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BRIEFING PAPER

Number 00593, 8 August 2013

Trade Union Political Funds and Levy

By Doug Pyper

Inside: 1. The current law and its

history 2. Political objects 3. Number and size of funds 4. Proposals for change 5. Guidance

Number 00593, 8 August 2013 2

Contents Summary 3

1. The current law and its history 4 1.1 Origins 4 1.2 Opting out 4 1.3 Opting in: Northern Ireland 4 1.4 Trade Union Act 1984 5 1.5 Political fund ballots 5

2. Political objects 7

3. Number and size of funds 8

4. Proposals for change 10 4.1 Labour Party proposals 10 4.2 Coalition Government policy 10 4.3 Review of the Funding of Political Parties 12 4.4 Labour Government review of the Employment Relations Act 1999 13 4.5 The Trade Unions (Political Funds) Reform Bill 2004 15

5. Guidance 19

Cover page image copyright: TUC Protest in London (Pre march photos) 18th October 2014 by Dean Thorpe. Licensed under CC BY 2.0 / image cropped.

3 Trade Union Political Funds and Levy

Summary Trade unions wishing to contribute to political parties or engage in other political activities must establish a political fund. Under legislation introduced in 1984, unions must ballot their members every ten years on the continuance of these funds. Individual union members in Great Britain can contract-out of paying the political levy. Those who remain contracted in cannot decide on the use of their individual contribution. The use of political funds (including whether to contribute to a political party) is a matter of union policy, subject to approval at the union’s annual conference.

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1. The current law and its history

1.1 Origins The legislation on trade union political funds is now contained in sections 71-96 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). It originated with the Trade Union Act 1913. The 1913 Act was passed to allow trade unions to maintain political funds in the wake of the House of Lords decision in Amalgamated Society of Railway Servants v. Osborne that such funds were unlawful under the Trade Union Act 1871.1 The 1913 Act required unions to ballot their members on the establishment of a political fund; to administer political funds separately from their general fund; and to allow members who did not want to contribute to the political fund to opt-out of the political levy. Those choosing to opt-out were not to be put at any disadvantage by the union.

1.2 Opting out This scheme operated unchanged for 70 years except that, as a result of the Trade Disputes and Trade Union Act 1927, union members had to opt-in rather than opt-out of the political levy between 1927 and 1946 (when the 1927 Act was repealed). The effect of opting-in was a substantial drop in contributions to political funds. Section 82 of TULRCA requires that trade union rules allow members to opt out of the levy and sections 84 - 88 lay down the procedure for ensuring that effect is given to requests to opt out.

1.3 Opting in: Northern Ireland In Northern Ireland trade union members must opt-in before they can become liable to pay the political levy.2 The reason for the divergence is historical and arose in 1958 when the Stormont Government chose to retain the Northern Ireland provisions on opting-in that had been enacted in 1927, notwithstanding the fact these provisions had been repealed in 1946 in Great Britain.3 The broad reason given for the retention was that the levy would go by default to the left wing parties. Mr Maginness, the Attorney General said:

We cannot bind ourselves to the political situation here where the majority of our trade union members support parties other than the Socialist Party, and there seems no good reason why the Socialist Party – which as far as I know is the sole recipient of such political funds – should be placed in any superior position to that of other parties.4

The opposition response by Mr Boyd of the Northern Ireland Labour Party was that this decision was wrong in principle:

1 1910 A.C. 87 2 For a summary of the legal position in Northern Ireland, see: NI Direct website, Trade

union political funds (accessed 07 August 2013) 3 See: section 4, Trade Disputes and Trade Union Act (Northern Ireland) 1927; Trade

Disputes and Trade Union Act (Northern Ireland) 1958 4 HC (Northern Ireland) Deb 18 November 1958 c651

5 Trade Union Political Funds and Levy

We feel that the decision is primarily one to nullify the decisions of British unions taken at national level. We certainly believe quite sincerely that this is party politics at its worst. For the sake of a small advantage the Unionist Party is prepared to have a dig at the Opposition and throw overboard the principle of parity.5

The law regarding political funding by trade unions in Northern Ireland is currently governed by the Trade Union and Labour Relations (Northern Ireland) Order 1995. At the time this was passed there was one debate in the House of Lords. The question of opting-in was not raised. The Order enables trade unions and unincorporated employers’ associations to establish separate funds in furtherance of political objects as part of their activities. Under the terms of the Order a resolution to adopt political objects must be passed by a ballot of the members. The Certification Officer is the statutory authority for approving the establishment and continuance of such funds.

1.4 Trade Union Act 1984 The Trade Union Act 1984, which was part of the Thatcherite reforms of trade union law, has come to be seen as a reduction in the scope of union power.6 The Act widened the definition of “political objects” so that unions which wanted to spend money on advertising campaigns designed to persuade people to vote for or against a political party (as well as those which actually wanted to contribute to a political party) had to establish political funds. It was introduced on the basis that unions needed to be more democratic and allow their individual membership more say in the process of electing leadership and decisions to take strike action. The opposing view saw this as an attack on the collective strength of the unions by attempting to drive a wedge between leaders and individual union members.7 The Act brought in the following:

• Part I required trade unions to ensure that all voting members of their executive committees were directly elected by secret ballots at least once every five years;

• Part II introduced secret pre-strike ballots. To protect its immunity, a trade union could only start industrial action if the action had been approved by a simple majority in a secret ballot held not more than four weeks before;

• Sections 12 and 13 introduced a requirement that political fund review ballots should be held at least once every 10 years to ensure that members wished their political funds to continue.

1.5 Political fund ballots As a result of the 1984 Act, a number of unions established political funds for the first time. For example, some public service unions which were not affiliated to the Labour Party felt they should establish political funds to campaign against cuts in public services. In the event, all 38

5 HC (Northern Ireland) Deb 19 November 1958 c733 6 House of Common Reference Sheet No. 83/16 which was prepared at the time the

Trade Union Bill was presented in 1983 provides further useful background. 7 Harvey on Industrial Relation and Employment Law, Issue 159, N[35]

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unions which had to conduct review ballots under the 1984 Act voted overwhelmingly in favour of retaining their political funds and virtually every union wanting to establish a fund for the first time received strong endorsement from its membership. The unions which balloted in 1985-6, following the 1984 Act, had to re-ballot in 1995-6. Of the 25 unions which had voted by February 1996, all voted by substantial majorities to retain their political funds.8 Details of the results of political fund ballots are published annually in the Certification Officer's Annual Report.

8 Labour Research, February 1996, "We will not be gagged"

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2. Political objects The law does not require a ballot on how the political fund is to be used, merely on the use of union funds for political, as opposed to industrial, purposes. Section 72 of TULRCA sets out the “political objects” which require a separate political levy:

(1) The political objects to which this Chapter applies are the

expenditure of money—

(a) on any contribution to the funds of, or on the payment of expenses incurred directly or indirectly by, a political party;

(b) on the provision of any service or property for use by or on behalf of any political party;

(c) in connection with the registration of electors, the

candidature of any person, the selection of any candidate or the holding of any ballot by the union in connection with any election to a political office;

(d) on the maintenance of any holder of a political office;

(e) on the holding of any conference or meeting by or on

behalf of a political party or of any other meeting the main purpose of which is the transaction of business in connection with a political party;

(f) on the production, publication or distribution of any

literature, document, film, sound recording or advertisement the main purpose of which is to persuade people to vote for a political party or candidate or to persuade them not to vote for a political party or candidate.

(2) Where a person attends a conference or meeting as delegate or

otherwise as a participator in the proceedings, any expenditure incurred in connection with his attendance as such shall, for the purposes of subsection (1)(e), be taken to be expenditure incurred on the holding of the conference or meeting.

(3) In determining for the purposes of subsection (1) whether a trade

union has incurred expenditure of a kind mentioned in that subsection, no account shall be taken of the ordinary administrative expenses of the union.

Although the Labour Party is the party that benefits most from trade union political funds, the funds can be used to contribute to any party and for general campaigns of a political nature. Affiliation to the Labour Party is a matter of union policy and, as such, requires approval by the union conference (although see below for current Labour Party proposals to change this).

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3. Number and size of funds The Certification Officer supervises political fund rules and ballots. The details of how funds are collected are contained in the constitutions and rule books of individual trade unions. There is no legal prescription about how money is collected only a requirement not to charge those members who have opted out and to hold 10 yearly ballots on the question of whether or not to have a fund at all. Membership contribution rates for individual unions often state the political fund as a separate amount charged at weekly or monthly rates. For example, the Unite Rule Book provides as follows:

The Executive Council shall give effect to the exemption of members to contribute to the political fund of the Union by relieving any members who are exempt from the payment of part of any periodical contributions required from the members of the Union towards the expenses of the Union as provided and such relief shall be given as far as possible to all members who are exempt on the occasion of the same periodical payment.

For the purposes of enabling each member of the Union to know as respects any such periodical contribution what portion, if any, of the sum payable by him/her is a contribution to the political fund of the Union, it is hereby provided that a sum equal to seventy percent of the weekly contribution rate of a full time member payable in the first week of each quarter is a contribution to the political fund and any member who is exempt shall be relieved from the payment of the said sum and shall pay the remainder of such contribution only.9

The Certification Officer's Annual Report contains detailed information on the political funds of trade unions. Chapter 7 gives general information about political funds and Appendix 9 provides a breakdown of the individual funds.10 The latest Annual Report (for 2012-2013) lists the 25 unions with political fund resolutions in force at 31 March 2013 and gives details of the number of levy-payers, the numbers contracted out and the size of the funds. This is summarised in Chapter 7:

Annual returns received during the period 1 April 2012 to 31 March 2013, show the total income of political funds as £21.91 million compared with £22.78 million reported in the 2011-2012 report, a decrease of 3.8%. The total expenditure from political funds was £17.79 million as compared with £26.47 million in the preceding year, a decrease of 32.8%. The returns received within the period also show that the total value of political funds during the reporting period was £18.73 million: up £4.13 million (28.2%) on the £14.61 million contained in the 2011-2012 Report.

....

Appendix 9 also gives membership information provided by those unions which maintained political funds as indicated from the latest annual returns. These returns show that the number of union members contributing to a political fund was 4,414,929 compared with 4,403,244 in the 2011-2012 report, an increase of 11,685 members or 0.3%.

9 Unite Rule Book, 2012, p53 10 Annual Report of the Certification Officer 2012-2013, 2013

9 Trade Union Political Funds and Levy

....

The annual returns recorded 1,331,224 members belonging to unions with a political fund who do not make a political fund contribution, either because they have claimed exemption or they belong to a category of membership which, under the rules of the union, does not contribute to the political fund.11

11 Ibid, p.35

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4. Proposals for change

4.1 Labour Party proposals On 9 July 2013 the Leader of the Labour Party, Ed Miliband, spoke about the political levy and Labour Party affiliation. Mr Miliband indicated support for retaining the opt-out arrangements as regards paying the levy, although suggested introducing a new system whereby individual levy payers elect whether to be affiliated with the Party:

Our relationship with individual Trade Union members needs to change. Trade Unions have political funds for all kinds of campaigns and activities as they choose. These funds are governed by law, passed in the 1980s, and there are arrangements where their members can opt-out from that fund if they do not want their money spent on political activities. Activities covering a whole range of campaigning issues. We do not need to change that law on the right of Trade Unions to have political funds.

But I do want to change the way individual Trade Unionists are affiliated to the Labour Party through these funds. At the moment, they are often affiliated automatically. I do not want any individual to be paying money to the Labour Party in affiliation fees unless they have deliberately chosen to do so. Individual Trade Union members should choose to join Labour through the affiliation fee, not be automatically affiliated. In the twenty-first century, it just doesn’t make sense for anyone to be affiliated to a political party unless they have chosen to do so.12

Unlike a change to the rules on opting-in/out of the political levy, which would require legislation, a change to Labour Party affiliation practices is a matter for Party policy. The trade union Unite, Labour’s largest financial backer, has indicated its support for this change, although would strongly oppose any change to the law on the political levy.13

4.2 Coalition Government policy The Coalition Agreement committed the Government to pursuing “a detailed agreement on limiting donations and reforming party funding in order to remove big money from party politics”.14 A statement by the Deputy Prime Minister, Nick Clegg, in September 2010 promised action on party funding.15 On 9 July 2013, the same day Mr Miliband proposed reforms to the Labour Party’s relationship with the trade unions, Mr Clegg, suggested that reform could be carried out by way of legislation:

12 One Nation politics - speech by Ed Miliband, 9 July 2013 13 ‘Union leader Len McCluskey backs Ed Miliband's reform plans’, The Guardian

[online], 24 July 2013 (accessed 7 August 2013); ‘Unite and Labour at a historic turning point, says McCluskey’, Unite press release, 24 July 2013; see also: ‘Labour-union link and Miliband's plans to reform it – Q&A’, The Guardian [online], 9 July 2013 (accessed 7 August 2013); ‘Unite and the Political Levy - why Ed Miliband's announcement matters’, Unite press release, 9 July 2013 (accessed 8 August 2013)

14 HM Government, The Coalition: our programme for government, May 2010, p.21 15 Speech at the Annual Meeting of the Committee on Standards in Public Life,

GOV.UK, 9 September 2010 (accessed 8 August 2013)

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If Labour Members want to turn their leader’s words today into action, we are prepared to work with them and use the forthcoming party funding Bill—[Interruption.] That is a serious suggestion and offer to turn the principle of an opt-in on the political levy into law, and indeed to give trade union members the right to support other parties, if that is what they wish. I hope Labour Members will take that opportunity, because it is time to turn words into actions.

....

the fact is that the issue in British politics today is how on earth it is possible that the Labour party—a so-called progressive party—is funded to the tune of £11 million by Unite, which hand-picks its parliamentary questions and its parliamentary candidates. That is why I repeat my sincere offer to use forthcoming legislation to turn the promises being made by his leader into action.

....

I do not think it healthy for the Labour party or, for that matter, the trade unions to have this dysfunctional relationship. I welcome what the leader of the Labour party is saying today and offer legislation on behalf of the coalition Government to turn his words into action.

....

I repeat what I said earlier: given that the Labour party finally seems to have had a change of heart over the way in which it organises its dysfunctional relationship with its financial backers, I hope that it will work with us to reflect that in law.16

This indicates that the Coalition Government supports amending the law to make the political levy opt-in, as opposed to opt-out. This is a separate proposal to (although often conflated with) Mr Miliband’s proposal to make affiliation (as distinct from the levy) opt-in.17 The Bill Mr Clegg appears to be referring to is the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Bill 2013-14, introduced into the House of Commons on 17 July 2013.

Conservative Party sources have for some time argued that the extent of trade union funding of the Labour Party leads them to expect access and influence, while the views of individual trade union members are not given due weight.18 For example in 2008, Francis Maude, then Shadow Lord Chancellor, responding to the previous government’s white paper on Party Finance and Expenditure in the United Kingdom, said:

Will the Justice Secretary agree that the discussions came very close to overall agreement, but foundered on the key issue of whether trade union donations should be subject to donation caps on the same basis as other donations? Will he now place in the Library the minutes and the background papers to the review, which will show that it was Labour’s refusal to allow further work on trade union funding that brought the talks to an end? Does he recall that he and Peter Watt—the then Labour general

16 HC Deb 9 July 2013 cc159-160 17 For an explanation of the distinction, see: ‘Unite and the Political Levy - why Ed

Miliband's announcement matters’, Unite press release, 9 July 2013 (accessed 8 August 2013)

18 See for example, Andrew Tyrie, Clean Politics, 2006, p.3

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secretary—refused point blank even to discuss giving trade union members the right to a real choice in whether to pay the political levy? [Interruption.] Well, does the Secretary of State remember the revelation that a Lib Dem MP received a ballot paper for Labour’s leadership contest, having unwittingly become a Labour party member through a trade union? Will he not acknowledge that when trade unions routinely declare that 100 per cent. of their members—and in two cases, more than 100 per cent.—are paying the political levy, the idea that these are voluntary individual donations to Labour are laughable, especially when polling shows that fewer than half of union members even vote Labour, let alone want to support it financially?19

4.3 Review of the Funding of Political Parties The Review of the Funding of Political Parties conducted by Sir Hayden Phillips failed to reach agreement during Inter-Party Talks, which were suspended on 30 October 2007. The draft agreement contained a proposal for a cap on donations, with specific provisions concerning trade union political funds:

Affiliation fees paid by trade unions will be treated for the purposes of the cap as individual donations of the members, provided the conditions at A7-A10 are all met.

The amounts paid by individuals into a union’s political fund as their contribution to the union’s affiliation fee, and the money paid by that union to a political party as its affiliation fee will be the same. This one-for-one link will be transparent and auditable.

The following information will be provided on all union membership application forms:

• an explanation of what the political fund is and the union’s affiliation to a political party;

• an explanation of how much individual members contribute to the political fund and towards the union’s affiliation fee;

• an explanation of the trade union member’s right at any time to stop contributing to the political fund and the union’s affiliation fee and clear information about how they can do this; and

• an explanation of the fact that if a member stops contributing, their membership subscription will be reduced accordingly.

Trade union members will be reminded annually of the amount they are contributing to the union’s affiliation fee and of their right to opt out of contributing to the political fund, including how they may do so.

The requirements of transparency and choice set out here will be overseen by the Certification Officer acting in concert with the Electoral Commission, which will have the power to order affiliation fees to be repaid if they are not compliant with the requirements.

Due to the increased transparency and choice for trade union members the ten-year review ballot on the existence of the political fund is no longer necessary and should be removed.20

19 HC Deb 16 June 2008 c693-4 20 Proposals for the funding of political parties, Draft agreement put to the

Conservative, Labour and Liberal

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4.4 Labour Government review of the Employment Relations Act 1999

There was some press speculation that the Labour Government, fearful that trade union members disillusioned with the Labour party might vote against the continuance of their political fund, was considering repealing the requirement for ten-yearly ballots.21 The TUC, in its submission to the Government’s review of the Employment Relations Act 1999, argued that the requirement imposes an unnecessary burden on trade unions, particularly as individuals have the right to opt out of the political levy.22 The Better Regulation Task Force supported this view:

Trade unions

It is often forgotten that trade unions are employers themselves, and businesses. As such they experience the same problems as other businesses of keeping up with employment law changes. The trade unions in particular commented that employment law seems to be developed piecemeal across Whitehall. The continual rate of change makes it very difficult for them to keep up – both as employers and when giving advice to their members.

The trade unions said that there is some employment legislation that applies just to them, and which is now outdated and which imposes unreasonable burdens on them. In particular, they cited legislation relating to union elections and ballots; union political funds; and the certification officer. The Task Force agreed that these regulations appear to impose undue burdens on trade unions, but that they are primarily concerned with governance of the trade unions. We have therefore not dealt with these issues in this report, but will raise them separately with the Secretary of State for Trade and Industry.23

The reasons for the previous government’s decision not to abolish the ballot can be found in the consultation document which was issued as part of the review of the 1999 Act:

Union political funds

The 1992 Act requires trade unions to hold a postal ballot of their entire membership to establish a political fund. Further, the law requires unions to hold review ballots at least every ten years thereafter to confirm whether union members still wish to devote union resources for expenditure on political objectives. Given the expense involved in running the review ballots and the existence of other legal safeguards against abuse, the BRTF asked whether it was still valid to require the union to hold review ballots.

The Government understands the case for reform. However, these ballots serve an important democratic function and ensure that union members can at regular intervals collectively authorise their union’s involvement in political activities. The Government will therefore retain the requirement on unions to hold review ballots at least every ten years.

Democrat parties by the Secretariat of the inter-party talks on the funding of political parties in August 2007, p.3

21 “Labour set to repeal law on union funding”, Independent, 31 August 2002 22 TUC, Modern Rights for Modern Workplaces, October 2002 23 Better Regulation Task Force, Employment Regulation - Striking a balance, May 2002

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The Government is aware that the law on political fund ballots (and on other statutory union ballots and elections) is complex. The Government considers these ballots and elections should remain covered by statutory provisions but it invites views on simplifying the burdens they impose.24

The Labour Government’s response to the consultation set out why it intended to retain the requirement to hold review ballots:

Union Political Funds

In the consultation document the Government indicated it would not pursue the BRTF’s proposal to repeal the law requiring unions with political funds to hold ballots at least every ten years to confirm continued support for their funds. The Government invited views on other ways to simplify the law on political fund ballots.

Responding unions, including the TUC, called for the repeal of the requirement to hold review ballots. BFAWU, CATU and ASLEF suggested they serve no democratic purpose and UCATT claimed the ballots produce apathy. Several unions suggested that review ballots should be held only when requested by a significant number of members. The T&G suggested the cost of the ballots be refunded.

Few organisations suggested other ways to ease the burden of political fund ballots. GMB described its ideas to revise the guidelines issued by the Certification Officer regarding union rules for the holding of political fund ballots. The EIS added that the requirement to include details of the union’s political fund in recruitment literature should be repealed. Prospect suggested the information required to be placed on the ballot papers is onerous and asked for simplification. Prospect also suggested that regulations on ‘opting out’ of paying the political levy should be harmonised between Great Britain and Northern Ireland. In Northern Ireland, union members are required to ‘opt in’ to contributing to a political fund, rather than contributing automatically and having the option to opt out.

The Government considers that the idea to have review ballots triggered by a certain number or proportion of union members would complicate the law rather than simplify it. In particular, this proposal would create problems:

- in setting the appropriate trigger level for unions of differing sizes;

- in establishing independent arrangements to verify the passing of trigger levels; and

- in making the trigger proposal a feasible option in geographically and industrially dispersed unions where individual members often do not know the identity of other members.

As the consultation has not presented a workable solution the Government considers that the existing requirement to hold review ballots should be retained.

State funding of these, and other statutory and non-statutory ballots, was available in the 1980s and early 1990s under the Trade Union Ballot Scheme. There may be a case to establish a similar scheme in today’s conditions to encourage higher

24 Department of Trade and Industry, Review of the Employment Relations Act 1999, February 2003, pp.99-100

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participation and the use of innovative balloting technologies. The Government will therefore keep this idea under review.25

An Early Day Motion in 2004 called for the abolition of political funds ballots:

That this House notes the recent ballot held by the Transport and General Workers Union in which 75 per cent. voted to keep the political fund; further notes that under legislation introduced by the Conservative government in 1984, trade unions wishing to contribute to political parties or engage in other political activities must establish a political fund; further notes that each union must ballot their members every 10 years on whether to retain this fund; recognises that all individual union members have the right to opt out of paying into a political fund should they so choose; is concerned that trade unions bear an excessive financial burden in order to fulfil their natural role of representing their members interest; and believes that in light of the Transport and General Workers' Union members recent overwhelming vote in favour of retaining the union's political fund that the Government should abolish the legislation that puts such excessive burdens on trade unions.26

4.5 The Trade Unions (Political Funds) Reform Bill 2004

A Private Members Bill was introduced on 15 June 2004 by John Mann MP.27 The Trade Unions (Political Funds) Reform Bill proposed that the requirement to hold a ballot every ten years on whether or not to maintain a political fund should be limited to a total of three consecutive ballots. The Bill failed to make progress.

John Mann set out the arguments for the Bill as follows:

Trade unions have been involved in political activity since their creation and, for the past century, have faced regulation on how to operate politically through a requirement for a separate political fund, unlike companies and wealthy individuals. The genesis of that relates to an example that involves the Leeds Labour party, which was established in 1901. A member of my family, who was a shop steward in an engineering works, was one of the founding members. His employer told him that it was perfectly acceptable for him to be involved industrially as a union shop steward, but that if he chose to join the new Labour party he would neither be promoted nor have security of employment. By the time political funds were introduced, he had spent three years unable to work in any engineering company in Leeds solely because of the decision to be involved politically. Those who wished power in this country to be weighted heavily and indiscriminately in favour of a specific set of people knew exactly what they were doing.

The development of political funds enabled Members of Parliament, who were initially unpaid, to be put forward, elected and live while they were Members. The 1933 Hastings agreement legitimised the process by creating a system of sponsorship. As

25 Review of the Employment Relations Act 1999: Government Response to the Public Consultation, December 2003, pp.66-67

26 No. 857 of 17 March 2004 27 HC Deb 15 June 2004 cc645 - 648

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Members of Parliament began to be paid a living wage, union support became entirely electoral.

In 1984, the unions were picked out for special attention. That was nothing to do with individual rights because contracting out from the political fund was always possible and in some unions, especially white collar unions, it was common. The Tories hoped to cut off Labour's source of income, leaving them with their wealthy backers. They underestimated trade unionists. Ballot after ballot in 1984–85 and in 1994–95 reaffirmed the right to a political fund by huge majorities in every Labour-affiliated union.

Since then, the Nolan and the Neill committees were set up and the sleaze of Tory money began to be regulated. Cash for questions and nights in the Ritz hotel led to demands for action on transparency. We now have a parliamentary and a legal framework for political donations. That is right and proper but it creates an anomaly.

Union money has always been transparent. It is published and accountable. Now it is doubly transparent and accountable due to political party and MP requirements to declare any donations. Why, on top of that, should there be a red-tape burden of bureaucracy and regulation, forcing the waste of unnecessary regulation and expense on the unions? In recent months, Amicus, the print union, the Transport and General Workers Union and others have won ballots by huge majorities. Even the fence sitters must accept that the transparency laws work. Why one law for the rich individual, for company donations and for the Wheelers and the Ecclestones, but two for the unions?

My Bill provides that enough is enough: three times and you are out. I cannot imagine a more modest proposal. Once three ballots have succeeded, let us cut back the unnecessary red tape and burden of regulation. Let us have one rule for all. I commend the Bill to the House.28

Jonathan Djanogly set out the opposition to the Bill as follows:

So what are the unions saying about the proposal of the hon. Member for Bassetlaw (John Mann)? [Hon. Members: "They like it."] Oh, they do like it; indeed they do. According to the trade union co-ordinating committee, there has so far been no evidence of union members wanting to lose their political funds. In the 1980s, 83 per cent. of them voted yes; in the 1990s, the yes vote was 82 per cent. Currently, 35 unions representing 4.5 million members have political funds. Many of them have recently had, or are soon due to have, ballots.

In April 2003, the communications union Connect voted by 81 per cent. to 19 per cent. to keep its fund, in a turnout of 38 per cent. Also in 2003, Amicus voted to retain its fund, with a yes vote of 71 per cent. At the TUC conference in September 2003, 20 unions joined up to launch the trade union co-ordinating committee, combining their resources in fighting political fund ballots. The TUC argument is that the unions are happy with the political funds and that we should leave them to get on with it, on the assumption that, despite there regularly being turnouts of less than 50 per cent. in these ballots, most union members who have voted have supported continued political activity when asked.

I would suggest, however, that that argument is deeply flawed for three reasons. First, it has been shown that many union members

28 HC Deb 15 June 2004 cc645 - 646

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want to vote on whether their union gets involved in political campaigning. Only this year, an attempt by some members of the National Union of Journalists to set up a political fund was voted down in a secret ballot, with 53 per cent. of the vote going against the proposal. It has been suggested that that would have been enough to head off a schism, because several high-profile members had threatened to resign if the fund were instituted.

Union members, including the former NUJ president, now the Minister for Europe, the hon. Member for Rotherham (Mr. MacShane) and media figures such as Jon Snow and Jeremy Paxman had all expressed concern that the fund would prejudice the union's proud political independence. The NUJ had argued that all money in the fund would be used to finance campaigning on behalf of NUJ members, and not to support political parties. That proposal was defeated.

The second reason is that, under legislation introduced by this Labour Government, companies now need to approve political donations. Not only that, but they need to ballot their members on the matter annually rather than once a decade. So, I would suggest that, rather than making things easier for the unions by cancelling their once-in-a-decade vote, we need to equalise the position with companies by making unions vote on their political donations annually, as companies currently have to.

The third reason is the changing nature of political funding in this country. As we saw in the Employment Relations Bill, which is now making its way through the other place, the Government are proposing to set up a so-called modernisation fund involving an uncapped amount of money. The Government say that it could be up to £10 million, but it could be three or four times that amount because the Bill currently makes no provision in that regard, although I hope that it will do. That money will be given to unions for so-called modernisation proposals—things that I would have thought their membership subscriptions should be paying for anyway. Even if those funds are not going to be used for political activity, they will certainly leave the unions with more money that could be used in that way. Again, therefore, given the way in which the Government propose to change the law, it is even more important that union members have the right to say how unions should be able to spend their money in terms of politics.

We should also note the changing nature of the Labour party's funding. It has a collapsing membership, its base of new Labour entrepreneurs is rapidly disappearing, and it is becoming increasingly dependent on trade union funding, which, I believe, was some £6.5 million last year. The Labour party is not becoming less dependent on union funding, but a lot more dependent on it. In fact, it is becoming almost totally dependent on trade union funding. I do not see that as a reason for getting rid of union members' ability to vote on political funding but as a reason for giving them more rights as to how their union funds are spent.

As Labour becomes more reliant on such funding, the hon. Member for Bassetlaw asks for less answerability and more opaqueness, when there should be more accountability, more openness and annual debates, as companies must now have. The Employment Relations Bill ratchets up union rights significantly. This would be another attempt to ratchet up those rights even further, but this time to the detriment of union members, who

Number 00593, 8 August 2013 18

should be given more rights to decide on their funds, not less, as proposed by this Bill, which I oppose. 29

29 HC Deb 15 June 2004 cc646 - 648

19 Trade Union Political Funds and Levy

5. Guidance The Department for Business, Innovation and Skills has published guidance on trade union political funds, available here.30 The Certification Officer has also published guidance for trade unions and employers’ associations wishing to set up political funds, available here.31

30 BIS, Trade Union Political Funds - A guide for trade unions, their members and others, 2010

31 Certification Officer, Political Funds - A guidance for trade unions and employers’ associations wishing to establish a political fund, September 2012

BRIEFING PAPER Number 00593, 8 August 2013

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