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

Jessica Morden Excerpts

Tuesday 25th January 2022 General Committees

[Paul Scully]

I will respond to that in my concluding remarks so that I am accurate for my hon. Friend.

The two sets of regulations will modernise the role of the certification officer so that she can continue to function as an effective regulator of trade unions and employers’ associations. It is not about constraining the ability of the unions and employers’ associations to do their valuable work. The certification officer has always operated independently of Government and that will continue.

These reforms are about giving the certification officer the tools she needs to do the job as effectively as possible and ensure that the taxpayer no longer foots the whole bill, but that unions and employers’ associations that can afford—

[Jessica Morden (Newport East) (Lab)]

How is this proportionate, given that in her annual report for 2021 the certification officer stated that she investigated only 34 complaints—one complaint for every 200,000 union members—and no enforcement was taken?

[Paul Scully]

The certification officer has had a number of complaints. She has investigated some and dismissed some. Yes, only one enforcement was taken, but that is not the sole purpose of her job. She does not look at that single case; there is a lot of work that leads up to that. As I say, this is proportionate. If she is not doing that much work, then the levy will be cheaper because she will not have that much to do. The levy is to cover the cost of the work. The certification officer is not having holidays to the Bahamas and making a juicy profit out of this. The levy is just covering the cost of the regulator. That is what is proportionate about it and why it is appropriate for the regulator to do it, rather than the taxpayer.

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[Imran Hussain]

The current known cost of the certification officer as it stands is about £700,000, which is paid by the taxpayer. There is, however, a principle: trade unions are there. I have just gone through some of the huge achievements of our trade union movement—which I am sure Conservative Members agree with me about—not just in this country but internationally, for workers in some of the poorest and most squalid conditions around the world. Our internationalist trade unions have gone and done that. Now, on the other hand, we are saying that the draft regulations are not for the good of workers. Trade unions help our workforce with their rights and conditions. Therefore, the principle is that of course this should be paid for by the taxpayer.

[Jessica Morden]

I declare an interest as a long-standing member of a trade union. My hon. Friend is making an excellent speech. Is it worth stopping and recognising at this point that those trade unions have been flat out in supporting our nurses, shopworkers and transport workers, who have been on the frontline in the pandemic, during this difficult time?

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[Jessica Morden]

The proposals treat trade unions like profit-making companies. Political parties do not pay for the Electoral Commission, and charities do not pay for the Charity Commission, so why should trade unions pay for their regulator?

[Paula Barker]

My hon. Friend makes a really good point. No other organisation with social activities pays a levy of this sort, and it is wholly inappropriate for trade unions to do so.

This tax is unjustifiable, and is set to be grossly exaggerated by the certification officer’s own distorted valuations. The trade union levy will become the double levy, going far and beyond covering the base operational costs—the TUC estimates £415,000 in the year 2022-23. Some £1.15 million to cover £700,000 worth of costs simply does not add up. I do not know how the Government can justify that.

The levy is a double tax, with little safeguard, scrutiny or accountability. Trade unions will have to pay for potentially vexatious investigations, initiated by friends like the “TaxAvoiders Alliance”, as my right hon. Friend the Member for Warley called it, or the Institute of Economic Affairs. I know at first hand that our trade unions have a long-established reputation of complying with their legal regulations. I have been a member of the trade union movement for over 30 years. I was also an activist for over a decade before taking my place in this House—[Interruption.] Mr Davies, I think it would benefit Conservative Members to actually listen to what is being said.

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[Paul Scully]

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.

[Jessica Morden]

Why is it that the Minister is introducing these statutory instruments today but has not responded to the e-balloting review?