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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 852-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE TRADE AND INDUSTRY COMMITTEE
THE WORK OF THE ADVISORY, CONCILIATION AND ARBITRATION SERVICE (Acas)
Tuesday 24 January 2006 MS SARAH VEALE and MR SIMON NUNN MR ANTHONY THOMPSON, MR RICHARD WAINER and MR DAVID YEANDLE MR JOHN TAYLOR and MS SUSAN CLEWS Evidence heard in Public Questions 1 - 120
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Trade and Industry Committee on Tuesday 24 January 2006 Members present Peter Luff, in the Chair Roger Berry Mr Brian Binley Mr Peter Bone Mr Michael Clapham Mrs Claire Curtis-Thomas Mr Lindsay Hoyle Mark Hunter Judy Mallaber Mr Mike Weir Mr Anthony Wright ________________ Examination of Witnesses Witnesses: Ms Sarah Veale, Head, Equality and Employment Rights Department, Trades Union Congress and Mr Simon Nunn, Deputy Head of Research, Transport & General Workers' Union, gave evidence. 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 role 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 and that 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 per cent cuts in Acas (which are going through at the moment, which will probably mean 25 per cent 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 for 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 industrial 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 industrial tribunal? When industrial 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 industrial 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 industrial 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 per cent 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 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 up 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. Q20 Chairman: "Consensually" is the word you used? Ms Veale: Yes. Mr Nunn: There is a difference between promotion and facilitation. We would envisage it as Acas having a role in facilitating. The example at the moment is, as part of this Government's manifesto the workplace manifesto included in that was discussion of setting up sectoral forums in low paid industries. This country does have a problem (and we saw the tragedy at Morecombe Bay) with some employers (not all employers but a minority of employers) exploiting migrant labour - lots of low paid migrant labour in poor conditions. Is there a mechanism to facilitate in those sectors, bringing together employers, trade unions and stakeholders across the sector to try and raise standards across that sector? There would also be a mechanism for tackling social exclusion and poverty as well. Q21 Mr Clapham: Given the change we have seen in British industry, when one bears in mind that now 46 per cent of all production is in units that employ between one and 49 people; given the diversity there will be in the way in which relations are developed in those companies, it does appear that collective bargaining promotion could be helpful. Has the TUC had any discussions at all with employers and perhaps with government departments regarding that? Ms Veale: We have; we did a big project with the DTI on exactly that actually - how collective employment relations could assist in small firms on issues, as Simon has said, like skills and workforce development. There was a very, very interesting project and, although I think the small firms and organisations were initially quite hostile because people do politicise employment relations, actually there was quite a lot of evidence that they began to be interested in how you would offer (and obviously there are individualistic tendencies amongst all firms, but across small firms operating within a particular sector) and how it would be quite possible to reach some broad agreement on how to proceed on issues like training, flexible working and how to introduce packages that are more responsive to people's differing needs. It was a very interesting piece of work and I very firmly recommend it to anyone to read. There were three unions involved in it - but not Transport and General I do not think - and a couple of academics. There has been some work done on it which we found very illuminating and quite positive. Q22 Mr Clapham: Given now that Acas seems to have focussed more on its development of good employment relations, do you think that shifting the focus in that way will reduce the need for dispute resolution? Ms Veale: It ought to. Commonsense would dictate that if you have that sort of approach there are still ways of resolving disputes and there will be fewer of them. Obviously it is difficult to quantify those successes because you are looking at something that stops something awful from happening often, and it is difficult to say how much that has benefited a company. I would broadly agree with you. Q23 Mr Clapham: Has there been any research done? Ms Veale: There is quite a bit of academic research around which attempts to quantify the impact of good employment relations on the high performance. We can send on to the Committee some references to pieces of academic work which we are aware of that draw those links. Q24 Mr Clapham: Given as we said we are looking at that sort of changed structure, there are always going to be people who feel very hard done by and that is going to lead to disputes and it causes disputes. It would seem in that very changed situation there is a real need for Acas services to be available to deal with those issues. Is this something that again the TUC has argued strongly should be available much more for the small and medium sized sector? Ms Veale: Very much so. I think the problem is that people feel grievances when they have a general impression that their employer is not handling things very fairly. It may not be that a specific incidence that causes one grievance would cause a grievance in a different company; but because that manager is struggling and they have not got good systems in place, they are going to go on and on having disputes even if they are semi-fabricated, quite honestly. It is at that sort of point you need someone to go in and have a look at what they are doing with an expert perspective and say, "Actually the trouble is the employees have got the impression that you don't appreciate them; you don't respect them; you don't give them a voice; you don't listen to them". It takes a third party who knows what they are talking about to go in there, with no particular ideological baggage, and say, "Look, here's a much better way of doing it". A couple of years on, quite often you will find that things have settled down and people are not raising disputes over every single thing that happens to them because they have broadly accepted that the employer is trying to get things right. Q25 Roger Berry: Can we turn to the issue of equality and diversity that we touched on earlier. Clearly Acas provide workplace activities promoting equality and diversity. I think they are sufficiently committed to talk about enhancing these activities and that begs the obvious question: what is the role for Acas; what is the role for the existing equality commissions and, in the future, for the Commission for Equality and Human Rights? Ms Veale: I think they have worked well together so far, the three commissions and Acas. All have appreciated that there is a difference between what the commissions do and what Acas can do. One particular difference I might highlight is that the commissions have an enforcement role, which means that employers regard them in a rather different light from the way in which they regard Acas, which is not going to go in and enforce people's rights but is going to go in and advise and offer conciliation. I think what Acas can do that the equality commissions cannot do is go to employers and offer to work with them on diversity issues, help them solve problems that may be arising that have not necessarily got into the courts, or may have got into the courts, but without that sort of feeling that the employer would get that if I let the Disability Rights Commission come in and advise me they will spot I am breaking the law here, here and here and the next thing I will know there will be a general formal investigation under their powers into what I am doing. Q26 Roger Berry: The DRC also has a conciliation role? Ms Veale: Yes. Q27 Roger Berry: Could we have confidence that Acas staff have the skills in relation to disability equality at work, for example, that you would find in the DRC? The same argument could apply to the other equality commissions. My concern would be that Acas does not have the depth of experience of disability issues at work that, for example, DRC and its affiliates do? Ms Veale: I think they would marry together their two different areas of expertise pretty well; because the DRC, as you say, has all the in-depth knowledge of how the law works and what companies can and cannot do and should be doing; but Acas, on the other hand, can understand how those manifest themselves in human relations between one employer and an employee and can actually help with the practical steps, not the legal steps, the adjustments that have to be made, but how you ensure that the adjustments are what the employee thought they were going to get. It is one thing obeying the law but it is something else developing a system that actually ensures that the two can work together. The new commission, the Commission for Equality and Human Rights, has got a specific statutory duty to provide mediation and conciliation - not itself, but it would commission it. I would have thought there was a huge amount of scope there for Acas to be the main body to whom those services would be commissioned. I think Acas is going to be extremely helpful to the new commission in particular in ironing out some of the problems it is going to have with tensions between the different "strands" of inequality, of diversity. Just one obvious example which Acas is very much aware of is that the regulations on sexual orientation do not sit very easily with the regulations on religion and belief. That is not a problem that relates to the law specifically. There are those rights clearly enshrined in the statute. The difficulty for the employer is actually working out how to have a workplace that respects people's cultural diversity and respects people's sexual diversity, and does not end up with a massive conflict between groups of employees. I think there is a huge amount of scope there actually for some very good joined-together working. I do not think there will be duplication of effort. I think both organisations will be very much aware of the potential for that and will make sure that they avoid it and they develop their own particular skills and bring them together in the workplace. Q28 Roger Berry: Finally, I very much hope you are right about that. What is the TUC's experience of employers' attitudes to Acas's work in this area given that, with some honourable exceptions, employers particularly in the private sector have not over the years been great welcomers, great supporters, of measures on equality and diversity? Have employers in your experience felt that it was appropriate that Acas should be involved in this activity? Ms Veale: Very much so and particularly again because they are not worrying about Acas coming in and saying, "Yes, that had better go off to a tribunal", or, "Looks as though that would feed into a formal investigation we are doing". I think very much so actually, and it helps us because often the unions similarly with say, "Look, that lot are looking to cause trouble"; but if you get Acas in there they will say, "No, that's not what the unions are doing. We've talked to them; we've talked to you and this is where we all want to go", and pull them together instead of allowing them to make it an issue on which they divide. Mr Nunn: It is interesting you raise that because I think equality and diversity is one of those issues a lot of employers, particularly smaller ones, find tricky. They have not supported it generally, but the law has changed quite a lot in relation to equality and diversity and there has been a lot of legislation. Going back to the uniqueness of Acas, and you will see it from the responses, ownership of Acas comes from both the trade union side and from an employer side; and I think there is that level of trust there that employers do have with Acas because I do think there is joint ownership. In relation to this legislation which I do think is tricky, I do think Acas has a very important role to play there. Q29 Judy Mallaber: This is one of the areas where you point out that Acas makes submissions to Government on policy and legislation and did it on the CEHR; and they themselves point out giving evidence to the Women in Work Commission. How important do you think that role of Acas is in terms of making submissions to Government? What are the areas that they should be making submissions on? Is it the one that is likely to fall off the bottom of the pile if there are cuts in funding? Could you give us some indication? Ms Veale: I would hope not. What governments have to do with employment is reconcile competing interests essentially. They will want to introduce a piece of legislation that protects employees' rights; they will want to do things that stimulate growth in particular sectors of the economy; and they will want to make sure that the regulatory burden is not too heavy on employers, for example. Getting all that to work without having conflict and difficulty is something that governments need expert advice on; and quite often they will have one set of people or two sets of people working away on the legal side of something, or looking at the economic objectives, but not actually thinking in practical terms of how this would impact in the workplace. Having some evidence from an organisation like Acas about what the impact would be on relations between two parties if they were to move in a particular direction is absolutely invaluable. I think the intervention of Acas in the discussions about the CEHR was instrumental in ensuring that they did see themselves as having a role encouraging and stimulating an alternative dispute resolution, which has been a bit weak probably in the past on discrimination issues. I think the interventions that have been made have been absolutely invaluable. Acas is particularly good I think at intervening where it has expertise, but not feeling it needs to comment across the piece on other aspects of a piece of legislation. I think they are very good at focussing in on where their expertise can guide, help and steer and they have actually made differences. Q30 Mrs Curtis-Thomas: Acas currently charges for some of its training services. Are you happy with this type of charging? Ms Veale: I have to be a bit careful here in a sense because Acas potentially is a rival to the TUC which provides training for unions. I think the more important point to make is that we do not have an ideological objective to Acas charging for some of its training services and so on, although we would have a huge ideological objective if it ended up having to charge for conciliation, arbitration or anything like that. Q31 Mrs Curtis-Thomas: Why? Ms Veale: Because if you start charging for that, in a dispute the people who would pay would be the employer normally and it usually more in the interests in the short-term to settle, and any suspicion that something was being paid for by one of the parties would mean that the other party would almost certainly be much less trustful. They would not go into a mediation process, I do not think, so willingly if they felt that the employer was buying the mediation, because they would worry that who pays the piper calls the tune. The other point I would make about charging for services is that that would be okay as long the Government did not start clawing back the equivalent amount, so that every time Acas made a profit perhaps or broke even on providing training it got its grant cut proportionately by the DTI. It is a bit of a fine balance there which I would draw to the attention of the Committee. Q32 Mrs Curtis-Thomas: You do not think that the training service offered in England affects the impartiality of Acas? Do you think it is a business they should be in? Ms Veale: Not necessarily, no. It depends on what you are training people to do. I think on issues like diversity it should not be a big problem. If it is on issues like trade union recognition and you are giving training to employers about it you might get into more difficulty, particularly as Acas no longer has its duty to promote collective bargaining. Q33 Mrs Curtis-Thomas: Do they offer anything unique in terms of their training? Ms Veale: Acas, absolutely, yes. They offer an expertise which comes from both sides of industry and from working for a long time with both sides. Q34 Mrs Curtis-Thomas: This cannot be provided by others? Ms Veale: There is no comparable organisation. Private organisations are always paid for by somebody. I think it is right that the Government, the taxpayer, funds an organisation that does this sort of basic work in order to assist business. Q35 Mr Bone: I think what is basically being said, and it is accepted generally, is that really most private companies do things more efficiently than the state. My question would be that this work should be done by a private company that is more efficient and at a lesser cost? Ms Veale: Obviously you would expect us not to agree with your premise in the first place! I do not agree at all that the public sector cannot deliver. I think particularly in this area, as I have said, there would be huge sensitivity with employers buying those sorts of services and then attempting to parade them as being somehow neutral and not seeing any difficulties with that. I really do think you need a neutral party that does not rely on either side. Q36 Mr Bone: You are saying that trade unions should do it in relation to some part of that? Ms Veale: No, training trade unions - that is what I am talking about - which is different. You are talking about employers. We do not train employers. Employers can train themselves, but there is a particular point at which you need outside expertise. Q37 Mr Wright: We started off with the belief that cuts are taking place and we all agree that Acas does a wonderful job; but one of the things that really concerns certainly the PCS is the question of reduction in staff numbers. I think some of them come into effect at the end of January. In the evidence they have given to the Committee they say, "Losing this number of staff all at the same time would clearly have a long-term impact on the organisation's ability to deliver its services". Do you agree with that comment? Ms Veale: I think they are quite right to raise that. It is a real, real worry. It is too early to tell yet exactly what the impact is going to be because the cuts are going through at the moment, people are going and Acas has to reorganise its services to accommodate those cuts; but I cannot believe it is not going to have some sort of damaging effect on what is provided. I would agree with the PCS. Mr Nunn: I would too. As I say, it is a process which is underway at the moment. We have not got feedback on the ground yet as to how this is affecting Acas's work on the ground; but I do think to suddenly go for such an enormous cut is bound to have an impact on the ground. Q38 Mr Wright: Is it also not the case that the majority of staff that will be leaving is probably experienced staff? Mr Nunn: Exactly. Q39 Mr Wright: It also indicates the fact, as I understand it, that they are planning to take some of the experienced staff back to overcome some of the short-term problems that they may well have within Acas. Is that not a bit perverse, laying off staff and then saying, "We understand we're going to have these difficulties and therefore we're going to bring these staff back on a separate contract to help us through this process"? Ms Veale: That illustrates that very problem. Firstly, if you do it through a programme of voluntary redundancy, the people who are getting nearer to the end of their working lives but who have got a huge amount of experience are the ones who are likely to go, so you get a brain-drain effect. Because certain things have to be provided it is going to be necessary sometimes to get that expertise back in without actually establishing a fresh contractual relationship and re-employing people, but it is a nonsense. It would have been better if they had not had to go through this whole process in the first place. Q40 Mark Hunter: Since the public sector generally has to make efficiency savings at the moment, do you think that Acas itself should be exempt from the requirement for savings? If you do, could you explain why? If you do not, could you say what you think would be an appropriate reduction in the grant-in-aid Acas receives from the DTI? Ms Veale: I do not think it should be exempt: nobody should be exempt from reductions. I think Acas has done a huge amount to economise and make sure that it is making the most of its resources and not wasting or duplicating, a huge and rather painful exercise to that end. I would have thought that a 25 per cent cut is far too big and over far too short a period. I am sure when Acas give evidence later they will explain what the impact is going to be. I would have thought absolutely no way can it take any further reductions in expenditure without some really serious implications for it. I think the short answer is, no, it should not be exempt but I think it has already gone much further than really it should have had to go in order to economise. It has done very, very well. It really is extremely efficient, mean and lean and all that stuff, as business people say. Chairman: I am very grateful to you for your evidence. Thank you very much. I am sorry it was a rush at the end, but if we have specific questions we want to take up with you which colleagues have not been able to ask we might have an exchange of correspondence with you on their behalf. Thank you very much indeed for your evidence.
Examination of Witnesses
Witnesses: Mr Anthony Thompson, Head of Employment, Pensions and Skills, and Mr Richard Wainer, Senior Policy Advisor, the Confederation of British Industry; and Mr David Yeandle, Deputy Director, Employment Policy, EEF, the manufacturers' organisation, gave evidence. Q41 Chairman: Good morning. We have got a replacement because I understand one of your colleagues is unable to be here, so it is all the more important to ask you to introduce yourselves for the record. Mr Thompson: Thank you, Chairman. My name is Anthony Thompson and I am Head of Employment, Pensions and Skills at the CBI. I have to apologise for Katja Hall whose little girl was taken ill yesterday. Katja called me yesterday afternoon to see if I could cover this alongside Richard and David. I have to admit Acas is not an area of expertise on my part, although it is Richard's. I should, along with Richard and David, be able to give you a broad overview of the CBI's position in this area. Mr Wainer: Richard Wainer, Senior Policy Adviser in the employer/employee relations region. Mr Yeandle: David Yeandle, Deputy Director of Employment Policy at EEF, responsible for providing advice and guidance to members on a whole range of employment and pensions issues. I have a lot of experience of the organisation in terms of practical involvement with Acas both at national and regional level in a whole range of different fields. Q42 Chairman: Thank you. It was difficult to find any space for a cigarette paper between your evidence and that of the TUC or other unions. Why is Acas so highly regarded by you? Mr Thompson: It is not very often that we are in violent agreement with the TUC on a whole range of policy areas but I think in this area in particular, give or take a few specific issues raised in your last session around collective bargaining, in terms of the general role of Acas, its effectiveness, its appreciation and value and recognition within the employer and employee community, we would agree wholeheartedly with the positive assessment given by the TUC, both in their written evidence and their oral evidence. One of the main reasons is that one of our fundamental principles for the success of Acas has always been that it should achieve and maintain an impartial role in the whole area of dispute resolution, and I think it has and continues to achieve that impartiality. I think that assessment is shared from the CBI, within the EEF and the TUC. Mr Yeandle: When we go out and talk to our members, and particularly our regional associations who are very actively involved with a whole range of Acas officials on the ground, the message that comes back loud and clear time and time again is the very high regard in which Acas is seen on the ground, and that it has a well deserved reputation for impartiality, which is absolutely fundamental to the successful undertaking of all its roles. I think that is a fundamental point that has built up over 30 years and we lose it at our peril, frankly. Q43 Chairman: So it should have nothing to fear from the 2007 Comprehensive Spending Review and it has to be justified again from first principles? Mr Thompson: There are a few things in the reviews that are taking place at the moment where we have to have a bit of concern. You have been talking this morning already around funding cuts and some proposals for efficiency savings within the remit of Acas and its future role. I think we would share some of the concerns that the TUC has raised. Q44 Chairman: An objective spending review would pose no threat to Acas? Mr Thompson: It should not, indeed. Q45 Mr Hoyle: Obviously what can one say, everybody is singing from the same hymn sheet today. Acas gives specialist advice, it gives advice out; how does that compete with, say, the RDAs, the Small Business Service and BusinessLink, just to name a few? Do you think there is duplication in the advice being given? Mr Thompson: I think our experience to date is that Acas has a unique role to play. It is complementary in many areas, but not supplementary and repetitive. It has a unique role to play because of the expertise and insight it has gained over the past 30 years. That knowledge or resource is not there within other agencies like the RDAs and CABs. From our members' perspective, they go to Acas because they know that they will get expert advice from them which they will not get from other resources. That does not mean that agencies like the RDAs might not have a role to play or be able to offer advice or maybe direct people in areas where they can get more guidance on employment-related issues; but I think what it does say is that Acas has a very unique role to play, and it is a role that that it is succeeding in at present. Mr Wainer: If you look at the other agencies, they do see Acas has having that unique role as well. Where they provide some forms of advice they do refer employers to the Acas helpline and Acas guidance. Mr Yeandle: From an employer's perspective, clearly an organisation like our own provides a wealth and range of information on employment relations to our members; but our experience in talking to companies who do not have the benefit of our membership is that many of them actually do see Acas as the prime conduit which they would actually go to, and indeed their employees would equally want to go to, I think, for advice and guidance. They are seen as being very user-friendly. They have a very good website. They provide straightforward, understandable guidance, and that is absolutely critical. They also understand the world of work. They have a whole range of people working for them who do understand the world of work, and that is very important, I think. Q46 Mr Hoyle: What you are saying is that all that expertise is built up over many years, so really this is the authority for advice compared to other agencies? Mr Thompson: Yes, and I think that is the fundamental principle, but it is also particularly over recent years the way in which they are delivering for their users, both employees and employers. From our side of the fence, when we have asked employers what they think of Acas in comparison to other agencies, we are looking at much greater levels of satisfaction. 94 per cent, on our last employer survey, are getting a good service, compared to BusinessLink where we are looking at 41 per cent of employers thinking they are getting a good service. It is a fundamental principle of authority and impartiality; but Acas is actually very good as well at delivering that to their users. Q47 Chairman: Do you find sometimes that other agencies claim expertise but actually just act as post boxes to refer their clients to Acas? Mr Thompson: That would not be for the CBI to say. We can say that other agencies have Acas very prominently on their website. Q48 Mr Weir: We had earlier evidence that there had been a general reduction in collective bargaining and in multi-employer agreements, and much of the agreements between employers and employees are now on a much more individualistic basis. Given that, why do you think we need Acas to resolve individual employment disputes between the employer and the employee; when previously it would be a collective dispute but it is much more individual now? Why do we need Acas funding by the taxpayer to do that work? Mr Yeandle: First of all, you are right that the level of resolving collective disputes is less important perhaps in terms of the numbers of cases that they have to deal with, but it is still a very important role that Acas has to fulfil. When those occasions occur they are often causing concerns that are in the public interest to resolve as quickly as possible; and it is important that we have the expertise, skills and experience of officials who can deal with that. I have to say, one of the things that was touched on in the previous set of evidence, the reduction in the number of experienced officials in Acas which we are going to see over the coming months, does raise some concerns in our minds that it may be more difficult for Acas to handle as expeditiously and efficiently as it has done in the past the major disputes that inevitably will occur from time to time. As far as individual disputes are concerned, of course that is primarily dealt with through individual conciliation, through the tribunal system; and, again, Acas has a lot of very valuable services that it provides there. A key thing there again is impartiality; and a key to that is that it should not be charged for. If there was a question of Acas charging for individual conciliation cases that would inevitably effectively undermine the independence and impartiality that it has. Q49 Mr Weir: Given that Acas's involvement comes once the tribunal procedure has started and a claim for tribunal has entered into a legal dispute, if you like, between employer and employee, do you think a) there is some merit in Acas becoming involved before it gets to the tribunal; and b) to repeat the first question, which you did not answer, why should the taxpayer fund resolution of these individual disputes through Acas rather than going to a court where you end up paying for a lawyer? Mr Yeandle: I think in the general public interest it is actually going to save more money in the longer term. Acas has a very effective record of conciliation in these cases and, therefore, an awful lot of cases. If Acas was not there to do that conciliation in an impartial way then an awful lot of the cases that at the moment never get to court, for one reason or another because Acas has resolved them, would actually get to court and, therefore, the costs of that process, the costs of the tribunal employment process, would be much, much higher. It is a saving that is often not fully recognised as one of the clear benefits that we as society get from the Acas service. Mr Thompson: If I could back that up with numbers. If Katja had been here she would have told you that Acas conciliation services often cost about £400-£450 per case, as opposed to £2,000 per case if it goes to tribunal. If you put that into the volume of cases which Acas is dealing with that is a £30 million saving to the Treasury every year. I think that reinforces David's point that there is a role to play there, to try and keep individual cases out of employment tribunals which is a hugely costly process. Q50 Mr Weir: Do you feel Acas should be involved earlier in the alternative dispute resolution procedure? Mr Yeandle: I think that is an area they could look into. Clearly Acas has got a role to play in this area. I certainly do not think it would be something we would be averse to. Equally of course Acas have been taking on a more proactive role in recent times in encouraging good employment relations, particularly most recently in the whole area of information and consultation where Acas, often working alongside organisations like ourselves and the CBI, have been very much in the forefront of promulgating the business benefits and indeed the employee benefits of information and consultation, and indeed improved employee relations. I think there is a role for Acas to play in that, but it must not be at the expense of all the other very important roles that they all equally carry out. Mr Binley: I have a very quick question. I was an active executive director up until May and I claim 25 years of that experience, so that gives me a somewhat distinct position in this place, quite frankly, and I am pleased to be able to represent that. There is an elephant in the room, there is the tip of an iceberg of cases that Acas deal with and there is a whole lot of black economy going on with regard to employment disputes that do not even get attention. That black economy is where workers say if I make a claim I can get 1000 quid, and where employers say it is damn sight easier to settle with a 1000 quid than in fact go through the process, which is really very expensive. That happens, and I can tell you it happens. What should Acas's role be in that and what might we do to lessen that black economy, which I believe does no good at all to good employee relationships? Q51 Chairman: That is an extremely big question, rather than the short one I was expecting. Can you give a very brief answer, please? Mr Thompson: The shortest of short answers to that would be that we have got to identify where that problem area is. Q52 Mr Binley: I will tell you; see me later. Mr Thompson: It would be obvious that it is amongst the small employers. In our own surveys we find that 100 per cent of small employers, those under 49, are settling cases before they get to tribunal, even where 46 per cent of that 100 per cent - if you are following my short answer - feel that they have a very strong case, or vice versa the employee or the individual has a very weak case. The response to you would be yes, we have to identify that, we have to target it and we have to look at solutions that support, in particular, that small employer community to give them more confidence in the system. Q53 Judy Mallaber: Can you expand upon your concerns about the fixed periods for conciliation in cases and what the problems are with that? Mr Wainer: I think we all recognise that conciliation is a much better option than litigation and Acas figures show that they manage to stop around 77 per cent of cases actually reaching tribunal. The introduction of fixed periods was a big change to the system, with seven weeks, 13 weeks and then it is still unlimited for discrimination and equal pay claims, and the premise of their introduction, the rationale, was pretty laudable in that it would encourage speedier settlement, but the practice has not really followed that theory. Talking to Acas, their clear-up rates have remained generally the same, but the number of cases coming to them has actually dropped, although there are no hard and fast figures because it has only been a year or so since the changes were introduced. It will be interesting when they come out with their formal figures to see what actually has happened. Certainly, our members say that often the seven week and the 13 week period is just not long enough for any meaningful conciliation - tribunal chairs might not issue directions quickly enough to allow both parties to have relevant information, it often takes a couple of weeks to properly complete the ET3 response form, so that all eats into the fixed conciliation period which leaves a very short timescale for any meaningful discussion to take place between the two parties. Q54 Judy Mallaber: What are you suggesting should happen and is there a danger that if, say, it was 20 weeks you would just have brinkmanship going up to the 19th week rather than up to the 13th week? Mr Wainer: We would agree with what the TUC said earlier, that before we had these fixed periods a lot of settlement was done on the steps of the courthouse. I think it is always going to be a difficult one, because parties' minds will remain focused on the hearing date as the final date by which to resolve any dispute; sadly, although the rationale was laudable when they were introduced, we would certainly promote the Government and Acas reviewing the impact of those fixed periods to ensure that Acas are able to offer the most effective service possible. We would not want employers and employees who are about to resolve their dispute to have Acas stepping out of that if they do have discretion to carry on beyond the seven or 13 week period, but probably because of resource constraints I do not think that has really happened very much to date. Q55 Judy Mallaber: Do you have any particular proposals that you are looking at? Mr Thompson: We would not have particular proposals at this stage, but we have certainly flagged it up as an issue that is to be dealt with. The concerns that you are raising are very valid concerns, that you do not just prolong the exercise and increase uncertainty. Any review of this that takes place and has to balance those concerns, has to bear in mind that whilst the two parties are still talking you can maintain the employment relationship, but once you are into a tribunal/court situation it is very difficult to maintain that relationship, and that should be one of the underlying principles within any review of fixed conciliation. Acas actually has an extremely good track record of maintaining relations between both sides, and once those two sides are talking there should not be anything that incentivises them to cut that short and go for a quicker, easier option. Mr Yeandle: Can I add a couple of points. First of all, we do have some concerns - perhaps not so much today although it is beginning to build up - looking to the future with the fact that clearly Acas, particularly at the regional level, is going to lose a large number of experienced conciliators. We are worried that there will be the difficulty of getting conciliators and, clearly, those conciliators are equally - it is spelled out very clearly in the work programme of Acas - going to be doing a wider range of roles and responsibilities. Therefore there is a danger quite often that tracking down the conciliator and getting them to be proactive rather than reactive and getting them really actively involved in the conciliation, not just dealing with it as a telephone message service between the two organisations, is an issue. There is another point that I do want to raise, which may not be directly related to Acas but does raise a concern in our own minds. Many of the employers that we represent at tribunals have got recognised unions; historically, of course, it meant that you were dealing directly with the trade union in terms of the interface to do with the tribunal. What we find increasingly now is that more and more trade unions have passed the responsibility of dealing with the tribunal to a firm of employment lawyers, and it is certainly our experience that we do not get quite the same approach to conciliation from those employment lawyers as we have historically got perhaps from the trade union officials who were dealing with the case. Chairman: That is an interesting comment which leads on to Mick Clapham's question. Q56 Mr Clapham: Can I start with the point that you made earlier about the shift that is discernable in the way that Acas is now dealing with good employment relations. Is there evidence from your experience amongst your members that this has resulted in a reduced dispute resolution? Mr Yeandle: I cannot honestly say that there is a specific natural move from one to the other. There is a lot of evidence, of which you are probably well aware - the CBI have commented on it already, the TUC have not commented on it - that good employment relations can improve work performance and, clearly, there has been a lot of work done, particularly on information and consultation in recent times. There is, therefore, a lot of academic anecdotal evidence, but it is very difficult to specifically identify individual organisations to do so. We would be very supportive of the type of work that Acas has done in this area, providing it does not deflect it from the other very important areas and, very importantly, if as they are inevitably doing, moving into more of a charging environment in this area, it does not potentially undermine the impartiality that they have to demonstrate in other areas. It may well be quite difficult to be charging - we are not opposed in principle to the concept of them charging, but I think they have to strike the right balance in these areas, because clearly if they over-emphasise the charging, it could have an active impact on the perception of both employers, employees and trade unions of their impartiality, which is absolutely fundamental to the primary role that they have of seeking to resolve individual and collective disputes. Q57 Mr Clapham: I would agree with that. Is this something that you have raised at all with Acas or others? Mr Yeandle: We certainly have raised it on a number of occasions with Government ministers and Acas officials, so what I am mentioning now is not something that would be news to them I think. Q58 Mr Clapham: A little earlier you referred to the fact that your business is done much more now with lawyers rather than with trade unions. Given that situation, is there any argument to say that Acas ought to be still promoting collective bargaining? Mr Yeandle: I do not see that there is a case for Acas to promote directly collective bargaining. They clearly have an important role in collective bargaining - one of the major roles that I have seen over the last three or four years where Acas have been extremely effective is handling disputes, problems, difficulties resolved with collective bargaining under the statutory trade union recognition claim. In our experience - and we have been actively involved in a number of these cases - Acas have played a very important, helpful role in developing this and their impartiality and their expertise. I certainly would not see them as having, if you like, a requirement to actively promote collective bargaining. As far as collective bargaining is concerned, that should be something that is determined by employers and employees, subject of course to the legislative framework within which we operate. Mr Thompson: If I could just reinforce that, obviously we heard the evidence before from the TUC which gave the TUC's very strong position in this, and I think we would give the very strong CBI position on this - I flagged it up at the beginning, that we would not see this as being a core role or a role for Acas at all. There are strong reasons for that which David is alluding to, that the demand has got to be there. We were talking earlier about where the problems might lie in the system around dispute resolution, and some of the biggest problems are in the SME community. All the evidence from our own survey and from the workplace employee relations survey shows that, particularly in a small workplace, employees want direct communication with their employer, they do not want indirect mechanisms put in place. Richard, you have got some background on that. Mr Wainer: Our survey data from our Employment Trends* survey last year showed that direct methods of communicating with employees were twice as popular as the employee representative bodies and trade unions, and that trend is even more pronounced within the small employer community, those with under 50 employees. Q59 Mr Clapham: Nevertheless, given what you have just said, you would feel that if Acas was to have a smaller profile around industry it could be to the detriment of good relations in industry. Mr Thompson: We would say that Acas has had a very positive impact on employee relations overall in the UK. Where collective bargaining is already in place Acas has a role to play in facilitating those discussions basically when those discussions break down, but we see that there is a fundamental line which you would be crossing over if you were to say it was Acas's obligation to start promoting collective bargaining across the economy where there was no demand for it. At the moment, all the evidence suggests that there is no demand for it. Chairman: To enable the issues that we rather short-changed in the last evidence session, for which I apologise, we are going to take the charging section next and here I look to Peter Bone. 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 they were 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 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 enquiries 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 that 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 out there. 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 from 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 in numbers 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 what 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. Examination of Witnesses
Witnesses: Mr John Taylor, Chief Executive, and Ms Susan Clews, Regional Director, North West of England, Advisory, Conciliation and Arbitration Service (Acas), gave evidence. Q80 Chairman: I am sorry we have kept you waiting a bit beyond the advertised time. We will run a little bit beyond one o'clock as a result but some of my colleagues have to leave at one o'clock for other engagements, so they will sneak out, I am afraid, at one; I apologise for that, there is no discourtesy. We are anxious to give you a fair crack of the whip and our earlier witnesses, as it was, were frustratingly caught short on the questions asked on a number of issues, so I apologise for that. Can I begin, as always, by asking you to introduce yourselves for the record, please? Mr Taylor: Thank you. My name is John Taylor, I am the chief executive of Acas. Ms Clews: My name is Susan Clews, I am the director for Acas in the North West Region and I chair Acas's strategy group on smaller firms. Q81 Chairman: Thank you. We have had a peon of praise to you all morning, which has been remarkable and wonderful, motherhood and apple pie is a great thing and you clearly support it robustly, and all our witnesses have. I would like a bit harder-edged than this; have you made any assessment of your actual contribution in statistical and factual terms to the health of the UK economy? Mr Taylor: If I could try and answer that in two kinds of ways really, in terms of hard statistical evidence there is a lot of information around about costs, around individual conciliation, for example. £30 million was used as what we save the Exchequer, but in addition to that there are various sums bandied about in terms of GDP that we actually save employers, and indeed employees, in terms of reducing the length of the process. On collective conciliation we know, for example, that if we save a one day strike on the London Underground the London Development Agency estimate that to be about £35 million of GDP that we actually save for the London economy. What is much more difficult to put a cost on is the value of the advice and information that we actually give out. It is very difficult to disaggregate the effect of our intervention from a whole range of other sources. The other thing of course is that we regularly sample our customers to find out what they actually think of what we do. Q82 Chairman: What do you mean by your customers in that context? Mr Taylor: Employers and employees. For example, with the employment tribunal system, which is an incredibly stressful activity for all sides, we come out with remarkably high customer satisfaction levels of 90 odd per cent, so we are pretty clear in our own mind --- Q83 Chairman: Do you see a difference between big and small companies in that respect? Mr Taylor: It is right across the piece, Chairman. The majority of our customers - I will use that term, it is a much better one than respondents, I think --- Q84 Chairman: I wanted to make sure you were not just referring to businesses when you said customers, that is all. Mr Taylor: It is generally businesses because that is primarily who we deal with, but of course we have a helpline which deals with a million telephone calls per year and that is roughly 50-50 between individuals and employers. Q85 Chairman: The evidence we have received only struck two discordant notes with us, and one of them is the large number of people who could not spell "its" and I need to send a copy of Eat Shoots and Leaves, but the other one was a very strange comment from one firm of solicitors who said "We note in particular the reference [in our terms of reference] to how Acas contributes to increased productivity, an odd approach to measuring the work of statutory bodies expressly charged with promoting the improvement of industrial relations." Presumably you would see, as I hope you would - a leading question if ever there was one - that improving industrial relations makes a direct contribution to increased productivity. Mr Taylor: Indeed. We would argue very strongly, and this is the argument that we put to Government in terms of trying to justify our budget, that getting it right in the workplace is a real means of driving up productivity. On the one hand you have a Government which spends £6 billion on skills acquisition, and really we are about skills deployment and making the best of their time in the labour force. We would say there is a massive link between the two. Chairman: Thank you very much. Lindsay Hoyle. Q86 Mr Hoyle: Thank you, Chairman. Obviously, the man from Number 11 has set about the Comprehensive Spending Review for 2007 and of course the DTI has got to go under the microscope. Part of that will relate to yourself at Acas with the funding you receive; does this worry you? Mr Taylor: There are other problems I would prefer to have than dealing with this one. As an organisation, we have been in the process of continuous improvement for a number of years, and what we have done is looked, using jargon, at smarter ways of working. We have looked at new technology, for example - ten years ago websites did not exist - and we are attempting to get through to individuals using technology. We have looked at smarter ways of working, so many of our staff work from home. We have looked at ways of moving work to staff rather than staff to work to equalise the workload, we are in the process of reducing our estate, so we have got in hand a continuous process of trying to contain costs and provide value to the taxpayer, but obviously with a cut of this size and a reduction in the workforce of this size it is going to be a painful time for us over the next few years to make sure that we have got a commensurate response and continue to provide a good service. Perhaps I could ask Sue to comment on the way in which we have gone about it at grassroots level. Ms Clews: What we are trying to do really is to get the most impact with the money that we have got, so we are looking, for example, at smaller firms and how we can get to as many of the 1.2 million businesses as there are, and that may not be through direct face to face contact, which is a luxury we really cannot afford to use very much. We will look at enhancing our website and, as John has mentioned, particularly the helpline where we have increased the opening hours, the training of our staff so they are able to offer a wide range of support in employment matters, and also looking to work with intermediary bodies as well so we have developed much better links with people like FSB - the Federation of Small Businesses - the Chambers, accountants, so that through a certain amount of Acas expertise we can lever a bigger impact. Chairman: Moving now to quality and diversity, Roger Berry. Q87 Roger Berry: Thank you. Acas provides advice on promoting equality and diversity in the workplace, and in your submissions you talk about enhancing those services. You do refer to equality strands that are currently not are covered by existing commissions, which I think is commendable, but it does beg the obvious question, which you have probably heard before this morning, what is the relationship between Acas and the existing commissions and how do you anticipate the relationship with the new Commission on Equality and Human Rights in the future? Who is doing what, basically? Mr Taylor: Before I answer that, when we talk about equality and diversity we are really talking about the labour force - what has happened to the labour market and what has happened to Britain's workforce, which has completely changed from what it was 50 years ago. Employers do not think in nice little silos, that this is an equality and diversity issue, employers think how can I actually run my business. With the existing commissions what we have tended to do, because we have no compliance duties because we have no enforcement powers, we have tended to go to employers and talk about equality and diversity in business terms - this makes business sense, to access as many people in the labour force as you can, if you want to be acceptable to everybody in the community, to customers, you yourself need to represent the local population; it is very much the business case. I have to say that the existing equality commissions have welcomed our involvement in that area because we are promoting good practice - you have heard this morning about the fact that people actually believe what we say because we have not got a particular axe to grind. With the new Equality Commission we are talking to DTI officials and, of course, once the new chair and chief executive are appointed we will talk in more detail but, roughly, we would see that same kind of relationship continuing. Q88 Roger Berry: Can I ask a specific question. If we are talking, for example, about disability equality, do you advise employers of the reasonable adjustments that they are required to make or should be obliged to make if they are considering employing a disabled person? Do you have the expertise at Acas in that area? Mr Taylor: We have a team of equality advisers, about 25 people across GB, who I would say, yes, have that expertise, but the generality of our workforce do not have that depth of knowledge and, where appropriate, we would refer on to the DRC. It is getting that relationship right. Q89 Roger Berry: You do not see any risk of duplication again? Mr Taylor: No, we see ourselves essentially as complementing what is there. It is essentially the private sector which has difficulty getting its head around some of these concepts of equality and diversity, and what we have attempted to do, as I said a little bit earlier, is to put that in the context of business sense and demystify the area. Roger Berry: Thank you very much. Q90 Judy Mallaber: What representations did Acas make on the new commission and all of the legislation, and in general how do you see your role in making submissions to Government? Mr Taylor: As you will appreciate from this morning, we have an Acas council which goes across the spectrum, so there are some issues where it is highly unlikely we would get an Acas council agreement on a particular line, but actually there are many more where there is a broad consensus. Essentially, we would see ourselves representing common sense and pragmatism, if you like, drawing from the fact that we have been operating with businesses for 30 years and we would offer advice to Government as to whether we thought this would actually operate in principle. It is very unusual, certainly in the time I have been chief executive, for us to take a political stance on a particular issue. It would be very unusual for us to take a political stance on a particular issue and it would be, essentially, what is the practical impact of what the Government is proposing. On the Equality Commission we have put broad comments to the Equality Commission - and I am very happy that the Equality Commission have sent them to you - arguing the business case to learn, and all the signs are that the new commission wants to be seen to be much more business-friendly and we would certainly support that approach. Q91 Judy Mallaber: The areas on which you would feel you should make a contribution, are they the areas where you think you can get an agreement on the Acas board, or is it that there is a particular category of areas on which you feel you should be seeking to influence policy? Mr Taylor: I go back really to our mission statement which is about improving organisational performance and improving working life. That is the position of the Acas Council and our position would be that those things are mutually inclusive, that if you improve one you should improve the other. That is the broad driver. Q92 Judy Mallaber: Is this an area of work that is likely to be hit particularly by the cuts you are having to make? Mr Taylor: As Sue said, we are having to think again about how we deliver at the front end, if you like. We have retained capacity in head office in London to produce codes of practice and to give Government advice. The Council took the view, rightly in our view, on the part of management, that this is real high value added that we can actually bring along to Government policy, not just to DTI, trying to influence wider policy on training, for example. Chairman: That actually leads very neatly to the questions Anthony Wright wanted to ask. Q93 Mr Wright: Following on from the question that was asked before - and you are obviously aware of those questions - regarding the staffing and the cuts, are you concerned about the effectiveness of Acas to perform its duties as it has done for many years with the amount of cuts that are taking place, and could you also confirm how many jobs are actually going to go because it was quoted 100 and PCS have quoted something like up to 160. Mr Taylor: There are 150 jobs. What we have tried to do is ensure that our activities around dispute resolution have been safeguarded, so we have tried to retain a credible individual conciliation workforce, who also get involved in mediation, and also retain our capacity to get involved in collective dispute resolution. That is what we have attempted to do. In order to balance the books, if you like, we have had to reduce the amount of what I would call discretionary activity, advice and information. There are some 26 million employees, 3.1 million employers, 600,000 employers who employ five or more, and what we have had to scale back a little bit is our ambition in terms of trying to get closer to SMEs and perhaps workers in some of those vulnerable sectors, which are cleaning et cetera. We are a people-centric organisation and there is a limit to what you can do through a website once you get into human relations difficulties, but what we have tried to do is come up with a commensurate response depending on whether it is a rural part of the country or an urban part. Ms Clews: That is right. In my area, for example, in the North West, we will look for opportunities where we think we can have a big impact, like the Liverpool Capital of Culture bid where there is going to be massive growth of employment in the area. We would look at working with other organisations to make sure that new jobs that are created are good ones, wherever possible, with high standards of work, so we look for areas where we can have the most impact. That is not to say that we will forget the very small firms, so we will try and work with people like Business Links, the Chambers of Commerce, so that for one day's work of an Acas person we can reach as wide an audience as possible. We are also trying to look more creatively at how we deliver our services as well, so that might involve things like talking to much larger groups of people than we have traditionally done, having events spread wider throughout the day, but at the moment it is important to recognise that our staff are working extremely hard still to deliver a very high quality service to customers. Q94 Mr Wright: Will they have to work any harder because of these cuts, or will there be a loss of effectiveness do you think? Ms Clews: Because they are highly professional staff who are driven very passionately by the mission to improve employment relations - stopping a tribunal case going to tribunal is not merely a paper exercise for our teams, so they will do everything they can do and are doing at the moment, particularly in the transition as we lose some staff on early retirement and training. They are working extremely hard and we are also being more flexible in how we deal with cases to make sure that the level of service that is provided, particularly in individual conciliation, is proportionate to the complexity of the case, so something like a race discrimination case would very likely have face to face contact with all the parties, perhaps joint meetings, some real hands-on conciliation, whereas a dispute over a holiday pay claim might well be dealt with purely over the telephone - that would be the likelihood of how it was handled. Q95 Mr Wright: Do you not think it is inevitable that there will be an increase in employment tribunals? Ms Clews: I do not think that is necessarily the case because we will do our utmost to make sure that the service we offer is appropriate to that case, particularly with the very short period cases where they are over more factual points of evidence. We will point those issues out to the parties and we are confident that we will still achieve a high level of settlement in those cases. It is something we will monitor and, clearly, if there is any reduction in service then we would reflect that to the Acas Council and to DTI. Q96 Mr Wright: Have you got plans to bring back any of the staff who have taken voluntary retirement on short term contracts? Ms Clews: We have not got plans to do that. It is an option that we would consider in very, very rare circumstances, and the ones that spring to mind would be, for example, if they were working with a particular customer, perhaps following a collective conciliation to improve employment relations, it might be reasonable for them to do a few days work to finish off that particular piece of work - relationships that have been established would be hard to replicate with another colleague. That is the main situation I see. The only other area where I believe we are actively considering it would be if we had a large influx of equal pay cases where we needed to conciliate, and that would stretch our resource considerably so that might be one of the options. It would only be one option that we would look at, it is not a widespread practice at all. Q97 Chairman: I wonder if, as a point of fact afterwards in writing, you would let us have a note of your staffing in regional offices, broken down with the numbers in each office - the annual report does not give that breakdown - so we have an indication of where the staff are working geographically. Mr Taylor: Yes. Q98 Mark Hunter: My question is about staffing as well. Given the current situation where the public sector generally has to make savings, do you think that Acas should be exempt from that situation? If you do, perhaps you could explain why and if you do not and you think it is reasonable that Acas should similarly be expected to make efficiency savings, what would you think would be an appropriate reduction in the grant in aid that Acas receives from Government? Mr Taylor: We certainly should not be exempt from good governance or from the taxpayer getting value for money, and that is why I was talking about the way in which we are using new technology, for example. We are a very odd organisation because at one level we do not want any repeat business - hopefully, we resolve your problem and you do not actually come back - but on the other you know that the demand is almost infinite because as regulation increases the complexity of working life increases. What we have attempted to do is increase our output if you like for the same amount of money. I am not in denial about the impact that this staff cut will have on the organisation, and even with the best, smartest, cleverest way of responding you simply cannot lose 150 qualified, frontline staff and continue to provide the same kind of service, so we have looked very long and hard at how flexibly we can deal with that. What kind of reduction in budget would be reasonable? Certainly the argument that we have put to Government is that we have taken our fair share of cuts and if you were to reduce our budget by another substantial amount then we would have to think very seriously about stopping doing things. At the moment our response is we have been able to continue with the broad remit of services, I do not think we could manage with another significant cut. Q99 Mark Hunter: If you had to stop doing things, as you put it, what areas of the service would be under threat immediately? Mr Taylor: We would look at whether or not technology could help, and certainly around advice and information we could do a lot more in terms of enhancing the website. What that would do is it would drive us off our mission; in particular it would mean that vulnerable employers, in particular SMEs who do not necessarily have the time or the intuition to go on the website and really need people contact, they would not get that, similarly, vulnerable workers, if we were forced to scale back our helpline or reduce our standards et cetera. There is a limit to what we can do, given the statutory responsibility we have got around providing the conciliation service. Chairman: We will be exploring charging a little later on in the session, but not now. We will move now to individual dispute resolution. Mike Weir. Q100 Mr Weir: We have heard a lot about there has been a reduction in collective bargaining over the years and a lot more bargaining is done on an individual basis between employer and employee. Do you think that we need Acas to become involved in that individual dispute resolution? Mr Taylor: I do not necessarily accept the premise that there has been a massive reduction in collective bargaining. There has been a massive reduction in days lost through industrial action and actual disputes that we get involved with, but at any one time we are running alongside many, many other disputes which never see the light of day because the parties do not particularly want it to be known that Acas are involved. There is still a considerable amount of activity taking place collectively. On the individual point I really do not have anything original to add to what the other witnesses have said, except to say that in terms of the Exchequer our intervention saves a huge amount of cash, £30 million, and there are various sums around the fact that we help GDP. Could another organisation do it if it was not Acas? I guess the answer is yes. Would it be more expensive? Could it create the 30 years worth of reputation that we have got overnight? I think the answer is probably no. On the basis of that I would say that we offer a very good, value for money service. In addition to that conciliation service of course we then provide a window into advice and information because there are your "offenders", let us get them back into rehabilitation - it is my point about not wanting repeat business - because what we would then do is try to work with the employer to make sure that we do not end up in a tribunal once again. Q101 Mr Weir: Do you feel that by being a taxpayer-funded organisation you are saving the taxpayer money by your work? The argument would be that these are individual employment contracts that are being disputed, why should the state be paying to finance that dispute? Your argument, if I hear you correctly, is that you are actually saving money by becoming involved in that, is that correct? Mr Taylor: It is correct. There is another argument which is not for me to make, but I would expect the employers to make, about the polluter pays here. In essence, it is Government which passes regulation, either here or in Brussels, and creates an environment in which employers have to operate. Employers pay taxes; is it a legitimate use of taxpayers' money to somehow mitigate those effects by funding an organisation like Acas. Q102 Mr Weir: As I understand it, at present you only become involved in the mediation of individual disputes once an application is submitted to a tribunal. It may not be a proper question when you are looking at cuts in organisation, but do you see that there is perhaps a role for Acas with earlier intervention before it gets, as you put it yourself, on the stressful way of getting to a tribunal? Mr Taylor: Could I ask Sue to expand on that? Ms Clews: There is enormous scope for work pre-tribunal. We have piloted, as a response to the Better Regulation Taskforce a couple of years ago, which made a similar suggestion, a media service where we would go into an organisation, particularly a small firm where there is not the HR expertise, to try and sort out some sort of dispute while it is perhaps at a grievance stage or even before a grievance has been raised. That has been very successful in terms of resolving those disputes without them turning into a tribunal application. Take-up was limited, I have to say, so I think that is something around maybe how we publicise that and about giving employers the confidence that having a third party in is not such a scary thing, but it might actually be good for them and their employee relationship. Particularly around issues such as bullying and harassment, where we get large numbers of claims at the moment, even personality clashes between two employees, there is a lot we can do there. Obviously, an issue for us at the moment is how we would fund that, so through the pilot - we are rolling the pilot out nationally - we are charging for that. That is an area that we clearly need to think through as to whether in the long term that is in the best interests of employers and employees. At the moment it does not fall within our statutory duties. Q103 Chairman: We have been asking witnesses about this issue of the seven and 13 week fixed periods for conciliation; do you have a view on that subject? Mr Taylor: It is a little early really to take a view as to what has happened. Certainly, we did have a view as Acas and in our evidence to the Government's White Paper - this was way back in 2002 - we suggested that this could have wings but it would be best to be piloted out rather than introduced. The Government itself has committed to a review in October of this year, and we will feed in more studied thoughts, but broadly speaking, if we just look at it in headline terms, we are still producing the same amount of conciliated settlements, though there are issues about quite a steady and quite a massive drop in the number of applications. When the TUC were giving their evidence I think Sarah Veale explained there are concerns from some people about access to justice in terms of is this now such a bureaucratic process that people are actually giving up. We are only seeing the people who actually enter the tribunal system and we are still providing the same kind of results. Q104 Chairman: The jury is out. Mr Taylor: Yes. Q105 Mr Clapham: The organisation was born in 1975 and has had an enormous impact on the UK industrial scene, and we have heard this morning from both trade unions and employers who say it has been a very positive impact. Given that at the time Acas was born the academic writers of the Sixties and early Seventies were arguing that it would help to embed democratic procedures in industry, and given what has been said about the reduction in the number of days lost through industrial disputes - but nevertheless there is still a great deal of collective bargaining that goes on - is there a case to say that Acas should still be promoting collective bargaining? What is your view on that? Mr Taylor: This is one of these classic ones where the Acas Council would not have a view. There is clear consensus that getting information and consultation right in the workplace has to be a good thing, whether it is a unionised workplace or not. In the everyday conduct of our work we do get into situations where an employer has a sizeable number of employees who are members of a union and the employer does not want to recognise the union; it is not for us to direct the employer, we would set out the pros and cons, the benefits or any disadvantages there might be, but generally speaking we are very partial when it comes to getting information and consultation right. How someone wants to do that is a matter for them. History shows that when Acas was given statutory recognition powers back in the late Seventies/early Eighties it did throw into question its impartiality and there were difficulties with the employers remaining on the Council. I will be diplomatic and stop at that. Q106 Mr Clapham: Can I then just take you on to the changed area that you are focusing on? You are now focusing on good employment relations and from that, presumably, hoping that conflict resolution will be reduced. Given that many more employers come to you than previously - I note from the Workplace Survey that 26 per cent of employers come to you, compared with 16 per cent in 1998 - it would therefore indicate that your services are seen to be of great worth. Is there any evidence to show that conflict resolution has been reduced as a result of you focusing on good employment relations? Mr Taylor: There is not any blindingly direct evidence. What we have seen is that as we have invested in advice and information the general trend is for employment tribunal applications - if you want to use that as a proxy for conflict management - to actually come down. What is difficult to know is whether that is because we have got relatively full employment or is it because of our intervention? We know that for every case that comes to a tribunal there are another six or seven that could potentially come to a tribunal, and we know just from listening in to our helpline that every day we are probably averting somebody going to the tribunal, but we have not got any real hard and fast evidence. It is something that we will be looking at. Q107 Mr Clapham: But for the future it is quite clear that that is where your focus is going to be, good industrial relations. Mr Taylor: Yes. Q108 Mr Bone: I want to go back to something you said previously. The wonderful thing listening to this is the fact that you have managed to build your impartiality across the board, it seems to be the key to the organisation and the evidence has been very impressive on that. You have also mentioned that you are doing quite a lot of work with the public sector on the Government's public sector reforms; do you not think that this could be the perception, that because you are promoting the Government in that regard you lose some of your impartiality? Mr Taylor: I do not think we are promoting the Government. There is a political issue for the public sector unions to face up to, and that is will they fight all job cuts or will they accept some reductions in job numbers. That is an issue for unions and Government to resolve. Our involvement is to work with the managers if you like, the employers, and the unions in the public sector to try and implement life after the cuts, if I can use that phrase for short. Q109 Mr Bone: That is the problem, is it not? There are the unions in the public sector fighting, and I had some firemen on to me yesterday, very concerned about their pension situation. I am sure you are not, but I am just worried that the unions might therefore see that what you are doing in trying to say after these reforms this is what is going to happen, and we are going to help you with that, is promoting something that they are not in favour of. Mr Taylor: All I would say in response to that is that if we went back to the 1990s when there was a radical restructuring of the private sector with a real impact of globalisation, the fact that there were job cuts there has not led in any shape or form to our impartiality being questioned by private sector unions. The big issue is the practical impact of it where we help. Q110 Chairman: I am glad that Peter Bone mentioned pensions issues because before we come to the last section with Claire Curtis-Thomas I just want to pick this up. One of the big looming industrial disputes is local government pension schemes, and there is real unhappiness among local government workers, for which I have enormous sympathy, but there is also a real problem out there financially, on which I also have enormous sympathy for the Chancellor of the Exchequer. It is a huge political question; can you have a role in that dispute which looks likely to come without taking a view on the political question that lies at the heart of it? Mr Taylor: It is very difficult to see a role around the big issue, that is a direct political issue between unions and Government. We actually did get involved in conciliating in a private sector company around the pension fund last year, and that was really where the union's and the company's actuaries disagreed - if you want to give somebody a difficult task, try conciliating between two actuaries, it is not easy. There has to be life after whatever will happen on the pension debate and I really go back to what I said about the private sector, that once you have gone through these troubled waters - and every sector has this, every organisation has it - you have to pick yourself up and continue being an efficient organisation. That is where we would see our main role. Ms Clews: Could I just add to that. We do have a role in bringing together organisations at a regional level to focus on those issues - for example, in the North West we have got an employment relations forum where we bring together regional fulltime officers from trade unions and some of the employer associations, so that issues like what can we do to prepare for pensions issues, age discrimination, there is a forum for people to actually talk those issues through in a more constructive manner than waiting until there is a particular dispute. I understand that that will not solve those difficulties, but at least it is an opportunity to have open communication and a joint approach to trying to resolve those difficulties or at least to head off some of the worst implications of them. Chairman: We will move to the last section of questioning. I am grateful for everyone's indulgence and being here so late. Q111 Mrs Curtis-Thomas: You were here earlier on and you will have heard my questions around charging for services. Does the fact that you charge for your training compromise the integrity of the training that you provide? Mr Taylor: In a short answer, no, and I will expand on that in a second. I just want to make the point that charging is not unusual for public sector bodies; most public sector bodies which have a monopoly charge - driving licences, passports et cetera - so we are not desperately unusual. We are a bit unusual in terms of support for employers because generally, in terms of training for example, there is massive subsidised training given to employers. We are required to charge for our training activities, which we used to provide for free. Q112 Mrs Curtis-Thomas: But you do not have people coming to you saying because you are charging for this I am going to get a biased training programme, based on the fact that I have paid you. You do not get criticisms like that, do you? Mr Taylor: No, perversely we get the opposite. If you want some biased support you go to a solicitor and he or she will give you the answer that they want. Q113 Mrs Curtis-Thomas: If you had to charge for your services, would you still provide impartial services or would your impartiality be compromised by the fact that you had to charge for them? Mr Taylor: I do not believe so, because what we are advocating is good practice. If we worked with an employer, we would not work with an employer if that employer did not have an engagement strategy for his or her workplace. Q114 Mrs Curtis-Thomas: What I am trying to establish here is that charging for a service does not mean to say that you cannot provide an impartial service for that money, because I have heard this morning - and you will have heard - from other witnesses that there is a notion that by charging for something it somehow renders you partial. I am glad to see that, like me, you do not believe that that is the case. Mr Taylor: Certainly for training and advice I do not think it has compromised our impartiality. Q115 Mrs Curtis-Thomas: But you do think it might - the inference is there - compromise you in conciliation services? Mr Taylor: Sue mentioned mediation a little bit earlier and we have started to charge for that, and that has not, as far as we can see, compromised our impartiality. The difficulty with individual conciliation is that the first time we know anything about this is when the individuals put their claim into the employment tribunal and we get a copy of the papers, and what has happened once someone has got to a tribunal is the relationship between the individual and the employer has broken down big-time. The conciliation process is difficult enough, to try and get those two parties back speaking to each other, without them requiring the employer, or the employer and the individual, to actually pay, because then a new hare would start running about who was to blame for this. If you are an employer and a litigious individual puts in a claim against you, and you are completely innocent, you are going to be faced with spending a lot of money at an employment tribunal. The last thing that you want to do is also spend a lot of money in terms of trying to get a conciliated settlement. The benefit of our intervention is that we drive down the cost for both the employer and the individual. Q116 Mrs Curtis-Thomas: Are you comfortable about the fact that it is the public actually that fund this service and yet the vast majority of beneficiaries so far are large companies. Should this not be a cost that they bear on the bottom line, not necessarily the cost of that service coming to you but going to the Treasury? Your service at the moment is being compromised by budget discussions in the DTI; have you not looked at the possibility of recovering the cost from business to pay for your service, to continue to do that service which is obviously valued by business itself? Mr Taylor: Companies and individuals pay for our service through general taxation; Government takes a view about whether or not this is a sensible use of public money and Government has taken the view that providing the conciliation service free at point of delivery is a sensible thing to do. Our view and our experience would say that is the correct decision because certainly when we look at our colleagues in the United States, the FMCS - the Federal Mediation and Conciliation Service - they rejected the thought of charging for their collective services on the very grounds that both the employers and the trade unions mentioned this morning. Q117 Mr Binley: I am going to be slightly more robust than Claire, but working on the same lines, because it seems to me that you have got two things that you are not appreciating. The first is that you have a tremendous brand - I do not think you understand what value that has. Secondly, with SMEs you have a tremendous marketplace that you are not even tapping into to any great extent. I listened to the big monoliths and they horrified me, quite frankly, with their attitude. It seems to me that you have tremendous pre-tribunal, pre-problem abilities - let us take charging for a website of 160 quid that is updated regularly, specific access. I reckon I could sell that and make a great deal of money, quite frankly. Let us look at the problem of SMEs where we know from the Employment Trends Survey that all those employers with fewer than 50 employees settled in every tribunal claim they faced in 2004/05, despite the fact that in 46 per cent of the cases they were advised that they were likely to win. That is a massive payout by SMEs that you could tap into by stopping, and it seems to me that you need an injection of entrepreneurialism, quite frankly, because I do not think that it would get mixed up with your arbitration services but would in fact go a long way to providing a service that small businesses need that have not got the expertise to buy and that a marketplace exists to buy. Can I ask you to respond to that? Mr Taylor: I will ask Sue in a second to bring you up to date on some of our thoughts about a subscription service to SMEs but I do not think I can accept your assertion that we have not been entrepreneurial. We have grown the business from nothing --- Q118 Mr Binley: So did I. Mr Taylor: That is why I described it as entrepreneurial. We have grown the business from nothing, with a workforce who were recruited for a completely different skills set in order to provide a conciliation service. We have also harnessed new technology and we have to go through a whole series of hurdles set by the Treasury to make sure that we are not competing unfairly against the private sector, so I would say that our staff have responded magnificently to create the revenue streams that we have actually created so far. Sue, could you respond? Ms Clews: I am sure you are right that there is a lot that we can do and we are taking steps forward. There are two things I will cover, first the subscription service which we have considered as a way of getting to more small firms, because we do try and publicise ourselves, but with the number of businesses there are we are clearly not making massive inroads - we are making some, but not at a quick enough pace. We are looking at ways in which we could try and have more of an ongoing relationship with smaller firms so that we are their first thought when they have a people issue, when somebody is late, when somebody does not turn into work --- Q119 Mr Binley: Contracts of employment assistance. Ms Clews: That is right; we are looking at whether there is some mechanism, either alone or with other organisations, so that when a new business sets up or when it takes on its first employee it could in some way be linked to Acas. We are working on that at the moment to try and find a method that does not compete with other organisations but reaches the SMEs that, frankly, do not have anybody to support them. That is one thing we are doing. The other thing is to work with the regional organisations which are very keen to promote entrepreneurship within business. We know that management and leadership training is woefully inadequate for a lot of small firms, they have other pressures to concentrate on, so we are trying and get our relationship with regional development agencies so that we can input where perhaps Business Links are not able to do that, so to try and help other small firms that way. We would welcome a further discussion on ideas around that certainly. Q120 Chairman: Positively the last question, which flows directly from that, it is a funny old entrepreneur that works hard to raise money for someone else. Brian Binley has suggested that you should be more entrepreneurial, but every time you are entrepreneurial you raise money for Gordon Brown. Mr Taylor: If we had a funding agreement which allowed us to incentivise staff in the institution then life would be easier, chairman, yes. Chairman: Thank you very much for that last answer. I am very grateful to you for your endurance in a rather long session.
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