HL Deb 05 May 1983 vol 442 cc211-36

5.8 p.m.

Lord Trefgarne

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Trefgarne.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD AMPTHILL in the Chair.]

Clause 1 [The Director General of Telecommunications]:

Lord Ponsonby of Shulbrede moved Amendment No. 1: Page 2, line 3, after ("shall") insert ("after consultation with the Telecoms Equipment Manufacturing Association and the Trade Unions recognised by the successor Company").

The noble Lord said: As we begin consideration of the first amendment of what I fear will be a long Committee stage on this Bill, I should at the outset make quite clear that we are implacably opposed to the purposes of this Bill, but we will seek in a constructive way to try to improve what we believe to be a bad Bill. The Government themselves are still obviously trying to improve the Bill. I bring to noble Lords' attention the fact that 37 new amendments were tabled by the Government this Tuesday. I should have complained bitterly about the late tabling of such a large number of amendments had it not been for the fact that only one of these amendments may be reached in our consideration of the Bill this evening.

Amendment No. 1 seeks to ensure that the appointment of the Director General of Telecommunications is not made without consultation with those organisations which will be affected by his action. The clause as it stands enables the Secretary of State to appoint whoever he wishes without consulting anyone. The appointment of a director general is of great importance, as on his shoulders will ultimately lie the responsibility for the British telephone service.

The director general's first duty will be to establish the Office of Telecommunications. Oftel will have the responsibility of monitoring the activities of British Telecom and other organisations in an effort to ensure that they honour and keep their licence obligations. The responsibility of the director general and Oftel will be to take action to enforce those obligations if they are not carried out, and to initiate licence amendments if licences are shown to be inadequate. Equally, Oftel will have the responsibility to receive, consider and follow up complaints from individual consumers and firms that use telecommunication services or buy telephones or other telecommunication apparatus.

The director general will also be obliged to check that British Telecom and other organisations which supply telecommunication services or apparatus compete fairly with each other and do not abuse their monopoly or engage in practices which prevent, restrict or distort competition. British Telecom are concerned that the powers of the director are capable of arbitrary application, with only limited appeal against his decision, despite the width and scope of his powers. They are also concerned by the fact that licence enforcement lies in the hands of the director general and can be challenged only on the grounds that he has acted beyond his statutory powers and has not gone through the necessary statutory processes. The licence, when granted, may be amended by the director general against the successor company's wishes, subject only to a reference to the Monopolies and Mergers Commission. This also is a cause of concern to British Telecom.

The director general will have powers to direct, restrict or prohibit the day-to-day activities of telecommunication companies. It is for this reason, and because there are some 235,000 employees in the industry and another 70,000 employees in Telecoms Equipment Manufacturing Association jobs, that it is vitally important that there should be this consultation. I know that in his reply the Minister is likely to say that of course he will consult, but this is not enough. A requirement for him to consult, as outlined in the amendment, should be in the Bill. I beg to move the amendment.

Lord Lloyd of Kilgerran

In rising to support this amendment, I think that it would be appropriate for me to make a somewhat neutral introduction. I agree with the noble Lord, Lord Ponsonby of Shulbrede, that this is a bad Bill, but we on these Benches will endeavour to be constructive in the amendments we are proposing. It is ironic that the Government's overwhelming and almost passionate desires for the so-called liberalisation of the market for the provision of telecommunications equipment—and the Government's announcement that it is giving new opportunities for British industry by weakening the dominance of British Telecom—could have precisely the opposite effect. Unless amendments on the lines of this amendment concerning the appointment of the director general, and the later amendments concerning the scope of his duties, receive the careful consideration of the Government—in different words possibly, but the theme being adopted—there will be an even greater loss of confidence in the actions of the Government in this field.

There is no convincing argument for privatisation as envisaged in the Bill. The Economist recently referred to your Lordships as providing: the last chance to catch British Telecom before it escapes untamed into the private sector". Referring generally to this Bill, it went on to say: All that will have been achieved is to set a £8 billion predatory monster free.". This amendment and others with which I am concerned are therefore designed to help the Government to create a climate of confidence so that there will be less unfair competition in carrying out the proposals of the Bill and that the Bill will create more jobs in the United Kingdom and better relationships for employees, including the famous research teams and innovators in the BT research establishments, such as Martlesham.

I can see the noble and learned Lord, Lord Elwyn-Jones, looking at me. I hope that he will not disapprove too strongly of my next few words. Incidentally, in the public interest, the object of my amendments is to create less work for lawyers than the Bill is bound to create if it continues in its present form. The amendment before your Lordships should go a long way towards giving confidence to British Telecom employees and to users of Telecom systems and their customers as to the way that the Office of Telecommunications would be run. Before the appointment of this director general, as the amendment suggests, there would be consultation with the Telecoms Equipment Manufacturing Association (TEMA) and the trade unions.

Perhaps I ought at this stage to declare an interest. I was a guest of TEMA at their annual dinner only a fortnight ago. I am consoled in making that declaration by the fact that the Secretary of State for Industry was also there and spoke very warmly about the activities of the association. So perhaps I have wasted a little of the Committee's time in declaring such an interest, when the Secretary of State himself was also so prominently present there.

Those of us who are concerned with industrial and technical problems in industry know how difficulties arise in interpreting not only contracts but sections of an Act. In the case of disagreements or potential disagreements, surely there would be more confidence in the ability of the director general to deal with such problems or potential problems if he had been appointed after the kind of consultation envisaged by this amendment.

The Economist article to which I have just referred prompted the Secretary of State for Industry to write a long letter to the magazine which appears in the current issue. He referred to some of the powers of Oftel and the orders which Oftel could make. In referring to licences, the letter states that, Such orders can be made when Oftel thinks there is a breach (there is no delay to establish the facts), the order can require sweeping remedial action (any step which in Oftel's opinion is requisite) and failure to obey an order leads to fines or imprisonment or both". Yet as at present drafted the Bill envisages that one man, appointed in the way to which the noble Lord, Lord Ponsonby, referred, should have to deal with such problems.

In his letter, the Secretary of State then goes on to say that, Oftel will have a duty (enforceable in the courts) to promote efficiency and economy on the part of operators". So at once the Secretary of State himself envisages problems—serious problems—which require the intervention of the courts. As I have indicated, the amendments that we have put forward try whenever possible to avoid reference to the courts. Before the noble Earl, Lord Mansfield, sat down after winding up the debate which preceded this Committee stage, he remarked on how important it was to try to avoid conflicts arising in the courts by ensuring clarity of expression in Acts of Parliament.

I am a little surprised that the Secretary of State himself indicated that the director general, or his office, should have such powers, and I am also a little surprised at the reference he made to taking the disputes to the courts. I have the highest regard for much of the work of the Secretary of State for Industry. By chance on one occasion he and I found ourselves in a trade mark case, led by a most distinguished advocate, who is now a very much respected High Court judge, Mr. Justice Arnold. Even in that case our attempt was to limit the applications of court processes. It seems to me that, as one step towards that kind of situation, this amendment would be effective.

Since Clause 1 is so important, I have also considered whether Amendment No. 1 alone is enough, and, with the leave of your Lordships' Committee, I should like to refer also to Amendment No. 2, as well as to Amendments Nos. 3 to 5 and Amendment No. 12, so as perhaps to save a little of your Lordships' time. Amendment No. 2, which I have proposed, and which is supported by the noble Lords, Lord Ponsonby and Lord Bruce of Donington, provides that the director general shall not operate on his own. If Amendment No. 1 is approved, the director general will be chosen following consultation with the trade unions and TEMA. I go further than that and ask rhetorically whether it would not be more appropriate for a director general with such important duties to carry out—duties which inevitably will lead to conflict, as indicated by the letter of the Secretary of State for Industry—to have around him a group of experts or of persons with experience in industry and trade unions. In the subsequent amendments associated with the main amendment (No. 2), I have suggested that the proposed council shall include two members of trade unions. The council would in effect be an advisory body, possibly on a part-time basis, to which there could be referred from time to time disputes arising regarding licences, modification to licences, or the scope of the duties of the director general. I should also be prepared to suggest, as one of the amendments proposes, that the director general should be the chairman of the council.

I want to make it quite clear that I am not suggesting an advisory council to which all matters would have to be referred by the director general, thus slowing up the organisation and administration. I am suggesting that, having been selected after consultation as proposed in Amendment No. 1, the director general should also have the assistance of a council, or call it what you will; a group of people who could help him in dealing with difficult matters of importance to industry.

Having analysed the position very carefully as to the problems which a man in the position of the director general will have to deal with, I have certainly come to the conclusion that his appointment should be made after consultation with TEMA and the trade unions. I have included a reference to my Amendment No. 2 in the hope that, when he replies, the Minister will be good enough to direct some of his remarks towards it, though later, if there is time, I shall develop the theme in relation to Amendment No. 2 and my subsequent amendments.

At this stage, I must register an apology to your Lordships' Committee, since I shall be unable to remain here throughout the debate. I see from the expression of cheerfulness on the part of the Minister, the noble Lord, Lord Trefgarne, that he is very pleased about that, though of course I may have misinterpreted the meaning of his smile. I had expected that other Bills would be dealt with today, and I am committed to an engagement which I cannot at this stage cancel. I beg to support the amendment.

5.27 p.m.

Lord Campbell of Alloway

In opposing Amendment No. 1, I should like to limit my very brief observations to that amendment, and leave the monster languishing in his den for the moment. The noble Lord, Lord Lloyd of Kilgerran, peripherally referred to Amendment No. 3, but, with the greatest respect to him, I must say that, as I understand it, what is envisaged is not an advisory function, but a decision-making role. To revert to Amendment No. 1, I would say that it enjoins the Secretary of State to entertain mandatory consultations with both the employers' association and recognised trade unions before appointing a director. I think that that is novel. Mandatory consultation constitutes a perhaps unacceptable derogation from the exercise of administrative discretion. It is a departure from past practice. It has no legal efficacy. It is, as I understand it, cosmetic, in order to give confidence. Finally, does not extending the functions of trade unions and employers' associations to the question of appointments reflect a misunderstanding of the true nature of those functions? For those reasons I oppose the amendment.

Lord Molloy

It is of great importance that we should realise what a mammoth organisation is being created. There will be a huge hotch-potch of varying responsibilities, with the people of the country being represented by the Government and the Secretary of State in the first instance. All the various people who are to invest their money in the new organisation will, I assume, want to have their voice heard as much as the voice of the state will be heard, and that is quite fair. That is the position with regard to the principle of the matter. What happens when the organisation gets under way, I am afraid that we shall have to wait and see, but there are a number of points I would like answered.

First and foremost, the people of our land are, in my judgment, being robbed by the Bill. However, through the Secretary of State they have a right to have their voice heard. They have a right to be heard because the measure at the moment is a Bill and not an Act of Parliament. It is still the people's property. Does anyone disagree that it is still the people's property?

We have a right to submit what should be done. This powerful individual is to be appointed by the Secretary of State and to be responsible to him. We have therefore a right to demand answers to our questions. How will the post be advertised? In what manner will it be advertised? Where will it be advertised? It should be advertised in such a manner that anyone interested in the post has the right to apply for it. If that is not accepted, one has to decide those who have not the right in Britain to apply for the job of director. There is a need to examine closely the sane suggestion of my noble friend, who proposed the first amendment, that the Secretary of State should consult with important people like TEMA and the trade unions who are experts in the machinery of running the new organisation due to their massive experience gained in the previous organisation.

I would have thought that a sensible Secretary of State would realise that one of his most important jobs is the appointment of a director. There are, of course, Permanent Secretaries and other important people with whom he will consult. However, when it comes to the actual running of the organization, I would have thought it would be wise and prudent of the Secretary of State to have discussions with those who will be involved from the outset. They will be able to give the Secretary of State the benefit of their experience and their wisdom on the calibre of the individual to be appointed. I consider the amendment very worthwhile. It should commend itself to the House.

I turn now to the proposition outlined by the noble Lord, Lord Lloyd of Kilgerran. Unlike the noble Lord, I am not necessarily singing for a supper that I have had. The arguments, in my judgment, were very sound. They were very applicable.

Lord Trefgarne

I wonder whether the noble Lord would like to reconsider the terms of the assertion he has just made.

Lord Molloy

It was a humorous remark which, I notice, caused the noble Lord, Lord Lloyd of Kilgerran, to smile when he declared his interest. I thought it was probably not worth declaring. It is in vein of the work of Lord Lloyd to declare every little thing with which he might have been concerned when he speaks in this House. I commend him on his exactness and his thoroughness. He gives an example to a few other Members of this Chamber. They will note that the noble Lord, Lord Lloyd, when he speaks, is always careful to make this transparently clear. If it had been a bun and a cup of tea, he would have made the point in your Lordships' House.

I wish to discuss the wisdom of his submission in calling for the creation of a council of six that will include two trade union members. Here again, this should commend itself both to the Committee and to the Government. The amendment makes it transparently clear that the council will have a chairman who will be the director himself. There will be no one between. The proposition is that the council of six wise men should be able to advise the Director General who will always attend the meetings because he is chairman. He will no doubt also be responsible for the agenda and have particular regard to possible administrative changes. However, rather than carry them out only to find that he had made an error, which would mean calling together the trade unions and other interested bodies, he will have the issue at his finger-tips.

What is proposed is that prevention is better than cure. Neither amendment dramatically changes the Bill. Yet the points submitted by my noble friend and by the noble Lord, Lord Lloyd, represent worthy amendments. It would appear that Lord Lloyd's party, and certainly mine, are opposed to the Bill. It is nevertheless in the tradition of our Parliament that amendments are proposed that seek to improve a Bill even when one disagrees with it. I hope therefore that the Government Front Bench will accept what I say in that spirit which is peculiar to the British Parliament.

Lord Underhill

I wish to support my noble friend Lord Ponsonby of Shulbrede in Amendment No. 1. There is no intention of debating the whole question of the regulatory machinery. We are dealing only with the narrow issue of the appointment of the Director General. We can deal with the wider issue at a later stage. While appreciating the points made by the noble Lord, Lord Lloyd of Kilgerran, supported by my noble friend Lord Molloy, a separate principle is involved. We would prefer to keep the two issues separate. We might support one but not support the other. We shall support both but there might be a difference of view.

The noble Lord, Lord Campbell of Alloway, said that Amendment No. 1 would make a mandatory qualification and added that this was an unusual provision. So is the Bill an unusual Bill. It is a massive Bill of so-called privatisation. It is of a calibre that has not previously appeared before your Lordships' House. It contains many important features. I am certain that the Government want to make the regulatory machinery a success. This amendment will help towards achieving that aim. The Department of Industry's own paper has stressed the detailed knowledge that will be required to carry out this machinery. It will involve expert knowledge of telecommunications, of technology and of commercial aspects—all in one man.

On previous Bills that have passed industries over to the private sector, we have often criticised the great powers given to the Secretary of State. Now we are giving great powers to another individual to be called the Director General. When we come to deal with the machinery, I hope that we shall make some of these points effective. Everything that has been stated in departmental papers and ministerial statements stresses the importance of this post. The noble Lord, Lord Campbell of Alloway, argued that this might be just cosmetic. If industrial relations and consultation with the unions in this massive industry are assisted, that alone will justify this appointment.

The noble Lord also questioned whether or not the employers' body should be consulted. But TEMA is not the employers' body. In fact, TEMA is the manufacturers' body from which British Telecommunications obtains 95 per cent. of its equipment. It is vital that it should have confidence in the director general. In view of the vital importance of this post, not only is it essential that there he a democratic procedure—call it "cosmetic" if you like—but because of the very important considerations here it is sheer common sense. Moreover, it will also assist the Government in their objective of giving both the manufacturers and the workforce some confidence in the regulatory machinery. Later we shall put our views on the regulatory machinery, but if it is to come into effect it is vital that both the manufacturers and the employees should have a great degree of confidence in the director general. That is why the amendment should be supported.

5.41 p.m.

Lord Trefgarne

I understand the concern of some of your Lordships about consultation before the holder of any important post is appointed. However, I do not believe that formal consultation is appropriate. It is not provided for in the appointment of the Director General of Fair Trading, nor in the appointment of the Chairman of the Board of the Civil Aviation Authority. This is not to say that the Secretary of State makes such appointments without informal consultations. But the need for consideration of a wide range of suitable appointees, for flexibility in discussions and discretion in approaching persons who are already in employment, all preclude formal consultations.

However, there is another reason why I cannot accept the amendment. There will always be some person with an interest who thinks that he should be consulted. The proposed list of bodies who have to be consulted emphasises this difficulty. It is simply not possible to consult everyone. Why should consultation be limited to one equipment manufacturing association? Incidentally, I am happy that the noble Lord, Lord Lloyd of Kilgerran, managed to have dinner with them but he actually got the name slightly wrong. Indeed, the name is slightly wrong in the amendment, and maybe the noble Lord went to the wrong place! In fact the correct title of TEMA is the Telecommunication Engineering and Manufacturing Association and not the Telecommunication Equipment Manufacturing Association.

What about the Electronic Engineering Association and the Business Equipment Trade Association? What about system operators and providers of telecommunication services over systems? Why are they not to be consulted? What about the trade unions representing those who work, for example, in the Kingston-upon-Hull telephone system? What about consumer bodies? The director will be required to deal with their complaints. The list is endless. It is simply not practicable to provide for formal consultations in the manner suggested in the amendment.

The noble Lord, Lord Molloy, asked me about how we would appoint the director general. I can assure the noble Lord that the appointment will be made in accordance with the normal procedures for all public appointments. We are certainly looking at the possibility of advertising for the post in order to attract the best possible candidates. I can see, for example, that on the present scale the salary is £35,000 a year, which is a good deal more than I get! I believe that I have been able to describe—at least, I hope so—some of the difficulties which this amendment presents. Of course the most important one is that the range of people to be consulted is so great that it is not possible to put a definitive list in the amendment. I hope, for that reason, that the noble Lord will not press it.

Lord Oram

When the Minister began his reply he gave two examples—the Office of Fair Trading and the Civil Aviation Authority—in which appointments had been made without consultation.

Lord Trefgarne

Without formal consultation.

Lord Oram

I agree, without formal consultation laid down in any statute. I should like from my own experience to give a contrary example and it is a very small one. My noble friend Lord Molloy referred to the organisation in this Bill as being a mammoth. The organisation to which I wish to refer is a minnow by comparison.

I am referring to the setting up of the Co-operative Development Agency under the 1978 Act. I happen to know that consultation took place with the appropriate bodies on that occasion because, as a result of the consultations, I was the fortunate person who emerged as the chairman of the Co-operative Development Agency. That Act provided that the Minister should consult with representatives of the co-operative movement. The Minister went on to say that there are many organisations involved and that therefore it is difficult to have consultations. But I assure him that if he knows about the co-operative movement he will realise that it is an extremely complex organisation with many ramifications. Yet, under that Act it was perfectly feasible to have satisfactory statutorily required consultations before the appointments were made.

Therefore, not only do I see no reason why it should not happen in this case, but I see an overwhelmingly greater reason why it should happen in this case. As regards the organisation to which I have referred, the staff numbered only a couple or dozen or something of that kind and the amount of money involved was less than £1 million. If formal consultation was necessary for the setting up of such an organisation, then when we are talking about an organisation which employs a quarter of a million people, and realise that when the director general's work gets under way he himself will have to consult with representatives of the organisations mentioned in the amendment, is it not likely that his consultations day by day will be smoother and more effective if he has come to his appointment after consultation with those organisations? I suggest that this amendment is an extremely necessary one and I give it my support.

Lord Trefgarne

I hope that I may be permitted to intervene again. I suggest to the noble Lord that there may well be difficulties on the other side of the coin as well. Although the noble Lord has cited an example where he says that formal consultation was provided for, I have no doubt that the list of people who are required to be consulted under the legislation to which he refers is not exhaustive and there may well be people who are not required to be consulted in the appointment to which he refers. In this context that could certainly create a good deal of difficulty if, for example, TEMA was written into the Bill and had been consulted, and one of the other trade associations to which I referred had not been consulted. I think that there would be no justice in that. In my view it is better to leave the Bill as it is and I hope that your Lordships will agree to do so.

Lord Lloyd of Kilgerran

The noble Lord the Minister has emphasised the fact that one of the main reasons why he has to reject this amendment is that the range of organisations to be consulted is so large and he has mentioned many other organisations. However, there are two defects in his argument.

The first defect surely is that he has, with great respect, misread the amendment. The amendment is not conclusive about the number of organisations to be consulted. It says that two large organisations are to be consulted. There is nothing wrong in consulting other organisations if necessary.

As regards the other defect in his argument for rejecting the amendment, the noble Lord said that it is far better to have informal discussions and informal inquiries. Would the noble Lord the Minister be prepared to disclose to the Committee the number of organisations which might be consulted informally in this way? Where is the harm in putting into an amendment that at least two large, respected organisations should be consulted? That does not prevent further organisations from being consulted informally or formally.

Lord Mottistone

As a Fellow of the Institution of Electronic and Radio Engineers, I take grave exception to its omission from the amendment, and will vote against the amendment on that ground as well.

Lord Howie of Troon

I have the strongest sympathy with the Institution of—

Lord Mottistone

The Institution of Electronic and Radio Engineers.

Lord Howie of Troon

I have the strongest sympathy with the Institution of Electronic and Radio Engineers, and many other organisations have been omitted. However, as the noble Lord, Lord Lloyd of Kilgerran, has quite clearly said, there is no problem. This amendment simply says that in consultations, which presumably will take place—because I find it inconceivable that the Government would blunder on into this appointment without consulting anybody—two bodies should be included. There is nothing in the amendment or elsewhere to prevent the Government from casting their net as wide as they feel so inclined, just so long as they do not exclude these two organisations. The amendment is extremely sensible and extremely helpful, and the Government should accept it without further cavil.

Lord Morris

I believe that this amendment should be positively resisted because, in effect, it is dangerous. As all noble Lords are well aware, the telecommunications and, indeed, the information technology industries, are dynamic and volatile industries, and it is absolutely essential that whoever is appointed as director general be just as dynamic, and that nothing should be put in his way to hamper the decision-making process, because he will have to take some vitally important decisions which affect the commercial and economic future of this country. I would suggest that to bring in various interest groups as part of his statutory duty to consult would do nothing other than cramp his style.

Lord Ponsonby of Shulbrede

In his reply to the debate on this amendment I think that the noble Lord, Lord Trefgarne, pulled a certain amount of wool over noble Lords' eyes. He set his face against any form of formal consultation. He made some comments about the particular list set out in the amendment, but he was not even prepared to concede any form of formal consultation on the appointment. I have had considerable support for this amendment and I think it right that the feeling of the Committee should be tested on it. I would remind noble Lords that we have even reached the situation today when the Prime Minister consults with the Church about the appointment of the most reverend Primate the Archbishop of Canterbury.

5.53 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 60: Not-Contents, 105.

DIVISION NO. 1
CONTENTS
Airedale, L. Longford, E.
Ardwick, L. Lovell-Davis, L.
Aylestone, L. McIntosh of Haringey, L.
Banks, L. Mais, L.
Birk, B. Mishcon, L.
Bishopston, L. Molloy, L.
Brockway, L. Nicol, B.
Collison, L. Oram, L.
David, B. [Teller.] Peart, L.
Denington, B. Perry of Walton, L.
Diamond, L. Pitt of Hampstead, L.
Ezra, L. Ponsonby of Shulbrede, L.
Fisher of Rednal, B. [Teller.] Prys-Davies, L.
Foot, L. Rochester, L.
Gaitskell, B. Ross of Marnock, L.
Granville of Eye, L. Shinwell, L.
Hale, L. Stedman, B.
Hampton, L. Stone, L.
Hanworth, V. Strabolgi, L.
Harris of Greenwich, L. Taylor of Blackburn, L.
Hatch of Lusby, L. Thurso, V.
Houghton of Sowerby, L. Tordoff, L.
Howie of Troon, L. Underhill, L.
Jenkins of Putney, L. Wallace of Coslany, L.
Kagan, L. Whaddon, L.
Kilbracken, L. Wigoder, L.
Kilmarnock, L. Wilson of Langside, L.
Llewelyn-Davies of Hastoe, B. Winstanley, L.
Lloyd of Kilgerran, L. Winterbottom, L.
Lockwood, B. Wootton of Abinger, B.
NOT-CONTENTS
Abercorn, D. Lauderdale, E.
Airey of Abingdon, B. Lawrence, L.
Alexander of Tunis, E. Long, V.
Ampthill, L. Loudoun, C.
Auckland, L. Lucas of Chilworth, L.
Avon, E. Lyell, L.
Bauer, L. Mackay of Clashfern, L.
Belhaven and Stenton, L. Macleod of Borve, B.
Bellwin, L. Mancroft, L.
Beloff, L. Marley, L.
Belstead, L. Massereene and Ferrard, V.
Burton, L. Merrivale, L.
Caccia, L. Mersey, V.
Caithness, E. Molson, L.
Campbell of Alloway, L. Monson, L.
Campbell of Croy, L. Morris, L.
Cathcart, E. Mottistone, L.
Cockfield, L. Mowbray and Stourton, L.
Colville of Culross, V. Murton of Lindisfarne, L.
Colwyn, L. Nugent of Guildford, L.
Cork and Orrery, E. Orkney, E.
Cottesloe, L. Orr-Ewing, L.
Craigavon, V. Pender, L.
Cullen of Ashbourne, L. Portland, D.
Daventry, V. Rankeillour, L.
Davidson, V. Romney, E.
De La Warr, E. St. Aldwyn, E.
Denham, L. [Teller.] St. Davids, V.
Drumalbyn, L. Saltoun, Ly.
Eccles, V. Sandford, L.
Ellenborough, L. Selkirk, E.
Elliot of Harwood, B. Sempill, Ly.
Elphinstone, L. Shannon, E.
Elton, L. Skelmersdale, L.
Faithfull, B. Southborough, L.
Ferrers, E. Stamp, L.
Fraser of Kilmorack, L. Stanley of Alderley, L.
Gainford, L. Stodart of Leaston, L.
Glanusk, L. Strathcona and Mount Royal, L.
Glenarthur, L.
Grantchester, L. Strathspey, L.
Greenway, L. Swann, L.
Gridley, L. Swansea, L.
Hailsham of Saint Marylebone, L. Swinfen, L.
Swinton, E. [Teller.]
Halsbury, E. Thomas of Swynnerton, L.
Henley, L. Todd, L.
Hives, L. Trefgarne, L.
Hornsby-Smith, B. Trenchard, V.
Hunt of Tanworth, L. Vaux of Harrowden, L.
Hylton-Foster, B. Vickers, B.
Killearn, L. Vivian, L.
Kinnaird, L. Young, B.
Lane-Fox, B.

Resolved in the negative, and amendment disagreed to accordingly.

6.1 p.m.

Lord Lloyd of Kilgerran moved Amendment No. 2: Page 2, line 3, after ("appoint") insert ("a Council known as the Telecommunications Council (in this Act referred to as "the Council")")

The noble Lord said: I beg to move that "a Council known as the Telecommunications Council (in this Act referred to as 'the Council')", should be created and appropriate words put into Clause 1, so that the Secretary of State will be appointing not only a Director General of Telecommunications but also a council. Earlier this evening I spoke about this council and its nature, but I am encouraged by the observations of the noble Lord, Lord Campbell of Alloway, to make a few further observations. With the leave of the Committee I should like to speak to Amendments Nos. 3, 4, 5, 7, 8, 9 and 10, all of which are concerned with the council and its structure, and also to Amendment No. 12.

As the noble Lord, Lord Campbell of Alloway, rightly indicated, Amendment No. 3 describes the functions of this council which I have suggested should be created to assist the director general. It is not to be concerned with all administrative problems, and therefore to hinder him in his work; but where there are disputes or potential disagreements which may arise as to the scope of his duties or the scope of licences, or as to what should be put into licences, he would have some experts, some representatives of industry, and, the amendment says, two representatives from the relevant associated trade unions, there to help him.

Whether that group of persons should decide any of the problems that come up before it or are referred to it is a matter for further consideration. It is true, as the noble Lord, Lord Campbell of Alloway, pointed out, that in my Amendment No. 3 it is mandatory in the sense that it says: The Director shall refer to the Council for decision any matters in which disputes have arisen or appear likely to arise relating to the administration and performance of the functions assigned or transferred to him under this Act. If the Committee were to accept Amendment No. 2, which says that "a Council" should be appointed, then it would be a matter of administration. It would be a matter of creating guidance notes or guidelines, which would not appear in the Bill, as to how that council should be constructed. In one of my amendments, Amendment No. 4, I have suggested that the director shall be the chairman of this council, and that the number of members of the council should be seven, including the director. Naturally, that is not an amendment which I propose to press, but that is a matter for later discussion.

Amendments Nos. 7, 8, 9 and 10 are consequential amendments to the Bill which I need not discuss further, but I should like to draw your Lordships' attention to Amendment No. 12. This amendment indicates the kind of problem that would in my view inevitably arise in the administration of this Bill. If I may read it, it says: In relation to any matter which is referred to the Council the Council shall consider whether any licence or agreement concerning any United Kingdom Consumer or United Kingdom Operator or foreign user or associations of such consumers, operators or users may effect the prevention, restriction or distortion of competition between United Kingdom operators in the United Kingdom or in markets outside the United Kingdom.

Those words are not words which I have devised. They are taken almost verbatim from Articles 85 and 86 of the Rome Treaty, which deal with competition matters in relation to business activities in the European market. In passing, I should like to ask the Minister whether he has considered the effect of EEC competition law Articles 85 and 86 in connection with this Bill, because the scope of those articles of the Rome Treaty is bound to affect, particularly agreements of an international nature.

It would be part of the function of the council to consider these matters. It may be appropriate to say that I had the honour of being co-opted recently to a committee of the EEC whose function was to consider what are the obstacles to trade between companies in the EEC which have research and development activities. That committee sat for about nine months. It was ably and efficiently chaired by the noble Earl, Lord Shannon, who I am pleased to see in his place this evening. It has recently produced a report endeavouring to assist the commission on how to remove obstacles to trade when the companies have research and development activities and are concerned internationally in their business.

It seems to me inevitable, therefore, that that kind of problem will arise with Oftel, and surely it would be far better that the director general, instead of merely relying on his staff, which he can appoint as he thinks fit, should have a council of the order of six persons to support him and give him such advice as is necessary. Therefore, I beg to move Amendment No. 2, that "a Council known as the Telecommunications Council" should be created to assist the director general.

Lord Ponsonby of Shulbrede

I rise to support the noble Lord, Lord Lloyd of Kilgerran, in his Amendment No. 2 and in the amendments which he mentioned as being in association with it. This amendment effectively starts to put some flesh onto the structure of Oftel. The Bill as it now stands creates an organisation with a head who has wide powers to direct the organisation. Inevitably there will be layers of staff beneath that particular head, but as of now we have no concept what those layers will be or who will act in the absence of the director, or what support he will have in terms of advice.

We warmly welcome and support this amendment to create a telecommunications council. As I see the noble Lord's amendment, this will effectively be the Oftel board of directors. The proposal in Amendment No. 4 that two members of the council should be two trade union representatives is widely welcomed. The telecommunications industry has a fine record of partnership between those who work and those who employ in the industry. Noble Lords will recall that until 1979 trade union members previously sat on the old Post Office board before it was split into the post and telecommunications businesses after the 1981 Act, when this experiment in industrial democracy, which had been deemed a success by those involved, was ended by the present Government.

As I have said, it was acknowledged that this experiment was a success and that the seven trade union nominees who sat on the board had no trouble in terms of divided loyalties between their unions and the work of the hoard as a whole, which many critics had suggested might happen in advance of this experiment taking off. A report was presented to the Post Office and the unions at the time which commented particularly on the part played by industrial democracy experiment at regional and area levels. The report concluded by saying that the people compiling the report had been impressed by the express desire from all sides to continue.

It may be that the views of the independent members are particularly relevant here, for in addition to those who were generally enthusiastic about what was being achieved, or what might be achieved in the future, there was also a very strong view, even among those not generally in favour, that to withdraw at that stage would have been undesirable and would have a generally bad effect on the climate of industrial relations within the Post Office. The amendment will have the effect of creating this council and of diffusing the decision-making policy within Oftel and will enable more heads to be able to be consulted to bear on particular items of decision making. That would greatly strengthen the work of Oftel.

6.13 p.m.

Lord Campbell of Alloway

I oppose the series of amendments to which the noble Lord, Lord Lloyd of Kilgerran, has spoken. For the moment I exclude Amendment No. 12. The effect of the series appears to be that one sets up a council instead of the director general. One enjoins the director, in matters of administration under the Act, to defer to decisions of that council. One ensures that one-third of that council—the decision-making body—is comprised of members of trade unions and one ensures that the appointment of staff should take place only after consultation with trade unions.

These amendments would appear to have been sired out of Employment Act worker participation by Vredeling or perhaps vice versa. The administration of all British telecommunications as envisaged by the Bill must require a firm hand, sound and effective decision making and a relatively simple structure. This the Bill provides with the Secretary of State—answerable to Parliament—who discharges certain functions, who appoints the director, who discharges other functions, who appoints staff, subject to Treasury approval.

Is it not much to be doubted whether administration by council in committee (where one-third of the members concerned with the making of decisions are members of recognised trade unions) could ever afford the type of administration requisite for the due and orderly exercise of functions and discharge of duties under this Bill? So far as I am aware, there is no precedent for setting up any such system as is envisaged by the amendment. Surely this cannot be the occasion on which to indulge in an unproven experiment.

Particularly I oppose the introduction of the concept that the appointment of staff with Treasury consent may take place only after consultation with the trade unions. This seems to misunderstand the true nature and functions of trade unions and could only serve as a cause of friction if the views of the trade unions are not adopted. Provided there is consultation the provisions of Amendment No. 6 have no legal efficacy.

Lord Ponsonby of Shulbrede

Amendment No. 6 is not covered by the present debate.

Lord Campbell of Alloway

I am very much obliged to the noble Lord. With the Committee's leave, I should like to excise what I have just said about Amendment No. 6 and perhaps come to that, if necessary, if the amendment is moved later.

I conclude with Amendment No. 12 which stands on its own. With the greatest respect to the noble Lord, Lord Lloyd of Kilgerran, it does not really follow Articles 85 and 86, and it does not quite make sense, because the last alternative—or in markets outside the United Kingdom if it was to follow Articles 85 and 86—should be limited to the territories of the Common Market. This would include China, the USA or wherever. That is not the point. I am not making a drafting point. I am trying to suggest that the concept of including this amendment is otiose, because Articles 85 and 86 apply in any event by decision of the Court of Justice. They apply to state enterprises, and the noble Lord knows the decisions, and to such an enterprise as this. They can operate, as the noble Lord knows, either on the complaint of any aggrieved party or by the Commission acting ex officio. Thus, with the utmost respect, I suggest that Amendment No. 12 is unnecessary.

Lord McIntosh of Haringey

I fear that the noble Lord, Lord Campbell of Alloway, has introduced objections to these amendments on a principle that is dear to his heart: that nothing should be done for the first time. However, leaving that aside, I fear that he has misconstrued the amendments in two serious respects. First, he has been talking as if the council proposed by the noble Lord, Lord Lloyd of Kilgerran, is to be a council of a body responsible for administration of British telecommunications. That is not the case. The council is to be of the Office of Telecommunications which, of its nature, is a body, small, deliberately compact and concerned with relations with a large variety of outside bodies, including trade unions but also, particularly, including existing and potential licencees.

Lord Campbell of Alloway

I am obliged to the noble Lord for giving way. If he will look at Amendment No. 3, in its present form—and I am not trying to take drafting points—it is mandatory that the director shall refer to the council for decision any matters relating to the administration. It is on that interpretation, with the greatest respect to the noble Lord, that I think I am not mistaken about this. Maybe it is not what the movers of the amendment intend, but, as the amendment stands, I think that I am not mistaken.

Lord McIntosh of Haringey

The distinction that I was attempting to draw was between the administration of the office, a body of 50 people, and the administration of British Telecom, a body of nearly a quarter of a million people. That is the extent to which I was saying that the officers were concerned with the outside world and that internal administration surely will be a very minor part of its activities.

If I may resume, the activities of the Office of Telecommunications will certainly involve the licensees; and they will involve the trade unions, the Government and the manufacturers and suppliers of equipment, both in this country and, almost certainly, outside this country. It is in that respect that I understood that the amendments meant that the appointment of a council—a small, compact, hardworking council, I have no doubt—would be of value to the director in helping him in those relations with the outside world.

The second respect in which I fear that the noble Lord has misconceived the amendment is when he refers to the need for a firm hand in management. I take it that what he means here by "a firm hand" is an untrammelled hand in management, without, as he repeated, being obliged to refer various matters to the council for decision. The experience of British Telecom has been that the period during which the board of British Telecom had by statute seven trade union members as members of the board was a period of unparalleled success in management terms, in terms of financial results, in terms of investment and in terms of the adoption of new technology.

It was only the accident of the division between the Post Office and the telecom business in 1979, and the determination of the Government not to continue with experiments in industrial democracy, that led to that experiment being terminated. It was certainly not through any failure of the experiment itself, and it was certainly not through any failure of the principle of having trade unions taking part in the management of an organisation. To that extent, too, I think that, although it is a minor change, perhaps, the amendments express something which it is worth the Government taking up and is worth being included in the Bill.

Earl De La Warr

I should like to say a word about this in rather more general terms, which means that I shall confine what I say to Amendment No. 2. I am not concerned with the way the body is made up. I suppose that what we are really discussing is whether an extra ministerial body such as this one should consist of one man, as is proposed in the Bill and as we find in the case of the Director of Fair Trading, or whether we should go right to the other end of the spectrum—and there is, of course, an existing "other end" of the spectrum, and that is the IBA, where there is a director general who is responsible for nearly all the decisions but who has a chairman and a non-executive board which meets regularly and to which he refers.

I do not think that this is an easy decision. I have thought for some time that the DGT, as he is to be called, was going to be rather a lonely fellow. On the other hand, in an indirect way I have for many years had some considerable experience of the IBA, and I have to say that, on balance, I find that the decision-taking capability of a body like the IBA—including that for fast decisions when they are necessary—is cumbersome and frequently takes too long. Therefore, just from the point of view of expedient and competent management, after considering it very carefully, I would plump not for the IBA method but for the DGT on his own.

Lord Molloy

I think it suffices to say that any large organisation in our country has something similar to the proposal that is being made by the noble Lord, Lord Lloyd of Kilgerran, in his amendment. What I find particularly nauseating, coming from the Benches opposite, is this. Whenever there are strikes and industrial unrest we on this side of the Committee are regaled and are pleaded with to look at the German system, where the Germans have, in both private and public industries, what they call their Betriebsrat; that is, the business advisers, to advise the director or chairman of a company or the person who is responsible for a state organisation. We have been told that it is about time that the British trade union movement had a look at this; that this is how it ought to be done.

But the Government, when they drafted this Bill, forgot that advice which they are always giving us; and we, in our good socialist "confelicity" and liberal way of thinking, think that it is not fair that a Government which have always embraced this principle should now take it by the throat and strangle it. That is not a good way to start an organisation of this character. I would remind your Lordships that these debates will be read—and I was absolutely shocked when I heard the noble Lord, Lord Campbell of Alloway, describe it as (I am not quite sure of his expression) either vicious or odious; anyway, it was something which caused him displeasure.

Lord Campbell of Alloway

Otiose in relation to a technical, legal amendment. It was nothing vicious.

Lord Molloy

I must say that, as a layman, I, like the noble Lord, find all legal and technical amendments somewhat odious. Let us come down to the facts of the matter. I can understand Members opposite saying, "We did not really mean what we used to say about the German example, about having a form of collective security and sensible, intelligent discussion. We only meant that particular thing when there were strikes and when there were industrial disputes. We were using that German argument simply to lambast the Labour Party and the Liberal Party". That is not a particularly good way of working, either.

When one hears the argument which, no doubt, will be submitted, as I think it was adumbrated by the noble Lord, Lord Campbell of Alloway—the argument of one-third of this advisory body representing a few hundred thousands of working people who will be engaged in this thing—I can hear people saying: "What do the Labour and Liberal Parties mean? Are they telling us that, unlike we who always pay lip service to industrial democracy but who in no way are going to make it a reality, they intend to make it a reality with this amendment by Lord Lloyd of Kilgerran?" That is the point of conscience that has to enter every breast opposite if there is a Division on this; because, if not, they will have to be harried to the rack at every instance of unrest that can happen in our country. I hope there is none.

Let us have a look to see whether there have been any examples of where this has actually happened and what contribution it has made. Let us take one which is very similar: namely, the Post Office Board. Does anyone deny that the Advisory Council, with more powers than we are proposing in this amendment, was a failure? It was lauded and praised by successive Ministers from both parties when they had responsibility. Why, when this principle has been so successful, has it suddenly to be discarded? This seems to me to be quite remarkable.

I should like to close on one particular point. There is sometimes argument about representatives of the skilled craftsmen, technicians and professional people who go to work in this telecommunications organisation, giving advice to the General in charge. Indeed, speaking in parenthesis and looking at the arguments that we have heard, if this were applied to the Army and the Navy, all chiefs and their staffs would be sacked tomorrow morning. How daft the opposing arguments are about this proposal, because the idea has been proved. No one can contradict me when I say that in the Post Office Board, and in a number of other boards, such representatives have proved to be successful; and the figure of six is even a small number.

The argument is: how can trade unionists, professional men, skilled artisans, on the one hand, look after the interests of their members and then sit on these boards? The answer is simple. Every responsible trade union leader detests any possibility of industrial unrest and knows full well, particularly in the public sector, that if the whole organisation is working as a team that means that the trade union representatives must be as much interested in the success of the organisation. By doing that they are contributing to the welfare and the satisfaction of their members, who are vital to any organisation. Therefore I beg Ministers and Members opposite to look at the quintessentials of this simple proposal. If it is no good and does not work it could be removed, but I believe it is of such proven value that at least we ought to start off with it and test it.

6.33 p.m.

Lord Orr-Ewing

I support the Government on this matter. I have had misgivings, as probably all of us have, about the setting up of a new independent authority and I am worried about the overlapping between this authority and the Office of Fair Trading, which has been much quoted, by the RRD Department of the Home Office; and possibly the new cable authority in certain areas will be overlapping. So I think there will be a reshaping and possibly, over the next 10 or 20 years, a growth in the powers of this authority. Therefore I would not wish to saddle it at its birth with statutorily-laid-down members—two of this, two of that and two of the other—whom they should consult and who should be sitting on the council, and so on. I believe we would be much wiser to leave it to the authority as they begin to grow into their responsibilities. It is necessary in a high technology industry—and in a developing high technology industry—which they are going to be responsible for monitoring and policing to some extent, to have great flexibility so that the system can develop along the lines that are needed.

I contemplated putting down an amendment suggesting that we ought to have a High Court judge as the director. I felt there ought to be, as I suggested at Second Reading, a High Court judge with Patent Bar experience, because I thought he would be numerate and would understand some of the technicalities. But I did not do that because I thought that, again, if that were in an amendment I would be limiting the choice. If it be possible to persuade somebody with great industrial experience to serve here, I think it would be perhaps even better than a High Court judge because you want somebody who has authority and has the respect of all the people with whom he is going to negotiate and deal.

It is not going to be easy. One of the great problems of setting up organisations like this, or even of running the great nationalised industries, is to find leaders of adequate calibre who will go through all the hassle, the problems and the difficulties and who will serve loyally. We find them, but it is not easy; and in this case I am not sure that the reward of 05,000—which after average taxation will be about 17,000—is going to match the need for all time. If it is to be limited to that, I think Parliament will have to be consulted and the amount would have to be adjusted in accordance with inflation, which of course will take off if the Party opposite by any chance should become the Government.

So I think we should have flexibility. I do not believe that it is wise to limit the number of people on a council or to say exactly who they should represent. For that reason I decided not to put down an amendment suggesting that perhaps a deputy permanent secretary was not the ideal person, which I believe was contemplated. I agree that it would be much better if the person came from industry or from the law. But, above all, if we leave it as the Government have suggested—flexible and without statutory obligations to any one commitment—then it is very important that we should get the best and most influential director who really knows his job and can manage this new-born child and see that it undertakes the responsibilities which this Bill lays upon it.

Lord Perry of Walton

We on these Benches support these amendments; but we are debating first of all Amendment No. 2 and I should like to ask the Government not to consider all amendments together, because Amendment No. 2 simply asks for the appointment of a council. It leaves complete freedom as to the nature of that council, unless the further amendments are accepted together with it. I would therefore suggest that the Government accept Amendment No. 2 and bring forward at Report stage their own proposals to be debated at that time about the nature and shape of the council, if they cannot agree to the rest of the amendments today.

Baroness Fisher of Rednal

I want to speak particularly to Amendment No. 3, regarding any disputes that may be likely to arise, bearing in mind that one of the new directions which the director will be working under will be that of the responsibility for looking after the interests of the consumer. If one reads the Government handout, it says that one of the functions will be the receiving and considering of representations by consumers and other users of the telecommunication services.

I feel quite strongly that this will be a cause of great conflict. On the one hand, we have the director having the responsibility of granting licences to telecommunication operators and also assuming the role of consumer watchdog. When we are considering anything to do with the Post Office and telecommunications, we have to remember the late Lord Peddie, who served in this Chamber for a considerable number of years. I remember him with great affection because he was one of the Peers who introduced me into this Chamber. He was a very active and highly-thought-of Chairman of POUNC.

I have information from many sources that the POUNC was recognised as one of the very good consumer organisations, and for that to be destroyed is a very retrograde step, which the Government will take when they give responsibility to a director who is part and parcel of the organisation of the industry.

I should like to remind the Government that only a few weeks ago the Water Bill was going through this House, and one of its important aspects was the role of the consumer consultative committees. It is important for the Government to remember that one of the important issues that were then faced was the fact that the guidelines for those committees had to be placed before Parliament. So it was felt, because of the loss of local government representation on the water boards, that consumer representation needed to be identified. We are in exactly the same position here. We are losing consumer representation, if the director is to take over the receiving and considering of representations by consumers and other users of telecommunications services.

As the noble Lord, Lord Orr-Ewing, said, there will be an overlapping of the functions of the man who is in charge. The Secretary of State for Industry, the Monopolies and Mergers Commission, consumer protection, fair trading and even, possibly, taking people to court will be involved. It is a very formidable task that this person will have. But this group of consumers, which means everybody, should have protection and it is for that reason that by Amendment No. 3 we ought to make sure that the council recognises that there is a great need for consumer protection and it must not be cast aside so easily, as the Government seem to be recommending in the Bill.

Lord Ezra

I wonder whether I might make a short contribution. I was very struck by the judicious comments made by the noble Earl, Lord De La Warr, and the noble Lord, Lord Orr-Ewing, because it seemed to me that they had very carefully considered this problem and, on the whole, had inclined towards the view that there should be a single director in charge of this operation. I have had experience of running a fairly large organisation for many years, and I have also thought about this in the light of that experience. After the same careful thought as those noble Lords gave to this problem, I have come to the conclusion that, bearing in mind that this is a totally new experiment in a very large sector of industry, we would on balance be better advised to set up a council alongside the director general, so as to make people feel that there was full representation at the top of the body which would set the rules and see that they were carried out.

This is an experiment of vital importance and there must be created a feeling of confidence that the body which will regulate the operation of this sector under these new rules will be such as to have been drawn from a number of sources, albeit to have presiding over it the director general, as is suggested in this amendment. But I believe that your Lordships ought very seriously to consider that aspect of creating confidence in the new body that is to be set up.

6.45 p.m.

Lord Trefgarne

It might be appropriate if I reply to this amendment in the same way as the noble Lord, Lord Lloyd of Kilgerran, moved it: that is, to address myself to the general principles rather than to go through all the amendments one by one. May I take first the question of whether there should be a council? I must confess that I was slightly puzzled to see that the noble Lord is proposing that the council should be in addition to the director and not instead of him. Several people have suggested the latter, usually arguing that it would be more appropriate to have a body like the Civil Aviation Authority, rather than an individual officer such as the director.

I do not want to go into the arguments for and against each of these, since they are set out in detail in the explanatory note on Clause I that was circulated to your Lordships some days ago. But regardless of which model is the best—and I must say that I myself firmly believe that the one we have in the Bill is the right one—I am very doubtful of the merit of having both, for this seems to be duplicating the bureaucracy and a recipe for delay and over-administration.

Turning now to the functions of the proposed council, what I think the noble Lord has in mind is that it should act as a sort of appeal body for the resolution of disputes between the director and, for example, a licensee. If this is so, perhaps I might explain why I believe that to be unnecessary and why I do not believe the procedures envisaged in these amendments would actually work.

First, let me take the case where the dispute is over-administration or, perhaps more accurately, maladministration. I should like to point out that this is already covered by the Parliamentary Commissioner for Administration—usually called the ombudsman. Paragraph 4 of Schedule 1 widens his ambit to include the director's activities. If the dispute concerns the actual performance of his functions by the director, then the director—

Lord Lloyd of Kilgerran

I apologise for interrupting, but I was not pressing that aspect of the amendments. I was concentrating, as I thought the noble Lord was doing, only on Amendment No. 2 as to whether a council would be helpful for any purpose. As my noble friend Lord Ezra indicated, help would appear to be required and, therefore, we are considering only that aspect. I entirely agree with the noble Lord that there are difficulties about Amendments Nos. 3 and 4 and possibly 5, but I am not concerned with the details of the structure or scope of the council at the present time.

Lord Trefgarne

I accept that that is what was in the noble Lord's mind. But other noble Lords have raised different points and I was seeking to reply to the debate altogether, so that I do not have to rise to my feet a dozen times between now and dinner. Let me say that I think it is sufficient that aggrieved persons should have access to the courts, if they believe that the director has failed to fulfil any of the duties in Clause 3, so it is unnecessary to provide a special council.

But there are two further matters which puzzle me. If the council is to act as an appeal body about the performance or administration of the director's functions, it would be quite wrong for him to be its chairman. This would, in effect, make him judge, jury and defendant. Secondly, Amendment No. 3 empowers the director to refer disputes to the council for decision, but the other party has no such power. I do not think that the noble Lord could really have intended the arrangement to be as one-sided as that.

I could raise a number of question marks, but I do not want to be on my feet forever. But may I just touch on one more, which is raised by Amendment No. 12? The effect of this, it seems to me, is to require the council to have regard to one, and only one, objective; namely, the promotion of competition. I, of course, wholly agree that this is very important but, as will be explained when we come to Clause 3, there are other factors to be considered when determining telecommunications policy and it would be wrong to concentrate upon one alone.

May I finally turn to one or two points that I think were in the mind of my noble friend Lord Orr-Ewing? I do not think that he is now in his place, but perhaps I may just refer to them. My noble friend asked what sort of person the Director General of Telecommunications would be. This matter is in the mind of at least one noble Lord on the other side of the Committee. No decision has yet been taken, but I can assure your Lordships that whoever is appointed will be a person of considerable stature.

The Government attach great importance to the job of the director, as must be obvious from the role we have already prescribed for him. Clearly he must be somebody of both knowledge and authority. We are determined that the appointee shall have those qualities. Parallels have been drawn with the Director General of Fair Trading. Indeed, the Government themselves have drawn those parallels. The last two directors general in that post, Sir John Methven and Sir Gordon Borrie, were very successful and set a very reassuring precedent. The salary will be tied, as I said, to that of a Second Permanent Secretary. Currently, that is £35,000. However, to answer my noble friend, that scale is reassessed from time to time.

I hope I have said enough to convince your Lordships that we think that this is the wrong course to go down. I hope, therefore, that the noble Lord will not seek to press his amendment.

Lord Bruce of Donington

I seek to persuade your Lordships that it would be in the best interests of the Bill if the Committee supported Amendment No. 2, which stands in the name of the noble Lord, Lord Lloyd of Kilgerran. It is quite clear that Clause 1 of the Bill reached its final form long before Clause 3 found its way to the other place. Clause 3 was drafted and put before the other place because of the general disapproval and distrust expressed in all parts of the other place as to the new set-up proposed by the Bill. All that Amendment No. 2 seeks to do is precisely to establish the degree of flexibility to which the noble Lord, Lord Orr-Ewing, referred.

In effect, this is a new tier of Government inside the telecommunications industry. The duties of the director general and of the Secretary of State had not been closely defined when the Bill first came before the other place. They were elaborated only when Clause 3 was introduced. Clause 3 includes a number of specific duties. One duty, however, escaped the Government. Clause 3 lays a joint responsibility on both the Secretary of State and the new director. In certain respects their responsibilities are absolutely identical. What will happen if the resonable interpretation by the director of, in particular, subsection (2) of Clause 3 differs from that of the Secretary of State? However intelligent, however purposeful the Secretary of State may be—or, for that matter, the director general—I cannot see that an identity of viewpoint, an identity of attitude towards the carrying out of the specific functions of Clause 3 can be guaranteed. The director general is, in one sense, a tier alongside the Government, because he has identical responsibilities to those of the Secretary of State. This is a tier above the ordinary business administration of British Telecom. In many respects his position is analogous, even though his duties and responsibilities are carefully defined, to that of the chief executive of a very large holding company.

If we carry the principle of personal, individual control too far, shall we not run the risk of confirming what many people already think, with abundant justification—that some of the boards of big public companies are grossly inflated by having what, broadly speaking, is the equivalent of a council? But a council consisting of six members (two of whom are members of trade unions) for consultative purposes—in order to sound out views, or to reinforce one's own views, or dissent from them, or to pass observations on the views of the Secretary of State if the views of the Secretary of State quite honestly differ from those of the director general in the application of Clause 3—would be a very sensible way of dealing with this matter. Those who are in positions of public or commercial, professional or industrial responsibility find it very helpful to be able to talk aloud at the level of those with whom they normally confer—say, a board of directors or, as in this case, a council.

I have very grave reservations about the establishment of this further tier of administration. I dissent from it completely. The country considers that the whole Bill is a complete waste of time, anyway. Amendment No. 1 has been defeated; but, on the assumption that a director general will be appointed, surely it is a matter of common sense that he ought to be assisted by a council of the type proposed by the noble Lord, Lord Lloyd of Kilgerran.

I appeal to your Lordships to be reasonable. There is no party dogma about this amendment. It is a matter of sound business, commercial and professional experience. It is a matter of everyday common sense. I warn noble Lords on the Government side that there is no unanimity in the country on this question. I shall not regale your Lordships with what the Economist, which is by no means friendly towards either the Liberal-SDP Alliance or the Labour Party, said about the matter on 23rd April. It is one of the most pungent criticisms of Government that I have read for some time and I would suggest that the Committee should heed it. I appeal to noble Lords, who have a degree of independence since they are not dependent upon selection for a constituency, to assert that independence and to insist upon common sense being paid some heed.

Lord Lloyd of Kilgerran

We have had a very long and interesting debate on Amendment No. 2, and I should like to thank those noble Lords who have taken part in it. In particular I should like to thank the noble Earl, Lord De La Warr, for his sympathetic and statesmanlike approach to the matter. I also thank the noble Lord, Lord McIntosh of Haringey, for dealing with the suggestions made by the noble Lord, Lord Campbell of Alloway. I am also deeply grateful for the support of my noble friend Lord Ezra, who has great experience of these matters. It seems to me that the time has come to test the views of the Committee. May I say that we are dealing only with Amendment No. 2 and whether or not to form a council.

7 p.m.

On Question, Whether the said amendment (No. 2) shall be agreed to?

Their Lordships divided: Contents, 49; Not-Contents, 79.

DIVISION NO. 2
CONTENTS
Aylestone, L. Lovell-Davies, L.
Bishopston, L. McGregor of Durris, L.
Bruce of Donington, L. McIntosh of Haringey, L.
Buckmaster, V. Mishcon, L.
Collison, L. Molloy, L.
Craigavon, V. Monson, L.
David, B. Nicol, B.
Diamond, L. Oram, L.
Ewart-Biggs, B. Peart, L.
Ezra, L. Pitt of Hampstead, L.
Fisher of Rednal, B. [Teller.] Ponsonby of Shulbrede, L.
Foot, L. Prys-Davies, L.
Gaitskell, B. Ross of Marnock, L.
George-Brown, L. Stedman, B.
Han worth, V. Stone, L.
Harris of Greenwich, L. Strabolgi, L.
Hatch of Lusby, L. Thurso, V. [Teller.]
Houghton of Sowerby, L. Tordoff, L.
Jenkins of Putney, L. Underhill, L.
Kagan, L. Wallace of Coslany, L.
Kilmarnock, L. Whaddon, L.
Llewelyn-Davis of Hastoe, B. Wigoder, L.
Lloyd of Kilgerran, L. Wilson of Langside, L.
Lockwood, B. Winstanley, L.
Longford, E.
NOT-CONTENTS
Airey of Abingdon, B. Glenarthur, L.
Avon, E. Gowrie, E.
Bauer, L. Grantchester, L.
Bellwin, L. Greenway, L.
Beloff, L. Gridley, L.
Belstead, L. Henley, L.
Burton, L. Hives, L.
Caccia, L. Hornsby-Smith, B.
Caithness, E. Hunt of Fawley, L.
Campbell of Alloway, L. Hunt of Tanworth, L.
Cathcart, E. Killearn, L.
Cockfield, L. Kinnaird, L.
Colville of Culross, V. Kinnoull, E.
Cork and Orrery, E. Lane-Fox, B.
Cullen of Ashbourne, L. Lauderdale, E.
Davidson, V. Lawrence, L.
De La Warr, E. Lindsey and Abingdon, E.
Denham, L. [Teller.] Long, V.
Drumalbyn, L. Loudoun, C.
Elliot of Harwood, B. Lucas of Chilworth, L.
Elphinstone, L. Lyell, L.
Elton, L. Mancroft, L.
Faithfull, B. Marley, L.
Ferrers, E. Massereene and Ferrard, V.
Forte, L. Merrivale, L.
Fraser of Kilmorack, L. Molson, L.
Glanusk, L. Morris, L.
Mowbray and Stourton, L. Stodart of Leaston, L.
Murton of Lindisfarne, L. Strathcona and Mount Royal, L.
Newall, L.
Orkney, E. Suffield, L.
Pender, L. Swinfen, L.
Rankeillour, L. Swinton, E. [Teller.]
Romney, E. Thomas of Swynnerton, L.
Saltoun, Ly. Todd, L.
Sandford, L. Trefgarne, L.
Skelmersdale, L. Trenchard, V.
Southborough, L. Vickers, B.
Stamp, L. Vivian, L.
Stanley of Alderley, L. Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

Lord Glenarthur

I believe that now may be a convenient moment for the Committee to break until 7.55 p.m. I therefore beg to move that the House do now resume.

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

House resumed.