HL Deb 16 March 1993 vol 543 cc1412-40

House again in Committee.

Clause 8 [Annual return to contain additional information]:

The Deputy Chairman of Committees (Lord Airedale)

In calling Amendment No. 29, I have to point out that, if it were agreed to, I should not be able to call Amendment No. 30.

Lord Wedderburn of Charlton moved Amendment No. 29: Page 13, leave out lines 4 to 10 and insert: (" "() for the period to which the return relates,

  1. (i) the aggregate amount of emoluments paid to members of the executive, the president and the general secretary;
  2. (ii) the amount of any such emoluments waived;
  3. (iii) the emoluments of either the general secretary or the president, whichever is greater (or both where they are the same);
  4. (iv) if the emoluments of any other persons mentioned in paragraph (i) exceed that entered under paragraph (iii), the greatest amount of those emoluments;
  5. (v) the number of those persons mentioned in (i) whose emoluments fell within each of the following bands:
in this section "emoluments" bears the same meaning as in paragraph 5 of Schedule 6 to the Companies Act 1985, and").

The noble Lord said: The amendment, in a sense, takes the Government at their word. The Government rightly insist that there is no natural parallel between trade unions and companies in respect of the matters which are peculiar to each of those entities. However, in regard to matters where a common standard can be found, the Government immediately reach for the analogy. That is apparent in respect of the appointment of inspectors, where they use the precise words of the Companies Act, section after section, because they regard the parallel as correct. Therefore, there is no point in talking about trade unions not being companies and companies not being trade unions. The question is whether, on a particular issue, there is an analogy and, if there is not, what is the reason.

On page 13 of the Bill we are concerned with the question of disclosure. I immediately stake a claim, if not an interest, in having argued for further disclosure in all kinds of bodies, especially companies and the like, in particular in regard to those who constitute the controlling group in the entity. In any body that group is nearly always the committee of directors or the executive committee with the important officers. Company law specifies the chairman, but I am not sure that that is correct in company practice. In trade union law it is naturally the president and general secretary.

In this amendment I have transposed, with a few differences —president or general secretary for chairman and so on—the company law standards, the standards which are now thought right for a wide range of bodies. When we speak of a company we may be speaking of a very large public company, a large private company or small bodies. There are small divergences, but Schedule 6 to the Companies Act 1985 lays out a pattern of disclosure which is largely similar to that which the amendment contains. The important points are: the disclosure of what the chairman obtains by way of emoluments, including, as indicated in paragraph (1) of Schedule 6 to the Companies Act, fees and percentages; sums paid by way of expenses that are chargeable to income tax; contributions and the estimated money value of any other benefits received otherwise than in cash. Those must be revealed by the chairman in person. Beyond that the sums are recorded by means of bands, set out in the statute £5,000 apart, except in the case of any directors who receive more than the chairman. I have included those three basic points in the amendment. One could argue about the precise sums.

In the Bill we find that, even though the Government have taken a direct analogy in terms of company law for their inspectors, there is a very different requirement of disclosure for trade union members of the executive. Each and every member of the executive committee has to disclose salary and benefits. My noble friend will take up the question of what benefits means. In broad terms this is a pattern of individual disclosure.

I remember very well arguing in 1967 the case for individual disclosure. I was not then a Member of this Chamber, but I remember that even the body I addressed dissolved into anxiety and shock at the idea that each individual director should be made to disclose. Directors are not required to do so.

My first question to the Government is: what is the ground upon which the individual disclosure doctrine for this particular body displaces the bands philosophy which has operated for a long time in company law? If it is said that the difference is caused by the number of proven decisions or cases of misfeasance—and there is always misfeasance in every type of body—then, if one adds up the company law map of coloured regions in this country, in the City one would not put company law disclosure so far below that of other bodies such as trade unions. What are the factors which make the Government say that disclosure for other associations should be more stringent than for companies? It seems to me that there is no ground in terms of the history of the matter.

If one wants to find trade union movements which have been riddled with real racketeering one has only to look at labour union history in the United States. If there were such a background one could legislate much more strictly. However, there is no such scene here and there is no justification for saying that each and every person on these bodies should disclose. I do not wish to keep matters secret; I merely say that there is a pattern elsewhere which the Government acknowledge and ask what is the reason for diverging from it now.

Every time in connection with company law any of us has tried to argue that company directors should disclose at least a little more information than now, it has always been argued that those are matters which are subject to some rule of privacy. I do not argue that everything should be kept hugger-mugger. I am perfectly prepared to accept a pattern of this sort for all bodies. All I ask is: why is there a discrepancy? My interpretation of what has been said in the other place is that the intention is to make trade unions more difficult to administer. That is a pattern which can be seen very easily. I beg to move.

Baroness Turner of Camden

I support my noble friend's amendment. It bears some resemblance to a similar amendment moved in Committee in another place. However, on that occasion the response of the Government was not convincing, at least to me. I am grateful to my noble friend for giving us the opportunity to debate the merits again today.

My noble friend has made the point that no one, certainly not on this Front Bench, quarrels with the notion that union members have the right to know what is paid to the officials whom they employ, including the general secretary, and that they should also be informed of any emoluments accruing to members of the national executive council.

However, I cannot help feeling that the Government are under the impression that senior trade union officials and members of the executive receive large sums of money by way of emoluments. That is not the case. If they do not think that, why have the Government put requirements on unions in the Bill which are certainly not requirements on companies?

When I worked as a very senior official I earned considerably less than many of the members on whose behalf I negotiated. It is true that my union organised among managerial staff, but I refer to middle managers rather than top managers. Of course I worked much longer hours than they did. The previous general secretary of my union received a salary very much lower by commercial standards than he would have received had he been a chief executive in a major company. One has only to consider some of the salaries paid in private enterprise to understand that there is no comparison with top directors. Salaries of £300,000 are not uncommon. The best paid director of Whitbread's receives £330,000 a year; at Allied Lyons it is £369,000. There are plenty of other examples too numerous to mention.

My noble friend has made it clear in moving the amendment that he seeks to bring unions into line with the provisions of the Companies Act under which it is permitted to show persons within bands of entitlement. He referred to that as the "band philosophy". I do not believe that the Government's response in another place was adequate to deal with the point that unions should not have more onerous demands placed upon them than companies. I do not believe that the case has been made out. I do not know of any large examples of fraud by members of the executives or by chief officials of unions. I therefore support the amendment.

8.45 p.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield)

I am delighted that the dinner break allowed the voice of the noble Lord, Lord Wedderburn, to recover a little.

I believe that it is now widely accepted that trade unions should provide information to the certification officer and to their own members about the salary paid and benefits provided to all of their leaders. Those salaries and benefits come from subscriptions paid by ordinary union members, and the leaders are subject to election to office by those members. It should no longer be necessary for members, or indeed the public, to depend on what information about these matters can be gleaned from details which union leaderships may choose to make available.

The Government resist Amendment No. 29—I understand that Amendment No. 31 is being considered in conjunction with it —because it would amount to a significant modification of the information about salaries and benefits provided to union leaders which the Bill proposes should be made available in a union's annual return. As proposed by the amendment, there could be no assurance that the salary and benefits provided to each union leader would be identifiable as such. Indeed, the noble Lord made that quite clear. There would be no way of knowing, for example, which particular member of the executive was covered by which of the bands proposed by the amendment since there could be several listed as being in any one particular band.

The provisions of the new subsection (aa) of Section 32 derive directly from the proposal in the 1991 Green Paper. Paragraph 7.25 of that consultation document proposed that: unions' annual returns to the certification officer should in future, as a matter of course, identify the salary or other remuneration (including loans and benefits in kind) provided out of union funds to each member of a union's principal executive committee, to its president and to its general secretary, in the period covered by the return". The new information requirements relate to union offices which are subject to the statutory election requirements, and to those offices alone. Accordingly, an attempt to make a distinction between the offices of union president/general secretary, on the one hand, and a member of the executive, on the other, as the amendment proposes, would introduce an unwarranted distinction. We believe that union members should, without undue difficulty, be able to identify the salary paid and benefits provided to each of the union's leaders who has been elected to office.

The measures in the Bill represent what the Government believe are necessary measures to reform trade union law. Attempts to make comparisons between company law and trade union law are neither apt nor useful. As my noble friend has already stated, unions and companies are different organisations, with a different legal status and different relationships with their members or shareholders.

The argument that there is any real analogy between the situation of a company shareholder and a union member is difficult to understand. People invest in companies in order to make profits on that investment, and often make their investments in substantial lump sums. Individuals join unions for a variety of reasons, but their subscriptions are membership payments and not investments. It is quite unsurprising therefore that the law should differ, and should continue to differ, according to the different circumstances of shareholders and of union members. That seems to me a very firm ground on which to make that distinction. I hope in view of that response that the noble Lord will withdraw the amendment.

Lord Stoddart of Swindon

I listened carefully to what the noble Baroness said. She stated that it is not apt to make comparisons between a trade union member and a shareholder of a company. I believe that it is apt. In both cases the funds of individuals are being managed and used by another group of individuals who have been elected, one way or another, to manage and look after those funds.

The noble Baroness states that of course companies and unions are different. People invest their money to make a profit. I suggest that trade union members invest their money to ensure that they are treated fairly: that they have people to look after their interests because they are in a weak position generally in relation to their employers. On the one hand, therefore, one has a group of people working in industry who elect and pay a group of people who are prepared to look after their interests, their conditions of service, their wages, whether or not they are dismissed fairly or unfairly and a range of benefits which they may receive. On the other hand, the shareholder invests his money in a business. He does so in the knowledge that he can elect people to the board who will look after his interests. It is still an interest similar to that of the trade unionist. The shareholder wishes to ensure that he has a group of people who will invest his money so that he obtains the best return. I see no reason why the group of people looking after the shareholder's money and interests should have to make a lesser declaration than the people who look after the trade unionist's interests. Although not identical, in many ways the interests are the same. I hope that the Government will reconsider the issue and that the noble Baroness will reconsider what she said.

As the noble Baroness knows, I am a reasonable person. I like to listen to argument, and I like to put the other side of the argument. But they are giving the impression in this legislation, and indeed in previous legislation, that what they want of the trade unions is bodies which, in themselves, have little or no power to affect and look after the interests of their membership, but, as I said at Second Reading, are more administrative bodies which are useful on certain occasions to the employers. When they are not, then of course the Government take a dim view of them, and would like to get rid of them.

They are giving that impression. I urge the noble Baroness to listen to my noble friend, who is a great expert on these matters. My Front Bench colleagues are great experts on these matters. They are academics or they have worked in the trade union movement, as indeed in a voluntary capacity I have. I urge the Government to listen to the arguments being used. They would find that people out in the country, trade unionists, would warm to them if they took their point of view into account, and could believe that the Government had some concern and consideration for their interests.

Baroness Seear

I do not understand why the Government think that they have to have such detailed information about individual people. What the ordinary member wants to know is that there is not a racket going on in the payment of the officials. They want to know that there is not somebody going off with £100,000 a year and somebody else getting £10,000, or something. They can do this if they have bands along the lines suggested here. That is all they want to know.

They do not want to know—and it seems to me they are not entitled to know—that Mr. X or Miss Y is getting £5,000 a year more than somebody else. That is not their business. They want to know that they are not being ripped off by the executive being paid excessive amounts. That is all they need to know. The amendment is adequate for that. You do not have to have these identifiable rates for individual people that many people would just love to argue about and make great nuisances of themselves.

Lord Blease

There is one point that has not been mentioned. In the modern trade union movement they require to bring in academics who have been professionally trained and educated in terms of work study, job evaluation and economics—in some cases even philosophy—to steer their union in the right direction. In many cases, these persons need to be of the top calibre. They come in at a wage level sometimes above that of the general secretary, and there is nothing as demeaning as someone having to administer to people who are getting enhanced salaries far above theirs.

If the trade union movement is to do a job in the interests of industry throughout the United Kingdom, it must have people of high calibre, and people who will come into the trade unions and not be streamed off into industry. It is a terrible anomaly to have the general secretary sometimes working for a salary which is thousands of pounds below an assistant employed in an economic research capacity.

Baroness Denton of Wakefield

The noble Lord, Lord Stoddart, misses no opportunity to assure me of his reasonableness, and I take great note of that. Perhaps I may also say that I would not dispute for one moment the great expertise on the opposite Benches to which he drew attention. But I believe that we are not discussing company law here; we are discussing trade union law.

The argument to which the noble Lord and the noble Baroness, Lady Seear, drew attention was that they have a right; that these are membership payments. Union leaders are paid from funds provided through members' subscriptions. We are talking about elected officers. We are not talking about the executive. The noble Lord, Lord Blease, and the noble Baroness, Lady Turner, drew attention to the fact that many elected officers work for considerably less than the staff they employ. Ministers well understand that situation, too.

Members have a right to know these details. I believe that we have common ground on openness in many areas here. I am aware that in the past allegations made against NUM leaders indicated that there could be confusion about the total remuneration provided to union leaders, and about whether particular remuneration they received came out of union funds. I am afraid that I cannot see that there is a reasonable objection to this, and I hope that the noble Lord, Lord Wedderburn, will withdraw his amendment.

Lord Wedderburn of Charlton

I wanted to welcome the noble Baroness in putting her first toe into this ocean, this morass, of trade union law, but she caught me unprepared in some of the reasons she gave for opposing this amendment about disclosure. She mentioned that trade unions have to give information to the certification officer. They have had to give information to a public officer since 1876. Not as much, but of some considerable kind, which lasted for a century. The noble Baroness said that trade union leaders have to be elected. They have had to be elected in one form or another since 1871. These curious historical explanations do not give us much to go on.

The Government will go on saying it because it is in all the briefs; but we must insist that it is absurd to say that this belongs to company law, and that belongs to labour law or trade union law, or however you like to define it. Of course there are some things that are special to particular bodies. I take two examples. First, the Government have taken over the whole structure of inspectors from company law into trade union and association law in this Bill. I did not say, "Oh, dear, that is a structure for companies, and we had better not touch that." There are vast streams of case law which belong equally to company, trade union or indeed association law. The venerable precedent of Foss v. Harbottle in 1843 is a basic case in company law, of which the most useful illustrations are in cases concerning trade unions.

There is a flow of law about associations, and of course it syphons off into particularities for particular bodies. The Government cannot tell us that they are doing a particular thing for trade unions merely by saying that they are not companies. Nor does it do much to help the argument for the Government to rely—and the noble Baroness was not the first to do it; it is a repetitious theme for the Government—on their own Green Paper of 1991. I know what the Green Paper says, and it is possibly even worse than the Bill.

The investment of people in their companies, as my noble friend Lord Stoddart said, is easily matched. People invest their lives in their jobs, when they have not lost them, and they join a trade union to try to keep the job and do as well as they can. The shareholder is different in certain respects; but he is investing part of his life in a company or companies into which he puts his finance. There you have two groups of people whose resources are being managed by other people on their behalf.

Do the Government say that the doctrine of fiduciary duty which applies to company directors does not apply to executive officers or senior officers of a trade union? Of course, it does. There is precedent after precedent. One could go on with a long list of things that apply to all associations. Fiduciary duties apply to all associations. One would have thought that in this House the Government could have done better. There was simply a repetition that "these are trade unions, not companies". We expected a little better.

I suggest to the Government, as the noble Baroness, Lady Seear, said—and whose intervention I greatly welcome—that they must go away and think about this again and not rely upon some slogan about one set of propositions for companies and one for trade unions. The insistence upon individual disclosure looks rather odd. It looks as though it has some purpose other than the perfectly genuine one of the need of the membership for disclosure.

I do not think that the noble Viscount would have a covert purpose; I would not think that of him. But look at the Bill: the provision does not rate a good measure of approval because, as the noble Baroness, Lady Sear, said, it is not what is required in the situation. If it is not required in that situation nor in the company situation which has some analogy, what is it there for? We suspect, as the noble Baroness suggested, that its purpose is that it would be useful to make trouble on a few occasions. That is the level to which we have descended. The noble Viscount looks astonished. I have the greatest respect for him, but he may not be clear what the legislation is about. I say that quite honestly and straightforwardly. Many others have not seen the drift of the legislation over the past five years.

This legislation dislikes collective bargaining—it wants to push it into a corner. If one pushes collective bargaining into a corner, one pushes trade unions into a corner and leaves them as weak as one can. One deprives them of funds which they thought they would receive and one makes them disclose matters beyond a level which is reasonable for anyone to demand, because it will help a little fragmentation here and there. No such thought crossed the mind of the Minister, but I suspect that that is the real aim and purpose of the legislation which we shall see in a few years' time.

I know that I have to withdraw the amendment, but I feel that this has been a productive debate. No doubt the Government would like to consider the amendment to see whether we could at least come back to parts of it on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9 p.m.

Baroness Turner of Camden moved Amendment No. 30: Page 13, line 4, after ("benefits") insert ("excluding expenses directly incurred in work on behalf of the union").

The noble Baroness said: It is a pity that the previous amendment was taken late in this evening's proceedings because I believe that it is an issue to which we shall have to return at Report stage. I understand that, had the amendment been carried, I should not now be in a position to move this amendment.

In this proposal I seek to exclude under the heading of "benefits" expenses directly incurred in work on behalf of the union. There was some discussion in Committee in the other place about expenditure which union officials must quite legitimately incur in the course of their duties for the union. The response from the Government on that occasion did not strike me as being satisfactory, and in my view showed no understanding of what the job of an official is really like in practice.

For example, in my union it was customary to provide officials with cars. The general secretary was provided with a car and a driver. In my view, that was a quite proper use of funds. It was necessary for him to go to many evening meetings, and to drive home late, and tired, by oneself, is not a good idea for anyone. The provision of a driver was seen as a sensible measure by our executive. The same attitude is taken, I think, with many companies as regards their senior executives.

The rest of the union officials were provided with cars which they drove themselves—not, I may say, very expensive models, in case the Government should think that unions are in the habit of throwing their members' money about. I drove then, as I drive now, a Ford Orion or its equivalent. A car was and is regarded as a tool of the job. It was intended to ensure that the official was able to make the best use of his or her time and to visit sites on the occasions when it was felt that he or she needed to be there. Of course, there is the provision of offices, telephone, secretary, support staff and so on, without which no modern organisation can effectively function.

It was not at all clear from the discussion in the other place that the Government fully appreciated that there are expenses which are quite legitimately incurred in the course of carrying out duties on behalf of members. They in no sense represent any kind of benefit. They are what it costs to do the work properly. Of course, in all unions expense claims of that kind are checked by internal administration, as they would be in any organisation.

Thus it is necessary, in my view, to separate from benefits, legitimate expenditure incurred in pursuance of the job. That is the aim of the amendment and I hope that the Government will give it favourable consideration. I beg to move.

Baroness Denton of Wakefield

I am grateful to the noble Baroness for explaining the reasons for her amendment, which is important. I hope that I shall be able to explain to her why we feel that it is unnecessary. To insert the words proposed by the amendment would risk creating a real confusion between the concepts of a "benefit" and of an "expense". Frankly, there really is and should be no such confusion. An expense cannot be a benefit because, to put it simply, there is no benefit to the individual recipient. No one suggests that the expenses of people in situations where those are required in the pursuit of their duty are a benefit.

As concerns the need to provide details of all actual benefits, there would be little point in setting up arrangements which meant, for example, that a union could legitimately avoid detailing valuable benefits provided out of union funds to the holder of an office. The present proposed provisions of Section 37 ensure that this cannot happen.

The key principle is that if a benefit such as the use of a car, payment towards a pension or the use of a flat or house is provided out of union funds for the personal use of an individual, then its value or description should be given.

At present, the nature of the new requirement is clear enough. A union must give details of all salary payments (expressed as a cash amount) and all "other benefits" (which could either be expressed in terms of a cash equivalent figure, or in terms of an adequate description of the benefit concerned, if that is more appropriate or practical).

It is not the intention that if the union does its best to provide those details it should fall foul of the law. There will, I am quite sure, be no question of prosecuting a union for a criminal offence in those circumstances. It is worth while bearing in mind that it is the criminal law that provides the sanction against failure in this area.

I hope that the noble Baroness will accept that the result of the amendment would be to introduce an unnecessary ambiguity and confusion into the proposed requirements. I hope that she will not pursue it.

Lord Wedderburn of Charlton

I should like to ask a question for a response either now or at a later stage.

I understood the noble Baroness to say that the words "other benefits provided to or in respect of" did not include benefits which were necessary for the job. Have Ministers taken advice from the Inland Revenue as to whether that situation would appear obvious to a tax expert? I think that it would not be obvious. Under another statute of 1985 which I dare not mention, persons who have to disclose their salary and, in general terms, benefits, must disclose sums paid by way of expenses allowance so far as they are chargeable to income tax, and the estimated money value of any other benefits; that is to say, expenses which are chargeable to tax, excluding benefits necessary for the job, for example, and any benefits received otherwise than in cash.

It was thought necessary to spell those matters out in Schedule 6 to the Companies Act 1985. It is always felt that companies Acts should spell out the exact meaning of expenses and benefits. I doubt, in the absence of authority against the argument, whether the phrase "salary paid to and other benefits provided" does not mean salary paid, because salary means taxable salary. It is "salary paid to" as well as other benefits in full. Then one has to explain what is needed for the job.

My noble friend on the Front Bench has made a cast-iron case that at first blush everything is included. If the noble Baroness, Lady Denton, states that it does not include all benefits and does not include the kind of thing that the amendment seeks to take out, she must, give some authority for that proposition. Such statute as I know is against that suggestion and the question is what the tax authorities would say in the light of the tax statutes, which I am sure Ministers must have looked at.

Baroness Denton of Wakefield

The noble Lord is leading us back down the avenue of comparing company law with other areas. We will note his words very carefully and take them into account.

Lord McCarthy

I should like to ask the Minister about a related point. I understood her to give an undertaking that there would be no prosecutions. Is that what the noble Lady said?

Baroness Denton of Wakefield


Lord McCarthy

How can the noble Baroness say that?

Baroness Denton of Wakefield

I stated that, if a union does its best to provide the details, it will not fall foul of the law.

Lord McCarthy

If it does its best, but its best is outside the law, how can the noble Baroness say that there will not be prosecutions, even though the union did its best?

Baroness Denton of Wakefield

One must bear in mind that it is the criminal law that provides sanction against failure to do what the law requires in that area. I was trying to be helpful to the noble Baroness.

Lord Stoddart of Swindon

I am puzzled as to the question of company law and benefits in kind. We are not dealing merely with a question of company law. Benefits in kind affect individuals. If one has a company car or even a car allowance, one is required to account to the Inland Revenue for that benefit. Part of it is taxable. A benefit in kind is not only a question of company law; it is also a matter of individual taxation and, therefore, is relevant in this case.

Baroness Denton of Wakefield

We appear to be going down two different avenues, one regarding Inland Revenue matters and one regarding the amendment. The clause to which I am speaking relates to the provision of information to the certification officer as part of the union's annual return.

Lord Stoddart of Swindon

Does the noble Baroness not understand that, in relation to individual taxation, part of the benefit can apply to work done and part can be considered by the Inland Revenue to be a benefit in kind, so that there can be a split benefit? One part of the benefit is necessary for the conduct of the work and the other part is a personal benefit. That is the matter that concerns me.

Baroness Denton of Wakefield

It is possible that the noble Lord is more knowledgeable than I am in the area of tax law but we are not dealing with tax law in this instance; we are dealing with trade union law, under which the rules and enforcement are different.

Lord Wedderburn of Charlton

With great respect to the noble Baroness, we are discussing a serious point. Noble Lords should ask Ministers to look at the matter again. We are concerned with the meaning of the Bill; whether "other benefits" includes all benefits or, as my noble friend on the Front Bench contends, benefits other than those that are necessary for the job.

The noble Baroness says that it is just a question of a return to the certification officer. Yes, it is under Section 32. But under Section 45(1) failure—wilful failure at any rate; and there is some argument about what that might be—to fulfil that obligation is a crime. It is an offence. It is rather serious for Ministers to give us assuredly an interpretation which some of us find rather odd about what might constitute the base for the criminal offence without, with the greatest respect, any authority, without a case, a statute or an argument which seems quite clear. I believe that the Committee would not be doing its duty on this occasion if we did not ask the Government—Ministers may refuse if they wish—to look at the point again because the whole of the beginning of Clause 8(a) begins to unwind. It is a most unsatisfactory clause, which could form the basis of criminal liability.

9.15 p.m.

Baroness Denton of Wakefield

I repeat what I said to the noble Lord earlier. We will take into account very seriously, and obviously with our colleagues, the matters he has raised this evening.

Baroness Turner of Camden

I am grateful for the last remarks of the noble Baroness. I would not anyway have pressed the amendment at this time. But I look forward to hearing what she has to say at Report stage. I very much support what my noble friends have said. This is an important question. I believe that we have had a very confusing response from the noble Baroness. I believe that we are entitled to know because, as has already been said, this clause puts us into the realm of criminal law. This would be a criminal offence if it were wrongly interpreted as a result of a part of the statute which is not at all clear and as a result of assurances which have been given which a number of us find rather difficult to follow. In those circumstances, and against the assurances given that there will be further examination of the issue and that we shall hear further about the matter when we come to Report stage, I shall not press the amendment this evening.

Amendment, by leave, withdrawn.

Clause 8 agreed to.

Clause 9 [Statement to members following annual return]:

[Amendment No. 31 not moved.]

The Deputy Chairman of Committees (Lord Airedale)

In calling Amendment No. 32, I have to say that were it agreed to I could not call Amendment No. 33.

Lord Wedderburn of Charlton moved Amendment No. 32: Page 14, line 5, leave out ("anything inconsistent with") and insert ("something materially different from").

The noble Lord said: In moving Amendment No. 32, perhaps I may also speak briefly to Amendment No. 33, although I know that my noble friend will wish to speak to it as well.

It is a very simple matter and I am sure it will not detain us long. The Bill speaks of "anything inconsistent" (page 14, line 5) in respect of the requirements of the section on statements that are made. A statement must not specify: anything inconsistent with the contents of the [annual] return". It is a simple point. The phrase "anything inconsistent" appears to include anything due to a misprint or some other mistake of a minor kind. Usually in statutes saying this kind of thing one would expect to find something different in a material respect or, as my amendment suggests, something materially different. My noble friend has a similar suggestion. Surely "anything inconsistent" should not stand by itself. There should be some relation to a material difference, which should then bring the clause into effect. I beg to move.

Lord McCarthy

There is nothing much for me to say about the amendment—everything has been said —except to say that we did have Amendment No. 33 which inserts after "anything" the word "substantially", so that we are talking not about "something materially different from" but about something substantial. We are indifferent to which of those two forms of words the Government find acceptable. If they could tell us whether they find either of them acceptable, that would be very helpful.

Baroness Denton of Wakefield

As currently drafted, the proposal in Section 32A requires the trade union to provide its members with a statement following its annual return to the independent certification officer. Subsection (4) provides that that requirement will not be satisfied if the statement to members specifies anything inconsistent with the contents of the return to the certification officer.

I appreciate the concern that, for example, a simple misspelling or a printing error might mean that a union failed to satisfy the requirements. Indeed, such concerns were fully expressed during the consideration of the clause in another place. Perhaps I may reiterate some of the comments that were made there about this provision. First, the provision gives trade unions the opportunity to use information which they have already compiled for the purpose of their annual return to the certification officer. That is a factor which would be welcomed by trade unions. Secondly, it is important to ensure that the information which a trade union gives to its members is consistent with that in the annual return. I believe that the provisions as currently drafted will ensure that such important consistency is maintained.

Finally, I hope I can reassure the Committee that an offence would not be committed if a minor or inconsequential inconsistency such as I have mentioned occurred. I do not believe that a court would consider that an offence had been committed on the strength of a simple mistake of the kind I have just described. Again I would say that a trade union which has every intention of honestly informing its members about its financial affairs has nothing to worry about with the provisions as drafted. I hope therefore that there is no need to press the amendments and that they can be withdrawn.

Lord Wedderburn of Charlton

We shall not press the amendments, but what is so curious about the Minister's position is that either form of the words we suggest, or indeed other forms, would make her argument secure. She prefers to rest on an uncertain definition in the clause. It is uncertain, however much she may assure us that there would not be an offence. It is less sure than either of the forms proposed. The Government have done that before, and we have lived with it, I suppose. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 33 not moved.]

Baroness Robson of Kiddington moved Amendment No. 33A: Page 14, line 48, at end insert: ("() The Certification Officer may authorise a trade union to modify the statement in subsection (6) (a) above, to the extent he considers it desirable to do so in the case of that particular union.").

The noble Baroness said: I am moving this amendment at the request of the Chartered Society of Physiotherapy, of which I am president. I should explain that the chartered society, as well as being a professional body incorporated by Royal Charter, is a registered trade union and is therefore subject to this legislation.

The Committee will appreciate that the way the statement is drafted at the moment permits of no amendment to reflect the individual circumstances of a particular organisation. It may well, therefore, involve a union in giving misleading advice to its members. For instance, the chartered society, along with other special registered bodies such as the occupational therapists—I am sorry that the noble Lord, Lord Ennals, who has put his name to the amendment, is unable to be present this evening—has no trustees and yet it is to be required to tell its members to complain to non-existent trustees. It is also not in the habit of referring to itself as "the union". It quite rightly prefers to use the title which has been granted to it by Royal Charter. The statement would prevent it from doing so.

What I am therefore proposing is that the certification officer should have power to allow trade unions to modify the general statement. Obviously, he will have to ensure that the general principles of the requirements in the statement are observed, but what is proposed would permit an organisation to delete any clearly irrelevant material, such as a reference to trustees when it does not have any, or to insert its own proper name in the statement.

In correspondence the Minister of State at the Department of the Environment suggests that, provided that the required form of words appears in the statement to members, the Society … will be free to take reasonable steps to help ensure that its inclusion does not confuse or antagonise members. This could include, as the Society suggests, making it clear that the mandatory form of words appears in the statement in order to satisfy particular requirements of the law". That, would mean that the chartered society would put out a statement including the words, "You can complain to the trustees of the society" and then having to have a subsidiary clause saying, "Sorry, but we have not got any trustees". It seems to me that that is too stringent a demand. Therefore, I am proposing that the certification officer should have power to allow trade unions to modify the general statement. In general, the demand for inclusion in the statement of trustees is inflexible. My amendment is focused on at least making the statement realistic and honest in the particular case of individual organisations.

I hope that the Government are able to accept this amendment because it does not alter the meaning of the statement; it just enables it to be true to the facts of the case. I beg to move.

Lord McCarthy

This is the most silly thing that we have had so far. I hope that the Government can correct it. It is Gilbertian and Pythonesque. It is the action of a Ministry of Silly Words that an organisation is told, as a way out of the situation that the Government have created, that it has to print the words, but underneath it has to say, "Don't worry, this is all rubbish". If ever there was a way of bringing the law into disrepute and if anything was ever completely daft, it is this provision. Surely the Minister can accept the amendment.

Lord Wedderburn of Charlton

Before my noble friend sits down, will he suggest to the Government Front Bench that they allow another document in a separate envelope?

Lord McCarthy

That may be giving the certification officer yet another task.

Baroness Denton of Wakefield

Perhaps the noble Lord will accept that, for the main part, I address my answer to the noble Baroness, to whom I listened with interest. I well understand the points that she raised. I know that she has been involved in discussions with my honourable friend the Minister concerned with this matter. The new statement which unions will be providing to members about the conduct of their financial affairs should certainly include the form of words set out in Section 32A(6) (a). Without requiring that, I fear that unions might not give their members sufficient information to help them identify the possible route by which they can pursue worries about the conduct of their union's financial affairs.

However, as has been remarked, we recognise that a mandatory form of words could not be expected adequately to cover the circumstances of all unions. That is why we have the provisions in Section 32A(6)(b), which allow a union to, include such other details of the steps which a member may take for the purpose … [which] the trade union considers appropriate". In addition, it will be open to a union to comment on the mandatory form of words in any way that it sees fit. I do not share the noble Lord's conviction that this is a way of adding something unfortunate. These freedoms, used properly by a responsible trade union, should easily enable it to avoid any risk, no matter how remote, that the form of words may confuse its members. So, if a union was, for example, one of the special registered bodies which uniquely are allowed to be trade unions while not being unincorporated associations, it could certainly tell its members that the form of words was being included to satisfy the statutory requirements but that it had no trustees if that was the case.

The idea of giving the certification officer some discretionary power to modify the form of words to be used by particular unions would be very problematic. By what criteria would the certification officer be expected to decide on whether any particular change would produce a result that was more desirable than the form of words sanctioned for use by Parliament? Could the certification officer completely change the form of words so that it became virtually unrecognisable? How would he deal with requests (which might be made by many unions) for him to exercise his discretion?

I know of no precedent in employment law for giving the certification officer the power to modify the use in documents of a form of words which has been enacted by Parliament. I am far from sure that he would want any such power. I certainly cannot see any good case for the particular discretionary power that the amendment proposes.

The noble Baroness said that members of the Chartered Society of Physiotherapy are not used to the society being described as a trade union, but the fact remains that the society has that status in law. Indeed, the society has applied for and holds a certificate of independence issued by the certification officer, and appears as a trade union in the list of such bodies published each year by the certification officer. As a trade union, the society gets certain benefits that are available only to such bodies, for example, the limitation on the amount of damages which can be awarded against it in certain tort proceedings and the right to enforce rules that would otherwise be deemed to be in restraint of trade. There are also tax advantages. Its members are also protected against dismissal and actions short of dismissal on grounds of union membership because the society is an independent trade union.

For those reasons, although I well understand why the noble Baroness tabled this amendment, I cannot be sympathetic to the argument that the form of words should be modified or modifiable for special registered bodies such as the society. I hope that the noble Baroness will accept that we have given very careful attention to the concerns which prompted this amendment. I hope also that, having heard my explanation, she will find it possible to withdraw it.

9.30 p.m.

Lord McCarthy

Before the noble Baroness sits down, she asked for an example. She does not know of an example, but the most precise example is in the instrument of amalgamation. The certification officer himself has powers. The legislation sets out in broad terms what the instrument of amalgamation must contain. The certification officer has issued guidelines to unions telling them what needs to be described in detail in an instrument of amalgamation. The unions send the words in and the certification officer agrees them, corrects them or modifies them. We are talking about long statements, all based on a series of principles, embodied in a statute and interpreted by that very officer.

Baroness Denton of Wakefield

I thank the noble Lord, Lord McCarthy, for that information. However, the Government still feel that we are taking the right path on this matter.

Baroness Robson of Kiddington

I find it absolutely staggering that a mandatory statement has to be included which contains an untruth, which is the situation here. The Chartered Society of Physiotherapy has no trustees, but in a mandatory statement it is supposed to send out to its members the notice, "Please complain to the trustees if you have anything to complain about". I cannot for the life of me understand why the certification officer should not have the right to alter that mandatory statement to comply with the facts of life. It is completely incomprehensible to me, but it is much to late to press the subject. I shall come back to it on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 34 not moved.]

Clause 9 agreed to.

Clause 10 [Investigation of financial affairs]:

Lord Wedderburn of Charlton moved Amendment No. 35: Page 15, line 18, leave out ("Certification Officer") and insert ("Commissioner for the Protection of Trade Union Members").

The noble Lord said: I feel the need to trouble the Committee with the amendment which the Committee will see is somewhat odd. It relates again to the certification officer. Its purpose is to remove the certification officer as the officer who appoints inspectors. It does not challenge the structure that the Government want. It raises the question of who should appoint and deal with inspectors. I have inserted the Commissioner for the Protection of Trade Union Members. I put that in just once, but if the amendment were carried that officer would have to be the subject of a substitution for the next few pages. I was advised that that was the right way to raise the issue in principle.

We have discussed the certification officer. I am conscious that the Minister has kindly said that he will reconsider his functions. I move the amendment because it raises further issues germane to the reflection into which he is now entering.

I shall try to summarise the points under two headings. The first relates to the issue that I raised previously, but it is in a new form here. When the certification officer is made the organiser of inspectors and the central point to which the inspectors report, he is in the middle of a most important area not just of civil but of criminal law. Without going through them, if the Committee will look at Section 37A(7) and Section 37B(6) it will find that the right to silence and the right to refuse to produce documents are raised. The person who is the counterpart to the union, or it may be officials, is the certification officer. So here I raise my previous point in a new form. Is it right that the person who is the administrative organiser of trade union lists and so forth, and is also the first instance judiciary in certain trade union litigation, including disputes about elections, political funds and amalgamations, should be in that position? That is a link with what went before.

The second point is a new one. In our curious constitution, of which when I look at written constitutions I become usually more fond, we appoint an inspectorate, and we make it responsible to a Minister. The Health and Safety Executive has taken over factory inspectors and, although they do not speak much about it, the last point of responsibility is the Secretary of State for Employment. The Wages Inspectorate, although the Government are phasing it out, is, in the last resort, similarly responsible. Similarly—I do not know whether I dare mention them, but I will—company inspectors, for investigations under the Companies Act, for many years have been appointed by the Secretary of State for Trade and Industry. Ultimately he or she bears the responsibility.

In all those cases, and in a number more, the Minister can be asked a Question in this place. It is a democratic responsibility which is ultimately at stake. I know of no precedent for inspectors appointed with powers which are equivalent to those of company inspectors under the Companies Act. The noble Lord may have a precedent but I know of none which is parallel to this case. I know of no inspector who is appointed by another functionary with statutory powers who, I apprehend, is not—although the matter is cloudy—a person for whom in this and in every respect the Minister would be answerable in the Chamber.

Perhaps, if I can engage the Minister's attention, I may give an example of why that may not always be the case. At a critical point the certification officer must decide whether a prosecution should be launched on the basis of an investigation. That is not a matter for which a Minister would normally be responsible in the Chamber. It is a decision more like that of an Attorney-General—indeed, we know that it is, because in Scotland the Procurator Fiscal and not the certification officer is involved. That is not a matter for which the Minister would be answerable in the Chamber. There are other examples in the clauses which are not so clear but which are questionable.

This is an extremely important matter. The Government have the place of the certification officer in trade union law so wrong that it bursts out of every seam of the Bill. We are dealing with a Bill which will set up a series of inspectors. Members of the Committee will notice that, because they are the counterpart of company law, I make no complaint about their powers. Inspectors of this kind seem a little over the top: nevertheless, here they are. But they are not responsible to any Minister. The Government dared not have them appointable by the Secretary of State. If they dare, why did they not have them appointable by the Secretary of State just as company law inspectors are appointable by the Secretary of State for Trade and Industry? Why? I suspect that there, are two reasons. The first is because the Government knew that that would kick up a fuss and that people would ask what they were doing. That really would be state control of trade unions and it would be on the face of the Bill instead of being merely a line under it. The second reason is because the Government believed that they had made the most wonderful discovery in the certification officer, who appeared to be able to do anything. In previous Bills he has done such a great deal that they thought they would include him in this Bill. I prefer the second explanation but I believe that we have an example of slovenly drafting.

Many other points are raised in connection with Amendment No. 35. However, I hope that the Minister will take the point about responsibility with him into the journey in the night which his reconsideration of the place of the certification officer will lead him. We hope that he will come back on Report with an answer which is better than the Bill. I beg to move.

Baroness Denton of Wakefield

The noble Lord, Lord Wedderburn, acknowledged that, in speaking to a previous amendment, my noble friend said that he would take away the issue of the role of the certification officer. However, perhaps I may explain why the Government believe that the amendment is inappropriate but acknowledge that the overall issue will be examined. The certification officer is a natural point of contact for individual union members anxious about possible financial irregularities. The independent certification officer is well placed to decide whether to exercise those powers. It appears to us that in those respects he is much better placed than would be the commissioner for the rights of trade union members.

We do not believe that the availability of the new powers need in any way damage the ability of the certification officer to fulfil the other important functions of his office. The certification officer already hears complaints from union members against their unions about a variety of matters. He is and has always been the enforcing authority who can prosecute unions for particular offences and has done so. I am pleased to say that none of those tasks has damaged the certification officer's independence, nor has it jeopardised his reputation among trade unions.

There is no reason to assume that the availability of those new powers for the certification officer need be detrimental to either his reputation or his ability to perform his present functions. Indeed, I am sure that his reputation will be enhanced, not least among trade union members to whom he will now offer significant assistance if they have justifiable concerns.

Indeed, we are fortunate to have in the certification officer an independent authority who is both well established and well regarded. His office has contacts with and knowledge of the trade union world which enable him to exercise these proposed powers effectively and independently.

As regards one small point which arose, the Health and Safety Executive is responsible to the Health and Safety Commission and not to Ministers. That point should be clarified. However, I hope that the noble Lord will not press the amendment this evening.

9.45 p.m.

Lord Wedderburn of Charlton

I shall not press the matter because the Minister is to reconsider it. However, I hope that two points in particular will be reconsidered carefully. First, the factory inspectors who are now in the general inspectorate are responsible to the Health and Safety Executive. In certain respects, the Health and Safety Executive is responsible to the Health and Safety Commission. However, I hope that the noble Baroness is not saying that the Secretary of State is not answerable for the actions of those bodies down the line. That would be an astonishing doctrine. The matter is not as clear as that, and it appears to be clear otherwise that in this case the Secretary of State would not be able to be pressed as regards any responsibility for the inspectors.

I hope that when we return to the matter on Report we can take the central point and examine it further; namely, whether the Secretary of State is ultimately answerable for the actions of those inspectors. The noble Baroness did not answer that question. I did not expect her to because this is to be reconsidered. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Turner of Camden moved Amendment No. 36: Page 16, line 27, leave out ("members of his staff or other") and insert ("competent members of his staff or other competent").

The noble Baroness said: This is a fairly simple amendment. The present clause which we seek to amend says that: The Certification Officer may appoint one or more members of his staff or other persons as an inspector or inspectors to investigate the financial affairs of a trade union and to report on them in such manner as he may direct". The Minister is to return to the question of the functions of the certification officer. However, the amendment seeks simply to ensure that anybody appointed as an inspector will be suitably qualified. In fact, we say that they should be: competent members of his staff or other competent persons". At present the Bill states that he may appoint one or more members of his staff. However, an inspector will deal with the financial affairs of the union, which can be a fairly complex and specialised matter. It seems to me important to ensure that the people so appointed are appropriately qualified and competent to do the job. For that reason we tabled the amendment. I beg to move.

Baroness Denton of Wakefield

I fully appreciate the concern of the noble Baroness that those appointed to carry out an investigation into a trade union's financial affairs must above everything else be competent to do so. I am glad we have common ground over this issue. However, let me reassure the noble Baroness that the provisions of new Section 37B, as currently drafted, already address this point. The proposed new Section 37B will give the independent certification officer the power to appoint one or more persons to investigate the financial affairs of a trade union. This provision gives the certification officer discretion to decide whom to appoint to conduct such investigations. He is, therefore, already making a judgment about the capacity of the appointed person to carry out the investigation.

I believe it is unnecessary to question the certification officer's ability to decide such matters. We must remember that the certification officer is independent, but his activities are funded by public money, and he is accountable in the normal way for his use of that money. If the certification officer knowingly appointed an incompetent person to conduct such an investigation he would be acting improperly in discharging his duties. The normal sanction for misuse of public money would therefore apply. Indeed, the threat of investigation by the Public Accounts Committee would surely deter the certification officer from appointing persons whom he did not consider to be competent.

We believe that the provisions of new Section 37B, as drafted, will ensure that any investigation of a trade union's financial affairs will be properly conducted by those competent to do so. I hope I have been able to reassure the noble Baroness.

Baroness Turner of Camden

I have made a careful note of the final sentence of the noble Baroness when she said that new Section 37B, as drafted, will ensure that people who are appointed will be properly qualified and competent to carry out investigations. I do not intend to press the amendment at this stage, but I am grateful for the opportunity to raise the point and to have the assurance that has just been given. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 10 agreed to.

Lord Wedderburn of Charlton moved Amendment No. 37: After Clause 10, insert the following new clause:

("Power of court to grant relief in certain cases

After section 43 of the 1992 Act there shall be inserted—

"Power of court to grant relief in certain cases.

43A.—(1) If in any proceedings for negligence, default, breach of duty or breach of trust against an officer or official of a trade union or a person employed as an auditor by the trade union it appears to the court that that person is Or may be liable in respect of the negligence, default, breach of duty or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case (including those connected with his appointment) he ought fairly to be excused for the negligence, default, breach of duty or breach of trust, that court may relieve him, either wholly or partly, from his liability on such terms as it thinks fit.(2) If any such person has reason to apprehend that any claims will or might be brought against him in respect of any negligence, default, breach of duty or breach of trust, he may apply to the court for relief; and the court has the same power to relieve him as if it had been the court before which proceedings had been brought." ")

The noble Lord said: This matter was discussed in another place but not very satisfactorily in my view or, I believe, in my noble friend's view. The nub of the issue is simply the following. Given that a number of new liabilities, and in particular criminal liabilities, are created in the Bill, I believe there should be here something which one finds elsewhere in a number of different forms; namely, a provision which allows the court, when it thinks that the official concerned or the union concerned has acted reasonably and ought fairly to be excused—I take the key words from the amendment—to excuse him or the union either wholly or partly. Those four final words also appear in the amendment. The liability would be construed on such terms as the court thought fit.

This is a simple type of clause. I have based it on a form of words taken from other legislation. I should have thought it was clear that, when one is increasing the area of criminal liability, a provision of this kind was necessary so that the courts did not always have to try desperately to reflect—courts sometimes have to do this with legislation which is insufficiently flexible —in what appears to be an inadequate sanction or penalty an offence which appears to be absolute. It is a useful device and I do not know of many complaints about it in the areas in which such provisions have operated.

The only reason for going further in moving the amendment, which I had hoped would receive a fair wind, is the possibility of receiving the same reply as was given in the other place. The nub of the Government's reply in the other place was that it was inconceivable that any such provision could possibly apply to any provision under the Bill. If I have not put that correctly the noble Baroness will correct me, but that is what I understand to be the nub of the Government's position.

Apart from the danger of ever stating anything for ever or never, which is always a very dangerous position to take in all affairs in life, it is also not true that under the Bill there is no conceivable case. For example, under the new Sections 37A and 37B there could be a situation in which someone refuses to produce documents which an inspector requires or does not do other things which the inspectors, in their investigations and under their powers, want him to do.

I accept that it is true that in all such cases most of the offences in the Bill relate to lawful refusals, or even occasionally fraudulent design. Those are not likely to be cases to which the amendment would ever apply. However, there are cases to which it could apply. It would be of benefit to the statute book and the courts to be able to measure the particular circumstances of an offence against criminal provisions by relation to flexible powers of this type. I beg to move.

Baroness Denton of Wakefield

I am grateful to the noble Lord for his explanation of the amendment. I share his horror of the word "never". However, I must tell the noble Lord that the effect of the new clause would seem to be either to confuse and distort the intended and proper operation of employment law or to create a novel and unjustifiable special protection for individuals who happen, for one reason or another, to have a particular relationship with a trade union.

As far as concerns employment law the new clause could mean that, where a court found that a union officer or official had breached a duty giving rise to an offence under Section 45 of the 1992 Act, it would then have to consider yet further issues about that person's motivation. However, Section 45(1) and (4) offences are already expressed with reference to motivation.

Thus Section 45(1) offences relate to circumstances in which a union "refuses or wilfully neglects" to perform certain duties. The Section 45(4) offences similarly refer to "wilfully" altering a document "with intent to falsify". So the new clause could distort the intended effects of the law by setting an impossible task. Its terms would require consideration of any plea of mitigation based on the proposition that the person concerned nonetheless acted honestly and reasonably.

As regards the new offences to be added to Section 45 by Clause 11, they already contain the appropriate protections to ensure that individuals should not be prosecuted (or convicted) where that should not happen. By way of example: first, Section 45(6), which provides that it is a defence against charges of contravention of requirements imposed by new Sections 37A(3) and 37B(4) for a person to prove that relevant documents were not in his possession and that it was not reasonably practicable for him to comply; and, secondly, Section 45(7), which provides that it is a defence for an official or agent of a union charged with destruction, and so on, of relevant documents to prove that, he had no intention to conceal the financial affairs of the trade union or to defeat the law". As expressed, however, the provisions of the new clause would be of even wider application. Proceedings for "negligence, default, breach of duty or breach of trust" could be brought against the classes of person described in the new clauses in a number of ways.

Such proceedings could be brought against a union official by a member of the union who claimed that some duty owed to him by that official, under the union's rule book, had been breached. It could also be quite possible that a union auditor might be the subject of proceedings for negligence brought by the union itself.

I remain unconvinced that there is any sound basis for concluding that, in such cases, the kind of special arrangements the new clause proposes would be justified.

Is there real evidence that the courts have not had proper regard to the circumstances of any particular case before reaching a decision in such proceedings? Is there an instance where the courts did not relieve from an individual a liability from which they concluded that he ought to be "fairly excused"? I quote from the new clause.

I understand that the noble Lord believes that there is indeed a case for a new clause. However, we are unconvinced. We should only enact such special privileges and protections where they can be fully justified; and nothing that we have heard today provides such justification. I hope that answer will give the noble Lord more satisfaction than the reading of the proceedings in another place. I hope that he will consider withdrawing the amendment.

10 p.m.

Lord Wedderburn of Charlton

The response is different from that in another place. I am not sure, with great respect, that it is any better. I understand that there are the offences to which the noble Baroness referred. I said that a number depend upon intention or even fraud to which the new clause might not apply. I referred—the noble Baroness did not—to offences such as refusing to produce documents to the inspector. Someone who was rather resolute in the wrong quarter might commit an offence in that respect. He might have got the position wrong.

The noble Baroness stated that one would have to consider the provision at a separate stage of the proceedings. The amendment provides that the court "may" relieve that person wholly or partly. It is purely a discretionary power. The provision is partly based upon the Companies Act. To listen to the noble Baroness one might think that administration of the Companies Act must be completely distorted and confused by such provision. That provision has existed for decades and no one has regarded it as improper. In fact, the courts regard it as useful. As I understood the noble Baroness, she said that the courts might have to deal with a few of the cases on their merits, taking into account all the circumstances. The court often has to do that when it passes sentence or imposes a sanction. Sometimes if one's offence is too absolute it is awkward because it looks as though a sentence is being imposed which is not up to the breach of such an absolute offence.

I simply seek to introduce a tiny bit of flexibility. I hope that the fact that it is novel in trade union law would not be a barrier in this Chamber. Most good ideas are novel. It is a good idea to use this provision as it is used elsewhere.

Perhaps I may say this to my noble friends on these Benches. This is a tiny matter which would help the administration of justice but, it is true, might sometimes allow a trade union official to be exculpated from a crime which might also apply to a director of a company or other officer. But the Government take up distorted postures of logic in order to resist the provision. They are prepared to argue throughout the night. I am not. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11 agreed to.

Clause 12 [Disqualification of offenders]:

The Deputy Chairman of Committees (Lord Cocks of Hartcliffe)

Clause 12, Amendment 38. Before calling Amendment 38, I should point out that if it is agreed to I cannot call Amendments Nos. 39 to 42 inclusive because of pre-emption.

Lord Wedderburn of Charlton moved Amendment No. 38: Page 22, leave out lines 10 to 20 and insert: ("45B.—(1) Where a person holding a position in a trade union to which this section applies is convicted of an offence under section 45, the court may in its discretion disqualify him from holding any such position

  1. (a) where he is convicted under subsection (1) or (5) of that section up to a maximum of two years, or
  2. (b) where he is convicted under subsections (4), (7), (8) or (9) of that section up to a maximum of 10 years.
(1A) A trade union shall use its best endeavours to ensure that a person convicted of any such offence shall not hold any such position during the period in which he is disqualified.").

The noble Lord said: It is in a way a shame that this important matter comes at this point of the evening. But I am sure that that will not stop the Committee considering it carefully, because it involves an important matter of human or civil rights. When a statutory provision says that someone should be automatically disqualified from a post or a position, or from some benefit which would otherwise be his or hers, it is doing something important. When it does it, as this provision does in the Bill, by way of an automatic disqualification, saying that given certain criminal offences someone will be disqualified automatically —and I accept that here we have a relationship with the previous amendment; it is the same thought—for five years or 10 years according to the criminal offence, I should like to ask the Ministers whether there is a precedent in any other area of the law (it certainly is not in company law, but it can be anywhere in history) in English legal history of automatic disqualification of this character in the Bill?

If a trade union official were convicted, the court might think that there were mitigating circumstances to some degree. Under the previous amendment, which we can put aside, it could still say, "Well, we will amend and modify the penalty". But it cannot do that here. If it convicts, the disqualification is automatic. Suppose the court gave a suspended sentence, the disqualification would still be automatic.

Of course this is legislation by reference, about which we are all now experts, but it is misleading. For example, it refers to Section 45(1), but Section 45(1) includes an enormously wide area of offences relating to accounts, refusal to produce rules, and indeed superannuation schemes. Then again we have the refusal of the demands of the inspectors. The offences are wide, and the automatic disqualification is not justified, because there can be cases—I put it no higher than that, but as high as that —where someone who is convicted of one of these offences does not deserve, and the court may say does not deserve, to be disqualified from taking any part in a trade union executive for 10 years.

I am not sure how the Government justify to themselves that imposition of 10 years. I now quote the Company Directors Disqualification Act 1986 because it is relevant on this point. In that Act the maximum disqualification for the most heinous fraud, which will have brought about loss far more than any possible fraud under this Bill, is 15 years, with a minimum of two years. Most of the others are five year offences. Here I have said that surely the more minor offences should have a disqualification of two years, and very well, if the Government must, up to a maximum of 10, although that seems to me a long time in respect of these offences. But I accept that the subsection (4) (7) (8) or (9) offences, as in my amendment and as set out in the Government's Bill, are serious offences, and so I have left the Government with that 10 year maximum.

The main point is that there must be a way—and here I speak in respect of my noble friends' amendments which follow mine—there must be the possibility for the court to have discretion in respect of disqualification from a civil position in an organisation, especially where it decides that the defendant is guilty but that the right penalty is a short sentence, a small fine or a suspended sentence. I beg to move.

Baroness Turner of Camden

I support the amendment moved by my noble friend. As he indicated, I put down a similar amendment, but his does rather better and more comprehensively what my noble friend Lord McCarthy and I sought to do in our amendments. Amendment No. 38 seeks, as ours do, to ensure that the court has discretion about disqualification and should have such discretion for periods of up to a maximum of two and, in the more serious cases, up to a maximum of 10 years. I share his view about the length of time: 10 years seems a long time, but the amendment would provide for up to a maximum of 10 years in the more serious cases.

If we do not have an amendment on these lines, it will mean that the court has no flexibility at all when it considers those offences which may be of various kinds, some perhaps not large at all. Some of the minor offences certainly do not justify the period of two years which is provided for without any flexibility. It seems sensible to me that, if the issues are to go before a court, flexibility should be available to that court when judging them.

I also like the last paragraph in my noble friend's amendment, which states that: A trade union shall use its best endeavours to ensure that a person convicted of any such offence shall not hold any such position during the period in which he is disqualified". The use of the term "best endeavours" is reasonable in the circumstances. Unions are large organisations and it is conceivable that someone could slip through the net and stand for election and even be elected, particularly if there is a long period of disqualification like 10 years. Therefore, simply to say that the trade union should use its best endeavours in such circumstances seems to be reasonable and suitable, in view of the provisions of the legislation. I support my noble friend's amendment.

Baroness Denton of Wakefield

Perhaps I may reassure the noble Lord, Lord Wedderburn, that we recognise that he has raised a very serious issue and, whatever the hour of the evening, we would not treat it lightly. However, perhaps I may also say that I note that, when he brings forward a new proposal, he takes credit for it being novel; when we bring something forward, we have to provide a precedent.

The amendments would produce a quite unworkable and inappropriate system for the application of disqualification from union office. Conviction for a Section 45 offence is a matter for the criminal law courts—specifically, magistrates' courts (in England and Wales). Such courts are properly equipped to deal with prosecutions for such offences and to determine when they have been committed. They are, however, not best placed to make decisions about whether a person should be disqualified from holding any of the offices to which the new disqualification penalty will relate.

In passing, I point out that in practice offences under Section 45 are prosecuted by the certification officer, and his record shows that he will not prosecute for any trivial or technical offence.

All the offices are ones which the law requires to be filled through election by union members and it is to the civil courts, not the criminal courts, that a member would complain if, for example, he believed that his union had not satisfied its statutory duties in respect of such elections. The idea that it should be up to any court at its own initiative to impose disqualification from union office on any person would be fundamentally inconsistent with the present law on election to union office. Under that law, it is up to members to bring complaints to the courts if they believe that their union has breached its duties in respect of election to union office. The proposed provisions in Clause 12 are consistent with that principle. The provisions in the amendments are not.

Establishing fixed periods for disqualification, as opposed to the variable system envisaged by the amendments, has important advantages. The proposed fixed periods of five and 10 years achieve three things.

First, they distinguish between the relative gravity of the offences which result in disqualification from office. Secondly, they relate the disqualification period to the statutory election requirements, since the latter provides for election to union office at intervals of no greater than five years. Thirdly, they avoid the need for a court to address the question of what period of disqualification is appropriate in any given set of circumstances. That, in turn, will also give a member who is contemplating such proceedings greater assurance as to the nature of the outcome.

I understand the reason behind the noble Lord's amendment and I hope that he will understand that we do not reject it lightly.

Lord Wedderburn of Charlton

That reply shows no concept of how disqualification works in other areas. I understand the opposition of the noble Baroness to the amendment. My amendments have often been called misguided and, more frequently, wrong, but it is quite another thing for them to be called unworkable. I defy the noble Baroness to show that the amendment is unworkable. One of the reasons why it is not unworkable is that precisely that kind of discretion, which is what the noble Lady seemed to dislike most, operates under the Company Directors Disqualification Act 1986. Under that Act the court has a discretion in regard to disqualification.

Noble Lords will note that it is a proper, general principle of the law of associations—namely, that, if someone is to be disqualified and is to lose his civil rights, then it is a sensible idea to give the courts some kind of discretion as to the period of disqualification.

I hope that I did not hear the noble Baroness correctly. She appeared to state that, because the officials concerned were elected, it was fundamentally contrary to the system of election to have a system of discretionary disqualification. However, the Bill states that it is permissible to disqualify the same people so long as it is an automatic disqualification. What do the Government mean by saying that there cannot be disqualification at discretion because the officials are elected, but that there can be automatic disqualification?

I accept that we are not discussing trivial crimes. The prosecution would be under Section 45 for the most part. It is not true to say that members would always go to the civil courts in respect of disagreements with their unions. One knows of cases where members have tried to interest the prosecuting authorities in matters concerning particular officials. The Government have not taken on board the kind of frontier that the Bill crosses. The Bill illustrates that, wherever a choice has to be made, the choice is made against the trade union; it is an attempt to break down the trade union, to make the union lose funds and its capacity to operate strategically for its members. That is why the proposal is for automatic disqualification. There is no reason otherwise not to have a discretion in the court.

I have often criticised members of the judiciary but I would be very sympathetic to them or to magistrates in trying to operate such a provision. They will see someone in front of them and say, "We are very sorry, but you wilfully refused to produce the document for the inspector, and, therefore, we have to find you guilty; we shall fine you £100". He or she will say: "But that means that I am disqualified for five years". And they will say: "We're very sorry. We can't do anything about it". One will not get much respect for this law on that basis except among those who want to do down trade unions.

Lord Hacking

Before the noble Lord withdraws the amendment, perhaps I may briefly intervene. I speak as the only Back-Bencher who is left on this side of the Committee, and almost the sole Back-Bencher, apart from the noble Lord, Lord Wedderburn, in this Chamber at all.

The point raised comes as somewhat of a surprise to me, though I have been practising law for nearly 30 years; and that may be of particular surprise to the noble Lord, since he instructed me in law before that period of 30 years had started. It has been my experience time and time again that mandatory sentences in which the courts do not have discretion are unsatisfactory. Indeed, it usurps the essential role of the court, and that is to mete out justice according to each case in front of it according to what it believes to be the right standards of justice for that case. For that reason, I am disturbed to hear my noble friend's answers to Amendment No. 37 and now to Amendment No. 38. I rise to my feet only to express an anxiety. I hope that my noble friend will hear it from me, and indeed from other Members of the Committee.

Lord Wedderburn of Charlton

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 39 to 42 not moved.]

Clause 12 agreed to.

Viscount Goschen

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.