My Lords, the Minister’s justification for the levy is that it is entirely normal for a regulator to be paid for by those whose businesses are subjected to regulation. That argument is untenable for at least five reasons.
First, the CO is not a regulator in the same way that others are. She has an administrative role to list trade unions and employers’ associations but her principal
function is judicial, regulated exclusively by the Trade Union and Labour Relations (Consolidation) Act 1992. It is confined to the following matters: elections; disciplinary proceedings; balloting, other than for industrial action; the constitution and proceedings of the executive; elections for president, general-secretary and executive committee; political funds; amalgamations; transfers and engagements; accounting records; and annual returns. All these are purely matters of internal trade union affairs. The Secretary of State has the power to specify other matters by order but has not done so.
In relation to these issues, the CO acts judicially. If she receives an application from a member against the union which manifests a prima facie case, the CO conducts a formal hearing. Both parties take their turns—often through counsel—to present their evidence, cross-examine witnesses and make legal submissions. The CO then hands down a decision and may make a declaration if she finds a breach.
Appeals lie from the CO to the Employment Appeal Tribunal, which is of course a division of the High Court presided over by a High Court judge. There are few regulators with such judicial functions and where the governing legislation has specified a direct route of appeal to the High Court. However, one such is the employment tribunal, from which there is the identical route of appeal to the EAT. Noble Lords will recall that the Government legislated to impose fees on employment tribunal claimants but the Supreme Court, in the Unison case, held that that was unlawful; the Government consequently withdrew the fees regime. However, what is significant in this debate is that the Government have never suggested a levy on employers to pay for employment tribunals. It is not surprising therefore that trade unions point to the fundamental injustice of them paying a levy to meet judicial costs under the legislation which applies to them when the costs of adjudication under the legislation which applies to employers is met by taxpayers.
The second point is that the justification for the imposition of virtually every regulator is the need to protect the public. That does not apply to the CO. The primary purpose of bodies such as the CO and the employment tribunal is not to protect the public but to adjudicate in disputes between specified classes of claimants and respondents. In the case of tribunals, this is between workers and employers, and in the case of the CO between unions and members. The jurisdiction of each is limited to the statutorily specified subject matters. That is why members of the public cannot complain to the employment tribunal or to the CO that a friend of theirs has been unfairly dismissed by an employer or unfairly disciplined by a union.
Therefore, the CO is not there to protect the public from breaches of the relevant rules but to give trade union members, and only trade union members, an avenue of judicial complaint. It is true that the Government have now extended the remit of the CO to investigate matters on her own initiative, even where no member has complained, but the scope of her jurisdiction is still confined to the specific items I have listed. An infraction by a trade union in any of those matters will not impinge on members of the public
and neither will any member of the public have the right to bring proceedings before the CO about it. So the public interest argument is simply without merit.
This is important, for although unions are complaining that newspapers and political parties hostile to them will rush to make complaints to the CO, such complainants cannot make a formal application and, if she thinks there is any merit in an informal complaint, the CO will be called upon herself to act as investigator, prosecutor and judge. That is not a position she is likely to enjoy, I imagine. Indeed, I doubt that she will welcome the extra workload of investigating allegations from unaffected outsiders about the internal workings of a union where no member feels sufficiently aggrieved to make a formal application to her.
My third point, which has already been dealt with by my noble friends Lord Bassam and Lord Monks, is that where regulators are funded by a levy, they are invariably conducting a business for profit, or at least earning a living from the regulated activity. That does not apply to trade unions, which make no money from the regulated activities.
That leads to the fourth point, which is that where a regulator is funded by a levy, those who must pay it are able to deduct the cost of their levy from the tax they pay on their profits. Trade unions cannot do that. Their income is derived, as has been said, almost exclusively from members’ subscriptions and goes to offset their running costs. They have no profits to tax. They do not have a tax bill against which to claim their levy.
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The fifth and final point—there is a lot more which could be said—is that this is utterly unwarranted. My noble friends have already suggested how rare these cases are, but let me contrast the CO’s jurisdiction with that of the employment tribunal. There are 32 million workers in the UK. Last year, some 118,000 complaints were made against employers in employment tribunals. That is a rate of four in 1,000—one in 250. In comparison, there are 6.56 million trade union members in 141 trade unions. Last year, the CO received 14 applications—which, it is true, contained a number of complaints. The year before that, she received seven applications, and in the preceding year, 15 applications. Last year, there were 14 applications against 11 unions—I include applications which were dismissed as having no merit. This level of applications in proportion to the number of trade union members is infinitesimally small—two in a million. It should also be noted how few unions receive a complaint, yet all are to pay for the levy except for the smallest.
This legislation is unfair, unnecessary and speaks only to the Government’s malevolence towards trade unions, which they regard as distorting the labour market and preventing wages being driven down to the lowest level that workers will tolerate. I support the amendment.