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4.9 pm
Mr. Ian McCartney (Makerfield): Today, I have drawn the shadow Cabinet short straw and, instead of being in my constituency on local election day, I am left here. It is a pleasure to debate with the Under-Secretary and, in the past few weeks, we have been constant companions, either on the Floor of the House or in Committee, morning, noon and night. I have enjoyed the discussions with the Under-Secretary, but I think that this one will be the most pleasurable that he has had with me for some time because of the Opposition's position on the Bill.
I said earlier that I should be in my constituency as it is local election day. My local agent has substituted me on the loudspeaker with a tape of my favourite,
Jimmy Krankie. Worryingly, I understand that nobody has yet been able to tell the difference. [Laughter.] That is the last of the jokes.
The Under-Secretary was right when, at the conclusion of his remarks, he said that the official Opposition and our parliamentary colleagues from the Liberal Democrats broadly welcomed the Bill in another place. Given the amount of international trade created by arbitration, and its contribution to this country's invisible earnings, we are pleased that proposals have come forward to simplify arbitration proceedings in England and Wales. We are relieved because the lack of commitment shown in the past by the Government had threatened the future of that important source of invisible earnings, of which London is an international centre. A movement to reform arbitration law has existed for 10 years yet, unbelievably, the Government still wasted time before making their proposals.
Arbitration for the resolution of commercial disputes is of vital importance. England has been the preferred forum for the settlement of disputes by arbitration in vast areas of international trade--the Under-Secretary alluded to that fact--and we were in danger of losing much of the trade to the courts of arbitration in Holland, France, Switzerland and other areas, because English law had become outdated, unnecessarily obscure and far too legalistic.
A number of eminent lawyers, headed by Lord Justice Saville, have led the battle to defend London as the arbitration centre of the world. It is just as well that we did not have to rely on the Government to undertake that task over the past decade. Conservative Back Benchers have, on occasions, ranted and raved about the powers of the European Court of Justice, yet when urgent action was needed to defend our legal system, they, until now, sat on their hands. As the Minister of State at the Home Office might say, they should be chained up for their behaviour.
The United Nations Commission on International Trade Law adopted a model law of arbitration in 1985, which was the first worldwide step towards simplification. Scotland, not for the first time, was quick off the mark and adopted the United Nations model. England and Wales declined to do so.
The departmental advisory committee of the Department of Trade and Industry, chaired by Lord Justice Mustill, as he then was, reported in 1989 on the direction that English law should take. The committee said that a new Act, consolidating the existing arbitration statutes of 1950, 1975 and 1979, but making a number of innovations, was required and that, above all else, the law should produce an easily readable and accessible Act that could be understood and operated by lay arbitrators, reducing court intervention to the minimum. That was accepted by the then Secretary of State, but in the full flood of privatisation, the Government made neither funding nor other resources available to enact the policy.
The work of the departmental advisory committee was shelved until the Bill was produced. How often have we seen such a blinkered attitude? In the absence of DTI support, in 1990 a private group of arbitrators, funded by a collection of City solicitors, briefed counsel to produce a Bill. After two versions, the Department of Trade and Industry agreed to take it over and put it in the hands of a parliamentary draftsperson. A number of drafts have been
produced, but by general consensus the version before the House this afternoon fulfils the requirements of the Mustill report. It is logical, it is designed to be acted on by the layperson and most sections of the arbitration community are in favour of it.
Labour recognises that, according to the Bill, the object of arbitration is to obtain the fair resolution of disputes by impartial tribunals without unnecessary delay or expense. As the Opposition employment spokesperson, I have a great interest in the speedy resolution of disputes, especially with regard to industrial tribunals. As with the arbitration system, it is vital that industrial tribunals be streamlined and disputes be resolved as simply as possible. Labour is developing proposals to make the resolution of disputes more efficient; the courts must be used only as a last resort. This would save the taxpayer a great deal of money--by contrast with the Government's proposals. They are determined to place even heavier burdens on the industrial tribunal system.
In February this year, the House debated the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995, but the Minister offered no regulations worthy of the name. He simply said that the lack of guidance could be dealt with by industrial tribunals. That was wholly at odds with the promise given to the House on 18 March 1996 by the President of the Board of Trade, who said that he would publish a Bill to streamline the industrial tribunals system. So the Minister piled on the burdens in February and his boss, the Secretary of State, promised reform in March. What, in fact, is the Government's position? Will they reform the industrial tribunal disputes system, or was the idea--like job insecurity--all in the President's mind?
The Bill states that parties should be free to agree how disputes are resolved, and the structure of the legislation follows that principle. Labour supports the fact that, when parties do not take full advantage of this freedom, the Bill lays down comprehensive fallback positions for the convenience of the parties and of arbitrators who do not wish to make their own decisions in these matters and are content to accept conveniently laid out structures.
We welcome the fact that, for the first time, arbitrators are not to be held liable for anything they do or omit to do in the discharge of their duties unless they are shown to have acted in bad faith. Similar immunity is to be given to arbitration institutions in their capacity of appointing or nominating arbitrators. Parties now have greater freedom to say how they would conduct their arbitration; what rules of evidence should apply; and what procedures should be followed--whether according to law, and if so which law, or whether on the basis of the best solution for the parties without regard to law. This last is sometimes called an equitable solution. That is the basis on which a number of consumer-type arbitrations are conducted, either by an ombudsman or in areas of activity such as the travel industry.
The court is now to be involved only when the parties ignore the arbitrator's orders, and the court must be brought in for more powerful remedies. No longer will the parties, if dissatisfied with the arbitrator's directions, go to the court to have them overridden. The court's role now is to uphold whatever the arbitrators say, as long as they have discharged their duty in good faith. Thus, after an award, which must be reasoned, the court has certain powers not dissimilar to its present ones. The court can hear a challenge
from the parties on the grounds that the tribunal lacked jurisdiction, despite the arbitrator's decision, or on the grounds of serious irregularity, or on a point of law.
As I have said, Labour supports the measure, but I want to raise a number of points and I would be obliged if the Minister responded to them, if not at the end of the debate then in writing.
First, I have heard suggestions that the Act will come into force on 1 January 1997, but that there may be delay. The Lord Chancellor's Department thinks that it may take longer to prepare what it considers necessary amendments with respect to the jurisdiction of the High Court and county courts in arbitration. Can the Minister confirm the target date of 1 January 1997 for enactment? Can he confirm that all steps will be taken to ensure that there is no delay? It would indeed be regrettable if this important measure were delayed for bureaucratic reasons--especially since the Lord Chancellor's Department has been represented on the departmental advisory committee since its inception.
I understand that the Department's role was specifically to avoid delay and conduct proper liaison. That being so, it would clearly be unacceptable--a charge of incompetence could be levelled--if the Bill were delayed because of inadequacies on the part of the Lord Chancellor's Department.
Secondly, Lord Justice Saville has raised a concern about a cross-reference between clause 107(5) of the Housing Grants, Construction and Regeneration Bill and the provisions of this Bill as applied to the scheme for adjudication. Lord Justice Saville is an eminent and experienced lawyer. In a letter to the business law unit at the Department of Trade and Industry, dated 17 April, he says:
Lord Justice Saville continued:
I am sure that the Minister will agree that I could not have put it better myself. Has the Minister read that letter? If so, what was his response?
The opposition to which Lord Justice Saville refers is widely shared in the construction industry. Will the Minister take into account the views of Lord Justice Saville and consider the removal of the cross reference?
If not, there is a serious risk that, in construction industry dispute resolution, the purpose and effect of the Arbitration Bill, which we all support, will be blunted.
Thirdly, I shall speak about the construction sector in relation to the measure. The Bill, especially if Lord Justice Saville's point is acted on, should lead to arbitration in construction disputes becoming what it was once, and what it should be--a quick, effective and economical way of deciding largely technical disputes arising from construction contracts. The Bill is a sister measure to the relevant sections of the Housing Grants, Construction and Regeneration Bill, which will bring the Latham report into law. Sir Michael Latham's report was set up against a background of increasing concern about the number of disputes arising from contractual practices in the construction industry and the effect that they have on the industry's productivity and competitiveness.
Both the Arbitration Bill and the Latham report are welcome, but some arbitrators have raised doubts about clause 69 because most of the joint contracts tribunal family of building contracts and sub-contracts contain a provision by which the parties agree in advance to refer any question of law to appeal. If, at the end of clause 69(2)(a), the words
were added, there might be less clogging up of the courts. Perhaps the Minister will consider that amendment when the Bill goes into Committee. If not, perhaps he will write to me saying why he will not consider it.
What of the appalling contracts sometimes offered to construction workers? Cowboy employers tend not to enter into arbitration agreements, so there is nothing in the Bill for exploited employees. Is the Minister aware that trade unions in the construction industry have been forced to launch a major drive to end tax fiddles by contractors who force building workers into bogus self-employment to avoid national insurance and tax payments? Mr. George Henderson, construction secretary of the Transport and General Workers Union, is quoted in Construction News of 25 April 1996, as saying:
labour agents in construction, not Labour parliamentary agents--
I understand that the main construction employers are supporting the union's actions, because they recognise that such dishonesty benefits neither side of industry. Will the Minister offer his support to the campaign?
The self-employment trick is not confined to small projects. An estimated 10,000 construction workers are in bogus self-employment. Quite apart from being illegal, the practice poses a serious threat to health and safety. A report in Contract Journal, also dated 25 April 1996, quotes a trade union official as saying:
Labour will give the Bill a fair wind, and assist in its speedy implementation. In return, will the Minister consider proposals to assist construction employees and
taxpayers who are cheated by those underhand, Arthur Daley-style practices? As I have said, Labour supports the Bill because it is a commonsense measure to assist dispute resolution. It is in line with our commitment to streamline dispute resolution in general. If the Government share our support for a reform of general industrial dispute resolution, will the Minister tell us when the House will be presented with the legislation to reform tribunals which was promised by the President of the Board of Trade on 6 February? Given that his right hon. Friend promised consultation, will the Minister tell us whether the consultation process has begun? Will he give details of whom he will consult, and will he give us a guarantee that the consultation submissions will be published so that hon. Members can give proper consideration to the proposals following their publication?
Does the Minister accept the urgency of reform? He will be aware that, in order to cope with an unprecedented increase in its caseload, the Central Office of Industrial Tribunals was forced to open another tribunal office in north London. The Department of Trade and Industry advertised for lay members on a temporary basis, and that created further confusion. Temporary members were subject to different selection and reselection criteria from permanent members. Will the Minister explain why? Surely a lay member is either competent or not competent. Can we not simply have one set of rules for all appointees?
"I am unhappy with present proposals (regarding the cross reference) which seem to muddle two quite separate concepts, namely arbitration and adjudication.
It seems to me that there are two ways in which the problems could be addressed.
Firstly, it would be possible to use the Arbitration Bill by incorporating into standard terms the agreement of the parties to operate Clause 39, giving the tribunal the power to order interim measures, which would (under sub-section (3) be subject to the final adjudication of the tribunal. If this course were adopted, then the rest of the Arbitration Bill would apply and there would be no need for any further detailed provisions.
Secondly, it seems to me that it should be possible to devise a scheme of adjudication quite separate and distinct from arbitration, where the adjudicator is empowered to make temporarily binding decisions."
"The present proposals, to my mind, are likely to cause confusion and to distract from the Arbitration Bill. It also seems they are meeting substantial opposition. The overall impression that I get from what is indeed a very cursory look at the problem is that it would be unwise to continue with the present proposals, and that it would be far better to sit down with interested parties and try to work out precisely what is wanted and how it can best be achieved."
"provided that any such agreement shall not be effective unless reached after the dispute to which the arbitral proceedings relate has arisen"
"This campaign is a drastic measure which we are forced to take after years of urging these employers to play by the rules.
My officers are working undercover on the situation so that we can expose crooked labour agents,"--
"and the guilty contractors and subcontractors."
"There are cases of injured people being dumped outside hospitals and left there to be picked up by hospital staff because the employer was too frightened to call an ambulance because this would reveal the location of the work site."
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