Employment Bill

HL Deb 13 July 1982 vol 433 cc136-96

3.5 p.m.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—(Earl Ferrers.)

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

The Lord Advocate (Lord Mackay of Clashfern) moved Amendment No. 99A: After Clause 11, insert the following new clause:

("Prohibition on union recognition requirements.

.—(1) Any term or condition of a contract for the supply of goods or services is void in so far as it purports to require any party to the contract—

1. (a) to recognise one or more trade unions (whether or not named in the contract) for the purpose of negotiating on behalf of workers, or any class of worker, employed by him;
2. (b) to negotiate or consult with, or with any official of, one or more trade unions (whether or not so named).

(2) A person contravenes this subsection if, on the ground of union exclusion, he acts in a manner falling within paragraph (a), (b) or (c) of section 11(2) of this Act.

(3) For the purposes of subsection (2) above, a person acts on the ground of union exclusion if the ground or one of the grounds for his action is that the person against whom it is taken does not, or is not likely to, recognise, negotiate or consult as mentioned in subsection (1) above.

(4) Subsection (2) above does not create an offence but the obligation to comply with it is a duty owed to each of the following—

1. (a) the person against whom the action is taken; and
2. (b) any other person who may be adversely affected by the contravention,

and any breach of that duty shall be actionable accordingly (subject to the defences and other incidents applying to actions for breach of statutory duty).").

The noble and learned Lord said: I should like to take Amendment No. 99A in explanation with Amendments Nos. 99B, 99C, 103A, 103B, 104A, 104B, 104C and 151A. Before I move those amendments to Clause 12 I would point out that there are two very minor mistakes in them as they appear on the Marshalled List that I need to correct before moving the amendments in the corrected form. First, in Amendment No. 99B the phrase to be inserted should begin with the word "Section" so that the insertion reads: Section 11(1) or". Secondly, in Amendment No. 104B, originally numbered as Amendment No. 104A, the phrase to be inserted should end with the figure (1) so that it closes with the phrase, as mentioned in Section (Prohibition on union recognition requirements) (1)".

Amendment No. 99A, which is the first one to which I shall speak and which I move now, is a Government new clause. The other amendments that I mentioned are so closely linked with the new clause that it seems sensible to speak about them together. The new clause and the amendments have all been tabled to deal with a specific problem which has recently come to our notice and which we believe is not at present covered by Clauses 11 and 12 as drafted. The problem is this: a number of local authorities have been insisting that contractors must recognise and negotiate with trade unions or have agreements with trade unions about procedures if they are to gain contracts. We know of at least one council which is insisting that even before they can be on the list of contractors from whom tenders are invited, contractors should undertake to recognise the appropriate trade union.

These requirements have caused great and understandable concern among non-union contractors. They are not covered by Clause 11, because they do not say that all the contractor's employees must be union members. But in many respects their effiect is the same: first, because they force trade unions and trade union recognition on to companies and employees who do not want it; and, secondly, because they exclude non-union firms from tender lists and contracts in the same way as union labour-only requirements. Let me emphasise that we are not against employees recognising trade unions for negotiation and collective bargaining purposes. All we are saying is that this should be an internal matter for an employer and his employees to decide—free from external pressure from another employer or a trade union. We do not understand what business it is of the local authority how the contractor chooses to conduct his relations with his employees. Why, my Lords, should a local authority refuse to do business with a company which does not negotiate with trade unions?

The purpose of the new clause and the amendments is therefore to make requirements about recognition and negotiation unlawful and to provide redress for those who suffer from them. The new Clause 99A is a mirror image of Clause 11. It provides, first, that any requirements about recognition and negotiation which appear in a contract will be void and unenforceable. Secondly, it makes it unlawful to exclude someone from a tender list or fail to award him a contract or to terminate a contract with him on the ground that he does not recognise, negotiate or consult with a trade union or a trade union official.

Amendments Nos. 99B and C, 103A and B and 104A to 104C referring to Clause 12 deal with the same problem from the trade union point of view. As I said earlier, in the Government's view it is unacceptable that a company should be forced to accept recognition of a trade union owing to pressure from outside, and that is so whether the pressure comes from a company or from a trade union. The effect of Amendments Nos. 99B and 99C is therefore to remove immunity from trade unions who take or threaten industrial action to put pressure on an employer to act in a way which is unlawful under the new clause.

The other amendments seek to remove immunity from industrial action to interfere with the supply of goods and services, taken on the ground that a supplier does not recognise, negotiate or consult with trade unions. We believe that the new clause and the amendments constitute an important addition to the present Bill. They will help to stop practices which most people would consider unacceptable and they will be widely welcomed by contractors in particular. For all these reasons, I commend them to your Lordships and beg to move Amendment No. 99A.

Lord McCarthy

When the noble Lord, Lord Mackay, said that there were certain mistakes in the amendment, I thought for one wondrous moment that the Government might have relented. I did not believe this amendment when I saw it and I hoped maybe they had thought better of it; and of course one should think better of it. But it was not the case. I do not say that this is the most important new clause; I do not say it is the most important clause. I say it is the most objectionable; I say it is the most immoral; I say it is the most unjustified. I say it represents a further incursion into trade unionism and the ordinary day-to-day practices and beliefs of those who believe in trade unions.

Those members of the Committee who were awake when we stopped yesterday may remember that it was necessary to withdraw the amendments which my noble friends and I had put down, dealing with the previous clause. That was a pity but it was necessary, and it was justified on our side because of the very much more objectionable nature of this clause—which is not to say that we found the previous clause in any way acceptable, but at least it could be said about the previous clause that it was to do with the closed shop.

It is perfectly true that it simply meant that no rank-and-file trade unionists, whether they were in a position of authority in local authorities, or the chairmen of Labour clubs, or branch secretaries in trade unions or whatever they might be, or whether they were rank-and-file journalists working with various types of casual journalists, were entitled to insist on the so-called "fair lists", because fair lists in one way or another include firms or are made up of firms who recognise trade unions and who in many cases operate a closed shop.

But this clause goes much further. It has similar widespread coverage to the previous clause—that is to say, it does not deal just with contracts but with all forms of commercial activity, such as tendering, cancelling, failing to enter into tender. All kinds of commercial activities are covered in the way that Clause 11 covers them, but this clause has nothing to do with the closed shop. No longer are we being told, "You must not make these requirements in cases of a closed shop", but, "you must not make these requirements if the only thing you are asking for is that people should recognise trade unions and carry out trade union rates".

I wonder what noble Lords opposite really believe to be the motivation of people who try to secure that contracts, undertakings and work go to firms who recognise trade unionism. As little while ago as the 1971 Industrial Relations Act, a previous Conservative Government—though it is embarrassing to the present Government to refer to it—understood this; and indeed, the 1971 Industrial Relations Act, for all its faults, contained a number of provisions to encourage the spread of collective bargaining. Even in 1971, men of good will on both sides of the Chamber believed in the encouragement and spread of collective bargaining. Noble Lords opposite have changed their minds. They want to discourage the spread of collective bargaining. They believe that anybody who seeks to use his position, and even his own money and his own work, to encourage the spread of collective bargaining is some kind of moral pariah who should be in some way penalised.

It is perfectly true that the noble and learned Lord told us that this Government is not against recognition and that they do not intend at this moment (although of course we must be careful, because we have not finished the passage of the Bill yet and we might get another clause on Report) but at this moment the Government are not against recognition—not yet—in the sense that they are not yet introducing a clause which actually makes the recognition of trade unions unlawful. But give them time. Step by step the seven league boots are still in place and we are promised another Bill and another Bill and another Bill. They may get round to it; and if they got up today and told me that they did not intend to get round to it, it would not mean much to me.

So we have to look at this clause. This clause is saying that people should not use their positions of authority to seek to encourage trade unionism—not the closed shop, not coercion, but trade unionism. So we have to tell noble Lords, since they have clearly forgotten, though they knew about it in 1971, why it is that people should want to do that. It is because they are old-fashioned enough to believe that recognising trade unions, negotiating with trade unions and paying trade union rates is a kind of shorthand for non-exploitation; because they believe that if you insist on this simple provision the chances are that the people whose business you put in their way will not be exploiting their workers, will not be paying "scab" rates, will be giving decent conditions and therefore you will not be negotiating practices which you consider to be unjustifiable. That is their belief, and that is the belief which this Government are now going to make an actionable belief.

I sought to argue late last night that one of the great weaknesses, one of the great emotional, cultural and moral weaknesses, of the party opposite is that they have forgotten—one wonders how far they ever knew it—the possibility that trade unionists can have morals, beliefs, convictions and conscientious objections to encouraging "scab" labour and low levels of pay and conditions of work which they consider to be a disgrace. And because they consider them to be a disgrace, they insist, whenever they can, on putting work in the way of trade union firms. This is a simple, ethical principle. We think this is an ethical clause, and we will certainly divide the Committee.

Lord Campbell of Alloway

I do not understand how the noble Lord, Lord McCarthy, can stigmatise this amendment as objectionable, immoral and unjust. We are not against recognition, but we are against abuse and we are against pressure to force recognition. Why are we against that? It is because we are committed to the concept of freedom of association and all that that entails, which is envisaged in this Bill. Indeed, the activities that gave rise to this amendment only highlight the problem that there is now, as I stated before, no recognition machinery to obviate poaching, or to deal with inter-union disputes, which adversely affect those with no interest in the dispute. By and large, the Bill does not purport to deal with the internal affairs of trades unions, and how it can be stated that this amendment is immoral and objectionable, when all that it seeks to do is to obviate abuse, wholly defeats me.

Lord Underhill

In supporting the objection to this new clause, I should also like to take into consideration some of the points which might have been made last night on Clause 11 stand part, if there had been time, because they are somewhat inter-related. I could hardly believe my ears when the reasons for this new clause were given by the noble and learned Lord the Lord Advocate. It may be that some of us are wrong, but it hits at the very principles and beliefs for which some of us have strived for over half a century, and have tried to do it with a sense of moderation, believing that our way was the right way to achieve them.

I asked yesterday what noble Lords on the Government side were doing to show their belief in trade unionism—not dealing with abuses—and nothing that has been said in favour of this clause can possibly be said to be in support of a belief in trade unionsim. I hope that all sides of the Committee will question this, because of where it will lead in future industrial relations. It was asked: what right have people to interfere?—I was going to say as a member of the working class, but that may be an out-of-date expression to use. But as somebody who believes in the advancement of the people of this country, as someone who believes that the trade union organisation is a step towards that, I have a right to interfere in order to see that other people get decent conditions of work, and that is why we are opposed to this clause. It is said that it is to protect contractors, particularly small firms. Has anything been said about the protection of workers who find that they are in competition with another contractor or sub-contractor who has no trade union agreement, does not observe trade union conditions of work and who undercuts?

The Minister referred to freedom of choice. What about my freedom of choice as a consumer? I do my very best to buy essential things that are British made. I also want to do my very best to ensure that the things I buy are produced by people whose firms give them decent wages and conditions. Clause 11 may prevent me from doing that. For years and years, the organisation with which I was associated would not give a piece of printing to firms that did not observe a fair list, not because we were saying that they had to be trade union members, but in order to ensure that the conditions of work were fair and that we were not having competition from jumped-up outfits which did not observe proper print conditions.

Under Clause 11, I cannot in future get a fair list. Will a firm still be able to put, Printed by Blank Blank Brothers (TU)". to show that I am dealing with a decent firm and not one that is undercutting rates? I am concerned with trade union conditions of work, as well as with trade union membership, and why should I, as a ratepayer, not insist that my local authority does not give work out to firms that undercut union conditions?

I ask your Lordships to put trade union membership on one side for a moment. Let us talk about decent conditions of work. If I can avoid it, my local authority will not give any work out to a firm which undercuts, which does not have a trade union agreement and which will not observe trade union conditions of work. I believe that the whole attitude—not just the wording—shows that words which say, "We are not opposed to trade unionism" need to be reconsidered. We are talking about the right of people to ensure that other people have decent conditions of work.

I should like to take one final example—and I ask your Lordships to remember that we are not just talking about local authorities. There may be a firm or an authority with construction work. It has good agreements with its own workers, trade union agreements, and it observes all national conditions of wages and other matters. A contractor comes on the job and he has no trade union agreement and is undercutting conditions. What do you expect the workers in the first outfit to do? They will down tools immediately and say, "We are not going to put up with this." It is an obvious thing to do for people who want to preserve not only their own conditions, but the conditions of other people.

The noble and learned Lord the Lord Advocate referred to the right of interference with materials. I am a moderate person, but if I knew that a firm which undercut trade union conditions, which did not observe trade union membership and did not even recognise a trade union was bringing in equipment and materials, I would stop it from being used in my firm. That is the spirit which still exists in the trade union movement, and this new clause, and Clause 11, are leading the way to further industrial action. I ask the Government to reconsider, and I also ask noble Lords on all sides to refuse to let this amendment go through, because it will be fatal for future industrial relations.

3.27 p.m.

Lord Boyd-Carpenter

This debate, so far, has been immensely revealing in that it has shown that the normally moderate Lord Underhill and the normally immoderate Lord McCarthy are lined up together in quite vehement opposition to a proposal which appeals to most of us on this side as fair and reasonable. This indicates, regrettably, a very real gap in the thinking of noble Lords on the other side from that of noble Lords on this side.

The noble Lord, Lord McCarthy, was extraordinarily emotional and used highly emotional terms, such as "scab rates" and "scab labour". What do those expressions really mean? They mean labour paid at rates lower than those negotiated by trade unions. But it does not follow from that, particularly in the present economic situation of the country, that those rates are either unreasonable in payment to the people concerned, or contrary to the national interest. Indeed, those rates may well mean that people are employed who otherwise would not be employed at all, because it is, if you like, a platitude of economic discussion that the higher you force up wage rates, the higher you force up the level of unemployment and vice versa. Therefore, to try to obscure a calm consideration of this matter by use of distinctly old-fashioned expressions of this kind—I think that the expression "scab" goes back to Victorian times—high in emotional, but low in intellectual, content does not help.

If I understand it aright, what my noble and learned friend's amendment means is that those who put out business should remain neutral as between those firms that recognise, accept and negotiate with trade unions and those who do not. If trade unionism does all the good which noble Lords opposite sometimes suggest—and I believe that it does quite a lot of it, though perhaps not all—that should be a sufficient advantage to the firms which recognise unions in terms of good industrial relations, co-operation, working together, of which we hear a great deal, and a great deal of it is very good sense, and should reward them sufficiently. But why should the purchasing power of particular purchasers—we are concerned here with local authorities and other politically motivated bodies—be used to discriminate between those who as a matter of good sense and good policy recognise trade unions and those who, as a matter of their own judgment of what is good sense, do not? Why should they be able to use their political power to discriminate in this way?

Baroness Gaitskell

Why not?

Lord Boyd-Carpenter

The noble Baroness asks, why not? I am delighted that she asked that question. Let me take the case of a local authority. A local authority represents ratepayers of all political views, some of them no doubt loyal and determined trade unionists. Others have perhaps suffered from trade union action. Other people see—as many of us do—the harm which the excessive power of trade unions has done to the British economy in recent years. The ratepayers consist of people of all those different views. Why should a majority, perhaps a temporary majority, in political control of a local authority use that political power to discriminate in favour of trade unions and against those companies which do not recognise them? That seems to me to be a most dangerous thing to do.

If the noble Baroness will permit me, I shall follow this a little further. It is well known that the Labour Party owes most of its financial support and a great deal of its electoral support to the unions. There is to some of us something a little repulsive in a political majority, owing so much to the support of the unions, using its political power in the direct financial interests of its supporters. If this were done the other way round and one had a Conservative-controlled authority openly acting in the interests of employers, noble Lords opposite would be raising Cain and would be perfectly entitled and right to do so. But they must appreciate that what is sauce for the capitalist goose is sauce for the even larger and rather redder Labour gander. I think therefore that they must appreciate that there are a great many people in this country who, like myself, believe strongly in a fair and effective trade union movement but who very much dislike exercises of political power of this kind which are designed to benefit the supporters of the political majority concerned at the expense, maybe, of the ratepayers.

It does not seem to me that there is anything unreasonable in saying that those who place contracts of this kind should do so on the normal basis upon which a businessman places contracts: on the basis that the supplier is likely to supply the right sort of goods or services at a competitive price. Why they should get worked up and involve themselves in questions about alleged scab rates is quite a different matter. In the present situation in this country, it is a little unrealistic—as I say, it goes back to Victorian times—to talk about scab rates. In Victorian times there was such a thing and the union movement was a very strong and a very natural and proper reaction against them, but to go on talking about scab rates in the situation of 1982 is to suggest that one is not in the real or the contemporary world. There are rates below trade union rates. They may be perfectly good rates; and they are rates which people are prepared to work for. There is no divine dispensation about trade union rates which makes it, in the words of the noble Lord, Lord McCarthy, immoral to pay less. It may well be—it is, in fact, the case—that some rates negotiated by some trade unions in recent years have been excessive and contrary both to the competitive power of the industries in which the people concerned work and therefore to the employment prospects of their own members. This is undoubtedly the case. Therefore, to say that as a matter of morality, again to quote the noble Lord, Lord McCarthy, any firm which pays less than that is doing something immoral is not only, to most people's minds, an exaggeration but a blinding revelation of the mentality of some noble Lords opposite.

Baroness Gaitskell

The noble Lord has mentioned me, so may I just comment? I have heard him make very many reactionary speeches, but the one which he has just made is one of the most reactionary.

Lord Boyd-Carpenter

Will the noble Baroness allow me? Her intervention is based on a misunderstanding. I did not mention her.

Lord Rochester

At the beginning of this discussion I think I can say that I had a completely open mind on this point. Until now we have been discussing union membership agreements. This clause has to do with union recognition requirements. I must confess that I was a little concerned as to the reason why this new clause was being suggested. I felt that it might indicate some feeling on the Government's part that union membership should in some way be discouraged. However, as I understand it, an abuse has been uncovered in which certain local authorities, or a certain local authority, is seeking to exclude from lists of tenderers firms which do not recognise trade unions.

I believe in trade unions. I have said before in this House that if there were not trade unions somebody would have had to invent them in order to protect working people. I would go further and say that I believe in the positive encouragement of people to belong to trade unions. But I do not think that that belief in trade unions should extend to a position where certain firms which are not unionised are excluded from work, all the more when such firms may employ very few people. Having therefore listened to the arguments on both sides, it seems to me that the Government case has been made out. I shall therefore recommend to my noble friends that we should support the insertion of this clause.

Baroness Wootton of Abinger

The noble Lord, Lord Boyd-Carpenter, concluded his speech by choosing a particular example. There is no reference in the amendment to local authorities. Local authorities do employ persons and they have to pay certain rates of wages, but this is an amendment which refers to employers, and the typical employer is a business person. It is intended, and I think rightly intended, that business people, whether or not they be local authorities, should pay the wages which have been negotiated by trade unions for the particular occupations of those whom they employ. It is not a device by which local authorities can somehow betray ratepayers by giving preference to people who are members of the Labour Party, as the noble Lord, Lord Boyd-Carpenter, apparently implied.

Baroness Burton of Coventry

I never know how wise it is to appear to be ignorant, but I am completely ignorant on this matter. However, it may be that when I sit down, having exhibited my ignorance, I shall get an answer. In listening to—I was going to say to my noble friend Lord Underhill, whom I have always regarded as a moderate, I came to the conclusion that we were obviously not looking at the same amendment. I should be very grateful if somebody could explain it to me afterwards.

I should like to ask the noble Lord, Lord Underhill, whether what he was saying means that, when firms tender for a job, if, for example, one firm has better conditions, offers better pay and produces a good tender but does not recognise trade unionism among its member, then the job concerned will go to the firm which has none of those advantages but which does recognise trade unions? That seems to be the argument put forward, and I believe the noble Lord, Lord Underhill, is indicating that that is the case. Obviously my ignorance has been enlightened, and I totally disagree.

Perhaps I may move on from there. It seems to me most unfortunate that these days, when the trade unions have done so much and when there is considerable criticism about the wrong use of some of their powers, their friends should think they are in need of any recognition such as this. I would not have thought that any trade union of real standing—as most of them are—would feel that it needed to have written into the law that jobs were only to go to firms or to organisations which have a trade union membership. I believe that is completely wrong. The more I have listened to the vehemence on this side of the Committee, the more it seems to me that there is nothing unfair in suggesting that, while conditions should not be applied to the giving of contracts, we hope that they will go to the firm or tenderer offering the best tender and the best conditions for its workers.

Lord Jenkins of Putney

I wish that I had been able to get in before the noble Lord, Lord Rochester, and the noble Baroness, Lady Burton of Coventry, because I might conceivably have been able to explain one or two points in the clause which might have brought them to a rather different conclusion from that to which they have committed themselves. The reason why I would endeavour to do so—successfully or otherwise—is this. The new clause is titled Prohibition on union membership requirements. This clause and the previous clause, Clause 11, which has the title Prohibition on union membership requirements, and also the next clause, which is also the subject of amendments we are now discussing, entitled Pressure to impose union membership requirements, are all prohibitive.

It is within my knowledge that the British Actors Equity Association believing that these clauses—although not this new one—might inhibit the operation of their arrangements with theatrical employers, had a discussion with Mr. Tebbit and he gave them an assurance that it was not the intention of the Bill to intervene in any way in arrangements between employer and employee, and that the object of this series of clauses was to lay down conditions which would affect a contract of service in the sense which has been illustrated in a somewhat exaggerated form by the noble Lord, Lord Boyd-Carpenter, as being something which a Labour-controlled council might carry out in relation to contracts which it would engage.

How much reliance one puts on an undertaking given by Mr. Tebbit is a matter of opinion.

Earl Ferrers

No.

Lord Jenkins of Putney

It appears to have satisfied Equity. However, I believe that if Equity had seen the new clause which has been moved this afternoon, they might have had second thoughts. What the clause says is: (1) Any term or condition of a contract for the supply of goods or services is void in so far as it purports to require any party to the contract"— and so on. The point might be made that a contract of employment between an employer and employee is a contract of service and is not a contract for the provision of services. This is generally true but it is not true so far as theatrical employment is concerned. An actor is not on a contract of service but is on a contract for the provision of services. He provides his services on income tax Schedule D in the same way as any small businessman might. Therefore, it is my belief that he is caught by this clause.

The West End contract I have here is the one on which every actor in the West End is employed, and it contains within it a clause stating: The Society agrees"— that is, the Society of West End Theatre Managers— that its members in the normal course of events shall not offer engagements for any of the said productions to artistes who are not full members of Equity or"— et cetera. It is my belief that the proposed new clause after Clause 11 prohibits that condition in the society's agreement. We believe that the new clause put forward this afternoon combined with the other clauses which have been put in effectively scuppers the London Theatre Council. In fact, I believe that every contract existing in the West End will, after these clauses have been brought into effect, be null and void.

If the noble and learned Lord who has moved Clause 11 can give us an absolutely firm assurance that this is not the case, then it may be that we shall be able to tell Equity that the assurance they received from Mr. Tebbit has been carried out publicly and has been carried out here. But if the noble and learned Lord is not able to give such an assurance—and, whatever he says, I myself doubt whether the wording will support him—then what he ought to do, if Mr. Tebbit meant what he said, is to agree to the insertion of a manuscript clause at Report stage which would make it quite clear that, when the relationship between the parties is that of employer and employee, irrespective of the fact that it may be a contract for services and thus caught by this clause, it will under these circumstances be inapplicable. Without that manuscript amendment in the Bill, or in the Act as it will become, the consequence will be completely to destroy the entire theatrical employment set-up and it would be entirely contrary to the assurances which I understand Mr. Tebbit gave to Equity.

3.47 p.m.

Earl De La Warr

I am rather surprised that up to now no noble Lord has mentioned the local authority called East Kilbride. I had a copy of that letter many weeks ago. I know that the noble Lord, Lord McCarthy, is very cross about this amendment, but I too was extremely indignant when I read the letter that went out to all local authorities on the East Kilbride list. It was clear to me—and although this is not evidence, it was clear to the Financial Times—that what East Kilbride were doing was deliberately trying, in advance of the passing of this Act, to get round its intentions. Noble Lords can have whatever views they like about the intentions behind Clause 11, but it seems to be monstrous when a local authority in advance of the passing of a Bill which will surely go through, makes provisions such as these which deliberately flout the law which is to come.

I am not going to say that this is what the Government had in mind, but I am sure that it was not very far from their minds. Perhaps the noble Lord, Lord McCarthy, would help us by giving us an assurance, if he can, that in his opinion it was not the intention of East Kilbride to get round the provisions of this Bill. If he really believes that, then we shall be a little bit wiser about why he is so upset.

Lord Wedderburn of Charlton

Will the noble Earl tell your Lordships whether he objects to the army of draftsmen who arrange the avoidance, quite lawfully, of Finance Bills and tax reviews which come before both Houses of Parliament? Is that to be stopped?

Earl De La Warr

I really do not feel disposed to widen the debate that far.

Lord Oram

My noble friend Lord McCarthy reminded us that we are under some threat that this Employment Bill will not be the last and that there are other measures contemplated by the Government in relation to trade unions. Reading this proposed new clause, I wonder whether one of those new steps will be a change of the House of Commons resolution concerning fair wages in Government contracts. In reading that and reading this new clause, I believe we are on the brink of passing a clause which runs contrary to that resolution of the House of Commons. I do not say it does; I do say it is a matter that we ought seriously to consider.

For that purpose I will read just two of the clauses in the House of Commons' Motion which concerns fair wages clauses in Government contracts. The House of Commons is of the opinion that such contracts should provide as follows: The contractor shall pay rates of wages and observe hours and conditions of labour not less favourable than those established for the trade or industry in the district where the work is carried out by machinery of negotiation or arbitration to which the parties are organisations of employers and trade unions representative respectively of substantial proportions of the employers and workers engaged in the trade or industry in the district". Further: The contractor shall recognise the freedom of his work-people to be members of trade unions". I recognise that that is not directly contrary to this clause, but suggest that we are getting dangerously near to the point where, if the Government pursue the path they seem bent on pursuing, they will have to ask the House of Commons to change its own resolution, and if they do that I believe there will be trouble in store.

Lord McCarthy

I do not want to intervene twice in this debate, but I have been asked a number of specific questions and I would like to reply to those briefly. The noble Lord, Lord Boyd-Carpenter, was surprised at the degree of unanimity between myself and the noble Lord, Lord Underhill. So far as I can remember, we have never disagreed yet, so perhaps it is just the language we use. The noble Lord, Lord Boyd-Carpenter, also asked me why I used phrases like "scab rates". I use the phrase "scab rates" because those are the phrases which are still used by people who are seeking to defend trade union rates and trade union principles.

Of course, if the world were full of nothing but trade union rates and nothing but employers who observe trade union principles such words would be old-fashioned and out of use, but while there still are "scab rates", which are rates below trade union minimum rates which are paid in order to under-cut trade union minimum rates, then we have to have a word for them, and the word in conventional normal usage is "scab rates".

He also asks me why I think, why anybody would think, that local authorities have a right to insist that they do not employ contractors who pay scab rates. The answer is because they believe in trade unions and they believe in trade union standards. The only thing which can be asked of them—and if this is what he said I would accept it entirely, and I do not know the answer on this one in East Kilbride—is that they should make no secret about that. This may not be the kind of thing that you put in election addresses, but I do not see why not. I do not see why a party with a majority should not say in an election, "We do not propose to employ contractors who do not observe trade union rates". If the electorate do not want to elect them on that basis that is a matter for the electorate, but if the electorate do elect them then they are perfectly entitled to do so.

This brings me to a question raised in particular by the noble Lord, Lord Oram. I should have said this, and it is my answer to the question posed by the noble Lord, Lord Rochester. It is quite true that there is an almost exact parallel with the fair wages resolutions, the fair wages resolutions of the Commons, which go back a very long time. Whether they are exactly the same, the noble Lord, Lord Oram asks; I do not know whether what we are doing is formally in breach of them. But their objectives are exactly the same as the objectives of the East Kilbride Council. Parliament in its wisdom at that time wanted to prevent giving public money to support "scab rates". That is what the fair wages resolution is all about. We understand that the present Secretary of State, so he has told us, intends to introduce legislation which will repeal the fair wages clauses whether or not that puts us in breach of various ILO conventions. So that is the answer to the noble Lord, Lord Rochester. The abuse, which he says has to be corrected, is the abuse of seeking to do in local authorities and private authorities and, so far as one's own money is concerned, what Parliament has done at this moment in time on the fair wages clauses. That is what is involved with this Bill.

Finally, the noble Baroness, Lady Burton, says that she does not like it because we are asking for something to be written into law, that people shall recognise trade unions. We are not saying that. In the first place, it is a Government clause; it is not an amendment of ours. In the second place, we have not an amendment asking for it to be written into law that people must recognise trade unions. We are asking for it not be actionable at large if individuals or organisations want to support trade union standards in the way that Parliament at this moment of time, though God knows for how long, does through fair wages resolutions.

Baroness Burton of Coventry

The noble Lord, Lord McCarthy, has not translated my very simple question in the very simple terms in which I asked it. I said nothing about the public recognising trade unions. I did ask whether I had understood from what the noble Lord, Lord Underhill, had said—and he confirmed it—that what was suggested from the Opposition side of the Committee was that contracts should not be given to firms, whatever standards they offered, if they did not recognise trade unions in their establishment. That is quite different. Would the noble Lord care to correct that?

Lord McCarthy

I would only say let us see what Hansard says tomorrow. I think I have got what the noble Baroness said right.

Lord Underhill

May I say that what the noble Baroness has just said is what I want, because I do believe that public contracts should not go to firms which do not observe trade union conditions and which oppose trade union agreements. I am certain that the Social Democratic Party will find itself in very great trouble if that proves not to be the policy of the Social Democratic Party.

Baroness Burton of Coventry

I am sorry to be persistent and be a nuisance, but I am going to have this right because one gets tied with it for ever if one does not put it right. I did not say about recognising trade union practices; I said something quite different. I asked the noble Lord whether he would take it that firms which might offer better wages and better conditions than trade unions should not have a contract, and he agreed with me.

Lord Wilson of Langside

I wonder whether I could ask the noble and learned Lord a very simple short question, the answer to which I thought I knew when this debate started, but having listened to the debate I find myself in some doubt. The question is simply this: Is there anything in this amendment which would prevent an individual or a company, who wished to employ a contractor who observed certain conditions for his workpeople with regard to membership of trade unions, from doing so.

As I understand it, the amendment says that any condition to that effect shall be void. But does the clause go further than that? Is there any sanction to prevent an individual doing that? For example, if the TUC want to let out a printing contract, why should they not make it a condition of that contract that certain conditions shall be observed by the printer? Is there anything in the amendment which prevents that happening? I can understand the anxieties about the local authority abusing political power. I can understand the anxieties expressed by the noble Lord, Lord Boyd-Carpenter. I can understand Lord Boyd-Carpenter's scorn at the use of emotive expressions by those concerned with trade union liberties. But is there anything in the amendment which would seriously interfere with the right of people who quite legitimately want to ensure that any work done for them shall be done under certain conditions?

Lord Mackay of Clashfern

I venture to think that the noble Baroness, Lady Burton of Coventry, has underlined, as so often she does, if I may say so with respect, the confusion which has existed in a good deal of what has been said about this clause. The clause deals with provisions requiring a proposed party to a contract to recognise a union or to recognise its negotiating procedures. It does not deal with rates of pay, and as I understand the position the fair wages resolution of the House of Commons is not in breach of this clause—indeed, I think that the noble Lord, Lord Oram, who raised that matter accepted that to be so. He said that they were coming close, but this certainly is not in conflict with that resolution because of the distinction between conditions of work and recognition of a union.

It would be perfectly possible to have a situation at present in which a district council took the view that it should apply a clause such as this, requiring recognition of a union, to strike out from their list of contractors a contractor whose rates of pay were double those that the union required, but did not himself have union recognition in his business and where his employees were perfectly satisfied with that situation. Why should a person who has managed to arrange his affairs in such a way as not to require the intervention of a union between himself and his employees in a way with which the employees are perfectly satisfied, be prevented by conditions of this type from getting work from other employers?

The situation with which this clause is dealing is a situation in which there is a requirement about union recognition or union procedures in the contract and it outlaws such a requirement as part of the contract. It does not, of course, prevent a contracting party himself from employing union labour if he wishes to do so. The freedom of persons to join a union and, indeed, the protection of persons engaged in union activity, is not managed by this Bill at all. Indeed, the compensation provisions for people who are dismissed for trade union membership and activity are improved by the Bill. Accordingly, what the Bill does not affect is the right of an employer and employee to make arrangements between them about the union matters in that firm. What it does strike at is pressure from outside on these matters. In our view, it is that pressure which requires to be made unlawful and that is the purpose for which this clause is introduced.

Lord Wedderburn of Charlton

Before the noble and learned Lord sits down, may I ask one question which is very germane to this part of your Lordships' discussion? It is not about pay: it is about the lives and the security of people at work. Looking at the new clause—Amendment No. 99A—I should like to ask the noble and learned Lord how wide is the forbidden consultation in respect of which the four subsections extend? Would a requirement of one contracting party upon another, that the other party observe the requirements of Section 2 of the Health and Safety at Work Act 1974, and that that other party consult with safety representatives and with safety committees which have been established in the last few years and which have saved a large number of lives and maimings in industry, also be forbidden within this new and extraordinary clause?

Lord Mackay of Clashfern

Before I answer that question completely, I would need to look at the detailed provision that the noble Lord has in mind. On a proper reading of the clause, I certainly would not regard this clause as striking at the consultation provisions of the Health and Safety at Work Act.

Lord Beswick

I should like to ask the noble and learned Lord the Lord Advocate whether he would be good enough to answer the question put to him by the noble Lord, Lord Wilson of Langside. Would this amendment preclude or not preclude the Trade Union Congress from awarding a contract to a printer on the basis that that printer was a trade union house?

Lord Wilson of Langside

Before the noble and learned Lord answers that matter further—indeed, I thought that he did say something about it—I should like to focus his attention in particular on the provisions of subsection (4) of the amendment, which trouble me a little. I have not had much time to think about it, but it states: Subsection (2) … does not create an offence"— so it is not a criminal offence— but the obligation to comply with it is a duty owed to each of the following". and there then follows (a) and (b). It then goes on to say: and any breach of that duty shall be actionable accordingly (subject to the defences and other incidents applying to actions for breach of statutory duty). It was the implications of that which troubled me a little.

Lord Jenkins of Putney

Before the noble and learned Lord replies to that point, would he agree that a court would interpret this provision of services which is made void if it requires recognition of a trade union, to apply to the employer/employee relationship which exists between Equity and the West End theatre managers? In those circumstances, would he accept a manuscript amendment to make it clear that that kind of relationship is not caught by the clause?

Baroness Seear

I should like to raise another matter which is germane to the other questions which have been raised. Would I be right in thinking that, if the clause goes through, it would still be open to any local authority, for example, to use the fair wage regulation which does not require union membership but which requires conditions no less good than union membership, and that in that case—to use a rather extreme example—they would then be in the clear? They could then employ IBM because it certainly has no less good conditions whereas if there is a ban on contracts where there is not union membership, they would not be able to employ IBM. Am I right?

Lord Mackay of Clashfern

Yes, as I understand the position, the noble Baroness, Lady Seear, is perfectly right. Indeed, that is what I was trying to say, although not so plainly, when I took up the point that the noble Baroness, Lady Burton of Coventry, made earlier. This clause strikes at matters related to union recognition and union procedures. It does not deal with rates of pay and conditions. I gave the illustration of a company that perhaps paid double the amount but did not recognise a union being excluded by the clause. So far as the noble Lord, Lord Jenkins of Putney, is concerned, I shall not expressly deal with the point that he raised because I think it would be unwise for me to try to deal with it and to give a view on it without the full text of the document from which he was reading. But I shall be very happy to have from him the use of a copy and to consider it later on. However, as I say, I think that it would be unwise to venture a view at the moment.

I endeavoured to deal with the question asked by the noble and learned Lord, Lord Wilson of Langside, and I said that this clause would strike at a condition of that sort as part of the contract. It would not, of course, strike at the relationship between the employer and the employee if the employer decided that he wished the work to be done for him by members of a trade union.

4.11 p.m.

On Question, Whether the said amendment (No. 99A) shall be agreed to?

Their Lordships divided: Contents, 144; Not-Contents, 48.

DIVISION NO. 1
CONTENTS
Abercorn, D.	Ebbisham, L.
Adeane, L.	Eccles, V.
Airedale, L.	Ellenborough, L.
Alexander of Tunis, E.	Elliot of Harwood, B.
Allerton, L.	Elton, L.
Amherst, E.	Energlyn, L.
Ampthill, L.	Evans of Claughton, L.
Auckland, L.	Faithfull, B.
Avon, E.	Ferrers, E.
Aylestone, L.	Fortescue, E.
Baker, L.	Fraser of Kilmorack, L.
Beaumont of Whitley, L.	Gardner of Parkes, B.
Belhaven and Stenton, L.	Gladwyn, L.
Bellwin, L.	Glanusk, L.
Beloff, L.	Glenarthur, L.
Berkeley, B.	Glenkinglas, L.
Bessborough, E.	Gowrie, E.
Blake, L.	Granville of Eye, L.
Boyd-Carpenter, L.	Grey, E.
Burton of Coventry, B.	Gridley, L.
Byers, L.	Hailsham of Saint Marylebone, L.
Campbell of Alloway, L.
Campbell of Croy, L.	Halsbury, E.
Cathcart, E.	Hampton, L.
Chitnis, L.	Hankey, L.
Clifford of Chudleigh, L.	Harris of Greenwich, L.
Clitheroe, L.	Harris of High Cross, L.
Cromartie, E.	Henley, L.
Daventry, V.	Home of the Hirsel, L.
Davidson, V.	Hylton-Foster, B.
De Freyne, L.	Ilchester, E.
De La Warr, E.	Kennet, L.
Denham, L.—[Teller.]	Killearn, L.
Diamond, L.	Kilmany, L.
Dilhorne, V.	Kilmarnock, L.
Donaldson of Kingsbridge, L.	Kimberley, E.
	Kinloss, Ly.
Drumalbyn, L.	Lane-Fox, B.
Duncan-Sandys, L.	Lauderdale, E.

Listowel, E.	Sainsbury, L.
Long, V.	St. Aldwyn, E.
Lucas of Chilworth, L.	St. Davids, V.
Lyell, L.	St. John of Bletso, L.
McAlpine of Moffat, L.	Salisbury, M.
McFadzean, L.	Saltoun, Ly.
Mackay of Clashfern, L.	Sandys, L.—[Teller.]
Mackie of Benshie, L.	Seear, B.
Macleod of Borve, B.	Sharples, B.
Mancroft, L.	Skelmersdale, L.
Mansfield, E.	Soames, L.
Margadale, L.	Spens, L.
Marley, L.	Stradbroke, E.
Marsh, L.	Strathcarron, L.
Merrivale, L.	Strathcona and Mount Royal, L.
Monk Bretton, L.
Montgomery of Alamein, V.	Swinfen, L.
	Tanlaw, L.
Mottistone, L.	Taylor of Gryfe, L.
Mowbray and Stourton, L.	Terrington, L.
Murton of Lindisfarne, L.	Trenchard, V.
Norfolk, D.	Trumpington, B.
Northchurch, B.	Vaux of Harrowden, L.
Nugent of Guildford, L.	Vernon, L.
Onslow, E.	Vivian, L.
Orkney, E.	Wakefield of Kendal, L.
Orr-Ewing, L.	Ward of Witley, V.
Penrhyn, L.	Weidenfeld, L.
Perth, E.	Westbury, L.
Plummer of St. Marylebone, L.	Whaddon, L.
	Wigoder, L.
Porritt, L.	Wilson of Langside, L.
Portland, D.	Windlesham, L.
Rochdale, V.	Winstanley, L.
Rochester, L.	Young, B.
Romney, E.

NOT-CONTENTS
Ardwick, L.	John-Mackie, L.
Balogh, L.	Leatherland, L.
Beswick, L.	Llewelyn-Davies of Hastoe, B.
Birk, B.
Bishopston, L.—[Teller.]	Longford, E.
Blease, L.	Lovell-Davis, L.
Blyton, L.	McCarthy, L.
Boston of Faversham, L.	Milford, L.
Brockway, L.	Oram, L.
Bruce of Donington, L.	Paget of Northampton, L.
Caradon, L.	Peart, L.
Collison, L.	Ponsonby of Shulbrede, L.—[Teller.]
David, B.
Davies of Leek, L.	Ross of Marnock, L.
Davies of Penrhys, L.	Stewart of Alvechurch, B.
Donnet of Balgay, L.	Stewart of Fulham, L.
Elwyn-Jones, L.	Stone, L.
Ewart-Biggs, B.	Strabolgi, L.
Fisher of Rednal, B.	Strauss, L.
Gaitskell, B.	Taylor of Mansfield, L.
Glenamara, L.	Underhill, L.
Hatch of Lusby, L.	Wedderburn of Charlton, L.
Houghton of Sowerby, L.	Wells-Pestell, L.
Jeger, B.	White, B.
Jenkins of Putney, L.	Wootton of Abinger, B.

Resolved in the affirmative, and amendment agreed to accordingly.

Clause 12 [Pressure to impose union membership requirements]:

4.19 p.m.

The Minister of State, Northern Ireland Office (The Earl of Gowrie) moved Amendment No. 99B: Page 14, line 14, leave out ("subsection (1) of section 11") and insert ("section 11(1) or (Prohibition on union recognition requirements) (1)").

The noble Earl said: This amendment was spoken to earlier. I beg to move.

On Question, amendment agreed to.

The Earl of Gowrie moved Amendment No. 99C: Page 14, line 16, leave out ("subsection (2) of section 11") and insert ("section 11(2) or (Prohibition on union recognition requirements)(2)").

On Question, amendment agreed to.

Lord Wedderburn of Charlton moved Amendment No. 100: Page 14, line 18, at end insert ("and one of the facts relied upon for the purpose of establishing liability would satisfy subsection (2)(a) or (b) below").

The noble Lord said: This is the first of our amendments on Clause 12. As some of my noble friends have pointed out, Clause 12 now becomes even more important than it was before this new clause was introduced to your Lordships' Committee, over six months after the Bill was brought into the light of day, to remedy what it appears from previous speeches has been a long, well-known abuse. I noted that noble Lords speaking to the clause referred only to local authorities as the offenders. It puzzled me why it was not limited to them if they were right. But it is not; it includes all employers.

Clause 11, new Clause 99A, and Clause 12 now make up a trio that will cover a wide area of British commercial and industrial life. I stress commercial because Clause 11 and the new clause are about commercial practices, and Clause 11 underpins them by trying to prevent the activities of those who by industrial action or the like would try to cause a contravention either of Clause 11 or of the new clause in a variety of ways.

However, it is about far more than pressure in regard to work that is to be done. Clause 12(1) sets up to remove a defence from that which is being done. Clause 12 may be put into two parts: 12(1) appears to want to stop the inducements which it describes which lead to a contravention of Clause 11, or now the new clause. Clause 12 subsections (2) to (7) are the second half, to which we come later. When Parliament appears at least to be enacting a new liability, given the way some of your Lordships think this House should function, no doubt noble Lords opposite will think that this House is somewhere where attention should be paid to this matter, because if the clause does not clearly set out the liability, then in view of the serious nature of the problem as described by noble Lords opposite that is a grave matter for a revising Chamber, albeit that it has first go at the new clause. In Clause 12 doubly so because it is indeed a revising question.

Having set up the forbidden commercial practices which must not be done on the ground that the other employer is to insist on union membership, or the other employer is to be forced, or compelled, or persuaded to recognise, consult, or negotiate with trade unions, we now find in Clause 12(1) that nothing in the 1974 Act, in Section 13, is to prevent an act from being wrongful or actionable in tort where the person who does it induces the other person to do one of two things, and the act which is done incorporates, or constitutes, the inducement. The two things which are described as being induced are, first, to incorporate in a contract any of the terms previously described as being void. That is to say, the terms in Section 11(1) or subsection (1) of the new clause whereby the contractor is required to have union employees, or to recognise a trade union or even consult with it.

I hope that the noble and learned Lord the Lord Advocate will tell us what the position is on safety, because it is a most serious situation that the Government can introduce liabilities of this kind without even a flicker of interest in the statute of 1974 in respect of safety representatives and safety committees, to which people's lives and safety have been more closely related since that year.

First, then, we have an inducement to incorporate a void term in a contract. Nothing in Section 13 of the 1974 Act is to protect it. But Section 13 of the 1974 Act does not say anything about incorporating void terms in a contract. Section 13 of the 1974 Act is about interferences with a contract by a third party. If I had a contract with the noble Earl, Lord De La Warr, who I see looking with amusement at this point, and if someone else interrupted it then they would be liable for the tort of inducing a breach of contract. But if that were done in furtherence of a trade dispute subject to the Government's Act of 1980, which of course has more or less destroyed it, they would have had a defence under Section 13 of the 1974 Act in a trade dispute.

But that is not this. This is inducing someone to put a term into the contract which then the Government say is void. So that the defence is taken away against a liability which is irrelevant to the defence. Then one says, where is the liability? And you cannot find it. It is not set out in terms that an act which induces the incorporation of a void term in a contract is a tort. You will not find that anywhere in the clause. The same is true of the second except that it is rather more complex. I say to the noble Lord, Lord Boyd-Carpenter, that if he wants more intellectual content and less emotion then perhaps we can move carefully together across the face of the clause. He will not mind if it becomes complicated, because the matter is complicated and ought to be looked at. It is said by Clause 12(1) that the protection of Section 13 of the 1974 Act shall be taken away when anyone induces another person to contravene Section 11(2). Although we did not debate it yesterday, that is a vast range of commercial practices pressuring the contractor to enter into union labour only requirements.

But again Section 13 of the 1974 Act is not about inducing people to enter contracts based on union labour only requirements. I accept there could be a case where some interference with another contract was constituted by that same Act, but not by reference to the definition of Section 11(2). Once again the Bill will have the appearance, if enacted in this form, that 12(1) will take away a defence from a cause of action which is not clearly there, on the basis of which I suppose the courts will say, "Well, what shall we do?"

I am sorry that the noble and learned Lord the Lord Advocate has left us. I appreciate there are good reasons for this. I make no complaint. I think I heard him accurately when he said that what the Government were out to do was to ban pressure either by a union or by a company. Presumably then that would include any sort of pressure by means that were lawful or unlawful whereby the object is the unlawful purpose under paragraph (a) or paragraph (b). I hope that the noble Earl will not tell us that it is necessarily an unlawful and tortious act to do something inducing the breach of a paragraph in a section if all that the section sets out is that the contract shall be void—which is taking paragraph (a)—because of course that is not true.

If a statute says that a contract is void, or a term in a contract is void, as here, and I induce you to enter into such a contract, no liability in tort arises under the ordinary principles of English law. We shall come back to recognition in another context, because throughout Section 12 of the Act comes the influence of the new clause.

Under the influence of the new clause, Clause 12, which was a bit odd and should be looked at again, now becomes horrendous, because the courts might say—I think it unlikely, but who knows?—that as the provision is drafted the legislature must have meant all these things to be tort or civil wrongs.

If that happens, how will businessmen conduct their affairs? I am not talking only of trade unions. Indeed, I note that our amendments in this series, in a curious way, might be unfair to trade unions as against companies. Amendment No. 100 would, in effect, limit the liability which could arise under Clause 12(1) to the same area as subsection (2) and the provisions following it, which in layman's terms I can call "industrial action"; that is, inducing breaches of contracts of employment or interfering with them or threatening to do so. Therefore, by Amendment No. 100 we would create a liability usually for trade unionists as against the company so that our object when I tabled it would not be fulfilled. As against that, there is a later amendment, which I mention in passing but will deal with in detail later, No. 106, which deals with the second half of Clause 12. Again, that is an attempt to limit the area of liability.

With the permission of the Committee I will now speak to Amendment No. 102, which is another attempt to say to the Government, "Please spell out the area of tort liability", because No. 102 says that nothing in the subsection we have been discussing shall be a tortious liability, or actionable in tort, on any ground except one which would be protected by Section 13 of the 1974 Act. I am anxious to make that point strongly in closing my remarks on the clause, before coming to the social meaning of these—I am sure the noble Lord, Lord Boyd-Carpenter, agrees—complicated legal points. Amendment No. 102 would say, "Since you are protecting a liability in Clause 12(1) with Section 13, presumably you must be talking only of the torts in respect of which Section 13 applies, for you mention no other". There is no other area of independent liability in Clause 12(1) for inducement. As I say, it is not automatically an inducement to induce terms in a contract, nor indeed to induce statutory torts, although it may be said that the parties would be joint tortfeasors. If that is what the Government mean, they should spell it out. When Section 13 is not to be a defence, it would seem sensible to spell out the liability.

There is one golden principle with which I suggest the Committee approach this and the other matters which the Government—the Government, not we—have introduced into the Bill. It is that every time one sees a protection from the immunities (usually in the 1974 Act as amended in 1976) the golden principle is: if an immunity is removed, a liability springs up. Most of the way through the Bill later we shall see that where immunities are removed, liabilities spring up for trade unions in respect usually of the common law. That is a good way through the verbiage of the clause. But it does not work here because, remove the protection and in Clause 12(1)(a) you do not have a liability, and in paragraph (b) if you have one it is very obscure; it is difficult to know exactly what it is or how wide it is.

As the Government put such enormous store on this basic freedom they are enacting, one would have thought that they would have got rather more clarity into the clause that begins to underpin the whole apparatus. I trust that the noble Earl will be able to tell us clearly and precisely—albeit with a complex structure, because it is a complex matter—what the liability is that the citizens of this country are supposed to be put under by subsection (1). I say, on the analysis that I make, that at the moment the first part of it is absurd and the second part is highly obscure. We await with interest to hear what the Minister has to tell us about the matter. I beg to move.

4.35 p.m.

The Earl of Gowrie

The noble Lord, Lord Wedderburn, was kind enough to remind the Committee that my noble and learned friend the Lord Advocate has had to be away, with good reason. I am here to take his place on this amendment. I must say that I am not fully happy at this substitution at this stage, but I will do my best. This is the first amendment to Clause 12 and therefore it may be helpful briefly to remind the Committee what the clause is about.

Clause 12 is really a mirror image of Clause 11. Whereas Clause 11 is mainly about employers who impose union labour only requirements on non-union firms, Clause 12 is about trade unions and trade union officials who seek to impose such requirements or to have them imposed. The clause operates by removing the immunity provided by Section 13 of the 1974 Act from those who threaten or organise industrial action to prevent work being done by non-union firms. Therefore, it is most important for the Committee to realise that all this clause does is to remove immunity from action to put pressure on an employer to discriminate against non-union firms. Removing immunity means that if a person, in putting pressure on an employer, induces a breach of contract, then he is liable; it is the interference with the contract which is actionable.

Subsection (1) removes immunity from those who threaten or call industrial action against an employer to pressurise him to put a void term in a contract or otherwise to contravene Clause 11. Subsections (2) to (4) are mainly concerned with industrial action taken or threatened after the contract has been awarded, to prevent a non-union firm from fulfilling the contract or to prevent goods provided under the contract from being delivered or used. This amendment focuses on subsection (1). That is the subsection which removes immunity from those who threaten or call industrial action against an employer to pressurise him to put a void term in a contract or otherwise to contravene Clause 11. The amendment seeks to limit the circumstances in which that immunity is removed by subsection (1) to cases where there has been interference or threatened interference with contracts of employment. In other words, to bring an action under subsection (1) it would be necessary to show that the trade union pressure on an employer to impose union labour only requirements had involved threatened or actual industrial action which had interfered with or threatened to interfere with contracts of employment.

I have to say that the Government do not believe that this would have much effect on the coverage or impact of subsection (1). In practice, the sort of pressure which is envisaged in the subsection is pressure which is exercised through threats of, or actual, industrial action. So in 99 per cent. of the cases which are liable to arise under subsection (1), there will have been the kind of interference with contracts of employment which are set out in subsection (2)(a) or (b).

There may, however, be the odd case where there is no clear interference with contracts of employment, but there is nevertheless clear pressure on employers to break commercial contracts. That will not arise very often in cases arising under subsection (1), but it might do so, particularly in cases involving pressure to terminate a contract with a non-union firm. It seems to us right that if such direct interference with contracts occurs, it should lose its immunity under this subsection. If the amendment were accepted, it would not do so. I emphasise again that there is not very much between the Government and the proposers of the amendment. All we are doing in subsection (1) is to remove the Section 13 immunity in certain circumstances from interference with contracts. The normal cases which arise under Clause 12(1) will be cases where there has been threatened or actual interference with contracts of employment.

The noble Lord asked me about a number of specific points. He asked me about the Health and Safety at Work Act 1974. That Act imposes duties on employers to consult safety representatives who are union nominated. The duties apply to employers in any case, and there is no need whatsoever for them to be imposed through commercial contracts by other employers. The noble Lord raised the question of liability for inducing a breach of statutory duty. As I said, the principal effect of Clause 12(1) is to disapply the Section 13 immunity, where there is trade union pressure to put union labour-only clauses in contracts, or otherwise to prevent non-union firms obtaining contracts or getting on to tender lists. That means that the principal cause of action will be for the well-known and well-established torts of inducing breach of, or otherwise interfering with, contract or threatening such, which is set out in Section 13 of the 1974 Act.

Therefore, despite there not being a very great deal between the noble Lord and myself on subsection (1), he will see that Clause 12 is critical to Clause 11, which we have just passed, and is the mirror image of it. Therefore I hope that he will not see fit to press the amendment.

Lord Wedderburn of Charlton

I found the noble Earl's reply at one and the same time disappointing and revealing. Since I think that we shall have this thread during the debate, I would say that safety is a very important matter. I do not wholly accept the noble Earl's reply, though I am grateful for it. He suggested that because there is a statutory duty on an employer under the 1974 Act to take steps to allow safety representatives to operate and to consult safety committees where requested—which is a separate step under the Act—no pressure of contractual form would be needed to cause the obligations to be observed. Of course we all know that in matters concerning equal pay, safety, and so on the better employers—I do not now speak of trade unions—veryfrequently put pressure, sometimes commercial pressure, upon other employers to observe standards of this kind; and it is the erosion of such standards which is objectionable. But the question of safety does not rest there. I hope that there will be further intervention on safety when the noble and learned Lord perhaps deals with it on the debate on clause stand part. I pose the question now so that it can be thought about.

Under Section 2 of the Health and Safety at Work Act 1974 there are various obligations; they are not all the same. There are regulations which enshrine some further provisions. There is then a code of conduct, which is not law, but guidance, and then there is a code of guidance, which is in fact further guidance, but is below the code. How far can either a union or another employer go in pressurising a "cowboy" employer to observe decent standards of safety for his workers in terms of consulting trade union safety representatives? Can he do only what the Act obliges the other man to do? Can he verge off into the regulations? Is he allowed to get into the code or the notes on guidance and the like? Without a specific provision in the schedule of the Bill this matter will be what I think would be called a "dog's breakfast".

As I said, the noble Earl's reply was revealing, and I should like to put the matter very quickly in the following way. He has confirmed that Clause 12(1) is really about industrial action. It is about threatened or actual industrial action. He has said that the practice of pressurising in the way that he has described would in 99 per cent. of cases involve threats of industrial action which would amount to inducing breach of employment contracts or the other tortious acts which are similarly described—by way of interference with contracts of employment. The noble Earl said that there might be 1 per cent. who break commercial contracts. Well, I do not agree with his batting averages, but that does not matter. That is the ground that he covers—interference with contract.

But where in subsection (1) is the provision that liability is restricted to that area? It would be quite improper of me in reply—and I am sure that the noble Earl would not so wish me—to try to go through the case law on breach of statutory duty in respect of civil liability. But there is much difficult case law in a certain chapter of a certain book to which I could refer the noble Earl, about the difficulty of knowing when the courts will construe a statute to impose a civil liability perhaps rather wider than Parliament had foreseen. That is why it is so important to get this matter right. I remember many occasions when in regard to other legislation the party opposite said, "Go and get it right". I do not believe that the noble Earl considers that on any ground subsection (1) is thoroughly satisfactory, but in view of the position that he has taken, we shall expect the Government to look at it again, and perhaps to debate it once more in a rather different way on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.46 p.m.

Lord Wedderburn of Charlton moved Amendment No. 101: Page 14, line 18, at end insert ("and is, or (as the case may be) are, directed against the person by whom the action is brought").

The noble Lord said: This is perhaps a rather easier matter for me to understand. The basis of liability is always to be measured in part by the question, Who can sue? Who can bring an action? Indeed, the first thing that the lawyer asks, if he is told that there is a likely plaintiff, is, "Has he got a cause of action?" The point of the amendment is to question the extraordinary width of persons who might sue, if Clauses 11, the new clause contained in Amendment No. 99A, and Clause 12 are added together. I shall not try to do that by reference to the Bill. In speaking to Amendment No. 101 I should also like, if I may, to speak to Amendment No. 106, which parallels the amendment that I am now moving, in limiting Clause 11(7)—and I shall come to that in the right place.

If in looking at the Bill one asks the question, who can sue? the most important provision to which to refer is Clause 11(7). In doing that, one should bear in mind that it is all about people who can complain of others who have carried out the commercial practices that the Government find so terrible, including requiring consultation with trade unions. The situation is rather extraordinary. One would not have believed that your Lordships could possibly be considering a Bill that provided that one could not refuse to contract with someone on the grounds that he did not recognise or consult a union. But that is what it comes to. One's right to contract with whom one pleases is taken away. Under Clause 11 a remedy can be obtained against one if one refuses to contract with a person because he does not consult safety representatives—unless the statute gets one out of it, and one is lucky with the 1974 Act. We have been told that one can then sue the person who has done the inducing by means of industrial pressure, and indeed I accept that Clause 12(2) and what follows is about industrial pressure.

Who are the people with whom we are concerned? Subsection (7) on page 13 of the Bill states, first, that the person is the supplier who is being kept off the tenders list, and the like. Well, given the philosophy of the clause, which I deplore and abominate, I understand that that is logical. Paragraph (b) of the subsection states that the person is the other party to a contract which has been torn up, albeit lawfully on other grounds. One can lawfully terminate the contract in every other respect, but one can then be sued by the person concerned if one did it because one wanted him to consult the trade unions. So notice is given, and all the rest of it, but that is not good enough. Well, at least I understand that on the basis of the words used.

Thirdly, in paragraph (c) on page 14 there is a slightly wider area, which one can only describe as relating to other people, who have been referred to earlier as being involved, largely in subsection (3), in the commercial practices which are being struck at. I understand that a rather more general reference has to be made. But those people are fairly clearly identifiable. If it had stopped there, at least the employer, who has done this terrible thing of pursuing the policy of the fair wages resolution by parallel means, or the union, which has done this terrible thing of demanding that decent standards be maintained of rates and conditions at work, would know who they had to fear. But, no, there is an extra group—paragraph (d). I quote: in any case, any other person who may be adversely affected by its contravention"— that is, the contravention of this section. Of course, it is such a group which, logically and understandably, would be the plaintiffs against the union for inducing the wrong.

I repeat: any other person adversely affected by the contravention of the section? I do not understand it. I hope the Government will not say that I ought to understand it because (as they said in another place) the same phrase is used in the Resale Prices Act 1976, Section 25(3) of which also talks about enforcement by, "any other person who may be adversely affected", because so far as I know, people who have looked at that Act are still trying to find out what it means there, so if they have taken a precedent from that they are not doing very well.

It is necessary now to depart from the law and to think about real life. If I may say so, although the first debate today was extraordinarily useful in setting the broad lines of where we are, we have had precious little detail of what this clause really could do—indeed, what these three clauses really can do. May I take an example? Let us take a supplier of goods. I have it in mind to take fish; I do not know why, but I suppose it is because he sends his fish by lorry to the docks, where they are taken across the estuary to the wholesaler across the way, who distributes to the retailers who, in turn, sell to the fish and chip shops who sell to the public.

Let us suppose this all goes wrong. Why does it go wrong? His normal lorry has broken down, and he has on offer three people who have lorries. One of them, Lorries Limited, employs only T and G members; or, if you like, Lorries Limited recognise the Transport and General Workers' Union and consult them. So he takes Lorries Limited because he thinks it is not a bad firm; and, as a matter of fact he rather likes to have a firm which negotiates and consults with the union because the dockers are in the union, too, and it is a fact of life, whether it is good or bad, that the drivers in the Transport and General Workers' Union get on rather better with the dockers. Noble Lords opposite will not like that, but it happens; and why should the employer not be free to consider such a matter in a competitive society?

So he deliberately rejects Carriages Limited, which has submitted a parallel tender, and one of his grounds—we will come to that in moment; it need only be one, but we will take it as the one for the moment—is that Carriages is a non-union firm. They may pay good rates, they may drive good fish in their lorries, but they do not seem to get the same co-operation with everybody else.

Then, Lorries Limited having been taken on, the unfortunate thing happens (that is, fortunate only to the lawyers) and that is that Lorries Limited's lorry breaks down—it has not got enough cash, perhaps, to service its vehicles—and the fish does not get through, or at least gets through very late. It gets to the wholesaler, who says he cannot distribute it, it is late at night; the retailers have not got any fish; there are fish and chip shops which have not got any fish and chips; and Bill the consumer is so enraged that he tells his wife some very nasty things when she tells him she cannot get any fish and chips for supper. This is a very serious question. The noble Earl looks amazed.

The Earl of Gowrie

Not amazed.

Lord Wedderburn of Charlton

Not amazed; dumbfounded, perhaps. Who are the people "adversely affected "by reason—indeed, not "by reason", because the Bill does not say "by reason", but "adversely affected by its contravention"? That is even looser than "by reason". It must be that Carriages Limited has an action, and from debates in another place that is what the Government were thinking about, although actually I think they would come under another head, given my example. The wholesaler? It is difficult to say that he should not have an action if he has lost his profit on the deal. The retailers? Did they not depend on this practice not being engaged in? What other reason is there for them having suffered loss or being affected adversely but that this man chose the union firm instead of the non-union firm? And what about Bill, the consumer? Why should he be excluded—the little man? And what about the lady consumer? Where does she come in if she has suffered either physical or mental torture from this unhappy event?

Of course, I put the point in a somewhat jocular tone to the noble Earl, but I say that it covers a most serious problem. Under normal principles of law there is no universal duty of care to all the citizens of the United Kingdom to avoid a breach of each and every statute that might affect them adversely beyond all contemplation of the person who contravenes it, or, indeed, in many cases, even within the contemplation of the person who fails to observe the statutory duties. It is not a question of contemplation; it is a question of what the legislation says, and this legislation says that anyone can sue who may be—not who is likely to be, not who can reasonably be foreseen to be, but who may be—adversely affected by its contravention.

Amendments to Clause 11 could, as it were, have taken this point then, but as my noble friend Lord McCarthy said, we (I think quite properly) decided to debate these three clauses together in substance on the new clause and Clause 12. But I say to the Govern- ment that two things arise out of that analysis and that illustration. Firstly, is it not the case that the words "may be adversely affected" cover an enormous range and should perhaps be rather limited in the two ways that my noble friends' two amendments suggest? The first way, in Amendment No. 101, is that the contravention must be directed against the plaintiff who says he was adversely affected. This is an ordinary principle of law. If we are talking about the tortious liability of unlawful interference with trade, it is clearly established in the case that the plaintiff, in order to sue, must show that he was deliberately and directly aimed at by the defendant. That is quite different from this. This is a vague liability and covers a wide range. I say, first, that it should be limited to the intentional or deliberate act aimed in the clear direction of the defendant.

Secondly—and this would be Amendment No. 106 —if the Government cannot go that far, then at any rate (and this is a subsidiary point; in order not to go further, I make this, as it were, a totally separate second heading to the noble Earl) Clause 12 does not even tell you that the people who can sue the union are limited to the people who can sue the employer. What Amendment No. 106 does is to say that, whatever range of plaintiffs can sue the men in the commercial deal which you dislike so much in order to have consultation with unions prohibited and done down by commercial dealing, which must not be allowed, if you insist on saying that anyone who may be adversely affected can sue if he suffers loss—I see that the noble and learned Lord is with us, and he may not have heard the beginning of my speech. Of course, I accept that there must be causation; clearly causation of the loss must be proved, and so on; but given that, it is the range of plaintiffs and who may be adversely affected which I have illustrated.

If the Government insist on keeping that, then I say that it will be noted by the courts that it is not repeated in Clause 12, on which I think the courts will place considerable significance. Because the courts believe—the courts have to believe, because there is no other way of administering the law and justice—that there is such a thing as the intention of Parliament. We in this Chamber tonight may think of it only as some abstract thing high up in the ceiling that will go forth without us noticing it when we send this Bill away. But there is such a thing as an intention of Parliament, expressed not in the ceiling but in the Bill. If the Bill is left in this form, a court will be bound to say: "What a funny thing that they put subsection 7(d) at the end of Clause 11 and nothing parallel in Clause 12 and, therefore, as a second string, Amendment No. 106 (to which I speak as well) would say that only those who could sue under Clause 11 could sue the union under Clause 12. I beg to move.

The Earl of Gowrie

The only thing which rather amazed me about most of the speech of the noble Lord, Lord Wedderburn, is that it seemed to be about Clause 11 and who can sue under Clause 11. Under Clause 11, a person can sue if he is adversely affected by the unlawful practices set out there, but under Clause 12, which we are supposed presently to be debating, a person can sue in tort if he is a party to a contract which is broken or threatened by industrial action against a non-union firm. It was that which caused my expression of puzzlement when this sad story of the failed fish was enunciated from the Benches opposite—and not through any culinary inexpertise, as I am the cook in my household.

Lord Wedderburn of Charlton

I am grateful to the noble Earl. Of course, I should have said the sentence expressly: if you accept this amendment, you will have to amend Clause 11. We did not have a debate on that. It was agreed that we should debate all the clauses together. I accept we will come to it on Report.

The Earl of Gowrie

I am glad that the noble Lord and I are on side about that. If I could deal with the point he made—I accept wholly that it is a serious point—in his interesting story about the fish and chips, there may be those who can show that they have been adversely affected by practices outlawed by Clause 11, and, if so, they, too, may have a course of action under subsection 7(d) of Clause 11. But this does not over-ride the normal principles of law. Anyone bringing an action will have to show that he has sufficient locus standi to bring a case; in other words, that he has suffered loss as a result of the imposition of union membership requirements. It will sometimes be difficult enough for a contractor himself to prove that he suffered because of those practices. The more remote a person is from the union membership requirement, the more difficult it will be for the person to bring a case. It would be a mistake, therefore, to think that subsection 7(d) of Clause 11 will cause widespread legal actions. But we believe that anyone who can show a sufficient cause of action should be able to bring legal proceedings; and subsection 7(d) will enable them to do so.

Returning to Amendment No. 101 and to Clause 12, this amendment would restrict the right to take legal proceedings in tort by virtue of Clause 12(1) to a person against whom the trade union pressure to impose the union labour-only requirement was directed. This presumably means that in most cases only the employer whose employees were taking, or threatening to take, industrial action to persuade him to discriminate against non-union firms, will have a right to sue in tort, The non-union firms themselves and anyone else whose contract was interfered with by unlawful action could be prevented from taking legal proceedings. We do not accept the limitations which that amendment imposes on the rights of plaintiffs to take legal action against those acting unlawfully and, for that reason, I would ask the Committee to reject the amendment.

Before I sit down, if I understood the noble Lord aright, the noble Lord also gave me notice that he was speaking to Amendment No. 106. As I have said in response to the previous amendment, Amendment No. 101, we do not see justification for restricting those who may be able to take legal action under Clause 12. The effect of Clause 12 is to remove in certain circumstances the immunity from actions in tort provided by Section 13 of the 1974 Act. This means that anyone who is damaged will be able to bring legal proceedings, if he can show under the normal rules of the law on the relevant tort, that he has sufficient cause for action. This may be the employer of the employees who are taking the industrial action or the customer or supplier of such an employer if they are damaged directly as a result of unlawful action. There, in a slightly different context, the noble Lord's story of the fish may be relevant; or the non-union firm which has been prevented from fulfilling a contract. In practice, it is unlikely to include anyone more remote from the action than that.

I cannot leave this debate without returning to a point which has been made. There is one simple way to avoid being liable under Clause 12 and that is simply to remain within the law. If trade unions and trade union officials abide by the provisions of Clause 12 then it will not matter who can sue because no unlawful act will have been committed and no damage caused.

Lord Wedderburn of Charlton

I must express disappointment that no other Members of your Lordships' Committee with legal knowledge is taking part in this debate, because the noble Earl has taken us into water which is very deep. I have brought forward some points which perhaps would have been made later but which now must be made here because they are germane to what he said. They fall under three headings. The first relates to his last remarks. I put it this way. It will not do for the Government to tell us when the Bill is obscure that the easy way to avoid problems is to stay within the law. That is a self-contradiction. What we are saying is that the law is not clear. "Tell us what the law is", we say, "and we will try to keep within it". But I do not know what it is, and the noble Earl has not told me; so that it is no good his getting up and saying that there is nothing wrong with the Bill, keep within the law and do not break it so as to effect a contravention. What I am saying is that the Bill is obscure.

May I take the two points that he put to me? I understand them. They engage with my argument but they do not answer it. The first was that the normal principles of law would apply and the ordinary law of the land—I have noted it—would be applicable. Of course, that is true. But the ordinary law of the land on this matter has become extremely complex. There was, for example, in 1981 an action taken to the Judicial Committee of your Lordships' House between Lonrho Corporation and Shell Petroleum based upon the issue of whether Lonrho could sue Shell because Shell, breaking the sanctions regulations, had put petrol and oil into Rhodesia for many years. Lonrho said: "Because you broke that criminal obligation in that case"— but that is not the only point of the judgment—" and the statute and regulations, we want damages because we suffered loss". As a matter of fact, they might well have been people who were adversely affected. They certainly were; and Shell could even foresee it, as was accepted.

The argument was whether or not the statute on its construction allowed for this plaintiff to sue in respect of that kind of loss. So the problem in the Lonrho case, albeit not parallel in every respect, is, nevertheless, precisely germane to the noble Earl's correct reminder that the normal principles of law apply. There, the Law Lords have recently clarified this area of the law. The noble and learned Lord, Lord Diplock, in a unanimous opinion put it forward in two propositions—and I will read only thoseparts which make it absolutely clear—in page 461 of 1981 2 All England Reports. He says: First, there is liability where on a true construction of the Act it is apparent that the obligational prohibition was imposed for the benefit or protection of a particular class of individuals". —such as in the Factory Acts. I am saying that this Act does not make it clear where the class of individuals is to be delimited. And it could do better. On Lord Diplock's principle, there, how do you get much help on the basis of anyone who may be adversely affected, except to say that it is very wide indeed? It is certainly wider than the Factories Act.

Then there is a second principle that where a statute creates a public right then a particular citizen who suffers can sue if he suffers particular, direct and substantial private damage. I apprehend that no one would suggest that the second principle applied. So we are left with the first principle, the ordinary law of the land. I say that it leaves the matter obscure.

I say with no hesitation that the law officers of the Government should pay attention and say to the Cabinet that this is a very serious matter. It has been to the courts and the appellate courts many times, and only in the last few weeks have there been cases on other statutes—it happens to be statutes that people want to use to control those who pirate and bootleg video tapes and so on, a constant source of litigation—but it raises the same point because the Acts are obscure as to who can sue for what. There is no reason why there should be very much obscurity about that. Any decent plaintiff can always raise a bit of dust; but there is no reason to leave it as obscure as the Bill does.

The noble Earl's second point was this. He said if you limited it to a liability for acts done which are directed at a person, then only the other party to a contract or in a similar relationship would be able to sue, and third persons, the non-union firms—which were really the losers down the line—would not be able to sue. With great respect, that is a simple confusion.

You can of course limit the range of plaintiffs to the other parties to a relationship. That is what paragraphs (a), (b) and (c) of Clause 11(7) do and by reference presumably thereby to Clause 12, although we have not had much response to the idea that perhaps the unions could be put in the same position as the employers by taking Clause 11(7) into Clause 12 as well. I hope that the Government are thinking about that. But it does not follow from the fact that you have limited the liability to acts which are done when they are directed against another person that that only reaches the other party to the transaction. That reaches a much wider area.

All the cases on unlawful interference and unlawful damage in trade and business show clearly that the plaintiff need not be a party to a contract. He need not be a party to a relationship. He must be someone in respect of whom the deliberate act of the defendant in breaking a statute which caused the duty to be owed to him caused damage of the type envisaged by the statute and caused proximate loss within the normal principles of causation. I take the noble and learned Lord, Lord Diplock, to be saying that in slightly different words in the first principle in the Lonrho case.

If the noble Earl does not like "directed", he can find something else; anyone who is deliberately done damage by the breach. I am not asking the noble Earl to take these words. I am saying—he said nothing about it at all—that Clause 11(7) is not in Clause 12, which means that the unions have no guidance at all. In so far as they would have guidance if it were put there, it would be poor guidance because his answer did nothing to clarify the meaning of "adversely affected". I cannot understand why the Government six months after they have put a Bill forward have the new clause which is what makes this such a big matter and imposes these areas of liability with hundreds of plaintiffs who may have to litigate and perhaps waste their money to see whether there is locus standi or not, and expect a revising Chamber to put it through. I expect that the Committee will put it through. With the greatest respect to the Committee, it shows the limitations of the House of Lords as a revising Chamber.

Lord Molloy

I should like to emphasise one point which occured to me when the noble Earl was speaking. One tried to follow the arguments as closely as possible. The point that I am trying to make is that the noble Earl referred to the fact that no one need worry if they keep within the law. Does he mean the law that might come if this Bill becomes an Act or the law at the moment extant?

It seems to my simple mind that if he means the existing law, there is no need for the Bill. If he means when the Bill becomes law then I am faced with the quandary that my very experienced noble friend Lord Wedderburn is in. This is not a political matter; no politics are involved in this. If it is a question of the law which ought to be reasonably easy for ordinary lay people to understand, I simply say that I found difficulty in following both the noble Earl's arguments and my noble friend's arguments. We shall not solve anything by having Divisions or political arguments—there are no politics involved in this is it therefore unreasonable, as my noble friend Lord Wedderburn has requested of the noble Earl, to ask that this particular aspect be taken back and that a fresh look be taken at it in the light of what my noble friend has said as an expert, and in the light of what I have said as an ordinary person who does not understand too much of the details of law?

5.16 p.m.

The Earl of Gowrie

I am extremely grateful for the intervention of the noble Lord, Lord Molloy, because he has brought us back to earth. The fact of the matter is that I meant that there would not be difficulties—or I would have thought few difficulties—for people once this Bill became an Act to decide on their liability or on whether or not they could sue. The territory we are in in the arena of Clause 11 and Clause 12 of the Bill is pretty simple. It does not involve a great deal of learned expertise or difficulty. Clause 11 is designed to deal with what are generally known as union labour only requirements. We have debated the reasons why the Government find this long standing practice in some industries distasteful, particularly in view of the increasing use by public authorities. We can argue the merits or demerits in political terms. Here I respectfully disagree with the noble Lord, Lord Molloy; there is a political argument here about these practices.

If we pass Clause 11—as so far, for the sake of argument, we have—Clause 12 is only a logical extension of it in that Clause 12 goes on to make it unlawful for employees and unions to put pressure on employers to violate the laws that we have, so to speak, just passed under Clause 11. To even an unlearned figure like myself this does not seem to be a very difficult point to grasp. The noble Lord, Lord Wedderburn—with I acknowledge a great deal of flair and all the expertise of one who spent a lifetime in the distinguished practice of labour legislation—has both widened and narrowed the debate. He has taken our eye a little off the ball as to what these clauses are designed to do. As he is a skilful professional person, I may be forgiven a little if I suspect him of going into these regions in order to take the mind of the Committee off the rather simple provisions which exist in these clauses.

Lord Wedderburn of Charlton

I know that the noble Earl will not think I am in any way being other than courteous and respectful. I want to remind the Government of an occasion—I have to admit that I do not remember which Bill it was, but I remember reading the Hansard account in 1974, 1975 or 1976—where the provisions of one of the trade union labour relations Acts or employment protection Acts caused the then Opposition to demand that the noble and learned Lord the Lord Chancellor come to the Chamber to explain them. I have made no such demand tonight, but we should all look at that occasion in Hansard. I suspect that provision was certainly not as obscure and strange as this one. Our eye was not off the ball. The noble Earl's eye was well on the ball when he diverted us to the simple point at the end. We shall not withdraw these amendments. Let them remain on the record.

On Question, amendment negatived.

[Amendment No. 102 not moved.]

Lord Wedderburn of Charlton moved Amendment No. 103: Page 14, line 35, leave out ("reason, or one of the reasons,") and insert ("principal reason").

The noble Lord said: If I may, I will move Amendment No. 103, speak to Amendment No. 104 and mention Amendment No. 105. Unless the noble Lord the Minister says something very extraordinary compared with what has been said throughout these three-and-a-half days of debate, my noble friends and I will ask leave to withdraw the amendments. The reason for moving them is so that they can be put on the record, and if I am brief I hope it will not be thought that the amendments are considered by us to have anything other than 100 per cent. convincing merits.

The point made by Amendments Nos. 103 and 104 is that this very wide new liability is based upon someone acting for a reason or "on a ground", as it is in Clause 11. Of course the things aimed at, as the noble Earl has made clear, are union labour requirements and now banning consultation with trade unions or anything to do with trade unions, as far as one can see, in terms of consultation and commercial practice. When one puts these clauses together, one can see that they cover a very wide area.

At the centre of the liability is the reason or the ground upon which somebody does an act. Normally, in a statute, if you think something is obnoxious you say, "You must not do it for that reason", and then somebody will say to you, "But most people in life are more complicated than that". It may be that noble Ministers act for only one reason, but most of us are rather more complex and it is normally enacted, in the format in which earlier, indeed, clauses in this Bill are enacted, that the particular provision applies when someone acts for a reason, or, where there is more than one reason, a principal reason, and then it is set out. On page 2 of the Bill in Clause 2 you will find— the reason (or, if more than one, the principal reason)"— and then follows the rest of the clause. But that is not so here.

All the way through Clause 11, the new clause, and Clause 12 imposing commercial and industrial liabilities, constricting the freedom of people to contact and constricting the freedom of workers to take ordinary industrial action or indeed, as we have seen, possibly not industrial action, inducing breach of any contract, there at the centre is the one ground which, if it appears, vitiates the entire cobweb of transactions. So there might be a hundred reasons. According to this Bill, you can have a million reasons, and so long as one of them is what the Government do not like then the Bill automatically comes down with its civil liability for damages, the extent of which you cannot be sure of because you do not know.

In regard to injunctions, if we had had some debates on this in which the Government were prepared to consider the difficulties, perhaps we might have discussed the remedies of injunction, because the Government plainly mean to have injunctions available for plaintiffs here. I should like the noble and learned Lord to tell us what forms of injunction he thinks are likely to be awarded and what are not, and whether or not they would reach to the edge of a court, telling a defendant that he must enter into a contract or telling a union that it must help him to enter into a contract, or what form the injunctions would take under the new Clauses 11 and 12. The noble and learned Lord may say that they will take the ordinary form, but that will not do because this is not an ordinary trio of clauses. They raise entirely new problems and they do so because the liability tests where someone acts with a variety of reasons; but you have only to have one reason—to push someone, to force someone or to edge someone towards consultation with a union—and all your other reasons are out of the window.

I say that is totally unreasonable and I appeal to noble Lords—the Government cannot be serious in saying that only one reason, when there are dozens of others, is a liability every time. It is not sensible—I use a neutral word: it is silly. The public will think we are silly if we pass an Act which says that if you have a million reasons and one of them falls within the Bill you will be liable for the loss, sued by someone who is adversely affected. Surely the Government will look at this again; but I suspect they will not. And presumably they will not look at the kind of liability which might be reconstructed around the notion that an employer should be put with his associated employee, which we put forward in Amendment No. 105. I have some hope left that the noble and learned Lord will tell us something to the advantage of the Bill, apart from anything else; and so in that sense I move Amendment No. 103.

Lord Mackay of Clashfern

The purpose of subsections (2) and (3) of Clause 12 is to remove immunity from industrial action to interfere with the supply of goods or services from another employer on the grounds that the work in connection with these goods or services is to be or has been done by non-union or union employees. As with the imposition of union membership requirements by employers, it does not make much sense to consider in these cases, as these amendments would have us do, whether union membership was a major or a minor factor. If it was a factor at all in the union's action, then, in our view, it is right that the immunity should be removed. If the action is taken for other reasons altogether then the immunity is retained. That seems to us to be a reasonable criterion and to justify your Lordships in not accepting this amendment.

On Question, amendment negatived.

Lord Mackay of Clashfern moved Amendment No. 103A: Page 14, line 38, leave out from ("persons") to ("who") in line 39 and insert ("(other than persons employed by the relevant employer)").

The noble and learned Lord said: I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendment No. 103B: Page 14, line 40, leave out ("or").

The noble and learned Lord said: I have spoken to this amendment already, and I beg to move.

On Question, amendment agreed to.

Amendment No. 104 not moved.]

Lord Mackay of Clashfern moved Amendment No. 104B: Page 14, line 44, at end insert ("or (c) the supplier of the goods or services in question is not the relevant employer and the reason, or one of the reasons, for doing the act is that the supplier does not, or is not likely to, recognise, negotiate or consult as mentioned in section (Prohibition on union recognition requirements)(1)").

The noble and learned Lord said: I have already spoken to this amendment, and I beg to move.

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendment No. 104A: Page 14, line 43, leave out (" (employed by another") and insert ("(other than persons employed by the relevant").

The noble and learned Lord said: I have already spoken to this amendment, and I beg to move.

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendment No. 104C: Page 15, line 1, leave out from ("above") to first ("the") in line 2 and insert ("the "relevant employer" means").

The noble and learned Lord said: I have already spoken to this amendment, and I beg to move.

On Question, amendment agreed to.

[Amendments Nos. 105 and 106 not moved.]

On Question, Whether Clause 12, as amended, shall stand part of the Bill?

5.29 p.m.

Lord Wedderburn of Charlton

It is, in the view of my noble friends and me, very important now to look at the clause as a whole and indeed, as I have said in regard to previous amendments, to look at Clause 12 as the final chance of the Committee to pass a judgment upon the trio of clauses. As I shall suggest later, they enact anti-union measures and indeed measures aimed at businessmen, who are happy with their relationships with their unions and merely want to see common standards and fair wages resolution standards applied in a decent way throughout a trade. It is not just unions who have things to fear from these clauses, and the message should go out to businessmen. As we have just seen over the last amendment, the Government do not care whether a businessman has 300 charitable reasons, 5,000 decent reasons and 600 justifiable reasons: so long as he has one reason that he wants someone else to recognise or consult with a union; that is enough for the Government. Then he is for the high jump and the whip or the hoop can be thrown by anyone who may be adversely affected.

There is a little recent history to this—the encouragement of employer—undercutting of basic rates; the problem of the—to use the Words of Alan Flanders—employer and union engaging in the joint regulation of the enterprise and, perhaps, of the trade, district or whatever is the relevant sphere; the whole concept of the extension of standards and decency in trades which many British employers are right to uphold. Many British employers do not like the cowboy outfits which do not observe safety regulations and which have standards that do not depend upon statute. Many British employers do not like people who cut rates, when they know that, somewhere in the background, there is not a payment of social security subscriptions or various other practices, to which I shall come later, in regard to self-employment.

This matter was discussed in 1980, and subjects of this kind were put to the then Secretary of State in regard to Section 18 of the Employment Act 1980. That was triggered by the report of Mr. Leggatt on SLADE, and its activities as a union to compel people into membership over a very wide area of activity. The Government then devised a clause which they said would stop the activities of SLADE and would not go very much further, because it was put to them "Wouldn't it be a very bad thing if, in this legislation, you stopped what in some industries are called fair lists?"

On 28th July, 1980, the then Secretary of State, Mr. Prior, said in Committee in another place: I do not particularly care for the fair list system operated by TASS, but I accept that it is an industrial practice and one with which I am not seeking to deal in this clause or in any other clause of the Bill". He went on later: We are not seeking to abolish fair lists. The way fair lists are entered into as a result of an agreement, as is the case with the TASS agreement with the employers here, is something with which we all ought to be able to live in good industrial relations". —[Official Report.] My noble friends and I were critical of Section 18, but it did not seem to us that the Secretary of State at that time was anything other than sensible about fair lists and similar arrangements.

It may be that there is a line to be drawn, but why ban them all, when in some industries they are the only reason why those employers who would be the black sheep employ their workers on contracts of employment, instead of on self-employment or lump labour, and when they are much more effective in upholding jointly regulated standards—I stress jointly regulated—than legislation? They are employer-union arrangements which are not harmful to competition and they are not harmful to costs, because, in the long run, they give the employer an opportunity of working with his work force, of participating with them and of gaining productivity and efficiency through consensus, rather than conflict.

They are part of arrangements between some of the best unions and employers in the country. But they will be more than at risk, and 90 per cent. of them will very likely fall foul of this Bill. There must be many in Birmingham, Leeds, Glasgow, Manchester and Cardiff who, when they read the report of this debate, will wonder what on earth was going on in London when these provisions were passed.

My second point is about the extraordinary way in which these three very wide liabilities in the clauses, and these three very wide areas of possible plaintiffs, have been justified in effect, by one area alone—local authorities. I said yesterday that gradually coming out of the Bill was the attack upon what the noble Earl, Lord Gowrie, referred to as the politically motivated act by certain councils. I referred to the fact that the district auditor will be used in order to charge labour councillors for political convictions which the Government do not like, but on which they may well have been elected.

But this time the Government are not going to leave it to the courts, in case it goes wrong. They are going to say, "We do not care what your election programme was. You are not allowed by us, no matter what your local voters say, to make contracts on the basis of consultation with trade unions by the other contracting party". What a preposterous, outrageous proposition to put before the country! Indeed, was it ever put before the country? What was the consultation on this? Perhaps the Minister will tell us when he replies. What document was sent and to which union and to which employer? What are the views of the CBI? Does the EF agree, because they did not agree with many areas in the Bill? Can we know and, if we cannot, when will we be told?

The noble Lord, Lord Boyd-Carpenter, said earlier that these clauses are fair and reasonable and he could not understand why anyone should oppose them. The words that he used were almost exactly those used in a certain leader in The Times, which said that unhappy though it was to see this happening "we must preserve the rules of fair fighting". That was in 1872, when the gas strikers were convicted for the strike in the West End of London that was called a criminal conspiracy by Mr. Justice Brett. The terms of the speech of the noble Lord, Lord Boyd-Carpenter, were very similar to The Times on that occasion which I do not have with me, but which I have well in mind in speaking of it.

This whole debate has shown again that the Government have forgotten some of the wisdom of those from whom they would claim descent, because when, in 1909, the wages councils or the trade boards, as they were called, were being set up, the President of the Board of Trade said on 28th April, at col. 388 of Hansard: It is a serious national evil, that any class of His Majesty's subjects should receive less than a living wage in return for the utmost exertions. It was formerly supposed that the workings of the laws of supply and demand would naturally regulate or eliminate that evil. The first broad division we make on that question is between healthy and unhealthy conditions of bargaining". That was the basis of the Trade Boards Act and the wages councils which, if they have their head, I have no doubt the Government will get rid of, in view of the response of the noble Earl, Lord Ferrers, in the debate initiated by the noble Lord, Lord Spens.

The President of the Board of Trade went on: Where in the great staple trades of the country you have powerful organisation on both sides, there you have a healthy bargaining which increases competitiveness in industry". Later he said: But where you have what we call sweated trades you have no organisation, no parity of bargaining, the good employer is undercut by the bad and the bad employer is undercut by the worst". The Government have forgotten all that. The Government are now going to legislate against the kind of organisation that prevents that. The speaker on that occasion was far more wise those many years ago. It was the President of the Board of Trade, Winston Churchill. This Committee should not accept Clause 12, nor, indeed, should it have accepted the previous two clauses.

Lord Mackay of Clashfern

A good deal of the latter part of the noble Lord's speech in relation to Clause 12 suffers. I suggest, from the same sort of confusion as was pointed out by the noble Baroness, Lady Burton, in connection with an earlier debate. The fact that these clauses seek to preserve for employers and employees the right to manage their own affairs without outside interference, is in no way to promote cowboy outfits in relation to safety or to promote sweated labour or anything of that sort. The conditions in which trade unions are able to invite people to join today are surely very different from those which prevailed in the history to which the noble Lord has been kind enough to treat us this afternoon.

So far as the Government are concerned, Clause 12, like Clause 11 and the new clause, is concerned with the imposition of union labour only and other requirements on contractors, but whereas Clause 11 and the new clause deal with the imposition of such requirements by employers, Clause 12 is aimed at trade union pressure to impose and enforce such requirements. The Government take the view that pressure of this kind, which is dealt with by this clause, is not appropriate and ought no longer to be lawful.

The clause is in two distinct parts, as your Lordships have seen, which it is convenient to consider separately. Subsection (1) is a direct consequence of the two previous clauses. It removes immunity from a union or other person who organises or threatens industrial action in order to put pressure on an employer to do something which Clause 11 and the new clause declare to be unlawful. In other words, if trade union representatives in a company threaten to call out the employees in that company unless that employer sub-contracts only to a sub-contractor with a closed shop or recognition agreement, they or their trade unions may be liable to be sued for an injunction or damages.

I hope no one is in any doubt why we are taking such a step. The Government are opposed to requirements about union membership and recognition, whether they are enforced by employers or trade unions. It would be absurd to make it unlawful for an employer to impose such requirements while leaving trade union action to persuade the employer to impose such requirements completely untouched. It would put employers in an impossible position, caught between the provisions of the law on the one hand and pressure from their trade unions on the other.

Subsections (2) to (4) of Clause 12 deal with the related but wider question of industrial action which interferes with the supply of goods or services from non-union companies. Two typical examples of such action which may be affected by these subsections are, first, the refusal of employees to work with or allow on to a site an employee of another company who cannot produce the requisite union card and, secondly, the refusal of workers in a company to handle goods or materials because they have come from a non-union source. It does not at all follow that because they are coming from a company which is a non-union source, the terms upon which the workers work are any less favourable than those which would obtain in a union situation.

Lord Wedderburn of Charlton

They may be.

Lord Mackay of Clashfern

The noble Lord says they may be, but that shows that the mere fact of this sort of provision being put in has very little to do with conditions. It is a very different situation that the union wishes to achieve by pressure of this kind. It is to have the union recognised rather than specially to promote any particular conditions of employment. These practices are common in some industries, particularly where there is a long tradition of union membership or a high level of sub-contracting.

The noble Lord asked me about consultation and spoke of the practical difficulties of implementing these proposals which, in our view, are very justified in principle because of the practices which they are to outlaw. The possible consequences were considered. The Government consulted on these matters and set out the issues very plainly in the Green Paper on trade union immunities, and in a consultative paper on the Government's proposals we specifically sought further advice on this question before we made up our mind about the contents of the Bill.

The response to both the Green Paper and the consultative paper left us in no doubt about the strong views of employers and employers' organisations that these practices should be dealt with in the Bill, first because they are objectionable in principle and if we miss this opportunity to put up barriers to them they may take an even firmer hold; and, secondly, because without subsections (2) to (4) it was widely felt that the Bill's measures to make unlawful union labour only requirements would be incomplete—and dramatically incomplete.

We were impressed by these arguments and by the strength with which they were expressed. In the light of these explanations, I hope your Lordships will agree that this clause should stand part of the Bill.

Lord McCarthy

Before the noble and learned Lord sits down, I think he referred to the trade union immunities Green Paper. May I ask the noble and learned Lord where in the trade union immunities Green Paper, to which I am sure he referred, there is anything at all on prohibition of union recognition requirements. I do not think it can be found anywhere. Indeed, I cannot find a direct reference in it to any of the previous clauses on union requirements. But specifically I think the noble and learned Lord will find that there is nothing at all on the prohibition of union recognition requirements. It is something which the Government have invented in this Committee at the last moment.

Lord Mackay of Clashfern

As the noble Lord will remember when I introduced the amendment with the new clause about union recognition, I explained that the matter concerning this particular aspect had been drawn to our attention since the Bill was published. But the principle upon which it rests is exactly the same and the reason that it is obnoxious is exactly the same as the reason in principle upon which Clause 11 itself rests.

Lord Wedderburn of Charlton

Before the noble and learned Lord finally resumes his seat, there is nothing in the document about that. May I ask him a second question? I asked, I think specifically, about fair lists. The Government specifically took a stand in 1980 and gave the reasons for their position on Section 18 of the 1980 Act. That position has now been overturned and these clauses do what the Government said they would not do in 1980. What specific points about fair lists have the Government taken into consultation and which parties on fair lists have they consulted?

Lord Mackay of Clashfern

If I correctly took the quotation which the noble Lord gave from my right honourable friend who was then the Secretary of State for Employment, he was making it clear that it was not the intention of the Government to deal with that particular matter in the 1980 Bill. The quotation does not suggest that it would not be appropriate to deal with it on a future occasion, once these matters had been consulted upon.

5.47 p.m.

On Question, Whether Clause 12, as amended, shall stand part of the Bill?

Their Lordships divided: Contents, 139; Not-Contents, 52.

DIVISION NO. 2
CONTENTS
Aberdeen and Temair, M.	Lane-Fox, B.
Airedale, L.	Lauderdale, E.
Airey of Abingdon, B.	Lloyd of Kilgerran, L.
Alexander of Tunis, E.	Long, V.
Allerton, L.	Lucas of Chilworth, L.
Auckland, L.	Lyell, L.
Avon, E.	McFadzean, L.
Aylestone, L.	Mackay of Clashfern, L.
Baker, L.	Mackie of Benshie, L.
Bellwin, L.	Macleod of Borve, L.
Beloff, L.	Margadale, L.
Bessborough, E.	Marley, L.
Blake, L.	Marsh, L.
Boardman, L.	Massereene and Ferrard, V.
Boyd-Carpenter, L.	Merrivale, L.
Brougham and Vaux, L.	Mills, V.
Burton of Coventry, B.	Montgomery of Alamein, V.
Campbell of Alloway, L.	Mottistone, L.
Campbell of Croy, L.	Mowbray and Stourton, L.
Cathcart, E.	Murton of Lindisfarne, L.
Chitnis, L.	Norfolk, D.
Clifford of Chudleigh, L.	Northchurch, B.
Cockfield, L.	Nugent of Guildford, L.
Craigavon, V.	O'Hagan, L.
Cromartie, E.	O'Neill of the Maine, L.
Daventry, V.	Onslow, E.
Davidson, V.	Orkney, E.
De Freyne, L.	Orr-Ewing, L.
De La Warr, E.	Pender, L.
Denham, L. [Teller.]	Penryhn, L.
Diamond, L.	Plummer of St. Marylebone, L.
Dilhorne, V.
Donaldson of Kingsbridge, L.	Portland, D.
Drumalbyn, L.	Rochdale, V.
Ebbisham, L.	Rochester, L.
Eccles, V.	Romney, E.
Ellenborough, L.	Sainsbury, L.
Elles, B.	St. Davids, V.
Elliot of Harwood, B.	St. John of Bletso, L.
Energlyn, L.	Salisbury, M.
Erroll, E.	Saltoun, Ly.
Faithfull, B.	Sandford, L.
Ferrers, E.	Sandys, L. [Teller]
Fortescue, E.	Seear, B.
Fraser of Kilmorack, L.	Sempill, Ly.
Gardner of Parkes, B.	Sharples, B.
Gladwyn, L.	Skelmersdale, L.
Glanusk, L.	Spens, L.
Glenarthur, L.	Stamp, L.
Glenkinglas, L.	Stodart of Leaston, L.
Gowrie, E.	Stradbroke, E.
Gridley, L.	Swinfen, L.
Hailsham of Saint Marylebone, L.	Tanlaw, L.
	Terrington, L.
Halsbury, E.	Thomas of Swynnerton, L.
Hampton, L.	Trefgarne, L.
Hankey, L.	Trenchard, V.
Harris of Greenwich, L.	Trumpington, B.
Harris of High Cross, L.	Vaux of Harrowden, L.
Harvington, L.	Vernon, L.
Henley, L.	Vivian, L.
Home of the Hirsel, L.	Wakefield of Kendal, L.
Ilchester, E.	Walston, L.
Ironside, L.	Ward of Witley, V.
Kennet, L.	Westbury, L.
Killearn, L.	Whaddon, L.
Kilmany, L.	Wigoder, L.
Kilmarnock, L.	Wilson of Langside, L.
Kimberley, E.	Windlesham, L.
Kinloss, Ly.	Young, B.
Kinnaird, L.

NOT-CONTENTS
Ardwick, L.	Bernstein, L.
Balogh, L.	Beswick, L.

Bishopston, L.	Llewelyn-Davies of Hastoe, B.
Blease, L.	Lovell-Davis, L.
Blyton, L.	McCarthy, L.
Boston of Faversham, L.	Milford, L.
Briginshaw, L.	Molloy, L.
Brockway, L.	Oram, L.
Brooks of Tremorfa, L.	Peart, L.
Bruce of Donington, L.	Phillips, B.
Collison, L.	Pitt of Hampstead, L.
David, B. [Teller.]	Ponsonby of Shulbrede, L. [Teller.]
Davies of Leek, L.
Davies of Penrhys, L.	Ross of Marnock, L.
Elwyn-Jones, L.	Sefton of Garston, L.
Ewart-Biggs, B.	Segal, L.
Fisher of Rednal, B.	Stewart of Alvechurch, B.
Gaitskell, B.	Stewart of Fulham, L.
Gregson, L.	Strabolgi, L.
Hatch of Lusby, L.	Taylor of Mansfield, L.
Houghton of Sowerby, L.	Underhill, L.
Jeger, B.	Wedderburn of Charlton, L.
Jenkins of Putney, L.	Wells-Pestell, L.
John-Mackie, L.	White, B.
Kirkhill, L.	Wootton of Abinger, B.
Lee of Newton, L.	Wynne-Jones, L.
Listowel, E.

Resolved in the affirmative, and Clause 12, as amended, agreed to.

5.56 p.m.

The Earl of Gowrie

I think that the noble Lord, Lord Marsh, and the noble Lord, Lord Harris of High Cross—who appear not to be present—would wish to move their amendments, although quite what to do about it I do not know. But now I see the noble Lord, Lord Harris of High Cross, approaching.

Lord Harris of High Cross moved Amendment No. 107: Before Clause 13, insert the following new clause:

("Lay off and industrial action by employees of the employer

.—(1) An employer whose customary course of business is disrupted by industrial action by his employees shall, subject to compliance with the requirements of subsection (2) and the provisions of subsection (3), be entitled to suspend without pay—

1. (a) employees participating in industrial action or financing or directly interested in the dispute which caused the industrial action;
2. (b) any other employees of the employer for so long as the dispute continues.

(2) The requirements of this subsection in respect of subsection (1)(b) are satisfied if the employer—

1. (a) causes to be displayed at the place of work of all employees intended to be suspended a written notice ("the warning notice") identifying such employees and stating the reason for such intended suspension;
2. (b) takes such steps as are reasonably practicable to ensure that the attention of all employees intended to be suspended is drawn to the warning notice on the day on which it is first displayed ("the date of notification"); and
3. (c) exercises the right to suspend not sooner than 48 hours after the date of notification as shall have been specified in the warning notice.

(3) A complaint may be presented to an Industrial Tribunal by any person whose pay has been suspended by the employer by virtue of the provisions of subsections (1) and (2) of this section on the grounds that such provisions were inapplicable; and unless the employer satisfies the Industrial Tribunal that in all the circumstances of the case the suspension and the period of suspension were justified having regard to the provisions of subsections (1) and (2) of this section, the Tribunal may declare the suspension to have been unfair and award compensation in accordance with the principles set out in section 74 of the Employment Protection (Consolidation) Act 1978.").

The noble Lord said: The full merits of Amendments Nos. 107 and 108 will be revealed to the Committee shortly by my noble friend Lord Marsh who has been working intensively for some days on the full legal complexities of the matter. I want to put a simpler argument before your Lordships. The Committee has listened patiently for some days to many amendments which have been advocated on a whole range of different grounds. Some have been posed on legal or constitutional grounds and others have been based on political, historical, social or even—when the noble Lord, Lord Molloy, was in full spate—on high emotional grounds. We have heard about individual or collective rights. We have heard about public opinion. We have heard about restoring the balance between the two sides. I want to put before the Committee the economic merits of this amendment.

Whatever the rights or wrongs of a strike, one of its primary aims and one of its invariable consequences is to impose a cost on the company through the interruption of production. In olden days, if the workforce went on strike, the company suffered some loss through the interruption of its business and through having to bear unavoidable overheads which persisted throughout the strike. But then at least the cost of maintaining the strikers and their families is shifted to the trades unions, if they offer strike pay, or to the workers themselves—or to the taxpayers, through supplementary benefits and related support.

However defective the economic understanding of some trades union leaders may be, they have recently increasingly "tumbled" to a way of inflicting a larger cost on employers at small expense to themselves. Thus, a selective strike by key workers is a far more onerous penalty to impose upon the employer with whom they are in conflict. They can immobilise production—sometimes completely—but leave the company with a contractual obligation to pay wages to the non-striking majority for whom there may be no work at all. In this way, a small minority of workers, at minimum sacrifice, may impose a maximum loss upon the company. This wholly disproportionate pressure may lead to an immediate "shot-gun settlement" on the strikers' terms, or it may lead to a protracted dispute, as we saw in the Civil Service dispute last year, or as we are seeing in the present National Health Service strike. Either way the company may suffer losses which impair its competitive position or its ability to raise or service new capital for investment. But when you come to a number of industries that have a very high proportion of their costs represented by labour costs, like the railways, or coal, or newspapers, the cost of continuing a selective strike by key workers is particularly severe and it must at some stage bring the company towards insolvency or indeed into bankruptcy.

I believe the Government may be inclined to offer some token resistance to this amendment as licensing a breach of contract. But if that is so, we have to ask who is responsible for the breach: is it the employer, who is running out of cash, or is it the union for bringing the company's survival into jeopardy? And if the company is finally bankrupted, what then? Not only will contracts be broken willy-nilly but future employment prospects may be destroyed. This is by no means an arcane economic speculation, if we remember how the print unions have helped over the years to destroy newspapers, going back to almost forgotten names like the News Chronicle, the Daily Herald, and more recently two of the three London evening newspapers with which most of us were brought up.

I want to put to the Committee very strongly that lay-off provisions of the kind incorporated in these two amendments, Nos. 107 and 108, are perfectly familiar in leading European countries. I cannot claim to have had time to conduct a possibly exhaustive survey, but in Germany, in France, in Denmark, in Belgium employees can be laid off if strikes in essential public services cause disruption or suspension of a company's production. This is regarded as force majeure, as arising from the interruption of supplies from outside of the company, for which the employer can have no possible responsibility. This is covered by our new clause in Amendment No. 108, the second of the two clauses. In most of these cases, even in Sweden, there is also provision for lay-off where a selective strike is by the company's own workers which causes the disruption of production, as incorporated in our Amendment No. 107 as we will discover from my noble friend Lord Marsh. Both these clauses provide the customary safeguards. They provide for an announcement of the intention to activate the suspension, they provide for a period of notice, and they provide for the right to appeal to an industrial tribunal.

We may hear that not all employees are agreed about the need for these clauses. Well, that is fine, they do not have to use them: there is no compulsion; there is no requirement. I can conceive of employers who would judge that to mobilise these powers might on balance be disadvantageous to the company. That is for their judgment. But in some circumstances they might find it a valuable way of preserving the solvency of their company as a future employing unit.

The Engineering Employer's Federation have strongly urged the merits of this amendment, as discouraging irresponsible militancy and diminishing the possibility of jobs being destroyed by selective strikes. Similar clauses to those before the Committee were tabled in the other place but were not discussed owing to the operation of the guillotine. It is my submission that, by incorporating these clauses in the Bill tonight, we shall be performing our constitutional duty in providing an opportunity for the elected House to consider, for the first time, these amendments, which have so much industrial and economic logic to commend them. I beg to move.

Lord Campbell of Alloway

I would urge upon your Lordships not to accept this amendment. Your Lordships have heard the economic case advanced, but will it work in practice, and ought we to license breaches of contracts of employment? We have heard about other countries. They are Napoleonic Code countries with a wholly different régime, where the lay-off clause in different ways is treated as a force majeure clause. Comparison with those countries, because the régime is so different, affords little assistance.

But to take a common law country, consider Australia. There is at the moment a Bill before the Australian Parliament to amend their principal Act of 1904, and Clause 6 of that Bill contains a lay-off clause which bears a striking similarity to the form of the subject matter of this amendment. It may interest your Lordships to know that this Bill at the moment has been referred to the Select Committee of the Senate to consider inter alia—and here I quote, with your Lordships' leave: whether this right of lay-off without reference to the Conciliation and Arbitration Commission is consistent with modern industrial practice and will contribute to industrial peace". I would oppose this clause as drafted mainly for the reason that it seeks to impose lay-off without the pre-requisite of conciliation. If there were some sort of mandatory conciliation, such perhaps as is envisaged by Amendment No. 143, that might—I underline "might"—be different. But there is not.

I am tired of hearing from noble Lords opposite that I am anti-union, hostile to unions, do not understand anything about it, and so on. I may not understand much about it, but I am not hostile to anyone, I regard this lay-off clause in its present form as unwise, unfair to trade unions, far too draconian and only for use in a form of national emergency, and this is not a Bill, fortunately, which envisages any such situation. I invite your Lordships for those reasons, if they commend themselves to your Lordships, to reject this proposed amendment.

Lord Marsh

I must apologise to the Committee for having been somewhat late on this occasion. I think it is a combination of my past with British Rail and experience of another place where things move at a more leisurely pace. I listened to the noble Lord, Lord Campbell, obviously with very great interest and consideration for the views which he puts forward. But, with the greatest respect, I suggest that he misses the entire point of the new clauses. This is not a question of a legal argument, it is a question of practicality. These two amendments are designed to assist an employer whose business is disrupted, either (in the case of Amendment No. 107) by some of his own employees or (in the case of Amendment No. 108) by employees of some other business on which he is dependent. This is intended to provide him with a third course of action. As things stand in the present situation, he has only two options open to him. In such a situation he can meet the claim, whatever its justification and however fair or unreasonable, or he can continue to pay the full costs of the labour until such time as he goes insolvent.

To the best of my knowledge, there is no other alternative open to him. That is a situation which is a practical problem. In these days, recession and cash flow problems can result, and do sometimes result, in the collapse of a company and the permanent loss of the employment opportunities for the workforce themselves. In fact, the clauses are designed not to attack trade unionists and their employment, but as the only practical proposition which I personally can see at the present of preserving their future job opportunities in those circumstances.

In the bad old days employers were able—and frequently did—dismiss their workers without notice, without compensation and frequently for no good reason. It still happens no doubt sometimes but it is not without notice and not without compensation but it is sometimes done without good reason. I suspect that there is nobody in this Committee who would wish to see those days return or would have any time for that sort of behaviour. That situation was indefensible and it has changed very much indeed, and quite properly so.

Anyone who is involved in day-to-day business will know that the dismissal of an employee today is frequently very difficult and it is almost always very expensive. It is not something which employers do lightly. Indeed, the situation has changed so much that voluntary redundancy is an extremely attractive proposition to many employees, particularly older staff with long service, and it is a traditional well known way in which to reduce labour forces. In periods when Governments of both parties decide to freeze salaries or to control them within certain norms, frequently the best way of helping a good executive is to fire him and let him get his tax-free redundancy payments.

Therefore, the situation has changed very much. Today the required notice for the dismissal of an employee varies, but in most cases it is quite substantial. Perhaps I may speak about one industry, the newspaper industry, in which I obviously declare a direct financial interest. The average period of notice there is 12 weeks. I would ask your Lordships to bear that in mind—12 weeks notice. Of course, despite the pockets of low paid wages in some industries, in others wages today are not at subsistence level. In national newspapers, for example, the average earnings of a semi-skilled worker today is £206.85 per week—£10,765 per year. That is the wage for the semiskilled and obviously one would not expect him to get as much as the skilled worker whose average earnings today are £341.25 per week—£18,000 per year. So we are talking about a commitment in the case of a stoppage for which the employer has no direct responsibility and, indeed, if it is caused by extraneous action in some other company, no control. There is nothing that he can do. The option he has is to pay out for a period of 13 weeks, wages at those levels. It is not a legal question; it is an economic impossibility in many companies.

Let us take, for example, an average national newspaper company. A stoppage will cost something around £4 million a week; something in excess of £½ million a day. It may well be that the contract reached says that the employer has to go on paying £½ million a day for 13 weeks. But I would submit to your Lordships that it is no great secret that there are many newpsapers in Fleet Street who could not go on doing that for a month or a fortnight—they are already in a loss-making situation. The danger is that it is possible for people to have in mind the long disputes that can be borne in the public sector. However, they cannot be borne in the private sector on this scale for long.

So what are the options? One option is that they can give 13 weeks notice to their employees, but of course they will be insolvent long before that time and the jobs will be gone for good. The second option is that they can pay up regardless of the merits of the claim. All Ministers—and many Members of this House have been Minister and have shared this view, including myself—have a touching and totally unjustified faith in the power of exhortation. I have heard industrialists—I have taken part in it myself—over and over again entreated to stand firm in the national interest. I have heard Prime Ministers of both parties and several Governments make the most scathing attacks—and frequently the irritation of Conservative Prime Ministers with industrialists is only matched by the irritation of Labour Prime Ministers with trade unionists—on the weakness of employers for not assisting them. The position is that very few companies in the private sector can afford not to accede to any union claim if it is pursued with skill and with determination.

These clauses are quite well known in British industry. I am sure that the noble Lord, Lord Wedderburn, would agree that they exist in a number of industries and have done for many years. I accept that they exist on a voluntary basis, but they are well known and the value of them has been known in the past. It could be said that to introduce them would involve a breach of faith with employees by their employers. I dispute that. As my noble friend Lord Harris has said, in these cases the employer is frequently not in dispute with his employees, particularly if it is extraneous action.

I keep coming back to the point, at the risk of being tedious, that the company has no alternative if it is to survive. Frequently, the temporary suspension of the guaranteed week is the only way in which to preserve the longer-term job opportunities of the employees within the company where the company is faced with a financial obligation which it simply cannot meet. We have talked a great deal about the rights of trade unions and the power which they have quite legitimately obtained over many years. If they have that power, then to suggest that they have an obligation to take into account the effect of the exercise of that power upon other workers is not unreasonable. That is something about which they can be asked.

The two clauses have differences. The first of course deals with the right to suspend after 48 hours. It concerns the case where there is a domestic dispute and where it is easy for the workers affected to consult with the management and, equally, to consult with each other. I suspect that in very few cases would the powers be used as early as that. But I come back to the point where one can give examples of industries where 48 hours may not sound very long, but it is £1 million in hard cash and there really is not a long time to philosophise about it.

The second involves a company suffering the effects of extraneous industrial action. Here the provisions of the clause become effective after five working days because the affected company, as in the case of the rail strike, will have some flexibility at least for a limited period. The rail disputes and mining disputes are good examples. As my noble friend has said, subsection (3) of both clauses provides a way whereby any employee who feels aggrieved can take his case to an industrial tribunal and the industrial tribunal can find against the employer if the industrial tribunal believes that it has been unfairly applied.

I understand the view of those who think that the clauses perhaps go too far; that, as the noble Lord said, they are draconian. But I believe it is a fact that must be faced, and the Government delude themselves if they believe that industrialists have any chance of standing firm when the scales are so unbalanced that the actions of, say, 5 per cent. or 10 per cent. of a labour force, or a labour force totally outside the company, can completely cut off the income to the company and leave it with an obligation to pay the whole of the wage bill.

Lord Boardman

The noble Lords, Lord Harris and Lord Marsh, have spoken of the problems of particular industries, and the noble Lord, Lord Marsh, referred specifically to the difficulties in the printing industry, which is an example of the problem which his clause seeks to remove. All of us who are involved in industry must know of countless similar cases where one or two people can stop a whole business and operation with thousands of other employees. The penalty that is imposed upon the employer and the pressure that it puts upon the employer, as the noble Lord, Lord Marsh, has said, is a menace.

There is the further point, that if a clause on the lines of that now proposed should become law, there would be increasing pressure upon the other employees to bring sense to bear on those who are out on strike. One would have the pressure of those who have been laid off because of the strikers, which I believe would be helpful in reaching a sensible solution. As the noble Lord, Lord Campbell said, there may be defects in the clause or other procedures which should be adopted, but I hope that, when the Government reply to this amendment they will indicate their acknowledgment and understanding of the problems around us, and perhaps make some proposals as to how this can he dealt with in order to relieve industry from the very heavy penalty that it suffers at the moment.

Lord Spens

I want to intervene for a very short moment because the noble Lord, Lord Campbell of Alloway, suggested that my amendment, No. 143, would be better than this one. I do not agree with that at all. I think that this Amendment, No. 107, and the next one, No. 108, will fit in extraordinarily well with my Amendment, No. 143, and I hope that the Government will accept all three of them.

6.32 p.m.

Lord Wedderburn of Charlton

We on these Benches have listened with great interest to the debate. We have been a little disappointed. The noble Lord, Lord Harris, said that his noble friend Lord Marsh would explain the full legal complexities to us. I do not think that he did that. I contest the law in Denmark, France and Germany as stated by the noble Lord, Lord Harris, with which no doubt he and I can join at another time. There are legal questions and, indeed, industrial and moral questions in these amendments. There is a sense in which the noble Lords, Lord Marsh and Lord Harris, solve the problem of lay off by the ultimate solution of putting the employer completely in the saddle, and indeed equating lay off to dismissal—at any rate, as near dismissal as any employee would like to get. The clauses, as the noble Lord, Lord Marsh, has taken your Lordships through them—give the employer as much power as it would be possible to imagine without using the word "dismissal".

Perhaps I may deal with the legal points which the noble Lord, Lord Marsh, mentioned. He said that dismissal was always expensive, to which one might respond that it is not more expensive than that which you have contracted to pay if you do it with notice, and fairly. It is, of course, true that by statute workers have a basic floor of notice rights in their contracts of employment, as their service goes up over the years. But I was not very sure whether the noble Lord, Lord Marsh, wanted to get rid of that, and whether that was his main statutory object and target, becaues if it was, it would be very easy simply to repeal those clauses and have done with it.

If notice depends—as he seemed to suggest—upon contract, and the reality in industrial life upon industrial relations conducted so far, at least, despite what so far has gone in this Bill, by collective bargaining, then, of course, it is a matter beyond that floor of negotiation. It may be that there are situations where the noble Lord, Lord Marsh, and I, would find ourselves in disagreement and others where we would find ourselves possibly in agreement as to the power, and desirable power, of the parties to the bargaining. But I suggest that the only thing the noble Lord, Lord Marsh, can do in that situation, if he thinks the union is too powerful, is to go away and keep away from the arrows and shots of the law. If the union is powerful enough to impose on the employers more notice than they would care to have given above the statutory floor, I do not know what he thinks the union's response to these clauses would be likely to be.

I do not claim expertise in having surveyed clauses of this sort in the way in which some of my noble friends, have, but I came across some in the Law Reports, because they have come to court, especially in Scotland—and I am sure that the noble and learned Lord, the Lord Advocate, would agree—where cases have been dealt with rather favourably to the employers in their interpretation of the standard guaranteed week and the suspension clauses in them. On this I should like to say a few words, because so far it seems to me that their position has been left rather obscure.

The one I came across in 1977 Reports said: All hourly-rated manual workers continuously employed for not less than four weeks will be guaranteed employment for five days in each normal pay week". But it went on: In the event of dislocation of production in a federated establishment as a result of an industrial dispute, in that or any other federated establishment, the operation of the period of guarantee is automatically suspended. That is a lay-off clause by way of a suspension. It sometimes begins for workers who are under discipline, but normally arises in these collective agreements where the disruption is due to a trade dispute. Sometimes it covers disputes within the federation or within associated employers, and, as the noble Lord, Lord Marsh, knows, sometimes it deals more widely. This is a matter for negotiation.

These clauses are saying that those who support them wish, by law, to impose the unilateral right of the employer, no matter what collective agreement he has negotiated, to tear it up and lay off the workforce without pay. What would the party opposite say if a Labour Government asked for a similar right on the other side of the coin to be negotiated or legislated: that unions could seek peace-obligations clauses, but if they found them inconvenient, contrary to custom and practice or harmful to the workers in some economic way they could, in giving suitable notice, say "We shall now tear up the agreement"? What would happen would be what will happen if clauses of this kind are enacted in Bills of this sort.

I say, "Bills of this sort", because I think it behoves my noble friends and myself to say this to the Government. We apprehend that the Government are likely to oppose this amendment—we may be wrong, but that is what we guess—just as we thought that the Government would oppose certain amendments in the Bill in 1980 that went through then. If we had said in 1980 that the 1980 Bill would incorporate in two years' time the sort of things before your Lordships' House in this Committee, most people would have laughed. They would not have believed us. Indeed, I suggested some of the things myself. In fact, I was quite wrong; I was too moderate. I had no idea that they would go as far as they have gone today.

Let us look at what the Government are now doing: getting ready to tear up the fair wage legislation—not in this Bill; getting ready to pounce on the Wages Councils—not in this Bill; dealing with supplementary benefit for those who will not have training places (in one way or another it is a tight-rope which way it will go)—and not in this Bill. A clause of this sort?— no not in this Bill. But what about the next one? The answer from the Government tonight will be looked at very carefully, not only by those who know what is going on in your Lordships' Committee, but by trade unions.

To return to the industrial reality, what happened the last time something of this sort was tried? The parallel is the attempt in 1971 to make collective agreements into contracts by law or, in effect, with very little way out. But a way out was left: presumed to be contracts unless they stated that they were not. What happened?—all the collective agreements had within them the TINALEA clause—this is not a legally enforceable agreement. Indeed, shop stewards—and I am told in one case a manager—had rubber stamps with the TINALEA formula ready to put on the end of the document, because what mattered was the agreement, not whether it was legally binding. They wanted to get away from the presumption which the Act created.

If these clauses were enacted now and came into effect in 1983, by 1984 we should have a rash of Son of TINALEA or IPNUMALL—I promise not to use the Marsh lay-off law. That would be the rubber stamp this time. The noble Lord, Lord Marsh, must know that that would happen unless—unless what? That would happen unless workers were driven further into the ground, rather than in the way they are being treated now, and if the policies being pursued in this Bill are any indication that is how they will be treated in future.

For the noble Lord, Lord Marsh, to come to your Lordships' Committee and complain about the fact that one-third of 35,000 applicants to industrial tribunals last year received compensation for being unfairly dismissed, when there are three million people without work, verges upon the irresponsible. Of course, most noble Lords know that is true, and also most noble Lords know that it is not the way to handle the problem. Most of your Lordships know what the Financial Times said (and since the noble Lord, Lord Marsh, is associated with the newspaper industry I know he will have read it and taken it in in the way that I did; I keep it close to me at all times) on 10th November last—and this was a leader and is relevant to this debate: Managements should not believe, however, that employees' more docile attitudes which have been bred mainly by fear of unemployment, automatically indicate a permanent acceptance of economic realities or a permanent willingness to co-operate with management decisions". I quote this not because I agree with all the phraseology but because of the argument. It goes on: One is not arguing here for soft management, nor for creation of endless committees which can slow down decision making … The tide that swept the Bullock proposals on industrial democracy into a major issue has not receded forever". I agree a bit more now. Then, Employees, whether they are shop-floor workers, or highly paid professional staff, are slowly demanding a greater say in the, affairs of their companies. Most of them do not want to usurp their managers' authority; but they do want their views to be heard and taken into account, sometimes by the boards of holding companies as well as by their nearest line managers. The challenge now is for companies to find ways of basing their newfound managerial authority on the involvement and support of their employees". Although my programme would no doubt be different, my sentiment is very much the same. It is a sentiment which cannot be accepted by those who promote the policies of this clause and the economic policies that go with them, quite honestly because they believe that the way to deal with economic problems is to price workers in and out of work with as little collective organisation as possible. They believe that is the way—the Hayek, the market, way. The question for the Government now with this Bill, because it is a decisive Bill, is whether they are going to allow their industrial relations policy, albeit that they refuse this amendment, to go down that path, and leave behind the sensible sentiments and the ability and desire of consensus and collective industrial relations, which up to this time has been a beneficial feature for all of our citizens and our industries.

6.34 p.m.

The Earl of Gowrie

I, for one, am glad that the noble Lord, Lord Marsh, got to the church on time because the Government have considerable sympathy with the plight of employers whose business is disrupted by industrial action. It therefore must follow that the Government are sympathetic to these amendments which are concerned with the situation where an employer cannot provide work for his employees as a result of industrial action. Amendment No. 107, for instance, deals with the situation of selective industrial action in the employer's own organisation; Amendment No. 108 is concerned with extraneous industrial action which disrupts the supply or delivery of goods or services, and that can of course be as damaging to a business as the industrial action in the employer's own organisation. Both amendments therefore seek to give employers a statutory right to lay off without pay employees who have been rendered idle in these circumstances.

The Government therefore appreciate that selective industrial action can be disproportionately expensive for an employer, and we heard the noble Lord, Lord Harris of High Cross, talk about the infliction of huge costs to employers at small costs to unions. I think that was a point very well found. In these situations a few key workers can be called out on strike, and unless there is a voluntary lay-off agreement in force the employer must continue to foot the wage bill for the remainder of his workforce even though they cannot be provided with productive work.

Extraneous industrial action can be equally devastating, particularly if it occurs in a major service industry. How many employers are facing severe hardship at this moment, or even, as the noble Lord, Lord Marsh, sought to remind us, facing actual insolvency at this very moment, because of a national rail strike for which, of course, they are in no way to blame? How many employees are liable to lose their jobs as a result of this dispute, or of comparable disputes, in which they are in no way involved? It really depressed me that nothing in the words that the noble Lord, Lord Wedderburn, used a few moments ago paid even lip-service to the difficulties faced by industry of the kind outlined by my noble friend Lord Boardman.

I can assure the Committee that the Government have given careful consideration to these amendments. We do, however, have some difficulties in accepting them. To confer on employers the right to lay off without pay employees who may not be connected with the industrial action poses profound and difficult problems, both practical and legal, and some of these have been intimated by my noble friend Lord Campbell of Alloway. Given the state of trades unionism as we find it in Great Britain, it is difficult to make easy comparisons with other countries. In Denmark, Norway, and Sweden employers may lay off without pay employees who cannot be employed in the normal manner because of industrial action taken by others. In Norway and Sweden this right is embodied in law, and in Denmark it is a traditional feature of industrial relations, and all three Scandinavian countries seem to be very sensible in this regard.

However, the right to lay off in Scandinavia is very much part of the wider collective bargaining context. Collective agreements are legally binding, and strikes are unlawful during their period of validity. Then again collective bargaining units are very large and negotiations are highly centralised. They are conducted as it were, by the equivalent of the TUC and the CBI. Therefore, employees laid off normally belong to the same bargaining group as the strikers and have an interest in the outcome of the dispute. Consequently, the power to lay off can be regarded as a spur to strong internal trade union discipline. I cite those instances to show how a principle with which I personally am in broad agreement may need a somewhat different industrial relations context to be easily operable in practical and legal terms.

Some practical difficulties were recognised by a number of those who responded to the Green Paper on trade union immunities last year as well as those who responded to the Government's more recent consultative document; and had a considerable debate on the subject. It was pointed out that giving employers wide powers to override their employees' individual contracts of employment could have a damaging effect on their industrial relations. I can say in this context to the noble Lord, Lord Marsh, that employers do, of course, have a third option to the two he mentioned. They can negotiate, perhaps in return for improved terms of service, a right to lay off in the circumstances envisaged by the amendment, and many employers have already done so, but I accept of course that this option is not always available or possible for employers. The Government have therefore concluded that given the other major changes in industrial relations legislation which are being made in the Bill, we need to go into these legal and practical difficulties rather more deeply before embarking on any additional measures at this stage concerning lay-off.

It is also the case that the two amendments being discussed contain a number of technical deficiencies, though I hasten to say that this is not an insuperable objection. Nevertheless, these technical difficulties illustrate the difficulties of legislating in this area. There are problems of interpretation in the drafting of amendments. For instance, industrial tribunals would have considerable difficulty in deciding in any particular case whether the customary course of business had been disrupted or whether useful or valuable work could have been found for the employees laid off.

To what extent, for instance, would an employer be expected to apply measures of self-help? These uncertainties could leave art employer, exercising the right of lay-off, exposed to numerous challenges by the employees who were laid off by him and the employees could present complaints to industrial tribunals alone the lines that one or more of the requirements had not been satisfied by their employer. My noble friend Lord Campbell of Alloway, with his great experience, indicated some of the difficulties there. Furthermore, I find that the two amendments appear to give the employer no protection against statutory claims which employees might bring for unfair dismissal and redundancy pay. The words "be entitled to suspend without pay" also may not protect the employer from all common law rights such as the right to claim wrongful dismissal.

In sum, the Government have said that they will not hesitate to introduce further measures in the employment field as and when these are shown to be necessary and desirable. I want to make it clear that we have much sympathy with the thinking behind this series of amendments, but we do not believe that the time is yet right to introduce a far-reaching measure of the kind proposed, if only because of other shortcomings or deficiencies in industrial relations law and practice. We are, as your Lordships know, committed to the step-by-step approach. I have also tried to draw the Committee's attention to certain deficiencies in the drafting of the amendments. For those reasons, and because I have tried to indicate the Government's sympathy to the problem and our determination to wrestle with attempts to find a solution to it, I hope that at this stage noble Lords will not seek to press the amendment.

Lord Marsh

I thank the Minister for making those remarks and the context in which he made them. In the light of them and the assurance that he has given, it would be totally unreasonable, even unforgivable, to take any steps which would force him and the noble Lord, Lord Wedderburn, into the same Lobby.

The Deputy Chairman of Committees (Baroness Wootton of Abinger)

Amendment No. 107 was moved by the noble Lord, Lord Harris.

Lord Harris of High Cross

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 108 not moved.]

Clause 13 [Actions in tort against trade unions and employers' associations]:

6.45 p.m.

Lord Wedderburn of Charlton moved Amendments No. 109 and 110: Page 15, line 5, at beginning insert ("Subject to subsection (1A) below,").

Page 15, line 7, at end insert— ("(1A) Subsection (1) above shall not apply to proceedings arising from an application for an interlocutory injunction (or in Scotland interim interdict) made to a court pending the trial of an action.").

The noble Lord said: As the discussion on the Bill goes on, in the view of my noble friends and myself it becomes more and more serious and one would like to think that it would receive increasing attention. Clause 13, is of course, the provision which will reintroduce the Taff Vale principle which, as I said in debating an earlier amendment, is the principle that a trade union should be liable in tort as established in the Taff Vale judgment of 1901 by the Law Lords.

It is worth recalling, as we look at the clause and the amendments tabled to it, the context in which we debated the matter. In 1901 the decision of the House of Lords Judicial Committee, in the words of Citrate on Trade Union Law, reversed the unanimous decision of the Court of Appeal, who pointed out with unassailable logic that the provisions of the 1871 Act were inconsistent with an intention to incorporate registered unions or render their funds generally liable in the law of tort". Lord Asquith in 1927, in a book he produced when he was still at the Bar, surveyed the law and concluded that it was, not surprising that public opinion was unprepared for any such decision". The shock of the Taff Vale decision is still relevant today for a number of reasons. I preface them by saying that of course my noble friends and I understand what the Government have said and will say: that to re-enact the principle of Taff Vale is not necessarily to re-enact the liability of Taff Vale because the trade dispute defences, or such of those defences as are left after the ravages of the 1980 Act and of this Bill—which is a matter we will come to later—apply.

Nevertheless, it is worth recalling that, in the long and protracted debates that took place in another place, in your Lordships' House, in the Royal Commission and in many other places in the era of 1901 to 1906 and after, the debate really centred around two things. One was the juridical character of a trade union, on which various people held various views both in analysis and in policy, and I would share the view of anyone who said that that problem, from a lawyers' point of view at any rate, was never properly cleared up; indeed, it has caused much unnecessary litigation in the civil area other than the one we are discussing.

The second problem, however, is rather more germane to the Bill, although it is notable that this measure does not try to do what the Industrial Relations Act 1971 tried to do; namely, to settle that problem once and for all by having a registered set of trade unions which were incorporated. On the whole, trade unions do not respond kindly to that, either here or in other jurisdictions, especially in the Commonwealth, because they feel like corporate bodies; they are not what I called, in debating a previous amendment, command organisations in that they do not rest on a chain of command.

What was central also to the Taff Vale problem was the special difficulty in the English jurisdiction—I think the Scottish, too—more than perhaps some other similar countries, but not wholly dissimilar, that if you apply the old law of the common law to trade unions, you tended, because of the nature of the illegalities of industrial action, rapidly do to away with their funds, and when we come later to the substantive issues in the clause, my noble friends and I will wish to look further at that and to ask the extent to which the Government have understood that problem.

Perhaps I could put it in a phrase as a preliminary to our discussions on the clause. The problem which underlines the difficulty—and in respect of which the amendment, to which I now come, is moved maybe summarised by saying that since the 1850s, there have been at least six major new dimensions to the law of tort and tortious liability. If one rested merely as one was told to do at times, on a defence in trade disputes for certain headings of liability, one constantly found that the common law—the genius of which is to develop; the common law does develop, and therefore if you are dealing with a statutory defence, which is necessary static, or at least lagging behind, one finds that the common law has a genius to develop—always finds some new course of action in the end.

Lord Campbell of Alloway

I am terribly sorry, but I have become lost, even though I have been trying to follow the noble Lord. Are we on Amendments Nos. 109 and 110, relating to injunctions, or are we moving beyond the injunctive relief? I shall be most grateful to know the situation, since I am trying to follow, but I have become lost.

Lord Wedderburn of Charlton

I am grateful to the noble Lord for his efforts, and I shall make a bigger effort. I have said that the remarks that I am now making will save time in the end, because they are a necessary preface to the amendments that we are moving, and to which I am about to come. One is dealing with damages because the first amendment is about injunctions, not damages, and that is why I am explaining the basis of the damages difficulty. The basis of that difficulty is that with the six or seven major new developments in the law of tort in the last century, statutory protection, if it is based onnominated tort liability, is always out-of-date. There are other problems, too. But we shall leave the matter there for the moment, and return to it later.

The noble Lord, Lord Campbell of Alloway, has asked, what has the matter to which I am now referring to do with Amendment No. 109?—and at the same time I should like to speak also to Amendment No. 110. Well, it is everything to do with the amendment, which is a very modest one. The Government are about to revive liability in tort for trade unions, with all the dangers that that has, in the final orders upon a final trial. Let us take the two customary orders: the order for compensation by way of damages, and perhaps the order for a final injunction. We need do no more than take those two orders. The amendment is not about the final trial. That is why I have prefaced the amendment in the way that I have done, so that we can see it in its context. That does not mean that my noble friends and I are happy about the final trials position under Clause 13. We are certainly not, and we shall vote against the clause. But the labour injunctions, or the interlocutory injunctions—I think that at home the noble and learned Lord the Lord Advocate would call them interim interdicts—are in a category different from that of the final trial remedies.

We seem to be indulging in a little comparative law this evening, and so it is not uninteresting to mention that other comparable countries have got rid of, or have tried to get rid of, the labour interlocutory injunction. For example, in 1932 in federal labour law the United States tried to get rid of it. So what is so special about it? In the common law jurisdictions the interlocutory labour injunction exists so that one can go to a Chancery judge as quickly as possible and stop the noble and learned Lord the Lord Advocate from knocking down one's house—not of course that he would ever do so. But it is a very sensible remedy to have. It is peculiarly sensible procedure. One gets to the judge immediately, and says, "Don't knock the house down until we see that there is a right to knock it down".

That is the image which the lawyer carries over into labour relations and labour law. When it comes to an interlocutory injunction application the plaintiff has had some time to prepare his case, and then, on one day's or two days' notice, he takes the defendant to court. The case might, or might not, last a while, but all the evidence is on affidavit—and that is very important. If your Lordships' rights have to be decided, and the evidence is all on affidavit, and the witnesses cannot be cross-examined—or at least normally are not cross-examined—then the situation is very different. Your Lordships would not like your final rights to be decided on that basis.

After the rather speedy procedure that I have described the remedy is either denied or given; and of course for many years it was regularly given. The trade union had very little way of opposing even ex parte interlocutory injunctions; that is to say, interlocutory injunctions where the plaintiff came along and there was not time to get the defendant to court. In 1974 we tried to put a stop to that in trade dispute cases, under Section 17 of the Trade Union and Labour Relations Act. In 1975, in our administration, we added a section which also stated in effect that the courts should take special care in seeing whether at the interim stage, as it is supposed to be, the defendant trade unionists had in fact a likely defence. That was because the wording of the interlocutory proceedings is always concerned with likelihood.

But of course the reality of the matter—and this is why the amendment is so important—is that to a great extent the employer wants the interlocutory injunction as his final remedy, subject to going against the union for damages at a much later stage. He wants the interlocutory injunction quickly; and it does two things. If he gets the injunction, and it is obeyed, as it normally is, he stops the industrial action, and he also holds above the head of the union at any rate an interim verdict that the union is in the wrong. Cases go on for years. A leading case was decided in 1965 in your Lordships' Judicial Committee, where the injunction was granted. In 1969 (four years later) it went back to the Court of Appeal in a dispute about damages; and I am aware that the noble Lord, Lord Campbell, knows the case well. There are very serious matters for the trade union, because the procedure is unsatisfactory. The way that it is carried out, with much more notice for the plaintiff than for the defendant, is quite unjust. The examination of affidavit evidence is never satisfactory, in particular for the defendant, because he never has time to get his affidavit evidence into shape. There might be an adjournment, but sometimes the court is slow to grant one, because it has the image of the house being knocked down, which until very recently has been built into the common lawyer's mind.

I say "until recently" because of what the noble and learned Lord, Lord Diplock, said in 1979 in the case of NWL Ltd. v. Woods, which I think we shall be looking at later in the Bill, since I fear that it is necessary to look at some of the law that we are amending in order to understand what we are doing. In giving his judgment in the case, at page 1305 of the Weekly Law Reports, the noble and learned Lord, Lord Diplock, stated, in effect, that the interlocutory labour injunction is a special and indeed unique kind of procedure. At page 1308 he stated that the interlocutory injunctions are "unique". He prefaced that by explaining what he meant. There are some two or three pages of his judgment, but I shall read to the Committee only a few lines. He stated: … on the face of the proceedings in an action of this kind the balance of convenience as to the grant of an interlocutory injunction would appear to be heavily weighted in favour of the employer"— This is Lord Diplock speaking, not me; and I draw attention to the phrase, heavily weighted in favour of the employer". The noble and learned Lord went on to state: To take this view, however, would be to blind oneself to the practical realities"— He then set out the four considerations that he thought go back upon the proposition, but if one takes them, one can see at least the realities. They are as follows: (1) that the real dispute is not between the employer and the nominal defendant but between the employer and the trade union that is threatening industrial action; (2) that the threat of blacking or other industrial action is being used as a bargaining counter in negotiations either existing or anticipated to obtain agreement by the employer to do whatever it is the union requires of him; (3) that it is the nature of industrial action that it can be promoted effectively only so long as it is possible to strike while the iron is still hot; once postponed it is unlikely that it can be revived; (4) that, in consequence of these three characteristics, the grant or refusal of an interlocutory injunction generally disposes finally of the action; in practice actions of this type seldom if ever come to actual trial". Your Lordships will see that in the judgment there are some phrases with which, naturally, I disagree. But as a general analysis that is now accepted as being right—that the interlocutory injunction is unique and special; that there are certain features of it at least which lean against the defendant; and that most employers stop at that point once they have got the injunction. Perhaps I may add to the analysis of the noble and learned Lord, Lord Diplock, by saying it is true that employers regard it as the final remedy, at any rate for the time. They very frequently leave the interlocutory order on the file.

So what does the amendment state? It relates to when an employer goes in for the kind of procedure I have described; and my noble friends and I shall later be moving a new clause asking the Government yet again to modify this very unfair procedure for trade unions in interlocutory cases. I shall make a fuller case on that point when we come to it. However, having that in mind as the context in which we move the amendment, the effect of it would be as follow—and it seems to me perfectly reasonable that the Government should accept this. If this were the only amendment moved, the Government would have their way on two things. They would have their way that trade unions were liable in damages, and they would have their way that trade unions were liable to injunctions and orders on the final trial, where the evidence has been properly heard, cross-examined to and the rest, and no doubt appealed.

But in interlocutory proceedings, if they stay as they are, the employer will not be able to go against the union, though he can go against the officials. There is nothing in Amendment No. 110 (which goes, of course, with No. 109) which says that interlocutory proceedings cannot be pursued against officials and members of the union. The law would stay as it is now, subject to the dreadful alterations made in this Bill, but the individuals could be ordered by the court not to do whatever it was the court thought was contrary to their duties in the law of tort and the rest.

The one change which would be made would be that the issue of union liability would not be fought out on interlocutory proceedings; and that is why Acts like the Norris-La Guardia Act in 1932 in the federal jurisdiction of the United States got rid of the interlocutory injunction. That had a slightly different history, but it was a very parallel point in the United States; and in other jurisdictions, too, the problem has arisen. The problem is particularly acute. This amendment is (if you like) not dealing with the whole ill-patch of the Bill across Clause 13; it is taking out the worst spot of it.

This is the place where it will be most effective from the point of view of some who sponsor it, and most resented, because the interlocutory proceeding is resented, certainly in my experience, by every trade union official who has been part of it. As one said to me once, "If I am going to be done, I want to be done with a full trial and with him up there for a day or two in his red robes". I think most British trade unionists have great respect for the High Court, despite all the criticisms that sometimes flow to and fro in that connection. But they have little respect for the interlocutory proceeding, and although that would still go against the officials, though they would lose that as well, nevertheless if you make that interlocutory proceeding go against the union and fight out the issue of vicarious liability and statutory agency, as we have seen in previous debates, on an interlocutory basis, with affidavits, the resentment when it is understood what is happening will be very great indeed.

So Amendments Nos. 109 and 110 are together, in fact, I hope the noble Lord, Lord Campbell, will accept, a rather carefully thought-out small amendment to the clause which says that there is a special area, it is specially had and it will be made specially worse in the interlocutory proceeding by your Bill, so could we not take that out? Because at least that will do something to make the thing less harmful to trade unionists—and I make no bones about that. That is absolutely true. But let us at least give the trade union the right to have its action determined upon a full trial instead of the threat of a quick action for damages on the basis of interlocutory proceedings which must, while the order stays on the file, prejudice the position as the evidence gets stale. I beg to move Amendment No. 109, speaking also to No. 110.

The Deputy Chairman of Committees

Does the noble Lord wish to move Nos. 109 and 110 en bloc? They are very closely linked.

Lord Wedderburn of Charlton

Yes.

The Deputy of Chairman Committees

The Question is that Amendments Nos. 109 and 110 be agreed to?

Lord Campbell of Alloway

Could I, very briefly, in view of the hour and in view of my involvement in this—indeed, there have on occasions in the past been cases where the noble Lord, Lord Wedderburn, and I have been on opposite sides—say that I agree that he has drafted this provision, Amendment No. 110, with very great care. I also agree that the interlocutory injunction in a trade union case is within a special category. But where I do not agree—and this is where the rub lies—is that the main purpose of Clause 13 of the Bill is to be able to give the court jurisdiction to do this very thing rather than to award damages; in other words, to be able to move in quickly and regulate a problem, a trouble, as it does in other spheres, before the whole thing gets out of hand and vast damage is caused.

The concept is not to be legalistic, not to put legal shackles around trade unions, but merely to state what I am sure practically all your Lordships would agree: that the unions must be subject to the rule of law. If they are subject to the rule of law, and if they act outside the law, then the courts can move in (and why not here as in other cases?) to grant the interlocutory injunction if, in the discretion of the judge—subject, of course, to the Court of Appeal—it is considered appropriate to do so. So while I give the noble Lord, Lord Wedderburn, the first two points he has made, it is on the third point that we are in disagreement.

Lord Mackay of Clashfern

At first sight this might look a rather technical amendment, but as the noble Lord, Lord Wedderburn, has explained it (and I think that if one had thought about it even without the benefit of his help it would have appeared so) it goes to the very heart of Clause 13 in practical application. In a case where a trade union was responsible for unlawful industrial action it would prevent an employer seeking an immediate interlocutory injunction against that trade union, ordering it to call the action off. If he wanted to proceed against the trade union itself he would have to wait for a full hearing of the case—possibly weeks or months later.

In our view this is unacceptable. Experience has shown, as the noble Lord has said—indeed, it is part of his argument—that many cases on industrial action do not proceed beyond the interlocutory stage. Where an employer is suffering serious loss as a result of unlawful action, his main concern is to get that action stopped as quickly as possible. He cannot wait until the matter can he brought to a full hearing—often months later—before a decision is made. By then it may be too late. His business may be damaged beyond redemption, and along with it the jobs of his workers. That is an aspect of this matter which we ought not to leave out of account. It is sometimes very easy to forget the community of interest, at least the community of long-term interest, between an employer and his employees.

The noble Lord, Lord Wedderburn, has pointed out very fairly to us—indeed, he reminded me of it just this moment—that this amendment will not prevent an employer proceeding against a senior official of the union like the general secretary. That is certainly true. It is fair to say that in some cases it will not make much difference whether an interlocutory injunction or interdict is granted against the general secretary or the union itself. But in some cases it will make a difference. In some cases it will be an advantage that it is the trade union as an organisation which is held liable for an unlawful action and which has the responsibility for making sure that the injunction or interdict, the order of the court, is obeyed.

The noble Lord has also argued that the odds will be stacked against trade unions in interlocutory proceedings; that there will not be time for a court to establish at the interlocutory hearing whether or not the union is liable, and that, therefore, the courts will tend to award injunctions against them. I do not think I can accept that. The noble Lord has referred to Lord Diplock's speech in the NWL case. In the passage which the noble Lord has very fairly quoted—he did not stop off at the first sentence; he never does, as he points out: sometimes there might be an advantage from some points of view if he did, but not on this occasion—Lord Diplock very severely qualifies what he said first, and no doubt any judge dealing with this matter since the NWL case will give very careful attention to these factors in the other direction to which the noble and learned Lord, Lord Diplock, drew attention. In our view, Clause 13 sets out perfectly clear rules on when a union has to be held liable for the unlawful acts of its officials and members and in most cases it should be a relatively simple matter to decide whether the union is liable. The fact that the matter has to be decided in the context of an interlocutory proceeding fairly quickly, with limitations on the time that can be spent on it and so on, are factors which the court will have in mind in these matters; but, it certainly seems to us, as my noble friend Lord Campbell of Alloway has just remarked, that it would be extraordinary to allow this amendment to pass. It will be, in effect, to say that at the interlocutory stage the unions, for no particular reason, were to be above the law. I hope that your Lordships will not accede to this amendment and that the noble Lord may feel able to withdraw it.

Lord Wedderburn of Charlton

I shall ask leave to withdraw these two amendments, although on the basis of some puzzlement. The noble and learned Lord the Lord Advocate would well get his remedy if he went against all the officials. The only point against going against the union is to tie it up or half tie up to get halfway towards damages and by an unsatisfactory procedure; but to that we shall return on a subsequent amendment. I beg leave to withdraw the amendments.

Amendments, by leave, withdrawn.

Lord Sandys

I think it may be the wish of the Committee to take the dinner break at this point. During the dinner adjournment we will take other business and will return to consider the Committee stage at 8 o'clock. Meanwhile, I beg to move that the House be now resumed.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.