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Baroness Miller of Hendon: The Minister said that there would be wide consultation with the CBI and the TUC as regards the code. However, can he confirm that there will also be consultation with other organisations representing employers? I ask that question because the CBI has not always been in line with, for example, the IOD or the EIS board, the small business bureau or, indeed, other such organisations.

Lord McIntosh of Haringey: I thought that I had just confirmed that. It is certainly not our intention to restrict consultation in any way.

Baroness Miller of Hendon: In that case, I shall certainly withdraw Amendment No. 39, but I shall look at it with a view to rewording it and perhaps adding one more amendment to the list of 100, or so, amendments which have been tabled by the Government. Indeed, more are due to come. I do not know the exact number but it is certainly way over a hundred. As the Minister has already indicated that Part II of Schedule 1 will be much changed on Report, I do not believe that one or two harmless, moderate little amendments that I may wish to bring forward could cause any problems for the Government.

Lord McCarthy: Before the noble Baroness withdraws her amendment, I should say that what the

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noble Lord said is quite true. There is much to be said in favour of a code of practice. However, the case against it is that it is not legally enforceable.

Lord McIntosh of Haringey: In the White Paper and in the Bill we have talked about a statutory code of practice.

Lord McCarthy: But it is not legal.

Baroness Miller of Hendon: I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendment No. 40 not moved.]

[Amendments Nos. 40A and 40B, as amendments to Amendment No. 40, not moved.]

Lord McIntosh of Haringey moved Amendments Nos. 41 and 42:

Page 24, line 12, at end insert ("after that on which")
Page 24, line 50, leave out ("19 or 20") and insert ("20A")

On Question, amendments agreed to.

Baroness Miller of Hendon moved Amendment No. 43:

Page 25, line 2, leave out from beginning to ("by") in line 3

The noble Baroness said: In moving this amendment I shall speak also to Amendments Nos. 44 and 45. These amendments all relate to the provisions in paragraph 19(2)(3) and (4) of Schedule 1, which provide for the cost of ballots regarding union recognition. It is sometimes confusing to have to follow the effect of an amendment which picks a word here or there out of a clause. In this case, as the wording concerned is very short, I should like to read to Members of the Committee an abbreviated version of it as it would be if my amendments were accepted.

The paragraph would say:

    "(2) The gross costs of the ballot shall be borne by the union (or unions);

    (3) If there is more than one union, they shall bear the gross costs in such proportions;

    (4) The person appointed to conduct the ballot may send the union (or unions) a demand", and so on.

The effect of the amendment is to remove from the employer the liability to contribute 50 per cent of the cost of the recognition ballot, leaving the union or unions to pay the whole cost instead of just half. The justice of the amendment is simple. A union wants recognition, with which the employer disagrees, as he is entitled to under the Bill. The union invokes the machinery to test the views of the workers. The ballot may or may not prove to be in favour of the union's proposal. There is certainly no justification in making the employer contribute to the cost of a negative ballot which shows that he was right to resist the claim for recognition.

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If the ballot proves to be in favour, then the union will benefit from the addition of new, dues paying members and, presumably, enhanced status. Once again, there is no reason why the employer should contribute to costs which the union will recover over time, even though he resisted the application in the first place. The payment of the costs is not the same as the rules relating to costs in civil litigation.

A liability to contribute to the cost of the ballot imposes an additional burden on employers, especially those operating small businesses about which I spoke earlier. They are the ones who will be most affected by disputed requests for recognition. The Government disclaim any intention of imposing unnecessary burdens on business. I believe that the paragraph, if unamended, will do just that. I beg to move.

Lord McIntosh of Haringey: On the face of it, the amendment seeks to encourage a union to minimise the costs of a recognition ballot. That is certainly a good thing. However, making the union pay for the whole ballot is not the way to do it.

The approach that we have taken is to divide the costs of a recognition ballot between the union and the employer. That means that neither party has an interest in going ahead with a ballot it is unlikely to win, or an extravagant, costly ballot. Both parties have an incentive to keep costs down, and, indeed, if they think they are not going to win, to avoid having a ballot at all. That is a thoroughly desirable alternative. This is the principle that the Government have applied to both recognition and derecognition ballots.

These amendments would not encourage co-operation by employers. They would give an employer scope to increase the cost of a ballot to deter a union from seeking recognition or to punish it for doing so. That would be petty and would not help to foster good employment relations. The present solution, where the costs of a ballot are split between employer and union, gives both an incentive to hold a quick, clean ballot. It is the best solution both financially and in terms of employment relations. Therefore, I hope that the noble Baroness will withdraw her amendment.

Baroness O'Cathain: Can the Minister tell us what impact the employer has on the overall costs of the ballot? For example, what say does the employer have in that respect? Is it the union calling for the ballot that determines what costs will be involved? Indeed, there could be many costs involved. There could be side meetings which would mean the cost of hiring rooms, and so on, as well as the cost of providing entertainment and even suppers. Under the Bill as is stands, what sort of input would the employer have as regards the total costs?

Lord McIntosh of Haringey: The ballot has to be organised by an independent organisation. The Electoral Reform Society has organised many ballots. The costs which we are discussing--which are shared between the union and the employer--are the costs of

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the independent balloting organisation. What unions or employers do on their own behalf is quite another matter and is a matter for them.

Lord Cavendish of Furness: Before the noble Lord sits down, in accepting that these costs constitute a disincentive to hold a ballot, do the Government accept that the cost is material? Is the Minister therefore saying that for a small company of 21 employees, for example, the cost has the same materiality as for a giant trade union? I find that hard to believe.

Lord McIntosh of Haringey: The costs of a ballot depend in part on the number of people being balloted. A ballot in a small company will cost less than a ballot in a large company. A large company or a small company could receive a request for recognition from a large union or a small union. The burden of the costs will be greater for a small union than for a larger union; it works both ways.

Lord Cavendish of Furness: I am sorry but that is not the case. In the case of a small business of, for example, 21 people which is perhaps not wealthy, the Minister has accepted that the cost of a ballot could be material and could lead to a disincentive to hold a ballot. That being so, that is a material consideration. However, it cannot possibly be as material to a giant, powerful, rich trade union as it is to a small company.

Lord McIntosh of Haringey: As I say, it works both ways. This matter is more material to a small union than to a large union and it is more material to a small company than to a large company. A ballot comprises fixed costs and variable costs. The variable costs depend on the number of people who are being balloted; the fixed costs comprise the costs of preparing the questionnaire, and so on.

Lord Brookman: Let us consider a case where 20 people are balloted. What costs are involved? Are we talking about 20 postage stamps or a sum of £20, £30 or £10? Is that going to break the Bank of Monte Carlo?

Lord Cavendish of Furness: It is more likely to break the bank of a small business which is struggling and having more and more regulation put upon it than it would a giant, powerful trade union--

Lord Brookman: Is it the case--

Lord Cavendish of Furness: I have not quite finished. The Minister said that the cost is material and will constitute a disincentive in this regard. I did not suggest that; I think that it is an absurd idea.

Lord Brookman: I apologise for interrupting the noble Lord. However, I believe that a company which is in that kind of difficulty would need a trade union to pull it out.

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