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Lord McIntosh of Haringey: I want to give a substantive answer to the amendment itself. However, before I do that, I have to respond to what my noble friend said about method and about the question of whether a legally binding method contains a mechanism for resolving disputes.

Perhaps I may start with the issue of imposed method. We have said that we will consult ACAS about this, but what we have in mind is a simple method for the parties to meet to carry out collective bargaining about pay, hours and holidays. The method is likely to set out the frequency of regular meetings, how additional meetings can be triggered, who will take part in normal meetings, and what further and higher level meetings can be triggered in the event of a failure to agree. The objective of the method is to get the parties talking to each other and to give them the incentive and opportunity to negotiate a procedure agreement which better suits their particular circumstances. This could involve changing the scope of collective bargaining--for example, by adding or possibly dropping matters as well as by changing the mechanics of bargaining. I know it is true that there is no definition of method on the face of the Bill but I hope that my noble friend will find that helpful as a description of what we mean by method.

My noble friend asked whether the legally binding method will contain a mechanism for resolving disputes; for example, about unilateral access to arbitration. We do not intend the model to provide for arbitration or other third party intervention, though it will of course be open to the parties to amend the method and agree this if they want to. The duty on the parties will be simply to meet and to talk. We recognise, as my noble friend recognises, that they cannot be forced to agree.

I turn to the amendment itself. I know that my noble friend feels strongly about the matter. I can assure him that the Government reflected long and hard on the policy in this area. There are two principles underlying our thinking. First, we want statutory recognition to be as far as possible equivalent in its effects to voluntary recognition. Otherwise there would be an incentive for one party to prefer statutory recognition when everyone is agreed that voluntary agreements are the best solution. So it is important that statutory recognition should deliver no more and no less than voluntary recognition. Voluntary recognition does not guarantee that there will be an agreement at the end of bargaining; nor does statutory recognition. Voluntary recognition does not provide an automatic route to arbitration; nor does

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statutory recognition. Voluntary recognition does not contain an obligation to bargain in good faith or with a view to reaching agreement; nor does statutory recognition. That is deliberate and it is balanced.

Secondly, we wanted as far as possible to promote dialogue and avoid confrontation. That is why the ultimate sanction is for the parties to be forced to talk to each other. We cannot force them to agree and it would be wrong to impose some third party as arbitrator. There might be a way of dealing with short-term disputes but that does nothing to promote long-term partnership and dialogue. My noble friend suggests importing a duty to bargain with a view to reaching an agreement, a concept that he borrowed.

Lord Wedderburn of Charlton: With great respect to my noble friend, one should look at the wording of the amendment,

    "To conduct collective bargaining with a view to reaching an agreement". That is not the same thing as a duty to bargain.

Lord McIntosh of Haringey: I accept that correction, but my noble friend acknowledged that this concept was derived from European law. I know that he has sometimes argued against picking a concept from one legal system and importing it into another. I also know that we already have this concept through the European directive on collective dismissals--what he calls collective redundancy. He referred to TUPE. We shall shortly have to implement something similar in the context of European works councils.

The Government are uneasy about the situation. We are afraid that introducing the concept in the circumstances of an imposed legally binding procedure is fraught with danger. Such a duty is almost an invitation for each side to claim that the other is not bargaining in good faith. It is likely to lead to difficult, counter-productive court cases. What is the court to say, for example, to an employer who says: "This is my best offer; I cannot afford any more"? Will the court crawl all over his books to decide whether or not he is telling the truth? Even if he is telling the truth, is he bargaining "with a view to reaching an agreement"?

I accept what my noble friend says and I will not attempt to argue with what will appear in Hansard. The Government examined this approach very carefully and decided that it was unlikely to work well. You cannot force people to bring goodwill to the negotiating table, but you can oblige them to turn up for negotiations. The procedural alternative that we have proposed, whereby the matters to be subject to negotiation and the mechanics of that negotiation are specified in the imposed method, is simpler, easier to verify and less likely to lead to damaging and pointless disputes. I hope that my noble friend will feel able to withdraw his amendment.

Lord McCarthy: The noble Lord has given us a great deal to think about and we shall reconsider our attempt to put some precision into this term, but I also emphasise that he too should think about it.

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The Government introduced the word "method" when they removed the phrase "default procedure agreement". I take it that that phrase which, God knows, is relatively clear and straightforward, was taken out because it does not take you anywhere. While you call the ultimate sanction a default procedure agreement, it becomes obvious that there does not have to be an agreement, as the noble Lord stated. You set up the procedure and get the parties together, but there does not have to be an agreement. So, rather than leave that on the face of the Bill, we then saw the word "method". This is the most bizarre word to use. In the Oxford Dictionary there are many definitions of the word "method" and none of them helps us. They are: a mode of investigation, a systematic treatment for a disease; an orderly arrangement of ideas and topics; a procedure for obtaining an objective. That is not what we are talking about. We are still waiting for the definition of the word "method", which is not merely a repetition of the phrase "default procedure agreement".

The noble Lord made some extremely interesting comparisons between the voluntary recognition situation and the compulsory recognition situation. However, there is a fundamental difference. With voluntary recognition you must assume that the parties want to reach an agreement; otherwise, if the employer did not want to reach an agreement, they would de-recognise; they would not deal with the union; they would not talk; they would not be there. The very fact that they continue to recognise the union and the union continues to turn up means that we can assume that in voluntary recognition there is a desire to reach agreement.

If we are to add nothing more than a default procedure agreement as the ultimate sanction, and if we continue to rule out any recourse to a third party decision, what is the ultimate sanction when a final decision has to be taken as to what "method" means? Either we shall not decide, and we shall not say, or the courts will decide. That cannot be what the Minister wants.

Lord Wedderburn of Charlton: I hope that we can return to the nub of this amendment on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

10.45 p.m.

Lord McCarthy moved Amendment No. 228:

Page 57, line 7, at end insert--
("(1A) Where the parties fail to reach agreement on any outstanding issues between them at any stage of procedures set out in this Schedule, the CAC may decide, after hearing the views of the parties, that these issues should be submitted to an independent arbitrator nominated by the CAC after consultation with ACAS.
(1B) Where an arbitrator is nominated by the CAC under sub-paragraph (1A), he shall hear the parties on the issues in dispute between them and make a declaration on the issues and, if he sees fit, make a substantive award.
(1C) The substantive award of an arbitrator under sub-paragraph (1B) may state the terms and conditions of employment and, if so, those terms and conditions take effect as terms of the employment contracts between the relevant employees and any employer who is a party in the dispute; and those terms and conditions (or terms and

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conditions no less favourable) shall be amended only by a subsequent award, or by incorporation into the terms of the employment contracts of the relevant terms of a collective agreement between the employer and the relevant union.")

The noble Lord said: This amendment is an attempt to provide something concrete, something that goes beyond the default procedure agreement.

Those with long memories will appreciate that this is an attempt to recreate in modern terms, as it were, the procedure of Section 11 of the 1975 Employment Protection Act. We are told that this compulsory arbitration device did not work last time, so why do we want it now? The answer is that it did work to some degree, as the noble Baroness said, and I shall come to that. But if we put together the admirable parts of this Bill, in which measures are being taken to prevent the procrastination of employers in terms of access, with the use of the compulsory procedure, plus an ultimate recourse to a Section 11 device, there is a mixture that did not exist previously. But it requires us to realise what happened last time.

It is true that the existence of the Section 11 procedure did not work previously, in that there remained a hard core of employers who would not recognise the union. When they went to the CAC and were given an award in terms of wages and conditions, they paid that substantive award. None refused to pay, so we did not have to enforce it through the courts. But they did not recognise it. The assumption had been that everyone, when faced with a substantive award rather than recognition, would say: "I do not want constantly to be taken to arbitration in this way". It is a fact that a minority of hard-line employers paid the award and did not recognise.

But it is also the case that many employers--and there is a great deal of research to this effect--when asked why they recognised the union, and why they did not want to go to the CAC--and we investigated the fact that we had during that period the biggest rate of increase in union membership since the war--said that they did not want to face the alternative of compulsory arbitration.

It may well be that the existence of the Section 11 procedure provides a measure of coercion on the great majority of reluctant employers. But it does not provide the ultimate coercion on the small number of tough employers who would rather pay than recognise. Nevertheless, it is one additional pressure. In the absence of any provision of this kind, we fear that the Government will find that they cannot define what "method" means, and the courts will have to tell them. I beg to move.

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