Informing and Consulting Employees

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Dr. Ladyman: Subsidiarity is an important principle. When I wander over the road on a Sunday evening for a quiet pint in the Chiltern Tavern, I hear the customers discussing nothing else. Therefore, I can understand why the Government have taken this position as a result of defending that principle. If the issue should be dealt with by member states, we should let them deal with it. Let us resist the European directive on the matter. However, we cannot have our cake and eat it. If it is better dealt with by member states, then member states must address it. If we do not accept the directive, we must clearly state that we intend to address it in our own legislation as it covers important issues that employees have a right to be addressed.

We heard an eloquent, but strange address from the Opposition. They seem to agree with the Government's position, which has not changed, but they are still trying to contrive objections to it. If the hon. Member for Bognor Regis and Littlehampton were a newspaper editor, he would be running headlines about dogs that did not bite people.

I found the hon. Gentleman's speech especially strange because it was the Conservative Government who agreed to extend qualified majority voting to the matter. I do not blame them. I think that qualified majority voting is required for the resolution of many such decisions across the European Union, and that it is proper to resolve this issue in that way, but the Opposition cannot have their cake and eat it. They agreed to extend qualified majority voting to such issues, and they must accept the consequence: sometimes the United Kingdom might be in the minority and lose the argument.

I was interested, but disappointed, to hear nothing about the needs and rights of employees in the comments and questions of the hon. Gentleman and other Opposition Members. They did not ask a single question about employees, nor make one statement about employees' need to be involved. The Opposition gave not one hint that they were remotely concerned about employees' rights and needs.

Mr. Gibb: The hon. Gentleman is being slightly disingenuous. In response to one of his hon. Friends, I stated my belief that keeping employees fully informed is the best way to run a business. However, I object to using the law to force that on companies.

Dr. Ladyman: I shall deal with that point later in my speech, when I attempt to demonstrate exactly why the law needs to be involved. However, the hon. Gentleman says that the only time during the Opposition's questions when interest was shown in the needs of employees was when he was prompted by a remark raised by one of my hon. Friends. That is lamentable.

I will explain why I think that we need minimum standards. I agree totally with my hon. Friend the Minister that it is best when companies build partnerships between employer and employees. Such partnerships must be based on trust, and should be always developing. Each side must be able to offer constructive advice and criticism, and take those on board in good part, to make progress. I agree with that principle.

We nevertheless need minimum standards set in law. It is companies that do not recognise the need for such partnerships whose employees need statutory protection. Employees are most in need of information when a company is in trouble. Even if a partnership has been built up, and there has been continuing discussion, people start to hide things when difficulties arise, and the partnership is threatened.

When a small engineering company in my constituency got into financial difficulty, its employees came to me because their employer was refusing to give them information. I had to ask the employer to tell me what was going on so that I could tell the employees. The employer eventually sold the company, and it soon became clear that the new owner had no interest in the employees or the company. He had bought it to take its equipment away to prop up other companies that he owned.

The new owner's long-term aim was the disposal of the company's employees and the closure of the business-but could the employees get that, or any other, information out of him? Were they ever told what was going on or given advice with which to plan their lives? Some of them became frustrated and drifted away from the company. Even if the new employer had wanted to save the company or sell it as a going concern, the breakdown of the partnership and the lack of information created a situation where, from day to day, the company became less of a viable concern.

Mr. Ivan Henderson: As we heard earlier, the Opposition believe that companies' procedures for dealing with consultation and information should be voluntary. When I was a trade union official during the years of the previous Government, I had to deal with employees whose redundancy notices were delivered by taxi. There had been no prior consultation or negotiation. We need minimum standards so that people will not be treated as they were under the previous Government, who encouraged such conditions.

Dr. Ladyman: My hon. Friend is 100 per cent. correct. Minimum standards must be written into law to deal with such circumstances and to guarantee the right of employees to know what is happening. The cost of compliance was discussed, and a figure of £200 million was given as the cost of implementing minimum standards across the country. However, the majority of decent companies already comply with the minimum standard. That £200 million is not an additional cost of compliance but the total cost. The additional cost would be incurred by companies that were not already following best practice and spending money on this. It would be very small, a tiny fraction of £200 million.

Minimum standards would give tremendous benefits to employees. My hon. Friend the Member for Harwich (Mr. Henderson) gave the example of a company that bussed redundancy notices to its staff, and I cited an example from my constituency. If those companies were publicly quoted, the shareholders would have been given information that was denied to the employees. Creditors would probably have been given that information—the company owners, acting within the law, would have told their creditors what was happening—but the employees were denied it.

As long as employees' wages are paid on time, they are denied information that is given to shareholders and creditors and discussed among the directors. They are denied information about the company on which their livelihoods depend. That is why I believe that we need to have standards written in law. I am prepared to accept the Minister's view that the principle of subsidiarity applies and, therefore, that this is a matter for UK law. However, we must enact it within UK law, and I encourage the Minister to make such a statement today.

Mr. Gibb: Before the hon. Gentleman continues, I wish to address briefly the point that he raised about the regulatory impact assessment. He is right that 36 per cent. of all work places have some form of consultation process, but the RIA makes the point that it is difficult to know how many of those undertakings will be able to adapt existing arrangements and how many would need to introduce entirely new structures to comply with the detailed requirements of the directive. The problem is caused not by the practice of consulting employees but by prescribing detailed regulations. The law creates the cost, not the practice.

Dr. Ladyman: The hon. Gentleman leads me to my final point. Because the Government believe in the principle of subsidiarity, they have not negotiated directly. I understand their tactical reason for not negotiating. However, they might suddenly realise that they are going to lose the battle in Europe. They might suddenly realise that other member states were moving towards accepting the directive and that they had to start negotiating to get the best possible deal for the UK. They would then have to go into that sort of detail.

Perhaps we should ask for a directive that deals with information being given to employees, rather than with consultation. Were that to happen, I suspect that the cost of complying with the directive would be minimal, as it would only be bad companies, or those getting into difficulties, that would be expected to do something that they were not already doing.

The hon. Gentleman is right. It might be very difficult to establish how many existing companies would comply with the detail of the directive. However, we will not know the detail unless we take part in negotiating on it. Nevertheless, I totally support my hon. Friend the Minister in his contention that subsidiarity is an important principle in this case and that the matter should be dealt with by member states. I also support the resolution, but I would do so with a much easier mind if my hon. Friend were to say not only that he accepted the principle that information should, by law, be given to employees at all times but that the Government would return very soon to the matter, with a view to applying it in the UK.

11.36 am

Miss McIntosh: I am delighted to be able to support the Government's position in a spirit of co-operation and consensus-something that, as the Minister will appreciate, causes alarm bells to ring among Conservative Members. If anyone is to be accused of not taking an interest in employees, it must be the Liberal Democrats, whose Benches have been vacated for some while.

Dr. Ladyman: Not only are the Liberal Democrat Benches empty now, but I can say, as a member of European Standing Committees since the start of this Parliament, that they have at least turned up today. They do not usually do so.

The Chairman: Order. That is interesting but not relevant.

Miss McIntosh: I draw the Minister's attention to the latest edition of Small Business News. It reports a conference that clearly demonstrated that business is already engulfed in red tape. For that reason alone, this proposal should be resisted. I would also argue, and I am sure that the Minister will find it an attractive proposition, that there are other issues of greater concern to employees. A good example is the mobility of pensions—not just those of people working for multinational companies—and I hope that the Minister will forgive my using my personal experience to illustrate it.

Recently, a number of years after returning to the UK, I received a note from the national insurance office in Newcastle upon Tyne, informing me that it has no record of my whereabouts from about 1978 to 1989. From the correspondence, which I have shared with the Minister and with his colleague, the Secretary of State for Social Security, I can conclude only that the contributions that I made, both to national insurance and to my pension, notably in Belgium for a number of years between those dates, will simply be lost. I am sure that I am not alone in this. During that time, I was both an employee and self-employed. I have always encouraged people to spend at least part of their working life, if not part of their time at university or in training, in another EU country. However, if they are likely to experience this kind of loss they will, regrettably, think twice about doing so.

Regulation in the market place should, as the Minister has said, be kept to the minimum. It is difficult for the state to justify interfering in business, except to set broad parameters for what is, primarily, a personal relationship between the employer and the employee. Each Member of Parliament now operates as a small business, so we can appreciate the problems that such businesses face. We must discharge our responsibilities towards our employees very carefully. For example, if we wish to close down part of an office or move it in or out of the constituency, or to London, we have to consider at what stage to consult them in order to avoid setting off alarm bells. In a competitive situation—more competitive than adversarial politics—getting it wrong could have damaging consequences.

The Minister will remember that Baroness Thatcher, as Prime Minister and leader of her party, successfully negotiated against excessive interference from the Commission and other member states. She had a number of supporters and admirers among member states—I am sure that the Minister will agree that the handbag technique was successful. She took the flack, while other member states took the benefit. Under my right hon. Friend the Member for Huntingdon (Mr. Major), the last Conservative Government achieved a flexible labour market. The country achieved an historic level of direct investment. I accept that that has continued due to the golden legacy that we bequeathed to this Government.

The Minister referred to subsidiarity and I do not understand why the hon. Member for South Thanet (Dr. Ladyman) has a problem with the concept. Even he, whom I understood to be broadly pro-European from our time on the Transport Committee, must understand that certain issues are best dealt with nationally. This country has agreed that other issues, set out in treaties, can be dealt with at European level but I do not believe that social policy should be one of them. The Minister is absolutely right. I am sure that he has not experienced a sudden conversion on the road to Damascus to make him enthusiastically endorse the principle of subsidiarity, but his endorsement is welcome none the less. I take heart from the fact that there is no qualified majority on the Council of Ministers.

The proposed legislation is intrusive. We have already discussed the cost of it; I want to return to the issue of confidentiality. If an employee inadvertently or wilfully breached confidentiality, severe financial consequences could follow for the company. The Minister reported that member states are alarmed that sanctions could be imposed to prevent the disclosure of confidential information, but there has to be a penalty to protect a company's negotiating position.

During the war, there was an expression, ``Loose talk costs lives''. In company speak, loose talk can cause a loss of confidence in the company and cost jobs. During my time as a Member of the European Parliament for North Essex, later North Essex and South Suffolk, I recall a highly successful public relations company operating in Colchester. It was a medium-sized employer that was competitive and vibrant and was about to be taken over—to the delight and satisfaction of its employers, but not its employees—by a bigger west end firm. The lady who owned the company inadvertently named a number of her most prestigious clients who were then approached by the west end firm and poached. As a direct consequence, the Colchester company went into receivership and a number of jobs that should have been drafted into the London firm were lost.

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Prepared 28 February 2001