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Companies Bill [Lords]

I wish to look at the treatment of trade unions in the Bill. At the end of our debate in Committee, the relevant provision said that unions were not political organisations which, as we all know, is a legal fiction. The recent document published by the Trade Union and Labour Party Liaison Organisation on party funding made it clear that"““unions are an inseparable part of the Labour party.””" Union votes account for a third of the votes for the next Labour leader. The unions make Labour party policy through the national policy forum, and they exercise a 50 per cent. block vote on policy motions debated at the Labour party conference. How best should we address the political position of trade unions in the Bill? As the Minister said, the Government clearly listened to the debate in Committee, particularly the points made by Conservative Members, and have moved the debate forward by tabling Government new clause 83. Under subsection (1), a company does not have to submit to the approvals process prescribed in the Bill if a donation, other than a contribution to a union’s political fund, is made to a trade union. Financial support from companies for trade unions to facilitate training, educational development, employee counselling and other important aspects of unions’ work to promote good employment relations in the workplace would fall outside the approval requirements. That is of particular concern to many companies—indeed, that concern largely drove the inclusion of clause 372 at the outset. Subsection (2) makes it clear that the qualification—I have termed it a legal fiction—that a union is not a political organisation applies only in connection with political expenditure in clause 371. In other words, a company can promote or publicise a trade union’s activities without the need to seek shareholder consent. That is entirely appropriate in the context of fostering positive employee relations and ensuring that employees have access to advice and guidance in the event of a dispute or a safety issue. It is worth putting on the record the fact that trade unions’ political activities are framed by the Trade Union and Labour Relations (Consolidation) Act 1992, which incorporates provisions on the establishment and maintenance of the political fund and the uses to which the fund can be applied. Section 72 makes provision for the contribution of funds to political parties, as well as the distribution of materials relating to the promotion of political parties or candidates. The political fund can be used by the union only for political purposes, but I expressed anxiety about it in Committee, and I remain slightly concerned about the proposal on displacement. If a company made a donation to a trade union for non-political purposes, could it be used to free up, displace or transfer resources to the political fund for a political application? We debated the issue in Committee, and the hon. Member for Burnley (Kitty Ussher) highlighted advice from the TUC on actions taken by a union that could endanger its independence for the purposes of the 1992 Act. The Minister kindly wrote to me on 24 July 2006, enclosing a copy of the briefing note, for which I am grateful. It would be helpful, however, if the Minister were to respond to the following points when she sums up. First, has she obtained legal advice confirming that a transfer of funds from an employer to a union, which either displaces or frees up other resources in the general fund, which are then transferred to the political fund, would be a breach of the independence requirements of the 1992 Act, as per the advice given by the TUC in its briefing note? Secondly, does she construe the wording in new clause 83,"““other than a contribution to the union’s political fund””," to encompass direct and indirect contributions, where the purpose of the contribution was clear or where it might not be clear from the contribution that it was so intended but it had that effect indirectly? Amendment Nos. 376 and 377 develop a slightly different point—the equivalence between the treatment of companies and trade unions in terms of the approval process for sanctioning political donations or expenditure. Under clause 371, companies are required to pass a shareholder resolution at least every four years. Under the 1992 Act, however, political fund ballots are only required every 10 years. The Government have argued clearly that there is a need to ensure, in the context of companies, that protections are afforded to shareholders in relation to the use of company funds for political purposes. Similar arguments also apply to trade unions. In the consultation document, ““Review of the Employment Relations Act 1999””, the Government responded to calls for a review of the requirement for political fund ballots:"““The Government understands the case for reform. However, these ballots serve an important democratic function and ensure that union members can at regular intervals collectively authorise their union’s involvement in political activities.””" In that context, the purpose behind each of the constructs seems to have a broad equivalence. If a company is required to seek shareholder approval every four years, surely it is appropriate for a trade union to be treated in the same way. The Bill cannot, by its nature, amend the underlying trade union legislation, so the amendments seek to highlight that important point in the context of company donations only. Back in 1994—this was reflected in the Labour party’s manifesto—the Prime Minister said in an interview with The Independent:"““In my view trade unions are an important part of our democracy—but fairness, not favours, is the way we are going to run things.””" Fairness is what we are seeking in the amendments, and I hope that the Minister will consider that. With regard to new clause 76 tabled by the Liberal Democrats, I recognise the concern about lobbying expressed by the hon. Member for Cambridge (David Howarth), and we debated in Committee whether undue influence is a factor. To resolve the matter by putting restrictions on the company seems particularly harsh, however, given that some lobbying informs political debates, as Members on both sides of the House would recognise. Obviously, if the issue relates to political expenditure and attempts to change or to influence the way that people vote, it would be caught by the existing provisions relating to political expenditure in the Bill.