HC Deb 14 June 1982 vol 25 cc595-7
4. Mr. Michael Marshall

asked the Secretary of State for Industry what role his Department is playing in the current negotiations between British Telecom and Mecury Communications Ltd.

5. Mr. Richard Page

asked the Secretary of State for Industry whether he envisages the need to exercise his powers under the British Telecommunications Act 1981 in furthering the development of Project Mercury.

10. Mr. Waller

asked the Secretary of State for Industry if he will make a statement about the progress of discussions with Mercury Communications Ltd. concerning the provision of new telecommunications facilities.

The Minister for Industry and Information Technology (Mr. Kenneth Baker)

The Government, British Telecom and Mercury have accepted the principle of connection between Mercury and the public switched telephone network and of Mercury's access to separate international circuits. Negotiations between BT and Mercury are now taking place to establish the appropriate terms, and the Government do not wish to prejudge or to influence the outcome of those negotiations, which concern commercial and technical details. The ITeCs by the end of the year. If it appears possible to find the money and to get the backers to go further, we shall want to do so.

Mr. John Garrett

Will these schemes have an effect on the £300 million annual deficit in trade in information technology equipment and services? Does the right hon. Gentleman agree that the greatest threat to our success in information technology is the constant cuts that are made by the Department of Education and Science in university and polytechnic computer science departments?

Mr. Jenkin

Very much at the heart of our approach to these matters is the need to correct the balance of payments deficit in information technology goods and services and to stop it rising, as one estimate has it, to £1,000 million by 1990 if we were to do nothing. That is why we are attaching such importance to the schemes. I remind the hon. Gentleman that even after the cuts that have had to be made in the funding of universities there will be 2 per cent. more places in engineering. It is part of the Government's policy progressively to shift the emphasis of university courses to courses that involve science and technology and numeracy. It is those skills upon which industry will have increasingly to depend in the years ahead.

Following is the table:

Government would reconsider their position if it became evident that there was no possibility of agreement before the end of July, bat both sides are still negotiating.

Mr. Marshall

I thank my hon. Friend for that reply, but is he not concerned about the delays that are inherent in this kind of triagular negotiation? Will he consider what might be more applicable in the future for further liberalisation measures? With regard to Mercury, will he confirm that orders for fibreoptics should be placed shortly, and will he give an estimate of when he hopes to see the alternative network in place? Will this not mean jobs, which critics such as the Post Office Engineering Union ought to take into account?

Mr. Baker

The alternative network will certainly mean jobs in the United Kingdom. I understand that orders will be placed shortly, and that Mercury hopes to provide this service to the public in the second quarter of next year.

Mr. Page

I am sorry to press my hon. Friend further on this point, as I am aware of his immense contribution to information technology, but in view of the speed of technological changes will he confirm to the House that British Telecom does not have the right of veto, either in part or in total, on Project Mercury?

Mr. Baker

I can confirm that. Parliament has agreed that the monopoly of BT should be ended and that competition should be allowed. The issue of the licence to Mercury is the direct result of that parliamentary decision. Clearly, the will of Parliament should not be frustrated.

Mr. Waller

Is it correct that the limit of Mercury's market share is set at 5 per cent., but that in any case there is no possibility of that being reached before the figure is reviewed? Will my hon. Friend confirm that there is no threat to BT's position and that there is certainly no reason on that score for creating any delay, which, as my hon. Friend said, would frustrate the will of Parliament?

Mr. Baker

It will take some time for Mercury to build up a reasonable level of business, because BT has been in business for the better part of 70 years. Some anxiety was expressed over this at the POEU conference last week. Some members of that union feel that the telecommunications network is their property. It is not. It is the property of the nation. I was glad to see that wiser counsels prevailed. Mercury could bring extra business to BT.

Dr. John Cunningham

Is it not strange for the Minister to be, in effect, bringing pressure on BT to reach a conclusion by the end of July on what is essentially a commercial negotiation, given that the principle is accepted? Should he not make it clear to his hon. Friend the Member for Arundel (Mr. Marshall), and others, that the unions in the industry—the Post Office Engineering Union and the Union of Communication Workers—made it clear to him that they object in principle to the ending of monopoly, and, like the Labour Party, want to see that monopoly restored?

Mr. Baker

I think that wiser counsel prevailed at the POEU conference last week, I am glad to say. As to pressure on BT, the principle was agreed early this year, just after Christmas. We said then that the commercial details should be agreed between the two by the end of July. That is a reasonable time for commercial negotiations. I do not think that undue pressure is being put on either party to conclude.

Mr. Neale

Despite the determined efforts by my hon. Friend to liberalise BT's monopoly in this way, will he acknowledge that he is coming under increasing pressure to make BT still more accountable to the market place? Will he confirm that he will examine in detail any proposals to achieve that and offer greater freedom of choice, particularly in the supply, installation and maintenance of telephone attachments?

Mr. Baker

There is a question about freedom of choice later on the Order Paper, to which one of my right hon. or hon. Friends will be replying, although I can confirm that we want it. Already the range of competition to which we have subjected BT has had some beneficial effects for the consumer. British Telecom reduced trunk and international rates by one-third. I do not believe that those reductions would have taken place if the Government had not issued a licence to Mercury.