Grand Committee Report of 16 June 2004

Official Report of the Grand Committee on the Employment Relations Bill
(Fourth Day)
Wednesday, 16 June 2004.
The Committee met at half past three of the clock.
[The Deputy Chairman of Committees (Lord Brougham and Vaux) in the Chair.]
The Deputy Chairman of Committees (Lord Brougham and Vaux): Before I call Amendment No. 77, there may be a Division on the Business of the House, in which case, whoever is speaking, we shall adjourn for 10 minutes.
Clause 39 [Information and consultation: Great Britain]:
Baroness Miller of Hendonmoved Amendment No. 77:
Page 37, line 3, leave out "satisfying" and insert "or agreements at the level or levels of the undertaking that the management of the undertaking may reasonably determine and which satisfy"
The noble Baroness said: In moving Amendment No. 77, I shall speak also to Amendment No. 78. I do so with some difficulty because this part of the Bill depends on the Secretary of State publishing no less than four documents. The first is the Government's response to the consultation that they held about the consultation process, which of course is of the essence of the Bill; the second is the revised regulations; the third is the DTI's guidance on those regulations; and the fourth is the guidance note from ACAS on the practical procedures.
The noble Lords, Lord Sainsbury and Lord Triesman, have both acknowledged that the failure to supply those documents in a final form to employers' organisations, as well as to Parliament, during the consideration of the Bill is "unfortunate". I should have thought that a stronger word might be appropriate. Nevertheless, I thank the Ministers for their courtesy in providing me in draft form such material as is currently available. That has been helpful. I may need to reserve my position for a later stage of the Bill when these vital documents are published in their final form.
I now turn to the amendments, which, as the Committee will have discerned from the marginal note to Clause 39, relate to the very wide topic of the provision of information and consultation. This clause seeks to implement the EU information and consultation directive but, not for the first time, the Government are proposing to go further than the directive requires and carry out gold-plating. They are
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failing to take advantage of the provision for exceptions to the basic information and consultation process.
Article 5 provides for two types of arrangement different from those stipulated in Article 4. One relates to agreements existing at the date that the directive was introduced into member states; the other, which is even more significant for the future, is a negotiated agreement entered into at any time with the workforce or, indeed, with the workforce's representative. In other words, the Government have it in their power, without infringing their treaty obligations, to introduce flexibility—a word to which I shall return in these remarks—into both this Bill and the regulations that they will shortly lay before Parliament.
Clause 39(3)(b) relates to the contents of the, as yet unpublished, draft regulations concerning the initiation and conduct of negotiations between employers and employees (and employees' representatives) on the subject of, first, providing information to employees and, secondly, consulting about that information.
The clause requires the parties to reach an agreement satisfying conditions which these unpublished regulations will prescribe in relation to the process of informing and consulting. Amendment No. 77 would clarify that provision and remove possible grounds for dispute as to the number of employees to be informed and consulted. Obviously, that will not be an issue for the smaller firms, where the area of consultation and the persons to be informed will be 100 per cent of the workforce. But the amendment would permit the employer to determine what level of the undertaking should be involved in that process. "Reasonably" determine is the qualification that I have introduced into the amendment because that is not a word from which I shy away.
The problem that the amendment seeks to resolve is best explained by a hypothetical example. Let us consider a conglomerate, running different and diverse businesses, with one making, say, widgets and another publishing magazines. In a matter requiring information to be disseminated and consulted on relating to just one of those businesses, there is no reason why the workers in the other should be consulted.
In a business which comprises several trades, in a matter wholly affecting only one of those trades there will usually be no reason why the union representing another should be involved in the consultations. Why, for example, should the electricians be involved in matters relating to changes in the working practice of the carpenters unless they too are affected? Why should the entire workforce of a large company be potential consultees when only a handful are involved in the matter? For example, Lloyds TSB has 72,000 employees organised into 21 separate divisions. It simply does not make sense to have representatives from those 21 different businesses to negotiate on something that may affect only one of them.
If the employer is not able to reasonably select one appropriate unit—I stress, "reasonably" select—there will be one giant works council for each large company, and that would be too far removed from the employees involved to be of any use whatever to them.
Consistently throughout the consultation process the employers have made it clear that they want the law and regulations to be framed in the manner that best suits their employees and the individual businesses. The Government echoed that sentiment in the very first page of the first chapter of the consultation document, which states:
"There should be no single static model for information and consultation—a 'one size fits all' approach will not do."
However, by chapter four the Government contradicted that very sensible sentiment by stating,
"A number of provisions in the proposed regulations assume that information and consultation will be organised at the level of the undertaking".
In the hypothetical example and the actual example of Lloyds TSB that I gave earlier, I illustrated how impractical that may be. The difficulty is that without the regulations being tabled there is no certainty which way the Government will jump. What is required by employers in commerce and industry is that they should have the legal certainty to make agreements below the level of the entire undertaking if that is what they wish. Even more importantly, what business needs is agreement at the level of the workplace, whether it be a factory, workshop, warehouse, office, shop or even, say, one branch of a national chain of supermarket—for example, Sainsbury's. The Minister is not here so he would not perhaps know about that. It is where people work, at the workplace, that most issues arise and where employee involvement and engagement is clearly most beneficial.
In Germany and France the level of consultation is the "establishment" because that gives a much bigger degree of flexibility. What is really required on the issue of information and consultation is "flexibility", a word I have mentioned before. In my submission, Amendment No. 77 provides exactly that.
Amendment No. 78 is a much simpler matter. It seeks merely to tidy up some very loose wording at the end of paragraph (b). Currently the words in parenthesis state:
"whether that provision or consultation is to be direct or through representatives".
Directly with who? Obviously it must be with the employees, so why does it not state that? The purpose of this corrective amendment is to make that clear. I beg to move.
Baroness Turner of Camden: Perhaps I may ask the noble Baroness a question. She said, as I understand it, that the objective of the amendment was to ensure that the management could determine the level or levels of the undertaking at which consultation would take place. There could very well be a situation in that event where levels were not included and workers felt that they should be. So there would be a problem in that
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certain people who felt they should be involved would not be involved because the management had not chosen their particular level. It seems to me that this issue is most appropriately dealt with by regulation. I have not seen any draft regulations, but surely that is why the Bill says,
"Regulations … may make provision",
and then sets out general principles.
Baroness Miller of Hendon: First, we have not seen the regulations, and I totally accept that it is a little difficult—which is what I said. When we have the regulations we may know a little more. I was trying to make the point that the level is much more flexible abroad. It is not flexible here; the level is only on the undertaking. That is why I put in the amendment that the management should "reasonably determine" what would be the appropriate way of dealing with the matter.
I was also making the point that in dealing with a huge business with different, separate sections, the provision may not be good for industrial relations. I used the example of carpenters and electricians. If what you are working for with the carpenters has a bearing on the electricians, that is completely different, and the level is that they should both be there. But if not, one will end up in a huge organisation with loads of people, which makes the negotiations that much more difficult.
I was trying to say that the provision should be flexible, so that it can be suitable for particular businesses that have to inform and consult.
Lord Triesman: I start with a quick comment about the regulations and the draft guidance. Obviously, I understand everyone's desire to have seen the material before the work of this Committee began. I regret that ongoing discussions between the CBI and the TUC have not made it possible. It is much better that those discussions are thorough and come to a proper conclusion because that would probably help us all, rather than any exchange that, with the greatest of respect, we might have. I understand that the material is now very near completion, and I hope that some of the earlier thinking on it has been of assistance.
Amendments Nos. 77 and 78 are closely linked, and I would like to take them together. Amendment No. 77 picks up on one of the outstanding issues identified in last year's consultation document on the information and consultation regulations; namely the level at which information and consultation agreements can be struck. I think that that goes to the substance of the concerns of the noble Baroness. I hope that I will be able to reassure her that the amendment is not necessary.
In any case, whether or not I succeed in that, I make the point that the amendment is not consistent with the framework agreed between the CBI and the TUC for implementing the information and consultation directive. I am very keen to see that balance of agreement sustained if it possibly can be.
It was clear from the consultation that there is a need for sufficient scope for information and consultation agreements to be struck at levels other than that of the individual undertaking; for example, to make sure that arrangements could cover a group of undertakings, or only parts of an undertaking such as an individual establishment. That is one of the objectives that the noble Baroness has put to us. It will do that.
The point was made in the consultation that if the legislation is to work in practice it is vital that the regulations should permit information and consultation to take place at a variety of different levels, and those specific drafting changes to the legislation would be needed in order to achieve the required flexibility.
In the light of this concern, I want to make it absolutely clear that we want to allow consultation arrangements to be set up at a level different from that of the individual undertaking and that we will be making specific changes to the legislation in order to achieve that. We will also spell out in guidance that the regulations do not automatically require that information and consultation is carried out at the undertaking level.
It may very well be that there is very little between us on this issue. I do not want to minimise a difference that is genuine, but it may be that there is not in this case such a difference. The regulations already provide sufficient flexibility for different arrangements to exist within different establishments, both through preexisting agreements and newly negotiated ones. We appreciate that this may not be all that obvious from the text of the legislation. For those reasons, the guidance must make it plain and be in detail. We envisage saying something to the effect that the regulations do not automatically require information and consultation to be carried out at the undertaking level. Both pre-existing and newly negotiated agreements may provide for different consultation arrangements in different parts of an undertaking, as long as the employees in the undertaking as a whole are covered by some arrangements.
3.45 p.m.
A key point to note is that the legislation sets only limited requirements as to the contents of agreements negotiated under it. It purposely allows the employer and negotiating representatives considerable flexibility to agree arrangements that are best suited to their particular circumstances. I entirely appreciate the thinking behind the amendment, but it is not possible to accept it. One of the fundamental principles of the framework for implementation agreed with the CBI and the TUC is that information and consultation arrangements must be agreed with the employees.
This amendment would allow management to decide unilaterally at what level the information and consultation arrangements should operate, and for that reason it should be resisted. I hope that in the light of the explanation that I have been able to give about the degree of flexibility, which I believe exactly meets the suggestions, the noble Baroness will feel able to withdraw Amendment No. 77.
Amendment No. 78 is not necessary. All it does is remove the brackets from the part of Clause 39(3)(b) that refers to the fact that consultation may take place directly with employees or through representatives. One of the aspects of the CBI/TUC framework was that information and consultation agreements may provide for information and consultation to be carried out directly with employees or through employee representatives. As with other parts of the framework, the key point is that whatever arrangements are put in place must be agreed with the employees. That is the baseline foundation for all of this. It is what Clause 39(3)(b) already provides for. I hope that in that light the noble Baroness will feel able to withdraw her amendment.
Baroness Miller of Hendon: I think that I made it clear at the beginning that in any event I would reserve my own position. Until I see the regulations that the Minister was talking about, which he suggested would give the necessary flexibility, I cannot be sure of my position. We have not seen that document, so we do not know. It was important to air what we saw as the potential problem, and leave it at that. Under those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 78 not moved.]
Baroness Miller of Hendonmoved Amendment No. 79:
Page 37, line 6, at end insert—
"( ) for the information to employees and the consultation of them expressly to exclude those matters which by law or by custom and practice can be construed to be matters relating to terms and conditions or employment normally reserved for collective bargaining between an employer to whom the regulations apply and a recognised trade union;"
The noble Baroness said: Amendment No. 79 is, at least at this stage, a probing amendment, which is a funny thing to say because they are all probing amendments. I tabled it because of the considerable concern expressed by the Engineering Employers' Federation and the European Study Group about the meaning of two words that appear in the draft regulations. The Minister will recall that I voiced this concern at the meeting that we held after Second Reading. The two words are in draft Regulation 18(1)(c) of the draft Information and Consultation of Employees Regulations.
The words are "contractual relations". Those words are incorporated in the regulations presumably following some phraseology in a European edict. Here is the danger. Translations of technical terms from one language to another can easily, and often do, produce a totally different result. As it is, the words "contractual relations" are already being interpreted by some specialist lawyers as including changes to the terms and conditions, working and employment conditions and even with regard to pay and conditions. Of course, that is not what the regulations are intended to cover. The term—if the Government insist on continuing to use it instead of a less ambiguous and

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less elastic phrase—must be defined as narrowly as possible to ensure that it excludes issues that should or would be the subject of collective bargaining between employers and employees and recognised trade unions.
The noble Lord, Lord Sainsbury of Turville, was kind enough to write to me after our meeting and was quite helpful on that point. However, as I told him at the meeting, it is essential that the interpretation should be placed on the parliamentary record, where, in the event of any continuing doubt about the meaning of the words, the Government's intentions should be available for judicial notice. I beg to move.
Lord Triesman: I am grateful for the opportunity to speak to the amendment. It is important to generate, so far as we can, some common understanding of what the directive is about and what it is not about. The Government have always been clear that it is about the consultation of employees and not about codetermination or joint decision-making. Nor is it about collective bargaining or negotiating. I want to say that clearly, as the kind of on-the-record statement that the noble Baroness asked for. I believe that it accords completely with the views expressed by my noble friend Lord Sainsbury of Turville in his letter of 26 May.
When the Government consulted on draft regulations last year, one of the issues on which we sought views was the potential overlap between the obligations created under the information and consultation regulations and those in existing collective agreements. The general view, including that of the TUC, was that in most cases the interaction between a collective agreement and an information and consultation agreement should not prove too problematic, and the employer ought to be able to work with the respective bodies to determine how the arrangements would work in practice. On that basis, therefore, the Government do not propose to make any special arrangements under the information and consultation regulations with regard to collective agreements.
Although I appreciate the thinking behind the amendment, I fear that it is not possible to accept it. I take the point that is a probing amendment, designed to elucidate the facts. We cannot accept it because, although a typical collective agreement will cover pay, hours and holidays as a minimum, such agreements may well include other matters and often do, because the parties mutually consent to covering other matters. Section 178 of the Trade Union and Labour Relations (Consolidation) Act 1992 defines a collective agreement as one that may deal with a range of matters, such as the machinery for consultation or the allocation of work between workers or groups of workers. In other words, a collective agreement could well cover matters about which there is required to be information and consultation under the information and consultation directive.
That said, the emphasis of the directive is on changes and events of a major nature. Article 4.2(c) refers to information and consultation on decisions likely to lead to substantial changes in work organisation or contractual relations. In the normal course, there will be no need for employers to consult under the information and consultation procedures about the routine outcomes of the collective bargaining process.
One effect that the amendment might have is to deny information and consultation rights to employees who are outside the scope of the collective agreements that operate in their undertaking. More generally, it could also restrict the scope of an information and consultation agreement in workplaces where no collective agreement exists, so that information and consultation took place only on a residual number of issues not normally dealt with by collective bargaining in cases where such bargaining exists. It is not possible to exclude matters that are the subject of collective bargaining from the scope of the information and consultation regulations in that way, because that would be an incomplete implementation of the directive.
I hope that, in the light of that explanation, the noble Baroness will feel that she has probed sufficiently on the main facts, and that the statement with which I started makes clear the bottom line for the arrangements in terms that she will find helpful.
Baroness Miller of Hendon: I thank the Minister for his long reply. I accept that he started off by making a short statement and then we went into a rather long explanation. I am sure he will understand when I say that I am grateful for what he said. I shall read it most carefully and speak to those who have advised me about their concern, to see if they are equally satisfied. With pleasure, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 80 not moved.]
Clause 39 agreed to.
Clause 40 [Information and consultation: Northern Ireland]:
[Amendments Nos. 81 and 82 not moved.]
Clause 40 agreed to.
Clause 41 agreed to.
Lord Triesmanmoved Amendment No. 82A:
After Clause 41, insert the following new clause—
"WITHDRAWAL AND REPLACEMENT OF NOTICES
(1) After section 22 of the National Minimum Wage Act 1998 (c. 39) insert—
"22A WITHDRAWAL OF ENFORCEMENT NOTICE

(1) Where an enforcement notice has been served (and has not already been withdrawn or rescinded), an officer acting for the purposes of this Act may withdraw the enforcement notice by serving notice of the withdrawal on the employer.

(2) Subsection (3) applies if an enforcement notice is withdrawn and either—

(a) no new enforcement notice is served in accordance with section 22B; or

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(b) a new enforcement notice is so served, but the notice of withdrawal states that subsection (3) applies.

(3) If an enforcement notice is withdrawn and this subsection applies—

(a) after the withdrawal no penalty notice may be served under section 21 in respect of any non-compliance with the enforcement notice before it was withdrawn;

(b) if any penalty notice was so served before the withdrawal, it ceases to have effect and any appeal against it must be dismissed;

(c) any sum paid or recovered in respect of any such penalty notice must be repaid to the employer with interest at the appropriate rate running from the date when the sum was paid or recovered;

(d) any appeal against the enforcement notice must be dismissed;

(e) after the withdrawal no complaint may be presented or other civil proceedings commenced by virtue of section 20 in reliance on any non-compliance with the enforcement notice before it was withdrawn;

(f) any complaint or proceedings so presented or commenced before the withdrawal may be proceeded with despite the withdrawal.

(4) In subsection (3)(c) "the appropriate rate" means the rate that, on the date the sum was paid or recovered, was specified in section 17 of the Judgments Act 1838.

(5) Where subsection (3) applies the notice of withdrawal must indicate the effect of that subsection (but a failure to do so does not make the withdrawal ineffective).

(6) Section 21(6) has effect subject to this section and sections 22B and 22C.

22B REPLACEMENT OF ENFORCEMENT NOTICE

(1) This section applies if an officer withdraws an enforcement notice.

(2) The officer may at the same time as he serves the notice of withdrawal (and if he is of the opinion mentioned in section 19(1) or (2A)) serve on the employer a new enforcement notice under section 19 relating to some or all of the workers to whom the old enforcement notice related.

(3) The new enforcement notice may not relate to any workers to whom the old enforcement notice did not relate (but this is without prejudice to any power that arises apart from this section to serve an enforcement notice relating to those workers).

(4) If the new enforcement notice includes a requirement under section 19(2) as respects a worker, it must relate to the sum due to the worker under section 17 in respect of the employer's failure previous to the new notice to remunerate the worker as mentioned in section 19(2) (regardless of whether that failure occurred to any extent before or after the service of the old notice).

(5) The new enforcement notice must—

(a) indicate the differences between it and the old enforcement notice that it is reasonable for the officer to consider are material; and

(b) unless the notice of withdrawal states that section 22A(3) applies, indicate the effect of sections 22C and 22D.

(6) A failure to comply with subsection (5) does not make the new enforcement notice ineffective, but a notice that does not comply with that subsection is not to be treated for the purposes of sections 22A(2), 22C(1) and 22D(1) as served in accordance with this section.

(7) The reference in subsection (1) to an enforcement notice does not include an enforcement notice served by virtue of this section.

22C EFFECT OF REPLACEMENT ON PENALTIES WHERE SECTION 22A(3) NOT APPLIED

(1) If an enforcement notice is withdrawn and a new enforcement notice is served in accordance with section 22B, this section applies unless the notice withdrawing the old enforcement notice states that section 22A(3) applies.

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(2) Where this section applies, subject to subsections (3) and (5) the withdrawal of the old enforcement notice does not affect—

(a) any penalty notice that before the withdrawal was served under section 21 in respect of any non-compliance with the old enforcement notice;

(b) the power under section 21 to serve a penalty notice in respect of any non-compliance with the old enforcement notice before it was withdrawn.

(3) If—

(a) before the withdrawal of the old enforcement notice a penalty notice was served which included an amount for a day's non-compliance with the old enforcement notice as respects a worker, and

(b) that amount could not validly have been included in the penalty notice if the old enforcement notice had been as it should have been according to the new enforcement notice,

the penalty notice shall be treated as withdrawn under section 22E at the same time as the old enforcement notice is withdrawn.

(4) Where subsection (3) applies, section 22F (power to replace penalty notice) applies—

(a) as if the cases mentioned in section 22F(1) as cases in which that section applies included the case where a penalty notice is by virtue of this section treated as withdrawn; and

(b) as if the references in section 22F(2) to the amount and particulars that the officer considers should have been stated in the penalty notice were to the amount and particulars that he considers should have been so stated if the old enforcement notice had been as it should have been.

(5) A penalty notice served by virtue of subsection (2)(b) must not include an amount for a day's non-compliance with the old enforcement notice as respects a worker if, had the old enforcement notice been as it should have been according to the new enforcement notice, that amount could not validly nave been included in the penalty notice.

(6) The words after paragraph (c) in section 22(3) shall not apply for the purposes of any appeal against a penalty notice continued in effect by virtue of subsection (2)(a) above or served by virtue of subsection (2)(b) above.

22D EFFECT OF REPLACEMENT ON APPEALS AND CIVIL PROCEEDINGS WHERE SECTION 22A(3) NOT APPLIED

(1) If an enforcement notice is withdrawn and a new enforcement notice is served in accordance with section 22B, this section applies unless the notice withdrawing the old enforcement notice states that section 22A(3) applies.

(2) If an appeal has been made under section 19(4) against the old enforcement notice and the appeal has not been withdrawn or finally determined before the time when that notice is withdrawn—

(a) that appeal ("the earlier appeal") shall have effect after that time as if it were against the new enforcement notice; and

(b) the employer may exercise his right of appeal under section 19(4) against the new enforcement notice only if he withdraws the earlier appeal.

(3) If an appeal is made under section 19(4) against the new enforcement notice (or by virtue of subsection (2) above has effect as if so made), section 19(9) and paragraphs (a) to (c) of section 21(7) apply in relation to any penalty notice—

(a) continued in effect by virtue of section 22C(2)(a), or

(b) served by virtue of section 22C(2)(b),

as they apply in relation to penalty notices served ill respect of the new enforcement notice.

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(4) Where this section applies—

(a) after the withdrawal of the old enforcement notice no complaint may be presented or other civil proceedings commenced by virtue of section 20 in reliance on any non-compliance with that notice before it was withdrawn;

(b) any complaint or proceedings so presented or commenced before the withdrawal of the old enforcement notice may be proceeded with despite the withdrawal and replacement of that notice.

22E WITHDRAWAL OF PENALTY NOTICE

(1) Where a penalty notice has been served on a person ("the employer") (and has not already been withdrawn or rescinded), an officer acting for the purposes of this Act may withdraw the penalty notice if he is of the opinion—

(a) that, in the case of each of the allegations of failure to comply with the enforcement notice in respect of which the penalty notice was served, the facts are such that an officer who was aware of them would have had no reason to serve any penalty notice on the employer; or

(b) that the amount of the financial penalty is too great because the penalty notice is incorrect in some of the particulars which affect that amount; or

(c) that the amount of the financial penalty is too great because its calculation is incorrect.

(2) The withdrawal shall be effected by serving notice of the withdrawal on the employer.

(3) If a penalty notice is withdrawn and is not replaced under section 22F—

(a) any sum already paid or recovered in respect of the penalty notice must be repaid to the employer with interest at the appropriate rate running from the date when the sum was paid or recovered;

(b) any appeal against the notice must be dismissed.

(4) In subsection (3)(a) "the appropriate rate" means the rate that, on the date the sum was paid or recovered, was specified in section 17 of the Judgments Act 1838.

22F REPLACEMENT OF PENALTY NOTICE WITH NOTICE IMPOSING LOWER PENALTY

(1) This section applies if a penalty notice is withdrawn because the officer is of the opinion mentioned in section 22E(1)(b) or (c).

(2) The officer may, at the same time as that notice is withdrawn, serve by way of replacement a new penalty notice under section 21 in which—

(a) the amount of the financial penalty is the amount (which must be less than that in the old penalty notice) that the officer now considers should have been the amount stated in the old penalty notice; and

(b) the particulars stated under section 21(2)(c) to (e) are as he now considers they should have been in that notice.

(3) The new penalty notice must indicate—

(a) the differences between it and the old penalty notice that it is reasonable for the officer to consider are material, and

(b) the effect of subsections (4) to (7),

but a failure to comply with this subsection does not make the new penalty notice ineffective.

(4) If a sum was paid or recovered in respect of the old penalty notice—

(a) an amount equal to that sum (or, if more than one, the total of those sums) shall be treated as having been paid in respect of the new penalty notice; and

(b) any amount by which that sum (or total) exceeds the amount payable under the new penalty notice must be repaid to the employer with interest at the appropriate rate running from the date when the sum (or, if more than one, the first of them) was paid or recovered.

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(5) In subsection (4)(b) "the appropriate rate" means the rate that, on the date mentioned in subsection (4)(b), was specified in section 17 of the Judgments Act 1838.

(6) Subsection (7) applies where—

(a) a new penalty notice is served by virtue of this section; and

(b) an appeal has been made under section 22(1) against the old penalty notice and has not been withdrawn or finally determined before the time when that notice is withdrawn.

(7) In such a case—

(a) that appeal ("the earlier appeal") shall have effect after that time as if it were against the new penalty notice; and

(b) the employer may exercise his right of appeal under section 22 against the new penalty notice only if he withdraws the earlier appeal.

(8) The reference in subsection (1) to a penalty notice does not include a penalty notice served by virtue of this section.

(9) This section is without prejudice to any power arising apart from this section to serve two or more penalty notices in respect of the same enforcement notice."

(2) In section 19(6) of the National Minimum Wage Act 1998 (c. 39) (cases where appeals against enforcement notices are allowable), in paragraph (c)(ii), for "incorrect" substitute "too great".

(3) In section 22(3) of that Act (cases where appeals against penalty notices are allowable), for paragraphs (b) and (c) substitute—

"(b) that the amount of the financial penalty is too great because the penalty notice is incorrect in some of the particulars which affect that amount; or

(c) that the amount of the financial penalty is too great because its calculation is incorrect."

(4) Nothing in subsections (2) and (3) affects sections 19 and 22 of the National Minimum Wage Act 1998 (c. 39) as those sections have effect for the purposes of the Agricultural Wages (Scotland) Act 1949 (c. 30)."

The noble Lord said: Under the National Minimum Wage Act 1998 as presently drafted, compliance officers are unable to withdraw enforcement or penalty notices, even if they realise that they have made an error or new evidence comes to light. Employers are understandably often unwilling to comply with incorrect notices, and tribunal hearings are the only way to rectify the notices which both sides know to be incorrect. That is obviously an inefficient way of conducting any kind of business because it introduces delays into the process and means that the workers will have to wait longer to receive the arrears to which they are entitled. It also wastes the time of the tribunals.
In essence, therefore, the new clause that the Government have tabled allows officers to withdraw enforcement and penalty notices and replace them with corrected notices where necessary. Obviously the new clause is a little more complex than that, or else it would not run to six new sections and to so many words. None the less, I have stated the essence of it.
This might be the right moment to mention that the Government covered this proposal in our consultation paper on the package of minimum wage amendments in August last year. Responses to the package of amendments, now set out in Clauses 41 to 43 and this new clause, were supportive and no one expressed any reservations about this proposal.
I want to say a tiny bit more in detail about the clause because it is lengthy and the background is important. Section 19 of the National Minimum Wage Act 1998 allows compliance officers to issue enforcement notices requiring employers to pay the minimum wage in future, and to pay arrears due in respect of the past. These notices set out the workers that have been underpaid, the pay period or periods in question, and the amounts due to each worker. For example, an enforcement notice might, say, cover five workers owed £100 each in connection with work done in April 2004.
It may be worth adding at this point that the Inland Revenue resolves the great majority of cases—around 95 per cent—without the need for formal notices. We are talking about a minority of cases here, perhaps 50 per year, where an employer has not readily agreed to pay the arrears due. If an employer refuses to comply with an enforcement notice, Section 21 of the Act allows officers to issue a penalty notice. These are calculated on the basis of the numbers of workers covered by the enforcement notice, multiplied by twice the hourly rate of the minimum wage and, usually, the number of days that have elapsed since the enforcement notice was issued.
To use the example I gave a moment ago, the penalty notice could cover five workers at £9 per day twice the current adult rate—for, say, 60 days, hypothetically, if it was issued in June. That would give a fine of £2,700 payable to the Exchequer. It is worth noting that the amount of the fine is not dependent on the amount by which the minimum wage has been underpaid. If the amount of the underpayments was incorrectly stated in the enforcement notice but the number of workers was correct, the size of the fine would not be altered.
As I mentioned, these notices are sometimes issued for the wrong amount. That could arise because of mistakes made by the compliance officer, who might wrongly include a worker in the notice or perhaps miscalculate the arrears due. There could be a number of other mistakes. That is what the amendment seeks to remedy. I hope that the Committee will feel that, although the issue covers a small, complicated element of law and may cover only a limited number of people, it is right that every individual be subject to the same justice in this regard. That is why the amendment is worded as it is. I beg to move.
4 p.m.
Baroness Miller of Hendon: As the Minister said, the amendment is very long—it covers no fewer than six pages—and it was nice that he explained it in detail. Even though I have read it, it is much better when someone explains it.
The amendment seeks to make major changes in the Government's National Minimum Wage Act. These were needed because, if there are errors, they have to be put right. The Minister may feel that he can answer my only question: why has the matter taken so long in the course of the Bill to be rectified? I am amazed that
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it was not brought up in the other place so that it could be dealt with there. It is an issue that we would want put right at the first possible opportunity.
Lord Triesman: The noble Baroness makes a very fair point. As work on the Bill has gone forward, relatively small anomalies have been detected that have themselves led to changes. In this case, it was during the process of consultation that a relatively small number of anomalies and unfairness became apparent. That combination has led to this result. Even if it is late in the progress of the Bill, I am happy that we have the chance to put right an injustice.
On Question, amendment agreed to.
Clauses 42 to 50 agreed to.
Clause 51 [Provision of money for trade union modernisation]:
Baroness Miller of Hendonmoved Amendment No. 83:
Page 47, line 36, leave out "or may become"
The noble Baroness said: In moving Amendment No. 83, I shall speak also to Amendments Nos. 85 and 86, which all relate to what the Government call a "modernisation fund"—or, in the words of the title of new Section 116A, to,
"Provision of money for union modernisation".
We are talking about the provision of an unspecified amount of money—the Government have spoken of £10 million—for the somewhat vaguely defined purposes described in new Section 116A(1), which is being added to the 1992 Act. Amendment No. 83 deals with a more specifically objectionable purpose.
New Section 116A(1)(c) provides for the provision of services to persons who are members of the union—which is fair enough—and also to persons who,
"may become members of it",
which is not. That is why I seek the removal of the provision that allows union funds to be given to nonmembers.
There will be every temptation for the unions to use that fund as a recruiting tool. Every day we see insurance companies offer free gifts to people if they will take out a policy. All kinds of other commercial concerns offer inducements to potential new customers if they will only sign up. Credit cards offer interest-free facilities, banks offer low interest and so on. It takes no imagination whatever to conceive of a union offering inducements to potential recruits to join, such as discounts from various shops, vouchers from M&S or other chain stores, cut-price holidays and so on. Those may all be legitimate recruiting tools—I do not suggest for a moment that they are not—but they should be provided with the union's own funds, not at the taxpayers' expense.
That is why "or may become" must be removed from the clause, as called for by Amendment No. 83. Although I have singled out those three words for specific attention, it should not be assumed that I do not regard some of the other vague provisions of new Section 116A(1)(a) to (e) as any less difficult. For example, why should the taxpayer be asked to fund the

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holding of ballots? They should be part of a union's normal activities and funded from its own resources, not from a government handout.
I expect that we ought to say, "Perish the thought", but what about the possibility that unions which receive money into one pocket—money that they would otherwise have had to find from their own resources for their normal purposes—will be able to recycle it into funding the Labour Party out of the other pocket? We all know that—and it is quite right too—the unions support the Government and that our party often gets a lot of help from big business. That is the reality of life. However, if the Government are giving out taxpayers' money for a specific purpose that is what it should be used for.
I understand the Government's problem in giving a specific description without being too prescriptive about how their largesse should be distributed to and used by their friends in the unions. Amendment No. 85 shows the way the problem is to be tackled. It is not by specifying how the money should be used, but by indicating how it shall not be used.
There are several very moderate prohibitions which the Government can easily accept as reasonable and, more importantly, as the proper protection of the public funds. The funds should not be used for recruiting or retaining members; to further industrial action; for political or campaigning purposes; for the support of a political party or a candidate; to fund a serving politician at any level of government; and not for any of the political purposes already set out in Section 72 of the 1992 Act not already covered.
That last provision is necessary because it might be possible to argue that the vague purposes of the new modernisation fund defined in the present Bill could override Section 72. In other words, this would be a belt and braces provision. I see an official looking a little vague. If I am saying something which is not the case, he will clearly give a note to his Minister. The matter is rather vague at this stage.
Subsection (5) requires the Secretary of State to frame rules for the operation of the fund and that those rules should incorporate the prohibitions that I have just proposed. I am well aware that in the case of the partnership fund, the DTI has established a measure of control over the money that it distributes by the very nature of the application form that it issues and the criteria that it applies in granting or refusing applications. I simply do not think that that is good enough. In dealing with powerful unions exercising considerable political influence, there should be clear rules to be followed by the Secretary of State in authorising the allocation of funds.
In my preamble to the list of prohibited purposes, I referred to money being used directly or indirectly. "Indirectly" is defined in subsection (6) so as to prevent the union utilising the fund for normal union functions, and thereby to free up the money it would normally have used for other purposes. In other words, contributions by the Government from the fund are being ring-fenced for the specific purpose covered by the application.
There is at present no cap on the fund, although, as I said earlier, the Government have mentioned a figure of £10 million. I have proposed a cap of that figure, but it will be noticed that I have suggested in subsection (6) that the Government can return to Parliament for more if the scheme proves workable in the long term. Similarly, in subsection (7), I have proposed that the fund should be subject to a sunset provision, unless Parliament renews it for five-yearly periods from time to time. These large funds cannot be distributed by the Government to what are in some respects political organisations without a considerable degree of transparency and public scrutiny. I think that that is important. Subsections (8) and (9) require the Secretary of State to publish an annual report on the allocation of the modernisation fund, and for the union strictly to account to him, and through him to Parliament, on how the fund has been used.
I cannot believe that the moderate controls that I have proposed in Amendment No. 85 could be regarded as anything but reasonable, entirely proper and constructive. However, before I formally move the amendment, I should like to turn to Amendment No. 86. The Government should not simply dish out money without any constraints on the recipient union. I have proposed two such conditions. The first is that the union should provide matching funds. If the project is such a good idea, the union should be willing partially to fund it out of its own resources. That would avoid the possibility of unviable schemes being proposed or schemes being extravagantly implemented. There is a stipulation that donated funds must not come from another union, to avoid possible mutual back-scratching. Secondly, I propose a cap of £100,000, which is 1 per cent of the entire fund, for any one project—not to any one union, but simply to any one project. That limitation is self-explanatory.
We have severe inhibitions about this scheme and about the idea of using public funds to subsidise the unions. There is no question that we would be reconciled to letting the Government have their way subject to the safeguards that are proposed in this group of amendments. I beg to move.
Baroness Turner of Camden: I welcome new Clause 51 to establish a union modernisation fund. I gather that there have been initial discussions between the DTI and the TUC and that the fund will probably become operational around June 2005.
A consultation paper is to be produced, which will set out the criteria for making bids for funding. Projects likely to attract funding would include the promotion of diversity, which is important in today's labour world; the development of information technology systems; and similar matters. There will be a management board, and there will be consultation about structure and membership. As the TUC puts it, the fund, which is a tiny fraction of the government money given to help businesses, will allow unions to adapt to changing circumstances and work more effectively across the industrial relations sector. It will allow unions to improve communications with their

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members, enhance participation in union structures, and ensure that unions fully reflect the diversity of the present-day labour market.
Those who oppose the fund often do so because they are ignorant of the valuable work that unions already do for their members. All too frequently, unions attract attention only in disputes, when they are invariably presented in a negative way. For example, Amicus, which is my union, provides a range of services for members, including legal aid. We have our own training college at Bishop's Stortford, where we run courses for union representatives on a wide spectrum of subjects including, importantly, schemes for member trustees in pension schemes. We also train union representatives, which is becoming more and more necessary in the light of the rather complicated legislation that we have been debating.
Previous Conservative administrations have often been fully aware of the benefits provided by unions and the work done by them. Indeed, when the noble Lord, Lord Tebbit, was Minister at what was then the Ministry of Labour, a deal was negotiated whereby unions had grants towards their education programmes. I well remember the discussions that took place at the time, and my union benefited as a result.
This is an entirely worthwhile endeavour, on which the Government should be congratulated. The Bill as it stands does not require amendment. Many of the items listed in the amendments tabled by the noble Baroness will be covered when the consultation takes place and when, as I have indicated, the management structure is established. I hope that the noble Baroness will not feel it necessary to press her amendments.
Lord Razzall: With the exception of her last-but-one sentence, I agree with everything that the noble Baroness, Lady Turner, just said. The difference between the two opposition parties—occasionally on this Committee there are three opposition parties—is that I do not feel, although no doubt the noble Baroness will deny it, that in reality the Conservative Party is in favour of the proposal at all. That is where we on the Liberal Democrat side differ. We think that this fund is an extremely good idea and that the amendments that the noble Baroness is proposing would provide far too rigid a fetter on the operation of the fund. The one sentence of the noble Baroness, Lady Turner, with which I disagree is that this clause requires no amendment at all. I think there are certain concerns in that area. However, I propose that we debate those issues when we deal with Amendment No. 84. I do not support the noble Baroness's amendment because I feel that it will fetter the operation of this potentially very valuable fund.
I do not understand the Conservative position on this matter. I should have thought that anything that can be done to help to modernise and educate trade unions in this area would be to the benefit of all political parties, let alone the body corporate.
4.15 p.m.
Lord McCarthy: I am glad to see that we have had a widespread, even if at times conditional, acceptance of the Government's notion. We might ask a number of questions about it; we might ask whether it is new. People have sometimes said that it is not new—my noble friend Lady Turner suggested that—but that it goes back a lot further to the Whitley report in 1918, when a Conservative-dominated commission recommended that the government should assist, advance and subsidise the development of trade unionism. It occurred during and after the Second World War in the nationalised industries and was introduced in the Industrial Relations Act 1971 under a Conservative government. It has been said that the noble Lord, Lord Tebbit, in particular, gave money for trade unionism education. Therefore, there is no reason why this should not be pursued after seven years of a Labour government.
Of course there have to be conditions, and of course there cannot be a list of every possible thing on which this money is to be spent. However, several people have said—it is said again in the amendment of the noble Baroness, Lady Miller—that there should not be any money for political purposes. I think that is agreed. In fact, there is a clear provision in statute which states that the money for political purposes which trade unions give to the Labour Party—or perhaps to some other party; it is a matter for the union—must come out of a separate fund. If that is the case, it would be quite wrong—I should be surprised if the Government suggested it—if money from this fund could be transferred into a trade union political fund. If it was transferred into a trade union political fund, of course, it could not possibly be lawful for it to be used.
But some of the qualifications advanced by the noble Baroness, Lady Miller, which are embodied in her amendments, give me cause for concern. I do not quite understand why Amendment No. 83 should apply only to paragraph (a)—in other words, the money should not be used for increasing the range of services unless it is limited to existing members—but all the other matters listed in paragraphs (b), (c), (d) and so on are not limited to existing members. I do not see why paragraph (a) should be taken out and not the remainder.
Indeed, if one has a fund of this kind, I do not see why it is to be used only to assist and advance existing members. Like many organisations, trade unions have to grow if they are to remain the same size. The average union loses about 30 per cent of its membership a year. If it did not try to recruit and offer services to new members, it would get smaller and smaller in the same way as do banks, financial institutions and similar organisations, which have to advertise to gain new customers and new members or they continue to shrink. I do not see any reason for making a distinction of this kind.
Of course, there must be control. There must be limits, and we can argue about the limits in the regulations. However, Amendment No. 86, tabled by

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the noble Baroness, Lady Miller of Hendon, seems to go much too far. It says that there must be matching provision. It is, I suppose, a less immediate and precise imposition than saying that the union cannot have money, if it can be shown that the union is saving money. People sometimes say that we cannot give money to the unions because, whatever they are given, they just spend it in ways that they would have spent it anyway, thus saving their own money. Well, of course they do: that is what subsidies are about. That is what happens when we give money to the Royal Shakespeare Company: it puts on more shows. That is the whole idea. If we were to say, as people sometimes do, that the Royal Shakespeare Company could not do this or that unless it provided matching funds, it would not take the money, as it would not be much good to it.
We try to improve the functioning of an institution—any institution—that we think is worthwhile. We want such an institution to have more organisers and better offices, because we think that it is a worthwhile institution. If we say before we start that the institution cannot save money in doing so or must provide matching money, we defeat the whole idea. It makes no more sense to have Amendment No. 86, which relates to the unions, than it would to do something similar for all other institutions, including employers who get money from government.
Baroness Miller of Hendon: Before the Minister replies on behalf of the Government, I must respond to the noble Baroness, Lady Turner of Camden. She gave a list of all the excellent projects in which the union is involved and, undoubtedly, could use the money for. I was not giving such a list. In fact, I made a point of saying that I was not talking about all the things that the union could do. Rather, I was talking about the difficulties that I would have if the union were to do certain things.
The noble Baroness also said that there would be rules, a consultation document and regulations. It may be that that will clarify the position; I know not. I was making the point—I do not think that she answered it—that there were things for which the fund should not be used.
I listened carefully to the noble Lord, Lord Razzall. Clearly, he thinks that I have gone too far, but he also has a problem with the modernisation fund. No doubt he will explain that in a moment.
I have particular difficulty with what the noble Lord, Lord McCarthy, said. He talked about the objections that he had to a couple of things in my amendments. In particular, he said that he could see no reason why the modernisation fund should not be used for recruiting new members. I made it clear that there was no reason. I accept that unions are in the business of recruiting new members, but the point that I was making was that that should be a matter for the union, not for the taxpayers.
The noble Lord did not like Amendment No. 86 about the matching funds. He is entitled to that view. I was trying to give a reason for it by suggesting that
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that would stop the fund being used for frivolous projects. The fact that the noble Lord did not like one aspect of the amendment does not mean that he dealt with all the reasons why I said that there could be problems. The only person who dealt with that point was the noble Baroness, who said that there would be regulations and that that might become clear.
Having said all that, I await with interest what the Minister will say on the matter, as no doubt everybody else does.
Lord Triesman: I shall direct the bulk of my remarks to Amendments Nos. 85 and 86. Amendment No. 83, although it comes earlier in numerical sequence, is consequential on the main points of Amendment No. 85 and refers to new subsection (4)(a), proposed in Amendment No. 85.
In combination, the amendments would place a remarkable list of conditions and limitations on the use of the moneys that would be provided under the administration of the union modernisation fund that we wish to establish. The noble Baroness described it as a moderate list. I do not know whether numbers are a direct contrary indication but there are 20 restrictions that I have counted in the amendment and some of them are fairly forceful.
Perhaps I may set out, as briefly as I can, the background issues that I would ask noble Lords to consider. We are living in a world which changes rapidly. The world of work changes rapidly and we want an environment in which there are modern and efficient institutions. Among those I would hope that there would be a general consensus that trade unions should live in that modern world as modern and efficient institutions.
We do a good deal in this country—some may argue about whether it is enough—and invest in various forms of help and subsidy to ensure that businesses can behave in a modern and efficient way and take on the tasks of competition. That can be no bad thing on either side. From a philosophical point of view the idea that a very small element—against the backdrop of all the other kinds of subsidies that are available on the other side of industry it will turn out to be a very small amount of money—is somehow not to be used in one direction or another could be an unrealistic restriction.
I wholly agree with my noble friend Lady Turner about the issues in which unions now seek to engage; that is, issues on diversity, information technology, and the improvement of management and structure. Whilst that discussion was taking place—I am grateful for the debate—I thought of some of the things that unions have funded which have been exciting innovations, but I could not say, hand on heart, that they had never led to the recruitment of additional members.
I shall give one example which may help by way of illustration. Two major unions—I think I am right in recalling that it was USDAW and the GMB—put together a number of workshops in Manchester to teach information technology and came up with the innovation, because children were doing so much of

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this work at schools, that it should be done with families, and that children should help to teach their parents.
The interesting thing about it, quite aside from getting people who might not otherwise have broken into the use of information technology to do so, was that it may well be the case that some of those parents felt moved to join the unions that had sponsored that. Those kind of things reflect a flexible and modern attitude to a modern work environment and we should welcome them.
I shall go through the fundamental points raised. The noble Baroness asks why we should help in the funding of ballots. The answer is that we may very well want to encourage innovative forms of balloting, including the use of e-balloting and other techniques which might increase the turnout in ballots making the results of whatever is being voted on that much more legitimate. These are all examples of trying to think our way into a modern environment and being responsive to it.
I shall return, in the next group of amendments, to the point about political funds because I do not think that it is helpful now to go through the whole of the argument. It is better to do it in one clean block. I remind noble Lords that this is enabling legislation. It is based on the enabling power contained in the Employment Relations Act 1999, which led to the establishment of the Partnership at Work Fund. It too was short and did not set out the detail of the fund, although I do not remember at that time anyone moving a set of restrictions about the use of the fund of the kind that we have seen today.
Perhaps I may say to the noble Baroness that there may he a genuine difference here as distinct from some of the issues across these tables. I believe, and say, that the Conservative Party has opposed this change root and branch at every stage. I cannot recall it being supported. It is possible that the party opposite does not want to see the money going to trade unions. I think that it may feel that that would empower trade unions and upset balances which it does not wish to see change in the direction in which these proposals may lead.
The amendments that we are discussing convince me that that is the ideological difference. It is fair enough for people to have ideological differences, but this is one such difference and we should not try to avoid the conclusion that is drawn. The amendments would shackle the fund. Perhaps I may give a few examples.
4.30 p.m.
According to Amendment No. 85, many things should not be supported either directly or indirectly. One is the recruitment and retention of members but, as mentioned by other noble Lords, recruitment is entirely central to what a union does. My noble friend Lord McCarthy made that point just a few moments ago. A similar example would be if a condition were placed on a business support scheme stating that businesses should not increase their sales turnover as an indirect result of having received assistance,
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whereas of course the intention is to make businesses more successful. That is the point of the scheme. If we said that about a business, it would be regarded as absurd.
Any modernisation of a union is bound to have an impact on its ability to recruit. If a union has an efficient back-room operation or is aware of diversity issues of the kind mentioned by my noble friend Lady Turner, it is bound to be more attractive to potential members and better able to recruit them. The amendment provides a definition of "indirect support" at proposed new subsection (6), but that definition is very broad and I think that very few bids for support would ever pass such a test.
Amendment No. 86 would create a statutory rule requiring a 50 per cent matching of funding. We are discussing the idea of matching funding with stakeholders, and most recognise its advantages. It shows that the union is committed to a project and has a strong stake in it. It also provides scope for modest-sized funds to support more projects. However, it is far from certain that anyone would want to consent to a 50 per cent rigid formula. There could be strong advantages in varying the proportion from project to project, depending on the circumstances and objectives. That is the way in which the Partnership at Work Fund has operated.
Amendment No. 86 also proposes the setting of maximum amounts for any assisted projects. That would ensure that more projects could be funded. However, it is unclear why we need to prescribe a maximum in statute. It is also unclear why the figure of £100,000 has been selected. We certainly would not want to rule out the possibility of funding a large project if it met the selection criteria fairly. Indeed, large projects may have a greater chance of bringing about the transformational change that we seek.
The amendments refer to matters that one would expect to be addressed in most support schemes. We may adopt some of the ideas in the final design of the new fund following the consultation process, but there really is no need to set them down as hard and fast rules in primary legislation. Again, that would hobble the process and pre-empt the outcome of the detailed consultations, which are going very well.
We have had about a dozen meetings with interested parties, employers and professional bodies, as well as with unions, and we have identified with them a list of issues that we need to address in designing the fund. Those have been informal consultations. As we announced previously, we intend to publish a full consultation document this autumn which will set out the detailed rules of the fund in draft to which everyone can respond. It is likely that a further round of informal consultations will precede its publication. We shall be open and we shall take account of all opinions expressed before finalising the fund's rules.
As the noble Baroness will have anticipated, we cannot accept the amendment and I respectfully ask her to withdraw it.
Baroness Miller of Hendon: I listened with great interest to what the Minister said. Of course, he would

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not expect me to do anything other than read very carefully in Hansard what he has just said. However, I want to make one or two points. I have already put on the record what I said—my notes will be handed in—so that noble Lords can read it.
The noble Lord said that, in any case, he is sure that the Conservatives do not want such a measure and so on. I said that we have severe reservations or inhibitions about it but would be reconciled provided there were certain safeguards. The noble Baroness, Lady Turner, mentioned that there would be regulations and that those would be included. I think that the Minister repeated that. Obviously we shall see whether that is the case.
I would like to make one point. In supporting the noble Lord, Lord McCarthy, on there being no reason why the provision should not be used to recruit people as it would happen automatically, the Minister gave the example of what happened in Manchester and said that he could think of several schemes where, as a result of education and money used in such a way, new members joined the union. I totally accept that, but that is different from what I said in the amendment. We are saying that the money should not be used to induce people to join the union. That is quite different from saying that, on a good scheme, in due course a parent working with a child might think joining quite a good idea. That would be the result of a training scheme, but it is not an inducement.
We need to get a lawyer to look into the meaning of "inducement", which I think goes further than the example given by the Minister. Taxpayers' money should not be used for normal activities. All the education programmes are fine; I have no objection to anything referred to by the noble Baroness and confirmed by the Minister. At this stage, obviously, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Razzallmoved Amendment No. 84:
Page 47, line 41, at end insert—
"( ) The Secretary of State shall not provide money to a trade union under this section that is to be used for the furtherance of the political objects as set out in section 72 of this Act (political objects to which restriction applies)."
The noble Lord said: Perhaps I should apologise to the Committee for arriving slightly late, and also say that that was not because the noble Lord the Deputy Chairman of Committees and I took more than two hours to complete the mile for Comic Relief in which we participated at lunchtime. However, neither of us did it in under four minutes.
I did not want Amendment No. 84 to be grouped with Amendments Nos. 83, 85 and 86 for the reasons that I gave on those amendments, because I do not share all the concerns of the noble Baroness, Lady Miller, on the Bill. However, I expressed my concern at Second Reading. When a Labour government bring in such a measure, it behoves that government to make it absolutely clear—I suggest that they do so in the Bill—that the fund cannot be used directly or
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indirectly for political purposes. The argument against me would be that the law as it stands probably prohibits that happening.
Having said that, I would have thought it important and a necessary protection for Her Majesty's Government in such circumstances to have, directly in the Bill, an absolutely categorical provision that demonstrates to all the anti-trade union commentators, newspapers and politicians that the accusation that there has been a political fix, as a way of subsidising trade unions, is not true. For those reasons, I hope that the Minister will accept the point.
The amendment is our go at drafting a provision, and it may not be as felicitous as it could he. However, the general point is absolutely clear. I hope that the Government will accept an amendment, in either this form or some other, that they can bring forward if they wish, that makes it absolutely clear in the Bill that the fund cannot be used for political purposes. I beg to move.
Lord McCarthy: It may surprise the noble Lord that I very largely agree with him. As he says, one can argue that the law exists already. The point is not simply to cite Section 72 of the consolidation Act, but Section 71, which states that there must be a fund and that a union cannot spend money unless it comes out of it. That fund is subject to all kinds of regulations. A very strong case could be made for saying that we are there now, so why do we need additional regulations or laws?
On the other hand, the noble Lord is right that people will say that the money is being spent on political objectives. In such a context you cannot really reply, "Let them say that". The difficulty with that is that unless you frame the words extremely carefully—and I shall be interested to hear what the Minister says—we could get into a lot of litigation in which people might say that this, that, or the other thing is quasi-political, or that there is a political aspect. The Government would be very much criticised if as a result of that they created a whole series of cases in which people said that at the margin 10 per cent, 20 per cent or 25 per cent of this grant was being spent in the wrong way. I look forward to hearing what the Government says, because this is a very real problem and it needs to be safeguarded in some way or other.
Baroness Miller of Hendon: That was an interesting contribution from the noble Lord, Lord McCarthy. He will be surprised to know that in one respect he certainly agrees with me. There is no way that I do not agree with the amendment proposed by the noble Lord, Lord Razzall. In fact, Amendment No. 84 is identical to subsection (4)(f) of Amendment No. 85: the wording is exactly the same. So it would be churlish of me not to get to my feet to support the noble Lord, Lord Razzall. I simply do not think that he has gone far enough.
I certainly support the noble Lord. I am amazed that for once, and only once through several employment Bills, I find that I happen to be on the same side as the noble Lord, Lord McCarthy.
Lord Triesman: It is always a particular delight to be present at epoch-making moments in history. I thank noble Lords for giving me that opportunity. The noble Lord, Lord Razzall, said in clear terms at Second Reading—and he has repeated his view here today—that he does not in principle oppose the use of public funds to support the modernisation of unions. He made a most effective intervention on that in our last debate, and I am grateful to him for that. He has put the case as well as I could, and I appreciate it.
Various concerns have been expressed that the Government have established the power in Clause 51 for party political purposes. Amendment No. 84 is a manifestation of that concern, not necessarily in this room but perhaps in the public eye. We have repeatedly explained that this is absolutely not the case. Let me repeat that assurance today. The moneys will not be used to inject money into the political funds for trades unions from which the Labour Party or other political parties could indirectly benefit.
At Second Reading I did my best to explain why that could not occur. The moneys will be paid in to general funds of unions, and the law explicitly prohibits payments from the general fund of a union into its political fund. Therefore, the moneys dispersed will be completely sealed from political contamination.
However, I note what the noble Lord has said, and indeed what noble Lords on all sides of this debate have said. He has made the case for us to put the issue beyond doubt into the Bill. In view of the repeated concerns expressed on that point, I can see the value in so doing. I think that it is good of him to assist us in looking after the good name of the Labour Government and the Labour Party. I appreciate that very much. I say that not at all frivolously. I accept that these issues of reputation are fundamental to the good name of political practice and political life in general.
I am not certain, as the noble Lord, Lord Razzall, has said, whether the words exactly achieve the ends, but I do not want to make a particular point other than to say that it would place an onus on Ministers and those who administer the fund to judge whether moneys would be spent on political objects when individual bids for support are made. That could create difficulties. I give the assurance today that we will look again at this matter. We shall draw up an amendment of our own for your Lordships' consideration on Report, which will achieve exactly the same objective as Amendment No. 84. I can see strong support on all sides, which I welcome. In the light of those comments, I hope that the noble Lord will feel able to withdraw his amendment at this stage.
4.45 p.m.
Lord Razzall: I thank the Minister for what he has said. I should say for the record that the preservation of the reputation of the Labour Party was not my sole
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motivation for bringing forward the amendment. However, in the light of what he said, I am happy to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 85 and 86 not moved.]
Clause 51 agreed to.
Lord Razzallmoved Amendment No. 87:
After Clause 51, insert the following new clause—
"UNOFFICIAL INDUSTRIAL ACTION
(1) Section 237 of the 1992 Act (dismissal of those taking part in unofficial industrial action) is amended as follows.
(2) After subsection (2) insert—
"(2A) The Secretary of State shall make appropriate arrangements for the provision of penalties to be incurred by an employee who takes part in an unofficial strike or other unofficial action when a member of a trade union.
(2B) The Secretary of State shall make appropriate arrangements for the provision of penalties to be incurred by a trade union when it is considered not to have acted in a manner appropriate to the discouragement of an unofficial strike or other unofficial action.
(2C) The Secretary of State shall consult such persons as he considers appropriate on the form penalties will take and shall publish the responses received pursuant to those consultations.""
The noble Lord said: My instinct tells me that I shall not receive the same support from the Government as I did on the previous amendment.
To some extent this is a probing amendment. However, it also seeks to make a substantial point. If we are to have another Employment Relations Bill—this is the third or fourth that we have had in recent years—we on these Benches believe that the opportunity should be taken to deal with the issue of unofficial strikes. Those of us who travel on the line from the Hammersmith tube depot to central London—or, indeed, who are reliant on certain areas of the Post Office—do not need to go too far to know that there are significant difficulties at the moment with unofficial strikes.
The purpose of the amendment is to make absolutely clear that penalties will be imposed on trade unions which are, unofficially but tacitly, encouraging unofficial strikes. I suspect that the Government position is that they do not want to get involved; that these are matters for the employers, who have perfectly sufficient remedies if they wish to get involved. However, when we are talking about quite significant areas of the public sector, I do not think that the Government can simply say that it is only a matter for the employers. They should take powers to provide for penalties being imposed on individuals and unions in such areas. I beg to move.
Lord McCarthy: The concordat is dissolved. What does the noble Lord mean by "penalties"? After all, the late Conservative government left us in a situation, embodied in the consolidation Act, in which there is no doubt at all that if workers go on strike without constitutional authority, without a ballot or without the support of their executive, they are acting unlawfully, wrongfully, and employers can if they wish dismiss them. That is quite clear.
It is also quite clear under the consolidation Act 1992 that, unless the unions, in a sense, disavow such workers and separate from them—unless in the end the unions take action against them—they, too, can be made liable. Indeed, in the past, in the Conservative government's period of office, they were. The miners' strike was all about that. So there are powers. By golly, the powers are there.
The reason why we do not read much about the use of the powers is that we have a very low level of strike activity—I know it does not feel like it if you travel on the London tube now and again—the lowest for a very long time. That strike activity, on the whole, is official. The one thing the Conservatives did with their legislation, their series of Acts, was to make trade unions responsible for the use of industrial action.
But if someone says, "We want to go further"—I think this is what the noble Lord is saying—they cannot be asking for more powers for employers because they already have powers that they do not use because they think it is counter-productive in terms of industrial relations. That is their right. So the powers must be there for the Government.
In that context, we come to the meaning of "penalties". Surely they are criminal penalties of some kind. They cannot be contractual penalties because no contractual issue is involved. The noble Lord must be saying that we should go back to the early 1970s and to the Industrial Relations Act 1971. Then, the government were given a whole range of criminal sanctions, which of course the Thatcher government were much too clever to get into. That must be what he is saying. I do not think that that would help or that the Government would do such a thing, but I want to know whether I have got the matter right.
Lord Razzall: I am perfectly happy to elucidate for the noble Lord. As I said at the beginning, this is a probing amendment. However, if one reads proposed new subsection (2C), the whole point is that the Secretary of State would consult all sides of industry and anyone appropriate, including the noble Lord, to decide what penalties were appropriate in what circumstances.
The purpose of the amendment is to flush out the Government's position on what is happening in certain sectors of industry. Of course I take the point made by the noble Lord, Lord McCarthy, that strikes in British industry, the public services and the public sector are at their lowest ever number. However, there are certain black spots which show no signs of getting any better, where there are significant allegations of trade unions being involved behind the scenes, or of encouraging or turning a—I was going to say a black eye; often the people who turn an eye in those disputes do get a black eye—blind eye to what is happening and tacitly encouraging it.
One purpose of the amendment is to obtain a clear statement of government policy. Are the Government saying that it has absolutely nothing to do with them when the people of London are disadvantaged by
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unofficial strikes and where care is taken by the union to avoid overt actions? It is a perfectly understandable position but, if that is what they are saying, they should say so. That is the purpose of the amendment.
I believe that the Government should move further. At present, the two most prominent examples are to be found in certain branches of the Tube system in London and in the Post Office and the Royal Mail, where there are clearly significant problems of this nature. Do the Government propose to do anything about the issue or are they simply saying that the law as it stands is perfectly satisfactory?
Baroness Miller of Hendon: When the noble Lord, Lord Razzall, moved his amendment, he started by saying that his instinct was that the Government would not accept it. Although he did not say so, I suspect that he might have thought that my instinct was to welcome such a probing amendment in order to flush out the position. The truth is that the public are totally inconvenienced by these strikes in that kind of quasi public sector.
My only other comment has nothing to do with the amendment, but, as an aside, has to do with the language that the noble Lord, Lord McCarthy, used. He talked about the "late" Conservative government. In future, I should prefer it if the term "former" Conservative government were used. "Late", to me, means that someone has passed over. When we have just done so extraordinarily well in terms of the share of the vote in the three elections that have been held, I do not think that the word "late" is correct. The Conservative Party is alive and kicking.
Lord Triesman: I shall resist any temptation, difficult though it is.
Lord Razzall: Do not go there!
Lord Triesman: The amendment seeks to significantly tighten up the law governing unofficial industrial action. I believe that it could he based on what might be three flawed presumptions. The first is that unofficial action is widespread. I shall come back to any estimates we can make of the amount of unofficial action, but in 2003 the number of days lost during strikes was a shade under half a million, 499,000; whereas the days lost in industrial action in the 1980s on an annual basis were around 7 million days per year. So, we are not talking of a huge phenomenon.
The second presumption is that the existing law is weakened and does not deter such action. I want to address that specifically. The third presumption may be that each case, however rare or infrequent, is none the less very grave and causes disproportionate inconvenience. I think that I have heard that point around these tables. The problem there is that to legislate for everyone right across the whole of the trade union movement on that basis would be punitive and probably would not succeed.
On the first point, there is no evidence of an emerging problem that requires yet more controls and penalties to be introduced. Occasionally, it is true that

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large or high-profile strikes do occur. That is part and parcel of living in an open and liberal democracy in which people have the right to do that. It is the nature of unofficial action that it is short lived and usually represents a spontaneous reaction by the workers concerned to an incident at work.
Official statistics do not distinguish between official and unofficial action. Therefore, it is right to say that there are no truly reliable figures on which the Government can rely in this area. However, because stoppages are at an all-time low, there is no indication that unofficial strike action has significantly risen.
Reference was made in the other place to research undertaken by Dr Gregor Gall of the University of Stirling, who is an authority on unofficial action. According to his estimates, unofficial action accounted for about a quarter of the days lost in 2003. That is certainly an increase over earlier years. However, the figures on days lost through unofficial action vary considerably from year to year and are dependent on the occurrence of a few larger strikes, which may distort the figures and make one year look particularly bad. Where such larger strikes do take place, they are normally of very short duration. It follows that although unofficial action remains a feature of our industrial relations, the data that Dr Gall produced do not suggest that it is a dominant or highly problematic feature.
On the second point, British industrial action law already contains powerful disincentives for those taking or contemplating unofficial action. For the individual concerned, there are no protections against dismissal. In practice, workers think very hard indeed about taking any form of industrial action in any case because a loss of wages always results, but in the case of unofficial action, the chances are that workers risk losing their livelihood.
Perhaps noble Lords feel that under the current arrangements unions can tacitly support unofficial action that their local officials may be encouraging. I believe that that is the burden of the point put today. I should point out that unions can also lose their immunities if that is the case. My noble friend Lord McCarthy made that point. Large penalties could then follow, of up to £250,000 depending on the number of members in the union. To avoid such very serious consequences, the union must—I put the word in quotes to emphasise it—"repudiate" the action as soon as reasonably practicable after it has come to its knowledge. In other words the union must take steps publicly to dissociate itself from the action. I say from experience that that is generally done with a good deal of energy because the size of the possible fines, much less the seizures of properties or sequestrations that can occur are a very powerful disincentive in those circumstances.
5 p.m.
The repudiation must be undertaken by the most senior figures in the union—that is, the executive, president or general secretary. It is therefore not a matter that can ever be delegated to a minor official
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who carries no weight or authority among the membership. A written notice of the repudiation must be sent to the union committee or official concerned. Local lay representatives can be left in no doubt that they should not be instigating or supporting the action.
The union must give written notice of the fact and date of repudiation to every employer concerned, and do its best to give such a notice to every individual member of the union who could be involved. Many hundreds of letters—many thousands in some cases—would therefore be involved. The written notice of repudiation must contain a statutory warning which reminds the members that while taking unofficial action they have no right to complain of unfair dismissal. Individuals could not be unaware of the risks that they would be taking.
The overall effect of the provisions is that, if union officials have anything to do with the organisation of unofficial industrial action, the union would have a choice: it could let the action continue, in which case the organisation of that action will be the legal responsibility of the union—although, in practice, as it will not have been balloted, it will have been organised unlawfully—or, alternately, the union can repudiate it in the way I have described.
The steps needed to repudiate effectively are by no means trivial. Indeed, unions regularly complain that they regard them as very onerous. Moreover, the law requires the senior figures in the union, after repudiating the action, to behave in a way consistent with the repudiation; there is no shilly-shallying about that kind of operation, nor can there be. That stops the union repudiating the action one week and then acting to support it soon afterwards, or from one day to the next. It means that unions must continue taking action to ensure that their lay representatives do not organise or direct the unofficial action.
I hope that I have demonstrated that there are strong disincentives in the law against taking or organising unofficial action for both unions and individuals. The amendment would create two powers for the Secretary of State to "make appropriate arrangements" in relation to industrial action.
The first power, outlined in subsection (2A) in the amendment, relates to arrangements for the provision of penalties for union members if they take unofficial action. The second power, outlined in subsection (2B) in the amendment, relates to arrangements for the provision of penalties for a union "when it is considered" not to have acted in an "appropriate" manner to discourage unofficial action.
There are real problems in the wording. For example, it provides no legislative mechanism that would be subject to parliamentary scrutiny, whereby the Secretary of State could make,
"appropriate arrangements for the provision of penalties".
The proposed penalties on unions could perversely create more unofficial action, inspired by factions within a union that wish to embarrass the leadership. One or two of the examples given in this Room could very well fall into that category on occasions. That

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situation would come about if every action by any union member could lead to a penalty being imposed on the union itself. However, the truth is that the second power is also not necessary; the existing law already prevents unions giving surreptitious support to unofficial action.
We have no intention in the legislation to release unions from their obligations in that regard. I again want to make that completely clear. That is why the amendment is not necessary. From experience, I believe that it could be counterproductive. For those reasons, I urge the noble Lord to withdraw his amendment.
Lord Razzall: I shall obviously read what the Minister said with interest. In the mean time, I am happy to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clauses 52 to 55 agreed to.
Schedule 1 [Minor and consequential amendments]:
Baroness Turner of Camdenmoved Amendment No. 88:
Page 50, line 26, leave out paragraph 6.
The noble Baroness said: In moving Amendment No. 88, I shall speak also to Amendment No. 89. We are back again with our old friend "sole or main", which we debated to some extent yesterday but in an entirely different context. Yesterday, we debated amendments to Clause 28 that would have removed the words "sole or main", and we tried—unsuccessfully—to persuade the Government to remove those words from the description of the employer's purpose and insert "the purpose". We did so with the support, as we saw it, of the Joint Committee. Even the Joint Committee's later report seemed to give some qualified support to our position, as it suggested that the inclusion of the words "sole or main" in Clause 28 should be kept under review. I think that there was some agreement on the part of the Government that it should be kept under review. So, it is surprising to find, in Schedule 1, that the Government are seeking to remove the words "the purpose" and substitute "sole or main". In other words, they are doing the reverse of what we wanted to do in Clause 28.
One of the reasons why we propose that neither paragraph 6 nor paragraph 7 should be included is that the sole reason for including them in the schedule is to replace the words "the purpose" with "the sole or main purpose". We do not know why that should be necessary with regard to Section 146 of the 1992 Act, which relates to action short of dismissal on grounds related to union membership or activities. The same goes for Section 148 of the 1992 Act, which relates to consideration of complaints. The Government's reason for including paragraph 7 in the schedule is to delete the words "the purpose" and substitute "the sole or main purpose". That is contrary to what the Joint Committee originally recommended with regard to Clause 28.
I cannot understand why it should be felt necessary to do that, and I would like the Minister to say whether there is any record of an incident or any history that has prompted the Government to remove the words "the purpose", with reference to the employer's purpose, and substitute "sole or main purpose". I beg to move.
Lord Triesman: When we considered Clause 28, we debated the "sole or main purpose" tests contained in the new rights not to be offered various types of inducement. In Schedule 1, the Bill introduces a similar test into the existing terms of Sections 146 and 148 of the 1992 Act, which both currently refer to the "purpose" of the employer's acts or failures to act. Those sections provide protection against detrimental treatment by the employer on the grounds of trade union membership or activities.
The changes in the schedule are designed to create a consistent set of provisions across trade union rights. Equally, I understand that my noble friends are consistent in their desire to oppose that approach, wherever it appears. Inevitably, similar issues arise in this and our earlier debate. I apologise in advance if I repeat points that were made then by my noble friend Lord Sainsbury of Turville.
As well as achieving consistency across those closely related provisions, our insertion of the "sole or main" test will bring helpful clarity to the law. The tribunals have to deal with situations where several purposes might have driven the employer's conduct. If that occurs, Sections 146 and 148 are unclear about the consequences because they are framed on the premise that there is only one purpose involved, rather than a number of purposes. It is highly likely that, in such cases, the tribunals would interpret the current wording as referring to the "sole or main" purpose, but the existing wording leaves the position open to at least some doubt. That is a potentially confusing situation that does not help any of the parties to enforce and respect trade union rights.
I think that the nub of my noble friends' concerns is their belief that the introduction of the "sole or main" test into the sections will diminish the existing protections that they provide. But, as I have argued, the extent of the existing protections is not as wide as they have argued. The "sole or main" test would probably be applied anyway, when a complicated case arose. Moreover, Clauses 28 to 30 will significantly extend the entitlements in Sections 146 and 148. The entitlements will apply to workers and not only to employees. They will cover detriment for using the union's services and they will apply without the limitation imposed by the Ullswater amendment.
Therefore, I cannot accept that we are taking a step backwards in the Bill. Our proposals significantly enhance the protections within Sections 146 and 148. In the light of those comments, I ask my noble friend to withdraw the amendment.
Lord McCarthy: There is not much point in keeping this discussion going but I think that we shall have to return to it. I should like the Government to use their

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resources to provide one or two concrete examples of tribunals—I have never heard of any—where this has caused doubt, trouble and concern and where we have seen the poor tribunal members racking their brains about it. I do not think that it does that at all and it is up to the Government to provide some evidence for what they say.
I have no evidence to back up my side, as it were, but I believe that the existing wording would make it more likely that the case would go in favour of the workers. That is why we want to leave it as it is. But perhaps the Government could tell us whether the last 10 cases—I do not know how far back one would have to go—went in favour of the workers or in favour of the employers and whether any great difficulty arose.
I suppose that, en passant, we must also ask another question to which the Government might provide an answer. If they want to change the phrase, why do they not use the word "principal"? They have never explained to me why they have used this term of art—"sole or main"—which they got from nowhere. If they want to insert another phrase, why do they not use the word "principal"? They have said on certain occasions that "principal" is the same as "sole or main", but that makes the situation even more absurd. Therefore, if we are to return to this matter, perhaps the Government could do a little homework in the mean time.
Lord Triesman: I shall respond very briefly. I can see that the JCHR was worried that tribunals would find the "sole or main" test too difficult to apply because the question might be asked: are we asking tribunals to do the impossible in making fine distinctions between the main and subsidiary purposes of an employer? I would not for a moment pretend that it is an easy matter to decide.
However, I make the point that tribunals are expert and accustomed to assessing such issues when presented with the arguments put forward by each side. I say to my noble friend Lord McCarthy that when tribunals hear unfair dismissal cases, for example, they frequently assess the principal reason for a dismissal and they make similar fine judgments when applying the terms of existing Section 146. They try to deal with what they consider to be the critical facts rather than the side issues. I believe that that is a generality in the life of tribunals.
In asking my noble friend to withdraw the amendment, I am not suggesting any departure from that proposition. I shall certainly look across tribunal cases to see whether an argument has been submitted which I have not considered thoroughly enough. I do not think that that is the case, but I am always open to further improvement in my knowledge.
Baroness Turner of Camden: I thank the Minister for those comments but I still do not believe that we have been given any evidence that the present wording in the two sections of the 1992 Act has caused any problems. That point was raised by my noble friend Lord McCarthy. Therefore, we can see no reason for utilising that legislation to change the wording to comply with the Employment Relations Bill. There
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does not seem to be any connection at all. I am very much afraid that we feel that the existing protection under the 1992 Act could be undermined by the use of the wording "sole or main". As we have indicated throughout the discussion on that wording, the Joint Committee has itself expressed some concerns about it and has expressed the desire that it should be kept under review. Having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 89 not moved.]
5.15 p.m.
Lord Triesmanmoved Amendment No. 90:
Page 52, line 39, leave out "after "paragraph" insert "19F(5),"." and insert "for "22(2), 27(2)" substitute "19F(5), 22(2), 27(2), 27D(2) or (3),"."
The noble Lord said: We have already debated Amendments Nos. 90 to 97. I beg to move.
On Question, amendment agreed to.
Lord Triesmanmoved Amendments Nos. 91 to 96:
Page 52, line 41, leave out "after "paragraph" insert "19F(5),"." and insert "for "22(2), 27(2)" substitute "I9F(5), 22(2), 27(2), 27D(2) or (3),"."
Page 53, line 22, leave out "after "paragraph" insert "19F(5) or"." and insert "for "22(2)" substitute "19F(5), 22(2). 27(2), 27D(2),"."
Page 53, leave out line 25 and insert "for "22(2)" substitute "19F(5), 22(2), 27(2), 27D(2),"."
Page 53, line 25, at end insert—
"( ) In paragraph 133(2) (ballot on de-recognition under Part 5 of that Schedule)—

(a) in paragraph (a), for "reference in paragraph 119(2)(a)" substitute "references in paragraphs 119(2)(a) and 119D(3)"; and

(b) in paragraph (b), for reference in paragraph 121(4)" substitute "references in paragraphs 119E(1)(b) and 121(4)".

( ) In paragraph 147(2) (ballot on de-recognition under Part 6 of that Schedule)—

(a) in paragraph (a), for "reference in paragraph 119(3)(a)" substitute "references in paragraphs 119(3)(a) and 119H(1)"; and

(b) in paragraph (b), for "reference in paragraph 121(4)" substitute "references in paragraphs 119E(1)(b) and 121(4)"."

Page 54, line 10, leave out paragraph 29.
Page 54, line 20, at end insert—
"31A (1) Section 191 of that Act (application to the Crown) is amended as follows.
(2) In subsection (4), omit the word "and" at the end of paragraph (d) and after that paragraph insert—
"(da) the reference in section 98B(2)(a) to the employer's undertaking shall be construed as a reference to the national interest, and".
(3) In that subsection, in paragraph (e), for -references", where it first occurs, substitute "any other reference".
31B In subsection (2) of section 192 of that Act (provisions applicable to service as a member of the armed forces on the commencement of that section)—

(a) in paragraph (aa), after "sections", where it first occurs, insert "43M,?; and

(b) in paragraph (e), after "sections" insert "98B(2) and (3),".

31C (1) Section 194 of that Act (provisions of the Act which have effect in relation to employment as a member of the staff of the House of Lords) is amended as follows.
(2) In subsection (2), in paragraph (c), after "sections", where it first occurs, insert "43M,".
(3) After that subsection insert—
"(2A) For the purposes of the application of section 98B(2) in relation to a relevant member of the House of Lords staff, the reference to the employer's undertaking shall be construed as a reference to the national interest or, if the case so requires, the interests of the House of Lords."
(4) In subsection (3) for "the provisions" substitute "the other provisions".
31D (1) Section 195 of that Act (provisions of the Act which have effect in relation to employment as a member of the staff of the House of Commons) is amended as follows.
(2) In subsection (2), in paragraph (c), after "sections", where it first occurs, insert "43M,".
(3) After that subsection insert—
"(2A) For the purposes of the application of section 98B(2) in relation to a relevant member of the House of Commons staff, the reference to the employer's undertaking shall be construed as a reference to the national interest or, if the case so requires, the interests of the House of Commons."
(4) In subsection (3)(d), after "undertaking" insert "(other than in section 98B)".
31E In section 200 of that Act (application of certain provisions of the Act to police officers), in subsection (1), after "sections", in the second place where it occurs, insert "43M,".
31F (1) Section 202 of that Act (restrictions on disclosure of information: national security) is amended as follows.
(2) In subsection (2)(b), after "sections", where it first occurs, insert "43M,".
(3) In subsection (2)(g)—

(a) in sub-paragraph (i), after "section", where it first occurs, insert "98B,"; and

(b) in sub-paragraph (ii), for "(2)," substitute "(2A),"."

On Question, amendments agreed to.
Schedule 1, as amended, agreed to.
Schedule 2 [Repeals]:
Lord Triesmanmoved Amendment No. 97:
Page 56, line 14, column 2, at end insert—

"In section 191, the word "and"

at the end of subsection (4)(d)."

On Question, amendment agreed to.
Schedule 2, as amended, agreed to.
Bill reported with amendments.
Committee adjourned at sixteen minutes past five o'clock.