AUDITORS OF BODY WHICH IS BOTH A COMPANY AND A TRADE UNION, ETC. (Hansard, 19 October 1976)

§ Mr. Clinton Davis
I beg to move, That the clause be read a Second time.
I can move this clause quite shortly. The provisions of the Companies Acts and of this Bill, as amended, relating to the qualification, appointment and removal of auditors, differ from the equivalent provisions in the Trade Union and Labour 1283 Relations Act 1974 and therefore some element of uncertainty could arise as to the position of a trade union or an employers' association which is also a company.
The new clause overcomes the difficulty by providing that the auditors of a company which is also a trade union or an employers' association are to be appointed in accordance with the provisions of the Companies Acts and are to have the rights conferred by and be subject to the duties imposed by virtue of the 1974 Act.
The TUC and the CBI have been consulted about the clause and both are content.

§ Mr. Higgins
That was a fairly superficial explanation of the new clause by the Under-Secretary. It seemed to show some regrettable tendencies towards the corporate State as the Government, the CBI and the TUC are apparently at one regarding the provisions of the clause.
What change in policy is involved? I understand that sections of the Trade Union and Labour Relations Act 1974 are to be amended. Presumably when the Bill was drafted the Department of Trade had views on the subject and on why special provisions for auditing should be made. However, the Minister has proposed a new clause which alters the position of auditors to this kind of hybrid body.
I am not immediately clear about the extent to which the provisions of New Clauses 1 and 2, which have now been added to the Bill, regarding the removal of auditors or of people appearing at general meetings to explain why they should not be removed, would apply here. If a trade union which is also a company decided to remove the auditor, subject to the provisions of new Clause 2, would the individual auditor concerned—perhaps I should say not "individual", but the partnership or representative of the partnership—be able to attend the general meeting of the trade union and put forward reasons for not being removed?
The Minister's initial remarks did not explain sufficiently why at this late stage, apparently completely out of the blue—or perhaps not quite out of the blue—we should have a provision regarding trade unions thrust upon us at short 1284 notice. We have not had an opportunity of carrying out the adequate consultations which we would wish to have carried out. A straight assurance by the Minister to the effect that both the CBI and the TUC agree with the Government is not necessarily adequate to satisfy us that this change should be made.
There is a problem in this respect because, according to the conventions of the House, the Minister can speak only at the opening and, if it is his amendment or new clause, at the conclusion of the debate. I hope that we shall have a more substantial explanation than we have had so far. I shall naturally be inhibited from speaking again. However, the Minister owes it to the House to give a more comprehensive explanation so that in another place we can, if necessary, revert to the matter. I understand that is in order if we amend a Bill which originated in their Lordships' House.

§ Mr. Ron Thomas
I, too, would like more information. I have read through Schedule 2 of the Trade Union and Labour Relations Act 1974, and I am still not clear, having read New Clause 3 and heard my hon. Friend, what the changes are to be. Paragraph 12 of Schedule 2 makes clear that Notwithstanding anything in the rules of a trade union or employers' association, its auditor or auditors shall not be removed from office except by resolution passed at a general meeting of its members, or of delegates of its members. Therefore, auditors for trade unions seem to be in a much stronger position than auditors for companies, judging by what I have heard this evening.
Does this affect trade union branches? They elect their auditors. Are we talking here only about the auditing of the national accounts of a trade union? What will the changes mean for the trade union movement?

§ Mr. Clinton Davis
Perhaps I was too brief in opening the debate. I get rebuked if I take too long and rebuked if I am too brief.
The purpose of New Clause 3 is to clarify the position of a body which is both a company and a trade union or employers' association. That is the answer to the second point raised by my hon. Friend the Member for Bristol, North-West (Mr. Thomas). We are con- 1285 cerned to clarify the position in relation to the qualifications, application and removal of the auditors of such a body.
The effect of the clause is that auditors appointed for the purposes of the Companies Act are to have the rights and duties of auditors appointed for the purposes of the Trade Union and Labour Relations Act 1974. Section 11 (3) of that Act requires auditors to be appointed to audit the accounts of trade unions and employers' associations. It will therefore cease to apply to such bodies. The provisions of the 1974 Act are very similar, but not identical, to those in the Companies Act. For example, under the 1974 Act an auditor can be removed at a general meeting of delegates of the members, and under the Bill the auditors may be removed by the members themselves.
I think this is essentially a technical provision. We consider it important, although I must concede that it was not observed when we were dealing with the Bill in Committee. So far as that is concerned, I apologise to the House. This is a complex and technical Bill and I accept responsibility for the fact that this point was missed earlier. But I do not think that it is a matter which should give rise to contention. The CBI and the TUC, which carry some degree of authority in this matter—it is not just a question of saying that they are determining it—have both expressed concern. They wanted the position put right, and we are seeking to do so.

§ Mr. Higgins
May I press a point which the Under-Secretary of State has raised? He distinguished, as I understood him, between a meeting of delegates of a union and a meeting of members. The point to which I did not get an answer arises from New Clause 1—whether an auditor who is threatened with being forced out of office by a general meeting is able to appear, presumably at a meeting either of members or of delegates, and argue that he should not be removed.
As I understand it, he at any rate cannot be a delegate and, as far as I can see, cannot be a member either, in which case it seems a somewhat curious innovation that we are making in what is, as the Minister has rightly said, a complex matter. Will the Minister spell out in 1286 rather more detail precisely what scope there will be for auditors insisting on not being removed if they do not wish to be removed?

§ Mr. Clinton Davis
I thought I had spelt it out when I said, using these words carefully, that the auditors of a company which is also a trade union or employers' association are to be appointed in accordance with the provisions of the Companies Acts and to have the rights conferred and be subject to the duties imposed by virtue of the 1974 Act. It will be possible for an auditor of a body which is a company and a trade union to be removed only in accordance with the Companies Act provisions.
I think that deals with the points which have been raised by the hon. Gentleman.