I thank noble Lords. This has been an important follow-up to a series of debates and meetings outside the Chamber that we have had—to
reply to my noble friend Lord Cormack—on the important issue of the Certification Officer and the linked issues, because the Certification Officer runs like a rainbow through the Bill. I also recognise that most trade unions work within the regulatory framework most of the time. We are a deregulatory Government—noble Lords know that, and I am unapologetic about it—but let me be clear: some trade unions break the law. Our reforms provide the Certification Officer with the right tools to ensure effective regulation. Equally, they ensure proportionate regulation, which is an important point given the concerns raised about bureaucracy by the noble Baroness, Lady Donaghy, the noble Lord, Lord Oates, and my noble friend Lord Cormack.
Let me give an example: the case of Mr Dooley v the Union of Construction, Allied Trades and Technicians—UCATT. I am sure the noble Lord, Lord Collins, will know the case. The Certification Officer determined that the union had breached its statutory duty to ballot all its eligible members during the 2009 general secretary election. He also observed other issues relating to the union’s membership register, but he was unable to investigate further as no complaint had been received. This seems to be the wrong situation, and it is that sort of situation we are seeking to change, but we have also listened, as I promised we would when we started Committee stage in this House.
We agree that the Certification Officer, like any other regulator, is and should be independent. However, it is fair to say that noble Lords are seeking a greater assurance. I therefore intend to bring forward at Third Reading an amendment to confirm the Certification Officer’s freedom from ministerial direction. I also confirm that the Certification Officer will follow OCPA appointment procedures.
The noble Baroness, Lady Donaghy, suggested that the Certification Officer might consult on his enforcement strategy. Clearly, he needs to have the ability and space to respond to the information that he receives and to decide the right way forward. He is of course independent, and it is an independent matter whether he investigates and what his approach is to an investigation. That is really a matter for him.
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I turn to human rights. Subsection (3)(c) of the new section in Amendment 31A is about compliance with the requirements of the European Convention on Human Rights. The Certification Officer, as a public authority, is already required to act in a way that is compatible with the European convention. We do not need to legislate to require someone to comply with the law, and I am happy to say that again today. However, we listened carefully, as I promised we would, particularly to concerns that appeals on a point of law were not sufficient reassurance. That is why the Government have tabled Amendment 31E, which I have already discussed, allowing appeals on points of fact as well as on points of law. I am grateful to the noble Lord, Lord Collins, for his comments. As he said, this seems to meet the outstanding concerns.
Subsections (3) to (5) of the amendment concern the Certification Officer’s powers to regulate. The Certification Officer has important statutory duties,
which are approved by Parliament. However, the current system relies on union members bringing complaints to him—for example, about the conduct of elections. Complaints in relation to other statutory duties are made less often, but that does not mean that there is no problem. Union members may simply be unaware that they can complain, and that is why we need a responsive and diligent regulator. As I have said, he needs to be able to respond proactively if he becomes aware of a breach. This is in line with regulators in other areas.
Now and in future, the Certification Officer must consider the union member’s complaint and make a decision, but the Certification Officer will not be bound to consider representations from third parties. Instead, he will be free to decide what inquiries to make and whether to launch an investigation. I understand the desire for further reassurance that the Certification Officer is not sidetracked into spurious and resource-intensive activity, with costs passed on to the unions via the levy. That is why government Amendment 23A increases the threshold for the appointment of inspectors to circumstances where there are reasonable grounds to suspect that a union has failed to comply with the duty. This provides a sensible additional control on the actions of the Certification Officer, while not unduly restricting his powers to investigate.
The noble Lord, Lord Collins, asked whether, if the Certification Officer does not investigate a complaint, he can be judicially reviewed. Of course the answer has to be potentially yes, because judicial review applies in these kinds of areas of law. However, provided that the Certification Officer has acted reasonably in deciding not to investigate, there is no reason why his decision should be successfully challenged. Deciding whether or not to investigate a potential issue is the sort of assessment that regulators make all the time.
That brings me on to subsections (6) to (8) of the new section in the amendment, which propose that regulations for the levy should provide for a review by an independent panel. The noble Baroness, Lady Donaghy, has raised concerns about costs, as have the noble Lord, Lord Oates, and my noble friend Lord Cormack. I understand the concern about how activities of the changed Certification Officer might result in costs for the unions. To demonstrate that my value-for-money and deregulatory heart is in the right place, I am ready to propose an alternative solution. This is not a matter for Third Reading because it concerns the way in which we exercise the power to make regulations on the levy, but I want to explain some of our thinking on that because I believe it will help to reassure noble Lords.
Specifically, we intend that the levy will recover only part of the costs for the Certification Officer. It is an important feature of Clause 18 that there must be consultation with organisations such as the TUC and ACAS before we make the regulations. This consultation will include detail about which expenses will be funded from the levy and which will be borne by the taxpayer. However, given the concerns that have been raised by a number of noble Lords, we will specifically propose excluding from recovery by the levy the cost of external inspectors. That would mean that trade unions would
not bear the full costs of their regulation at all, and specifically they would not bear the most variable element of the Certification Officer’s costs. This addresses concern about the cost to unions from the potential for third parties being vexatious. It changes the incentive structure and brings in the power of the Treasury to ensure that public money is handled in an effective way that achieves value for money.
The Bill also provides for regulations to set the minimum and maximum penalties according to the size of the organisation and the type of breach. I can say today that we will consult unions and relevant stakeholders on these proposals before making a final decision about how the power will be exercised.
There are now numerous safeguards around the Certification Officer. I will come back at Third Reading to ensure that the Certification Officer is free from ministerial direction. I have made a number of changes, which represent an improvement and which will make things better, and I invite the noble Lord not to move Amendment 31A.