HC Deb 14 December 1983 vol 50 cc1072-98
Mr. Golding

I beg to move, amendment No. 3, in page 2, line 36, leave out clause 3.

It is regrettable that we have only two hours to debate this clause because it was inadequately debated in Committee. The fall of the guillotine has frustrated the democratic process of this House. The difficulty with this clause is that, from time to time, with regular monotony, the Government have changed it. It is not a static clause and it is not the same clause as was introduced back in November 1982. It has been changed out of all recognition.

There are Conservative Members who have since been put into purdah, but who assisted in changing this clause to the point where it is almost unrecognisable, seen from the standpoint of November 1982. The changes that the Government have been forced to introduce to clause 3 underline the importance of the effective opposition that we have mounted to the clause. It underlines also the fact that, far from scaremongering, we saw the Bill's inconsistencies many months ago. The chopping and changing of clause 3, the introduction of one new formula after another and the popping out of the hat of one rabbit of a report after another show that the Government's proposals have been unplanned and inept. The Government do not yet know what they want to do with the Bill. That is why they are still uncertain about the clause.

By including clause 3—I may return to this point on Third Reading — the Government have admitted the central contradiction of their privatisation policy. They know that privatisation will harm the customer and that it will especially damage the residential subscriber. The intention behind clause 3 has been to repair some of the damage that privatisation will inflict on the customer. The Government are having difficulty reconciling the principles of competition with the desire to save customers who will suffer from the type of competition that the Government are introducing.

My job is to tell the House of the so-called improvements to clause 3 that have been introduced during the short time that the Bill has been debated. They have been substantial. Despite those improvements, clause 3 is harmful to British telecommunications and is inadequate. It sets out apparently to protect the residential customer, but it fails to do so. My hon. Friend the Member for Wigan (Mr. Stott) laid a trailer to his arguments when he said that clause 3 sets out to destroy British manufacturing industry, and it can succeed.

I apologise to Conservative Members if I abandon intuition for the moment and deal with facts, but they must be faced. Fact No. 1 is that British residential telephone charges are among the lowest in the world. That has been commonly agreed by the Government and the Opposition. Fact No. 2 is that many residential charges do not cover the costs of the telephone service. The costs have been made up by charging big business users more than is necessary. Big business users have supported project Mercury to escape helping the ordinary customer. That is the nub of the Bill. For months on end I have been subjected to sedentary abuse from inexperienced Conservatives. Now, at the last knockings, the Secretary of State himself has been sent along to try to do the job that others have completely failed to do. He will have the opportunity, of which he did not avail himself in Committee, to put the Government view. The nub of the Bill is the reluctance of big business to cross-subsidise the ordinary residential subscriber.

Fact No. 3 follows from facts Nos. 1 and 2. It is that residential charges will be higher under liberalisation and privatisation than they would have been under public ownership. That is one of the reasons why public opinion has shifted so remarkably in the past 12 months. The ordinary residential subscriber now realises that privatisation is a Tory con—a way of taking money from the pockets of ordinary working people and putting it into the bank accounts of the rich. Residential charges will be increased to reduce the costs for big business.

Mr. Timothy Wood (Stevenage)

Will the hon. Gentleman state clearly whether he supports the overcharging of commerce and industry and, if so, whether he believes that that is damaging to British competitiveness generally?

Mr. Golding

I support and have always supported cross-subsidisation, just as I support the Minister's proposals for access charges, which follow the same principle. I do not believe that the cross-subsidisation that I have described is any more harmful than that proposed by the Minister. It has been to the benefit of ordinary people that they have been able to obtain their telephone service at a cheaper rate because additional charges have been placed on big business.

Mr. Archie Hamilton (Epsom and Ewell)

What about small business?

Mr. Golding

The Government Whip—known as "Archie" — finds it no easier to remain silent in the Chamber than he did in Committee before he got the sack. He asks about small business. The Government, of course, are creating small businesses. They are creating small businesses out of ICI, Shell, BL and the rest. All the big businesses that we used to have will become small businesses under the Government and their Whips.

The Government say that assurances are to be found in the licence, that prices will be subject to restrictions and that there will be controls. I know that my hon. Friend the Member for Wigan feels strongly about this because in political advertisements paid for by the public BT has been calling the same tune. Those assurances are not worth the paper that they are written on. The licence being sold to the general public for a pound is not worth that amount of money.

9.15 pm

The Minister produced out of a hat an RPI minus X formula to which he has referred for almost a year. We still do not know what X means. The Minister has not a clue what X means. The hon. Member for Epsom and Ewell (Mr. Hamilton), who was sacked from the Committee, says that his right hon. Friend means system X. He might as well mean system X as he does not know what else it can mean. Probably a civil servant has said, "Tell them that it is X. They will never know. By the time they have asked what X means, the Bill will have passed through the Commons." Such has been the Minister's approach. Every time he faces a difficulty, he brushes it aside, talks to the Leader of the House, obtains a guillotine, stops our questions and hopes that their Lordships will be asleep, not having read any of our proceedings. The technique has been to dodge the difficult questions. Laryngitis or not, what does X mean? I doubt that we shall get an answer.

The intention of the formula is to keep BT's prices for connection charges, exchange line rentals, local call charges and call charges from public call boxes below the level of inflation. The Government are using the formula to give an impression that they are keeping prices down. The past two years have seen only increases. The formula could have been used in the past two years to introduce increases that were completely unjusified and unnecessary. The Government can tell the public, "Under this new system we shall keep prices below the cost of living, although we do not know by how much. We will tell you that when we have assessed everything after the Bill has been enacted." All that sounds smashing. The Government fail to tell the public that under public ownership charges have been below the cost of living for years. As a result of increased productivity by the staff and massive public investment, they said that their target would be a real reduction in costs of 5 per cent.

If the formula means that the figure will be worse than that achieved under public ownership, we will have something to say. Unfortunately, at that time it will be too late as the Government will have bulldozed the Bill through both Houses. When the Bill is enacted, even though its provisions will become inceasingly unpopular, they will announce decisions which will mean a raw deal for the customer. The formula is cosmetic and fraudulent. Prices will probably be higher under private ownership than under public ownership.

The Government do not know how to guarantee profitability to the investor and at the same time peg prices while creaming off profitable business through Mercury. They do not know how to do it, they have not got a clue. That is made clear even in the financial columns of the posh newspapers that normally support the Tory party. Every financial commentator is sceptical. That is a polite way of describing their cynicism about the Government's proposals to privatise BT. The Government do not have a clue about what the pricing policy is to be. There can be no doubt that the formula will be inadequate.

In Committee we made it clear to the Minister that unless he could give us decisions about some of the important issues, it was not yet time to take decisions. Let us take the example of what items are to be considered for inclusion in the average. It makes a big difference whether trunk calls are included or excluded. The Government could say that they will take the average increase in prices.

We already know that under privatisation and liberalisation, BT will reduce the cost of international calls to compete with Mercury. My constituents, who are ordinary working people, do not make many international calls. Big business men in the City make them. The Minister of State smiles at me. I know that the constituents of Mole Valley are a bit better heeled than the constituents of Newcastle-under-Lyme, so I exempt them. Those rich people may well make more international calls. However, most of us represent ordinary working people and they certainly make very few international calls.

Reductions in the cost of international calls will not make much difference to most people. The introduction of Mercury represents one of the most wasteful investments to have been made in Britain since railways were constructed parallel to one another. However, since its introduction, BT has decided to reduce the cost of trunk calls. I hope that it does so in order to drive Mercury out of business.

Privatisation and liberalisation mean that the cost of international and trunk calls will fall. To make up the money in the kitty the cost of local calls will be increased. That will hurt the constituents of most hon. Members unless they represent very posh constituencies. It will hurt all those who make many more local calls than trunk and international calls. Clearly, the Government are taking money out of the pockets of working people so that big business can be given more cash. We oppose that, because it is bad. The latest opinion polls on this privatisation measure show that the public also oppose it.

There has been no proper discussion. The Minister of State was floored several times in Committee by detailed questions. For example, we asked him whether the licence made it possible for BT to keep the price the same while changing the nature, quality and size of the service. It does not do so, but we asked him because it embarrassed him. We have had no satisfactory answer. I call it the Sainsbury factor— the principle where by the price remains the same, but the size of the packet shrinks. How will the Government deal with what I call the Sainsbury factor, the changing of the commodity?

The Financial Times has been telling the Government that if the local call area in London is made smaller, much more profit will ensue. Will the Government stop that? Will the Government state in the licence that London customers will not be penalised?

No willingness has been shown by the Minister of State to help Londoners since he left his last two London seats. Before he went to Mole Valley he might have given London some assistance, but, having exhausted his London seats and gone further south, he seems unsympathetic to my proposition.

I have also asked the Minister of State—I gave up asking questions of the Under-Secretary of State on 10 February — what he intends to do about the cost of maintenance and maintenance charges. Will he put a ceiling on the charges that can be imposed upon customers for the maintenance of equipment? There is no separate maintenance charge at present. The maintenance charge is included in the rental charge. Will BT be able to have a separate maintenance charge in future? I made this point to the Minister of State in Committee. Will BT customers be exploited, as I have been exploited, by private companies charging £14.75 for four minutes' work? If the telephone goes out of order and a call is made at the subscriber's house necessitating only four minutes' work, will the telephone subscriber be handed a bill for £14.75 and be told that is the minimum call-out charge?

How does the Minister of State intend to guarantee the continuance of the quality of service? Should there be a statement in the licence which says: "Thou shalt not behave as badly as television companies, thou shalt not behave as badly as the private companies that maintain electric cookers"? I brought tears to the eyes of the Government Front Bench when I explained during consideration of this Bill, the difficulties I had in getting my cooker repaired. During consideration of the previous Bill the repair item was a television. The Under-Secretary of State should take the question of maintenance seriously. Telephone customers have had a good public service and the surveys indicate customer satisfaction. I cite that as one reason why public opinion says it does not want the Bill. Public opinion does not want to get rid of a good maintenance service for the residential subscriber in exchange for the shoddy service often offered by private enterprise companies.

The draft licence as presently written is not very helpful. The House would welcome the Under-Secretary of State's observations on the Bill before Third Reading. I assume that he has been silent because he has been wondering how on earth he will justify the Bill tomorrow night. Is there any other reason why he has been so silent?

9.30 pm
Mr. Marlow

Yes, because the hon. Gentleman will not stop talking!

Mr. Golding

The hon. Member for Northampton, North (Mr. Marlow) is now assisting the Secretary of State. My advice to the right hon. Gentleman is to disown his hon. Friend as quickly as possible.

The BT licence will not protect residential customers and one need only look at the small print to see that the exceptions will make the licence meaningless. For example, we are told that people are entitled to a service if there is a reasonable demand for it. When one asks what is meant by "reasonable demand", the answer is usually, "A reasonable demand is one that is backed by money. If people are prepared to pay the full cost of a service, they are entitled to it."

The vast number of rural subscribers and a substantial number of residential subscribers are provided with a telephone service at below cost. In other words, somebody else pays. I do not find anything wrong with people in the countryside receiving cross-subsidisation from people living in the city. Nor do I find anything wrong with residential subscribers receiving some cross-subsidisation from big business.

If the Secretary of State follows the logic of his argument he will have to say that the customer must pay the full cost of the service. If that were to happen, Britain's telecommunications system would be decimated. It cannot and should not be run on a full-cost basis. It is not only an economic service but a social service. It has a great contribution to make in the social fabric of the nation.

Indeed, in my view many families should have a telephone whether or not they can afford the full cost. If the Secretary of State does not believe that, then tomorrow night he will have to justify the Minister of State's action in introducing access charges and placing a control on prices. It is clear that the Minister of State does not believe that every customer should pay the full price, and he has introduced cross-subsidisation because he shares my view. Although he does not share my view in its entirety, he accepts that some people are entitled to a telephone service —he confines it to a telephone service—whether or not they can afford the full cost. That is why he has placed a tax on international and trunk calls, called "access charges". The Secretary of State, by tomorrow night, had better decide how far he agrees with the philosophy of the Minister of State.

The licence is inadequate because it is full of escape clauses. It gives discretion to the Director General of Telecommunications and it makes it impossible for the residential subscriber at times of difficulty to get the service that is needed. My hon. Friend the Member for Wigan referred to an article in The Guardian of 25 November headed, "Towards the Year 2000". It is clear that the Government intend that telecommunications in Britain should be developed in such a way that the nation is divided.

In an intervention an hon. Member asked whether it was not true that even now there are two nations, those with telephones and those without. The answer is yes. The position is changing constantly because the number of telephones is increasing all the time. However, it is clear from the Guardian article and from the cable policy of the Government that there will still be two nations. One half of the country will have an advanced telecommunications system and the other half will have a rudimentary telephone system.

Mr. Henderson

The hon. Gentleman has said that he approves of total cross-subsidisation for BT operations. Does he feel that subscribers' payments for their telephones should be used, through BT and cross-subsidisation, to enable BT to continue the major investment in cable which it has undertaken? Is that right?

Mr. Golding

Yes. There should be mixed funding. Some should come from the customer, some from provision for depreciation and some from borrowing, but that is another subject which we shall deal with later. The answer to the hon. Gentleman is yes: a simple question, a simple answer.

I am sorry that the Chief Whip for the Liberal party is not here because I wish to speak about call boxes. The position is unsatisfactory. Sir George Jefferson and the Minister of State are leading people to believe that there will be no attack on call boxes. That is not justified by the licence.

The Secretary of State for Trade and Industry (Mr. Norman Tebbit)

Some people have been attacking call boxes with crowbars for years.

Mr. Golding

The Secretary of State says that some people have been attacking call boxes with crowbars for years. What a contemptible contribution to a debate on telecommunications. We are debating the liberalisation and the privatisation of the foremost public enterprise in Europe, and what does the Secretary of State talk about —the vandalisation of call boxes with crowbars. That may be the experience of the Secretary of State but it is not my experience. I have never vandalised a call box in my life.

What is missing in the argument about kiosks is the specification of the minimum figure that a box has to take in revenue before it is at risk. That is not in the licence. All we are told is that a minimum figure will be laid down and that if the box takes less than the minimum figure it will be at risk. Various estimates have been given. There has been talk of £1,000 a year. It is nonsense to talk in such terms. Currently kiosks lose BT about £77 million a year. There is an average loss of about £1,000 per kiosk. The kiosks in London railway stations are profitable so many kiosks must lose a great deal of money.

I am not in favour of abolishing kiosks; I think the Secretary of State would be. His philosophy would be that people should get a big house with two telephones. We are two nations. We have not achieved even the favourable Disraeli state of affairs refereed to by the Minister of State. As has already been pointed out, there is still a considerable number of people who cannot afford a telephone. It is only reasonable that we provide them with kiosk facilities. The kiosk is still at risk.

We are still waiting for the Minister to tell us what "rural" means. We have had statement after statement on what he will do about rural areas but he has not told us what they are. However, he is repentant and has now concluded that, having written such a provision into the Bill, he must decide what "rural" means. Will we have that information before tomorrow night? If we do not, what is the point of it being mentioned in the Bill? It is also time that the Government told us more about the low user rebate.

It is disgraceful what clause 3 will do to British manufacturers of telecommunications and electronic equipment. The Secretary of State is not bothered whether we have such an industry —that is why he has been made Secretary of State for Trade and Industry. I said recently that the Minister with responsibility for the west midlands should be called the Minister for Overseas Development. The Secretary of State should oversee his functions. The purpose of their sending officials to and having discussions with America and Japan is to destroy British companies by giving business to Japanese and American companies. The Secretary of State and the Minister spend their lives denigrating British industry and sucking up to the Japanese and the Americans. How is it that we can have a Secretary of State for Trade and Industry, a Minister with responsibility for the west midlands and a Minister for Information Technology who have each little regard for British industry that they are intent on destroying it?

Mr. Marlow

Let us have a serious debate.

Mr. Golding

The hon. Gentleman should consider whether Lord Weinstock has ever been known to come out in opposition to a Tory measure. Moreover, the chairman of Standard Telephones and Cables opposes the Bill. The remarkable feature of the Bill is that it has brought together the chairman of Standard Telephones and Cables, the head of General Electric Company Ltd.—Lord Weinstock—the trade unions in BT, parish councils, women's institutes, the National Farmers Union and even all the Opposition parties. That takes some doing, but the Secretary of State has managed it. He has the capacity to unite men of reason against such a measure. There is united opposition to the Bill and I hope that there will be united opposition to clause 3 which is such a sloppy part of it.

Mr. Henderson

The past few minutes, during which we have listened to the hon. Member for Newcastle-under-Lyme (Mr. Golding), have been nostalgic as I did not have the privilege of serving on the Committee which considered the Bill. In the past three quarters of an hour the hon. Gentleman has given us a brief resumé of the speeches which he made during the 161 hours of consideration on the first Bill. On that occasion I had the duty of serving on the Committee. I suspect that about 130 of those 161 hours were a broader elucidation of the views which the hon. Gentleman has summarised so succinctly today.

9.45 pm

The one thing that the hon. Gentleman did not do was to tell us why he opposed the clause. That is interesting. I believe that the hon. Gentleman opposes the clause not because it does not help consumers but because it does not give the totally free hand to BT that it has had until now to do what it wishes with consumers. The hon. Gentleman mentioned the "dynamic relocation"—in computer terms —of certain words in the clause. Since I saw the clause in the original Bill, it has changed considerably. However, far from being a negation of the democratic process, it has done credit to the democratic process. What was a good clause in the original Bill and an improvement on the existing circumstances has become, through the democratic process and the work of members of the Committee, a better clause. I hope that the House will approve it.

The hon. Gentleman referred to a marginal shift in public opinion on the privatisation of BT. I should have thought that if there had been no shift of public opinion the hon. Gentleman would wonder why his friends had spent £1 million or more on advertising. I should have thought that they would expect at least some return from an expensive advertising campaign to try to influence public opinion. Much of the attempt to change public opinion was based on misrepresentations of the facts and the reality of what is in the Bill.

For example, the hon. Gentleman referred to telephone charges for private subscribers. The private subscribers' bills pay for 90 per cent. of the long-term capital investment of BT. One possible result of privatisation, and one of its great merits, is that more of the capital investment can be sought on the market, from which capital resources normally come, and not from the poor modest subscriber.

Until now BT has operated under a generalised, weak and largely unenforceable general obligation. In the Bill, particularly in the clause, it has been replaced by the creation of Oftel and the appointment of the director, who has a clear duty. The clause lays a duty on the Secretary of State and the director specifically to ensure that the objectives in the Bill to protect the consumer will be carried out. That is of particular importance to constituents in rural areas such as mine.

The hon. Member for Berwick-upon-Tweed (Mr. Beith) said that a large sum of money was charged by BT under the present rules for connections in rural areas. If that was an unreasonable charge, at least under the new regime proposed in the Bill, that person could have appealed to the director and asked him to consider whether it was a fair, reasonable and sensible charge. There is no such protection at present. The clause improves substantially the rights of the consumer.

I particularly welcome the fact that the clause provides not only for telephone services throughout the United Kingdom, as at present, but for "telecommunication services", which implies wider services than merely the telephone service. The clause states that BT will satisfy the need for in particular, emergency services, public call box services, maritime services and services in rural areas". I welcome those clear duties on the Secretary of State and the director. Perhaps more important, in clause 3(1)(b), we find that finance is to be made available to ensure that those things happen. At present there is no such clear obligation. Also, each will have a duty to carry out the aims and objects defined in subsection (2). I particularly welcome paragraph (a)to promote the interests of consumers … in particular, those who are disabled … in respect of the prices charged for, and the quality and variety of, telecommunication services provided and telecommunication apparatus supplied". The emphasis in the clause is on the interests of the consumer in general and in particular the interests of consumers who might, in the face of a substantial and powerful commercial interest, be potentially at risk. Those people have been intelligently identified in the clause. The duty is clear. I believe that Opposition Members oppose the clause because it is concerned with the consumer rather than the supplier.

Mr. McWilliam

Talk of concern for the consumer sounds odd in the context of the Bill because very little in it measures up to the reality of such concern. I congratulate the hon. Member for Fife, North-East (Mr. Henderson) on managing completely to misunderstand the finances of BT. He said that the charges on private subscribers fund 90 per cent. of the investment. I do not know how he makes that calculation if the private subscribers themselves do not produce any profit and there is therefore no surplus to provide capital. I also challenge the hon. Gentleman's view about the reasonableness of charges. What the hon. Member for Berwick-upon-Tweed (Mr. Beith) said about reasonable charges and charges in rural areas was quite right. I do not believe that the present level of charging is reasonable.

Under clause 3(1)(a) the Secretary of State and the director must ensure the provision of services so as to satisfy all reasonable demands for them". However, paragraph (b) states "without prejudice" that those who are to provide the services must be able to finance them. That means that the general duty of the director is financial rather than social. It may well be, financially speaking, perfectly reasonable to charge £6,000 or £7,000 for an installation in a rural area and yet completely unreasonable on social grounds to do so. The director will have to have regard to the financial grounds. No one would argue about that. I cannot see the point that the hon. Gentleman was making.

My hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) referred to the two nations—those with and those without a telephone. I believe that the Bill will encourage that tendency. With the Government's intentions on cabling, the Bill will make matters worse. We are talking about those who do not have what are currently regarded as normal telephone services. We are not taking account of what is happening in cabling. Even on the Government's plan, only half the population will have access to the new enhanced cable, data and telecommunications systems by the year 2000. The other half, unless they have modern digital equipment, will not get any service at all. The service will certainly be extremely limited because a privatised British Telecom is unlikely to invest enough manpower to maintain the services that are provided today even in the rural areas.

In view of the areas that Conservative Members generally represent, it is surprising how callous they are about the rural services. I am one of the few Labour Members who can boast that he has an entire branch of the National Farmers Union in his constituency. Indeed, I have a forest in my constituency. I know the kind of pressures that my constituents will find when the Bill becomes a reality. They have not been backward in telling me of them and their worries. Conservative Members seem to equate service in the rural areas with service to the wealthy middle class people who choose to live there.

We rely on the rural areas for our food and recreation. The vast majority of people who live in rural areas do so because that is where their jobs are. They are generally low paid compared with those of us who live in urban areas who have jobs. They suffer the added disadvantage of communication difficulties because of distance. The telephone is a necessity in rural areas. It is still something of a luxury in urban areas for many families.

The Government are saying that they will put up the price of that necessity in the rural areas. I take great exception to that. The social consequences are horrendous. There are problems when one is faced, as I am, with a reduction in ambulance services and the additional distance that people have to go to call an ambulance if they cannot afford a telephone. They will have to find a neighbour who may be more than a mile away and whom they may not be able to reach in a car because the roads are iced up in the winter or they will have to find a telephone kiosk. But I doubt whether any telephone kiosk will exist in rural areas because few will meet the required minimal financial return. We are talking about a life and death service being callously removed from people who generally have to make a sacrifice to have that service in their houses.

Conservative Members will come to regret the day that they proposed these measures and will be surprised by the reaction when the inevitable happens.

The clause imposes a duty to maintain and promote effective competition between persons engaged in commercial activities connected with telecommunications in the United Kingdom. What about those people interested in the telecommunication services outside the United Kingdom? My hon. Friend the Member for Newcastle-under-Lyme talked about the Minister's officials being in America and Japan trying to flog shares in BT. He did not say that there was little point in those officials trying to flog system X in America arid Japan, not because it is a poor system or too expensive —taken all in all, it is not—but because it is impossible to sell as they have put up positive barriers against us. They want open access to our markets and the Minister wants them to have it.

My hon. Friend mentioned the destruction of the telecommunications equipment manufacturing industry and the serious impact that that will have on jobs, particularly in areas such as Merseyside, Tyneside, Glasgow and Fife which are major telecommunications equipment production centres. The already outrageous levels of unemployment will increase.

We are faced also with the problem of financing this measure. It is clear from the statements that BT has already made, the kind of activities in which it has indulged and the establishment of Mercury that the Government are not interested in anything but allowing their friends to milk the highest possible profit from the major cities in the south and to blazes with the rest of the country. Mercury is not going anywhere north of Preston.

There are some words in the clause which say that it would be nice to maintain services and that if it is reasonably possible to do so they should be maintained. Again, it comes down to the word "reasonably". I do not know what the Minister means by "reasonably' in this context. He has never been anything but subjective in his use of the word. He has never spelt it out. He has never said exactly what he thinks it means. He has just given us what he thinks is a reasonable explanation. If he starts being subjective about a subjective word again this evening, we shall be no further forward than we were in Committee, and that was not very far. Again, therefore, I express my concern about what the Minister meant by "reasonable" in terms of the services.

10 pm

Even the Minister will admit that, in many of the changes proposed in the last Telecommunications Bill and in this one, the Ministers were much influenced by what was happening in America on liberalisation, the experience of the FCC, and the liberalisation on AT and T's attitude. However, AT and T, when faced with the choice of retaining or shedding its subsidiary companies —which provide telephone systems, and not just the trunk network—volunteered to get rid of them so that it could get involved in the high profit enhanced services on line. As a result, our colleagues in the American House of Representatives had to take action. I quote from the Financial Times of 12 November this year: The US House of Representatives voted late on Thursday to limit the massive increase in local telephone charges expected to result from the planned breakup of the Bell telephone system. The Minister goes on about his access charges from the same article: AT and T, the telecommunications giant, has spent millions of dollars lobbying in favour of a so-called access charge. They failed. Despite all that, despite the fact that the House of Representatives was able to do a little towards limiting the article concludes: Despite the House action US local telephone charges are still set at least to double after January 1. This is because local telephone companies, in an effort to maintain margins and reprice services, have filed a request for at least $7 billion in rate increases with local state regulators". The American experience has been, despite what Conservative Members may say, and despite what they may believe, that local telephone charges increased dramatically. Indeed, they are set to double. I challenge the Minister to explain to the House what mechanisms exist to prevent them doubling in this country. If they double, they can be seen only as an additional tax on ordinary people in order to subsidise big business, for whose benefit the Bill is solely intended.

Mr. Patrick Thompson

The Opposition have gone for overkill in tabling this amendment. If the importance of the amendment is in proportion to the length of the speeches on it, clearly it is highly important for them that clause 3 should be removed from the Bill, although this is the clause that provides the protection for which they have continually asked throughout Committee and again tonight.

Clause 3 provides protection for the consumer and for the purchaser. The clause provides protection to the disabled. This is the very clause that removes the harsh commercial realities from the scene and ensures that the ordinary person, about whom the Opposition wax so eloquently, does not suffer as a result of the Bill. I find it extraordinary, therefore, that the Opposition should table the amendment and attach so much importance to it. I agree with my hon. Friend the Member for Fife, North-East (Mr. Henderson) that clause 3 is a highly important part of the Bill. The last thing that one would want to remove from the Bill is clause 3. The Opposition are using a wrecking tactic and we have known all along that the Opposition's purpose is to stop the Bill in its entirety. We might as well face up to that.

Since I joined Standing Committee A—Opposition Members may be surprised about this—I have had many discussions with people who work in the telecommunications industry in my constituency and elsewhere. Indeed, within the past 48 hours I have had an interesting day at the British Telecom research laboratories at Martlesham Heath. I learnt a great deal there and from my discussions with my constituents who work for British Telecom. Of course they have some concerns about the Bill but during those discussions I have not gained a distorted impression that has been put across by Opposition Members. My confidence in this measure has increased during the time that I have been studying the details of the Bill.

Clause 3 lays general duties on the Secretary of State and the Director General of Telecommunications. Provisions are laid down in clause 3 that are essential to running telecommunications services in this country. As I have already pointed out — I hope that the hon. Member for Wigan (Mr. Stott) will take this on board once and for all—the needs of the community are protected in the clause. Indeed, the needs of users are also protected for the foreseeable future.

Despite the ramblings of Opposition Members, there are points in clause 3 to which we should address ourselves seriously. Under clause 3(2)(d) the Director General of Telecommunications has a duty to exercise functions in such a way as to promote research into and the development and use of new techniques". I believe that this is a responsibility that he must take seriously and watch carefully with regard to the future. Without successful research and development, we cannot take advantage of the twofold revolution which is taking place in world telecommunications. In the industrial countries there is a revolution in the sense that the telephone is being replaced by the socket, the plug or whatever the technical term may be, in our house. We can plug into that socket the ordinary telephone into which we talk. We can also plug into it all types of other devices about which I do not have time to talk this evening. We shall be able to interact with other systems, banking systems and so on. This revolution is going on.

The Opposition have wept crocodile tears about the fact that only 70 per cent. of the population have telephones. They completely forget the recent dramatic expansion in the number of telephones in use in this country. Between 1970 and 1983 the number of telephones has increased from 5.8 million to 15.5 million. The growth was most rapid during periods of Conservative Government, between 1970–74 and 1979–83. According to the figures, the period of stagnation, where there was one, was under the Labour Government. This shows up the nonsense to which we have had to listen during hour after hour of debate. It is time we put this to rest once and for all.

The Bill provides a climate for a thriving telecommunications industry. There will be no bonanza for British industry where there is a deficiency, and this includes research and development. Our present position as one of the six countries leading the world in telecommunications must be maintained and we shall do so only if we take research and development seriously. However, there is a genuine difficulty. Over the years since the second world war the British Government have taken initiatives on research into large systems and have set up the large Government research laboratories about which we have heard, including the one at Martlesham Heath. Under that regime industrial firms had scope only for technical contributions and design components and so on. This has led to problems, in that the research departments of industrial firms have not been as advanced as they might be when compared with Government establishments. I do not know what the answer is, and we are in changing circumstances, but I am sure that the Director General of Telecommunications will take this on board when he is encouraging research and development in this important industry. The board of the new British Telecom plc, when the flotation occurs and the company is going, will have to make serious judgments about the proportion of money that it puts into research and development. This is a deadly serious point, and it is vital that the board gets the balance right.

There is always the danger that the view could be taken that a particular type of research has no obvious pay-off and might be dropped as an unnecessary overhead. This may have a short-term financial benefit, but in the longer term it could be a disaster for research and commercial prosperity. The Secretary of State and the Director should take this matter seriously as we move into the era after the Bill has become law.

Time will not permit me to refer at length to training and the supply of skilled graduates in engineering that will be required if we are to keep our lead in this industry and go ahead.

I hope that, in spite of the tedious nature of some of these debates, the management and unions involved in the telecommunications industry, once this debate is over, will adopt enlightened attitudes. I hope that management will look to the long term, particularly with regard to research and development, and that the unions and all those working in the telecommunications industry will look to the tremendous opportunities to be gained from the Bill. I hope that they will be thinking about industrial action— not about the kind of industrial action about which we heard at the start of the debate, but the kind of exciting industrial action that can occur in the industry if we get on with the job.

We must not listen to those who mourn the passing of a golden age. I could wax eloquent upon gold, as a theme of our debates. For example, there is the new electronic mail system which is called "Telecom gold". The other day, I was trying to think of a suitable name for the new electronic voice that never tires and goes on and on, and I was tempted to call it "Telecom Golding". We must not allow the initiative to slip away to foreign competitors. This is a serious duty. We must keep ahead of the field in technical developments. Clause 3 ensures that the Director has this aim in mind. That is why we should oppose this amendment. It is clearly nonsense.

10.15 pm
Mr. Charles Kennedy (Ross, Cromarty and Skye)

Although the Ministers have not yet spoken, the comments from Government Back Benchers so far have shown that they are out of touch with reality. As a Scottish Member, I was especially surprised by the comments by the hon. Member for Fife, North-East (Mr. Henderson) about the Bill's safeguards for rural telephone services. Although his constituency may not be as scattered or widespread as mine, none the less it will display many features that will be central to both our constituencies if the legislation is passed. I am sure that as problems begin to arise, as emergency services begin to suffer, and as those who live in more remote areas — admittedly, they are paying higher charges and higher servicing prices already —begin to suffer more, the hon. Gentleman will, like me, be one of those hon. Members both south and north of the border who will hear much about their difficulties. It is sad that by that stage it will be too late, because the legislation will have been implemented.

The hon. Member for Newcastle-under-Lyme (Mr. Golding) made an important point when he said that there are about 77,000 telephone boxes and that they lose almost £80 million a year. Those are inescapable facts.

Mr. Henderson

The hon. Member for Newcastle-under-Lyme (Mr. Golding) did not mention that the economics of telephones, which are very profitable, should not be completely unrelated to kiosks.

Mr. Kennedy

I agree that the two aspects are not wholly unrelated, but I believe that the hon. Member for Fife, North-East would be the first to agree that kiosks are extremely important in rural areas. They will be threatened by this legislation. This will not immediately come about because of what the Minister of State wants to do. To be fair to him, great problems already exist. I am sure that most right hon. and hon. Members will have seen an article in The Times of 13 November which is entitled "And yet so far". The article states: A television advertisement for British Telecom 'shows a pristine red telephone box surrounded by sheep in a mist-shrouded landscape. That could be a part of Ross, Cromarty and Skye. The article continues: A voice-over proclaims the merits of Telecom's far-flung service. The booth is in fact a fake, erected in Cumbria's Wrynose Pass for the purpose of the advertisement. Local farmer Christopher Akrigg, who appears in the commercial, has been trying to get a public telephone box installed on that very spot, for a very long time, such is the demand for his own phone by passing motorists during the tourist season. He is out of luck. Telecom plans not to expand but to reduce public phone boxes in the Lake District because, it says, that they are underused. If that is a fair expression of how ridiculous the position is at the moment, imagine what it will be like once the legislation is enacted.

We heard about definitions being needed f or rural areas. I am aware that the Minister of State has some considerable knowledge of my constituency. He will see many examples of those isolated telephone boxes and the type of telephone kiosks mentioned in that article in one of the communities most removed from the House—the island of Skye. Portree, Broadford, Ewe, Dunvegan, Gairloch and Kyle of Lochalsh demonstrate the type of problems that will exist if privatisation proceeds. It is a sad fact that the elected representatives of those areas have spoken strongly against this type of measure. I ant talking not simply about in Parliament but about regional councils and Government agencies, such as the Highlands and Islands Development Board, which is an arm of Government initiative and enterprise in the Highlands of Scotland. All their protestations, however, will not matter much because once the guillotine falls and the measure is passed there will be nothing that Members of Parliament can do but listen to the protests and problems that will inevitably come from their constituents.

Mr. Marlow

The hon. Gentleman talks about his constituents. We all have constituents, as he will appreciate. When the hon. Member for Blaydon (Mr. McWilliam) said earlier that the Bill did nothing for consumers, the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) nodded his agreement and said "Hear, hear." Clearly, as a member of the Social Democratic Party and representing that party on the Bill, the hon. Gentleman believes that the Bill does nothing for consumers. Rumour has it that the hon. Gentleman was a member of the Standing Committee on the Bill, but we did not see him there very much. I believe that on one occasion when he actually came into the Committee someone suggested that he was a member of the press who had got on to the wrong side of the barrier. Had he attended the Committee, he would realise that the Bill abolishes monopoly. If he believes that abolishing monopolies does not help the consumer, that is an interesting point of view for the Social Democratic Party.

Mr. Kennedy

It is clear from that fatuous intervention that two points went over the hon. Gentleman's head. First, if he thinks that the Bill creates real competition in the interests of the consumer when it merely institutionalises one monopoly and puts another monopoly alongside it, he has missed many of the arguments. Secondly, judging from the reaction of hon. Members who served on the Committee, I believe that my interventions in the Committee were more pertinent and more popular in my constituency than any that I heard from the hon. Gentleman.

I shall not detain the House much longer, especially as my time has been drawn out by fatuous interventions of that kind. There is a divide in our nation and it is evident in many aspects of our politics. As communications technology is one of the major advances sweeping Britain as we head towards the end of the 20th century, it is especially sad that this will be yet another divide exacerbated politically by the Government's actions. When the hon. Member for Newcastle-under-Lyme was talking about telephone users in rural areas it was sad to hear the Secretary of State for Trade and Industry, who is ultimately responsible for the Bill, muttering something about somebody else paying for the services that those consumers enjoy. That is true. Somebody else finances the services that we enjoy in the Highlands of Scotland. Somebody else has to underwrite those services. That is as much a social obligation as a financial reality and we should support it.

I hope that the House will support the amendment and that we shall continue to expose the hollow decisions taken by the Government which will affect rural constituencies throughout the country

Mr. Peter Thurnham (Bolton, North-East)

We have come to know the Bill well after so many hours in Committee.

Clause 3 is at the heart of the Bill, placing a duty on the Secretary of State and his watchdog, Oftel, to control prices and promote competition. For the next five years, competition will be limited. We must therefore look to the price formula RPI-minus-X to control prices. My constituents want to know whether X will be greater than RPI so that prices will actually fall in cash terms. The answer in Bolton must definitely be "Yes" as Bolton is the most efficient BT area in the country in terms of both service and productivity. BT's own figures show that productivity in Bolton is 50 per cent. better than for the rest of the country as a whole. If BT could bring the rest of the country up to that standard in the next five years, X could equal 8 per cent., which should comfortably take care of inflation.

I asked Mr. David Knowles, the manager of the Bolton-Blackpool area—British Telecom refer to the Blackburn area, although Bolton has the largest exchange in the area —the secret of his success. He said it resulted from good team work and underground engineering. In view of Bolton's premier position in the country, I suggest that Oftel, the new office of the Director General of Telecommunications, should be based in Bolton, and I shall be pleased to show him how efficient British Telecom can be. I shall encourage him to bring new entrants into the market who, I hope, will benefit from the new proposed regional aid for service companies.

I hesitate in suggesting that British Telecom should move its head office to Bolton, because my only criticism of the Bill relates to its lack of competition. The thought of BT and its supposed watchdog both being in the same town and working with Bolton's customary good team work and well-oiled underground communications would most deter BT's competitors.

My reservations about the Bill involve competition. I urge the Secretary of State to use the next five years to advantage. We need more than a monopoly supplier of international lines, more than a duopoly of inland lines and cellular radio and better than a British approvals board which frightens off small manufacturers with excessively expensive and slow procedures for unnecessarily elaborate and complex standards.

Owing to the lack of competition we must rely on the formula RPI-minus-X, which must be set arbitrarily. A footnote to the licence states that X will be determined near the date on which the licence comes into force, taking account of circumstances at that time. The footnote will soon become a large X factor headline.

In setting the value of X, the Secretary of State must balance the interests of customers, investors, employees and all those dependent on the fortunes of the industry. I urge him to be fair to all those who can contribute to improvements in productivity and who hope to benefit from them. In being fair to investors and employees, the Secretary of State may not consider that X can be set as high as 8 per cent., as my constituents might wish. I hope that he will set the X factor at least as high as the average increase in productivity for United Kingdom industry as a whole, which the Chancellor of the Exchequer showed in his autumn statement as 2.7 per cent. per annum for the past three years.

But British Telecom can do better. I have a letter from its chairman showing that in the past five years the reduction of British Telecom's real unit costs has been 3 per cent. per annum. I suggest that there should be no difficulty in floating 51 per cent. of BT on the stock market with an X factor of at least 2.5 per cent. or 3 per cent.

A suggestion has been made that a £4 billion flotation may be difficult for a stock market that has raised only £3 billion in new equity issues in the past year. We should examine the total capitalisation and turnover of the market to gauge its capacity. With a total market capitalisation of £250 billion and an annual turnover of £75 billion, a £4 billion issue should be a stimulus and not a problem. I regard the low level of the previous year's equity issues as having nothing to do with lack of capacity but merely lack of opportunity.

I look forward to next autumn's flotation of British Telecom as a hugely successful demonstration of the benefits of privatisation which will bring gains to customers, employees and investors.

I recommend the House to accept clause 3 in its entirety

Mr. Stuart Randall (Kingston upon Hull, West)

Subsection (1)(a) refers to the duties of the Secretary of State and the Director. It states: to secure such telecommunication services as satisfy all reasonable demands". I shall refer to the telecommunications service in Hull. I have previously said in the Chamber that Hull is very proud of its telecommunications service. It has been extremely successful. It is the only independent telephone operation on the British mainland. The network covers a very small area — about 120 square miles. Hull city takes up about 30 square miles, although the total area also embraces the two boroughs of Holderness and Beverley. The boundary of the Hull network was established in 1898, under the original Telegraph Act.

10.30 pm

We have not yet seen the licence for Hull, but I think that we can accept that under the Bill the area will be the same as it is now. I assume that that is so. There are 180,000 telephones in the area and 150,000 working lines. There are about 750 people operating the system and about 14 main exchanges. The operation is thus quite small and compact but it is very efficient, and we are proud of it.

Quite a range of telephony services are at present provided. We provide the lines, all the line plant, trenches and so on. We also provide all the overhead cables where necessary, and all the switching equipment. However, that is restricted to the area that I have described. In addition telex services are provided. Hull's telephone department provides the lines, and at present BT provides the switching. We provide the lines for data and certain other pieces of equipment, and BT provides the rest. Therefore, the service, in terms of who does what, is rather fragmented at present and slightly confused.

Several Conservative Members have mentioned the consumer. However, those who live in that part of the country, which has a municipalised telephone service, are very happy with the service that they receive. They enjoy many advantages. For example, the telephone connection charge in Hull is only £25. It is still possible to make a telephone call that lasts all day for 5p, because the calls are not timed. The social consequences of that are important.

The rental cost of line equipment going into the home and of telephone apparatus in Hull is about 10 per cent. below the national figure. I have cited three areas in which the consumer benefits considerably. As a result, telephone penetration in Hull is extremely high. About 84 per cent. of residential units in the area have telephones. That is due to the policies of the local authority, which is responsible for running the service. We need not privatise, because that service is both public and superb. If anything in the new legislation caused a deterioration of the services, I assure the Minister there would be uproar from the people of Hull.

There is still great uncertainty surrounding the services in Hull because at present we do not have the licence. The draft licence on its own is meaningless. It is essential to have the licence to go with it to know exactly what will happen to the services and the effect on the consumer. As there is still no licence for Hull, I ask the Minister to confirm whether Mercury will be able to provide all kinds of telecommunications services in the Hull area. If that is so, it would be fair and sensible for the telephone operation in Hull to have the option of providing a similar range of services as defined by the network. I should welcome the Minister's confirmation on this matter because it is an important issue over which there is considerable uncertainty in the absence of a Hull licence. If the telephone department in Hull is not to be permitted to provide all the services, which services will be the exception?

Looking to the future, hon. Members will know that a recent decision was made in Hull to procure system X for its trans-exchanges. Between £20 million and £30 million is due to be spent over the next few years in installing the equipment. Reference has been made to the loss of jobs as a result of reduction in the size of the telecommunications industry. I believe Hull has made a great contribution in procuring system X that will do much to help protect jobs and assist the telecommunications manufacturing industry.

System X will provide a substantial advance to the benefit of consumers. When system X is interconnected with other system X systems throughout the country, a very high speed of connection will be available to consumers. Such advances augur well. Other benefits include the provision of alarm services and abbreviated dialling at the exchange

Mr. Wood

I have tried to relate the hon. Member's remarks to the clause under discussion and to the general debate. Two matters only are coming over to me. First is the argument that there will be merit in having not just one British Telecommunications but a number of local organised telephone services. Secondly, what are the specific matters in clause 3 by which the hon. Gentleman believes Hull will be disadvantaged?

Mr. Randall

I referred in my opening remarks to the provision of telecommunications services. I have endeavoured to show that, if the terms and conditions of the licence were detrimental to the interest of Hull, the services provided would not be satisfactory.

With system X, I believe that in the future we shall be providing combined voice and data through the same switching equipment. The policy of the Hull telephone department is to integrate voice, data, text, video, image and so on all in one network. That is our aspiration, in addition to increasing the range of services.

As we are making this investment in British equipment that has all the functions that I have described, that justifies Hull in providing all the telecommunications services— of voice, text, data and so on— so as to exploit this equipment and get value for money from this large investment in British products.

It is also the intention of the Hull telephone department to accelerate the introduction of digital services, and we hope that the recent decision about system X will allow the department to exploit the growing BT digital network to the advantage of our colleagues in BT and, of course, of the customers.

Another matter of concern that will become clearer when the discussions on the Hull licence take place is the sale of terminal equipment. We are assuming that BT and Mercury will be able to sell terminal equipment in the designated area for Hull, but the Hull telephone department cannot sell such equipment outside its area. The difficulties are obvious, and I hope that the Minister will comment on the subject and will be able to provide an equitable arrangement for dealing with the problem.

The accounting arrangements for calls involving the Hull network and the rest of the national network are another matter of concern. I understand that this subject will be discussed in the new year by officials. I hope that the Minister will give an assurance that the Hull telephone department will be fairly treated and that perhaps similar arrangements will be made for the area as have been made for other local area managers

Mr. Phillip Oppenheim (Amber Valley)

I must begin with a humble apology to the hon. Member for Newcastle-under-Lyme (Mr. Golding). Hon. Members who, like me, were members of Standing Committee A will recall that I referred to the hon. Members for Newcastle-under-Lyme and for Stoke-on-Trent, Central (Mr. Fisher) as Bill and Ben the Flowerpot Men. I referred to them in that way for two reasons. First, like Bill and Ben, as soon as Bill sat down, Ben stood up, and vice versa. Secondly, like Bill and Ben, neither spoke much sense. However, I gather that the hon. Member for Newcastle-under-Lyme has taken the greatest exception to my remarks, has complained in the most bitter terms to a close relative of mine, and has asked that any suggestion that he might be confused with a now sadly departed colleague should be absolutely scotched. I am happy to say that no confusion was intended.

The hon. Member for Newcastle-under-Lyme mentioned in his lengthy peroration that Lord Weinstock of GEC had come out against the Bill. That should not surprise hon. Members. Could that opposition to the measure not have something to do with the fact that GEC and its shareholders have benefited for far too long from the cosy, monopoly purchasing power of BT? For too long it has been a member of BT's circle of charmed approved suppliers. No wonder it is against the Bill.

10.45 pm

I fully support the Bill and the safeguards within it. I welcome especially clause 3 (2)(h), which calls on the Director to maintain and promote outside the United Kingdom competitive activity on the part of persons providing …telecommunication apparatus". This can only mean that the Government intend to do something about the disgraceful situation in regard to access for our telecommunications manufacturers to overseas markets. Currently the French, Japanese, German and Swedish markets do not even maintain the pretence of free access. I am not in favour of protectionism. It does not work. Not only does it limit consumer choice but in the long term it makes industry uncompetitive and inefficient. The manufacturers of Sweden, Japan, Germany and France have access for their products into our markets but our manufacturers do not have reciprocal access to their markets.

Foreign equipment is coming into this country in large quantities. I could go on at length to give examples of the types of foreign equipment. I have done so in Standing Committee. I should like to concentrate briefly on one area, keyphones, the electronic replacement for key and lamp systems. Until recently only the British-made BT Herald and Ensign systems were available in this country. Now, however, several systems from overseas have been approved.

These include a system from the Nippon Electric Co. which is being imported by Ans-a-phone, an American system being imported by an organisation called TIE, a German system from Shipton Communications Ltd, which comes from the Deutsche Telephonwerke and Kabelindustrie Aktiengesellschaft, which has fortunately changed its name to suit market requirements. As I pointed out to the hon. Member for Newcastle-under-Lyme, this German company is based on a road with the name Wrangelstrasse which he should consider visiting some time. Finally, Northern Telecom of Canada is introducing a system assembled in Eire.

What does Plessey — the great white hope of the British telecommunications industry — have to answer the threat? The answer, I regret to say, is that it is importing a Japanese system from the Nitsuko company, although, to be fair, it intends to launch its own British-made system next year.

Even if we get a proportion of local assembly of these products, often this proportion is very low. All too often the addition of a plastic casing and a highly misleading "Made in the United Kingdom" sticker is the net result of local assembly. Regrettably, the right of access to overseas markets is almost totally lacking to our manufacturers.

I should like to read an extract from a letter I received from one of our major manufacturers: Past experience with other products suggests that entry into most European countries and EEC countries in particular would be covertly blocked, certainly as far as sales to the national administrations are concerned. Selling in the private/commercial sector might also be effectively controlled through the approval procedures, even if the market is theoretically liberalised for the particular class of equipment being offered. I know that my hon. Friend the Under-Secretary is well aware of the problem. I have received assurances that something will be done to counteract it. I urge that the great advantages enshrined in this speech—in the Bill —[Interruption.] The hon. Member for Newcastle-under-Lyme is all too easily amused. Obviously years of listening to his own speeches have lowered his tolerance for amusement. I urge that the great advantages enshrined in the Bill — advantages for the consumer, for BT employees and for my constituents — should not be allowed to be offset by the negative effects of unfair competition from overseas companies in nations that do not allow reciprocal access to their markets for our manufacturers

Mr. Butcher

The House has had another weighty debate. Many interesting observations have been made and many questions have been asked. I shall do my best to answer the many points that hon. Members on both sides of the House have raised.

The debate on clause 3 must be near to setting a record for the length of time that any one clause has ever been debated. So far, it has been debated for more than 100 hours in two Committee stages — 65 hours in the previous one and 36 in this—and there has been some fairly lengthy consideration by the House.

However, as hon. Members on both sides of the House have observed, there is no doubt as to the importance of clause 3. It imposes duties on the Secretary of State and the Director General of Telecommunications which will govern how they exercise their functions as provided by the Bill. Those duties set the framework for the implementation of much of the Bill. They are important to, and provide safeguards for, operators of telecommunications systems, the providers of telecommunications services, the telecommunication manufacturing industry and, last but not least, the consumer. I should like now to concentrate on the latter and explain how clause 3 provides firm legislative safeguards for consumers that are, perhaps, better than those whoch have ever been provided. That is especially so in respect of services which we all agree are essential—those to rural and remote areas, emergency services, public call boxes, services to ships at sea and services to the disabled.

Anxiety has been expressed that, because such services are loss-making or, at best, uncommercial, they will no longer be provided. That is simply not the case. They will continue to be provided, as clause 3 imposes a duty on the Secretary of State and the Director General to exercise their functions to ensure that they are. The issue of licences and the inclusion of conditions in them is a most important function in that respect. We have already published the draft of the licence that the Secretary of State would issue to BT when the Bill comes into force. That draft contains conditions that oblige BT to provide such services. Under the conditions of the licence, BT will be obliged to provide telecommunications services throughout the United Kingdom to satisfy all reasonable demand and to provide services to customers in rural areas, public call boxes, emergency services, services to ships at sea and services for the disabled. No doubt we shall have more debate on the disabled later on Report.

Those obligations will be enforced by the Director General using his powers under the Bill. Nevertheless, Opposition Members have said that they are not proper obligations just as they have said that the duty in 3 (1)(a) is not a proper duty because it is limited to "reasonable" demands so long as provision is "practicable". We had a lengthy debate on that matter in Committee. I should like to reassure the House that those limitations are not a let-out. They do not let BT off the hook of its obligations to provide services. They are simply essential to make the duties and the obligations in licences workable.

For example, it would not be sensible if BT were put under an obligation, which was ultimately enforceable in the courts, to do something which it was physically impossible for reasons beyond BT's control to do. I doubt whether the Secretary of State could find anyone willing to accept a licence if it imposed obligations to provide services which were not subject to the limitations of reasonableness of demand and practicability of provision.

The limitations will not operate at whim. They are spelt out in the licence—condition 42 of the draft licence. Therefore, when a person requests a service and BT declines to provide it, if the matter is brought to the Director General's attention he will be guided by that condition when deciding whether BT is under an obligation to provide services in the circumstances in question. If he decides that BT is under such an obligation, he may issue an order to force BT to provide a service. If he considers that BT is not under an obligation, it does not have to provide it, but the Director's interpretation of what is practicable or reasonable can always be challenged by the complainant in the courts. I hope that that goes some way towards reassuring my hon. Friends and Opposition Members.

In the debate we also heard claims that, although service will be provided, the quality of service to the ordinary customer will decline as BT directs its investment to the business sector and neglects the ordinary customer. It has also been claimed that with the ending of the role of the Post Office Users National Council in respect of telecommunications, consumers will no longer have a voice to represent their interests. I accept neither of those arguments.

I shall deal first with consumer protection. POUNC has played a useful role, but it has been one of persuasion rather than of enforcement. Faced by a problem, it has had to use its powers to persuade BT to do something. While I expect that in future much will be negotiated voluntarily, the power of the Director ultimately to force BT to carry out its obligations, will stregthen the Director's arm in such negotiations. That can only be to the benefit of consumers.

In any case, it would not be appropriate for POUNC to continue, as it is designed to look after a nationalised industry, a state of affairs that we are bringing to an end. Therefore, we are setting up Oftel under the Director General of Telecommunications. I believe that that will strengthen the voice of the consumer. The Director will be under statutory duties, by virtue of clause 3, to promote the interests of the consumer not only as regards the provision of the essential services but in respect of the quality, variety and price of telecommunications services and apparatus available. The mention of the word "quality" brings me to the second claim, that the service to the ordinary consumer will decline.

As I said, the Director will have a duty in respect of quality and service. In accordance with that duty, I expect him to keep a close eye on the quality of service that is provided. In doing so he will no doubt be informed by the representations of consumers, but he can also ask BT for the information, and I expect him to monitor things such as the time taken to install telephones, the number of crossed lines and the ready supply of special apparatus to the ordinary consumer. I expect that he will keep in close touch with BT about developments because it is in both BT's and the customers' interests to improve the quality of BT's services. However, in the last resort, if the Director were dissatisfied with BT's response, he could seek to impose a licence condition requiring it to provide a service of a specified quality,.

In that context, several Opposition Members advanced yet again the notion of two nations—a deprived nation and a nation that was filled, by contrast, with telecommunications services. They repeated that allegation, regardless of the fact that communications services will be improved through the impact of new technology. The example of cable television was given. It was said that it would cover only half the country over the next 10 to 15 years. There is no doubt that cable television will take some time to expand across the country. It may not extend to the rural areas, as it will be expensive to install. However, Opposition Members also forget that other forms of technology will be of benefit to rural areas. They forget that satellites, microwave and cellular radio systems can deliver advanced communications facilities similar to those available in the cities, when there is no broad band cable and no cheaper way of delivering data or, in- due course, voice communication, other than through the air. We do not have to be wired through cables for ever to deliver voice telephony or data communications.

I thank my hon. Friend the Member for Norwich, North (Mr. Thompson) for his observation on research and development. We take that matter seriously. BT cannot afford to ignore those requirements.

My hon. Friend the Member for Bolton, North-East (Mr. Thurham) was absolutely right to highlight the performance of his local area telecommunications network. Through the hon. Member for Kingston upon Hull, West (Mr. Randall) I congratulate Hull on choosing system X. It is a good product which will safeguard jobs in a number of companies whose names we shall not mention tonight.

The hon. Member for Newcastle-under-Lyme (Mr. Golding) let the cat out of the bag when he said that he wanted to see BT drive Mercury out of business. [HON. MEMBERS: "Hear, hear."] In other words, the hon. Gentleman is an unreconstructed monopolist. He does not want competition. He fails to understand—

It being Eleven o'clock, MR. DEPUTY SPEAKER proceeded, pursuant to the Order [21 November] and the Resolution this day, to put forthwith the Question already proposed from the Chair.

Question put, That the amendment be made:—

The House divided:Ayes 192, Noes 317.

Division No 102] [11 pm
Adams, Allen (paisley N) Ashton Joe
Archer, Rt Hon peter Atkinson, N. (Tottenham)
Bagier, Gordon A. T. Hogg, N. (C'nauld & Kilsyth)
Banks, Tony (Newham NW) Howell, Rt Hon D. (S'heath)
Barnett, Guy Hoyle, Douglas
Barron, Kevin Hughes, Mark (Durham)
Beggs, Roy Hughes, Robert (Aberdeen N)
Beith, A. J. Hughes, Roy (Newport East)
Bell, Stuart Hughes, Sean (Knowsley S)
Bennett, A. (Dent'n & Red'sh) Hughes, Simon (Southwark)
Bidwell, Sydney Janner, Hon Greville
Blair, Anthony John, Brynmor
Bray, Dr Jeremy Johnston, Russell
Brown, Gordon (D'f'mline E) Jones, Barry (Alyn & Deeside)
Brown, Hugh D. (Provan) Kaufman, Rt Hon Gerald
Brown, N. (N'c'tle-u-Tyne E) Kennedy, Charles
Brown, R. (N'c'tle-u-Tyne N) Kilroy-Silk, Robert
Brown, Ron (E'burgh, Leith) Kirkwood, Archibald
Bruce, Malcolm Lambie, David
Callaghan, Jim (Heyw'd & M) Lamond, James
Campbell, Ian Leighton, Ronald
Campbell-Savours, Dale Lewis, Ron (Carlisle)
Canavan, Dennis Lewis, Terence (Worsley)
Carter-Jones, Lewis Litherland, Robert
Clark, Dr David (S Shields) Lloyd, Tony (Stretford)
Clarke, Thomas Lofthouse, Geoffrey
Clay, Robert Loyden, Edward
Cocks, Rt Hon M. (Bristol S.) McCusker, Harold
Cohen, Harry McDonald, Dr Oonagh
Coleman, Donald McGuire, Michael
Concannon, Rt Hon J. D. McKelvey, William
Cook, Frank (Stockton North) Mackenzie, Rt Hon Gregor
Cook, Robin F. (Livingston) McNamara, Kevin
Corbett, Robin McTaggart, Robert
Cowans, Harry McWilliam, John
Cox, Thomas (Tooting) Madden, Max
Craigen, J. M. Maginnis, Ken
Crowther, Stan Marek, Dr John
Cunliffe, Lawrence Martin, Michael
Cunningham, Dr John Mason, Rt Hon Roy
Davies, Rt Hon Denzil (L'lli) Maxton, John
Davies, Ronald (Caerphilly) Maynard, Miss Joan
Davis, Terry (B'ham, H'ge H'l) Meacher, Michael
Deakins, Eric Meadowcroft, Michael
Dewar, Donald Mikardo, Ian
Dixon, Donald Millan, Rt Hon Bruce
Dormand, Jack Miller, Dr M.S. (E Kilbride)
Dubs, Alfred Mitchell, Austin (G't Grimsby)
Duffy, A. E. P. Molyneaux, Rt Hon James
Eadie, Alex Morris, Rt Hon A. (W'shawe)
Eastham, Ken Morris, Rt Hon J. (Aberavon)
Evans, Ioan (Cynon Valley) Nellist, David
Evans, John (St. Helens N) Nicholson, J.
Fatchett, Derek O'Brien, William
Faulds, Andrew O'Neill, Martin
Field, Frank (Birkenhead) Orme, Rt Hon Stanley
Fields, T. (L'pool Broad Gn) Paisley, Rev Ian
Fisher, Mark Park, George
Flannery, Martin Parry, Robert
Foot, Rt Hon Michael Patchett, Terry
Forrester, John Pavitt, Laurie
Forsythe, Clifford (S Antrim) Pike, Peter
Foster, Derek Powell, Raymond (Ogmore)
Foulkes, George Prescott, John
Fraser, J. (Norwood) Randall, Stuart
Freeson, Rt Hon Reginald Redmond, M.
Freud, Clement Richardson, Ms Jo
Garrett, W. E. Roberts, Allan (Bootle)
George, Bruce Roberts, Ernest (Hackney N)
Gilbert, Rt Hon Dr John Robertson, George
Godman, Dr Norman Robinson, G. (Coventry NW)
Golding, John Rooker, J. W.
Gould, Bryan Ross, Ernest (Dundee W)
Hamilton, James (M'well N) Ross, Stephen (Isle of Wight)
Hamilton, W. W. (Central Fife) Ross, Wm. (Londonderry)
Hardy, Peter Rowlands, Ted
Harman, Ms Harriet Sedgemore, Brian
Harrison, Rt Hon Walter Sheerman, Barry
Hart, Rt Hon Dame Judith Sheldon, Rt Hon R.
Hattersley, Rt Hon Roy Shore, Rt Hon Peter
Haynes, Frank Short, Ms Clare (Ladywood)
Heffer, Eric S. Short, Mrs R.(W'hampt'n NE)
Skinner, Dennis Torney, Tom
Smith, C.(Isl'ton S & F'bury) Wallace, James
Smith, Rt Hon J. (M'kl'ds E) Wardell, Gareth (Gower)
Smyth, Rev W. M. (Belfast S) Wareing, Robert
Snape, Peter Welsh, Michael
Soley, Clive White, James
Spearing, Nigel Wigley, Dafydd
Stewart, Rt Hon D. (W Isles) Williams, Rt Hon A.
Stott, Roger Wilson, Gordon
Strang, Gavin Winnick, David
Straw, Jack Woodall, Alec
Thomas, Dafydd (Merioneth) Young, David (Bolton SE)
Thomas, Dr R. (Carmarthen)
Thompson, J. (Wansbeck) Tellers for the Ayes:
Thorne, Stan (Preston) Mr. George Robertson and Mr. Allen McKay.
Tinn, James
Adley, Robert Couchman, James
Aitken, Jonathan Crouch, David
Amess, David Currie, Mrs Edwina
Ancram, Michael Dickens, Geoffrey
Arnold, Tom Dorrell, Stephen
Ashby, David Douglas-Hamilton, Lord J.
Aspinwall, Jack Dover, Denshore
Atkins, Rt Hon Sir H. Dunn, Robert
Atkins, Robert (South Ribble) Durant, Tony
Atkinson, David (B'm'th E) Dykes, Hugh
Baker, Kenneth (Mole Valley) Edwards, Rt Hon N. (P'broke)
Baker, Nicholas (N Dorset) Eggar, Tim
Baldry, Anthony Emery, Sir Peter
Banks, Robert (Harrogate) Evennett, David
Batiste, Spencer Eyre, Reginald
Beaumont-Dark, Anthony Fallon, Michael
Bellingham, Henry Farr, John
Bendall, Vivian Favell, Anthony
Benyon, William Fenner, Mrs Peggy
Berry, Sir Anthony Finsberg, Geoffrey
Best, Keith Fletcher, Alexander
Biffen, Rt Hon John Fookes, Miss Janet
Biggs-Davison, Sir John Forman, Nigel
Blaker, Rt Hon Sir Peter Forsyth, Michael (Stirling)
Body, Richard Fowler, Rt Hon Norman
Bonsor, Sir Nicholas Fox, Marcus
Bottomley, Peter Fraser, Peter (Angus East)
Bowden, A. (Brighton K'to'n) Freeman, Roger
Boyson, Dr Rhodes Fry, Peter
Braine, Sir Bernard Gale, Roger
Brandon-Bravo, Martin Galley, Roy
Bright, Graham Gardner, Sir Edward (Fylde)
Brinton, Tim Garel-Jones, Tristan
Brittan, Rt Hon Leon Gilmour, Rt Hon Sir Ian
Brooke, Hon Peter Glyn, Dr Alan
Brown, M. (Brigg & Cl'thpes) Goodlad, Alastair
Browne, John Gorst, John
Bryan, Sir Paul Gow, Ian
Buchanan-Smith, Rt Hon A. Gower, Sir Raymond
Bulmer, Esmond Grant, Sir Anthony
Burt, Alistair Greenway, Harry
Butcher, John Griffiths, E. (B'y St Edm'ds)
Butler, Hon Adam Griffiths, Peter (Portsm'th N)
Butterfill, John Grist, Ian
Carlisle, John (N Luton) Grylls, Michael
Carttiss, Michael Gummer, John Selwyn
Chalker, Mrs Lynda Hamilton, Neil (Tatton)
Chapman, Sydney Hampson, Dr Keith
Chope, Christopher Hanley, Jeremy
Churchill, W. S. Hannam,John
Clark, Hon A. (Plym'th S'n) Hargreaves, Kenneth
Clark, Dr Michael (Rochford) Harvey, Robert
Clark, Sir W. (Croydon S) Haselhurst, Alan
Clarke Kenneth (Rushcliffe) Hawkins, C. (High Peak)
Clegg, Sir Walter Hawkins, Sir Paul (SW N'folk)
Cockeram, Eric Hawksley, Warren
Colvin, Michael Hayhoe, Barney
Conway, Derek Hayward, Robert
Coombs, Simon Heathcoat-Amory, David
Cope, John Henderson, Barry
Cormack, Patrick Heseltine, Rt Hon Michael
Corrie, John Hickmet, Richard
Hicks, Robert Neubert, Michael
Higgins, Rt Hon Terence L. Newton, Tony
Hill, James Nicholls, Patrick
Hind, Kenneth Norris, Steven
Hirst, Michael Oppenheim, Philip
Hogg, Hon Douglas (Gr'th'm) Ottaway, Richard
Holland, Sir Philip (Gedling) Page, Richard (Herts SW)
Hooson, Tom Parris, Matthew
Hordern, Peter Patten, John (Oxford)
Howarth, Alan (Stratf'd-on-A) Pattie, Geoffrey
Howarth, Gerald (Cannock) Pawsey, James
Howell, Ralph (N Norfolk) Peacock, Mrs Elizabeth
Hubbard-Miles, Peter Percival, Rt Hon Sir Ian
Hunt, David (Wirral) Pollock, Alexander
Hunter, Andrew Porter, Barry
Hurd, Rt Hon Douglas Powell, William (Corby)
Irving, Charles Powley, John
Jessel, Toby Prentice, Rt Hon Reg
Johnson-Smith, Sir Geoffrey Price, Sir David
Jones, Gwilym (Cardiff N) Prior, Rt Hon James
Jones, Robert (W Herts) Proctor, K. Harvey
Joseph, Rt Hon Sir Keith Pym, Rt Hon Francis
Kershaw, Sir Anthony Raison, Rt Hon Timothy
King, Roger (B'ham N'field) Rathbone, Tim
Knight, Gregory (Derby N) Renton, Tim
Knight, Mrs Jill (Edgbaston) Ridley, Rt Hon Nicholas
Knowles, Michael Ridsdale, Sir Julian
Knox, David Rifkind, Malcolm
Lang, Ian Rippon, Rt Hon Geoffrey
Latham, Michael Roberts, Wyn (Conwy)
Lawrence, Ivan Rossi, Sir Hugh
Lawson, Rt Hon Nigel Rost, Peter
Lee, John (Pendle) Rowe, Andrew
Leigh, Edward (Gainsbor'gh) Rumbold, Mrs Angela
Lennox-Boyd, Hon Mark Ryder, Richard
Lester, Jim Sackville, Hon Thomas
Lightbown, David Sainsbury, Hon Timothy
Lilley, Peter St. John-Stevas, Rt Hon N.
Lloyd, Ian (Havant) Sayeed, Jonathan
Lord, Michael Scott, Nicholas
Lyell, Nicholas Shaw, Giles (Pudsey)
McCrindle, Robert Shaw, Sir Michael (Scarb')
McCurley, Mrs Anna Shelton, William (Streatham)
Macfarlane, Neil Shepherd, Colin (Hereford)
MacKay, Andrew (Berkshire) Shersby, Michael
MacKay, John (Argyll & Bute) Silvester, Fred
Maclean, David John. Sims, Roger
McNair-Wilson, M. (N'bury) Skeet, T. H. H.
McNair-Wilson, P. (New F'st) Smith, Sir Dudley (Warwick)
McQuarrie, Albert Smith, Tim (Beaconsfield)
Major, John Soames, Hon Nicholas
Malins, Humfrey Speed, Keith
Malone, Gerald Speller, Tony
Maples, John Spence, John
Marland, Paul Spencer, D.
Marlow, Antony Spicer, Michael (S Worcs)
Marshall, Michael (Arundel) Squire, Robin
Mates, Michael Stanbrook, Ivor
Mather, Carol Stanley, John
Maude, Francis Steen, Anthony
Mawhinney, Dr Brian Stern, Michael
Maxwell-Hyslop, Robin Stevens, Lewis (Nuneaton)
Mayhew, Sir Patrick Stevens, Martin (Fulham)
Mellor, David Stewart, Allan (Eastwood)
Merchant, Piers Stewart, Andrew (Sherwood)
Meyer, Sir Anthony Stokes, John
Miller, Hal (B'grove) Stradling Thomas, J.
Mills, Iain (Meriden) Sumberg, David
Mills, Sir Peter (West Devon) Tapsell, Peter
Miscampbell, Norman Taylor, Teddy (S'end E)
Mitchell, David (NW Hants) Tebbit, Rt Hon Norman
Moate, Roger Temple-Morris, Peter
Monro, Sir Hector Terlezki, Stefan
Montgomery, Fergus Thomas, Rt Hon Peter
Morris, M. (N'hampton, S) Thompson, Patrick (N'ich N)
Morrison, Hon P. (Chester) Thorne, Neil (Ilford S)
Moynihan, Hon C. Thornton, Malcolm
Mudd, David Thurnham, Peter
Neale, Gerrard Townend, John (Bridlington)
Nelson, Anthony Tracey, Richard
Trippier, David Wells, John (Maidstone)
Twinn, Dr Ian Wheeler, John
van Straubenzee, Sir W. Whitfield, John
Vaughan, Dr Gerard Whitney, Raymond
Viggers, Peter Wiggin, Jerry
Waddington, David Wilkinson, John
Wakeham, Rt Hon John Winterton, Mrs Ann
Waldegrave, Hon William Winterton, Nicholas
Walden, George Wolfson, Mark
Walker, Bill (T'side N) Wood, Timothy
Wall, Sir Patrick Woodcock, Michael
Waller, Gary Yeo, Tim
Walters, Dennis Young, Sir George (Acton)
Ward, John Younger, Rt Hon George
Wardle, C. (Bexhill)
Warren, Kenneth Tellers for the Noes:
Watson, John Mr. Robert Boscawen and Mr. Archie Hamilton.
Watts, John
Wells, Bowen (Hertford)

Question accordingly negatived.

11 pm

Mr. Deputy Speaker

then proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at Eleven o'clock.

Amendment made: No. 4, in page 3, line 44, leave out `16 or'.

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