HL Deb 29 April 2004 vol 660 cc901-32

12.12 p.m.

Baroness Farrington of Ribbleton

My Lords, I beg to move that the House do now adjourn during pleasure until quarter past twelve.

Earl Ferrers


Baroness Farrington of Ribbleton

My Lords, I fear that the Whip on duty made an error of judgment about timing.

Earl Ferrers

My Lords, I thank the noble Baroness for such a courteous self-reprimand.

Baroness Farrington of Ribbleton

My Lords, I beg leave to withdraw the Motion.

Motion, by leave, withdrawn.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)

My Lords, I apologise for the slight delay.

I beg to move that this Bill be now read a second time. The aim of the Government is a stable and thriving labour market characterised by high employment, flexibility and choice, and a constructive climate of employment relations.

Through the Employment Relations Act 1999 and other legislation, we have put in place a framework for fair employment and fair pay, ensuring protections for the most vulnerable workers. We are moving from competition based on low pay and low standards to competition based on best practice, high performance and a committed, motivated workforce.

Vital to the success of this strategy has been a shift in workplace culture. We have worked with our key stakeholders to foster and support a better climate of employment relations based on partnership between employers and employees in the workplace. Over the past seven years we have seen a move towards more dialogue, and more productive workplaces. A new trend is being established on which we want to build.

The evidence shows that our policies are working. Better employment and trade union rights have not jeopardised jobs or led to industrial unrest as predicted. Quite the opposite. The UK now has the highest ever level of employment and the growth in jobs goes from strength to strength. The number of people in work at February 2004 was 28.3 million, up 183,000 on the previous three months and up 318,000 on a year ago.

We have created an environment in which business can grow and prosper. Job creation in the private sector is strong, especially in the retail, distribution, hotel and restaurant sectors. Employment in small and medium-sized enterprises has risen by over 637,000 since 1997. It is now our task to build on these achievements, moving towards high performance workplaces and worthwhile jobs.

It is against this background that I am pleased to stand before the House today to debate the Employment Relations Bill. The Bill draws together the key elements of our strategy and builds on the success of the 1999 Employment Relations Act.

I shall now outline to the House the ways in which the Bill will achieve this. We want high performance workplaces where employees are informed, involved and committed to the success of their business. We believe that the best employers thrive through good employment conditions and good workplace relations. Many of our most successful companies already work in partnership; for example, companies such as the Compass Group and Legal and General. The information and consultation directive, which the Bill implements, will ensure that this standard will apply across the large and medium workplaces. Employees will have the right to be informed and consulted on key decisions affecting their future. Stories about employees hearing of redundancies by text or on the radio have abounded in the media. We do not think that that is an acceptable way to conduct employment relations and neither do the best companies.

Draft implementing regulations, which the Government have already published, are based on a landmark framework agreement between the CBI and the TUC. We have also consulted extensively with other stakeholders on the new provisions, first on the principles of information and consultation, and again on the detail of the draft regulations, as well as holding a series of roundtable discussions around the country.

We have been mindful not to ride roughshod over existing arrangements or to prescribe a "one size fits all" solution. The draft regulations will enable firms to tailor arrangements that suit their needs. Employers will of course be free to manage and to take decisions as they see fit, but the opportunity for ongoing consultation will lead to better decisions and help the process of change by creating a climate of trust and co-operation.

I turn now to statutory recognition, which is dealt with in Part 1 of the Bill. The Employment Relations Act 1999 was a landmark piece of legislation. It enshrined in law the cornerstones of our fairness at work agenda—fair minimum standards, a new culture of partnership and family-friendly working. At the centrepiece of the 1999 Act was a new procedure for trade union recognition and derecognition in the workplace, where the majority of the workforce so choose. The Government gave an undertaking to review the operation of the 1999 Act and in July 2002 we delivered on that promise with the launch of a detailed and wide ranging review.

It was said at the time that the new recognition procedure was introduced that it would be unworkable and would lead to disputes. I am happy to report to the House that the review of the 1999 Act shows that quite the reverse is true. The statutory recognition procedure has been a resounding success. We wanted it to encourage parties to resolve issues voluntarily. That is exactly what has occurred. More than a thousand deals for voluntary recognition have been agreed between employers and unions since 1998. In contrast, the Central Arbitration Committee had made 89 declarations of statutory recognition by the end of March 2004.

The statutory procedure is workable for both employers and unions and has enabled the timely settlement of recognition applications. Contrary to the gloomy forecasts that the new procedure would encourage strike activity and jeopardise jobs, stoppages from industrial disputes are at their lowest since the 1920s.

We have therefore concluded that the overall structure of the procedure, its criteria and voting thresholds, are sound. There is no case for change.

However, the review has identified a number of areas where the procedures could operate more efficiently and successfully.

Part 1 also contains important new measures to prevent the intimidation of workers during the period of recognition ballots, whether by a union or by an employer. Intimidation has been a problem in only a small number of cases to date, but we believe it is important that we take action to stop this type of reprehensible behaviour growing and undermining the success of the statutory procedure. There are two elements to our approach. First, the Bill ensures that access meetings between the union and the workers in the bargaining unit during the ballot period are private.

Secondly, we are importing tried and tested standards of general elections into recognition ballots. The Bill places a new duty on both employers and unions not to engage in improper campaigning activity. That will ensure that unions and employers cannot induce, coerce or threaten workers into voting a particular way or use undue influence to affect the outcome of a vote. These measures are fair and balanced. They send a clear message to both employers and unions that intimidatory behaviour is unacceptable and will not be tolerated.

The Bill contains a power for the Secretary of State to make regulations setting out what the remedies for breach of these provisions should be. It is our intention to bring forward amendments that will set out the remedies on the face of the Bill. We have taken the opportunity to consult fully with employer organisations and unions before finalising these policies.

I turn now to another major aspect of the Bill: the power to make money available for the purposes of union modernisation. I know this issue has attracted some criticism in the other place. So let me spend some time setting out the background and purpose of the fund.

We believe that unions have an important role to play in society. They are the collective voice of millions of workers throughout this country and they have a vital role to play in taking forward partnership at work. Modern efficient unions working closely with employers can help to encourage high-performance workplaces and a motivated productive workforce. Unions like other organisations need targeted support to enable them to adapt to the changing labour market, to modernise their operations and to meet the needs of their increasingly diverse membership.

The union modernisation fund will help them on the path to achieving that. We are talking about a relatively modest sum of money—£5 million to £10 million—spread over several years, to support innovative projects that would not otherwise take place.

I should like to set the record straight at the outset and say that the fund is not to be used to support recruitment drives by unions or their day-to-day activities; and it cannot be diverted for political purposes. The law on the use of political funds is clear. Unions are not permitted to spend money on political objects—including the making of donations to political parties—unless they have a separate political fund for that purpose. The law prevents them using money from their general fund for such purposes or from transferring money from that fund to their political funds. Monies allocated from the union modernisation fund will go into unions' general funds and therefore will be clearly ring fenced.

The allocation of funds and the monitoring of their use will be carefully controlled. We envisage that it will operate on similar lines to the partnership at work fund. If so, unions will be asked to bid periodically for funding, and their applications would be assessed against clear selection criteria. The process would be overseen by an independent supervisory body that could advise Ministers on the ranking of projects, and, more generally, on the fund's overall operation. We would from the outset develop a clear evaluation strategy to measure the effects of the fund and ensure it achieves its stated objectives.

We intend to issue detailed rules on the fund for consultation with all stakeholders in the autumn. Informal prior consultations with key stakeholders have already begun.

I want to say a few words about the other key elements of the Bill. Part 2 deals with the law on industrial action. The evidence from the review is that on the whole the law on industrial action works well. All parties to a dispute want a speedy resolution; and the evidence is that the present law supports that. The review of the 1999 Act concluded that the eight-week protections are working adequately. Analyses by the Office for National Statistics indicate that 93 per cent of all industrial action lasts for less than eight weeks. The essential features of industrial action law will therefore remain the same. However, there are areas where we believe the law could be usefully clarified.

Noble Lords may be aware of the regrettable events at the Friction Dynamics plant at Caernarfon. Striking workers were prevented from returning to work and subsequently sacked by their employer. Although an employment tribunal found that they had been unfairly dismissed, the workers and their families have suffered unnecessarily; and we do not wish to see history repeat itself. The Bill clarifies that days when employees on lawfully organised official strike action are locked out from their workplace do not count towards the eight week protected period for striking workers.

It emerged from the Friction Dynamics case that the employer merely paid lip service to the procedures for resolving disputes. We are taking measures to ensure that does not happen again by clarifying the reasonable steps which employers and unions are required to take to resolve a dispute.

The review of the 1999 Act also concluded that the current law on information, which unions are required to provide to employers prior to industrial action, could be simplified and clarified. The Bill contains provisions to address that.

Part 3 deals with an important set of rights, which stem from the 2002 European Court of Human Rights' judgment in the case of Wilson and Palmer. The judgment concluded that UK trade union law breached Article 11 of the European Convention on Human Rights. We take our international obligations very seriously. We have examined the judgment in detail as part of the review and consulted with stakeholders on our proposals to amend the law. The provisions will make it unlawful for employers to offer inducements to union members to relinquish key union rights. They provide a clear entitlement for union members to use the services of their union, and will ensure that workers as well as employees are covered by these essential protections. We have also safeguarded key business concerns and protected the ability of employers to offer enhanced terms to key workers.

I draw the attention of the House to another very important provision in Part 3, which deals with the racist infiltration of unions by far right extremists. Unions are dedicated to the promotion of tolerance and equality. The actions of those who seek to undermine unions and use them as a vehicle to promote racism and xenophobia are deplorable. There is no place for such views within unions. I am pleased that we are bringing forward measures to address that. The Commission for Racial Equality supports those measures.

I have set out some of the Bill's key features. I shall mention very briefly some of the other measures. We are introducing a set of provisions to improve enforcement of the national minimum wage, as a result of a small consultation exercise that we carried out last summer. We propose to bring forward one further measure to enable enforcement officers to withdraw or amend enforcement and penalty notices where they have made an error or new evidence has come to light.

The Bill also clarifies the right to be accompanied at disciplinary and grievance hearings. It makes improvements to the procedures of the certification officer and will streamline union operations, as recommended by the Better Regulation Task Force.

Finally, we propose to bring forward an amendment to the Bill, which will provide protections from detriment and dismissal for employees who undertake jury service. The Bill will further our partnership agenda and build on the solid foundations laid down in the Employment Relations Act 1999. It does not make radical changes to the balance of trade union and employment law but brings forward a set of sensible provisions, which mainly improve the operation of existing legislation.

We recognise that there are parts of the Bill about which both employer organisations and unions have concerns, but the measures being taken forward are based on extensive consultation. Overall, we believe that we have got the balance right. The TUC has welcomed many of the changes proposed in the Bill and the CBI has broadly welcomed the outcome of the review. It states: The Employment Relations Act was intended to encourage the development of more dialogue and less confrontation at the workplace. The CBI strongly supports such objectives and the broad thrust of the Government's Review". There is a wealth of expertise and experience in industrial relations matters in this House. I look forward to the debate on the Bill and to a constructive and detailed examination of it in Committee. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Lord Sainsbury of Turville.)

12.30 p.m.

Baroness Miller of Hendon

My Lords, this is the fourth major Bill on employment relations that the Government have introduced since they came into office. That is, without all the references to the subject in other Acts, and to say nothing of statutory instruments too numerous to count.

Before us today we have another stage in the drop by drop dismantling of the employment legislation enacted under the previous government, which brought order out of the chaos of industrial relations that had resulted in the United Kingdom being rightly described as the "sick man of Europe".

The Government are now introducing the Bill, which is very largely intended to take another slice off the salami of the industrial relations regime that served the economy so well during the 1980s and most of the 1990s. The Secretary of State told the other place: The recognition arrangements that we put in place in the Employment Relations Act 1999 have been a resounding success".—[Official Report, Commons, 14/1/04; col. 823.] On the American principle of, "if it ain't broke, don't fix it", why are we being asked to tinker with the recognition arrangements in the Bill? Answering myself—I believe that it is further to strengthen the hands of the unions.

Perhaps I may remind your Lordships that the 1999 Act is based on the Government's White Paper, Fairness at Work, which was the subject of detailed and widespread consultation. Barely had the ink dried on the Act when, on 11 July 2002, the Government announced a review of it, and this Bill is the consequence. As originally presented to Parliament, this Bill contained 45 clauses and two schedules. As my honourable friend the Member for Edddisbury predicted at Second Reading in the other place, it could grow upwards and outwards rapidly. Indeed, it did. It began with 45 clauses, but like Topsy, it has just "growed" to 55 clauses.

Let me make it clear that it is not our view that everything in this Bill is bad, or that everything is unnecessary, as the noble Lord often tells me. On the contrary, just like the Curate's egg, it is quite good in parts. First and foremost, we join the CBI, the British Chambers of Commerce, the Institute of Directors, and others, in welcoming what is not in the Bill—the decision not to extend the union recognition rights to small businesses. I suspect, from remarks made by some Labour Members in the other place, that might be just a temporary reprieve until the Government introduce yet another employment Bill. We welcome the fact that pensions are not included in this legislation, and the fact that the eight-week time limit of protection against dismissal of strikers has not been extended, except for adding on lock-out days.

The CBI, in giving a limited welcome to the Bill, points out: The current legislation which is still new … appears to be working quite well". It does, however, have some reservations about certain of the Bill's provisions, on which we shall be seeking clarification at a later stage. They include the proposed new consultation proposals. Why are these provisions, which are based on an EC directive, given effect in the Bill, rather than by a statutory instrument, as I believe is the usual practice? Also, my impression is that the Bill goes further than is required by the directive. Perhaps the Minister might comment on that when replying to the debate. If he cannot do so now, as he courteously offered to discuss any problems that I have in a meeting before the next stage, perhaps we can put that on the agenda.

The CBI, based on its members' experience, says: Recognition campaigns at the workplace are divisive and detrimental to performance". The CBI has serious concerns that new proposed duties on employers to supply information to the unions, and the power of the Central Arbitration Committee to end the period for agreement about bargaining units, seriously erode the time frame for employers—and to what end? What abuses of the status quo are these two further turns of the screw designed to remedy? Perhaps the Minister could address that when he replies.

We are also concerned that there is no qualification for the duration of union membership before a worker is qualified to be counted in a demand for recognition. It seems that he need not even have paid a subscription. We shall seek to remedy this potential abuse but we trust that in the interest of fairness the Government and the unions would agree that this is a proper safeguard. The Engineering Employers' Federation suggests: Each of the proposed changes may, in themselves, be relatively small, but the cumulative effect of all of them is potentially quite significant". For example, the first part of the Bill, expanded into 20 clauses, deal with union recognition. Clause 10 amends two paragraphs of Schedule A1 to the 1992 Act by altering the words "pay, hours or holidays", to, all of the following: pay, hours or holidays", which the Bill now says will be called "the core topics". I should be grateful to hear an explanation of the significance of this distinction, which appears to be a distinction without a difference.

Of greater importance is the introduction of postal voting, for, workers absent from ballot at workplace". On the face of it, it might appear to be reasonable for workers who do not attend at the designated workplace—itinerant workers and workers seconded to other places of employment to be able to participate in the ballot. That would be subject to the caveat that the CAC should be responsible for ensuring that there are adequate precautions against fraud. It seems to me that some sort of cat was inadvertently let out of the bag at Second Reading in the other place. The honourable Member for Warrington, North asked the Secretary of State to, look once again at the rules on trade union recognition ballots, as, in effect, they count abstentions as no votes". The Secretary of State replied that, we shall be tightening up on that aspect … under the current Bill".—[Official Report, Commons, 14/1/04; cols. 823–24.] I am advised that, in fact, Clause 7 does no such thing. Giving voting facilities to workers who it is known will be absent from the workplace is perfectly proper, but placing an interpretation either way on abstentions is something else and is entirely unacceptable. The only legitimate interpretation that can be placed on the fact that a person did not vote is that he did not vote. I invite the Minister to make it clear that that might have been an off-the-cuff remark of his colleague, not an interpretation of the Act by the Government. Such a clarification by the Minister today would save us the trouble of seeking it in an amendment.

I note that the CAC does not have procedural rules for its operations. This too is unacceptable, and we shall be calling on the Government to promulgate them, so that this powerful body has operating rules, like any other quasi-judicial body.

I will talk about the three important provisions that were introduced into the Bill during its passage through the other place. One was the change of the law as to dismissal during strike, which I have already mentioned. However, we will look to the Government to provide a clear legal definition of the word "lock-out", as distinct from any rhetorical term of abuse that is sometimes used in the course of a trade dispute.

Secondly, in Committee in the other place the Government introduced new provisions by means of convoluted amendments to the 1992 Act, which in effect enable unions to expel members for racism or for support for the BNP. We do not disagree with these worthy objectives, but care must be taken to ensure that this powerful weapon is not used by an unscrupulous leadership to get rid of political opponents, or even those who might campaign in opposition to their policies. We will need to look carefully at the clause, simply to see that it does not go too far, or further than the Government intend.

The third important provision, in Clause 51, is the provision of a hand out. The Minister said that it would be between £5 million and £10 million, but I am advised that it is probably £10 million to £15 million. That amount is just to start with, with possibly more to come. It will be given to the trade unions for what the marginal note euphemistically calls "modernisation". There is no ceiling or time limit on this open-ended fund. When you look at the possible uses of that money, your Lordships will see that it need not have anything to do with modernisation, for it can be used to, improve the carrying out of any of its existing functions". Does this include the provision of strike pay? It can be used to, carry out any new function". How wide is the word "any"? Does it include political campaigning? I heard what the Minister said in his opening speech, but the Bill says that it can be used to, increase the range of services it offers to persons who … may become members". That does not look as if it cannot be used for recruiting—in other words, to enable unions to offer inducements to persons to join the union.

Many noble Lords might have read today a report of Digby Jones' speech to the Institute of Directors conference yesterday, where he argued that taxpayers' money should not go to what he described as a lobby group. I think that he said something like an "irrelevant lobby group", but I was being more polite than that. The fact is that not just that subsection, but the whole of the so-called modernisation money could be nothing much more than a blatant bribe, unless all these points are clarified. In so far as a union uses the money, which it would have provided out of its own funds for its normal union services, by means of using it that way if they are allowed to, by means of some creative book-keeping, it would not be difficult to find that the taxpayers' money was recycled into political donations to the Labour party.

Perhaps it is indicative of the tenor of the Government's altitude to even-handedness in this Bill that when my honourable friends in the other place introduced an amendment against intimidation of employees in recognition ballots, it was negatived, and I believe that it was whipped by the Government. I note again what the Minister said today, and I am happy for him to correct me on that point if I have been misinformed about the result of the vote on that amendment. If it is not so, we will be introducing a similar amendment in Committee. But on the matter of intimidation, the Government have introduced Clause 28, described in the marginal note as, Inducements relating to collective bargaining"— which has the result of repealing Section 17(4) of the Employment Relations Act 1999. The Minister has actually mentioned that. That subsection permits a worker to make a separate agreement with his employer, whereby in return for performing additional services with a monetary value he can receive extra pay. The Government have used the cases of Wilson and Palmer before the European Court of Human Rights as their justification for that. The Minister did say that the Government do, of course, obey European rules and results of courts, and so on.

But the Wilson and Palmer cases related to agreements banning the workers—banning them—from trade union membership. Section 17(4) provided—anticipating the ECHR decision by five years—that such an agreement was excluded; I know that well. After the subsection was passed, the TUC denounced it and demanded that what it called "the Miller amendment" should be repealed. I was immensely flattered because no one has ever named anything after me, let alone an amendment—especially not one on trade union law. But it is not for that reason that we want to see that we do something about that, because that was a negotiated compromise with the Government, which was reinstated and accepted by the Government without a Division. I will not take up any more time on that now. We will doubtless have an interesting debate about that later.

The Bill contains provisions about information and consultation in the workplace, which implement another EU directive. The cost of that over a 10-year period is estimated at £258 million, although the IOD suggest it could be £430 million. The Birmingham chamber of commerce reported a survey among its members showing, that 76 per cent were very concerned at the additional cost on business. The noble Lord, Lord Sainsbury of Turville, described the provision as simply the imposition of new European work rules. But they are yet another instance of directions being given on how UK companies should run their businesses and in fact could interfere with business decision-making and give scope for all kinds of over-the-top rules in the workplace.

My honourable friend the Member for Eddisbury complained, quite rightly, that the Government will be adopting the job-destroying employment model that undermines labour flexibility. Earlier this month, Germany, once the engine of European industry, reported yet another increase in unemployment, which now stands at 10.4 per cent. So I hope the Government might look at that and see whether they really want it that way.

Perhaps it is not surprising that a survey last January reported that a third of 500 workers surveyed were worried about losing their jobs. Had they known that, 100 per cent of the workers at the 200-year-old factory of Terry's of York would have expressed similar fears since their jobs are being exported next year, including some to eastern Europe. That worry transcended worries about levels of pay or long working hours. Is it not the case that these regulations, along with the many others imposed from the EC, will do nothing to give people the confidence they need that they will be able to remain in work?

In conclusion, the Bill has been most extraordinarily difficult to prepare for because it does not contain free-standing provisions that can be examined on their own merit. I see the Minister is nodding —I hope in agreement. It is a large series of bit-by-bit amendments to another Act, which was a consolidating Act, which we may well need after the Bill is passed. The Bill is a series of tweaks, adjustments and fine-tuning, and substantial amendments of that other Act. Yet, despite the considerable impact and importance of those adjustments, the meat on the Bill is still not clearly visible, and it needs to be picked out from the effect on the other Act. That is illustrated by the particularly obscure Explanatory Notes, which compare most unfavourably with the outstandingly high standards of helpfulness of the notes usually prepared for Parliament by the DTI. I certainly do not blame the officials—I can imagine that they had difficulty looking at all these Bills.

When the Bill reaches Committee we shall certainly give it the careful attention it needs and which the Minister said he welcomed, especially as the procedures of the other place often deny giving the same kind of scrutiny that we are able to provide in this House.

12.45 p.m.

Baroness Turner of Camden

My Lords, I thank my noble friend the Minister for his introduction to the Bill. There is much to welcome in it. Trade union recognition is important, and means by which it can be achieved should be set out clearly in legislation.

Furthermore, individuals who want to belong to a union, to benefit from union services and to be represented by a union should not be discouraged from achieving these very legitimate aims by employers who wish to avoid dealing with their employees in a civilised fashion.

Part 1 of the Bill sets out the procedures by which unions may acquire recognition and the right to bargain collectively for their members. The procedures have already been explained by the Minister in his opening speech. They are of great interest to me, since much of my union career was spent dealing with recognition issues. The union of which I was assistant general secretary—then called ASTMS, now AMICUS—recruited and organised in private industry as well as in some public services. In many of the industries concerned—notably financial services—there was often no tradition of union recognition, except through what were sometimes house unions.

In the 1970s, a number of these organisations joined the union, and we then had to secure recognition and collective bargaining rights from employers unused to dealing with unions and often extremely reluctant to do so. An earlier Labour government did introduce legislation—the Employment Protection Act—which was of assistance to unions, but that disappeared under a swathe of legislation introduced by subsequent Conservative administrations.

I was therefore very interested in the new procedures proposed in the Bill and I applaud the Government's intention to ensure that the procedures are clarified. I must say however, speaking personally and based on my own experience, that they do seem to be rather complicated. Part 1, which is almost entirely concerned with recognition, takes up about 22 pages. Of course, a great deal of it is necessary—I do not dispute that. It is necessary to deal with bargaining units, the powers of the Central Arbitration Committee, what happens in amalgamations, and so on.

But why is it necessary to have a "suitable independent person", probably paid for by the union, in order for the union to communicate with the workforce? In my day, we used to campaign for recognition—holding meetings on site or adjacent to the site, getting union representatives to put out material to non-members—and we used the procedures to recruit more members, and why not? We certainly did not need a "suitable independent person" to assist with communication with the workforce.

I am not sure either about the QIP—the qualified independent person—to conduct ballots. ACAS has conducted ballots in the past, and indeed provisions exist in the Bill for ACAS to have a balloting role in some circumstances. My impression is that the QIP simply adds to complication and cost.

On the ballot itself, why must the union's application—if it is to be successful—be supported by a majority of those voting, which is fair enough, but also by at least 40 per cent of those entitled to vote? Why the 40 per cent? Is a straight majority of those voting not enough?

Then there is the limitation of the right to bargain to "core" issues. Pensions are quite specifically excluded. I note that there is provision for the Secretary of State to amend that by order. But as we all now know, pensions are becoming massively important. I certainly bargained about pensions in my union career. I occasionally meet retired members who tell me that they are very grateful for what the union did for them in those days. I see no reason to rule out pensions as an issue on which there may be bargaining.

The same is true of a number of other issues— training, redundancy, redeployment, discrimination, bullying, and so on. I see no reason why these important issues—important to many workers, and perhaps even the reason why some have wanted to join a union and get the backing of union support—should be ruled out. It is wrong to limit bargaining rights in the way the Bill does.

I am however glad that the right to be accompanied by a companion in meetings with management is to be clarified, but it does not seem that the right to be represented by a companion has been effectively established—that is something we shall pursue further in Committee.

There is concern that the legislation is limited when it comes to small firms. The TUC in particular has protested that firms with less than 21 workers are to be excluded from the legislation. Yet it is often in small firms that employees are most in need of union protection. Again, this is something to which we may return in Committee.

I acknowledge that the Government are attempting to deal with the well-known Wilson case in Clause 28. This was the case that arose because of the existence of legislation which allows employers to offer inducements to employees to give up their right to be members of trades unions—the famous Ullswater amendment. I remember it well because I was very active in the House at that time. This has been held to be in breach of Article 11 of the ECHR.

The Scrutiny Committee has reported on the relevant clauses of the Bill. It has reached the conclusion that the proposed legislation in the Bill does not succeed in offering a secure protection for rights under Article 11. It has comments to offer on a number of issues—whether there is an effective remedy for trade unions—and on the matter of the employer's purpose it suggests that the words "sole or main" be omitted.

It is further suggested that the legislation should provide that each employee and trade union should be given both the right not to be offered inducements to give up Article 11 rights, and the right not to have better terms and conditions of employment made available to other employees who have agreed to forego these rights. Furthermore, the legislation should apply whether or not the union is recognised. I hope that in Committee we shall be able to deal with some of these points.

On the matter of industrial disputes, I note that the Government are seeking to deal with cases which have arisen of dismissal of striking workers by excluding lock-outs from counting towards the eight-week period during which there is protection against dismissal. Any improvement is, of course, to be welcomed, but why retain the eight-week period at all? ILO conventions specifically protect the right to withdraw labour and our own law legitimises such action subject to prescribed procedures having been followed. At present it is possible for a stubborn and particularly obdurate employer to prolong a dispute until it becomes possible for him to get rid of some employees he would like to do without. Again, this is something we may explore in Committee. Perhaps we can get the eight-week period extended.

So far as concerns individual rights, I welcome the protection for employees seeking to exercise their right to request to work flexibly. This is becoming increasingly important. The Government freely acknowledge the contribution made by carers. They are mostly women, undertaking duties which otherwise would put a severe strain on overworked social services. Many employers are willing to co-operate in this regard and to make flexible working available; others should be encouraged to do so.

I am also glad to note that further steps are to be taken in regard to minimum wage enforcement. Most people were shocked and horrified at the fate of the Chinese cockle pickers on Morecombe Bay. Clearly they were being exploited and paid much less than the minimum wage for the dangerous work they were doing. Had there been an effective inspectorate, perhaps this would have been exposed earlier and lives might have been saved. I realise that this is part of the larger problem of illegals, who can be exploited by criminal elements because they are vulnerable. However, something should be done to stop this unacceptable exploitation, and a more numerous and powerful inspectorate could help.

Reverting to the main thrust of the Bill, which is about recognition, the TUC has been concerned to ensure that intimidatory tactics by employers to deter workers from supporting union campaigns for recognition should be dealt with. As a result, an amendment designed to deal with this was included in the Bill in the Commons. However, Clauses 9 and 12 apply to both employers and unions because the Government want an even-handed approach. But the management of a company and a union seeking recognition are not really in a position of equality.

Trade unions campaigning for recognition must obviously offer benefits of union membership as part of the reason why employees should join. Threats or bribes from an employer made to prevent the union from gaining support—which is what the clauses aim to deal with—are by no means the same as the union benefits on offer as part of a recognition campaign. As the clauses stand, it would be open to an employer to complain to the CAC that the union was making offers even though it was doing nothing more than setting out the benefits of union membership. I think we must look again at this issue in Committee.

Another clause introduced in the Commons seeks to amend the laws on exclusion or expulsion of workers from unions where a member behaves in a way that is contrary to union rules. I understand that the TUC is seeking to broaden this to include the union's objectives. This is important. Whatever their rules may say, most unions have very strong policies against racial discrimination. Therefore, the replacement of the present wording, contrary to the rules of the union", with inconsistent with the rules and objectives of the union might be more appropriate. Again, we would want to explore this issue further.

I repeat what I said at the commencement of my remarks: there is a great deal to welcome in the Bill—it contains many improvements, which we are very glad to see—and I look forward to exploring it further in Committee.

12.56 p.m.

Lord Campbell of Alloway

My Lords, I congratulate my noble friend Lady Miller of Hendon on her detailed and careful assessment of the provisions of the Bill, with which I agree. In particular, I agree with her comments about the costs of its imposition to business; the cumulative effect of the provisions; the question of resignation, with which I shall deal; abstention on votes and funding. I am using telegraph to save time but the House will know, having listened to my noble friend's speech, what she had in mind.

I do not question the careful criticisms of the noble Baroness, Lady Turner of Camden, to whose practical experience the House will no doubt, as usual, defer. So why should someone who some 40 years ago, when in opposition, set up and chaired the first Conservative committee on trade union law and employment relations—on which, informally, it sought and obtained the continuing advice of the trade union leaders, without which it could not have operated—presume to speak in this debate from these Back Benches at no one's behest?

The reason is that the Government's policy, as reflected in the Bill, is not in the interests of the rank-and-file membership, the employer or the conduct of business; it is not conducive to the better order of employment relations in the national interest. The Bill is a deal between the Government and the TUC. In the current climate of industrial relations, it is not in any sense able to serve to sweeten the symbiotic relationship soured by the distrust and disillusion which is about to manifest itself, again, in June at a meeting to be attended by UNISON, the RMT, the Transport and General Workers' Union, ASLEF, the Fire Brigades Union, and so on, and the rank-and-file membership, at which an adverse vote is predicted.

No matter of current common concern to the public and to the unions is addressed by this Bill, such as the want of improvement to our public services, on which £20 billion has been spent each year for seven years without improvement. No attempt is made to deal with the problem of common concern to the public of disproportionate disruption. The Long Title inhibits requisite reform. Long before 9/11, the Iraq war, and the EU constitution, which some people refer to as "events", such requisite reform—long overdue on such matters—was recognised by the Prime Minister. He gave an undertaking to deal with them. That undertaking has not been met, and cannot be implemented under this Bill.

The work of that committee, incidentally, was not implemented by the Heath administration, who did not like it much. It was implemented much later in the Thatcher reforms, the broad substance of which remain. This Bill disturbs the long-established balance to increase the powers of the leadership and puts it to an advantage, while putting employers and industry to a disadvantage, which inevitably slights the prospect of employment.

Within the remit of the Long Title, there is a need not only for a broader appointment to the Central Arbitration Committee, but also for procedural rules on discovery to include all branch records, for evidence to be taken on oath, for cross-examination, for safeguards to avoid jeopardising the conciliation process, and to avoid destruction of confidentiality. There is also a need, as expressed by an employers' association, for the CAC to have clear procedural rules in view of the new responsibilities concerning enforcement of their practices during statutory union ballots, and enforcement of the new information and consultation regulations. As far as the latter is concerned, it is considered that this new and very different set of enforcement responsibilities means that the CAC should have a broader spectrum of members, and in particular that its membership should include employer and employee representatives who have had practical experience of information and consultation arrangements in a non-unionised environment, and that the addition of the detailed requirements about behaviour during conciliation and mediation proceedings is unnecessary.

There is no doubt whatever, having listened to the previous speakers, that in Grand Committee this Bill shall receive meticulous examination such as was not afforded to the Trojan stalking horse, and that due note will be taken of the Tenth Report of the Joint Committee on Human Rights on the question of compatibility. I shall not take time on that on Second Reading.

The constraints of time also preclude an analysis of Clauses 1 to 16 of Part 1, regarding recognition of collective bargaining, supply of information, union communication, postal votes in ballots, notice to bring an end to bargaining arrangements, and so on. Quite simply, a recognition dispute arises either at the instigation of a single union or as a result of an inter-union dispute. The first attempt at regulation was Barbara Castle's Industrial Relations Bill 1971, which, in effect, on this aspect, was implemented by the Heath administration. It worked extremely well, and I remember Vic Feather saying to me that it worked well to general satisfaction—the only trouble was that it was a branch of the High Court. Of course that objection was removed long ago. We have heard today, as my noble friend Lady Miller pointed out, that not only in another place but elsewhere everything is working extremely well.

What is it all about? Why has this aspect of the longstanding balance to be disturbed? I think there is some explanation due, if everything is working satisfactorily, as to why this burden of complexity has to be imposed. Why, in subsection 2G inserted by Clause 21(4), should the union be entitled to determine who is to vote in a ballot? Why, in Sections 145A to 145E inserted by Clause 28, should the employer be prevented from offering an inducement to a worker which the worker is entitled to accept on pain of penalty, because it puts the union at a disadvantage relating to membership taking industrial action, or the provision of services? Why, in new section 145F(3), should the worker be deprived of resort to the High Court on a sort of ouster clause? These are only examples, and one could pick out all sorts of things, but there is not time to deal with them. Lastly, in Clause 47(1) and (2), why, on appeal from a decision of a certification officer, should the extant right to have an appeal on any question of fact be restricted to a matter of law, which in fact effectively stifles an appeal?

Finally, and in conclusion, what about the consequences of this Bill —and my noble friend Lady Miller touched on this in her speech—on the burden on business? What about the consequences on the prospects of employment? Those prospects are entirely dependent on demand of profitable business, save for some sort of state intervention or subvention, such as when 160,000 jobseekers have been shifted onto benefits where there is no obligation to seek work. But that is rather a one-off situation, I hope.

There has been a steady fall in productivity over seven years, as well as the mammoth shift in manufacturing, business, banking, communications, IT and other services towards cheap labour abroad, and the benefit of lower taxation. This is a commercial fact of life on the Internet which cannot be forestalled and is bound to accelerate. We stand on the threshold of a more massive spending which cannot be met without further borrowing and taxation. There is an immovable mountain of government and personal debt. Those are the circumstances in which this new burdensome tide of bureaucracy, with statutory impositions of penalties for non-compliance, is to be imposed on the employers.

You have only to read the papers to see that industry struggles with redundancy. When these provisions seep through the clogged sieve, it is not the leadership of the trades unions that will suffer from want of employment—it is the rank and file.

1.11 p.m.

Lord McCarthy

My Lords, I want to return to the approach taken by the Minister in introducing the Bill, because I rather feel that subsequent speakers on the other side so far have missed the point.

The Bill has been criticised because it modifies, adjusts, changes at the margin and adds at the margin, to the Employment Relations Act 1999. Of course it does—this is the way we approach legislation in all subjects now. We certainly do it in matters involving the law, prison reform and health service reform. We introduce Bills and modify what happened in the past, and then we pass on. That has to be understood.

I was glad that the Minister went through the past— what was done in the 1999 Act, what we are attempting to do now and what may have to be done in the future to extend the legislation and provisions for regulation of the labour market. This is a continuous process now.

It is true, of course, that in the past seven years since my party has been in office, there has been a succession of Acts. You can argue about how you count them up—my counting is not quite the same as that of the noble Baroness, Lady Miller, for example. I make it seven Acts in seven years—three general and four special, the most important of which was the National Minimum Wage Act 1998. There was also the legislation on dispute resolution, on public disclosure, and so on. In rough terms, you might say that we have been legislating every year. In addition, because we agreed to scrap the opt-out negotiated by the previous Conservative government, we have not held up—in fact, we have encouraged—the implementation of a series of directives from Europe. That, too, will continue.

In any case, it is very strange for people on the Opposition Benches to complain about this, because that is exactly what Mrs Thatcher did. It is true that if you take her first seven years, I do not think she introduced more than five such Acts. There were two concerning employment, one about trade unions, one about wages and one about sex discrimination. But they all moved on from the previous piece of legislation—that is what you do nowadays. The critical difference is the balance.

We took the view then and we take the view now that what was wrong with the successive Acts passed by the previous government—and they did not stop after seven years; in fact, the pace escalated and got more radical—was that the balance was one-sided. Two thirds of the proposals in the Bills introduced in the first seven years restricted the right to organise, the right of trade unions to run their own concerns and the right to strike. That is not a good balance.

It was said at the time that two thirds of the proposals were anti-union. That is a crude way of putting it, but reasonable. It is true that the other third was sometimes pro-worker, but many of them took away the individual rights of workers. Those that added to the individual rights of workers—most particularly, the Sex Discrimination Act 1975—were introduced because there was no way out. The Conservatives were very reluctant to introduce a Bill which advanced workers' rights and they got rid of them by signing the Maastricht opt-out.

The basic difference is not the number of Acts but their content and balance. The Government have been trying to restore the balance, and that will be maintained. When we consider what is being suggested in this Bill, the balance is being maintained. There are some further restorations of trade union rights—that is right and proper. Some of us on this side of the House do not think that there are enough, but that is another debate. This is a further restoration of the balance.

There were also extensions of individual worker rights, such as unfair dismissal, maternity provisions, discrimination, and so on. They have been provided and will continue to be provided because we accept the need to extend individual worker rights. There is, in fact, an essential need to do this. If we take the view that trade union organisation and the extension of collective bargaining is becoming increasingly difficult, you must have some alternative. The only alternative we have so far found is individual employment rights. That movement, therefore, will continue. There are still gaps, as I said. My noble friend Lady Turner mentioned some of the things we think must be done. The Bill contains quite a few of them.

I shall concentrate my remarks on one major gap in the Bill because I am rather worried at what has been said so far. It concerns protection against discrimination in actions short of dismissal against trade unionists. It goes back to the first time a government attempted to do something about this, in the Employment Protection Act 1975. Section 53 effectively provided for the first time that there must be some restriction on the right of employers to use action short of dismissal—not dismissal—in order to discourage trade union membership.

Part of the trouble has been that for all their expertise, the Government are not very good on history. They do not go in for history very much. The central point for them to understand is that this is the oldest trick in the world. If you read the Webbs, G.D.H. Cole and Askwith in Industrial Problems and Disputes, in the First World War, employers divided into three groups. There were the good ones who encouraged trade union membership; there were the bad ones who sacked anybody who joined a trade union; and there were those in the middle who thought they were decent chaps. They did not sack their employees for belonging to trade unions but they did not encourage them. They shifted them on to slightly better work; they promoted them to foremen; they moved them on to established status; they gave them executive washrooms; and, above all, they gave them extra money.

This was the kind, nice way of dealing with trade unionism and it is as old as the hills. It is a good thing that we have tried to deal with it by law, but we cannot do so entirely. Old Adam will always be there and there will always be employers who give trade unionists executive washrooms to bribe them out of the union.

An attempt was made to accept that in the 1960s and 1970s, but it was not until the Employment Appeal Tribunal upheld an attempt to narrow and to destroy Section 53 of the Employment Protection Act that the Ullswater amendment was tabled in this House. My noble friend Lady Turner has mentioned it. I do not know how many noble Lords who are here today were here then, but I can remember the noble Viscount, Lord Ullswater, standing at the Dispatch Box.

Lord Campbell of Alloway

My Lords, will the noble Lord explain who is bribing whom? I never come across that kind of thing in trade union affairs. I may have misheard. What is going on?

Lord McCarthy

My Lords, I am making a speech. That is what is going on. Can the noble Lord not hear me or can he not understand me?

Baroness Turner of Camden

My Lords, I think the noble Lord is referring to washroom bribery.

Lord McCarthy

My Lords, the most traditional and common way of seeking to give trade unions less influence and power and fewer members was to offer privileges to trade unionists on the condition that they became non-unionists. One of those privileges was better conditions and better washrooms, but, above all, more money. I hope that is clear.

Matters came to head with the Ullswater amendment was tabled in 1993 at 3.45 p.m. However, the Government now have a chance to deal with the problem. They have received a clear edict that the amendment runs contrary to international obligations to which this country is committed. They have received three reports from the Joint Committee. I am a little surprised and upset that we have not yet heard a word on what the Government intend to do now. A member of the Government is to sum up. The Government must tell us. If they cannot tell us now, they should give us some indication that they intend completely to revoke that amendment, on the strength of the four concrete suggestions advanced in the latest report from the Joint Committee. Those suggestions are clearly spelt out. Words are required. If the Government do not act, we shall be back to international legal conflict. We shall be back to tribunals and courts if we do not accept the committee's findings. The only option now is to accept the decision. Of course, it will not stop executive washrooms, but it is a start. It is just an attempt to go back to the simple principles of the Employment Protection Act.

I end by going into the future, just for a few moments. Since it is a Bill of bits and pieces—and there is nothing wrong with that—there are a few positive reforms to employment protection. That is partly because it is an evolving issue, but also because, although both parties have improved employment protection, no party has so far thought about the scope for employment protection in a period when trade union organisation is falling but job insecurity is rising. What should the Government's policy be? For the most part, successive governments have been pushed into employment protection legislation by external factors. The Labour Party—I make no apologies for it—has been pushed by trade unions. Trade unions have stated that they should have certain employment rights. The Labour Party, as well as the Conservatives, has been pushed also by particular groups; for example, women's groups. It was not trade unions that won women's employment protection rights—until they found a friendly Minister—so much as women's groups. That was also the case with race discrimination and disability rights and so on. For the most part, changes have been brought about by external groups, when they have not been brought about by an even more external group; that is, directives from the European Union.

The Government should be thinking now about what they want to see as a government in terms of employment protection. They should be doing so not in this Bill, which is probably the last important Bill before the general election, but beyond the general election. If one looks in detail at employment protection, it is very uneven. For example, we enforce the minimum wage in one way, but we enforce most other employment rights in a quite different way. We set up ever-bigger commissions to suggest improvements in certain kinds of employment rights, such as discrimination rights, but we have no body of comparable size or importance to look at the most common case to go to industrial tribunals; namely, unfair dismissal. There is a considerable amount wrong with the way in which we deal with unfair dismissal, but nobody tries to think about a new policy. After all, the outcome of the 90 per cent of the cases that result in a positive award by the tribunal is not reinstatement, but dismissal with compensation.

I could continue, but I do not want to. It is time for the Government to think about a more coherent policy for unfair dismissal. The Government would be party to it because they had thought it out, in part, in their own election manifesto. But perhaps that is a debate for another day and another place.

1.27 p.m.

Lord Lea of Crondall

My Lords, I echo my noble friends Lady Turner of Camden and Lord McCarthy in their broad support for the Bill. I shall begin by giving some historical context to the Bill's significance. It concerns the pattern of collective agreements versus the role of the law in employment relations.

If we look at not just the European but the whole international picture, this country has been relatively light on individual legal protection for the reasons that my noble friend Lord McCarthy has indicated. It has also been light on rules governing collective representation. For various reasons, collective agreements have now been supplemented by what one might call benchmark collective rules on representation.

The Bill is historically interesting because, broadly speaking, we now have three levels of legal regulation. A debate has been taking place for the past 50 years that has resulted in the third level of regulation being built into the Bill before us today. I shall explain what I am referring to.

The first rung of legal representation is the individual right of the worker in all companies to be able to raise a grievance and to have some rights of due process in any disciplinary hearing. In some ways, that is the most important step forward. But it cannot be isolated from the context in which trade unions play their role, which is not only at the level of representation in a grievance or disciplinary procedure, if the individual worker so wishes, but also in the balance of interests which determine the culture of the workplace— often where not a great number of workers are actually members of the union.

I have described the first rung of representation. I should just like to mention, before I come to the second rung, the third rung. This is trade union recognition through the procedure of the Central Arbitration Committee, of which I happen to be a member, through the 1999 Act, following a framework agreement between the TUC and CBI. The historic change of this Bill, and why I am glad it is on the face of the Bill rather than being introduced through regulation, is that we have the results of a framework agreement between the TUC and the CBI, against a background of the European Directive on Information and Consultation. The directive is a framework agreement at two levels. It is a classic framework agreement under the Social Chapter in Brussels. There have been some remarkable achievements since the Labour government signed the Social Chapter as one of their first acts of government in 1997. Those who think that nothing of practical benefit to workers has come from the Social Chapter, that it is all bureaucracy in Brussels, could not be more wrong. Workers have four weeks' holiday: many workers, from the construction industries through to agriculture, had never dreamed of four weeks holiday with money up front. That has been an historic advance for workers in this country. There are pro rata rights for part-time workers. The more we want so-called atypical workers to be part of a thriving economy, the more there must be some framework right for them. That has been an advance through very flexible negotiations in Brussels, and is a simple collective agreement to be understood by employers and anions in industry. With regard to fixed-term contract workers, if they are going to be part of a modern labour market, are we saying there should be no minimum benchmark rules for those workers?

We have still to crack the issue of agency workers. We have seen the recent exposure of the terrible chaos in the case of gangmasters in Morecambe Bay. Trade unions dealing with such agency workers in agriculture or construction on a daily basis in East Anglia know that this needs to be covered as well.

In some respects, the pièce de résistance of the Social Chapter procedure has been the way it has reached a conclusion—not without difficulty—on the question of information and consultation. This was agreed in Brussels, and is a relatively short text that has now been transposed, you might say, into the recommendation for national law through the framework agreement between the TUC and the CBI. This Social Chapter procedure stands in sharp contrast to the procedure used if the employers and unions cannot agree to go down the road of social dialogue. I have in mind the endless criticism of the Working Time Directive. The significance of the contrast between that and the procedures we have in the Bill for information and consultation, is that one has a much more complicated text because it was done as a directive of Article 118a of the Treaty of Rome, health and safety provisions, and there has been a lot of difficulty in implementing it. However, the alternative, rejected by employers, was to have done it through a framework agreement. We have the framework agreement on information and consultation. If somebody wants to say it is a revolution I think that would be stretching language, but let us say that it is. It is a revolution because for the first time—it is a debate that would have gone the other way in the trade union movement 50, even 25, years ago—a collective system of representation should be open to election of workers' representatives by all of the people in the workplace. Unions can have slates of supported candidates, but there is certainly no guarantee that the union candidates will win the election.

There are a million reasons—such as whether this could be an alternative to union recognition, or whether there could be manipulation by employers why some people have not, historically, been over the moon about that sort of approach. Now that the TUC and the unions have bitten the bullet across Europe, and this is part of the procedure, I want to say that this is an historic moment that we must welcome in order to see rung two of the employment relationship in place. It will apply to every company above a certain size. The argument about numbers began with 150, then 120; there can be arguments about the pace of progress on these numbers. But this has been a very important development, providing a context in which we are discussing this Bill.

I hope I am conveying a picture which is very different from that presented by the noble Baroness, Lady Miller of Hendon, when she said that this is a drop by drop dismantling of the Thatcher legislation and it reminds her of when we were the "sick man of Europe". I do not think that this is the most measured of her contributions on this topic.

I should like to mention the debate about the union modernisation fund. I cannot corroborate exactly what Digby Jones said—according to this morning's press—in his speech yesterday, but it would be a little rich if he wanted to describe the TUC as an "irrelevant lobby group", without somebody saying "touché". The fact is that social partners are the alternative to the sort of heavy legislation to which employers purport to be particularly opposed. On the actual substance of £10 million, over many years we have known that sums like £100 million, £200 million—it all depends what you include, such as subsidies to training courses in industry—go in the direction of the employers. There is squealing perhaps because the supposition that new Labour is about dismantling the trade unions turns out not to be true. I never thought that it was true. It is hard to believe that people seriously thought that that was the agenda. There is squealing now that we are trying to create a level playing field.

There is no doubt that we need to do some work on that level playing field. The pensions issue is one example. At the end of next month, I think, we will be considering a Bill on that issue. Directors of FTSE 100 companies receive something like 80 per cent of the tax benefits from the present pension arrangements, whereas workers are often left with nothing—as in the case of Allied Steel and Wire—when a firm goes into liquidation. That has to be dealt with. There is no doubt that, despite the minimum wage, inequality in income distribution towards the top end of the distribution spectrum has grown by leaps and bounds.

The trade unions are the only bulwark for ensuring greater equality. All the OECD statistics show a striking correlation between the density of trade union membership and equality. If we want a tolerably equal society, it is in the interests of public policy that we have a strong trade union movement. Whatever the Government do, they cannot ensure that. However, small steps such as those in the Bill are very welcome. I commend the Bill to the House.

1.42 p.m.

Lord Razzall

My Lords, in winding up from the Liberal Democrat Benches, and having listened to a number of speeches from both sides, perhaps I may start by bringing noble Lords back to what I should have thought was common ground—although it does not appear to be—which is that the Bill makes relatively small amendments to the previous legislation. Having listened to a number of the speeches—particularly that of the noble Lord, Lord Campbell of Alloway, who saw fit to spend 16 minutes giving us a history lecture but does not seem to have time to be in his place for the winding-up speeches—one might think that the Bill will lead to hordes of workers led by Arthur Scargill marching on Westminster. Having listened to the Minister, however, I have the impression that this is a relatively small Bill, building on the experience of the previous legislation. With one or two reservations to which I shall return, the Bill was largely supported by my party in another place, and it will be supported by my party in your Lordships' House.

I start with two general points and will then turn to the three specific areas on which we will want to touch in Committee. First, having listened to some of the language in your Lordships' House on reports this morning of comments made by Digby Jones on behalf of the CBI, I think it a great shame that, despite the fact that we appear to have probably the best industrial relations that we have had in my adult lifetime in terms of hours lost through strikes, we still seem to have coming from both the CBI and the TUC the rhetoric of confrontation that so bedevilled industrial relations in the past. As I think Malcolm Bruce said in another place either on Second Reading or in Committee, when the Government present their legislative proposals in this area, the press releases from the CBI and the TUC can almost be written in advance.

So I have some sympathy with the Minister as he tries to find a path between the two approaches of the CBI and the TUC. As someone not involved in any of those discussions or procedures, were I to be treating this as a football game, I do not think I would call it a score draw between the TUC and the CBI as regards consultation on the Bill. I should think that any objective observer would say that it is a pretty significant away win for the CBI. The TUC came in with a large number of pretty radical proposals that it thought should go in the Bill, many of which the Government have rejected. So to those on this side of the House who seem to suggest that this is a deal between the TUC and the Government, all I can say is, "Some deal". If it was a deal, the Government have certainly played a much stronger hand than the TUC managed to do.

That is probably not something on which the Minister will want to comment. However, it would be unfortunate if we started off our deliberations on the Bill by characterising it as a radical attempt to change employment law. It is not. It is a small attempt to improve on the workings of the previous legislation. As I said, from these Benches we welcome most of the reforms.

The second general point will be relevant when we consider the Bill in Committee. It is becoming almost a characteristic of any Bill which the Minister introduces to this House that it has probably not had proper scrutiny in another place. The Bill was passed by another place under a programmed structure, and amendments of quite fundamental importance were introduced at Report and Third Reading. Far be it from me to say that it would have changed the course of history, but, because of the programmed nature of the debate, the Liberal Democrat Front-Bench spokesman was not even called on Third Reading to indicate my party's views and reservations. That is not the Minister's fault, and he will certainly not be criticised for it. However, it gives your Lordships House greater licence to table amendments and to ask the Government to take our amendments more seriously than they would perhaps feel necessary if the Bill had had 100 per cent proper scrutiny in another place.

I see a number of heads on both sides of the House nodding at that. I hope that the Government will take those remarks in the spirit in which I intended them. From these Benches we certainly do not intend in any way to attempt to wreck the Bill.

I should like to speak to three areas of concern on which we should like to probe the Government a little further in Committee. The first concerns Clause 39, which goes much further than simply tidying up the recognition and bargaining provisions in the previous legislation. It is the start of implementing the European directive of February 2002 requiring member states to establish national systems for informing and consulting employees in undertakings with at least 50 employees. Clause 39 gives the Government power to introduce regulations to implement that directive.

Lord Lea of Crondall

It is Clause 31, my Lords.

Lord Razzall

I apologise, my Lords; it is Clause 31.

In view of some of the very high profile examples of failure to consult employees regarding closures and the fact that probably half of all private sector places of work are not unionized, the importance of these regulations and the likely future of industrial relations in this country as a result of these regulations cannot be overestimated.

Indeed, somebody at Warwick University thought that in due course the implementation of this directive will revolutionise the way in which industrial relations are conducted in the United Kingdom.

Liberal Democrats in another place wanted to extend the powers of the Government and take them a little further down the path of implementing this directive, and we will seek to bring forth amendments in Committee to this effect.

The second area in which Liberal Democrats in another place tried to see whether the Bill was satisfactory or if there was a gap in it that could be filled was that of unofficial strikes; and whether the law as it currently stands deals satisfactorily with the position of unofficial strikes, both in non-unionised workplaces—

Lord Campbell of Alloway

My Lords, I apologise to the noble Lord for not being in my place when he started.

I agree with him on the question that he raises, but it is without the ambit of the Long Title of the Bill. It cannot be extended to deal with strikes and unofficial strikes without amending the Long Title.

Lord Razzall

My Lords, it may well be that such a change to the drafting would be necessary, but in this Second Reading debate I am trying to deal with a point of substance.

In the light of recent experience of unofficial strikes in the Post Office—to name but one organisation—we on these Benches will seek to probe the Government on whether further improvements or amendments to employment law could be put into this legislation.

The third area on which a number of noble Lords have touched—and here we have considerable sympathy with the points raised by noble Lord, Lord Campbell of Alloway, and the noble Baroness, Lady Miller—is the provision of money for trade union modernisation.

If there is one area where your Lordships need to be absolutely certain that the section is in its correct form and the necessary safeguards have been put in before we pass it, this is it. I do not wish to make a wider point. But when a Labour Government—who are significantly funded by the trade union movement—use their majority in the House of Commons on a whipped vote to pass this particular clause, then your Lordships need to be certain that the appropriate safeguards are in place before passing it.

We do not disagree with public money being made available to trade unions for this purpose—indeed we support the principle—but your Lordships have a duty to the electorate in this area in particular to ensure that the necessary safeguards are in place.

1.53 p.m.

Lord Triesman

My Lords, I have listened attentively to the debate. As ever, it has been a debate among noble Lords with a huge amount of experience, and the quality of the contributions has reflected that. I am grateful to everybody who has participated in our discussion here today.

A number of important and telling points have been made and I will do my best to address as many of them as possible. But first I should like to make some general points about the Bill, to underline the core arguments made by my noble friend Lord Sainsbury in his opening remarks.

Let me remind the House of the significant achievements of this Government in the field of employment relations. This is a limited list. Among other things, we have put in place fair minimum standards and fair wages for all through minimum wage legislation; paid holidays, rest breaks and a cap on the working week; flexible and family friendly working, which has provided greater choice for employees, encouraged the retention of skilled and experienced employees, and enabled employers to cope with the changing demands of their business.

My noble friend Lady Turner asked for consideration of other areas of flexibility, and I have no doubt that there will be a discussion on those points.

We have also put in place new protections against discrimination at work on grounds of sexual orientation, religion or belief, and work is under way to provide new protections against discrimination on grounds of age. Trade unions now have the right to be recognised for collective bargaining purposes where the majority of the workforce want this. It is now unlawful to dismiss workers for taking industrial action within eight weeks of the start of that action, or after that time if the employer has not taken reasonable steps to resolve the dispute. I shall return to that point when I deal with some of the detailed questions that have been asked.

In reminding the House of these achievements and in summing up the debate, the noble Lord, Lord Razzall, is right to say that it is a relatively small sequence of additions, precisely for the reasons given by my noble friend Lord McCarthy. This is a process that will continue. As the world of work changes—and we all discussed change in that light—it is inevitable that all the things that I have mentioned, and all that my noble friend Lord Lea mentioned about the gains that have been made over a period producing, as he put it, a very different picture, are matters of some importance to your Lordships.

I remind the House that these achievements have been accompanied at each step by predictions that the policies were bound to lead to unemployment, would damage business and would encourage industrial unrest or worse. No doubt we will hear the same comments made about this Bill. The arguments will be as unfounded as they have been on other occasions.

As this is an issue of such principle, this is the right moment to take up one or two of the points about the big picture that were raised by the noble Lord, Lord Campbell of Alloway, and the noble Baroness, Lady Miller.

The cumulative effects of the legislation that has been introduced during the life of this Government can scarcely be liable to cause the damage that has been described on the one hand, and on the other be understood against a background of employment stability, the lowest rates of unemployment in living memory, and unprecedented economic progress. Those cannot both be true. I ask noble Lords to reflect on the likelihood that the rather draconian predictions are not likely to be accurate. I have the deepest respect for the way in which the noble Lord, Lord Campbell of Alloway, put it, and I know that he has had a deep interest in these matters for many years, but none the less I put that point to him.

We believe that our policies make sense for employees, that they will lead to the tolerable equality that my noble friend Lord Lea mentioned and that they will be good for business and for the economy. Our record bears this out. As I have said, we are enjoying an unprecedentedly good period in economic and employment terms. All of those advantages lie at the foundations of sound government.

The Bill takes us one stage further. It builds on our successes and sets down solid foundations for the future: a future based on high performance workplaces and high quality jobs; a future where employers, employees and their representatives are informed, involved and committed, working together for mutual benefit.

Unions play a central part in taking forward the partnership agenda and contributing to greater productivity. That has been among their greatest accomplishments. We want unions, like businesses, to embrace new ways of working and to modernise. The union modernisation fund will help to achieve this goal.

I understand the point that the noble Lord, Lord Razzall, made about wanting to ensure that the funds that go through it could not be diverted in ways that would be inappropriate. In his opening speech, my noble friend Lord Sainsbury made the point that that could not happen under political fund legislation. None the less, we believe that the modernisation issues are fundamental in ensuring that we have hard-working, stable industrial relations. I do not accept the argument advanced in the past few days by Digby Jones that 7 million organised working people constitute some kind of fragmentary lobby group. That seems to be a disparagement rather than an analysis and probably in due course he will think the better of it.

We want to ensure as a matter of sound law that the good work of unions can continue without being hindered by racists and xenophobes who seek to use unions to spread their vile message of hatred and intolerance. We have brought forward measures in the legislation to enable unions to address this. We have delivered on our commitment to review the operation of the Employment Relations Act 1999, and I believe that most of the evidence shows it is working well.

The statutory recognition procedure has been a resounding success. It has encouraged voluntary recognition in more than 1,000 cases and has contributed towards a new partnership approach between unions and employers. I wonder whether I might pay my own personal tribute to Sir Michael Burton for his exceptional leadership of the CAC and the efforts his colleagues have made, which have unquestionably led to smoother and better relations. The Bill will make improvements to statutory procedure, which will enhance its smooth operation and ensure that the spirit of co-operation and fair play that has contributed to his success is not undermined either by a minority of employers or unions who prefer to use intimidation rather than play by the rules that have been established.

It is an essential feature of a fair and modern society that workers are free to belong to and to be represented by a trade union, and the Bill puts in place important protections for trade union members of the kind my noble friend Lady Turner described. They will ensure that they have clear rights to use union services and cannot be induced by employers to forgo their union representation.

I will turn to some of the points about the European consultation procedures, which are very important. No one wants to see a repeat of the most unfortunate events of Friction Dynamics. The Bill will strengthen protection for workers on legitimate strike action and will ensure that employers and unions take their obligations to resolve disputes seriously.

I shall now deal with as many of the questions as I can handle in the brief time available. First, the noble Baroness. Lady Miller asked about the overall increase in employment legislation. Generally speaking, the point has been addressed by my noble friend Lord McCarthy. I will not elaborate on it—we have needed to deal with matters as the situation has changed. It cannot be said that Europe is dictating employment law, as has perhaps been suggested. The original version of the directive presented by the European Commission would have imposed a single works council model on everyone. Changes were agreed by all of the member states to give more flexibility for employers and employees to agree arrangements suited to their particular circumstances. That was the basis on which the Government agreed to it.

We have been asked why we chose not to use statutory instruments but instead chose to use primary legislation. It is not possible to implement all of the agreed CBI and TUC framework under Section 2(2) of the European Communities Act, as originally intended, without having a Bill that allows us to do so. The employment relations Bill is a timely vehicle to achieve that objective. The Bill will implement the directive. That is not in itself a convention—we have opted to do it because this is the appropriate moment to do it.

We have been asked about whether this gold plates the directive in any respect. The framework and draft regulations have been agreed with the CBI and the TUC and, as both parties agree, no gold plating is involved. We have used a light and flexible touch in the implementation process. The wording used in the clauses of the Bill makes it clear that that is the case.

The noble Baroness, Lady Miller, understandably asks why the "Miller amendment" should not be retained. Having read about the Miller amendment for many years, I am delighted now to sit on the Benches opposite its author. The amendment concerned the need to retain necessary employer flexibility when rewarding staff. Our proposals already adequately safeguard these key business concerns and protect the ability of employers to offer enhanced terms to key workers who they wish to retain for sound business reasons and not in a way that undermines collective bargaining. The Bill secures this in a way that balances employer interests against the necessary rights of union members.

The amendment inserted into the Employment Relations Act 1999, which pre-dates the European Court's judgment, is an important turning point. It was inserted in what is now Section 17 of that Act. That section has never been commenced and its provisions are superseded by this Bill and by the judgment.

The noble Baroness, Lady Miller asked us to define "lock out". We are a little loath to do so. The definition would not necessarily be useful. The possibility has been considered. We believe that any definition would risk covering situations which it should not and failing to cover situations which it should. We believe that it is a matter best left to the courts and the tribunals to decide in the light of the situation on the ground. The term "lock out" has been used in this legislation for many years without further definition and I do not believe that the absence of a definition has itself caused legal difficulties.

We were asked why the procedural rules for the CAC were not set out in statute. We want to provide the CAC with the necessary freedom to determine its own procedures. It has done it very well so far and it has been a signal success. Its ability to operate effectively under a senior judge has been one of its greatest virtues.

We were asked, with regard to Clause 3 and the provision of information to unions regarding proposed bargaining units, what abuses we are intending to address. The statutory procedure was designed to encourage the voluntary resolution of claims at every opportunity. The limited information which must be supplied to the union under Clause 3 is intended to facilitate agreement between the parties on what the bargaining unit should be. Such information is often revealed to the union in the course of such negotiations in any case.

Lord Campbell of Alloway

My Lords, the House will forgive me for intervening. Could the noble Lord deal with a serious problem relating to the procedure of the court? Is he prepared to consider that evidence should be given on oath? Is he prepared to consider that there should be cross-examination? Is he also prepared to consider whether the discovery rules as to procedure should include branch discovery of records, which I am told do not?

Lord Triesman

My Lords, it is probably as well if I try to address that immediately. It is a complex issue and I should be prepared to discuss it in much more detail in Committee.

On the application to undertakings employing fewer than 50 employees, we are wary of imposing additional regulatory burdens on small firms unless there is an absolutely clear need to do so. The directive acknowledges this by giving the option of applying only to undertakings with more than 50 employees. In practice, the vast majority of UK employees—about three quarters of them—will gain new rights under the information and consultation legislation. But we will be considering good practice guidance on employee dialogue in small firms not covered by the legislation.

We do not intend to change the status of abstentions in recognition ballots. However, the Government are keen to ensure that as many workers as possible vote. It is obviously good for democracy and for the standing of the ballot result. Indeed, the introduction of postal votes, for example, in relation to industrial action ballots was designed entirely to accomplish that objective—at least that was the argument put for it by the Conservative government at the time—hence, the need to introduce the provision in Clause 7 to give workers a chance to vote by post in workplace ballots.

The significance of the changes in the wording of paragraphs 35 and 44, which are referred to in Clause 10, was discussed in the review of the Employment Relations Act. The review found that there was some confusion in the meaning of the paragraphs, which would be resolved by this kind of wording.

In all these cases, we are seeing sensible resolutions to outstanding issues. Having raised those matters, the noble Baroness, Lady Miller, is entitled to a serious answer to them. If I have missed any of her other points, I shall be happy to write to her in due course.

My noble friend Lady Turner raised several very important questions—echoed, I believe, by my noble friend Lord McCarthy—about the complexity of the procedures. I am sure that that matter will be discussed in greater detail, and therefore I would say only that the complexity is, without question, a reflection of the fact that ambiguities have been thought to exist in the processes as they stand. A great deal has been spent on legal advice in order to try to find a solid route through some of these matters, and one often ends up with as many pieces of advice as the number of lawyers to whom one turns. Even if the procedures are lengthy, the intention must be to ensure the greatest possible transparency for everyone.

To my answer to my noble friend Lady Turner, I would add that the use of a qualified independent person in ballots and suitable independent persons for the purpose of union communications is to give greater confidence to everyone involved that the matters have all been handled fairly and efficiently and so that every party can have confidence in the results.

Noble Lords will be pleased to hear that I do not intend today to go over the arguments and evidence on the 21-worker threshold or the 40 per cent ballot threshold. Much evidence relates to these areas, and I have no doubt that the matter will be discussed in Grand Committee. However, the evidence suggests that those are not insuperable barriers in any respect and, in fact, they place upon everyone the need to work harder to produce sensible results.

The core bargaining agenda is important. What we have—I shall not disguise it—is the basis of an agreement between the TUC and the CBI about the core topics. There is no question that other matters may well be discussed by additional routes, but they will not themselves represent the greatest level of consensus that was achieved in those discussions, which I believe were hugely valuable. I make the same point to my noble friends Lord McCarthy and Lady Turner. Again, there is a great deal of evidence in relation to the whole issue of the eight-week rule in industrial action, and I believe that that is probably best handled in Grand Committee. In short, there is at least a degree of consensus on all those matters, even if the TUC and the CBI would like us to go further.

In going through many of those issues and in considering some of the others, in the brief time available I want to touch on just one other matter that was raised—that is, the question of the JCHR report. The Government have prepared a detailed response to the concerns, which is available in the Library of the House. The memorandum explains why we consider the Bill's provisions on Wilson and Palmer to be compatible with the European Convention on Human Rights and the implementation of the European Court's judgment in that case. However. I say openly that we shall look forward to discussing that matter in detail in Grand Committee.

Lord McCarthy

My Lords, perhaps I may get one matter clear. Is my noble friend telling me that he has written something new which we have not seen and that it is now in the Library?

Lord Triesman

My Lords, I am saying exactly that. It is very recent and very new. Even yesterday, I myself was not aware of its contents but I am today.

Things are, in a general sense, working well. We were asked why we should change that position. As my noble friend Lord McCarthy said in making his point about incremental change, it makes the law more explicit and more effective.

In summing up, perhaps I may say that it is a privilege and a pleasure to be involved in this Bill. I look forward to the continuing and detailed discussions that we shall no doubt have in Grand Committee, where I am sure we shall receive the benefit of everyone's close and expert scrutiny. I completely agree with the point that any rhetoric of confrontation will not help that process. The measures contained in the Bill will take us further down the road of partnership and high-performance workplaces and will help to maintain the impressive climate of employment relations that we enjoy today, which are so fundamental to the well-being of our economy. I commend the Bill to the House.

On Question, Bill read a second time, and committed to a Grand Committee.