Employment Relations Bill

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Brian Cotter (Weston-super-Mare) (LD): I support what my hon. Friend said. He has made several of the key points that need to be made. The hon. Member for West Renfrewshire raised the fact that so often consultation comes after decisions have been made, and that is definitely to be deplored. We in this country have lagged behind for many years: with Ireland, we are at the lower end of the league in terms of implementing consultation of one sort or the other.

I was shocked when I returned from running a one-man-band business to engage in a company, of which, until recently, I was the managing director. Many years ago in my teens I was taken by the idea of works councils, and I used to write to a group in either Oxford or Cambridge—it was the nearest I got to attending one of those universities—that issued information on works councils and consultation. I was shocked to find that, when I became more involved in a slightly bigger company with between 20 and 30 employees, and became managing director, after all those years between leaving school and engaging with the company, a ''them and us'' attitude still prevailed. It was so awful in this country that when anything went wrong with the machinery, the work force used

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to put their hands in their pockets and say, ''Why should we bother? If it's gurging out extrusions of the wrong shape or size, so be it. It's nothing to do with us. The management don't care about us, so why should we care about our work?''

My time in that company was all about building trust. My aim, which I hope was achieved to a reasonable extent, was to open things up with the work force by running the company in an open manner so that once people got to know me they believed what I said and the company ran better.

I would normally declare an interest on occasions such as this—I have done so ever since I have been in Parliament, for six years. I no longer have to do so, as from the end of September I am no longer managing director of my company. I have been pleased and lucky enough not just to introduce a works council but to hand over the company to the employees themselves. They have been given free shares and they now totally run the company, without my involvement, which I achieved with shareholders and the other directors—being the only working director, fortunately I was taken notice of.

I had better not give you too many details, Mr. Stevenson. I could go on at length about how that was achieved. However, the principle is there. I very much believe in this sort of approach. As I stand here today, I totally detach myself and hand the company over to the employees. That is why I feel even more keenly than my hon. Friend the Member for Gordon (Malcolm Bruce) on this issue. The way forward in this country, for small or large companies is to be open and engage with employees. When all is said and done, the greatest amount of time in our lives is spent at work. I deplore the way in which many companies are still run.

I support my hon. Friend in saying that I hope the covenant will be more proactive, more definite and have more push—like him, I respect the Minister but was surprised when he made his statement. We are looking to the Government to give some push along the way.

Jim Sheridan: I genuinely apologise, Mr. Stevenson, if my earlier intervention was somewhat longer than expected. I tried to make the main point that—certainly in my industrial experience—works councils may be the choice of some employees, but in my view they are no substitute for independent trade unions. I advocate that every company give its employees the right to an independent ballot on whether they wish to join a trade union.

My experience is that, when it comes to consultation, the shop stewards or the works representatives are usually the first to go, because they take the main negotiators out of the picture—

Jon Cruddas (Dagenham) (Lab): Or promote them.

Jim Sheridan: Indeed. My experience of consultation is of companies in my constituency that went through a major rationalisation programme—again, with the works council. The consultation was on how to make a better product; how best to make

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people better workers and produce more. However, when it came to the crunch, in terms of making people redundant, the consultation ceased. That leaves great cause for concern.

Having met the works council, members of senior management transferred all their employees to an employment agency, without any consultation. Strangely enough, the senior management who advocated that this was the best thing for the workers did not think it the best thing for themselves. They were not transferred to the employment agency, so there is an element of hypocrisy there. What struck me most of all was when I asked the senior management whether this would make the workers more productive. They quite clearly said no, it would not make the workers the slightest bit more productive than if they had stayed within the company. They were acting on the diktats from Texas or somewhere else.

It gives me cause for concern that consultation, as it stands, is a sham in this country.

Malcolm Bruce: On exactly the point that the hon. Gentleman is making, over the past few years, a number of major oil companies in the North sea have effectively outsourced much of their in-house technical and financial work. They are now reaching a critical situation where these people are about to retire and they do not have any succession. At least one of the companies understands that it was a mistake and says that it should have trained up more people. The hon. Gentleman is absolutely right that consultation might well have avoided a bad decision for business as well as for employees.

Jim Sheridan: The hon. Gentleman is absolutely right. Before a decision is taken, the fundamental question that should be posed to workers in the consultation process is what they can do to turn the company around and make it more productive. There is a belief, certainly in British and American management, that the workers do not understand the complexities of the industry and therefore should not be consulted on such matters—although they are consulted on everything else. I am genuinely concerned that big employers, who outsource their employees to employment agencies, after an upturn in the business, may find that those skills are no longer there because people will have moved on. That worries me also in the sense that it then allows major companies to move out of the country under the pretence that they cannot find the labour here and have to move on to pastures new.

The regulations are to be welcomed. They are long overdue. Consultation has to begin in the workplace, with the workers' representatives. It should also begin with the trade unions, preferably on site.

10 am

Mr. Sutcliffe: Good morning, Mr. Stevenson. The debate is important. We will talk about the details and technicalities of the amendments in a moment. Lots of important issues have been raised and I congratulate the hon. Members who have spoken for sharing their

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experiences on a crucial issue facing the country regarding good industrial and employment relations: the right to information and consultation.

Conservative Members have not joined in the debates. I miss the hon. Member for Huntingdon (Mr. Djanogly) for his outlook and attitude.

Jim Sheridan: Don't tempt him.

Mr. Sutcliffe: He may come through the door shortly.

This is a key element of the Bill that will help the Government achieve their aims through modern employment relations. The hon. Member for Gordon chides us on not going far enough or quickly enough. In previous debates and on Second Reading, he has had a consistent, long-standing view about the role of works councils in industrial democracy. I was tempted to talk about ''In Place of Strife'', but I shall resist. We can certainly learn the lessons from history.

This is a culture change. We should move from an adversarial position of ''us and them'', recognise where we are going with business and global competition in Europe and acknowledge the need for good employers.

Most good employers inform and consult their employees voluntarily, but there are those who do not. We must ensure that such a culture develops. I pay tribute to the hon. Member for Weston-super-Mare (Brian Cotter) for the way in which he has dealt with his company and how it has progressed. That has culminated in a transfer of shares to the employees. He should be commended for that.

Mention was made of what one of my predecessors said and how he said it. I am sad that the hon. Member for Gordon did not mention the CBI-TUC framework document. It is a first in the UK, as it gets both bodies round the table to agree a methodology and framework.

Malcolm Bruce: Just for clarification, I was saying that, despite the fact that that document was produced—and I am happy to pay tribute to the way in which it was done—comments were made afterwards that retreated back to the two sides approach.

Mr. Sutcliffe: I am grateful for the hon. Gentleman's comments. That is where the Government are at. If we are to develop the culture that we both want to see, we have to get organisations such as the TUC and the CBI to develop into those framework arrangements, not only on the major issue of information and consultation but on other issues as well. That culture is about high-performance workplaces, with highly productive work forces that are fully engaged in the development of the business and the trading needs of the company. It was important to get the terms of negotiation around information and consultation right. The framework agreement is a major step forward.

I accept that there are concerns about the pace of change, but we want the process to be voluntary and we want the culture to change. The statutory provision will exist as a backdrop, but we want the voluntary

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approach to be the way forward. We wish to get away from the examples mentioned by the hon. Member for Gordon in previous debates and on Second Reading—people being sacked by text message, redundancies being announced on the radio and so on. Those practices are unforgivable, when people's livelihoods and lives are concerned. We want to get away from the ''no surprise'' culture.

The proposals are not solely concerned with redundancies either, although they are an important element when a company restructures or changes. They are concerned with how matters are taken forward for the business. The framework arrangements give us the opportunity to develop and change the culture.

The amendment is unnecessary because the powers already exist. I was asked about works councils. That is the main focus of the amendment. We are hoping through ACAS guidance to help firms and unions to understand the roles of works councils. They are one vehicle that could be used, but we are offering up a menu of opportunities for providing information and consultation. It will be for employers and employees to decide what is the best method of representation. That might or might not include trade unions—that would depend on the nature of the workplace. The framework agreement gives us opportunities on this.

Works councils play an important role. There is a change of culture in the UK in terms of how they operate. We have been consulting on their effectiveness and how they have been dealt with in the UK. There have been mixed responses, and we will publish some of them shortly. In some areas they have worked well, but in others they have not—for example, where there has been a failure to meet, or where the agenda for issues to be discussed has not been as significant as it might have been. However, works councils are one route that can be taken.

The amendment would include the requirement that works councils must be considered. That is technically unnecessary, as the powers already exist in the clause. However, I do not wish to criticise the spirit in which the hon. Member for Gordon has promoted the idea of works councils. I understand that he is trying to address issues involving works councils, and to suggest that works councils are an appropriate part of the information and consultation process.

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