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Standing Committee D
Thursday 26 February 2004
[Mr. Eric Forth in the Chair]
3.8 pm
The Chairman: I remind the Committee that there is now a money resolution in connection with the Bill, copies of which are available in the Room. New clause 5
Provision of money for trade union modernisation
'(1) Before section 117 of the 1992 Act (and before the cross-heading immediately preceding that section) insert—
''Union modernisation
116A Provision of money for union modernisation
(1) The Secretary of State may provide money to a trade union to enable or assist it to do any or all of the following—
(a) improve the carrying out of any of its existing functions;
(b) prepare to carry out any new function;
(c) increase the range of services it offers to persons who are or may become members of it;
(d) prepare for an amalgamation or the transfer of any or all of its engagements;
(e) ballot its members (whether as a result of a requirement imposed by this Act or otherwise).
(2) No money shall be provided to a trade union under this section unless at the time when the money is provided the union has a certificate of independence.
(3) Money may be provided in such a way as the Secretary of State thinks fit (whether as grants or otherwise) and on such terms as he thinks fit (whether as to repayment or otherwise).''
(2) In section 118 of that Act (federated trade unions), after subsection (7) add—
''(8) In the application of section 116A to a federated trade union, subsection (2) of that section shall be omitted.'''.—[Mr. Sutcliffe.]
Brought up, and read the First time.
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe): I beg to move, That the clause be read a Second time.
The Chairman: With this it will be convenient to discuss Government amendment No. 58.
Mr. Sutcliffe: Good afternoon, Mr. Forth. We tabled this important new clause on 10 February, at which time I made a parliamentary written statement about it. I hope that members of the Committee consider that they have had adequate time to study both the new clause and the additional information about it. New clause 5 provides a power for the Secretary of State to spend money on modernising trade unions. We intend to use that enabling power to establish a union modernisation fund.
We are still many months—at least a year—from launching the fund. Much preparatory work has first to be undertaken. It is our intention to draw up the detailed arrangements and rules for the fund by the autumn. We will then publish them for consultation by the end of the year. As usual, we will invite comments from all interested parties—unions, employers and
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others—during the public consultations. As at least three months will be set aside for consultations, it is likely that the fund in its final form will not be up and running until the 2005–06 financial year. I freely admit that we are at an early point in the process. I look forward to working with interested parties to finalise the coverage, operational rules and procedures for the fund.
That said, the case for establishing the fund is clear and convincing. Unions are key labour market institutions, which represent more than 7 million workers: about a third of the work force. Trade unionists are present in the majority of workplaces that employ 25 or more people. They are more concentrated in the public sector than in private sector organisations, but nearly half of all trade union members work in the private sector. Trade unions remain mass organisations of continuing significance. They play vital roles in assisting their members and contribute in many unsung ways to productive employment relations throughout the economy.
That said, unions have been in decline for some years. Membership levels have fallen, although they have stabilised during the last three years or so. There has been a consequent reduction in the number of full-time and lay officials. Many unions have retrenched, cutting costs to match declining incomes. Some have merged.
Unions have shown remarkable resilience, despite the pressures on them. Many have taken steps to provide a wider range of services to their members. They have reshaped themselves to appeal to workers in the expanding parts of the labour market, and have recognised the changing needs of business in moving towards partnership working and the flexible deployment of labour. In short, unions are modernising themselves. The TUC, for example, has redesigned its educational services to unions, and it has established the TUC Partnership Institute to encourage new approaches to employment relations.
However, it is incontestable that the pace of change is too slow. All parts of society lose out as a result. Workers do not receive all the quality services that they need. Equally, employers do not benefit from working with well trained and well supported representatives. There is evidence that union involvement contributes to the development of high-performance workplaces that involve and engage their staff, have sound human resource systems, and therefore have a motivated and productive work force. The economy loses out on the general benefits, better training and improved health and safety, with which effectively unionised workplaces are also typically associated.
We believe that the time is right to inject state funding into unions to stimulate the processes of modernisation. Like other organisations, unions deserve and need help to adjust to changing markets. Employers recognise that, and have generally welcomed the new fund. The CBI says that business would support union modernisation, and the Engineering Employers Federation considers that the proposed uses of the fund will be largely acceptable.
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Of course, employers would be concerned if the fund supported industrial action or recruitment, but it will not. In our judgment, a lot can be achieved if we make about £5 million to £10 million available, which would be spent over several years.
I turn to the shape of the new clause. It works by inserting proposed new section 116A into the Trade Union and Labour Relations (Consolidation) Act 1992. It defines the recipients of the support as independent trade unions and federations of trade unions. That means that non-independent trade unions—organisations that often depend on financial support from employers—will be ineligible for assistance from the fund. Of course, virtually all union members belong to independent unions.
I expect that hon. Members will be most interested in the precise purposes to which the fund will be put. Five broad categories of purpose are set out in paragraphs (a) to (e) of subsection (1) of new section 116A. All are connected to the theme of modernisation, although none uses the term ''modernisation'' explicitly. That has no sinister significance. Modernisation is a broad term and was not considered to be defined tightly enough for this statutory purpose.
I hope that it will help the Committee if I go through each of the five categories of support. Paragraph (a) provides for funds to be used to ''improve'' the carrying-out of any existing union function. Under that heading, we would envisage support being given to unions to reassess their internal efficiency, possibly by using outside consultants. There remains much scope for unions to streamline their operations, using new management methods to achieve productivity gains and a better deployment of their limited resources.
Paragraph (b) provides for the fund to be used to enable unions to prepare for carrying out new functions. We would particularly want to assist the way in which modern unions seek to widen their dialogue with employers. The Bill, through the information and consultation provisions in clause 31, provides some legal underpinning to the development of such a wider dialogue. Unions will need to equip their representatives and members to make best use of that new opportunity through training in company accounts and corporate strategies.
Paragraph (c) covers assistance to increase the range of union services to current and future members. We see that being used mainly to widen the ability of unions to meet the needs of young, female and ethnic minority workers, who have traditionally been less involved in union affairs. That could involve delivering services in new forms relevant to our increasingly diverse labour market.
Paragraph (d) provides for support to assist the merging of unions. As I said, financial and other pressures have prompted a series of union mergers in the past decade. However, there may be scope for further merger activity to simplify union structures and to align them with changing labour markets. The
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fund could help unions to employ consultants to assess the implications of merger options.
3.15 pm
Paragraph (e) deals with the funding of ballots and elections in unions. As with public elections, the turnout for union ballots is often low. We would be interested in using the fund to help to finance innovative ideas or pilot projects designed to increase the numbers participating in ballots. That dovetails with the power in clause 41 to widen the range of methods that unions can employ in statutory elections. If we used that power to allow, say, internet voting for those purposes, we would like to use the fund to gear unions up to use the new method of voting. Of course, state support for union balloting is not new. The previous Government spent more than £24 million between 1981 and 1996 in financing the costs of union elections, strike ballots and other forms of statutory balloting.
I have tried to give examples, under those five headings, of the kind of projects that the fund could support but, of course, at this early stage, I cannot give a definitive list of all the types of project. That will depend on the outcome of our detailed consultations. However, we are clear that the fund will be unsuitable for some types of project. It might assist the Committee if I mentioned some of the things that we do not foresee the fund supporting.
The focus of the fund is on supporting innovative working by unions or their contemplation of major strategic decisions. It follows that we are not interested in funding the day-to-day work of unions, where there is no change in approach. That would be a straight subsidy and there would be no knock-on benefits to that union or, through a demonstration effect, to other unions in encouraging positive adjustment. It also follows that the fund would not be used to fund the day-to-day recruitment of union members. Such initiatives by unions are often linked to campaigns for recognition. It would be inappropriate for the Government to take a role in what might become a contentious issue between a union and an employer.
It follows that the fund will not be used to support unions in their collective bargaining with particular employers. Again, that would intrude into the delicate relations between a union and an employer. The fund will not be used to finance the political work of unions. That is a contentious area, and the Government wish to avoid any suggestion that unions could use the fund to finance directly political donations to the Labour party or any other political party. Finally, the fund will not duplicate other types of state or European Union funding for unions. In other words, the fund should be used to provide funding that is additional to that found elsewhere, and that finances additional activities for unions that would otherwise not have occurred.
New clause 5 gives no suggestion of the way in which the fund will be managed or administered. I imagine that hon. Members would like some idea of our thinking on those matters. I envisage that it will operate on similar lines to the successful partnership at work fund. If so, unions will be asked to bid
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periodically for funding, and their applications would be assessed against clear selection criteria. The process would be overseen by an independent supervisory body that could advise Ministers on the ranking of projects and, more generally, on the fund's overall operation. We would from the outset develop a clear evaluation strategy to measure the effects of the fund, examining in particular whether the fund is achieving its stated objectives.
There is considerable work to be done before the fund is ready for introduction. We are committed to detailed consultation before our plans are finalised. However, I am convinced that a fund is needed. We want modern unions, and we want them to be properly structured and efficiently run. We want them to be outward-looking, to accept new challenges, to develop wider dialogue with employers and to meet the needs of our diverse labour force.
Amendment No. 58 is consequential on new clause 5. It changes the long title of the Bill to ensure that it fully encompasses the uses to which the fund will be put. I commend new clause 5 and amendment No. 58 for inclusion in the Bill.
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