HC Deb 02 December 1980 vol 995 cc135-212

Order for Second Reading read.

4.2 pm

The Secretary of State for Industry (Sir Keith Joseph)

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

I suppose that most Ministers who bring a Bill before the House claim that it is important and substantial. In this case, however, I commend the Bill to the House without hesitation as a substantial measure likely to bring noticeable and worthwhile benefit to those who work in the public and private sectors connected with telecommunications and to the public generally as consumers and users of telecommunications.

The purpose of the Bill is to allow a more flexible approach to the postal and telecommunications services by the private and public sectors. Technological advances in telecommunications have made or are making the concept of an absolute monopoly out of date. Monopoly stifles the growth of services and the development of new equipment. The existing structure in telecommunications is far too rigid.

The Bill will help break down the artificial barriers between the public and private sectors. Overseas experience—a number of other countries are far ahead of us in collaboration and competition between the private and public sectors—demonstrates that the public at large and the national carriers gain enormously from open telecommunications markets where competition encourages new equipment and services.

There is a huge demand now even for existing services and an even greater potential demand for services that are already available in some form, let alone the services that will become increasingly available. There is every reason to expect that over the years ahead a large increase in jobs will emerge from telecommunications and the new industries and sub-industries and services flowing from them. The way in which they will be distributed between the public and private sectors will depend upon performance in meeting the demand of customers. The Bill will facilitate growth to meet the demand.

I do not want to give the impression that the Bill is connected only with British Telecommunications. Part of it is also concerned with the postal services, where more flexibility is similarly needed. I must emphasise the Government's view that monopolies are not rights but privileges, which must be earned and re-earned every day.

The Bill points the way to much more flexible organisation both for British Telecommunications and the Post Office. It does not just split the present Post Office into a continuing Post Office for postal services and a new British Telecommunications corporation for telecommunications. It will also lead to the creation of new profit and self-accounting units which should be more responsive to the needs of customers.

The Bill also extends the Post Office Act 1969 so that the Government will have power to dispose of their shares in Cable and Wireless Ltd. We are seeking that power in pursuance of our general policy of disposals in the public sector. However, no final decision on the exercise of this power or on the timing or form of the disposal of shares will be taken until overseas Governments directly affected by the operations of Cable and Wireless have been fully consulted.

Mr. John Silkin (Deptford)

This is an important point because Cable and Wireless was formed in 1949 by agreement with the Commonwealth. That was its whole basis. Clause 76 is already included in the Bill, but I gather that so far not only has there been no agreement with the members of the Commonwealth but apparently they have not yet even been consulted.

Sir Keith Joseph

No policy decision will be taken until the overseas Governments directly affected have been fully consulted. We are seeking only the power to dispose of some or all of the shares should the Government so decide.

Mr. John Silkin

But surely the Secretary of State is taking unprecedented action in the Bill. This is a vital matter, on which the Commonwealth has to be consulted. That was the basis of the 1949 set-up. For the Government to put the provision into a Bill without ever having consulted those countries seems an outrage to those countries and to the House.

Sir Keith Joseph

We have talked of this possibility a number of times. The Governments immediately concerned know that we shall be consulting them. We are doing no more than putting ourselves in a position, subject to consultations, to take a decision. We shall be able to pursue this matter at a later stage in the Bill. No policy decision has been made.

I come to the split of the Post Office into separate corporations for the postal services and telecommunications. The split has been under consideration for many years. The Carter committee, set up by the last Government, recommended in favour of the split in 1977. Its argument was that the two businesses were markedly different, one being capital-intensive and the other labour-intensive. Each needs its own board to concentrate on running its business. I announced the Government's acceptance of those arguments last year. The Post Office has been carrying out the necessary preliminary arrangements. The separation is now, subject to the passage of the Bill through Parliament, largely prepared. The Bill, if approved, will complete the process.

Dr. Oonagh McDonald (Thurrock)

Do those considerations include splitting the pension funds, and, if so, what consultations have taken place with the trade unions involved?

Sir Keith Joseph

If the hon. Lady will permit me, I shall come to that in due course.

Both corporations will be large in their own right. Much of the Bill is devoted to the creation of British Telecommunications and the transfer to it of the rights and liabilities of the Post Office with respect to telecommunications. To this extent the Bill merely repeats the existing law, but for British Telecommunications rather than for the Post Office. All this is contained in Part I.

Part II deals with the Post Office and contains changes to the postal monopoly. These changes are necessary to bring the ministerial controls over the Post Office into line with those for British Telecommunications.

It would be right, perhaps, to concentrate at the start of the description of the proposed British Telecommunications regime on a factor that I know interests the House—investment. After the passage of the Bill, the borrowing of British Telecommunications and of the Post Office will, like the borrowing of other nationalised industries, continue to count against the public sector borrowing requirement. Therefore, the Government must continue to set limits on the amount of external finance that the businesses can take.

As my right hon. and learned Friend the Chancellor of the Exchequer announced last week, British Telecommunications is being set an external financing limit for 1981–82 of £180 million, which is substantially more than in the current year or in recent years, of some of which a net repayment was required. This limit should allow for an investment programme in excess of £2 billion — bigger in real terms than the current year's programme and an increase on the previous year.

There is no dispute about the need to increase British Telecommunications' investment to expand: the network further, to modernise it and to speed up the introduction of new attachments and services. However, I believe that there is scope for British Telecommunications, to finance part of what could by this means be a still larger investment programme by partnerships with the private sector, particularly as regards new o attachments and services.

We need a strong and successful British Telecommunications, not only competing with the private sector but co-operating with it in joint ventures. That is the way forward for management and staff to secure expansion and jobs. We hope to see BT co-operating with the private sector in, for example, providing auxiliary services which depend on the telecommunications network and attracting private capital into subsidiaries set up to market subscribers' apparatus. Provided that BT is not in control of any partnership, it will be a genuine private sector activity whose financing can be conducted outside the PSBR and, therefore, in addition to the £2 billion investment programme of which I have spoken.

In drafting the Bill, we have sought to remove any obstacles that there might have been to BT proceeding down these paths. For instance, the drafting of clause 3 makes it clear that BT can discharge its duty through a subsidiary or a licensee. It does not necessarily have to provide all the services if it is satisfied that others can provide them adequately or if it can arrange to do so through a subsidiary or associate. At the same time, it will not be free to dispose of its interest in a subsidiary except with the consent of the Secretary of State.

I think that it will be common ground on both sides of the House that there has been widespread, and often justifiable, public dissatisfaction with the operation of telecommunications and postal monopolies. Whether this stems from the shortcomings of management, from trade union restrictions or working methods or from equipment deficiencies is not the immediate point. The fact is that the quality of service is inadequate. The Government believe that the introduction of competition, or the possibility of its introduction, will bring increased benefits for the consumer and the economy generally.

In 1977, the Carter committee recommended that the boundary of the telecommunications monopoly should be redrawn. We believe the case for that to be unanswerable.

In the United States, the past 15 years have seen marked progress towards open competition in place of closely regulated local and national monopolies. Entrepreneurs in the United States have gained freedom to develop new services and a wide range of equipment associated with telecommunications. Few would doubt that this has enormously stimulated enterprise and benefited users.

Meanwhile, in this country, where we have been almost entirely relying on a single public sector organisation, there is great dissatisfaction with the range and availability of equipment and services, many of which are subject to unacceptable delay.

Telecommunications is in a stage of rapid development and growth. It is essential that we allow these developments to evolve as rapidly as possible for the benefit of the public. A new revolution is upon us, spurred by the dramatic reduction in the unit cost of computing power and electronic memory. The combination of technical advances in microelectronics, computing, telecommunications and automation makes the application of these interlocking technologies fundamental to the progress of industrial economies. We have the economic means to put within the reach of everybody the power to store, retrieve and process information on a scale impossible only a few years ago. Telecommunications lies at the heart of this transformation and can play a vital part in the future efficiency of businesses of all kinds everywhere. We cannot afford to lag behind in its development and use.

Throughout industry and commerce, management and work forces which do not keep pace with the application of the new technologies will become more and more uncompetitive. Individual firms must judge for themselves in their own areas of work, but as a nation we cannot afford to let the application of this technology be held back by inadequate telecommunications services. There are immense opportunities for the telecommunications industry, private and public alike. More jobs will result from the rapid expansion of telecommunications which this measure will help to stimulate. We look forward to the creation of many new businesses as new ryes of products and services are developed in response the the wider opportunities which will evolve.

The new corporation has a crucial role in providing a modern and efficient network and in applying the new technologies. It will benefit substantially from the increased volume of traffic generated by the growth of new services which it helps to make possible. Our policy is that British Telecommunications should be free to compete in all areas but that it should do so fairly and, as; far as possible, on an equal basis with the private sector. To this end, BT will have powers to supply telecommunication equipment which serves other purposes as well — for example, in data processing—and to extend its activities into new technologies such as opto-electronics.

I must emphasise that we regard a financially healthy and thriving BT as essential to the full development of telecommunications in this country. There is plenty of scope for both BT and the private sector to play a full part, in some areas in competition and in others working together in joint enterprises.

The new arrangements under the Bill are designed to achieve a far greater degree of flexibility to make that possible. We shall be looking to BT to carry out many of its developing activities through Companies Act subsidiaries and in partnership with the private sector.

Clause 4 gives the power to require the corporation to set up a self-accounting subsidiary or subsidiaries to carry out its competitive activities — for example, in the supply of terminal equipment. This will ensure that there is no hidden cross-subsidisation of the corporation's competitive activities.

The Director General of Fair Trading will monitor the development of the competitive market and will be on the look-out for evidence of unfair trading practices. If the full potential for development is to be achieved, both public and private investment will be necessary. The Bill will help to make that possible. It is for industry to make the most of the opportunity.

Mr. Frank Dobson (Holborn and St. Pancras, South)

Will the Director General of Fair Trading be looking to see whether private sector competitors as well as British Telecommunications are competing fairly?

Sir Keith Joseph

That is his function. That is what he is there for.

The Government's role in the process that I have described is to provide a framework within which these developments can take place in response to market demand.

There are three main objectives behind the Bill: first, to protect the interests of consumers; secondly, to stimulate the United Kingdom industry; and, thirdly, to promote greater flexibility of telecommunications systems. The key to this is the introduction of competition over as wide a field as possible. This will ensure a more responsive management of service and will encourage more choice and better service.

We believe that the Bill will promote growth in the supply of services via the network and may extend to the provision of public network services where there is a market opportunity to supplement the main network services provided by BT.

I shall now describe in more detail how we intend to use the powers in the Bill. First, we shall liberalise the supply, installation and maintenance of all equipment attached to the network, with the exception of the subscriber's first telephone and the maintenance of private branch exchanges. Technical approval of attachments to ensure compatibility with the network will be carried out by a self-financing independent body working to standards formulated by the British Standards Institution and approved by the Secretary of State.

Secondly, we intend to liberalise the use of the network for third party services. We shall decide the extent of this liberalisation in the light of the study into its economic implications currently being carried out by Professor Beesley, of the London Business School. This should be ready early next year. Thirdly, we are exploring the scope for licensing the provision of transmission services in competition with BT and will be considering, on their merits, proposals for such services that are put to us. There is, for example, a crying demand for Telex and good digital fast lines. If consortia from the private sector can organise themselves with concrete proposals to meet this manifest market gap, I shall naturally consider them with sympathy. Any such proposal will add to the national capability, ease some of the immediate burden on BT and bring forward the benefits of an improved telecommunications infrastructure.

In all these areas, we hope, so far as possible, to proceed by means of general rather than individual licences, although specific licences are more likely for competitive networks. The powers will allow complete flexibility in the development of the new regime to take account of changing technology. They are framed in a way which we hope will enable us to avoid creating a new licensing bureaucracy on the lines of the American Federal Communications Commission.

Mr. John Golding (Newcastle-under-Lyme)

How is it envisaged that the royalties on licences mentioned in the Bill will be determined? Who will receive the benefit from those royalties?

Sir Keith Joseph

The hon. Gentleman refers to the royalties on licences. If the proposal is to use the network for value added services—the degree to which this will be within our policy depends on our study of the Beesley report—the proposal will, no doubt, contain within it a rental or equivalent system. BT will be in negotiation, no doubt, with any such proposers of value added network services.

Mr. Golding

Can the Secretary of State say why provision is made for the payment of these moneys into the Consolidated Fund?

Sir Keith Joseph

Perhaps at a later stage, or now, if he can find it, the hon. Gentleman will say to what he is referring. I think it is more likely that he may be referring to some charge that will be levied for service of the approval institution. The approval institution and the standards—setting institution will be self-financing. The hon. Gentleman is welcome to pursue the detailed point later.

Mr. Golding

It is in clause 15(9).

Sir Keith Joseph

I am grateful to the hon. Gentleman. This is in connection with licence proposals. It may well be to give freedom to the Secretary of State in his wide licensing powers and that there will be occasion for a charge to be made, in which case it will be payable into the Consolidated Fund. I do not think that there is any difficulty about that.

Mr. John Silkin

I wonder whether I can assist the right hon. Gentleman in explaining his Bill to him. Clause 15(9) definitely says that any moneys obtained under the licences granted by him in respect of BT are to go into the Consolidated Fund. Under clause 65, the same process arises in the case of the Post Office. There can be no question, therefore, of BT or, later, the Post Office making any royalty deals with other people, because they will not get the advantage of the money. That is what my hon. Friend is saying.

Sir Keith Joseph

We are talking of two overlapping contingencies. One is the value added network services, which to a large extent will be negotiated between the private sector and BT. The other is licences given for services which may or may not interconnect with the national network, where any licence fee chargeable by the Secretary of State will go to the Consolidated Fund.

The powers of which I am speaking will allow complete flexibility in the development of the new regime to take account of changing technology framed in a way which, we hope, will enable us to avoid creating a new licensing bureaucracy on the lines of the American FCC.

Mr. John McWilliam (Blaydon)

I must go back to previous questions asked from the Opposition side. The reference in clause 15(9), if followed back, is to clause 12. clause 12 refers to everything that BT has power over, including the network. Therefore, value added services on the network must be licensed. If there is any fee from the licence, it must be applied to the Consolidated Fund. I reiterate the remarks made by my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) that British Telecommunications cannot expect to receive any benefit from any licence so granted.

Sir Keith Joseph

I think that the hon. Gentleman misunderstands BT will stand to get the normal revenue from the service that is used. The licence is additional to that. There will be a negotiation between the provider of the service and BT. It will be for both to ensure that they get the benefit that they seek. BT will stand to benefit from the increased use of its services and the charge made for them.

At the same time, our existing telecommunications manufacturing industry, which in many of the most important terminal equipment areas has been dependent on he Post Office as its main customer, must have time to adjust to the new competitive conditions if it is successfully to resist the challenge from imports of overseas manufacturers who have not been so constrained. We therefore intend to phase in the liberalisation of attachments over a period of about three years.

In the meantime, we intend to ensure so far as possible hat, where they do not already have them, our manufacturers obtain reciprocal trading opportunities in countries that will be exporting their products here. In advance of liberalisation, we shall be seeking assurances on this matter from overseas Governments in the countries mainly concerned.

Within the EEC, our proposals are closely paralleled by proposals now before the Council for liberalisation of the market for telecommunications terminals on an equal basis throughout the Community. We shall be giving strong support to the early adoption of these proposals and their extension to all types of terminals. In so far as these proposals, do not go as far as our own intentions to liberalise the supply of all types of terminals, we shall seek trilateral assurances from other member States concerning reciprocal trading opportunities in respect of the remaining types of terminals. Progress in obtaining these various assurances may clearly have an impact on the timing of full liberalisation.

Meanwhile, we are considering with BT the possibility of allowing the competitive supply of equipment which is already approved for supply through the Post Office, so that users will have an early opportunity to obtain equipment from independent suppliers ahead of general liberalisation. This will include PABXs, teleprinters, modems and telephones. Taken together, these changes will provide much greater opportunities for the country to make the most of the new technologies and will stimulate new industries and new jobs.

Mr. John Bruce-Gardyne (Knutsford)

Will my right hon. Friend explain in slightly more detail the motivation behind the decison to preserve for BT an extensive maintenance monopoly? It is a little hard to reconcile that with what he rightly said about the poor reputation of the Post Office in terms of service to the customer.

Sir Keith Joseph

Yes. The Government's thinking is that it is crucial to safeguard the integrity of the network. That integrity depends upon the attachment to the network and the maintenance of the prime attachments, which are the first telephones and the PAB exchanges, which are conduits to many telephones. We have decided that the integrity of the network includes those particular connections. That is why maintenance has been preserved as a monopoly for BT. Maintenance of all other equipment attached to the network will not be within the monopoly.

Mr. Geoffrey Robinson (Coventry, North-West)

On the point about the ancillary equipment, as this is a massive growth area—as the right hon. Gentleman has already indicated—I am sure that there will be concern on both sides of the House that there should not be massive damage to our balance of payments from imports of this sort of equipment. That is why we have the three-year transition period. Will the right hon. Gentleman give a categoric assurance and understanding to the House that, in the event that he is not able to negotiate very tight bilateral agreements for the reciprocal supply of this equipment with other countries, be they within or outside the Common Market, in respect of those countries that will not give to our industry the same advantages as we are considering giving them, he will not proceed with the liberalisation?

Sir Keith Joseph

I have already said that the outcome of the consultations that will be taking place may well have an effect on the timing of liberalisation. I must preserve the obligations into which this country has entered under the EEC and GATT.

I turn to the postal monopoly. The need for efficiency, the value of competition and the scope for innovation apply equally to the postal service as to telecommunications. We have, therefore, decided that certain changes to the exclusive privilege of the Post Office for the carriage of letters are needed—first, the derogation of express mail from the monopoly; secondly, that document exchanges will be allowed to carry mail in bulk between city centres; and, thirdly, that charities will be allowed to deliver Christmas cards.

In addition, I have said that I would seek powers to make further derogations in certain circumstances—for example, where the Post Office does not react adequately to new market demand, when industrial action stops the service or causes it to deteriorate seriously, or if service declines for other reasons within the Post Office's control. I should make clear that primary considerations will be performance and the interests of consumers.

I decided upon these measures in the light of the severe dissatisfaction expressed in the summer of 1979 with the postal service, as a result of which the Government instigated a review of the monopoly. The changes which I am now proposing take very much into account the views expressed in the consultations. I have also had in mind the report of the Monopolies and Mergers Commission on the inner London letter post, which drew attention to a number of shortcomings in the Post Office in London.

Mr. Harry Ewing (Stirling, Falkirk and Grangemouth)

Who will be the judge of an "adequate reaction" to market demands?

Sir Keith Joseph

I have it in mind that the Government would not intervene suddenly and arbitrarily but would put the Post Office on notice that it appeared from the figures and the information available to the Government that either the standard was falling below the service specified or that the market demand was not being met, and would give the Post Office reasonable time to correct the defect; and only after that time had elapsed, perhaps in vain, would the Government use the powers in the Bill to derogate from the monopoly.

I believe that the measures that I am proposing will have the effect of stimulating the Post Office to greater efficiency and thus rendering a better service to customers.

I shall now describe the principal clauses of the Bill. Clause I sets up the new corporation — the BT corporation. Clause 2 confers upon it the necessary powers, which also enable it to supply any telecommunications equipment and to provide services for the Post Office. Clause 3 lays down the general duty of the new corporation in terms which will not place it at a disadvantage where it is subject to competition. The duty is, therefore, limited to provision of the main network and the prime instrument, except where others are providing it, as is, for example, currently the case in Hull.

Clause 4 empowers BT to set up Companies Act subsidiaries and to transfer parts of its undertaking to them. Transfers under this clause have to be agreed by the Secretary of State or made at his direction. These powers could be used to create a self-accounting subsidiary and to carry on BT's competitive activities.

Clause 5 sets out controls over some activities of BT's wholly owned subsidiaries.

Clause 6 contains the main powers of the Secretary of State over BT. These reflect the existing powers over the Post Office and include a power for the Secretary of State to direct the disposal of assets not required for the exercise of BT's duty.

Clauses 7 and 8 provide for the control of BT's manufacturing and some of its purchasing activities, similar to those now applying to the Post Office.

Clause 9 provides for the Post Office users' councils to have the same oversight of BT's activities as they do now over the Post Office. It also enables the Secretary of State, after consultation, to remove competitive activities from the detailed overview of the users' councils.

Clauses 10 and 11 transfer all the relevant property rights and liabilities to BT. Clause 10 also deals with the transfer of employees. All present Post Office employees will remain with the Post Office or be transferred to BT. Those transferred will retain all their statutory rights under the Employment Protection Acts. In most cases, it will be obvious which corporation a particular employee will work for. For others, such as those in central headquarters, the Bill provides for agreements to be made between the Post Office and individual employees. These will be a matter for the Post Office and the employees concerned to work out.

Clauses 12 to 15 transfer to BT the existing exclusive privilege with respect to telecommunications and enable the Secretary of State to license the running of telecommunications systems.

Clause 16 provides for the Secretary of State or BT to approve apparatus for attachment to BT's network and also enables the Secretary of State to direct BT not to hinder the attachment of any approved apparatus. It is these clauses which provide the enabling powers for the new regime which has already been announced.

Clauses 17 to 19 cover the legal basis for the supply by BT of telecommunications services and its liability.

The Post Office has long had a privileged position, and there is a need to give customers a greater legal right to redress while recognising the special nature of telecommunications services. Where there is competition, BT should have the same liability as competitors. The Bill secures just this. I think that this is a major advance that will be welcomed by customers.

BT will be liable for attachments to networks supplied to subscribers in the same way as will be its competitors. Also, BT will be liable for errors in special entries in telephone directories — that is, all entries for which a charge is made, such as bold type. Thus, subscribers will be able to choose whether to pay more and receive additional protection. Any attempt by BT to limit such liability will be controlled by the Unfair Contract Terms Act, in the same way as anyone else.

Clauses 20 to 28 contain the financial powers of BT and the ministerial parliamentary controls over them. They represent the current standard form for nationalised industries.

The hon. Member for Thurrock (Dr. McDonald) asked me a question about pensions. Clauses 29 and 30 contain the pension provisions. No decision has yet been taken on the future of the Post Office pension fund. The enabling powers contained in clause 30 allow the Secretary of State either to split the fund or to retain a single fund for employees of both corporations. The Bill provides that no order of the Secretary of State can remove or reduce any existing pension right. The final decision on the future of the fund will be taken only after all interested parties have been able to make their views known to me.

Clauses 31 to 54 re-enact existing legislation which relates to the telecommunications business, to rating, land or specific criminal offences. These are essentially unchanged, although some of them incorporate modifications to bring them up to date.

Clause 55 contains the new powers of the Post Office. It will be allowed to undertake counter work for a wider range of public sector bodies. I shall reserve the right to debar specific transactions or work for specific bodies. General guidelines will be drawn up. The change is a precautionary one, designed to help safeguard the sub-post office network, especially in rural areas, in the event of loss of business from existing counter users.

The post Office will have the power to provide electronic mail services where the material is either collected or delivered in hard copy form. It would not be right to give the Post Office a monopoly of this when important technological developments are taking place. The existing network puts the Post Office in a strong position to compete.

Clause 56 lays down the general duty of the Post Office. It is on the same lines as that for BT—that is, in terms which will not place it at a disadvantage where it is subject to competition—and is therefore limited to the provision of letter services, except where others are providing such services.

The intention of clause 59(3) is to provide power for the Secretary of State to direct the Post Office to establish subsidiary companies and, if necessary, to dispose of them to the private sector. There are similar provisions for British Telecommunications and in other nationalised industry legislation. I do not intend to use my power of direction in the immediate future, but the scope for possible Post Office subsidiaries; is one of the matters that I would expect to see examined. I should use my powers only after full consultation with the Post Office Board.

Clauses 57 to 62 contain the power to create Companies Act subsidiaries and modifications to the power of the Secretary of State to bring the Post Office into line with BT. Where the Post Office competes with the private sector, we need powers to ensure that it does so on fair and equal terms. Certain activities might, in the interests of efficiency of resource management, need to be undertaken on a separately accountable basis. Other activities might be more appropriately undertaken in the private sector.

Mr. Dobson

I return to the matter that I raised earlier, which is related to cross-subsidisation. If the Director General of Fair Trading has special responsibilities in this sphere, will he be given powers to look into cross-transfers and cross-subsidisation within the existing companies which are not at present contrary to the law?

Sir Keith Joseph

That raises interesting questions. As I understand it, there is nothing to stop a private enterprise company from cross-subsidising within its own subsidiaries. What the House will want to be sure about is that, in the case of a public sector activity, such cross-subsidisation shall be transparent—shall be seen—if it is to occur, provided that it is legally allowed to occur. The purpose of encouraging the creation of Companies Act self-accounting subsidiaries is to make sure that the competition with the private sector is as fair as practicable.

Mr. Geoffrey Robinson

Surely that is grossly unfair. If it is to be made manifestly transparent that there is cress-subsidisation in the Post Office—the nationally owned sector—and if the private sector and the public sector are to compete on truly equal terms, the same criteria must be applied to and enforced on the private sector.

Sir Keith Joseph

With the best will in the world, they are not the same animals. The private sector company can in the last resort go bankrupt. Under present laws, the public sector company cannot go bankrupt. These are two very different animals. It is from a desire to make competition between them as fair as practicable—it can never be made totally fair — that we propose these changes.

Mr. Robinson rose

Sit Keith Joseph

This is very important, but I doubt whether we should pursue it. I have given way to hon. Members a great deal. I think that I ought to get on with my speech.

Clause 62 enables the Secretary of State, after consultation with the Post Office and the Post Office Users' National Council, to exclude from the users' councils' oversight any services of the Post Office for which it does not hold a monopoly. The Post Office would be at a disadvantage compared with private operators providing competing services if it were subject to the scrutiny of the users' councils while they were not. It is intended that this power should be used at the earliest possible date to exclude the banking services of the Post Office National Giro, in which area the Post Office already faces competition.

Clauses 63 and 64 re-enact the exclusive privilege of the Post Office with respect to the conveyance of letters and specify exceptions. For the first time in legislaton, there is included a definition of "letter" — a very temerarious endeavour. The definition is intended to reflect the present position, and we have been helped in this by the views expressed during the monopoly consultations.

Clauses 65 and 66 empower the Secretary of State to issue licences and to suspend the exclusive privilege. The powers will enable the Secretary of State to suspend the exclusive privilege locally or nationally for a specific category of letter. Suspension will be by order subject to annulment by either House. Licences can be issued to individuals or companies to carry mail otherwise within the monopoly.

Clause 67 allows the Post Office to accept liability for loss of or damage to all postal packets and not just registered mail, as at present. This will also allow the arbitration in the code of practice to be legally binding on the Post Office. I am sure that these changes will be welcomed by customers generally.

Clauses 68 to 72 contain the financial powers of the Post Office and the ministerial and parliamentary control over them. They are the same as those for BT.

Clause 73 clarifies the criminal law for delivery to garden gate or central delivery points in blocks of flats. It does not give the Post Office power to insist that such boxes be provided by its customers, but it makes it easier to reach voluntary agreements.

Clauses 74 and 75 deal with interpretation and application to the Channel Islands.

Clause 76 empowers the Treasury to dispose of its shares in Cable and Wireless Ltd.

Clause 77 is a technical change to ensure that all the protection given to Post Office telegraphic lines extends to cables made from optical fibres, thus recognising the role of BT in developing new technology.

Clauses 78 and 79 deal with tax implications of the transfer of property under the Bill. They ensure that such transfer does not itself create any new tax liability. But no existing tax liability is removed.

I repeat that this is an important Bill with great potential for new services and new jobs. I hope that the House will agree that we have tried to strike a proper balance between the interests of the customer and the interests of the public and the private sectors.

I hope that the House will give the Bill its Second Reading.

4.48 pm
Mr. John Silkin (Deptford)

As the House is aware, there has been considerable argument and debate over a number of years — going back before 1977, the date mentioned by the Secretary of State—about whether the Post Office should be split. There are opinions on both sides. It is a question of balance. Some hon. Members take one view and some another. However, there is one aspect about which I agree with the Secretary of State. It was important to make a decision. To have left the position open for very much longer would have added to the uncertainty. Therefore, although I do not speak for right hon. and hon. Members, I accept that the right hon. Gentleman was right to make a decision.

Such a decision is not made easily, nor is it carried out easily. To carry it out over a period of perhaps three years will be an extremely difficult job. We have to see that the new methods of dealing with British Telecommunications and the Post Office are such that they learn to work well together and, above all, that the services which they give the country are not only maintained but improved. That must be the job. To expect that to be done easily, with no hiccups and no difficulties, would be folly.

There are various factors to be considered. First, there is the question of the morale of the staff. During the past few months morale has not been at its best, and it may decline considerably. There is also the question of management. There have been management troubles in the Post Office as we all know. The departure of Sir William Barlow has left the right hon. Gentleman in a difficult position. There is now a double difficulty in management.

There is also the difficulty of the boards themselves. There are now to be two, which will have to work out how they will interlock, as they must. They own a great deal of property and services in common and, as my hon. Friend the Member for Thurrock (Dr. McDonald) pointed out, they have a pension fund in common. All these matters will have to be worked out.

The problem of getting the organisation working over the next three years and providing an efficient service for the customers, the country in general and those who work in the industries — industries they will be, not one industry—will be more than enough to cope with during the next three years, without bothering about anything else. That is an argument for leaving the monopoly as it is.

With the splitting of the Post Office into two sections comes something else—another Bill hidden within the main Bill. The hidden Bill is the one which enables the Secretary of State to use his own powers to—as he puts it—privatise, or, as I would put it, to piratise, national assets and make them acceptable and workable by the private sector.

The right hon. Gentleman has what is known in criminal law as a long course of conduct. In other words, one can go back over his various Bills produced when he has been in three different Departments. I can do that over some 17 years during which I have sat opposite him in Committee. One finds that his Bills fall into a simple pattern. They are simple—except that all the powers, the important matters that arise, are never dealt with in the Bill. They are dealt with by guidelines, by a memorandum here or a memorandum there. They are dealt with, above all, by enabling powers.

That is how the right hon. Gentleman likes to work. It is, of course, very difficult in a democratic assembly to say "This power should not be in the Bill." The right hon. Gentleman smiles his Mona Lisa smile and says "I had not intended to use it except in such-and-such a case, such-and-such an emergency." It is a good, clever technique, which he used in the case of the National Health Service, the National Enterprise Board and the 1980 Industry Bill. He is attempting to use it now.

The right hon. Gentleman gives himself in all his Bills, as in this Bill, the most enormous powers, which are practically dictatorial. Then comes the problem. After some turmoil, the Bill is given Royal Assent. Then the right hon. Gentleman has to decide how to use those powers and what to do with them. Then begins the long period of agonising. He walks up and down, worrying whether to use those powers, whether to use some or all of them. That has been the course of his conduct over the years.

The right hon. Gentleman makes up his mind to use some of the powers. He comes to a decision, which is usually the wrong one. Then, 20 years after the rest of us, the right hon. Gentleman makes a public confession, wringing his hands, that he was wrong in the first place.

This Bill is a splendid example of what is yet to come. It is possible to look into the crystal ball and see what will happen. Let us consider what is happening in the Bill and the powers that the Secretary of State is giving himself. The right hon. Gentleman went through the clauses of the Bill but he did not halt long enough at each clause, so I shall do it for him. Under clauses 3 and 56, the corporation and the Post Office are, respectively, to provide telephone and postal services, but only where they are not provided by "other persons". The right hon. Gentleman believes that there should be no monopoly, so he has breached it. That is the first breach. But here we come to the interesting part. Who are those others to be? The right hon. Gentleman did not say. He said there would be others and that that would be to our great advantage, but he did not say who they were.

What the right hon. Gentleman did say was that in his form of licensing, unlike that in the United States, there would be no bureaucracy. He was very proud of that. Certainly there is no bureaucracy, but let us see why. Under clause 15(1)(a), it is the Secretary of State himself who can grant licences, on any terms he likes — irrevocably, if he likes, without giving reasons, if he likes. Certainly there is no bureaucracy there, though there is not much democracy either.

As was pointed out very cogently by my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding), the Secretary of State can actually make charges under those licence provisions, and the moneys gained by those licences go into the Consolidated Fund. They do nothing at all for British Telecommunications. Apparently, it came as rather a surprise to the right hon. Gentleman to learn that he had this power.

To understand what is happening, we must go back to the right hon. Gentleman's technique of Bill-making, the basis of which is very strong on philosophy, much stronger on assertion but a little woozy on detail. So let me help him to clarify his mind. He disputed that there would be any real difficulty, though he said that there might possibly be a little overlapping. Of course, he had not really read his own Bill.

Mr. Russell Kerr (Feltham and Heston)

I do not blame the right hon. Gentleman.

Mr. Silkin

I do not blame the right hon. Gentleman, either, but it is rather important in trying to explain the Bill to the House to know what one is introducing and why it is so good.

Clause 15(4) says that a licence may be granted, to anybody virtually, on conditions requiring the rendering to the grantor of a payment on the grant of the licence or periodic payments during the currency of the licence or both. There is no restriction on that right. It can be used in any case the Secretary of State likes. The same is true of the postal services. So the right hon. Gentleman has now learnt something about clause 15. He has learnt what his powers are under the clause, and he has learnt where the money comes when he proposes to charge it.

The same is true, as I pointed out in an intervention, when it comes to the Post Office under clause 65(1) and 65(7), which is the twin subsection of the original clause.

In addition, the light hon. Gentleman mentioned clause 4. He rightly received rather a grilling from my hon. Friends about it. Under clause 4—subsection (4) in particular—British Telecommunications is additionally shackled, because it is required to set up subsidiary companies in order, as the right hon. Gentleman said, to prevent the monopoly from subsidising less profitable ventures.

Then there is the question of the Director General of Fair Trading. When one mentions him, a reverential hush always descends on the House. It is as though one were talking about the archangel Gabriel. But, whereas the archangel Gabriel's powers may be unlimited, the powers of the Director General are extremely limited. He is supposed to seek out monopolies. That is what he is there for. It is logical for the right hon. Gentleman to say "He must look into all these subsidiary companies which I have decided that British Telecommunications has to create." That is perfectly logical, because there might well be a monopoly there.

What if the corporation is in competition with private companies? No question of a monopoly arises in a relationship between a holding company and its subsidiary. No question of a monopoly arises if a holding company decides that company A, in private hands, shall lose money so that company B can make money. That is a well-known trick. One does rot even have to go to the Rossminster company to find that out, although it was one of its dodges. The trick is operated by supermarkets. There, today's offer might be sugar or potatoes. Under the Bill, today's offer is Mickey Mouse telephones. A loss leader will operate and the Director General of Fair Trading will not be able to interfere. Apparently, the right hon. Gentleman envisages giving the Director General greater powers to intervene in the proposed subsidiaries.

Even without the privatisation provisions, the Bill will take a whole Session. It is technical and complicated. Many elementary mistakes appear in the Bill and it is in for a justifiably rough passage. When we finish with it, it has to go to another place. I hope that the other place will have the time, energy and expertise to pick up these points. I am sure that Government Members would like the Bill to slide through in one Committee, but I believe in democracy.

Clause 6 (6) imposes the final stranglehold over British Telecommunications and the postal services. Under that clause the Secretary of State can direct the corporation to dispose of its assets, or any of them, and ensure that its subsidiaries, or any of them, dispose of their assets, or any of them. The power is universal. Oliver Cromwell would have loved to have such a power, but he did not. If British Telecommunications is doing better than some other organisations, the Secretary of State can stop it doing so well and take away its assets. He does not even have to come to Parliament.

Clause 76 deals with Cable and Wireless Ltd. This provision was shoved in as a secretive gesture towards the end of the Bill where, it was hoped, no one would notice it. Cable and Wireless Ltd. was formed like an ordinary company, but it is different. It is a special company 100 million shares of which are owned by the British Government. It was set up in 1949 with the agreement and full co-operation of the Commonwealth to provide worldwide external telecommunications. It was set up contractually by the British Government and members of the Commonwealth.

The Secretary of State says that he might bother to consult the Commonwealth when he has a little time. He did not consult before he inserted the clause. I know of no other example, except possibly of the Minister of State when dealing with the Falkland Islands today, of anybody being so guilty not only of a lack of diplomacy but of a lack of common courtesy. The company has a —200 million turnover. It is supported throughout the world by the users of the service because it is backed by the British Government. That is its strength. This British Government, and Britain, at this time are in need of a bit of prestige. However, the right hon. Gentleman is proposing to throw it away.

The company provides an external, and sometimes internal, telecommunications service for a large number of independent countries and some dependent territories. Examples involve the whole of the Caribbean, almost all the Gulf and in the Indian Ocean the Maldives, the Seychelles and Mauritius. In the Far East it serves Hong Kong and the Philippines. In the Pacific it serves the Solomon Islands, the New Hebrides, Fiji and Tonga. One could go on at length. Since the subject was raised earlier, may I say that it also serves the Falkland Islands and St. Helena in the South Atlantic.

Another factor is involved. The Falkland Islands and St. Helena, for example, cannot operate the service themselves because they are not economically capable of doing so. We operate such services at a loss. The service is not a loss leader in the sense that I used the term earlier. We provide the service because it is a duty and because we acknowledge that it is a service. It has a social, economic and security content. What does the right hon. Gentleman believe will be the reaction if we say that the British Government propose to denationalise the service? If I were to advise the countries involved, I would say "You nationalise them."

Why should there be a postal or telecommunications monopoly? The right hon. Gentleman is bad at detail but adept at philosophy and even better at assertion. He never gives us reasons, so let us explain why there should be a monopoly. Is it not the fact that the postal service since the days of Rowland Hill and long before has been based on a monopoly? It has been a monopoly for 300 years under many forms of economic development. Government after Government have agreed that it should be a monopoly. The great quality which Rowland Hill brought to our postal service and which has been emulated throughout the world is that it provides a national service at a uniform price. It does not matter whether one wishes to deliver a letter to the hills of Cumbria, the depths of Cornwall or across the street in Westminster—the price is the same. That is the whole basis of the system. The big conurbations pay for the rural services which could never be operated economically and would disappear if it were not for that uniformity. The Secretary of State should understand that.

There was enough fuss last year about sub-postmasters. Surely, the right hon. Gentleman learnt his lesson then. Apparently, he did not. The service involves a high labour content and a high element of fixed costs. Volume is essential in such circumstances. It costs exactly the same for one postman to deliver 20 letters to one address as one letter. Without volume, the service will deteriorate or the prices will go up—or both.

As Nye Bevan used to ask, "Why look in the crystal when you can read the book?" We can read the book. In 1971, private enterprise broke the postal monopoly during the postmen's strike. Private enterprise had everything going for it. A fairly neutral, dispassionate observer of the day, The Daily Telegraph, stated on 12 March 1971: About 5,000 letters were dumped at Luton post office yesterday by a man driving an unmarked van. It was not the Secretary of State. Each carried the name Randall's Mail Service, Chelsea and charges ranging between 15 pence and 75 pence. Date stamps showed that the letters had been collected between January and February. That is the great service that private entrepreneurs will give us. Are we not lucky that such a kind Secretary of State will bring that benefit back to us once again? Some of us had hoped that it had gone for ever. So much for the service provided by private enterprise.

The right hon. Gentleman talked, although not so strongly as he did in questions earlier, about the poor service from the postal monopoly. Frankly, that does not wash. It is about time that he stopped doing it. It is an insult to those who do a great deal of work extremely well and in difficult conditions, including being grossly understaffed. Let us be quite clear that the service always was as good as any in Europe and is now better. Nearly 90 per cent. of first class letters are delivered the next day. That is a better average than anywhere in Europe. With second class mail, 94 per cent. is delivered by the third day. That is what the postal service is about. That is the monopoly that the right hon. Gentleman proposes to break in order to bring back Randall's Mail Service of Chelsea.

Many of the same considerations apply to the telecommunications monopoly. The loss of the monopoly will mean a worse service for the majority of people. Once again, the rural services will be at risk. It also means something else. The right hon. Gentleman tries hard to reassure us on this matter, because of this, at least, he is aware. It means the decline of our industries in a special way. At the present time the British telecommunications industry orders about 90 per cent. of its equipment from British firms. The right hon. Gentleman says that there will be a three-year initiation, intermediate, transitional period—how it reminds me of my dear old days in the EEC when we had a transitional period, which meant that we were being screwed even worse year by year—during which our industries can match up to our foreign competitors. He assures us that our industries will have that period of time subject, of course, to such little things as the Treaty of Rome or GATT or—although he does not mention it—the fact that any American, European or Japanese company can simply establish a private company in Britain if it so wishes. That company would then become, from our legal standpoint, a British company. It could undercut our companies. That is what the future holds. There can be no way in which the right hon. Gentleman can protect British industry, however much he may talk about reciprocal agreements.

Mr. Geoffrey Robinson

There is one way in which we can protect our industries. If we do not obtain a reciprocal agreement with other countries—or even if we do—we should continue to operate the system as it is now and ban their imports. We do that now despite our obligations under GATT. Why cannot we continue to do that irrespective of the transitional period? I am sure that my right hon. Friend would agree that our industries have a stranglehold grip on our market, as the Japanese or other successful countries would do in their case.

Mr. Silkin

I shall come to the wider aspect of my hon. Friend's point in a moment. It depends on British Telecommunications having a monopoly. To destroy the monopoly will destroy the protection to which my hon. Friend referred. While that monopoly is being destroyed, the private sector has an interest only in one part of it—the profitable part. I spoke earlier about Cable and Wireless Ltd. What private company, if it took the shares in Cable and Wireless, would wish to take over the Falkland Islands and St. Helena and perform a useful social function? No private company would wish to do that. The answer is simple. British Telecommunications would be left with the less rewarding services and the creamy, profitable, get-rich-quick services would go—I had intended to say to the right hon. Gentleman's friends in the City, but that is not true—to Japan, the United States or other parts of Europe.

While, inevitably, British Telecommunications became poorer and poorer, and while its service declined because of the attack from the private sector, the right hon. Gentleman would be wringing his hands and saying "But it is not providing the service that it should be providing. We must privatise—or piratise—them even further." How he expects the morale of the staff to continue in those circumstances is beyond me.

If that is the basis of what is to happen, what should be done? As I said earlier, if the decision has been made to split the Post Office, so be it. I accept that. I would not ask my hon. Friends to go into the Division Lobby against that. There may be some who do not like it, but a decision had to be made one way or the other. That is where it should have ended. There will be work enough in that.

We need the best possible postal and telecommunications service. We shall not have that with the cash limits that the Government are talking about today. For example, we need greater mechanisation in the Post Office. It is proceeding, but it needs to be increased enormously. The right hon. Gentleman mentioned electronic mail, which has an enormous future and needs all the support that it can get. But that means investment, which means money. It means not rigid cash limits but encouragement by the Government and full investment in the Post Office. That is the only way to preserve what I believe to be a fine record of service in the operation of the Post Office.

I agree with the right hon. Gentleman—for the second time this afternoon—that telecommunications are the spearhead of new technology. I accept that that is so. Where we differ is how we should make that spearhead effective. I was interested in the right hon. Gentleman's statement on 21 July. I am sure that he said that one of the reasons for America's greater success was the freedom available there to entrepreneurs to develop new services and a wide range of equipment associated with telecommunications. I assume that he has not changed his mind since then, but, knowing and loving him as I do, even that is not beyond the bounds of possibility. Let us examine what he is saying, because it is a splendid example of his ability to deal with an issue by assertion and not by detail.

The United Kingdom is level with and may even be a head of the United States in the development of system X, which started operation in July 1980. We may have an integrated digital network system, before the United States. Therefore, in that respect we are slightly ahead of the United States. We are well ahead of the United States in the area of optical fibres. The United States; routes are short and experimental. By 1982 we shall have 15 fully operational routes. If we have the money and the investment, we can keep the lead.

However, those are the developments of the future. What about present developments? We have fewer shared lines than the United States. Where we have party lines, they consist of two people. In the United States they have a larger percentage of party lines, with as many as eight people sharing one line. That does not say much for the American telephone system.

As for international direct dialling, we can dial directly to more than 100 countries from Britain. That can be done by 90 percent, of our customers. In the United States, that can be done by only 40 per cent. of subscribers. Let us rot run away with the idea that the Americans are so much more efficient than we are. They are not. In viewdata systems, Prestel is streets ahead of systems in the United States and, incidentally, in almost any other country. I am rot denying that the United States has had some successes in telecommunications. It would be absurd to make that denial. The Secretary of State argues; that those successes should be put down to its great entrepreneurs. It is nothing of the sort. The successes of the United States axe attributable not to its entrepreneurs but to enormous sums of Government money spent on defence and space research and development.

Furthermore, the United States is a rather larger continent than the United Kingdom. The right hon. Gentleman may have noticed that as he travelled around California. As a result, there is a population that inevitably wanted telecommunications long before we had become used to it Indeed, the United States was the home of the invention of the telephone for the simple reason that communications between large areas of the continent were au imperative. There is that historical reason.

The United States Government are spending twice as much per head of the population as we are spending in the United Kingdom. That might add another reason for the successes that the Americans have had, apart from their entrepreneurs.

We do not have to go very far to find a parallel. It is necessary only to look across the Channel. The House well knows my views on membership of the European Economic Community and on some of the policies of some of the members of the Community. However, I have never been foolish enough to underestimate the French, and I never will. I do not underestimate the French way of dealing with matters such as telecommunications. France is spending rather more than twice as much as we are on investment in telecommunications. It has a simple policy. It has 14 million telephone subscribers and it intends to have 34 million by the end of the decade. It intends to get the market in telecommunications, and it will probably succeed unless we are prepared to make every effort now.

The French are not nearly as queasy as the right hon. Gentleman. For example, all contracts for viewdata terminals go to French firms and French firms only. If the Treaty of Rome has anything to say about that, the French attitude is to say "To hell with the Treaty of Rome." As a result, the terminals will be able to be sold for not £500, which is about what they cost now, but £50. That is the French way of doing things in telecommunications. That policy means a great deal of investment. It means that public money has to be spent and that cash limits have to be forgotten in getting down to it.

We are talking not only about customs or of those who work in an industry but of the future of the United Kingdom. Britain has a legitimate lead in telecommunications. That lead should be preserved, maintained and improved. That is what it is all about.

The silly, queasy and foolish policy of the right hon. Gentleman's—

Mr. Russell Kerr

And short-sighted.

Mr. Silkin

—will put us way behind again. We shall repeat on a larger scale the stupidities of the past. We invent and our people's skills produce, but the Government and the British people are too small-minded to produce the finance that is necessary for us to take advantage of our own inventions. That is what I fear will happen as a consequence of the Bill.

There is one consolation in the right hon. Gentleman's speech — only one. Whether he means it or not and whether he changes his mind or not, he is talking about a transitional period of three years. In three years we shall have a Labour Government — [Interruption.] Conservative Members may laugh as much as they like. There is an old proverb about who laughs last. Within three years, that Labour Government will be in a position to reverse what the right hon. Gentleman is doing and to ensure that telecommunications, our postal services and Cable and Wireless Ltd., I hope—I hope that we shall be able to stop the Cable and Wireless measure even before it starts—are prevented from being destroyed by the right hon. Gentleman's method, philosophy and assertions.

I ask anyone who thinks that he is going to make a quick killing out of all this to stop and think about it. Think what will happen when a Labour Government are returned. We shall ensure that no one will make a profit out of the public sector and that no one will make a profit out of national assets.

It is in that spirit — in the spirit and in the understanding that what could have been an acceptable technical Bill that could have passed through the House with little opposition has become a doctrinaire piece of private enterprise philosophy dating not from this century but from the middle of the last century—that I ask my right hon. and hon. Friends to oppose the Bill when the House divides.

5.26 pm
Mr. Kenneth Baker (St. Marylebone)

In view of the remarks of the right hon. Member for Deptford (Mr. Silkin), there is no doubt about the strength of feeling of himself and his party against the Bill. He has made it clear that the Opposition are opposed to the Bill root and branch. They start tonight with a three-line Whip and, as the right hon. Gentleman has promised, they will go on in Committee—he promised a long Committee stage—and there will be a fight on Report. Then the right hon. Gentleman said—I could not believe my ears—"And then we shall go to the House of Lords".

I was under the impression that at the most recent Labour Party conference the official policy of the right hon. Gentleman's party was to dissolve the House of Lords as soon as possible. However, he is now using it as the constitutional longstop to defend the British Post Office. This was a total suspension of disbelief.

Mr. John Silkin

We have the House of Lords at this moment. The fact that we are in favour of abolishing it does not mean that we would be stupid enough to let the Bill go unfought in the House of Lords. I merely say that we shall fight it.

Mr. Baker

The depth of cynicism is unplumbed: "As it exists now"—that is, the House of Lords—"we shall use it." That is what it comes to.

The right hon. Gentleman was stretching parliamentary convention to the very limit when he accused my right hon. Friend of being the Mona Lisa. I have heard my right hon. Friend accused of dogmatism, which I personally do not accept. I have heard him praised as pragmatic, which I think he is. I have never heard him accused of being enigmatic. My right hon. Friend is not in the least enigmatic. He wears his heart on his sleeve. His views on the Bill were clearly expressed.

The Bill is important. I think that it is the most important Bill of this Session. It is profoundly important for three reasons. First, it splits the Post Office between telecommunications and postal services. Secondly, it reduces the telecommunications monopoly. Thirdly, it provides the hope of a much better system of funding for the remaining monopoly of the Post Office.

I deal first with the splitting of the Post Office. The second Bill on which I served in Committee when I was elected to this place at the end of the 1960s was the Post Office Bill of 1969. That was the Bill which set up the Post Office corporation and transformed it into a nationalised industry. In 1969 I moved a series of amendments to split the Post Office between the postal side and the telecommunications side. At that time we were led by my hon. Friend the Member for Howden (Sir P. Bryan). We were accused of being barbarians and not understanding the issue. It has taken 11 years for the heresy to become absolutely accepted. A few of us kept the lamp of progress burning during those 11 years. I am glad that it has now become official Government policy, supported by the Carter committee, that postal services and telecommunications can be split.

The logic of that split was as strong then as it is today. They are totally dissimilar businesses. The telecommunications side is capital intensive, highly technological and expanding. The postal side is labour intensive, less technological and in certain cases hostile to technology and contracting. It is right that the two businesses should be separated. I am only too pleased that all the work of 11 years sees fruition in the Bill.

Mr. McWilliam

The hon. Gentleman's assertion that the postal side of the business is hostile to technology seems ill founded when the mechanised letter sorting centre at Newcastle cannot be fully brought into service because of Government cash limits and not because of objections from the postal side.

Mr. Baker

I shall come to the question of the financing of the Post Office. The hon. Gentleman will find that I am in agreement with him on the system of cash limits and investment in nationalised industries.

I am in favour of the split, and I am glad that it is to happen.

The second major part of the Bill is concerned with the reduction of the monopoly of the Post Office. First, I echo some of the remarks of the right hon, Member for Deptford. I am familiar with the work of the Post Office in a rather detailed way. I would be the first to say that in its research activities it is in some respects a centre of excellence. It has produced various systems and equipment that have given us a world lead — for example, Prestel. There is no doubt that that is the best system of video text linking in the world. It is better than the Canadian system. It is infinitely better than the French system, which does not exist, although that does not prevent the French Government from selling it. It never does; they are highly imaginative. I have always encouraged my right hon. Friend and his colleagues on the Front Bench to give every support possible at ministerial level to the development of Prestel, its use in Government circles and its active promotion by Ministers wherever possible overseas. It is, of course, used in embassies. I start with that encomium for the Post Office.

However, it is the absolute range of possibilities that lie before the Post Office that makes it necessary to open up opportunities wherever possible to co-operative ventures between the public and private sectors. We are on the threshold of a major revolution in information technology, which will create an enormous number of jobs in this country if we get it right over the next few years, at a time when job creation possibilities will get much smaller in conventional industry.

Therefore, I have called in the past for a national strategy for information technology. I am pleased to see that my hon. Friend the Minister of State who will be replying tonight has been made responsible for that. It was only one point of my 10-point programme for information technology. The other nine remain yet unfulfilled. I shall be pressing him to develop them and spend a bit of money here and there to take the maximum advantage for our country in an area where in certain respects we have a world lead.

I look upon the possibility of the private sector being invited to provide certain services that the Post Office provides as an opportunity. I appreciate the argument of the right hon. Member for Deptford that in an ideal world he would like the State monopoly to be continued. However, he has to recognise that we live in the real world of limited resources for State expenditure. Many more resources will be available for the development of telecommunications and information technology usage if the private sector is involved.

As regards the extent of that involvement, I was interested to hear the various points made by my right hon. Friend today, which amplify his statement earlier this year. One was that private companies will be allowed to sell and provide PABXs of fewer than 100 lines. I was not quite clear what he said—perhaps the Minister of State can clarify it—about maintenance. The view has been put to me in the industry that the firms that provide PABXs should be allowed to maintain them. It is not entirely clear whether they will be allowed to do so. I express the hope that they will. They should not be given an exclusive right, but the analogy with the other public utilities is clear. If an independent contractor installs central heating in a house, the householder can get either the electricity board or the original contractor to maintain it. That choice should also pertain in I he maintenance of PABXs with less than 100 lines.

I was glad that my right hon. Friend made clear that an institution would be set up to test equipment to ensure that it was technologically correct to be fitted to the system and would not in any way cause its breakdown. I am very pleased that an independent institution will do that. It was thought at one time that perhaps the Post Office should do it, but it is clearly wrong when there are competing interests that one of them should also be the test body.

I was also glad to hear that my right hon. Friend would consider the possibility of allowing competitive networks. I heard an example only this week of a major British oil company wanting to communicate with its offshore drilling rigs in the North Sea. That company can do that because it was allowed to set up its own system of communications by projecting a beam off which would bounce signals 10 the rigs. It is the only system that has teen allowed by the Post Office. It was the first one. The Post Office could not provide the service. It now says that companies cannot do that.

The system was all very well for communicating in the North Sea, but the company also wants to communicate with its drilling operations on the; Western Approaches. It is not allowed by the Post Office to set up its own system. In order to communicate with a drilling rig on the Western Approaches, the company has to telephone on a normal line to America and the signal is bounced in America off a satellite back to the Western Approaches. That is absurd. It is one of the major British oil companies, and all that it is asking for is to put a saucer about 3 ft. wide on the roof of its offices in London so that signals can bounce off one of the many satellites in orbit.

When asked for permission, the Post Office said that it was sorry but it was still considering its satellite policy. In such a case the customer's interests have not come first. Such a dog-in-the-manger attitude is fundamentally wrong. I hope that my right hon. Friend, in the exercise of his powers when the Bill is enacted, will bear such things in mind.

Finally, I come to the financing of the Post Office. I cannot believe that we have a sensible system for the financing of those nationalised industries that are profitable. They come under the general consideration of public expenditure. Successive Treasury Ministers of both parties have maintained that they cannot give even profitable nationalised industries the complete powers that they want to invest. This Government have worked within the tradition of the previous Government, and we have external financing limits. Nationalised industries that are profitable find operate in a commercial way, competing for services, should be given the opportunity to raise their money in the private sector. Some of their financing should not be considered as part of the PSBR and part of the general level of Government expenditure.

The advantage of the Bill is that that possibility opens up. Some say that it is easy to achieve more open financing by removing the Government guarantee for bodies such as the Post Office. That is not a realistic alternative. At the end of the day, if the Government remove their guarantee from the borrowing of the Post Office and, for instance, British Telecommunications gets into an appalling financial mess, it is inconceivable that the Government, irrespective of which party is in power, would not have to intervene to ensure the maintenance and continuity of the monopoly national network. I do not believe for a moment that merely removing the guarantee would be anything more than a cosmetic operation which would have the disadvantage of slightly increasing the borrowing costs for the nationalised industry concerned.

The only way forward is to look to various partnership operations between the public and private sectors, which are self-financing and in which the private sector combines with the public sector on particular projects. That possibility is opened up by the Bill in a dramatic way. That is why it is one of the most important Bills that we are likely to deal with this Session. It could, if it develops on the lines that I have outlined, provide an enormous inflow of capital into profitable ventures, in which both the public and private sectors are partners. There will be common agreement on both sides of the House that substantially more money will be needed in capital investment in the industry. We should, therefore, look in a co-operative way to see where the money can come from. It cannot possibly come, on the scale that is needed, from the public purse over the foreseeable future. Labour Members should recognise the reality of that.

The Bill is not only right in its constitutional framework, in dividing the two bodies, reducing the monopoly and providing the enormous advantage of bringing in the private sector. It is also right in regard to the possibility of bringing in private sector money in substantial quantities. That is why the House should support the Bill and speed it on its way.

5.40 pm
Mr. Charles R. Morris (Manchester, Openshaw)

Few would deny that the Post Office faces formidable problems, particularly in the present economic climate, in seeking to improve Britain's postal and telecommunications services. The tragedy and reality of the Bill are that it does not address itself to any of the major difficulties currently confronting the Post Office or its customers.

I listened carefully to the speech made by the Secretary of State in introducing the Bill. In recommending the Bill to the House, the right hon. Gentleman said that it has noticeable and worthwhile benefits. I went on listening, and the fact is that the right hon. Gentleman did not go on to identify any benefits, noticeable or worthwhile, for either the Post Office or the customers of the Post Office.

The Bill, as I read it, has four main objectives: first, to split telecommunications from postal services; secondly, to breach the postal and telecommunications monopolies; thirdly, to legalise postal pirates in the event of industrial disputes in the Post Office; fourthly, to sell off shares in Cable and Wireless Ltd.

I turn first to the question of the separation of telecommunications from postal services. I should like to question the whole justification of the Bill for the establishment of a separate business for telecommunications. We had precious few real or new arguments from the Secretary of State in favour of separation. He was showing all the signs of having been brainwashed by the bureaucrats.

I listened to the admirable speech by my right lion. Friend the Member for Deptford (Mr. Silkin). He said that he would not advise his colleagues to go into the Lobby against the division of telecommunications services from the Post Office. I take a completely contrary view, and I thought that an admirable speech by my right hon. Friend was marred when he sought to justify the separation by saying that it has been hanging around for quite some time now and has been discussed and debated since 1977. The hon. Member for St. Marylebone (Mr. Baker) said that it was discussed in the debate on the Post Office Bill of 1969. That is absolutely right. But there has been no great public debate on this major issue.

Here is an industry which provides telecommunications and postal systems for the whole of the country and employs more than 400,000 workers, representing 2 per cent. of the working population in this country, and there has been no major public debate on the crucially important issue whether we should separate telecommunications from postal services. Why not? I shall suggest why there has not been any major debate. Equally, may I suggest why there is this commonality of view between the Front Benches on the question of the split? They know as well as I know that the separation has already taken place.

What the Bill does, and what the bureaucrats at Post Office headquarters have achieved, is to reduce this House of Commons, this Parliament, to a rubber stamp, because the separation is a fait accompli. The two businesses have been established already in all but name. By the Second Reading and the Committee stage of the Bill, what we are embarking on is to give authority to that which has taken place. That is the reality of separation. Now, we are being invited to rubber-stamp the decision and the policies of Post Office headquarters and the Post Office Board.

But have they always been right? Let us look at the record. These are the same people who in 1969 encouraged the Post Office and the politicians to believe that public corporation status would set the Post Office free, give it greater commercial freedom and lessen the control of the Treasury over the Post Office. What the Post Office Act 1969 did was to interpose a new Department of State, the Department of Industry, between the Post Office and the Treasury. It made Treasury control that much more strict and increased by thousands the number of bureaucrats at Post Office headquarters.

When we are looking at the argument for separation, I suggest that it is not quite as compelling and convincing as the Secretary of State suggests and as is reflected by some of my right hon. and hon. Friends.

The way that the argument for the split has been presented today is a sad commentary on ministerial accountability or, for that matter, accountability to Parliament. As I have indicated already, the Bill effectively reduces Parliament to the role of a rubber stamp.

I read very carefully the parliamentary briefing that has been supplied by a number of interested bodies. In an eight-page parliamentary brief provided by British Telecom, the question of separation is dismissed in three lines. Paragraph 1 reads: The separation of British Telecom from the Post Office makes business sense. They are two entirely different enterprises and they need managing in different ways. The question I pose to the House is: are they "two entirely different enterprises"? I submit that the transmission of letters and communication by telephone are merely two forms of communication. What has happened in recent years is that, given a free choice, the public have opted for convenience. Understandably, they would prefer to pick up a telephone rather than sit down and write a letter. As a consequence, this has created a problem of an ever-expanding telecommunications industry, a capital-intensive problem and a labour-intensive problem with regard to Britain's postal service. But is that sufficient justification for the proposed division of postal services from telecommunications?

I remind the House that if the Bill goes ahead and we divide telecommunications from postal services we shall be splitting the Post Office corporation at a time when technology is bringing them together.

Reference has been made to electronic mail handling. We know that virtually every major post office, sorting office and parcel office in the country is now mechanised. We have recently learnt that it is now possible to send facsimile reproductions of letters from London to Canada by electronic means. We have seen the onset of optical character recognition processes. Reference has been made to Prestel. It is a fact of life that technology is moving fast. In my view, it is therefore short-sighted and unrealistic to talk about two entirely different enterprises.

One might be tempted to believe that such a split is justified by the size of the business. But I have not seen any of the multinational companies, some of which are many times larger than the Post Office corporation, being encouraged to split because its area of operation covers more than one area of activity. Let us take for comparison a multinational company which is based in high technology and also is involved in household deliveries, namely, Shell-BP. That enterprise is based on high technology in extracting oil from the North Sea, and that same multinational company delivers it to the housewife in her home. No one ever suggests that it would be in the interests of Shell-BP to split those two operations. Yet here, without any public debate, we are discussing a Bill concerned with whether there is merit, advantage or disadvantage in splitting telecommunications and postal services. The proposal is that the split should go ahead.

What will be the consequences of the split? I do not know how many Members have been privy to the negotiations that have already taken place with Post Office headquarters and some of the staff associations involved. It is proposed to split the research and development facility at Martlesham. There will be a research and development facility for the postal services, but if it is split from telecommunications it will not have the financial resources to embark upon the detailed research and development which Britain's future postal services will need. It will be forced to buy off the shelf in terms of computer and microtechnology- based postal systems.

My hon. Friend the Member for Thurrock (Dr. McDonald) referred to the question of superannuation. The House is entitled to assurances with regard to the splitting of the superannuation fund. I believe that the Post Office superannuation fund is the largest single superannuation fund in this country. The staff of the Post Office, whether they operate in the telecommunications side or in the postal services side of the business, are entitled to binding assurances with regard to any proposal to split that superannuation fund. One might well ask how one would split an investment portfolio. How does one split the blue chips from the other shareholdings in companies? The Secretary of State has said that negotiations are proceeding with the unions. I wish them well. But I would remind him that the staff of the Post Office will be watching this particular split very closely indeed.

One may also ask why countries such as Germany, France, the Netherlands, Ireland and Finland have not split telecommunications from postal services. It is because the majority of countries recognise the value of a unified communications service.

We shall be discussing many features of the Bill in great detail. I wish to refer briefly to the proposals for breaching the monopoly end legalising the postal pirates. I was very much at one with my right hon. Friend the Member for Deptford when he reminded the House of the chaos which arose in 1972 as a result of Randall's postal pirates. They conned the British public into posting letters at 75p per letter, waited for the strike to end and then posted all those letters back into the national postal system.

It should be borne in mind that taking these powers will have a very serious impact on industrial relations in the Post Office. The Secretary of State gave the impression that there were major industrial relations problems in the Post Office. In reality, there has been only one national Post Office strike since 1657, and that was nine years ago. There has been only one major Post Office strike in the history of the Post Office. Yet in the Bill the Secretary of State is taking powers to encourage postal pirates to set up an alternative postal service.

I can think of no other group of trade unionists who would sit back quiescent at such a development. If the Secretary of State is to exercise those powers at a time of Industrial difficulty with Post Office staff, I can think of nothing more ill judged. At a time when tact and sensitivity will be absolutely crucial, he is to exercise the most provocative line of action one could possibly envisage. Why is he doing that? We have had no explanation. There is no great industrial relations problem with Post Office workers either in telecommunications or in the postal services. There has never been a national strike on the telecommunications side of the Post Office. Yet the Government are embarking upon these enabling powers.

In conclusion, I re-emphasise my right hon. Friend's point about clause 76 dealing with Cable and Wireless Ltd. I recently read the 1980 Cable and Wireless annual report and accounts. I particularly noted the comments of the chairman. Lord Glenamara. On page 4 of the report, under the heading "Chairman's Message", he says: Cable and Wireless was set up and still operates under the Companies; Acts. I though the whole of our equity is owned by HM Government … a major part of our business arises from franchises grantee by independent countries where we provide the essential public utility of international and sometimes domestic telecommunications. He continues: The present government of the United Kingdom came into office in 1979 with an electoral mandate to dispose of part of the equity in publicly owned companies. He adds: If this policy is applied to Cable and Wireless it will be one of the most profound changes in our history. I must warn that the pursuit of profit—important as it is for both the Company and its shareholders—can never be the sole motivation of Cable and Wireless. He is absolutely right. Cable and Wireless is not some Fairey Engineering company or a Ferranti company. It is a major international company which provides the essential telecommunication systems for independent countries. Today we have seen a demonstration of a Secretary of State who has not even consulted his colleagues in the Foreign Office on the implications of clause 76. The right hon. Gentleman has not even consulted his ministerial colleagues.

What will be the attitude of Governments throughout the world when they learn that the British Government are taking powers in clause 76 to start selling off shares in Cable and Wireless Ltd., which provides essential telecommunications systems for those independent countries? The company's annual report demonstrates that only last year the Government of Oman exercised their right to assume complete responsibility for their own telecommunications system, and they have ended their agreement with Cable and Wireless Ltd. on that basis. If clause 76 is passed, Hong Kong and countries throughout the Caribbean and the Pacific which rely on Cable and Wireless for their telecommunications systems will begin to take precisely the same sort of action as Oman has already taken. That is the reality of the Bill. Frankly, this is a badly drafted, ill-thought-out, partly irrelevant Bill which in the interests of the Post Office and its customers ought to be rejected.

6.3 pm

Mr. John Gorst (Hendon, North)

I cannot possibly share the view of the right hon. Member for Manchester, Openshaw (Mr. Morris) or, indeed, the views expressed by the right hon. Member for Deptford (Mr. Silkin). I welcome the Secretary of State's desire to liberalise the telecommunications monopoly of the Post Office. Having fought and pressed for 15 or 16 years through the Telephone Users' Association, which no longer exists, but of which I was a founder, it would be strange if I did not welcome this step forward, which I believe to be a marked and valuable one.

At this stage, I should declare an interest in the newly formed Telecommunications Council, even though I no longer have an interest in the TUA. The council provides a forum for users, manufacturers and suppliers of services to express common interests and have discussions on matters relating to the liberalisation of the telecommunications sector. It is common ground among everyone who wants to see such a liberalisation that British Telecom has an important and pivotal role to play. It has the responsibility to service and supply what I would describe as the telecommunications trunk roads—motorways, if one likes—but not the country lanes or the bridle paths of the system. It should certainly not handle the traffic which goes over them or, indeed, provide the garage and maintenance service of the equipment which travels either on the periphery or on the trunk roads.

In the opening phase of two or three years, I hope that my right hon. Friend will be flexible about how much liberality there will be in relation to the maintenance of equipment. I believe that greater flexibility than has yet been suggested is necessary.

I turn to the various options that were open to the Government. Basically, I believe that there were two options, either to transfer the monopoly to the Minister or, to transfer it to British Telecom. My right hon. Friend chose the latter. Some people believe that it would have been preferable to choose the former. But what matters is how things turn out in practice, and in practice there are two essential considerations—first, whether the user will benefit and, secondly, whether the industry and suppliers will be stimulated to produce better results than they have done in recent years. Those are the key considerations, and they were certainly said to be so by my right hon. Friend the Secretary of State.

However, one class of user does not emerge as happily from the proposed arrangements as it ought to. That group comprises those who have only one telephone, which is to be supplied by British Telecom. If an individual subscriber lives in a home in which only one telephone is appropriate and necessary, I do not see that he has anything to gain from the proposed changes. I should like the Minister to tell me what he thinks is contained in this new change for the ordinary, domestic subscriber.

That is perhaps a weakness in the arrangement. There may be technical considerations which the Minister has in mind, but I am assured by people with technical knowledge that there are no real obstacles to prevent the monopoly ending at the front door, just as it does with gas, water and electricity. If some flexibility on this subject is also shown in the ensuing years, it may be that a great deal of benefit will accrue to the ordinary, domestic consumer, who must be in a majority of millions over all the others who will be affected.

My main point concerns the monopoly itself. Why must the phrases contained in sections 24 and 25 of the Post Office Act 1969 be re-enshrined in clauses 12 to 14 of the Bill? Exactly the same words are used. I question that, because as it stands the wording means that things which have not yet been invented and which do not yet exist—forms of communication which have not yet been realised—are still to be nationalised and to be the subject of the monopoly. I do not regard that aspect as any form of liberation. Why must we do things that way? What have we learnt in the 11 years since the 1969 Act which makes us keep things as they are?

Indeed, the Conservative Party appears to have changed its mind, because I recall that my right hon. Friend the Lord Privy Seal, who at the time served on the Committee which dealt with the then Post Office Bill, said: It seems to me that to give this very general monopoly power to the Post Office is as if the Government in 1820 had given the whole monopoly of transport to the people who were then running stage coaches. They would then have been able to have controlled the railways and any other form of locomotion and communication which was set up. It seems to us"— that is, the Conservative Opposition of the day— extremely undesirable that this monopoly power is vouchsafed to the Post Office in this form. It goes very wide indeed.

He was right. He went on to query one aspect of what is repeated in the Bill. He said: I understand that binoculars may become very dangerous instruments under this Bill, as at present drafted. If someone should happen to look at traffic lights through binoculars, he may well lay himself open to a £400 fine. If racegoers at Newmarket Heath should level their binoculars at a racehorse, the finishing photograph of the race may also be in trouble with the authorities. Nothing has changed. Indeed, the reply that was given by the then Minister—a most extraordinary reply—was: It would be dangerous to take away an existing practice simply because we are transferring the monopoly from a Department. We must ensure that possible technical developments are caught within the monopoly before they are invented and before they become competitive with the monopoly, for that would be a very embarrassing position."—[Official Report, Standing Committee D, 11 February 1969; c. 691–92, 702.] I am puzzled that, when in Opposition in 1969, we felt that the monopoly should have been in the hands of the Minister. I quote the words of my hon. Friend the Member for Howden (Sir P. Bryan), who led for the Opposition at that time: one cannot foretell how the monopoly will develop, it is almost impossible to describe it. Therefore … since we do not know what nature the monopoly will take as the years go on, we should introduce some flexibility … the easiest way to do that is to put the monopoly in the hands of the Minister. That is not the way in which we appear to be proceeding. That view was repeated then by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), who is now the Minister of State, Foreign and Commonwealth Office. He said, in supporting that view: it is wrong for that monopoly to belong to the Post Office. It should belong to the Minister, or perhaps some agency of the Minister, who can then give it to the Post Office for such purposes and at such times as it requires it."—[Official Report, Standing Committee D; 13 February 1969, c. 746.] That was sound thinking. What advice has my hon. Friend received since which makes him change his mind and after what was our corporate point of view 11 years ago?

We should not be dogmatic. Nor will my hon. Friend the Minister wish to be arbitrary. We simply seek clarification, and we hope that the justification that my hon. Friend will give will be based on a reasonable explanation of what will be practical and effective, what will be in the best interests of users. What is required is that which will not stultify innovation, but will stimulate it. I am delighted to support the Bill.

6.14 pm
Mr. Roger Stott (Westhoughton)

I declare an interest in this debate in that I am a sponsored member of the Post Office Engineering Union and a qualified telecommunications engineer, and prior to my becoming a Member of Parliament I was employed by British Telecom as a telecommunications engineer.

Over the last year and a half, we in this House have witnessed Ministers, and in particular the Secretary of State for Industry, presenting Bills or orders whose prime intention has been to rip off profitable sections of public enterprise. The Secretary of State has never presented a Bill to the House that would privatise those parts of publicly owned organisations that make considerable losses. In addition, he seems to have concentrated more and more power to direct and influence the policies of publicly owned industries into his own hands—a rather paradoxical view when this Government came into office on the premise of less interference in industry.

I suppose that the Secretary of State would argue, with his usual evangelical zeal, that his activities on the industrial front have been in pursuit of the entrepreneurial lift-off that he claims will take place as a consequence of his industrial policies. On the present evidence of his industrial strategy, there has been no sort of entrepreneurial take-off. The Bill is a further example of the Secretary of State's tortured thinking.

I said earlier that the Secretary of State has developed a habit of acquiring extraordinary powers unto himself. One of the more disreputable parts of the Bill is clause 15, under which the Secretary of State seeks to take unto himself unfettered powers to grant licences. As far as I can see, there is no provision for parliamentary scrutiny or debate about the granting of those licences. The Secretary of State can make fundamental changes in the structure of the telecommunications industry without further reference to the House. Some of those changes could be far reaching and difficult to reverse.

One of the unfortunate hallmarks of this Government is their contempt for proper accountability. I suggest that the largest business in Europe is of fundamental concern to this House and that anything that is done to change it, whether by licence or by any other subterfuge, should be discussed in the House and not left to the discretion of the Secretary of State.

My union is strongly opposed to the Bill. It is convinced that the effects of the policies that the Secretary of State intends to implement would be damaging for the customer, particularly for the ordinary residential customer, and damaging also for the British telecommunications manufacturing industry. In addition, we believe that it would be damaging to Britain's future industrial performance. I say to Conservative Members, and particularly to those hon. Members who represent rural areas, that the Bill represents a blow to the quality of service that both the telecommunications and postal networks can provide. Services in rural areas are, by their very nature, unprofitable, and the measures to liberalise the supply of attachments and to open up the use of value added services will cream off the revenues and profits from British Telecommunications. Yet, at the same time, the corporation must keep its massive investment programme, which currently costs £4 million a day. That sort of investment should be increased if we are to have an efficient telecommunications network on the same level as that of cur European partners, who are updating their networks

Crippled as the business is by the Government's short-sighted and destructive policy of cash limits, and further damaged by the losses of revenue that will arise as a result of the Bill, the corporation can only resort to increasing the price to the consumer—the customer. In addition, the improvements in the quality of the service that are still possible will have to be directed at the commercial business end. The cities will obviously pre-empt the large amounts that are required within the service, and as a result tie rural areas are bound to suffer.

The Bill is bad for the British telecommunications manufacturing sector. Who will benefit from the markets that will be opened up for competition? The Post Office currently orders 90 per cent. by value of the supplies it requires from British sources. The remainder comes from abroad only when British manufacturers cannot make it. Such niceties will go by the board when British Telecommunications finds itself competing primarily with foreign firms. Big business in the: United States and Japan is watching what we are doing today with great interest. I have no doubt that some of its representatives will even be listening to me now. They are gearing themselves up to an assault or our market—[Interruption.] The hon. Member for St. Marylebone (Mr. Baker) may find this amusing, but I can assure him that British telecommunications manufacturers do not.

Mr. Kenneth Baker

The hon. Gentleman's whole approach to this matter is immensely defeatist. The opportunity will be thrown open to British telecommunications manufacturers to provide equipment. For the hon. Gentleman to believe that they cannot provide—and quickly—the sort of equipment that the consumer uses is defeatist.

Mr. Stott

I could argue the case as one who was working on that kind of equipment, but time prevents me from doing so, since I know that my hon. Friends wish to take part in the debate.

Foreign telecommunications manufacturers cannot believe their luck that this country's Government, obsessed as they are with doctrinal free market views, are not prepared to back their indigenous telecommunications industry. Perhaps those Conservatives who believe that the Secretary of State's weak assurances that he will seek reciprocal trading opportunities for British manufacturers will provide them with any protection will, if I may take a leaf out of the book of my right hon. Friend the Leader of the Opposition, hold up their hands. We can then marvel at their faith in the right hon. Gentleman's ability to secure those agreements. We on the Labour Benches do not believe that they are possible.

The Bill will damage the broader interests of British industry. Industry relies on an adequate telephone service. That which is currently provided is not good enough. I freely admit so and no one in my union would deny it. However, no one need be surprised that it is not good enough, because for years the British telecommunications industry has been underfinanced. The only way to secure a proper and competitive system is to put in the kind of finance that is obviously required.

In a recent report, the advisory council for applied research and development on information technology made a point that I wish to stress: This country's future trading performance will depend greatly on its ability to compete in world markets for products and services based on information technology". That is right. It is only fair for me to add that the report went on to agree with the Government's proposals, but while I accept much of its analysis I reject its conclusion. The deadly combination of restrictions on investment and measures that will reduce the income and profitability of British Telecommunications will delay the modernisation programme that is so urgently necessary.

I have never in the past 15 or 16 years been an apologist for the Post Office board as it was or the British Telecommunications board as it now is. However, certain statements made in the House about the telecommunications network need to be firmly rebutted, and I am glad of the opportunity provided to me—I suggest that I know what I am talking about—by the debate to put on the record some facts about British Telecommunications.

Its tariff increases this year are the first for over four years. It has met or exceeded the Government's financial target over the past 10 years. It is still meeting the target of an average 5 per cent. annual reduction in real cost per unit of output. Britain has the world's fourth largest public telecommunications system. It has more than doubled in the past decade with virtually no increase in staff.

British Telecommunications plans to increase the system by half as much again by the 1990s. It is responsible for 27 million telephones, 4 million new ones having been installed last year. It handles 55 million telephone calls a day. More than 90 per cent. of United Kingdom telephone users can dial 101 countries—that is, 4 million telephone numbers—which is unmatched anywhere.

I could go on in this direction, but time does not allow me. I merely wish to point out that that is not a bad record of achievement, particularly when the industry has been so long starved of finance. It is a laudable record for the men and women who work in British Telecommunications, most of whom are members of my union.

British Telecommunications employs hundreds of thousands throughout the country. Many of them are second or even third generation employees. Its employees work in town and country, in all weathers, 24 hours a day, 52 weeks of the year. From personal experience, I know that my colleagues are committed to the public service that they render and that they are proud of it. They have invested their lives and skills in an industry that, given the resources, could be as good as any in the world. My colleagues outside in the industry and here in the House view the Bill as both capricious and unnecessary. My right hon. and hon. Friends and I will vote against it.

6.27 pm
Mr. Gerry Neale (Cornwall, North)

Like the hon. Member for Westhoughton (Mr. Stott), I declare an interest, but as a director of Telephone Rentals Limited. I hope that just as I respect his sincerity and his argument, he will respect mine. He seemed to make an extremely good case for British Telecommunications being only too ready to go into competition with any company or individual in the private sector.

I congratulate my right hon. Friend the Secretary of State and my hon. Friend the Minister of State on the months of inquiries and research they have conducted and the research carried out by their advisers. We in the Conservative Party are committed, and have been for a number of years, to reducing the scale of public monopoly and to inhibiting its powers while increasing the degree of private enterprise competition and consumer choice. It is a remarkable feat that after only 18 months we are able to introduce such a significant Bill, and great credit goes to those who have worked so hard to produce it.

I agree that the division of the Post Office into two separate entities is worth while. The retention of the network under some form of statutory control is essential. The fact that we are now moving into an area of greater freedom of choice in the purchase and supply of all forms of attachments and switchboards for the system is good news.

The right hon. Member for Deptford (Mr. Silkin) delivered a lecture on monopoly and the impending collapse of the system if this measure were introduced. Similar arguments were advanced in Canada, the United States, France and Belgium when operations such as this were being considered. If the right hon. Gentleman were to make inquiries in those countries, he would find that former monopoly companies, such as Bell in the United States, have gained greatly from the change.

It is excellent that private manufacturers and suppliers are to be allowed to compete at home and abroad. I take issue with Opposition Members on this aspect. If our manufacturers and suppliers are able to compete at home with products which are marketable abroad by reason of having similar standards, that must greatly improve the employment potential for British companies.

I am pleased to see the relaxation of the stringent standards on attachments and the new regulatory proposals that we intend to bring in.

I am sure that my right hon. Friend has long since realised that it is necessary to delve much deeper than the principles involved in the Bill. It is necessary to go deeply into the technological and practical implications of these proposals. I accept that Second Reading is not the time to indulge in highly technical argument. That will be for detailed analysis in Committee. However, will my hon. Friend the Minister of State reflect again on the proposals for including in the Bill the maintenance of business switchboards and associated line wiring? Manufacturers and suppliers are worried that their freedom of manufacture, supply and sale will be inhibited by their inability to maintain what they supply direct to the consumer.

My right hon. Friend the Secretary of State said that monopoly had stifled the private sector. As mention has been made of the situation in the United States, it should be noted that maintenance by private enterprise suppliers has existed since 1969. The right hon. Member for Deptford asked my right hon. Friend the Secretary of State about maintenance. My right hon. Friend indicated that his reason for retaining maintenance within the monopoly was to preserve the integrity of the network. It is no exaggeraion to say that the frustration of the manufacturers and suppliers is that they cannot find an argument on this matter which bears analysis. Lest my hon. Friend the Minister of State yields to the temptation of giving a broad brush reply, perhaps I can prompt him by advancing questions to which the answers would be most helpful.

It may be the view that we cannot allow the corruption or so-called pollution of the network by improper voltages or power surges going through it. But the privately supplied and maintained PABX systems, as I am sure the hon. Member for Westhoughton will confirm, which have been evaluated and certified against the most rigorous technical standards laid down by the British Standards Institution or other bodies approved by the Secretary of State, fall within the requirements of the Post Office. Under the Bill the same situation would apply. We have fitted to the system attachments which have been approved for all purposes. Indeed, we have a number of approved privately supplied systems fitted to the network. Presumably they meet the standards laid down by the Post Office. Therefore, there does not seem to be any argument in terms of technical pollution.

As has been indicated, it may be that the network should include the first telephone and the switchboard system on a consumer's premises. It may be suggested that, from a technical point of view, it is impossible to separate those parts of the network from the main part of the network operated by the Post Office.

Does my hon. Friend see any sense in the view that the network should be split into a series of different parts? It is a complex arrangement of channel translation, connection and distribution frames. The network is already divided at many points. However, the most important factor is that in all premises into which the Post Office lines enter, before the system reaches the switchboard there is the main distribution frame which is a system similar to fusing. It has to be there to cope with problems such as lightning. It is a clear technological break. Some of my hon. Friends have pointed to similarities with the provision of fittings to the electricity network. It is the same in that sense as having a switchbox, a meter or a break point inside a house before the consumer starts to draw off power.

Mr. McWilliam

I hope that the hon. Gentleman will accept that the analogy between the telephone network and the electricity and gas networks is false. It is illegal to fit anything into the gas or electricity networks. The telephone network is designed for just that. Despite what the hon. Gentleman may say about voltages and surges, with an integrated digital network the possibilities for damage at a point remote from the point where the force signals are generated and the opportunities to trace where the damage started and the time taken are such that the potential for damage is enormous. One of the shortcomings in the Bill is that it does not allow anyone reparation against such damage

Mr. Neale

Even if we go on the system described by the hon. Gentleman, there will have to be a break. I accept that my analogy with the electricity network is not quite apposite, because one is feeding into the system. However, there has to be a break between the network as it enters premises and any attachments fitted. I shall come on to matters such as system X later. I repeat that there is a clear view that this argument, if it is relied on, is not valid.

I turn now to the approach of system X and its introduction in the next decade or so. It is a marvellous system, but it is. dependent on the use of a series of break points throughout the network. There is a strong view that, although it will be capable of carrying and distributing calls to different parts of various; premises, there will still be a need for internally operated switching devices to cope with incoming calls. The industry feels that if it is to supply those attachments, even as an adjunct to system X, it should have the right to maintain them.

Another argument on which reliance may have been placed is that there is a lack of maintenance resources in the private sector. The view may have been advanced that no other organisation can muster the resources to provide the quality of maintenance service to operate PABX or other business systems connecting with the current analogue network or the future digital network. Private industry can muster these resources to provide the quality of maintenance service nationwide not for the maintenance of the whole of the attachment of switchboards but simply for those that it has supplied. It now maintains about 20,000 private PAX and direct speech systems and networks throughout the country. It maintains a further 25,000 related communications systems. Radio paging, radio telephony and data communications are examples. It also installs and commissions 300 large PABX systems a year. This gives a clear indication of the capacity that the private sector possesses.

The right hon. Member for Deptford talked of the possibility of "creaming off' by the private sector. There has also been reference to the rural areas. This is the traditional reaction of a monopoly. The American experience shows that it is not borne out by the facts. The use of the network in the United States has increased and revenue has therefore increased More interesting is the fact that the cost of articles to the consumer in a competitive market has reduced by as much as 7 per cent. If the private sector dealt with the maintenance element of what it supplies, this would have advantages for the consumer.

The most curious argument is that British Telecom, if necessary, will subcontract to private maintenance contractors. This seems an astonishing admission. I ask my hon. Friend the Minister of State to enlarge on the matter. All the technical arguments seem to be thrown out of the window as British Telecom goes on to admit that perhaps it cannot cope. One finds, in fact, that the private sector already spends a considerable time in assisting British Telecom or the telephone side in its work. It amounts to about £1,000 a day and about 200 man hours a month of private industry aid and expertise going to help the Post Office to maintain the private sector. Either there is a technological argument or there is possibly some reason connected with manning which explains why the Post Office wishes to keep this to itself. The industry deserves a clear indication of the basis of the argument.

I should like to mention one example. A company such as Standard Telephones and Cables, which is part of ITT—this is not a company in which I have an interest—makes switchboard equipment for the system. It is permitted to install and maintain PABX 4s in its own premises and now wants to change to a more technical and updated system. The Post Office, however, says that it cannot maintain that system. This is a situation where Standard Telephones and Cables is putting in its own premises equipment that it has manufactured itself and has assisted the Post Office in maintaining it. Now, it faces a situation where it is not permitted to maintain its own equipment in its own premises. That is nonsense.

I wish to draw attention to the problems of joint maintenance. This has been advanced as another reason, or perhaps the reason, for the refusal to countenance maintenance of equipment. The situation in the United States, Canada, France and Belgium is worthy of investigation. If there is a fault on a private system supplied and attached to the network and maintained privately, the company that supplied the equipment is approached by the consumer who is suffering. That company sends someone who not only checks out the equipment but also checks the line through to the exchange. This was made clear by the managing director of British Telecom in a letter in July this year when he said: When faults develop on any installation, whether we have provided it or not, customers will have to tell us first; and no one else will be allowed to test apparatus while it is connected to our lines. If a fault is found on the line in the United States, the company that checked the equipment will call the Post Office or the equivalent, Bell, which will check it. If no break or fault is found on the line, the consumer gets it put right by the supplier of the equipment, who pays for the cost of calling in Bell to check it. The consumer does not get caught either way. The consumer has the situation put right for him for nothing. A joint maintenance system could work just as well in Britain.

There is no technical reason why the company which supplies the switchboard equipment, fits it to the system, services and maintains it and checks it back to the main exchange should not operate in the same way. I hope that my hon. Friend the Minister, at the end of the debate or subsequently, will clarify these points. I can only repeat my congratulations to my right hon. Friend the Secretary of State and the Minister on the work they have done on the Bill. It is a remarkable achievement. It will contribute a great deal to providing a freer market in telecommunications. I am delighted to support it.

6.48 pm
Mr. Alfred Morris (Manchester, Wythenshawe)

This debate provides me with an opportunity that must not be allowed to go by default. My right hon. Friend the Leader of the Opposition has recently written a book entitled "Debts of Honour". I owe a very special debt of honour to the Post Office engineers of this country. That is why I am intervening briefly in the debate.

When my Chronically Sick and Disabled Persons Bill became law in 1970, the Post Office Engineering Union was among the first of the organisations to ask itself how it could help to speed the full implementation of the new Act. Inevitably, its members took a special interest in section 2(l)(h ) of the Act, which provides for certain disabled people to be helped by their local authorities through the installation of a telephone and any special equipment needed for its use. Quite remarkably, as many will think, members of the Post Office Engineering Union decided that they would work without pay to install telephones under the Act.

We hear a great deal today, not least from the Secretary of State for Industry, and have done throughout the decade since the Chronically Sick and Disabled Persons Act became law, about trade unionists grabbing as much as they can for themselves. But how many people know of the humane and compassionate decision of POEU members to work without pay to install a lifeline in the homes of countless thousands of their fellow citizens who are severely disabled? Who in the mass media, whether friend or foe of the trade union movement, has given even a moment's attention to this most striking act of Good Samaritanism? Why is it considered to be so lacking in newsworthiness when people who are often attacked for avarice decide to work, often at weekends, entirely without pay? Is there anyone in the media who is prepared even now to report an initiative that gives the lie to all that we are normally told about the values of contemporary trade unionism?

The Chronically Sick and Disabled Persons Act has led to the installation of well over 100,000 telephones in the homes of severely disabled people. The cost, for taxpayer and ratepayer alike, would have been vastly higher but for the selflessness of so many Post Office engineers in working without pay to help people in special need. Their example is one of man's humanity to man, and I honour them and their union leaders—not least Brian Stanley, Norman Howard and my good and hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding)—for the deeply important lead that they gave. They have helped to bring a new happiness and a new sense of security to many of the most needy people in Britain today.

When the right hon. Gentleman, who was then Secretary of State for Social Services, was first approached about the decision of Post Office engineers to work without pay to install telephones for the disabled, he raised a snag that led to considerable delay in the implementation of the men's decision. He pointed out that if the men were not to be paid for their work in installing telephones under section 2(1)(h ) of the Act they would not, in consequence, be covered for the purposes of the industrial injuries scheme. In the end, the problem was overcome by the strategem of making a token payment of a few pence for each installation that would then be donated to charity. The right hon. Gentleman will no doubt remember our exchanges about the men's generosity at that time. I hope that he will acknowledge it today, if only so as to give at least some balance to his unmerited, increasingly obsessional and tedious attacks on trade unionists and their organisations. It is a very narrow and ignorant view of trade unions to see their members as people who are concerned only with themselves and their immediate colleagues at work.

Let the right hon. Gentleman also reflect on, and acknowledge today, the social responsibility of the very large number of postmen who willingly joined, under Tom Jackson's leadership, in the Good Neighbour Scheme and, in so doing, went far beyond the calls of duty in helping elderly and disabled people on their rounds. I honour them, too, and feel sure that they, like their engineering colleagues, will want to mark next year, the International Year of Disabled People, by doing still more to help the disabled.

My right hon. Friend the Member for Deptford (Mr. Silkin) said that the Secretary of State has become notorious over the years for making no explicit mention in the Bills that he promotes in this House of many of then-most important objectives. It is, as my right hon. Friend said, the custom of the right hon. Gentleman to litter his legislation with enabling powers. The Bill before us is no exception. I hope, however, that there will be a firm assurance today that nothing in the Bill will inhibit those who work in the public service, as engineers and as postmen, from continuing to distinguish themselves by helping others who are less fortunate. Let us also hear Conservative Members, and not only Opposition Members, pay some tribute to the very special merit of those who work in the great public service whose future we are discussing in this debate. They deserve well of the House.

6.54 pm
Mr. John Butcher (Coventry, South-West)

Before I enter into the main aspect of this debate, which has been covered by a number of hon. Members, I should like to take up a few of the remarks of the right hon. Member for Deptford (Mr. Silkin). At the beginning of his speech he indulged in very witty semantics and compared the word "privatise" with the word "piratise". This theme has been emerging in the speeches of a number of Opposition Members.

If the right hon. Gentleman were in the Chamber, I would ask him to consider the use of the word "piratise" in the context of the first Elizabethan age, because the pirates of those days were called privateers. It is no secret that those gentlemen were very successful in breaching a particular monopoly — the monopoly of Spaniards to mine and ship gold from the Caribbean and from South America. In those days, those who behaved in that highly laudable fashion were rewarded with knighthoods and they added to the wealth of our country. I hope to prove later in my remarks that that is precisely what should be happening in the course of the objective before us this evening.

The Post Office has a monopoly. If one were looking for piratical behaviour, surely one would find it in the ability of a particular organisation to extract funds from the public for a service for which there is no competition. It may seem unusual to have to say such a thing, which is presumably a truism, but we must keep reminding ourselves that this is the position of British consumers at present.

In the second part of his remarks, the right hon. Member for Deptford drew across our field the red herring of the creaming off of services in the profitable areas in the big conurbations, perhaps to the detriment of the level of service in the rural areas. Again, I find it somewhat ironic that Opposition Members have suddenly become champions of the rural areas. But I believe that this argument is fundamentally flawed because it goes against two facts or trends.

The first fact can be verified by those who read the Financial Times some two weeks ago and who may have noticed a story which said that an organisation called the British Export Managers Association was complaining very strongly indeed that managers were having great difficulty in obtaining, installing and getting service for the now very sophisticated pieces of equipment required for international communications in order to transfer their legal documentation around the world. Their problems were so immense that a number of them were saying publicly that some of these shipping, exporting and service companies were considering moving their headquarters out of the City of London to places such as Hong Kong and Dubai—in other words, to what we now jokingly call the underdeveloped nations, which seem to be far more capable of installing sophisticated communications equipment without any of the problems which seem to occur in Britain.

The second part of the right hon. Gentleman's argument which is flawed lies in the fact that he fails to understand that the information technology revolution will be the first revolution which frees people from their place of work in the traditional sense. It will be the first industrial revolution which does not depend on the location of raw materials under a particular piece of ground. It is, therefore, freed from geographical inertia. It will be the first revolution which allows both managers and the managed to communicate between themselves at the places where they live, so that the home can also become the workplace.

If it sounds a little futuristic to produce that kind of argument in this debate, I can only point Opposition Members to the literature which is being disseminated by many trade unions—I am reviewing a book on the subject—in which they, too, see this trend. They have an eye for the main chance. They see the profitable implications of the information society for working members of trade unions. The literature is on the record. It is by no means party political in its bias.

When we consider the position of BT, I hope that we shall be aware that an information explosion is taking place in our midst, that it is increasing geometrically and that, if we do not come to terms with it, we shall be left in an industrial backwater.

I could discuss the thoughts of a gentleman named Toffler, an American, who has coined the phrase "the electronic village". I could go on to discuss the electronic home or the electronic office. But these are trends with which we shall have to cope, and I see the sort of activities permissible here as running against current trends either for urbanisation or the concentration of jobs in the big conurbations. Sc we need not necessarily see a creaming off of profits in the urban areas, because work will be disseminated, and it is the telecommunications system which will permit us to do this.

I am afraid that the right hon. Member for Deptford made another mistake, this time in his analysis of the relationship of the public utilities, public expenditure and domestic industries in the United States and France and his comparison of it with our record in the United Kingdom. When my right hon. Friend the Secretary' of State moved the Second Reading of the Bill, he correctly used the word "partnership". If the right hon. Member for Deptford were here, I should say to him that, if he had used this word, he would have been more accurate in his prognostication of the effects of the Bill. I should have referred him to the ACARD report entitled "Research and development: a purchasing policy in the public sector", which asked us to consider the view that there may be too much in-house research and development done in our public utilities and that we could farm out more of this research and development work to the private sector, admittedly working to specifications laid down by the public utilities. Again, I hope that there could be some unanimity in the House that there is a strategy which should be beneficial to all concerned.

Finally, the right hon. Member for Deptford said that no private company would make a profit out of our telecommunications system. The right hon. Gentleman used his usual languid and civilised language, but I am afraid that his words can be interpreted only as a rather shoddy threat aimed at trying to kill this magnificent experiment at birth. Unfortunately, an integral part of the right hon. Gentleman's logic is that there will be a change of Government at the next general election. But, as the newly formed Opposition Front Bench has decided to go in for even more reactionary economics and for more undiluted Marxism, that possibility may be a little more remote.

Mr. Barry Henderson (Fife, East)

Does my hon. Friend agree that that kind of remark made by the right hon. Member for Deptford (Mr. Silkin) could guarantee that the major British computer industry would go to the wall? Its success depends very largely on the ability to have effective communications systems. If it is not to make a profit through the effective use of those systems, what hope is there for a computer industry in this country?

Mr. Butcher

My hon. Friend is right. There has to be some agreement that the freedom of communications, which we all see as desirable, should be maintained and that to go back to a monopoly position when many companies employing tens and hundreds of thousands of people in the electronics industry have made decisions which must of necessity be five, seven and 10-year decisions would be highly irresponsible.

The right hon. Member for Manchester, Wythenshawe (Mr. Morris) made an eloquent defence of the status quo and asked that we should not divide the functions of letter delivery and electronic mail. He asked that we save and retain the system as it is. He argued that the delivery of letters or the delivery of electronic mail via BT was all part of the same function. I am bound to say that this logic was fundamentally flawed. It is as though I were to argue that I could travel from London to Coventry by road, rail or air. The exercise that I should be indulging in is that of travel. But to say that the whole facility should be monopolised by one carrier through all three media is surely not in the interests of the consumer.

If I were to draw any parallel between this Bill and another piece of legislation, I should compare the Bill with the new Transport Act, which has increased competition not just within the various modes of transport but within the road transport function itself. I should have thought that there was a clear comparison here. We all hope sincerely that this Bill will have the same effect in telecommunications.

My right hon. Friend the Secretary of State referred to the huge demand for existing terminals available on the market. I am sure that he is aware that if a British consumer wishes to purchase and install a modern, a Telex or even a simple device such as an Ansafone, he experiences great difficulty and perhaps even anger compared with the ease of such an exercise in other parts of the world. My right hon. Friend was right to refer to the massive demand for Telex facilities. My hon. Friend the Minister of State will know that I have referred to him the issue of the very long waiting list for Telex facilities in a shipping company, where they are required for legal documentation to enable the company to pursue its job. The waiting list is six months in certain parts of the country, where there is no priority system for allocating facilities to those business users who find them essential and where some users or potential users are so fed up with waiting that they are renouncing their need for the service.

There is a massive opportunity here to give benefits to consumers, to the economy generally and especially to British industry and our own software and hardware suppliers.

British software engineers and development engineers are among the best in the world. There is something very British about the skills which they employ in that it is very difficult to "restrictively practise" someone who sits at a desk thinking. It is no surprise, therefore, that a lot of multinational companies, especially American multinationals, have disproportionately large software development teams when they set up their British companies.

The market here is already huge. Within the nextwork system itself, with the devices needed to control and drive the system, in 1979 orders worth £1 billion were placed in the private sector and some £225 million worth of terminals were installed. All this is ready for take-off.

At the centre of it all is BT. I say to Opposition Members that if the Bill is passed in the form in which it has been drafted, there is nothing for members of the Post Office Engineering Union to fear. If they pursue their objectives within their legitimate role in the network, they can share in the additional wealth which should be created by the massive increase in traffic. [Interruption.] While the hon. Member for Newcastle-under-Lyme (Mr. Golding) is waving his finger at me, perhaps I may put it on record that I have spent a day with his POEU colleagues. I have gone down the manholes and up the telegraph poles to see how they work. I respect the difficulty of their job, the unsocial hours that they work and their attitude, to which the right hon. Member for Wythenshawe referred, with regard to some of the charitable work that they do. But they have nothing to fear. It is irresponsible to try to encourage them to think that, somehow, their jobs are at stake or that their living standards or conditions of service are threatened. In fact, there are some opponents of the Bill outside the House who believe that the POEU may be getting slightly too easy a ride in the Bill. If the Government have their Bill somewhere between these views, it may be that they have struck a happy medium.

I have to refer to one very thorny problem. Where does the monopoly end? At the moment, there is a somewhat general definition that it should end at the first telephone. That I take to mean the first telephone at the end of each exchange line. Thus there may be a problem. We have to consider the position of a mainframe computer which has a number of points of entry in an interacting telecommunications system. Is each of these points to be construed as a first telephone?

We have to solve the problem of PABXs. I commend to my hon. Friend the TEMA definition, which I know he has considered in his consultations, as being worthy of further investigation, particularly the proposal to have a network attachment point or socket considered as the first telephone or point of entry to the consumer's premises.

There is some curious evidence which I think should be investigated in the context of some of the very new PABXs which have the facility actually to vet and monitor the network itself. There is evidence that some of these new PABXs are detecting faults in the network, rather than the network itself being corrupted by faults on the PABX. If we are to move to a digital system, we should countenance the possibility of two-way diagnostics. Although there was a challenge earlier on that matter, it should be borne in mind that things are developing rapidly.

There is also a practical argument that we shall have to consider, presumably in Committee. It concerns the logistical and physical problems of having one whole team of POEU engineers who, within that work force, will have to be trained and capable of servicing a wide range of PABX equipment specifications. I fear that we may reach a position where a user who has a fault may telephone the local BT branch and be told "We are sorry, but Harry is on the training course for the Mark V D(3). He has to specialise in four pieces of equipment, and it so happens that he cannot pop round for the next month." That is a real danger. It happens at the moment. If BT personnel are to be responsible for all types of PABXs, there will be an immense management problem, particularly in connection with training.

I endorse my right hon. Friend's remarks about the need for phasing. As I have said before, if I have a concern in this debate, it is to note the interests of the GEC, which is a large employer in Coventry and the lead contractor in the triumvirate which installs system X. It would be helpful if my hon. Friend the Minister of State could indicate the type of phasing which the Government have in mind. Could it be through the products themselves—for example, from telephones to terminal devices through to PABXs? Our domestic manufacturers are afraid that, having worked so far to equipment of a very high specification, as ordained by the old Post Office, if the specification moves downmarket and becomes less sophisticated, they may be left at a great disadvantage.

In those circumstances, bearing in mind that we are constrained by the GATT and EEC agreements, there might be a temporary worsening in our trade balance if the phasing were not handled in the appropriate fashion.

I welcome the magnificent news that my right hon. Friend gave about the £2 billion investment programme for BT. I welcome particularly has further remarks about the ability of BT to raise additional finance outside the market. If I could wave a magic wand this evening, it would be to bring about the allocation of about —30 million to BT to rejig its purchasing programme for system X, which lies it the heart of the system, the whole of which is at the centre of this information revolution.

I welcome the objective and the potential effects and conclusions of the Bill. It will do for telecommunications what the Transport Act is now doing for the road transport industry. It will affect one area of industry which is still projecting immense growth. Any computer company which is not projecting a 15 per cent. increase in income this year is considered to be a stagnant company. The Bill is rightly controversial and, most important, it lies at the very heart of Tory philosophy, representing the honouring of yet another election pledge.

7.1.5 pm

Mr. John Golding (Newcastle-under-Lyme)

I declare my interest as an assistant secretary of the Post Office Engineering Union. My hon. Friend the Member for Westhoughton (Mr. Stott) put the POEU's case very effectively, but I shall add my own views.

The Bill will jeopardise both the job security and the job satisfaction of Post Office engineers. I do not consider that I am irresponsible in putting that point of view. Job security will be threatened because work will go to firms, both foreign and British,. outside British Telecommunications, as a consequence of the Bill. Therefore, work will not be available for British Telecommunications engineers to replace the work that is lost as a result of advancing technology.

I want to emphasise the great disquiet and uncertainty that exists among telecommunications engineers at present because of the possible loss of work resulting from changing technology. When I joined the union 20 years ago. we saw a future that was moving ever upwards in terms of employment and expansion. Now, we have to bear in mind that technical change can itself destroy jobs.

The POEU has constantly looked to the future and told its members "Even if jobs are destroyed in the maintenance of telephone exchanges, even if jobs are lost en the laying or maintenance of cables, additional work will be created in peripheral equipment." The challenge to tie POEU's members from the Bill and the threat to their jabs lies in the fact that that promised work will in all probability go to outside firms, including foreign firms, and will not be available to them.

Mr. Henderson

It is here, I suspect, that there is a possibility of conflict of interest between the hon. Gentleman as an office-bearer of his union and the membership of that union. Is it not true that while the extension of private sector activities in some of the areas which are now a Post Office monopoly might reduce the work carried out by members of the Post Office Engineering Union, there will be no diminution of the kind of work carried out by the kind of person who is a member of the union? Surely, with the enhancement of the number of people competing for the considerable skills of members of that union, those members have an extremely exciting future.

Mr. Golding

There is some truth in that statement that expansion will lead to greater demand for skilled technicians and craftsmen. But the truth does not rest there. The threat is to people in their present occupations. Job security in telecommunications has brought substantial advantages, not only to the staff but to the subscriber and to the service. For example, it has meant that there has been adult recruitment and training. There has been no craft demarcation, and there has been a ready acceptance of technological change. Job security has made possible union initiatives leading to productivity bargaining and a productivity record in British telecommunications which was superior to that of other industries.

In other words, the union has been able to do that which is pressed on other unions as being in the national interest. We have been able to do it because there has been among the membership a feeling that there is job security. If that job security is challenged, we take away the conditions under which we have been able to adopt rational policies over the past 20 years.

Because so many spend their working lives in the Post Office, job security has also led to a great concern for job satisfaction, which itself has been totally in the interests of the public. For more than 20 years the POEU has campaigned for a more efficient service, more efficient in maintenance as well as installation, for the modernisation and growth of the system and the recognition of the social role of telecommunications, I was glad to hear my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) refer to one aspect of that.

That is why the POEU not only supported the Post Office Act 1969, thereby accepting the loss of Civil Service status, but supports the separation of post and telecommunications provided for by the Bill. That is why it has pressed constantly for greater investment and an ending of the present crippling policy of cash limits. I have been pleased to hear hon. Members on both sides of the House ask the Government to change that policy.

It is the desire to have a system of which its members can be proud to serve that has led the POEU to argue strongly for technical innovation—for system X and optical fibres—even when difficult problems have been created for the union as a consequence. For the same reason, the POEU has campaigned for an integrated telecommunications system with the unfettered right to manufacture its own equipment and has pressed hard for improved management, including industrial democracy and freedom from political interference.

The Bill will undoubtedly undermine job satisfaction and will be harmful to customers, because it will increase State interference in the running of British Telecommunications and the Post Office. I could not have imagined that the Secretary of State and the Minister of State would argue for more State interference. The Secretary of State has given himself powers that are far too great.

I do not share the desire of my hon. Friend the Member for Westhoughton for greater parliamentary accountability. It will be important for the management of British Telecommunications and the staff to have as much freedom as possible. We have already seen that managers leave British Telecommunications, praising the staff and their dedication to the service but critical of political interference in their managerial decision-making. Sir William Barlow is a recent example.

The Bill is bound to undermine management's ability to manage. It is bound to lead to pressure on Ministers, however well intentioned, to reflect the Treasury's stop-go policies in their directions to the board of management of British Telecommunications and the Post Office. I very much hope that Conservative Members who serve on the Committee considering the Bill will join us in reducing the power of the State to interfere in the industry.

I think that the Bill will undermine the job satisfaction because it will reduce BT's duty to give a service. That could be harmful in country areas. Under the 1969 Act, the Post Office had the same responsibility throughout the country. Wherever one was, it could be assumed that there was a responsibility on the Post Office to provide a subscriber with, for example, an extension telephone or aid for the disabled. As I read the restrictions on the duties of British Telecommunications, that is no longer so. The responsibility is limited to providing the first handset; there is no responsibility on BT to provide anything else. If equipment or service is unprofitable, nobody outside will provide it. In that sense, we have taken a big step backwards in our attitude to providing service to those who live in outlying areas.

Members of the POEU feel strongly that there will be a loss of job satisfaction when responsibility for the maintenance of some equipment is divided. This will never be satisfactory for the customer or staff. If he could speak in the debate, my right hon. Friend the Member for Wakefield (Mr. Harrison), our Deputy Chief Whip, would tell Conservative members how different is explaining the complexity of systems to customers from making speeches in the House. One of the matters causing the greatest aggravation to Post Office engineers will be rival teams of maintenance engineers declaring that a problem is the other's resonsibility. The "aggro" will often be beyond comprehension, and it will be the customer who suffers.

I have said before that it is always my loss when I call someone to repair my television and I am told "It's the aerial", and then when I call the aerial man he swears that the problem is in the set. That is the dilemma with divided maintenance. It is difficult for the maintenance man to explain to the customer.

Many members of the POEU are also upset about the decision to force British Telecommunications to set up subsidiaries, when its competitors are not forced to do the same thing. Having listened to the Secretary of State, I am not certain whether the Government will allow cross-subsidisation. Perhaps the Minister of State will tell us.

The POEU will be very unhappy about the suggestion that we can get round artificial public sector borrowing requirement constraints by creating joint subsidiaries in which BT has a minority interest. That is an artificial device to avoid some technical restrictions.

There will also be great dissatisfaction because of the creaming off of revenue, particularly on the use of leased lines. That revenue is needed to develop the network. The thought of competitive networks horrifies me. Nobody involved in transport is thinking of a duplication of railway lines. The railway lines have been rationalised. Nobody is thinking of introducing further toll-gates because the system is rationalised. We cannot afford a creaming off of revenue.

The Bill is an irrelevance to the needs of telecommunications. The overriding priority is to modernise and expand the network, not to attach new equipment to the system. The Government propose to concentrate on increasing equipment fitted to the network at the expense of the network itself. We believe strongly that that network will be damaged severely. It is important that we do not allow the Government to destroy telecommunications as they are destroying so many of our basic industries. We must vote against the Bill and give it careful scrutiny in Committee.

7.31 pm
Mr. Barry Henderson (Fife, East)

The hon. Member for Newcastle-under-Lyme (Mr. Golding) was disappointing in his conclusion. He did something which I did not expect him to do. He might have talked me out of supporting the Government on the proposition that the Post Office should be responsible for the maintenance of PABXs whether it supplies them or not. His argument provides me with a considerable reason to reconsider supporting the Government in that respect. The simple way to solve the argument is to say that whoever supplies the equipment should maintain it. That should be the end of the story. To that extent, I must think further about many of the hon. Gentleman's arguments. I was going to apologise to the right hon. Member for Deptford (Mr. Silkin) for not hearing his speech, but as he is not present to hear mine I shall not.

I have spent most of my working life in the computer and related industries. That gives me an interest in communication systems. To prove that I am unbiased, I declare an interest in that nearly 20 years ago I worked for a company which was responsible for supplying several hundred thousand pounds worth of kit to the British Post Office and to Cable and Wireless Ltd.

I welcome the Bill. The right hon. Member for Manchester, Wythenshawe (Mr. Morris) asked Government Members to pay a tribute to Post Office staff. I take up that invitation. For an organisation of its size and with the hundreds of thousands of people who work for it, it contains much that is admirable. I admire the vast numbers of people who work for the service, not least those who come directly in contact with the customers, whether they are postmen on the beat, telephone operators or the men who go out in bad weather maintaining the lines. I pay tribute to such people, although I have criticisms to offer on certain matters.

The split of this mammoth corporation which employs more than 420,000 people must be right and is long overdue in view of the developments in the two aspects of the business. We have worries about the decline of the postal service but a hope of great opportunities from technical revolution in telecommunications.

In 1979, over 6,000 more people handled 817 million fewer items of mail than five years previously. The crunch came last summer, when the system nearly collapsed and the London letter service was referred to the Monopolies and Mergers Commission.

In my right hon. Friend's recent statement we were glad to hear that in the last year the service has improved again. However, productivity is still low by any criterion, historically or internationally. The postal service will remain a big and important business. The improvements in the service and the control of its 175,000 employees should have the undivided attentions of a board responsible for that service.

An industrial dispute has occurred recently in telecommunications. Nearly 250,000 people are employed in the telecommunications business. The damage to the Post Office and the telecommunications business by that industrial dispute will be a long-standing disadvantage to the service and to the subscriber. It certainly cost the taxpayer dear, although it was little noticed by the public and involved only a small proportion of employees.

More important for the future is the explosion of innovations in telecommunications technology. It has started a revolution in the operation of the service and offers immense scope for expansion by the industry in both the public and private sectors.

That brings me to the parts of the Bill which have produced the liveliest controversy. Where should the boundary be drawn between the spheres which legitimately should form part of the monopoly and those which are better open to injection of private capital with the stimulus of free competition?

Opposition Members have a blind doctrinaire belief in the benefits of state monopoly. That belief is held in the face of facts and almost all experience. Some hon. Members have the mistaken belief that the reduction of the monopoly will affect employees adversely. I do not believe that that is so.

The Secretary of State said that monopoly was a privilege that must be earned. Many parts of both services should be based on a monopoly. The justification for that is that a decent service must be provided throughout the land on an equality of prices basis. I shall not take lessons from Opposition Members who talk about the interests of rural areas. Rural areas will be well served by the retention of most of the exclusive privileges, traditional in the old Post Office and now in the two corporations, which are retained by the Hill. Some of my hon. Friends are deeply concerned about the interests of the consumer. They feel that the interests of customers and employees will be best served by giving free rein to the force and energy of competitive enterprise in a free market formed by consumer needs and demands. I take my stance somewhere between both those views.

In its overall emphasis, the Bill has the right balance between the conflicting viewpoiints—not only because the Government have been moderate in seeking the broadest compromise but because rational evaluation of the facts will, more often than not, lead an objective observer to the conclusions that have been reached in the Bill. That is especially true of the lines drawn for the postal business as foreshadowed by my right hon. Friend the Secretary of State for Industry in his statement: in July.

Within the general lines proposed in the Bill for telecommunications there are points at which the Government may have been unduly cautious or, perhaps, over-influenced by technical arguments advanced by British Telecommunications. I hope that some of the arguments will be thoroughly scrutinised in Committee and that the point of balance of some specific decisions will be shifted, taking account of the best technical advice available.

Mr. Leslie Spriggs (St. Helens)

The hon. Gentleman referred to the town and city centre work and to the rural areas. If the Bill divides the business of the Post Office, who will handle the city and heavy conurbation centre work and who will handle the rural areas? Two different areas are involved. It will cost a great deal of money to deliver postal communications in rural areas. It will be cheaper in the city centres. Who will handle those areas?

Mr. Henderson

The hon. Gentleman has revealed one of the great problems in dealing with the arguments surrounding the Bill. I do not believe that the Bill proposes anything remotely like the hypothesis put forward by the hon. Gentleman. It has nothing to do with the Bill. It may be a scare and an anxiety for the future, but it has nothing to do with what is in the Bill. In the past, the gentlemanly and slow-moving paternalism of the Post Office has stifled much of the development of crucial sectors of the telecommunications and computer industries. There is a need for enormous investment in the industry and in what will be the telecommunications service.

Mr. Me William

That point cannot go unchallenged. Twenty months ago I was working in a telecommunications planning office. The waiting list for a simple relay set from private industry was at least two years. It could not supply it. Where will the drive come from—private industry, which cannot supply it, or the Post Office, which is desperate to put in the lines? That is true about almost every sphere of Post Office activity today.

Mr. Henderson

The supply position would have been easier today if we had not had the recent disruptions in the Post Office supplies department.

I wish to return to an important point about which the Opposition share my concern, namely, the hunger for capital that will be created by British Telecommunications if it is to develop the central network service that we want to see over the next decade or two. That hunger for capital will be beyond what can reasonably be expected to be provided by the taxpayer and by public sector borrowing. It will be greatly aided if those sections that are not an essential part of the network are encouraged by the injection of private sector capital.

While British Telecommunications should have the right, as the Bill allows, to engage in all sons of enterprises, it would be well advised to limit its enthusiasm for enterprises outside the new network or for enterprises that will directly increase the business of the network. I refer specifically to the part of the network for which it alone can have responsibility. If British Telecommunications has ambitions to expand beyond the basic task, it could lose the opportunity within the key task, which only it can perform, of becoming the biggest business in the country, without touching peripheral areas. The basic task will consume thousands of millions of pounds of capital investment, paid for by the customers and the taxpayers. Unless it can prove that it will positively enhance the use of its service, British Telecommunications does not have the right to use capital for inessential services.

My right hon. Friend referred to partnership and cooperation between British Telecommunications and the private sector. The Bill does not make it clear where that co-operation will come from. Clause 4 refers to company subsidiaries, but my recollection is that that refers only to wholly owned subsidiaries and not to participative or sharing subsidiaries. Unless the sort of sharing envisaged by my right hon. Friend is dealt with under the general terms of power to do almost anything that is included in the Bill—which may be too general—I wonder what will control the growth of sharing, participative arrangements. In many cases that might be an excellent thing, but it might give rise to concern in other companies if the Post Office had a deal with one company.

One of the great achievements of the Post Office is the establishment of the Prestel service. Without doubt, it is an immensely important development for the future of telecommunications. The Post Office should think seriously of cashing in on the benefits of that service by selling either the service or the technology to others—not because it is profitable but because it will consume capital if it is to be developed as rapidly as we wish to see happen. In the using and the development of the service it will enhance the use and development of the network itself, which is where the responsibility of British Telecommunications primarily lies.

Mr. Gregor Mackenzie (Rutherglen)

I am intrigued. As I understand it, for many years the Post Office, with others, has spent a great deal of money developing the Prestel service. The service is about to make money for the Post Office, which it can use to expand and develop its service. Is the hon. Gentleman seriously suggesting that the Post Office, having done all that work, should simply sell it off so that someone else can have the benefit of that work?

Mr. Henderson

Yes, I am seriously suggesting that the Post Office should do that, and at a substantial profit. I am not suggesting that it should not make a profit through selling the service. It would be sensible for the Post Office seriously to consider that suggestion. The time, effort and money used in the development of the service should achieve profit. It might also make it easier for my constituents to obtain a basic telephone service now. Let us not forget that 12 million out of 17 million customers of telecommunications are domestic consumers. I am horrified at the number of people who write to me each month saying that they cannot obtain a basic, fundamental service in their homes. The queue is lengthening rather than shortening. The Bill has not had any effect on the existing supply of telephones to consumers. That applies in my constituency as far as I am aware. There is a shortage of capital to meet the requirements of the development of the service to the extent that the public want that service. Considerable attention should be paid to that.

I mention briefly three areas in which I think that the influence of British Telecommunications might be kept under close review by my right hon. and hon. Friends. Much mention has been made of the way in which coin boxes have been vandalised. The Post Office is always telling us that it is an uneconomic service. Has it ever thought of inquiring whether anyone would run a franchise arrangement for coin boxes in housing schemes or elsewhere?

What is the "first telephone"? How is it defined? It is not in the Bill but it has been referred to as the measure of where there will be the distinction between the end of the Post Office monopoly and the beginning of the opportunity for a private service. It is an especially unfortunate way of referring to the boundary when it is not included in the Bill. Indeed, a telecommunications service can often be provided without the need for a telephone.

British Telecommunications says that satellite operations are uneconomic. I hope that it will not allow my right hon. Friend to stop others who take a different view about the economics of those operations from advancing in that technology if they wish to do so. I hope also that my right hon. Friend will ensure that the test for attachment to the network must not be whether British Telecommunications happens to think that it would be a good thing or whether it would work well. I hope that the criterion will be whether such attachment would damage the network or another user.

Lastly, I agree with the Government that British Telecommunications should be allowed to compete on fair terms outside the monopoly. However, I question whether it should be encouraged to do so in a period in which demands for new capital will exceed the ability to raise it without an unacceptable strain on the public sector borrowing requirement.

7.53 pm
Mr. Ken Weetch (Ipswich)

I wish to make only a brief intervention. I want to focus attention on one aspect of the Bill, namely, the powers of the Secretary of State within the framework of its provisions, particularly because many of my constituents work in the Post Office research centre at Martlesham. On their behalf I raise some questions, voice some misgivings and ask for certain assurances.

The main purpose of the Bill is to estabish a new public corporation with responsibilities for data processing and telecommunications. That is a principle with which I would not quarrel. The creation of a separate corporation with the responsibilities that are described in the Bill makes good sense.

I take the opportunity to underline the argument of my right hon. Friend the Member for Deptford (Mr. Silkin) and my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) that the telecommunications network is the central nervous system of the economy. Its health or otherwise will have a crucial effect on the course of Britain's industrial recovery. It is not too much to say that the quality of our telecommunications system will be a basic factor in the competitive performance of Britain as against other industrial economies.

It goes without saying that two factors follow from that. Of first importance is the fact that we need a stable and substantial investment programme to finance a growing volume of technical research. In the second place, the new corporation will need freedom from arbitrary and politically motivated interference from the Secretary of State. Those two factors are interconnected and I put them both in the context of my constituents who work in the Martlesham research centre, which deservedly enjoys a high national and international reputation.

The centre has developed considerable technical research in diverse areas. If system X succeeds in making any impact in foreign markets for British Telecommunications' equipment, much of that success will be due to the research that many of my constituents have participated in at Martlesham. I do not want any of these achievements to be lost by possible arbitrary political tinkering through the excessive powers of the Secretary of State that are enshrined in the Bill.

I am concerned about clause 6, and especially subsection (8), which sets out the powers of the Secretary of State. I am anxious about its possible effect on technical research. The subsection provides: The Corporation shall settle from time to time, after consultation with the Secretary of State, a general programme of technological research into matters affecting the services provided by it or its wholly owned subsidiaries and other matters affecting its or their functions, and of development connected with such matters, and shall secure the carrying out of any programme so settled. I should like to know why the provision for consultation on the corporation's research and development programme has been included. The Secretary of State and his advisers have no expertise in these matters. Clause 6 provides a dangerous opportunity for irresponsible meddling in areas that involve technical matters about which the right hon. Gentleman and his advisers know nothing.

In past years, investment in industrial research and development in Great Britain has been far too restricted. That is one basic reason for our poor industrial performance. It is evident that often the research has been too little directed to the commercial realities of this world. The research centre at Martlesham cannot be accused of that. Its research has been of real practical commercial value. It has taken place often in conjunction with the main industrial firms in the sector.

The Under-Secretary of State for Industry (Mr. Michael Marshall)

I think that the hon. Gentleman's argument is entirely valid. I add my voice to those who praise the technical researches at Martlesham, in his constituency. He has rightly said that in exploiting some of that research and development access has been used to the major commercial companies in the sector. He cited system X. Does he agree that that is a good example of the mix of public and private enterprise that has encouraged further development along the limes set out in the Bill?

Mr. Weetch

Yes, I accept that. I was not speaking against co-operation between the public and private sectors. In many areas they can mix, to the benefit of both. I am voicing my misgivings about possible political interference with the proper functions of management in the new telecommunications corporation. I accept the Minister's comment.

I seek some assurances from the Minister. First, I ask that there will be no political tinkering with the investment that is needed for essential and provenly successful technical research such as that which takes place at Martlesham. Secondly, I want an assurance that there will be no restriction of management initiative in the research aid development programme. To that end, will the Secretary of State seriously reconsider the whole of Clause 6 and the related provisions? I make these points in the interests of keeping Britain ahead in information technology.

8 pm

Mr. Gary Waller (Brighouse and Spenborough)

Among all the uncertainties that face British industry, it can be claimed with some confidence that one industry can only expand—the information industry. It has been said chit the amount of recorded knowledge in the world doubles every decade. We can be sure that people will not only want to share that knowledge with one another but will seek speedier, cheaper and more efficient means of communication.

The Bill is to be welcomed. It is a timely and appropriate response to a changing situation. It could be argued that posts and telephones should always have been kept apart. However, the technological developments of the past few years and those in the pipeline make the differences between the two even greater, necessitating different skills and approaches to the needs of the public.

The bread and butter of British Telecom will for some time remain the basic telephone service. However, as it approaches saturation in the number of subscribers served, in order to grow it must aim to increase the use made by those subscribers of its services. It must develop and expand new services.

It is absolute nonsense for the hon. Member for Newcastle-under-Lyme (Mr. Golding) to suggest that the development of new equipment that can be linked to the line is of subsidiary importance. It does not take a genius to forecast that considerations of cost are bound to make business users turn increasingly in the next few years to electronic mail and developments of Prestel. However, as economies of scale start to operate, the real cost of postal communications will become relatively cheaper, eventually bringing those services within the reach of many, and eventually perhaps all, domestic users.

The logic of those developments is, as so often is the case, easier to foresee than the time scale over which they will occur. However, I tentatively suggest that the coming decade will see a vast switch to electronic mail in commerce and industry. Perhaps the 1990s will be marked by similar developments in the domestic sector.

What, then, are the implications for the postal side? Eventually, existing economies of scale will be lost, turning the screw particularly on the non-business user, who will not be able to switch so quickly to the alternatives, despite rises in the cost of mail, Those increases will result from various causes, such as the fact that, despite scope for some mechanisation, posts must always be relatively labour intensive and the rising cost of transport as oil and energy prices increase, as well as the lost economies of scale to which I have referred.

The challenges will be very different from those faced by British Telecom. Given sufficient investment, British Telecom has almost unlimited scope for developing its business—and that includes exports. I am, however, a little concerned about the degree of control that clause 6 imparts to any future Secretary of State. Subsection (1) provides: The Corporation shall give effect to any direction given to it by the Secretary of State under the provisions of this Part and shall secure, so far as appropriate"— I am not sure what that means— that each of its wholly owned subsidiaries also give effect to any such direction. My anxiety comes about partly as a result of the present direction that investment in new technology, including electronic exchanges and system X equipment to replace the old Strowger electro-mechanical exchanges, must come from current income rather than borrowing in the market, desite the fact that, with British Telecom's plans and prospects, potential lenders will abound. If we say that we want British Telecom to operate on businesslike lines, we should allow it to do what any business would do in the circumstances.

I understand the argument that with a publicly owned monopoly—and in many respects British Telecom will remain a monopoly, despite the introduction of competition into certain aspects of its business—it is necessary for the Government to fulfil the controlling functions that a banker would fulfil in the private sector. However, that only makes it more important for the Government to discriminate between those public users of capital that only consume resources and those, like British Telecom, that have the potential to be very profitable by adopting equipment, such as system X, that is far more reliable and offers far more benefits to the user than the existing equivalents.

The need to conquer inflation encompasses the necessity to control the public sector borrowing requirement, but I hope that the Government will discriminate more in favour of successful — and potentially even more successful — investments. That apart, it is surely not fair that existing subscribers should have to pay much higher telephone bills so that future users might benefit.

I am also concerned that with the vast changes taking place in telecommunications there is no guarantee of continuity. Policy may be changed at the whim of any future Secretary of State. The Bill would be improved if it had built into it the requirement for the Secretary of State to submit his proposals for scrutiny by Parliament.

The pension fund is dealt with in clauses 29 and 30. The question whether the existing Post Office pension fund is to be split is left open for future decision. As everyone knows, that fund is the largest pension fund. It may be considered that greater flexibility will result if it is split. However, against that we have to balance the fact that the fund is in the top quartile of pension funds in its performance over the past few years. Because of its leading position, it is often offered particularly favourable investment opportunities. At any rate, it will be natural for employees of British Telecom and the Post Office to seek assurances about the future of the fund. I hope that they will be given them.

Conservatives believe in competition and deplore monopolies. The spur of competition provides an invaluable element which is often missing in nationalised industries. We welcome the opportunities for competition provided in the Bill. Several of my hon. Friends have said that the Bill does not go quite far enough. However, it is quite wrong to go from that position, as I am afraid that some do, to snipe continually at those who work in the public sector. I have met many in my constituency and elsewhere who work in the postal and telecommunications businesses. I find them to be as loyal and dedicated and to take just as much pride in the quality of their work as anyone. Most of them will welcome the opportunity to compete in the market place and will consider that they have nothing to be afraid of.

There is always room for improvement, but it is demoralising that some people always complain about occasional failures and never compliment those responsible for the things that go right. The Bill has the potential to enable more things to go right. I therefore wholeheartedly welcome it.

8.7 pm

Mr. Harry Ewing (Stirling, Falkirk and Grangemouth)

The hon. Member for Brighouse and Spenborough (Mr. Waller) must forgive me if I do not follow him in detail. I agree with him about the compliments that should be paid to workers in the Post Office postal and telecommunications services. It is far too easy to bounce cheap headlines off public servants, particularly those in the Post Office, as has been done in recent years. Nothing is more designed to undermine their morale.

I am a Member of Parliament sponsored by the Union of Communication Workers. I had the great misfortune to come back from my meal relief, as we used to say in the Post Office, and listen to the hon. Member for Fife, East (Mr. Henderson), whose memory has failed him badly tonight or whose research is not as good as hitherto. He said that he would take no lectures from Labour Members on services in rural areas. He must have forgotten that for seven years before I came to the House I was a rural postman in East Fife, before he came near the constituency.

Mr. Henderson

I certainly have not forgotten it, and I am sure that I would not be alone in East Fife in believing that the hon. Gentleman was an extremely good postman. Perhaps he was an even better postman than a Member of Parliament.

Mr. Ewing

The hon. Member for Fife, East would be alone in East Fife in thinking that I am not a very good Member of Parliament. If the hon. Member thinks for a minute that his constituents who live in the New Gelson area, the Montrave area or the area which surrounds the farms and farm cottages at Pilmuir or Blindwells will in years to come receive the same kind of postal service as they have received down the years, he is due for a very sad and bitter disappointment. When constituents from those areas, write letters of complaint to the hon. Member, I hope that he will reply by saying that he supported the Bill. If any areas are bound to suffer under the Bill, it is the rural areas, which in general are represented, I concede, by Conservative Members.

Tonight we have seen the continuation of the syndrome that was started years ago by the Secretary of State for Industry. I well remember the right hon. Gentleman, who was then Secretary of State for Social Services, coming to the Dispatch Box in 1972 and displaying the same confidence that he had got it all right when he introduced the massive reorganisation of the Health Service. After about seven years had elapsed, his right hon. Friend the present Secretary of State for Social Services was able, prior to the last election, to stump the country and to gain votes at the expense of the bad structure of the Health Service that his right hon. Friend had created. If the people of Great Britain have a capacity for anything, it is a capacity to forget who are the guilty people. The present Secretary of State for Social Services was able to play on the fact that not many people in the country remembered that it was the present Secretary of State for Industry who reorganised the Health Service in such a disastrous way.

In seven or eight years' time, when the Labour Government are getting ready to go to the country for a second time, I can foresee the hon. Member for Fife, East, who by that time will no doubt be Shadow Secretary of State for Industry—surely he will get some reward for his loyalty—going round the country talking about the bad Post Office services, hoping against hope that everyone has forgotten that on 2 December 1980 his right hon. Friend the Secretary of State for Industry introduced this bad reconstruction.

I share many of the reservations that have been expressed from the Labour Benches, and I wish to make only one comment about British Telecom. One of the things which have incensed me about British Telecom in recent weeks is the way in which it has increased the land line rental of our hospital broadcasting services throughout the country from £1,000 to £5,000 a year. There is no doubt that the hospital broadcasting services will die a death as a result of that decision because they will be unable to raise the revenue necessary to meet such a land line rental cost. I hope that British Telecom will have a greater degree of compassion than the present telecommunications section of the Post: Office which is about to disappear.

I turn now to part II of the Bill, which deals primarily with the postal side of the business. Here, the purpose of the Bill is to give the Secretary of State for Industry powers to break the postal monopoly if he so desires. In certain ways and to a certain extent the postal monopoly has already been broken. The Secretary of State for Industry seems to take the view that the only people that a monopoly benefits are the company or the industry which, according to the Secretary of State, enjoys the monopoly, but very often monopolies are just as much in the interests of the customer., of the consumer, as they are in the interests of the industry concerned.

This was never truer than in the case of the Post Office. My right hon. Friend the Member for Deptford (Mr. Silkin) cited what happened in 1971. I went through that strike. It began on 20 January 1971 and went on for nine weeks. We in the then Union of Post Office Workers had great difficulty in persuading our people to come out on strike; I openly admit that But we had even greater difficulty in persuading them to go back after they had seen how they were insulted by the right hon. Member for Sidcup (Mr. Heath), when he was Prime Minister, and by Christopher Chataway, who was the Minister responsible for the Post Office.

At that time a private enterprise system of delivering letters was developed in this country, but no letters were delivered. The people operating the system charged astronomical rates for their services, but eventually, after the strike was over, they posted every letter through the Post Office system, so that postmen were delivering letters for which people had been charged 15 shillings or 75p. I forecast that that will happen again. If the monopoly is relaxed in the way in which the Secretary of State for Industry intends to relax it, some companies will attempt to abuse the system by accepting mail and feeding it through the Post Office system. It will be interesting to see whether the Secretary of State tells the new postal board that if that happens any letter that is stamped by a private company will in no circumstances be handled by the Post Office. It will be easy to identify such letters.

Much has been said about the efficiency of the Post Office. As my right hon. Friend the Member for Manchester, Openshaw (Mr. Morris) said, all the main letter and parcel sorting offices are now mechanised, and the efficiency of those offices depends to a great extent, as computers do, on the information that is fed into the n mechanised letter-sorting machine. It is common knowledge that if an envelope with the wrong postal code is fed into the machine, the machine rejects the letter and it then has to be sorted by hand.

I have a very interesting example in that connection. Almost every day I get letters from the Scottish Office. They are addressed to me at the House of Commons with the wrong postal code on the envelope. The postal code given on the envelope is "House of Commons, London SW1A 2AU" whereas the correct postal code for the House of Commons is "SW1A 0AA". The postal code on those letters is the postal code for the Scottish Office at Dover House in Whitehall. A Minister criticises the efficiency of the Post Office, yet a Government Depertment, the Scottish Office, is sending out letters every day of the week with the wrong postal code on the envelope. How on earth can a highly mechanised service such as the Post Office be efficient when all these letters are fed in and rejected and have to be dealt with by hand?

Much of the criticism levelled at postal workers is misdirected. It ought not to be levelled at postal workers. Much of the delay, in the case of the small percentage of letters not delivered on time, has nothing to do with the postal workers. It often has more to do with the customer.

If I can enter one complaint on behalf of postal workers, it is against all those business organisations which have their own franking machines and which get an office girl to spend about three hours a day in running about 5,000 envelopes through the machine, all postmarked, for example, 2 December. But nothing goes into those envelopes until about 20 December. Then, lo and behold, there are complaints from people. The hospitals used to be the most guilty in this respect. Appointment cards were run through in their thousands and not sent out for another five or six days. As a result, those who receive them complain "This was posted on 2 December and I have only now received it." Such correspondence does not go through the Post Office franking machines.

Business itself—this great, efficient private enterprise about which we hear so much—also has a lot to answer for with regard to late deliveries. About 8 per cent. of the total volume of mail that is handled by the Post Office arrives late. If an analysis were carried out on that 8 per cent., I believe that the two factors to which I have referred would be responsible, namely, wrong postal codes, as happens in the Scottish Office, and the use of franking machines with which young girls frank thousands of envelopes which are not used for another three or four weeks. Naturally, the customer complains because he thinks that the envelope has on it a Post Office postmark and time, whereas it has been franked by private business.

Much of the critism against the efficiency of the Post Office has nothing to do with the postal worker, but it has a great deal to do with the bulk customer in the form of private business.

As my right hon. Friend the Member for Deptford said, the postman or postwoman lends himself or herself to a greater increase in productivity than any other worker in this country. My right hon. Friend put his finger on the point when he said that it is just as easy to deliver 10 letters to an address as it is to deliver one. All the door-to-door delivery services in Great Britain are dying a death. The milk delivery service diminishes almost weekly, and the newspaper delivery service diminishes almost daily. All the other door-to-door services are dying. But the one door-to-door service that is being retained and maintained is the service provided by the Post Office. Conservative Members and those of my hon. Friends who are guilty of criticising the Post Office should appreciate that this is the finest door-to-door service in the world.

The Secretary of State made a comparison with the United States, but the United States letter-carrying service has no obligation to make a door-to-door delivery and it does not do so. The people of the United States post many more items per head of population than do the people of the United Kingdom. If the people of the United Kingdom, pro rata, posted the same number of items as are posted in the United States, the productivity of our postal workers would increase by leaps and bounds.

It is appropriate that we should be holding this debate at the beginning of December. I can imagine Conservative Members queueing up at post offices at Christmas and saying "Well, lads, you are a great bunch of chaps, you have done a marvellous job, but if we can do so we shall take your job from you." I hope that they remember to tell the postmen that when they go into their post offices this coming Christmas.

My worry is for the future of the service. There is no doubt that what is contained in the Bill is the beginning of an attack on the postal service. I still retain my interest with the people who were instrumental in helping me to become a Member of this House. For my part, I shall resist that attack with every ounce of my energy, and I shall be delighted to join my right hon. and hon. Friends in the Lobby tonight.

8.23 pm
Mr. Mark Lennox-Boyd (Morecambe and Lonsdale)

I am delighted to be called in the debate and happy to follow the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing). I should like to make several brief comments about his contribution. I do not wish to speak at length about the postal side of the Post Office or about that aspect in the Bill. Indeed, I defer to the hon. Gentleman's experience in this regard. It is something about which he clearly knows a lot.

However, the hon. Gentleman said one thing to which I took exception. He said that monopolies were often in the interests of the customer. As a general proposition, I do not think that I could support that. But I have some sympathy with the hon. Gentleman's argument that there are many occasions when employees in the postal service are accused of malpractice when it is not their fault. Those words are true, and I am sure that the House took note of them. However, we must recognise that the postal service is not as good as it used to be. I do not seek to pass judgment on why that has happened, but undoubtedly that fact, about which I am sure there would be common agreement, is part of the history which has prompted the introduction of legislation of this kind.

I am happy to support the Bill, even though I am called at that stage in the evening when all the good points have already been made and there is very little to be said. I notice that the Whips may want me to speak longer than I intend to do as only a few hon. Members remain to be called, but I shall not do so or delay the House any longer than necessary.

There has not been much time for the telecommunications industry to present its undoubtedly strong feelings about the Bill, as the time between publication and this debate has been comparatively short. Perhaps that is a good thing, because it means that we must try to frame our own arguments and read the Bill as much as we can. I have read the Bill, and I fear that much of it has not completely penetrated the depths of my mind with total comprehension. However, my confusion over some of the small print is more than exceeded by my admiration for the immense hard work which must have gone into the preparation of this legislation by my right hon. and hon. Friends.

I wish to confine my remarks to the telephone monopoly and how it is to be reduced in some measure. I accept entirely—I believe that it is common ground among all my colleagues—the need for standards and licensing in respect of any equipment that is to be available from the private sector, as well as the installation and maintenance of the first telephone in any household.

I should like to pursue the problem of maintenance a little further and invite my hon. Friend the Minister of State to deal with one or two aspects of it. I approach it on the basis of asking some questions. This is an area about which I do not claim to have any particular expert knowledge, although I have been briefed on the subject. Either this evening or on a future occasion, my hon. Friend should justify fully the Government's decision about the maintenance of the PABX systems and so on. As I see it, the public will be surprised to discover that the first telephone will be maintained by British Telecom as well as the wiring for the extension telephone within the household.

As I understand, although it has not been expressly stated, any private household exchange system will be maintained by British Telecommunications. My hon. Friend nods assent. I imagine that a private household exchange would come under the category of a PABX system, and, of course, any PABX system is to be maintained and serviced by British Telecommunications. As my hon. Friend will appreciate—I know I am stating the obvious, but it is important to point it out—that means that every telephone in this country that is used by a member of the public for an ordinary domestic telephone call or for an ordinary business telephone call will be subject to the power of British Telecommunications to control and, in many cases, to maintain it, and in all cases to control the maintenance by a form of sub-contracting.

That is not what the public would have expected of legislation of this sort, and, therefore, it calls for the clearest possible justification. The argument that was put forward by my right hon. Friend the Secretary of State and other hon. Members is based upon the wonderful words "the integrity of the telephone network". That is a magnificent phrase, but what does it mean? I suggest that it is a sort of phrase of science in the subject, which suggests greater meaning behind it than it has. It means that there must be no method of causing damage to the network. However, I find it confusing that private enterprise will be able to install the PABX system in the first place, although it will not be able to maintain it thereafter. I genuinely invite my hon. Friend to consider how it is possible for private enterprise to install the machine in the first place without damaging the system if there is any reasonable fear that on future occasions it will cause damage. That is a real objection.

I also invite my hon. Friend to indicate the comparisons between the system that he proposes in this legislation and the systems that pertain in other countries. We have heard a certain amount about the system in the United States, but we have not heard anything about other countries in Europe. I have obtained some information about that. In the Netherlands, the whole of the telephone network is a state monopoly along the lines of the system that we currently have in the United Kingdom. In Germany, Denmark and Eire there is a degree of delegation from the State monopoly in respect of house exchange systems and PAXB systems for their maintenance and mending, but only to authorised sub-contractors, which, as I understand it, can take place under this legislation. But, in the case of Belgium, France, Italy and Luxembourg—I draw my hon. Friend's attention in particular to those countries—it appears that the maintenance of both household exchange systems and PABX systems may be carried out by any licensed private contractor who is able to satisfy the conditions necessary for him to be licensed. That is substantially true, with a small exception in the case of Belgium for some household exchange systems and in the case of Italy for the supply and installation of some PABX systems.

If that is the case, will my hon. Friend explain the position on "the integrity of the telephone network"? Do other countries accept lower standards, or is it that the question of "the integrity of the telephone network" is something, of a red herring? My hon. Friend will forgive me if I suggest that, from the information I have obtained, that is probably the case. But we are trying to gloss an argument of a different sort. I would be fully prepared to face up to it, arid in some circumstances I would be able to agree with it. But it is important to understand the argument. It is about the retention of the monopoly and the desire not to cause more antagonism to the powers that be in this area than is necessary and, as was mentioned by Labour Members, a desire not to affect unduly the morale of the staff who are responsible for maintenance. If it is that, I should he prepared to consider and debate it more filly along that line. Will my hon. Friend, however, reconsider the matter seriously? If we are conducting an argument on the basis of information from many experts which is to the effect that the argument is wrongly placed, it is much harder to accept it in the good faith that we are invited so to do by the Government.

With that reservation, I strongly commend the legislation to the House.

8.35 pm
Mr. Bruce George (Walsall, South)

My contribution nay seem, given the contributions of almost all other hon. Members who have taken part, tangential to the Bill. However, it concerns a subject of great importance, namely, the need to control the proliferation of devices on the market to monitor people's conversations. Electronic surveillance has grown incredibly over the past 20 years, with the increased sophistication of the devices and with the growing desire by individuals and organisations to capitalise on the technology for illegal purposes.

I have reached the same conclusion as Sir Robert Megarry at the close of the Malone telephone tapping trial, Mien he said that this was an area that cried out for legislation. It is regrettable that the 13ill, which could have provided a perfect opportunity to answer that cry, fails to correct many of the serious current deficiencies. The poverty of legislation on this subject underlines the potentially dangerous way in which the interception of communication can undermine the foundations of our democratic society. That is, rightly, a subject of concern within and outside Parliament. However, successive Home Secretaries have been tip-toeing about the subject for the past 23 years since the Birkett report.

The most recent resurgence of interest was probably occasioned by the series of articles on surveilance by Duncan Campbell in the New Statesman and the excellent report produced by the Post Office Engineering Union on the subject of telephone tapping. In that important report the union calls for a full inquiry into all aspects of interception of communications, and it and I have argued that public and private tapping and bugging are much more widespread than the Home Secretary either admits or, possibly, knows. The report says that tapping is now effectively out of political control, and since there is no adequate accountability of the Home Secretary to the House on the subject this is a matter of very serious concern.

Unfortunately, the Home Secretary has not initiated the inquiry I should like to see undertaken. Earlier this year there was an inquiry into official bugging. I wrote to the Home Secretary asking him to expand its terms of reference to include official and unofficial tapping. One may find justification for official tapping and bugging. It o can be said that ostensibly it is in the public interest. No such case can be made for tapping by private individuals and investigators who are seeking to elicit information illegally and immorally.

The report described the White Paper as a totally unsatisfactory effort to reassure the public. I hope that when the Bill goes into Committee we shall not miss the opportunity of implementing the provisions essential for this crucial subject.

There is a long list of points to be legislated upon, and I can mention only some of them, and briefly at that. They are not properly accommodated within the Bill. One of the most glaring deficiencies is the lack of any clear legal authority for the interception of mail and telephone calls. This is riot only highly dangerous but could probably be a breach of the European Convention on Human Rights, to which we are supposedly morally and formally bound.

Most people mistakenly believe that the legal authority rests with the Home Secretary and some have argued that it is the prerogative right of the Crown. But it is a vague area and, regardless of where and exactly how the Home Secretary derives this power to issue warrants, the point remains that the whole issue is clouded. That may seem a vague statement, but it is true. In view of the extreme delicacy of interception, there should be an independent check on the Home Secretary's judgment. No one questions the Home Secretary's integrity, but such is the burdensome implication that it is too important for one man, however honest and hardworking he may be. With his other commitments to the Home Office, the Cabinet, the House and his constituency, it is doubtful whether the Home Secretary has the time to oversee officially Undertaken tapping.

A second frequent criticism relates to the procedure for the issuing of warrants—a procedure which is far too weak. According to the Birkett committee 23 years ago, to obtain a warrant for interception three conditions had to be met: the offence must be really serious; normal methods of investigation must have been tried and failed; and there must have been good reason to think that an interception of communication would result ill a conviction.

In a recent White Paper, even further complications have emerged. Some phrases in that White Paper cause me considerable worry about what is happening. The scope of the phraseology is so excessively wide, leaving a great deal of scope for varying interpretations, as to be positively frightening.

The third criticism relates to the White Paper in which the Government admitted that one of the reasons for the present concern about interception is the fear that technological changes have made it much easier to intercept telephones". Yet in the Bill very few clauses deal with the unlawful, fraudulent and improper use of the public telecommunications system. It virtually ignores the enormous technological advances which have made electronic surveillance so easy, so accessible and so inexpensive. We have closed our eyes to the situation that has emerged. Much greater control should be exercised by the Home Secretary. In my view, there should be more control over the use of private surveillance. There should be an annual report to Parliament detailing the number of interceptions authorised in the previous year and there should be political accountability for tapping and electronic surveillance. At the moment, there is little meaningful accountability.

Any person who suspects that his mail and telephone conversations are being illegally intercepted should have the opportunity to have his suspicions officially investigated and authoritatively confirmed or denied. Obviously there are difficulties, but I hope that these difficulties can be remedied.

Bugging and tapping are not the prerogative of the wealthy, civil servants or captains of industry. Looking at Exchange and Mart, one sees that tapping and bugging have now come within anyone's reach. One can buy an effective bug for £15 or £20. One newspaper article, headed "Love Bug a Flop", stated: Husband who fitted bugging device on his phone to check on his wife's alleged lover ordered to pay £35 costs and conditionally discharged 12 months. I should add that the bug did not work.

Bugging is now easy. Not only are people in big business vulnerable to industrial espionage; virtually anyone is vulnerable to surveillance. Tapping and bugging equipment is now reasonably cheap. The likelihood of people using such equipment being caught appears to be very slim. When one thinks of the minuscule penalties which are meted out to those who get caught, there is a positive inducement to people, organisations, private investigators or whoever to indulge in this kind of illegal activity.

Hon. Members with an interest in bugging or tapping, when they understand how simple it is to be bugged or for a telephone to be tapped, find themselves getting paranoid on realising that it can happen to them. There has been dramatic evidence of an increased use by private investigators and private security companies of electronic listening devices. It is an indication of the technology that one can be tapped from a telephone in San Francisco. The emergence of the infinity transmitter means that one does not even have to lift the telephone for a conversation in one's house to be monitored. The laser principle can be used. The vibrations on the window in the room where one is speaking can be transmitted to a person half-a-mile away using sophisticated equipment. That is the extent of electronic surveillance. Everyone is vulnerable.

I have in my possession a manual published in the United States entitled "The Big Brother Game — Bugging, Wiretapping, Tailing, Optical and Electronic Surveillance, Surreptitious Entry—How to Stop It or Do It Back." That is available for anyone to use for his illicit advantage. We have not yet reached American proportions, but there is no guarantee, unless we take firm action now, that we shall not catch up with the United States. I would regard that as reprehensible.

The penalties in the Bill are derisory. In Committee we should stiffen the penalties to make sure that people who are caught are punished. The punishments and the legislation must not be confined to this country. Tapping and bugging are an international phenomenon. There is not much point in possessing purely domestic legislation if the penalties cannot be extended to someone abroad who may be involved in this activity. There should be a system of public licensing to ensure that any person employed as a private investigator or a private security company found to be transgressing must be busted and forbidden to practice within this sector again.

The Bill does not address some of the problems that worry hon. Members. It deals with some aspects. I hope, however, that those who have been clamouring for tighter controls on electronic surveillance will realise that the Bill is a possible vehicle for tightening legislation. The clamour that has occurred in the House should be directed much more towards the Bill. I hope that there will be developments during the further stages of the Bill that will bring greater protection to people and bring to book those who are using an electronic system or devices independent of the telephone system. This is a growing phenomenon in this country that must be curbed. It can be curbed only by this legislation and by firm action on the part of the Home Secretary.

8.48 pm
Mr. John McWilliam (Blaydon)

I rise, like my hon. Friend the Member for Westhoughton (Mr. Stott), to oppose the Second Reading of the Bill. I declare the same interest in the matter. The theme of the Bill is fragmentation. It fragments the responsibilities for the day-to-day running of the business between the chairman and the board and the Secretary of State through the greatly increased powers of intervention provided by the Bill for him. The powers that the Bill gives the Secretary of State to open up competition in the supply of attachments to the network will fragment maintenance responsibilities, to the detriment of the residential and the rural customer.

The Bill gives the Secretary of State power to force the corporation to fragment itself by directing it to set up subsidiaries and to transfer functions to them. It empowers him also to disperse one of our great national assets by directing British Telecommunications to sell off both its functions and its assets. I shall try to show how damaging these developments are and how tragically they are timed. Telecommunications stands today on the verge of a host of exciting possibilities for technological change. To exploit these possibilities and to take full advantage of the technological possibilities opened up requires a unity of purpose and of effort and not the fragmentation proposed by the Bill

The development that opens up the range of technical possibilities in telecommunications services is the possibility, through the use of digital switching and transmission facilities, of providing what is called "an integrated network facility". Currently, we have in this country a predominantly electro-mechanical switching facility together with an analogue transmission system. This copes adequately with voice transmission but is too slow to provide more than a limited facility for data transmission. The conversion to electronic high-speed switching and digital transmission will allow data, voice and text, which means electronic mail facilities, together with pictures, all to be transmitted on the same—hence the word "integrated"—network. I regret that the hon. Member for Morecambe and Lonsdale (Mr. Lennox-Boyd), who spent so much time trying to find out what that was, is not in the Chamber to hear that.

The pursuit of this ideal—the integrated network—has long been the goal of the POEU. Instead of the expensive duplication of networks for Telex, data and voice which we now provide, we see one network delivering not just the services I have listed already but other services as yet undreamed of. For those of us who work or have worked in telecommunications, the potential of our industry to bring people far removed from one another by distance together in conversation and our capacity to enable them to work together more efficiently with data interchange give our work a broad significance which few other industries possess.

The main question that we must answer is whether the Bill will help us to provide these services. It certainly will not do so. The Bill seeks to cramp and confine the new corporation to the most limited definition of its function. It will be allowed to compete in other areas for which the Post Office already has responsibility, but with two hands tied behind its back. One hand is tied by inadequate investment due to cash limits and the other hand is tied by the requirement not to compete "unfairly".

What does that mean? It means that BT will be required to set up subsidiaries which it will, not be able to support with any revenues from monopoly services. It will, apparently, not be able to engage in marginal cost pricing or in loss leader marketing strategy for new types of equipment. Private industry will, of course, not be so constrained. Unlike BT, it will be able to borrow as much as its credit rating allows for, and in providing services, unlike BT, private industry will not be prevented from normal commercial practices of subsidising new products.

We have a Government whose belief in free competition apparently extends only to the private sector. If the public sector is to compete, it must be with a series of handicaps and impositions that ensure that the Government will not be embarrassed by the spectacle of Winning against the private sector. Perhaps the Secretary of State will explain to the House how he intends to use us power to force BT to set up subsidiaries. If I have it wrong, I shall be only too glad to be informed of it.

I should like to examine further the problems that the Bill will cause to the customer. If he purchases approved equipment for attachment to the network and it develops a fault, where does he get it corrected? Does he go to the supplier? But the fault may be in the network. Does he go to BT? But the fault may be in the apparatus. He is likely to pay more for service and to suffer more in getting fault corrected than he does now.

Even if the customer's own equipment is adequate, he may well suffer from problems caused from an attachment elsewhere. Clause 16 allows for approval of equipment for attachment even when detailed standards for safety and technical compatibility have not been established. Even more damagingly, as I read clause 17, if the attachment damages the network, as it well could, stopping services or damaging services to others, clause 17(2)(b) would prevent the corporation from recovering the money to pay for the damage caused.

I could go on at length pointing out clause by clause the unfair constraints placed on BT by the Bill. I shall not do so. The most likely result of the Bill may he to provide in the short term new facilities for some business customers at the expense of poorer service and higher prices for the many. It does not tackle the problems that currently prevent us from giving better service—the problems of achieving sufficient investment. It will make them worse by cutting BT's income and profitability.

8.55 pm
Mr. Frank Dobson (Holborn and St. Pancras, South)

I thank my hon. Friend the Member for Blaydon (Mr. McWilliam) for his very brief contribution. It is rather ironic that, when we are discussing instantaneous communication, we have some very turgid and vapid speeches, especially from the almost totally empty Government Benches.

Sometimes I feel like a Luddite in this place. It appears that virtually everyone subscribes to the view that it is a good idea to divide the Post Office from telecommunications. I have to express doubts about that. I have been brought up to be suspicious of any proposal supported by Government Front Benches, senior civil servants, university vice-chancellors and even some leading trade unionists. When I discover that this proposition is put forward by the Secretary of State for Industry, I become even more suspicious.

Originally I was thinking in terms of Greeks bearing gifts. This place is practically the home of misquotation, so I checked what Virgil wrote, and I find that it is even more appropriate. He wrote: Whatever it is, I fear the Greeks even when they bear gifts. All that I say to the Post Office engineers and anyone else who is in favour of this break-up is that, whatever it is, they should fear the Secretary of State, especially when he is bearing reorganisations. We have only to look at the monstrosity of the reorganisation which he imposed on the Health Service to appreciate the wisdom of that advice. It has actually killed people. People have died as a result of the appalling reorganisation of the Health Service for which the right hon. Gentleman was responsible. We should remember that, and we should also remember that he was aided and abetted in the murder of the Health Service — certainly there was grievous bodily harm inflicted upon it—by the management consultant firm of McKinsey.

I am sure that other management consultants will have advised on this present proposal, and it is no surprise that they have transatlantic connections such as ITT, IBM and others who have been leaning on the Treasury Bench to propose these measures. We should bear in mind all the influences which have been brought to bear on the Secretary of State and to which he is bowing. They are not intended in any way to be to the benefit of the British people. The right hon. Gentleman said that he was sorry for what he did to the Health Service. I hope that we shall not all be too sorry about what he now proposes to do to the Post Office and telecommunications.

I move to a topic which is unaffected by the break-up of the Post Office and telecommunications. They will continue to be financed by the Government. It should be remembered that when, in those halcyon days of May and June last year, the Chancellor of the Exchequer announced the Government's financial and economic proposals he was talking in terms of shifting the Government contribution to the nationalised industries, which for last year was supposed to be about £2,300 million going in, so that by 1983–84 there would be £400 million coming out and going into the Treasury. That has been done by way of cash limits. Most of the right hon. and learned Gentleman's policies have collapsed in ruins, but he has kept the cash limits going reasonably well in the eyes of those who favour them and fairly well for the Post Office and telecommunications.

One of the problems that both the post and telecommunications sides find is that if they cannot raise money externally they have to put up their prices. What is more, the famous cash limits assume, as they have done under all Governments, a lower rate of inflation than occurs in practice. This leads to an effort by the management of British Telecommunications or that of the Post Office to pay lower wages to the people working in the industry. There is also tremendous pressure to increase prices. Above all, there is less money for investment, and this shows up best in its effects on British Telecommunications.

A very high level of investment is crucial to the future of British Telecommunications. It is a high-technology industry. It is part of the communications revolution about which the Secretary of State talked, and British Telecommunications is at the heart of it. As I understand it, it is talking about investing £4 million a day. As it is at the heart or spearpoint of technological thrust in Britain, one would have thought that it would get encouragement from the Secretary of State. But it is not. This year, 1980–81, it is getting £200 million less to invest than its management thinks is necessary.

That is having an effect on its customers. In the area which I represent in central London, I constantly hear individuals and businesses complaining that British Telecommunications cannot provide them with telephones and various other services. The answer from British Telecommunications is that it cannot get the staff that it needs in central London and, above all, that the private equipment suppliers cannot supply the equipment and that that is holding things back.

We must also consider the position of the private equipment suppliers. I understand that no fewer than 100,000 people are employed in manufacturing telecommunications equipment supplied to British Telecommunications. They, too, are being done down as a result of the cash limits. We have now reached the bizarre stage at which British Telecommunications management is having to ask some of its major suppliers whether it is all right to buy something now and to pay for it next year, because it cannot be paid for out of this year's budget. That will certainly be damaging to the suppliers, even if it is possible, given the current rate of interest that they will have to bear on money that they are, in effect, lending to British Telecommunications because it does not have the money.

It seems to me to be the economics of Noddyland to go on in this way with a high-technology industry and to say, as the Government are saying, in effect, that a high proportion of the investment of British Telecommunications must come out of current income. That might be an appropriate way to run a grocer's shop in Grantham, but it is a quite inappropriate way to attempt to finance and run British Telecommunications.

Finally, I make two points about postal services. People have been talking, rightly, about the danger to letter services in rural areas, in the belief that everyone will do fine in London and the other major conurbations. But that is not true. If the monopoly is broken in central London, one can bet one's boots that both commercial and domestic users of the postal service will eventually suffer. The more that is creamed off, the more they will suffer.

I make one final, technical point. As I understand it, the Bill gives a new definition for the delivery of letters. It provides that the Post Office may enter into an agreement with the occupiers of a block of premises about the delivery of mail to a central point. If that provision goes through, I hope that the Minister and the Post Office will interpret "occupiers" of a block of council flats to mean the occupiers of the individual flats. We do not want pressure for the Post Office and a council to come to an agreement that all the letters can be slung in a box just inside the front door of a multi-storey block. There needs to be the agreement of those living in the blocks of flats, not the owners or operators, be they in the private or the public sector. I trust that that will be the interpretation.

Whatever the interpretation and whatever happens to the monopoly, vast amounts of public money will continue to be needed if the Post Office and British Telecommunications are to provide the service that the country will require if it is to be prosperous. There is no evidence at all that the Secretary of State or any of his loony crew at the Department of Industry are likely to produce that sort of money.

9.4 pm

Mr. Les Huckfield (Nuneaton)

My hon. Friend the Member for Holborn and St. Pancras, South (Mr. Dobson) has made one of his customary searching and revealing speeches, coming to the same kind of conclusion as I shall come to.

A vast wealth of tehnical knowledge has been revealed on the Opposition Benches. Several of my right hon. and hon. Friends have personal experience of many long years of work in the industry, and I pay tribute to the technical expertise that they have brought to the debate. They have elevated the standard of the debate on what is, after all, a technical Bill.

I wish that I could say the same of those on the Conservative Benches. When the hon. Member for Fife, East (Mr. Henderson) said that the Bill would cut the telephone waiting lists in his constituency, I wondered whether he had read it. It was clear from some of his other remarks that he had read one or two pages, but there is a woeful ignorance on the Conservative Benches of the effects of the Bill. When hon. Members, particularly from rural areas, extol the virtues and benefits of competition and how it will all be good for their constituents, it is clear that they cannot have read the Bill, let alone understood it.

We hear from the Government soothing, syrupy phrases from time to time. They try to tell us that what they are doing is to take nationalised industry after nationalised industry out of politics. That is the message that the Minister of State gave us about the denationalisation of British Aerospace. That is what we were told about British Airways and the transport holding company. They say that they are trying for once and for all to take them out of politics, and that they want to provide a non-political solution. They have a daft way of doing it in the Bill.

To us, the Bill shows the typical Tory Pavlovian reaction to anything that is publicly owned. I can sum the matter up simply by saying that the Conservatives want to hammer, halt and cripple anything that is publicly owned. If any publicly owned enterprise looks as though it has a few profitable activities, they want to flog them off as soon as possible so that private enterprise can get all the rich pickings.

Anybody who thought that the Bill was a rice endeavour by the Government to take the Post Office or British Telecommunications out of politics would have been sadly mistaken. It is the typical Tory reaction to anything that is publicly owned and that, in the case of both the Post Office and British Telecommunications, is doing well.

The trouble is that Conservative Members are so determined to carry on with this typical doctrinaire Tory reaction to anything publicly owned that they seem not to realise that the majority of those who will be clobbered most, those who will be dealt the most severe blows, are their own constituents. The crazy thing is that city dwellers and those who live in towns may even obtain some marginal benefit from the Bill, but they do not live in the kind of constituencies that Conservative Members represent. In the main, their rural constituents are bound to come off worst.

I ask the Secretary of State in particular why the Government, in being so doctrinaire, do not try to understand their proposals before bringing them to the House. It was clear when the right hon. Gentleman was questioned during his opening speech that he did not understand the Bill that he was introducing.

The Tories always want to hamper anything that is publicly owned, giving it as many restrictions, as many onerous burdens, as they can. I was surprised that we did not find a reference to the so-called common carrier obligation, though the Government have almost written that in. I was surprised that we did not find that British Telecommunications and the Post Office must not show undue preference—the typical Tory way of making sure that anything that is publicly owned has great difficulty in surviving.

However, although we did not find that matter in clauses 3 and 56, we found almost those words. If we do not see the kind of restrictions that the Conservatives usually want to place on publicly owned industries, we find their attitude towards them displayed in what we have already seen from the Government on cash limits.

There is no doubt that if all the wonderful things which the Government believe are contained in the Bill are to be achieved the Government must have a completely different attitude to cash limits. Their attitude to cash limits will not secure any expansion of the basic telephone network. The Government's frequent changes of mind make it almost impossible for anybody in charge of the Post Office or British Telecommunications to plan ahead with any degree of certainty.

It is remarkable that in all the Secretary of State said earlier there was no proposal to take the Post Office or British Telecommunications out of the public sector borrowing requirement. British Airways managed to do a dell under which it is out of the PSBR. Not so the Post Office. Not so British Telecommunications. They will be inside the PSBR. Until we have a change of attitude on cash limits and the PSBR, there will be no real expansion of the Post Office or British Telecommunications.

Mr. Henderson

Will the hon. Gentleman give way?

Mr. Huckfield

I shall give way to the hon. Gentleman once.

Mr. Henderson

Surely, there is no change in the position which applied under the Labour Government. The Post Office borrowing limits were then part of the PSBR.

Mr. Huckfield

The hon. Gentleman has not been here long. When he comes into the Chamber occasionally, he does not understand what is going on. The Labour Party's attitude to cash limits and the PSBR when in Government was different from the attitude now being displayed.—[Interruption.] The hon. Member for Gillingham (Sir F. Burden) has returned to the fold. We know that his contributions are always lively and completely irrelevant.

If the telephone and other services deteriorate, as they will as a result of the Bill, the Government will put the blame on the Post Office and British Telecommunications being still publicly owned. That is what it is all about. They always heap the blame on public ownership.

One must sympathise with the Post Office and British Telecommunications. If certain aspects of their services are doing well, they are likely to be told by the Secretary of State to flog those services. What an incentive that is to efficient management. If they do the job well and a service is expanding and profitable, such as Cable and Wireless Ltd. which is 100 per cent. Government-owned and profitable, the Secretary of State will use one of the many powers with which he has armed himself to tell the organisation to divest itself of profitable activities. What an attitude that is for a Secretary of State who is supposed to believe in entrepreneurial ability. The Secretary of State says "Do a service well, and you risk being told to get rid of it." That is what the Bill is all about.

Some Government Members have the nerve to say that no one has anything to worry about in terms of jobs and morale. We have everything to be worried about in terms of employment, jobs and morale. Every time the Secretary of State comes to the Dispatch Box and introduces a Bill, he gives workers every reason to be worried. By his attitude the Secretary of State has shown that Post Office staff will not be allowed to be an exception.

The Secretary of State says that he wants to leave as much as possible to management. He has always said that he believes that the Government should not intervene. Has he noticed the unlimited powers that he has given himself in clauses 3 and 56, where he is only prepared to allow the Post Office and British Telecommunications to provide services as long as no one else is providing them? What an incentive to entrepreneurial spirits. Has he noticed the powers that he has given himself in clauses 8 and 59? Under those powers, he can tell the Post Office and British Telecommunications to divest themselves of any of their activities. Has he noticed the powers that he has given himself in clauses 6, 7, 8, 65 and 66, which show that there is no doubt where the real management will lie? It will not be with anybody calling himself the chairman of British Telecommunications or the chairman of the Post Office. The real management and decision-taker will be the Secretary of State. The right hon. Gentleman is saying that once he has the enabling powers under the Bill he does not want to return to the House and say what he will do with them. He simply wants the powers. As a result of that, any chairman of either British Telecommunications or the Post Office will get a stiff neck looking over his shoulder in an attempt to determine the current attitude — which changes occasionally — of the Secretary of State.

The Secretary of State has armed himself with so many powers that to expect us to accede to the powers without returning to the House for further debate is an insult to the experience that we have gathered on the Labour side of the House. One of the amendments that we shall press time and time again in Committee is for further debate. We want the affirmative, not the negative, resolution procedure in both Houses of Parliament before the Secretary of State is allowed to exercise any of the powers.

Let us consider the unique formula that the Government have devised for skimming off the cream. Many of us thought that the Minister of Transport was doing well when he came along with his formula for British Coachways. That is a good example of what will happen to the Post Office. One only has to consider what the Minister of Transport is doing to the National Bus Company and British Rail—[Interruption.] I am glad that Conservative Members have recognised the foretaste of things to come, We now have something called British Coachways that operates out of a left luggage locker in St. Pancras station, merrily undercutting the National Bus Company and British Rail. Why cannot Conservative Members understand the effect of the Minister of Transport's proposals which, at the end of the day, will deprive their rural constituents of any public transport at all? That is the forerunner of the sort of thing that will happen in the Post Office.

Mr. Donald Thompson (Sowerby)

Quite the opposite.

Mr. Huckfield

The hon. Gentleman does not understand the Bill. He keeps proving that. We have already had some internal Post Office studies. I do not think that the Secretary of State needs a Post Office mole to tell him about them. He must have read some of the studies. When he frightened the living daylights out of the Post Office by telling it that he might derogate the monopoly, it carried out some investigations into the effects of derogation and the loss of certain aspects of the monopoly. The Post Office calculation was that if it lost only 12 per cent. of its traffic as a result of proposals like these it would have to raise its prices by up to 20 per cent. Its costs could increase by £40 million, and about 10,000 jobs could be lost in the Post Office. That is on the Post Office side—

Mr. Russell Kerr

That would not worry Conservative Members.

Mr. John Farr (Harborough) rose

Mr. Huckfield

The hon. Gentleman has only just come into the Chamber. He has not been here for most of the afternoon like most other hon. Members. Think of what that sort of increase in costs and difficulties would do to people living in rural areas. It is the same in the rural areas.

Mr. Farr

Will the hon. Gentleman give way?

Mr. Huckfield

Let me finish my sentence. The hon. Gentleman has not been in the Chamber until recently. I have had to be here all afternoon and evening. That is part of the job, and I stick with it.

The proposals on the telephone side are exactly the same. The real needs in the rural areas will be extended telephone networks and new telephone exchanges. The Bill will not meet the needs of those living in rural areas.

Mr. Farr

I have not been in the Chamber all day. However, I listened to the memorable opening speech of my right hon. Friend the Secretary of State. Having heard my right hon. Friend, I had to attend a committee meeting. I can assure the hon. Gentleman that he has not accurately reflected opinion and feeling about bus services in rural areas. Those who represent rural areas have found generally that since the Government introduced the Transport Act 1980 there has been a new potential for those who live in the countryside to enjoy the benefits of that measure, which has freed independent operators from the shackles of controls left by the former Socialist Government.

Mr. Huckfield

I am almost sorry that I introduced the rural transport analogy. It is clear that the hon. Gentleman does not understand that in the not too distant future public transport will disappear in his constituency. It is clear that he does not understand that that will have the same effect as the proposals in the Bill will have on postal services and telephone services. He should remember what the sub-postmasters' lobby said to the House. Even he and his hon. Friends had to listen to it. They were persuaded by the forceful arguments that were advanced by that lobby. It is exactly the same argument, and the hon. Member should understand it.

My right hon. Friend the Member for Deptford (Mr. Silkin) made some telling points about the Director General of Fair Trading—

Mr. Michael Marshall

The hon. Gentleman is muddled.

Mr. Huckfield

The hon. Gentleman is very muddled himself. He has shown that tonight.

My right hon. Friend made some telling points about the way in which the Director General of Fair Trading will need to have access to the separate accounts of the separate subsidiary companies that will have to be formed by the Post Office and by British Telecommunications under the Bill.

If the Director General of Fair Trading has powers to investigate the separate subsidiary companies that the Post Office and British Telecommunications will be forced to operate, he should have exactly the same powers to investigate the activities of GEC, Plessey, IBM and some of the other companies with which the Post Office and British Telecommunications will be in competition. However, whenever my hon. Friends make any reference to an investigation into GEC, they are told that that is beyond the powers of the Director General of Fair Trading

If we are to have fair competition, let the Director General of Fair Trading have exactly the same powers to go into the private sector first. It was my hon. Friend the Member for Westhoughton (Mr. Stott) who said that our foreign competitors must be rubbing their hands with glee over the proposals in the Bill. The Post Office will be forced to open all its books. It will be forced to give, all the details that are in the London Gazette. It will be forced to give the equipment manufacturers of Japan, Germany and America all the information that they want to enable them to dump their products in our market. That is what the Bill is all about. That is the competitive disadvantage under which the Post Office and British Telecommunications will be forced to operate.

I turn from the almost malicious way in which burdens have been heaped on the Post Office and British Telecommunications to ask the Minister of State — I hope that he will be able to give me some answers when he replies—which of the problems revealed in pages 90 to 98 of the report of the Monopolies and Mergers Commission on the inner London postal monopoly will be solved by the Bill. The Monopolies and Mergers Commission investigation reached detailed conclusions. We cannot see how the proposals in the Bill relate to those conclusions.

The same applies to telecommunications. On 31 October, 260,000 people were waiting to be connected to the telephone services. The exchange equipment was there, but in many cases handsets and other equipment had not arrived from the manufacturers. In addition, a further 207,000 people were waiting to be connected because the exchange equipment was not there. How will they be helped by the proposals in the Bill? They are the main problems for the Post Office. British Telecommunications does not have the money to invest to build up the network and. build new exchanges. The people on the waiting list will not be helped in any way by the Bill. The proposals in the Bill are irrelevant to the main problems of the telephone network and to improving the postal service.

In a moment of doctrinal inspiration, the Secretary of State told us this afternoon that we have at our disposal the means to put within everyone's reach the power to store and retrieve information, which cannot be held back by inadequate telecommunications. However, the Bill will result in inadequate telecommunications. Does not the right hon. Gentleman understand that we must try to build an efficient and established network for voice and computer communications? In order to do that, we need digital transmission facilities and. vast investment in big new extensions of the established network.

If the private sector carries out the expansion, we shall not have the national updating of the network that adequate voice and computer communications require. As a result of breaking the monopoly, we may once more deprive British industry of sufficient means to compete with our manufacturing competitors in the remainder of the world. The Secretary of State said that technical progress had rendered the postal and telecommunications monopoly outdated. I believe that technical progress reinforces the argument for monopoly. If we do not continue with the monopoly, we shall not get technical progress. if we miss out in establishing the right kind of national network, the secretary of State will have done yet one more disservice to the vital needs of British industry.

The Secretary of State proposes an attachment policy. Conservative Members paid glowing tribute to the telephone equipment that is available. The hon. Member for Cornwall, North (Mr. Neale) made an extraordinary speech. After declaring his interest, he appeared to make a speech on behalf of the company of which he was a director. I hope that his constituents will benefit from the attachments that he mentioned, if they are able to be connected to a telephone at all.

The main problem will be policing the attachment policy. Already, much of the equipment that is advocated by Conservative Members is in the shops and is being connected to the telephone system, whether the legal permission exists or not.

Those hon. Members who may be worried about the enforcement of the Wireless Telegraphy Acts and who may be worried about what are called video pirates and about some of the problems facing the Home Office ought to realise that we shall have exactly the same problem of enforcement with the provisions of the Bill. The Secretary of State ought at least to be coming to the House with proposals for type approval to stop foreign manufacturers dumping. He ought to have been talking as well about the licensing of wholesalers and retailers of the equipment, because at the end of the day we shall have a running dogfight between British Telecommunications and the equipment manufacturers about what ought to be properly attached to the network.

We have not heard much about job implications, but many of my right hon. and hon. Friends are very fearful, as I am, about the job consequences in the equipment manufacturing companies as a result of the Bill. When the Secretary of State talks about trying to get reciprocal trading facilities, does he really think that we shall have reciprocal trading facilities with the Japanese, the Germans and the Americans to implement the provisions of the Bill? He is living in some kind of cloud-cuckoo-land if he thinks that the Japanese will give the Post Office the same kind of access — through system X — to their telephone system as he will be giving to their telephone equipment manufacturers in this country. If he wants to protect jobs in the manufacturing sector, he will have to do a lot better than the proposals that he is introducing this evening.

We have had a lot of enabling Bills introduced by the Secretary of State for Industry. This is the same kind of enabling Bill as he introduced for the denationalisation of British Aerospace. It is the same kind of enabling Bill as his right hon. Friends introduced to denationalise British Airways and to flog off parts of the transport holding company. The principle is always the same—"Give us the Bill, trust us, and everything will be all right."

I am not prepared to trust the Secretary of State as to what will happen if we give the Bill a Second Reading tonight. We already have a system under which we can see that the engineering system is collapsing as a result of the Government's policies. The steel industry is certainly collapsing as a result of the Government's policies.

I therefore urge my right hon. and hon. Friends to join me in the Lobby tonight to ensure that the post offices and the telecommunication systems of this country do not collapse as well.

9.33 pm
The Minister of State, Department of Industry (Mr. Adam Butler)

The hon. Member for Nuneaton (Mr. Huckfield) paid tribute to his hon. Friends who have contributed to the debate. I should like to do the same, but I should also like to pay tribute to those of my hon. Friends who spoke from their very considerable knowledge, although perhaps in some cases from a different point of view. Those of us on the Government Benches are quite prepared to listen to hon. Members who speak from experience, such as those who are sponsored by the Post Office Engineering Union.

We have inevitably, as happens in Second Reading debates, covered a vast amount of detail, and the House will not expect me to answer every point tonight. I do not doubt that we shall have a constructive Committee stage, when we reach it, and I do not doubt, equally, that it will be carried out in a spirit of good humour.

I want to deal first with the matter of consultation prior to the presentation of the Bill. One or two hon. Members have suggested that there has been little or no consultation. I totally and utterly reject that suggestion.

Prior to my right hon. Friend's statement in July last year, I, officials in my Department and my hon. Friend the Under-Secretary of State met a wide range of interested parties — manufacturers, union representatives and anyone conceivably with an interest. The July statement put the policy on the table for the industry to see, and since that time there has been a wide process of consultation. We are now going through the period of parliamentary debate.

The Bill is concerned mainly with the Post Office and British Telecommunications. However, I first want to deal with the one item that is different, although related, because previous Post Office legislation has concerned itself with Cable and Wireless Ltd. We shall doubtless debate the question of whether shares should be sold. In the Bill, we are seeking only the power for them to be sold. We believe that the arguments which we have deployed on many occasions, and to which the hon. Member for Nuneaton referred, apply in the case of Cable and Wireless Ltd. as well as in respect of other companies. There is certainly an important extra consideration, which is the Government's relationship that can exist in relation to the franchise side of the activities of Cable and Wireless Ltd. We shall have to see what proportion of the shares is retained by the Government, but in this first instance we are looking merely for a power to dispose of them.

In this connection, too, it was suggested that there had been no consultation. Indeed, the right hon. Member for Manchester, Openshaw (Mr. Morris) suggested that my right hon. Friend had not even consulted his ministerial colleagues. That may have been a slip of the tongue, but if the right hon. Gentleman thinks about it he will realise how foolish a statement that was. What is more important is whether the Government have consulted, or informed, those Governments who are most directly involved, and the answer is definitely "Yes".

Mr. Charles R. Morris

Which Governments of which independent territories have the Government consulted about clause 76 and its implications?

Mr. Butler

We have informed those Governments who are most concerned with the future. We have done it in such a way as to point out what is involved in the Bill. There have been close consultations with the Governor and other members of the Hong Kong Administration, to whom the largest activity relates.

Mr. Morris

What was their reaction?

Mr. Butler

At this stage, I cannot give the House the reactions of those Governments. All I can say is that the talks particularly with the Hong Kong Government, because of their prime importance, have been carried out in an extremely constructive and friendly manner.

Mr. John Silkin

I do not want to delay the hon. Gentleman, but this is a vital point. There are two aspects. We are not only concerned about the consultation with the various Governments. The Secretary of State—I hope that I do not do him an injustice—told us that he was proposing to have consultations. He did not say that consultations had actually taken place. Either he did not know what was happening or he is telling the plain truth, which is that there have been no consultations. This relates not only to Hong Kong but also to the Philippines, which has never been part of the Commonwealth.

That is one stage. The other is that the Cable and Wireless Ltd. set-up was based upon a Commonwealth agreement. That was the basis in 1949. One must have the agreement of the CTO before one can deal with this matter. How can one possibly put it in the Bill before having the agreement of — not just the proposal to consult with—the CTO?

Mr. Butler

I do not think that my right hon. Friend misled the House in any way.

Mr. Silkin

I did not say that he did.

Mr. Butler

I have just taken the opportunity to make the position somewhat clearer with regard to information about our intentions which, quite properly, has been passed to the major Governments concerned. Substantial discussons have already been held with the Government of Hong Kong. I am prepared to make clear now, as I have done previously, that before decisions are taken on the sale and proportion of shares to be sold there will be full consultation with the Governments involved.

Mr. Silkin

Will the hon. Gentleman give way?

Mr. Butler

The Bill is bigger than that.

Mr. Silkin

The hon. Gentleman did not answer the question about the CTO. Have the Government had the agreement of the CTO—yes or no?

Mr. Butler

The taking of powers to dispose of shares does not affect the arrangements, but the disposal of shares would. There will be full consultations before that happens.

In view of the limited amount of time available, I move on to matters affecting the Post Office and British Telecommunications. There is a dispute between right hon. Members opposite about the split, and the right hon. Member for Deptford (Mr. Silkin) said that the split would take three years to fulfil. The two future corporations—the two sides of the Post Office—have been working effectively as two parts for many years. Over recent months they have made the necessary preparations for the full split, and I expect the split to take effect, to all intents and purposes, within two or three months after the Bill becomes law. There will be the important question of a pension fund, and I hope that if the remainder of the activities are to be split there will also be a split of the pension fund. That was recommended strongly by the Carter committee. It is generally agreed that the character of the two businesses is different. They are both sizeable businesses, with many tens of thousands of employees, and they will both benefit from proceeding in their separate but special ways.

I judge that the debate has concerned itself mainly with British Telecommunications, so I shall deal briefly with the question of the postal monopoly. The right hon. Member for Deptford took us back to Rowland Hill and to many years before—I did not follow the relevance of that—but he used the argument of volume, and the need for the retention of a monopoly because of the effects on the finances of the Post Office if that volume of traffic were to be affected in any substantial way. I assure him that the argument was persuasive, and for that reason we are, at least in the first instance, liberalising only express mail, work connected with document exchanges, the part carriage of mail through the private sector before it goes through the Post Office network, and Christmas cards. They are a small proportion of the whole, which I estimate to be about 1 or 2 per cent.

The hon. Member for Nuneaton tried to raise a scare in connection with the Tabor report. He suggested that our plans would result in a loss of about 12 per cent. That is not the case, and I should be grateful if the hon. Gentleman would not attempt to raise scares, either in the Post Office or in the rural areas where he felt there might be a particular impact. The duty of the Post Office will be to provide a postal service throughout the United Kingdom, and, therefore, there can be no cause for concern among my hon. Friends who have fought strongly for the rural areas in the past.

Mr. Les Huckfield

I am sure that the hon. Gentleman will not mislead the House and will not attempt to deny that those calculations have been made by the Post Office. That is the sort of abstraction of traffic that could take place, and an additional burden would thereby be placed on the Post Office as a result.

Mr. Butler

It is possible for assumptions to be made, but if one arrived at the figures that the hon. Gentleman suggested it would imply a virtual suspension of the monopoly across the country, with widespread local services, high penetration by the private sector and substantial inter-city links. That is the advice that I have, but—[Interruption.] They are calculations worked out with a great deal more objectivity than the hon. Member for Nuneaton could muster.

I have explained that we were persuaded by the argument that generally the postal monopoly should be retained, but we have made it fully clear that we are not prepared for the customer to be subjected to a significant deterioration in the service. In July 1971, the next-day delivery of first-class mail fell to less than three letters out of four—to 73 per cent. The public do not deserve that sort of performance and they should not be asked to tolerate it.

Sir Keith Joseph

It was 1979.

Mr. Butler

We have therefore explained clearly, as my right hon. Friend said in his July statement, that if, for reasons that are within the control of the Post Office, the service deteriorates and continues to deteriorate after suitable warnings, we reserve the right to open up to private contractors the delivery of letters.

Mr. Harry Ewing

Does the Minister of State consider that his choice of the July 1971 date was fair given that by then the Conservative Government of the day had demoralised the Post Office to such an extent that it was a miracle that 73 per cent. of the letters were being delivered on time? Will the Minister deal with the proposition to legalise the postal pirates?

Mr. Butler

My right hon. Friend the Secretary of State rightly took the opportunity to correct me. I said 1971 because I IA as thinking of the example which had been used by the right hon. Member for Deptford of Randall carriers during the strike. It was a footling experience, but it served the hon. Gentleman's purpose. The correct date when the service deteriorated to 73 per cent. was July 1979. The Labour Party may be content with that sort of service from the Post Office, but we are not. At the moment, the first-class service has recovered, and although it has not reached the 90 per cent. mark it is somewhere near.

I shall deal briefly—I have not been left as much time as I should like—with British Telecommunications and the effects of the Bill on the customer. It was significant that neither the right hon. Member for Deptford nor the hon. Member for Nuneaton mentioned the customer. They behaved true to form, because the right hon. Gentleman did not mention the customer at the time of my right hon. Friend's statement either.

Mr. John Silkin

While the Minister of State was sleeping or talking to the Secretary of State, I mentioned the customer three times in the first six paragraphs of my speech, as the hon. Gentleman will see in Hansard tomorrow. I said that it was with the customer that we should be primarily concerned, but with the country as well. I take it that the Minister will now withdraw his remark.

Mr. Butler

I listened to the right hon. Gentleman with some care. If I missed his reference to the customer, apologise. He will note the difference, however, that I put the customer at the head of the list.

Mr. Silkin

So did I.

Mr. Butler

The domestic customer will certainly benefit—not as much as he would have done had the prime telephone instrument been opened up to competitive supply—from a choice of equipment for secondary or other telephones and other types of equipment such as answering machines. That will be a significant benefit. After the phasing-in period, the business user will have the choice of competitive equipment, provided it meets the technical standards, and he will benefit substantially from that. At the moment, he is starved of such equipment.

Concern has been expressed about the implications to suppliers of opening up competition. That is a damning sentiment. I hope that it will be refuted by the majority of suppliers in this country. One cannot get away from the fact that when dealing with a monopoly customer—the Post Office—they have not been subjected to the same competitive forces as they would otherwise be. For good reasons, the Post Office has standards for its equipment which are significantly higher than those required for equipment which generally sells in the world market. For those two reasons, if for no others, our manufacturers have been protected. Because of that, we propose to have this phasing-in period, which will affect various categories of equipment. Again, that point was made by some of my hon. Friends. We hope that the simpler equipment will be liberalised in the earlier stage. There will probably be two subsequent stages over a total of three years.

There is the important question of reciprocal arrangements with foreign Governments. We have obligations under the GATT and within the EEC. The policy within the EEC is not one of the greatest liberalisation. We shall have urgent and tough negotiations with countries which aspire to export equipment to us to ensure a fair trading opportunity for our manufacturers.

I turn now to the effect on British Telecommunications—principally financing. Financing is outside the Bill, because, like other nationalised industries, British Telecommunications will be subject to the cash limit system. It is suggested that the cash limit system is strangling British Telecommunications of funds. The amount which will be available for investment in the next year will be greater than in the current year, in the same way as the current year is greater than last year in real terms. Expenditure of more than £2 billion is significant. Half of that will go for growth and new applications.

The financial side of British Telecommunications is not as satisfactory as any of us would want, but, as the cash limit system has to be applied as a means of allocating resources, our judgment is that this allocation is right for the purpose. But—and this is where the Bill comes in—as my right hon. Friend made clear, money for investment can come not only through self-financing and the cash limit system but through the disposal of assets or the introduction of private capital into subsidiaries set up by British Telecommunications for that purpose. As the funds of British Telecommunications would not be used for the purposes for which its subsidiaries would be formed, more funds would be available for the central purpose of preserving the network.

The question of maintenance of PABXs was raised by some of my hon. Friends. The very fact that certain Opposition Members suggested that the argument was not all one way indicates that we shall be debating this matter, perhaps at some length, in Committee. However, I have listened carefully to what my hon. Friends have said.

The simple argument is that we are giving the continuing responsibility for the network to British Telecommunications, and if it has that responsibility it must also have the maintenance responsibility. We believe that the technical arguments on balance suggest PABX is an integral part of the network and that British Telecommunications should therefore have responsibility for maintaining it.

I should like to say a few words about the effect on jobs. It is probably best to draw on experience in places where liberalisation has been practised. I refer to the position in the United States, where the operator of the network, in the shape of the Bell Telephone company, has, I am informed, experienced an increase in jobs. Liberalisation will, in my view, require an expansion in job opportunities.

It is a defeatist attitude for Opposition Members to argue that the result will be a severe decline in jobs. It is best on these occasions to lean on experience. I would even go so far as to suggest that if the opportunities offered by liberalisation are not taken the job position will seriously deteriorate. If our various business companies are not able to buy the equipment that is most up to date and represents the best value, they will lose out in competitive markets and jobs will suffer.

My hon. Friend the Member for St. Marylebone (Mr. Baker) said that he thought that the Bill was the best of the Session. I suggest that it may even prove the most important of the decade. It touches upon the nation's entire industrial and commercial life and on the private lives of its citizens. Communication is the essence of commercial and personal relationships. The Bill and the Government policy that flows from it will help to ensure that the United Kingdom has the best possible arrangements in communications.

Government policy is designed, first and foremost, to ensure that the customer has efficient communication systems at his disposal and receives the best value for money. Customers ranging from the personal user of services to the business user of the most sophisticated telecommunications equipment will benefit. I believe that the interests of the customer will be served. I also believe that the fruits of Government policy will benefit the providers of goods and services. The telephone network is the arterial system through which telecommunications flow.

British Telecom will continue as the custodian of that network. The Bill proposes that it should have a statutory duty generally to ensure that a universal telephone service is provided, and powers which will, be given to the Secretary of State will not permit action which conflicts with that duty. I see British Telecom having a crucial role to play, with a unique opportunity to profit from the vastly increased volume of traffic.

The advent of competing transmission services — I suggest that the Opposition Front Bench should at least listen to this — will result either from an expanded demand for services or from a failure to meet demand satisfactorily by British Telecom. British Telecom starts from a position of advantage over potential competitors and the opportunity is theirs.

I believe that United Kingdom manufacturers are offered far-reaching opportunities. They stand to benefit from liberalisation. The Bill is essentially designed to open up opportunities to the users and providers of communications services. It promises greater efficiency of operation and better value for the customer through a massive injection of competition. I commend it to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 303, Noes 234.

Division No. 5] [10 pm
Adley, Robert Body, Richard
Aitken, Jonathan Bonsor, Sir Nicholas
Alexander, Richard Boscawen, Hon Robert
Alison, Michael Bottomley, Rt Hon A.(M'b'ro)
Amery, Rt Hon Julian Bowden, Andrew
Ancram, Michael Braine, Sir Bernard
Arnold, Tom Bright, Graham
Aspinwall, Jack Brinton, Tim
Baker, Kenneth(St. M'bone) Brocklebank-Fowler, C.
Baker, Nicholas (N Dorset) Brooke, Hon Peter
Beaumont-Dark, Anthony Brotherton, Michael
Beith, A. J. Brown, Michael (Brigg & Sc'n)
Bell, Sir Ronald Browne, John (Winchester)
Bendall, Vivian Bruce-Gardyne, John
Benyon, Thomas (A'don) Bryan, Sir Paul
Benyon, W. (Buckingham) Buchanan-Smith, Alick
Best, Keith Buck, Antony
Bevan, David Gilroy Budgen, Nick
Blackburn, John Bulmer, Esmond
Blaker, Peter Burden, Sir Frederick
Butcher, John Henderson, Barry
Butler, Hon Adam Heseltine, Rt Hon Michael
Cadbury, Jocelyn Hicks, Robert
Carlisle, John (Luton West) Higgins, Rt Hon Terence L.
Carlisle, Kenneth (Lincoln) Hogg, Hon Douglas (Gr'th'm)
Carlisle, Rt Hon M. (R'c'n ) Holland, Philip (Carlton)
Chalker, Mrs. Lynda Hooson, Tom
Channon, Rt. Hon. Paul Hordern, Peter
Chapman, Sydney Howe, Rt Hon Sir Geoffrey
Churchill, W. S Howell, Rt Hon D. (G'ldf'd)
Clark, Hon A. (Plym'th, S'n) Howell, Ralph (N Norfolk)
Clark, Sir W. (Croydon S) Howells, Geraint
Clarke, Kenneth (Rushcliffe) Hunt, David (Wirral)
Clegg, Sir Walter Hunt, John (Ravensbourne)
Cockeram, Eric Hurd, Hon Douglas
Colvin, Michael Irving, Charles (Cheltenham)
Cope, John Jenkin, Rt Hon Patrick
Cormack, Patrick Johnson Smith, Geoffrey
Corrie, John Jopling, Rt Hon Michael
Costain, Sir Albert Joseph, Rt Hon Sir Keith
Cranborne, Viscount Kaberry, Sir Donald
Critchley, Julian Kilfedder, James A.
Crouch, David Kimball, Marcus
Dean, Paul (North Somerset) King, Rt Hon Tom
Dickens, Geoffrey Knox, David
Douglas-Hamilton, Lord J. Lamont, Norman
Dover, Denshore Lung, Ian
du Cann, Rt Hon Edward Latham, Michael
Dunn, Robert (Dartford) Lawrence, Ivan
Durant, Tony Lawson, Rt Hon Nigel
Eden, Rt Hon Sir John Lee, John
Edwards, Rt Hon N. (P'broke) Lennox-Boyd, Hon Mark
Eggar, Tim Lester, Jim (Beeston)
Elliott, Sir William Lewis, Kenneth (Rutland)
Emery, Peter Lloyd, Ian (Havant & W'loo)
Eyre, Reginald Lloyd, Peter (Fareham)
Fairbairn, Nicholas Loveridge, John
Fairgrieve, Russell Luce, Richard
Faith, Mrs Sheila Lyell, Nicholas
Farr, John McCrindle, Robert
Fell, Anthony Macfarlane, Neil
Fenner, Mrs Peggy MacGregor, John
Finsberg, Geoffrey MacKay, John (Argyll)
Fisher, Sir Nigel Macmillan, Rt Hon M.
Fletcher, A. (Ed'nb'gh N) McNair-Wilson, M. (N'bury)
Fookes, Miss Janet McNair-Wilson, P. (New F'st)
Forman, Nigel McQuarrie, Albert
Fowler, Rt Hon Norman Madel, David
Fox, Marcus Major, John
Fraser, Rt Hon Sir Hugh Marland, Paul
Fraser, Peter (South Angus) Marlow, Tony
Fry, Peter Marshall, Michael (Arundel)
Galbraith, Hon T. G. D. Marten, Neil (Banbury)
Gardiner, George (Reigate) Mates, Michael
Gardner, Edward (S Fylde) Mather, Carol
Garel-Jones, Tristan Maude, Rt Hon Sir Angus
Gilmour, Rt Hon Sir Ian Mawby, Ray
Goodhart, Philip Maxwell-Hyslop, Robin
Goodhew, Victor Mayhew, Patrick
Goodlad, Alastair Mellor, David
Gorst, John Meyer, Sir Anthony
Gow, Ian Miller, Hal (B'grove)
Gower, Sir Raymond Mills, lain (Meriden)
Gray, Hamish Mills, Peter (West Devon)
Greenway, Harry Miscampbell, Norman
Griffiths, E.(B'y St. Edm'ds) Mitchell, David (Basingstoke)
Griffiths, Peter Portsm'th N) Moate, Roger
Grist, Ian Molyneaux, James
Grylls, Michael Monro, Hector
Gummer, John Selwyn Montgomery, Fergus
Hamilton, Hon A. Morris, M. (N'hampton S)
Hamilton, Michael (Salisbury) Morrison, Hon C. (Devizes)
Hampson, Dr Keith Morrison, Hon P. (Chester)
Hannam, John Mudd, David
Haselhurst, Alan Myles, David
Hastings, Stephen Neale, Gerrard
Havers, Rt Hon Sir Michael Needham, Richard
Hawksley, Warren Nelson, Anthony
Hayhoe, Barney Neubert, Michael
Heddle, John Newton, Tony
Nott, Rt Hon John Squire, Robin
Oppenheim, Rt Hon Mrs S. Stanbrook, Ivor
Page, Rt Hon Sir G. (Crosby) Stanley, John
Page, Richard (SW Herts) Steen, Anthony
Paisley, Rev Ian Stevens, Martin
Parris, Matthew Stewart, Ian (Hitchin)
Patten, Christopher (Bath) Stewart, A.(E Renfrewshire)
Patten, John (Oxford) Stokes, John
Pawsey, James Stradling Thomas, J.
Percival, Sir Ian Tapsell, Peter
Peyton, Rt Hon John Taylor, Robert (Croydon NW)
Pink, R. Bonner Taylor, Teddy (S'end E)
Pollock, Alexander Temple-Morris, Peter
Porter, Barry Thatcher, Rt Hon Mrs M.
Powell, Rt Hon J.E. (S Down) Thomas, Rt Hon Peter
Prentice, Rt Hon Reg Thompson, Donald
Price, Sir David (Eastleigh) Thorne, Neil (Ilford South)
Prior, Rt Hon James Thornton, Malcolm
Proctor, K. Harvey Townend, John (Bridlington)
Pym, Rt Hon Francis Townsend, Cyril D, (B'heath)
Raison, Timothy Trippier, David
Rathbone, Tim Trotter, Neville
Rees, Peter (Dover and Deal) van Straubenzee, W. R.
Rees-Davies, W. R. Vaughan, Dr Gerard
Renton, Tim Viggers, Peter
Rhodes James, Robert Waddington, David
Rhys Williams, Sir Brandon Wakeham, John
Ridley, Hon Nicholas Waldegrave, Hon William
Ridsdale, Sir Julian Walker, Rt Hon P.(W'cester)
Rifkind, Malcolm Walker, B. (Perth)
Rippon, Rt Hon Geoffrey Walker-Smith, Rt Hon Sir D.
Roberts, M. (Cardiff NW) Wall, Patrick
Roberts, Wyn (Conway) Waller, Gary
Ross, Stephen (Isle of Wight) Walters, Dennis
Ross, Wm. (Londonderry) Ward, John
Rossi, Hugh Warren, Kenneth
Rost, Peter Watson, John
Royle, Sir Anthony Wells, John (Maidstone)
Sainsbury, Hon Timothy Wells, Bowen
St. John-Stevas, Rt Hon N. Wheeler, John
Scott, Nicholas Whitelaw, Rt Hon William
Shaw, Michael (Scarborough) Whitney, Raymond
Shelton, William (Streatham) Wickenden, Keith
Shepherd, Colin (Hereford) Wiggin, Jerry
Shepherd, Richard Williams, D.(Montgomery)
Silvester, Fred Winterton, Nicholas
Sims, Roger Wolfson, Mark
Skeet, T. H. H. Young, Sir George (Acton)
Speed, Keith Younger, Rt Hon George
Speller, Tony
Spence, John Tellers for the Ayes:
Spicer, Jim (West Dorset) Mr. Spencer Le Marchant and
Spicer, Michael (S Worcs) Mr. Anthony Berry.
Sproat, lain
Abse, Leo Callaghan, Jim (Midd't'n & P)
Adams, Allen Campbell, Ian
Allaun, Frank Canavan, Dennis
Anderson, Donald Cant, R. B.
Archer, Rt Hon Peter Carmichael, Neil
Armstrong, Rt Hon Ernest Carter-Jones, Lewis
Ashley, Rt Hon Jack Cartwright, John
Ashton, Joe Clark, Dr David (S Shields)
Atkinson, N.(H'gey,) Cocks, Rt Hon M. (B'stol S)
Bagier, Gordon AT. Cohen, Stanley
Barnett, Guy (Greenwich) Coleman, Donald
Barnett, Rt Hon Joel (H'wd) Conlan, Bernard
Benn, Rt Hon A. Wedgwood Cook, Robin F.
Bennett, Andrew(St'kp't N) Cowans, Harry
Bidwell, Sydney Craigen, J. M.
Boothroyd, Miss Betty Crowther, J. S.
Bottomley, Rt Hon A.(M'b'ro) Cryer, Bob
Bradley, Tom Cunliffe, Lawrence
Bray, Dr Jeremy Cunningham, G. (Islington S)
Brown, Hugh D. (Provan) Dalyell, Tam
Brown, R. C. (N'castle W) Davidson, Arthur
Brown, Ron (E'burgh, Leith) Davies, Rt Hon Denzil (L'lli)
Buchan, Norman Davies, lfor (Gower)
Callaghan, Rt Hon J. Davis, Clinton (Hackney C)
Deakins, Eric Mabon, Rt Hon Dr J. Dickson
Dean, Joseph (Leeds West) McDonald, Dr Oonagh
Dempsey, James McElhone, Frank
Dewar, Donald McKay, Allen (Penistone)
Dixon, Donald McKelvey, William
Dobson, Frank MacKenzie, Rt Hon Gregor
Dormand, Jack Maclennan, Robert
Douglas, Dick McNally, Thomas
Douglas-Hamilton, Lord J. McTaggart, Robert
Dubs, Alfred McWilliam, John
Duffy, A. E. P. Marks, Kenneth
Dunnett, Jack Marshall, Dr Edmund (Goole)
Dunwoody, Hon Mrs G. Marshall, Jim (Leicester S)
Eadie, Alex Martin, M(G'gow S'burn)
Eastham, Ken Mason, Rt Hon Roy
Ellis, R. (NE D'bysh're) Maxton, John
English, Michael Maynard, Miss Joan
Ennals, Rt Hon David Meacher, Michael
Evans, loan (Aberdare) Mellish, Rt Hon Robert
Evans, John (Newton) Mikardo, Ian
Ewing, Harry Millan, Rt Hon Bruce
Faulds, Andrew Mitchell, Austin (Grimsby)
Field, Frank Mitchell, R. C. (Soton Itchen)
Fitch, Alan Morris, Rt Hon A. (W'shawe)
Fitt, Gerard Morris, Rt Hon C. (O'shaw)
Flannery, Martin Morris, Rt Hon J. (Aberavon)
Fletcher, Ted (Darlington) Morton, George
Foot, Rt Hon Michael Moyle, Rt Hon Roland
Ford, Ben Newens, Stanley
Forrester, John Oakes, Rt Hon Gordon
Foster, Derek O'Halloran, Michael
Fraser, J. (Lamb'th, N'w'd) O'Neill, Martin
Freeson, Rt Hon Reginald Orme, Rt Hon Stanley
Garrett, John (Norwich S) Owen, Rt Hon Dr David
George, Bruce Palmer, Arthur
Gilbert, Rt Hon Dr John Park, George
Ginsburg, David Parker, John
Golding, John Parry, Robert
Gourlay, Harry Pendry, Tom
Graham, Ted Powell, Raymond (Ogmore)
Grant, George (Morpeth) Prescott, John
Grant, John (Islington C) Price, C. (Lewisham W)
Hamilton, James (Bothwell) Race, Reg
Hamilton, W. W. (C'tral Fife) Radice, Giles
Harrison, Rt Hon Walter Rees, Rt Hon M (Leeds S)
Hart, Rt Hon Dame Judith Richardson, Jo
Hattersley, Rt Hon Roy Roberts, Albert (Normanton)
Haynes, Frank Roberts, Allan (Bootle)
Healey, Rt Hon Denis Roberts, Ernest (Hackney N)
Heffer, Eric S. Roberts, Gwilym (Cannock)
Hogg, N. (E Dunb't'nshire) Robertson, George
Home Robertson, John Robinson, G. (Coventry NW)
Homewood, William Rodgers, Rt Hon William
Hooley, Frank Rooker, J. W.
Horam, John Roper, John
Howell, Rt Hon D. Ross, Ernest (Dundee West)
Huckfield, Les Rowlands, Ted
Hughes, Mark (Durham) Ryman, John
Hughes, Robert (Aberdeen N) Sandelson, Neville
Hughes, Roy (Newport) Sheerman, Barry
Janner, Hon Greville Sheldon, Rt Hon R.
Jay, Rt Hon Douglas Shore, Rt Hon Peter
John, Brynmor Short, Mrs Renée
Johnson, James (Hull West) Silkin, Rt Hon J. (Deptford)
Johnson, Walter (Derby S) Silkin, Rt Hon S. C. (Dulwich)
Jones, Rt Hon Alec (Rh'dda) Silverman, Julius
Jones, Barry (East Flint) Smith, Rt Hon J. (N Lanark)
Jones, Dan (Burnley) Snape, Peter
Kaufman, Rt Hon Gerald Soley, Clive
Kerr, Russell Spearing, Nigel
Kilroy-Silk, Robert Spriggs, Leslie
Lambie, David Stallard, A. W.
Lamborn, Harry Stewart, Rt Hon D. (W Isles)
Leadbitter, Ted Stoddart, David
Leighton, Ronald Stott, Roger
Lestor, Miss Joan Straw, Jack
Litherland, Robert Summerskill, Hon Dr Shirley
Lofthouse, Geoffrey Taylor, Mrs Ann (Bolton W)
Lyon, Alexander (York) Thomas, Dafydd (Merioneth)
Lyons, Edward (Bradf'd W) Thomas, Jeffrey (Abertillery)
Thomas, Mike (Newcastle E) Whitlock, William
Thomas, Dr R.(Carmarthen) Willey, Rt Hon Frederick
Thome, Stan (Preston South) Williams, Rt Hon A.(S'sea W)
Tilley, John Wilson, Gordon (Dundee E)
Torney, Tom Wilson, Rt Hon Sir H.(H'ton)
Varley, Rt Hon Eric G. Wilson, William (C'try SE)
Wainwright, E.(Dearne V) Winnick, David
Walker, Rt Hon H.(D'caster) Woodall, Alec
Watkins, David Woolmer, Kenneth
Weetch, Ken Wrigglesworth, Ian
Wellbeloved, James Young, David (Bolton E)
Welsh, Michael
White, Frank R. Tellers for the Noes:
White, J. (G'gow Pollok) Mr. Terry Davis and
Whitehead, Phillip Mr. James Tinn.

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).