Trade Union Political Funds and Political Party Funding

Baroness Neville-Rolfe Excerpts

Wednesday 9th March 2016 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills and Department for Culture, Media and Sport (Baroness Neville-Rolfe) (Con)]

My Lords, before I address the substance of the issues before us today, I would like to join others in warmly thanking the noble Lord, Lord Burns, and endorse his warm thanks to the committee members and the clerks and staff for producing a clear, crisp report in such record time. This was an impressive achievement. As the noble Baroness, Lady Dean of Thornton-le-Fylde, said, the committee clearly worked really well together—apparently oiled by good humour.

What is most encouraging is that the committee has found cross-party consensus on the fundamental principle that lies at the core of the debate and our manifesto: that union members should be asked to make an “active choice” to contribute, or not to contribute, to a political fund. There are clearly a range of views as to how this principle should be implemented, but that does not detract from the consensus.

The report covers aspects of the Trade Union Bill, which we will be discussing again in this Chamber very shortly, and party funding. Let me first focus on Clauses 10 and 11 of the Bill. Taking a step back, these clauses are about the relationship between trade union members and trade unions; they are not—this is an important point on which I do not agree with the noble Lord, Lord Stoneham, or with the noble Baroness, Lady Smith—about relations between union members and political parties, although I will come on later to talk about the impact that freedom of choice might have on the Labour Party.

The relationship between trade union members and their unions should be based on transparency and on choice. This Government believe in trusting the people with choice—an “active choice”, as the committee puts it, not a theoretical choice buried away in the fine print—and we were not alone in this. As my noble friend Lord Sherbourne reminded us, Nick Clegg told the committee that he sees the decision to opt in to a political fund as,

“a sovereign decision for an individual citizen”.

At times, our discussions on these matters have covered overlapping matters in a complex way. It is therefore very helpful that the report makes it clear that the Bill does not contain the proposal that was contained in the 2011 report of the Committee on Standards in Public Life. That report referred to union members opting in to the payment of union affiliation fees to the Labour Party, whereas Clause 10 concerns union members opting in to union political funds. Nor is it the same as the proposals in the Labour Party’s Collins review—the work, of course, of the noble Lord, Lord Collins—which also focused on the relationship between trade unions and the Labour Party.

Furnished with the facts provided by the committee, let me examine the argument put up by those who oppose Clause 10. Nearly 5 million trade union members did not opt out of the political levy in 2013. It has been claimed that were these people asked to choose, explicitly, whether they wished to pay money into their union’s political levy, millions would decline to do so. Opponents of the Bill have suggested that that could cause union political funds to decrease by up to 90%. Personally, I doubt this assessment, but if it were true, up to 90% of union members would currently be making contributions when they do not want to. Across the 25 unions with political funds, 17 unions make no clear reference to the right to opt out on their membership forms, four only mention it in the small print requiring members to write in separately to opt out, two do not have membership forms which are publicly accessible and just two provide a clear choice on the right to opt out.

In other sectors, this would be called inertia selling and would normally be seen by this House as a wrong that we should put right. The same should apply here. We want members to make a positive choice to contribute at the point of sale. However, union rulebooks are not easily accessible, so how would a member know to look there unless they had been told of their right to opt out?

Earlier, noble Lords made much of an exchange in 1984 between my noble friend Lord King—who I am glad to see again in his place—and the TUC whereby, in effect, to avoid opt-in, trade unions would in future ensure their members were aware of their ability to make a choice not to contribute to a union’s political fund. Crucially, it was also agreed that opt-in legislation would not be pursued as long as this agreement was adhered to by trade unions. As my honourable friend Nick Boles said in written evidence to the committee:

“We do not believe that the agreement between the then Employment Secretary and Len Murray, then general secretary of the TUC, has been fulfilled”.

There is also an important commitment in the manifesto. It is the Government’s intention to implement that clear manifesto commitment to create a clear and transparent opt-in process. The manifesto commitment is also intended to apply to all union members. The commitment that matters for this Bill is on page 19 of our manifesto—there are in fact two different references in different places—which says:

“We will … legislate to ensure trade unions use a transparent opt-in process for union subscriptions”.

That is part of the reforms that we are bringing forward in the Trade Union Bill.

I now turn to the impact this freedom of choice might have on the Labour Party. The facts are that of the UK’s 163 listed trade unions, 25 have political funds, of which 15 have an affiliation to the Labour Party. As the Labour Party’s general secretary told the committee, fewer than 50% of the political funds of trade unions affiliated to the Labour Party actually go to the Labour Party. As to the impact on the Labour Party, the committee said,

“we see no obvious reason why union payments to the Labour Party must decrease in size by precisely the same percentage as union political funds”.

I agree. Indeed, according to the report, Helen Pearce of the Trade Union and Labour Party Liaison Organisation accepted that:

“Unions might decide to spend a slightly higher proportion of their political fund to increase slightly the amount of money they give to the Labour Party”.

Clearly, much depends on the key point of how many trade union members decide to part with their money and opt to pay into the political fund.

[Lord Tyler]

I am very grateful to the noble Baroness. She said in the debate on 11 January that this section of the Bill is not about party funding. Does she accept or not the clear, unanimous recommendation of the Select Committee at paragraph 134:

“It is clear to us that clause 10 will have an impact on party funding and that it is very far from commanding the consensus which we have said is desirable in such situations”?

It seems to me that the noble Baroness is dancing on the head of a pin, which is not a desirable prospect at this time of night. Can she be clear: is she now accepting that the clause has a likely impact on party funding and that her previous statement was therefore, to some extent, misleading? Is she accepting the recommendation of the Select Committee or not?

[Baroness Neville-Rolfe]

I think I have already been very clear on the point. I do not accept the link, but I am trying to answer on the question of Labour Party funding, and to move forward to say something about party funding, because that is the subject of the debate and the report.

There is, in my view, no reason why a union that is using the political fund to advance the interests of its members could not get a large majority of them to contribute. In Northern Ireland, where the system has existed since the 1920s, some unions, such as the Prison Officers Association, have up to 89% of their members contributing. It is clear that if unions are providing a service that people want through their political funds, members will willingly pay for them. It is not unreasonable, as some have suggested, that some union members may want to contribute more.

I move on to what might loosely be described as the mechanics of the opt-in process. The committee has made a useful contribution to the debate on this issue, analysing the Bill’s measures and suggesting changes to the opt-in process. I remind your Lordships that my honourable friend Nick Boles told the committee that he wanted,

“to make sure that the transition from the pre-existing approach to a modern approach of opt-in is possible for the unions to do in a way that is successful for them and their members and not punishing in terms of costs”.

I repeat that because I think it is an important statement.

[Baroness Smith of Basildon]

I am grateful to the noble Baroness for repeating that quotation, because she talks about a modern method of opting in. Does she think that the hurdles placed in the way—that it has to be within three months in every five years but also that it has to be in writing, on paper—are a very modern approach?

[Baroness Neville-Rolfe]

If I may, I will continue and perhaps return to that point in due course.

No doubt on Report, which starts next week, your Lordships will wish to debate the further specific measures and suggestions contained in the report, but an important point is that the Government remain committed to introducing a transparent opt-in system for political funds for all union members, not just new ones. However, we will reflect on both the recommendations of the committee and the views of other Members of the House expressed in Committee on the Bill and this evening on the mechanism of the provisions.

As for the specific recommendations on the operation of Clause 11, I am pleased that the committee has endorsed the principle that union members are entitled to a reasonable amount of detail about the political expenditure of their unions, and agrees that the current level of reporting is insufficient. Again, we will reflect on the committee’s technical recommendations and, as I said, continue to engage with the Certification Officer on this and other matters.

I turn to the wider issue that the committee was asked to consider in relation to party funding: the necessity of urgent, new legislation to balance those provisions with the other recommendations made in the Committee on Standards in Public Life report. As the committee itself noted, we have a democratic mandate to introduce the opt-in for political funds. Our manifesto did not state that that depended on there being party funding reform. So the Government agree with the committee’s conclusion:

“While there is no agreement between the political parties, we see no scope for introducing urgent new legislation on party funding to balance the provisions of this Bill. We believe that the political parties should give effect to their manifesto commitments on party funding”.

The Government agree in principle, but for any talks to be productive, there needs to be a sense that all parties agree on the basis for discussion.

Let us not forget that, despite the efforts of its members, the 2011 Committee on Standards in Public Life report did not get cross-party support. Indeed, both parties opposite objected to at least some of its conclusions. It is also important to note that the report predated the Government’s 2015 manifesto.

There are clearly major stumbling blocks to progress. There is no appetite for state funding of political parties. As the noble Lord, Lord Wrigglesworth, a former treasurer of the Liberal Democrats, told the committee:

“I cannot see a time when political parties will be willing to go to the taxpayer and ask for money for their own organisations”.

So what might the approach be? The unfortunate fact is that inter-party party funding talks over the last decade have failed to reach any consensus, in part because they have focused on controversial and complex structural changes. Evidence to the Select Committee suggested moving ahead with smaller reforms that might command cross-party support, such as finding practical ways in which to encourage more and smaller donations from wider audiences. As part of the Government’s broader approach of promoting giving to good causes, the Government would be willing to take that forward for further consideration, such as publishing a discussion paper in the first instance, if there was a positive reaction to such a potential step from the political parties. I hope noble Lords will be pleased to hear that; I shall be particularly interested to hear the views of the committee chaired by the noble Lord, Lord Bew, on these issues.

To conclude, we are heartened that the committee agrees on the fundamental principle behind Clauses 10 and 11—that union members should be given an active choice to contribute or not contribute to political funds. We welcome the contribution and ideas on how that mechanism might work and commit to reflecting further on these recommendations, such as the transitional provisions for implementation and the methods of communication that a union is permitted to use in our digital world.

[Lord Whitty]

My Lords, before the noble Baroness sits down, I just reflect that that was a very disappointing performance in view of the sentiments that have been expressed all around the House. We all recognise that the present system of funding of political parties has a lot of problems and that we need a fundamental new review. Without a commitment from the Government to engage in that review, the compromise that we have come up with in this committee does not deliver what the committee wants and what I believe this House wanted in its decision to set up the committee, and what has been expressed quite widely in the debate tonight. I hope that between now and Report the Minister and her colleagues will reflect further on whether this is a sensible stance for the Government in the face of such widespread sentiment in this House.