Sitting of 7 June 1999

Preamble
Reassembling after the Spring Bank Holiday Recess, the House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Bradford.
The Earl of Oxford and Asquith The Earl of Oxford and Asquith—Took the Oath.

Horserace Betting Levy: Offshore Bookmakers
Viscount Falkland Viscount Falkland asked Her Majesty's Government:
How the interests of the British horseracing industry will be affected by the recent decision of a leading credit bookmaker to move operations to Gibraltar in order to offer clients tax-free betting.
The Minister of State, Home Office (Lord Williams of Mostyn): My Lords, it is far too early to tell. Bookmakers pay a levy on horserace betting and this is then distributed by the Horserace Betting Levy Board for the benefit of racing. If a significant portion of the betting market were to transfer to offshore bookmakers, then clearly the amount available to racing would diminish. However, we are a long way from that and are monitoring the position closely.
Viscount Falkland: My Lords, I thank the Minister for that Answer. However, has he perhaps understated the long-term dangers of betting being taken offshore in this way? Those who believe that the economic engine of racing is not gambling are probably deluding themselves. including the Treasury, which takes £0.5 billion a year. Any reduction of the pool of money from bookmakers will damage racing. If this is a gesture by one bookmaker to show the problems that arise from the tax being lowered in Ireland to 5 per cent and to push the Treasury into recognising that we are in a difficult position, action needs to be taken fairly quickly.
Lord Williams of Mostyn: My Lords, undoubtedly the betting industry funds horseracing to a significant extent. I agree with the noble Viscount that it would be foolish to overlook that. I declare an interest in this matter in that I formerly acted for Mr. Chandler, the bookmaker in question, in happier times from my point of view. If the newspapers are correct, he is proposing to offer telephone betting. Most people in this country do not bet by telephone. Over 90 per cent of the revenue that goes into betting is not in fact from credit telephone betting at all.
Baroness Trumpington: My Lords, does the Minister agree that the United Kingdom is the only
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country in Europe to have bookmakers? Would not the racing industry be far better off if there were no bookmakers?
Lord Williams of Mostyn: My Lords, I can certainly drop a postcard to that effect to Mr. Chandler. I am not sure that the noble Baroness is right. My recollection is that bookmaking goes on in the Irish Republic quite vigorously and quite successfully. It also goes on in the Isle of Man and in Orkney.
Lord Ewing of Kirkford: My Lords, my noble friend says he used to act for bookmakers. Is he aware that he was in the unique position, both in this country and probably in any other country of the world, of being the only person ever to make money from a bookmaker?
Lord Williams of Mostyn: My Lords, I am happy to think that that is probably correct.
Lord Peyton of Yeovil: My Lords, will the noble Lord ask himself why it is so much more comfortable to go racing in France and many other countries than it is here? Also—perhaps I am being a little simple here—will he encourage this particularly observant, opportunist bookmaker to encourage racing by giving directly to racing the extra money he will earn by not paying tax?
Lord Williams of Mostyn: My Lords, according to the newspapers, Mr. Chandler intends to return some of the money to horseracing. It is true that many people who attend horseracing in France find it much more agreeable than here, but many other people take a contrary view. I am told by my noble friend Lord Donoughue that Cheltenham Week is always well supported, and people are entitled to a free choice.
Lord Burnham: My Lords, the noble Lord says that 10 per cent of the betting turnover is from telephone credit betting. Does the Minister realise that Mr. Chandler's exercise also involves Switch and deposit betting? That means that 20 per cent of the levy, if it goes through, will be lost to racing.
Lord Williams of Mostyn: My Lords, I am not entirely clear on an authoritative basis what plans Mr. Chandler has in mind. I stress that I have simply been given newspaper reports. However, the point made by the noble Lord, Lord Burnham, is well taken. We need to monitor the situation carefully because, as the noble Viscount said originally, the revenues are critically important to the industry.
Lord Pearson of Rannoch: My Lords, bearing in mind the pressures which are being brought to bear upon

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Gibraltar from other directions, does the Minister feel that his client is well advised to have set up in Gibraltar as a tax-free exercise in the longer term?
Lord Williams of Mostyn: My Lords, I should like to make two points. First, he is not my client; and, secondly, if he were, I should certainly not be giving him free advice.
Lord Cope of Berkeley: My Lords, no doubt the Minister's former client will return some money to racing, but I think it most unlikely that he will return any of this money to the Exchequer. Therefore, can the Minister tell the House of other taxes where the revenue is similarly likely to vanish as a result of the spreading of electronic commerce, of which this is but one small indication of what will happen?
Lord Williams of Mostyn: My Lords, the taxation component of the charge levied on the punter is the general betting duty, which, at present, stands at 6.75 per cent. Of course, the levy, which is what the noble Viscount had in mind, stands at 1.25 per cent. In answer to the noble Lord's more general question, I could not possibly speculate about what devious minds—possibly devious accountancy minds—might think of in terms of avoiding duty. Obviously, the Revenue keeps a very close eye on such matters, but one needs to get this into perspective: this is one bookmaker who is talking about offering a single, limited service.

St. Helena Citizens and UK Access
2.44 p.m.
Lord Beaumont of Whitley Lord Beaumont of Whitley asked Her Majesty's Government:
What arrangements they are proposing to make to allow citizens of St. Helena free access to the United Kingdom in the interim period before permanent legislation can be introduced.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, all British dependent territories citizens are subject to immigration control. The Government are considering what interim measures might be possible for residents of St. Helena and Tristan da Cunha. These include an extension to permission to stay for those who, having completed full-time formal education, require to undertake supervised work experience to gain British professional qualifications; an agreement to grant full three-year permission to stay at the outset for those coming to Britain under the training and work experience scheme and the three-year employment scheme; and a named contact for St. Helenians to deal with for approval to changes of employer.
Lord Beaumont of Whitley: My Lords, I am grateful to the Minister for that statement; indeed, I welcome
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it. However, can she say how soon it is expected such arrangements can be put into practice so that, in the meantime, St. Helenians, who have had an acknowledgement of the injustice done to them by taking away citizenship, can enjoy their right to come to this country?
Baroness Symons of Vernham Dean: My Lords, all these measures are under active consideration. As the noble Lord will appreciate, they involve a number of different government departments. We hope that it will be possible to come to a decision by the autumn as regards all or any of the three measures I outlined.
Lord Skelmersdale: My Lords, can the noble Baroness say whether the legislation referred to in the Question will be primary or secondary legislation? If the latter, it could be implemented much faster should the department so wish.
Baroness Symons of Vernham Dean: My Lords, primary legislation will be necessary.
Baroness Young: My Lords, I welcome what the Minister has said. However, will she recognise in all her considerations the very great difficulty of St. Helenians in this respect? There is very little employment in St. Helena. Although we welcome the fact that St. Helenians are able to come to this country to gain educational qualifications, they need to be able to see the prospect of a proper future. That applies especially to the young. It is a very serious matter for the inhabitants of the island.
Baroness Symons of Vernham Dean: Yes, indeed, my Lords. Her Majesty's Government recognise the very particular problems experienced by people living in St. Helena. We are currently discussing with the United States the possibility of using the Wideawake Airfield on Ascension Island to facilitate more communication of an easier nature between St. Helena and the outside world. It is because we have recognised the particular employment problems of St. Helena that there are already some measures in place. For example, there is the taking of some 30 people a year on special work permits; in fact, we have about 60 individuals on these work permits at the moment. There are also one or two other measures in place to try to ease the employment situation.
Lord Moynihan: My Lords, further to her last answer, can the Minister give the House an update on the Government's plans to provide St. Helena with landing facilities for aircraft? In particular, can she give any further information on the results of the preliminary study into the technical feasibility of an airlink to St. Helena? A final report was due by Easter.
Baroness Symons of Vernham Dean: My Lords, I have indicated in Written Answers and in response to the noble Baroness, Lady Young, a few moments ago that we have been discussing with the United States the possibility of using the airfield on Ascension Island.

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Those discussions have started, and I raised the issue in the US a short while ago. We hope very much to be able to conclude some sort of an arrangement with the US over the use of Ascension Island in the near future. We will then be able to make an announcement.
Viscount Montgomery of Alamein: My Lords, the Minister will be aware that many citizens of St. Helena are working in the Falkland Islands. Can she tell us how long they will be required to stay there before they can enjoy the same rights and privileges of the Falkland Islanders as regards coming to this country?
Baroness Symons of Vernham Dean: My Lords, I hope very much that the legislation about which we have spoken, and which I have indicated will be primary, will go ahead as soon as possible. However, I am not in a position to anticipate the contents of the Queen's Speech. The noble Viscount is right to say that there are a number of St. Helenians on the Falkland Islands. I do not know whether there is any specified period before they can qualify for residency in the United Kingdom in the same way as the Falkland Islanders have since 1982. If there is a specified period, I shall write to the noble Viscount to let him know.

The Times Pricing Policy: OFT Report
2.49 p.m.
Lord McNally Lord McNally asked Her Majesty's Government:
When they expect the publication of the Office of Fair Trading report into alleged predatory pricing by Times Newspapers.
The Minister of State, Department of Trade and Industry (Lord Simon of Highbury): My Lords, the Director General of Fair Trading announced on 21st May the outcome of his investigation into complaints of predatory pricing of The Times newspaper. Copies of the director general's press notice arc available in the Libraries of both Houses.
Lord McNally: My Lords, those who have read the director general's press notice will welcome the robust terms in which he condemned the practices of Times Newspapers. However, did the Minister read yesterday in Sunday Business that Times Newspapers is now adopting a new tack in terms of competitive practices? The article states:
"The price war will be less visible on news stands but discounts and special offers will continue to distort the market".
Does the Minister still think that it was wise for him to resist the opinion of this House; namely, that the Competition Act requires special protection for our newspaper industry? Will he also consider whether during the period when The Times was acting improperly its independent directors who were charged with protecting the public interest protected that interest or simply acted as apologists for The Times newspaper?
Lord Simon of Highbury: My Lords, I did not have the pleasure of reading Sunday Business as I was doing
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Sunday business. To my mind it is still open to the Director General of Fair Trading to take into account any pricing practices in making judgments about the anti-competitive behaviour of any company. The noble Lord raises the question of whether the newspaper industry should be regarded as different from any other sector of industry. Happy as I am to answer his question for the fourth time—I am glad the noble Lord acknowledges robust responses to his previous three questions—I do not believe that other than in terms of the merger law the newspaper industry requires any separate legislation in this regard.
As regards the directors and their role, the noble Lord makes a sweeping statement when he says that the company was acting improperly. I did not notice the word "improper" in any part of the judgment. The noble Lord should be cautious about using that word.
Lord Bruce of Donington: My Lords, in order to avoid a stampede into the Library, will the noble Lord give a brief summary of the result of the inquiry?
Lord Simon of Highbury: My Lords, my noble friend has called my bluff. I have seen no one move, but this is an extraordinarily interesting matter. I rise to the challenge of summarising what is quite a complex statement and I thank my noble friend for asking the question. The director general concluded that News International deliberately made a loss on The Times during the period between June 1996 and January 1998, but that the price-cutting then stopped. He has obtained informal assurances from News International that it will submit a detailed business statement to the Office of Fair Trading within 10 days of any future price-cutting of The Times which is intended to last longer than one month or which forms part of a series of price changes which has lasted for more than one month.
Lord Harris of High Cross: My Lords, as one of the maligned independent national directors, it was kind of the noble Lord, Lord McNally, to alert me that my attendance here this afternoon might be helpful. First, does the Minister agree with the OFT's report when it says that the UK has one of the most competitive newspaper markets in the world? Secondly, are the Minister and others aware that one result of cheaper newspapers has been to increase the total market of broadsheets by 12 per cent—that is, by 300,000 daily copies—which, significantly, includes a large number of younger readers? Finally, does the Minister really consider that the wholly modest words of the Office of Fair Trading justify four references to the OFT over six years, largely at the prompting of the noble Lord, Lord McNally?
Lord Simon of Highbury: My Lords, I thank the noble Lord for the tripartite question. Certainly, his grasp of the statistics of the industry is. better than mine. However, I am inclined to answer yes to his first two questions. I am sure that increased circulation is good for those who want to read the broadsheets. I believe that we have a competitive market-place. As regards his final point on the liberty of noble Lords to ask a series

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of questions, I would say that if the subject matter is good—in this case I think that it is—I am perfectly happy to answer the questions.
Lord Borrie: My Lords, in view of the deliberate selling at a loss that the director general found The Times had engaged in over a certain period, does not the Minister think it appropriate that suitable compensation should be made by Times Newspapers to the Independent, the Daily Telegraph and other newspapers which have suffered economic loss as a result of that practice?
Lord Simon of Highbury: My Lords, it is for those newspapers to try to claim compensation if there is a legal basis. The people I considered to be most at risk were the shareholders of The Times.
Lord Marsh: My Lords, the Minister says that he sees no reason why newspapers should be treated differently from any other company. Does he agree that there is nothing unusual in companies in every sector selling products at below cost for certain periods of time as a marketing device? Is the Minister aware that, having spent 13 years as the independent chairman of the Newspaper Publishers Association, my recollection is that throughout the whole of that time all of the parties concerned conspired together to condone practices which almost destroyed the industry and would have done so if Murdoch had not intervened?
Lord Simon of Highbury: My Lords, I bow to the noble Lord's greater knowledge of what happened during the 13-year period he mentions. I certainly agree that loss leading is an extremely common feature of any business activity. That is why I said it is for the shareholders of companies who indulge in loss leading to decide whether that contributes to the general strategic good of their companies.
Lord Razzall: My Lords, for the benefit of noble Lords who have not yet had the opportunity to read the report, will the Minister indicate whether he agrees with accounts the next day in the Guardian, the Telegraph and the Independent newspapers that it represented a significant defeat for the pricing policies of News International, or whether he agrees with The Times that it was a significant victory?
Lord Simon of Highbury: My Lords, my own view is that it was both a proportionate and appropriate response to the inquiry that was undertaken.
Lord Monkswell: My Lords, is an informal undertaking worth the paper it is printed on?
Lord Simon of Highbury: My Lords, it depends who gives the undertaking and how the receiver takes it. However, I am sure that in this case the undertaking will be carefully followed and carefully monitored.
Lord McNally: My Lords, I would not like to leave on the record the Minister's rebuff with regard to
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my use of the word "improper". I notice that the OFT obtained 13 separate assurances from Times Newspapers with regard to its future behaviour. If its previous behaviour was not improper, what was it?
Lord Simon of Highbury: My Lords, I am very happy that the noble Lord chooses the word and defends it judiciously.

Chinook ZD576
3 p.m.
Lord Chalfont Lord Chalfont asked Her Majesty's Government:
Whether there have been any recent developments regarding the crash of Chinook ZD576 on the Mull of Kintyre on 2nd June 1994.
The Minister of State, Ministry of Defence (Lord Gilbert): My Lords, I am not aware of there being any developments since this tragic accident was last debated in the House on 2nd June 1998.
Lord Chalfont: My Lords, I think that the Minister means 1994. But let us assume that he means the accident to which I am referring, which was in June 1994. Has the Minister had an opportunity to study a well-researched report by Computer Weekly which has thrown considerable doubt and uncertainty upon the possible causes of the accident? In the light of the doubts and uncertainties put forward in the report, is he willing to stand up in your Lordships' House today and reiterate, without reservation or equivocation, that the Government's view is that the accident was "without any doubt whatever"—those are the words used in the appropriate regulations—the fault of the two pilots concerned to the extent of gross negligence? If he is not prepared to do that, is he prepared to have the board of inquiry reopened in order to study the Computer Weekly report, revise its opinions and report again?
Lord Gilbert: My Lords, as to the noble Lord's first point, perhaps I did not enunciate the answer clearly enough. Nineteen ninety-eight, the date in my Answer, was the last occasion when the accident was debated in the House. Secondly, I have not had time to study the document; it reached me only on Saturday. It is very thick and I have had one or two other things to do since Saturday. I am informed by those who have looked through it that there is nothing new in the report whatever. I have no difficulty in standing once again at the Dispatch Box and reaffirming that it is the view of the present Government, as it was the view of the previous government, that, tragic as it is, the accident was due to pilot negligence.
Lord Burnham: My Lords, whatever the alleged failings of the software, which are recorded at length in Computer Weekly, is it not the case that the direct course the pilots should have taken from Belfast to Inverness goes to the island of Pladda, where they turn left; that they had no reason whatever to be in line with the Mull of Kintyre; that if they hit fog and icing conditions and

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the computer software was in some way faulty, the instructions were quite clear that they should have turned 180 degrees and reversed their course?
Lord Gilbert: My Lords, not for the first time I am much obliged to the noble Lord for his contribution on this subject. Even if one assumes that there had been a catastrophic failure in the FADEC software, that does not alter the fact that the plane should not have been where it was, flying at that height, in that weather and on that heading. We have seen the flight plan that was filed and I understand that something like 90 seconds before the aircraft hit the Mull of Kintyre there was a way point where it was due to make a turn of about 15 degrees to port. I regret to tell your Lordships that that turn was never executed.
Lord Whaddon: My Lords, whatever the cause of this accident, will my noble friend bear in mind that fixed wing aircraft are safer, quicker and cheaper where suitable airfields can be used at either end of a journey, as was the case on this occasion? Will he reassure your Lordships' House that we shall always avoid putting so many security assets in a single aircraft?
Lord Gilbert: My Lords, as one who has had the pleasure of enjoying the privileges of both a PPLA and a PPLH, I do not necessarily agree with what the noble Lord said about fixed wing aircraft being safer than rotary wing. If an engine fails on a rotary aircraft one can go into auto-rotation and, if one is skilled enough and lucky enough, one can land in a smaller space than one can with a fixed wing aircraft. However, I certainly take his point about the number of people of high sensitivity in that plane at that time.
Lord Fitt: My Lords, irrespective of statements emanating from anonymous spokesmen in the Ministry of Defence, is the Minister aware that throughout these islands there is great unease about the blame apportioned to the two young pilots? Is he further aware that I live in Northern Ireland and that I have a direct vision to the Mull of Kintyre and the lighthouse where the tragic accident took place? For the past nine days I have noticed the frequency with which fog can drop, lift and drop again. Together with a number of people, I have been able to see how it would be possible for such a fog to be generated that the young pilots and the computers in their aircraft would not have time to deal with it. Does the Minister also accept that over a number of years there have been many miscarriages of justice in these islands? Time and time again such cases have been brought to the Court of Appeal, where it has been finally decided that those who were against the original decisions were found to be right.
Lord Gilbert: My Lords, I take the point that there is concern about the matter. That is why I have been on my feet so many times in your Lordships' House during the past couple of years. I, other Ministers in the Government and Ministers in the previous government have all crawled over the evidence with very great care. To a man, the conclusion we have reached is that the
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Royal Air Force findings were inevitable and totally justified. I should point out to my noble friend that, whether or not there was fog, the aircraft should not have been in that place, at that height, at that speed, at that time.
Viscount Slim: My Lords, was the helicopter maintained completely by RAF groundcrew or by contractors? I think the noble Lord will agree that there was some disquiet about certain airframes at the time the Ministry decided to bring in outside contractors for maintenance. Was this helicopter entirely maintained by the RAF, the contractors or a mixture of both? Was it an RAF officer or a civilian who confirmed that ZD576 was fit to fly? Is the Minister satisfied with the overall maintenance of the helicopter fleet within the Royal Air Force?
Lord Gilbert: My Lords, as to the noble Lord's specific point, I cannot be certain. My impression is that it was wholly maintained by the Royal Air Force. I shall check the point, write to the noble Viscount and have the Answer put on the record. As to his general point, I am perfectly satisfied with the maintenance requirements for Royal Air Force helicopters and that those requirements are met. It is always the pilot's responsibility whether or not he flies.

Local Government Bill
3.7 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, I beg to move the Motion standing in my name on the Order Paper
Moved, That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 to 29,

Schedule 1,

Clauses 30 to 33,

Schedule 2,

Clauses 34 and 35.—(Lord Whitty.)

On Question, Motion agreed to.

Employment Relations Bill
3.8 p.m.
Lord Simon of Highbury: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Simon of Highbury.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 1 agreed to.
Schedule 1 [Collective bargaining: recognition]:
Lord McCarthy Lord McCarthy moved Amendment No. 1:
Page 17, line 26, after ("holidays;") insert ("and
(b) any of the other matters mentioned in section 178(2), which the CAC specifies as within, or as relevant to, the method by which the parties are to conduct collective bargaining;")
The noble Lord said: The objective of the amendment is to widen the scope for recognition, particularly in terms of what the declarations of the CAC can contain. At present the Bill provides that a declaration of the CAC can cover pay. Would the Committee like me to wait?
Lord Clinton-Davis: Yes.
Baroness Farrington of Ribbleton: Noble Lords leaving the Chamber should do so without conversation in order that business may proceed.
Lord McCarthy: The object of the amendment is to widen the scope for recognition of declarations from the Central Arbitration Committee. As the Bill now stands, a declaration of the CAC in effect recommending recognition to a union can only cover three subjects—pay, hours and holidays; nothing more, nothing less.
The object of the amendment is to widen it so that the CAC is able at its discretion, not automatically and not in every case, to add to the subjects recognised, or take away, if it wishes, everything which is contained in the list of subjects in Section 178(2) of the consolidation Act of 1992; namely the definition of collective bargaining.
If that is collective bargaining and that is also very roughly the scope of a trade dispute, we are asking why all these subjects which can be negotiated voluntarily or which can form the basis of industrial action within the normal scope of what we regard as collective bargaining cannot be extended and included, at the discretion of the CAC, within the ambit of a CAC declaration. That is the object.
In Section 178(2) of the consolidation Act, "collective bargaining" is defined in such a way that it includes terms and conditions of employment, physical conditions, the engagement and dismissal of workers, the allocation of work, discipline, facilities for shop stewards or full-time officials, the machinery of negotiation and consultation. We are asking why, since that is all part of collective bargaining, it has been excluded from the ambit of the CAC when awarding a positive declaration in favour of collective bargaining.
One can put forward a range of arguments in favour of this proposition. The first thing that one might do is to go back to previous legislation of this kind. When the Conservative government in 1971 introduced the Industrial Relations Act, the body charged with the duty of making recommendations could include all these matters. Alternatively, if we look, for example, at the 1975 Employment Protection Act, when ACAS had the job, it could include all these kinds of subject. It was not necessary for it to do it every time and it did not do it every time. It chose the subjects which it thought were
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relevant to the workers concerned in the bargaining unit concerned and said "You will recognise all these subjects on this occasion".
Indeed, when this Bill was debated in the other place, these matters were included. This definition of Section 178(2) of the Consolidation Act 1992 was, in effect, the area and ambit of the discretionary work of the CAC. It was not until an amendment was moved in the Commons by the Government that this restrictive definition involving pay, hours and holidays was introduced. Even this Government and previous governments that have been involved in this kind of activity have seen the point of trying to make the widest possible discretion available to an organisation like the CAC.
Another argument might be that to give discretion of this kind very considerably helps the CAC in deciding what it can do for the union concerned. Sometimes the union has advanced a potential bargaining unit in respect of which it is not appropriate for the union to be recognised for the purposes of pay. This is because pay may be determined on a plant basis, a company basis or a national basis, and what the union is asking for is recognition for pay purposes within a particular group of workers. Similarly, with hours and holidays the employer may be able to go along to the CAC and say "We cannot be forced to recognise a union for these purposes with this small bargaining unit. It is not appropriate for pay, hours and holidays to be collectively bargained for at this level". However, it might be appropriate for engagement and dismissal to be negotiated at this level and it might be appropriate for grievance procedures and discipline to be recognised at this level. Therefore, I would argue that to introduce a firm, precise, limited link of this kind will make it much more difficult for a union to gain recognition.
Indeed, one of the questions that I would like to ask the Minister, because it is not clear from the face of the Bill, is whether it is seriously intended that if you gain recognition from the CAC you are entitled to negotiate all aspects of pay, even those which the employer can legitimately argue are not settled at this level. Surely not, and surely not all aspects of working hours. These are three rather odd subjects to be inserted in this restrictive way. They have never been inserted previously; they have not been inserted in parallel jurisdictions. What we are saying is that it would be much better if the Government were prepared to take a much more flexible approach in order to help the CAC. I ask them to accept the amendment.
Finally, I would also like to ask precisely where this limited list of subjects comes from. I have been told that it was in the election literature. It is true that it was in the election literature, but that is not necessarily a justification. It was not in the election manifesto. It was in the pre-election literature. It has never really been defended and it has never really been explained. Therefore, if the Government decide that they cannot accept our amendment for the first time this afternoon, perhaps they will explain to us why they have what appears on the face of the Bill. I beg to move.
3.15 p.m.
Lord McIntosh of Haringey: My noble friend ended his remarks by asking where the phrase "pay, hours and holidays" came from. He went back in time a little, prior to the election. However, I should remind him that the Fairness at Work White Paper said (in Annex 1, paragraph (viii) on page 42) that collective bargaining would,
"cover pay, hours and holidays as a minimum".
That is exactly what the Bill does. When my noble friend describes this as restrictive, I believe he underestimates the opportunities which exist for other matters to be covered in collective bargaining as a result of agreement between employers and employees.
My noble friend also made a point relating to the CAC declaration. He said that he wants Amendment No. 1 to reflect the emphasis which he places on the CAC declaration. Our point is that once recognition has been gained, either through a CAC declaration or because the employer has agreed to a statutory request, the employer and the union or unions try to reach agreement on how to give effect to recognition. In other words, they try to reach a procedure agreement which covers the scope of their bargaining, as well as how they will conduct it. If they agree between themselves, they are free to choose whatever subject matter they like. It is not at all restrictive. That is the effect of paragraph 2(7) of the schedule.
However, if in the last resort the CAC has to impose a bargaining procedure under paragraph 2(7) of Schedule 1 because the employer and the union are unable to agree how they will bargain, that procedure will, by virtue of paragraph 2(6), apply only to pay, hours and holidays. The imposition of the procedure will also trigger the requirement to consult on training under Clause 5, to which we will come later in the Bill.
The logic of this structure is that it is preferable for both sides to reach a voluntary agreement. Such an agreement can cover matters such as facilities for union officials, disciplinary procedures, steps to avoid industrial action and other detailed arrangements which are in the interests of unions and employers. My noble friend quoted the previous government's legislation and used the phrase "could include". That is exactly what can happen in the terms of Schedule 1. Once the statutory procedure has been imposed—the Government will be disappointed if that is not a rare occurrence—the parties can by consent vary it. Therefore, they have every opportunity and incentive to reach an agreement which suits them better than the rigid, fall-back model. If were to go back to the full wording of the paragraph in the Consolidation Act referred to in Amendment No. 1, we would have a rigid, fully detailed fall-back rather than the limited fall-back which we have here.
These amendments are intended to give the CAC discretion to include in an imposed bargaining procedure any matters which it thought appropriate. I have been talking, as did my noble friend, about Amendment No. 1. I think that Amendment No. 72 is intended to achieve much the same in respect of voluntary recognition. However, as I think noble Lords who took part in the Second Reading debate will know,
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the Government intend to table significant amendments to Part II which will not be compatible with Amendment No. 72.
I think it is apparent from the way I have described the structure of this aspect of the schedule that the Government cannot agree to these amendments: first, because we believe that the imposed procedure should be a simple, basic formula, a bare minimum which most employers and unions will find inadequate and which they will replace with something more suited to their wishes and circumstances; and, secondly, because it would be wrong to give the CAC such a wide-ranging discretion with no indication as to how it is to be used. I was a little surprised to hear my noble friend say that this would help the CAC. I think that it would be contrary to the kind of brief that we have been seeking to give the CAC. We have tried throughout the schedule to give the CAC clear guidance, even on such difficult issues as determining the appropriate bargaining unit, so that it does not find itself having to make up policy as ACAS did in the 1970s. That led to endless judicial review, something we have sought to avoid by including in the schedule clear criteria for decisions even at the expense of the schedule being incredibly long and complicated.
With the Government's proposed structure, employers and unions know exactly what the alternative is to a negotiated agreement on the scope of collective bargaining. But if the amendments were accepted, that would not be the case. It could undermine the incentive to reach an agreement if, for example, a union thought it might be able to persuade the CAC to include additional matters in the imposed procedure. That would not be a good idea. I hope the Committee will agree that we are seeking to do everything we can to encourage negotiated agreements.
I turn to Amendment No. 73 in the same group. As I said on Amendment No. 72. the Government will be bringing forward substantial amendments to Part II of Schedule 1, as Michael Wills said during Committee in another place. We intend to narrow the scope of Part II by excluding entirely voluntary recognition reached before the entry into force of the Bill or without a formal request, citing the schedule, from the union to the employer. So Part II will apply only to what might be called "semi voluntary" recognition, where the union has made a formal request and, if necessary, the CAC has determined the appropriate bargaining unit, but the employer has agreed to recognise the union without a ballot and without a CAC declaration of recognition. So Part II will be concerned with what happens if the parties are unable to reach agreement on a method for collective bargaining.
Lord Wedderburn of Charlton: I am grateful to my noble friend for giving way. What he has just said is of great importance to those of us who have put down amendments to Part II or have points of argument or presentation which rest on matters in Part II. What my noble friend said gives us a certain clue. But it is difficult for those of us who thought that Part II was about voluntary agreements if they turn into something rather more compulsory. Before this afternoon goes very

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much further, will my noble friend be prepared to make further points so as to allow us not to move amendments which have become irrelevant in view of the alteration of Part II of the schedule?
Lord McIntosh of Haringey: I understand the difficulty in which I have placed my noble friend and indeed all of my noble friends. I have been saying something which has not yet been set out precisely in the form of amendments. I have used the phrase "semi voluntary recognition" and I have undermined, if one likes, a substantial element of Part II, which I know is a matter of concern to my noble friend. The answer is, yes, I shall try. When we come to the first amendments which affect Part II, I shall try to say something a little more general about the way in which we see Part II, although it will not be very much more than I have been able to say on the amendments before us.
Lord McCarthy: Will the noble Lord be moving his new amendments during the Committee stage of our proceedings, in which case they will be manuscript amendments?
Lord McIntosh of Haringey: No, I shall not be moving them. They will have to come forward before the Report stage. We are still working on the detail of some of the amendments. As I think is apparent to anyone who is not as expert as my noble friends are in these matters, this is an incredibly complicated issue. The relationship between statutory recognition and voluntary agreements is, although of great importance in employment relations, very difficult to put into legislation. I am glad to see that my noble friend Lord Wedderburn is nodding in agreement.
Lord McCarthy: I am sorry to intervene again but the position is not clear to me. The noble Lord suggests that we should spend some of our time this afternoon passing Part II when we know it will not survive. It is a Part II that is nothing like the Part II that will come before us when we reach Report. That is a very strange procedure.
Lord McIntosh of Haringey: I shall try to make it possible for us to spend as little time as possible on Part II by being as explicit as I can about the objective of our amendments to Part II. What I cannot do is put the amendments down—and certainly not in manuscript form this afternoon. I do not think that the Committee would appreciate that.
Perhaps I may return to Amendment No. 73. The Government believe that in this case the law should be exactly the same as where the parties are unable to agree a method following a declaration of recognition; that is, the CAC should impose a legally binding agreement which the parties may then vary or replace, if they wish, by written agreement between them. The amendment would introduce a difference between the procedures in Part I and Part II. In Part II the scope of the legally binding method would be pay, hours and holidays only if the parties had not agreed on some other scope. I have
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to say that I think it unlikely that the parties will agree on the scope of bargaining but not on the other mechanics. It seems to me that it is more likely to be the other way round. But leaving that aside, the amendment appears to misunderstand the logic of the imposed method.
We said in the White Paper that recognition would at a minimum cover pay, hours and holidays. If the parties are unable to agree the scope and mechanics of bargaining, then the CAC will impose a method which will cover pay, hours and holidays. If that scope does not suit the parties—for example, if they have agreed some different scope—then they can immediately, if they wish, vary the imposed method provided that they agree the changes and make them in writing. So the Bill as drafted allows the parties to achieve the same effect as this amendment, though of course by a different route. On that basis, I hope that my noble friend will feel able to withdraw the amendment.
Lord Campbell of Alloway: Leaving aside for a moment the valid points made on Part II by the noble Lord, Lord Wedderburn—I gather that we shall come to that at a later stage—I wish to associate myself with the reasoning of the noble Lord, Lord McIntosh. Since I first arrived in the House I seem to have spent the whole of my time on trade union affairs and I have read the Second Reading report of the debate, although I was not present for it. In those days recognition was a distant prospect, and it has now come to life in a reasoned form, providing a fair balance between the employer and the employed.
I cannot see why the amendment is necessary in order to induce a better atmosphere for industrial relations. I listened with respect to the argument of the noble Lord, but he did not point to any specific way in which the industrial climate would be improved. For that reason, and for the reason given by the noble Lord, Lord McIntosh, I support the Government's rejection of the amendment.
3.30 p.m.
Lord Monkswell: I did not speak in support of my noble friend's amendment when he moved it, partly because I thought he moved it very eloquently but also because I was interested to hear the Government's response. Having listened carefully to their arguments, however, I think that the objective of good industrial relations will not be achieved by the present wording of the Bill but by the amendment.
If an employer is innately antagonistic to trade unions and trade union activity, probably because he has little experience of the way trade unions work, he will use all the mechanisms available to ensure that there is minimal involvement with trade unions and that any involvement is as fragmented as possible, thereby seeking to gain an apparent advantage over the trade unions.
The Bill states that the employer will be able to engage in three different mechanisms: the statutory recognition contained in Part I of Schedule 1, the training requirements of Clause 5 and the implementation of health and safety at work regulations. If

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the employer is minded, he can operate on a divide and rule basis, with three separate structures within the company negotiating those three different elements. The difficulty is that while everybody may think it is sensible to have one negotiating structure, through the trade unions, to deal with all aspects of relationships at work, the company will have an incentive not to come to agreement with the unions and to resist at every stage because it knows that the fall-back position is minimal.
I implore the Government to think carefully about the practical implications for commercial undertakings.
Baroness O'Cathain: The noble Lord, Lord Monkswell, has described industrial relations that pertained 25 years ago. People collaborate these days and there are no battlefields in organisations. The amendment will not improve industrial relations. I agree with the noble Lord, Lord McIntosh, and my noble friend that Clause 7 gives flexibility in regard to collective bargaining. Each company will want to negotiate with the unions in different areas. There should be an adult, co-operative relationship, rather than a confrontational relationship. I hope that the Government will persist in rejecting the amendment.
Lord McIntosh of Haringey: The noble Lord, Lord Monkswell, appears to think that the Bill contradicts the Fairness at Work White Paper which was generally well received both by the CBI and the TUC. I have already quoted page 42 of that paper. The purpose of a statutory minimum for collective bargaining is to encourage negotiation and agreement and to discourage the statutory procedures as far as possible. The statutory procedures are in place, and any employer who denies recognition to his employees on the basis that my noble friend seems to think survives in this legislation will be very unpleasantly surprised because there are 40 pages in Schedule 1 which are designed to ensure that that does not happen. However, that does not remove our determination that as far as possible there will be agreement and that that agreement will be a common agreement on what should constitute collective bargaining.
Lord McCarthy: I would be most willing to withdraw the amendment if I could secure the Minister's agreement to what I think he said and what I think Hansard will say he said: that in Fairness at Work pay, hours and holidays are a minimum. In the Bill they are stated to be a maximum.
Would the Government support an amendment on Report which proposed that the CAC would be free to add additional subjects if it so desired to the minimum, as spelt out in Fairness at Work?
Lord McIntosh of Haringey: I cannot allow that to pass. I said that they are minimum, and by agreement between employers and employees all the other subjects that may form part of collective bargaining may be added. We would not agree that the CAC should add
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others, because it is those concerned in the individual workplace who should be responsible for determining the scope of collective bargaining.
Lord McCarthy: It is a maximum so far as the CAC is concerned, which is what the Bill is concerned with, is it not?
Lord McIntosh of Haringey: That is not the CAC's function; it is there to institute procedures where it is not possible to achieve agreement in any other way. It is not the job of the CAC to determine the negotiating structure within any individual workplace.
Baroness Miller of Hendon: We firmly believe that when bargaining is imposed on parties, as distinct from what they mutually agree, it must be minimal. I agree with the noble Lord, Lord McIntosh.
Lord McCarthy: The CAC is the only body that has authority to institute negotiation. When there is no agreement, it is a maximum. The point I am making is that this is a change of policy. What is stated in the Bill is not what was contained in Fairness at Work, where it was stated to be a minimum, and if it had been, it would not have been necessary for Mr. Willis in Committee and the other place to move the amendment which would change it from a minimum to a maximum. It would be much more plausible and sensible if the Bill were an expression of Fairness at Work.
The spread of voluntary recognition cannot be promoted—I do not believe that that is what the Opposition want—by limiting the scope of statutory recognition. Because of the way in which the scope has been limited, with a concentration on wages, hours and holidays, it will often not be plausible, reasonable or sensible for the CAC to recommend any recognition at all.
Also, in Amendment No. 2 the Government propose a choice. I call it a pontoon game. The choice in future will be that if you receive a small amount of recognition outside the three statutory subjects, you will have to take a chance. You will have to "tick or twist", because you cannot go before the CAC and keep what you have. You will have to give it up and hope that you will get more. That kind of chopping and changing on the subject matter of recognition is not conducive to extending the scope of recognition.
Lord McIntosh of Haringey: I really cannot accept that. My noble friend suggests that there has been some change between the White Paper and this Bill. He suggests that we are now imposing a maximum rather than a minimum, and that the difference is in the role of the CAC. That is not the case. Paragraph 4.18 on page 25 of the White Paper states that the CAC will decide. Regarding,
"the procedure to be followed for negotiations between an employer and a trade union",
it goes on immediately to state,
"Recognition will cover pay, hours and holidays".

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There is no change between the Bill and the White Paper.
Lord McCarthy: In that case I cannot understand why the government representative in Committee in another place thought it necessary to move the amendment that he did. He changed the face of the Bill, giving as his reason that the Bill as drafted did not represent present government policy.
The Government have carefully, intelligently and shrewdly sought to fashion a very different system of recognition to the system we had in the previous period. I am not attempting to bring back that system, merely the small parts of it that worked. The noble Lord knows as well as I do that there are many reasons why the previous statutory recognition procedure did not work. It was mainly because access could not be obtained; it could be decided to whom the procedure applied. Employers had ways of prevaricating. But it was never because the CAC had discretion in deciding the subject matter of recognition. Nevertheless, at this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 2:
Page 17, line 29, at end insert—
("(8) The meaning of collective bargaining given by section 178(1) shall not apply
(9) Sub-paragraphs (6) to (8) do not apply in construing paragraph 30.")
The noble Lord said: I shall speak also to Amendments Nos. 60 and 61. We have already discussed the issue of pay, hours and holidays. Clearly, we have not achieved consensus. We shall have to attempt to do so. There are two related changes to the Government's position which need to be made to Part I of the schedule. The first is to ensure the "collective bargaining" covers only pay, hours and holidays rather than the whole range of subjects in Section 178 of the consolidation Act. That was the issue debated in relation to Amendment No. 1. That is the definition proposed in Fairness at Work, and it is already part of the Bill. It is also necessary to disapply expressly the definition in the 1992 Act. That is the purpose of the new paragraph (8) which Amendment No. 2 would insert in paragraph 2.
The reason for imposing a collective bargaining method over a restricted range of subjects is to give the union and employer incentives to negotiate as to what other matters should be bargained about. That is why it is not a maximum. Pay, hours and holidays are intended to be a fair minimum set of subjects for collective bargaining which the employer and the union will often wish to extend.
The second change concerns existing recognition agreements. The Government's policy is that existing bargaining arrangements should not be disrupted by the procedures in this schedule and that the existence of any bargaining arrangements should rule out an application for recognition under Part I. Paragraph 30 gives effect to that.
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However, not all collective bargaining deals with pay, hours and holidays. For example, as I said earlier, I ran a company which recognised an independent union for the purpose of representing workers in disciplinary claims and the like. It was also extremely helpful in the advice that it gave to the company on, for example, forming or improving a pension fund. We wish to ensure that no existing bargaining arrangements as defined by the 1992 consolidation Act are disrupted. The new paragraph (9), which Amendment No. 2 would insert in paragraph 2, ensures the definition of collective bargaining for the purposes of paragraph 30.
Amendment No. 2 therefore applies the appropriate definitions of collective bargaining to the schedule. Amendments Nos. 60 and 61 make changes to paragraph 30 to ensure that an existing collective agreement will not be disrupted by an application for recognition under Part I. Amendment No. 60 ensures that a collective agreement by which two or more unions are jointly recognised cannot be superseded by recognition under Part I. It also makes clear that paragraph 30 extends to collective agreements within the meaning of Section 178(1) of the Act. Amendment No. 61 ensures that a collective agreement which has ceased following a change in the bargaining unit under Part III does not bar any future applications for recognition in the new unit. Both these changes are relatively minor and do not affect the policy underlying paragraph 30. I beg to move.
3.45 p.m.
Lord McCarthy: These amendments are amazing. This provision was not mentioned in any manifesto. What we are being told is that if a union has a recognition agreement but it does not cover the three subjects of statutory recognition, if a move is made to obtain statutory recognition, to quote Amendment No. 61:
"An agreement for or declaration of recognition which is the subject of a declaration under paragraph 64(3) must for the purposes of sub-paragraph (1) be treated as ceasing to have any effect on the making of the declaration under paragraph 64(3)".
In other words, the union has to choose. Is it to go forward and hope that it obtains recognition on pay, conditions and hours, and give up what it already has in the hope of obtaining something else? Or is the employer going to say, "If you are going for recognition in the big league of pay and hours and matters of that kind, I will offer you agreements handling, but of course you cannot have both"? This is a very strange and queer amendment. If the Bill's main objective was to discourage recognition, I could understand this provision. But in a Bill whose intention is to encourage recognition I do not understand why we are playing pontoon.
Lord McIntosh of Haringey: I am sorry to have to disagree again with my noble friend—I do not like the position in which I find myself—but he misunderstands Amendments Nos. 60 and 61. Paragraph 30 is concerned with specific cases which must be dealt with separately under Schedule 1. Amendment No. 60 is concerned with the collective agreement by which two or more unions are jointly recognised. Amendment No. 61 ensures that a

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collective agreement that has ceased following a change in the bargaining unit does not bar any future applications for recognition. These provisions simply complete the policy that is already in the Bill in these two specific cases: more than one union, and an agreement ceases as a change in the bargaining unit. It does not cause any agreement to cease. It simply recognises the different circumstances that already occur in the Bill, and in particular in paragraph 30.
Lord Campbell of Alloway: I support the amendment. I me rely seek to find out exactly what it does. Is it related to the reference in paragraph (7):
"If the parties at any time agree matters as the subject as the subject of collective bargaining"?
Is the object to extend the definition of Section 178(2) to include such other matters as the parties may wish to agree?
Lord McIntosh of Haringey: If the noble Lord will look at paragraph (6) the definition there says that,
"References to collective bargaining are to negotiations relating to pay, hours and holidays".
Paragraph (7) states,
"If the parties … agree matters as the subject of collective bargaining, references to collective bargaining are to negotiations relating to the agreed matters".
The new paragraph (8) says,
"The meaning of collective bargaining"—
that is the broader agreement—
"in Section 178(1) shall not apply".
That is because we have already covered the minimum and all the optional extras, if I may put it that way.
Baroness Miller of Hendon: I did not rise to my feet before the noble Lord, Lord Wedderburn, replied because we had no exception to anything which the noble Lord, Lord McIntosh, had said on the matter. It is an extraordinarily long list of amendments. I shall only rise to my feet when I have something to say other than at this stage to say that since my noble friend asked for clarification, I ask the noble Lord, Lord Wedderburn, to clarify what he meant by "them"? I presume he meant Members of the Committee opposite. The noble Lord does not have to comment; I merely wanted to say that.
Lord Wedderburn of Charlton: I have not spoken yet.
Baroness Miller of Hendon: I beg the noble Lord's pardon. I meant the noble Lord, Lord McCarthy.
On Question, amendment agreed to.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 3:
Page 17, line 29, at end insert—
("(8) References to a breach of anything made legally binding on a party by any provision of this Part refer to liability for breach of
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contract (with such limitations as to remedies as are set out) and no other breach of duty or liability is thereby created, Whether in the law of tort or otherwise.")
The noble Lord said: In moving this amendment I shall speak also to Amendment No. 58. As in the case of a number of amendments in the name of myself, my noble friend Lady Turner and the noble Lord, Lord McCarthy—just to make clear who is who—this is an amendment which some have described as "legalistic". Of course it is legalistic in the sense that we are making law. It is a legal point. in substance. It is very much along the lines of what I take to be the Government's policy in introducing a schedule in this Bill making recognition of collective bargaining in certain circumstances obligatory. That is why I understood that the only remedy offered to one of the bargaining partners for a breach of a legally binding contract, method or agreement—all three are in the schedule—is a very limited one based on the old equitable remedy of specific performance. There must be more to be said about the schedule on that matter since plainly the courts will look for guidance to the legislature on how that old remedy is to be used for new circumstances. That must come later.
Amendments Nos. 3 and 58 will need extension if they are taken on board by the Government since at the moment they apply only to Part I of the schedule. It is easier to do it this way. Both amendments suggest that further limitations on litigation may be needed in the light of judicial developments, of rather uncertain ambit, in the civil law generally and in particular as regards the law of tort. As the Bill stands those developments have possible ramifications as regards recognition and collective bargaining where the CAC specifies that that should occur.
There are moments in the gradual development of labour law at court level which must be looked at carefully in new legislation. A classic moment of this kind occurred when Sir Charles Dilke, on 3rd August 1906, saw that the trade disputes Bill of that year did not cover the liability which had come about in the courts for inducing a breach of employment contracts after the case of Lumley v. Gye of 1853. He persuaded the House to adopt it. He did not need to make a formal speech. As Lord Robert Cecil said, he was much too old a parliamentary hand to do that. Dilke pretty well persuaded the House, except for the last-ditchers like Lord Robert Cecil, to adopt a measure of protection in trade disputes without which the entire structure would have fallen like a pack of cards.
This is a similar situation although, unhappily, it lacks Sir Charles Dilke to deal with it. The uncertain extensions in the liability in tort began in the 1960s when a breach of contract came to be regarded as an unlawful means or an unlawful act. Therefore, if one breaks a contract with X knowing that damage is going to occur to Y. that may be actionable by Y. That is a very important proposition because the schedule of the Bill says that only one of the two bargaining partners can bring the action for specific performance of the agreement put in place by the CAC. If that were not so and a third party could sue, what would be the point of limiting the remedy for the first two parties?
I should substantiate the point. Gradually the view that a breach of contract, inducing it or using a breach of contract of any kind in order to establish liability to a third party—or even one of the two parties if it is induced by someone else—is now pretty clear. There are doubts about its precise formulation. I have to establish, so that the record is clear, that that point is established with a review of the authorities by Lord Justice Stuart-Smith and Dame Elizabeth Butler-Sloss in Associated British Ports v. The Transport and General Workers Union in 1989. In that case Lord Justice Butler-Sloss said that the case of Torquay Hotel Co. Ltd. v. Cousins, 1969, established that a breach of contract which had effectively no remedies left after the operation of a force majeure clause, even though the other party could not sue for damages, had no injunction or similar remedy, was a breach of contract and therefore unlawful. As Lord Denning said on a number of occasions, to make use of it was to use an unlawful means.
I shall cite what Lord Justice Stuart-Smith said in what is sometimes called the "Dock Strike" case, which was Associated British Ports v. The Transport and General Workers Union. He said that in Torquay Hotel Co. Ltd. v. Cousins the remedy was not available in damages since force majeure was pleaded, but the existence of a breach of contract which might be repudiated was recognised.
I detect already a note in the debate that "This will not happen often" or "This is not what it is about". The legal provision is nearly always about the pathological situation and not about the common and normal situation. If one employer and one trade union gains recognition through the CAC one wants to know what happens if the employer or the union actually breaks the CAC-imposed agreement. We know that between the two parties that is a remedy of specific performance, although there may be difficulty in carrying it out. The third party may say, "When you took action in breach of the agreement you knew that it would damage me". For instance, a subsidiary of the employer would always be a standing object for such status. Perhaps an associated body of either party says, "You knew that damage would flow from a possible breach and therefore we can sue you. What is more, we can sue you not merely for specific performance"—that would be absurd; there would be no specific performance rights here because it would be a third party—"but for damages, an injunction and any other remedy that our lawyers can think of on the day".
Unless a barrier to the range of legal remedies in Schedule 1 is put in place there is a risk of many situations arising in which there is quite unnecessary litigation. At any rate, if there is to be litigation we should know what we are doing. I suggest that in principle a limit should be placed on legal action of this kind. Where the parties can sue each other for whatever is a limited liability or right third parties should not be allowed to extend legal proceedings on a different base of the law of tort just because a breach of contract is regarded as unlawful in the law generally.
I put the point in a final and rather important way. In the course of the Bill we are learning to live with principles that are the opposite of those which have applied since 1969, or possibly before that in the literature. For a very long time the presumption has been that collective agreements are not legally binding at the collective level, to say nothing about their incorporation into individual employment contracts, because that is the way that they are made legally enforceable in Britain. But at the collective level for many decades they have not been regarded as legally enforceable agreements. That presumption is abandoned in the schedule. (I thought that the noble Baroness, Lady Miller of Hendon, wanted to interject. I am glad to see that she shakes her head vigorously.)
The presumption laid down in Ford Motor Company v. AUEW in 1969 that collective agreements are not enforceable between the parties is to be set aside in the relatively limited but nevertheless real territory of Schedule 1. If we change the basic legal rule we have an obligation to see how far we are going and to say, "Not that far because it will do great damage to the social fabric of collective bargaining between employers and trade unions".
If we do not impose a limitation it will be on our heads and not the responsibility of the courts, whom I have been known to criticise, because the fact that the principle goes beyond the normal rules of the law of tort will be there for all to see. It will be our fault if we do not stop at this point and say that we do not want a lot of litigation, especially by third parties, because it will ruin the entire scheme and that we may as well scrap Schedule I and go back to collective bargaining that is nothing more than voluntary and includes all the legal obligations that we can think of. I beg to move.
4 p.m.
Lord McIntosh of Haringey: I am sure that my noble friend and I are in agreement about the importance of ensuring that any procedure which is enforced in the way set out in the schedule should be as rare as possible. I am also sure that my noble friend and I are at one in wishing to ensure that any proposed enforcement procedure in this Bill should not be broadened by the courts in a way that is not intended. I hope I am right in my understanding that that is what lies behind my noble friend's amendment.
My noble friend raises historical parallels which I am certainly not qualified to match or cap. He does himself an injustice if he thinks that he is not the Sir Charles Dilke of the end of the 20th century. I believe that over many years he has enjoyed a reputation for finding defects in trade union and employment relations legislation and ensuring that, given the political will, they are put right. But I hope to persuade him in the first instance that he is right to say that the occasions on which these issues will arise will be relatively limited.
I accept that in the past the courts have been ingenious in finding new obstacles to trade union activity, but we do not believe that the Bill creates other potential liabilities, for example breach of a statutory duty. We believe it is completely clear that the imposed

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method for collective bargaining under paragraph 27—which is when the CAC comes in—is legally binding only between the parties. Indeed, sub-paragraph (4) makes clear that,
"Any method specified under sub-paragraph (3) is to have effect as if it were contained in a legally enforceable contract made by the parties'.
Sub-paragraph (6) provides that,
"Specific performance shall he the only remedy available".
We have constructed this carefully to exclude any breach of statutory duty, for example.
Perhaps I may take the opportunity to clear up any misunderstanding about what the imposed method in paragraph 27 will involve. The model method which the Government intend to provide under paragraph 127 of the schedule will be purely procedural. It will specify the matters for collective bargaining, namely pay, hours and holidays, and when talks are to lake place, who is to attend and what further steps are 'to be taken in the event of a failure to agree. In other words, it will be a typical basic procedure agreement. It will not require the parties to agree; it will not require arbitration if talks fail; it will not impose additional legal constraints on industrial action. That is an important point which my noble friend should consider when he suggests that there will be an extension into the courts.
The parties can, if they agree, vary the method imposed on them by the CAC to do all these things and snore, if they wish, but the method will not impose them. We hope and believe that the method will be invoked only rarely. I know that my noble friend anticipated that; indeed, he said so. We believe that almost all employers and unions will prefer to reach a negotiated agreement on a bargaining procedure which offers far more flexibility.
My noble friend believes that the exception will arise where there is a pathological condition, as he put it. I am not sure whether he was referring to a pathological disagreement involving both employer and union or a pathological condition in one party alone. But we believe that the restrictions set out in paragraph 27 mean that the kind of extension that he anticipates and fears is unlikely to take place.
The legal advice that I have received is that these amendments are unnecessary. However, I recognise his expertise in this area. I assure him that the Government will study very carefully what he has said today and reflect further on whether a provision on these lines is desirable. We shall be very happy to talk to him about it between now and Report stage. On that basis, I hope that he will feel able to withdraw the amendment.
Lord Wedderburn of Charlton: I am grateful for such a positive response from my noble friend. The test is not whether it will happen only once. If one had a Bill which said that X's head would be chopped off it would be highly objectionable, and it would happen only once. That is what one means by going a step further into social affairs. Pathological social events are those where some part of the system has gone wrong. I accept that this type of case will occur mainly or only where part of the system of collective bargaining, CAC
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and all the rest in Schedule 1 goes wrong but people's reactions cannot be limited to that. The case of Rookes v. Barnard in 1964 that I cited sent the trade union movement, rightly, into a great flurry of objection to the direction of the law of tort. I tried to make it clear that I appreciated why the Government have done that.
A contract, agreement or method between the two parties—the employer and the union, to make it clear—is of course a legally binding contract or legally enforceable agreement with a limited remedy. All that is absolutely clear. I have been known to write criticisms of cases. One gets to know cases better when one criticises them. One of the Government's troubles is that they do not like any arguments other than those they have seen, then altered.
A contract made through the CAC procedure is binding between A and B and enforceable only by a specific performance. There are problems about that specific performance remedy. Also, there are many cases involving a contract even of that kind—Torquay Hotel Co. Ltd. v. Cousins was one of them—where the limitation of remedies did not prevent the court saying, "You've broken your contract, which induced further damage to a third party". Of course there must be some degree of knowledge or deliberateness, which is the phrase wisely used elsewhere in the Bill. That does not mean that a case will never arise.
As the Government are reconsidering many important parts of the Bill, I ask them urgently to look a t that type of case again. If my noble friend wants me to submit a further reading list, I will do so—although I have tried to avoid that response. Even the three cases that I cited are enough to show that a third party in some cases could get to court under the schedule. Then he would not be limited by the limitation of remedy.
The fact that such a case might happen rarely is neither here nor there. My noble friend cannot predict the response of the trade union movement, CBI, TUC or anyone else to one dreadful decision because they believe that cannot happen. I do not believe that any of the parties that went before the Government with their arguments thought that such a remedy could occur. If the Government want a Schedule 1 that works, I ask them to accept an amendment of this kind. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.15 p.m.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 4:
Page 17, line 39, leave out ("21") and insert ("50")
The noble Baroness said: I would like to speak also to Amendments Nos. 5, 6, 74 to 75A, 163, 165A and 169A. The amendments relate to the number of employees who may form the quorum to initiate the procedures for union recognition under paragraph 6(1)(a) and (b). I have said that I shall be as brief as possible because of the number of amendments. I do not wish to sound churlish towards Ministers and their officials who were so helpful to me before this stage in faxing other amendments and so on. The truth is that the Bill has grown enormously since we set the time, so

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although I made up my mind to be as brief as possible I have rather more to say on this particular amendment which is of great importance to small and even medium-size businesses.
Amendments Nos. 4 and 5 increase the number employed from 21 in the Bill to 50. The original number seems to have been plucked from the air. There used to be a sign on London Transport double-decker buses, "Small dogs may be carried upstairs at the conductor's discretion". I remember the debate about how small was a small dog.
When the Bill was debated in Committee in another place, it was suggested that the number of employees be increased to 50 and that the Secretary of State should have the power to reduce the number to 21 in light of circumstances and on the advice of the CAC—whereas the Secretary of State was proposing to reverse that process by starting at 21 and increasing the number to 50 in light of circumstances. Paragraph 6(6)(b) gives that power of variation. At least we have taken one small step in the right direction. By having that paragraph, the Government have acknowledged that 21 may be too stringent. I go further. I believe that that number could seriously damage small businesses. By the time the Secretary of State is persuaded of the existence of a problem and gets around to resolving it, it could be too late.
For the purposes of this Bill the Government have arbitrarily picked on 21, but in the case of the liability to pay interest under the Late Payment of Commercial Debts (Interest) Act 1998, the number chosen to define a small firm was 50 or fewer. Consistency in legislation would be an advantage. My honourable friend the Member for Daventry told the Committee in another place that the basic test for a small firm in the US was 50 employees or fewer.
That brings me to the second reason for saying that the figure of 21 is unacceptably and unreasonably low. Let us assume that the firm has a bare minimum of 34 employees. The employer must recognise the union if a mere nine employees—40 per cent of the workforce—requires it and the majority vote in support. In other words, if only three bother to vote, it would take just two votes to approve. Even 11 out of 21, although a majority, could be disruptive in a small business where everyone knows everyone else.
If 50 employees were the qualifying number to start the process, 20 employees would have to approve—which would be much more reasonable. It is no use saying that the other employees should have voted. Apathy towards union affairs is one of the factors that unions, in their heyday, relied on to rule an indifferent majority. The fact that an employee does not vote is not an indication that he is in favour any more than against. It simply means that he did not vote. It is not too difficult in a small firm with just 21 employees for union-minded activists to secure a derisory nine votes, especially when personal relationships can be a means of asserting influence. I would not say pressure, although that could be a factor.
In Committee in the other place, the Minister said:
"The Government recognise that small firms may be different in that they are often managed on a personal basis and collective bargaining may be inappropriate".
That returns me to the question of how small is a small firm. I believe that the answer is 50 employees and hope that the Government will consider accepting that figure.
Amendment No. 6 excludes from the definition of workers those who are directors, the company secretary or any other persons regarded as officers of the company. Common sense suggests that a director could in no way be regarded as a worker for the purposes of the Bill and thus contribute to the quorum when deciding whether a claim for union recognition could be launched. However, I have no doubt that some ambitious trade union organiser would try to establish that directors are to be included in the total number of workers. More relevant than that hypothetical suggestion is the Government's own attitude to the definition and status of directors.
When your Lordships debated the National Minimum Wage Act 1998, I sought to exclude directors on the ground that many directors of small family businesses would choose for whatever reason to pay themselves no wages, especially when the business was experiencing cash flow problems. The Government adamantly refuse that exemption on the ground that they would accept no deviation from the national minimum wage.
Again, on grounds of consistency, clearly the Government are going to hold that directors are workers for the purposes of this Bill and their mere existence may very well trigger the recognition process. Once again, I believe that the Government overlook the special needs of small businesses, those which will almost certainly be most hardest hit by the operation of the Bill.
There are tens of thousands of small family businesses with just two husbands and wives as the directors and perhaps a bookkeeper acting as company secretary. Therefore, they already have five people out of the 21. Of course, they could vote in the ballot and possibly ensure its being lost, but I am certain that the union organisers would say it was unfair that the directors should have a vote in the circumstances. I do not believe that the Government can have it both ways. Either the directors should be excluded or they should have a vote in the ballot. It is our preference, in the interests of commonsense, that directors, using the ordinary everyday meaning of the word, should not count as part of the workforce.
The amendment also excludes some shareholders because in the context of small family businesses, members of the family may have shares and work in the business, possibly just part-time when extra help is needed. Under paragraph 6 of Schedule 1, part-time employees are counted. I have excluded workers who also hold shares in their employing company which are quoted on a recognised stock exchange. Clearly, it would be unfair to an employee that he should suffer a loss of his franchise simply because he has enough faith and interest in his employers to buy shares or to acquire them as part of an incentive scheme.
However, I recognise that a Government who have an inherent distrust of employers, even those who operate share incentive schemes sanctioned by the Inland Revenue, may suspect that some Machiavellian employers may hand out shares to a few employees in order to reduce the number of qualifying employees. If the Government would accept the principle of excluding persons who are not really employees within the ordinary understanding of the word, I am sure that with a little more specific drafting we may be able to reach an accommodation over this aspect without causing any kind of loophole.
Finally, I have proposed to exclude members of a partnership who as individuals would obviously be working in the business. When we debated the national minimum wage, I postulated the hypothetical large firm of solicitors with, say, 74 partners who the Government insisted were just one legal entity. I am sure that the noble Lord, Lord Clinton-Davis, will remember that discussion. If then they were regarded as workers, the starting line would be crossed before one counted the first typist or the first tea lady. Of course, it would be harder to get the 40 per cent, or a majority of it, but in order to avoid future litigation and in the interests of clarity I feel that it is better to exclude them in clear terms.
This group of amendments is intended simply to provide a fair balance of rights and responsibilities such as was claimed by the Secretary of State during Second Reading in the other place to be the objective of this Bill. That being so, I very much hope that the Minister will feel able to accept them.
Lord Taylor of Warwick: I support the noble Baroness, Lady Miller, especially in relation to Amendments Nos. 4 and 5. It was Groucho Marx who complained,
"I worked my way up from nothing to a state of extreme poverty".
This aspect of the Bill in its present form could cause many small business owners to echo those words. The heart of the problem is that under the terms of the Bill the definition of a small business is one with 20 employees or fewer. That automatically puts a firm with just 21 workers in the same league as a giant corporation with huge resources. It is like the young chap who called himself a plant manager when in reality all he was required to do all day was water them.
The Confederation of British Industry, the British Chambers of Commerce, the Federation of Small Businesses and the Institute of Directors have all asked the Government to raise the threshold. They suggest that an exemption for small companies with fewer than 50 employees is more realistic. It is a great concern that the Bill uses the arbitrary number of 20 workers, ignoring all the advice and submissions from those expert organisations.
The figure 20 has no real significance. My first fee as a lawyer many years ago was a four-figure sum. That sounds impressive until I tell your Lordships that it was £12.95. I should like to know what impact analysis the Department of Trade and Industry or any other government department have carried out. What will be
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the percentage cost increase of compliance for firms employing 20 people? If that research has not been done, why not?
It would not be unusual for a firm with fewer than 50 workers to have just one personnel manager and one accounts manager, or even just a bookkeeper. A letter from a firm's trade union requesting collective bargaining at a time when some key people are away, on sick leave or on holiday could make it difficult for the employer to respond within the statutory timetable. One could argue that a union is likely to take advantage of such an employer, but the very existence of such provisions makes smaller firms more vulnerable.
The future of small companies is vital to our economy and I do not believe that anyone here would disagree with that. They are the majority of businesses in this country, contributing 40 per cent of turnover and employing 50 per cent of the private sector workforce. Since this Government came into power in May 1997, they have imposed 2,400 new regulations. The Institute of Chartered Accountants estimates that the extra cost of these regulations for small businesses is £5,000 a year. As a vice-president of a small business bureau, I know that many small firms have struggled to survive this onslaught. Now, just as they see a light at the end of the tunnel, it is the light of an oncoming train called the Employment Relations Bill.
Lord Davies of Coity: I am wondering whether the point of the legislation is being missed by the spokespeople on the Benches opposite. It is about fairness at work. It is about ensuring that workers in this country are treated fairly by their employers and by this society. It is a bit rich for Members on the Benches opposite to describe fairness when for more than a decade, beginning in the 1980s, they introduced anti-trade union legislation which damaged the interests of workers who were represented by trade unions and workers who were not. By that I refer to the emasculation and eventual abolishment of the wages councils which were intended to produce minimum standards for working people in this country.
I notice that the noble Lord, Lord Tebbit, is smiling. I recall that a couple of weeks ago he described the extent to which he consulted before he introduced his legislation. I was at the sharp end of his legislation and I do not recall him once taking on board any representations made by trade unions on behalf of their members and workers generally.
The noble Baroness, Lady Miller, says that in America the figure is 50 workers. If the industrial environment, the structure, determines that 50 is the appropriate figure, that is fine, but we are saying that this Government have consulted widely with representatives of employers and trade unions. To a large extent, they have forced representatives of the CBI and the TUC to come together to try to thrash out as many points as possible so that legislation could be made easier and fairer for those people.
Where that was not possible the Government had to take a decision. However, they did so based on the evidence before them and on the structure of industry in

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this country. As the legislation is about fairness at work, perhaps I may remind the Committee that every worker is entitled to that fairness. We have mentioned the figures of 50 and 21. The noble Baroness, Lady Miller, said that the Government picked the number 21 out of the air. I suggest that perhaps she picked the number 50 out of the air as an alternative. Perhaps there is evidence from America which does not apply here.
4.30 p.m.
Baroness Miller of Hendon: The figure of 50 that I picked out was the amount used in the late payments Bill. That was the number used to define a small business. The American experience was another matter.
Lord Davies of Coity: I take that point. However, an enormous number of people in this country, working throughout industry, will be denied the opportunity to have a trade union to represent their interests in terms of collective bargaining and representation if this amendment is agreed to. We understand that industry is changing and larger companies are employing fewer people and small firms are enlarging to more than 50 workers. I believe that the Government have got this right and I hope that the amendment will be withdrawn.
Lord Cavendish of Furness: Perhaps I may declare an interest, as I did on Second Reading. Rather than going through the lengthy description of the interest that I declared then, suffice it to say that I employ some 300 people and this Bill would impact on my affairs and those of my workforce.
I rise to speak in support of my noble friend's amendment. There has been talk of consultation and partnership in relation to this Bill. I believe that consultation was dealt with, although there still remains the question of who is to be consulted and who will listen to the consultation.
On partnership, again and again on Second Reading the question was raised as to whether partnership favoured the employer at all. In the reply there was no mention of it, and I can find nothing whatever to support the suggestion that partnership favours employers.
The debate on "smallness" is important. There is a level at which it is acknowledged, almost universally, that trade union activity is not appropriate. I believe that "smallness" relates to functions rather than to the numbers on the payroll. The number of people on a payroll can be misleading in a huge number of ways. My slate quarry operation opened an office in London—a huge investment with high risk—involving three people. It was crucial to the business's success that that little unit functioned properly, and it was completely discrete from the workforce in Cumbria.
All businesses have a minimum number of functions for which management is always looking for cover, just as Ministers look for cover when one of their number falls ill and someone else has to do their business. I would have thought that the question of functions would show a typical profile which would include an accounts department, a marketing department, a sales
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force, a human resources department, a production department which, in turn, can be sub-divided into several utterly different activities, packaging, transport, and so on. A minimum number of functions would perhaps be six to 10, so to say that you are talking about 20 people would be wrong as you may be talking about cover for only one person in a very small business.
I believe that a business with 50 employees is still a small business. I would not go to the barricades over it, but I suggest that this is a genuine attempt to achieve a sensible number. I suggest that we are looking more towards the number of 50 than towards the number of 21, for the reasons that I have outlined.
Lord Gladwin of Clee: When speaking to sub-paragraph (a) of Amendment No. 6 the noble Baroness referred to officers of a company, directors, company secretary and other officers of a limited company, but she made no reference to managers. I know a lot of managers and there are many in my trade union who would resent the fact that they are not described as workers. I find that curious. Officers of a limited company are identified, but managers are not.
In sub-paragraph (c) the noble Baroness talked about a partnership and described the kind of partnership that she had in mind. Should I assume that she would exclude companies like the John Lewis Partnership?
Baroness Miller of Hendon: I did not mention managers. In relation to small businesses, in many respects the husbands and wives who run the businesses are the managers of such businesses. We are not talking about large businesses. However, so far as managers are concerned—
Lord Gladwin of Clee: There must be managers if there are 50 employees.
Baroness Miller of Hendon: Amendment No. 6 refers to excluding such people from the number of 21 employees and not 50. That was the point that I was making. If the Government do not feel it is possible to alter the number from 21 to 50—although I hope they will be able to—at the very least I included in the same grouping an amendment which recognises that if you include all the other people in the figure of 21 you are in trouble. The reason that I did not add managers was for the reason that I gave in the first instance, not because of an implied insult to managers, but if I excluded managers as well there would be only one person left in the business.
Lord Brookman: I too want to declare an interest. I currently sit on the General Council of the TUC. Alongside me is a past General Secretary of the TUC and other colleagues around me have also sat on the General Council of the TUC. The majority of people with whom I come into contact in my area of work would wish to see all workers, irrespective of a figure of 21 or 50, with the right to be represented by a trade union at their place of work. Why? The reason is that, in my opinion, in the world of work there are bad employers.

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I recall my second-oldest daughter, home from university—she is a married woman in her late 30s now and she is doing quite well—working part-time in the holidays in a small factory. There were probably about 20, 30 or 40 young ladies working there making sandwiches which were on sale up and down the high street in various parts of the area where I live. I cannot recall precisely—I would not want to be sued—but I believe that my daughter received 75 pence per hour while the owner had a white Rolls-Royce outside the front door. I think that is grossly unfair and I am sure that noble Lords opposite would agree.
On representation at work, I realise that some noble Lords on the Benches opposite are inclined to have no views about trade unions, trade unionists, national leaders of trade unions or the General Council of the TUC. If they could do away with them, neuter them or abandon them, they would do so. We have survived 18 years. I understand the shaking of heads in relation to looking at the past. I am one who wishes to look to the future. I would like those on the Benches opposite also to look to the future. This legislation is about the future and fairness at work in the future. We would hope that all workers have the right to have trade union representation at work. We are satisfied that the Government are doing their best to get harmony in the workplace. Therefore, I hope, along with my colleagues on this side of the Committee, that the figure of 50 is withdrawn.
Lord Tebbit: I am tempted to my feet partly by the remarks of the noble Lord, Lord Davies of Coity. For a while he dwelt upon my reluctance, when I was Secretary of State, to engage in consultations about my legislation. He has a short memory. He should remember that the trade unions mandated themselves not to discuss with me anything about my proposed legislation. I was cast into what they believed was some form of outer darkness and they would not speak to me. I believe that I enjoyed quite a nice illuminated life at that time.
However, if I may tell a secret or two, my life was illuminated from time to time by the fact that the noble Lord, Lord Murray, would come in to see me through the underground car park and the back lift. I always found those meetings agreeable, even when we could not find agreement. I often profited from the wise words of the noble Lord, Lord Murray, though I do not know whether he ever profited from anything I said in return. That was the situation at that time. I was willing to consult; but it takes two.
I support these amendments. I have in mind an engineering company with which my family sometimes deals. The proprietor and chief executive of that small company, which would be caught by the Bill, spends days at a time out on the road without even returning to his office. It is a company in which nobody works harder than the proprietor. Often, for days, his only contact with the office is by telephone. Where does that fit in with these provisions?
There is some idea, particularly among those who have been so grand in life as to have served on the General Council of the TUC, that all companies, even
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those with only 21 employees, have a personnel manager, perhaps a personnel department and a multiplicity of people backing up on each function. It is not like that. If one is faced with a difficult trade union, a difficult regional officer or shop steward, life can be made almost impossible under the provisions of this Bill. One is always going back to deal with the many trade union matters that can be generated rather than looking after the customers and running the business.
I thought we had got away from that. and that most people were glad to get away from it. In fact, there are some former businessmen on the Government Front Bench who were glad to get away from the days of the 1970s. This is a small step back in that direction. Of course it will not unduly worry the vast multinationals. In general they can cope with these things—they have years of experience of them. In any case, most of my legislation will be left intact. We are not going back to the bad old days where the print unions ensured that no women, blacks or Asians were employed at the print shops at The Times and other newspapers in Fleet Street; my legislation stopped that. As I understand it, it is not the intention of the Government to undermine that.
So the big boys will not be particularly worried. But this Bill will hit the small companies—those we hope will not stay small but will grow. It will be a disincentive to them to grow. Also, as I read it—I hope I will be corrected if I am wrong—it will be a disincentive to employ part-time workers. After all, if we employ part-time workers, we employ twice as many people, so we bring ourselves into the ambit of the Bill with even a dozen employees, not even 21. There will be a clear incentive on managers and proprietors of such small companies to get rid of part-time employees and replace them with full-timers, thus reducing the head count. I am not sure that that is altogether a good thing. Many part-time workers are part time only because they have other responsibilities; most notably single parents who still have custody of children. Part-time working is one way in which they can get back into the labour market. It would be a tragedy to discriminate against the likelihood of their achieving a job by the introduction of this sort of legislation.
I do not understand why the Government are so attached to the figure of 21. It is an extraordinarily low number. A few years ago we normally defined small businesses as those employing fewer than 100 people. Now we are setting down this sort of definition. Small businesses cannot cope with the possibility of difficult trade union activists mucking the business about, possibly in order to pursue an agenda which is nothing to do with the company in question but concerns a company down the road. For that reason, if my noble friend decides to press these matters to a vote either at this stage or on Report, unless I have heard some powerful arguments to the contrary from Ministers. I shall support her.
Lord Murray of Epping Forest: I wonder whether the noble Lord, Lord Tebbit, recalls the old, unhappy. far-off days and battles of long ago. Truth to tell, there was only one real disagreement between the noble Lord and myself in those days. I was anxious to extend to

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every individual employee the inestimable value of having standing behind him an organisation, a group of people, who would protect him if he was intimidated, treated wrongly or exploited by any employer, no matter who that employer was. The noble Lord's purpose was to restrict, limit, inhibit and make it as difficult as possible for that individual to join a trade union. Trade unions are about individuals.
I am astonished that we should argue about the number 21. As has been said already, that number is far too high. We are talking about a Charlie Jones and a Mavis Thompson. The right of an individual to seek protection is paramount in our society and I wish to ensure that that is achieved. If the figure of 50 had been on the face of the Bill, we would have heard the same arguments, the same passion and the same demands from the Benches opposite to extend it to 75 or 100 for exactly the same reasons as have been adduced. If I was able to introduce an amendment to reduce the number from 21, I would be tempted to do so. I am happy to accept a compromise. It is a good compromise and I go along with 21 for the present time.
4.45 p.m.
Lord Geddes: It is with apologies that I intervene in the proceedings of your Lordships' Committee as I was not able to take part in the Second Reading debate. I shall be extremely brief. It may help the Committee, and indeed the Government, to take cognisance—I say this with some trepidation with my noble friend Lord Tebbit sitting beside me—of the EU definition relative to the number of employees. It supports my noble friend Lady Miller. A "large" firm is defined as an organisation employing 250 plus; a "medium" firm is 50 to 249; "small" is 10 to 49. It is interesting to see how the figure 21 comes into the middle of this. There is a fourth definition of "micro", which is nought to nine.
I am fully aware that British legislation is being proposed but, as my noble friend Lord Tebbit reminds us again and again, to some extent British legislation is also subject to European legislation. I hope that the Government have not got it wrong with the figure of 21 when the Commission defines a "small" business as up to 49 employees and a "medium" business as 50 plus.
Lord Brookman: Surely the noble Baroness is not too interested in knowing what is going on within the European Union. After all, the other side is always wishing to pull out of the European Union.
Baroness Miller of Hendon: The noble Lord, Lord Brookman, has never heard me say that I wish to pull out of the European Union. His comments do not add anything to our discussion.
Baroness Turner of Camden: Do Members on the other side of the Chamber appreciate that when we talk about trade union membership, it is something entirely voluntary? People voluntarily decide to join a union and once they are in a union, they simply want to ensure that they receive their legitimate rights. Quite frankly, the noble Lord, Lord Taylor, made the case for us to
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some extent when he said that 50 per cent of the private sector workforce was involved. If that is the case, we are really talking about a very large number of employees. If we do not have legislation of the kind proposed by the Government, those employees will not have the rights which really ought to be theirs.
Lord Monkswell: The noble Lord, Lord Tebbit, seemed to think that trade unions were a hindrance to economic activity in industry. He mentioned the fact that small firms may not have a personnel manager, a training manager or indeed a health and safety officer. However, perhaps I may suggest that the expertise which exists within the trade union movement could be an asset to small businesses in terms of providing the sort of advice and information on such matters as health and safety at work and training with which a small company may find it rather difficult to cope. Surely that should be seen as an asset.
When my noble friend the Minister responds, I am sure he will argue that the amendment should not be accepted. However, paragraph 6(6)(b) suggests that the number of workers specified may be varied and that,
"different provision may be made for different circumstances".
Can my noble friend say whether that provision has been included in the Bill so as to enable the figure of 21 to be moved downwards as employers and workers experience the benefit of trade union recognition?
Lord Clinton-Davis: During the course of my noble friends' remarks, I noticed that the noble Lord, Lord Tebbit, assented to a proposition being imputed to him; namely, that he did regard trade unions as a form of encumbrance and as being hostile to the interests of the economy. I draw that to the attention of my noble friends because I believe that it illustrates the noble Lord's attitude towards trade unions and that it ought to be on the record. Of course, a nod of one's head does not indicate that at all. It is precisely because the noble Lord adopted this attitude of hostility that much of it was reciprocated during the period in which he held office. However, we have, happily, moved on from that unhappy experience.
The Bill is designed to create a different attitude in industry—one which the noble Lord finds disagreeable but one which I believe most people would regard as being very desirable. I hope that the noble Lord might, in his more elderly wisdom, come round to a rather different conclusion from that which he entertained during his period of office.
Lord Tebbit: The noble Lord has forgotten that in my younger days I was a trade union leader; indeed, not an altogether terribly pliant one. I was forced into that position by a very bad employer called "a nationalised industry." When you are dealing with a management which is perpetually mucked around by Ministers and is unable to manage, people are forced into that sort of position. I understand that full well. Of course, with no shareholders to fire the management which was wrecking the business, we experienced very great difficulties in getting anywhere in our negotiations.

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If unions have anything to offer—and the noble Lord, Lord Monkswell says that they have—I am sure that employers would be very happy to accept it. I can imagine a number of the operators of our ports would he most anxious to accept advice from the dockworkers' union on how to run our ports. It was constantly doing so over a very long period of time during which all the jobs vanished to Rotterdam and such places. However, where there is such advice, I am sure that it will come forward.
It seems to me that the noble Lord, Lord Murray, has forgotten the basic intent of the Bill. It is not about giving people the right to belong to a trade union because everyone has that right; it is about intervening in the negotiations between a trade union and an employer and insisting that an agreement is reached that the union will be recognised as the negotiating body. In other words, it is arbitrarily taking the view that the trade union should be the negotiating body.
Lord Davies of Coity: The one point that the noble Lord has failed to express is the fact that a trade union does not operate in isolation from its members' wishes. When it makes representations to an employer seeking recognition, it does so on behalf of those workers who are employed by that employer and have joined the union. It is not an arbitrary situation and it is not a third party situation; indeed, it will be done directly on behalf of the workers employed by that employer.
Lord Tebbit: I fully understand that. However, the noble Lord does not seem to understand that there is another party involved; namely, the owners, the proprietors, of the business. They have created a business which enables them to offer employment to their workers. Do they not also have rights? Do they not have the right to run their business in a reasonable way within the limits which the law imposes?
Lord Davies of Coity: I understand that perfectly well. However, the two sides of industry are trying to come together in the most harmonious way possible to ensure fairness for the employees and prosperity for the employer. That, in turn, will run through to the employees. It is a case of working together. But when you see an employee faced with his employer, it is rather like a David and Goliath situation. Only collectively is any influence brought to bear on an employer, who is the stronger of the two parties.
Lord Tebbit: I must say that the prospect of a firm employing 21 men or women faced with the Transport and General Workers' Union could indeed be seen as a David and Goliath situation. Unfortunately, I think the noble Lord has got the roles reversed. He talks about harmony. My goodness me, does not every married couple want to live in harmony? However, they do not want: the mother-in-law constantly coming in and telling them how to do it. That is what this Bill is. It could be retitled the Mother-in-Law Bill, or perhaps I should say the Father-in-Law Bill, so that I do not fall victim and transgress in some way as regards anti-discriminatory laws.
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Noble Lords opposite simply do not agree that an employer has the right to say, "No thank you. I would rather deal with my own employees directly and I would like to deal with them as individuals." That applies particularly in a small firm comprising 21 people. That is a better way to manage a company. After all, there is a choice for the employees. It is often possible to find another job in a larger, unionised company. Happily, on the whole, these days we have relatively low levels of unemployment in this country. It is not as though we were living in Euroland, in Germany, in Spain or in one of those countries where they have all these sorts of laws but also have extraordinarily high levels of unemployment. It is more as though we were living in America in some ways where, in a deregulated economy, jobs are created without—I should point out to the noble Lord, Lord Monkswell—too much assistance from the trade union movement.
Lord McIntosh of Haringey: Perhaps I may start by acknowledging the passion with which noble Lords opposite addressed the issues raised by these amendments. Although the argument became rather expanded, the noble Baroness, Lady Miller, has a genuine passion for the interests of small businesses which she has expressed throughout her time in politics. I respect her for that. However, two further aspects have become apparent. First, there is the passion which a number of noble Lords opposite have against trade unions wherever they may appear, whether that be in small or large firms. It is when the noble Lord, Lord Tebbit, characterises the interventions of trade unions as being those of difficult trade union activists that we come out into the open.
The second matter that has become apparent is the passion with which we in the Labour Party address the issue of individual rights and collective rights at work. As has always been acknowledged, there is no dispute about the right of any individual to be a member of a union and to benefit from the services and facilities which a union may provide. However, alongside that—although this should not be confused with it—is the right to make one's membership of a union effective through collective bargaining. The noble Lord, Lord Tebbit, manages to turn the story of David and Goliath on its head. The issue here is a profound political and economic one. It would do no justice to anyone in this Chamber if I did not acknowledge that from the beginning. I acknowledge the sincerity with which noble Lords opposite address this issue but we profoundly disagree as regards the purpose of this Bill.
The principle behind statutory trade union recognition is the protection of vulnerable members of society. Everyone may agree that that is a worthy aim. However, it must be understood that in applying this principle we have sought to use common sense, excluding firms where collective bargaining may not be appropriate. We have done our best not to impose unnecessary costs on employers. However, the fundamental principle of protecting the vulnerable means that we cannot ignore workers in smaller companies.

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Much has been made of different cut-off points for smaller and larger firms. I refer to the different cut-off points used in Europe and the different cut-off points used for different purposes. I remember the Boswell report on small businesses that was issued many years ago. I remember that that report proposed a cut-off point of 200 employees because that was thought to be a sensible way of dealing with those who did not comprise the large organisations on which macro-economic policy had been based for many years. That was a breakthrough because for the first time the interests of smaller businesses were recognised. That was a valuable step. But surely the cut-off point for one purpose is not necessarily the cut-off point for another. Health and safety measures have to be in place in workplaces of all sizes. One cannot say that someone who works in a firm that comprises only three people cannot be protected from burning to death through not having appropriate health and safety measures in place. In other respects a cut-off point of 50, 100 or 200 employees may be quite appropriate. With regard to the cut-off point of 21, we do not suggest that it is perfect or that it is in any way a magical figure. It has been selected after much consultation because we recognise that employees of small firms are often dealt with on a personal basis and collective bargaining is not likely to be appropriate for them.
Let it not be thought that that means that those firms with 21 or more employees will be forced into collective bargaining. That, of course, is not the case, as my noble friend Lady Turner made clear. If there is to be collective bargaining, it has to be agreed by a majority of those voting and by 40 per cent of those eligible to vote. If that is not the case, I am sure that an employer who has a larger number of employees and good relationships with his workforce will ensure that there is no vote for compulsory collective bargaining. In that situation, voluntary agreements are much more likely which will suit that workplace. Some of those will concern basic pay, holidays and hours and others will concern other issues. The whole point of this Bill is that those measures can concern the subjects that employers and employees believe constitute the proper basis for collective bargaining.
I return to the arguments of the noble Baroness, Lady Miller, which I think we have lost sight of. We do not believe that collective bargaining will impose significant costs on small firms. I am sorry to repeat this but I speak from personal experience. I am convinced that the collective bargaining that I achieved by recognising a union in a company with 30 to 35 employees was beneficial to management. Against the cost of collective bargaining should be offset the costs of setting pay by any other method. Sometimes it is more efficient to bargain collectively. It is also likely that respecting workers' wishes for union representation will improve morale and hence productivity. A number of my noble friends have made that point effectively.
The figure of 20 or 21 is of course a pragmatic judgment. However, I say to the noble Baroness, Lady Miller, that it is not true—as she said—that we acknowledge that it may be too stringent. We
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acknowledge that it may have to vary in either direction. It could be too stringent or not stringent enough. We have provided a possibility for variation in the Bill. The Secretary of State may initiate a process whereby the cut-off point changes. Our subsequent amendments in the group commencing with Amendment No. 7 extend that provision to ensure that the possibility of variation applies throughout the Bill. We believe that this is the right figure and we believe that the amendments that I have discussed should be rejected.
I now turn to Amendment No. 6 and its associated amendments which seek to exclude from the definition of "worker" three categories of person: officers of a limited company; shareholders in unquoted private companies; and members of a partnership. The amendment is unnecessary. Officers of a company are not normally workers, nor are they shareholders. The only way in which a person who is an officer or a shareholder can be a worker is by entering separately into a contract of employment that makes him or her into a worker. I am sure that the noble Baroness is not arguing that those who have contracts of employment should be excluded from the head count implied in the cut-off point of 21. Shareholders and officers who do not have a contract of employment are not workers and do not count towards the figure of 21.
Lord Tebbit: I am grateful to the Minister for giving way. He made it plain that those who have contracts of employment are included in this figure. What about those who have contracts for employment? I am sure there are other noble Lords in this Chamber who have contracts for employment as opposed to contracts of employment; that is, they are essentially self-employed persons contracting to do a particular job for a company.
Lord McIntosh of Haringey: They do not have a contract of employment and they do not count, just as Ministers who are office holders do not count. They are not employees for this purpose. The third category the noble Baroness mentioned were members of a partnership. Members of a partnership are working for themselves and are not workers in the sense used in Schedule 1, which is the definition in Section 296 of the Trade Union and Labour Relations (Consolidation) Act 1992. I hope I have persuaded the noble Baroness that these amendments are not necessary. Also they are undesirable because they could exclude genuine workers who hold shares in their company from counting towards the 21 workers limit.
One of my noble friends mentioned the John Lewis Partnership. I am not sure whether that would qualify—I rather think it would not—because I believe it is a title rather than a legal status. Nevertheless it would clearly be quite wrong for people to be excluded from the right to argue for collective bargaining simply because they were also part of an employee share ownership scheme. I hope that the noble Baroness will not pursue Amendments Nos. 6 and 75A. Having considered the intensely political issues involved in the cut-off point, I hope that the Committee will agree that the Government have consulted widely and have taken into account the nature of the burdens on small businesses;

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that there are opportunities for small businesses in partnership at work; and that the Government's solution is preferable to the one proposed by the noble Baroness.
Baroness Miller of Hendon: The Minister will not be at all surprised that I am extraordinarily disappointed that he did not accept my Amendments Nos. 4 and 5. I am grateful to all noble Lords who have spoken in support, particularly to my noble friend Lord Tebbit, who spoke from great experience, and to my noble friend Lord Geddes, who made the point that in European legislation a small business is defined in a certain way; that is, anything up to 49 people. I was surprised by some of the interventions from noble Lords opposite. No one has commented on the numbers I have mentioned. We are talking about a partnership, about fairness at work. My noble friend Lord Tebbit spoke about fairness to the employer. I was making the point that, all of a sudden, compulsory collective bargaining could be imposed with very few people deciding that it was necessary.
As to the last three parts of Amendment No. 6, I shall read very carefully what the Minister said. I do not consider them unnecessary; had I thought that I would not have mentioned them. In my view they are very necessary and I shall read the clauses carefully.
I intend to beg leave to withdraw Amendment No. 4, but noble Lords opposite should not take that to mean that I am content. This is a very bad day for small business. The Minister says that the Government consulted widely but numerous business organisations are not at all content with 21 plus. The IoD, the EES and various other organisations felt, on consultation, that it would make it very difficult for employers with small businesses. I shall consult with my colleagues as to what is to happen at the next stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 5 and 6 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 7:
Page 18, line 22, at end insert ("and
(b) may include supplementary, incidental, saving or transitional provisions.")
The noble Lord said: In moving Amendment No. 7 I shall speak also to Amendments Nos. 76 and 170. I referred to the amendment when I denied that the Government acknowledge that the 21 cut-off point is too stringent. The Bill already provides that the Secretary of State may, by means of a statutory instrument made under paragraph 6(6), alter the 21 workers cut-off. He has no equivalent power to seek to amend paragraphs 40 and 75, where it also appears. It is obviously desirable to alter the figure in all three places, if it is to change at all. Amendments Nos. 76 and 170 respectively would give the Secretary of State the power to alter the 21 workers figure in each paragraph and resolve this anomaly.
If the 21 workers limit should need to change, the Government wish to ensure an orderly transition from one limit to another. Therefore we are also putting
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forward Amendment No. 7 which gives the Secretary of State power to make transitional arrangements in regulations which alter the 21 workers limit. These are modest but necessary changes.
Amendments Nos. 76A and 170A standing in the name of the noble Baroness, Lady Miller, assume that there will never be a time when the Government believe that the limit needs to be reduced. I do not have that kind of power of foresight. I can envisage a government—certainly not this Government—raising the limit to 200 workers and a. subsequent government wishing to reduce it to 100, 50 or perhaps even 21 workers. The amendments would prevent that. They would always ratchet up the limit. I repeat, the Government have no intention of increasing or reducing the 21 workers limit. However, we believe that the Government should have the power to alter the limit in either direction in whatever way necessary. I commend Amendments Nos. 7, 76 and 170 to the Committee. I beg to move.
Baroness Miller of Hendon: My Lords, I shall speak to my Amendments Nos. 76A and 170A, both of which are in identical terms. I am sorry if I misunderstood paragraph 6(6)(b). I was gratified to think that the Government would extend the number rather than reduce it; I did not realise at that stage that the Government intended the power to move it either way.
My two amendments seek to vary government Amendments Nos. 76 and 170. The government amendments seek to give the Secretary of State power to vary the number of workers employed by a firm required to trigger the representation figure from the low number of 21 specified in the Bill, which we have just discussed at length in the previous amendment. As the Committee is aware, we regard the figure of 21 as unduly low. We do not object to the Secretary of State having power to amend it by, in effect, ministerial decree. However, we object to the possibility that the figure could be reduced even further. The Secretary of State may say that no such possibility has entered his mind. After what the Minister has recently told us, I suspect he may not say that. My proposal would remove any possible ambiguity. It allows the Secretary of State to move the figure upwards—but only upwards—when, as we suspect he will, he discovers that the figure of 21 is far too low.
He may also argue that the amending order will contain a provision requiring the approval of both Houses and that our fears are unfounded. That may be so, but it is no reason why the Bill should not specify the exact limits of the basis of the order. The power should be to amend the number only in an upward direction.
Lord McIntosh of Haringey: I have already responded to the points made by the noble Baroness. It would have been polite for me to have listened to her first. I do not think she expects me to change my mind. I commend Amendment No. 7.
On Question, amendment agreed to.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 8:
Page 18, line 28, at end insert ("; and
(d) identifies any specific issues on which the union or unions are currently seeking recognition, or will seek recognition in the future, or both.")
The noble Baroness said: The amendment proposes a very simple and totally undemanding obligation on a union seeking to represent workers in a particular firm. All it has to do is to state in its request for recognition whether there are any specific current issues or ones it foresees in the future about which it would wish to represent its members. It may well be that there are no such specific issues and that all the union wants to do, in general terms, is to represent employees concerning matters such as pay and working conditions. In that case, in its request for recognition the union will state:
"Apart from pay and conditions in general, there are no specific issues on which we currently wish to represent our members or which, at this time we anticipate will arise".
However, let us suppose that the union believes there are issues of redundancy, expansion, shifting work from one place to another, multi-tasking or any other of the numerous problems that arise in industrial relations. Is there any reason why the union should not state in advance of its recognition what it has got on its mind? Forewarning the employer does not enable the employer to veto the request, nor does it give an employer any tactical advantage. Indeed, by laying its cards on the table, the union could make the resolution of a specific issue much less confrontational.
I do not wish to make heavy weather of the amendment. Equally, the Government should have no difficulty in accepting it. I beg to move.
Lord McCarthy: The answer to the question of why we do not need the amendment—which would not do any harm—is that it would not do any good. One of the points I tried to make earlier was that in the way this Bill is constituted one gets only one answer: whether one twists or busts, one either gets recognition, or wages, or house, or holidays, or one does not get recognition at all. Indeed, subsequently it would be the case that one would have to give up the recognition one has in order to get some more. What is the point of disclosing all the other things that a union wants? The employer almost certainly knows that and he will not give anything. It is because he will not give anything that he finds himself in front of the CAC.
Lord McIntosh of Haringey: The amendment was moved very attractively and modestly by the noble Baroness because, as my noble friend Lord McCarthy recognises, it is a very modest amendment. It refers to "any specific issues" and the noble Baroness made it clear that if there were no specific issues there would be nothing for the union to reveal. I acknowledge that it is not unreasonable for an employer to want to know in advance what
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recognition is being sought. Any employer who has a good relationship with his workforce is likely to have that knowledge anyway.
It is certainly true that both the union and the employer will have matters upon which they may or may not wish to bargain. In other words, if the amendment is to be put forward, it should be put forward for both sides. Both will probably feel more strongly about some matters than others. A union might feel relaxed about not bargaining for facilities for union officials but regard matters of discipline as vital. An employer might be happy to bargain on the level of pay but not on the firm's pay structure. There needs to be negotiation about what collective bargaining should cover if there is to be a voluntary agreement, which, I repeat ad nauseam, is the purpose of this legislation.
The amendment would damage the negotiation by requiring a union, and only a union, to put its cards on the table. In particular, a requirement to state matters upon which the union will seek recognition is likely to result in unions listing all the matters they can think of in order to keep their options open. I believe that that would be counter-productive and certainly would not advance the negotiations.
I am therefore of the view that, however modest the amendment may be, it would be unhelpful. I am sure that there is no particular virtue in having the requirement on the face of the Bill. The Secretary of State already has a power under paragraph 8 to specify the form of requests by statutory instrument, and that could, if necessary, duplicate the effect of this amendment. I hope the noble Baroness will not press it.
Baroness Miller of Hendon: I am, of course, once again disappointed that my very modest amendment, which, as the Minister said, might very well do some good—and certainly I do not believe it would do any harm—is not to be accepted. I believe that there is an area in which it would do some good; namely, where a union is seeking compulsory recognition and an employer is not too happy about it but understands what it is that the union is seeking. It removes all the fears that he might have.
I notice that the noble Lord the Minister said that it might be a better amendment if it cut both ways. Perhaps I might suggest that since the Government are bringing up so many other matters in the next stage, they should have another look at this proposal and come back with something that we might find acceptable. It would be very nice indeed if, somewhere along the line, something that is proposed from this side of the House was accepted, rather than hearing the word "no" in answer to absolutely everything, as was the case with the National Minimum Wage Bill. The one success that I had, which would have helped the Government enormously, was overturned in the other place. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 9:
Page 18, line 40, leave out ("in the second period")
The noble Lord said: My Lords, in rising to move Amendment No. 9, I wish to speak also to Amendments 10, 13 to 15, 17, 21, 23, 41, 47, 49, 50, 56, 69, 71, 80, 84, 88, 106, 109, 112, 121, 156, 167, 173, 178, 183, 188, 189, 192, 193, 201 to 204, 210, 212, 215, 218 and 219.
This group of amendments is intended to clarify the time periods for the procedures in Schedule 1. We are making three types of change: consolidating negotiation periods; a consistent use of working days for all time periods; ensuring that time periods begin the day after an application is received, or whatever triggers the start of a period.
Amendments Nos. 9, 10, 14 and 15 together act to consolidate the two negotiation periods in paragraphs 10 and 11. The employer will still have the first period of 10 working days in which to respond to a request for recognition. However, if he or she agrees to negotiate, instead of there being a second period of 20 working days for negotiation there will be an additional 20 working days. In other words, there will be 20 working days plus whatever is left of the first period. That could be as long as six weeks. Of course, the parties may agree to extend the period. We are therefore making sure that there is plenty of scope for negotiation and voluntary agreement.
Amendments Nos. 188, 189 and 193 make an equivalent change to the negotiation periods in the derecognition procedure.
The second change that we are proposing is the use of working days throughout the schedule. At present, we use working days for shorter periods and normal days for longer periods, working days being Monday to Friday. It has been represented to us by the Industrial Society that a mixture of terms is confusing. We have therefore introduced amendments to replace 28 clays with 20 working days, and so on. We have not otherwise changed the length of any of the periods.
The rest of the amendments are equally technical. They are intended to ensure that time periods begin the day after an application is received or that another event triggers the start of the period. This will ensure that there will be a full 10, 20 or however many working days in which to respond to the event. For example, it ensures that an employer has 10 full working days in which to respond to a union's proposal to involve ACAS under paragraph 82(3).
I commend these amendments, which make modest but worthwhile improvements to the schedule. I beg to move.
Lord Monson: I wonder whether the noble Lord, Lord McIntosh, can explain an apparent anomaly in the definition of "working day", which is referred to in Amendments 13, 23, 47, and 49, and no doubt elsewhere in this very long grouping and, of course, throughout the Bill as at present drafted.
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The definition of "working day" for the purposes of Schedule 1 is to be found in paragraph 129 of that schedule on page 57. It says:
"For the purposes of this Schedule in its application to a part of Great Britain a working day is a day other than … a Saturday or a Sunday".
However, elsewhere in the Bill, Clause 13(5) states:
"For the purposes of section 10(5)(h) in its application to a part of the United Kingdom a working day is a day other than … a Saturday or a Sunday".
Clause 37 of the Bill states:
"This Act shall not extend to Northern Ireland".
The United Kingdom, of course, refers to the United Kingdom of Great Britain and Northern Ireland. I suspect that this may be a drafting error and that in Clause 13 the reference ought to be to "Great Britain" rather than "the United Kingdom". Perhaps the noble Lord the Minister might like to confirm that, or otherwise.
Lord McIntosh of Haringey: The noble Lord, Lord Monson, has certainly caught me on the hop. I had seen the definition in paragraph 129 of Schedule 1 but I had not observed the definition in Clause 13(5). If may, I will write to the noble Lord, place a copy of the letter in Library and copy it to the noble Lords who have taken part in this debate.
Lord Wedderburn of Charlton: When my noble friend replies by letter, a copy of which I hope he will place in the Library, he will no doubt notice that in Clause 13(5) the definition is for a particular purpose; that is, the purposes of Section 10(5)(b). When he considers the matter, he may wish to take the view that there is a different definition for this clause than perhaps for some others.
Lord McIntosh of Haringey: I would like to think that my noble friend had got me out of a difficulty; I do not think he has. Clause 10(5)(b) refers to alternative times for disciplinary and grievance periods. I do not believe that helps the Northern Ireland issue.
Lord Tebbit: I wonder whether the noble Lord, Lord McIntosh, could say whether he feels that this is quite right as it is drafted. Does this work in the case of small companies which still engage in what used to be a very widespread practice, in the style of wakes weeks, of closing down a company for a period of perhaps a week or a fortnight—for five or 10 working days when everybody goes on holiday? The managers or owners of a company may be away on holiday and perhaps not readily in touch during a period which has been triggered by some event under these provisions.
5.30 p.m.
Lord McIntosh of Haringey: There are two answers to that. First, the Bill says that the triggering event when a period is being defined after which an employer has to do something is the date when the employer receives the notice. Therefore, if the employer has been away on holiday and does not receive the notice until he comes back, the qualifying period is the period after the day on

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which he comes back. That point was made by the noble Lord, Lord Taylor of Warwick, and is dealt with in the Bill. On the issue of wakes weeks, where that happens—it is increasingly unusual these days—it is always possible by agreement for a period to be extended to take account of that.
Lord Tebbit: I am grateful to the noble Lord. I have not found how the term "employer" is defined. If a proprietor, who is colloquially what we would call the employer and who runs the whole business, goes away and the company secretary receives the notice, does that trigger the start? That is not a problem in large companies but in companies of the size dealt with by the Bill there could be a real problem.
Lord McIntosh of Haringey: The definition in the schedule of an employer is somewhat circular. It states:
"References to the employer are to the employer of the workers constituting the bargaining unit concerned".
That does not quite answer the noble Lord's question. But I think that the answer to his question is that the employer is the person with whom the worker has a contract of employment. That will be defined by the company as being the person who signs that contract of employment on behalf of the company.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 10:
Page 18, line 43, leave out ("in") and insert ("before the end of")
On Question, amendment agreed to.
Baroness Seccombe Baroness Seccombe moved Amendment No. 11:
Page 18. line 47, leave out ("10") and insert ("20")
The noble Baroness said: In moving this amendment, I wish to speak also to Amendments Nos. 16, 191 and 194. They are all identical amendments and extend the time for the machinery for union recognition to operate under paragraph 9 and, as regards the employer and the union, if the derecognition machinery is to be invoked under paragraphs 80(6) and 82(3). The extension that I propose is a moderate one—from 10 working days to 20 working days. By no stretch of the imagination can this be regarded as giving either side the opportunity to play for time. On the one hand, the party invoking the machinery, either by seeking union recognition or derecognition, will have had all the time it needs before launching its request carefully to consider its position and all its implications and to prepare its case, while the other side will have to start from scratch and may need time to take expert advice or to consult with the workers. Two working weeks, because that is all we are talking about, is too short, while extending it to four working weeks will harm no one. These cases will not be ones of immediate urgency. There will be no burning fire to put out.
I have noticed that among the vast swathe of amendments to Schedule 1 which the Government are introducing at this late stage after all the hours the Bill spent in Committee in the other place they are proposing
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to alter the number of days for what is described as the second period of the same machinery and the negotiating period and the time for a ballot from 28 days to 20 working days. These very sensible amendments to exclude weekends and holiday periods now provide for 20 working days for the operation of the particular machinery involved in those clauses. There is absolutely no reason why, in the interests of consistency, the periods covered by these four amendments should not be identical. I trust that the Government will accept them. I beg to move.
Lord McIntosh of Haringey: These are indeed modest amendments and I understand the basis on which the noble Baroness has moved them. I wish to speak, first, to Amendments Nos. 11 and 191 and then to Amendments Nos. 160 and 194; Amendments Nos. 191 and 194 being the time periods for derecognition. The aim of all four amendments is to ensure that there is enough time for negotiation. That is a laudable aim. But there is no point in prolonging negotiations if the parties have nothing to say to each other. At all stages of the process the parties may agree to extend the period of negotiation. If agreement cannot be reached, or if one party refuses to negotiate, then a requirement for additional time just drags out the process. That is what would result from the amendments.
Amendments Nos. 11 and 191 seek to amend the schedule where the parties agree. The amendments would extend the employer's initial response period from 10 working days to 20. That would add up to two weeks to the recognition process, which in the worse case could run to 18 weeks from the initial request to the holding of the ballot. That would lengthen the application process without materially improving it. If the employer is willing to negotiate, there are an additional four weeks for negotiations and the employer and the union can agree to extend this period still further. If the employer will not negotiate, there is little point in delaying the application.
When the topic was discussed in Committee in the other place much was made of the potential problem for the small business where the employer was on holiday. I think that I answered that point in what I said to the noble Lord, Lord Tebbit. The 10 working day period starts the day after the request was received by the employer and in all cases the employer will have two full weeks to decide whether or not to negotiate. I cannot see any benefit to industrial relations in extending the first period for negotiation to 20 working days.
Amendments Nos. 16 and 194 apply where the negotiations fail. The amendments would, in effect, require a union to accept an employer's request to involve ACAS at any time during the negotiations about recognition under paragraph 11. There are four weeks—20 working days—for these negotiations, or possibly a little longer because of the amendments which have just been agreed to. During the first two weeks of this period, if the employer proposes the use of ACAS in conducting negotiations, and if the union refuses or ignores the request, the union may not apply to the CAC for a determination of the appropriate bargaining unit or whether the union should be recognised. The

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amendments would extend the period in which the employer could, in effect, require the union to accept the services of ACAS from two weeks to four weeks, the same length as the negotiation period. There is no point in involving ACAS if it does not have any time in which to work. Of course it is possible that the union and employer will agree to extend negotiations; but then they can also agree to involve ACAS. We are discussing the question of whether it is reasonable to require one party to accept the use of ACAS.
There is also no point in allowing one party to make a request for the use of ACAS a week before the end of negotiations since the other party has 10 working days in which to accede to the request. So, for example, a union could wait for a week, until the negotiating period was over, accept the employer's proposal that ACAS be involved, and then refuse to extend the period for negotiation. The actual involvement of ACAS would be nil. So I do not think the amendments would have any effect in practice.
The amendments, however well meaning, imply that it would be unreasonable for a union or employer to reject a proposal for the use of ACAS which was made on the last day of negotiations. I do not think that that is unreasonable. What would be unreasonable is to require the union or employer to accept the proposal, which is what the amendments—I do not think wittingly—would do.
Baroness Seccombe: I thank the noble Lord for that detailed answer. We see a difference between the second stage and the 20 working days. We shall study the noble Lord's answer and consult with colleagues. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 12:
Page 18. line 48, at end insert ("for recognition")
The noble Lord said: In moving the amendment, I speak also to Amendments Nos. 33. 46, 48, 64, 184, 185, 187, 190, 211, 213, 214, 216, 217 and 220.
The amendments are miscellaneous drafting improvements. They have the effect of removing superfluous words, adding clarity, correcting cross-references et cetera.
Amendments Nos. 12, 48 and 220 are clarifications, which have no effect on the function of the schedule. Amendment No. 33 brings the wording of paragraph 21(3) into line with paragraph 90(5)(b), the equivalent provision dealing with derecognition ballots. Amendments Nos. 46, 187, 190, 211 and 214 remove superfluous words. Amendment No. 64 inserts a missed cross-reference, and Amendment No. 184 corrects an erroneous cross-reference.
Amendments Nos. 185 and 213 correct a logical omission, and require requests for derecognition to be received in order to be valid, as in paragraph 4.
Finally, Amendments Nos. 216 and 217 ensure that the definition of "bargaining unit" in Part VI is consistent with that in the rest of the Bill: a group or groups of workers.
I commend the amendments to the Committee. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 13 to 15:
Page 19, line 2, leave out ("28") and insert ("20 working")
Page 19, line 21, leave out ("in") and insert ("before the end of")
Page 19, line 30, leave out ("in") and insert ("before the end of")
On Question, amendments agreed to.
[Amendment No. 16 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 17:
Page 20, line 14, after ("day") insert ("after that on which")
On Question, amendment agreed to.
Lord McIntosh of Haringey moved Lord McIntosh of Haringey moved Amendment No. 18:
Page 20, line 40, after ("is") insert ("made in accordance with paragraph 10 or 11 and")
The noble Lord said: In moving the amendment., I speak also to Amendments Nos. 19, 20, 24, 59, 62, 63, 65 to 68, 70, 79, 85, 175 to 177, 195 to 200.
These purely technical amendments clarify the procedure for the scrutiny of applications by the CAC. They ensure that applications to the CAC must be made in accordance with the relevant parts of the schedule.
Amendments Nos. 18, 19 and 20 deal with applications for recognition, which are required to pass the preliminary tests in paragraphs 28 to 36 inclusive. They require the application to be in accordance with paragraph 10 or 11. Paragraph 10 relates to when the employer rejects the request and paragraph 11 relates to when negotiations fail. In other words, the CAC must be sure that the negotiation process in those paragraphs has been followed. Amendments Nos. 198, 199 and 200 do the equivalent for the derecognition procedure. Amendments Nos. 59, 63, 65 to 68 and 70 make it clear that the preliminary tests apply to an application to the CAC under paragraph 10 or 11 and not, for example, the union's application under paragraph 3.
Amendment No. 62 corrects an oversight: it deals with the case where two or more unions are jointly recognised. The present draft deals only with a single union.
Amendment No. 79 is a clarification of paragraphs 41(2) and 41(3), and Amendment No. 85 corrects a "typo". Amendments Nos. 175, 176, 196 and 197 all remove superfluous uses of "to the CAC".
Amendment No. 177 is to ensure consistency with the parallel provision in paragraph 14(5). Amendment No. 195 provides that a failure to respond to a proposal of ACAS arbitration within 10 working days has the same effect as a refusal. This is to ensure consistency with paragraph 11(5).
All of the amendments make modest and, I hope, unobjectionable improvements to the schedule. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 19 and 20:
Page 20, line 43, at end insert ("made in accordance with paragraph 10 or 11 or is not")
Page 21, line 1, after second ("is") insert ("made in accordance with paragraph 10 or 11 and is")
On Question, amendments agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 21:
Page 21, line 6, after ("day") insert ("after that on which")
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 22:
Page 21, line 9, at end insert—
("Withdrawal of application
14A.—(1) If an application under paragraph 10 or 11 is accepted by the CAC, the union (or unions) may not withdraw the application—

(a) after the CAC issues a declaration under paragraph 19(2), or

(b) after the union (or the last of the unions) receives notice under paragraph 19(3) or 20(2).

(2) If an application is withdrawn by the union (or unions)—

(a) the CAC must give notice of the withdrawal to the employer, and

(b) no further steps are to be taken under this Part of this Schedule.")

The noble Lord said: In moving the amendment, I speak also to Amendments Nos. 27, 29, 30, 31, 32, 37, 38, 42, 158, 207 and 208.
A major principle underlying the recognition procedures is the desirability of voluntary agreements. An implication of this principle is that it should usually be possible to withdraw an application to the CAC without being forced to go through the entire procedure. I am reminded of what is happening at the borders of Kosovo and Macedonia at the moment.
There are other circumstances in which it should be possible to withdraw an application. For instance, if the CAC determines an appropriate bargaining unit which is different from the union's proposed bargaining unit, the union may wish to withdraw its application, build up support in the appropriate bargaining unit and then reapply. The Government believe this should be allowed for by the schedule.
At present the schedule is unclear as to whether an application to the CAC may be withdrawn, and what the consequences of that withdrawal would be. This is a particular problem for Part I of the schedule, since the recognition procedure is complicated by the need to identify a bargaining unit.
The amendments are intended to clarify the situation. They allow applications for recognition to be withdrawn at any time up until a ballot is arranged by the CAC. Amendment No. 22 does so by stating that they cannot be withdrawn later.
Once the ballot process begins, the union is committed to seeing it to a conclusion. This will deter speculative applications, and by requiring the ballot to
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be held will produce a definite result for or against recognition. Whoever wins the ballot will be able to say to the other party, "You lost fair and square, now let's move on". In other words, it will encourage a definite result.
Withdrawal of an application will not be free of consequences. There will be no penalty for withdrawing an application before it is accepted. Once the CAC accepts an application, however, there will be a three-year bar on applications by the union for recognition in the same bargaining unit, or in a similar unit. Paragraph 34 already has this effect. So a union will be able to withdraw, but it will not be able to come back for three years. Withdrawal may still save time, face and money.
These are helpful amendments which clarify the procedure for withdrawal of applications for recognition. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 23:
Page 21, line 15, leave out ("28") and insert ("20 working")
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 24:
Page 21. line 16, leave out ("accepts the application for decision,") and insert ("gives notice of acceptance of the application,")
On Question, amendment agreed to.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 25:
Page 21, line 30. leave out ("compatible with") and insert ("supportive of")
The noble Baroness said: This very short amendment would require the CAC to ensure that when it decides what is an appropriate bargaining unit within a business, that unit should be supportive of effective management and not merely compatible with it.
This is not merely a matter of semantics. The Oxford English Dictionary defines compatible as meaning able to co-exist or being well suited. A secondary meaning is closer to what we are looking for because merely being able to co-exist with effective management, as the paragraph at present provides, is not enough. Earlier this afternoon I complained about some of the remarks from the Opposition Benches, not from the Front Bench, I hasten to say, that took us back to trade union relations a while ago. Noble Lords might think that my next line does the same. Co-existence, as noble Lords will recall, was the minimum objective of the West in regard to communism during the Cold War. Peaceful co-existence was the next objective.
As an example, a particular bargaining unit, for example an outlying factory, may be compatible with effective management because it is geographically separate and distinct from the rest of the enterprise, while still not being supportive of it because it could

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end up with different conditions being applied to identical but geographically different units in a business when the circumstances did not warrant it.
The many definitions in the dictionary of the word "support" include these: to carry all or part of the weight of, to give strength to, or to encourage; to back up, to maintain, to keep from falling or to keep from sinking. We fully support the concept that in defining an appropriate bargaining unit the CAC must, in the slightly altered words of the paragraph, take into account whether the unit will carry part of the weight of effective management, give strength or encouragement to effective management, hack up effective management, or keep effective management from falling or sinking.
I emphasise that we do not wish to diminish the concept of the provision. We want to see it properly defined because the phrase "effective management" is not dealing with a tangible, measurable thing that is capable of objective judgment. It is only a word, but an important one. We hope that the Government will accept it as the constructive amendment that we most certainly intend that it should be. I beg to move.
Lord McIntosh of Haringey: I am sure that the amendment is intended to be constructive. It is a subtle little amendment, and I quite like it for that. But I am afraid that the noble Baroness destroyed her argument in her quotations from the dictionary. She said that the first definition of "compatible with" was "co-existence" but the second was "consistency", which is what she wants to achieve. If the definition is already there in the dictionary, surely "compatible with", meaning "consistent", is the right term to use.
Of course we want the choice of bargaining unit to support effective management. The CAC's general duty already requires it to encourage and promote effective practices and arrangements in the workplace. However, the problem with the amendment is that the duty that it would impose is more subjective than merely to ensure compatibility with, and therefore consistency with, effective management. It could make the CAC's decision more liable to challenge in the courts; and in extreme cases it might bring the CAC and the employer into conflict because they disagreed about what was supportive and what was not supportive of effective management. The amendment would make the CAC's decisions more liable to challenge, and hence risk disrupting the effective function of the CAC. I am sorry; I cannot support the amendment.
Lord McCarthy: That is right. The point about the words on the face of the Bill is that they are negative. The words used are "compatible with"—in other words, "not incompatible".
The critical thing that management wants is that the CAC does not recommend a bargaining unit which cuts across the relative autonomy of different units inside an organisation. It wants the CAC to respect the organisational structure that management has introduced into the firm. Any sensible arbitration committee of this kind would do that. It is a negative thing. It does not want people to mess up existing arrangements and put in a collective bargaining unit which cuts across different
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groups of workers whose wages, terms and conditions are largely autonomously determined. That is a negative thing.
If the words "supportive of effective management" are used, what does that mean? It could mean anything. If one took the kind of attitude taken by the noble Lord, Lord Tebbit, who is not in his place, one would say that in any organisation a form of recognition would not be supportive of effective management and there would be an attempt to find one that would be the least effective from the workers' point of view.
What workers want is that the bargaining unit should fit the solidarity or sense of common interest of a particular work group or series of work groups. It is the job of the CAC to try to find a middle ground between those two viewpoints. In so far as we are expressing what needs to be done from the management point of view, "compatible" is much easier to apply than "supportive".
Baroness Miller of Hendon: Obviously I shall withdraw this subtle little amendment, as it was described by the Minister. This is a case of déjà vu. It reminds me of the time when I, from this side of the Chamber, debated the national minimum wage with the noble Lord, Lord Clinton-Davis. My amendments were described as "charming", "modest and "beautiful". All kinds of lovely words were used, making me feel very warm. Nevertheless, the Government refused everything. We have heard a different adjective applied to my amendment today. I beg leave to withdraw it, given the very charming way in which the Minister replied.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 26:
Page 21. line 41, at end insert
("(4A) The CAC must give notice of its decision to the parties.")
The noble Lord said: With this amendment, I shall also speak to Amendments Nos. 105, 107, 108, 110, 111, 113 to 117, 119, 162, 164 to 166, 168, 169, 171, 172, 174 and 179 to 182.
These amendments are concerned with the giving of notice. They are intended to ensure that notice of applications and decisions is given at appropriate times to keep the CAC, employers and unions informed of progress. They also deal with a problem with the existing text concerning the CAC's rejection of invalid applications.
Amendment No. 26 requires the CAC to give the parties notice of the appropriate bargaining unit if it has to decide one under paragraph 16. The current text of the Bill omits any requirement to do so and the union will need notice of the appropriate bargaining unit to have the option of withdrawing its application because the unit has changed.
Amendments Nos. 105 and 107 deal with a problem that arises if an employer makes an invalid notification under paragraph 55, which is concerned with a situation where an employer believes that the unit has ceased to

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exist. If the union does not question the validity of a notification, it is not clear how the CAC should act. These amendments require the notice to be copied to the CAC and for the CAC to decide whether it is valid.
Amendments Nos. 108, 110, 111, 113 to 117 and 119 are consequential.
The other amendments, Amendments Nos. 162, 164 to 169, 171, 172, 174 and 179 to 182, concern a situation where an employer applies for derecognition on grounds of having fewer than 21 workers. The amendments specify that the 13 weeks during which the employer had fewer than 21 workers must be immediately prior to the application under paragraph 75, but allows five working days for the application to be made—which sounds realistic. Amendment No. 171 deals with the same problem of an invalid notice that arose in connection with paragraph 55. These are technical amendments which improve the flow and function of the schedule. I commend them to the Committee. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 27:
Page 21, leave out lines 42 to 44
The noble Lord said: This amendment was spoken to with Amendment No. 22. I beg to move.
On Question, amendment agreed to.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 28:
Page 22. line 10. at end insert (". and
(c) the qualifying members for the purposes of this sub-paragraph are fully paid up and their membership has not ceased or been suspended owing to resignation, disqualification or the non-payment of dues or internal union disciplinary procedures.")
The noble Baroness said: Paragraph 17 of the schedule deals with the definition of an appropriate bargaining unit by the CAC. The CAC is required in paragraph 17(2)(a) to decide whether,
"members of the union (or unions) constitute at least 10 per cent of the workers constituting the bargaining unit".
I cast absolutely no aspersions on the integrity of any union or union officials who may be called upon to prepare a case for recognition, an essential constituent of which is the number of its members working in a particular place. However, any of us who have had anything to do with the compilation of lists of persons qualified for something or other know how frequently unqualified people are included. When I was chairman of my local family health service authority I was absolutely amazed to discover that there were numbers of "ghosts" appearing on GPs' lists of patients: patients who had moved or died without the doctor even being aware of it.
Every public company has a list of shareholders whom it can no longer trace for one reason or another. Most, if not all, unions will have a rule suspending a member from membership privileges for non-payment of dues or for other reasons listed in the amendment; or
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its membership list may not be fully up to date. As regards the latter problem, the union ought to bring the lists up to date if it is to count heads. Ten per cent is not a very high number of members needed to qualify. It cannot be right that, say, in a unit with 100 workers the union only has to produce a list of just 10 persons whom it says are members to meet the first condition, and it then transpires that one of those persons is disqualified from participation under the union's own rules.
If it is the union itself that makes the rules about qualifications, this amendment is not anti-union. It is not about vote-rigging or the stuffing of ballot boxes. I have no doubt at all that the unions will act with propriety and will ensure that their officials and shop stewards also act with propriety. But the purpose of the amendment is to ensure that other workers and their employers can be sure that what is done is done properly—in other words, that the procedures are, in a phrase that is becoming extremely fashionable in "politics speak", "transparent". I beg to move.
Baroness Turner of Camden: I hope that the government spokesperson will not feel disposed to accept this amendment. I feel that, in framing it, the noble Baroness probably did not understand exactly how unions operate. The proposed sub-paragraph refers to "fully paid up" members. Unions do not normally exclude people until they are, say, three months in arrears. We have the term "in compliance" with the rules which may mean that people do not have to be fully paid up members. If they are three months in arrears, they are still members. Therefore, the wording of the amendment is not acceptable. Moreover, the text of the Bill itself refers to members; in other words, people have to be members and fully compliant with their union in order to be regarded as members. This amendment is not acceptable from the standpoint of its wording or the Bill itself.
6 p.m.
Lord Cavendish of Furness: I support my noble friend's amendment. It is a minimum requirement. Even if the wording is slightly wrong, I hope that the Minister will listen to the arguments and perhaps produce an alternative. I echo my noble friend. I do not believe that there is anything to suggest that there is an assumption of corruption or wrongdoing here. In framing legislation it is a very good idea to prevent for all time the possibility of future corruption, which protects all parties in this case and society in general.
Lord Meston: I agree with the noble Baroness, Lady Turner, about the unnecessary reference to being fully paid up. I agree that a member who has ceased to be a member is therefore not a member. That would be sufficiently clear on the face of the Bill. What needs to be covered is the possible problem of suspended membership although I suggest that the words,
"owing to resignation, disqualification or the non-payment of dues or internal union disciplinary procedures"
are otiose and unhelpful. They might cause confusion.

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When the noble Baroness, Lady Miller, moved her amendment I could not help but think that I would not want to be the patient of any doctor who did not know when his patient had died.
Lord McIntosh of Haringey: I hope I can assure the noble Lord, Lord Cavendish of Furness, that I always listen to the arguments. Whether I understand them is quite another matter. I am sorry that we are unable to agree to this amendment. We understand the concern that union membership should not be exaggerated or inflated, but I do not believe that the amendment achieves the effect that is wanted. The amendment asks, "When is a trade union member not a trade union member?" That is not a trick question, nor is it a difficult one. If union membership has lapsed, then according to the rules of the union that person is no longer a union member. That is true whether it is because of resignation, disqualification or the non-payment of dues. In any of those circumstances a person does not count as a union member for the purposes of the schedule.
The relationship between a member and his union is a contractual matter between the worker and the union. A union member has the right to end his or her membership on giving reasonable notice and complying with any reasonable conditions. Of course, a worker has the right to join or not to join a union. Therefore, it is not appropriate to specify that union members must be fully paid up. There are Benches of union leaders behind me. I confess that I have been known to become more than a year in arrears with my union dues. It was then discovered that I could be persuaded to pay my union dues in advance, which is what I do now. Sometimes I avoid the rises which occur in union dues from time to time. In practice the important point is that the 10 per cent membership is only the first hurdle. Any union which can muster only 10 per cent membership by counting members not in good standing is most unlikely to pass the test of having majority support. Any evidence that the union had distorted its membership would count against it in the majority support test. I do not believe that the amendment would screen out any more applications than paragraph 17 does at the moment. I hope that the noble Baroness will not press the amendment.
Lord Cavendish of Furness: The noble Lord dealt adequately with the two circumstances of resignation and disqualification, but he was silent about suspension. Perhaps the noble Lord can deal with that.
Lord McIntosh of Haringey: It depends on the union's rules. If a union says that a suspended member is a member of a union, that would count towards the provisions of the schedule. What it means is that a member would be suspended from membership and is therefore not a member of a union.
Baroness Miller of Hendon: I take no offence at the noble Baroness, Lady Turner, suggesting that I am not so qualified in knowing all the membership rules of trade unions. She is right. I have never been a member of a union. When I ran my own business I did not have a union shop. I am well aware that noble Lords opposite have
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enormous experience of all union matters. I make that absolutely clear. That may be why the wording of my amendment is not as it should be.
However, I believe the point I was trying to make is important. The noble Baroness, Lady Turner, said that it was usual to have in the rules that a member of a trade union could be up to three months in arrears with dues and still be a member. When we talk about recognition for the purposes of collective bargaining for small businesses where there are perhaps between 23 and 25 people working in the business and only 10 per cent have to be in a trade union to trigger the whole mechanism, then whether part of that small number of members is in arrears or not could be quite important. At this stage I shall seek to withdraw the amendment and take advice on how to reword it and make it more acceptable.
As regards the comments of the noble Lord, Lord Meston, I shall most certainly tell him outside the Chamber exactly the difference between a ghost patient and a real patient and how a doctor would deal with the case.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 29 to 32:
Page 22, line 33, after ("must") insert ("give notice to the parties that it intends to")
Page 23, line 9, after ("must") insert ("give notice to the parties that it intends to")
Page 23, line 11, at end insert—
("20A.—(1) This paragraph applies if the CAC gives notice under paragraph 19(3) or 20(2).
(2) Within the notification period—

(a) the union (or unions), or

(b) the union (or unions) and the employer.

may notify the CAC that the party making the notification does not (or the parties making the notification do not) want the CAC to arrange for the holding of the ballot.
(3) If the CAC is so notified—

(a) it must not arrange for the holding of the ballot,

(b) it must inform the parties that it will not arrange for the holding of the ballot, and why, and

(c) no further steps are to be taken under this Part of this Schedule.

(4) If the CAC is not so notified it must arrange for the holding of the ballot.
(5) The notification period is the period of 10 working days starting—

(a) for the purposes of sub-paragraph (2)(a), with the day on which the union (or last of the unions) receives the CAC's notice under paragraph 19(3) or 20(2), or

(b) for the purposes of sub-paragraph (2)(b), with that day or (if later) the day on which the employer receives the CAC's notice under paragraph 19(3) or 20(2).")

Page 23, line 12, leave out ("19 or 20") and insert ("20A")
The noble Lord said: These amendments were spoken to with Amendment No. 22. I beg to move.
On Question, amendments agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 33:
Page 23, line 19, leave out from ("may") to end of line 20 and insert ("decide")
The noble Lord said: This amendment was spoken to with Amendment No. 12. I beg to move.
On Question, amendment agreed to.
Lord McCarthy Lord McCarthy moved Amendment No. 34:
Page 23, line 21, leave out from beginning to ("In") in line 25 and insert—
("(4) The ballot may be conducted—

(a) at a workplace or workplaces decided by the CAC, or

(b) by post, or

(c) by the employment of proxies, or

(d) by a mixture of the methods set out in (a), (b) and (c),

depending on the CAC's preference, having regard to the need to encourage a high turnout of employees in the ballot.
(5) In addition to the need to encourage a high turnout,")
The noble Lord said: The object of this amendment is to maximise the turnout in recognition ballots. The assumption is that all sides of the House would want to see ballots which result in recognition or non-recognition having the highest possible turnout. At the moment the Bill does not support that contention. Page 23, line 21, states that,
"The ballot must be conducted—

(a) at a workplace or workplaces decided by the CAC, or

(b) by post,

depending on the CAC's preference".
The Bill continues:
"In deciding how the ballot is to be conducted the CAC must take into account—
(a) the likelihood of the ballot being affected by unfairness or malpractice if it were conducted at a workplace or workplaces".
So malpractice and unfairness are identified with the workplace. The other provisions are,

"(b) costs and practicality;
(c) such other matters as the CAC considers appropriate".
We say that that is old hat. It goes back to the days of shop floor meetings where people raised their hands before they went on strike and things of that nature. We now need a system in which the CAC can combine any method it feels appropriate, the objective of which is to maximise turnout. Our amendment states that,
"The ballot may be conducted—

"(a) at a workplace or workplaces …

"(b) by post, or

(c) by the employment of proxies, or

(d) by a mixture of the methods set out in (a) (b) and (c)".

We are leaving it all to the CAC to find the best possible mix of methods in order to maximise the turnout. We say that it is,
"depending on the CAC's preference, having regard to the need to encourage a high turnout of employees in the ballot".
I take it that there is no dissent about the contention that one wants to maximise the turnout in a ballot of this kind. We have the 40 per cent. test. It is not just the majority of the members of the bargaining unit who are members of the union, which is one way of achieving
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the objective, or that the majority of the bargaining unit vote for collective bargaining. We also need a 40 per cent. test of people in the bargaining unit who have to vote in favour of recognition.
It seems to me, and I believe to trade unions, that the 40 per cent turnout rule is a reasonable condition if everything is done to make participation possible. The problem is that we have carried over the fear of the workplace ballot from the days of the mass meeting. I am quite sure that the noble Lord, Lord Tebbit (who unfortunately is not in his place), still lives in that period, and loves it, but these are not the days of Red Robbo and strikes. We are talking about a secret ballot with conditions conducted by the CAC, not the union. The Government have provided a lot of protection and regulation to govern the conduct of that ballot.
One looks at improper interference in the conduct of recognition ballots. If one looks at the considerable volume of research and investigation carried out by ACAS last time legislation of this kind was considered one finds that improper interference is not the monopoly of unions. Improper interference by employers was reported in many ACAS reports. One of the major problems was that they had no real sanction or power to resist improper interference. We believe that in this case the Government have placed a number of protections on the face of the Bill.
We are talking here about a recognition ballot that is conducted by an independent organisation, the CAC. Surely, the object of the exercise must be to encourage participation so that there is the maximum number of workers involved in deciding whether they want recognition and a minority does not decide the matter one way or the other. That is the reason for the 40 per cent rule. For that reason one of the major objectives of the CAC and the Government, to maximise participation, should be on the face of the Bill.
I understand that the amendment is grouped with other government amendments, in particular Amendments Nos. 35, 36, 205 and 206. It may be that my noble friend Lord McIntosh will say that in combining these amendments I am given most of what I want. That is not so. My noble friend says that there will be a combination of methods and not just one rather than another, so we are not in a situation in which it is necessary in all cases for the CAC to decide whether it should be a postal or workplace ballot, which is a pointless decision. Nevertheless the factors that he wants to take into account are location—for example, whether the ballot takes place on board ship or the parties want it to be a multi-dimensional election. The amendment assumes that the norm is a choice between a workplace ballot and a postal ballot, and it is only if there is no real reason why there should not be a more effective result using a workplace ballot that one decides on a postal ballot. There is no commitment in the Government's amendment to maximising participation. There is no suggestion by the Government that in general as opposed to exceptional circumstances there should be a multiplicity of methods. Therefore, I ask the Committee to accept the amendment. I beg to move.
6.15 p.m.
The Deputy Chairman of Committees (Lord Brougham and Vaux): I should advise the Committee that if this amendment is agreed to I cannot call Amendment No. 35.
Lord Clinton-Davis: I hope that my noble friend will accept the amendment. It is extremely important to ensure that there is as large a turnout at the workplace as is practicably possible. These are extremely important issues. I found my noble friend's remarks in moving the amendment extremely persuasive. The Government would be wise to accept the need to be rather more specific than their amendments. The amendments represent important and complementary provisions as far as concerns the Bill. Because of their importance there should be no room for ambiguity. I hope that my noble friend will view this amendment with approbation. Subject to anything that he may say, it seems to me that there is nothing in the amendment that is in any sense incompatible with what the Bill seeks to achieve. I hope that my noble friend will accept the amendment.
Baroness Miller of Hendon: I very much hope that the noble Lord the Minister will not accept the amendment moved by the noble Lord, Lord McCarthy. We believe that the amendment is thoroughly objectionable; it would allow ballots to be conducted by post and proxy voting. The noble Lord has tabled an amendment which would allow ballots to be conducted by post. We have no objection to that whatever. It is a very good thing to enable as many trade union members as possible to respond, and we have no objection to that. Our objection is to the provisions of sub-paragraph (4)(c). To hand over a proxy vote to a union activist is hardly an indication of a commitment. I believe that it also lends itself to direct moral pressure, if not personal intimidation.
Without wanting to open up old wounds, the history of unions pressurising workers at factory gate mass meetings is hardly reassuring as to how campaigns to secure proxy votes would he conducted. It is absolutely not necessary. If postal votes are permitted, as is allowed for in the amendment tabled by the Minister, there is no problem. People who cannot attend can vote by post, but proxy voting is another matter and we very much object to it.
Lord McIntosh of Haringey: My noble friend Lord McCarthy always seeks to anticipate my response to his amendments. He suggests that I shall try to persuade him that the Government have given him most of what he wants. My speaking note says that I can meet him half-way. I intended to say that I could meet him one-third of the way, so we are not really within striking distance.
There are essentially three elements to the amendment: the employment of proxies; the possibility of a mixture of voting methods; and the encouragement of a high turnout. I begin with the last element. I believe that we have done everything we can to encourage a high turnout. We require a substantial positive vote in
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favour of recognition. That means that those who seek recognition know that they must get at least 40 per cent of those eligible to vote to back recognition. As to those who oppose recognition, it is very risky to rely on abstention, for if the supporters of recognition reach the 40 per cent threshold only a majority of votes against recognition can prevent it. Therefore, both sides have the strongest interest in encouraging members to vote. The Government believe that this is the right way to do it. We want these decisions to have clear democratic legitimacy.
The amendment would make it the task of the CAC to encourage a high turnout. I suggest to the Committee that in this matter the CAC must be strictly neutral. If some people do not care either way about the decision and therefore do not choose to vote, that is their prerogative. It is for the supporters and opponents of recognition to try to persuade them to vote, not the CAC. The amendment would place the CAC in the invidious position of having to balance the need to encourage a high turnout against other factors, such as the risk of unfairness or malpractice.
The amendment appears to require the CAC to give higher priority to encouraging a high turnout than to avoiding unfairness or malpractice. Therefore the Government have encouraged voting by means of the structure of the Bill. That is a better way than placing the duty on the CAC as this amendment seeks to do.
As to the mixture of voting methods, there is a measure of agreement between us. We recognise that there may be circumstances where a mixture of workplace and postal voting may be appropriate. I do not go back, as the noble Baroness, Lady Miller, seeks to do, to the days of mass meetings and "I'm alright Jack" with Peter Sellers as the sinister union activist:. I had not heard the word "activist" for years until this afternoon's debate.
The best example of where workplace and postal voting together may be appropriate could be an oil rig where one crew is on duty and the other is ashore on leave. It would be sensible to ballot the on-board crew at their workplace—probably the only way one could do so. The crew on shore would have to be balloted by post. We had a representation from a union representing seafarers on precisely that point. Amendments Nos. 35, 36, 20:5 and 206 are proposed to deal with it.
My noble friend's third point is the employment of proxies. The noble Baroness, Lady Miller, attached highly emotive language to that aspect, but the Government are less sympathetic to proxies. We do not wish to complicate the procedure unduly. For any individual, a recognition ballot will be a rare event—unlike company general meetings, to several of which even a modest shareholder is likely to be invited each year. People who are off sick or on leave can mostly be accommodated by postal voting. We do not believe that proxy voting involving an essentially personal decision on a single issue is right—but not for the noble Baroness's reasons.
Lord Clinton-Davis: If that were to be coupled with a provision that there had to be in support of any proxy

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voting evidence provided that it was not possible to vote any other way, does my noble friend think that that would, in principle, be a way through this particular problem?
Lord McIntosh of Haringey: That is a hypothetical question. We have the possibility of workplace and postal ballots. I would need a lot of convincing that proxies add anything to those alternatives. As we have always provided for them to be permissible separately and we are now proposing that they be allowed together, we cover the waterfront. If my noble friend seeks to persuade me and produces an example, I would be glad to listen—as always.
One third of the way is all that I can say in respect of Amendments Nos. 35, 36, 205 and 206. The present situation is that the CAC has two choices, each with its own advantages and disadvantages—a workplace ballot and a postal ballot. The amendments would add a combined workplace and postal ballot where neither a workplace nor a postal ballot alone would represent a fair test of support.
I acknowledge that my noble friend Lord Clinton-Davis is saying that it tends to be better to err on the side of providing more options than fewer in statutes. It is likely that most situations would be best suited to a simple postal or workplace ballot but it would be foolish to deprive the CAC of the power to choose a combination of the two if that were more appropriate. There may be particular situations where a combined ballot is appropriate. I gave the examples of a merchant ship or oil rig. We want the CAC to have discretion to conduct a mixed workplace and postal ballot if only because, for particularly good reasons, it believes that to be appropriate. The key tests of appropriateness are the views of the employer and unions, location of the workers, and the nature of their employment.
Amendments Nos. 35 and 36 would allow such mixed ballots for recognition, and Amendments Nos. 205 and 206 relate to derecognition ballots. We set a requirement that 40 per cent of workers must vote in favour of recognition for an application to succeed. It is only fair that we allow the CAC to run ballots that do not artificially restrict the ability of workers to vote.
Baroness Miller of Hendon: The Minister referred to my use of the phrase, "trade union activist". I am not surprised that he has not heard that phrase for a long time. I claim that is because of the trade union legislation that we brought in. It is because we are concerned not to go back to those days that we have tabled amendments to the Bill.
Lord McCarthy: The noble Baroness says that the object of the Conservative administration over 17 years was to destroy trade union activists. That seems to be what she was saying.
Baroness Miller of Hendon: I did not actually say that. I said that the Minister had not heard that phrase because of the trade union legislation that we brought in. I hasten to add that the new Labour Government, it
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seems, have no intention of overturning much of the legislation they fought tooth and nail when in opposition but are happy with now. I could not resist saying that, in view of the Minister's remark.
Lord McIntosh of Haringey: Of course the noble Baroness could not resist saying that. Activism has its merits.
Lord Cavendish of Furness: We have heard much today about old days gone. The idea from the noble Lord, Lord McCarthy, that there is no such thing as activism or mass meetings at the workplace is absurd. I do not know where academics or Ministers go these days but evidently not to the north of England. Furthermore, I think that that is extremely healthy. I was pleased, by and large, by what the Minister said about the amendment. There is a great deal in the management of business and in the creation of wealth that involves a rather robust expression of feeling on the shop floor. I welcome that.
Lord McCarthy: Perhaps it is the acoustics in this Chamber, but I was trying to say that it was the noble Lord, Lord Tebbit, who was in the back of beyond in talking about activists. Never mind. Whether that is accidental or intentional, let me return to my amendment.
I did not expect the noble Baroness to be in favour of proxy voting. It is of course all right for companies. One can buy and sell Marks and Spencer by proxy vote but not use that method to achieve union recognition. All right. We do not need to have proxies. I gave that as an example. I want maximum participation. My noble friend Lord McIntosh says that we cannot do that, as if the members of my party—
Lord McIntosh of Haringey: I said no such thing. I said that the Bill wants to maximise participation. We want a high turnout. All I said was that we do not think it is the CAC's job to maximise participation. The people taking part in the ballot should do that.
Lord McCarthy: It is all right for the leaders of our party to go around saying, "For God's sake vote in the European elections." That is considered perfectly fair and proper but is not thought to be a job for the CAC. Okay. I want a series of provisions that result in high participation. It is said that the Government do not want that on the face of the Bill. One does not need that on the face of the Bill.
I want a series of provisions that induce high participation, partly because of the 40 per cent turnout rule. That rule is reasonable if there are facilities for high participation. But where employers have a vested interest, as they do, in discouraging high participation, one must have something going the other way. The easiest way for an employer to ensure that a 40 per cent turnout is not achieved is to make it difficult to vote.
Lord Brookman: Does the noble Lord agree that trade unions—and I represented a trade union—have a job to do as well? I am absolutely convinced that trade

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unions will do what is necessary and will work hard to achieve 40 per cent. We do not need that much help from legislation in that respect. We will do what is necessary and have substantial success.
Lord McCarthy: I sincerely hope that the noble Lord is right. Maybe I am living in the past in that respect. I remember what happened between 1974 and 1979. I remember all the obstructions that employers put in the way of high participation. I remember ACAS reports that spelt out the way that was done. As a result, quite rightly, this Bill has a number of protections for employees and trade unionists in the participation process. I am merely trying to say that there should be a mix of methods to induce high participation.
That brings me to the Government's amendment. The noble Lord. Lord McIntosh, said that he had met me one third of the way. Look at the words. Amendment No. 35 refers to,
"a combination of the methods".
That is fine. But Amendment No. 36 states:
"The CAC may not decide that the ballot is to be conducted as mentioned in sub-paragraph (4)(c)"—
the one I have just read—
"unless there are special factors making such a decision appropriate".
So it is not going to be the norm. The useless, pointless choice between a workplace and postal ballot will still be the norm. The abnormal will be,

"(a) factors arising from the location of workers or the nature of their employment;

(b) factors put to the CAC by the employer or the union (or unions)".

The unions may put to the CAC the fact that they do not believe that they can achieve high participation unless they have a mix of methods. What would the Minister say to that?
6.30 p.m.
Lord Wedderburn of Charlton: A further question arises from the important remarks of my noble friend. Surely. the Government's Amendment No. 36 is somewhat odd and should be corrected as suggested by my noble friend. The factors which must be taken into account by the CAC exist in an inclusive fashion. They might refer to other factors. Many Members of the Committee have greater knowledge than I, but surely many trade unions tend to be individual in their structure, nature and culture. That is often why it is difficult to achieve a merger which would otherwise be sensible.
One does not want to encourage that as an obstacle. So would it not be sensible to stress that these factors, if they have to be mentioned, are only examples and that the CAC is free to take other factors into account?
Lord McIntosh of Haringey: The important point, in answer to both of my noble friends, is that it is greatly to the union's advantage to encourage a high turnout. It used to be thought that that was more readily achieved in workplace ballots. Many people opposed to trade unions used to oppose such ballots on the ground that
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they were more likely to be manipulated or even distorted. If the argument were only about high turnout, it could be said that there should be only workplace ballots.
However, the evidence is much more confused. There are examples of high turnouts in postal ballots; for instance, in a recent recognition postal ballot from ADT Security Systems the turnout was more than 70 per cent. It is true that nowadays, with more flexible working conditions and more people working away from a fixed location, a workplace ballot can be more difficult to organise than in a single-site factory. Therefore, unions, when making such decisions, must take into account many considerations peculiar to their situation. My noble friend Lord Wedderburn made exactly that point. However, what is consistent about them is that it is always in their interest to have a high turnout because of the turnout threshold we have included in the Bill.
Under those circumstances, all we are doing with Amendments Nos. 35 and 36 is to give the unions flexibility in order to help them achieve a higher turnout without risk of malpractice or distortion in the ballot. Our proposal is a worthwhile advantage. I cannot see what proxies add and I am not greatly tempted by the argument of my noble friend Lord McCarthy about shareholders.
Lord McCarthy: In the circumstances, we are happy to withdraw the amendment. It may be that we can get one-third of the way forward on Report. On that understanding, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 35 to 38:
Page 23, line 23, at end insert ("or
(c) by a combination of the methods described in paragraphs (a) and (b),")
Page 23, line 30, at end insert—
("(5A) The CAC may not decide that the ballot is to be conducted as mentioned in sub-paragraph (4)(c) unless there are special factors making such a decision appropriate; and special factors include—

(a) factors arising from the location of workers or the nature of their employment;

(b) factors put to the CAC by the employer or the union (or unions).")

Page 23, line 40, leave out ("has decided") and insert ("is required under paragraph 20A")
Page 23, line 42, leave out ("of the decision") and insert ("that it is so required")
On Question, amendments agreed to.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 39:
Page 24, line 9, at end insert ("provided that, unless the employer otherwise agrees, such access shall only be required to be granted on each occasion outside the hours the employees are required to work and shall be restricted to such parts of the employer's premises as he may from time to time designate")
The noble Baroness said: In moving this amendment, I wish to speak to Amendment No. 209. I also have two amendments to Amendment No. 40, which is in this group. Perhaps I can be advised when I can speak to them.
Under paragraphs 21 and 29 of the schedule, an employer is obliged to provide access to the workers to,
"enable the union … to inform the workers of the object of the ballot and to seek their … opinions on the issues involved".
The ballots referred to concern recognition in paragraph 21 and derecognition in paragraph 29. What I have described as an obligation is much more dramatically described in the introduction to each paragraph as a "duty." Well, it is only a word and in these days no one could object to being obliged or duty-bound to provide the facilities. On the contrary, we believe that it is far better to be on the employer's premises than at the factory gate, or even in the car park, where all kinds of unconnected and outside parties might want to join in.
Since the obligations are to allow the union access to the workers, I have to assume that this means personally and not being supplied with a mailing list. Perhaps the Minister will clarify that. If the employer has a large staff, there may not be a canteen or hall, or other space, to accommodate them all at once. Will the Minister tell us what will happen then? Possibly the Government will need to introduce yet another amendment on Report.
Without detracting from the principle involved in this clause, and despite the fact that in both cases there is the restriction that the access has to be reasonable, I fear that some further clarification is needed in order to enable an employer to have some idea about the meaning of being reasonable. I have provided two restrictions, both of which the employer is at a liberty to waive. First, the employer can require the meeting to take place outside normal working hours. What must not happen is for the unions to be able to get the workers to down tools to go off to a meeting of indefinite length during working hours. Calling meetings at an inconvenient time is not unknown in the history of trade disputes and is a means of exerting pressure on an employer by having what can be described as "a mini strike" without going through the formalities of calling a real one.
My second point is that the employer shall designate the place of the meeting. The Bill requires the employer to be reasonable. But the employer may not want the meeting to take place outside the loading bay where goods are constantly coming or going. He may not want it in the car park under the full glare of TV news. He may not want it on the shop floor where it will disrupt the work of another shift. As I pointed out, the Bill quite properly requires the employer to act reasonably.
Despite the reference by the Secretary of State during the Second Reading debate in the other place to,
"measures for partnership based on rights matched by responsibilities".—[Official Report, Commons, 9/2/99; col. 130]
as with other large tracts of this Bill there are no responsibilities imposed on the unions to match the duties. As I recently reminded the Committee, that word is imposed on the employers under this provision. These
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two identical amendments at least restore the balance in two minor ways without seriously inconveniencing the union, even if at all. I beg to move.
Lord McCarthy: I am a little confused. We had wanted our amendment to be introduced on its own, but it became amalgamated. It is too late in the day to complain about that—
The Deputy Chairman of Committees: If the noble Lord would like to deal first with Amendment No. 39 I shall call Amendment No. 40 separately.
Lord McCarthy: No, I can deal with this, but it will be confusing to start with. I hope that the Government will not accept Amendment No. 39. In cases of attempting to gain trade union recognition by using public bodies, it has always been accepted that the public body be present in the organisation and have powers to talk to the parties involved, and that any surveys, ballots and counting will be done in the firm's time. Otherwise, it would be monstrous to insist upon the 40 per cent rule. If you say that you want a bare majority, it may be possible to do that outside the firm, but people may say that you have only a minority of people, 15 per cent of the labour force, and by a bare majority they have voted in order to get recognition, and we would agree with that. Therefore, there should be a high level of participation. That is what I was trying to say in relation to the previous amendment. If you suddenly say that the access has to take place outside the hours that employees are required to work, and you institute the 40 per cent rule, that will put an enormous premium on the employer's side of the vote. That would do everything possible to make the vote a foregone conclusion. Of course we could not accept that. That is a nonsense.
Turning to my own amendment—Amendment No. 40—the object is to describe in more detail the ways in which the employer is expected to co-operate and the way in which that co-operation takes place. Paragraph 22(1) states:
"An employer who is informed by the CAC under paragraph 21(8) must comply with the following three duties".
That is something new which we did not have in 1974, when we hoped for a great deal. Sub-paragraph (2) states:
"The first duty is to co-operate generally, in connection with the ballot, with the union (or unions) and the person appointed to conduct the ballot; and the second and third duties are not to prejudice the generality of this."
Sub-paragraph (3) states:
"The second duty is to give to the union (or unions) such access to the workers constituting the bargaining unit as is reasonable to enable the union (or unions) to inform the workers of the object of the ballot and to seek their support and their opinions on the issues involved".
All that must take place inside the firm, in the firm's time. The CAC has to be given the names of the representatives of the workers in the bargaining unit, and the CAC's job, via the ballot conductor, whoever he is, is to give out any information supplied by the

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union and to become a kind of union post office. No doubt there will be a code of practice which will spell out in more detail the significant role for the union.
This amendment seeks to put parts of that on the face of the Bill. The amendment suggests that information—the names of all employees in the union—should be given directly by the employer to the union, not via the CAC, within seven days. We do not see why the employer should not be under an obligation to give that to the union rather than making him go through the CAC.
Secondly, we believe that there should be on the face of the Bill, not just in the code of practice, something about the facilities that the union enjoys during the campaign. The term "campaign" has not been used anywhere in this legislation; it is not in Fairness at Work. It will be a campaign. It was a campaign last time. The union will be making its case for the most part to non-unionists. It will be saying to the majority of workers who are not trade unionists, "This is why we think you ought to vote for collective bargaining". That will almost certainly be on the voting paper. The employer will reply to that, saying, "Nonsense, trust me, I'm your good employer and we are going to have a wage increase next week so you do not want to vote for this".
There will be a campaign. Therefore, as all the controls in this situation are in the hands of the employer, the employer controls the organisation, the hierarchy, the supervision; and the employer can always put his arguments across, as he should. We are saying that something should be on the face of the Bill about the facilities that the unions have in these circumstances. We are putting in small, moderate matters such as details of the facilities, where to hold meetings and so on.
The justification is that we know that in the past the kind of employer who got into this situation—we are not talking about the great majority of employers—and found himself in front of ACAS or the CAC resisted union access, frustrated union access, prevaricated and sent incomplete returns over and over again, as reflected in the reports of the legislation. In addition to the extra safeguards that the Government have put in paragraph 23 of Part IV of the Bill, we want those two things on the face of the Bill.
6.45 p.m.
Lord Clinton-Davis: In conjunction with the considerations that we are now addressing, one has to read the provisions of paragraph 23, which my noble friend will acknowledge. I believe that my noble friend is seeking to avoid ambiguity and unnecessary recourse to the CAC. That is thoroughly desirable.
In relation to Amendment No. 39, that is possibly a matter, when looking at the provisions of paragraph 23, that can be obviated completely. The point made by my noble friend Lord McCarthy as to the provision of all employees constituting the bargaining unit is quite important in an election. It is something that is commonplace. I hope that my noble friend will not take exception to that.
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Moreover, the details of facilities and the place or places of work also are significant in relation to the holding of meetings, which are, of course, an essential provision in relation to any electioneering. I hope that my noble friend will accept that that is complementary to the requirements that the Bill currently sets out.
Lord Wedderburn of Charlton: Before my noble friend replies, perhaps I can ask him to take the problem addressed by this amendment very seriously when we return to it on Report. Wherever in modern societies the law plays a part in pushing the employer a little further towards collective bargaining than he would go on his own a significant percentage of the employers involved tend to resist, at any rate if they have not had much experience of trade unions.
One can take examples from many systems in Europe or North America, but I mention one to illustrate what I mean. In the United States, where the obligation to enter into bargaining in good faith has been an obligation since 1935—I do not suggest that our Bill goes anywhere near bargaining in good faith—there have been phases of employer resistance, many of which have been very successful. However, the example from the United States shows how a high percentage of employers tend to move towards what is permitted by the law—they do not necessarily cross the border—and what the law suggests as a standard for their resistance.
In the United States, of course, matters take a particular colour from the constitution because the employer so often takes his stand on his constitutional right to free speech. Any resistance to what he is allowed to do in terms of communication to the workforce is often ruled out by limitations on free speech in constitutional law.
Will my noble friend consider the matter in that light: that is, when it is agreed that a high turn-out and a free vote—the CAC's preferred method—are important? It is also a question of some groups of employers, in the British circumstance, doing what they are not forbidden to do. Therefore, especially in this matter of facilities, my noble friend Lord McCarthy made a strong case which I hope the Minister will consider before we come to Report.
Lord Cavendish of Furness: Perhaps I may say a word in support of my noble friend's amendment. If I heard the noble Lord, Lord McCarthy, right this time, he helpfully blew out of the water the myth that the Bill is about partnership. He talked about the campaign in which there would be winners and losers; the tension and the reinforcement of the "them and us" culture.
He spoke also, as he has done often today, about the bad employers against whom employees need protection. On this side we acknowledge that there are such things as bad employers; it is idle to pretend otherwise. At Second Reading the noble Lord, Lord McIntosh, said that bad employers in this present climate would probably go out of business, but they also needed to be legislated out of business. There was therefore a belt and braces approach to this minority of bad employers. But we hear nothing about had trade unionists. In fairness, if one says it is idle to pretend that

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there is no such thing as a bad employer, it is idle also to pretend that there is no such thing as trouble-making trade unionists. I accept that they are in a minority. I accept that we want to put those practices behind us; but they still exist. At least people can walk away from a tyrannical, unpleasant employer; the tyrannical, unpleasant trade unionist can do a mass of damage to the economy at large beyond the single company.
I therefore echo my noble friend Lady Miller in asking where is the matching responsibility and where is the protection for small business?
Lord McIntosh of Haringey: Quite honestly, this is a beast of a subject. It is probably the most difficult thing to legislate for. No one can complain that in Schedule 1 we have not sought precision, even at the expense of being extremely long-winded. But on this occasion we chickened out. We chickened out in the White Paper. We said that we were,
"minded to ask ACAS to draw up a statutory code of practice to help employers and unions understand what reasonable access means in practice".
In paragraph 22(8) of the schedule we provided for such a code. Indeed, we have gone even further. We realise that it is possible that ACAS may not be able to produce such a code and allowed for the possibility that it might have to be issued by the Secretary of State. There is therefore no precision in these matters; there is no one right answer and I approach these amendments in that spirit. Of course there are arguments on both sides. Of course employers want to ensure that their workers are not distracted from their work and trade unions have an equally proper concern to put their views to workers.
Let me turn to Amendments Nos. 39 and 209. The noble Baroness is concerned about unnecessary disruption of business by campaigners for recognition. The code of access is intended to prevent that. I hope that the noble Baroness will be reassured by what I tell her about it. I am afraid that Amendments Nos. 39 and 209 give an employer too much scope to act unreasonably. It may be entirely reasonable for an employer not to allow access during working hours, but breaks in the working day may be a good opportunity for unions to approach workers and I do not believe that this amendment allows that. Perhaps the noble Baroness could clarify that point.
Under this amendment it would be possible for a hostile employer to designate unsuitable or inconvenient areas for access to workers. It might not quite add up to "non co-operation" but it would certainly be obstructive and we do not want that to happen. These amendments therefore go too far in the direction of helping the employer and too far against the trade union.
I turn to Amendment No. 40. There are two aspects to that and they are both difficult. First, there is the question of providing the union with a list of the names of workers in the bargaining unit. I acknowledge that we said in the White Paper that the employer would be required to do that. However, we reflected on that point particularly in the light of Clause 4 and Schedule 3. Schedule 3 will remove any duty on unions to give
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employers a list of names of union members who are to be balloted about or be called upon to take industrial action. Schedule 3 responds to a reasonable wish on the part of some workers to keep their union membership secret from their employer.
We have come to the conclusion that in relation to recognition ballots, employees could have an equally valid wish not to be identified to the union or unions seeking recognition. However, the union has a perfectly legitimate right, indeed a duty, to communicate with those workers and we provided for that in paragraph 22(6). A union can send material to the works to be balloted via the body conducting the ballot. That ensures that the union can put its case while avoiding the disclosure of names and addresses to the union. Disclosure to the union could also be contrary to the right to privacy guaranteed by Article 8 of the European Convention on Human Rights. Therefore for that reason, which has not been raised in debate, the Government are unable to accept the first part of my noble friend's amendment.
The second part of the amendment also causes problems. We hope that any reasonable employer would do his best to enable a union seeking recognition to have access to workers on the premises. However, we have to accept that some premises are unsuitable for this purpose. We accept too that it could be unduly disruptive to allow a union to call a meeting of workers during working time—I am not talking about mass chapel meetings in printing works at nine o'clock at night. There are problems where the workforce is peripatetic or works largely from home. In the Commons we heard about the problem of employers with a religious objection to trade unions. There are so many difficult issues involved that we believe it would be unwise to place any absolute requirements on the face of the Bill. Instead we propose to deal with these matters in a statutory code which can give good guidance in a more flexible way on what is reasonable and good practice. I hope that the CBI, the TUC and others will be able to contribute to such a code.
The noble Baroness, Lady Miller, did not speak to her amendments to Amendment No. 40 so perhaps I shall leave my comments until she does. The Government's approach to this—it is a statutory code off the face of the Bill—is the only realistic way of dealing with these difficult problems and is certainly better than the restrictions on both sides proposed by the amendments in this group.
Baroness Miller of Hendon: I am not comforted by what the Minister said about Amendment No. 39. I am comforted by the fact that he acknowledges that this is an extremely difficult problem; that the Government were not able to define it either in the Bill or in the Notes to the Bill and that those asked to advise as yet have not been able to come up with an answer. I am not happy with the suggestion that I shall somehow be comforted when I see it in the code. As the Government have had great difficulty until now, I am sure that they will also have difficulty with the code.

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A great deal of legislation is coming out in codes of practice or regulations. We do nor have the same opportunity to discuss those as we would do if the measure were before us now. It is not helpful—although as helpful as the Minister can make it—for those who are trying to argue a different case if the grounds for turning down our suggestions are that the Government do not have a better answer but will somehow provide a better answer in the code. We shall not have an opportunity of dealing with that in such detail. That is extremely unfortunate.
The Minister asked whether the provision would prohibit any meeting at any time during the course of the day. I am not sure that it would. The amendment says,
"provided that, unless the employer otherwise agrees, such access shall only be required to be granted on each occasion outside the hours the employees are required to work".
There are many hours during the day when an employee is not required to work and I am sure that some accommodation could be found. However, in view of what the Minister said I shall take that amendment away and see whether we can come up with something that is slightly more acceptable. It would be nice at this stage, after this number of hours—of course there are bigger things to come later on—if we obtained some small sort of co-operation or co-existence.
When I started my remarks I stated that I was somewhat confused about the correct order of things and that I was not sure whether I should speak to Amendments Nos. 40A and 40B, which are amendments to Amendment No. 40, because the noble Lord had earlier dismissed my amendments before I had spoken to them. I have a feeling that that has happened again. I believe that the noble Lord has spoken to Amendment No. 40. I was going to say to the Minister that I do have some very brief notes with me as to why I do not accept Amendment No. 40 as drafted.
7 p.m.
Lord McCarthy: If the noble Baroness wants a small concession, I can see nothing wrong with Amendments Nos. 40A and 40B; indeed, I think that they would make our amendment even better. However, that is not much good because my noble friend the Minister will not accept it. Nevertheless, I am not against the suggestions of the noble Baroness.
Baroness Miller of Hendon: That is the exact point I was trying to make. The noble Lord, Lord McCarthy, says that the Minister will not accept his amendment. The Minister has already spoken to Amendment No. 40 and has said that he will not accept my amendments before I have actually explained their purpose. That brings us back to where we were before. The noble Lord the Deputy Chairman of Committees said that that would not happen. However, I have no objection to any of this. I am absolutely sure that it is all inadvertent. As the Minister is not going to accept any of the amendments, I shall not say all the clever things I have written down.
Lord McIntosh of Haringey: We have done pretty well. We have had an amendment moved; we have had
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another amendment spoken to on the same subject; and we have reached agreement on amendments to an amendment in the same group without drawing breath. I am afraid that the noble Baroness is right. I am not going to accept my noble friend's amendment, even with the sensible amendments she has proposed to it and which he has accepted.
Perhaps I might say a few words about the code of practice. Some people use the derogatory phrase about the Government "chickening out" of decisions, but there are other arguments for a code of practice rather than trying to put everything on the face of the Bill. The principle argument for such a code is that it is drawn up in detailed consultation with those who actually spend their lives doing this sort of thing. It will be drawn up in consultation with the CBI, the TUC, and other employer organisations, together with other organisations and individual unions which wish to become involved. If something goes wrong it can be changed, but that would not be the case with legislation on the face of the Bill.
Therefore, although I have acknowledged that I do not have a perfect answer to all of these questions—and there may not be one; indeed, I suspect that, as so often, it will be different in different work places—I think that the code of practice which we proposed in the White Paper and which we have confirmed in the Bill represents the right approach. I think it would be a mistake to accept any of these amendments because they would restrict the proposed code of practice.
Baroness Miller of Hendon: The Minister said that there would be wide consultation with the C BI and the TUC as regards the code. However, can he confirm that there will also be consultation with other organisations representing employers? I ask that question because the CBI has not always been in line with, for example, the IOD or the EIS board, the small business bureau or, indeed, other such organisations.
Lord McIntosh of Haringey: I thought that I had just confirmed that. It is certainly not our intention to restrict consultation in any way.
Baroness Miller of Hendon: In that case, I shall certainly withdraw Amendment No. 39, but I shall look at it with a view to rewording it and perhaps adding one more amendment to the list of 100, or so, amendments which have been tabled by the Government. Indeed, more are due to come. I do not know the exact number but it is certainly way over a hundred. As the Minister has already indicated that Part II of Schedule 1 will be much changed on Report, I do not believe that one or two harmless, moderate little amendments that I may wish to bring forward could cause any problems for the Government.
Lord McCarthy: Before the noble Baroness withdraws her amendment, I should say that what the

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noble Lord said is quite true. There is much to be said in favour of a code of practice. However, the case against it is that it is not legally enforceable.
Lord McIntosh of Haringey: In the White Paper and in the Bill we have talked about a statutory code of practice.
Lord McCarthy: But it is not legal.
Baroness Miller of Hendon: I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendment No. 40 not moved.]
[Amendments Nos. 40A and 40B, as amendments to Amendment No. 40, not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 41 and 42:
Page 24, line 12, at end insert ("after that on which")
Page 24, line 50, leave out ("19 or 20") and insert ("20A")
On Question, amendments agreed to.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 43:
Page 25, line 2, leave out from beginning to ("by") in line 3
The noble Baroness said: In moving this amendment I shall speak also to Amendments Nos. 44 and 45. These amendments all relate to the provisions in paragraph 19(2)(3) and (4) of Schedule 1, which provide for the cost of ballots regarding union recognition. It is sometimes confusing to have to follow the effect of an amendment which picks a word here or there out of a clause. In this case, as the wording concerned is very short, I should like to read to Members of the Committee an abbreviated version of it as it would be if my amendments were accepted.
The paragraph would say:
"(2) The gross costs of the ballot shall be borne by the union (or unions);
(3) If there is more than one union, they shall bear the gross costs in such proportions;
(4) The person appointed to conduct the ballot may send the union (or unions) a demand",
and so on.
The effect of the amendment is to remove from the employer the liability to contribute 50 per cent of the cost of the recognition ballot, leaving the union or unions to pay the whole cost instead of just half. The justice of the amendment is simple. A union wants recognition, with which the employer disagrees, as he is entitled to under the Bill. The union invokes the machinery to test the views of the workers. The ballot may or may not prove to be in favour of the union's proposal. There is certainly no justification in making the employer contribute to the cost of a negative ballot which shows that he was right to resist the claim for recognition.
If the ballot proves to be in favour, then the union will benefit from the addition of new, dues paying members and, presumably, enhanced status. Once again, there is no reason why the employer should contribute to costs which the union will recover over time, even though he resisted the application in the first place. The payment of the costs is not the same as the rules relating to costs in civil litigation.
A liability to contribute to the cost of the ballot imposes an additional burden on employers, especially those operating small businesses about which I spoke earlier. They are the ones who will be most affected by disputed requests for recognition. The Government disclaim any intention of imposing unnecessary burdens on business. I believe that the paragraph, if unamended, will do just that. I beg to move.
Lord McIntosh of Haringey: On the face of it, the amendment seeks to encourage a union to minimise the costs of a recognition ballot. That is certainly a good thing. However, making the union pay for the whole ballot is not the way to do it.
The approach that we have taken is to divide the costs of a recognition ballot between the union and the employer. That means that neither party has an interest in going ahead with a ballot it is unlikely to win, or an extravagant, costly ballot. Both parties have an incentive to keep costs down, and, indeed, if they think they are not going to win, to avoid having a ballot at all. That is a thoroughly desirable alternative. This is the principle that the Government have applied to both recognition and derecognition ballots.
These amendments would not encourage co-operation by employers. They would give an employer scope to increase the cost of a ballot to deter a union from seeking recognition or to punish it for doing so. That would be petty and would not help to foster good employment relations. The present solution, where the costs of a ballot are split between employer and union, gives both an incentive to hold a quick, clean ballot. It is the best solution both financially and in terms of employment relations. Therefore, I hope that the noble Baroness will withdraw her amendment.
Baroness O'Cathain: Can the Minister tell us what impact the employer has on the overall costs of the ballot? For example, what say does the employer have in that respect? Is it the union calling for the ballot that determines what costs will be involved? Indeed, there could be many costs involved. There could be side meetings which would mean the cost of hiring rooms, and so on, as well as the cost of providing entertainment and even suppers. Under the Bill as is stands, what sort of input would the employer have as regards the total costs?
Lord McIntosh of Haringey: The ballot has to be organised by an independent organisation. The Electoral Reform Society has organised many ballots. The costs which we are discussing—which are shared between the union and the employer—are the costs of

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the independent balloting organisation. What unions or employers do on their own behalf is quite another matter and is a matter for them.
Lord Cavendish of Furness: Before the noble Lord sits down, in accepting that these costs constitute a disincentive to hold a ballot, do the Government accept that the cost is material? Is the Minister therefore saying that for a small company of 21 employees, for example, the cost, has the same materiality as for a giant trade union? I find that hard to believe.
Lord McIntosh of Haringey: The costs of a ballot depend in part on the number of people being balloted. A ballot in a small company will cost less than a ballot in a large company. A large company or a small company could receive a request for recognition from a large union or a small union. The burden of the costs will be greater for a small union than for a larger union; it works both ways.
Lord Cavendish of Furness: I am sorry but that is not the case. In the case of a small business of, for example, 21 people which is perhaps not wealthy, the Minister has accepted that the cost of a ballot could be material and could lead to a disincentive to hold a ballot. That being so, that is a material consideration. However, it cannot possibly be as material to a giant, powerful, rich trade union as it is to a small company.
Lord McIntosh of Haringey: As I say, it works both ways. This matter is more material to a small union than to a large union and it is more material to a small company than to a large company. A ballot comprises fixed costs and variable costs. The variable costs depend on the number of people who are being balloted; the fixed costs comprise the costs of preparing the questionnaire, and so on.
Lord Brookman: Let us consider a case where 20 people are balloted. What costs are involved? Are we talking about 20 postage stamps or a sum of £20, £30 or £10? Is that going to break the Bank of Monte Carlo?
Lord Cavendish of Furness: It is more likely to break the hank of a small business which is struggling and having more and more regulation put upon it than it would a giant, powerful trade union—
Lord Brookman: Is it the case—
Lord Cavendish of Furness: I have not quite finished. The Minister said that the cost is material and will constitute a disincentive in this regard. I did not suggest that; I think that it is an absurd idea.
Lord Brookman: I apologise for interrupting the noble Lord. However, I believe that a company which is in that kind of difficulty would need a trade union to pull it out.
Baroness O'Cathain: On the point of costs, the Minister mentioned the Electoral Reform Society. The
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activities of that organisation would involve more than merely the cost of postage stamps. After all. it has its administrative costs, its overheads and all the rest of it. I ask for clarification whether there is a market as regards bodies which organise ballots or are we just talking about the Electoral Reform Society? Is there a competitive element here?
7.15 p.m.
Lord McIntosh of Haringey: I should not have named that organisation as I am no doubt giving it a competitive advantage. There is a market in this area. There are other organisations which provide these services.
Baroness Miller of Hendon: As we do not know the costs involved, I sought to make the point that if a ballot did not succeed because the workers did not wish to have recognition of collective bargaining it seems extraordinarily unfair that the employer—who may be a small employer—may have to bear the costs of something that he did not wish to occur in the first place. I listened with interest to the comments of the noble Lord, Lord Brookman. He said that he thought the relevant costs were so small they should not inconvenience an employer in any way. If the costs are so small I do not see why unions should not bear these small burdens if they wish to adopt the measure in the first place. The noble Lord, Lord Brookman, mentioned the cost of postage stamps in this regard.
Lord Brookman: I agree with the noble Baroness. Let us do a deal; we shall swap the 40 per cent for 10 per cent and we shall pay all the postage.
Baroness Miller of Hendon: It is nice of the noble Lord to start to do deals with me but I am sure that the Members of his Front Bench would not agree with that. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 44 and 45 not moved]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 46 to 50:
Page 25, line 9, leave out ("written")
Page 25, line 13, leave out ("21 days starting with the day") and insert ("15 working days starting with the day after that on which")
Page 25, line 44, after ("declaration") insert ("under this Part of this Schedule")
Page 26, line 4, leave out ("42") and insert ("30 working")
Page 26, line 6, after second ("day") insert ("after that")
The noble Lord said: These amendments have already been spoken to with Amendments Nos. 12 and 9. I beg to move Amendments Nos. 46 to 50 en bloc.
On Question, amendments agreed to.
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 51:
Page 26, line 14, after ("effect") insert (", subject to the following provisions of this paragraph,")
The noble Baroness said: This is by way of being a probing amendment to what I repeatedly said at Second Reading is a good Bill. The amendment derives from my own experience as a union official during the period when previous governments have sought to introduce legislation governing the conduct of employment relations. There have of course been numerous attempts in the past 30-odd years. Many of them were concerned with legislating for trade union recognition. Others, of course, were designed to constrain the ability of unions to act on behalf of members.
I believe that most people involved with industrial relations would agree that in the UK both employers and unions have been somewhat chary of involving the law too much. I say this with great respect to my noble friend Lord Wedderburn who sometimes agrees with me on that point. Of course it is accepted that as regards individual rights the employment tribunals and the EAT were welcome innovations. However, the enforcement of collective rights is a different matter. Previous attempts by governments—noticeably Conservative ones—have sought to make collective agreements legally enforceable. That has by tradition been resisted by unions. In fact I can remember when it used to be union policy to negotiate agreements which stated quite specifically that they were enforceable in honour only, and not legally enforceable.
Many employers were prepared to co-operate in that regard as both sides wanted to keep the lawyers out. The experience of the United States was not felt to be particularly encouraging in that regard. I remember that when I went to the States during that period I was surprised to discover that it was quite usual for a union's labour lawyer to accompany officials to negotiations with employers. One result of that was enormously thick agreements and, incidentally, no lessening in the number of industrial disputes. In the present Bill when the CAC makes an adjudication about recognition it can make the resulting agreement legally binding. The objective of the amendment is to allow both parties if they wish—I emphasise the expression "if they wish"—to opt that this should not be so. In other words, there could be an agreement that is binding in honour only. I shall be interested to hear the Minister's views on this point. As I said earlier, this is a probing amendment. I beg to move.
Lord McIntosh of Haringey: I am grateful to my noble friend for that explanation. If I have understood correctly, I believe that the amendments are intended to enable an employer and a union who have had a procedure imposed on them by the CAC because of their inability to agree to modify or end that procedure. However, that is exactly what sub-paragraph (5) of paragraph 27 does. It provides that if the parties agree in writing that all or part of the procedure is not to be legally binding, or if they agree to vary or to replace the procedure, they may do so. They are therefore free to replace the legally binding procedure with some other arrangement which is not legally binding if they so wish.
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I think that part of the confusion is our fault in the sense that we could be misled by the end part of sub-paragraph (5) which states that,
"the written agreement shall have effect as a legally enforceable contract made by the parties".
What we intend to be legally enforceable and what the sub-paragraph states is legally enforceable is not the original agreement which had been imposed but the agreement to end or vary the procedure imposed by the CAC. It is necessary to give the new agreement legally binding force to override the previous procedure. It does not have to impose any new legal obligations on the parties unless they wish it to do so and provide for that in the agreement. My noble friend's amendments are unnecessary because the wording achieves that. Similar arguments apply to Amendments Nos. 81 to 83, which are in the same group.
Baroness Turner of Camden: I thank my noble friend for his reply. In the light of his explanation, I shall withdraw the amendment. I shall look very carefully at what he said to see whether it would be a good idea to clarify sub-paragraph (5) on Report. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 52 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 53:
Page 26, line 23, at end insert—
("( ) In determining a complaint where the only remedy available is specific performance under sub-paragraph (6), the court shall not imply any term in the relevant contract, method or agreement falling within this paragraph which affects—

(a) the rights of employers, workers or an independent trade union to take action in contemplation or furtherance of a trade dispute, or

(b) the operation of subsections (2) and (3) of section 180.")

The noble Lord said: Amendment No. 53 reverts to the question raised earlier in the Committee's discussions. It attempts to point towards the new machinery, which will either form itself or be formed, in a situation where a collective agreement specified—as to method at least—by the CAC is legally binding. Speaking not only as a lawyer, I am unhappy at the way in which there has been very little debate, both in the other place and here, about the question of what follows from the new world of legally enforceable agreements, which, to a remarkable degree, my noble friend Lady Turner has just touched upon.
Amendment No. 53 takes us into a situation where an agreement or contract has been specified by the CAC, or under a CAC declaration, and one side or the other raises not a new question but a very old question—which I am sure that the noble Lord, Lord McIntosh, will appreciate—namely, that of one side saying to the other "You have broken the procedure". That is the oldest sentence in arguments about industrial relations and collective agreements. The problem is not new. One side says to the other, "You should have taken this course in the procedure before"—in some cases—"you called industrial action".
The new feature then provides for the innocent party to take action in a court for the only remedy which is permitted; namely, a specific performance, a matter we touched on earlier. In doing that, the innocent party will have a claim to that remedy—and that remedy alone—but of course within the procedures of that court. I suspect that I am right in saying that the Government have not yet vouchsafed just which court it will be. There were a number of types of actions under Schedule 1 which could be brought in the county court. Two of those have now been knocked out and the county court does not seem to be the favourite vehicle for that sort of action. Indeed, in such commentaries on the Bill that I have seen, most people assume that the action will take place in the High Court. When the schedule gives no guidance and the parties have a contract in front of them in respect of which they say there has been a breach, they would have a right within, at least, the new rules of the noble and learned Lord, Lord Woolf, to go to the High Court.
The first question is whether that is right or whether the plaintiff is to have a total claim as to the court. If that is right, then we must ask what is likely to happen in a High Court action against the background of this new type of enforceable collective agreement. I am aware that collective agreements could be enforceable under the old regime but, as the noble Baroness opposite knows very well, this is a new type of collective agreement which is enforceable by reason of a CAC declaration. If one got that far, it would mean that appeals would rely then on a question of law to the Court of Appeal or to your Lordships' Judicial Committee.
More importantly, in 1988 the Court of Appeal established that the interpretation of a collective agreement—not its legally binding character—should be drawn from the normal principles of employment law contracts, which are normally individual contracts. In one case it interpreted a minute of the Railway Staff Joint Council—a body well known to my noble friend Lord McCarthy—on the basis of implied terms and expressed terms; that is to say, "Is this the whole contract which I have before me?" "No. There are some implied terms". What kind of implications could we envisage in a contract which is in front of the High Court and it decides that such evidence as it has is not the full contract between the parties? That is highly likely because the CAC is not obliged to establish all the terms between the parties.
In many other systems of labour law, the court implies that there are "peace obligations", as they are called. Let me say that I cite foreign cases not because of a need to travel to conferences in delightful places but because we can learn from different jurisdictions. In Germany and Sweden, the peace obligation is the basis of the whole labour law system, either as a relative peace obligation, which covers points within the expressed agreement, or as an absolute peace obligation prohibiting all industrial action during the life of the agreement.
If nothing were done we would need a hot precedent—by which I mean an unusual case which established people's reactions to the whole system. That
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is how it would work. As we saw earlier this afternoon, it would not need an employer who is typical of employers in any way; it would need a case which would bring out the hostility or otherwise of other parties. If the High Court implied peace obligations into one example of the new collective agreement which is legally binding, my prediction would be that the whole system would crash to the ground. There would be an enormous argument about whether there should be an implied obligation and whether the court was right to give that impression.
If one looks at the individual employment contracts, which the Court of Appeal tells us to do in Mr. Cresswell's case in 1994 involving the Board of the Inland Revenue—about which one of your Lordships' should know something—the duty of co-operation was firmly established at the centre of employment laws. In the case of Mrs. Ticehurst in 1992, the Court of Appeal went much further. It established that a worker who returned to her work with her group—in her case a junior management group—with the wrong attitude and not being prepared to say she would not take action again, that by itself was a breach of the employment contract.
I am well aware that it is only those lawyers who look at employment law who come across these bizarre cases. I am happy to make plain the assertion that these are typical cases, slightly pressing at the edges. If the High Court applied the same concept to the interpretation of collective industrial relations, then a co-operative trade union might be caught more frequently than one would think by reason of implied obligations of peace; it might be caught perhaps rather more frequently than a union which was less co-operative since the intentions of a co-operative union might be held to a higher standard.
These are uncharted waters. The amendment says that there should be no such implication and, secondly, that nothing should be implied concerning Section 180 of the 1992 Act, as this Bill refers to it.
If the Government would be prepared to say that they will look at this, I think it would be of enormous help. I am well aware that the legal establishment outside employment law will tell the Government that it is quite impossible to cope with injections of orders to the court. It is not at all impossible. We do it every day. We tell the courts what they can and cannot do and let them get on with it. Sometimes they get on with it so well that we have to come back and tell them that they must not do something else.
However, something must be said about this. It is not in the Government's documents, and it is not in the Bill. It is nowhere to be found. We should be told, first, which court it is to be; secondly, what is to be the approach of the court to implied terms in regard to co-operation and whether or not it is to be the same as in individual contracts of employment; and, thirdly, whether the Government are prepared to say something on the face of the Bill, and not just in

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a code, which will prevent the case that will knock its Schedule 1, as Lord Montgomery used to say, out of the ground and out of earshot. I beg to move.
Lord McIntosh of Haringey: I hope I can reassure my noble friend but I am very sceptical about my ability to do so, with good experience. It has never been the Government's intention in this Bill to restrict in any way the ability of unions to organise, or workers to take part in, industrial action. Indeed, the whole of Schedule 5, to which we shall come later and which is about the unfair dismissal of striking workers, goes in the opposite direction by providing protection for workers where industrial action is properly balloted and otherwise organised within the law.
The Government intend to use the power contained in paragraph 127 of Schedule 1 to draw up a model for collective bargaining. The imposed procedure will be exactly what it says, a procedure for bargaining. It will not impose new requirements on employers or unions beyond the procedural duty to bargain in the way set out in the method. It will certainly not constrain the ability of unions to organise, or workers to take part in, industrial action.
I am legally advised that there is no risk of the Bill leading to the courts—and I should say to my noble friend that this does mean the High Court or, in Scotland, the Court of Session—reading into the proposed procedure terms which restrict industrial action and, as a result, restraining such action. It is not possible to restrain industrial action by an order of specific performance. The procedure will contain no condition restricting individuals within the terms of Section 180 of the 1992 Act. I am advised, therefore, that the noble Lord's amendment is unnecessary.
However, since my noble friend Lord Wedderburn is moving this amendment, I undertake to study carefully what he has said. If there are any new matters which the Government have not so far considered, we shall, of course, examine them and will, if necessary, be prepared to bring forward an amendment at Report stage. I shall be glad to discuss the issue with my noble friend between now and then. In the light of that assurance, I hope that he will feel able to withdraw the amendment.
Lord Wedderburn of Charlton: I am delighted to hear the words that preceded my obligation to withdraw the amendment, and one especially. We can read it in Hansard, but I believe the noble Lord said something to the effect that it is not possible to restrict industrial action by an order for specific performance. I contest that. I ask the noble Lord to look at it again. It may not be the normal case, but it is possible to restrict industrial action, and indeed a lot of other things—and the case that I made did not rest only on industrial action—by specific performance. I would be very grateful if the noble Lord would look again at that question. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Amos: I beg to move that the House do now resume. In moving this Motion, may I suggest that the Committee stage begin again not before 8.35 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

King's Manor School, Guildford
7.35 p.m.
Baroness Sharp of Guildford Baroness Sharp of Guildford rose to ask Her Majesty's Government whether they welcome Surrey County Council's decision to seek private sector bids for the running of King's Manor School, Guildford; and, if so, whether they will lay down guidelines for the procedures to be adopted by local education authorities seeking similar bids in the future.
The noble Baroness said: My Lords, the experience of King's Manor School in Guildford raises a number of interesting issues of principle which it is worth our while debating. I wish to talk about the background issues which led Surrey County Council to seek bids from external contractors and the process itself before coming back to what I regard as the key issues of principle in the affair.
Guildford is an affluent town of some 70,000 inhabitants, 35 miles to the south-west of London in the Surrey commuter belt. The population is, in relative terms, well educated, with a disproportionate number, by national standards, of those with academic and professional qualifications. This is reflected both in the aspirations of the parents and the quality of the schools.
We have a number of leading private schools and, in addition, five state secondary comprehensive schools, two of which are Church schools, one a grant maintained school, one a large and thriving LEA controlled school to the south of the town, and another school, King's Manor, on which this debate focuses, to the north of the town.
The school has room to house over 1,000 pupils, taking 150 per year. Its roll is now down to 360. Last September's intake was only 40, well short of the numbers needed. Located at the edge of a large council estate, it was never a popular choice with Guildford's middle-class parents. Its position has worsened over the course of the last 10 or 15 years. The publication of league tables and increasing competition between schools have highlighted its poor performance. In addition, the fact that it was the only school in the area with excess spaces led to the school acquiring a disproportionate number of those excluded from other schools.
Because it had space and because the building lent itself better than others to conversion, Surrey County Council invested considerable sums in disabled facilities in the school. It grew to have an increasing reputation for being the school in the area with both staff and facilities to cater for secondary school pupils with special needs. It met the full range of special needs.
A full inspection in 1994 recognised these strengths and spoke of a special school within the school. However, an inspection carried out last summer was less sympathetic and pointed to low standards of achievement, with an average of only 20 per cent of pupils gaining five GCSEs at grade C or better, compared to a national average of over 40 per cent.
One of the teachers, commenting on the difficulties she faced in teaching biology to GCSE level, told me, "Just as you have the class working well and you think you have a group from whom you will achieve good results, two or three new pupils with a history of disruption and truancy at other schools are moved into the class and you are back to square one, having to start all over again in trying to establish trust and confidence and getting the group to work together".
One can understand only too well the pressures that the school was under. I think that the teachers did a fantastic job. By inner city standards, it was not a bad school; indeed, in many senses, it was not a failing school. Yet the fact remains that the school was failing to provide the requisite quality of education for many of those attending it, and certainly failing to meet the aspirations of many parents in the Guildford area. Against this background of falling rolls, the failed Ofsted report and being put on special measures, Surrey County Council decided last autumn to put the running of the school out to tender. It argued that it had done all it could to try to turn the school around and had failed. Given projected numbers of teenagers in the Guildford area and the lack of space in the other four schools, all of which are oversubscribed, closure was not an option. A new start was needed.
Whether Surrey really had exhausted all other options is a moot point. Parents and teachers at the school argued that the county had never really attempted to put in the resources necessary to turn it around. A name change in the early 1990s had come not at the behest of the county but at the behest of the parents and governors. Moreover, for an education authority that had been one of the first in the country to be subject to an Ofsted inspection and had come through with plaudits and accolades for its efficiency and competence, it was strange that it really felt that it did not have the competence internally to turn the school around. The answer is of course that had Surrey put its mind to it, it could have turned the school around, as other successful experiments in turning schools around have shown. It could have put in a new management team, committed the resources necessary and made all the difference to the school. The decision on privatisation was essentially a political one. The leadership of the county council wanted to use King's Manor as a guinea pig to see what could be achieved by the privatisation route, and I think the Government were interested to see what resulted from that.
Having decided on privatisation, the next issue that arose was how. Given an annual budget at the school of approximately £1.5 million, any contract fell within EU provisions requiring an announcement in the Official Journal and adherence to tender procedures laid down within the European Union. A specification was drawn up by the contracts department at Surrey County
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Council, which normally deals with matters such as roads and bridges, requiring those submitting bids to do so subject to the normal commercial procedures, which included submitting audited accounts and financial projections. These procedures effectively stymied a projected bid by the local parents' action group, which was understandably unhappy at the idea of the privatisation of their children's school. In addition, they and the governors of the school and all the county councillors received a warning letter from the lawyers at the county council saying that if they were party to a bid to run the school, they automatically excluded themselves from any voice in the selection procedures. Those two actions effectively blocked any community bid from those closely involved with the school—parents, teachers, governors or local councillors.
There was, nevertheless, a very strong feeling in Guildford that the problems of the school were a community issue that ought to be solved by community action. There was good will from the other schools in the area, both state and private, from the further education college, from the university, from the Church and cathedral establishment and from the borough council. They were involved because King's Manor formed the nub of a single regeneration budget project in north Guildford. These players were in the event brought together by a Church-based initiative under the aegis of a rapidly created Guildford Community Education Trust—GCET—which set about raising the resources to put the bid together. In a short time it had on board a former deputy education officer, two former head teachers, other educationalists, lawyers and accountants, and the bid was submitted, as required, by early December.
The bid brought together the offers of support from the various institutions in the town into a coherent educational plan and raised also the possibility of charitable funds to the tune of more than £5 million to be invested in the school. It was one of seven bids forthcoming in December, but it was not one that was short listed. The bids had each been subject to an evaluation procedure by a panel set up by Surrey County Council which consisted of two officers of the council and two heads, one from Surrey and one from outside the Surrey area.
While the plans being put forward by each bid are certainly counted in the evaluation procedure, the EU procedures also required that weighting be given to the experience of the bidder in the matter involved—in this case, turning around failed schools—and to the financial viability of the bidder. For both items, GCET, being a new enterprise with no track record and only the promise of resources, got a zero mark. When this was questioned, GCET was told that EU regulations required only that events in the past were taken into consideration. The input of such advice would seem to be that no new company, or, as in this case, ad hoc grouping coming together to make a bid for such a contract can ever succeed.
That brings me to the second part of my Question. I start by making my own position clear. My view of the situation at King's Manor, which is not untypical of other failing schools in areas such as Guildford, is that

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the issue has to be tackled as a community issue. Only by creating a partnership among schools and education providers in the Guildford area to prevent an undue concentration of special needs pupils and sharing the burden out among schools will the issue be solved. Creating a partnership among schools is to my way of thinking essentially the function of a local education authority. In that respect I think that Surrey County Council abdicated its responsibilities in relation to King's Manor.
What is more, the solution chosen, bringing in an outside contractor—in this case the 3Es group, which had already run the successful Kingshurst City Technology College in Birmingham—may, and I certainly hope will, solve the problems of King's Manor, but it will be at the expense of other schools in Surrey, particularly perhaps other schools in Guildford. Already Surrey is ploughing an extra £1.5 million into the building and equipment at the school to bring it up to the standards required by 3Es. That is good and it is about time too. But that is £1.5 million less for Surrey schools, which are already strapped by the local education settlement. The school is going to call itself King's College of Arts and Technology.
Baroness Farrington of Ribbleton: My Lords, I must tell the noble Baroness that she is already two minutes over time and that there is very little free time available.
Baroness Sharp of Guildford: My Lords, I am very sorry. I thought I had twenty minutes. I beg the House's pardon.
The problem here is that we have school set against school, with each school claiming to have special status. That is not a satisfactory situation, and it is why I have asked this Question. As I indicated earlier, I wish to elicit from the Government a clear answer as to where they stand on the issue. How far do they back the initiative in relation to King's Manor of bringing in private contractors to run the school? Do they recognise the dangers that such a course may bring in setting school against school? Are the procedures and the criteria used by Surrey County Council, which are taken from EU procedures in judging such bids, satisfactory, or is there a need to develop separate criteria which give greater weight to community considerations?
7.48 p.m.
Lord Baker of Dorking: My Lords, I thank the noble Baroness for raising this issue. It gives us an opportunity to discuss an interesting matter, although I must say that I do not share her concerns and anxieties about it. I shall explain why in a moment.
My former constituency extended into parts of Guildford but did not include this school. I am, however, very familiar with Surrey Education Authority's policies. In relation to this school, it cannot be faulted for trying to correct it. It changed the name of the school and brought in a new team of people, as the noble Baroness will know, but still the school failed. The roll declined from 1,200 to about 350. It was the classic
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problem of a school sinking. Indeed, Surrey Education Authority, I believe under Lib-Lab control, recommended the closure of the school for a time but that was rescinded as the result of parental pressure. I am glad that that parental pressure succeeded.
I fundamentally disagree with the noble Baroness's argument that if one concentrates in a novel way on trying to improve a failing school one somehow disadvantages the other schools in the area. That was always the argument of the Liberal Party and the Labour Party—it has changed, I am glad to say—in opposing the creation of city technology colleges. I still believe that that position filters through the noble Baroness's view.
This school was failing and failing badly. It was the classic case of falling school rolls, which created further falls in school rolls. There was very little discipline and there was absenteeism. I prefer the word "absenteeism" to the word "truancy". The latter has an element of a lark about it, whereas absenteeism is a determination not to attend. There was a determination among many of those pupils not to attend that school or any other school. As a result, Ofsted decided upon special measures. The management of Surrey Education Authority was condemned.
Then they went out to tender. This was a very good initiative, and I entirely support the Government's attitude on this matter, they will be glad to hear. When they get education policy right, I am the first to praise it. Usually when they get it right, they follow policies that I introduced, but this is one they thought up by themselves, and I warmly welcome that as well.
When faced with a failing school, what can you do? You can either close it or you can try to make it better. There are very good examples in America of both those principles being applied. I remember one school in Spanish Harlem which had all the problems of King's Manor, but many times worse, where pupils had to be frisked as they entered the school in the morning, and there was even drug-dealing in the classrooms. A group of local people outside the local education board decided literally to close the school but to keep it as a building. Then it was refurbished and an entirely new team of people was brought in. They saved that school and made it a significant and successful school.
The important thing was that a break had to be made. I believe that a break had to be made in this particular school, and that it would not have been possible to save the school through Surrey Education Authority. The school is now very popular with the parents. That is something which the noble Baroness omitted to mention. They are 98 per cent behind this school. They had the presentation from the four bidders and they supported it. I am particularly pleased that Kingshurst is the school that has been given the task to save this school.
Kingshurst City Technology College was the first of the colleges that I announced in 1986. It was a failing school, and was in worse condition than King's Manor. It had a 17 per cent stay-on rate at the age of 16. The stay-on rate at Kingshurst today is now 90 per cent. Kingshurst is in a much worse catchment area than

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Guildford; it is an appalling catchment area. Forty per cent now go to university. In the old days not one of them ever thought of going to university. This has been a remarkable turn-round.
The noble Baroness mentioned that in Kingshurst 80 per cent get grades A to C in GCSE. They have one of the most successful turn-round teams that is now available to this school, and the noble Baroness should recognise that fact. I do not believe that the procedures that have led to the selection of Kingshurst were anything other than totally appropriate and correct. They were in accordance with the EU procedures, thus ensuring that the bidders had experience in turning round failing schools.
The philosophy behind city technology colleges was to place them in areas of acute social need. We never placed them in the leafy suburbs. We placed them in difficult areas because that is where the challenges were. We need to motivate youngsters to go to those colleges. The Labour Party opposed the concept at the time, but it has extended the 15 colleges to 300, and only a fortnight ago the Prime Minister and David Blunkett extended them to 800 specialist schools. I applaud and support that measure. That is the way forward. This discussion is part of that programme.
The noble Baroness used the word "privatisation" in the pejorative sense. As a Tory, I find nothing wrong with that word, but she is not addressing me; she is talking to other people to alarm them into thinking that somehow this school is being privatised. Fees will not be charged. It will still be supported by state money on exactly the same basis as other schools in Surrey, but it will raise more money from its own resources to plough back into the school. What is wrong with that? Although the noble Baroness says that this will be to the disadvantage of other schools in the area, it has been shown that, when there is a successful technology college, the other schools move up to the level of that performance. So there is not a "no-win" situation; there is a definite gain. I am therefore very pleased, on all those grounds, to support the Government's initiative.
The team still requires official approval from the Government. I hope that that approval will be forthcoming, because there are other failing schools—for example, the Regis School in Wolverhampton. There is a slightly different arrangement there. I suppose that the noble Baroness might call it privatisation, but it is a combination of another team with a local school pulling it round. There are many ways to achieve success.
The present Labour Government will be faced with even bigger problems because one local education authority has been designated as being unfit to provide education. The schools in Islington will have to be handed over to other agencies to run. Thank heavens! If Islington cannot provide education to the children of Islington and they are letting those children down, then other measures are needed. I welcome the fact that the Government recognise that situation. Other measures will mean new teams of people coming in, starting afresh. The whole thing is called A Fresh Start.
I do not share the anxieties of the noble Baroness. I believe that this is an interesting and exciting way forward. It creates a diversity. I thought we had won the
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argument that only the local education authority in the area should be the provider of education back in the 1980s when we provided choice and diversity in the form of grant-maintained schools, city technology colleges and proposed that grammar schools should be retained. There was a choice for parents. That is an effective way forward. If this school is successful, parents over the next two or three years will want their children to go to that school. That is the test. I am quite sure that that test will be fulfilled and that the school will be regenerated and become a star performer in Guildford.
7.55 p.m.
Lord Dearing: I am delighted that the noble Baroness has raised this issue since the decision by the Surrey County Council to contract the management of King's Manor, because others may wish to follow this precedent. It is helpful for noble Lords to look to the Government and invite the Government to consider the principles or the issues of principle that may be involved.
As is appropriate for someone who sits on the Cross Benches, I have no principles to argue in this matter. If a school has gone through a bad period, with continuing problems, I have no difficulty with a situation where the local authority invites tenders for the management of the school, and where the outcome appears to be the award of the tender to a group which includes a very successful city technology college. I have visited that college arid met the head. I know that the results are remarkable arid there is a very good chance that the children of Guildford will benefit under that kind of leadership arid management contract.
I adopt a totally pragmatic approach to whatever course is most likely to benefit young people, rather than starting from a point where the school is managed directly by a governing body and local authority or by any other means.
It would be helpful for the Minister to reflect on the issues that may be at stake for some. The noble Baroness, Lady Sharp, wondered whether this decision would be to the detriment of the resources of ether schools in the public sector. Apart from any initial funding that may be needed to correct what has gone wrong and to avoid this becoming a matter of acrimony between one set of schools and another, would it he a valid principle that, for that kind of education to that kind of standard, the basis of funding should be exactly the same for a school of this kind under new management as it would be had it continued under the direct aegis of the local authority?
Secondly, does the Minister consider it a valid principle that the governing body should always contain a substantial minority of local people or nominees of the local authority? Does he think that the application of that principle, at least for the next few years, should be limited to rescuing schools that are in difficulty? Does he consider that in any contract there should be provision for its cancellation if there is failure to perform in accordance with its terms? Does he agree that there should always be clear performance criteria

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against which managers can be held to account? Those are legitimate issues of public concern on which clarification would be helpful.
I wish to make a further point. I am glad to assure the House that, if the noble Baroness, Lady Sharp, took a extra few minutes, I shall sacrifice some of my own time. As this may be the first of several such processes, I counsel that the Government should take action to fund experience from the King's Manor initiative and from other such initiatives in regard to the procedures that are proper in such cases. Will the Government consider carefully the noble Baroness's points about not disabling local people from participating in the creation of groups to tender? It seems from her remarks that an ad hoc group such as this, without a track record and without assured funding, is disabled from participation. Do the Government consider it to be in the public interest to enable such bodies to tender and to be considered on merit?
Returning to the funding of experience, will the Government consider introducing measures, perhaps with the assistance of Ofsted, to fund the experience of contract negotiation, the terms of contract and the assessment of performance? As I said, I am not looking for direct assurances from the Minister on these matters this evening. However, I should be grateful if he would consider them and advise the House in due course.
8.2 p.m.
The Lord Bishop of Bradford: My Lords, I am grateful for the opportunity to contribute briefly to this debate. I take up the remarks of the noble Baroness, Lady Sharp, regarding the Church. There is a fine and growing collaboration between the diocese of Guildford and Surrey County Council. I understand that the diocese of Guildford thought very carefully indeed about asking to be allowed to take over the King's Manor school. But Guildford already has a thriving comprehensive school which has over 1,100 pupils. I believe that the bishop himself supported the consortium to which the noble Baroness referred. However, in this case the collaboration was not to be.
I make no comment whatsoever about the details of this case, other than to wish the school and its pupils and staff well. But I should like to underline the importance of collaboration between the local education authority and the Church in a diocese. In the diocese of Guildford, for example, three county schools have become church schools, including a comprehensive school some two years ago. The diocese has pioneered what it calls affiliated status whereby local authority schools which wish to have a closer connection with the Church in parish and diocese become affiliated schools and receive diocesan resources and diocesan in-service training.
I very much hope that the example of Surrey will be followed elsewhere. I am happy to say that in my own diocese of Bradford we are now to have two Church of England secondary schools for the first time, and we collaborate closely with the local authority. I hope that
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Her Majesty's Government will offer the strongest possible support to Church and local authority collaboration in the field of schooling and education.
8.4 p.m.
Lord Tope: My Lords, I, too, am grateful to my noble friend Lady Sharp of Guildford for introducing this important debate. What it has lacked in time and numbers has been made up in quality. We have heard distinguished speakers, including a former Secretary of State. The noble Lord, Lord Dearing, has many distinctions—one of which, noble Lords may not know, is as "official school opener" in the London Borough of Sutton. The noble Lord is regarded with considerable respect by all Members of this House. My only concern is that we are debating King's Manor school, and the debate is to be replied to by a Minister who has King's Heath school in his title, which has already caused some confusion in this debate. Perhaps we need to be clear about that.
My noble friend Lady Sharp was closely involved in the whole process involving King's Manor school. She spoke about it with considerable knowledge and eloquence. I am sure that the noble Lord, Lord Baker of Dorking, similarly has local knowledge. I claim none, save at second hand and a relatively close local knowledge.
I wish to concentrate on the second part of my noble friend's Question. It may well be that this is the first of a number of schools involved in such a process. Therefore it is important that the Government establish some guidelines. We need to think about the implications of any LEAs moving down this road. I say that without wishing to judge whether or not LEAs may wish to do so.
I say that, too, because I begin with what is the most important principle for Liberal Democrats; namely, democratic accountability. First and foremost, it is for the LEA to decide on which course to take, and then to be held properly accountable for what happens. We have a fierce belief in local democracy. We have deplored, and continue to deplore, the trend under both Conservative and Labour governments to diminish the power of democratically elected local councils. That view is shared on all sides of this House, if not by the entire House.
Therefore we begin by recognising fully the right of education authorities to take unusual and imaginative steps to solve problems that they may have, but on the clear understanding that the electorate also has the right to kick them out if and when it becomes clear that their policies have been disastrous. The two are indivisible.
What we object to is the intrusion of central government and outside agencies which unilaterally decide that they know better than the electorate what is best for people. It seems to us important, especially in regard to the governance of schools, that certain guidelines are followed by local and national government if democratic accountability and natural justice are to be preserved.
Turning first to natural justice, it does not seem reasonable for a local education authority—I do not suggest that it has happened in this particular case—to

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spend several years running down a particular school, not funding it properly, denying it capital improvements and so on, and arranging admission policies that guarantee it a poor intake, and then lambasting it in public as a failing school. I stress that I am making a general, not a particular, point, although it is very much what happened with the Ridings school in West Yorkshire. In our view that is not natural justice.
Another deplorable trend in the "devil take the hindmost" world of league tables is where a school is stigmatised because it has taken on more than its usual share of children with special needs, whether learning difficulties or emotional and behavioural problems. Far from being supported as centres of excellence with a mission to combat social exclusion, such schools cannot be attacked because they cannot produce results which compare, for instance, with selective schools. That is not natural justice either. A government who claimed—sincerely I am sure—in their Green Paper on special needs to support integration and social inclusion should be creating a very different climate. It seems at least possible that King's Manor School, Guildford, may have been unjustly treated in that kind of way. As my noble friend pointed out, in Hackney, Lambeth or in other inner city areas, it may not have been seen as a failing school, but it was in the Guildford context.
I want to return to the central issue for us which is democratic accountability. We have no difficulty with the principle of a democratically elected local authority contracting out some of its services; indeed, many authorities of all political complexions have long done so. We accept that in certain circumstances it might well be worth setting up a contract with a firm of private consultants to advise and oversee the management of a school or group of schools. However, we see it as quite crucial that elected councillors remain responsible. The contract needs to be set up in such a way that it is effectively way-staged so that at clearly identifiable points during the life of the contract the elected councillors can judge whether the private firm is coming up to scratch. There need to be penalty clauses and mechanisms for ending the contract early if things are not working out. The councillors need to be able to go back to the voters and say, "Because we hired this company these goals have been achieved". It may be that they have not been achieved. Then the voters can judge whether or not it has been a success. That needs to be set at the start and not invented part way through.
I now turn to the question of financial profit. It is our natural inclination on these Benches to prefer a co-operative and communitarian culture to that of the cut-throat free market. There is perhaps something uncomfortable—I put it no stronger—about making a profit out of running schools. In that spirit where a group other than the education authority itself is going to oversee the management of a school, we would ideally prefer to see the wider community to which the school belongs organising itself to take it on.
I come to the point which my noble friend made and which the noble Lord, Lord Dearing, took up. The community group that constituted itself in the hope of bidding for the King's Manor franchise, if I may call it that, was debarred from doing so, not least under EU
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regulations. That is a matter of considerable concern to us. It would certainly not suggest that a local community group should automatically get the franchise. It is a very important decision for any LEA in this matter to be as confident as it can be that any group, especially one that cannot have had previous experience, is capable of running such an important operation effectively. It is an important decision, but the LEA should be able to make it and the group concerned should not be debarred because of regulations set up for an entirely different purpose. I do not believe that the EU regulations were established on the basis of companies running schools. If the effect is to debar local communities from doing so, then that is a bad thing.
Where the use of a private firm is preferred for good reasons to the community model then the watch words have to be "value for money". If the parents, pupils and the wider community are getting a better service than they would otherwise have done, even private profit may be acceptable as long as democratic accountability remains. It is important, too, that the involvement of private companies and private finance does not prejudice the freedom of headteachers and staff to make the purchasing choices that they believe to be in the best educational interests of their pupils rather than in the best commercial interests of the promoters.
When the Minister responds I hope that he will be able to tell us a little more clearly just what the Government regard as acceptable guidelines for preserving both natural justice in particular schools and democratic accountability for both the management of schools and of their LEAs. I also hope that he will be in a position to say something about the effect of the EU regulations in this area. Finally, I hope that he can tell us how the needs and wishes of a school's wider adult community can be secured especially when either a private company or private finance is involved.
8.14 p.m.
Baroness Blotch: My Lords, I, too, am grateful to the noble Baroness, Lady Sharp, for giving us this opportunity. I come at this debate from a very different angle to that of the noble Baroness. My honourable friend in another place, Nicholas St. Aubyn, the Member for Guildford, has sought over many months clarification from Mr. Blunkett, the Secretary of State and Ms Estelle Morris, the Minister of Stale, of their attitude towards the King's Manor scheme involving the private sector. Therefore, it will be very welcome if tonight the Minister is able to offer a definitive view of the scheme.
I shall pose my questions at the outset to give the officials in the Box time to produce the answers, because I am usually accused of asking them at the end of my speeches. First, now that private sector involvement in schools is acceptable, what action is the department taking to simplify and clarify the tender process and its EU dimension? That is a question which has already been posed. Secondly, where are the regulations on partnerships between LEAs and local independent schools? The department promised a consultation draft earlier this year. Why has it not yet

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been written? The School Standards and Framework Act, which requires these arrangements to be regulated, came into force over a year ago.
Why did Mr. Blunkett take so long to reply to the letter from his shadow, Mr. David Willetts, MP? The letter was written on 16th October and it was not replied to until the middle of December. Even then it did not provide all the answers to the questions. Again, it seemed that the department was ducking each question on private sector involvement while this bid was proceeding.
Fourthly, does the department agree with Her Majesty's Inspector in his evidence to the House of Commons Education Select Sub-Committee on 10th February that private sector agencies such as 3Es in Guildford can help solve the problems of failing schools? Does it matter to the department whether the best agency for the job is a profit-making concern as long as it provides the best value? Why is it that EU rules for tendering do not apply, for example, to Hackney where services are being contracted out? What is the distinctive feature of the Surrey County Council scheme which makes it subject to EU rules? Will those rules be applied to the Islington LEA which, I understand, will be contracting out a very large proportion of its services?
The vision that Surrey County Council has for its schools, which I support, is to create an orderly school where best educational practice is followed in academic and pastoral care; to introduce a broad curriculum including opportunities for studying academic subjects; developing facilities for sport and for the performing arts; in addition, to evolve a vision of vocationally-oriented education where businesses can make links with their employees of the future. It seems to me that is followed in the technical college method.
The Liberal Democrats held the key positions in that authority. Indeed, they held the post of chairman from 1993 to 1997. They and their Labour colleagues were hostile, as we all know, to the King's Manor scheme from the very start. Since 1997 the DfEE has prevaricated and has as yet provided no definitive view about the scheme. The successful bidder, 3Es, is a charity whose proceeds are used to advance educational projects. The scheme was supported, as has already been said, by an overwhelming majority of parents in a ballot by a ratio of nine to one. I agree with my noble friend Lord Baker of Dorking that the principal of Kingshurst school and Stanley Goodchild, an ex-chief education officer, who were involved with the 3Es bid, both have excellent track records for turning around failing schools in a way that benefits all concerned.
I am really puzzled by a number of things that the noble Baroness said. I understand she said that closure was not an option. Closure was certainly contemplated by her colleagues. Taking children in from other schools was cited as a contributory factor for the problems of the school. There is hardly a secondary school in the land that does not have to take children in mid-year. We have a large military presence in my authority. The turnover of children in the course of a year is very high indeed. That is not an excuse for failing the children.
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My honourable friend Nicholas St. Aubyn was supportive of the GCET bid. It did not succeed. It was given every opportunity to make a firm proposal and worked very hard at it, but it could not produce a firm backer in the timescale provided. That was a key flaw. Certainly, my honourable friend the Member for Guildford still believes that there is a role for GCET and that it can perhaps become involved in an education action zone. I know that if it did so my honourable friend would support it.
However, progress cannot be made when the tendering mechanism of the European Union takes no account of the overwhelming popular support of parents. It seems that the EU mechanism is such that the contracts manager has more control over the process than the chief education officer. The EU tendering mechanism has also proved to be pretty expensive. The GCET bid by a group of churches had to raise £30,000 just to reach the first round along with eight others. That cannot be right.
There was a complete lack of guidance from the department. That is the subject of one of the key questions that I should like to put to the Minister this evening. The barrier of the EU regulations and the inertia of the department both stand in the way of genuinely innovative proposals to address the vexed issue of failing schools. There are now two choices in the hands of the department: to thwart or to liberate enterprising LEAs to turn around failing schools. Only the Government can clear the hurdles that have been erected by Brussels and Whitehall.
One of the problems is the tension between No. 10 and the department, which was well documented by the Sunday newspapers last December. It was reported that,
"The Prime Minister and his supporters want the rules relaxed to meet complaints from the business community that they should be able to compete to run schools with local authorities on the same basis. Mr Blunkett, who is uneasy about private companies moving into the state system, is resisting the move".
I find the comments of the noble Lord, Lord Tope, very puzzling. One talks in ideological terms of "private companies". Private companies are making money out of schools. They provide pens, pencils, books and laboratory and other equipment; they build and repair it. Every company that is involved in all the activities that take place in a school makes a profit. What is so wrong about a flourishing business and commercial sector? I thought that that was the policy of the Government.
Andrew Povey, Surrey education chairman said:
"Ministers from the Prime Minister down are sending out conflicting signals".
He and his colleagues made the decision to propose the scheme only to be subjected to inordinate delay by the Secretary of State. Mr. Povey also went on to say that if Ministers did not clarify the position without further delay the whole drive to involve the private sector in turning round failing schools would founder. We seek specific answers to these questions from the department but according to Mr. Povey we do not get them.

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I hope that in the interests of the parents and children of King's Manor, who are overwhelmingly supportive of this scheme, the Minister can bring this matter to a successful conclusion. What the Minister says this evening will be critical to that process.
8.23 p.m.
Lord Hunt of Kings Heath: My Lords, first I welcome the opportunity to congratulate the noble Baroness, Lady Sharp, on initiating this important debate in your Lordships' House tonight. I also thank her for the helpful background that she provided to the debate. I acknowledge, as did the noble Lord, Lord Tope, that, although the number of speakers has been small none the less we have gathered an extremely distinguished list of speakers. Time is very limited and I shall attempt to answer as many of the points that have been raised as possible. I respond to the debate in the context of the need, which we all share, to raise standards overall in our schools but also in the context of the contribution that business and the private sector can make in partnership with those very schools.
I start by making it clear that our agenda for raising standards in education, which we believe is ambitious, means that we must work in partnership with local authorities, schools, parents, the local community and businesses to meet that challenge. It is worth recalling that business is already working with schools to raise standards in a raft of ways—for example, through work experience opportunities, work placement for teachers, mentoring, volunteering and the provision of professional advice. Education action zones create new partnerships that involve schools, businesses, LEAs and voluntary organisations. As the noble Lord, Lord Baker, pointed out, city technology colleges have close links with businesses. I am glad to acknowledge the work of Kingshurst CTC based in Birmingham.
In this context it is also right to acknowledge that the Government, in seeking to develop specialist schools, recognise that one of the most important components is the sponsorship that must be raised from business. That is an indication of the contribution of business. My understanding is that a considerable amount of money has already been raised through sponsorship in this area. Therefore, the context in which this debate takes place is the many opportunities for businesses to become involved in schools which benefit both partners. We greatly value this support in the drive to raise standards. Clearly, it is important to learn from the experiences that are gained and to build upon them.
It is against these broad examples that we must examine the actions taken by Surrey County Council in connection with King's Manor. I should make it clear at this stage that in talking about the actions taken by Surrey County Council I cannot in any sense give a government view on the proposals for closing and reopening the school which are now the subject of formal statutory proposals. If there are statutory objections, it will fall to the Secretary of State to determine those proposals. I cannot prejudge his decision, which will be taken in the light of all the facts then at his disposal.
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What Surrey proposes to do in relation to King's Manor represents a very particular type of private sector involvement for a particular purpose—to turn round a failing school. That point was acknowledged by the noble Lord, Lord Baker. We want local education authorities to take decisive action where schools fail, just as we shall take decisive action where LEAs fail to perform adequately. I believe that this is the answer to the point raised by the noble Lord, Lord Tope. We would not seek to take such action in relation to local education authorities, nor would we expect local education authorities to take decisive action where schools fail, if we were not convinced of the value of the role of those LEAs.
I believe that our determination to tackle under-achievement in schools has been demonstrated by the tough new procedures that we have introduced to ensure that failing schools are turned round, closed or given a fresh start. Equally, we welcome the innovative approaches that are being taken throughout the school system to tackle failure. This may include seeking help from the private sector, as Surrey has done, where in the view of the LEA this represents the best option for improving the quality of education for pupils. Surrey has chosen one way to tackle a previously intractable problem.
In answer to a number of points raised by noble Lords, I do not believe that at this stage there is a case for issuing general guidance about how LE As should proceed in such cases, but some principles are very clear from the current law. The Secretary of State has already made clear that local authorities and governing bodies who involve the private sector in any respect must bear in mind three principles: first, the law does not allow them to abandon their responsibility to raise standards. They simply cannot hand over the running of a school to the private sector. Secondly, the choices that they make about how to carry out that responsibility must be motivated by the best interests of pupils. Thirdly, they must ensure that any expenditure represents best possible value for money. Public accountability demands no less.
Despite media reports, I stress that the proposals now up for consultation would not result in King's Manor being privatised. There is no question of a state school being run for profit by a private firm. That would not be legal. Governing bodies run schools and councils run local education authorities. The point is that governing bodies and education authorities can buy in outside help to offer advice or undertake specific functions on their behalf. In the case of King's Manor, Surrey has chosen to seek private sector help because it has not been able to prevent the school sliding into failure and is not confident that it can turn the school round without outside help. Therefore, 3Es will help the authority to improve existing school, establish a foundation to support the use of the school, appoint foundation governors and—if the proposals are approved—continue to provide support to the new school on the LEA's behalf.
The noble Baroness, Lady Sharp, made a point about the submission of the Guildford Community Education Trust, which involved the provision of charitable

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funding for the school over and above that received from Surrey County Council; a package of radical change that would differentiate the school from other secondary schools operating in Guildford; and the active support of the community and other local education providers. As the noble Baroness said, that bid was not shortlisted by Surrey County Council. The council required evidence of technical capability and financial standing but the bid from the GECT was considered not to meet those conditions. I recognise the disappointment felt by the noble Baroness over that decision but the trust has offered its support to the initiative in future. That is in the spirit of the partnership that the noble Baroness mentioned and I am sure that it will be heeded by the school and county council.
As to the bidding rules—which were raised by the noble Baronesses, Lady Blatch and Lady Sharp—European Union rules are designed to ensure open and fair tendering and LEAs are used to applying them. In the case of the interventions in LEAs, I say to the noble Baroness, Lady Blatch, that we have operated a tendering process in accordance with EU rules to establish framework contracts from which tenders can be invited at short notice. Both the law and good practice require contracts of that sort to meet procedures and ensure fairness and value for money. At the end of the day, they must be the crucial criteria.
I recognise the difficulties for a local community consortium in developing the necessary expertise. While it is unlikely that any ad hoc local grouping could contain within itself such expertise, it would be open to such a consortium to buy in the services of the relevant personnel, to show that it could address the challenges posed by the contract on offer. Ultimately, it must be right that the LEA is absolutely confident that any organisation to which it gives a contract is up to the task.
The noble Baroness, Lady Sharp, felt that the school's development in the way suggested would create an unlevel playing field for other Guildford schools. A number of points can be made. First, children at the existing school have been disadvantaged because of the failures there. Secondly, the proposals are focused on turning that situation around. They are aimed at ensuring a much higher quality of education for pupils who are not receiving it at the moment. Far from fearing that, turning the school around would act as a stimulus to other schools in the Guildford area. Surely we want to drive up standards in all schools and ensure that the choice on offer to parents and pupils in the Guildford area is between equally good schools.
I take note of the comments of the noble Lord, Lord Dearing, in relation to the need to secure best value from all investment of public funds. The continuing accountability of the LEA and governors for the expenditure should secure that and the public accountability that we regard as so important. Turning around failing schools often requires significant investment, and that would come whatever the particular status of the school and the circumstances in which it finds itself.
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The noble Lord also raised the question of governors. There will be LEA governors as well as teacher and parent governors—as for other aided schools. Local community involvement will be assured.
The noble Lords, Lord Tope and Lord Dearing, asked about the nature of the contract between the county council and 3Es. The contract is a matter for the county council but there should be no problem in making sure that the necessary performance criteria are in place; there are penalty clauses, if required; and there is monitoring of the contract.
I take very much to heart the point made by the noble Lord, Lord Dearing, about sharing experience. We shall certainly be happy to consider with the school and Ofsted the lessons that may be drawn from the process of improvement and applied to other schools. I thank the right reverend Prelate for his comments about partnership and collaboration between schools, Church schools and LEAs—with which I agree strongly.
As to the relationship between the DfEE and Surrey County Council, the department has no locus in the county council's current action, provided that it is within the law. We have always made clear to the LEA that we think it has proceeded in line with the law.
Time presses on, so I will conclude my remarks. I reiterate my welcome to the opportunity to debate this issue. I stress the context in which the matter is being decided, which is to address a serious problem in relation to King's Manor School. It is important to recognise the contribution that the private sector can make to help improve the existing school, advise on establishing a charitable foundation and provide support to the new school.
I make it clear that the governing body of such a new school, if established, would remain entirely responsible for all key decisions. That is a matter of law. The school budget will be under the control of the governors and must be spent in the best interests of the pupils. It is clear that we should all be keen to draw on the best expertise and new approaches, to tackle long-standing failure with swift and remedial action. The noble Baroness's Question is surely best considered in that context.

Employment Relations Bill
8.40 p.m.
House again in Committee on Schedule 1.
[Amendment No. 54 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 55:
Page 26, line 26, at end insert—
("(7A) No interlocutory proceedings shall be entertained by any court where the only remedy available is specific performance under sub-paragraph (6).")
The noble Lord said: The amendment relates to the terms of the remedies available for the breach of a binding collective agreement as specified by the CAC.

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In view of our recent debates, it is necessary that I should read out Schedule 1, paragraph 27. Sub-paragraph (3) states:
"If at the end of the agreement period the parties have not made such an agreement the CAC must specify to the parties the method by which they are to conduct collective bargaining".
Sub-paragraph (4) states:
"Any method specified under sub-paragraph (3) is to have effect as if it were contained in a legally enforceable contract made by the parties".
Sub-paragraph (5) is not relevant. Sub-paragraph (6) states:
"Specific performance shall be the only remedy available for breach of anything which is a legally enforceable contract by virtue of this paragraph".
Members of the Committee will note that the remedy is limited to the breach of anything 'which is a legal enforceable contract under this paragraph. That includes all the forms of CAC declaration and the like.
The amendment seeks to exclude a form of procedure in the High Court which is interlocutory in its nature; that is to say, theoretically it is interim. However, the Scots courts use the word "interim" rather more sensibly than the English courts, but always refuse to accept that the two are the same. Therefore, I shall use the English term "interlocutory injunction." It is a case where the claimant comes to the court and says, "You are about to commit a wrong [a breach of collective agreement that is binding] and I want the remedy available to me, which at the moment is an interlocutory injunction."
Therefore, first, the procedure is an Alice in Wonderland procedure. It speaks as though the orders requested are effective until the full trial or order. In fact, the interlocutory order is usually what the plaintiff wants; he wants to stop the other side from doing what he complains about.
In order to establish that an interlocutory proceeding could come into play with the High Court, which is all I seek to do, I shall state in not academically correct order the nine most important reasons why the interlocutory injunction is an undesirable procedure. The noble Baroness need not look afraid; each point will be dealt with in a short sentence. First, the applicant—normally the employer—ought to give notice of some two days, but usually and frequently gives less. In one notorious application for an injunction, the judge was contacted on a Sunday and the order was made against the union without any notice.
Secondly, the cases are regularly heard not only with little or no notice but also ex parte; that is, without the defence being heard at all. Thirdly, the judge may grant an injunction if the plaintiff proves that he has a serious case to be tried. The plaintiff does not have to prove that he has a bona fide case, as he used to under previous case law. Fourthly, the judge has a discretion to decide whether damages are adequate and whether the balance of convenience favours the applicant. What the balance of convenience is is a highly subjective matter.
Fifthly, the employer has his damage assessed on the assumption that it will be as he says it will be and on that basis the court decides whether an order will be made. Sixthly, injunction to a trial or further order is the
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nature of the interlocutory proceedings, but invariably the employer, under present case law, has little intent of taking the case on to full trial. Seventhly, the court should and must grant an injunction if the alleged damage is about to hit the employer, or third parties, or the interests of the public. A number of cases have recently increased the importance of that last phrase, such that the public interest is to the fore. One Lord Justice of Appeal in the dock strike case in 1989 said that there could be a "complete stoppage" in all the scheme ports under the action. There would then be a major impact on innocent third parties and the economic well-being of the nation.
Eighthly, the normal rule is that the court must not grant an interim declaration of rights. A declaration of rights should be a final declaration. However, in interlocutory cases within the past decade or more such declarations have been made and they normally give rise to the defendant not pursuing the action.
Ninthly, the judge should consider the desirability of a return to the status quo. When Mr. Justice Millett, as he then was, did that in the dock strike case, putting the position back to where the strike began, the Court of Appeal immediately struck him down and said that the status quo means where it was when the ports were under normal working. In other words, status quo means before the industrial dispute began.
I accept that as the present case law stands, those points are relevant to interlocutory injunctions. I say to the Government that if they would like to write them all out and insert an order for specific performance in a number of the cases where interlocutory injunction occurs they will see why it must be possible for specific governments to come as part of a dispute between the two parties, which is extremely undesirable.
The reason that it must be so is found in sub-paragraphs (4) and (6) of paragraph 27. The paragraph is about parties in dispute, even though its language is parties in agreement, because the agreement between two parties is always tested by what happens when they come into dispute. If it were not the case that such orders of specific performance could not affect the parties, there would be no reason to have paragraph 27 (6) at all.
Before the dinner break, my noble friend said that it would be impossible for a specific performance order to intervene and affect industrial action. However, I must add that the threat of industrial action—
Lord McIntosh of Haringey: The word I used was "restrain".
Lord Wedderburn of Charlton: I am happy with that. We could spend some time with a dictionary, but I shall accept what my noble friend says. However, it is interesting that he prefers "restrain" to "intervene". This paragraph makes no sense unless it includes a remedy for parties who are in dispute and in respect of which one of them has allegedly acted in breach of the imposed contractually binding procedure. If it does not mean that, I do not know what it means. If it does mean that, to put it at its lowest, the Government should decide

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whether they want interlocutory proceedings to be brought. Do they want to allow for interlocutory proceedings in respect of breaches of paragraph 27? I say that they should not. I say that it would be very silly. If the question were put in a straightforward way, I believe that most employers and unions would want to exclude the possibility of interlocutory proceedings, as they know perfectly well that they give rise to enormous legalism in proceedings, which is undesirable; and in many cases they give rise to enormous legal costs because matters are taken to appeal.
Are the Government happy that the refusal of a specific performance order could allow for an appeal to the Court of Appeal and then to your Lordships' Judicial Committee on the basis that the parties have disagreed?
Parties who agree do not need the schedule. They may just need it in the vocabulary of the bargain. Parties who disagree will look to the schedule, first, as to whether the CAC will impose an agreement, and, secondly, for remedies under paragraph 27. Very often, perhaps always, the remedy is characteristic of the rights. If the Government are saying that no employer will ever receive a specific performance order that will restrain, in part, action by the union—whether or not industrial action—it will give rise to an enormous new proposition on which we should have a debate on Report. I beg to move.
Lord McIntosh of Haringey: I have listened carefully to my noble friend's argument. I recognise that it is in line with the arguments that he has used on previous amendments. I shall deal with the amendment but, after that, I believe that it is best if we deal with these matters off line. Perhaps my lawyers should talk to him and to any other lawyers whom he wishes to bring to court with him. It is difficult to envisage circumstances in which a court would entertain an application for an interlocutory order to compel compliance with an imposed procedure agreement. I do not think a court would make an order simply because one party feared the other might not comply in due course. The fear would have to be well-founded. I suppose it is conceivable—I shall use an example which works in the other direction from that which my noble friend has used—if an employer, for example, had announced publicly that he had no intention of complying with the procedure imposed by the CAC, then a union might be able to obtain an interlocutory order compelling compliance with the procedure. Presumably, that could work in both directions. However, I have to say that that sounds somewhat far-fetched.
I have listened carefully to the nine reasons given by my noble friend. It still seems to me that it is unlikely that the procedure would give rise to interlocutory proceedings but equally I am not convinced that we should rule out such proceedings if, for example, circumstances, such as those I have just outlined, were to arise.
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However, clearly, we have to talk about this. If my noble friend is willing to do so, I would ask him to withdraw the amendment so that we can do that before Report stage.
Lord Wedderburn of Charlton: In anticipation of the session with my noble friend, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Simon of Highbury Lord Simon of Highbury moved Amendment No. 56:
Page 26, line 28, leave out ("28") and insert ("20 working")
On Question, amendment agreed to.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 57:
Page 26, line 31, at end insert—
("( ) Where it is alleged that a party is vicariously liable for a breach of an agreement or method made legally enforceable by virtue of this paragraph, he shall be so liable by reason of the act of another person only where that person was—

(a) an employee acting in the course of his employment, or

(b) an agent acting within the scope of his authority,

and where in addition such an act would have constituted a breach of that agreement or method if done by that party:
In this sub-paragraph the word "act" includes a deliberate failure to act, and similar words shall be construed accordingly.")
The noble Lord said: Amendment No. 57 touches on the same areas as previous amendments. It concerns responsibility of a party for what has been done where the collective agreement, or collective contract, has caused that party to be in breach of the obligations.
My next point is different from previous ones. Let us take the most common situation in a collective agreement as we know it. I am sure that my noble friend will have met many of these types of cases, not just in the Law Reports. Indeed, there are very few reported in the Law Reports as we do not have binding collective agreements. There have been many such situations where one side says to the other, "These are the procedures that we set out in the collective agreement". There can be little difficulty about that. However, the employer will say, "Your people"—in the case of the union "your members" or sometimes "your shop stewards"—"have acted precipitously and have not gone through the procedure"; the holy words of British industrial relations. It may be the other way round: the union may object that the employer's action is not consistent with the procedure. Much can be said about that in terms of paragraph 27; but let us leave it there. That could occur. If it occurred after the Act was given Royal Assent, he could be in breach of contract. The only remedy is specific performance.
One way out is for the employer or union to say, "Those were not my people at all". On the union side the people concerned may not have had any authority to act as they did. The Minister may recall the case of Heaton's Transport in 1973 Appeal Cases, better known as the "stuffing and stripping case". The Transport and General Workers' Union shop stewards took it upon themselves to bring out a lot of workers in the docks

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who objected to the new transportation system for goods which could and did deprive them of their jobs. I see that the Minister knows about that case.
I can assure the Minister that everything will turn on such legal points. It is all very well to have quoted in the courts what the Government believe but it is what is in the Bill that counts. There was nothing in the 1971 Act about whether or not the union was liable for the shop stewards' actions. This Bill will be like that if something is not done about it. The matter went to the Court of Appeal and the Court of Appeal said, "Yes, you looked from the top down on the union and the shop stewards really do not have the authority". The matter came to your Lordships' House and the Judicial Committee said, "No, the union is liable because the shop stewards had implied authority to commit the union, as such, to this form of action".
One can find dozens of cases on the employers' side, but they are not so remarkable. I note that that point has been ignored in some of your Lordships' debates. The employer is normally a company; and a company will have employees and other agents who will cause the company to be responsible for what they do, if it is within the course of their employment or within the express or implied authority. The amendment asks the Government to make the position clear on the face of the Bill.
The normal authority tests are set out here. Noble Lords may not like the drafting; if so., I am sure that it can be improved. All that is set out here is the common law test. Why, it may be asked, do we have to do that? There is already some confusion about whether the very special rules about agency and the like apply to this Bill. Those special rules are in Sections 20 and 21 of the Trade Union and Labour Relations Consolidation Act 1992. I shall not go through them because I allege that it is wrong to transpose statutory authority rules put in there in terms of industrial action or the industrial torts, as they are sometimes called.
If one leaves it blank there may be confusion in the courts that somehow the Government meant to go to Section 20 of the Act. I am sure that is not what it means. At least, I hope that is not what it means because a large number of people will withdraw from this field if that sort of thing is put in in terms of action. The fact that parties have done a deal does not mean that they will abide by it, however defective it is later seen to be. I hope the Minister will at least give us some chance to come back to this matter on Report. I beg to move.
9 p.m.
Lord Meston: I did not follow the noble Lord, Lord Wedderburn, in his argument about interlocutory proceedings—or interim proceedings as we are meant to call them since the reforms introduced under the initiative of the noble and learned Lord, Lord Woolf. However, I follow his argument about vicarious liability.
It seems to me, particularly in employment, that vicarious liability has different meanings in different contexts, as the noble Lord explained. For example, in the fields of racial and sex discrimination, the courts
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have recently come to give an extended meaning to the phrase—many of us would say quite rightly. In this amendment the noble Lord invites the Government to indicate the parameters of vicarious liability, and on that basis I look forward to the Government's response.
Lord McIntosh of Haringey: This amendment deals with the complicated subject of vicarious liability. I am advised that the concept is well established in law. Vicarious liability can arise only where the person causing, in this case, the breach of contract is an employee acting within the course of his employment or an agent acting within the scope of his actual or ostensible authority, ostensible authority being the authority that the agent gives the appearance of having to outsiders. I appreciate that that could fit some of the examples given by my noble friend in moving this amendment.
My noble friend confirmed that he is concerned primarily with the possibility that a union could be held vicariously liable for a breach committed by a member or lay officer, perhaps acting, as he said, precipitously, on the basis that the member or official is an agent who, even if he has no actual authority from the union to commit the breach, may be viewed by the courts, in the terms of the definition I have given, as having the ostensible authority to do so.
Except in the area of liability for inducing industrial action where special rules apply, trade unions are subject to the same common law principles as everyone else. My noble friend referred to the case of Heaton's Transport v. Transport and General Workers' Union which was decided by the Judicial Committee of this House in 1972. In that case it was held on the facts and having regard to the union's rules that the union was responsible for the acts of lay officials in inducing industrial action. My noble friend will be aware that, because the case concerned the inducement of industrial action, it could not occur today because the rules in Section 20 of the 1992 Act would apply. I appreciate that my noble friend referred at some length to the provisions of Section 20 of the 1992 Act, but my advice is that the Heaton's case could not occur in the same way.
It is true that common law rules will apply. Section 20 of the 1992 Act applies only to industrial action, not to the range of subjects covered by the schedule, which is concerned with collective bargaining. I am not aware of any examples where the application of the ordinary principles of vicarious liability to unions in other areas has caused them particular problems and I see no particular reason for thinking that they will do so here. I also have a high opinion of trade unions' ability to train and brief their officials and members. The prospects of a union finding itself in a position where it is vicariously liable for the acts of an official who has no actual authority to undertake them are remote. There is therefore no need to try to narrow it in the way proposed by the amendment. The courts can be trusted to apply the concept sensibly and reasonably.
My noble friend will be aware that, since his amendment is quite properly even-handed, it gives employers the same leeway as unions. If we made the

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changes in his amendment, it would be difficult indeed not to apply it to both unions and employers. But I am far from convinced that it is appropriate in relation to employers.
Clearly this is a matter where lawyers must speak to some extent to lawyers. I repeat the offer which I made to my noble friend on earlier amendments; that is, that we should talk together between now and Report stage. My present inclination is to take the view that this is an unnecessary amendment; that the fears expressed by my noble friend are not likely to be realised, indeed, are not in danger of being realised. However, I am happy to talk to him about it between now and Report stage and I hope that he will see fit to withdraw his amendment.
Lord Wedderburn of Charlton: I am grateful to my noble friend for that invitation. When we have all read Hansard I am sure that we will see that it is necessary.
I wish to raise two points; one concerns the past and one the future. I am amazed that my noble friend should suggest that in the Heaton's case the Transport and General Workers' Union had not been sufficiently careful in its selection of officials or shop stewards. It is nothing to do with how careful it had been. It was simply that the Court of Appeal saw the authority test one way—three to nothing—and the House of Lords reversed that decision.
Lord McIntosh of Haringey: I did not say that the Transport and General Workers' Union was insufficiently careful. In that case it was held on the facts and having regard to the union's rules that the union was responsible for the acts of lay officials in inducing industrial action. It was nothing to do with whether or not it was careful.
Lord Wedderburn of Charlton: I misunderstood my noble friend. He talked about the way in which unions would not be confronted with this problem if, as I understood him, they were careful in their selection. But we can look at Hansard. I withdraw my comments, of course, if it was not said and they must be stricken out in some way.
The point in relation to the future is more important. The Minister says that we will not have a case like this in the same way; there are no examples outside the Heaton's case type of industrial action and there are no problems. Of course we have not had examples of paragraph 27(6) and its effect in law. Our complaint is that we have not had an example from the Government as to what would happen, except that the common law would apply, which is what we all assumed in the Heaton's case. That is the problem. Let my noble friend look again at the reason why there is not such a problem and why paragraph 27(6) might give rise to one in the future, and therefore why it would be undesirable to leave the Bill blank when some people will be only too happy to apply Section 20 of the 1992 Act. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 58 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 59 to 71 en bloc:
Page 26, line 33, leave out ("to the CAC under this Part of this Schedule") and insert ("under paragraph 10 or 11")
Page 26, line 42, leave out ("that a union is already") and insert ("there is already in force a collective agreement under which a union is (or unions are)")
Page 26, line 43, at end insert—
("(1A) An agreement for or declaration of recognition which is the subject of a declaration under paragraph 64(3) must for the purposes of sub-paragraph (1) be treated as ceasing to have effect on the making of the declaration under paragraph 64(3).")
Page 26, line 46, after ("have") insert ("(or none of the unions has)")
Page 27, line 40, leave out ("for decision an application under paragraph 10 or 11") and insert ("a relevant application")
Page 27, line 42, after ("19(2),") insert ("23(2),")
Page 27, line 44, leave out ("application under paragraph 10 or 11") and insert ("relevant application")
Page 27, line 48, at end insert—
("(2A) A relevant application is an application under paragraph 10 or 11.")
Page 28, line 2, leave out ("for decision an application under paragraph 10 or 11") and insert ("a relevant application")
Page 28, line 4, leave out ("application under paragraph 10 or 11") and insert ("relevant application")
Page 28, line 5, leave out ("date") and insert ("day after that on which the CAC gave notice of acceptance")
Page 28, line 10, at end insert—
("(2A) A relevant application is an application under paragraph 10 or 11.")
Page 28, line 20, leave out ("date of the declaration,") and insert ("day after that on which the declaration was issued,")
The noble Lord said: I spoke to these amendments earlier when dealing with Amendments Nos. 2, 3, 9, 12, and 18. Therefore, with the leave of the Committee, I should like to move them en bloc. I beg to move.
On Question, amendments agreed to.
[Amendments Nos. 72 to 75A not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 76:
Page 30, line 16, at end insert—
("(9) An order made under paragraph 6(6) may also—

(a) provide that sub-paragraphs (2)(a), (3) and (5) to (8) of this paragraph are not to apply, or are not to apply in specified circumstances, or

(b) vary the number of workers for the time being specified in sub-paragraph (3).")

[Amendment No. 76A, as an amendment to Amendment No. 76, not moved.]
On Question, amendment agreed to.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 77:
Page 30, line 18, after ("made") insert ("in writing")
The noble Baroness said: In moving the above amendment, I should like to speak also to Amendments Nos. 78 and 186. These amendments are intended to rectify small administrative omissions from the wording of the Bill. I do not find it surprising that we have

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detected such omissions. After no fewer than 14 sessions in Committee in the other place, the Government are still tabling amendments in this Chamber. Indeed, we have had well over 100 amendments on this first day of Committee and, as we heard earlier, there are many more to come. Therefore, as I said, it is not surprising that we have found one or two omissions of an entirely minor nature.
My amendments are simple and self-explanatory. However, I shall take just a few moments to go through them. Amendment No. 77 requires applications to the CAC to be in writing. It might be said that, obviously, they will be. But I believe that nothing is obvious and I should like to see it stated. The amendment would avoid any dispute as to the contents of an application or indeed as to whether it was made at all; and, as there are time limits involved, as to when it was made. That would be important.
Amendment No. 78 requires that the grounds of the application must be stated, unless the CAC has already provided for this in the form it prescribes under paragraph 41(1)(a). As a copy of the application will have to be provided to the other party under paragraph 42(5), it is only right that he should not only know the nature of the application but also the grounds for it.
It is an elementary rule of common justice that a person shall know the case that he has to meet. Perhaps the CAC would be ensuring that this happens under its own new procedures, but the proposed wording is to ensure that it does happen. Following the new procedures in the civil courts which came into effect on 26th April, perhaps the evidence should be detailed as well. But that is a matter for the CAC.
Amendment No. 186 is a reciprocal provision which requires that the employer should give specific reasons when he applies to end the bargaining arrangements with the union. I have tabled it to demonstrate an even-handed approach over this aspect. I feel certain that Members opposite will appreciate that I am being very even-handed in everything that I am doing this evening. I beg to move.
Lord McCarthy: I believe that the noble Baroness has spoken to Amendment No. 78. I should like to know what she means by the inclusion of the word "grounds". What would the noble Baroness regard as adequate grounds in this respect? One might say, "We want recognition because the members want it". Should they decide at this stage whether or not they are going to go forward by saying that they have the support of a majority of members? Alternatively, are they to go in and say, "We are not saying that we have a majority of members, we are saying that we can get the support from the majority in the bargaining unit"? Are they to go in and say, "We are underpaid"? What does the noble Baroness mean by the use of the words "grounds"?
Baroness Miller of Hendon: Earlier I believe that I used the word "reasons" in connection with a different amendment. What I seek in this group of amendments is clarification; people should understand exactly what
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we are saying. The rules of the CAC may refer to provisions being given in writing. However, if there are extra reasons, they should be stated.
Lord McCarthy: Is the noble Baroness saying that there must be reasons and there must be grounds, but she does not know what they are?
9.15 p.m.
Baroness Miller of Hendon: I do not wish to enter a debate about what will happen in a ballot. Perhaps I am not making myself sufficiently clear to the noble Lord. I believe that my amendment would clarify the procedures that are necessary for these applications that we are discussing. That is all I am saying. If the noble Lord does not like the word "grounds" he may be able to suggest another word. However, I do not think he need worry too much about this as I have not yet received any sympathy from the Minister on this matter in terms of meeting me half way or inviting me to discuss the matter further or in terms of initiating any of the provisions he has suggested to other people. That would have been nice.
Lord Wedderburn of Charlton: What the noble Baroness appears to be saying is that she wants a union to say something more than the Bill makes it say at the moment. However, she does not know what that is and she does not know what it is about. Have I misunderstood her? Can she give us an example of what she means?
Baroness Miller of Hendon: I am afraid I would find it absolutely impossible to get inside the head of a union. I should have thought the noble Lord, Lord Wedderburn, would know that only too well. I believe that the relevant provisions should be in writing. I seek to clarify the whole situation. As I say, I would find it totally impossible to get inside the mind of a union. I often do not know what unions want when they tell me that.
Lord McIntosh of Haringey: I shall try to return to the text of Amendments Nos. 77, 78 and 186. I have problems which are not quite the same as those of my noble friends. Amendments Nos. 77 and 78 are intended to affect paragraph 4l of the schedule which governs the form of applications to the CAC under the voluntary recognition part of the schedule. Paragraph 41 is the direct equivalent of paragraph 28, which prescribes the form of applications to the CAC under Part I, which is the recognition part of the schedule. At present, both paragraphs allow the CAC to prescribe the form of requests. Amendments Nos. 77 and 78 together would restrict the freedom of the CAC to choose the most helpful form of application under paragraph 41, and would break the symmetry with paragraph 28. In other words we would not have the same provisions for statutory recognition as for voluntary recognition.
Amendment No. 77 would require the application to be in writing. I would expect the CAC to require that it should be in writing. I think that is implicit in the idea of supporting documents that the application should be in writing as well. In that sense the amendment is unnecessary. However, the CAC may want a phone call

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to be part of the application process: the application is not made until a telephone call confirms its authenticity, for example. I do not see why that may be necessary but I do not wish to remove that possibility entirely. Amendment No. 77 would remove it and I believe it to be unhelpful as well as unnecessary.
Amendment No. 78 is unnecessary for the same reason as Amendment No. 77: surely the CAC will require that provision anyway. In any case, if the CAC is to judge whether an application is valid, it must be presented with evidence that there are grounds for the application. I do not understand what is meant by "grounds" and I sympathise with my noble friends who have questioned the use of that word. A failure to state the grounds would prejudice the chances of a successful application. Therefore I believe that self-interest will ensure that all applications state their grounds.
I am also unsure about the requirement to state fully the grounds on which the application is being made. An application is made because the union believes either paragraph 40(4)(a)—which occurs when there is no agreed method of collective bargaining—or 40(4)(b)—where the method of collective bargaining has been agreed but there has been a failure to carry it out—to be true. A full statement of the grounds would be, in effect, "(a)" or "(b)," as it is in the Bill. Evidence that the grounds are correct is another matter. Therefore I do not believe that the amendment would require the union to go into additional detail.
Amendment No. 186 would require an employer to give his or her reasons for seeking derecognition. I am sure that in most cases this would be sensible and reasonable but I am against having a statutory requirement to do so. Requiring an employer to give reasons for an application invites a challenge. It would be open to the union to say, "Ah, no, the real reason for this application is such and such, it is not valid" and the CAC would have to decide what the employer's actual motivation was. That would add an unacceptably subjective element to the CAC's consideration of whether an application was valid under paragraph 18.
I understand the desire of the noble Baroness to clean up the schedule. I also understand that she has some doubts about our ability in view of the number of amendments we have had to bring forward to adequately clean up the schedule. I know she is trying to help, but these amendments will not work.
Lord McCarthy: Before the Minister sits down, as I understand it we are now into Part II. I understood that there was to be some kind of statement about the validity and utility of Part II if we only waited for it. When is it coming?
Lord McIntosh of Haringey: I suppose I invited that. I have considered the matter since I made that statement. It is clear that there will have to be amendments to Part II. It is also clear that at this time of night, with this kind of House, it would be undesirable for me to rely on Hansard to say more specifically what we propose to do with Part II. I suggest instead that, in terms of effective
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communication, I should make a public statement about our intentions in respect of Part II in good time before Report stage. That would enable discussions to take place between my noble friends and both Benches opposite before we come to consider any amendments the Government may put down. I think it would be inappropriate for me to go beyond that at this stage.
Baroness Miller of Hendon: I am perfectly happy at this stage for the Minister not to go beyond what he has just said on Part II. However, I am disappointed that he did not accept my small Amendment No. 77. I anticipated in my speech that he would say it was not necessary; that the CAC would have it within its regulations. He then said that if the CAC did not have it within its regulations it might be satisfied with a telephone call. Either the CAC will have it in its regulations or not. It would be totally inappropriate for the procedure to start by someone making a telephone call. I think that is what the Minister said.
Lord McIntosh of Haringey: On the contrary. I said that although it would have to be in writing at the outset it could be that a confirmatory telephone call would be part of the procedure to ensure that an application was properly based.
Baroness Miller of Hendon: I am sorry if I misunderstood the Minister. I think he is saying that the application would be in writing because the CAC rules would provide that it should be in writing. Let us hope that that is so. The amendment was purely to make sure that that is how it would be. That is how we believe it should be. At this stage I shall seek to withdraw the amendment. If it should turn out at some later stage that an application in writing is not in the rules, we will have a coffee together and discuss the matter.
Amendment, by leave, withdrawn.
[Amendment No. 78 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment Nos. 79 and 80:
Page 30, leave out lines 20 to 28 and insert—
("(2) An application which is made by a union (or unions) to the CAC is not admissible unless the union gives (or unions give) to the employer—

(a) notice of the application, and

(b) a copy of the application and any documents supporting it.

(3) An application which is made by an employer to the CAC is not admissible unless the employer gives to the union (or each of the unions)—

(a) notice of the application, and

(b) a copy of the application and any documents supporting it.")

Page 30. line 44, after ("day") insert ("after that on which")
The noble Lord said: I spoke to Amendment No. 79 with Amendment No. 18 and to Amendment No. 80 with Amendment No. 9. I beg to move.
On Question, amendments agreed to.
[Amendments Nos. 81 to 83 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 84 and 85:
Page 31, line 21, leave out ("28") and insert ("20 working")
Page 31, line 22, after ("acceptance") insert ("of")
The noble Lord said: I spoke to Amendment No. 84 with Amendment No. 9 and to Amendment No. 85 with Amendment No. 18. I beg to move.
On Question, amendments agreed to.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No, 86:
Page 31, line 23, at end insert—
(" . This part of this Schedule shall not apply to any agreement made by an employer and a union (or unions) prior to the passing of this Act to the extent that such agreement is inconsistent with the provisions of this Part, in which case the prior agreement shall prevail and paragraph 38(a) shall be construed accordingly.")
The noble Baroness said: Amendment No. 86 is another short and self-explanatory amendment which is designed to clear up an obvious omission from the Bill. As I understand it, one of the main objects of the Bill is to encourage union representation wherever it is appropriate. The Government said in various responses to amendments in the other place that there are many satisfactory arrangements already in place between large and small employers on the one hand and unions on the other. Maybe there are. The amendment is to ensure that where there are agreements between unions and employers which were made prior to this legislation corning into force, the new Act should not apply to them; in other words, that it should not act retrospectively or interfere with them. Try as I might, I really cannot think of anything more to say on the point. It is absolutely clear what I mean. I am sure that that is a relief to your Lordships.
Lord McIntosh of Haringey: I am rather inclined to agree with the noble Baroness that Part II of the Bill should not apply to existing voluntary agreements. One of the Government's aims in framing the legislation is to maintain stable bargaining agreements. We would have preferred to leave voluntary recognition out of the Bill altogether.
However, as we said in paragraph 60 of the Explanatory Notes, that would have created a loophole. The loophole would have allowed an employer to claim to recognise a union voluntarily but fail to negotiate with it. We have designed Part H of the schedule to plug that loophole, and that is where we have gone wrong. My noble friends are clearly right when they say that Part II does not meet its points.
In another place, Michael Wills, the Minister for Small Firms, Trade and Industry, responded to a similar amendment. He said:
"We think that we have found a simpler, more elegant way to deal with the problem that does not interfere with existing voluntary recognition agreements but deals fully, and better than the current wording does, with the risk of evasion".—[Official Report, Commons, Standing Committee E, 16/3/99: col. 411.]
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He said "We would seek to incorporate this method into the Bill if it were satisfactory", but asked for time to make sure that it was a genuine improvement.
We have taken time to consider an improvement to Part II and we believe that it is satisfactory. However, I promise your Lordships that we will put down an amendment on this subject for report. I refer back to what I said in answer to the challenge of my noble friends. Since our amendment will have the same effect as the noble Baroness's amendment that we are debating, I would like to ask her to withdraw her amendment.
Baroness Miller of Hendon: I am absolutely amazed. I am so surprised that I am not sure I can continue with the remainder of my amendments! Clearly, in view of what the noble Lord the Minister has said, I most certainly will withdraw the amendment. It seems extraordinary to me—and I must agree on one point with the noble Lord, Lord McCarthy—that after all the debate in the other place, after all the extra amendments that were put down here, after all the time that has been taken, and after all the promises that Mr. Wills gave in the other place, we are still here. I shall withdraw my amendment, because when the Government deal with Part II, they intend to do something. I do not like to sound churlish, a phrase which I used earlier, but it seems to me impossible to believe that in a government Bill that has been thought about for a long time, which followed Fairness at Work, here we stand—on Part II, at half past nine at night. I shall withdraw the amendment and the noble Lords will have to go back to the drawing board with the officials and come up with something else. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 86A:
Page 31, line 36, at end insert—
("( ) If there is a voluntary agreement, any dispute concerning its interpretation or either party's performance there... shall be resolved in such forum or by such other arbitrator as the employer and the union shall mutually agree from time to time, and in default of such agreement, by ACAS and not the CAC.")
The noble Baroness said: I am so surprised by the response to the last amendment that I find it difficult to continue with the next.
Amendment No. 86A seeks to improve the arrangements between employers and unions regarding recognised bargaining units when this recognition has taken place as a result of a voluntary agreement.
I was interested to hear that the noble Lord the Minister said that he would have preferred not to have had voluntary agreements within the ambit of this 13ill at all, not only to improve those arrangements, I understand, but also to encourage them.
It is quite possible that, in negotiating a voluntary recognition agreement across a table, the representatives of employers and the unions may make a mistake, leave: something out or genuinely misunderstand each other.

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With the best will in the world, there are endless possibilities for misunderstanding. It would be regrettable, after the parties had gone to the trouble of negotiating a recognition agreement, if some misunderstanding were to destroy the purpose of union recognition and that a strike should ensue. This additional clause inserts arbitration provisions into the agreement, something that a properly negotiated agreement would have had in the first place. I beg to move.
9.30 p.m.
Lord McCarthy: I have to say, "Welcome to the club". It is quite remarkable at this time of night to see—I understand that the noble Baroness is speaking for her party—the conversion of the Conservative Party to the use of arbitration. It is a good job the noble Lord, Lord Tebbit, has gone to bed. It is astonishing. We are now dealing with Part III of Schedule 1, which is entitled, "Changes Affecting Bargaining Unit". Paragraph 44(2)(b) states that,
"references to the bargaining arrangements are to the declaration and to the provisions relating to the collective bargaining method".
What the noble Baroness is telling us is that we should add to that what is in effect a compulsory arbitration provision. Is she serious? Is the Conservative Party really saying that when there is a voluntary agreement and a dispute we should enact a system of arbitration? Is that now Conservative policy?
Baroness Miller of Hendon: I am speechless. Perhaps it is the time of night. Is the noble Lord suggesting that because the noble Lord, Lord Tebbit, is not sitting behind me, I have strayed out of line or I have committed my party to something it would not wish to be committed to? I put down the amendment. That is it. I am sure that it will be rejected.
Lord McIntosh of Haringey: The noble Baroness can treat that as a rhetorical question, particularly as I think that the amendment is based on a misapprehension. The noble Baroness seeks to insert it after sub-paragraph (2) of paragraph 44 at the beginning of Part III of the schedule which deals with changing the bargaining unit. But sub-paragraph (1) makes it clear that the part applies only where the CAC has issued a declaration of recognition; that is, following a ballot or on the basis of majority union membership. The part does not apply to voluntary recognition. If that was the point of the intervention of my noble friend Lord McCarthy, I think that he may have been unjustly accusing the noble Baroness of breaking ranks. The presumption is that if parties are capable of agreeing on recognition in the first place, they are capable of dealing with a change in the bargaining unit. In the last resort a union always
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has the option of ending voluntary recognition and applying under the schedule. The amendment is therefore entirely unnecessary.
Lord Wedderburn of Charlton: Before my noble friend sits down, perhaps I may thank him for explaining the problem that some of us had with the amendment. It is in the wrong place.
Lord McIntosh of Haringey: Yes.
Lord Wedderburn of Charlton: But in view of the hour, if we were kind to it and it were moved some 20 or 30 lines up the page, would we then be in favour of it?
Lord McIntosh of Haringey: That is a hypothetical question.
Baroness Miller of Hendon: If it is found suitable to put it in a different place, so be it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 87:
Page 32, line 23, leave out ("there is prima facie evidence") and insert ("it is likely")
The noble Lord said: In moving Amendment No. 87, I wish to speak also to Amendments Nos. 89 to 104, 118, 120, 122 to 155, 157 and 159 to 161. I shall have to turn over a number of pages in order to get beyond the text and effect of these amendments.
This is a large group of amendments to Part III of the schedule. Although there is a large number of them, they make only two substantial changes: a minor alternation in one criterion for the acceptance of an application, and a number of changes which together allow the CAC to decide that a bargaining unit has split into several new units.
Amendments Nos. 87, 118 and 120 alter the standard of proof required for the CAC to consider an application in line with similar changes made in another place. Instead of considering whether there is prima facie evidence that the bargaining unit has changed, the CAC will have to decide whether it is likely that the unit has changed. It will be able to consider evidence about this, whether or not it is prima facie evidence. This is a slightly higher standard of proof to ensure that only well-founded applications go forward.
The rest of the amendments in this group—I shall not try the Committee's patience by listing them all—are intended to make one important alteration across Part III of the schedule. At present, an employer or union may apply to the CAC to determine whether a bargaining unit has changed. If it has, the CAC may specify the single new unit which it believes to be appropriate. The changes we are seeking will allow the CAC to specify more than one new unit as "appropriate".
I should like to give two examples of where this might be desirable. An employer might have two factories covered by a single collective bargaining

1251
arrangement. The employer might, for good business reasons, choose to manage each factory separately. We want the CAC to be able to decide that each factory is a new bargaining unit.
Another example is a firm which is restructured so that, instead of setting pay rates centrally, half a dozen regional offices will each set pay for workers in that region. I remember some controversy about nurses' pay on that subject in recent years. There could therefore be six new bargaining units arising from one original unit. In this situation, it is not appropriate for the CAC merely to identify one of the new units; it should identify all six.
The amendments fall into four categories. First, there are the amendments which merely alter references to a new unit, so that they read "unit or units". Amendments Nos. 89, 92, 94 and 96 are the first four such amendments in this group. They are essentially straight forward.
Secondly, there are amendments which are intended to prevent decisions by the CAC from interfering with other recognition arrangements. Amendment No. 90 is the first example of these. We have invented the concept of an outside bargaining unit—in other words, workers covered by another collective agreement. These amendments deal with a new unit which includes any workers who are members of an outside bargaining unit. If a union and an employer agree a new unit which includes such workers, the CAC will take no further action, in order not to interfere with existing arrangements. In other words, we are seeking to prohibit "overlapping" bargaining units. Amendment No. 100, for example, requires the CAC to determine new units in such a way that they do not overlap with each other.
The amendments also deal with the situation where the CAC decides that the bargaining unit has changed, and that one or more new units contain workers covered by another collective agreement. The CAC will "wipe out" recognition for all workers in a new unit which overlaps with an outside bargaining unit. The unions may then discuss between themselves whether they wish to apply for recognition, and, if so, whether they should make a joint application, or if one of them should apply on its own. We are proposing two changes to this procedure. Amendment No. 140 allows the CAC to deal separately with each new unit, so it may decide that new unit A overlaps with an outside unit, whereas new unit B does not. Amendment No. 150 means that the CAC will not interfere with a voluntary recognition agreement, but will only "wipe the slate clean" of recognition if the outside bargaining unit was recognised through the statutory procedure. It also provides for a 65-clay interim period, which is three months in my calculation, during which the original bargaining arrangements will continue unless the CAC decides that they should cease immediately in the interests of good industrial relations.
I know this is getting hard to follow, so I shall give an example in a minute. I should first like to say that the third type of amendment in this group is consequential on the first two. Amendment No. 91 is an example.
There are a number of amendments which remove references to "a bargaining unit which is no longer appropriate". Amendments Nos. 98 and 102, are examples. On reflection, the Government believe that the CAC should always decide the most appropriate new bargaining unit if the unit has changed. That is the fourth category.
I promised to give an example. It is wholly fictitious, but I hope it will illustrate the kinds of situation which the amendments are intended to deal with. Consider a firm which employs widget-makers and widget-painters. A union is recognised to conduct collective bargaining on behalf of both groups. The employer then expands by taking on some widget-packers as well. A separate union is recognised for the widget-packers, under Part I. The employer then applies to the CAC to rule that the bargaining unit of widget-makers and widget-painters has changed.
The employer and the union representing the makers and painters cannot agree a new unit or units. The CAC then decides that there are two new units. It decides that the units are as follows: Unit A is all the widget-makers and most of the painters, and Unit B is those widget-painters who used to parcel up the widgets for transport, plus the packers who now deal with the widget-painters. I trust that noble Lords are with me! The CAC then looks at each unit separately. The union continues to be recognised for Unit A. In Unit B, the CAC decides that it contains workers who are members of another bargaining unit—the packers—for which another union was recognised via Part I, and therefore decides that the bargaining arrangements should cease for all workers in Unit B, and that, in the interest of good industrial relations, they should cease immediately.
I admit that this is a rather contrived narrative—although I enjoyed it. But each of the CAC's decisions that I have just mentioned is one which it could not make without these amendments being made. The amendments add flexibility to the procedure for changing the bargaining unit, and will help the CAC to make appropriate decisions. I commend them to the Committee.
Baroness Turner of Camden: I thank my noble friend the Minister for his comprehensive explanation, which I shall follow with a great deal of interest when I read it in Hansard, as I do not think I have understood it so far.
I should like to ask my noble friend about amendment No. 90, which states that,
"If in the CAC's opinion the new unit (or any of the new units) contains at least one worker falling within an outside bargaining unit no further steps are to be taken under this Part of this Schedule".
There could be a situation in which an outside union recruits a substantial number of the workforce but one individual in that group maintains membership of

1253
another union where there is possibly some kind of national bargaining unit. Does that mean that no further progress can be made because of that one worker?
Lord McIntosh of Haringey: No. The provision prevents the overlap of the new units with outside units and with each other, and it allows the CAC to deal with each of them separately.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 88 to 162:
Page 32, line 46, after ("day") insert ("after that on which")
Page 33, line 5, leave out ("(the new unit) which differs") and insert ("or units (the new unit or units) differing")
Page 33, line 7, at end insert—
("(1A) If in the CAC's opinion the new unit (or any of the new units) contains at least one worker falling within an outside bargaining unit no further steps are to be taken under this Part of this Schedule.")
Page 33, leave out line 8 and insert ("If sub-paragraph (I A) does not apply—")
Page 33, line 11, at end insert ("or units")
Page 33, line 12, at beginning insert ("so far as it affects workers in the new unit (or units) who fall within the original unit,")
Page 33, line 16, after ("unit") insert ("or units") Page 33. line 23, at end insert—
("(4) An outside bargaining unit is a bargaining unit which fulfils these conditions—

(a) it is not the original unit;

(b) a union is (Or unions are) recognised as entitled to conduct collective bargaining on its behalf;

(c) the union (or at least one of the unions) is not a party referred to in paragraph 44 or 45.")

Page 33, line 27, leave out ("which differs") and insert ("or units differing")
Page 33, line 32, leave out ("appropriate or that no other unit is") and insert ("or units are")
Page 33, line 44, leave out ("whether another bargaining unit is appropriate, and what the unit is,") and insert (-what other bargaining unit is or units are appropriate")
Page 33, line 46, after ("unit") insert ("or units")
Page 34, line 6, at end insert—
("(5A) If the CAC decides that two or more bargaining units are appropriate its decision must be such that no worker falls within more than one of them.")
Page 34, line 14, leave out ("in relation to the application under paragraph 47")
Page 34, leave out lines 15 to 22
Page 34, line 25, after ("is") insert ("(or units which are)")
Page 34, line 25, at end insert—
("54A.—(1) This paragraph applies if—

(a) the parties agree under paragraph 50 a bargaining unit or units differing from the original unit,

(b) paragraph 50(1A) does not apply, and

(c) at least one worker falling within the original unit does not fall within the new unit (or any of the new units).

(2) In such a case—

(a) the CAC must issue a declaration that the bargaining arrangements, so far as relating to the worker or workers
1254
mentioned in sub-paragraph (1)(c), are to cease to have effect on a date specified by the CAC in the declaration, and

(b) the bargaining arrangements shall cease to have effect accordingly.")

Page 34, leave out lines 27 to 30 and insert—
("(1) If the employer—

(a) believes that the original unit has ceased to exist, and

(b) wishes the bargaining arrangements to cease to have effect,

he must give the union (or each of the unions) a notice complying with sub-paragraph (2) and must give a copy of the notice to the CAC.")
Page 34, line 37, after ("day") insert ("after that")
Page 34, leave out lines 39 to 41 and insert—
("(3) Within the validation period the CAC must decide whether the notice complies with sub-paragraph (2).
(4) If the CAC decides that the notice does not comply with sub-paragraph (2).

(a) the CAC must give the parties notice of its decision, and

(b) the employer's notice shall be treated as not having been given.

(5) If the CAC decides that the notice complies with sub-paragraph (2) it must give the parties notice of the decision.
(6) The bargaining arrangements shall cease to have effect on the date specified under sub-paragraph (2)(d) if—

(a) the CAC gives notice under sub-paragraph (5), and

(b) the union does not (or unions do not) apply to the CAC under paragraph 56.

(7) The validation period is—

(a) the period of 10 working days starting with the day after that on which the CAC receives the copy of the notice, or

(b) such longer period (so starting) as the CAC may specify to the parties by notice containing reasons for the extension.")

Page 34, line 43, leave out ("a notice is given which purports to be given under paragraph 55") and insert ("the CAC gives notice under paragraph 55(5)")
Page 34, line 44, after ("day") insert ("after that")
Page 34, line 46, leave out ("one or more of")
Page 35, leave out line 2
Page 35, line 27, after ("day") insert ("after that on which")
Page 35, line 33, leave out ("question or")
Page 35, line 35, leave out ("question or")
Page 35, leave out lines 37 to 40
Page 35, line 41, leave out ("that the employer's notice is given in accordance with paragraph 55 and")
Page 35, line 46, leave out ("that the employer's notice is given in accordance with paragraph 55,")
Page 35, line 47, leave out ("there is no evidence") and insert ("it is not the case")
Page 36, line 2, leave out ("that the employer's notice is given in accordance with paragraph 55,")
Page 36, line 3, leave out ("there is prima facie evidence that")
Page 36, line 8, after ("day") insert ("after that on which")
Page 36, line 17, leave out ("(the new unit) which differs") and insert ("or units (the new unit or units) differing")
Page 36, line 19, at end insert—
("(1A) If in the CAC's opinion the new unit (or any of the new units) contains at least one worker falling within an outside bargaining unit no further steps are to be taken under this Part of this Schedule.")
Page 36, leave out line 20 and insert ("If sub-paragraph (1A) does not apply—")
Page 36, line 23, at end insert ("or units")
Page 36, line 24, at beginning insert ("so far as it affects workers in the new unit (or units) who fall within the original unit,")
Page 36, line 28, after ("unit") insert ("or units")
Page 36, line 35, at end insert—
("(4) An outside bargaining unit is a bargaining unit which fulfils these conditions—

(a) it is not the original unit;

(b) a union is (or unions arc) recognised as entitled to conduct collective bargaining on its behalf;

(c) the union (or at least one of the unions) is not a party referred to in paragraph 44 or 45.")

Page 36, line 39, leave out ("which differs") and insert ("or units differing")
Page 36, line 40, leave out from beginning to end of line 4 on page 37 and insert—
("(2) During the second period the CAC—

(a) must decide what other bargaining unit is or units are appropriate;

(b) must give notice of its decision to the parties.")

Page 37, line 5, leave out ("whether another bargaining unit is appropriate, and what the unit is,") and insert ("what other bargaining unit is or units are appropriate")
Page 37, line 7, after ("unit") insert ("or units")
Page 37, line 17, at end insert—
("(5A) If the CAC decides that two or more bargaining units are appropriate its decision must be such that no worker falls within more than one of them.")
Page 37, leave out lines 23 to 26
Page 37, leave out lines 27 to 34
Page 37, leave out lines 36 and 37 and insert ("a decision as to the bargaining unit which is (or units which are) appropriate.")
Page 37, line 37, at end insert—
("63A.—(1) This paragraph applies if—

(a) the parties agree under paragraph 59 a bargaining unit or units differing from the original unit,

(b) paragraph 59(1A) does not apply, and

(c) at least one worker falling within the original unit does not fall within the new unit (or any of the new units).

(2) In such a case—
(a) the CAC must issue a declaration that the bargaining arrangements, so far as relating to the worker or workers mentioned in sub-paragraph (1)(c), are to cease to have effect on a date specified by the CAC in the declaration, and
(c) the bargaining arrangements shall cease to have effect accordingly.")
Page 37, line 39, leave out ("or paragraph 60")
Page 37, line 42, leave out ("(the new unit)") and insert ("or units which are appropriate")
Page 37, line 42, at end insert—
("(1A) This paragraph also applies if the CAC gives notice under paragraph 6(1) of a decision as to the bargaining unit which is appropriate or units which are appropriate.
(1B) The CAC—

(a) must proceed as stated in paragraphs MA to 69 with regard to the appropriate unit (if there is one only), or

(b) must proceed as stated in paragraphs 64A to 69 with regard to each appropriate unit separately (if there are two or more).

(1C) References in those paragraphs to the new unit are to the appropriate unit under consideration.")
Page 37, leave out lines 43 to 48
Page 38, leave out lines 1 and 2 and insert—
("64A.—(1) If in the CAC's opinion the new unit contains at least one worker falling within an outside bargaining unit—")
Page 38, line 10, leave out ("other") and insert ("outside")
Page 38, line 13, leave out ("other") and insert (outside")
Page 38, line 14, leave out ("agreement or")
Page 38, line 16, leave out ("other") and insert ("outside")
Page 38, line 21, leave out ("other") and insert ("outside")
Page 38, line 25, leave out ("other") and insert ("outside")
Page 38, line 27, leave out ("other") and insert ("outside")
Page 38, line 27, at end insert—
("(8) An outside bargaining unit is a bargaining unit which fulfils these conditions—

(a) it is not the original unit;

(b) a union is (or unions are) recognised as entitled to conduct collective bargaining on its behalf by virtue of a declaration of the CAC;

(c) the union (or at least one of the unions) is not a patty referred to in paragraph 44 or 45.

(9) The date specified under sub-paragraph (3)(a) trust be—

(a) the date on which the relevant period expires, or

(b) if the CAC believes that to maintain the relevant bargaining arrangements would be impracticable or contrary to the interests of good industrial relations, the date after the date on which the declaration is issued;

and the relevant period is the period of 65 working days starting with the day after that on which the declaration is issued.")
Page 38, line 27, at end insert—
("64B.—(1) This paragraph applies if—

(a) the CAC issues a declaration under paragraph 64A, and

(b) in the CAC's opinion the outside bargaining unit contains at least one worker not falling within the new unit.

(2) In this paragraph—

(a) references to the residual unit are to the worker or workers falling within the outside bargaining unit but not within the new unit;

(b) references to the outside union (or unions) are to the union (or unions) recognised as entitled to conduct collective bargaining on behalf of the outside bargaining unit.

(3) The CAC may issue a declaration that the outside union is (or outside unions are) recognised as entitled to conduct collective bargaining on behalf of the residual unit.
(4) But no such declaration may be issued if the CAC has received an application under paragraph 47 or 56 in relation to the outside bargaining unit.
(5) If the CAC issues a declaration under this paragraph—

(a) the declaration shall have effect in place of the existing declaration that the outside union is (or outside unions are) recognised as entitled to conduct collective bargaining on behalf of the outside bargaining unit, so far a; the existing declaration relates to the residual unit;

(b) the method of collective bargaining relating to the outside bargaining unit shall have effect in relation to the residual unit, with any modifications which the CAC considers necessary to take account of the change of bargaining unit and specifies in the declaration.")

Page 38, line 28, leave out from ("If') to ("it") in line 29 and insert ("the CAC's opinion is not that mentioned in paragraph 64A(1)")
Page 38, line 38, at beginning insert ("so far as it affects workers in the new unit who fall within the original unit,")
Page 39, line 2, after ("arrangements") insert (", so far as relating to workers falling within the new unit,")
Page 39, line 34, at beginning insert ("so far as it affects workers in the new unit who fall within the original unit,")
Page 40, line 1, after ("day") insert ("after that")
Page 40, line 7, after ("arrangements") insert (", so far as relating to workers falling within the new unit,")
Page 40, line 12, leave out ("19 or 20") and insert ("20A")
Page 40, line 19, at beginning insert ("so far as it affects workers in the new unit who fall within the original unit,")
Page 40, line 30, after ("arrangements") insert (", so far as relating to workers falling within the new unit,")
Page 40, line 31, at end insert—
("69A.—(1) This paragraph applies if—

(a) the CAC decides an appropriate bargaining unit or units under paragraph 51 or 60, and

(b) at least one worker falling within the original unit does not fall within the new unit (or any of the new units).

(2) In such a case—

(a) the CAC must issue a declaration that the bargaining arrangements, so far as relating to the worker or workers mentioned in sub-paragraph (1)(b), are to cease to have effect on a date specified by the CAC in the declaration, and

(b) the bargaining arrangements shall cease to have effect accordingly.")

Page 41, leave out lines 40 to 45 and insert—
("(1) This paragraph applies if—

(a) the employer believes that he, taken with any associated employer or employers, employed an average of fewer than 21 workers in any period of 13 weeks, and

(b) that period ends on or after the relevant date.

(1A) If the employer wishes the bargaining arrangements to cease to have effect, he must give the union (or each of the unions) a notice complying with sub-paragraph (2) and must give a copy of the notice to the CAC.")
The noble Lord said: I have already spoken to these amendments. With the leave of the Committee, I beg to move them en bloc.
On Question, amendments agreed to.
[Amendment No. 163 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 164 and 165:
Page 41, line 47, at end insert—
("(aa) specifies the period of 13 weeks in question,")
Page 41, line 48, at end insert—
("(ba) is given within the period of 5 working days starting with the day after the last day of the specified period of 13 weeks,")
On Question, amendments agreed to.
[Amendment No. 165A not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 166 to 169:
Page 42, line 2, leave out ("period of 13 weeks ending with the day preceding that on which the notice is given") and insert ("specified period of 13 weeks")
Page 42, line 6, after ("day") insert ("after that")
Page 42, leave out lines 8 to 10
Page 42, line 12, leave out ("period of 13 weeks ending with the day preceding that on which the notice is given") and insert ("specified period of 13 weeks")
On Question, amendments agreed to.
[Amendment No. 169A not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 170:
Page 42, line 27. at end insert—
("(7) An order made under paragraph 6(6) may also—

(a) provide that sub-paragraphs (1) to (6) of this paragraph and paragraphs 76 to 78 are not to apply, or are not to apply in specified circumstances, or

(b) vary the number of workers for the time being specified in sub-paragraphs (1)(b) and (2)(c).")

The noble Lord said: I spoke to this amendment with Amendment No. 7. I beg to move.
[Amendment No. 170A, as an amendment to Amendment No. 170, not moved.]
On Question, amendment agreed to.
9.45 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 171 to 185:
Page 42, line 27, at end insert—
("75A.—(1) Within the validation period the CAC must decide whether the notice complies with paragraph 75(2).
(2) If the CAC decides that the notice does not comply with paragraph 75(2)—

(a) the CAC must give the parties notice of its decision, and

(b) the employer's notice shall be treated as not having been given.

(3) If the CAC decides that the notice complies with paragraph 75(2) it must give the parties notice of the decision.
(4) The bargaining arrangements shall cease to have effect on the date specified under paragraph 75(2)(d) if—

(a) the CAC gives notice under sub-paragraph (3), and

(b) the union does not (or unions do not) apply to the CAC under paragraph 76.

(5) The validation period is—

(a) the period of 10 working days starting with the day after that on which the CAC receives the copy of the notice, or

(b) such longer period (so starting) as the CAC may specify to the parties by notice containing reasons for the extension.")

Page 42, line 29, leave out ("a notice is given which purports to be given under paragraph 75") and insert ("the CAC gives notice under paragraph 75A(3)")
Page 42, line 30, after ("day") insert ("after that")
Page 42, line 32, leave out from first ("whether") to end of line 34 and insert ("the period of 13 weeks specified under paragraph 75(2)(aa) ends on or after the relevant date and whether the statement made under paragraph 75(2)(c) is correct")
Page 42, line 35, leave out ("to the CAC")
Page 42, line 38, leave out ("to the CAC")
Page 43, leave out lines 5 and 6 and insert—
("(5) If the CAC decides that the application is admissible it must—

(a) accept the application, and

(b) give notice of the acceptance to the parties.")

Page 43, line 8, after ("day") insert ("after that on which")
Page 43, line 14, leave out from ("the") to end of line 16 and insert ("questions whether the period of 13 weeks specified under paragraph 75(2)(aa) ends on or after the relevant date and whether the statement made under paragraph 75(2)(c) is correct")
Page 43, line 17, leave out ("question (or questions)") and insert ("questions")
Page 43, line 19, leave out ("paragraph 75(1)(b) is fulfilled and that the notice is given in accordance with paragraph 75") and insert ("the period of 13 weeks specified under paragraph 75(2)(aa) ends on or after the relevant date and that the statement made under paragraph 75(2)(c) is correct")
Page 43, line 22, leave out ("paragraph 75(I)(b) is not fulfilled or that the notice is not given in accordance with paragraph 75, the notice") and insert ("the period of 13 weeks specified under paragraph 75(2)(aa) does not end on or after the relevant date or that the statement made under paragraph 75(2)(c) is not correct, the notice under paragraph 75")
Page 43, line 26, after ("day") insert ("after that on which")
Page 43, line 34, leave out ("84") and insert ("85")
Page 43, line 38, at end insert—
("(aa) is received by the union (or each of the unions),")
The noble Lord said: These amendments have already been spoken to. I beg to move.
On Question, amendments agreed to.
[Amendment No. 186 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 187 to 190:
Page 43, line 43, leave out ("in relation to the request")
Page 44, line 1, leave out ("in the second period")
Page 44, line 3, leave out ("in") and insert ("before the end of")
Page 44, line 4, leave out ("in relation to the request")
On Question, amendments agreed to.
[Amendment No. 191 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 192 and 193:
Page 44, line 11, leave out ("28") and insert ("20 working")
Page 44, line 25, leave out ("in") and insert ("before the end of")
The noble Lord said: These two amendments were spoken to with Amendment No. 9. I beg to move.
On Question, amendments agreed to.
[Amendment No. 194 not moved.]
Lord Mclntosh of Haringey Lord Mclntosh of Haringey moved Amendments Nos. 195 to 208:
Page 44, line 31, leave out ("and the employer rejects the proposal") and insert ("and—

(a) the employer rejects the proposal, or

(b) the employer fails to accept the proposal within the period of 10 working days starting with the day after that on which the union makes (or unions make) the proposal.")

Page 44, line 33, leave out ("to the CAC")
Page 44, line 37, leave out ("to the CAC")
Page 45, line 5, after ("is") insert ("made in accordance with paragraph 81 or 82 and")
Page 45, line 8, at end insert ("made in accordance with paragraph 81 or 82 or is not")
Page 45, line 13, after second ("is") insert ("made in accordance with paragraph 81 or 82 and is")
Page 45, line 18, after ("day") insert ("after that on which")
Page 46, line 8, after ("day") insert ("after that on which")
Page 46, line 20, leave out ("28 days starting with the day") and insert ("20 working days starting with the day after that on which")
Page 46, line 37, leave out ("28") and insert ("20 working")
Page 46, line 42, at end insert ("or
(c) by a combination of the methods described in paragraphs (a) and (b),")
Page 47, line 1, at end insert—
("(7A) The CAC may not decide that the ballot is to be conducted as mentioned in sub-paragraph (6)(c) unless there are special factors making such a decision appropriate; and special factors include—

(a) factors arising from the location of workers or the nature of their employment;

(b) factors put to the CAC by the employer or the union (or unions).")

Page 47, line 11, leave out ("has decided") arid insert ("is required under sub-paragraph (3)")
Page 47, line 13, leave out ("of the decision") and insert ("that it is so required")
On Question, amendments agreed to.
[Amendment No. 209 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 210 to 220:
Page 47. line 32, at end insert ("after that on which")
Page 48, line 37, leave out ("written")
Page 48, line 41, leave out ("21 days starting with the day") and insert ("15 working days starting with the day after that on which")
Page 50, line 18, at end insert—
("(aa) is received by the union (or each of the unions),")
Page 50, line 25, leave out ("in relation to the request")
Page 51, line 16. after ("day") insert ("after that on which")
Page 51, line 35, after ("group") insert ("or groups")
Page 51, line 46, at end insert ("(or the groups taken together)")
Page 52, line 37, after ("day") insert ("after that on which")
Page 53, line 2, leave out ("28 days starting with the day") and insert ("20 working days starting with the day after that on which")
Page 53, line 26, leave out from ("whether") to ("hut") in line 27 and insert ("sub-paragraph (1) is fulfilled")
On Question, amendments agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 221:
Page 53, line 28, at end insert—

Employment Relations Bill

  PART VIA LOSS OF INDEPENDENCE
  Introduction
  114A.—(1) This Part of this Schedule applies if the CAC has issued a declaration that a union is (or unions are) recognised as entitled to conduct collective bargaining on behalf of a bargaining unit.
  (2) In such a case references in this Part of this Schedule to the bargaining arrangements are to the declaration and to the provisions relating to the collective bargaining method.
  (3) For this purpose the provisions relating to the collective bargaining method are—

  (a) the parties' agreement as to the method by which collective
  bargaining is to be conducted,

  (b) anything effective as, or as if contained in, a legally enforceable contract and relating to the method by which collective bargaining is to be conducted, or

  (c) any provision of Part III of this Schedule that a method of collective bargaining is to have effect.

  114B.—(1) This Part of this Schedule also applies if—

  (a) the parties have agreed that a union is (or unions are) recognised as entitled to conduct collective bargaining on behalf of a bargaining unit,

  (b) the CAC has specified to the parties under paragraph 43(2) the method by which they are to conduct collective bargaining, and

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  (c) the parties have not agreed in writing to replace the method or that paragraph 43(3) shall not apply.

  (2) In such a case references in this Part of this Schedule to the bargaining arrangements are to—

  (a) the parties' agreement mentioned in sub-paragraph (1)(a), and

  (b) anything effective as, or as if contained in, a legally enforceable contract by virtue of paragraph 43.

  114C. References in this Part of this Schedule to the parties are to the employer and the union (or unions) concerned.
  Loss of certificate
  114D.—(1) This paragraph applies if—

  (a) only one union is a party, and

  (b) under section 7 the Certification Officer withdraws the union's certificate of independence.

  (2) This paragraph also applies if—

  (a) more than one union is a party, and

  (b) under section 7 the Certification Officer withdraws the certificate of independence of each union (whether different certificates are withdrawn on the same or on different days).

  (3) Sub-paragraph (4) shall apply on the day after—

  (a) the day on which the Certification Officer informs the union (or unions) of the withdrawal (or withdrawals), or

  (b) if there is more than one union, and he informs them on different days, the last of those days.

  (4) The bargaining arrangements shall cease to have effect; and the parties shall he taken to agree that the union is (or unions are) recognised as entitled to conduct collective bargaining on behalf of the bargaining unit concerned.
  Certificate re-issued
  114E.—(1) This paragraph applies if—

  (a) only one union is a party,

  (b) paragraph 114D applies, and

  (c) as a result of an appeal under section 9 against the decision to withdraw the certificate, the Certification Officer issues a certificate that the union is independent.

  (2) This paragraph also applies if—

  (a) more than one union is a party,

  (b) paragraph 114D applies, and

  (c) as a result of an appeal under section 9 against a decision to withdraw a certificate, the Certification Officer issues a certificate that any of the unions concerned is independent.

  (3) Sub-paragraph (4) shall apply, beginning with the day after—

  (a) the day on which the Certification Officer issues the certificate, or

  (b) if there is more than one union, the day on which he issues the first or only certificate.

  (4) The bargaining arrangements shall have effect again; and paragraph 114D shall cease to apply.
  Miscellaneous
  114F. Parts III to VI of this Schedule shall not apply in the case of the parties at any time when, by virtue of this Part of this Schedule, the bargaining arrangements do not have effect.
  114G. If—

  (a) by virtue of paragraph I I4E the bargaining arrangements have effect again beginning with a particular day, and

  (b) in consequence section 70B applies in relation to the bargaining unit concerned,

  for the purposes of section 70B(3) that day shall be taken to be the day on which section 70B first applies in relation to the unit.")
  The noble Lord said: In another place the honourable Member for Daventry, Mr. Tim Boswell, pointed out that Schedule I had no procedure for dealing with a union which was recognised but then ceased to be independent. My speaking notes say that that is almost unheard of. I believe that it has never happened for a union to lose its certificate of independence. But the possibility exists and we should allow for it. So we have a two-page amendment. It is fair that no employer should be required to recognise a non-independent union.
  However, we also want to promote stable industrial relations. It would be perverse to require a union to be derecognised simply because it ceased to be independent. Therefore, the Government believe that statutory recognition should be treated as voluntary if a union loses its certificate. That means that the employer could derecognise the union if he or she wished or, if the workers wished to derecognise it, they could apply under Part VI of the schedule.
  Amendment No. 221 adds a new Part VIA which gives effect to that policy. We have also provided for the bargaining arrangements to end. There is no reason why the parties should not agree to continue them, but there should be no legal requirement to do so. This is a helpful change to deal with what is likely to be a rare event. I commend the amendment to the Committee.
  On Question, amendment agreed to.
  Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 222:
  Page 54. line 7, after ("employer") insert ("other than a breach which is accidental or which is a reasonable furtherance of the principal reason for the employee's action which fell within one or more grounds set out in sub-paragraph (2),")
  The noble Baroness said: In moving this amendment I speak also to Amendment No. 225, which covers roughly the same point. Part VII deals with detriment and seeks to protect a worker who has a right not to be subjected to any detriment. The grounds are set out on which an employee should be protected against detriment. Clearly, they are connected with campaigns for recognition.
  However, what we intend to do is protect the worker against what is provided for in sub-paragraph (3) because he or she is not protected in the event of a breach by a worker of his contract with an employer or for an unreasonable act or omission by the worker. We wish to write into that sub-paragraph,
  "other than a breach which is accidental or which is a reasonable furtherance of the principal reason for the employee's action which fell within one or more grounds set out in sub-paragraph (2)"
  In other words, the various grounds under sub-paragraph (2)(a) to (e). It seems to us rather harsh that an individual could lose his protection for what perhaps could be an accidental breach. He might be found in a part of the premises where he was not normally supposed to be by sheer accident and in support of what he thought was a quite legitimate activity within the terms of paragraph 115(2).
  I hope that my noble friend regards this as a reasonable proposition. These things can happen in the workplace. One would not want to see a worker lose his protection under this clause of the Bill simply through a minor or accidental breach. I beg to move.
  Baroness Miller of Hendon: Paragraph 115(2) sets out the grounds on which an employee is not to be subject to detriment when he is acting in furtherance of recognition or derecognition of a union or bargaining arrangements. Paragraph 115(3) provides that that protection does not apply when the employee acts in breach of contract or his conduct is unreasonable. I believe that that is entirely even-handed. The amendment seeks to drive a coach and horses through the withdrawal of protection by saying that the breach of contract shall not count if it is accidental. How can that ever be established? What is an accidental breach of contract? It is also said that the protection is not lost if the action is in breach of paragraph 115(2), but that provision protects him anyway. I believe that this amendment is simply an attempt to muddy the waters.
  Lord McIntosh of Haringey: Is the noble Baroness intending to speak also to Amendments Nos. 223 and 224 which are included in the same group? If so perhaps it would be helpful if she dealt with them now so that I can respond to all four amendments.
  Baroness Miller of Hendon: I thank the Minister for his very helpful suggestion. I should like to speak also to Amendments Nos. 223 and 224 together. The part of the first schedule to which these amendments relate deals with compensation that may be awarded by an employment tribunal to an employee if (to paraphrase the provision) he is subjected to any detriment as a result of activities in connection with union recognition. Paragraph 118(2) and (3) contain the formula for assessing that compensation. It is those two sub-paragraphs that I propose should be very slightly modified. As this is not just another case of plucking odd words out of a paragraph, it may be of assistance to the. Committee if I read an abbreviated form of the two sentences as they would appear if these amendments were accepted. Sub-paragraph (2) would read:
  "The amount of the compensation awarded shall be such as the tribunal considers just and equitable in all the circumstances having regard to any loss sustained by the complainant".
  Sub-paragraph (3) would read:
  "The loss shall be taken to include—

  (a) any expenses … and

  (b) loss of any benefit".

  The words that I propose to delete from sub-paragraph (2) refer to compensation taking into account "the infringement complained of'; in other words, as drawn the provision would allow the tribunal to award not only compensatory damages, which is only right and proper, but also some arbitrary sum as punitive damages. I believe that that is wholly inappropriate in this case. The Bill clearly sets out a menu of detriments in paragraph 115(1). There is nothing in that list of detriments that justifies punitive damages.
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  Doubtless the Government will argue that it is up to an employer to put himself in the position of not incurring liability under this paragraph. That means that the provision is intended as a deterrent, but in the present climate of compensation culture it would be all too easy for an employee to dream up an imagined detriment that he could attribute to one of the items in paragraph 115(1) and seek unlimited punitive damages from the tribunal. He might allege that he was not promoted because he was one of those who brought the union into the factory. The employer would then be left struggling to prove a negative or to prove that the reason why the complainant was not promoted was because the person who had more experience, was better suited or had greater seniority.
  We have all seen cases where disgruntled employees have unjustifiably complained that they have been discriminated against on the grounds of race or sex when that had nothing to do with whether they were or were not promoted. An employer is left with the expense of fighting a case where the employee has nothing to lose as the unsuccessful party does not have costs awarded against him. He may launch a case in the hope that the employer will be blackmailed into paying something, or the employee may find a generous and gullible tribunal which will give him the equivalent of a minor lottery win. There is no case for attempting to intimidate employers or to make them lean over backwards in favour of an employee who was active in getting union recognition as against one who did not, for fear of a malicious gold-digging complaint being launched.
  Amendment No. 224 is consequential. Leaving out the words "taken to include" makes it clear that the only basic compensation is for expenses reasonably incurred by the employee and any actual or anticipated loss of benefit. There is nothing for hurt feelings; nothing for bad nerves; nothing for post-traumatic shock syndrome.
  The common law of this country has always dealt with employment disputes on the basis of compensating the employee for the actual monetary loss sustained, however that may be calculated—how long the employee was out of work after dismissal; how much he lost in wages as a result of having to accept a lesser paid job; loss of pension rights and fringe benefits; and so on. There is absolutely no need to impose another set of potential claims on industry when all that is needed is the right of an employee who has been unfairly treated to recover his pecuniary loss.
  Lord Davies of Coity: I wonder whether the noble Baroness really understands. Employment tribunals take decisions on the evidence presented and it is not helpful to talk about "gullible" employment tribunals and "imaginary" claims. If a tribunal adjudicates on a well-founded, sensible claim where the employer has acted unjustly towards the employee, it is not only a question of expenses and the practical loss experienced but of an entitlement to compensation.
  Nothing in the Bill is in contradiction with the normal standards that would apply under the current system of employment appeal tribunals legislation. I am bemused that the noble Baroness thinks that people who have

  1265
  been unjustly treated by their employers are not entitled to compensation when they make a well-founded, not imaginary, application to not a "gullible" but a reasonable tribunal.
  Lord Meston: I entirely agree with the noble Lord, Lord Davies of Coity. Listening to the noble Baroness, Lady Miller, there was some confusion of thought between punitive awards and exemplary awards—and the fact that exemplary awards are themselves the exception was lost from sight.
  The noble Baroness referred to persons launching unjustifiable claims. Such persons do not receive punitive or exemplary awards. They do not receive any formal compensation. Tribunals are well versed in dealing with such claims.
  Lord McIntosh of Haringey: I have some sympathy with Amendments Nos. 222 and 225, proposed by my noble friends, which are intended to protect workers against detriment or dismissal where they accidentally breach their contracts or commit breaches in reasonable furtherance of a purpose protected by virtue of Paragraph 115(2), which is concerned with grounds for protection against detriment, or paragraph 120(2), which is concerned with dismissal. Our intention has always been that a worker dismissed on one of the grounds set out should not be protected where the worker's action amounted to a breach of contract in a different way or was unreasonable.
  I also remind my noble friends that Part VII of the schedule does not exist in isolation. The effect of that part is to make it automatically unfair to subject a worker to detriment or dismissal if the reason is one set out in paragraphs 115 or 120, unless the worker falls foul of sub-paragraph (3). This does not, of course, mean that it is fair to dismiss or punish such a worker. Rather, it is simply not automatically unfair. An employee who was dismissed in these circumstances, or who was subject to such detriment as to justify a complaint of constructive dismissal could still argue that the dismissal was unfair and the tribunal would consider such a complaint in the normal way.
  However, I listened carefully to what my noble friend said in support of the amendment. I am not entirely sure that the Bill as drafted achieves everything we intended. With the assurance that we will look closely at this matter again and, if necessary, come back with a suitable amendment on Report, I hope that he will feel able to withdraw his amendment.
  I turn to Amendments Nos. 223 and 224 in the name of the noble Baroness, Lady Miller. Part VII of the schedule provides workers with protection against detriment or dismissal arising from their actions concerning recognition or derecognition of a union under the schedule. That is only fair. Without such protection, workers could not make a free choice as to whether or not they wanted to be represented by a union. If a worker believes that he or she has suffered detriment, the case may be put to an employment tribunal.
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  These amendments would restrict a tribunal award for detriment to the economic loss suffered. They would exclude any element of compensation from the award. I do not believe that this would be a sufficiently credible sanction on a bad employer, even if one puts aside the points made by the noble Lord, Lord Meston. The bad employer will think, "Even if I lose, I won't have to pay any more than I would have anyway. And I might win, or my employee might not complain". That is a calculation stacked against the worker. Instead, we need to send a clear signal that treating workers badly because they favour recognition, for example, is not acceptable and carries a penalty.
  Of course, we sympathise with employers' fears that this will lead to a spate of tribunal actions. That is not our intention. We have been careful to ensure that workers must act in accordance with their contracts and must act reasonably in order to benefit from protection against detriment.
  These amendments would reduce the protection available to workers who suffered genuine detriment, and would therefore encourage unscrupulous employers to take action against workers wanting to recognise or derecognise a union. Paradoxically, these are the very cases in which workers are most likely to need the protection of a union from a bad employer. I therefore ask the noble Baroness not to move her amendments.
  In summary, I hope that my noble friends will feel that our undertaking will enable them to withdraw their amendments and I hope that the noble Baroness from the Opposition Front Bench will feel that our arguments have persuaded her not to move her amendments.
  10 p.m.
  Lord Wedderburn of Charlton: Will my noble friend look again at this issue? On page 55, under what concerns dismissal, the reasons, the main one of which is one of those set out for the worker's protection, are in sub-paragraph (2). As regards detriment short of dismissal on pages 53 to 54, the grounds for protection are set out in sub-paragraph (1). However, sub-paragraph (2) sets out a list which is totally modified on page 54 by sub-paragraph (3). There is no mention of the main purpose. If the worker picks up a pencil and part of the work rules in his contract is that he must not pick up company pencils to register a communication which would have fallen with sub-paragraph (2) he does not fall within that sub-paragraph; he has broken his contract. I hope that my noble friend will look at least at the question of how far the breach of contract must be a substantial one and how far it is related to the grounds in sub-paragraph (2).
  Lord McIntosh of Haringey: Of course, I shall look at it again, but on my reading of paragraphs 115 and 120, the respective sub-paragraphs (3) are identically worded in each case.
  Lord Cavendish of Furness: Perhaps I have been absent from your Lordships' House for too long. When the noble Lords, Lord Wedderburn and Lord McCarthy,

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  speak they often say "we". Given that the noble Lords speak on their own account, how does the Minister interpret the use of the word "we"?
  Lord McIntosh of Haringey: I respond to arguments and not to personalities.
  Lord McCarthy: It is the three of us who have tabled the amendments.
  Baroness Turner of Camden: I thank the Minister for his reply. I still have some doubts which have been voiced so eloquently by my noble friend Lord Wedderburn. As he rightly says, this is a different part of the Bill from that to which my noble friend drew our attention. They were the rights set out under the heading of "dismissal", whereas here we are talking about detriment.
  I shall carefully read what the Minister said in Hansard to see whether a slightly different amendment may be suitable on Report. In the meantime, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Baroness Miller of Hendon Baroness Miller of Hendon had given notice of her intention to move Amendment No, 223:
  Page 54, line 42, leave out ("the infringement complained of and to")
  The noble Baroness said: I shall not move Amendments No. 223 and 224, but I want to make one point. When talking about the menu of detriments in paragraph 115 of sub-paragraph (1), I said that there was nothing in the list of detriments that I thought would justify punitive damages. However, I have listened carefully to what the Minister said and I shall not move the amendment.
  [Amendment No. 223 not moved.]
  [Amendments Nos. 224 and 225 not moved.]
  Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 226:
  Page 56, line 31, at end insert ("but he must provide written reasons, in an explanatory note to any draft order, for not following the recommendations of the CAC")
  The noble Baroness said: In speaking to Amendment No. 226 I shall also speak to Amendment No. 230. Both amendments are in support of the concept of open government, or to use the new buzz word "transparency".
  I shall deal first with Amendment No, 226. Paragraph 19 of the first schedule provides for the machinery to be employed by the CAC when it is dealing with an application for union recognition. The Government have already discovered that the machinery that they proposed needed some adjustment, hence Amendment No. 29 which was proposed by the Minister.
  This is a massive Bill containing a whole new and novel system of the administration of labour relations, including concepts of a quasi-judicial nature. Quite rightly. the Government have introduced what I may call
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  a long-stop provision, enabling the Government to have second thoughts if they discover that what has been legislated for is not necessarily working perfectly.
  That is exactly the same sort of situation as I believe a helpful amendment, which I intend to introduce later and which comes before Clause 27, is designed to cover.
  The long-stop provision that the Government have proposed is in paragraph 125: that if the CAC in the light of its experience of the operation of the Act, decide that the paragraph 19 machinery is not working properly, they can ask the Secretary of State to amend the paragraph. Sub-paragraph (2) gives the Secretary of State the necessary power to amend paragraph 19.
  However, it is also provided that the Secretary of State does not have to amend the paragraph in the way proposed by the CAC. I suppose that is fair enough because it is the Secretary of State who represents the Government and not the CAC.
  Therefore, we have no quarrel with the concept of paragraph 125, except in one respect. If the Secretary of State decides to depart from the advice of the CAC, which will be based on their practical experience of the working of the schedule, he should be prepared to give his reasons at the earliest possible stage—that is, when he tables the proposed new regulations.
  Sub-paragraphs (3) and (4) require the Secretary of State to make any amendments by statutory instrument, and for such instrument to be subjected to a positive resolution of both Houses. As his decision will be subject to parliamentary scrutiny, no real concession is being asked for, except for Parliament to be given as much advance notice as possible of the Secretary of State's reasons. The dividend that the Government will receive is that it may save them some precious parliamentary time if prior information enables the regulation to go through on the nod.
  I now turn to Amendment NO. 230. This is on the same grounds and for the same purpose. When the CAC makes a decision that can affect the parties to a dispute, or even a set of complicated negotiations, it cannot be wrong that it should give reasons to the parties for its decisions and that those reasons should be in writing. The amendment also provides that other persons should be entitled to a copy of those written reasons; first, because the CAC will be acting in a quasi-judicial capacity and justice must be open; secondly, and no less importantly, because the publication of decisions will ensure that the parties to future matters being dealt with by the CAC will be aware of its attitude to given problems. A set of precedents will be established. h will also ensure that there is consistency in the manner in which the CAC makes its decisions. I beg to move.
  Lord McCarthy: Amendment No. 226 is a useful amendment, in that it gives the Government an opportunity to tell us whether they really mean what the Bill implies; that is, that all the CAC does is make a declaration. In other words, the CAC simply declares that, by whatever method it used—presurnably it counted the union membership cards and decided within the bargaining unit that 50 per cent were members of the union—it recognises that union. Alternatively, it

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  declares that it is not that way; that a ballot was held; that there was 50 per cent support for the union and the 40 per cent rule was agreed to. And it will say nothing else.
  Is it the case that declarations of the CAC will merely record that a criterion of one kind or another was met, and nothing further?
  Lord McIntosh of Haringey: I rise to speak to Amendments Nos. 226 and 230 in the name of the noble Baroness, Lady Miller, and Amendment No. 229 in the name of my noble friend Lord Simon of Highbury, which also comes within this group.
  My noble friend asked whether all the CAC does is make declarations. All these three amendments concern declarations and decisions by the CAC. The declarations by the CAC have statutory effect and that is pervasive all the way through Schedule 1 to the Bill. The CAC is not simply a declaratory body; it is a body which triggers a whole series of statutory procedures to enable, in proper circumstances, the recognition of trade unions for collective bargaining to take place.
  I believe we are in general agreement about the principles of these amendments: that the CAC should give notice to the appropriate parties; that is, that the CAC should usually give reasons for its decisions and the Secretary of State should have to give reasons if he decides not to accept the CAC's advice. Where we appear to differ is how best to achieve those ends, and I hope to convince the Committee of the merits of the Government's approach in Amendment No. 229.
  I hope it will be agreed that it is right for the CAC to notify involved parties of its declarations. The CAC's declarations are usually declarations that a specific union is now recognised or has ceased to be recognised—obviously something about which the parties need to know. For example, the CAC may issue a declaration under paragraph 25(4) that a union is not entitled to be recognised. Amendment No. 229 provides that the union and the employer must be told of that. That is a necessary and helpful change and on that basis the amendment will be moved in due course.
  I return to the amendments in the name of the noble Baroness, Lady Miller. Amendment No. 226 would require the Secretary of State to give, in writing and in advance, his reasons for not following the advice of the CAC in amending Paragraph 19. That is the part of the schedule which deals with "automatic" recognition for unions with over 50 per cent membership in a bargaining unit.
  It is reasonable to require the Secretary of State to justify to Parliament any decision to amend Paragraph 19 which is not proposed by the CAC. Of course, subparagraph (4) means that any change to Paragraph 19 must be scrutinised by both Houses of Parliament. The Secretary of State will have to explain and defend his decision whether or not he takes the CAC's advice. That is regarded as more than adequate scrutiny for most other purposes. I therefore see no need for this amendment, and I invite the noble Baroness to withdraw it.
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  As regards Amendment No. 230, I am happy to agree with the general principle behind this amendment. I believe that the CAC should in general provide the reasons for its decisions, in the interests of open government. However, I do not think it is helpful to make it part of the CAC's general duty.
  As my honourable friend the Minister for Small Firms, Trade and Industry said in another place:
  "We expect the CAC to give its decisions and reasons in writing in almost all cases, but it may be desirable for some minor decisions—for example, on minor procedural matters—to be conveyed orally in the interests of speed and efficiency.
  "The CAC will normally give reasons for its decisions, but occasionally it may regard that as unnecessary or undesirable—for example, if it would damage industrial relations or criticise an individual. The CAC increases its risk of judicial review if it decides not to give written decisions with reasons, but it would not be right to oblige it to do so in every case".—[Official Report. Commons, 16/3/99; col. 440]
  Perhaps I may add another example. There may be cases where an employer has relevant information which is commercially sensitive. For instance, if a secret merger is on the cards, the appropriate bargaining unit might be X rather than Y. This amendment would require the CAC to state its reasons, even if they were commercially sensitive, and hence the employer would not tell the CAC about the merger. That is one example of the CAC not being able to reach a correct decision because of a requirement to give reasons.
  To give an example of a minor decision where written reasons are probably not necessary, the CAC must sometimes decide things like whether an application is in writing, or an application states that it is made under the schedule. I am thinking of paragraph 7, but there are other examples as well. These are questions of fact, and it would be perverse to require the CAC to give reasons in writing, or indeed at all.
  Although I sympathise with the reasoning behind Amendment No. 230, I see no need for it. I fear that it might sometimes impair the work of the CAC. Therefore, I invite the noble Baroness not to move the amendment when we reach that stage in due course.
  10.15 p.m.
  Lord Meston: Before the Minister sits down, I must say that it strikes me that the CAC may well be a "public authority" within the meaning of the Human Rights Act and that it is determining civil rights and obligations. Therefore, to use an unfashionable Latin phrase which was dispensed with earlier in the proceedings on the Bill, it ought, prima facie, to be giving reasons, otherwise there is a risk of infringement of the European Convention on Human Rights.
  Lord McIntosh of Haringey: I do not dissent from that view. As a public body, I am sure that the CAC will take account of its obligations under the European Convention and that it will wish to give reasons wherever possible. I have merely been suggesting examples of where it would be undesirable for the CAC to do so. I am sure that the European Convention would take into account those special circumstances.
  Lord McCarthy: I have a question for my noble friend the Minister which is slightly different. I may

  1271
  have misunderstood what he said and, in that case, I apologise. Perhaps he will say that we must read the Hansard report to find the answer. I rather gained the impression at one stage that my noble friend was saying that there were circumstances in which the Government could override a decision of the CAC or that the Secretary of State could set aside a decision of that committee. From the way that I have read the Bill, it seems to me that, if the CAC makes a declaration, that is the end of the matter and it cannot be set aside in any way. It is quite true that paragraph 126 of Schedule 1 states that the Secretary of State may issue general guidance, hut, when speaking about the particular decisions which the CAC makes on declarations of recognition, surely there can be no alternative open to the Secretary of State other than to accept them. Is that correct?
  Lord McIntosh of Haringey: No, the Secretary of State can disagree with the recommendations of the CAC but if he does so he must justify any order to both Houses of Parliament.
  Lord McCarthy: Where is that stated on the face of the Bill because I cannot find it?
  Lord McIntosh of Haringey: Perhaps the Members of the Committee will talk quietly among themselves while I try to find it. Paragraph 125(1) states,
  "If the CAC represents to the Secretary of State that paragraph 19 has an unsatisfactory effect and should be amended, he may by order amend it with a view to rectifying that effect".
  Paragraph 125(2) states,
  "He may amend it in such way as he thinks fit, and not necessarily in a way proposed by the CAC (if it proposes one)".
  Lord Wedderburn of Charlton: I appreciate what the Minister says and I thank him for that reference. However, most of the people with whom I have discussed this matter thought that paragraph 125 constituted an amendment of the relevant documents and so on which have had an unsatisfactory effect in order to deprive them of that effect in the future. Is it not a matter of changing the decision of the CAC and for the Minister to step in with big boots to step on the CAC's decision in a particular case? Is that what the Minister is saying?
  Lord McIntosh of Haringey: We are in danger of getting into theology here. If the Secretary of State may amend the provision in such way as he thinks fit, he could amend it in a fundamental way. I think that is what is provided for in the Bill.
  Lord McCarthy: He could amend paragraph 19, but he surely could not amend the decision of the CAC as regards a declaration.
  Lord McIntosh of Haringey: My noble friend is, of course, correct. The Secretary of State can amend paragraph 19 of Schedule 1 but not necessarily in such a way as proposed by the CAC. The degree of amendment that implies can be interpreted by lawyers.
  Lord Cavendish of Furness: Paragraph 125 states,
  "If the CAC represents to the Secretary of State that paragraph 19 has an unsatisfactory effect".
  However, am I right in saying that subparagraph (2) is not necessarily triggered by the CAC making those representations to the Secretary of State? Is it a stand-alone provision?
  Lord McIntosh of Haringey: Paragraph 125 states that the Secretary of State cannot amend the decision. He can amend paragraph 19 of Schedule 1, but not necessarily in a way proposed by the CAC.
  Baroness Miller of Hendon: After that little interchange on Amendment No. 226 I hope that the noble Lord, Lord McCarthy, will not take it amiss when I say that when he suggested that my amendment had some merit I wondered whether I had read the wrong amendment as I did not think that we would be in agreement on that. I am well aware that any order will have to be laid before Parliament by means of a Statutory Instrument and that that instrument should constitute a positive resolution of both Houses. That is right and proper. I do not think that we differ greatly in our views on this matter. I hope that on reflection the Government will consider that this measure may be a means of conciliation. It is late, but I am tempted to divide the Committee as I believe I would be accompanied in the Lobby by unusual "friends", as it were. However, I am not serious about that. At this stage I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 227:
  Page 57, line 5, at beginning insert—
  ("(A1) Where the CAC specifies a method whereby parties are to conduct collective bargaining, such a method imports a duty on the parties to conduct collective bargaining with a view to reaching agreement on matters falling within the meaning of collective bargaining in the relevant part of this Schedule.")
  The noble Lord said: In all statutes there are key words. In every discussion that I have been privy to in regard to the Bill there have been a number cif them. We have just discussed part of one of them; namely, the declaration of the CAC. The amendment is about the key word, the concept, of "method". It can be approached very simply. Its easily understood use is contained in paragraph 27. I counted about 30 other places where it was also used and where its grammatical construction was not precisely the same. It is also in the general part of the schedule at paragraph 125 and onwards.
  In paragraph 127 the method of conducting collective bargaining is set out, but only in respect of the change of methods. The Secretary of State, having consulted ACAS, may then specify the method by which collective bargaining might be conducted. Then follows one of the most remarkable sub-paragraphs in recent legislation: if such an order is made the CAC must take it into account under the relevant paragraphs but,
  "may depart from the method specified by the order to such extent as the CAC thinks it is appropriate to do so in the circumstances".

  1273
  Having been required to consider the method, it may then set it aside. That is a possible construction which might lead the CAC into some difficulty.
  That paragraph does not contain a definition or explanation of what a "method" is. There are those who say—this is also in some of the Explanatory Notes to the Bill—that one can equate it to something like a bargaining procedure. The Explanatory Notes tend to do that with regard to diagrams. Those of us who are less numerate than literate do not find it easy to follow precisely from the text what the notion of "method" is.
  I raised the matter on Second Reading and, because it was the only place then and I believe it is the only place now, I quoted from where the Government give their secret thinking on the definition through a statement by the Minister for Small Firms, Trade and Industry, Mr. Wills, on 16th March. As far as I am aware, he is the only person who has confronted the question of what is a "method". Before referring to what he said, it may be convenient to look at paragraph 27, one of the first places where the definition appears in the Bill. According to paragraph 27, the CAC is to help the parties reach an agreement. I fully support my noble friend the Minister in some of the remarks he made about the nature of this attempt to put collective bargaining on some kind of statutory footing. It is an attempt to put it on a voluntary basis up to that point; the CAC is to try to get agreement.
  But at sub-paragraph (3) it states:
  "If at the end of the agreement period the parties have not made such an agreement the CAC must specify to the parties the method by which they are to conduct collective bargaining".
  Sub-paragraph (4) states:
  "Any method specified under sub-paragraph (3) is to have effect as if it were contained in a legally enforceable contract made by the parties".
  I add as an important footnote that sub-paragraph (4) shows us that in these usages—not everywhere—the method is to have effect as if it were contained in a legally enforceable contract. Whether or not there is significance in that, it plainly gives rise to legal obligations of some kind in respect of what the CAC is declaring.
  My honourable friend in another place, Mr. Wills, gave an answer as to what it meant. He said:
  "If the CAC has to impose a bargaining procedure because the parties cannot agree, it will be legally binding".
  We all agree that that is what it means; it clearly says so. He went on:
  "However, it will he a procedure for holding talks only; the parties will not be required to reach agreement for the simple reason that people cannot he forced to agree".—[Official Report, Commons, Standing Committee E, 16/3/99; col. 348.]
  I remarked to your Lordships on Second Reading that the last part of his statement was obviously right. Parties cannot be forced to agree. They can only be subject to some penalty if they do not agree.
  The important part of the statement seems to me the crunch of the core concept. It will be a procedure for holding talks only. On its face, that is plainly not right. They are not talks only; they are talks about certain
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  things or with a certain approach or which in some way are relevant to all the other places where we find the method central to the structure.
  I do not wish to advance the argument that the definition of the method, or even the absence of definition, has taken us into the country of duties to bargain. There are many types of duties to bargain. This Bill avoids them. In my submission, it correctly avoids them because, in our circumstances at least, that would not be a very sensible way to further the venture.
  On the other hand, if one looks at the other side of the statement, it is not a procedure for holding talks of any old kind. That would be absurd. On Second Reading, I quoted the case of Mr. Boulwar in the United States, who came with his research team, saying, "This is what we will offer and that is an end of it". I have never had an answer to the question whether Mr. Boulwar would have satisfied his duties under this Bill. I suspect he would not. I suspect that, when consulted, the CAC would say, "We do not think it is enough simply to meet with the union." What would it say? I suggest it would say, "You really must, under the definition of the method, come with some kind of view to reaching agreement".
  It so happens—and, in my submission, it is pure chance—that the duty to consult with a view to reaching agreement is part of the two EC directives which have some relevance: the directive on collective redundancy of workers and the directive on the transfer of undertakings and the safeguarding of employees' rights in such a situation with our regulations, which are normally known as TUPE. They were re-written in 1998 as directives 50 and 59. However, the phrase which was key in their origins, and still is in our law, is that the parties should consult, that the employer should consult with employee representatives, with a view to reaching agreement in their texts.
  I do not think that that goes very far. I do not believe that most employers and unions would regard it as an unreasonable definition of what they are about. They are there to consult with one another on something which might become an agreement and are under no obligation to go further than that.
  However, it does line up the ball park and avoids a situation, which I repeat the Bill would do well to avoid, in which the CAC has made its declaration and says, "You must now fulfil the method." The employer has been half-hearted about it, because that will normally be the situation, as they have just agreed, and the employer's lawyers say, "This is not an indication of method at all. We simply do not know what your obligation to execute a method as part of a legally enforceable contract means at all." At that point, with no definition, the scheme is in jeopardy.
  I seem to have said that in relation to other matters, but I say it again. If you do not attend to these legal questions in advance, they will blow up in your face. That is what happened once previously. Nobody knew of a man called Mr. Ward at Grunwick Processing and what blew up in the face of a previous scheme. Therefore, this amendment goes only so far as to suggest that method in this schedule imports a duty with a view

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  to the parties conducting collective bargaining with a view to reaching agreement on matters falling within the meaning of collective bargaining in the relevant part. The final two words are somewhat circuitous because collective bargaining may mean different things in different parts.
  I do not want to go further into the question of what it will mean in Part II. Perhaps the Committee will allow the words to stay there until we see more. In my view, Amendment No. 227 is of the greatest importance because it tries to give a shape and a protection to the CAC in regard to a concept which is central to the execution of its duty. I beg to move.
  Lord McIntosh of Haringey: I want to give a substantive answer to the amendment itself. However, before 1 do that, I have to respond to what my noble friend said about method and about the question of whether a legally binding method contains a mechanism for resolving disputes.
  Perhaps I may start with the issue of imposed method. We have said that we will consult ACAS about this, but what we have in mind is a simple method for the parties to meet to carry out collective bargaining about pay, hours and holidays. The method is likely to set out the frequency of regular meetings, how additional meetings cart be triggered, who will take part in normal meetings, and what further and higher level meetings can be triggered in the event of a failure to agree. The objective of the method is to get the parties talking to each other and to give them the incentive and opportunity to negotiate a procedure agreement which better suits their particular circumstances. This could involve changing the scope of collective bargaining—for example, by adding or possibly dropping matters as well as by changing the mechanics of bargaining. I know it is true that there is no definition of method on the face of the Bill but I hope that my noble friend w:11 find that helpful as a description of what we mean by method.
  My noble friend asked whether the legally binding method will contain a mechanism for resolving disputes; for example, about unilateral access to arbitration. We do not intend the model to provide for arbitration or other third party intervention, though it will of course be open to the parties to amend the method and agree this if they want to. The duty on the parties will be simply to meet and to talk. We recognise, as my noble friend recognises, that they cannot be forced to agree.
  I turn to the amendment itself. I know that my noble friend feels strongly about the matter. I can assure him that the Government reflected long and hard on the policy in this area. There are two principles underlying our thinking. First, we want statutory recognition to be as far as possible equivalent in its effects to voluntary recognition. Otherwise there would be an incentive for one party to prefer statutory recognition when everyone is agreed that voluntary agreements are the best solution. So it is important that statutory recognition should deliver no more and no less than voluntary recognition. Voluntary recognition does not guarantee that there will be an agreement at the end of bargaining; nor does statutory recognition. Voluntary recognition does not provide an automatic route to arbitration; nor does
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  statutory recognition. Voluntary recognition does not contain an obligation to bargain in good faith or with a view to reaching agreement; nor does statutory recognition. That is deliberate and it is balanced.
  Secondly, we wanted as far as possible to promote dialogue and avoid confrontation. That is why the ultimate sanction is for the parties to 1De forced to talk to each other. We cannot force them to agree and it would be wrong to impose some third party as arbitrator. There might be a way of dealing with short-term disputes but that does nothing to promote long-term partnership and dialogue. My noble friend suggests importing a duty to bargain with a view to reaching an agreement, a concept that he borrowed.
  Lord Wedderburn of Charlton: With great respect to my noble friend, one should look at the wording of the amendment,
  "To conduct collective bargaining with a view to reaching an agreement".
  That is not the same thing as a duty to bargain.
  Lord McIntosh of Haringey: I accept that correction, but my noble friend acknowledged that this concept was derived from European law. I know that he has sometimes argued against picking a concept from one legal system and importing it into another. I also know that we already have this concept through the European directive on collective dismissals—what: he calls collective redundancy. He referred to TUPE. We shall shortly have to implement something similar in the context of European works councils.
  The Government are uneasy about the situation. We are afraid that introducing the concept in the circumstances of an imposed legally binding procedure is fraught with danger. Such a duty is almost an invitation for each side to claim that the other is not bargaining in good faith. It is likely to lead to difficult, counter-productive court cases. What is the court to say, for example, to an employer who says: "This is my best offer; I cannot afford any more"? Will the court crawl all over his books to decide whether or not he is telling the truth? Even if he is telling the truth, is he bargaining "with a view to reaching an agreement"?
  I accept what my noble friend says and I will not attempt to argue with what will appear in Hansard. The Government examined this approach very carefully arid decided that it was unlikely to work well. You cannot force people to bring goodwill to the negotiating table, but you can oblige them to turn up for negotiations. The procedural alternative that we have proposed, whereby the matters to be subject to negotiation and the mechanics of that negotiation are specified in the imposed method, is simpler, easier to verify and less likely to lead to damaging and pointless disputes. I hope that my noble friend will feel able to withdraw his amendment.
  Lord McCarthy: The noble Lord has given us a great deal to think about and we shall reconsider our attempt to put some precision into this term, but I also emphasise that he too should think about it.

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  The Government introduced the word "method" when they removed the phrase "default procedure agreement". I take it that that phrase which, God knows, is relatively clear and straightforward, was taken out because it does not take you anywhere. While you call the ultimate sanction a default procedure agreement, it becomes obvious that there does not have to be an agreement, as the noble Lord stated. You set up the procedure and get the parties together, but there does not have to be an agreement. So, rather than leave that on the face of the Bill, we then saw the word "method". This is the most bizarre word to use. In the Oxford Dictionary there are many definitions of the word "method" and none of them helps us. They are: a mode of investigation, a systematic treatment for a disease; an orderly arrangement of ideas and topics; a procedure for obtaining an objective. That is not what we are talking about. We are still waiting for the definition of the word "method", which is not merely a repetition of the phrase "default procedure agreement".
  The noble Lord made some extremely interesting comparisons between the voluntary recognition situation and the compulsory recognition situation. However, there is a fundamental difference. With voluntary recognition you must assume that the parties want to reach an agreement; otherwise, if the employer did not want to reach an agreement, they would de-recognise; they would not deal with the union; they would not talk; they would not be there. The very fact that they continue to recognise the union and the union continues to turn up means that we can assume that in voluntary recognition there is a desire to reach agreement.
  If we are to add nothing more than a default procedure agreement as the ultimate sanction, and if we continue to rule out any recourse to a third party decision, what is the ultimate sanction when a final decision has to be taken as to what "method" means? Either we shall not decide, and we shall not say, or the courts will decide. That cannot be what the Minister wants.
  Lord Wedderburn of Charlton: I hope that we can return to the nub of this amendment on Report. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  10.45 p.m.
  Lord McCarthy Lord McCarthy moved Amendment No. 228:
  Page 57, line 7, at end insert—
  ("(1A) Where the parties fail to reach agreement on any outstanding issues between them at any stage of procedures set out in this Schedule, the CAC may decide, after hearing the views of the parties, that these issues should be submitted to an independent arbitrator nominated by the CAC after consultation with ACAS.
  (1B) Where an arbitrator is nominated by the CAC under sub-paragraph (IA), he shall hear the parties on the issues in dispute between them and make a declaration on the issues and, if he sees fit, make a substantive award.
  (1C) The substantive award of an arbitrator under sub-paragraph (1B) may state the terms and conditions of employment and, if so, those terms and conditions take effect as terms of the employment contracts between the relevant employees and any employer who is a party in the dispute; and those terms and conditions (or terms and
  1278
  conditions no less favourable) shall he amended only by a subsequent award, or by incorporation into the terms of the employment contracts of the relevant terms of a collective agreement between the employer and the relevant union.")
  The noble Lord said: This amendment is an attempt to provide something concrete, something that goes beyond the default procedure agreement.
  Those with long memories will appreciate that this is an attempt to recreate in modern terms, as it were, the procedure of Section 11 of the 1975 Employment Protection Act. We are told that this compulsory arbitration device did not work last time, so why do we want it now? The answer is that it did work to some degree, as the noble Baroness said, and I shall come to that. But if we put together the admirable parts of this Bill, in which measures are being taken to prevent the procrastination of employers in terms of access, with the use of the compulsory procedure, plus an ultimate recourse to a Section 11 device, there is a mixture that did not exist previously. But it requires us to realise what happened last time.
  It is true that the existence of the Section 11 procedure did not work previously, in that there remained a hard core of employers who would not recognise the union. When they went to the CAC and were given an award in terms of wages and conditions, they paid that substantive award. None refused to pay. so we did not have to enforce it through the courts. But they did not recognise it. The assumption had been that everyone, when faced with a substantive award rather than recognition, would say: "I do not want constantly to be taken to arbitration in this way". It is a fact that a minority of hard-line employers paid the award and did not recognise.
  But it is also the case that many employers—and there is a great deal of research to this effect—when asked why they recognised the union, and why they did not want to go to the CAC—and we investigated the fact that we had during that period the biggest rate of increase in union membership since the war—said that they did not want to face the alternative of compulsory arbitration.
  It may well be that the existence of the Section 11 procedure provides a measure of coercion on the great majority of reluctant employers. But it does not provide the ultimate coercion on the small number of tough employers who would rather pay than recognise. Nevertheless, it is one additional pressure. In the absence of any provision of this kind, we fear that the Government will find that they cannot define what "method" means, and the courts will have to tell them. I beg to move.
  Baroness Miller of Hendon: I believe that this amendment says that if employers and employees do not agree during the CAC process, the matter should be referred to arbitration—the CAC in consultation with ACAS. Why? Resolving such matters is exactly why the CAC is there. Also, the amendment proposes that the arbitrator should have the right to make substantive

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  awards; for example, decisions on terms and conditions of employment. Again, I ask why. Surely that is the CAC's job.
  Lord McCarthy: Did the noble Baroness ask why the matter did not go to ACAS rather than the CAC?
  Baroness Miller of Hendon: Is not the point of the amendment that if employers and employees do not agree during the CAC process, the matter should then be referred to arbitration by the CAC in consultation with ACAS? I simply ask why. I thought that the CAC was to resolve these matters.
  Lord McCarthy: One must make a distinction between the procedures and substantive terms and conditions. This time the CAC cannot make an award on substantive terms and conditions. It cannot give more money. It cannot shorten the hours. In effect, it cannot impose any sanction on the employer. All it can do is ask for specific performance on a procedure. There is no substantive remedy. We are saying that there should be one. A substantive remedy is that the CAC brings in a form of compulsory arbitration. We cannot take that to ACAS because it does not want to be involved in compulsory recognition. It considers that voluntary negotiation, conciliation and mediation is its business and does not want to become involved directly in compulsory recognition. If we are to have compulsory arbitration it has to be outside ACAS. It cannot be within the CAC because it has conducted the investigation. The people who investigate and declare cannot make a substantive award. So there has to be someone else.
  We are saying that the CAC should have a panel of arbitrators and one, two or three of them could take on the task.
  Baroness Miller of Hendon: I do not know whether I am particularly thick or, because it is late at night, I am particularly tired. I thought that this Bill was based on Fairness at Work and even-handedness between the employers on the one hand and the employees on the other. I thought that when an arrangement was set in place and the CAC was going to deal with it, that was it. Now other things are to be put in and if they do not work there can be extra compensation or what have you. I did not believe that was the intention of the Bill. But as I said, perhaps I am just thick.
  Lord McIntosh of Haringey: The last exchange reminds me of the Marx brothers in, I believe, "Duck Soup". Margaret Dumont lost some of her jewellery. They searched the house and Groucho said that it was not in there so it must be in the house next door. There was not a house next door so they had to build one in order to search that as well. That seems to be the argument which my noble friend Lord McCarthy is using about the need for a further arbitrator since the CAC and ACAS cannot do the job that he wants done.
  He spoke about last time and the Employment Protection Act 1975. We do not want to go back to that or the provisions of Section 11 of that Act. Under it,
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  using an approach which amounts in effect to arbitration, a settlement imposed under the threat that a person or body—in this case appointed by the CAC rather than the CAC itself—will make an award of new terms and conditions to be incorporated into individual worker's contracts if the employer does not keep to the settlement.
  We looked again many times at the 1975 Act but, as we made quite clear in the White Paper and since, we believe that time has moved on. The number and severity of industrial disputes has declined dramatically since the 1970s.' Members of the Committee opposite can gloat as much as they want about. that. I am quite relaxed. Employers, workers or their representatives have on the whole learned to resolve their disputes without prolonged industrial action and indeed without such action at all in most cases.
  The Bill is aimed more at promoting partnership than resolving disputes. Moreover, there are problems with the arbitration approach. At a time when inflation and the level of disputes were both high, compulsory arbitration had some attraction. Most disputes were about pay increases and could be settled by an arbitrator splitting the difference. But the world has changed. We are now in a prolonged period of low inflation. There is widespread use of performance pay. and industrial disputes are at their lowest level for over a hundred years. These days disputes are more likely to be about work organisation than basic conditions. Few employers will enter into a dispute unless they see the issue as very important for their business and arbitration is less attractive in these circumstances. Far more effective is the approach promoted with some success by ACAS of joint problem solving. That requires the willing consent of both parties and joint recognition of the large degree of common interest which both employer and employees have in the long-term success of the business.
  The Bill is in part about signals and encouragement of a new partnership approach. For that reason I must say to my noble friend that the Government do not consider arbitration in the way suggested by him to be a necessary or appropriate element in the scheme for recognition. I hope that my noble friend will not pursue his amendment.
  Lord McCarthy: I shall not pursue my amendment. My noble friend has made some very original and stimulating comments tonight but he cannot do so in relation to this amendment. We all know it has been laid down at the very highest level that there can be no movement on this matter. My noble friend said that the amendment reminded him of the Marx brothers. His observation reminded me of the Red Queen who said:
  "What I tell you three times is true."
  Lord McIntosh of Haringey: It was the Bellman in The Hunting of the Snark who said that.
  Lord McCarthy: It is not true in either case, is it? I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 229:
  Page 57, line 13, at end insert—
  ("Notice of declarations
  127A.—(1) If the CAC issues a declaration under this Schedule it must notify the parties of the declaration and its contents.
  (2) The reference here to the parties is to—

  (a) the union (or unions) concerned and the employer concerned, and

  (b) if the declaration is issued in consequence of an application by a worker or workers, the worker or workers making it.")

  On Question, amendment agreed to.
  [Amendment No. 230 not moved.]
  Schedule 1, as amended, agreed to.
  Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 231:
  Before Clause 2, insert the following new clause—
  PROTECTION OF ACTION PENDING RECOGNITION FOR COLLECTIVE BARGAINING
  (".—(1) The Trade Union and Labour Relations (Consolidation) Act 1992 shall be amended as follows.
  (2) After section 225 insert—
  "Action pending recognition for collective bargaining.
  225A. An act is not protected if the reason, or one of the reasons, for which it is done is that an employer has refused to recognise, to any extent, a trade union for the purpose of collective bargaining and—

  (a) the procedure laid down in Part I of Schedule AI has not yet been exhausted: or

  (b) the procedure laid down in Part I of Schedule A 1 has been exhausted and the union has failed to qualify for recognition."").

  The noble Baroness said: I am in some confusion as to the siting of the amendment. When I tabled it I believed that it should fall somewhere in the middle of Schedule 3, but I am sure that the Public Bill Office knows better than I do. For that reason we find this amendment before Clause 2.
  The Trade Union and Labour Regulations Consolidation Act 1992 provides for the protection of unions and their members from legal—I stress "legal"—action taken in furtherance of a trade dispute. Clearly, there can be no objection to that; indeed, the Act was itself produced by the former government. A strike becomes legal if a proper ballot is taken of the workers, appropriate notice is given, and so on, and the proper procedures are followed. This amendment removes protection from two courses of action: first, if the workers and the union seek recognition under the terms of this Bill and, although the employer refuses to agree to such recognition voluntarily, the machinery laid down in the Bill is still being conducted by the CAC; and, secondly, if the machinery laid down by the Bill has been employed and the CAC has decided that the union's case for recognition has not been made out. In other words, in the first case the matter is still sub judice, and in the second case the matter has been decided but the union has failed in its representations.
  The Bill gives extensive rights to employees and unions to enforce recognition against unwilling employers. If the case is made out the employer is bound to accept recognition whether or not he is willing. The amendment prevents a union or its members from jumping the gun by pre-empting the decision of the CAC and calling a strike or engaging in some other industrial action while the matter is still under consideration by the CAC. It also removes the protection from action taken after a decision has been reached by the CAC and the union has lost; in other words, it prohibits an attempted second bite at the cherry by using force where the conciliation machinery laid down by the Bill has already been employed. The Bill will give unions a lot of rights that they do not have at present. The reciprocal act required for those rights must be that unions and their members accept that a referee's decision is final.
  11 p.m.
  Lord McIntosh of Haringey: The amendment would prevent any form of industrial action in support of a claim for recognition. I hear the argument that it is a quid pro quo for the existence of a statutory procedure but I am not sufficiently convinced to accept the amendment.
  The right of unions to call industrial action is already heavily circumscribed. We do not propose to limit it further. If we did, we would be breaching our International Labour Organisation commitments, which the Government take very seriously. The statutory recognition procedure in Schedule 1 will provide a better, more predictable way of resolving disputes than strikes. Industrial action over recognition should become extremely rare or disappear altogether. However, it would be unfair and unjustified to restrict a union's right to take industrial action in support of recognition.
  The amendment is in danger of limiting the ability of unions to take industrial action in respect of causes entirely unrelated to recognition. If a union were to take industrial action on an unrelated matter after a failed application for recognition, an unscrupulous employer might claim that a reason for the dispute was that the employer had failed to recognise the union. That could deter a union from taking otherwise fully justified industrial action. That would be wrong.
  There are drafting difficulties with the amendment, which refers to the recognition procedure that has "not yet been exhausted". It is not clear whether that is intended to include the case where no application has been made. If not, it is unclear. If so, the effect of the amendment would be to ban all industrial action in support of a recognition claim. The amendment makes no reference either to industrial action in support of a claim for derecognition under Part VI, which renders its scope somewhat defective.
  I do not think that the amendment is necessary or proportionate to the end effect that it seeks, and I do not believe that its drafting is satisfactory. I ask the noble Baroness to withdraw the amendment.
  Lord Cavendish of Furness: Before the Minister sits down, my noble friend said that she tabled the

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  amendment to provide protection for an employer against unions jumping the gun. The noble Lord does not think that the amendment is necessary. Can he say that is because the employer does have protection? I would like clarification.
  Lord McIntosh of Haringey: There are two separate sections of the law. One is the law on industrial action. The amendment is about industrial action, which is why the Public Bill Office advised the noble Baroness to table it within Section 1. The other area is statutory recognition. We shall deal with industrial action as a separate issue in the Bill. We have a whole section on that subject, including Schedule 5. It is better not to introduce, as the amendment appears to do, a restriction on industrial action as part of the process of recognition and collective bargaining.
  Baroness Miller of Hendon: I shall seek to withdraw the amendment but I will think about it again. My noble friend Lord Cavendish repeated my comment about jumping the gun. The Minister referred to two separate sections of the law. While the CAC is considering the whole matter, is it appropriate for a strike to take place during that period of consultation?
  Lord McIntosh of Haringey: There could be reasons for taking industrial action which have nothing to do with the recognition procedures. It could not be the case that while extensive negotiation about collective bargaining and recognition is taking place the workforce should be debarred from taking industrial action. There is a whole series of reasons why industrial action might be necessary as a last resort.
  Baroness Miller of Hendon: As I said, I shall withdraw the amendment, but I am left with enormous anxiety. If an unwilling employer running a small business is in the middle of the process that has been triggered and suddenly a strike is called, that will not make for a good partnership, conciliation or willingness to work together. It is a most unfortunate situation. However, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 2 agreed to.
  Schedule 2 [Union Membership: Detriment]:
  Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 232:
  Page 58, leave out lines 32 to 45 and insert—
  ("(4) Subsections (3), (4) and (5) shall cease to have effect.")
  The noble Lord said: As previously, we aim to help the Government. I was delighted to hear the Minister's fine statement that we aim here and elsewhere to maintain our observance of International Labour Organisation conventions. Although it is late at night, and since we are all citing our favourite films, I remind the Committee of Bette Davis saying, "Hold on to your seat belts, it's going to be a bumpy ride!". There is a lot left to deal with, not least the amendment we are now moving.
  The nub of the issue is that we want to do what we believe the Minister wants to do—although at the moment I am not sure what he wants to do—which is to get rid of what have sometimes been called the Ullswater amendments. I refer to the subsections in Section 148 of the 1992 Act which were inserted in 1993.
  The Ullswater amendments, in social fact, were the beginnings of a most violent and abusive introduction of derecognition in the ports and the newspaper industry. It is an important area of social life to which the Bill addresses itself. In our view, it is most important to get rid of the Ullswater amendments fully and completely as they were introduced in 1993. Let me explain why.
  In the two cases—Wilson in respect of the newspapers and Palmer in the case of the docks—the employers instituted a system of favours for those who did not want to obtain benefit from collective bargaining. Lord Justice Dillon always spoke of these advantaged as douceurs. He did not go to Latin, but he got half way. Curiously enough, we have a good word for what was happening; namely, "sweeteners". There were sweeteners for those who stuck by the employer who wanted to get rid of collective bargaining.
  The immediate problem was that Section 146 of the Act makes it a wrong for the employer to penalise or in any way deter membership or the activities of an independent trade union on the part of employees. Those are not the full words, but it is the nub of the matter. The Court of Appeal took the view that it was bang in the centre of the section; that it was a system introduced by employers who were discriminating against those who were sticking by the union. Some Members of the Committee will remember that the noble Baroness, Lady Dean, said that the tactic was to let the union and collective bargaining wither on the vine. It was a good description of what was being done.
  The Court of Appeal having said that, and before the judgments of the Court of Appeal were in print, on behalf of the Government the noble Viscount, Lord Ullswater, introduced, within five days, three new subsections. Subsections (4) and (5) are simply supports for subsection (3) and I take it that the Government will agree with that. Subsection (3) of Section 148, as it became, said that, where the evidence in the case showed that the employer was discriminating against the worker, and where there was evidence also that the employer intended to further a change in his relationship with his workers or any part of them, the first evidence should be cast aside and the second evidence should be taken, whatever the balance in the court room, as dominant to the case.
  The assessment of the real evidence, if I may put it that way, was struck down and many authors wrote about how difficult it would be to show that the Ullswater balance between the employer giving evidence that he was changing the relationship with his workers on the one hand and that he was discriminating against the employee on union grounds on the other hand, must always come out on behalf of the employer.
  So far, I think that the Government are with the amendment, although I submit that, having got this far, it is beginning to look as though subsections 1.3), (4) and
  (5) of Section 148 of the 1992 Act should simply be dispensed with. I suspect that the Government did not do that in paragraph 4(4) of Schedule 2 because they wanted to keep in something about reasonable employers. The Ullswater doctrine gave the new formula a minor dent by saying that, if there was no possibility of an employer being reasonable in what he was doing, it would not apply. The Government have done something similar, which they have set out on page 58 of the Bill. The Government have added a proviso that occurs when the employer has, as stated in paragraph 4(4)(b):
  "acted or failed to act, unless it considers that no reasonable employer would act or fail to act in the way concerned".
  I should have said that another aspect of the legal doctrines involved is fully dealt with by the Government's amendment. That is to say, the House of Lords went on to find, in Judicial Committee, that what the employers had done with their douceurs, as it were, was simply an omission in not paying them to the discriminated workers. The Government have got rid of that by speaking of acting or deliberately failing to act. I congratulate them on that brief way round the point. That deals with the point and repeals the point.
  However, there is the proviso. There is a problem about giving an exit for the reasonable employer in practice compared with what the formula appears to say on the face of the Bill, or indeed in the judgment. It arises in the cases of unfair dismissal where the employer is trying to show that he acted reasonably and very often he succeeds. However, in cases like Iceland Frozen Food v. Jones, 1983, the courts said:
  "there is a band of reasonable responses to the employee's conduct within which one employer might reasonably take one view, and another might reasonably take another".
  That formula has, especially in the writings of commentators, been shown very clearly to get rid of any substantive notion of reasonableness in the operation of such parts of the law. Professor Collins, in his book Justice in Dismissal, spent some time showing conclusively that it is an undesirable formula as it stands.
  In my submission, it would also be part of the Government's proviso as set out on line 36 of page 58. It is inevitable that, where the employer is asked to balance the change of relations with the workers on the one side, and his action discriminating against an employee for trade union reasons on the other, he may well say—if I were briefed for him I would expect to win—that the context is a set of changes in the workforce (the Minister talked about the new situation at workforce level) in relation to himself in the course of which he happened to discriminate against an employee on trade union grounds.
  Amendment No. 232 does not include that proviso because we do not believe it to be right that the only way in which an employer can discriminate on trade union grounds and get away with it is by saying he is changing his relationship with the workforce. If he were to show that there was some economic or social reason, or reasonable consultation for the change, that might be a different matter; though I would resist it. However, to
  1286
  give the proviso in sub-paragraph 4(b) on page 58 is to give the employer a way round the defence against discrimination of the workforce, and discrimination on trade union grounds in respect of the employee, all without the "do serve" which Mr. Justice Dillon found in previous practice.
  In other words, the Government should look at paragraph 4(4)(b) on page 58 with a view to satisfying themselves that the proviso would take away a great deal of the repeal of the Ullswater amendments. If we are going to repeal the Ullswater amendments, let us do so. That is what our amendment seeks to do. Let us not play around with the notion of reasonable employers. I mentioned the book of Professor Collins not merely to increase his royalties, but also to suggest that if one wants to find a place where this line of case law is set up, there it is. It must be answered in terms of what has happened in tribunals and appellate courts. Therefore we hope that the Government will consider the straightforward wholesale cut of the Ullswater amendments, which were bad enough in themselves. I beg to move.
  11.15p.m.
  Lord McIntosh of Haringey: The right to belong to a trade union is separate from any rights to collective bargaining. They are related but they are distinct. The existing law makes that distinction and we wish to preserve it.
  Clause 2 and Schedule 2 relate to an individual's right to belong or not to belong to a trade union and the right to participate in union activities; they do not relate to any entitlement for an individual to have his or her terms and conditions determined by a collective agreement negotiated by a union. Those rights are covered elsewhere in this Bill, most notably in Clause 1 and Schedule 1, and in Clause 15 to which we will come later.
  My noble friend's amendment is aimed at paragraph 4 of Schedule 2 which amends the wording of Section 148 of the Trade Union and Labour Relations Consolidation Act 1992. As he makes clear, the amendment is aimed at what are now subsections (3) to (5) of Section 148; in other words, the Ullswater amendment. Those subsections specify that where an employer seeks to change his bargaining arrangements, his purpose shall be taken to be to effect such a change, and not to deter union membership unless his action is such that no reasonable employer would have taken it for that purpose. In other words, any reasonable act by an employer to change his bargaining arrangements is not discriminatory against trade union members.
  The Ullswater amendment was introduced under controversial circumstances at a late stage in the passage of the Trade Union Reform and Employment Rights Act 1993. It was intended to reverse an aspect of the Court of Appeal's judgment in the Wilson and Palmer cases. In the event, the Judicial Committee of this House subsequently overturned the judgment of the Court of Appeal. Nevertheless, the amendment clarified the law. To accept this amendment and thereby repeal the latter would reintroduce uncertainty.

  1287
  I acknowledge that, when in opposition, the Labour Party objected both to the content of the Ullswater amendment and to the manner in which the previous government introduced it. In the climate of those times it was seen as yet another anti-union measure, rushed through in the light of a Court of Appeal judgment which was subsequently overturned. But the context has now changed. First, the House of Lords judgment has confirmed that there is a real distinction between trade union membership and collective bargaining. Indeed, we have spent the whole of today debating collective bargaining.
  Secondly, Section 148(3) needs to be seen in the context of government proposals on recognition and our objectives to avoid the fragmentation of bargaining. Thirdly, under Clause 15 we propose to give employees protection against pressure to give up the terms of collective agreements.
  I can assure my noble friend that the Government have looked very carefully at Section 148(3) and have concluded that it serves a useful purpose in this new context and ought to be retained. It helps to make clear the important distinction between rights for trade union membership on the one hand, and, on the other, our proposed rights to collective bargaining, which the Committee has now agreed.
  Repeal would raise doubts as to the intended purpose and effect of changing the law. We wish to avoid any such confusion. There will continue to be circumstances in which employers seek, quite legitimately, to change their bargaining arrangements; for example, following voluntary or statutory derecognition or where the bargaining unit has changed. The law must allow them to do so.
  As has been made clear on the record both here and in another place, the Government have recognised that some employers might put pressure on employees to accept individual contracts. The inclusion in the Bill (in Clause 15) of protection for employees from being forced to sign contracts with terms that differ from applicable collective agreements will deal with this situation.
  We have entered a new era of industrial relations. In the light of these explanations and the new context created by the Bill, I hope that my noble friend will not press his amendment.
  Lord Wedderburn of Charlton: I hear what my noble friend the Minister says. However, I hope that he will give a reason on Report as to why the whole of subsection (3) of Ullswater ought to be retained. We should have one reason why we ought to retain a law which says, "You've been discriminated against, Smith, because you are a trade union member. But it is all very sad. You would have a remedy but your employer has decided to change the relationships of the workforce. So the discrimination against you is at an end, legally". What kind of law and justice is that? Do we go to the trade unions and say, "Yes, you are going to get a big right: of recognition, although we don't know what some of it means. But you will not get any rights in terms of discrimination on trade union membership or activities
  1288
  because the employers might change the nature of the relationship with the workforce". It is absurd. Every word we said about the Ullswater amendment was absolutely correct. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Schedule 2 agreed to.
  Clause 3 [Blacklists]:
  Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 232A:
  Page 1, line 19, after ("compilation") insert ("and misuse")
  The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 232B, 232C and 232D. They all relate to the provisions enabling the Secretary of State to prohibit blacklists. This is a concept which the Opposition wholly support. 1 regret to say, however, that the drafting of the clause leaves something to be desired—this is not the first time I have said that—in a number of respects. My first four amendments in this group seek to address that.
  Amendment No. 232A qualifies the prohibition against compiling lists of trade union members or activists—I beg pardon of the noble Lord. Lord McIntosh, for using the word "activist" again—when the lists are to be used by employers or recruitment agencies. The compilation of a list of such persons cannot itself be improper or even undesirable. Indeed paragraph 9(3)(b) of Schedule 3 postulates that lists of members may be used. It is that use in connection with the employment of an individual that the Bill seeks to prohibit. However, it is not even that use which should be prohibited. It is—as the amendment provides—the improper use of such a list that should be prohibited.
  What might be a proper use as distinct from an improper use? I give a single, simple example. An employer who has entered into a single union agreement would need to maintain such a list and the union would need to keep the employer updated as to its membership. As the Bill is drafted, the Secretary of State may make regulations leaving both the employer and the union liable to sanctions. If there are to be criminal sanctions they should be imposed for doing something improper, not for doing something that might have a perfectly innocuous purpose, however outlandish it may seem. Clearly the onus of justifying the production of the list will rest on the compiler.
  Amendment No. 232B qualifies the word "activities". The amendment requires the activities to be lawful activities. What can be improper about making a list of those who have flouted the law by calling or taking part in an unlawful strike, illegal picketing, violence or sabotage, even if they did so in purported furtherance of a dispute? As an aside, the wording of this paragraph seems to be particularly loose. Suppose a list is made of paedophiles who happen to be members of one of the teaching unions. That surely would be perfectly proper. But, as they would be members of a union, that seems to be prohibited. Perhaps the Minister will consider tightening this up before the next stage and before one of these people tries to get his or her name off such a list.
  Amendment No. 232C again seeks to clarify a provision. Obviously the Government are trying to prevent a list being used against a potential employee on the grounds that he is a trade union member. There is no reason why the Government should have been so coy about saying what they mean. Therefore I have done it for them. Amendment No. 232D seeks further clarification. It states that any list properly prepared and used in accordance with these amendments shall not be used for the purposes of positive or negative discrimination—that is, for preventing trade union members from being employed, or for ensuring that only union members are not employed. It would not inhibit the use of a list in the case of a single union shop because non-union members or members of other unions might still be employed so long as they accepted that their own union would not represent them. I hope the Government will accept that these small amendments improve and reinforce the Bill.
  I realise that the noble Lord, Lord Simon, has an amendment in his name—which the noble Lord, Lord McIntosh, will no doubt address—to which I have an amendment (No. 235A). Every time I have tabled an amendment to the amendments of noble Lords opposite, although I was supposed to speak to my amendment first, that never happened. Is not Amendment No. 234A an amendment to Amendment No. 234, or have I got in a total muddle with this?
  Lord McIntosh of Haringey: Amendments Nos. 234A and 234B are amendments to Amendment No. 234. In view of the agreement that has been reached, we shall not reach those amendments tonight. Amendment No. 235A is in the group we are discussing.
  Baroness Miller of Hendon: I shall not be speaking to that at this stage.
  Lord McIntosh of Haringey: In view of the agreement that has been reached through the usual channels, we should truncate the group of amendments. We should deal with Amendments Nos. 232A, B, C and D, which have been spoken to by the noble Baroness, Lady Miller, and with my Amendment No. 233, which is part of the same group. It would be realistic to move Amendments Nos. 235 and 235A after Amendment No. 234 on the next day in Committee.
  All of the amendments concern the Bill's blacklisting provisions. Clause 3 gives the Secretary of State the power to introduce regulations to prohibit the blacklisting of trade union members and activists. The Delegated Powers and Deregulation Committee has made a number of observations about this clause and the powers that it gives to the Secretary of State. My Amendments Nos. 233 and 235 respond to the committee's concerns. They provide some further detail on the extent of the regulation-making powers which the clause confers on the Secretary of State.
  Amendment No. 233 deals with an ambiguity in our original proposals. As currently worded, the clause provides powers for the introduction of regulations to prohibit the compilation and use of blacklists. The term
  1290
  "use" is probably inadequate to describe everyone who might handle the blacklists after they had been compiled. It would certainly cover the end users of the lists; that is, employers who use the lists for recruitment purposes. However, it would probably not cover organisations or individuals who act as middlemen, actively disseminating the lists provided by the compilers among employers.
  Blacklisting is an activity where middlemen might flourish. In fact, they could be the main actors in the process, encouraging others to compile lists for them, which they then sell on to employers or employer organisations. Potentially, employer organisations could themselves act as middlemen, disseminating the information among their member companies. The amendment ensures that such middlemen are caught by the prohibition. In the regulations we will obviously ensure that the Royal Mail and other mailing companies that unknowingly distribute the lists as part of their normal business are not caught by any prohibition.
  Perhaps I may now turn to the amendments brought forward by the noble Baroness. Amendment No. 232A seeks to give the Secretary of State the power to introduce regulations which prohibit the misuse of blacklists, as well as their compilation. I cannot see what this would usefully add to the clause. The noble Baroness should note that subsection (2) of the clause gives the Secretary of State the power to introduce regulations which prohibit the use of blacklists. In defining prohibited uses, the Secretary of State is in effect simultaneously defining how lists can be misused; he cannot avoid it. The effect of the amendment is therefore embedded in the wording of the clause.
  It might be that the noble Baroness thinks that the clause should indicate in some way that there might be permissible uses of union lists. That too is unnecessary. There is nothing in the clause which prevents the Government from exempting certain lists or certain uses of lists from any prohibition. For example, it would seem inappropriate to stop unions from using lists of prominent trade unionists when trying to appoint one of them to a senior trade union position. Amendment No. 232A is unnecessary.
  The purpose of Amendment No. 232B is to ensure that lists cannot be prohibited if the trade unionists on those lists had ever engaged in unlawful union activities. This seems to create a whole new area of uncertainty into the protection we are creating. It would create a smoke screen behind which blacklisters would continue to persecute ordinary trade unionists. It would be easy for a blacklisting organisation to allege that individuals had been involved in some kind of unlawful activity at some point during their union careers. Union law is exceedingly complex. It is very easy for individuals unintentionally to breach the law in some small way. Any breach of the law, however insignificant and however long ago it was committed, could be used by a blacklisting organisation to justify its work. At the very least the amendment would cause complications at the enforcement stage. Tribunals and courts would be asked to judge if individuals had ever engaged in any unlawful behaviour. There is plenty of scope there for arguments and expensive disputation about the facts.

  1291
  We all agree that blacklisting should end finally and completely. This amendment would thoroughly undermine the clause. It would provide a lifeline for blacklisters and complicate the enforcement of any prohibition. I am sure that the noble Baroness does not want to achieve that and I would ask her to think again about the amendment.
  Amendment No. 232C deals with the use of blacklists by employers and employment agencies. The clause states that the employers' purpose should be related to recruitment. That is the main purpose for which blacklists have been used in the past. Of course, employers could potentially use lists for other purposes. For example, they might be used to select existing employees for redundancy or dismissal. We are therefore considering whether Clause 3(1)(b) is correctly worded to cover all possible abuse, and we may come back to it, with amendments, at Report.
  Amendment No. 232C qualifies the purpose by stating that the list should be used by employers or employment agencies in restricting or preventing recruitment. I cannot see the case for introducing a wording of that sort. It is very difficult to see how the lists could otherwise be used to inform recruitment decisions. Why should an employer purchase a list if he was not interested in using the names on the list to help determine his selection of possible candidates?
  Amendment No. 232D is closely connected with Amendment No. 232C. It tries to ensure that regulations could be introduced to prohibit the compilation of lists which benefit those trade unionists who appear on them. I do not know what experience the noble Baroness draws on to justify the amendment. Is she concerned that this is a widespread practice? It may be that she feels that the Economic League and similar blacklisting organisations are really fairy godmothers in disguise, working for the benefit of their listed trade unionists. This is not a significant issue. I do not think there is any need to highlight the matter in primary legislation.
  The current wording of the clause permits us to introduce regulations to prohibit the compilation and use of lists which contain the names of trade unionists. The regulation will focus on the use of such lists which work to the detriment of named individuals. That is where the problem exists; that is what the regulations should
  1292
  address. This amendment is also unnecessary. It identifies or seeks to identify a solution to a problem which does not exist in the real world.
  I ask the noble Baroness to withdraw Amendment No. 232A and not to move Amendments Nos. 232B to 232D, and I ask the Committee to agree to Amendment No. 233.
  Baroness Miller of Hendon: I shall seek to withdraw Amendment No. 232A, as the Minister has requested, and I will not move the rest of my amendments in this group. I am glad that debate on the other amendments has been postponed. However, I do not think the Minister answered one of my points. Let us suppose that a list was made of paedophiles who happened to be members of a teachers' union. I imagine that making a list of paedophiles would be perfectly proper. But if they had been members of a union, it seems that it would be prohibited by the provision. That is the point I was making.
  Lord McIntosh of Haringey: No, the case made by the noble Baroness is covered by other legislation. It would not be overridden by trade union legislation.
  Baroness Miller of Hendon Baroness Miller of Hendon: I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 232B to 232D not moved.]
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 233:
  Page 2. line 4, at end insert (";
  (b) the sale or supply of lists to which subsection (1) applies.")
  The noble Lord said: I have already spoken to this amendment. I beg to move.
  On Question, amendment agreed to
  Lord McIntosh of Haringey: I beg to move that the House do now resume.
  Moved accordingly, and, on Question, Motion agreed to.
  House resumed.
  House adjourned at twenty-one minutes before midnight.

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