New Clause 12

HC Deb 30 March 1999 vol 328 cc978-83

DUTY TO AVOID CONFLICTS OF INTEREST IN EMPLOYMENT

—'(1) The Secretary of State may make regulations prohibiting employers from knowingly engaging an employee in a position where a conflict of interest could arise which might expose the employee to criminal, civil or regulatory proceedings. (2) Regulations under this section may provide for the imposition of a fine, not exceeding level 6 on the standard scale, on a person convicted of an offence under subsection (1). (3) Regulations under this section shall not be made unless a draft thereof has been laid before, and approved by a Resolution of, each House of Parliament.'.—[Mr. Brady.]

Brought up, and read the First time.

11.15 pm

Mr. Brady

I beg to move, That the clause be read a Second time.

I am pleased to have this opportunity to explore some of the Government's views on this matter. In Standing Committee, some Labour Members suggested that Conservative Members adopted a Scrooge-like tendency when it came to matters of industrial relations and employment rights. However, I was heartened to see the Government's seeking to assume that Scrooge mantle this evening by opposing the new clauses regarding discrimination on the basis of age and sexual orientation.

To complete the process, I thought that I would experiment by proposing a new individual employment right and employee protection in new clause 12, which would impose a duty of care on an employer not knowingly to engage a person in circumstances where he may put that person in a position of conflicted interest, particularly when some civil, criminal or regulatory proceedings could arise.

Such circumstances could arise in numerous ways. For example, a former police officer might have personal knowledge or information of a private nature about certain individuals. A person employed in the City might have prior knowledge that is relevant to his duties in managing a fund. A new employer who is familiar with the financial circumstances of a particular company might be charged with the disposal of shares in that company.

I do not seek to introduce an onerous burden in such situations. New clause 12 would give Ministers the power to bring an order into effect. I hope that it would impose the lightest possible burden because it would prohibit employment only when that would knowingly put an employee in a difficult and potentially dangerous position. My new clause recognises what many Labour Members know: there are sometimes imbalances in employment relationships. For example, an employee might be pressured—financially or by some other means—to accept a position.

Following on from the statement earlier today, as we move into an age of electronic government, an increasing amount of knowledge, information and private data may be held by Government bodies, Departments and agencies. That might cause difficulties if a person were to move into another sector of employment. For example, somebody who owns or runs a building firm might be put in charge of a public building project and of awarding contracts in that connection.

The importance of this measure in public sector terms has been thrown into sharp relief by recent events in the European Commission, where we have seen clear evidence of fraud, corruption and nepotism. There are real pitfalls. For example, employees might be put in control of public funds and of decisions that might seriously compromise them. Another relevant instance in the context of this new clause may be the power to take action that may influence markets to the advantage of a particular individual. In that context, one might consider appointments to the Bank of England, the European central bank or other agencies that handle market-sensitive information or statements.

Mr. Fabricant

My hon. Friend will remember that there was a little conflict between us earlier on ageism, when he argued that self-regulation was more important than legislation. Does he believe, as I do, that in the past our financial institutions have been particularly effective at self-regulation? Why does he now think that it is necessary to impose additional regulations on those financial institutions?

Mr. Brady

As always, my hon. Friend makes a valid point. I have already mentioned the example that has been set by the European Commission, but clearly the Government, particularly the Department of Trade and Industry, have been setting an appalling example. It sends out signals that conflicts of interest are not only tolerable but perhaps positively to be encouraged, and there are now reasons why the Government might consider correcting those messages. I hope that my reply reassures my hon. Friend that I have not gone soft on self-regulation or other aspects of market control.

The Prime Minister has appointed one DTI Minister to oversee genetically modified food and science who has large shareholdings in GM food companies, while another Minister appointed to control the offshore oil industry still held £2 million-worth of British Petroleum shares. If the former Secretary of State, the right hon. Member for Hartlepool (Mr. Mandelson), had been responsible for controlling or regulating the financial services industry while engaging in creative mortgage practices, he might also have been put in a difficult position by the Prime Minister. [Interruption.]

Mr. Deputy Speaker (Mr. Michael J. Martin)

Order. We cannot have noise from hon. Members on the Government Benches—it is wrong. [Interruption.] Order. We must have more order in the House.

Mr. Brady

I seek to be brief, and I am grateful for your assistance, Mr. Deputy Speaker, in bringing the House to order.

Given the worrying signals and mixed messages that the Government have sent out by allowing conflicts of interest at the very highest level of public service, it is now appropriate that they consider ways in which they may redress that balance. They should send out a new message that conflicts of interest are not to be tolerated and certainly not to be encouraged. Even if Ministers are not inclined to accept new clause 12, at least I have given them an opportunity to send out that message, to suggest ways in which they want to put their house in order and achieve better standards and to set out their views on containing and preventing conflicts of interest.

Mr. Ian Bruce

I must admit that I had difficulty in understanding new clause 12, to which my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) ably spoke, until he got towards the end of his speech and stated exactly what he was driving at. I understand that right hon. and hon. Members on the Treasury Bench may feel somewhat embarrassed because the issue goes to the heart of the cronyism within the Government.

My hon. Friend was a little remiss in not describing the problems that the Government or any employer would face in taking on a person with a large number of interests. He made a strange decision to leave out of his speech any mention of the hon. Member for Coventry, North-West (Mr. Robinson), whose case clearly goes to the heart of the problems—

Mr. Deputy Speaker

Order. Personal remarks against other hon. Members are uncalled for. [Interruption.] Order. Hon. Members should realise that it is best to let me deal with the chairmanship of these proceedings. I urge the hon. Gentleman to consider what he is saying.

Mr. Bruce

I am most grateful, Mr. Deputy Speaker. I am certainly not intending to be personal in my remarks. The difficulties that any Government—any employer—might have in taking on people and thereby putting them into a difficult position go to the heart of this new clause.

It is important when we are legislating for the rest of country that we put such issues into contexts that we can understand as small employers and as people involved in the nature of government—we did so regularly in Committee. Time and again, the Government have totally ignored their own provisions. The unpaid Minister for Small Firms, Trade and Industry has made speeches about ensuring that people's employment rights are preserved, yet he is simply a volunteer in the Government. I hope that somebody, somewhere is providing him with additional remuneration, which he obviously deserves. If so, we should be careful about whether that poses a conflict of interest. I do not make any accusation; that is not a personal comment. I sure that he is as honourable as any Labour Member—in fact, more honourable.

Mr. Fabricant

rose—

Mr. Deputy Speaker

Order. Before the hon. Member intervenes, may I ask what the remarks directed at the Minister by the hon. Member for South Dorset (Mr. Bruce) have to do with new clause 12? I am at a loss to understand.

Mr. Bruce

I shall relate my remarks directly to the new clause. The new clause would help to address the problem that arises when somebody who accepts a job in good faith and works with the very best of intentions is then criticised for having to resign—as has happened with two hon. Members, and could happen in industry as well—

Mr. Desmond Swayne (New Forest, West)

rose—

Mr. Bercow

rose—

Mr. Bruce

If I may, I shall finish the sentence. The new clause would address the problem of people who have to resign, who then lose financially and have their careers cut short—in the case to which I referred, the employers were the Government and the decision was taken by the Prime Minister—even though that was the fault of the employer. That goes to the centre of the new clause.

Mr. Swayne

My hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) drew parallels with recent events in the European Commission. Is it my hon. Friend's estimate that, had Edith Cresson's dentist had the good fortune to have been an Englishman, he might have benefited from the protection of a clause such as this?

Mr. Deputy Speaker

Order. That is nothing to do with the new clause.

Mr. Bruce

Edith Cresson's dentist was not an Englishman and, therefore, unfortunately, would not be protected by the new clause.

Mr. Bercow

I am not sure that I entirely agree with my hon. Friend's most recent remarks. Does he agree that to meet the requirements of new clause 12, it would often be necessary for employees or potential employees to divulge to the employer past, present or potential conflicts of interest?

Mr. Bruce

That would be very important. It is interesting that, under the provisions of clause 28, which are about to be amended by new schedule 2, employment agencies alone must make proper checks on individuals entering employment. If we accepted the new clause, such checks would have to apply to all employers and employees. That is the important issue.

We are probing to find out how Ministers intend to stop employees being put in an embarrassing situation and my hon. Friend the Member for Altrincham and Sale, West rightly wants to know how the Government believe that this matter should be dealt with.

We have tried to put those serious points into context, not because we want to embarrass individual Members of the House, but simply so that people can understand them. I invite the Minister to enlighten us.

11.30 pm

Mr. Wills

I, too, was baffled when I read the new clause, but I was reassured when the hon. Member for Altrincham and Sale, West (Mr. Brady) told me that it was an experiment. I hope that he keeps practising, because he has a lot of work to do, but I shall pay him the respect of treating the new clause as a serious experiment and will address it as it has been tabled.

Throughout our debates on the Bill, the Opposition have fought our proposals for underpinning in law basic, decent standards of employment practice. They appear to have been motivated by a doctrinaire dislike of the necessary legislation, so I was rather surprised to see in the new clause a proposal for new regulation-making powers, giving the Government powers to intervene where we see no need to do so. Indeed, those powers are backed by such draconian penalties that they reach level 6 on the standard scale—past the standard 5-level fine.

Why is it proposed that the Government should intervene in this area? What employer in his right mind would choose to employ people in positions where they are likely to finish up on the receiving end of criminal, civil or regulatory charges? What benefit would an employer derive from having a person in their employment in such a situation? Of course employees, like others, may find themselves in a position where conflicts of interest arise, but the new clause assumes that employers are likely deliberately to employ people in such positions where serious conflicts could arise.

Sensible employers would do no such thing, and I suspect that the hon. Member for Altrincham and Sale, West knows that. If conflicts arise, they will have every incentive to make sensible arrangements to sort them out. In the circumstances in which conflicts of interest are most likely to arise—for example, in local government—there are rules requiring interests to be declared and for councillors to take no part in proceedings in which they have a financial interest. In other such areas, there are similar ways of dealing with those matters, but the onus to act with propriety must be on the employee—who knows when a conflict of interest is likely to arise—and not on the employer.

The hon. Gentleman has once again produced a solution for a non-existent problem and there is no case for his experimental new clause. I very much hope that he will withdraw it and not waste any more of the House's time.

Mr. Brady

I am most grateful to the Minister for his typically courteous response. I shall not detain the House for long, but it was well worth flushing out the Government's position on this important issue.

My only real disappointment was the Minister's suggestion that the Prime Minister, by engaging people who were then subject to a conflict of interest, was behaving as no employer in his right mind would behave. From the Minister's point of view, that was an unfortunate suggestion, however, as my hon. Friend the Member for South Dorset (Mr. Bruce) will doubtless point out, he is unsalaried already, so perhaps he has less to lose than other Ministers.

It is unfortunate that the Minister did not stress the seriousness with which the Government take these matters and did not send out a message that they wish to put behind them some of their own difficulties with conflicts of interest. It would have been nice if a stronger message had been sent out to the private sector that it is possible for higher standards to be observed than some of those in the public sector.

Mr. Redwood

Does my hon. Friend find it curious that the Minister should take our line against more regulation in the only matter where he fears that the Prime Minister and other senior Ministers might be caught by the legislation?

Mr. Brady

I do not find that curious at all; I find it entirely predictable and typical of the conduct of the Government. It is disappointing that there was not a more convincing condemnation of those practices, and a more convincing attempt to show that the Government have turned over a new leaf. However, having made my point, and having heard the Minister's rather disappointing response, I have no desire to press the matter to a vote, so I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.