HC Deb 17 July 1984 vol 64 cc265-86

10.2 pm

Mr. Harry Ewing (Falkirk, East)

I beg to move, That an humble Address be presented to Her Majesty, praying that the Public Telecommunication System Designation (British Telecommunications) Order 1984 (S.I., 1984, No. 855), dated 26th June 1984, a copy of which was laid before this House on 26th June, be annulled.

Mr. Speaker

With this it will be convenient to discuss also the next motion: That an humble Address be presented to Her Majesty, praying that the Public Telecommunication System Designation (Kingston upon Hull) Order 1984 (S.I., 1984, No. 856), dated 26th June 1984, a copy of which was laid before this House on 26th June, be annulled.

Mr. Ewing

I should make it clear that it is not the Opposition's intention to oppose the statutory instrument relating to the Kingston upon Hull Order 1984. It must be obvious to the Minister of State that the Kingston upon Hull telecommunications system has been in existence for many years. It is a system of which the Opposition, including my hon. Friends who represent Kingston upon Hull constituencies, are especially proud. The Opposition are not critical either of the licence for that system. We do not intend to vote against that statutory instrument.

We intend—I must make this clear at the outset of this brief debate—to divide the House on the order on the British Telecommunications licence, which was published on 13 July but which comes into operation on 5 August 1984. We wish to record our displeasure at the conditions contained in the licence. The Opposition recognise that it is a different form of licence. If the British Telecommunications unions — the Post Office Engineering Union and the Union of Communication Workers—and my right hon. and hon. Friends had not campaigned so vigorously during the Government's privatisation proposals, there is no doubt—I am sure that the Minister of State in his most generous moods would accept this—that the conditions contained in the British Telecom licence would have been different.

It is significant that although an opinion poll taken at the beginning of the legislative process on this measure about 18 months ago showed that people were in favour of privatisation — I do not shift from that view — a subsequent poll by the same firm well into the campaign to which I referred showed that pubic opinion had completely changed. Thus, by the time the Telecommunications Act became law, the majority of people in this country opposed privatisation and I believe that the licence reflects that change in public opinion.

Mr. John Powley (Norwich, South)

If public opinion has changed so quickly in one direction, does the hon. Gentleman accept that, when privatisation proves successful, public opinion will move equally rapidly in the opposite direction?

Mr. Ewing

I am not arguing that the change took place quickly. We had the advantage of a general election between the 1982 Bill and the 1983 Bill and about 18 months to argue the case. Public opinion was not changed in a short time but as a result of a lengthy debate about the value of BT as a co-ordinated unit. This debate is not about whether privatisation will be successful, although I should expect Conservative Members to have serious reservations in view of their experience with Enterprise Oil, Wytch Farm, Amersham International and certain other privatisation ventures which could scarcely be described as outstanding successes. I shall be happy to take part in that debate when the time comes, but on this occasion, having made it clear that we do not dispute the entire licence, I wish to concentrate on certain aspects of the BT licence and leave my hon. Friends to deal with other aspects which give cause for concern.

When we considered the legislation in Committee we were given one assurance after another that the rural services would be protected, but condition 11 of the licence shows that those assurances were not worth the paper that they were written on. We were told that everything would be different and that rural services would be far more secure with privatisation, but we now find that as from 5 August the conditions laid down will allow the closing of up to 5,000 telephone kiosks in rural areas. I cite that figure because the break-even figure for takings is defined as £185 per annum whereas recent evidence shows that for kiosks in rural areas the average take is only about £140. On the Minister's information, it is clear that 5,000 telephone kiosks in rural areas will be affected.

I do not know how Conservative Members will be able to repeat to their constituents the assurances that they gave during the passage of the Bill, as those assurances are not to be found in the licence. Early in the operation of BT plc, many rural telephone kiosks will be closed. I am not scaremongering; I am merely trying to be factual. I know that the Minister will say that clause 83 of the Telecommunications Act 1984 gives local authorities power to contribute to what are described as uneconomic services. The Secretary of State, who is on his weary walk from the Chamber——

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

Wrong again.

Mr. Ewing

The Secretary of State has now taken his proper seat below the Gangway. I am glad to see him go there at long last.

Hon. Members who write to the Secretary of State or the Minister will be told that they ought to have urged their local authority to contribute to the cost of keeping rural telephone kiosks open. We should bear it in mind that we shall tomorrow discuss the English and Welsh rate support grant supplementary reports, which will seriously restrict the ability of local authorities to spend on anything, let alone telephone kiosks. Only today the Secretary of State for Scotland told Scottish local authorities that he will claw back £94 million from them It is beyond me how local authorities in any part of the United Kingdom are to contribute to keeping open uneconomic but socially essential telephone kiosks.

The Secretary of State has now assumed the seat of the Chief Whip. He is a man of many guises.

It is beyond me how local authorities will keep the services open.

Mr. Tebbit

It is not difficult.

Mr. Ewing

The Secretary of State should be careful, because he will soon have to sign the letters that close the telephone kiosks. I hope that, in his usual generous way, the Minister will explain how, in Committee, on Report, on Second Reading and on Third Reading he could assure rural communities that their telephone service would be preserved, when the first thing that stands out from the licence like a sore thumb is the fact that 5,000 rural telephone kiosks are almost guaranteed to be closed.

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

I agree with the hon. Gentleman's contention that it is impossible to land local authorities with the bill. Will he be careful in his use of the word "uneconomic", as many of the telephone boxes that do not make £180 a year are used widely by people who put only 10p in the box to get someone to ring them back. I refer to travellers and lorry drivers who go around the countryside. The true economic contribution of those telephone boxes is often not recorded in the accounting figures and they might be quite wrongly condemned.

Mr. Ewing

That is a fair point. I and, I am sure, the House would like the Minister to explain the principle on which BT plc has been instructed to give a 20 per cent. rebate to the Mercury company on the end-user rates. If ever I heard of a direct subsidy being given to a competitor company, that is it.

The Minister will correct me if I am wrong, but I understand that BT plc is under pressure from the Government to give a 20 per cent. discount to Mercury. That was widely reported in the daily press on Friday 22 June, when Tom Rowland said: Details are emerging of the agreement between BT and the government which helped to break the deadlock in negotiations over the BT licence". That article went on to explain the 20 per cent. rebate on end-user rates which has been given to Mercury by BT and said that the 20 per cent. rebate would reduce as Mercury's turnover and profitability increased. If that report is wrong, and if there is no possibility of that happening, the Minister will have to explain the relationship between BT plc and Mercury, specifically in relation to any rebates or discounts which BT plc has been pressurised into giving to Mercury.

The Minister for Information Technology (Mr. Kenneth Baker)

Perhaps I can answer some points as they arise. The terms of interconnect between BT and Mercury have been freely negotiated between those two companies. It took a long series of negotiations, because this is an immensely complicated subject. Those terms were freely negotiated and the companies came to a private agreement which they have signed and initialled. Neither party wishes to make that agreement public, but I should make it absolutely clear that at no time did I or the Government put pressure on BT. The agreement was freely negotiated between two independent operations.

Mr. Ewing

I am grateful to the Minister. If he is saying that the report from which I quoted is inaccurate and that at no time did the Goverment apply pressure or use any other form of influence on BT plc in its negotiations with Mercury on interconnect rates, I accept what he says. But I do not accept that the details of the negotiations should be kept secret. After all, BT plc will be floated in the not-too-distant future, and the House ought to know the details of that agreement on interconnect rates.

This is an important aspect of our debate. It will not be acceptable to the House if the Minister says that he does not want to give details and that BT plc and Mercury do not want to reveal them.

Under the licence, BT plc is under an obligation to provide Mercury with all the connecting facilities for which it asks. I have heard nothing so ridiculous in my life. A competitor company—Mercury—has been given the right to use the facilities of BT plc. As Bryan Stanley of the Post Office Engineering Union said last week, it is like privatising British Rail and giving a competitor the right to use its track and rolling stock. Although that may seem a ludicrous proposition, that is exactly what we are faced with in telecommunications.

Operator services directly affect the Union of Communication Workers—I declare my interest as a member of that union. There is great concern that BT plc will continue to apply pressure to be allowed to charge for operator services. It will be an outrage if the company were, for instance, allowed to charge for directory inquiry services. The largest users of that service are usually the blind, those who cannot read telephone directories and those who normally need help to make a telephone call. After all the assurances given by the Minister, it would be an outrage if BT plc were allowed to charge for directory services.

I hope that the Minister can give the House an absolute assurance on this. We do not want any nonsense, with the Minister saying that the matter is out of his hands, and that BT plc is a private company and makes its own commercial judgment. The Minister and his junior Ministers were quick to give us assurances in Committee that there would not be any charges for the operator services. Kim McKinlay of the Union of Communication Workers, who represents this grade of worker, is concerned that BT plc will eventually be allowed to charge for operator services.

I have highlighted a few points, and my hon. Friends will highlight others. I hope that I have laid the foundation for opposition to some of the conditions in the licence granted to BT plc. I shall end where I began. I recognise that the licence is different from that which would have appeared had the Opposition and the British Telecom Unions Committee not conducted vigorous opposition to this Bill in Committee. We claim the credit for that; let there be no doubt about it.

Despite the improvements that we have forced in the licence, there is still sufficient in it to give us concern about the operator services, the rural services and the commercial agreements that have been made between Mercury and BT plc. That will take us into the Lobby tonight to vote against the first order.

10.22 pm
Mr. Gerrard Neale (Cornwall, North)

It epitomises the way in which the debates on the Bill have taken place over this Parliament and the last that the hon. Member for Falkirk, East (Mr. Ewing) put his arguments on behalf of his party in a manner lacking in the vindictiveness that we often hear in many other debates. That has meant that the debates on telecommunications have been all the better.

The hon. Gentleman spoke about the effects of pressure to change from the various unions on my right hon. Friend the Minister for Information Technology. I declare my interest in the industry. It is only fair to say that there has been pressure from a whole range of interests within that industry, as my right hon. Friend will agree, all of which have led to various changes. Despite the fact that my right hon. Friend has been criticised at various stages for not coming to the House with a Bill in a sufficiently finite form, he has shown that he is always ready to listen to constructive points, whether they have come from Labour or Conservative Members, and he has accommodated them wherever possible.

I still nurse a fundamental misgiving about the way in which we have indulged in the privatisation process. My right hon. Friend knows full well that for a long time I said that we should have had a far clearer policy of separating the supply and attachment end of the market within BT from the network. In leaving it all in one, we have left a large monopolistic enterprise, which we are floating on to the market.

I am further disturbed, with those in the industry, that there is no express condition in the licence as it stands to set up an arm's length Companies Act company to deal with the supply of business systems. It is fair to say that a range of conditions in the licence refer to its various elements, but there is no set condition that requires it to set up a separate Companies Act licence.

Condition 17.2 states: The Licensee may be deemed to have shown undue preference … if it unfairly favours to a material extent a business carried on by it … so as to place at a significant competitive disadvantage persons competing with that business. In that condition, the words "fairly", "material" and "significant" are all subjective. What might be insignificant to the licensee—in this case BT, with its massive turnover—might be very significant to a small competitor who was trying to enter the market.

I have a nagging doubt about the continuation of the arrangement. I fear that before very long, in terms of the development of telecommunications, the House will need to reconsider the size and nature of BT within the telecommunications market, with a view to breaking it down still further to a form that is seen in the United States.

There are two other important points that I should like to make in the time that I have available. They relate to licences.

The first deals with intellectual property rights. A licence condition of critical importance to the home telecommunications industry relates to the prohibition of certain exclusive dealing arrangements, especially the requirement in condition 31(c). It says that: The Licensee shall not, except with the written consent of the Director make the acquisition … of any telecommunications apparatus … conditional upon agreement … to transfer to the Licensee … any interest in Industrial or Intellectual Property with a view to restricting unreasonably the freedom of the supplier … to exploit his Industrial or Intellectual Property in order to confer on the Licensee … an unfair competitive advantage. If that condition were left as it is, many in the private sector of the telecommunication industry would have been desperate. Unfortunately, condition 36.4 lists a number of qualifying circumstances to that condition which tend to nullify it. I am left with the strong belief that the exclusions in 36.4 totally negate the prohibition in paragraph 36.1(c).

I know that my hon. Friend has received representations on the matter and that he is aware that counsel's opinion has been obtained. They make it clear that the Government's intention in relation to the retention of the ownership of intellectual property rights is safeguarded. I know also that he made attempts, belatedly, before the publication of the licence, to make a further amendment. Even since then, attempts have been made in correspondence to clarify it further. The view remains that BT's position in the case is far too powerful.

If the Minister makes the point that individual owners of intellectual property rights are safeguarded and if, as I understand it, BT is of the view that they are safeguarded and both believe that they have accommodated the fears of the private sector, surely the Minister should deal with the Director-General of Oftel immediately that he is in post. The Minister should ask him to make an agreed change to the licence to ensure that that doubt does riot continue.

My other concern relates to BT's right to go into apparatus production. One could make several points about that, but suffice it to say that, although the licence requires the setting up of an arm's length Companies Act company, it still falls short of the sort of protection that the private sector would wish to see. It does not impose any suitable conditions on BT until 1986. Furthermore, there is no mention of making clear what the apportionment of overheads should be between the rest of BT and the production company, and no mention of the restraints on hidden subsidies or the transfer price to supply companies. I must emphasise that all those points should be referred immediately to the Director-General of Oftel.

I am surprised that the Opposition should pray against the order. I can assume only that Opposition Members are relaxed about it because they know full well that the Government will defeat them tonight in the Lobby. I cannot imagine a worse recipe for the future of BT's union members or for the future of the members of any union in telecommunications than that of further delaying the licence. As my right hon. Friend the Minister knows, major reservations have been expressed by the private sector and by trade unions. However, it would be the worst thing possible for the industry to continue with the present doubt-ridden interregnum.

I served on the Committee that discussed the Bill in 1980–81. My right hon. Friend the Minister was appointed to his post in the middle of our proceedings on that Bill, having made a speech on Second Reading that I would have been proud to make. I should like to thank him for accommodating various requests for change. I congratulate him on the way that he has dealt with allcomers throughout the Bill's long passage. It certainly made things far easier for those of us who wanted to see competition introduced in its fairest form. I hope that he will continue to apply just as much zest and energy to ensuring that Oftel polices the Act and all the provisions relating to BT and telecommunications as a whole, so that there is no unfair competition and so that his aspirations for the telecommunications environment are achieved.

10.32 pm
Mr. John McWilliam (Blaydon)

At the outset I should like to declare my interest as a sponsored member of the Post Office Engineering Union. As such, I speak for the other members of the British Telecom Unions Committee as well, which means that I represent tonight 250,000 people who depend for their future on the success of BT. I believe that the Government have put that success seriously at risk.

At the end of more than 600 hours of debate we are left with the hon. Member for Cornwall, North (Mr. Neale) still complaining about the conditions in the licence and about the fact that the Minister has, as he would say, let loose upon our society a monopolistic monster. I agree with him, but it is the Minister's fault. If he had accepted our advice all those hours ago, he would never have resorted to such a measure. The United States has opted for a system of very detailed statutory controls over private monopolies within the telecommunications system. Like most of the world, we have traditionally opted for our monopoly to be constrained by the state, and therefore directly controlled by the democratic process. The hybrid that the Minister lets loose tonight is neither flesh nor fowl and does not satisfy either side.

Many hon. Members wish to speak, so I shall briefly outline my main objections—and those of the BTUC—to the licence as it now stands.

Our first objection is that there is no guarantee that a service will be available at as a fair price to rural users as to users in more urban areas. Secondly, there is no requirement that directory information will remain available free of charge to all customers, especially to disabled customers. The Minister must take that point on board. My hon. Friend the Member for Falkirk, East (Mr. Ewing) made it clear that the closure of many thousands of telephone kiosks will be permitted. It is nonsense for the Minister to say that local government can pay for that. It cannot. His right hon. Friend the Secretary of State for the Environment is making sure of that. British Telecom will be forced to allow rival operators to interconnect with the public network. There is no guarantee that, if they do, the access charges will be levied, and even if they are levied, there is no guarantee that the charges will be at such a level as to enable BT to meet the uneconomic services which it must supply to rural areas.

The Minister is placing restraints unfairly on the manufacturing role of BT, and I object to that. The formula for regulating BT traffic is seriously defective and needs further consideration. Protection charges for the introduction of certain exchange lines are too weak. Research and development on aids for the disabled is not being ensured, and the detailed, delicate and helpful work which many employees at BT have undertaken voluntarily and free of charge over the years to help the disabled is not underpinned by the licence.

BT's marketing and promotion operations are to be restricted. The Minister is, in part, helping his hon. Friend the Member for Cornwall, North because "restricted" does not mean impaired entirely. We want to know what that restriction will mean in a practical sense. Will BT be asked regularly to lay off the big boys and to eat up the small fry, or will it be the other way round? It is not clear and we want to know. There is no real commitment within the licence to the universal provision of non-voice services.

I could continue, but time marches on. We will have spent about 600 hours on the Bill. It is not a geat deal better whan it was when we started. The degree to which it is better is largely due to the activities of my colleagues and of British Telecom Unions Committee, who have pressurised the Minister and others to think carefully about the nonsense that the Government were perpetrating. I urge the House to reject the measure out of hand.

10.38 pm
Sir John Farr (Harborough)

I shall speak briefly about the provisions for the granting of the licence, especially in relation to the safeguards which may not be sufficiently strong for those who live in remote areas.

I spoke in two Second Reading debates—the first one and then the resumed Second Reading. On both occasions I was assured by the Minister that no rural kiosk would be shut where there was a proven need. Moreover, I was told that the cash take by a rural kiosk would stay fairly low and that a director would be in control and ensure that possibly marginal kiosks were not closed on a wholesale basis. With those assurances my hon. Friends and I felt it right to welcome the Bill. Indeed, we fully support all its other provisions.

However, hon. Members with responsibility for rural areas are a little worried. We do not want an arbitrary limit of, say, a £185 take for a call box below which it is under serious threat.

The point has been made in the House for years, and ignored consistently by the drafters of the Bill, that one cannot judge the value of a call box solely on the cash intake per annum. I am not just thinking of the great value of call boxes to those who live alone and the elderly and their value for emergency purposes, but there is evidence that many remote kiosks serve as staging posts for long distance lorry drivers. Many long distance hauliers make a practice of calling a driver at a key point at a certain time so that he can receive the latest instructions. There is no record in the annual take of the use of the call box, but it forms a vital and important link.

I hope that my right hon. Friend is listening because that has been said in the House several times during the past two or three years and has been completely ignored. I should hate to think that it will be ignored again.

Can my right hon. Friend tell the House whether it is in the Government's intention eventually to draw up guidelines in accordance with which the director should act when considering whether to close a rural kiosk? We are worried about closures in the country. We do not want the future of a kiosk which is a lifeline in a remote hamlet to be subject to the whim of a director in London who is solely going on whatever figure is decided. The director should have the benefit of the best advice, and he should heed it, but guidelines should be laid down as to when a kiosk should remain open. It should be possible for the House to debate and approve such guidelines because the provisions for rural kiosks is the one part of the Act that causes me a great deal of anxiety.

I wanted to ask my right hon. Friend some questions particularly in relation to condition 24, the restriction on prices for certain services. As the House is aware, it has been agreed that trunk call charges may not increase by more than the RPI minus 3 per cent. before July 1989. We are worried that call box charges have been left out of the basket of services whose prices will be controlled. Those who rely upon the call box services are often the less well-off and they are worried about that.

The other point that I wish to make involves people who are at the end of their own telephone line, which may be long and remote and which goes through woods and over difficult terrain. At the moment, such people do not pay for the repair of a telephone line if it is carried out in normal working hours. Apparently, that will change under the conditions that we are considering. Condition 23 allows BT to charge for the maintenance and repair of a consumer's telephone line. Many people who have such lines, which ar subject to torrential rain and strong winds, are worried that they will be faced with horrifying bills for the damage to their lines unless something is included in the condition which will ensure the averaging of the maintenance costs to all consumers by means of the rental charge.

I want also to ask about condition 3 in schedule 4. It is the requirement that BT wherever possible should install new lines underground rather than overhead. One would have hoped that condition 11 of the schedule would have contained the suitable minimum depth at which such underground lines are installed for safety reasons.

While reminding my right hon. Friend again that many of us are concerned about the position of scarce and valuable rural kiosks, I welcome the order.

10.45 pm
Mr. Ian Wrigglesworth (Stockton, South)

I am sure that all hon. Members will share the anxieties that have been expressed by the hon. Member for Harborough (Sir J. Farr) and other hon. Members. I do not want to pursue that debate in the course of my brief remarks.

The licence before the House is central to the future development of British Telecom and, as that is one of the most important industries for the future of the country, it is in that context that we should predominantly consider it.

I and my hon. Friends have not regarded the question of ownership of BT as the most important issue in the debate. We consider that liberalisation for the consumer is by far the most important issue for the future. In our view, either one should have retained the public monopoly where it can be properly regulated, or one should have a much fuller and fairer competition than will be the case under the existing regime, as spelt out in the licence. I therefore wish to mention some of the reservations that we have about the terms of the licence, and how the new regime will operate.

First, while other methods of telecommunications are coming down the track, on the major provision of telecommunications, Mercury will be the only serious competitor to BT in the foreseeable future, and it will have 3 per cent. of the market only, so what we are doing is changing a public monopoly into a private monopoly.

In a number of areas covered by the licence, the public have good cause to be anxious about how the new system will operate. It is not clear that BT plc will be able to demonstrate that the separation of the systems of supply and production will be adequate and clean enough to prevent predatory pricing. That the BT accounts will not be capable of differentiating between those areas for at least three years shows the dangers facing consumers and potential competitors as a result of that lack of clarity. How can Oftel regulate BT if its accounts for the next three years will not be clear enough to show that there is proper separation of the systems of supply and production? I hope that the Minister will explain that.

Many parts of the licence depend heavily for effective operation upon Oftel. I and my hon. Friends think that the resources and the qualifications of the people in the Office of Telecommunications are central to whether that office will be able to do its job on behalf of the consumer in order effectively to ensure fair competition. All that we have seen from the Government so far gives little reassurance that Oftel will have adequate resources and a staff sufficiently qualified to do the job properly.

This task will be made more difficult because of some of the woolly drafting that Oftel will have to interpret in the licence—phrases such as at a significant competitive disadvantage. What is significant, and how does one judge that? As to the phrase if it unfairly favours to a material extent", who will interpret what that means? Such phrases are unexplained in many parts of the licence. We are not convinced that the Office of Telecommunications will be adequate to the task that it has to carry out on behalf of consumers and in the interests of competitors to BT who wish to compete fairly with it.

I shall be interested to hear the Minister's justification for the proposed RPI minus 3 per cent. pricing formula. Unless there is proper competition, it is difficult to know what the right price should be, but, in view of the productivity progress in the industry, not only here but in other countries, does the Minister regard the formula as an adequate yardstick by which to judge the operation of BT?

As a result of the fiasco over the recent sale of Enterprise Oil and its effect on the market, some terrible asset stripping is likely to occur if BT is brought to the market later this year. In the light of that and of the rise in interest rates and its repercussions on the market, I appeal to the Minister to consider delaying the sale of BT, certainly beyond the end of this year, and to consider selling it in smaller tranches than is proposed.

Whatever methods the Government may adopt for selling BT to subscribers, I am sure that many hon. Members feel that the Government will not obtain a fair price for BT, which has many assets and much experience and has made a tremendous contribution to this country over the years, if it goes to the market at the time the Government propose.

For those reasons, we shall join other Opposition Members in opposing the licence.

10.52 pm
Mr. Richard Shepherd (Aldridge-Brownhills)

It is always amusing to see the antics of the SDP as it moves in to take over the position of the many Conservative Members who have tried arduously to persuade my right hon. Friend the Minister for Information Technology to respond to some of our anxieties. The SDP is slowly trying to identify consumers and their interests as its central theme. I am sorry that Conservative Members have not been more rigorous in our defence of that position.

I shall forgo the usual encomium of the Minister and his assistance on this issue. One can argue that the licence is a substantial improvement on previous intimations, but grave reservations remain. I hope that I shall be forgiven if I refer closely to my notes, because I wish to make a number of points that I think are of value and may influence the game plan that we shall have with BT.

Under the licence, the success of regulation will depend entirely on the expertise and dedication of the Director General of Telecommunications. For that reason, I wish him well, but it is disturbing Ito note that BT has obtained several changes in wording that release it from, for instance, bearing the burden of proof and place the onus for action on the director.

The change is most apparent in condition 18. In the section dealing with prohibition on cross-subsidies, the draft licence provided: The licensee shall, except where the Director agrees otherwise, not transfer capital from monopoly to competitive operations for a consideration which is less than full cost. The new licence provides: where it appears to the Director that the licensee is unfairly cross-subsidizing … it shall take such steps as the Director may direct for the purpose of remedying the situation". Not only is the standard of unfair cross-subsidy potentially more vague than the previous injunction against transfers at less than full cost, but the licence no longer directly prohibits anti-competitive conduct by BT. Instead, it requires the director to make a finding of cross-subsidy and to direct unspecified remedial steps.

Condition 39, relating to the potentially anti-competitive use of BT's patent library, is similarly contingent on action by the director. Condition 24, regarding the RPI-X formula places an even more formidable burden on the Director General. If BT adopts a potentially predatory pricing policy by lowering only those "relevant prices" that face competition, the licence immunises BT from any remedial action unless the Director General finds that "undue advantage is being taken" within 28 days. The RPI-X formula has been weakened by the carry-over provision that allows BT to increase prices in excess of the ceiling if it did not take the full allowance of increases in the previous years.

These provisions reflect a complete inversion of one of the most basic principles of civil procedure—that the person who has exclusive access to the evidence needed to establish a fact in dispute should bear the burden of proof. BT should have the incentive to maintain the records and accounting systems necessary to establish that it is behaving in a proper fashion in avoiding anti-competitive practice.

When price differences appear among similar services for a particular service among different regions or classes of customers, BT should bear the burden of disproving the prima facie case of discrimination. In that context, it is especially disturbing to note language in the licence that I believe to be meaningless. It attempts to limit even the access of the Director General to information.

Condition 52.2 provides that BT need not produce information that would not usually be available unless the Director General considers a particular report essential for him to exercise his functions. If competition is to become a reality, the Director General will have to proceed aggressively, have adequate staff and be willing to make findings of undue preference or discrimination where his knowledge is incomplete and BT is unwilling or unable to provide the additional information required.

The powers of an aggressive Director General are extremely broad, as is best illustrated by condition 17.3 that allows him to make determination of undue preference whenever BT favours an affiliated business So as to place its competitors at a significant competitive advantage. Apart from the general authority to prevent anti-competitive behaviour, the licence is short on specific provisions relating to those areas where BT is most capable of achieving an anti-competitive advantage. This lack of specifics illustrates the obvious—that the civil servants and the negotiators for the Government are considerably less knowledgeable about the business than the negotiators for BT.

There are three areas of conspicuous omission—the right to approve the capitalisation plan, the control of network information flow and the use of customer specific proprietary information. The explanatory notes—this is extraordinary — congratulate the drafters of the new licence on "greatly strengthening" condition 18 in the 25 October draft which failed to deal with capital transfers. I refer to the congratulatory note that the Minister's advisers put together.

Although condition 18.4(c) clarifies that the licence prohibits capital transfusions at below market interest rates, the requirement to document those transfers does not become effective until 1 April 1987, almost three years away. It seems that the rationale is that BT's current book-keeping procedures preclude any accurate attribution of costs. The effect is to provide a strong incentive for BT to capitalise its competitive subsidiaries on a non-compensatory basis without subjecting its initial financing to the approval of the Director General.

Another issue relates to the use of information about the network by BT's affiliates that produce and supply apparatus. That has been a matter of considerable concern to my hon. Friends. Changes in the network may require modifications to apparatus for transmission facilities, so advanced knowledge of potential alterations would give affiliated manufacturers an anti-competitive advantage. The licence recognises that problem in several places. Condition 21.5 requires BT to publish specifications for equipment it procures, but only at the time of tender.

Condition 23 requires the disclosure of reasonably anticipated changes to the BT network or its protocols from time to time. Information about changes in the network should be made available for inspection by leading manufacturers at the same time that it is disclosed to the engineers at BT's manufacturing affiliates.

The licence appears to tolerate a similar preferential flow of customer specific information. The restrictions of condition 38 are aimed exclusively at the problem of disclosure without the prior consent of customers. If information about the telecommunication needs of customers is passed to suppliers affiliated with BT, it should also be made available—on identical terms—to competing suppliers.

These omissions demonstrate a lack of wisdom in the Government's decision to lay this licence before Parliament on a take-it-or-leave-it basis. The licence requires significant refinement in a number of highly technical areas, and the Secretary of State should take proper account of the parliamentary debate, which is the first real opportunity to understand interests other than those of BT.

The new licence reflects substantial changes from the draft of 25 October 1983. It seems slightly undemocratic to allow the document to emerge in final form after extended negotiations with BT, from which all other parties including Parliament, were excluded.

Another basic flaw in the licence is the difficulty in obtaining modifications within its 25-year term. Any modification requires either the consent of BT or the invocation of a cumbersome process involving the Monopolies and Mergers Commission. The purpose of this inflexibility seems to be to maximise the Exchequer's return by assuring the investment community that BT can never be regulated more strictly than the licence currently provides. Moreover, if BT violates the licence, the director has no power to assess penalties other than complete revocation, a sanction that he is never likely to impose.

The risk to the public interest is obvious. In an area of rapidly changing technology, where the prospects for truly competitive conditions are most uncertain, the requirements of the national economy and the interest of consumers may require significant changes in the way in which BT is regulated. It seems extraordinarily unwise, for example, to provide in condition 24 that all price controls will expire in 1988. It is also disturbing that the Government have attempted to embed in the licence their prohibition of simple resale until July 1989, although resale may prove to be essential to achieve the control of prices through competitive market forces. I am particularly mindful of Mr. Solomons' advice to the Department on the shape of telecommunications through to the next century.

What should have been in the licence? BT should always bear the burden of proof. It has the information, but the consumer does not know what it is, and that is the real problem. Parliament should have set national telecommunications policy. We should know the answers to certain basic questions which our constituents will ask. For instance, what is the definition of "local versus trunk"? What does "discrimination" mean? The statute does not tell me and the licence tells me only in part. Is it discrimination mile by mile? For instance, if I live in Scotland, where a 100-mile call costs more than the same call in England, can one describe that as discrimination?

The Director General should have been made to interpret and adjudicate, not to set policy. That is the problem; we have given over the policy options to the Director General. That is highly unsatisfactory and, in my view, unconstitutional. I said that BT should bear the burden of proof. Any pleading before the Director General should be in public, the licence should prescribe BT's behaviour, and it should not be contingent on the Director General taking steps.

The licence for 25 years is too long, because in five years the price controls run out and we do not know what will happen then. Perhaps there will be no competition within three years. What, then, will happen after five years? A seven-year ban on resale is written into the licence. In five years from now there might be almost no competition. We have an inconsistency in dates. What evidence is there that duopoly acts differently from monopoly?

I have shortened my comments, but I have tried to put the thrust of my argument as concisely as possible. There are grave doubts about a licence being presented to the House in a fully completed form which we are unable to amend or to discuss in detail. That is unsatisfactory constitutionally and it shows a misunderstanding of how a complex, great industry moves forward and how sometimes one must fine-tune. I deeply regret and resent the fact that we in Parliament have had no real role in determining telecommunications policy. After those remarks, I can only wish the Director General well.

11.5 pm

Mr. John Golding (Newcastle-under-Lyme)

The debate has summed up the general attitude towards the British Telecommunications Bill. Only the Minister for Information Technology will have spoken in support of the Bill and the licence. He will be their sole supporter. Member after Member from the Tory Benches have been most critical of the licence. The Secretary of State showed his interest by walking out of the Chamber. Even the Under-Secretary of State has abandoned the Minister in his hour of need. Why is this? The answer is that the House has come to realise increasingly that privatisation is a flop.

The privatisation of telecommunications is not in the interests of the consumer, the manufacturing industry or the staff. I am sorry that my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher) could not lend his considerable weight to the condemnation of the selling of BT shares, on which he is an expert. We all know that that sale will be a scandal like all the other privatisation sales, for it will represent the giving away of public assets.

As Tory Members have said, the licence is a mixed bag. The Opposition will be voting against the principle of privatisation. However, the licence is better from our view, as the hon. Member for Aldridge-Brownhills (Mr. Shepherd) underlined, than the one that was presented to us two years ago. It is better because of the campaigning of the trade unions outside the House and the intense parliamentary opposition within it. There have been changes in the Government's attitude which have brought criticism from Tory Members. The Government have accepted that serious competition will not be in the interests of the development of telecommunications. British Telecom will become almost a private monopoly for outside Hull it will faced only by the irritants of Mercury and cellular radio.

I know that many Conservative Members dislike that fact. The hon. Members for Aldridge-Brownhills and far Cornwall, North (Mr. Neale) have illustrated the antagonism that they feel. They wanted more competition and the break-up of BT, but they do not have that in the licence. I must congratulate the Minister on facing reality and ensuring that his hon. Friends' wishes have not been met. I would prefer a public monopoly to a private monopoly, but I think that it would have been disastrous for telecommunications had we gone along the road advocated by Conservative Back Bench Members.

British manufacturers are acting against their own interests in supporting the weakening of BT. It is in their interests to have a strong British telecommunications system. British manufacturers should be concentrating on preventing the excessive telecommunication imports that will be arriving as a result of privatisation rather than trying to undermine the strength of British telecommunications. The licence is far superior, because of what the Opposition have campaigned for in terms of rural areas and the disabled and protection for the vesting subscriber. There are safeguards that would not have been included had we not argued day in, day out, night in, night out. The justification for our intense opposition to the Bill is to be found in an improved licence.

I promised to finish my speech at 11.10 pm, and I shall keep my word. Much still needs to be done to improve the licence. It is still unsatisfactory—not in its provision of sufficient competition and sufficient 19th century laissez-fair, but in its provision of sufficient safeguards for the weakest people in our society. We shall be voting against the measure.

11.10 pm
The Minister for Information Technology (Mr. Kenneth Baker)

This debate has been similar to other debates in the long process of this measure passing on to the statute book. When my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) said that he would spare passing his encomium upon me, I thought that that was a self-denying ordinance that he observes at the beginning of our debates, because I did not notice him scattering encomiums upon me.

My hon. Friend's contribution — I say this with genuine feeling — to the competitive balance in a deregulated telecommunications network has been significant. My hon. Friend has consistently taken a different view from the Government. He has had a considerable impact upon the shape of the licence and the legislation. He may believe that his contribution is not as great as he would have liked, but I pay tribute to him for the fact that his thinking has changed significant parts of the licence and the framework of regulation and has led to greater competition. I have noted what he said tonight. I shall read carefully his points, and I am sure that the Director-General of Oftel will do so as well.

There has been little mention of the Hull licence. It is almost identical to the BT licence, both in the protection that it gives consumers and in its provisions to ensure fair competition. Its 25-year term creates adequate confidence in the further development of the telecommunications system which has served the people of Hull well for many years.

The licences granted to British Telecom and Hull must be granted before the appointed day when the legislation comes into force — 5 August. That is clearly foreshadowed in section 7 of the Act. Unless the BT licence is in place when the licensing provisions of the Act come into effect, BT would be committing the offence of running an unlicensed system. It would be unable, for example, to place its telegraph poles along the highway, because its present powers to do so under the Telegraph Acts will be repealed on 5 August. The same consideration applies to Hull.

In addition to the licences for BT and Hull, a series of other licences will need to be in place by 5 August. In addition to the licences under the order we are debating, BT will require separate licences for its mobile radio, value added and cable television systems. These will place BT on a level footing with its competitors so that it will enjoy no unfair competitive advantage over them. Hull will also require a value added services licence.

Apart from this, a considerable number of private systems are currently run under BT's exclusive privilege and have not required licences. Now that BT is to be licensed, they will need licences as well, and the Department will be consulting those concerned about the text of the necessary licences.

I shall deal with a specific point raised by my hon. Friend the Member for Cornwall, North (Mr. Neale) about intellectual property. I apologise for the complexity of these sentences, but my hon. Friend made an important point. He questioned whether the new safeguards in the licence were adequate to ensure that BT is not able to require the transfer to it of intellectual property — possibly a patent—in such a way that it gains an unfair competitive advantage. The doubts that have been expressed relate to condition 36 of the licence which places a clear prohibition on BT making it a condition of the acquisition of any telecommunication apparatus that any interest in intellectual property — the patterns and design—should be transferred with a view to restricting unreasonably the freedom of the supplier … to exploit his Industrial or Intellectual Property in order to confer on the Licensee or some other person an unfair competitive advantage. In other words, there is anxiety that when BT buys a piece of telephonic equipment it could insist that the supplier transfer the patents, which BT could then exploit.

A number of specific qualifications in condition 36.4 disapply the prohibition in certain circumstances — for example, where the transfer is necessary or desirable to facilitate the running of any of the Applicable Systems or to the extent that it is "reasonably necessary" for the purpose of enabling the licensee to secure an alternative source of supply.

As I understand it, my hon. Friend's concern is that that would enable BT to require the assignment to it of intellectual property rights. I do not accept that that is so, because the provisions refer specifically to transfers which the director must agree are necessary or desirable or which are reasonably necessary. In one case, BT would have to obtain the specific authority of the director before any such transfer could be made and in the other case any disagreement about what is reasonably necessary would naturally fall to the director to determine. I regard it as highly unlikely that the director, acting in accordance with his duties under section 3 of the Act, would ever decide that the acquisition of industrial or intellectual property was necessary or desirable for the purposes that I have mentioned.

I appreciate that concern has been expressed by others as well as my hon. Friend about the drafting of the condition, but I hope that they will be reassured that there are adequate safeguards to ensure that BT does not behave in an anti-competitive fashion in relation to industrial or intellectual property. If they are not sufficient, the Act provides clear mechanisms for the Director General to amend licences and no doubt representations will be made to him in due course.

Several hon. Members raised the not unfamiliar question of the provision of public call boxes after liberalisation following privatisation. My hon. Friend the Member for Harborough (Sir J. Fan) has raised the matter on several occasions, as have the hon. Members for Falkirk, East (Mr. Ewing) and for Blaydon (Mr. McWilliam). Perhaps I may explain how the Act and the licence improve the situation. I assure my hon. Friend the Member for Harborough that I am just as concerned about this as he is. When I started taking the legislation through the House four years ago I represented an urban seat. I now represent a rural seat, with many remote kiosks, and my constituents put the same points to me as my hon. Friend's constituents put to him. I hope that my hon. Friend will be reassured by what I have to say.

For the first time, there is a positive obligation on BT to continue to provide call boxes. Under the present arrangement, no such obligation exists. Secondly, at present there is a voluntary agreement between BT and POUNC which has worked very satisfactorily. The licence ensures that that arrangement will continue, but the safeguards will be stronger in that the arrangement is at present only voluntary whereas in future it will be obligatory and enforced by the director.

Several hon. Members mentioned the guideline figure of £185, which is the trigger level at which the director may consider whether a kiosk should be closed. It has been claimed that this will lead to the wholesale closure of kiosks in rural areas. I wish to take this opportunity to allay that concern. First, BT has always behaved responsibly in the past. For example, in 1982–83 only 66 call boxes were withdrawn on account of low takings, of which 29 were in rural areas, out of a total of more than 70,000 kiosks. There is no reason to expect any significant change in BT's behaviour. Indeed, BT has publicly committed itself to maintain and improve services in the rural areas. Moreover, certain parts of the licence oblige BT to continue specifically to continue the provision of those services to the rural areas.

Secondly, I draw attention to the role of the Director-General in this respect. Section 3 of the statute obliges not just the director but the Secretary of State to exercise his functions in the way that he considers best calculated to secure the provision throughout the United Kingdom of such telecommunication services as satisfy all reasonable demands for them including, in particular … public call box services. I do not believe that there could be a clearer obligation.

Perhaps I might discuss the constituent parts of the £185 as I know that it worries hon. Members, especially the hon. Member for Berwick-upon-Tweed (Mr. Beith), as he has raised the matter several times. The figure is not new as it was agreed between BT and POUNC in 1981. Revenue to a call box cannot be measured just by the number of coins that drop into it as there are transfer calls and credit charge calls and someone can make a short 5p or lop call and ask the other person to ring back. We have said that, in additon to the £185, there must be taken into account an allowance of 25 per cent. of takings. The call box's takings therefore need amount to only £138.75 a year to meet the £185 minimum. If we assume that each call costs 10p, a call box has to take only about 26 calls a week — or fewer than four a day — to meet the minimum figure. If we use the more realistic assumption of a 20p call, the box has to be used only 13 times a week — or less than twice a day — to be kept in business. Even in those circumstances, representations can be made. In condition 11 there are the most elaborate arrangements by which the Director-General must advise the parish council, put up a notice and receive representations. That does not exist under present arrangements in the United Kingdom.

Mr. Ashdown

Why are call boxes excluded from the constraints of condition 24 on the restriction of prices?

Mr. Baker

We made up the basket on the restriction of prices on the guidance of the recommendations of Professor Littlechild. We have included in the basket the area of substantial monopoly that will continue and have excluded certain others. The one that the hon. Gentleman mentioned is one of those which we have excluded. I do not think that the House need feel too much anxiety on that account.

I should like to deal with the promotion of competition and what the hon. Member for Stockton, South (Mr. Wrigglesworth) and my hon. Friend the Member for Aldridge-Brownhills said. We have tried to increase substantially competition in this market. I shall not go through the history of the provision of services and apparatus. Conditions 13 and 14 promote competition. Perhaps I might add to what has been said about resale. I want to announce an extension of competition. In my statement of 17 November 1983 in Standing Committee A on the Telecommunications Bill, I set out the Government's intention in regard to competition in telecommunications. I discussed the principles of the Government's approach towards the various forms of resale of private circuits. I said that, although the Government did not intend to introduce resale before July 1989, we would examine the scope for the relaxation of existing rules in several specific areas. The Government have made several decisions that will provide a distinctly more liberal regime for users. These issues are complex, and I believe that I should strain the patience of the House if I went into the details of schemes for lease circuits and interconnect.

Mr. Golding

No, go on.

Mr. Baker

I think that my judgment might be better than that of the hon. Member for Newcastle-under-Lyme (Mr. Golding) in this respect. The details run to about seven pages of close typing. If I may, I shall arrange, in the next two days, to answer a written question. I shall set out the principles now. The Government have decided to introduce specific liberalisation measures for the group use of inland lease circuits, the interconnection of leased circuits and public switched networks and the use by BT or Mercury of spare capacity on privately owned networks.

These measures will, on the one hand, stimulate greater availability and improved use of telecommunications services, but, on the other, they are aimed at avoiding the financial threat to the services provided by public telecommunications operators which could arise from the early introduction of simple resale capacity on private circuits. When the House and the various interested parties in the country have had time to consider these, as they will, I hope that they will find them a significant increase in liberalisation.

Several hon. Members touched on the flotation of BT. I have consistently argued that the privatisation of BT is not an act of dogma but a logical extension of liberalisation of a monopoly. BT will certainly benefit by being removed from a web of public control; the taxpayers will benefit by receiving the receipts from the sale of BT; and the consumers will benefit from better services from BT.

I am glad to say that we are moving down the path to privatisation and are holding the course well. The Act received Royal Assent on 12 April. The capital structure on the RPI minus 3 formula was announced on 2 May. The BT licence was issued on 22 June. The Director-General of Oftel took up his post on 1 July. BT will become a plc on 6 August. The legislation is all in place, and the machine is running. BT will be privatised in the late autumn, and all the signs are that it will be extremely successful.

The sale of BT represents the greatest opportunity we have ever had to increase the ownership of shares by ordinary people in Britain. If all the 240,000 BT employees take up their free allocation of shares, BT will have the largest number of shareholders in the country, second only to ICI. However, this is only the beginning. We want to do much better than that.

First, we intend to set the minimum application level at around £250 worth of shares. Less than half of this— in the region of £100—will be payable at the time of flotation, and the balance in instalments over a set period. The exact duration of the instalments period will be firmed up closer to the flotation.

I announced on 25 May that we intended to offer telephone subscribers who buy shares a set of vouchers which can be set in part payment of their quarterly telephone bills for a period of up to three years. The vouchers will be of a fixed monetary amount and will be usable one at a time over the period of the scheme. The number of vouchers which investors can receive will be related to the number of shares which they buy at the time of the flotation and which they keep until the vouchers are sent out.

This scheme is designed to encourage telephone subscribers to invest in BT, and also to reward their loyalty by keeping the shares during the period of the voucher scheme. The first set of vouchers is likely to be sent out six or seven months after the flotation.

Mr. Peter Shore (Bethnal Green and Stepney)

On a point of order, Mr. Deputy Speaker. This all too short debate, lasting one and a half hours, is on the licence of BT. It has nothing whatever to do with privatisation. It is a gross abuse of the House for the Minister now to make a statement on the details of that.

Mr. Deputy Speaker (Mr. Paul Dean)

We have had a fairly wide debate from both sides of the House.

Mr. Baker

The right hon. Gentleman is a little too peevish. He has not been present for most of the debate. Had he been, he would know that the question of flotation was raised. However, I can understand why he is so peevish, because the scheme that I have outlined will be attractive to many of the telephone subscribers of Britain and will represent an enormous opportunity to increase share ownership. The Opposition do not like that, but that is what will happen.

We want to take every opportunity to ensure that, with the sale of BT, we extend ownership not just through the City institutions but to many ordinary people. That is why we shall be introducing the scheme, and why the flotation of BT will be a great success later this year. I am glad to say that we have already set in train a series of measures involving the promotion and sale of BT which the public will see over the next few months. It will culminate in the issue of a shortened prospectus as well as a full prospectus in November, and I am sure——

It being half-past Eleven o'clock, Mr. Deputy Speaker put the Question pursuant to Standing Order No. 4 (Prayers against statutory instruments, &c. (negative procedure)).

The House divided: Ayes 186, Noes 247.

Division No. 412] [11.30 pm
Alton, David Bell, Stuart
Anderson, Donald Bennett, A. (Dent'n & Red'sh)
Archer, Rt Hon Peter Bermingham, Gerald
Ashdown, Paddy Bidwell, Sydney
Ashton, Joe Blair, Anthony
Atkinson, N. (Tottenham) Boothroyd, Miss Betty
Barnett, Guy Boyes, Roland
Barron, Kevin Bray, Dr Jeremy
Beckett, Mrs Margaret Brown, N. (N'c'tle-u-Tyne E)
Beggs, Roy Brown, R. (N'c'tle-u-Tyne N)
Beith, A. J. Brown, Ron (E'burgh, Leith)
Bruce, Malcolm Lamond, James
Callaghan, Jim (Heyw'd & M) Leadbitter, Ted
Campbell, Ian Leighton, Ronald
Campbell-Savours, Dale Lewis, Ron (Carlisle)
Canavan, Dennis Lewis, Terence (Worsley)
Carter-Jones, Lewis Litherland, Robert
Clark, Dr David (S Shields) Lloyd, Tony (Stretford)
Clarke, Thomas Lofthouse, Geoffrey
Clay, Robert Loyden, Edward
Clwyd, Mrs Ann McCartney, Hugh
Cocks, Rt Hon M. (Bristol S.) McDonald, Dr Oonagh
Cohen, Harry McKay, Allen (Penistone)
Coleman, Donald McKelvey, William
Conlan, Bernard Mackenzie, Rt Hon Gregor
Cook, Frank (Stockton North) McNamara, Kevin
Cook, Robin F. (Livingston) McTaggart, Robert
Corbett, Robin Madden, Max
Corbyn, Jeremy Maginnis, Ken
Cowans, Harry Marek, Dr John
Cox, Thomas (Tooting) Marshall, David (Shettleston)
Craigen, J. M. Maxton, John
Crowther, Stan Maynard, Miss Joan
Cunliffe, Lawrence Meacher, Michael
Dalyell, Tam Meadowcroft, Michael
Davies, Rt Hon Denzil (L'lli) Michie, William
Davies, Ronald (Caerphilly) Mikardo, Ian
Davis, Terry (B'ham, H'ge H'l) Millan, Rt Hon Bruce
Deakins, Eric Miller, Dr M. S. (E Kilbride)
Dewar, Donald Mitchell, Austin (G't Grimsby)
Dobson, Frank Morris, Rt Hon A. (W'shawe)
Dormand, Jack Morris, Rt Hon J. (Aberavon)
Dubs, Alfred Nellist, David
Dunwoody, Hon Mrs G. Nicholson, J.
Eadie, Alex Oakes, Rt Hon Gordon
Eastham, Ken O'Brien, William
Evans, John (St. Helens N) O'Neill, Martin
Ewing, Harry Orme, Rt Hon Stanley
Fatchett, Derek Park, George
Faulds, Andrew Patchett, Terry
Field, Frank (Birkenhead) Pavitt, Laurie
Fields, T. (L'pool Broad Gn) Penhaligon, David
Fisher, Mark Pike, Peter
Flannery, Martin Powell, Raymond (Ogmore)
Foot, Rt Hon Michael Prescott, John
Forrester, John Randall, Stuart
Forsythe, Clifford (S Antrim) Redmond, M.
Foster, Derek Rees, Rt Hon M. (Leeds S)
Foulkes, George Roberts, Allan (Bootle)
Fraser, J. (Norwood) Roberts, Ernest (Hackney N)
Freeson, Rt Hon Reginald Robertson, George
George, Bruce Robinson, G. (Coventry NW)
Gilbert, Rt Hon Dr John Rogers, Allan
Godman, Dr Norman Rooker, J. W.
Golding, John Ross, Ernest (Dundee W)
Gould, Bryan Ross, Stephen (Isle of Wight)
Gourlay, Harry Rowlands, Ted
Hamilton, James (M'well N) Sedgemore, Brian
Hamilton, W. W. (Central Fife) Sheerman, Barry
Hancock, Mr. Michael Sheldon, Rt Hon R.
Harrison, Rt Hon Walter Shore, Rt Hon Peter
Hart, Rt Hon Dame Judith Short, Ms Clare (Ladywood)
Haynes, Frank Short, Mrs R.(W'hampt'n NE)
Healey, Rt Hon Denis Silkin, Rt Hon J.
Heffer, Eric S. Smith, C,(Isl'ton S & F'bury)
Hogg, N. (C'nauld & Kilsyth) Smith, Rt Hon J. (M'kl'ds E)
Holland, Stuart (Vauxhall) Snape, Peter
Howell, Rt Hon D. (S'heath) Soley, Clive
Howells, Geraint Strang, Gavin
Hoyle, Douglas Straw, Jack
Hughes, Dr. Mark (Durham) Thome, Stan (Preston)
Hughes, Robert (Aberdeen N) Tinn, James
Hughes, Roy (Newport East) Torney, Tom
Hughes, Sean (Knowsley S) Wallace, James
Hughes, Simon (Southwark) Wardell, Gareth (Gower)
Janner, Hon Greville Wareing, Robert
John, Brynmor Welsh, Michael
Jones, Barry (Alyn & Deeside) White, James
Kilroy-Silk, Robert Wigley, Dafydd
Kirkwood, Archy Williams, Rt Hon A.
Lambie, David Wilson, Gordon
Winnick, David
Woodall, Alec Tellers for the Ayes:
Wrigglesworth, Ian Mr. John McWilliam and Mr. Don Dixon.
Young, David (Bolton SE)
Adley, Robert Edwards, Rt Hon N. (P'broke)
Aitken, Jonathan Eggar, Tim
Alexander, Richard Evennett, David
Amess, David Fairbairn, Nicholas
Ancram, Michael Fallon, Michael
Arnold, Tom Farr, Sir John
Ashby, David Favell, Anthony
Aspinwall, Jack Fenner, Mrs Peggy
Atkins, Rt Hon Sir H. Finsberg, Sir Geoffrey
Atkins, Robert (South Ribble) Fletcher, Alexander
Atkinson, David (B'm'th E) Fookes, Miss Janet
Baker, Rt Hon K. (Mole Vall'y) Forman, Nigel
Baker, Nicholas (N Dorset) Forsyth, Michael (Stirling)
Baldry, Anthony Forth, Eric
Banks, Robert (Harrogate) Fowler, Rt Hon Norman
Batiste, Spencer Fox, Marcus
Beaumont-Dark, Anthony Fraser, Peter (Angus East)
Bendall, Vivian Freeman, Roger
Berry, Sir Anthony Fry, Peter
Biggs-Davison, Sir John Gale, Roger
Body, Richard Galley, Roy
Bonsor, Sir Nicholas Gardiner, George (Reigate)
Boscawen, Hon Robert Gardner, Sir Edward (Fylde)
Bottomley, Peter Garel-Jones, Tristan
Bottomley, Mrs Virginia Glyn, Dr Alan
Bowden, A. (Brighton K'to'n) Goodhart, Sir Philip
Brandon-Bravo, Martin Goodlad, Alastair
Brinton, Tim Gow, Ian
Brittan, Rt Hon Leon Greenway, Harry
Brooke, Hon Peter Gregory, Conal
Brown, M. (Brigg & Cl'thpes) Griffiths, Peter (Portsm'th N)
Bruinvels, Peter Grist, Ian
Buchanan-Smith, Rt Hon A. Ground, Patrick
Buck, Sir Antony Grylls, Michael
Budgen, Nick Gummer, John Selwyn
Bulmer, Esmond Hamilton, Hon A. (Epsom)
Burt, Alistair Hamilton, Neil (Tatton)
Butcher, John Hanley, Jeremy
Butterfill, John Hannam, John
Carlisle, John (N Luton) Hargreaves, Kenneth
Carlisle, Kenneth (Lincoln) Harris, David
Carlisle, Rt Hon M. (W'ton S) Harvey, Robert
Carttiss, Michael Haselhurst, Alan
Cash, William Havers, Rt Hon Sir Michael
Chalker, Mrs Lynda Hawkins, C. (High Peak)
Channon, Rt Hon Paul Hawkins, Sir Paul (SW N'folk)
Chapman, Sydney Hayes, J.
Chope, Christopher Hayhoe, Barney
Churchill, W. S. Hayward, Robert
Clark, Sir W. (Croydon S) Heathcoat-Amory, David
Clarke, Rt Hon K. (Rushcliffe) Hickmet, Richard
Clegg, Sir Walter Higgins, Rt Hon Terence L.
Cockeram, Eric Hind, Kenneth
Colvin, Michael Hirst, Michael
Conway, Derek Hogg, Hon Douglas (Gr'th'm)
Coombs, Simon Holland, Sir Philip (Gedling)
Cope, John Holt, Richard
Corrie, John Hooson, Tom
Couchman, James Howard, Michael
Cranborne, Viscount Howarth, Alan (Stratf'd-on-A)
Critchley, Julian Howarth, Gerald (Cannock)
Crouch, David Howell, Ralph (N Norfolk)
Dicks, Terry Hubbard-Miles, Peter
Dorrell, Stephen Hunter, Andrew
Douglas-Hamilton, Lord J. Hurd, Rt Hon Douglas
Dover, Den Jackson, Robert
Durant, Tony Jenkin, Rt Hon Patrick
Dykes, Hugh Johnson Smith, Sir Geoffrey
Jones, Robert (W Herts) Spencer, Derek
Joseph, Rt Hon Sir Keith Spicer, Michael (S Worcs)
Kershaw, Sir Anthony Squire, Robin
Key, Robert Stanbrook, Ivor
King, Roger (B'ham N'field) Steen, Anthony
King, Rt Hon Tom Stern, Michael
Knight, Gregory (Derby N) Stevens, Lewis (Nuneaton)
Knight, Mrs Jill (Edgbaston) Stevens, Martin (Fulham)
Knowles, Michael Stewart, Allan (Eastwood)
Knox, David Stewart, Andrew (Sherwood)
Lamont, Norman Stokes, John
Lang, Ian Stradling Thomas, J.
Lawler, Geoffrey Sumberg, David
Lawrence, Ivan Taylor, Teddy (S'end E)
Lee, John (Pendle) Tebbit, Rt Hon Norman
Leigh, Edward (Gainsbor'gh) Temple-Morris, Peter
Lennox-Boyd, Hon Mark Thomas, Rt Hon Peter
Lester, Jim Thompson, Donald (Calder V)
Lilley, Peter Thompson, Patrick (N'ich N)
Lloyd, Ian (Havant) Thome, Neil (Ilford S)
Lord, Michael Thornton, Malcolm
McQuarrie, Albert Thurnham, Peter
Malins, Humfrey Townend, John (Bridlington)
Maples, John Tracey, Richard
Mather, Carol Trippier, David
Miller, Hal (B'grove) Trotter, Neville
Monro, Sir Hector Twinn, Dr Ian
Moore, John van Straubenzee, Sir W.
Murphy, Christopher Vaughan, Sir Gerard
Neale, Gerrard Viggers, Peter
Neubert, Michael Waddington, David
Nicholls, Patrick Wakeham, Rt Hon John
Norris, Steven Walden, George
Oppenheim, Philip Wall, Sir Patrick
Page, Sir John (Harrow W) Waller, Gary
Peacock, Mrs Elizabeth Ward, John
Porter, Barry Wardle, C. (Bexhill)
Powley, John Warren, Kenneth
Roberts, Wyn (Conwy) Watson, John
Robinson, Mark (N'port W) Watts, John
Roe, Mrs Marion Wells, Bowen (Hertford)
Rossi, Sir Hugh Wells, Sir John (Maidstone)
Rost, Peter Wheeler, John
Rowe, Andrew Whitfield, John
Rumbold, Mrs Angela Whitney, Raymond
Sainsbury, Hon Timothy Winterton, Mrs Ann
Sayeed, Jonathan Winterton, Nicholas
Scott, Nicholas Wolfson, Mark
Shaw, Giles (Pudsey) Wood, Timothy
Shaw, Sir Michael (Scarb') Woodcock, Michael
Shelton, William (Streatham) Yeo, Tim
Shepherd, Colin (Hereford) Young, Sir George (Acton)
Shersby, Michael Vounger, Rt Hon George
Silvester, Fred
Sims, Roger Tellers for the Noes:
Smith, Sir Dudley (Warwick) Mr. David Hunt and Mr. John Major.
Smith, Tim (Beaconsfield)
Soames, Hon Nicholas

Question accordingly negatived.