My Lords, the amendment has a great deal to do with enterprise. Perhaps I may begin with an anecdote. A British company recently wanted to take over a Swedish company, and when the MD went to Gothenburg there was a meeting over lunch with the works council. The workers’ chief representative on this body asked him the following question: “Mr Struthers, if you take over this company, do you think it will help us to increase our world market share?”. Mr Struthers reported when he got home that he had been flabbergasted; no such question had ever been put to him in such circumstances in a lifetime of working in British industry and commerce.
We in this country have reached a crisis of non-representation of employees in most of British industry and commerce. I am talking here about a lack not of co-determination, as in Holland, Germany and Scandinavia—we will no doubt have time to talk about that next month—but of the most rudimentary processes for meaningful information and consultation, IC, with the workforce generally. By that I mean, as the rubric on the IC default mechanism states,
“consultation with a view to reaching agreement”.
According to the ACAS Workplace Employment Relations Survey, WERS, the proportion of firms or enterprises with no joint consultative committee at any level increased from 65% in 2004 to 76% in 2011.
The conclusion is that the CBI pays lip service to this principle only on odd days of the week. Local team briefings and so forth are the most that is generally provided; and the research shows that the local manager often knows as little about what is happening in the company as a whole as the workers on the shop floor—and he or she is certainly in no position to engage in authoritative consultation about such questions as restructuring, which could lead, for example, to collective redundancies that are simply handed down as a fait accompli, thereby shutting the proverbial stable door.
This is the American business model of accountability exclusively to the shareholders—one might say to the share price—side by side, in case I overlook it, with rocketing increases in inequality of pay from top to bottom, with contempt for any notion that the enterprise is “one happy family”, as used to be said, or even that, “we are all in this together”.
Years ago, there used to be interest in these matters in the Department of Employment and Productivity, but now we have an ideology in the Department of Business, Innovation and Skills—I should make it clear that I am not suggesting that it is open to individual civil servants to change that ideology—that is totally orientated to the notion not only that should we remove the concept of two sides of industry but that one side of it is now without a voice or role in any sort of decision-making. Therefore, in practice, BIS does as little as possible to make progress on joint consultation. Indeed, it puts huge resources, side by side with the CBI, into killing off any real advance, particularly if it arises from EU legislation. All this is in the supposed interests of a competitive economy. What a blinkered view it is that is reflected in this ideology on what makes a modern competitive enterprise.
One model is of autocracy, with the interests of the few far outvoting the interests of the many. This ideology is more or less universal in BIS, with the notable exception of the Secretary of State Vince Cable, who, in the light of the current debate on the scandals in top remuneration and tax avoidance, has described the IC regulations as “a potentially powerful mechanism” that,
“has been underutilised to date”.
Let me therefore try to do Mr Cable a favour, otherwise he will have to await the return of a Labour Government in two years’ time. In that broader context, it is now clear Labour Party policy, to give one instance, that there will be worker representation on the remuneration committees of boards. You do not need to be Einstein to figure out that for that to be meaningful it is necessary for there to be a substructure for two-way communication.
One reason why the debate has got stuck is the ideology of what is called, “the British voluntary system of industrial relations”. It is true that the so-called voluntary system meant that it was not laid down by the state. However, that did not mean that there was no general system. On the contrary, it was a very substantial system, both through collective bargaining and other types of collective representation, depending on the subject, on such matters as are identified in the
default list in the IC regulations. The fashionable point being made is, “Well, what have the unions been doing about it?”. Let me be very frank and ask the Minister a direct question. Is he aware that so far as triggering the IC regulations are concerned, to which I shall refer in more detail in a moment, in the vast majority of cases union representatives cannot even get through the gate, never mind to the canteen at lunchtime? Some senior figures in the central arbitration committee have even been heard to say that this is the intention—that is, that this is a “non-union” channel, meaning that union reps should not set foot in the place unless they are recognised. Unions are therefore damned if they do, and damned if they do not.
6 pm
Research by Professors John Purcell and Mark Hall from Warwick Business School is particularly telling. If one wants effective consultation of employees as a group, documentation and pre-meetings of the employed representatives must be organised. For the CBI to imply that one is needed, but not the other, is illogical, to say the least. The CBI is in danger of grossly overplaying its hand, as it deemed the TUC to have done some 30 years ago. It is now the best part of 10 years since the TUC and the CBI were asked by the Labour Government to try to reach some agreed formula for the implementation—or transposition, in the jargon—of the regulations in this country. Experience has shown that that policy formula does not work. I doubt that the TUC or the CBI would contest that statement. The need now, at the minimum, is to provide that firms above a certain size should have a consultative body with a serious purpose. I strongly contest the notion that this obligation can ever be met by unilateral management e-mails, which are patently not the same thing at all.
Our UK regulations at present require 10% of the employees to sign a request for the body to be established. This is often referred to as the trigger. However, this entails a Catch-22 of classic proportions. The very people who might be able to help with the logistics of getting this off the ground are not allowed through the door. We know anecdotally that the whole process is an obstacle course which may have a stooge body at its end. For the individuals concerned, at a personal level there are certainly strong discouragements. These are people who, with no benefit to themselves, stick their head above the parapet for a proposition which is ridiculed by management and is very complicated to explain, out of the blue, to the average worker.
What is the immediate priority? It is to remove the trigger gradually from large companies, starting with 1,000 or more employees in 2014; 500 in 2015; and 250 or more in 2016. Removing the trigger whereby one has to gather 10% of employees’ signatures would remove the likelihood that it would be left to the employer to organise the employees. These numbers would within a couple of years take us to about half the private sector of the economy. The Office for National Statistics defines the other half of the economy—below 250 employees—as small and medium enterprises. Above that level, we have half the value added in the private sector and approaching half the employed. There are only some 6,500 firms involved in
this group—the bigger firms—out of 9 million firms in the country as a whole, but they constitute half of the private sector of the economy, employing some 10 million workers.
Finally, for the avoidance of any doubt whatever, I want to be very clear that a trigger of a smaller number—for example, 5%—would be no more satisfactory than 10%. No: the system is broke, caput, dead duck. For the larger companies it simply encourages them to make mischief; removing it would be the first step in putting some substance into what is currently an empty shell.
This reform is pellucidly in the national interest. It would, over time, materially widen the scope and horizons of many millions of workers who at present are in no way recognised as being more than a cog in the wheel of industry and commerce. It will, in 10 or 20 years’ time, be seen as an absurdity that we so undervalued our fellow citizens that their citizenship had to be left outside the door of their workplace. This is not the 19th century; it is the 21st. This is a reform whose time has come.