HC Deb 26 October 1999 vol 336 cc922-8

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Betts.]

10.28 pm
Mr. John McAllion (Dundee, East)

The subject of the debate is Government policy towards the joint industry board for the electrical contracting industry—the JIB. When I first became involved with the JIB 10 years ago, I was approached by my constituent, Mr. Frank Graham. He is an electrician and, at that time, he was a member of the EETPU—the Electrical, Electronic, Telecommunications and Plumbing Union—and a JIB-graded employee. Initially, his concerns centred on a dispute that took place at Aldermaston in 1989 and which was handled by the JIB. Frank was one of 129 men who were sacked during the dispute. Subsequently, he was most unhappy with the way in which the JIB handled the dispute and he sought the assistance of his local Member of Parliament—that is the reason for my involvement.

Over the years, my concern over the JIB—and that of Frank Graham—has grown wider and deeper than the board's handling of that dispute in 1989. Together, Frank Graham and I have entered into a massive correspondence with the JIB itself, the Electrical Contractors Association, the EETPU, successive Ministers, the certification officer for trade unions, the commissioner for the rights of trade unions, the then Select Committee on Education and Employment, the Select Committee on Trade and Industry and the parliamentary ombudsman.

There is not enough time to go into all that correspondence in detail. I shall focus on what I believe to be the big issues affecting Government policy, but I must first put the JIB into a political and historical context.

The 1950s and early 1960s were a time of great stress and bitter strife within the electrical contracting industry. At that time, the union with sole negotiating rights in the sector was the ETU, which later became the EETPU. That union was riven by internal battles between right and left, which culminated in the infamous ballot-rigging case that led to the takeover of the union by its leading right-wing members, particularly Mr. Frank Chapple and his close ally, Mr. Eric Hammond.

The new leadership was determined to consolidate right-wing control of the union and to end what it believed to be confrontation between employers and employees. Militant action was discouraged and strikes were reduced from 36,800 man days lost in 1962 to just 9,900 days lost in 1966. Building upon the new moderate approach, the leadership resolved to import from the United States a new system for running the electrical contracting industry. The new model was called the joint industry board, and it had been operating in New York for more than 20 years.

Essentially, the New York JIB was a sweetheart deal between employers and the union to regulate and control the electrical contracting industry in the city. In return for the union's disciplining its members, improving productivity and eliminating strikes, the employers delivered an agreed package of pay, welfare benefits and training. The EETPU and the ECA signed a legally binding agreement in 1967 which introduced the JIB into British industrial relations for the first time. At the time, Eric Hammond boasted that it was his "first revolution" in the operation of trade unions in Britain.

The JIB has only two permanent or true members: the respective executive committees of the EETPU and the ECA. Each of them appoint the members of the ruling body of the JIB: its national board. The executive committees of the EETPU and the ECA are effectively the JIB. They control an impressive bureaucracy and have their own chief executive, secretary, industrial relations officer and other specialist staff. In the late 1960s, they had an annual income of more than £1 million and annual running costs of £100,000. With inflation, those figures would be much higher today. They also own buildings and assets and have their own employment agency. They control and regulate one of the most important industrial sectors in the British economy. The JIB matters, and that is why I have sought this debate tonight.

What has this to do with Government policy? From its inception, the JIB was registered as a trade union, but the legality of such registration was always in doubt. When it was first registered in 1967, the chief registrar noted in his annual report that it was an unusual type of registered trade union as it included representatives of both employees and employers. As I understand it, employment legislation has never allowed for the registration of a hybrid body such as the JIB.

The JIB was conscious of the doubtful legal basis of its registration as a trade union. When Frank Graham and I challenged it about its registration, it claimed initially to have received special dispensation to register in 1968 from the then Minister for Labour, Mr. Ray Gunter. The JIB made that claim in letters to the certification officer and to the Chairman of the Employment Sub-Committee, but the claim is bogus. The hon. Member for Solihull (Mr. Taylor), who was then Under-Secretary of State at the Department of Trade and Industry, told me in a letter in 1996 that he could find no reference to such dispensation in the Department's records. He added that he could find no statutory basis—past or present—under which anyone in any Government could have given such a dispensation.

My right hon. Friend the Member for Makerfield (Mr. McCartney), then a Minister of State at the Department of Trade and Industry, later confirmed to me in writing that the Department does not have, nor has it seen, any evidence supporting the view that any Minister ever granted any such dispensation. If successive Tory and Labour Ministers are to be believed, we must conclude that the JIB misled the Chairman of the Employment Sub-Committee and the certification officer in claiming special ministerial dispensation to register as a trade union. I believe that the time has come for someone in Government to hold the JIB to account for seriously misleading senior Members of the House.

There are other concerns over the JIB's registration as a trade union. Why did successive registrars of friendly societies and certification officers allow an organisation that was clearly not a trade union to register as a trade union? Let me refer to some of the extensive correspondence that I have had with the certification officer. In a letter dated 23 October 1990, he writes of the JIB that as the organisation consists mainly of workers, it meets the definition of a trade union as set out in … the 1974 Act. Another letter to me dated 10 January 1991 says: I have no reason to doubt the status of the JIB as a listed trade union. The certification officer based those views on information supplied to him by the JIB. I have correspondence in which it claims to have three categories of member: the constituent parties to the JIB—effectively the executive committees of the ECA and the EETPU; more than 2,000 employer participant members; and more than 30,000 employee participant members. On the basis of those figures, he ruled that the JIB was a body mainly consisting of workers and therefore eligible to be listed as a trade union.

Right up to May 1991, that line was defended solidly by the JIB and the certification officer, but in June 1991 Frank Graham complained to him that, as a listed trade union, the JIB was in breach of the Trade Union Act 1984, which requires trade unions to elect their principal executive committees. The JIB's principal executive committee—the national board—is appointed, not elected by the members.

The certification officer, because of Frank's complaint, was required to write to the JIB to ask why its 30,000 employee participant members had not been allowed their legal right to elect the principal executive committee of the union to which they belonged. In its reply dated 17 June 1991, the JIB was forced to come clean and it was made clear that only the two constituent members—the ECA and the EETPU—were permanent or true members of the JIB. In its own words, the employee and employer members were not full members. Their participation in the JIB was in the nature of transient affiliation rather than true membership of the JIB. That statement changed everything. On 23 July 1991, the certification officer wrote that, based on the JIB's own admission, it followed that the JIB was not a trade union and would have to be deregistered. More importantly, he informed the JIB that he intended to hold a public hearing on Frank Graham's complaint. Within a month of receiving that letter, the JIB threw in the towel and asked to be removed from the list of trade unions. It simply was not prepared to appear at any public hearing to defend its status as a registered trade union.

We must remember that only three months previously, the JIB and the certification officer had resolutely defended the JIB's status as a trade union; not any more, under the pressure of a public hearing. In a later letter, the certification officer wrote to Frank Graham: I remain of the view that the JIB is not and probably never was a trade union. Why does any of this matter? Is it not a matter of concern for the Government that between 1967 and 1972, and again between 1974 and 1991, an organisation that was clearly not a trade union was allowed to register as a trade union without challenge from anyone in authority? There was no challenge from the registrar of friendly societies, certification officers or any Minister, despite the fact that Ministers and certification officers had been made aware of Frank Graham's concerns on this issue. Now that we know the JIB to have been illegally registered for so long, will no one in the Government hold it to account for that illegal registration? Is no one in the Government even interested in serious breaches of employment legislation by such important organisations? If they are not interested, they should be.

The JIB gained considerable material benefits from being registered as a trade union. The research division of the Commons Library wrote to me in 1996 and said that registration as a trade union with a certification officer is one of the requirements for attaining certain tax exemptions. This year, the Inland Revenue wrote to me admitting that the JIB had set up a provident fund on 1 October 1977 and that payments out of that fund were allowable as a deduction against tax. That concession stopped only when the JIB deregistered as a trade union in 1991. Thus for at least 14 years, the JIB was receiving tax allowances to which it was legally not entitled. If the Government are not interested in investigating that, I suggest that they should be.

There are other serious concerns about the JIB. There has only ever been one instance when a Secretary of State substituted a dismissals procedure agreement between employers and trade unions for the statutory provision of unfair dismissals. That instance was the substitute agreement between the ECA and the EETPU, relating to the electrical contracting industry—the dismissals procedure agreement run by the JIB. That substitute agreement was allowed by the Secretary of State only on the premise that workers in the industry would have the right to independent arbitration.

Frank Graham has produced evidence that, although on paper the JIB dismissals procedure allows for access to independent arbitration, in reality that access is blocked. The JIB's procedure, as set out in its handbook, makes it clear that any appellant must give good reason to the JIB national board to justify reference to independent arbitration. Clearly, if the JIB national board does not accept those reasons, there will be no reference to independent arbitration for that appellant.

Frank Graham's claim is contested by the JIB, but to the best of my knowledge, the dispute between him and the JIB on this issue has never been independently investigated. Given the unique nature of the substitute agreement run by the JIB, should not Ministers mount just such an investigation?

On the current legal status of the JIB, we know that it is no longer a registered trade union. I have correspondence from the certification officer, in which he admits that neither is it an employers' association. The JIB itself now claims to be an unincorporated association. According to the Library, legal controls prevent large organisations from operating as unincorporated corporations of association. Should not those controls apply to the JIB, which, by any standards, is a very large organisation?

I have also seen annual returns from Companies House for a company called JIB Ltd.—a private company limited by shares, which has the same address and the same secretary as the old JIB trade union, but which retains no record of holding any of the old trade union's assets. Who now controls those large assets, which once belonged to the JIB trade union?

This state of affairs is totally unsatisfactory. We simply do not know the current legal status of the JIB. If it is an unincorporated association, it has no legal personality of its own. We do not know who is legally responsible for registering it, to whom it makes returns, or who holds it to account. For a large and wealthy organisation that exercises tight control over one of our most important industrial sectors, that is entirely unacceptable.

There are any number of outstanding questions. For example, why was the JIB ever allowed to register as a trade union? Why did those in authority support such registration until such time as the lone campaign by my constituent forced them to do a U-turn? Why have claims about special ministerial dispensation by the JIB never been investigated? Why has no one in the JIB ever been held to account for the misleading statements that they made about it? Why were tax concessions, which are available only to registered trade unions, paid out to an organisation that was never a registered trade union? Has the Inland Revenue attempted to reclaim any of the moneys given out in those tax concessions?

Those and many other questions need to be answered. That is why I am asking the Minister to undertake a comprehensive investigation into the operation of the JIB from its inception in 1967 to the present day. Most importantly, that is why I am asking him, once he has carried out that investigation, to report back to the House on the outcome of his inquiries.

10.45 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alan Johnson)

I congratulate my hon. Friend the Member for Dundee, East (Mr. McAllion) on securing a debate on Government policy towards the Joint Industry Board. This is an important issue, and he has pursued it with great vigour and energy on behalf of his constituent. I appreciate the concerns that he has raised.

My hon. Friend has taken an interest in the affairs of the JIB for many years. In July 1997, he met my predecessor as the Department of Trade and Industry Minister responsible for employment relations, my right hon. Friend the Member for Makerfield (Mr. McCartney), to discuss his concerns. He has corresponded with him on several occasions, both before and after this meeting. Moreover, he has tabled a number of parliamentary questions about the JIB, the most recent of which was answered in January this year.

My hon. Friend has built up a great knowledge of the JIB, as his speech has amply shown. As someone with limited previous experience of the JIB, I feel that my knowledge has been significantly enhanced by listening to his contribution.

My hon. Friend has raised a number of issues, and I shall try in the time available to deal with his main concerns and questions. He referred to the history of this organisation, and has raised questions about its past and current legal status. As he said, the JIB has had within its membership both a union—currently the Amalgamated Engineering and Electrical Union—and an employers' organisation, the Electrical Contractors Association. I understand that it also has individual companies and workers employed by those companies in its membership.

The JIB has been in existence for more than 30 years. For much of that period, it was registered as a trade union, first by the chief registrar of friendly societies and subsequently by the certification officer. I shall not go into the convoluted history of the JIB and its on-and-off registration as a union, because there is not time. Suffice it to say that the law on trade unions has changed considerably over the years.

As a former trade union leader, I know only too well how frequently the legal goalposts have been moved. Those changes have probably affected the views of the public bodies concerned as to whether the JIB met the criteria for registration at the time. They may also have affected the JIB's views on the desirability of being so registered.

The current position is that the JIB is not registered as a trade union. As my hon. Friend said, it removed itself from the list in 1991. It is not the Government's responsibility to say whether the organisation is, or is not, a union. That is a matter for the certification officer and the courts to determine as cases arise. However, it seems likely that it is not a trade union. I believe that that is the view taken by the certification officer, and perhaps by the JIB itself.

I understand that the JIB currently classifies itself as an unincorporated association. As such, it would not have a legal personality of its own. It would, however, have to make returns for tax purposes to the Inland Revenue and Customs and Excise.

Mr. McAllion

As the Minister says, the JIB has to make returns to the Inland Revenue, but the Inland Revenue refuses to give any details of those returns or to put them in the public domain, so no one knows what the nature of this organisation is. Does the Minister think that that is a serious problem for the Government?

Mr. Johnson

That is a matter for the Inland Revenue. Our ministerial responsibility is to address the important point that has been made about the JIB's status as a trade union and its operation under the definition that has applied at various times over the 30 years of its existence.

As for the influence that individual electricians have over the affairs of the organisation, such matters should be laid down in the JIB's rules and constitutional arrangements. In that sense, it is no different from any other unincorporated association. Obviously, trade union law will not apply, unless it can be shown that the JIB is a union; and as I said, that does not seem likely.

However, trade union law applies to the relationship between individual electricians who are members of the AEEU—and who are also members of the JIB—and the AEEU. If individuals are concerned that the AEEU is infringing union law and its rules through its dealings with the JIB, they can always take up the matter with the union. If necessary, they can take their complaints to the courts or to the certification officer. Only yesterday, the provisions of the Employment Relations Act 1999 came into force, extending the certification officer's powers to determine complaints by a union member that his or her union had infringed union law or rules. We believe that the certification officer represents a more accessible and informal way than the courts for individual union members to resolve problems with their unions.

Let me now deal with legislation on dismissal procedure agreements. My hon. Friend pointed out that his constituent had been dismissed outside the employment tribunal system. The normal redress for an employee who believes that he or she has been unfairly dismissed is a complaint to an employment tribunal. Although employment tribunals do a good job of resolving such disputes, the employment rights legislation sensibly enables employers and independent trade unions to opt out of their statutory obligations on unfair dismissal—I stress that this does not cover other jurisdictions—by adopting other procedures in their place.

Of course, there must be safeguards. Such an agreement can have effect only if it has been designated by the Secretary of State, and it will be designated only if it meets certain conditions laid down in the legislation. For example, the agreement must provide remedies for unfair dismissal that are, on the whole, as beneficial as the statutory remedies.

As my hon. Friend rightly said, only one such agreement has been designated—for the JIB, where designated procedures have been operating, with some revisions, since 1979. My hon. Friend said that there was a discrepancy between the wording of the dismissal procedure and the JIB handbook in regard to the right to an independent arbitrator. As I think he knows, that has been taken up with the JIB, and the handbook was amended to bring it into line with the DPA.

The JIB sees itself as an important industrial relations institution for its sector. It is through the JIB that the main collective agreements affecting the industry are voluntarily negotiated between the AEEU and the Electrical Contractors Association. I understand that the JIB also gives cards to individual electricians who join, grading them according to their level of training and occupational attainment.

Generally, electricians with JIB cards will work for companies that are themselves members of the JIB, but as far as I am aware JIB rules do not require member companies to employ only electricians with such cards, so there is no reason to believe that the JIB operates some kind of closed-shop practice under another guise.

The JIB is an organisation with an unusual history. My hon. Friend may imply that "unusual" implies "suspect", but on the evidence presented to me and to my predecessor, we cannot share that judgment. My hon. Friend asked why the Government had not investigated why the JIB was ever registered as a union, and asked whether we could set up an investigation now. I cannot answer for the activities of past Governments, but I see no reason to undertake an investigation now, eight years after the JIB was last registered as a union. There is no reason to believe that any public agency acted improperly in the affair. I understand that the Parliamentary Commissioner for Administration—the Parliamentary Ombudsman—has been asked whether there was any administrative fault in the actions of the certification officer. He found that there was none, and was very clear in his rulings. As I have said, the JIB has an unusual history, but that is not sufficient reason to query its actions.

I will consider the arguments presented to me very carefully, but we are dealing with a case in which the individuals concerned had every right to raise the issues at the time, and which has been referred to the Parliamentary Ombudsman. My predecessor also examined the issue carefully. We are convinced that at every stage in the history of this affair, the JIB has registered properly under the terms of the legislation that existed at the time.

I understand the concern that has been caused to my hon. Friend's constituent. I will look at the issues again, but on the basis of what we know at the moment, we cannot support the holding of an investigation into issues that we believe have been properly dealt with by public bodies.

Question put and agreed to.

Adjourned accordingly at five minutes to Eleven o'clock.