§ Amendment made:
§ No. 112, in line 9, leave out `all'.—[Mr. David Hunt.]
§ Order for Third Reading read.
§ [Queen's consent, on behalf of the Crown, and Prince of Wales's consent signified.]
§ 7.8 pm
§ The Secretary of State for Trade and Industry (Mr. Norman Tebbit)
I beg to move, That the Bill be now read the Third time.
This is one of the most discussed measures ever to come before the House. I pay tribute to the Stakhanovite workers of the successive Committees; they indeed established some records. They may in some ways have been unenviable ones, but at feast they were records. Particularly I pay tribute to my hon. Friend the Minister for Information Technology for the extraordinary work that he put in, together with my hon. Friend the Under-Secretary of State.
During the first time round the course the Bill received a Second Reading, 161½ hours in Committee and two days on Report and Third Reading. That was in 1982 and in early 1983. On the second time around, after the temporary interruption of the election—at which our policies were endorsed—the Bill had a Second Reading, 111½hours in Committee and a further two days on Report and Third Reading. No claim that the opportunity for debate has been inadequate can carry any conviction. On the other hand, it would be hard to claim that the opportunity for discussion was well taken, not because of any restrictions by the Government, but because of the attitudes that were adopted by the Opposition. In Committee the Opposition determinedly and repeatedly avoided debate on most of the important issues at stake and, as a result, some cases of trivia were accorded more time than some of the important issues. Although there was discussion on some important matters, they were not necessarily the central issues.
The concentration of discussion on time-consuming and peripheral matters has not been accidental. The Bill has been the subject of a campaign of deliberate misinformation and of advertisements deliberately aimed at arousing needless and groundless anxiety. That is regrettable, but the price of free speech is that it is available even to those who wish to distort or reverse the truth. When such a campaign relies so heavily upon statements which even those making them most know to be untrue, we can be sure that the campaigners have a bad case. When they resort to the arguments of industrial action, it is certain that they know that they have lost the intellectual arguments, particularly when, as in this case, the issue has been decided at a general election.
An even more unsavoury aspect of some of the lobbying has been the widespread use of British Telecom's 1227 official paid envelopes by BT employees who have sent lobbying materials through the post. My office has received representations in that way from no fewer than 130 lobbyists. Although I read that the Post Office Engineering Union is concerned to protect the consumer, that misappropriation of BT's property—in effect, the customer's cash — makes it all the more difficult to believe. It casts an illuminating and unflattering light on the tactics and standards of some of those in the POEU who have organised that campaign. I am glad that the industrial action has ended. The POEU has instructed its members to work normally, and that is a good and sensible thing.
On this occasion I should like to review the Bill, set it in the framework or our economic policy, deal with some specific points and describe the opportunities that it opens for BT, its customers and its employees.
First, I refer to the Bill in relation to our general economic policy. The Government believe that industry and commerce exist to serve their customers, not the other way round. Wherever possible, the customer should be king and free to choose what he or she wants. The element of choice is the basic freedom that separates West from East and has for many years separated the more successful economies of choice and competition from the more spectacular failures marked by centralised planning and direction.
We seek to widen areas of choice wherever we can so that more people can be more free to choose where they live and where they travel, what they think and what they say, and bear responsibility for their choices. Those choices are fundamental freedoms which are vital even though economic choices are bound to be limited by economic factors.
Absence of choice is bad for the customer. If someone else decides what we may and may not buy with our money, we are placed in an economic prison. Absence of choice is bad for the manufacturers, it stultifies innovation, perpetuates poor management and leads in the long run to industrial decline. It is bad for those who provide services who can escape with poor quality or use resources wastefully. In sum, absence of choice is bad for the country since it leads to dissatisfied consumers, inefficient manufacturers incapable of competing in world markets and dozy and stagnant provision of service.
The basic aim of the Telecommunications Bill is to give more choice to people when they use telecommunications. Our choice tonight is whether we should give the people the choice or reserve it for the functionnaires and the bureaucrats.
In 1979 the Government inherited a monopoly industry running both post and telecommunications. There was almost no choice. People received only the service which the Post Office decided they wanted, only when it decided people could have it, often irrespective of what people wanted or when the service was wanted. There was widespread complaint about the service in normal times, and those criticisms were aggravated by the demonstration of monopoly labour power by the POEU, which took industrial action in 1978 to stop the connection of new equipment.
Telecommunications—so central to the industrial life of a mature economy like that of the United Kingdom—was faced with a stranglehold. The circumstances were not 1228 by any means all black. Much that the Post Office did was excellent. We had nationwide subscriber trunk dialling and international direct dialling. However, the advantages were more than outweighed by the problems of poor service, delay, lack of innovation and poor value for money. A root cause was clear—monopoly. A single, centralised, nationalised, monopoly organisation took all the decisions, and a monopolistic union underpinned it. There was an absence of choice.
The Government's first step was the British Telecommunications Act 1981 which separated the Post Office and British Telecom. An incidental, but noteworthy, result has been the impressive way in which the Post Office, given more coherent objectives, has performed since the two bodies were separated.
The 1981 Act made the first steps towards giving customers choice in three areas. First, customers are now beginning to get the opportunity to choose the telecommunications equipment that they buy for office and home. By the end of 1987 there will be a completely free market for approved apparatus.
Secondly, customers are now being given the choice of the services that they can receive over their telephone lines. The increasing coming together of computing and telecommunications will provide value added network services of a wide variety offering choices hitherto unheard of.
Thirdly, customers will be given a choice of the telecommunications network into which they can connect. We have already taken major steps in this direction through the licensing of Mercury and the two cellular networks, and we are about to license local cable systems. In all those areas the Government are making a steady and significant change.
Above all, the transition from the traditions of a Civil Service inheritance to modern management systems, accounting and the attitudes required for present and future business is a huge task, and it cannot be accomplished overnight; nor are the sums involved anything other than huge. Many hundreds of millions of pounds, spread over years of planning and implementation, will be invested in British Telecom and its rivals. We are talking of systems of great complexity. BT and Mercury are part of an international telephone network which together comprise what can be argued to be the largest single machine on earth. It is proper, therefore, that our progress should be paced to match the scale of the task.
Once opened, the gates of consumer choice will remain open and there can be no turning back. Already with the door ajar, but not yet fully open, customers are seeing the benefits.
§ Mr. Tebbit
The hon. Gentleman says that those gates can be closed, but I assure him that he would be unwise to try to do so because he would fail spectacularly, as he failed last May and June.
Millions of pounds have been committed to developing new apparatus, services and systems. I believe that the liberalisation of BT will have a significant effect upon our country, as did the liberalisation of broadcasting when the stranglehold of the BBC was removed. I am sure that the hon. Member for Wigan (Mr. Stott) was against that as well.
§ Mr. Tebbit
The hon. Gentleman may grow old enough to be wise. It is a remote hope, but if he gets very old he may.
Lastly, I remind my hon. Friends that we have already made significant progress. This Government have already taken liberalisation in telecommunications further than any other Government. We have been the first to license a nationwide alternative telecommunications network with international access. We were the first in the world to license two competing cellular networks with nearly total national coverage. We were the first in Europe to establish independent standards and approvals arrangements. Today we are already the country with the most liberal arrangements for value added network services in the world.
I recognise the complaints of some of my hon. Friends that we have done too little, or that we are moving too slowly, but I ask them to consider the fact, which I believe to be proven, that we have done more to change the regulatory environment in the past 26 months than the Americans have done in the 15 years since the Carterphone decision.
The 1981 Act played its part in liberalising the industry, but it was not sufficient on its own. In particular, it left three major areas for further action. First, it did not reform the general law as it affected telecommunications. For example, it left in BT's hands the power to license operators to use the Telegraph Acts to place apparatus on streets and private land. It did not reform the Telegraph Acts themselves, which the Law Commission has described as a blot on the statute book, and it did little to amend planning and other laws to accommodate competing operators. The licensing of Mercury and the work done by the Mercury team have also revealed a host of legal, commercial, planning, taxation and technical problems which were not anticipated when the BT Bill was drafted.
The Bill, and especially the telecommunications code in schedule 2, reform the law to meet the changed circumstances of competition, but the Opposition decided not to debate the code or the substantial amendments made to it earlier today. The code will, of course, receive close attention in the other place, but I should like to explain to the House why we have thought it necessary to make these changes and the amendments to schedule 2. They illustrate our responsiveness to constructive criticism of our proposals, although I regret that those constructive criticisms were not made during the debates.
§ Mr. Tebbit
The debate on clause 3 went on for some time. It might have been better if the Opposition had been prepared to move on to other parts of the Bill.
I wish to describe one particular aspect of the detailed changes. As many hon. Members will know, the Royal Institution of Chartered Surveyors drew attention to the compensation provisions of the telecommunications code, which it regarded as inadequate. In a carefully prepared memorandum, it explained how the Bill as introduced failed to provide for compensation to be paid for certain types of loss or damage which may occur when a telecommunications operator is given the right to install apparatus. Our amendments attempt to meet those valid 1230 concerns, so that even without the Opposition playing any constructive role we have shown ourselves ready to meet sensible argument.
In relation to compensation, we have set out to do three things. The first is to clarify and strengthen the arrangements for compensation when the court, having had regard to the principle that no one should unreasonably be denied access to a telecommunications system, decides that an operator should be given the right to install apparatus on private land against the wishes of a landlord or tenant.
The second is to ensure that a person whose agreement was not sought by an operator before apparatus is installed on land in which he has an interest can obtain compensation for any diminution in the market value of his land, which might arise because of doubts about his ability to secure the removal of the apparatus when he comes into possession of the land. The third is to provide for compensation when someone with an interest in neighbouring land suffers loss or damage as a result of the installation of telecommunication apparatus. We hope that the amendments meet the concern that the RICS has explained to us.
We could not, however, accept the objections of the RICS to the principle that occupiers alone should be able to agree to the installation of telephone wires and other apparatus on rented property without obtaining the consent of their landlords. That concern was reflected in the amendments in the name of my hon. Friend the Member for Hertford and Stortford (Mr. Wells). The Government believe that the principle of occupier-only consent is important. We are all familiar with the problems when there is delay in getting a line installed connecting one of our constituents to the telephone exchange. We have probably even experienced the problem ourselves at times. This prevents people from obtaining telephone service in their homes or offices. Such delays would be more serious in the future because of the growing importance of telecommunications in all aspects of business and social life.
The Bill is designed to simplify and speed up the procedures for obtaining telecommunication services. Under the existing Telegraph Acts, which go back to the middle of the last century, consent has to be obtained from the owner, from any lessee and from the occupier of a property before an operator can install wires and cables. This legal requirement for the operator to obtain such a wide range of consents is profoundly unsatisfactory. En replacing the old Telegraph Acts we have opted for a much more straightforward procedure whereby a telecommunications operator need obtain only the agreement of the occupier of private land before he installs his apparatus. We have made exceptions to this where the occupier is a short-term tenant with a lease for a term of less than a year and where large apparatus is involved. The amendments made to the code earlier today also make provision to protect the interests of landlords whose consents are not required under the code. I hope that the House will forgive my making these points, but as we were unable to debate them it is useful to make them known in this way.
Returning to the 1981 Act, the second area in which further changes were required concerned the "exclusive privilege" to run the telecommunications systems, which was left in that hands of BT. Under the 1981 Act, BT could do everything in telecommunications and was subject to no limitations, whereas its competitors were licensed and 1231 controlled. The Bill removes the exclusive privileges of BT and subjects it to licensing controls comparable with those which apply to any other telecommunications operator. I should add that these licensing provisions guarantee the rural services, the 999 services, the public call boxes, and services to the disabled, about which so much misinformation has been published.
In yesterday's debates, the hon. Member for Newcastle-under-Lyme (Mr. Golding) who, uncharacteristically, is not present now, expressed much support for the principle of cross-subsidisation. When he expressed the view that business callers should subsidise private callers, I wondered whether he intended to try to persuade his colleagues to take the same view in relation to energy charges and to suggest that charges for industry should be increased to subsidise private consumers. To be consistent, he would have to do that. [Interruption.] The hon. Member for Wigan may have his lights on all the time, but it is not the best thing to do. Again, perhaps he will wise up to that, as the Americans would say.
The third failing of the 1981 Act was that it left BT as a nationalised industry run by a statutory board. I pay tribute to Sir George Jefferson, the board and the management of BT for the improvements that they have made and for the co-operation that they have secured from the staff, the great majority of whom have been loyal and co-operative in seeking to make those improvements.
The board itself, however, has statutory duties giving it power to decide the public interest in telecommunications. It has access to public finance at special rates. It also has the safety net of last resort—the knowledge that the taxpayer will stand behind it and pick up the bill for its mistakes if, indeed, the monopolist does not pass the bill direct to the customer. That framework — a statutory board with statutory duties, judging its own and the public interest, protected by monopoly and underpinned by the public purse and the wallets of customers who have no choice—is no way to set up a competitive organisation to respond to its customers. It is therefore necessary to complete the transaction started by the 1981 Act through the transformation of BT from a statutory body into a public limited company.
The transfer of BT from the public to the private sector is an essential step towards ensuring effective and fair competition and towards giving the customer the choice which our policy is designed to produce. The choice, which is our essential aim, cannot be cosmetic.
§ Mr. McWilliam
I was pleased to hear the Secretary of State mention access to finance and choice. He is clearly unaware that BT has not resorted to Government finance for many years, but has been a positive provider. The 1981 Act was about choice, and I was a member of the Committee throughout the passage of the Bill.
§ Mr. Tebbit
I am sure that the hon. Gentleman is not about to tell me that BT has never had access to finance at preferential rates.
§ Mr. Tebbit
ICI does not have access to the taxpayers' purse by right, whereas British Telecom always has had such access.
I do not think the hon. Gentleman understands that there is a difference between the rates that one pays for 1232 finance when one has a guarantee from the Government and those that one might have to pay in the real world outside.
§ Mr. Fisher
Is the Secretary of State not aware that British Telecom is paying many different rates of interest on various loans, all of which are at market value?
§ Mr. Tebbit
Of course I understand that it is paying different rates, because its loans were made at different times. The hon. Gentleman must understand that an organisation which borrows with a Government guarantee is different from one which borrows without such a guarantee—[Interruption.] I am sorry, but I must repeat what I said to the hon. Gentleman. When the Government stand absolutely behind the financial obligations of any organisation, bankers look at the position differently from how they would view a commercial organisation.
The transfer of British Telecom from the public to the private sector is an essential step towards ensuring effective and fair competition, not least because the rival companies do not have a Government guarantee when they look for capital, and towards giving the customer the choice which our policy is designed to produce.
§ Mr. Tebbit
Some people do not have a choice today. Is the hon. Gentleman suggesting that everybody today is provided with a telephone as a social service? He must know that that is not true. He must also know that that was never such a proposal by any Labour Government. It might be proposal by the Labour party from time to time, but it is secure in making such proposals, knowing that it will never be in government.
It would have been easy, in theory, to have attempted to move to instant free-for-all competition, and I am sure that some of my hon. Friends might have welcomed such an attempt, but I must tell them that I believe it would have been the wrong step to have attempted.
Our purpose is not to confront BT with a series of minnows, with the appearance rather than the reality of competition. It is no easy task, where there is an existing monopolist, to introduce real competition. Experience in other industries where there has been a single dominant nationalised industry has shown that complete open market entry and a free-for-all can all too easily result in a number of small and under-capitalised market entrants attacking each other, hardly denting the power of the established monopolist and failing to grow to a scale to offer real alternative service. The result is that the customer is not given the effective choice which should be the result of our policies.
Since telecommunication networks involve enormous investments, spread out over long pay-back periods, the problem is especially acute.
There are other considerations, not least those of an environmental nature, such as the impact of proliferating overhead wires and street works. There is the physical limit on available radio frequencies. These in practice constrain the number of competitors that can be accommodated. For these reasons, we have decided that for the next seven years there will be two national operators providing the basic telecommunications service of conveying messages over fixed links whether cable, radio or satellite, both nationally and internationally.
1233 BT will be confronted, not with a series of weak competitors, but with a single, properly capitalised competitor with the technical and management resources needed to establish a competing network which will really compete. Its main competitor, Mercury, backed by two of the most significant companies in Britain, has the necessary technical and financial skills.
§ Mr. Fisher
When discussing Mercury and competition, can the Secretary of State tell us exactly how many residential customers will latch into Mercury? Will the figure be zero?
§ Mr. Tebbit
If the hon. Gentleman would restrain himself and learn some of the good manners that characterised his father, he would get on much better in the House. Competition will begin in the business sector and is already beginning to show its effect. We cannot move from 70 years of monopoly to complete open competition overnight. The hon. Gentleman really must grow up.
There will also be the two national cellular radio networks and local cable system to intensify competition for BT. In 1990, when Mercury has established itself, and when BT has adjusted to competition, we shall review the competitive situation. We shall then see if there is scope for licensing additional competition. For the time being, however, we plan no changes.
We have given firm assurances about our policy, and those concerned are spending hundreds of millions of pounds on the basis of those assurances.
I have dwelt on what we have done in terms of the choice offered to the customer in this country. I have referred, briefly, to the protections that will be given, which are not in existence today, by the Director General of Oftel. Opposition Members would do well to examine those protections. They will then discover how they will enhance the position of the consumer from what it is today, and how they will strengthen the provision of the many services about which Opposition Members have wept crocodile tears for hours on end — not least the call boxes.
There is a further and important dimension. We are creating a wholly new telecommunications environment which will provide immense opportunities and challenges. The companies which are set up, responding to market demands in this country, have the opportunity to take the skills, the technologies, the management techniques, which they develop and market them abroad.
For too much of the interminable debate on the Bill the discussion has been narrowly centred on special interests, not least the special interests of those employed within the industry. The time has come for us to consider the wider horizons, the opportunities open in the most important sector of the modern industrial world. There is no need for BT to remain both protected and caged. The prospects are for exports, profits and employment. All this has been made possible by the changes in attitude which directly result from the policies of the Government.
1234 I therefore move that the House should, for the second time, give the Bill its Third Reading.
§ Mr. Peter Shore (Bethnal Green and Stepney)
We have reached the Third Reading of this 195-page Bill. The discussion in Committee was protracted and lengthy. I pay tribute to my hon. Friends who played so full a part irk those proceedings.
We have won most of the argument. We have persuaded public opinion. The Government lost the argument in Committee, the Minister for Information and Technology lost his voice——
§ Mr. Shore
That often happens, but equally those who do so often find that over a protracted period they eventually lose the vote.
How often in the past 10 years have majority Conservative Governments enacted measures which at the time were thought to be the essence of wisdom only to repeal and tear them up five or 10 years later? I think in particular of some legislation that is now before us. Who were the architects of the present system of local government, and who are now about to tear that up? Who created an entirely new structure for the NHS in the belief that it was the right way to proceed, but who changed it only two years ago?
I wonder whether in a few years' time the Government will come to the conclusion that somehow or other they have got this measure wrong. They had better contemplate that possibility, because as events develop over the next few years the arguments will increasingly reinforce the main principles on which we have criticised the measure and the main alternatives that we have advocated.
In spite of all the debates, this is essentially the same Bill as the one introduced on 18 July. Not one Opposition amendment has been accepted, although the Government, because of faulty and inadequate drafting, have tabled a number of amendments. Indeed, only yesterday heavy amendments were tabled to the code, although the opportunity to debate those has been denied because we are operating under a rigid timetable motion. It is right that we should now stand back and look at the broad sweep of the argument as well as the principles and major policies contained in the Bill.
I doubt whether any hon. Member doubts the importance of the continuing and future success of the British telecommunications industry to users, employees and the economy. Linked as it is with the computer industry, telecommunications is now the leading growth industry in Britain. The pace of development has been truly astonishing. In 10 years, the basic telephone service has entered the homes of 10 million new British subscribers. That is only one part of telecommunications. A whole range of new services are now being developed, mainly pioneered by Britain's publicly owned telecommunications industry. As I said in the guillotine debate, BT's record isa unique combination of public service, priofitability and technological advance". — [Official Report, 21 November 1983; Vol. 49, c. 37.]Given its record and the enormous potential for further development at home and abroad, the onus of proof is indeed on the advocates of change. Why do the Government insist on a risky and destabilising strategy of privatisation and competition?
1235 Some of the arguments have been put by the Secretary of State. It is obvious that to him it is simple. He supports the ideological assertion that in all cases, regardless of circumstances, monopoly is inefficient and that competition will be to the public good. He went so far as to suggest that to advocate a monopoly approach to a public service was to subscribe to the philosophy and doctrines of command economies in eastern Europe and elsewhere. That is fantastic and wholly unconvincing.
If the wish of a monopoly to make a great public service universal is the test of a totalitarian society, the company of totalitarian nations has grown enormously, because most of the countries in western Europe — and the United States until very recently—maintain monopolies for good practical reasons. It is no good the Secretary of State bringing his hobgoblins to the House of Commons in an attempt to frighten us with what obviously frightens him in the long reaches of the night.
§ Mr. Tebbit
Uncharacteristically, the right hon. Gentleman overstates my case. I said that the element of choice was the basic freedom that separates the West from East, and which has for many years separated the successful economies of choice and competition from the failures marked by centralised planning and direction. That is a more modest statement than the right hon. Gentleman's argument. I have never said that under no circumstances can monopoly ever be supported.
§ Mr. Shore
In that case, it is difficult to see the relevance of the broader statement. The right hon. Gentleman is not here to give a philosophical dissertation about East and West. He is here to put the case for supporting the Bill.
We are discussing two areas of competition —competition in the provision of networks and services and also in the supply of equipment and apparatus. As to the provision of services, the Government lack the courage of their own convictions. The Secretary of State made that plain in his defence of duopoly and cautious development.
Indeed, when speaking of free competition, the then Secretary of State was equally careful. He said that the Bill "contributes" to free competition and brings that nearer. Mercury and the new licensed operators for specialist services such as radio telephones will be allowed to cream off the most profitable traffic, but the authors of the Bill have made the basic decision. They will not break up British Telecom or separate local services from the trunk services, not because there are limits to their pursuit of dogma but because that would be incompatible with the continuation of what the former Secretary of State described asthe present statutory duty for BT to provide a nationwide service".He added:that duty has been extended from a duty to provide a telephone service to a duty to provide telecommunications services. This reflects our commitment to making modern telecommunications facilities and services available to all".—[Official Report, 18 July 1983; Vol. 46, c. 35.]Whether in practice these public service obligations will be fulfilled under the proposed arrangements, we have the gravest doubts. There is public recognition by Conservative Ministers that already competition across the whole of BT's service would be incompatible with the imposition upon it of public service obligations. We are 1236 to have, therefore, not free competition but carefully regulated competition at the profitable margins of BT's activities. As we heard reaffirmed today, there will be no further general licensing other than for Mercury until at least 1990.
Now a word about the second area of competition—competition in the provision and purchase of equipment and apparatus. Here things are different. In this important area competition is to be meaningful. Some 70,000 people are employed in the supply industry in great companies like GEC, Plessey and Standard Telephones and Cables. For a long time 95 per cent. of BT's requirement for capital and other goods has been purchased from British firms. There is a small but useful favourable balance of trade in telecommunications equipment. It is not much. The last figure I have for 1982 from the "Business Monitor" series shows a balance in our favour of £18 million to £19 million.
What is to happen? Soon the British market will be open to the world. Of course, there will be regulation of the apparatus. It will have to pass certain tests. A foretaste of what we can anticipate was given in the reply by the Under-Secretary to a question only yesterday. When he was asked about approvals for types of telephones, not under this Bill which will open up new possibilities but under the British Telecommunications Act 1981, he said that there were no fewer than 112 applications for approval for different types of telephone, of which only half came from United Kingdom firms. There were others with UK components in them but the other half had a foreign content.
The House is indebted to my hon. Friend the Member for Wigan (Mr. Stott), amongst others, and the hon. Member for Amber Valley (Mr. Oppenheim), who is not in his place, for opening up the important subject of trade in telecommunications apparatus. The hon. Member for Amber Valley's illustration of the kind of equipment that is already on order, and the extent to which Japanese, German, Swedish and other suppliers are already involved in the supply of apparatus needed for the development of British telecommunications, is disturbing.
The hon. Member made an important point. I do not think that his proposal would be successful; indeed, I think it was muddled. He talked about reciprocity. He asked what guarantee there would be that if Britain opened its market for telecommunications goods of all kinds, other major countries would do the same. In most countries of the Organisation for Economic Co-operation and Development—it is true of Japan, France, Italy, Sweden and Germany — a preference for the country's own goods is jealously safeguarded to defend a basic industry which those countries are not willing to see opened up to the ravages, as they may turn out to be, of competition.
§ Mr. Gerrard Neale (Cornwall, North)
Will the right hon. Gentleman comment on the view put by many manufacturers in this country that they have been uncompetitive overseas in recent years—the right hon. Member described it, I think unintentionally, as if it was an aberration in the trade figures, but it has been going on for a considerable time—because British Telecom was so introverted about what should be used here, and because they as companies depend on a growing, developing and evolving telecommunications market to have saleable products for overseas markets? They say that they have 1237 been unable to be competitive in those markets and that at last they have the prospect of competing not only at home but abroad with competitive products.
§ Mr. Shore
In some cases it does not reflect well on British suppliers. For the last decade when the Government have been a major purchaser the relationship between Government and private suppliers has been of major concern to nearly all economic Departments. The same kind of problem arises when the Ministry of Defence orders British warships—to what extent is it meeting simply a British home requirement? Surely the suppliers can be pushed into considering wider markets. This requires energetic Ministers, a positive interventionist approach and a bringing together of consumers and suppliers to take account of the needs not only of the British but of the wider market.
§ Mr. Tebbit
The right hon. Gentleman has raised an extremely interesting point. The problem, as he knows, was that British Telecom was not a good customer of the supply industry. The story of system X illustrates that. May I put to the right hon. Gentleman an experience which he and many other hon. Gentlemen may have shared with me? Under the sub-monopoly of the monopoly of BT I used to have a telephone answering machine. It was not a very good one; it was very expensive, but it was all I could get. When the monopoly was ended, I found that I was able to purchase freehold a much better machine for less than six months' rental. Because the British manufacturer had been protected by the monopoly, there had been no drive for him to improve his product. The product I had to buy was, regrettably, Japanese.
§ Mr. Shore
I am aware of this as a serious problem, but there is a great danger. Effort must be put into an industry which is changing. The main thrust of BT over the past 10 years has been, first, in exploring new services and development, and then in extending massively the provision of telephone services. Let us remember the figures—10 million new home subscribers in the past 10 years. Neither British Telecom nor its suppliers have put the same effort into more sophisticated apparatus. They have not been encouraged to do so. They should be encouraged, but I do not despair. I do not believe that the only way to get British manufacturers to produce the right kind of goods is suddenly to say that the market should be opened up to competition by letting in a flood of imports. That is too crude and will not work. It will be too late. We shall find that we are losing out on the balance of trade which has been modestly in our favour.
I should like to refer again to yesterday's exchanges in the House. Leaving aside the larger argument, we were told that the export-import ratio between Britain and the Common Market was 66 per cent. Four years ago—when the right hon. Gentleman and his hon. Friends took over—the figure was 89 per cent. That shows the drift and the trend. In a written answer yesterday we were told that in 1973 the export-import ratio between Britain and the Common Market was 130 per cent. We exported much more than the Common Market. This is a serious development. I do not believe that it is sensible or that the case has been made—I believe that all the evidence is to the contrary — that this massive change should be brought about simply to get rid of what has been a progressive public service monopoly and to replace it with competition in the two areas that I have described.
1238 I have dealt with competition but what other arguments are there? Privatisation? I recall the Secretary of State's predecessor speaking about major difficulties with funding future investment. I interpret that in some ways as a desire on the part of the Department of Trade and Industry to be rid of the clutches of the Treasury. It is an assertion of the Department's belief that this rapidly growing industry can secure the funds for its further capital development only if all responsibility is taken away from the Chancellor of the Exchequer. I understand that. Indeed, taking account of the policies and achievements of the present Chancellor and of his unfortunate predecessor, I have some sympathy with that point of view. I see that the Minister for Information Technology is solidly in agreement.
My remedy is different. I would prefer to rid the public sector of the Chancellor rather than of British Telecom. That is a simpler, swifter, and less expensive remedy. As the Secretary of State's predecessor put it:By removing BT from the public sector, as is proposed in the Bill, we shall be freeing the company to seek finance in the market."—[Official Report, 18 July 1983; Vol. 46, c. 27.]We are told that the Government cannot finance future investment of British Telecommunications but that the market can. Both propositions are nonsense and, indeed, dangerous nonsense.
Self-evidently, the Government can finance the investment programmes of BT. They have done so for the past 70 years and there is no earthly reason to believe that they cannot do so in the future. I should of course add "finance to the extent that external finance is required." That is a major qualification for the truth is that, as my hon. Friends have been pointing out, like all large organisations, whether publicly or privately owned, by far the greater part of BT's investment finance comes from its own retained profits. Indeed, it was only during the last period of Conservative Government, led by the right hon. Member for Old Bexley and Sidcup (Mr. Heath), and in the earlier period of Lord Wilson's Labour Government when the nation faced a tidal wave of imported inflation, that the prices and charges of the nationalised industries including British Telecom were deliberately depressed as part of a national counter-inflation strategy.
Only then, in those few years, was any substantial part of British Telecom's expenditure financed by Government loans. In 1982–83, British Telecom's capital expenditure was more than self-financed. The external financing limit was negative to the tune of £220 million. This year, 1983–84, with an investment programme of just on £2 billion, British Telecom is once again expected not to draw on the Government finance, but to contribute £100 million to the external financing limit. Next year, 1984–85, the contribution is expected to rise to £250 million. Far from adding to the public sector borrowing requirement, British Telecom is actually reducing it. So much, then, for the alleged restrictions imposed on the growth of BT by the disciplines of public expenditure control.
Of course, it may be that BT has plans ready and waiting well in excess of its present £2 billion per annum investment programme, which, if carried through, would exceed its capacity for self-finance. If this is so, the House should be told. It should be told the size of the alleged capital requirement that is not now being met.
What indeed are the financial borrowings, whether in the form of equity capital or loans, that the Government expect a privatised BT will need to raise from the market? What is their expectation about the recourse of BT to the 1239 market over the next few years? Surely they have made that calculation because we are dealing with an industry that must plan three, four, or five years ahead. The Government are not replying. Do they know? Since it is precisely in the area of high technology, heavy investment industry that the market has, over the years, proved to be a most unreliable source of funds, why does the Secretary of State think that any significant increase to the privatised BT's investment programme could be more easily financed from this source, the market, rather than from self-financing or Government loans?
It is not a convincing argument that the only way to finance British Telecom's expenditure is to go to the market and to take it out of the public sector borrowing requirement. One must look for other and more convincing reasons. I can offer only two. Firstly, there is the belief that the Government obviously hold that all profits should be privately appropriated. Profits must accrue not to the public but to the shareholder. Loss-making industries, if they cannot be closed down, are okayed for the public sector. Profitable industries must be turned over to private ownership. Secondly—we are coming here to perhaps the most powerful immediate motive — there is the Chancellor's special requirement. If he can sell off this most valuable public property, if he can raise the £4 billion or so that a 51 per cent. private stake in British Telecommunications will yield, in the short term, he will have that much less to raise in taxation or borrowings. The Chancellor and the nation can to that extent postpone the day of reckoning that lies ahead for the failure of his own economic, monetary and fiscal policies. Just as we are squandering the benefits of North sea oil, so too we can live for a time off the proceeds of public property sales. In the last Parliament, £1.33 billion of public assets were disposed of. In this Parliament, if the Government's manifesto commitments are carried out, no less than £7.5 billion of public property will be sold off. Of course, there are limits. The stock of public assets, although large, is limited. So too are the reserves of the North sea. The Chancellor's philosophy—the Secretary of State has not the wisdom to combat it— seems to be "apré moi le deluge". While the terrible day of reckoning undoubtedly lies ahead, I do not think that the Secretary of State or the Chancellor have even begun to understand the immediate effects on the capital markets of their policy of mass sales.
The Government have been reticent about the details but it is a reasonable inference to say that they expect to sell off £2 billion this year and they expect to raise a further £2 billion in the following financial year. Never in their history have the Stock Exchange or the British capital market been faced with such a huge single demand. In the past six years, 1977–83, total United Kingdom capital issued for all industry and commercial companies has exceeded £2 billion in only one year. In 1983–84 the figure may reach £3,000 million. I emphasise that the figure that I have just quoted includes the total of new capital issues for industrial companies and for commercial companies, including banking and insurance companies. To seek to raise £2,000 million in a single issue of BT shares is bound to have major repercussions. Unlike other company issues, the money raised will not be used to finance new investment, but the existing stored value of BT will simply be abandoned.
1240 To attract such a vast sum, the share price will have to be well below its real value. Unless a substantial proportion of the vast sums of British money, which are now pouring into the equity and property markets of other countries, is diverted back to London, there will be a danger of crowding out. The overall effect will be a rise in yields and increased difficulties for existing private sector companies that seek to raise new capital. The Government know that, which is why they are trying to encourage the Americans and the Japanese to purchase BT shares.
I can recall no piece of industrial legislation which is so clearly against the national interest as is this Bill. There will be many more stages before its implementation, and the Opposition will use them to expose and oppose what is being done. We shall seek to repair the damage done and recoup the losses to the public as soon as we have the power and opportunity to do so, and we shall vote against the Bill tonight.
§ Mr. Richard Page (Hertfordshire, South-West)
I rise, as a veteran of three telecommunications voyages, with a sense of relief that the harbour is at last in sight. I look for a respite from the false storm warnings that have been produced by Opposition Members, and a rest from their dulcet tones of more than 300 hours in Committee. Although it was a good-humoured Committee, Conservative Members realised that the objections to the Bill came from dogma, not from the realities of the telecommunications world.
I welcome the Bill because it is a further means of reversing the hitherto genteel decline of the British telecommunications industry on the world stage, to which the right hon. Member for Bethnal Green and Stepney (Mr. Shore) referred. It will give a welcome shot in the arm to the British home industry. An examination of our percentage share of the world market shows that we now have only 5 per cent., and it shows the effect of decades of a cosy, uncompetitive and, dare I say it, incestuous relationship between BT and the United Kingdom suppliers. The chief characteristic of that relationship was a marked lack of change. Although the technology was known, and was being produced and installed throughout the rest of the world, the rub was that that technology was being installed in and produced by the rest of the world.
First, it is right to look back and contrast similar protestations of doom from Opposition Members before the British Telecommunications Act 1981 with the reality of it, which is a better choice of services from BT during the past three years, shorter waiting lists, reduced trunk call charges and improved equipment. The Bill continues the change started in that first Bill of 1980, and will free the home communications market by removing the privilege and monopoly of BT. It will do that by providing a further choice for consumers on the home market. That spur of competition will provide the springboard for information technology in the United Kingdom, and from there a base from which to claw back those lost overseas markets. That will take us back to our position of 25 years ago, and we will again have 25 per cent. of the world telecommunications market.
If I have said it once in the House, I have said it half a dozen times that the Japanese have designated information technology as their major growth area during 1241 the next decade. They are looking to that sector to provide the most employment, and we should be wise not only to recognise that judgment but to act upon it.
It must be obvious to the House that the introduction of new equipment to meet or to provide competition must give a home market base of such a size and substance that it will in turn provide a base for export. I do not wish to labour the point, but the recent order by the Hull exchange for system X is an example. In the interests of balance, I must also mention the optical fibre cable order from Mercury. Such orders and developments will assure employment. The scare of unemployment has been trailed regularly across the Committee floor, and it takes a peculiar courage to ignore the increasing numbers employed in that sector in Japan, and the increasing employment in the telecommunications and supply industry of the United States of America.
To continue to prophesy that this Bill will cause a reduction in employment shows a remarkable lack of faith in the effort and ingenuity of the British people, especially those employed by British Telecom. Those cries of doom ignore the inward investment in high-tech industries in Britain during the past four years, with about 60 companies investing here and creating at least 48,000 jobs.
The cries also ignore the activities of the value-added network companies, such as Tunstall Telecom, which provides the equipment for Highland regional council's help call. I wish to mention that service briefly, because it illustrates the sort of service that is now becoming available to the people of Britain, and marks the progress of information technology. It is an emergency communications service for about 300 people in the Highland region, which represents about one tenth of the land mass of the United Kingdom. Those whom it helps are mostly elderly or in some way at risk. They carry with them a small device; when they are in trouble, they press that device, which then opens up a two-way communication service. They can speak to the control centre, which may be many miles away, which provides them with assistance. It is a sophisticated device which enables people to remain longer in their homes and with their neighbours and friends, and it puts off the time when they must enter residential care. Such services will become more common as a multitude of companies seize the opportunities opening in front of them. The services will also provide more employment.
§ Mr. Charles Kennedy (Ross, Cromarty and Skye)
I am grateful to hear of the hon. Gentleman's interest in a major benefiting service in my constituency. I am sure that he will share my concern and regret, and that of those who have benefited from Highland help call, that current financial restraints and pressures upon local government in that part of Scotland, as a result of measures such as those announced this afternoon by the Secretary of State for Scotland, endanger the future of the system.
§ Mr. Page
All that I can say to the hon. Gentleman is that I believe that such services will become freely available throughout the length and breadth of Britain. Nothing can hold back the march of progress once this liberalising measure gets fully under way.
Labour Members have raised objections and scare stories about unemployment. In the light of the facts, I and my hon. Friends are inextricably drawn to the conclusion that the truth of the matter is that they are motivated purely 1242 by the desire to preserve their sponsoring unions rather than to see a general national growth of employment in this industry.
The creation of Oftel and in particular the role of the Director General of Telecommunications will be crucial in seeing that fair play is operated in the competition policy between the licensees. Members of the Committee who will serve on this Bill and those who served on the previous Committee know that on this aspect the Conservative Members, if they could get a word in edgeways when the hon. Member for Newcastle-under-Lyme (Mr. Golding) was giving one of his two, three, four or 11-hour speeches, were concerned to see that there was a clear, understandable competition policy. My hon. Friends the Under-Secretary and the Minister for Information Technology have created by the Bill a framework in which the licensees can operate. The role of Oftel can be most effective in introducing a sensible route of competition, perhaps not fully free-ranging, but, most importantly, practical, to give the best results of service, quality and choice.
The Government's choice was between complete liberalisation which might have created uncertainly, with nobody prepared to invest and to compete fully with BT, and the encouragement of one strong competitor so that an increasing number of customers should have a genuine choice. The Government have made the right choice, and therefore I hope that we shall soon hear an announcement about the post of the Director General, and who w ill fill it, so that he has as much time as possible to bed himself in and familiarise himself with the task before the Bill becomes an Act.
The Bill is a great liberalisation measure and already the speed of BT's reaction to impending competition has been noticed and appreciated. Waiting lists have been slashed from over 100,000 to a few thousand. BT salesmen are keen and motivated to provide BT goods and services, as my constituents have noted and reported to me.
I know that several of my hon. Friends will want to make some contribution to the Third Reading debate and I know that some Labour Members would like to finish with a short contribution after 300 hours of Committee, so I shall not take up the many points that were freely and openly put to us during the Committee. This is the most important privatisation measure that has been brought before the House in this Parliament. I congratulate my right hon. and hon. Friends on the Front Bench on piloting it through Committee, and warmly recommend it to the House.
§ Mr. Charles Kennedy (Ross, Cromarty and Skye)
As other hon. Members have said, this is the last occasion on which this company will debate this measure. Both as a new Member and as the sole alliance representative on the Committee, I thank both sides of the House for the courtesy which they have, by and large, extended to me. I say that particularly to the rather infamous hon. Member who, when I met him and got to know him, turned out to be not nearly as bad as his reputation, the hon. Member for Newcastle-under-Lyme (Mr. Golding).
Despite the niceties, at the end of the day the alliance remains opposed to this measure, because, as previous SDP and Liberal spokesmen have said, it is part of our political thinking to want to stabilise the frontiers between 1243 the public and private sectors in British industry. For various reasons, which we have argued in the past, this measure will only disturb those frontiers.
As the right hon. Member for Bethnal Green and Stepney (Mr. Shore) pointed out, this is not privatisation or liberalisation as many would understand it. Instead of a truly competitive market, we are seeing the institutionalising of a private monopoly. As such, the private monopoly will be detrimental for the consumer, both in terms of services and of charges, and for BT, in terms of its development and future investment.
As the Minister is aware, the alliance has expressed concern and opposition to many parts of the Bill. I shall not go over the old arguments again on such things as rural communities, the missed opportunity for industrial democracy or the problems faced over the pension issue. Instead, given that the legislation will be passed at 10 pm, I shall look briefly at the role of Oftel and what we see to be the problems that it faces. I shall also make some constructive and positive suggestions about improvements which I believe the Secretary of State and his Ministers may use and implement, if the hints that I have received from various sources are correct, in the time ahead as the new set-up is improved and brought in.
Oftel has three potentially conflicting tasks. It has to try to achieve fair network competition, to provide fair apparatus supply competition and, at the same time, to try to protect the consumer and the community. It has already been argued by the right hon. Member for Bethnal Green and Stepney that a not particularly competitive set-up will emerge as a result of the legislation. I wish to examine the achieving of fair apparatus supply, which will be one of the issues confronted by Oftel.
At the moment, the markets are not large enough for the achievement of real competition. In each of the last two complete financial years, for example, telephones and service have increased annually by about £250 million. Once that figure is divided among the few suppliers that we now have, it is doubtful whether there will be room for either further manufacturers or, if it is economic, for a major manufacturer to supply direct or through the outlets on offer through BT.
The economics of production of the basic telephone instrument appear to dictate that competition will be limited, for example, to the so-called fancy or gimmick phones. I noticed recently "Snoopy" and "Mickey Mouse" telephones. I am tempted to suggest that the Cabinet should use a "Snow White and the Seven Dwarfs" telephone. As one Conservative Member said, imports will pose an extremely serious threat to British industry, given the problems that will be faced domestically over the comparative smallness of the market that will be opened up.
Oftel will face problems from the consumer and the community, which will have to be examined in comparison with BT. Oftel already appears to be under-resourced. We have heard the figure of about 50 internal staff and a modest budget. BT's corporate headquarters employed over 2,000 staff as at the year ended 31 March 1983. Moreover, 25 per cent. of those staff are being paid in excess of £30,000. As details of Oftel become clearer, it appears that the salaries will be fairly modest in comparison. There is a danger, therefore, that either the 1244 intellectual or the technical calibre in Oftel will not match the competition that it will get from BT. That is a danger, and I hope that the Minister can reassure us on the matter.
I want to say a word about the regional implications of the Bill — the powers that are given to the Director General to set up regional advisory bodies in, for example, Scotland and Wales. It is said that finance will be provided to the Director General to set up these advisory bodiesto such extent as may be approved by the Treasury".I hope the Secretary of State will appreciate that those words are of deep concern to the Opposition. In fact, I sit here as a Member of Parliament because those words cost the previous Member for the former Ross and Cromarty constituency his seat at the election, in that the Treasury did not produce the cash and the public did not produce the votes for the gentleman who is now Lord Gray. That was largely because of the problem of trying to get finance from the Treasury, and I think it is fair to say that the same problem could well arise with this legislation.
The licence itself is weak, in that it does not appear to allow the Director General to deal with anticipated breaches of its terms. The breaches have to be manifest before action can be taken. Perhaps more seriously, there do not appear to be powers to allow the Director General to deal with predatory pricing. Cross-subsidisation is restricted between equipment provision and network provision, but not within the network provision. Thus, profits may be used — it may be a danger in the legislation—from one line to stave off competition on another, apparently with impunity.
Let us compare the position in the United States. DATRAN was eliminated from the market there by AT and T by precisely those tactics. Surely, therefore, there should be further provision for interim orders to be made when breaches of the licence are suspected, thus speeding up the official response and reducing the likely attraction of such tactics.
The real importance of the RPI-X formula is not simply to stop the overcharging, in the sense of a calculated exploitation of consumers, but also, we hope, to keep up the pressure for efficiency improvements in the new regime that will take effect from next year. I am sure that the Minister of State will bear that in mind. However, it is unlikely that Mercury or the cable operators will supply enough competitive pressure to achieve that, for a number of reasons. Those reasons include the size and permitted scope of operations, as well as the limitation on further competition.
X should surely be calculated to force BT to adopt the most efficient methods and practices available by reference to the trend that has been achieved abroad. We accept that it is not easy or straightforward to achieve those targets, but it is a price that BT should be expected to pay for its continuing privilege and dominance. An international comparison currently suggests that 7 to 8 per cent. would be a feasible value for X, implying a reduction in overall costs of 32 per cent. in the next five years.
My argument is one of opposition from the Liberal-Social Democratic alliance. None the less, accepting the political reality of the situation, it is a constructive opposition, bearing in mind what has yet to be done. Our own policy, lest anyone should inquire about what we would do at a future date, were we in a position to do so, is to accept that privatisation has gone ahead but to realise that changes and improvements can be made. We hope 1245 that the Government will not be too dogmatic and thereby miss the opportunities that will present themselves to do that.
I end by quoting from a recent letter in the Financial Times by none other than Sir George Jefferson. He was replying to criticism that had been expressed in that newspaper by a reader about the advertising campaign that BT had been conducting. I do not quote it to draw attention to the campaign, but because it raises an important matter. It said:British Telecom is concerned to ensure that its customers and its employees are informed of the facts, upon which they can base their own conclusions".Although I was not a party to the exhaustive Committee deliberations on the Bill, I nevertheless hope that the Government will acknowledge that many of the facts have been highlighted by the Opposition, and I hope that we on these Benches have contributed to this process. If our worst fears are confirmed and the facts become more apparent in the years ahead up to the next election, the Government may find that public opinion, which has been swinging against them on this issue, will repudiate them, in contradiction of the way in which they endorsed the Government, in some respects at least, last June.
I speak in a spirit of constructive opposition. In that spirit I hope that, even if the Bill is passed this evening and becomes the modus operandi of the future, the Government will bear in mind their obligations to the people of the country as much as to the employees of BT.
§ Mr. Peter Thurnham (Bolton, North-East)
I spoke on a number of issues yesterday, but I take this opportunity to speak on an additional separate matter. One of the most significant developments since the Second Reading last summer—I do not belittle the efforts of the Committee — has been the complete collapse of the union's campaign of disruption and strike action. I welcome that development, which I believe is a result of the efforts of my hon. Friend the Minister for Information Technology, who has laboured to make the Bill such a good measure. His efforts have gone a long way to ensure that the Bill is fair, and that the various interests have been reconciled, one with another.
One of the most important aims of the Bill is to promote competition. Here we welcome the development of Mercury as an alternative network. Mercury is planning to provide a link to the north-west. I welcome that as an extension of service to my constituents. Nevertheless, I regret to report that Manchester city council has decided to reject and frustrate the efforts of Mercury to set up a radio telephone link in Manchester. On Tuesday, the Leftwing dominated planning committee threw out Mercury's application as an admittedly political decision. The union had prompted it by saying that radio waves were dangerous, although the planning committee neglected that. I deplore that action. It can only damage the interests of all who live in the north-west. It is doubly unfortunate, in view of the north-west's record as the crown in BT's services, with eight firsts and seven seconds in the league table of service. I have already drawn attention to the fact that Bolton is the jewel in the north-west's crown, but I call on Manchester city council to do its bit to make the north-west the best of Mercury's service.
I urge all hon. Members to put the Bill on the statute book without delay.
§ Mr. John Golding (Newcastle-under-Lyme)
The problem with this debate is that we must address ourselves to questions which do not belong to a Third Reading debate. It is necessary to make almost a Second Reading speech on this occasion. The Government have brought the Bill to Third Reading but they have left so many problems unresolved. They should have solved the problems before they reintroduced the Bill this Session. They knew that it was in a shambles when it received its Third Reading on the first occasion before the general election. They knew that problem after problem remained unresolved but they chose not to set about solving them. They merely reintroduced the Bill and it remains in chaos and confusion.
My speech will be addressed neither to the Minister without words nor to the Under-Secretary of State without brief. Instead, it will be addressed to those in another place. We must ensure that the issues that are unresolved, along with the doubts and uncertainties, are well debated in another place. They must be given further scrutiny in another place.
There are those who say that this is the end, but they have overlooked the long debates that will take place early next year on Lords amendments. I look forward to the time when reason prevails in another place in contrast to the voting juggernaut of the Tory Government. I look forward also to the amendments returning to this place.
The Bill is a disgrace and it is no wonder that the Government do not understand it. It is not comprehensible to anyone. When the Minister of State was ashamed of it in Committee, his practice was to leave matters to the Under-Secretary. He did so because the Under-Secretary understood little. When he presented sections of the Bill that were meaningless, we were expected to notice no difference. For example, clause 25 is incomprehensible. Conservative Members were quite forthright in the Committee Corridor and in the Tea Room. They scented, too, to consider the clause to be incomprehensible, but in Committee they voted for it. They did so because the Whip rounded on them. The Whip insisted that they should vote for something that no one understood. The only person who thinks that he knows what it is about is the draftsman. There are many such clauses in the Bill and those in another place will have a busy time.
Huge sections of the Bill have gone undebated, yet Government amendments have poured in this week. The sections remain undebated, yet more than a year after the Bill's introduction the civil servants are still providing Ministers with amendments to their own legislation. The fact that such large sections of the Bill remain undebated cannot be attributed to delaying tactics or obstructionism on the part of the Opposition. I shall not be surprised if further amendments pour out in bucketfuls in another place.
I think that the Bill was introduced at an early stage because, given the hours of their sittings, their Lordships will probably take months to cope with Government amendments before account is taken of the amendments that must be tabled by those in another place in an attempt to make the Bill acceptable.
I should not be forced to make these comments on Third Reading. If necessary, I should not be surprised to have to make them on Second Reading. However, the Bill is in such a shoddy condition that it still remains necessary to 1247 amend it in Committee. I see that the Minister of the State is taking notes. I sympathise with him tonight because I know that he wants to make a great historic speech. He wants to say that the Bill is the greatest measure of this Parliament. That is the speech that he made during the previous Parliament, but he did not mention the Bill during the general election. He wants to claim that the Bill is historic legislation, and he will have to make that speech with a croaky voice. I feel sorry for him because his speech will hit a false note from beginning to end.
Those in another place will have to examine carefully the Bill, the draft licence and the Littlechild report. The Bill is badly drafted and the licence is completely inadequate. We have made some impact upon the licence, but it remains completely unsatisfactory. Even now, a year since the Bill was introduced, we are receiving letters from POUNC begging us to ascertain what the Government intend to do about access charges and the implementation of their cross-subsidisation principle. The Secretary of State's approach is one of rejection, and perhaps that is why there is delay. The Minister of State may still be plugging access charges, which are taxes on international calls and trunk calls, to enable services to be provided in rural areas, if the Minister knew what a rural area was.
The Minister of State wants some cross-subsidisation but we heard the mumblings of the Secretary of State last night. We heard that he believes that people should pay the full cost of the services that they receive. In other words, no cross-subsidisation. There is a split in philosophy between the crowbar kid, the Secretary of State, and the whiz kid, the Minister for Information Technology. That may be the problem.
Access charges were introduced because of a torrent of criticism from the consumer groups. I have never before been in such an alliance. It seems that I am supported by the National Farmers Union. I could not have imagined that happening when I was elected in 1969 at Newcastle-under-Lyme, which was then an agricultural constituency. I was elected despite the vote of the farmers. However, in 1983 I receive letters from the National Farmers Union in my constituency asking me to fight the Tory Government's anti-nationalisation proposals. It is unbelievable. Those farmers had not been brainwashed by advertisements in the Daily Mirror. Their reading does not go further than the price review. They get their information before milking time. However, they knew intuitively that the legislation would damage the rural areas.
Unlike the Minister of State, the farmers know what a rural area is. They wrote to me to ask me to oppose the Government on this measure, and I have not let them down. Tory Members who say that we oppose the Bill only because of our sponsorship ought to see those letters. They are not all from farmers. My hon. Friend for Stoke-on-Trent, Central (Mr. Fisher) has reminded me on many journeys through Staffordshire how the local parish councils, the councils for social services——
§ Mr. Golding
My hon. Friend corrects me. He must have reminded me of the community councils when I was passing a heavy articulated lorry in the rain. The parish councils, the women's institutes and the community associations are not bastions of the Labour party. They do not sponsor Labour Members. Their members attend 1248 coffee mornings run by the wives of Conservative Members who are missing their husbands because of the BT Bill. Yet those are the people, who, last year, asked us to attack the Bill.
It was not just the spokesmen for the rural areas who asked us to oppose this reactionary legislation with all our might. I was astonished to find that the heads of British industry—the very people who had pressed for the 1981 Act — started to say, even on television, that the legislation was harmful to Britain.
The Tory party on its own, therefore, was faced by a broad-based coalition, and even the Tory party was divided. The record of the Second Reading shows that Tory Member after Tory Member had reservations about the Bill. Tory Members—I shall not mention the hon. Member for Cornwall, North (Mr. Neale)—who at one time would have made powerful speeches on the Bill are now reduced to minor interventions. Why? Since they made those powerful speeches, they have listened to the Minister of State and the Under-Secretary.
§ Mr. Golding
The debate has lasted for two days, but the hon. Member for Cornwall, North has not shown a great deal of interest. He comes here from time to time for old time's sake, but not very often.
There are many subjects, such as access charges, which the Government must sort out before the Bill goes to another place. There is the question of "reasonable demand". I hope that the House of Lords will press hard to discover what reasonable demand now means in the legislation. Does it mean, as it meant in the licence before it was redrafted, demand backed by enough cash to pay the full cost of the service? If it means that anybody in the countryside, or anybody in need, can have a service so long as he can pay the full cost, then the reservations in the Bill and the licence mean nothing.
The Minister of State must produce a definition of "rural". He has spent over a year taking the Bill through the House, and the Bill includes a section on the rural areas, and yet the Minister cannot define a rural area. That is a disgrace. I do not know how the Minister can face the House tonight, leaving that question unanswered.
The Minister is sending the Bill to another place without having been able to explain the price formula or say what it includes. Unless the House of Lords is very tolerant, that will delay the business for some considerable time. I shall be disappointed if the House of Lords does not press for a definition of terms and an explanation of what the Bill is about.
I hope that the ridiculous situation in respect of the right to strike will be dealt with in another place, and that the question of the sale of shares will be dealt with more thoroughly. I still find it a disgrace that officials visited Tokyo on 20 and 21 June to try to persuade people there to buy shares in BT. If the Lords want to see the minutes of those meetings, I shall be pleased to provide them—free. The Government are charging £1 for a licence so I shall provide my secret briefing for nothing.
1249 I also look to the other place to go further with regard to protecting manufacturing industry. We know that we have Lords Weinstock, Carrington and Nelson of Stafford, all of whom are connected with the General Electric Company. I hope that their connection will not prevent them from speaking for their own and other companies. When the Bill goes to the other place they have a duty to speak up for Britain.
The vicious attack that we heard yesterday from the hon. Member for Sleepy Hollow—for Amber Valley (Mr. Oppenheim)— should be answered completely by Lords Weinstock and Carrington. I hope that the present Lord Nelson does not turn a blind eye to the way in which Conservative Members who support the Treasury Bench are doing their best to smash British industry. I hope that they recant the support they have traditionally given to the Tory party and see reality. The Labour party is now the patriotic party. It is the Labour party that will defend British industry.
What I find shattering about the Government's approach is that they constantly reiterate that there is no need for the staff to be worried. They say that this, that and the other will be provided for the staff but the staff have nothing in writing. I compare the Bill with the British Telecommunications Act 1981. In schedule 1 the Government then provided for a reasonable framework of industrial relations. The Minister had no difficulty in making such a provision in legislation then and he should have no such difficulty now. There is every reason to put safeguards for the staff into this Bill. If the Minister feels unable to do that he should at least put such safeguards in the licence. And if he cannot do that he should persuade Sir George Jefferson to put it publicly and categorically in writing that he, Sir George Jefferson, ought to do it. It is utterly wrong that the staff should have such uncertainty. It should be cleared up by categorical reassurances.
The Minister has put safeguards for consumers and even for manufacturing industry into the Bill and the licence. If he can do that, he can provide safeguards for the staff. If Sir George Jefferson can spend so much money buying space in newspapers to reassure consumers and all and sundry that all will be well in the BT of the future and if he has no difficulty in buying in a future board now, he should find no difficulty in providing the staff with assurances. The attitude of the Government and, I believe, of the management of BT must have led to ever greater staff insecurity.
I cannot understand what BT and the public can get from privatisation. My hon. Friend the Member for Stoke-on-Trent, Central has pointed out that payments of dividends will, at a conservative estimate, amount to about £350 million a year. The dividends payment of £350 million a year is equivalent to a 16 per cent wage increase. If the staff went to the management of BT and said, "Give us an extra 16 per cent on our wages next year, give us the £350 million," the reply would be that investment, prices and the future of the industry would be affected. My hon. Friend the Member for Bolsover (Mr. Skinner) says that even the pound would be affected. There would be apoplexy on the faces of the management. Governments would issue directives stating that in no way could anybody afford another £350 million.
The Bill is concerned with giving private individuals public money to the tune of £350 million a year with no 1250 benefit to British Telecommunications, to the customer or to the manufacturing industry, but with wholesale damage to Britain.
§ 9.6 pm
§ Mr. Neale
Firstly I should declare an interest in the subject. It was a pleasure to hear a fifth replay of the number four speech of the hon. Member for Newcastle-under-Lyme (Mr. Golding) as I have been on two of the three Standing Committees that have brought the Bill to its present stage.
The Under-Secretary of State and the Minister of State deserve the congratulations of the House, particularly the Government Benches, for bringing the Bill and, indeed, all the legislation on British. Telecommunications to a conclusion.
There is no doubt about the perception of hon. Members as to the difficulties of privatising a large organisation like British Telecommunications, but perception is very wide of the truth when it comes to judging the difficulties involved. I know well that, once an annoucement is made, an organisation such as British Telecommunications for its own interests immediately distances itself from the sponsoring Department. This makes it even more difficult for the officials advising the Ministers to obtain the information they need to prosecute the Bill properly through the House. From my own involvement in the subject, I think the officials deserve tribute for the way in which they have handled the matter. It is true that Ministers have suffered from unpreparedness in the industry to see the possibilities and difficulties involved in the legislation.
There was criticism from the hon. Member for Newcastle-under-Lyme about the way in which my hon. Friend the Minister of State introduced various changes during the debates in Standing Committee on three occasions. In his defence, I should point out that the Minister has been willing to acknowledge that the situation in the telecommunications market place has been changing. It has been necessary to meet the various criticisms by creating more competiton. It is a great tribute to the Minister that he has been willing to do just that and to make certain that, as far as possible, the Bill meets, as much as possible, the criticism expressed.
I was greatly reassured by the Secretary of State's comment on competition that, in his view, the door had been left ajar. He gave the clear impression that, once the door was ajar, it would be much easier to push it futher open.
I am sure that my hon. Friend the Under-Secretary, who has put in many hours on this subject, is aware that apprehension still exists over two matters. One is the competition-free holiday during the period up to 1990. The second is the similar period that has been talked about in terms of the complete resale of network lines. I urge him and his colleagues at the Department not to commit themselves any more than they must to ensure that companies such as Mercury establish themselves quickly. They should not commit themselves too strongly to preventing competition in respect of network provision and network use in terms of resale, bearing in mind that technical development is fast and all-embracing and that there is every reason to expect that in the period to 1990 it will progress even faster. It is important that we allow for as much evolution in the development of telecommunications in its widest sense as we can.
1251 The hon. Member for Newcastle-under-Lyme frequently reminded me that I represented a rural constituency. One of the planks of the Opposition policy was that rural areas would suffer most from the Bill. In the early stages of my representing Cornwall, North in the last Parliament I was constantly being bothered by people who were dissatisfied with the provision of service or who complained that they had no service from BT. In recent months I have received little or no comment about that service. It is obvious that as a result of the first liberalisation measures and the further threat of competition BT is much better placed and more willing to take the interest of the consumer into account and realises that the welfare of its employees, and of itself as a company, depends utterly on providing consumers with the products that they want.
I hope that the Under-Secretary will accept our congratulations on bringing the Bill to this stage and will assure us that he will keep a watchful eye on the way in which telecommunications evolves in the coming period, and certainly over the years of this Parliament.
§ Mr. Phillip Oppenheim (Amber Valley)
Opposition Members have expressed their deep, and understandable, concern about job losses. They have clear ideas about how jobs are created and protected. Monopolies, public ownership and inefficiency are apparently the great guardians of the economy and of jobs. Fortunately, everybody else knows that the only way to create and protect jobs in the long term is by having an efficient, progressive and well-managed industry.
Apparently some Labour Members thought that BT was efficient in 1979. The hon. Member for Falkirk, East (Mr. Ewing) — who is absent for reasons with which we sympathise—said in Committee that he believed that BT was an efficient industry at that time. I can only assume that he was joking. I do not blame inefficiency solely on the BT work force. On the contrary, good management is the key to the efficient running of an industry, and much of the blame for the inefficiency of BT in the past must be laid fairly and squarely at the feet of its management. Already the British Telecommunications Act 1981, which the Opposition opposed tooth and nail, has brought greater efficiency. I do not believe that in their heart of hearts the Opposition would deny that. Privatisation will continue that process. That is the best safeguard for BT employees.
What of the consumer? We have heard much on the subject of the work force from the Opposition, but we have not heard so much about the consumers. Surely the 15 million users of BT's services count for at least as much as the BT work force. In the past, before the 1981 Act and before the current measures were mooted, BT offered customers a frankly disgraceful service. Customers who had the cheek to ask for a phone were told to wait for at least six months and often for as long as a year. Getting in touch with the BT sales department was like trying to get a private audience with the Pope. Equipment was often poor and maintenance was often achieved only through bribery.
The Opposition know that the 1981 Act has benefited users greatly. Already competition from Mercury has forced BT to bring forward its digital lines and to speed up the introduction of the X-stream services, which will 1252 be of great benefit. I do not know whether the Opposition know that. They are in a difficult position, and I have much sympathy with them. They are having to oppose, for dogmatic reasons, a measure that safeguards consumers as they have never before been safeguarded in this industry. The Opposition have had to ally themselves with two great vested interests in this country to form an unholy triple alliance between the Post Office unions, Lord Weinstock and the Labour party.
Lord Weinstock of GEC opposes the Bill, as the Opposition know, because for a long time he and his shareholders have benefited from being part of BT's magic circle of approved suppliers. The unions oppose the Bill because they are unions. Labour Members oppose the Bill because one would expect something silly from them. By opposing the Bill the Opposition are striking a blow for the dead weight of the past. They bury their heads in the sand. One is almost surprised not to have heard any reference to what Nye Bevan, or Herbie Morrison, might have done about this matter. The Opposition make the Luddites look progressive. Conservative Members know that there is no conflict between private profits and public service. Profit is made by providing a good service. Until now, we have had huge public profits and a total lack of public service. The Opposition may well look back in anger, but we prefer to look forward.
§ Mr. Randall
The Secretary of State's statement about the monopoly of telephone services was incorrect, because, in addition to our marvellous BT service, we have a separate telephone service in Kingston upon Hull and the surrounding area. Hon. Members will know that we are very proud of that service. It has been successful and I hope that with this legislation the Government will not destroy and impede the services which, over the years, have been provided so successfully in that area. The customers are extremely happy. The notion that we must privatise something to provide a service which is acceptable to the customer has clearly been shown to be untrue by the experience in Hull.
The Bill will be a disaster for telecommunications services, the industry and the consumer. We seem to be embarking on a path of opening up the market in a way that Conservative Members believe most laudable but which shows a total lack of understanding of the British and world telecommunications market. The world telecommunications market is dominated by companies which are subsidised to the hilt by the countries in which they operate. Their products will now flood into this country. Sir George Jefferson has stated that that is his intention. Jobs in areas such as Liverpool and even in the constituency of the Under-Secretary of State, the hon. Member for Coventry, South-West (Mr. Butcher), will undoubtedly suffer as a result.
It is nonsense to suggest that the destruction of the home market for our telecommunications industry can provide a basis for export potential. At present, about 9 per cent. of our telecommunications products are exported, and I accept that we must improve on that, but the Bill allows no time for adaptation to a new telecommunications market and will be a disaster for our industry. To believe that if we open up our market to all and sundry other countries will immediately do the same is sheer insanity, and I deplore it.
1253 There is no doubt that residential users will suffer most, especially those in rural areas and in other areas which will not appeal to the new profit-motivated BT plc. So far, BT's operations have been based on the notion that all citizens, irrespective of income, geography or whether they are private or commercial users, are entitled to a service. We support that view, given the importance of communications in modern society. Moreover, the service should be good. There is no excuse for poor service.
Both we and BT believe that an important challenge lies ahead to ensure that the services provided are nothing but the best. BT is geared up to do that. It has undertaken the basic investment to establish the network and to ensure that a large majority of people have telephones. Since the early 1970s the number of telephones has increased dramatically and there is now good coverage. More remains to be done, but the Government are now kicking BP workers in the teeth, discounting the marvellous work that has already been done and selling off the whole operation to their friends in the City.
With privatisation, the notion of providing a good service to residential users will be a thing of the past. We want a national telecommunications service for all the people of this country, but the Bill will destroy that philosophy. The private shareholders will ensure that BT concentrates on the most profitable routes. There is no question about that. There will be immense pressure to maximise profits and dividends. The notion of cross-subsidies will be deemed undesirable. People who live in remote parts of the country will have to pay the full price for the service. The consequence will be that if one is not well off one will go without. There will be no choice. Persons in that bracket will not have a choice and will be priced out of telecommunications.
The total emphasis on profitability will mean that residential subscribers will lose out—the consequence of privatisation. The trend already exists. We have seen the rebalancing of the tariff, and as recently as July, and in November 1981, we realised that the Government wanted to reduce the cost of telecommunications to the business sector and to increase the cost to the individual. That trend will continue as long as the Conservatives remain in office.
BT, as a nationalised industry, has a special responsibility to look after those in the community who have special difficulties. The Government will discount the chronically sick and the disabled. They have no regard for them whatever. The Opposition believe that the disadvantaged should be considered. As a private company, BT will be subject to market pressures and it will not have the money — the shareholders will not allow it to provide the money—the time or the incentive to help the disadvantaged. The enactment of the Bill will result in that situation.
If the Government have less than 50 per cent. of the shareholding, their ability to influence policies will he lost. That is a significant threat to public accountability. The theme of the Government's privatisation proposals is to permit cream skimming of the market. BT will be forced, as a result of being put into a competitive environment, to concentrate on the most profitable routes. The logic of competition is that competing companies fight for the most profitable routes. The principles of public service will be discounted. The work of the Committee has shown that to be so. The Government have not given assurances that such services will be provided.
1254 Mercury has identified the most profitable parts of BT's network and has concentrated its services around them. It is already linking 26 major cities because the business user provides the most profit by using the service at premium rates. The Bill has nothing to do with providing a national service. Its purpose is to provide an out-of-balance service for business.
We accept that business must be given every opportunity to communicate effectively. We have nothing against business, but we want equity in the way that services are provided. Cream skimming will result in BT responding by cutting charges on selected routes. A sum of £300 million of vital revenue will be lost annually, which will bring pressure for reduced services outside the golden "figure of eight" which includes the 26 towns.
The argument that privatisation is essential to force BT to be competitive is inaccurate. BT can provide all the services that Mercury plans to install. The signs from Mercury are that it does not claim that it will provide substantially different technological services from those provided by BT.
I deplore the Bill as a lot of nonsense which will result in the deterioration of telecommunications standards. The telecommunications manufacturing industry will be decimated, and a service which is crucial to the future of our economy and people will decline.
§ Mr. Roger Stott (Wigan)
I have only four things to say to the Secretary of State for Trade and Industry. First, he deserves his reputation as the most studiously offensive man in the House of Commons. As to his speech, he read it—he read it badly and in any case it was not worth reading.
We have walked a long road since the Government first introduced— [HON. MEMBERS: "Reading."]—a Bill to privatise BT. Labour Members would have walked that road much longer had they not been prevented from doing so by two completely unnecessary guillotine motions tabled by the Leader of the House.
My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) systematically demolished the reasons for privatising BT, certainly on two crucial points, and my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher) in a contribution yesterday, which ill my view was one of the best that I have ever heard, critically analysed the so-called five reasons of the Minister for Information Technology for privatisation. He rubbished every one. They did not add up to a row of beans. They did not, and will not, stand the test of scrutiny.
The Conservative party does not like successful publicly owned industries. The Prime Minister is obsessed with exhuming the rotting corpse of Adam Smith and dragging it screaming into the second half of the 20th century. Since her election as Prime Minister, she has continually waged a war against public enterprise which is totally unjustified, irrational and based purely and simply on her own neolithic prejudices.
That is one reason why the Government have embarked on a series of privatisation programmes. It is political dogma and nothing else. The Government have so mismanaged the economy that the Chancellor now faces a crucial dilemma—how to reconcile the demands for 1255 increased public expenditure, which is what unemployment benefit is, with the long-term commitment to lower taxation and a commitment to ensure that the Government are institutional in financial discipline.
The medium-term financial strategy announced by the Chancellor two or three weeks ago will remain intact only at the cost of fudging the figures through the sale of public sector assets. Equally, they will remain intact only if the Government can sell assets to pay for the army of unemployed and to give tax concessions to their friends. That is the second reason why they have embarked upon a programme of privatisation. In this case they are aided and abetted by their stalking horse, Sir George Jefferson, the chairman of British Telecom, who incidentally has been using £2 million of British Telecom money, public money, to advertise the virtues of privatisation.
The Bill marks a watershed in the history of telecommunications. The Government have progressively attacked the position of British Telecom; it had an overall monopoly under the Post Office Act 1969, then a partial monopoly under the British Telecommunications Act 1981 and now under this Bill a mere licence to continue to operate. The principle of a publicly owned and publicly accountable national telecommunication service for the benefit of everyone will end with the passing of the Bill.
During the debate yesterday Conservative Members said that we should not mourn the passing of a golden age and that we should look forward to a new and brighter future. Fine words. What they really meant and what lay behind those words is that we should disregard the public service ethic that is the historic characteristic of British telecom and concentrate instead on the Tory principle of maximising profit for the shareholders. That has been the ethos of the debates in Committee over the last 18 months. That has been the sole motive behind all their contributions.
The radical new philosophy envisaged by the Government can be summed up in this way. The sole criterion for investment will be the ability to generate profit, not the ability to provide a public service. That is what will happen when the industry is privatised. The Government are not concerned about whether people in the remote parts of the United Kingdom can have telephones or about whether coin boxes, an essential part of British life, will be able to remain in existence after privatisation. They are not concerned about the semi-rural person who has difficulty now. All they are concerned about is pursuing their dogma to its end and privatising one of the most successful——
§ Mr. Stott
I am speaking for myself. Who does the hon. Gentleman think I am speaking for? [Interruption.] I am conscious of the fact that the Minister of State has got laryngitis. He has told me that he cannot speak for more than a quarter of an hour; that leaves me five more minutes. The Minister of State should tell his hon. Friends that if I am to abide by the agreement I have made it would be better if I were allowed to get on with what I have to say.
During the deliberations in Committee the Minister of State was, to put it mildly, rather disingenuous about a document produced by the unions in British 1256 Telecommunications. It is called "The American Experience". It is the most well-researched and thoughtful document that I have read in all my years as a member of the Post Office Engineering Union. The evidence that has been collated by the British Telecom unions in respect of the experience in the United States should be read by Conservative Members.
The Minister of State said in Committee that we should not pay too much attention to what is contained in the document because it has no relevance in the United Kingdom and that the example we cited of AT and T divesting itself of its local services had no relevance in the United Kingdom. He said, "Take no notice of what is said in the document, because it will not happen to us once British Telecom is privatised." I wonder whether the Minister of State has read the Wall Street Journal of 13 December 1983. If he has not, perhaps I should acquaint him with a couple of the paragraphs in it. Under the headlineUsers Crushed by AT & T Split Must Get Subsidies, Judge Says",the article says:Washington—The US judge overseeing the breakup of the American Telephone & Telegraph Co. urged that subsidies be provided for those unable to pay higher local telephone rates.'It seems clear to me that we cannot afford to leave stranded without a telephone line to the outside world those who are poor or ill or elderly, or live in isolated areas of the country,' said US District Judge Harold H. Greene.Judge Greene is currently hearing the case in the United States court about AT and T's divestiture of its local services.
In case my hon. Friends do not know what this means, AT and T has decided that it will no longer use cross subsidies to support isolated communities in the United States. That will mean that those people will no longer be able to have telecommunication services. Furthermore, people will face threefold increases in their telephone bills. Everything we told the Minister in Committee is now taking place in the United States because the United States private monopoly is being broken. That is what will happen in the United Kingdom if we allow the Bill to proceed.
I have been associated with the industry for 20 years, from the days when we were civil servants to the time of the changeover to a public corporation. The bedrock on which British Telecommunications has carried out its responsibilities has been rooted in the universal provision of a national service. British Telecom has been able to balance the conflicting pressures of profitability and the provision of a national service. The provision of a telephone to someone who is old and lonely and lives in a rural area is one of the most emancipating elements in his life. That provision has been made by the members of my union who are fiercely proud of the public service principle that has operated within British Telecommunications for the past 70 years. On their behalf, and on behalf of the millions of customers throughout the land, I say to the fat cats in the City, who hope to profit by this venture, and to anyone else who cares to listen, that upon the return of a Labour Government we shall restore British Telecom to its rightful owners, the British people.
§ The Minister for Information Technology (Mr. Kenneth Baker)
This is the 321st hour of debate on the Bill, which is the longest time for which any Bill has been 1257 debated since the war. It outdistances the long debates on the Gas Bill during Clement Attlee's Government. We are almost in sight of harbour, and one of the ironies and injustices is that the hon. Member for Newcastle-under-Lyme (Mr. Golding) has made the long speeches, but I have the sore throat.
First, I thank all the Conservative Members who served on both Bills, especially my hon. Friends the Members for Hertfordshire, South-West (Mr. Page) and for Northampton, North (Mr. Marlow). That requires a mention in dispatches. I thank all my advisers in the Department, and my hon. Friend the Under-Secretary of State for dealing so convincingly with the detailed and complicated issues in the Bill. I also thank Opposition Members for the splendid opportunity that they have given us to discuss the merits and advantages of the measure.
I pay generous tribute to the hon. Member for Newcastle-under-Lyme for his speeches, one of which has already reached the "Guinness Book of Records" and which is celebrated in a painting in the Upper Committee Corridor. I hope that the House will buy the drawing, by one of our police constables, and hang it in a Committee Room, not only as a solemn reminder of what can happen, but as a celebration of a unique parliamentary performance. The House should have more contemporary drawings and pictures like it. Some of the paintings that grace our walls today commemorate events which none of us can remember and few of us know anything about. I assure my right hon. Friend the Secretary of State for Trade and Industry that I am not offering departmental funds for its purchase.
The Bill ends the long process of liberalisation, which the present Secretary of State for Education and Science started in the summer of 1980. That was a historic decision. As my right hon. Friend the Secretary of State said in his opening speech tonight, we have done more for liberalisation in two years than has happened in America in 15. We have pursued the Bill because we believe it to be in the best interests of the country. It increases consumer choice, stimulates greater efficiency, and encourages growth and innovation. That is now generally agreed, although some Opposition Members still oppose liberalisation.
The generality of feeling in the country and in the Labour party is that liberalisation has brought undoubted benefits. It has brought considerable investment from overseas. Mitel, which is one of the leading Canadian communication companies, has built a factory in south Wales, which employs 600 people. That would not have happened without liberalisation. Comdial Communications is investing in another factory in Cardiff, which would not have happened without liberalisation. Northern Telecom, one of the great companies of Canada, has announced plans to invest in a facility in Britain to supply British and European markets. That would not have happened without liberalisation. TIE Communications of north America is also setting up in the United Kingdom, which would not have happened without liberalisation.
Then there are the joint ventures. Ferranti has tied up with GTE to build PABXs in Manchester. This would not have happened without liberalisation. Ansafone has tied up with Nippon Electronic of Japan to build answering machines and small business exchanges in Britain. Again, that would not have happened without liberalisation. Many small companies have sprung up. In Leeds there is a fibre optic company, Photocom Systems, which produces base 1258 data communications. A small company in Stroud, Merlin Communications Ltd., makes call distribution equipment. In Acton, Fidelity Radio is now making cordless telephones. None of those ventures would have been started unless the Government had begun the progress of liberalisation.
The House and the Opposition should recall that the Government did this because they were disappointed with the performance of British industry. Figures have been quoted frequently in the debate; 25 years ago British companies had 25 per cent. of the world market in telecommunications equipment, but now they have less than 5 per cent. That is a sad litany of retreat, but the retreat has been stopped and we are going ahead again. None of this would have happened had we not ended the monopoly of British Telecom.
The Government have gone further and provided competitive networks. I remind the House that we are committed to two radio cellular networks, which will be operating by 1985. Motorola has already said that it will expand its facilities in Britain and will probably employ a further 500 people. Had BT had the monopoly, it would not have happened. The Government have granted a licence to Mercury Communications, which has already invested about £90 million and will be investing about £200 million during the next two years. That company already employs 150 people, and by 1985 it expects the figure to increase to 500. That would not have occurred unless we had granted those licences. Competition and liberalisation are good for the broad interests of Britain, not for vested interests.
The Government have provided opportunities for a host of small companies to produce value added network services. About 88 forwarding services have been registered—40 for the provision of storage and retrieval message systems, 26 for protocol conversion, and 22 for electronic mail facilities. Those are the fruits of liberalisation, and they are real fruits. They are not like fairy gold, which disappears as soon as it is touched.
As a result, the great sluggish giant that was British Telecom has responded. When the Government came to office the waiting list for telephones was 262,063. It has been reduced to little more than 2,000 as a result of the spur of competition. British Telecom has reduced its trunk call charges. Would it have done so if the Government had not given a licence to Mercury? No, it would not. That has benefited the customers, and I am glad to say that efficiency has been improved, with 73.6 per cent. of residential orders being met within 12 working days. By the end of 1982–83, 85.1 per cent. of faults reported were cleared by the next working day. I praise BT for that, but it was the spur of competition that produced the improvement.
The attitude of the Liberal party and the SDP is to say, "We think that liberalisation has some advantages, but why go further to privatisation?" We cannot have a state of competition in which the largest operator in the market — British Telecom — tries to compete with other companies but remains in public ownership, with all the advantages of recourse to public money. It is a natural consequence that liberalisation must be followed by privatisation.
I remind the House of two strong advantages of the Bill. Earlier this evening the right hon. Member for Manchester, Wythenshawe (Mr. Morris) introduced a debate on the disabled. I recognise the great work that he 1259 has done for the disabled in Britain, but I hope that he, too, will recognise that the Bill will improve the lot of the disabled. We shall include conditions in BT's licence—conditions 32 and 33—to ensure that the hard of hearing can obtain from BT telephones adapted to their needs. In other words, BT will be obliged to provide these telephones. There is no statutory obligation for that at the moment.
Secondly, we have set up and are funding a research group of experts to find means to adapt the new technology for the hard of hearing. As for the blind, we shall include conditions in BT's licence to ensure that directory inquiries continue and, if charges are to be made for them, that the blind who cannot use printed directories are not worse off.
We also want to preserve the job opportunities for the blind, and particularly for blind telephonists, because telephony has been one of the traditional ways of providing work for the blind. The new electronic exchanges do not need blind telephonists. Therefore, we have decided, in principle, that all new operator-controlled private branch exchanges should be required to be capable of adaptation for use by blind operators. This will be a major step forward and will safeguard existing job opportunities for the blind.
I remind the House of the considerable improvement in consumer protection which the Bill provides. Under the Bill, the Director General will have powers to examine complaints. If a complaint is founded, the Director General will have the power to give directions for any abuse to be corrected. There is no consumer body in the country that has as its chairman someone who has powers of direction over the cases that he is examining and looking after. That is a substantial extension of consumer interests.
I have also agreed to set up a national advisory board for England for consumers' interests, mirroring the existing committees for Scotland, Wales and Northern Ireland—again an extension of consumer interest. In future, and perhaps this is the biggest change in the Bill, BT's present immunity from being sued is ended. Any subscriber or customer who is fed up with British Telecom cannot now sue. In future, customers will have a contract in the same way as for any other service. This will enable them to sue BT if it does not provide the services which the contract obliges it to provide. That represnts a considerable improvement in consumer protection.
I see the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) in his place. The Liberals and the SDP have always favoured wider share ownership and employee participation. Tonight they have an opportunity to vote for both. They can vote for one of the greatest exercises in wider share ownership since the war, and they have an opportunity to vote for one of the measures which provides the biggest increase in employee participation since the war. The right hon. Gentleman has made many speeches advocating both wider share ownership and employee participation, but he will lead his party into the Lobby against the Bill.
The Labour party's attitude is clearer. It is opposed to the Bill because it is a major measure of denationalisation. The Labour party has said that it will restore the monopoly if it is returned to power, in spite of the fact that such a 1260 restoration would almost certainly lead to lost jobs—jobs that we have created — and to the loss of investment, which we have also created.
The Bill ends the exclusive privilege of BT. It ends the exclusive privilege of the Post Office Engineering Union to be the only union that can employ people to provide telecommunication services. It ends the monopoly of BT on equipment, services and maintenance. It ends BT's right to be the sole determinant of who should interconnect with the system, and its exclusive right to license its competitors and thereby to know their plans. It provides great new opportunities, and I am glad to say that in a moment or two it will proceed to the House of Lords. We are now on course to privatise British Telecom in the autumn of next year. That was the mandate that we had from the country in June, and it is a mandate that we intend to fulfil.
§ Question put, That the Bill be now read the Third time:—
§ The House divided: Ayes 313, Noes 187.1263
|Division No. 109]||[10 pm|
|Aitken, Jonathan||Clark, Dr Michael (Rochford)|
|Alexander, Richard||Clark, Sir W. (Croydon S)|
|Alison, Rt Hon Michael||Clarke Kenneth (Rushcliffe)|
|Amess, David||Clegg, Sir Walter|
|Ancram, Michael||Cockeram, Eric|
|Arnold, Tom||Colvin, Michael|
|Ashby, David||Conway, Derek|
|Aspinwall, Jack||Coombs, Simon|
|Atkins, Rt Hon Sir H.||Cope, John|
|Atkins, Robert (South Ribble)||Cormack, Patrick|
|Atkinson, David (B'm'th E)||Corrie, John|
|Baker, Kenneth (Mole Valley)||Couchman, James|
|Baker, Nicholas (N Dorset)||Crouch, David|
|Baldry, Anthony||Currie, Mrs Edwina|
|Banks, Robert (Harrogate)||Dorrell, Stephen|
|Batiste, Spencer||Douglas-Hamilton, Lord J.|
|Beaumont-Dark, Anthony||Dover, Denshore|
|Bellingham, Henry||du Cann, Rt Hon Edward|
|Bendall, Vivian||Dunn, Robert|
|Benyon, William||Dykes, Hugh|
|Berry, Sir Anthony||Edwards, Rt Hon N. (P'broke)|
|Best, Keith||Eggar, Tim|
|Biffen, Rt Hon John||Emery, Sir Peter|
|Biggs-Davison, Sir John||Evennett, David|
|Bonsor, Sir Nicholas||Eyre, Reginald|
|Bottomley, Peter||Fallon, Michael|
|Bowden, A. (Brighton K'to'n)||Farr, John|
|Bowden, Gerald (Dulwich)||Favell, Anthony|
|Boyson, Dr Rhodes||Finsberg, Geoffrey|
|Brandon-Bravo, Martin||Fookes, Miss Janet|
|Bright, Graham||Forman, Nigel|
|Brinton, Tim||Forsyth, Michael (Stirling)|
|Brittan, Rt Hon Leon||Fowler, Rt Hon Norman|
|Brooke, Hon Peter||Fox, Marcus|
|Brown, M. (Brigg & Cl'thpes)||Fraser, Peter (Angus East)|
|Browne, John||Freeman, Roger|
|Bruinvels, Peter||Fry, Peter|
|Bryan, Sir Paul||Gale, Roger|
|Buchanan-Smith, Rt Hon A.||Galley, Roy|
|Buck, Sir Antony||Gardner, Sir Edward (Fylde)|
|Budgen, Nick||Garel-Jones, Tristan|
|Bulmer, Esmond||Gilmour, Rt Hon Sir Ian|
|Burt, Alistair||Glyn, Dr Alan|
|Butcher, John||Goodhart, Sir Philip|
|Butler, Hon Adam||Goodlad, Alastair|
|Butterfill, John||Gorst, John|
|Carlisle, Kenneth (Lincoln)||Gow, Ian|
|Carttiss, Michael||Gower, Sir Raymond|
|Chapman, Sydney||Greenway, Harry|
|Chope, Christopher||Gregory, Conal|
|Churchill, W. S.||Griffiths, Peter (Portsm'th N)|
|Clark, Hon A. (Plym'th S'n)||Grist, Ian|
|Ground, Patrick||Maxwell-Hyslop, Robin|
|Grylls, Michael||Mayhew, Sir Patrick|
|Hamilton, Hon A. (Epsom)||Merchant, Piers|
|Hamilton, Neil (Tatton)||Miller, Hal (B'grove)|
|Hampson, Dr Keith||Mills, Iain (Meriden)|
|Hanley, Jeremy||Mills, Sir Peter (West Devon)|
|Hannam, John||Miscampbell, Norman|
|Hargreaves, Kenneth||Mitchell, David (NW Hants)|
|Harvey, Robert||Moate, Roger|
|Haselhurst, Alan||Monro, Sir Hector|
|Hawkins, C. (High Peak)||Moore, John|
|Hawkins, Sir Paul (SW N'folk)||Morris, M. (N'hampton, S)|
|Hawksley, Warren||Morrison, Hon C. (Devizes)|
|Hayhoe, Barney||Morrison, Hon P. (Chester)|
|Hayward, Robert||Moynihan, Hon C.|
|Heathcoat-Amory, David||Mudd, David|
|Heddle, John||Neale, Gerrard|
|Henderson, Barry||Nelson, Anthony|
|Heseltine, Rt Hon Michael||Neubert, Michael|
|Hickmet, Richard||Newton, Tony|
|Hicks, Robert||Nicholls, Patrick|
|Higgins, Rt Hon Terence L.||Norris, Steven|
|Hind, Kenneth||Onslow, Cranley|
|Hirst, Michael||Oppenheim, Philip|
|Hogg, Hon Douglas (Gr'th'm)||Oppenheim, Rt Hon Mrs S.|
|Holland, Sir Philip (Gedling)||Osborn, Sir John|
|Hooson, Tom||Page, Richard (Herts SW)|
|Hordern, Peter||Parkinson, Rt Hon Cecil|
|Howard, Michael||Parris, Matthew|
|Howarth, Alan (Stratf'd-on-A)||Patten, Christopher (Bath)|
|Howarth, Gerald (Cannock)||Patten, John (Oxford)|
|Howell, Rt Hon D. (G'ldford)||Pattie, Geoffrey|
|Hubbard-Miles, Peter||Pawsey, James|
|Hunt, David (Wirral)||Peacock, Mrs Elizabeth|
|Hunter, Andrew||Pollock, Alexander|
|Hurd, Rt Hon Douglas||Porter, Barry|
|Irving, Charles||Powell, William (Corby)|
|Jessel, Toby||Powley, John|
|Johnson-Smith, Sir Geoffrey||Prentice, Rt Hon Reg|
|Jones, Gwilym (Cardiff N)||Price, Sir David|
|Jones, Robert (W Herts)||Prior, Rt Hon James|
|Joseph, Rt Hon Sir Keith||Proctor, K. Harvey|
|Kershaw, Sir Anthony||Pym, Rt Hon Francis|
|King, Roger (B'ham N'field)||Raison, Rt Hon Timothy|
|Knowles, Michael||Rees, Rt Hon Peter (Dover)|
|Knox, David||Rhys Williams, Sir Brandon|
|Lang, Ian||Ridley, Rt Hon Nicholas|
|Latham, Michael||Ridsdale, Sir Julian|
|Lawler, Geoffrey||Rifkind, Malcolm|
|Lawrence, Ivan||Roe, Mrs Marion|
|Lee, John (Pendle)||Rossi, Sir Hugh|
|Leigh, Edward (Gainsbor'gh)||Rost, Peter|
|Lester, Jim||Rowe, Andrew|
|Lewis, Sir Kenneth (Stamf'd)||Rumbold, Mrs Angela|
|Lightbown, David||Ryder, Richard|
|Lilley, Peter||Sainsbury, Hon Timothy|
|Lloyd, Ian (Havant)||Sayeed, Jonathan|
|Lloyd, Peter, (Fareham)||Scott, Nicholas|
|Lord, Michael||Shaw, Giles (Pudsey)|
|Lyell, Nicholas||Shaw, Sir Michael (Scarb')|
|McCrindle, Robert||Shelton, William (Streatham)|
|McCurley, Mrs Anna||Shepherd, Colin (Hereford)|
|MacGregor, John||Shersby, Michael|
|MacKay, Andrew (Berkshire)||Silvester, Fred|
|MacKay, John (Argyll & Bute)||Sims, Roger|
|Maclean, David John.||Skeet, T. H. H.|
|Macmillan, Rt Hon M.||Smith, Sir Dudley (Warwick)|
|McNair-Wilson, M. (N'bury)||Smith, Tim (Beaconsfield)|
|McNair-Wilson, P. (New F'st)||Soames, Hon Nicholas|
|McQuarrie, Albert||Speed, Keith|
|Madel, David||Speller, Tony|
|Major, John||Spence, John|
|Malins, Humfrey||Spencer, D.|
|Malone, Gerald||Spicer, Michael (S Worcs)|
|Maples, John||Squire, Robin|
|Marland, Paul||Stanbrook, Ivor|
|Marshall, Michael (Arundel)||Steen, Anthony|
|Mates, Michael||Stern, Michael|
|Maude, Francis||Stevens, Lewis (Nuneaton)|
|Mawhinney, Dr Brian||Stevens, Martin (Fulham)|
|Stewart, Allan (Eastwood)||Walker, Rt Hon P. (W'cester)|
|Stewart, Andrew (Sherwood)||Wall, Sir Patrick|
|Stewart, Ian (N Hertf'dshire)||Waller, Gary|
|Stokes, John||Walters, Dennis|
|Sumberg, David||Ward, John|
|Tapsell, Peter||Wardle, C. (Bexhill)|
|Taylor, Teddy (S'end E)||Warren, Kenneth|
|Tebbit, Rt Hon Norman||Watson, John|
|Temple-Morris, Peter||Watts, John|
|Terlezki, Stefan||Wells, Bowen (Hertford)|
|Thatcher, Rt Hon Mrs M.||Wells, John (Maidstone)|
|Thomas, Rt Hon Peter||Wheeler, John|
|Thompson, Donald (Calder V)||Whitfield, John|
|Thompson, Patrick (N'ich N)||Whitney, Raymond|
|Thorne, Neil (Ilford S)||Wilkinson, John|
|Thornton, Malcolm||Winterton, Nicholas|
|Thurnham, Peter||Wolfson, Mark|
|Townend, John (Bridlington)||Wood, Timothy|
|Townsend, Cyril D. (B'heath)||Woodcock, Michael|
|Tracey, Richard||Yeo, Tim|
|Trippier, David||Young, Sir George (Acton)|
|Twinn, Dr Ian||Younger, Rt Hon George|
|van Straubenzee, Sir W.|
|Vaughan, Dr Gerard||Tellers for the Ayes:|
|Viggers, Peter||Mr. Carol Mather and|
|Wakeham, Rt Hon John||Mr. Robert Boscawen.|
|Walker, Bill (T'side N)|
|Adams, Allen (Paisley N)||Douglas, Dick|
|Alton, David||Dubs, Alfred|
|Archer, Rt Hon Peter||Duffy, A. E. P.|
|Ashton, Joe||Dunwoody, Hon Mrs G.|
|Atkinson, N. (Tottenham)||Eastham, Ken|
|Bagier, Gordon A. T.||Edwards, R. (W'hampt'n SE)|
|Banks, Tony (Newham NW)||Evans, Ioan (Cynon Valley)|
|Barnett, Guy||Evans, John (St. Helens N)|
|Barron, Kevin||Fatchett, Derek|
|Beggs, Roy||Faulds, Andrew|
|Beith, A. J.||Field, Frank (Birkenhead)|
|Bell, Stuart||Fields, T. (L'pool Broad Gn)|
|Bennett, A. (Dent'n & Red'sh)||Fisher, Mark|
|Bidwell, Sydney||Flannery, Martin|
|Blair, Anthony||Forsythe, Clifford (S Antrim)|
|Boyes, Roland||Foster, Derek|
|Brown, Gordon (D'f'mline E)||Foulkes, George|
|Brown, Hugh D. (Provan)||Fraser, J. (Norwood)|
|Brown, R. (N'c'tle-u-Tyne N)||Freeson, Rt Hon Reginald|
|Brown, Ron (E'burgh, Leith)||Freud, Clement|
|Caborn, Richard||Garrett, W. E.|
|Callaghan, Jim (Heyw'd & M)||George, Bruce|
|Campbell, Ian||Gilbert, Rt Hon Dr John|
|Campbell-Savours, Dale||Godman, Dr Norman|
|Canavan, Dennis||Golding, John|
|Carlile, Alexander (Montg'y)||Gould, Bryan|
|Carter-Jones, Lewis||Hamilton, James (M'well N)|
|Clark, Dr David (S Shields)||Hamilton, W. W. (Central Fife)|
|Clarke, Thomas||Hardy, Peter|
|Clay, Robert||Harman, Ms Harriet|
|Cocks, Rt Hon M. (Bristol S.)||Harrison, Rt Hon Walter|
|Cohen, Harry||Hart, Rt Hon Dame Judith|
|Coleman, Donald||Heffer, Eric S.|
|Concannon, Rt Hon J. D.||Hogg, N. (C'nauld & Kilsyth)|
|Conlan, Bernard||Home Robertson, John|
|Cook, Frank (Stockton North)||Howells, Geraint|
|Cook, Robin F. (Livingston)||Hoyle, Douglas|
|Corbett, Robin||Hughes, Mark (Durham)|
|Cowans, Harry||Hughes, Robert (Aberdeen N)|
|Cox, Thomas (Tooting)||Hughes, Roy (Newport East)|
|Craigen, J. M.||Hughes, Sean (Knowsley S)|
|Crowther, Stan||Hughes, Simon (Southwark)|
|Cunliffe, Lawrence||Janner, Hon Greville|
|Cunningham, Dr John||John, Brynmor|
|Davies, Rt Hon Denzil (L'lli)||Jones, Barry (Alyn & Deeside)|
|Davies, Ronald (Caerphilly)||Kennedy, Charles|
|Davis, Terry (B'ham, H'ge H'l)||Kilroy-Silk, Robert|
|Deakins, Eric||Kinnock, Rt Hon Neil|
|Dewar, Donald||Kirkwood, Archibald|
|Dobson, Frank||Lambie, David|
|Dormand, Jack||Lamond, James|
|Leighton, Ronald||Redmond, M.|
|Lewis, Ron (Carlisle)||Richardson, Ms Jo|
|Lewis, Terence (Worsley)||Roberts, Ernest (Hackney N)|
|Litherland, Robert||Robertson, George|
|Lloyd, Tony (Stretford)||Robinson, G. (Coventry NW)|
|Loyden, Edward||Robinson, P. (Belfast E)|
|McCartney, Hugh||Rogers, Allan|
|McCrea, Rev William||Rooker, J. W.|
|McCusker, Harold||Ross, Ernest (Dundee W)|
|McDonald, Dr Oonagh||Ross, Wm. (Londonderry)|
|McKay, Allen (Penistone)||Rowlands, Ted|
|McKelvey, William||Sedgemore, Brian|
|Mackenzie, Rt Hon Gregor||Sheldon, Rt Hon R.|
|McNamara, Kevin||Shore, Rt Hon Peter|
|McTaggart, Robert||Short, Ms Clare (Ladywood)|
|McWilliam, John||Skinner, Dennis|
|Madden, Max||Smith, C.(Isl'ton S & F'bury)|
|Maginnis, Ken||Smith, Rt Hon J. (M'kl'ds E)|
|Marek, Dr John||Snape, Peter|
|Martin, Michael||Soley, Clive|
|Mason, Rt Hon Roy||Spearing, Nigel|
|Maxton, John||Steel, Rt Hon David|
|Maynard, Miss Joan||Stewart, Rt Hon D. (W Isles)|
|Meacher, Michael||Stott, Roger|
|Meadowcroft, Michael||Straw, Jack|
|Michie, William||Thomas, Dafydd (Merioneth)|
|Mikardo, Ian||Thompson, J. (Wansbeck)|
|Millan, Rt Hon Bruce||Tinn, James|
|Miller, Dr M. S. (E Kilbride)||Torney, Tom|
|Molyneaux, Rt Hon James||Wallace, James|
|Morris, Rt Hon A. (W'shawe)||Wardell, Gareth (Gower)|
|Morris, Rt Hon J. (Aberavon)||Weetch, Ken|
|Nellist, David||Welsh, Michael|
|Nicholson, J.||White, James|
|O'Neill, Martin||Wigley, Dafydd|
|Paisley, Rev Ian||Williams, Rt Hon A.|
|Park, George||Wilson, Gordon|
|Pendry, Tom||Winnick, David|
|Penhaligon, David||Woodall, Alec|
|Pike, Peter||Young, David (Bolton SE)|
|Powell, Rt Hon J. E. (S Down)|
|Powell, Raymond (Ogmore)||Tellers for the Noes:|
|Prescott, John||Mr. Frank Haynes and|
|Radice, Giles||Mr. Don Dixon.|
§ Question accordingly agreed to.
§ Bill read the Third time and passed.