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Fair Pay Agreements Act


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I move that this Bill be read a second time.

Since this Government came to office, we have taken decisive action to end low pay in Britain and make sure everyone has a fair deal at work. We have set the minimum wage on a path to £10 an hour, given workers rights from day one, and invested in our economy and our people.

This Bill, Mr Speaker, is the next piece of the puzzle in our plan to get wages up and improve living standards. It would represent a significant change to industrial relations in this country: moving away from a model that currently does not serve either employees or employers, and putting in place a modern, 21st century model of collective bargaining that can get wages up, improve productivity, and bring employers and employees together to negotiate for better conditions and better outcomes.

Across this House, Mr Speaker, we get plenty of extortions of the virtue of work; from the party opposite, we also get demonisation of those unable to work. Well we in the Labour movement believe in the value of work. But we believe in a simple adage: fair pay for a fair days work. 

And unfortunately, that basic social contract is being eroded over time. In 2010, when the Labour Government left office, around 61% of our national output went to wages. Today that is just 59%. But the issue is more longstanding than that: before the 1980s, that number was between 65% and 70%, and fell as low as 53% under the Thatcherite policies of Margaret Thatcher and John Major. 

Action to arrest that decline is necessary, Mr Speaker. Without the benefits of growing prosperity shared, the fundamental principle I alluded to earlier - fair pay for a fair day’s work - breaks down. And with is, so does the productivity and security of our economy. 

We will not build an economy for the many not the few; or even a particularly prosperous, stable, or wealthy one - if we simply race wages to the bottom to compete or to grow. 

This Bill, Mr Speaker, established a new model and mechanism through which employees and employers can work together to raise wages and raise standards. It is not, Mr Speaker, a return to the 1970s models of industrial relations. It is a new, 21st century model that is alive to the realities of our world today.

What is not new or novel is that the principle of collective bargaining and partnership at its core. It has proven over centuries to be the best and strongest way to achieve a fair distribution of incomes, prosperity, and growth.

This Bill is necessarily somewhat complex: but the principles and its terms are simple, and I will outline them now. 

Part one of the Bill establishes that unions may initiate for an FPA when there has been sufficient interest or public interest shown; and that they will be negotiated by relevant unions in a bargaining term and relevant employer associations in a bargaining team; and that bargaining sides must operate in good faith. ACAS, a long respected institution among both employers and employees, will take a central role in this new model.

Part two of the Bill sets out the contents of an FPA, which will include mandatory elements - such as minimum pay scales and leave entitlements - and any other elements so decided by the bargaining sides. Part two also clarifies that no FPA may require so-called closed shop arrangements.

Part three of the Bill sets out how FPAs will be ratified; that is by a vote of both employees and employers. If a vote fails twice, then ACAS may resort to arbitration to fix the terms of an FPA without a ratification vote: but doing so would be a matter of last resort; and ACAS would consider whether both sides had made best endeavours to reach a deal. ACAS may also undertake arbitration where either side is not acting in good faith or a deal is not possible; in those circumstances a ratification vote would happen in the usual way.

Part 4 allows an FPA to be renewed, and part 5 sets out penalties for infringements under this Bill.

This Bill, Mr Speaker, ends an on-again-off-again experiment in Britain with a low-wage, low-productivity economy.

Instead, we are building a high-wage, high-productivity economy. We are investing in our economy, while giving employers and employees the framework and the tools to work together, fairly, to ensure that there is fair pay, fair standards, and high skills and productivity in the workplace.

Fair Pay, Mr Speaker, for a fair day’s work. I commend it, Mr Speaker, to this House.

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Mr Speaker,

If there were ever any doubt that we are faced with the same old Labour and the same old danger we have conclusive proof now. This is a bureaucratic nightmare of a Bill set against an anti-business budget that puts employers and employment last, runs roughshod over employees' interests, and puts the Government's paymasters in the Trades Union movement in poll position. This legislation is actively dangerous and I urge ever member of this esteemed body to vote against it before it is too late.

The crux of this legislation is the creation of so-called FPAs. Just 10% of workers are needed to try and create an FPA, no matter what the other 90% think, triggering months of bureaucratic movement starting at ACAS, an organisation never built or designed to undertake this additional work, and ending in a complex multi-part referendum splitting employers and employees into a two constituency First Past the Post system, winner takes it all... so long as they voted for the FPA.

Mr Speaker after three months of protracted, complicated negotiation there is the aforementioned referendum which, as stated, must achieve a 50%+1 majority of both employers and employees to achieve a positive response and take effect. A negative response is simply not allowed. This legislation pre-supposes that the voters got it wrong when they rejected the FPA, they clearly want an FPA the Chancellor muses so they will get one.

"Both sides must resume bargaining", even if only 5% of workers vote for the FPA (meaning half have since changed their mind) and 0% of employers vote for it, they must bargain on. Indeed they must continue to bargain until the referendum reaches what the Government deem to be the correct result or ACAS will simply enforce an agreement. This Government is literally forcing employers and employees to negotiate an agreement they may not even want or the Government and their public bodies will agree one for them. At this point voting is an optional extra.

Once an FPA is in place you cannot leave it. Think about that for a second. Think about how drastically the economy changed in a couple of days during Labour's financial crisis and recession in 2007. Unemployment skyrocketed, hours worked fell through the floor, but under an FPA every worker is entitled to a standard weekly allocation of hours. There is no provision to quickly amend an FPA so during a recession a business under the purview of an FPA would have two real choices, fire workers or go bankrupt. It would be punishable by £20,000 fine per worker for them to reduce hours to avoid layoffs unless they are prepared to negotiate an amendment and have it ratified in a potentially nationwide vote. Anti-business, anti-worker, these are Labour's Layoffs.

If you are fortunate and your FPA covers a period of time where there is no paradigm shattering economic upheaval then you are, once again, at the mercy of Labour's trades union masters. It is the Unions, not the workers, who can decide to open FPA negotiations again when the current one is ending. That means that the Unions, not the workers, have the right to force both employer and employee back through the never-ending bureaucracy trying to reach an agreement lest ACAS agree one for you.

But this time there is a delightful twist Mr Speaker. An existing FPA cannot end until the new bargaining phase is complete. That means that a Trades Union could, without any mandate whatsoever, call for new negotiations and have them carry on indefinitely just to enforce the old FPA.

Mr Speaker this legislation is dangerous. It puts workers at the beck and call of the unions when it should quite clearly be the other way round. It invests vast and unaccountable power in the hands of a tiny minority of workers in an industry and puts the entire industry at the mercy of 10% of their colleagues, who could live on the other side of the country. And it creates a bureaucratic hell-scape of red tape with the end result being an enforced result irrespective of what the employers and employees actually want.

Mr Speaker ACAS is a dispute and contractual resolution body, it is not and has never been a body designed to enforce agreements on an entire industry because the employers and employees could not give the "correct" answer which this Bill is so desperately demanding that they come up with. This Bill would be a disaster for employers, a disaster for employees, and a disaster for regulators. It has no place on our statute books and I once again urge every member of this esteemed body to reject it entirely and utterly.

Arnold J. Appleby

MP for North Bedfordshire (1979-Present)
Shadow Foreign Secretary

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