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31 Jan 2001 : Column 90WH

Employee Rights

11 am

Mr. Tony Lloyd (Manchester, Central): Just before Christmas, as we approached the 21st century, Vauxhall workers woke up to hear on the radio that their jobs and way of life were threatened with destruction. Most of us outside the Vauxhall work force considered that an outrage, but those who worked there were entitled to go further and speak of devastation for their families, and of how such things should not happen in a civilised country that claims to have the rule of law and acceptable minimum labour standards.

I pay tribute to my hon. Friends the Members for Luton, North (Mr. Hopkins) and for Luton, South (Ms Moran), who have worked to ensure that Parliament faces this issue squarely. Although the blunt reality is that too many Vauxhall workers have no right to information and consultation, this debate extends beyond Vauxhall to the rights of employees in general. In the main, the right to know what is going on and what is likely to affect individual employees simply does not exist for most who work in British industry and commerce.

Vauxhall workers are not the only ones to have been treated with contempt. The same problem arose at Coats Viyella and Biwater, and other hon. Members will want to raise similar issues of local concern. Britain is simply out of step with the rest of the European Union. Last week, Vivendi, the French company, held its European works council meeting in Paris. Vivendi employs some 25,000 people throughout Europe. Its employee representatives examined detailed company proposals on employment structure, employment trends and a range of other issues. Interestingly, although they were able to identify the situation in France in minute detail, no such detail could be discerned for the United Kingdom.

The right to information and consultation is a simple trade union issue. It is morally right and proper that employees should know what is going on, and it is sensible that they should demand that right; but it is also in the interests of companies to ensure that employees are properly consulted. There is considerable evidence to suggest that firms that communicate do better. My hon. Friend the Minister will be aware of a study that was undertaken at the behest of the Department of Trade and Industry by the Industrial Society. As the DTI itself said, all firms included in the case study asserted

Consultation is in the interests not simply of the rights of workers, but of companies. Although I am not sure that it meant what it said, even the CBI agreed with that view, stating:

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Mr. Michael Clapham (Barnsley, West and Penistone ): My hon. Friend will know that there is a further pressure--globalisation. The ferocious competition between the trading blocs is leading to restructuring, especially in Europe. Is it no essential that British workers should have the same consultation rights as workers in the rest of Europe?

Mr. Lloyd : My hon. Friend is right. One problem that we face--not only on information and consultation, but across the board--is the lag between the rights and protections that are available to British workers and those that are available to their European colleagues. That means that, in case after case, British workers are the first to be laid off. We are an easy country to invest in, but also an easy country to disinvest in.

Mr. Llew Smith (Blaenau Gwent): Would my hon. Friend care to comment on the situation facing steel workers in my community in Ebbw Vale? When Corus was set up some 18 months ago, I received a statement from the managing director, Tony Vickers, saying that the plant was safe and that there was no threat to jobs. Now, if we are to believe the serious press, the plant faces closure.

The sad thing is that the workers, public representatives and the Government are not being consulted and the meetings that have taken place have left the Government no clearer about what is happening. The people who work in the UK steel industry and who have built it up into one of the best in the world have the right to be consulted about the future of their plant. Not only have they not been consulted, but the management will not even tell them when the redundancies will be announced.

Mr. Lloyd : My hon. Friend is right. The Corus saga bears out everything that has been said this morning about the need to change the basis on which British employers operate. I was disappointed that Corus turned down flat the offer by the Iron and Steel Trades Confederation to discuss a buyout. I am not in a position to know whether that would have been the right way forward, but a company that treats its workers with contempt deserves little in the way of plaudits from the general public.

Since the furore over Vauxhall broke out, we have heard strong statements of condemnation from the Prime Minister and from the Secretary of State, who announced some weeks ago that he was contemplating a change in legislation, saying that more should be done to ensure effective consultation with employees. Welcome as his comments were, he did not go far enough; he was merely talking around the issues involved in collective redundancies legislation.

The simple fact is that, as in the case of Corus, the need for consultation goes far beyond the point at which redundancies are announced. It must take place during the periods when employees can make a difference to the

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decision making of management. I hope that my hon. Friend the Minister will consider carefully the possibility that the present review will be inadequate unless it is cast wider.

On the EU directive, the Government have made it clear that they do not want to take that route. Like many people, I am somewhat mystified by their resistance. Some critics, such as the CBI, argue that the directive would damage small and medium-sized enterprises and that although effective employee involvement is critical to business, it cannot be legislated for. That is not a very progressive view. The CBI has stated:

Judy Mallaber (Amber Valley): Before my hon. Friend moves away from the issue of redundancies, does he agree that it should not be a managerial prerogative to do what was done at Coats Viyella? The DTI was notified late one night of a decision that was announced to employees the following morning, the mater having been referred to the Stock Exchange first. That decision resulted in hundreds of redundancies in my constituency and contradictory press releases during a two-hour period. There was a 13-week gap from the initial announcement until it was said that part of the company would be sold off . We are still waiting for information on how some parts of the company will be disposed of. There has been confusion throughout and a lack of information for Government Departments, unions and representatives such as myself on what is happening in the company.

Mr. Lloyd : I hope that this Chamber will condemn that use of the so-called managerial prerogative because it was not an acceptable use of the power. It may have been legal, but it is immoral and, in the long term, disastrous for British industry.

I turn to the European directive. The Government said that British company law is radically different from European law and that the one-size-fits-all approach is inappropriate. I have looked carefully at what the directive would do and those arguments do not apply. The most up-to-date version of the directive provides minimum requirements on information and consultation, as is right and proper; it would be pointless without those minimum requirements. It specifies a floor of 50 employees, which is quite high. Only 2.8 per cent. of United Kingdom companies would be caught and it is arguable that the cut-off point is too high, not too low.

The directive would allow national Governments to determine what procedures were appropriate for individual nation states. It allows considerable freedom to the British Government to say that British company law is different from that in other countries. Finally, it provides considerable scope for local agreement between management and employees to be accepted as being consistent with the directive.

On all those counts, the arguments against the directive do not apply and I must tell the Minister that I am bemused that the British Government are now

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accused of blocking the directive. At the Employment and Social Affairs Council on 20 December, the British Government used obscure procedural devices to keep the matter off the agenda. I am sure that my hon. Friend will want to respond to that, but the real issue is that a qualified majority exists to implement the directive.

It would be a tragedy if Britain were the one country out of step with the European framework. It would be a tragedy if we turned our backs on the clear need for change that hon. Friends have described, following the terrible experiences of British workers in recent months. It would be crazy if we were accused of siding with extremists such as the CBI, whose view of the directive is so ridiculous as to put it beyond reasonable consideration.

The change is necessary--I hope that even the Opposition accept that following recent disastrous experiences--and should be introduced quickly.

Mr. Alan Duncan (Rutland and Melton): Does the hon. Gentleman accept that in all trade and commerce, there is a need for some confidentiality when negotiations are taking place? Negotiations cannot, realistically, be conducted step by step in public. If he is saying that proper communication with the work force is necessary, what parameters of confidentiality can reasonably be imposed so that normal commercial negotiations are not blown out of the water by being played out in public?

Mr. Lloyd : Of course everybody accepts the need for confidentiality. The trade unions, for instance, know that their members have the same interest in confidentiality as management. I urge hon. Members not to construct the debate as if it were workers against the company.

I shall give an example that moves us into the absurd in terms of confidentiality. I know of a Europe-wide merchant bank--I will not give its name--one of whose non-union European works council representatives learned of threats to jobs in the bank across Europe. He could not have obtained that information within the United Kingdom set-up, and would not have done so without the European works council directive. That has nothing to do with confidentiality. It is about a basic right to know, which is provided under the European works council directive but not under British law. It is about time that British law caught up. There is no question of a managerial prerogative to refuse to give information; it is a basic human and employment right to know. I hope that the Opposition will concede that point.

Dr. Nick Palmer (Broxtowe): Does my hon. Friend agree that the tradition of consulting the work force on major restructuring has worked well on the continent? The usual procedure is to consult the work force representatives, who are well schooled in the need for confidentiality. It is not a question of immediately informing 10,000 people, but of making sure that the representatives are involved from an early stage.

Mr. Lloyd : If one looks around this Chamber, there is probably several thousand years of trade union

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membership among those present. My experience is that trade unionists are well aware of the need to protect confidentiality when it affects the running and good management of individual operations and companies. My hon. Friend is right. We do not need lessons in the need to maintain secrecy when it is important. However, we do need to make sure that there is consultation, so that the workers know what is planned for them as individuals and are able to respond collectively in the best interests of the company.

I appeal to the Minister to tell us what is wrong with the directive. If the directive is adopted by qualified majority voting in June this year, as is now possible, those who stand out against it but have not advanced a strong case will look a little ridiculous, if nothing else. If we are to follow the route of national legislation, will the Minister tell us in clear-cut terms when that legislation will kick in? The current reality is spates of redundancies, such as those at Vauxhall and possibly at Corus and other big and small companies. We need to know when British workers will be given the protection that would be taken for granted in any other part of the European Union.

11.18 am

Mr. Andrew Miller (Ellesmere Port and Neston): I congratulate my hon. Friend the Member for Manchester, Central (Mr. Lloyd) on securing this debate, which is well supported within the trade union group of the parliamentary Labour party. I also echo his words of congratulation to my hon. Friend the Member for Luton, South (Ms Moran) on the way in which she has conducted herself in this Chamber in the context of the appalling situation facing Vauxhall workers.

Many Labour Members will know that I was involved in creating some of the early European works councils, especially in the late 1980s when I had an international responsibility for the creation of the Unilever European works council, so I speak with some experience of the process.

It has been argued that consultation can have an adverse effect on markets, because of market confidentiality and so on. GM-Vauxhall told me, after the current situation was made public on Teletext, that it could not give me full details of what was going to be announced for two reasons. The first was that the workers must be told before anyone else; that was a bit sick, because the announcement was all over Teletext and the national news. The second, which was outrageous and untenable, was that the matter was sensitive in terms of the stock market. One can see that that is nonsensical if one examines the stock values of GM's traded stock over the last year. I refer to data available on GM-Vauxhall's web site, which I presume is accurate. Unfortunately, we cannot display graphics in the Chamber, so I must describe the information. A graph on the web site shows stock values for the past 12 months. Interestingly, a steady downward trend started in mid-May of 2000.

At that time--the markets are sensitive and traders knew that something was about to happen--the market started to trade heavily. In the period May-June last year, there was massive trading in GM stock, way ahead of the norm. The price continued to decline without a blip, until GM made its announcement just before

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Christmas, which shows that the argument about stock market confidentiality is nonsensical. The market knew that something was going to happen. The trend began in early summer 2000 and continued downward.

I have experienced pan-European and UK works councils, and they all have confidentiality clauses. Discussions with the work force and its representatives about sensitive issues are covered by such clauses. Last night, I examined every service sector European works council. I deliberately chose a sector outside manufacturing to illustrate my point, in case I was accused of being emotive about the problems facing Vauxhall workers, colleagues in Luton and my constituency, which are inextricably linked.

In the service sector, I could not find a single works council that did not have a confidentiality clause, but there was only one case of a company having triggered it. In that case, the company had asked the works council to exercise sensitivity because a takeover was imminent. It was accepted that it was perfectly proper to give the work force the facts. The argument that sharing information with employees is damaging to shareholders does not stand up to examination and, as far as I can ascertain, there has never been any evidence for it. Indeed, quite the opposite is true. The engagement of workers adds value to the decision-making process.

Consultation is a good management tool, and consultation bodies allow management to hear news direct from the work force--the horse's mouth. The bodies can obtain information about what is happening in the company. It is a two-way trade. As daft as it may seem, the European group of trade union representatives at Unilever knew more about the structure of the company, its representatives, its product lines, volumes and predicted outputs than individual site managers in the United Kingdom. One reason why Unilever eventually caved in and accepted that there should be a consultative process on a pan-European basis was that it recognised that the work force had better information than it had and that it might be a good idea to get in on the act. There are management reasons why companies should engage in such processes.

The process of receiving early warning of what is happening in a workplace is generally a two-way trade. I can provide doubters with several concrete examples of information from employees helping the business to develop. There are plenty of examples when strategic plans shared with employees have materially benefited the way in which companies operate.

Consultation creates stability. It creates a better understanding of the overriding issues that affect the business. Undoubtedly, a better-informed work force is a more productive work force. When confidence exists in a company and employees understand precisely what is happening inside the business, the co-operative nature of such a relationship maintains productivity, even in difficult times.

Stability also helps to smooth out the process of acquisitions. It stops the short-termist approach that applies in the human resource departments of some companies when it is only discovered the following day that the company has bought another business.

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Engaging the work force in such activities resolves problems. No one has a monopoly on what is good information; it must be shared openly within those forums that are represented by works councils.

Different views are being expressed regarding Vauxhall and information is bubbling around all over the place. I cannot say what will happen to the constituents of my hon. Friend the Member for Luton, South; or, indeed, to my constituents. The rumour-mongering through the inadequate management chain has left people in the dark.

One of my constituents, a national official of the Transport and General Workers Union, has given me a detailed view of his analysis, supported by information that he has collected from the trade union side. My hon. Friend the Member for Wirral, South (Mr. Chapman), with myself and others, met employees and, briefly, the management last Friday in Ellesmere Port. I still have not been told in any detail what the company wants to do. Why should I be? I am not an employee of the business. But those who have given their heart, their soul and their life to the company do have the right to be told.

Many members of the work force in my constituency have relied on that business for their employment for many years; in many cases, for a lifetime. It is not just a one-way street. They have relied on the business, but, let us be honest, the business has relied on them. Those employees have turned round what was a failing business less than a generation ago and made it into one of the most successful vehicle companies; yet they cannot be trusted to be given information about its medium-term strategy. That is an unacceptable state of play.

I welcome the statement of my right hon. Friend the Secretary of State for Trade and Industry last week that everyone shared my anger and that of the work force at the way in which the situation was handled. As my hon. Friend the Member for Manchester, Central described, we have an opportunity to address such matters. I ask my hon. Friend the Minister to put into context the situation that is facing us today in respect of Vauxhall when considering our responsibilities under the directive.

I echo the point made by my hon. Friend the Member for Blaenau Gwent (Mr. Smith). We are dealing not only with Vauxhall, as Corus, too, acted abysmally. Three years ago, a transfer of undertakings in my constituency closed the steelworks that had existed for 100 years. As a result, people lost their pensions because the pension fund was under-funded. At an employment appeals tribunal, the company said that the information that they provided to the work force at the time was false. It said that no transfer of undertakings took place, and it now acknowledges that the information that it gave to Her Majesty's Customs and Excise and to the European Union stated exactly the opposite. Had a proper dialogue taken place, such a mess would not have arisen. It is an appalling state of affairs and yet another solid argument in favour of more information-sharing with employees inside businesses in the United Kingdom.

Several hon. Members rose--

Mrs. Marion Roe (in the Chair ): Order. I ask hon. Members to keep their comments brief, so that as many Members as possible can contribute to the debate.

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11.32 am

Ms Margaret Moran (Luton, South): I congratulate my hon. Friend the Member for Manchester, Central (Mr. Lloyd) on securing this important debate. Two years ago, when Vauxhall's management announced that problems were emerging in the plant, they were fast off the mark to contact me and members of the Government to secure support for funding for General Motors. It wanted to ensure support from the work force for what was hailed as a flagship partnership agreement. That pay and productivity deal was acclaimed as an exemplar of partnership arrangements. In other words, the company consulted at that time and, as a result, we were able to save the plant. Its productivity and profitability increased, as is still the case today.

Let us contrast that with the situation up to Christmas eve, when workers heard via local radio that their jobs were going. They had not been involved in any consultation process. What modern business operates in such a way in the 21st century? General Motors believed that it could get away with it. That is why it is essential that the Government act now to ensure that legislation is effective, so that we never again hear on early morning radio details of redundancies such as those at Vauxhall in Luton.

The way in which General Motors announced its plans for Luton was a disgrace. It is the unacceptable face of modern business. People clearly have a right to know if they face redundancy before the media finds out. I hope that the Minister will assure us that, notwithstanding the CBI and some Opposition Members urging us not to legislate on the matter, he will ensure that there is strong and forceful legislation to guarantee workers' rights to consultation when redundancy is imminent.

It is clear that the announcement came out of the blue. I suggest that the company not only failed to consult its work force, but went to some lengths to conceal the fact that there were difficulties. My hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) referred to emerging trends, so the company could have consulted the work force much earlier. It is clear that the company discussed the issue with trade unions before the announcement, but it assured them that a package of measures would save the plant, saying that there would no job losses or any impact on jobs.

I contacted the company a few days before the announcement to ask the reason for the extended Christmas closure, and was assured that there were no problems in the plant. At that point, the company must have known of the prospect of imminent closure and the potential loss of 2,000 jobs. We were presented with a fait accompli, and a flagship agreement was simply thrown in the faces of the work force.

The situation could have been different. If there had been consultation in advance, we could have changed the company's mind. I congratulate the trade unions on their work to outline the financial implications of closure and the strong arguments for the plant's productivity and profitability. Such arguments could have made a difference. We must ensure that they are addressed by GM, and that it understands that it cannot present its workers with a fait accompli and expect to walk away from the consequences.

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I welcomed the statement of my right hon. Friend the Secretary of State for Trade and Industry at Question Time a few weeks ago, when he said that he intended to review the employment legislation affecting collective redundancies. Different legislation would have made a difference. As a Government, we could have suggested aid packages to GM. Ironically, money is available in the Luton area to secure such plants. European structural funds, objective 2 funding and assisted area status funding is available for precisely such circumstances, but GM did not approach the Government to ask for that money.

Had there been a right to consultation before the decision was made, the trade unions could have made their coherent case as to why the European market was not in sufficient difficulty to legitimise the closure of one plant in the United Kingdom. We could have all asked the fundamental questions that remain unanswered. Why is a profitable plant being closed down? Why are the so-called losses of the company--they seem to be a one-year write-off of funds rather than actual losses--being used to justify the closure? How much is it costing the company to tear up contracts with supply-chain companies, many of them signed only weeks or months earlier in expectation of a second Vauxhall line?

Legislation is urgently needed, but, more importantly, it should ensure on-going consultation rights for workers. I recently raised the matter with my right hon. Friend the Secretary of State at Trade and Industry questions. It is not good enough, although it would have helped in the circumstances with which I am concerned, simply to give notice of redundancy within a few months of the event.

Mr. Graham Brady (Altrincham and Sale, West): Is the hon. Lady aware that just before Christmas and the Prime Minister's departure for the European summit negotiations in Nice, he gave me a categorical assurance that the Government would not allow worker representation?

Ms Moran : I am interested in whether the hon. Gentleman's party would introduce any measures to safeguard workers' rights.

Mr. Alan Duncan (Rutland and Melton): The answer is that we have no intention of doing so, but perhaps the hon. Lady would answer my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) and tell us whether she agrees with the Prime Minister, whose view is clearly the opposite of hers.

Ms Moran : The hon. Gentlemen doth protest too much, methinks. As we have heard, the Conservative party would not pass measures to protect workers with respect to redundancy; not only would the Tories fail to do as much as the Government are prepared to do, but they would rip up workers' rights introduced by the Government--the right to join a trade union, the right to paid holidays, and so on. Their free market would have told the Vauxhall workers, "Go hang; we will not help you." Will Conservative Members tell me when a Government of their party assisted workers as the present Government have done? I will not hear such hypocrisy.

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We need legislation and on-going consultation so that workers can participate in the business plans of their organisations and understand the imperatives for productivity and profitability. That partnership can work, and has worked in the past. Companies ignore that approach at their peril. There is a strong business reason for advocating such an extension of the legislation. The Industrial Society has concluded, as a result of research--some of it in partnership with the Department of Trade and Industry--that employees should have the right to make their views heard on major changes affecting the businesses in which they work

The Industrial Society also considers that consultation has proven business benefits. Before Conservative Members again protest that there should not be legislation, I remind them of the clear benefit that new measures would provide in reducing the bureaucratic burden imposed by the current piecemeal approach to consultation legislation--in addition to the benefit of recognising the stakeholder rights of employees.

Consultation is relatively widespread in the United Kingdom in comparison to the continent, but significant no-go areas exist, particularly among smaller companies. However, there is also a significant gap affecting the degree of influence that can be exercised after consultation. The evidence from the Industrial Society is that employees' motivation and productivity improve after the passing of measures such as those I advocate. A study by the Involvement and Participation Association shows that participation tends to be associated with a wide range of positive outcomes. Work done by the Industrial Society for the Department of Trade and Industry has shown that the adoption of a partnership-based approach helped all case study firms to achieve enhanced competitive performance. A 1997 European survey confirmed a positive correlation between the economic performance of a company and the scope for employees to contribute their views.

The Industrial Society has recommended measures creating an obligation to consult on major business decisions and an opportunity for the Advisory, Conciliation and Arbitration Service to be involved when necessary. It argues that if the Chancellor wants to increase United Kingdom productivity, he should persuade Ministers to widen consultation rights. If staff are consulted on major decisions that will affect them, it will pay off in better employee trust, commitment and performance. The Government can achieve those benefits by legislating to ensure that on-going consultation is introduced at the earliest opportunity.

I welcome the Secretary of State's statement that he will introduce legislation to prevent morning radio redundancies. We owe it to the Vauxhall workers to make sure that legislation ensures the widest possible consultation, so that no other workers have to endure what the Vauxhall workers went through. A strong Vauxhall workers Bill that gives employees the rights to proper consultation would be a great honour and a real tribute to the hard work and loyalty of the Vauxhall work force.

Several hon. Members rose--

Mrs. Marion Roe (in the Chair ): Order. I remind hon. Members that there will be three winding-up

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speeches, starting at 12 noon. I ask hon. Members to keep their comments brief so that as many as possible can speak.

11.45 am

Mrs. Diana Organ (Forest of Dean): I congratulate my hon. Friend the Member for Manchester, Central (Mr. Lloyd) on securing this debate. Many hon. Members have strong feelings about the need to improve consultation and the way in which workers are kept informed, and I wish to mention a constituency matter. First, however, I want to speak on the essential subject raised by the debate.

The European Union directive that gives workers the right to be told by their employers about impending decisions and the right to have their views on such matters taken into account is not radical. It is wholly reasonable that workers should have that right. They should be entitled to be told about their employer's economic and financial status, about recent developments and possible changes in the company's activities, and about the prospects for job security. They should know about decisions that are likely to cause significant changes in the organisation or work that might affect employment contracts. Workers should have time to digest that information, to prepare their opinion on it and to meet with management to discuss it and take to matters forward.

Workers in the UK do not enjoy the same rights as those in other EU member states, which is wrong. The rights afforded by the directive are not only fair but necessary in modern industrial relations. As John Monks, the TUC general secretary, said:

A situation similar to that at Vauxhall is now being played out at Mitcheldean in my constituency by Xerox. The past three years have seen two major changes at the local plant. The first, in 1999, resulted in the company being the subject of censure and criticism at European level, partly because of the lack of information and consultation. The company has a history of not sharing information and not consulting workers. Every time that there is a change, the workers reel in shock, because they do not learn until the last possible moment what is about to happen at the plant. They learn about such decisions after they have been made instead of taking part in them. They are unable fully to work with the company to ensure their job security.

Xerox is the largest employer in the Forest of Dean. In 1998, it employed 2,900 people on its business park site, of which 1,900 were involved in manufacture. In 1999, the company decided to transfer 1,700 jobs from Mitcheldean to a new plant in Dundalk, Ireland. The plant was set up with the advantage of a low level of corporation tax--a rate of 10 per cent. was offered by the Irish Government--and for each new employee in Dundalk the company received a substantial subsidy from the Irish Industrial Development Agency. The

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company stated that it was committed to the future and that Mitcheldean would be a manufacturing site well into the 21st century. Some compensation.

The company came in for considerable negative publicity within the European Parliament for the use of European Union money for job movement rather than for job creation. The company also failed adequately to consult with the work forces involved.

Xerox faces a massive problem, with financial difficulties on a global basis. A wholesale review of its operations and a radical re-structuring of its manufacturing in Europe are under way. Its three main plants are located at Venray in Holland, which employs 2,000 people; Dundalk, which--even after the transfer of 1,700 jobs--employs 1,000; and Mitcheldean, which employs 1,500, with another 300 employed in supply chain operations on the business park. Dramatic reductions in employment at Xerox could have a devastating impact on the local economy in the Forest of Dean, since many hundreds of other jobs are linked to that activity. More than 2,000 jobs are dependent on the viability of the Xerox plant in Mitcheldean.

Xerox issued a statement on 10 January, which was vague and gave no time scale for decisions or a review. It talked about everything being in and everything being out. As before, the work force was left not knowing what was happening with regard to jobs and job security. The company says the problems are economic, that its cost bases are too high and that costs must be cut to make the plant competitive. The review groups operating in Mitcheldean are considering all possible ways of cutting costs. In the past, the plant has attained all the targets set by the company.

Mitcheldean is the plant with the greatest experience of the digital products that the company aims to produce globally. It is recognised that it is cheaper to make parts at Mitcheldean than in other plants. It is working hard to improve its cost effectiveness and competitiveness to bring them up to the levels found in Korea. All of that obscures the fact that, on another continent, the company has made its decision. The company has effectively taken the decision in advance of the process of consultation and information. The company says that it is evaluating and reviewing the work. That is rubbish. It has made its decision, which is a clear breach of Community law. The MEP for the south-west, Glyn Ford, is taking up the matter in the European Parliament through written questions tabled yesterday.

One reason why I believe that the decision has already been made is that the Dundalk plant was set up with the advantage of grants and substantial subsidies. The company would have to make restorative payments--thousands of euros--for every job lost in Dundalk. It is easier for the company to shed jobs in the United Kingdom than in Ireland. However cost effective the jobs in Mitcheldean may be, the payments that will have to be made for any job losses in Dundalk will outweigh any savings.

Dundalk has been afforded protection. Joe Browne, the director and general manager of Xerox in Ireland, has said that around 2,500 jobs will be cut in the European operations, but the numbers in Ireland would not be affected. That begs the question of where the 2,500 jobs will be lost. Xerox has made its decision, and is just managing the release of the information. It has engaged a political public relations company, Grayling, to assist with that.

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Xerox does not want the criticism that it received when it was restructuring and moving jobs to Dundalk. The company will carefully time any major announcement on redundancies and closures so that it is not made when issues such as consultation and information are high on the agenda, either here or at the European Parliament; especially when the European Parliament maybe discussing the directive.

Over the years, trade unions and work forces have complained that they have not been given information or had real consultation. Consequently, in the present situation, it is impossible for them not to think the worst scenario. It is difficult to build an effective, trusting industrial partnership in that environment. The local management have tried to address that in recent years but, since the culture and attitude of the company globally is not so inclined, it is difficult for them to do so. A constructive relationship is difficult to develop.

The situation facing the workers, the management and the company at Xerox in Mitcheldean is serious. Securing as many jobs as possible for as long as possible on the site requires efforts from all concerned and the support of local agencies, such as the regional development agency, Gloucestershire development agencies, national and European Governments.

The Government must sign up to the employee information and consultation directive. That would not do much to assist the workers at Mitcheldean now, but if they had had those rights over the past few years, they and their representatives would be better prepared and would be able to work constructively to keep the plant competitive. They would have had the right to know what was happening to their employment and their job security. Although at a local level the plant management have recently made greater efforts to consult, it is difficult for them to do that when it runs counter to the ethos of the company, which involves making announcements to fit the company's time scale and to fit in with what it wants to do. It is important that we have rights for workers, so that the Mitcheldean workers--who I hope will remain workers there for a long time to come--are not treated in that way.

11.55 am

Mr. Kelvin Hopkins (Luton, North): I congratulate my hon. Friend the Member for Manchester, Central (Mr. Lloyd) on securing the debate. I also congratulate my other hon. Friends who have spoken, particularly my hon. Friend the Member for Luton, South (Ms Moran), who has played a strong role in the determined campaign by the work force and the whole town to stop the Vauxhall closure, and to keep motor car production in Luton.

I want to make some simple points to the Minister about rejecting the Tory mantra of burdens on business. It is evident from events at Vauxhall that removing all constraints from multinational companies does not help our economy. It does not persuade those companies to stay in Britain, and it does not help the work force, who have been sold down the river. Many countries that have much stronger worker protection have done just as well, if not better, in terms of attracting investment from multinational companies.

We should not get involved in a Dutch auction, where we try to reduce worker rights to the lowest-possible level in the vain hope that we can attract multinational

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companies to these shores. British workers must have the same rights as those elsewhere. Governments must work together to ensure that democratic government means something, and that they do not have to lie down and be walked over by multinational companies.

I worked at the TUC in the 1970s. At that time, there was a big change in the organisation's culture. We used to have the view that trade unions had negative rights, in the sense that we had the right to strike and to take industrial action against companies that had different interests and different views. That does not work when unemployment rises. In that situation, industrial action by trade unions is not as effective as it might be.

In the 1970s, workers and trade unions decided to promote the idea of industrial democracy. The Institute for Workers Control initially developed the idea, but the TUC published a major report on it, which included rights to consultation and information. That is the direction that we wanted to take 25 years ago. We continue to press for movement in that direction.

Two weeks ago, my right hon. Friend the Secretary of State for Trade and Industry moved some way towards considering consultation rights. I am pleased that the Government are moving in that direction and making a clear break with what the Tories have done over the past 20 years. I want to see the Government move a good deal further in promoting trade union and worker rights, including the right to consultation.

In the past fortnight, I have promoted a private Member's Bill on consultation rights. It is 17th on the list, and probably will not get very far. However, I hope that it will, at least, help to persuade the Government that we want full workers' rights to consultation and information, so that what happened to the workers at Vauxhall does not happen again.

11.58 am

Dr. Vincent Cable (Twickenham): I, too, congratulate the hon. Member for Manchester, Central (Mr. Lloyd). He has clearly struck a chord, and he has also talked a great deal of sense. For most of us, the starting point is that several companies, notably Vauxhall, behaved in a crass and insensitive way. The key point, which has been picked up in several interventions, is that they were also very short-sighted. If a big company is trying to sign up its work force for a productivity package or a new flexible work force arrangement, the work force will look around at the company's other operations and draw its own conclusions as to whether the management can be trusted. The kind of behaviour exhibited in Luton sends all the wrong signals.

It seems strange that the management did not sit down with its work force representatives and say, "We have a problem here. We cannot compete because of economic conditions, excess capacity in the industry and so on. Have a look at our books, at our costs--these are the difficulties that we share. Go and talk to your friends in the Government about it and we will do our best." The company should have treated the work force in an adult way, and tried to involve it in the decision-making process. That would be grown-up management, and I do not understand why it did not do that.

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There are two issues that can be summarised briefly. First, should there be compulsion and regulation? Secondly, should that be established at a national or European level? In an ideal world, good management practice should be voluntary. In Holland--which I know reasonably well--Denmark and Germany, prior consultation is spontaneous because it has been embedded in their culture for decades. It has deep roots, and is related to their political system and much else. In this country, we do not have that culture.

There are two arguments for introducing regulatory compulsion. First, if one does not regulate to reinforce good practice, bad practice will tend to dominate. Every company with 100 workers that is faced with difficult decisions will look at blue-chip companies and multinationals and say, "If such behaviour is standard practice, why shouldn't we do the same?" Secondly, there is something in the argument that one can gain a competitive advantage by adopting hire-and-fire labour practices, although unions tend to exaggerate the force of such practices. I doubt whether companies decide in which part of Europe to invest £100 million on the basis of a hire-and-fire labour policy. None the less, such considerations clearly play a part at the margin, so some element of regulation and compulsion seems justified in principle.

In respect of compulsion and regulation at a European level, the Government have applied the subsidiarity principle. They argue that certain matters should be dealt with at a European level but that others should be dealt with nationally, and that labour law is clearly the province of the nation state. I have some sympathy with the subsidiarity principle. In many ways, my party is the most pro-European, but we nevertheless accept that there is too much European standardisation. The test of the subsidiarity principle is right and should always be applied, but it is difficult to apply it to the issue before us. Many industries--for example, the car industry--operate on a European basis. European business planning is relevant not just to the Renault-Nissan arrangements, but to Ford in Europe, the German operations of General Motors and the Japanese companies. To that extent, the subsidiarity principle does not apply to those companies.

Mrs. Ray Michie (Argyll and Bute): My hon. Friend talks about subsidiarity in European terms, but I would like him to consider the global aspect as well. I draw his attention to an issue that extends beyond Vauxhall, and which is set out in early-day motion 254. Merchant Navy officers have offshore contracts with Associated Bulk Carriers, which is being sold by P&O. They have given many years of loyal service to that company, and are entitled to information and consultation, rather than being kicked out with three months' half-salary in lieu of notice, on contracts that are now based in Bermuda. Incidents such as that say everything about what is happening to our once great Merchant Navy, and I hope that my hon. Friend will take them into consideration.

Dr. Cable : That is a helpful intervention, because it reminds us that the problems associated with redundancy are not confined to the traditional manufacturing industry or European enterprises, but occur throughout the economy.

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In conclusion, we should be open-minded about how to tackle this problem. I am not a labour lawyer, so I cannot comment definitively on the implications of labour law, but it would seem that are two approaches to the problem, the first of which is set out by the TUC. As the hon. Member for Luton, North (Mr. Hopkins) said, these days the TUC is a modern-minded institution that, in general, tries to help to create a positive business environment. The TUC's approach is to treat the EU directive as a broad framework of protection within which, at a national level, it can sit down with the CBI--and unions can sit down with employers--to work out arrangements that are relevant to this country. If that is not practical, perhaps the Minister can explain why not. As a framework for commonsense--argument, it has few obvious flaws.

Alternatively, the Government could adopt a similar approach to that which has evolved in relation to competition policy. A few years ago, strong European directives and laws governed monopolies, mergers and restrictive practices. Over the past five years, the view that Europe is becoming over-centralised has taken hold. Consequently, the subsidiarity principle has been increasingly applied and much competition law has been pushed down to the national level--except in cases where mergers and monopolies are clearly European in character. The European directive could be recast so as to apply its provisions to cases where a European element is involved--such as in the car industry--but in all other cases legislation should be national in character.

If the Government take that route, they will have to explain how the national approach will evolve. Workers are not asking for much. They are not asking to intervene in the running of the companies for which they work, but for prior consultation on key decisions that affect their livelihoods. I would be surprised if the Government cannot find their way through the thicket of European and British law to resolve the problem.

Mr. John Cummings (in the Chair ): The hon. Member for Rutland and Melton (Mr. Duncan) has graciously offered to make his speech a little shorter to enable me to call Mr. Harry Barnes.

12.6 pm

Mr. Harry Barnes (North-East Derbyshire): There is no greater argument for the introduction of employee consultation than the case of Biwater--a pipe manufacturing company in Clay Cross in my constituency, which was mentioned by my hon. Friend the Member for Manchester, Central (Mr. Lloyd)--where, before Christmas, 700 jobs were lost with no prior consultation.

The attempted takeover of Biwater by St. Gobain was first known about in April last year. Discussions about what was to happen took place between the GMB, the shop stewards, the work force and Biwater's management. They were assured throughout that their future was guaranteed--although two of the managers involved went over to St. Gobain after the takeover. Within minutes of the takeover on 4 September, it was announced that the plant would be closed within 90 days. It closed on 22 December, although some people had already lost their jobs.

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Despite the fact that deputations had met the Secretary of State for Trade and Industry, and he had spoken to Jean-Louis Beffa, the managing director of St. Gobain, about consultations on any changes, the work force was not allowed to enter into any discussions other than those concerning how the redundancies were to take place. Of course, it sometimes overstepped the mark and tried to raise other matters, but, as far as the management were concerned, such discussions were not to take place.

The loss of 700 jobs had a devastating impact on the area--yet there was no need for it to happen. Biwater was a viable works, and 80 per cent. of its output went into exports. St. Gobain's interest in taking over the company was to knock out a competitor, take over its order book, asset-strip and sell off those assets. There should have been prior consultation and discussion. I am convinced that had the directive existed and there had been consultation, that plant could have been saved. The importance of the measure cannot be exaggerated and I hope that the bitter experience of workers in Clay Cross will lead to suitable legislation.

12.10 pm

Mr. Alan Duncan (Rutland and Melton): The hon. Member for Manchester, Central (Mr. Lloyd) has done us all a favour in raising this matter and I hope that I shall not destroy the future career of the hon. Member for Luton, North (Mr. Hopkins) if I say that his contribution was particularly thoughtful. My ulterior motive in encouraging the hon. Member for North-East Derbyshire (Mr. Barnes) to speak was to continue my enjoyment of the great spat between old Labour and new Labour--the fissure in the party and the great project is now clear for all to see as the old trade union bloc asks for certain measures, which the Minister and perhaps the Prime Minister will pretend to give, but will never deliver. I hope that they will not be taken for suckers by their own Front Bench.

We should listen to the CBI, which was, amusingly, described as extremist today. I have never heard it so described in such a context. Digby Jones, the director-general, warned:

Mr. Brian H. Donohoe (Cunninghame, South): Does the hon. Gentleman condemn or condone Vauxhall's actions?

Mr. Duncan : I shall come to that in a moment. It is a fair point, which has coloured all the contributions to this debate.

Before the general election, Labour promised business:

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Perhaps the Minister will tell us the status of the blocking minority to the directive. As I understand it, his allies in opposing the measure were Germany, Denmark and Ireland. Can he confirm whether the Germans are still opposed, because there were reports before Christmas that their resolve was weakening? That is important, because the Swedish presidency has made clear its wish for progress on the matter. Sweden's Employment Minister stated:

The directive will be adopted by qualified majority voting, so the Government must ensure that they have sufficient allies to block it. We heard much at the Lisbon summit last summer about how the EU would be a powerful engine for economic advance. If that amounts to more than the empty rhetoric that we are used to from the Government, why has the Minister failed to persuade more of his EU counterparts that the directive is exactly the sort of measure that undermines business competitiveness and increases business costs? I hope that he will clarify the position.

It was disgraceful that the redundancies at Vauxhall were announced on the radio. That was appalling. It was also unprofessional on the part of the broadcaster and doubly devious on the part of the person who leaked the information. The problem was not so much the process of consultation as the fact that the announcement was leaked before it was given to the work force. It was a complete and utter disgrace on someone's part and if the culprit could be found, he would face universal national opprobrium.

Mr. Hopkins : Is the hon. Gentleman saying that the decision would have been more acceptable if we had known about it before it was announced?

Mr. Duncan : The problem with the directive is that it does not cover the fact that the openness of what is said to a series of people down a chain of information has to be consistent with the process of negotiation. If all aspects of negotiation, whether commercial or based on employment, are played out in public, there will be massive problems, which may militate against a successful conclusion and the achievement of the firm's objectives. All that would have happened had the works council been told, is that some kind of rumour or half-announcement would have been made public, half-baked and before matters had been concluded. The danger is that compulsion in law could work against the interests of a work force, because management would be compelled to reveal, step by step, every aspect of their negotiation process.

Mr. Miller : Where is the hon. Gentleman's evidence?

Mr. Duncan : It is self-evident. Every reputable company will involve the work force at the earliest possible stage of negotiations, in a way that is consistent with the best commercial interests of the firm and the work force. Such a one-size-fits-all legalistic prescription could end up working against the interests of a work force. Its supporters think that that will not

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happen, but in many cases, such regulations ultimately have that effect. The Opposition want firms to be able to build up proper partnerships with the work force, so that they are not denied the opportunity to do what is best for them by legislation that is too prescriptive and narrow, which might work against the interests of many people.

12.16 pm

The Minister for Competitiveness (Mr. Alan Johnson) : This is an important and topical debate, and I congratulate my hon. Friend the. Member for Manchester, Central (Mr. Lloyd) on securing it.

I do not intend to spend long on the comments made by the Opposition. Suffice it to say that the hon. Member for Rutland and Melton (Mr. Duncan) has many attributes, but understanding social justice is not one of them. I once said that trying to explain social justice to the Conservative party was like trying to explain origami to a penguin. The hon. Gentleman's contribution should be left out of the debate.

First, I want to explain the Government's current approach to information and consultation generally, and then I shall talk about the European directive and high-profile recent events, which have largely prompted this debate.

Our approach must be seen within the context of our overall approach to employment relations, which were set out in the "Fairness at Work" proposals. If my colleagues and I are absolutely honest, when the Labour party was deciding its agenda on coming back into government after so many years in opposition--I was part of that process in a previous incarnation--the information and consultation issue was never really at the top of that agenda. That is one of the historic problems, on which my hon. Friend the. Member for Luton, North (Mr. Hopkins) touched, of the trade union movement in this country especially.

In a very short period, however, we implemented the minimum wage, the working time directive, the right to trade union recognition and the right to be accompanied at grievance and discipline hearings. Let us not have any suggestion that this Government are acting against workers' rights. The question is where to place the important issue of information and consultation in the context of future Government action.

We are committed to the promotion of partnership. We believe in information and consultation. Our argument in relation to Europe, which I shall discuss later, is about the ends, not the means. Central to everything that we have done in relation to "Fairness at Work" is the attempt to encourage a genuine spirit of partnership. One can set up all the mechanisms, structures and works councils in the world--my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) is well aware of this, as he has studied the matter in great detail--but the important issue is how to ensure that the work force can have a genuine influence on and input into management decisions.

The solution is not having token workers on the board, as we had under the Bullock proposals. I experienced the industrial democracy experiment--as did my hon. Friend the Member for Derby, North (Mr. Laxton)--at first-hand level as a local shop steward. It did not work. The mechanisms were in place,

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but management moved the decision-making structure. When workers sat on the board, decisions started to be made in a sub-committee of the board. We had the right to approach any issue locally, regionally and nationally. On the trade union side, we were not over-enthusiastic about the experiment and did not put the major trade union players in to bat. In effect, the entire project disintegrated. Mrs. Thatcher--

Mr. Duncan : Will the Minister give way?

Mr. Johnson : I do not have time. I have only 10 minutes. A refusal often offends; I should have made it clear at the beginning that I would not have time to take interventions.

How do we arrive at a genuine--

Mr. Duncan : That is very shabby.

Mr. Johnson : The hon. Gentleman would know everything about shabbiness.

How do we genuinely influence decisions? Informing and consulting employees is an integral part of harnessing the energy and commitment of the work force. The debate has hinged on certain specific, well-defined circumstances, such as collective redundancies. My hon. Friend the. Member for Manchester, Central said that he hoped that our review would not concentrate on collective redundancies. However, almost every contribution has centred on what happened to workers at Vauxhall, and BMW and in Clay Cross. We must examine collective redundancies and transfers and investigate the legal underpinning of those processes when necessary and practicable. We have done that, and I want to have time to explain the rights that British workers have at the moment, so that we can record them.

Mr. Duncan : I am grateful to the Minister for giving way. He made some good points about legislation pushing decision making into other layers of secrecy. I have been absolutely upfront about my opposition to the directive. However, the Prime Minister has said that he opposed it and, in the past, the Minister has said that he opposes it. Is he in favour of the EU directive or not?

Mr. Johnson : I shall discuss the European directive in a moment. We have just wasted a couple of valuable minutes.

We believe that employee involvement mechanisms must reflect the requirements of individual organisations. Employee involvement goes to the heart of the way in which an organisation is managed. Organisations vary greatly in that respect. Some operate in a global context; others are national or regional. They have different ownership structures and patterns of employment, and some are subject to Stock Exchange rules. Structures imposed from above will not work as intended.

Labour Members, and the hon. Member for Twickenham (Dr. Cable), were as one in asking for genuine information and consultation mechanisms. The establishment of a constructive dialogue between employees and management cannot simply be decreed through legislation. That is why, until now, we preferred

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to pursue a voluntary approach. That approach included the partnership fund and the launch of the TUC partnership institute last year, which stemmed from the partnership fund. The comments of my hon. Friend the Member for Luton, South (Ms Moran) on the Industrial Society relate to that approach. We want genuine involvement and a culture change.

As I explained, the Government's policy has been to encourage information and consultation on matters to which no statutory requirement applies. Some people say that the voluntary approach is not working. I ask such people to read the work force employee relations survey, which I do not have time to detail. It is the most comprehensive survey carried out in this country, and it is well respected by the trade union movement; partly because it shows that trade union membership is a plus for the company and the work force. The survey showed a large extent of voluntary work force involvement throughout the country, which suggests a healthy pattern.

Recent high-profile cases have suggested that we cannot be complacent. The Luton closure is the latest example--like BMW-Rover and Ford recently--of the problems that British workers are experiencing. An interesting point that I do not believe was sufficiently covered in the debate is that the decisions in all three cases were made--

Judy Mallaber : Will my hon. Friend give way?

Mr. Johnson : I really do not have time.

All those decisions were made outside the United Kingdom, and they should all have been covered by the European measure that we wholeheartedly supported. I do not remember the position of Opposition Members, but it was probably against the measure; that is usually the case if a measure mentions workers. We supported it precisely because we agreed that in trans-national and pan-European companies--with decisions being made in Munich or Paris or elsewhere in Europe--we had to have a mechanism to ensure that British workers were informed and consulted.

Although it is recent, we must review that measure because it has not worked sufficiently in the three cases that I have mentioned. That is an important part of our review. We must take stock of what happened, particularly in relation to the disgraceful way that workers in Luton found out their fate from a radio broadcast. We must ensure that whatever we introduce--or if we change the arrangements--such issues will be dealt with. The three high profile cases concern Europe.

Judy Mallaber : What about Coats Viyella?

Mr. Johnson : Coats Viyella is a good example of something that happened in the United Kingdom. I am merely trying to put the matter into context. Even if we had accepted the information and consultation directive from Europe, and applied it domestically, we would have been going through a process in which there was only the appearance of consultation. The actual decisions would be made outside the UK. That is what the European works council was designed to put right.

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The review announced by my right hon. Friend the Secretary of State will not be restricted to consideration of the redundancy issue. It must also take into account the accusation that it is cheaper to sack workers in the UK than anywhere else. The review must be wider. The process will involve three or four months of review followed by a decision, because it is important that we do not repeat past mistakes, such as the Bullock report, which was an experiment in industrial democracy. We must ensure that the problem is resolved.

As far as the European Union directive is concerned, our position has not changed. We are not alone in believing that it breaches subsidiarity, and the countries that support us in that belief have a long history of trade union involvement. I draw attention to the European works council. The European company statute that we agreed on 21 December has a full section on industrial democracy information and consultation, and that is the right way to proceed in Europe. However, we must protect our domestic situation. The countries that oppose the directive, under qualified majority voting, feel the same way. They have sophisticated systems and they do not want a one-size-fits-all measure to interfere with them.

I say to my hon. Friend the Member for Manchester, Central that I did not use some obscure procedural device on 21 December. I know more about "ABC of chairmanship" by Citrine than I do about "Erskine May". Coming from a trade union background, I know that if something is not on the agenda, it is not discussed. My hon. Friend can call that a procedural point if he likes. The situation in Europe is the same, because it breaches subsidiarity. If we are to resolve the problem in the United Kingdom, we must, given our history of employment involvement and industrial relations, take account of our domestic situation.

The history of this subject is fascinating. A statue should have been built to honour Alan Flanders, a young trade unionist who worked for the TUC; I suppose that my hon. Friend the Member for Luton, North was a young trade unionist once. Alan Flanders was the man whom Ernie Bevin sent to Germany after the second world war to recreate the German trade union movement, which had been banned by Hitler since 1933. To a great degree, Alan Flanders developed co-determination. Although we exported that sort of model, those of us in the trade union movement were not exactly enthusiastic. We all grew up with free collective bargaining, civil rights only with a union card and no state interference. We have changed tack. We are not as well advanced as some countries in Europe, and we have had to take a different route.

I have not had time to mention all the important legislation, such as the Transfer of Undertakings (Protection of Employment) Regulations 1981 and the collective redundancies directive--which was amended and improved in 1999--and other issues in relation to workers' rights. We are determined to have a proper review to consider whether the important concerns highlighted so effectively by my hon. Friend the Member for Luton, South can be resolved domestically, as part of our overall approach to social justice and fairness at work.

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