HL Deb 25 June 1981 vol 421 cc1158-68

3.22 p.m.

The Minister of State, Department of Employment (The Earl of Gowrie)

My Lords, I beg to move that this Bill be now read a third time.

Moved, That the Bill be now read 3a.—(The Earl of Gowrie.)

Lord Glenamara

My Lords, before we part company with the Bill I should like to say a few words about it—

The Lord Chancellor

My Lords, I think that perhaps the noble Lord would find it more convenient if we now proceed to deal with the amendments. He will have an opportunity to speak on the Motion that the Bill do now pass.

On Question, Bill read 3a, with the amendments.

Clause 6 [General control and supervision by the Secretary of State]:

Lord Caccia moved Amendment No. 1: Page 11, line 4, leave out ("and").

The noble Lord said: My Lords, the general purpose of this amendment is on the same lines as an amendment that I moved with the noble Lord, Lord Orr-Ewing, on Report. As I undertook during that debate, I have in the meantime carefully studied what the Minister said in arguing that an annual report by the Secretary of State was unnecessary. On that occasion he pointed out, quite correctly of course, that apart from the annual report from the British Telecommunications Corporation, the Secretary of State must lay all directions before each House of Parliament, and that all general licences must be published, as must be notification of an approval of a standard or variation in, or any withdrawal of, such a standard. The Minister also said that any statutory obligation to produce an annual report would add to administrative and other costs, which the Government are, very properly, keen to keep down.

Naturally I accept all that. But, after study and following consultation with the industry, I would suggest to your Lordships that the situation is still not wholly satisfactory. The Minister has repeatedly assured us that the object of the Government is to be as helpful as possible in administering the Bill—helpful to industry, the British Telecommunications Corporation, and others. Of course I accept those assurances, but I would urge that it could be of real value to industry for the Secretary of State at least once a year to give some account of his role and the reasons which lay behind the directions, licences and approvals which he has given.

At the moment the future of the industry and the development of this new technology is to a large extent new territory. It is a part of industry in which great hopes must lie for us in the future. It will entail lead time and long-term investment. These factors surely suggest that the Secretary of State could help those who are investing public money, in the case of British Telecommunications, and private money, in the case of in dustry, by a system of a regular report over and above the incidental notifications and other measures which the Bill requires from time to time.

As to the question of cost, your Lordships may remember that in a Written Answer on 12th January it was stated in another place that the current estimated average cost for oral Answers was £50 and for written and priority Written Answers it was £30. What is more, even at that cost there are limitations to the kind of information that can be reasonably extracted from Ministers by this method.

As I stated on Report, and as was confirmed by the Minister himself, the British Telecommunications Corporation is in any case required under the Bill to produce an annual report, which the Secretary of State will be under statutory obligation to lay before each House of Parliament. Is it really too much to ask, as the amendment suggests, that in doing so he should in a covering note make his own comments and give an account of the performance of the wide-ranging responsibilities which are his under the Bill?

If, as seems unlikely at least in the near future, he has no comments to make, then a covering note need consist of only two paragraphs. Paragraph 1 would state baldly that in laying the corporation's report he had no comment to make. Paragraph 2 might add that he attached a list of the directions, notifications and approvals that he had given in the course of the year in question. As I have said, I think that it might be unlikely in the next few years, as we are entering this relatively unexplored territory, that any Secretary of State would wish to be as costive as that, especially if he continues to wish to be as helpful as he can to industry and others. Therefore I trust that, on reflection, the Minister will find the amendment reasonable and indeed acceptable. I beg to move.

Lord Lloyd of Kilgerran

My Lords, I wish strongly to support the amendment so forcefully and so persuasively put forward by the noble Lord, Lord Caccia, on behalf of British industry. As has been said over and over again during the course of the long discussions on the Bill both in your Lordships' Chamber and in the other place, the importance of the telecommunications industry to the recovery of the economy and to the generating of jobs cannot be over-emphasised. Accordingly, the responsibilities of the Secretary of State under the Bill are very onerous and are extremely significant to the development of our economy. Consequently, it seems to me, if I may put it quite briefly and bluntly, to be plain commonsense that, in the national interest, the Secretary of State should under Clause 6 of the Bill give an account of the performance of his responsibilities in the way that the noble Lord, Lord Caccia, has indicated.

Lord Robbins

My Lords, I should like to express some perplexity about the fact that there should be any opposition to this suggestion. One has learnt so much from the elucidations already furnished by the noble Earl in the course of our discussions of this new experiment in industrial structure that one is tempted to wish for a more systematic exposition of the way in which policy evolves. I can only believe that the wish must be to save the time of the Secretary of State himself, but I hardly find that convincing having regard to the multiplicity of talent which he will have at his disposal.

Lord Bowden

My Lords, I wonder whether I could add a little to what has been said. I should like to ask this specific question. How are the accounts of the organisation to be presented? The reason why I raise this point is that for many years the Post Office survived, and is with us to this day, because the accounts were drawn up in what we now realise was a wholly irregular way. I think it is perhaps worth while to recount this story for the benefit of those who may not have heard it. In 1949 the accountant to the Post Office, which was then under the control of the Government, inserted an item in the accounts to provide half a million pounds towards the maintenance of capital. This item was kept in the accounts (because accountants are conservative men) and two years ago, when I heard this story from Sir William Barlow, it amounted to £350 million and was approximately equal to the declared profits of the Post Office as a whole in that year.

It is because this money was kept in the Post Office and was used by them for the capital expenditure which, mainly, will now be the responsibility of this particular section of it, that the Post Office is with us today. In effect they devised a system for indexing their accounts which did not accord with any of the mechanisms proposed by the chartered accountants in their various exposure documents but which, nevertheless, has been exceedingly effective. I want to know whether, when the accounts are presented, they will be presented in a form based on historic costs, as is now the case with all the rest of industry, or whether they will be based on the old, traditional and wholly unique system of indexing accounts which the Post Office has been able to get away with, to the enormous advantage of everybody, ever since 1949.

It is a most obscure point but in fact it contains the secret of the success (such as it has had) of the Post Office in surviving at a time when, for many years, this country invested less in telecommunications in general than did any other country in Western Europe.

The Earl of Gowrie

My Lords, on the specific question put to me by the noble Lord, Lord Bowden, I understand that the accounts will of course be available in British Telecom's annual statement which has to be laid before Parliament, but if the noble Lord will be so kind as to allow me to check on that I will do so and will also write to him on the methodology employed by the corporation in laying its accounts. I imagine it is the same as in the case of all the other public sector industries, but I should like to check it if I may.

The noble Lord, Lord Caccia, has once again put forward very succinctly and clearly his arguments for requiring the Secretary of State to make an annual statement commenting on British Telecom's annual report and covering the exercise of all his powers under the Bill. The noble Lord feels that, in addition to all the statutory requirements already laid by the Bill on the Secretary of State to publish or notify Parliament of his actions, there should be a still further requirement to publish an overall statement once a year to draw everything together; or, in the words of the noble Lord, Lord Robbins, in support of the noble Lord, Lord Caccia, in order to achieve a more systematic exposition of the matters involved.

I have some sympathy with this view, although I also remind the House of the very many provisions in respect to information that already exist. But if it will meet the purposes of the noble Lord, Lord Caccia, with which I am in some sympathy, as I said, I am prepared to give an undertaking that the Secretary of State will report to Parliament from time to time, not necessarily strictly on an annual basis, which might give us some difficulty in respect of other and comparable corporations, but as and when necessary in order to keep the House informed of what actions he is taking under the Bill in connection with the liberalisation of the telecommunications régime.

I hope that if that undertaking, allied with the other provisions that exist in the Bill for communicating information about the corporation and about the Government's policies, is acceptable to the noble Lord and to those like the noble Lord, Lord Lloyd of Kilgerran, who supported him, he might feel that he would not press his amendment.

Lord Caccia

My Lords, while thanking the Minister for this response and particularly for the precise words in which he put it, I would be ready, as far as I am concerned, to withdraw this amendment. If in the passage of time it is found that this particular procedure does not meet all the requirements which can reasonably be expected by industry and other interested parties, then naturally there will be further opportunities to reconsider whether another look should be taken at the need for an annual report. With your Lordships' leave, I beg to withdraw this amendment on that understanding.

Amendment, by leave, withdrawn.

[Amendment No. 2 not moved.]

Clause 58 [Powers of the Post Office]:

The Earl of Gowrie moved Amendments Nos. 3 to 5:

Page 47, line 31, leave out ("by whomsoever run")

Page 47, line 33, leave out ("a telecommunication") and insert ("such a")

Page 47, line 39, leave out ("by whomsoever run").

The noble Earl said: My Lords, with the leave of the House I should like to speak to, and move, Amendments Nos. 3, 4 and 5 together. These three Government amendments to the definition of telepost service in Clause 58 are merely drafting, and put it beyond doubt that the Post Office may transmit telepost messages by a telecommunication system no matter who runs the system; that is, they will not be confined to using their own system. I hope your Lordships can agree to these amendments for clarification. I beg to move.

On Question, amendments agreed to.

Clause 59 [General Duty of the Post Office]:

The Earl of Gowrie moved Amendment No. 6: Page 47, line 43, leave out ("the Post Office Acts") and insert ("Part III of the 1969 Act or this Part").

The noble Earl said: My Lords, this amendment is consequential on Amendment No. 78 made at the Report stage, which removed the definition of the Post Office Acts in the Bill. The words inserted by this amendment make good that oversight. I beg to move.

On Question, amendment agreed to.

Clause 80 [Amendment of the Telegraph Acts:

The Earl of Gowrie moved Amendments Nos. 7 to 9:

Page 68, line 13, leave out ("As soon as may be")

Page 69, line 1, after ("and") insert ("subject to subsection (5)")

Page 69,line 3, at end insert— ("(5) Nothing in subsections (2) and (3) shall affect the operations of sections 26 to 29 and 34 of the said Act of 1863 in relation to any hearing begun before the appointed day.")

The noble Earl said: My Lords, with the leave of the House, with Amendment No. 7 I should like also to speak to Amendments Nos. 8 and 9. The first amendment removes some unnecessary words from the beginning of subsection (2) of Clause 80, while the other two are transitional provisions to make sure that any arbitration proceedings which have started before this new provision takes effect can be continued. I beg to move.

On Question, amendments agreed to.

Schedule 6 [Enactments repealed]:

The Earl of Gowrie moved Amendments Nos. 10 and 11:

Page 131, line 10, column 3, at end insert—

("In the Schedule, paragraphs 7 to 9, 12 and 13.").

Page 131, line 20, at end insert—

("1 & 2 Geo. 5, c. 39. The Telegraph (Construction) Act 1911. Section 6(2).").

The noble Earl said: My Lords, with the leave of the House I should like to move Amendments Nos. 10 and 11 together. These amendments add a further repeal of spent legislation and simply help to tidy up the statute book. I beg to move.

On Question, amendments agreed to.

3.39 p.m.

The Earl of Gowrie

My Lords, I beg to move that this Bill do now pass.

Moved, That the Bill do now pass.—(The Earl of Gowrie.)

Lord Glenamara

My Lords, we believe that this Bill is both foolish and irresponsible. It is irresponsible because it risks great damage to the efficiency of a vital element in our economy, in our defence arrangements and in our social life. Noble Lords can go out of this Chamber and into a telephone kiosk and dial any subscriber in the Kingdom, from Land's End to John O'Groats, immediately. By pressing a few more buttons they can speak to anybody on the other side of the Atlantic or in Australia or New Zealand, because we have a highly efficient telecommunications system. It has its faults, which I discussed fully on Second Reading, faults which are due to under-investment; nevertheless it is one of the best telecommunications systems in the world. The postal service in this country, again with all its faults, is infinitely better than almost any postal service in the western world. As I have said before in the House, any noble Lords who know the United States or Canada will agree that the postal service in Britain is infinitely better.

These two systems, the postal system and the telecommunications system, comprise the Post Office, the public corporation set up in the 1966–70 Parliament by the Labour Government. I, myself, announced the decision to turn the GPO into the Post Office Corporation just before the Summer Recess in 1966, to free it from the constraints of the Civil Service and to allow it to act in a commercial way.

Now, this irresponsible Government are going to replace the corporation with two quite separate bodies—an emaciated Post Office and an emaciated telecommunications business called British Telecom, each of them competing for business in the lucrative areas with private enterprise licensed by the Secretary of State, each surrounded by a number of partially-owned subsidiary companies, again, in lucrative areas.

I would remind the House that it is not just a matter of commercial judgment on the part of the two bodies—the corporations—whether they set up subsidiaries, because the Secretary of State is taking power to direct them to set up subsidiaries. In our considered opinion, this will turn one of our finest British institutions into a veritable dog's dinner, a mish-mash of private enterprise and public enterprise which it is difficult to understand unless we remember that its author is Sir Keith Joseph. It is his brain child and his, whim, just as the reorganisation of the Health Service was his whim. He is assisted by civil servants who, because the report of my noble friend, Lord Fulton, was unfortunately never implemented, are still gifted amateurs who know little more about telecommunications than he does. I do not say that in any derogatory sense at all, but they are still amateurs. They move very quickly. I know most of them. Like the Secretary of State most of them have done a Cook's tour of the United States for 7 or 14 days and they have come back here and believe themselves qualified to pontificate to us about how our telecommunications should be organised.

The initial decision to break up the Post Office, and all the subsequent consequential decisions were made for purely political reasons. The noble Earl, Lord Gowrie, and other noble Lords admitted that during our long discussions. That is one fact that we have established. They have not been made for business reasons; the noble Earl himself has said that in terms. Let me read a quotation to noble Lords: Decisions are being made for political and not for business reasons. The process has been managed in such a way as to damage the long-term interests of the industry". That is not from a Labour Party spokesman, it is not from a union spokesman; it is from a senior representative of the British telecommunications industry.

The object of this Bill has nothing to do with efficiency, because it is going to result in a much less efficient postal system and telecommunications. So far as telecommunications are concerned, the Secretary of State will receive evidence this week from the Beesley Report which will point out that it will benefit only 4.6 per cent. of business subscribers with quarterly call bills of over £300. Approximately 95 per cent. of business subscribers and 100 per cent. of domestic subscribers will lose out under the new pattern under this Bill. It is being done solely to enable investors to pillage the Post Office.

The Government are proposing in this Bill to do exactly the same thing with Cable and Wireless, our most successful publicly-owned company and one of our finest companies. During the Committee stage and Report stage my colleagues and I made certain forecasts about what would happen under the Bill. Almost every day, evidence is accumulating to support the views we put. I strongly urged the view that the rural areas would suffer under this Bill. I have here a recent report in the Western Daily Mail. This report makes it clear that rural areas will suffer. I quote: With the new Telecom Bill going through Parliament to allow competition in the telephone market and inevitably cutting Post Office profits, the organisation is determined to go through with its plans to cut off kiosks that make a loss". Then a British Telecoms spokesman was quoted, who said: We realise the social need for the kiosks and we do not go into this sort of thing lightly but no company can be expected to give such a big slice of its revenue to social needs". The noble Lord, Lord Mottistone, spoke about this. He is not with us today. He said, "So what? The rural communities can look after themselves. If their telephone kiosks are not paying then they ought to raise the money locally". We on this side believe that Eaton Square ought to subsidise a remote village in the hills of Cumberland or the Western Islands. This from the Western Mail illustrates another point: Community council clerk, Mr. Jones, said, 'The Post Office has offered to leave the kiosk there so long as we can either subsidise it or guarantee the revenue they expect, but we think it is a national service and should not be looked upon as a local thing. Travellers and visitors use the box in emergencies and the Post Office has a national responsibility to keep it there". The point is that British Telecom will get the blame for the effects of this Bill. The Government and the noble Earl know quite well that this Bill will reduce services for many customers and will increase costs for almost all customers. Why does not he, why do not the Government, stand up and acknowledge their responsibility and justify what they are doing on the grounds of their ideology? That would be fair. What is not fair is for the noble Earl, as he has done throughout the Committee and Report stages, to fail to acknowledge what he knows the consequences of the Bill will be. I think that the only admission that I extracted from him was that the quarterly rental would rise by £6 if the Beesley Report is implemented, as it almost certainly will be. He said that that is nothing; that £6 on a quarter's rental is nothing. It will happen in two or three years' time and inflation will be such in the meantime that £6 will not be important.

I have also warned the Government about what they are doing to Cable and Wireless. What they are doing to this company is, I think, quite shameful. The scene is being set for it to be pillaged for loot by the Chancellor and by investors. Ever since the Government came to office, I have warned them that they are in danger of destroying this company which has existed for over 100 years. The greater part—95 per cent.—of its revenue and almost the whole of its profit is earned by providing international telecommunications for foreign countries under franchises. I warned the Government that if they persisted in this Bill there was a danger of those independent countries nationalising the operations of Cable and Wireless within their territories. I have read press reports about the three major profit-earning areas for Cable and Wireless which account for 80 per cent. of its profit: Hong Kong, Bahrain and Bermuda.

Hong Kong, we have heard from the press, has driven a hard bargain for its acquiescence in the Government's proposals. Now the company will have to pay 40 per cent. of their revenue to the Hong Kong Telephone Company (which is independent) and have had to agree to a local company being set up in which there will be Hong Kong directors and which will give the Hong Kong Government power eventually to acquire the equity. I should like to ask the noble Lord, what will happen to the profits which Cable and Wireless earn in Hong Kong? Up to the present all profits have been remitted to the United Kingdom and with that profit it has been possible, as I have said, to subsidise such places as St. Helena, the Falkland Islands and others. In future, if this Hong Kong company is set up, that will not happen.

I read in the press also that talks are taking place with the Bahrain Government, which wants to have a similar arrangement. I am told that the Prime Minister of Bermuda is quite furious because Bermuda does not have the same arrangments, and he is demanding that it should. If Cable and Wireless lose the major part of their revenue in these three areas, the company will virtually cease to exist.

Again referring to a report in the press which I read this last weekend, if the Government feel that Cable and Wireless can find an alternative role for themselves by joining a consortium in the United Kingdom to skim off the cream of British Telecom by providing an alternative network—for example, to Birmingham—then the Government and Cable and Wireless had better think again. We should like to make it absolutely clear to everyone concerned that an incoming Labour Government would give an immediate directive to stop this sort of activity. The essential function of Cable and Wireless, which they have carried out with brilliant success for the past 100 years and which has brought great profit to this country—the company paid a dividend of £10 million to the Government last year—is to provide telecommunications for independent countries overseas. Both these excellent British institutions are shortly to be boarded by the piratical hordes led by Sir Keith Joseph and the noble Earl, Lord Gowrie. All I can say on behalf of my noble friends and for myself is that I hope and pray that both institutions will survive until sanity is restored by an incoming Labour Government.

3.51 p.m.

Lord Lloyd of Kilgerran

My Lords, we on these Benches have at all times supported the objectives of this Bill. There can be no doubt that the Bill is one of the most imaginative measures to come before this Parliament. We have endeavoured to contribute to the many key issues that have arisen, by means of proposing amendments and by making speeches during the hours of speeches upon this measure. I am sorry to say that we on these Benches cannot record many outstanding successes in regard to our amendments, but nevertheless we feel that the Bill requires our support at this Third Reading. Here, I should like on my own behalf to pay a personal tribute to the noble Earl, Lord Gowrie, and his team for the clear, careful and courteous way in which they have received the amendments and contributions which have come from these Benches.

We still have a number of reservations about the framework of the telecommunications industry as envisaged by the Bill. The development of this industry will require massive investment and we would have preferred to see the Government being more sympathetic to the proposals we made from these Benches for a more flexible system of investment, unconstrained by the rigidity of the public sector borowing requirement. As a result of the contribution made by the noble Lord, Lord Byers, on Second Reading, I feel that in the course of this debate we have made some progress even in this very important matter.

At Committee stage I submitted some amendments to try to ensure that the high standards and international value of research undertaken by the Post Office will not in any way be inhibited by this Bill. I received from the noble Earl, Lord Gowrie, some assurances that so far as research was concerned the Government and British Telecom will maintain those high standards. On a personal note, on behalf of the innovators who are members of the staff of the Post Office and of British Telecom, may I express the hope that the reward for their innovations will be even more generous than they have been in the past. My Lords, for these reasons we support the Third Reading of the Bill.

3.55 p.m.

The Earl of Gowrie

My Lords, when I moved the Second Reading of this Bill I suggested that it was one of the most important Bills of this Parliament, and I think that the subsequent debates in your Lordships' House have confirmed that judgment. Telecommunications are and will continue to be of fundamental importance to the country. At the moment we are standing on the threshold of very rapid developments in telecommunications. The new technologies—especially those concerning information handling—will revolutionise most of our lives. We need a new framework for new telecommunications in order to make this revolution possible, and we need a framework that will enourage innovation and give entrepreneurs the chance to provide new services—and thereby to create new jobs.

Quite clearly in our judgment, this can only come about with competition, and this Bill will introduce much needed competition into the industry. We have had a number of debates on this subject and I do not consider that it is necessary for me to go over all the ground again this afternoon. Both the Post Office and British Telecom affect the lives of everyone in this country, and this fact has been reflected in the variety of important discussions which we have had at Second Reading, at Committee, and at Report. We have debated privacy, interception, the relationship between Ministers and nationalised industries, and the proper liability for the mail and for telecommunications. We have also debated the right to strike and other industrial relations issues, and there have been a number of stimulating debates on the means of financing the investment programmes of nationalised industries. May I say to the noble Lord, Lord Lloyd of Kilgerran, that we too should like to escape from the rigidities of PSBR, but alas! these rigidities are imposed less by ourselves than by the national and international money markets of the world.

I do not want to start a further debate on this very important subject, but I believe that anyone who reads the proceedings on this Bill in the Official Report will appreciate the high level of discussion and will indeed learn a lot about an exciting industry. I yield to no one in my desire to find a solution which will allow investment in profitable projects, which stimulates employment, but which is compatible with wider economic objectives. In that connection I am sure that your Lordships' House has welcomed the recent increase in British Telecoms' external financing limit, to which I drew your Lordships' attention just last week.

This has been a long and complex Bill, reflected by the time given to it by your Lordships' House in considering more than 350 amendments. The amendments reflect the wider interests in the Bill and in many cases they have been the result of consultation with several groups and bodies. Before sitting down I should like to pay tribute to the most helpful way in which your Lordships' House has dealt with the Bill, and particularly to the noble Lords on the Opposition Benches for the important debates which they have stimulated and for their interest. We have of course been rapped over the knuckles by the noble Lord, Lord Glenamara. He said today that it was a foolish and irresponsible Bill. I must still express some astonishment at this comment. in the old days the Labour Party used to stick up for the poor. Now they are never so zealous as when defending some giant corporation or monopoly, so long as it is one in the public sector.

I shall pass over what seems to me to be extraordinary remarks by the noble Lord, Lord Glenamara, about civil servants. If what the noble Lord said were to be taken literally there could be no advice ever given to Governments from anyone except those with a vested interest. I would point out to the noble Lord that all domestic subscriber services, whether they are in Eaton Square or in Little Gidding, so to speak, are in fact subsidised by the business subscriber. I would also remind the noble Lord and your Lordships' House that in keeping down the costs to the subscriber the major element in an industry which employs very many people would be pay restraint.

Leaving the Opposition Benches, there have been many friends on my own side and in other parts of the House who have taken a close interest in the Bill and sought on a number of occasions to improve and clarify it. I am glad that I have been able to accept some of their suggestions, including, to some degree, that made by the noble Lord, Lord Caccia, this afternoon. The Government are very grateful to the whole House for keeping us on our toes.

Lord Ponsonby of Shulbrede

My Lords, before the noble Earl sits down, I should like to echo the remarks of the noble Lord, Lord Lloyd of Kilgerran, about the warm response that the noble Earl gave to many of the amendments moved on this Bill. But I should like to point out that of the 350 amendments tabled, 110 were tabled by himself. All of these were accepted but not one of the amendments tabled by the Opposition—many of a constructive nature—received any constructive response at all.

On Question, Bill passed, and returned to the Commons.