HC Deb 28 March 1983 vol 40 cc110-29

`The obligation of a person to comply with such conditions as are referred to in section 8(2) (a) to (d) of this Act is a duty owed to any person who may be affected by a contravention of it and any breach of that duty is actionable accordingly subject to the defences and other incidents applying to actions for breach of statutory duty.'.—[Mr. Henderson.]

Brought up, and read the First time.

10.15 pm
Mr. Barry Henderson (Fife, East)

I beg to move, That the clause be read a Second time.

The new clause deals with the rights of persons affected by a contravention of licensing conditions. Under the Bill as drafted licences may be granted to various public telecommunications operators. Provision is made in clause 8(2)(a) to (d) for conditions that may be applied to those licences. The purpose of the new clause is to ensure that a breach of those conditions could be actionable by an aggrieved party.

A slightly similar amendment was moved in Committee by my hon. Friend the Member for Hertfordshire, South-West (Mr. Page), who sought to impose a duty on the Director General to ensure compliance with these conditions, whereas under the Bill the Director General may take action against such an infringement of the licence conditions. In response to my hon. Friend's amendment the Minister argued that it would be liable to constrain the activities of the Director General and that that was perhaps bad. My new clause overcomes that objection without affecting the Director General's duty as described in the Bill, and it adds to anything that the Director General may or may not do a right for a person who feels that he may be adversely affected by a breach of the licensing conditions to go to the courts to seek redress.

In any concept of natural justice—and I do not speak as a lawyer—it must be right that if someone feels aggrieved as a result of the actions of other persons that affect him he should have the right of protection from the courts. Because of the way in which the new clause would be implemented—it is fairly narrowly defined—a person could not go to court and say that he did not like the licence, or anything of that kind. He could go to court only if he felt that particular contraventions of the conditions of the licence as laid down in clause 8(2)(a) to (d) had been breached.

The new clause states that we accept the terms of clause 8(2)(a) to (d) and those of clause 15, which place general duties upon the Secretary of State and the Director General, and that if, and only if, the Director General feels, for one reason or another, for whatever pressures may be upon him, that he need not take action against someone who has contravened his licence conditions, that person may take action.

The licence that would be granted under clause 7 and the conditions laid down in the licence must fall within the criteria stated in clause 8. Where those criteria have been breached, it is possible to envisage circumstances in which the Director General might, on balance, decide not to take action against the licence holder. One could hypothesise about the circumstances in which that might occur. It could be pressure from the Secretary of State or from a vested interest in industry. It might simply stem from a desire for a quiet life.

Obviously, the Director General has many duties to consider. New clause 1, which will replace clause 3, contains a long list of things that the Secretary of State and the Director General have to take into account in exercising their functions. Some of them may produce a contradiction in themselves. In such circumstances, the Director General may feel that on the balance of his range of duties as specified in the Bill it would not be appropriate in a particular circumstance of breach of conditions of licence to pursue the licence holder under his powers in clause 15. In that narrow sphere of difficulty, it would be appropriate to give someone who is adversely affected by a breach of licence conditions the possibility of recourse to the courts. In that spirit, I commend the new clause to the House.

Mr. Golding

The new clause should be rejected. When the new clause was tabled, clause 8(1) presumably referred to clause 3(1)(a), (b), (c), (d) and (e). Therefore, how can the new clause tabled by the hon. Member for Fife, East (Mr. Henderson) take into account the provision in clause 3(2), which states: Subsection (1) above shall not apply in relation to functions of the Secretary of State which are exercisable in the interests of national security or relations with the government of a country or territory outside the United Kingdom. Have those who proposed the new clause taken that into account? I doubt it.

Clause 8 is not the same as it was 22 minutes ago. It is now different. When we debated the issue, Conservative Members probably did not realise that subsection (1)(a) was being debated for amendment. The Minister will correct me if I am wrong, but I understand that we have just decided to amend it, so that A licence granted under section 7 above may also include— (a) such conditions as appear to the grantor to be requisite or expedient having regard to the"— "duties" laid down in the new clause. It is not clear whether clause 8(1)(a) is modified by new clause 3. The amendment just accepted refers to the clause on the general duties of the Secretary of State and the Director General, but it does not say which parts of the new clause are covered by it. We are in some difficulty. The Minister looks puzzled, but if he looks at the amendment that we have just accepted to clause 8(1), he will see that, instead of referring to particular parts of the new clause, it refers to the new clause in its entirety.

Had I had more time to address the House before we voted, I should have drawn attention to the vagueness of the amendment. I take this opportunity to ask the Minister of State what the amendment covers. If it includes subsection (3) of new clause 1, perhaps my remarks are not quite so pertinent. If not, those who propose this new clause should consider the position that would arise if a licence were not implemented because of national interest.

Mr. Henderson

I thank the hon. Gentleman for giving way. He has raised an important point. As my new clause is concerned with breach of licence conditions, it seems improbable that any licence conditions would include things that the public telecommunications operator would have to do to comply with subsection (3) of new clause 1, which we have just passed. Those terms are likely to be in the licence, and therefore there would be no breach of licence conditions if something were done that another operator did not like, provided it was under subsection (3) of new clause 1.

Mr. Golding

The hon. Gentleman is talking about probabilities and possibilities. Such things should be clearer in legislation.

Conservative Members have been caught, because we have altered both clause 8 and clause 3. The difficulty arises because of the amendment that we have just passed. New clause 5 says: The obligation of a person to comply with such conditions as are referred to in section 8(2)(a) to (d) of this Act". we are not clear now what we are debating. Subsection (2) says: Without prejudice to the generality of subsection 1(a) above". Unless we know what 1(a)means, we do not know what Without prejudice to the generality of subsection 1(a) above means. The Minister of State must admit that.

Mr. Kenneth Baker

Quick thinking.

Mr. Golding

Because Conservative Members have been caught out by deficient drafting, they try to score these puny points, which are always misdirected.

This is almost like the Committee stage. The Minister of State moves away from the ministerial seat to that of the Whips so as to disclaim responsibility, and the Under-Secretary is bound up in constant discussion with the parliamentary advisors, trying to find out what the amendment that we have just passed actually means. It is like old times. The hon. Member who proposed the new clause is now trying to puzzle out what is happening. The scene is made complete by the hon. Member for Northampton, North (Mr. Marlow) saying "Get on with it". We are back where we began in Committee.

What is wrong is that we would suffer from one of the worst features of the American system—the constant resort to litigation.

10.30 pm
Mr. Richard Shepherd

Clearly, an injury could be done or a person aggrieved. For instance, if BT discriminates against a customer there could be injurious effects, such as financial damage. If I understand new clause 5 correctly it enables the injured party to seek compensation in the courts for any loss suffered and I support that. Is not that a principle that the Opposition would support? Should not an injured party be compensated for any injury that has been suffered?

Mr. Golding

We do not accept any part of the Bill. The hon. Gentleman knows that. But if we are to have this legislation, let us not have the worst of all worlds. The hon. Gentleman says that this legislation will be that. Were we to end up in constant litigation we would be in the same position as the United States. We would be spending a considerable amount on lawyers rather than on technologists and technicians.

Mr. Shepherd

The hon. Gentleman has not answered my point. As I understand new clause 5 it gives a defence against being injured by the failure of BT or somebody else to act in accordance with the terms and conditions laid down. Where the Director General refers a matter in the ordinary way it still may mean that a person applying for a service or whatever suffers a loss or is otherwise injured. The new clause enables that loss to be claimed in the courts. Is not that a general principle that the hon. Gentleman and the Opposition accept?

Mr. Golding

I speak not for the Opposition but for myself and I do not accept it. If I did I would not be speaking against the new clause.

Mr. Shepherd

Does the hon. Gentleman understand it?

Mr. Golding

I understand what lies behind it and that is the temptation to go constantly to litigation, and that we do not want.

We are used to having a provision that action should be taken only by the Director of Public Prosecutions. We are used to officials being charged with the duty of deciding whether there are breaches of law—in this case civil law—of sufficient gravity to take them into the courts. In this case the Government have decided that they will apply the principle that there should not be an easy road to litigation. I do not blame them. I shall not go over the last debate, but 8(1)(a) relating to new clause 1 is so vague, so indeterminate, and, if one considers the draft proposals for the license, so absurd that it does not make any sense to be saying to all and sundry—"Look, we hereby give you authority to take the public telecommunications authorities to the courts."

I hope that Ministers will resist the new clause.

Mr. Marlow

Is the hon. Gentleman's problem the fact that if the Post Office Engineering Union, by its present prediction of action, were to cause major losses to Mercury, Mercury would be able to go back to BT and claim compensation through the courts from BT? Is that what is worrying the hon. Gentleman?

Mr. Golding

That does not concern me in this context. I am addressing myself to the general principle. I doubt whether it will concern the Minister any more than it concerns me. I think that the Under-Secretary will stick to his guns for once and respect the decision taken in Committee. It would not make sense to accept the amendment.

Mr. Richard Page (Hertfordshire, South-West)

I support the amendment proposed by my hon. Friend the Member for Fife, East (Mr. Henderson). The debate has been a re-run of what happened in Committee and we have heard the hon. Member for Newcastle-under-Lyme (Mr. Golding) make the shortest of his speeches on this Bill. I wish that he had set for the entire proceedings the pattern that he followed today. We could have discussed more aspects of the Bill if we had not been subjected to the 11-hour, five-hour and four-hour speeches on the continuous works of the hon. Member for Newcastle-under-Lyme.

New clause 5 is similar to the amendment that I moved to clause 15 in Committee. I am still worried about what course an aggrieved third party can take if the Director General of Oftel decides to be slow or not to take action against a breach of a licence.

I support new clause 5, but I am worried about some aspects of it. It clears a path for a third party to take action against any licensee who is in breach of his licence. My main concern is for the tune that could be lost before a decision on action is taken. One has only to remember how quickly technology moves to appreciate that if a breach takes place a third party could be seriously disadvantaged before any move is taken.

Clause 10 provides the mechanism by which the conditions of a licence can be altered or added tce and clause 15 provides the mechanism by which the particular conditions can be enforced.

I hope that the Minister, who will shortly represent a seat more reminiscent of Kenneth Grahame's "The Wind in the Willows" than Marylebone, will recall that in my original amendment to clause 15 I wanted the Director General's discretion to be strengthened. I thought that the discretion that enabled him to do something only if he wished was a weakness. Many third parties want the position to be more clear cut. That is why I support the new clause. It will clarify the position.

Mr. Richard Shepherd

Will my hon. Friend vote for it in the Lobby?

Mr. Page

My hon. Friend was a constant support to the Government throughout Committee. I should like to weigh up the position, see how the debate continues and how my hon. Friend the Minister replies before I make a decision. I come to the debate with an open mind. I do not announce before I make my argument that I shall vote against the Government, like some people who shall be nameless.

My hon. Friend the Minister made great play of the strength that is in the Director General's hands because of his discretion to deal with minor breaches of licence. He said that The discretion does not mean that the Director General can deliberately ignore a flagrant breach of licence conditions—this is the important point. He continued: If the Director General did not act so as to enforce conditions in licences … he would be in clear breach of that duty and could be challenged in the courts".—[Official Report, Standing Committee H, 24 February 1983; c. 1222.] I was grateful to him for drawing that to my attention.

Clause 15 provides for at least 28 days to elapse before any order may be produced and seven days before it can be submitted. While that is a sensible and adequate protection when allowing people in breach to make a submission to the Director General, it is open-ended. There is no cap on the end of the timescale. A third party suffering by the breach is prevented from taking any form of action.

The Director General could take weeks, months or even years to decide to take action. I am not a legal expert, unlike my hon. Friend the Member for Leominster (Mr. Temple-Morris) who was our unpaid legal adviser in Committee. I do not know the position under the Bill for taking action against a licensing breach while the Director General is considering the matter. But it appears that the third party would find it difficult to take action. I should welcome clarification from my hon. Friend the Minister on that point.

New clause 5 clarifies the position. It allows the third party to take action, through the courts if necessary. It will begin the process and give a clear date from which some redress for the losses can begin. If it takes two or three years for the Director General to make up his mind about a breach, the third party will have lost two or three years of revenue before being recompensed, simply through the slowness of action of the Director General. I support the purpose of new clause 5, which enables the Director General to make up his mind more quickly, or the third party to take action.

It is only fair to remind the House that the speed at which information technology is developing is frightening. Japan has designated that area as its maximum growth area for not only wealth but employment during the next decade. We cannot afford to waste time while the Director General considers whether a breach has occurred. Although I would prefer the Director General to control the licensee, I want him to act a great deal more quickly.

My hon. Friend the Member for Fife, East (Mr. Henderson) has produced an alternative. I look forward to hearing what my hon. Friend the Minister has to say. We must strengthen clause 15 if we are to avoid a great deal of confusion and problems in future.

10.45 pm
Mr. McWilliam

I have read new clause 5 with a great deal of interest, and I listened to the speech of the hon. Member for Hertfordshire, South-West (Mr. Page) with the same amount of interest, but I have problems. I cannot relate what the hon. Gentleman said to the wording of new clause 5. It refers to section 8(2)(a) to (d), which appears to be an extremely doubtful vehicle on which to float any type of legislation.

Clause 8(2) says: Without prejudice to the generality of subsection (1)(a) above, a licence granted by the Secretary of State under section 7 above to a particular person may include conditions requiring that person". as the clause is permissive, how on earth can anyone go to the courts and say, "I want redress about a permissive power of the Secretary of State"?

The other aspects of new clause 5 refer back to clause 3, which no longer exists. It appears to me that Conservative Back Benchers are trying to give the impression that they are concerned to protect the individual, when the subsection of the clause on which they are hanging that peg is permissive. Therefore, no such protection can possibly be available in law.

Mr. Richard Page

Surely the hon. Gentleman appreciates that many conditions may have been involved in the creation of the licence, but, it having been created, that is the licence on which the company will base its financial forecasts, its cash flow and its future investment programme. If that licence were then to be breached, surely all those calculations and, indeed, employment, would be put at risk.

Mr. McWilliam

I am grateful to the hon. Gentleman, because he has made my point for me.

There is another problem with new clause 5. Nowhere in the Bill is it specified that the licence has to be published. The Minister has said that he will publish the licence. Indeed, he said in Committee that he would publish the licence, but when it came to the crunch what he published was the Department of Industry's views about the generality of the licence. In fact, the Minister had the opportunity to publish the Mercury licence, which already exists, but he decided, for reasons of commercial confidence, not to publish it. I deplore the fact that he did not do so. It would have been useful to the Committee when we discussed the Bill to have available the terms of the Mercury licence, but the Minister decided not to publish it. How much redress can be obtained at the end of the day on the basis of a licence that has not yet been published? The contents thereof are not known and they cannot be known under the Bill if the Minister chooses not to publish the licence.

It seems that yet again Conservative Back Benchers are perpetrating a piece of pious nonsense. I should dearly love to see the Mercury licence. I should dearly love also to see the BT licence. The Opposition have argued that these documents are necessary so that we can sensibly consider the Bill. The Mercury licence was not made available, because of "commercial confidence". Surely that phrase means nothing in the House except a blank refusal by the Minister to give information to the House. There is no such thing as "commercial confidence" under the Standing Orders. I agree that the Minister could not show us the BT licence, but that was because it did not exist when we were discussing it. He and his officials were still discussing it when we were trying to ascertain what it meant. The document that was given to us was not worth any more than the paper on which it was written. It merely set out the Minister's officials' views of the generality.

New clause 5 gives no additional rights, and the present rights amount to nothing. I fully endorse the principle which the hon. Member for Fife, East (Mr. Henderson) was adducing. It is a good principle, but I am arguing on the practicalities of the Bill. I think that the hon. Gentleman, in his heart of hearts, will agree that although the clause is well intentioned it means nothing when set against the Bill. If an amendment had been tabled that stated that the Minister must publish all the licences in full and that had been followed by the new clause, the hon. Gentleman's clause could have been regarded as offering a protection, but in the absence of such an amendment it means nothing and I think that the House should so regard it.

Mr. Richard Shepherd

Let us assume that a small company makes an application for a telecommunications service as specified in a licence and that discrimination is exercised against it. The discrimination may be such as to cause financial loss; it may put the company out of business. Normally we would, not unreasonably, suppose that in the event of discrimination, which is proscribed by the terms of the licence, there would be some form of compensation or the right to sue for redress.

I am not one who denigrates the courts' role. I believe that our freedoms and liberties are defended and preserved by our access to the courts. I recognise, perhaps not in sympathy with most hon. Members, that as our society evolves, our confidence in institutions is eroded and our confidence in the decisions of bureaucracy and in ministerial fiats diminishes, we shall increasingly seek reference to the courts for the defence of our liberties and of our property. Therefore, I consider new clause 5 to present an extremely important concept.

I have noticed during our consideration of the Bill in Committee and on the Floor of the House that anything I endorse is almost invariably rejected by my ministerial colleagues. That does not mean, however, that the principles enunciated in the clause are not important. My heart leaps up when I behold A rainbow in the sky"— to quote the poet—but also when I behold clause 8(2)(d), because the concept of discrimination had been omitted from the Bill, and that was a very grave omission. That concept has now been included, albeit not in quite the form that I should have liked, because it is a variable that may or may not be included in a licence.

Where it is included in a licence, as under clause 8, it is important that there should be recourse to the courts if someone is discriminated against and suffers a consequential loss. I am therefore slightly dismayed by the way in which my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) traditionally advances an argument, retreats from it, suggests that he will listen to the counter-arguments, and invariably never presses it. That depresses me, because although I understand that the amendment was nurtured in the bosom of Mercury, the principles behind it are tremendously important to every other user of the systems.

I therefore urge the ministerial team, although the exact wording meets the legal requirements, to take on board the arguments behind the amendment. If they reject the amendment I shall certainly wish to press for a Division, if only to see and count those hon. Members who stand for the principle that we should be compensated when we are discriminated against by an overwhelming—in this instance our real fear is that it will be overwhelming—monopoly.

I therefore urge my hon. Friends to consider carefully the important principle of the defence in the courts of our personal wealth and fortunes and of our industries and businesses. If, for instance a licensee exercises undue discrimination that damages someone commercially, that person should have the right to reference to the courts and to compensation.

Mr. Michael Marshall (Arundel)

My hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) was right to touch on the important principle behind the new clause. I wish to declare my interest as parliamentary adviser to Cable and Wireless. It is pleasant to he back in these salubrious surroundings. For many months I have had the pleasure of listening to a number of hon. Members who are present tonight, and I have followed the Bill through Committee stage by making occasional visits and even dipping into some of the speeches of the hon. Member for Newcastle-under-Lyme (Mr. Golding).

I rise to support my hon. Friends the Members for Fife, East (Mr. Henderson) and Hertfordshire, South-West (Mr. Page) in their arguments. The essential difference between the new clause and the points made by the hon. Member for Newcastle-under-Lyme is perhaps twofold. First: as my hon. Friend the Member for Hertfordshire, South-West made plain—the approach is quite different from that which was advanced when the so-called Mercury amendment was discussed in Committee. That amendment was designed to strengthen the powers of the Director-General. This amendment is designed to give the aggrieved party an opportunity to go to court. I support my hon. Friend's arguments. I believe that that is a sound principle. We traditionally look to the courts for clarification when our laws are not crystal clear, and in an area as complex as this, I anticipate that recourse to the courts may from time to time be necessary.

It is also important to stress that the Bill as it is now—and certainly as it will be after the new clause has been added—refers to the operation of the public telecommunication operators. I always enjoy the sophisticated arguments of the hon. Member for Blaydon (Mr. McWilliam) when he tries to oppose the arguments of the Government, but he may wish to consider that this provision is open to all public telecommunications operators. Therefore, it is not a one-sided argument that Cable and Wireless will be free to use, because BT could be equally free to use it. It may be that in some circumstances Hull or cellular radio—or those whom we know would fall within that category at present—would use it. There is a significant two-way principle here.

11 pm

I should like to put the argument in the context of some of the practical problems which have been experienced so far. It is no secret that in regard to the operation of value-added network services there have of recent months been differences of view between BT and Cable and Wireless, and they turn on the interpretation of the existing agreements and licences. This has shown in practice the need to have some clear-cut procedure by which differences can be reconciled. The Minister will no doubt wish to give us his views on the matter, but I should think that one of the first advantages of the new clause is that it would make the task of the Director General somewhat easier.

If the Government are looking to the discretionary powers, as reconfirmed in Committee, rather than the strengthened powers to be carried into force wherever there is a dispute, surely we are looking for something which may be used perhaps regularly, and which could be avoided. If the Director General were able to say, "I understand that you have a power to seek recourse through litigation, and if it is your intention to move in that direction there is no need for me to take action", that would be an additional "light rein" aspect of the proposal that should commend itself to the Government.

With regard to the question of speed, I think that my hon. Friend the Member for Hertfordshire, South-West was right to raise the question of what would happen if the Director General, for perhaps perfectly good reasons, was unable to bring remedial action to help an aggrieved party promptly, because that could mean that perhaps in certain circumstances the commercial loss and damage might run on for many months and might be substantial. The Bill as drafted seems to provide no recourse by which that could be made up.

It is true that the Director General has discretion. The amendment does not restrict the powers and duties of the Director General under part II of the Bill. It would remain open to him in appropriate circumstances—for example, where a number of people were affected—to make and enforce an order. If, for example, only one person were affected by the alleged non-compliance with the conditions of a public telecommunication operator's licence, the Director General might in practice rely on a provision such as I am suggesting, but could encourage that person to seek his own remedy. For the reasons I have given, I think that would be perhaps part of the additional discretion and the "light rein" touch.

For all those reasons, I think there is a very serious point to be examined, and I am wondering what might encourage the Government to oppose the proposal. I say that advisedly because I have to reflect that over the years the incidence of Government accepting Back Bench amendments on Report is extremely limited. Indeed, I would struggle to recall a single occasion under successive Governments.

At this stage I wonder whether we are getting into the "Yes, Minister" territory, where the advisers in practice come forward with good reasons why a proposal should be resisted. If the Minister is looking at a brief which says "Resist", I should be fascinated to know whether the appropriate drill has been followed. Aficionados of "Yes, Minister" such as I will recall that the drill consists of four parts. The classic one is to say "Resist on technical grounds". That means, "We can perhaps look at the drafting." The hon. Member for Newcastle-under-Lyme, during this unholy alliance, has already tried to make some play with that tonight. I can see that his long years in Government service have made him very receptive to that kind of argument. He will know, as will the whole House, that it is possible to overcome drafting problems. We can also examine them when we deal with the legal aspects.

The House will recall that the second part of the drill is to say that there will be administrative problems. That is usually construed to mean that there will have to be a great deal more staff to police something adequately. As I have explained, if we have the light touch on the rein, we will probably have the opportunity to save staff. I am sure that that will commend itself to my hon. Friends.

The third part of the drill is to ask, "Is this the right moment?". My hon. Friend the Minister will concur that the Bill is now moving with proper speed. With good opportunities for debate under the guillotine, we cannot say that timing is a critical element.

That brings me to the last and, perhaps, most worrying part—whether there are legal problems. When we consider litigation, legal problems look like a natural. I have not had the privilege to hear what my hon. Friend has to say, but I have a feeling that he will take that course with all the alacrity of the homing pigeon looking for safe refuge. If he does, there is a serious and genuine point that he should bear in mind and which I should like to make with some care.

The real worry of those who have advised me is that the status of an order that is made under clause 15 does not seem to be wholly free from doubt. It is clear that breach of such an order is not an offence, but it can be enforced by an injunction by the Crown—for example by section 93 of the Fair Trading Act 1973, which is incorporated by clause 15(6). Despite the opening wording of section 93(2) of the 1973 Act, no express power is given under clause 15 to enable a person who suffers loss as a result of a breach of an order to take any direct action to enforce that order. He may not even know of the existence of the order as there appears to be no obligation on the Director General to publish it other than to the operator whom it is to bind.

I am sure that the House will realise that, as I have used copious notes, I have merely advanced the basis of the legal advice that I have received. It is of great significance. My hon. Friend the Minister may wish to consider the matter with some care when he replies, especially if we are considering different legal interpretations.

Mr. Henderson

In the legal context that my hon. Friend has highlighted, is there any way in which someone who has suffered damage can obtain restitution, even if the Director General had made an order, showing that the licence conditions had been breached and caused damage to another party?

Mr. Marshall

I agree that that does not seem to be clear in the Bill as we now have it, not only with regard to the final decision and all that flows from it, but with regard to delay. It is hard to find proper grounds on which what I have suggested can be resisted.

Drafting problems can be overcome, but the legal problem is a genuine and serious point which should be examined carefully. Therefore, it is not in any idle sense that I say that I shall listen to my hon. Friend's reply with the greatest care. It is on legal interpretation that the whole of his argument may turn.

Mr. Gerry Neale (Cornwall, North)

I shall raise points that are similar to those which my hon. Friends have raised. Like my hon. Friend the Member for Arundel (Mr. Marshall), I shall be interested to hear what my hon. Friend the Minister says in reply. He may say that his defence arises from the Government's general philosophy of trying to create an environment of proper competition and that sufficient powers have already been given to the Director General to monitor that competition to secure the competitive environment that he has proclaimed.

Many of the Ministers' great claims about the future under the Bill are shared by the telecommunications industry, in which I declare an interest, but there is a fear abou the lack of redress for a third party who suffers loss or damage as a result of a breach of a licence.

There will be an inherent time lag in decisions being made by the Director General, not only because in a complicated, technical age all sorts of arguments can be put to the Department of Industry about why it is not easy to make an early decision, but because until Oftel takes on people with the appropriate skills and becomes used, as an organisation, to dealing with all the matters that will arise, there will be delays in arriving at decisions.

I join my hon. Friends in urging Ministers at the Department of Industry to pay heed to the apprehensions felt by those who consider that they could be third parties who would suffer as a result of licence breaches.

The hon. Member for Blaydon (Mr. McWilliam) and the hon. Member for Ashton-under-Lyne—

Mr. Golding

Is it not time that Conservative Members stopped offending my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) in this way?

Mr. Neale

That was a slip that I have come to fear making, because I knew that it would cause the hon. Gentleman to intervene. Nursing that fear causes me to make the slip. I apologise to the hon. Member for Newcastle-under-Lyme (Mr. Golding).

The hon. Gentleman and the hon. Member for Blaydon implied that the new clause was an attack on BT or would adversely affect only BT. My hon. Friends have made it clear that the new clause would affect all licences granted under the Bill.

The hon. Member for Newcastle-under-Lyme suggested that it would be ridiculous for us to follow the American practice on litigation. In Committee, a number of us used examples from America to support various arguments, but the situation in the United States is different in this case, because the legislation on which much of the American procedure is based is very old—it was passed in the late 1930s—and it is because the Senate has found it impossible to pass any new law that successive actions have been taken in the courts, which have amounted to legislation.

I agree with my hon. Friends that we should not exclude recourse to the courts when licence breaches adversely affect third parties. While I suspect that my hon. Friend will seek to defend the Government's position, and I have to accept that it is unfortunately unlikely that this point will be taken, I ask him to reassure the House that he will carefully monitor the way in which the matters are considered by Oftel. In particular, will he consider the time that it takes for a decision to be made on some of these matters, and take careful note, particularly of the companies and individuals that are adversely affected and suffer loss, to see whether it is necessary in the future to stiffen the proceedings by allowing recourse to the courts?

11.15 pm
Mr. Marlow

I ask the Minister a simple question. As I understand it, new clause 5 visits an obligation on a licensee to comply with section 8(2) (a) to (d) of the Act. If the duty is not complied with, the matter is actionable in the courts. Among 8(2) (a) to (d), one of the duties that will be required to be performed will be to permit the connection of any telecommunications service to which the licence relates.

Supposing that BT were to be required through its licence to connect Mercury into its system, and that the Post Office Engineering Union, in its wisdom, were to decline to effect that connection. Would it be possible for Mercury to take action in the courts against BT, or would force majeure be said to act? If it were possible to take BT to court, would it be possible within the existing state, either of contract of employment or of employment legislation, to join the POEU with BT in that court action?

Mr. Golding

The hon. Gentleman will probably get advice from the Minister, but I should have thought not, because specifically, in the draft proposals for a licence, one of the conditions that excludes BT from having to give service is that of industrial dispute.

Mr. Marlow

That is an interesting point. We all know what the hon. Gentleman's interests are in these matters, but I should be interested, before passing judgment on the new clause, to hear what ray hon. Friend the Minister has to say.

Mr. Temple-Morris

There is a frenzied discussion behind me that may result in a Division, and as my name is on the new clause, I feel that I should make my reasoning clear. I liked, when I first read the new clause, the fact that an independent individual should have a right to sue, as well as the Director General, in conjunction with the Secretary of State. It is right that all those affected should have their rights, and I look forward to hearing the Under-Secretary's answer.

I have listened carefully to the debate. I add as a reason for putting my name to the new clause not only the championship of the individual, but the fact that if the Director General is in any way dilatory—here I agree with the frenzied conversationalists on my right—I feel that there would be a getting together, and the Director General would take action if he felt that somebody else would do it first.

I take the point made by the hon. Member for Blaydon (Mr. McWilliam) about the practicalities of this, which add up to the fact that there will have to he further amendments if we pass the new clause, not least over the question of the application of licences. How on earth one can enforce a licence if one does not know what it is is a bit of a mystery. I respect my hon. Friend the Member for Arundel (Mr. Marshall) for tabling this new clause. I had words with him about this, and applaud the spirit of what he said.

With due respect to my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd), we are not dealing with small individuals, but with firms such as Cable Wireless, which have adequate resources to have their own contractual arrangements with BT. Therefore, there is a case for saying that the Director General, as the public watchdog, will be dealing with people who, are at liberty to reach their own contractual arrangements with BT and enforce them. I should like to hear what my hon. Friend the Under-Secretary says about it but, first, I give way to my hon. Friend the Member for Aldridge-Brownhills. This is a matter which concerns me and, if my hon. Friend can help me, I shall be grateful.

Mr. Richard Shepherd

As my hon. Friend will appreciate, it concerns me also. The concept that it will be only substantial companies that become licensees or have dealings with licensees is a wrong one. I hope that my hon. Friend the Under-Secretary will confirm that, as competition expands, it is his wish that small firms take part as well. As I understand the clause, if I am discriminated against in an application for the provision of a service as set out in the licence—say that I am a small company, I apply for the provision of a telephone, I am discriminated against in favour of a competitor and, as a result, I lose some of my market or am put out of business—am I not entitled to argue for compensation? It does not have to be substantial companies. Insubstantial companies can be at risk.

Mr. Temple-Morris

We have put in abundant duties, as my hon. Friend the Under-Secretary reminded us when he replied to the debate on new clause 1, which can be legally enforceable against the Secretary of State and the Director General. There are clear ways through to remedy my hon. Friend's concerns.

Dealing primarily with the bigger fraternity, do we want a free-for-all or are we to create a public creature, the Director General, in whom we must have some trust and on whom the smaller person will have to rely because he will not be able to afford the cost of a full-scale legal action, anyway? Be it small or large, there is abundant scope for private contractual relations which are now, and always will be, enforceable in the courts. That is what concerns me, and no one has yet given me the answer.

Mr. Marlow

Will my hon. Friend say what legal redress a butcher in Northampton would have if he felt that he had been discriminated against in the provision of a telephone?

Mr. Temple-Morris

With respect to my hon. Friend, we have heard an awful lot about Northampton, its butchers, its citizens and its voters. I wish them all well. I shall even volunteer to return to my practice at the Bar and represent my hon. Friend's constituent without a fee if that will put his mind at rest.

Although I am in favour of the spirit of this proposal, there may be other ways of dealing with it without necessarily getting to the litigious stage—a dangerous free-for-all and a public official in whom we must have some confidence.

Mr. Butcher

My hon. Friend the Member for Arundel (Mr. Marshall) voiced his feeling that it was rare for amendments to be accepted by Governments during the Committee stages of Bills. Had he spent the past four months in Committee on this Bill he would have discovered that the Government had not been inflexible in accepting a number of changes to the Bill. Some would say that the passage of the Bill through its Committee stage had been the very justification of the principle of open government.

Mr. Michael Marshall

May I remind my hon. Friend that I said "on Report". If my hon. Friend is about to break all parliamentary records by accepting an amendment on Report, we shall welcome it.

Mr. Butcher

It goes without saying that this amendment takes us into the realms of legal procedure. My hon. Friends have tempted me sorely into using information which I have resisted using for the past three-and-a-half months, especially during the gruelling passage in Committee, about the use of words such as desiderata. Unfortunately, to meet my hon. Friends' comments this evening, I shall have to use words such as "mandamus" or even "certiorari" and look at declarations or, in plain English, injunctions.

Mr. Henderson

I hope that if my hon. Friend uses words such as "mandamus" he will be able, in the course of the evening, to clarify what Scottish law comparison there is with that practice.

Mr. Butcher

It is MacMandamus, as my hon. Friend has reminded me.

During the Committee stage, Cable and Wireless and Mercury both expressed concern that licensees, and in particular BT, will not comply with the conditions in their licences and that this failure could cause substantial harm to other people, particularly those who are the licensees' competitors. For example, if the licensee did not comply with a licence condition which prevented an anticompetitive practice its competitors might find that their legitimate business interests were seriously affected. If the breach of the licence condition was not put right quickly, the competitors might even be forced out of business. Consequently, Cable and Wireless and Mercury have sought an arrangement under which they would receive compensation for any damage they may suffer as a result of the breach of the licence condition.

I do not want this problem to arise any more than my hon. Friend does. The Government are firmly committed to the promotion of competition. As I explained earlier in the debate, all the measures, including this Bill, which we have taken since we came to office, have been directed towards this aim. We are, therefore, fundamentally sympathetic to the concern that underlies this proposal and we do not want to overlook a possible change to the Bill that could further our objectives. I do not believe that my hon. Friend's amendment will do so. Indeed, it may be counter productive.

I believe that the Bill as it now stands, following amendment by the Committee, contains sufficient powers to meet, both effectively and speedily, those situations that cause my hon. Friends concern.

Perhaps the House would find it useful if I briefly explained what these powers are and why I believe this new clause would not help. The new clause is framed by reference to the licence conditions listed in clause 8(2) of the Bill which, as the House will note, is now drafted differently from when the Bill was first introduced. This is an extremely important subsection and was one on which the Committee spent a considerable time. For the foreseeable future, BT will be the most dominant force in the telecom market. Inevitably, there will be scope for this monopoly power to be used deliberately or accidentally to the detriment of the competition we wish to encourage. We have always made it clear that BT's licence will contain certain conditions directed towards the promotion of competition and the prevention of unfair competition. Clause 8(2) as amended and expanded in Committee, contains the power needed to include these conditions in BT's licence. I think my hon. Friends are now content with clause 8(2).

I come to the point that causes concern to Cable and Wireless, and to my hon. Friends. What happens when a condition included in a licence by virtue of clause 8(2) is, or appears to be, breached? We have given careful thought to this problem and clause 15 gives the Director General sweeping powers of enforcement. What will happen is that, if the Director General becomes aware of the possible breach of any licence condition, including, of course, those mentioned in 8(2), the Director General will investigate the matter and if he considers that a licence condition has been breached he can issue an order under clause 15 requiring the licensees to stop the offending practice. For example, if a breach concerned a tariff that was set so as to constitute undue discrimination, the Director General could order the licensees to reduce the price to a level that was not in breach of this condition. The important point is that the Director General can act at once on his own initiative and order the licensees to take any corrective action that is necessary. The powers do not end there. If the licensee chooses not to obey the order, the Director General can apply for an injunction, breach of which could result in the licensee being fined or in its directors being put into gaol.

I must emphasise the wide range of the Director General's powers to issue orders, his ability to act quickly, and the strength of the sanctions if the order is disobeyed. I shall not disguise from the House my concern, when the Bill was being drafted, that the powers were too great. The clause has therefore been drafted to strike a balance between speedy action and fairness to the licensee in question.

11.30 pm
Mr. Richard Page

I thank my hon. Friend for what he has said, but he has used the phrase "speedy action". Under the Bill, as drafted, what is there to guarantee "speedy action"?

Mr. Butcher

It may well be that delay could be a de facto violation of the duties in new clause 1, as laid down in subsection (2)(a) to (g). Not only may they be breached and the Director General be in dereliction of his duty, but there may be an infringement of the competition code as a result of that delay. On that point I have the greatest sympathy with my hon. Friend.

On occasion, BT could use delay to thwart the ends of liberalisation. Although that is not relevant to this clause, I appreciate the genuine fears that are held because of the propensity of major licensees to fudge and delay. However, once the liberalisation programme is in place in July, it will be a quite different animal from that which pertains under the interim arrangements.

Mr. Richard Shepherd

I am not sure that my hon. Friend the Under-Secretary has understood the anxiety felt about the provisions in the clause. He argues that the Director General may enforce compliance with the licence, but we are worried about the delay. In supporting this amendment, I argued that if someone who applied for a service found after some time that he had been discriminated against, the Director General, once alerted, would swing into action under clause 14. We may be talking about a delay of four to nine weeks, by which time the original applicant for the service who had been discriminated against may have gone bankrupt. Why cannot he have a right of redress and make an application for compensation?

Mr. Butcher

That is not the type of delay that we have in mind in these measures, important as they are. There are fundamental areas of delay, one of which has been mentioned. However, that incident would not become an inordinate delay, because that would be a legitimate area in which to invoke these measures. But I shall consider those concerns and the sanctions in more detail later.

Concern has been expressed that the Director General has a discretion whether to exercise his powers under clause 15, and that he might decide not to take action against a particular licence breach. That fear is unfounded. The Director General will be under a duty to act in accordance with clause 3 and it is a principle of public law that if a person such as the Director General has a discretion to act, he is under an obligation to consider whether to exercise that discretion and he may refuse to exercise it only if he has good grounds of which he may legitimately take account. So far, the procedures that I have described involve only the Director General and the licensee in the enforcement of compliance with licence conditions. But what of other parties? I can assure the House that their interests are fully taken into account.

Mr. Marlow

If the Director General, in line with everything in the Bill, makes a decision, is there any appeal against it? Real commercial considerations could be at stake, as well as a lot of money, companies' futures, and profits. Does my hon. Friend the Under-Secretary have more faith in the Director General—without any recourse to appeal against him—than in our courts of law? If so, why?

Mr. Butcher

If the Director is negligent and unreasonable in his pursuit of redress, allowing for the guidelines, and allowing for the measures in clause 8(2), remedies are available against him or against the Secretary of State. I mentioned earlier that in one proceeding the court can award one or more of several remedies of which the following may be relevant under those circumstances: mandamus—an order of the court commanding the Secretary of State or the Director to perform his functions in the manner that the court says is proper; an injunction—something that prevents rather than obliges, but this is available only in limited circumstances under order 53; damages—although it is notoriously difficult to obtain an award of damages for breach of statutory duty; and a declaration that either the Secretary of State or the Director General has failed to carry out his statutory duty.

I hope that my hon. Friend will understand, as I go through my response, that the remedies should be fast. I agree with him that justice delayed is injustice, but in these cases we believe that the Bill provides a route which gives a fast and relevant response to the issues that we are debating.

Mr. Richard Shepherd

I thank my hon. Friend for giving way. Let us suppose that the Director General is prepared to enforce all the conditions of licences that he issues, but that, nevertheless, the licensee is in breach of one of the terms. Clause 15(1), to which the Minister has referred us, says that he can make an order not being less than 7 days", but before he makes that order, he has to give notice of a draft of that order, he has to give the option to the licensee in breach of the licence, and specify the time not being less than 28 days from the date of the service of the notice". So already we have 28 days plus seven days, which makes five weeks. The Minister talks about speedy redress, but in that time the small applicant company may have gone bust and suffered considerable consequential losses. That is not because the Director General is not prepared to enforce the licence, but merely because of the delays involved, first, in identifying, say, any discrimination in the example that I gave, and second, once it has been identified, for the Director General to set in motion the means by which he ends that discrimination. Meanwhile, the person who has been discriminated against has suffered loss. Why can he not, under the amendment, sue for compensation for the amount of the loss? That is the normal defence that one would expect in a reasonable society.

Mr. Butcher

My hon. Friend makes my case for me. The process that he describes would take 35 days. In the United States, for example, a similar process, even if it were not contentious, might take three, four, five or even six months.

We believe that we have here a fast route. The justice that is required here is one where reactions have to be fast. We said in earlier debates—my hon. Friend and I crossed swords over this matter early in the Committee stage—that we wanted the Director General to be authoritative and informed. We wanted him to be the sort of a person who could react quickly to such demands. One can go to a court of law. That is another route, but the route that we have prescribed meets the fears of a number of other operators. It should also meet some of the longer-term fears of hon. Members on both sides. In my opinion, it is a useful balance between the conflicting pressures that are placed on my hon. Friend and me.

Mr. Golding

Is the Minister aware that the Committee was told that under an order of mandamus the writs are the subject not of jury trials but of a straight High Court hearing? If an individual is not doing something that he should do it is comparatively easy under our legal system to make him do it. The hon. Member for Leominster (Mr. Temple-Morris) may remember that he advised the Committee strongly that this procedure was sufficient to ensure that the Director General and the Secretary of State looked after the licensee's interest.

Mr. Neale

Not many authorities outside the House dispute what is said about procedure once the Director General has found a proven breach. It is the delay in reaching that point, possibly on sound and understandable grounds, bearing in mind the technological complexity of a case, that is the problem. Over that period a loss can develop and be sustained by people who have no privacy of contract with the licence holder. While I accept my hon. Friend the Minister's case I urge him to watch carefully how Oftel succeeds in the early stages to fulfil his expectations of its ability to contain this investigative period, so that when added to the processing time of an order it is only a short period in all.

Mr. Butcher

My hon. Friend has a strong point. I take to heart that the Secretary of State and the Director General should be mindful of the delay in getting these matters into the in tray. As I said earlier, justice delayed is an injustice.

My hon. Friend the Member for Fife, East (Mr. Henderson) may not have considered the impact of his proposals on the enforcement procedures under clause 15. If there were a legal action in progress against an operator in respect of a breach of a licence condition it would be difficult for the Director General to issue an order under clause 15 in respect of the same breach. To do so would be to interfere with the operation of the court and the Director General would not want to be seen to prejudge the issues before the court. Therefore, the effect of the new clause would be to delay enforcement action against the licensee committing the breach which would harm those with whom the amendment is concerned.

There is also a pernicious effect. If licensees are to be continually subject to the threat of legal action they will have to be always looking over their shoulder and not getting on with their business. One of the main aims of licenses is to provide a clear, consistent framework within which operators can develop and expand. There need to be effective weapons to ensure this framework is adhered to but not day-to-day contentious interference. We have provided the former and avoided the latter. However, my hon. Friend's new clause contains a danger that we might not avoid it and therefore I must ask him to withdraw it.

Mr. Henderson

Will my hon. Friend clarify something that he said about damages for breach of statutory duties being hard to get? Was he speaking in the context of an action under the proposed new clause, or would it be open to a person to seek restitution for financial loss as a result of the Bill without new clause 5?

Mr. Butcher

I was trying to say that if all else fails in this set of provisions, mandamus or other legal actions against the Secretary of State have been difficult to pursue in the past. That is the best advice that I can give on that and I hope that it helps my hon. Friend.

Mr. Michael Marshall

My hon. Friend has just made an important legal point about the difficulty he foresaw for the Director General in running, as it were, simultaneous actions. Does he accept that that raises questions that should be explored more fully because there appears to be a direct legal contradiction here with the advice that I gave earlier, to which I appreciate he has not been able to address his mind during the debate. Will he undertake to keep an open mind if perhaps in another place these legal arguments are given further detailed consideration?

Mr. Henderson

I understand that my hon. Friend was referring to damages against the Secretary of State as opposed to against those who breach their licence obligations. That should be pursued further.

My hon. Friend the Member for Hertfordshire, South-West (Mr. Page) said that this debate was a re-run of a debate that he initiated in Committee. It is different from that because the amendments that he proposed in Committee would have forced the Director General into action in every case, regardless of whether there had been a breach of licence conditions. The new clause is different in character. The third party must be affected by the contravention.

The hon. Member for Blaydon (Mr. McWilliam) said that we had not yet seen the licence. The new clause can apply to any licence, not just to BT's licence or any immediately foreseeable licence. That is important for BT or any other licence holder.

The debate has prompted many thoughts for me. We have explored a number of important aspects, I should like to think further about some of them. I cannot vote tonight even if I want to, because, technically, I am in Aberdeen. The debate has revealed a number of points which strengthen the argument for such a new clause, but it has raised a number of issues which, in the words of Para Handy, give us pause to consider. Having paused to consider, there are other opportunities to improve the Bill in another place.

I beg to ask leave to withdraw the motion—

Hon. Members "No."

Mr. Marlow


Mr. Deputy Speaker (Mr. Ernest Armstrong)

the hon. Member for Northampton, North (Mr. Marlow) has already contributed so he cannot make another speech. I shall put the Question.

Question put and negatived.

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