Armed Forces Bill
Debate between Lord Tunnicliffe and Lord De Mauley(13 years, 2 months ago)
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Lord Tunnicliffe
My Lords, I have to confess that I come to this Committee briefed by my own party to take a neutral position. Equally, I have to recognise that, if this matter were to go to a vote on Report and we took a neutral position, the Government would not be realistically challenged. In light of the breadth and depth of the speeches that I have heard today and in light of what the Government have to say, I shall be reconsidering our position.
Lord De Mauley
My Lords, first, I ought to apologise on behalf of my noble friend Lord Astor, who of course would have been here to respond to these amendments. However, as your Lordships will know, he is on standby to deal with a Statement in the Chamber and is therefore unable to be here.
I have to declare a couple of interests: first, as president of the Council of the Reserve Forces and Cadets Association and, secondly, as the Colonel Commandant of the Yeomanry.
The noble and gallant Lord, Lord Craig, was very modest about his collection of medals. I can be even more modest about mine.
I have listened carefully to the very powerful speeches that have been made in this debate. They have all explained the lack of satisfaction with the position, which of course I shall report back to the department. I shall do my best to respond to noble Lords’ points, although I do so with some trepidation, as I have little doubt that I will not satisfy every noble Lord.
Amendment 25 in the name of the noble Lord, Lord Touhig, involves the proposal to insert a new clause, which would see the creation of a new committee to make recommendations to Her Majesty on the grant of medals to members of the Armed Forces. My understanding of the amendment is that it would affect two aspects of the grant of medals in particular. The first is the institution by Her Majesty of new medals for the Armed Forces and the second is the rules concerning the acceptance and wearing of foreign medals.
I should say that recommendations on individual operational gallantry awards are dealt with differently from these matters, but I do not think that we are particularly focusing on those today. They are made by the military chain of command up to the Ministry of Defence, where they are approved by the Secretary of State before being submitted to Her Majesty.
As to the first of the two areas that would be affected—the institution of new medals—I hope that it will be helpful to recall that in 1939, on the outbreak of war, the King was anxious to ensure that there be co-ordination regarding honours and decorations, both military and civil. He directed that the head of the Civil Service should set up and chair a permanent committee to take this in hand and to advise him. This is what we now know as the Committee on the Grant of Honours, Decorations and Medals—as the noble Lord, Lord Touhig, said, the HD committee.
The need for that committee reflects the fact that there is not a simple division between the institution of civil and military awards. For example, major wars impose exceptional demands on all parts of society. The HD committee is chaired by the Cabinet Secretary and its members include Permanent Secretaries from a number of departments, together with the private secretaries to the sovereign and the Prime Minister. It was essential to this approach that the work of the committee should be dispassionate so that the King could be properly advised as to his constitutional role as the fount of honour.
While it must be recognised that there is a political element in decisions on honours, the intention was that decisions on new awards should, so far as possible, avoid politics and the pressure that could be exerted by interest groups. This is perhaps particularly important in relation to decisions about awards to members of the Armed Forces. What is important is that when considering proposals for military decorations the committee and the sovereign have a full appreciation of the case for the proposals and advice based on an understanding of the Armed Forces and their role. This is provided in two ways. First, any such proposals are considered by the Chiefs of Staff, and their written case for the proposal goes to the committee. Secondly, the Ministry of Defence and the Armed Forces are well represented on the committee, with both the Permanent Secretary and the Defence Services Secretary—a serving military officer of two-star rank—being members.
Under the proposed amendment, the members of the new committee would be appointed by the Secretary of State. They would include Members of Parliament and persons who the Secretary of State decides represent members of the Armed Forces. While I can entirely understand the motives of the noble Lord in proposing the amendment, I, like the noble Viscount, Lord Slim, remain firmly of the view that we should neither introduce a directly political aspect to the advice given to Her Majesty, nor try to reflect a supposed view of members of the Armed Forces by persons considered by the Secretary of State to be their representatives.
Moreover, the HD committee would cease to have a role in advising on or making recommendations about the grant of medals to servicepeople. This would mean that we would lose this very important interrelationship with other departments provided by the HD committee and the ability to consider civilian and military awards in the round. It would also mean that the advice on civilian awards would be given on a completely different basis from the advice given on military awards. An example of the need for such discussion was the HD committee’s recent consideration of the creation of a Diamond Jubilee medal. Traditionally, such commemorative medals are issued not just to members of the Armed Forces but to members of the emergency services and those from some other areas of public service. It would have been impractical for such a medal for the Armed Forces to be considered in isolation.
The division of responsibility created by the establishment of a new committee would introduce major difficulties in the other area affected by the amendment—the rules on the award and wearing of foreign awards. It would raise wider issues on the need for consistency in relation to civilian and military awards, and on the important general principle that UK citizens, especially Crown servants—whether military or civilian—should be awarded honours by the sovereign for their services to the sovereign and their country. I shall come back to that point when I turn to the amendment proposed by the noble and gallant Lord, Lord Craig of Radley. I suggest that we already have a politically independent body, free from any suggestion of partisanship, that is charged by the sovereign with advising on matters relating to honours, decorations and medals and has stood us in good stead for more than 70 years. I see no justification for the fundamental change proposed.
The noble Lord, Lord Touhig, suggested an inconsistency of allowing the PJM to be awarded but not worn, other than for one week. Despite the words of some noble Lords today, the five-year and double-medalling rules are the convention by which decisions are considered on medals. However, each situation is considered on a case-by-case basis. Exceptions to the normal conventions are very unusual but are sometimes made after consideration of all the relevant and significant factors. These might be political, diplomatic or other special reasons.
I turn to Amendment 26 from the noble and gallant Lord, Lord Craig of Radley. It proposes the insertion of a new clause, which would permit serving or former members of the Armed Forces to wear, without restriction, medals awarded by Commonwealth Governments. Our rules are strict and long-standing. As I have mentioned, they reflect the wish in 1939 of King George VI to ensure, so far as possible, consistency across government in our response to proposed awards by foreign states. The UK rules provide that no UK citizen, civilian or military, should accept and wear a foreign award or that of an international organisation such as the UN or NATO unless given permission to do so.
There are several reasons why these rules were put in place and why they have, I suggest, stood the test of time. First, they reflect the need to avoid the difficulties that can arise from of any suggestion of patronage or influence if other states honour UK citizens, and especially where they honour UK citizens for the performance of duties owed to their sovereign and their country. Secondly, the rules are aimed at maintaining the status and integrity of our honours system by generally excluding those of other countries for services for which honours have already been awarded by Her Majesty.
In support of these principles, Her Majesty is advised on the award and wearing of foreign and Commonwealth honours and medals by the HD committee. The committee, as I have outlined in response to the previous amendment, is a deliberately non-political committee of very senior Crown servants, representing the departments most involved in issues of medals and honours and the Armed Forces. The committee advises Her Majesty on the rules, acceptance and wearing of foreign and Commonwealth medals and honours. Its work is administered by the Cabinet Office and, in respect of foreign awards, the Foreign and Commonwealth Office which liaises with the Governments of other countries on issues relating to proposed awards.
Her Majesty and her Government equally respect the rules of other countries about what honours may be given to their citizens. The principles I have already mentioned, especially the one that honours for service to the United Kingdom should be awarded by Her Majesty, are applied most strictly to those whose service, whether civilian or military, is to the Crown. Even for Crown servants, exceptions are recognised. An important example is where a Crown servant is seconded to a foreign or Commonwealth country or their Armed Forces in a theatre of operations and works directly for them. In such cases, an award by that country may well be appropriate. Such proposals are considered through the Foreign and Commonwealth Office and the HD committee on a case-by-case basis.
However, the effect of the proposed amendment would be to apply a different approach to the award of medals to the members of the Armed Forces, as opposed to other UK citizens, if the proposed award is from a Commonwealth country. The especially close links between all countries of the Commonwealth, especially the close constitutional connection between those countries where Her Majesty is Head of State, is deeply respected and enormously valued. None the less, it would not be advisable to apply a totally different rule for the special category of awards proposed by the amendment.
Armed Forces Bill
Debate between Lord Tunnicliffe and Lord De Mauley(13 years, 2 months ago)
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Lord De Mauley
My Lords, before I respond to these amendments, I should declare two interests—one as President of the Council of Reserve Forces’ and Cadets’ Associations and the other as Colonel Commandant of the Yeomanry.
The amendments in this group all deal with the matter of under-18s serving in the Armed Forces. I welcome the efforts of noble Lords in reminding us that the welfare of those who join under the age of 18 is very important indeed and I thank all those who have moved amendments and spoken today. I can assure your Lordships that the Ministry of Defence is well aware of the need to ensure that these young people live and work in an environment which safeguards their interests and wellbeing, and I thank in particular the noble Baroness, Lady Dean, and the noble Lord, Lord Young, for their helpful and positive comments to this effect. I welcome the suggestion of the noble Baroness, Lady Dean. Things have been improving and will continue to improve, but we can always do better.
A great deal of close attention has been focused on this whole area in recent years, especially after the tragic deaths at Deepcut. We now have robust and effective safeguards in place to ensure that under-18s are cared for properly. Moreover, as the noble Lord, Lord Tunnicliffe, suggested and I can confirm, no service person under the age of 18 is to be deployed on any operation which will result in them becoming engaged in or exposed to hostilities. And recently we announced a change to the right of discharge for those under the age of 18. I shall come back to this in a moment.
Through Amendment 6, the noble Lord, Lord Judd, seeks to include service personnel under the age of 18 as being within the group covered by the Armed Forces covenant report, which is a laudable objective. However, the guidance accompanying the Armed Forces covenant, which we published on 16 May, is quite explicit. It states that:
“Special account must be taken of the needs of those under 18 years of age”.
I can assure noble Lords that we will not forget this aspect of our responsibilities for service personnel. The Armed Forces covenant report is to be a report about the effects of service on servicepeople, so as regards Amendment 6, minors under the age of 18 are already within the definition of servicepeople in the clause. I hope that the noble Lord will accept that.
As regards Amendment 8, I have some difficulty with the wording proposed. Not only would the amendment require the Secretary of State to give particular consideration every year to the effects of service on those under 18 years of age, it would also require him to have particular regard to those effects right through until the individuals in question became veterans. It would oblige us to treat those who joined under the age of 18 as a separate category throughout their service, and perhaps even throughout their lives. I hope it will be apparent to noble Lords that that is not an appropriate distinction to build into legislation.
I turn now to Amendment 22, spoken to by the noble Lord, Lord Tunnicliffe. This provides that service personnel under the age of 18 will be required to confirm in writing that they wish to continue serving in the Armed Forces after their 18th birthday. This must be done at least three months before their birthday. As noble Lords will know, it has long been our policy to enable service personnel under the age of 18 to reconsider their choice of a career in the Armed Forces up until their 18th birthday, and indeed for three months afterwards if they have already declared their unhappiness. To that effect, we are travelling in the same direction as the noble Lord. In fact, these informal arrangements have provided our under-18s with six months more to think about whether they have made the right choice of career than would the amendment. But following a review of our discharge policy for the under-18s, this has been converted into a legal right. A regulation was introduced on 12 July this year for each of the Armed Forces to provide a new statutory right for all service personnel to claim discharge up to their 18th birthday. This new regulation is separate from and additional to the long-standing legal right of all new recruits, regardless of age, to discharge within their first three to six months of service, depending on their service, if they decide that serving in the Armed Forces is not a career for them.
Under the new regulation, everyone under the age of 18 serving in the Armed Forces already has a right to claim discharge up to their 18th birthday. For the first six months of service this is achieved by giving not less than 14 days’ notice in writing to their commanding officer after an initial period of 28 days’ service. At any other time after six months’ service, those under the age of 18 who wish to leave their service must give notice in writing to their commanding officer, who must then discharge the under-18 within the next three months. For those who give notice just prior to their 18th birthday, this means that the latest they will be discharged is at 18 years and three months of age.
The new right of discharge includes a cooling-off period to avoid the unintended consequence of a decision made in the heat of the moment. A shorter period may be agreed with the commanding officer, but three months provides the serviceperson under 18 with a period of due reflection, with appropriate guidance and the right to rescind their request for discharge. The amendment proposed by the noble Lords, Lord Rosser and Lord Tunnicliffe, adds no protection for those under 18 who are serving, and would put a staffing burden on the chain of command that I hope they will accept is unnecessary. The right of discharge is made clear to all service personnel on joining the Armed Forces. We wish to continue to ensure that those young men and women who wish to serve in the Armed Forces are able to do so, while those who realise that a service career is not for them can leave as a right. On this basis, I hope that the noble Lord, Lord Judd, will withdraw his amendment.
Lord Tunnicliffe
My Lords, will the noble Lord be kind enough to send me and interested Members of the Committee a copy of that regulation, and deposit a copy in the Library?
Lord Tunnicliffe
My Lords, I want to make one or two general points about the approach to the Bill. We have a role as the Official Opposition to scrutinise the Bill thoroughly clause by clause. This is a particularly important role for the House of Lords and one we feel we need to discharge. In the event, Members of the Committee will note that only two amendments relate to clauses beyond Clause 2. I want the Committee to be in no doubt that this has nothing to do with the sloth of Her Majesty’s Official Opposition or other Members of the Committee, but is a commendation to the Minister and his officials on the very extensive consultation we have had, and the fact that many of the concerns we raised about the Bill have now been handled. We have been given assurances, so there is no need to bring forward amendments. I also particularly want to thank Mr Morrison for a long and complicated telephone conversation with me. I am not a member of Her Majesty’s Armed Forces, a lawyer or a former Minister in the Ministry of Defence, so frankly I did not understand how service law sits alongside normal criminal law. I thank him for taking me through it so painstakingly. It was particularly in pursuit of this clause that I sought his advice.
The basic rule is that service law and the criminal law of the land sit side by side. In round terms, a serviceman is answerable to the law of the land, and Clause 24 extends it to overseas, which seems complicated but is really very simple. A serviceman has to obey the criminal law and, broadly speaking, must obey service law on top of that. This part of the Bill is unique in that service personnel are excepted from a piece of the law which applies to civilians, and that is the Railways and Transport Safety Act 2003. Certain sections of that Act specifically except the military. The Explanatory Notes at paragraphs 36 and 37 highlight the fact that there is an exception. My first question is: why was this exception necessary? The Act itself is beautifully straightforward. I will not go into the railway area because it forms so small a part of military activity that it is not worth mentioning. How it relates to shipping is also extremely straightforward. Basically, the Act applies to,
“(a) a professional master of a ship,
(b) a professional pilot of a ship, and
(c) a professional seaman in a ship while on duty”.
The aviation part of the Act states that an offence is committed if,
“(a) he performs an aviation function at a time when his ability to perform that function is impaired because of drink or drugs”.
An aviation function is defined simply as,
“acting as a pilot of an aircraft during flight”.
Various other categories are mentioned, including members of cabin crew and air traffic controllers. It is difficult to understand why it was necessary to except the Armed Forces from this Act. I would have thought that, as a generality, one would not want the pilot of an aircraft, whether it be a military or civil craft, to have his performance impaired by alcohol. My basic proposal is to delete these two exceptions and to ask why they were necessary in the first place.
It seems that the Ministry of Defence has had second thoughts and sees the necessity of bringing a similar law into effect, which will be the effect of the various clauses set out in the Bill that relate to alcohol. However, a rather difficult idea is introduced. Instead of prescribing the roles and acts along the lines of the civilian law, the Bill states that a duty may only be prescribed if its performance while the ability to do so is impaired through alcohol and carries the risk of,
“(a) death;
“(b) serious injury to any person;
“(c) serious damage to property; or
“(d) serious environmental harm”.
The beauty of the Act is that it is extremely clear about what activities it applies to. The service law should be equally clear.
The issue of drink and safety-critical activities is close to my heart. I had an early career in aviation and then one in the railway industry. When I joined the railway industry, there were serious problems with drink and safety-critical activities. It is now a leader in the country in having a very strong campaign that has driven drink out of the industry in safety-critical areas. To do that, it uses not only the 2003 Act but also random testing. My second concern that I put to the Minister is this. In seeking to bridge the gap—obviously the department has felt it necessary to move into testing—why do the Government not produce a simpler piece of law by essentially adopting the Act and removing the exceptional clauses? Secondly, why do they not write into the Act—if they feel the need to do this by an Act—the capability of random testing, which has proved so effective in the railway industry and has contributed so significantly to the improvement in safety? I beg to move.
Lord De Mauley
My Lords, on behalf of the Bill team, I thank the noble Lord, Lord Tunnicliffe, for his very generous words at the start of his speech. In putting forward Amendment 23, the noble Lords, Lord Tunnicliffe and Lord Rosser, bring personal experience of the operation of the Railways and Transport Safety Act 2003 in the civilian environment, which is helpful to the Committee in considering the provisions for the Armed Forces set out in the Bill.
First, I will say something about our general approach when looking at whether to apply to the Armed Forces legislation that is aimed primarily at civilians and civilian institutions. In some areas of law, we follow closely—and in some cases apply directly—the general law that applies to civilians. As the noble Lord, Lord Tunnicliffe, said, this is most notable in the application of the criminal law and many aspects of criminal procedure and evidence. However, noble Lords will accept that the circumstances of Armed Forces life, and the need to ensure the highest standards of operational effectiveness, mean that we have to look very carefully at whether we need different provisions and solutions for the Armed Forces.
The Railways and Transport Safety Act applied the sensible principle of giving powers to test on the basis of a reasonable ground to suspect that someone carrying out navigational and other transport-related activities has taken drugs or alcohol. The Bill adopts this basic approach. However, in deciding what to put in place, we have also considered two special aspects of service life and defence needs. First, members of the Regular Forces, and members of the reserves when they are with the Armed Forces, are on duty or on call for duty 24 hours a day. Secondly, the range of their safety-critical duties is extremely wide. On operations and in training, members of the Armed Forces are constantly dealing with danger and with dangerous equipment and activity.
The approach we decided on includes a number of special aspects in response to these factors. It allows a commanding officer, with reasonable cause, to consider the testing of anyone under his command to establish whether they are unfit through drink or drugs to carry out any duty which they may be expected to carry out and which the commanding officer considers is safety-critical. In addition, it allows specific limits to be set by regulations for any safety-critical duty. This will allow us to develop a comprehensive regime for drugs and alcohol safety over the whole range of military functions.
There is another important difference from the civilian provisions. As I have mentioned, members of the Armed Forces are always subject to be called on to carry out duties. Many of them are living permanently on base and there is no easy way of saying whether, at any one moment, they are on duty or off duty. Moreover, the likelihood of their being called on to carry out dangerous tasks varies greatly in practice between locations—between Afghanistan and places of rest and recreation. We considered carefully how to avoid a necessarily wide power to test from becoming oppressive.
To deal with this, we have provided that it is the commanding officer who will decide, for example, when and whether those under his command are likely to be called on to carry out dangerous tasks. This will allow the chain of command to apply reasonably flexible policies on testing between different theatres and locations. By taking this approach we have tailored the scope and application of drug and alcohol testing to fit service life and needs. I hope that the noble Lord will feel able to withdraw his amendment.
Postal Services Bill
Debate between Lord Tunnicliffe and Lord De Mauley
Lord De Mauley
My Lords, I thank the noble Lords, Lord Tunnicliffe and Lord Clarke, for tabling their amendments, and also thank my noble friends for their contributions. I should perhaps declare an interest; my wife owns and jointly runs a web-based mail order company that uses Royal Mail to deliver its products.
I am delighted that the noble Lords, Lord Tunnicliffe and Lord Clarke, agree with the Government about the attractions of the establishment of an employee share scheme. I say that in the most welcoming and genuine sense. We all agree that this key feature of the Bill will help to improve employee engagement and the culture of the company. We should not lose sight of the fact that the overriding purpose of the Bill is to safeguard the universal service and to secure the future of Royal Mail. A key means of doing that will be by introducing private capital. In deciding on the size of the stake that should go to employees, as my noble friend Lady Kramer said, the Government have had to balance giving a meaningful stake to employees with the imperative of ensuring the private sector investment that the company needs. This is a matter of judgment.
I will put in context the commitment that we are making through Clause 3. The minimum 10 per cent share requirement in the Bill is the largest statutory employee share scheme of any major privatisation. The share is unprecedented, and there is no doubt that it is meaningful. Most major privatisations did not even refer to employee shares in their respective Bills. Furthermore, the share schemes that eventuated offered smaller stakes: 5 per cent in the case of BT and British Gas, and less than that for the other utilities of electricity and water. Only Rolls Royce and BA came close, at 10 per cent and 9.5 per cent respectively. However, we are committed to at least 10 per cent.
I share with my noble friend Lady Kramer experience of advising companies in similar situations. I did that for nearly 20 years, and my experience convinced me that a requirement that employees should own at least 20 per cent, or even 25 per cent, of the shares in the company, as the amendments suggest, would jeopardise getting the investment that the company needs simply by virtue of the substantial size of that stake. We therefore unfortunately cannot accept the increases to the size of the employee share scheme proposed by these amendments. I hope that noble Lords will accept that what is offered is offered in good faith, and that to commit to more would prejudice our ability to achieve a sale.
The requirement to pay equal dividends to all participants of the scheme certainly has attractions. However, Clause 3 is designed to maintain as much flexibility as possible to design the right scheme. We would be ill advised to set in stone the form of an employee share scheme until we have more certainty on the form of the private sector investment. Furthermore, there are other equally sensible methods for determining the allocation of shares and therefore dividend payments. An example of another equally sensible method is length of service, for example. I therefore urge noble Lords not to restrict options at this stage.
The noble Lords, Lord Tunnicliffe and Lord Clarke, asked about the specific route to be followed. The noble Lord, Lord Tunnicliffe, helpfully compared, for example, share trusts against individual ownership. This subject will come up again in subsequent debates on amendments. In brief, some of the benefits of share trusts are that they can be structured to last indefinitely. Depending on their design, they would always keep the capital value of the shares within the trust. Against that, this may not be the appropriate form of scheme to motivate individuals, and we will assess the merits of a share trust and other designs at the appropriate time. Individual ownership clearly offers individuals the opportunity to build up a share pot while they are employed in the business, which they can benefit from when they retire or move on. Individual shares can also be better for employees, in that they offer a greater sense of ownership and can be more tax efficient. The noble Lord, Lord Tunnicliffe, suggested other options, which I found very helpful. This emphasises why it is important at this stage that we keep our options open.
The noble Lord, Lord Tunnicliffe, specifically pointed out some risks of going down the route of issuing shares to employees. As I have said, the exact form of the scheme is still being developed and will be likely to be dependent on the form of the private sector investment. If the share scheme allows for individual ownership of shares by employees, we will obviously explore the most appropriate way of encouraging employees to keep their shares for the long term. Many of the tax efficiencies associated with those schemes relate to a certain holding period, which could be incorporated into the scheme rules. Noble Lords should not assume that employees will automatically sell their shares. In its written evidence to the other place, ifs ProShare noted that two-thirds of BT employees retained their shares rather than selling them off.
The noble Lord, Lord Tunnicliffe, was concerned that there is no guarantee in the Bill that employees will get any shares until the Government have sold their entire holding. Employee shares are an integral part of our policy for Royal Mail, and we have committed to ensuring that there are shares within the scheme at the same time as private capital is introduced. This is the strongest legislative commitment of any major privatisation. The exact sequence of events in such a large and complex sale is difficult to predict at this stage. This means that we need to maintain a degree of flexibility about precisely when during the process the scheme is set up, so as not to complicate that process even further.
The noble Lord, Lord Tunnicliffe, quoted Employee Ownership Association evidence to the Commons Public Bill Committee, saying that 10 per cent was not enough. I might give another quote from evidence to that committee. Alexy Armitage of ifs ProShare said:
“Although they might not hold as much as 10 per cent, or more than that, they like the fact that they own shares in their company and they see that as a benefit and a worthwhile thing to do”.—[Official Report, Commons, Postal Services Bill Committee; 9/11/10; col. 71.]
That is at all levels, not just executives; it goes right through those organisations.
The noble Lord, Lord Clarke, was concerned about how to ensure that management does not get all the shares. I think that was the nub of his concern. He makes a very important point. As I have said, it is too early to get into the specifics, but we imagine that management will be able to benefit from the share scheme as well as other employees. However, the point is to incentivise employees and to give most of the shares to management would simply destroy that purpose; that is absolutely not the intent.
The future ownership of Royal Mail, by both private investors and its employees, will be inextricably linked. Within the important boundaries set by Clause 3, the exact size and form of the scheme will, therefore, be informed by the type and detail of the transaction. It is very important that we keep our options open, for the reasons mentioned by the noble Lord, Lord Tunnicliffe, among other things. I assure noble Lords who have taken part in this debate that their suggestions will be taken into account. I, therefore, ask the noble Lord to withdraw the amendment.
Lord Tunnicliffe
My Lords, I thank all those who have taken part in this important debate and the noble Lord, Lord Cotter, for his general support. I hope that his influence will be, as I think I heard him say, that as many shares as possible go to employees. I accept that this debate is about balance and we are obviously putting our finger on a particular balance. I certainly hope that the eventual situation is closer to our position than the minimum.
I thank my noble friend Lord Clarke of Hampstead for his contribution. I hope that the Government will look back at previous privatisations because they have not been universally successful in properly engaging employees through share ownership schemes. His other point, which supplements my own point, is important: that this must not be seen as in place of a proper relationship between employees, trade unions and the new company but must complement it and make the whole relationship stronger and more meaningful. He referred to the trust solution, and the closer we are to a trust solution than an individual-ownership solution the more comfortable we would be. We hope that the Government are thinking in that way.
The noble Baroness, Lady Kramer, said that this was a great improvement on the previous Government’s contribution. I am sorry that the noble Lord, Lord Hunt of Wirral, is not here to assure me that my recollection and research are correct, but my understanding of our debate is that we took the point on employee share ownership but because our Bill did not have a 100 per cent sale, it left within our discretion an ability to award shares—fairly late in the Bill we were persuaded of that situation—and therefore our advice was that we could bring that forward without the need for a specific clause.
The noble Baroness made the point that there must be a balance between the new owners and the employees, which I take on board—I think it is the same point as the Minister made. However, she said that it would be wrong to introduce too much complexity into the Bill. My reading of the situation is that this will be quite a lengthy process, and we are seeking as much clarity as possible in this area, because we want to create confidence in the workforce. The more that can be done to create that confidence, the better the outcome.
Lord De Mauley
My Lords, I thank the noble Lord, Lord Tunnicliffe, for moving his amendment and all noble Lords who have contributed to this debate. While the idea of an employee share scheme representative on the board may well have merits, it is for Royal Mail and its shareholders to decide how it will structure its board, just like any other company would. Thanks to this Bill, Royal Mail’s shareholders will include its employees in the future.
The noble Lord, Lord Clarke, spoke from his experience of the vital importance of effective employee engagement and communication. The Government wholeheartedly agree with him on that. The employee’s shareholding is not the only way to create that engagement. I understand that there are a number of initiatives that Royal Mail is following at the moment which also contribute helpfully to that—for example, the world class mail initiative.
As we have already discussed, in the debate on Amendment 4 on Monday, we ask noble Lords to accept that it is not appropriate to impose the composition of a company’s board through legislation. In fact, I am not aware of a single precedent where such an imposition has been made by statute. Furthermore, if this amendment were passed, it would mean that in the future a fully independent Royal Mail, which had no government shareholding, would be obliged to request new legislation if the company or the employee share scheme were ever to want to change the way its views were represented to the board.
I am grateful to the noble Baroness, Lady Donaghy, for her recognition that the scheme will enhance the modernisation agreement concepts regarding fostering better relations between the company and its employees. She raised the fact of employee representation on the boards of some European companies. Of course, my noble friend Lady Kramer is absolutely right that their corporate structures are very different to the typical United Kingdom board structure. The noble Baroness also gently questioned the Government’s commitment to the concept. Perhaps I may tactfully say to her that, as the noble Lord, Lord Tunnicliffe, admitted in the debate on the previous amendment, the previous Government had to be pushed quite hard even to agree to contemplate an employee share scheme in the 2009 Bill; we are embracing this concept wholeheartedly.
Richard Hooper’s reports for both this and the previous Government stated clearly that Royal Mail must be freed of the “spectre of political intervention”. I ask noble Lords to accept that specifying the composition of the board in statute will not help with achieving this objective. I would therefore ask the noble Lord to withdraw his amendment.
Lord Tunnicliffe
My Lords, I thank all noble Lords who have participated in this debate, and I thank my noble friend Lady Turner for reminding us how modest this amendment is in providing for only “at least one representative”.
As so often happens, the noble Viscount, Lord Eccles, probably lighted upon the essence of the debate, which is the extent to which such a provision should be on the face of the Bill. It is about whether there is uncertainty for the new owner or not. We disagree on that point. We want the new owner to know that there is going to be at least one employee representative on the board—I have to admit that we want to discourage an owner who would have difficulty with that. We want to take away the uncertainty so that, when Government are negotiating for either a trade sale or some other form of disposal, the new owner cannot resile from this provision. We believe that any owner who would have difficulty with it would not be good for the interests of the Royal Mail in the long term.
My noble friend Lady Donaghy, whose chairmanship of ACAS was so important to a period of change in that direction, pointed out that, while the European structures are different, nevertheless the acceptance of significant board-level presence is part of their legal structure. There is significant employee representation, and large, successful European companies manage with that. Under the structure of our company law, the only way we can sensibly introduce such a requirement into the new structure is by including a provision about who should be on the board. It is a change of attitude, but we are living in a changing world.
I concur with my noble friend Lord Clarke of Hampstead that there was an important initiative in the 1970s on moving towards industrial democracy. I was involved in that on one side of the fence, many of my noble friends were on the other side, and we were starting to make some progress. In many ways I wish we had built on this so that we might not be having this debate now. We would probably be taking the involvement of the workforce for granted in the management of major companies, whether in the private or public sector, because we would have had years of experience of it working. I think that this is the time to set this down.
When I was on the government Benches, I always got a sense from my civil servants that, when they had run out of ideas, they scribbled on a piece of paper “Not appropriate”. Another one that they would come up with was, “It is unprecedented”. Of course, all law is about setting precedents, and we think that this is an occasion when this chance should be seized.
Clearly, I am not going to press the amendment today. We will read the Minister’s words with great care, but we may come back to the issue because I think it is an important marker of the style and the character of company that we hope Royal Mail will become. With that, I beg leave to withdraw the amendment.
Lord Tunnicliffe
My Lords, this repeats an amendment already discussed in the Public Bill Committee of the other place, because we still do not really understand why the Bill is drafted as it is, so in that sense this is essentially a probing amendment. The current draft gives rise to concerns that the employee share scheme could be designed for people other than employees of Royal Mail. Do that on a wide scale and all the benefits of introducing such a scheme, which we have been through in previous discussions, will be dissipated. Of course we accept the narrow definition in the Bill of the employees of Royal Mail only, which could exclude former employees, but who else do the Government have in mind by the use of the term “or include”? Could it be other public servants, customers or competitors? Surely the scheme has to be centred on and be for the benefit of the employees of Royal Mail, whoever it is owned by.
The fault-line here, as in so many issues raised by this side of the Committee—some with the support of other Benches—is that the answer is, “It will be all right on the night. Royal Mail is going to be sold to a wonderful company with all the virtues and none of the faults of big business”. I hope I will be forgiven for saying that, at the end of the day, it will be an average company because in the long term we are all average. We feel that this is the time for the Government to give a more specific response to this probing amendment in order to allay our fears. I look forward to hearing what the Minister has to say and I beg to move.
Lord De Mauley
My Lords, as the noble Lord, Lord Tunnicliffe, has explained, Amendment 21 relates to the scope of the employee share scheme. The words “or include”, which through his amendment he seeks to remove, allow the employee share scheme to encompass those employees of Royal Mail who work for its subsidiaries, even if those subsidiaries do not fall strictly within the definition of a Royal Mail company in Clause 2. Royal Mail has a number of subsidiaries that do not themselves directly provide the universal service, but would nevertheless be considered to be part of the overall company infrastructure and play an essential role. An example would be Royal Mail Estates Ltd, which oversees Royal Mail’s property portfolio. It is clearly our intent that those who work for any Royal Mail company be able to be part of the employee share scheme, but without the words “or include” in subsection (4), there would be significant legal doubt over whether the Government could extend employee shares to the employees of other group companies not strictly falling within the definition of a Royal Mail company.
We do not wish to create a situation where some staff in the group are barred by statute from being members of the employee share scheme. It would mean that they would not have the same incentives to engage with the business they work for and share in its future success. I do not believe that that is what the noble Lord, Lord Tunnicliffe, wants, and I therefore ask him to withdraw his amendment.
Lord Tunnicliffe
My Lords, it would be unprecedented for someone to rise from these Benches and say that they were wholly satisfied with the answer, and therefore I will not set that dangerous precedent. I will say that I like what I have heard, and I will study the noble Lord’s words with great care, but in the mean time I beg leave to withdraw the amendment.