Trade Union Bill

Lord Forsyth of Drumlean Excerpts

Wednesday 20th January 2016 Lords Chamber

[Lord Tyler (LD)]

My Lords, I shall try to be reasonably brief because, as the noble Baroness said, I referred to a number of these issues at Second Reading last week.

Since then, I have been struck by the number of Members on the Cross Benches and the Conservative Benches who have agreed that this is the right time to look at the wider issue of party funding. Indeed, it is probably the only opportunity that we will get in this Parliament. I therefore very much welcome the initiative by the noble Baroness, Lady Smith, to bring the idea back before the House this afternoon in prime time, and I hope that we will be successful today.

The Trade Union Bill before the House is deliberately very tightly drawn. The Minister told us repeatedly at Second Reading that it is not about party funding and, as the noble Baroness said, we have all received a letter from her which makes that point yet again. However, I refer the House to the Conservative Party manifesto which contained a two-part promise not only to make this change in this Bill but to reinitiate cross-party discussions about party funding, so this is part of the general package to which the manifesto referred. By making a tight Long Title to the Bill, without even the usual provision of “connected purposes”, the Government are able to advance changes to the way in which individuals contribute to the Labour Party through union political funds and ward off any amendments to the Bill about the way in which such provisions might apply to other parties and other action on the issue.

Most of the big money goes to the Conservative Party. It took 59% of all party-political donations by individuals in the 12 months leading up to the previous election. Even once trade union donations are taken into account, the Conservatives attracted £2 in every £5 donated to all political parties put together. We now know that the cash was spent—in avalanches—in target seats, in marginal constituencies, in the 2015 general election. Jim Messina, the Conservatives’ election adviser from the US, told the Spectator just a few days ago that he thinks the party spent £30 million in the run-up to the poll last year. I suspect that the Conservative treasurer may have recalculated that in the final returns to the Electoral Commission, since the legal limit is £19 million.

As it happens, quite coincidentally, the figures are out today from the Electoral Commission, and they repay very careful analysis. Michael Crick of BBC2, who I think is acknowledged to be an expert in these matters, comments:

“those are the OFFICIAL national party spending figures. I don’t believe them”.

Nor do I. They do not include Conservative candidates’ own expenditure. He then highlights “unsolicited material to voters” costing £4 million. As a recipient in a target marginal seat, I can confirm that, yes, we were all receiving unsolicited mail of that nature. And then it is identified in the Electoral Commission figures published today that £2.4 million was paid to Mr—as he was then—Lynton Crosby, and £369,000 was paid to that very same Jim Messina. Presumably, his opinion on the amount that has been spent by the party is worth paying for.

Having deployed those funds to win a narrow majority in the other place, the Government are now plainly set on redefining the rules of the political game to entrench their own power, perhaps permanently. The Bill must be set against the overall picture of changes secured by Conservatives in the past few months and years. There were arguments over boundary changes. We then saw in the House at the end of last year Ministers nipping through provisions to wipe nearly 2 million people off the electoral register just in time for the boundary-change calculations. We saw last week how the Government are now challenging, with as yet no parliamentary process, even the power of your Lordships’ House. Now with this measure, presented as a technical change to make union members’ donations to political funds more transparent, we have an extraordinary attempt to fully stymie an already hobbled Opposition.

It is extraordinary that we need this Motion, but it is absolutely right to refer us back to the recommendations of the Committee on Standards in Public Life, which examined in detail a whole suite of issues on party funding five years ago. Its work built on that of Sir Hayden Phillips in the review that was commissioned by the then Labour Government. Sadly, no progress was made following the Phillips report because no consensus could be reached on the twin matters of altering principally Conservative funding by way of individual donations on the one hand and altering principally Labour funding by way of restrictions on the way in which trade union political funds work on the other.

We have now an opportunity to look again at a comprehensive package, balanced to affect the major parties in roughly equal measure. The CSPL arrived at such a package in 2011, and that should have been implemented by the coalition Government. It is one of my biggest regrets that no progress was made and the nettle was not grasped then in a fair and equitable way. We cannot turn the clock back, but what we can and should make progress on now, in the first year of this Parliament, is a fundamental package of party- funding reform. It was promised in the Conservative manifesto as well as in those of Labour and the Liberal Democrats.

As the noble Baroness has made clear, a Select Committee of your Lordships’ House seems to be an ideal catalyst for implementing those commitments, and of course it could make very good use of the evidence that the CSPL amassed. Last week the noble Lord, Lord Bew, who chairs the CSPL, made it clear that there is still some work to do in updating the calculations and judgments that his committee made in 2011, and surely a Select Committee is the most effective way to do that. His contribution to the debate last week and that of the noble Lord, Lord Kerslake, are essential reading, particularly perhaps for their colleagues on the Cross Benches, because they were particularly significant.

The Select Committee could look carefully at the partisan effects of the Trade Union Bill and could make recommendations for progress on balancing the provision of a donation cap. It could also review fully, in the light of Electoral Commission evidence, the operation of the current law on constituency spending. As my noble friend Lord Rennard pointed out last week, the spirit of the law on constituency spending limits is being abused—no doubt by all parties—even if its letter is still observed.

[Lord Forsyth of Drumlean (Con)]

Does the noble Lord not think that his credibility in arguing for fairness and balance and non-partisan behaviour in respect of constituencies would be greatly enhanced if the Liberals had not voted to prevent the boundary changes going through in time for the general election?

[Lord Tyler]

It is quite irrelevant. What is absolutely clear—and I think I will have the noble Lord, Lord Forsyth, with me on this—is that all parties now do not respect the constituency limits that he and I had to observe years ago when we stood as candidates. We were told, were we not, by our lawyers and our agents, that were we to spend one penny over the limit for a constituency, we would be in trouble. Indeed, last year all parties swamped marginal, targeted constituencies with money from outside which, as long as it did not mention the name of the candidate, was completely outwith the constituency limits. I think the noble Lord and I would agree that what was set in motion by the 1883 Act, which limited how you could buy a constituency, is now not worth the paper it is written on. We need to look at that again, and it is important that it should be effectively considered by a good cross-party Select Committee of your Lordships’ House.

Spending on material of that nature hugely exceeds the constituency limits, and it is clear from the figures published today that the Conservative Party, and no doubt the other parties, made huge use of that just last year. Voters do not get to vote nationally in our system. Every voter in a constituency votes for their own constituency MP, and therefore material distributed in those constituencies by parties contesting the election is just constituency campaigning. The law needs to reflect that point.

The Motion today sets out an ambitious timetable for the committee, seeking a report by 29 February. I support that, because foot-dragging is the enemy of progress in this issue, perhaps more than any other. No sooner are proposals produced than people start saying, “It’s too close to the next election to do anything”, so it is urgent that this issue is looked at now. The committee might choose to make a first report by 29 February, which could then of course be seen in the light of progress with the Trade Union Bill through your Lordships’ House. This timetable, however, must enable it to work constructively and fully with the Committee on Standards in Public Life to bring forward renewed proposals for comprehensive reform.

If anyone still doubts that the clauses in the Trade Union Bill will entrench the invidious iniquity in the UK’s party funding arrangements or that there is a dangerous arms race in spending, they need only consult the figures the Electoral Commission has published today, which speak eloquently to both. Ministerial claims in the debates hitherto and in the letter sent to us that the Bill may not adversely affect Labour’s income are either charmingly naive or stark-staring mendacious. Perhaps they think we are naive. Either way, balancing provisions for the rest of party funding are urgently needed, so my noble friends and I will strongly support this Motion in the Lobbies this afternoon.

--- Later in debate ---

[Baroness Burt of Solihull (LD)]

My Lords, I am conscious of the House’s time this afternoon, so I will be brief. The purpose of this Motion is to convene a separate committee to consider Clauses 10 and 11 of the Trade Union Bill, because its practical outcome is all about political party funding. The Government can say that the Bill is not about political funding but it patently is. It has the practical effect of further unbalancing the playing field in favour of the Conservative Party by practically reducing the access to funds for the Labour Party.

If we look at the report on the Committee of Standards in Public Life, the opt-in was the quid pro quo for Labour to be considered alongside the reduction in maximum donation of £10,000, which would, it thought, roughly equate to a similar reduction in Conservative funding. But after the analysis that the noble Lord, Lord Tyler, treated us to, that perhaps is a little optimistic.

To my mind, two points follow. First, the Conservatives seem to misunderstand the role of trade unions in this country. They are as much a part of our functioning democracy as the courts, political parties and the dual-Chamber system, which is also under attack, as are the freedom of information changes which the Government are also currently trying to push through. The Labour Party can be accused of many things, including exceeding powers, as the noble Lord, Lord Cormack, has mentioned, but someone, as well as the Liberal Democrats, must constitute an Opposition in a functioning democracy, and Labour, frankly, is in a weak enough state already.

Secondly, if the Government have already taken away Labour’s bargaining chip in any future negotiations on party funding, what incentive is there for the Conservatives to ever return to the negotiating table? It is a win-lose situation and happy days for them. The winning advantage that they will get will enable them to stay in power for the foreseeable future.

At Second Reading, I said that one of the roles of this House is to ensure fair play and a level playing field. This section of the Bill risks that, so a Select Committee is the right approach. I urge noble Lords from all sides of the House to support it.

[Lord Forsyth of Drumlean]

My Lords, I was not planning to speak on this matter but I have been provoked. I do not know what I think about this because I am in two minds. First, this is a manifesto commitment. This House is not expected to oppose Conservative Party manifesto commitments. However, the manifesto commitment is in two parts—it is about a review of funding, and this is only one part. I had to deal with this when I was a Minister of State in the Department of Employment in 1992.

In 1982, my noble friend Lord Tebbit dealt with the matter very well. The issue then on opting out or opting in was that people were not able to choose whether they wished to subscribe to the political fund and many were not aware that there was a political fund. In 1982—I hope that my memory is correct— my noble friend Lord Tebbit and Lady Thatcher’s Government decided that the fairest way to deal with this was to have a regular ballot every 10 years to establish whether there should be a political fund and that people should be able to opt out if they wished, thus preserving individual freedom.

In 1992, 10 years on, we looked at this again and we had some employment legislation which was a little controversial. It included abolishing wages councils and one or two other things like that. The debate in the Conservative Party and the Government at the time was that we should change the law and make a requirement to opt in. I decided that we should not do that and the Government took that view. I decided that we should do so not for any reasons about party political funding, but because I thought that it would be unfair to the Labour Party, reduce its funding and inevitably start a debate about state funding of political parties, to which I am totally opposed. The day we put our hands in the pocket of the taxpayers to pay for our party political campaigning is the day when a bigger gap will open up between us and the electorate.

It would be a great mistake if we moved away from the system that we have—I take the point raised by the noble Lord, Lord Tyler, about the importance of controlling expenditure in constituencies—and the need for political parties to raise their funds by getting members on the ground and in the constituencies. A culture that enables one or two very rich people to bankroll one party, or three or four trade unions to bankroll another, encourages the loss of that grass- roots support that is so desperately needed at present.

As I say, I am in two minds. I hope that my noble friend will be able to answer this in responding to the debate on the Motion: what is the problem that we are trying to solve? What has gone wrong with the trade union political funds and the system established in 1992? I have seen the letter that my noble friend wrote to all of us. Is it that we think that people are being lent on not to opt out of the political levy? Is it, as she said in her letter, that we think that people are not aware that they have the right to opt out of the political fund? If that is the case, is it not possible for the trade unions to come forward with proposals on a voluntary basis that would establish that whatever these deficiencies are would be put right? I know that they have done so.

We are provoking a confrontation that will do none of us any good and certainly will not do the political system any good. I say to the noble Baroness, who I have enormous respect for, on the idea that we can sort this out in five weeks: this will be a bean-feast for the media to have a go at all political parties and their funding.

[Baroness Smith of Basildon]

If I might briefly assist the House in looking at this issue, I am not for one moment suggesting that, in the five weeks or so to the end of February, the Select Committee would be able to look at all issues of party funding. That is not the purpose of my Motion. It is on one specific point: that, on the issues that the Committee would be deciding and voting on, there should be a parallel process to inform its deliberations. No one would dream that it could do it in five weeks—if we cannot do it five or 10 years, we will not do it in five weeks. It is specific on the point of what the committee will be debating.

[Lord Forsyth of Drumlean]

The noble Baroness is very smart and clever and that is exactly the right answer to give to my point, but I am trying to make bricks here. She may be correct in saying that the terms of reference for the committee and its functions could be limited to that period of time, but that will not affect what goes on in the outside world. We will have a great old row about party funding and we will not be in a position to get agreement between the political parties. We all know that it was about setting a limit. The trade unions think that the limit should not apply to them, the Labour Party is so dependent on the trade unions that it will not want to do that, and the same on our side. We know where the differences are. I hope that these might be resolved in the future, but I do not think that the noble Baroness’s Motion is the right way to do that. I agree with my noble friend Lord Cormack that the proper way to do this is in consideration of the Bill.

I hope that my friends on the Front Bench will recognise that this will take away funding from the Labour Party at a time when the Labour Party is perhaps not at its strongest. I have no brief to build up the Labour Party, but our parliamentary system depends on having a strong and effective Opposition. The Short money is supposed to enable the Opposition to operate in Parliament; it is nothing to do with party politics as such and is being cut, so that makes it harder for them to operate. At the same time, to attack the funding is, I think, misguided because I know what will happen. The people will say, “Well, let’s have a look at the Tory Party. How can we inflict this there?”, and we will get into a war of mutual destruction. I do not think that would help enhance the reputation of Parliament or of the political parties. Therefore, the best possible outcome would be not to pass the noble Baroness’s Motion and for the Government to think again about whether there is a way to meet our manifesto commitment and, at the same time, reach a deal with the trade unions which enables whatever the problem is that the Government perceive makes it necessary to do this to be resolved.

[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, I thank the Leader of the Opposition for introducing her Motion and I have listened very carefully to the arguments for appointing a Select Committee to consider Clauses 10 and 11 of the Trade Union Bill. However, I ask the House to bear with me as I set out the Government’s position that these clauses relate to trade union reform and not to party funding reform.

The Trade Union Bill is just that: it is about trade unions, and it introduces a number of reforms based on the 2015 Conservative election manifesto, as my noble friend Lord Forsyth explained so eloquently. I believe that most uncommitted observers would regard these reforms as unexceptional. They represent proportionate reform based on a clear manifesto commitment, which includes a transparent opt-in process for union subscriptions.

However, I must deal first with the confusion which has surfaced—namely, the difference between contributions to trade unions’ political funds and trade unions’ funding of political parties. The Bill requires members of trade unions explicitly to opt in to a political fund. That is not the same as requiring opt-in to union donations made to a political party. Political funds are used for all sorts of campaigns, some of which are not at all party political.

Let me explain the problem that Clause 10 seeks to address. Under current trade union legislation, union members have the choice to opt out of contributing to a union’s political fund. However, that choice is on too many occasions difficult to exercise, and not made clear to individuals. So, to reply to my noble friend Lord Forsyth, we want to end that unfairness and provide full transparency by allowing union members an active opt-in to the political fund. I look forward to discussing that in Committee.

This Motion has been brought to consider Clauses 10 and 11 in the light of the 2011 report of the Committee on Standards in Public Life. Of course, the noble Lord, Lord Tyler, also sought to bring forward a Motion on party funding at Second Reading based on the same report. However, Recommendation 4 of the report specifically addressed a cap on affiliation fees to a political party, not how the contributions are made to political funds of trade unions. The latter did not, in fact, form part of the recommendations of the CSPL report, as the report related to party funding, and party funding is not a matter for this Bill. It is a separate matter that has been the subject of a large number of reports over many years. The recommendations in the 2011 report of the Committee on Standards in Public Life were not accepted by the two major political parties, as we heard, including the party of the noble Baroness, Lady Smith. It would be peculiar for a Select Committee on political party funding to be set up based on a report that does not command cross-party consensus. As the noble Lord, Lord Bew, suggested, a lack of party consensus is at the heart of the problem. Therefore, it would be difficult to make any progress in five weeks, as he said.

[Lord Forsyth of Drumlean]

Can my noble friend give us some examples of where people have been prevented from opting out of the political fund and explain the extent of the problem? Can she also explain why this cannot be achieved by some kind of agreement of a code of conduct with the trade unions?

[Baroness Neville-Rolfe]

My Lords, this is a Motion on procedure and I was not planning to go into the detail, but I will certainly write to my noble friend and other noble Lords and we can discuss in Committee the sort of examples that he is talking about.

As we made clear in our manifesto, we will seek to secure an agreement on party funding reform. Indeed, it is open to the committee of the noble Lord, Lord Bew, to take this work forward in the light of updated data but, I repeat, such work is entirely separate to the passage of the clauses in this Bill, which relate to trade unions and not to party funding discussions. The noble Lord, Lord Tyler, and other noble Lords have made a number of interesting points today, which I will not seek to reply to, as this Bill is not about party funding. I recognise, of course, that some noble Lords feel strongly about the Bill, but all institutions need modernisation and that is what the Bill is about.

The noble Baroness, Lady Smith, has suggested that the House is underinformed about the Bill. I find this difficult to believe, given the marathon debate that we had at Second Reading. The measures in the Bill are rooted in the manifesto, for which we won a majority of support in the election. They are supported by members of the public, whose interests as parents, patients and commuters the Government were elected to defend. The measures secured clear majorities at all stages of the Bill in the elected Chamber. They had the benefit of extensive scrutiny in the other place, including in oral evidence from key stakeholders in Committee.

Furthermore, I am looking forward to a comprehensive debate shortly in a Committee of the whole House. Even my noble friend Lord Cormack, with whom I do not always see eye to eye, seemed to think that the Bill should be considered in Committee, in the best traditions of this House. That is because a primary purpose of this House is to scrutinise and improve legislation. Today’s Motion will not improve the effectiveness of that scrutiny; indeed, it would shift the focus of scrutiny to party funding and away from the central purpose of the Bill, which is trade union reform.

To address the specific concern raised by the noble Baroness, Lady Smith, I am pleased to confirm that we will publish impact assessments on the Bill tomorrow. I will personally ensure that copies reach the noble Baroness and the noble Lord, Lord Mendelsohn, once they are published.