Informing and Consulting Employees

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Dr. Vincent Cable (Twickenham): The Minister will recall that we went over much of this ground in a well attended debate in Westminster Hall a couple of weeks ago. While I accept that the principle of subsidiarity is valid and important, how would the Minister apply it to industries—of which the motor industry is the most obvious example—that are organised and managed on a European basis, and in which the existing European directives do not appear to have been effective in making companies apply elementary principles of consultation to their work forces? What happens to subsidiarity in that case?

Mr. Johnson: The hon. Gentleman raises an important point. The European works councils directive, to which we happily signed up, contains a clause that clearly states that, in circumstances such as those that have occurred, for example, at General Motors in Luton, at Ford, or at BMW-Rover, there should be consultation and an exchange of information about proposals with the work force through a European works council. There is a cross-European dimension to that. There is a strong argument for putting arrangements in place where workers in each member state cannot influence decisions or access information or consultation because decisions that affect them are made not in their own country, but elsewhere in Europe. A key question was posed by my right hon. Friend the Secretary of State in his announcement on 18 January: were European works councils used in these situations, and if not, why not? Existing voluntary agreements cannot be superseded by European works councils, and that is a proper area for investigation. The Government have consistently argued that even if the information and consultation directive had been in place in this country at the time when BMW's decision was taken in Munich, it would have been proper to use the EWC directive rather than this one.

Mr. Ivan Henderson (Harwich): Will the Minister explain what more the directive offers compared with the European works councils directive? Before I was elected to Parliament, I was involved in negotiating a European works council for a trade union, and I saw some of its useful points.

The Minister suggested that what really matters is the attitude of employers, rather than legislation, consultation or information. Historically, there has been a lack of negotiation and consultation between companies and their employees in this country. The previous Government encouraged that, and it has got to change.

Mr. Johnson: I agree with my hon. Friend. There are many and varied reasons for that history. The United Kingdom is in a different situation from that of the rest of Europe because of the tradition of its industrial relations: both the trade union movement and employers have tended not to want interference from the state and have not wanted to adopt the models of industrial relations prevalent in continental Europe. Although it is important to acknowledge that background, the latest workplace employee relations survey—which is the most comprehensive of its kind and is being copied in Australia and Canada because it produces such good information—reveals that many companies of all sizes have procedures for consultation and information. The partnership fund has operated over the past four years. It was only a toe in the water—a mere £5 million was dedicated to it, but it has been a great success—to find out whether both sides of industry would respond in the way that the Government want. The baking industry, which covers a broad range of businesses, has had a bad employment relations record, but many companies associated with baking have applied for partnership fund awards—as has London Underground, which also, dare I say, has suffered from bad industrial relations—and they have discovered that both sides of industry genuinely desire to improve their relationship.

I acknowledge that there is a problem in this country on both sides of industry, and that it will be difficult to change the confrontational culture of the past, but that can be achieved by voluntary means. The introduction of the prescriptive methods and minimum standards that are set out in the information and consultation directive would militate against that, not least because the successful implementation of policies such as the minimum wage and the agenda contained in ``Fairness at Work'' requires both sides of industry to co-operate. The TUC and the Confederation of British Industry have very different views about the matter, and that suggests that, deep down, we would face considerable problems in trying to implement this kind of directive.

Miss Anne McIntosh (Vale of York): I apologise to the Committee for missing the opening statement. Will the Minister explain why, given the explanatory memorandum statement, there has not yet been formal consultation on the document?

Mr. Johnson: If the Committee agrees, I will think about that question and reply later.

Dr. Ladyman: Publicly quoted companies have to give their shareholders information about profit warnings and threats to the future of the company. Does the Minister see any parallels between the minimum standards for that information and what the directive requires employers to give employees?

Mr. Johnson: No. My hon. Friend is right. The Companies Act 1985 sets out disclosure requirements in company law. However, that is a world away from the minimum standards that would have to be enforced to give employees a new legal right to information and consultation in certain circumstances and to require member states to guarantee the exercise of those rights.

Mr. Gibb: As the Minister knows, the Opposition want to support the Government in securing the defeat of the directive in Europe. Therefore, will he comment on the report in The Times on 16 February, which said that Germany had agreed to support the British Government's position until the general election, but afterwards would swing its support behind the directive? Will he confirm that that report is false and that nobody in the Department of Trade and Industry—neither Minister nor civil servant—has made or discussed that suggestion with any German Minister or civil servant?

Mr. Johnson: The speculation in The Times and other newspapers is simply that—speculation. We have set out clearly, and do so again today, our position on the directive. On discussions between civil servants and Ministers, the position expressed by the Germans at a working group in January was exactly the same as that expressed in November at the Council of Ministers.

Mr. Stephen Hesford (Wirral, West): My hon. Friend mentioned the TUC's position on the directive. Can he expand on that? What representations has the TUC made to the Government, and does it support the Government's stance?

Mr. Johnson: The representation from the TUC is that it supports the information and consultation directive.

Miss McIntosh: Perhaps the Minister has had time to think about my first question. I want also to ask about the costs of implementing the proposed directive. Those costs are substantial, as is shown in the explanatory memorandum on pages 10 and 11. As well as the recurring cost, there will be a substantial set-up cost too. Has the Minister had the opportunity to ask his counterparts in Europe why the costs are so high?

Mr. Johnson: I have reflected on the hon. Lady's first point. We have had no formal consultation on the directive because, when the ``Fairness at Work'' White Paper was published, we also set out our views on the issue of information and consultation, which had already emerged from Europe. Our views were well known before the directive was published and, as such, it would have been wrong to conduct a sham consultation.

The hon. Lady mentioned costs. We have not discussed them because we believe that the directive breaches subsidiarity. It would be wrong for us to give the Council of Ministers the impression that our opposition to the directive is a matter of cost or that we could overcome our difficulties through negotiation, because we are fundamentally opposed in principle to the directive. Costs will be a factor in some people's minds, but not in ours. It is not a cost issue; it is about subsidiarity and whether the directive would improve employment relations in Britain. We do not think that it would.

Mr. Darvill: On the same point, I have studied the regulatory impact assessment and I was surprised by the level of costs. Does the Minister agree that the likely cost of the directive will be much less for companies that have good practice in employment relations than for those that have poor practice?

Mr. Johnson: I agree with my hon. Friend completely. Unions are free to negotiate with employers for such provisions on information and consultation, as part of their regular bargaining arrangements. Many companies have such provisions and they would incur a lesser cost following the introduction of the directive.

Dr. Ladyman: Given the Opposition's wish to find out how successful the Government will be at resisting the directive, can my hon. Friend tell us when qualified majority voting was extended to this policy area?

Mr. Johnson: I cannot remember the exact date but I am pretty sure that the official Opposition were in power at the time.

Mr. Gibb: Will the Minister clarify a matter for the Committee rather than myself, as I tend to agree with the Government's position on the directive?

The Chairman of the European Scrutiny Committee wrote a round robin letter to the Minister's predecessor, which was copied to other members of the Committee. He wrote:

    ``we are disappointed that you have not commented on our suggestion that some legislation of this kind may be needed at Community level to balance the consequences of competitive pressures.''

Will the Minister respond to that now?

Mr. Johnson: That is a spurious argument and we do not agree that such legislation would balance competitive pressures. Furthermore, we do not believe that anything that could be done at European level could not be done at a member state level.

For obvious reasons, countries with a long history of using such a model are sanguine about the directive. However, countries that do not have such a model, such as the UK, could have their competitiveness damaged by the directive.

It is important that the Lisbon process should be not just words, but something tangible. Under that process, we look at improvements in terms of best practice, bench marking and peer pressure, rather than through the regulatory sausage machine. Such measures, as I mentioned in my opening statement, would be far more effective in that area and in protecting competitiveness than a directive.

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Prepared 28 February 2001