Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 60-79)


24 JANUARY 2006

  Q60  Mr Bone: Acas charges for some of its training services; are you happy with this type of charge and does that affect their impartiality?

  Q61  Mr Yeandle: If I might just comment on that, I have already to a large extent covered that. We do not object in principle to Acas charging for some services like that, and clearly if this was to be totally free it could be seen as potentially commercially undermining organisations like EEF, who are already providing the same type of services to our own members. Very importantly, we see that charging should not be for conciliation services, I have made that point already, but equally as I said before the right balance needs to be struck. The balance needs to be struck in such a way that the fact that they are doing more commercial training does not drive Acas to spend more and more of its resources on this commercial training, rather than what are seen as the really important services that they provide for our members and, equally and very importantly, that it does not undermine their impartiality. It is very difficult if an employer is paying for services that Acas is providing—and inevitably it will be the employer who is paying—there is inevitably going to be a perception that it is not necessarily going to be as independent as it is now. It is a question of getting the balance right. I am not opposed in principle, it is getting the balance right. That is quite a tricky management exercise and one that the Acas management team will have to look at very, very carefully over the coming months and years.

  Q62  Mr Bone: Would it be fair to say really that you have something that is very successful in Acas in its core business which, might I suggest, is empire-building and going after things that really could have been done successfully and are being done successfully by private organisations, and really if there is going to be this training should it not be outsourced or privatised anyway?

  Mr Yeandle: There is a case for bringing the two together; it is an inter-related service. The experience that the Acas officials get from doing other parts of the work will actually prove beneficial for them in the other parts of their job, so it is a question of bringing the two together. I would not see it as something that they necessarily should be seen as separate from, but it must not be seen as driving the agenda of Acas. The Acas agenda is very clearly the core business, but we do think there are some valuable things they could equally do because of their impartiality and because of their independence that actually can improve employment relations in the UK.

  Q63  Mrs Curtis-Thomas: Mr Yeandle, you mentioned that charging for dispute resolution would affect the impartiality of Acas, but would that be true if the costs were apportioned between employer and employee?

  Mr Yeandle: First of all, I think it would be incredibly difficult to apportion the costs in an appropriate manner and, clearly, as far as the employee is concerned it is likely that it will be seen, at least if it is the same amount, as a higher figure. It would effectively undermine that credibility and that independence and I really do feel that it is a very fundamental point as far as we are concerned. We actually think it is really important that conciliation services, whether they be individual or collective, are free because anything that moved away from that—even if it was shared out in some way, which would be very difficult to do, frankly—would inevitably undermine the credibility of Acas.

  Q64  Mrs Curtis-Thomas: I cannot hear a coherent argument actually to support that. I do not think that necessarily taking money for a service compromises your impartiality.

  Mr Yeandle: It may not in reality do so, but it will in perception. Inevitably, he who pays the piper will be seen as calling the tune, so there is a degree of inevitability about that.

  Q65  Mrs Curtis-Thomas: But currently, you would acknowledge, Acas provide training services and the funding in fact reverts to the Government, so why would funds received for conciliation necessarily have to go back to Acas, why should they not go back to the Government? Is not what we are doing at the moment giving employers an opportunity to reduce the costs of problematic employment relations on their bottom line and fencing that off to the taxpayer?

  Mr Yeandle: The fact that these conciliation services are actually reducing the number of cases that go to tribunals is a huge benefit that we often do not properly recognise in terms of the overall benefit that Acas provides as a service. We do feel very strongly that it should not be something that is chargeable. We do think it would fundamentally change the attitude of the general public, employees, the trade unions and employers towards Acas, it would undermine its very impartiality, which is so fundamental and so critical to the successful delivery of a conciliation service.

  Q66  Mrs Curtis-Thomas: Mr Yeandle, I do not think you have made the argument particularly well, I do not think you have been able to robustly defend my assertion that what employers are seeking to do is remove the cost of problematic employment relations from their bottom line, and you have not said why it would not be appropriate for the Treasury to handle the charges that are raised from this particular exercise rather than Acas themselves. That would not be seen to compromise their impartiality because they are not primary beneficiaries of the money that would accrue from undertaking these inquiries on behalf of employer and employee?

  Mr Thompson: I would agree with everything that David has said absolutely, you would be surprised if we did not, but maybe to put it in a different way to give a more rounded picture, I think the primary beneficiary from our point of view—and I think I can speak on behalf of the TUC which they would not often allow us to—is the economy rather than the employer or the employee. We have seen that Acas's role has had a positive impact on productivity in the UK, through good employment relations, and we would see the economy as being the primary beneficiary. To assert that employers are using Acas to deal with problematic employee relation difficulties is to ignore the amount of money expenditure and management time which is expended on litigious claims, on difficult claims within the workplace, on just employee relations, employee communications overall. It is only when you get into the most difficult cases where you need a third party with that impartial view, where you need a room that is unfettered or unpolluted by opinion and you need somebody in that room who can deliver a service in a way that will bring the two sides together and help resolve the issues. From our perspective, to have that role in the most difficult of circumstances is absolutely crucial and the primary beneficiary of that is the economy.

  Q67  Mrs Curtis-Thomas: I still do not believe that impartiality is going to be compromised by charging; I do not believe that that is the case.

  Chairman: Well, there we are, you have failed to persuade. Mark Hunter.

  Q68  Mark Hunter: Moving back to staffing issues, Acas as we know is reducing staff numbers through the early retirement scheme at the moment. The union PCS, which represents those staff, fears that this is going to lead to greater workloads, obviously, for the staff who remain, or indeed lower standards. Would you share the concern that reduction in staff numbers will affect the effectiveness of Acas?

  Mr Thompson: If I could say a couple of words on efficiencies, and then I know David has some experience on the staff cuts in particular. From the CBI's perspective, obviously, we are huge supporters of drives and initiatives at the moment to improve efficiency across the public sector. We want to learn from the best of the private sector and the best of the public sector and drive up efficiency across the whole economy, so that is where we are coming from. We are not in the game of saying that we need to have cost cuts and job cuts for the sake of it and we would like the Government to take a hard and fast look at Acas and work out whether we are talking about spending cuts or whether we are talking about efficiency savings. From our perspective, reducing the numbers of people employed by Acas by the proportion that is being discussed and talking about suggestions that we lose 100 posts or so could actually undermine the very efficiency of Acas rather than just driving down costs and getting a more efficient product; we do not think that we would want those significant cuts. Mr Yeandle: It is probably, frankly, a bit too early to make a clear judgment as to what the impact of the change in numbers will be, but certainly it is not just about numbers from our perspective, it is about the types of people that we, frankly, are going to be losing from the Acas service over the next six, nine, twelve months, because all the indications from talking to our regional officials is that—perhaps understandably—it is the older, more experienced officials who we are going to lose out of the regions, and I think there is a genuine worry whether we are going to have sufficiently well-equipped and experienced officials out there to deal with the large number of individual and indeed sometimes collective disputes that they have to deal with. Equally, there is a concern that, inevitably, they will be providing perhaps a wider range of services and that may mean that they will not sometimes necessarily be available, as they may need to be, on an urgent basis to deal with a conciliation case of one form or another. It also does raise another issue which I think is an important one, which is that the world of work is changing very rapidly out there and it is very important that Acas and its officials have the expertise and knowledge of a modern way of work. Therefore, I think it is going to be important, as we move forward in this new environment that Acas is going to be in, that they look more widely in terms of who they recruit so that they bring into their resources people who have a wide range of experiences, of public and private sector, unionised and non-unionised environments, different types of work organisation, so that they can genuinely reflect in their advice and guidance what in reality is happening out there.

  Q69  Mark Hunter: If you support the efficiency drive and also our concern about the impact on the quality of advice and service that might be available, how do you propose that the circle be squared? Where does the extra money come from to pay for the extra people to keep the service running at the very efficient levels it appears to be at the moment?

  Mr Yeandle: I do not think it is for me to make a judgment, I am not involved sufficiently in the administration and budgets of Acas to be able to make comments as to where, if at all, savings can be made.

  Q70  Mark Hunter: Or indeed where other revenue may come from.

  Mr Yeandle: Yes, indeed, there are a number of different routes.

  Q71  Mark Hunter: You did say in a previous answer that you did support businesses paying.

  Mr Yeandle: For certain services, yes.

  Q72  Mark Hunter: Do you have other ideas as to how it might be funded?

  Mr Yeandle: Not any specific ideas, but at this stage it is too early to make a judgment about what the impact is on the numbers, but we have genuine concerns that we are losing an awful lot of expertise and experience which has been built up over a very long period of time.

  Q73  Mr Wright: We have gone through the question of the possibility of 100 job cuts and some say up to 160 in actual fact may well disappear, but there is also the question of whether or not Acas are formulating short term contracts to bring these people back in with the experience. Whilst I accept your argument, David, regarding it is a changing world and a changing environment and Acas needs to change in particular respects and take on people with those experiences, is it not true that this may well result in more employment tribunals? I think it was your figure that Acas was about £450 per case whereas an employment tribunal was about £2000 per case which really means, when the equation comes together, if there are more employment tribunals it is going to be more costly at the end of the day, is that not true?

  Mr Thompson: Yes, it would be, if we see an increase in employment tribunals then it would be more costly than achieving a successful result through Acas.

  Q74  Mr Wright: Do you not see that as being one of the effects, that probably if we are having these staff cuts more cases may well end up in employment tribunals?

  Mr Thompson: It is certainly one of the dangers, that that could happen, but it is very difficult to quantify of course. It is certainly one of the dangers.

  Mr Yeandle: It is certainly a possibility, but at this stage it is too early to call. It is an issue that both the CBI and ourselves will be watching very carefully, as to whether as a result of changes that have taken place in the Acas service perhaps the level of conciliation that takes place reduces and, as a result, more cases end up in tribunals rather than being resolved as they currently are through conciliation services with the expertise of Acas.

  Q75  Mr Wright: It would be fair to say then, to summarise, that you would oppose these cuts that are taking place overall within the staff within Acas?

  Mr Yeandle: I think you are putting words into my mouth. I would not say that we oppose the cuts, we are saying that Acas needs to deliver value for money and live within its means, and it may well be that changes—as in any organisation—have got to be made. It is not for me to make a judgment as to how those changes should be made, that is something that is the role of the Acas management to determine as to the best way in which they can meet their objectives—their statutory objectives, their financial objectives. What we should be watching very carefully is to ensure that what changes are made do not have an adverse effect both on employee relations and the number of tribunal cases. It is too early to make a call, I think, at this stage.

  Q76  Mr Wright: Surely that is one of the risks. If there is a risk that we are going to go into more employment tribunals, that will obviously cause a great deal of concern for employers as it would for trade unions and indeed employees. Surely that is a risk too far to take?

  Mr Yeandle: It is a potential risk, but I do not think we can quantify at this stage exactly what the risk is. Life is full of risks.

  Mr Thompson: You have to see Acas within the round of all the other provisions and renewed disciplinary and grievance procedures to try and resolve disputes in the workplace much earlier. They are still bedding down and we need to see the full impact of that. I think what we are saying is that we are very concerned about the possible impact, but that does not lead us to say that there are no possibilities for cuts within Acas, but we have to be fully aware of the ramifications, and that is a broader, Government-led review rather than anything from the CBI.

  Q77  Roger Berry: Acas provides advice about promoting equality and diversity in the workplace. Do you support that, or do you see that as an area for cuts?

  Mr Yeandle: I certainly see it as something that I think Acas is potentially well-equipped to do. My concern I suppose in this area is that we want to ensure that the advice and guidance they give in this new area meets the same high levels of standard that we have in all other areas of employment-related advice, and I suppose my question really is have they got a sufficient depth of expertise within Acas to be able to deliver it? It may well be that this is an area in which the Acas management have to look at the types of expertise that they have got within the service to be able to provide it. It would be unfortunate if that standard of service and expertise were to decline in this important area.

  Q78  Roger Berry: Given your experience and your members' experience of the work of Acas in this area, and your experience of the Equality Commission's work in this area, what conclusion do you draw?

  Mr Thompson: From our side we would say it is a positive step that Acas has moved into this area for two very clear reasons, which are connected, the first being that the vast majority of problems in the whole equality sphere is lack of information and understanding on both sides, both from an individual's perspective but also an employer's perspective. It is not that employers are anti equality provision or anti equality policies, it is that very often they have difficulty in dealing with the information and when there is a problem they want to go to a trusted friend, if you like, who they can talk to and say can we get some impartial advice and information here. I am afraid to say that with particular equality bodies employers do not always see the equality bodies as that trusted friend, and we have seen examples where people have gone and raised issues about getting more information and the next they hear from the equality body is that they are being investigated. Acas has a very clear role to play there in providing information and guidance, which is absolutely crucial to improving the situation on diversity.

  Q79  Roger Berry: You do not see it as a duplication of effort.

  Mr Thompson: We have to be very careful about not duplicating, but I think there is a clear role to play from within Acas on both, providing information and also conciliating. I am sure Acas will have the figures, but I think 41 per cent of race discrimination applications in 2005 were settled by Acas with just 21 per cent going to tribunal, so there is the evidence.

  Chairman: We will have to bring it to a conclusion there, Mr Thompson. We are very grateful for your presence; for someone who claimed not to be an expert on Acas you have done remarkably well. Thank you very much indeed.

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