House of Commons - Blacklisting in Employment: Interim Report

Blacklisting in Employment: Interim Report - Scottish Affairs Committee Contents

3 Members of the Consulting Association

37. As we noted above, Ian Kerr told us that there were 17 initial members of the Consulting Association: Amey, Balfour Beatty Civil Engineering, Balfour Beatty Construction, Ballast Wiltshier, Edmund Nuttall, Higgs and Hill, John Laing, John Mowlem, Kier Group, Morrison Construction, Norwest Holst, Sir Robert McAlpine Ltd, Tarmac, Taylor Woodrow, Trafalgar House, Walter Llewellyn and Willmott Dixon. Bovis and G. Percy Trentham were also involved at an early stage, but dropped out. Other companies joined, and 43 companies or divisions of companies were at some point subscribers to TCA (see Table 1 below). So far, we have taken evidence from representatives of Sir Robert McAlpine, Skanska and Balfour Beatty, and we have received written evidence from Carillion. It is our intention to take oral evidence from other companies in due course.

38. We also received from Ian Kerr the accounts of TCA that he held, and so we have been able to see the amounts of money which different companies paid for the services which TCA offered. These can be seen on our website. We would like to see TCA's daybook in order to be able to link individual payments to individual sites. We are quite certain that Sir Robert McAlpine Ltd was a major force in the formation and operation of TCA, and it is hardly likely to be coincidence that the company provided the organisation's Chairmen for eight of its sixteen years (Cullum McAlpine 1993-97, David Cochrane 2006-09). McAlpine was also a major spender on the services of TCA; so too was Skanska and its predecessors and subsidiaries. We will outline the involvement of those companies from whom we have taken evidence below.

Sir Robert McAlpine Ltd

39. We took evidence from Cullum McAlpine, the first Chairman of the Consulting Association. Mr Kerr told us that he was an important part of creating the organisation from the remnants of the Economic League and the Services Group:

At its inception, the first chairman was the person who was there guiding it towards becoming the Consulting Association […] that was Cullum McAlpine of Sir Robert McAlpine.[50]

Mr McAlpine denied that he was personally an important part of the creation of TCA. He described how a group of human resources managers from the companies which had been involved in the Services Group were working towards forming an association which would become TCA, and decided that they wanted a main board director from one of the larger civil engineering and construction companies to act, in effect, as a figurehead. He was approached, and referred the issue to the board of McAlpine.[51] He added that the group "really wanted McAlpine, not me."[52]

40. Mr McAlpine also played down his role as Chairman during the first four years of TCA. He chaired the finance committee, which concentrated "pretty much only on budgets and financial arrangements—income, expenditure and that sort of thing", and told us that there was no real control of the day-to-day or month-to-month activities of TCA.[53] He summed up his function like this: "My role was to try to make sure that it [TCA] did not lose money and that it survived the first three years. To that extent, it was a commercial role."[54]

41. Whatever Mr McAlpine's personal involvement in TCA, which we will consider a little later, it is evident that Sir Robert McAlpine Ltd was a major subscriber and client. Between the financial years 1996/97 and 2008/09 (the years for which Mr Kerr was able to supply us with usage and subscription charges), the company spent in excess of £150,000 on the services of TCA—with each individual check only costing in the region of £2 (though of course this amount will also have included the annual subscription fee).

42. We were not persuaded by Mr McAlpine's description of his role with the Consulting Association as being hands-off. We accept that there was little direct supervision of Ian Kerr's activities as Chief Officer of the organisation, and in that sense Mr McAlpine acted as a non-executive Chairman. However, his position as the founding Chairman, and as a Director of one of the biggest spenders on TCA's services, suggests that his involvement may have been rather more substantial than he suggested. The evidence we heard from Mr Kerr suggested that he was simply a paid employee of TCA and that initiative and direction came from elsewhere. We see no reason to doubt this.

43. Sir Robert McAlpine Ltd is currently facing a court case over its involvement with TCA, in which Cullum McAlpine is personally named. The claim is that the company:

Was involved in an unlawful conspiracy with other construction companies which subscribed to the database, which involved inter alia the wrongful gathering, storage and use of information concerning trade union activities and in particular the making of decisions as to whether or not the Claimants should be employed.[55]

The company has declined to comment on the claim, as it is preparing a legal defence. However, a spokesman for Sir Robert McAlpine Ltd, noting that a large number of construction companies had contributed information to and accessed information from TCA's database, added:

Sir Robert McAlpine Ltd has never operated a 'blacklist'. We are, and have always been, wholly committed to maintaining good relationships with our workforce and to responsible trade unionism.[56]

44. During our evidence session with Cullum McAlpine, we were careful not to engage in any lines of questioning which might be seen as prejudicial to the case. We hope that Mr McAlpine was as frank and full in his evidence to us as he could reasonably have been. There is the potential for considerable reputational damage for all the construction firms from which we have taken evidence of appearing to be less than open to a committee of the House.

Skanska

45. Skanska UK was created in 2000 when Kvaerner sold its construction arm to Skanska AB, the Swedish parent company. Kvaerner had previously acquired Trafalgar House in 1996. Trafalgar House was one of the founders of TCA in 1993. We took oral evidence from Harvey Francis, Executive Vice President, Human Resources, Communications and IT for Skanska UK, who had been in post when the activities of TCA came to light in 2009. He and the then head of Skanska UK, Mats Williamson, were responsible for dealing with Skanska's reaction to the revelations about the Consulting Association.

46. Skanska, like McAlpine, spent significant sums of money on the services of TCA, including in its incarnations as Trafalgar House and Kvaerner. During the years for which Mr Kerr provided records, their total spend was over £200,000. Mr Francis admitted that Skanska had been heavy users of TCA. While he did not seek to excuse the practice, he did seek to put it in context, when asked how many individual checks the company had made:

It is difficult to tell for sure, because the records that exist are very patchy. We have not seen the database, so we do not know for sure, but extrapolating from the invoices, the number is around 66,000. That looks like a huge number—I am not sitting here trying to excuse that in any way—but by way of context, if you look at 2008, which was one of our peak years in terms of volume and large buildings, we had something like over 90,000 people working on our sites during that one year alone. You need to think about the cyclical nature of how the trades come on to projects and go off, and then the churn within that. I just wanted to explain by way of context why the number looks big, and is big.[57]

It is clear, therefore, that subscriber companies to TCA used its reference checking service as a matter of course. Mr Francis also noted—and this is especially relevant to some of the employment tribunals which have arisen from TCA's activities, including that of Mr Smith, discussed above—that Skanska used the reference checking service primarily for subcontractors, rather than for people whom the company would be employing directly.[58]

47. Ian Kerr told us that different companies used the information from TCA's database in different ways. He said:

It could be shown that some companies took a harder line, to be fair, and didn't employ because—I think this is what you are saying—the name was there. Some would say, "Well, that was a long time ago", or "He's not to come along with any of the others,"—say there were half a dozen involved in a project. "We'll take a chance. We will note and monitor." In other cases, if the information was quite old or they thought it was minor, or if they knew the person it had come from and they thought that person was too hard, too harsh, they would say, "We'll take him on." This depended, to a degree, on the company's philosophy. Some were more hard and earnest than others.[59]

When pressed, he identified Skanska as being among this latter group of companies.[60]

48. After the discovery of Skanska's involvement with TCA, senior executives from the company met with trade union representatives, including Jim Kennedy of UCATT, who has given evidence to the Committee. The senior executives were Mr Williamson and Mr Francis. Skanska revealed that their internal investigation had revealed that the company's named contact with TCA was Stephen Quant, then human resources director. Mr Quant had also been Chairman of TCA in 2002 and 2003. There was also a second point of contact, unnamed, who was a security manager in London. Mr Quant left Skanska not long after the ICO raid on TCA's premises.

49. We acknowledge that Skanska have faced up to the responsibilities they had for their use of TCA's services. Mr Kennedy, of UCATT, told us that, when he met Mr Williamson and Mr Francis in the wake of the ICO raid:

I have to say that at that meeting they were deeply embarrassed by the whole scandal and were asking us, "What can we do to make things right?", you know, in terms of future processes. What had come out of their internal investigation—and they were adamant about this—was that Stephen Quant had assured him that he had only ever requested information concerning health and safety issues. There was no record of any communication between Skanska, Kerr and the Consulting Association. Apparently, all the communications had been done via fax or telephone.[61]

It was not initially clear what "information concerning health and safety" meant, and it is certainly no excuse for the illicit use of a blacklist. Mr Francis admitted to us that the use of TCA's services did not come to general attention in Skanska. When he was asked if anyone except Mr Quant would have known what TCA invoices were for, he said that they would not, as an invoice with an authorised signature (that of Mr Quant) would have been paid by the finance department without any further questions.[62]

50. Skanska's internal review, conducted in 2009, initially concluded that the company had only drawn information out of TCA's database, rather than added any data to it. However, Skanska subsequently discovered that that was not the case, and wrote to the ICO to inform it of this fact.[63] After some negotiation, Skanska has agreed to make its internal investigation available to us on the basis of confidentiality, and we intend to return to the matter in the future.

51. Mr Kennedy of UCATT thought that Mr Quant was likely to be the lynchpin of Skanska's use of TCA. However, he pointed to the fact that several operating units in the Skanska family and 'genealogy' had made checks against TCA's database, and concluded, "If you look at that, at one point it was pretty widespread across all operating units in Skanska. There was, obviously, one point of contact, but a lot of people would have been feeding into that one point of contact—i.e. Mr Quant."[64]

52. It should be noted that Skanska was not among those companies served with an enforcement order by the ICO when TCA's activities came to light. We asked Mr Francis why he thought that was. He said he did not know, but suggested it might have been a result of the "full co-operation, transparency and candidness with which we shared information".[65]

53. One final concern which we have in terms of Skanska's reaction to its use of TCA's services is that no individual employees have been held responsible for any wrongdoing. Mr Francis told us that he—and, we assume, by extension, Skanska—preferred to take corporate responsibility for what had happened.[66]

54. Skanska's claim is that its use of the Consulting Association was essentially dependent on one individual, Stephen Quant, who is no longer with the company. We have no evidence to contradict this, though it seems implausible that no-one else in the company had the slightest inkling that potential employees or subcontractors were being systematically checked against a database. We acknowledge the extent to which Skanska subsequently faced up to its responsibilities in this regard once caught, and conducted a swift internal review. We look forward to examining this process in more detail. We also heard extensive evidence from Skanska that practices and cultures within the company had changed fundamentally as a result of this review. We accept that Skanska has made significant efforts to cooperate with the ICO.

55. We remain concerned by the failure of Skanska to hold any individual to account for the wrongdoing which it has acknowledged. There is much in the company's determination to accept corporate responsibility to be admired, but the fact remains that thousands of workers may have had their employment prospects blighted and their lives significantly disrupted, whereas those responsible for the illicit use of TCA's blacklist may still be employed by Skanska.

Balfour Beatty

56. Balfour Beatty was another significant user of TCA's services, through a number of distinct subdivisions: Balfour Beatty Civil Engineering/Major Projects; Balfour Beatty Construction; Balfour Kilpatrick; Haden Young Ltd; Raynesway/Balfour Beatty Infrastructure Services; and Balfour Beatty Scottish and Southern. In July 2009, Balfour Kilpatrick and Haden Young merged to form Balfour Beatty Engineering Services. All of these companies were covered by a single group subscription to TCA, but were invoiced for their usage charges for TCA's services directly. As we mentioned earlier, Balfour Beatty Construction and Balfour Beatty Civil were founder members of the Consulting Association.

57. As we discussed in relation to Skanska, Mr Kerr told us that some members of TCA were especially severe in applying information found on individuals during reference checks against the database. He noted that "The Balfour Beatty companies were particularly hard-nosed, I found".[67]

58. Gail Cartmail, of Unite the Union, told us that Balfour Beatty Engineering Services was engaged in blacklisting.

One firm in particular is Balfour Beatty Engineering Services. One of our members, Stewart Hume, was interviewed by a manager called Gerry Harvey who, if I can put it in the vernacular, has form on blacklisting. The Committee may say that we could pursue the victimisation of trade union activities, but I am absolutely convinced that Stewart Hume will never be engaged by Balfour Beatty Engineering Services following his redundancy.[68]

Asked if she believed that Mr Hume was blacklisted on the basis of his trade union activities, she replied, "I am absolutely convinced of that".[69]

59. As we mentioned above, we heard evidence from Alan Wainwright, who had been employed by Haden Young, a Balfour Beatty subsidiary, as Regional Production and Resources Manager for the Midlands and Southern Region from 2004 to 2006. In 2005, while working for Haden Young, Mr Wainwright wrote to his head office, alleging that the company operated a system of blacklisting for new recruits and hired temporary agency workers "to check for any previous history of union militancy, troublemaking".[70] From time to time, Mr Wainwright claimed, lists of names were faxed to Haden Young's head office; he believed that this was so that the names could be vetted. The following year, he resigned his position at Haden Young and pursued a claim against them at an employment tribunal, but was unsuccessful. Mr Wainwright confirmed to the Committee that Haden Young was a subscriber to the Consulting Association and checked names against its database.[71]

60. Balfour Beatty has admitted using the services of the Consulting Association. According to an article in The Guardian in January 2013, Mike Peasland, Chief Executive Officer of Construction Services UK, Balfour Beatty plc, who gave evidence to us, wrote to Dennis Hone, Chief Executive of the Olympic Delivery Authority, admitting that:

Companies within Balfour Beatty's Construction Services UK division "used the services of the Consulting Association prior to February 2009 when the office of the information commissioner raided the Consulting Association's offices". It adds: "We have carried out an internal review of our operating companies. We found that in 2008 we used the Consulting Association in connection with the engagement of 12 operatives".[72]

After the raid of TCA's office by the Information Commissioner in 2009, six Balfour Beatty companies were among those served with enforcement notices: Balfour Beatty Civil Engineering Limited; Balfour Beatty Construction Northern Ireland; Balfour Beatty Construction Scottish & Southern Limited; Balfour Beatty Engineering Services (HY) Limited; Balfour Beatty Engineering Services Limited; and Balfour Beatty Infrastructure Services Limited.[73]

61. Mr Peasland confirmed to us that Balfour Beatty, as a group of companies, had been a member of the Economic League, and had been a founder member (in more than one guise) of the Consulting Association. Once he had acknowledged that TCA provided a referencing service for potential employees against a database, we asked him why Balfour Beatty had felt the need for such a service. He said:

We were suffering huge amounts of disruption in our business from unlawful acts on our sites. That would have led to major issues in terms of disruption for our customers, for our staff and for our own work force. We felt that this was a way to help prevent unlawful acts on our sites from happening.[74]

He went on to accept that Balfour Beatty had been slow to react to changes in data protection legislation, and had been using the services of TCA in an improper way. He said that "We regret using the Consulting Association".[75]

62. In the wake of the ICO's raid, Balfour Beatty, like Skanska, initiated a review of its process in these specific areas. Mr Peasland said that the company's "reaction was to review exactly where we were with what we were doing and to change and improve our policies both in terms of our code of conduct and data protection".[76] When asked if he thought matters would have improved without the impetus of the ICO raid, he affirmed that he did, though more slowly. Pressed on the evidence for this assertion, Mr Peasland replied, "There is no evidence of that".[77]

63. We asked Mr Peasland what the review had revealed. He told us that Balfour Beatty's data protection policies and code of conduct had been found wanting, and needed to be toughened up "to make it much more visible and explicit in terms of the actions that would be taken for either the use of or support of lists that supported people being excluded from sites without reference".[78] The existing systems had not been robust enough.[79] We asked Mr Peasland to supply a copy of the review for us to see. He declined our request on grounds of legal privilege. However, we continue to negotiate with Balfour Beatty in the hope that a satisfactory solution can be found.

64. As we had done with Mr Francis from Skanska, we asked Mr Peasland if individuals within Balfour Beatty had been held to account for the failings involving the company's use and membership of the Consulting Association. He told us that no-one had either been sacked or made redundant as a result.[80] He argued that individuals had simply been following existing company policy: only obeying orders.[81]

65. We welcome the fact that Balfour Beatty has acknowledged that it was mistaken in using the services of the Consulting Association. We also welcome the fact that the company conducted an internal review in the wake of the ICO's raid. On the first point, however, while we are sure that Balfour Beatty regrets being caught, we were less convinced that management regretted its involvement with TCA. On the second point, we cannot comment on the robustness or extent of the internal review until we see a copy of the document. We encourage Balfour Beatty to engage with us in a spirit of openness and honesty.

66. The final point is, once again, the lack of individual accountability. Balfour Beatty confirmed that no-one had been sacked or made redundant as a result of the company's wrongdoing. We find this difficult to accept. Admission of corporate responsibility is an admirable thing, but it can be no substitute for holding individuals to account when they have committed illicit or illegal acts. It is hard to see how workers who have been systematically and illegally denied employment will understand that the perpetrators are still in their jobs. We do not accept the defence that people were only obeying orders.

50 Q 1047 Back

51 Q 1422 Back

52 Q 1436 Back

53 Q 1458 Back

54 Q 1465 Back

55 Claim form, High Court of Justice, Queen's Bench Division, 20 March 2012 Back

56 "McAlpine denies high court claim it has major role in 'blacklist scandal", The Guardian, 12 January 2013 Back

57 Q 2062 Back

58 Q 2084 Back

59 Q 1082 Back

60 Q 1213 Back

61 Q 872 Back