TELEPHONE BILL (Hansard, 24 July 1951)

§ LORD ARCHIBALD
My Lords, I shall not detain the House longer than is necessary on this Bill, but I feel 1148 that it would be discourteous if I did not present some explanation of the reason for, and the scope of, this Bill. Your Lordships may have noticed that this is the first Bill ever to be introduced under the title, "Telephone Bill." Indeed, it is the first Bill which has specifically recognised and dealt with the operation of the telephone service. Until now, this vast undertaking has been operated by successive Postmasters-General under what I can describe only as rather antiquated powers. These powers were derived from the Telegraph Acts of 1868 and 1885. These Telegraph Acts were not, of course, designed for the telephone service. A High Court decision of 1880, that a telephone message was also a telegraph message, was the basis on which successive Postmasters-General have rested their regulation-making powers over telephone charges.
The machinery and the powers provided by the Telegraph Acts for a telegraph service were not very suitable for the vast telephone service as it has now developed. Their unsuitability is indicated by the fact that, technically, to take only one illustration, telephone charges should be pre-paid in stamps. It is, I think, a tribute to the ingenuity of Postmasters-General and to the adaptability of our people that this "horse and buggy" legislation should have been made to serve so long. The size of the undertaking which it has served is illustrated by a few figures which I think may well interest your Lordships. At March 31, 1950, the investment in the telephone service at prime cost was £381,000,000 for plant, and £32,000,000 for land, buildings, and so on. At current prices, the figure for plant would be about£715,000,000. The telephone staff in 1949–50 numbered 142,000. As I feel sure your Lordships will agree, an enterprise with a capital value of about £750,000,000, employing over 140,000 people, should be conducted under up-to-date legislation
The position with regard to telephone charges is that at present virtually every telephone charge, except the rental, can be changed by the Postmaster-General by laying a regulation on the Table of both Houses. Such a regulation is not effectively debatable, so that the charges are not subject to Parliamentary control. Nor are they subject to negotiation with the telephone subscriber. Only the rental and a few minor charges are subject to 1149 an agreement, an individual contract, between the subscriber and the Postmaster-General. But, although that contract is freely entered into by the subscriber, it cannot in any sense be described as a freely negotiated contract. It is a standard contract, which stipulates the rental to be paid, and unless he signs it the subscriber cannot obtain a telephone. The conditions under which he may use the telephone and the charges for calls are specified by regulation outside the contract.
All that the contract really provides is a stipulated rental charge, a minimum term, and the period for termination—one month or three months. But, limited as the contract is, the fact that there is this contract means that the rental cannot be raised without the Postmaster-General giving notice to terminate the contract and offering a new contract at a higher rental. With a reasonably small number of contracts that might work well enough. When the last change in rental was made in 1921, apart from the wartime change, there were only 500,000 subscribers, but even then the difficulties were considerable. And to-day, with over 5,000,000 contracts and over 3,000,000 subscribers, that would be a quite unworkable arrangement. The estimated cost of terminating all the existing contracts and replacing them with new contracts is of the order of £800,000. I hasten to assure your Lordships that it is not proposed to incur that expenditure. But, you will see from that figure that, in view of the cost involved, it might not be worth while to make any modest adjustment, up or down, of telephone rentals. It is not proposed, under this Bill, to cancel existing contracts. Undoubtedly, it would be tempting to do so, because the work involved in giving individual subscribers proper notice to terminate over 5,000,000 contracts is very great—it will take several months to complete it—and very costly. I am advised that it will cost the telephone service in the region of £300,000. But to cancel individual contracts under Act of Parliament is regarded as such an invasion of the sanctity of contract that it has been completely ruled out. In fact, as noble Lords will see, there is an express provision in the Bill against that course.
What is proposed, then, under the Bill, is that when the contracts have been 1150 terminated in accordance with the terms contained in them, the service shall be provided thereafter on terms, conditions and charges as set out in regulations. As I pointed out earlier, Parliament has no control over telephone charges or rentals at present, except in so far as the Postmaster-General is generally accountable to Parliament and may be subject to censure or to a Motion to reduce his salary. But there is no specific control over charges and rentals. My right honourable friend the Postmaster-General proposes by this Bill to bring all telephone charges and rentals under statutory regulation for the great mass of subscribers and to extend the degree of his Parliamentary accountability. If this Bill is passed, as I hope it will be, individual subscribers will be served with notice to terminate their contracts and will be sent an explanatory letter indicating that the future service will be on the basis of statutory regulations. The present telephone charges, including rentals, will be embodied in regulations which will be laid before Parliament. Any change in these charges will have to be made by further regulations under the control of Parliament.
Let me now turn, briefly, to the clauses of the Bill. Clause 1 provides the general power of the Postmaster-General to make regulations for the use of the telephone service. Subsection (1) is necessarily drawn in general terms to cover the power to make regulations dealing with the whole operation of the telephone service, whether carried out wholly or only partly under the direct control of the Postmaster-General. Paragraph (a) deals with charges, terms and conditions for calls; and paragraph (b) deals with charges, terms and conditions for equipment. Paragraph (c) covers the recoupment of the Post Office where the service is given up prematurely; and paragraph (d) deals with the provision for payments. Subsection (2) provides power to make regulations for different terms and charges for different classes of case. Subsection (3) subjects the regulations to the negative Resolution procedure.
Perhaps I should pause here for a moment to say something about this procedure. I know that it is a procedure which does not in every case commend itself to many of your Lordships. My 1151 right honourable friend the Postmaster-General was under considerable pressure in another place to make the regulations subject to affirmative Resolution. I can assure your Lordships that he has given the most earnest consideration to that proposal. However, it does not seem to be really suitable in this case. From time to time new regulations will be required to vary charges for calls or for rentals or to vary other terms or conditions, or to deal with changed circumstances, economic or technical, in this vast and complex service. There can be no question of these changes being slipped through, as it were, surreptitiously. Telephone subscribers are too numerous and Parliament is too watchful for there to be any element of secrecy. But while the changes may be important to the Post Office or to the subscriber, or to both, they may be of such a nature that they simply do not justify taking up Parliamentary time. Under the affirmative Resolution procedure, the Postmaster-General would have to find Parliamentary time so that he might justify his regulation. Under this Bill the Postmaster-General is already extending the control of Parliament over this great undertaking, and I think he might well be thanked for doing so rather than be pressed unduly for a further extension which would not give Parliament substantially more control over him and his successors. I felt it would be proper to say those few words about that procedure at this stage.
Clause 2 (1) enables the Postmaster-General to enter into agreements for the provision of telephone service in exceptional cases where the regulations system would be inappropriate. Clause 2(2) was added to the Bill at the Committee stage in another place to give statutory effect to the Postmaster-General's assurance that in no circumstances would a contract be terminated other than by the procedure for termination provided in that contract. Subsection (3) enables regulations to be made to avoid interruption of service in the transfer from a system of agreements to a system of regulations. Subsection (4) retains the Postmaster-General's existing power to decline to provide service in certain cases. This might apply, for example, where a former subscriber has failed to pay his account and was seeking a new service. Subsection (5) preserves Section 2 of the Telegraph Act 1885, this 1152 being necessary to enable the Postmaster-General to make regulations about telegraphs and telegraphy. Clause 3 repeals Sections 17 and 18 of the Telegraph Act, 1868. Those sections are obsolete and quite inapplicable to the present-day telephone service.
May I sum up by saying that this Bill merely does only two things? It enables the Postmaster-General to run this great organisation under powers designed for that purpose instead of under the powers of old Telegraph Acts. At the same time, it extends the degree of his accountability to Parliament—which is, of course, very much in accord with views expressed in your Lordships' House in recent debates. It is a Bill providing improved machinery which I hope will commend itself to your Lordships. I beg to move that the Bill be now read a Second time.

§ LORD TWEEDSMUIR
My Lords, I think we are all grateful to the noble Lord, Lord Archibald, for his clear exposition of this measure. I will not take up the time of your Lordships for even as long as it takes to put through a trunk call. This Bill, as your Lordships perceive, is a slim volume, with a careful and valuable preface in the form of an Explanatory Memorandum. It has been discussed in another place, and many rough corners have been knocked off it. As the noble Lord has said, it is a sort of Parliamentary milestone, in that it is the first Telephone Bill, as such, that has ever been before the British Parliament. The noble Lord has given us some of the reasons why it is necessary—how the contracts have increased from 500,000 thirty years ago to 5,000,000 now, and would have increased much more if the great number of citizens who desire telephones were able to get them. At the beginning of this Memorandum the object of the Bill is set out in two lines—namely, to provide improved machinery for the conduct of the telephone service. The Memorandum goes on to mention a number of things drawn in very wide terms, that the Postmaster-General is able to do, and in Clause 2 (4) he is given a sort of "fifth freedom," because he has the power not to install a telephone if he so feels, leaving the would-be subscriber with nothing to ring but his hands. 1153 My Lords, is this Bill simply to substitute statutory for contractual arrangements, or is there to be some attempt to alter the whole structure of charges? I cannot avoid the disquieting feeling that that is what the machinery is ultimately designed to do.
I have only one real point to make on this Bill and it is one to which I hope the noble Lord, Lord Archibald, will give some further thought. He has spoken on the subject of regulations. The Bill provides that these regulations shall be dealt with by negative Resolution procedure. He has said that he does not see why the Postmaster-General should be pressed for affirmative Resolution procedure, when he has gone so far to bring these affairs under the control of Parliament, which was not the case hitherto. Let me put it like this, if I may: so far as the actual terms and conditions of the working of the service go, there is a strong case for a negative Resolution. I think that is reasonable. After all, a long wait covering the Summer Recess might well interfere with the efficiency of the service. But when it comes to the matter of the charges, I cannot help regarding telephone charges and their increase as a form of taxation, and a form of increase of taxation. Surely it is one of the canons of taxation that it must not be increased without the proposed increase being laid before Parliament assembled, and receiving assent.
I know that it is difficult to separate these two matters in one Bill, and to have a negative Resolution for conditions and terms, and an affirmative one for charges. Nevertheless, I feel that a not inconsiderable point of principle is involved here. The Postmaster-General in another place showed great sympathy with this point. He did not deny the great difficulties of separating the two matters, but he showed sympathy with, and also willingness to meet, those who raised the argument which I am now putting forward. From what the noble Lord, Lord Archibald, has said, I understand that he has found the problem too difficult. It may be difficult, but it is none the less, a matter of important principle so far as I am concerned. For that reason, I cannot say that I am satisfied by that part of the noble Lord's speech. Subject to that reservation I, and I am sure my noble friends on these Benches also, are able to give this Bill a welcome.

§ LORD ARCHIBALD
My Lords, I thank the noble Lord, Lord Tweedsmuir, for his friendly reception of the Bill. It would be idle to pretend that there will never at any time be a change upwards or downwards in the rental charges. But I can assure the noble Lord that there is no sinister purpose in the Postmaster-General's mind at the present time in bringing in this Bill: it is not simply a preface to a wholesale upward rise in the charges. The Bill will facilitate alterations of charges in future, but it is not brought in with the prime purpose of early increases being made in those charges. The main point, I agree, is this question of whether the regulations should be subject to the negative or the affirmative Resolution procedure. All I can say at this stage is that I will again discuss the matter with the Postmaster-General, but I am doubtful whether it will be possible to meet the noble Lord on this matter. I was interested in the noble Lord's suggestion that telephone charges and rentals are a form of taxation. The fact that it is a nationalised industry surely does not make the charges levied in respect of this service any more a form of taxation than, say, the charges of the nationalised electricity service, the National Coal Board, or other under takings of that type which do not have to go to Parliament for power to increase their charges. From that point of view, I am not sure that his case with regard to the financial aspect being made subject to affirmative Resolution is as strong as it would appear. However, as I have said, I will undertake to discuss the matter again with the Postmaster-General, but, as I have also intimated, I am not very optimistic that I shall be able to meet the noble Lord on that point.

LORD GIFFORD
My Lords, arising out of the answer which the noble Lord has just given, is it not true that alterations in the telephone charges were included in the Budget this year?

§ LORD ARCHIBALD
Charges are not dealt with in the Bill which is now before the House; only the method of making charges.