EMPLOYMENT BILL

HL Deb 13 June 1980 vol 410 cc776-815

House again in Committee.

12.34 p.m.

Lord WEDDERBURN of CHARLTON moved Amendment No. 80AA:

After Clause 17 insert the following new clause: Restrictions on grant of interlocutory injunctions and interdict.

1. (" .—(1) In subsection (2) of section 17 of the 1974 Act, the words "in exercising its discretion whether or not to grant the injunction, have regard to the", shall be replaced by the words "not grant the injunction where it is shown that there is a".
2. (2) Subsection (3) of that section shall cease to have effect.")

The noble Lord said: This amendment would add to the Bill a new clause which would deal with the matter of interlocutory injunctions in industrial disputes. It is perhaps necessary to say that the interlocutory injunction or interim injunction, or interdict in Scotland, occupies a rather special place in labour relations. Indeed, the labour injunction, as it is sometimes known, was, of course, abolished in the United States Federal Courts as long ago as 1932, the reason being that such injunctions can frequently inflame an industrial situation, which is why the United States legislation was passed.

The interlocutory injunction is very rapidly obtainable by a plaintiff. In the steel case not so long ago the proceedings were begun on a Thursday; the injunction was refused on a Friday by Mr. Justice Kenneth Jones, who was overruled by the Court of Appeal sitting on a Saturday, who were again overruled by the House of Lords giving judgment on the following Friday. No doubt there are many situations in which even greater speed is desirable in regard to interlocutory injunctions. If someone is bringing a bulldozer to knock down one of your Lordships' houses, no doubt it is right that you should be able to approach a judge within minutes to stay that action, to see whether or not it is lawful and have it tried at trial.

But in labour disputes it is now recognised by our existing legislation, to which I shall come, that the labour injunction in an interlocutory proceeding is special in a number of ways. There is a particular difficulty in relation to the defendant who frequently has only 24 hours or sometimes less to get his evidence together from union officials who are often engaged in trying to settle the industrial action up and down the country. Moreover, the evidence is heard on affidavit, and therefore without cross-examination—although it is possible to cross-examine it is scarcely ever done—and it is evidence on affidavit from which the facts have to be assessed by the judge in a rather different way from the normal trial procedure. More than that, the factors which go into the grant or refusal of an injunction become of particular importance in labour disputes. For example, it is now generally accepted and judicially recognised, that whereas in the ordinary interim proceedings a full trial will be reached at a later date to test the full merits of the plaintiff's and the defendants' case, in the labour injunction case the plaintiff is normally quite satisfied when he gets the so-called interim remedy.

What he normally wants to do is to stop the strike, the work to rule, or the other industrial action. It is very rare indeed to find such actions going for trial. Indeed, in the recent case of NWL v. Woods in 1979, the noble and learned Lord, Lord Diplock, sitting judicially, said at page 1305 of the Weekly Law Reports, Volume 1: The grant or refusal of an interlocutory injunction generally disposes finally of the action. In practice actions of this type seldom, if ever, come to actual trial".

That makes important the two factors which a plaintiff has to show in order to obtain the injunction. Those two factors begin with his persuading the judge that the balance of convenience lies with him rather than with the defendant. Where the plaintiff is an employer, a customer, a company or a business concern, he can normally show very easily indeed on the affidavit evidence, which it is difficult for the defendants to dispute, that if the strike continues he will suffer considerable property or monetary loss, and that weighs heavily in the balance.

The defendants can only say that if they are not allowed to continue with the industrial action, industrially their members and the union generally will suffer a great deal in their negotiating position. The noble and learned Lord, Lord Diplock, recognised this in the same judgment in NWL last year, when he said that: It is the nature of industrial action that it can be promoted effectively only so long as it is possible to strike while the iron is still hot". Nevertheless, the balance of convenience is normally with the plaintiff employer or customer, and the noble and learned Lord, Lord Diplock, again said: So on the face of the proceedings in an action of this kind the balance of convenience as to the grant of an interlocutory injunction would appear to be heavily weighted in favour of the employer", although he then goes on for the first time in a judgment to talk about the practical realities from the union's point of view, to which I have referred.

It therefore becomes important to consider the second hurdle which the plaintiff must leap over in order to obtain his interlocutory injunction. In the old days before 1975 all the cases suggested that he had to show a good prima facie or arguable case that the defendants were doing something wrong. That would not seem to be unreasonable if the defendant is to be forbidden by court order from doing what he is doing. But in 1975, in the English jurisdiction at any rate, in the case of American Cyanamid Limited v. Ethicon, in the Appeal Cases of 1975, the House of Lords departed from that tradition and in a patent case laid it down in general terms that the hurdle was not to be judged by the prima facie case test but by a test which has come to be known, perhaps not wholly accurately but for the sake of expedition I will use it, as the test whether or not the plaintiff has, in the words of Lord Diplock in that case, shown that there is a serious question to be tried. It is much easier to show that there is a serious legal issue between the parties than that you have a prima facie case which outweighs the likely defences of the defendant.

It was because of that case that there was introduced in 1975 an amendment into the 1974 Act which is referred to in this amendment to this Bill; namely, subsection (2) of Section 17. In that subsection the courts in England were asked by statute, required by statute, in taking account of their discretion whether or not to grant an interlocutory injunction, to take account of the likelihood of the defendant establishing at trial a defence based on one of the trade dispute defences under, for example, Section 13 of the 1974 Act, which we discussed so much yesterday.

Scotland was excluded from the subsection for the reason which is made clear by Lord Fraser in the same case of NWL last year; namely, that the Scottish courts had managed to reach that happy situation by themselves without the aid of statute. Therefore, the law of England and Scotland was in a sense brought into accord by statute saying to the English courts, "Take particular account of the question whether the defendants have shown a likelihood that they will be able to establish a trade dispute defence".

However, the story does not end there. In a series of cases between 1977 and 1979 the English Court of Appeal rather failed to apply the tests of Section 17(2) as required by statute and had to be brought up short by the House of Lords in a number of their decisions of 1979 and 1930. It is, however, our argument now that this question of the discretion of the court to grant an interlocutory injunction, which is always very difficult to avoid for the trade union defendants for the reasons that I have given in the procedure that actually obtains, should not be the state of the law.

The reason we give for that is this. This Bill squeezes the rights of trade unions, as we would put it, or the immunities of trade unions as it may be put by the noble and learned Lord. The rights of trade unions in terms of their protection and rights of action in trade disputes are, in our view, severely squeezed by the terms of the Bill. It is, I think, common ground that they are heavily restricted in regard to secondary action. It is, I think, common ground that they are severely restricted in regard to picketing at other than strictly the place of work of the workers concerned. It is perhaps not common ground that the Bill attacks the legality of the primary right to strike. I only say that we assert that it does; the Government assert that that is not their intention and assert that it is not the effect of the Bill.

Naturally since we take that view, adding the common ground to the ground that we covered at least, we believe that now that the immunities are of such small dimensions that if a defendant in that difficult procedure, under the difficulties of the tests and presumptions of the common law, manages, on the interim stage, to show that he has a case which is stronger than the plaintiff's in the sense that it appears on the balance of the evidence that his trade dispute defence, or all that is left to him of it, will be likely to succeed, then at that time there should surely not be a further discretion in the court to grant an interlocutory injunction.

What we say in a sentence is that the labour injunction—which can be very inflammatory in industrial relations—now that the immunities or the rights of trade unions are so restricted as they are under this Bill, should not be granted where a defendant who has acted in contemplation or furtherance of a trade dispute shows that he has on balance the stronger case than the plaintiff, the stronger case in the sense that his trade union or trade dispute defence is the one that it appears on the evidence of the interim proceedings is the more likely to succeed. We cannot envisage situations where the courts should grant an injunction in that situation.

It is true that the noble and learned Lords in the three recent big cases on industrial law have talked in different ways in their different judgments about the possibility of a so-called residual discretion to grant injunctions where there is some damage of a very special kind. But, as Lord Scarman pointed out in the steel case—I shall not read the passage but I think it is not inaccurate to reflect his view as saying this—in most such situations it is for the Government to act by way of emergency measures and not for the courts to step in.

We submit that our amendment is justified in terms of the restriction of the immunities in the Bill, and that where the defendant in interim proceedings is in the situation I have described the court should he directed by statute not to grant the injunction. I beg to move.

12.47 p.m.

Lord MACKAY of CLASHFERN

As the noble Lord has explained, the effect of this amendment—and it is a most important effect—is that it would remove the residual discretion which Section 17 has left to the courts in deciding whether or not to grant an injunction. As a result of this amendment, if it were approved, the court would no longer, in exercising its discretion whether or not to grant an injunction, have regard to the likelihood of the defendant arguing successfully in a full trial that he acted in contemplation or furtherance of a trade dispute. Instead of that if the likelihood was established at the interim hearing, the court would have no option but to refuse to grant an injunction.

In our view this is highly undesirable. It is essential that the courts retain their residual discretion to grant an injunction in what Lord Scarman, in your Lordships' House sitting judicially, described as an "altogether exceptional case". We have had a number of indications in recent judgments in your Lordships' House of what such exceptional cases might be. I pause to say here that it is true that the discretion given to the court in this matter has been the subject of decisions in your Lordships' House which no doubt will be followed very closely in the subordinate courts, the inferior courts, from now on, whatever may have been variations of practice in the past.

May I just give two examples. The noble and learned Lord, Lord Diplock, in NWL v. Woods, said: where the consequences to the employer or to third parties or the public and perhaps the nation itself might be disastrous if it were refused". The noble and learned Lord, Lord Fraser of Tullybelton, in the Steels case, said: or where there was an immediate and devastating effect upon the applicant's person or property or immediate serious danger to public safety or health". The noble Lord, Lord Wedderburn, is really saying that in that situation the court should be prevented from granting an injunction altogether even although at that stage the probability only had been established that the defence would succeed. They are really saying that the interests of strikers and others taking industrial action must always take precedence over everything else, whatever the consequences to the applicant, the public, or the nation.

In our view the residual discretion of the courts, as explained in your Lordships' House, is a very useful and indeed a vital safeguard. It cannot be represented, as the noble Lord seems to be suggesting, as a serious threat to the ability of the trade unions to take industrial action. Indeed, their Lordships in this House have gone out of their way to explain that the courts' residual discretion to grant injunctions, notwithstanding Section 17(2), is to be used only in the most rare and exceptional circumstance.

We believe that this amendment is unnecessary and highly undesirable. It seems to arise from a myth, which is all too often expressed, that the courts are biased against the trade unions. There is not a shred of justification for that view. The judges do their best justly to apply the law to every case coming before them, be it a trade union case, an industrial relations case or any other case, and it is high time that this myth was put to rest once and for all. I hope your Lordships will assist in that by rejecting the amendment.

Lord WEDDERBURN of CHARLTON

I am obliged to the noble and learned Lord for his reponse, but we are somwhat disappointed by it. We feel that the residual discretion is such that in these cases perhaps further statutory intervention really is justified. After all, the situation which faces the court on the premises we have taken is that the probability—indeed, more than the probability, the likelihood—is that the defendants are acting lawfully; the defendants are, on the evidence, likely to appear at the trial to have acted lawfully.

We say that whatever the situation in other types of case, because of the special features set out at some length in the judgment of the noble and learned Lord, Lord Diplock, in NWL—added to the fact that the immunities are now narrowed in such a way that to establish that likelihood will be extraordinarily difficult for defendants who have acted in furtherance of a trade dispute—we think the discretion in that small area should be displaced. We do not say that in any way being critical of the courts. Rather the opposite. In the judgments of the noble and learned Lord, Lord Scarman, in the McShane case and in the Steels case, there is, if I may put it this way, a thread of reluctance on his part, which is shared by some of the noble and learned Lords who sat judicially on those cases, to become embroiled in industrial disputes unless they have to be.

There is perhaps an argument to say that the residual discretion is a way in which the courts could be forced into doing that, when many noble and learned Lords would not wish it to be so. Indeed, even in the Steels case, the noble and learned Lord, Lord Scarman, said that, although it was serious, the damage in that case: was not so immediate as to justify the intervention by the court granting relief to which it is probable that the plaintiffs are not entitled. There is time for the parties to come to terms or for the Government to act, either by intervention or by taking emergency powers, or by some other Executive or legislative action. When disaster threatens, it is ordinary for the Government, not for the courts, to act to avert it". That would be our submission as being the correct approach and, without wishing in any way to trespass on the perfectly proper discretions of the courts in England and Scotland—and of course the amendment tries to keep the law in step in both places—we suggest that perhaps Section 17(2) of the 1974 Act should be looked at again, and although we will not divide the Committee on the amendment, we want to register our complete support for it by not withdrawing it.

The LORD CHANCELLOR

I have listened to the noble Lord, Lord Wedderburn of Charlton, with mounting indignation. Behind the smokescreen of legal jargon and learning in which he has indulged, there remains one naked point of principle—and I quote from the noble and learned Lords, Lord Diplock and Lord Fraser of Tullybelton—which is that. where the consequences to the employer or to third parties or the public and perhaps the nation itself might be disastrous … or where there was an immediate or devastating effect upon the applicant's person or property or immediate serious danger to public safety or health"— the supposed rights of the strikers should take precedence over those considerations and the courts should have no discretion at all. That is what the noble Lord, Lord Wedderburn, is saying on behalf of the Labour Party, and it is disgraceful.

Lord WEDDERBURN of CHARLTON

I appreciate that the noble and learned Lord Chancellor feels strongly on these matters, but I am sure he would not wish to misrepresent the case I put. I did not put the case where there were supposed rights of strikers; I put the case where, on the evidence in interim proceedings, on balance the strikers had the better case and were thought by the court to be acting lawfully. As I say, I appreciate that the noble and learned Lord feels strongly on this subject. I will not respond to him in the terms he put to me. I feel strongly on the matter as well, but I will not get emotional about it. This is a very difficult and delicate area of the law—the relationship between the courts and industrial relations is a difficult area—and our judgment is that this is a line which perhaps should be slightly moved. The noble and learned Lord disagrees and I understand his point. We must agree to disagree.

On Question, amendment negatived.

Clause 18 [Enactments ceasing to have effect]:

12.56 p.m.

Lord McCARTHY moved Amendment No. 80BB: Page 20, line 32, leave out paragraph (b).

The noble Lord said: The object of this amendment is to try to do something about the intention of the Government in this clause in effect to take away all legal aids to recognition, and we are suggesting that the present position should remain. The history of legal recognition aids goes back to the Donovan Commission, and it is worth stating briefly why that commission thought the state should take this responsibility. One reason was that at that time, in the late sixties, there was a rising number of industrial disputes over recognition, and the Donovan Commission thought that anything we could do to reduce the number of industrial disputes was a good thing.

Secondly, at that time the Donovan Commission were very concerned—as everybody was, and I think still is— about the basic problem of multi-unionism, and the Donovan Commission thought that if we could have some way of structuring and controlling trade union recognition, we might be able to do something to prevent multi-unionism from becoming worse in this country. Thirdly, the Donovan Commission thought that collective bargaining was, as it said, the best way of carrying on a developed system of industrial relations, and it therefore wished to do something to assist those unions and workers who were struggling to get recognition in difficult areas without driving them into a situation in which they were forced to use industrial action to obtain recognition.

The original ideas of the Donovan Commission had very little time to take effect before the Conservative Government came to office and introduced the Industrial Relations Act. But the Conservatives at that time said they favoured those aspects of the Donovan Report which were in favour of facilitiating trade union recognition, and in many ways those parts of the Industrial Relations Act were in the correct direction and, I would say, the concept of the sole bargaining agency introduced in the 1971 Act was essentially sensible.

The problem with the Industrial Relations Act was that it confused recognition with the revocation of recognition, with the need for trade unions to register and with all the other aspects of the Industrial Relations Act which made it the total and complete failure it was. Nevertheless, the Conservative Government at that time accepted the need to do something about recognition very much for the wide variety of reasons which the Donovan Commission had reported.

The Labour Government put forward their own proposals in the sections of the 1975 Act which this clause of the Bill proposes to repeal; the famous Sections 11 to 16. We all know—and I am not attempting to deny it—that a whole range of difficult problems arose over the application of Sections 11 to 16. The first problem was that of multi-unionism. Sections 11 to 16 did not in fact provide a simple way of solving the question of which union was to be recognised.

But secondly, and more important, it was discovered that the way of applying Sections 11 to 16, which involved the agreement in effect of the council of ACAS on a common policy for recognition, was very difficult to carry out because there emerged very wide differences of opinion between the TUC and the CBI over the criteria of recognition.

I personally believe that all these matters would in time have sorted themselves out had it not been for the fact that the effects of the interpretation of the 1975 Act by the courts—and I am not criticising their interpretation; I am not competent to do so—were to mean that on many occasions when ACAS could have intervened and could have operated within the constrictions of Sections 11 to 16, it was not able to do so; so much so that the council of ACAS came to the conclusion that with the existing legislation it could not operate effectively.

Nevertheless, I maintain that an alternative system for statutory recognition is still required, that without an alternative system of statutory recognition there is no alternative for workers who wish to gain recognition, other than to drive themselves, I regret to say, down a line of country which ends with disputes of the Grunwick type. I know that it will be said that disputes of the Grunwick type took place when Sections 11 to 16 of the 1975 Act existed. That merely shows how difficult the problem is.

We have put down the amendment because we wish to probe the Government. We wish the Government to say whether they feel there should be a future for statutory forms of aiding recognition, or whether they consider that with the repeal of Sections 11 to 16 of the 1975 Act, that, so far as they are concerned, is the end of the chapter. I appeal to them to say that it is not the end of the chapter. In this Bill the Government have done a whole range of things that I do not propose to traverse this morning, which are widely believed to represent an attack on trade unionism. If even at this stage they were to say that they are trying to develop ways which might assist the peaceful advance of trade unionism, there would be no need for us to press the amendment. I beg to move.

1.3 p.m.

Lord ROCHESTER

Sections 11 to 16 of the 1975 Act have been criticised by employers, trade unions, and, as in degree the noble Lord, Lord McCarthy, has just acknowledged, by ACAS itself. Late last night we had a little banter about the so-called all-party group to which the noble Lord, Lord Orr-Ewing, referred. There is in your Lordships' House another group, the Industrial Study Group, of which I have the honour to be secretary, which is truly representative of Members of all parties and indeed of none, since it includes some Cross-Benchers. I see the noble Lord, Lord Mottistone, in his place. He is the treasurer of the group, and we even require members of it to pay a small token subscription, which he collects.

There was a feeling that it would be helpful if we could obtain an authoritative view of the chairman of ACAS itself on this matter, and as a number of Members of your Lordships' Committee will know, he came along and addressed us on the subject. He made plain, to my satisfaction at least, his feeling—and in degree the noble Lord, Lord McCarthy, has acknowledged this—that the statutory recognition procedures, as they stand, cannot operate satisfactorily, that they conflict with the conciliation and advisory role of the service. May I take this opportunity to say how widely I think it is recognised that the service performs that part of its functions so well. The chairman further indicated to us that some of these sections at least may on occasion require ACAS to intervene in situations where that is actually injurious to what is perhaps its main task of seeking to improve industrial relations.

The noble Lord, Lord McCarthy, has said, as I understand it, that that in effect is all very well, but that at least there should be something put in the place of these sections. I can understand the argument, but it seems to me a little odd that on the face of it, no attempt has been made in any of the amendments before us at any rate to do anything of that kind. Certainly if this amendment were passed in its present form, it would, as I understand it, merely leave things as they are.

I suggest to your Lordships' Committee that the fairly forthright views of the chairman of the service itself, as they were expressed on the occasion to which I referred, are really quite significant. I should have thought that, coming as they did from someone with his trade union background, they should carry considerable weight, not least with the Labour Opposition. So, as matters now stand and with all those considerations in mind, I certainly hope that the noble Lord, Lord McCarthy, will not press the amendment, which for my part I cannot support.

The Earl of GOWRIE

Let us start with what can be agreed between the noble Lord, Lord McCarthy, and the Government. I agree that multi-unionism is a central, perhaps arguably the central, problem in the British economy. It means that phrases such as, "the Government must get on with the unions" or, "the Government should sit down and talk with the unions" are very largely meaningless, whether there be a Labour Government or a Conservative Government in power. I say that because the degree of competition and the size, scale and quantity of our trade unions mean that there is an inevitable weakness at the top and in the representative bodies that exist for all unions, such as the TUC. It means that the tripartism which our competitor economies have found so productive and useful—though I must say that since OPEC that tripartism has come under some strain, and is likely to come under more—is denied to us.

So we want to see orderly recognition procedures. There, we are in agreement with the noble Lord; they can only improve matters by lessening inter-union competition. It is very widely thought by people that most industrial difficulties are either between unions and employers, or between unions and the Government. We must take every opportunity to remind ourselves that very often they are directly or indirectly the result of inter-union competition; and if orderly recognition can improve that situation, all of us, wherever we stand or sit politically, have much to gain.

Since we want orderly recognition procedures, why are we repealing the provision in the 1975 Act, which is what we are doing and what effectively this amendment would see us not do? It is because, in our view, the statutory provision—and here we are in agreement with the noble Lord, Lord Rochester—has not generally improved the recognition position of unions. I said "in our view", but in fact this is something on which we did not take a doctrinaire view or position. We consulted very widely, and we consulted with the body most prominent in this field and most responsible for activities within it; that is to say, ACAS. ACAS has made perfectly clear the difficulties it has had in carrying out its statutory duties under the recognition provisions and the damaging effects which these are having on ACAS's other important advisory and conciliation work.

I do not wish to detain the Committee (and the noble Lord, Lord Wedderburn, has been self-denying with his authorities and sources) but I can say that I have here an important letter in this regard from the Chairman of ACAS, Mr. Jim Mortimer. I will skip over one part, but it might be useful to the Committee to give the second part, which says—and I am quoting him: The Act gives ACAS no guidance as to the criteria to be adopted in determining a bargaining group or the level of support which it should consider appropriate in deciding a recognition issue beyond the general formulations in section 1. Nor has it been possible for the Council to agree on any such criteria which would be generally applicable. The absence of criteria has made the decision-making duty of the Council increasingly difficult, and one which can only be carried out at all by the exercise of a wide discretion. As time passes without criteria, the risk increases of the Council making apparently conflicting decisions on similar facts, which may lead to the Council appearing to outsiders to be inequitable or partisan, to the detriment of the impartial traditions of the service in other areas, such as conciliation and advisory work. There is also the risk of the Council being unable to reach, in some cases, agreed conclusions". The chairman concluded: The Council wishes me to advise you"— "you", in this context, is my right honourable friend the Secretary of State— that in the light of the increasing difficulties which it is encountering it cannot satisfactorily operate the statutory recognition procedures as they stand". Now, ACAS is not alone in criticising these procedures or their effects. The TUC is worried about the fact that they have led to claims which could disrupt established bargaining arrangements and dispute machinery. They prefer disputes to be resolved by voluntary methods—and, of course, they have their own methods to which we have paid tribute on several occasions during this Committee stage. The CBI have long felt that ACAS's terms of reference are biased by the inclusion of the duty to encourage the extension of collective bargaining as a particular aspect of its general duty to improve industrial relations, and that the recognition provisions themselves are biased in favour of the unions, which alone can bring references to ACAS. Other unions, especially those representing specialists, would prefer to see provisions include more explicit criteria, more balance of individuals, more legally-binding recommendations; and some, indeed, advocate an independent tribunal as an alternative to ACAS. So there is not agreement about what should be put in the place of these provisions, but there is widespread agreement that these provisions are not satisfactory.

So our position is that the statutory procedure has not generally improved the recognition position of unions, which, as I have said, we agree with the noble Lord, Lord McCarthy, is a central problem. The statutory procedures generated our position and led to increased inter-union problems. In previous debates, as I said, noble Lords expressed their faith in and concern for the Bridlington procedures. The recognition procedures of the 1975 Act, in our submission, have subjected those procedures to more strain than anything which the Bill might achieve, and people have been critical of the Bill in that regard.

Finally, we held our consultations on recognition open-mindedly, but it became clear that there was a lack of basic consensus on what the criteria for determining recogntition should be, and therefore how the present statutory provisions should be improved or amended. Our view is that unless and until there is broad agreement on at least the general criteria for sorting out recognition disputes, any statutory procedure for resolving these will not only continue to run into the kind of difficulties that I have outlined but will remain in this legislation (to adopt a phrase used by my noble and learned friend the Lord Chancellor yester- day) as a kind of floating kidney which may pop up and cause damage in an area where we have no wish to see further damage done. That is why I would hope that the amendment would not be pressed.

Lord McCARTHY

I am sorry that the noble Earl cannot go any further. I want to say just two very quick things. First, on what he said about inter-union competition, I would argue that outside the very difficult area of union recognition, inter-union competition, largely as a result of the activities of the TUC since 1968, is nowhere near the problem that it was. So far as the recognition problem is concerned, I agree with the letter which the noble Earl read from Mr. Mortimer, of course, but there we must say that, as I remember it, that letter was written at the time of the EMA and UKAPE decisions, which very severely limited the ability of ACAS to act; and, of course, that particular line of decisions has, from the ACAS point of view, been improved by the recent decision of the House of Lords. So I am still very sorry he does not feel it is the responsibility of the Government to find some alternative way forward.

On the other hand, in answer to what the noble Lord, Lord Rochester, says, he is perfectly entitled to say to us that we have not put down an amendment which provides an alternative of our own. This is absolutely true. My own personal preference would be to return to what used to be called the Woodcock CIR, with criteria in an Act, but that is a very complicated question. I suppose we must go away and think again, and in the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 80CC and 80DD not moved.]

On Question, Whether Clause 18 shall stand part of the Bill?

Lord McCARTHY

I do not want to hold up the Committee, but we cannot accept this clause and I merely want to say so. There are other issues on which we have not moved amendments—dealing, for example, with the road haulage wages affair and other issues—and because we are not moving them we cannot agree to this clause as it stands.

Clause 18 agreed to.

1.18 p.m.

Lord McCARTHY moved Amendment No. 80EE:

After Clause 18, insert the following new clause:

("Recognised Terms and Conditions

For Schedule 1 of the 1975 Act there shall be substituted:

"SCHEDULE

EXTENSION OF TERMS AND CONDITIONS

PART I

RECOGNISED TERMS AND CONDITIONS

1. A claim may be reported to the Service, in accordance with and subject to the following provisions of this Part of this Schedule, that as respects any worker an employer is, in respect of any matter, observing terms and conditions of employment less favourable than the recognised terms and conditions.

2. In Part I of this Schedule— the 'recognised terms and conditions' means terms and conditions of workers in comparable employment in the trade or industry, or section of a trade or industry, in which the employer in question is engaged, either generally or in the district in which he is so engaged, which have been settled by an agreement or award, to which the parties are employers' associations and independent trade unions which represent (generally or in the district in question, as the case may be) a substantial proportion of the employers and of the workers in the trade, industry or section, being workers of the description to which the agreement or award relates; and the reference to terms and conditions, in a case where minimum terms and conditions have been settled as mentioned above, is a reference to those minimum terms and conditions.

3. No claim shall be reported under paragraph 1 above as respects workers whose remuneration or terms and conditions, or minimum remuneration or terms and conditions, is or are fixed (otherwise than by the employer, with or without the approval of any other person) in pursuance of any enactment other than—

1. (a) the Agricultural Wages Act 1979 or the Agricultural Wages (Scotland) Act 1949;
2. (b) the Wages Councils Act 1979;
3. (c) sections 90 to 94 above; or
4. (d) this Schedule;

or in the case of whom provision is made by or under any such enactment for the settlement of questions as to remuneration or terms and conditions or minimum remuneration or terms and conditions.

4. A claim may be reported under paragraph 1 above, where, or so far as, the claim is founded upon recognised terms and conditions, by an employers' association or an independent trade union being one of the parties mentioned in paragraph 2 above.

5. A claim under paragraph 1 above shall be in writing and shall contain such particulars as the Service may require.

6. When a claim is reported to the Service under paragraph 1 above the Service shall take any steps which seem to it expedient to settle the claim or to secure the use of appropriate machinery to settle the claim and shall if the claim is not otherwise settled refer it to the Committee.

7. The Committee shall hear and determine the claim and it shall be for—

1. (a) the party making the claim to show that there are recognised terms and conditions and what those terms and conditions are;
2. (b) the employer to satisfy the Committee that he is obesrving terms and conditions of employment not less favourable than the recognised terms and conditions.

8. In ascertaining whether, in respect of any matter which is the subject of a claim under paragraph 1 above, the employer is observing terms and conditions less favourable than the recognised terms and conditions, regard shall be had to the whole of the terms and conditions observed by the employer as respects the worker to whom the claim relates.

9. If the Committee finds the claim wholly or partly well-founded it shall make an award that the employer shall observe the recognised terms and conditions and shall identify or specify—

1. (a) the recognised terms and conditions;
2. (b) the description or descriptions of employees in respect of which they are to be observed; and
3. (c) the date from which they are to be observed, being a date not earlier than the date on which the employer was first informed of the claim giving rise to the award by the union or association which reported the claim to the Service.

10. Any terms and conditions which by an award under paragraph 9 above the employer is required to observe in respect of employees of his shall have effect as part of the contract of employment of such employee as from the date specified in the award, except in so far as they are superseded or varied—

1. (a) by a subsequent award under that paragraph;
2. (b) by a collective agreement between the employer and the trade union for the time being representing that employee; or
3. (c) by express or implied agreement between the employee and the employer so far as that agreement effects an improvement in any terms and conditions having effect by virtue of the award.

11. Where—

1. (a) by virtue of any enactments, other than one contained in this Part of this Schedule, providing for minimum remuneration or terms and conditions a contract of employment is to have effect as modified by an award, order or other instrument under that enactment, and
2. (b) by virtue of an award under paragraph 9 above any terms and conditions are to have effect as part of that contract,

that contract shall have effect in accordance with that award, order or other instrument or in accordance with the award under paragraph 9 above, whichever is the more favourable, in respect of any terms and conditions of that contract, to the employee.

12. If in the course of determining a claim under this Schedule after the commencement of section 3 of the Equal Pay Act 1970, it appears to the Committee that a collective agreement or pay structure within the meaning of that Section contains any provision applying specifically to men only or to women only so that it would, had it been referred to the Committee by the Secretary of State under that section, have required amendment in accordance with subsection (4) of that section so as to remove that discrimination between men and women—

1. (a) that provision shall not be regarded as part of the recognised terms and conditions, and
2. (b) the Committee shall report its opinion to the Secretary of State and, in the case of a collective agreement, to the parties to that agreement or, in the case of a pay structure, to the employer concerned.

13. For the purposes of this Schedule the carrying on of the activities of pubic or local authorities shall be treated as the carrying on of a trade or industry.

PART II

COLLECTIVELY NEGOTIATED TERMS AND CONDITIONS IN CERTAIN INDUSTRIES

14. A claim may be reported to the Service under this paragraph by an independent trade union as respects any worker who is a member of that trade union and who falls within the field of operation of a wages council, a statutory joint industrial council, the Agricultural Wages Board or the Scottish Agricultural Wages Board—

1. (a) that the union is a party to one or more collective agreements and that those agreements cover a significant number of establishments within the field of operation of that council or Board either generally or in the district in which the worker is employed; and
2. (b) that in those establishments the circumstances of the employer are similar to those of the employer of the worker in question; and
3. (c) that the employer is paying him less than the lowest current rate of remuneration (disregarding any rate agreed to more than 12 months before the date on which the claim was reported) payable to the workers of his description under any of those agreements.

15. The provisions of paragraphs 6, 7 and 9 to 13 above shall apply to a claim under paragraph 14 above—

1. (a) as if for any reference to the recognised terms and conditions there were substituted a reference to the rate of remuneration referred to in paragraph 14(c) above;
2. (b) as if the reference in paragraph 11(a) to Part I of this Schedule were a reference to Part II of this Schedule and so much of Part I as is thereby applied.".").

The noble Lord said: This amendment, which I am afraid is a rather long one, in fact aims to put back (if we have got it right) Section 8 of the Terms and Conditions of Employment Act 1959, given the fact that we have just agreed, at this stage, to cancel out the legislation which was a substitute for that, in effect, under the 1975 Act. Section 8 of the Terms and Conditions of Employment Act 1959 was enacted by a previous Conservative Government, as I understand it, when they became aware of the disastrous consequences of their own decision to repeal Order 1376; and that stood, in effect, until 1975, with the Wages Council legislation, as the main statutory barrier to what one might term a free market in pay. But in 1975 the Employment Protection Act substituted alternative measures, in effect, through the provisions which we have just cancelled, which gave rise to the notion of the general level and the notion of recognised terms and conditions as applied by references to the Central Arbitration Committee. We appreciate that the general-level concept can be criticised on a number of grounds. We realise that it can be said, and has been said in another place, that what was originally put forward as a Way of dealing with low pay by the then Secretary of State for Employment in the previous Labour Government turned out to do something more than that. I should prefer to say that it dealt with area-based pockets of relatively low pay; but it has been criticised on those grounds and we are not at this moment talking about putting that back in the Bill.

Secondly, it was criticised on our side of the House at the time by some Members as a way of getting round incomes policy—and it was, to some extent, a way of getting round incomes policy. I hardly feel that this is the kind of argument which can be made by a Government who say, "Come Hell or high water, we are never going back to an incomes policy!" But that, of course, is by the way. It was criticised by those on the Left (I suppose) of the Labour Party for not dealing with absolute low pay and, in effect, for not being an alternative method of a statutory minimum wage. So we are not suggesting that the methods applied for dealing with the problem in the 1975 Act worked properly or worked in entirely the way that they were intended to work.

What we are saying is, having abolished the previous system, why sweep away all attempts to deal with the problem of low pay outside the area of the wages councils? Why not put back something which was acceptable to the previous Conservative Government in what might have been a rather more humane period of their policy formulation—and which would have been there now, I should have thought, had not the Labour Government decided to take it away for something that they thought was better.

Finally, if we are to be told that this is not to be acceptable, what is the logic in the Government retaining the wages councils themselves? It is said that if one abolishes the wages councils clauses—and the fair wages clauses, I suppose the Government would be in breach of the conventions of the ILO. But I take it that the Government will not come forward today and say, "If we were not in breach of the ILO, we would do away with wages councils". If they keep them, what is the logic of keeping in place the wages councils and not keeping in place the two limbs of this schedule? Part I would lever up low pay to recognised levels in trade and industry generally and Part II is a more limited provision dealing with individual low-pay problems in wages council areas.

Both these things were acceptable to a previous Conservative Government; both operate through the established system of collective bargaining. In the light of other provisions in this Bill, we suggest that the Government should accept this amendment.

1.24 p.m.

The Earl of GOWRIE

I rise at this point not to answer the noble Lord, Lord McCarthy, but to make a suggestion to the Committee. There are some amendments down in the names of the noble Baroness, Lady Seear, and the noble Lord, Lord Rochester, which take up some of the minimum wage arguments of Schedule II and which the noble Lord, Lord McCarthy, has touched on. It may be for the convenience of the Committee to take the debate as a whole. Therefore, what I should like to suggest, if it is convenient, is that they should come in now. I will listen to the debate and then answer as best I can.

Baroness SEEAR

Is that agreeable to the noble Lord, Lord McCarthy?

Lord McCARTHY

Yes, it is.

Baroness SEEAR

This would be convenient and useful because it is clear that there are overlaps between these two amendments and, to some extent, although not entirely so, their purpose is the same. I will confine myself to the amendment which is down in my name and in that of my noble friend Lord Rochester, although we are also interested in the whole issue of the terms and conditions of the restoration of Section 8.

I am very aware of the traditional arguments against having a statutory minimum remuneration. I have on many occasions rehearsed the arguments myself, and it is only for exceptional reasons that I am now proposing the amendment which is before the Committee. The arguments are that if you have a relatively high level of minimum statutory remuneration, then you will be pricing certain numbers of people out of jobs and will be increasing the already disastrously high unemployment figures. This would be particularly disastrous in the case of groups which are already very much at risk, and increasingly so, in the present unemployment situation; and, particularly, school leavers, ethnic minorities and women —all of whom are in grave danger in large numbers over the next year or two of being increasingly removed from employment.

Also there is the danger that if you go above a certain minimum level of remuneration this can increase inflation. At the same time, if we are removing Schedule 11—and I am in favour of the general removal of Schedule 11 as it appears in the Employment Protection Act—there is no safety net for those who are really in the low-paid category. What we are suggesting is merely enabling legislation which makes it possible for the Secretary of State to fix a level of minimum remuneration (after considerable consultation, after taking fully into account the danger of pricing people out of jobs) which can provide a necessary safety net.

In the national earnings survey of 1979, for full-time working males and full-time working females, it was shown that over 19 per cent. full-time working females earned less than £45 a week and over 8 per cent. of female full-time workers earned less than £40 a week. The corresponding figures for males were 2 per cent. and 1 per cent. But over 19 per cent. of females were earning less than £45 a week in full-time employment—which cuts out the great mass of little jobs round the corner which people take on a part-time basis and which are perhaps not a major concern here. This is a very considerable section of the female working population.

I would argue that there really is a case for having a safety net. We need this safety net (with Schedule 11 removed) for certain sections of trade union or organised workers—unless terms and conditions of employment are in some way rescued by the preceding amendment —and also we need it even more for that sizable proportion of the working population (and it applies particularly in relation to women) who are not protected by a trade union and who make contracts with individual employers, normally small employers but where we know there is a very considerable amount of low pay. In the conditions which we are facing now, and will be facing over the ensuing two years, their rates of pay may be seriously driven down. In today's circumstances, we can fairly assume that many women among that 19 per cent. have quite heavy domestic responsibilities. We are in a position now in which a large number of women are the main breadwinners. For those people the level of pay is something quite unacceptable.

I would also make the point that if we can provide this safety net we will remove some of the most seriously underpaid persons from being claimants to the "FIS" for rent rebates. We can assist a tidying up of those means-tested benefits—of which we have far too many, and which are neither satisfactory nor economic—by seeing that employers who are employing people at the lower end of the scale are paying a more rational and acceptable wage and are not forcing the maintenance of certain groups in our society back on to state provisions.

Again, in doing this we are doing something towards easing the poverty gap. In the longer term we are taking a step in the direction in which it becomes overwhlemingly obvious that it is necessary, sooner or later, to go in the direction of a credit income tax which requires that there should be some minimum level, otherwise of course the state will under such a scheme be subsidising indefinitely employers who are grossly under-paying. I beg to move.

1.32 p.m.

Lord MOTTISTONE

If I may speak to Amendment No. 80 HHA and depart from what the noble Baroness has been saying, may I mention in passing that the main theme of my amendment follows more closely Section 8 of the 1959 Act referred to by the noble Lord, Lord McCarthy. Indeed, it follows it more closely than Lord McCarthy's own amendment, which is really a reprint of the relevant parts of Section 11 as it was before, which included various points which are not relevant to the main purpose which I wish to pursue.

Section 8 of the 1959 Act carried on a tradition, which was started in the last war, which was encouraging the development of joint industrial councils. I should declare an interest at this stage as an employer member of a joint industrial council. Among other things, the purpose of joint industrial councils is to set a minimum earnings or a wages level and other terms and conditions in an industry. This sets a guideline for employers in the industry towards which to work.

As the system is voluntary on a joint basis, there is no legal requirement for employers to adhere to it. However, JIC levels are taken into acount by industrial tribunals and other legal bodies when relevant cases are referred to them. They serve to provide a discipline for safeguarding low paid workers—in this sense we go towards what the noble Baroness was saying—and also, which is important, as a safeguard for proper competition between firms within the industry. After all, if one can spend less on wages than is agreed as the minimum for the industry, one can probably market the product more cheaply and undercut rivals which are paying at least the JIC rates. So there is this element, which I hope will appeal to my noble friend on the Front Bench, of ensuring fair competition within an industry as well as providing a minimum for the wage levels of the people working in that industry.

The removal of the recognised term and conditions provisions, notwithstanding their long established history, would remove an essential prop to the joint industrial councils who themselves have a long record—and that goes back further than the last war—of acting as a most useful neutral catalyst in industrial relations in the industries which have them. I emphasise "neutral catalyst". Their influence on employers who wish to take competitive advantage of paying low wages would be removed. Of course this useful and voluntary safeguard for the low paid would also be removed for the first time in 40 years. For Members of the Committee who do not know about them, I should add that the membership of joint industrial councils, is half employer representatives and half trade union representatives. So it is a joint affair and all agreements have to be jointly agreed.

There is not an agreed view on this matter by CBI members. In some industries the JICs are more effective for all sizes of membership than they are in others. As a result of that, there is not a firm view from industry on that point. I would however say that large and medium sized companies have always paid above—and in many cases well above—joint industrial council levels, and they will therefore not be affected whether or not JICs continue.

It is important that where they do continue, their interests, and those of their employees, should be safeguarded. The JIC of which I am a member has an agreed clause which it has been possible to insert only because of membership by the firms throughout the industry where the minimum levels are not automatically reflected back in wage bargaining within companies. This safeguards all firms and is mutually agreed between both sides of the industry. That is the sort of thing where the JIC itself can establish its own safeguards. If you do not take your JIC seriously, you do not have this same ability. This is why I suggest to industry, quite apart from the Committee, that JICs can be a great help on both sides. It is important therefore that the terms and conditions provisions should be drawn in the amendment so as to ensure this, and to a large extent they do.

The fact that Schedule 11 has not, as stated by my right honourable friend in another place (in column 358 of Hansard) acted as a mechanism to eliminate pockets of low pay should not cloud the issue. The main value of its relevant parts, the wartime regulations and the 1959 Act, has been in providing a guideline for employers rather than as a piece of law to be invoked. In a sense, the less that it is used, the more successful can a JIC agreement be said to be.

I have said that my amendment is somewhat different from those of the other Members of the Committee, and I would have hoped was rather closer to the thinking of the Government on this matter. It was tabled in another place by my honourable friend Mr. Bill Walker, but unfortunately was not selected. However, he had encouraging noises from the Secretary of State and I hope that my noble friend will be able to do the same for me. I commend my amendment to the Committee.

Baroness HORNSBY-SMITH

We are considering a labyrinth of complicated amendments. May I say straightaway that I am not in conflict with anybody who has spoken about fair minimum wages; but I rise to support my noble friend the Minister and I hope that he will adhere to the Bill as it has been drafted. I want to raise another point which is of great concern for companies who, in the main, are major companies which certainly adhere to trade union rates but, with many firms operating different processes within that complex, they find themselves at a considerable disadvantage under the law as it stands. This point should be made although I may find myself in conflict with my noble friend Lord Mottistone.

Under the present law, the unions have a unilateral right to resort to legally binding arbitration on comparisons of wages and working conditions with the general level enjoyed by comparable employees. For a firm with many factories with varying processes, this positively hampers and sometimes makes an utter nonsense of productivity agreements. Industry is exhorted to modernise and invest. For example, if Factory A, at enormous expense, extends and puts in the most up-to-date computerised machinery, immediately, as a condition for operating these new processes, the union demand a higher rate of pay—often quite rightly covered by a productivity agreement. Expecting to produce more, the workers quite justifiably expect to be paid more.

But other factories, not operating such new and sophisticated processes but processes which may require slightly lower intensive skills and already paid for at an agreed union rate, promptly invoke the general level clause, regardless of whether they are pursuing increased productivity or not. If the basis for the increase in factory A is valid and accepted, then it is not reasonable that it should be automatically applied throughout where such arrangements and such new processes do not apply. The handing down of wage awards regardless of increased productivity quite often, in the minds of those employees entitled to these increases, positively negates the advantage and differential they have gained. We have indeed seen particular examples in Northern Ireland where they have tragically high unemployment, where many firms have closed down as a result of these escalating wage costs. Therefore, I would support my noble friend most strongly in the terms in which the present Bill is couched.

Further, and finally, the handing down of awards from remote central bodies creates in employees' minds the vision of a bottomless pit of wealth, irrespective of the circumstances of their particular enterprise and totally at variance with the Government's philosophy of ability to pay. If such increases are automatic and totally unrelated to the particular workplace, it can only put firms out of business—and, Heaven knows! we have seen enough closures over the last three years; and the workers in many of these factories which are now closed have learned tragically and in a brutal way that there is no bottomless pit and the only way to ensure continuity of employment and to relate productivity to wages and profitability to pay rises is to take a national outlook. Where it applies the payment should be made, but it should not automatically be extended.

At present, the exchange of commitments which has been experienced in many firms and which has resulted from originally effective bargaining on increased productivity within individual companies or, in some cases, an individual work place of a major company, have been made very difficult indeed when, as a result, every similar grade in the firm, the industry or even the area of employment, benefits, quite regardless of whether that increased productivity is forthcoming and regardless of the special circumstances of the company or a slight alteration of skills. In short, it has tended to pamper the less efficient and has eliminated the rightful differential of the truly productive.

Lord MOTTISTONE

May I just set the mind of my noble friend at rest? There is nothing in my amendment which would perpetuate the sort of thing she was talking about and which I entirely agree with her should not be perpetuated.

Lord MONSON

Because the television screen in the dining room is running a little behind-hand, I am afraid that I missed the opening of the debate on these particular clauses, and therefore I hope the Committee will forgive me if I go over any ground which has already been covered. I must say it is odd that a party which has been traditionally associated with free trade and laissez-faire should put forward such dirigiste proposals. I wonder whether the noble Baroness, Lady Seear, realises that there are thousands of students all over the country, including my own sons, who would happily work for a very low hourly rate if the holiday job in question was an interesting one. If the job is a boring one, of course they want a good deal more money and they will not take it unless it is well paid. The same thing applies to housewives, who may want to occupy their afternoons, and to retired people.

The Committee may remember the case featured in the newspapers a year or two ago about an antique dealer in some country town, who did not have a great deal of business but who needed someone to help him and who could sit in the shop when he either was out for lunch or had to attend sales. A friend of his, who was extremely interested in antiques, leapt at the chance to work in the shop for 50p an hour or thereabouts. Some busybodies came along and told the antique shop owner that this was illegal and that he would either have to pay the man well over a £1 per hour or sack him. So the man had to be sacked. I do not think anybody would want to encourage that sort of thing, and for that reason I cannot support the amendment.

1.45 p.m.

The Earl of GOWRIE

I get the feeling that the Committee stage is drawing peacefully to its close and that this is possibly the last substantive matter we shall debate. I must congratulate as well as thank my noble friend Lady Hornsby-Smith, because she may have saved the Committee time by putting a part of my case very clearly and succinctly. She reminded us about the connection between pay issues and productivity issues and general levels of employment, about which we are all concerned. Behind some of our doubts on Schedule 11 lies the spectre of rising unemployment, and I thought she put that extremely well.

If I say that I want to make a short personal statement, that nowadays will probably be taken to mean that I am about to apologise to the Committee; but what I really mean is that I have subjective views about pay issues. For a long time I have tended to be a high wage man and one who believes that part of the difficulties which our economy has faced has been due to imperial preference, cheap food and the rest, and that over the 1950's and 1960's we had very low labour costs which provided a marked disincentive to industry to invest. I have been quoted favourably in the Morning Star, of all places, for recommending high wages; but they cut out the rider to my support for them, which was that I would, of course, have an almost minimal level of free social services, which would be the necessary corollary to high wages.

But there is general agreement, and non-subjective agreement, that since it was implemented in January 1977 Schedule 11 has come in for a lot of criticism. My Department referred to those criticisms in a working paper which was published last September, and any of your Lordships who are interested in the general issues of low pay should certainly have a look at that. Broadly, the criticisms were that Schedule 11 had in practice been used not to eliminate pockets of low pay but to get round the restrictions of the last Government's pay policy—I am not talking about pay policies generally but about the fact that this was how the provision was actually used—and that unilateral access to statutory arbitration ran counter to the establishment of sound collective bargaining arrangements, including, as my noble friend Lady Hornsby-Smith reminded us, the essential element of productivity in local bargaining arrangements.

It was also thought that awards could disrupt agreed relativities and pay structures, and that arbitration based on the general level of terms and conditions —again what my noble friend thought of as "the bottomless pit of wealth" that was coming from some generalised "they" or "them" rather than from the individual enterprise concerned—would make it possible that some groups were better able to take advantage of the schedule's provision than others. Not even the TUC has argued strenuously for the schedule to be preserved in its existing form. It has urged possible amendment of the schedule, but has not made quite clear what it wants. The Government's view is that we do not believe that a solution can be found in amending the schedule, since we believe largely for the reasons outlined by my, noble friend Lady Hornsby-Smith, that it is objectionable in principle.

I want to come, very quickly, to the issue of low pay. There has been some misunderstanding about the intention and effects of Schedule 11 in relation to low pay. Here I am addressing myself particularly to the remarks made by the noble Baroness. The schedule was aimed at eliminating "pockets of low pay"—I agree with that—but, surely, in a relative rather than in an absolute sense. The evidence we have on the pay levels of employees who have actually benefited from awards is incomplete. But what we are confident is that substantial numbers of quite highly paid employees have benefited, including the famous instance of the managerial and production staff at the BBC, as well as senior industrial training board and local authority employees.

Baroness SEEAR

I am sorry to interrupt the noble Earl. I want to make it quite clear that I am in no way defending Schedule 11. What I am asking for is something quite different from the preservation of Schedule 11.

The Earl of GOWRIE

I am aware of that, but I said to the noble Baroness that I was coming to the general level of her debate, rather than to the point she made. Part II—and this will make her intervention clearer—of the schedule applies to wages council industries and to employees covered by the agricultural wages boards. So it enables clauses to be based on collective agreements covering a "significant number" of establishments which are already within the field of operation of wages councils. Therefore, our abolition of Schedule 11 must be seen in the context of our retention of the wages council system. That is the point I really want to make to the noble Baroness, Lady Seear.

The intention was that it should be possible to mount claims in those low paying sectors, without the need to rely on either a national agreement or the "general level". Trade unions have made very little use of Part II; only one award has been made under it in the three-and-a-half years since the schedule came into operation, and there has been no pressure for the retention of Part II. Since it has evidently become completely ineffective, little is likely to be lost by its repeal.

May I turn quickly to the so-called first leg of Schedule 11, relating to "recognised terms and conditions" laid down in national or district agreements? As your Lordships may be aware, there was lengthy discussion about this in the Standing Committee of another place, and my right honourable friend the Employment Secretary undertook in the Committee on 27th March to consider further representations on this matter. He wrote to the CBI and the TUC seeking their further comments, and copies of his letter were sent to other bodies which had earlier shown an interest in the schedule.

Over 60 replies were received to this request and they were almost evenly divided between those supporting repeal of the first leg and those supporting its retention. A number of employers' associations showed concern that repeal might lead to undercutting of pay and conditions by employers, and an increase in industrial disputes. Individual companies however, with one or two exceptions, were substantially in favour of repealing the first leg on the sensible grounds—or sensible they seemed to us—that wages and conditions should be based on what employers can afford. Several firms emphasised the different competitive situations of large and small companies, and objected—again, sensibly in our view—to pay being determined on some general basis of comparability.

The most damaging objection to retaining the first leg, however, as to retaining the schedule as a whole, has always been that it represents an unnecessary and unwarranted interference in employers' freedom to negotiate their own settlements. We are not opposed to the conclusion and maintenance of national agreements, where those concerned want this and regard it as appropriate. But we do not believe that employers should be required by some remote statutory machinery to observe terms and conditions which have been arrived at in those agreements—

Lord MOTTISTONE

I do not think that an understanding of what joint industrial councils negotiate is reflected in what my noble friend has just been saying. There is nothing compulsory affecting all employers. All that is established are minimum earnings levels and minimum terms and conditions. All the big companies, whose views are no doubt reflected in what my noble friend is saying, pay well above that and have at least the same, if not better, terms and conditions.

The Earl of GOWRIE

I have not made myself clear to my noble friend, because what I am dealing with at the moment is in fact the big companies and the ability of big companies to be able to let their arrangements filter down and cause wage disruption in that way. I said that we were not opposed to the conclusion or the maintenance of national agreements, where those concerned regard this as appropriate. But I said that in the con- text of the larger groups of organisations; nation-wide bargaining or whatever. Arrangements which are reached through that kind of statutory machinery should not necessarily be binding on other people. That is simply the point I am trying to get across. I shall, however, come to the point raised specifically in his intervention by my noble friend in just a moment.

I want to emphasise that support for retaining the first leg has come from quite a small number of industries, notably building and construction, furniture manufacture and garages. The Government have not received the kind of evidence which could persuade us that this provision is needed in the interests of employers and employees in the industries concerned, and in industry and commerce generally. We have no reason to doubt that national agreements will continue to be widely negotiated and observed.

The first leg of Schedule 11 has had negligible influence on the pay of lower paid employees as a whole and we do not anticipate that its repeal will have any major implications in this area. If evidence is produced in the months and years ahead that we are wrong in this, we shall of course examine it. But no convincing evidence, in our view, has yet been produced and that is why we want to repeal the schedule in the Bill.

I want now to come to the issue of minimum wages. The final group of amendments—that is, Nos. 80FF, 80GG, 80HH and 80JJ; and I will come to my noble friend's amendment at the end—propose the introduction of a statutory minimum wage linked to average earnings. We have already had the arguments about a national minimum wage, so I shall refer to them only briefly. It would not, in any case, be right to introduce such a provision, without the most extensive consideration and consultations at this stage of the Bill's proceedings.

The inflationary repercussions of the statutory minimum wage is not simply that a minimum wage is, in theory, a bad thing or inequitable. It is that everybody else wants to adjust to their old level above the minimum wage. It is the difficulty of norms generally. Average earnings would be artificially pushed up, without regard to output, productivity or the employer's ability to pay. Therefore, that would have job opportunity and employment implications of the kind that my noble friend has mentioned.

In industries where there is inadequate collective bargaining machinery and a tradition of low pay, the wages councils currently fix statutory minimum rates. Wages councils are not without their critics, not least within my own party, but they have two important advantages which a national minimum wage lacks; and we have had criticism earlier of them from the Cross-Benches, from the noble Lord, Lord Monson. First, they encourage the development of voluntary collective bargaining institutions which will eventually supersede them, and as these institutions grow up the Secretary of State has powers to get rid of the wages council which is superseded. Secondly, the rates are set by representatives of employers' associations and trade unions in the industry concerned, and not by the Government.

Coming to my noble friend Lord Mottistone and his Amendment No. 80HHA, essentially the same arguments apply to that amendment as to those which would retain the first leg of Schedule 11, in that in our view it would tend to interfere with employers' freedom to negotiate pay and conditions in the light of their own circumstances.

I do, of course, take the point about cowboy employers. I am a little doubtful whether in practice this description would necessarily be accepted as fitting all the employers who might be caught by my noble friend's amendment. But I will look further at the amendment and will consider at more length the points my noble friend has made in support of it. I will not, of course, give any undertaking that we shall be able to accept it, but I can undertake that we will look at it. Overall, in terms of the debate, I hope I have given the reasons why I would ask the Committee to reject these amendments should they be pressed.

2 p.m.

Lord McCARTHY

I understand, if I have got it right, that we are still on Amendment No. 80EE, and therefore it falls to me to say whether we are satisfied and can accept what the Government have said. I should also like to say just a word, since it is a general debate, about how we feel about the other amendments. I am sorry that the noble Earl, after making a welcome personal statement that he was in favour of high wages, made a political statement that the Government do not propose to do anything about low pay, and that he spent most of his time attacking and describing why he could not accept Schedule 11, which I do not think is actually at issue on this amendment or any of the amendments. We are really talking about a return to Section 8 of the 1959 Act, which in many ways is different. Perhaps I should have spent more time, though it was late, in explaining the difference between that and Schedule 11. But, as the noble Earl said, this Committee stage is drawing peacefully to its close and I do not want to disturb the peace. Certainly it is much more peaceful and calm on the noble Earl's side of the Committee than it was half-an-hour ago.

I should like to turn to what the noble Baroness, Lady Seear, said. We found much agreement with her amendment. I would say that the main problem is that of course it is a much wider issue than the issue we are generally debating under our amendment; it is a form of minimum wage legislation. What worries me about it is that it is a form of minimum wage legislation which essentially is unilateral in its form of operation. It is perfectly true that in one of her several amendments the noble Baroness talks about consultation with interested parties. Consultation about wages is to some extent even more far back in time than consultation about terms and conditions. I should have thought that any form of minimum wage legislation would have to be collective. It would have to involve both unions and employers, and perhaps the state, in a tripartite system whereby, unilaterally, minimum wage rates are fixed by the Secretary of State after consultation. I do not think we could go very far down that road.

I come to the noble Lord, Lord Mottistone. Here I would find far more to agree with. In fact, I think I agreed with virtually everything the noble Lord said, which is a good way to finish. The only point I would make is that, as I read this amendment and as I take his speech, it appears to apply exclusively to the joint industrial council areas, and, with great respect, that is not the sum total of the problem. We have to concern ourselves with other areas where there are not joint industrial councils, where there may be wages councils or where there may just be no settled system of negotiation at all, which of course is precisely what is being dealt with under our amendment. Nevertheless, I feel there is a basis, as the noble Baroness said, for some collective understanding on this and I think we might all be able to come back on Report with something rather more sensible and something more generally supported. On that basis, I beg leave to withdraw our amendment.

Amendment, by leave, withdrawn.

2.4 p.m.

Baroness SEEAR moved Amendment No. 80FF:

After Clause 18 insert the following new clause:

"Right to minimum remuneration.

(. Every employee aged 16 years or over shall be entitled to a minimum hourly remuneration, in accordance with the provisions of this Act, to be paid to him by his employer. This section applies to every employment except in so far as its application is modified or excluded by an order under section (fixing of minimum remuneration).").

The noble Baroness said: In reply to the noble Lord, I think he may not have fully understood what I have been trying to say, which is the argument of the safety net. Obviously, if this level is high it would have inflationary effects. I do not want to repeat the main burden of my speech, but I do not believe that the level at which I was revealing pay exists at the lower levels would have much effect on differentials. The argument usually is that if one puts it at that level it does not really serve any useful purpose. My contention is that it would serve a useful purpose, particularly at the present time of unemployment, when in certain quarters of the country, because of the sheer difficulty, it would be very easy to push wages down substantially.

However, I take the point the Minister has made and the points which have come from the Labour Front Bench. When I mentioned consultation it was fully understood that any settlement in this matter would have to be the result of very considerable discussions with both the CBI and the TUC. There is no intention whatever —I think Lord McCarthy knows this perfectly well—that it should be handed down as a diktat from on high. As he says, that would be a totally out-of-date way of approaching it.

If the noble Lord is suggesting that he comes back on Report stage with the intention, which is the same as our intention, of dealing with the lower levels and safeguarding the lower levels of pay by some form of amendment to this legislation, then we shall be very glad to discuss this with the Labour Front Bench and to return to the matter on Report. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 80 GG and 80HH not moved.]

2.6 p.m.

Lord MOTTISTONE moved Amendment No. 80HHA:

After Clause 18, insert the following new clause:

("Settlement of issues as to recognised terms and conditions of employment.

(1) In accordance with and subject to the provisions of this Clause a report may be made to the Secretary of State that as respects any worker an employer is, in respect of any matter, observing terms and conditions of employment less favourable than the recognised terms and conditions.

(2) In this Act "the recognised terms and conditions" means minimum terms and conditions of workers in comparable employment in the trade or industry, or section of a trade or industry, in which the employer in question is engaged, either generally or in the district in which he is so engaged, which have been settled by an agreement or award made by a Joint Industrial Council or Joint Industry Board to which the parties are employers' associations and independent trade unions which represent (generally or in the district in question, as the case may be) a substantial proportion of the employers and of the workers in the trade, industry or section, being workers of the description to which the agreement or award relates.

(3) The report referred to in sub-clause (1) above may be made only by or on behalf of the Joint Industrial Council or Joint Industry Board mentioned in sub-clause (2) above.

(4) The Secretary of State may take any steps which seem to him expedient to deal with the issue raised in a report made under sub-clause (1) above, or to secure the use of appropriate machinery to deal with the issue, and shall if the issue is not otherwise settled, refer it to the Central Arbitration Committee.

(5) On a reference under this Clause the Committee shall hear and determine the issue. If the Committee is satisfied that the employer is observing terms and conditions of employment less favourable than the recognised terms and conditions the Committee shall make an award requiring the employer to observe the recognised terms and conditions and shall identify or specify—

1. (a) the recognised terms and conditions;
2. (b) the description or descriptions of employees in respect of which they are to be observed; and
3. (c) the date from which they are to be observed.

(6) Any terms and conditions which by an award under sub-clause (5) above the employer is required to observe in respect of employees of his shall have effect as part of the contract of employment of any such employee as from the date specified in the award, except in as far as they are superseded or varied by a subsequent award under that sub-clause, or by more favourable terms and conditions agreed between the employee and the employer.").

The noble Lord said: I am most grateful to my noble friend Lord Gowrie for his closing remarks and I shall look forward very much to hearing what he has to say when he has given further examination to my amendment. I am grateful, too, to the noble Lord, Lord McCarthy, for suggesting that perhaps we might get together, but I am not entirely sure that I welcome this, in the sense that he wishes to take my amendment further and cover more, whereas I would suspect that it might be acceptable to my noble friend if it said a little less. I do not know how far we shall go, but I would certainly wish to wait to hear from my noble friend before proceeding any further on any joint discussions with the Opposition Front Bench. I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Clause 19 [Interpretation, minor and consequential amendments and repeals]:

[Amendment No. 80JJ not moved.]

Clause 19 agreed to.

Clause 20 [Short title, commencement and extent]:

2.8 p.m.

The Earl of GOWRIE moved Amendment No. 81:

Page 21, line 9, leave out from beginning to ("such") and insert— ("(2) Sections (Secret ballots on employer's premises), 3 to 18 and 19(2) and (3) of this Act, and Schedules 1 and 2, shall not come into operation until").

The noble Earl said: This amendment follows upon our discussion of secret ballots. I beg to move.

[Amendment No. 81A not moved.]

Clause 20, as amended, agreed to.

Schedule 1 [Minor and consequential amendments]:

[Amendments Nos. 81B and 81C not moved.]

The Earl of GOWRIE moved Amendment No. 82: Page 24, line 8, after ("section") insert ("(Secret ballots on employer's premises,)").

The noble Earl said: This amendment adds the new clause dealing with secret ballots on employer's premises to the list of clauses in the Bill which, when enacted, will be covered by the provisions of Section 136(5) of the Employment Protection (Consolidation) Act 1978. The effect of this is to ensure that an appeal from a decision of an industrial tribunal under the provisions of this new clause will lie with the Employment Appeal Tribunal and not with any other body. I beg to move.

[Amendment No. 82A not moved.]

The Earl of GOWRIE moved Amendment No. 83: Page 24, line 32, leave out ("(3E)") and insert ("(3D)").

The noble Earl said: The effect of this amendment is to delete from paragraph 24 of Schedule 1 to the Bill the reference to subsection (3E) of the 1978 Act. In fact, that is a subsection which does not exist.

Schedule 1, as amended, agreed to.

Schedule 2 [Repeals].

[Amendments Nos. 84 and 85 not moved.]

Schedule 2 agreed to.

House resumed: Bill reported with the amendments.