Baroness Smith defends Trades Union funding

BARONESS Smith of Basildon rose on the floor of the House of Lords to make a speech on Trades Union funding.

Baroness Smith said:

"My Lords, we have had a good debate this evening. I admit to a slight pang of guilt when the noble Lord, Lord Burns, started speaking, because I recall that he did not support the setting up of the committee when we first voted on it in your Lordships’ House. I was gratified and reassured by his comments on how well the committee had gone. I know the work that he and his colleagues put in and we are very grateful to them. I am also grateful to the noble Lords, Lord Cormack and Lord Bew, who did not support such a committee originally, but saw the value of it and were prepared to say so tonight.

When we asked that the Select Committee be set up, we did so in the recognition that the only way to have the effective scrutiny we needed and to resolve these issues was to have more detailed information about the impact, both intended and unintended. At the time, I referred, as the Minister will remember, to a fundamental difference of opinion between the Government and the Opposition. For that reason, it seemed wise to have a more detailed examination of Clauses 10 and 11 of the Bill to better assist and inform the normal scrutiny process.

Having read the report and much of the evidence presented, it is very clear that the committee and its support team have, in the short time available to them, undertaken the task they were set in a focused, diligent, forensic and very fair way. It therefore allows your Lordships’ House, as a scrutiny Chamber, to fully understand both the detail and the implications of the legislation before us. The detail is important. I was struck by the comment of the noble Lord, Lord Callanan, who confessed how little he know about trade unions and the terms in the Bill before he served on the committee. The way the hearings were conducted, the quality of the evidence provided, and the committee’s final report reflect the work that was put in and illustrates your Lordships’ House at its very best.

The report is, by any standards, impressive. I have to say that it contrasts very markedly and favourably with the Government’s impact assessment. Noble Lords will recall that when I proposed the Motion to set up the committee, we had still not seen the impact assessment. It was, in fact, published the following day. That is quite extraordinary for a Bill that started its life in July 2015, had been through all its parliamentary stages in the House of Commons, and had had its Second

Reading in your Lordships’ House. After such a delay, we could be forgiven for expecting a comprehensive, analytical assessment of the potential consequences of the Bill. That is what an impact assessment would normally deliver. So let us compare the impact assessment the Government produced with the findings of our own Select Committee. Page 73 of the impact assessment states:

“Our main estimate is that there will be no change in the number of members contributing to the political fund. We do not have reliable data to estimate any changes in the proportions contributing”.

On Page 75, it states:

“We have no evidence of whether there would be substantial attrition in membership participation … of active opting-in after 5 years. Therefore we have assumed no attrition”.

How on earth is it possible to say on the one hand that there is no evidence and on the other reach a conclusion which is based on no evidence? That is pretty fuzzy thinking to my mind. In contrast, the rigorous assessment by the noble Lord, Lord Burns, and his committee colleagues, conducted after considerable evidence-taking and questioning, led to a different conclusion on the impact of going back to an opt-in process. Even without taking into account the Government’s hurdles on opt-in of having to put it in writing on paper within three months, retrospectively including all new and existing members, and renewing every five years, the Select Committee still came to the conclusion that this,

“could have a sizeable negative effect on the number of union members participating in political funds”.

As we heard from the noble Lord, Lord Burns, and the noble Baroness, Lady Drake, the Government’s own behavioural analysis unit—or “Nudge Unit”—confirmed the evidence from Dr David Halpern that he would expect participation rates to be lower. He said:

“Yes, substantially so—20 or 30 percentage points lower”.

The Government have insisted that the impact assessment did not consider the impact on political parties because the Bill—I quote the exact words that the Government used—“is not about” them. That point has been made repeatedly in debate, parliamentary Answers, and in evidence to the Select Committee. I struggle with this, and not just because so much of the evidence points to the contrary. Page 62 of the Government’s impact assessment deals with the reporting of expenditure from political funds and lists the six categories of spending. Top of that list in the Government’s own impact assessment is:

“Contributions to the funds of a political party”.

So how on earth can the Government claim that contributions to a political party would not be affected, and therefore would not even be considered by the impact assessment, when that very same impact assessment puts such contributions at the top of the list of the use of political funds? Again, this is pretty fuzzy logic. That comes back to my point about there being a duty in government impact assessments to consider all and any consequences.

The essential question here is: what effect will the political fund changes have? The Select Committee’s report is again very clear. It states on page 25:

“A fall in the size of union political funds need not necessarily lead to the same percentage cut in union payments to the Labour

Party but, given the expected scale of the reduction in the size of political funds, it seems likely that there will be a significant reduction”.

The conclusions of the impact assessment and the deeper and more rigorous analysis of your Lordships’ Select Committee are clearly at odds on the impact of switching from opt-out to opt-in on both the trade unions themselves and the Labour Party. The Government contend that there is no impact, yet an analysis of the evidence concludes that there is, and that it is significant.

As regards the demand for change, the Certification Officer reported to the Select Committee that he,

“had not received any complaints specifically about a union’s failure to tell members about the right to opt out of the political fund”.

He received not one complaint. Other noble Lords have referred to that. However, the Government claim a mandate for the change on the basis of their manifesto commitment, which states on page 49:

“In the next Parliament, we will legislate to ensure trade unions use a transparent opt-in process for subscriptions to political parties. We will continue to seek agreement on a comprehensive package of party funding reform”.

The committee highlighted that the terminology was inexact and the drafting clumsy, but I think we all know what the manifesto meant by that. The linking of these two issues, side by side in the manifesto, one following on from the other, further weakens the Government’s claim that this is not about political parties. They were not in the same manifesto but separate from each other, they were not even on separate pages or in separate paragraphs; they sat, side by side, one sentence following another, declaring the Government’s intentions. It takes some creative thinking to reconcile the vigour with which one issue is being pursued and the passive approach to the other, on which there is no government initiative.

When Ministers gave evidence to the Select Committee, they claimed that one of the key reasons for the legislation was a lack of compliance with an agreement between the then Employment Secretary, now the noble Lord, Lord King of Bridgwater, for the Government, and the then general secretary of the TUC, Len Murray, in the 1980s. Yet the noble Baroness, Lady Neville-Rolfe, had to admit that she was unaware of this agreement before it was drawn to her attention by the noble Lord, Lord King, a few weeks ago, and it has never been mentioned at any point in any of the debates here or in the other place. So how can that agreement be used in any way now to justify this policy when Ministers did not even know it existed?

I note the comments of the noble Lord, Lord King, who has apologised that he cannot be in his place for the wind-ups this evening and promised to read my comments tomorrow. He said that the agreement was not fully complied with. The evidence varies on that. I think in many cases it has been very well complied with. But even if we accepted that, even if that was the case in its entirety, surely there are cheaper, quicker and more effective ways of dealing with it than through this Bill.

A key issue pursued by the committee was whether the measures proposed by the Government are proportionate and reasonable. The noble Lord, Lord Burns, asked the Ministers, Nick Boles and John Penrose, whether,

“the whole content of 10 and 11, taken together, is disproportionate in dealing with that, particularly in many of the arrangements that are built around it, which are both expensive and make it less likely that—in the short term, certainly—consent will be achieved”.

His point is clear.

One of the great strengths of the Select Committee report is the factual data. It shows that 25 unions have a political fund and, as we have heard already, that the average political levy is less than £5 a year—just over 9p a week. Clearly, to impose such costly bureaucracy on all the existing members of trade unions would be disproportionate for the amounts we are talking about here—a point that was made very powerfully by my noble friend Lady Dean. It also makes the opt-in much harder to achieve, and the financial reporting measures in Clause 11 are unnecessarily detailed beyond any genuine transparency need.

I am pleased to say that the Minister’s tone in response to Lord Burns was conciliatory—I think the noble Lord noted that in the report—and although he would not accept that the proposals were disproportionate, he said that,

“we need to make sure that the transition … is possible for the unions to do in a way that is successful for them and their members and not punishing in terms of costs. I know that Baroness Neville-Rolfe indicated yesterday in the debate that on questions of timing for transition and methods by which the opt-in could be declared she was very much open to arguments and would be reflecting on them before Report. I endorse everything she said”.

To me, that implies that Ministers accept that these measures are disproportionate and that they are willing to consider changes. In Committee, the Minister stressed how she was—and I welcome this quote—“in listening mode” when she made the points referred to by Mr Boles.

I think it is fair that I be honest with your Lordships’ House on this issue. I would prefer that we did not have the Bill at all. It is ill considered, it is likely to make employment relations more difficult, and the funding clauses that we are debating tonight are one-sided and, I believe, damaging to democracy. In a previous debate on this issue, I offered a view that the devil was not so much in the detail of the Bill but in the design. I remain of that view. But this report from the Select Committee is thorough and thoughtful and, in the best traditions of your Lordships’ House, it seeks to find a way forward to resolve these issues—not taking my view or the Minister’s but finding a way through this difficulty. It recognises the first part of the Government’s manifesto commitment and accepts that an option to opt in to a political fund should be made when joining.

It is evident from tonight’s debate, in contributions from across the House, that there is a genuine desire for a more measured, proportionate approach that is designed to ensure that opt-in happens, rather than make that as difficult as possible, as the clauses in their current form would do.

Among the many recommendations made in the report of the noble Lord, Lord Burns, is the conclusion, unanimously agreed by the Select Committee, that it would take, at the very least, 12 months to implement the proposed changes. There is no need to repeat all the recommendations that we have heard from the noble Lord, Lord Burns, and others, but I agree with the majority recommendation that any proposal to make these provisions retrospective—that is, to apply to all existing members—should be taken as part of wider party-funding reforms.

In conclusion, I think that your Lordships’ House should be proud of the work undertaken by the Select Committee and of its report, and I repeat my thanks to those who contributed. The Minister has an opportunity now, and I hope she will grasp it with both hands. As we have heard throughout this debate, the evidence is clear and the committee’s recommendations are clear: this Bill will impact on trade union funding and, by consequence, on Labour Party funding.

I am grateful to the noble Lord, Lord Burns, for tabling his amendments for Report stage next week. On the point raised by the noble Lord, Lord Balfe, on Report your Lordships’ House will have the opportunity to vote to make these reasonable and sensible changes in the amendments of the noble Lord, Lord Burns. However, would it not show some respect for the work and the evidence of the committee if, on behalf of the Government, the noble Baroness could say tonight that they are, at the very least, actively and seriously considering supporting those proposals? That would be not just the House of Lords at its best but government at its best. I look forward to the noble Baroness’s response.

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