Lords Sitting of 15 June 1981

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Chancellor.
The Viscount Allendale—Took the Oath.

Disarmament Proposals
Lord Brockway: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what response they have made to the document submitted to them by the World Disarmament Campaign containing proposals to the United Nations Disarmament Committee at Geneva for a treaty implementing in phased stages over six years the recommendations of the 1978 UN Special Assembly on Disarmament to be presented to the renewed assembly in June next year.
Lord Skelmersdale: My Lords, the Government have studied the proposals of the World Disarmament Campaign submitted to the Committee on Disarmament in Geneva. In response, we drew attention to the proposals already submitted to the United Nations Secretary-General, giving United Kingdom views on the question of a comprehensive programme of disarmament.
Lord Brockway: My Lords, is the Minister aware that during the Defence debate, the noble Lord, Lord Trefgarne, stated that the Government would give careful consideration to our proposals? Is the noble Lord aware that the United Nations Special Assembly on Disarmament last year recommended the ending of all nuclear weapons and phased progress to general disarmament? Do not our proposals achieve that in a practical way? Is he aware that we now have the support of a majority on the Geneva Committee? Will the United Kingdom change their attitude and give us support there?
Lord Skelmersdale: My Lords, the only thing that I was not aware of in that long list of supplementaries was the fact that the proposals had the support of the majority of the Geneva Committee. However, the Government consider it unrealistic to seek to achieve the ultimate goals of general and complete disarmament of all nations through one treaty. Moreover, it would be impracticable to set time scales for such a treaty in advance like the six-year limit envisaged in the WDC proposal. The proposed treaty would be unnegotiable, we feel, in several respects. For example, it mentions that United Nations inspectors in each state would have unimpeded access to all establishments and records. I cannot see any prospect of the Soviet leadership negotiating such a provision.
Lord Underhill: My Lords, is it not a fact that the Government share in the decision in the final document of the 1978 Special Assembly? Have not the Government also declared their support for the World Disarmament Campaign which is a multilateral campaign? What positive steps are the Government taking to try to work out something rather than just give airy answers?
Lord Skelmersdale: My Lords, I am sorry if your Lordships feel that I have given an airy answer. However, positive steps are being made and our ambassador to the Committee on Disarmament has written in the May edition of Arms Control and Disarmament which is currently available in your Lordships' Library.
Lord Jenkins of Putney: My Lords, will the Government reconsider their position on this matter? Will they recall that the late Lord Louis Mountbatten described the old Roman precept,
"If you desire peace, prepare for war",
as being absolute nuclear nonsense? In the light of that, will the Government look again at their position in this matter?
Lord Skelmersdale: My Lords, like all members of the United Nations, we have accepted general and complete disarmament under strict and effective international control as the ultimate goal of arms control efforts. As the final document of the special session recognised, progress towards world disarmament will depend on the successful negotiation of a number of specific arms control measures.
Lord Stewart of Fulham: My Lords, the noble Lord said that the Soviet Government could not be expected to agree to inspection. While that may very well be true, may I ask when they were last asked?
Lord Skelmersdale: My Lords, I have no information on that particular point. However, we know that they refused even to allow international atomic agency safeguards on their civil nuclear programme.
Lord Ritchie of Dundee: My Lords, is the Minister aware that there are a significant number of young mothers in the country suffering painful anxiety about the future safety of their children under the threat of worldwide nuclear arms proliferation? Would he not agree that the highest priority for this or any Government is to seek to reduce this threat by the vigorous pursuit of disarmament measures such as the one under discussion?
Lord Skelmersdale: My Lords, I also have young children. At a time when the Soviet Union continues to build up its nuclear and conventional forces, unilateral disarmament, which I think probably is the point the noble Lord is getting at, would serve only to undermine our security and weaken NATO's ability to deter aggression. It would also remove the incentive for the Soviet Union to negotiate, and indeed it would add to our own difficulties. One cannot negotiate from a position of weakness.
Lord Ritchie of Dundee: My Lords, I was not advocating—
The Lord President of the Council (Lord Soames): My Lords, I think that the noble Lord, Lord Brockway, has got up in order to ask his last question.
Lord Ritchie of Dundee: I apologise, my Lords.
Lord Brockway: My Lords, is the Minister aware of the massive feeling now on this subject? Is he aware that we are thinking in our meetings not in terms of hundreds but of thousands?—3,000 in Edinburgh, 5,000 in Plymouth and a crowded guildhall at Southampton. Is he aware that this is worldwide and, with unemployment, this problem of nuclear weapons is now becoming a dominant issue in people's minds?
Lord Skelmersdale: My Lords, the noble Lord, Lord Brockway, says this feeling is worldwide. So far as we know, I would have to correct him and to say that it is Westernwide. The authoritarian states do not have, or do not allow, pressure groups such as the noble Lord belongs to, and therefore I think we have a very one-sided view of all this.

Kennels: Licensing Legislation
2.45 p.m.
Lord de Clifford: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they intend to implement the licensing of kennels under the Guard Dogs Act 1975.
The Parliamentary Under-Secretary of State, Home Office (Lord Belstead): My Lords, we have at present no plans to bring these licensing provisions into force, but will continue to keep the matter under review.
Lord de Clifford: My Lords, while thanking the noble Lord for his reply, may I ask whether he is aware that the killing of a child by several guard dogs under training came as a great shock to a number of us? Is he also aware—I think he undoubtedly will be—that the noble Lord, Lord Gordon-Walker, and myself envisaged just such a situation when the Guard Dogs Bill went through Parliament? May I ask my noble friend whether he is also aware, as again I think he will be, that this Act has been in operation for some time, and is it not time that it was brought into effect?
Lord Belstead: My Lords, like my noble friend, I was shocked and saddened to read about the death of Michek Francis on 4th June. He was a baby and so far as we know he died as a result of an attack by Alsatian dogs. There is some doubt whether the dogs in the case were guard dogs. However, if they were guard dogs, and had a licensing system been in operation, we could not say for certain that the incident would have been prevented. However, that does not prevent the thrust of my noble friend's Question, and the answer I have to give him is that to bring in the licensing provisions of the 1975 Act would impose
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additional burdens on local authorities which the Government would be reluctant to impose in present circumstances.
Lord de Clifford: My Lords, I do not wish to press my noble friend much further, but under this licensing provision is it not a fact that any inspections must be paid for at a rate which covers the cost for the local authority and there is no cost to the rates?
Lord Belstead: My Lords, it depends on how regulations would be drafted under the Act.

Fiscal Legislation: Preparation
2.47 p.m.
Lord Renton: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether it is now accepted by those responsible for the preparation of fiscal legislation that the scope of a charge or relief should be stated clearly in general terms at the beginning of the clause or group of clauses dealing with it, in accordance with recommendation (75) of the Committee on the Preparation of Legislation (Cmnd. 6053).
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I understand from those concerned that the answer to my noble friend's Question is in the negative.
Lord Renton: My Lords, while thanking my noble and learned friend for that unwelcome reply, may I ask this: Is he aware that the Royal Commission on Taxation and the Committee on the Preparation of Legislation did suggest what is proposed in this Question, in fact in the recommendation which the Question refers to, and that parts of this year's Finance Bill do most fortunately follow the recommendation? Will my noble and learned friend therefore please encourage those whose duty it is to draft our fiscal legislation to do what is proposed, namely, to state the scope of the charges and relief wherever it is feasible to do so?
The Lord Chancellor: My Lords, that puts the question in a somewhat different light. Wherever it is feasible to do so I am quite sure they will do so.

Interest Rates: International Agreement
2.49 p.m.
Lord Beswick: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what initiatives they have taken with allies of the western world to secure agreement designed to prevent competitive interest rates.
The Minister of State, Treasury (Lord Cockfield): My Lords, the present high level of interest rates in most countries reflects essentially the need to check monetary growth to curb inflation. Lower interest rates will be achieved not so much by initiatives of the kind the noble Lord has in mind, but by firm fiscal and monetary policy leading to a fall in the rate of inflation.
Lord Beswick: My Lords, I am aware of the noble Lord's doctrine about high interest rates, but I am talking about the artificial and excessive interest rates that occur, for example, in the United States at the present time. Does the noble Lord not agree that whatever short-term improvements there may be to a domestic statistic in the United States, for example, at the present time they are far outweighed by the damage done to the international trading community? Would the noble Lord also not agree that if we are interested in the stability and security of the western world it is as important to get some sensible cooperation in these monetary matters as it is in the military field?
Lord Cockfield: My Lords, we are all anxious to see lower rates of interest. But I do not think that the American Administration would accept the noble Lord's description of American interest rates as being either arbitrary or excessive. He will be interested to know, as I hope he does, that in the last few weeks rates of interest in the United States have already begun to fall. In terms of the long-term health of the international community, the overriding requirement is to reduce the rates of inflation. This does from time to time entail maintaining interest rates which are higher than any of us would like to see.
Lord Hankey: My Lords, are the Government aware that almost everybody in the House will agree with what the noble Lord has said today. But I think that the Question of the noble Lord, Lord Beswick, was to draw attention to the instability of interest rates. Would the Government agree that, when American rates go up very suddenly to an unprecedented level of 20 or 21 per cent., it draws a lot of funds out of the other members of the OECD and has very undesirable effects on their domestic situation? Would it not be advisable to go back in some degree to the principles of the OECD, which are that we should try to conduct our economic policies in such a way that we damage other people's economies as little as possible? If I might ask the noble Lord one more question, would it not be a good idea to ask the Group of 10 to discuss this problem a little more often?
Lord Cockfield: My Lords, I am not at all certain that the noble Lord was asking a question as much as making a long statement of policy. Of course, in principle, we all agree with international collaboration. I am sure that all countries pay regard to the effect of their policies on other people. But it would be quite wrong to regard the weakness of some of the European currencies at present as being primarily the result of funds being siphoned off to the United States, as a result of the high rates of interest prevailing there.
Lord Beswick: My Lords, may I ask the noble Lord to consider that, when he has time to read what the noble Lord on the Cross-Benches had to say, he will find that it was, indeed, a very relevant question? May I ask the noble Lord further whether I am to gather from what he has told me that the answer to my original Question is, No, sir?
Lord Cockfield: My Lords, if the noble Lord is looking for a very brief reply to his question, the answer is that the Government recognise the overriding need for reducing rates of inflation worldwide. This means, from time to time, that rates of interest are seen which are higher than one would normally like to have.
Lord Beswick: My Lords, may I press the noble Lord? I asked what initiatives have been taken to try to secure agreement. Is the answer to that question, none?
Lord Cockfield: My Lords, I, in fact, specifically answered the noble Lord when I said in my reply:
"Lower interest rates will be achieved not so much by initiatives of the kind the noble Lord has in mind, but by firm fiscal and monetary policy".

DINNER
Lord Denham: My Lords, it may be for the convenience of the House if I announce that dinner will be available today at the usual time. The Report stage of the British Telecommunications Bill will adjourn at approximately seven o'clock for a short period. During the adjournment, the Sheep Variable Premium (Protection of Payments) (Amendment) Order 1981 and the Committee stage of the Industrial Diseases (Notification) Bill will be taken.
At a convenient moment after 3.30 this afternoon, my noble and learned friend the Lord Chancellor will, with the leave of the House, repeat a Statement that is to be made in another place on Trooping the Colour.

Education Bill
Brought from the Commons; read 1a, and to be printed.
Education (Scotland) Bill
Brought from the Commons; read 1a, and to be printed.

Insurance Companies Bill
Lord Lyell: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Lord Lyell.)
Lord Bruce of Donington: My Lords, we on this side of the House do not seek in any way to prevent the Third Reading of this Bill. We are naturally a little sorry that the Government did not act on the basis

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of our recommendations. Nevertheless, the Bill itself does not raise any profound questions of social or political significance within the party context. We on this side of the House should like to thank the noble Lord for the very great efforts that he made to simplify the provisions of the Bill and to explain it so patiently to the House.
Bill read 3a, with the amendments, and passed, and returned to the Commons.

British Telecommunications Bill
2.57 p.m.
Report received.
Clause 2 [Powers of the Corporation]:
Lord Morris Lord Morris moved Amendment No. 1:
Page 2, line 23, leave out paragraph (b).
The noble Lord said: My Lords, I think it will be for the convenience of the House if I speak to Amendments Nos. 1, 2 and 3 en bloc. These three amendments are covered by precisely the same principle. The purpose of these amendments, as I explained at the Committee stage, is to delete three paragraphs of Clause 2, which I believe are nothing other than three pieces of declaratory law, and which are not necessary. These three paragraphs state that the corporation shall have power to perform services for the Post Office, to perform services for Her Majesty's Government and to perform services for local authorities or National Health Service authorities.
During the Committee stage, my belief that these paragraphs were unnecessary was heightened by virtue of the answer that my noble friend Lord Trefgarne gave to me. He said:
"The two businesses"—
he was referring to the British Telecommunications side of the Post Office and the Post Office itself—
"have provided certain services for each other for many years".
That, of course, is manifestly so. Later he went on to say:
"To agree to this amendment and thus prevent British Telecommunications from providing services for the Post Office would, I feel, lead to an unnecessary disruption of the activities of the two businesses".—[Official Report, 12/5/81; col. 464.]
If the corporation does not have power beforehand to provide services for the Post Office, why is it then necessary to have this power placed in the Bill? Surely it would not act ultra vires. It is plain to me, at any rate, that the British Telecommunications Corporation is perfectly at liberty under the provisions of the Bill to provide services to whomsoever it chooses and in virtually in any way that it chooses. For those reasons, I beg to move.
The Minister of State, Department of Employment (The Earl of Gowrie): My Lords, when we debated this question during the Committee stage of the Bill, my noble friend Lord Morris suggested, as he has again suggested today, that the powers of British Telecom which are contained in Clause 2(1)(b), (c)
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and (d) are unnecessary because of the existence of the power in Clause 2(1)(a) to provide telecommunication and data processing services. I think my noble friend is under a small misapprehension which I hope I can dispel.
The point is that Clause 2(1)(b), (c) and (d) are all necessary because they cover services provided by British Telecom other than telecommunications and data processing services. In the case of Clause 2(1)(b), the two businesses, posts and telecommunications, have provided certain services for each other for many years. The particular examples of which I am thinking are vehicle maintenance, procurement and research and development. Activities such as these obviously do not fall within the power set out in Clause 2(1)(a) and therefore it is necessary to include Clause 2(1)(b), and its parallel provision in Part II of the Bill in Clause 57, in order to allow these necessary and useful services to continue.
Similarly, as regards 2(1)(c) and (d), British Telecom already provides some services other than telecommunication services under the equivalent section, Section 7(1)(d), of the 1996 Post Office Act. The example I have in mind here is the procurement of hearing aids for the DHSS and also an agreement to provide emergency power supplies to hospitals. Again, these subsections allow these necessary services, which are not purely telecom or data processing services, to continue.
I hope therefore that my noble friend appreciates that the point is now clear. These paragraphs are necessary because they are not covered by the powers in Clause 2(1)(a). I would just add that all the services covered by Clause 2(1)(b), (c) and (d) will be performed by BT under specially negotiated contracts. In providing these services, BT will of course be competing with the private sector. Therefore the Post Office, the Government, local authorities and National Health Service authorities will all be able to choose whichever supplier they wish. I hope that, in the light of this detailed, if necessarily rather technical explanation, my noble friend can now agree to withdraw his amendments.
Lord Morris: My Lords, I am most grateful to my noble friend for that very full and careful explanation. It is an immense improvement on the explanation which we received at the Committee stage; certainly it clarifies my mind a great deal. Therefore I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 2 and 3 not moved.]
Lord Morris Lord Morris moved Amendment No. 4:
Page 3, line 13, leave out ("requisite, advantageous or convenient") and insert ("expedient").
The noble Lord said: My Lords, this amendment is precisely the same as an amendment which I moved at the Committee stage. I do so again, for I believe the answer given then was not so satisfactory as I might have wished. In his answer my noble friend Lord Trefgarne said:
"In any case it would not always be easy to prove that a particular activity was expedient and this could give rise to uncertainty as to the practical extent of British Telecom's powers".—[Official Report, 12/5/81, col. 467.]

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If it would not be easy to prove that a particular activity was expedient, how much more difficult, I suggest, would it be to establish whether it was convenient, not to say requisite or advantageous. I believe that the use of the word "expedient" as opposed to these three words would not make life more difficult. On the contrary, they would not limit any of the powers of British Telecommunications, because one could not go any wider than "expedient". I beg to move.
Lord Lyell: My Lords, as my noble friend Lord Morris has already said, my noble friend the Minister, Lord Trefgarne, attempted to give an explanation to my noble friend at an earlier stage about this amendment. The word "expedient" in this case could be construed as narrower than the phrase "requisite, advantageous or convenient". While the Government have no wish to narrow the powers of British Telecom, the advice we have received makes us unable to accept the addition which my noble friend seeks to make to the Bill.
I hope my noble friend will accept that the phrase which is used in this Bill, we hope satisfactorily, is common to several nationalised industry Acts which have a good track record both for clarity and for expression. The coal, the electricity and the gas industries are several examples, as well as the Post Office. All of them have similarly worded powers to those which are found in the Bill. I hope this explanation will go a little further towards satisfying my noble friend Lord Morris.
Lord Morris: My Lords, indeed it does. I am most grateful to my noble friend. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [General duty of the Corporation]:
3.6 p.m.
Lord Glenamara Lord Glenamara moved Amendment No. 5:
Page 6, line 2, after ("Islands") insert ("including its rural communities").
The noble Lord said: My Lords, the purpose of this amendment is to call attention once more to the damage this Bill is going to do to people living in rural areas. The rural areas are already suffering in a great many ways. Transport in many villages is now poorer than it was at the end of the last century. The additional 20p per gallon on petrol has added to the difficulties of people living in those areas. It is agreed by everybody who understands this Bill that it will put up by a good deal the cost of the telephone in rural areas. It is also going to make the obtaining of equipment beyond the first telephone much more difficult.
Had the Government been more open about this issue during the Committee stage, we should not have found ourselves today in the position of having to put forward an amendment at the Report stage to safeguard the rural areas. Ministers opposite know quite well what effect this Bill will have in rural areas, but they have never admitted that what we and almost everybody else who understands the Bill have said is correct.
One of the clearest features of the Bill is the restriction it now places on British Telecom's duty to provide a telephone service throughout the United Kingdom. Let us be quite clear about what the Bill does. It lays on British Telecommunications a simple duty. The only obligation it has is to provide the first telephone in every home. There is no obligation beyond that. There the duty stops. That is a fact of which the Government are well aware, since Clause 3 clearly reflects this change in duty.
During the Committee stage debate on this issue I was taken to task by the noble Earl, Lord Gowrie, on a number of occasions, but on 12th May he said:
"He really should not, in my view, stir up anxieties among the disabled or people in rural areas that in some way they are going to be denied access to a telephone".—[Official Report, col. 479.]
If the noble Earl will look through what I said, I never at any time said that. Of course, people will continue to be able to go to British Telecommunications for the provision of the first telephone. What we on this side of the House and what many other people outside it have said, and I repeat it, is that if they live in rural areas and want any additional apparatus in their home, their office, their firms, the local auction mart or anywhere else, they may find themselves in difficulty in finding suppliers. Once installed, they may find difficulty in getting maintenance services. For both the supply and maintenance of equipment they are likely to pay a very much higher price than they have done to date.
The Government should not try to escape the logical consequences of the policy they have adopted in this Bill. BT, as a monopoly supplier of telecommunications services in the United Kingdom, has traditionally subsidised the provision of services where they are unprofitable, by provision where they are highly profitable. For example, cities have always subsidised the rural areas and there really is no other way to provide a national telephone system in this country. The Government propose to change all that. They propose to introduce competition and private sector firms will inescapably concentrate on competing with British Telecom in areas where the profit potential for them is high. It is not because they are wicked or lacking in social responsibility but that is in the nature of a private firm. It is their nature and their duty imposed by company law and the Government should recognise that. To the extent that that competition is successful—and I take it that the Government want private firms to compete successfully—BT's revenues will be reduced and its ability to subsidise unprofitable services, such as those in rural areas, will thereby be diminished.
Of course, I do not expect the process to stop there. If I were the chairman of BT, confronted with the threat of the implementation of the Beesley Report and facing competition in the provision of terminal apparatus of the kind I have just been talking about, I should be engaged in a thorough reassessment of BT's role. Indeed, I should be very surprised if the chairman of BT was not doing that already. I should be looking for a new strategy that would enable British Telecom to retain the largest possible market share in the areas open to competition. Inevitably therefore I should, to a far greater degree than up to

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the present, concentrate my resources, both of manpower and of finance, in areas where I expected competition to be the fiercest; that is, in the provision of certain types of terminal apparatus in the urban areas of the United Kingdom. As the Government require BT to generate most of the funds for investment, BT really has no option. The Government require BT to find most of its funds for investment itself, so it has no other course available to it except this kind of reassessment of its strategy.
I think it is fair to require a monopoly supplier to operate to some degree in an uncommercial fashion. That is the tradition which has shaped the attitude of BT. It is for that reason that it has for years been subsidising, for example, the telephone box on the village green at considerable loss and has done very much work in developing new aids for the disabled, without concern for the profitability of either of those projects. Inevitably under the new pattern which will emerge during the next three years under this Bill, those attitudes in BT will change, unless of course BT is to suffer a catastrophic drop in revenue, and I think it would be franker if the Government admitted that, but that of course is what the Government want. They want to import a harsh commercial attitude because they believe that the market can solve everything—it can solve the supply of anything we want and it can get the price right.
In the Committee stage the noble Earl, Lord Gowrie, indicated—and I quote:
"If British Telecom were to fail to provide reasonable service in any part of the country—it is open to the Secretary of State to give them directions to do so either under Clause 6(2) or (3) or under Clause 6(5)".—[Official Report, 12/5/81; col. 480].
Here again I am sure that on reflection the noble Earl will feel that he is in danger of misleading the House, for if BT no longer has a duty, other than the duty to provide the first telephone in any home, I should he very surprised indeed if the Secretary of State would then be acting within his powers in directing them to provide more than the first telephone in any home. But I am sure that if I am misleading the House one of the noble Lords will interrupt me. Does one of the noble Lords wish to interrupt me and say that the Secretary of State would have the power to give BT a direction to provide something apart from the first telephone? I am quite willing to give way if the noble Earl wishes to intervene. Well, perhaps he will reply later.
Today we are going to consider in more detail the position on the Beesley Report. However, I call the report to my aid in re-emphasising that the Government are well aware of the fact that the cost to the residential and rural customer of telecommunication services is bound to rise. For much of the dispute between Professor Beesley, the Secretary of State and other parties about the extent to which his recommendations would lead to increases in charges is based on the fact that Professor Beesley assumes that BT will, if his recommendations are implemented, re-balance its tariff structure. Re-balancing means, quite simply, a process of spreading the burden of profit more evenly across the services that it provides. In other words, insisting that everything shall be profitable—the telephone box on the village green, the farm telephone across a mile of fields or a remote moor in the north
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of England, and so on. So the extensive traditional subsidising of loss-making services which has continued in the British Post Office for very many years will have to be greatly reduced, if not altogether stopped. One of the less profitable services that BT provides is residential installations anywhere—not just in rural areas—and I do not think any noble Lord would contradict the fact that installing a telephone on the Island of Skye or in a remote Cumbrian farm is unlikely to be profitable to anybody, unless at a massive cost.
On this side of the House we believe profoundly that the Government are quite wrong in bringing forward this Bill and doing what they are doing to telecommunications in this country. We believe that they are moving in the wrong direction for telecommunications. We do not believe that the provision of an effective telecommunications system can be a product, like strawberries or any other product, which can be left to market forces to regulate the supply and the price. We believe that an efficient and well run telecommunications service is a social as well as an economic necessity and therefore that telecommunications has a social role to play, particularly in rural areas. The Government view the matter otherwise, but they should not seek to ride two horses and try to delude people into believing that they can import market forces (as they are doing) into the provision of telecommunications and at the same time leave the social role of BT in rural areas undisturbed. That cannot be done. They cannot ride those two horses at once. One cannot bring in market forces and at the same time enable British Telecommunications to retain that social role.
I hope the noble Earl, Lord Gowrie, will therefore take a somewhat franker line on the effect that this Bill will have in rural areas than he did at the Committee stage. The Government have been less than open about the effect that the Bill will have on rural areas and residential customers generally. The purpose of this debate has been to enable Ministers to come clean, to tell the House, to tell the country, to tell noble Lords exactly what effect the Bill is likely to have. I hope the ultimate effect of the amendment is to write a very minor safeguard into the Bill for the rural areas of this country.
Lord Mottistone: My Lords, in the mid-sixties I had the good fortune to live for a year in Canada, where the telephone is produced by the Bell Telephone Company. I can assure your Lordships that not only did they provide the telephones the people in the towns and cities and rural areas needed, but they did it more cheaply. One of the reasons they managed to do this was by not wasting a lot of money on trying to underpin things in an orderly bureaucratic fashion. The other reason was that if the communities reckoned they were not getting the service they wanted they jolly well found it themselves. The did not think they had to fall back on "Auntie" Government to provide it for them; they thought they had to get on and do it, and they negotiated hard and they found the money collectively and all sorts of things like that.
I really think the noble Lord is not allowing us to free the British people to look after themselves instead of being looked after by central Government. That is the message of this Bill. I really think we want to stop

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trying to cosset poor little British Telecom because the Post Office has been nationalised for centuries; and what a pity! I think we want to say: "This is a commercial operation; for heaven's sake, let us follow in the footsteps of our cousins in North America who really know the way to do things on a free enterprise basis".
As to the particular amendment, I welcome the phraseology of the Bill as it stands, though this might sound contradictory to what I have just said. Islands, as I tried to explain to your Lordships earlier, particularly in the local government Bill last year, have a special problem; they have a communication problem which involves the sea, and it is different. You can quite easily dig a trench for a telephone down the side of the road but you cannot put it under the water, to take that one example. In regard to the local government Bill we had the problem of trying to persuade the Government that we do have a special extra cost because of the sea transport situation. I will not go over that ground again. But the fact is that in Canada, about which I spoke a moment ago, they do have a very special underpinning and subsidising of all the transport to all their islands in a way that I hope to show the Government in due course, when I have a little time to do it. Therefore, I think that this amendment is misconceived. It misses the point of the Bill. It tries to put us back again in a terrible straitjacket, and it does not understand that uniquely islands require special treatment in a way that rural areas never will.
Lord Underhill: My Lords, with due respect to the noble Lord, Lord Mottistone, I wonder whether he has got it completely right. We are not talking about cosseting British Telecom. I do not like the word, but we are talking about cosseting the consumer; this is the important thing. No reference has been made, so far as I can gather, to the question of maintenance. The noble Lord, Lord Mottistone, says that in Canada it is done much cheaper. Nothing can be much cheaper than nothing. British Telecom carries out maintenance as part of its normal rental charge. What will be the position in the rural areas? If, as my noble friend Lord Glenamara has pointed out, and it cannot be denied, profitable services are to be taken away by licence from British Telecom, obviously British Telecom has to make a very important decision: Does it carry on in difficult rural areas? Many noble Lords come from rural areas; they know that telecom engineers go out in all weathers, at almost all hours, to deal with problems of maintenance, and that is included in the telephone rental charge. Nothing can be cheaper than that. British Telecom will have to take an important decision. If it is going to be denied other important revenues it has got to decide whether it carries on maintenance at its present cost.
It may be argued that the private sector will take over the maintenance. That may be, but it will be at an additional cost. No private sector is going to take over maintenance in the rural areas unless it can make a useful remuneration. I do not expect any private company to carry out maintenance work for the love of doing it. Therefore, that aspect has got to be dealt with when we are considering this amendment.
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An obligation must be placed upon someone to ensure that the services in the rural areas are continued. Many noble Lords come from the rural areas. I hope they will look at this, and, if mine is not the answer, perhaps they will tell me what the answer is. The only answer can be private sector charges at a profit, which will be far greater than the charges made by British Telecom at the moment.
Lord Hawke: My Lords, may I ask my noble friend about one point that rather troubles me? Living in a rural area, with some extensions to the telephone—many people are in the same boat, of course—those extensions belong to, and are rented from, the Post Office at the moment. After the passage of this Bill, the Post Office will presumably come and mend my main telephone free of charge, as they do at the moment, but will it be incumbent upon them to come and mend the extensions free of charge, as they do at the moment, or will they be able to levy a charge for doing that?
The Earl of Gowrie: My Lords, I would have to take advice on my noble friend's question. I think the position would be that, where British Telecom are freely competing for the provision of services with the private sector, as against any undertakings they have given to my noble friend or others, on the mainframe system they would be able to levy a charge. But I will take advice about that and come back to my noble friend, if he will be so kind as to allow me that passage of time.
My Lords, I think the noble Lord, Lord Glenamara, is a marvellous addition to your Lordships' House, in that, in keeping with the traditions of the House, he is very experienced, very lucid, and extremely conservative. One of the real puzzles, I think, of political life over the last 10 years in which I have been engaged about it is the steady progression of the Labour Party towards being the party principally of the defence of the status quo. We have had time and time again in this debate, and indeed in other debates, the argument put to us which, if I may synopsise it, and the noble Lord, Lord Glenamara, put it very clearly, goes something like this: in order to provide the bread of the social service we should be allowed a monopoly on the jam to put on it. I think there is a false logic here.
The same arguments were heard most conspicuously about 15 to 20 years ago when it was suggested that the BBC monopoly should be done away with. The implication then was that if the BBC lost its monopoly all forms of the admirable Reithian tradition would be thrown out of the window and the effects would be calamitous on our broadcasting system. In fact, while we can all find things to criticise in the BBC or the ITV, or indeed in any of the media, just as they find things to criticise where we are concerned in the legislature, I think most of us agree without sentimentality that we have probably one of the finest broadcasting systems in the world, if not the finest, and that the process of competition between these two services has been to the immeasurable benefit of both. Therefore, I simply do not accept the central premise of the noble Lord's argument.
Turning away from the central premise to some of the detail, the amendment itself of course is extremely curious, since there can surely be no doubt that the

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term "British islands" includes the whole country, including the rural communities. It would be very odd if we had, as it were, hived them off in our description of this country as the British Islands. The duty as contained in the Bill makes it absolutely clear that British Telecom must have regard to the social, commercial and industrial needs of the British Isles. As I have already said, this necessarily includes the rural communities. British Telecom will continue to provide the public network and the prime instrument throughout the country. Even if it is more expensive to provide a prime instrument on the island of Skye than it is to provide one in, say, Belgravia, think of the number of prime instruments required in Belgravia and how perfectly delicious it is in commercial terms to have that monopoly of supply. There should not be too much difficulty for British Telecom in meeting its social and commercial obligations, given that it has been allowed to retain the prime instrument and the basic network, which is where most of the demand is. Whatever the fantasies all of us may have in respect of wonderful new processes and inventions, I believe most of us accept that over the next 10 or 20 years the bulk of the market will still be in the provision of the basic prime instrument.
The noble Lord, Lord Glenamara, has suggested that this Bill will result in an increase in charges in rural areas. This is a seductive argument and I believe that the noble Lord was being a little too sensitive when he appeared to have had his feelings rather hurt by my implication at Committee stage that the noble Lord was running around stirring up anxiety. The reason why I believe that the noble Lord opposite is being a little disingenuous is because he knows perfectly well that tariffs are affected by a wide range of factors. Pay has something to do with the tariffs that are charged by a large public sector monopoly. Staffing levels have something to do with charges. While I very much welcome the passionate concern expressed by the noble Lord, Lord Glenamara, and shown by the Labour Party for the fate of customers in rural areas, I do hope that they will bring equal pressures to bear on the public trading sector unions in these large monopoly industries, to see that they are equally sensitive to the costs which devolve on consumers in rural areas.
I can assure your Lordships' House that if British Telecom did choose to discriminate in some way against their customers in rural areas—and I cannot imagine that they would—then the Secretary of State would be able to direct British Telecom to cease doing so, because the Secretary of State has very considerable powers in Clause 6—his social override powers, if you like. Therefore, it seems to me that the duty of British Telecom to have regard to the interests of rural communities quite clearly remains. The Government are convinced that consumers of British Telecom communications will benefit from the introduction of competition. I must say that I find it obscurely insulting, as someone who spends some of his time in rural areas, to think that those who live there would be less interested in receiving the new products, technology and services than their counterparts in the towns. I should have thought that the more remote one's community was, the more likely one would be to wish it to be clocked-in to the central communications system which we all enjoy and wish to improve. I
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hope that what I have said will persuade the House that the noble Lord, Lord Glenamara, has raised something of a red herring—although admittedly he has dyed it blue in doing so.
Lord Hawke: My Lords, before my noble friend the Minister sits down, may I just ask him—
The Earl of Gowrie: My Lords, I did say to my noble friend Lord Hawke, that I would come back to his point and in fact, mirabile dictu, my original answer was correct, and what I said to him was confirmed by the Box. The contracts entered into in respect of the primary network obtain, but if new services are provided by British Telecom they could levy a charge for that maintenance.
Lord Hawke: My Lords, I do not believe my noble friend quite got the point. I was asking whether there would be a charge in respect of existing ancillary services; those that are being maintained free of charge at the moment. I refer to those cases where British Telecom own the apparatus and rent it out to the subscriber. In future, after this Bill passes, will there be a charge?
The Earl of Gowrie: My Lords, at the moment, the corporation, regardless of the passage of this Bill—and this is the point that I really want to get across—can seek Parliamentary assent to levy charges if it finds that it cannot maintain a service economically. The short answer to my noble friend is that the position changes in no way.
Lord Mottistone: My Lords, will my noble friend the Minister confirm that what he said earlier in his speech indicated that where this clause mentions "British Islands" it is not, as I had assumed, the islands surrounding Britain, but the "British Isles" as I learnt about them in school, including the Republic of Ireland?
The Earl of Gowrie: My Lords, I do not think my noble friend is right in thinking that. As one who hails from the Republic of Ireland, the phrase we use there in this context is "these islands". That has become a tactful and general geographical expression. Quite clearly "British Islands" means the United Kingdom, and the emphasis is on the provision of services to off-shore communities within the United Kingdom.
Lord Kilbracken: My Lords, I do not know that I can agree. I come from the same Republic and I too talk about "these islands". Is it not the case, however illogical and unjustifiable it may be, that the term "British Isles" as defined in British legislation does in fact include the 26 Counties?
The Earl of Gowrie: My Lords, it is a confusing issue, as the noble Lord is aware, because the technical definition of the word "Scot" is an Irishman. Our history and geography and culture are pretty confused on these issues, but I do not think our legislation is.
3.38 p.m.
Lord Glenamara: My Lords, with the tremendous

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honesty that characterises him, if I may say so, the noble Lord, Lord Mottistone, let the cat out of the bag. He said that people in rural areas could look after themselves. He said that they could club together to buy the services that they wanted, and if the Post Office finds that it is no longer able to provide a telephone box on the village green, the local community can have whist drives, beetle drives and dances to raise the money for one. That illustrates the divide between us. We believe that it is right and proper for more lucrative areas to subsidise those areas which cannot pay their own way. The noble Earl, Lord Gowrie, mentioned Belgravia; I wish my noble friend Lord Lever were here because I am sure he would agree that it would be right and proper for Belgravia to subsidise Benbecula in the Hebrides.
The Earl of Gowrie: But Belgravia does do that, my Lords.
Lord Glenamara: Of course it does, my Lords. That is our whole point—and it should continue to do so, but the noble Earl does not believe that.
The Earl of Gowrie: My Lords, if the noble Lord will allow me, the point I was making is that Belgravia does subsidise the Isle of Skye and I am sure the noble Lord, Lord Lever, is very content that it should do so. It will continue to do so in respect of the monopoly over the primary network. All we are suggesting liberalising is the secondary apparatus, which should generate a great deal of development employment in this country, and I should have thought that the noble Lord, Lord Glenamara, would have welcomed that.
Lord Glenamara: My Lords, I have listened carefully to the noble Earl's interjection, but I cannot see that it is very relevant to what I was saying. What we are saying is that it is right and proper that Belgravia should subsidise the islands in the Hebrides. The noble Earl criticised me for saying that. If I could return to remarks made by the noble Lord. Lord Mottistone, for a moment, he accused me of wanting to put the country back into a straitjacket. I hope that noble Lords have looked at what my colleagues and I are suggesting. In Clause 3 it says:
"It shall also be the duty of the Corporation, in exercising its powers, to have regard to"—
and then there are listed a number of matters, including:
"the social, industrial and commercial needs of the British Islands".
We are suggesting that we then insert:
"including its rural communities".
I should hardly have thought that such a step would be putting the country back in a straitjacket. To say that is really coming it a bit much, even from the noble Lord, Lord Mottistone.
The noble Lord, Lord Hawke, raised the important question of maintenance. The Post Office will, of course, have to charge maintenance in future. It is now included in the rental, but in future, as certain as day follows night, when this Bill becomes operative they will have to charge separate fees for maintenance.
The noble Earl, Lord Gowrie, criticised me for wanting to preserve the status quo. I think that the
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status quo is a highly desirable state of affairs sometimes. If I am standing on the top of a cliff and the option is to be pushed over it, then I shall want to preserve the status quo—and that is just about what this Bill proposes. The noble Lord said that the term "British Islands" included rural areas. Of course it does, but we are all agreed, I think, that they are at special risk here and we simply wish by this very innocuous amendment to underline their importance and to emphasise the need to safeguard them.
As regards tariffs, I hope that noble Lords listened to what the noble Earl, Lord Gowrie, said. He still has not told us whether or not, in the opinion of the Government, this Bill will cause tariffs to rise in rural areas. What did he do? He got off on to the old red herring about the unions and pay demands. It was a little unfortunate because in this particular industry the unions—and there are two—are probably the most responsible unions in the British Isles, so he really cannot put forward that plea in this case. Noble Lords should note that we have still not yet been told whether, as a result of this Bill, telephone bills and maintenance charges will go up in the rural areas. We say that they will and everybody who is informed about this matter and who has considered the Bill agrees that they will go up. The noble Earl, Lord Gowrie, still has not told us the Government's view.
We are still confused (are we not?) about the Minister's power to direct. The Minister may well have the power, as the noble Earl says, to direct BT if it is seen to be discriminating against rural areas—that would be very difficult to prove, but I agree that he would probably have the power to direct it in those circumstances. But what happens if BT refuses to install a PABX in a local auction mart; the one I quoted earlier? Would he have the power to direct it to do that?—of course he would not. The Minister has no power to direct in matters of that kind.
Finally, the noble Earl criticised me—and I am amazed about this—saying that I was not in favour of rural areas having up-to-date equipment. The whole of my argument is that I am in favour of them having the best equipment but they will not have it under this Bill. That is the whole point. I am sorry that the noble Earl missed it. I want them to continue to have the best equipment available in the Islands and Highlands; the remote areas; Cumbria where I was born, brought up and live; and areas like that. The whole point is that I am afraid that under this Bill they will not get that. So please; I did not say that they ought not to have it. I am sorry that the Government have taken the view which they have taken. This is a very sensible amendment and I hope that many noble Lords—for example, those who voted on the question of rural transport—will feel that they can support us in this matter.
The Lord Chancellor: My Lords, it is up to me to put the Question. However, if there is likely to be a Division I wonder whether the House would prefer me to make the Statement next or to put the Question? I shall take it upon myself to make the Statement.
Several noble Lords: Question!
The Lord Chancellor: My Lords, if that is the case then I must put the Question.
3.45 p.m.
On Question, Whether the said amendment (No. 5) shall be agreed to?
Their Lordships divided: Contents, 52: Not-Contents, 101.

CONTENTS

Ardwick, L.

John-Mackie, L.

Bacon, B.

Kilbracken, L.

Beswick, L.

Leatherland, L.

Bishopston, L. [Teller.]

Listowel, E.

Blyton, L.

Lovell-Davis, L.

Briginshaw, L.

Molloy, L.

Brockway, L.

Morris of Grasmere, L.

Bruce of Donington, L.

Oram, L.

Cledwyn of Penrhos, L.

Pargiter, L.

Collison, L.

Peart, L.

Crowther-Hunt, L.

Phillips, B.

David, B. [Teller.]

Ponsonby of Shulbrede, L.

Ewart-Biggs, B.

Reilly, L.

Fisher of Rednal, B.

Sefton of Garston, L.

Gaitskell, B.

Shinwell, L.

Glenamara, L.

Stewart of Alvechurch, B.

Greenwood of Rossendale, L.

Stewart of Fulham, L.

Hale, L.

Stone, L.

Hall, V.

Strabolgi, L.

Hayter, L.

Strauss, L.

Henderson, L.

Taylor of Mansfield, L.

Howie of Troon, L.

Underhill, L.

Jacques, L.

Wallace of Coslany, L.

Janner, L.

Wedderburn of Charlton, L.

Jeger, B.

Wilson of Radcliffe, L.

Jenkins of Putney, L.

Wootton of Abinger, B.

NOT-CONTENTS

Alport, L.

Grimston of Westbury, L.

Ampthill, L.

Hailsham of Saint Marylebone, L.

Amulree, L.

Auckland, L.

Hankey, L.

Avon, E.

Hanworth, V.

Balfour of Inchrye, L.

Hawke, L.

Beaumont of Whitley, L.

Hives, L.

Beloff, L.

Home of the Hirsel, L.

Bellwin, L.

Hylton-Foster, B.

Belstead, L.

Ilchester, E.

Bessborough, E.

Kennet, L.

Boyd-Carpenter, L.

Kinloss, Ly.

Byers, L.

Lane-Fox, B.

Caccia, L.

Long, V.

Campbell of Croy, L.

Lothian, M.

Cawley, L.

Loudoun, C.

Clancarty, E.

Luke, L.

Cockfield, L.

Lyell, L.

Cottesloe, L.

McAlpine of Moffat, L.

Croft, L.

McFadzean, L.

Cullen of Ashbourne, L.

Macleod of Borve, B.

Daventry, V.

Mansfield, E.

Davidson, V.

Marley, L.

De La Warr, E.

Montgomery of Alamein, V.

Denham, L. [Teller.]

Morris, L.

Dundee, E.

Mottistone, L.

Effingham, E.

Moyne, L.

Elibank, L.

Murton of Lindisfarne, L.

Elliot of Harwood, B.

Northchurch, B.

Evans of Claughton, L.

Nugent of Guildford, L.

Exeter, M.

Nunburnholme, L.

Faithfull, B.

Orkney, E.

Ferrers, E.

Orr-Ewing, L.

Fortescue, E.

Penrhyn, L.

Fraser of Kilmorack, L.

Rankeillour, L.

Gainford, L.

Rawlinson of Ewell, L.

Gibson-Watt, L.

Reigate, L.

Glenkinglas, L.

Renton, L.

Gore-Booth, L.

Robbins, L.

Gormanston, V.

Rigby, L.

Gowrie, E.

Sainsbury, L.

Gridley, L.

St. Aldwyn, E.

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Sandford, L.

Trefgarne, L.

Sandys, L. [Teller.]

Trumpington, B.

Savile, L.

Vaux of Harrowden, L.

Seear, B.

Vivian, L.

Skelmersdale, L.

Wakefield of Kendal, L.

Soames, L.

Ward of Witley, V.

Strathcarron, L.

Westbury, L.

Strathspey, L.

Wigoder, L.

Sudeley, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

Trooping the Colour: Incident
3.52 p.m.
The Lord Chancellor: My Lords, before, from the Woolsack, I call Amendment No. 6, with the leave of the House perhaps I may now repeat a Statement being made in another place by my right honourable friend the Home Secretary. The Statement reads as follows:
"As the House is aware, on Saturday, 13th June, as Her Majesty was making Her way to the ceremony of Trooping the Colour, a man in the crowd of sightseers fired six shots of blank ammunition using an imitation revolver. A man was immediately arrested and has been charged by the police under Section 2 of the Treason Act 1842. As the matter is now sub judice, the House will realise that it would be wrong this afternoon to discuss the details of the incident itself.
"It has not been the practice, nor would it be desirable, to describe the arrangements made for the safety of Her Majesty The Queen and other members of the Royal Family, but I can assure the House that those arrangements are kept under continuing review, and have recently been re-examined. What occurred on Saturday is being carefully studied by the Commissioner of Police of the Metropolis, and full account will be taken of it in future planning arrangements. It is Her Majesty's wish that both on state and on less formal occasions she should be able to move freely among her people. Consistent with this everything will be done to keep the risks to a minimum.
"There has been concern in the past about the misuse of replica firearms. Although the law provides severe penalties for their misuse, I have asked my department, together with chief officers of police, to re-examine, as quickly as possible, what effective controls can be devised.
"I am sure that the whole House will wish to put on record its admiration for the calmness and control which Her Majesty displayed throughout".
My Lords, that concludes the Statement.
Lord Peart: My Lords, first, I should like to express the relief of the Opposition that neither The Queen nor any of her subjects was injured as a result of the incident last Saturday. I should also like to thank the noble and learned Lord the Lord Chancellor for the Statement that he has made. The Opposition wish to applaud and support The Queen's own view that the day must never come when she is unable to move

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freely among the people of the United Kingdom. I know that sometimes this creates difficulties and that it may involve personal danger. But we look to the Home Office to ensure that the risks involved are kept to a minimum.
In another place the Home Secretary has reminded us that the incident is now sub judice, and therefore it would be wrong for us to go into detail. However, all of us admire The Queen. Our constitutional Monarchy is something that we treasure and we hope that it will show to the people of many other countries that we are proud of Her Majesty for her courage and for all that she stands for.
Lord Wigoder: My Lords, we on these Benches should also like to express our respectful admiration for the incredible composure shown by Her Majesty at a moment which, at that time, must have seemed to be one of very real danger. I should like to ask the noble and learned Lord on the Woolsack only this question. Is it not a fact that year after year a substantial number of serious criminal offences, particularly of armed robbery, are committed by people using imitation firearms which are skilfully produced, which are advertised for sale without any restriction, and which are bought and sold without any limitation whatever? If that is so, would not the noble and learned Lord say that it is at least the intention of the Government to legislate as soon as possible to prevent this, once they are satisfied that there is a practicable way of doing so?
The Lord Chancellor: My Lords, I am very grateful to both noble Lords for the way in which this Statement has been received. I am sure that they were expressing the feelings of every person in this House in what they said about The Queen and the way in which she behaved on this occasion. Of course, she also showed very considerable horsemanship. It should not be forgotten that riding on horseback can lead to fatal accidents if the horse is in any way disturbed.
Responding for the moment to what the noble Lord, Lord Wigoder, has asked me, I do not know the figure for offences committed with dummy firearms. I have read in the papers of precisely this happening, and it is obviously one of the arguments which my right honourable friend will be taking into account when he looks at the review which he has said in the Statement will be undertaken. Quite obviously, in view of the words in the Statement I cannot go further this afternoon.
Lord Kennet: My Lords, I should like to associate all of us on this Bench, both present and absent, with what has been said by the noble and learned Lord the Lord Chancellor, and by the spokesmen of the two longer established Opposition parties, especially about the deportment of Her Majesty during the incident on Saturday. I should also like to put a question, which has been raised, to the noble and learned Lord in a slightly different way. Is it not now nearly time that we shifted our interest in preventing these attempts and apparent attempts away from the local protection of public figures—which events around the world in recent months and years have shown to be impossible
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to achieve to perfection—towards a yet stricter control not only of guns but of toy guns, replica guns, air guns or anything which can look, sound or smell like a gun?—as both democracy and Monarchy depend upon the free circulation of politicians and monarchs, and neither depends on the free possession of guns.
The Lord Chancellor: My Lords, obviously these are questions which we must all ask ourselves since our anxieties have been very well focussed by what happened on Saturday. I know that toy guns and the difficulty of differentiating the toy from the so-called replica are part of the problem which my right honourable friend is having considered. I have sometimes doubted the wisdom of toy guns myself. I think we perhaps sometimes underestimate the importance of child play in adult behaviour, but of course it raises a very big question. There are literally millions of objects which would fall into this category. Whether one is talking about replicas or toys there are a very large number already available in the country, and therefore if one turns off the tap now to a larger or a greater extent there would still be those objects which it would be very difficult to control. I think that that is about all I can say about that at the present stage.
Baroness Hylton-Foster: My Lords, I am sure that those sitting on the Cross-Benches will want to be associated with the feelings of thankfulness that no harm came to Her Majesty the Queen on this occasion, and also to express our congratulations on her courage at this very difficult time.
The Lord Chancellor: My Lords, I am very grateful to the noble Baroness, whose words will again find an echo in all our hearts.

British Telecommunications Bill
Report stage resumed.
Clause 4 [Redistribution of property, rights and liabilities among wholly owned subsidiaries]:
4.2 p.m.
Lord Morris Lord Morris moved Amendment No. 6:
Page 6, line 35, leave out ("exclusive privilege of providing") and insert ("power to provide").
The noble Lord said: My Lords, the purpose of this amendment is to draw your Lordships' attention to references in the Bill to an "exclusive privilege of providing" services when there is no such exclusive privilege. I believe it would be for your Lordships' convenience if we were to take Amendments Nos. 6, 12, 14 and 17 together because the principle underlying this amendment covers all four amendments. This amendment is a drafting amendment, for it really does jar that there should be a reference in these four places in the Bill to the provision of services which the corporation has the exclusive privilege of providing, when the clause of the Bill which covers the exclusive privilege—namely, Clause 12—refers only to the exclusive privilege of running telecommunication systems.
That apart, my noble friend Lord Trefgarne was kind enough to write to me on this very point. He suggested in the letter that my amendment might imply that British Telecommunications' powers are limited to the monopoly. The purpose of the amendment is nothing whatsoever to do with an attempt to limit the powers of British Telecommunications. Indeed, British Telecommunications' powers are not limited if one were to read Clause 2, which has very wide powers granted to British Telecommunications which go beyond the monopoly itself. I do not argue with that because they are obviously necessary. My noble friend Lord Trefgarne said in the letter that he believed that British Telecommunications should be free to compete outside the monopoly with the private sector provided that the competition is fair. I cannot see that this amendment in any way stops, or prevents, British Telecommunications from competing outside the monopoly. I would commend this amendment to your Lordships' attention.
I was also puzzled with the suggestion that the running of systems itself is not wide enough to empower British Telecommunications to carry out the necessary services attached to the running of systems. I do not believe that that is so. Indeed, my noble friend Lord Gowrie, on the first day of the Committee stage, on certainly two occasions stated that the intention of the Bill was indeed to limit the monopoly solely to the public switch telephone network and the provision of the first instrument. That being so, I would suggest that Her Majesty's Government should welcome this amendment. I beg to move.
The Earl of Gowrie: My Lords, it may assist my noble friend if I explain the purpose of subsection (4) of Clause 12, to which he has just referred and to which he drew attention when this House considered the clause in Committee. I apologise in advance that this is a detailed, rather technical matter but I shall do my best to make it clear. This subsection is no more than a definition of the phrase "services which the corporation has the exclusive privilege of providing". It does not create a new conclusive privilege; there is only one such privilege conferred by the Bill—that of running telecommunications systems. However, the corporation does have power under Clause 2 to provide telecommunications and data processing services, and of course it has a duty under Clause 3 to provide such telephone services as satisfy all reasonable demands for them. It is not an undue simplification to say that the running of systems for which the corporation is given an exclusive privilege is a means to the end of providing services. It is in the nature of things that some of these services, for example the basic public telephone service, could not be provided by anybody else unless they were to run a system, and to run a system would infringe British Telecom's exclusive privilege. These are what is meant by services which the corporation has the exclusive privilege of providing, and Clause 12(4) simply says so in order to try to make the meaning of the phrase precise.
It is necessary to be so precise because the phrase is used at several points in the Bill. These points which are picked out by my noble friend's other amendments, which we are now considering, are all ones at which
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British Telecom is either made subject to special powers, or is given special privileges or obligations, because it has a monopoly and is charged with a duty. It would not be appropriate for these powers, privileges and obligations to apply to British Telecom's competitive activities, and so to make this distinction the Bill refers to services which the Corporation has the exclusive privilege of providing. I hope this explanation will convince my noble friend that there is nothing sinister about Clause 12(4).
The amendments to Clauses 4, 6 and 9 have effects which my noble friend may not have intended. In each of these the intention of the Bill is to make provisions that apply only to services in which British Telecom enjoys a monopoly by virtue of its exclusive privilege to run systems. For example, Clause 6(5) allows my right honourable friend the Secretary of State to give the corporation directions when, in its provision of monopoly services, it is showing undue discrimination or preference. That is the watchdog role where monopoly is concerned. My noble friend's amendment, if read with its natural meaning, would extend that watchdog power to all services. But British Telecom's competitors would not be subject to such directions, and they would therefore enjoy a potential unfair competitive advantage over British Telecom, and I do not believe that that would be right.
The amendment to Clause 9(2), in its natural meaning, would limit the power of my right honourable friend to withdraw services from the scrutiny of the Post Office Users' National Council so that it applied only to those services that the corporation did not have power to provide. That would, therefore, nullify the provision, which I am sure is not my noble friend's intention. With that explanation of the meaning of Clause 12(4), I hope he will not press the amendment.
Lord Morris: My Lords, I am not happy with that explanation. Before deciding the course to adopt, may I ask my noble friend whether he thinks the answer might be to refer to the "exclusive privilege" in the heading of Clause 12, which might handle the objection to the reference elsewhere in the Bill to "exclusive privilege" and which apparently does not appear in the Bill?
Lord Orr-Ewing: My Lords, I do not like the provision where Clause 4(3) states quite clearly:
"with the provision of services which … the Corporation has the exclusive privilege of providing".
It does not enumerate the services, and I think any person could argue that that relates to all services, yet we have specifically encouraged competition in services because we know it is an area where the Post Office is rather weak. I therefore urge my noble friend to look for a solution perhaps at this point in the Bill, at Clause 4(3), because at present it does not make sense to me and I am sure it will not make sense to many people reading the Bill.
The Earl of Gowrie: My Lords, I think both my noble friends are unhappy about something which is not in the nature of policy or in the nature of the Bill but which is primarily semantic. We are concerned to see that the common or everyday use of the word "services" can continue to function because, as I

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said in my opening response, there are conditions in which the running of systems, which is the exclusive privilege of British Telecom and which I think we all accept, tangents on to services; it is in the nature of things that the basic public telephone service could not be provided by anybody unless they infringed the monopoly to run a system.
We have taken care, at the risk of the ordinary pedantry of legislation, to spell out this distinction between systems and services throughout the Bill by the repetitions I have mentioned, and I think is necessary. However, if we went down the road my noble friend suggests, my advice is that there would be confusion where the use of the word (this is the semantic point) "service" in fact implied the running of a system. That principle is clear and we have tried, therefore, to clarify the language in respect of it.
Lord Morris: I was not of course suggesting anything sinister in the use of the words "exclusive privilege" as applied to the services, my Lords. However, I believe this could be an important point because from, an observation made in Committee by my noble friend Lord Trefgarne, I understood that the Post Office had never prayed in aid the exclusive privilege point since the passing of the 1969 Act. Apparently what they do pray in aid are their property rights in the equipment—that would be the cable, junction boxes, the telephone instruments, the items which come under the terms of the schemes through which they provide the services—and it is that about which I am concerned because they have the ultimate sanction of pulling out the plug.
The Earl of Gowrie: I think I have made the position clear, my Lords. While both my noble friends Lord Morris and Lord Orr-Ewing have made the area in which they have some disquiet clear, I am saying there is no justification for that disquiet. While we have phrased the Bill in such a way as to make that distinction between systems and services, very often the word "service" is used in a context where the running of a system is also implied. That is the problem we have had and I have outlined the way we have tried to solve it. I do not think there is any need for my noble friends' disquiet in that as we have the basic principle of the monopoly in running the system into which services can be slotted or injected, those services can be provided by British Telecom in free competition, and they can also be provided by other organisations, and that is the purpose of the liberalising passages of the Bill. I do not believe, therefore, that their anxiety is justified, but I shall read in Hansard what they have said and if I find that my use or the Bill's use of semantics is at variance with theirs, I shall table a Government amendment at a later stage. I hope with that assurance my noble friend will not press the amendment.
Lord Morris: I am most grateful to my noble friend, my Lords, and it would be churlish of me not to thank him warmly for a much fuller explanation than was received at an earlier stage of the Bill. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.17 p.m.
Lord Lyell Lord Lyell moved Amendment No. 7:
Page 7, line 22, after second ("to") insert ("a transfer by or").
The noble Lord said: My Lords, I am sure the House will be grateful if I speak at the same time to the following amendments: Nos. 8, 16, 65, 66 and 89. These are drafting amendments to ensure that all references to the transfer of property rights and liabilities under the Bill are phrased in the same way. This group of amendments removes a number of minor inconsistencies in the drafting of the Bill.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 8:
Page 7, line 23, after ("to") insert ("a transfer by or").
On Question, amendment agreed to.
Clause 5 [Control of wholly owned subsidiaries]:
Lord Morris Lord Morris moved Amendment No. 9:
Page 7, line 43, leave out sub-paragraph (ii).
The noble Lord said: My Lords, I think it would be convenient to the House if I spoke at the same time to Amendment No. 10. I raised this matter in Committee and in so doing questioned the necessity for a public trading corporation to have need to hide behind the skirts of a nominee company. I was assured at that stage that my noble friend would look at the matter again and I tabled the amendment in order that he might do just that.
Lord Lyell: My Lords, as my noble friend said, this subject was raised in Committee and, as the House may be aware, my noble friend's proposal would require British Telecom or a wholly-owned subsidiary to obtain the consent of my right honourable friend the Secretary of State before it issued any shares, stocks or other interest to a nominee of British Telecom itself or to one of its wholly-owned subsidiaries. The definition of a wholly-owned subsidiary of another body corporate which we find in Section 150(4) of the Companies Act 1948 means that even if shares in a wholly-owned subsidiary of British Telecom are transferred to a nominee of that company, or to a wholly-owned subsidiary, that company remains a wholly-owned subsidiary subject to the same controls under the Bill. There is thus no need for the Secretary of State's consent to be required.
I am sure that the House will be aware that the use of nominees is a perfectly standard business practice, and certainly it cannot be ruled out that British Telecom may find it convenient to operate in this way at some stage. The Companies Acts require every company to have not less than two registered shareholders and so, in effect, it is necessary that at least one share in each wholly-owned subsidiary should be registered in the name of a nominee.
That explanation was of necessity slightly technical, but I hope that it will go some way towards enabling my noble friend Lord Morris to feel more satisfied than he did on an earlier occasion.
Lord Morris: My Lords, I am most grateful to my noble friend for that explanation. In the light of my

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slight misgivings about a public corporation hiding behind the skirts of a nominee, I should like to ask whether it would be possible, not by legislation, but by executive order, for Her Majesty's Government to instruct British Telecommunications that, where it is not the de jure owner of shares in subsidiary companies, but is the beneficial owner, a statement to that effect be made? That would make it quite clear to members of the public that the beneficial owner of the shares was a public corporation.
Lord Lyell: My Lords, my noble friend has, in cricketing parlance, howled me something of a tricky and fast ball. I shall answer with a dead bat and say that if my noble friend's wishes cannot be met, I shall certainly endeavour to see what can be done. I hope he will agree that I should write to him on the last part of his query.
Lord Morris: My Lords, I am most grateful to my noble friend for that reply, in the light of which I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 10 not moved.]
Clause 6 [General control and supervision by the Secretary of State]:
4.23 p.m.
Lord Morris Lord Morris moved Amendment No. 11:
Page 9, line 12, after ("agreement") insert ("including the obligations arising by virtue of the provisions of Article 90(l) of the Treaty of Rome").
The noble Lord said: My Lords, at the Committee stage I spoke at hideous length and, I fear, with some complication to an amendment similar to this one, and no doubt your Lordships will be delighted to learn that I shall not retrace those steps. However, in his answer my noble friend Lord Trefgarne raised a point which, following some research, I believe has some merit. He said, as reported at column 524 of the Official Report of 12th May,
"where in a situation such as this one identifies a particular international agreement … then in certain circumstances one tends to imply that other international agreements are not therefore necessarily covered".
It is for that reason that I have altered the amendment slightly from the form in which I tabled it at the Committee stage. Previously the amendment read:
"… and in particular to facilitate the discharge of the obligations by virtue of the provisions of Article 90(1) of the Treaty of Rome".
I have changed the opening words from "and in particular to" to
"including the obligations arising by virtue of …"
et cetera. I believe, no doubt wrongly, that that meets the point raised by my noble friend Lord Trefgarne. With those words I beg to move.
Lord Lyell: My Lords, my noble friend Lord Morris has this afternoon added to the very lucid account which he gave at the Committee stage. I hope that he will not expect me to go further into a definitive opinion on a matter as intricate as European Economic
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Community competition law, and in particular all the implications of Article 90 of the Treaty of Rome. I would agree that British Telecom is bound by EEC law in the way in which it conducts its business. British Telecom must very carefully avoid illegal abuse of a dominant market position, and I can, and do, go so far as to reassure the House that both the Government and British Telecom are in regular contact with the Competition Directorate of the European Commission on this particular matter which my noble friend has raised.
However, I fear that I have a divergence of opinion with my noble friend over the need to add to Clause 6 of the Bill a specific mention of the Treaty of Rome. Clause 6(4) is a general, and indeed necessary, provision which among other things enables the Secretary of State to give directions to the corporation to secure compliance with the United Kingdom Government's international obligations. These obligations arise in many fields, including, for example, that of defence; the Treaty of Rome is one among many. If the wording proposed by my noble friend Lord Morris were to be adopted, it would elevate obligations under the Treaty of Rome above any other international obligagations. Should there ever be a conflict in the field of telecommunications between, for example, our obligations to NATO and those under the Treaty of Rome, the Secretary of State would have to give priority to the obligations to the EEC. This turn of events might be very unlikely, but should our obligations to two differing international bodies ever clash, then the Government would certainly wish to consider this particular matter on its merits, and in consultation with our partners in other countries which are affected by the point at issue. Therefore it would be wrong for the Bill to prejudge this issue.
We are very grateful to my noble friend for the clear way that he has drawn attention to the relevance of Community law to all who compete in the telecommunications market, and above all to British Telecom. I hope that the explanation that I have given is not too hypothetical. We believe that it is realistic and that my noble friend's query is a little beyond the bounds of reason at the moment.
Baroness Phillips: My Lords, before the noble Lord proceeds to deal further with his amendment, I should like to say to the Minister that I found his explanation very curious. He says, "Maybe", but we are dealing with rather important legislation. As I understood it, what he said in essence was that if a particular treaty is named, it must take priority over treaties that are not named. Surely that would introduce a rather strange form of government. As we are all aware, we suffer all the time from directives from the European Communities. These directives affect us all the time, whereas treaties with NATO and other bodies do not affect us in the same way. I think that the noble Lord, Lord Morris, is on to a very important point. I do not know what he thinks, but I do not regard the explanation offered by Her Majesty's Government as very satisfactory.
Lord Morris: My Lords, I must confess that I am now slightly more enlightened than I was. As I understand my noble friend's explanation, it seems to be

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based on a somewhat esoteric form of construction. My sole intention in suggesting the amendment for inclusion in the Bill was (as my noble friend suggested) in order to draw attention to the vitally important fair competition provisions of the Treaty of Rome. I thought that this was a neat and brief way to go about it. I believe that this matter is very important because of Her Majesty's Government oft-stated view that one of the primary tenets of the Bill is that the British Telecommunications Corporation should trade on a fair basis with the private sector, and indeed vice versa. However, in the light of what my noble friend has said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 12 not moved.]
4.30 p.m.
Lord Caccia Lord Caccia moved Amendment No. 13:
After Clause 8, insert the following new clause:
("Annual report by Secretary of State
. The Secretary of State shall prepare and publish annually a report to Parliament on the performance of his responsibilities with respect to telecommunications under this Act with particular reference to those functions carried out by him under sections 6, 12, 15 and 16 below.").
The noble Lord said: My Lords, with this Bill we are setting out on a new course for telecommunications in this country, involving wide-ranging and important powers of the Secretary of State, a position for British Telecommunications and the interests of industry and the consumer.
If I may say so with respect, the answers given by the Government in another place and here have helped a great deal to explain, whether or not you like the Bill, how the Government intend that it shall operate. But it is a new course, and both for the purposes of Parliament and of industry, and of the consumer, is it not highly desirable, at the least, that the Secretary of State should annually give some account of the way in which he has carried out the very important and, I say again, wide-ranging functions which the Bill confers upon him?
True, under Clause 6(12) British Telecommunications will have to produce an annual report, but, although it might be possible to deduce from such a report what has been the part played by the Secretary of State in any year, the question arises whether this is a wholly satisfactory way of proceeding. I would suggest that in his own interests, even, the Secretary of State might wish to supply a separate annual report, and thereby not put everything on to British Telecommunications in this respect. As I say, you might be able to deduce what he had done but you would not hear in his own words what his decisions had been.
True, also, under Clause 6(7) it is laid down:
"The Secretary of State shall lay before each House of Parliament a copy of every direction given under subsection (6) unless he is of opinion that disclosure of the direction is against—

(a) the interests of national security; or

(b) the commercial interests of any person".

But, of course, his powers are very much more wide-ranging and important than those covered by that provision in subsection (7).
It is with those arguments in mind that I would propose
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this amendment. I recognise, of course, that it may not be in a form which the Government would find acceptable, either as to its place in the Bill or as to its wording. But I would draw attention to the fact that it also sets out the particular respects in which the Secretary of State may wish to give an annual account of his functions—namely, under Clauses 6, 12, 15, and 16. But those are not exclusive, and the main purpose of this amendment is to suggest that in the general interests—parliamentary interests and the interests of industry—the Secretary of State would himself wish to lay an annual report. I beg to move.
Lord Orr-Ewing: My Lords, I am really hopeful that for the first time—I think I have taken part in the debates on a number of amendments to successive Bills, first the Employment Bill and now this Bill, both dealt with by my noble friend, and always with elegance, courtesy and efficiency—this proposal that the Secretary of State should publish an annual account might be accepted. Surely every single major corporation produces an annual account. They have consumer councils, as POUNC does in this case, and it is a perfectly customary arrangement. I feel sure that, of all the nationalised industries, British Telecom, with a virtual monopoly, even after this Bill, would not want to be the only one which does not publish an annual account. It is of such importance to so many people in this country that I think it is right that an annual account should be published.
We shall go on later to discuss various amendments, but I notice that a brief sent to me by the Post Office Engineering Union—it is a brief which I believe the noble Lord, Lord Glenamara, has also probably had, judging from one or two of the phrases that he has used —says that they want to ensure,
"that the Secretary of State pays proper attention to the impact of his decisions on the manufacturing sector".
This is behind much of what the noble Lord, Lord Caccia, said. We want the Secretary of State to bear responsibility and to give an account of that responsibility in an annual report, and to make sure that he carries out all the consultations, not just with BT but with the industry in general and other aspects of this very important sector.
There is something else I must mention here. My noble friend dealt with the breaking up of the BBC monopoly, and I was very concerned with that in my early days in the House. I remember all the warnings; but I also remember that even when that monopoly was broken there was a cosy relationship—a very cosy, almost too cosy, relationship—between the Postmaster-General's Department and the BBC. This had grown up over 20 or 30 years, and I have no doubt that over the years the same relationship has grown up between the people responsible in the Ministry and British Telecom. Therefore, I would hope that we make sure that proper consultation is carried out before coming to decisions, not just with British Telecom but with all other people—the industry in general, and other people closely concerned with the well-being of this industry and, therefore, of course, with our exports, with our technology and with the well-being and prosperity of telecommunications.
Earl De La Warr: My Lords, I should like to say that I think the idea behind this amendment is a very sensible one indeed. The Secretary of State has, after all, given himself unusually wide powers over the whole industry—British Telecom in particular, but not confined to British Telecom. I quite understand why he has done it. He is trying to achieve something that is right at the heart of what has been called the new industrial revolution, and in order to do that he has wanted to make sure that at least in reserve he has the powers to see that certain very important and new things happen. So, as I say, it is understandable.
But, from that, does it not follow that it is also understandable that Parliament would wish, once a year, just like the shareholders of any private enterprise company, to have an account from the Secretary of State as to how he has exercised his stewardship? That is all that is being asked. One would hope that the Secretary of State would be happy to go to Parliament and say, "This is what I have done", and perhaps take the opportunity to say as well, "And this is the way I am thinking about the future". So this suggestion appears to me to be eminently reasonable.
Having said that, I recognise—and I think this was behind something that the noble Lord, Lord Caccia, said—that there may be difficulties, particularly in the wording of this amendment. I think that what I, for one, want to hear (I cannot speak for the noble Lord, Lord Caccia) is an undertaking from the Government that it is their intention to come before the House once a year and offer an account of their stewardship, and to give both Houses the opportunity to make their comments. If my noble friend finds it difficult, as possibly he may, to put this into primary legislation, then speaking for myself alone, because I cannot speak for anybody else, I would be very happy to hear him give an undertaking, provided only that it is very specific. If he can do that, then it is possible that some of us will be satisfied. But I repeat that the principle that is behind the noble Lord's amendment is in my opinion an admirable one.
Lord Harmar-Nicholls: My Lords, my instinct is against this amendment. I recognise the attractiveness of cosmetically appearing to keep Parliament fully in the picture, and that this ought to be the case. One recognises that one could preen oneself that one had protected the nation by getting these annual reports. But my instinct is against it because statutory annual reports of all sorts become such a formality that they often do not play an important part in explaining the picture or in a sharing of minds with others. Where there is a great difference in this matter with private industry, to which my noble friend Lord De La Warr referred, is this. Private businesses have not got Question Time every day where any Question one wants to put can be dealt with and one is kept up to date. Private businesses have no Adjournment Debates. Private businesses have not the same facilities for Ministers in charge to come and give reports, not necessarily annually but when they think they are necessary.
I recognise the purity of writing into the legislation that under statute we must have a report; but I do not know that one wants to be cosmetic on this. We do not want to put the onus on this department or on
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that department of making a report just because they have to do so, irrespective of whether the conditions under consideration necessitate it, particularly when we have all the other opportunities which are denied to private business to know how things are going on. For my sins, I am a chairman of companies and of a couple of public companies and we have to give half-yearly reports, which are now to be made three-monthly reports and then we have the annual report of the chairman. We know how formalised that is. I think it is right in the case of private industry because they do not have these alternative ways, nor can the shareholders question the management with the same ease as we can in Parliament. I would say that, attractive though it seems and purist though it is, in the sense of having it written into the Bill, I would not wish this amendment to be accepted. I would leave it to the good sense of Parliament to decide when it wants to know something at Question Time and on adjournment, and so on. I would leave it to the good sense of the Minister to use his judgment as to where he thinks there ought to be a sharing of minds with Parliament.
Lord Orr-Ewing: My Lords, is my noble friend wrong in referring to leaving it to the good sense of Parliament? We cannot probe into the details of nationalised industries, into their price structures, into their policies, into delays in issuing licences or into whether licences have been given. None of that is open to us to discuss in detail. Only the broad structure and capital expenditure of the nationalised industries come under the control of Parliament. It is a problem that Parliament has not yet resolved.
Lord Harmar-Nicholls: My Lords, my noble friend and I have been in and around Parliament for the past 30 years. He knows well there are many opportunities for him and for any other Member, on adjournment and in other ways, to find out what he wants to know. Nothing is kept from the probing of MPs if they really want to know about it. It may not be done in a formalised way as in an annual report, but there is no question but that, if any Member of Parliament wants to know anything about anything in this country, he can find out if he uses the machinery properly. Putting this in a formalised way, attractive though it may seem, is an unnecessary burden and will cause the use of a lot of paper and words which will not get us anywhere. It is up to Members of Parliament, apprised, as they are, by their constituencies as to what is wrong, to use the facilities which are open to them and not to formalise their methods. I do not know what will be the reaction of my noble friend on the Front Bench. He may want to accept it; but I still think it is unnecessary.
Lord Byers: My Lords, before the noble Lord sits down, I think it is important that he should get the record right. The noble Lord gives the impression, which will go abroad out of this House, that you can deal with the day-to-day working of nationalised industries by asking a Question in another place. Such a Question would be stopped by the Table. It would not be allowed to go forward.
Lord Harmar-Nicholls: My Lords, I say to the noble Lord that the probe you can make if you have an annual report (as is proposed here) is no wider and gives no more opportunity to go into depths than if you use the facilities in this place. If you have an annual report, you are still prevented by the Table from going into the day-to-day running of the nationalised industries—and rightly so. The fact that you have an annual report will not overcome the freedom that we rightly give to the nationalised industries who have to run separately and who need freedom. There is nothing you can do arising out of an annual report that cannot be done by Questions or an Adjournment Debate or the proper use of the machinery set down in Parliament for the use of Members.
Lord Noel-Baker: My Lords, may I support what was said by the noble Lord who has just sat down? When I was in the other place in charge of nationalised industries, coal, gas and electricity, I had a dispute with the late Lord Morrison (the then Herbert Morrison) about answering Questions there on day-to-day management. In fact I never refused to answer a single Question put to me by any Member of another place. The Table never made any trouble and I always found it of the utmost advantage both to the nationalised board and to the other place to have the fullest information given at Question Time which anyone could ask for.
Lord Morris: My Lords, I find it unusual that I should have to disagree with my noble friend Lord Harmar-Nicholls, with whom I normally agree on almost every subject. However, I believe that he is not aware that the whole point of this amendment is that if the steward has to account then it concentrates the mind wonderfully. If one compares the other nationalised industries with British Telecom, then it is plain to see that in the case of British Telecom, unlike many other nationalised industries, the Secretary of State has considerable powers, far more so than in British Rail or the gas board or others. This is the key. It is not so much that he should account for his good stewardship and for what he has done, but, above all, for what he has not done and what he intends to do. It is essential to planning in industry because it affects directly and indirectly the private sector operation. It is this worshipping at the altar of more open government that commends this amendment to me.
The Earl of Gowrie: My Lords, I think the fact that there has been this lively debate indicates that people are concerned about a problem which is not peculiar to this industry or to this parliamentary system, but to the whole question of relationships between large public trading sector industries and questions of public accountability and the accountability of Ministers who sponsor them but do not run them. I share many of my noble friends' innate feelings that in an ideal world we would not have started down this road of large public trading sector monopolies with sponsoring Ministers but that it would be disruptive and difficult to alter them or to change the system altogether. What we seek to do is to try to liberalise them and thereby introduce elements of organic change.
During this process it is obviously necessary that
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two things obtain. One is that one can scrutinise the sponsoring and responsible Minister; and I think my noble friend Lord Harmar-Nicholls was very clear, in that that is available to Parliament and that Parliament is not noticeably reticent in grilling its Minister. Whereas all Ministers, I suppose, from time to time seek refuge in the old formula about "these are matters for the day-to-day running" of the Post Office or whatever industry it is, they can seldom get away with that for very long if parliamentarians actually seek to raise the matter not only in Questions but in Adjournment Debates, Unstarred Questions or general debates in this House.
Against that general issue of principle (which I thought my noble friend Lord Harmar-Nicholls answered very well) there is an additional reassurance available to those who, like the noble Lords, Lord Caccia, Lord Morris and Lord Orr-Ewing, are concerned that there will not be enough data for us in Parliament or members of the public generally to make assessments about the performance of what is, we hope, an expanding public industry, but also an industry which will of course absorb very large sums of money.
I have quite a detailed brief, but the burden of what have to say can be put very shortly. I agree with the noble Lord, Lord Caccia, in what he seeks to achieve, but I feel that what he seeks to achieve is covered by the Bill, not simply by existing parliamentary procedures—though those put forward by my noble friend meet some of the objections that he raised—but by the publications, running and activities of the corporation. To add to the cover in the form of a statutory obligation would add to administrative and other costs which those of us on this side of the House are equally particularly keen to keep down. My noble friend Lord De La Warr left me a loophole here in his kind and tactful way by suggesting that if I could convince your Lordships that the matter was covered, it might not be the most appropriate thing to do to add to that cover by a statutory obligation.
Before going any further, I should just like to clear up one technical point. The new clause proposed by the noble Lords, Lord Caccia and Lord Orr-Ewing, refers to responsibilities of the Secretary of State, under Clauses 6, 12, 15 and 16, but, so far as I am aware, the Secretary of State has no direct responsibilities under Clause 12. I shall therefore refer only to the other three clauses mentioned.
I hope that it will be agreeable to the Liberal Benches in particular—and the noble Lord, Lord Byers, did come in briefly on the debate—if I discuss Amendment No. 39 with this amendment, which is the same general point of principle, though this does not pre-empt in any way Amendment No. 39 being moved later. Under Clauses 6, 15 and 16 the Secretary of State has a number of powers to give the corporation directions in certain circumstances.
It will reassure my noble friend if I remind them that Clause 6(13) provides that all such directions (with the only exception of national security issues) must be published in British Telecom's annual report, which the Secretary of State must lay before each House of Parliament. Moreover, any directions given by the Secretary of State to the corporation for the creation of subsidiaries or the disposal of any assets must (except in specialised circumstances of the kind

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I have mentioned) be laid by him before Parliament at the time the directions are given, irrespective of the fact that they will be published later in the annual report. Then again, under Clause 15, all general licences must be published, and under Clause 16 notification of an approval of a standard or a variation in or any withdrawal of a standard must also be published.
There is already provision, as the House will be aware, for the publication and/or notification to Parliament of the performance of most of the Secretary of State's responsibilities under these clauses. Those that are not specifically provided for are in Clause 6. My right honourable friend's discussion of the research and development programme, his approval for their capital investment programme and his ability to request information of the corporation, would all be covered in the annual report. As I have already said, the annual report has to be laid before Parliament. The capital programme, which is of great concern to Parliament at the moment, is inevitably also published in the annual Public Expenditure White Paper.
Moving to new Clause 39, the new clause proposed by the noble Lords, Lord Lloyd and Lord Winstanley, that suggests that the Secretary of State's annual report should refer specifically to the exercise of his powers in respect of finance, innovation and export. Now again in this case, the exercise of his financial powers will be covered twofold: once by the annual report laid before Parliament, and by the Public Expenditure White Paper. I am not sure which power noble Lords are referring to as regards "innovation" and "export", but I can only assume that they must mean the powers under Clauses 6(9) and 15, to which I have already referred.
In sum, my Lords, I believe that all the statutory obligations laid by the Bill on the Secretary of State to publish or notify Parliament of his actions provide an adequate check on the exercise of his powers, and the nub of my objection to an annual report—which is an admirable principle in the private sector, as we have acknowledged—is that it would simply repeat information of which Parliament had been notified in most cases twice over already. If we add that notification to the ordinary powers of ordinary Members of Parliament and ordinary Members of your Lordships' House, which my noble friend Lord Harmar-Nicholls clearly delineated, we would be piling Ossa on Pelion to go for a statutory annual report in the way that has been proposed.
I hope, therefore, that the statutory objection will be the objection that is laid at my door rather than any doubt on my part or obfuscation by me as to this accountability and this possibility for scrutiny not being of the first importance, not only to the parliamentary system but also to the healthy development of this corporation.
Lord Caccia: My Lords, I am grateful to the Minister for that reply and clear account of the various ways in which the Secretary of State will—as he already is—be brought to account to Parliament. I should like to study carefully what he said. If necessary, I shall return to this at a later stage.
At this stage I would only say to the noble Lord, Lord Harmar-Nicholls, that I entirely sympathise
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with all that he has to say about the undesirability of the proliferation of more paper work. We are all drowned by that already. Admitedly, by question and answer we often can get the information which is needed, but, as has already been said by the noble Lord, Lord Morris, there is a difference here, in that the Secretary of State is being given far wider powers under this Bill than otherwise has happened in other cases quoted.
Secondly, the procedures under the Bill are going to be of vital interest not only to the corporation itself but of course to the whole supporting industry. It was with those considerations in mind that I had thought it might be of general use and interest to Parliament, to industry and to the consumer that there should be an opportunity once a year, quite apart from the annual report of the British Telecommunications Corporation—that is a different thing—to learn once a year how the Secretary of State had dealt with his responsibilities. Perhaps I may take up the words of the noble Earl, Lord Dc La Warr, in suggesting that something more is demanded than all the individual bits and pieces that have gone before Parliament during the year in the way described by the noble Earl, Lord Gowrie, even including some indication of the way in which he intends to develop the considerable powers that he has under this Bill and the procedures he wishes to follow. Perhaps the noble Earl would also give some consideration to this aspect. Subject to that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 14 not moved.]
5.01 p.m.
Lord Orr-Ewing Lord Orr-Ewing moved Amendment No. 15:
After Clause 9, insert the following new clause:
("Regular consultation by Secretary of State
. The Secretary of State shall make formal provision for consultation on a regular basis with the Corporation, Users' Councils, business and domestic users of the Corporation's systems, suppliers of telecommunications systems and services, and others with relevant interests or experience.").
The noble Lord said: My Lords, this follows in the same group as Amendment No. 13, which we have just discussed, and I think it might be for the convenience of the House and of my noble friend if I took Amendments Nos. 15 and 35A together, and thus helped to speed up the process.
My noble friend and the House will be aware that all these three are alternative, fall-back positions, because many of us felt that there should be a "buffer" state between the very big responsibilities put on the Minister himself under this Bill, and the other interested parties. We had advocated in Second Reading a telecom authority and many other people and representations from trade associations, trade unions and the like, have all suggested that this might be a good solution. But the Government appear to have turned their minds and heads against this particular solution and therefore we are moving a series of amendments as an alternative to make sure that the Minister does give a proper account of his responsibilities and answers in other ways.
We were advocating a body similar to the Civil

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Aeronautics Authority or the IBA, but that again was rejected. The point really is that he has to consult the trade associations, the telecommunications industry as a whole, the BSI, the BEAB, British Telecom, the new corporation, and indeed he has to take the responsibility for licensing. On that last one, I should like to quote some of the anxieties which were voiced by the National Computing Centre in their journal of April 1981, which succinctly put the point—I may say that they again wanted a telecommunications authority. They say.
"Without such a body there is now the possibility under the Bill as it now stands that de facto control of licensing could revert to BT or be exercised within the Department without sufficient evidence of public discussion of the issues, neither of which seems to us to preserve user interest."
That is exactly the point I was trying to make on the amendment of the noble Lord, Lord Caccia.
Regarding these amendments, I would ask my noble friend to consider whether we have not got an alternative, more accountability. For instance, it has been put, and it was put again by the National Computing Centre in a report they have sent to Sir Keith Joseph, which is to be published shortly, I think, when they said they were worried about the pricing policy of British Telecom. For example, they could so charge users for the facilities they have as to slow down progress until such time as they could come in with a competitive piece of apparatus and be ready to compete with the private sector. That surely is anti-social, and it is not the intention of my noble friend in this Bill to produce that state of affairs.
Also in this Bill there is no appeal mechanism. How are we going to be sure that people will not feel they have been wrongly treated if they have produced a piece of equipment for which they believe there is a market and regarding which they have risked their own money on R & D, on testing the equipment, presenting it to the BSI and other bodies and they are also ready to market it and risk their own money in so doing, and they cannot then get a licence? Who do they appeal to? Judge and jury in every case is the Minister. That is why we thought we would bring forward this series of amendments and in them we ought to make it quite clear that the Minister has this responsibility and that he should so man-up his Department with people who become professional so that they they should not be dependent on British Telecom for their advice—least of all in fact British Telecom. By having that body they should then carry out the responsibilities which are now given to them. We have very considerable perturbation as to whether he will be suitably equipped to carry them out, but at least these amendments do lay down exactly what he should do and how he should carry out his duties. I beg to move.
The Earl of Gowrie: My Lords, these amendments would place a formal obligation on my right honourable friend the Home Secretary to consult interested parties at regular intervals. I am grateful to my noble friend, in the interests of getting on with the Report stage, in that he recommended that we should also look now at his new clause, Amendment No. 35A. My brief argues that the same substantive issues are
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covered by Amendment No. 36 in the names of the noble Lords, Lord Lloyd of Kilgerran and Lord Winstanley. I notice the noble Lord, Lord Byers, nodding at that, and perhaps I may therefore speak to that as well.
I am certainly in complete agreement that effective consultation will be indispensable to the Government in achieving their policies in the sphere of which the Bill forms a part. I think my noble friend is aware that the Department of Industry already has a consultative committee on which sit representatives of all the interests which are listed in his amendments. As well as consulting through this representative body, the Department is in regular contact with a great many individuals and organisations which are concerned about telecommunications. From time to time it has more formally invited the submission of users' views, as is happening in the consultations arising in connection with Professor Beesley's report. The value of this approach to consultation lies in its flexibility and in the fact that it can occur as and when it is necessary. Therefore I do confess that I have some difficulty with these amendments in that they do provide a rather less flexible system by imposing a formal and statutory requirement to consult interested parties at these regular intervals.
Of course, there is a place for a consultative group, as I have said already, which already exists. Our philosophy is that the strength and value of the work of such a group owes a great deal to the fact that it is there to respond to a need rather than to a statutory imposition which could, I think, be regarded as a burden but more relevantly perhaps, it would effectively mean that the existing flexible procedures would inevitably, in order to avoid duplication, have to be abandoned if this statutory road were chosen.
Also in respect of my noble friend's new clause, if I am reading it aright, I am myself doubtful as to whether it would be right to set out in a statute a requirement that certain bodies must act in accordance with certain policies if you do not at the same time also set out in the statute what those policies are. You would get muddled law there. Either the Government's policies are embodied in law, in which case, of course, the corporation and other bodies have to obey them, or the Secretary of State has to use his powers of persuasion to see that his policies are implemented. It does not seem to me to be very compatible with our legal system to enshrine in statute quite the open-ended requirement that my noble friend's new clause seeks to do.
But while I have that technical objection, as it were, I believe that I can put my noble friend's mind at rest in relation to policy, in relation to our determination to ensure that the corporation carries out Government policies. I can remind him that the Secretary of State has a number of powers in the Bill to give the corporation directions of both a general and a specific nature, which can be used to bring it back on course if it is thought to be straying. I refer to Clause 6(3) and (5), Clause 16(2), Clause 6(6) and Clause 15(2). On many occasions, I have said that I consider most of these powers in this Bill to be reserve powers and the Secretary of State does not expect to have to use them frequently. But they are, of course, there and, therefore, the corporation does not need a further

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statutory method to see that it is carrying out Government policies.
I hope that what I have said has reassured the House that we are not in any way seeking to prevent consultation. One would not want that, and development of the industry would be quite impossible, so long as a large part of it was in the public sector, without such consultation. In view of that reassurance and that indication that the Government are susceptible of common sense, I hope that my noble friend will be able to withdraw his amendment.
Lord Orr-Ewing: My Lords, I am most grateful to my noble friend. He did not mention Amendment No. 35A and the new clause in which I mentioned "without delay" and "with reasons". There are many ways of "belling the cat", and one of the ways about which Government departments are very wise is an unconscionable delay in giving decisions. Delays in competitive industry are very expensive, if you are using your own money, paying heavy interest and waiting for some "pay-back". Can my noble friend assure us that there will not be unconscionable delay, and that when licences are rejected by the Secretary of State the person applying will, at least, be given some explanation that will allow him to direct his attentions to modifying the apparatus that he is developing, and then to resubmit it for inspection purposes to see whether he can market it? Could my noble friend deal with those points and, if I am reasonably satisfied—and I am sure that I shall be, because my noble friend is very co-operative in these areas—I shall then beg leave to withdraw the amendment. Perhaps he could deal with those points first.
The Earl of Gowrie: My Lords, I take my noble friend's point about the necessity not to hold decisions too long, and I do not think that anybody has a very glorious record in the public trading sector on this front. But it is important that the right decision is made; and we have also been debating the need for consultation. What I have to rest on is that various noble Lords have pointed out that the Bill gives the Secretary of State wide powers.
Some have expressed certain doubts about these, but even if those doubts are well- founded—and I have tried to show that, in most cases, I do not think they are—there is, at least, the "upside", the benefit side, of the wide powers of the Secretary of State; that if something is taking too long or is interfering with policy, with the development of the corporation, with the interests of the taxpayer, with the public sector borrowing requirement or whatever, you have this fellow to grill, to interrogate and to throw coconuts at, if need be, and can urge that he gets along with it. Therefore, I should have thought that those wide enabling powers are something of a guarantee that decisions are taken with all due expediency.
If we enshrine in statute that they have to be taken with expediency, however worthy that is and however much we all approve it, we shall then probably have to take out of the statute anything that could contribute to delay which might also be worthy, in the way of consultation or whatever. Otherwise, the law will be in a muddle and will be bad law. But I recognize
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how damaging economically it can be for important decisions to be postponed. Of course, British Telecom will have a very considerable degree of independence in its operating decisions, and it is certainly aware of the perils of delay. If, for some reason, it appears to be dragging its feet, then, as I said in the previous debate, we have methods of getting at the Secretary of State in order to get him to see that it gets a move on.
Lord Orr-Ewing: My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 [Transfer to the Corporation of certain property, rights and liabilities of the Post Office]:
5.17 p.m.
Lord Lyell Lord Lyell moved Amendment No. 16:
Page 14, line 20, leave out from second ("Act") to end of line 21 and insert ("includes a reference to a transfer under subsection (6)").
The noble Lord said: My Lords, this is part of a series of technical amendments to which I have spoken. It goes with Amendment No. 7 in the series. My Lords, I beg to move.
On Question, amendment agreed to.
[Amendment No. 17 not moved.]
Clause 13 [General classes of acts not infringing the telecommunication privilege]:
Lord Morris Lord Morris moved Amendment No. 18:
Page 16, line 13, leave out ("received or") and
The noble Lord said: My Lords, I believe that it will be for the convenience of your Lordships if I speak to Amendments Nos. 18 and 19 together. I tabled precisely the same amendment at the Committee stage and I was delighted to hear my noble friend Lord Lyell say:
"… if there is any logical or drafting matter here, perhaps my noble friend will permit me to get in touch with him before the next stage of the Bill".—[Official Report, 18/5/81; col. 745.]
I was very grateful for that suggestion. Unfortunately, he has not been in touch with me on that point. My noble friend also warned me that the answer could be more than esoteric. That is something which I shall have to bear with as much fortitude as I can muster. My Lords, I beg to move.
Lord Lyell: My Lords, first, I owe my noble friend apologies for not getting in touch with him. He and the whole House know that we have had more than enough time and opportunity to be in touch with each other, both formally and informally, since the last stage. I shall also have to apologise to my noble friend for the fair length of my reply to his very relevant and well-constructed amendments. But I hope that what I have to say will provide even greater clarity in the perception or reception of what we are discussing today.
The House will appreciate that my noble friend is motivated by a tremendous desire to improve the drafting of this Bill, but I am afraid that these amendments do not achieve what he hopes. If I may briefly

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recapitulate on the amendments, they are to exempt from the monopoly communication by visible light, where the communication which is being transmitted by this light is capable of being received and analysed by the human eye. I shall come to analysis in a minute. I know that my noble friend will agree that this is common sense and that it would be absolutely absurd if the use of a telescope or binoculars were to infringe the monopoly. The present wording which we find in the Bill achieves, we believe, the end we seek. For this reason we believe that the amendments are unnecessary.
The first amendment, Amendment No. 18, seeks to remove the reference to the eye receiving the things conveyed. There is a very subtle though not insignificant difference between receiving a message and perceiving it. I am given to understand that perceiving implies understanding. This goes beyond receiving, which is much more passive. A message may be received but it may not necessarily be perceived. Perhaps I could give an example. For instance, if a message in morse code were to be sent by heliograph, this would be received as a series of dots and dashes but the letters and words being conveyed would not necessarily be perceived or understood unless the recipient had his morse code book with him. If Amendment No. 18 were made, it would, we believe, narrow the exemption which is taken directly from the 1969 Act. I am quite sure that my noble friend does not intend this.
Turning to Amendment No. 19, the concern which we believe is in my noble friend's mind is that the use of optical aids such as spectacles or binoculars might infringe the monopoly. May I take this opportunity of assuring the House categorically that the present drafting does not have this effect. The exemption in Clause 13(1)(a) is cast in terms of whether the things conveyed are capable of being received or perceived by the unaided eye, not whether they actually are perceived or received. Thus, the fact that I might need a telescope to perceive a message from a distant heliograph does not result in my infringing the monopoly. The message would be capable of being perceived by the unaided eye of an observer closer to the source of light. So there is no infringement.
The words "without more" are intended to catch the use of both sophisticated and complicated apparatus that, for example, by slowing down the modulations of a very rapidly changing light beam or converting the wavelength of an infra-red beam renders the message intelligible to the unaided eye. The message would not be capable of being received by the eye, no matter how close the observer was to the source unless one had this complicated and sophisticated apparatus which could be used to aid the eye.
Amendment No. 19 would result in the use of such apparatus being within the exemption, despite the fact that it is manifestly equivalent to similar systems using other parts of the electro-magnetic spectrum and thus should be treated accordingly.
I am certain that my noble friend does not intend to include equipment within the exemption. Therefore I hope he will be sufficiently reassured and satisfied by the lengthy and detailed explanation which perforce I have had to give.
Lord Morris: My Lords, I am most grateful to my noble friend. That the explanation was indeed esoteric in no way made it less fascinating. I am entirely satisfied with the explanation, though before withdrawing the amendment I would point out that this subsection is a very good example of Parliament legislating for inventions which have not yet been invented. As a practice, I find this a little disturbing. Notwithstanding that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 19 not moved.]
5.25 p.m.
Lord Mottistone Lord Mottistone moved Amendments Nos. 20 to 23:
Page 17, line 30, leave out ("person") and insert ("business")
Page 17, line 21, leave out ("person") and insert ("business")
Page 17, line 23, leave out ("person") and insert ("business")
Page 17, line 24, leave out ("person") and insert ("business").
The noble Lord said: My Lords, with the permission of the House I should like to take Amendments Nos. 20, 21, 22 and 23 en bloc. These amendments are designed to underline the point which I raised in my Amendment No. 70, on the second day of our Committee stage on 18th May about the need for freedom for independent companies or businesses to install and maintain their own equipment, which would include private automatic branch exchanges. At that time, in response to a very reasoned and carefully put over argument by my noble friend Lord Gowrie, I withdrew the amendment. However, since then I have read carefully what my noble friend has said and it throws up an important question of detail. I must apologise to my noble friend for the fact that in the intervening period I have not had time to let him know what this question is. I shall fully understand if at this stage he cannot give me a specific answer. At the top of col. 754 my noble friend said:
"After careful consideration, we were persuaded that where a PABX employed digital stored programme control technology, British Telecom should be able to perform its network supervision remotely from a central location".
The question which arises from that is what is meant in that context by digital stored programme control technology? It seems to me and to those who have advised me that it could have two meanings.
The first might be that the technology of the stored programme control is digital—that is, that the SPC is exercised by a digital computer. If that is so, the implication is that all current computer-controlled SPC PABXs are already included in the phrase of my noble friend in col. 754. The only exceptions would be a few hard wired stored programme controls and all Strowger and crossbar PABXs. If that is so, this is satisfactory. However, we believe that the current interpretation by British Telecom is that the meaning of my noble friend's phrase is that the stored programme exercises control over the switching of trains of digits as opposed to the switching paths over which analog signals pass. I must apologise to your Lordships for the technicality, but it is a deeply important technical question, the outcome of which can make a great deal of difference to industry and, in the end, to the commercial success and profitability of industry.
At least two of the companies currently selling analog SPC PABXs in the United Kingdom claim that

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the technology is available for the remote supervision of those parameters which may disturb the public network. What we ask is whether the Government will now extend the right of private maintenance to analog SPC systems. The wording I have quoted from my noble friend's reply to me implied that this might be so, but other things which he has said, and what is understood by British Telecom's attitude to this, make us fear that this is not so.
The point is made by major companies in this country that remote supervision of their analog system would be no more difficult and could be easier than for digital systems. Another major company comments that they have the capability but have not used it in PABXs in the United Kingdom—and I quote from them:
"Because of the current maintenance philosophy of British Telecom".
I referred to parameters which might disturb the public network and the ones that we are considering here (so that my noble friend may be aware of them) should not be more than high or dangerous voltages, signal frequencies and levels that could cause interference or mis-operation or signalling conditions to which the network cannot respond correctly. I make that point to show that we, and the companies that I have quoted that have that capability, understand exactly what could upset the network and we would see that as being perfectly reasonable.
The technology is there; the maintenance men are there—and I spoke about that at Committee stage. So we want to be assured that the Government are being properly advised and understand that a delay in the private maintenance of PABXs is not justified. Furthermore, in order to avoid the postponement of PABX purchases (that is, new PABXs) that may or may not conform to the Government's precise rulings in this area—until they can be bought with the choice of private or British Telecom maintenance and the consequent delay in the development of British systems; and that is important in order to encourage British competition, which is what is behind the Bill as a whole in this area—can my noble friend assure me that the liberalisation of SBC PABX maintenance will be developed or allowed as soon as possible, and as soon as the necessary standards have been agreed—and indeed that it shall be retrospective?
I apologise to the House, as well as to my noble friend that I was not able to put this complicated argument to him on paper in advance. I shall quite understand if he cannot give me an immediate answer. But perhaps I might underline the message. The necessary know-how to allow SBC PABXs of all sorts (except those which I mentioned were excluded earlier) is there. It could be done now; there is no need for delay. If there is delay it is feared that British industry will not be geared to be in the competitive battle when the freedom that my noble friend announced earlier would be spread over a three-year period is available. We must make sure that British industry is ready to grasp the nettle when it comes. The noble Lords opposite are fearful—I understand them—that British industry is going to be swamped by people from overseas.
The whole point is that we must allow our people to get going. What is underlining my argument is
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that we should free things so that companies may get on and buy new PABXs and maintain them themselves and give British industry a chance to develop the techniques necessary to allow this remote supervision of them. I hope that my noble friend has got the message and can reply to me. If he can do it now—super; otherwise, in a letter in a way in which I shall not feel hound to return to the charge at a later stage. I beg to move.
The Earl of Gowrie: My Lords, one of the pleasures of preparation for this particular Bill was that one went around the industry and received very interesting and enlightening briefings and also a preview of many exciting new products. I made every effort to "mug-up" some technical knowledge in a fast developing sphere. I reckon that probably I got to O-level, but not to A-level or to PhD, as evidenced by my noble friend's question; so I hope that he will allow me the indulgence that he was kind enough to suggest. I will have his point looked at and will write to him. If he is not satisfied and/or if he wishes to engage the House in the fact that he is not satisfied, perhaps we could return to it at a later stage.
Lord Morris: My Lords, perhaps I may make a quick attempt to dissuade my noble friend from retabling this amendment, whatever happens. Perhaps I might make the point that if this amendment were carried as at present drafted, the individual would be excluded from an exception to the monopoly. A business or a body of persons only would be included as an exception to the monopoly. There is a slight flaw in the drafting.
Lord Mottistone: My Lords, I admit to the fact that I had to find some way of doing it without frightening my noble friend that I was going to cut something vital out of the Bill. It occurred to me that perhaps my noble friend Lord Morris would like to do his own maintenance and pass the necessary examinations! In a way these exemptions apply to business. However, having said that very briefly, I thank my noble friend and I understand of course, that like myself he is not as expert in this area as we should like to be and I look forward to receiving a letter from him, I hope reasonably soon. With that, I beg leave to withdraw Amendments Nos. 20 to 23.
Amendments, by leave, withdrawn.
Clause 15 [Saving for things done under a licence]:
5.38 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 24:
Page 18, line 2, leave out ("with") and insert ("which includes").
The noble Lord said: My Lords, with the leave of the House, I should like to suggest that we take Amendments Nos. 29 and 30 with this amendment. At the Committee stage—again on the second day—my noble friend Lord Trefgarne, at column 747, in answer to my amendments Nos. 68 and 69, which related to British shipping said:

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"I can confirm, as my noble friend pointed out, the Secretary of State's powers to issue licences in Clause 15, permitting licensed shipowners to operate their own coast radio stations should that be appropriate.".
Later, in answer to a point raised by the noble Lord, Lord Lloyd of Kilgerran, my noble friend Lord Trefgarne said (at col. 748) that he saw the argument of the noble Lord, Lord Lloyd, and indeed the argument of myself, that there might be trouble if British Telecom were the only people concerned with the grant of licences. He went on to say:
"… but of course that is not the case. The Secretary of State has a role to play as defined in Clause 15".
The main point about this is that Clause 15, without the amendments which I have proposed, implies—in the various places in which the amendment would take effect—that in Clause 15(1)(a), for example,
"the Secretary of State, after consultation with the corporation".
It does not give the point which I think my noble friend Lord Trefgarne was trying to make in answer to my Committee amendment, that the Secretary of State will consult with all sorts of people. It implies that he consults only with the corporation, and that is the one thing that we want to get away from. As we found at Committee stage, the object of this Bill is to a certain extent—this is what noble Lords opposite are finding it difficult to live with—that the corporation is going to be in free competition with other similarly capable private enterprise companies. To that extent it will be a private enterprise company just like any other.
What one is terribly fussed about is that only the corporation will turn out to be the main advisers, a point made by my noble friend Lord Orr-Ewing, by the noble Lord, Lord Caccia and by my noble friend Lord Morris. We are very concerned that in practice, even if not in theory, the only advisers to the Government will be the corporation, as has been one of the troubles over the years up to now. So the object of my amendments is to try to ensure that the revised phraseology will make it the duty of the Secretary of State to consult with others as well as the corporation. Of course he must consult with the corporation—that is perfectly reasonable; but we do want to have something a little stronger in the Bill to try to bring this about. I hope, therefore, that my noble friend will find himself able to agree to my amendments. I beg to move.
Lord Lyell: My Lords, we are very grateful to my noble friend Lord Mottistone for moving his amendments so clearly and for being so helpful in giving us all the references to the comments of my noble friend the Minister, Lord Trefgarne, at an earlier stage in the Bill. I have listened carefully to what my noble friend has said, hoping that it ties up with what was said and is more or less parallel with what was said at an earlier stage. I hope that he and the House agree that the first amendment sought by my noble friend would oblige my right honourable friend the Secretary of State to consult with other bodies than British Telecom when making decisions on the licensing of any systems or apparatus, and also when approving standards or apparatus for connection to the public network.
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Of course we would sympathise with my noble friend wishing to make the process of licensing and approval as open as possible. I hope he and the House would agree that in practice this system of obligatory consultation will often create various difficulties, and indeed will create unnecessary delay in many cases. The department has already established broadly based consultative machinery which has played a very important part, and will continue to do so, in giving advice; it will continue to remain in existence after the enactment of this Bill.
I would assure the House, and would very firmly assure my noble friend, that this machinery of consultation will be used whenever the Secretary of State plans to use his power in a way which would break new ground or would set an important precedent. But in one or two matters—for instance, approval of standards—we require to see that matters will be routine, and therefore it would be wasteful to be obliged to go through a general consultative process for each and every one of these routine matters on each occasion when they were to be considered. This is especially true since the British Standards Institution already has a consensus procedure which ensures that standards are normally fully acceptable to those affected by them before they are ever submitted for approval by the Secretary of State.
Consultation would take place if the approval were to include special or unusual conditions, but we would not expect this to be the case very often, and indeed the need to consult bodies other than British Telecom is unlikely to be very frequent. Of course, there will be other situations, mainly in the area of licensing, where individual interests will be at stake and where it would not be right to expose applications to wide scrutiny. But the present wording of Clauses 15 and 16 does not in any way prevent the Secretary of State from seeking advice from parties who will be interested wherever this is necessary. I do once again assure the House that this will be done through machinery which is already set up and is already working very well. The Government have already agreed, after discussion in another place, to a statutory obligation to consult British Telecom only, because it is evident that as the network provider they must have a say on the connection of apparatus to public circuits. These particular considerations really could not apply to any individual interest groups or the special situations suggested by my noble friend Lord Mottistone.
Lord Mottistone: My Lords, I am most grateful to my noble friend. Before I go on, he said there is already provision within Clause 15 for outside consultation, but he did not, as is normally the case, draw my attention to just where that provision might be. Is he able to do that for me?
Lord Morris: My Lords, it may be that I can help my noble friend Lord Mottistone on this amendment. In Section 9 of the Wireless Telegraphy Act there is a consultative duty on the Postmaster-General, now the Secretary of State, to consult with those people who are affected by decisions in that particular field. I am afraid my noble friend Lord Mottistone is really flying in the face of reality. In truth, in dealing with Governments,

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more particularly than with persons, unfortunately the reality of consultations happens only when it suits Governments, and not individuals. In this instance of the Wireless Telegraphy Act, although there is there a duty to consult parties who are interested and affected by a Government department decision, this does not necessarily come about. I have a Question down on this subject for answer tomorrow; the radio regulative department of the Home Office manifestly, as far as I can understand, have been trying as hard as they can to avoid consultation. It is extremely difficult, even where there is the formal means for consultation within a Bill, to ensure that Government departments do consult people when it suits the people who should be consulted, rather than the other way round.
Lord Lyell: My Lords, may I take the first point and reply to my noble friend Lord Mottistone. I am advised, as indeed I hope I had said, that there is no specific provision in Clauses 15 and 16 to oblige the Secretary of State to consult, but, on the other hand, there is nothing specifically to prevent him consulting with whomsoever he chooses. I think that would go some way towards disposing of the question which was raised by my noble friend Lord Morris as to forcing the Secretary of State to consult various bodies. I think it might also be relevant to the question asked by the noble Baroness, Lady Phillips, at an earlier stage, in that if we put in one body there would be at least a hundred, possibly a thousand, who would also fit into that category at some special time, who would require to be consulted, or might feel that they should be consulted. I hope we can take it that the wording of Clauses 15 and 16 is permissive and will not do anything to impinge on proper and valid consultation, where relevant, by the Secretary of State with interested bodies who feel they have a relevant case to put to him.
Lord Mottistone: My Lords, I thank my noble friend Lord Lyell, and indeed my noble friend Lord Morris, for clarifying the issue and indeed giving point to the underlying submissions which gave rise to my amendment at this stage and at Committee stage. This is not a satisfactory situation; and neither is it satisfactory that there is something in the Bill that provides for consultation because, as my noble friend Lord Morris has said, even that is not all that helpful. I believe that what my shipping friends have to do is to wait until this Bill is enacted and then, as quick as may be, put in a request for coast stations for a group of shipping companies, as has been suggested, and see what happens.
In the event that they get a dusty answer from the Secretary of State, they will be quite within their rights, in view of what my noble friend has said, to ask, "Who have you consulted and why have you rejected us"? In the Post Office they have somehow managed to brush aside this sort of thing in a grand way in the past; let us hope that they will not be able to do so in future. With that comment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.51 p.m.
Lord Glenamara Lord Glenamara moved Amendment No. 25:
Page 18, line 9, leave out ("running of any such telecommunications system") and insert ("supply and maintenance of apparatus to be connected to a system run by the Corporation").
The noble Lord said: This is the Beesley amendment, but I should like to speak also to Amendments Nos. 31 and 32. The purpose of these amendments is to prevent the Secretary of State from licensing the extensive use of value added network services and private transmission systems, as recommended by Professor Beesley. We believe that Professor Beesley's report would be potentially much more damaging than the proposal in the Bill itself to open up terminal equipment to competition.
At the Committee stage we were criticised for defending Professor Beesley while at the same time attacking the conclusions reached in his report. That debate reflected feelings of disquiet which emerged on all sides of the Committee about the conclusions reached by Professor Beesley after his brief, three-month study. I would remind noble Lords present at that time, or who read the debate, of the speech made by the noble Earl, Lord De La Warr. We make no apology for returning to this theme at the Report stage, although noble Lords will be pleased to hear that I have no intention of going through all the details of the Beesley report.
We believe it is very important that members of your Lordships' House should consider very carefully how far they wish the Government to go in applying their policy for the opening up of competition in telecommunications. The opening up of terminal equipment to competition as proposed in this Bill is one thing, but opening up transmission systems to competition is quite another thing—one that is not proposed in the Bill but is proposed in the Beesley Report. Noble Lords will have noticed from the Order Paper that we do not seek to prevent the Secretary of State from licensing the competitive supply of terminal equipment, as proposed in the Bill; although at Committee stage we did put forward such an amendment and argued it very strongly. We did so because we believed it was right that my own party in this House as well as in another place should clarify its objections to a policy that we believe will be profoundly damaging to customers of British Telecom and to its suppliers, as well as inflicting yet more burdens on the residential telephone subscribers.
However, we do recognise that your Lordships are reluctant to pursue an amendment to the principles of the Bill, which have been approved in the other place. The amendment now before your Lordships is in a different category. The Beesley Report was not opposed in the other place; indeed, the Beesley Report had not been published when the Bill was discussed in the other place—it was not known about in the other place. When the Secretary of State for Industry made his original statement on the Government's policies for telecommunications in July 1980, the policy proposed for value added network services was very different from that which is now recommended in the Beesley Report, which, incidentally, the Secretary of State has given every indication of accepting.
Eleven months ago the Department of Industry's policy was that value added network services should

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only be licensed when British Telecom was not offering the particular service involved and had no plans to do so within a given period. Then Professor Beesley was asked to look into the question of whether there was further scope for the competitive supply of value added network services. The recommendations made in the report went very much further than the Secretary of State's policy announced last July and even beyond the terms of reference that had been given to Professor Beesley. Moreover the Beesley Report itself, as I have said, was published after the Bill had concluded its passage through the other place. I believe that places a special responsibility on your Lordships' House, for, if Parliament is to scrutinise the merits of this aspect of Government policy, it can only be scrutinised in this House.
Noble Lords will appreciate that if the Beesley Report is implemented it will have a profound effect on the development of telecommunications in this country, and yet, as one noble Lord after another stated when we discussed this at Committee stage, the report is based on minimal study, minimal consultation and—we believe—minimal consideration. I make no apology for reminding noble Lords about this. I repeat that we believe this is no fault of Professor Beesley himself. The fault was that Professor Beesley was compelled by the Department of Industry to keep to a time table that made it quite impossible for him to give proper consideration to the many difficult and highly technical issues involved in the subject he had been asked to cover. It is the Government we are blaming for the inadequacies of the Beesley Report and its unsoundness, and not Professor Beesley himself.
During Committee Stage my noble friend Lord Underhill pointed out that of the organisations and individuals listed as having given evidence to Professor Beesley very few, on enquiry, were able to confirm a submission of any very substantial evidence during the course of Professor Beesley's inquiry. I believe it would be worthwhile updating your Lordships on this point, because it does bring home very vividly something we have tried to stress during our consideration of the Beesley Report. The point is that a major change of policy, with profound implications, is being taken on the basis of quite inadequate consultation and thought. Of the 36 sources quoted in Professor Beesley's report, 28 were approached by letter. Of these, 22 have replied to date. I understand that of the 22, only seven submitted written evidence; four generally supporting the trend towards increased competitive supply of value added network services and three in opposition. None of the four who supplied evidence in support of the extension of the competitive supply of value added network services touched on the question of international resale or private transmission, because those were outside Professor Beesley's terms of reference.
Noble Lords may therefore ask, where did Professor Beesley find any support for this proposal? As far as we can tell, Professor Beesley's most important recommendation was made without any consultation or without receiving any evidence at all—because it was outside his terms of reference. Of those who responded, two-thirds provided only, as they said,
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the more casual kind of oral evidence. I say "casual" because invariably, we have been told, such evidence consisted of an informal conversation. To our knowledge, no detailed minutes of evidence were taken, as is normal when oral evidence is given on such a major question. Some of those listed were, quite frankly, astonished at their inclusion and they have no record whatever of even informal conversations having taken place.
Professor Beesley was obviously greatly influenced by the United States experience. He visited the United States for one week during his inquiries. I may say that both as Postmaster General and as Chairman of Cable and Wireless I paid many visits to the United States to study their system, but I would hesitate to make any recommendations for radical changes in our own system on the basis of those visits. Anyway, he reached conclusions about the American experience which we believe are not sound, because, in practice, the United States experience substantially confirms the view—contrary to what he concluded—that allowing private transmission and resale does not promote innovative services: all that it promotes is cream skimming. Microwave Communications Incorporated (MCI), which operates the largest system competitive with AT and T, has abandoned all pretence of innovative work and simply undercuts AT and T on a limited number of the most heavily used transmission routes. Those facts must surely underline the doubts and fears of many involved in the industry about the way in which this major matter is being handled by the Government. Indeed, we might say, what a way to run a country!—certainly it is no basis on which to carry out radical changes in our most complicated and sensitive public utility.
On 27th May this year, there was an article in Electronics Weekly which said:
"There is utterly no reason why we should consider Beesley the last word on the subject, and had a similar report from such a source backed the BT's monopoly, as others much more well-informed have done in the past, the suppliers would have ignored it. Sir George"—
that is, Sir George Jefferson—
"was quite right to highlight the haste with which Beesley's report was prepared and published, and the even more surprising nimbleness of the Whitehall machine in nipping in and seeking to implement it. The two months which the government has allowed for the debate is, as Sir George says, far too short a time to consider the highly complicated effects of changes which will affect all of us well into the next century … The makers, for example, were given a three-year breathing space by Sir Keith Joseph when he announced that the supply of equipment would be open to competition with British Telecom equipment. Sir George, in asking for what he called a 'soundly conceived and carefully phased' process of change, was not asking for a great deal."
At Report stage the noble Earl, Lord Gowrie, opposed our amendment on Beesley on the grounds that it was too restrictive on the Secretary of State. We have tried to avoid that as regards these amendments. I do not believe that that view bears analysis but the present amendments, if they were accepted into the Bill, would leave the Secretary of State free to license the competitive supply of terminals, and that is the point at which this Bill and the policy underlining it had the approval of the other place: that and that alone. So what are we proposing does not offend against your Lordships' constitutional practice in this

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matter. However, many of those in the industry who broadly support the competitive supply of terminal apparatus are very mindful of the need to preserve a truly national network of the highest possible technical standard. Very few in the industry are in doubt that Professor Beesley's report threatens this essential requirement.
I need not remind your Lordships about the extremely unpleasant effect that Beesley would have on residential charges for telephones. Everybody, including Beesley himself, has admitted that his proposals would put up residential charges. The estimates range from 2 per cent.—Beesley's own estimate—to 63 per cent. which is British Telecom's estimate of the increase that this would cause, and Keith Joseph lies about halfway or a third of the way in between the two.
Most impartial observers would agree that the Beesley report simply fails to justify the conclusions and recommendations reached by the study. If the Government proceed to implement its recommendations they will be taking an enormous gamble to the clear detriment of 90 per cent. of British Telecom's customers, on the basis of totally inadequate consideration and debate. That was the view of the noble Earl, Lord De La Warr, as well as my view, and that is the view of Sir George Jefferson, the Chairman of British Telecom. The process which has taken two decades of debate and decision in the United States is to be thrust on the United Kingdom after only three months' study.
There is a good case, I believe, for the House of Lords to pass this amendment and to refuse to allow the Government to rush into a situation with potentially disastrous consequences for telecommunications in this country on the basis of totally inadequate consideration and debate on the issue. I invite noble Lords on both sides of the House to support us in this matter. I beg to move.
Lord Morris: My Lords, I am puzzled by the vigorous opposition of the noble Lord, Lord Glenamara in carrying the point underlying his amendment and particularly in blaming Her Majesty's Government for the Beesley Report. I find it rather analogous to shooting the harbinger of bad news. In so far as the Government might take up Beesley's points, or any of them, I should have thought that that was the time to oppose Her Majesty's Government. However, Her Majesty's Government have not in its entirety, and above all in its detail, endorsed the whole of Beesley and, in their desperate attempt to oppose, I do not really believe that it is absolutely fair that Her Majesty's loyal Opposition should attack the Government for something which, at present, is nothing other than an hypothesis.
Lord Underhill: My Lords, I have no intention of going through the criticisms that I made in Committee about the details of Beesley, but I should like to ask one or two questions. Was the Government's attitude based on Beesley? If so, surely the account which has been given by my noble friend about the inadequate survey and the limited time, must be important factors despite any views that may be expressed by the noble Lord, Lord Morris, or any other noble Lord. If the Government's view was based on Beesley, then I must again ask: is it not strange that this report—if it was
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so important to the Government's view—was not available to the other place until it had completely passed the Bill? If the Government's attitude is not based on Beesley, then I should like to ask the Minister on what information did the Government base their decision which is in accordance with what Beesley has recommended? If the Government had any other sources on which to take their decision, why then did we have the Beesley inquiry, report and survey?
Those are important questions. If it should transpire that the Government's decision was mainly based on Beesley, then surely the inadequate survey seems to suggest, despite what noble Lords say about this side of the House, that the Government are following a clear example of doctrinaire policy in this matter in their endeavour to get the utmost so-called endorsing views in order to back up their case. Although we are not discussing it now, another matter that will be reflected if the Government decide to go ahead is their proposal to close down the 250 or so showrooms of British Gas. It is the same sort of doctrinaire policy which has come up time and time again. I should like to know quite clearly whether the Government's policy was based on Beesley and, if not, why did we have Beesley? If it was not based on Beesley, on what was it based?
The Earl of Gowrie: My Lords, I am very happy to save time and take up the challenge of the noble Lord, Lord Underhill, directly. The Government's policies were not based on Beesley; they were based on doctrine. It is the clear doctrine of the Government to try to liberalise British Telecommunication's monopoly and, indeed, wherever possible and at responsible speed, to try to privatise the public sector trading monopolies wherever they can.
The Government have made a start on these policies in a number of fields, including this one, and we intend to continue with this policy. If that is doctrinaire, all I can say is that it is a doctrine that was put squarely to the public and to the electorate at the time of the last election and would, in my view, be likely to be followed by additional manifesto commitments come the time of the next election.
The Government consider that relaxation of this monopoly, and indeed, other monopolies, at the Government's initiative and in pursuance of the Government's policy, should primarily be carried out by the Secretary of State, who is answerable to Parliament just as Parliament is answerable to the electorate. Therefore, I think that that is a clear answer about the underlying motivations of the Government.
In a moment I shall have something to say about the Beesley Report itself, though I must say that I enjoyed the skill with which the noble Lord, Lord Glenamara, tried to praise Professor Beesley, the man, while divorcing himself altogether from any praise of Professor Beesley's conclusions. I do not think that it would be any secret to say that as life unfolds and works out, Professor Beesley's conclusions are likely to wish the Government to go at a greater speed than, in fact, the Government may be able to go. Therefore, I think that the conclusions reached by the noble Lord, Lord Glenamara, are very extraordinary.
Of course, the Government are not looking to Professor Beesley for confirmation of what is a clear policy

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decision, but they are having consultations and they are using Professor Beesley's admirable report as a document for debate and discussion. That debate and discussion is taking place now and since, as many noble Lords have recognised, this is a Bill with wide enabling powers, of course the Government in their use of these powers can make use not only of Professor Beesley's conclusions, but also of the conclusions of the debate on the report, including conclusions made to us by the noble Lord, Lord Glenamara.
Therefore, behind this amendment is not a debate about whether Professor Beesley had enough time or whether the remit given to him was the appropriate one; there is a clear policy difference between the noble Lord, Lord Glenamara, and ourselves as to the principle of this matter. He has made his position very clear; I hope that I can make our position very clear. But let us not pretend that these amendments are anything other than amendments of principle, or wrecking amendments in our parliamentary slang. If they were to be accepted, the power to license the running of systems would no longer exist and all telecommunication systems, other than those falling within the exemptions of Clause 13, could be run only by British Telecom, unless it happened to wish to delegate this task through some contractual arrangement. The régime therefore being proposed under the noble Lord's amendments would, in fact, be much less liberal than the Post Office Act 1969, the so-called Stonehouse Act. That would be regressive indeed.
The amendment also appears to me to be designed to take away the Secretary of State's powers to license additional networks, as well as the many classes of value-added network services which are dependent on systems connected to the network, and also to take away the freedom of network use. The amendments would strengthen the corporation's monopoly over the running of telecommunications systems, and severely curtail the Secretary of State's power to accomplish his liberalisation policy. Therefore, the amendments are designed to make it impossible to introduce competition in the provision of the network and in the provision of most important kinds of services to third parties using the public network.
Turning from these wide issues of principle which are clearly before the House, the noble Lord, Lord Glenamara, asked me one or two specific points. He asked me about international resale issues and competitive transmission services. The recommendations in Professor Beesley's report—and these are subsidiary to his main conclusions—were mentioned because the report considered that there were implications in these areas in relation to the uses of the network. As I said, subsequent to publication of the report, a public debate is taking place and the Government are not bound by the report other than agreeing with the central premises of the report which are close to the Government's own policy.
For the second time today the noble Lord, Lord Glenamara, claimed that domestic charges would rise if the Bill was implemented or if the implications of the Beesley Report were to be accepted. It is true that Professor Beesley's calculations are based on British Telecom's own figures. He shows that even if the total prospective loss of revenue to the corporation by 1984–85, due to complete liberalisation of
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network use, was to be made up by an increase in domestic rentals (as the noble Lord fears) on the worst assumptions rentals would need to increase by no more than about £6.40 or about 10 per cent. or 11 per cent. of what rentals could by that time be expected to be in any case, unless we can continue to contain inflation. It is inflation and pay and wage factors which are at the heart of increases in price to the consumer, rather than policy of this general kind.
I endorse what the noble Lord said earlier about the responsibility of the unions involved in this field. Nevertheless, unions make no secret that part of their duty to their membership is to keep pace with increases in the cost of living; and so long as unions successfully keep pace with increases in the cost of living, those increases will continue apace and so will the job losses attendant on them. Those are broad issues with which we are wrestling, as the previous Government had to wrestle with them, over all sectors of the economy. But it is entirely misleading to think that it is policy of this kind which is liable to be the main upward push on increases in costs rather than the inflationary and other factors that I have mentioned.
I think that we have also barely begun to appreciate the very great range of possible services that can be brought directly to homes and businesses throughout the entire telephone network. If the experience of America is anything to go by, the corporation will raise considerable revenue from the providers of these services; and, indeed, despite the noble Lord's accusations that providers of third party services have been "cream-skimming", as he put it, in America AT and T has continued to improve its financial position and—and this is of very great interest to me, primarily as an employment Minister—AT and T has continued to take on more labour.
It is astonishing to me that the Opposition, which understandably draw our attention to the great concern that we all have about high and rising levels of unemployment, are opposed to policies which are specifically designed to generate more wealth, more activity and more employment in this economy. Our analysis is that more jobs will be created in the new service industries themselves as well as in the industries that supply the hardware and software that would be needed. I am grateful at least to the noble Lord, Lord Glenamara, in that, as I said earlier, with his great experience and skill he has no difficulty in putting clear choices before the House. This is a straight policy issue between him and ourselves, and my own view would be that the House would have to make up its mind accordingly on the merits.
Lord Glenamara: My Lords, the noble Earl was perfectly honest when he said that this was a matter of doctrine so far as he was concerned, and now we know. This is what we have been saying for a long time; that this is being done for purely doctrinal, theological Tory reasons.
The Earl of Gowrie: Hear, hear!
Lord Glenamara: Hear, hear! The Minister is confirming it. So there is no assessment in depth of policy alternatives. As I said in our last debate, they simply look at their problem and then they apply their Tory commandments: the efficacy of the market

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place; down with the unions; public enterprise is bad; private enterprise is good. Whether they are appropriate or not, they apply these dogmas to every problem that comes along. That is the whole basis of this Government: apply their theology to every single problem. So now we know.
The noble Earl said that this was a wrecking amendment. It is no such thing. I pointed out that the amendment would enable the Secretary of State, as the Bill proposes, to open attachments to terminals to competition, but what it would do would be to preserve the integrity of a national system to which those attachments were attached. That is our only concern, to preserve that. I thank the noble Earl very much, and I hope everybody, including the press, will take note that Beesley's proposals, according to him, will cause residential telephone rentals, quarterly rentals, to rise by £6. That was his estimate, so you can be quite sure it will be £26.
The Earl of Gowrie: My Lords, would the noble Lord allow me? I should like to make what I said absolutely clear. By £6.40 between now and 1984–1985. That is not a very substantial rise in annual terms.
Lord Glenamara: My Lords, if the noble Earl was living on a retirement pension, as many telephone subscribers are, he would know how big a rise £6 was. Anyhow we are told, admitted by the Government, that these proposals if implemented will add £6 to the quarterly rental. So let us all get that quite clear. The noble Earl said that we are against the generation of wealth—"This would not generate any more wealth". Well his proposal will certainly generate some more wealth, but it will generate it for the investing public and not for the ordinary telephone subscribers.
As the noble Earl said, this is a clear divide between the two sides. We on this side wish to preserve the integrity of the national telecommunications system. On that side they wish their Tory dogma to prevail. That is the issue in this Division. I hope my noble friends will carry the amendment to the Lobby.
6.24 p.m.
On Question, Whether the said amendment (No. 25) shall be agreed to?
Their Lordships divided: Contents, 44; Not-Contents, 102.

CONTENTS

Ardwick, L.

Jacques, L.

Aylestone, L.

Janner, L.

Bacon, B.

Jeger, B.

Bishopston, L. [Teller.]

Jenkins of Putney, L.

Boston of Faversham, L.

John-Mackie, L.

Bruce of Donington, L.

Kilbracken, L.

Cledwyn of Penrhos, L.

Kilmarnock, L.

Collison, L.

Longford, E.

David, B. [Teller.]

Lovell-Davis, L.

Elwyn-Jones, L.

Molloy, L.

Ewart-Biggs, B.

Oram, L.

Glenamara, L.

Peart, L.

Hale, L.

Plant, L.

Hanworth, V.

Ponsonby of Shulbrede, L.

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Ross of Marnock, L.

Wallace of Coslany, L.

Sefton of Garston, L.

Wedderburn of Charlton, L.

Shinwell, L.

Wells-Pestell, L.

Stewart of Alvechurch, B.

Whaddon, L.

Stewart of Fulham, L.

Willis, L.

Stone, L.

Wilson of Radcliffe, L.

Taylor of Mansfield, L.

Wootton of Abinger, B.

Underhill, L.

Young of Dartington, L.

NOT-CONTENTS

Ailesbury, M.

Luke, L.

Airey of Abingdon, B.

Lyell, L.

Amherst, E.

McFadzean, L.

Auckland, L.

Macleod of Borve, B.

Avon, E.

Mancroft, L.

Barrington, V.

Mansfield, E.

Beaumont of Whitley, L.

Marley, L.

Bellwin, L.

Monk Bretton, L.

Belstead, L.

Morris, L.

Boardman, L.

Mottistone, L.

Brabazon of Tara, L.

Mountevans, L.

Bridgeman, V.

Murton of Lindisfarne, L.

Brougham and Vaux, L.

Northchurch, B.

Caccia, L.

Ogmore, L.

Chitnis, L.

Orkney, E.

Cockfield, L.

Orr-Ewing, L.

Colville of Culross, V.

Penrhyn, L.

Colwyn, L.

Rankeillour, L.

Craigavon, E.

Rawlinson of Ewell, L.

Croft, L.

Renton, L.

Croham, L.

Rochester, L.

Cromartie, E.

Romney, E.

Cullen of Ashbourne, L.

St. Aldwyn, E.

Daventry, V.

Saint Oswald, L.

Davidson, V.

Sandford, L.

de Clifford, L.

Sandys, L. [Teller.]

De La Warr, E.

Savile, L.

Denham, L. [Teller.]

Seear, B.

Eccles, V.

Sharples, B.

Elliot of Harwood, B.

Skelmersdale, L.

Evans of Claughton, L.

Spens, L.

Faithfull, B.

Stamp, L.

Ferrers, E.

Stanley of Alderley, L.

Fortescue, E.

Stedman, B.

Fraser of Kilmorack, L.

Strathclyde, L.

Gormanston, V.

Strathspey, L.

Gowrie, E.

Sudeley, L.

Greenway, L.

Swinfen, L.

Gridley, L.

Swinton, E.

Grimston of Westbury, L.

Terrington, L.

Hailsham of Saint Marylebone, L.

Tordoff, L.

Trenchard, V.

Halsbury, E.

Trumpington, B.

Harris of Greenwich, L.

Vaizey, L.

Hives, L.

Vaux of Harrowden, L.

Hylton-Foster, B.

Vickers, B.

Inglewood, L.

Vivian, L.

Kinloss, Ly.

Wakefield of Kendal, L.

Lane-Fox, B.

Ward of Witley, V.

Lindsey and Abingdon, E.

Westbury, L.

Long, V.

Wigoder, L.

Loudoun, C.

Resolved in the negative, and amendment disagreed to accordingly.
6.32 p.m.
Lord Glenamara Lord Glenamara moved Amendment No. 26:
Page 18, line 13, at end insert—
( ) The Secretary of State shall not grant a licence under paragraph (a) or issue a direction to the Corporation under subsection (2) unless he is satisfied that he will not thereby adversely affect the prospects of the British telecommunications manufacturing sector.").
The noble Lord said: My Lords, the purpose of this amendment is to call attention to the threat to the

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British telecommunications manufacturing industry as a result of the Bill. The measure gives the Secretary of State power to license exceptions to the monopoly in the provision of telecommunications, which is transferred from the Post Office to British Telecom in Clause 12. The Bill does not say how the Government are to use that power, though the Government have themselves made clear how they intend to use it; the first telephone in the customer's premises is to remain the monopoly of British Telecom and all other terminal apparatus will be open to competition—that is, both in the installation and maintenance of it—and we are told now that the maintenance of PABXs will also be open to competition.
Even more threatening than that are the recommendations of the Beesley Report, which we considered in debating the last amendment. These proposals have come to be referred to as "liberalisation", and I protested about the misuse of that word in our last debates. In any event, this so-called liberalisation will have two massive effects, both of which will do enormous damage to our British telecommunications manufacturing industry. First, it will lead to a flood of foreign-manufactured telecommunications imports and, secondly, it will reduce British Telecom's capacity to place orders for equipment with British firms. I will comment on each of those effects resulting from the Bill, starting with the second.
The Bill's proposals, when operative, will impoverish British Telecom. The Beesley proposals will reduce the revenue by £110 million, according to Beesley himself. But of course when the terminal equipment is open to competition—as I pointed out an hour or so ago, presumably the Government want it to succeed—the revenue of BT must be reduced, if it succeeds, and so it will impoverish BT. Perhaps that is the wrong way to put it; it will reduce BT's revenue because under Clause 3, they are charged with the duty of providing:
"throughout the British Islands … such telephone services as satisfy all reasonable demands upon them".
That is, except—and the Bill says this—where they are provided by other persons, and they will certainly tend to be so provided where they are most lucrative.
Noble Lords must remember that the reduction of BT's revenue which will follow is in the context of the Government's external financing limits policy which not only limits BT's investment programme at a level which is well below what the British economy requires, but also forces British Telecom to generate the greater part of the capital required, and requires it to borrow the rest from the Government. BT—the Post Office at present—buys 95 per cent. by value of its requirements from British manufacturers. BT is virtually their only market for large complex switching equipment; 80 per cent. of their output as a whole goes to BT and therefore, from those two figures, it will be seen that any interference with BT's capacity to order equipment will immediately affect the British telecommunications manufacturing firms. The Bill represents a major interference in the capacity of BT to place those orders because if their revenue falls, as it will, so must their investment programmes. A recent NEDO report said:
"Recent cash limits for BT have halved the industry's order book for certain types of equipment".
I have received a letter—I assume other noble Lords have received it too—from the managing director of Plessey, Mr. D. H. Pitcher, who says among other things:
"One issue in particular stands out which needs to be resolved. This concerns the funding of BT. The UK has no specific and clear strategy for telecommunications. The substitute for strategy is the large procurement programme of BT. In Plessey and the other manufacturers, this is the basis for maintaining the financial and technical resources required to develop new products. Without a balanced and steady ordering profile from BT, it is impossible to sustain our product development programmes aimed at the commercial and export markets. We will be disadvantaged and the UK régime will continue to fall behind the French, German, Japanese and the Americans. A sound, stable, continuing domestic market is essential to the development of export markets".
That is an elementary economic truth, but it is one which the present Government are prepared to put at risk in pursuance of the noble Earl's dogma about which he was telling us a short while ago.
A senior manager in one telecommunications firm has estimated that the Government's proposals under the Bill could put at risk 30 per cent. of the industry's output. There is another very practical difficulty which the manufacturers face but of which the Government appear completely unaware, and this too has been set out with great clarity in a document sent to noble Lords by the Post Office Engineering Union today, and I can best refer to it by quoting from a speech which the noble Earl made on 18th May:
"The introduction of competition in the market for attachments, where it does not already exist, will be introduced in a phased licensing programme over the next three years or so. That is to allow our manufacturers, who so far have been designing their products primarily to meet particular specifications of the Post Office, to adjust to the new competitive conditions and to develop products to match those produced elsewhere".
Perhaps the noble Earl will tell us how they can start to develop products for new markets before the technical specifications are known. I am told that between one year and three years' work on the specifications is required before publication, and even after publication they will need a considerable period to market suitable products for the attachments. Perhaps the noble Earl will tell us about that. I mention it because it is a practical difficulty that the firms have.
The noble Earl went on to say, at col. 762 of the Official Report of 18th May:
"I am quite certain that our manufacturers are watching the progress—this final progress, so to speak—of the Bill through Parliament very carefully and they really have little excuse not to get to work right away in order to adapt to the changed conditions which we are creating and which overwhelmingly they themselves have asked for".
That reminds me very much of a speech that Mr. Edward Heath made about industry when he was Prime Minister. There appears to be scant regard by the Government for the problems of the telecommunications industry in overcoming difficulties that this change will involve. So that is the first problem, the first massive effect that the Bill will have on our telecommunications industry.
The second problem is the danger of a flood of foreign imports. I believe that it is going to be a free-for-all. I imagine that noble Lords often look in the windows of shops selling electronic products and they will be aware of the flood of products into the United Kingdom market from Japan, Korea,

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Hong Kong, Sweden, Germany, the United States and France, some of them shoddy, some of them excellent. Is it to be supposed that these foreign firms will not do their utmost to capture this new, lucrative market which this kind British Government are opening up for them?
When I was a young man I was very keen on motorcycles. I had an AJS. Some of my friends had BSAs, Panthers, and so on. Today there is virtually no motor-cycle manufacturing capacity left in this country. If noble Lords look at the motor-cycles being ridden by the police in London, they will not find a single British model among them. They are virtually all Japanese or German. Perhaps in a few years' time we shall be saying that we used to have a motor-car industry.
How much value have the reciprocal agreements, with which Sir Keith Joseph hopes to safeguard the telecommunications industry, been to those industries against the invasion of our domestic markets? Anyhow, with a trading reciprocal agreement there is no guarantee of access to the foreign market for our manufacturers. I think that the only countries where that can be guaranteed are communist countries, Eastern European countries, where there is a central buying agency for the whole of each country, and it decides how much of each product it buys, and where it buys it. Of course if such an agreement were made with a country of that kind, there would be guaranteed access in return for accepting a quantity of their exports. But of course in countries such as Japan, America, Sweden and Germany there is no guarantee of access at all. Short of outright protection, import controls and tariffs, there is no way in which our telecommunications industry can be safeguarded, and I believe that British manufacturers are becoming increasinely concerned about the flood of foreign imports.
After the Government's announcement last July, Business Week published an article with the heading, "A bonanza for US manufacturers". The article concluded:
"US makers of telecommunications equipment may stand to gain the most from Britain's July 21st decision to rescind the state monopoly of telecommunications equipment".
We know that GTE (General Telephone and Electronics) which is a major United States manufacturer, is now looking at setting up a manufacturing operation in the United Kingdom.
There is no doubt whatever that as the Government's timetable under the Bill comes closer, the fears and apprehensions of British manufacturers are mounting. I do not think that the Government have yet given them any comfort at all. They have no answer to their fears. They have talked vaguely of reciprocal trading agreements, but they are no answer; they are ineffective. The detailed setting of standards by supposedly impartial bodies is the method by which our competitors find a way of effectively restricting imports. I think that the British Government show every sign of playing the game "fairly"; that is, at the expense of British jobs and the future of a very important section of British manufacturing. So there is a very real danger that the firms that are now sending vast amounts of electronic equipment to this country will
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start to send vast amounts of telecommunications equipment as well,
In view of the fears and apprehensions of the British manufacturers, we have tabled the amendment. All it does is to require the Secretary of State, when he issues a licence, to satisfy himself that the use of the licensing powers in Clause 15 of the Bill does not threaten the interests of British manufacturers. I shall summarise what I have said. I have said that the proposals in the Bill, plus the Beesley proposals if they are implemented, will in our view present two massive threats to our own very important telecommunications manufacturing industry. First, if implemented, the proposals will reduce British Telecommunications' ability to order equipment. They are hound to do that; and BT is the main source of orders at the moment. Secondly, we think that the proposals will, inevitably, lead to a flood of foreign imports. If the House of Lords really is a revising Chamber, if noble Lords are concerned about the British Telecommunications manufacturing industry—as I know they are—I invite them to support us in the amendments. I beg to move.
Lord Underhill: My Lords, I am certain that no noble Lord wishes to make this debate into a party dogfight. However, I must refer to the justification that the noble Earl has put forward for the entire principles of the Bill, according to Conservative doctrine, for which he says there is a mandate. Incidentally, I become very perturbed about mandates, because sometimes there might be only three words hidden in an election manifesto and it is then claimed that one has a mandate. During the Division I went to my case and took out a copy of the Conservative manifesto. I cannot see anything in the manifesto about British Telecom; I cannot see anything in it about the Post Office; I cannot see anything in it about following the principle that Beesley has put forward and the Government have accepted—not a word!
The only references to public industries concern aerospace, shipbuilding, the National Freight Corporation, and the public bus services. What I do see is the following statement:
"We want to see those industries that remain nationalised running more successfully and we will therefore interfere less with their management and set them a clearer financial discipline in which to work".
Several noble Lords: Hear, hear!
Lord Underhill: There is nothing in what I have read out that justifies the "Hear, hears" from the Government Benches, since in the Bill there is clear interference with the whole of Telecom, and when we come to deal with another amendment we shall see what is happening to the question of financial discipline. As my noble friend has pointed out, and as has been mentioned in the letter from the Plessey management, the question, of funding is linked very closely with the question of British Telecom development.
My noble friend read out a letter from the director of Telecom. In another note that it issued, Telecom added:
"British Telecom will remain Plessey's biggest customer for many years. Much of our product development will depend on BT ordering programmes which in turn depend on BT funding".

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In a later amendment we shall have to return to that reference to dependence on BT funding.
The amendment which my noble friend has moved says that the Secretary of State shall not do these things,
"unless he is satisfied that he will not thereby adversely affect the prospects of the British telecommunications manufacturing sector".
I am sure the Government will be prepared to accept that attitude. Otherwise, it means that they are prepared adversely to affect British Telecommunications' manufacturing ability. When I saw this amendment down, I remembered that in Section 99 of the Local Government Act 1980, which dealt with the disposal of land owned by public bodies, the Government deliberately put in a proviso which made it quite clear that no land belonging to the public bodies should be disposed of unless the Government were satisfied that there would be no serious detriment to the performance of their functions or the carrying on of their undertakings. So this amendment is seeking to put into this Bill the same sort of proviso as the Government put into their own Local Government Bill, for it is saying that action will not be taken which adversely affects British Telecom. Therefore, there seems to be no reason why the Government should not accept that principle.
Lord Morris: My Lords, I am sure I am not alone in getting exceptionally weary of noble Lords opposite continually blaming the Government, or considering that the Government are responsible, for creating unemployment or for the insolvency of businesses. It just flies totally in the face of reality. Notwithstanding that, one of the more objectionable parts of this amendment, as I see it, is the phrase "the British telecommunications manufacturing sector". I wonder whether the noble Lord, Lord Glenamara, could possibly define for me—it would be a great help—what he means by "the British telecommunications manufacturing sector". As far as I am concerned, any company that generates jobs, which in turn generate funds in this country, is to that extent a British company. That is the thing that matters. The owners of the company, be they British shareholders or any other shareholders, I believe to be of no importance whatsoever.
Lord Molloy: My Lords, I feel that the noble Lord, Lord Morris, has earned himself a great distinction today. He is probably the only man in this country who really believes that the present Government have not set about deliberately creating unemployment. But I want to say that while there are issues that might divide either side of your Lordships' House with regard to public ownership and private enterprise, I would have thought that this amendment would appeal to the noble Earl, because whatever system either side of this House wants to adopt, what both want to see, I feel sure, is that British industry gains from it. I am so pleased that the noble Earl nods his head, because if that is so I cannot see how he can resist this amendment, which proposes that, irrespective of whether it is carried on by British Telecom or whether British private entrepreneurs come in, there will be a safety valve, the safety valve being that the Secretary
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of State shall have power and authority, and shall exercise it, to see that nothing happens that damages, not British private enterprise, not British public ownership, but Great Britain and its people. That is the issue, and that is what I hope will not divide us tonight.
In this particular aspect I see something that can unite us, and what can unite us is this: if we accept this amendment, not only shall we be assisting and aiding and safeguarding British Telecom, but perhaps it might well be that we shall be making a contribution towards reducing unemployment in this country, or at least preventing an increase in unemployment. May I put this to the noble Earl? If instead of British Telecom this Bill was about another publicly-owned sector—the Royal Air Force, the British Navy or the British Army—would they be prepared to go into the Lobbies on the basis of that public sector, of that publicly-owned endeavour, and vote against this amendment? The matter now lies solely and absolutely on the conscience of every noble Lord in this House.
6.53 p.m.
The Earl of Gowrie: My Lords, it was indeed the case when we debated the previous amendment that there was a clear divide—a divide of doctrine, if you like—between the two principal parties in your Lordships' House. We had made it clear that we should seek to liberalise the public sector where we could, and that this Bill was designed, indeed, to preserve the integrity of the network (as the noble Lord, Lord Glenamara, put it) but to allow companies to compete in providing the services which could integrate with the national network. That is a clear policy issue, if you like, between us. Therefore, our argument could rest on political or, if your Lordships prefer the word, doctrinal or even theological grounds. In fact, when I was being brought up, a little theology was not thought to be such a disastrous thing from time to time.
But here, as I think the noble Lord, Lord Molloy, reminded us—and I certainly agree with him—we are not on very different ground. We are all concerned for the welfare of the British telecommunications manufacturing industry, and of the very many people who depend on it for their livelihood. Indeed, as employment Minister, I have a very special interest, as I said earlier to the noble Lord, Lord Glenamara, in seeing some of these new industries which can slot into the network getting off the ground so that more wealth is generated and more jobs are created—and that, of course, is the source of employment. At heart, employment is conditioned by customers and by demand.
I am quite sure that our native manufacturers have a bright future before them in this field, and I do not think that I need prove my credentials to the House with yet another account of the prospects for growth in information, technology and telecommunications industries, or the Government's commitment to them. I am also with noble Lords opposite in believing that there is a danger to our industry while a transition takes place from monopoly to greater competition, though I would hasten to say that a primal monopoly in this field is still being retained. We should not allow our doctrinal or theological differences to obscure the fact that what

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we are talking about is the liberalisation of the vehicles that travel on the road, rather than the liberalisation of so to speak, the road itself.
I am therefore in considerable sympathy with the spirit behind the amendment, as well as the way in which the noble Lord, Lord Glenamara, moved it and the way in which other noble Lords have supported it. The reason I resist it is that the amendment is not necessary. It is, in jargon, as it were, tautological, because my right honourable friend the Secretary of State has said that the liberalisation of subscriber apparatus will be phased over a three-year period in order to give industry time to prepare for the new market conditions. I have every confidence that British industry will be able to react to the new market conditions; and were it not able to react—were it so uncompetitive in cost terms, in wage terms, in poor management or in restrictive labour practices, or in an inability to attract investment—then I do not see why the consumer or the customer should be burdened with an incompetent domestic industry and not allowed in some way to be able to utilise new goods and services in this field.
Lord Molloy: My Lords, will the noble Earl allow me to interrupt him?
The Earl of Gowrie: My Lords, I will give way, but I did not want to give way at that sentence because I wanted to go on to say that it is much too gloomy to say that there is no prospect for our native industry; that the Government—wisely, in my view—are protecting our native industry during the changeover period, and that they have interpreted this changeover period pretty generously.
Lord Molloy: My Lords, I am grateful to the noble Earl. Surely he must understand that when one talks about a British publicly-owned industry, whether it be British Telecom or the National Coal Board or the Steel Corporation, there is massive support from private endeavour. Very many private industry endeavours depend on their parent, the publicly-owned industry. Their competition and their earnestness is as decent and sincere as anyone else's within the private or publicly-owned sector. Therefore, I beg the noble Earl to bear that in mind as well.
The Earl of Gowrie: My Lords, certainly I agree with the noble Lord. Nothing that I suggested went on the old private/public sector divide. I am conscious in my job of the contribution of the coal industry to the export of mining equipment. This is an admirable industry and it has responded very well and is providing some of the most advanced equipment in the world. There is no division between us. We say that a wise parent protects the child as it grows up but that it would be a foolish parent that sought to protect the child once it had become an adult. The Government have also to take into account other interests. In only the last amendment the noble Lord, Lord Glenamara, was urging us to pay more attention to the interests of the consumers. Thinking protectionism, apart from the damage it would do to a still very flourishing and
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successful exporting country, would not be in the interests of consumers ultimately.
Our belief is that our job in Government is to try to create a climate in which enterprise and industry can flourish as free as possible from the intervention of the state; and I include in that rubric the public sector trading industries as well. Obviously the service industries cannot be covered by that; but I do not think that the NUM or the NCB want any more intervention from us than they can possibly get away with. The liberalisation of Telecoms is part of this process and I see nothing in the amendment or, I hope, in my response to it, which divides us; but if I were to advise my noble friends on this side to accept it, we would be writing two contradictory pieces of simultaneous identical advice into the Bill and we would also be calling into considerable question the sincerity of the interim protection period that the Bill already provides for. Therefore, I hope that, in the light of what I have said and in the length I have taken to find agreements between us, noble Lords will not press their amendment.
Lord Glenamara: My Lords, I am disappointed in what the noble Earl has said or, at least, in the conclusion that he reached and not so much in what he said, especially on one of his last points. It is beyond my comprehension how we are seeking to write something contradictory into the Bill. If noble Lords have read it they will know that this is what we propose to insert:
"The Secretary of State shall not grant a licence under paragraph (a) or issue a direction to the Corporation under subsection (2) unless he is satisfied that he will not thereby adversely affect the prospects of the British telecommunications manufacturing sector".
I cannot imagine anything more reasonable than that. I do not understand why the Minister cannot accept that.
However, time is getting on and I do not propose to push this to a Division. I hope that I am around in 10 years' time and that the noble Earl is around, too. I doubt whether this Chamber will be now that it has abandoned its role as a revising Chamber on this Bill. If we are, it will be interesting to see what has happened to the telecommunications industry as a result of this Bill; but before then, no doubt, there will be a long period of Labour rule when the matter will have been put right again. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lyell: My Lords, I hope that this may be a convenient moment to move that further consideration of this Bill on Report be adjourned.
Moved accordingly and on Question Motion agreed to.

Sheep Variable Premium (Protection of Payments) (Amendment) Order 1981
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers)The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers) rose to move that the order laid before the House on 21st May be approved.
The noble Earl said: My Lords, I beg to move, that the Sheep Variable Premium (Protection of Payments) (Amendment) Order 1981 a copy of which was laid before this House on 21st May, be approved. This order amends the Sheep Variable Premium (Protection of Payments) (No. 2) Order 1980, by introducing a new mark which may be applied to live sheep qualifying for premium payment under the Community sheepmeat régime. Like the national arrangements which preceded it, the régeme requires that animals which have been certified as eligible for variable premium payment must be indelibly marked, so that they cannot be fraudulently presented for premium payment a second time. Having considered alternative methods over the years, the Government feel that the only truly indelible form of marking for live sheep is ear punching.
The current Protection of Payments Order provides that the prescribed mark should be a punch hole either in the form of a 12 millimetre circle or of an equilateral triangular mark with 13 millimetre sides. In fact, the triangular punches have proved impractical for technical reasons and the order presently before the House deletes the provision for triangular punch holes and replaces it with one for a smaller 6 millimetre (approximately ¼ inch) circular punch hole.
We intend to introduce the new six-millimetre punches only for the certification of live sheep exported from the United Kingdom. The larger 12 millimetre instruments, which have been in use up to now, will continue to be used for domestic certifications at liveweight, where they have proved satisfactory. It is not proposed to adopt the smaller punch for domestic certification because a six millimetre hole in the animals' ears would have time grow over during its lifetime, thereby enabling it to be presented for premium payment more than once. Noble Lords will appreciate that any such loophole in the United Kingdom's financial control arrangements could lead the Community's auditors to disallow Community reimbursement of sums paid out in premium payments to United Kingdom farmers. can inform the House that this order has been considered by the Joint Committee on Statutory Instruments and that they have made no comments on it. I hope with that brief introduction, the House will approve this quite small technical amendment to the arrangements for the administration of the sheepmeat régime in the United Kingdom.
Moved, that the order laid before the House on 21st May be approved.—(Earl Ferrers.)
7.9 p.m.
Lord Bishopston: My Lords, I do not know whether it is appropriate to say that I have been earmarked to speak in this matter—only briefly, of course, because it is not a contentious matter. There are two points I should like to raise. Would the Minister say what consultations with the industry took place before the introduction of the order? Further, the House will know that over many years successive Governments have recognised that the only indelible and sure way of marking live sheep is by ear punching. As the Minister has said, the Sheep Variable Premium (Protection of Payments) (No. 2) Order 1980 which came into operation on 29th November 1980 required for live animals that the mark should be an ear punch
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in the form of a circular punch hole of 12mm diameter within a tattoo or an equilateral triangular punch hole with sides measuring about 13mm in length.
Triangular punch have proved to be impracticable. This order deletes them from the list of prescribed marks and substitutes a circular punch of about 6mm in diameter. If a punched hole alone is regarded as being sufficient, I wonder why it is proposed to reduce the diameter to 6mm, particularly as the Minister said there may be the possibility of a smaller or 6mm punched hole growing over thereby creating the risk of double certification with animals being fraudulently prescribed for a premium a second time. If the noble Earl would comment on those few points it would be helpful.
Earl Ferrers: My Lords, may I be permitted to say at the outset what a pleasure it is to see the noble Lord, Lord Bishopston, taking part in agricultural matters once again. Certainly as far as I know this is the first time in this House. Of course he was a distinguished Minister of State in the department in which I have the honour to be involved. I was not a little concerned when I saw in a previous Honours List the preponderence of ex-Ministers of State from the Ministry of Agriculture now coming into the House to keep us all very much on the ball.
As usual, and as is expected, the noble Lord Lord Bishopston, has put his finger on a number of important points. This is quite a small order and the noble Lord referred to the consultations. We did not consider this a particularly controversial subject and therefore consultations as such with the industry have not been undertaken. There have been a lot of consultations within the department and with myself in particular over this.
He asked why it is necessary to produce a smaller ear punch as opposed to a bigger one. The fact is, as I explained, when a sheep is presented at the market, it has a large hole punched in its ear. If it were a small hole it would be possible for somebody to buy the sheep, the hole would heal and the sheep could be presented again. Where it is for export, the punching is done at the lairage immediately before the animal is exported. Therefore, it is considered perfectly suitable to have a much smaller mark because the animal is going to be exported and will not be able to be certified or be presented for certification a second time. Clearly, the smaller the hole, the less distress it causes the animal. That is the reason why the smaller hole was decided upon. I hope that that answers the noble Lord's questions. I am grateful to him for accepting this order and the way in which he had done so. I look forward to him taking part in debates on agriculture on many occasions and keeping all of us on the ball as is his right and due.
Lord Swinfen: My Lords, my noble friend said that the object of using a smaller hole was to cause less distress to the sheep. Is there any hole smaller than the 12mm one which is large enough for all practical purposes not to grow over that could be used so that more sheep could be caused less distress?
Earl Ferrers: My Lords, if I have understood my noble friend's question correctly, he is referring to sheep which are being exported.
Lord Swinfen: No, my Lords, the larger hole for use only in this country.
Earl Ferrers: My Lords, it then becomes a question of what is the practical size. Our experience and belief is that if you have a hole less than 12 mm it is always possible that the hole will heal over and the animal could be presented again. If that were to happen, the auditors of the Commission could easily find that we had been misappropriating funds by paying twice on one animal. Nobody likes earpunching of any animals. It is a fact of agricultural life. We have tried to ensure that the punched hole is as small as feasible and practicable.
On Question, Motion agreed to.

Industrial Diseases (Notification) Bill
7.16 p.m.
Lord Plant: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the Order of Commitment be discharged.
Moved, That the Order of Commitment be discharged.—(Lord Plant.)
On Question, Motion agreed to.
Viscount Long: My Lords, I beg to move that the House do now adjourn during pleasure until 7.45 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.17 to 7.45 p.m.]

British Telecommunications Bill
Further considered on Report.
Lord Morris Lord Morris moved Amendment No. 27:
Page 18, line 14, leave out subsection (2).
The noble Lord said: My Lords, the purpose of this amendment is to delete Clause 15(2) from the Bill. This is one of the clauses which is new—new, that is to say, from the point of view of the equivalent section of the 1969 Act. I move it to eludicate from Her Majesty's Government the reason for this clause. Your Lordships will remember that Clause 15(1)(b) says that:
"(1) A licence may be granted— …
(b) with the consent of, or in accordance with the terms of a general authority given by, the Secretary of State, by the Corporation, …".
I have difficulty in understanding why the separate power is required for the Secretary of State to direct the corporation to grant licences when the Secretary of State himself can grant a licence by virtue of the provisions of Clause 15(1)(a). The only reason I can see in which such circumstances could arise is where the Secretary of State, rather than take upon himself the responsibility to grant the licence, chooses
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that the corportion shall grant the licence. The problem there is that it is that much more difficult to get to the decision-making process of the corporation than it is necessarily with the Secretary of State. With that, I beg to move Amendment No. 27.
Lord Lyell: My Lords, as I am sure my noble friend will be aware, the relaxation of the monopoly is indeed the policy of the Government. We believe that it is right that the Secretary of State, who is answerable to Parliament, should be responsible for granting the main licences in the strategic sense that will make a reality of liberalisation and, indeed, which will define its principal directions. Most of these cardinal licences will be general licences that are granted under this clause and others which will give everybody the right to run a system of a specified kind.
Through his statutory consultations with BT, my right honourable friend the Secretary of State, as well as holding wider consultations with other interested bodies, will be able to ensure that these relatively few key licences are not in any technical respect defective. But of course from time to time there may well be cases of individual licence applications that are very important, for example, as precedents in the carrying forward of the main thrust of this Bill in liberalising the monopoly. Individual licences are more likely to involve quite detailed technical considerations that only the network operator can deal with satisfactorily.
If and when that is the case, Clause 15(2) will allow the Secretary of State to take responsibility by directing BT to license, while at same time allowing BT to deal directly with any special terms that would call for detailed and specialised knowledge of the network or indeed of BT's operating methods. Clause 15(2) neatly combines the Secretary of State's responsibility for overall policy with a sensible method of dealing with technical detail, however fine. I hope that that brief, but not too detailed, explanation may go some way towards helping my noble friend.
Lord Morris: My Lords, that has, indeed, gone a long way towards helping me. May I, on a point of further clarification, ask my noble friend whether it is envisaged that the licence granted by the Secretary of State, by virtue of Clause 15(1)(a), will be of only a general character, and that a licence granted through the direction mechanism, by virtue of Clause 15(2), will be of a more specific or detailed nature?
Lord Lyell: My Lords, we should need to take great care in defining the areas. My noble friend talked about general areas in respect of Clause 15(1)(a), and areas of a more detailed kind under Clause 15(2). The wording in subsection (2) seems to overlap a licence covered by either subsection (1)(a) or subsection (I)(b). Therefore, given this overlap of possible details, some licences might go into a reasonable amount of detail and yet, at the same time, cover fairly wide generalities in a certain sector of communication, be it voice, speech, light and so on.
I do not think that an analysis of subsection (1) or subsection (2) would necessarily lead into the classifications mentioned by my noble friend. Probably, there could be other divisions. But I wonder whether

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we could consider exactly what has been said by my noble friend. I undertake to be expeditious and to be in much closer and swifter touch with him on this point than I was the last time, when I promised my noble friend that I would inform him. I certainly undertake to attempt some analysis of the problems of Clause 15(1)(a) and Clause 15(2) before the next stage.
Lord Morris: My Lords, I am most grateful. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.55 p.m.
Lord Morris Lord Morris moved Amendment No. 28:
Page 18, line 43, leave out subsection (7).
The noble Lord said: My Lords, at the Committee stage I argued in some detail about my concern that a licence granted under this clause could not be impugned on the grounds that it was granted neither with the consent of, nor in accordance with the terms of a general authority given by, the Secretary of State. My concern centres around the fact that subsection (7) vitiates the corporation's duty under Clause 15(1)(b) to seek the consent of, or to look to the terms of a general authority given by, the Secretary of State prior to the granting of a licence.
In answer to that, my noble friend Lord Lyell said, among other things:
"I am advised that the main object of subsection (7) is to ensure that a licensee will not be penalised for any illegal acts done wittingly or unwittingly by British Telecommunications".—[Official Report, 18/5/81; col. 790.]
The only observation one could possibly make on that is: I should think so, too!
But my major concern, which was not really dealt with, although my noble friend Lord Lyell promised to return to it at a later stage, was where a licence could be granted by the corporation to favour one private sector company to the disfavour of its competitors, without the consent of, or within the terms of a general authority given by, the Secretary of State. This could happen and, for the harmed or wronged company to have no recourse to the licensing authority—namely, the corporation—could constitute a very serious wrong. My Lords, I beg to move.
Lord Lyell: My Lords, it is clear from my noble friend's speech, and from various comments of other noble Lords, that there is still some misunderstanding about the exact scope and purpose of subsection (7). I hope that, in the course of my brief remarks, I shall be able to alleviate some of the concern that is felt about this subsection.
First, the subsection in no way gives to British Telecom, or to any of its licensees, carte blanche to disregard the rights of any third party or its other legal obligations or duties. If British Telecom were to infringe some such rights in issuing a licence, the aggrieved party would be fully able to explore the usual and proper legal remedies in the normal way, just as it would be able to do at the moment.
All that subsection (7) seeks to do is to protect the licensees of British Telecom against the unlikely event of a licence being granted by BT ultra vires, without the
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consent of the Secretary of State. Were this to happen, it would render the licensees unwittingly open to charges of infringing the monopoly and thus to criminal sanctions. It would plainly be unsatisfactory if BT's licensees could be put at even a slight risk of infringing BT's monopoly as a result of the fault of BT itself. The provision that we have included in subsection (7) enables licensees to operate without having to undergo the inordinate, lengthy and unnecessary delay involved in checking that the Secretary of State's consent had been given to the licence. The subsection can be found in exactly analogous form in Section 27(6) of the 1969 Act. We believe that subsection (7) of the Bill will be even more desirable in the future when we envisage greater competition being allowed under licences.
May I take this opportunity to stress and reiterate most strongly that the subsection in no way allows British Telecommunications to disregard its wider legal duties and obligations. I hope that this firm and categorical reassurance will go a long way towards clearing up any misunderstanding there may still be in my noble friend's mind and that, far more importantly, it will reassure him.
Lord Morris: My Lords, I am most grateful to my noble friend for his response. It goes further than a long way; it goes to the end of the road. Not only I, but many others who have been concerned about the subsection, will be most grateful to him for explaining it so clearly. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 29, 30, 31 and 32 not moved.]
Clause 17 [Marking orders]:
8.4 p.m.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 33:
Page 21, line 19, leave out from ("to") to end of line 20 and insert ("a fine").
The noble Earl said: My Lords, the House will recall that when we discussed the Bill during its Committee stage my noble friend Lord De La Warr tabled some amendments to remove the penalty of imprisonment from the offences in Clauses 17 and 18. At that time I promised the Committee to consider the point and to undertake consultations to see whether there were any wider policy implications which should be considered. I am very happy to say that I have done this. In the light of this wider consideration, I can now agree that imprisonment would not be an appropriate penalty in these cases. The penalty on indictment will therefore simply be an unlimited fine. I am most grateful to my noble friend for the great contribution which he has made. These Government amendments make the necessary changes. I beg to move.
Earl De La Warr: My Lords, I am sure that the whole House will be very grateful to the Government for having taken on board this point and for having moved the two amendments which were suggested at an earlier stage.
Lord Morris: My Lords, before we leave the amendment, may I ask my noble friend what precisely "unlimited fine" means? I was puzzled to see that there is no ceiling for the offence of conviction on indictment.
The Earl of Gowrie: "Unlimited fine" means a fine on which there is no limit.
On Question, amendment agreed to.
Clause 18 [Information etc. to be given in advertisements]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 34:
Page 22, line 12, leave out from ("to") to end of line 13 and insert ("a fine").
The noble Earl said: My Lords, this is consequential on the previous amendment.
On Question, amendment agreed to.
Clause 19 [Offences under sections 17 and 18 due to default of third person]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 35:
After Clause 19, insert the following new clause:
("Enforcement of sections 17 and 18
.—(1) A relevant authority shall have power to purchase apparatus, and to authorise any of their officers to purchase apparatus on their behalf, for the purpose of ascertaining whether sections 17 and 18 and orders made under those sections (in this section referred to as "the relevant provisions") are being complied with.
(2) Every local weights and measures authority in Great Britain shall have power to enforce the relevant provisions within their area; but nothing in this subsection shall be construed as authorising a local weights and measures authority in Scotland to institute proceedings for an offence.
(3) In this section "relevant authority" means—

(a) in relation to Great Britain, the Secretary of State or a local weights and measures authority on whom a power to enforce the relevant provisions is conferred by subsection (2);

(b) in relation to Northern Ireland, the Department of Commerce for Northern Ireland; and

(c) in relation to the Isle of Man, the Board of Consume Affairs.").

The noble Earl said: My Lords, this new clause clarifies the means of enforcing the marking orders which will be made under Clauses 17 and 18 of the Bill concerning telecommunications apparatus. In general, these provisions are based on the corresponding sections of the Trade Descriptions Act 1968 which also contains a power to make marking orders enforceable by local weights and measures authorities. It is our intention that marking orders under the Bill should be enforced by local weights and measures authorities and this clause makes the necessary provisions. I beg to move.
Lord Ponsonby of Shulbrede: My Lords, the implications of this amendment, as the noble Earl said in moving it, are that local weights and measures authorities are to be the enforcement authority for Clauses 17 and 18 in respect of all apparatus, whether marked or unmarked. This implies the purchase and testing of equipment and the undertaking of prosecutions, all of
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which could be very costly for the local authority. No mention is made of any role for British Telecom. This placee additional duties on local authorities. There is no assurance that local authorities will receive any additional financial compensation as a result of having to carry out these duties. The public and British Telecom will expect the enforcement of these provisions by local weights and measures authorities to be properly carried out.
Unless local authorities have the additional financial resources available to them to carry out these duties, they will only be able to try to fit in this task with the other priorities which they have, including their mandatory duties, at a time when their resources are already overstretched and when authorities as a whole are under extreme pressure to reduce expenditure. Local authorities will no doubt have to decide what priority to give to this particular function. I hope that the noble Earl will be able to give a satisfactory assurance to local authorities.
The Earl of Gowrie: My Lords, I share the concern and desire of the noble Lord, Lord Ponsonby of Shulbrede, that local authoriies should not have placed upon them additional burdens at a time when we are anxious that so far as expenditure is concerned they should put their own house in order. We have therefore not thought it right to impose upon them a duty to enforce the order. We are confident that they will be able, and will wish, to take the steps which they feel to be necessary to enforce marking orders within their areas.
It will continue to be the duty of local weights and measures authorities to enforce the comparable provisions of the Trade Descriptions Act where that is relevant to telecommunications; but in practical terms we envisage that the corporation itself will participate in the enforcement of these matters and will cooperate with local authorities and relieve any burdens on them. For instance, I would expect British Telecom to undertake any testing which may be necessary and, if need be, to give evidence on technical matters. So I believe that, in practice, marking orders will have a substantial deterrent effect on the supply of wrongly marked or unmarked equipment, that enforcement will be a co-operative venture which is not enforced on local authorities and that in fact it will prove to be no very great burden upon them.
On Question, amendment agreed to.
[Amendment No. 35A not moved.]
Lord Winstanley Lord Winstanley had given notice of his intention to move Amendment No. 36:
After Clause 20, insert the following new clause:
("Duties of Secretary of State
.—(1) The Secretary of State shall institute and publish formal procedures for carrying out the functions reserved to him under sections 6, 12, 15 and 16.
(2) The said procedures shall include formal provision for consultation on a regular basis between representatives of the Corporation, business and domestic users of the Corporation's systems, suppliers of telecommunications systems and services, and others with relevant interests or experience to the said functions.").
The noble Lord said: My Lords, Amendment No. 36 stands in the name of the noble Lord, Lord

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Lloyd of Kilgerran, and myself. In the absence of my noble friend, who I understand is either in Hong Kong or on his way to your Lordships' House therefrom, may I say a brief word. If my recollection is correct, I understand—
The Earl of Gowrie: My Lords, I am most grateful to the noble Lord but in fact we debated this clause with Amendment No. 15 and I think I had the consent of the then leader of the Liberal Benches that we should do so. Does the noble Lord wish to debate it again?
Lord Winstanley: My Lords, I am grateful to the noble Earl. That indeed was my understanding of the situation and I am glad to have it confirmed. Having had it confirmed, the amendment is not moved.
[Amendment No. 36 not moved.]
Clause 21 [Deemed contracts in certain cases]:
Lord Mottistone Lord Mottistone moved Amendment No. 37:
Page 24, line 15, leave out ("in pursuance of a scheme made under section 20").
The noble Lord said: My Lords, at the Committee stage I tabled an amendment (No. 96) which covered this general area, and my noble friend Lord Trefgarne was very helpful and drew my attention to Clause 21 of the Bill. He pointed out that schemes, as they are called, had been exempt from contractual liability in the past but were now not going to be so exempt, and he said, at col. 801 of Hansard of 18th May:
"Generally speaking, almost all Post Office telecommunications services are supplied under schemes".
That is absolutely true in questions of total numbers but in fact there are some services and associated apparatus, such as wide band and international and digital circuits rented to business which are not in schemes, and it is very important that these kinds of contracts—which is what they are—should have the same exemption from Clause 22 of the Bill as the other schemes which are mentioned in Clause 21.
So I should be grateful if my noble friend could tell me whether it is known to him that there are these very important provisions on equipment and circuits which fall outside the scheme's arrangement. It is in this area that delay in provision can be very costly to a company—and we are really talking only about big companies in this area—that has invested in a complete new communications system if it cannot then exploit it for lack of circuits, and it has no redress. That is the point. This is the exemption, that the Post Office and British Telecom remove the redress. Fundamentally, those areas in which British Telecom does not face competition now are precisely those areas in which the customer needs protection because he has no alternative supplier.
At a later point in his speech my noble friend Lord Trefgarne referred to the right balance between the rights of the individual subscriber and the costs to users in general. I would suggest to my noble friend that this is a misleading way of putting things. We are really talking about business errors. If none of us made errors there would be no problem over contracts and later actions. The costs of all business errors are
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either charged to the customers in general or to the owners in general. Such errors should be firmly dealt with by good management.
For example, I should like to ask my noble friend (although I do not suppose it would be fair to expect him to reply immediately) how much it would cost to pay the penalty of one year's failures and delays in British Telecom. It would be a very interesting thing to look into. So I think it would be only fair if the amendment that I propose, which leaves out the particular reference in Clause 21 to "in pursuance of a scheme" so that the provision then becomes general, covering all services that the corporation may supply, would be a very fair one, because it allows for the special cases to which I have been referring. I beg to move.
Lord Morris: My Lords, while I support entirely the spirit behind the amendment moved by my noble friend, I am a little puzzled as to the necessity for it because, if a customer of British Telecommunications were to enter into a contract outside their scheme, I imagine that the normal common law of contract would prevail and the necessity for this amendment would become doubtful, although I may be quite wrong in saying that.
Likewise, as regards the terms and presumably the customer problem—although I have a great sympathy with this amendment—there is a problem whereby a customer or putative customer of British Telecommunications is under the sanction that if BT are the only people who can provide this particular service or part of the service, if they write into the contract a term which says that there is no recourse under that contract, the customer will be forced to accept that.
Lord Mottistone: My Lords, before my noble friend sits down, perhaps I may draw his attention to Clause 22(1), which was the one I sought to amend before, which gives the let-out to British Telecom.
Lord Morris: My Lords, that is in tort, not in contract.
Lord Lyell: My Lords, before I attempt to reply to the amendment which has been moved by my noble friend Lord Mottistone, or indeed attempt to put any quantity upon the penalty for the total delays in one year of British Telecom—or words to that effect; we shall certainly be able to garner it from the Official Report—before I attempt any such Herculean intellectual feat, I am sure the House would find it helpful if I were to try first to explain the intention which lies behind Clause 21.
Under the 1969 Act, the Post Office was able to provide its services under schemes made under Section 28 of that Act. In view of the little legal tussle—or dare I call it a dialogue?—between my two noble friends, Lord Mottistone and Lord Morris, as to what was contract and what was tort, I am instructed that these schemes in Clause 21, which indeed are made currently under Section 28 of the 1969 Act, are not contracts and that therefore the Post Office had, and still has, no contractual liability. Generally speaking, almost all Post Office telecommunications services are supplied in this way—namely, under schemes—and Clause 20 gives to British Telecom a similar power to supply its equipment under schemes.

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Clause 21(1) of the Bill deals specifically with the supply of apparatus and deems supply of apparatus under schemes to be contractual. This process ensures that the subscriber has all the same rights as under a contract. It also means that, broadly speaking, British Telecom will be supplying apparatus under the same legal framework as its competitors. This change, which is a significant improvement—and we believe a very welcome improvement—in the rights of customers, has been welcomed both here and in another place. Without Clause 21(1), schemes would continue to be non-contractual as far as the supply of apparatus is concerned, as for everything else. So we regard it as essential that the clause contains a reference to schemes. But there is no need for there to be any reference in this clause to any other form of supply by British Telecom, since this would automatically involve a contract of one kind or another and British Telecom would have the normal contractual liability in the same way as anybody else.
I hope this explanation has been of some assistance to my noble friend Lord Mottistone. I hope it has also been of some help to my noble friend Lord Morris. I am sure the House would welcome that I should read carefully the particular questions posed to me by my noble friend Lord Mottistone and that I should reply to him as expeditiously as far as I can, but I would warn him and the House that such figures as he has asked me to supply are very broad ranging and probably extremely difficult to obtain with any reasonable degree of accuracy; but, nevertheless, as in all cases, I will do my best.
Lord Mottistone: I must thank both my noble friends, particularly my noble friend Lord Lyell, for his closing remarks. Of course nobody will ever supply them to him; it would not suit them to do so. But it would be very nice to get the figures. I really think, if I may speak on behalf of my noble friend Lord Morris, that they have both told me the same story; that is, that a contract which is not in a scheme is a contract. That is very useful to have in print. I thank my noble friends very much and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos 38 and 39 not moved.]
Clause 22 [Exclusion of certain liabilities in tort in relation to telecommunications]:
Lord Morris Lord Morris moved Amendment No. 40:
Page 25, line 5, at beginning insert ("unreasonable").
The noble Lord said: My Lords, I think it would be for the convenience of the House if I were to speak to Amendments Nos. 40 to 44 en bloc because the same principle attaches to all five amendments. Your Lordships will be aware that there is a duty cast upon the corporation by virtue of the provisions of Clause 3 to supply telephone services as satisfy all reasonable demands for them. The intention of this amendment is so to apply the same test of reasonableness for actions in tort. I believe this is extremely important because this would be setting the corporation on precisely the same basis as competitors in the private sector. I do not
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need to develop this because I know your Lordships are more than well aware of the damage that can be done to companies and to individuals by unreasonable delay or unreasonable failure, interruption or suspension of the service to the customer by the corporation.
If I may move forward to the unreasonable omission from the directory for use in connection with the telecommunication service, perhaps I can illustrate this with a case I was closely connected with. A company involved in what are commonly called "car telephones" was refused an entry in the Yellow Pages directory by the Post Office on totally spurious grounds, which I will not go into. Although the customer wanted it under this heading, which is perfectly proper—most people think of car telephones as just that—there was a feeling that the Post Office were determined to make life as difficult as possible for their competitors. It is for this sort of practice that I believe the test of reasonableness would be extremely useful. I beg to move.
Lord Lyell: My Lords, the effect of the five amendments which have been spoken to by my noble friend would, I understand, be to give to British Telecom an exemption from liability in tort only for unreasonable actions which are covered by Clause 22(1). Thus presumably if British Telecom caused a person loss or damage when acting reasonably in such cases it could be held liable. I appreciate that the tort of negligence, which is the one we are mainly concerned with in this case, is primarily concerned with what we call unreasonable actions. It has been described somewhat irreverently as "leaving undone those things which ought to have been done and doing those things which ought not have been done". I am sure that will help my noble friend Lord Morris; it is beginning to help me anyhow. However, I am advised that this is not invariably the case; my quotation does not always match up with what the noble Lord seeks to apply in Clause 22(1). Therefore, we think it would be very strange to give British Telecom an exemption for its unreasonable actions but not for its reasonable ones, however remote the chance might be of a case brought in this latter example.
I did point out earlier in Commitee that the amendments of my noble friend would lead to great uncertainty in the operation of Clause 22 since a court would have to decide whether or not a particular act, or indeed a failure to act, was unreasonable. I hope that will be of considerable help to my noble friend. Certainly I think we should not go too far in further definitions of the law of tort. We should wait for my noble and learned friend who is normally upon the Woolsack.
Lord Morris: My Lords, I think that is very wise advice. With that I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 41 to 44 not moved.]
8.29 p.m.
Lord Winstanley Lord Winstanley moved Amendment No. 45:
After Clause 22, insert the following new clause:
("Telecommunications Authority
.—(1) The Secretary of State shall establish a public authority to be called the Telecommunications Authority hereinafter referred to in this Act as "The Authority".
(2) The Authority shall be responsible to the Secretary of State for the management of the telecommunications environment of the British Islands including the performing of the functions of the Secretary of State under sections 6, 12, 15 and 16 of this Act and shall publish an annual report in relation to its activities.").
The noble Lord said: My Lords, in the absence of my noble friend Lord Lloyd of Kilgerran, I beg to move Amendment No. 45, which, as your Lordships will see, consists of a new clause which seeks to do little, save to establish a public authority to be called the Telecommunications Authority and set out certain functions which that authority must fulfil.
Then it requires that authority to publish an annual report in relation to its activities. My recollection is that this is a matter which was ventilated in Committee and I do not think it would serve the interests of your Lordships' House if I went over the argument again. What I think might be helpful to the House would be if we were to hear the arguments or comments of the noble Earl who is to reply to this second bite of the cherry, if I may so put it. I beg to move.
The Earl of Gowrie: My Lords, I appreciate the position which the noble Lord, Lord Winstanley, is in. I believe the noble Lord, Lord Lloyd of Kilgerran, is even now winging his way towards us from the far East. It may be that my remarks will percolate through the scaffolding and reach him in one way or another sooner or later. This amendment is in fact quite plainly a narrow variation of one introduced by the noble Lord, Lord Lloyd, in Committee.
The noble Lord has sought to make this amendment less detailed, perhaps in an attempt to reduce the functions of the body which he proposes should be created although I am surprised to see that the noble Lord considers that the new body should also exercise the Secretary of State's powers under Clause 6 of the Bill. In fact this is a departure from the noble Lord's suggestion and it is not acceptable to the Government. The powers in Clause 6, such as those concerning the control of British Telecom's investment programme and the powers to give directions in the interests of national security or in relations with other Governments, are surely not those which would be practical or appropriate for the Secretary of State to delegate to a Quango. I do not base my opposition to the proposed clause on those grounds alone, but rather to the wider principle that the amendment advocates an additional layer of decision-taking and one that can only be thought necessary if the new regime is to be based on regulated competition, whereas the Government want to see as much competition as possible. Our proposals go a long way to complete deregulation without the intermediate of regulated competition.
The logic of that is that the trend is of rapidly increasing momentum in the United States, where the concept of regulated competition originated. In our judgment it will be only a matter of time before, in this industry, that tendency also gains momentum in Europe. Our proposal would put this country in the lead in Europe and fully on a par with the world leaders in the field. Also, the implication is that any regulatory effort required would be relatively small. Much liberalisation can be achieved through the handful of strategic general licences, which is at the core of the
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mechanics of the Bill and as your Lordships' House is aware, our view is that this responsibility should rest firmly with the Secretary of State, who is also responsible to Parliament.
We had quite a debate in this House earlier this afternoon regarding the various safeguards which exist. The same is true of the continuing regulatory licensing effort that will be required, which the department has the capacity to deal with and which has access to expert and technical advice. I have tried to look sympathetically at the noble Lord's amendment, as I did in Committee, but he proposes expensive additional machinery—certainly out of kilter with general Liberal Party positions on bureaucracy—and I hope that he, or the noble Lord, Lord Winstanley, by proxy, will be willing to withdraw the amendment.
Lord Morris: My Lords, is my noble friend the Minister confident that the Department of Industry will have the necessary know-how, and expertise to fulfil its highly onerous function by virtue of this Bill? At the same time, may I also ask my noble friend whether serious consideration has been given to moving the regulatory department from the Home Office to the Department of Industry? I believe such a move is absolutely vital because, with the integration of the information technology and telecommunications technology, proper and careful planning of the electromagnetic spectrum is essential. I would most humbly suggest that the Cinderella of the departments of state—namely, the Home Office—is the wrong girl, so to speak, to be looking after the increasingly important question of the radio spectrum.
The Earl of Gowrie: My Lords, I am not sure that I think of my right honourable friend the Home Secretary as Cinderella; it is not an easy role for him to take.
Lord Morris: My Lords, I meant that the Home Office was the Cinderella of the departments of state, in that everything is thrown at it.
The Earl of Gowrie: My Lords, my comment still stands. For the duration of the Government my right honourable friend is the Home Office and, as I said, I feel that Cinderella is a curious role in which to cast him. In fact it is the radio regulatory matters which are for the Home Office, and they exercise those powers very well. Our intention is that the bulk of the regulatory work will be achieved under general licences, as I said. I do not think my noble friend need be too alarmed about the issue of whether departments of state have sufficient expertise. Departments of state are long-used to dealing with specialised areas of activity in the economy. My own department, the Department of Industry and the Department of Energy, all have their own boffins, if I may put it that way. It is perfectly possible to sub-contract work to boffins outside one's own department where necessary, and so I do not believe there need be any great anxiety on that score.
Lord Winstanley: My Lords, I have no way of knowing whether my noble friend Lord Lloyd of Kilgerran will find the noble Earl's answer wholly acceptable and satisfactory, but I am bound to say that having read carefully the noble Earl's answer on a previous occasion,

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at Committee stage, it seems to me that he has gone a little further on this occasion and into other matters. It may well be that my noble friend will not wish to pursue the matter further. The noble Earl the Minister was entirely right when he said that noble Lords on these Benches are wholly opposed to unnecessary, inefficient and cumbersome bureaucracy—whether it be the Cinderella in the Home Office or the ugly sisters in the Department of Industry, I do not know. We certainly accept the noble Earl's remarks and we are glad to see unnecessary bureaucracy disappearing. I believe my noble friend felt that bureaucracy would be under more direct public control were it vested in an authority of the kind proposed in his amendment rather than being hidden away somewhere in the labyrinths of Whitehall. However, having heard the noble Earl's answer, which I am sure my noble friend will wish to study, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.38 p.m.
Lord Ponsonby of Shulbrede Lord Ponsonby of Shulbrede moved Amendment No. 46:
Page 26, leave out lines 7 to 9.
The noble Lord said: My Lords, Clause 23(1) imposes upon British Telecom the general financial duty at least to break even. This is a common provision in nationalised industry legislation, and a corresponding duty is presently in force for the Post Office under Section 31 of the Post Office Act 1969. Further to this general duty, Clause 23(2) allows the Secretary of State to set specific financial targets in relation to different assets and activities of the corporation.
Provisions concerning the setting of financial targets for nationalised industries have become increasingly common in recent legislation. For example, Section 14 of the Iron and Steel Act 1975 gives the Secretary of State the power to determine the rate of return on net assets as a whole which the British Steel Corporation would be required to achieve. Section 5 of the Petroleum and Submarine Pipe-Lines Act 1975 contains a much wider power which requires BNOC to perform such financial duties as the Secretary of State may specify. Similar powers were incorporated in the Aircraft and Shipbuilding Industries Act 1977.
The proposals in this Bill differ from the precedents I have mentioned in that they are more specific. Clause 23(2)(a) provides that different targets may be set at different times for different activities and assets. This power is sufficiently wide to enable the Secretary of State to interfere with British Telecom's pricing structure—for example, by specifying an especially high rate of return for a particularly competitive activity. British Telecom would naturally be opposed to any such interference. This amendment deletes that paragraph.
We believe that the provisions of this paragraph are unprecedented and give the Secretary of State very considerable power—too much power—and he could use the paragraph to meddle in British Telecom's pricing policy if, for example, British Telecom came through fair but effective competition to dominate a particular sector or a competitive market.
We appreciate the Government's concern to stop British Telecom pricing competitive activities unfairly by, for example, cross-subsidising from monopoly revenues. Having said that, this paragraph as it stands gives the Secretary of State powers way beyond those powers which he needs. As I have said, the paragraph enables the Secretary of State to interfere in the day-to-day running of British Telecom. One would have thought from the remarks which the noble Earl made earlier this evening that that was against the Government's philosophies. I hope that the noble Earl will be able to clarify how the Government intend to use these powers. I beg to move.
Earl De La Warr: My Lords, I have assumed, like the noble Lord, Lord Ponsonby of Shulbrede, that the purpose of this particular paragraph was to make sure—and to do no more than make sure—that the corporation did not make use of its monopoly activities to subsidise its competitive activities. In so far as that is its sole purpose, I am perfectly happy with it and I think that it is quite fair.
Having said that, I must say that any noble Lord who has worked in a large and diverse corporation like British Telecom will know that never is there a time when one part of the business is not in trouble—it might be the overseas business, it might be Prestel or it might be a number of things. When that happens it is the duty of the board of directors—and they are a body of gentlemen who, I think, have not been referred to enough during the course of our debates—to decide whether they are able to put it right; and, if they think that they can put it right, whether they are justified in subsidising what they must regard as the temporarily unprofitable side of the business until it gets on its feet again.
Therefore, let us not use the word "cross-subsidisation" in too pejorative a way. If the directors conclude that it cannot be put right, then they sometimes have to take the chopper to it. The reason I am saying this is that I am so anxious to hear from the Government that they do regard the board of directors as people who have that sort of duty, just like the board of directors in any other company whether it be public or private. So if my noble friend could help us by confirming that there is a narrow but wholly legitimate reason for this paragraph and that in general terms it is not the Secretary of State's intention to go beyond that, then I think that there are many of us who would be extremely relieved.
The Earl of Gowrie: My Lords, perhaps I may take up first the point made by my noble friend. It obviously is necessary to have powers to set different targets for BT's monopoly and competitive activities. However, it did prove extremely intractable to us to draft the clause in such a way that the powers were explicitly limited to that. Ministers have told the corporation that they have no intention of using powers in this way.
From what the noble Lord, Lord Ponsonby, said, he supports the general principle of Government setting the financial target for nationalised industries and, since it is a fundamental part of the relationship between Government and industry, of giving the target a statutory basis. So there is no difference between us.

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Of course, there is no difference also between my noble friend and myself in that we want the board of directors to behave like a board of directors and we do not want to interfere in their detailed management decisions. But we cannot pretend that we are in anything other than public sector monopoly territory and as noble Lords know, wherever they stand on these particular industries, that does give Parliament, the Secretary of State, the Government, the Treasury and so on—but essentially the Government and Parliament—a special relationship with these industries. One can try to leave them to manage their affairs as if they were private sector industries and, indeed, that is what we seek to do. However, one cannot get away from the fact that they are providing great public services and also they are subject to Government guarantees in financial terms which are inherently and essentially different from the conditions under which private sector industry operates.
The noble Lord's amendment questions the need for the powers to extend to setting different targets for different parts of the corporation's business. It seems to us that the obvious example where this would be necessary would be those parts of the business which are open to competition. It is by no means clear that the same financial target as applies to the corporation's monopoly functions, should also apply to its competitive activities. They are inherently different in kind. Indeed, it might be that no statutory financial target would be appropriate for this part of the business.
We therefore are inexorably drawn by logic to the fact that flexibility is needed and the flexibility needed would be removed if this amendment were made. I cannot feel that a restriction to a single financial target, applicable to the whole business, would either be helpful to the Government with the necessary eye that has to be kept on broad external financial limits or to the hoard of directors of BT. I hope, therefore, that the frank explanation that I have given of the need for the powers will satisfy the noble Lord and that, if satisfied, he will feel able to withdraw the amendment.
Lord Ponsonby of Shulbrede: My Lords, I should like to thank the noble Earl for his explanation and for his indication of how he would see the Secretary of State using his powers. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.50 p.m.
Clause 25 [Borrowing powers of the Corporation and its wholly owned subsidiaries]:
Lord Glenamara Lord Glenamara moved Amendment No. 47:
Page 27, line 1, leave out ("temporarily").
The noble Lord said: My Lords, three amendments go with this amendment. The noble Lord, Lord Lyell, quoted the 1662 Book of Common Prayer, Cranmer's book. I am glad that he quoted Cranmer's book and not the Alternative Service Book. We come now to a group of amendments on cash limits, on which I am afraid that the Government have erred and strayed from their ways like lost sheep and followed too much the devices and desires of the Treasury. The purpose of our amendments is to give the Government a chance
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to return to the fold of sanity and common sense.
The amendments seek to remove the distinction between temporary and long-term borrowing and to alter the requirement from that of gaining the consent of the Secretary of State for Industry and the approval of the Treasury to a process of consultation with the Treasury. Essentially, these amendments seek to give a much freer hand to BT to determine where it should raise finance.
The noble Earl, Lord Gowrie, occupied a lonely position during the Committee stage debate on the cash limits issue. On 19th May, he defended cash limits on three main grounds: first, that if British Telecom was able to borrow freely, it would crowd out or divert funds from the private sector. The Wilson Committee Report is the most recent of a number of reports that have stated that there is no shortage of investment finance for projects with an adequate rate of return. Even the reduction of BT's real rate of return target from 5 per cent. to 4 per cent., announced on 2nd June, is virtually double the average rate of return of 2 per cent. for British business quoted in a recent Bank of England report. So there is not much substance in the first point made by the noble Earl.
Secondly, he argued that the national and international money markets perceive:
"nationalised industry borrowing as carrying an implicit Government guarantee".
Therefore, presumably, Governments have to control borrowing. To the extent that this statement is true, the difficulty surely is self-created by the Government's insistence on the idea of a notional guarantee. So far as I know, no other European Government has adopted a cash limits policy on telecommunications finance or, to my knowledge, classes investment by nationalised industries as public investment. That was the second reason which the noble Earl gave.
Thirdly, he maintained that the sheer size and recent increase in BT's investment proves its adequacy. The fact is, that we are still investing less per head of population in telecommunications than almost any other competitor country. At constant prices, current investment has merely returned to the level it achieved in 1973–74. This is too important an issue to be sacrificed to ideological fixations.
The noble Earl, Lord Gowrie, was the sole contributor to the debate during the Committee stage to defend the Government's policies—the only one in the whole Committee. Increased investment in Telecom is vital for our industrial future. At the moment, the customer is paying the price for that investment through increased prices—there were two major increases last year; a policy which has, in the depths of the recession, proved self-defeating, as disconnections are increasing. If the Government believe in letting market forces rule—and they are always saying that they do—they should let the market determine the size of BT's investment by letting the market judge just how willing it is to lend to British Telecom.
The House of Lords' existence is justified by its supporters in terms, first, of its ability to put common sense before party dogma and, secondly, its capacity to introduce essential improvements to poorly drafted Bills. On both of those grounds, I would commend this amendment to your Lordships. We believe that there can be no clearer case for revision by a revising

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Chamber than to support an amendment on the issue of cash limits. With the exception of Treasury Ministers reading gloomily from Great George Street briefs, no volunteer can be found to support the absurd doctrine of cash limits, which is preventing so much essential investment in publicly-owned industries such as British Telecommunications.
I do not believe that we need to run through all the arguments again which we deployed in Committee. It is surely sufficient to say that, although there are widely different opinions on many other aspects of the Government's policy towards telecommunications, on the issue of cash limits all those involved in the industry stand united.
In an earlier amendment, I quoted the letter from the managing director of Plessey's. The Government expect telecommunications manufacturers to be able to respond to the challenge of competition in the terminal apparatus markets and to be able to resist the very real threat of a flood of foreign imports, as I said on the last amendment that I moved. But while industry is seeking to gear itself to this competition it is being subjected to considerable uncertainty as regards its major customer. The recent NEDO publication, to which I have already referred, pointed out that order books for certain types of telecommunication equipment had been more than halved as a direct result of the restrictions on BT investment imposed by the Government's doctrine of cash limits.
We know from earlier debates in Committee and on Second Reading that we have the support of all parties in the House of Lords on this issue. We also know from earlier debates that despite that support, some noble Lords feel reluctant to follow the logic of their thinking into the Division Lobby. But, I would ask them to think again. An amendment forced on the Government on this issue would clearly demonstrate to the Government and to the country the strength of feeling about the absurdity of current Government policy on this point. I have no doubt that the noble Earl, Lord Gowrie, will suggest that the amendment would leave the Bill in an inappropriate form. If that is so, then it is purely a technical matter and the Government could correct any technical problems through tabling amendments in another place. Doubtless, in his response, the noble Earl will suggest that it would be particularly inappropriate to amend the Bill at this time; first, because the Government have recently offered some concession by announcing an increase in BT's external financing limit for the current year, and, secondly, because the matter is now under consideration both by a Select Committee of another place, and by a NEDO committee, and we are glad that it is. However, in our view, neither of these two reasons has much force.
Although it is true that on 2nd June, the Government announced a £200 million extension on BT's cash limit, this still leaves British Telecom £120 million short of the resources it requires even to maintain the investment programme at current levels. In practice, no one who works in the industry is in any doubt that we should be investing very much more than we are. Moreover, above all, what is required both by the manufacturers and by British Telecom is financial stability and certainty. Financial stability will enable BT to plan its investment sensibly, and to maintain its
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orders from the manufacturers without continual chopping and changing in order to meet the financial problems caused by current Government policy. Again I would remind noble Lords of the letter from the managing director of Plessey.
It is the uncertainty caused by the present situation, the requirement continually to revise investment plans, that is the most damaging feature of the cash limit policy so far as the manufacturers are concerned. The uncertainty is not overcome by short-term concessions, welcome as the extra £200 million was this year. It will only be overcome, my Lords, when British Telecom is free to determine its investment programme on the basis of commercial considerations and commercial judgments.
We on our side of the House welcome very much the fact that NEDO and the Select Committee have chosen to examine the issues posed by cash limits on nationalised industries. Both inquiries provide overdue recognition of the relevance of these problems to our economic development over the next decade. But what better opportunity could be provided to this House to set a lead to both the NEDO Committee and the Select Committee? Both committees are considering the issue as it affects nationalised industries in general.
Of course, these industries vary a great deal. They range enormously from the profitable, like British Telecom, to the unprofitable; from those that provide the seed corn of future industrial development, like British Telecom, and those that are to a substantial degree relics of the past industrial pattern. All, for a variety of reasons, must in my view, and the view of my party, be publicly owned. And yet the priority we should accord to them varies. But the one area of total unanimity is the industry we are considering today. It is an industry which is highly profitable and which is in the forefront of advanced technology.
No commentator, so far as I am aware, can or has resisted, or failed to acknowledge, the strength of the case for substantially greater investment in British Telecom. Indeed, it is the absurdity of the restrictions on BT's investment that has led many commentators to consider the broader issues of cash limits on nationalised industries generally. This is an issue on which, for once, we find ourselves united in this House, so far as one can judge from the Committee stage. I say united because I venture to suggest, as I did last time, that if the noble Earl, Lord Gowrie, were speaking from his own convictions, he too would speak in favour of the amendment we are putting forward today. If the House of Lords has a role it is in expressing a unity of purpose, a commonsense consensus of the kind that has emerged over cash limits, and so I beg your Lordships to take the opportunity to pass this set of amendments. I beg to move.
9.4 p.m.
The Earl of Gowrie: My Lords, it is nice to imagine that we all enjoy unanimity about external financing limits. I can console the noble Lord, and indeed the House, by saying that the Government will unconditionally welcome any valid means of raising extra finance for telecommunications investment outside public sector borrowing requirement constraints. It is not good enough, however, for the noble Lord, Lord Glenamara, to say that the Government are entwined

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in dogma, or doctrine over this issue, because the mechanisms, and indeed the whole philosophy of external financing limits, were introduced into our system by the previous Government, of which Lord Glenamara was a distinguished Member and is indeed associated, I suppose, more than with any other single individual, with his right honourable friend the former Chancellor, Mr. Healey. I do not think that, whatever our differences with Mr. Healey, we would accuse him of ideological fixations.
The fact is that Mr. Healey analysed, and successive Governments have had to analyse, that the scale of the operations of the public sector monopolies does give them a unique and curious position in this economy. We have gone over those arguments, and I do not intend to repeat them now. What I can do is to repeat my original remark that the Government will welcome a valid means of raising extra finance for telecommunications investment outside PSBR constraints, and indeed one of the central purposes of the kind of liberalising policies in whose direction we are taking a few first cautious steps this evening is to see that in the future more financing outside PSBR can be achieved.
The other thing that I would contest in the remarks made by the noble Lord is that it is true that we would like to see even greater investment in this sector—investment nearer, say, French and German levels. Nevertheless, since this Government have been in office we have increased in real terms, in constant prices, the amount of money available for the external financing limits in this field. It has been a steady increase, and the increase is planned to continue through to 1984. It is a substantial advance on the sums provided for by the previous Government, who indeed as part of their public expenditure cuts policy had to hit this sector, particularly the capital programmes, particularly hard.
An earnest of our intentions is that my honourable friend the Minister of State for Information Technology recently announced in another place that British Telecom's external financing cover for this financial year, for 1981–82, was to be increased by £200 million. That in a year when all EFLs are subject to considerable restraint is an earnest of the confidence we feel in this industry and its need to invest.
It is not the choice of this Government that British Governments have got into the relation with the public trading sector monopolies that they have. This was a system inflicted on our political economy by socialism, and it has borne a very heavy cost and made it difficult for such industries to behave as their modern managements would like them to behave. Part of the whole purpose, as I said, of our policy in this field is to try to chip away at this system, to liberalise it and get it more in line with the competitive demands of a late 20th century economy rather than an economy run on principles arising out of injustices or whatever in the 19th century. It is a slow and intractable business, and I recommend the Bill and its provisions as a substantial step forward in the direction which, rather curiously, the noble Lord, Lord Glenamara, himself appears also to desire.
Lord Underhill: My Lords, what disappoints me about the noble Earl's reply is something I have
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mentioned on more than one occasion; namely, that I am certain he believes in a mixed economy, though one would never believe that from the arguments he frequently adduces from the Government Front Bench. I believe in a mixed economy, which means there must be efficient, properly run national industries—that is the phrase to use—and therefore we are playing a different ball game from the one the noble Earl outlined. First, we have the need to develop British Telecom's national network to the utmost extent and we must enable BT to compete on fair commercial terms with the on-moving private sector. That requires finance. We must also, as my noble friend pointed out, be in a position to help manufacturers of equipment who need the stability and long-term basis of orders which can be given only by BT, and BT can give that only if they have the necessary finance. Dare I also mention that we are in the ball game of having 2½ million unemployed? Any investment which is directed towards constructive industry can only be to the advantage of the whole nation.
I repeat what has been said often before, namely that BT needs investment of £2.2 billion a year, and about 90 per cent. of that is found from its own resources. How many other businesses would think it right to provide nearly 90 per cent. of a £2 billion investment programme a year out of its own resources? It is a great credit to a national industry that it is able to do it. I am wondering whether, even at this stage, we can begin to think what difference there is between an industry of this kind—which is efficient and able to pay its way and pay the interest on any financing it borrows—and the same industry under private control.
The Earl of Gowrie: My Lords, as the noble Lord put the question squarely to me, perhaps I might answer it now. The essential difference is that it is not so much that Governments, whether the previous or present Government, make the judgment about the financing of nationalised industries. It is that the money markets do, and the money markets judge that financing in this sector on this scale carries an explicit Government guarantee. If I or my right honourable friend the Chancellor were to announce to the world that the Government were abolishing a guarantee in this area, the noble Lord, Lord Underhill, would probably find that the financing for such industries was very much harder to achieve. That really is the nub of the issue. It has not changed between this Government and their predecessor, and when the noble Lord makes political points, which it is perfectly fair for him to do, he should also recognise that continuity.
Lord Underhill: I was not aware that I was making any political points, my Lords. I thought I was putting forward a sensible and logical argument free of party politics. I must draw attention to some earlier comments of the noble Earl in a similar context. The only reason I am on my feet now is that, unfortunately, this issue came up at about 9.30 at night in Committee and it is coming up again late tonight, yet this is the most crucial issue facing the development of British Telecom.
What did the noble Earl say on that occasion? I quote from col. 813 of the Official Report of 18th May:
"I got the feeling that what he"—

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he was referring to me—
"really wanted was nationalisation without tears. We on this side of the Committee are not over-enamoured of nationalisation"—
that surprises me!—
"but in the provision of great public services we can often see its logic and indeed we have kept more of the special privilege or the monopoly power of British Telecommunications than some of our own supporters would have liked. But one does pay for having a nationalised industry …".
Well, frankly, my Lords, surely that is not the language that we ought to be using. It is not a question of whether we are to pay for a nationalised industry, for bailing someone out. This is a matter concerning a great public national industry, and it is surely in the interests of the whole nation that we help British Telecom, first, to develop its own network, and, secondly, to help to develop the position of the private manufacturers who rely on BT. Surely that is the way that we ought to be looking at it, and I hope that the noble Earl will reconsider what he has said—
The Earl of Gowrie: My Lords, I am most grateful to the noble Lord for giving way. With the leave of the House, before the noble Lord sits down I wish to mention that in the passage that he quoted from my speech in Committee he was making an error of interpretation which might have been due to a fault of mine. I did not mean it as a complaint that one has to pay for investment. Of course investment has to be paid for, and money has to be found. When I spoke about the noble Lord wanting nationalisation without tears, I was saying that where a nationalised industry whose financing, whether current or capital, carries implicit Government guarantee, one is in the territory of external financial limits, whether one likes it or not. That is the difficulty which successive Governments have had to face, and which no Government have yet found their way out of.
Lord Underhill: My Lords, I do not want to prolong the argument, but the noble Earl asked me to give way to him, and I should in turn like to ask what might have been the position of Rolls-Royce?—an undertaking which was in a more difficult position than the one that we are now considering. I do not think that the argument we are now hearing about obtained then.
Lord Morris: My Lords, at the Committee stage of the Bill on this issue I raised a point which, no doubt unwittingly, was not taken up by my noble friend Lord Gowrie. That was not really surprising since the point was not put in interrogative form. I have a suspicion that I am being very naive about it, but, very simply, it is as follows. In the private sector when a private corporation guarantees a loan, the guarantee does not form any part of the monetary measure of that company. It is included solely by way of a note on the balance sheet. I have never quite been able to understand why in the accounts of nationalised industries a guarantee, expressed or implied, has to be included as part of the PSBR. I should be most grateful for an explanation.
Lord Winstanley: My Lords, in discussing this group of amendments so ably and persuasively spoken to
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by the noble Lord, Lord Glenamara, and so eloquently, though briefly, supported by the noble Lord, Lord Morris, I wonder whether at the same time we may discuss Amendment No. 51. It deals with precisely the same point, and appears in the names of my noble friends Lord Lloyd of Kilgerran and Lady Seear, as well as my name. Amendment No. 51 does not perhaps go the whole way, as do certain of the amendments of the noble Lord, Lord Glenamara, but it goes part of the way, and so perhaps it would be convenient to the House if we were to get rid of Amendment No. 51 at the same time as we deal with the other group of amendments, since it deals with precisely the same point.
The point in question was raised on Second Reading by my noble friend Lord Byers, the Leader of the Liberal Party in your Lordships' House. He spoke very persuasively and very powerfully on the importance of the telecommunications industry being able to raise its finance, its capital, on the market in the ordinary way. The main argument advanced against that point by the noble Earl tonight, as well as at Second Reading and in Committee, has always been the same; namely, that if a nationalised industry is allowed to raise capital on the market, somehow investors know that behind the industry stand the Government. I do not think that potential investors would be greatly reassured by such a statement. I believe that their confidence is in the telecommunications industry. There is an enthusiasm to invest. This is not for a moment regarded as risk capital. It is regarded as an area in which the City would like to invest, given the opportunity.
I am not a Keynesian economist; indeed, I am not an economist at all. I am not a Keynesian of the kind who thinks that at the moment Britain can spend her way out of all her problems. However, I believe that it is desperately important that we pour investment into certain areas, in particular into the science-based industries and into industries such as telecommunications. By doing that we can certainly do much to avoid in future many of the difficulties that we now face.
I really think that we must get away from this preoccupation with the fact that the ability to raise finance on the market, which Telecom undoubtedly could, somehow is a factor in the public sector borrowing requirement. I do not see how that can be; I do not see why it need be. The noble Lord, Lord Glenamara, said that this is a matter on which there is agreement in all parts of your Lordships' House. There is not necessarily agreement in all parts of all parts of your Lordships' House, but I think the noble Earl would certainly accept that there are noble Lords of all political persuasions and all political viewpoints who take the view which has been expressed by the noble Lord, Lord Glenamara, that the restraints must now be removed.
I merely say to the noble Earl that the last of these amendments, which I should like to be considered along with these others, which I am sure would save your Lordships' time, perhaps goes less far than any of the others. It leaves the Secretary of State with the power to intervene and prevent developments of this kind, and merely takes out the words "and the approval of the Treasury". It removes what we

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perhaps might regard as the nigger in the woodpile, if that is not considered a racial and wholly improper remark at the moment. I hope that perhaps the noble Earl can respond to that amendment.
The Earl of Gowrie: My Lords, if I may answer the very direct question put to me by my noble friend—
Lord Ponsonby of Shulbrede: Order!
The Earl of Gowrie: My Lords, I was asked a question by my noble friend and I sought to answer it, but if your Lordships do not wish me to then I shall not.
Lord Ponsonby of Shulbrede: I think it is "by leave", probably, my Lords.
The Earl of Gowrie: My Lords, by rising to my feet I am seeking the leave of the House. I will sit down if the leave is not granted to me. I think the answer to the very straightforward question put to me very clearly by my noble friend Lord Morris could also answer the general points made by the noble Lord, Lord Winstanley. The difficulty is that behind private sector borrowing there is the assumption that competition or investment can end in failure. Behind public sector borrowing that assumption does not exist, and that quite radically alters the character of the borrowing. In my contention it alters the character of one's decisions at a very micro-level in private life. If you get money from somebody who cannot go broke as against money from somebody who can, the terms and conditions of your borrowing alter in degree; and, of course, it is a very much larger degree where Governments are concerned.
That said, I do not find the position wholly satisfactory. What I find unsatisfactory is that these conditions are imposed upon Ministers by the nature of the nationalised sector itself. I go back to my previous remarks to the noble Lord, Lord Underhill, that there may he very good and justifiable arguments for having a large public sector, but if you do have a large public sector you have to pay for it by submitting yourself to the constraints of the fact that the Government stand behind the borrowing. If you can in some way demolish the public sector, or have less of it, you have fewer of such constraints on the borrowing. That is what I meant by saying that you pay for this privilege or for this burden, according to which way you look at it, of having a large public sector.
But I would try to give a ray of light, if you like, to the House. In my original remarks I said that if the Government can find ways, if there are ways, for financing in the public sector generally—I am not just talking about British Telecom—to be done outside public sector borrowing funding guarantees, we would greatly welcome them. I hope that with that asurance, and in view of the fact that we have been over this argument in great detail at Committee stage, noble Lords will not seek to press their amendment.
Lord Glenamara: My Lords, I thank the noble Earl for what he said in his opening reply and for what he said just now. I imagine he chose his words very carefully, as it is a matter of some significance. We shall look at what he said very carefully indeed, but it
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looks to me as though it might be the first slight sign of a thaw in the Government's attitude; so I am grateful to him for that. The noble Earl quoted the Labour Government. Of course there is a very great difference. We are now in the depths of a major recession. In these circumstances, it is surely quite ridiculous to limit profitable investment in an industry in this arbitrary way—and it is arbitrary—simply because it is publicly-owned. The limitation does not apply to a privately-owned industry. If this were lifted, a major contribution could be made to creating jobs and, as the noble Lord, Lord Winstanley, has said, to creating the kind of infrastructure that this country, a highly-developed technological society, will need when we come out of the recession.
The noble Earl talked about the guarantee, but this is purely academic in the case of an industry like British telecommunications. There is not the slightest possibility of British Telecom reneging on borrowing in the market. Therefore, the Government's notional guarantee in the case of an industry like this—not in the case of some industries, I agree, but in the case of this industry and one or two others—means nothing at all. There is no earthly reason why BT, like any other major profitable industry, should not be free to determine its own investment programme and to borrow freely where it wishes. The noble Earl appeared to be saying that external financing limits are an essential characteristic of a publicly-owned firm. Is that what the noble Earl was saying?
The Earl of Gowrie: Broadly, my Lords.
Lord Glenamara: Then, my Lords, will the noble Earl reply to the question that I asked him in the last debate and tell me about Cable and Wireless, with which this Bill deals? They are 100 per cent. owned by the Government, but external financing limits do not apply to them. They are free to borrow wherever they can get the best terms in the world, and they do so successfully—in this country, in Hong Kong, in the Gulf or anywhere else. That is a public wholly-owned industry in the same kind of business as British Telecom but external financial limits do not apply, and rightly so. There is no problem about raising money.
I am grateful to the noble Earl for what he has said but we feel so strongly about this matter that I am afraid that my noble friends and I must carry it to a Division.
9.27 p.m.
On Question, Whether the said amendment (No. 47) shall be agreed to?
Their Lordships divided: Contents. 27; Not-Contents, 60.

CONTENTS

Ardwick, L.

Howie of Troon, L.

Bishopston, L. [Teller.]

John-Mackie, L.

Boston of Faversham, L.

Northfield, L.

Brooks of Tremorfa, L.

Peart, L.

Caccia, L.

Pitt of Hampstead, L.

Collison, L.

Ponsonby of Shulbrede, L.

David, B. [Teller.]

Rochester, L.

De La Warr, E.

Ross of Marnock, L.

Elwyn-Jones, L.

Shackleton, L.

Glenamara, L.

Stedman, B.

517

Stewart of Alvechurch, B.

Underhill, L.

Stewart of Fulham, L.

Wells-Pestell, L.

Stone, L.

Winstanley, L.

Tordoff, L.

NOT-CONTENTS

Airey of Abingdon, B.

Loudoun, C.

Ampthill, L.

Lyell, L.

Avon, E.

Macleod of Borve, B.

Belstead, L.

Mansfield, E.

Boardman, L.

Marley, L.

Boyd of Merton, V.

Monk Bretton, L.

Brabazon of Tara, L.

Morris, L.

Bridgeman, V.

Mottistone, L.

Brougham and Vaux, L.

Murton of Lindisfarne, L.

Chelwood, L.

Newall, L.

Cockfield, L.

Rankeillour, L.

Colville of Culross, V.

Redesdale, L.

Craigmyle, L.

Reigate, L.

Croft, L.

Sandford, L.

Cullen of Ashbourne, L.

Sandys, L. [Teller.]

de Clifford, L.

Savile, L.

Denham, L. [Teller.]

Sharples, B.

Dormer, L.

Skelmersdale, L.

Dundee, E.

Stradbroke, E.

Eccles, V.

Strathclyde, L.

Elliot of Harwood, B.

Swinton, E.

Ferrers, E.

Trefgarne, L.

Fortescue, E.

Trenchard, V.

Gowrie, E.

Trumpington, B.

Grimston of Westbury, L.

Vaizey, L.

Hailsham of Saint Marylebone, L.

Vaux of Harrowden, L.

Vickers, B.

Hive, L.

Vivian, L.

Inglewood, L.

Ward of Witley, V.

Kinloss, Ly.

Westbury, L.

Long, V.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendments Nos. 48 to 51 not moved.]
9.35 p.m.
Lord Morris Lord Morris moved Amendment No. 52:
Page 27, line 20, at end insert ("and where consent or approval by virtue of the provisions of paragraph (2)(b) above is withheld reasons for withholding such consent or approval shall be given in writing by the Secretary of State to the Corporation").
The noble Lord said: My Lords, I have the feeling that by moving this amendment I am whistling in the wind: for, in my experience, the one thing that Ministers and Departments of State do not like doing is justifying their decisions. It is rather like putting oneself on a ducking stool or putting one's own head into a pillory. In worshipping at the altar of "more open government" I believe this amendment would prove of value to the Government, for what it does fundamentally is to support the Conservative Government's fundamental tenet that it is not the business of Government to be in business. Where the Treasury in practice effectively takes a business decision by withholding consent to a loan for British Telecom—
The Earl of Gowrie: My Lords, I am most grateful to my noble friend for giving way. I am very much under the impression that this was debated, because the substantive issue is the same and was indeed brought to a decision following the last debate. We are still on the external financing limit territory, are we not?
Lord Morris: My Lords, as I understand it, this amendment raises a very different principle: that is
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that Her Majesty's Government must give reasons to the corporation as to why they withhold consent. It is slightly different from the previous amendment, but I believe that is the case. I must repeat what I said: if Her Majesty's Government take a business decision on behalf of the corporation, I think it is only fair that they should give reasons to the corporation for the withholding of consent for external borrowing by British Telecom. With that, I beg leave to move the amendment.
Lord Lyell: My Lords, we believe this amendment proposes that in the event of the Government going so far as to withhold their consent or approval from British Telecom's application for any long-term finance in the money markets, the Secretary of State should write to British Telecom, giving the reasons for a particular decision. If any amendment is required—and I would remind the House, as I am sure my noble friend is aware, that the Government have recently announced an increase in British Telecom's external financing limit for 1981–82—this is agreed with the business as a matter of general policy, not as a special decision on whether a particular loan will, or will not, obtain Government consent.
The general guidelines on the type of borrowing which a nationalised industry, or something like British Telecom, may undertake—for example, relating to the permitted sources of short-term funding—are likewise settled as a matter of general policy. When nationalised industries feel that a certain aspect of Government policy on their borrowing is causing them difficulty, discussions are held to see whether any changes can be made.
Any industry such as British Telecom is aware of which loan applications are likely to prove acceptable to the Government, and thus can avoid the embarrassing and disruptive situation which would arise if it submitted a loan application which the Government felt obliged to refuse. The amendment of my noble friend is unnecessary since, in practice, the reasons for the Government's policies are explained to the nationalised industries, and it would not help the process of explanation which needs to be carried out before any formal loan applications are submitted.
Lord Morris: My Lords, I am most grateful for my noble friend's explanation. Not for the first time, I have learned something tonight. I was under the impression that loans were applied for at the Treasury on a piecemeal basis. I did not realise that the general blanket control was handled in that way. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 30 [The Corporation's accounts and audit thereof]:
Lord Morris Lord Morris moved Amendment No. 53:
Page 31, line 24, leave out ("161(1)(a)") and insert ("13").
The noble Lord said: My Lords, I think it would be convenient if I spoke to Amendments Nos. 53 and 54 together. I spoke to these amendments at a very late hour in the Committee stage, and I am sure that my

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noble friend and your Lordships are aware of the point underlying them. As I have no desire to delay your Lordships any further, I beg to move.
Lord Lyell: My Lords, it was I who explained to my noble friend at that late hour in our deliberations that Section 13 of the Companies Act 1976 does not supersede or in any way replace Section 161(1)(a) of the Companies Act 1948. What that section in the 1948 Act does is to define a person who is qualified for appointment as auditor of a company as,
"a member of a body of accountants established in the United Kingdom and for the time being recognised for the purposes of this provision by the Secretary of State".
Section 13 of the 1976 Act lists the bodies of accountants now recognised by the Secretary of State for the purposes of Section 161(1)(a) of the 1948 Act. That is all that Section 13 is designed to do. I hope that that further clarifies the position for my noble friend. Fortunately, the hour is not so late as it was when we discussed this subject at the last stage.
Lord Morris: My Lords, my noble friend is certainly right on that last point. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 54 not moved.]
Clause 32 [Power of the Secretary of State to make orders about pensions]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 54A:
Page 32, line 24, after ("of") insert ("any").
The noble Earl said: My Lords, with the leave of the House, I should like to speak to Amendments Nos. 54A and 54B, as well as Amendments Nos. 55A to 55F and 77A and 77B en bloc. This is a series of amendments to Clause 32 which clarify the drafting of the pensions clause in a number of ways. It may be helpful, therefore, if we take them all together.
The House will be aware that my honourable friend the Minister of State for Industry and Information Technology has been consulting the Post Office, the trustees of the Post Office Pension Fund and the unions concerning the future of the fund. These consultations are now almost complete, but the Government want a little time to reflect on the issues and do not propose to take any hasty decisions. I gave the House an assurance during Committee that no final decision will be taken without full consultation. I should like to repeat that assurance on this occasion.
The House may be aware that the Post Office Board has recommended that the existing pensions fund should be split into two, with one fund for each corporation, but that the trustees and the unions would prefer the single fund to be maintained. A number of compromise solutions have also been suggested which involve varying degrees of separation, including the possibility of two sets of trustees or two schemes but enjoying a common investment fund. I think it will be readily agreed that the Bill should not exclude the possibility of implementing any solution which had the support of all the parties concerned or which was
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felt to be the most acceptable compromise between them. These amendments are designed to achieve this end. They are necessarily a complex set of amendments, but I should like to stress again that many of them are merely to ensure that all possible solutions to the pensions fund debate and issue can be implemented under the Bill. The Government have not yet come to a conclusion. We intend to proceed with the maximum degree of consent. I am sure your Lordships will agree that it would be wrong for the drafting of the Bill to rule out particular solutions before any such decisions have been taken. I hope therefore that the House can accept this package of amendments.
Lord Ponsonby of Shulbrede: My Lords, the noble Earl has explained very fully this package of amendments. This makes it unnecessary for me to make the speech which I was going to make on my Amendment No. 55. That amendment was tabled specifically for the purpose of finding out what is the present state of the Government's thinking with regard to the splitting of the fund. I am glad to know that the Government are still maintaining a very flexible attitude and that they intend to move with the fullest support and co-operation of all those involved.
On Question, amendment agreed to.
The Deputy Speaker (Lord Ampthill)The Deputy Speaker (Lord Ampthill): My Lords, before calling Amendment No. 54B, I have to point out that if it is agreed to I cannot call Amendment No. 55.
9.47 p.m.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 54B:
Page 32, leave out lines 27 to 32 and insert—
("(b) the transfer of rights and liabilities as respects any persons to whom this section applies from trustees of a Post Office scheme to trustees of a Corporation scheme;
(bb) the requiring of persons who are both trustees of a Post Office scheme and trustees of a Corporation scheme to hold the whole or any part of a pension fund held for the purposes of the Post Office scheme partly for those purposes and partly for the purposes of the Corporation scheme;
(bc) the transfer to investment trustees appointed both in pursuance of a Post Office scheme and a Corporation scheme of the whole or any part of a pension fund held for the purposes of either of those schemes or partly for the purposes of one and partly for the purposes of the other;
(c) the apportionment between trustees of a Post Office scheme and trustees of a Corporation scheme of a pension fund held for the purposes of the Post Office scheme or partly for the purposes of that scheme and partly for the purposes of the Corporation scheme;").
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendments Nos. 55A, 55B, 55C, 55D, 55E and 55F:
Page 32, line 34, leave out ("that") and insert ("the 1969")
Page 32, line 37, leave out ("this") and insert ("that")
Page 32, line 38, after ("supplemental") insert ("or incidental")
Page 32, line 39, at end insert ("any statutory provision, any contract of employment and")
Page 33, line 2, after ("payment") insert ("or purposes connected with the payment")
Page 33, line 10, after ("ceases") insert ("or ceased").
On Question, amendments agreed to.
Clause 52 [Documentary evidence as to sums due for services]:
Lord Morris Lord Morris moved Amendment No. 56:
Page 43, line 8, after ("services") insert ("or under an agreement with respect to telecommunication services provided by it (subject to any term of the agreement to the contrary)").
The noble Lord said: My Lords, this is purely a drafting amendment. I believe that it aids the Bill in that it clarifies and shortens Clause 52. Your Lordships will be aware that there is no substantive change to the meaning of this clause, with one minor exception. By drafting effectively subsections (1) and (2) in this way, the phrase "subject to any term of the agreement to the contrary" attaches to both a certificate under a scheme under Section 20 and to an agreement with respect to telecommunications provided other than under a scheme under Section 20. I do not think that this does any harm at all. As I see it, there is no reason why British Telecommunications should not wish to write this presumption of documentary evidence out of their scheme under Section 20, should they so wish. I believe that this is a very minor improvement to the Bill. I beg to move.
Lord Lyell: My Lords, I am sure the House will appreciate the efforts of my noble friend to add clarity to the Bill tonight. Of course we accept my noble friend's wish that the Bill should include nothing that is excessive and indeed that he wishes to cut any unnecessary verbiage from the Bill, and, above all, to see that it is as short and as understandable as possible. But I hope my noble friend may be able to accept that his drafting is not adequate in this particular case. The proviso, "subject to any terms of the agreement to the contrary", has to qualify the verb "shall" as in line 14 on page 43 of the Bill and the amendment simply cannot be construed in a way that is consistent with what is in the Bill.
Although it might be possible to combine the subsections 52(1) and 52(2) we believe that the outcome would be more than a little clumsy and, above all, more difficult to understand and I am afraid that would vitiate the laudable efforts of my noble friend to see that the Bill is clearer than he believes it to be at the moment. I hope my noble friend will accept that the Bill as it stands is as clear as we can make it.
Lord Morris: My Lords, I am grateful to my noble friend for that explanation and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 57 not moved.]
Clause 54 [Power of local authorities to contribute towards new offices or facilities]:
Lord Lyell Lord Lyell moved Amendment No. 58:
Page 44, line 2, after ("authorise") insert ("the giving of an undertaking as respects").
The noble Lord said: My Lords, this is a brief drafting amendment. Subsection (1) of the clause provides for the giving of undertakings by local authorities which can recompense British Telecom's
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losses in connection with facilities which it provides and not for local authorities to authorise British Telecom to provide those facilities. The amendment corrects the drafting of subsection (3) accordingly. I beg to move.
On Question, amendment agreed to.
Clause 56 [Interpretation and extent of Part I]:
Lord Lyell Lord Lyell moved Amendment No. 59:
Page 45, leave out line 10.
The noble Lord said: My Lords, I hope it will be for the convenience of the House if I speak also to Amendment No. 82. These are two simple drafting amendments which move the definition of the word "pension" from Clause 56, interpretation and extent of Part to Clause 84, the general interpretation. This is necessary because the term "pension" appears also in Clause 75. I beg to move.
On Question, amendment agreed to.
Clause 57 [Powers of the Post Office]:
The Deputy Speaker The Deputy Speaker: My Lords, Amendment No. 60 should read "Page 46, line 4, after ("For") insert ("paragraphs (a) to (d) of").
Lord Lyell Lord Lyell moved Amendments 60–64:
Page 46, line 4, after ("For") insert ("paragraphs (a) to (b) of")
Page 46, leave out lines 6 and 7 and insert ("paragraphs")
Page 46, line 21, after ("authorities") insert—
("(1A) At the end of that subsection there shall be inserted the words")
Page 46, line 28, at end insert—
("(1B) After that subsection there shall be inserted the following subsection").
Page 47, line 31, leave out ("This section") and insert ("Subsections (1) and (2)").
The noble Lord said: My Lords, I wish to point out first of all that there is a small printing error in the Marshalled List. I apologise to the House for this. I understand that Amendment 60 should read "after ("For") insert ("paragraphs (a) to (d) of"). Granted that, I hope it will be for the convenience of the House if I move Amendments Nos 60 to 64 en bloc and speak also to Amendments 97 and to 99 to 102 inclusive.
This group of amendments, which appears numerous and possibly complicated, performs, as I am sure the House will accept, a simple and, I hope, a useful function. At present, Clause 57 sets out the powers of the new Post Office and this is due to come into operation on the appointed day after the passage of this Bill. This is clearly the case because, by virtue of Clause 1(2), British Telecom will not take on its full powers until that day. But the Post Office has notified us that it would like to take advantage of its new power to provide counter services for nationalised industries before that date. Therefore these amendments provide this particular power contained in Section 7(1)(f) of the 1969 Act as inserted by Clause 57(1) of the Bill tonight. This power will come into effect at Royal Assent. I am sure the House will agree that the Post Office should be allowed to avail itself of its new power as it wishes at the earliest opportunity.

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I hope, therefore, the House will support this vast block of amendmens. I beg to move.
Lord Ponsonby of Shulbrede: My Lords, I welcome the tabling of these amendments and I am only sorry that the Government have not been able to see fit to extend the range of counter services which the Post Office could provide to the private sector as well as to the nationalised sector.
On Question, amendments agreed to.
Clause 59 [Redistribution of property, rights and liabilities among wholly owned subsidiaries]:
Lord Lyell Lord Lyell moved Amendments Nos. 65 and 66:
Page 49, line 19, after second ("to") insert("a transfer by or").
Page 49, line 20, after ("as") insert ("a reference to a transfer by or").
The noble Lord said: My Lords, I spoke to these amendments when I moved Amendment No. 7 earlier this afternoon. I hope it will be for the convenience of the House if I move Amendments Nos. 65 and 66 together. I beg to move.
On Question, amendments agreed to.
Clause 65 [Exclusive privilege of the Post Office with respect to the conveyance etc. of letters]:
The Earl of Gowrie The Earl of Gowrie moved Amendments Nos. 67 to 69:
Page 55, line 1, leave out ("Part") and insert ("section and section 66—
"correspondent", in relation to a letter or other communication, means the sender or the addressee;
"employee", in relation to a body corporate, includes any officer or director of the body corporate and any other person taking part in its management, and "employer" and other cognate expressions shall be construed accordingly;")
Page 55, line 7, leave out ("the sender or the addressee") and insert ("either correspondent")
Page 55, line 14, leave out ("Post Office Acts") and insert "1953 Act, the 1969 Act or this Part").
The noble Earl said: My Lords, Amendments Nos. 67 to 69 are formal drafting amendments. I beg to move.
On Question, amendments agreed to.
Lord Lyell: My Lords, I understand it has been agreed through the usual channels that this might be a convenient place to adjourn consideration of the Bill on Report. I see my noble friend, who will have further information on this.
Lord Sandys: My Lords, I think this would be a convenient moment to adjourn the consideration on Report. I beg to move.
Moved accordingly, and, on Question, Motion agreed to.

SOUTH YORKSHIRE BILL
Brought from the Commons; read 1a, and referred to the Examiners.