Trade Union Bill (Ninth sitting)

Nick Boles Excerpts

Tuesday 27th October 2015 Public Bill Committees

[Ian Mearns]

Yes, I was aware of that, but I thank the hon. Lady for bringing it to the Committee’s attention, because it certainly helps to make the point that I am pursuing.

Clearly, there is a vision of trade unions that this Government do not understand, and that vision is shared by many private sector employers. Unfortunately, this Government see trade unions as the enemy within. They still hark back to the miners’ strike of 1984-85 and to the 1970s, when, we all accept, industrial relations in this country could have been a lot better. However, we are not in the 1970s; it is 2015, and the landscape of industrial relations is very different.

I have been a trade unionist all my adult life. On my second day of employment with British Gas I asked the personnel department how I could see a union official to sign up for my union membership, and I joined the National and Local Government Officers’ Association—NALGO—which is now part of Unison. I think that NALGO was an acronym for “Not A Lot Going On”—[Laughter.] I have been a trade unionist all my adult life, and I had the honour of working with many very decent and honourable union officers, both full-time officials and lay officials who were elected by their peers in the workplace.

I have also been an employer; I was deputy leader of Gateshead Council. Back in the days before we had the severe and harsh cuts that we currently have to go through, we had something like 11,000 employees in Gateshead. They covered a whole spectrum of different professions, providing public services for the people of the borough and the constituency that I represent. We prided ourselves on having good industrial relations and having good dialogue with our workforce on a regular basis. There were of course times when there were problems, but we managed to talk through the vast majority of those problems through good, robust and—on occasion—friendly industrial relations.

I have been above that as well; I have also chaired a national negotiating committee of the LGA called the Soulbury committee. We looked after the interests of advisers for schools, educational psychologists and other professionals of that nature. I therefore have an understanding of the strategic role that employers play in good industrial relations.

The Government need to understand why business is not that keen on these provisions. For instance, they should read Personnel Today, the journal for human resources professionals and practitioners. An article in that journal states that:

“You can have the most sophisticated industrial relations structures, follow all the rules and negotiate ad infinitum, but you will get nowhere if your relationships with staff and their union reps aren’t based on trust”.

It continues:

“This was abundantly clear during the recent civil service industrial action and the narrowly averted strike at British Airways (BA). We see this time and again. An organisation might call us in because it can’t get an agreement signed off, or the process has become too uncomfortable for both sides. What we frequently find when we get there is a climate of mistrust, entrenched ideas, and even outright hostility between union and management, employer and worker.

It doesn’t have to be this way. Look at Co-operative Financial Services, where we recently facilitated a management/union agreement over outsourcing—one of the most sensitive industrial relations issues over the past five years. Similarly at Gillette where, faced with redundancies, the business consulted with employees at the earliest opportunity and asked the staff representatives for alternative proposals, how to approach the situation and what the final redundancy package should contain. Larger, more complex organisations can learn from these successes”.

The UK Government need to learn lessons from the real world. Instead of fighting the ideological battles of the last century, they need to start equipping this country with legislation that fosters and supports good practice, and supports workers and their representatives. The legislation needs to recognise not only that it is right and fair to support the weakest and the most vulnerable but that, ultimately, as the best employers have repeatedly demonstrated, it is good for business too.

[The Minister for Skills (Nick Boles)]

It is a pleasure to be starting what I hope will be the final day under your chairmanship, Sir Alan. Sometimes during this debate it strikes me that the two sides of the Committee are discussing completely different pieces of legislation. Both Opposition parties portray the Bill as one of the most egregious attacks on fundamental human rights since King John, whereas I would describe it as, to borrow a phrase from the previous speaker, a NALGO Bill, in that there is not a lot going on.

What the Government are proposing here is nothing more than a set of provisions that seek to change behaviour within the public sector. After all, the public sector is funded by taxpayers: they go out to work to earn money and they pay taxes, so they have a right to see that money spent responsibly. We hope that, in the light of public scrutiny of the information relating to facility time that public sector employers will be required to publish under clause 12, public sector employers will voluntarily renegotiate their existing facility time arrangements with trade unions and bring their spending on taxpayer-funded facility time under control.

We could, of course, have legislated now for a cap, so the idea that the clause, to cite another famous monarch, is a Henry VIII measure, an egregious attack, is false. We have heard a lot about the constitution in recent hours. We could have legislated for a cap now and no doubt the Opposition would have attacked that. We have taken the more modest route of suggesting reserve powers, which—the clue is in the name—will be kept in reserve and used only as the last resort. Only if transparency shows unacceptable inefficiencies in relevant employer spending on facility time and poor value for money for taxpayers from existing facility time arrangements with trade unions will Ministers set a cap on the time and money spent on facility time.

Amendment 101 would prevent the reserve powers being exercised so as to effect changes to a contract of employment or collective agreement, or limit the relevant employer’s discretion as to the contents of the contract or agreement concerned. The amendment would, in effect, neuter any consequential provision that regulations could make amending or otherwise modifying contracts of employment or collective agreements. As I have said, it is by no means certain that the reserve powers will ever be exercised and, should they be exercised, it is also by no means certain that this would interfere with, or override, existing contractual rights and rights under collective agreements. Most union representatives do not have contractual rights to facility time over and above their statutory rights, which we are not seeking to change.

[Jo Stevens (Cardiff Central) (Lab)]

What legal advice has the Minister received as to whether this proposal for a cap conflicts with EU law, with TUPE law or with the Information and Consultation of Employees Regulations?

[Nick Boles]

We keep going around this merry-go-round. The Government receive a great deal of legal advice from their own officers and sometimes they seek other advice. We do not publish that advice; we are satisfied with the compatibility of all our proposals with all the laws and treaties to which we are signed up. Any cap on facility time will only apply prospectively. It is, on the other hand, possible in theory—though, as I have said, unlikely in practice—that a cap may apply to ongoing, legally-binding relationships; either legally enforceable terms in a collective agreement, or in the contractual rights of individual employees. This is what is flagged in the European convention on human rights memorandum to the Bill. The Government acknowledge, however, that even the potential impacts upon pre-existing contractual arrangements should be fully debated. That is why we considered the affirmative procedure to be necessary to provide the correct level of parliamentary scrutiny.

Before asking hon. Members to withdraw their amendment I want to respond to a question, which is not specific to this amendment, about the devolution settlement. The devolution settlement does not define which individual Ministers in the Government can do things. It defines which areas of policy are devolved and which are not. We have established, and there is general consent—although it might well be wished otherwise—that employment law is not a devolved policy but a reserved policy, and therefore Ministers in the UK Government are entitled to exercise those reserved powers in relation to their responsibilities. That does not imply that, say, the Secretary of State for Health, would be breaching the devolution of health to the Scottish and Welsh Governments by exercising the reserve powers under employment law in the way that we have outlined.

[Chris Stephens]

First, can the Minister confirm that the Scotland Bill has still to reach the end of its parliamentary journey and so the issue of devolving employment law has still to be settled? The Secretary of State for Scotland is considering that matter, as I moved the devolving of employment law in Committee.

Secondly, can he confirm which Government Ministers will have the reserve power to dictate facility time for local government and health in Scotland?

[Nick Boles]

It is very clear. First, we are following the Smith commission recommendations. It may be the case that a particular Bill has not yet received Royal Assent and anything is possible, as we are in the process of discovering in our vibrant parliamentary democracy. No doubt, if there is an unexpected result, future legislation will be adjusted to reflect it. The Government’s intention to follow the Smith commission recommendations that employment law remains a reserved policy is very clear. It would be odd if we brought forward a Bill that conflicted with another Bill that we were trying to take through Parliament at the same time by presuming that that Bill was going to fail. We are presuming that the Bill will succeed, because we are following the Smith commission.

I have been clear that Ministers of the Crown can exercise the reserve powers that are reserved to the United Kingdom Government. There is no detailing that this Minister can do this and that Minister can do that. We are all Ministers of the Crown and the reserve powers of the UK Government are clearly set out in the Bill.

[Stephen Doughty]

What the Minister is admitting is quite extraordinary. The hon. Member for Glasgow South West mentioned the Scotland Bill. There is also a debate about a draft Wales Bill, which many Members of this House and the Welsh Government consider rolls back the devolution settlement. This seems to be a further rolling back. I draw the Minister’s attention to the comment from the Minister for Public Services who, on hearing the Minister’s claims on Thursday, said:

“This confirms our assertion that the UK Government cannot impose these regressive changes on Wales and any change will require our consent.”

Is the Minister proposing to take the Welsh Government to the Supreme Court if they refuse to implement the Bill?

[Nick Boles]

He would say that, wouldn’t he? He is a member of the hon. Gentleman’s party and he disagrees with the Bill. I entirely respect that, but the fact remains that employment law—to which all these provisions relate—is a reserve matter in the Smith commission proposals that all parties and certainly his party signed up to. We are currently taking Bills through Parliament which will implement the Smith commission proposals in full, therefore all our proposals, including proposals on facility time are entirely consistent with the devolution settlement. On that basis, I ask him to withdraw the amendment.

[Stephen Doughty]

I did not expect the Minister to do anything other than stick to his guns, but I find it extraordinary. There are very serious questions, not only about how the measure cuts across existing conventions and legal treaties and provisions that we are party to. I hope the Government’s legal advice is very good because I suspect there may be a number of significant challenges to the Bill.

I remain astonished at the admission that the executive powers that have been devolved since 1999 to the Welsh and Scottish Governments are being exposed as limited by the Bill. On top of the debates on the Scotland Bill and the draft Wales Bill, that is extremely revealing. Has the Minister had consultations with the Secretaries of State for Scotland and Wales about this?

--- Later in debate ---

[Ian Mearns]

The hon. Gentleman makes a valid point. Once enacted, the provision will give the certification officer the right, or possibly even the duty, to act on any complaint, no matter its source. That is a matter of grave concern. The provision is concerning and an expensive waste of time for trade unions.

As a means of restricting the rights of trade unions and their members, the provision is nothing short of disgraceful, and that has been borne out by the evidence from a whole range of international organisations and lawyers representing many interests. The provision will turn the certification officer’s role from one of protecting trade union members into one that is highly political. They may be forced to react to politicians and newspaper editors, instead of members. Where the certification officer becomes the investigating power, they will become judge and jury over trade unions, their members and officials. Trade union members—the ones we are all concerned about with the Bill—will have to foot the bill while having no easy mechanism to hold the certification officer to account for their actions.

[Nick Boles]

The Government believe that it is entirely appropriate for a modern regulator to be able to investigate properly when non-compliance with statutory requirements is suspected. The idea is nothing new, as the Electoral Commission and the Charity Commission have investigation powers that can be used proactively when they suspect a breach.

The powers are important because we want the certification officer to be able to determine as quickly and efficiently as possible whether there is a problem so that that can be swiftly remedied. If no problem is found, the quicker the doubts, representations and complaints can be dismissed, which is better for everyone concerned, including unions, employers and the public. The Bill therefore extends the certification officer’s investigatory powers into a number of areas: political funds; union mergers; union leadership elections; and the appointment of a person to, or the failure to remove a person from, a union office when they have been convicted of certain financial offences. To ensure that all the certification officer’s investigatory powers are set out in one place in statute, the Bill also replicates not-yet-commenced investigatory powers in relation to statutory requirements to maintain an accurate register of members’ names and addresses.

We want the certification officer to have investigatory powers in those areas because they relate to statutory requirements that are not only of concern to union members, but of wider relevance to the general public. Members of the public need the assurance that unions are complying with statutory requirements, and they will be given that assurance if the certification officer is able to investigate of his own volition. The investigatory powers will also allow the officer to bring in additional resources or specialist knowledge, should an investigation prove complex and technical. That will give them flexibility when choosing an appropriate inspector, including a third party, to deal with such investigations and then resolve them swiftly and effectively. It will also assist their ability to manage the certification office’s workload, should there be a sudden spike in cases.

--- Later in debate ---

[Ian Mearns]

The Minister seems to be implying that there is zero chance of the certification officer being a political appointment in future.

[Nick Boles]

There is no proposal to change the appointment procedure for the certification officer. As the hon. Member for Cardiff Central reminded us, the appointment is made in consultation with ACAS. I remind the Committee that ACAS is currently run by Brendan Barber, the former general secretary of the Trades Union Congress. The idea that we are going to be able to stuff in some political stooge is somewhat far-fetched, like almost everything that Opposition Members have said during the Committee.

On amendments 69, 70 and 71, I am happy to reassure Members that a union will continue to have the opportunity to present its case in written representations to the certification officer before a declaration is made. The officer may also allow the union to make oral representations. That right will also apply before the certification officer issues a financial penalty or conditional financial penalty. In practice, a union may have several chances to reply to any allegations and put forward a defence. Any inspector appointed is likely to make a series of enquiries, which will include dealing with the union directly, before providing their report to the certification officer.

Finally, the union will be able to appeal a certification officer’s decision to the Employment Appeal Tribunal. That will ensure that a union has the opportunity to make further representations to an independent tribunal should it believe a decision made by the certification officer was unlawful. I therefore urge the hon. Gentleman to withdraw the amendments.

[Stephen Doughty]

I welcome the Minister’s clarification on those last points. Given that, I am content to withdraw the amendments, but I hope that when we discuss the subsequent groups of amendments the Minister will explain what other position in Government has the same range of investigatory, adjudication and enforcement powers in the hands of one individual. It would be useful to understand the sort of comparisons we are looking at. The powers are very wide-ranging and the situation is very blurred.

The Minister has given assurances that the position will remain independent and so on, but he mentioned a spike in cases: perhaps he suspects that there might be such a spike. Opposition Members have expressed concerns about the malfeasance that might be attempted by, for example, a fascist group or someone else who wanted to tie up the certification officer’s time or, indeed, a union’s finances in dealing with a bunch of illegitimate cases in order to disrupt and cause problems. That would be of great concern. I hope that the Minister can explain that in subsequent debates, but for now I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Stephen Doughty]

The Bill needs so many amendments because of its complex nature. A lot of information and important detail is contained in the relevant schedules, and it is necessary to apply the changes that we want to make to all the relevant parts of the Bill. I will go through the amendments briefly without repeating our arguments and overall concerns about this part of the Bill.

Amendment 54 would remove schedule 2, which includes provisions permitting the certification officer to carry out investigations, even though no complaint has been made by a union member. Amendment 55 seeks to ensure that the certification officer only carries out an investigation against a union where a complaint or application has been received either from a union member or an employer who employs union members. The amendment aims to tease out our concern about who might bring investigations or complaints.

Amendment 66 would mean that only the certification officer or his or her staff—and not inspectors—would have the power to require the production of documents from unions during an investigation. This is an important point because the Minister made a case in his comments on the preceding group about a potential spike in cases and the need for additional inspectors to help the certification officers conduct their work. That is a very worrying suggestion. While the Minister might give us assurances about the independence and conduct of the certification officer under the new role, appointing a legion of inspectors under them who have some sort of quasi-judicial role separate from existing legal authorities or police does not reassure me about the way in which they would conduct themselves. Will the Minister explain how he sees their role and what constraints they would operate under?

Amendment 67 would mean that the certification officer could only initiate an investigation if they have received a complaint from a member of the relevant union and if they believe there is evidence that the union has breached one of its statutory duties. The aim is to ensure that the certification officer—or one of the inspectors—does not initiate investigations on their own volition or go on fishing expeditions through union records when they have not received a complaint from union members. Does the Minister believe that the certification officer would be allowed to undertake such investigations without complaints being made by a relevant party, particularly where a complaint from the union member involved has not been received? In my view, certification officers should not have the ability to wander around initiating investigations here, there and everywhere without any just cause.

Amendment 68 would mean that only the certification officer or members of his or her staff could investigate a union. Amendment 56 would mean that the certification officer could only make a declaration that a union has failed to comply with the new reporting requirements if they had received a valid complaint from a member of the relevant union. Again, this is to ensure that the certification officer does not initiate investigations on their own volition if no one has complained. Amendment 57 would prevent a union member who was not a party to the relevant complaint seeking to enforce an order made by the certification officer.

It is a very odd set-up where, on our reading of the legislation, somebody who is not involved at all could look at a decision that has been made and then seek to enforce the order. If that is not the case, can the Minister confirm that on the record? The role of organisations such as the TaxPayers Alliance has already been commented on. Many individuals and organisations would attempt to undertake vexatious expeditions, perhaps on the back of fishing, to attempt to enforce orders against trade unions, which would already have spent quite a lot of their own funds in dealing with the complaints. They would potentially then have to fight attempts by another individual who was not even involved to try to enforce the orders made under this clause and the schedules.

Amendments 58 to 65 would further limit the enforcement powers of the certification officer and define their role rather than that of others who might be involved in potential enforcement. The amendments are designed to tease out various concerns we have about the way in which the legislation is drafted and would be applied in practice. I will be interested to hear what the Minister has to say and whether we seek to press any of the amendments to a vote.

[Nick Boles]

On amendments 54, 55, 56 and 67, the current enforcement regime is limited. With the exception of statutory duties in relation to financial records and as of next year the membership register, the certification officer may only make inquiries and take action following a complaint from a union member. That is not satisfactory. A modern regulator should be able to take action as appropriate where they suspect that there has been a potential breach of statutory duties or obligations. That is not new: the Electoral Commission and the Charity Commission both have such powers. The powers will enable a certification officer to take enforcement action once he has made inquiries and only if satisfied that there has been a breach of statutory duties or obligations in relation to the new reporting requirements. It would be wrong to restrict the exercise of the certification officer’s powers simply to responding to a complaint as the amendments seek to do, so the Government cannot support them.

Amendment 67 additionally seeks to change the test for the use of the officer’s powers of investigation. Currently, the officer may request documents when it is believed there is good reason to do so and appoint an inspector in circumstances that suggest a trade union has breached a duty. The amendment would require the certification officer reasonably to believe that evidence indicates a breach of duty.

It is important to note that the amendment relates to the test of the use of investigatory powers, not the basis on which the certification offer can make a determination that there has been a breach. Of course, there must be evidence and investigatory powers are about gathering that evidence. The tests we propose for the use of the investigatory powers are essentially the same as those that apply to the officer’s long-standing powers to investigate potential breaches of financial affairs under the 1992 Act. Those tests have been in place for a long time.

The investigatory powers are intended to assist with determining whether there has been a breach. The officer will still have to give the union the chance to make representations and then be satisfied that a breach has actually occurred before taking any enforcement action. If a trade union believes that the certification officer has acted beyond his powers or that the officer has made a mistake in applying the law when reaching a decision, it can still appeal to the Employment Appeal Tribunal. I therefore believe that adequate safeguards are already in place.

I turn to the enforcement of the certification officer’s orders. Amendments 57 to 65 aim to restrict the enforcement of orders to the officer exclusively. In tabling the amendments, the hon. Gentleman seems to be under the impression that we are trying to subcontract enforcement of the officer’s orders to individual union members. I assure him that that is not the intention. We simply seek to reflect the current situation in which complainants and other members of the relevant trade union are entitled to apply to a court to enforce obedience with the officer’s orders. That is nothing new; indeed the 1992 Act is clear on that point.

[Stephen Doughty]

Will the Minister clarify whether he believes it would be reasonable for someone who was not a party to a dispute—the TaxPayers Alliance, for example—to attempt to enforce an order or be involved in such an enforcement?

[Nick Boles]

As I think I just explained, it is currently the case under the 1992 Act that complainants as well as other members of the relevant trade union are entitled to apply to a court to enforce obedience with the certification officer’s orders. If such a body had been a complainant, there had been a process and the certification officer had made an order, under the provisions of the 1992 Act it is entitled to apply for enforcement of that order. There is nothing new in that; that has been in place since 1992 and, needless to say, throughout the period of the previous Labour Government.

Amendments 66 and 68 seek to restrict investigation activities, including the power to demand documents from a trade union, to the certification officer’s own staff. I understand concerns in relation to data protection and confidentiality, but the ability to appoint a third party gives the officer discretion to identify an inspector with specific expertise or simply to bring in additional resource should that be necessary.

Some investigations might be complex, technical and lengthy, so the officer’s permanent team may not have the time to carry them out. The amendment would reduce the officer’s flexibility in choosing an appropriate inspector to appoint, should such a case arise. It is important to note that the ability to authorise or appoint people to assist with investigations in that way is not new. It is exactly the same as the options currently available as part of the certification officer’s long-standing powers to investigate financial affairs. All the Bill does is to provide similar powers of investigation in relation to other potential breaches.

[Stephen Doughty]

I want to test the Minister a little more on inspectors. He says that there is nothing new, but he spoke previously about a potential spike in cases leading to an increased need for inspectors to help the certification officer carry out their duties. Will he tell the Committee—if he cannot do so now, perhaps he could write to us—how many inspectors would be required, whether there would be a cap on the number of inspectors that the certification officer could appoint, where those costs would be met from, whether there would be any cap on the cost and what sort of qualities would be required in the recruitment and employment of those inspectors by the certification officer?

[Nick Boles]

I am happy to write to the Committee with that information. I would like to correct something that I said previously, in case I created a false impression. I had not understood that a complainant has to be a member of the trade union. Under the 1992 Act, any member, whether a complainant or another member, can enforce the certification officer’s orders. That is what we propose to replicate for these other powers. Except in the unlikely event that the TaxPayers Alliance decided to join all the trade unions that it wanted to complain about, it is unlikely that it would be in a position to enforce those orders.

[Stephen Doughty]

So just to clarify, it would not be appropriate for vexatious individuals outside the dispute, who were not members, to attempt to involve themselves in the enforcement of orders or the investigations.

[Nick Boles]

That is exactly right. I apologise to the Committee if I created a slightly false impression.

[Chris Stephens]

Just so I am clear, is the Minister indicating that he is amenable to amendment 55, which would provide that the complainant must be a trade union member? He said earlier that he was going away to consider some aspects of picketing, in relation to what could be defined as outside interference.

[Nick Boles]

No, I am not indicating that, but we believe that the Bill already makes it clear who has the power to complain and who has the power to enforce. Moving on, I have explained that the appointment of investigators is not new; it happens under existing powers regarding the investigation of financial matters, and the Bill simply extends it to other potential breaches. The new investigatory powers contain specific provisions to impose a duty of confidentiality on any inspector that the certification officer appoints to prevent the unauthorised disclosure of personal information about union members. I therefore ask Opposition Members to withdraw the amendment.

[Stephen Doughty]

The Minister has provided helpful clarification on a number of points, but I am still not convinced that there are enough safeguards built into the Bill concerning the role and extent of investigations, and the basis on which they are made. He has said that the Bill does not change what was there before, but it will massively extend the powers of the certification officer, so I think it is only right that we look at defining limitations to those investigations, adjudications and enforcements. We may table other amendments at later stages and I would like, at the appropriate point, to press to a vote amendment 67, which would establish limits to ensure that the certification officer does not go on fishing expeditions where they have not received complaints.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

New clause 7—Certification Officer—

“For subsections (2) to (4) of section 254 of the 1992 Act substitute—

“(2) The Certification Officer shall be appointed by the Judicial Appointments Commission, and the person appointed shall have expertise in trade union law.

(3) There shall be a Certification Officer for Scotland, equal in status to the Certification Officer in subsections (1) and (2) above.

(4) The Certification Officer for Scotland shall be appointed by the Judicial Appointments Board for Scotland, and the person appointed shall have expertise in trade union law.””

New clause 10—The Certification Officer—

“In section 254 of the 1992 Act (The Certification Officer) for subsections (2), (3) and (4) substitute—

“(2) The Certification Officer shall be appointed by the Judicial Appointments Commission, and the person appointed shall have expertise in trade union law.””

[Nick Boles]

The previous two groups of amendments afforded us the opportunity for extensive debate on clause 14, so I do not propose to speak at length about it. It extends the certification officer’s investigatory powers and enables the officer to exercise a number of those powers without a complaint from a trade union member. It is entirely appropriate for a modern regulator to be able to investigate properly where non-compliance is suspected.

I turn to new clauses 7 and 10, and I remind the Committee that the provisions in the Bill, including those that relate to the certification officer, concern employment law and industrial relations matters. They are about how trade unions act and how they should be regulated. Those remain reserved matters for Westminster and are not devolved to Scotland or Wales. In my view, the provisions should apply across the whole of Great Britain, and I do not propose to rehearse devolution arguments here. I note, however, that section 254 of the 1992 Act requires the certification officer to appoint an assistant certification officer for Scotland and allows for the delegation of functions relating to trade unions based in Scotland to that assistant certification officer for Scotland. I believe, therefore, that the 1992 Act sufficiently caters for Scotland’s needs and that appointing a separate certification officer for Scotland is not necessary, especially since the 1992 Act provides a regulatory framework for the whole of Great Britain.

Turning to the proposal that the Judicial Appointments Commission should be responsible for the selection and appointment of the certification officer, I do not agree that the certification officer is a judicial office. Currently, the certification officer has a range of functions—administrative, investigatory, regulatory and adjudicatory —all of which are important aspects of the office. Hon. Members will note that the Bill further increases those investigatory and regulatory functions. It would not be correct, therefore, to describe the certification officer as a judge or other holder of judicial office.

It has been long-standing practice that the certification officer should be a ministerial appointment; a practice not, I believe, challenged or questioned by the previous Labour Government. Such appointments are typically made following Department for Business, Innovation and Skills public appointments practice: a panel, which includes an independent panel member, as well as representatives from the CBI and the TUC, considers applications and makes recommendations to BIS Ministers. In making its recommendations, the panel must only put forward names of candidates that are appointable—that is, who have demonstrated competence to perform the role. It is then for the Secretary of State to make the final decision on whom to appoint. This is nothing new and certainly nothing unusual.

I am keen to stress that the certification officer is, and always has been, independent of Governments of whichever party. Ministers have never directed what the certification officer does. Indeed, no one has suggested otherwise since 1975, when the office was set up. The certification officer is appointed by the Secretary of State after consultation with ACAS, but as his annual report, deposited in the Libraries of both Houses of Parliament, points out, he is independent from both ACAS and the Secretary of State for Business, Innovation and Skills. As the Committee knows, we want to enhance the role of the certification officer to ensure robust and effective regulation of trade unions. We want to modernise this regulatory role to bring it up to date with a new, modern system for industrial relations. Our changes increase the regulatory aspects of the role. The Government do not therefore think that appointment of the certification officer by the Judicial Appointments Commission is appropriate.

Turning to the proposal that the certification officer should have expertise in trade union law, I agree, of course, that the certification officer should have knowledge of trade union law, but I do not believe that it is necessary to prescribe this in legislation, primarily because to do so risks limiting the range of candidates that could perform the role in future. In any case, the recruitment panel will only recommend to Ministers appointable candidates for the role of certification officer and those candidates will need to demonstrate to the panel that they have full competency for the role. For these reasons, I ask hon. Members to withdraw the new clauses.

[Stephen Doughty]

I am somewhat bemused by the Minister’s comment that the certification officer is not a judicial officer. He has explained the wide powers that the certification officer has, so I am very interested to know what positions the Government consider to be comparable. Most people would consider the certification officer to have a quasi-judicial role, at the very least, and therefore we need some very strict controls about how it is regulated. The crucial point is that we are moving well beyond the original role set out for the certification officer. As my hon. Friend the Member for Cardiff Central said, this is not to comment on the suitability or the work that has been done by the current certification officer, who, from all my experience and that of the stakeholders I have engaged with, has done a very good job, but this is a complete change in the role and its powers. That change requires a fresh look at how the certification officer is appointed.

Our new clause would provide that the certification officer in Great Britain would be appointed by the Judicial Appointments Commission. Currently, as we have heard, the role is appointed by the Secretary of State for Business, Innovation and Skills in consultation with ACAS. The Minister went through the process of shortlisting and so on, and obviously, it is great that a number of stakeholders are involved. However, of course the final decision rests with the Secretary of State and that, again, gives wide latitude to a Secretary of State to veto or to appoint someone partisan or political. Given the nature of the rest of the Bill, many of us might strongly suspect that that would happen.

The Secretary of State for Business, Innovation and Skills of course regularly consults many different stakeholders, but as we saw in debates about the steel industry he seems willing to ignore all the advice and carry on regardless. I have no faith as to whether things would continue in that vein, when I consider the intent and purpose of the Bill.

We all agree that the certification officer should be independent of Government and required to have expertise in trade union law rather than just knowledge of it. Demonstrable knowledge could be an ability to list by rote the clauses of the Bill. Someone who takes such a wide range of powers needs a detailed understanding of the provisions. The 1992 Act does not specify the qualifications required, but the Bill gives the certification officer extensive new powers and remits, and it is only reasonable to expect the person appointed to have expertise in that regard, particularly given the various aspects of the role.

If the Minister intends to reject the new clause, will he explain what consultation, as a minimum, he would expect for the new role? Will things just carry on as they do under the old system, with the limited involvement of the TUC, CBI and so on at the shortlisting stage, or does he envisage a wider range of people being involved? Will he give wider assurances about the type of qualifications and other requirements? Given the nature of the proposed role, we believe that the certification officer should be appointed by the Judicial Appointments Commission—that is only right—and that there should be a clear requirement for expertise in trade union law.

New clause 7 is essentially similar to our new clause in its purpose; I understand why the hon. Member for Glasgow South West and his hon. Friends have tabled it, in relation to Scotland. As I have said before in similar debates, we want the fairest settlement in the Bill for workers and trade union members across the UK, and I hope the hon. Gentleman understands that that is what we intend with our new clause. It would deal with the whole of Great Britain, not just Scotland.

--- Later in debate ---

[Nick Boles]

We do not accept that the Bill would dramatically expand the certification officer’s role. We are simply replicating the investigatory powers that he already has in relation to financial matters with regard to the new matters that he will have the power to investigate, so we certainly do not see any basis for changing how he is appointed. Previous Governments who were happy for him to have those investigatory and regulatory powers in relation to financial matters thought the arrangements for appointment were adequate. I commend clause 14 to the Committee and ask Members to resist new clauses 7 and 10.

[Stephen Doughty]

To clarify, we will press new clause 10 to a vote at the appropriate point.

Question put, That the clause stand part of the Bill.

--- Later in debate ---

Enforcement by Certification Officer of new annual return requirements

[Nick Boles]

I beg to move amendment 94, in clause 15, page 12, line 23, at end insert—

‘( ) In section 45D of that Act (appeals from Certification Officer), after “31” insert “, 32ZC”.’

The amendment adds a reference to the new section 32ZC (inserted by clause 15) in section 45D of the 1992 Act. The effect is that decisions made by the Certification Officer in relation to the enforcement of the new annual return requirements provided for by clause 15 are subject to a right of appeal.

The amendment rectifies a small omission in the clause relating to appeal rights. Where a union fails to comply with the new annual reporting requirements, the certification officer will have the power under the clause to make a declaration to that effect. If the certification officer makes a declaration, he will have the power to make an enforcement order unless it is in inappropriate to do so; he will also, under clause 16 and schedule 3, have the power to issue a financial penalty.

It has always been our intention that if the certification officer makes such a declaration or order, the union will have a route of appeal to the Employment Appeal Tribunal on a point of law. That is consistent with the approach taken elsewhere in the 1992 Act. However, the clause as it stands will not provide for such rights unless a reference to the new provisions is inserted into the correct place in the 1992 Act. The amendment corrects that oversight. I trust that hon. Members will be content to accept this minor amendment.

[Stephen Doughty]

I appreciate the comments the Minister made. Given that this is a rare chink in the cloud that allows trade unions some rights to challenge use of the draconian powers provided for elsewhere in the Bill and in the clause, I do not intend to oppose the amendment. However, we will oppose the clause to which it relates.

Amendment 94 agreed to.

Question put, That the clause, as amended, stand part of the Bill.

--- Later in debate ---

[Stephen Doughty]

I want to ask the Minister a few questions. The clause inserts new section 32ZC into the 1992 Act and gives effect to schedule 3, which we will come to shortly. The certification officer will have a new power to impose financial penalties on unions when an enforcement order has been made, and the Government will have the power to set the level of penalties in regulations. Paragraph 6 of schedule 3 states that penalties will range from £200 to £20,000. The clause also extends the ability of individual members of a union to enforce the certification officer’s orders even if that order was no concern of theirs.

Will the Minister explain a little more about the penalties—how they will be applied, the different gradings and so on? Do the Government plan to increase the limit at any point? How often does he expect them to be used in the different categories? What size of penalty does he expect to be applied?

I also want clarification on the individual member’s ability to enforce orders. Thankfully, we had clarification from the Minister that individuals outside a dispute cannot be involved, but there is a possibility that members of the union that was party to the dispute who were not personally involved could attempt to enforce orders.

The Committee might wonder why I am worried about that, but there are circumstances in which a couple of individuals who are members of a union may be involved in malicious activity and attempt to undermine others who have taken a wider, collective decision that was endorsed by other members. I want to understand who can be involved in attempting to enforce a certification officer’s orders. Can that be any member of the union involved whether or not they were personally involved in the case? I would be grateful if the Minister would clarify those points.

[Nick Boles]

New schedule A4 to the 1992 Act will enable the certification officer to issue financial penalties or conditional financial penalties in those areas where he has existing powers to issue declarations and enforcement orders, which will provide a consistent approach. He will also be able to issue those penalties for breaches of the new annual reporting requirements on trade unions in relation to details of industrial action and political fund expenditure. Those areas are all listed in paragraph 1 of the new schedule.

Paragraph 4 of the new schedule requires the certification officer, before issuing a penalty, to provide written reasons for his decision, which will allow the union to know why the certification officer has found against it. The union will also have the opportunity to make written representations and may be given the opportunity to make oral representations.

Paragraph 5 of the new schedule provides for appeals to the Employment Appeal Tribunal based on an error of fact or a point of law, or on the grounds that the decision to impose a financial penalty or conditional financial penalty is unreasonable. The appeal grounds are similar to those provided for in other financial penalty regimes and will ensure that a wrong decision can be challenged.

Paragraph 3 of the new schedule provides for enforcement of conditional penalties. In cases of non-compliance, the certification officer will issue a further order requiring that a penalty be paid immediately or by a certain date. Where a union has provided evidence of partial compliance, the certification officer will have flexibility to reduce the amount of the penalty should he choose to do so. That will encourage unions to comply with conditional penalty orders while punishing those that take no steps towards compliance.

The hon. Member for Cardiff South and Penarth asked whether any member of the union about which a complaint has been made, including members who were not themselves complainants, can apply to court for the enforcement of the certification officer’s orders. My understanding is that currently, under the 1992 Act, it is possible for any union member to apply for enforcement of such orders, but I am happy to write to him with the full detail if that is helpful.

[Stephen Doughty]

Are there any cumulative limits on the number of financial penalties or the total amount that can be imposed on any one subject in the legislation within a year, or could numerous orders of up to £20,000 be imposed, with no limit on the overall amount sought? Obviously, due to vexatious actions or fishing expeditions and so on, a union could be subject to hundreds of thousands of pounds in penalties in a year as a result of investigations, without any kind of limit.

[Nick Boles]

There is no limit, but as the hon. Gentleman points out, if a union is subject to vexatious complaints, the certification officer will not find in favour of the complainant or impose a penalty. As I have explained, the union will have every opportunity to appeal any penalty imposed improperly. Although I understand the drift of his concern, the provisions already protect unions from vexatious complaints that might lead to an accumulation of penalties.

[Ian Mearns]

There is, of course, a downside for the trade unions even in that situation, in that it is the trade union that will have to pay for the investigation.

[Nick Boles]

We will move on, I believe, to the question of how the costs of the certification officer will be paid for. It is absolutely right that the Government are proposing that, in common with other regulators, the certification officer will be paid for by the regulated. However, again, if vexatious complaints are made, we have every reason to expect the certification officer, who has all the powers necessary to do so, simply to dismiss them and not to pursue them to the detriment of union finances.

On that basis, I commend the clause to the Committee.

Question put, That the clause stand part of the Bill.

--- Later in debate ---

Power to impose levy

[Nick Boles]

I beg to move amendment 95, in clause 17, page 14, line 1, leave out

“(b) payments made by ACAS under section 254(6),”.

Section 254(6) of the 1992 Act is spent: it depends on section 115 of that Act, which has been repealed. The reference to section 254(6) in the new section inserted by clause 17(1) was included in error, and this amendment removes it. Amendment 97 repeals section 254(6) itself and the reference to it in section 254(5A).

[The Chair]

With this it will be convenient to discuss Government amendment 97.

[Nick Boles]

Clause 17 inserts new section 257A into the Trade Union and Labour Relations (Consolidation) Act 1992, to provide the Secretary of State with the power to make regulations requiring the certification officer to charge a levy on trade unions and employer associations to recover the cost of the certification officer’s expenses. New subsection 257A(3) sets out the sorts of expenses that the regulations might specify are recoverable by the levy; this includes payments made by ACAS under section 256(6).

The payments under section 256(6) were intended to enable the certification officer to make payments towards expenditure in connection with secret ballots. However, the provision to make those payments—section 115 of the 1992 Act—was repealed more than 20 years ago by the Trade Union Reform and Employment Rights Act 1993. That in turn means that section 256(6) is not required—in fact, it should have been repealed when section 115 was repealed back in 1993. Amendment 95 corrects that oversight and repeals section 256(6). Amendment 97 completes that tidying up. It removes reference to those sums being included in the expenses of the certification officer that the regulations could require the levy to recover. I commend Government amendment 95 to the Committee.

[Stephen Doughty]

I accept the Minister’s point about the two Government amendments being technical in nature, so we do not intend to oppose them, but I do want to explain briefly our concern about clause 17.

As we have discussed at length, the Bill imposes significant new administrative obligations on unions in a range of matters. They face a major increase in regulation that the Government simply would not apply to other sectors in society—certainly not to business. They will also be expected to pay for the pleasure of the enforcement of the new obligations.

As discussed, clause 17 contains a power permitting the Government to levy a charge on trade unions to cover the running costs of the certification officer, which currently stand at approximately £1 million but are expected to rise. I suspect that they will rise under the new regime, given the wide expansion of powers. The levy looks set to apply to employers’ organisations—I hope the Minister can clarify this point—including the Engineering Employers’ Federation, the Electrical Contractors’ Association, the Federation of Master Builders and the National Farmers Union. The measure will apply not only to trade unions but to a whole range of employers’ organisations.

We understand that the Government are consulting on how much should be levied, but, like on so many areas of the Bill, they have not published their consultation responses, so we are in the dark on this matter. We are expected to vote on the Bill without knowing what will happen. Will the Minister explain a little more about how the levy is expected to work, whom it will be levied on and whether it will apply to the organisations I mentioned? What level can we expect it to be at? Will it rise in the future? What provisions will there be to review it? How will it be put into operation? It is not acceptable that a Committee considering matters of this nature is making its decisions largely in the dark.

[Nick Boles]

Trade unions and employer associations, like many other organisations, should be regulated. Proportionate regulation helps to improve confidence in the way such institutions are run, which can only be a good thing. It is only fair that the cost of such regulation falls not on the taxpayer, but on those who are regulated. I note that the previous Labour Government introduced an almost identical provision, which I believe all members of the Committee support, in the financial services industry, whereby the costs of financial regulation and the regulator fall on the members of that industry.

[James Cartlidge (South Suffolk) (Con)]

I ran a small financial services business and remember paying high fees, which went up steeply, to the Financial Services Authority. I recall no consultation, about which we were unhappy, but the key issue was that the regulator failed rather substantially in the credit crunch. If such payments are made here, can we have assurances that we will have a good quality system for all those affected?

[Nick Boles]

I am certainly trying my best to ensure that the regulation of trade unions is more effective than the regulation of the financial services industry preceding the 2008 crash. I do not think that the risks are as great, and I have been the first to point out that it is unlikely that the trade unions, which mostly do an excellent job, will crash the economy in the way that the under-regulated financial services industry did under the previous Labour Government. Sir Alan, I think you are going to say that I am moving away from the point, so I will return to it.

The clause enables regulations to be made so that the certification officer can charge a levy on trade unions and employer associations.

[Jo Stevens]

Will the Minister give way?

[Nick Boles]

I am going to make some progress.

It is important to understand that employer associations are also subject to the levy. The Bill does not prescribe the amount of the levy because the certification officer is independent. It is for the certification officer to decide each year how much they need to charge to cover the costs of performing their functions. We have taken the approach of providing a regulation-making power, rather than setting out in the Bill exactly how the certification officer is to determine the amount of the levy, because the Bill expands the certification officer’s role. It is only once this new expanded role is established that it will be possible to determine precisely how the regime should work. Having said that, we also recognise that Parliament and those directly affected rightly expect to see how the regime will work when Parliament is being asked to agree the detail of the legislation. That is why the Bill sets out specific parameters for the content of the regulations. It is also why the regulations will be subject to the affirmative procedure. The clause also requires consultation before any regulations are made.

To meet our objective of cost recovery, the levy must be enough to cover the cost of the certification officer’s functions, but it cannot be any more than the certification officer needs. The certification officer cannot make a profit from their activities, nor undertake spurious activities to generate funds. That is only right as the certification officer is an independent public appointment and not a commercial enterprise.

[Stephen Doughty]

I can understand the need for the certification officer to have a role in identifying the costs of their operations, but the Minister and the Government must have a ballpark figure. Are we expecting a doubling of the £1 million figure or an increase by a factor of 10? What sort of ballpark are we in? The people affected by the levy need to have an idea, remembering that it will apply not only to trade unions, but to the employer associations that I have listed.

--- Later in debate ---

[Nick Boles]

The hon. Gentleman is entitled to speculate on any figure he likes, but we are going to leave it to the independent certification officer to assess the additional requirement and to set an appropriate levy.

We recognise that trade unions can vary greatly in size and that employers associations are often small, meaning that the size of the regulatory functions provided by the certification officer to such organisations may vary greatly. Smaller unions and employer associations may require less of the certification officer’s time and resources.

[Jo Stevens]

I am pleased to hear that clarification about employers organisations. Will the Minister tell us whether federated employers organisations, such as the CBI, will be covered by the measure?

[Nick Boles]

My understanding is that federated employers associations will not be covered, but all other employers associations will be.

We want to be able to consider whether organisations that use more of the certification officer’s time should bear more of the cost. We will need to consult before determining whether that is the right way to proceed and will only take that approach if we find during consultation that it costs more for the certification officer to regulate larger organisations that it does for smaller ones.

Let me conclude by summarising the safeguards in the Bill on the way the levy is to operate: the amount of the levy will be limited to covering the cost of the certification officer functions; ACAS, unions and employer associations will be consulted before regulations are made; the regulations will be subject to the affirmative procedure, allowing a full debate in Parliament before they are brought into force; and the certification officer will be required to report annually on the amount levied and how that was determined, which will be published and laid before both Houses, ensuring transparency.

Question put, That the amendment be made.