HL Deb 15 June 1981 vol 421 cc448-90

Report stage resumed.

Clause 4 [Redistribution of property, rights and liabilities among wholly owned subsidiaries]:

4.2 p.m.

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 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 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 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 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 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 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 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 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 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 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—

  1. (a) the interests of national security; or
  2. (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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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: 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.

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, 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 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 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, 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 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 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 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 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 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.

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.
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.
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 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 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, 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 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". 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 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 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 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.