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Mr. Russell Brown (Dumfries) (Lab): I think that all Labour Members applaud the Government for what they have done on trade union recognition. My right hon. Friend referred to small and medium-sized businesses, which, in areas such as mine and throughout the country, are the very lifeblood of the local economy, yet there is a major anomaly, because the provisions will not provide that recognition for businesses that employ 20 people or less.

Ms Hewitt: I understand my hon. Friend's concern, which I know that many other hon. Friends share. I have been discussing the matter with trade union colleagues for some time, but although I welcome, as my hon. Friend does, the fact that many sole firms do voluntarily recognise trade unions, and there are nationwide agreements—such as those from the print union Graphical, Paper and Media Union—that cover all firms in a sector regardless of size, the Government continue to take the view that it is much better for this to be done on a voluntary basis. I really do not think that it is appropriate or right for Government, through the law, to impose a trade union recognition procedure on a small firm where everybody knows one another and where procedures are necessarily much less formal. However, I also want to stress to my hon. Friend on this point that the right, which we established in the 1999 Act, for any individual employee to be accompanied at a grievance or disciplinary hearing by a trade union colleague applies to everybody, regardless of the size of the firm.

Tony Lloyd (Manchester, Central) (Lab): My right hon. Friend will know that there is real unease about the small firm cut-off, first because it appears illogical, and secondly because, as she rightly said, proper collective bargaining is very important in improving industrial relations, so many of us want it to be the practice for small firms as well. Even if she will not concede the whole principle, does she recognise that many firms that employ 20 people or fewer are no longer small firms as considered in an historic context, and will she accept that it is time for us to look again at the cut-off point, because it is the wrong one?

Ms Hewitt: My hon. Friend makes an ingenious point and I respect his concern on this issue. I do not think he is right. Only 5 per cent. of applications for union recognition are currently coming from firms with between 21 and 30 employees, who of course are covered by the current union recognition laws. In the private sector there is very low trade union membership among smaller firms and, as I have said, we have already strengthened the rights of the employees in those firms by giving them the right, regardless of whether there is union recognition, to be accompanied by a trade union official or member at a grievance or disciplinary hearing.

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I think that is the right approach to take in firms that, by virtue of their size—I think that 21 is the right cut-off point—are informal in their procedures and should not have imposed upon them a statutory procedure, although I, like my hon. Friend, hope that more will continue to put in place partnerships with their work force, whether by trade union recognition or some other route.

Mr. Henry Bellingham (North-West Norfolk) (Con): I strongly agree with what the Minister said about small firms, but before she leaves the information and consultation directive, may I ask her to comment—I doubt she will have time to do so in her winding-up speech—on the maximum fine that can be imposed for breach, which is £75,000? The CBI considers that to be too much, but I gather that the GPMU says that it is derisory. What is her view? Does she think it is at about the right level?

Ms Hewitt: We think it is at the right level, which is why we put it in the Bill.

The statutory recognition procedure has operated very smoothly and has been accepted by both employers and employees. That is why we shall not alter the principles of the original legislation. As I have said in response to interventions, we will not move the small firms threshold nor change the voting threshold. However, what we will do in the Bill is to improve the recognition procedures in practice. For instance, we believe that it makes sense to give unions access to the work force at an earlier stage in the process, once an application has been registered and accepted by the Central Arbitration Committee.

Mr. Ian Davidson (Glasgow, Pollok) (Lab/Co-op): Are the Minister and her Department monitoring the flow of voluntary agreements? It seems to me and many of my colleagues that those small businesses that were willing to have voluntary agreements have already done so and that the flow of voluntary agreements has virtually ceased. It seems to us that in a large number of small firms, workers are genuinely in difficulty because of bad employers, that those workers are the people who need protection, and that what we are providing for them in the Bill does not give them anything additional to what they had already. Will the Minister give an undertaking that this matter will be kept under review, and that if examples of bad practice come to light, she will be willing to revisit it?

Ms Hewitt: My hon. Friend will be aware that, as I said earlier, over the last six years we have done an enormous amount to strengthen the rights of employees in all firms, regardless of size and regardless of whether there is trade union recognition. I am sure he would agree that, in a sense, the priority for trade unions is to recruit more members, given the inadequate levels of trade union membership in the private sector. But I believe that he is wrong in his suggestion that the growth in voluntary agreements is tailing off. We rely very much on the TUC to monitor those voluntary recognition agreements, but I think I am right in saying that when it publishes its latest survey we shall see a significant

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increase, even over the 1,000 new voluntary recognition agreements that I mentioned. But as I said, the Bill will strengthen and improve the practical operation of those recognition procedures.

Thirdly, the Bill will improve the law on industrial action. The Bill does not affect the basic structure of the law on strikes but it will make the law on strike ballots and notices much more straightforward, so that the legal obligations on trade unions are well defined and reasonable. We shall also strengthen the law that protects strikers who are taking lawful industrial action from dismissal.

All of us on the Labour Benches were shocked by the treatment of the workers at Friction Dynamics in Caernarfon—T and G members who were sacked after eight weeks on strike by an employer who made no effort whatever to resolve that dispute. Those workers won their case for unfair dismissal, only to find that the employer put the company into administration and promptly reopened the operation under a new name—Dynamex Friction.

I have met Bill Morris, the recently retired general secretary of the TGWU, and some of those Friction Dynamics workers. I know how appalling the effect of that dispute and the treatment of those workers has been on them and their families. I can tell the House today that with their information and help, my Department has been looking closely at the failure of that company and considering whether there are further grounds for action.

The Bill is another opportunity to act. In it we shall remove from the eight-week protected period any days that the employer locks out the work force, as occurred at Friction Dynamics, and we shall table a clause in Committee to improve the minimum obligations on both employers and unions to take reasonable steps during conciliation to try to settle the dispute.

Albert Owen (Ynys Môn) (Lab): My right hon. Friend is right to take those steps with regard to the lock-out, but does she agree that the very fact that the company now operates under a different name means that the Government grant that it received from the National Assembly for Wales should be given back to the taxpayers, because it is an unfair abuse of that taxpayers' money?

Ms Hewitt: That is of course a matter for the National Assembly and I am sure that it and the Executive are looking at it.

Fourthly, the Bill will clarify various issues around individual employment rights. In particular, we shall spell out the role of the companion at disciplinary and grievance hearings, making it clear that they are allowed to play an active role and not simply a passive one.

Fifthly, the Act will improve and strengthen the law in a number of other ways, bringing United Kingdom legislation up to date following the ruling in the European Court of Human Rights case of Wilson and Palmer, improving trade union regulation and clarifying the certification officer's role.

Finally, I come to a matter of considerable importance to trade unions and to my hon. Friends. For some time we have been discussing with trade unions the very difficult issue of tackling the infiltration of their

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ranks by racist activists. Many of my hon. Friends have drawn to my attention, and that of my hon. Friend the Minister for Employment Relations, Competition and Consumers, the nauseating content of some British National party journals, which celebrate the fact that if its members take action against a trade union and are successful, they can receive compensation.

I can tell the House today that my hon. Friend will introduce new provisions in Committee, setting out how we will enable unions to tackle that problem, because it is utterly unacceptable that the vital work that unions and others have been doing to eradicate racism from society should be undermined by their inability to root out the political racists who seek to exploit trade unionism for their own purposes.

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