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passed to neuter the unions, unemployment would suddenly cease to exist ; there would be no balance of payments deficit and no public sector borrowing requirement ; and manufacturing investment would go up and up. What do we have today? We have a rip-roaring balance of payments deficit ; public sector borrowing is over the top ; 4 million people are unemployed ; and the economy is in disarray. The Government's legislation was based on a false premise. It has not worked, and it never will ; nor will the amendment.

Mr. Michael Forsyth : The hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) accused Conservative Members of having run out of speakers at 7.53 pm. Opposition Members ran out of argument at about 4.38 pm, two minutes after the hon. Member for Holborn and St. Pancras (Mr. Dobson) stood up.

I do not think anyone could deny that we have examined the amendment in a thorough and detailed manner. We have heard conflicting views about its meaning. The Opposition have exaggerated and misrepresented its effects in an attempt to portray it as an attack on the rights of trade unionism ; the hon. Member for Wallasey (Ms Eagle) even told us how to spot the seeds of totalitarianism. Let me tell her that totalitarianism begins with socialism, not with a belief in free enterprise or the market forces so hated by the hon. Member for Sunderland, North (Mr. Etherington).

My hon. Friends the Members for Plymouth, Sutton (Mr. Streeter), for Hertfordshire, North (Mr. Heald) and for Teignbridge (Mr. Nicholls) brought some common sense to our proceedings, giving us the benefit of their legal and professional training and expertise. It should be absolutely clear that the Government value highly the protection that section 146 has offered, and will continue to offer, individual employees. It has an important role to play in ensuring that employers do not victimise individual employees to persuade them to become, or to cease to be, trade union members. It has no part to play in collective and strategic issues such as an employer's decision to introduce personal contracts for his work force. We have had claims about the effects of the new clause from Opposition Members which, even by the high standards of the hon. Member for Holborn and St. Pancras, have set new records. His claims about bribes to leave unions and penalties for remaining in unions are unfounded, exaggerated and nonsensical. He was at it again yesterday. He told the BBC's one o'clock news that :

"The amendment will make it lawful for an employer to bribe or punish an employee if they are a member."

He told Channel 4 news yesterday :

"The Government is proposing to change the law to encourage employers to deter people from being in unions or to penalise them for doing so."

I must tell my hon. Friend the Member for Eltham (Mr. Bottomley) that it was not the Court of Appeal whom I accused of talking poppycock, but the hon. Member for Holborn and St. Pancras and the others who joined hit, and an employee's right to accept arrangements that can improve his or her terms and conditions.

My hon. Friend the Member for Eltham also suggested that we might idemnify the loser for costs if either of the

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two Court of Appeal cases goes to the House of Lords. Any appeal would be on the basis of the law as it currently exists. The new clause will not apply retrospectively and I do not, therefore, believe that we would be justified in acceding to that request.

Mr. Peter Bottomley : My hon. Friend's crucial point is fair. Section 146 still exists and will continue to exist even if the amendment is written into the law. My hon. Friend will agree that the industrial tribunal found, as a matter of fact, that the actions of the employers in each case wholly negated union membership. Can he tell the House whether, in his view--it will be decided by the courts in the end--Mr. Palmer and Mr. Wilson would have been unsuccessful if this amendment had been written into law when their cases were heard by the industrial tribunal?

Mr. Forsyth : I should not be drawn on that matter. The amendment is clear and it is for the courts to determine, on the basis of the facts, what will apply. The employment appeal tribunal highlighted a lack of clarity in the law and that is why the amendment is required.

The hon. and learned Member for Montgomery (Mr. Carlile) and the hon. Member for Strathkelvin and Bearsden asked me to put on record the meaning of the words which include a test of reasonableness. The wording is included in the clause to provide a further test of the employer's action. If the tribunal is satisfied that there is evidence that the employer has a purpose.

"to further a change in his relationship with all or any of his employees",

it must also be satisfied that the action was not

"such as no reasonable employer would take"

to further that purpose. Otherwise, the action could still be found to have been taken for a purpose within section 146, and therefore to have been unlawful. I hope that that helps hon. Members. It should help my hon. Friend the Member for Eltham with the substance of his question, if not the case that he put to me.

The hon. and learned Member for Montgomery also asked why we had not waited for the outcome of any eventual House of Lords hearing. My hon. Friend the Member for Teignbridge made the key point that even if an appeal were to be heard and whether or not the Court of Appeal judgments were reversed, the difficulties would not necessarily be resolved.

The purpose of the courts is to interpret the law as it is enacted by Parliament. It has become clear that this section of the law as presently drafted has caused, and is continuing to cause, difficulties for the tribunals and the courts and it is right that we should take steps to clarify it.

As my hon. Friend the Member for Cambridgeshire, South-East (Mr. Paice) said in an excellent speech, the Government have made clear their aim to create a climate in which individual effort and performance can be rewarded. In our White Paper, "People, Jobs and Opportunity" which was published before the general election--we fought and won a general election on its basis--paragraph 4.7 says : "The Government will continue to encourage employers to move away from traditional, centralised collective bargaining towards methods of pay determination which reward individual skills and performance ; respond to the wish of individual employees to negotiate their own terms and conditions of employment ; and to take full account of business circumstances".

Who could argue with that?

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The amendment is entirely consistent with that policy. It will remove an artificial and unintended obstacle to employers who wish to differentiate within their pay structures as they move in that direction.

In response to those such as the hon. Member for Southampton, Itchen (Mr. Denham) who have questioned employers' motives in offering incentives to employees who agree to accept personal contracts, let me say that there are perfectly legitimate business reasons for doing so. In a letter to my Department on 24 May--after we had tabled the amendment--the chairman of Associated British Ports explained his company's position as follows :

"Generally, we believe that personal contracts give companies and their customers substantial advantages. We think it is only right, therefore, that those who accept personal contracts receive benefits greater than those who remain within a negotiated employment structure.

The company pays more to an employee who undertakes to work with complete flexibility, and the employment contract permits the company to base remuneration on merit and to withhold an annual pay increase if the company should run into financial difficulties. Basically, an employee who accepts a personal contract is selling a higher value product in the employment market, and should be rewarded accordingly".

I agree with him.

Many employers would echo those sentiments, as would the many thousands of employees who have benefited financially and in terms of personal motivation from the opportunity to be rewarded on the basis of their own commitment and performance. I agree with my hon. Friend the Member for Hertfordshire, North. Only the neanderthals in the Opposition and their trade union mentors still adhere to the fallacy that rigid pay structures and equal pay rates for everyone doing the same work are the best way of improving productivity in a modern economy.

Mr. Dobson : If individual contracts are so attractive, why do employers have to offer financial incentives to get people to accept them?

Mr. Forsyth : If the hon. Gentleman is so wedded to the concept of collective bargaining, why are he and his colleagues so worried that people will get more money because they are abandoning collective bargaining? I thought that the Opposition's argument to justify collective bargaining was that it gained a better deal for employees. We have now heard from the Opposition that that is no longer the case.

What sticks in the gullet of members of the Opposition is that improvements in pay and conditions can be achieved by individuals acting on their own initiative, without the precious protection of trade unions and the apparatus of collective bargaining. The Opposition have always been keen to show examples where a trade union can negotiate a better deal for its members, but they cannot bear the thought that people might be able to negotiate a better deal for themselves as individuals.

In attempting to discredit the amendment, the Opposition have succeeded in tying themselves in knots. In attacking the amendment, they have sought to portray it as a new weapon in the hands of employers who want to derecognise trade unions. Perhaps they even believe that it can operate only in that one-sided way.

We certainly do not want to prevent employers from derecognising trade unions, which has been the

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Government's position since we abolished the previous Labour Government's wholly unworkable statutory recognition legislation in 1980. Even the Advisory, Conciliation and Arbitration Service recognised that this legislation could not be made to work and told the Government so. Nor would we want to prevent an employer from recognising one or more trade unions for collective bargaining if it suits his business purposes. The important point is that employers should be free to decide what bargaining arrangements best suit their circumstances at a particular time. That is precisely what the amendment will achieve.

The Opposition ignore entirely the fact that the amendment is even-handed. In the two cases before the Court of Appeal, the employers offered a financial incentive to those who agreed to personal contracts, but the amendment would cover the actions of employers just as much if they decided, for example, to introduce a single union agreement and to offer an incentive to those who agreed to have their pay negotiated under that arrangement. Of course the employer would still be at risk of acting unlawfully if he sought to compel people to join the particular union concerned, just as he would be at risk if he sought to prevent people from being members of any trade union when they agreed to sign personal contracts. I should have expected the Opposition to welcome an amendment that enabled employers to offer incentives to encourage people to agree to have their pay settled through a single union agreement. After all, the Labour party, despite its much-trumpeted conversion to espousing the rights of the individual, voted against clause 13, which gives individuals greater freedom to join the union of their own choice. Why did they vote against it? They argued that it posed a threat to single-union deals. Never mind that the argument was based on an entirely false premise. Never mind the fact that the unions and the Labour party can at best be described as latter-day converts to the merits of the single union deal. Never mind that Labour's real reason for voting against the clause was to try to protect the power of the trade union bosses and to prop up the creaking edifice of the TUC's so-called Bridlington principles.

Where is the consistency in claiming to uphold the rights of individuals, yet seeking to deny them the right to join the union of their choice? Where is the consistency in upholding the merits of single-union agreements and then arguing against an amendment that would allow employers to offer incentives to promote acceptance of such an arrangement? The only consistency in those arguments--a consistency that runs right through the industrial relations policy of the Labour party--is that, as my hon. Friend the Member for Colne Valley (Mr. Riddick) said, Labour is once again obeying the orders of the TUC and the trade union bosses who still dictate its policies on such matters. Those people are at this very moment fighting a rearguard action to ensure that they can continue to dictate Labour party policies in the future. No one is fooled by the Opposition's claims to represent the interests of the individual. How could they be when the Labour party is so much in thrall to the collectivist ideals of trade unionism and traditional collective bargaining? I wonder why have we spent whole day in the House debating the amendment. Could it be anything to do with the criticisms of Mr. John Edmonds that the Labour party was not doing enough to fight the cause of the trade union movement? Is that why there has been such an impressive

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display of jousting for the trade union barons? Union membership does not carry any automatic right to trade union recognition, or to have pay determined by collective bargaining. Indeed, there have always been many thousands of people who want to belong to trade unions even though their employers do not engage in collective bargaining. There are about 1 million trade unionists who are not covered by collective bargaining. That is one in 10 of all trade union members in Britain. What is the message from the hon. Members for Holborn and St. Pancras and for Bolsover (Mr. Skinner) to those people? Presumably it is that their membership cards are worthless, and that they should tear them up and leave the union. The Labour message throughout the debate has been that without collective bargaining there is no proper trade union membership. I hope that that message was heard and received.

This evening, we have seen once again the shallowness of the Opposition's commitment to the individual and the depth of their loyalty to the collectivism of the past. They have not changed their spots. As my hon. Friend the Member for Teignbridge pointed out, they have consistently opposed our policies to give new rights and protections to trade union members. They have opposed the new right in the Bill for individuals to belong to a union of their choice. They have opposed the new protections for union members who pay their subscriptions by check-off. In the past, they opposed our reforms to outlaw the iniquities of the closed shop, even though that meant denying a job to thousands of individuals. They even opposed our reforms that gave individual trade union members the right to a secret ballot before their union could call on them to go on strike. The Opposition are driven by the bosses of the trade unions, and it is the Government who have restored individual rights to trade union members. The amendment would allow individual trade union members to exercise choice over the appropriate form for their bargaining arrangements. Many trade union members have already chosen to do so, and many more will do so, no doubt welcoming the freedom given to them by a Conservative Government.

The truth is that Opposition Members will never be free to do what is right for trade union members until they are freed from having to look over their shoulders at the wishes of union leaders, on whom their power depends. That is why the Opposition would deny employers and individuals the flexibility to agree bargaining arrangements that would best reflect performance and reward individual effort. They would reinforce the rigidity of collective bargaining, where the interests of the individual are subordinated to the lowest common denominator.

This amendment will help to create and support

flexibility--something to which the Government are firmly committed in the interests of competitiveness, individual motivation and the creation of sustainable jobs. I commend it to the House.

Question put, That this House doth agree with the Lords in the said amendment :--

The House divided : Ayes 297, Noes 275.

Division No. 297] [10.00 pm

AYES

Ainsworth, Peter (East Surrey)

Aitken, Jonathan

Alexander, Richard

Alison, Rt Hon Michael (Selby)

Allason, Rupert (Torbay)

Amess, David

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Arbuthnot, James

Arnold, Jacques (Gravesham)

Arnold, Sir Thomas (Hazel Grv)

Ashby, David

Aspinwall, Jack

Atkinson, Peter (Hexham)

Baker, Rt Hon K. (Mole Valley)

Baker, Nicholas (Dorset North)

Baldry, Tony

Banks, Matthew (Southport)

Banks, Robert (Harrogate)

Bates, Michael

Batiste, Spencer

Bellingham, Henry

Bendall, Vivian

Beresford, Sir Paul

Blackburn, Dr John G.

Body, Sir Richard

Bonsor, Sir Nicholas

Booth, Hartley

Boswell, Tim

Bottomley, Rt Hon Virginia

Bowis, John

Boyson, Rt Hon Sir Rhodes

Brandreth, Gyles

Brazier, Julian

Bright, Graham

Brooke, Rt Hon Peter

Brown, M. (Brigg & Cl'thorpes)

Browning, Mrs. Angela

Bruce, Ian (S Dorset)

Budgen, Nicholas

Burns, Simon

Burt, Alistair

Butcher, John

Butler, Peter

Butterfill, John

Carlisle, John (Luton North)

Carlisle, Kenneth (Lincoln)

Carrington, Matthew

Carttiss, Michael

Cash, William

Channon, Rt Hon Paul

Churchill, Mr

Clappison, James

Clark, Dr Michael (Rochford)

Clifton-Brown, Geoffrey

Coe, Sebastian

Colvin, Michael

Congdon, David

Conway, Derek

Coombs, Anthony (Wyre For'st)

Coombs, Simon (Swindon)

Cope, Rt Hon Sir John

Cormack, Patrick

Couchman, James

Cran, James

Currie, Mrs Edwina (S D'by'ire)

Curry, David (Skipton & Ripon)

Davies, Quentin (Stamford)

Davis, David (Boothferry)

Day, Stephen

Deva, Nirj Joseph

Devlin, Tim

Dickens, Geoffrey

Dicks, Terry

Dorrell, Stephen

Douglas-Hamilton, Lord James

Dover, Den

Duncan, Alan

Duncan-Smith, Iain

Dunn, Bob

Durant, Sir Anthony

Dykes, Hugh

Eggar, Tim

Elletson, Harold

Evans, David (Welwyn Hatfield)

Evans, Jonathan (Brecon)

Evans, Nigel (Ribble Valley)

Evans, Roger (Monmouth)

Evennett, David

Faber, David

Fabricant, Michael

Field, Barry (Isle of Wight)

Fishburn, Dudley

Forman, Nigel

Forsyth, Michael (Stirling)

Forth, Eric

Fowler, Rt Hon Sir Norman

Fox, Dr Liam (Woodspring)

Fox, Sir Marcus (Shipley)

Freeman, Rt Hon Roger

French, Douglas

Gale, Roger

Gallie, Phil

Gardiner, Sir George

Garel-Jones, Rt Hon Tristan

Garnier, Edward

Gill, Christopher

Gillan, Cheryl

Goodlad, Rt Hon Alastair

Goodson-Wickes, Dr Charles

Gorman, Mrs Teresa

Gorst, John

Grant, Sir Anthony (Cambs SW)

Greenway, Harry (Ealing N)

Greenway, John (Ryedale)

Griffiths, Peter (Portsmouth, N)

Grylls, Sir Michael

Hamilton, Rt Hon Archie (Epsom)

Hamilton, Neil (Tatton)

Hampson, Dr Keith

Hanley, Jeremy

Hannam, Sir John

Hargreaves, Andrew

Harris, David

Haselhurst, Alan

Hawkins, Nick

Hawksley, Warren

Hayes, Jerry

Heald, Oliver

Heathcoat-Amory, David

Hendry, Charles

Heseltine, Rt Hon Michael

Hicks, Robert

Higgins, Rt Hon Sir Terence L.

Hill, James (Southampton Test)

Horam, John

Hordern, Rt Hon Sir Peter

Howard, Rt Hon Michael

Howarth, Alan (Strat'rd-on-A)

Howell, Rt Hon David (G'dford)

Howell, Sir Ralph (North Norfolk)

Hughes Robert G. (Harrow W)

Hunt, Rt Hon David (Wirral W)

Hunter, Andrew

Hurd, Rt Hon Douglas

Jack, Michael

Jackson, Robert (Wantage)

Jenkin, Bernard

Jessel, Toby

Johnson Smith, Sir Geoffrey

Jones, Gwilym (Cardiff N)

Jones, Robert B. (W Hertfdshr)

Jopling, Rt Hon Michael

Key, Robert

Kilfedder, Sir James

King, Rt Hon Tom

Kirkhope, Timothy

Knapman, Roger

Knight, Mrs Angela (Erewash)

Knight, Greg (Derby N)

Knight, Dame Jill (Bir'm E'st'n)

Kynoch, George (Kincardine)

Lait, Mrs Jacqui

Lang, Rt Hon Ian

Lawrence, Sir Ivan

Legg, Barry

Leigh, Edward

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