UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 543-vii

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Scottish Affairs Committee

Blacklisting in Employment

Wednesday 22 January 2014

Kevin Coyne, Bernard McAulay, Phil Whitehurst and Steve Murphy

Evidence heard in Public Questions 3507 - 3586

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Oral Evidence

Taken before the Scottish Affairs Committee

on Wednesday 22 January 2014

Members present:

Mr Ian Davidson (Chair)

Jim McGovern

Graeme Morrice

Pamela Nash

Sir Jim Paice

Lindsay Roy

________________

Examination of Witnesses

Witnesses: Kevin Coyne, National Officer for Energy and Utilities, Unite, Bernard McAulay, National Officer for Construction, Unite, Phil Whitehurst, National Officer for Engineering Construction, GMB, and Steve Murphy, General Secretary, Union of Construction, Allied Trades and Technicians, gave evidence.

Q3507 Chair: May I welcome you all to this meeting of the Scottish Affairs Committee? As you are aware, the Committee has been conducting an inquiry into blacklisting in employment. We have been looking at what has happened in the past and what can be done to remedy that, but we are also interested, of course, in looking at best practice and what we can recommend, going forward. Today’s hearing is intended to clarify the EDF agreement, which we have been told is perhaps a template for good practice. That is what we want to flush out.

We understand that there will be a number of votes during the course of the afternoon. Normal procedure is that the Committee is suspended, we go off to vote and then we recommence. Hopefully, notwithstanding that, we should be finished by about 10 o’clock-we’re all on an hourly rate.

Could I start by asking you to introduce yourselves and briefly to outline your role in the Hinkley Point negotiations?

Phil Whitechurch: My name is Phil Whitechurch. I am the GMB national officer for construction. I was on the negotiating committee for all three agreements for Hinkley Point C.

Steve Murphy: I am Steve Murphy, the General Secretary of UCATT. I have been involved in the civils agreement for Hinkley Point C.

Bernard McAulay: I am Bernard McAulay, a national officer for Unite. Like Phil, I was involved in all discussions relating to the Hinkley Point agreements.

Kevin Coyne: I am Kevin Coyne, the national officer for energy and utilities, with particular responsibility for nuclear. Like my colleagues, I was involved with the three agreements.

Q3508 Chair: May I first ask a general question, before we get into the detail, about whether you believe that blacklisting is still ongoing in the construction industry?

Steve Murphy: Yes, it is. We believe that it still is. In fact, we have recent evidence that it has been happening, with a Unite member who was blacklisted on Crossrail.

Q3509 Chair: The Committee has taken quite an interest in the Crossrail issue, as you will be aware. I wondered whether there has been any evidence of it ongoing elsewhere in construction.

Steve Murphy: It would be a reasonable assumption that blacklisting was still occurring now-albeit anecdotal. We have no hard evidence at the moment but, rest assured, we still believe that it is happening.

Q3510 Chair: Is that the general view of all the witnesses?

Bernard McAulay: Yes.

Kevin Coyne: Yes.

Phil Whitechurch: Surely the evidence the Committee has got through Kerr on blacklisting-everything about it-tells you that it is happening, and it will continue in the UK until blacklisting is made a criminal offence punishable by imprisonment and unlimited fines. Until that legislation is brought in by whichever Government decide to bring it in, it will continue.

Chair: The bells are ringing for a vote, so we have to go right away. We shall be back as quickly as we can.

Sitting suspended for a Division in the House.

On resuming-

Chair: We can recommence, as although some Members are on their way back, we have a quorum now.

We were asking whether you believe that blacklisting is ongoing. Graeme, you want to ask a supplementary, and so does Jim.

Q3511 Graeme Morrice: Thank you, Chair. I am a bit out of breath after rushing back from the Division.

I was interested in your sharp response to the Chair when he asked if you believed that blacklisting was still taking place within industry. You will be aware that, as a Committee, we have spent several months inquiring into the whole issue. We have spoken to myriad people, and we have obviously spoken to employers. The feedback that we had from them is that they accept that it happened in the past, and we often got the "mea culpa" excuse from them. When we asked whether they felt that it was happening today, they all said that they did not think that it was. Of course they would, wouldn’t they, on the basis that engaging in blacklisting is a criminal offence?

How would you respond to that? You said that you felt that there were anecdotal examples of blacklisting taking place. I am not sure whether we can go into that today, for legal reasons. Perhaps we need to have some further discourse on the issue, because it is obviously of concern.

Finally, I should have declared an interest at the beginning. I am a member of Unite the union, although I am sitting here as a parliamentarian.

Steve Murphy: I shall respond as general secretary of UCATT to the Unite question.

I said "anecdotal." Yes, the trade unions believe that blacklisting is still happening. The question that I pose is this: unless there was a tip-off when the CA was raided, there were 44 companies in the file that were blacklisting trade union members. Nobody has ever been able to answer me, but if the CA had not been raided in 2009, would those 44 companies still be blacklisting our members? The clear answer to that is yes.

When I spoke to some of those companies, they said, "Oh, we didn’t know it was happening." If at the very top of the companies they are saying that they did not know it was happening, there is obviously something happening further down the chain-it was happening, but they were not aware of it. It is a rhetorical question, I know, but I and my colleagues believe that there will still be blacklisting-probably not in the way that it was happening in the past, when there were files made and all that, but by word of mouth. I am absolutely convinced that, if you are a shop steward or a safety rep, the chances are that by word of mouth you may be blacklisted by construction companies.

We have to remember that there are hundreds of construction companies working in the UK; 44 of them were found to be on the files, and we know that only between 5% and 10% of the files were ever found. There is a huge chance, then, that the industry is still blacklisting.

Q3512 Graeme Morrice: Would anyone else like to respond?

Phil Whitechurch: I do not want to labour what I said before about blacklisting needing to be made a criminal offence punishable by imprisonment and unlimited fines. Equally as important is that we know now that the employers cannot be trusted, after all that has come out about the blacklisting scandal. As Steve said, we are getting it by word of mouth from shop stewards that it is happening. Unfortunately, we do not have access to every site for shop stewards. We have to fight for access to every site. The law wants altering again to protect workers’ civil rights from abuses.

As we have seen in this country, with all the evidence being given here, it is only by word of mouth. If there was open access on the sites, and that was made through legislation, we would find out then. We would soon find out, because it would be getting back more and more. So far it has been run covertly by the employers, and we could never have access on all the sites. It is only the sites we had access to where we have had information back, which was never believed. Now that Kerr’s office has been raided, we have the proof. We have the proof to tell you, "Yes, it has been happening." You are agreeing that it has been happening, so now the legislation needs to be altered to stop it.

Kevin Coyne: There is also a point in terms of the open application process. The problem currently is that there is no clarification, one way or the other, of whether somebody has or has not got a job because of their beliefs, for want of a better phrase. The thing about Hinkley Point, which I know we shall come to, is the audit and why it is critical. If you can audit applications, you can see exactly why somebody has or has not taken the job. That seems to me something that has to be adopted across the construction industry in order to bring any level of confidence to people that they are not being blacklisted.

Bernard McAulay: There is also another point that needs to be taken into account. Since the 1970s, what you are seeing in the industry is that the employers have changed their business models. By changing their business models, they have moved away from direct employment and, to make it easier, are engaging people on a CIS4 self-employed basis with employment business service providers and payroll companies. Operating on that basis is to undermine the role of the trade unions. If anybody raises issues of health and safety or about industrial relations on site, it means, in itself, that they are no longer required on site because the agencies remove them.

Q3513 Chair: Steve, you wanted to come in on this.

Steve Murphy: There are a couple of points that I would like to make. One has just been raised about payroll companies and full self-employment in the industry; it is the easy way to get rid of somebody if they are an activist or are trying to help their colleagues with health and safety. It is a very easy way to get rid of them the next day.

I would like to make this point. We are going to come to the Hinkley agreement in a moment, I am sure, but I just want to show you what kind of world we work in. The main contractor on Hinkley Point is a company called Laing O’Rourke. You will be familiar with it; it was one of the 44 named in the files of the CA. Picking up on the point that Phil has just made, we have extreme difficulty as a trade union in getting on to sites, particularly at the Alder Hey hospital in Liverpool, and other sites. The main contractor is Laing O’Rourke. It is very difficult-nigh on impossible-to get on to those sites to make sure that the CIJC working rule agreement is adhered to, that health and safety is adhered to, and that, if we have shop stewards, we can support them. We are going to come to the agreement in a moment, but I want to make the important point that we still have problems with these companies, even though they have signed up to the Hinkley agreement.

My final point on this-Phil is absolutely right; these are voluntary agreements that we are going to talk about-is voluntary agreements. What we need is legislation so that if somebody blacklists somebody, it is appropriate to have a custodial sentence, because they have absolutely ruined people’s lives. We have seen that in the evidence that has been presented here throughout the months. We have seen that people’s lives have been ruined, so there can be nothing less than custodial sentences when it is proved that companies have blacklisted individuals.

Q3514 Graeme Morrice: That point is well made. Parliament needs to look at the whole issue of how current legislation can be developed to cover the issues that you raise.

I think it was Phil who made the point initially in relation to blacklisting currently happening. You said that you felt that information coming back was anecdotal, but that it was difficult for the unions to engage in that, on the basis that there are some sites where you cannot get access. If you are receiving that information from your members or from employees, agency staff, subcontractors or whatever, what are you doing with that information? Potentially it is a criminal offence, and, although you may not be allowed on to the sites, I do not think that the police are barred from getting involved. What are you doing with that information? If you believe there is a continuation of blacklisting, it is incumbent on you, as it is on all of us, to do something about it.

Phil Whitechurch: We challenge employers on it, but it is up to us to prove that blacklisting is happening. The most difficult thing has been to get cast-iron proof that it is happening. Now all this information has come out. As Steve rightly says about Laing O’Rourke, one of the 43 companies on the list, it is proved with receipts that it paid towards the CA. We now have proof, but even then it still wants the legislation altering. As Steve said, we want custodial sentences and everything else that goes with it. It has to be the complete package. You have got to have the complete package. It is one thing to catch somebody doing it, but what is the punishment for doing it?

Q3515 Chair: Do others want to come in on that?

Bernard McAulay: Steve touched on Laing O’Rourke. Laing O’Rourke has a number of subsidiaries-for example, Crown House engineering. Crown House engineering notified the trade unions about redundancies and invited us in for consultation. Consultation is going through the process with the trade unions but, when you look and examine further their access to the work force, the work force are barred from meeting with the trade union officers. Where we have had shop stewards within Crown House, Crown House has isolated them. That has occurred in London, and the issue is being taken up through the local official in London, who is seeking legal advice on particular matters relating to being denied access to represent members. That is crucial.

Kevin Coyne: In addition, on a practical level, we are now moving towards a situation where activists within our union who are applying for jobs are being asked to lodge their applications with us also. We are monitoring that. If they are successful, there is obviously no problem, but if they are not successful we take steps in that regard, and that might be through our legal services in the manner that you suggest. That is going to be critical for the future, but we are just at the start of that process currently and it is something that we intend to do.

Q3516 Graeme Morrice: I am sorry to labour this point, but it is clearly an important issue. I fully accept what you are saying in terms of the practical difficulties surrounding all this. Phil, you mentioned that you needed to prove it. I am looking at it in terms of the legalities of the situation, because there is potentially alleged criminal activity here. Is it not just a case of you having evidence? At the end of the day, it is down to the courts of law to prove whether someone is guilty of an alleged offence, but obviously when it comes to the police charging they do it on the basis of the evidence. It may not always be conclusive, but nevertheless if there is at least a prima facie case they will obviously prosecute. On the basis of evidence that you are receiving, what are you doing with it, or do you feel that you do not really have enough evidence? Is the problem that you do not have real, tangible evidence, if it is all anecdotal?

Steve Murphy: As I said earlier, what we are hearing is anecdotal. We do not have any physical evidence. If we did, we would act on it. The three trade unions sat here would certainly act upon it; of course we would.

The other thing that we have to consider is this. Although it was underground before, our guess is that it will be going even further underground, and it will be phone calls to whoever. These people work with each other in a huge industry, and they all have their contacts, so I am sure-absolutely 100% convinced-as we all are, sat here, that it is still occurring today-anecdotally. We do not have the firm evidence, but as soon as we have it that will be exposed.

We must also remember this. With what has happened and the evidence that has been uncovered, the worry for us as trade unions is that potential shop stewards or safety reps, or indeed existing safety reps and shop stewards, may not want to raise issues or problems on the sites they are covering. It has a huge knock-on effect on the whole health and safety arena within construction. It is a problem. The problem is not going to go away, but the trade unions and the Blacklist Support Group will not be gagged by the industry-absolutely will not be gagged. We want to talk about some positives, and we want to talk about the Hinkley agreement, but we must never lose sight of the fact that we believe it is still happening, and our members believe that it is still happening. Unless legislation is brought in to introduce custodial sentences, in our view it will continue to happen. That is the reality of what is happening out there in construction. It is a huge business, and if they see somebody out there who raises an issue about health and safety that is going to cost them a few quid, you can bet your bottom dollar that they will blacklisted.

Chair: Jim, you wanted to ask a supplementary question a while ago.

Q3517 Jim McGovern: May I say, Chair, that if every witness is going to answer every question, some of what I want to ask has probably already been covered?

In an earlier discussion with the Chair, it was recognised that the information gained from the CA was probably just the tip of the iceberg and that it is much more widespread. The question that I was going to ask-I think you have probably covered it, Steve, in your answer-was about exactly how you prove it. Phil said that the big problem is getting access to sites. As a former GMB official myself, I have stood at factory gates, the gates to building sites and so on trying to get people into the union on the basis that if we had enough members, we would get recognition and have negotiating rights. Possibly it is a problem of recruitment. Obviously, when there is bogus self-employment-what we used to call 714 certificates, SC60s and so on-a lot of these operatives simply do not join the union. Is the problem possibly recruitment? From our side, the problem might be recruitment.

Bernard McAulay: The issue that you are talking about-recruitment-is an important element for everybody. It is about getting the message over to convince people to come into membership of a trade union regarding their rights, their entitlements and the impact on health and safety, and where people are asking basic questions about welfare facilities on site and PP equipment. Where people are raising this, you find that they are quickly removed from site and transferred across the business to areas where they cannot be influential. Anybody who challenges management on site is seen, targeted and removed from site. You cannot come in and say, "I’ve been blacklisted for that," because we have to have the evidence. They just say, "Well, that scope of work on the site has finished, and on the basis of that we have to transfer these people off site." We have evidence like that, and we can identify where people are raising it. The other point you touched on is recruitment. Recruitment is an ongoing issue for all trade unions in the industry.

Steve Murphy: You raise a very important point. You have done it, I have done it, we have all done it-we have all stood on the gates for people going in. It was a problem in the 1960s and 1970s, although I was not around then. We have a problem with 714s, 715s and SC60s, but we have a bigger problem now: we have not just bogus self-employment, but the payroll companies as well. When the lads and lasses are going through the gates now, their heads are down. If they are directly employed, there is a complete difference, but if they are working for a payroll company-by the way, you are paying for the privilege of working for the payroll company; you pay between £15 and £25 a week to pick up your wages-they have absolutely no employment rights. If you are doing that, it is desperation to get a job. If you are walking to the factory gates or walking up to that building site, your head is down and you do not want to engage with anybody. I have seen that myself. People will not talk to you; all they want to do is get the wage at the end of the week.

We have particular problems within the industry. You wanted to come on to those, and there is a way-

Q3518 Chair: Let us deal with that when we get to that stage. Before we come to the next set of questions, may I clarify one point? Steve, you mentioned that you had major difficulties about access to sites, particularly those of Laing O’Rourke. I was under the impression that, if a union had members on a site, you had the right to have access to the site. Would you clarify that?

Steve Murphy: Actually, you don’t. We have had protests outside the site in Liverpool about getting access. How can we do an audit of the site and of the members-bearing in mind that we have Laing O’Rourke there and there might be subcontractors-if we cannot get on to the site? So we do not know what the membership levels are.

Q3519 Chair: May I clarify? Union full-time officials can get on to a site only with the agreement of the company involved, and you have no right to meet your members actually on the site.

Steve Murphy: No. You can write to the company, but I think Laing O’Rourke on some sites around the piece have been asking for a month’s notice for us to get on site to meet our members. At Alder Hey hospital, we have had particular problems getting on to the site.

Q3520 Chair: Why is that?

Steve Murphy: It is something that we are dealing with currently, so I will no doubt be able to tell you in the near future what the problem is.

Q3521 Chair: I was tempted to ask you to write to us to give us some more detail, and then to suggest to the Committee that we should write to Laing O’Rourke to clarify the position.

Steve Murphy: Absolutely.

Chair: Why not do that? Why not put something in writing to us, clarifying this point about not having access? Once we have received it, we will consider how to proceed. It may be that we would wish to write to Laing O’Rourke, raising this as an example of the difficulties that have been brought to us. We may subsequently want to bring Laing O’Rourke before us. They are one of the companies that in due course we would probably want to bring in and have on oath about involvement with the Consulting Association, but we have not scheduled that or any of the others at the moment.

Q3522 Lindsay Roy: Is Laing O’Rourke involved in Hinkley Point?

Steve Murphy: Yes. That is why I raised the point. Laing O’Rourke is one of the main contractors. There are two contractors; Laing O’Rourke is one of the two.

Q3523 Lindsay Roy: Why won’t it extend the good practice from Hinkley Point to other sites?

Steve Murphy: We will come to Hinkley Point, and what we have done for Hinkley Point. It is a good question, and I would like to expand on that.

Chair: Can we come back to that after these points?

Steve Murphy: But it is very, very important that we come back to it.

Chair: It raises issues, presumably, about the role of the client and so on. We can come back to that later.

Q3524 Graeme Morrice: I shall focus on Hinkley Point and the common framework agreement that was brought about by yourselves and the employers. Will you explain how it differs from previous agreements between clients and contractors?

Bernard McAulay: On the point about Hinkley Point, if you go back there is some history. EDF Energy has operated in this country as a client, with numerous plants around the country. The last project built for EDF was West Burton power station. West Burton had numerous design problems, and advice was sought from ECIA-the engineering construction employers association-but that fell on deaf ears.

We should also look at the events that have occurred in the last five years. I have provided the review of the Engineering Construction Forum, which was set up in 2010 under the Labour Government. That identified the events at Lindsey Oil about planning and organisation, and the fact that the client should have a more effective role, instead of awarding the contract at the lowest price, and then having a free-for-all in a claims culture.

As a client, EDF decided to change. It looked at the bullet points that came out of the Engineering Construction Forum report and decided that it was going to build the next generation of nuclear new build power stations under an agreement directly involving the trade unions, the client and, if contractors were not in place, involving the contractors by bringing them into an agreement as to what the terms and conditions were.

If you just step back from Hinkley Point and look at a project called Vivergo in Hull, on the BP chemicals site, Aker Solutions was the EPC-the engineering procurement contractor on site. It had a company called Redhall Engineering doing the engineering construction work, but the two companies fell out. The client, Vivergo, and the EPC contractor removed Redhall Engineering; 350 to 400 people were locked out when they removed that contractor. That contractor then tried to talk about TUPE transfers and leaving people adrift. The ECIA completely failed to bring the two contractors together to resolve their differences. The client was looking at what were the key issues: "We have a project. We want to build the project, and we want to build it to cost, on time and within the programme." All those key items were not being achieved.

You can look at events that have occurred in other major projects around the country. Crossrail has no trade union involvement, because it left it to the companies. That is a difficulty. It is riddled with self-employment on site. It went back to the contractors, but the contractors dismissed it out of hand, saying, "We have to secure labour. We have to employ people the way they want to be employed." There are no audit facilities at all.

Look at other projects that have taken place. Laing O’Rourke was on Teesside; there was also Crown House, and Balfour Beatty, with Speke, doing the M and E job. Under the MPA in electrical contracting and on the mechanical side-at the time it was the AEEU that was signatory to the agreement-we had a major project agreement that talked about integrated team working. We wanted to build upon it and have an agreement that was credible, following the debacle over the Jubilee line. On that job, again, money was thrown at it with no employment conditions.

The T5 project on the M and E side was on cost plus 10%. It had something in there about integrated team working, but the contractors did not do anything at all about bringing people and making them more productive to deliver the project, because the contractors were fairly convinced and comfortable with the working arrangements. The client gave up in the end. The project got built, but it was not designed in the manner that should have been delivered. These are the key issues affecting industrial relations on site. There was a seven-day dispute with Laing O’Rourke on that particular site. You have to go through the events that have taken place in construction.

We have a client that said to the trade unions, "We want change. We are not prepared to continue going down this particular route." Everybody was challenging the trade unions about why we were doing something differently from the current collective agreements. We do not believe that the structure of the current agreements is strong enough to deliver direct employment. One of the key issues is direct employment, but there is also the other issue, which is about the clause in the agreement that the joint project board will be the people who decide whether there is a need to bring an employment business service provider in, on a short-term basis. It will not be left to the companies on site to bring people in to undermine the collective agreement.

What we have is a structure that talks about six working groups. Those six working groups talk about work organisation. What happens with work organisation? It is about planning a job. If you look at the previous jobs that I touched on, none of them have planned to succeed. Actually, they have failed to plan. That has been one of the big disasters of this industry. If you look, we are having six working groups, and the trade unions are going to be involved in those working groups and will be able to monitor things, and it will be fed through the structure to the joint project board so that we have full implementation. We can deal with it.

We talk about integrated team working, different working and shift patterns to meet the requirements on the job, and what sorts of bonus scheme. People might say, "What site access and egress have you got?" That is significant, because of where Hinkley Point is located, and the motorway network. You have to lay down car park areas. Because you do not have the infrastructure to get to the site, there has to be a bussing arrangement. All this has been factored in. When you are talking about the other projects, none of this has been factored into the structure.

If you look at supervision across the industry, since the 1970s employers have moved away from direct employment. There has been no pay structure as such for front-line supervision-i.e. to replace the old general foreman-to be actively involved in delivering the project. That leadership has disappeared across the industry in general.

You talk about training. The Engineering Construction Industry Training Board and the Construction Industry Training Board both do training-they do training up to management level-but it is not in people skills: inspiring the shop floor to go out and get the projects done; and to plan, organise and tap into their ability and knowledge to deliver their areas of work. That is sadly lacking. There is also the mentoring part to assist people who are having difficulties, instead of the bullyboy culture, which has been notorious in construction. That links to the employment support unit, which is key. That talks about the set-up of the project, making sure that everybody is going to be compliant with the structure of the agreement-the process of reporting back and the engagement with the shop floor, which has been sadly lacking.

How are you going to recruit your work force? There is a clause in the agreement; it is on the mechanical side of the agreement, and we will be going back to EDF to bring that kind of clause in so that we have a consistent approach across the site. It is about people having the right to be interviewed. I have just been reading a report from the CIPD, which talks about the fact that in construction everybody is self-employed, so there is no need to interview people. Interviewing people is about establishing people’s competencies. It is not about the individual’s ability as a trade unionist or anything like that. It is about competency to do the job as a skilled journeyperson.

On inductions, there is involvement of the trade unions in inductions to encourage people to come into membership under the agreement and to know who to go to if there are problems on site, and to utilise life-long learning. The employment affairs unit will also be utilised when redundancies are occurring to provide people with the opportunity to be re-employed with other companies on site. Then you have statements of particulars. Obtaining a contract of employment is near non-existent in the construction industry for people who are directly employed.

We have talked also about pensions. We did something that we believed was essential. We have 5% for the employee under the structure, because of auto-enrolment, but we also have 5% coming in from contributions on a like-for-like basis. In 2016, it will be 4% and 4%, as opposed to 4% and 2%. In 2017, instead of 3% and 5%, it will be 5% and 5%. That is a significant step forward, because construction workers have not had a pension scheme like the one people have in other settings in the industry.

On industrial relations, there are going to be regular meetings. The site union representatives will be meeting the companies on a monthly basis, having local joint meetings with the companies to iron out difficulties. Then, on a bi-monthly basis, they will be going into site project meetings. On a quarterly basis, the national officers, my three colleagues, will be meeting the client and the senior HR people, or managing directors of the respective companies, on site. This is the first time that trade unions have ever been involved at that level, and it is a major step forward.

We then come on to skills development, making sure that everybody is being given the opportunity to acquire a skill. On the civil side, Laing O’Rourke came in and said, "Five hundred apprentices, adult trainees, on that job." But we went further in the mechanicals when we sat down to it; we discussed it further with our shop floor activists and shop stewards, and on the mechanical side, we have an 8:1 ratio. That is significant. It has never been known in the industry before. When we did some audit searches across the country in engineering construction, we could identify that on average it was a 50:1 ratio. We have to ensure that we have the right skills to deliver the next generation; if we do not have the skills, we shall have to go overseas to bring the labour in. We have the ability in this country, and we have the skill sets. We just need to adapt, and we can deliver.

We have adult training schemes. There are adults who have left school and drifted about-the 18-to-35 age group; disadvantaged working-class people who are overlooked. We are there to give them the opportunity to acquire a skill. That is crucial to everybody. There are also personal development plans to assist people through a career pathway, to move from the tea boy right through to front-line supervision. We also have skills funding to make sure that we are tackling it and utilising the resources.

A crucial commitment is to get the welfare facilities right, because many times on jobs welfare facilities are not in the right place. Everybody criticises the working man on the shop floor because he has a 25-minute walk to the canteen. Productive performance is about planning the job and making sure that the facilities are in the appropriate locations to utilise the productivity that can be achieved, and not having people walking distances. It is about where the cabins are, where the tea breaks are, and the timing of the tea breaks, getting the message over to people and maintaining standards.

We believe that this agreement is a raising of the bar, taking it to the next level. We are trying to encourage employers to come away from the approach they operated in the past. Operating in the past has been a failure. We have identified for you certain projects where there was not the engagement of trade union involvement. That is why we believe that there is an opportunity to build on this as a core mechanism for going forward.

Q3525 Chair: That was the longest single answer that we have ever had in the entire history of this Committee. It was also done, I think, in one breath. It was worth letting you give us all that, in order that we have it on the record, but I hope that your three colleagues do not feel obliged to compete with you.

Listening to you, it seems to me-perhaps you will correct me if I’ve got this wrong-that there are three things that would characterise this agreement. First, it was client-led, much more than on other occasions. Secondly, it had the trade unions as partners, much more than other agreements. Thirdly, it was comprehensive in the sense that it was an agreement covering virtually the whole range of activities on the site. Those three points are the issues that differentiate this from the normal run-of-the-mill agreement. Is that true? I see some of you nodding. That would be sufficient, but as we have said before nodding is not recorded by Hansard.

Steve Murphy: On that point, you are absolutely right. Principally, there are three elements to it. It covers the spectrum of a construction site. There is £16 billion investment in the site, so this covers everything.

You are right to point out the fact that the trade unions, as Bernard eloquently said, have been fully engaged in the process. It is ironic that it is a French company that is producing our power that has negotiated with us on this agreement. It comes back to the point that I was going to make in a wee while about procurement. Yes, it is essentially that. When we are building a site like this, there are things that you do not think about. What are people going to do of an evening? It is very important; they have to have a social life. It covers everything, but it is very, very important that the collective trade unions are engaged at all levels of the project. Equally important is that people on the site are going to be directly employed. That is key to the industry in the UK.

Q3526 Chair: That is a point that I missed in the three points I made. There is also the point about direct employment.

Steve Murphy: Yes.

Kevin Coyne: It can be covered by the phrase "best in class" for terms and conditions. That is an important element in the agreement.

Q3527 Chair: There is perhaps a point that is almost philosophical. Steve, you were saying that it was a French company and so on, and I wonder whether it required somebody from outside the British environment to come in and do something. Phil, did you want to add something?

Phil Whitechurch: I did, just to make the point so that the Committee is aware of it. EDF does not build power stations; it outsources the work to subcontractors. Getting back on track to blacklisting-which is what we are here for, and Bernard quite eloquently painted a full overview of the agreements with the negotiator-it truly believes that it can work with the trade unions 100% on blacklisting, with the structures that Bernard has highlighted for working as partners with the trade unions. It realises that blacklisting does exist. It does not build power stations, but subcontractors do, and it is these contractors that have been blacklisting our members. EDF is going to work with us 100%. Being client-led is the key. Because it is leading it, it can now audit and run the job. It has never been known that we get involved with the client. Normally our involvement stops at the EPC, because the client is never involved.

Q3528 Chair: What is the EPC?

Bernard McAulay: The engineering procurement contract.

Q3529 Jim McGovern: If EDF finds out that one of the contractors is somehow involved in blacklisting, is the contractor put off site? What is the sanction?

Phil Whitechurch: It would go to the joint project board, which would decide what course of action to take. Because we are involved with the client, we can talk with the client about our findings, and it is discussed with all the contractors-100% engagement.

Q3530 Jim McGovern: Yesterday, on a different subject, we were talking about sanctions, and the witnesses said that no sanctions had ever been applied. That was almost suggesting that, because no sanctions had been applied, everything was perfect and hunky-dory. The point I am trying to make is that if you find that one of the contractors working on an EDF site-

Phil Whitechurch: I am sorry to cut across you, but I shall answer you now because I know exactly where you are going.

We sit on the joint project board. The recommendation by the three signatory trade unions involved-I am sorry, it is four; it includes Prospect as well-is that if they get caught blacklisting, they will be removed from the site and another contractor fetched in. It is not dissimilar from a lot of things, such as when a company might go bust or something like that. They just TUPE the employees over to the incoming contractor, and away we go again. It has happened on several jobs-not with blacklisting but with companies going bust or not doing the job right-so it is nothing that we could not handle. Yes, if they get caught blacklisting, our recommendation would be to remove that company from site.

Q3531 Jim McGovern: On the contract that I was speaking about, there has not even been a hint that anything like that has been going on.

Phil Whitechurch: Come again? Would you repeat that?

Jim McGovern: On the contract that we are talking about, Hinkley Point, there has been no hint whatsoever that anything like this was happening.

Steve Murphy: It has not started yet.

Q3532 Chair: If a company is caught blacklisting on site, the agreement is that they are put off. What happens if they are caught blacklisting on another site-a different site completely dissociated from this?

Phil Whitechurch: This is why I said earlier, although I do not want to keep mulling over things, that if legislation was altered to make it a criminal offence-

Q3533 Chair: I understand that. I understand the point about legislation, and we will come to that slightly later. In terms of this agreement, my understanding of what you are saying is that, if a company is caught blacklisting on this site and it goes to the project board, that company is potentially kicked off the site. What I am not clear about is what happens if it is caught blacklisting on another site. Is it still kicked off?

Kevin Coyne: This agreement does not cover that. What you are talking about, in effect, is self-cleansing. We hope that this agreement is a catalyst within the industry so that best practice applies, especially with blacklisting. In terms of the companies on that site and their practice elsewhere, we can embarrass them-we can tell the company and do all those things-but we have no direct input under this agreement on what companies do on other sites.

Chair: Thank you. That is helpful. Lindsay, you wanted to follow this up.

Q3534 Lindsay Roy: What steps are you taking to make that breakthrough on other sites? Are there any other sites where this has been a catalyst for development?

Steve Murphy: I was going to come back to you about this, wasn’t I?

Chair: Yes. Can we come to that point slightly later, once we have gone through a bit more of this?

Q3535 Graeme Morrice: To develop the theme of the agreement, and hopefully preventing the occurrence of blacklisting, you said a few moments ago that anyone caught blacklisting on the site would be booted off, because that is explicit within the agreement. Is there anything else in the agreement that you think is particularly helpful in potentially addressing the issue of blacklisting?

Kevin Coyne: Yes, there is. Through the employment affairs unit, there is an audit of the agreement. The audit would also take the form of auditing applications through the job application body. We will know exactly who has applied for jobs and who has been rejected. Secondly, there is a third-party audit involved in the employment affairs unit that is part of the agreement, which will also assist. We believe that we have built in the mechanisms. We might be a bit naive about this, but it is the first time that we have had a go or had the opportunity to do this. We believe that it can be made rigid and robust, and that we will be able to analyse what is happening on the site, not just in terms of blacklisting but also in terms of contract compliance on all the other issues.

Steve Murphy: Can I come back to the point that you made earlier? We have this agreement, and, as was said earlier, we hope that it is going to be a blueprint for the industry. I shall try to answer your question a little better. If you are a contractor, you would be kicked off one of the most prestigious sites in the country. You will go to another client, but that client will say, "Why did you get kicked off Hinkley?" As I said earlier, although it is a huge industry, it is a small world that we work in. It will inevitably get out, so it is going to be a form of embarrassment, as has been said. This is only the first step. Somebody once said that the longest journey starts with the first step, and I believe that this is the first step. We need to introduce this agreement to the whole industry. Again, we will come back to the point a little later.

To back up what I said about the company going out to another contractor, under this agreement, as Kevin said, we jointly audit the site and we audit the agreement. Out there, we obviously do not. Hopefully we will in the future, but we don’t if it happens currently.

There are remaining issues. You asked earlier whether blacklisting is still happening-the first question. If you ask what happens if a company blacklists again, we are answering the question ourselves.

Bernard McAulay: You also have the opportunity when people apply for a job. If their CVs are not bad, and constantly not bad, you have the opportunity to monitor it. If the individual has all the skills to do the job, you have evidence there. That process will be followed because, in construction, people do not get interviewed. We have now put that into the agreement, and it is a key component to put the onus and responsibility on companies to treat people correctly.

Q3536 Chair: Are all the issues that you are raising with us now ones that you think are transferrable to other contracts, and are all best practice?

Bernard McAulay: Yes.

Kevin Coyne: Yes.

Phil Whitechurch: Yes.

Steve Murphy: Yes.

Q3537 Graeme Morrice: I have one more point. Often agreements are compromises between the various parties. I am sure that you would like to see further improvements to the agreement, but from what you describe it seems to be not a bad agreement in general. With regard to the issue of blacklisting, do you think that there are areas of the agreement that could have been improved in terms of tackling that whole area? Do you think it could have gone further?

Bernard McAulay: There is always scope for improvement in all agreements. Looking at the report from CIPD, it talks about interviewing, pre-employment vetting, being fair, giving feedback and transparency. That is crucial, but there has never been that in construction-because of the volume of people engaged on a self-employed basis, they do not believe there is a need to do it. That is crucial; it is changing the culture of employers to go back to direct employment.

Kevin Coyne: Importantly, this is the first agreement to use the phrase "all parties agree that it is not acceptable for any party to use or make any reference to any form of blacklisting." In a sense, as trade unionists, your members always come to you afterwards and say, "You should have got that," when you only got this. It is work in progress. We are working on it, and we hope that the mechanisms involved are things that work and are transparent, and then we can apply it to other agreements in future.

Q3538 Jim McGovern: You are probably aware that we have taken evidence from a large number of witnesses in this inquiry-not only trade union officials, but construction workers. The constant throughout has been that people who raise health and safety issues find themselves blacklisted, either knowingly or unwittingly. Do you think that this agreement addresses that problem to make sure that there will not be a problem-that, if anybody wants to raise a concern on health and safety, they can do so without fear?

Phil Whitechurch: Bear in mind that with this agreement, there is a nuclear safety culture that comes into it, which is far above the bar of normal construction sites. With EDF’s awareness of safety at generating stations and nuclear, it is going to adopt the same safety culture on the construction side. There will be active safety reps and everything is set up; I think Nigel Cann gave you evidence of what they do, with the bulletin boards and everything.

I am not here to fluff up EDF’s pillow. At the end of the day, we are negotiating what we think is a best in class agreement, but on your question, the safety culture there is going to be far higher than it is on other sites. EDF will listen and it will come back then to the employment affairs unit. There is a structure built into it to answer every safety question, and safety reps will be taken seriously.

On blacklisting, there is employment brokerage, where everybody who applies for a job has to go through safety vetting and everything, so everybody’s applications will be monitored, and also the replies to the interviews, which Bernard went through with you. Yes, I think that safety will not be an issue, regarding blacklisting or ostracising anybody, because in nuclear they take safety very seriously.

Q3539 Jim McGovern: I have been a safety rep, and my background is the construction industry. We were allowed to do quarterly inspections of sites and so on, and often the management would say, "If you try to implement this, the site will be closed."

Phil Whitechurch: I have had experience of that on sites myself. It is a known fact on construction sites that when there is a big lift to be done, or anything like that, safety is put in a box until the lift is done, because of the sheer cost of shutting the site because of safety. Safety reps are not listened to; they have never been taken seriously. It is happening on construction sites that Bernard and I are monitoring now; we had one safety rep who was suspended from work because he pointed out a safety issue-balancing a lift with a fork truck. Because that safety rep worked for an agency and not directly for the employer, they suspended him and then told the agency that he was no longer required. It is happening, but we have enshrined in this agreement for that not to happen. It cannot happen.

Steve Murphy: I think, Jim, that our expectation from the trade union side-you spoke about inspections, and we have all done that-is that this will be the safest major contract site in the UK, with the right provision for safety representatives and safety committees, and with the level of engagement with the trade unions that was explained to you earlier. We have to make it the safest.

Kevin Coyne: There is monitoring in terms of the employment affairs unit. There are three levels. First, obviously, is the trade union level and the health and safety role. Secondly, there is anonymous reporting, which will be fed into the employment affairs unit on which trade unions sit. You will be able to audit that as well, and understand the reasons why somebody felt the need to report anonymously rather than reporting openly. Thirdly-

Q3540 Jim McGovern: I have actually read that, but if there is no fear factor any more, why would some people-

Kevin Coyne: Precisely, but it is a safeguard, if you think about it. However, we need to analyse why somebody felt they would need to do it anonymously rather than openly. On nuclear sites, it is very important that people are open and that there is a no-blame culture, in a sense, so that people are not scared of reporting things. That is absolutely essential within the whole nuclear industry.

Bernard McAulay: The key to the success of this project is direct employment. That puts a clear onus on companies. It will build confidence in the work force if they can raise their concerns, because the structure is built in. I am confident, and I am sure that my colleagues are confident, that the role of the safety representative will rise.

Q3541 Chair: Before Jim comes in with his next question, you said that the key issue here is the question of direct employment. Unless I am mistaken, the other two unions agree with that. For the record, is that your view also?

Kevin Coyne: Yes.

Steve Murphy: Absolutely; that is absolutely correct.

Q3542 Chair: We just wanted it on the record that it was a unanimous view that the role of direct employment was crucial.

Steve Murphy: The biggest scourges in construction are full self-employment and payroll companies-on the record.

Q3543 Jim McGovern: Possibly Ian put this question to you earlier, Steve, but do you believe that this agreement could be replicated in other areas, particularly in the public sector?

Steve Murphy: Absolutely. That is what I wanted to come on to.

Q3544 Jim McGovern: Related to that is whether you are aware of any major clients who have expressed an interest in the document.

Steve Murphy: The supplementary question we can come to in a second, but first may I say this? Irrespective of EDF, the biggest client in construction in the country is the Government. It is huge; about 80% of all construction work in the UK is Government-procured.

Ironically, as I said earlier, if we can get an agreement with a French company-which, by the way, is out to make a profit on this build; it is not doing it for nothing or because it wants to supply fuel and light to the UK, but doing it for profit-and the trade unions as in depth as this, why can’t the UK Government do the same?

As a supplement to what you were saying, we have had meetings up in Scotland and we have had meetings in Wales-with Johann Lamont in Scotland, and with Carwyn Jones, the First Minister in Wales. You will have seen in evidence what came out of those two Parliaments. It is very important. Advice was given to councils in Wales about blacklisting, and, if any company has been blacklisting, it should not be part of procurement. But this goes further, doesn’t it? This really says to clients, "This is an agreement that can work."

May I make another point? I said that EDF wants to make a profit. It wants to make a profit on the fuel, but it also wants this done in time and on budget, and it will make a profit there as well. I promise that I shall come back to your point about Laing O’Rourke in a sec, but the contractors will want to make a profit as well. If this is transferable, and I believe that it is, why can’t the Government make a profit on all the contracts we have got around the country? I have talked about hospitals and other contracts.

To answer your question, yes, it is a blueprint. It is a blueprint that is absolutely needed within our industry. What other industry employs people as we do? What other industry kills 40 people a year because people dare not raise questions about health and safety? What other industry has blacklisted thousands of workers? There is no industry other than the construction industry that does this. To take somebody who is directly employed and say to them that the only way that they can have a job in future is to work through an agency or a payroll company is despicable. That person may have worked for the company for years-for decades-but then be forced to work, having to pay for the benefit of working, for an agency or a payroll company. If the Government are serious about challenging those bad practices in construction, this is the blueprint for the Government. This has to be the blueprint.

I make a final point on this. When are we going to wake up and smell the coffee, and realise how much money is being lost to the country by full self-employment and by payroll companies that are not paying the right level of tax? How much money is being lost? I can tell you: it is almost £2 billion a year. Two billion pounds a year is being lost to the Exchequer through full self-employment in construction. We can do better than this, can’t we, by direct employment?

Q3545 Chair: Lindsay, you wanted to come in here.

Steve Murphy: I am sorry, but was it the question about Laing O’Rourke? I wanted to come back to you on that.

Lindsay Roy: Yes.

Steve Murphy: I tell you now: with this agreement and the contract, Laing O’Rourke was kicking and screaming at the agreement, and I am sure my colleagues will bear this out. It was kicking and screaming. Although it wanted the contract, it did not want to sign up to it with all the benefits that were in it. Eventually it did, but it did not want to. It certainly would not want to take it out of Hinkley and put it in somewhere else unless it was absolutely forced to. That is why I am coming back to procurement. It came kicking and screaming. It wanted a piece of the action, but did not want all the agreement-it really didn’t-until EDF, the client, said, "Either you have it or you leave it," and it had it.

Q3546 Jim McGovern: Laing O’Rourke did a major project in Dundee, a shopping centre, about 10 or 15 years ago. When anybody started there, on the day they started, they got the hard hat, the Totectors, the overalls and a union form. That was from Laing O’Rourke. I must say that UCATT had a very good organiser at the time in Steve Devine.

Steve Murphy: Steve was brilliant, yes.

Jim McGovern: So I am surprised in a way that it is being portrayed as the villain of the piece. I have always regarded McAlpine’s as the villain when it comes to blacklisting.

Steve Murphy: I can only say as I find. To be fair, Laing O’Rourke employs direct. There is no question about that. It employs direct but, when we see it kicking and screaming when coming to the table to sign this agreement, it is a problem. When it does not allow us on certain sites around the country, it is a problem. There is something there that is not right. I would not have raised it if it was utopia.

Q3547 Lindsay Roy: Have you tried to introduce this blueprint at any other site projects?

Steve Murphy: We call it a blueprint, but the ink is only just drying. No doubt, as I said earlier, what we are saying to politicians-local politicians and particularly shadow Ministers-is that this kind of agreement has to be the norm in future.

Kevin Coyne: The point has been well established that it is client-led, which is a new phenomenon. What we are doing, certainly within Unite, is talking to the other nuclear new build companies: NuGen and Horizon. We will be putting forward the agreement as one which-

Q3548 Chair: Are NuGen and Horizon new build companies in the nuclear industry?

Kevin Coyne: Yes, in the nuclear industry; at the new Wylfa plant, which is Horizon, and the new one up at Sellafield. That is quite apart from Sizewell, if they build that. They are all major, massive projects that will be undertaken, possibly, over the next 20 years. We see this as the blueprint for the whole of that industry, and obviously for other major projects.

Q3549 Chair: Can I clarify this? During another inquiry, we visited Dounreay and were struck by the safety culture there, even having to hold the railings when we were walking down the stairs. You could see the mentality of it. Given that the other examples that you hope to take it on to are both also nuclear power stations, is this an agreement that is much more applicable to that particular industry than to anything else in general?

Bernard McAulay: No, because we have to look at the other infrastructure projects that the Government have on the drawing board. On the basis of that, the trade unions will be seeking meetings with those prospective clients, because we want to raise the bar.

Kevin Coyne: In answer to your question, we are using this as a model that we will take to other employers. I believe that you set the alarms off at Dounreay with your watch.

Q3550 Chair: That’s right. Can I be clear about the question of why the client was prepared to sign up to this, and why Laing O’Rourke seemed to be opposed? I want to clarify two things: first, whether the arrangement-the deal struck here-is going to be more expensive; and, secondly, whether it is going to be slower. If it is less expensive and quicker, I cannot quite understand why anyone would not want to sign up to this, and why in particular people like Laing O’Rourke would not want to sign up to it.

Bernard McAulay: That is clear. As I said earlier, the industry has a culture of claims. In ECF’s report, the findings were that the client stood back and allowed a claims culture to develop. They would go in on price and then hold the client to ransom. I’ll give you an example. When Lindsey Oil was built, it was supposed to be done in 900,000 man hours and cost £250 million. The final cost was 2.3 million man hours and £533 million-£283 million over budget-because the job had not been designed prior to its starting, and design changes then took place. These are the problems in the construction industry.

Q3551 Chair: I understand that. The Scottish Parliament ran over time and over budget as well; Government procurement frequently runs over time and over budget. It is not exclusive. What I am not clear about is that if this sort of arrangement is likely to be less expensive and more effective, why should employers or clients not be beating a path to your door? We should not need to persuade the Government; they should simply adopt it.

Steve Murphy: Again, it is a really important question. There has been a culture in the industry for a number of years now, and it goes back to the fall-off of employment and all that from the 1960s. They did not want to engage with the trade unions. The employer has never really wanted to engage with the trade unions, and I shall give a brief example.

The CIJC working rule agreement covers between 350,000 and 500,000 construction workers. Since 2009, we have been banging the drum about getting a working rule against blacklisting. It was not until last year that we were able to get a working rule in there about blacklisting. It is a voluntary agreement. Will it achieve anything? We shall see-at least we have it in there-but they are not beating a path to our door. What we have in this agreement is engagement with the trade unions. That has never happened before, so it is a huge culture change within the industry.

Q3552 Chair: I understand that point, but I am not clear about why, if it is seen to be less expensive and enables them to deliver projects on time, your clients are not beating a path to your door. Why might we have to persuade the Government of this? Surely they should be saying, "Well, if this is the new holy grail, of course we accept it."

Steve Murphy: What we have said is that this is going to be a blueprint for the industry-not just the nuclear industry, but the construction industry. If this works, Ian, I am hoping that the clients and the employers are going to be beating a path to our door. I really am. The proof of the pudding is going to be in the eating. We firmly believe, and EDF firmly believes-and I am convinced that Laing O’Rourke believes-that this will work. Engaging with the work force and engaging with the trade unions will work. As I say, it is difficult for us to answer your question at this stage, because it has not been implemented yet.

Q3553 Lindsay Roy: The long presentation you did was very helpful, and you have probably covered some of the points I want to make, so we might get quite short answers. On the relationship between casual labour-or the casualisation of the work force-and the use of the blacklist, do you want to make a comment about that?

Steve Murphy: Would you repeat the question?

Lindsay Roy: Given the relationship between the casualisation of the work force and the use of blacklists, how does directly employing workers help to protect them against blacklisting?

Bernard McAulay: Directly employed people have employment rights. They have their rights, and they have the opportunity to use the internal procedures of the company, but people employed by payroll companies or through agencies and the self-employed have no rights and no redress whatsoever. There is a difference. It is about redefining that culture and those individuals accepting responsibility to address the issue at first hand and then involving the trade unions at the appropriate level.

Q3554 Lindsay Roy: We still have agency workers. I have them in my constituency. How can they be better protected?

Steve Murphy: By getting rid of agencies and having them directly employed. Let me talk about the payroll companies as an example, and you can include agencies in this.

I said earlier that some of our members-I know as a fact, so this is not anecdotal; I have evidence-have been moved from direct employment. They have worked for a company for 10, 15 or 20 years, but have then been told, "Because of the difficulties that we have in the construction industry with getting jobs etc., you must go and work for this payroll company. You’ll still come and work for me and you’ll still do the same job, but you’re employed through a payroll company." When you are employed by a payroll company-this is how people are employed in our industry-you have absolutely no employment rights. You have no sick pay, no holiday pay and no pension. You can join the trade union, but they will say that there is no value in joining a trade union. You can be hired and fired at will. You cannot go to an employment tribunal if you have any issues or problems. These are massive issues, and these people who are working for payroll companies and agencies are in a desperate situation.

Q3555 Lindsay Roy: Is it your contention that a change in the law is necessary?

Steve Murphy: I absolutely believe it. I absolutely believe that, without that change in legislation, this will perpetuate.

Q3556 Chair: I am not clear what change you want.

Steve Murphy: We want direct employment for a start.

Q3557 Chair: I understand what you want, but I am not sure what legislative change you are looking for.

Steve Murphy: We are clearly saying that there is no room for payroll companies in the UK.

Q3558 Chair: Let me be clear. You would make payroll companies illegal.

Steve Murphy: Yes.

Q3559 Chair: There are no circumstances at all in which you believe that payroll companies could be justified.

Steve Murphy: Absolutely. I cannot see any justification. As the leader of a construction union in this country, I cannot see any justification whatsoever for payroll companies-none whatsoever. There are no employment rights, no sick pay, no holiday pay and no pension-all the things that I have talked about-and at the end of it I’m paying that payroll company between £15 and £20 a week to pick up my payslip.

Q3560 Chair: May I pursue this a little? We have had a sub-debate about zero hours. In general, people think that zero hours are a bad thing, for all the reasons that you will understand, but we have heard the defence of zero hours and the argument that there are some circumstances in which zero hours are justifiable. They can suit people’s needs and allow people to dip in and out of the work force, so a blanket ban would not be appropriate. Although I understand that you have hostility to payroll companies, I am not clear whether you would concede that there are any circumstances in which anybody could be employed through a payroll company and it would actually be suitable to the circumstances.

Steve Murphy: Agencies are different.

Bernard McAulay: When payroll companies first came in-they were introduced when Gordon Brown was Chancellor-it was for IT, but from IT they have spread across industry. Employers have sought to manipulate that, putting people at a disadvantage. On the point that you make, there is legislation about flexible working, and that could be implemented.

Zero-hours contracts are not a new buzz phrase. They have been in since 1972, when the Ted Heath Government brought in agency legislation. It has come to the forefront now, because of the abuse that is going on and the public outcry, but they have always been there.

Q3561 Chair: Because something is abused, there may be an argument for tightening the rules to stop the abuses. If Gordon Brown brought it in, presumably it must be a good idea. The question is whether you are being slightly too extreme in your view by saying that they should be entirely outlawed. Maybe I misunderstand it. Can you clarify for me what the difference is between payroll companies and agencies? I always thought of the two terms as being virtually the same. Presumably you would regard agencies as acceptable, but payroll companies as not acceptable, or have I misunderstood that?

Bernard McAulay: No. When people go to an agency, the agency will say to them, "One, you can go direct employed; two, you can go on a CIS4; or, three, you can go through a payroll company, and these are the advantages for you if you go through the payroll company." They then ask them to sign the form.

Q3562 Jim McGovern: What would be the advantages?

Bernard McAulay: The advantage is that they would pay less in tax and national insurance contributions.

Phil Whitechurch: What they also do is to put a price tariff on it. They say, "You could work PAYE, with full national insurance, but you will be on, say, £10 an hour. If you work for a payroll company, you will be on £14 or £15 an hour, and we will channel your wages through our system, but we are going to charge you £20 a week for doing it."

Steve Murphy: An accounting system.

Phil Whitechurch: Yes, an accounting system. They will charge you £20 a week for doing it, but you will pay £70 or £80 less tax. It is tax avoidance. That is what it is all about, so the lad thinks, "I’m getting £50 or £60, or whatever it is, for nothing. I’m having to pay them £20 for doing it, but I’m getting £50 out of it." What they do not understand, when they are being pushed in that direction, is that, as soon as they do that, they are bogusly self-employed. If you work for an agency and your card is in, under the agency legislation, after three months you get equivalent terms and conditions to the long-term employees of that company. That is the difference.

Chair: We could spend some time discussing this and it might be something that we refer to in our report as requiring additional information. Because you were so clear about that, I wanted to explore it.

Q3563 Jim McGovern: If an employer says to an employee who has 20 years’ service, "As of Monday, we are going to transfer you to a payroll company or an agency," presumably they get 20 years’ redundancy.

Steve Murphy: They do not. They will say, "It’s a continuation of your work for us. You’re still working for us, but you’re working through a payroll company." This is exactly the point that I am making. You asked me about examples of where it works; you give me an example. I do not believe that it can work anywhere in a just and fair society. It does not apply, because they have signed over to it.

Bernard used the word "manipulation". A huge amount of manipulation goes on: "We’re struggling to get work and we still need to pay your wages. This is an idea: you can go over to a payroll company."

Chair: You asked us to give you an example of how it can be justified. I ought to explain that the way this works is that we ask you questions, and you answer them. That’s the purpose. Perhaps we should have made it clear earlier.

It might be helpful if you agreed between yourselves or individually to give us a note about the question of payroll companies, agencies and so on, and the advantages and disadvantages. We have seen your report. Will you clarify how that in particular impinges on what we are looking at here? There are obviously wider issues that we might want to return to, so we may look at that subsequently and make some comment.

Q3564 Lindsay Roy: My final question is this. My understanding is that labour-only contractors will be allowed on the site at Hinkley Point. Is that your understanding? If so, will it be agency workers?

Bernard McAulay: No.

Kevin Coyne: No.

Phil Whitechurch: No.

Steve Murphy: The agreement does not allow for agency workers.

Q3565 Chair: Does it allow labour-only subcontractors?

Steve Murphy: Not at Hinkley Point, no. The question was about Hinkley Point, wasn’t it?

Lindsay Roy: Yes.

Steve Murphy: It is all direct labour.

Phil Whitechurch: It is direct employment by the principal or subcontractors. Direct employment.

Steve Murphy: Everybody is directly employed.

Bernard McAulay: There is a clause in the agreement which says very clearly that, if there is a need for outsourcing on a short-term basis, the permission of the joint project board is needed. It has to be at that level; it is not down to the contractor.

Q3566 Chair: I remember that, when I was involved with the Glasgow garden festival at Silverburn, where we were trying to maximise local employment, we took the view that everybody should be local. However, we accepted that for some specialist skills-glass cutting and the rest of it-other people could be brought in. I take it that the question of bringing in other people in these circumstances is when there is a particular focus, a narrow remit and it is short-term, and it has to be cleared centrally. Those are the circumstances in which, for instance, labour-only contractors would be allowed on the site.

Bernard McAulay: May I come back on a particular point, and something that a lot of people may overlook? For individuals to get on the job, they have to go through the Scottish disclosure. That takes four to six weeks for clearance. The question is whether we get top-up labour from an agency by ringing up on Monday morning to say, "Can you get yourself down here tomorrow morning?" to put labour on that site, but that is not going to happen. It is about planning and structure to make sure that labour is available.

Chair: Having to clear people is specific to the nuclear industry, isn’t it? That is not something that would apply on every run-of-the-mill hospital contract. That makes it particularly difficult, or inappropriate, to have labour-only subcontractors brought in at short notice. However, in terms of parallels for other jobs and whether this is a template that can be applied right across construction, there is a difference, where they might not have that vetting system. Right, I think I understand that.

Q3567 Pamela Nash: Bernard, you mentioned self-cleansing earlier, which the Welsh Government had put in their policy advice.

Kevin Coyne: That was me, actually.

Pamela Nash: Sorry. First, is everyone aware of the self-cleansing process?

Bernard McAulay: Yes.

Q3568 Pamela Nash: What are your views on this? How successful do you think it might be-not only in future recompense, but in preventing further blacklisting?

Kevin Coyne: Yes, our position on it-as Phil and Steve have outlined-is that we believe that there needs to be legislative change in regard to that, but in the interim we have said to many companies that one of the major things that we are interested in is getting blacklisted people back into work, and to ensure that. In that sense, it is essential that any of the companies that have formerly blacklisted recognise what they have done and open up their panels to employ people again. I see the self-cleansing aspect of it as being a very important part of the blacklisting debate, but it is not the only one. In itself, it will not reform it. What is important is that legislative change, as we have said.

Bernard McAulay: The key to this, from Unite’s perspective, is that we are submitting people’s applications, and for the applications of all those who have been blacklisted the proof will be in the pudding. If they are not taken on for jobs and are overlooked, yes, it is still going ahead. We are saying to the employers, "Come on; let’s see what your commitment is."

Q3569 Chair: May I clarify one thing? You said, speaking on behalf of Unite, that you are submitting applications. Are your members’ applications going through you, or are they just applying direct?

Bernard McAulay: The members have been applying direct, but they also send copies of their CVs with the job applications to us, and we pass them on to the companies. We are saying to the companies, "If you are genuine about this, you’ll interview people, and where there are vacancies, you’ll offer them to those individuals. If you do not offer those vacancies to those individuals, clearly there is a hidden agenda to deny people employment."

Kevin Coyne: That goes hand in hand with the rigorous recruitment selection procedure, with competence-based interviews, and then a reason why people did not get the job-something that goes on in every other sphere of industry, but never within the construction industry. It is a really important process.

Phil Whitechurch: The GMB take on it is that we have a list of people who have been blacklisted, and it is going through court proceedings and so on. When the employment brokerage is set up, we will inform those people so that they can apply for a job with their CV. We will not put their applications in for them, because you would actually be spot-balling them. Our line on it would be that we have a database set up that would advertise that: "This is who you apply to for the job. This is the way that it is done. You have to go through nuclear clearance. Apply for a job." Everybody would apply for jobs.

Once they have gone through clearance and gone through the interviews, as Bernard highlighted earlier, there is a clear interview path, with a reply saying that you had got through clearance. If not, they will tell you why. It is so transparent, and we wouldn’t break that transparency by giving-we would not recommend it as such, but we would tell them to apply for a job and we would soon see. We know that they have been blacklisted; if there is blacklisting happening, that would highlight it.

Chair: My understanding is that there is going to be another vote at quarter to 5. If we can finish before then, we need not hold you until afterwards. We do not have all that many questions still to go, so, unless there are major issues that you want to raise, perhaps you can try to keep the answers a little shorter. We will still give you the opportunity at the end to make any additional points.

Q3570 Pamela Nash: I can ask everything else in one question. How much did self-cleansing feature in the negotiations for Hinkley Point? Are each of the unions satisfied that the companies involved in the contract have sufficiently self-cleansed? If not, why enter into negotiations with them for this contract?

Bernard McAulay: On self-cleansing and Laing O’Rourke, you have heard from Steve, and I can speak on the mechanical side. I know that Crown House has not been invited to tender for the job because of its approach over the last two or three years with BESNA about cutting people’s wages. We have serious concerns about Crown House on the mechanical side, but on the civil side my colleagues are approaching Laing O’Rourke for access to the sites. Laing O’Rourke is very provocative in making us jump through hoops to gain access to sites. The only time that these companies will do anything about it is when redundancy consultations take place.

Steve Murphy: Pamela, may I answer the question a little more? I said earlier about kicking and screaming when coming to the table and all that, but part of the process was that EDF went through its processes with its contractors as well. Although we agreed and negotiated the agreement, we can’t always negotiate with the contractor-the preferred contractor, as it were.

Q3571 Chair: Sorry. Can you run that past me again? What was the last point you made? You can’t-

Steve Murphy: We cannot negotiate, can we, with EDF on who it is going to get in as a contractor? It will negotiate there. EDF will say, "This is going to be the agreement." It will invite contractors to apply for the job. It goes through its particular process, but I don’t think we were ever-

Kevin Coyne: I think there’s something in the sense that we said at the outset that there are very few companies that have not blacklisted at one stage or another, although we know the evidence is limited.

Chair: I understand that.

Kevin Coyne: That is important when considering the answer to your question. Your question was, "Why haven’t you done something to prevent them getting on the site if they have not self-cleansed?" The answer to that is that I don’t think we are in that position. We would be much happier anyway if they held their hands up and said, "Okay, we’ve got procedures now in place and we want to employ people." You have only so many contracting companies in the UK, and all of them at one stage or another have been involved in some form of blacklisting. What we are saying is that in future we want blacklisted people re-employed, and we want the processes to be open and transparent in the interview system-if they go down that road. At Hinkley Point, they are going to go down that road.

Q3572 Pamela Nash: I understand. When I first asked the question about whether it was discussed during the negotiations, you all shook your heads, so it was not discussed at all.

Kevin Coyne: No.

Q3573 Pamela Nash: Was that something that you would like to have brought to the table, or was that discussed within your own trade unions?

Kevin Coyne: We will be monitoring; we will be auditing. Obviously the phrase "self-cleansing" is emerging now from other areas. It was not something that we had at our disposal.

Q3574 Pamela Nash: I appreciate that it might not be that phraseology, but it was in terms of companies looking back and compensating victims of blacklisting before being awarded these huge contracts.

Bernard McAulay: On the mechanical side, that scope of work is still out to tender. It will be another 12 or 18 months before the contracts are awarded. We will be working with people in the industry to address concerns, and I am quite sure that, if we know that there are companies with a proven record, we will be bringing that to the attention of the joint project board.

Q3575 Chair: I want to be clear, in terms of our recommendations, that had the negotiations that are taking place at the moment between the unions, the Blacklist Support Group and the employers been at a more advanced stage when you were negotiating this, the whole question of self-cleansing would have been incorporated. You hope and intend to have that in future, but it just wasnae timeous.

Kevin Coyne: Exactly.

Bernard McAulay: Exactly.

Chair: That is helpful.

Q3576 Sir James Paice: Gentlemen, I want to change the subject, if I may, to the proposed compensation scheme for those who have been affected by blacklisting. Mr Murphy, we have a report of your remarks where you are quoted as describing the proposition as a complete travesty of justice. Would you like to add to that? After that, I would like to hear the other unions’ view on the proposed packages.

Steve Murphy: I stand by those remarks. The proposal as it currently stands has a gagging clause. If people were to accept £1,000 now, it is finished, irrespective. There is a year’s grace on the proposal; you can have only a year. We are not going to be able to find people within that year, so it is a travesty because as it stands now people would lose out. The level of compensation, by the way, we believe-this is collectively among the joint trade unions-is not anywhere near high enough.

Phil Whitechurch: They are after a cheap package to vindicate what they have done. As Steve said, it is a travesty of justice, and putting a gagging order on it as well is an absolute shambles. From the GMB perspective, if it stays the way it is, every case will certainly end up in court.

Q3577 Sir James Paice: And Unite?

Bernard McAulay: Yes, it is similar to my colleagues. The way that they have tried to exclude the trade unions and deal directly with individuals clearly shows contempt. The paltry amount of £1,000 and the other requirements are simply not acceptable.

Kevin Coyne: What we would be saying is that the level of hurt and the level of damage to the families over the years is by no means significantly met, even in your wildest dreams, by that level of offer. That is what I do not think is understood-that level of hurt and damage to both family and prospects as a result has damaged them permanently. They have lost money for a start. Secondly, we know from people who have been affected that it has emotionally damaged them and so on. In any other legal case where there was an admission of guilt in that regard about particular individuals, there would be a chain and a scale of damages to be awarded. This in no way goes near that. It does not try to identify that. Indeed, it seems to us to be brushing it under the carpet.

Q3578 Sir James Paice: Just to pick you up on one point, I am not here to challenge you on your views. Because of what you have just said about where there is an admission of guilt, am I not right that it adds motivation?

Kevin Coyne: There is no admission of guilt. Sorry, perhaps I should have said that there is an acceptance that something went on; I have rephrased it.

Q3579 Sir James Paice: Can you bring us up to speed on where the negotiations are? Are you still in negotiation with the group of businesses that are involved? What is the current state of play?

Steve Murphy: We are still in negotiations.

Q3580 Sir James Paice: Your seemingly pretty unanimous view of the proposals has not actually taken you away from the negotiations at all. You listed three things: the one-year period to find those affected, the low level of compensation and the gagging clause. Are some aspects more of a sticking point than others in your discussions?

Steve Murphy: We have a joint legal response from the three trade unions, which has gone to the companies, and there is a face-to-face meeting with the companies in the very near future.

Q3581 Sir James Paice: You do not want to tell us any more about it.

Steve Murphy: No.

Chair: They don’t necessarily want to negotiate through us.

Sir James Paice: I appreciate that. That is probably as far as we can go.

Chair: It is worth putting on record the fact that I and the Clerk to the Committee have been meeting privately with representatives of the unions and the Blacklist Support Group on the one hand, and the employers on the other. We recognise that things are moving towards face-to-face talks, if not necessarily at the stage of expecting a settlement to be announced immediately. We have certainly made known our view that, if there is to be a negotiated settlement, that is infinitely preferable to any imposed settlement. We have communicated, after discussion with the members of the Committee, our view that an imposed settlement or an attempt to impose a settlement would be at variance with the idea of self-cleansing. That would not be helpful in the circumstances, but we are hopeful that an agreement will be reached between the relevant parties, taking account of the quite legitimate interests that both sides have in this.

Again, it is worth formally putting on record the fact that we have written to all the companies that we are aware of as having been involved with the Consulting Association, and that have not signed up so far to the joint industry approach in terms of compensation. We are seeking clarification from those companies why they have not signed up to this compensation scheme. Again, once we have had the replies-or if we do not get replies-it is probable that some of them will be called to give evidence to us in due course. That would no doubt be a hearing of interest to a number of the people involved.

Jim, are there any other points that you wish to cover?

Sir James Paice: No.

Q3582 Chair: We are coming to the end-of the first half. May I ask whether the other members of the Committee have any additional points that they want to raise? No.

When I spoke to you informally before we started, I indicated that at the end we would ask you whether there were any answers that you had prepared to questions that we had not asked. I doubt very much if Bernard has any.

Bernard McAulay: I hope you noticed that I kept fairly quiet.

Jim McGovern: It was an abbreviated version of Fidel Castro.

Q3583 Chair: It was very much the abbreviated version of Fidel Castro. I wonder whether the others had anything that you wanted to put on record. In particular, I know that there was some mention made by Phil of legislative change being sought, but I am not entirely clear whether that was covering the terms of this agreement or whether it was other issues. Perhaps you would give us an indication, as well as any other final points that you want to make.

Phil Whitechurch: Seeing as I made the point, it is a broad statement. I know that we are here to talk about Hinkley Point and the agreement, and I believe that the agreement will work, but time will tell. You don’t know until you suck it and see. I think in my heart of hearts that the agreement will work 100%, but getting back to changing the legislation it is a broad band.

We are not only trying to stop blacklisting on its own. We are committed to stopping blacklisting per se-just finishing it. You cannot make a statement like that for Hinkley and just hope that they are going to change the legislation. It is across the board, and everything to do with payroll companies and all that we have talked about today is linked to that statement. If it was made a criminal offence, punishable by imprisonment and unlimited fines, that change of legislation alone would alter that side of it. That would stop it, or it would be a big enough deterrent for the companies to stop.

The second part of what I wrote was making it a statutory right to give the unions access to every workplace. Then you would get access into the workplace to head it off at the pass. You would know what was happening. Those two go arm in arm; linked together, they will completely stamp out blacklisting in this country. That is the GMB opinion-not my opinion, the GMB opinion.

Steve Murphy: To back up what Phil has said, we touched earlier on the levels of compensation being totally inadequate-reprehensible. What blacklisting did to people’s lives is outrageous. We know of cases where people were very close to suicide or where they have lost their families, and of where good trades people, because they raised issues about health and safety, all of a sudden found themselves out of work and could not get a job again for 20 years, and then lost their families.

If we are going to stamp anything out-if we are going to make sure that blacklisting never occurs again in the UK, not just in construction, but in other sectors-we have to bring in legislation. We have to bring in legislation that makes it a custodial offence if you are found to have blacklisted anybody. That really sums up what I hope can come out of this Committee.

Kevin Coyne: I concur entirely with those two contributions, but I wanted to say something that differs. Halfway through, you asked whether it is significant that EDF is a French company. I would say in conclusion that it is very significant. It is the operation of social partnership with a European dimension that has had a significant influence on this agreement. It is reflected through its approach to industrial relations and industrial affairs. It is with the company generally, but importantly in this agreement it engages in partnership with unions and contractors. We hope that it is a very successful agreement for the future, but it is the application in principle of the social partnership arrangements as we envisage them.

Q3584 Chair: Two things arise from this. First, we have not spent all that much time discussing the question of legislative change, and we will have to decide at some stage whether we want to go down the road of examining that as well, because that takes us considerably beyond what we were originally looking at. It would be helpful if we could have from yourselves a brief note, either individually or collectively, about the legislative change that you have in mind. We could then consider whether we wanted to include that in our recommendations as being something that required further examination, or take a view on it.

Secondly, there is a point that I should have picked up earlier. Regarding the CIPD, or the Institute of Personnel Directors-we have had them before us, but I forget the initials, and I have never been entirely clear whether they are part of the solution or part of the problem-can I clarify whether it has been involved in any way at looking at any of this, or expressed a view on the merits of this? We may want to speak to it at some point about its view of this deal.

Steve Murphy: I do not think that it has been involved in this agreement.

Kevin Coyne: Did you mean the agreement?

Steve Murphy: The only bodies involved in the agreement have been EDF-

Q3585 Chair: Has it expressed a view on it, saying, "This is jolly well done chaps," or anything like that?

Bernard McAulay: In the documentation, there is the latest correspondence from it about pre-employment selection. It is dismissive when it comes to construction. It talks about blacklisting and then moves on to the self-employed, saying that there is no need to have any procedures in place to interview or to feed back to individuals. That was in the findings from the reports and information that it has had sent back to them.

Chair: That is very helpful. If there is nothing else, I thank you very much.

Q3586 Jim McGovern: I am interested in what Steve was saying about it not applying only to the construction industry. I am reminded that I had a half-day’s debate here on the subject of blacklisting. One of our colleagues, a former miner who was imprisoned during the miners’ strike, obviously found himself on a blacklist, but it was not only him. His wife, a social care worker, was blacklisted because he was married to her. They could not get a job. It certainly goes beyond the construction industry, although that is where it is most prevalent.

Steve Murphy: Absolutely. It happens with journalists and in other sectors as well.

Chair: Okay. On that note, thank you very much for coming.

Prepared 30th January 2014