HL Deb 05 May 1983 vol 442 cc239-68

7.55 p.m.

Committee stage resumed.

[Amendments Nos. 3 to 5 not moved.]

Lord McIntosh of Haringey moved Amendment No. 6: Page 2, line 20, at end insert ("and after consultation with the appropriate trade unions")

The noble Lord said: It is a peculiarity of the way in which the Bill is organised that subjects of very great moment appear to be introduced at the outset of this Committee stage on matters which appear to be relatively trivial, but the issues which are raised, even by these perhaps minor matters of the composition and administration of the Office of Telecommunications, do have harmonics which will undoubtedly reverberate (if that is the right word for harmonics) later in the Bill. We come with Amendment No. 6 to an issue—the issue of the consultation with the appropriate trade unions—which has very considerable importance throughout the later stages of the Bill and to which we shall undoubtedly be making future reference.

It is not quite so unimportant as the Government would have us believe. Ministers in another place pretended to think, or may indeed genuinely have thought, that a comparable amendment put down there was simply a matter of terms and conditions of service. The assurance was given by a Minister in the other place that the terms and conditions of service of the staff of the Office of Telecommunications would be comparable with those of the Civil Service. I am quite sure that that assurance was accepted by my honourable friends there. Indeed, the noble Baroness, the Leader of the House, said in response to a Question this afternoon that industrial relations in the Civil Service are good. I would not attempt to deny that. But the issue here in this clause and in the amendment is much wider than the issue of the terms and conditions of service. It is about the appointment of staff and about the very complex range of subjects which the Office of Telecommunications and the Director General of Telecommunications will have to deal with with their relatively small staff.

Just as in Amendment No. 2 it was urged from the Opposition Benches, and from the Liberal Benches in particular, that under these circumstances the director general ought surely to have as much help as he can in dealing with these complex issues with the outside world, so I argue that it is highly desirable that the director, in formulating his own staffing policy, should consult with the relevant trade unions. This may be something which is totally unprecedented. The noble Lord, Lord Campbell of Alloway, is not here to object to it on those grounds, and I am sure that the noble Lord, Lord Trefgarne, would not dream of objecting to it on those grounds. The fact that it may be unprecedented is not an argument for not trying it here.

I say that with particular reference to the telecommunications industry. In the telecommunications industry, on consultation, cooperation between management and trade unions and participation by the trade unions in the management of the Post Office (which was the case in those two years of the experiment to which I have referred up until 1979), the record is first class. It has gone together with good management. It has gone together with commercial and technological success and advancement. It has gone together with a vast expansion in the service provided, with only a very small increase in the numbers of people employed for the purpose. Surely if ever there was to be a case for starting correctly at the beginning, even in this minor way, and having the trade unions involved in initially establishing the Office of Telecommunications, it should be on this occasion, and in this industry.

As I have said, it is not simply a matter of the terms and conditions. We must consider those who are experienced in the Civil Service unions and in the telecommunications unions, those who are experienced in the telecommunications industry and in the complexity of Government control of that industry, which no doubt we shall be referring to later this evening and on days to come. Such people will, I am sure, feel that the experience gained by the trade unions over the years ought to be shared with the Director of Telecommunications as he makes his decisions about staff and as he represents his views to the Treasury about numbers of staff and terms and conditions of service.

As I say, this may appear to be a minor matter, but in fact it is a question of starting correctly in the way that we mean to go on. It is also a question of treating the industry—and all sides of it—with the respect which it has come to deserve and which in the past has been shown to be so successful. I beg to move.

Lord Oram

In rising to support my noble friend who has moved the amendment I make only two points. The first is that I am glad that he has made it quite clear that the addition of the words contained in his amendment applies to the phrase "as to numbers" just as much as to the phrase, as to terms and conditions of service". That was certainly my reading of the amendment, and it seemed to tally with what my noble friend has in mind. It is desirable that the trade unions should be consulted specifically under the provisions of the Bill not only on terms and conditions, which is obvious, but also on wider considerations of staffing policy. That is the first reason why I support my noble friend's amendment.

My other reason is also in line with what my noble friend has said, and here I wish to reiterate a point that I made on Second Reading. Lest any Conservative members of your Lordships' Committee should be in fear and trembling whenever the words "trade unions" are introduced into our discussions, I can assure them that in this particular case we are dealing with trade unions which have a long record of responsible trade union action. As I put it at Second Reading, within the spectrum of TUC membership they are among the most reliable and responsible of trade unions. I believe that because of the record which my noble friend has spelled out, as well as on grounds of general principle, these trade unions are entitled to have the amendment written into the Bill.

8.4 p.m.

Lord Trefgarne

I am not quite clear how the noble Lord sees the amendment working in practice. Who would decide which were the "appropriate" trade unions? The assumption must be that it would be for the director to interpret that. In any event, however this question is decided, I think that the amendment is undesirable. Of course I appreciate the noble Lord's concern about the need to consult trade unions about manning levels. But, as the noble Lord, Lord McIntosh, has already indicated, he appreciates Oftel's staff will be civil servants, and there already exist long-established procedures for consultation on all the matters to which he referred in his opening remarks. Terms and conditions of service, including salaries, are agreed centrally. To add a further level of consultation would at best be unnecessary, and I submit might also undermine existing procedures.

I really believe that there is nothing between the noble Lord and me on this matter. We both agree that the objectives which he has described are desirable; but I suggest that they are already achieved by the arrangements at present in place.

Lord Bruce of Donington

I hope that the words of the noble Lord the Minister on this particular aspect of the Bill are not his last on the subject. I do not know whether those who framed the Bill as originally presented in another place had any real concept of what they were doing, other than presenting the various finance houses within the city with a very good opportunity to make large sums of money. This is of course implicit in privatisation.

I have before me the accounts of British Telecom, which show in extended form the results over the past six or seven years. If at any point the noble Lord wishes to challenge me and say where British Telecom has proved to be below the standard of efficiency and service to which the Government very often pay at any rate some lip service, I should be very glad to be reproached, and indeed to be cross-examined on the financial results shown in the accounts.

The noble Lord surely must realise—as I believe the country realises—that the entire fortunes of British Telecom over the years, with the progressive improvements that have been effected within it, have in the main been the result of very dedicated effort by highly specialised technicians, scientists, and engineers, as well of course as some other employees who do not have functions which call for such high qualifications. One is not dealing with the trade unions in the form which is very often imaginatively put forward by Mr. Tebbit. One is dealing with people with intellectual abilities and work qualifications much higher than those of Mr. Tebbit himself, and probably higher than even those of the Secretary of State referred to in the Bill.

Over the years the people to whom I refer have been responsible for the entire conduct of British Telecom's affairs and have played the main part in its continued success. They belong to their respective trade unions, according to their particular vocations as scientists, engineers, technicians, or whatever they may be. They know what the Government do not know. They know how the industry runs. They know its functions, its real needs, and its day-to-day work. They are not subject to the periodical political arbitrament of elections. They have their vocations to which they dedicate themselves and in which they work. They are a fine body of men. The qualifications of many of them—technically, scientifically, and administratively—exceed those held by any member of the present Government. Any insult that can be—

Earl De La Warr

May I—

Lord Bruce of Donington

I shall give way to the noble Earl in a moment, when I have completed my sentence. If the noble Lord the Minister can think of any greater insult to these people than that their unions—which they support—should not even be consulted, then he in turn is insulting them. If the noble Lord looks at his own speech again, although he said—

Lord Trefgarne

The noble Lord has, I fear, become the victim of a misapprehension. We are talking about the staff of Oftel, not that of British Telecom.

Lord Bruce of Donington

I agree. The noble Lord makes my point. If the noble Lord reads those matters set out in Clause 3 of the Bill which the director, now a lone individual with no council to consult, is required to deal with, is it conceivable that he should proceed upon the whole business of making appointments of the staff he requires in order to enable him to deal with his various functions under Clause 3 and elsewhere without consulting the trade unions? No-one disputes the right (I use the term colloquially) of the manager to rule. Non-one disputes the right of the director general, after interview and after examining the CVs of the various applicants for the task, to appoint whoever he wishes. No-one disputes his right and, indeed, his duty, within the parameters of Clause 3 and elsewhere, to have a rough idea or to put forward some rough proposals—he has no council to which he can put them—on the staffing and the qualifications that he needs.

We shall come back to this super-person and the qualifications that he individually requires at a later stage. But can anyone—an ordinary businessman, a professional man or an industrialist—in his right mind, really think that the advice of the council of trade unions in devising the parameters and the staffing would not be of value? The amendment does not say that the director general has to accept any kind of diktat, or anything of that kind. He alone, without the council, is responsible ultimately for doing what he has to do in the appointment of his staff.

I begin to feel sorry for the Government and this pitiable little Bill. I would have thought, once again, that it is plain common sense to consult with the appropriate trade unions. I do not know why Her Majesty's Government seem bent on putting every trade unionist in the country into purdah as some untouchable type. I agree that there is the fashionable Thatcher-Tebbit philosophy that, of course, despises and hates all trade unionism.

Lord Trefgarne


Lord Bruce of Donington

But that cannot be pervasive of the whole Government and all on the Conservative Benches. I would have thought that the amendment was a very reasonable one, and something that ordinary prudent people would do. Do the Government want this industry to function in an atmosphere of complete antagonism? I agree that, like The Economist, most of the responsible unions involved in British Telecom regard the Bill as a complete nonsense. They have expressed hostility towards it. But there is no doubt that their collective wisdom, accumulated over the years, would be of assistance to this "lone ranger" who is to be appointed—at a salary, I understand, of £35,000 a year—in making up his mind on his staffing arrangements. Why do the Government bother to resist? It is ridiculous.

The noble Lord may speak to his brief, which has been prepared in the usual way along the lines of "The Minister might say", "The Minister will argue", or whatever those things are that are immortalised in the programme "Yes, Minister". However, as a matter of common sense, does he really believe in the argument he puts forward when he says that he understands what my noble friend Lord McIntosh says and that there is not all that much between them? If there is not all that much between them, why does he not accept the amendment? There is no diktat in it beyond the statutory responsibility to consult. It is a very reasonable amendment. I will now give way. I apologise to the noble Earl, but he interrupted my flow of argument.

Earl De La Warr

Has the noble Lord finished, or am I interrupting him? I realised where I differed from the noble Lord when he asked if it would not be prudent to discuss these things with the right people. Of course it would. The noble Lord and myself are both businessmen. He runs a large professional firm; I ran a large industrial undertaking. Of course we took advice. Did we not quietly go and have a drink—

Lord Bruce of Donington

Is the noble Earl inviting me to interrupt his interruption?

Earl De La Warn

—in my case with David Basnett and, in his case, I do not know with whom. I do not want to confine this to trade unions. Of course we take advice. But does the noble Lord not think advice is sometimes more useful when you take it of your own volition and not because an Act of Parliament says that you have to do so and because the people you take it from know that you are bound to ask for it? Why do we not leave some things to the good sense of this lonely fellow, the director general, instead of trying to guide his everyday steps by telling him he must do this and that? I think that this is the weakness in what the noble Lord says. I feel quite strongly about it.

Lord Bruce of Donington

I am grateful to the noble Earl. I invite the noble Earl to examine Clause 3 of the Bill carefully. As the noble Earl knows, it was only introduced under pressure and as an afterthought in another place. He will find that precise functions have been laid down.

I do not know about the noble Earl's experience. My experience, at any rate in parliamentary life, which extends over some time in another place and here, is that power can tend to corrupt and that unless certain duties and responsibilities are imposed on people they are likely to behave irresponsibly. I am not saying that the Secretary of State, in his appointment (if, indeed, the Secretary of State, as distinct from the Prime Minister, appoints the director general), will appoint the wrong man to the job, or anything of that kind. I am not saying that the individual concerned would not possess all those high professional, commercial and industrial qualifications that would commend themselves to the noble Earl, Lord De La Warr. I am saying that, in the same way that one has given both the Secretary Of State and the new director certain specific duties—we shall seek to give him more at a later stage of the Bill—so this ordinary elementary duty to consult with the appropriate trade unions should be specified. I am fortified in that belief by what the noble Lord, Lord Trefgarne, has himself stated. The noble Lord will recall that he made a Statement in the House a few days ago on the Alvey Report. I asked him whether in this particular matter and in the consultations that took place afterwards he had consulted with the trade unions. The noble Lord replied, "We sent the TUC a copy".

That is indicative of the Government's attitude at present not only towards the trade union movement as a whole, which they have caricatured so far quite successfully—how successfully we shall see—but also towards some of the highest qualified and responsible people within the whole of the telecommunications industry who themselves have been responsible for the great developments that have taken place scientifically, commercially and industrially in the telecommunications industry over the past 10 or 20 years.

If the noble Lord wishes to persist and declines to accept this amendment, he will have automatically created a different climate within which this Bill, if it ever comes into operation, will ultimately have to function. He will be telling the trade union movement and all those technical people in it—scientists and graduates of all kinds—that he is treating them on the same basis as he treated them dismissively in the case of the Alvey Report, a copy of which was sent to the TUC in lieu of consultation. If the noble Lord thinks that this is good for the future development of the telecommunications industry, that is his affair —indeed, it is the affair of the whole Government.

I am trying to help the noble Lord as best I can based on my own professional, commercial and industrial experience. The noble Lord is making a very great mistake. I am trying to prevent him from injuring himself. Why does he persist in being masochistic about it? All he has to do is the reasonable thing. Unfortunately most of his colleagues are not on the Benches opposite to listen to the arguments that I am deploying. I have no doubt that as and when a Division comes he can rely on their support because they have not listened to the arguments. Even if they had done so perhaps their party loyalties exceed their regard for the national interest.

This is, in a way, a very small point; but, in another way, it is a very big point indeed and I invite the noble Lord to reconsider it before he forces us into the Division Lobby against him.

Viscount Thurso

Before the noble Lord the Minister replies, I wonder whether he can explain something which at the moment is not quite clear to me. In the Bill the words used are: subject to the approval of the Treasury … as to terms and conditions of service". The Minister has said that these terms and conditions would be exactly the same as those centrally negotiated for the whole of the rest of the Civil Service. Do those words mean precisely that, or do they mean that they are subject only to a general approval? It is important to understand that, if they mean precisely that, then the terms and conditions of service will have been negotiated in various joint industrial councils, and as such would have been laid before trade union representatives. I should like to be quite clear about this because I am not at present.

8.24 p.m.

Lord Trefgarne

If I may intervene at this point, I can answer the noble Viscount in the affirmative on that particular matter. As I understand it, the Treasury are responsible for approving the terms and conditions of all civil servants. The employment and the terms and conditions of all civil servants are subject to Treasury approval and this form of words has been put into the Bill so that the terms that would be approved would be identical to those agreed for all other civil servants in parallel grades.

I turn to the speech of the noble Lord, Lord Bruce of Donington. It seemed to me that the noble Lord was running out of arguments in favour of the proposals now before the Committee because most of his speech was concerned with personal invective against my right honourable friend the Prime Minister, my right honourable friend the Secretary of State for Employment, my right honourable friend the Secretary of State for Industry—and more latterly I think that all Members of the present Government came in for the noble Lord's verbal lash. But that is not the issue at this particular moment. What your Lordships are being asked to consider is the terms of the amendment on the Marshalled List.

The proposal which the movers of this amendment, supported by the noble Lord, Lord Bruce, seek to put before the Committee at this juncture, is a proposal which is wholly and utterly without any type of precedent in the whole of the public service so far as I can understand it. There is no provision for the unions to be formally consulted in connection with—

Lord Molloy

I should—

Lord Trefgarne

Just a moment, please. There is no provision for the formal consultation machinery with so-called appropriate trade unions in respect of the appointments to any of the public bodies of which I am aware. I stand open to correction if the noble Lord, Lord Molloy, can think of a parallel body; but, so far as I know, there is none.

Lord Molloy

The noble Lord said that this is without precedent, as he understands it. His saving grace is, "as he understands it". Those of us who have been involved for 30 and 40 years in this form of organisation know how totally and absolutely incorrect his statement was. His saving grace is that he said "as he understands it". He should now get up and say, "as he misunderstands it".

Lord Trefgarne

I am not going to rise to that sort of proposal. What I am saying is that there is no formal consultative machinery, as is proposed in this amendment, in any of the other public bodies of which I am aware. If the noble Lord can think of one then of course I shall give way and hear what he has to say, and if I am wrong I shall immediately withdraw.

Lord Bruce of Donington

I am grateful to the noble Lord. The noble Lord said that it is without precedent. Will he agree that we are dealing with a situation that is without precedent? We are dealing with the case of a highly successful industry that is being privatised. This is a situation without precedent.

Lord Trefgarne

No, the noble Lord is not quite correct. We are considering here the appointments to a regulatory body. That is a very different matter from the appointments to a public corporation or, less still, a private corporation. I stand by what I said: appointments to public bodies, especially regulatory bodies such as this, are not the subject of formal consultative procedures with the trade unions involved or, as I think the noble Lord, Lord Bruce, appeared to imply, almost any trade union that might have some distant interest in the matter. That is not to say that there will not be informal consultations, as we have already discussed in other contexts and at great length. However, if I may say so, I do hope that the noble Lord will not continue to mar the tone of this debate with a number of personal references, as he did earlier on.

Lord Molloy

We must look at the amendment in its context and how it will read as an addendum to Part I of the Bill. Subsection (5) reads: The Director may appoint such staff as he may think fit, subject to the approval of the Treasury". Everything has to be subject to the approval of the Treasury. That is where the power is in this island of ours—it is in the Treasury. And yet we allow little things like this to slip by. I want someone on the Benches opposite to tell me right now who elected these moguls to the Treasury and gave them such massive power. All Governments are guilty of it. It is about time that we realised that they have to adhere to the rules of Parliament as much as anyone else.

Lord Trefgarne

It is of course Ministers in the Treasury who formally take the decisions to which I have referred. As the noble Lord will be aware, when a matter such as this comes before the Treasury it is a Minister in the Treasury who takes the decision on the advice, no doubt, of his officials. However, it is the Minister who takes the decision.

Let me make one additional point. The noble Lord said that the Treasury rules all our lives. I am sometimes tempted to agree with him. However, the fact of the matter is that in past years—and I am not saying just under the previous Labour Administration but under previous Administrations of every complexion—there has not been sufficient adherence to some of the appropriate dictums of the Treasury or in any event to some decent disciplines. I think that in recent years we have paid the price for that.

Lord Molloy

I accept what the noble Lord has said. Therefore, I hope that they will accept an amendment to make it transparently clear to the people of this land that it is the Ministers at the Treasury, because this Bill does not say so and so long as it remains in this form, it is inaccurate. So that must be made clear some time.

Lord Trefgarne

I am sorry, but I must correct the noble Lord again. The procedure in this matter—and I speak from some experience in these matters—is that when Treasury approval for something such as this is sought, that approval is not regarded as valid unless it is issued by the Minister concerned.

Lord Molloy

That may very well be so. I am trying to say that the ordinary people who are the bosses—not the Treasury, not Ministers or moguls—have a right to know what these nuances are. As a former staff side chairman of Whitley Councils, I was always appalled at the contributions to debates that senior civil servants could make without any authority of the Minister, who was sometimes sitting there, and we had to challenge the Minister to put some of these people in their place. I am hoping that those days are over and that that has passed.

The probability is that very many people know who the Chancellor of Exchequer is and they know who the Financial Secretary is. If they do not, they receive a copy of Hansard once a month and find out. I do not even know who the Permanent Secretary is or all those who sit around him. So this needs to be made transparently clear.

I now wish to continue with what I was saying. The Bill says: (5) The Director may appoint such staff as he may think fit, subject to the approval of the Treasury as to numbers and as to terms and conditions of service", and if we add the amendment, it simply says: and after consultation with the appropriate trade unions.". What can be wrong with that? Let me put it in other words: after consultation with the appropriate representatives of the thousands of professional and skilled people who are going to work in this particular sector. For example, that little phrase means that there will probably be represented 23,800 members of the Society of Telecom Executives. What is wrong with that? What is wrong with all these men learning their trade—and many of them are the products of our universities—and being asked to contribute to the smooth running of this new organisation?

As I have said, I really cannot understand the attitude of the Government. I am vehemently and passionately opposed to everything in this Bill; but I still think that in a democratic society it behoves me and, for example, my noble friend Lord Bruce of Donington, even to make suggestions which would improve the Bill. In this country we have been at this business of democracy for a very long time, and I frankly and freely admit that people from other parts of Europe cannot quite understand our procedures.

Why should the Labour, Liberal and SDP opposition be trying to improve the Bill, to make sure that their contribution will make the whole operation smoother, when they ought to be opposing it tooth and nail? Here we are—and this involves Her Majesty's Opposition in this House, the Liberal Party and the SDP—all supporting a proposition which involves representations of thousands of skilled men and women, without whose full support the measure will collapse. Anyone looking on would say that we on this side of the Committee must be barmy, why do we not try to wreck the Bill, why do we not try to make sure that there will not be any professional representation, that there will be one dictator? Then when the director is appointed, with massive power given to him by the Conservative Party to rule over everybody, the trouble will start.

An outsider could be excused for thinking that that ought to be our attitude, but that is not our attitude. By these amendments, our attitude is to make certain that the principle and the spirit of the democratic structure of publicly-owned and partially publicly-owned industries are maintained. In addition to the 23,800 members in the management of British Telecommunications at the moment, there are many other thousands of trade unionists. The only reason I can imagine why the Government are not prepared to accept these amendments is that they will not take the risk that within perhaps months of this Bill becoming law and this organisation being set up, we shall see the headlines from The Times to the Daily Express, "Trouble, Anarchy, Strikes"—unofficial and otherwise—in this new organisation.

We are saying that that is not a good way to start, even with an organisation which we believe does not exist. But we are practical people; we know that it has to be established. Of course, the Prime Minister may decide otherwise and go to the country before this measure can become law despite, as I read in the newspapers, the appeals made by the Leader of this House. If she loses, we get the best of both worlds. We do not get this rotten Bill and we get rid of a rotten Government.

Nevertheless, despite that, we are making propositions to improve the most vital part of any industrial organisation. If the Minister were to talk to any experienced member of the Confederation of British Industry, he would say that it is vital in any new organisation—particularly one that is technically and technologically involved to a high degree—that we get our personnel relationship as near to perfect as we can. To do that we must say to people, "Come and be part of the team". As I have always understood it—

Earl De La Warr

If the noble Lord will allow me, I think that he (and I have to say that he is not the only one) is getting way beyond this particular point of what the DGT does before he decides on the appointment of the members of his regulatory authority. The noble Lord is ranging over a huge number of questions and it is destroying what could be a very good little debate.

Lord Molloy

It is a huge subject.

Earl De La Warr

Not this one.

Lord Molloy

It has huge threats; it has huge possibilities. Not for one sentence have I gone away from the need to ensure that there is proper teamwork. What is wrong with that? Are Members of the Committee opposite against teamwork in this industry? Their silence is the answer. That is the basis from which I am arguing. Where do you get this teamwork? It comes from the technicians, the high technologists, right the way through to the other aspects of the trade union movement—their representatives; so that the director general with, if you like, his top staff, can call on these people to make this proposal a great success. That is what we are asking. I am of the opinion, and I am going to say it, that secretly any member of the CBI, any industrial director with knowledge of industrial relations, would be with us one hundred per cent. So would the trade unions. Why not the Government?

8.40 p.m.

Baroness Lockwood

I wonder whether we can draw a distinction between the meaning of two parts of this particular clause. The clause talks about the numbers and the terms and conditions of service. The terms and conditions are determined, as the Minister has rightly said, at national level, but that is the terms and conditions of particular grades. Surely what we are talking about in this particular clause and the amendment is the numbers at particular levels. It would seem appropriate, when we are establishing a new and important organisation such as this, that the appropriate trade union should be consulted about the numbers at different levels, and therefore the terms and conditions which would apply to those levels.

Lord Trefgarne

I am disinclined to try to extend this debate much longer. That is for others if they seek to do so, not for me. We are basing this new body on the form that was agreed, and I believe widely welcomed even on Benches opposite, when we set up the Director General of Fair Trading and his office a few years ago. That was a proposal which was welcomed on all sides of your Lordships' House and in another place. The procedures that we are now adopting are procedures modelled closely on the procedures agreed at that time.

What the amendment seeks to do is to set up a wholly new and unique consultative process for this body, and for this body alone. As I said to the noble Lord, Lord Molloy, just now, there is no parallel for the proposals now before your Lordships in any of the other regulatory bodies in our entire public life. I say that with certainty and with conviction, but naturally I stand open to correction if noble Lords opposite can think of any such body.

Lord Molloy

In the 1947 Act creating British Rail, in the creation of the public ownership of the air services, and then finally when the public ownership of the steel industry was brought about, a very similar procedure was adopted.

Lord Trefgarne

I said "regulatory bodies". I was careful to use those particular words. I do not think that any of the organisations which the noble Lord refers to would fall into that category. We have had a longish debate on this matter. It is not for me to say when such a debate should be drawn to a close, and there is at least one noble Lord who certainly ought to intervene before we reach a conclusion on this matter, but I put it to your Lordships that what is proposed is a wholly new and different consultative process which would not, I think, be in the interests of the smooth working of this organisation.

Lord Wilson of Langside

In spite of the discouragement of the Minister, may I try to make three short points in support of the propositions of the noble Lords, Lord Molloy and Lord Bruce of Donington? First, surely if precedent is to be the test in these matters, it is quite inappropriate. I speak as a member of a profession which, without precedent, was frequently unable either to move backwards or forwards. If precedent is to be the test, it is quite the wrong test.

The second point is that these matters under subsection (5) of Clause 1 are subject both as to numbers and terms and conditions of service to the approval of the Treasury. What that means is that the Treasury has a veto, or what the noble Lord, Lord Molloy, referred to rather picturesquely as "the dead hand of the Treasury". I am sure that is a very unfair approach to the Treasury's problems and the problems of Ministers who are responsible for the Treasury. Nevertheless it seems to me extraordinary that, having given this veto to the Treasury, the Government refuse to accept consultation—not a veto—with the trade unions.

The Minister—and this completes my point—spoke rather critically (there is no reason why we should not be critical in this Committee from one side or the other) of the invective of the noble Lord, Lord Bruce of Donington. Speaking for myself, I am not surprised that the noble Lord, Lord Bruce of Donington, was a bit "invective", if that is the right word, in this context, when here we have a situation in which the Government, having given the power of veto to the Treasury, refuse even to accept consultation with the trade unions.

I accept the wisdom of what the noble Earl, Lord De La Warr, said in this context. It was obviously wise and it may be more sensible just to have these consultations informally rather than put them into a statute. I accept the wisdom of that. On the other hand, do the Government not appreciate the unwisdom of their reaction to this proposal that trade union leaders should be consulted in these matters?

Lord Trefgarne

I agree with the noble and learned Lord that, if the only argument I had to deploy tonight was that this was some long-established arrangement and therefore there was no good reason to upset it, that would not be a particularly good argument. But that is not the case. What we are comparing these proposals with is a recently established arrangement in so far as the Director General of Fair Trading is concerned—an arrangement which was widely welcomed both by your Lordships and in another place. It is the amendment which now seeks, I would say prematurely, to reject that as unsatisfactory when it has worked so well, and to propose these new alternative arrangements.

What I was complaining about with regard to the speech of the noble Lord, Lord Bruce of Donington, was not the mere tone of invective. We have become used to that so far as the noble Lord. Lord Bruce, is concerned, and I do not complain about it. What I complain about is his personal remarks about certain members of the Government.

Lord Oram

When I spoke briefly in favour of this amendment, I meant to ask a question. I wonder whether I may ask it now and can the Minister perhaps help me? What is the Government's estimate of the size of the Oftel staff as at the moment? I may have missed it in some debate, or document or other. I should be grateful to know that.

Lord Trefgarne

We have it in mind that the staff would number about 50 in this particular office. I think that is the answer to the noble Lord's question.

Lord McIntosh of Haringey

The Minister, in his several responses on this amendment, has no doubt wisely exercised the better part of valour. He has taken the amendment at its face value and he has sought to argue against it, first, I am sorry to say, on the grounds of precedent—and I shall come back to that in a moment—and, secondly, on the grounds that it is difficult to say who the appropriate trade unions should be. That second objection can readily be answered. So far as the Civil Service element is concerned, it should be the trade unions representing the grades who will be employed in the Office of Telecommunications. In so far as the Government have it in mind to recruit from outside the Civil Service, possibly only on secondment but possibly on a longer-term basis, this will most likely be from the telecommunications industry in its widest sense. The appropriate unions would therefore include those unions recognised in the telecommunications industry. This need cause no serious problems to the Government at all.

So far as precedent is concerned, the Minister made several references to the Office of Fair Trading. I had assumed that the choice of the non-ministerial department as the formula for this office was an issue which ought not properly to be debated on this amendment but should be debated when we come to debate the Question, That the clause stand part? That was where I had proposed to make my own humble interventions. Now that he has raised it, there are substantial differences from the Office of Fair Trading which ought to be recognised.

First, the Office of Fair Trading—as far as I know—except for the appointment of a director general, does not recruit from outside the Civil Service. The members of staff of OFT are all career civil servants with the exception, as he has rightly said, of Sir Gordon Borrie and his predecessor, Sir John Methven.

Secondly, the Office of Fair Trading operates not merely on a telecommunications code, as is proposed in the Bill, and on certain other relatively limited though broad legislative criteria, but it operates on very detailed regulations laid down by departments. For example, the Consumer Credit Act is, in fact, implemented by means of enormously lengthy and complex regulatory controls and the Office of Fair Trading, therefore, does not have the kind of independence which I understand it to be the wish of the Government that the telecommunications office should have. The situation is not really parallel. I should have thought that it was undesirable for the Minister, in approving this alternative to quangos such as the Civil Aviation Authority, or to a Government department, to cite in aid the Office of Fair Trading.

The one aspect of the amendment in which the Minister has gone beyond the strict wording has been the issue raised by several of my noble friends about the Treasury. I find his arguments curious, not in themselves about the clause, but in relation to the other provisions of the Bill. The noble Lord mentioned to us the controls of the Treasury—which I do not particularly object to, for I think it proper for Government centrally to keep control over numbers and over money; that is what any Government have to do. In these matters it requires at least the formal approval, I think he said, of Treasury Ministers. Therefore he is saying that there is to be political control over the basic issues of the size and cost of the Office of Telecommunications—and so be it.

However, why is it that in every respect other than the staffing the Government have allowed the Office of Telecommunications to escape from Government control? Why has the formula of a non-ministerial department been chosen rather than, as we have now, a perfectly satisfactory regulatory body for telecommunications with responsible offices within the Department of Industry? It can only be because on everything else the Government want to avoid the political control which it appears from their reaction to this amendment they want to impose on the staffing of the Office of Telecommunications. I suggest that the argument being put forward is in complete contrast to the argument which was put forward elsewhere in the Bill and in complete contrast to the arguments which I fear will be put up against further amendments which my friends and I have put down and which attempt to secure what the Notes on Clauses contemptuously call "political influence" but which I call "proper parliamentary responsibility".

That was an issue upon which it was unwise of the Minister to venture in his response to these amendments. I think on subsequent clauses he will regret what he has said. As it is, the amendment may not be of fundamental importance in itself, but it is true that industrial relations in the telecommunications industry as a whole are of wider import than they are in an office of 50 people, though, having controlled for many years a company rather smaller than 50 people, I am very well aware of the need, even among 20 people, for consultation with my own staff on all these matters. The amendment starts to raise issues of principle which we on this side cannot let go and cannot ignore, even when they raise a tiny threatening head, and I shall ask your Lordships to express your opinion on this matter.

On Question, Whether the said amendment (No. 6) shall be agreed to?

Their Lordships divided: Contents, 18; Not-Contents, 54.

Bishopston, L. Collison, L.
Bruce of Donington, L. Ewart Biggs, B.
Buckmaster, V. Fisher of Rednal, B. [Teller.]
Hatch of Lusby, L. Ponsonby of Shulbrede, L. [Teller.]
Houghton of Sowerby, L.
Lockwood, B. Ross of Marnock, L.
McIntosh of Haringey, L. Strabolgi, L.
Molloy, L. Underhill, L.
Oram, L. Wilson of Langside, L.
Pitt of Hampstead, L.
Airedale, L. Lyell, L.
Auckland, L. Macleod of Borve, B.
Avon, E. Marley, L.
Beloff, L. Marshall of Leeds, L.
Belstead, L. Massereene and Ferrard, V.
Bessborough, E. Molson, L.
Brougham and Vaux, L. Morris, L.
Burton, L. Mottistone, L.
Caccia, L. Murton of Lindisfarne, L.
Campbell of Alloway, L. Pender, L.
Cathcart, E. Rankeillour, L.
Cockfield, L. Saltoun, Ly.
Cork and Orrery, E. Skelmersdale, L.
Davidson, V. Stanley of Alderley, L.
De La Warr, E. Stodart of Leaston, L.
Denham, L. [Teller.] Suffield, L.
Elliot of Harwood, B. Swinton, E. [Teller.]
Elton, L. Thomas of Swynnerton, L.
Glanusk, L. Thurso, V.
Glenarthur, L. Trefgarne, L.
Gridley, L. Trenchard, V.
Hives, L. Vaux of Harrowden, L.
Hornsby-Smith, B. Vickers, B.
Lane-Fox, B. Vivian, L.
Long, V. Windlesham, L.
Loudoun, C. Wise, L.
Lucas of Chilworth, L. Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendments Nos. 7 to 10 not moved.]

9.2 p.m.

Lord Bruce of Donington moved Amendment No. 11: Page 2, line 26, at end insert ("but the annual sum so payable shall not exceed £1 million without approval of both Houses of Parliament.").

The noble Lord said: This amendment seeks to make an addition to Clause 1(6), which reads: There shall be paid out of money provided by Parliament the remuneration of, and any travelling or other allowances payable under this Act to, the Director and any staff of the Director, any sums payable under this Act to or in respect of the Director and any expenses duly incurred by the Director or by any of his staff in consequence of the provisions of this Act".

To these words this amendment would add: but the annual sum so payable shall not exceed £1 million without approval of both Houses of Parliament".

I commend this amendment to the Committee. What we are talking about here is the expenditure of taxpayers' money. Your Lordships may feel that the allowance of £1 million, which, on the assumption that the staff is 50, works out at an annual average of £20,000 per member—and we should bear in mind, too, that there is going to be some differential because the director himself, I believe, is going to receive £35,000—ought to be adequate for this purpose. I cannot see any reason why, if it is necessary to go over this quite reasonable sum, Parliament should not be consulted. After all, Parliament is the ultimate custodian of the taxpayers' money.

I shall try to put this as pleasingly as I can. The noble Lord reproached me, when we were dealing with the last amendment, on the quality of my personal vituperation. May I say to the noble Lord, in partial reply to that, that I have listened to and read some of the personal vituperation that has emanated from Members of his own Government in another place. This vituperation has grown over the Government's four years in office progressively as the arrogance has grown. So the noble Lord must not complain if, every now and again, the party opposite, his party, get it back in kind. Sometimes they deserve it. I will say immediately that none of my vituperation is directed against the noble Lord, for whom I have the utmost respect—nay, even affection! Such invective as I am able to use is directed at places that ought to be accustomed to receiving it and which will be receiving it in even greater measure at a later stage.

Lord Mottistone

Is it not out of order to cross-connect between the two places in debate in the way that the noble Lord is suggesting? I would suggest to him that he keeps his thoughts to this Chamber and to people in this place, and does not worry too much about what happens elsewhere in the Palace of Westminster.

Lord Bruce of Donington

The noble Lord has a point there. I quite agree that it is advisable from time to time to pay attention to the monkey and to ignore the organ-grinder; but every now and again one has to refer in context to the real organ-grinders behind the whole business. It does no real violence to our procedure.

Now, having put myself right, I trust, with the noble Lord, may I say that the main purpose of this amendment is to limit expenditure and then to seek parliamentary approval. But the noble Lord must be asking himself why. I am bound to confess to him that I had in mind the first year only in regard to this amendment, and not the subsequent expenditure. Your Lordships will recall that a person has to be appointed as director general. We know what a terrible trouble it was to obtain a person to lead British Steel and then again to lead the National Coal Board. I am sorry to have to allude to the other place for just a moment but, if the noble Lord, Lord Mottistone, will bear with me, he will recall the circumstances surrounding the appointment of Mr. Ian MacGregor where, according to the then Secretary of State, they had to scour the country—ignoring the fact that Mr. MacGregor was already on the board of BL—before they were able to find somebody. But they were not able to find anybody from domestic resources. So what did they have to do? They had to pay a transfer fee of £1,500,000 million to Lazard Frères, and that has been repeated in the recent appointment to the coal industry.

How can we be quite sure, unless the constraints that we are proposing to put into the Bill are accepted, that it is going to be possible to fill this important post of director general without paying somebody a transfer fee? If I may remind the noble Lord, there are very good precedents (to use his own term) for it. We want to prevent that. If the Secretary of State, without the intervention of the Prime Minister, is to appoint his own director, we do not think we ought to give him such financial latitude when he is called to see the Prime Minister, who has already made up her mind whom she wants to fill the post and is prepared to pay a transfer fee for it. We just do not want that to happen. We all know perfectly well that no noble Lord or noble Baroness in this Chamber in his or her secret heart really approved of this MacGregor transfer fee. They had to take it because they all had to dance to the Prime Minister's tune—"the only man in the Cabinet". We know this. We just want to prevent it. We think this is a very prudent way of seeing that no transfer fees and no extraordinary sums are paid in head hunting.

As a matter of ordinary commercial prudence, whatever legal arguments about precedent might fall from the lips of the noble Lord, Lord Campbell of Alloway—who is notoriously reliable on these occasions—I would have thought this amendment would commend itself to your Lordships and I sincerely hope that the Government will accept it. Otherwise they will be saying that they think the expenditure will exceed £1 million per annum. I do not think they want that to happen and I am quite sure they would be amenable to the adoption of the ordinary Parliamentary controls, limiting it to what the taxpayer might feel was a reasonable annual sum. I beg to move.

9.12 p.m.

Lord Campbell of Alloway

May I oppose this amendment. I have listened with very great care but I do not understand the reasoning. Surely, if the approval of the Treasury is requisite, as it is, then whatever party may be in Government that is a fair and sufficient safeguard. This approval, as I read the Bill—I shall be corrected if I am wrong—relates to the appointment of staff and must inferentially relate to the approval of the salaries. I should hate to disappoint the noble Lord, Lord Bruce, so I shall ask: why should this be so? Is there any precedent for a provision of this type to which anyone can point? If not, when one already has the belt, why do we have to have the statutory braces?

Lord Morris

For the noble Lord, Lord Bruce of Donington, even by way of analogy, to refer to the other place as the "real organ-grinder" and to refer to the Upper House of Parliament as "the monkey" is not only clumsy and extremely unattractive but also deeply offensive. I would ask him to withdraw the terms.

Lord Underhill

I wonder whether I can add one further reason to that put forward by my noble friend in reply to the question raised by the noble Lord, Lord Campbell of Alloway. This is a new body. I know we have other regulatory bodies but this is a regulatory body of a type we have not already had, with its dimensions and extensions. It is a non-ministerial body, not directly accountable to Parliament. This will be an opportunity for accountability—an opportunity for Parliamentary "quizzing"—because if the £1 million were exceeded and they had to come to both Houses of Parliament for affirmative approval, that would give an opportunity for both Houses to question what is being done and what is the nature of the activities carried on. It may be the only opportunity that Members of your Lordships' House would have to question this important regulatory body. Therefore, for that reason alone I believe that the Government ought to accept the amendment and endeavour to introduce some accountability for the actions of what will be an important regulatory body.

Lord McIntosh of Haringey

Before the Minister rises, I have a simple question which he might like to take on board at the same time as he gives his other replies. It has to do with the difference between financial control by the Treasury and control by affirmative approval of both Houses of Parliament. My question is this. Is a non-ministerial department of the kind proposed, like the Office of Fair Trading, within the orbit of any of the Select Comittees of the other place? Is there any other opportunity than that proposed in this amendment for something more than financial control, and for some real questioning by either House of Parliament of the activities of the office?

Lord Trefgarne

This amendment clearly seeks to limit the size of Oftel through direct parliamentary control of its budget. May I first repeat the assurance that I gave to your Lordships at Second Reading? I made it clear then that the regulation would be operated with a light rein and that there would be a minimum of interference with the legitimate commercial decisions, so that companies can flourish in response to this matter as long as they compete fairly with each other. Secondly, the budget of the director and his office will already be voted by Parliament. The normal parliamentary scrutiny—the procedure is, I am sure, well familiar to the noble Lord, Lord Bruce—is surely appropriate. No more is done before money is voted to the Office of Fair Trading, and I see no special reason for extra parliamentary control in the case of Oftel.

May I also refer to the significance of the sum of £1 million? This is the estimate, given in the Explanatory and Financial Memorandum accompanying the Bill, of the cost of issuing, monitoring and amending licences. It would seem that the proposers of this amendment would not wish the director to carry out his functions, except those under Part II of the Bill, without parliamentary approval. But Part III of the Bill, which we shall discuss in due course, contains some important functions; for example, the giving of advice, the investigation of consumer complaints, the establishment of advisory bodies for England, Scotland, Wales and Northern Ireland and the exercise of certain functions under the fair trading and competition Acts. Is it the wish of the proposers of this amendment that there should be specific parliamentary approval before the director can carry out these functions? I would hope not, but that is certainly the effect of the amendment. I think, therefore, that the amendment is unnecessarily restrictive and bureaucratic, and I hope that your Lordships will reject it.

Lord Ross of Marnock

Is the Minister quite right in saying that the functions under Clauses 50 and 51 are included in that sum? The amendment of my noble friend relates purely and simply to the remuneration of the director general and his staff. The noble Lord said that part of the functions is the provision of advisory councils for England, Scotland, Wales and Northern Ireland. Are these to be appointed without consultation? Is he to use the same argument in relation to remuneration, et cetera—which had some force—as about not consulting trade unions? I felt at one time like asking about the advisory councils, but then I thought I would be quite out of order because they have nothing to do with the argument on this clause. Yet in opposing this amendment we have the Minister praying in aid the cost of these things. With due respect, I think that he is quite out of order in doing that. It is not included in this sum of £1 million.

I was concerned about the fact that the Explanatory and Financial memorandum states: It is estimated that the costs of the Director and his staff in discharging his functions, the additional costs of an increase in the number of members of the Monopolies and Mergers Commission and also any additional expenditure incurred by the Secretary of State in exercising his licensing functions"— the latter two have nothing to do with this amendment— will be about £1.5 million a year". So I estimate that the costs of the staff and the director general will be well under £1 million. When we look at the functions of the director general in Clause 2, we are worried about whether there is going to be a pretty bureaucratic set-up. We are not told anything about staff selection, their quality and so on. Parliament should be given an indication. Incidentally, I am not sure whether something so financially concentrated as this is a matter for your Lordships' House. The other place might have something to say about this House taking powers in relation to finance which should not be ours. But Parliament should be able to watch how this develops and, if necessary, should be able to stop it. It is all very well for the noble Lord the Minister to say that the cost will be printed in the Estimates. The House of Lords will never have a chance to debate the Estimates. And because of the way that they are dealt with in the other place, it may be that this particular item will not properly be dealt with there, either.

Because this matter is so important, it is essential that Parliament should have the right to draw attention to costs which soar well beyond what Parliament was led to believe they would be in respect of the development of this new organisation. I do not wish to touch upon the MacGregor theme, but I am sure that many noble Lords on the other side of this House and on the other side in the other place must be horrified at the cost of this superman. It may be that in his spare time he will do the job of director general of this body. If he is to get only £35,000 a year, it will only take him half an hour. It should be well within his range of abilities. Seriously, however, I believe that the Government ought to have another look at this matter if they wish to create something that is manageable and will not get out of control financially. We should be able to get on to it if this body is required to come back to Parliament, should it need more than the £1 million to be allocated to it.

9.22 p.m.

Lord Trefgarne

Whatever the intention of the amendment may be, the fact is that the functions which I described in my earlier remarks will have to be paid for out of the sums of money we are here discussing and which are provided for in this clause. The noble Lord, Lord Ross of Marnock, is right to sound a cautionary note about how far it is proper for Members of your Lordships' House to consider these matters. The other place would take grave exception to any proposal that your Lordships' House should have specific control over the sum of money which is to be made available, or otherwise, for these purposes.

I believe that the fears which have been expressed about the creation of some monster which is out of control are exaggerated. First, there are the procedures involved in the approval of the Estimates, to which I have referred. The noble Lord, Lord Ross of Marnock, indicated that his experience is that these matters do not always receive the scrutiny they deserve in the other place. Doubtless that is the case. I have not had the privilege of being a Member of the other place so I cannot say whether or not that is so. Your Lordships will also be aware that the director is obliged to prepare an annual report for Parliament. This will give considerable scope for parliamentary scrutiny of the affairs of Oftel and the director general. The combination of those two procedures—the scrutiny of the Estimates, however effective that may be, and the submission of an annual report to Parliament—will, I believe, provide proper Parliamentary control over these matters. I hope the Committee will be content to leave it there.

Lord Molloy

I can understand the noble Lord's position tonight. He has to resist the amendment. But could not the noble Lord at least say that there are to be further stages of the Bill? There are Members on all sides of the Committee who are anxious about this subsection if there is to be no amendment. Therefore, if the Government cannot accept the amendment now, can they say that they will be prepared to look at some of the serious arguments which have been advanced in support of this amendment and will then come back with some modus operandi?

Lord Trefgarne

I am sorry to have to tell the Committee that I have not been persuaded by the arguments which have been deployed in support of this amendment. If I were to give some assurance that we will look at the matter, I fear that I should be misleading your Lordships. I am convinced that the proposals contained in this Bill are the right course to follow.

I have said before that these arrangements have some precedent—as indeed they do—in terms of the Director General of Fair Trading. Your Lordships have not found that argument particularly convincing, but it is the case that we are looking at an established procedure—not an historical, long-established procedure which may be creaking with the passage of years, but a recently-created procedure which has worked very well indeed, in my estimation. It is one that, at the time of its inception, enjoyed the support both of your Lordships and of another place. I hope that the Committee will be content to leave it there.

Lord Oram

; Can the noble Lord the Minister clear up the point raised by my noble friend Lord Ross of Marnock? As and when the advisory bodies come to be set up, presumably they will be staffed by professionals. I wonder whether they are included in the estimate of 50 Oftel staff, or will they be additional? That seems to me to be relevant to the matter we are now discussing.

Lord Trefgarne

My understanding is that the advisory staff will be additional to the number I gave to your Lordships earlier. If I am wrong about that, I will write to the noble Lord.

Lord Bruce of Donington

I am obliged to the noble Lord the Minister. It is quite clear from the financial explanations on page viii of the Bill that the sum of f £1 million suggested by this amendment is quite a reasonable sum anyway. If one says that the total cost, which includes the additional staff, of the Monopolies Commission will be about £1½ million; if there are going to be savings, as my noble friend Lord Ross of Marnock pointed out, of £100,000 in connection with the Post Office Users' National Council; if there is to be further revenue; and if the total cost is put at £500,000, I should have thought that the £1 million suggested was a reasonable sum.

I am mindful of what was said by the noble Lord as to the desirability of this House intervening in financial matters. I noted too the observations of my noble friend Lord Ross of Marnock on that point. I should not have thought that they were applicable in this particular case. The House is not entitled to intervene in Finance Bills or anything of that kind, but we frequently discuss various expenditure on one thing or another to be made by the Government in connection with Bills, so far without any particular disapproval on the part of another place.

May I say to the noble Lord, Lord Morris, whose sensitivities I appear to have upset, that the words I used were of an allegorical nature and were certainly not intended to give any personal offence? If I may say so, I find the noble Lord, Lord Morris, to be a most agreeable person with whom to debate matters and I should not wish to cross him in any way.

Although I should prefer the limitation that I have mentioned to be in the Bill, and indeed we on this side of the House support this amendment, I am persuaded by the reasonableness of the noble Lord the Minister in this matter. I am sure he will use his best endeavours to ensure that taxpayers' money is not wasted on excessive transfer fees. I would hope to have an assurance that no transfer fees will be payable in circumstances of this kind. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 12 not moved.]

9.30 p.m.

On Question, Whether Clause 1 shall stand part of the Bill?

Lord Bruce of Donington

I am sorry to have to return the Committee to the whole purposes of Part I of this Bill, which sets up the appointment of a director general and a completely new tier to the new team of administration and supervision within the industry itself. We cannot let this occasion pass without indicating very firmly that of course this Part of the Bill is a complete irrelevance to the needs of the telecommunications industry in this country; it serves no useful purpose whatever. No complaint has been made concerning the conduct of British Telecom and its undoubted success over the past decade and even before. The country knows perfectly well, in spite of inspired press propaganda in some sections of the press to the contrary, that the story of British Telecom is a success on every count.

Really, the sole purpose of the Bill, which necessitated this regulatory machinery, is the determination of the Government to privatise this highly successful industry. I am sorry the noble Lord finds that boring, but I am afraid that it has got to be said and it is going to be said again. It is only when one comes into the later parts of the Bill that one finds the terrific amount of machinery that has to be established in order to preserve the public interest. As British Telecom has been working over the years—and I have made reference to the accounts and have offered to be cross-examined upon them—it is quite clear that British Telecom has served a national purpose, has operated profitably and has been able to finance itself for the past 6 years out of its own resources with an average of 6.8 per cent. return on capital employed in the business. It has been responsible for a very great deal of the technical innovation that has taken place in the telecommunications field. Employed in British Telecom are some of the finest telecommunication and electronic engineers in the country, and scientists as well. It is, therefore, a story of success.

All the items that are put in by way of public regulatory machinery, of which Clause 1 of the Bill is the leading part, are completely unnecessary unless British Telecom passes out of public control—I repeat, completely unnecessary. Under the telecommunications Acts and the wireless telegraphy Acts and the various licensing provisions, the appropriate Minister has always been able, should he so desire, merely by the issue of directions to the chief of British Telecom, to ensure that the public interest is preserved. Those who have led British Telecom over the years have been fully conscious of that: they have been conscious of their public duty; they have known what is required of them. And, where they have been uncertain as to what has been required of them, they have always been able to consult with the appropriate Secretary of State to find out what he thinks about their plans.

So British Telecom has been able to function over the years without this kind of regulatory machinery. Indeed, the Government found out in another place—I am sorry to mention another place again—that this machinery did not meet the requirements of their own supporters, let alone those of the Opposition. As a result, we had at a very late stage the introduction of specific duties under Clause 3. But none of this would have been necessary had it not been for the Government's determination to see that 51 per cent. of the industry was privatised. It was then hurriedly realised—as indeed is very succinctly set out in the Economist for 23rd April last—that they had created a private giant over which, unless they did something, they could exercise no control at all in the public interest. That is why of course all this regulatory machinery becomes necessary.

Even so, I have no doubt that further misgivings will be expressed. The noble Lord, Lord Orr-Ewing, is not in his place, but I can imagine what he possibly thought when he read The Times for 30th April, where it was revealed that British Telecom are to sell computers, or what he might have thought when he read the Financial Times of the same date, where it was indicated that British Telecom was going to move into office automation. I suspect that perhaps in a later stage of the Bill he will express misgivings as to how all this will react on the British electronic manufacturing industry.

British Telecom was conscious of its public responsibility. Under the general supervision of the Secretary of State, it has always been the policy of British Telecom to give preference to British manufacturers. It did not have to be told what its public duty was at all. But fired with the magnificent vision of the industry being privatised, can it be wondered that the chief of British Telecom (who presumably will carry on his functions as before under the control of the director general or the Secretary of State) has already given notice that he intends to buy cheaply wherever he can? This, after all, is in the best traditions of competitive industry as defined by the Prime Minister in another place. So the whole of this machinery which has been put in is an expression of the Government's fundamental distrust of the way in which this gigantic private corporation will function if it is left to its own devices to function within the normal canons of free enterprise.

Nowhere is the barrenness of the thinking behind this Bill more revealed than it is by the establishment of Oftel. It is argued that unfettered competition yields the best results in the best possible of worlds and ensures the prosperity of everybody, and why is not free enterprise completely unfettered to do exactly as it wishes. This Government in this Bill already destroy this basic philosophical argument. They acknowledge that there has to be control. This whole elaborate apparatus of control is being introduced solely so that there can be some plausible justification seen by the British public, British manufacturers, the staff and the world at large for this truly pathetic effort to privatise on a scale which the London Stock Exchange will find difficult to deal with, in any event. It will absorb the total capital resources available for investment, so The Times informs us, over a couple of years. The Government will have to think again.

I should like to eliminate this clause altogether as that strikes to the root of the Bill. The Government would describe a vote on the Question that the clause shall stand part of the Bill as an effort to wreck it. With what I hope is engaging candour I shall say that that is precisely the purpose of voting against the Question that the clause stand part. With those amiable sentiments, I express the hope that the Government will accept in good faith, and that the noble Lord, Lord Morris, will approve, the intimation that we may have to troop into the Division Lobby against them.

Viscount Thurso

On behalf of my noble friends on the Liberal Benches, and in particular my noble friend Lord Lloyd of Kilgerran, I feel that at this point I should say that we were very sad to have lost the amendment which would have set up a council to advise and help the Director General of Telecommunications, or whatever he is to be called. We are especially sad that, because of its wording, Amendment No. 12 was lost in the general collapse of that particular effort on our behalf to set up a council.

We feel that the principles enshrined in Amendment No. 12 are worthy of consideration and probably debate, and at a later stage we may well feel it necessary to bring forward another amendment which is properly worded. It could perhaps be put to your Lordships' House at Report stage. However, I consider that now, when we are discussing the Question of clause stand part, it is right to mention this particular point; otherwise it might be thought that we simply let the principle enshrined in Amendment No. 12 go by default. We do not let it go by default, and we may well return to it later.

Lord Morris

It is quite clear from what the noble Lord, Lord Bruce of Donington, has said, that he has totally and completely missed the whole point and purpose of the Bill. In these days of dynamic change in this industry, which will affect the way of life of every single person in the country, it is quite wrong that the tempo of change resides in the hands of one, two, or even six, corporations. It is essential that the tempo of change resides with Government, and that is the fundamental reason for Clause 1.

I do not think that the noble Viscount, Lord Thurso, should be distressed about Amendment No. 12, because Clause 3(2)(b) of the Bill provides that one of the duties of the director general shall be, to maintain and promote effective competition between United Kingdom operators". That certainly covers part of the point which is in line with Amendment No. 12. I would certainly suggest to Members of your Lordships' Committee that you support the clause in its entirety.

Lord Trefgarne

If I may say so, the speech of the noble Lord, Lord Bruce of Donington, admirable though it was, had a familiar ring about it. Rather than reply at length, may I refer your Lordships to what I said on the Second Reading of the Bill, since the noble Lord repeated much of what he had said on Second Reading. My reply is in col. 403 of Hansard of 18th April. If your Lordships want even further enlightenment, I would refer you to the speech of my noble friend Lord Glenarthur, which begins at col. 461.

9.43 p.m.

Lord Ross of Marnock

I should like to make a very simple point, for I am a very simple person. We are dealing here with the Director General of Telecommunications. We have spoken about his remuneration. We have spoken about his staff, and the cost of providing them. Where is he going to meet the staff? Are they going to meet somewhere on the Embankment? There is no evidence that they are to have any office of their own. Is the remaining nationalised part of the telecommunications industry going to have to put them up? If they have to get themselves an office in London, it will cost them some money, and it may well be that the Financial Memorandum which we spoke about earlier underestimates just what the cost of this body is going to be.

I agree with everything that my noble friend said about the daft dogma of this whole thing. Not a single soul in your Lordships' House or in the other place, on either side, ever thought that we would get to the point where a Tory Government which proclaimed their pride in what was being done in these services and in what was done in the old services of the Post Office for so long would descend to this kind of thing.

I am proud of what was done. For a long time after the war, when I became a Member of Parliament, I served on the Post Officer Users' Council, which in those days also dealt with the telegraph side. The work that was done by the engineers, and the co-operation that existed between them and British manufacturers, was all to the good of this country. It built up a tremendous reputation, which has continued under British Telecom. It is a sad day when the Government ask us to be proud of the virtual destruction and breaking up of an organisation in which there was a pride and prestige that was a credit to Britain. It is not a happy day for Britain that they should do something like this purely for dogma—and daft dogma, at that.

Lord Trefgarne

I am happy to be able to reassure the noble Lord, Lord Ross of Marnock, that the director general will not have to meet on the Embankment, and that offices will be provided.

Lord Ross of Marnock

By whom? Who will pay for them? Is that sum contained within the Financial Memorandum?

Lord Trefgarne

It is the provision made in Clause 1(6).

Lord Underhill

We are discussing, on clause stand part, the regulatory machinery and the director general. We are not discussing the tempo of change, as suggested by the noble Lord, Lord Morris. We shall come to that when we deal with Clause 2. There will undoubtedly be much to be said about it.

I understand that the Department of Industry has a section of 40 or more staff which, with British Telecom, handles the affairs of telecommunications satisfactorily and with the expertise to which my noble friend Lord Bruce of Donington referred. Why can it not be left there? We have often had to question powers being left with the Secretary of State. But here we have a department with a section that functions efficiently. Surely, with that staff and all the expertise, the knowledge and the know-how that exists in British Telecom, which cannot be denied, why cannot the regulatory machinery, if it has to exist, be left with the Department of Industry and the section to which I have referred?

I think that on a previous amendment, if I heard correctly, the noble Lord, Lord Trefgarne, said that this matter will be exercised with a light rein. My noble friend, in speaking on clause stand part, referred to the reasons why we are faced with this regulatory machinery. Paragraph 2 of the Department of Industry's own paper on the functions of the Office of Telecommunications, issued in November 1982, stated: The Government wishes to be able to ensure that after BT is transferred to the private sector those who own, manage and work in BT PLC do not use its market dominance to make excessive profits, operate inefficiently or prevent or restrict the development of competition in telecommunications". The very fact of giving market dominance to stop people making excessive profits and operating inefficiently means that we have to set up this regulatory machinery. The noble Lord, Lord Mottistone, says, "Nonsense". I am quoting—

Lord Mottistone

Of course we have to do so, because the market is not proper. The trouble is that British Telecom has 97 per cent. of it thanks to the years of nationalisation previously suffered. Until the market is made proper, one is bound to have some kind of regulatory machinery. I personally hope that in due course British Telecom will find itself breaking up into bits so that it does not continue to dominate the market. I think that that is very dangerous and I entirely agree that it is very dangerous right now, before the Bill ever becomes an Act. It is a great pity that we have these huge organisations which have come out of the dogma of noble Lords opposite and which dominate markets which they should not dominate. We can have proper competition if we have organisations of a reasonable size and we have to have some type of regulatory machinery because that is not yet the case.

Lord Underhill

I am grateful to the noble Lord, Lord Mottistone. He has given us some further information as regards the facts when we come to deal with Clause 2, which is what we are really talking about. There is another side of the argument that will have to be heard. Nobody challenges—and I am not going to do so as regards Clause 2—the success, competence and efficiency of BT and its research and development capabilities. I have quoted the reason why the Government say that we have got to have regulatory machinery: with the change to the private sector, the company has to be stopped from making excessive profits or operating inefficiently. If you had never interfered and brought forward Clause 2 you would not need to have this, and that point will be made when we come to Clause 2.

The Government have often said that they want to avoid bureaucracy in industry. If there was ever a piece of bureaucracy that has been set up, it is this regulatory machinery. However, time is getting on and I shall therefore leave out many of the points which I had intended to raise. It must be borne in mind, as was said during a previous debate, that this regulatory machinery is taking over the work of POUNC, but there will be no consumer representative putting the case for the consumers as there is under the present machinery.

My noble friend Lord Ross referred to the advisory committees to be set up under Clause 50. There has only been reference from this side of the Committee to Clause 50 and the fact that there is power for the director general to set up advisory committees. But do we know how they will be formed? The advisory committees will be composed of members whom the director general himself will appoint. Yet these are supposed to be the only advisory committees which will provide regulatory machinery. If noble Lords challenge this, they can read Clause 50, because I read it before I made my notes a few minutes ago.

This is a bureaucratic device. It is unnecessary. I recognise that, if we are going to have privatisation, we shall need regulatory machinery, but it surely could be left with the body which now exists inside the Department of Industry and with the Secretary of State so that it could be made directly accountable. Surely no one will regard reference to an annual report as sufficient accountability and control over this vast industry with an expenditure of £2 billion a year. That is why we oppose Clause 1.

Lord Campbell of Alloway

I wonder very briefly whether my noble friend the Minister will look into this question because it seems that neither Clause 1(6) nor Clause 50(5) are apt to provide the appropriate answer to the noble Lord—

Lord Mottistone

Oh yes they do.

Lord Campbell of Alloway

With respect, I doubt it very much. If we read the clause, we find that they are related to remuneration, travelling or other allowances, and then: any sums payable under this Act to or in respect of the Director and any expenses duly incurred by the Director. I have heard my noble friend Lord Mottistone say, "No", three times from a sedentary position. All I am saying to my noble friend the Minister is that this really does need looking at.

Lord Trefgarne

I could explain at some length how the matter works. Perhaps your Lordships will forgive me if I do not do so, but I will happily write to my noble friend with an explanation.

Lord Ross of Marnock

Will the noble Lord include me in that explanation? Before we leave this matter, may I have a promise that I, too, shall be included in the explanation?

Lord Trefgarne

With pleasure.

Clause 1 agreed to.

Schedule 1 [Director General of Telecommunications]:

9.55 p.m.

Lord Bruce of Donington moved Amendment No. 13: Page 76, line 6, at end insert ("subject to approval by a resolution of each House of Parliament".).

The noble Lord said: I draw attention to Schedule 1 of the Bill. It deals generally with the matters relating to the Director General of Telecommunications and, indeed, was referred to specifically in Clause 1 of the Bill. Paragraph 1 of the schedule says: There shall be paid to the Director such remuneration, and such travelling and other allowances, as the Secretary of State with the approval of the Treasury may determine.

The amendment to which we seek to obtain the approval of the Committee is to add the words: subject to approval by a resolution of each House of Parliament".

On the face of it, it would not appear that this is a matter of very great importance, although this is a new office, and of course Parliament has a legitimate interest in determining the director's remuneration, travelling and other allowances. There would seem to be no reason why it should not be subject to the parliamentary safeguards that this amendment suggests.

On an earlier occasion I had the opportunity to advert to Section 29 of the Companies Act, where, as noble Lords will recall, the mere alteration of a category to be included in an appendix was made subject to the affirmative resolution of both Houses of Parliament. It was a very trivial matter, but for some reason the Government thought it necessary that such a revolutionary change—which I believe involved pharmacists or people of that kind—merited the attention of the whole House. Judging relatively, I should have thought that this is a matter upon which Parliament ought to be consulted, particularly in the earlier stages. I commend it to the Committee. It seems to me to be eminently reasonable, and I look forward to the noble Lord agreeing with the amendment. I beg to move.

Earl De La Warr

It seems to me rather surprising that the noble Lord should bring forward these two amendments, because he gave way on an amendment which, so far as I can see, dealt with nearly the same principle. Having said that, it appears to me to be quite ridiculous that Parliament should have to deal with the salary of one man. I cannot think of anything more calculated to waste Parliament's time than just to pick one man almost out of a hat just because it is a new job.

Lord Trefgarne

I was about to say exactly the same as my noble friend. The amendments, indeed, seek to fix the salary and pension entitlements of the director, who will be a civil servant, by an affirmative resolution of both Houses. Why pick on the poor director? There are over 600,000 other civil servants whose salaries, wages or pensions could be fixed in the same way. However, I take it that the intention is to reduce the director's salary and so reduce the attraction of the post to able and well-qualified candidates.

However, I do not see why Parliament should wish to become involved in such a matter. The director will be a senior official ranking, as I have said, with the Director General of Fair Trading, and will be paid accordingly. There are already arrangements for setting the salaries of senior officials, and we do not intend to breach such arrangements for the director. The Director General of Fair Trading's salary is not fixed by Parliament.

If the amendments are accepted, they would delay the establishment of Oftel, and cause extra work for Parliament, which in my view is wholly unnecessary. I should point out that the Bill already provides for scrutiny of any financial arrangements by the Treasury, which acts as an effective guardian in such matters. Therefore, I hope that the noble Lord will promptly withdraw his amendment.

Lord Bruce of Donington

I am sorry that the noble Lord should take that attitude about it. I hasten to reassure him that our interests would not be purely negative. We might even decide that the salary offered was inadequate. There is no intention to apply the pruning knife to these matters; merely to bring it to public review. The noble Earl, Lord De La Warr, indicated that the appointment of one man and the salary was of insufficient significance to attract the interest of Parliament. May I recall to his memory the almost uproar in another place when the appointment of Mr. MacGregor was originally announced. That was of sufficient parliamentary interest and aroused a great deal of criticism from his own party in the other place. There is very often interest in the appointment of an individual.

Earl De La Warr

Will the noble Lord give way? Were there not other circumstances attached to his salary which naturally provoked a slightly greater interest?

Lord Bruce of Donington

I quite agree, but there is no undertaking from the Government—I have not heard one this evening, although I would be pleased to receive it—that we shall not once again in this case he faced with a transfer fee. There is no undertaking to the contrary from the Government. For all I know, there may be some unsuspecting soul in the world—probably in America—to whom an inducement in terms of a transfer fee may be offered in order to fulfil the onerous burdens of this office. I do not want to press the point, particularly at this late hour. Possibly the best thing for me to do in these circumstances would be to ask your Lordships' leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 14 not moved.]

10.2 p.m.

On Question whether Schedule 1 shall be agreed to?

Lord Ross of Marnock

I was hoping that my noble friend would move his next amendment. I am fascinated by paragraph 2 of this schedule. Those who have heard me on the subject before will not be surprised that I have raised this because I have raised it on recent Scottish measures. I am appalled by the fact that not only have we got to pay this new director general a very substantial salary, but we have to pay him, or there is the possibility that he will be paid, as may be determined by the Secretary of State with the approval of the Treasury—the whole band is there— such a pension, allowance or gratuity, as may be so determined", in respect of his retirement or death.

This gentleman is appointed for five years. I have not the slightest doubt that he is already well endowed with pensions from his other work, and here we have to give him another pension for five years' service. When I think of what happened in another place, which eventually got round in, I think, 1965 to even thinking about pensions after service which had lasted 33, 34, 35 years in some cases, it astonishes me that this MacGregor theme goes on. I hope my noble friend realises when he is calculating the cost to this country of Mr. MacGregor that we have not seen it all yet. There may well be a pension. There may be a gratuity, an allowance when he actually gives up the job. Judging by the way he has been able to negotiate in the past, I have not the slightest doubt that he will be able to negotiate a very handsome pension or gratuity in respect of his eventual retirement from his present positions.

I want to know what is the justification for this. It was not always so. I welcome the fact that there is one new phrase in this clause. The recent case we dealt with was, I think, in respect of the chairman of the Mental Welfare Commission in Scotland, who was given the possible advantages of these things as well. But the new phrase—and I want to know if it is new—is: payments towards provision for such a pension, allowance or gratuity, as may be so determined". Is that new? If it is not, may I be referred to the other statutes in which it appears?

Lord Trefgarne

I can answer that question swiftly. It is taken straight from the statute which, as I have said on so many occasions this evening, set up the Director-General of Fair Trading in his office. The provisions are identical.

Schedule 1 agreed to.

Lord Denham

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

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