indebtedness and higher tax ratios are largely a consequence of dealing with these adverse shocks. I am afraid that the consequences for growth will take some time to work through.

House of Lords Appointments Commission

Lord Burns Excerpts

Thursday 21st July 2022 Lords Chamber

[Lord True (Con)]

My Lords, any Prime Minister would normally pay heed to the advice, as this Prime Minister has made clear. There is a particular case to which your Lordships continually return, where the Prime Minister made an appointment on his own judgment. I defend that particular person; he plays a valuable role in our House.

[Lord Burns (CB)]

Since the establishment of the Lord Speaker’s committee, some three-quarters of political appointments have been made to the Conservative Benches. There are now 89 more Conservative Members than Labour Members and there are more Conservative Members than Labour and Liberal Democrat Members combined. If there were to be a change of Government at the next election and similar partisan behaviour were to continue, would the Minister be comfortable with a House of 900 or more Members?

[Lord True (Con)]

My Lords, the reality of this House is who comes here and who works. Sometimes, those who do not come here very often make enormous contributions; I can think of a very distinguished scientist who comes on occasion. The Prime Minister has appointed—I should say recommended; Prime Ministers do not appoint—91 Peers since he became Prime Minister. That is not out of order with numbers in the past.

House of Lords: Membership

Lord Burns Excerpts

Tuesday 21st April 2020 Lords Chamber

[Lord True]

My Lords, my noble friend makes some concrete suggestions, some of which would require legislation. The Government’s view is that any reform of your Lordships’ House would need careful consideration and should not be brought forward in a piecemeal fashion. On a minimum participation threshold, I think many noble Lords feel that it is not the quantity of participation that matters in this House but its quality.

[Lord Burns (CB)]

My Lords, I am of course strongly in favour of the proposal for two out, one in, as it is an important part of the transition to a smaller House. However, I would not like to lose sight of some of the other issues which the Lord Speaker’s Committee felt were important in the longer term. We concluded that the hard work of getting the numbers down would be in vain unless a cap on the size of the House is maintained and the allocation of new Members reflects each party’s electoral performance and progress in achieving departure. Does the Minister agree that without some combination of proposals such as these it is difficult to see how we will bring an end to the almost continual growth in numbers that we have seen since the 1999 Act?

[Lord True]

My Lords, as a matter of fact, the recent history is not of numbers increasing. I pay tribute to the noble Lord, Lord Burns, and his committee for the inventive and constructive suggestions they have made and commend the spirit with which many in the House are following them. However, the longer-term proposals of the committee to maintain a steady-state size require further careful thought and wider engagement, particularly with the House of Commons. That was a point made by the previous Prime Minister.

Inflation

Lord Burns Excerpts

Monday 1st July 2019 Lords Chamber

[Lord Burns (CB)]

My Lords, I too thank the noble Lord, Lord Forsyth, for securing this debate and chairing the committee so effectively. I found the inquiry rather a strange experience to begin. I had spent almost 20 years in the Treasury worrying about how to control inflation, yet in this inquiry we were deep in the detail of measuring inflation down to a few decimal points. In the process, as has been mentioned, we became aware of a series of quite surprising events that cast doubt on the Government’s various measures of inflation. I should like to develop some of those concerns.

I well recall that the main governance for the RPI until the mid-1990s was the existence of the RPI advisory committee, which consisted of some officials and a number of stakeholders, including the trade unions. The noble Lord, Lord Lea, mentioned that he was for many years a representative on that committee; there were also business representatives. My recollection is that the advisory committee found it difficult to accept any change that made a significant impact on the inflation rate, one way or the other. Indeed, there was a strong and continuing concern to uphold confidence in the RPI measure of inflation, for the reasons he mentioned.

It turns out that the RPI advisory committee did not meet between 1995 and 2007. I was somewhat surprised to learn this. It was charmingly referred to by the ONS in its evidence to us as a period of “no governance”. Then in 2007, we had the Statistics and Registration Service Act and the introduction of the RPI protocol. This required the ONS to produce a monthly figure for the RPI and introduced the formality we have heard about: that the Chancellor had to give his consent to any fundamental changes judged by the Bank of England to be materially detrimental to the holders of relevant gilts.

Paradoxically, this legislation, designed for the worthy purposes of increasing the independence of the statistics authority and improving the governance of the RPI, turns out to be a contributory factor in the loss of confidence in the RPI as a measure of inflation. In my mind, this stems from the asymmetric treatment of changes that are detrimental to the holders of gilts, as opposed to changes that are to their advantage and to the detriment of others. This is set out in the statute.

As we have heard, where a fundamental change is seen as materially detrimental to the holders of gilts, the Chancellor, with advice from the Bank of England, has to decide whether the changes should go ahead. By contrast, if changes are beneficial to the holders of indexed gilts, the Bank of England is not required to take any action. This asymmetry became evident in 2011 and 2012, when there was a change in measurement of clothing prices, as we have heard. I argue that the statistics authority then made some quite serious mistakes.

The effect of the change was, as we have heard, an unexpectedly large increase in the clothing component of the index and an increase in difference in the growth of the RPI and CPI to around 0.8% a year, instead of 0.5%. I stress that, in the evidence we received, there was a lot of criticism of the change, along with claims that it had not been tested before implementation. This was the first mistake.

What I conclude to be a second mistake followed, which was not to undo the change and to go back to the previous arrangements reasonably quickly, when the emerging problems became evident. It became clear that the statisticians were influenced too much by worries that it would be judged a fundamental change that was materially detrimental to gilt holders. The one-sided nature of the protocol meant there was no requirement to be concerned about the original change, which had materially advantaged gilt holders. Instead, the options were studied and the focus switched to the weighting system and horrendous technical debates about the merits of different methods of compiling the two indices. This response is a classic case of the best being the enemy of the good. Reversing the clothing changes would not have removed the whole difference between the two measures but would have dealt with it in part. Reversing it quickly might also have been seen as a correction and not a fundamental change.

There followed what I think we all agree was a third mistake: the decision to maintain the RPI in its current form, but to declassify it as a national statistic and consider it a legacy measure, with no further improvements to be made. This was astonishing, because it was evident that the RPI would be in place in contracts for many years, both for gilts and pensions. The committee raised the question of whether admitting that this statistic is flawed, but refusing to fix or maintain it, leaves the authority failing in its statutory duties.

Another related governance aspect of this story worries me, which was emphasised by the noble Lord, Lord Darling. The authority admitted that it had been reluctant to propose a change to the Bank of England when there was a significant risk that it would be told that it was a fundamental change likely to go to the Chancellor. This fails to follow what is set out in the legislation. I have some experience of public bodies, where the framework for their independence is set out in statute but there is a requirement to obtain the agreement of Ministers on a limited number of occasions. My interpretation is that it is for the public body to take a view about changes that should be made on professional grounds and not to shrink from referring them to Ministers for their approval, when required. In this case, it is not for the statistics authority to seek to guess the Bank’s response before deciding whether to propose changes; the decision should be taken on professional statistical grounds. It is then for the Bank of England to decide the materiality and potential detriment and for the Chancellor, in turn, to take a view on whether the proposed change should go ahead.

The committee has come forward with a sensible and workable set of proposals to try to get us out of this stand-off. At the same time, we should reflect on aspects of the governance of national statistics. As I said, the drafting of the legislation is unhelpful because of the asymmetric treatment of gilt holders and other stakeholders, not least those saving through government saving schemes. Even taking the legislation at face value, surely it is possible to make changes necessary in the light of changes in markets and product innovation without them being classed as fundamental and so that, when a mistake is made, repairing it is seen not as a fundamental change but as a tiny correction.

House of Lords: Membership

Lord Burns Excerpts

Monday 21st May 2018 Lords Chamber

[Lord Young of Cookham]

With respect, my right honourable friend the Prime Minister has exercised restraint. I note that in the 2010 Dissolution Honours List, Nick Clegg insisted on 11 former Lib Dems becoming Peers, so there was not much restraint then. So far as going forward is concerned, the Prime Minister has made it absolutely clear that there will be no more automatic peerages. As I have said, if your Lordships look at the number of Peers appointed since she became Prime Minister, the House is now smaller than it was then so she is on track to deliver that commitment. What we are still waiting for is some retirements from the Liberal Democrats.

[Lord Burns (CB)]

My Lords, over the weekend the noble Lord, Lord Adonis, tweeted that the Lord Speaker had welcomed the composition of the new list. He clearly did not read what the Lord Speaker actually said; the only thing he welcomed was the Prime Minister’s ongoing commitment to restraint in appointing new Peers, which provides such a contrast with her recent predecessors. As the Minister has pointed out, the 21 life Peers appointed since the last election is the smallest number of appointees in the first year of a Parliament for perhaps 40 years. Does he agree that what is important now is to arrive at an understanding for departures and appointments for the remainder of this Parliament and, furthermore, that this should be closely in line with the framework set out in the report of the Lord Speaker’s committee, which was overwhelmingly welcomed by the Members of this House?

[Lord Young of Cookham]

I am grateful to the noble Lord not just for his helpful intervention but for the work which he and his committee have put in. I understand that he is continuing that work. Yes, I did read the comments made by the Lord Speaker, as reported in the press, and my right honourable friend the Prime Minister has shown restraint. Tony Blair appointed 374 new Peers—including the noble Lord, Lord Adonis—David Cameron appointed 245 and Gordon Brown appointed 34, so two years in the Prime Minister has indeed shown some restraint and I think that we are on track. The noble Lord set out targets for the individual parties to reach by 2022, and those are challenging targets. As I indicated a week ago, some groups and parties within the House are making progress but not all of them.

Trade Union Bill

Lord Burns Excerpts

Tuesday 3rd May 2016 Lords Chamber

[Baroness Neville-Rolfe]

My Lords, we have debated at length the principle of how union members exercise their choice to opt either in or out of a political fund. I am particularly grateful to the noble Lord, Lord Burns, and the wider Select Committee for their deliberations on this complex issue. They were both careful and wise, and extraordinarily rapid because of what looked like an impossible five-week deadline.

I extend thanks in particular to my noble friends Lord Sherbourne, Lord De Mauley, Lord Robathan and Lord Callanan, who gave up their time to help the committee find a way forward on these very important matters and ensure that the principle of union members having a transparent and active choice to opt in was supported.

The Government have given careful consideration to the recommendations of the Select Committee and to the amendment tabled by the noble Lord, Lord Burns, which followed the majority view that opt-in should apply only to new members. We tabled an amendment in the other place, but concerns were expressed by a number of colleagues from both Benches in both Houses.

It was important to progress matters and get this Bill through the House and on to the statute book, and the Government subsequently tabled a new amendment, now before your Lordships following its acceptance by the other place, which like the original amendment of the noble Lord, Lord Burns, reflects the recommendations of the Select Committee on opting in.

The amendment corrects some legally defective drafting and, instead of the Certification Officer being required to issue a code of practice, places a statutory obligation directly on unions to provide an annual reminder to those new members who have opted in to the political fund. It is not usual for the Certification Officer to be involved with communications between unions and their members, and it provides more certainty to have this requirement in the Bill.

In the interests of finalising this important Bill for Royal Assent, I hope that noble Lords will support the amendment. I beg to move.

[Lord Burns (CB)]

My Lords, I am delighted to be able to thank the Minister for her statement and the amendments, and I hope that this will be the end of what has been the controversial issue of trade union political funds. As the Minister said, today’s proposals leave intact the substance of the amendment which was passed so comprehensively by your Lordships’ House. Noble Lords will recall that the amendment was designed to put into legislation the majority recommendations of the Select Committee on Trade Union Political Funds and Political Party Funding, which I had the honour to chair. I remind noble Lords that most of the recommendations reflected the unanimous view of the committee, although there was a difference of opinion about the treatment of existing members of unions with political funds.

In essence, after a transitional period of at least 12 months, all new members will be required to pay into political funds only if they have actively opted in. They will be reminded annually of their right to opt out. Opting in or out will be allowed electronically, there will be no renewal requirement every five years, and the requirement to opt in will not apply to existing members.

--- Later in debate ---

[Lord Forsyth of Drumlean]

In the noble Lord’s discussions with the Government about his amendment, at what stage was he told that the Government had changed their position? Was there a stage before that?

[Lord Burns]

Mr Nick Boles explained to the other place one day last week that he and I met last Monday evening and had a discussion. He put a proposal to me that I thought was rather unsatisfactory and fell somewhat short not only of the majority recommendation of the Select Committee but of the minority view. I explained that from my perspective it did not go far enough and that there would have to be further stages between the two Houses. Then I was subsequently told on Tuesday evening, the following day, that the revised proposal was being set down.

[Lord Robathan (Con)]

My Lords, I rise with some disappointment to speak on these amendments, but I start by paying tribute to my noble friend Lady Neville-Rolfe because throughout she has been exemplary in her courtesy and assistance. I know from past experience that sometimes as a Minister you hold to a line and then suddenly a hole appears in front of you into which you drop. I fear that she may be feeling slightly like that, and our honourable friend Mr Boles may feel the same.

I am disappointed not because this is a grand old Duke of York moment, although in the committee we were indeed marched up to the top of the hill, but because this is the wrong decision. The Bill that came to the House of Lords was frankly not a good Bill. There were three issues that I particularly seized on. One was electronic balloting and the unnecessary bureaucracy involved in the Bill—the need to write to people and people only being able to communicate by writing, which was nonsensical. The second was that there was just not enough time to do it in a matter of months. Any large organisation needs time to contact all its members. I am glad to see that, as a result of our deliberations, there will now be a 12-month window for transition. The third reason was that having to review the decision every five years was punitive, as the noble Lord, Lord Burns, who ably chaired the committee, has described it. Others in this Chamber will know better than me, but I wonder whether the Bill was stitched together by some special adviser who was being paid too much; some teenage scribbler who should, perhaps, have been given greater and wiser direction.

There were two reasons for my disappointment. First, this was a commitment in our manifesto, which specifically said that we would,

“ensure trade unions use a transparent opt-in process for union subscriptions”,

and not just for new members. The second reason is the very important issue of principle. If the principle is that people should opt in, rather than out, then that principle is right—would any noble Lord like to disagree with that? As we heard in our committee, presumed consent is no longer acceptable in financial services. In our earlier discussions on the Bank of England and Financial Services Bill, the Opposition were speaking ably and rightly about consumer protection. Why should trade unionists not have the same consumer protection as anybody else and not have to opt in rather than out?

These two reasons leave me gravely disappointed. I am sure it is not the case, but there is a hint that a deal may have been cut behind closed doors, which does not reflect well on this Government. They should have stuck by their principles and by the principle which I have mentioned. Politicians are much criticised for not keeping their promises and for inconsistency. By allowing these amendments to go forward, the Government have not kept their manifesto promise and have been inconsistent, and it pains me to say that.

Trade Union Bill

Lord Burns Excerpts

Monday 25th April 2016 Lords Chamber

[Lord Collins of Highbury]

It was sunny, actually. In addressing the conference, I responded to concerns about this aspect of the Bill. The Minister mentioned good practice. USDAW’s annual report to its annual delegates’ conference itemises its range of political spending. I think that is repeated in its AR21 to the Certification Officer. People asked what the Government were seeking by this additional element in the amendment and whether they had consulted on it, as it could result in members becoming even more confused. For example, how much did unions spend on the Sunday trading proposals—an industrial campaign with elements of political spend? The campaign opposing violence against shop workers was again an industrial campaign with elements of political fund expenditure. So what is the point of having a statute that says what expenditure must come from a political fund, as clearly defined in the 1992 Act, when this Bill is saying that that is not enough? If money is spent out of that fund, it has to be reported to the Certification Officer. It is an additional requirement which is a burden; it increases red tape and I doubt whether the department, or the Minister, has properly consulted on it. I beg to move.

[Lord Burns (CB)]

My Lords, I support Amendment 1. The Select Committee, which I chaired, agreed that union members were entitled to more detail about the political expenditure of the unions in the annual returns to the Certification Officer. However, we were concerned by the Certification Officer’s prediction of the amount of extra work which the existing clause would cause both for the unions and for the Certification Officer himself. There was also quite a lot of confusion in Committee about exactly what the clause required and the significance of the £2,000 threshold. This seemed disproportionate to the committee and we proposed that the Government should consult the Certification Officer and come back with revised proposals which would give a better balance between accountability and proportionality.

Unlike the Minister, we have clearly not had the opportunity to have further information from the Certification Officer, but my personal interpretation is that the amendment produces a much better balance, by aggregating items of expenditure under headings which are, I hope, manageable. It is less onerous for the unions and deals with the practical concerns of the Select Committee.

I understand the concerns of the noble Lord, Lord Collins, and the issue of burdens. However, given that we are going in the direction of looking at aggregates of expenditure, it seems reasonable that all expenditure from political funds should be accounted for. Where this falls outside political parties’ expenditure and the categories in Section 72, they should be included. I support Amendment 1.

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.