Controversy over union modernisation fund

In February 2004, the UK government tabled an amendment to the Employment Relations Bill to enable the establishment of a new funding scheme to assist trade unions to modernise their operations. The move has been strongly attacked by employers and by opposition members of Parliament.

On 10 February 2004, Gerry Sutcliffe, employment relations minister at the Department of Trade and Industry, tabled an amendment to the Employment Relations Bill (UK0312104F) which would enable the government to make funds available to trade unions to modernise their operations.

According to a written ministerial statement issued the same day, ministers envisage that the size of the fund would be in the region of GBP 5 million-GBP 10 million in total, with expenditure spread over a number of years, probably beginning in 2005-6. The funding scheme would be used to support 'innovative projects' in areas such as:

  • 'training union representatives (for example in the area of business and people management) in order to help promote the development of high performance workplaces';
  • 'reviewing internal union structures and organisation and to support more efficient management systems within unions';
  • 'enabling unions to broaden their dialogue with members by greater use of the internet and other new technologies and to develop innovative and user-friendly voting mechanisms'; and
  • 'making union systems more accessible to young people and other under-represented groups within unions'.

The minister said that the case for establishing such a fund is 'compelling', and that: 'Unions - just like businesses - need targeted support to speed their adaptation to changing labour market trends and to new ways of working.' He emphasised that the fund 'will not be used to support the day-to-day work of unions', and 'will not impact directly on collective bargaining'. The new clause refers to the fund being used for improving the carrying out of existing union functions, preparing to carry out new functions, increasing the range of services it offers to members, preparing for union mergers and balloting its members.

On 26 February, MPs debated the creation of the union modernisation fund both in the standing committee giving detailed consideration to the Bill and on the floor of the House of Commons. In committee, the new clause was approved by nine votes to four. The Commons as a whole approved a 'money resolution' concerning the new fund by 261 to 123 votes.

However, the proposed fund was strongly criticised by Conservative and Liberal Democrat MPs as being politically motivated and open to abuse. One MP called the fund 'a bung to the trade unions', many of which are affiliated to the governing Labour Party. Others argued that they were being asked to vote in favour of financing such a scheme without seeing the detailed criteria and procedures for its operation.

The same day, the Confederation of British Industry (CBI) announced that it was seeking 'regulatory safeguards' on the use of the union modernisation fund. It urged ministers to ensure that the fund will not subsidise trade union 'inefficiency', recruitment and 'campaigns against employers including strikes'.

Digby Jones, the CBI director-general, said that clear rules were needed on 'exactly how this money will be spent, what has been achieved and how the outcomes will be audited. Ministers must close down any chance of taxpayers’ money being abused by unscrupulous unions. If they do not, they should not be surprised to find people from all walks of life questioning this proposal and its justification.'

Further criticism of the move is expected from opposition MPs at the Bill’s report stage in the House of Commons, due shortly.

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