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Labour and the Trade Unions

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Labour and the Trade Unions Centre forPolicyStudies THE THE AUTHORS Jonathan Djanogly has been MP for Huntingdon since 2001. He is a qualified solicitor and is currently Shadow Solicitor General and Shadow Minister for Business, Enterprise and Regulatory Reform. Alan Duncan has been MP for Rutland and Melton since 1992. He is currently Shadow Secretary of State for Business, Enterprise and Regulatory Reform. The aim of the Centre for Policy Studies is to develop and promote policies that provide freedom and encouragement for individuals to pursue the aspirations they have for themselves and their families, within the security and obligations of a stable and law- abiding nation. The views expressed in our publications are, however, the sole responsibility of the authors. Contributions are chosen for their value in informing public debate and should not be taken as representing a corporate view of the CPS or of its Directors. The CPS values its independence and does not carry on activities with the intention of affecting public support for any registered political party or for candidates at election, or to influence voters in a referendum. Centre for Policy Studies, November 2007 ISBN No: 978-1-905389-64-3 Centre for Policy Studies 57 Tufton Street, London SW1P 3QL Tel: 020 7222 4488 Fax: 020 7222 4388 e-mail: [email protected] website: www.cps.org.uk Printed by The Centre for Policy Studies, 57 Tufton Street, London SW1P 3QL CONTENTS SUMMARY AND RECOMMENDATIONS 1. TRADE UNION DONATIONS TO THE LABOUR PARTY 1 2. STRENGTHENING THE TRADE UNIONS 6 3. CONCLUSION 14 APPENDIX 1 TRADE UNION DATA APPENDIX 2 METHODOLOGY FOR CALCULATING TRADE UNION DONATIONS APPENDIX 3 LIST OF EMPLOYMENT LEGISLATION SINCE 1997 SUMMARY The Labour Government has, since 1997, made much of its “business- friendly” credentials. However, study of its employment legislation and its relaxation of Trade Union regulation shows that, in reality, employers have been faced with significant extra burdens and that the rights enjoyed by Trade Unions have been greatly strengthened. Since 1997 the Labour Government has introduced 18 Acts and over 280 Statutory Instruments that deal directly with employment. Despite business representatives increasingly speaking out against the growing burden of regulation and the resulting erosion of Britain's competitive advantage, the process is now accelerating. Trade Unions and Labour MPs are calling for more employment protection and more rights for Trade Unions. A further Employment Bill is being prepared for 2007-08. Trade Unions have benefited significantly from the policies of the Labour Government since 1997. The Working Time Directive, the Warwick agreement, the Employment Relations Act and the Legal Services Act are all examples of legislation which has been favourable to the Trade Unions. Over the same period, the Trade Unions have been generous donors to the Labour Party. In 2006, Labour received donations of £11.8 million. Of these, £8.6 million, or 73% came from the Trade Unions. Since the beginning of 2001, when parties were first required to declare donations, the Unions have given £55.5million to the Labour Party, two thirds of all the donations to Labour. Most trade unionists are not Labour voters: the 2005 British Election Study reveals the majority of trade unionists (54.3%) voted for Parties other than Labour. Although the law states that ‘political donations’ are to be voluntary, and that union members who do not subscribe to them should not be disadvantaged, the majority of Trade Unions do not inform their members of their legal right to opt out on membership application forms. Companies face strict regulatory provisions in relation to political donations. Trade Unions do not. There seems to be little justification for this anomaly. The Government has also attempted to exempt Trade Unions from regulatory regimes aimed at protecting the consumer. SUMMARY OF RECOMMENDATIONS The following recommendations would mean that political donations made by Trade Unions would be subject to similar levels of transparency and democracy as apply to companies and individuals. Unions’ members should vote annually on maintaining a political fund. A Union’s members should be required to vote on the level of the political levy annually. The political fund opt-out right should be clearly stated on Trade Union membership application forms or a specific opt-in introduced. The opt-out right should be offered annually to each union member. Union members who do wish to contribute to the political fund should be able to decide either directly as individuals or collectively via a members’ vote to which party/parties/causes their funds should be put. The accounting reporting requirements of Unions should be reviewed – particularly with a view towards improving transparency. In addition, the following proposals would ensure that the transparency and accountability of Trade Unions was improved: The Employment Relations Act 2004 Modernisation Fund should be abolished. There should be a review of regulatory exemptions for unions, including regulation in the provision of legal services. There should be an inquiry into the Unions’ participation in the miners’ compensation claim fiasco. There should be a review of the role and governance of the Certification Officer. There should be a review of the relationship between the Certification Officer and the Electoral Commission, both as regards the monitoring of Union elections and the registration of political donations. CHAPTER ONE TRADE UNION DONATIONS TO THE LABOUR PARTY The Trade Unions have donated over £55 million to the Labour Party since 2001, a figure which represents 65% of the Party’s total income from donations. Not all Trade Unions with political funds affiliate to a political party; but those that do affiliate to the Labour Party. They are charged a fee to affiliate. Trade Unions also affiliate to other bodies, such as the National Pensioners’ Convention and Amnesty International, some of which will also be paid for from the Trade Union’s political fund. DONATIONS BY TRADE UNIONS TO THE LABOUR PARTY Some Trade Unions have given donations to parties other than the Labour Party, but the majority of donations are made to the Labour Party. Sixteen Trade Unions affiliate to the Labour Party out of the 29 who have political funds, although these figures are subject to change due to union mergers.1 The 1 See Appendix 9 of the Official Report of the Certification Officer 2006/07 for details of affiliated Trade Unions and Appendix 1 for details of donations to the Labour Party made by individual Trade Unions. 1 table below, based on data collated by the Electoral Commission, shows the percentage of donations the Labour Party has received from Trade Unions.2 DONATIONS TO THE LABOUR PARTY Year Total cash Cash donations from Trade Percentage cash donations to Unions (including affiliation donations from Trade the Labour fees) to Labour Party Unions Party (£ million) (£ million) (%) 2001 12.0 9.7 81 2002 11.0 6.7 61 2003 14.7 8.0 54 2004 15.1 10.7 71 2005 20.6 11.8 57 2006 11.8 8.6 73 Total 85.2 55.5 65.1% Notes 1 Reporting requirements came in part way through 2001, so the data for that year are not comparable with following years. 2 The table only covers cash donations as defined by the Electoral Commission. Trade Unions also made significant other non-cash donations to the Labour Party. The value of these non- cash donations is not included in the above table. See Appendix 2 for detailed methodology. 3 Donations only form part of the total income of the Labour Party. The above data do not therefore include sources of income such as, for example, membership fees, fundraising income, commercial income or government grants. Nor do they include loans made on “friendly terms” to the Labour Party. Most trade unionists are not Labour voters: analysis of the British Election Study 2005 indicates that only 45.7% of Trade Union members voted Labour in 2005, compared with 19.0% for the Conservatives and 22.1% for the Liberal Democrats. Most trade unionists are not Labour voters: the House of Commons Library analysis of the British Election Study 2005 indicates that only 45.7% of Trade Union members voted Labour in 2005, 19.0% Conservative, 22.1% Liberal Democrat and 13.2% other parties (mainly SNP and Plaid Cymru, 4.3% and 4.2% respectively).3 However, the bulk of these individuals are not given the right to pay reduced subscription fees as a result of opting out of such a donation to the Labour Party. Nor can they choose to donate this money to an alternative political party. 2 See Appendix 2 for full details of the methodology of extracting the data from the Electoral Commission website. 3 University of Essex, British Election Study 2005, 2006. 2 THE POLITICAL FUNDS Legislation introduced in the 1980s and early 1990s was intended to make sure that the process by which Trade Unions made political donations were transparent; and that individual trade unionists should have the right to withhold their political donation should they so wish. In practice, however, the rights of individual Trade Union members are not being respected as fairly as they might be. Equally, the transparency and accountability of Trade Union donations needs to be improved at least to the same level as that which has been imposed on political donations made by companies. A Trade Union that wishes to spend money on party political activities must set up a separate political fund for financing any such expenditure. Trade Unions must comply with specific statutory requirements in setting up and running such funds and union members have rights in relation to the requirements. For example, no member is obliged to contribute to a Trade Union's political fund.
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