Validity and Effect of Orders

Clause 39 – in the House of Commons at 11:45 pm on 9th April 1984.

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Lords amendment: No. 80, in page 22, line 30, leave out from "final" to second "is" in line 31 and insert "or provisional order"

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker:

With this it will be convenient to take the following:

Lords amendment: No. 81.

Lords amendment: No. 82A, in page 22, line 35, at end insert— (5C) Where a duty is owed by virtue of subsection (5) above to any person—

  1. (a) any breach of the duty which causes that person to sustain loss or damage; and
  2. (b) any act which, by inducing a breach of that duty or interfering with its performance causes that person to sustain loss or damage and which is done wholly or partly for the purpose of achieving that result,
shall be actionable at the suit or instance of that person.(5D) In any proceedings brought against any person in pursuance of subsection (5C)(a) above, it shall be a defence for him to prove that he took all reasonable steps and exercised all due diligence to avoid contravening the order.

and amendment (a) thereto in the name of the hon. Member for Newcastle under Lyme (Mr. Golding), at end insert— ' provided that no person shall be taken to have done an act wholly or partly for the purpose of causing loss or damage merely because he appreciated that such loss or damage would be a consequence of that act. A trade union shall not be liable under this section in respect of any act unless that act was authorised or endorsed by a responsible person for the purpose of causing such loss or damage. For the purposes of this section, "authorised or endorsed by a responsible person" shall have the same meaning as in section 15 of the Employment Act 1982.'

Lords amendments Nos. 83, 84 and 117.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

This is a most important matter, and probably represents the most important change in the Bill since it went to the other House. I have asked the Solicitor-General to be present, because the amendments relate to a change in the law about industrial relations. It is a complex matter, and I am sure that the House will welcome the advice of the Solicitor-General when I invite him to reply to the debate.

The amendments strengthen the enforcement procedures in the Bill and give greatly increased protection to those who depend upon telecommunications. The Bill as it left this House had two important defects. First, no one apart from the Director General could sue an operator for damages or apply for an injunction requiring the operator to comply with a provisional order until after the order had been confirmed. That meant that there could be a delay of well over 28 days between the Director General making a provisional order and anyone damaged by the breach of the order being able to obtain any relief.

Second, the Bill made no provision for circumstances where the operator's failure—let us say, BT's failure— to comply with an enforcement order arose when he was doing his best to comply but the breach resulted from the deliberate action of someone else. As a result, there was no clear way of ensuring that those who were deliberately harmed would recover damages from those who actually caused the harm, and no adequate defence for operators —the public telecommunications operators — who contravene their licence obligations through no fault of their own.

These amendments correct these defects. Amendments Nos. 80 and 81 mean that clause 18(5) will specify that: The obligation to comply with a final order or provisional order is a duty owed to any person who may be affected by a contravention of it". Therefore, as soon as a provisional order enters into force it must be obeyed. that is a significant change and represents a considerable strengthening of the powers of the Director General.

If it is not obeyed, the customers or potential customers who are denied service or are otherwise affected by the breach of the order can go to the courts to obtain an injunction requiring compliance, or can sue for damages. This applies even where the provisional order is subsequently modified or revoked. During the period when the provisional order is in force, its provisions must be obeyed. If the operator fails to comply with a provisonal order, anyone caused loss or damage by that failure can sue.

Lords amendment No. 82A ensures that anyone who suffers loss or damage as a result of the duty to comply with the enforcement order can sue the operator—for example, BT—who breached the duty and any person who acted deliberately to induce the breach or who interferred with the operator's duty to comply with the order. When the action is against someone who induced the breach or someone who interfered with the performance of the duty, the plaintiff will have to demonstrate that he has suffered loss or damage as a result of the breach of the duty to comply with the enforcement order and that the action was taken wholly or partly to achieve the resultant loss or damage.

I apologise to the House for the complexity of that legal statement, but it will recognise that such provisions are vital. In the past few months we have all been subjected to a campaign by the British Telecom unions committee which has spent hundreds of thousands of its members' money to sow the idea that privatisation will lead to a loss of essential telecommunications services. The papers have been full of advertisements of heavy hands taking away public call boxes, of rural areas without telephones and wires being cut by scissors labelled "Telecommunications Bill". One advertisement has included a full-page photograph of my right hon. Friend the Secretary of State, implying that he will personally attack BT. I only hope that, when the advertisement appears, such is the wish for accuracy in promoting the campaign, that my right hon. Friend's name will be spelt correctly.

The message has been that the Bill must include safeguards to ensure that rural areas and people who use call boxes will continue to receive services and that nobody in the privatised industry will be enable to cut off vital services. We entirely agree. The Bill has always contained safeguards and these amendments add to them. Nobody, management or worker, member of the telecommunications industry or outsider, will be able deliberately to cut off services to any telecommunication customer who is protected by a licence enforcement order without exposing himself to the risk of paying damages to the people who suffer loss or damage.

I appreciate that Opposition Members are worried about that. They claim that the Bill takes away from trade unions their right to strike. That is not so. Lords amendment No. 117 makes a substantial change to clause 45. The House will recall that that when the Bill left this House, clause 45, like the existing Telegraph Acts, contained the important provision that anyone engaged in the running of a public telecommunications system who intentionally prevented, delayed or interrupted the transmission or reception of a message committed a criminal offence, the maximum penalty for which was to be two years' imprisonment. That had been the law since the middle of the 19th century.

Opposition Members claimed repeatedly and loudly that that restricted the right of telecommunication workers to strike. They were right. We have listened to their complaints and made a significant change to clause 45. Although we were convinced that telecommunications were specially important to all aspects of modern life, and although we were sure that some special protections were needed for people who depend on telecommunications, we were uneasy about the idea of criminal penalties being applicable to those who go on strike. We therefore decided that if we amended clause 18 to give people who were deliberately damaged by trade union actions the right to damage and injunctions, we could take away the criminal penalties.

Amendment No. 117 therefore safeguards the right of unions to strike. It is wrong to say that it takes those rights away. Amendment No. 82A merely provides that if anyone, including a trade union, takes industrial action deliberately to damage anyone who depends on telecommunications, that person, whether a trade union, a firm or a private individual, exposes himself to being sued for damages.

In another place the Lord Advocate made it clear that the sense of amendment No. 82A is that it does not limit the ability of trade unions to take generalised strike action, provided that it is wholly for the purpose of achieving an increase in pay, or an improvement in conditions, and so on. However, it ensures that if a union takes action which induces a breach of an operator's duty—in this case let us say British Telecom—to comply with an enforcement order issued by the Director General of Oftel, and if the union's action was taken partly for the purpose of achieving the result of causing loss or damage to an individual, that individual can sue the union for damages.

12 midnight

As I said, the Solicitor-General will reply to the debate because this is very much a matter of legal definition, but it is appropriate for me, as the Minister responsible for the policy, to set out and to defend that policy.

The hon. Member for Newcastle-under-Lyme (Mr. Golding) has tabled an amendment which seeks to weaken the protection that we are now building into the Bill. I cannot speak to it yet because he has not moved the amendment, but I can say that I know the arguments that he is likely to adduce because there has been correspondence——

Mr. Deputy Speaker:

Order. It might help the Minister if I say that the hon. Member for Newcastle-under-Lyme (Mr. Golding) need not move the amendment. It is being taken with amendment No. 80, so the Minister, or anyone who wishes to take part in the debate, can mention all the amendments that I called out when the debate began.

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

On a point of order, Mr. Deputy Speaker. The Minister is right to say that he knows my arguments. I have always let him know my views, and I have always pleaded with him to do the same.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

The hon. Gentleman knows the arguments that I set out during the past 10 minutes.

This group of amendments changes significantly the trade union law relating to telecommunications activities. It eliminates the criminality of deliberate interception, which has worried the Opposition Members and some Conservative Members, but it introduces, in the circumstances I described, a liability to damages should an enforcement order be wilfully broken as a result of trade union action.

I strongly commend the amendments to the House. They represent a significant package which improves the enforcement arrangements in the Bill. I stress again the fact that the amendments ensure that trade unions will enjoy the right to strike, but at the same time they provide protection to individuals who depend on telecommunications and who may be damaged by the deliberate actions of telecommunications operators or their employees.

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

Whenever the Minister of State has a legal brief that he does not quite understand he always tells the House that it is a complex matter. It is perhaps for that reason that the first sentence of my notes reads, "The background to this amendment is complex."

The Minister of State told the House — I believe following the remorseless logic of my speech on Report — that the Government, after voting against this proposal at least three times, sneaked off to the other place and decided there to remove the criminality. I thank the Minister of State and the Solicitor-General for that. I have never relished a winter spent in Wormwood scrubs. However, I cannot thank the Minister for introducing a system of civil damages instead. The Government are saying to officials, such as myself, "You need not go to Wormwood scrubs, but you and your members will go instead to the debtors' prison after you have been bankrupted in the civil courts." As the Minister said, the Government have left a union open to civil actions when it is held to be its fault that the duty imposed by a licence is not fulfilled, thereby causing damage to a third party.

As the right hon. Gentleman will know, with the help of lawyers we have been discussing this matter for several weeks. The unions do not agree that there should be any liability' for civil actions. They believe that they should be free in all respects to engage in strike action, whether it is political or directed against particular customers. However, we know that Government policy is firm on this point and that we shall not persuade them to change it. My amendment does not attempt to do so. It attempts to deal only with the rights of a trade union to take industrial action to further its legitimate industrial interests of securing higher pay, improved conditions, and so on.

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North

Has not the hon. Gentleman uncharacteristically slipped up? This is not about where action interferes with the customer, but where the intention of that action is to interfere with the customer or potential customer. Is not that a great and important distinction?

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

That is what the Minister and I have been discussing for several weeks, with the help of lawyers. I hope that the Solicitor-General will forgive me, but with lawyers it is a question of paying your money and they take their choice.

Photo of Richard Shepherd Richard Shepherd , Aldridge-Brownhills

Wherein lies the equity when a union or union members, in pursuit of their own interests, may perhaps cause the bankruptcy of a private individual or company who may not sue for damages?

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

The equity lies in the fact that, so far as I am concerned, all people have the right to withdraw their labour, just as the firms that the hon. Gentleman has in mind have the right to withdraw their services. That leads us into philosophical discussion, but firms are able to withdraw their services to me. For example, doctors can knock me off their panel without let or hindrance. I could go on, but we should then be discussing freedom when we ought to be discussing telecommunications.

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North

Now answer the question.

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

I have answered the question, although, if I were to answer it fully, it would take a long time.

I know that I shall not persuade the Government or Conservative Back Benchers on this point. My amendment seeks only to make sure that unions have the right to strike for better pay and conditions without threat to their funds from civil actions. I believe that the Government agree that they should be able to do so. My argument is that the wording of the legislation is such that we cannot be certain that the unions will have that freedom.

The Minister got out of answering my amendment by saying that you, Mr. Deputy Speaker, would not let him answer it. When you said that he could, the right hon. Gentleman collapsed and floundered. The Minister of State thought he could get out of answering the amendment by appealing to the Chair, but you scuppered him, Mr. Deputy Speaker. You clobbered him in what I was about to describe as an unseemly fashion, but, of course, you could not possibly do that.

The Minister of State was hoping that the responsibility would be placed on the Solicitor-General to answer the amendment. The Minister of State came to the Dispatch Box and said, "I shall take the political responsibility", but he did not take the political responsibility of answering my amendment. He is leaving it instead to legal gobbledegook.

I come to the nub of the argument, and here I have to say that the hon. Member for Northampton, North (Mr. Marlow), for the first time in three years, made a relevant intervention. The whole nub of the argument is about how the word "purpose" will be interpreted in the courts. 'The hon. Member was right, and that shows there is hope for everybody in the House.

When a strike takes place, making it impossible for BT to fulfil a duty, the union is liable, if it can be proved that the act of inducement was done wholly or partly for the purpose of causing loss or damage. That is in the legislation. The difficulty is that all strikes cause loss or damage. That is inevitable. A union must assume that when loss or damage is caused to a customer, pressure will be placed on the employer. A strike does not take place to cause loss or damage to a customer. A strike takes place to persuade the employer to provide better conditions, to pay more, and so on. However, when loss or damage is caused, an employer may be persuaded to pay out more readily.

The question for the Minister is one that he has fobbed off to the Solicitor-General. What is meant by "purpose" in such cases? What is the purpose? Is it to cause loss or damage to the customer and so entitle him to sue the union, or is it to persuade BT? If it is the latter, it makes the union immune. That is the nub of the argument, as rightly seen by the hon. Member for Northampton, North.

Our legal advisers tell us that the law can be interpreted either way. It is a toss-up. That is the advice we received from our solicitors and from counsel. They say that as the legislation is drafted, the interpretation can go either way. If we go before one judge, he may decide that we are subject to civil damages; if we go before another, he may decide that we are not. It is unsatisfactory that the Government are passing legislation that legal advisers are saying is ambiguous, unclear and uncertain. Perhaps it is forgivable if a Government do so not knowing what they are doing, but when, week in week out, we tell the Government that what they are doing is uncertain, they should clear up that uncertainty one way or the other.

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North

I defer to the hon. Gentleman's expertise and experience and ask his advice. Is he not on a wild goose chase? Is not the position that, without the amendment, the Post Office Engineering Union, should it feel so inclined, would be able to prevent the operation of any other telecommunications system of any other licensee? Does not the amendment mean that if it does so it will be actionable in the courts? Without this amendment, the Bill as it is could be worthless, because the idea of increasing competition and the diversity of telecommunications services could be obstructed by the POEU.

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

Wild geesing is out of season. I made it clear that my amendment would not have the consequence that the hon. Gentleman suggests. I said clearly that we do not like it, but we accept that Government policy is to make such actions actionable if they discriminate against the customer. We are not arguing about the amendment.

My amendment is to make it clear that we can take general industrial action, in particular in support of pay and conditions claims. Counsel and solicitors have got that point, and I do not think that the Minister will argue on that. We are trying to make certain that the Government's intentions are set out clearly in statute.

12.15 am

I am advised that a judge could follow the case of Chandler v. the Director of Public Prosecutions, or Emerald Construction v. Lowthian, in which it is stated that a person is taken to intend the natural consequences if he or she runs the risk of such consequences. In other words, if one causes loss or damage to a customer while trying to persuade BT, one must pay the consequences. The judge can look at these cases and say that whatever the person has done, the purpose was defined in a narrow way, and any action that was taken could subject that person to damages.

On the other hand, another judge could follow the case of Crofter, Harris Tweed v. Veitch, or Lonrho v. Shell or Hadmor Production v. Hamilton, and that would be to the advantage of the union. Mr. Bryan Stanley, the general secretary of the POEU, has set these arguments down in a letter to the Minister. I shall quote for the record, because I am sure that the Solicitor-General has studied the letter from Mr. Stanley. These cases concern the tort of conspiracy that is frequently used in industrial relations. In Crofter, Harris Tweed v. Veitch, Viscount Simon said: A question to be answered is not: 'Did the combiners appreciate, or should they be treated as appreciating, that others would suffer from their action?'; it is 'What is the real reason why the combiners did it?' or 'What is the real purpose of the combination?' The test is not what is the natural result to the Plaintiff of such combined action, or what is the resulting damage which the Defendants realise, or should realise, will follow, but what is in truth the object in the minds of the combiners when they acted as they did. It is not consequence that matters but purpose. In other words, did the union set out to get more pay and better conditions, or did it set out to cause loss or damage to customers? That was reaffirmed by the House of Lords in Lonrho v. Shell, when it was held that an intent to injure was essential in the tort of conspiracy. It was re-emphasised in Hadmor Productions v. Hamilton when Lord Diplock said: However misguided the purpose of ACTT in threatening the blacking may have been, that purpose was not to injure Hadmor however inevitably injury to Hadmor might be one result of the blacking. The purpose of my amendment is to ensure that the courts follow the second rather than the first line of cases. My amendment uses the words "appreciate" and "consequence". Those words were used by Viscount Simon in the Crofter case. They were mentioned earlier and so should guide the courts in that direction.

My amendment covers another point. The Bill at present does not specify when a trade union will be liable under clause 18(8)(b). That means that the common law concepts of vicarious liability and agency will be brought to bear in deciding whether a trade union is liable for the acts of its officials and other members.

The purpose of my amendment is to eliminate the union's liability along the same lines as in section 15 of the Employment Act 1980. The common law concept of vicarious liability is drawn very widely and is likely to include a situation in which an official calls out members even if he or she is not authorised by the rules to do so. Under section 15 of the Employment Act, on the other hand, it is open to the executive council, president or general secretary to repudiate an action taken by anyone else who is not authorised by the rules to take such action.

It should be noted that section 15 does not automatically apply to the Bill in the same way as section 16 on limitation of damages. Section 15 is limited to the three torts specified therein—intimidation, inducing breach of contract and conspiracy—whereas section 16 refers to any proceedings in tort.

I am grateful to you, Mr. Deputy Speaker, for allowing me to put that on the record. This is a very important subject. It would be tragic if in the months to come it was found in the courts that what the Government intended had not come to pass. It would be tragic if it was not found that in reality, because of the threat of civil action to the funds of trade unions, the union had effectively lost the right to strike in cases where the dispute was about pay and conditions of service.

In my view, the Minister has acted in good faith, but he has not gone far enough in making certain that the law is clear.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I appreciate the arguments that the hon. Gentleman has adduced. They have been set out in two long letters to me by Mr. Brian Stanley and the chairman of the BTUC, to which I have replied at considerable length today.

I shall let my hon. and learned Friend the Solicitor-General deal with some of the legal argumentation on the cases that were quoted, but I remind the hon. Gentleman of a question put to him my my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) to which the hon. Gentleman has not really addressed himself. My hon. Friend asked what was the equity in allowing a union total immunity when by its action it intended to cause damage that could drive a person or company into bankruptcy. What is the equity in that? The net result of the amendment would be to establish that position.

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

I do not believe that the amendment is addressed to that. This is our advice. It is not an argument that I have dreamt up; it is an argument based on the advice of counsel and solicitors. The amendment is addressed to a situation in which action is taken not with the purpose of causing loss or damage to the firm involved, but to improve its employees' pay and conditions.

There may be circumstances when, in an argument between a trade union and an employer, a third party gets hurt. That, historically, has been the case. Then the responsibility is as much on the employer as on the trade union. But in arguments between commercial organisations, third parties can be damaged. That is a risk that one takes in the free economy. My amendment is directed not to the point that the Minister and the hon. Member for Aldridge-Brownhills (Mr. Shepherd) made about what happens if the union deliberately sets out to smash a private firm, but to the situation that exists when a union sets out to negotiate better pay and conditions from the employer and the employer is adamant in his refusal to grant them.

Photo of Richard Shepherd Richard Shepherd , Aldridge-Brownhills

I note what the hon. Gentleman says, but we are considering the provision of a monopoly service and members of the general public seeking satisfaction elsewhere, whether in transport or something else. If a monopoly service is withdrawn, it can damage ordinary members of the public and that is what is important. It is the duty of the House to try to protect the individual and the individual company against the situation which arises in monopoly industries. Will the hon. Gentleman comment on that?

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

That is not the Government's position. As I understand the Government's position, if the union sets out deliberately to smash a company or to take political action, it is to be subject to action in the civil courts. The Government's position, as set out in letters, is that if the union sets out to process a normal industrial claim, it shall not be subject to action in the civil courts. I shall listen with interest to the Solicitor-General. All the Minister's statements to the union have been to the effect that the Government do not want to take away the normal right to strike or to make normal industrial action subject to action in the civil courts. The argument between us is one not of principle, but of definition. It is about writing into the Act the right words to achieve that.

I think that the Solicitor-General will say what the Government have said to us for weeks. He will tell us not to worry. That is what the Government said on the first occasion, and then they introduced an amendment. Then they said that there was no difference between us, but they thought that the wording of the legislation was sufficient to do what we wanted. The argument raised by the hon. Member for Aldridge-Brownhills is an entirely different one from that of the Minister. I understand the hon. Gentleman's difficulties because the Government have decided to keep a virtual monopoly in telecommunications when previously they promised competition. Of course, there is a difficulty when there is a monopoly. That is a difficult dilemma to solve in the private sector.

12.30 am

It is one of the problems that have arisen because the Minister has created a private monopoly. If the union could be subject to civil damages, having taken action against the employer and hurt a customer, that would mean effectively that the union could not take industrial action. It would be faced with a private monopoly employer and, as such, virtually a private monopoly employer of telecommunications skills as well. The union would be faced with a private monopoly employer against which it could not take industrial action. In those circumstances, where is the equality of bargaining? The employer would try always to resist wage claims and improvement in conditions. If the hon. Member for Aldridge-Brownhills were to get his way, the union could never take action against the employer for fear of being made bankrupt through action in the civil courts. There is a difference in position between the hon. Gentleman and the Minister.

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North

As I understand it, there are two parts to the amendment. The first part states that if the employee, or group of employees, realises that what is being done could cause damage, that is not to say that it is the intention to cause damage. On this question, the House will hear from my hon. and learned Friend the Solicitor-General. The second part of the amendment says that, if damage is caused through unofficial action, that shall not be actionable in court. Does the hon. Gentleman intend to come to that point?

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

That is to put it on a par with other unions, and that is reasonable. However, it is unreasonable to say that a union is to be subjected to civil damages for acts that it has not authorised. That makes the running of a union almost impossible. If a group of union members decide that their purpose is to bankrupt the union, they can do so, but it would be intolerable. All legislation has recognised that if one is to be able to sue a union, at least the people who have taken the decision must be those in the union authorised to do so. For that reason, the second part of the amendment is included. When the Solicitor-General speaks, he will say that in his view one set. of opinions will have greater weight than the other set of opinions. I look forward to hearing the Solicitor-General. We have paid our money to one lot, so we may as well get some free advice from the other.

Photo of Mr Harry Ewing Mr Harry Ewing , Falkirk East

I am glad that the Minister changed his mind about leaving the Chamber, because I wish to take him to task for his criticism of the BTUC, and the advertisements that it ran throughout the campaign against privatisation. Given his usual fairness, I thought that he might have been a little more even-handed and taken British Telecom to task for the expenditure of hundreds of thousands of pounds of customers' money without the permission of the customers. At least BTUC spends its members' money with the full permission of its members. I am not aware of Sir George Jefferson or anyone else asking the permission of BT's customers to spend the hundreds and thousands of pounds that it has spent on its advertising campaign.

I hope that the Solicitor-General will accept that the issue must be tested on one or two points. First, we must test whether the POEU is treated in the same way as all other trade unions under section 15 of the 1980 Act. Under the clause as amended—and we accept that the criminal aspect of taking industrial action has been removed, although the civil consequences are definitely still there — the POEU is clearly treated differently from other trade unions. As the hon. Member for Northampton, North (Mr. Marlow) said, the difference is that vicarious responsibility would lie with the POEU or any other union involved in the telecommunications industry if any union members took unofficial action. That would be so regardless of whether, for example, the president and general secretary of the POEU repudiated that unofficial action. The Solicitor-General is bound to accept that the POEU is being treated differently from all other trade unions and in that event my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) has proved our case beyond any shadow of doubt and the Minister must accept our argument.

The issue must also be tested in relation to purpose and consequence. Although I have more than 30 years' experience of the trade union movement, I have never known a trade union or any of its members set out to damage a company beyond repair or to bankrupt it. Trade unions seek to improve the pay and conditions of their members. We all know what happens. Negotiations take place, and sometimes they break down. Sometimes the union decides to withdraw its members' labour, not in order to bankrupt the company, but to emphasise the arguments for the company being able to pay those increases, and so on. I should point out to the hon. Member for Aldridge-Brownhills (Mr. Shepherd) that both the employer and the trade union have a responsibility. One party, the union, argues that the company can afford to pay, while the other, the company, argues that it cannot afford to pay. Both seek to prove their point, but neither sets out to damage the company.

All the cases cited by my hon. Friend the Member for Newcastle-under-Lyme show that case law is on our side. The Solicitor-General must accept that. In all the cases that my hon. Friend cited, the ruling is clear. It must be proved that it was the original intention to set out to damage the company as a result. In all these cases, some of which were considered by Viscount Salmon and Lord Diplock, it is made clear that that must be proved. In none of the cases was judgment given that it was the intention to damage the company. Therefore, damages were not awarded.

The issue will stand or fall on the two tests to which I have referred. As my hon. Friend the Member for Newcastle-under-Lyme so rightly says, the amendment does not seek to amend what the Government have done in moving two thirds of the way to the position that we want them to adopt. We are seeking to take the Government the remaining third of the way forward and clarify their intention by accepting the amendments which were introduced in another place.

I hope that the Solicitor-General will base his reply on two tests. First, will employees in the telecommunications industry and members of the Post Office Engineering Union, for example, be treated in the same way under section 15 of the 1980 Act as the members of all other trade unions? The answer now is clearly and unequivocally no. The Solicitor-General has a legal obligation to correct that anomaly and the amendment gives him the opportunity to do so.

The second test is the consequence and intent argument. If the right hon. and learned Gentleman draws on the case law on which my hon. Friend the Member for Newcastle-under-Lyme has drawn, he must come to the conclusion that the consequence and intent argument comes out strongly in favour. This will possibly be the last opportunity for a long time to correct the anomaly and I hope that the right hon. and learned Gentleman will not miss it. I trust that he will correct the anomaly once and for all so that at least the Post Office Engineering Union is treated in the same way as all other trade unions under section 15 of the 1980 Act.

Photo of Sir Patrick Mayhew Sir Patrick Mayhew , Tunbridge Wells

My right hon. Friend the Minister for Information Technology has explained the objective of the Government's group of amendment's and the amendment of the hon. Member for Newcastle-under-Lyme (Mr. Golding) must be considered in the light of that, especially when considering whether the objective is achieved. The Government's purpose is to safeguard the proper interests of those who are users of telecommunications services by protecting the security of their supply.

A good deal has been said in the course of the Bill's passage through the House about the importance of these services to many people. Those concerned are not always the most profitable customers, but the Government agree that proper safeguards for those services should be provided.

When the Bill left this House, as my right hon. Friend said, the means by which the interests of users were safeguarded against interruption was a criminal sanction. Clause 45 reproduced, in effect, the criminal sanction that has been in the telegraph Acts for about the past 100 years. That sanction was very unpopular. A good deal was said about it in Committee, as I know from the occasion when I was invited to explain the circumstances in which it would apply. Whether or not my appearance in Committee on that occasion had anything to do with it, the Government later considered the matter and concluded that the criminal sanction for preventing, delaying or interrupting telecommunications messages could properly be withdrawn. Clause 45 is therefore substantially amended by amendment No. 117. The criminal sanction remains only for the intentional modifications or interference with the contents of a message. There is an element there of deceit or fraud, and most people would say that that still warrants a criminal sanction.

12.45 am

With the criminal sanction removed from all other acts which, in breech of an order of the Director General of Oftel, either prevent, delay or interrupt the transmission of a message or induce such interference, the user of telecommunications services should not be left wholly unprotected. With criminal liability removed, civil liability had to be substituted, otherwise there would be no sanction. A remedy had to exist in the form of an action for damages.

The hon. Member for Newcastle-under-Lyme fairly said that although he did not like the policy, he would not be so unrealistic as to suppose that the Government would be moved from it. The House is grateful for that realism. This is where we come to the crux of the debate. It is common ground between the Opposition and the Government and between the union and my right hon. Friend, that that civil liability should not be used to the total exclusion of the immunity that protects those who have, in contemplation or furtherance of a trades dispute, sought to interfere with the performance of a commercial contract.

That would be to go too far, and it would discriminate unnecessarily against those employed by operators of telecommunications systems. They should not be stopped from taking all industrial action — for example, in support of a pay claim. The Government do not intend that they should be, as the hon. Gentleman fairly acknowledged. Mr. Chamberlain, the secretary to the British Telecom unions committee, also fairly acknowledges that that is not the Government's intention.

The Government intend that when an operator is under a duty to comply with an order of the Director General, and somebody either induces a breach of that duty or interferes with its performance with the purpose of achieving the result that loss or damage is sustained by the person to whom that duty is owed, the Government say that he should face the consequences. What will be those consequences? He will be liable to compensate the person who has sustained the loss or damage by reason of what was done.

That should apply whether the act was done wholly with that purpose or only partly with that purpose, provided that that purpose was present. That is the Government's intention, and anything less would fail properly to protect the structure by which the Bill's provision enables the Director General to require that an operator's duty to telecom users, as set out in the conditions of the licence, shall be discharged. The Director General is, as it were, the policeman of the conditions of that licence.

Photo of Mr Harry Ewing Mr Harry Ewing , Falkirk East

Does the Solicitor-General agree that the purpose to which he referred would have to be proved as part of the civil action? Does he further agree that in none of the cases on record—he may correct me on this—was it proved that the purpose was to set out deliberately to damage the company? If there is no case law to support the Solicitor-General, why is he basing his argument so heavily on the conclusion that he appears to be drawing?

Photo of Sir Patrick Mayhew Sir Patrick Mayhew , Tunbridge Wells

It is absolutely right that the burden of proof lies with the claimant. If there are few occasions on which such a burden has been discharged, there is little about which the Opposition can complain. It is important to bear in mind that the burden lies with those who claim that they have been injured and claim damages. The operator himself is already under a statutory duty once an enforcement order is made. That duty gives rise to an action for damages at the suit of anyone who sustains loss or damage through its breach. But that would be insufficient protection if a third party can cause an operator to breach his duty to comply with the order, and the third party is not liable to damages.

Government amendment No. 82A sets out to impose liability on the third party, and it achieves just that aim and no more. It does so by identifying a specific result which it must have been the defendant's sole or part purpose to achieve. "Result" is the key word. That result is the sustaining of loss or damage by the person to whom, under the enforcement order of the Director General, the operator owed a duty by means of inducing a breach of the operator's duty or interfering with his performance. The result places the burden on the plaintiff—the user—to show that it was with that sole or part purpose the defendant did the act complained of.

It will not be sufficient to show that the defendant merely intended the act in the sense that he knew that such loss would be the inevitable or likely result of what he was reckoning to do—for example, when striking for more pay. That loss or damage must be shown to be the thing, or one of the things, he was setting out to do.

I shall give the other side of the coin. It will not be a defence that the defendant's main purpose is to secure improved terms of employment, if his purpose includes a desire to bring about the breach of the order and thereby to cause loss to the customer. In that case, he will be liable. — [Interruption.] I know that this is not exhilarating stuff at 12.50 am, but it is important to the Government's case in answer to the amendment.

"Purpose" is the key word to amendment No. 82A. I cite a dictum of Lord Diplock in Sweet v. Parsley decided in 1969. It states: Purpose connotes an intention by some person to achieve a result desired by him. The use of the word "purpose" in the amendment therefore identifies a particular result which the defendant must have intended to achieve if he is to be liable. The result must be that a person would be deprived of the service, not an improvement of working conditions.

I must deal with a contrary view that has been fairly expressed by the hon. Members for Falkirk, East (Mr. Ewing) and for Newcastle-under-Lyme—that the word "purpose" includes the natural and probable consequences that the person appreciates will probably flow from his act regardless of whether they are desired. My view, and that expressed by my noble and learned Friend the Lord Advocate in the other place, is that that belief does not give sufficient weight to the speech of Lord Simon in the Crofter Harris Tweed case, to which reference has been made, on the meaning of the word "purpose" when assessing the interpretation that the courts would apply to this clause. He states: That word directs us—at any rate in the economic torts of which this is one—to the real reason for the act being done. Purpose has been consistently construed in that sense in numerous cases of economic torts, including recent cases. I have already cited Lord Diplock's dictum.

The union's opinion effectively contends that that interpretation is not to be relied upon, because it was unnecessary to the real issue in that case and was obiter dictum. That is not the case. Before the conviction could be upheld it would be essential to determine that miss Sweet, the defendant in that case, had intended that relevant purpose.

There is a high-water mark to the union's case, and that may be found in the Chandler case, which was decked in 1962. That was a criminal case, in very special circumstances under the Official Secrets Act 1911, in which the defendants denied that their subjective object was prejudicial to the state, and sought to prove it. It was held that the royal prerogative was involved and that the ultimate motive of the defendants in a criminal case was irrelevant. That case can be authority for the meaning of "purpose" only in the highly specialised context of section 1 of the Official Secrets Act. As Lord Radcliffe said in that case: Lawyers must do the best they can to find what its content is in the context of this Act. The Government are, accordingly, confident that, in the context of the Bill, amendment No. 82A meets the objective that I have described. The first part of the amendment of the hon. Member for Newcastle-under-Lyme is unnecessary, because amendment No. 82A does not create liability for any loss or damage that was the intended but incidental result or the natural consequence of the actions taken. The second part is actively harmful and incompatible with the Government's objective, because it would confer too much protection on unions which could repudiate individual actions by union officials or members and thereby deny remedies to those who are damaged by breaches of the licence conditions induced by wildcat action.

It is because the Government consider that the secure provision of and access to telecommunications services are so important that they believe it right to make this special provision. They thought it right to withdraw the criminal sanctions, but they also believe this proposal to be right.

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North

If damage were caused and intended by unofficial action, who would find themselves in court? If that action were taken by men of straw with no assets or resources, what would be the result of the court action? Would responsibility fall on the main union?

Photo of Sir Patrick Mayhew Sir Patrick Mayhew , Tunbridge Wells

The Opposition's amendment says—'A trade union shall not be liable in respect of any act unless it was authorised or endorsed by a responsible person for the purpose of causing loss or damage.' It would be easy for whoever authorises action to say that he authorised the act, but not for the purpose of causing damage to the user of a telecommunication service. It was because that would afford so ready a let-out that the Government felt that it could not be admitted and that therefore the ordinary rules should apply. The unions have a remedy in their own hands, since they can readily take steps to ensure that their members fully understand when strike action is authorised.

I think that I have answered the two particular questions that I was asked. Of course, I do not argue that the opinion put forward on behalf of the union has no basis. It is seldom that in any matter of drafting one can say that no contrary argument can be put about its interpretation. However, if it does not seem arrogant to say so, the far better view is the one that the Lord Advocate and I have expressed. We did not pluck that view out of the air. We reached it by reference to the decided cases.

As to whether the union is being treated in a different way, unions have been treated in a separate way under the Telegraph Acts for the past 100 years, by virtue of the criminal sanction. The Government have thought it right to remove that, but the unions cannot be treated in exactly the same way, because of the importance of the telecommunication services.

The Labour Government did not withdraw the criminal sanction when they had the opportunity. A Tory Government have done that, so let it not be said that we are manifesting some malicious intent.

I hope that, notwithstanding the lateness of the hour and the turgid prose in which my argument has been expressed, hon. Members have been able to follow it and will acknowledge that the amendment of the hon. Member for Newcastle-under-Lyme should not be accepted.

Question put and agreed to.

Subsequent Lords amendment agreed to.

Lords amendment: No. 82A, in page 22, line 35, at end insert— (5C) Where a duty is owed by virtue of subsection (5) above to any person—

  1. (a) any breach of the duty which causes that person to sustain loss or damage; and
  2. (b) any act which, by inducing a breach of that duty or interfering with its performance causes that person to sustain loss or damage and which is done wholly or partly for the purpose of achieving that result,
shall be actionable at the suit or instance of that person.(5D) In any proceedings brought against any person in pursuance of subsection (5C)(a) above, it shall be a defence for him to prove that he took all reasonable steps and exercised all due diligence to avoid contravening the order.

Read a Second time.

Amendment proposed to the Lords amendment, at end insert ' provided that no persons shall be taken to have done an act wholly or partly for the purpose of causing loss or damage merely because he appreciated that such loss or damage would be a consequence of that act. A trade union shall not be liable under this section in respect of any act unless that act was authorised or endorsed by a responsible person for the purpose of causing such loss or damage. For the purposes of this section, "authorised or endorsed by a responsible person" shall have the same meaning as in section 15 of the Employment Act 1982.' —[Mr. Golding.]

Question put, That the amendment be made:—

The House divided: Ayes 155, Noes 224.

Division No. 239][1 am
Alton, DavidConcannon, Rt Hon J. D.
Archer, Rt Hon PeterCook, Frank (Stockton North)
Ashdown, PaddyCorbett, Robin
Ashley, Rt Hon JackCorbyn, Jeremy
Atkinson, N. (Tottenham)Cowans, Harry
Banks, Tony (Newham NW)Craigen, J. M.
Barron, KevinCrowther, Stan
Beckett, Mrs MargaretDalyell, Tam
Beith, A. J.Davies, Rt Hon Denzil (L'lli)
Bell, StuartDavies, Ronald (Caerphilly)
Benn, TonyDavis, Terry (B'ham, H'ge H'l)
Bennett, A. (Dent'n & Red'sh)Deakins, Eric
Bermingham, GeraldDewar, Donald
Blair, AnthonyDixon, Donald
Boyes, RolandDormand, Jack
Brown, Hugh D. (Provan)Dubs, Alfred
Brown, N. (N'c'tle-u-Tyne E)Duffy, A. E. P.
Brown, R. (N'c'tle-u-Tyne N)Dunwoody, Hon Mrs G.
Brown, Ron (E'burgh, Leith)Eastham, Ken
Callaghan, Jim (Heyw'd & M)Ellis, Raymond
Campbell, IanEvans, John (St. Helens N)
Campbell-Savours, DaleEwing, Harry
Canavan, DennisFatchett, Derek
Carter-Jones, LewisField, Frank (Birkenhead)
Clarke, ThomasFisher, Mark
Clay, RobertFlannery, Martin
Cocks, Rt Hon M. (Bristol S.)Foot, Rt Hon Michael
Coleman, DonaldForrester, John
Forsythe, Clifford (S Antrim)Nellist, David
Foster, DerekNicholson, J.
Fraser, J. (Norwood)O'Brien, William
George, BruceO'Neill, Martin
Gilbert, Rt Hon Dr JohnParry, Robert
Godman, Dr NormanPatchett, Terry
Golding, JohnPavitt, Laurie
Gould, BryanPendry, Tom
Hamilton, James (M'well N)Penhaligon, David
Harman, Ms HarrietPike, Peter
Harrison, Rt Hon WalterPowell, Raymond (Ogmore)
Hart, Rt Hon Dame JudithPrescott, John
Haynes, FrankRandall, Stuart
Heffer, Eric S.Redmond, M.
Hogg, N. (C'nauld & Kilsyth)Rees, Rt Hon M. (Leeds S)
Holland, Stuart (Vauxhall)Richardson, Ms Jo
Hoyle, DouglasRoberts, Allan (Bootle)
Hughes, Robert (Aberdeen N)Robertson, George
Hughes, Roy (Newport East)Ross, Ernest (Dundee W)
Hughes, Sean (Knowsley S)Ross, Wm. (Londonderry)
Hughes, Simon (Southwark)Rowlands, Ted
John, BrynmorRyman, John
Jones, Barry (Alyn & Deeside)Sedgemore, Brian
Kennedy, CharlesSheldon, Rt Hon R.
Kirkwood, ArchibaldShore, Rt Hon Peter
Leadbitter, TedShort, Ms Clare (Ladywood)
Leighton, RonaldSkinner, Dennis
Lewis, Ron (Carlisle)Smith, C.(Isl'ton S & F'bury)
Lewis, Terence (Worsley)Smith, Rt Hon J. (M'kl'ds E)
Litherland, RobertSnape, Peter
Lloyd, Tony (Stretford)Soley, Clive
Lofthouse, GeoffreySpearing, Nigel
McCartney, HughSteel, Rt Hon David
McDonald, Dr OonaghStott, Roger
McGuire, MichaelStrang, Gavin
McKay, Allen (Penistone)Thomas, Dafydd (Merioneth)
McKelvey, WilliamThomas, Dr R. (Carmarthen)
McNamara, KevinTinn, James
McTaggart, RobertWardell, Gareth (Gower)
Marek, Dr JohnWareing, Robert
Marshall, David (Shettleston)Welsh, Michael
Martin, MichaelWhite, James
Maxton, JohnWigley, Dafydd
Maynard, Miss JoanWilliams, Rt Hon A.
Meacher, MichaelWinnick, David
Meadowcroft, MichaelWoodall, Alec
Michie, WilliamWrigglesworth, Ian
Mikardo, Ian
Miller, Dr M. S. (E Kilbride)Tellers for the Ayes:
Mitchell, Austin (G't Grimsby)Mr. Lawrence Cunliffe and
Morris, Rt Hon A. (W'shawe) Mr. John McWilliam
Morris, Rt Hon J. (Aberavon)
Aitken, JonathanBoyson, Dr Rhodes
Alexander, RichardBrandon-Bravo, Martin
Amess, DavidBright, Graham
Ancram, MichaelBrinton, Tim
Arnold, TomBrittan, Rt Hon Leon
Ashby, DavidBrooke, Hon Peter
Atkins, Robert (South Ribble)Brown, M. (Brigg & Cl'thpes)
Atkinson, David (B'm'th E)Browne, John
Baker, Rt Hon K. (Mole Vall'y)Bruinvels, Peter
Baker, Nicholas (N Dorset)Budgen, Nick
Baldry, AnthonyBulmer, Esmond
Banks, Robert (Harrogate)Butcher, John
Batiste, SpencerButterfill, John
Beaumont-Dark, AnthonyCarlisle, John (N Luton)
Bellingham, HenryCarttiss, Michael
Bendall, VivianChalker, Mrs Lynda
Benyon, WilliamChapman, Sydney
Berry, Sir AnthonyChope, Christopher
Best, KeithChurchill, W. S.
Biggs-Davison, Sir JohnClark, Hon A. (Plym'th S'n)
Blaker, Rt Hon Sir PeterClark, Dr Michael (Rochford)
Bonsor, Sir NicholasClark, Sir W. (Croydon S)
Boscawen, Hon RobertClarke, Rt Hon K. (Rushcliffe)
Bottomley, PeterCockeram, Eric
Bowden, A. (Brighton K'to'n)Colvin, Michael
Bowden, Gerald (Dulwich)Conway, Derek
Coombs, SimonMoynihan, Hon C.
Cope, JohnNeale, Gerrard
Couchman, JamesNewton, Tony
Crouch, DavidNicholls, Patrick
Dicks, TerryNorris, Steven
Dorrell, StephenOnslow, Cranley
Douglas-Hamilton, Lord J.Oppenheim, Philip
Dover, DenOttaway, Richard
du Cann, Rt.Hon EdwardPage, Richard (Herts SW)
Dunn, RobertParkinson, Rt Hon Cecil
Durant, TonyParris, Matthew
Edwards, Rt Hon N. (P'broke)Patten, John (Oxford)
Emery, Sir PeterPawsey, James
Evennett, DavidPeacock, Mrs Elizabeth
Eyre, Sir ReginaldPercival, Rt Hon Sir Ian
Fallon, MichaelPowell, William (Corby)
Farr, JohnPowley, John
Forman, NigelPrentice, Rt Hon Reg
Fox, MarcusProctor, K. Harvey
Fraser, Peter (Angus East)Raffan, Keith
Garel-Jones, TristanRathbone, Tim
Glyn, Dr AlanRenton, Tim
Goodlad, AlastairRhodes James, Robert
Gregory, ConalRhys Williams, Sir Brandon
Grist, IanRidley, Rt Hon Nicholas
Grylls, MichaelRippon, Rt Hon Geoffrey
Gummer, John SelwynRoberts, Wyn (Conwy)
Hamilton, Hon A. (Epsom)Roe, Mrs Marion
Hanley, JeremyRossi, Sir Hugh
Hayes, J.Rost, Peter
Hayward, RobertRowe, Andrew
Henderson, BarryRumbold, Mrs Angela
Heseltine, Rt Hon MichaelRyder, Richard
Higgins, Rt Hon Terence L.Sayeed, Jonathan
Hogg, Hon Douglas (Gr'th'm)Shaw, Sir Michael (Scarb')
Holland, Sir Philip (Gedling)Shelton, William (Streatham)
Holt, RichardShepherd, Colin (Hereford)
Howard, MichaelShepherd, Richard (Aldridge)
Howell, Rt Hon D. (G'ldford)Shersby, Michael
Hunt, David (Wirral)Silvester, Fred
Hurd, Rt Hon DouglasSkeet, T. H. H.
Key, RobertSmith, Tim (Beaconsfield)
Lamont, NormanSoames, Hon Nicholas
Lang, IanSpeed, Keith
Latham, MichaelSpencer, Derek
Lawler, GeoffreySpicer, Michael (S Worcs)
Lewis, Sir Kenneth (Stamf'd)Squire, Robin
Lightbown, DavidStanbrook, Ivor
Lloyd, Peter, (Fareham)Stanley, John
Lord, MichaelStern, Michael
Luce, RichardStevens, Lewis (Nuneaton)
Lyell, NicholasStevens, Martin (Fulham)
McCrindle, RobertStewart, Allan (Eastwood)
Macfarlane, NeilStewart, Andrew (Sherwood)
MacGregor, JohnStewart, Ian (N Hertf'dshire)
Maclean, David JohnStokes, John
McNair-Wilson, P. (New F'st)Stradling Thomas, J.
Madel, DavidSumberg, David
Major, JohnTebbit, Rt Hon Norman
Malins, HumfreyTemple-Morris, Peter
Malone, GeraldTerlezki, Stefan
Marland, PaulThomas, Rt Hon Peter
Marlow, AntonyThompson, Donald (Calder V)
Marshall, Michael (Arundel)Thompson, Patrick (N'ich N)
Mates, MichaelThorne, Neil (Ilford S)
Mather, CarolThornton, Malcolm
Maude, Hon FrancisThurnham, Peter
Maxwell-Hyslop, RobinTownend, John (Bridlington)
Mayhew, Sir PatrickTracey, Richard
Mellor DavidTwinn, Dr Ian
Merchant, Piersvan Straubenzee, Sir W.
Meyer, Sir AnthonyVaughan, Sir Gerard
Miller, Hal (B'grove)Waddington, David
Mills, Iain (Meriden)Wakeham, Rt Hon John
Mitchell, David (NW Hants)Waldegrave, Hon William
Moate, RogerWalden, George
Monro, Sir HectorWaller, Gary
Morris, M. (N'hampton, S)Wardle, C. (Bexhill)
Morrison, Hon C. (Devizes)Watson, John
Morrison, Hon P. (Chester)Watts, John
Wells, Bowen (Hertford)Wood, Timothy,
Wells, John (Maidstone)Woodcock, Michael
Wheeler, JohnYeo, Tim
Whitfield, JohnYoung, Sir George (Acton)
Whitney, Raymond
Winterton, Mrs AnnTellers for the Noes:
Winterton, NicholasMr. Michael Neubert and
Wolfson, Mark Mr. Tim Sainsbury.

Question accordingly negatived.

Lords amendment No. 82A agreed to.

Subsequent Lords amendments agreed to.

Lords amendment: No. 82, in page 22, line 35, at end insert— (5A) Where a final order has been made or a provisional order has been confirmed, any contravention of a condition of the licence to which it applies, which occurred prior to that order taking effect and which would have been in breach of the duty owed by virtue of subsection (5) above had that order then been in force, shall be actionable with the prior consent in writing of the Director at the suit or instance of any person who has suffered loss or damage as a result of that contravention.(5B) In any proceedings brought against any person in pursuance of subsection (5A) above, it shall be a defence for him to prove that he took all such reasonable steps and exercised all due diligence to avoid contravening the condition of the licence in question.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley 1:15 am, 9th April 1984

I beg to move, That this House doth disagree with the Lords in the said amendment.

Mr. Deputy speaker:

With this we may take Government amendments (a) to (h) in lieu thereof, Lords amendment No. 61 and the Government amendment (a) thereto.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

There are some 12 Lords amendments—Nos. 58 to 60 and 62 to 70—to clause 16, which we have already considered. In addition, there are our proposed amendment to Lords amendment No. 61 and eight Government amendments to clause 16 in lieu of Lords amendment No. 82. The House may find it difficult at this, or any, hour to follow the proposed amendments, so for the convenience of the House I have placed in the Vote Office two documents. The one labelled A is the text of clause 16 incorporating the Lords amendments as sent to us, and the second, labelled B, is the text of clause 16 incorporating the Government's proposed amendments. Document A is the text which the Lords have asked us to accept, and document B is the text which the Government wish to send back to the Lords.

The Government disagree with amendment No. 82, which adds two subsections (5A) and (5B) to clause 18. They would provide that, where a final order has been made or a provisional order confirmed, any person who has suffered loss or damage as a result of any contravention of the licence condition to which the order refers should have the right to sue for damages in respect of any contravention of the condition which took place before the order was made. That is a radical change from the Bill as approved by the House. We made provision for the right to obtain damages to commence only when a final order had been made or a provisional order confirmed. That means that an operator becomes exposed to a liability to pay damages only when the Director has taken formal steps to specify that a condition has been breached.

The procedures leading up to the making of a final order or to the confirmation of a provisional order involve delay while the operator is given the opportunity to object to the proposed final order or to the terms of a provisional order. The Government accept that this delay is undesirable and agree that damages should be payable earlier. Under amendment No. 80, which we have just approved, damages become payable as soon as a provisional order is made. That is a significant change from the point of view of strengthening the powers of the Director General of Oftel. But amendment No. 82 goes further and proposes that the right to damages should go right back to the time when the licence condition was first breached. The only limitation on the ability to claim damages is the proposed requirement.

The Government are convinced that amendment No. 82 would do serious damage not only to telecommunications operators, both large and small, but to those who depend upon telecommunications generally. The main reason why amendment No. 82 is objectionable is that it introduces retrospection. If it remained in the Bill it would bring about circumstances in which an operator would be exposed to unlimited damages in respect of courses of action which were entirely acceptable when they were taken.

This problem arises because licence conditions will not be precise rules. They will set out broad guidelines. Therefore, an area of uncertainty would be created in the operations of a public telecommunications operator. This uncertainty would obviously harm BT and, indeed, other public telecommunications operators. BT's position would be impossible if each of its 19 million customers had the opportunity to claim unlimited damages in respect of past actions.

The position of small operators such as the radiotelephone or message handling companies would be no better. They, like BT, will have licence conditions, but they have limited resources, and actions for damages could readily drive them into liquidation.

The amendment would also do serious harm to the enforcement provisions in the Bill. As it is drafted, licence conditions are enforced by the Director, and if he discovers a breach he must normally make an order requiring the operator to take specific steps to comply with his licence conditions.

We have now changed that. The Director has a duty to act quickly. This will produce swift remedies. If, however, his action gives others the right to sue for damages in respect of the period before he makes his order, the Director will, before making any order, have to take account of the potential impact of those damages on the operator concerned. This will lead to delays in decision-making by the Director General, which no one wants.

Photo of Richard Shepherd Richard Shepherd , Aldridge-Brownhills

Surely the right to sue for the proceeding period causes the licensee to be very much more cautious in its acts in relation to the general public or the third party concerned.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

The changes that we are now introducing will make any licensee very careful indeed not to breach the licence conditions. We have given the Director General the power to issue an interim order straight away, virtually on a prima facie case before an investigation. That is a considerable extra power.

If a small company claimed that it was discriminated against by BT or Mercury—or vice-versa for that matter —and if there was a good prima facie case, the Director General could issue a provisional order which would effectively say to the offending party, "Cease and desist."

There could then be a further examination, and if the Director confirmed a prima facie case and issued a final order, damages would start from the day that a provisional order began.

That is a considerable strengthening of the powers of the Director General of Oftel. That will make all licensees very cautious indeed. That is what we want, because the whole structure of the regime that we are setting up is swift and effective policing by the Director General.

For these reasons, I hope that the House welcomes the changes that we have made. We recognise that their Lordships had a point, but we do not think that the amendments moved in another place met it effectively. We have now moved very far to meeting what they want. Towards the end of their Lordships' deliberations, those who proposed the changes felt that the purpose was not achieved by their original intention. We have now tidied it up, and I commend the amendments to the House.

Photo of Mr Roger Stott Mr Roger Stott , Wigan

Throughout the progress of this miserable Bill I cannot recall an occasion when I have had the opportunity to agree with the Minister. However, I absolutely agree with his opposing their Lordships in their amendment.

I do so for perhaps different reasons. Given that the Lords amendment contains retrospection, we are concerned not only about the operators but about those who work in the telecommunications industry as well as the trade unions in that industry. I refer to trade unions in the plural, because the Minister will be aware that the Secretary of State has granted licences not just to BT— whose principal union is the POEU—but to Mercury. It has granted licences to the Hull corporation and to two cellular radio companies, all of whose employees could be subject to the amendment if the House were to agree with their Lordships in the amendment.

I should like to put on record why the Opposition agree with the Government in disagreeing with their Lordships in the amendment. As it stands, clause 18(6) allows for the retrospective imposition of damages on those, including the trade unions, who ignore an order prohibiting them from continuing a breach of a telecommunications operator's licensing conditions.

Although we do not agree with the Bill and have said so on many occasions — the Minister for Information Technology is fully aware of that—we accept that it is essential for the Director General to decide whether action such as a breach of BT's licensing conditions would be liable, if continued, to damages. It follows that the period from which the damages would start must be when the Director General issues such an order. But following the Lords amendment a totally unsatisfactory situation has been created.

The Director General would still decide his view of such action and issue or not issue an order as appropriate, and the trade unions concerned could then proceed on the reasonable assumption that the Director General's view was correct. However, it could see his view overturned at some time in the future in an entirely unexpected way. That could be because of the different views, perhaps, of a new Director General facing the same situation, or because of a later decision of the same Director General which had the accidental effect of modifying his previous decision.

The unions—I stress the plural: the unions, not just the POEU — would then be in an extremely onerous position in having to continue a course of action which, though it breached BT's licence, did not, they thought, malice them liable for damages, only to find subsequently that they were subject to those damages because of the retrospection clause. It is a matter which clearly concerns not just the Government in respect of the operation of the licence, but the trade unions, which would be subject to the conditions of the amendment if if were to be passed by the House this evening. Therefore, we wholeheartedly approve of the Government's decision not to support their Lordships in their amendment.

Photo of Mr Michael Marshall Mr Michael Marshall , Arundel

I should like to say a few words about the Lords amendment that we are being asked to reject. Initially, I declare my interest as a parliamentary adviser to Cable and Wireless. Much of the debate that has taken place in a truncated form tonight relates to the problems that we have all had to examine very carefully when considering the difficulties with a near monopoly and its competitors.

Due to the problems that we all know so well in this House, we have not had an opportunity for adequate debate in this whole area, and I think that their Lordships, in this matter, have performed a valuable service as a revising Chamber. I pay tribute to my noble Friend Lord Morris for his work in bringing the amendment forward, and to those who, on an all-party basis, have sharpened up the debate. Having said that, I should like to make the point to my right hon. Friend that I think throughout the whole proceedings on the Bill a great deal has depended on the good will and, indeed, the assurances that have been forthcoming from Ministers in trying to mark the card for the Director General of Oftel.

I pay tribute to what my right hon. Friend and his colleagues have done in trying to meet the arguments that some of my hon. Friends have made. I hope that before the debate closes, my right hon. Friend will find an opportunity to provide further assurances on the value added network services, on the whole range of anticompetitive practices, and to touch on inter-connection. I know that he will be able to do this by correspondence, or when the licences are debated. On that I agree with what the hon. Member for Newcastle-under-Lyme (Mr. Golding) said, because we shall have an opportunity to raise some of the issues then. If some of these background problems can be met by Ministerial reassurances, the difficulties envisaged in the amendments may not come to pass.

My right hon. Friend has clearly made out a case that the Government amendment strengthens the hand of the Director General of Oftel and of those likely to be affected by the Bill against non-compliance by a licensee with his licence in a way which would not have been the case were their Lordships' amendments to be sustained. It is true that the Director will have a specific duty to act, by issuing a provisional order where he deems that a licence provision is being breached, and he can, my right hon. Friend has fairly argued, do that quickly. I accept that that is a considerable step forward. He must also take account of any loss or damage that a person may be suffering from a breach of a licensee's conditions. In that, my right hon.

Friend has made out a case. While not decrying the efforts in the other place, we can see an opportunity not only to meet the thrust of the argument, but to avoid the retrospective problems that my right hon. Friend outlined.

It would be churlish not to say that throughout the Bill's stages much has depended on the way in which my right hon. Friend, my hon. Friend the parliamentary Under-Secretary and their officials have met the spirit as well as the substance of our representations. As one who, in the past, had some part in the original Telecommunications Bill, I feel that we are in the process of removing one of the last remaining stumbling blocks on the forward path towards not just liberalisation but privatisation. I wish my right hon. Friend well in that further endeavour, and the House will look forward to what he still has to say tonight.

Photo of Mr Gerrard Neale Mr Gerrard Neale , North Cornwall

I remind my right hon. Friend the Minister for Information Technology of the speech that he gave on Second Reading of the Bill that was introduced in 1981. If he recalls his words in that debate, he will take pride in introducing these amendments this evening. However, I point out to my hon. Friend the Member for Arundel (Mr. Marshall) that I have some slight reservations about the reduced nature of his proposals. The nature of this amendment has been supported so vigorously by my right hon. and hon. Friends in the various stages of the development of the law on telecommunications because of the fear of the extent of the BT monopoly and the way in which the nature of telecommunications has been contained in the various proposed licences for the next few years.

The hon. Member for Newcastle-under-Lyme (Mr. Golding) made a point with which it is difficult to contend — that we are converting a public monopoly into a private monopoly—and asked what reason we have for doing so. I know that my right hon. and hon. Friends have made considerable efforts not only to liberalise but to increase competition. They have rightly referred to a whole range of issues where this has been done. The fear of continuing the power of the monopoly—the power to enter into unfair practices—is still there. My right hon. Friend is aware of a number of these practices that have been entered into by BT.

In the time remaining to my right hon. Friend before the licence is finalised and the framework which he has worked so hard to prepare is established, I hope that he will take account of the comments being made and try to accelerate the process whereby the attachment side of BT is separately accounted and clearly identified apart from BT's network operation to ensure that it is clear to all concerned that there is no unfair cross-subsidisation that militates against other operators, providers of other attachments and the market generally. I hope that he will see that there must be some real sense in allowing the network side of BT to have an unfettered and unihibited desire to see anyone connect to it rather than having that desire inhibited purely because it is itself in the market providing attachments.

I concede that in spirit the amendment is a considerable and welcome step forward, and I congratulate my right hon. Friend.

Photo of Richard Shepherd Richard Shepherd , Aldridge-Brownhills 1:30 am, 9th April 1984

I wish to add my own word of appreciation to the Government for taking on board the legitimate concern expressed by many of my hon. Friends and fought for very spiritedly just over a year ago by my hon. Friends the Members for Arundel (Mr. Marshall) and for Cornwall, North (Mr. Neale). At that time the Government did not entirely appreciate the fears expressed by some of their colleagues. I am glad that they have now met some of the anxieties expressed and accepted in the other place.

My only caveat—and it is a substantial one—is the moment from which one is entitled to sue for damages. My own feeling— and my experience of the Bill supports me in it — is that we do not always appreciate the moment at which we suffer damage or loss. It may be that our reckoning or understanding of the position in which we find ourselves consequential upon an act by a monopoly that is damaging to our interests is slow. Therefore, if we cannot identify to the satisfaction of the Director General of Oftel at an early stage the damage that we are experiencing and the breach of licence that we suspect, we are extremely vulnerable. It would not have been unreasonable for the Government to accept the contention that we ought to be able to sue for the entire amount of the damage and not just from the time that the Director General said that we suffered it.

My right hon. Friend accepts that his proposal will act as a caution to what we all hope is the lessening monopoly of BT and the providers of services. I acknowledge that the Government have accepted a large number of the arguments advanced in the other place and by my hon. Friends, but I regret that they did not take the final step to give our citizens rights, which are available elsewhere, to sue in defence of their properties, businesses and own interests. Therein lie our freedoms. That is much of the argument behind the contentions of my hon. Friends— that if we are to have a liberal, dynamic society, each of us must be able to defend our rights in the courts and sue for redress.

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Stockton South

I share the anxieties expressed by Government supporters. I have had recent examples of the way in which the monopoly of BT can oppress those who seek to challenge its position and open up the market in the way that the Government intend.

I have in my constituency a new firm which has been established to add on equipment to the BT system and provide a challenge to BT. It has found it very difficult to obtain equipment because of delays over approval and because of the purchasing power of the BT monopoly which prevents suppliers from supplying equipment. That will be a grave worry in future. People such as my constituents must have the power to seek redress if such unfair competition and obstacles are placed in their way. The purchasing power of BT which will remain after the enactment of the Bill will be substantial. There are ways in which that substantial purchasing power can be used against the interests of other people who want to purchase equipment from the manufacturers.

In addition, I have had evidence of some of the most appalling behaviour by BT recently. I have written to the Minister about that and I look forward to receiving his response in due course. I have had evidence—it is not the only evidence of such things happening—of firms seeking to obtain business who have had to go to BT to seek approval for installing equipment and, lo and behold, five minutes later BT has gone to the customer and offered its services at a knock-down price, taking the business away from the new company. Obviously, that will change in future. I regard that as sharp practice. It is unacceptable to have such action being taken by BT at present when it has this enormous power of approving the installation equipment when it is in competition with people who are seeking to install it.

It is worrying for the future that BT will have such a substantial, dominating part of the market. Therefore, I hope that the Minister will assure the House that the right of redress will be there, and, as we proceed this evening, that the approval of equipment will be rapid and provide equipment manufacturers with the means of getting their new equipment on to the market so that purchasers other than BT will be able to obtain it in order to install it in competition with BT. I look forward to the new system coming into operation so that there can be much greater competition in the telecom sphere than we have at present.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

My hon. Friend the Member for Cornwall, North (Mr. Neale) referred to the Second Reading of the Bill in 1981. It has been on a long journey and we are almost in port now. The Bill has changed quite a bit as it has journeyed across the seas, always—I think and hope—for the better.

I have listened carefully to what has been said about competition and I accept that there is a growing concern about some of BT's activities. The hon. Member for Stockton, South (Mr. Wrigglesworth) has written to me about the case to which he referred. I have replied to him and I am raising the matter with Sir George Jefferson. If what he says is justified, there are unacceptable practices. We are considering such instances in determining the final details of the licence, because it is essential that it should be the instrument whereby one can ensure the competition that my hon. Friend said he wanted to see.

I accept that the amendment does not go quite as far as my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) wants. On the other hand, this is a significant change. Under amendments (b) (d) and (e) the Director General has a duty to make a provisional order. He cannot just wait and see. In examining that duty he has to take into account specifically the extent to which any person is likely to suffer damage or loss if the contravention continues. Finally, there is the speed at which the provisional order can be introduced. Those are important weapons in the armoury to ensure greater competition.

Question put and agreed to.

Lords amendment No. 82 disagreed to.

Amendments made to the Bill in lieu thereof:

  1. (a), in page 19, line 30, leave out '(3)' and insert '(2)'.
  2. (b), in page 19, line 35, leave out from 'condition' to end of line 38.
  3. (c), in page 19, line 39, leave out '(3)' and insert '(5)'.
  4. (d), in page 19, line 40, after 'Director', insert '(a).
  5. (e), in page 19, line 41, leave out 'may' and insert
',and(b) that it is requisite that a provisional order be made, the Director shall (instead of taking steps towards the making of a final order)'.

(f), in page 20, leave out lines 1 and 2 and insert— '(3) In determining for the purposes of subection (2)(b) above whether it is requisite that a provisional order be made, the Director shall have regard, in particular, to the extent to which any person is likely to sustain loss or damage in consequence of anything which, in contravention of the relevant condition, is likely to be done, or omitted to be done, before a final order may be made.'.

(g), in page 20, line 9, leave out 'The duty imposed by subsection 81) or'

and insert 'The duties imposed by subsections (1) to'.

(h), in page 20, line 24, leave out from 'at' to 'is' in line 25 and insert 'such time, being the earliest practicable time, as'. — [Mr. Kenneth Baker.]