Draft Trade Union (Levy Payable to the Certification Officer) Regulations 2022 Draft Trade Union (Power of the Certification Officer to impose Financial Penalties) Regulations 2022 Debate
Full Debate: Read Full DebateChris Stephens
Main Page: Chris Stephens (Scottish National Party - Glasgow South West)Department Debates - View all Chris Stephens's debates with the Department for Business, Energy and Industrial Strategy
(2 years, 7 months ago)
General CommitteesIt is a pleasure to serve under your chairmanship, Mr Davies.
The purpose of the regulations is to enact the reforms made by the Trade Union Act 2016 to the powers of the certification officer—the regulator of trade unions and employers’ associations. The regulations were commented on by the Secondary Legislation Scrutiny Committee in the Lords in its 25th report, on grounds of policy interest. Before I explain the content of the regulations, it is important that I provide Members with some context to the reforms.
Unions play an important role in effective industrial relations. They also play a significant role in our workplaces and in wider society. There is therefore a legitimate public interest in trade unions running their affairs according to what is required of them. It is necessary that they have a responsive and diligent regulator. It is vital that we all have confidence that those affairs are conducted properly. The provisions in the 2016 Act are about proportionate and effective regulation. We are bringing the current powers of the certification officer up to date with the situation that we accept as completely normal in other sectors.
The 2016 Act brings in three reforms to the role of the certification officer. The first enhances the CO’s investigatory powers. Those reforms were implemented in commencement regulations made in December 2021, and they will commence in April. As they are not the subject of the regulations before us, I will only briefly explain the Government’s intentions.
The current system largely relies on union members bringing complaints to the CO—for example, on the conduct of elections. The 2016 Act gives the CO the same powers to investigate all breaches that she currently holds for financial matters and the register of members. That will enable her to act without having to rely on a complaint from a member. That is a wholly reasonable power for a regulator.
There are at least two Members present who served on the Trade Union Bill. Can the Minister remind us who can make a complaint to the certification officer?
I will come back to that in my closing remarks. The CO will be able to take up her own views on a matter when there is a breach. It is a wholly reasonable power for a regulator and works on the basis of similar regulators.
My hon. Friend is absolutely right. The regulations in no way attack; they are simply designed to fund the work of the regulator. Most regulators get their costs paid for by the people they regulate. That is eminently reasonable.
The regulations we are considering today bring into effect the second and third reforms set down in the 2016 Act, relating to financial penalties and the levy. We consulted separately on both reforms in 2017 and we conducted a further engagement exercise on the levy last year. The majority of respondents to both consultations and the further engagement exercise were trade unions. I know that they are concerned about the measures, as we have heard, but we have listened to their concerns and I will explain the measures in the regulations.
The Minister is being very generous in giving way. On the consultation in 2017, we should note that there have been two general elections since then, so why are the Government proceeding now?
Because we have proceeded as quickly as we can, given the circumstances of parliamentary time. We wanted to make sure that, in response to the consultation, we could reflect the views of the trade unions by making some changes to the regulations. I will outline them in a second, but I repeat that this is the right time to be making the changes.
Under the financial penalties regulations, the certification officer’s enforcement powers are strengthened by allowing her to impose such penalties against organisations that breach their statutory obligations. The maximum amount of penalty will vary by the type of obligation breached and will be banded into three groups to take account of the severity of the obligation breached. That approach found support during the consultation.
The most important statutory obligations required of trade unions relate to political funding, the proper conduct of union elections and personnel propriety considerations. Those obligations are serious matters and I believe that the maximum penalty of £20,000 should be made available to the certification officer. That is in line with the penalties imposed by other bodies, such as the Electoral Commission.
For other failures of statutory governance requirements, a lower level of maximum penalty, £10,000, is appropriate, and that includes the requirement to keep the membership register up to date. Where breaches do not relate to failures of governance as a whole but to requirements to provide information, comply with investigatory requirements or breaches of internal union laws, the regulations limit such fines to a maximum of £5,000.
I will talk about the distribution in a second.
The regulations also provide for a reduction in the maxima by 50%--bearing in mind that we are talking about the financial penalties—for unions whose membership is under 100,000. That means that no small or medium-sized unions will pay more than £10,000, £5,000 or £2,500, depending on the type of obligations breached. The Government took heed of consultation responses that charging interest would unduly penalise small unions, so we decided not to charge interest for the late payment of penalties.
The Trade Union (Levy Payable to the Certification Officer) Regulations 2022 provide for a levy on unions and employers’ associations to fund the certification officer’s work. It is no longer acceptable for the taxpayer to fund the regulation of these organisations. As my hon. Friend the Member for Thirsk and Malton said, a levy is one of the ways used to fund such regulators. The regulations establish a framework for the levy that is equitable, affordable, predictable and simple.
First, the time that the certification officer spends on each of the different categories of regulated organisations, which are non-federated trade unions, federated trade unions, non-federated employers’ associations and federated employers’ associations—
We know from the Trade Union Bill Committee that the net cost of the certification officer’s work was about £500,000. Can the Minister tell us what it is today?
I will go through the structure in a little more detail shortly.
To make the levy equitable, the certification officer will be able to broadly apportion the levy between the different types of organisations according to how much time she spends on them.
Secondly, I know that many hon. Members and unions are concerned about the affordability of the levy. That is why the certification officer must exempt lower-income organisations from the levy entirely. No organisation will pay more than 2.5% of its annual income, as set out in its annual return to the certification officer.
Thirdly, it is important that a levy is predictable, so the Government will continue to fund the cost of any internal inspectors that the certification officer hires, as the use and cost of those can vary significantly. That was discussed during consideration of the Trade Union Act 2016. For the same reason, the Government will also fund the cost of any external legal advice that the certification officer may seek. That was not identified during consideration of the Act, but the Government believe that that approach will allow for a fairer levy.
Finally, the Government have taken steps to ensure that the levy is simple and transparent. The certification officer will need to aim to ensure that income from the levy matches expenditure over a three-year period, as well as explain how she calculated the amount of levy each organisation is charged. A number of the certification officer’s existing fees will be abolished and subsumed into the levy. That will be the subject of separate regulations, which will be made under the negative procedure, and we intend them to come into force at the same time as the levy.
I declare that I am a member of the Institute of Chartered Accountants in England and Wales. That body does similar things to those that a union might do: it represents its members, makes representations to Government and ensures that the regulated activities that we undertake as members are properly monitored and controlled. There has never been any issue that the Government should somehow pick up the bill for those things—
Or the taxpayer, absolutely. So I am quite surprised that there is huffing and puffing over this. The Minister has made it clear that 2.5% is the maximum. Has he calculated whether, if that 2.5% maximum levy, which I doubt will apply in many cases, were applied across the income of all the trade unions that are registered, it would cover the true cost of the certification officer’s work, or would there still be a shortfall that taxpayers were expected to make up?
I first declare an interest as a proud member of Unite the union, Unison and GMB.
For well over 100 years since the founding of modern organised labour, trade unions have been at the forefront of improving the pay, terms and working conditions of ordinary people across our country. It is because of the struggle of trade unions, even in the face of opposition, obstruction and oppression at the hands of big business and Governments, that working people today have statutory sick pay, which means they are not left completely out of pocket when illness strikes, a minimum wage, which helps to provide a basic floor against poverty, and high safety standards, which ensure that dangerous work places are no longer the death traps they once were.
Yet despite the immense improvements that they have made for working people over the past century, our trade unions are as important today as they have ever been. Working people are still exploited by unscrupulous employers and our trade unions still provide the only real bulwark against even greater exploitation. That has been made all too clear over the last two years of the coronavirus pandemic, with bad bosses, for example, using the dishonest tactics of fire and rehire to take advantage of the workforce.
It seems, however, that the Government do not recognise the value and importance of our trade unions.
Is the shadow Minister not as curious as I am that, four years since the Government started a consultation and after four years of promises of an employment Bill, there is no employment Bill, but there is now this levy being imposed on trade unions? Does that not say all about how this Government view workers’ rights in this country?
The hon. Gentleman is absolutely right and adds to the point that I was beginning to make. It is clear that the Government do not recognise or value the importance of our trade unions. Instead, as we see with the measures before us today, they choose to attack rather than support those who are fighting for working people.
The hon. Gentleman is somebody who I have time for and who normally makes some very good points. However, pay structures within organisations are pay structures within organisations—again, that issue is not relevant here. I take the point; he wants to make a political point. Again, I do not see the relevance of that issue in this debate.
The second statutory instrument deals with the financial penalties that the certification officer can impose. As the Minister pointed out, these can range up to £20,000 for a level 1 breach and closely resemble fines imposed in a criminal setting. However, the burden of proof is much lower, which means that the certification officer, in a politically motivated complaint, can impose a huge fine with a much lower evidential threshold. As I have pointed out, trade unions have high levels of compliance, with just one complaint for every 200,000 union members. As my hon. Friend the Member for Newport East pointed out earlier, the question is: what is the need for greater financial penalties when there has been no need for them in years gone by? This is a deliberate attempt by the Government to squeeze every last penny that they can from our trade unions, preventing them from putting funds forward, representing their members and fighting for working people. That is another reason why these statutory instruments must be voted down today.
The Minister also referred to the expansion of the certification officer’s investigatory powers—although that is not included in these SIs, Mr Davies, I do not think we can have this debate without discussing it. This expansion, giving the certification officer new and wide-ranging powers, will allow for the initiation of investigations against a trade union even if there are no complaints from within the union itself, allowing anti-union organisations to submit vexatious and politically motivated complaints against trade unions. Even if no such complaint is upheld, the damage to the trade union will already have been done, with valuable time, money and resources being spent on fighting vexatious complaints rather than unscrupulous employers.
I am grateful to the hon. Gentleman, because he is emphasising the point that was made repeatedly in the Trade Union Public Bill Committee, namely that this process could include far-right organisations attacking trade unions for their fine anti-racism campaigning work. Does he believe, as I do, that if the Government are consistent, the people who make these sorts of vexatious and malicious complaints should have a levy and a fine imposed on them if they make these sorts of complaints against trade unions?
I absolutely agree with the hon. Gentleman, and I hope that Government Members also agree. We believe this measure is politically motivated, but even if they do not, surely they would accept that it widens the scope and allows for far-right organisations to make malicious or vexatious claims, which at the very least will have to be investigated, and somebody will have to pay for that.
That is the issue at the heart of this debate. This legislation is not well thought out, as the hon. Member for Glasgow South West has said. We maintain, of course, that it is politically motivated. I ask hon. Members to think about that and I particularly ask those who are members of trade unions to accept that point at least. This ministerial direction, which has huge implications, has also had a concerning lack of scrutiny, as it will never receive a proper debate in Parliament or a vote involving all Members.
That takes me to the lack of scrutiny that these measures as a whole have had. Rather than holding a debate on the Floor of the House, the Government have chosen to tuck these SIs away and try to pass them in Committee, which begs the question: why the avoidance of scrutiny? Why the avoidance of debate? The reality remains that the Government know that this is anti-union, anti-workers and anti-rights legislation. They want it passed in Committee rather than exposed in the full House.
Having looked at the clock, I will bring my remarks to a conclusion. Again, I say in the most respectful manner to the Minister—I do not envy him his job; he often gets rolled out in some of the most difficult to defend places—that I hope he answers some of the questions that have been raised by Opposition Members. Thus far, he has not answered any of them; he has said that he will deal with them in his concluding remarks. I ask him to address the serious concerns that have been raised by Opposition Members; set out why he believes that these regulations, which so clearly impede the ability of trade unions to represent working people, should be introduced, especially at a time of great economic uncertainty when working people are facing one of the greatest assaults on their rights in the workplace; and announce when he will fulfil the promise to give trade unions the power to hold ballots electronically by delivering the pilots that were announced half a decade ago.
When trade unions are empowered, working people are empowered, wages rise, conditions improve and productivity soars, so if the Government have any intention of fulfilling the promises they have made to working people, they will pull these regulations and repeal the Trade Union Act 2016. The Labour party has a proud history of standing up on the side of working people and those across the country who fight to protect them and their rights, and we will never shirk those responsibilities. We will therefore be voting against these regulations today.
It is a pleasure to see you in the Chair, Mr Davies, and I wish everybody a happy Burns day—the day of our national bard. As you know, Mr Davies, 90% of the world claims Scottish heritage; the other 10% are not trying hard enough. In discussing this legislation, I was reminded of the national bard’s poem “Address To The Toothache”. What I have heard so far from the Government—their excuses for trying to force through this levy—reminds me very much of that poem.
I am proud to declare my membership of Unison’s Glasgow City branch, my role as chair of the Public and Commercial Services Union’s group in this place, and my role as a trade union activist for 25 years before I came to this place. I am a proud trade unionist, and I always will be. I am proud of the work that trade unions have done across these islands.
As someone who sat on the Trade Union Bill Committee, I think it is important to give some context for some of the difficulties that the Government have found themselves in over the past four or five years, and that they still find themselves in. They are attempting today to impose fees on trade unions—a tax on trade unions, as was mentioned earlier—for complaints that could be made against them. At the same time, the Government tried to stop trade unions paying employers to take their subscriptions off under the check-off regulations. The Government ended up having to abandon that part of the Bill. They also had to abandon the holding of lists of those who were picketing an industrial action, because of concerns over breaches of human rights. At the time, they voted down attempts to introduce e-balloting for industrial action and internal trade union elections while they were using e-ballots to decide their own parliamentary candidates and their candidates for London Mayor—you really couldn’t make it up.
In the four years that we have been waiting while the Government have held the consultation—as I mentioned earlier, there have been two general elections since the consultation started—they have been promising an employment Bill, but where is it? We now know: when the Government were asked at the last Queen’s Speech where the employment Bill was, they admitted publicly that it was not a priority. Dealing with zero-hours contracts, short-term shift change notices and all the other abuses that we see in the workplace is not a priority, but imposing a tax on trade unions somehow is.
I have real concerns. I deliberately asked who makes a complaint for the certification officer to look at. In my view, it should be a trade union member. Trade union members have the right to go to the certification officer and raise a concern that they have with trade unions. However, I am sure the Minister will confirm that under the current Trade Union Act, with the new powers that have been issued to the certification officer, any organisation or member of the public can make a complaint against trade unions.
As the right hon. Member for Warley and the shadow Minister mentioned, that can include far-right organisations. Far-right organisations can make complaints against trade unions for their spending on anti-racism work. The trade unions have been one of the drivers in the fight against racism in this country, and I am proud of that, but we can have far-right organisations making vexatious complaints about funding for organisations such as Show Racism the Red Card—I declare that I chair the showing racism the red card all-party parliamentary group—and Hope not Hate.
Of course, we might have other organisations, such as that friend of the Conservative party, the TaxPayers Alliance, making vexatious complaints. It is somewhat ironic that the biggest cost to the taxpayer has been vexatious freedom of information requests, on occasion, from the TaxPayers Alliance, which could make vexatious and malicious complaints against trade unions.
I think the hon. Gentleman has slightly misnamed that organisation. Given that it will not reveal the sources of its income and that there are credible reports that many of them live abroad, should it not be the “TaxAvoiders Alliance”?
I stand corrected. The right hon. Member is absolutely correct: it should indeed be the TaxAvoiders Alliance. I can assure him that if we continue to refer to that organisation in this debate, I will use the appropriate term.
There are real issues with who should be allowed to make a complaint. My view has always been that I do not have a problem with a trade union member going to the certification officer with their concerns, but I will have a real concern if members of the public are allowed to do so.
We keep being told the cost to the taxpayer, but it is not a lot of money—£500,000 or £700,000. I have in front of me the transcript of the debate on the certification officer in the Trade Union Bill Committee. It is a good eight pages of reading, and it is very enlightening as to the arguments against fees and against increasing the powers of the certification officer, and the Government’s excuses about that. However, I have real concerns that what is at the heart of this legislation is an attempt to curb the work of trade unions in this country by imposing a financial cost on them.
I will just finish this point and then I will give way.
The trade unions have worked to ensure that people are not on exploitative zero-hours contracts, and they have fought against short-term shift change notices. By the way, all those things are covered by my Workers (Rights and Definition) Bill, which the Government could pick up at any time.
I ask this question out of curiosity rather than to try to make a political point. We hear that the certification officer is costing around £750,000 a year, which could increase. What would that be as a proportion of the total revenue generated by the trade unions through membership fees? I am afraid that I just do not know the total collective income of the unions. It would be helpful if we knew what proportion that £750,000 is of total union revenue across the United Kingdom.
I do not know what the trade union revenue is in the whole of the United Kingdom, but I can tell the hon. Member that I was the treasurer of the Glasgow City branch of Unison and its revenue certainly was not anywhere near £700,000. If he wants to see the accounts of that organisation, I am sure I can provide him with a copy.
The hon. Gentleman is making an excellent speech. The issue here is not the revenue that trade unions generate; it is that any money taken away from the trade unions is money taken away from helping working people—helping to improve their terms and conditions and fighting for their rights.
I agree with the shadow Minister. He will recall, because he referred to it, the attempt to impose fees at employment tribunals, which the Government ended up losing. That was also costing trade unions money, because they were having to pay to defend their members at employment tribunals.
Returning to the legislation at hand, I have a real concern that it curbs the basic work of trade unions in fighting for dignity in the workplace. Over the last two years, during the pandemic, we have seen a real exploitation of workers. That shows why we need an employment Bill, which we have been promised for the last four years. That is why the priorities are all wrong.
In addition, the Government have international obligations here, and they are not following them by taking this route. Thompsons Solicitors is clear that the International Labour Organisation conventions and article 6 are being breached. Extending the certification officer’s investigatory powers and imposing a levy would effectively make the certification officer the complainant, the investigator, the prosecutor and the judge. That is in contravention of article 6 of the European convention on human rights and in breach of International Labour Organisation standards. That is a very real concern. Once again, the Government find themselves outliers when it comes to international labour standards.
The Minister will try to present the regulations as standard practice, but I believe that they are ideological, they are an attack on the trade union movement and they are in breach of international obligations. Once again, the Government find themselves with their priorities all wrong. Will the Minister indicate whether he will accept my Workers (Rights and Definition) Bill, which would go a long way towards ensuring fairness in the workplace, or can he tell us when the Government will finally introduce their employment Bill to deal with so many issues affecting workers in this country?
Of course, it is symbolic for the Tory party, but it is also part of a pattern. The union learning fund, which was mentioned previously; industrial tribunal fees; access to industrial tribunals—it is all part of a drip, drip, drip, wearing away at the ability of trade unions to represent their members.
I am slightly surprised that the Minister prays in aid a time of austerity. Did he not see what happened yesterday in the House of Lords, when his noble Friend Lord Agnew resigned from the Government, saying that they have paid out nearly a billion pounds to banks claiming the state guarantee, and that they estimate that about 20% of that was fraud? Lord Agnew went on to say:
“Total fraud loss across government is estimated at £29 billion”.—[Official Report, House of Lords, 24 January 2022; Vol. 818, c. 21.]
Rather than address that, they want to have another go at the trade unions.
In the same way, the Home Office was found in court to have broken the law by charging excessive amounts—grossly overcharging—to register children as British citizens, yet the Government still have not responded to that by introducing legislation. Again, we ask why not.
The right hon. Gentleman is making an excellent contribution. Does he see the irony in these regulations coming from a Government who preach deregulation in almost all sectors of the economy except for trade unions, which are subjected to massive regulation? It goes from laissez-faire to Stalinism with nothing whatsoever in between, does it not?
I will not give way, because unfortunately I now have so little time to respond that I need to plough on.
In terms of vexatious complaints by third parties, third parties will not have a right to make a formal complaint or have them investigated, but clearly the certification officer may consider their representations in deciding whether to launch an investigation. The certification officer, unlike with a complaint from a union member, will not be required to take action in response to a third party’s concern. She will have the decision to do so. And the certification officer can conclude that she will take no action. That is why I do not believe that the arguments about the far right are relevant in this case.
In terms of the net budget that we have heard about, the £700,000, and where that money is coming from, that is the net budget, as I said. That is the money given by ACAS after accommodation, IT and a lot of the other fixed costs. It does equate currently to about £1 million; £1.15 million—that is the estimate according to our figures—is given to the certification officer, based on those current accounts. The certification officer can only charge for expenses incurred over a three-year period. Clearly, there are tests that are required, as it is a public authority, to ensure that she has sight of them at a reasonable level.
The right hon. Member for Warley talked about how the levy is calculated and who will be paying. The total levy, which is clearly needed to pay the expenses for the financial year, will be worked out by the certification officer. Approximately 50% of her time and functions relate to all organisations. That is covered in the basic levy. Small organisations will be exempt when the basic levy exceeds 2.5% of their annual income. The remaining 50% of the certification officer’s time is taken up by regulations that apply to non-federated trade unions. That will be divided out in the additional levy. The total shortfall in the amount collected by the basic and additional levies due to organisations that are exempt from paying will be divided equally among all higher-income organisations. That will support the enhanced levy. There are 21 employer associations and 40 non-federated trade unions that will be totally exempt from the levy, and 59 non-federated unions will be at that top level of the basic, categorised additional and enhanced levy.
We have talked about whether this is compliant with the European convention on human rights. Trade unions, as I have said, play an important role in our workplace and society. It is perfectly reasonable for the Government to legislate to ensure that they act democratically, transparently and within the rule of law. We are satisfied that regulation by the state, as set out in the Trade Union Act 2016, is entirely consistent with the ILO conventions and the European convention on human rights. This is not an attack on trade unions. This is not politicisation. No aspect of the decisions of the certification officer is subject to any pressure from a Minister of the Crown, and that will not change at all. This measure is simply modernising it.
My hon. Friend the Member for Wyre Forest asked what happens to the fines. They go into the Treasury’s consolidated fund. They do not subsidise the certification officer, and neither will she be able to profit from them. That will keep things on a level playing field and she will fine people based only on what is in front of her. This provides no temptation, albeit as a public authority she should clearly not be going down that road anyway.
It has been said that a higher evidential standard should be applied to the higher fines. Clearly, the burden of proof standards are lower than those applied in criminal investigations, but this is a civil action, so they equate and are comparable to other civil payments.
Accusations have been made comparing the £1.15 million to the fraud that was talked about in the other place yesterday. No fraudulent claims for bounce back loans have been written off. In fact, nearly £2.2 billion-worth of potentially fraudulent claims for bounce back loans were stopped and recovered just last year.
We have also talked about valuing workers organising. Clearly, we on the Government side value workers organising. Indeed, we valued that in December 2019, especially when workers in Stoke organised to vote in droves for two fine Conservative Members.