Written evidence from The Trades Union Congress (PGG13)

The Public Administration and Constitutional Affairs Committee

Propriety of governance in light of Greensill inquiry

1. Introduction

1.1 The Trades Union Congress (TUC) exists to make the working world a better place for everyone. We bring together more than 5.5 million working people who make up our 48 member unions. Trade unions' day-to-day work is bargaining for higher wages and fairer conditions in workplaces, and representing individual trade union members. We use the insight from our industrial work to campaign for policy changes that benefit all working people and input into emerging government policy. During the pandemic, for example, the TUC has met government ministers across HM Treasury, Beis, DWP and the Cabinet Office frequently, and we were thanked by the Chancellor for our input as he announced the Job Retention Scheme.   

1.2 We welcome this inquiry into propriety in government in the wake of the Greensill scandal. The TUC believes that effective governance is vital to a democratic system in which working people can have a clear voice and have their concerns taken seriously by government and decision makers. We share the widespread concern that those with money and power in our society can too easily buy influence and access to ministers, special advisers and officials, while the voice of ordinary citizens, whether as workers, consumers or simply as members of society, can be overlooked.

1.3 We will concentrate on two issues in our answer: transparency in lobbying, and transparency in public procurement.

2. Transparency in lobbying

2.1 It is right that ministers and senior officials meet a wide range of people and consider all relevant views and interests before taking important decisions.

2.2 The TUC believes that there is deep inequality of access to decisionmakers. Former politicians, former civil servants and professional lobbyists (whether in-house or consultant) may achieve superior access to decision-makers, whether ministers or senior officials, because of their connections and contacts.

2.3 We think the key way to solve these problems is to shift the core expectation of transparency from lobbyists onto those being lobbied. All lobbying efforts are directed at decision-makers, and they are therefore in the best position to report on the activities of those seeking influence.

2.4 The following actions would support this:

-          Ministers, special advisors and senior civil servants (above director-general level) should publish their diaries in a comprehensive and timely fashion, with meaningful penalties for non-publication. This requirement should be extended to contacts (for example, phone calls or significant unscheduled conversations) as well as meetings, and to social and personal contacts and meetings as well as official contacts and meetings.

-          Freedom of Information rights should be strengthened and reinforced. Currently, requests are routinely delayed or obfuscated. The Information Commissioner should be independent of ministers, and given the resources to do their job adequately. Alongside this, the FOI Act should be extended to cover private and social contacts.

-          The FOI Act should also be extended to cover all those delivering public services on behalf of the state, not just public sector providers.

-          Penalties for non-compliance with FOI requirements should be strengthened. The Committee could consider whether there are more effective penalties that could be applied for failing to meet FOI and transparency requirements, such as suspension, dismissal or barring from public office.

2.5 The TUC supports more openness and transparency about the operation of lobbyists, and supported the introduction of a register of consultant lobbyists in the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014 (the Lobbying Act).

2.6 However, we believe the 2014 Act is insufficient. The information provided by those registering is too light-touch to provide meaningful transparency – for example, it only regulates contact with ministers and permanent secretaries, excluding, for example, special advisors and senior civil servants. The transparency requirements require less disclosure than many lobbying companies already provided voluntarily before the register came into being.

2.7 The TUC also believes that the boundaries of “consultant lobbyist” were too tightly drawn in 2014, leaving out significant lobbying activity. As the TUC predicted ahead of the 2014 Act, a significant group of lobbyists who operate in a similar fashion to consultant lobbyists remain unregulated – namely think tanks and campaign organisations who seek to influence the public policy agenda but are not registered charities. These groups are not required to register as consultant lobbyists, but are able to lobby on behalf of donors and in pursuit of their interests without revealing the sources of their income and information about their governance and activities.

2.8 The TUC would suggest that non-charity campaign groups should be required to publish their accounts, alongside details of any donors making significant contributions. The minimum size of donation to be declared on the register should be linked to the disclosure requirements for donations to political parties, and donations to groups covered by the register from companies should be subject to the same regulations that currently apply to company party political donations.

2.9 A further gap in the register of consultant lobbyists is that the activities of in-house lobbyists for corporate interests are not required to be disclosed, as has been made clear by the Greensill affair. In principle we support the extension of the lobbying register to those who lobby on behalf of their direct employer, where that employer is a company of any size.

2.10 The TUC does not support the inclusion of unions in a register of lobbyists.

2.11 Trade unions are democratic and highly-regulated membership organisations which are funded through voluntary contributions. We are advocates for the working people of the UK and their families, and contribute expertise to the public policy debate across the range of economic and workplace issues. Our role is fundamentally different to the operations of lobbyists, whether in-house or consultant, who seek to win contracts and legal changes to benefit their corporate clients’ shareholders. It would be unjust if a lobbying scandal borne of privileged political access for private corporations in pursuit of profit were to result in yet more restrictions and requirements on democratic unions which exist not for profit but rather to represent the everyday concerns of working people.

2.12 Unions are already some of the most regulated organisations in UK society, and already have to meet high standards of transparency. The 2014 Lobbying Act accepted this argument, excluding unions from having to join the register of lobbyists. Since 2014, there have been two further pieces of primary legislation imposing further transparency requirements on trade unions – the 2014 Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act and the 2016 Trade Union Act.

2.13 To assist the Committee, we have set out some of the key requirements on unions:

Membership

Unions must provide to the Certification Officer annual confirmation that their membership registers are up to date. Since the 2014 Lobbying Act, this must be supported by a membership audit certificate and the appointment of an assurer. The Certification Officer has powers to investigate apparent irregularities by demanding documents and/or appointing inspectors.

Finances

A union must send to the Certification Officer an annual return including accounts featuring income and expenditure and its balance sheet at the end of the period plus an auditors’ report. Information disclosed includes the salaries and other benefits paid to senior officials. The Certification Officer has the power to demand documents or appoint inspectors to investigate apparent irregularities.

Political expenditure

In order to spend any money on political activities, trade unions are required to create a separate political fund. Every ten years, they have to hold an all-member vote on whether to continue to hold a political fund. Under the 2016 Trade Union Act, new members of the union have to actively opt-in to paying an additional political levy to the political fund. Unions have to report detailed information about their political expenditure to the Certification Officer every year.

It is a common misconception that political funds exist only for the direct support of political parties and candidates, and affiliation to political parties. But in reality unions can only spend money on a significantly wider set of activities if they have a political fund. Unions have to set up a political fund to fund the following activities:

“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.” (S72 Trade Union and Labour Relations (Consolidation) Act 1992)

Other reporting requirements

A trade union has to include details of any industrial action taken in the reporting period in its annual return to the Certification Officer. This includes the nature of dispute, the type of industrial action, when the industrial action was taken, as well as confirmation that the relevant thresholds were met. In addition, employers in the public sector have to publish information on facility time - the amount of paid time off employees may take for union duties and activities.

2.14 Given the pre-existing transparency about the activities and spending of unions, we do not believe that it is necessary or proportionate to require the TUC or trade unions to join a register of lobbyists. The requirements on trade unions to both disclose their activities and accounts to the Certification Officer and to establish and account for a political fund means that unions already disclose their activities.

2.15 Further disclosure of day-to-day contact between decisionmakers and unions would of course also be revealed if decision makers were required to disclose their contacts with all non-constituency lobbying, as we note above.

2.16 Any move to extend the register to unions which would also raise fundamental questions about the nature of lobbying. The TUC and our member unions engage with decisionmakers on a variety of contexts – both as public policy decisionmakers and as the ultimate employer of many of our members. For example, contact with senior decisionmakers in the context of ongoing industrial relations between employers and their recognised unions and the TUC (eg pay bargaining) is not lobbying, and cannot be used as justification for extension of the register to unions.

2.17 The legal restrictions on charities should also provide sufficient safeguards to make it unnecessary for them to be included in a register of lobbyists.

3. Transparency in procurement

3.1 The TUC set out a number of our concerns about the use of consultants and contractors in government in our response to the government’s green paper Transforming Public Procurement, in March 2021.[1]

3.2 The TUC believes that we need to restore public confidence in the credibility, probity and efficacy of the government procurement process, particularly given the poor practice of the last year. No one would question the urgent need to secure medical and protective equipment urgently in response to the Covid-19 pandemic. However, the National Audit Office found that “insufficient documentation on key decisions, or how risks such as perceived or actual conflicts of interest have been identified or managed”.[2] The Public Accounts Committee found that leads given highest priority for PPE supply “were those from government officials, ministers’ offices, MPs and members of the House of Lords” without a clear rationale for this. In the event, they found that the government “wasted hundreds of millions of pounds on PPE which is of poor quality and cannot be used for the intended purpose”.[3]

3.4 The TUC is so concerned about the quality of public procurement in the last year that we have called for this to form part of the pandemic public inquiry. We believe the inquiry should explicitly look at who government contracts were awarded to and why, and the impact this had on the quality and supply of PPE and other areas of public procurement. We also believe that the government should commit to a timetable for the inquiry, and start an immediate consultation on its terms of reference.

3.5 The TUC has long called for greater transparency in government procurement. Neither the Cabinet Office nor the Treasury have reliable or complete data on contracts let in Whitehall, and no consolidated data exists for the NHS, local government or the devolved administrations. The National Audit Office itself points out that the there is too little information in the public domain to conduct an effective analysis of the performance, rewards and governance of major contractors delivering publicly funded services.[4] In the wake of the collapse of Carillion, the TUC called on the government to produce a Domesday Book of government contracting – a public sector-wide record of contracts awarded, performance and company data.[5]

3.6 A cause for further concern is that the government is now proposing to expand the scope for the use of informal tendering processes. Plans set out in its Transforming Public Procurement green paper would give new powers to the Cabinet Secretary to declare crisis conditions that would allow greater use of direct awards and exempt these contracts from automatic suspension if legally challenged.[6] Rather than formalising the practices we saw in the pandemic, the TUC believes that securing an approved supplier list of potential providers through an open procurement process would not only provide confidence and transparency but could also develop the capacity of UK supply chains. A stronger, better funded public sector would also reduce the need to contract others to deliver services, making us more resilient in times of crisis.

May 2021