HC Deb 28 March 1983 vol 40 cc31-107

`(1) The Secretary of State and the Director shall each exercise the functions assigned to him by this Part in the manner which he considers is best calculated—

  1. (a) to secure that there are provided throughout the United Kingdom, save in so far as the provision thereof is impracticable or not reasonably practicable, such telecommunication services as satisfy all reasonable demands for them including, in particular, public call box services, emergency services and services in rural areas; and
  2. (b) without prejudice to the generality of paragraph (a) above, to secure that any United Kingdom operator by whom such services fall to be provided is able to finance the provision of those services.
(2) Subject to subsection (1) above, the Secretary of State and the Director shall each exercise the functions assigned to him by this Part in the manner which he considers is best calculated—
  1. (a) to promote the interests of United Kingdom consumers (including, in particular, those who are disabled) in respect of the prices charged for, and the quality and variety of, services provided and apparatus supplied;
  2. (b) to maintain and promote effective competition between United Kingdom operators;
  3. (c) to promote efficiency and economy on the part of United Kingdom operators;
  4. (d) to promote research into and the development and use of new techniques by United Kingdom operators;
  5. (e) to enable United Kingdom operators to establish and maintain a predominant position in the field of telecommunications;
  6. (f) to encourage foreign users to establish places of business in the United Kingdom;
  7. (g) to promote the provision of international transit services by United Kingdom operators; and
  8. (h) to maintain and promote competitive activity on the part of United Kingdom operators in markets outside the United Kingdom.
(3) This section does not apply in relation to functions of the Secretary of State which are exercisable in the interests of national security or relations with the government of a country or territory outside the United Kingdom.

(4) In this section— foreign user" means a user of telecommunication services outside the United Kingdom; international transit service" means a telecommunication service consisting in the conveyance of sounds, visual images or signals which have been conveyed from, and are to be conveyed to, places outside the United Kingdom; United Kingdom consumer" means a consumer, purchaser or other user of telecommunication services or telecommunication apparatus in the United Kingdom; United Kingdom operator" means a person carrying on any of the following activities, that is to say, the provision of telecommunication services in the United Kingdom, the production and supply of telecommunication apparatus in the United Kingdom and the export of such apparatus from the United Kingdom.'.—[Mr. Kenneth Baker.]

Brought up, and read the First time.

Mr. Speaker

With this it will be convenient to take the following amendments to the new clause: (a), in line 1, after 'shall', insert `have the duty to'. (b), in line 3, leave out from 'Kingdom' to 'such' in line 4. (c), in line 5, leave out 'reasonable'. (i), in line 5, leave out `demands' and insert 'needs'. (d), in line 6, after second 'services', insert 'services for residential subscribers'. (e), in line 10, at end insert 'on a stable and long-term basis' (f), in line 17, leave out paragraph (b). (g), in line 24, leave out paragraph (f). (h), in line 27, leave out paragraph (h). Government amendments Nos. 5, 10, 12 and 13.

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

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

I shall first speak briefly to the four Government amendments, which have been grouped with new clause 1.

Government amendment No. 5 is entirely consequential, in that it takes the present clause 3 out of the Bill, because new clause 1 will replace clause 3 of the Bill.

Government amendment No. 10 is consequential.

Government amendments Nos. 12 and 13 refer to a point raised in Committee. It was put to me that when matters were referred to the Monopolies and Mergers Commission the range of considerations which it would have to take into account was far too wide. I was asked to narrow it, and, in effect, that is what the amendments do. It will mean that the Monopolies and Mergers Commission will also be bound by the new clause that we are about to discuss.

New clause 1 is a very important clause. It replaces clause 3 of the Bill as originally introduced and sets the framework of general duties regulating how the Secretary of State and the Director General must exercise their functions under part II of the Bill. Its influence is very wide-ranging. I should, therefore, like to explain to the House both the provisions of the new clause and how it will operate when the Bill comes into effect. Although it is tabled as a new clause, most of the ideas it contains will be familiar to the House, or at least to those of us who served on Standing Committee H, which spent a substantial proportion of this parliamentary Session considering the Bill, starting on 9 December last year and finishing on 10 March this year.

Clause 3 of the Bill, as introduced, was debated for over 60 hours by the Committee, which, if not a record, is an extraordinary length of time to debate a single clause. But, as I have said, it is an important clause, and I have been very willing to consider the comments that have been put to me by hon. Members on each side and by outside interests. I told the Committee that the Government appreciated its concern and would consider changing the clause to meet its comments. In the event, I have decided that, rather than simply tabling amendments, it would be more convenient for hon. Members if I recast the whole clause. The new clause now before the House is the recast clause.

The new clause imposes duties on both the Secretary of State and the Director General when carrying out their functions under part II of the Bill. It might therefore be helpful if, before turning to the detailed provisions of the new clause, I briefly outlined those functions.

The most important function is licensing, since in future all those wishing to run telecommunication systems will require to be licensed. This will apply equally to British Telecommunications, which will lose its exclusive privilege and will operate under a licence just like any other operator. Licences granted under the Act will give permission both to run telecommunication systems and to provide services over those systems. Licences will also set out the conditions under which the system must be run and the services provided.

The terms and conditions of the licence to be granted to BT are obviously of central importance and great interest. That is why, on 25 January, we published a document setting out our preliminary views on what BT's licence should contain. Our views had to be preliminary because the eventual licence to be issued to BT will need to take into account the amendments to the Bill made by this House, including the amendments we are discussing at this moment. We also want to take fully into account comments made by interested parties. I am grateful for the comments that we have already received on the document but of all the BT unions I have had so far only the views of the Post Office Engineering Union. I would welcome the views of the other unions. I also want to discuss the BT licence with the National Farmers Union before the legal document is drawn up.

The primary responsibility for issuing licences and fixing their initial conditions will lie with the Secretary of State. When doing so, he will be duty bound by the provisions of the new clause which we are now debating.

The new Director General of Telecommunications will also have licensing functions. Those functions include the granting of licences if the Secretary of State authorises him to do so, but I must stress that the major licences—those which will be issued to public telecommunications operators such as BT, Hull, Mercury and the two radiotelephone networks—will be issued by the Secretary of State alone. The Director General will also keep under review the observance of conditions in licences and will have powers to enforce compliance with such conditions if he discovers that they are not being observed. The Director General will also have power to modify licence conditions. In exercising all those licensing functions the Director General must act in accordance with the general duties laid down in the new clause. The same duties will apply to the Monopolies and Mergers Commission when it considers licence modification references.

The second main function of part II of the Bill concerns the setting of standards for, and the approval of, apparatus which is to be connected to telecommunication systems. Standards and approvals are vital in order to protect people working on telecommunication systems, and the systems themselves, from dangerous voltages and to prevent any impairment of the services provided over those systems caused by the connection of unsuitable or unapproved apparatus.

The third main function under part II is the approval of contractors for the installation and maintenance of such apparatus. Both the Secretary of State and the Director General can exercise these functions, and they will need to operate within the general duties laid down in the new clause. Before leaving those functions I should mention that the Government do not intend to use their powers to approve apparatus or contractors so as to interfere with BT's freedom to install the apparatus of its choice and to maintain that apparatus in the core of its network. BT's licence will reflect this.

I do not want to dwell on any of those functions at length now but I hope I have said enough to give guidance to the House in its consideration of the new clause.

I should now like to turn to the detailed provisions of the new clause. Essentially it sets out what I believe are our national United Kingdom telecommunications objectives. It will provide a clear and consistent basis from which the whole United Kingdom telecommunications industry—not just BT but all others who may enter the market—can expand and develop. This will bring benefits not only to customers but to the companies themselves, and not least to the people who work in them.

I do not deny that the Bill as a whole represents a major change. I make no apology for this and I believe that we are doing what is needed. Transferring BT to the private sector will have benefits for consumers, for manufacturing industry, for all those who depend on telecommunications and, indeed, for those who work in BT.

I realise that many people are concerned about the effects of our proposals. Many of those expressing concern have been misled by people who have a vested interest in preserving the status quo. That development is wholly regrettable and many people have been caused needless anxiety. Whatever its cause, however, the Government recognise that concern is widespread and that it is genuine. Many people fear for the future of services to the ordinary consumer, to those living in rural areas and to disadvantaged groups such as the deaf and the blind. As I have said, those concerns are genuinely felt, but I wish to make it clear that these are services which we are absolutely committed to preserving. Indeed, we have made that clear ever since we first announced our proposals.

As my right hon. Friend said when he first announced the proposals in July last year, anyone who has access to a telephone under present arrangements will continue to do so under the new arrangements. Since then, I have given innumerable reassurances on this point and I believe that they have, in the main, been accepted. Certainly, there is now a much better understanding of our proposals.

One of the causes of concern was that clause 3 originally set out "guidelines" to which the Secretary of State and the Director General merely had to have regard. People felt that mere guidelines could be overlooked and other matters could be taken into account. To answer that concern, we have recast clause 3 so that it imposes positive duties on the Secretary of State and the Director; the new clause lays down that they "shall" exercise their functions in the manner that they consider best calculated to secure the objectives set out in the new clause. I believe that that significant change will reassure all hon. Members.

The new clause also imposes a series of duties similar to those in the original draft but expanded and better defined in some cases. The paramount duty is in subsection (1)(a). That not only continues the obligation in the existing legislation that there should be a telephone service throughout the United Kingdom, but extends it to cover telecommunications of all kinds. Whereas the existing obligation extends only to a single telephone instrument, the new duty extends to all kinds of telecommunication apparatus. That is a significant improvement, especially for rural areas. Whereas the existing obligation cannot be enforced in the courts, any failure by the Secretary of State or the Director to act within their general duties could result in their being taken to court. That is a further significant safeguard.

Subsection (1)(a) mentions specifically for the first time in telecommunications legislation services to rural areas, telephone call box services and emergency services. Those are areas where there has been special concern, and the House will want me to explain how our proposals will operate in practice.

Mr. Tom Ellis (Wrexham)

Does the Minister mean that if a community council in a rural area felt that the provision of telephone kiosks in its district was not adequate, it could go to court and get a judgment?

Mr. Baker

Yes. If the council were satisfied that the Secretary of State or the Director General were not observing the duties placed upon them, the action suggested by the hon. Gentleman could be a consequence. I shall deal later with kiosks in rural areas.

Many fear that services in rural areas will be reduced, that their quality will be diminished or that the cost of rural services will increase. I can say that services will continue to be provided. BT already provides a universal service and the licence to be granted to BT plc will oblige the new company to provide all the telecommunication services which it is practicable to provide and which satisfy all reasonable demands in all parts of the country. If BT fails to provide service or attempts to withdraw service from an area, the Director will have powers to make orders to force BT to continue to provide service. Those are much greater than the powers of Ministers under existing legislation.

BT's licence will also prevent a diminution of quality; BT will not be permitted to exercise any undue discrimination against any group of persons, and that will apply to customers in rural areas. Moreover, BT will be obliged to provide all forms of telecommunication services in all parts of the country. New technology is expected to improve the quality of rural services.

Fears about higher prices in rural areas are unfounded; there is no evidence that it costs more to provide service in rural areas than in cities, since overhead wires are far cheaper than underground wires.

Mr. Tony Marlow (Northampton, North)

Originally, the Director General had a series of guidelines. He is now to be given a series of duties. They will be the law of the land and will enshrine special protection for those in rural areas. My hon. Friend has said that there is no evidence to show that it costs more to provide services in rural areas than in urban areas such as my constituency.

My constituents will want to know why the interests of rural areas are picked out in the law of the land in such a way that my constituents' interests are not safeguarded.

Mr. Baker

My hon. Friend made that point repeatedly in Committee—

Mr. Stan Thorne (Preston, South)

Ad nauseam.

Mr. Baker

No, fluently and eloquently. It is a fair point. We have changed the Bill because there is genuine anxiety and a prima facie case, though it is not supported by any figures that I have seen, that services in rural areas are more costly to maintain than those in urban areas.

My hon. Friend refers to discrimination against a group of customers. BT will not be allowed to discriminate unduly against any customers, whether in rural or urban areas. That is the direct answer to my hon. Friend.

Mr. Orme

The hon. Member for Northampton, North (Mr. Marlow) said that the Director General will have duties to ensure that services are provided, but the Minister has not provided for that in the new clause. The important paragraphs (a) and (b) in subsection (1) are treated in the same manner as other paragraphs in the clause.

Mr. Baker

The right hon. Member has tabled an amendment on that point. We shall deal with that later, but I am advised that it is unnecessary, because we do not need to use the word "duty". The new clause is specific in saying: shall … exercise the functions assigned to him by this part in the manner which he considers is best calculated". The Department's legal advisers tell me that that is the same as using the word "duty", but perhaps we may debate that later.

Mr. Richard Shepherd (Aldridge-Brownhills)

I hope that my hon. Friend will continue to give way when asked to do so, because the new clause has been sprung on us and includes fundamental duties and rights. Are the words which he considers is best calculated challengeable in the courts?

Mr. Baker

Yes. It is a matter of judgment. The judgment of the Director General or the Secretary of State in providing a universal telephony service or other functions under the Bill would be challengeable.

Mr. Peter Temple-Morris (Leominster)

Is my hon. Friend saying that the reference to duties in the title of new clause 1 General duties of Secretary of State and Director"— has the same statutory weight as the word "duty" would have in the clause?

Mr. Baker

I am advised that the words The Secretary of State and the Director shall each exercise the functions assigned to him by this Part are equivalent to imposing a clear duty on both of them to fulfil the functions under the clause. As I said, there is no evidence that it costs more to provide services in rural areas than in urban areas. Some senior managers in BT have told me that there is some evidence that rural services may subsidise some urban services.

Nevertheless, there are some remote areas, where pole lines suffer from weather damage, where services are more expensive to provide. I am exploring with BT whether the access charges that I shall discuss shortly will contribute to the cost of services in remote areas or whether the BT licence should require BT to charge customers in all areas the same amount for the maintenance of the line from the customers' premises to the exchange. I can, however, assure the House that we are determined that customers in rural and remote areas will not suffer price discrimination once they are connected to BT's system.

Mr. A. J. Beith (Berwick-upon-Tweed)

I hope that the Minister will realise that, despite the important general point that he has just made, differential pricing under the present system operates against the rural consumers and their access to the system. I can tell him of a recent case in my constituency where someone was quoted £4,500 to have an ordinary domestic telephone connected. That figure was reduced to £3,200 after prolonged discussions in which I took part, but that was still the bottom line under the present system. Therefore, even under the present arrangement there is a serious problem, which everyone feels will become a great deal worse.

4.30 pm
Mr. Baker

I shall deal with the installation charge later. Hon. Members who served on the Committee will know that we dealt with that matter at some considerable length. The position on installation charges under the Bill is greatly improved for the potential subscriber. If a subscriber, as in the case mentioned by the hon. Gentleman, is quoted £4,500, at the moment he can go to his Member of Parliament, who can try to negotiate a reduction. However, I have no powers as a Minister to deal with BT or to examine whether the charge is justified. Under the new arrangement, the subscriber can approach the Office of Telecommunications, which will be able to investigate the basis of the charge to see whether it is reasonable and can go to the extent of getting a second quote for the laying of that line. If the new charge came out at a much lower figure, the Director General of Oftel could then instruct BT to install the phone at the lower figure. This is a considerable improvement on the existing position. I shall deal with the level of installation charges later because I appreciate that it is a matter of concern, particularly for those living in rural areas.

Subsection (1)(a) means that the Secretary of State must, when issuing licences to telecoms operators, include in one licence, or in as many licences as he sees fit, conditions whose effect is to secure provision of the services covered by this subsection. If he did not, the Secretary of State would be open to challenge in the courts. The Director General is similarly bound by this duty. Thus, if he received a complaint that a licensee was refusing to supply a telephone in a particular rural area despite being obliged to do so by a condition in its licence such as I have just mentioned and then failed to take action to ensure compliance, the Director General could be compelled, in the courts if necessary, to ensure that the licensee took such action necessary to comply with the condition. I do not believe that this action in the courts will be necessary, but the possibility, which is not permitted in present legislation against BT, gives powerful confirmation that this is a major advance for consumers.

However, it might be argued that, although the initial licence will contain conditions safeguarding the rural areas and the social services, these could be removed at a later date. The answer is a categorical no. I have explained that it is the Director General who is responsible for changing conditions either by agreement with the licensee or following a reference to the Monopolies and Mergers Commission. There is no question of the Director General and BT getting together, for example, to remove the condition relating to the provision of telephone kiosks because the Director is duty bound by this clause so to exercise his power to ensure that the service is provided. If he did not, he could be challenged in the courts. Indeed, I could so challenge him.

I should like also to mention briefly the qualifications of reasonableness and practicability mentioned in subsection (1)(a). Concern has been expressed that these severely diminish the safeguards that this paragraph otherwise provides. That is not the case. The words save in so far as the provision thereof is impracticable or not reasonably practicable —phraseology for which we are indebted to my hon. Friend the Member for Leominster (Mr. Temple-Morris)—simply repeat, word for word, the qualifications in the British Telecommunications Act 1981. The purpose of such qualifications is simply to prevent the obligations imposed on licensees front being unworkable because of the impossible or completely unreasonable demands that they impose. I point out that the wording of these qualifications in the Bill as it was introduced was slightly different, but I have followed the advice of the Committee and of the unofficial legal adviser to the Committee, my hon. Friend the Member for Leominster.

I should like to expand briefly on two other points of particular concern—the 999 service and the provision of telephone kiosks. I do not think anyone would dispute the fact that the 999 emergency service must continue, That is why it is specifically mentioned in the legislation. Indeed, some might think it surprising that it has not been included before in previous legislation. However, the Bill will put this right. We have already made it clear that BT''s licence will oblige it to continue to provide this service free of charge—thus preserving an especial feature of our emergency services which is not always found in other countries. We also propose that other major telecom operators such as Mercury, Hull and possibly the two national radio telephone companies will also be obliged to provide access to such services.

Mr. Orme

I am interested in the hon. Gentleman's point, which, as he knows., was of considerable concern in the Committee. Will the 999 calls still be used through operators and, therefore, will BT maintain its staff, or will there be a different system?

Mr. Baker

That is not for me to answer but for the management of BT, which will determine how the service will be run. I am aware of the concern and anxiety, particularly of the Union of Communication Workers, which will no doubt be expressed. I am sure that BT management will take note of what is expressed in the House, but this is essentially a matter for it.

I doubt whether anyone here could doubt the value of telephone call boxes, almost all of which are open 24 hours a day. Apart from my hon. Friend the Member for Northampton, North (Mr. Marlow)—who is unfortunately not with us at the moment, although I am sure that that is by accident—who has told us that he always loses his money when he tries to make a call, what hon. Member has not at some time given thanks for the assistance offered by a call box? Not only are call boxes of great value to those who do not have a phone of their own; they are even more important in an emergency, as the majority of 999 calls are made from call boxes. The new clause ensures that call boxes will continue to provided, but the House might like to know a little more about how we intend to ensure that.

As many hon. Members will know, there are at present guidelines agreed between BT and the Post Office Users National Council governing when the least-used call boxes can be removed. When a call box takes less than the agreement says, that call box becomes a candidate for removal. The figure is below £200 in revenue. I think that it is a sensible arrangement as it enables there to be flexibility in the positioning of kiosks while protecting the interests of those wishing to use the network. We intend that the director should continue to operate broadly similar arrangements. We propose to include in BT's licence a condition obliging BT to continue to provide the call boxes installed at present and not to withdraw any call boxes except in accordance with procedures agreed with the Director. This arrangement means that the obligation to provide call boxes can be enforced whereas at present BT is under no obligation to provide any call boxes. BT has, of course, provided the existing network of call boxes without an obligation and has followed the POUNC guidelines.

Mr. Beith

I wish that the Minister would not sound so satisfied with the arrangements for the call boxes that take less than £200, of which there are many in remote places. Will he bear in mind that many people travelling, including country people going about their work, will put a small coin in one of the boxes and then be called back from their office to the box from where they are calling? This depresses the revenue of the box, and when the figures are applied they can lead to the removal of boxes that are essential, and have done so in a number of cases. I hope that the Minister will not continue to express such satisfaction with these arrangements. It is because of them that my hon. Friends and I are worried about the word "demand". We have sought to substitute "needs" for "demand" because we have related "demand" to this provision, which suggests that a box taking less than £200 is not in demand, whereas it may be in great demand.

Mr. Baker

The cost of maintaining each box is more than £2,000 a year, so there must be some measure of revenue against which the box will be considered for closing. However, I do not want the House to have any impression that there have been massive numbers of closures of telephone kiosks—there have not. The numbers for each year are very modest. In 1979–80, 32 were closed, in 1980–81 it was 30 and in 1981–82 it was 63. These are modest closures and may reflect the change in the pattern of living in the community. I assure the House that for the first time in legislation, a duty and obligation to provide telephone kiosks on a national basis is now enshrined in statute.

Mr. Charles R. Morris (Manchester, Openshaw)

The Minister said that all licensees would have an obligation to provide access to emergency services such as the 999 services. Are we to assume from that that all licensees will share in the financial obligation of providing such services?

Mr. Baker

I shall come to that in a moment when I deal with access fees. But first let me complete my remarks about telephone kiosks. One has to measure the number of closures against the extensive network of telephone kiosks. There are more than 77,000 in the country. They provide an invaluable service not only to remote areas but in urban areas, at railway stations and in areas where the provision of telephones in the home is not very great. We want that service to be continued.

Mr. Marlow

My hon. Friend said that it cost £2,000 to maintain a telephone kiosk. Does that mean that for each telephone kiosk that is removed there is a saving of £2,000, or is my hon. Friend talking about the average cost over the whole system being £2,000?

Will there be any change since, at the moment, if a kiosk is threatened with closure the public have access to my hon. Friend whereas in future their only access will be to the Director General? My hon. Friend is talking about what he is telling the Director General at this stage. When the Director General is more free-standing than my hon. Friend is describing at the moment, will not the public's access to the political situation be rather less than it is at the moment?

Mr. Baker

It is so remote to Ministers now that I cannot recall over the past two and a half years ever having had a letter from an hon. Member about the closure of a telephone kiosk. Even if I had, I remind the House that I do not have any powers to stop BT. In the future, the complainant—it could be a person or a local authority—could complain to the Director General of Oftel, who would be obliged to examine the matter. He would have to be satisfied that the guidelines were followed before action was taken. It means a considerable improvement for consumer interests.

I turn to subsection (1)(b), which concerns the need for those persons providing the services mentioned in subsection (1)(a) to be able to finance those services. This duty is of equal importance to paragraph (a), and I may anticipate some questions if I explain why.

The effect of subsection (1)(b) is to ensure that neither the Secretary of State nor the Director General exercises his functions in such a way that the operators are unable to finance, both in the immediate future and thereafter on a continuing basis, the services that their licences oblige them to provide. For example, as I told the House on 7 February following the publication of the Littlechild report, we intend that any increases in BT's prices in some of its monopoly areas such as local calls and residential rentals shall be limited to less than the rate of inflation. This limitation, which will be contained in the RPI minus X formula, will take the form of a condition in BT's licence, but paragraph (b) means that the Secretary of State could not set the value of X, nor the Director General and the MMC change it, to such a low level that BT could not finance the service that it was obliged to provide. That is a considerable protection which I am sure that the House recognises.

I have dealt with subsection (1) at some length because it is of fundamental importance. In short, subsection (1)(a) imposes on the Secretary of State and the Director General a duty to use their powers in the way best calculated to ensure that a universal service is provided, so that services are provided in rural areas and so that emergency services and call box services are provided. Subsection (1)(b) provides that they will act in the way best calculated to ensure that operators can finance these services. These fundamental duties are recognised in the new clause as being more important than the duties set out in subsection (2), and the duties in subsection (2) are specified as being subject to subsection (1). Thus the duty, for example, to promote consumer interest in low prices is made subject to the overriding duty to ensure that action to encourage low prices does not damage the ability to finance the universal service. As hon. Members will recognise, this set of overriding duties in subsection (1) corresponds to the needs of old clause 3, while the secondary duties in subsection (2) correspond to the desirabilities in that clause.

4.45 pm
Mr. Donald Stewart (Western Isles)

Although I acknowledge the apparent practical safeguards in subsection (1)(a), will the hon. Gentleman clear my mind about paragraph (b)? Does that mean that if an operator could prove that these services were uneconomic, he would no longer be under any obligation to maintain them?

Mr. Baker

I shall come to that in a moment. I know that it is a matter of great concern. It is all very well to oblige BT to provide a universal service, but, the right hon. Gentleman wishes to know whether, if it becomes uneconomic for it to do so, there will be a let-out. I shall deal with that specifically, because we have an arrangement to ensure that it can be properly financed.

Mr. Richard Shepherd

Subsection (1)(b) raises the spectre of cross-subsidisation. In Committee, we had very little discussion of what that leads to in terms of the misallocation of resources and investment decisions. Therefore, given the Littlechild proposal and given a respectable body of intellectual and academic opinion, I wonder why the Government have rejected the direct Treasury subsidisation of subsection (1)(a) which would identify clearly the costs attributable to and support the necessary services that we say are to be provided.

Mr. Baker

Perhaps I may be allowed to answer that at the same time as I deal with the question put to me by the right hon. Member for Western Isles (Mr. Stewart).

I want to deal now with the detailed provisions of subsection (2).

Mr. Marlow

Before my hon. Friend moves to subsection (2), perhaps he will deal with one other matter. BT is to become a public limited company with shareholders. As I understand subsection (1)(b), it appears that the better that BT does, the more pressure the Director General will be able to put on BT to ensure that the services, priorities and duties set out in subsection (1)(a) are better effected. The more efficient and the more effective BT becomes, the more it will have to spend in satisfying the Director General about the rural areas, and so on. Is that not a rather invidious position in which to put a public company with shareholders? Does not it make nonsense of the arrangement?

Mr. Baker

It is implicit in the legislation that, when converting a public monopoly into what for a time will be a private monopoly until further competition and new market entrants are allowed, the obligations must be carried by that company. We have to be satisfied, first, that the obligations for the services are imposed and, secondly, that conditions so operate that the services can be provided at an economic cost and nationally as well.

I move to the provisions of subsection (2), because I want now to deal with the questions put to me about subsidy and price restraint. It has been claimed that prices will increase after privatisation since BT will be under pressure to run each part of its business at a profit. Others have suggested that we should institute a scheme of price control with prices approved or set by the Director General to ensure that BT or other operators do not abuse their monopoly position.

We have listened carefully to all these arguments, and I believe that we can say with confidence not only that fears about prices will be set at rest but also that elaborate schemes of price control are unnecessary. Past experience of much more limited price control involving only a restriction of price increases as opposed to absolute price fixing shows conclusively that this is likely to be counterproductive.

We propose a number of steps which I believe are a much better approach and ensure protection of consumers' interests. On prices, I am convinced that competition, the subject of subsection (2)(b), is both the fairest and the most powerful weapon of price restraint. Nevertheless, we must be realistic and recognise that for the foreseeable future BT will be the dominant force iii the telecommunications market and for the majority of ordinary residential households the only supplier of a telephone line.

That is why I told the House on 7 February that we proposed that prices for certain of BT's monopoly services, especially residential and local calls, should be limited initially for five years to less than the rate of inflation. Our minds are stall open on the range of services to be covered by the RPI minus X formula, and I was pressed in Committee to examine whether certain other items should be included in it. For example, several installation charges and international calls have been suggested for inclusion within the formula, and I am considering these at the moment.

As with much of the regulatory framework, we must strike the right balance between preventing abuse of monopoly power and allowing BT the commercial freedom to achieve the expansion, growth and responsiveness that the Government and BT seek. Overall, the effect of our proposals is that privatisation and an end to direct Government controls should lead to a fall in prices in real terms during the next five years.

Mr. J. Grimond (Orkney and Shetland)

Is it correct that a freeze on prices would apply only to local calls? In the rural areas, especially in the islands, the most important calls are those to the county towns and outside the islands.

Mr. Baker

The Littlechild report recommended that the control on prices should apply only to those areas of British Telecom's activities where there is, in effect, a de facto monopoly and it identified particularly the residential subscriber network. Price controls will not be needed as more and more areas are opened up to competition. Competition is opening up substantially on the trunk lines. Mercury will be offering services very shortly to the business world. That has led to the price of trunk calls being reduced by BT significantly. I am examining the question whether other matters should be included in the area covered by price control but they are, essentially, the residential, the rental and unit charges.

Mr. John Golding (Newcastle-under-Lyme)

Is the Minister of State suggesting to the right hon. Member for Orkney and Shetland (Mr. Grimond) that Mercury will operate in the Scottish Highlands and Islands?

Mr. Baker

Mercury, initially, will be operating a business service over the main city networks. Mercury, which will take some years to become established, cannot possibly compete with BT in the remote areas. BT will have a monopoly in those areas and the Government must ensure that that monopoly is not exploited and that the service continues.

I wish to deal with the question of prices in rural areas, and specifically that raised by the hon. Member for Berwick-upon-Tweed (Mr. Beith). Again, his is a claim without foundation. When the House first debated the Bill last November, there was a fairly lengthy discussion about the costs of installation of a telephone to a constituent of the hon. Member for Whitehaven (Dr. Cunningham). As I explained, BT at present levies a standard charge when an installation takes no more than 100 hours. It is only when an installation is so difficult that it takes more than two-and-a-half weeks of one man's time that an extra charge is made. I do not find that unreasonable and I expect that BT would continue such arrrangements.

In any event, customers will be in a stronger position in the future. At present, as I have already said, a customer has no formal means of complaint other than through POUNC but in the future, when BT's licence will prevent it from discriminating unduly against any class of customer, which includes those living in rural areas, any potential customer who thinks that the installation charge quoted amounts to undue discrimination will be able to complain to the Director General. Moreover, if the Director General considers the complaint justified, he will have powers—unlike POUNC—to oblige BT to reduce the charge to a level that is not unreasonable in the circumstances.

Dr. John Cunningham (Whitehaven)

We have had this out many times in Committee. The House is going over the same ground. Will not the Minister admit that, because the Director General has to ensure that BT operates commercially, the reality is that in most cases he will have to accept BT's sums, even if a contractor is brought in to check the arithmetic and the calculations of cost? The net result will be a very high connection charge for many people in remote and rural areas.

Mr. Baker

That certainly will not be the result.

Mr. Marlow


Mr. Baker

Before my hon. Friend the Member for Northampton, North intervenes, let me say that connection charges can be high for those living in urban areas. Digging up a road can be complicated and expensive. The cases that are usually quoted are those in very remote areas where, often, a land line is insisted upon for environmental reasons in areas of unique natural beauty and matters of that sort. That is an obligation imposed by the state upon a particular operation. The dilemma that the hon. Member for Whitehaven and my hon. Friends referred to is the clash that exists between the duty to provide services in remote areas or 999 services and the duty to make a profit.

I turn to the question of finance for such loss-making services, specifically the 999 service, call boxes and possibly—I emphasise the word "possibly"—services in the remote areas. BT's system of accounting is undergoing a total reorganisation because it was accounted for on Treasury systems. There was only one cost centre in BT when it ceased to be part of a department. BT is now revising its accounts so that it can determine whether telecommunications in Scotland or Wales make money. The first indication from these revisions is that the rural areas make a positive contribution to the centre in terms of profit. When I say the "loss-making services", I do not necessarily include the rural areas, but if they were to be loss-making they would be included in that revision. As I have explained, it will be a duty of the Secretary of State and the Director General to use their powers in the way best calculated to ensure that the provision of these services is financed.

Where is the finance to come from? Some have suggested that it should be from the Government or the taxpayer, since it is they who are imposing the obligations. One of the recommendations of Professor Littlechild was that there was a clear case for subsidy and it should be paid for by the taxpayer or the Treasury. The Government's experience of this in dealing with nationalised undertakings has not been happy. Having started down this route, the whole concept of a direct subsidy being met from the Exchequer has led to very high levels of subsidy in the provision of certain services in the United Kingdom. I have considered this but decided against it. Such a subsidy would only prolong day-to-day interference by the Government in BT's business and encourage complacency in both the quality and efficiency of the service. The chairman of BT agrees with this view and opposes subsidies from the taxpayer.

I believe that the best way to secure the provision of these services and to avoid placing those who are obliged to provide them at an unfair competitive disadvantage is by the system of access fees, which I explained at some length in Committee and wish now to explain to the House.

An access fee is a fee that will be payable by providers of services, including BT, when they connect into BT's local networks. It is these networks that provide the loss-making services that BT will be obliged by the terms of its licence to provide. On the basis of present information we know that there are two loss-making services, the call box network and the 999 service. It is possible, as I mentioned, that services in remote areas are also run at a loss, but there is no firm evidence of that. If this service were shown to be unprofitable, then it too would be covered by the access fee arrangements. The purpose of charging access fees is to provide local areas of BT with a source of finance to make a fair contribution towards the net cost of services that BT is obliged to provide and that make a loss. That is the basic outline of the scheme. The details are still to be worked out. It may be helpful if I briefly elaborate on one point.

Mr. Golding

In Committee the Minister was pressed for details on the access fees. He said that he would ask the chairman of BT to produce a paper. He said: I have written today to the chairman of BT and asked him for a paper to help the Committee to see exactly how it would operate."—[Official Report, Standing Committee H, 10 February 1983; c. 983.] We did not get a reply in time to help the Committee. Has the chairman sent the paper in time to help us at this stage?

Mr. Baker

I regret to say that the chairman has not submitted a paper. The Government have started discussions at official level to determine the details of the access fee and the interconnect fee.

Some people have expressed concern that while access fees are fine in principle they could be used to frustrate competition, which I believe was the point raised and the anxiety of my hon. Friend. For example, the fee might be set at such a level that competitors would find it hard to pay and to maintain a profitable business. However, BT will have to pay the same fees when a trunk call is connected to a local area, so that the fee should be fixed at a reasonable level.

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Fears have also been expressed that the fees could be used to subsidise and disguise inefficiencies in other activities apart from the specific loss-making obligations. Indeed, my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) raised that point. I can assure the House that we are aware of those concerns and I intend that the Director General shall ensure that the access fee arrangements are not abused in that way.

Dr. John Cunningham

It is most unsatisfactory that when we discussed this issue in Committee almost two months ago we were promised some detailed arguments about access fees and that the chairman of British Telecom, who has had every opportunity since then to provide the Government and the House with the paper, has failed to do so. Since we are told that there will be an entirely new way of financing important services, the House is entitled to be given the information.

Mr. Baker

Obviously, I would have preferred to be able to provide the House with a paper from the chairman of BT. However, the principle of the access fee is established and determined. The chairman of BT and his management believe that there are matters of detail that have to be pursued. However, we have established the principle and the details can be discussed between my officials and those of the chairman. I repeat the assurance that I gave in Committee that the fees will operate and will be set at a level that will ensure the provision of the necessary, subsidised social services.

Mr. Richard Shepherd

Professor Littlechild's comments showed the anxiety that most people have that cross-subsidisation may lead to the misallocation of resources and is thus against the interests of the community as a whole. By identifying the costs that need to be subsidised and paying for them by Exchequer grant, the possibility of cross-subsidising other areas and of misallocating resources is more likely to be eliminated. My hon. Friend should address his remarks to that argument.

Mr. Baker

I shall try to do so. My hon. Friend's point is important, but if an Exchequer subsidy was applicable to the social services, the Government would have to be satisfied that the costs were truly borne and that the services of telephone kiosks in remote areas and 999 calls were properly incurred, and a whole team of people would have to be engaged in doing that. At present, we do not have a team doing that. One of Oftel's purposes would be to respond to complaints about prices not only from the public but from other public telecommunications operators. Oftel would be able to satisfy itself that the access fees were set at a level that would cover only the specific services mentioned in the clause.

Mr. Richard Shepherd

Does not my hon. Friend therefore have to satisfy himself that those charges are reasonable and fair to ensure that subsection (2)(a) is satisfied?

Mr. Baker

I do not have to satisfy myself of that. We have debated this issue at some length. The whole history of the regulation of private and public monopolies in America shows that one cannot follow the route of cost allocation in determining whether the charges are reasonable and fair. Indeed, the whole system has broken down in America and it has proved that that is not the path to follow. The purpose of the regime of control that we are operating is to have the blanket overall cover of Professor Littlechild of the retail price index minus X. That provides the telecommunications consumer in this country with the greatest protection that he has ever had. There will be a right of complaint by public telecommunications operators to the Director General of Oftel in respect of access fees.

Mr. Marlow

What safeguards will there be against the escalation of access fees? It has been said that an element of subsidisation may well be needed in the remote areas. What will prevent Mercury, which will make massive investments for the future and will look for a return on those investments over many years, from being in the position of ratepayers and commuters on whom excess charges can be levied each and every year while there is nothing that they can do about it?

Mr. Baker

My hon. Friend has made an important point. The answer is that the onus will be on BT to prove to the Director General of Oftel that those services lose money. The Director General of Oftel must be satisfied of that. He can examine the details and, indeed, the whole case, and will do so on a continuing basis. The operators—Mercury, Hull and the two radio telecommunications networks—will have the right to complain to the Director General of Oftel if they think that the charges are too high. The rest of FT's network must also account internally for the access fees as otherwise it might lead to the real possibility of cross-subsidisation. It must also make its accounts transparently available to the Director General to satisfy him that it is not subsidising other activities by means of the access fee arrangements, at the expense of other competitors in the market.

I hope that I have gone some way towards satisfying my hon. Friends. I have tried to deal with the access fee. I do not want the access fee arrangements to be abused and I intend that the Director General shall ensure that they are not. The licence condition that I have already mentioned, preventing undue discrimination, will apply to the access fee element of interconnection charges, as to other charges. We intend that before the fee is set, BT and the Director General must agree the accounting policies on which the loss for the service in question is calculated and also on the particular services eligible for inclusion in the access fee. Finally, we intend that the revenue that BT's local network receives from the access fee shall not exceed the losses on the eligible services.

I turn now to the other duties placed on the Secretary of State and the Director General, which are listed in subsection (2). I think that these aims are largely self-explanatory, but the House might find it helpful if I briefly nm through them. I do not think that anyone would dispute the importance of subsection (2)(a) on the interests of consumers. Some have said that that should take precedence and therefore should be upgraded to subsection (1). However, we have taken the view that the consumers' interest in the provision of a universal service takes precedence over their interest in low prices and that, if necessary, prices should be increased—for example, by the access fees—to finance the universal service.

The duty in subsection (2)(a) is not dissimilar to the guideline that exists in the original clause 3, but there is one important difference. I have included a special reference to the disabled, which is something that I promised the Committee. But its inclusion is more than simply fulfilling a promise. It is an important step forward in safeguarding the interests of disadvantaged groups.

As some hon. Members will be aware, there are a number of pieces of apparatus supplied at present only by BT which are specially adapted for the use of disabled people. Two examples are: first, inductive couplers in ordinary telephones which enable the partially deaf to use them in the normal way; and secondly, the adaptations made to private automatic branch exchanges which enable them to be operated by blind persons who can benefit from the job opportunities thereby opened to them. At present the Manpower Services Commission can help finance these adaptations, and we are considering whether these arrangements are sufficient. We want these benefits to continue and subsection (2)(a) requires the Secretary of State and the Director General to carry out their functions to ensure that they do. The ways in which they will do this include the inclusion of appropriate conditions in licences and the inclusion of appropriate requirements in the standards and approvals for apparatus. The exact requirements for both are not yet finally decided, but are being carefully considered in consultation with all interested parties. I am sure that the House welcomes that provision.

The duty in subsection (2)(b) encapsulates one of the main features of the telecommunications policy we have been pursuing ever since we came to power. We believe that competition is the key to achieving the expanding and dynamic telecommunications industry that is our main objective, and one that I would have thought Opposition Members would share. Competition in price, quality and variety of services will provide the consumer with maximum choice and the opportunity to obtain the services which best suit his needs. It will make the providers of such services responsive to the wishes of consumers and will stimulate them to develop new services to meet demand.

Since we came to office we have taken a number of measures to promote competition and encourage market entry. We have already liberalised the supply of many kinds of telecommunication apparatus, and when the end of the phasing-in period is reached in July we shall have gone a long way towards freeing the supply of such apparatus. We are now seeing encouraging signs that more and more companies are entering the market. We have licensed Mercury to run an alternative national telecommunications network and have announced our intention to license two national cellular radio companies. We have also issued a general licence for value added network services, of which so far 33 companies have taken advantage.

In addition, on 7 February I announced further measures to increase the scope of competition. In particular, I announced our intention to end the prime instrument monopoly and BT's monopoly over the maintenance of call-routing apparatus. I announced also that we accepted the principle of reducing restrictions on resale of capacity on private circuits leased from BT, and finally other public telecoms operators, and that the restrictions on Mercury's supply of international services should be eased.

The whole Bill, and clause 3 in particular, are designed to further this process of promoting competition and encouraging market entry. We have achieved a lot so far in a short space of time, but I believe that it will be impossible to fulfil our aims unless all competitors are on equal footing. Parts II and III are designed to achieve this. The process will, however, not be complete while BT remains a nationalised industry. Part IV, of course, remedies that by providing for the conversion of BT into a public limited company.

Mr. Richard Shepherd

Some anxiety has been expressed that the Bill is not an engine in itself to promote competition. In what way does the Director General promote competition in the issuing of licences? Is it incumbent upon him to issue a licence when it is applied for in the absence of certain criteria—against the interest, and so on? Otherwise, could we not come to a complete halt after the limited introduction of competition that has already taken place? Is that not, therefore, dependent on the good will of the Secretary of State or his successor?

Mr. Baker

Both the Secretary of State and the Director General "shall each exercise" his function in the manner which he considers is "best calculated" to promote competition. There is no doubt that with the present Government in power, and with my right hon. Friend and myself in charge of policy, we are clearly in favour of market entry. We have made rapid progress in that direction in a quite unprecedented way. As I have said, I think that our example will be followed by other countries in the next few years because I do not believe that this great and expanding industry can be dominated by monopoly. The Director General, quite apart from the Secretary of State, will also have to exercise his functions to maintain and promote effective competition. Even if the Secretary of State were hostile, in many ways we are setting up a regulatory regime that is separated from political control. I should have thought that Opposition Members, including those who occupy the Liberal and SPD Benches, would welcome that. We are removing much of the control and influence that were operated by successive Ministers on our public telecommunications system. That is surely right.

The issuing of licences can be delegated to the Director General of Oftel, and we envisage that certain general licences would be delegated. However, as I said earlier, we do not envisage delegating to the Director General of Oftel the issuing of licences to further public telecommunications operators. They are highly important licences, because public telecommunication operators are given various privileges under this legislation and under law, and in our view that responsibility should remain with the Secretary of State.

Mr. Golding

I understand that the Director General will not be authorised to issue further licences to public telecommunications authorities. Does the Minister of State intend that the number of public telecommunications licences be confined to the three we have at present—that is, BT, Mercury, and Hull?

Mr. Baker

At present the public telecommunications operators that we envisage licensing under the legislation will be BT, Mercury and Hull and two radio-telephone networks. There is to be a debate later about cable systems and the extent to which they are telecommunications systems. It is not our intention in the foreseeable future to go beyond that.

5.15 pm
Mr. Richard Shepherd

First, does not my hon. Friend's statement contradict his declaration that we are trying to advance the frontiers of competition, and is it not, therefore, against the public interest? Secondly, if, as I understand and as reported in yesterday's papers, a major union concerned in British Telecom decides effectively to inhibit competition and thus limit consumer choice, and so on, in what way can the Secretary of State or the Director General of Oftel insist upon competition coming into being?

Mr. Baker

Perhaps I might deal first with my hon. Friend's last point about the story that appeared in The Observer yesterday, saying that the Post Office Engineering Union was threatening not to connect Mercury, and thus deprive it of the possibility of interconnecting with the BT network. It is a matter of crucial importance, because I know that Mercury causes genuine worry and anxiety within BT. Recent press reports about the indefensible policy of the Post Office Engineering Union towards co-operation with Mercury stem from that anxiety. Many of those who work in BT's middle management and in the telephone areas are worried about Mercury and the whole idea of competition. They have been insulated from competition for 70 years or more and have devoted their working lives to building up a monopoly national network. They now see that significant changes are taking place, and they fear that competition will damage BT and the network.

I ask the House to accept that this anxiety and fear are real. None of us likes change, or too sudden a change. I would like to assure the House that Mercury itself is not a threat to BT. Competition in telecommunications is not like a boxing or wrestling match where both combatants attempt to knock the other to the ground. Telecommunications, instead, is a huge and rapidly growing market, the most rapidly developing industry in the world, and the revolution in communications and information technology means that there is room for both BT and Mercury to prosper, but by collaboration, not by confrontation. Experience in America shows that competition between telecommunication companies increases employment and revenues while improving quality.

The way forward for those in BT who are concerned is to increase their efforts to ensure that BT itself provides the best service. This means collaborating with the BT board to reduce the cost of telephone services.

The wrong way forward would be to black Mercury or to try to block its development, as advocated by some members of the POEU. If the POEU did that, it would be seen as an attempt to frustrate the development of Mercury. That would be seen as a naked attempt to defend a vested interest. The House will remember that the POEU also pursued it own narrow interests in 1977–78, when it did serious damage to business and industry by its refusal to collaborate in the connection of new equipment.

The problem of Mercury interconnect, which lies behind the recent articles, is covered by a commercial agreement between BT and Mercury. The Government did not instruct BT or Mercury to make the agreement and the arrangements for putting it into effect are a matter for the two companies. I do not want to enter into discussion about the detailed arrangements but I can assure the House that the board of BT knows that the Government expect it to honour its agreement with Mercury. The Government are confident that that will be honoured.

Mr. Richard Shepherd

As I understood it, my hon. Friend has just listed the way in which he is inhibiting competition. He said that there would be only three licensees, and I said that that seemed to be a contradiction.

Mr. Baker

My hon. Friend should first recognise the enormous amount of market entry that we have allowed over the past three years. That has been on an unparalleled scale in the history of telecommunications. My hon. Friend seems to give scant regard to that. I know that he is ambitious for the future but he should first recognise what we have done. We have allowed competition to come in and apparatus to be sold, and that is by no means marginal. The fact that the Post Office Engineering Union is considering the action that it is means that it is worried about it.

It is significant that we have allowed two mobile telephone networks. We are moving rapidly into cable television, and those local networks will be capable of taking data transmission. All that involves considerable competition. We have already said that there are 33 companies that are already operating value added network services. There were none doing that legally before. I have already said that I am looking at resale and that I intend to ease restrictions on Mercury's international business.

Mr. Richard Shepherd


Mr. Baker

I must continue if my hon. Friend will allow me.

When competition is introduced into an area that has been subject to monopoly for 70 years it must, by its very nature, take some time. For example, we found in 1980 that virtually all the expertise in telecommunications equipment—standard-writing and testing—was in BT's hands. BT had the engineers and the expertise. It has taken us nearly three years to set up a separate testing and standard-writing arrangement. It takes a long time to write standards for telecommunication equipment. It takes between a year and 18 months, and that is after we have given more resources to that process. My hon. Friend should recognise that we are moving rapidly and want to see as much competition as possible. At the same time, it must be done in a mature and sensible way to ensure that what one has liberalised flourishes and survives.

I doubt whether any hon. Member would dispute that the promotion of efficiency and economy is a desirable aim. Subsection (2)(c) particularly incorporates the point raised by my hon. Friend the Member for Northampton, North, but we must realise that competition is still in its infancy and will be slower to develop. Similarly, the duty in subsection (2)(d) will not cause any controversy. Indeed, it should be positively welcomed by Labour Members as it follows closely a suggestion that they made in Committee. Research and development are of great importance, particularly in such a fast-moving business as telecoms. The United Kingdom has already benefited from the expertise of and the work done at Martlesham and we want that to continue in future. We also want to encourage research and development by other companies—for example, Mercury, the radio telephone companies and the manufacturers of telecommunications apparatus.

Mr. Marlow

How will the Director General carry out the duty in subsection (2)(d)? What will he do to encourage research and development and what effect will that have on, for example, Martlesham?

Mr. Baker

In the exercise of his duties in the consideration of the matters that BT submits to him, he will have to satisfy himself that his decisions do not inhibit the work being done at Martlesham. He would seek out ways in which that could be promoted. It is not only Martlesham but the other telecommunications operators as well—Mercury and the radio telephone networks. It may be helpful if I were not to give way again so that other hon. Members can have an opportunity to express their views about new clause 1. I do not want to talk out the new clause.

Subsections (2)(e), (f), (g) and (h) are listed separately because they all contain separate points. However, the ideas that they encapsulate are connected. The Bill is directed towards the pursuit of excellence in telecommunications. It removes the present barriers to achieving that and sets up the framework that will allow that to happen. So far I have concentrated on the benefits that that will bring to the domestic market but we want excellence to manifest itself in other ways, particularly in markets outside the United Kingdom. We want the United Kingdom to establish itself as a centre of excellence for the services, skills, apparatus and systems that are available here so that major international users of telecommunications will want to base their operations here and so that the United Kingdom economy will benefit. There is a great opportunity for London and Britain to become a major telecommunications switching centre. We also want that excellence to be manifested so that we can sell our products and services abroad.

I have spent a lot of time on new clause 1 and have tried to answer the questions that have been put to me, but, as I said at the start, it is of crucial importance and I wanted to give the House as much explanation as possible in the time available of what it contains and what it means in practice. I commend it to the House.

Mr. Marlow


Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. I heard the Minister say that he would not give way further.

Mr. Marlow


Mr. Deputy Speaker

Order. Before I propose the Question, it might be for the convenience of the House if I clarify the position regarding the amendments that are grouped with new clause 1. These are amendments (a), (b), (c), (i), (d), (e), (f), (g) and (h) and Government amendments Nos. 5. 10, 12 and 13. It will not be possible to move individual amendments until new clause 1 has been read a Second time. If the House agrees, perhaps the best solution is to have a general debate on new clause 1 with the grouped amendments and, at an appropriate moment before 10 o'clock, when the guillotine falls—perhaps at about 9 o'clock—I shall put the Question, That the clause be read a Second time. I shall then ask whether any right hon. or hon. Member wishes to move an individual amendment formally for Division. The House should bear in mind that no amendments other than Government amendments may be taken after 10 o'clock.

Mr. Orme

Your suggestion, Mr. Deputy Speaker, appears to be sensible. The only problem will arise if the debate on new clause 1 runs until 10 o'clock, with some of my hon. Friends still endeavouring to speak.

Mr. Kenneth Baker

I shall seek to accommodate the right hon. Gentleman's wishes. Under the guillotine motion, the pattern of debate must depend on the right hon. Gentleman and his right hon. and hon. Friends.

Mr. Orme

We have had a long speech from the Minister of State, with several interruptions. May I have the Minister's attention? Perhaps his hon. Friend the Member for Northampton, North (Mr. Marlow) will raise his point with him at a later date. It is important that Labour Members address themselves to the Government. I am sure that the hon. Member for Northampton, North will have an opportunity to speak to his hon. Friend later.

We have had a long speech from the Minister on new clause 1 and we do not complain about that. We find ourselves in a unique position, because clause 3—probably one of the main clauses in the Bill—has now been withdrawn. The Minister said that he did not think he should amend it and that it would be better to put before the House a completely new clause. Some hon. Members feel a little aggrieved. We spent 64 hours on clause 3 in Committee and had begun to feel some affection for it. After 64 hours of debate it is plucked out and replaced by new clause 1, which, in effect, is clause 3. From what the Minister has said, and because of the difficulties involved in the new clause, it is evident that the Government have not yet got the Bill right, irrespective of the deep philosophical and political divide.

5.30 pm
Mr. John McWilliam (Blaydon)

I agree with my right hon. Friend. Will he reflect on the fact that we are discussing not just a new clause, but a new Bill? If the Minister wanted to deal with the Bill properly he would withdraw the new clause and take it upstairs, so that we could sort it out properly. As things stand, the House cannot properly debate the issue.

Mr. Orme

I take my hon. Friend's point, but I do not know whether we want to go back into Committee, because we may have a similar experience and another new clause might be presented.

The Government are ill-prepared and confused about their major proposals. Crucially important policy statements and papers were provided by the Government far too late for adequate consideration. I refer to the Department of Industry's views on the BT licence, the Littlechild report and the Government's response to it, and the articles of association for BT plc. The confusion has been increased by the Government having to withdraw their original clause 3.

I shall not refer to the new clause in detail, because hon. Members on both sides of the House have important comments to address to the Minister. Irrespective of the changes that the Minister has made, some as a result of pressure from the Opposition in Committee, the new clause still falls far short of what we consider necessary and I shall ask my right hon. and hon. Friends to vote against it.

Detailed discussion has taken place on subsidies, access fees and rural services. The detail spelt out by the Minister today shows how worried the Government are about maintaining essential provisions. BT is a publicly owned company which operates a monopoly under which such services are not threatened. The change proposed by the Government—to give the company competitiveness, as the Minister would put it—and the private capital will create a double headed company, part privately and part publicly owned.

Mercury will have access to the system. The changes will put in jeopardy BT's loss-making services. Since 1906, when the organisation was originally conceived by the then Liberal Government, and which has since been supported by Liberal, Labour and Conservatives, it has been seen as a public service. The service had to be paid for, but one could take advantage of the service whether one lived in the Western Isles, Cornwall, Orkney, the Greater Manchester conurbation or anywhere else in the United Kingdom. That universality is being broken up by the Government.

The Government now have to identify the loss-making areas so that they can he paid for. BT plc will have to answer to the shareholders, who will ask, "Why are we subsidising rural telephones, the 999 emergency service or any other loss-making services?"

Mr. Richard Shepherd

That is not what will happen, because all users of the telephone system will support the loss-making services through the access fee system.

Mr. Orme

I accept that. The hon. Member for Aldridge-Brownhills (Mr. Shepherd) in Committee asked the Minister what criteria would be used. The Minister acknowledged that there could be argument among the different companies about their accounting, whether the access fees were correct and whether they were subsidising other sections of BT plc. Such questions do not arise in the public monopoly. The Minister has not satisfactorily answered our probing about the rural services, the maintenance of the emergency services and other general provisions.

Our amendments try to clarify certain provisions in the new clause. The amendments seek to define what is meant by "general duties" now that the original title of the guidelines has been dropped. We seek to identify the priorities given by the Government to the many and sometimes conflicting objectives in the new clause. We seek to remove qualifications such as "not reasonably practicable" and "reasonable" which reduce the requirement to provide telecommunications services. We seek to identify the needs of residential subscribers, whose bills are certain to rise more than necessary.

We seek to ensure that the finance from unprofitable services such as public telephone kiosks and emergency and rural services is based on a stable long-term objective. We seek to question the prices to be charged and how the service will be provided in non-profitable areas. How is the access charge supposed to work? We have not been told that. We seek to remove the requirement to maintain competition in the United Kingdom, which will simply increase imports and reduce British jobs. We seek also to remove the requirement to promote competitive activity overseas. The Government's arguments are wholly without teeth.

The Minister has made a concession to the disabled, who are now included in new clause 1(2)(a). We welcome that, but the issue goes much wider. Those using the network are not only the disabled, but the elderly, those who cannot read, the confused, the housebound, those simply unable to help themselves or unable to use the system. The hon. Member for Northampton, North is laughing. There is nothing funny about groups of people for whom the phone is a lifeline. The Opposition see the phone not as a luxury but as a necessity in modern society. A person can be lonely, not only in Orkney and Shetland, but in a housing estate in my constituency.

Mr. Marlow

The only reason for my amusement was that I thought the right hon. Gentleman was talking about himself when he referred to the confused. With the way that his speech has gone so far, I thought that that was a pretty good description.

Mr. Orme

I think that the House can ignore that remark. The hon. Gentleman is not taking seriously the problems of groups of people who need help. He might not think that they do, but the Opposition think so. He and I can take the brickbats, but those people need help.

Mr. Stan Thorne

My right hon. Friend may remember that the hon. Member for Northampton, North (Mr. Marlow) was himself so confused that he stayed away from the Committee for much of its proceedings.

Mr. Orme

We can leave that to the judgment of the electorate and the people to whom he is responsible.

The Minister dwelt at some length on new clause 1(1) (a) and (b) The Opposition tabled amendment (a) to insert the words "have the duty to". The Minister said that he had been advised that the Bill covered that point. I have sat on the Government Benches and spoken at the Dispatch Box. I know that when a Minister is given legal advice and tells the House, "I am advised," it means that he is in a weak position. It certainly does not mean that the point has been met. If the Minister believes that the point is fully met he can have no objection to accepting our amendment, but that would, of course, cause a fluttering in the dovecotes. He would be told in strong terms by the legal advisers, "Look, Minister, that alters the whole complexion of the Bill."

We are attempting to strengthen paragraphs (a) and (b) We want the point to be emphasised. Hon Members will know that paragraphs (a) and (b) deal with crucial areas covering emergency services, services in rural areas, and so on.

New clause 1(4) defines the United Kingdom consumer and the United Kingdom operator. It states that a 'United Kingdom operator' means a person carrying on any of the following activities, that is to say, the provision of telecommunications services in the United Kingdom, the production and supply of telecommunication apparatus in the United Kingdom and the export of such apparatus from the United Kingdom. We have been told that buying British will not be the order of the day. BT currently buys British, and many thousands of jobs in the private sector will be in jeopardy if orders go overseas.

Mr. Richard Shepherd

Is the right hon. Gentleman saying that those jobs should be protected at a greater cost to the general consumer and therefore lead to the misallocation of resources within our community? Is that a desirable objective?

5.45 pm
Mr. Orme

BT has a right to insist—as it has insisted—that the services and equipment are first class. BT has a research and development organisation that is second to none. Some of the foreign equipment does not meet the required standards. Some of it will be subsidised, probably through hidden subsidies. I want the best equipment for BT, and I want it to be British equipment. I want British manufacturers to meet the requirements. BT has a right to insist on its requirements being met and not to accept shoddy goods. Orders should not willy-nilly be placed overseas because the equipment is cheaper.

Mr. John Farr (Harborough)

The right hon. Gentleman must get his facts right. For a long time BT has been supplying foreign-made telephones and equipment, some of which has been very good. We all want British jobs to be preserved and British equipment to be supplied, but the facts are not as stated by the right hon. Gentleman. BT has been supplying a great deal of Scandinavian goods as well as goods from other countries.

Mr. Orme

But BT uses predominantly British-made equipment.

Mr. McWilliam

BT currently buys 95 per cent. British equipment.

Mr. Orme

The equipment is not exclusively British, and I accept that there are some imports, but the figure is well over 90 per cent. for British goods. I want to maintain that figure.

The Financial Times of 18 March states: Mr. Charles May, who heads BT' s large research establishment at Martlesham, said: 'I have spent my whole life developing equipment with British industry. My opinion of British industry is extremely low and I, given the choice, would spend a great deal more of my money in Japan and Sweden and Germany. I don't necessarily think that is a good thing but something that a plc would be bound to do.' Mr. May's remarks were made earlier this month at a public meeting in Ipswich. He emphasised yesterday that the comments were made purely in a private capacity—a point he also made at the time. I find it extraordinary that an employee of BT should make such a statement and denigrate British industry when he is employed in research and development that is passed on to the manufacturers. The Government have a duty to say whether Mr. May has been approached and, if so, to tell us British Telecom's reaction. According to the press, the need for that to be done has been re-emphasised by Sir George Jefferson.

The Under-Secretary of State for Industry (Mr. John Butcher)

Surely the right hon. Gentleman is aware that, unfortunately, over the past few days there has been mutual recrimination between those who are the predominant suppliers of BT and those who supply the research and development and industrial property rights. Does this not encourage the House to come to the conclusion that the cosy relationship between the two sides of that debate does not serve the country well, and is this not an argument for proceeding with all haste with the further momentum in the liberalisation programme? Could we not do better for the United Kingdom?

Mr. Orme

Of course we want to do better for the United Kingdom. We want to see the best products, but if the orders were removed from BT we could see the loss of 60,000 or 70,000 jobs. The Government are supposed to be encouraging everyone to buy British and to think British. The Government and the consumer have a right to say to British manufacturers that they may not be doing as well as in the past and we want improved standards, better pricing and British goods. The Government should insist on that. That is where the argument lies. They should not be going off to Japan, Sweden or West Germany to purchase this equipment.

There has been a tremendous development in modern technology. One could say that BT has been slow in catching up, but it is now at the forefront. One could say that British manufacturers did not put in enough effort in the past, but they now realise the importance of this matter. The answer is not to denigrate British manufacturers—Plessey, GEC and Standard Telephones and Cables Ltd.—at this stage, when the explosion is about to take place, but to call for improvements and say that we will support British industry and buy British. British manufacturing industry, which is in a terrible state, would be absolutely devastated if a large number of orders were to leave BT and go overseas.

Mr. Golding

Is it not shocking that the Under-Secretary of State for Industry, who represents Coventry, South-West, should advocate the export of jobs from Coventry to Tokyo?

Mr. Orme

The Under-Secretary of State for Industry must answer that himself. He made that public statement and he will have to answer for it.

Mr. Butcher

I am grateful to the right hon. Member for Salford, West (Mr. Orme) for allowing me to answer the point made by the hon. Member for Newcastle-under-Lyme (Mr. Golding), particularly as I recently had the happy opportunity to open a factory in Coventry that makes telecommunication products. It is because I have numerous contacts with those who supply BT that I know that there is more than one side to this story. BT is not entirely without blame—because of the way in which it specifies its products, fiddles and messes around with its development programmes, changes specifications and imposes gold-plated standards on its suppliers — in driving some of the supplier companies into a position where they cannot be internationally competitive. In that context, I am anxious to defend jobs in Coventry.

Mr. Orme

That does not alter my argument. No one is saying that BT has been perfect in the past or that it cannot improve in the future. No one has said that there is no room for British manufacturers to improve, but some of this equipment can be dangerous or lethal if it is not correctly made. British safety standards are second to none. If we are not careful we shall import equipment that does not match those safety standards and, as a consequence, undercut British manufactured products. That would be dangerous to the consumer and to the whole network.

Mr. Marlow

Is not the right hon. Gentleman indulging in a certain amount of impractical rhetoric? He is asking the Government to ensure that BT buys British. Is he not aware that we have treaty obligations towards both the EC and GATT which prevent the Government from taking such a direct role?

Mr. Orme

When the hon. Member for Northampton, North (Mr. Marlow) and I have taken Britain out of the Common Market, we will have removed one major obstacle. The countries to which I have referred—Sweden, West Germany, Japan and the United States—and from which much of the equipment could come are, apart from West Germany, non-EC countries. The main problem, as with motor cars and high technology, will come from the Japanese, not the EC. I make that point because new clause I will open the door to the very thing to which we are opposed.

I have said enough and my right hon. and hon. Friends have many other points to make.

Mr. Richard Shepherd

I am surprised that the right hon. Gentleman should say that the main problem is that someone else provides us with something cheaper. Is that really what the Opposition spokesman intended to say? It is clearly in the interests of the country that we pay as little as possible for the goods that we buy, so long as they meet the criteria that we want in the market place. Therefore, that should not be the problem. The problem is to get our suppliers to provide the same standard and price as our competitors.

Mr. Orme

The hon. Gentleman appears to be missing my main point, which is the preservation of jobs in British manufacturing. I accept that criticisms can be made. I accept that improvements can be made in competitiveness and in meeting order deadlines, but that should be based on the overwhelming desire to purchase British goods. To date, the policy of BT has been to buy British, and that should remain the policy of the company. This issue involves thousands of jobs in the manufacturing sector, which has been decimated over the past three or four years. That is what I am trying to protect. A major company, whether it be British Telecom or the British Oxygen Company, should maintain a policy of buying British.

Mr. Richard Shepherd

We are therefore forcing our consumers and our national companies to pay more than they need do. If one pushes them down that road, one will put other jobs at risk. One must contrast the jobs that the right hon. Gentleman now identifies as being at risk—presumably through inefficiency or failure to meet the market criteria—with those that would be viable but for the charges that would be pushed on to BT as a consequence of his policy.

Mr. Orme

The hon. Gentleman should bear in mind that his Government have seen the necessity of maintaining jobs in British Leyland and in British Steel on the basis that we need a motor car industry and a steel industry. We may have disagreed about the approach, but, nevertheless, large subsidies have been given and demands for efficiency and improved output have been made. Considerable improvements have resulted. That would happen with the provision of telecommunications equipment. What will be the cost to the nation of 30,000 or 40,000 people on the dole? That is the argument. While we are interested in creating jobs, I am now talking about maintaining jobs.

I have covered some of the important effects of the Bill. The Minister made virtually a Third Reading speech which covered the ambit of the Bill. That was inevitable when discussing a wide-ranging clause that covers the powers of the Director General and the Secretary of State.

6 pm

Mr. Temple-Morris

I am grateful to you, Mr. Deputy Speaker, for calling me at this early stage of the debate, not least because I had the pleasure and privilege of moving the "rural" amendment. The concessions that amount to new clause 1 resulted from our Committee debates and arose from the so-called "rural" amendment, which enjoyed the support of both sides of the Committee. I moved also the "international" amendment, which has resulted in new clause 1(2)(d) to (h) Again, the amendment enjoyed the support of both sides of the Committee. The Government's concession is set out in the part of the new clause to which I have referred. I wish to put that in the most charitable way because I feel that the Government are anxious to tidy up that part of our beloved old clause 3.

I do not intend to follow the speech of the tight hon. Member for Salford, West (Mr. Orme) word for word. I shall not do so as I have a sneaking suspicion that this is not the end of the matter. Their Lordships in another place may develop a tremendous affection for the clause when it reaches their House. The right hon. Gentleman referred to the speech of my hon. Friend the Minister for Industry and Information Technology as a Third Reading contribution. I suspect that it is not the final Third Reading speech that we shall hear from him. No doubt we shall hear much from him about old clause 3, which is now replaced by new clause 1.

As I have said, I agree entirely with the Bill, but when we take a public monopoly into the private sector it is necessary to establish statutory controls, and that is when we find ourselves in a dilemma. With the establishment of those controls we get into the arguments that were advanced in Committee about the extent of the controls. I appreciate the pressure that must be being placed on my ministerial colleagues by British Telecom. Once we unshackle BT and encourage it to be part of the brave new world of private enterprise, it should be allowed to be fully competitive. On the other side of the coin, we are creating a private monopoly with what could be an unfair advantage at the beginning over other organisations with which it is meant to compete. That is the dilemma. It is one that creeps into the new clause and it will probably do so when we discuss subsequent clauses.

I wish briefly to examine how the new clause lives up to the spirit of the concessions that were made in Committee. I said earlier that I did not want to be uncharitable. Indeed, I am grateful to my right hon. and hon. Friends in the Department of Industry for introducing the new clause, which is a marked improvement on what went before. It achieves a better balance overall. If I appear to be detailed or semantic, I shall be adopting that approach for the benefit, I hope, of what eventually becomes the Telecommunications Act.

I am sad that my hon. Friend the Member for Northampton, North (Mr. Marlow) is no longer in his place. When rural areas are mentioned in Committee or in the Chamber he breathes fire and brimstone on behalf of his constituents. However, when he made an eloquent intervention on behalf of his constituents, my hon. Friend the Minister for Industry and Information Technology replied to the effect that he recognised that there was considerable concern in the rural areas but one could not escape the fact that many of the services within them have been loss-makers. The accounting practice of BT did not allow it to assess whether rural areas were loss-makers. It is obvious that the services in rural areas will be put in jeopardy unless they are looked after, and that is what all the fuss is about. That is why they are specially included in the new clause and have always been included in the Bill.

This has to be a more expensive approach and I recognise that the services are already in jeopardy. It is a matter of considerable concern to those in rural areas that telephone boxes are already being removed. There is a great reliance on the telephone in remote areas. Petrol is becoming more and more expensive and it is increasingly difficult for those in remote areas to go to the nearest town. Village shops are closing and so are schools and churches. Rural deprivation is clearly a matter of concern.

In the rural and remote areas there is the absence, of course, of the urban money spinner—big business. It is in that sector that money can be made out of the brave new technology. I have seen the admirable exhibition of telephonic and communications equipment in an area adjacent to the Committee Corridor, which I understand my hon. Friend visited last Thursday. It is clear that many of the services there exhibited will benefit the rural areas, but the big business money spinners are not to be found in those areas. Probably the constituency of my hon. Friend the Member for Northampton, North has a more lucrative base than that which exists in the constituencies of Leominster or that of my hon. Friend the Member for Hereford (Mr. Shepherd), or of those of other of my hon. Friends who are in their places.

As I have said, I am concerned about whether the new clause measures up to the pledges that were given in Committee. I look forward to the reply of my hon. Friend the Under-Secretary of State, who gave the various undertakings in Committee. My hon. Friend was extremely lucid and brave when he addressed the Committee—perhaps he was slightly fatigued—at 7.25 am, having been up all night. He had to answer many questions and queries. He may agree that the sentences that I am about to quote form the most important part of that speech. My hon. Friend said: I accept that it may be appropriate to place the Secretary of State under a duty —I wish to emphasise that "duty" appears quite frequently in the various pledges that have been made— to ensure that certain services will be provided through his power to impose obligations when issuing licences. Therefore, I shall consider amending clause 3 to provide that the Secretary of State and the Director General should have a duty when issuing and amending licences to ensure that telephone services will be provided throughout the United Kingdom, subject to the test of the reasonableness of the demand and practicability of supplying the services. I am grateful that the somewhat semantic argument that we had in Committee about what would be practicable or unpracticable has been concluded in the form of the new clause. I am grateful to my hon. Friend the Minister for Industry and Information Technology for introducing the clause.

In Committee my hon. Friend the Under-Secretary of State went into the structure of what has now become the new clause. He then reached the most important part of his reply. He said: I am anxious to help the Committee and it may be helpful to put before Committee Members the sort of amendment, in terms that we can now define, that I would be prepared to introduce on Report. It would read roughly as follows:". There then appears the long passage within quotation marks in column 687, which appears in the fourth part of the Hansard report for the so-called afternoon sitting. About halfway through the outline of what the Government expected to introduce as a new clause is the word "duty". It is to be found in the seventh line of the passage within quotation marks. The passage reads: subject to this duty, take into account all matters which appear to them in the particular circumstances to be relevant and, among other things, shall have regard to—(a)".—[Official Report, Standing Committee H, 1 February 1983; c. 686–87.] That "duty", to which I shall not refer, is a reference to call boxes, emergency services and services in rural areas. We then have the words "subject to this duty", and the draft continues as I have quoted.

When the Minister of State referred to the matter in his very helpful speech today, he made a mass of references to "duty". He said that new clause 1 imposes duties on the Secretary of State and the Director General. He said that it imposes positive duties, that it imposes a series of duties, and that subsection (1)(a) is the paramount duty. I was glad to hear all that, and it helps me to favour the clause. However, although we heard much about duty in Committee and in the Minister of State's speech today, what counts is what is actually in the clause. I should be grateful if the Under-Secretary would take up this point in his reply.

I have not had time to check thoroughly, and my knowledge of the law is sometimes a little rusty, but, as far as I remember, I was taught that the heading or marginal description of the clause was not part of the statute but only a guideline to the contents of the clause. I may be wrong on that point. I am trailing my coat to elicit a reply, just as, to give further notice to those sitting in the Civil Service Box, I interrupted the Minister of State.

Mr. Golding

The hon. Gentleman should take into account Government amendment No. 10, which inserts the word "duties" into clause 8.

Mr. Temple-Morris

Yes, indeed. I believe that the hon. Gentleman is referring to an Opposition amendment.

Mr. Golding

I understand that the Government have tabled an amendment—

Mr. Kenneth Baker

indicated assent.

Mr. Golding

The amendment would delete the words: matters mentioned in paragraphs (a) to (e) of section 3(1) above", and replace them by a reference to "the duties" outlined in new clause 1.

Mr. Temple-Morris

I am grateful to the hon. Gentleman for that helpful intervention. It strengthens what I have to say. The word "duty" ought to occur in the body of the clause. If there are further amendments that refer to "duties", and the description of the clause refers to "duties", it seems strange that the word "duty" does not appear in the body of the clause. I shall be interested to hear the Government's reply on amendment (a) to new clause 1, which would insert the word "duty" into the clause.

It appears from the intervention of the hon. Member for Newcastle-under-Lyme (Mr. Golding), from what I have said about the Committee stage and from my hon. Friend's speech that everyone is presuming the existence of the duty. I invite the Minister to tell us where the presumed duty appears in the body of the clause. Subsection (1) of new clause 1 states that The Secretary of State and the Director shall each exercise the functions assigned to him by this Part in the manner which he considers is best calculated". There is no reference to duty there. The clause does not even refer to "the duties and other functions" or "the duties and desirabilities", but merely to functions. Those trying to form some idea of what the clause is about will not give precedence to the marginal note: General duties of Secretary of State and Director". They will look at the body of the clause and see the words: shall … exercise the functions assigned to him"— no reference to duties— in the manner which he considers is best calculated". If I remember rightly, that is what is known as the subjective test. The Secretary of State or the Director General is to act in the manner that he considers is best calculated to preserve the rural areas, the telephone boxes, or whatever it may be.

This point is very important to the understanding of the clause. That is the reasoning behind my comments about a fundamental dilemma. I am tempted to say that new clause 1 is a skilful regurgitation of our beloved old clause 3. It has been further strengthened and is a better clause, but it does not take us as far as I believed we were to go.

6.15 pm

My hon. Friend the Minister of State said that there was no need to put the word "duty" into the body of the clause and that the words The Secretary of State and the Director shall each exercise were sufficient and amounted to a duty. Our beloved clause 3 is full of the word "shall". I know that that clause concerns the guidelines. Clause 3(1) reads: In exercising the functions assigned to them by this Part the Secretary of State and the Director shall take into account all matters which appear to them in the particular circumstances to be relevant and, among other things, shall have regard to"— and so on. I feel that we have not got what we are entitled to. I hope that the Minister of State or the Under-Secretary will have an answer to put my mind at rest. I am concerned about the rural areas, bearing in mind that we are dealing with a great new technology for the future and a completely new concept, which in many ways means that we are crossing all manner of frontiers.

I do not want to appear too semantic. I apologise if I have been. I believe that my points are valid, bearing in mind that they result from amendments that I originally moved in Committee and undertakings that were given to me in Committee by my hon. Friend the Under-Secretary of State.

New clause 1(1)(b) seems to be a bit of a nightmare. The old conflict between clause 3(1)(a) and 3(1)(b) is creeping in. It was discussed in Committee again and again. I think that the word "regurgitation" is appropriate. New clause 1(1)(b) reads, as an American might say, "fancy", but it comes to the same thing. Phrases such as without prejudice to the generality of paragraph (a) above seem nightmarish to construe. Those words mean that if someone cannot afford to provide the services, something different applies. I have doubts about that. There should be more justification than there has been hitherto for the difference from the beloved clause 3, with its various difficulties.

I shall raise some specific queries which are relevant. I could come back to them on Third Reading, but that might be too late. They were mentioned in Committee, and caused considerable concern. The reason is that we do not have the licence and, I dare say, will not have the licence until the Bill becomes law. This has been of concern to many hon. Members on both sides of the Committee. Therefore, these queries must be made. My hon. Friend the Under-Secretary of State tried valiantly to deal with almost everything that was put to him. I believe that this query went past him in the early hours of the morning. It is concerned with paragraph 19(c) of the important document called "Ringing the Changes". It is crucial. I shall return to this point on Third Reading or later if we do not get an answer. We must have a further explanation.

In paragraph 19(b) various duties are put on BT to provide ordinary voice telephony everywhere and advanced services in all areas except those where there is insufficient commercial demand for them. BT has the duty to provide those services. There are various other references to the duties of BT. According to paragraph 19(c), BT will not have to supply if someone will not pay BT the cost of supplying a person with a service. That means that there is a possibility of pricing out or raising one's charges so that they become impossible to pay. I know that the hon. Member for Newcastle-under-Lyme is also concerned about the balance between paragraphs 19(b) and 19 (c)

Mr. Golding

Will the hon. Gentleman advise me on this point? If the Minister and Secretary of State were taken to court, as the hon. Gentleman described in Committee, to enforce subsection 1(a), would the court be bound by the restrictive definition of "all reasonable demands" in the licence or could the court take a more reasonable and just view of what "reasonable demands" means?

Mr. Temple-Morris

It depends who the action was against and who the parties were. If the Secretary of State or the Director General were taken to court, what is in the clause is vital. It is on that that they will be judged. The licensee comes into the picture when the Secretary of State or the Director General wants to enforce matters against BT. If they tell BT that they have not supplied Mrs. Bloggs, BT can refer to clause 19 as the reason. Some people may argue that that is a semantic point. I do not believe that it is as it concerns rural organisations, including the National Farmers Union, Rural Voice and everyone else. They want and deserve an answer.

Public call boxes have been mentioned. There may be considerable delay before vesting date. Because that process has already begun in rural areas, there is anxiety about security for those areas against BT. It is feared that, perhaps before the appointed day, it will get as lean and fit as possible by getting rid of as many public call boxes as it can, before the licence conditions outlined in "Ringing the Changes" comes into force. An assurance from the Government on that point is desirable. I hope that I have not repeated myself. I am grateful to have had the opportunity to speak.

Mr. Stan Thorne

I must deal with some of what the hon. Member for Leominster (Mr. Temple-Morris) said. In reply to my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding), he appeared to suggest what I have long believed—that the law is interpreted according to who takes action against whom in a court of law. If a Minister or Secretary of State is taken to court because of the failure of a licensed provider to provide the required type of service, the court will interpret "reasonable", however the Secretary of State defines it. Those who have difficulty because of a lack of money or for various other reasons will have another problem if that is how the law will operate.

It is unfortunate that the Report stage involves some repetition of the arguments that are made in Committee. As my hon. Friend the Member for Blaydon (Mr. McWilliam) said, the amendments to new clause 1 would be better dealt with in Committee. They are significant, although they appear to be simple, as they clarify the nub of the clause.

In essence, we are debating the competition which the Government are trying to introduce against an existing service. The Government have a responsibility to prove beyond doubt that increasing competition in British Telecom will not result in a diminution of service. So far, both in Committee and today, they have failed miserably to produce such overwhelming proof.

I was sorry to learn today that the Minister has been adopted for a new constituency. In Committee I revealed that the Government had taken my seat away. People in the Preston area have now selected me to contest the new Preston seat. Therefore, I issue a challenge to the Minister. He should seek adoption as the Conservative candidate for the new Preston constituency. That would give us an ideal opportunity to debate the implications of the Bill. The probable outcome would be that the Minister would lose his seat. I could not regret that, because it would mean that it would be possible to argue what the Government have denied about a variety of recent legislation. It could be said that the people have completely rejected the privatisation of BT. Will the Minister agree at this late stage to withdraw from his Surrey constituency and come to Preston? We could have an excellent campaign debating this issue.

Mr. Kenneth Baker

I must resist that temptation, as I am sure that the hon. Gentleman would resist the temptation to come down to Surrey to advance his case that the interests of the consumer and the telecommunications industry are best promoted and supported by the continuity of monopoly. I am sure that that will not be the case.

The hon. Gentleman and I will stand for different seats in different parts of the country in the forthcoming general election, but the Conservatives will set out clearly in our manifesto that if we are elected we intend to privatise BT. We intend to sell 51 per cent. of BT. We shall put that argument to the country. It will be one of the many issues at the election and people will be invited to decide accordingly. If, as I expect, we are returned to power, we shall have a clear mandate, reinforced by the country, for our policy.

Mr. Thorne

The Minister has made an interesting set of observations, but, as usual, they are far from reality. I reject completely the suggestion that the Conservative party is capable of winning the next general election, but let us assume—

Mr. Deputy Speaker

Order. Perhaps I should have intervened immediately after the Minister spoke to say that this has nothing to do with the new clause. I hope that the hon. Member for Preston, South (Mr. Thorne) will not follow that track too far.

Mr. Thorne

I shall respect your ruling, Mr. Deputy Speaker. I had intended to talk about percentages, but perhaps I had better not pursue that line.

The Government have a responsibility to promote a competitive telecommunication industry. They also have a responsibility to promote the service that people not only expect but receive from BT. It is inevitable that I shall have to refer to specific parts of new clause 1.

I do not want to repeat the valuable point that the hon. Member for Leominster made. In spite of his political affiliations, he clearly has a grasp of the loss of service that his constituents will suffer should the clause go through as it stands. Subsection 1(a) uses the words: The provision thereof is impracticable or not reasonably practicable". The hon. Member for Leominster suggested that that was a major improvement on the original wording of clause 3. A good solicitor, barrister or judge could drive a bus through that sort of wording, given certain circumstances.

6.30 pm

With regard to emergency services, I understand that there is a recognition within BT that doctors have a special role in the community. Doctors can be called upon at weekends and during the night, when most of us are asleep. There are urgent cases when people, in order to help people who are dear to them, call out doctors. Hospitals also have emergency calls on their services.

If private operators are merely concerned with what is profitable rather than with the service that they should be providing to doctors and hospitals, they may seek to argue that it is "not reasonably practicable" to attend to the particular repair or deficiency within the telecommunications system. Such an attitude will be totally unacceptable.

At present it is possible for BT to provide proper maintenance and repair facilities, on the basis of recognising the need for a public service. My experience tells me that private companies in search of private profit are less concerned than public services about the facilities that they provide to their consumers. The hon. Member for Aldridge-Brownhills (Mr. Shepherd) shakes his head. That was his practice in Committee when Labour Members suggested that people in search of profits might not necessarily provide good services. I am sorry that he feels that way about it, but that is our total experience of life within a society in which profit is the motive for production.

Mr. Richard Shepherd

We have been over this ground many times, but I remind the hon. Gentleman that most enterprises find that the way to profit is by providing a good service. The consumer makes a judgment in terms of price and service. Generally speaking, it is only where a monopoly is involved that the quality of service to the consumer tends to be ignored. That is the complaint that the general public have frequently levied against monopolies. That is why Conservative Members have been so concerned to ensure that the regulatory function protects the consumer against a monopoly. The hon. Gentleman, who passionately espouses Socialist policies, should recognise that, generally speaking, the public do not think that they have had the fairest deal possible from state monopolies.

Mr. Thorne

It could be argued that the National Health Service is a form of state monopoly, but very few people who have had occasion to be a patient in a British hospital would complain about the service they received from that sort of monoply. Service to the public has always been at the forefront of BT's endeavours. We are perturbed that that service is likely to be eroded following the introduction of the profit motive. Shareholders seek to make profits by the shortest and best route and not on the basis of providing services. Therefore, public call box services, emergency services and rural area services are likely to suffer when the motive is private profit.

The hon. Member for Leominster made a valuable point when he referred to subsection (1)(b) of the new clause, which contains what I regard as a banal provision. How is the provision to be determined? I do not know whether the Minister of State is interested in the remotest degree in what I am saying, but I hope that the Under-Secretary of State will be able to say what is meant by without prejudice to the generality of paragraph (a) above, to secure that any United Kingdom operator by whom such services fall to be provided is able to finance the provision of those services. How is that provision to be determined? Who is to determine it? Is it to be determined before a licence is issued to an operator, or is it to emerge from experience or knowledge of the way in which an operator is or is not able to meet the necessary financial commitments?

Subsection (2)(a) refers to the promotion of the interests of United Kingdom consumers. I do not want to revert to the point made by the hon. Member for Aldridge-Brownhills, but over the weekend I had a particularly unfortunate experience as a consumer. It was not a telecommunications problem, but one that arose in connection with my motor car. The service that I was offered was ridiculous. I was told, "We cannot do it—come back on Monday." Is that to be the sort of service that we provide to consumers under the new clause? Will consumers be told that, even in special circumstances, services will not be available because they are not profitable? Will that be the criteria when services are required outside normal hours? Is that how BT is to operate in private hands? Private operators may well find that paying people to provide services during weekends will be a little more expensive than paying them for services provided during the week.

Mr. Richard Shepherd

Is not the hon. Gentleman's experience that it is very difficult for many people to get their telephones repaired at the weekend? The hon. Gentleman and I, as Members of Parliament, may have special provision made for us, but the ordinary consumer does not necessarily have that degree of attention.

Mr. Thorne

I am always conscious that it may well be the case that Members of Parliament, simply because they are Members of Parliament, from time to time receive privileges that they should not receive. We should seek to ensure that people receive services on the basis of equality. I am sure that the hon. Member for Aldridge-Brownhills would not, simply because he is a Member of Parliament, seek to lean on some supplier to get a special dispensation. We do not have an ideal world, and we are not likely to get it as long as the motivation for production is profit. We shall get the best possible service only when the motivation is production for use and not for profit.

Subsection (2)(c), to promote efficiency and economy on the part of United Kingdom operators", is particularly relevant to some of the interventions of the hon. Member for Aldridge-Brownhills. If a person has to keep his eye on costs while attempting to promote efficiency, it will mean that efficiency will sometimes be sacrificed in the interests of avoiding increased costs.

No private entrepreneur will deliberately cut corners to achieve a profit, but, because he is in competition with others providing a similar service, he has to take into account what those others are doing on the provision of services and products and cutting costs. Inevitably, he will cut costs to avoid losing money.

One of the speediest ways of cutting costs is to cut the labour force. That is what has happened in most of our industries. Labour represents the highest cost to most manufacturers and if they are in financial difficulties they seek to cut the size of their labour force, which results in increased unemployment.

Mr. Richard Shepherd

I imagine that when the hon. Gentleman's wife shops for food for his family she is pleased that she has a choice between suppliers who compete against each other to offer her the best service at the lowest price. The choice of food-retailers — Sainsburys, Safeway, International Stores and others —allows shoppers to check that they do not make excess profits or rip them off. If a store attempts to do that, a shopper can go somewhere else.

The hon. Gentleman referred to the difficulty that he had in getting his car repaired, but he has a choice of garages. There is no choice in the supply of telephones, and the introduction of competition and the ability to reduce costs through that discipline are tremendously important. The hon. Gentleman must try to understand the advantages that his family gain from competition in most areas, and he should extend that principle, on behalf of us all, to the provision of telecommunications.

Mr. Thorne

I am not sure whether the hon. Gentleman thinks that I or my wife ought to understand things. I regret that she is not here, but I am sure that she could give a good reply to what the hon. Gentleman said about competition and choosing between supermarkets.

My wife has read a little about economics and she recognises that those oligopolies fix prices so that they can all make fulsome profits. If they were eliminated, the prices of many goods would be reduced. If those oligopolies were in public ownership, we could do something about the price mechanisms and restrictive practices that they operate.

I am sorry to have taken so long, but the hon. Member for Aldridge-Brownhills has obviously not prepared his own speech and thinks that he can intervene frequently and make a speech every two or three minutes. He may wish to do so again after my next remarks.

6.45 pm

Subsection (2)(d) refers to the promotion of research into and the development and use of new techniques". Where will the new investment come from? I understand that savings in Britain total about £20,000 million a year and that about £1,000 million per month is exported and invested in overseas companies that sell their goods here and undercut our manufacturing industry.

One of the fears of BT employees is that the importing of equipment for BT will take off after privatisation. A substantial proportion of BT's equipment is bought in the United Kingdom. I do not have the precise figures with me, but I am sure that my hon. Friends could provide them.

Mr. Orme

The figure was given earlier. About 95 per cent. of BT's equipment is British.

Mr. Thorne

That must be applauded, because it means that BT recognises that importing goods means exporting labour and, thus, increased unemployment. Privatisation is likely to have precisely that effect.

I know that some of my comrades wish to take part in the debate—[HON. MEMBERS: "Comrades?"] I see a number of hon. Members on the Opposition side who are my comrades. There are some exceptions, most of whom are SDP Members.

Subsection (2)(h) refers to maintaining and promoting competitive activity. That is where I began. The Government regard the promotion of competitive activity as the raison d'etre of virtually all their legislation. It may be five or 10 years before the damage that the new clause will cause to our telecommunications industry becomes apparent. Of course, that depends on the Government's winning a majority at the next election. Last week I spent four days in Darlington, and, although the Labour party had a very good candidate in Mr. Ossie O'Brien, it was the general presentation of Labour party policy that won us that seat.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

Order. The hon. Gentleman must get back to the new clause.

Mr. Thorne

I was seeking to do so. My argument is that the clause will do irreparable damage only if the Government are returned to power at the general election. I believe that that will not happen.

Mr. Donald Stewart

Needless to say, I shall not follow the hon. Member for Preston, South (Mr. Thorne) down the Darlington road, as, understandably, in that instance I am an innocent bystander between the Opposition and Government sides of the House.

The only thing that can be said for the new clause is that it is a decided improvement on the original clause. The hon. Member for Leominster (Mr. Temple-Morris) is due the thanks of both sides of the House for having suggested the new amendments, although they still leave a good deal to be decided, particularly by hon. Members such as myself, who represent rural areas that will suffer if the Bill goes on to the statute book.

Perhaps with the exception of the right hon. Member for Orkney and Shetland (Mr. Grimond) I have the most scattered constituency in the country. One of the most important facilities is the telephone. Communities that are extremely remote depend, as the Minister said, on the telephone as a lifeline. Any threat that that lifeline might be removed or diminished is a great threat to my constituents. I think of one community in a place called Rhenigidate on the island of Harris which is six miles from the nearest road. Recently, two incidents there put life at risk. Had it not been for the availability of the telephone, these matters might have been a great deal more serious than they turned out to be.

The Minister referred to rural lines and said that some may be cheaper because they are overhead. However, a number of the lines in my constituency have been buried, I believe on the ground that that would save maintenance. There still remains the question, in spite of the safeguards that the Minister sought to assure us were in the new clause, of who will pay for the cost of repairs. In many of the areas and no doubt in other parts of the country, overhead lines are brought down by inclement weather, ice and so on. Who will pay for the cost of maintaining the lines and repairs?

Mr. Kenneth Baker

I understand the anxieties of the right hon. Gentleman about the telephone in his remote constituency. I know only part of his constituency—I know Wester Ross, which looks out on his constituency, rather better. I am aware that in the western Highlands the provision of a telephone is an important service. I assure him, as regards the provision of the telephone, that under the existing legislation it is up to BT alone to decide whether to provide service. Under the Bill, that obligation is extended widely to involve the Secretary of State and the Director General both of whom, in the decisions that they make, have to be satisfied that a universal telephone service and beyond that a telecommunications service is provided. That represents a substantial increase in safeguards over existing legislation. The right hon. Member asked who would pay for cost of repairs. At the moment BT does that and in future BT, the provider of telecommunications, will continue to do so.

Mr. Stewart

I thank the Minister for that reply. He says that BT makes the choice. There is no doubt that that is so, and nobody has suffered any great loss because that was so. To the best of its ability, BT has provided a good service. There were faults here and there, even so. I have written to the general manager of BT over the years, and the faults have been rectified as much as it was in BT's power to do so. Therefore, there is no great demand for changing the present system. BT has to make judgments, but it was widely accepted that in most cases a fair judgment was made.

Mr. Orme

Since the British Telecommunications Act 1981 and the liberalisation that has taken place as a result, a limited number of phone boxes has been closed by BT on the basis that they were no longer profitable. We are going down that road slowly but surely, and the right hon. Gentleman is right to emphasise that the telephone booth, or the public call box, and the service to the subscriber are of major importance.

Mr. Stewart

I have noticed that in my area. Recently, I also noticed that two of the kiosks were not of the ordinary metal type seen about in the rest of the country and the rest of my constituency but were composed of concrete blocks with the instrument provided by BT. One wonders whether the standard of kiosk will be maintained in the future.

Mr. Roger Stott (Westhoughton)

With regard to the right hon. Gentleman's point about maintenance, is he satisfied with the Minister's answer? At the moment, BT is obliged to maintain the equipment that it provides and the subscriber pays no charge for the maintenance of equipment, apart from the rent of the instrument from BT. If, under the new provisions in the Bill, BT is obliged to sell the instrument, it may be that his constituents and mine in the future will have to pay excessive amounts of money in maintenance costs, particularly his constituents who live in remote rural areas that are subject to storm damage.

Mr. Stewart

I assure the hon. Gentleman that I am against the purpose of the Bill. I am seeking to try to get as many assurances as I can from the Minister before the Bill is put on the statute book, if it is.

As to amendment (b), the clause, as amended, should be suitable, and even acceptable to the Government, as long as there is provided throughout the United Kingdom such telecommunications services as satisfy all reasonable demands. In other words, the expression save in so far as the provision thereof is impracticable or not reasonably practicable seems a little alarming. I hope that the amendment will be accepted. Amendment (a), which provides that after "shall" there will be inserted "have the duty to", would, however redundant it may be regarded in legal terms, save much disquiet.

I have great doubts about maintenance if the Bill goes through as it is. We have had a good service and we recognise that ours is a difficult area. Within the financial restraints of BT headquarters in Aberdeen, BT gave consideration to any requests for extending the service. I doubt whether that will continue. We should have more assurances that the same standards as elsewhere will be maintained in the services and that there will be adequate pressure to ensure that this will be the case. Unfortunately, it appears that the uniform national prices will come to an end, and undoubtedly the service in rural areas and special services will suffer as a result.

It has been said that there has been no choice, but there has also been no complaint because this was a national service that was serving the public well. The Bill is a great mistake, but I hope that these amendments will be accepted by the Government.

Mr. Farr

I welcome the Bill. I begin by referring to the remarks of my hon. Friend the Member for Leominster (Mr. Temple-Morris) about his concern about remote rural areas. His constituency of Leominster, which I am privileged to know quite well, is second in its natural beauty only to my own. It has one thing in common with my constituency. They both contain large remote rural areas. Therefore, both of us have a real concern about some of these isolated villages. In my constituency, some of them are merely hamlets—groups of houses round a crossroads. At the moment, they have a service by telephone kiosk, which is essential and must be continued.

7 pm

In a very interesting speech, my hon. Friend the Member for Leominster expressed concern about the wording of new clause 1 and said that he hoped that amendment (a) would be accepted, adding the words "have the duty to". I go some way with my hon. Friend. If we highlight only the important words in subsection (1), we see that, as amended, it would read: The Secretary of State and the Director shall have the duty to each exercise the functions … to secure that there are provided throughout the United Kingdom … including, in particular, … services in rural areas. Earlier, we had an assurance from the Minister that there would be no price discrimination against rural area call boxes. He also said that rural services would continue to be available to meet all reasonable demands. Finally, he said that British Telecom could be directed by the Director General to take certain steps to protect rural areas and matters of that nature. That being so, I am not prepared to go the whole way with my hon. Friend the Member for Leominster and treat the new clause with the probably quite justifiable suspicion or concern that he expressed.

I ally myself firmly with my hon. Friend the Member for Leominster when he stresses the importance of the rural call box. It is not fair to have as a yardstick that if it does not take £200 per annum it is not viable. As the hon. Member for Berwick-upon-Tweed (Mr. Beith) pointed out, rural telephone kiosks often exist at crossroads where little hamlets are located. Most of their traffic is not generated by people picking up the receiver and putting in money for lengthy calls. Essentially, they are key points in remote and scattered areas. Often calls are made by people who stop and use a system that they have devised whereby they dial the number that they require and, as soon as they hear the telephone at the other end ringing, they replace the receiver and wait for the person at the other end to ring back.

The rural telephone box is an essential part of village and hamlet life in the United Kingdom.

Mr. Beith

Does the hon. Gentleman realise that what happens in many cases is that a 5p or 10p coin is used by a stranded driver to establish contact and provide the call box number but that revenue accrues to British Telecom from the return call which goes on to the account of a subscriber somewhere else? Large amounts of revenue must accrue which never feature in calculations about whether rural telephone kiosks should remain in place.

Mr. Farr

The hon. Gentleman has made another valid point. This is all hidden revenue. The money is coming in, although it is not credited to the telephone kiosks in question. But there is no doubt that they generate income for British Telecom.

Mr. Kenneth Baker

I do not want my hon. Friend to have the impression that all telephone kiosks which generate revenue of less than £200 are closed automatically. That is by no means the position. When the revenue is very low—and sometimes it may be only £10 or £20—the future of the kiosk is looked at together by BT and POUNC. I am the first to accept all my hon. Friend's arguments. To rural communities, the telephone kiosk service is very important. I know of some in the Western Highlands which are literally in the middle of nowhere, but they are very important for travellers and, in that part of the country, for shepherds as well.

Mrs. Elaine Kellett-Bowman (Lancaster)

And in the Pennines.

Mr. Baker

I am quite sure that they are.

The arrangements for closure are not changed by the Bill. We are giving additional guarantees on the face of the Bill. Never before in our legislation has the responsibility to provide a telephone kiosk service been recognised. I assure my hon. Friend and other hon. Members who share his concern that the position is being strengthened by the Bill.

Mr. Farr

I am grateful to my hon. Friend for that lengthy and valuable intervention, which will provide reassurance to many hon. Members who represent remote areas.

I touch upon another matter affecting rural areas and villages which has not been mentioned so far. My hon. Friend the Member for Leominster talked about the closure of schools, which we have all suffered. The loss of a school is a tragedy for a village that has a heart. But in many of our villages the local sub-post office is also under threat. I wonder to what extent the Bill will affect the future prospects of sub-post offices in many of our villages. At the moment, the authorities in British Telecom are most sympathetic and very helpful. They do their best to keep sub-post offices open, especially if they see a real social need for them—for example, so that people may collect their pensions, buy their stamps and make telephone calls. What will be the position of sub-post offices, and will their future in our villages be prejudiced if the Bill is passed and British Telecom call boxes are dealt with in the way proposed?

I listened carefully to the Minister's remarks about the Director General. It seems to me that with all his duties he could be described as a sort of British Telecom ombudsman. In a way, many of his duties will be similar to those of the Health Service Commissioner and the Parliamentary Commissioner. As my hon. Friend said, he will be separate from political control and will be the umpire and arbiter in many disputes.

I should like to see the duties of the Director General in respect of rural telephone kiosks and other matters specified in a series of guidelines which Parliament could debate and approve. It may be that my hon. Friend will consider introducing some such provision at a later stage. But after the Bill is enacted, the Director General will be a man of considerable influence and importance, and I cannot help feeling that it would not have been inappropriate to introduce an order specifying the numerous duties with which he should concern himself so that Parliament might debate it at some later stage.

I welcome the provisions for deaf and blind persons and the Minister's assurance that disabled people in general will be no less protected and helped than they are, quite properly, now.

I have been in touch with the Minister about the Bill because I have received a lot of criticism from my constituents and through the post that centres round four main points. My criticisms do not relate to rural telephone services, but there are other criticisms that are unnecessary and untrue which have been brought about because the Government's public relations about the purposes of the Bill have been bad.

I have often had arguments put to me by constituents who are against the Bill who have made fanciful and outrageous suggestions about its effects. I have had great difficulty in countering those arguments because I have been short of valid information. I received so many criticisms that I wrote to my hon. Friend the Minister some months ago. He confessed that British Telecom and the Government thought it improper at this time to approach employees of British Telecom to point out the Bill's favourable aspects. No doubt the reasons were ethnical but, unfortunately, the result was that many people throughout the country who work for British Telecom have formed a jaundiced view of some of the Government's proposals. With the exception of questions about the rural telephone services and the Bill's effect on the services for the disabled, I have had great difficulty in answering questions that have been put to me about the Bill's effect on the security of messages of national importance. A fanciful figure has been flying about the city of Leicester and the county that 45,000 jobs will be lost in British Telecom when the Bill is enacted.

Several remarks have been made to me by my constituents about the impropriety of the sale of British Telecom to the public. I have told my constituents and others who have raised such questions that I will take the matter up with the Government. My view is that in the long run the Bill will prove best for British industry, British Telecom and my constituents in general.

Although I am convinced of the necessity for the Bill, which will bring our telephone service right up to date and even ahead of time, I trust that my hon. Friend the Minister will examine the possibility of countering some of the fabrications that are circulated by enemies of the Bill, the scaremongering stories and the absolute nonsense that are causing great anxiety in many remote and rural areas, and are putting some of the Bill's supporters in a difficult position.

7.15 pm
Mr. Charles R. Morris

I listened carefully and closely to the Minister of State's speech when he moved new clause 1, and in his preamble I felt that he made an outrageous charge.

He suggested that needless anxiety had been generated about the Bill's implications by those whom he described as having a vested interest in the status quo. That argument would have carried greater conviction had it not been made by a Minister who moved a new clause that completely rewrote clause 3 because of the validity of anxieties expressed about the Bill.

My anxieties focus on the four main points referred to by the hon. Member for Harborough (Mr. Farr). He referred to the impact of the Bill on the 235,000 staff of British Telecom. A proposal in a document entitled "Ringing the Changes", which the Minister made available to the Committee, stated that the licence to operators granted by the Director General and the Minister would oblige British Telecom to provide 999 services by means of operators who are employed by British Telecom if the Director General and British Telecommunications agreed that the service could be provided by other means. If that proposal were implemented, there would be an immediate impact on the staffing of switchboards by telephone operators. The Minister said that the anxieties regarding the impact of the Bill on BT staff were needless.

The Minister has rightly reacted to the understandable anxiety that was expressed on both sides of the House about the impact of the Bill and of clause 3 unamended on the disabled. It is not only the disabled who will be affected but the continuance of the telephone operator services. I believe that British Telecom should continue to have what I would describe as a human interface with the public at large. The disabled will continue to need an operator on the end of the telephone line if the service is to meet their needs.

The Minister rightly referred to the services that BT provides for the blind and the hard-of-hearing. There should be some reference in the new clause to the continuance of the provision of the telephone operator service, not only for the disabled but for the elderly, those who cannot read, the confused, the housebound, and those who are merely unable to help themselves or are unable to use the system. There are many instances where having an operator at the end of a telephone is an essential community need. In those circumstances, that is not a luxury but a necessity.

I have a host of instances where operators have assisted people in need in extremely esoteric circumstances. I quoted in Committee the instance of an old, sick woman who needed an ambulance in an emergency. Somehow she got through to the operator in Greenock, Scotland, although she was living in London and wanted the ambulance in London. Had the service been provided on the basis suggested in "Ringing the Changes", that operator would have been unable to help the subscriber. The anxiety about the impact on staffing standards is justified. Equally, the anxiety which the Bill causes to manufacturers who supply BT is justified. At present 70,000 workers are employed in the companies that make telephone equipment for BT. The Bill will expose the domestic telephone equipment manufacturing industry to unrestricted imports without reciprocal arrangements.

Imports will flood in from Japan, the United States of America and Sweden. The Telecommunications Equipment Manufacturers Association sent a deputation to Japan to assess its prospects of establishing reciprocal arrangements, but it came back and said that it was just not on. It is impossible to establish any reciprocal arrangements with Japan. We are blithely opening up the domestic market to imports of telecommunications equipment without making any reciprocal arrangements.

The anxieties that I have raised are real, just as the anxiety about the continuance of the public telephone call service is real. We have heard of the concern about telephone kiosks in remote and rural areas, but there is also concern about the kiosks in inner city areas. In my constituency—an inner city area—the proportion of private telephone subscribers is as low as between 25 per cent. and 30 per cent. In London and the south-east telephone penetration amounts to about 70 per cent. In certain circumstances a public telephone kiosk can act as a lifeline in inner city areas. Today, the Minister said that anxiety about telephone kiosks should be allayed because they will be financed on the basis of an access interconnect charge, which will be a rather sophisticated means of cross-subsidisation. At the time, it sounded very convincing, but the more one probed the less convincing it became. Nevertheless, we are invited to accept this legislation on the basis that details will be worked out. At this stage, that is just not good enough.

Mr. Richard Shepherd

Does the right hon. Gentleman recognise that a grave threat may arise when cable transmission through television sets is allowed so that two neighbours can be interconnected by their television sets either through cable or satellite transmissions? Presumably those operating outside the limitations of the Bill will not be subject to access charges and thus may be able to undercut the existing providers of services. In that case, those who are subject to the access fee will be disadvantaged and there will be a bias in favour of the new technologies.

Mr. Morris

That is a perceptive and valid point. Earlier, the Minister said that he had established a committee to consider what he described as the details that would be worked out later. I hope that the Minister will consider the hon. Gentleman's point. Our anxieties are real and understandable and are not the sort that the Minister lightly dismissed when he suggested that they had been generated solely by chose with a vested interest in the status quo. That was an outrageous charge, which was unworthy of the Minister.

The new clause refers to emergency services. I hope that the Under-Secretary will define that. Do emergency services mean solely 999 calls, or do they also cover the ship-to-shore services that are currently financed on the basis of a direct subsidy of £1.1 million from the Department of Trade? What will happen to that service? There is justifiable anxiety that the Government are seeking to phase out the ship-to-shore radio services.

I believe that my anxieties are justified, and that anxiety about the Bill as a whole is equally justified.

Mr. Tom Ellis (Wrexham)

In common with the great majority of Opposition Members, I am fundamentally opposed to the Bill and will vote against it on. Third Reading. Even when hon. Members on either side of the House profoundly disapprove of a Bill, however, they have a duty, if possible, to improve the Bill, both in Committee and on Report.

I listened carefully to the Minister's speech. I am grateful to him for making such a lengthy speech. I did not have the opportunity to spend 60 hours debating the original clause 3 and I was grateful to the Minister for spelling out some of the more complex issues. I was anxious to find out whether the new clause was a substantial improvement on clause 3.

I cannot see that the new clause is a significant improvement. The Minister claimed that it made some improvements, and in terms of parliamentary drafting it may be an improvement, but the nub of the issue has not changed in any way and the same broad issues that were contained in clause 3 still apply. Therefore, I shall vote against the provision, although if it had improved the Bill a little I might have been able to bring myself to vote in favour of it. To register ray profound disapproval of the Bill, I shall vote against that provision as it will be the only opportunity to do so before the guillotine falls.

The Minister claimed that the new clause would remove the rather vague guidelines for the Secretary of State and the Director General that appeared in clause 3 and that the guidelines were now much more specific. I accept that there is now a more direct relationship between the Secretary of State and the Director General and their general duties. The Minister pointed out that individuals, organisations or local authorities would, in certain instances, have recourse to the courts if they felt., for example, that the Director General had not acted in accordance with his duties, as laid down in paragraphs I (a) and (b).

The Minister said that he did not think that recourse to the courts was likely to be very frequent. However, we need to know how the courts will determine such difficult phrases as "reasonably practicable" and "reasonable demand". I am not a lawyer, and I hesitate to enter into this debate, but I seem to recall that some years ago, in a dispute about the Tameside district and whether there should be a grammar school or a comprehensive school, the House of Lords ruled that "reasonable" meant precisely what it said and that it was the opposite of bonkers. Therefore, if "reasonable demands" are interpreted as demands that are not stark raving crazy, it will clearly be the Director General's duty to impress on whatever official is involved the duty of implementing that demand.

Amendment (i), which stands in the names of my hon. Friend the Member for Berwick upon Tweed (Mr. Beith) and other hon. Friends, seeks to remove the word "demand". After all, the word "demand" has a financial connotation. People talk about demands when they mean bills. Indeed, BT sends out "demands". If it was felt that there was no financial justification, the demand would be doubly unreasonable, because it would not be meeting a need. Therefore, I hope that the Minister will agree to that technically straightforward amendment.

We are left with the problem of how the courts will decide. The Minister used recourse to the courts to illustrate the improvements that he had introduced in new clause 1 as compared with the original clause 3. If the courts decided that the Director General had not done his duty, it would be interesting to know what would then happen and what the Director General would be obliged to do. It seems no more precise, in practical terms, than the original so-called vague directions in the original clause.

7.30 pm

There is a reference in subsection (2)(a) to disabled persons. It says that the Director General shall exercise the functions to promote the interests … (including, in particular, those who are disabled) in respect of the prices charged for, and the quality and variety of, services provided and apparatus supplied". The Minister gave an example of a particular type of telephone for people who are hard-of-hearing. That makes sense. Where the word "disabled" appears in the subsection, it seems to qualify not only the apparatus but the price and the quality, and one assumes that there might even be a form of differential pricing for those who are disabled. If the intention is for the provision to apply only to the apparatus supplied for the hard-of-hearing, the words in brackets should be nearer to the words "apparatus supplied", to make it quite clear that those are the words being qualified.

I want to say a brief word about rural areas, because under the new dispensation I shall have the privilege of standing for Parliament at the next general election for a very rural constituency, where the largest town has a population of only 6,000 and there are scores of small villages and hamlets. The provision of telephone services in rural areas will be a matter of direct concern to me.

I was interested—perhaps I should say doubtful or sceptical—when the Minister said that under the new accountancy arrangements in British Telecom we find that rural areas are now making a positive contribution to BT's finances. I am surprised to hear that. As the right hon. Member for Manchester, Openshaw (Mr. Morris) said, telephone penetration in many such areas is very low. In many parts of rural Wales, in north and mid-Wales, telephone penetration is nowhere near as high as it is in many of the densely populated areas in, for instance, the south-east of England. There is a real threat to rural kiosks. During the time that I have been a Member, not for a truly rural area but for one that is part-way between a metropolis and a rural area, I have had correspondence on a number of occasions with British Telecom about retaining kiosks. However, my attempts were unsuccessful and the kiosks disappeared.

The hon. Member for Aldridge-Brownhills (Mr. Shepherd) came down firmly on the side of having an Exchequer grant to subsidise loss-making services, such as emergency services and others. Here, I am on the side of the Minister. Access fees are a much better proposal, because it would at least confine the matter to telecommunications and not become one of general taxation. The further one gets away from the specific item that one seeks to subsidise the worse it is. I agree with what the hon. Gentleman said about satellites, and so on. However, that is very much a matter for the future, and I should hesitate to cross bridges before reaching them. It is hard enough to cater for the realities of today, let alone for future possibilities.

Finally, I was pleased to hear what the Minister said about pricing policy. I do not know how he can be so certain about it. I assume that the RPI minus X policy—keeping price increases below the rate of inflation—is a measure of his confidence in the possibility of improving the efficiency and competitiveness of the telecommunications industry—not just BT, but Mercury, radio telephones, and so on. I said at the beginning that the improvements in the new clause were not sufficient to satisfy me, and although I accept that there are slight improvements compared with the original clause 3—

Mr. Richard Shepherd

I wanted to make certain that the hon. Gentleman understood me. I hope that he will forgive me if I seem impertinent. The purpose of cross—subsidisation is to ensure that one set of consumers pay more for a service than they otherwise would to enable another set of consumers to pay less than they otherwise would. To avoid confusion in charging, and to ensure fairness, one should identify the extent by which one charges those consumers less than they would otherwise pay, making that up through Exchequer grants.

Mr. Ellis

I had understood that. My reason for not agreeing with the hon. Gentleman is my experience in a whole range of publicly owned industries, not just telecommunications, where subsidies and so on have to be paid through general taxation, and there is an inability to pinpoint the costs of the profit-making or loss-making sectors—the cost centres. The Minister said that until fairly recently the Post Office, as it used to be, had just one cost centre for the whole telephone service. That illustrates the practical problems of catering in practical accounting for specific cost centres. This applies to the people in the telecommunications industry—the person seeking access and the person letting the access at a fee. At least it is contained in a comparatively small sector of our general industrial life, rather than being a matter of general taxation, which brings in matters such as macroeconomics. For those reasons, the Minister would be well advised to continue the access fee.

Mr. Stott

In accordance with Standing Orders I declare my interest, in that I am a Member sponsored by the Post Office Engineering Union. Before I came here 10 years ago I was employed by the Post Office as a telecommunications engineer. To my knowledge, there are only two Members of the House in that position, my hon. Friend the Member for Blaydon (Mr. McWilliam) and myself.

Because of my current position I was unable to be a member of the Standing Committee considering the Bill but I was one of the few people outside the Committee's membership who attended every sitting in an effort to show solidarity with my comrades and to listen to the devastating analysis of my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding).

It goes without saying that I am utterly opposed to the principles of the legislation. As I sat listening to the debates upstairs, I was extremely frustrated because I could not participate in the arguments that were being advanced against my hon. Friends. Tonight gives me an opportunity so to do.

New clause 1 is tabled in response to the arguments on clause 3 in Committee. It is wholly unacceptable for the Minister utterly to change the face of the Bill on Report. I suspect that I know why he has done that. On Second Reading he and the Secretary of State tried to tell hon. Members that we need not worry about the rural areas and that the Government had no intention of introducing a Bill that would materially affect the provision of telecommunication services to the rural areas. It is only because the Bill has been examined in microscopic detail and because of the worries that hon. Members have expressed about it that the Minister has had to come to the House today after a monumentally long time in Committee and fundamentally alter the Bill. The right hon. Member for Western Isles (Mr. Stewart), the hon. Member for Wrexham (Mr. Ellis) and many others have said that new clause 1 is still unsatisfactory for rural communities throughout Britain.

As somebody who for many years worked in the rural areas, climbing telegraph poles and putting up telegraph lines, rather than just philosophising about it, I know the value of the service to people in the rural areas. At the moment BT might not have the ultimate statutory responsibility to provide everybody with a telephone but custom and practice mean that it does. If anybody wishes to have a telephone he is connected to the system. In the old days of the Post Office everybody believed in what is commonly called the Rowland Hill principle. That was a tax on letters whereby everybody paid the same price for the delivery of mail, whether one lived in inner London or on the Isle of Skye. There was a comprehensive service and everybody paid the same. Apart from the one or two examples that have been quoted tonight, almost everybody pays the same installation fee. That has happened in the past and still happens today.

Mr. Orme

That is changing.

Mr. Stott

I appreciate that. Until now more or less everybody paid that fee. For the Minister to say that they are good guys and have enshrined in legislation the rights of people to have full access to a telecommunications system is nonsense because in custom and practice everybody had that before. Moreover, everyone had a right to have that service maintained free of charge. No maintenance charge was paid by subscribers.

Mr. Richard Shepherd


Mr. Stott

The hon. Gentleman need not get excited. If he will listen, I was about to qualify that. Maintenance charges might have been included in the rental charge for the instrument but there was no direct maintenance charge. There is no need for this legislation other than the fact that the Government are hell-bent on pursuing their political ideology. People are entitled to have access to the telecommunications network. They are provided with telephones and those telephones are maintained.

7.45 pm

The new clause seeks to mollify the opposition of all hon. Members who represent rural areas. The Minister is trying to tell us that new clause 1 will protect rural areas because it says: the Director shall exercise the functions assigned to him … in the manner which he considers is best calculated—(a) to secure that there are provided throughout the United Kingdom, save in so far as the provision thereof is impracticable or not reasonably practicable". Despite the Minister's speech, which lasted about an hour and 10 minutes—I do not criticise him because there were many interventions—the new clause does not satisfy my right hon. and hon. Friends who have the interests of the rural subscriber at heart.

The Minister talks about access fees and how the access fee arrangement will be constructed. Many people in Britain are worried that their kiosk services might be at risk. The Minister said that few kiosks have been removed and that the criteria for their removal is that they take in less than £200 a year. I think that that figure is £185 but I stand to be corrected. The hon. Member for Berwick-upon-Tweed (Mr. Beith) said that that is not the point. Many people use kiosks to ring a number, put the telephone down and wait for the subscriber to ring them back. Therefore, it is false to assume that simply because a kiosk does not turn over more than £185 or £200 a year it is not being used by the community.

If that is the criterion, who is to say that it will not come under attack? As my hon. Friend the hon. Member for Preston, South (Mr. Thorne) said in an interesting contribution earlier, if the Bill becomes an Act we shall not be dealing with the old Post Office as I knew it or British Telecom as we know it today; we shall be dealing with a commercial company that acts in the market place and has shareholders, which is responsive not necessarily to community aspirations or the rural areas, but rather to the demands of its shareholders.

Those shareholders might say that they are spending a lot on rural kiosks and suggest reducing the figure from £200 or £185 to £100. The Minister has not satisfied me or my right hon. and hon. Friends that that could not happen. Under BT's new rules I am not satisfied that different criteria will be applied for rural kiosks. Despite his words from the Dispatch Box today, I am not convinced.

It never took me over 100 hours to install a telephone but I can well imagine some of my union colleagues in the remoter areas of the United Kingdom such as the Outer Hebrides taking over 100 hours as a result of geographical and other problems. What is to say that that figure cannot come down? Under the new commercial arrangements that figure could well be under attack. The shareholders of BT might say that if it takes 100 hours or more to install a telephone and there is a common set of charges they should reduce that 100 hours to 50 hours and that anything more than 50 hours will be charged at the commercial rate. That is conceivable and there is nothing in new clause 1 to suggest that that might not happen.

The Minister accused me of being provocative when I intervened in the speech by the right hon. Member for Western Isles. I accept that charge. I was saying that under the present regime maintenance is not charged directly to the subscriber. The subscriber rents the instrument and part of the rental is assumed to cover maintenance costs.

There is nothing in the Bill to say that BT cannot sell the instrument to a subscriber. That subscriber would then have to take out a maintenance agreement. I should not like to be a subscriber in the Western Isles taking out a maintenance agreement with BT because that region is subject to inclement weather—to gales and storms. I know that because I talk to my colleagues who work there. The same applies to the southern part of the United Kingdom and the Yorkshire dales. I should hate to be a farmer on the Yorkshire dales having to pay for a maintenance contract.

I can remember spending three days in the snow connecting a Pennines farmer at lambing time. He was charged not a penny. I cannot see that happening under this legislation because BT today has an obligation to provide almost total maintenance cover. In future, if BT decides to sell rather than rent the prime instrument, the subscriber could be faced with heavy maintenance charges.

Mr. Richard Shepherd

I understand that we now rent a line and rent a phone. We may have the option, now that the Government have agreed to the removal of the prime instrument monopoly, of buying the phone rather than renting it. If a line breaks down, surely that is covered by the rental agreement on the line, whereas if the instrument breaks down the subscriber is regarded as an independent customer.

Mr. Stott

The prime instrument is rented according to an arrangement that takes in the line. Additional rental is paid for an extension to the prime instrument. The subscriber pays a rental for the line and the prime instrument and maintenance costs are included in that rental.

Mr. McWilliam

Is my hon. Friend aware that since the Minister refused point blank to make the terms of the BT licence available to the Committee it is not possible for any hon. Member to answer the question asked by the hon. Member for Aldridge-Brownhills (Mr. Shepherd)? BT may not be allowed to charge for maintenance, but perhaps it will be. We have not had the privilege of seeing the terms of the licence because the Minister says that commmercial confidentiallity is involved, whatever that means.

Mr. Stott

My hon. Friend the Member for Blaydon was a member of the Committee and he has a more detailed knowledge than I have. I accept his judgment. Until the Minister allows the House and nation to see the terms of the licence we are whistling in the dark. So much for freedom of information.

I am a little confused about what will happen now that the prime instrument is under attack. That is what Littlechild suggested. The prime instrument can now be privatised. What will happen if a prime instrument is fixed to a shared service? There are not many shared services in the United Kingdom today, but they have not been totally phased out.

The hon. Member for Aldridge-Brownhills (Mr. Shepherd) looks confused, but the matter will become clear. I shall demonstrate a technical, engineering point. If I fix a prime instrument, and an extension to it, on a shared service circuit, how will I be sure that the instrument is fitted correctly without ringing the exchange to test the instrument? In a shared service the current that rings the bell goes to earth rather than down the other leg of the telephone line. If the legs of the telephone lines are not fitted correctly and there is an extension on a shared service and I get the legs the wrong way round, every call made from the extension could register on the other subscriber's meter. Has the Minister thought about that?

The only way that BT can ensure that that does not happen is to ring the exchange and ask the engineer to conduct a proper, balanced test. If a private telecommunications operator has to do that, will BT receive an agency fee for the test? That question has nagged me for some time. I hope that the Minister will ask his officials for an answer.

My right hon. Friend the Member for Salford, West (Mr. Orme) mentioned telephone equipment. I have much to say about that but other hon. Members wish to take part in the debate. My right hon. Friend was right to say that BT and the Post Office bought British. About 95 per cent. of equipment in the exchanges—the telephones, cables and ancillary equipment—was made in Britain. I fitted the stuff and was not always satisfied with the quality, but that equipment has improved over the years. I have never been an apologist for the old Post Office board or for the private manufacturers, but equipment is improving. If the Bill is passed, the competition in equipment will be enormous.

Let us consider what has happened since CB radio became legal. The Under-Secretary is a great fan of CB radio, but since his Government legalised it—and I applaud that decision—almost every CB set bought in Britain has been made in Japan. If we adopt the principles enshrined in the Bill, British telecommunications manufacture will be under severe pressure. There will be an enormous inflow of imports, at the expense of jobs in our home-based telecommunications market.

This is an appalling piece of legislation. The Minister said earlier that the benefits of the Bill will be seen when the Government are returned to office. The Government will not be returned to office and, thank God, the benefits of the Bill will never be seen.

8 pm

Mr. Beith

The new clause improves the Bill. The Government have been much criticised on certain aspects of the Bill, and there are still strong reasons to doubt whether it will be effective. I hope that the Minister can reassure us.

There is a general doubt about the long-term position of British Telecom, which may be undermined by obligations for which it has no external finance. That issue has been dealt with extensively during this debate, especially by hon. Members who served in Committee. They have discussed the relative merits of cross-subsidisation and direct financing. However, laymen worry that it will turn out to be rather like the bus services that replace withdrawn rail services—at some point it may be said that it represents an unfair and unreasonable obligation—from which the operator should be freed.

In dealing with the problems of rural areas, the Government say that an attempt should be made to "satisfy all reasonable demands" for services. My hon. Friends and I have tabled an amendment to substitute the word "needs" for the word "demands". We were worried about the history and association of the word "demands". As my hon. Friend the Member for Wrexham (Mr. Ellis) said, the word is used extensively in a financial context. Therefore, it is hard to envisage it in the clause as meaning anything other than an association with the ability to pay. That same word is used in connection with the use of telephone boxes and the number of people prepared to subscribe to a service. It is the usual economist's word for those prepared to put up the money.

I do not think that the word "demands" was intended to mean that in the new clause. Some of the demands referred to are such items as emergency services, for which charges are not made. I hope that I am right in assuming that the Government had intended a more general meaning of that word. We need some assurance on that.

The word "needs" sums up what we are discussing—not the demands of rural areas in either the economist's sense or the requests of those in rural areas, but what would be judged by any reasonable person to be a genuine need in rural areas. For example, there is a need for call boxes to be connected to the telephone network, for maintenance and for access to various facilities. That is better expressed by the word "needs" than "demands". Perhaps the Government mean the same by "demands" as we mean by "needs". I hope that they will confirm that they do not mean the ability to pay for a service in straight commercial terms.

The Minister rightly pointed out that it is no more expensive to provide many services in rural areas than it is in urban areas—but some are undoubtedly more expensive, but are very much needed. People in the countryside have become more dependent on the telephone. As other services have retracted, they have had to rely more and more on the telephone for access to certain services. As shops and local delivery services have been withdrawn, they have relied on the telephone to order goods. As doctors' surgeries have been withdrawn, they have telephoned the doctor for advice and to avoid a journey for which no public transport is available.

Many suppliers and organisations use the freefone service, which shows no benefit in the call boxes. Many suppliers give a freefone number, which is especially helpful to those living in rural areas. Many public and social services use the freefone system. The citizens advice bureau in my constituency does so, which enables those in remote areas to telephone for advice because they do not have access to a local CAB office.

When I visit the remoter parts of my constituency, and the remoter parts of the country such as the outer islands, I notice that children appear to be dressed from mail order catalogues—they all wear the same clothes. Because there is no access to shops, people pick up the telephone and order their goods. The telephone has become an important aspect of the rural scene. That explains the deluge of expressions of concern that Ministers have received from rural areas. It is one of the few services that they have left, and all other services are now dependent on it.

The costs in rural areas can be prohibitive. In an intervention earlier I gave an example of a constituent who was quoted £4,500 for the installation of a telephone. Whatever the hon. Member for Westhoughton (Mr. Stott) may believe about the provision of services on a uniform basis, the rot has already set in. Changes are already being made. We negotiated a reduction in the installation charge to £3,200, which was still well beyond the resources of my constituent.

The pressures to charge an economic rate already exist. The only assurance that the Minister gave me was that in future my constituent would have a better means at his disposal for challenging the cost figure. He can secure an alternative quote. But at the end of the day it is probable that the quotation will still be for several thousand pounds. We are, therefore, talking about the problem of cross-subsidisation and the extent to which, in future, people using the telephone system can expect to have it made available to them, even though that might cost a great deal more than making it available to other subscribers. That must be viewed against the background that such a subscriber has far fewer other public services at his immediate disposal than a subscriber in an urban area who often has less need of a telephone.

It is worth reminding the Minister of our experiences in rural areas. We spent many years trying to get a telephone installed in one valley. Quite frequently, walkers on the Pennine way would become lost in snowstorms and go to the nearest farmhouse. They would sit there, wrapped in blankets and served with hot cocoa by the helpful farmer's wife, while watching on the television the rescue teams setting out to look for them. They were quite unable to tell them they were safely tucked away and well looked after because there was no access to a telephone. We managed to obtain a telephone for that valley, but there are still many rural areas where the telephone could save public services a great deal of money. I am sure that that applies to other rural areas, such as the Lake District.

The same high cost problem applies to telephone boxes, as many of those in rural areas are unlikely to show a reasonable return. They may fall below the £200 figure often used as a yardstick, but in reality some contribute far more to the system than the takings emptied from the coinbox show. Time and time again boxes are used by people who put 10p in the box and ask their office to ring them. I know that I do that. Feeding money into a coinbox is a both expensive and inconvenient way to conduct a long telephone call. Most significant telephone calls from those areas have to be long-distance. The centre to which anyone will telephone to contact his headquarters will be more than a local-call distance away in a scattered rural area.

In my constituency a telephone call box by the A1 has recently been removed. I am glad to say that, after a tremendous row, British Telecom has agreed to reinstate it. One of the immediate consequences of the removal was that people living in nearby farms were constantly troubled by long-distance lorry drivers coming to their homes and saying "I have broken down, please may I use your telephone?", or "I have used up my 10 hours under the 10 hours' rule; I must phone in, so may I use your telephone?" The need and demand for the telephone became obvious even though it had not been so apparent from the coin box in which these matters are recorded. Because of such reservations we are most anxious that the assurances should be clearer and that the emphasis should be on "needs" rather than "demands" in a narrow sense.

I regret that we cannot proceed to a vote on amendment (i) to new clause 1 and on some of the other amendments. It would have been better had we used the time available to us within the guillotine to ensure that we disposed of the new clause earlier and took votes on some of the crucial amendments. It would have been sensible to organise the proceedings better. However, that is beyond my control, but in his reply will the Minister try to carry us further with the assurances that he has given because our worries are still deep, and even the points that he made earlier in the debate leave us with the fear that the high cost of some rural facilities will mean that services which are already being threatened will be doomed under the new regime?

Mr. John Spellar (Birmingham, Northfield)

Previous speakers have addressed themselves substantially to the effect of the legislation on the system. In the time available to me I wish briefly to address myself to the implications of the Bill for manufacturing industry. I do so both as an official of the Electrical, Electronic, Telecommunication and Plumbing Union—which has several thousand members in the telecommunications manufacturing industry in companies across the country—and as a member of the sector working party for electronic components.

I am sorry that the Minister for Industry and Information Technology has just left the Chamber. He has made a considerable reputation for himself through his interest and work in information technology. He must realise more than most of his colleagues the key position of telecommunications in information technology. With that knowledge and experience, and given his responsibility under the new clause, he must be extremely worried about the recent pronouncements from BT about the implications of the Bill as it will be applied to the ordering of equipment. I join my right hon. Friend the Member for Salford, West (Mr. Orme) in drawing to the attention of the House the comments of Mr. Charles May and of Sir George Jefferson. With regard to Sir George Jefferson and his threat to resign if the Parliamentary Control of Expenditure (Reform) Bill was carried, I am almost led to reconsidering my position on that Bill. Sir George Jefferson made some disgraceful comments about a vital part of British industry. He was referring not to moving from existing suppliers—the three main companies, Standard Telephones and Cables, GEC and Plessey—but to importing substantial quantities of equipment from abroad.

8.15 pm

It could be charitably said that Sir George was trying to shake up the so-called "cosy relationship" between BT and the big three. Many hon. Members on both sides of the House would have criticisms of the impact that that relationship has had on the industry, not only on the supply of equipment to British Telecom but on the dramatic decline of the export share of British companies in the world market, which has fallen from 25 per cent. to about 6 per cent. I believe that that blame falls on both sides of that cosy relationship. It falls on manufacturers, for having looked on BT as a soft market and on BT for having over-specified for equipment, often making it unable to compete in the export market, for occasionally taking the wrong route in specification, and also, as in so many other respects of British purchase and investment, for having a stop-go policy which has led at some stages to substantial investments. Only recently we have seen another "stop" in the expansion of BT. Therefore, there have been problems on both sides. This is neither the time nor the place to investigate the implications of that relationship, athough, quite frankly, an investigation at some stage is necessary to see how we can improve the position in the future.

We need to consider the consequences for British industry and employment of a precipitate movement away from that relationship. With regard to some of the comments that have been made, I am worried that this is almost a rerun of the British Leyland argument. We know from the recent memoirs of Sir Michael Edwardes that siren voices inside the Government in 1979 said that not many people were employed in British Leyland and that closure might be a healthy shock to the economy and a lesson to other people in how they should conduct themselves in the future. It would be extremely worrying if, rather than just an attempt to shake the complacency of the big three, the comments of British Telecom were really an attempt to move out of ordering from British manufacturers in any sizeable way.

With regard to employment implications, the British telecommunications industry is a substantial employer, particularly in areas of high unemployment such as the north-east, Merseyside and Scotland. In addition, the industry has a good record in manpower policies. Industrial relations in telecommunications are good and productivity increases have been dramatic and substantial. This has been based on an acceptance of change by the work force. It would be ironic and grossly unfair if the reward for that co-operation and that acceptance of change were not only to be buffeted by the rapid speed of change, which is dramatic in the electonics industry, but to be devastated by a savage cut in orders.

Equally important for telecommunications are the implications for the future. Can we imagine Britain moving into the 21st century without a substantial telecommunications industry? The tying in of office technology with regard to computers and communications is vital for the development of information technology. Is a reduction in the advanced areas of that technology, taking them away from British companies and giving them to IBM, the company quoted in The Sunday Times and ATT and other North American companies, let alone companies in Europe, really the way to encourage the necessary development of volume, not only in telecommunications but in components? After computers, telecommunications are the largest single user of components, and the components industry will be vitally dependent on their development. Not only this industry but others would be severely disadvantaged in being able to compete with the rest of the world. That would also apply in software and development work. If the Government are to take work away from British manufacturers and give it to high technology manufacturers abroad, that will cripple the vital development work in British electronics and telecommunications.

We have had grounds for concern about the Government's will to follow this through. When liberalisation was introduced, for example, the Government gave many assurances that they would have approval testing and that, as well as having a board to consider new equipment, they would be seeking reciprocity with other countries. However, over recent months the Government have been moving away from reciprocity. They say that in the face of pressure from the GATT and the EC they are not able to sustain reciprocity. That applies in a number of other industries.

It was argued that liberalisation would provide a useful stimulus at the fringes of the telecommunications industry. But the British telecommunications industry has not been stimulated to provide peripheral instruments although there has been a dramatic improvement since liberalisation. However, protection for the British industry lies in mainframe orders. The bulk of orders will come from British Telecom and will be directed towards the domestic industry. It is that which will keep the main industry going, but the Government say that at the same time we shall have the stimulus of liberalisation which, they hope, will get other industries going. It is said that even if that brings in imports the effect will be only on the fringes. The Government seem to have retreated in that area of liberalisation. Their spokesmen in British Telecom seem to be retreating in the telecommunications industry.

Can we really envisage any other PTT or Government allowing main purchases of telecommunications equipment from foreign manufacturers?

Mr. Richard Shepherd

The United States Government.

Mr. Spellar

Can we honestly see the French PTT taking in foreign equipment in competition with its own? Can we see any of the other main European PTTs bringing in foreign equipment? We shall be one of the few open markets. The hon. Member for Aldridge—Brownhills (Mr. Shepherd) has mentioned the United States, but he knows full well that until recently there was an extremely close link between the major telecommunication manufacturer in the United States and the main telephone system in Bell telephones. There were major links, which sustained a particular development. That is not analogous with the position that we are discussing. The main bulk of equipment sold in the United States to United States telecommunications systems is produced in the United States. If there were a major threat posed to United States telecommunications systems, there would soon be pressures for trade restrictions.

Britain is yet again in danger of being one of the few open markets, with little benefit for our technology and little benefit for our industry. Telecommunications and the industries surrounding it, which are gradually converging, are the base for the next industrial revolution. It will be absurd if, through the Bill, we are to throw away the opportunity in pursuit of dogma.

Mr. McWilliam

Like my hon. Friend the Member for Westhoughton (Mr. Stott), I must declare an interest as a Member sponsored by the Post Office Engineering Union and as a telecommunications engineer for 22 years before entering this place. I do not speak entirely in ignorance of the effects of the Bill.

I congratulate my hon. Friend the Member for Birmingham, Northfield (Mr. Spellar) on his speech. He made an excellent contribution and addressed himself to some serious problems which the old Post Office, British Telecom and the Government have failed to face. One of the problems is the effect that the Bill will have on British industry.

My hon. Friend the Member for Northfield alluded to the endemic problems, and these can be summarised quite briefly. There has been the gutlessness of the Post Office and British Telecom in not insisting on getting new equipment. There has been opposition from British industry to investing in new technology. I am sure my hon. Friend will agree that it is the combination of those two misguided approaches that has caused some problems that have been thrust down our throats as excuses for introducing the Bill. These have been only excuses, and not reasons.

The real reason is that British industry has a rotten record of investment in technology. The reasons are nothing to do with the fact that British Telecom has never used its market position to force British manufacturing industry into the second half of the 20th century. The reasons are connected purely with the ability of a few individuals to make the maximum profit, and the devil take the hindmost.

I was fortunate to catch your eye earlier in the debate, Mr. Deputy Speaker, and to be permitted to intervene on new clause 1. I said that the new clause is in effect a new BT Bill. We do not like it any more than we liked the last Bill, but it is very different in kind from what we discussed in Committee, when we spent 63 hours trying to convince the Government that what they had started to do was wrong. Evidently the Government have accepted that they made some fundamental mistakes, because new clause 1 is a great change from the old clause 3, but it is not by any stretch of the imagination a charter for most of the telecommunications customers. It is still a charter for big business in the centre of London, Birmingham, Glasgow, Liverpool and Manchester. It does nothing much to defend the need for a pervasive telecommunications system to which all have access.

The hon. Member for Aldridge-Brownhills (Mr. Shepherd) took some flak from my hon. Friend the Member for Westhoughton, because in Committee the hon. Gentleman was consistent in his argument about cross-subsidisation. I do not agree with his argument, but I accept his consistency and the logic and clarity of the argument. However, we are not talking about mink coats or Rolls-Royces. Especially in the rural areas, we are talking about the staff of life. Only the telecommunications system enables those living in remote areas to have any life at all.

It is not fair to try to equate the financial decisions that would need to be taken if one were buying a mink coat or a Rolls-Royce with the financial considerations that face those living in remote areas. This is one of the aspects of new clause 1 to which I take most exception. There are cop-outs. There is the phrase save in so far as the provision thereof is impracticable or not reasonably practicable'". What does "reasonable" mean in that context? The hon. Member for Aldridge-Brownhills made great play of the ability to take a licensee to the courts, but anyone taking a licensee to court will be faced with the word "reasonable", the meaning of which will depend on the circumstances. The court's decision will depend on a judge's view of the particular circumstances of the case. That does not seem to be the guarantee described by the Minister of State when he moved the new clause at great length.

8.30 pm

There is another problem, to which my hon. Friend the Member for Northfield (Mr. Spellar) alluded, but did not expand his argument as much as he should have done. I refer to new clause 1(2)(h), which contains the words, to maintain and promote competitive activity on the part of United Kingdom operators in markets outside the United Kingdom". It appears that the clause states that the purpose of the Bill is to enable the British Telecommunications manufacturing industry to sell the very best and latest equipment all over the world, but that has to be taken in the context of the rest of the clause. When that manufacturing industry is to be undermined by cheap, shoddy, foreign competition and imports from other countries of equipment of questionable technical reliability and standards—I use those words advisedly—how on earth can we base an outgoing, technically advanced competent manufacturing industry on that? The rest of the clause says, "Thou shalt buy equipment wherever thou shalt find it as cheaply as thou shalt be able to get it, and ram it down people's throats." How on earth can that pie in the sky idea be realised?

I agree with my hon. Friend the Member for Northfield. BT has something to offer, and not merely in terms of maintaining employment in Coventry, Birmingham, South Shields, Liverpool, Glasgow, East Kilbride, Glenrothes and all the areas where telecommunications equipment is manufactured. In Martlesham we have a unique and superbly successful research establishment. The output from that establishment could have a great effect in improving communications, not just in the rich Western world that can afford to buy equipment, but in the developing countries.

Some of the equipment that is being designed and manufactured at Martlesham could have a dramatic effect on people's ability to communicate. The ability to communicate is one of the most important things that we can give to our fellow men. We should do so not just at any price. We should produce the equipment which they and their rich Western competitors want. That would revitalise the export of British technology and expertise, which, unfortunately, has been neglected of late.

Mr. Richard Shepherd

I am slightly confused by the arguments that have been advanced by the hon. Gentleman and his hon. Friends, who identified the relationship between BT and its suppliers as intimate. Why has that not served to enable the suppliers to be world efficient and world competitive when that intimacy of relationship has enabled them to reject the advances of foreign competition into our markets? Why are we confident that the situation will improve?

Mr. McWilliam

The hon. Gentleman has raised an interesting point. I thought that I had dealt with it earlier when I argued that there were two basic and conflicting interests in that relationship. The first is the interest of BT in getting the type of equipment that it wants, that it can get along with and that people will swallow. The second interest is that of manufacturers in making the most profit out of existing capital equipment. BT has not had the incentive to use its market position to force manufacturers to advance.

If I am criticising anyone, I am not criticising the manufacturers. If BT had told the manufacturers, "We are not buying your old rubbish. If you make this, this and this, we will buy it, but if you continue to make the old rubbish that you now make we will not buy it" things might have been different. BT has never done that. My union has made that argument for at least the 20 years that I have been a member of it. The point has never been taken up properly. It had nothing to do with the fact that BT was nationalised, a Department of State or anything else, but everything to do with the style of management and the type of attitude that is native to manufacturing industry.

Mr. Richard Shepherd

Surely it was to do with the fact that BT is a monopoly and the customer, the consumer, did not have a choice.

Mr. McWilliam

The hon. Gentleman has raised another interesting point. All telecommunications systems are a monopoly at some level, whether it be at a national level, as in the United States, a state level or a city level. Telecommunications suppliers do not run parallel networks in the same city at the same time. We are on our way to fulfilling the words in subparagraph 2(b), to maintain and promote effective competition between United Kingdom operators". That can be true only in the trunk sense. As the hon. Member for Aldridge-Brownhills well knows, it cannot be true in the overall sense. Moreover, it is only true in the trunk sense in that companies such as Mercury have set up to do a cream-skimming job, whereas BT has to provide a comprehensive service. It is nonsense to suggest that there will not always be a monopoly in this type of system at some level. No one is suggesting an alternative and privatised M1 motorway to the hon. Gentleman's constituency, and if anyone did he would fail miserably. On the other hand, some people suggest that Mercury can make money. It can do so only by taking money from someone else—and that someone else is BT.

Mr. Richard Shepherd

No doubt the hon. Gentleman will help me, but one of the arguments is that the new technologies that are advancing extremely rapidly are bypassing some of the old technologies and that in the easily foreseeable future there will be transmission by alternative services, whether by cable through our television sets or by satellite, which I hope the Minister will liberalise and offer alternative licences in. They will undermine the monopoly of the old-style provider of the service. The hon. Gentleman's anxiety may be that the union which he represents with distinction will be undercut by the new technologies.

Mr. Mc William

Technology cannot overcut or undercut anything. Only the application, ownership and use of technology can do that. I reject any technological argument out of hand. I know that BT, with its new systems, is as technologically advanced as any system in the world. System X is a far more advanced system than anyone else is using. It is a shade more expensive, but it is rather better. At Martlesham, BT developed fibre optics. Plessey has a system of transmission and reception of light pulses which uses a window that is unavailable to anyone else in the world.

At the level of technology and our ability to use it we have nothing to apologise about, but we have to apologise for our past inability to realise that things could not go on as they were. My criticism of the Government is that, instead of being concerned with the system, with the ability of people to have a telephone and to use it effectively, they are concerned with the ability of people to make money out of the profitable bits of the system and to leave the rest of it to fester as it will. That is the basic difference that the Opposition have with the Government.

The Government do not and will not accept that telecommunications, the telephone system, is far too important to be made the object of mere cream-skimming, ripping off the greatest amount of profit. It is far too important to a modern society for that to be permitted. The Minister talks about telecommunications instead of telephones and such things. I think that he honestly recognises the role that telecommunications has to play in the development of our country. Unfortunately, he happens to be a member of a party and of a Government ruled not by the technologists and not by the people who want to ensure that their old auntie in Caithness can speak to a relative in the west of England. The Government are utterly besotted with the idea that there is private profit here for somebody, that he ought to be able to make a profit, and that the benefits of it should not go into the development of the system.

The hon. Member for Caernarvon (Mr. Wigley) has just come into the Chamber. I shall not attempt to follow him in going round all the villages in his constituency, as he did in Committee, because I cannot pronounce the names of some of them.

It is appalling that, having gone through all the long hours in Committee, and having heard the Minister say that he accepts that something has to be done about public call boxes, about ensuring that the emergency services are run, and about the services in rural areas, he should table a new clause such as this. Even the Minister admits that it is not exactly in the kind of wording that his informal legal adviser, his hon. Friend the Member for Leominster (Mr. Temple-Morris), would have liked. It has been severely watered down in the Department. If the Minister had said, "It is the best that I can get away with because the Cabinet wants to rip off the greatest amount of profit," and had gone on to show a bit of heart and tried to make sure that some sort of service was available, most of us would have said, "Good for you, we shall still vote against you but you did try." Instead of that, the hon. Gentleman says that his new clause is the millenium and that it will protect public call box services, emergency services and services in rural areas.

8.45 pm

During our discussion about "a duty to provide", as opposed to "shall provide", the Minister admitted that the wording ought to be "duty to provide". If he agrees to make that change, I shall apologise for being too harsh on him, but I suspect that he will say that he has been advised that "shall provide" means the same as "duty to provide". The hon. Gentleman nods in confirmation. I cannot accept his assurance. I ask the House to accept that the Minister has had the ground cut from under him yet again, and I urge hon. Members to vote against the new clause.

Mr. Ken Weetch (Ipswich)

I shall concentrate on research and development, which will play an important part in the future of not only the telecommunications network, but British industry generally. New technology will be a precondition of industrial and economic advances.

I declare a constituency interest. A number of my constituents work at the Post Office research centre at Martlesham and I have been in touch with the management and unions there over a long period. I wish to deal with the issues that loom large in their future.

I welcome subsection (2)(c): to promote efficiency and economy on the part of United Kingdom operators and paragraph (d): to promote research into and the development and use of new techniques by United Kingdom operators. I hope that the Minister who is to reply will tell us what future the Martlesham research centre will have under the new conditions that will prevail in the telecommunications industry. What changes will affect that centre and what effect will they have on its skilled labour force?

I wish to ask some general questions. What will be the future of general high-level research and development under the new system, which will involve more competition? Will there be more investment in research and development? What will be the quality of the research that is carried out? The latter question is enormously important, not only as a broad principle, but for the future of those working at Martlesham.

Martlesham has built up a research team of high quality over a long period. I am sure that every hon. Member would want to pay tribute to the high quality of the research there. It is important to realise that the quality of the research has stemmed from the fact that people work together as a unit. What will happen to it? Will it be left intact or will it be split up now that the industry is to be opened to the winds of competition? Is the quality of research likely to be maintained, despite the new order of things? These are important questions for the Minister to answer.

The people who 'work at Martlesham need an assurance about their future because they have made a high quality contribution to our telecommunications industry. Most of them have serious misgivings about the future. There will be inevitable disruption—inevitable because of the changes which to me look to be brought about by political dogma rather than by any practical consideration. There is a definite danger that success will be interfered with because of the changes that have not been fully thought out. These are legitimate fears. What will happen to the research done, in terms of volume and quality? Secondly, what will happen in particular to Martlesham and the people who work in it?

We are told that in the future research will be determined more by commercial considerations 'than it ever has been before. Will that lead to higher quality research? I do not know. I have heard it argued from the Government Benches that when there is a more competitive system it is more highly tuned to the market and there is more research, more investment in research and development and more activity. Is that so? I doubt it. However, if there is a higher volume of research, what will happen to the structure of research at Martlesham, and what changes will occur there? Telecommunications will now be governed by commercial considerations, but the research done by BT in Martlesham has been conducted on certain principles. There, the research has been done not for commercial considerations but for the national interest. How will things alter?

I quote from some correspondence that I have had with the trade unions and the professional associations involved in Martlesham. They say: The principal and very understandable concern is the possibility of cuts in research and development and consequential job losses". This is especially so in an area where there are few other employment prospects. I hope that all hon. Members will recognise the legitimate fears that must arise from people who have invested a substantial part of their lives in Martlesham. Over a continuous period, many people have moved from London and resettled in another part of the country. They have invested a great deal in doing so. Now a question mark hangs over their future.

How far is the promotion of competition and the securing of efficiency and low cost in the telecommunications industry to be based on foreign equipment? Here, we have a contradiction in principle. If we wish to go for lower costs and competition and we exclude any other principle, do we pursue that objective by importing foreign equipment, possibly with the loss of jobs in British suppliers?

In a moment I intend to try to bring out one of the general contradictions in the clause but, before I leave this section of my remarks, I want to underline the importance of very high quality research and development and technical progress in the industry. We should hesitate and think very carefully before damaging what is so valuable and has been built up over such a long period.

I seek the assurance of the Under-Secretary on a number of matters arising generally in new clause 1. The clause contains a long list of aims and objectives which relate to the Secretary of State and the Director General and the functions that those two persons are to exercise.

I am not an expert in these matters, but it appears from the clause that the Government sat down with a fresh sheet of paper and made a list of all that could possibly be considered virtuous. The Government are trying with the clause to get into the Kingdom of Heaven with the clause. It contains about everything. But we must ask not whether everything is in it but how everything in it fits together. There are items in the clause which contradict others. But there is a let-out: The Secretary of State and the Director shall each exercise the functions assigned to him by this Part in the manner which he considers is best calculated", and so on. That means that they can both make up the rules as they go along. If at one time it appears to them that they should emphasise competition, they will underline it. If it is some other objective, they will underline that. The clause means all things to all men.

The Government have argued consistently that the clause is based on the principle of free competition. However, it contains provisions which are nothing of the kind. Some of the competition about which the Government talk in parts of the clause is a complete masquerade. I am tempted to think that when the Government drafted the clause, they not only made it up as they went along but they did not know what they were doing in certain parts of it.

There is one central contradiction in the clause. While the Government have been arguing about free competition, at the same time in another part they have been arguing about social obligations. It is impossible to argue both of those points at the same time because they simply do not go together.

I was interested in the speech made by the hon. Member for Aldridge-Brownhills (Mr. Shepherd), because he said that it was necessary to try to reconcile the position and to identify quite clearly when Government assistance was forthcoming and when it was not. The hon. Gentleman seemed to disagree with a blanket cross-subsidisation principle because then you did not know where you were.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. I thought that the hon. Gentleman referred to me.

9 pm

Mr. Weetch

I beg your pardon, Mr. Deputy Speaker. As I understood the hon. Member for Aldridge-Brownhills, he was saying that if Government assistance was forthcoming, it should be identified and clearly visible. I do not know whether he would say that about agricultural support, where it is possible to identify a deficiency payment as opposed to a common agricultural policy blanket price subsidy across the board. I am glad to hear the hon. Member say so and I appreciate his consistency.

In the long run, there are bound to be commercial pressures on the social obligations that the Government are trying to write into the new clause. When commercial pressures and free competition on a cost-related principle are brought to bear on the social obligations, they will, unless we are careful, go by the board. The House needs much more reassurance from the Government than it has had so far. I trust that hon. Members will get that reassurance when the Under-Secretary of State replies.

Mr. Richard Shepherd

I had not intended to make a speech on this clause because so much of the ground was trawled in Committee. I wanted to make one or two points merely by intervening in the speeches of hon. Members. The speeches have covered very marginally the tremendous issues of cross-subsidisation and the problems that it can give rise to. Although that has been alluded to briefly in the House and was covered, not very effectively, in Committee, I was prepared to let it go, reassured in the belief that the other place would look into these questions rigorously and form some conclusion about them. I appreciate that that may be an unfashionable view, but the Government have been left little option because of the attitude adopted by the Opposition in being unconstructive in our many debates in Committee.

I was stung into trying to catch your eye this evening, Mr. Deputy Speaker, by the remarks of my hon. Friend the Minister about the extent of competition and the way in which that issue is being approached. One of the great deficiencies of the Bill and of this clause is that it does not act as an engine for competition. There is nothing making it incumbent upon either the Secretary of State or the Director General of Telecommunications to issue a licence. From the date that the Bill is passed, I understand that no more licences need be granted. The Government are placed in the invidious position of privatising a mammoth monopoly with what one can only recognise as monopoly profits, and consigning that to private individuals without requiring Oftel to issue new licences as a statutory responsibility.

The only way that the Government can best protect the interests of the consumer—I fully endorse and support this view—including commercial and industrial users, is by introducing competition. That would give us all a choice in respect of the use of the systems available. The Bill does not insist that that happens. The Government are dependent upon the good will and the intention of the Secretary of State or the Director General of Telecommunications. I would have liked to have seen inserted in the Bill a requirement that licences be issued in the absence of certain damaging criteria to the rest of the system and, where refused, the reasons published. I fear that we could get the worst of all worlds—a private monopoly that is not responsible and not subject to competition. I say that with some hesitation because I listened as carefully as possible to many of the speeches made in Committee, and my hon. Friend the Under-Secretary of State, who spoke eloquently and forcefully on the Bill, mentioned a duopoly. I listened to what the Minister said about Mercury, and I think that we are getting into the worst of all possible positions. We are trying to coax Mercury into life but also to protect it from competition other than with BT, and at the same time argue that that is in the interest of the consumer. I should like anyone to be able to enter that market. Why do we have to give a semi monopoly, or, as my hon. Friend the Under-Secretary called it, a duopoly to such big interests as those behind Mercury? Is that what the Conservative Government were elected to do? How does it genuinely assist the consumer, our constituents? That is what niggles me.

The Minister said that I had failed to realise how far we had gone. Perhaps I am impatient and saw the Government as a valiant reforming Administration who, after four years in office, could turn round and say that the principle of competition and open access to it would be vigorously pursued. However, that it is not so at present.

I have also raised the question of access charges, but only because they raise the spectre of cross-subsidisation in the way that the Americans fear, and try to identify. There are advancing technologies. I listened carefully to the hon. Member for Blaydon (Mr. McWilliam), who spoke as if those developing technologies were not going on apace. I am not a seer and cannot envisage the state of technology in 20 years' time, but there are developments now that mean that in the not too distant future we may be able to bypass present arrangements. That will have a tremendous impact on BT and on those providing the more conventional services. I am mindful of our debates on cable television and of our ultimate ability to link one television to another and to provide effectively alternative telephone systems. Indeed, I believe that Plymouth can already do that. That will give citizens the choice of using a cable television system for transferring messages. I understand that there will be no access charges for that and, therefore, those involved will be at a competitive advantage, although in limited areas at present.

What about the use of satellites? Can I or can I not beam in lines through my own exchanges? Can I link up through the cable television? Will I be encumbered by access charges? I raise those general points in the hope that they are taken up elsewhere and because I want to reiterate to the Government my concern that when this Bill, with the new clause, is enacted no new licences will need to be granted. There is a rather vague intention—although I do not wish to deprecate it too much—to promote the interest of United Kingdom consumers in the manner which the Secretary of State considers is best calculated to do that, but we all have a different idea of what is in our best interests. If the right hon. Member for Bristol, South-East (Mr. Benn) was Secretary of State again, he might deem it to be in the best interests of consumers not to have any competition. Therefore, what safeguard is there for the charges that we pay for our systems?

Mr. Stan Thorne

The hon. Gentleman has made his opposition to monopoly clear and has taken up the point made by the Under-Secretary of State, who invented the term "duopoly". But does the hon. Gentleman accept oligopolistic competition as valid? If so, why?

Mr. Shepherd

All through the 161 hours on this Bill I have tried to argue resolutely, albeit not very successfully, for competition and consumers' interests. By and large, those are not provided in oligopolies, duopolies or monopolies. Where the latter exist, because of the nature of the business, they should be curbed and restrained until full competition can be introduced, if that is possible. In some industries—perhaps the water industry, I do not know—it is not always possible to introduce that freedom. However, in telecommunications, over a period it is possible to introduce competition. That is recognised in the United States and it is recognised by my hon. Friends the Ministers who are associated with this Bill. That I welcome. What worries me, however, is that it can come to a halt. I want to impress on Ministers that this clause could have encompassed at this stage something that made it incumbent on the Director General or the Secretary of State for Industry to issue a licence in the absence of compelling criteria that would damage the overall structure of the industry and, where a licence is refused, to publish the reasons for refusal.

I do not intend to take any more time, other than to say, with hesitation, that on balance I think I shall abstain when a vote is called.

Mr. Golding

This is a unique occasion for me. On every previous occasion when I have risen to speak, you, Mr. Speaker, have gone out. This is the first time when, after you have arrived, I have been called to speak. Therefore, it is unique.

I have to be brief, because the Minister of State spoke at such length earlier. He did so because he failed to answer so many debates in Committee, and because he failed to defend his clause 3 and had to revise it completely.

The other reason why I speak briefly is that we all want to hear my hon. Friend the Member for Whitehaven (Dr. Cunningham), who was so successful in pursuing Labour party policy last week and in shooting the fox. My hon. Friend did an excellent job last week, and tomorrow we shall welcome Ossie O'Brien. I only hope that my hon. Friend has briefed him to take part in the debate on this Bill later in the afternoon.

I do not regard new clause 1 as the most important part of the Bill. In my opinion, the two most important parts of the Bill are those that further take away the telecommunications monopoly from British Telecom and those that address themselves to privatisation. It is a red herring to regard this new clause as the heart of the Bill. It is window dressing; it is cosmetic.

The new clause is the Government's response to the rural lobby. It is the realisation by the Government that people in the countryside have caught them out. The Government have said: "Let's find a form of words that we can put in a new clause and then put it into a circular that we can send to Back Bench Members to keep them out of the Chamber when we debate this matter on Report. Let them think that the Government have met their point of view, so that they will vote with the Government, instead of courageously abstaining."

Tonight the House is in no better a position than we were in Committee to debate this matter with intelligence. As the hon. Member for Leominster (Mr. Temple-Morris) said, we are still waiting for the licence. I hope that we shall raise this matter again tomorrow. The Minister and Conservative Members made it clear at the beginning of the Committee stage that we could not intelligently discuss the Bill without seeing the draft British Telecommunications licence. There was agreement on that. The Minister supported us. He told us that we could not have a considered discussion until we had seen the licence. We still have not seen it. The reason is that the chairman of BT would not give the Minister permission to produce the draft licence.

9.15 pm

Our debates have been frustrated, not only by Ministers' incompetence and lack of comprehension but by the chairman's refusal to let the Government give to Parliament the information that it requires for purposeful debate. We came across that earlier today. I quoted the Minister's statement that he was writing to the chairman of BT to ask for details of the access charges that are to be used to fund the rural and emergency services, kiosks and some residential services. The Minister wrote to the chairman for that detailed explanation in order to inform the Committee. As he was so often embarrassed in Committee, so he was shamefaced this afternoon to admit that the chairman of BT had not had even the decency to reply to his letter. We still do not have details of the access charges. Is it any wonder that the only Conservative Member—the hon. Member for Aldridge-Brownhills (Mr. Shepherd)—to have listened to the whole of tonight's debate has decided to abstain? Nobody who has listened to the speeches from the Government Benches today could vote for the new clause, particularly in the knowledge that vital information has been withheld not by Ministers or civil servants but by the chairman of BT.

One wonders why the Government have proceeded with the Bill when they are unable to give us, and do not have, such vital information. The Minister said that he was not competent to give the information and could not answer our questions but that he would ask the chairman of BT to do so. What a situation! It is not only the licence and the access fees; we are no wiser about the pricing policy. When I listened to Conservative Members trying to get information from the Government, I felt a slight tremor of sympathy for them. They have desperately tried to find out what the formula RPI minus X means. What does it mean? What is X? The hon. Member for Aldridge-Brownhills shakes his head in despair, like a sad cocker spaniel, at what the Government are doing to telecommunications. He described the Bill as creating the worst of both worlds and all Labour Members must agree with that. I fear that I shall have to deal on Third Reading with the principle of some of my amendments.

The hon. Member for Leominster acted as our unofficial legal adviser in Committee. On more than one occasion he drove a coach and horses through the sloppy drafting of the Bill. Tonight he asked how important were the words "he considers". The new clause states: The Secretary of State and the Director shall each exercise the functions assigned to him by this part in the manner which he considers is best calculated— Of what value is the clause? The Secretary' of State or Director General can say in court "My judgment may be at fault, I may not have done my job properly, but I can put my hand on my heart and say that I considered that this was the best calculation that I could make."

The clause is not worth the paper that it is written on. The clause is not worth anything at all. The words "he considers" make the clause a sop to the rural lobby. The clause is there only because the POEU and the other trade unions drew the attention of the people in the countryside to the devastation that the legislation will cause to their telecommunications system. In Committee I examined the words "not reasonably practicable". In the licence, but not in the Bill, "not reasonably practicable" is illustrated. If a service cannot be provided because of the laws of nature or the topology of the earth, it is deemed to be "not reasonably practicable".

I asked the Under-Secretary for an example. He asked me to consider what would happen if a mountain shadow made telecommunications impracticable. When challenged about the constituency that the Government Chief Whip represents in the Lake District the Under-Secretary ducked. He did not know whether to tell the truth—that there would be no service for the Chief Whip's constituents. It was a pathetic sight to see the Under-Secretary in Committee trying to justify the small print in the proposals. I draw the attention of the House to the gibbering by the Minister when humiliation was poured upon him and the Under-Secretary in Committee.

The term "reasonably practicable" was not the only term which failed to stand analysis in Committee. The expression "all reasonable demands" suffered the same fate. If someone in the countryside will not pay BT the costs attributable to supplying that service there are no "reasonable demands". The hon. Member for Leominster underlined that if the people in the countryside are told that they have to pay the full cost of their telecommunications service they will not think that the Bill contains a fair definition of "reasonable demands". He feels that very strongly. He is not taking a cosmetic view of rural interests—indeed, he is speaking for them. It is the Government who are taking a purely cosmetic view.

Public call box services, emergency services and services in rural areas are mentioned in the new clause, but the residential subscriber is not. In Committee we established beyond doubt that one of the casualties of liberalisation and privatisation will be the residential subscriber. Since liberalisation the prices paid by the residential subscriber have risen so that the costs to the large businesses can be reduced. The consequences of privatisation for the residential subscriber will be even worse than they are from liberalisation. I intend to speak about that matter on Third Reading.

One of the Opposition's constant complaints in Committee was the slack draftsmanship and wording of the legislation that we are being asked to approve. Earlier today, during a lengthy speech, the Minster refused to give way when Opposition Members wished to question him on paragraphs (e), (f) (g) and (h). I do not blame him, because those paragraphs are written in such a way that they are absurd.

Paragraph (f) states that the Secretary of State and the director shall have the function to encourage foreign users to establish places of business in the United Kingdom". The definition states: 'foreign user' means a user of telecommunication services outside the United Kingdom". Does that wording mean that if an Eskimo uses a telephone in an igloo in the Antarctic—a user of telecommunications overseas—there is a duty on the Secretary of State and the Director General to try to persuade that Eskimo to establish a place of business in the United Kingdom? That is what the wording suggests.

We are owed an explanation of what those paragraphs mean. What are their qualifications? What parameters will be placed around them? The hon. Member for Croydon, South (Sir W. Clark) mutters from a sedentary position, with his feet spoiling the furniture. He has obviously come out of the cold into the warmth. He has no interest in telecommunications. As is typical of Conservative Members, he makes nonsensical remarks. I can tell the hon. Gentleman that that monopoly has been reserved for the hon. Member for Northampton, North (Mr. Marlow), and I ask him to desist.

9.30 pm

Will the Under-Secretary of State rectify the omission of the Minister for Industry and Information Technology? Will he address himself to new clause 1(2)(e), (f), (g) and (h), and tell us precisely what they mean for British manufacturers and British operators? Finally, with regard to new clause 1(2)(h), what sense does it make to maintain and promote competitive activity on the part of United Kingdom operators in markets outside the United Kingdom? Does the Under-Secretary of State think that the Japanese are telling their companies to go and compete against each other in Britain? Does he think that the Germans are telling their telecommunications companies to go and compete against each other in Britain? Does he think that the American companies are doing that? That is nonsense. What the Government should be saying to telecommunications companies is "Go together into the world markets and try to obtain orders for Britain." The Government should not be exporting them to compete against each other and to cut each other's throats. I hope very much that we reject new clause 1.

Dr. John Cunningham

It is always difficult to follow my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding), whether he is speaking about telecommunications or any other subject. Perhaps I should correct him in that foxhunting is outwith Labour party policy. Far from trying to shoot the hon. Member for Shipley (Mr. Fox), I may have done my best to snooker him during the Darlington by-election, but the real purpose of my efforts was to burst the bubble of a party which, in the name of the right hon. Member for Crosby (Mrs. Williams), has no roots, no principles, no philosophy and no policies.

It is not surprising that we have had a long debate on new clause 1. We had a long debate about the clause that it seeks to replace. In defence of the Minister for Industry and Information Technology, we made progress in Committee and we see in the redrafted clause that "guidelines" has been changed to "general duties", but much of the wording about which my hon. Friend the Member for Newcastle-under-Lyme and others have complained remains, as does the complete lack of definition of priorities for action either by the Secretary of State or by the Director General of Telecommunications.

Some of the best passages in the new clause are due to amendments moved by the Opposition in Committee. The use of the word "duty" is one example. The provisions for the disabled and the promotion of research and development are other examples. We have also, as my hon. Friend mentioned, removed the word "practicable" and the word "needs" and other desiderata, so painfully explained to the Committee by the Under-Secretary of State late one evening, which resulted in a row. Nevertheless, what remains is unacceptable.

The vagueness has been replaced by phrases such as "to promote" and "to encourage" which themselves leave wide open some of the important issues with which the clause seeks to deal. Lurking behind the clause are the all-important licence conditions and the guidelines for the Director General and the Office of Telecommunications. So this is a far from satisfactory state of affairs.

The general duties in the clause are no substitute for specifc duties being laid upon either the Secretary of State or the Director General. We would have much preferred clear and specific duties in respect of a number of matters which we sought to have clarified.

The Minister for Industry and Information Technology mentioned the importance of licensing, safety standards, standards for the provision of services and the need for approval to be given to appliances and contractors. The Opposition go along with much of what he said on those issues. In spite of the hon. Gentleman's remarks, the clause does not set out clear objectives for the United Kingdom telecommunications industry. The Bill fails to set out clear objectives and a strategy. Instead, it will provide a free-for-all in the telecommunications market and industry. We do not accept that that will be in the best interests of British manufacturers, of our telecommunications indudustry or of a universal telecommunications service and network, which we reckon to be all important for Britain and very much in the national interest.

The Minister glossed over the problems that will remain for consumers in not only rural areas but inner city areas and deprived urban areas, where low income wilt not attract investment either from British Telecom in future or from operators such as Mercury. Nor are the problems to be faced by the employees of British Telecom to be taken lightly. The Minister said nothing about them. Almost 250,000 futures are bound up with British Telecom, and perhaps pension rights will be put at risk.

There is no doubt that the creaming off that will result from the licensing of Mercury will threaten jobs in BT. It is not good enough to say that fears about the provisions of the new clause have been removed or assuaged. It is not true to say, as was implied, that the consumer organisations will be happy with the redrafting of the clause. The Consumers Association, the watch dog body—the Post Office Users National Council—Rural Voice and the National Farmers Union have all expressed deep anxiety about the Government's proposals.

It was clear from the time that the Minister gave to these matters that he is still sensitive about them. The reality is that Conservative Back Benchers, many of whom purport to represent rural communities and rural areas—an honourable exception is the hon. Member for Leominster (Mr. Temple-Morris), and perhaps the hon. Member for Aldridge-Brownhills (Mr. Shepherd)—have missed a marvellous opportunity to toughen the Bill and to ensure that a service is provided for those communities. They have missed it because they have not taken enough interest in the Bill, and nor have they sought to bring sufficient pressure to bear on their Government to bring about the changes—

Mr. Richard Shepherd


Dr. Cunningham

No. I should like to give way but I am very short of time.

There is no doubt that, as with rural bus services and the threat to rural schools and sub-post offices, a real threat to rural telephone services will remain in spite of the redrafting of the clause.

It is fair to ask who is really in charge of what is being proposed. On his own admission, the Minister of State asked the chairman of British Telecom almost two months ago to give the Committee and the House the details of how access fees will be applied. He has had no answer. That is an appalling state of affairs. The Minister says that he regrets it. I would have expected him to summon the Director General before Report and demand to know what proposals there are for the very important financial mechanism for the support of services in rural areas. It is not acceptable that the Bill should be passed before those proposals have been made clear.

Another anxiety remains. One of my hon. Friends raised the question of research and development. The Minister agreed that it was an important issue, and the clause was amended appropriately, but nothing has been said about the future financing of research and development. Nothing has been said about who will pay or whether any access fee or similar charge will be levied to ensure that our world lead in such places as Martlesham will be sustained once the privatisation and liberalisation aspects of the Bill have become law—as we regretfully assume that they will.

Much has been made of competition and choice for consumers, but in reality most domestic consumers, whether in urban or rural areas, will have no choice. They will be left with the services provided by British Telecom. They will not want to expend large amounts of money on equipment. They will want a simple, reliable telephone service, and British Telecom will be the only organisation offering them such a service. The only difference will be that it will have become a private rather than a public monopoly. The Opposition are in no doubt that such a monopoly should be under public control. That would give the consumers the best safeguard.

The Government tabled the new clause almost at the last possible moment. We have had very little time in which to consider its implications or to amend it. That is typical of the way in which a number of important aspects of the Bill, such as the licence arrangements, were handled throughout the Committee stage. The new clause encompasses many important facets of what the Government propose to do, but it leaves us with many concerns about the impact of the proposal on the community at large, and that is why we tabled a number of amendments which we are discussing together with the clause. The amendments seek to define "general duties" now that the original description of the clause as "guidelines" has been dropped, and to identify what order of priorities will be given by the Government to the many and sometimes conflicting objectives set out in the new clause. The prime example is the objective on the one hand to look after the consumer and on the other hand to promote efficiency and competition. The Minister and his hon. Friends have never been able satisfactorily to tell us how the Director General and the Office of Telecommunications can pursue those two directly conflicting objectives within the same umbrella organisation.

9.45 pm

We tabled an amendment to remove qualifications such as "not reasonably practicable" and "reasonable", which reduced the requirement to provide telecommunications services. As my hon. Friend the Member for Newcastle-under-Lyme said, we have tried to identify the needs of residential subscribers whose bills are certain to rise as a result of the proposals. We have sought to ensure that finance for unprofitable services, for example public telephone kiosks, the emergency services and services in rural areas, is on a stable and long-term base. We have sought to raise questions about the prices to be charged, the service to be provided in non-profitable services and how the access charge is supposed to work. We have sought to remove the requirements to maintain competition in the United Kingdom, which will simply increase imports and reduce British jobs, as many of my hon. Friends have said.

Finally, we have sought to remove the nonsensical requirement in the Bill which lays a duty on the Director General and the Secretary of State to promote competitive activity overseas in other people's markets, whatever that might mean. We reckon that to be a piece of nonsense. The Government have failed again to come forward with evidence that any other major industrial nation intends to provide any reciprocal arrangements for British manufacturers of telecommunications equipment. Therefore, we do not think that there will be anything other than a further disadvantage.

I said that some improvements to the clause had been made as a result of Opposition pressure, but we cannot accept it as presently drafted. I shall invite my right hon. and hon. Friends to reject it in the Lobby.

Mr. Butcher

We have had a long, six-hour debate on new clause 1, but when one bears in mind that we had a 60-hour debate in Commitee on the old clause 3, that puts things in perspective.

In the early part of the debate the Government were challenged by my hon. Friend the Member for Leominster (Mr. Temple-Morris) and a number of Opposition Members to state clearly the definition of the duty that is to be placed on the Director General and the Secretary of State to ensure that the operators provide a universal service. I agree wholeheartedly with the purpose of amendment (a) to new clause 1, which is to ensure that the Secretary of State and the Director General are each placed under a duty to exercise their functions described in the new clause. However, the drafting of the new clause achieves precisely the effect that the amendment seeks. The use of the imperative through the word "shall" in its opening words imposes the duty. There is no doubt about that. The amendment adds nothing.

I draw hon. Members' attention to a number of other duties in the Bill that are placed on the Director General and the Secretary of State. For example, in clause 11 the Bill enunciates a duty to publish a reference to the Monopolies and Mergers Commission. It says: The Director shall publish a reference". In clause 13 there is a duty to amend licences following MMC reports. The words used there are: The Director shall … make such modifications". Clause 52 states: The Director shall … make to the Secretary of State a report on his activities". Under clause 20 the Secretary of State has a duty to consult the persons running the telecommunication systems before delegating the functions under clause 19. It states that the Secretary of State shall consult with the persons running the telecommunication systems concerned". In clause 50 there is an unequivocal duty on the Secretary of State to lay copies of directions before Parliament. It states: The Secretary of State shall lay before each House of Parliament a copy of every direction given under this section". I remember the debate that we had in Committee. I remember my hon. Friend the Member for Leominster pursuing his argument with tenacity on behalf of his rural constituents. I remember proffering my version of the proposed amendment to him, which sought to satisfy his legitimate demands. I remember saying that night that we would elevate to a duty the need to secure the prime requirement—I even used the word "paramount"—which is a universal service. I can give my hon. Friend the Member for Leominster the strongest and most unequivocal assurance that the use of the word "shall", by every legal precedent that we can muster, not merely in this Bill but in others, imposes that duty with a capital "D".

My hon. Friend the Member for Leominster pressed me that evening to include not merely the first telephone and the 999 emergency service, but other telecommunications services. I recall that after an intervention, which I might even call a provocation, from the hon. Member for Newcastle-under-Lyme (Mr. Golding), who is our resident expert on these matters—I use those words in the kindest sense—I was provoked into saying something that was tantamount to a confession that the duty pertained only to the first telephone. I should have thought that he and my hon. Friend the Member for Leominster would rejoice that we have expanded that duty to telecommunications services. The broader spread of services can now be made available universally, subject to the constraint that hon. Members on both sides of the House have recognised as reasonable. Not only is that enshrined in the Bill, but something similar is enshrined in the previous Bill.

We have here a definition of the need to provide a universal service. It is a duty. We have broadened it, enshrined it and made it subject to supervision and checking by an impartial Director General. Moreover, we have made him accountable to the Monopolies and Mergers Commission for amendments to licences as he must secure the commission's permission to amend them. If we need it as a final sanction, we are even able to go through the courts, to take mandamus or certiorari action to impose duties or to check that the duties have been reasonably fulfilled by the Secretary of State or the Director General.

Many questions have been asked, but there is one in particular which hon. Members on both sides of the House have asked. It relates to the paragraph which endorses the need to make proper provision for the disabled. The Government have given considerable thought to the effect of liberalisation on the disabled, as anyone who has followed the debates on clause 3 will know.

We are deeply grateful, not only to my hon. Friends, but to the right hon. Member for Manchester, Openshaw (Mr. Morris), who has been persistent in his lobbying on the subject. The right hon. Member for Salford, West (Mr. Orme) also referred to it. Two points that arise from the increased competition in the supply of subscribers' apparatus have been discussed between the Department of Industry and representatives of the disabled. They are the ability of the hard-of-hearing to use telephones in conjunction with hearing aids and the safeguarding of the employment of blind telephonists. Various ideas to deal with those problems have been suggested and the Government are looking urgently for technical answers that meet the needs of the disabled at minimum cost to users or British industry.

The Bill contains ample powers to require special technical features to be incorporated into telephones or private switchboards. I am ready to use those powers for that purpose if that is regarded as effective and the best way forward. I undertake that those points will not be forgotten, but the technical issues are quite complicated and I do not want to prejudge what will emerge as the best answer.

The hon. Member for Berwick-upon-Tweed (Mr. Beith) entertained us and wanted to get rid of "demands" and insert "needs". The amendment that he proposed would alter the duty imposed on the Secretary of State and the Director General under subsection 1 of the new clause in a subtle but important way. The demand for telecommunications services can be measured, for example, by seeing how many people are prepared to pay extra for a more sophisticated and versatile domestic phone or by assessing the revenue from a telephone kiosk.

Those examples illustrate an important point—demand in an objective term. We intend that licensees of telecommunication systems will be able to respond to the demands of the market. The need for telecommunications services cannot be measured. It is a subjective matter that can be assessed, but the assessment of need will depend on the person who carries cut the assessment. It would be reasonable to predict that the Secretary of State, the Director General and the licensee of a public telecommunication system would have different views of the need for telecommunications services, although they could be expected to come to agreement on the demand for services.

If the amendment were to be accepted, someone would have to judge the need for telecommunications services. Would those who propose the amendment wish the judgment of need to be made by the Secretary of State? If so, how could the views of the Secretary of State be imposed on licensees without unreasonable day-to-day interference with their activities? The amendment does not help us in that regard. We believe that the juxtaposition of needs, demands, the universal service, duties, and, indeed, the needs of the market are synthesised in the clause.

Much was made of the need to innovate. We believe that in the clause we have put together in plain English the requirement for BT operators to apply for, and for equipment managers to supply, the goods and services required to keep the United Kingdom in a good position to make use of the international markets—for international they are.

I was asked a specific question by the right hon. Member for Openshaw about which services would be covered by the access payments. I can confirm that coastguard services are covered, as are the mountain rescue services and, by the usual understanding, police, fire and ambulance services via the 999 caller service. I understand that BT, the Department of Trade and the General Council of British Shipping are now talking about ship-to-shore radio. I regret that I cannot give the right hon. Gentleman the result of the negotiations but they are going on, and his point might be met as a result of the negotiations.

The hon. Member for Westhoughton (Mr. Stott) let the cat out of the bag. He said that maintenance, unbundled within the price as it was, was never a charge on the farmer whose telephone he fixed, and that it was always within the rental arrangement. He said that custom and practice sufficed. What we are saying in the Bill and in the clause is that, when BT is a private company, custom and practice will not suffice. Certain duties will be placed upon BT. Of paramount importance will be the maintenance of the universal service. But, unlike the arrangement in the early days, the 1960s and 1970s, BT will be liable. It will have lost its exclusive privilege. The Director General will be able to supply to potential customers an alternative quotation for the very service with which the hon. Gentleman provided the farmer. If the farmer thought that he was being overcharged for the service, whether the initial installation or otherwise, he would be able to take action about it.

The hon. Member talked about jobs and imports. I hope that he will bear in mind that since liberalisation was set in train in 1981, in one market alone—the PABX market—the volume of sales has increased by 50 per cent. I suggest to the hon. Member for Ipswich (Mr. Weetch) that Martlesham will be able to get its teeth into that. There is a new demand and a new dynamic, and a base against which British equipment suppliers can get their costs down, their volumes and their margins up, and attract the international markets, as we have so ordained and encouraged them to do in the subsections of the new clause.

The hon. Member for Blaydon (Mr. McWilliam) used the old argument about cheap and foreign competition making inroads into our market. He even used the word "substandard". I have been criticised for being too zealous in bringing forward standards, too zealous in seeing that they are objective, and too zealous in seeing that we are not flooded with cheap imports. I give the hon. Member the firmest assurance that we are more than alive to that danger, but we are concerned that, when the liberalisation programme is in place—as it will be in July of this year—British industry will be in a position to compete.

The hon. Members for Newcastle-under-Lyme and for Whitehaven (Dr. Cunningham) have thoroughly misunderstood the second half of the clause. They know better than I do that telecommunications is now an international market. Satellites have been invented; they exist.

We have to compete with other suppliers of telecommunications services. We wish the United Kingdom to become a centre of excellence that will attract international traffic and we want overseas companies to set up here and to base their value added network services in the United Kingdom. We believe that the new clause is important and that it reflects much of what was said in Committee. It is relevant—

It being Ten o' clock, MR. SPEAKER proceeded, pursuant to the Order [16 FEBRUARY] and the Resolution this day, to put forthwith the Question already proposed from the Chair.

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

The House divided: Ayes 279, Noes, 225.

Division No. 103] [10 pm
Aitken, Jonathan Fletcher, A. (Ed'nb'gh N)
Alexander, Richard Fletcher-Cooke, Sir Charles
Alison, Rt Hon Michael Forman, Nigel
Ancram, Michael Fowler, Rt Hon Norman
Arnold, Tom Fox, Marcus
Aspinwall, Jack Fraser, Rt Hon Sir Hugh
Atkins, Rt Hon H.(S'thorne) Fraser, Peter (South Angus)
Atkinson, David (B'm'th,E) Fry, Peter
Baker, KennethfSf.M'bone; Gardiner, George (Reigate)
Baker, Nicholas (N Dorset) Gardner, Sir Edward
Banks, Robert Garel-Jones, Tristan
Beaumont-Dark, Anthony Gilmour, Rt Hon Sir Ian
Benyon, Thomas (A'don) Goodhart, Sir Philip
Benyon, W. (Buckingham) Goodhew, Sir Victor
Berry, Hon Anthony Goodlad, Alastair
Best, Keith Gorst, John
Bevan, David Gilroy Gow, Ian
Biffen, Rt Hon John Gower, Sir Raymond
Biggs-Davison, Sir John Grant, Sir Anthony
Blackburn, John Gray, Rt Hon Hamish
Blaker, Peter Greenway, Harry
Body, Richard Grieve, Percy
Bottomley, Peter (W'wich W) Griffiths, E.(B'ySt. Edrn'ds)
Bowden, Andrew Griffiths, Peter (Portsm'th N)
Boyson, Dr Rhodes Grist, Ian
Braine, Sir Bernard Grylls, Michael
Bright, Graham Gummer, John Selwyn
Brinton, Tim Hamilton, Hon A.
Brooke, Hon Peter Hamilton, Michael (Salisbury)
Brotherton, Michael Hampson, Dr Keith
Brown, Michael(Brigg & Sc'n) Hannam, John
Browne, John (Winchester) Haselhurst, Alan
Bruce-Gardyne, John Havers, Rt Hon Sir Michael
Bryan, Sir Paul Hawkins, Sir Paul
Buck, Antony Hawksley, Warren
Budgen, Nick Hayhoe, Barney
Burden, Sir Frederick Heddle, John
Butcher, John Henderson, Barry
Butler, Hon Adam Heseltine, Rt Hon Michael
Carlisle, John (Luton West) Hicks, Robert
Carlisle, Kenneth (Lincoln) Hill, James
Carlisle, Rt Hon M. (R'c'n) Hogg, Hon Douglas (Gr'th'm)
Chalker, Mrs. Lynda Holland, Philip (Carlton)
Channon, Rt. Hon. Paul Hooson, Tom
Chapman, Sydney Hordern, Peter
Churchill, W. S. Howe, Rt Hon Sir Geoffrey
Clark, Hon A. (Plym'th, S'n) Howell, Ralph (N Norfolk)
Clark, Sir W. (Croydon S) Hunt, David (Wirral)
Clarke, Kenneth (Rushcliffe) Hunt, John (Ravensbourne)
Clegg, Sir Walter Irvine, Rt Hon Bryant Godman
Cockeram, Eric Irving, Charles (Cheltenham)
Colvin, Michael Jenkin, Rt Hon Patrick
Cope, John Jessel, Toby
Cormack, Patrick Johnson Smith, Sir Geoffrey
Costain, Sir Albert Jopling, Rt Hon Michael
Critchley, Julian Joseph, Rt Hon Sir Keith
Crouch, David Kaberry, Sir Donald
Dickens, Geoffrey Kellett-Bowman, Mrs Elaine
Dorrell, Stephen Kershaw, Sir Anthony
Dover, Denshore Kimball, Sir Marcus
du Cann, Rt Hon Edward King, Rt Hon Tom
Dunn, Robert (Dartford) Kitson, Sir Timothy
Durant, Tony Knight, Mrs Jill
Dykes, Hugh Knox, David
Eden, Rt Hon Sir John Lang, Ian
Edwards, Rt Hon N. (P'broke) Langford-Holt, Sir John
Eggar, Tim Latham, Michael
Elliott, Sir William Lawrence, Ivan
Emery, Sir Peter Lawson, Rt Hon Nigel
Eyre, Reginald Lee, John
Fairgrieve, Sir Russell Le Marchant, Spencer
Faith, Mrs Sheila Lennox-Boyd, Hon Mark
Farr, John Lester, Jim (Beeston)
Fell, Sir Anthony Lewis, Sir Kenneth (Rutland)
Fenner, Mrs Peggy Lloyd, Ian (Havant amp; W'loo)
Fisher, Sir Nigel Lloyd, Peter (Fareham)
Loveridge, John Rhys Williams, Sir Brandon
Luce, Richard Ridsdale, Sir Julian
Lyell, Nicholas Rippon, Rt Hon Geoffrey
McCrindle, Robert Roberts, Wyn (Conway)
Macfarlane, Neil Rossi, Hugh
MacGregor, John Rost, Peter
MacKay, John (Argyll) Royle, Sir Anthony
Macmillan, Rt Hon M. Sainsbury, Hon Timothy
McNair-Wilson, M. (N'bury) St. John-Stevas, Rt Hon N.
McNair-Wilson, P. (New F'st) Scott, Nicholas
Madel, David Shaw, Giles (Pudsey)
Major, John Shaw, Sir Michael (Scarb')
Marland, Paul Shelton, William (Streatham)
Marlow, Antony Shepherd, Colin (Hereford)
Marshall, Michael (Arundel) Silvester, Fred
Marten, Rt Hon Neil Sims, Roger
Mates, Michael Skeet, T. H. H.
Maude, Rt Hon Sir Angus Smith, Tim (Beaconsfield)
Mawby, Ray Speller, Tony
Mawhinney, Dr Brian Spence, John
Maxwell-Hyslop, Robin Spicer, Jim (West Dorset)
Mayhew, Patrick Spicer, Michael (S Worcs)
Mellor, David Sproat, Iain
Meyer, Sir Anthony Squire, Robin
Miller, Hal (B'grove) Stainton, Keith
Mills, Iain (Meriden) Stanbrook, Ivor
Mills, Sir Peter (West Devon) Stanley, John
Mitchell, David (Basingstoke) Stevens, Martin
Moate, Roger Stewart, A.(E Renfrewshire)
Monro, Sir Hector Stewart, Ian (Hitchin)
Montgomery, Fergus Stokes, John
Moore, John Stradling Thomas, J.
Morgan, Geraint Tapsell, Peter
Morris, M. (N'hampton S) Taylor, Teddy (S'end E)
Morrison, Hon C. (Devizes) Temple-Morris, Peter
Morrison, Hon P. (Chester) Thomas, Rt Hon Peter
Mudd, David Thompson, Donald
Murphy, Christopher Thorne, Neil (Word South)
Myles, David Thornton, Malcolm
Neale, Gerrard Townend, John (Bridlington)
Needham, Richard Townsend, Cyril D, (B'heath)
Nelson, Anthony van Straubenzee, Sir W.
Neubert, Michael Vaughan, Dr Gerard
Newton, Tony Viggers, Peter
Normanton, Tom Waddington, David
Onslow, Cranley Wakeham, John
Oppenheim, Rt Hon Mrs S. Walker-Smith, Rt Hon Sir D.
Osborn, John Waller, Gary
Page, John (Harrow, West) Walters, Dennis
Page, Richard (SW Herts) Ward, John
Patten, Christopher (Bath) Warren, Kenneth
Patten, John (Oxford) Watson, John
Pattie, Geoffrey Wells, Bowen
Pawsey, James Wells, John (Maidstone)
Percival, Sir Ian Wheeler, John
Peyton, Rt Hon John Whitney, Raymond
Pink, R. Bonner Wiggin, Jerry
Pollock, Alexander Williams, D.(Montgomery)
Porter, Barry Wolfson, Mark
Prentice, Rt Hon Reg Young, Sir George (Acton)
Price, Sir David (Eastleigh) Younger, Rt Hon George
Proctor, K. Harvey
Raison, Rt Hon Timothy Tellers for the Ayes:
Rathbone, Tim Mr. Carol Mather and
Renton, Tim Mr. Robert Boscawen.
Rhodes James, Robert
Abse, Leo Bennett, Andrew(St'kp't N)
Adams, Allen Bidwell, Sydney
Allaun, Frank Booth, Rt Hon Albert
Alton, David Bottomley, Rt Hon A.(M'b'ro)
Anderson, Donald Bradley, Tom
Archer, Rt Hon Peter Bray, Dr Jeremy
Ashley, Rt Hon Jack Brocklebank-Fowler, C.
Ashton, Joe Brown, Hugh D. (Provan)
Atkinson, N.(H'gey.) Brown, R. C. (N' castle W)
Bagier, Gordon A.T. Brown, Ronald W. (H'ckn'y S)
Barnett, Guy (Greenwich) Brown, Ron (E'burgh, Leith)
Beith, A. J. Callaghan, Rt Hon J.
Callaghan, Jim (Midd't'n & P) Hughes, Mark (Durham)
Campbell, Ian Hughes, Roy (Newport)
Campbell-Savours, Dale Jay, Rt Hon Douglas
Canavan, Dennis Johnson, James (Hull West)
Cant, R. B. Johnson, Walter (Derby S)
Carmichael, Neil Jones, Barry (East Flint)
Carter-Jones, Lewis Jones, Dan (Burnley)
Cartwright, John Kerr, Russell
Clark, Dr David (S Shields) Kilfedder, James A.
Cocks, Rt Hon M. (B'stol S) Kilroy-Silk, Robert
Coleman, Donald Lamond, James
Concannon, Rt Hon J. D. Leadbitter, Ted
Cowans, Harry Leighton, Ronald
Craigen, J. M. (G'gow, M'hill) Litherland, Robert
Crawshaw, Richard Lofthouse, Geoffrey
Crowther, Stan Lyon, Alexander (York)
Cryer, Bob Lyons, Edward (Bradfd W)
Cunliffe, Lawrence Mabon, Rt Hon Dr J. Dickson
Cunningham, G. (Islington S) McCartney, Hugh
Cunningham, Dr J. (W'h'n) McDonald, Dr Oonagh
Dalyell, Tam McElhone, Mrs Helen
Davidson, Arthur McGuire, Michael (Ince)
Davies, Rt Hon Denzil (L'lli) McKay, Allen (Penistone)
Davis, Terry (B'ham, Stechf'd) MacKenzie, Rt Hon Gregor
Deakins, Eric McNamara, Kevin
Dean, Joseph (Leeds West) McWilliam, John
Dewar, Donald Magee, Bryan
Dixon, Donald Marshall, Dr Edmund (Goole)
Dobson, Frank Marshall, Jim (Leicester S)
Dormand, Jack Martin, M(G'gow S'burn)
Douglas, Dick Mason, Rt Hon Roy
Dubs, Alfred Maxton, John
Duffy, A. E. P. Maynard, Miss Joan
Dunlop, John Meacher, Michael
Dunnett, Jack Mikardo, Ian
Dunwoody, Hon Mrs G. Millan, Rt Hon Bruce
Eadie, Alex Mitchell, Austin (Grimsby)
Eastham, Ken Mitchell, R. C. (Soton Itchen)
Ellis, R. (NE D'bysh're) Morris, Rt Hon A. (W'shawe)
Ellis, Tom (Wrexham) Morris, Rt Hon C. (O'shaw)
English, Michael Morris, Rt Hon J. (Aberavon)
Evans, loan (Aberdare) Mulley, Rt Hon Frederick
Evans, John (Newton) Newens, Stanley
Faulds, Andrew Oakes, Rt Hon Gordon
Field, Frank O'Halloran, Michael
Fitt, Gerard O'Neill, Martin
Flannery, Martin Orme, Rt Hon Stanley
Ford, Ben Owen, Rt Hon Dr David
Forrester, John Paisley, Rev Ian
Foster, Derek Park, George
Foulkes, George Parker, John
Fraser, J. (Lamb'th, N'w'd) Parry, Robert
Garrett, John (Norwich S) Pavitt, Laurie
Garrett, W. E. (Wallsend) Pendry, Tom
George, Bruce Penhaligon, David
Gilbert, Rt Hon Dr John Powell, Raymond (Ogmore)
Ginsburg, David Prescott, John
Golding, John Price, C. (Lewisham W)
Gourlay, Harry Race, Reg
Grant, John (Islington C) Radice, Giles
Grimond, Rt Hon J. Rees, Rt Hon M (Leeds S)
Hamilton, James (Bothwell) Richardson, Jo
Hamilton, W. W. (C'tral Fife) Roberts, Albert (Normanton)
Hardy, Peter Roberts, Allan (Bootle)
Harrison, Rt Hon Walter Roberts, Ernest (Hackney N)
Hart, Rt Hon Dame Judith Roberts, Gwilym (Cannock)
Hattersley, Rt Hon Roy Robertson, George
Haynes, Frank Robinson, G. (Coventry NW)
Heffer, Eric S. Roper, John
Henderson, Barry Ross, Ernest (Dundee West)
Holland, S. (L'b'th, Vauxh'll) Rowlands, Ted
Home Robertson, John Sandelson, Neville
Homewood, William Sever, John
Hooley, Frank Sheerman, Barry
Horam, John Shore, Rt Hon Peter
Howell, Rt Hon D. Silkin, Rt Hon S. C. (Dulwich)
Howells, Geraint Silverman, Julius
Hoyle, Douglas Skinner, Dennis
Huckfield, Les Smith, Rt Hon J. (N Lanark)
Hudson Davies, Gwilym E. Soley, Clive
Spearing, Nigel Weetch, Ken
Spellar, John Francis (B'ham) Wellbeloved, James
Spriggs, Leslie Welsh, Michael
Stallard, A. W. White, Frank R.
Steel, Rt Hon David White, J. (G'gow Pollok)
Stewart, Rt Hon D. (W Isles) Whitehead, Phillip
Stoddart, David Whitlock, William
Stott, Roger Wigley, Dafydd
Strang, Gavin Willey, Rt Hon Frederick
Straw, Jack Williams, Rt Hon A.(S'sea W)
Summerskill, Hon Dr Shirley Williams, Rt Hon Mrs(Crosby)
Taylor, Mrs Ann (Bolton W) Wilson, Rt Hon Sir H.(H'ton)
Thomas, Jeffrey (Abertillery) Wilson, William (C'try SE)
Thomas, Dr R.(Carmarthen) Winnick, David
Thorne, Stan (Preston South) Woodall, Alec.
Tilley, John Woolmer, Kenneth,
Tinn, James Wrigglesworth, Ian
Torney, Tom Young, David (Bolton E)
Varley, Rt Hon Eric G.
Wainwright, E.(Dearne V) Tellers for the Noes:
Wainwright, B.(Colne V) Mr. George Morton and
Walker, Rt Hon H.(D'caster) Mr. Norman Hogg.
Warded, Gareth

Question accordingly agreed to.

Clause read a Second time, and added to the Bill.

Mr. Speaker

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

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