Trade Union Political Funds and Political Party Funding

Lord Forsyth of Drumlean Excerpts

Wednesday 9th March 2016 Lords Chamber

[Lord Robathan (Con)]

My Lords, having been a member of the committee, I pay tribute to the Cross-Benchers, such as the noble Earl who has just spoken, for their measured contributions. I particularly thank the noble Lord, Lord Burns, for his skilful handling of the committee, which must not have always been easy, and his very good humour. As a new Member of this House, I have noticed that people are sometimes reluctant to intervene. I shall make a short speech and if anybody wishes to challenge me, I would be very happy for them to intervene.

First, I will address the question of opting in or out, and then the second, linked issue of how this will affect Labour Party funding. This discussion of the trade union political levy hinges on one issue alone: is it right in principle for trade unionists to opt in or out of the political levy? I know why the situation is as it is. I know the history. But the world has moved on since the second half of the 19th century.

Nick Boles, the Minister, came to our committee and gave us some very eloquent evidence, which I shall quote at length. He said that,

“there has been a very substantial shift across a whole range of areas of public life and consumer activity towards the idea that it is important, when you are asking someone to make a contribution to some other organisation—it could be a supplier of a good or a charity—that they should actively consent to do so … the consumer rights directive, which was implemented in the UK in 2014 and which applies across the European Union for contracts between a trader and a consumer, reinforces the concept of express consent … pre-ticked boxes are no longer permitted under that directive … Turning to the charitable sector … a review of the approach to self-regulation of fundraising in charities and strongly encouraged that, again, all fundraising organisations should take steps towards adopting a system of ‘opt-in only’ in their communications to donors … The FCA is very clear that when signing up to a financial product, consumers should be provided with clear information and be offered an opportunity to actively consent to a new commitment”.

Would anyone in the Chamber disagree about the principle of active consent—opting in, in this and indeed other fields—in the second decade of the 21st century?

The contributions to the political levy are, frankly, trivial, as we have heard already from the noble Baroness, Lady Dean, so the result is that people do not challenge them. It is just not worth the candle. It is not worth the hassle, after all, for an average of 9p a week—less than £5 a year. But if you multiply that, which the noble Baroness did not do, by nearly 5 million union members, you get not far shy of £24 million a year, of which around half goes to the Labour Party. Can anybody in the Chamber defend that system, where those who vote Conservative, Liberal Democrat or whatever unwittingly give money to a party that they do not support? I opt in to join the Conservative Party, and Conservative associations up and down the land sweat blood each year trying to get members and their subscriptions.

Turning to Labour Party funding, it is not my place to advise the Labour Party, it will be pleased to know, but I would suggest that it gets out and gets more members. We were told by the Guardian in January this year that membership of the party has increased from 202,000 to 388,000 since the general election, so perhaps the party is doing exactly that. I am told that more than 100,000 people paid £3 to vote in the leadership election by becoming registered or affiliated supporters. However, trade union membership is falling rapidly. It is less than half what it was in the winter of discontent. I might again advise the Labour Party: it is not wise to rely on these funds. The party needs to get more trade unionists who are committed to the Labour Party to subscribe properly. Perhaps the standard sub of £47 puts them off. In the Conservative Party it is only £25. I think that is too little, but there you go. The noble Lord, Lord Collins, is in his place, and his review has already started the process of opting in. I will quote—not to him because he will know it backwards—what he said:

“After a transitional period of five years, affiliation fees shall only be accepted on behalf of levy payers who have consented to the payment of such fees”.

Notwithstanding the Motion setting up the committee, the issue of trade union reform is separate from party funding. Indeed, all noble Members will have received the joint union briefing on the Trade Union Bill, which included briefing by USDAW and the NASUWT, both of which have political funds. The briefing did not even mention the opt-in or the opt-out, or political levies or political funding. So those unions saw it as separate. It is, frankly, immoral and unacceptable for any party to be funded unwittingly and unwillingly by people who do not support it. I believe that even those opposite must agree.

[Lord Forsyth of Drumlean (Con)]

Is there not a bit of a dilemma here with company donations made, say, to the Conservative Party, where some of the shareholders may not take the view that they support the Conservative Party?

[Lord Robathan]

My noble friend is absolutely right, although he may be slightly—dare I say?—living in the past. We heard evidence—somebody who was on the committee may correct me—that the amount of public company donations has dropped to a negligible level because of legislation brought in by the last Labour Government.

[Lord Forsyth of Drumlean]

My noble friend is absolutely right that the amount has certainly gone down but I thought he was making an argument of principle, not of quantity.

[Lord Robathan]

My noble friend is absolutely right, but of course, in principle, shareholders vote at a company general meeting and the result is that they do not vote for political donations. Of course, one can sell one’s shares, as indeed one can leave a union, but leaving a union may have implications for one’s employment.

--- Later in debate ---

[Lord Leigh of Hurley (Con)]

My Lords, I warmly welcome the report and congratulate the noble Lord, Lord Burns, and the other noble Lords who served on the committee. We had a good discussion on Clauses 10 and 11 in Committee, which I think it is generally recognised were instigated by the Conservative Party manifesto. As the noble Baroness, Lady Dean, and other noble Lords have pointed out, perhaps it did not contain the most elegant of wording, but it did none the less convey the message. As a humble treasurer of the party, I did not get involved in writing the manifesto, so cannot claim any credit for that.

The important point about Clauses 10 and 11 is that they are not seeking to prohibit donations to political parties by trade unions but rather seek transparency and ensure that those who wish to donate to a political fund, first, appreciate that this is the home for their money; and, secondly, understand how that money is spent. Those present in Committee will recall the Populus survey from which I quoted, which found that 30% of one union’s members thought that they had opted out of contributing to the political fund and a further third did not know if they had opted out or not. Nearly two-thirds of the members of this union who were polled thought that unions could do more to advance their members’ interests by using the money elsewhere than for political donations to Labour. Of course, a substantial proportion of members of this union and other unions support other political parties, but donations are focused exclusively on the Labour Party.

The report makes clear that it should be a requirement for all members joining a union with a political fund to be asked, on the membership form, to make an active choice to contribute, or not, to that fund. Like the noble Lord, Lord Robathan, who said it very elegantly, I cannot really see any argument against that. Indeed, I served on the Etherington committee, which made the point, in respect of charities, that there has to be an active opt-in before donations are made to avoid it being classified as aggressive fundraising. The current situation is that every 10 years a ballot is opened up for members to approve the continuation of opt-out arrangements. However, we have seen one union which, despite leaving the ballot open for three weeks—one would have thought a proper ballot would take just a day—achieved only an 18% turnout.

Accordingly, it seems to me that the only real issue for Members of this House to decide is whether to implement the opt-in requirements immediately or over a period of time. It would of course be very helpful if, at this point, the unions could enter into negotiations with the Government to reach an agreement on this, and perhaps my noble friend will explain whether that is happening. However, in the absence of any such negotiations, I would find it somewhat extraordinary if the opt-in does not commence for all existing union members, albeit phased in over a year or maybe two. I would not accept that a cross-party consensus on the general and much wider subject of political funding is necessary to implement this one particular aspect relating to trade union behaviour. Indeed, I am somewhat surprised that others think otherwise.

It should be borne in mind that, while the Conservative Party manifesto specifically called for a cross-party consensus on political funding, the Labour Party manifesto was explicit in its determination to impose a cap on political donations. There is no mention of consensus and no mention of agreement; simply that a cap will be put on political donations. Accordingly, if Labour had won the election in 2015, it would either have had to break a manifesto commitment or it would right now be implementing a very dramatic and severe change to party funding. It is clear to me that the Government are not proposing to do that but are simply trying to ensure transparency for those who wish to donate. The debate on the ethics of the state imposing a limit on a citizen’s free will to give their money to a political party of their choice is not for this occasion.

The discussions we are having about this situation must be pretty similar to those when PPERA was brought in in 2000 under the Labour Government. That required private, public and listed companies—the three can be different—to seek approval from members of the company in general meetings before political donations above quite a modest sum were made. Subsequently, the Companies Act required full disclosure of such donations. Both of those are now recognised as steps forward and I welcome them as being appropriate. The actual figures, since some noble Lords have questioned this, are that since 2010, declared donations from listed companies to the Conservative Party have been well short of £1 million. In the same period, well over £50 million has been raised, so the numbers speak for themselves.

[Lord Forsyth of Drumlean]

The point that I made, which I think the noble Lord is referring to, was not about the numbers or the amounts. I was responding to my noble friend’s point when he argued that it was immoral for people with money to be contributing to a political party when they did not support it. That applies in the case of some shareholders who may not support the Conservative Party. I am not against that; I was simply arguing that it was wrong to make a moral case which would apply to company donations. The extent of the donations—their number and volume—has nothing whatever to do with the principle. We are not discussing the price here; we are talking about the principle.

[Lord Leigh of Hurley]

I take the point, but the principle I am trying to explain is that a listed company has to have a general motion at a meeting where all shareholders have the right to vote. As a result, such listed companies have dramatically reduced their donations. Private and public companies also have to have shareholder approval.

I would agree with noble Lords who point out, in respect of Clause 11, that £2,000 is a very low level and may not be practicable. I would certainly not want to see unnecessary administrative expense for the unions in the enforcement of these new requirements.

Finally, I believe that further clarification is required on Clause 11. I note the Certification Officer will have to ensure that unions identify moneys spent under Section 72(1) of the 1992 Act, but there is confusion as to whether payments which are not within Section 72(1) should be similarly identified. For example, there are donations that can properly be described, in layman’s terms, as political but are not necessarily made through or to a political party. For example, payments by unions to CND and Boycott, Divestment and Sanctions against Israel made through the fund are not disclosed as such. I would argue that many members of unions would be horrified to find that that is how their money has been spent.

I would hope that a government amendment would clarify this point. I understand that it might be covered by case law, but I agree with paragraph 107 of the report, which states that the current level of reporting for political fund expenditure is insufficient.