Trade Union Political Funds and Political Party Funding

Lord Tyler Excerpts

Wednesday 9th March 2016 Lords Chamber

[Lord Tyler (LD)]

My Lords, when I first proposed in January that this Select Committee should be set up, I took the following as my text:

“It has become a well-established custom that matters affecting the interests of rival parties should not be settled by the imposition of the will of one side over the other, but by an agreement reached either between the leaders of the main parties or by conferences under the impartial guidance of Mr. Speaker”.—[Official Report, Commons, 16/2/1948; col. 860.]

That was Winston Churchill, leader of the Conservative Opposition, speaking in the Commons. That has been much quoted in evidence to the Select Committee and we should note that the one respect in which we did not follow that pattern was that we picked a much better chairman than Mr Speaker. I pay tribute to the noble Lord, Lord Burns, and to the clerks who were indefatigable in making sure not only that we had a very speedy conclusion to our work, as was determined by the Motion before your Lordships’ House, but that it was, of course, very successful. I hope Members on all sides will acknowledge that the report is comprehensive, intellectually robust and very positive. This has already been said by the noble Lord, Lord King, and I am delighted that he, too, recognised this.

The strong recommendations—with only one attracting minor misgivings from a minority on the committee—now await a government response. We should recall the firm double commitments of the 2015 Conservative manifesto, referred to constantly in debates on the Bill. Because, of course, there were two commitments in that manifesto. One has been regularly prayed in aid by Ministers, while they have tended to dodge the other. To remind the House, the first says that,

“we will legislate to ensure trade unions use a transparent opt-in process for subscriptions to political parties”,

while the second says:



“We will continue to seek agreement on a comprehensive package of party funding reform”.

As we have been constantly reminded, those two stood firmly together in the manifesto.

During our debates in January, we heard several contributions from, for example, the noble Lords, Lord Kerslake, Lord Bew, Lord Dobbs, Lord Cormack and Lord Forsyth of Drumlean—some of whom are going to speak this evening, which is welcome—all of whom warned Ministers to be extra careful in this area. I would summarise the concerns across the House as pointing out that this Government have been getting a bit too big for their electoral boots. After all, they were supported by fewer than a quarter of those eligible to vote last May. Unlike the coalition, for example, this is not a majority Government and therefore it behoves them to be very careful in approaching issues of this sort.

In the interest of brevity, I shall not refer to all the issues that the noble Lord, Lord Burns, has spoken of, because I very much endorse his approach, but I want to take up the point just made by the noble Lord, Lord King. We must ask the Government to think very carefully and not rush into these issues, because they are of very considerable long-term consequence. The crucial recommendations of the Select Committee can be easily summarised. They have already been referred to. Paragraph 134 states:

“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”.

I very much hope that the Minister will recognise that this stands in stark contradistinction to the assertion that the Bill is not about party funding. We unanimously agreed that that was not the case. There can be no pretence now that there is no connection between Clause 10 and party funding: that was the unanimous view of the Select Committee. Incidentally, colleagues on all sides of the House should note our comment in the report on,

“the inexplicable failure of the Impact Assessment to consider this issue”.

Next is the question of how to take forward a comprehensive package of party funding reform, as promised by all the parties. Here the committee, as the noble Lord, Lord Burns, said, was again very firm and unanimous in saying:

“Whether or not clause 10 is enacted, in whatever form, the political parties should live up to their manifesto commitments and make a renewed and urgent effort to seek a comprehensive agreement on party funding reform. We urge the Government to take a decisive lead and convene talks itself, rather than waiting for them to emerge”.

Again, this was unanimous. Whether Clause 10 is improved in ways we all support or not, the Government must simply stop sitting on the fence. It is not good enough for the Prime Minister, who is, after all, a party leader himself—as he is reminded daily at the present time—loftily to blame party leaders for not taking steps to make progress.

The whole logic of the report leads to the inescapable conclusion that the legislative proposals in Clause 10 —and, to a lesser extent, Clause 11—should not proceed, even if improved by amendment, if that latter manifesto promise is not actively pursued at the same time. In other words, unilateral legislation is not acceptable.

The only very minor divergence of opinion in the whole report was on timing, as the noble Lord, Lord Burns, said. The clear majority favoured an explicit omission of all existing trade union members from the opt-in provisions of the Bill unless and until this issue could be considered in the context of wider party funding negotiations. A minority simply wanted a longer transition period for them compared with new members, and there was talk of three years or so.

However, all the other recommendations, including those to which I have referred, were supported on every side of the Select Committee, as the noble Baroness said. It is fair to say that we all recognised the need for progress in this field. If we had not been so aware, we were often reminded of it by the evidence given to us. The public are understandably suspicious of the big donor culture referred to by the authoritative CSPL report. They argue that multimillion-pound donations seem to buy preferential access, influence and even—dare I mention it?—patronage in your Lordships’ House.

The CSPL report referred to,

“a high, and unhealthy, degree of public suspicion about the motivations of both donors and recipients”.

This was endorsed in evidence to the Select Committee from the Electoral Reform Society, whose polling in October 2015 found that 72% of the public believed that the current system of party funding was,

“corrupt and should be changed”.

Evidence from Unlock Democracy cites further Electoral Reform Society research which found that:

“77% … believe that big donors have too much influence”,

over our political parties. This is just one of many factors in the current dangerous level of public disengagement with our politics. There is a firm starting point to address this disenchantment set out in the Committee on Standards in Public Life’s report.

It is often said that where there is a will there is a way. The speed and success with which our Select Committee reached unanimous agreement on so many issues shows that there is potential for progress in this area. The parties have all recognised the urgent need for reform in repeated election promises; now Ministers and party leaders have an opportunity to follow brave words at election time with effective action. It is time for balanced legislation to reform party funding not just for one party—Labour—but for all parties in our political system.

--- Later in debate ---

[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.