HL Deb 23 May 1978 vol 392 cc848-57

3.45 p.m.


My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:

"With permission, Mr. Speaker, I wish to make a Statement on the White Paper on Industrial Democracy to be presented to Parliament this afternoon. Copies of the White Paper are in the Vote Office.

"The Government have now completed wide-ranging consultations on the report of Lord Bullock's Committee of Inquiry. It has not been possible to reach agreement between those principally concerned and the Government accordingly submit their own proposals.

"The basis of the White Paper is that employees at every level in companies and nationalised industries, like their counterparts in some other advanced industrial countries, should have a real share in the decisions within their enterprise which affect their working lives. The objective is positive partnership rather than defensive co-existence. This shared responsibility should bring improved industrial relations and increase the efficiency of British industry.

"The Government's intention is that this objective should be secured, wherever possible, by voluntary agreement between employers and representatives of employees. It is not the purpose to impose a standard pattern of participation on industry by law. Employers and employees will be encouraged to devise arrangements best suited to their own circumstances.

"But, where agreement proves impossible, employees will be able to claim certain statutory rights and the Government will introduce legislation to that end.

"The White Paper proposes that employees in companies employing 500 or more people in the United Kingdom should have a statutory right to have all major proposals of the company affecting them discussed with their representatives before decisions are taken. These discussions would include such matters as investment plans, mergers, take-overs, expansion or contraction of establishments and major organisational changes. This right should be vested in a joint representation committee. The committee would be composed of representatives of trade unions who are employees of the company and discussions will take place with this committee.

"The Government's consultations show that in some cases arrangements on these lines will be as far as employees will wish to go in taking part in the affairs of the enterprise.

"But in many cases there will be a wish to go further and for representatives of employees to be appointed to company hoards. If this cannot be achieved by voluntary agreement, the Government propose that employees in companies employing 2,000 or more people in the United Kingdom should be able, if they wish, to claim a statutory right to appoint, as a reasonable first step, up to one-third of the directors on the policy board of a new two-tier board structure. This right would be initiated by a request to the company from the joint representation committee and would be invoked after a ballot of all the company's employees to decide whether they wanted to be represented on the policy hoard.

"Company law would be amended to provide for the option of a two-tier board system where the company prefers. Where there is agreement, the right to board representation can be on the existing unitary boards. The White Paper proposes that there should be a period of three or four years' experience from the date of establishment of the joint representation committee before this statutory right comes into operation. The introduction of industrial democracy will be a developing process and the Government do not exclude parity of representation as an ultimate outcome.

"The Government are convinced that trade unionists have an essential rôle to play in industrial democracy. But the White Paper recognises that the responsibilities to be given to trade unions for the appointment of employee representatives on the boards will need further discussion. The Government will reach a decision on this matter after further consultations.

"The Government will continue to encourage the development of industrial democracy at all levels in the nationalised industries. Chairmen of nationalised industries have been asked to consult with unions and put forward proposals by August 1978. When legislation is introduced, it will give employees in nationalised industries the right to representation on boards, where it is desired.

"In the public service, accountability of Ministers to Parliament and Parliament to the electorate must not be eroded. Similar considerations apply in local government. But, subject to this principle, and the need to safeguard the interests of the community as a whole, the Government want employees and their representatives in the public services to be given all possible opportunities to contribute their views on matters affecting their legitimate interests.

"The Bullock Committee proposed the establishment of an Industrial Democracy Commission to provide advice on the implementation of industrial democracy. The Government are disposed to accept this recommendation but are ready to consult further about it.

"The direct involvement in overall company policies will require employee representatives to have a knowledge of business finance, management and other subjects. Training for board members in these matters will be essential. No doubt much will be undertaken within the organisation itself, but it is also proposed that training should take place in residential or non-residential colleges and other institutions. Public finance will be needed to assist this.

"The Government believe that these proposals will enable employees and managements to achieve real co-operation by sharing responsibility for the future prosperity of the companies in which they work. Both our economy and our democracy can benefit greatly. The Government will continue to consult widely so as to achieve the greatest possible agreement on the legislation that will be laid before the House".

My Lords, that concludes the Statement.

3.51 p.m.


My Lords, I should like to thank the noble Lord the Leader of the House for repeating the Statement made by the Prime Minister in another place. We shall of course need to study the White Paper, and in due course probably to debate it. May I straight away say that we welcome the last words of the Statement about the need for, and the possibility of, much further and wider consultation, because I am sure that that, to put it mildly, will be very much needed. We on this side of the House want all employees to have a growing opportunity to participate in the affairs of the enterprises in which they work. We believe that the development of employee participation will indeed play a critical rôle in the future development of British industry. We agree with the Prime Minister that the objective is partnership, but we ask ourselves whether these proposals will achieve partnership, and I am afraid that our answer is that we are extremely doubtful whether they will. These proposals certainly back down from some of the worst of the proposals of the majority of the Bullock Committee. For example, they provide more room for a voluntary and gradual approach, but they still seem to us on first sight to be far more concerned with extending trade union power than with extending real democracy among employees.

I should like, if I may, to put just three points to the noble Lord. First, are the Government aware that, in our view, participation must be available equally to all employees? We agree with the Prime Minister that trade unionists have an essential rôle to play—an essential rôle, but on no account a monopoly rôle. We regard it as wholly unacceptable that membership of the joint representation committees should be open only to nominees of unions approved by the TUC. They should have a major rôle in them, but not a monopoly rôle. We cannot have first- and second-class citizens among our employees.

Secondly, within this general point, are the Government aware that employees who have special responsibilities of the junior and middle as well as the senior levels of management ought to have a clearly defined place in the machinery of participation as they have, for example, in the West German system? So far as I can understand, they are not being given such a place in the proposals as they stand at the moment. Thirdly, may I ask the Government whether they would reflect again about the wisdom of beginning this process by bringing in firms down to the size of as few as 500 employees. This will ensnare very large numbers of firms which are pretty small, many of which have good participation arrangements which will have to be scrapped.

Moreover, it certainly raises in much more acute form the basic democratic point that I put a few moments ago, because very large numbers of firms of 500, rightly or wrongly, have only a minority of their employees as members of trade unions. If they are to have joint representation committees which can be comprised only of members of trade unions then they will indeed be representing only a minority of the employees in those firms. These are preliminary reactions, and I can only hope that the Government will give these matters serious consideration.

3.55 p.m.

Baroness SEEAR

My Lords, we on these Benches thank the noble Lord the Leader of the House for reading this Statement and welcome, in the main, the contents of the Statement. After all, over a period of 50 years, this Party has argued in favour of employee participation of this kind, and we have long been committed to the need for a statutory base for the development of employee participation. We particularly welcome the changes that have taken place since the discussions which were held arising out of the Bullock Committee, and the extent to which the Government spokesmen are now apparently moving more in the direction which many of us have advocated for a long time. The much greater degree of flexibility suggested in the Statement is in line with what we have pressed, recognising that no one standard of participation is appropriate to cover the whole range of British industry. This is much to be welcomed.

We also recognise that there is much to be said in appropriate cases for the development of a two-tier system. However, we are glad that it is not suggested that a two-tier system should be imposed on all organisations whether it is appropriate for them and whether they wish it or not. We welcome the reference to the need for training for persons who are to take part at directorial level, at board level, in the discussions and decisions that that the company has to make. It needs to be pointed out that that training will need to be thorough and continuous, and that one short period of training at the outset will not be sufficient but that continuing opportunities for up-dating are going to be required. This will need money, and it is a relief to hear that the Government are prepared to make resources available.

There are aspects of the Statement as read today which still leave us with some concern. We must agree with what the noble Lord, Lord Carr of Hadley, has said about the need for the representation of all persons in the enterprise and not only the trade unions. Indeed, there seems to be some inconsistency in the Government's own thought on these matters, for they define the need for development in terms of the requirement that employees should have a real share in the decisions within their enterprise which affect their working lives. "Employees" must mean all the people who are employed; it cannot mean a selective group of employees however they choose to be represented. Therefore, we would strongly stress the need to see that the joint representation committee includes on it not only union members.

I believe it is suggested in the White Paper that non-union members may be included if it is agreed by those already on the joint representation committee that such non-union members should be included. I believe this to be a pious hope at the very best. If non-union representatives are to be included, and all employees are to have the democratic rights which the Government themselves say all employees ought to have, then they must have a right to be on the joint representation committee, and not to be admitted only if those already there grant them permission to come in.

Similarly, on the nationalised industries committees, it is surely important to remember that where nationalised industries are also monopolies, or near monopolies, as is frequently the case, it is not only the interests of the employees—certainly not only the interests of trade unionists—which should be represented at the decision-making level. We must repeat, as we have done on so many previous occasions, that in these cases there must be consumer representation as well as employee representation.

4 p.m.


My Lords, I am grateful for the comments of the noble Lord, Lord Carr of Hadley, and the noble Baroness, Lady Seear. I do not detect any major criticism of the proposals—

Several noble Lords: Oh!


—and noble Lords should carefully read the White Paper before expressing any bitter partisan approach. I believe this is positive; and, after all, the Conservative Party are also anxious to have better relations and trade union and employee participation, as indeed we see from their published proposals. Ours are much more liberal and radical perhaps, and that is why I am grateful to the noble Baroness for her acceptance of our approach. She argued that we must be careful about trade union power. That was also stressed by Lord Carr. I accept all that; I do not want to create a trade union monopoly. But we must catch up with other countries in Europe, especially in the Community, where worker participation is succeeding and has helped to improve the efficiency of the firms in question. Thus, I do not think there is any dispute between both sides of the House or with the Liberal Party, who broadly have supported our policy.

The Government's approach is to encourage the voluntary development of participation. I would remind Lord Carr that where this fails, employees should have, as we say in the White Paper, two statutory rights: the right to discuss company strategy and the right to appoint worker directors, and for both these rights trade unions and companies should set up joint representation committees. These will discuss common strategy with management and, after being in existence for three or four years, trigger the right to employee representation on the board; so there is a long period of discussion.

That right will be exercised in this way: first, a request by the JRC for a company to organise a ballot of all employees and, if the ballot is affirmative, the appointment of worker directors to up to one-third of the seats on the policy board in a new two-tier board structure. The functions of the policy board are spelt out clearly in the White Paper; I will not weary the House with them because we will return to the subject, and this should be carefully considered. Here is a policy which is based on co-operation and which I believe will enable us to make the advance forward which is so necessary.


My Lords, my noble friend seemed to leave one field right open. He said that a great deal of discussion had yet to go on. Do I take it that much of that discussion will be with those trade unions which do not wish to participate in management? As he will be aware, there is a subdivision on this issue within the trade union movement. I take it that where a trade union does not wish to participate in management, there is still room for discussion with them.

Secondly, on the point raised by the noble Baroness, Lady Seear, am I right in believing that the formula will be that all employees may take part in the ballot but that they will not be permitted to be members of the committee unless they are representatives of trade unions? In other words, this is reverting to the old war period formula of production committees.


My Lords, all I can say to my noble friend is that we must consider with whom we are negotiating. We will have discussions; primarily, the responsible body to discuss with must obviously be the TUC, and the trade unions are involved there, as indeed we discuss with employers through the CBI. Yes, there will be discussions, and I cannot go beyond that.


My Lords, in view of the noble Lord's earlier importation of the phrase "bitter partisan" discussion, may I, as one who, if he has been or is bitterly partisan, has only ever been on the side of the Party to which the noble Lord belongs, ask whether he is aware that there is nothing bitterly partisan about arguing that, when it comes to discussion in participation decisions which affect an industry or an enterprise, there is all the difference in the world as against the factors to be taken into account when negotiating wages and conditions of work? Will he therefore please accept that many of us who are not bitterly partisan, as he would put it in that context, believe very strongly that workers, employees, managers, salaried workers or wage earners, whether or not they are members or representatives of trade unions, should be, indeed must be, allowed to take part in any discussions to do with the management and operation of their businesses?


My Lords, I understand the principles outlined by the noble Lord, Lord George-Brown, who has been and is a distinguished trade unionist, and I am anxious not to use the word "partisan" in that sense; I was thinking of it more in the political sense, of the House being divided on the matter. But I do not think that will be the case. I believe that when noble Lords and Members of another place have carefully read the White Paper, they will see it as a positive document which has broad liberal views and will be good for our country.

Viscount AMORY

My Lords, as a strong supporter of the principle of extending partnership in industry, may I ask the noble Lord whether he agrees that the best way of promoting this practice is to encourage its growth from the grass roots upwards—from the lower levels to the top—rather than by imposing something from the top?


That is an important point, my Lords, and from my own knowledge of industry I would accept that. On the other hand, one now needs to have something positive to create a framework within which we can have the beginning of a development which will last three to four years in the way I mentioned; it will take some time. We can do it only gradually and we must have co-operation, and that is what we want. Of course we may need to have legislation, but the Government believe that we can make a major advance through co-operation.

Forward to