Trade union mergers and competition in British banking

Industrial Relations Journal ISSN 0019-8692 $3.00

Trade union mergers and competition in British banking

Timothy Morris

This article examines union merger discussions in the clearing banks in relation to the model developed by Undy et al. Emphasising the importance of ideological differences and the proposed distribution of power in the negotiations, it argues more stress be placed on internal

political factors in explaining merger patterns.

The object of this paper is to examine the relationship between the principal trade unions in the clearing banks and, in the light of the several rounds of talks which have taken place over the last decade, assess the prospects and obstacles to a merger between them. The two unions involved are the Banking Insurance and Finance Union (BIFU) and the Clearing Bank Union (CBU). BIFU is a TUC affiliate which recruits throughout the finance sector and among all grades of clerical and managerial staff as well as non-clericals such as data processing and messenger staff. Of its 155,000 members, 50% are employed by the London clearing banks.* The CBU is an amalgam of three staff unions,+ formerly known as staff associations. It has a membership of 98,000 and as its name suggests, limits recruitment entirely to the London clearing banks where it also recruits among all grades of staff in that territory. Between them, these two unions have approximately 70% of the main

Timothy Morris is a Research Fellow at the London Business School. * Barclays, Lloyds, Midland and National Westmins- ter Banks. t Barclays Group Staff Union; Lloyds Bank Group Staff Union; National Westminster Bank Staff Association,

High Street banks’ staff in membership. The exception to the pattern of CBU-BIFU competition is the Midland Bank where the staff association transferred to ASTMS in 1974. Since then ASTMS has maintained a minority (and falling) membership in competition with BIFU.

According to Undy et al. mergers are usu- ally stimulated as a means of institutional survival or growth[l]. Of the three categories of merger that they distinguish (defensive, consolidatory, aggressive) the proposed merger between BIFU and the CBU would fall most easily into the second one. A consolidatory merger is defined as one

. . . where the aim of those involved was to con- solidate a shared positon in a given industry or occupational area.’ (p. 167)

and is initiated in response to changes in membership-actual, relative, or potential. These are, in turn, determined by a variety of factors including technological change and competition from other unions. Although in their case-studies Undy et al. refer to all three aspects of membership as ’primary change agents’ it is not clear whether each is a necessary pre-condition for stimulating a consolidatory merger, or whether, say, a loss of actual and potential

Trade union mergers and competition in British banking 129

but not relative membership would be sufficient. In the case of the banking unions a concern with prospective growth may be identified due to technological innovations being made by the banks in money trans- mission and account processing. Yet thus far both unions have continued to experience both absolute growth and gains relative to other white collar unions. As will be shown below, though, the motivation to merge is associated with non-membership factors broadly relating to the costs of con- tinuing institutional competition, both financially and in terms of organisational effectiveness.

Secondly, even though each side has expressed a wish to merge and repeatedly agreed to enter talks in good faith, external conditions such as changes in membership do not offer a prediction of the outcome on their own. In this paper it will be argued that internal politics are crucial to the outcome of the talks insofar as they determine the flexibility of each side in the process of negotiation. In their analysis Undy et al. do acknowledge the importance of internal politics and particularly the importance of a united group of national officials and an able General Secretary in initiating and carrying through mergers(21. Yet their case-study method arguably highlights the different sorts of problems that each potential merger confronts rather than delineating a general model, especially for consolidatory mergers. The case of the banking unions is also exceptional in many ways but it does highlight the way in which the distribution of power is central to any discussions when the need to merge is not pressing for one or both parties and neither is clearly the dominant body.

Although multi-unionism is by no means uncommon in British establishments the ideological basis of the dualism in banking is less common[3]. For this has, in turn, influenced the way each union is organised and its methods of representation. Of course, in other sectors and particularly among white-collar groups in the NHS and education sector, ideological issues such as integration and cooperation with the wider union movement or the ethics of using industrial action have also occurred. Hence, although i t is arguable that in banking the inter-union differences are more pronounced, there may be some wider implications to the merger discussions

130 Industrial Relations Journal

examined here. Banking is not the only industry in the private sector where staff associations or non-TUC affiliated unions operate, but the former are predominantly grouped in the finance sector[$] and the staff unions in the clearing banks are, according to a survey by the Certification Officer[5], distinctively larger than other non-TUC enterprise unions in the private sector and have been established for a much longer period. They also have much greater resources and provide a wider range of services, and whereas many smaller associations only have consultative rights the staff unions have for many years seen joint regulation as their principal method of operation. It remains difficult to predict, therefore, what the outcome of this inter- union rivalry will be by reference to events elsewhere or to general explanations of the pattern of union mergers such as that developed by Buchanan[6].

The ideological differences between the unions means there is a natural tendency to competition rather than co-operation which has undermined past efforts to merge. If it is to be overcome, two conditions appear to be necessary. First, that any merged body is sufficiently flexible to accommodate the differing interests and 'philosophies' of the two sides. This has implications for the locus of resources and the organisational structure of the proposed body. Second, merger success depends on the perceptions of those who are actively involved in the discussions and are strategically placed in the unions at present as to the costs of the alternative, that is separate bargaining, and the likelihood that either will achieve exclusive representation in the clearing banks on their own. Such considerations also depend to an extent on another group of 'actors', namely the employers, and particularly decisions over a range of issues affecting staff which will be mentioned below, as well as their bargaining policies.

The remainder of the paper is set out as follows. In the first section the origins of the unions are described and the role of the banks in creating a system of dual representation is noted. This is seen to be central to the longstanding hostility between the two sides. Secondly, past efforts to merge and the reasons for their failure are considered; the third section looks at the latest round of discussions examining in detail the crucial areas of negotiation and

the factors which influence the strategies of each side. In the course of the discussion it is argued that employer policies have had a strong and occasionally crucial influence over the outcome of the rivalry and the paper considers how these may influence the position in due course.

Origins and history of the inter- union rivalry

The special form of multi-unionism cannot be understood without reference to the origins of collective representation in the clearing banks. Other authors have examined this in detail so what follows is an abbrevi- ated account which is designed to illustrate the way in which the inter-union competition developed[7]. BIFU was formed originally as the Bank Officers Guild (BOG) at the end of the First World War, and because of the similarity of conditions between the clearing banks it saw its appropriate recruiting territory as being for all grades of staff throughout the banking industry as a national union. It seems that the BOG proved an attractive proposition and was claiming a membership of some 10,000 by 1921, three years after its formation. But the prospect of dealing with a trade union, albeit a moderate body, did not appeal to the bank employers. Instead they preferred to encourage membership of staff associations and in some cases actively assisted their formation. Despite its flourishing membership the BOG found it could not obtain bargaining rights and its membership dwindled from its early peak. It was from this experience of employer dis- crimination in the choice of bargaining agent that the hostility between the representative organisations grew. Thereafter the national union (which became the National Union of Bank Employees in 1946 and changed its name again in 1979 to BIFU) saw the staff associations not as rival unions but as part of a managerial strategy designed to keep proper trade unionism at bay. Hence, the aim of the national union was not so much to secure a compromise arrangement whereby it shared representative rights but to displace its rivals completely, believing that this would lead to their collapse and disbandment. Similarly, the associations were opposed to working with the national union, and regarded themselves as distinct from ortho-

dox unions. Rather than organising workers across a number of employers, like other unions in the private sector, they deliberately limited their boundaries to a single employer.

Justification for this distinctive form of organisation derived from what was regarded as the special employment relationship in banking. This was based around the informal agreement between the banks that they would not recruit each other’s staff, and secondly the practice of promoting exclusively from within their own ranks. In effect this meant that most staff were taken on in their ’teens with the opportunity of lifetime employment and career advancement with a single employer. So although conditions of employment across the industry were similar and despite the occupational similarities, most employees only weakly identified with staff in other banks. For the associations this sug- gested there was little point in organising across employer boundaries. Secondly, the associations did not favour the use of industrial action: given the high degree of job security and the opportunity for career advancement to positions of managerial authority, the notion of conflicting interests between employer and staff was thought, in banking at least, to be completely inaccurate. As both sides sbared a common interest in the prosperity of the business, differences could be resolved without recourse to sanc- tions. Thirdly, it also followed that links with other representative bodies or political affiliations were also irrelevant. The national union’s affiliation to the TUC was therefore considered inappropriate.

The organisational principles of the staff associations have been expressed in the term ’internalism’ because of the commitment to a relationship and organisation internal to one employer. But this is not a precisely formulated concept which binds the associations to a set of tightly specified principles. Rather, it is a loose and prag- matic philosophy descriptive of the mode and style in which the associations have approached their rote. The definition offered in 1960 by one of the banking associations still has relevance, internalism being:

’a system by which the staff of any particular business negotiate with their own management on all matters concerning staff conditions with an emphasis upon the common interests of employer and employed.’[8]


a definition which while emphasising the institutional orientation and the co-oper- ative philosophy of the associations also stressed the similarity to ’mainstream’ trade unions arising from their reliance on joint regulation, as Bain et al. argued[9]. Nor has this constrained the associations from coming to terms with changing employment conditions and new management strategies by becoming more ‘unionate’[lO]. Indeed, as Blackburn and his colleagues have subsequently pointed out some staff associations, such as those in the clearing banks, have become as aggressive in their negotiating function as orthodox unions at the enterprise level, obliging these authors to distinguish between enterprise and society unionateness in recent work to be able to sustain the distinction between associations and trade unions[ll]. Certain changes exemplify how the banking asssociations have become more like mainstream trade unions including: the recent name changes from staff associations to staff unions; the willingness to adopt strike clauses (albeit relatively restrictive ones) and contemplate industrial action; the widening of their recruiting territories to take in non-clearing bank members as the banks diversified; the concerted action in an industry-wide bargaining forum when the employers declared their intention to fix pay nationally; and the willingness to cooperate with BIFU despite their institutional rivalry. Some of these changes have come about from external pressure, and notably the legislation passed in the 1970s which forced the associations to become fully financially independent from the banks[l2]. Yet through these innovations the staff unions have managed to remain a sufficiently effective form of representation to attract members while sus- taining their argument that they are a distinctive and more appropriate form of representation than orthodox trade unions.

In formal terms this means that the objec- tives of the staff unions still stress cooperation. For instance, the rules of the National Westminster Staff Association state its function as being:

’To act as an official recognised medium for representing tu the Directorate and Management of the Bank matters affecting the Staff of the Bank and for that purpose to participate in any con- ciliation and arbitration machinery which may be considered expedient.’ll3]

132 liidustrial Relations Iournul

This is also said to be reflected in practice firstly by the stress upon a ’common-sense‘ approach to problems-in contrast to what is perceived to be the ideological posturing of many union officials (as one staff union General Secretary put it). This in turn is backed by the advantage that many staff union officials are recruited or seconded from their own banks, so that they have a superior acquaintance with the needs of their members.

Furthermore, the long experience of institutional rivalry has served to sharpen the dichotomy between the two sides. Hence the national union has always emphasised its externalism from the banks as a guaran- tee of its independence through a geographical branch structure, which tran- scends the organisational boundaries of one particular employer at its base. By contrast, the institutional structures of the internalists were said to reflect their dependence on and control by their respective banks. So, the organising principles and bargaining objec- tives of each side have been reinforced by the aim of being seen in strong contrast to their rivals, a factor which acts to make any merger all the more difficult.

Paradoxically, however, the associations and the national union were brought toge- ther in 1968 when the English clearing banks established a national bargaining council to fix pay and conditions in the industry. Unsurprisingly, the banks wanted to avoid separate negotiations in which they would face competing bodies and insisted on a joint staff side. At the time the associations could claim a larger membership and thus final control of this staff body under the agreed rules. To the union, co-operation with the associations was justified, however, by the belief that recognition would raise membership and with a majority backing it would take control of the staff side, demonstrate its greater bargaining effectiveness and thus force the demise of the intemalists.

The strategy failed: as the minority body, the national union remained subject to the control of the associations nationally in the joint staff side and domestically where the bargaining arrangements were replicated. NUBE therefore withdrew from joint working in 1977 and, formally or informally, separate bargaining at both levels has taken place subsequently.

Separate negotiations and union the CBU) whilst the latter has consistently competition maintained a set differentials policy. Sec-

A key assumption behind the national union’s (now BIFU) strategies was that membership decisions are primarily determined by the criterion of bargaining effectiveness. By enforcing separate bargaining BIFU has hoped to sharpen up the contrast between itself and the associations and to demonstrate that by refusing to use sanc- tions in the bargaining process the internalists were fundamentally powerless. From Table 1, however, it can be seen that although since 1978 BIFU may have gained members at a faster rate than its rivals, the CBU still has a substantial majority and has achieved a larger absolute rise. Moreover BIFU’s membership in the clearing banks fell by over 3000 in 1984 whilst the CBU’s membership rose slightly. At best, the strategy of separate negotiations as a means to ending the dualism is a slow one, and BIFU appears to have failed to reduce the proportion of unorganised staff (which remains at around 30%) or to have dented the CBU’s membership significantly.

To reinforce the competitiveness, in recent years BIFU has deliberately tried to dif- ferentiate its bargaining policies from the CBU. This is notable in pay policies where BIFU has pressed for a compression of differentials to favour the junior grades (where it has a higher proportion of members than

ondly, on working hours BIFU has iried to develop a strong stance. It called a strike in 1983 over the decision of the banks to remain open all day on the last working day before Christmas for example, and has opposed the return to Saturday opening by calling for non-co-operation from its members. Thirdly, BIFU has developed a strategy calling for joint control with the banks over the introduction of new technology, and reductions in hours of work to maintain employment levels[l4]. Associated with this, some local industrial action supported by the NEC has taken place over efforts to rationalise branch operations in certain clearing banks.

But for its part the CBU has also responded to the challenge posed by separate bargaining, demonstrating again the flexibility of its organisational ethos. Like BIFU, the staff unions initially opposed Saturday opening and the executive of one of them recommended industrial action over the bank’s unilateral decision to extend opening hours. The CBU has also criticised the management of new technology in the banks, pressing for consultation over its introduction and an undertaking that no compulsory redundancies will result[l5]. The balloting of members over pay claims has also taken place with the Barclays staff union votinR for action in 1985.

Partly because of these actions and partly because in the face of strong employer opposition BIFU has been unable to achieve widespread success on any of its demands on pay, new technology or hours of work, it

Total Membership BIFUKBU 1977-1984 has not been able to demonstrate its claimed (After Joint Staff Council Collapsed) greater effectiveness over the CBU. The Year CB U BlFU result has been a stalemate in the com-

Table 1: Union membership in the London clearing banks

Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec.

1977 1978 1979 1980 1981 1982 1983 1984

88670 90320 89997 92819 93173 92338 95950 97907

62287 64220 63119 67377 67737 67915 73540 70102

petition between the unions for dominance in representation.

Both the CBU and BIFU recognise the dis- advantages of the existing situation, whereby each bargains separately over the same issues with the banks. It means the unions are competing with each other as well as bargaining with the employers, allowing the latter the opportunity to play one body off against the-other if they so wish. An exam-

Absolute Gain: 9237 7815 ple of this occurred during the 1984 pay Increase over round when the employers federation con- Period: 10.4’/0 12.5% cluded an agreement with BIFU which it

then implemented over the heads of the Source: Union Records CBU; the reverse occurred in 1985, the

133 Trade union mergers and competition in British banking

employers implementing the agreement reached with the CBU, despite BIFU’s rejec- tion of the offer. The duplication of resources raises the costs of representation and means the unions divert resources into competing with each other rather than representing their members. In the past it has been argued that the competition has placed considerable financial strain on BIFU, forcing it to maintain lower subscription levels than other white-collar unions in order to try and match the staff unions[l6] and at its 1985 Delegate Conference BIFU’s President pointed out that less than 1% of the union’s income was retained in reserves after administrative costs. In contrast, the staff unions rely more on non-subscription sources of income and lay officials than BIFU, but the inter-union rivalry is thought by officials of both organisations to be unpopular with the majority of members who would favour a single channel of representation, and an impediment to raising the overall proportion of organised bank staff. Nevertheless, the obstacles to a merger remain substantial.

Meanwhile both unions (CBU and BIFU) acknowledge that their operating environment is becoming more hostile. This results principally from the stronger Competition experienced by the banks in the product market, and secondly the potential for labour displacement created by microprocessor applications[l7]. One result of this inten- sifying product market competition is the perceived need among the banks to con- strain labour costs which constitute the larg- est item in their operating expenditure. A consequence of this was the decision to end the longstanding commitment to unilateral arbitration in 1981, at national and domestic levels. No longer, the banks felt, could decisions on pay and other important cost items be left in the hands of a third party even if the likelihood of industrial action was thereby increased. Since then the banks have also implemented the extension of opening hours (at selected branches) and branch network reviews aimed at more closely relating services to customer demand rather than offering a full range at every branch which will (ceteris paribus) affect staffing levels and career prospects. Efforts to raise productivity through work re- measurement as well as by automation have also been undertaken. For their part, the unions have failed to obtain more than the

134 lndustrial Relations lournal

minimum of consultative rights on any of these decisions.

It appears, then, that as a result of these changes in management strategy and the stalemate in the competition for representative dominance, the unions have recognised the need to reconsider a merger. Each side is aware, however, that substantial differences regarding the nature of the proposed body, reflecting the longstanding differences in ideology, have to be overcome.

Merger discussions

ABFU

This awareness of the size of the problem stems from the fact that previous discussions have each floundered on a number of key issues which encapsulate these ideological differences. The first set of these merger talks took place from 1973 to 1976 and was known as the ABFU discussions, ABFU being the acronym of the proposed merged body, the Association of Banking and Finance Unions.

Essentially, the ABFU discussions were, in Undy‘s terms a ’defensive’ merger proposition against a specific external threat. NUBE (now BIFU), having been suspended and then expelled from the TUC for oppos- ing the non-co-operation policy with the Industrial Relations Act lost the protection of the Bridlington rules. It was thus exposed to competition from other white collar unions in its traditional territories, and particularly from ASTMS. This did not worry the associations unduly until in September 1973, the Midland Bank Staff Association executive announced that it was recom- mending a merger with ASTMS thereby giv- ing the latter its entry to the whole banking sector. Talks commenced almost immedi- ately with a senior manager from one of the banks acting as chairman, albeit in a largely passive role. But subsequently as ASTMS failed to extend its membership beyond the Midland and NUBE regained TUC affiliation, the ideological differences between the clearing bank unions once more re- emerged and the talks collapsed.

The Johnston Enquiry In an effort to overcome this division both sides agreed to invite an outsider to act as chairman of the second set of discussions, which were prompted by NUBE’s with-

I 1

Banking & Finance Industry Union 3rd TIER

ie Building Socieites/TSB

Union (CBU) (Covering London

2nd TIER

neg ot i at i n g level

4 National

1st TIER -company and local

level bargaining

Figure 1 johnston Report: Proposed Structure of Merged Union

drawal from joint machinery. In this case, therefore, the motivation was more ’consolidatory’. Dr Tom Johnston, of Heriot Watt University, was brought in: his terms of reference were ’to investigate the whole question of staff representation and negotiating procedures in the major London Clearing Banks, and to report with recom- mendations.’ Interpreting his role more pro- actively than the ABFU chairman had, John- ston developed an acceptable organisational framework relatively quickly on the basis of the ABFU discussions. The structure was to operate at three levels, see figure 1: the first level of the in-house bodies paralleled the existing staff associations which Johnston proposed to call staff unions. They would be responsible for all domestic bargaining. At the second tier was the industry level Clear- ing Bank Union which would negotiate with the Federation of London Clearing Bank Employers over the main terms and conditions of employment. Parallel to that would be grouped the other non-clearing bank members in their own sections. A third tier would coordinate the activities of the whole and liaise with the outside bodies including the TUC[lS]. Johnston then con- ciliated between the two sides in a series of meetings over differences in the working of the proposed body.

Through this approach it is arguable that Johnston came much closer to effecting a

merger than the ABFU discussions had[l9]. But talks broke down in late1979 ostensibly on a technicality regarding the proposed procedure for implementing the merger and the initiative quickly collapsed, with each side acrimoniously blaming the other. Underlying this though, it appears that the talks foundered on one key issue, branch organisation. Here Johnston proposed a sol- ution unfavourable to BIFU in rejecting the union’s request that its geographical organisation be replicated in the merged body. This decision so seriously worried some of BIFU’s rank and file when the proposals were sent out to the branches for discussion that BIFU’s negotiators were forced to take an uncompromising line. Although BIFU had a growing number of institutional branches it was felt that without a branch structure which to some extent bridged different enterprises, there was a possibility that internalist sympathisers could at some future date easily break away into separate enterprise level unions[20].

Recent discussions It may seem surprising that given the collapse of the two sets of formal merger talks there have been further attempts to reconsider a merger. Yet each side is aware of the heavy costs, financially and in terms of organisational power, that division creates


and that these have become more critical because of changes in management strategy outlined briefly above. There is, in short, a strong rationale for a merger.

Tentative merger discussions thus commenced again relatively quickly in 1982, but became more formal after the appointment of John Cousins as General Secretary of the CBU in 1983, as he had declared himself strongly in favour of ending the inter-union division in the press[21]. Subsequently, the CBU issued an invitation to talks in April 1984 but laid down a list of 12 preconditions which almost scuppered the discussions before they had begun. These referred to several of the matters which had proved contentious previously, such as TUC affiliation, the right of the enterprise level unions to certification, and at which level officials would be employed. In part this appears to have been a negotiating tactic since it must have been known BIFU would find these preconditions unacceptable. Yet they were stated to be of ’fundamental’ importance to the CBU and were indicative of the extent of the persisting areas of difference. In the event talks continued until the autumn of 1985 when the CBU decided at its Annual Conference to withdraw. The immediate reason for this was the opposition of the LBGSU to their continuation and the threat that it would break away rather than participate in a merger. Whether the talks can be resuscitated is unclear-BIFU has tried to restart them by generating rank-and-file pressure around the country-but in any event several areas of difference remain intractable.

These hinge around six issues which embody the conflicts over ideology and over the locus of organisational power which were also in contention in the 1970s. They are of substantive importance insofar as they represent the dimensions of organisational power which would determine the character of the merged body. In effect, these matters establish whether it is to be an essentially ‘internalist’ model where power is located at the first level (of the company-wide staff union) and the larger body is essentially a loose confederation of other company unions clustered around the clearing bank staff unions; or whether it is to be a centralised body, along BIFU lines, in which the clearing bank staff unions are components of a broad finance sector body. So whilst in the past there has been broad agreement

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over the structure of any amalgamated body, this disguises the fundamental disagreement over the appropriate relationship between the different levels.

The first concerns the level at which sub- scriptions are held: the CBU would prefer these to be collected at the first level (the individual enterprise-level union which cor- responds to the old staff association); BIFU would prefer them to be collected at the third tier covering the whole finance sector union. Clearly, it is felt that the control of collection will determine the control over disbursement and thus where resources are to be allocated. Thus to ensure that the existing emphasis upon the enterprise-level unit is sustained, the staff unions want the right to limit the distribution of funds to higher levels. This reflects the internalist principle that unionism is essentially an enterprise level relationship, so that higher levels are of secondary importance. Conversely, BIFU’s stance is predicated on an externalist position; its recruiting territory, covering a range of organisations in the finance sector, means that it would prefer power to be more centralised. Despite some concessions to local arrangements, it retains the traditional suspicion that enterprise unions may be susceptible to ’internalism’ in its most pejor- ative sense.

Secondly, there is disagreement over the employment of officials. In part this is an orthodox organisational problem of merging several groups each of which has a different salary scale, and has been partly resolved by a ‘no loss’ agreement guaranteeing existing terms. There is an element of institutional rivalry involved, however, which com- plicates the issue. BIFU see the employment of all officials through the central body as crucial to reinforcing the extra-clearing bank nature of the organisation, and ensuring that in the event of action being taken by one part of the union it can rely upon and coordinate the support of other sections. Given the contentiousness of the whole issue of strike action to the internalists, the issue of providing support for any group or section within the union could be very sensitive. In addition, therefore, BIFU would want to see central employment under common conditions as a means of ensuring that officials are prepared-’to move from one section to another (if necessary) and take a broad view of their responsibilities. Many staff union officials take a different position seeing their

loyalty as primarily to their particular enterprise based union and their experience not being something which could or should be readily transferred.

Thirdly, the issue of branch structure has to be resolved. Although this was a stum- bling-block in the Johnston talks, it might have been thought that BIFU would now be more flexible because it has itself deveIoped its institutional structure to the extent that the majority of its branches are now organised thus: hence the majority of its branches are based around a single workplace or several workplaces common to a single employer. However, it has reiterated its insistence on a basic geographical framework and his is to be understood as a means of ensuring 'externalism'. This goes against the interests of the staff unions which wish to preserve their identity specifically by organising on an institutional basis. Indeed, they have explicitly asserted that a common structure could not be imposed, given the variations in existing arrangements and that constitutionally,' the sovereignty to determine such issues resides at the first level rather than at the centre. Heterogeneity is therefore entirely justified. Furthermore, the staff unions have sought to reinforce the distinctions between themselves and other parts of the BIFU's existing structure which might 'swamp' them at some time in the future in any merged body at the second level (the industry wide level) by insisting the major English joint stock banks be grouped separately from the other retail bank sections, such as the TSB section. Possibly this would provide them with distinctive constitutional rights vis-a-vis the broader union.

Preoccupation with these major structural issues has directed attention away from the other persisting problems. These include affiliation to the TUC and to the inter- national trade union FIET and the right to certification. The question of affiliation to the wider trade union movement is a key area of difference, reinforced to an extent by the staff unions opposition to the TLJC policy of non-cooperation with recent employment legislation. Similarly, because the staff unions see the merged body as essentially a federation of enterprise unions they would wish to maintain their status as certificated bodies in any merged body. On this point BIFU did concede, albeit reluctantly, to the CBU before the talks broke down in 1985. It

f

also indicated a willingness to compromise more on the levying of income by the staff unions at the first level on a formula worked out by Johnston. They were considered insufficient to warrant further talks by the CBU, which wanted much stronger guaran- tees of independence at the first level and remained opposed to TUC affiliation.

Furthermore, a sixth area of difference has remained unresolved. This is slightly different, being a procedural matter. It concerns the proposal that BIFU should return to joint operating with the CBU prior to achieving a full merger. Having been a sticking point at the Johnston talks it is very unlikely that BIFU will ever accede to this, for it believes that joint working actually impeded moves to a full merger by allowing the associations to benefit in terms of membership growth from its superior bargaining strength and expertise. For its part, the CBU has argued that the resumption of joint working would be a gesture of good faith. It may be, therefore, that even if all the substantive differences were resolved, a merger could still be stopped by disagreement over this matter.

It is perhaps worth noting, however, that these issues are not totally intractable; indeed Johnston managed to establish agreements over most of them in his talks. Nonetheless, following their collapse every- thing once more has become negotiable and it is notable that there has been little attempt to build on past progress. It is also arguable that a degree of personal animosity exists between many of the full-time and lay officials of each side, reflecting the longstanding organisational rivalries as well as the distrust created by previous failures. This is compounded on the side of the CBU by the locus of power at the staff union level, so although the General Secretary of the CBU may be keen to effect a merger he cannot force any of the three constituent unions to cooperate, and the withdrawal of any one of them appears sufficient to ter- minate the CBUs involvement at any time.

For its part, although BIFU is a more centralised body its negotiators also have to 'deliver' any agreement to the membership and this has proved difficult in the past. Opposition to a merger requiring deep compromises has also been reinforced by the increasingly diverse range of interests which the union has built up in insurance, the building societies, finance houses and


banking in the last few years. This is firstly because the English clearing banks have become only one (albeit still the numerically predominant one) of numerous sections. Many of the other sections do not regard the issue as a priority and would certainly look carefully at any deal which appeared to give the staff unions exceptional treatment. Sec- ondly, diversification may in itself represent an alternative strategy to amalgamation[22]: if BIFU feels it can achieve growth by con- centrating on other areas of the finance sector it may decide that it can afford to wait and take the staff unions individually or collectively, but on more favourable terms than the latest round of formal talks would permit .

This brings us back to the market prospects for the banking sector and employer policies. Tn the past their ambiguous atti- tude to amalgamation has arguably impeded its achievement. On the one hand, they have formally supported efforts to end the division because they felt the instability of com- petitive unionism was ultimately unde- sirable. Yet only once, in 1968, after a series of unprecedented strikes by NUBE over its recognition claim did the banks collectively intervene over this issue. Although, since then, managers have considered ways to end the duplication of representation they have finally rejected intervention as too risky an option and since currently the banks appear to be gaining more from division than they are losing there would be little point in them trying to develop an initiative. Yet given the stalemate between the unions over membership and bargaining achievements and the wide areas of difference, i t may be that it will require a change of employer policy on recognition to precipitate a merger by raising the costs of separation. One such (purely hypothetical) change might be, for example, if Barclays Bank were to withdraw recognition from BIFU on the grounds that the union’s membership has fallen to such a level that it is no longer representative of a significant number of staff. Alternatively, if membership of the employers federation was extended to a number of other retail banks and BIFU found it was numerically predominant then this would obviously affect the balance of power between the two sides. But unless such a change in employer policy does occur it appears unlikely that a merger will be concluded.

Conclusions This analysis suggests that in a proposed ’consolidarity merger’ of this type, ideological differences and matters relating to the balance of power may override the sort of cost/benefit logic which was implicit in Undy’s model of mergers. It might also be concluded that, regardless of the skills of the negotiators or the commitment of the ‘dominant groups‘ in each side (which Undy also saw as crucial to the successful conduct of merger negotiations), where there is relatively less urgency to merge in order to sur- vive the distribution of power will be highly problematic, and may prove to be a stum- bling block to a successful outcome. The paper also stressed that in this instance merger discussions have been stimulated by factors other than membership trends. A variety of factors including bargaining power and the costs of separation have been important and these in turn have related to changing employer strategies. This suggests that although membership growth (relative, potential and actual) is obviously of importance to unions, there are other determinants of institutional survival and strength which are taken into account.

In general, Undy’s model would suggest that as membership has fallen throughout the union movement in the last few years then mergers would be likely to be occurring at an accelerated rate. Yet what is perhaps interesting is that as often as not likely can- didates for a merger do not proceed into discussions, or fail to carry them through. The faltering negotiations in the printing industry, or those between the civil service unions exemplify this. Unions may have alternative strategies which appear more attractive, such as diversification into other job territories; but sometimes they may appear to take little action at all. This is because union ‘rationality’ is not solely of a cost/benefit type, but is also determined by a number of internal political considerations; it is these that are likely to explain why, for instance, the logic of a merger between ASTMS and APEX has led to nothing, or why certain finance sector staff associations have opted to join ASTMS, some BIFU, and some like the Bank of England Staff Organisation initiated discussions with prospective merger partners and then decided to remain independent. Or why the ’passive’ GMWU was able sud-

138 Industrial Relations Iournal

denly to attract the Boilermakers into a merger in the face of strong competition. In his case-studies Undy does acknowledge the importance of non-economic factors in the merger process but appears to discount them in discussing why the strategy of merger is adopted or under what conditions they may be critical to the outcome. More needs to be discovered about this, as well as why mergers do not proceed despite falling membership rolls and tighter financial con- straints, in a wider theoretical context which seeks to explain the dynamics of union behaviour.

Secondly, the role of the employers could fruitfully be analysed further in this context. The discdssion above illustrated not only how laissez-faire employer policies undermined the pressure to merge but also how much the structuring of an enterprise philosophy sustained the relevance of internalism. On this point it is notable that in Japan, where large companies have, like the clearing banks, fostered strong internal labour markets and paternalistic employment policies enterprise unionism has also thrived. If, therefore, British employers are also seeking to extend policies through which their workforces develop a stronger enterprise orientation, as for example Brown and Sisson have argued this may have an impact on the nature of merger decisions particularly in other areas where staff associations have become established[23]. Changes in the division of labour and the blurring of craft-technician distinctions may also explain why a smaller union like TASS representing key groups in the manu- facturing sector can become more attractive to a variety of skilled and semi-skilled unions than the TGWU.

As for the banking unions, much of the evidence suggests there is little chance of a merger between BIFU and the CBU. Ideo- logical differences regarding the aims and methods of trade unionism have under- pinned the unique form of institutional competition between them and intensified these differences. As with previous discussions, the current round has exposed certain key problems which reflect the fundamental differences over the desired locus of power in any merged body. There are also a number of issues, such as membership of external organisations, relations with other unions and the provisions for industrial

action, over which the two sides have tra- ditionally disagreed. These differences reflect conflicting principles: BIFU, on the one hand, although a ’moderate’ union in many respects, has identified more closely with the mainstream of British unionism; in contrast, although the associations have proved flexible in coming to terms with a changing employment relationship in banking they have also retained a distinctive image based around their internalist principles.

Yet both sides are aware of the need to take a merger proposition seriously. A changing market environment and less ’indulgent’ management strategies, coupled with the rapid change in the nature of employment engendered by technological innovations (plus a slow down in employment growth in the sector) means that a further failure could be critical. For the unions could be looking at another five years of division in which they are unable to influence the changes taking place and from which a more ’defensive’ type of merger, possibly with another white collar union, might then be necessary.

References 1.

2. 3.

4.

5.

6.

7.

8.

9.

10.

Undy, R., Ellis, V., McCarthy, W. E. J. and Halmos, A. M., Change in Trade Unions, Hut- chinson, 1981. Ibid. Daniel, W. W. and Millward, N., Workplace Industrial Relations Survey, (DE/PSI/SSRC) Heinemann, 1983. Swabe, A. and Price, P., Building a Permanent Association! The development of Staff Associ- ations in the Building Societies, Poly of Central London Research Working Paper No. 21, 1983. Certification Officer for Trade Unions and Employer Associations (1979) Staff Associ- ations, Supplement to the Annual Report of the Certification Officer, HMSO. Buchanan, R. T., ’Mergers in British trade unions 1949-1979’, Zndustrial Relations Jour- nal, Vol. 12, No. 3, 1981. Allen, V. and Williams, S., The Growth of Trade Unionism in Banking 1914-1927, Man- Chester School, 1960. Martins Bank Staff Association document, 1960. Bain, G. S., Coates, D. and Ellis, V., Social Stratification and Trade Unionism, Heine- mann, 1973. See Blackburn, R. M., Union Character and Social Class, Batsford, 1967.


11. Prandy, K., Stewart, A. and Blackburn, R., White Collar Unionism, CUP, 1983.

12. Dickens, L., ‘Staff Associations and the Industrial Relations Act: the effect on Union Growth’, Industrial Relations Journal, Vol. 6 , No. 3, 1975. National Westminster Staff Association Con- stitution and Rules, 1982. New Technology in Banking Insurance and Finance. 1982, BIFU. ’New Technology and Developments’, CBU discussion document, 1985, CBU. Latta, G., Trade Union Finance. British lour- nu1 of lndustrial Relations, Vol. 10, No. 3,1972. Rajan, A., ’New Technology and Employ- ment in the UK Financial Services sector; past impact and future prospects’, Gower, 1984. See also Morris, T.J., Innovations in

13.

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Banking: Business Strategies and Employee Relations, Croom Helm, 1986. See Johnston, T. Reports ’Mark 1’ (Oct. 1978) and ‘Mark 2’ (Aug. 1979). unpublished. See Moms, T. J., ’The Establishment and Operation of National Negotiating Machin- ery in the London Clearing Banks‘. London Unv. PhD. 1984.

See Financial Times, March 12 1984. BIFU’s growth strategy is discussed more fully in Willman, P. and Moms, T., ’Union Growth: a case study of the Banking Insurance and Finance Union‘. London Busi- ness School discussion paper, 1985. Brown, W. and Sisson, K., ’Current trends and future possibilities‘, in Poole, M. et al. Industrial Relations in the Future, RKP, 1984.

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20. Ibid. 21. 22.

23.

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Trade union mergers and competition in British banking

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