Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 1-19)


24 JANUARY 2006

  Q1 Chairman: Ladies and gentlemen, thank you for your attendance today. Can I, as always, begin by asking you to introduce yourselves for the record?

  Ms Veale: Thank you very much indeed for inviting us. My name is Sarah Veale and I am Head of Equality and Employment Rights at the TUC. Could I also just say to the Committee that with a different hat on (which I am not wearing today) I am also a member of the Acas Council.

   Mr Nunn: I am Simon Nunn. I am Deputy Head of Research at the Transport and General Workers' Union.

  Q2  Chairman: There is a universal rule of politics that when everyone agrees, they are wrong—apart from the Dangerous Dogs Act! All the evidence we have received today is universal in its praise and support for the work of Acas. Why?

  Ms Veale: I am not sure I agree with the political analysis of the uselessness or the futility of agreements. I think that is an indication that Acas is doing an extremely good job. After all, the whole purpose of Acas is to work with, if you like, the two sides of industry and to bring them together when there are problems. If both sides of industry are saying that Acas is doing a very good job I would defy anyone else, who has the same depth of knowledge of what Acas does, to gainsay that. I think it is something very positive and I am very glad to see it.

  Chairman: I am never frightened of consensus!

  Q3  Mr Hoyle: As the Chairman has already stated, the popularity of Acas and everything says what an excellent service; but are you worried that the Chancellor is looking to claim monies back in a different way? The Comprehensive Spending Review is being looked at and one of the principles will be about how the DTI spends money but also the money it puts into Acas, does it worry you?

  Ms Veale: It certainly does worry us. I think the trouble with Comprehensive Spending Reviews is that they are comprehensive and go across the whole of Government; but because the Government is compartmentalised it means that each government department then has a limited sphere within which it is operating. It means that the DTI is looking at Acas and the Equal Opportunities Commission and its own work but not in comparison to other activities taking place in other departments; which means if the DTI has to cut by a particular proportion that can have a particular effect on the organisation it sponsors. If you looked at Acas compared to bodies sponsored by other departments I think you would find it would do proportionately less well, which is very unfair on the organisation. In a word, yes, we are very concerned about the level of cuts that Acas has been required to make in its services.

  Q4  Mr Hoyle: Do you think the actual good name of Acas should overcome that and should be enough to carry it through the DTI and the Spending Review?

  Ms Veale: It is a tall order. I very much hope so, and it has been very difficult for Acas to decide where to make the cuts. Obviously the worry is that the cuts would fall on frontline services because of the magnitude of them. I think it is very difficult to make all the cuts in the back room, as it were, even if you were able to sustain an argument that that was not going to do any damage. I think where we feel things are at the sharp end, as it were, we are okay at the moment but there is some worry about whether the impact will be on frontline conciliation services and collective dispute resolution, which of course is hugely important to the TUC.

  Mr Nunn: I back up what Sarah has said absolutely. As you say, we seem to have a consensus here that Acas do their job well. As I pointed out in our submission, much of the work that Acas does goes unsung because it goes on behind the scenes; it goes on behind closed doors in difficult negotiations. To the point that it has become such a part and parcel of British industrial relations, when proposals are made to make 25% cuts in Acas (which are going through at the moment, which will probably mean 25% cuts in Acas staff) we do not know yet what that impact will be because this is a process that is ongoing; but the danger always in these cases is when voluntary severance schemes are put into place the people with the most experience tend to be lost from the organisation and that is of particular concern to us as a union.

  Q5  Chairman: This resource question obviously lies at the heart of our inquiry today. Should Acas not be concentrating on its core work, its original work, rather than going into other areas, for example the equality and diversity work?

  Ms Veale: It is a very good question, but I think what Acas is doing on equality and diversity actually shows that it has a particular role that differentiates itself from, say, the Equality Commission and from other support services that exist in that area. The law is very complex on discrimination but it is not necessarily assistance with legal problems that employers are asking for and the unions are asking for. What they want is some help with dealing with a new diverse workforce and problems and tensions between different groups of workers and so on which cannot be covered adequately.

  Q6  Chairman: You are saying it is part of the core work, in a sense. We will ask you more questions about equality and diversity.

  Ms Veale: Yes, I think it is part of the core work and something we would not want to see Acas having to stop doing.

  Q7  Chairman: One of the things which struck me in the evidence is the emphasis that the business witnesses have given us in their evidence as to work with small-and medium-sized companies. I suppose Acas is seen as a relic of the great corporate era of the 1970s. In fact, it seems its real value is often with the SMEs. Is that your understanding as well?

  Ms Veale: I think it has a different role in relation to larger companies and in relation to SMEs. There has been a huge growth in the number of SMEs. Larger companies tend to have their own system up and running with personnel departments; but what larger companies get involved in, which smaller ones do not of course, is collective disputes. That kind of systemic problem exists where Acas comes in and can help out where deadlock has been reached and it is impossible to find a solution without getting a third party in. I think that is a very different kind of work than the work that it does with smaller and medium sized enterprises, which are usually bereft of any type of personnel management system and struggle. It shows how Acas has been flexible and has accommodated the very different labour market that we now have and has changed itself to suit the circumstances in which it operates.

  Q8  Mr Weir: In answer to an earlier question you talked about Acas bringing both sides of industry together. In your evidence you talk about the reduction in collective bargaining and more individual employment rights. Why do you think you need Acas to resolve individual employment rights rather than collective rights which is its traditional role?

  Ms Veale: It can do both; they are not mutually exclusive. There is less collective bargaining activity than there was—far, far less. If you look at employment relations over the last 20 years, we have generally moved away from a system where most pay determination was done through national collective agreements and regional collective agreements to a system where people actually tend to negotiate their own working conditions. The downside of that is there might be a reduction of trade union activity. It means because there is now a much better floor of basic employment rights that when things go wrong people want those rights to be recognised and their tendency is to go straight off to litigate—which nobody wants and is in nobody's interests—and that is why Acas has built up a very impressive portfolio in terms of individual conciliation, and helping employers as well to set up systems that manage disputes away from the courts; I think that is one of the chief values.

  Q9  Mr Weir: Given there has been a movement away from collective rights towards individual rights, why do you think we should have a public body funded by the taxpayer to deal with these disputes?

  Ms Veale: If all employers were perfect then we would not need anybody really—trade unions, Acas the lot—but unfortunately mistakes do get made. Yes, ultimately in capitalism it is down to the two parties to resolve those, that is not really going to help anyone. Quite often the problem is actually a symptom of a much deeper issue in the workplace which needs to be put right otherwise the problem keeps on popping up with other individuals. I think it is not simply a question of cutting off that dispute and everything is all right. It is a question of having an organisation that can say to the employer, "That went wrong. We can try and sort that out. It would have been better if you'd had a system in place that would not have allowed this to occur in the first place".

  Q10  Mr Weir: My understanding of how Acas works in these individual disputes is that when an employee takes the case to an employment tribunal it is then referred to Acas for voluntary mitigation. Do you think there is a case for perhaps giving Acas a role prior to getting to the stage of an employment tribunal? When employment tribunals were originally set up the idea was that they would be low cost and less bureaucratic than the courts; that does not seem to have worked out and many people have the same problems as they would with the courts. I wonder if Acas has a role as a mediator before it gets to a lengthy employment tribunal. Do you see that as a way it could develop in the future?

  Ms Veale: It is a slightly difficult question for the TUC because my answer ideally would be that there should be trade unions in there mediating, sorting out and regulating the relationship between the employer and the employees. We sadly accept the fact that a lot of workplaces, especially the smaller ones, do not have trade unions. The problems do not go away; they need to be sorted out; and a lot of the time you really do benefit from a third party intervening. Yes, to answer your question, there is more of a proactive role for Acas on request to go in and help employers even if they have not got any disputes bubbling around at that particular point in time. Within the limited resources we talked about, that would have to be balanced against the other work that gets done. Sadly, in the absence of universal collective bargaining coverage, there probably is an argument for having that.

  Mr Nunn: We ask in our submission that the Acas duty to promote collective bargaining be returned; and the reason why we do that is because—

  Q11  Chairman: We will ask about collective bargaining later on.

  Mr Nunn: In relation to your question, yes, there has been an explosion of individualised cases, partly as a consequence of the reduction in collective bargaining. Whether there is role that Acas can play in terms of intervening prior to cases getting to tribunal, yes, of course there is. In some senses what you are saying is that Acas's role increases rather than decreases as a result of that.

  Q12  Mr Weir: Indeed, but the point I was making was that before Acas becomes involved the employee and employer have got to the stage of a breakdown and gone to an employment tribunal. Now that starts a process where lawyers become involved and both sides often become very legalistic and that was not the intention of tribunals to happen. That is why we talk about, for example, reform of divorce law, alternative dispute resolution. I just wonder if there is a case for some sort of binding resolution by Acas at an earlier stage before it gets to the adversarial stage of the tribunal?

  Ms Veale: You do get into some legal difficulties then because people do have rights. Acas can already conciliate and reach agreements that are legally binding on parties. As you say, that is normally only triggered when there is an ET1 put in. In a sense, I do not think you can get round that because the problem does not lie with how Acas operates; it lies with the tribunal system which requires people to put in a form very, very quickly or they lose the right to do so. In a sense I suppose it is a trigger. It is probably the best thing you are going to get unless Acas is going to be given the resources to spend a lot of its time out there troubleshooting and providing a consultancy service.

  Q13  Judy Mallaber: What is the TUC's view of the fixed periods for conciliation which were introduced in 2004? Some witnesses, such as the CBI, reckon that is too short for meaningful discussion and want that to be reviewed.

  Ms Veale: I have to say, we would be 100% with the CBI on that. We said when the consultation took place, before the fixed periods came in, that we had reservations about them. Those reservations have been borne out by our people as well. They are saying it is much too short and does not give you adequate time to develop a consensus and an agreement; and it just shuts down before you have got to where you need to get.

  Q14  Judy Mallaber: Do you think it is resulting in a greater number of cases ending up going to a tribunal hearing?

  Ms Veale: It is too early to tell. It is quite difficult to draw the relationship between the two. I would certainly agree there needs to be a review done to see if that is the effect. We suspect that it probably is. The trouble is you have also got playing in the new dispute resolution procedures and the other requirements therein, which again have distorted the applications to tribunals because lots of applications are going in and bouncing back because they have not done the procedures properly. It is a bit hard to tell where the problems are coming from—whether it is the fixed term conciliation or whether it is other aspects of these dispute resolution procedures. We think the whole thing needs to be reviewed, because our real fear is that cases are not going to tribunals when they should be but, on the other hand, also are not being conciliated when they could have been. We seem to have a bit of a dog's breakfast at the moment.

  Q15  Judy Mallaber: I can see you arguing that there is not enough time for the conciliation process and sorting everything out, but could it not also be argued that if you have a longer period for conciliation that both sides will still practise brinkmanship and it will be the twentieth week rather than the seventh or fourteenth?

  Ms Veale: Yes. There is a problem that the psychology of disputes is that people will leave things to the last possible moment, and I think that tendency is unavoidable if you had a one week or a six year period. Dare I insult any lawyers present, but where there are lawyers around quite often the parties play the whole thing out as long as they possibly can and then do the settlement at the tribunal door. I understand the intention of the Government to avoid that, but I am not sure that this has done that at all. I am not sure you could do it through these sorts of means.

  Q16  Chairman: You used the phrase of cases `bouncing back': could you expand on that?

  Ms Veale: People think they have a good case which they put into the tribunal, whatever it is on (discrimination or whatever) and because they now have to go through statutory procedure in the workplace, if there is no evidence that they have gone through that properly or there is some defect in the way in which they wrote the letter to the employer complaining about whatever had gone wrong, the tribunal has to throw it back and say, "You haven't completed form [whatever it is] under Schedule 1. You'll have to do that before you proceed with this claim". We are picking up anecdotal evidence that some of our members, even people with trade union offices backing them, and certainly in the unorganised part of the workforce, are simply losing the will to live and saying, "I really, honestly can't go through all this any more. It's only a £400 claim for an unlawful deduction [or something]". There is a real worry that access to justice is being denied and you are not sorting out workplace problems but simply displacing them. I am sorry, it is a slightly tangential issue, but it does bear on what Acas does.

  Q17  Mr Binley: I hope you do not rule me out of order, but the CAB plays a part in reconciliation before Acas comes in very often, and it is almost a part of Acas in that respect. Can I ask if you are generally happy from a TUC point of view with the role that CAB plays? Do you feel that they get enough training in this respect and enough support? Do you think that the sort of cutbacks we are seeing at the moment will impact upon that preliminary work which if done well is so important to good resolution but if done badly can mess the whole thing up for months to come?

  Ms Veale: I have to be careful what I say about the CAB because they are staffed by volunteers and they are a fantastic organisation. I think one of their weaknesses, and this shows up in a piece of research work they did themselves, is that they do lack people who have the kind of knowledge that you need of employment relations and complex discrimination and employment law. Therefore, I think they have been quite heavily reliant on help from Acas locally within regions to assist them in doing their very valuable job. The trouble with cuts with one organisation that works well with others is that it is going to have a ripple effect. I think that is going to be quite damaging and difficult for the CAB, who themselves are not exactly generously funded and sometimes struggle to deal with these difficult problems.

  Q18  Mr Clapham: A little earlier we were talking about the enormous change which has taken place in the structure of British industry. We see many more small—and medium—sized enterprises today. Some years ago Acas used to have the duty to promote the extension of collective bargaining, and in fact Simon Nunn referred to this a little earlier. Does the TUC think that Acas, in the changed situation in British industry, should actually have the duty to promote the extension of collective bargaining?

  Ms Veale: If I could start and then perhaps Simon may want to come in on this. The short answer is, yes, we do. You can get party political about this but I think anyone would agree that it is obvious one of the costs of taking steps to reduce the powers of trade unions, the effectiveness of trade unions, the ability of trade unions to bargain freely, is that people have to go somewhere else. In a democracy they have to have the right to exercise a growing number of individual rights. Our view is that collective bargaining is the most efficient and best way of resolving a lot of problems that arise from disputes over people's individual rights. Just one example: if you look at equal pay, which is at the moment generating huge numbers of individual claims and causing a lot of work for Acas and the tribunals, if you have a trade union in there, particularly a recognised trade union, negotiating on equal pay is part of what they do. You can solve a problem that affects 3,500 employees through one set of negotiations. There are huge economies of scale if you have a successful collective bargaining arrangement. I would add the Vic Feather comment that collective bargaining is like marital relations, it is best done consensually. Nobody is arguing for a return to forcing trade unions on anybody. Where the employer and the union could be persuaded to have workable recognition agreements, there clearly are huge economies of scale. For that reason, we feel that Acas ought to have as part of its duty a remit to promote collective bargaining, obviously where that is appropriate and where it is going to work effectively.

  Mr Nunn: We had a reference earlier to whether Acas was a relic from the 1970s; the 1970s are always discussed when it comes to discussing industrial relation matters now. Acas originally in the 1970s was set up as part of the mechanism to improve industrial relations in Britain in response to a breakdown in industrial relations. Our former General Secretary Jack Jones was very instrumental in promoting the idea of a conciliation service. In terms of us asking for a duty to promote collective bargaining, I would back up what Sarah says. In the modern environment collective bargaining does not necessarily mean a return to the 1970s. If you look at some countries in Europe, particularly Scandinavian countries which have very high levels of collective bargaining, you will find very high levels of productivity. We would look at coordinated bargaining across the sectors of the economy as mechanisms to coordinate issues of training, skills and pensions as well, which is obviously a major issue for many workers.

  Q19  Chairman: There are two separate issues here: one is, is collective bargaining a good thing; and, if it is a good thing, who should promote it? The question I would like you to focus on, on the merits of collective bargaining, is: assuming that collective bargaining is a good thing, is it right that Acas should promote that; or should it be other people promoting the merits of collective bargaining? Is there a risk of Acas's impartiality being prejudiced if it is the body charged with promoting collective bargaining?

  Ms Veale: That politicises employment relations really, does it not? I would argue that you should try to depoliticise it. In that case it is quite sensible for Acas to have a role in promoting it where appropriate. In a large company in particular, if there are trade unions with substantial numbers of members, it would seem absurd if Acas did not try and help the employer and the union to reach some sort of acceptable recognition agreement; otherwise you are going to end up advising the employer how to deal with a group of fairly dissatisfied employees who want to have a collective voice but are being denied it. Where appropriate Acas should be able to promote collective bargaining; not to force it as a philosophy down everyone's throat—no-one is suggesting that.

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