§ 3.0 p.m.
§ Moved, That the Report be now received.—(Lord Jacques.)
§ Lord DRUMALBYN
My Lords, before we reach a decision on this point, could I ask the noble Lord the Leader of the House or the noble Lord, Lord Jacques, whether he would be prepared to accept a Motion for the recommitment of the Bill in respect of new Clauses Nos. 20 to 28 on the Marshalled List? These Amendments relate to maternity pay rebate, cover five pages and are entirely new. It seems only right that they should first be discussed in Committee since the Rules of the House do not allow the same flexibility of discussion on Report as in Committee. For my part, I do not wish to oppose the general tenor of the Amendments but to ensure that they are discussed in Committee. I would add that there are respectable precedents for recommitments in such circumstances. I hope that the noble Lord, on behalf of the Government and of your Lordships, will therefore be willing to agree to a recommitment.
§ Lord JACQUES
My Lords, this is not a matter on which we have any strong feelings, but it is right that I should tell your Lordships that there is a case against recommitting. First, the question of principle has already been discussed in both Houses of Parliament at every stage. The question of whether or not maternity pay should be funded has already been discussed. Secondly, the details are based entirely and very closely upon the Redundancy Payments Fund, which has been approved by both Houses. Thirdly, it should be borne in mind that, in this House as distinct from the other place, there is an opportunity to put down Amendments if any Member is dissatisfied with those which are now before the House. However, this is not a matter on which we have strong feelings.
I feel that I ought to explain what recommitment would mean. It would mean that we should recommit Clauses 34 to 43 inclusive, which would mean that Amendments Nos. 14 to 38 inclusive would be considered in Committee at the 644 end of the Report stage of the remainder of the Bill; that is, there would be a Committee stage tomorrow covering Amendments Nos. 14 to 38. I repeat that we have no strong feelings on the matter.
§ Lord DRUMALBYN
My Lords, first it is not a question of discussing the principle of the Amendments. That it would be proper to do on Second Reading. I am not asking for that. As to the basing of the Amendments on the redundancy payments provisions, there are very distinct differences, and I feel that it is appropriate to discuss the Amendments in Committee, so that people can make more than one speech on any clause or Amendment. It is not for me but for your Lordships to say whether you are prepared to accept the recommitment, but, for my money—if I may so express it—I believe that we should maintain the principle of full discussion in Committee on Amendments of this scope.
§ On Question, Motion agreed to.
§ Clause 2 [Conciliation]:
§ The LORD PRIVY SEAL (Lord Shepherd) moved Amendment No. 1:
Page 2, line 29, leave out subsection (4) and insert—
(4) The Service shall designate officers of the Service to perform the functions of conciliation officers under any enactment (including any provision of this Act or any Act passed after this Act) in respect of matters which are or could be the subject of proceedings before an industrial tribunal, and accordingly any reference in any such enactment to a conciliation officer is a reference to an officer designated under this subsection.
§ The noble Lord said: My Lords, this is a drafting Amendment to make subsection (4) appropriate for the designation of conciliation officers of ACAS to deal with industrial tribunal matters as may be required for any future enactment as well as this Act. It makes it unnecessary to define "conciliation officer" in any other Act, including any future Act. I beg to move.
§ On Question, Amendment agreed to.
§ Clause 3 [Arbitration]:
§ The Earl of MANSFIELD moved Amenedment No. 1A:
Page 3, line 12, at end insert—
( ) an arbitrator appointed under subsection (1) (a) above may be required to take
account of any incomes policy whether voluntary or statutory during the period in respect of which the award is made.
§ The noble Earl said: My Lords, I feel that it will be courteous of me to explain the lateness of the Amendment, though I do so without apology. Noble Lords will recollect that the House had a full debate on the subject of the duties and functions of ACAS in Committee. It was hoped, perhaps over-optimistically, that the Government would see fit to table some kind of Amendment to take account of the, I suggest, very genuine expressions of dismay which were given vent to at the last stage of the Bill. It was only when the Marshalled List came out at the end of last week and no such Amendment was forthcoming that noble Lords on this side of the House decided to table an Amendment.
§ Your Lordships may recollect that, in Committee, there was a considerable amount of discussion as to how the difference between a statutory or a voluntary incomes policy which might well have been thought up by the Government and agreed to by all sides of industry and a large section of the public might be reflected, if it is to be reflected, in ACAS and the duties and functions which that body will perform and has been performing independently of the Bill. The word "compliance"—and I did not play any part at Committee stage in relation to this clause so that I feel, if not virgin white at least a pale shade of grey—caused a certain difficulty and the Amendment has been devised to get over that difficulty and possibly to take the sting out of the word.
§ The point underlying the Amendment is of general application and the present circumstances merely highlight the need for it. At any time, as noble Lords will know, there are many disputes where conciliation is necessary and a certain number in which arbitration is required. The Gazette of the Department of Employ-in its September issue shows that during the first 12 months of its operation the new ACAS handled about 2,250 disputes, of which 294 went to arbitration, and that pay is the most common cause of dispute.
It follows that when an incomes policy is operating it is of importance that arbitration awards should not exceed the limits laid down, otherwise there is a danger
that a major loophole will be created, for, naturally enough, awards are normally accepted by both sides. The position under the present pay policy is not remarkable for its clarity. If one examines the Remuneration, Charges and Grants Act, the Attack on Inflation—and what is contained in the White Paper—and the Counter Inflation Act 1973, one sees that the only reference to the role of ACAS is in the appendix of the TUC in the Attack on Inflation, and in paragraph 9 in particular. I quote:
There may be isolated instances of negotiators experiencing difficulties in applying or observing the pay limit.
That could be said to be an understatement. I appreciate that there may be difficulties, and indeed the paper goes on to say:
The existence of any such difficulty does not remove from negotiators and their executives the responsibility of doing all they can to ensure that the limit is observed. Where unions and employers both agree that there is a serious difficulty, they can make a joint submission to the TUC and the CBI, who will jointly examine the problem and determine whether this should be submitted to ACAS for arbitration.
§ Therefore the dangers appear, to me at any rate, to be threefold. First, arbitrators may be allowed to recommend settlement at levels in excess of the limit and no action will be taken against employers who thereafter claim a price increase based on the excessive settlements. That is one prospect and is most likely. Secondly, arbitrators may be allowed to recommend settlement at a level in excess of the limit, but employers who accept their award and then apply for a price increase based on the consequent increase in labour costs will find the whole of their application set aside. That is the second possibility. Thirdly, arbitrators will be expected to recommend settlements within the limit, thereby ensuring that application of the agreed £6 limit is in fact, as well as in name, universal.
§ Nothing I have said should be taken as any desire or aim to embarrass ACAS or make its undoubtedly difficult task more difficult than it is and will be. But. as I have said, in the past 12 months, there were a number of cases—294—which went to arbitration, and the risks of higher increases for some by means of arbitration than for others whose claims 647 do not go to arbitration are there. Therefore one matter on which the Amendment seeks some form of reassurance is that the limit will be observed by ACAS and the arbitrators when making these awards. I beg to move.
§ 3.14 p.m.
§ Lord SHEPHERD
My Lords, I can perhaps deal briefly with this Amendment. What I have to say first of all is in no way a criticism, although it may appear to be a criticism of the drafting and of the possible consequences of the Amendment. The noble Earl will appreciate that this Amendment deals only with what one might call ad hoc arbitration. According to the Amendment it would be necessary to have regard to statutory or voluntary incomes policy where arbitration is undertaken by the Central Arbitration Committee but the arbitrator would not be bound by it. I take it that this is a matter which the noble Earl would put right if I were in a position to accept his Amendment. I am not in a position to do so, and in view of what I now propose to say about it, I hope that the House will not feel it right to accept the Amendment.
Noble Lords opposite have given full support to the establishment of ACAS and have also given full support to the conciliation and arbitration service. This Amendment deals with the arbitration procedures in the Bill. One point is agreed: that this body should be seen to be fully independent of the Government: that it should be a body that is truly independent; that it should be able to offer its services to both sides of industry quite freely; and that whatever decision it may arrive at it will have been arrived at through this degree of independence. If we can accept that, then I hope that the House would accept the consequence that to impose a statutory requirement would be to impinge upon the independence of that body. Clearly ACAS will give advice on the implications of a statutory or a voluntary incomes policy, if it is asked by both sides to do so. But it would be quite wrong, relying upon the independence of that body, to put a statutory duty of this nature upon it. I hope that the noble Earl will see what would be the consequences of his Amendment.
648 The other point that I should like to make is that clearly if there were a statutory policy, then a statutory policy by Act of Parliament would have to deal with the whole question of arbitration not only in terms of arbitration and in terms of income but in terms of the many other by-products that go with them. But we are now dealing with a voluntary incomes policy. One would hope that arbitration bodies would take account of the anti-inflation policy of the Government. But it would be quite wrong at this stage, in a voluntary period, to seek to impose any statutory conditions upon any body that has agreed to arbitrate. As the noble Earl will see under the clause, in order to go to arbitration it is necessary to get two sides to agree to go. One side, perhaps the employer, could make it a condition that whatever arbitration award is made it should have cognisance of the incomes policy. That could be made a condition; although whether it would be is another matter. But even the award of the arbitration body is not binding upon either of the parties.
Therefore, I hope that the noble Earl will feel that what I said on Committee—that it would be right and proper and that one would expect that, if approached, ACAS would give advice upon a voluntary incomes policy—is where we should leave the matter. But, above all else, we should be sure not in any way to intrude upon the independence—the known, the seen and the shown independence—of this body. I believe that the strength of this body, both for conciliation and arbitration, lies in its independence from the Government machine.
§ 3.18 p.m.
§ Lord WIGG
My Lords, I support what the noble Lord the Leader of the House said and I am indeed delighted that the spokesmen for the Opposition have given unqualified support to ACAS and to the principles of conciliation and arbitration. I think that the future destiny of this country as a major industrial power depends upon the acceptance, throughout the length and breadth of these Islands, of that principle; and having accepted it through words, we then give acceptance to it by deeds.
To my mind it must be independent. I should personally lean over backwards to resist anything that calls into question 649 the independence, because goodness alone knows— as the noble Earl, Lord Mansfield, said—the task of that body will be difficult enough without adding to its difficulties or seeking to put it into a cage, no matter how well-intentioned or how gilded that cage may appear to be.
The principles of this Bill have my full support. I certainly endorse all that the noble Lord the Leader of the House said because, in terms of the independence, we must ask, what is the great prize? The noble and learned Lord the Lord Chancellor and others like him—distinguished members of his profession—are forever preaching to us about the value of the rule of law. The rule of law does not rest in the hands of either judges or barristers, however distinguished: it rests, in the ultimate, in the consent of the overwhelming mass of the people of this country, who have respect for decisions and who do not by their actions strive to be judges in their own cause. This is really what we are aiming for in, first of all, the process of conciliation and, ultimately, the prize of arbitration. We are a long way short of attaining the goal. If we are civilised (and I use that term in its most generous conception) it ought to be possible, when disputes occur, for either party to go to arbitration, but I know only too well that the mere suggestion of compulsory reference would, to put it mildly, meet with very considerable opposition.
When one has attained that, if that be the next big step forward, what I also believe is the ultimate goal is that when two parties, with the consent of either of them or with the consent of neither, go to arbitration, then the decision of the arbitrator will find acceptance and have the backing of the whole of society, because on that all depends. But for that to happen there must be a sense of fairness, a sense of fair play. I am not one of those who worship at the shrine of English justice, nor do I claim to accept (I do not know enough about it) the oft-repeated dictum that British justice is the best in the world. But I have from time to time, starting in my early youth, seen what has happened to individuals charged with taking one of your Lordships' pheasants. They got fourteen days in Winchester even before they arrived in the dock. It was almost auto- 650 matic It is at that level, right at the bottom, where the law makes an impact on people's lives, that the resistance is first born.
I sometimes wonder whether, if there is justice for all, it depends on the size of your bank balance how much justice you are going to get. These are the obstacles—obstacles which cannot always be formulated, which are often unfair—which are built into people's resistance: and it is a resistance which arises because they do not believe that when a case is going to arbitration they will get a fair crack of the whip. They see that Mr. Justice So-and-so or Mr. So-and-so, QC, who has been a rather reactionary Tory Member throughout his life, is presiding, and they know that that is a "gonner" before they start. Here we are bringing into being something that has not that legacy of distrust behind it; we are bringing in something new. For it to work, as I believe we all want it to work and as I believe the national interest requires it to work, it must find general acceptance in terms of the belief that there is going to be absolute fairness.
I now turn to one point I would make to the Leader of the House. I have refrained from putting down any other Amendment to this Bill, either at the Committee stage or again at this stage, because I did not want to add any fuel to the fires of controversy, but I believe it absolutely essential that those who are appointed as arbitrators or conciliators—all the staff of ACAS—must be appointed by the Secretary of State for Employment. I have an Amendment down later really as a peg on which to hang the argument I am now going to make. Concerning the terms of appointment and the conditions of service, the Bill says that they are to be subject to the Secretary of State for the Civil Service. I know what this means. Those words are there because a battle has been lost. Various boards and organisations up and down Whitehall have become redundant. I have every sympathy with those staffs who have been displaced; but what this Bill sets out to do, in my judgment, is of such transcendental importance that, however important it may be to find jobs for people who have lost them, this new board should not be cluttered up with civil servants who have been bred in the Civil Service tradition. 651 This board wants new minds, new energies; and I regret very much that the Secretary of State for Employment has given way on this point and has fastened round the neck of the newly-functioning ACAS the necessity to take as part of its staff those who for various reasons have lost their jobs. Because everything depends on how this board operates; its independence of mind, the quality of the people it appoints. It is going to depend not on the words used in this House or in another place, but on how it works out in practice.
Certainly from a political point of view it could not have got a better start. The words of the Leader of the House today and of the noble Earl, Lord Mansfield, are excellent. They could not be better: the acceptance by the two great Parties of this Bill and all that it stands for. The Leader of the House has stressed independence. Yes, but independence from top to bottom. This wants to be an organisation which will put down its own roots, which will bear its own fruit and which will be free from any interference of any kind. It wants to be free from the interference which could come from well-intentioned people—and this Amendment is a very good example of good intentions. But, my Lords, good intentions are not sufficient. Let us give this little bird a chance to grow its wings and to fly.
§ 3.27 p.m.
§ Lord BRIGINSHAW
My Lords, I thought there was an air of déja vu about this debate this afternoon. I want to intervene shortly to emphasise the necessity, to which the noble Lord, Lord Wigg, has drawn attention, for complete independence. On some aspects with regard to staffing and officering the Service he has, I think, made some points quite properly, but I can also say that the board itself has made representations, and will continue to do so, to the Secretary of State with regard to what the noble Lord, Lord Wigg, has said. I also want to emphasise my sympathy for, and understanding of, what appears to me to be the good intent of the noble Earl, Lord Mansfield, in his Amendment. But the absolute validity of the presentation made by the board ought to prevail, I think, and the central aspect is the emphasis on independence. The experience of just over a year's work on 652 this matter (I think this would be agreed by all who have had anything to do with it) has been like the handling of a piece of Dresden china because of the necessity to re-establish, or perhaps even to establish, a confidence and a belief in the fairness of arbitration processes.
I think that the delicacy of success which has been achieved ought to be preserved, and I should therefore like to emphasise, with the Leader of the House—and perhaps the noble Earl, Lord Mansfield, will understand—that the opposition that I for one make to the Amendment is on the basis of the plea that we should be allowed to have complete independence. Anything which impinges on this, anything which seeks to suggest that the weight of the Government of any day is being given to the consideration of the arbitrators, is wrong, will not be helpful and, what is most important, under-estimates the people who are called upon to serve as arbitrators. They are all, and always, men and women of the world, or they would never get by any of the processes that lead to their appointment. Therefore, they are taking into consideration the facts of life all the time; otherwise they would never be suitable to be arbitrators under these circumstances. I think that if the position is left there, then the Amendment ought not to be accepted.
§ 3.30 p.m.
§ Lord DRUMALBYN
My Lords, the noble Lord, Lord Wigg, talked about acceptance of an incomes policy by the whole community. That is rather circuitous, admittedly; but this must cover the arbitrators and what we are talking about is whether there should be, as suggested, a statutory duty to take account of, or the general assumption that they will do so; because it would be astonishing if they did not take account of an incomes policy that was accepted by the whole community. May I ask this practical question? If an award were made which fell outside the terms of that incomes policy, what view would the Price Commission take of that? Would this be at the expense of the employer entirely so that he would be locked in and notable to increase his prices? There are a lot of implications behind this. If the arbitrators are to have complete freedom in making their awards, and if those awards are accepted by both 653 sides, will they be binding on the Price Commission?
§ Lord SHEPHERD
My Lords, my understanding is that arbitration awards are not exempt from the sanctions that apply to any negotiated pay settlement; for instance, sanctions through the Prices Code. If an arbitration award were outside a statutory incomes policy, I am sure that that would have been provided for in the legislation on which the statutory policy was based. May I just deal briefly with the point raised by my noble friend Lord Wigg? I am glad he accepted the Government's view that ACAS should be thoroughly independent. I wish to assure him that that part of Schedule 1 which he is seeking to amend—that is, the provision that the Minister for the Civil Service should exercise a control over the numbers, the manner of appointment and the terms and conditions of service of the staff of ACAS—in no way affects, or is intended to affect, the way in which ACAS operates.
The fact is that ACAS is taking over a very large number of civil servants from the Department of Employment, particularly those who provided many years of very valuable service in the field of conciliation. It was their wish, for obvious reasons, to remain Crown servants and the Government have accepted this position. Therefore, they are going to be Crown servants. But that in no way at all affects their relationship, their loyalty and responsibility, to the chairman and board of ACAS. It is necessary to retain this relationship of the Minister for the Civil Service, because he is responsible for the terms and conditions of all Crown servants. There has to be, too, a degree of scrutiny, if one likes, of any body that is dependent upon public expenditure. That being what it is, I can give my noble friend the very firm assurance that it is the Government's intention that the board of ACAS should be responsible for its own activities, and it is not the intention that the Secretary of State or any other Minister should become at all involved in the way in which ACAS approaches the duties required of it in the Bill.
It was on that ground, and on that ground alone, that I was resisting the Amendment of the noble Earl because, although ACAS would give advice (and 654 may even give written advice) to industry or to people who approached it as to the general economic situation and the policy that was pertaining, I feared that it would be quite wrong and would appear to affect its independence if it was given a statutory duty so to do. Therefore, I hope the House will agree with me that ACAS should be independent, completely and properly, and that we should do nothing which could in any way make it appear that its independence had been fettered or intruded upon by the Government. An incomes policy, whether statutory or voluntary, is a matter for the Government and for Parliament, and not for a body like ACAS.
§ The Earl of MANSFIELD
My Lords, this debate has highlighted the very real difficulties which will face employers in the course of the next rather difficult 12 months. I had hoped to get from the noble Lord the Leader of the House something a little firmer as to how the Government see arbitrators going about their functions in the future. It may be that a pearl was dropped, that employers would do well to make a condition of going to an arbitration body—
§ Lord SHINWELL
My Lords, may I ask whether the noble Earl has asked leave of the House to make a second speech? We are on Report stage.
§ The Earl of MANSFIELD
My Lords, the noble Lord the Leader of the House did not ask permission and neither did I; because it is my Amendment and I am going to withdraw it in a minute.
§ Lord SHINWELL
My Lords, if we are going to proceed with our business at all we ought to obey the rules. The mere fact that the noble Lord the Leader of the House did not ask for the leave of the House has nothing to do with it. He ought to have done so. I am asking the noble Earl whether he has asked leave of the House. Perhaps he will do so now.
§ Lord SHEPHERD
My Lords, perhaps I may deal with this matter now so that we have no further difficulties. Standing Orders provide that noble Lords who move Amendments have a right of reply. Sometimes a request is made to the 655 House, but on a number of occasions it is not. But it is clearly within the Rules of the House that those who move Amendments have a right of reply. Rightly or wrongly, your Lordships' House amended Standing Orders to permit Ministers to speak more than once. Whether that means they can speak three or four times, I am not sure. Certainly, Ministers have a right to reply at Report stage. Whether they should seek the approval of the House is a matter of courtesy. If I have offended I apologise; but I have the right to speak a second time.
§ The Earl of MANSFIELD
My Lords, I am grateful that the noble Lord the Leader of the House has come to my aid. If my reply to the noble Lord, Lord Shinwell, was rather sharp I regret that. There is a device among noble Lords opposite, and whenever I get into a theme I am interrupted sufficiently for all concentration to go. What I was endeavouring to say was that employers are possibly going to find themselves in a situation of difficulty over the way in which arbitrators go about their duties. I should say to the noble Lord, Lord Wigg, that certainly there was no desire on the part of those who tabled this Amendment that there should be any fetter or anything which would bind the powers of either the arbitrators or ACAS.
It is perhaps unfortunate that noble Lords opposite see, in every attempt to place a statutory duty on a body such as this, an equal attempt to fetter it improperly or unduly. That is not the case. The case is that, where you have a voluntary incomes policy, it imposes disciplines on every person who is a citizen of the country. All I am asking is: are the same disciplines going to be imposed upon the citizens who act as arbitrators? If they are not, how then shall an employee conduct himself That question has not been answered. Nevertheless, as I said at the beginning of this debate, I am grateful in a way to the noble Lord the Leader of the House for what he has told us as to how the Government see ACAS and its arbitrators working and, in those circumstances, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.656
§ Clause 4 [Advice]:
§ 3.41 p.m.
Baroness ELLES moved Amendment No. 1B:
Page 3, line 38, after ("recruitment,") insert ("retention").
§ The noble Baroness said: My Lords, I beg to move manuscript Amendment No. 1B and, with the permission of your Lordships, I should like to take manuscript Amendment No. 1C at the same time. I should like to do this for two reasons. The noble Lord, Lord Shepherd, during the Committee stage of the Bill, made an assertion that ACAS would not necessarily be bound by the statutory pay policies. We have gone into this in some detail and I will not repeat this argument. I wondered, nevertheless, regarding the functions of ACAS, whether—
§ Lord BEAUMONT of WHITLEY
My Lords, I wonder whether the noble Baroness could tell us what the Amendments are that she is moving before she tells us why she is moving them. That would be helpful.
§ Baroness ELLES
My Lords, I apologise to the noble Lord. I will read out the manuscript Amendments. They are in Clause 4 and the first one reads:1B. Page 3, line 38, after ('recruitment') insert ('retention').The other Amendment reads:1C. Page 3, line 39, at end insert ('including equal opportunities for all men and women').To go back, my Lords, to the remarks made by the noble Lord, Lord Shepherd, what I am not certain about—and we should like some clarification on this—is, accepting of course that ACAS is completely independent and not in any way under Government control, how far does it have to take account of any existing statutory provisions? If, for instance, one deleted "retention" or "equal opportunities", it may well be that it is more convenient or acceptable to arbitrate or give advice which might not take account of the temporary employment subsidy, the Sex Discrimination Bill or the Racial Discrimination Act. I would consider one of the functions of ACAS—and I hope noble Lords opposite will agree—is to draw the attention of employers and unions to existing legislation, which we 657 all know can indeed by very difficult at this present time, particularly in a time of recession.
This is one of the reasons why we should like to see the addition of the words "including equal opportunities for all men and women", to paragraph (j) in Clause 4. It would be analogous with paragraph (k), which refers to job evaluation and equal pay. There would be nothing illogical or unacceptable in the setting out of the functions of ACAS regarding the advice it should give which, after all, includes employment policies. It is also for this reason that we should like to see inserted in paragraph (j) the word "retention". The noble Lord, Lord Shepherd, said he was of a mind to accept the word "retention", but it was, as I understood it, to be within paragraph (g). I am not sure why it should come under paragraph (g), which refers to procedures. I would have thought that retention in a time of recession is a matter of employment policy—perhaps more important even than promotion. We should like to see the word "retention" included in paragraph (j) and to add these words regarding equal opportunities. Unless these words are included, only too often women and coloured workers will be laid off first. We think it should be one of the functions of ACAS to encourage employers and unions to respect and implement what might sometimes be rather difficult legislation. I beg to move.
§ 3.45 p.m.
§ Lord SHEPHERD
My Lords, ACAS will certainly have to take account of all statutory provisions, including the sex discrimination or equal opportunities legislation, and that it is one of the reasons why I suggest that the Amendment is unnecessary. In Committee, I said to the noble Earl, Lord Gowrie, that I was happy to accept the insertion of the word "retention" after the word "recruitment". I think that was where it was placed in Committee. The noble Earl did not press his Amendment when it was called and therefore it did not fall to me to deal with it. But since the noble Baroness is now moving it on Report, I can say that I shall be happy to accept it.
Regarding Amendment No. 1C, which inserts the words "including equal opportunities for all men and women", I suggest that is unnecessary because in 658 paragraph (j) the word "workers" clearly applies to both men and women. But if we were to include the words as the noble Baroness suggests, we will have a statutory duty to give advice on equal opportunities for all men and women. This might imply that equal opportunities should be given irrespective of the merit, capabilities and characteristics of the people concerned. I would not dissent from the spirit in which the noble Baroness moved the Amendment but considerable difficulties would be created if it was legislated for in this form. It is certainly the wish of the Government that ACAS will take into account and have regard to all forms of legislation on the Statute Book.
Regarding equal opportunities, we have two new pieces of legislation which will cover that when they are on the Statute Book. With those few words, I hope in accepting the first Amendment the noble Baroness will agree not to move the second one.
§ Lord LEE of NEWTON
My Lords, may I ask my noble friend a question regarding the second of the Amendments, which refers to equal opportunities for all men and women? One recalls that when we had the Equal Pay Act before another place one argued about the need for women and girls to have the same opportunities for training for skill as male apprentices. It would be unwise—indeed, it would be rather fatuous—to say we were granting equal pay for women for equal work if we were not going to give them equal opportunity to be trained for skill. Perhaps my noble friend would care to look at that point.
When we are talking of equal opportunities, we should ensure that girls and women receive equal opportunities for training in order that they can acquire skilled work appropriate to men. The Act does not include this. Although my noble friend mentioned the Act, as it now exists, I had an impression that he said that would not necessarily mean that girls would receive opportunities for training in the same way that apprentices would receive it. Therefore I should think that in this Amendment there is a point of importance in ensuring that when we speak of equal opportunity for all men and women we mean that we are not 659 going to bar girls and women from learning a trade in order to have the opportunity, with men, of acquiring skilled status. I hope that point will not be missed.
§ Baroness SUMMERSKILL
My Lords, may I ask my noble friend to bear one point in mind? Although we accept this in principle, how could pressure be brought to bear on both sides of industry to supply suitable apprenticeship schemes for women?—because that is what is lacking at the moment.
§ Lord LEE of NEWTON
My Lords, the idea that women or girls should not serve apprenticeships is a most reactionary one—reactionary in the extreme. It goes back to the days when girls were deemed to be in educable. For my part, I should deplore the thought that any forward-looking employer would bar a girl from any apprenticeship. I take my noble friend's point. If we can in this way assist in giving a far wider opportunity to girls, this would be an extremely good thing.
§ Baroness SUMMERSKILL
My Lords, may I ask my noble friend a supplementary question in order to press this point? Is he aware that in the industrial town of Warrington, with which we are both very familiar, the only apprenticeships for girls when I was there were three in number—all of them for hairdressing?
§ Lord WIGG
My Lords, we should not lose sight of the fact that in line 24 of this clause it says, "including the following". Because everything is not in there it does not mean to say that they are excluded. Once you start putting in a form of words, there is no end to it. For example, if you are piously minded, there is nothing in the world to stop your putting in there, "God is love". That is unexceptional. On the other hand, if you are concerned with the proprieties, there is no reason why you should not put in there. "Please adjust your dress". The list cannot be exhaustive and perhaps it might be better to use the words, "For example, it includes the following". Therefore this would not exclude what the noble Baroness is seeking to do. The Government have gone a long way. It seems to me that the noble Baroness 660 would be serving the interests of the House and giving co-operation regarding the many items that are to follow if she would respond to the plea made by the noble Lord the Leader of the House and let us get on to the next clause.
§ On Question, Amendment agreed to.
§ Clause 6 [Codes of Practice]:
§ 3.53 p.m.
§ The Earl of MANSFIELD moved Amendment No. 2:
Page 4, line 43, leave out subsections (5) to (7) and insert—
(5) If a draft laid under subsection (4)(a) above is approved by a resolution of each House of Parliament, the Service shall issue the Code in the form of the draft and the Code shall come into effect on such day as the Secretary of State may by order appoint.
The noble Earl said: My Lords, your Lordships may recollect that at Committee stage we had an interesting debate on the question of whether future Codes of Practice under this Bill were to be adopted—and I am deliberately slurring my words here—or were to be agreed to in Parliament under what I may call the Negative or Affirmative Resolution procedure. Under the Bill, there is no doubt that Codes of Practice will have a very important part to play and Clause 6(1) provides that the ACAS may:
… issue Codes of Practice containing such practical guidance as the Service thinks fit for the purpose of promoting the improvement of industrial relations.
For instance, the Service is charged with the duty of preparing Codes on the disclosure of information. These and others will be only a start, and no doubt in due course Codes will be issued on a number of subjects.
§ The importance of these Codes cannot be overstressed. Their significance is set out in subsection (10) of Clause 6, which provides that non-observance of a Code will not of itself lay a person open to proceedings but that in any proceedings before an industrial tribunal or the Central Arbitration Committee the terms of any Code shall be admissible. So the Codes, although they will not be law in themselves, will have legal status and bring about certain legal effects. Those effects are likely to be broad, as we concede they will be in the sphere of industrial relations generally.661
§ During the Committee stage your Lordships, and also the Members of another place, were concerned with two parts of the problem. The first of them concerned the way in which the actual Codes could be subjected to debate in either House; in other words, how Parliament could in future cast a reviewing eye on the Codes. The difficulty with all Regulations of this nature, as I mentioned earlier, is that it is not possible to amend them. Either they are approved or they are not. Either they go through on the Negative Resolution Procedure or there is some Prayer which is moved against them. The other point concerned the provision of Parliamentary time to deal with them. I think we would ail agree that so far as your Lordships' House is concerned—although we think we have quite a lot of work to do sometimes—time would be found so that we could have a debate on one or other of these Codes When necessary. In the other place such a procedure could be extremely difficult. Even in the case of a Prayer, in some cases the Government may not be in a position, or may feel themselves unwilling, to provide time for a debate.
§ The noble Lord the Leader of the House undertook to consider this matter further on Committee stage, and I have no doubt that he has done so. Noble Lords on this side, for the reasons I have given, feel that these Codes will be of the utmost importance and should be subjected to Parliamentary scrutiny. Secondly, if there is any doubt—and certainly there was doubt on Committee stage here—as to how and when Parliament would review these Codes in due course, there is no doubt in my mind that it should be in the form of an Affirmative Resolution. In that way, although I concede at once that it may not be very convenient for the Government of the day, whatever their complexion may be, to provide the time, under the Affirmative Resolution procedure they will have to do just that. I beg to move.
§ Lord SHEPHERD
My Lords, in Committee I expressed a good deal of sympathy for the Amendment that was moved on that occasion by the noble Earl, Lord Gowrie; but I sought to explain that there were some practical difficulties involved. The noble Earl, Lord Mansfield, has himself drawn atten- 662 tion to these in moving this Amendment today. There is the problem of the timetable and the arrangement of Business in another place, but certainly so far as this House is concerned I can envisage no difficulty whatsoever in providing the necessary time for a debate on any of these Codes of Practice if there was a wish for one. But in another place the situation is different. As the noble Earl may be aware, the timetable is not entirely in the Government's hands but arises between the two sides.
Clause 6 says that the Service may issue Codes of Practice containing such practical guidance as it thinks fit. Under the Industrial Relations Act, it was the Secretary of State who was required to produce such a Code of Practice and it was, as the noble Earl will know, very comprehensive indeed. Here we may expect a series of Codes of Practice to be issued from time to time by the Service. We are not dealing with just one debate; we could well be involved in quite a number in the course of the next Session. If we were then to have to find time for those debates and none of these Codes of Practice could come into operation until both Houses of Parliament had approved them, we would have a good deal of delay in their application and create considerable difficulties in another place in having to find time to discuss matters which may not be of great relevance or in any way controversial.
I have looked at this matter with a good deal of sympathy and wonder whether the noble Earl would be content with this suggestion. The Bill requires the ACAS, I think on two occasions, to produce Codes of Practice, one on disclosure and one in regard to time off. These are the only two Codes that the ACAS is required to produce. These Codes are of considerable importance but, as I say, are the only ones which Parliament requires ACAS to produce. I wonder whether the noble Earl would be content for these two, required by the Bill, to be subject to the Affirmative Resolution procedure and for all the remaining ones, as and when produced, to be subject to the Negative Resolution procedure, on the clear undertaking, at least so far as I am concerned as Leader of the House, that time would be provided in your Lordships' House for any of these Codes to 663 be debated. Certainly, in another place it is for Members themselves to find time and to put pressures upon their own business managers for the proper provision of time. I hope that this gesture to the noble Earl will satisfy him. I have looked at the matter with great sympathy and great care. Difficulties are involved in accepting the Amendment as it is now on the Marshalled List, and I hope that the gesture I have made will be acceptable to the noble Earl.
§ The Earl of MANSFIELD
My Lords, before the noble Lord sits down, may I ask whether it is his intention to table some sort of Amendment at the next stage of this Bill in your Lordships' House? I may say, for the sake of the Record, that the noble Lord moves his head in a vertical way.
§ Lord SHEPHERD
My Lords, if the noble Earl will accept my suggestion, I shall certainly be happy to do so at Third Reading.
§ Amendment, by leave, withdrawn.
§ Clause 10 [Central Arbitration Committee]:
Lord SHEPHERD moved Amendment No. 3:
Page 8, line 33, leave out ("(formerly known as the Industrial Court)") and insert ("(whether by that or any other name)").
§ The noble Lord said: My Lords, this is a redraft of a description of the Industrial Arbitration Board. The Industrial Court was established under Part I of the Industrial Courts Act 1919 to be a permanent national arbitration tribunal for the settlement of trade disputes. Its name was changed by the Industrial Relations Act 1971 to "Industrial Arbitration Board", but its constitution was unaltered. The Amendment reflects more accurately the fact that whether a reference in any enactment was to the Industrial Court prior to 1971 or to the Industrial Arbitration Board, it was a reference to the same body. I beg to move.
§ On Question, Amendment agreed to.664
§ Clause 12 [Inquiry and report on recognition issue]:
§ 4.5 p.m.
The Earl of MANSFIELD moved Amendment No. 4:
Page 9, line 17, leave out ("the trade union") and insert ("any applicant").
§ The noble Earl said: My Lords, it may be for the convenience of the House if I speak to Amendments Nos. 4, 5, 6 and 7 together. These Amendments are consequential on an Amendment to Clause 11(1) made by your Lordships during Committee. As a result of a Division, there was written into the subsection the words "or an employer", and the effect of the Amendment is that a recognition issue may be referred by an independent trade union or an employer to ACAS. In casting an eye down the rest of the clause and the next clause which deals with the matter, one sees that subsections (2) and (3)(b) do not really make sense and require amendment. I very much hope that the Government accept these Amendments in the spirit in which they are moved, and I now beg to move the first one.
§ Lord JACQUES
My Lords, at this stage I can make no commitment on the matter of principle as to whether employers referring recognition issues should do so under this clause rather than under the other clauses open to them. This is a matter which will have to be considered in the other place in due course. I accept, however, that these Amendments are consequential and that it is wise that the Bill should leave this House in a tidy, sensible and logical state. I should have been very glad to accept the Amendments, but I am advised that they are technically deficient. I would ask the noble Earl to withdraw them and I will undertake in the course of a few days to provide new drafts which he can submit at Third Reading. I will not go into the technical deficiencies unless he wishes me to do so.
§ The Earl of MANSFIELD
My Lords, with that undertaking, I am content to beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.665
§ Clause 17 [General duty of employers to disclose information]:
§ Lord CAMPBELL of CROY had given Notice of his intention to move Amendment No. 8:
Page 15, line 24, at end insert—
("(6) Where an employer is required by virtue of this section to disclose any information to any trade union representatives relating to the matters specified in the next following subsection he shall at the same time disclose the information to the members of the undertaking.
(7) The matters referred to in the preceding subsection are—
§ The noble Lord said: Had there been a new Marshalled List today, my Amendment would no longer be here. But as it is on the List I should explain that there has been a determined bid to solve a serious problem and this Amendment was to provide another possible way of helping the Government out of a difficulty. I believe a way has now been found by agreement of those concerned, and it is in Amendment No. 9. I therefore do not propose to move No. 8.
§ Lord TERRINGTON moved Amendment No. 9:
Page 15, line 24, at end insert—
("(6) Where an employer, being a company in the case of which there has, as respects the whole or any proportion of its share capital, been granted a quotation on a recognised stock exchange, is required by virtue of this section to disclose any information to trade union representatives relating to future plans of the company which could have a significant effect on the assets or profits of the company, he shall at the same time make the information available in accordance with the disclosure requirements for the time being of that stock exchange.")
§ The noble Lord said: My Lords, when I moved my previous Amendment in Committee, I sensed a good deal of sympathy with the idea behind it but had to recognise the justifiable criticism that it involved disclosure of a great deal of information that was of no interest to shareholders whatsoever. I therefore tried to meet this criticism by tabling a new Amendment which limits the amount of information to be given to shareholders, and at the same time I have tried to 666 define price-sensitive material in a way which is acceptable to the Stock Exchange authorities.
§ Furthermore, I have applied this subsection only to companies whose share capital is quoted on a recognised Stock Exchange, in accordance with subsection (10) of Section 33 of the Companies Act 1967, since price-sensitive material is really only relevant to companies quoted on a stock market. Finally, I have simplified the method of dissemination to shareholders by using the normal Stock Exchange channel of communication as laid down by their listing agreement, in order to avoid a mass of correspondence between companies and their shareholders, which was the basis of some criticism during the Committee stage. I ought to explain that this method of communication is direct to the Stock Exchange Quotations Department and that notification may be by Telex, telephone, telegram, or letters by hand or first-class mail but may not be through an agency or any third party.
In moving this new Amendment, I hope I may be excused from presenting once again all the background arguments. I have now done this twice; during consideration of the Industry Bill and quite recently in Committee on this Bill. However, during the Committee stage remarks were made by certain noble Lords on the Government Benches which call for a reply in support of the general case I am trying to make for this Amendment. For example, it was said by one noble Lord that my previous Amendment was misconceived and that he did not believe that disclosure to trade union representatives for the purposes of collective bargaining normally runs any risk of disclosure elsewhere. That may be so—and certainly I would not wish to suggest otherwise—but the fact remains that disclosure of price sensitive information to trade union representatives, whether or not they disclose it elsewhere, involuntarily makes them insiders and therefore runs counter to the Stock Exchange listing agreement. I said earlier that I did not want to repeat all the arguments that I put forward during our earlier discussions but this listing agreement, which is a voluntary agreement evidenced by board resolution, is so important to the central issue that I feel I must quote from
it once again. Its introduction is very clear and reads as follows:
A company having securities listed on the Stock Exchange is required by the listing agreement to give immediate notification of any information necessary to enable shareholders to appraise the position of the company.
Then it goes on to say:
Directors should not divulge price sensitive information in such a way as to place in a privileged position any person or class or category of person outside the company and its advisers.
Surely this legislation, unless amended, is in danger of forcing companies to do exactly what they have undertaken not to do in accordance with the agreement; that is, to put trade union representatives in a privileged position regarding information which may be price sensitive. The fact that the proposed legislation does not prevent companies from voluntarily giving information to shareholders, as has been frequently argued during several of our discussions, is to my mind tending to confuse the issue. Of course they can give information to shareholders in the same way as under the present voluntary system they can give information to trade unions. What bothers us is the legal obligation to inform one group without the same legal obligation towards the investing public. However honourably trade union representatives may intend to behave in their handling of price sensitive information which is made available to them under this Bill, the fact remains that they have been put in a very privileged position vis-à-vis the investing public and that they are therefore insiders.
§ I should like to take this opportunity of reporting that since the Committee stage I have held further discussions with the Stock Exchange Council and have obtained their views about this Amendment in its revised form. They feel that the voluntary system whereby listed companies are required to disclose price sensitive information to the Stock Exchange under the terms of the listing agreement has worked perfectly well in the past. However, now that the Government propose to introduce legislation which requires companies to disclose this type of information, their point of view is that it is right that the obligation to disclose to the Stock Exchange, and hence to share- 668 holders and the public, should be incorporated in the Bill.
§ Having said that, perhaps I could now turn to one or two remarks which were made by the noble Lord, Lord Jacques, in Committee. There were two points which particularly interested me. The first was his statement that if the information, presumably of a price sensitive nature, would have an adverse effect on the interests of the undertaking the employer would not have to disclose it. He said also that this is made perfectly clear in the Bill, although he did not indicate the relevant clause. Having made a further careful study of the Bill in conjunction with my Stock Exchange colleagues, I am afraid we cannot see how the Bill is clear on the specific question of disclosing price sensitive material and I should be most grateful if the noble Lord could help us further when he comes to reply.
§ The other statement of the noble Lord which interests me even more is that the kind of information involved in this Bill will be different from that concerned with the Industry Bill. I hope I am not being unfair. Had he said that the purpose for which the information is required is different I would clearly have understood, but what the noble Lord said according to the Official Report was that the kind of information will be different. Frankly, this leaves me rather puzzled.
§ The reason I make this point is that since the Committee stage I have taken the trouble to study Report No. 31 of the Commission on Industrial Relations which is concerned with the disclosure of information and I find that it contains as an Appendix an extract from a 1970 TUC Report which gives a list of the information to be sought for the purposes of collective bargaining by trade union representatives. I believe that this Report was never submitted officially to the CIR but on the supposition that it still represents trade union requirements I can assure the House that it is a list containing highly price sensitive information. In fact, I would go further and say that it is much more price sensitive than the list in the disclosure clauses in the Industry Bill and therefore is giving rise to much more concern to those who are responsible for maintaining a fair and orderly market.
§ With reference to the noble Lord's remarks concerning the 1971 Industrial 669 Relations Act, I should like to point out that during the Bill's passage through this House I expressed considerable concern about the disclosure clauses that it contained and moved an Amendment on this matter of disclosure to trade union representatives without taking due account of the position of shareholders. I think, therefore, that I can claim to be entirely consistent in my attitude towards both of these Bills. I cannot pretend that this Amendment is ideal because, apart from anything else, it has had to be drawn in such general terms that it would not necessarily cover all the price sensitive items that might have to be disclosed at some point to trade unions. However, I believe that it is a reasonable compromise which is acceptable to all interested parties with whom I have held discussions, although I must underline the fact that it represents a bare minimum to meet the considerable problem which this Bill may well create.
§ May I conclude by summarising the position as I now see it. First, there appears to be sympathy on all sides of the House regarding the danger of an extension of the circle of people with price sensitive information. Secondly, I hope I am correct in thinking that we all recognise the important part that the Stock Exchange listing agreement plays at the present time in ensuring that the best interests of the investing public are adequately protected. If that is an accurate summary, then I am afraid I must say once again that unless amended this piece of legislation is in real danger of upsetting a system which has worked perfectly well on a voluntary basis.
§ On the last occasion I asked the House for its support on the grounds of consistency because we had amended the disclosure clauses of the Industry Bill in order to protect the interests of the investing public. I am repeating my request for support of this new Amendment because I believe that it meets the major criticisms levelled at its predecessor but more particularly because, as I have already said, I believe that these disclosure clauses are far more of a threat to the proper treatment of price sensitive material than those contained in the Industry Bill. There must surely be a greater threat when, as the critics of my previous Amendment pointed out to me, one realises that the Industry Bill is 670 concerned only with a limited number of companies selected for planning purposes while this Bill covers the whole range of the quoted list of industrial undertakings. Of course I see the difficulties from the Government's point of view, but equally I am aware of the problem for listed companies vis-à-vis their shareholders, and that is the matter which we ought to put right in the Bill.
§ I feel sure that all sides of the House would wish to see a sensible and workable solution to a problem which I do not consider to be concerned with Party politics. It is a matter of some importance, however, to the mechanism of the Stock Market. I hope, therefore, that the Government will now feel inclined to accept my Amendment which, as I have often said, in no way interferes with the proposed disclosure of information to trade unions but carries the support of those who are responsible for protecting the interests of the investing public. My Lords, I beg to move.
§ 4.20 p.m.
§ Lord CULLEN of ASHBOURNE
My Lords, this Amendment is the outcome of much consultation and effort by many people. It has been designed to take account of the criticisms of the much more widely drawn Amendment moved by the noble Lord, Lord Terrington, at the Committee stage and to ensure, so far as is practicable, that the disclosure provisions of this Bill will not unduly interfere with the maintenance of an orderly stock market. As we all know, well-managed companies already supply as much information to trade unions as they prudently can while honouring the general undertaking in the listing agreement with the Stock Exchange. There are, however, some recalcitrant employers who are loth to divulge information to anybody; and so the shareholders and the trade unions are on common ground and there is no conflict of interest there. Anybody connected with the securities industry is in favour of maximum disclosure of suitable information both to the trade unions and to the shareholders, and is only concerned with price-sensitive information being given to trade unions but not to shareholders.
The point I should like to stress is that the present voluntary system works very 671 well. However, this Bill would end the voluntary system by placing a legal duty on employers on request to disclose information, be it price-sensitive or not, to the trade unions, either verbally or in writing. It would surely be sensible to incorporate in the Bill a duty to disclose through the Stock Exchange to the public, any information that is price-sensitive. There is no concern about well-managed companies, but recalcitrant employers may well be annoyed at being pressurised to release information to trade unions and will fail to pass on price-sensitive information to shareholders unless it is spelt out in this Bill where their legal duty lies.
I turn now to the three reasons given at the Committee stage by the noble Lord, Lord Jacques, as to why the much wider Amendment then moved was unnecessary and undesirable. First, that if the information to the trade unions would have an adverse effect on the undertaking the employer does not have to disclose it. I find it hard to believe that it is intended that the Bill should hand on a plate such a simple excuse for a recalcitrant employer to withhold information. It would inevitably result in conflict between the trade unions and the employer, or between the trade unions and the shareholders, or both, and this must surely be avoided at all costs.
Secondly, the noble Lord said that it would be on only very rare occasions that an employer would give price-sensitive information to trade unions. While I entirely agree that a great deal of the information would not be price-sensitive, it is clear from the CIR Report No. 31 to which the noble Lord, Lord Terrington, referred, that much of it will be highly price-sensitive. I appreciate that this expression "price-sensitive" is not easy to define, but there can be no doubt that profits before and after taxes, distributions and retentions and up to date value of fixed assets and stocks, can he so described. These are all included in the Report.
Thirdly, the noble Lord objected to the enormous burden that would be imposed on employers if they had to circularise all the shareholders with any information given to trade unions. The present Amendment entirely answers this objection, which I recognise as being valid, by removing the need to circularise share- 672 holders and by limiting the information to be made available.
In conclusion, I repeat that many people who are intimately concerned with the maintenance of a fair and orderly stock market have bent over backwards to work out as practical a solution to this problem as can be devised at this time, though it is admittedly only the bare minimum required. No doubt when a new Companies Bill conies before your Lordships' House it will be wise to consider the question of unlisted companies, but in the meantime I believe this to be a necessary amendment to this Bill.
§ 4.26 p.m.
Lord CAMPBELL of CROY
My Lords, the noble Lord, Lord Torrington, and my noble friend Lord Cullen have been much concerned and working with others in industry and the City who are anxious about the serious side effects which this part of the Bill could have on the Stock Exchange Market. This Bill—and the Industry Bill which was previously considered—has raised problems for the fair and orderly operation of the market for securities on the British Stock Exchange. I believe that the Amendment which the noble Lords have now tabled, and which replaces the earlier Amendments, is an appropriate one for this Bill, which will make the minimum disturbance to it so far as the Government are concerned and, of course, in no way affects the dissemination of information, which is what the Government are aiming for.
But the situation to be created by both the Industry Bill and this Bill are where companies would be required by Statute to provide to a group, perhaps of only two or three people, information including price-sensitive information in the sense of the Stock Exchange; that is, information which would put the prices of shares up or down if it became public. The whole system at present operates on the principle that such information is made public simultaneously through the Stock Exchange. The Government have recognised that there is a problem and several of us have been seeking a way of solving it with an appropriate formula for this Bill, having already devised an appropriate one for the Industry Bill. Of course, this problem is incidental to the purpose of this Bill. The intention of the Bill is to provide information needed for 673 the purposes of collective bargaining and there is nothing in this Amendment which subtracts from that. On this Bench I make clear again that we are in favour of good communications within industry, with representatives of employees and of the disclosure of the information needed—with safeguards—where, for example, there could be damage to a company or breach of confidence. What the Government must recognise is that these provisions as they stand now will affect the way in which certain information becomes known; the kind of information which can cause share prices to go up or down. At present, boards of companies undertake when a company enters into the listing agreement—to enable its shares to be dealt in on the Exchange—not to divulge price sensitive information in such a way as to place any person or category of persons in a privileged position. That is on page 14 of the Admission of Securities to Listing.
This part of the Bill aims to promote informed collective bargaining and other debates are taking place on the effectiveness in achieving that, but in the process it would be foolish in the extreme for us to upset the fair and orderly functioning of the Stock Exchange, confidence in which as a fair and properly conducted market is important for our economy. It is part of the City mechanism which earns a great deal abroad for Britain in services. It is also the flexible system by which money is raised and invested in British enterprises. The Government ignore possible damage to this system at their peril. The British Stock Exchange is the envy of many other countries which either do not have a comparable capital market, or have been unable to create the conditions for a trusted and respected market system based on an accepted system of working rules. When I refer to the Stock Exchange, of course I embrace those other parts of it in centres outside London, such as Glasgow, Manchester and Birmingham.
My Lords, I will endeavour as precisely as I can to comment on the somewhat technical problems, for the Government hitherto do not seem to have appreciated fully the consequences in this respect of this part of the Bill. The noble Lord, Lord Jacques, has been good enough to have informal discussions with me since 674 the Committee stage, and I know he is fully aware of the problems and the issues. The problem arose first in a different way, on the Industry Bill, where disclosure arises only in cases of certain major manufacturing companies, and the information is for national economic policies, or for consultations on the outlook of a particular sector of manufacturing industry. That is the wording of the Bill. Moreover, the compulsory procedure in that Bill applies only when a company is not prepared to make disclosure voluntarily. Under the Industry Bill, where a company's directors could be compelled, at the end of a prescribed procedure in the Bill during which they are able to put their case, to furnish information against their will such situations occur in certain cases only.
Objections which the directors may raise could be on matters of price-sensitivity, but it is more likely that the objections will be on other matters. The number of companies in that situation is likely to be only one or two a year, because they are in a small sector and the situation arises only when, as a result of a procedure—as the Bill stands at present an Appeals Committee decision—they are forced to disclose information against their will.
On the 25th July 1975 the noble Lord, Lord Beswick, speaking on the Industry Bill, said:This Bill is concerned with only a few cases, and they may never arise."—[Official Report; 25/7/75; col. 637.]So that is the difference between the Industry Bill and this Bill where, of course, many companies are involved. Provision was included in the Industry Bill by an Amendment that in these circumstances information should be circulated to all shareholders, too. Under the listing agreement, the information is made available simultaneously at the Stock Exchange, so that those involved in a share transaction concerning the securities of that company would all have the same information, and there would be no question of one party to a transaction having some inside information.
During the Committee stage of this Bill on the 22nd September last it was pointed out, in the case of this Bill, that a very large number of companies and businesses would be affected if the 675 information had to be sent to all the shareholders, and that it was information for collective bargaining and not for the very limited purposes of the Industry Bill. It was accepted in all parts of the Committee that this would impose a considerable burden on companies to keep many shareholders informed because some of the information was likely to be price-sensitive. My noble friend Lord Gowrie pointed out that this needed further thought. Now this replacing Amendment has appeared. The point is that the Amendment now meets that objection. As I understand it the Stock Exchange have accepted that it is not necessary for letters to be posted to many thousands of shareholders. Instead their information system can be engaged and will be available. None the less, the Stock Exchange feel very strongly, I understand, that it should be clearly prescribed that price information be disclosed to all concerned when it is being passed to trade union representatives by a statutory requirement, regardless of the judgment of the company directors concerned, who may be against it. We must avoid a situation—and I am sure the whole House will agree with this—where a few people are in possession of some inside information of a price-sensitive nature. This is in no way a reflection on trade union representatives. This is a situation where there should be no individuals or groups of any kind who would be put in a position where they have this inside information before it is generally released, otherwise confidence is likely to be lost in our Stock Exchange as a fair market. Amendment No. 9 describes the area in which price-sensitive information will occur. It requires the Stock Exchange information system to be used at the time of disclosure.
Since the Committee stage it has been agreed that that situation can replace what was earlier proposed for informing all shareholders separately. That was the system adopted for the Industry Bill, but, as I have explained, it is likely to arise only in the case of one or two companies a year or, as the noble Lord, Lord Beswick, suggested, not at all. This Bill, because it is for collective bargaining purposes, could be said not to include all the information in that price-sensitive area. But as the noble Lord, Lord 676 Terrington, pointed out, the CIR Report indicates that it would cover a very wide range of subjects, including price-sensitive information. This deals with the point raised by the noble Lord, Lord Houghton of Sowerby, on Committee, when he understandably thought that the information on this Bill would not extend to such subjects because it was for collective bargaining purposes, but it is clear now that such things will be covered.
In concluding I should like to deal with two points which the Government have made in previous replies. They have said, "There is nothing to stop companies' directors from making the information public or circulating it to shareholders". That is perfectly correct. But under the present voluntary system directors decide, using their own judgment and taking into account the terms of the listing agreement. The new situation which could be created under this Bill, and under the Industry Bill before it was amended, is that companies' directors would be required by Statute to disclose information, in some cases against their own judgment. In practice, their objection is unlikely to be because the information is price-sensitive; their objection is more likely to be for the reason that they think it will damage the firm. Having given trade union representatives this disputed information, the companies' directors in question may be most unwilling to spread this information further, for fear of damage to the company. Of course they can if they wish to; there is no objection or difficulty about that.
But the situation we have to tackle is one where the companies' directors do not want the information to go any further than it need. So that before these Bills are passed, companies' directors would not disclose such information at all, so there would be no breach of listing agreement. But after these Bills are passed—unless they are altered as suggested—then the directors can claim that the listing agreement has been overridden by Acts of Parliament, and the result would be an imperfect market for that company's securities, a situation which the Stock Exchange Rules should prevent, but which the company in the situation I have described might consider to be the lesser of two evils.
This Amendment which noble Lords have tabled is to ensure there is a fair 677 and rational market for the Stock Exchange in a situation where companies 'directors may not wish to extend the information any further than they have to. Therefore, to say there is nothing to stop the directors from disclosing information to shareholders or to the Stock Exchange is to overlook one likely eventuality, and to assume that the Stock Exchange requirement will coincide with a company's urgent anxiety. That is not necessarily so. The point is that they may be unwilling to disclose information further. There is nothing to ensure proper disclosure in this new situation where price-sensitive information is involved.
Secondly, the Government have said that this is a problem which should be remedied in a Companies Bill. But I would first make it clear that it is not a question of shareholders' rights; that is not what has arisen in these debates. It is the preservation of a fair and trusted United Kingdom market for securities, which is the basis on which our stock exchanges operate as an essential part of our economy. The noble Lord, Lord Beswick, agreed in the debate on the Industry Bi11 that it would be a year or two before a Companies Bill could be presented to Parliament; in fact, I think it would probably be more than that. Having accepted that action is needed, surely the Government will not leave this matter in the air, knowingly allowing a period of ambiguity for a year or two, with the risk of damaging the fair and effective market for securities in this country.
This Amendment has, I understand, been drafted with care to cause the minimum of disturbance to the Bill while providing an important safeguard for an institution essential to our economy. It in no way affects the purposes or provisions of the Bill in the disclosure of information for collective bargaining. I am glad that a way has been found to describe a price-sensitive area, though the noble Lord, Lord Terrington, accepted that it was not perfect, and I am glad also that the point has been met that the burden of correspondence, which was likely under the previous Amendment, between companies and shareholders has also been removed. I therefore commend this Amendment to the House and I hope that the Government will accept that although it is not a matter affecting the 678 purpose of their Bill, it is a very important incidental point of which they must take serious notice.
§ Lord WIGG
My Lords, it should be noted that none of the three noble Lords who has spoken—the noble Lords, Lord Terrington. Lord Cullen of Ashbourne and Lord Campbell of Croy—has, either directly or by implication, contested the principle that for the purpose of collective bargaining companies should be required by Statute to disclose information. So we can get that out of the way. What is argued is that the disclosure of this information, in many cases only as a result of the provisions of the Act, reveals price-sensitive information to a group et individuals and that that information should then be made available to a wider circle; not disclosed, be it noted, in the interests of the shareholders, not in the interests of the directors, but, as the noble Lord, Lord Campbell, has pointed out, in order to preserve the reputation and integrity of the stock market. All right, my Lords, let us accept that. But why, in heaven's name, do we need this clause? The power to ensure that is vested in the councils of the various stock exchanges.
We have had the argument used that the information must be disclosed, not by circular to the shareholders, not by taking somebody out for a drink in the City, or by ringing up one of the financial people who call themselves journalists—none of that; in order to disclose it the company will be required by Statute to use, "the disclosure requirements for the time being of that stock exchange". In other words, the House is being asked to accept this Statute without even knowing for sure what obligation it is being asked to impose upon somebody else, because the words "for the time being" are an important qualification. The qualification may be one thing today and another thing tomorrow. The point is that the information has to be disclosed in accordance with the accepted practice and accepted rules of the great stock exchanges of this country. So be it.
All that has to happen is for noble Lords to take their Amendment away, to go back to the Stock Exchange Council, if that is the body with which they have consulted, and say "Look, boys, we have changed the rules. Just you make it a requirement, make it a condition upon 679 which quotations are granted"—I understand that is the extreme penalty, the withdrawal of the quotation—"It is a requirement imposed upon you that if you disclose information to a trade union you must tell us". Then it is up to the Stock Exchange to do what they like. They are coming to this House and to the House of Commons—a body of private citizens who operate in the City, as they will, the Bulls, the Stags, the Bears and all the others—and asking to be treated in this way, to be given a legal sanction which they do not have the guts to impose by altering their own rules. I will put a title to this clause. It ought to be entitled "A clause for the protection of guinea pig directors", because that is what it means.
We have been told that directors are required—and some areunwilling—to disclose certain information. Of course, the reason why they do not want to disclose it is that it would be inimical to the interests of those whom they are on the board to serve. But here that is for them to judge. If they think it should not be disclosed, it is their responsibility. What the House is concerned about in this clause is one thing and one thing only, which has not been challenged, and that is that it is necessary in the interests of collective bargaining, of good industrial relations—it is imperative—that a limited number of trade union officials, trade union representatives, should be given information in order that they can become party to, and have the knowledge to discuss intelligently, future plans of the great companies concerned, and we are talking of only a few. So why do you want this enormous hammer to crack this little nut, when the stock exchanges can do it themselves?
There is nothing in the world that the Council of the London Stock Exchange cannot do this afternoon without waiting for the Royal Assent. So, my Lords, do not trouble us any further. Do not ask us to treat the Stock Exchange as if it were some great legal entity to be treated pari passu with accepted institutions which have grown up. It is not. It is a group of private individuals making their own rules, and properly so. Their independence and integrity is tied up with the quality of those who are engaged in that industry. There is nothing, nothing, 680 and I repeat a third nothing, that this clause seeks to do that cannot be done by the stock exchanges themselves.
§ Lord HARMAR-NICHOLLS
My Lords, the noble Lord has made a very important point of principle sound very trivial. The noble Lord, Lord Wigg, often does that. But I hope that on this occasion the spokesman on the Government Benches will not take his lead. There is much more to this than the words which appear in this Bill and which will appear in the Act when it has been passed. What has happened is this. There has been a system working which has worked satisfactorily over 99.9 per cent. of the field it is intended to cover. There was a voluntary arrangement between firms quoted on the Stock Exchange and outside people, including shareholders, whereby information was given and taken quite freely, and the system has worked; it has worked satisfactorily for all sides, except for a very tiny majority of managements who did not want to give information because they were ultra cautious, or because they were not prepared to share in away in which in these days they ought to share. They were in such a minority that it did not really weaken the benefits which flowed from the voluntary system which existed for so long.
But if the Government are not prepared to accept that, if they think that everybody ought to be made to disclose the information on the special cases of the trade unions, I accept that. I do not think it is necessary, there were so few which did not do it voluntarily, but if they want to make it statutory I accept that. But having accepted that, I think we would ignore at our peril the advice given to us by the noble Lords who moved this Amendment, who have gone to a great deal of trouble, who understand the system as it works, who understand how our stock exchange competence affects our standing in the world as regards all our invisible incomes, on which we are utterly dependent. I believe that in conceding the point that what has been voluntary and successful should be made statutory on one side, it should also be made statutory as regards the shareholders in those companies; it ought to be accepted without question.
The reason why I charged the noble Lord, Lord Wigg, with being trivial was 681 that he quoted the words in their narrow sense, how they fitted into this Bill which is in front of the House today. In point of fact, the truth is that now that this matter has been raised at all, when it is being said from authoritative sources that uncertainty in dealing with this would affect the confidence that the world has in our general system, which is based upon the City of London, we should be very stupid, and the Government would be wrong, to ignore the advice which is presented in the form of this Amendment. This is not an Amendment that is thrown out quickly; it is an Amendment that has arisen from many discussions in Committee, from many conversations with the Stock Exchange and all the other people who are trained to understand this and whose patriotism and desire to do their best for the country, quite apart from looking after their business in the proper way, is beyond criticism.
I ask the noble Lord, Lord Jacques, in voicing the Government's view on this Amendment, not to be guided by the trivial way in which the one voice against it has put it in this short debate, and that he will look at it in its true context. This is part of the great battle—which is going to be one of the major battles this country will face over the next five years—of retaining world confidence in London on financial matters. Many other centres want to take away the power we have in London; many other centres would like to become the important part in the world, with all the profit that that can bring them. If we did anything to weaken that at this time—and I am not over-exaggerating what on paper would seem a narrow point—we should be doing a great disservice to the future prosperity of this country.
§ 4.52 p.m.
§ Lord JACQUES
My Lords, we believe that this Amendment is unnecessary for two reasons. First, it is rarely that the information given to a trade union is, or will be, price sensitive. The information required for the purposes of collective bargaining is not usually highly sensitive information, and on the rare occasions when the information is price sensitive it is far too detailed to be of interest to the Stock Exchange. Secondly, on the rare occasions when the information is price sensitive, there is nothing 682 whatever which would prevent the employer from informing the shareholders, the Stock Exchange or anyone else. Furthermore, if the company has to part with the information, even unwillingly, it can first of all take steps to inform the Stock Exchange in accordance with its voluntary agreement. The company can do that before it informs the trade union. Therefore, why do we need this Amendment? It already has the means and the moral obligation to do it under the listing agreement. Why should we intervene?
Many employers are already disclosing such information to unions on a voluntary basis and they have not found that price-sensitive information is a problem. Nor was it thought to be a problem when the 1971 Industrial Relations Act was drafted I remind the House again that when the Bill before this House had its Second Reading in the other House, the shadow Minister said that the clauses relating to information had been lifted from the 1971 Act and therefore were acceptable to them. The Front Bench in the other place went further than that. The shadow Minister who wound up for the Opposition repeated what the leader for the Opposition had said: that the information was lifted entirely from the 1971 Act and was therefore not something over which they were very much bothered.
Lord CAMPBELL of CROY
My Lords, the noble Lord has referred to the Front Bench, which gives me an opportunity to intervene, as I cannot speak again. What they were saying was that the information covered in the Bill was the same, but what we are talking about is a side effect which, as I have indicated, in no way detracts from the information to be communicated to trade unions. It is a side effect which requires a safeguard.
§ Lord JACQUES
No, my Lords. What they said was that the provisions in the Bill were the same as in the 1971 Act. The provisions had been lifted from the 1971 Act. The last time I dealt with this in this House—and I have dealt with it twice already—I gave the column references to support it. Why is it that the Stock Exchange, when a Conservative Government put forward proposals, does not see the need to amend, but when a Labour Government put forward the same 683 proposals it sees the need to amend? The noble Lord, Lord Terrington, said that he has acted consistently; that he moved an Amendment at the time of the 1971 Act and that he is doing the same now. I hope that he will continue to act consistently, because since that Amendment is not part of the legislation he must have withdrawn it in 1971. If he withdrew it then, I invite him to withdraw it today and to continue his consistency.
The noble Lord, Lord Campbell of Croy, tells us that this is an urgent matter so far as the Stock Exchange is concerned. The law, so far as this Bill is concerned regarding information to the trade unions, will be exactly the same as it has been since 1971. If it was not urgent when the Conservative Government Act of 1971 was put into operation, why is it urgent now? Why has it suddenly become urgent? This is not a matter of urgency. I believe that this whole fear is being magnified. There may be a problem—and I do not think there is a problem—but if there is, then this Amendment is not the way to deal with it.
Let us examine the Amendment. The Amendment says that the company shall act if the information given to the trade union has a significant effect upon the assets or the profits. Every company will have a different interpretation as to what is, and what is not, significant. That is left in the air. Who is to be the arbiter as to whether or not a thing is significant? Presumably each company is to be its own arbiter, and the decisions will be entirely different. Suppose a company completely ignores a provision you are attempting to put into the Bill, what can you do? There is no penalty provided. You cannot do anything. It is unenforceable.
We were advised by the noble Lord, Lord Terrington, that a company could discuss with its own management, it could discuss with its own advisers, even price-sensitive information, provided that it did not divulge it in a general sort of way. But in many of our large companies there are senior shop stewards paid by the company, and who work for the company, and could be regarded by the company as their advisers on labour relations. Consequently, some companies would think that because they regarded 684 their chief shop steward as an adviser, they need not report to the Stock Exchange the information which they had given to him, while other companies would believe that they had to. There would be room for considerable differences of opinion.
Further, there is a constitutional issue here. Surely, there are serious constitutional objections to giving statutory force to rules which may be altered at any time by a body over which Parliament has no control whatever. This is constitutionally wrong. There is nothing whatever to prevent the company accepting the listing agreement of the Stock Exchange voluntarily. None of the disclosure provisions of the Bill prevents the continued operation of the Stock Exchange rules. If the present rules do not fit the situation, despite the fact that many companies are already disclosing such information to the unions, then no doubt the rules can be brought up to date. It is not a matter of urgency, because the kind of information in this Bill was in the 1971 Act, and it has not been considered a matter of urgency until today.
If the aim of the movers of the Bill were the general one of getting more information to shareholders, we should not disagree with them at all but would say that that is a matter for a Companies Bill. A Companies Bill should deal with what the shareholders have to know, not the Employment Protection Bill. The Employment Protection Bill is concerned with what the unions ought to know, and that can be quite different from the information which the shareholders ought to know. I might also be told that since there is no company legislation likely to come forward in the near future, this question is one of urgency and cannot wait. I would also point out that it has been going on since 1971 and has not been regarded as a matter of urgency until now. Finally, in our view the Amendment is defective in that it requires the disclosure of all matters having a significant effect on assets or profit. Obviously there are many matters affecting assets or profits which are divulged to a trade union but which never need to be divulged to the Stock Exchange, because they have a negligible effect on the operations of a company and are far too detailed to be of interest to the Stock Exchange. To sum up, the Amendment 685 is not necessary and is totally unacceptable in that it seeks to give legal force to requirements which may from time to time be imposed by the Stock Exchange without the control of Parliament. I hope that in response to these arguments the noble Lord will see fit to withdraw the Amendment.
§ Lord TERRINGTON
My Lords, we have been over this ground many times. In the Industry Bill and again in this Bill, I have put forward my arguments and the Government have put forward theirs, and there seems to have been very little change; in fact, it seems to be the same continuous argument. In my view, this Amendment is necessary. Indeed, I feel it is more necessary than it was in the Industry Bill. If I followed him correctly, the noble Lord, Lord
§ Jacques, was referring to employees in a company being in receipt of information, which I cannot argue with, but I think that in this Bill, if I have understood it correctly, we are concerned with trade union representatives and, again if I have understood it correctly, in this context trade union representatives do not necessarily have to be employees of the company. If that is right, then it reinforces my argument, but I do not want to pursue this because we have been over it many times. I have a feeling that a number of noble Lords agree that my Amendment is necessary and I must therefore test the opinion of the Committee.
§ On Question, Whether the said Amendment (No. 9) shall be agreed to?
§ Their Lordships divided: Contents, 119: Not-Contents, 62.687
|Aberdare, L.||Gainford, L.||Penrhyn, L.|
|Alexander of Tunis, E.||Gisborough, L.||Porritt, L.|
|Amherst, E.||Glasgow, E.||Rankeillour, L.|
|Amherst of Hackney, L.||Glenkinglas, L.||Reigate, L.|
|Amory, V.||Grenfell, L.||Robertson of Oakridge, L.|
|Amulree, L.||Grey of Naunton, L.||Ruthven of Freeland, Ly.|
|Auckland, L.||Gridley, L.||Sackville, L.|
|Balerno, L.||Grimston of Westbury, L.||St. Aldwyn, E.|
|Balfour, E.||Haig, E.||St. Davids, V.|
|Barnby, L.||Halsbury, E.||St. Just, L.|
|Beaumont of Whitley, L.||Hankey, L.||Salisbury, M.|
|Belstead, L.||Harmar-Nicholls, L.||Sandford, L.|
|Berkeley, B.||Headfort, M.||Sandys, L.|
|Byers, L.||Henley, L.||Scarborough, E.|
|Caccia, L.||Hornsby-Smith, B.||Seear, B.|
|Campbell of Croy, L.||Hylton-Foster, B.||Sempill, Ly.|
|Carrington, L.||Killearn, L.||Simon, V.|
|Cathcart, E.||Kimberley, E.||Sinclair of Cleeve, L.|
|Clitheroe, L.||Kinnoull, E.||Somers, L.|
|Cork and Orrery, E.||Kintore, E.||Stamp, L.|
|Cottesloe, L.||Lauderdale, E.||Stanley of Alderley, L.|
|Cowley, E.||Lloyd of Kilgerran, L.||Strathcarron, L.|
|Craigton, L.||Long, V.||Strathclyde, L.|
|Cranbrook, E.||Loudoun, C.||Strathspey, L.|
|Croft, L.||Lyell, L.||Suffield, L.|
|Cullen of Ashbourne, L. [Teller.]||Malmesbury, E.||Swansea, L.|
|Mancroft, L.||Terrington, L. [Teller.]|
|Daventry, V.||Mansfield, E.||Thorneycroft, L.|
|Denbigh, E.||Merrivale, L.||Tweedsmuir, L.|
|Denham, L.||Meston, L.||Vernon, L.|
|Drumalbyn, L.||Middleton, L.||Vickers, B.|
|Ebbisham, L.||Monck, V.||Vivian, L.|
|Eccles, V.||Monckton of Brenchley, V.||Wade, L.|
|Effingham, E.||Monson, L.||Wakefield of Kendal, L.|
|Bllenborough, L.||Mowbrav and Stourton, L.||Waldegrave, E.|
|Elles, B.||Newall, L.||Ward of North Tyneside, B.|
|Elliot of Harwood, B.||Northchurch, B.||Ward of Witley, V.|
|Emmet of Amberley, B.||Nugent of Guildford, L.||Wigoder, L.|
|Erskine of Rerrick, L.||Ogmore, L.||Wolverton, L.|
|Fraser of Kilmorack, L.||Onslow, E.||Young, B.|
|Aylestone, L.||Bernstein, L.||Blyton, L.|
|Sacon, B.||Beswick, L.||Boothby, L.|
|Balogh, L.||Birk, B.||Briginshaw, L.|
|Brockway, L.||Jacques, L.||Sainsbury, L.|
|Buckinghamshire, E.||Janner, L.||Segal, L.|
|Burntwood, L.||Kirkhill, L.||Shepherd, L. (L. Privy Seal.)|
|Champion, L.||Leatherland, L.||Shinwell, L.|
|Chorley, L.||Lee of Newton, L.||Slater, L.|
|Cooper of Stockton Heath, L.||Llewelyn-Davies of Hastoe, B.||Stedman, B.|
|Crowther-Hunt, L.||Longford, E.||Stewart of Alvechurch, B.|
|Cudlipp, L.||Lovell-Davis, L. [Teller.]||Stow Hill, L.|
|Donaldson of Kingsbridge, L.||Lyons of Brighton, L.||Summerskill, B.|
|Douglass of Cleveland, L.||McLeavy, L.||Strabolgi, L. [Teller.]|
|Evans of Hungershall, L.||Maelor, L.||Taylor of Mansfield, L.|
|Gaitskell, B.||Melchett, L.||Wallace of Coslany, L.|
|Geddes of Epsom, L.||Pannell, L.||Wells-Pestell, L.|
|Goronwy-Roberts, L.||Peddie, L.||Wigg, L.|
|Hale, L.||Phillips, B.||Winterbottom, L.|
|Harris of Greenwich, L.||Pitt of Hampstead, L.||Wootton of Abinger, B.|
|Houghton of Sowerby, L.||Platt, L.||Wynne-Jones, L.|
|Hoy, L.||Popplewell, L.|
§ Resolved in the affirmative, and Amendment agreed to accordingly.
§ Clause 18 [Restrictions on general duty under Section 17]:
§ 5.13 p.m.
The Earl of MANSFIELD moved Amendment No. 10:
Page 1.5, line 38, after ("would") insert ("be likely to").
The noble Earl said: My Lords, the effect of the Amendment, if it were carried, would be to find a way out of what was, at least to the noble Lords on this side of the House, an undoubted difficulty which became manifest during the Committee stage. So far as Clause 18 is concerned, it contains a list of the restrictions on the general duty of employers to disclose information under Clause 17. Your Lordships will see that Clause 18 contains a list of these restrictions and we are more especially concerned with subsection (1)(e) which, as the Bill stands, reads:
any information the disclosure of which would cause substantial injury to the employer's undertaking for reasons other than its effect on collective bargainin…".
When this Bill was in the other place, right up to the Report stage, the duty on the employer was alleviated if the information would "seriously prejudice". That phrase was changed on Report and the new phrase, "cause substantial injury" was substituted. When the matter last came before your Lordships. I argued that it would place far too great a burden on the employer when it came to the disclosure of information. The Amendment which was moved at that stage sought to leave out the word "substantial". I am the first to admit now that the intention was to try to make the Government think again and to make some sense out of what
I feel was, on most showings, a possible source of injustice. The debate on that occasion was not over-happy or satisfactory. What I have done, therefore, is to adopt the suggestion made by my noble friend Lord Drumalbyn when he addressed the Committee and which is reported at column 111 of the Official Report. In effect he suggested that it would be for the employer to show that the disclosure of the information would be likely to cause substantial injury rather than putting on him the burden of proving,
certainly and beyond any doubt [that] it would cause substantial injury".—[Official Report, 22/9/75; Col. 111.]
§ It seems to me that this is a reasonably happy compromise. Indeed it was the phrase used by the noble Lord, Lord Jacques, when he replied to the Amendment at Committee stage. I suggest to the House that the Amendment would get over the twin difficulties which now exist. First, the size of the undertaking would in no way be the measurement of the obligation. Secondly, this would remove any argument as to how substantial the injury had to be before it became substantial. The argument would now be on the likelihood of injury rather than on the substantial character of the injury or lack of it. I beg to move.
§ Lord DRUMALBYN
My Lords, perhaps I may say a word on this. I can understand it if the Government feel reluctant in any way to whittle down the protections for the employee and to reduce the number of occasions on which the request for information by an employee or the trades unions has to be complied with. However, I feel that we must keep a reasonable balance in this matter. If there is a strong possibility of substantial 689 injury being caused, I believe that that is the most that anybody without absolute foresight could predict. It seems right that on these grounds the requirement to disclose should be dispensed with, but I cannot help feeling that, as the Bill stands, it would be almost impossible to prove with absolute and definite certainty that the disclosure of the information would be bound to cause substantial injury, which is what the words mean. That cannot in any way be disputed. I commend to the Government that the most that should be required in these circumstances is that the employer should be able to demonstrate that the disclosure of the information would be likely to cause substantial injury. If the Government want to put it a little more strongly, that is fine: but to make this absolute and definite requirement that the employer must prove that substantial injury will indubitably and certainly be caused seems to me to be going too far. Nobody can foresee the future with such precision.
§ Lord JACQUES
My Lords, as the Bill is drafted, if an employer considers that disclosure would cause substantial injury to the undertaking he may refuse to give the relevant information to representatives of the trade union. The union can then go to the Conciliation and Arbitration Service which will have to determine whether or not disclosure would cause substantial injury. The Service will have to decide on the facts as presently known. However, the Amendment would require the Service to form a judgment about the probability of a certain event taking place which might depend on secondary events quite out of the control of the employer and the union. This would make the task of the Service very much more difficult and would increase the number of cases where employers would be able to refuse to pass information to unions.
This Part of the Bill is very closely in line with the 1971 Act which used the words "seriously prejudicial". I point out that it did not state:…which would be likely to be seriously prejudicial".
If it did not say,
which would be likely to be seriously prejudicial",
why should it now be necessary to have this qualification before the phrase "substantial injury"?
§ Lord DRUMALBYN
My Lords, may I answer that point quickly? "Prejudicial" means "likely to cause". It introduces an element of doubt; there is a prejudice. It may go either way.
§ Lord JACQUES
My Lords, we still think that there is a difference between the words, "seriously prejudicial" and "likely to be seriously prejudicial". There is a difference between those two phrases. Consequently, since one was adopted—that is to say, without the phrase beginning with the word "likely"—we feel that it is proper to include here in the Bill "substantial injury" without this qualification.
§ The Earl of MANSFIELD
My Lords, on the last occasion when the noble Lord replied to my Amendment I described his argument as one of semantic waffle, and perhaps that was too polite a phrase! I am afraid that the noble Lord and his advisers must go away and first try to see what is the meaning of ordinary English. If the noble Lord says that in his mind there is no difference between "seriously prejudicial" and "substantial injury" one can only be tempted to ask why was the matter changed on Report in another place? The meaning is perfectly separate and distinct.
"Substantial injury" is injury to an undertaking which is of a grave and weighty character. "Seriously prejudicial" merely imputes—at any rate to me—a grave risk; and these are two very different things. I do not think that we can go on wasting your Lordships' time talking about the meaning of English words. In the circumstances I shall ask my noble friends to join me in the Lobby.
§ 5.23 p.m.
§ On Question, Whether the said Amendment (No. 10) shall be agreed to?
§ Their Lordships divided: Contents, 104; Not-Contents, 62.691
|Aberdare, L.||Auckland, L.||Banks, L.|
|Amherst of Hackney, L.||Balerno, L.||Barnby, L.|
|Amory, V.||Balfour, E.||Beaumont of Whitley, L.|
|Belstead, L.||Hawke, L.||Ruthven of Freeland, Ly.|
|Berkeley, B.||Headfort, M.||St. Aldwyn, E.|
|Caccia, L.||Henley, L.||St. Davids, V.|
|Campbell of Croy, L.||Hornsby-Smith, B.||St. Just, L.|
|Carrington, L.||Hylton-Foster, B.||Salisbury, M.|
|Cathcart, E.||Killearn, L.||Sandford, L.|
|Clitheroe, L.||Kimberley, E.||Sandys, L.|
|Cottesloe, L.||Kinnoull, E.||Scarbrough, E.|
|Cowley, E.||Kintore, E.||Seear, B.|
|Cranbrook, E.||Lauderdale, E.||Selkirk, E.|
|Croft, L.||Lloyd of Kilgerran, L.||Sempill, Ly.|
|Cullen of Ashbourne, L.||Long, V.||Shannon, E.|
|Daventry, V.||Loudoun, C.||Somers, L.|
|Denham, L.||Lyell, L.||Stanley of Alderley, L.|
|Drumalbyn, L. [Teller.]||Malmesbury, E.||Strathcarron, L.|
|Ebbisham, L.||Mansfield, E.||Strathclyde, L.|
|Eccles, V.||Merrivale, L.||Strathspey, L.|
|Effingham, E.||Middleton, L.||Suffield, L.|
|Elles, B.||Monck, V.||Swansea, L.|
|Elliot of Harwood, B.||Monckton of Brenchley, V.||Terrington, L.|
|Emmet of Amberley, B.||Monson, L.||Tweedsmuir, L.|
|Fraser of Kilmorack, L.||Mowbray and Stourton, L. [Teller.]||Vernon, L.|
|Gainford, L.||Vickers, B.|
|Gisborough, L.||Newall, L.||Vivian, L.|
|Glasgow, E.||Northchurch, B.||Wade, L.|
|Glenkinglas, L.||Nugent of Guildford, L.||Wakefield of Kendal, L.|
|Grenfell, L.||Ogmore, L.||Waldegrave, E.|
|Grey of Naunton, L.||Onslow, E.||Ward of North Tyneside, B.|
|Gridley, L.||Porritt, L.||Ward of Witley, V.|
|Grimston of Westbury, L.||Rankeillour, L.||Wigoder, L.|
|Haig, E.||Reigate, L.||Wolverton, L.|
|Harmar-Nicholls, L.||Robertson of Oakridge, L.||Young, B.|
|Goronwy-Roberts, L.||Platt, L.|
|Aylestone, L.||Hale, L.||Popplewell, L.|
|Bacon, B.||Harris of Greenwich, L.||Sainsbury, L.|
|Balogh, L.||Houghton of Sowerby, L.||Segal, L.|
|Bernstein, L.||Hoy, L.||Shepherd, L. (L. Privy Seal.)|
|Beswick, L.||Jacques, L.||Shinwell, L.|
|Birk, B.||Janner, L.||Slater, L.|
|Blyton, L.||Kirkhill, L.||Stedman, B.|
|Briginshaw, L.||Leatherland, L.||Stewart of Alvechurch, B.|
|Brockway, L.||Lee of Newton, L.||Stow Hill, L.|
|Buckinghamshire, E.||Llewelyn-Davies of Hastoe, B.||Strabolgi, L. [Teller.]|
|Burntwood, L.||Longford, E.||Summerskill, B.|
|Chorley, L.||Lovell-Davis, L.||Taylor of Gryfe, L.|
|Collison, L.||Lyons of Brighton, L.||Taylor of Mansfield, L.|
|Cooper of Stockton Heath, L.||McLeavy, L.||Wallace of Coslany, L.|
|Crowther-Hunt, L.||Maelor, L.||Wells-Pestell, L. [Teller.]|
|Douglass of Cleveland, L.||Melchett, L.||White, B.|
|Elwyn-Jones, L.||Morris of Kenwood, L.||Wigg, L.|
|Evans of Hungershall, L.||Pannell, L.||Winterbottom, L.|
|Gaitskell, B.||Phillips, B.||Wootton of Abinger, B.|
|Geddes of Epsom, L.||Pitt of Hampstead, L.||Wynne-Jones, L.|
On Question, Motion agreed to.
§ Resolved in the affirmative, and Amendment agreed to accordingly.
§ 5.31 p.m.
§ Clause 22 [Right to guarantee payment]:
Page 19, line 24, after ("work") insert ("in accordance with his contract of employment").—(Lord Melchett.)
§ Clause 28 [Exemption orders]:
Page 24, line 9, at end insert ("is").—(Lord Melchett.)
§ Clause 29 [Right to remuneration on suspension on medical grounds]:693
Page 25, line 15, at end insert ("only").—(Lord Melchett.)
§ Lord JACQUES
My Lords, Amendments Nos. 14 to 38 inclusive will not be moved. They will be recommitted.
§ Clause 44 [Trade union membership and activities]:
Page 36, line 37, after ("as") insert ("so").—(Lord Jacques.)
§ 5.35 p.m.
§ Clause 47 [Assessment of compensation on complaint under s. 45]:
The Earl of MANSFIELD moved Amendment No. 40:
Page 38, line 11, leave out from first ("the") to end of line 14 and insert ("loss sustained by the complainant in consequence of the employer's action complained of, in so far as that loss was attributable to action taken by the employer.").
§ The noble Earl said: My Lords, this Amendment follows an Amendment which was moved in Committee in the matter of Clause 47, as it is now—it used to be Clause 48—of this Bill. I should say to your Lordships that the noble Lord, Lord Jacques, dealt with the matter on the last occasion and that he has been good enough to write to me in the intervening period. Nevertheless, I am sure that he will not take it amiss if I say I am not entirely satisfied with the extremely interesting matter contained in his letter, and that he will forgive me if we return to this subject again.
§ This Amendment seeks to return Clause 47(1) exactly to the way in which it was framed before it was amended on Report in another place. The clause then provided for compensation for loss sustained in consequence of an employer's action if it was held to arise from the subject of complaint. In Committee in the other place there was some criticism of the fact that the directions to the tribunals which would hear the matters were not such as to ensure that they would be what I might call even-handed 694 when they came to assess the compensation to be given to employees, and in those circumstances this Amendment was made by the Government on Report. It has, in effect, made a major change in the situation by introducing this concept of compensation for an infringement of rights in addition to compensation for loss, so that this now becomes one of the fairly rare parts of our legal system where it is possible to claim damages without there being loss.
§ The first point I would make to the House is that I regard such a departure as being wholly undesirable in itself unless there are very good reasons to bring in such an innovation. Secondly, the award of such damages is a feature of the law which is, if anything, contracting rather than enlarging, although I concede that recent statutory provisions are rather enlarging it again. But if one puts this provision in the same category or in the same bracket as, for instance, damages for defamation, then, to my mind, the illogicality and unsatisfactory nature of the Amendment made in another place becomes plain, because, although I will not say it is quite absurd, it is hardly a satisfactory comparison to equate an employee who has been prevented from carrying out some trade union activity with somebody who has been the subject of a defamatory statement or of libellous writing. Another way of looking at it is to say that the result of the Amendment made in the other place is that an employer could be put in a situation in which he had very little choice, because of pressures put on him by outside parties, and yet he will have the duty (if that is the right word) or the liability to pay damages, although there may well have been no loss. So the effect of this provision would be to impose a fine on an employer for a situation which he could do nothing about.
§ My Lords, if I may reflect momentarily upon other pieces of legislation which have sought to give a right to claim damages where there has not been any loss, one of them, of course, is the Sex Discrimination Bill, as it still is (it is not yet an Act), which, as I understand it, will give ladies the right to claim damages without there having been loss. I quite sec that for people of that sort, or possibly where there might be damage in a matter concerning race relations, it might 695 again be justifiable to have damages without there being loss, but not in the ordinary course of events. We are told ceaselessly by noble Lords opposite that the point of all this legislation is to have conciliation in the first instance, at any rate, and that only in the last instance should the power of the law be invoked to help the trade unionist either to gain or to enjoy the rights conferred upon him, and in those circumstances it is in my submission totally inappropriate to start equating such an employee with either a woman who has been discriminated against or a coloured person who has been discriminated against. It is not that type of discrimination.
§ The next matter, briefly, is this. If conciliation is to be the order of the day—and we are told that it is—everybody should be encouraged, in my submission, to conciliate and not to go to law even if it is the rather curious form of law proposed in this Bill. In my professional experience, the one thing which stops conciliation is the prospect of a little bit of cash at the end. Nobody is going to conciliate when they can get cash. It is better to have cash than a few kind words. I commend that to the noble Lord as another reason for the pressing of this Amendment at this stage.
§ Finally, one may say that if this provision is to become the norm; in other words, if it is going to be the order of the day that tribunals are to be given the discretion to award damages (although they are not, as I understand it, given any guidelines as to how the damages are to be assessed; how they are to fix the quantum), then, no doubt, the tribunals will carry out the dictates of Parliament and will award damages. If we are to have improved industrial relations, as has already been said, then I should have thought it better that there should not be this feeling of damages without loss at the end of the tribunal's deliberations. It is in that sense that we regard this as a slightly retrograde step. We see the reasons which prompted the Government to make it and we understand them although we do not like them. I ask the Government to think again on this matter.
§ Lord JACQUES
My Lords, the original Bill contained a subsection which invited tribunals to take into account 696 certain matters which might lead to a loss when calculating compensation. These matters included loss of benefits attaching to union membership, damage to future job prospects and so on. The Opposition criticised this subsection because it seemed to be removing the discretion of the tribunals to take into account both losses and possible gains in assessing compensation. The intention of the subsection was not to limit the tribunals' discretion; but we took the Opposition's point that we should not interfere with the discretion of tribunals or appear to be pointing them in any particular direction. Therefore, we dropped the offending subsection and replaced it by the provision which this Amendment would delete.
The provision enables, but does not compel, tribunals to assess compensation on a more general basis at their discretion. It is purely discretionary. The noble Earl moved a similar Amendment in Committee. He argued that the idea of compensation for something other than material losses was unprecedented and undesirable; that tribunals would feel compelled to award compensation where they might not otherwise have done so; that employees would be tempted to complain unnecessarily by the prospects of getting compensation. I undertook to look at the provision in the light of these arguments. We have done so and I have written to the noble Earl explaining why we do not think that we should alter the provisions and, in particular, why we should not accept this Amendment which would leave the Bill in an even more unsatisfactory state than it was when published.
My Lords, I will briefly outline our reasons. We believe that if Parliament confers rights it should ensure that realistic remedies can be given, when appropriate, to protect these rights. In other legislation concerned with discrimination against the person or his beliefs, such as the Race Relations Act and the Sex Discrimination Bill, Parliament has ensured that remedies for something more than just financial loss are available. We think it right to do the same in this case. We believe that a tribunal should be empowered to award compensation to an employee for general annoyance, inconvenience, loss of opportunity or humiliation which he may have suffered as a 697 result of an employer's action in infringing his rights. We do not believe that tribunals will feel duty bound to award compensation because of the inclusion of this discretion.
Clause 45(3) makes it clear that although a tribunal must make a declaration of rights if it upholds a complaint, an award of compensation is entirely discretionary. Furthermore, Clause 47(1) makes it clear that a tribunal's first consideration in assessing whether compensation should be paid is what is just and equitable in all the circumstances. Our experience of the work of tribunals does not lead us to think they will exercise the discretion given to them in anything but the most sensible way. Nor do we think that the changes we made will encourage vexatious complaints. The prospect of compensation is already there in Clause 47 to attract the mercenary individual. Conciliation Officers will have a chance of settling any disagreements before they reach the tribunal and, of course, an employee has to have a case which stands un before there is any question of compensation being paid.
We hope that there will be a few complaints under these clauses. The great majority of employers now respect an individual's right to belong to a union and take part in its activities. We think that in most cases where a complaint is upheld, tribunals will consider that a declaration of rights, and, sometimes perhaps, token compensation, will be the appropriate remedy. However, there may be a few cases of blatant penalisation on union membership grounds where the employee has been seriously aggrieved by the employer's action. We do not think that tribunals should be impeded in compensating the hard case. The provisions of Clause 47 ensure that they can do so without having any ill effects on their discretion in dealing with the more ordinary cases.
If we are going to give rights, then there must be some sanction to enforce them. All sides of this House are opposed to criminal sanctions. Surely, in those circumstances, the kind of sanction that we put in here, that of compensation, is the best sanction. I commend to the House the provision which was made at the Report stage in the other place and would ask the noble Earl to withdraw his Amendment.
§ The Earl of MANSFIELD
My Lords, it seems to me that the noble Lord—and I say this in no offensive spirit—muddles up compensation and damages. Far be it from me to lecture or hector the noble Lord on the legal difference between the two. It is all very well to say, if somebody has suffered a loss, that you compensate them for that loss. Nobody complains with that part of Clause 47. What the noble Lord does in his argument, and by this Amendment which was passed in another place, is to go much further than that. What the Government in effect are saying is: "We are going to award you damages"—which is not compensation; it is damages. That is a very difficult thing to quantify. It taxes the courts, who do it in such matters as personal injury and running down accidents; and it exercises them for a great deal of time and they have to take a great deal of trouble.
This is not a question of maxima. Of course any court, tribunal, or any body which is charged with the investigation of somebody's legal rights and the making of an order, if that has been breached, is going to be fair and equitable. But my point is—and I regret that the noble Lord does not seem to have taken it—if you put in a Statute that a tribunal has the power to award damages, then the citizens are going to go to the tribunal and ask for the damages. The tribunal, or a judge, is going to say, "If Parliament gives me the power to award damages to a citizen, and the citizen asks me for damages, I am failing in my duty under the Statute unless I award them". I see that I have the attention and agreement of the noble Lord on this. People will come to these tribunals and ask for damages, and they will get them because it will be the duty of the tribunal to assess and award such damages. That is what is between us.
How then does the noble Lord argue that this is going to lead to industrial peace? It certainly will not; it will lead to a great deal of resentment because the loser always resents having to pay damages. If in one's motorcar, or even on a bicycle, one runs somebody over and they are caused injury, then one, or one's insurance company, has to pay. But a firm in the situation which I postulated only a few moments ago might well be morally blameless and still be mulcted in damages. It is impossible to say that that 699 firm and everybody to do with it will feel anything other than a heightened sense of resentment and injustice at what the tribunal has ordered. The test of the tribunal is bound to be a subjective one to the applicant and not the firm involved; otherwise Clause 47 has no meaning. I had hoped that the Government would have looked again at this matter. I am not, on this occasion at any rate, going to divide the House, because I want to have one more thought on this and also a little more time for reflection. I do not think the noble Lord is legally right in what he says, and I am also sure that, tactically speaking, in the world of industrial relations he is plumb wrong. I must give him the benefit of any doubt which I have in my mind, and therefore at this stage, and in these circumstances, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 48 [Time off for carrying out trade union duties]:
§ 5.45 p.m.
Lord MELCHETT moved Amendment No. 41:
Page 39, leave out line 5 and insert ("the independent trade union of which he is an official.").
§ The noble Lord said: My Lords, the Amendment tightens up the drafting of an Amendment made in Committee, which provided that union officials were eligible for time off for industrial relations training only if the courses they wished to attend were approved by the TUC or a union of which they were members. This Amendment makes clear that the course has to be approved by the TUC or the union officials; that is, if they are members of two unions but officials of only one, it is the union for which they act as officials which has to give its approval. This clearly makes sense as the clause deals with time off for union officials. I beg to move.
Lord MELCHETT moved Amendment No. 42:
Page 39, line 14, leave out ("entitled") and insert ("to be permitted").
§ The noble Lord said: My Lords, in moving this Amendment I will speak also 700 to Amendment No. 44, if I may. These are drafting Amendments which were moved in Committee by noble Lords opposite. We have slightly amended the grammar. I beg to move.
§ Clause 49 [Time off for trade union activities]:
My Lords, according to a paper with which I was issued, I understood that Amendment No. 43 was going to be taken tomorrow. I am perfectly willing to take it today. I received a note which said it was going to be taken tomorrow.
§ The DEPUTY CHAIRMAN of COMMITTEES (The Earl of Shannon)
Is the noble Baroness moving the Amendment?
I do not know whether the Minister would like me to move the Amendment. I had a note saying that this was going to be taken tomorrow.
§ Lord MELCHETT
My Lords, I was not aware that this Amendment impinged in any way on the maternity provisions which I understand are being taken tomorrow. Unless the noble Baroness has some information of which I am not aware, I suggest it would be right to take the Amendment now.
Baroness VICKERS moved Amendment No. 43:
Page 40, line 25, at end insert ("and activities not relating to the employee's employment or to that of other of the employer's employees.").
§ The noble Baroness said: My Lords, I am delighted to take this opportunity of moving the Amendment, and I shall do so very shortly. I do not think this has anything to do with maternity as it affects both male and female employees. It was suggested by the County Councils Association that this clause enables employees to take time off for work—presumably unpaid—regarding trade union activities. The Association feels this should be only with trade union activities connected with the employer's work. The employers should not have to subsidise activities totally unconnected with their business. I beg to move.
§ Lord MELCHETT
My Lords, I can speak to this matter shortly as the noble 701 Baroness did in moving this Amendment. There would be no question of employers subsidising employees under the clause. Although it gives employees a right to take reasonable time off work for union activities, there is no question of people being paid during that period. That is the first point. The second point is the Bill says "reasonable time off work", but as the noble Baroness will know, ACAS will be providing a Code of Practice which will give some indication of what will be reasonable and sensible in these circumstances. Therefore, there will be no question of employees being able to walk off the job at any stage when they might want to in order to attend a union meeting. It is widely accepted that it is good for industrial relations if people working in a firm are active in their trade unions and all the people, all the members of the trade union, are encouraged to go to trade union meetings. This provision will encourage people to go to trade union meetings because it will enable union meetings to be held during working hours when all employees will be able to attend. In that way it will be to the benefit of the employers as much as to the employees.
My Lords, may I thank the noble Lord for that reply. If the meeting is in working time, presumably the employers will pay for that; they will not deduct the time involved from the wages of the employees. Also, the employers do not want the meetings to be entirely unconnected with the business they are undertaking. From what the noble Lord said, I am not certain whether such a meeting could deal with the business of another trade union which is not their trade union. This is the whole point of my Amendment. It is thought they should only deal with the matters connected with their own trade unions or perhaps a joint meeting, a joint council, at some time. Will the noble Lord make it clear that the employees will, as I said, be unpaid? If they are going to have meetings during working hours, I presume their wages or salaries will not be "docked". Does the noble Lord agree that the employees should go only to meetings dealing with their unions?
§ Lord MELCHETT
My Lords, if I may, by leave, reply briefly to those ques- 702 tions, certainly there will be no obligation on employers to pay employees who take time off under the provisions of this clause. I hope that makes it perfectly clear to the noble Baroness: there is no question of employers having to pay employees. It may well be some employers will see fit to pay employees for the time spent on this activity, but there will be no legal obligation on them to do so. Secondly, employees may take time off to attend to the activities of the trade union of which they are members; that may involve them in trade union activities which are not of direct concern to the employer. I hope I made clear earlier that the Government's view is that it is good for industrial relations, and therefore good for employers, that all members of trade unions should be active in their own trade union business.
My Lords, I thank the noble Lord for his reply. In view of what he has said, I should have thought that he might have been able to accept my Amendment. As he is apparently not able to do so, I beg leave to withdraw it.
§ Amendment, by leave, withdrawn.
§ Lord MELCHETT
My Lords, I spoke to this Amendment together with Amendment No. 42. I beg to move Amendment No. 44.
Page 40, line 35, leave out ("entitled") and insert ("to be permitted").—(Lord Melchett.)
§ Clause 52 [Time off to look for work or make arrangements for training]:
Page 44, line 21, after ("on") insert ("a").—(Lord Melchett.)
§ Clause 54 [Priority of certain debts on insolvency]:703
Page 45, line 26, leave out ("48(3)") and insert ("48(4)").—(Lord Melchett.)
§ Clause 62 [Order for reinstatement or re-engagement]:
Lord MELCHETT moved Amendment No. 49:
Page 54, line 11, leave out from beginning to ("for") and insert ("any benefit which the complainant might reasonably be expected to have had but for the dismissal, including arrears of pay,").
§ The noble Lord said: My Lords, if I may, I will speak to the next three Amendments, Nos. 50, 51 and 52, with Amendment No. 49. The general aim of the reinstatement and re-engagement provisions is that unfairly dismissed employees who receive either remedy should be restored as closely as possible to the position they would have been in had they not been dismissed. An award for compensation to cover the period between the date of termination of employment and the date of reinstatement or re-engagement should thus generally take account of all types of remuneration which the employee would have received if employed during the relevant period.
§ As drafted, subsections 62(3)(a) and 62(5)(d) provide that a reinstatement or re-engagement order must specify any amount payable in respect of arrears of pay, including bonuses, for the period between the date of termination of employment and the date of reinstatement or re-engagement. These words may not be sufficient to ensure that employees receive compensation for the loss of all fringe benefits during this period. Amendments Nos. 49 and 50 ensure that the tribunal must take account not only of basic pay but also, where appropriate, of any other elements of earnings such as overtime pay, bonuses or commissions and of any fringe benefits, such as the use of a company car or special credit facilities which the employee would have received if employed during the relevant period. The remaining two Amendments, Nos. 51 and 52, modify the drafting of subsection (9) of this clause, and are consequential on the first two Amendments. I beg to move.704
Page 54, line 36, leave out from beginning to ("for") and insert ("any benefit which the complainant might reasonably be expected to have had but for the dismissal, including arrears of pay,").—(Lord Melchett.)
Page 55, line 40, leave out from ("calculating") to ("for") in line 41.—(Lord Melchett.)
Page 55, line 41, after ("above") insert ("any amount payable by the employer").—(Lord Melchett.)
§ Clause 63 [Enforcement of section 62 order and compensation]:
Page 56, line 24, after ("award") insert ("of compensation").—(Lord Melchett.)
§ Lord MELCHETT moved Amendment No. 54:
Page 57, line 27, at end insert—
(8) Notwithstanding anything in the said Part II, the amount of a week's pay for the purpose of calculating an additional award under subsection (2)(b) above shall not exceed £80.
§ The noble Lord said: My Lords, if I may, I will speak to Amendment No. 66 with this one. At Committee stage I undertook to introduce an Amendment on these lines in response to an Amendment moved by the noble Earl, Lord Gowrie. Noble Lords opposite will see that, following consultations with the Parliamentary draftsmen, our Amendment in fact almost exactly follows the wording of their original Amendment.
§ Amendment No. 66 is consequential upon Amendment No. 54. It seemed sensible that the review provisions in Clause 77 should also apply to the new limit on the amount of pay to be taken into account in calculating an additional 705 award of compensation. The Amendment accordingly inserts in subsection (1)(c) of Clause 77 a reference to subsection (8) of Clause 63. All three of the earnings limits mentioned in that provision are currently set at the same level of £80 per week, and the Amendment ensures that they can be revised and, where appropriate, raised simultaneously. I beg to move.
§ Clause 65 [Calculation of basic award]:
Lord MELCHETT moved Amendment No. 55:
Page 57, line 42, at beginning insert ("By virtue of section 2(5) or (6) of the Redundancy Payments Act 1965 (unreasonable refusal or relinquishment of suitable alternative employment)").
§ The noble Lord said: My Lords, if I may, I will take the three following Amendments with No. 55—that is, Nos. 56, 57 and 58. These supplement the cross-references in subsection (2)(a) of Clause 65 to certain provisions of the Redundancy Payments Act 1965. They also improve the drafting of the subsection. I beg to move.
Page 57, line 43, leave out from ("payment") to ("or") in line 45.—(Lord Melchett.)
Page 58, line 1, leave out ("is not").—(Lord Melchett.)
Page 58, line 2, after ("Act") insert ("(renewal of employment or re-engagement) is not").—(Lord Melchett.)
§ Clause 66 [Provisions supplementary to s. 65]:706
Page 59, line 29, leave out ("of Schedule 4"). —(Lord Melchett.)
§ Clause 67 [Calculation of compensatory award]:
Page 60, line 34, leave out second ("the") and insert ("a").—(Lord Melchett.)
§ Clause 68 [Compensation for act which is both sex discrimination and unfair dismissal]:
Page 61, line 17, after ("account") insert ("under the other Act").—(Lord Melchett.)
§ Clause 70 [Orders of revival or continuation of contract of employment]:
Lord MELCHETT moved Amendment No. 62:
Page 64, line 7, leave out from ("pay") to end and insert ("or any other benefit derived from the employment, seniority, pension rights and other similar matters").
§ The noble Lord said: My Lords, subsection (1) of Clause 70 defines the scope of an interim order for the revival or continuation of a contract of employment. Such an order amounts in effect to an order for suspension on full pay. For the period covered by the order, the employee is to continue to receive full remuneration and to retain all existing rights and privileges just as if continuing in employment in the normal way. This Amendment is necessary because the existing wording of subsection (1) may not provide adequately for the continuation of all the benefits which the employee would have received if his or her employment had continued in the normal way. I beg to move.
§ The LORD CHANCELLOR
We are dealing with Amendment No. 62, as I 707 think it was, in the breathless rush of these Amendments.
§ 6.10 p.m.
§ Lord MELCHETT moved Amendment No. 63:
Page 64, line 26, leave out subsection (4) and insert—
(4) Any payment made to an employee by an employer under his contract of employment, or by way of damages for breach of that contract, in respect of any normal pay period or part of any such period shall go towards discharging the employer's liability in respect of that period under subsection (2) above, and conversely any payment under subsection (2) above in respect of any period shall go towards discharging any liability of the employer under, or in respect of breach of, the contract of employment in respect of that period.
§ The noble Lord said: My Lords, I will take it a little more slowly so that the noble and learned Lord on the Woolsack can get his breath back. Subsection (4) of Clause 70 is intended to ensure that where an employee is entitled both to wages in lieu or damages for breach of contract and to an award of pay under an interim order the employee should not receive both payments in full but should in effect receive whichever is the larger of them. But it appears that the provision as drafted may not achieve the desired result in every case. The Amendment makes it clear that any amount already paid as wages in lieu of notice must be offset against any payment ordered by the tribunal under Clause 70 and that any payment ordered by the tribunal must be offset against a subsequent claim for damages for breach of contract. I beg to move.
§ Clause 77 [Review of limits]:
§ Lord DRUMALBYN had given notice of his intention to move Amendment No. 64:
Page 68, line 37, at end insert—
("( ) the limit referred to in section 37(1) above;").
§ The noble Lord said: My Lords, this is a consequential Amendment on Clause 37, which has been postponed, so I am afraid I cannot move it yet. Therefore, I do not move.708
Page 68, line 38, leave out ("(3)") and insert ("(5)").—(Lord Melchett.)
§ Clause 87 [Duty of the Service to report on machinery for regulating remuneration and terms and conditions of employment]:
§ Baroness VICKERS moved Amendment No. 67:
Page 74, line 35, at end insert—
("The Service shall report to the Secretary of State within one year of the passing of this Act and each year thereafter on the problems of low pay and policies intended to deal with it with particular reference to wages council industries and home workers.").
§ The noble Baroness said: My Lords, I was asked by the noble Lord, Lord Jacques, whether I would take Amendments Nos. 89 and 91 with 67.
§ The LORD CHANCELLOR
My Lords, I think there is confusion on the Government Front Bench. I have no doubt that this is a wholly improper intervention from the Woolsack. What is the difficulty?
§ Lord MELCHETT
My Lords, I was a little worried as to whether we had actually taken Amendment No. 66.
§ The LORD CHANCELLOR
My Lords, I thought the House had passed No. 66. To place the matter beyond a peradventure, we will revert to Amendment No. 66 and I call Lord Melchett.
§ Clause 77 [Review of limits]:
Page 68, line 40, at end insert ("63(8) or").—[Lord Melchett.]
§ Clause 87 [Duty of the Service to report on machinery for regulating remuneration and terms and conditions of employment]:
Page 74, line 35, at end insert—
("The Service shall report to the Secretary of State within one year of the passing of this Act and each year thereafter on the problems
of low pay and policies intended to deal with it with particular reference to wages council industries and home-workers.")
§ I move this Amendment and at the same time will speak to Amendments Nos. 89 and 91. The Commission of Industrial Relations was initially established by Royal Warrant in 1969. It was strengthened I think by the Conservatives' Industrial Relations Act 1971. The Act of 1971 prescribed additional duties for the Commission and elaborated its terms of reference. The main effects of these were, I suggest, significant changes of attitude of the Commission arising from the political controversy over the IRA report. There was a final report on this matter by the CIR, No. 90. In particular the trade union movement introduced a policy of non-co-operation with the Committee—I think I am correct in saying that. However, in terms and scope and quality of the output of 1971 the change almost certainly led to the improvement.
§ There were 11 of these detailed studies and I am naturally not going to go into every one of them, but I would just mention the outstanding ones: the hotel and catering industry, industrial catering in particular; the coffin, furniture and cement-making wages council; the hollow ware wages council; the pin, hook and eye and snap fastener wages council, and the paper box wages council. I mention these because I think they were the ones that stood out among the low paid. I understand that in addition the CIR published annual reports and these drew together information on groups of low paid workers. Before the CIR there was the National Board of Prices and Incomes and they carried out a similar type of investigation. Unless there are instructions to report regularly on low-paid workers, who is going to tackle this problem? There will be, as I understand it, no official body looking into this matter.
§ Take, for instance, tailoring. There is an exceptionally large amount of female labour in it and they receive very bad rates of pay. The CIR in their report No. 77 of 1974 said there were unfilled vacancies for 18 weeks or more. In December 1974 the wages council implemented minimum rates of £23 and £24 for men and £22 for women. Also, they found that one in every 10 of the employees in the clothing trade was paid below the statutory minimum standard. 710 The CIR report went on to say that a considerable number of operatives were illegally underpaid. Many more people are paid less than the appropriate statutory minimum—this is one of their main conclusions—and the suggestions of wage inspectors were not always carried out. In April 1975 there was a new earnings survey and the findings were a little better. But even then the average was £8 lower, with overtime, than for the average male manual worker.
§ We are always hearing that all these new conditions under the Social Contract are going to help the low-paid worker. I suggest the situation is exactly the opposite. If they receive the £6, they then come into the income tax bracket in most cases; they lose their family income supplement; they lose their free school meals, and often lose their rent and rate rebates. If we take the laundry workers, of whom I gather there are about 86,000, a quarter are women part-time, and a half are between 40 and 59 years of age. Eight per cent. are juveniles, which is very much higher than the normal average: it is 5 per cent. in other industries.
§ As I am dealing with the other Amendments perhaps I might now say a word about home workers. I gather there is no published number of home workers, although Section 133 of the Factories Act 1961 requires employers of home workers in certain industries to register with the local authority. But the CIR reports, which the noble Lord will have read, Nos. 49 and 77, drew attention to the unreliability of these lists. The only national figure available comes from Poverty in the United Kingdom by Peter Townsend. In 1968–69 there were at least a quarter of a million persons engaged in this home work. The Low Pay Unit, which has given me quite a lot of information, carried out an excellent survey of 50 home workers and the findings were published in a document called Sweated Labour in 1974. The most common occupations of home workers were crocheting and knitting, making toys and Christmas crackers. The rates of pay were about 6p an hour; 11 workers were paid less than 6p an hour, and only 10 workers earned more than 31p an hour.
§ The sample taken by the Low Pay Unit was divided between those working full 711 time—30 hours and over—and those working part time. Six of the women work for more than 48 hours a week and five more work for 60 hours a week. All 15 workers who are working full time are earning less than £6 a week, with nine earning less than £3 a week. Seventeen of the workers in this survey stated that their work took up a lot of space, 11 of them carrying out their work in the living room of the family concerned.
§ I hope I have said enough to indicate that these are not very satisfactory arrangements. There is a great deal more information about this matter which I could add, if necessary. It was found that most of the home workers had young children or were looking after the disabled and the sick or dependant husbands. Some are themselves disabled. Only 10 per cent. of the home work was done for little extras. These details were given by 50 home workers, and it was found that one person only was working for pin money. Therefore I hope that the noble Lord may consider that it is necessary to accept this Amendment so as to protect low paid workers and the others I mentioned previously. It is confusing having to deal with the three Amendments together, but the noble Lord has seen them and will know what I have in mind. I beg to move.
§ 6.21 p.m.
§ Lord JACQUES
My Lords, according to CIR records, the proposal that ACAS should report within one year and each year thereafter on the problems of low pay appears to be impracticable. It that body's record is examined it will be found that the shortest period that it took to produce a report on a Wages Council industry was 14 months. That was in the case of the boot and floor polish industry which has only 1,500 workers and 50 establishments. That body spent 18 months on the metal trades, two years on the paper box industry and 2¼ years on the clothing industry. To expect a report as envisaged by the Amendment within 12 months is not practicable. We are trying to deal with this problem in a way different from that suggested by the noble Baroness.
Clause 87 of the Bill empowers the Secretary of State to request the Service to inquire into and report on negotiating machinery in the wages council field and 712 whether Wages Councils Orders are necessary in order to maintain a reasonably standard of pay and conditions, as well a, the general operation of the Act in relation to wages councils and the setting up, and conduct of statutory joint industrial councils. This will, in our view, be a more effective way of dealing with the problem than by asking wages councils to report on themselves, as one of these Amendments would do.
In regard to home workers, many of whom, but not all, work in wages council industries, the Parliamentary Under-Secretary of State explained in the Second Reading debate in another place that we are considering the possibility of an inquiry into the circumstances in which home workers are employed, and pilot inquiries into one or two wages councils covering home workers are likely to be undertaken.
Schedule II of the Bill provides for an independent trade union to report a claim that an employer is observing terms and conditions of employment less favourable than the recognised terms and conditions or, where there are no recognised terms and conditions, the general level of terms and conditions. Schedule II also provides in Part II for a claim to be reported to the Service as respects a member of an independent trade union working within the field of a wages council, statutory joint industrial council or an agricultural wages board, that his employer is paying him less than the lowest collectively negotiated rate of pay that applies in a significant number of establishments covered by the wages council or board. We have taken these steps to try to improve the sectors where there is low pay. The Reports of the Royal Commission on the Distribution of Income and Wealth on their standing reference should provide from time to time material relevant to the consideration of policy as regards low pay.
Finally, I would point out that the wages councils are independent bodies and have never been directed as to what is a reasonable level of remuneration. The reforms proposed in the Bill to bring them into line with voluntary collective bargaining loosens rather than tightens Ministerial control over their proceedings. Direction on this point might also run counter to pay policy, no matter what Party was in power. For example, there 713 may be a policy that pay shall be reconsidered only at intervals of 12 months, not six months, as proposed in the Amendment. Furthermore, the Amendments may cause the wages council to give an increase which is greater than that allowed by a particular pay policy. With these explanations, we hope that the noble Baroness will feel able to withdraw her Amendments.
My Lords, it is not very satisfactory from my point of view. It is very difficult to take these Amendments together. One specifies a period of three years while the others specify a period of one year. If it were only a question of time 1 should be prepared to accept a longer period. I should like to look at what the noble Lord has said. I am not satisfied that we are getting any further with helping the low-paid workers about whom I am greatly concerned. If I were to eliminate the exact period of time, could the noble Lord tell me whether he would then be more in favour of this Amendment.
§ Lord JACQUES
My Lords, with the leave of the House I can say that these Amendments are unacceptable. We believe that the more flexible approach which we make in the Bill to the question of low pay is better than the rather inflexible method which has been proposed by the noble Baroness.
§ Baroness SEEAR
My Lords, may I ask the noble Lord to look at this matter yet again. The answer we have had suggests a considerable amount of complacency on the part of the Government on an issue which has been a very severe issue for a long period of time. Many of us have a certain amount of knowledge of what has taken place in the wages council world. In many cases the wages council, through no fault of their own, have been unable to carry out the intentions behind the wages council legislation. We all know that there is a group of people that this legislation does not satisfactorily touch. The Low Pay Unit figures that the noble Baroness, Lady Vickers, has put forward are horrifying. A very large number of people may not be involved, but a considerable proportion of them are women and we have not found a way of dealing satisfactorily with this group of workers. It is deplorable that in a Bill dealing with employment pro- 714 tection so little is being done for this category of worker. Therefore, I hope very much that the Government will look at this matter again.
I, like the noble Baroness, Lady Seear, am not at all satisfied with the noble Lord's reply because it seems to me that we are going to have a laissez-faire policy for ever. For the moment I shall withdraw the Amendment, but I hope that the noble Lord will consider making a slightly better reply to any future Amendment. I beg leave to withdraw.
§ Amendment, by leave, withdrawn.
§ Clause 91 [Duty of employer to notify Secretary of State of certain redundancies]:
§ 6.30 p.m.
Lord PITT of HAMPSTEAD moved Amendment No. 67A:
Page 77, line 6, after ("State") insert ("and the local authority for the area in which the establishment is situated").
§ The noble Lord said: My Lords, with your permission in moving Amendment No. 67A I will speak also to Amendments Nos. 67B to 67F inclusive. Clause 91 of the Bill requires an employer proposing to dismiss as redundant 100 or more employees at one establishment within 90 days or less to notify the Secretary of State of the proposal at least 90 days before the first dismissals take effect, and an employer proposing to dismiss as redundant ten or more employees at one establishment within a period of 30 days or less to notify the Secretary of State of the proposal at least 60 days before the first dismissals take effect and to send a copy of such notification to the trade union concerned. This Amendment merely asks that the appropriate local authority should be informed at the same time.
§ The effect of redundancies can have very serious social and economic implications in relation to the employment situation in areas likely to be affected by the closing down or contraction of particular undertakings. In the large conurbations—and I speak particularly about London, which I know best—where employment is in decline the closing down or contraction of undertakings can be very serious in its consequences, affecting not only the 715 immediate area but wider areas in the locality in which the undertaking is sited.
§ I am asking that information concerning proposed redundancies should be made available at the earliest possible time to local authorities whose areas and functions would be involved, in order that the possible implication for the areas may be taken into account. Employment patterns and the distortion of them by redundancies are important factors to be taken into account in any planning exercise. A series of redundancies in one area can have a catastrophic effect on the employment situation in that area. We have had a few instances in London which have occasioned us considerable worry. While it might be quite easy for the Secretary of State to inform local authorities of such notifications there can be a time lag and that time lag can be vital, and unless the Secretary of State informs local authorities of all notifications it is also possible that important ones may be missed. The Secretary of State and the local authority would be looking at redundancies from entirely different standpoints. The Secretary of State would be concerned with the economic implications for the country as a whole, but the local authorities would be concerned with the effect of those redundancies on the employment patterns in the area. To illustrate what I mean, a small business closing down in the East End of London would really not appear to have any serious implications for this country. But with Stepney having an unemployment rate of 8.8 per cent. and Poplar having an unemployment rate of 9.1 per cent., the closing down of a small business in that area can have very serious consequences.
§ I imagine the question will be asked, what is the value of the information to you? The point is that, realising the consequences of such redundancies, the local authority, which admittedly has not very much power of its own, can start to activate the people who have the power. We can go to the Department of Industry and see whether or not they can do something under the Industry Act. We can go to the Manpower Commission and say: "In this area there are going to be redundancies and the consequences are going to be serious. Can work be created in an area in advance, or at the same time, so that these people can be 716 absorbed?" Or, now that we are in the EEC, we could go to the EEC and ask for some help from their Social Fund because of the social consequences of such redundancies.
§ We need to know of the redundancies early enough to be able to take that sort of action. Since the effect of redundancies will probably extend over a wide area, we are suggesting that the appropriate authorities to be informed are the county authorities, and of course in the case of London it would be the Greater London Council. The reason is that these are the authorities responsible for structural planning in the areas under the town planning legislation, and it is they who are able to consider employment in relation to other planning matters in the area as a whole because they are the strategic authorities and they can look at all these areas on a much wider plane. These Amendments do not impose a severe burden on the employer. He has already got to notify the trade union; all we are asking is that at the same time he should notify the local authority: in other words, instead of making his return in duplicate he makes it in triplicate.
§ Turning to another point, I gather from the "grapevine" that the Government are not very happy about cumulative sanctions against employers on behalf of the local authority. Therefore I have not reintroduced my Amendment to Clause 96, because that is not the point. What the local authorities are concerned about is getting the information and getting it early enough for them to be able to do something about it. This is a small Amendment but it could have large consequences for good. I hope the Government will see their way to accept it. I beg to move.
§ Lord SHEPHERD
My Lords, we are grateful for the way in which my noble friend has moved this Amendment. He suggested that it did not lay any great burden upon the employer. On the face of it that is so, but when one looks at the clauses referred to here there could be an increased burden because it would then be open to the local authority perhaps to require different information than the Secretary of State might wish. However, in resisting these Amendments I would not rest my case on the burden on the employer or the problems that 717 might arise. Clearly local authorities have a duty in regard to the well-being of their district, but mainly for the future or long-term planning rather than perhaps for the immediate planning. The immediate future dealing with redundancy, is clearly a matter for the Secretary of State and the Manpower Commission. That is why the information which we feel it is right should be given to the trade unions should also be given to the Secretary of State or his nominees—the Manpower Commission in the locality—in order that they may help to cushion the consequences of redundancy.
I believe that there ought to he a degree of co-operation between the local authority and the Manpower Commission. Certainly, the local authority have a special responsibility for the youth services. I understand that administrative arrangements are already in train, by which the Department of Employment will pass on any necessary information to the local authority governing those young workers between the ages of 16 and 17 who may be made redundant.
I can well appreciate that local authorities may wish to assist in dealing with redundancy within their area. I should like to suggest to my noble friend that it is not a question of putting on the Statute Book the Amendments which he has placed on the Marshalled List, but of agreeing to a proper administrative arrangement between the Secretary of State and those responsible to him, and the local authority. I should like to suggest to my noble friend that if he or any of the other local authority associations wish to take this up—and I say not only the associations but also my noble friend—the Department of Employment is only too willing to enter into immediate conversations to see how this matter can be dealt with administratively. There is nothing between us in seeking a solution to the problems of redundancy, nationally and locally. I question only whether it is right and proper to put in this form of statutory provision, which I believe at the end of the day would lead to additional bureaucracy, which should be avoided. This is something I feel passionately about. We could have unnecessary additional bureaucracy if we were to accept the Amendments of my noble friend.
718 My Lords, I am very much with my noble friend in spirit. If he and the various associations would like to discuss with the Department or myself, then I should be happy to enter into immediate conversation to see what administrative action could be taken so that we get the right degree of co-operation in dealing with the matter.
§ Lord PITT of HAMPSTEAD
My Lords, I am grateful to my noble friend for his offer, in the circumstances the best we can get, so we ought to accept it. Therefore, I gladly accept his offer, and in the circumstances beg leave to withdraw my Amendments.
§ Amendments, by leave, withdrawn.
§ Clause 95 [Reduction of rebate on failure to notify redundancies]:
Lord SHEPHERD moved Amendment No. 68:
Page 82, line 21, leave out from ("State") to ("shall") in line 22.
§ The noble Lord said: My Lords, this is a drafting Amendment. The clause deals with rebates to employers from the Redundancy Fund. It provides that the Secretary of State or the employer, as the case may be, must comply with the determination of the industrial tribunal that a reduction of rebate imposed by the Secretary of State shall be varied. As the Secretary of State imposed the reduction, the tribunal's determination will apply only to him. The reference to the employer is therefore being deleted. I beg to move.
Page 89, line 2, leave out ("or any tribunal or person").—(Lord Melchett.)
§ 6.45 p.m.
Lord MELCHETT moved Amendment No. 70:
After Clause 103, insert the following new Clause:
§ [Payments which are to be treated as earnings for social security purposes]:
§ ".—(1) Where a payment to which this section applies is made by an employer to an 719 employee, the payment and the period for which it is made shall, notwithstanding that the payment is made in respect of a period during which no contract of employment subsists, be respectively treated for the purposes of the Supplementary Benefit Act 1966 and the Social Security Act 1975 as earnings of that employee and a period of his employment by that employer.
§ (2) This section applies to the following payments—
- (a) any amount paid in respect of arrears of pay in pursuance of an order for reinstatement or re-engagement under section 63 or 69 above;
- (b) any amount paid by way of pay in pursuance of an order for the revival or continuation of a contract of employment under section 69 or 71 above;
- (c) any remuneration paid under a protective award under section 92 above."
§ The noble Lord said: My Lords, when a tribunal finds that an employee has been unfairly dismissed and makes an order for the reinstatement or re-engagement of the employee under the provisions of Clause 62 of the Bill, it will normally require the employer to pay the employee arrears of wages for the period between the dismissal and the reinstatement or re-engagement. However, since the employee has not actually been working for the employer during this period, the employee will not automatically be regarded as an employed earner for the purposes of the Social Security Act 1975, and no National Insurance contributions will be payable for this period.
§ The same problem arises in connection with employees who are temporarily reinstated or re-engaged under the interim relief provisions of Clauses 69 to 71 of the Bill, and with employees who are made redundant and subsequently receive a protective award under Clause 92. This new clause solves the problem by requiring payments awarded by tribunals under these various provisions to be treated as though they were earnings from employment for the purposes of the Supplementary Benefit Act 1966 and of the Social Security Act 1975, and by requiring the period for which the payment is awarded to be treated as though it were a period of employment, even if no contract of employment was then in force. This provision will enable national insurance contributions to be deducted from these payments for the period in question. I am sure your Lordships will agree that it is important for this to be done to safeguard 720 employees' contributions records, so that their entitlement to social security benefits and pensions is not adversely affected. I beg to move.
§ Lord DRUMALBYN
My Lords, does this mean that the payments from the employer in respect of social security payments will also have to be made? Is this covered by the Amendment during these periods? The noble Lord said that the payments made to the employee would have the contributions deducted. The corresponding side of that is that the employer's contributions should also be made. Is that intended?
§ Lord MELCHETT
Yes, my Lords. My understanding is that the employer will be obliged to pay those contributions by this Amendment.
Lord JACQUES moved Amendment No. 71:
Page 90, line 24, after ("providing") insert ("or obtaining").
§ The noble Lord said: My Lords, with the leave of the House, I speak to Amendments Nos. 93 to 98 at the same time. Section 5(1) of the Employment and Training Act 1973 is to be amended by paragraph 2 of Schedule14 to the Bill. An earlier Amendment gave power to subsidise employers in respect of employees already in employment. The purpose of the present Amendment is further to extend the powers which the Secretary of State can use to create and maintain work opportunities. When we announced the measures which the Government were proposing to take to deal with the problem of unemployment, we indicated that it was the intention of the Government to introduce a recruitment subsidy for young people, although we were not in a position to give details of the scheme at that time.
§ My right honourable friend has now announced that such a scheme will come into operation on 13th October; that is, today. It will continue to run until 29th February next year, by which time we hope that the great majority of this year's school leavers will be employed. Under the scheme the employer who recruits a young person registered for work, who 721 has had not more than six weeks' experience of work since leaving school, will be eligible to receive a subsidy of £5 per week for 26 weeks from the date of engagement. In order to qualify for the scheme, the employer will be required to certify that he has not deliberately created a vacancy in order to benefit from the subsidy, and that the employment is to continue for a reasonable period of time. We do not intend the subsidy to be available in respect of such employment as might be offered in connection with the Christmas trade or the January sales, unless, of course, the employer is prepared to retain the young person in employment after his immediate needs have been satisfied.
§ My Lords, the scheme will be administered by the Department of Employment, and will be operated by officers connected with the replacement of workers in employment. In particular, the careers officers of local education authorities will have a prominent part to play in the operation of the scheme. It is desirable to ensure that the necessary legal powers exist for the scheme, and it is for that reason that I have pleasure in asking your Lordships to accept this Amendment. I beg to move.
§ Lord STRABOLGI
My Lords, this may be a convenient moment to adjourn the Report stage. I beg to move that further consideration on Report be adjourned until tomorrow.