Union of Shop, Distributive and Allied Workers – Written evidence (TUP0010)
Introduction
Usdaw is the UK's fourth largest trade union with 440,000 members. Usdaw members work in sectors such as retail, distribution, road transport, food manufacturing and the dairy industry. The Union's membership is employed entirely in the private sector.
Usdaw has serious concerns over the proposals contained in Clause 10 and 11 in relation to the operation of the Political Fund as the Union believes that these proposals are neither fair nor proportionate. We believe that the proposed procedure for opting-in is deeply flawed and will in itself result in a substantial decrease in the number of people in the Union's Political Fund.
The fundamental practical problem the Union will have is the procedure that we will have to follow to reconfirm with members that they wish to remain in the Political Fund. The proposals, as outlined, mean that the Union will have to write out every five years to every Union member to ask if they wish to remain in the Political Fund. The Union will only be able to include members in the Political Fund if we receive written confirmation back from the member.
It is the Union's estimate that only 5-10% of the membership will respond to the Political Fund confirmation letter. This level of return is an estimate based on other returns to written communications from the Union, eg internal union elections.
It would be a mistake to view a return of less than 10% as a lack of support for the Union's Political Fund. Instead, it is more a reflection of the weakness of direct mailings requiring a response as a form of communication.
Usdaw is a strong supporter of the Labour Party. The mandate for this support is regularly reaffirmed by the Union's membership through Usdaw conference decisions and Political Fund ballots. Usdaw spends nearly all of our Political Fund in affiliating to and supporting the Labour Party. In total, Usdaw is funding the Labour Party by donations and affiliations totalling £1.9 million per year.
Usdaw believes that under the proposed changes Usdaw's Political Fund is likely to reduce to less than 10% of the current level. Of this reduced Political Fund an increased proportion will be required to administer a smaller fund. The financial impact on the Labour Party will be huge.
Usdaw believes that the proposals on the operation of the Political Fund are:
The attached document outlines in more detail the basis for Usdaw's position on the Trade Union Bill proposals regarding the operation of Trade Union Political Funds.
- 412,521 members out of 422,524 in England, Scotland and Wales who have not opted out.
- 7,248 members out of 18,079 in Northern Ireland who have opted in.
2.1 Usdaw Rule Book
Usdaw complies with the law on the Political Levy and our opting out procedure is as prescribed in the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).
2.2 Membership Forms
Members are informed of their right to opt-out of the Political Fund on the main page of the Union's membership form, using the wording spelt out in the Trade Union and Labour Relations (Consolidation) Act 1992.
2.3 Information in Membership Magazine and on Union Noticeboards
The same information on the Political Fund and members' rights to opt-out are included in Usdaw's membership magazine, alongside the annual increase in Union subscriptions, when members will be considering their membership fee. The magazine is sent to the home address of each member, complying with the requirement to provide each member with the information.
It is also included on a poster that Union reps keep on the Union noticeboard in each workplace, and is updated annually. Union reps are informed of the legal requirement to keep this poster on the noticeboard in their standard training course.
2.4 Political Fund Ballots
The Political Fund Ballot, held every ten years in accordance with TULRCA, involves sending a letter regarding the Political Fund to every member and a ballot paper for them to vote for or against keeping the Political Fund.
The ballot paper includes a short Explanatory Statement with the paragraph:
"This ballot is about keeping Usdaw's Political Fund. It is not about whether or not you contribute to the fund. All members have the right to vote and, if the vote is in favour of retention, the right not to contribute to the fund."
2.5 Political Fund Ballot – Advice To Reps
Our advice to union reps in workplaces, contained in a 'Frequently Asked Questions' factsheet about the Political Fund Ballot, reiterated the procedure for any member asking about opting out:
Usdaw's affiliation to the Labour Party is decided democratically at conferences of delegates from all Usdaw branches, known as the Annual Delegate Meeting. All branches are able to send delegates and to submit motions, with the annual conference typically consisting of around 800 delegates, representing the vast majority of branches.
The original decision on affiliation was taken shortly after the Union's formation. That support has been tested over the years, with branches sending a motion not to continue the affiliation from time to time. The last time such a motion was submitted in 2006, it was defeated with only a handful of votes in favour.
Other positive resolutions have been passed more recently, such as that from 2012:
Labour Party Membership
"This ADM calls upon the Executive Council to instruct all its Training Officers, Divisional Officers and Area Organisers to incorporate within any training needs to all reps the importance of joining the Labour Party and its importance to the Trade Union Movement as a whole."
Other policy positions, such as those on referendums for Scottish independence or membership of the EU are also taken democratically and transparently at the Annual Delegate Meeting.
Usdaw's political affiliation is made clear to our members. The Union is constantly campaigning on political issues and we encourage members to vote Labour at election time.
In the run-up to the General Election, we sent a special election edition of the members' magazine 'Arena' to each member who has not opted out of the political levy. The magazine encouraged members to use their vote and set out the policy differences between the political parties, with the overall message being to vote Labour. We also sent a series of emails on specific policy issues and the message to vote Labour.
Any member who emails, writes or telephones to complain of Usdaw's political affiliation is reminded of their right to opt-out of the Political Fund and offered a Political Exemption Notice to sign.
In the run-up to the Scottish Independence Referendum, Usdaw campaigned for a No vote and sent both a letter and emails to members in Scotland to encourage them to vote no. This caused concern among some members, who were asked if they wished to opt-out of the Political Fund and around 200 Scottish members opted out at this time.
Usdaw is transparent over our Political Fund and report income and spending both to our members and to regulators.
4.1 Audited Accounts and the Certification Officer
Usdaw produces annual accounts of both our general and Political Funds which are fully audited by an external body and reported to the Certification Officer, in full compliance with our legal requirements.
4.2 Annual Report to Annual Delegate Meeting
Usdaw produces an annual report for our branches, including details of the Union's industrial and political activity throughout the year, and financial statements including full reports of income and spending of both the general and political funds.
These reports are sent to all branches in advance of the Annual Delegate Meeting, and questions and comments from delegates are invited on each section separately, enabling any delegate with concerns about political spending to raise these. No concerns have been raised about political spending in recent years.
4.3 Political Parties, Elections and Referendums Act and Electoral Commission
All Usdaw's affiliation fees and donations to the Labour Party over a value of £2,000 per year are reported to the Electoral Commission in donation reports on a quarterly basis.
Usdaw also registers with the Electoral Commission as a Third Party for the purposes of electoral and referendum campaigning and we have to submit highly detailed returns of spending. These costs have to be apportioned where relevant between England, Scotland and Wales.
The latest Third Party Return following the General Election took approximately two weeks for skilled and experienced staff members to interpret the advice from the Electoral Commission and apply it as accurately as possible to Usdaw's third party campaigning, do the necessary calculations and apportionment to arrive at the declarable figures, and complete the Third Party Return.
This experience causes us concern for the amount of staff time that would be required to comply with the enormous level of detail required for annual returns of all political expenditure to the Certification Officer, as required under clause 11.
5.1 Cost of a Mailing to all Members
The cost of sending a mailing to 420,000 members with an identifiable response form, explanatory letter and leaflet, and reply paid return envelope would be around £180,000, based on our recent Presidential election mailing. The cost of around 21,000 responses - the amount that we envisage - would be around £8,822, making a total cost of £188,822.
5.2 Cost of Administration
In the Impact Assessment, the costs for additional trade union administration are based on an estimate that it will take a member of staff 30 seconds to process a form from when the form is received at the office. After consultation with the Usdaw Records Department, we believe that a process requiring us to; open the envelope, sort the form, look up a member, amend the membership record, and scan and file the form would take on average 2 minutes 30 seconds - five times the speed estimated.
Also, the significant additional work of processing these forms from our members, concentrated into a short period of time, would mean that we would not be able to cover it using existing staff and would need to either contract out the work or hire agency workers.
This would represent a significant cost. The 21,000 responses that we envisage would take 875 hours of work to process. At the cost assumed in the Impact Assessment of £13.68 per hour, this would cost £11,970 to process.
Additional forms that were received from members in workplaces, that did not necessarily include an identifiable membership number, would take considerably longer to process - around one every 5 minutes on average.
The additional 21,000 members that we hope to recruit into the Fund during the rest of the year would therefore take an additional 1,750 hours to process at a cost of £23,940.
The cost of the paper form system to the Union would therefore be:
Total £224,732
5.3 Organising Staff Resources
In addition, the organisation would have to make time for chasing up members at workplaces, using Union staff and lay representatives. In Usdaw workplaces it can be extremely difficult to contact members, who can work on a wide variety of shifts over a 24/7 working pattern.
Whilst there will not be a direct cost to the Union, much of the time of our officials and lay reps is used for recruitment as the Union needs to recruit around 80,000 new members a year. Any organisational effort that detracts from recruitment will impact severely on our income.
The Trade Union Bill seeks to make it as difficult as possible for unions to run a Political Fund. This will also have an impact in three ways on employers:
92% of Usdaw's members pay their subscription through check-off, whereby their union subscription is deducted from their wages by their employer, and then paid over to the union, less an administration fee.
Many employers, Usdaw has agreements with, are currently more than willing to operate check-off as part of their agreements with the Union.
The requirement for union members to opt into the Political Fund within a period of three months, rather than simply opt-out if they wish, will lead to much greater movement of members in and out of Political Fund contributions, and far more changes required to payments made through check-off.
Whilst Usdaw's Political Fund payments are only 10p per week, the legislation as drafted insists:
'that relief shall be given as far as possible to all members who are not contributors on the occasion of the same periodical payment,' Section 10, (2)2a
And also that:
'A withdrawal notice takes effect at the end of the period of one month beginning with the day on which it is given.' Section 10, (1)(1) (6)
7.1 Requirement for a withdrawal notice to take effect within one month
The requirement for a withdrawal notice to take effect within one month is not practical for members who pay either monthly by check-off, or by monthly Direct Debit.
If a withdrawal notice is received shortly before a payment is due, there would not be time for the employer to change the rate of union subscription on the payroll deduction, or for a bank to change the Direct Debit in time for the next payment.
Relief would therefore have to be given in the following month’s payment, but include the relief for both that month and the time in between the receipt of the withdrawal notice, and the payment that followed it.
7.2 Workplace Activity – Getting Members to Sign Up
Usdaw organises in private industries that operate on a 24/7 basis. The best place to speak to, and get the signatures of Usdaw members is in the workplace; and with just three months to sign members up, workplace engagement will be the only format that Usdaw can use to gather enough signatures.
This will involve diverting significant lay rep and Union official resources away from advising and representing members on day-to-day workplace issues.
The requirement to re-run this process every five years is likely to lead to a repetitive cycle of lost productivity, bringing with it reduced economic performance and increased costs for businesses. This proposal is the quintessential definition of tick box, red tape, regulation offering no demonstrable benefit, purpose or requirement.
Usdaw's political campaigns and lobbying have focussed on issues which are sector-wide issues affecting the workplaces and businesses that we organise in. This is important campaigning on behalf of our members over legitimate concerns.
These issues include:
It is difficult to estimate how many Usdaw members would opt into the Political Fund on the basis of the proposals in the Bill. However, from experience of other paper-based mailings requiring a response, the typical turnout is between 5% and 9%.
A mailing to individual members to ask them to sign and return a form in order to opt into the Political Fund is a process for which it will be difficult to explain to members why they need to do this and it is something they have not had to undertake before.
It is therefore highly likely that there will be a lower turnout response to the request to the letter asking them to sign and return the form than we have seen from other mailings:
Based on the figures above, Usdaw's best estimate for the number of members who would sign and return a written form is similar to the number who voted in the recent Presidential election - around 5%.
With a concerted campaign in workplaces, involving our workplace representatives reminding members, we may be able to recruit a further 20,000 or 5% over the next few months, leading to 10% in total.
Whilst the opt-in rate is much higher in Northern Ireland at 40%, this is on the basis of members opting in when they are recruited to the Union. This is a far more practical method of speaking to members about the Union's political affiliation, at the point at which they join Usdaw. 90% of Usdaw members are recruited through face-to-face discussions with union representatives, so they have an opportunity to explain issues and discuss any areas of concern, with the member having the final choice of whether to opt-in to contribute to the Political Fund.
Usdaw's Political Fund costs 10p per week, with each member contributing £5.20 if they are in membership for a full year. In 2015, the fund had income from Political Fund contributions of £2,159,661.
Usdaw affiliates to the Labour Party nationally on the basis of the membership of the Political Fund, so the cost of affiliation alone is £3 per year per member: £1,242,774 in total, or 57.5% of the fund. In addition, regional and local Labour Party affiliation cost £50,033 in 2015.
A further £408,744 was paid in donations to Labour from the Union nationally, regionally and from local branches. £267,877 costs of Labour Party Conferences, of which £136,145 went directly to the Labour Party in terms of delegate fees, room hire and exhibition stand costs.
Total payments direct to Labour were therefore £1,837,696 or 85% of income
In addition to these contributions, election materials were produced for use by both union members and Labour Party candidates. The leaflets, policy booklets, balloons, stickers and carrier bags which were used by the Labour Party were included on the Union’s return of Third Party expenditure which totalled £92,150.
Both direct and indirect contributions to the Labour Party therefore totalled £1,929,846 or 89.4% of Usdaw's Political Fund.
The majority of the remainder of the Fund is used for organising conferences with political speakers so that Usdaw members can get involved in political discussion, and both hear from speakers and give their views.
Part of the Fund is also used for Usdaw's campaigns and lobbying on issues such as Sunday trading, tax credit cuts, and Freedom From Fear.
Usdaw believes that, by the end of the first year of operation of the new rules, the number of members opting into the Political Fund will fall to less than 10% of those who currently contribute. Income to Usdaw's Political Fund will therefore fall to: 42,000 x £5.20 = £ 218,400.
With costs every 5 years of £224,732, plus knock-on organisational costs that will impact on Union membership, we believe that the costs of the system proposed are disproportionate to the Political Fund income that would be generated.
As members leave Usdaw at a rate of around 18% per year due to high turnover of staff in the sectors we organise, average membership length is 4.3 years. The Political Fund income per member is therefore on average £22.36 if they contribute for the whole period of their membership. However, the cost of recruiting that member to the Political Fund is £5.35 or 24% of their income.
Usdaw believe this is not only a disproportionate cost, but will impact even more heavily on Labour Party funding.
If the number of members contributing to the Fund was higher, then the total recruitment costs will also be higher.
From an annual contribution to the Labour Party of £1,929,846, Usdaw's Political Fund would be shrunk to a total of £218,400 per year.
Of this, an average of £44,946 a year would be spent in administration of the system, leaving £173,454 net annual income to the whole Political Fund.
Even if 100% of this income were given on affiliation and donation to the Labour Party, the Party's income would drop by £1,756,392 or 91% from the impact on Usdaw alone.
Conclusion
Usdaw believe that the impact of the Trade Union Bill as currently framed to apply retrospectively and to require all members to opt in every five years with a paper only system, is vastly expensive, bureaucratic and inefficient. As a result, the provisions will lead to most members not opting in.
The Political Fund and the amount received by the Labour Party will be impacted enormously.
John Hannett
General Secretary
Usdaw
10 February 2016