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Ms Katy Clark (North Ayrshire and Arran) (Lab): We have been talking about the complicated nature of the changes taking place in the workplace, in the public and private sectors. I am sure that my hon. Friend will be aware that individual workers are often not informed of changes—for example, changes involving the identity of the employer, complex corporate changes and changes to job categories. That is precisely the kind of information that the courts require be provided. Does he agree that the employer is often best placed to have the most accurate information, and that it is therefore reasonable to require them to provide it to the trade union, to enable the trade union to comply with the law?

John McDonnell: The new clause is simply seeking to ensure the co-operation of the employers who hold that information, and it would be in their long-term interests to comply with such a provision.

I apologise for having dealt rather flippantly with the point on education made by my hon. Friend the Member for Manchester, Central (Tony Lloyd). He provided a very good example of an area that contains an enormous range of establishments, resulting in balloting incurring very high costs. The Electoral Reform Society and other organisations must be making a fortune out of that. I must declare an interest at this point, because my wife works for the society, but that is another thing altogether.

It would be relatively easy for individual schools to supply information to a union, and for co-operation to be established in that way. That is all that new clause 1 seeks to achieve. It seeks to ensure that employers are engaged in assisting unions to keep their records up to date, which would enable proper democratic ballots to take place. My hon. Friend mentioned Unison, and that is a good example. One of the worst things that can happen is for someone not to receive their ballot papers. They feel aggrieved at having been unable to participate in the decision and, if industrial action does take place, they feel that they have not been party to that final decision.

Rob Marris: May I underline just how modest my hon. Friend’s proposal is? The balloting procedures exist so that, if a union goes through them properly, it will not have damages awarded against it for the tort of inducing a breach of contract. A more radical proposal—which I suspect my hon. Friend might, at some point, consider—would be to abolish the tort of inducing a breach of contract. If we did that, we would not need this panoply of balloting procedures.

John McDonnell: We would then be on a par with European law, because the right to strike is in place in most European constitutions. As my hon. Friend knows, the history of this goes back to Taff Vale in 1906, when we gained impunity against actions for tort when industrial action was taking place. The interesting thing is, however, that we now have fewer trade union rights in this country than we had in 1906. After 11 years of a Labour Government, I congratulate them on some of the improvements that have been made, and I am hoping that tonight we will be able to move that bit further towards re-establishing some fundamental rights for trade unionists.

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New clause 3 deals with agencies, and seeks to address the continuing problem of the use of agency workers by an employer to replace striking workers during an industrial dispute. I congratulate the Government on seeking to address that issue in 2003, but certain anomalies remain as a result of problems with the law. The new clause seeks to tidy up the Government’s original proposals. I should like to explain that in a little more detail.

In 2003, the Government introduced the Conduct of Employment Agencies and Employment Businesses Regulations 2003. The regulations bar the use of replacement labour to carry out the duties normally performed by a worker undertaking lawful industrial action or lawful strike action. They also bar the replacement of a worker who has been assigned to do the work normally performed by a worker undertaking lawful industrial action or lawful strike action. There are, however, three fundamental weaknesses in the regulations that need attention.

First, the regulations distinguish between an employment agency and an employment business. An employment agency introduces workers to hirers for direct employment by the hirer, and it can include temporary contracts. An employment business, on the other hand, supplies temporary and casual workers to third-party hirers. The clause barring the provision of replacement labour during lawful strikes applies only to those hired through employment businesses. If an employer hires labour through an agency rather than a business, they can avoid liability for engaging casual labour during lawful strikes. The amending provision would remove that anomaly. Secondly, the bar on supplying replacement labour applies only if the supplier knows that the worker is replacing one taking industrial action, so the onus is on the supplier of the labour to know whether industrial action has taken place. The amendment would clarify the regulations to impose a duty on the hirer—the employer—to inform the supplier about industrial action, and makes it unlawful for the hirer to hire replacement workers to carry out work usually done by workers who are lawfully engaged in industrial action. It closes that loophole; it is a tidying-up provision.

Thirdly, current regulations relate to replacement labour being employed during periods of official industrial action. However, the legislation has proved ineffective in that it allows employers to hire labour just prior to industrial action, thereby letting bad employers avoid the intent of the legislation. The amending provision would ensure that replacement labour could not be used to do the work of those taking part or intending to take part in a lawful strike.

My hon. Friend the Member for Vauxhall (Kate Hoey) provided a good example earlier when she mentioned the Communication Workers Union dispute at Royal Mail. Hon. Members will recall that the CWU took industrial action in 2007 when Royal Mail was repeatedly challenged about the recruitment of casual labour during the dispute. The union referred to the restrictions in the Conduct of Employment Agencies and Employment Businesses Regulations 2003, claiming that in Bristol alone the use of casual staff increased from 12 immediately prior to the dispute to more than 250 during the dispute. The employer, the Royal Mail, insisted that it was acting in accordance with the law. So confident was it in its ability to circumvent the intention of the legislation that it established a number of operations at various
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sites across the country to do the work of the striking workers, using casual labour. It did so by utilising the loopholes in the Government’s legislation. The use of such tactics undermined the staff’s decision to go on strike and demonstrated the failure of the regulations to prevent employers’ abuses, which the Government had sought to legislate against. It soured industrial relations in the Royal Mail for a long period to come.

Gwyn Prosser (Dover) (Lab): May I provide my hon. Friend with a more up-to-date example, in that a dispute is brewing in the port of Dover? About 200 of the work force are about to be laid off or hived off to the private sector, and we heard yesterday that Dover harbour board is considering taking in Gurkhas to fill the gap. Is that not precisely the sort of loophole that we need to close to stop that sort of thing happening again?

John McDonnell: I believe that the Government legislated with good intent to close that loophole in 2003. Let us be frank about it: scab labour was being used to undermine a legitimate dispute. The Government thought that they had seriously resolved the problem. Since 2003, however, we have seen so many examples of where employers can, with appropriate legal advice, ride a coach and horses through the legislation. That shows why we need the new clauses.

Kate Hoey: I want to add to my hon. Friend’s point about the bitterness that has been caused in the unions. The Communication Workers Union does things properly and has done so for many years, and its members serve the public day in, day out. I know how much bitterness has been left in areas such as my Nine Elms and other parts of London as a result of what happened in that dispute. It has been particularly damaging and it shows precisely why the Government should accept the new clause. Otherwise, long-term damage will be done to the relationship between trade unions and the public.

John McDonnell: I could not have said it more eloquently myself. I would add that abuse of the system by attempts to outflank the regulations also provokes unlawful wildcat action—understandably, as people get so angry when other workers are brought in to take their jobs and undermine their work and conditions. Usually, as we all know, people are paid pretty exploitative wage levels.

If the Government cannot accept the new clause, I hope that they will accept that there is an issue to be addressed and produce some proposals within a limited timetable. It was the Government themselves who sought to legislate to avoid the problem in 2003.

Mr. Dismore: As my hon. Friend knows, I have signed up to his new clauses. If the Government are not minded to accept them, however, does he agree that since the previous reform was brought about through regulations, the Government could quickly produce amendments to those regulations, which could then be passed relatively quickly if they thought it desirable?

John McDonnell: It is my view that the provisions are a tidying-up exercise, closing loopholes in legislation. It would be reasonable for the Minister to announce some consultation on appropriate delegated legislation that could deal with the problem. That would be entirely within the spirit and conform to the principle of the Government’s intentions in 2003.

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In this difficult economic period, we all hope that we can protect people in their jobs, secure their employment and, above all else, prevent exploitation, victimisation and unfair treatment. The three new clauses will go some way towards providing limited protection in the more difficult economic environment in which we all now operate.

I hope that the Government will think seriously about balloting procedures, so I will want to test the will of the House on new clause 2. On new clauses 1 and 3, I would welcome a statement from the Minister that there are issues to be addressed and that the Government will look into how to address them, perhaps by consulting hon. Members, trade unions and employers to see how best to move forward and ensure a good industrial relations climate in the coming period. At the very least, we should attempt to ensure fairness and prevent unequal and unfair treatment.

Mr. Jonathan Djanogly (Huntingdon) (Con): The Bill has wound its way between our two Houses for some time now—I believe since 7 December last year—with more or less agreement between the various parties on its contents, albeit with a difference of emphasis. We feel that the Bill is also a lost opportunity in failing to relieve the regulatory burden on business in respect of employment. As to these pro-union new clauses, the mood changes somewhat, as we totally oppose them. Here the true face and belief of the hard left of the Labour party is exposed and it is not a pretty sight for business.

The starting point of all modern industrial relations law is—and has been for well over 100 years—that industrial action is unlawful unless protected. In effect, participants in authorised industrial action have protections against being sued, making industrial action lawful. As such, the new clauses would represent the most fundamental change to industrial relations law for a century and could catastrophically unbalance industrial relations in the UK, empowering trade unions to bring our economy to its knees.

Section 238A of the Trade Union and Labour Relations (Consolidation) Act 1992 was inserted by the Employment Relations Act 1999. As it currently stands, the section provides protection to a striking employee within a framework. There is no sense that the employee is to be considered unfairly dismissed through an arbitrary action in statute. The new clause would allow striking employees to hold companies to ransom. It would serve as a brake on commercial enterprise and return us to the dark days of the 1970s—three-day weeks and perpetual strike action.

6 pm

Ian Stewart (Eccles) (Lab): The hon. Gentleman clearly does not understand industrial relations or the law. What he refers to was originally set up to ensure that when employers face a ballot for industrial action, they have good-quality information. It runs side by side with provisions such as cooling-off periods, which were introduced so that the employer and the trade unions could negotiate to try to resolve the problem and the ballot would not need to be put into action. He is wrong to tell the House that the problem is striking employees. They do not strike until after all the law on balloting has been implemented. He is wrong.

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Mr. Djanogly: I appreciate what the hon. Gentleman says. Indeed, the Bill is reforming the law in relation to ACAS, and we have for the most part supported the provisions on that. However, with this new clause we are staring down the barrel of a return to the old nasty days. Given that 90 per cent. of the Labour party’s funding comes from the very trade unions that the new clause would empower, perhaps Labour Members would welcome such a change—or they are at least unable to prevent their arms from being twisted by their party’s sponsors.

The hon. Member for Hayes and Harlington (John McDonnell) needs to put the new clause in context. For starters, will he say what unions have been promoting it? Does it form part of the Warwick II agenda, for instance?

John McDonnell: I shall send the hon. Gentleman a copy of my speech when it appears in Hansard. I referred early on to the support of every trade union affiliated to the TUC and said that the new clauses were unanimously carried by the TUC and its general council.

Mr. Djanogly: It is nice to hear the hon. Gentleman make clear the support of his party’s paymasters.

Rob Marris: I rise to declare my interest as a long-term member of Unite and a member of the GMB. Will the hon. Gentleman care to declare his interest, as registered, as a partner in a large law firm, SJ Berwin?

Mr. Djanogly: My interest is clearly stated in the Register of Members’ Interests. It forms no part of the debate because a law firm would act for either party in a dispute.

What has happened—hon. Members may agree with this—is that the Government have presided over a period of greed and arrogance on economic matters. The Labour Government have come to represent the zenith of boom and bust. They have taken the nation to the brink of recession. Businesses across the UK now face difficult decisions as a result. Jobs will be lost and businesses may fold. The last thing the Government should do is hand the power to self-interested employee groups to hold companies to ransom. The Government would be wrong to do anything that more than simply dismisses the new clause. If they do not, it would add yet further weight to the rumours that the “beer and sandwich” culture of the 1970s has worked its way back into Downing street.

Mr. Drew: I understand that Mr. Richard Balfe has been talking to trade unions on behalf of the Conservative party. I would be interested to hear whether he has delivered the same message as the hon. Gentleman is setting out, because I am not sure how long those discussions would have lasted had Mr. Balfe given that speech to the trade unions. What have those discussions been about?

Mr. Djanogly: The purpose of the debate is not to go through our private discussions with trade unions. However, we are more than happy to talk to trade unions. We have been doing that and will continue to do so because we want to have a smooth industrial relations policy when we get back into power. That does not mean that we will go to the extremes set out in the new clauses.

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Ian Stewart: If the Opposition have been talking to the trade unions, have the trade unions never explained why they want the new clause?

Mr. Djanogly: The trade unions have not personally approached me to discuss the new clause, but it seems as though they have approached a lot of Labour Members.

Let me mention the worst aspects of the new clause from the Conservatives’ point of view. It would be virtually impossible to dismiss a worker conducting industrial action under proposed new section 238A(1) and (2). Currently, employers can only fairly dismiss workers who are conducting union-approved industrial action where, first, there has been no proper ballot; secondly, they have made reasonable steps to resolve their trade dispute; thirdly, they dismiss every striking worker; and fourthly, they do not re-engage any of them within a three-month period. Although that scenario is extremely rare, the provisions are vital. They ensure that an employer can ultimately get on with business when striking workers are making unreasonable demands. In our view, the provisions clearly already provide reasonable protection to those who are conducting authorised action.

Industrial action short of a strike would be legalised by proposed new section 238A(3) and (4). The effective legalisation of action short of a strike, such as work-to-rule or a sit-in, would empower unions in a way not seen since the 1970s, when work-to-rule formed part of the action taken by unions intent on crippling the economy. Unbelievably, unions would no longer be liable for the consequences of their actions under the new clause. That is of fundamental importance. Under the current law, injunctions can be granted against trade unions by the courts and damages awarded where actions that they have endorsed are viewed as unjustified or disproportionately damaging to the employer. That provides an important check and balance against inappropriate behaviour and is mirrored by a substantial body of law restricting an employer’s conduct in a trade dispute. By removing liability on a worker engaged in industrial action, the unions would no longer be liable either. That would fundamentally unbalance industrial relations in our country.

Mr. Parmjit Dhanda (Gloucester) (Lab): Does the hon. Gentleman not in any way consider that what he has just said could change the mood of the relationship between employers and employees and might encourage more people to work to rule rather than take the risk of strike action?

Mr. Djanogly: I simply disagree. The hon. Gentleman is not right.

Proposed new section 238AA(2) and (4) would mean that staff are entitled to full pay when conducting industrial action, removing any disincentive from taking such action. Proposed new section 113A to the Employment Rights Act 1996 would make it impossible to make redundancies wherever industrial action occurs, even if the whole business would collapse as a result. Requiring employers to provide the detailed information necessary for ballots would place an unfair administrative burden on them during tough times. Moreover, the new clause would shift responsibility for conducting a proper ballot from the unions to employers, effectively giving the union someone else to blame if there are flaws in their paperwork or ballot conduct.

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In general, the new clause has a number of fundamental flaws. It calls for the continuation of employment as well as an award for damages where an individual has been dismissed for industrial action. That is in effect a double bite at the cherry—an opportunity that would not be offered to normal employees in any other unfair dismissal proceedings. Hon. Members who have tabled the new clause either hope to carve out a preferential niche for striking workers or they should have consulted more widely on it.

Mr. Binley: Let me declare an interest. I have been the managing director of a company employing 140 people who has been the target of vexatious claims. I hope that that interest is well understood by Labour Members.

I draw my hon. Friend’s attention to the statement in proposed new section 238AA(2):

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