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2.6 pm

Malcolm Bruce (Gordon) (LD): As the hon. Member for Greenock and Inverclyde (David Cairns) rightly said, the ebb and flow of industrial relations law has been severe in the past 20 years. At times, abuses of union power needed to be tackled and at others, workers' rights were trampled in the dust. There is no doubt that the judgment must be about achieving balance. We shall support the Bill because although we have some reservations and there are omissions, across the piece, it shows evidence of balance. Consultation with employers' and union representatives showed that both groups are happy and unhappy. That suggests that the Government have probably got the balance right.

I have been a Member of Parliament for 20 years and I voted for many of the trade union reforms that the Conservative Government introduced and that I believed were necessary at the time. I make no apology for that. However, I have also stood up and fought for workers' rights. All my life, I have campaigned for works councils and consultation rights, which the Bill introduces. I shall revert to that shortly.

I am puzzled by the Conservative party's position. First, I was intrigued by the statement of the hon. Member for Eddisbury (Mr. O'Brien), who said that the Bill was unnecessary but took 50 minutes to explain why. His argument was characterised by sophistry. He had decided to vote against the measure and was desperately trying to find reasons to justify that, rather than allowing analysis to lead him to his conclusion. Indeed, he constantly referred to issues that Conservative Members would like to tackle in Committee, should the Bill get a Second Reading. The provisions on, for example, implementing the European directive, certainly require legislation.

We believe that the Bill has merit and we shall be happy to support aspects of it. The hon. Member for Hamilton, South (Mr. Tynan) referred to pensions. The Government said that they will give themselves the power to include pensions in the general bargaining rights. However, I agree with him that the experience of the past two or three years has been shocking for many workers and that most people regard their employment

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package to be pay plus pension rights, including the amount that they contribute, the type of scheme and its benefits. It is difficult to separate pensions from pay and conditions. I hope that the Government acknowledge that. In the current climate, it is hardly surprising that employers resist that, but people have been frozen out of pension funds to which they have subscribed, and there have been differentials so that those who are in a scheme are allowed to continue with it but new employees are given a second-rate benefit.

It is difficult to resist the case that pensions should ultimately be seen as part and parcel of the whole employee package. None the less, I am pleased that the Government acknowledge the case for considering the introduction of legislation in that field.

My party and I take very seriously the cost of implementation and the level and range of regulation. The House, and certainly Ministers, will know that my party believes that there is a prima facie case for abolishing the Department of Trade and Industry. It is an over-large Department with a huge budget, much of which we think could be either deployed elsewhere or taken out of the calculation.

We must take business seriously when it complains about the cost of regulation and bureaucracy, but I am interested that the Conservative party is appealing to a wider public to help it in its efforts to cut public expenditure. My hon. Friend the Member for Weston-super-Mare (Brian Cotter) and I take seriously the representations that have been made, but when one actually asks business representatives which particular regulations they want us to get rid of, they are not very clear or forthcoming—[Interruption.] It is all very well to refer to the cumulative effect; I am genuinely happy to sit down with business representatives to discuss in detail how we can simplify or abolish existing regulations. My predecessor in this job, my hon. Friend the Member for Twickenham (Dr. Cable), made some recommendations on that. However, it is interesting that when one engages in discussion with businesses, their complaint boils down to a much bigger criticism of the Treasury than of the DTI. It involves the over-complexity of the tax system that the Chancellor has introduced and the costs of administering that, as well as administering the working tax credit, which keeps changing its name and which has collapsed because its administration is too complicated for not only the business community but the public sector to deliver.

There are real issues there but, as has been said, we have to deal with red tape practically. If there is too much red tape, let us identify it and get rid of it. I certainly pledge my party's support for any measures that could achieve that—[Interruption.] It is all very well for the hon. Member for Eddisbury to refer to being against red tape, but if we were to go back to the wonderful days of the free market economy, we would find the freedom to exploit without health and safety rights, workers' rights or holiday rights. The reality is that old-fashioned employers wanted to take work and not have to bargain on sharing the deal. That is why this debate has ebbed and flowed according to where the balance lies. The Conservative party had better think carefully, because its position seems characterised by a return to two simple points: bashing the trade unions and bashing the European Union. If those are to characterise Conservative party campaigning during the

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next two years, it will go down very well in the Daily Mail, but might not go down as well as the party thinks that it will in constituencies, even Conservative ones.

I turn to the European directive and the need to consult. All my life, I have taken the view that we should get away from the characteristic of having two sides to industry, and build partnerships. That is why my party was in favour of employee share ownership and has always been in favour of works councils and consultation. We therefore welcome the Government's introduction of regulation on that in clause 31. I do not want to be churlish, but I intervened on the Secretary of State to say that we would like the directive to be implemented in full, as early as possible. She gave her explanation, and I have no doubt that getting the balance right there is part and parcel of her consultation with employers, but my party would have liked the UK to adopt that policy many years ago. The reality is that only two countries in the European Union do not have the established practices of works councils and consultation: the UK and Ireland, for which a derogation has been provided.

The CBI has specifically said that that is the part of the Bill that it likes the least, although it must acknowledge that the directive exists and that as members of the European Union—which most of us accept is the long-term future of the United Kingdom, even if the Conservative party does not—we will ultimately have to adopt it because it has been agreed and voted on. The only questions are how and when we do that. It is perfectly reasonable for the business community to say that that will cost it money, and we should not ignore its concerns on that front. However, the record shows that employers who consult and include their employees generally have a better score on productivity and performance and far fewer disputes. Consulting is a positive virtue. Business must consider that, although there will be a cost in setting up such a mechanism, whether a works council or another system, there will also be a benefit that should substantially outweigh the costs and bureaucracy involved. At the end of the day, that will produce a better informed, better motivated and more constructive work force who will often be able to inform and advise management and help to achieve common and shared objectives.

That is one reason why I support the Secretary of State's judgment on the small business threshold. For consultation, that threshold is 50; for other aspects it is 21. It is not that bad practices exist among small businesses. I know, for example, that members of the union representing the textile industry say that most members of their work force are in companies that employ fewer than 21 people. However, the danger of legislating for such companies is that there are many other sectors in which that would place an excessive burden on small businesses, many of which have, by definition, much better consultation. The theory is that where an employer has 50, or certainly 21, workers, if they do not communicate with those people—it should be possible to talk to every worker every day—they are a pretty bad employer anyway. In general, those small businesses have shorter lines of communication and much better understanding. It is far harder for management to keep the work force in the dark because there are many things that they cannot help but know. The Government are right to take the position that they

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have taken on that. Although the CBI does not like the consultation, it likes that decision, and we must recognise that the Government had to strike a balance.

Jim Sheridan: On the point about small businesses, if someone is being bullied and harassed in a major company, and has the opportunity to go to the trade union to assist him or her on that, why should someone whose company has fewer than 21 employees and who is also being bullied and harassed not have the same right?

Malcolm Bruce: That is a fair point, but we are trying to strike a balance over the mechanism, and over the cost and bureaucracy involved in setting up quite mechanistic procedures. No one is condoning what the hon. Gentleman suggests, and workers have some rights through tribunals, certainly over unfair dismissal. They also have rights over bullying and harassment, but the difficulty can be in proving that that is happening and getting evidence. It is unfair to characterise the situation as people in small businesses having no rights; they simply will not have the structures that are being imposed here. The justification for that is that the larger the organisation, the greater the danger that the communication channels do not automatically exist and there is not more reasonable redress.

Whatever people might argue about the relative economic performance of the continental economies and our offshore economies, few would argue that, for example, Germany's long-term economic success was not partly founded on the strong consultative mechanisms that we established in post-war Germany, which were part of the driving force behind the German economic miracle. It is a cheap shot for the Conservatives to attribute the difficulties facing the German economy to that, rather than to the consequences and terms of reunification—[Interruption.] I am not saying that they are doing that, but there is nevertheless a danger of not acknowledging that we should have absorbed that very positive development in this country.

I have heard many speeches in this House and elsewhere in which people have pointed out that the occupying forces led by the United Kingdom imposed on post-war Germany a federal constitution, proportional representation and worker inclusion in management decisions. Those are three good liberal principles that we would like to adopt in the United Kingdom and which have helped to generate the success of the German economy. The difficulties facing Germany now are completely unrelated.

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