Telecommunications Bill

HL Deb 09 February 1984 vol 447 cc1331-64

House again in Committee on Clause 1.

Lord Lloyd of Kilgerran moved Amendment No. 7:

Page 2, line 10, at end insert ("for a further term not exceeding four years.").

The noble Lord said: It is a great pleasure for me to resume from the acrid atmosphere of party controversy in the still, calm waters of this simple little Amendment No. 7 that I am about to move. The object of this amendment is to try to limit the tenure of the director general in office. He can be first appointed for a term not exceeding five years. Then Clause 1(2) says: but previous appointment to that office shall not affect eligibility for re-appointment".

Therefore, in theory he could go on for at least another year, and then be re-elected again and find himself eligible. I should have thought that five years was getting on for a long time, and I have suggested in my amendment, which is a probing amendment, that if the fellow wants to be considered for a further term, that further term should not exceed four years. He might be appointed for only three years to start with, but he would never be able to serve more than seven years then. As your Lordships are aware, it often happens that a young man, of perhaps 51, might be appointed and go on and on until retiring age of 70. Why does he go on like that? It is because the people do not want to throw him out. They feel, "Well, he has done some good work in the past, and we will allow him to go on".

Although I do not deplore age in any way, in an area of this kind, with a director general with such responsibilities in a field of high technology where things are changing so rapidly, there should be a limit to the total tenure of office. In my amendment I have said that he should not be eligible for a term of more than four years after having been in office for any period before. There is no magic in the term of four years. I would have preferred perhaps to have two, but that might be considered to be too short. I beg to move.

The Countess of Mar

I wish to support this amendment. The office of director general is going to be an extraordinarily arduous one. Any man after perhaps a maximum of nine years' service would be exhausted. He might well have got things under his belt by that time, but at the same time he would be getting stale.

Another reason why I support the amendment is that we have had a lot of talk about the bias of the director general. He might be pro-customer, pro-manufacturer, or pro the supplier. If he is in office for only a limited period of time then the risk of him being accused of bias is much less than if he was there for a long term. I do not wish to prolong the evening, but I wish to support the amendment.

Lord Cockfield

As the noble Lord, Lord Lloyd of Kilgerran, says, this amendment seeks to achieve two things. First of all to ensure that a period of reappointment should not exceed four years as opposed to the five years provided in the Bill, and that there should not be more than one re-appointment, making a total of nine years in all. While it might well be that the individual concerned would not want to serve any longer than that period of time, I could not entirely accept the noble Countess's argument that after nine years anyone would be exhausted by the arduous nature of this job.

We have Members of your Lordships' House who have been active in public affairs for considerably longer than nine years. I recently celebrated the 50th anniversary of my first entering the service of the Crown. I do not think that we ought to regard nine years as necessarily the limit to a man's active life, even in an arduous occupation of this kind. The more important matter is that if the director proved to be an eminently suitable man and was doing the job to general satisfaction and doing it well, it would be unfortunate if the option to allow him to continue to serve had been cut off.

The present Bill, by making reappointment necessary every five years, gives the degree of control over this appointment which, I agree with the noble Lord, Lord Lloyd, is necessary. However, I do not think that we ought unduly to hamper ourselves by a provision of the kind proposed in the amendment.

Lord Lloyd of Kilgerran

I am grateful to the noble Lord the Minister for his reply. He brought himself into the arena, and as the noble and learned Lord sitting alongside him knows, if even a person of the greatest authority pulls himself into the arena, he is liable to be attacked. On this occasion I shall not make any comment about the personal observations that he made about his longevity and his long period in office. But the noble Lord the Minister is really not in tune with the facts of life in regard to this industry. Why should he, with all his experience, know anything very much about industry except on the fringe?

His argument that a man should stay in office for 15 years in this area of high technology and of great and rapid advance is not being "with it". I am sorry to be so blunt because the noble Lord the Minister was so gracious to me earlier in the evening; but I had hoped that even if I did not score a boundary, as he suggested, with my first amendment I at least would have scored one run on this occasion. However, I do not want to delay the proceedings. I see that the noble Lord, Lord Stoddart, is making signals to me. I do not know whether he wants to say something before I withdraw this amendment.

Lord Stoddart of Swindon

The Committee should seriously consider what the noble Lord, Lord Lloyd, has said. While I appreciate everything that the noble Lord the Minister has said, and while I must say that after his 51 years——

Lord Cockfield

Only 50.

Lord Stoddart of Swindon

He looks remarkably well on it and I congratulate him; and I sincerely trust that he will have at least another 50 years active life. But we are not really discussing anything here that we already know about. We are setting up a new organisation. The director general's post is a new post. What is more, it is a post which is in an industry which, if there is an industry of the future, this is it. Communications is one of the industries that will thrive for ever and a day, and over the next 20 or 25 years there will be enormous strides and great new technologies. For that reason, this post may very well be different from other posts, and we may very well need younger people who are in touch with this white-hot, technological, new telecommunications system which we shall have.

There is also a danger. I listened to Professor Galbraith speaking about bureaucracy and administrative inertia. He feared that, all too often, director generals and all sorts of other people in organisations clone themselves, so that you get a series of the same people going on and on into perpetuity. In this sort of industry we simply cannot afford to have a clone. We need somebody who has ideas of his own, who is in touch with modern developments, who is prepared to get up and go and take advantage of this new technology which is advancing and improving all the time. For example, this country is involved in the European space project and communications such as radio will be important. Therefore, we need the opportunity to appoint those people who are young, who are "with it", who can get up and go and who are not clones of a previous establishment.

Bearing all those points in mind, I hope that the Minister will consider this to be a serious amendment. Although I understand that it is to be withdrawn, I hope that the Minister will take note of the debate before Report stage. It may very well be that he will change his mind and bring forward his own amendment.

8.12 p.m.

Lord Lloyd of Kilgerran

The noble Lord, Lord Stoddart, has put the case far better than I could have done. In view of that speech, I am sure that the noble Lord the Minister will want to take this matter back and think about it again before Report stage. I am sure that that would be an easier and more gracious way to deal with it. The example that I gave of a man being appointed at the age of 51 was a bad one. It is quite likely that a man may be appointed at the age of 30. He may be very successful and go on until he is 35. He is then eligible for reappointment and goes on until he is 40. But by that time he will probably be completely out of date about activities in this field.

It is all very well to say that the director general will be a very good administrator, but being a good administrator in an advancing field of technology like this is very disadvantageous in industry. Therefore, I hope that I can encourage the Minister, with the help of the noble Lord, Lord Stoddart, to think again and come back with something on Report. I am tempting the Minister to say something, but he does not propose to make any observations.

Lord Bruce of Donington

I was hoping that the noble Lord the Minister would respond to the very cogent arguments of my noble friend Lord Stoddart. I shall not detain the Committee long, but one thing is certain. The person who occupies this office will be a very powerful person indeed. He will have enormous powers over various sections of the industry, and over various sections of the service. This person will not be supported by any kind of authority to which he is responsible—he will be responsible only to the Minister—and in those circumstances it is wise that some time limit should be put on his appointment, not because of any inference against his own personal or professional qualities, but simply on the principle that one person wielding that power for so long is not healthy in public life. I sincerely hope that the noble Lord, Lord Lloyd of Kilgerran, will test the view of the Committee upon this amendment, in the absence of any satisfactory assurance from the Minister that it will be further considered.

Lord Cockfield

I was in course of rising to my feet when the noble Lord, Lord Bruce of Donington, kindly interrupted me and I gather that he would have preferred that I had not given way to him. Having listened to his speech, I share that view. The answer to the noble Lord, Lord Stoddart, lies in exactly what he himself said. He said, "You may well need younger people". Of course, you may well need younger people, but it does not follow that an individual who has served with complete satisfaction and with great distinction should necessarily have his term of office brought to an end. This is the whole point.

The term set in the Bill is one of five years. At the end of that time the Secretary of State, whoever he may be, is then able to consider all the circumstances and decide whether to reappoint the man. He does not then have to reappoint him for five years; five years is the maximum period provided. The reason, and the only reason, why I oppose this amendment is that it introduces an unnecessary element of rigidity into a system where what we need is a degree of flexibility. It is on those grounds that I hope the amendment will not commend itself to noble Lords.

Lord Lloyd of Kilgerran

I am very grateful to the noble Lord the Minister for what he has said. I can cnly repeat, if I may say so quite bluntly, that he has no very clear idea of the circumstances under which this man would work, and of what an advantage it would be somehow to limit the term of office of any man who is appointed, along the lines that I suggest. But it is no good my trying to press this amendment any further. I shall think about what the Minister has said and perhaps raise the matter at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 8 and 9 not moved.]

Lord Mottistone moved Amendment No. 10:

Page 2, line 18, leave out first ("may") and insert ("shall").

The noble Lord said: Perhaps we might now move from the director, who has absorbed us for so long, to his staff. I suggest that it is essential that the Oftel staff are adequately qualified and experienced. It is too difficult to write into a Bill what that means and this amendment is in the nature of a probing amendment. I hope my noble friend the Minister will be able to tell us that he appreciates the point that I shall be making; that he hopes that the director is suitably advised and that, if this staff are engaged before he arrives, these rules will then be followed. With Amendment No. 10, I should like to discuss Nos. 11 and 12 which are consequential upon it: Amendment No. 11: Page 2, line 18, ("such") insert ("suitably qualified"). Amendment No. 12: Page 2, line 18, after ("stall". insert ("in adequate numbers").

The point which I want to make about the staff is two-fold. First, we want to make sure that the staff have not been too closely associated with the one major firm in the industry, which is British Telecom, or with the major telecommunications suppliers. A large number of telecommunications experts have been trained and have spent their working lives within, or as suppliers to, British Telecom. Their thinking, their attitudes, their spontaneous reactions are monopoly orientated and their working procedures reflect the stability and predictability of the environment in which they grew up.

In addition, administrators (who include officials in the Departments of State principally concerned) who have worked with and have been advised by these experts have inevitably become tainted. Few, if any, from these groups can be ideally suited to staff Oftel, where they would find it difficult to combat and control their friends and erstwhile colleagues in British Telecommunications. The initial staffing of Oftel will not be easy, but there are sufficient qualified and experienced people around, among the users of telecommunications and in the armed forces, and among consultants. I believe it to be terribly important that the staff of Oftel should not be tainted with the 70 years of monopoly control of the telecommunications industry that the Post Office and its successors have had. Above all, it is most important that the people who will be in Oftel should be as independent as they can be of that kind of attitude of mind.

Another point which concerns me relates to the financial effects of the costs of the director and his staff. The notes on pages viii and ix of the Bill tell us that the costs of the director and his staff in discharging his functions, the additional costs of the Monopolies and the Mergers Commission and additional expenditure by the Secretary of State will be £1,500,000 per annum. From page x, we see that the effects of the Bill on public services manpower indicate that the staff of Oftel will be about 50. That is small enough, in all conscience. If, say, one-quarter of the total costs are apportioned to running the function and the overheads on salaries are set modestly at 100 per cent., the average salary will be £11,250. This does not augur well for the quality, qualifications and experience of the staff who will have to be attracted from an already tight market.

Therefore, I put two questions to my noble friend: first, can he give me some kind of undertaking that the point I have made, about having a staff which is as free from the effects of having been part of British Telecom for a generation as is possible, will be aimed at by the Government and that advice accordingly will be given to the director when he is appointed? Secondly, can my noble friend provide clarification about the kind of salary levels which it is foreseen will be offered to these people in order to make sure that people of a reasonable standard can be attracted to this very important office? I beg to move.

Lord Bruce of Donington

We on this side of the Committee are most grateful to the noble Lord, Lord Mottistone, for having come clean as to exactly what is meant by the amendment. It appeared to be, on the face of it, quite innocuous, but the noble Lord has made its purpose very clear indeed. I am not a member of the Post Office Engineering Union. I am not, and never have been, engaged in any way with British Telecom, apart from being able to rent their lines on either a business or a residential basis. However, I am bound to say that I resent the inference, as many noble Lords from all sides of the Committee will have resented the inference, contained in the noble Lord's words "tainted by 70 years' experience or tradition of British Telecom", the inference being quite clearly that what the noble Lord wishes is that the offices of Oftel should not in any way be influenced by any personnel from British Telecom being employed by Oftel, because they would not be bringing to Oftel the competitive, naked, cash nexus tradition of the people whom the noble Lord represents. To them, money means more than anything, and progress is measured in terms of cash. The noble Lord wants Oftel to be manned by people with that kind of mentality rather than by those whose whole life has been dedicated to public service.

Lord Mottistone

If the noble Lord will give way, I want Oftel to be manned by people whose main interest is in the expertise and quality of their work, which has not been demonstrated across the board by the Post Office during the past 30 years.

Lord Bruce of Donington

The noble Lord protests too much. The Government which he supports, in bringing forward this Bill are trying desperately to reassure the public, by the legislative provisions which it contains, that it will be laid down by law that the service to the consumer will not be less efficient than the service they have received from British Telecom. That is all. It has nowhere been suggested by the Government and by the noble Lord, Lord Cockfield, opposite that as a result of the passing of the Bill the consumer will get a better deal. In fact, the bulk of the political stance of the Government has been to try desperately to reassure people that things will be just as good as they were before.

The noble Lord referred, perhaps fortuitously, to personnel from the armed services. Presumably the Royal Signals would be a likely source of recruitment into British Telecom. May I tell the noble Lord that in our communications affairs in the United Kingdom the role of the Royal Signals would not have gone very far without the recruitment of its personnel from British Telecom, the organisation to which he has referred in such derisory terms, and that in practice it has precisely been the close association between the military telecommunications side of our affairs and the Post Office, later British Telecom, which has made the signals communications system in the United Kingdom one of the finest in the world. The noble Lord can accept my assurance on that point. In suggesting, therefore——

Lord Mottistone

The noble Lord said that I referred to these things, but I did not refer to any of them. The noble Lord put all those words into my mouth. When I speak again, perhaps I can clarify what he is trying to say.

Lord Bruce of Donington

I am quite content to rely on the printed version, when it will be seen tomorrow in Hansard that the noble Lord used the word "tainted". The word "tainted" means only one thing to me. It means exactly that—tainted. The noble Lord referred to the personnel of British Telecom within that context. I do not believe that the Government should have a bias against the personnel of British Telecom. Because of their experience in public service as distinct from participating in private pelf, they are more entitled to serve the nation, if serving in Oftel would provide that opportunity, than the people to whom he refers and the people to whose aspirations he is so firmly wedded. That is my view, and I believe that is what the public view will be.

I was very glad—and I must congratulate the noble Lord for being so frank—to learn of the motives which lie behind the liberalising group of which he is such a distinguished member. We now know what we are in for, and I am grateful to the noble Lord. I hope that the Committee will reject his amendment.

Lord Molloy

In fairness, it ought to be stated quite clearly that in my own experience in another place—which is not inconsiderable—of dealing with both the Post Office and British Telecom, as well as with our military forces, the liaison and contribution of both the Post Office and British Telecom has been the subject of sincere and genuine praise from Ministers of all Governments. Indeed, this is the first and only time in 20 years that I have heard a perhaps not unpleasant but irritating remark about the people involved in British Telecom such as that which I have heard tonight from the noble Lord, Lord Mottistone. I am sure that when the noble Lord reads Hansard, he will come back to this Committee and withdraw his comment about the personnel in British Telecom.

I am bound to say that the Government Front Bench have acknowledged in this Committee today the remarkable contribution which both the Post Office and British Telecom have made in their close and devoted liaison with the forces of our country.

As I believe they may now make a further contribution, they ought not to be stained by any frivolous mention in this Committee. I am sure that the noble Lord the Minister will make it very clear that it is not the Government's view that these people are in any way "tainted" and will join with us in rejecting the amendment.

Lord Spens

I feel that I must at this stage talk a little about our liberalisation group. The noble Lord, Lord Bruce of Donington, has put a slur on our group which I do not think is acceptable. To start with, I do not believe that the noble Lord, Lord Mottistone, ever mentioned the armed forces. I have listened to the whole of his speech and I do not think that the armed forces were mentioned at all.

We in our group are trying to prevent the appearance of a "big brother" in 1984 in the Orwell style. We are faced with British Telecom, who are going to take over 97 per cent. of the industry as a private firm, which I call very much a monopoly. If we have also to accept that the majority of the director's staff will be ex-members of British Telecom, then that to my mind is exactly the kind of "big brother" situation we want to avoid. It is for exactly those reasons that the noble Lord, Lord Mottistone, has moved these amendments, which I support very strongly.

The Countess of Mar

As one of those people to who the noble Lord, Lord Mottistone, referred as being "tainted", and despite the fact that I left British Telecom two years ago, I must register my regret that he said it. On behalf of all my ex-colleagues, I hope they will understand that the noble Lord, Lord Mottistone, does not, perhaps, understand them as well as many other noble Lords do.

I have a little sympathy with this amendment; not very much, but a little. In connection with suitably qualified staff, the noble Lord, Lord Mottistone, did make a mention of members of the armed forces; I heard it. Doubtless there are suitably qualified staff in the armed forces, but they could be no less biased than people who have been with British Telecom.

One point about which I am very concerned is an adequate number of staff. We have heard several comparisons made with the Office of Fair Trading. I understand that in 1982, the staff there numbered 295. I would think that the duties being placed on the director must be fairly comparable with those of the director of the Office of Fair Trading, but if the director of Oftel has to manage with 50 staff, he will not be able to do a very efficent job.

Lord Campbell of Alloway

As a member of no group but as an ordinary Back-Bencher, may I be forgiven for asking how an amendment which seeks to substitute a mandatory obligation for a permissive power can give rise to such discussion as we have had?

Lord Glanusk

If I may return to what the noble Lord, Lord Buce of Donington, was saying, may I suggest that the travels around the country and see how many Strowger exchanges are still in daily use. I am sure that my noble friend Lord Mottistone was not referring to the staff of engineers and technicians who maintain those Strowger exchanges. But we do maintain that those Strowger exchanges should have been replaced 20 years ago when they were already redundant.

Lord Beswick

Clause 1(5), states: The Director may appoint such staff as he may think fit"— and I believe there is an argument for using the word "shall" instead of "may" without all the other connotations which I understand arise here in association with the explanation given by the noble Lord, Lord Mottistone, in moving the amendment. The question I wish to ask is this: do I gather from all this that the director will have to consult the Treasury over every appointment to his staff that he makes? If he wants to appoint another secretary or shorthand-typist, or a lady to make the tea, will he have to go to the Treasury and obtain their approval?

8.37 p.m.

Lord Cockfield

I wonder whether on the wider issue I may make just one comment, which I hope will be acceptable on both sides of the Committee. However good an organisation is, there is always room for improvement. British Telecom is better and more efficient today than it was three years ago; one would expect that. We hope that it will continue to be more efficient in the future than it has been in the past. Perhaps I may leave the matter on that basis.

So far as the amendments themselves are concerned, we do not consider that they are either necessary or that they will have any real effect. We agree that the director should have sufficient staff with the right qualifications and experience in order to ensure that he can carry out the difficult tasks assigned to him under this Bill. Having said that I consider the amendments to be unnecessary, perhaps I may take them in turn and explain my reasons in a little more detail.

The first amendment seeks to place a duty on the director to appoint staff by replacing the word "may" with "shall". In practice, it will be for the director to judge what staff he needs in order to perform the various tasks assigned to him. Since the amendment, quite rightly, does not qualify that discretion by removing the words, as he may think fit the amendment is unnecessary.

Turning to the question of suitably qualified staff, the Government are sympathetic to the proposition that the director should have available to him the expertise that will be clearly necessary if he is to be successful in regulating the telecommunications industry. But again, the words "suitably qualified" add nothing to what is already in the subsection. In considering the staffing needs of Oftel, the director will obviously have to look for particular skills among his advisers in, for example, accountancy, law, economics, or the technological aspects of the telecommunications. The clause needs no amendment to achieve that effect since without suitably qualified staff he will be unable to do the job properly. Obviously, in searching for suitably qualified staff the director ought not to exclude from consideration suitably qualified staff from every quarter.

A similar argument to the one I have already put forward applies in relation to the number of staff in Oftel, one of the specific points raised by the noble Lord. He asked whether the 50 staff mentioned in the Financial and Explanatory Memorandum would be sufficient. The Government of course are pledged to maintain firm control on the size of the public sector; but at the same time within those constraints we are determined to ensure that the director has the resources he needs to carry out his functions. The initial allocation is quite justifiable on the grounds that a small tightly knit unit is likely to be more effective than a large and less well integrated organisation. Nevertheless, I can assure Members of the Committee that we shall keep matters under review, and if in the light of the developments an increase in complement is called for it will be considered very sympathetically.

So far as the point raised by the noble Lord, Lord Beswick, is concerned, the approval of the Treasury is standard procedure in matters of this kind. The same phraseology appears in the Fair Trading Act under which the Director General of Fair Trading was appointed. What is required is the approval of the Treasury as to numbers and as to terms and conditions of service. The people in Oftel will be civil servants and broadly speaking they will be remunerated on normal Civil Service levels. This of course is the answer to the other point raised by my noble friend; namely, the question of the cost of Oftel, which he seemed to think was extremely modest in relation to the number of people employed. But when one is looking at an overall figure, one needs to bear in mind that in addition to the highly qualified people there will also he clerical staff, typists and others, whose level of remuneration is obviously less than that of the highly qualified technical people.

All I want to say in conclusion is this. The director will be bound to keep all of the matters which have been referred to under review because unless he has sufficient suitably qualified staff he will not be able to meet his various obligations under the Bill. I hope that in the light of this statement of the Government's position my noble friend will feel able to withdraw the amendment.

Lord Orr-Ewing

Before my noble friend sits down, could he elucidate a little? When he said that the staff of 50 would be civil, servants working under Civil Service conditions, I hope this does not bar Oftel from recruiting on a two-or three-year contract bright young people who would like to serve there for two or three years and who probably do not have a tremendous future there on a long-term basis. I hope that that freedom will be left, because these are the types of young people who ought to be there if they are going to carry out the sophisticated duties which will be essential in this case.

Lord Cockfield

I entirely take the point. There would be no bar on the recruitment of staff on specific short-term contracts. I was talking in general terms, and I used what I thought was a suitable qualification by saying that generally they would be remunerated on Civil Service levels. There would be no obstacle of the sort my noble friend refers to.

Lord Mottistone

I think my noble friend for those closing remarks. On that point, I hope that there will be no inhibitions about how much the director should be paid. I am sure we are all agreed that we want the very best person, and I would hope that the Government will feel free to pay him whatever is necessary for the task.

However, I seem to have stirred things up. I must make it clear before I conclude my remarks that I am sorry for the people in British Telecom, as indeed I am sorry for all people in monopoly organisations wherever they are, whether they are owned by the state or anybody else, because the people in monopoly organisations get soggy. I am sorry, but it must be so. They are not subjected to the disciplines of the market and the pressures of having to make the books balance in the sense that people in private industry do. I am certain that my noble friend Lord Glanusk was very helpful in pointing out that it is the managers we are talking about, because it is the managers who will be part of these 50.

The point is that those in these organisations, without those pressures, do not achieve what they could do if they were not. We shall no doubt have other amendments later when one will be able to show just exactly what this means. I am sorry for all the people concerned, but they are not really suitable for competitive industry and they are not suitable to administer it, either. Having said that, I take the points that my noble friend has put. I accept that the Government will do their best in this area. I beg leave to withdraw the amendment.

Lord Beswick

Before the noble Lord withdraws the amendment, I wonder whether he would clarify something. He says he does not appreciate the experience of those who work in a monopoly; he likes the influence of the market. He would appear to be suggesting that the influence of the market, and all the initiative that he would require, and I should like to see, will be found in the office of the director general. But if you have an office which is limited to 50 by Act of Parliament, if the Treasury have to agree who is appointed, if you have the terms and conditions of service approved by the Treasury, how then does the operation of the market come into it?

Lord Cockfield

Of course the number of 50 does not appear in the statute; it is merely an estimate given in the Explanatory Memorandum.

Lord Beswick

It may well be.

Lord Mottistone

If I may take the noble Lord's point, I am talking about the mentality of the people who operate within this Office of Telecommunications. It needs to be that which understands the market place. It is not well served if its people have come from a 70-year old monopoly. It is an attitude of mind that is needed, and in order to do the job properly within Oftel they need to have come from the hard world of the market place. I have withdrawn my amendment.

Lord Taylor of Gryfe

The noble Lord may withdraw his amendment but he does not withdraw his remarks. I was wondering how the noble Lord would reconcile his general support in this Bill for the creation of a public monopoly when he says that the incentives to inventiveness and enterprise cannot be contained within the structure of a monopoly system. I am afraid the noble Lord himself is rather far-removed from the market place and does not understand that there are other incentives to service in the community rather than purely the profit motive, and that some people in the Post Office over the years have taken a pride in the creation of the institution which has served this nation well. I am rather doubtful whether in the new circumstances, in an organisation that is devoted primarily to the profit nexus, we shall have an organisation of which we can be equally proud.

Lord Home of the Hirsel

A number of us might have attempted to speak, but I understand that the noble Lord has withdrawn the amendment.

Lord Donaldson of Kingsbridge

With respect, if any noble Lord wishes the amendment not to be withdrawn, we have the right to continue the conversation.

Lord Molloy

As I was about to say before I was interrupted, when the noble Lord, Lord Mottistone, talks about the purity of the market place it might be worth his while exercising his mind to realise that of the 4 million people that we have on the dole, many are unemployed today because of this form of activity of the free market place—a little asset stripping here and there which has resulted in thousands losing their jobs. A few takeover bids and the fact that many people——

Lord Spens

May I intervene? We are not talking about the 4 million unemployed. We are talking about some very specialist people who are required in the office of the director of British Telecom.

Lord Molloy

Noble Lords may not be talking about the unemployed, but I am. Many people are unemployed because of the market place that the noble Lord, Lord Mottistone, has been lauding. I mentioned asset stripping and takeover bids. I will also mention that people find it distasteful working for organisations where the profits that they have helped to create are salted away in some tax haven. That is part of the free market. We all know—at least we do on these Benches—that much of what has been created to assist the disabled, the blind and the deaf was done by ordinary people working within the Post Office and thinking of those things not to make a profit or to make money out of it but to contribute to the disabled. That is the society that we believe in on this side of the Committee.

Lord Mottistone

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 11 not moved.]

[Amendment No. 12 not moved.]

8.51 p.m.

Lord Stoddart of Swindon moved Amendment No. 13:

Page 2, line 18, after ("staff") insert ("following consultation with the appropriate trade unions")

The noble Lord said: I move this amendment in the name of my noble friends Lord Bruce of Donington, Lord McIntosh of Haringey, and of course in my own name. If I had any doubts at all as to whether this amendment should be moved before I heard the noble Lord, Lord Mottistone, speak, then those doubts no longer exist. In the light of what he said, his attitude towards the employees of British Telecom and the people who worked for the Post Office before British Telecom was set up, it is clear that the staff of British Telecom need protection. Certainly they need protection from the noble Lord, and they also need protection from the present Government, as I shall seek to show. Moreover, the future employees of Oftel need protection. The clause states: 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".

The noble Lord the Minister said that they will be appointed on Civil Service terms. I wonder whether that is entirely acceptable. How are we to know, because this is a new body, that Civil Service terms and conditions are appropriate to the new body and to its duties? It seems rather quaint that the director and the Treasury alone should be fixing the salaries and terms and conditions of service without, apparently, any reference to anyone with any outside experiece of the telecommunications industry. Certainly there will be no reference to the trade unions themselves. I am not pretending—and indeed I am not moving the amendment with this intention—that trade unions should approve the appointments; but we believe that there should be consultation, and the director should consult the trade unions about these conditions of service, salaries—and, indeed, numbers—because numbers are going to be very important to the efficient running of this organisation if it is to protect the consumer and do the myriad other jobs which it is set to do under this Bill.

I have to tell your Lordships that the trade unions in British Telecom are seriously worried about this Bill. They are seriously worried about the Government's intentions towards themselves, let alone to an industry which is not to be privatised but monopolised in a different manner. Their experience has led them to fear what the Government have in mind for them in the new arrangements for telecommunications. The Minister will be well aware that for many years within the Post Office—I know this from my own experience—there was extremely good consultative machinery. It was one of the finest sets of consultative machinery that has ever existed; and it worked. It was satisfactory both to the people who worked in the industry and to those who managed it. It worked very well for very many years. Indeed, there was a valuable element of consultation within the industry; but that, unfortunately, was put to death by the present Government in the 1981 Act.

The Government will say that they are not against trade unions, that they are quite happy for people to belong to trade unions, and that there should be trade union organisations. But when the Government take any action at all those actions make it clear that they consider the trade union movement to be an obstruction to the policies, economic and otherwise, which they wish to pursue. Throughout the past four or five years the trade union movement—not only in the Post Office but in many other fields—has felt the full force of Government legislation against it. In this Bill we see nothing which will reassure the trade unionists working in British Telecom that the Government will protect them, their interests, salaries, conditions of service, pensions, and so on, let alone allow them to have some say on how this new organisation is to be set up.

For example, we have had discussions in this noble House about industrial democracy. As far as I know there is no one in the House who is against better relationships within industry. Indeed, everyone calls for better labour relationships, better consultation between management and workers, and better worker involvement in industry. That is something which all sides want. That is what they had in the Post Office. The workers in the old Post Office had representation and consultation at every level right up to board level. In fact, they had people serving on the board of the Post Office at one time, until the Government took those rights away. Therefore, the trade unions are most concerned, I am very concerned, and so is this side of the House concerned, that there is nothing in the Bill that in any way gives assurance to the trade unions.

Some people will say that this is a new organisation, why should they have a say? In the long run they are the people who will have to do the work of administering the new organisation of Oftel under the director general. It is they who will have to undertake the myriad tasks placed upon the director and the Office of Telecommunications. Is it not right that they should be consulted as to the numbers? There are to be only 50 staff to administer all the functions contained in the Bill. Would it not be better, in the first place, to have some consultation not only with the trade unions inside the present British Telecommunications set-up but also with other trade unions, perhaps those with experience in manufacturing industry, to see exactly what the job will involve? That would start up an organisation which from the beginning will be able efficiently to discharge the functions which Parliament will give to the new director and the Office of Telecommunications.

This amendment, which asks for consultations with the appropriate trade unions, should find favour on all sides of the Committee. As I have said, I think that we all want better relationships within industry. We have the opportunity here to start as we mean to go on; to bring the trade unions in from ground level, to make them part of the organisation and to give them the opportunity to build up that organisation. If they are involved right from the beginning, they are likely to have a better loyalty to the organisation for which they work.

There are all sorts of things that they might want to discuss. The noble Lord, Lord Orr-Ewing, suggested that the Office of Telecommunications should not be tied to full-time Civil Service posts. There is something in that, I would not necessarily disagree with short-term appointments; but in my experience in industry, short-term appointments can often cause difficulties and friction. Before we embark upon short-term contracts, it is as well to get the agreement—having discussed it with them first—of the trade unions. That is just one reason why the trade unions should be taken into consultation at an early stage.

During the previous debate the noble Lord, Lord Glanusk, mentioned out-dated telephone exchanges using Strowger equipment. It seemed to me that he was blaming the workers in the telecommunications industry for that. I hope that he was not. If he wishes to intervene, I shall be glad to give way.

Lord Glanusk

I certainly was not. I was doing exactly the opposite. I was saying that the staff who maintain Strowger exchanges are first-class, but the Strowger exchanges should not be there in the first place. They should have been replaced many, many years ago.

Lord Stoddart of Swindon

Yes, indeed. I am most obliged to the noble Lord for putting me right on what he said. He is absolutely right. The staff of British Telecom are first-class, and have been maintaining old-fashioned equipment, which I was working on in 1945. The exchanges should have been replaced a long time ago. But, of course, it is not the fault of, originally, the Post Office, nor, indeed, of British Telecom, that they have not been replaced. It is largely due to the manufacturing industry, which went along the wrong road of developing new equipment. It has also had something to do——

Lord Weinstock

Will the noble Lord give way?

Lord Stoddart of Swindon

Yes; I thought that the noble Lord might wish to intervene.

Lord Weinstock

I do not want noble Lords to think that I rise merely to the challenge, but a great deal is being said about who is responsible for what without any evidence whatever to support it. It is not in fact the case that suppliers supply what they want to supply to customers. Customers buy what they want. The suppliers sold to British Telecommunications and to the Post Office, its predecessor, what they insisted upon having, and not what the industry dictated to them that they should have.

9.5 p.m.

Lord Stoddart of Swindon

The Post Office certainly laid down particular specifications, and I am quite sure that private industry tried to live up to those expectations. But at the same time I understand that at least the Post Office, and subsequently British Telecom, found that the manufacturers were not as co-operative as they might have been, because they had other fish to fry.

Lord Weinstock

I am grateful to the noble Lord for giving way a second time. There were no other fish to fry. As a result of the insistence by the Post Office, and susbsequently by British Telecom, on the equipment which they specified, all our other fish were drowned or lost at sea. We lost our export markets because, as has been said by noble Lords on both sides of the Committee, we did not have modern equipment to sell; and we did not have modern equipment because British Telecom and its predecessor would not buy it. At the point when it decided to stray from Strowger, which was some years ago, it changed to a system called TXE 4, the relay electronic exchange, which was not really electronic but was another electromechanical exchange. That was not saleable in overseas markets, and none was sold. That decision was made between British Telecom and one of its suppliers—not the company which employs me, but another one. The change from Strowger to TXE 4 did not make an appreciable impact upon our possibility to export. There was no question of manufacturers having other fish to fry. We always fry the fish that our customers demand of us.

Lord Stoddart of Swindon

I am most obliged, and I am sure that the Committee is most obliged, for that explanation from the noble Lord, Lord Weinstock. However, I must tell him that it is not an explanation that would be universally accepted, and I am sure that if he reads the minutes of the Select Committee on nationalised industries, which investigated the matter, he will find that there are two points of view on it. I have put one point of view this evening, he has put the other, and perhaps we shall have a discussion about the matter at much greater length outside the Chamber.

However, what the noble Lord will probably agree with me is that over a period of time the Post Office and subsequently British Telecom have suffered from financial interference by the Government. The Post Office has been unable to proceed to provide new equipment because of Government financial restrictions, not knowing from one year to the next how much it would have to spend on rejigging exchanges and on new equipment. Certainly that is one of the reasons why Strowger equipment is still being used in so many exchanges up and down the country—though, I may add, in many instances quite efficiently.

I sincerely hope that the amendment will be carried. I trust that we shall press it to a Division because I believe that it is important in the interests of people who will work for Oftel, and in the interests of the organisation itself and therefore the customers and users of telecommunications services.

Lord Donaldson of Kingsbridge

I wish to make only two remarks. I think it an awful pity that it should take 20 minutes to move an amendment so obvious as this one. I think it also a great pity that not a single amendment from the centre Benches on this side of the Chamber has been moved in less than 15 minutes. Having said that, I believe that what the amendment proposes is perfectly reasonable. The only answer that there can be to it is that what it proposes is already included in the Bill, or the Government are to do it, and the whole matter could very well have been dealt with in three minutes.

Lord Cockfield

I do not propose to follow the noble Lord, Lord Stoddart, down the tangled paths that he has been traversing. Therefore I shall stick to what the amendment itself deals with. Let me start by saying that there is an entirely legitimate field in which staff should be consulted, and where appropriate this should be done through trade unions, though not exclusively so. But having said that, it is clear that this amendment is intended to go very much further.

We are talking about Oftel, an organisation which is to employ 50 people. We are not talking about the whole of the telecommunications industry. In establishing Oftel our aim is to create an independent regulatory body staffed to carry out an important and specialised function in relation to telecommunications. If trade unions in the industry feel that they have valuable suggestions to make to the director on how his office should be staffed, they are always free to draw them to his attention, and I should expect them to do so. But a formal obligation to consult the trade unions or indeed anyone else on these matters would be quite wrong, as it would imply that the trade unions should have some right to approve either the individuals to be appointed, or if not the individuals, the types of individuals, or their numbers.

The amendment could well have another undesirable effect, because it could be interpreted as requiring the director to set up special arrangements for consulting the Oftel staff about manning levels and terms and conditions of service. Oftel's staff will in general be civil servants, and there exist long-established procedures for consultation on such matters. Terms and conditions of service, including salaries, are agreed centrally, and as the noble Lord well knows, are normally the subject of much discussion and negotiation with the unions concerned. To add a further level of consultation would not only be unnecessavry, but would also undermine existing procedures. On all those grounds, I ask the Committee to reject the amendment.

Lord McIntosh of Haringey

I feared, when the noble Lord, Lord Donaldson, said it was an obvious amendment, that he was too sanguine. My fears have been proved right. It seems that the Government have misunderstood virtually every aspect of what my noble friend said, and have misunderstood the purport of the amendment almost entirely. It is not the intention of the amendment—it does not say so, and it does not mean it—that there should be negotiations exclusively with the appropriate trade union. Of course there will be other people likely to be involved. It is not the intention of the amendment that the trade union should be involved in deciding what individuals should be appointed. I cannot think how the Minister reads that into the words of the amendment.

It is not the intention of the amendment that the consultation that is requested should replace the existing consultation procedures within the Civil Service. Indeed, it is the very fact that there is this consultation procedure within the Civil Service that makes necessary an amendment of this sort now. Not only has the Civil Service a tradition of consultation on levels of pay across the unions through the Council of Civil Service Unions, as well as with individual unions: there has also been consultation historically about such issues as the devolution of Civil Service officers from London to other parts of the country—and very properly so. It is impossible to see how these moves could have been made as smoothly as they have been made without that consultation. That inevitably involves consultation about staff numbers and manning levels. That is very proper.

As an organisation that is to be paid and managed, as we have heard from the noble Lord, Lord Cockfield, on Civil Service lines, it should be extended to Oftel. The experience of government in trying to ignore what seem to myself and to the noble Lord, Lord Donaldson, these rather obvious truths has not been terribly satisfactory. What consultation, for example, took place on the level of pay of the Audit Commission? It was found, only after the commission had started to employ people at significantly higher salaries than those they were supposed to be auditing, that there would be a great deal of trouble and unrest, and a feeling that a group of people there to save money in local government were spending money on a large scale themselves on their own salaries.

Is the experience of the GCHQ a good example? I am not going into the merits of the case, but at least it can be accepted that there has been a lack of consultation, even within the Cabinet, if not on a wider level. The history of government attempting to go ahead with new organisations without consulting the people who will be involved is not a good one. My noble friend needed to make those points, as evidenced by the Minister's reply.

Lord Donaldson of Kingsbridge

The noble Lord referred to my saying that the amendment was obvious. It is obvious that before you make appointments you consult trade unions. It is not obvious that you put it in the Bill.

9.17 p.m.

On Question, Whether the said amendment (No. 13) shall be agreed to?

Their Lordships divided: Contents, 38; Not-Contents, 62.

DIVISION NO. 3]
CONTENTS
Airedale, L.	Lawrence, L.
Ardwick, L.	Llewelyn-Davies of Hastoe, B.
Beswick, L.	McIntosh of Haringey, L.
Birk, B.	Mar, C.
Bishopston, L.	Mishcon, L.
Blyton, L.	Molloy, L.
Bruce of Donington, L.	Mulley, L.
Carmichael of Kelvingrove, L.	Northfield, L.
Collison, L.	Oram, L.
David, B.	Phillips, B.
Davies of Penrhys, L.	Ponsonby of Shulbrede, L. [Teller.]
Dean of Beswick, L.
Donaldson of Kingsbridge, L.	Seear, B.
Gallacher, L.	Shackleton, L.
Graham of Edmonton, L. [Teller.]	Stewart of Alvechurch, B.
	Stewart of Fulham, L.
Jeger, B.	Stoddart of Swindon, L.
John-Mackie, L.	Taylor of Gryfe, L.
Kagan, L.	Underhill, L.
Kaldor, L.	White, B.
NOT-CONTENTS
Abinger, L.	Davidson, V.
Airey of Abingdon, B.	De L'Isle, V.
Avon, E.	Denham, L. [Teller.]
Bellwin, L.	Elliot of Harwood, B.
Belstead, L.	Elton, L.
Boyd-Carpenter, L.	Enniskillen, E.
Brabazon of Tara, L.	Gardner of Parkes, B.
Brookes, L.	Glanusk, L.
Brougham and Vaux, L.	Glenarthur, L.
Bruce-Gardyne, L.	Gowrie, E.
Caithness, E.	Gray of Contin, L.
Campbell of Alloway, L.	Greenway, L.
Carnegy of Lour, B.	Hailsham of Saint Marylebone, L.
Cockfield, L.
Coleraine, L.	Hives, L.
Cork and Orrery, E.	Home of the Hirsel, L.

Hornsby-Smith, B.	Orr-Ewing, L.
Long, V.	Peyton of Yeovil, L.
Lucas of Chilworth, L.	Polwarth, L.
Lyell, L.	Rodney, L.
McAlpine of West Green, L.	Saltoun, Ly.
McFadzean, L.	Shaughnessy, L.
Mackay of Clashfern, L.	Skelmersdale, L.
Macleod of Borve, B.	Spens, L.
Marley, L.	Swinton, E. [Teller.]
Massereene and Ferrard, V.	Torphichen, L.
Maude of Stratford-upon-Avon, L.	Trefgarne, L.
	Trenchard, V.
Morris, L.	Trumpington, B.
Mottistone, L.	Weinstock, L.
Murton of Lindisfarne, L.	Whitelaw, V.
Orkney, E.	Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.

9.25 p.m.

Lord Bruce of Donington moved Amendment No. 14:

Page 2, line 19, after ("Treasury") insert ("and affirmative resolution of each House of Parliament").

The noble Lord said: I beg to move this amendment standing in my name and those of my noble friends. This amendment is designed to secure greater parliamentary control over expenditure, and it provides that the matters that are discussed in Clause 1 in regard to staff and numbers, in addition to being approved by the Treasury, should be approved by an affirmative resolution of each House of Parliament.

In the course of the debate on the last amendment we learnt of the Government's reluctance to enter into consultations—at any rate, on formal terms—with the appropriate trade unions in regard to establishment size. This amendment is tabled to make quite sure that someone somewhere exercises some control. The Government have a tradition going back many years in regard to setting up new kinds of organisations. Although they may have been reluctant to consult with trade unions, there has been no reluctance to consult with consultants, particularly American consultants.

That is evidenced by the restructuring of the National Health Service, which was carried out on the advice of American consultants, which is now admitted to be a disaster, and which has had to be reformed. Another example was the restructuring of local government, once again on the advice of consultants. A third one was in the setting up of the recent Audit Commission, once again on the advice of consultants.

This time one wants to make quite sure that when the establishment is set up and staff numbers and qualifications are finally determined, there is some control before Oftel is brought into operation. The reason for this lies in the ambiguity of the Government's own Explanatory and Financial Memorandum on this matter at pages viii and ix of the Bill, where they set out the financial effects of the Bill, and a little later on at page x where they anticipate an increased number of 50 to man Oftel.

At the moment, and in view of the vagueness of the figures that are given in the Explanatory and Financial Memorandum, I regard it with mild disbelief, more particularly after looking at Clause 3 of the Bill, which lays down not only the responsibility of the director of Oftel and, therefore, of Oftel staff, but also of the Secretary of State himself. Noble Lords will note from Clause 3, when we reach it, that the Secretary of State and the director have the same responsibilities—the one becomes interchangeable with the other. One of the delightful characteristics of this ridiculous piece of legislation is that two different people have identical reponsibilities with the result, of course, that there is bound to be some overlap. Is it to be thought that the Secretary of State's part in carrying out all the principles of the Bill in accordance with those laid down in Clause 3 will be done without any increase in his own staff? Is he going to exercise those responsible powers of Clause 3 sitting in his own office by himself without any extra staff in his office? This becomes inconceivable.

Even after a cursory look at the Bill, let alone a detailed examination of all its implications, right through to the advice that the Minister will be required to give and the decisions he will have to make later under Part V of the Bill—if Part V of the Bill ever gets past your Lordships—it is inconceivable that all this can be accomplished by a staff of merely 50 at Oftel, if this is to be done properly.

Perhaps it will not be done properly. Perhaps the whole of the provisions of this part of the Bill are an elaborate facade designed to lull City institutions into investing in shares in the new company, once its liabilities have been suitably written down to an acceptable figure to investors. Perhaps there is no real intention. Perhaps it will be a charade; but if it is to be a serious operation it will require more than this. But in any event, notwithstanding the Government's previous history in matters of this kind, will there be another new Government quango, by a Conservative Government dedicated to the assassination of quangos? It will not even receive parliamentary approval before it moves ahead. This amendment gives the noble Lord an opportunity of elaborating rather more extensively on the total costs and projected structure of this operation than has so far been given. The explanation itself bears all the stamp of having been cobbled together for the purpose of lending some degree of plausibility to the appropriate clauses in the Bill as they pass through the House. We want something a little more than that. We want closer financial estimates. We want closer numbers, increases in terms of the Ministry as well as Oftel. Unless the Minister can do better than that at pages viii, ix and x of the Bill there will remain a degree of dissatisfaction and unease.

In my respectful submission, the only way of exercising some parliamentary control over this from the outset, so that we can avoid previous mistakes such as those which occurred in the days of the troubles resulting from consultants, which everybody knows about, is for Parliament to be in on it from the beginning to give appropriate approval to the establishment, to any increases thereto, and to the total expense projected. I beg to move.

Lord Cockfield

Once the Bill is enacted, the director will be charged by Parliament with carrying out certain onerous duties. It follows from this that he must have freedom to appoint the individuals he considers appropriate to the task of running his office at Oftel. In practice Parliament will exercise control over staff costs through the normal procedures of voting expenditure. Separate approval by affirmative resolution procedure would be a major innovation, would greatly interfere with the director's freedom to manage Oftel, and would considerably delay the setting up of that office. There is no such requirement for the Director General of Fair Trading to obtain parliamentary approval.

We have already discussed on a previous amendment the suitability of the staff in respect of their knowledge and experience. Safeguards about the suitability of the staff in other respects and their terms and conditions of service are provided by the fact that, in general, they would be civil servants. They will therefore be subject to centrally-negotiated and agreed terms and conditions of service, including salaries.

The Treasury will ensure that the director does not exceed the number of staff that the Government consider appropriate to enable him to perform his functions properly and that he pays them neither more nor less than their equivalents in other Government departments. The question of the number of staff is a matter which, as I have said before, will be kept under close supervision. We shall be discussing later the extremely important question of parliamentary control in major matters. The present amendment, I suggest, is not the place for that major discussion. I hope that on this basis noble Lords will not accept this amendment.

Lord McIntosh of Haringey

Once again I accept that we have made some progress with the statement from the Minister. It is necessary for the Committee to be told explicitly about the nature of the control through the control of expenditure. But that does not answer the points made by my noble friend. The example that the noble Lord, Lord Cockfield, gives of the Office of Fair Trading is not particularly reassuring. I am not now talking about the functions of the Office of Fair Trading but about the fact which was referred to by the noble Countess, Lady Mar, on an earlier amendment that the Office of Fair Trading at the end of last year had a staff of 295. I am prepared to assert that, at the time the Office of Fair Trading was set up, the figure expected by Government was nothing like 295. In other words, the Office of Fair Trading, because it has only the financial control on its budgets and because it lacks the possibility of direct questioning of the Secretary of State on its activities, has grown in size, and therefore grown in cost to the taxpayer.

I am not making any judgment now on whether 295 is the right figure or the wrong one. I am saying that there is a lack of precision in the Bill which is not reflected in the Financial and Explanatory Memorandum. It is not good enough for the Bill to say nothing precise about the nature of the Office of Telecommunications and, outside the orbit of statute, for estimates to be made which are simple assertions. They have nothing in any way to back them up either on the costs or on the numbers involved. Somebody just pulled a figure out of the air; there is no attempt to justify it and it is not subject to parliamentary scrutiny because it is not part of the statute. The answers that the Minister has given are simply not satisfactory at this stage and it will be necessary for us to find other ways of probing the cost and protecting the taxpayers' interests.

Lord Cockfield

I wonder whether the noble Lord could quote me any case where the staffing complement of an office of this kind has been laid down in statute. I am quite unaware of any such instance. If I may take the noble Lord's argument in general, what he is saying is that one ought to learn from experience. I am entirely prepared to accept that; and that is the basis of the argument that I put to your Lordships. What I am saying—and said on one of the earlier amendments—is that one ought to start with a tightly-knit organisation. Our belief is that we could effectively staff this office with 50 people. If experience shows that the director cannot carry out his duties with 50 people, the staffing level will be reconsidered; and I said specifically that it will be sympathetically reconsidered. But neither side of the Committee would want us to staff the office beyond what the requirements of the job are. What we are trying to do is to get the right number.

Lord McIntosh of Haringey

I apologise to the Committee for rising again, but I was directly challenged. I agree with the noble Lord that it is not desirable to have actual numbers laid down by statute, but the necessity for us to ask for parliamentary scrutiny here arises because we have a quango being set up and because the Minister cannot be directly questioned on its activities.

I agree with the noble Lord that it is desirable to have a tightly knit group. I agree that it is desirable to have the expenditure kept to a minimum. We are at one on that. But I am worried when the Minister says that it should be tightly knit at the start, because in saying that he is implying that there is going to be the necessity for increase afterwards. It is the divorce from parliamentary control that is implicit in the quango status which makes it necessary for us to seek these assurances. It is not that we are asking for any control which is not available over the Civil Service, but simply that the Office of Telecommunications should not be freer from control than any other organisation.

On Question, amendment negatived.

[Amendments Nos. 15 to 18 not moved.]

Clause 1 agreed to.

Schedule 1 [Director General of Telecommunications]:

9.43 p.m.

Lord Bruce of Donington moved Amendment No. 19:

Page 86, line 6, at end insert ("subject to approval by resolution of each House of Parliament").

The noble Lord said: Perhaps it will be for the convenience of the Committee, and to the delight of the Government Chief Whip, if I ask the leave of the Committee to take amendments Nos. 19 and 20 together as they involve the same principle.

Amendment No. 20: Page 86, line 16, after ("him") insert ("subject to approval by resolution of each House of Parliament").

This asks that the salaries of the new director general, and indeed of any compensation that may subsequently be paid to him under certain circumstances, be subject to approval by a resolution of each House of Parliament. The reason for this is simple. I do not want to rake over old coals too much but one does not have to go very far back to recall to mind the instance of the appointment of Mr. MacGregor to the steel board and the compensation terms that were agreed to be payable to his firm in certain circumstances and subject to certain reviews.

I do not want to rake over the more controversial aspects of that again. However, I think I am within the recollection of both sides of the Committee, and of the public at large when I say that this appointment and the amount of compensation were denounced in most national organs of the press, whether they were Conservative, Liberal, or Labour—although there are very few of those, if any. Indeed they created widespread disquiet in another place and, if it is admitted, here also. That was, first, because the amount of the remuneration was considered to be out of all proportion to the value of the services performed, while the compensation terms were described, in sections of the media which are very favourable to the Government, as being ridiculous and in one case as scandalous. If there is any doubt about that, the press records of the time are available for inspection.

In a case of this kind we want to avoid a situation where, out of sheer desperation or because of lack of initiative and (to use the felicitous terms of Sir Keith Joseph) after scouring all the boardrooms in the United Kingdom, the Government are induced to offer wholly ridiculous terms as distinct from reasonable terms of engagement to the director general. I am one of those who believe, and believe firmly, that a person taking on onerous responsibilities should receive proper and adequate remuneration. Of this I am in no doubt, and I do not cavil at it in the slightest, although whether or not it should approximate to salaries and remunerations of the kind to which we agree in the European Economic Community is an entirely different matter. One hopes that the terms will not approach that kind of level, particularly on the taxation side. They were exceeded only by what happened on the appointment of Mr. MacGregor.

I think that the Committee would be well advised to put its foot down quite firmly and ensure that ridiculous arrangements are not made in the same way as they have been made before (possibly and very largely owing to the personal power and prestige of the Prime Minister, who succeeds in cowering most of her Ministers when she wants anything) and should make certain that any arrangement that is made carries the approval of Parliament. I repeat that nobody would object to a proper remuneration, allowances, compensation and everything else being paid. There is no desire to be mean on it, or anything of that kind; but in the light of the experiences that we have had, and for the sake of accountability, we think that in this instance an exception should be made because the circumstances are wholly exceptional. The occasions for appointment under this ridiculous Bill are very exceptional. The least that Parliament should be offered is some opportunity of preventing grossly excessive expenditure, and grossly extortionate terms of compensation, if these are envisaged.

I repeat that we are quite prepared to support the Government at any time on any reasonable arrangement they make to fill this very onerous post, in the full knowledge that it requires exceptional dedication and an exceptional ability to deal with a Government who are not always frightfully easy to deal with, bearing in mind their oft-expressed contempt for the Civil Service generally.

Lord Cockfield

The point of principle raised by these two amendments is precisely the same as the one that we were debating on Amendment No. 14: namely, the extent of parliamentary control over matters of this kind. These are not, I suggest, the kind of matters which ought to be the subject of detailed individual parliamentary control. The director general is a Crown servant, and the salaries of other Crown servants are not fixed by Parliament in the way that this amendment would propose. The salaries of people who occupy comparable posts—for example, the Director General of Fair Trading—are not fixed by Parliament. There is no reason why the Director General of Oftel should be picked out and dealt with in any other manner.

The noble Lord, Lord Bruce of Donington, and the noble Lord, Lord McIntosh of Haringey, raised the point that this particular body is a quango and is not subject to proper scrutiny by Parliament. Neither of these statements is true. This body is not established as a quango. It is what is technically called a non-ministerial department, as illustrated by the fact that the people in it will normally be civil servants and it is possible for Parliament to scrutinise the affairs of Oftel in the way that has been described in detail by Ministers in another place.

There are plenty of orthodox ways in which the affairs of Oftel will be subject to parliamentary scrutiny. For example, apart from questions to Ministers, committees of either House could investigate the affairs of Oftel. The estimates procedures provide a mechanism for questioning expenditure and, finally, the director's annual report has to be laid before Parliament and can be debated.

Turning to the second amendment which deals with compensation, its purpose is simply to deal with the case where, for some reason, the director general might leave office prematurely and there might be circumstances which then justify the payment of compensation for loss of office. This follows normal procedure elsewhere. The compensation may be a matter determined under the terms of the contract, or it may be agreed on the basis of negotiations at the time of the event. It would be unprecedented to involve Parliament directly in matters relating to the payment of compensation to an individual person, and I have heard no arguments which would persuade me that the Director General of Telecommunications should be singled out for peculiar treatment.

In all of these instances the Bill makes provision for Treasury approval, and the complaint normally made is not that Treasury approval is too readily given but that the Treasury exercises a very tight control over these matters. On all of these grounds I would advise your Lordships against accepting the amendment.

Lord Lloyd of Kilgerran

Earlier this evening the Committee heard a very powerful submission from an ex-chairman of the Conservative Party, Lord Thorneycroft. He said how exceptional this post of Director General of Oftel is and that it is important to find an exceptional man for an exceptional post. Therefore, I was interested in the Minister's statement that the director general will be a Crown servant. He went on to say that there are comparable posts. The post with which he compared that of the Director General of Oftel was the Director General of Fair Trading. He said also that the fixing of the salary of the Director General of Oftel would be on the same basis as that for the Director General of Fair Trading.

I do not know how the Treasury fix salaries. I wonder whether the Minister could be more precise and tell us, either now or on a future occasion, how he envisages that the salary of this very important, experienced man will be determined. Is the noble Lord the Minister saying that the salary of the Director General of Oftel is to be comparable with that of the Director General of Fair Trading, since he referred to it as a comparable post? In the case of comparable posts comparable salaries are, no doubt, paid.

Lord Cockfield

The noble Lord is not entitled to place that interpretation upon what I said. I am not saying that this post would necessarily be paid at the same level as that of the Director General of Fair Trading. I am making no statement of that kind. I was comparing the nature of the post, which is that of a Crown servant, with the nature of the post which is held by the Director General of Fair Trading. Obviously, when it comes to fixing the precise salary of the individual concerned there is a very wide range of factors to be taken into account—not least the onerous nature of the duties concerned.

Lord Lloyd of Kilgerran

I wonder whether I may press the Minister further, because he has said that the post of the Director General of Oftel is comparable with that of the Director of the Office of Fair Trading. That is not consistent with what we have heard all the time during this Committee stage and Second Reading; it has been stated that this is an exceptional post. I do not understand how the noble Lord can use the word "comparable" in relation to the work of the Director General of the Office of Fair Trading.

Lord Taylor of Gryfe

May I, too, press the Minister because he has indicated throughout that the man concerned and his staff will be Civil Service staff. The salary range in the Civil Service is well established, from Permanent Secretary downwards. If they are to be regarded as Civil Service staff, then obviously they will be contained within that salary range. It is not a commercial department such as the coal board or the steel board where they pay the market rates in order to get the man concerned. But if this new department is to be related to Civil Service grades, then I am afraid that it will not be possible to attract the kind of man who can exercise the vast authority and powers which are vested in him in this description.

Lord Molloy

Before the noble Lord, Lord Cockfield, replies, I wonder whether he can help us with another aspect of the submission made in the amendment. As he has already stated, it is perfectly true that the Treasury will be involved. The speech made by the noble Lord, Lord Thorneycroft, gained the approval of all parts of the House, and in that speech he got near to saying that the appointment of the director general of this new organisation is almost unique in history.

If that be the case, it is not unreasonable to assume that we have to look at this matter in an exceptional and special way—which we have not done hitherto. The noble Lord, Lord Thorneycroft, has immense knowledge of public affairs and has held the highest offices of Government in this country. We should not lightly dispense with what he had to say with regard to this particular post. The submission made by my noble friend Lord Bruce of Donington is at least worthy of examination by the Government. If the Government cannot reach a conclusion tonight, then they should be willing to examine the point.

There is one other aspect of concern. I do not know whether the noble Lord, Lord Cockfield, can provide any guidance—and perhaps it is not fair to ask him—but it is a point that is certainly in the minds of ordinary people. Were the Treasury concerned, when they appointed a person to a very senior position in the coal board and in the steel board, that he was not a British National? Do we want a British national in charge of this new authority? The Bill does not say so. That is my first point. Secondly, were the Treasury concerned about the fact that when they appointed Mr. MacGregor, they had to pay a foreign nation a vast amount of money for borrowing him? Are they going to do that in this case, or may we have an assurance that there will be no need for that sort of thing to happen?

If there are indeed genuine apprehensions, the only way to overcome them and for us all to be safe, irrespective of where we sit in this Chamber, is to accept the principle of the amendment. If, having listened to the arguments, the Government cannot get up and say that they accept them now, then will they at least be prepared to acknowledge that a number of valid and important points have been made and that they will reply to them later?

Lord Cockfield

The noble Lord, Lord Molloy, has strayed very far from the substance of this amendment. I certainly do not propose, as far as this is concerned, to enter into a debate on the salaries paid to the chairmen of nationalised industries. With regard to the point made by the noble Lord, Lord Taylor of Gryfe, the staff of Oftel will in general be Civil Service Staff and will be paid on Civil Service scales. The director general I have very carefully described as a Crown servant. I have made no statement one way or another about the level of his remuneration, which is clearly a matter to which a great deal of thought has to be given. I hope noble Lords agree that it is hardly appropriate for me to be entering into a salary negotiation in your Lordships' Chamber this evening.

10 p.m.

Lord Bruce of Donington

We are grateful to the noble Lord. I entirely agree that it would certainly be inappropriate for this House to enter into detailed discussions of amounts or anything of that kind. I think, with respect, it is largely the fault of the noble Lord that the misunderstanding has occurred. I think anybody reading the report in Hansard tomorrow will support the construction that the noble Lord, Lord Lloyd of Kilgerran, put upon what the noble Lord the Minister said, particularly in the light of the remarks that fell from the lips of the noble Lord, Lord Thorneycroft.

I have no desire to prolong this debate further. I do not conduct the business from the Opposition side for the convenience of the Government; the business I conduct for the Opposition is on the Opposition's behalf. I hope that the noble Lord will give this matter further consideration, because it is one which has obviously aroused anxieties on all sides. Everybody wants something done which is reasonable; but in the light of our previous experience of extraordinary appointments of this kind, the noble Lord will note, we at any rate have learned the lesson which the Government have not. With the leave -of the Committee, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 20 not moved.]

Schedule 1 agreed to.

Clause 2 [Abolition of British Telecommunications' exclusive privilege]:

Lord Bruce of Donington moved Amendment No. 21:

Page 2, line 30, after ("order") insert ("subject to approval by a resolution of each House of Parliament").

The noble Lord said: This amendment looks fairly innocuous in its form, in that it seeks on the face of it only to amend Clause 2 by getting the appointed day fixed subject to the approval of each House of Parliament. Clause 2 gives the Secretary of State power, in effect, to abolish British Telecom as from a given date. I think this is a very dangerous clause as presently worded for the Committee to agree to. It is not yet certain—indeed it is far from certain—that the proposals of the Government as set out in this Bill, even though passed by both Houses of Parliament, will ever materialise in practice.

The whole purpose of the Bill is to raise money for the Chancellor of the Exchequer. On all sides of the Committee there is anxiety—both on the form of the Bill and the statements of Ministers—whether the services at present being performed by British Telecom on behalf of residential and business consumers—more particularly residential consumers—will be carried out with the same efficiency, thoroughness, and the same regard to the public interest as at the moment those duties and functions are performed by British Telecom as it is now.

The services provided for the people of this country by British Telecom are comparable with those in most other nations in the world, and cheaper than in most of them. They are already performed voluntarily, as a matter of public duty, by British Telecom, responsible only to the Minister under Section 6 of the British Telecommunications Act 1981. There may be people who say that its services are not all that should be desired and that they are not perfect. But they are very good and compare with those in any other nation in the civilised world, including the United States, more particularly since the United States telecom system has been made, I shall say in parenthesis, subject to regulation.

There is sufficient anxiety, not only on both sides of the other place but also in this House and in the country, that safeguards need to be put into the Bill at later stages to ensure that the Government's general undertaking of continuity of service and the holding of the prices of the services provided under the famous RPI minus X principle are to materialise in practice. If the Government succeed in writing these appropriate safeguarding clauses into the Bill they will make it very difficult for the new British Telecom PLC to achieve its profit-making objective within the percentage required by invested capital unless a very drastic change in its capital structure is made ab initio.

As the Bill goes through the House we shall see, when we come to Clause 5, what extinguishment of liabilities at a cost to the British taxpayer are made by the Government in order to ensure an appropriate capital structure which will be attractive to the City of London. We shall then see whether this issue will succeed or not. If adequate safeguards are put into the Bill to protect the interests of consumers, thereby circumscribing British Telecom's ability to increase its charges to the customer, and if it is repugnant to the House that British taxpayers' money—yes, I use the term "British taxpayers' money"—should be used to extinguish liabilities on British Telecom's balance sheet so that the City will take up the shares, then a situation could arise where there will be no wish to privatise British Telecom anyway. If the shares cannot be sold, and the City does not take them up, the whole basis of the privatisation scheme is then defeated.

In short, this amendment permits both Houses and the public to have time for reflection. The Bill may pass, the Government may spend a few million pounds on promotional expenditure, a prospectus, and everything else that their City advisers suggest in trying to raise the money for X per cent. of its own shareholdings in British Telecom, but there is no guarantee that they will succeed. Indeed, if noble Lords opposite had spent some part of their time, not reading papers of the remote Left—if, indeed, there are any—but studying at some length over the past few months the extremely cogent articles in the Financial Times and the Economist (which are certainly not favourable towards the party that I have the honour to represent) they would know that there is very considerable anxiety as to whether the privatisation can go ahead at all on the basis of the existing structure proposed by the Minister.

Nobody is deceived. All that is happening is that a public monopoly which was susceptible to parliamentary pressure through the Secretary of State and which performed its duties admirably is now to be replaced by a private monopoly whose only safeguard ultimately resolves into detailed legislation with a combination of licences and everything else under the sun. That is all so that the City and institutional friends of the party opposite may take their share as rentiers from the profits generated by British Telecom.

Over the next few months as this Bill goes through this House—and we shall go through the Report stage—on the assumption that the entire British press is not Murdochised, objective reports will get through to the public as to what occurs. Even though the Bill passes, there may be disenchantment with it and the issue may fail, thus defeating the whole purpose of the Chancellor of the Exchequer in realising capital assets—selling the family silver to pay for the weekly food, which is not reckoned to be the best housekeeping. Sooner or later the public will realise this.

The reason why the amendment has been put down is so that, after the parliamentary battle has died down and the Government think everything is perfectly all right, the public will begin to become aware that the whole thing is a complete fraud on the taxpayer and on everybody else. The amendment would at least give both Houses of Parliament, and in particular your Lordships, an opportunity to say "No" when the appointed day comes to be named by the Minister. It is, of course, a wrecking amendment. It is meant to be. It is a wrecking amendment for a wretched Bill. I sincerely hope that, when it takes counsel of itself and of its sanity in dealing with matters of this kind, the House will say that this at any rate is a final chance for the nation to regain its sanity and leave British Telecom exactly where it is at the present time, giving a perfectly good service to the British public. I beg to move.

The Lord Advocate (Lord Mackay of Clashfern)

The noble Lord towards the end of his remarks succinctly explained his amendment as a wrecking amendment. I propose to deal with the amendment rather than with the remarks that preceded that particular comment, because indeed it is a wrecking amendment. That is its only purpose. If the House has gone through the Bill and approved it, I am sure that the last thing it would want to do is to approve a wrecking amendment.

Clause 2 provides that Parts II, III and IV of the Telecommunications Bill should come into force by a commencement order made by the Secretary of State. No parliamentary procedure is generally necessary for commencement orders because they apply provisions in Bills which have been debated and agreed by both Houses of Parliament. The effect of the amendment would be to cause unnecessary delay to the policy which I expect to be agreed by Parliament, and to reopen issues which have already been, on the assumption that the Bill is passed, decided in accordance with the constitutional process, in which of course the noble Lord is playing such a distinguished part.

In the case of this particular Bill, by the time that it is passed, Parliament will have debated it very extensively indeed, and I see no reason for it to do so again in order for it to be brought into effect. I, therefore, believe that this amendment is undesirable and the issues which will be debated and decided on the Bill should be concluded by these discussions and not reopened in this way. I hope that your Lordships will not agree to this amendment.

On Question, amendment disagreed to.

Clause 2 agreed to.

10.14 p.m.

Lord Mottistone moved Amendment No. 22: After Clause 2, insert the following new clause:

"(Abolition of British Telecommunications' limitation of liability.

The limitations of liability described in section 23 and elsewhere in the British Telecommunications Act 1981 shall cease from the appointed day.")

The noble Lord said: I shall be brief. This is a probing amendment. Perhaps I may tell my noble friend the Minister that I am aware that in Part I of Schedule 7 to the Bill Section 23 of the 1981 Act is repealed, but it is not quite clear to me where within the Bill this is stated and it is not clear whether the other limitations of liability that are left with British Telecom in the 1981 Act have themselves also been repealed.

This matter arises because I have been informed by a company named Air Call that it made a complaint to the Office of Fair Trading regarding predatory pricing by British Telecom in the radio paging field. The complaint originated in March 1981, it hotted up when the 1981 Bill became an Act in the summer of 1981, and it went on and on through 1982 and into 1983, and all the time British Telecom caused delays, did not respond, and did not give the information that the Office of Fair Trading required in order to take action.

Eventually, in March 1983, an appeal was made to Mr. Peter Brooke, a Member of Parliament, for the matter to be referred to the Ombudsman, and concurrently with that the Office of Fair Trading was informed that the company would take legal redress. In June 1983 the Ombudsman reported that he did not consider that the issue fell within his jurisdiction because the matter was one of British Telecom's failure to act in a commercial transaction; and at roughly the same time the company was told that because of the terms of the 1981 Act, because of the no-liability clauses within the Act, it had no legal right, either.

This is a long story of two-and-a-half years of prevarication in which British Telecom was totally protected by the law at the time. The object of my amendment is to follow up a speech that I made in moving an amendment to the British Telecommunications Bill on 18th May 1981, as reported at cols, 800 to 802—of which I have informed my noble and learned friend—in which I sought to amend the Bill so as to remove the unreasonable freedom-from-liability clauses. At that time my noble friend Lord Trefgarne insisted that they should be retained. I did not think that that was sensible; and now we find that a company has in fact had anticompetitive measures taken against it over a two-and-a-half year period, totally unreasonably, because British Telecom has been able to delay any action on its part. I trust that my noble and learned friend will be able to reassure me that all those no-liability clauses are in fact now being removed. I beg to move.

Lord Bruce of Donington

If the noble Lord, Lord Mottistone, will look at Schedule 7 to the Bill, he will see that Sections 11 to 23 of the Act are to be repealed——

Lord Mottistone

I began my remarks by saying that I had looked at Schedule 7, and I explained that this was a probing amendment.

Lord Bruce of Donington

Therefore, my inquiry is a probing inquiry, and I am most grateful to the noble Lord for having afforded me the opportunity to make it. Evidently while British Telecom was operating under the old regime, under Section 23 of the 1981 Act, it was thought fit to impose certain limitations on the right to sue British Telecom and, indeed, the right to sue its employees under certain circumstances. I am afraid that one cannot pass any judgment on the instance mentioned by the noble Lord regarding a firm named Air Call and British Telecom, and it is a cause of some anxiety that these matters can be referred to here ex parte without evidence being available from either side.

However, I should like to ask the Government what their intentions are with regard to the new British Telecom PLC. Is the new company to be liable in tort, or is it to receive the same kind of protection that the old British Telecom had under Section 23 of the 1981 Act? I should imagine that prospective investors in British Telecom PLC will be very interested in the response to that question.

Lord Mackay of Clashfern

If I may take the last question of the noble Lord, Lord Bruce of Donington, first, I think that he answered it himself in his introductory remarks when he pointed out that the limitation of liability in Section 23 of the 1981 Act is repealed by Schedule 7 to this Bill, to which he drew attention. My noble friend Lord Mottistone, in his remarks, made it clear that he was aware that that had happened. The position is that the repeal of Section 23 of the British Telecommunications Act removes the only immunities that British Telecom has in tort. It has no statutory immunities in contract.

The other point that I think I should make in relation to my noble friend's reference to the Office of Fair Trading is that under Part II of Schedule 5 to the Fair Trading Act 1973 telecommunications were removed from the remit of the Director General of Fair Trading. That part of the schedule is, however, repealed by Schedule 7 to this Bill at page 198, about line 13. The functions in relation to that area are by this Bill directed by Clause 49 to the Director General of Fair Trading and Oftel. There are provisions there that I am sure my noble friend has seen.

If I may take up the second part of the speech of the noble Lord, Lord Bruce of Donington, he asked about the reason for this limitation of liability in tort. I think the reason is that British Telecom does not provide services to the ordinary customer under contracts but under arrangements known as a scheme. The power to do this is contained in Section 21 of the Act of 1981. I shall not now go into the reasons for this arrangement; suffice it to say that the reasons are largely historical.

Because British Telecom does not provide services under contract it has no contractual liability, but equally it has no means of limiting its liability. Given the nature of the network and the number of messages transmitted, it is inevitable that faults and delays will occur. If British Telecom faced unlimited liability for consequential loss it would have to carry heavy insurance at substantial cost to its subscribers, the great majority of whom would receive no discernible benefit. Section 23 of the Act, which my noble friend Lord Mottistone is primarily concerned about, granted British Telecom certain restricted limitations on its liability in tort. These limitations relate to loss or damage suffered by a subscriber where British Telecom fails to provide service and not to death or personal injury, or anything of that sort, where there is no limitation of liability.

This is the situation as it exists at present. But, as your Lordships will see, it is the policy of this Bill that in future British Telecom is placed as far as possible on an equal footing with normal commercial companies. Therefore, British Telecom's ability to provide service under schemes should come to an end and, in future, like all normal companies, it should provide service under contract. Therefore, not only does Schedule 7 repeal British Telecom's present ability to make schemes but Schedule 5 provides that, as from the appointed day, all existing schemes are deemed to be contracts. In future, British Telecom's customers will have a normal contractual relationship with British Telecom and the usual rights of redress under the terms of the contract.

As regards liability, British Telecom, in common with normal commercial practice, will be able to limit its liability in the contract, but, again in accordance with normal commercial practice, such limitation will be subject to the Unfair Contract Terms Act, just as in the case of other people. I believe that this is an important step forward in consumer protection. I hope that I have been able to answer the questions that noble Lords have put to me. I assume from what my noble friend says that he does not intend to press the amendment.

Lord Mottistone

I thank my noble friend very much for his careful and full explanation. It seems to me absolutely as I had hoped, and I beg leave to withdraw the amendment.

Lord Bruce of Donington

I shall not detain the committee much longer. I should, however, like to ask the noble and learned Lord a question, because he has made an extremely important announcement; that is to say, that a future British Telecom PLC will have to take out its appropriate insurance at considerable cost against any breaches of contract that might result should the existing scheme, as he put it, be automatically converted into a contract.

I should like to ask the noble and learned Lord a second question. In view of the other assurances that have been given by the Government, will the contracts that are assumed to be in place when the scheme is abandoned, contain provisions about the holding of charges in accordance with the RPI minus X factor which has been made much play of by his right honourable friend Mr. Baker both in the Economist and in another place? These are very important matters and I am most grateful to the noble Lord, Lord Mottistone, for having given the noble and learned Lord the opportunity to say what he has said.

Lord Mackay of Clashfern

If I understood aright what the noble Lord said a moment ago, he has not fully understood what I said earlier. I said earlier that, under the arrangements that have existed up until now, British Telecom worked under schemes, and therefore unless one had a limitation of liability, one would require the kind of insurance to which the noble Lord has referred. Where one has contractual freedom, one has the possibility of limiting one's liability under the contract, subject always of course to the unfair contract terms legislation which regulates everybody else. I do not know whether the noble Lord wishes to make some intervention, but I am trying to explain to him the position as I see it and he has not quite understood what I said on the last occasion. No doubt it is my fault for not making it plain. However, I was explaining the reason for the existence of the limitation of liability under the present Act, the 1981 Act, and I have explained—or tried to explain—that the reason for that limitation is removed by the altered arrangements which we contemplate in this Bill for the future, where British Telecom will have contractual freedom and will not operate under these so-called schemes.

Lord Bruce of Donington

There is one matter that I should like the noble and learned Lord to clarify. I am sorry if I have misunderstood him; but, as I understand it, the situation will be that British Telecom will be under a contractual obligation, expressed in contract form, to provide certain services for the customer in exchange for the receipt of certain sums of money. In other words, there will be a contractual relationship. Can the noble and learned Lord inform me whether that contractual relationship gives a right to the customer under the contract to claim any damage for a breach of contract in the event of non-performance (for a variety of reasons) over a period of weeks?

Lord Mackay of Clashfern

Obviously, that will depend upon the terms of the particular contract which British Telecom operate. Of course, the terms of the contract will no doubt be reflected in the payments that are made under it. One would possibly get better guarantees, the more expensive the services.

Amendment, by leave, withdrawn.

Lord Denham

I beg to move that the House do now resume.

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

House resumed.

House adjourned at twenty-eight minutes past ten o'clock.