HL Deb 13 February 1984 vol 448 cc7-67

2.54 p.m.

The Chancellor of the Duchy of Lancaster (Lord Cockfield)

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

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

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 3 [General duties of Secretary of State and Director]:

Lord Stoddart of Swindon moved Amendment No. 23: Page 2, line 42, leave Out ("or not reasonably practicable").

The noble Lord said: I beg to move Amendment No. 23 which stands in my name and those of my noble friends. By the amendment we are seeking to leave out the words "or not reasonably practicable". I think everybody understands what "practicable" and "impracticable" mean. What is puzzling many people is the term "reasonably practicable". How do you qualify "practicable" by "reasonable"? Either something is practicable or it is not practicable. We are very concerned as to exactly what "reasonably" means. We could probably have a very long debate on this question, in particular since there are so many noble and learned Lords who may have a point of view to offer. The Opposition does not want to embark upon obstructing the Bill, but we want to make reasonable amendments to it and ensure that the Bill makes reasonable progress, provided that the Committee is able to do its job properly by examining the various clauses of the Bill. Therefore, the amendment is in the nature of a probing amendment.

The Committee would like to know exactly what test of reasonableness is going to be applied to the word "practicable". What one person thinks is reasonable somebody else may believe to be completely unreasonable. Last Thursday evening some of the remarks which I made were, I thought, perfectly reasonable and absolutely on the ball, but other noble Lords, notably noble Lords opposite, thought that they were completely unreasonable and attacked them. And they were perfectly entitled to attack those remarks as being unreasonable. So even in this noble Committee last Thursday there was some discussion and dispute as to what was reasonable and unreasonable.

I can imagine people of a legal frame of mind being able to take right apart the word "reasonably". If there were a proposal to install a telephone box in a rural area, I could understand it if it was believed to be not practicable to put it there. There may be all kinds of reasons why it could not be done. There might be a little hamlet in a valley, with mountains all round it, to which it would not be possible to get the wires. I should perfectly understand it if it was thought, therefore, not to be practicable to provide such a service to a telephone box, or to a private subscriber's house, or to a business subscriber's business. But it would be either practicable or not practicable. I should find it difficult to agree with the Director General of Telecommunications about whether it was reasonably practicable.

We want to know, first, who is going to decide what is reasonable and what is not reasonable. Does it mean, for example, that something might be practicable but because it is costly and does not produce a reasonable rate of return, or the desired rate of return, it is not reasonably practicable? Does the term "reasonably" mean that it will be too costly? This noble Committee is entitled to know exactly what the Government mean by this term.

Also, we should like to know what will happen if there is a dispute as to whether something is practicable or is reasonably or not reasonably practicable. Who will make that final decision? Will it be the director himself, or will the customer be able to test whether something is reasonably or not reasonably practicable through the courts? There are many points here on which we are entitled to seek clarification. I will leave the matter there in the hope that the Government will be able to reassure me and my noble friends, and other noble Lords, as to exactly what is meant by the phrase, and that no real harm will be done to telephone subscribers.

Lord Lloyd of Kilgerran

I hope that noble Lords will think that my brief intervention is both reasonable and practicable, because had the noble Lord, Lord Stoddart of Swindon, intended to force this amendment to a Division then I would have voted for him, that these words should be eliminated. They only add unnecessary confusion, and should be deleted.

The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur)

May I first make it clear that the duty which this part of Clause 3 imposes is not in any way a let-out in the way that the noble Lord, Lord Stoddart of Swindon, seemed to indicate that it may be. The practicability qualification is necessary simply to make the duty which the clause imposes workable. There is the same qualification on British Telecom's present duty under existing legislation to provide a telephone service. Section 3 of the British Telecommunications Act 1981 states that it shall be the duty of BT, so to exercise its powers as to provide throughout the British Islands (save in so far as they are provided by other persons or the provision thereof is, in its opinion, impracticable or not reasonably practicable) such telephone services as satisfy all reasonable demands for them". So there is nothing new about the words here.

The new way in which the duty will be fulfilled is through the inclusion of conditions in the licences—primarily, that of British Telecom. British Telecom's licence will contain obligations to provide, for example, services throughout the United Kingdom to satisfy all reasonable demands, in so far as the provision of such services is not impracticable or not reasonably practicable. Obviously British Telecom should not be required to provide services where it is impossible to do so. But it is also necessary to have the words, or not reasonably practicable to cover cases where, by virtually moving heaven and earth and committing a huge amount of resources (both in terms of finance and manpower), it would be physically possible to provide these facilities.

However, we may reasonably ask whether in such cases it is sensible for British Telecom to be under such an obligation. The heavy commitment of resources may mean that attention is diverted away from other tasks to the detriment of other consumers. I do not believe that the wording is unreasonable, but I realise there is concern that the limitation of reasonable practicability should not let British Telecom off the hook or away from their responsibilities in any case.

If I explain how we intend the limitation to work, I hope that it will serve to reassure the noble Lord, Lord Stoddart of Swindon. At present, if a customer requests service it is for British Telecommunications to judge whether the service requested is impracticable, or is not reasonably practicable. If BT decides that it is, then it can decline to provide a service and the customer has little comeback. However, if there is a dispute in future between BT and a potential customer as to whether service can be provided, it will be an independent third party—the director—who will decide in the first instance what is and what is not practicable or reasonably practicable. If he decides, contrary to what BT claim, that the service can be provided, then he can order BT to do so. In making that decision, the director will be guided by the licence.

Condition 42 of the draft licence sets out the sort of circumstances in which the Secretary of State believes that the provision of service is either impracticable or not reasonably practicable. Condition 42 clearly describes that the circumstances under which BT will not be obliged to provide service are strictly limited. They most certainly do not amount to a carte blanche on BT to decline to provide service. Indeed, the involvement of the director provides, as I have explained, a much stronger safeguard for consumers than before. I hope that with that explanation the noble Lord will understand why it is necessary that these words should remain in the Bill.

3.5 p.m.

Lord McIntosh of Haringey

We are entitled to ask the Government to be a little more precise about this matter. The noble Lord himself, in his reply, used the words "not impossible" in respect of British Telecom providing service. If he thinks that is a suitable phrase, then I am sure that my noble friends and I will be very glad to withdraw our amendment and allow its content to come up again in a Government amendment at Report stage; an amendment to the effect that instead of the words "reasonably practicable" there should be inserted "not impossible". I am sure all of us will be perfectly satisfied with that form of wording. But merely having it stated from the Government Front Bench is not enough for us, unless we can be assured that that will be the case.

These are not semantic arguments; these are not questions only of wording. They are questions relating to the directions which will be given to people who have to make decisions on the spot when requests for service arise. At the moment, British Telecom has a rule which lays down that if more than 100 man-hours of work is involved in the provision of a telephone service in a rural area then it becomes a matter for special negotiation. Then there is the possibility that service may not be offered to people in rural areas. Are the Government saying that that 100 man-hours rule will be continued? If they are saying that—and we would welcome it if they did do so—then why is it that they are talking about scales of charges after 1989 instead of the standard national pricing which is the protection of those who need unremunerative service at the present time?

It the Government were to answer both points satisfactorily—that concerning the words "not impossible" and my other point concerning the 100 man-hours definition—then my noble friends and I will be glad to reconsider.

Lord Molloy

I wonder whether the noble Lord, Lord Glenarthur, has taken it into consideration that if the words, or not reasonably practicable are eliminated, it would be to the advantage of everyone. It is possible that most folk will recognise what is "impracticable". Once one starts playing with different nuances of interpretation, such as, or not reasonably practicable", one is inviting comment, argument, and so on. If one leaves it at "impracticable", that will leave a heavy burden on those responsible. They will have to satisfy the Minister, and perhaps even Parliament. Taking away the words, or not reasonably practicable will be to their advantage. They will know that they cannot get away with doing this, that or the other and that the provision of service has to be shown to be absolutely impracticable. That will be to the advantage of both themselves and the consumers.

Lord Edmund-Davies

I suggest that there is danger in eliminating the qualification in the alternative. If we adhere to "impracticable", and if that is to be regarded as the equivalent to physically impossible, we are in dangerous waters. If I had done my homework as I should have done and had had notice of this suggested amendment, I believe I should have been able to cull from many an Act of Parliament—particularly the Factories Acts, the Mines and Quarries Acts and other provisions of that kind—a similar phrase. The word "impracticable" ought not to be regarded as synonymous with "physically impossible". If that is wholly understood, then I have some sympathy with the suggestion that one can eliminate the alternative, or not reasonably practicable". But if that is to be imported, then we do require the alternative.

It is quite impracticable that I should catch a train from Paddington at a quarter past three o'clock. It is reasonably practicable that I should catch a train from Paddington at four o'clock. But it is in my case reasonably impracticable for it would involve my cutting quite essential engagements which I have long undertaken. So in my case it is reasonably practicable that I should not get a train from Paddington at four o'clock.

There is a great deal of case law about the phrase "reasonably practicable". I repeat, if I had done my homework I should have been able to trot it along. Whether at the end enlightenment would endure is a matter open to debate. But I suggest that there is nothing revolutionary in the phrase "not reasonably practicable".

Lord Elwyn-Jones

It is with very great hesitation that I venture to disagree with my noble and learned friend Lord Edmund-Davies of all noble and learned Lords; but I do venture to disagree on this occasion. This is an important part of the Bill. When one sees the rest of paragraph (a) one sees to what it is in particular directed—namely, the provision of emergency services, public call-box services, maritime services and services in rural areas—which many noble Lords fear may be in peril as a result of this legislation. If one leaves out the words now sought to be omitted by the amendment there still remains the test of reasonableness in the demands for these services. The paragraph would read: to secure that there are provided throughout the United Kingdom, save in so far as the provision thereof is impracticable, such telecommunication services as satisfy all reasonable demands for them including, in particular, emergency services.". And so on. So there is a test of reasonableness attached to the nature of the demand. I should have thought if the provision of services involved (to use the Minister's phrase) moving heaven and earth, that would be eliminated, as a demand that was impracticable to satisfy. Any weakening, it seems to me, of the positive requirement to provide such telecommunication services as satisfy all reasonable demands for them in these very important areas, any qualifying of it, a whittling away of it or a diminishing of the primary importance of it by inclusion of such words as "or not reasonably practicable", would be a defect and would in the circumstances be dangerous.

Lord Donaldson of Kingsbridge

Until the noble and learned Lord, Lord Elwyn-Jones, spoke, I was rather doubtful whether this amendment should be supported. But I think if it is necessary to put the same thing in twice, which is what the noble and learned Lord has pointed out, this does mean a deliberate attempt to weaken something, and we are all perfectly clear that that should not be weakened. So I feel more able to support the amendment than I was before the noble and learned Lord spoke.

Lord Lloyd of Kilgerran

It is with great temerity, even greater than that of the noble Lord, Lord Elwyn-Jones, that I venture to differ from the noble and learned Lord, Lord Edmund-Davies, particularly as when he was elevated to the Bench as a judge of first instance I took over his chambers and indeed the very room where he had performed with such distinction for many years. But I agree entirely with the submission of the noble and learned Lord, Lord Elwyn-Jones, in this matter that this phrase merely adds confusion and should be deleted.

Lord Bruce of Donington

The noble Lord the Minister, in reply to the arguments put forward by my noble friend, referred to the draft licence within which context he wished the proposal to be judged. We know perfectly well of course that the licence in its present form may not meet the requirements of all your Lordships, and may indeed be challenged at some points both as to the method of its treatment within the Bill itself and as to its content. But suffice it to say that the very clause cited by the noble Lord the Minister, Condition 42.2(b)(d) of the draft licence says that the licence shall not apply, (d) where the person to whom the Licensee would otherwise be under an obligation to provide any of those services requests a service at a place in an area in which the demand or the prospective demand for that service is not sufficient, having regard to the revenue likely to be earned from the provision of that service in that area, to meet the cost of the apparatus necessary to provide that service in that area, its installation and maintenance and of operating that apparatus so as to provide that service.". Surely it is a little dangerous from the noble Lord's standpoint to cite that as being an area in which it would not be reasonably practicable to provide the service, because of course it is precisely the aim of the amendment to avoid situations of that kind.

The noble Lord referred to the Telecommunications Act 1981 and said that there was a similar provision as to reasonableness in that. The circumstances are totally different here. The circumstances under the 1981 Act laid certain duties on the Secretary of State in regard to his dealings with British Telecom and laid certain broad responsibilities upon the corporation itself, with the final check there being in Parliament. The fact is that under the old Telecommunications Act 1981 there were users' councils, a whole series of safeguards through which the consumer could protest or the prospective consumer could protest, either through Parliament or direct to the corporation; whereas these safeguards are denied here because the corporation or its successor are going to be under the straitjacket of legislation which the noble Lord is now laying down. This in our opinion raises a vital question of principle; and in the light of what the noble Lord himself has said we have no alternative but to divide the Committee on this issue.

Lord Glenarthur

I have listened with care to what noble Lords opposite have said. If I can first of all pick up the point made by the noble Lord, Lord McIntosh, about the 100 man-hours, that of course refers to charges; it does not refer to the practicability of provision. Nor does the amendment itself relate to reasonableness of demand, it relates specifically to the reasonable practicability, and those are separate things. I hope that the noble Lord, Lord Bruce, will accept that.

Lord Bruce of Donington

The noble Lord did cite Condition 42 of the licence himself; I only repeated it.

Lord Glenarthur

Yes. Condition 42 refers to one or two other things including reasonableness of demand. Lord Bruce's argument does not strictly relate to the condition of practicability, which the amendment specifically refers to.

Several of your Lordships have pointed out that the wording is in the 1981 Act. It is; so there can be no whittling away of any duties imposed on British Telecommunications in any way. It repeats line for line what is in Section 3 of the 1981 Act. These qualifications are designed to prevent, for example, the Secretary of State or the director imposing impossible or unreasonable demands on telecommunications operators through their licences.

Lord Bruce of Donington

If I may intervene, will the noble Lord bear in mind that Section 3 of the Telecommunications Act 1981 is specifically repealed by this Bill.

Lord Glenarthur

I do not think that is the point at all, if the noble Lord will forgive me. We are trying to put into the new Act exactly the same facts about reasonable practicability of physical provision as exist under the 1981 Act. So the situation is exactly the same; there will not be any particular difference as far as that is concerned.

Perhaps I may go on to say that, if the limitation of "reasonableness" were removed the Secretary of State would have to issue licences to require British Telecom and others to provide, for example, highly sophisticated data telecommunication services on demand in the remotest areas of the country even if the service were only required for a day. I do not think any Members of the Committee will feel that is essentially "reasonable" in any sense of the word at all. Therefore, I hope the noble Lord will not press this amendment.

Lord Spens

I am not at all sure that I understand what the noble Lord, Lord Bruce of Donington, was getting at in quoting Condition 42. Condition 42.2 begins: The obligations to provide telecommunication services other than voice telephony services under this Licence shall not apply". and then refers to (a) and (11), and (b) was quoted by the noble Lord. That surely, means that voice telephony services would have to be supplied.

Lord Torphichen

Noble Lords have been arguing rather minutely the length to which the Government should go to compel British Telecom to provide services to the limit. But no matter how far they compel British Telecom to go there will always come a point where the service will not be provided. The Government could get round that difficulty very easily by simply amending another part of the Bill to ensure that, where British Telecom does not wish to, or cannot, provide a service, either the individual who wishes to use the service or a third party shall be empowered or licenced to operate such a service, and why not?

Lord Stoddart of Swindon

We shall press this amendment, but I should like to make this final point. I listened very carefully to the Minister and it seems to me that he has given the Opposition the case. The argument I made originally, and the arguments made by my noble friends and other noble Lords, has been that the words "not reasonably practicable" are inappropriate. What the Government seem to be saying is that that is true and what they really mean is not that it shall be "not reasonably practicable" but that it should be "not reasonably economic". That is what the argument is all about. Indeed, the noble Lord mentioned, and it was virtually his only justification for the words "not reasonably practicable", that it might impinge unreasonably on finance and manpower resources. It therefore seems that the wording the Government want is "not reasonably economic" and that is what we are quarrelling about.

Lord Glenarthur

Before we go any further perhaps I may explain that Condition 42.2, to which the noble Lord, Lord Bruce, referred and which the noble Lord, Lord Stoddart of Swindon, also mentioned, applies to services other than voice telephony services. I know that noble Lords opposite are concerned about the provision of a telephone—the basic instrument—and that is covered in Condition 42.1, which makes it perfectly plain that: The obligations to provide any voice telephony services under this Licence shall not apply: where the service requested cannot be provided on account of physical, topographical or other natural obstacles". That amounts to impracticability or, indeed, possibly goes as far as impossibility. Therefore, I do not think that the noble Lord's two arguments necessarily follow.

3.24 p.m.

On Question, Whether the said amendment (No. 23) shall be agreed to?

Their Lordships divided: Contents, 85; Not-Contents, 119.

Allen of Fallowfield, L. Jacques, L.
Amherst, E. Jenkins of Putney, L.
Ampthill, L. Kagan, L.
Attlee, E. Kaldor, L.
Aylestone, L. Kearton, L.
Banks, L. Leatherland, L.
Beswick, L. Listowel, E.
Bishopston, L. [Teller.] Llewelyn-Davies of Hastoe, B.
Blyton, L. Lloyd of Kilgerran, L.
Boston of Faversham, L. Lockwood, B.
Brockway, L. Longford, E.
Brooks of Tremorfa, L. Lovell-Davies, L.
Bruce of Donington, L. McIntosh of Haringey, L.
Burton of Coventry, B. Mais, L.
Caradon, L. Mayhew, L.
Carmichael of Kelvingrove, L. Molloy, L.
Cledwyn of Penrhos, L. Oram, L.
Collison, L. Peart, L.
Cooper of Stockton Heath, L. Phillips, B.
Darling of Hillsborough, L. Pitt of Hampstead, L.
David, B. Ponsonbv of Shulbrede, L. [Teller.]
Davies of Penrhys, L.
Dean of Beswick, L. Prys-Davies, L.
Delacourt-Smith of Alteryn, B. Rathcreedan, L.
Rochester, L.
Denington, B. Ross of Marnock, L.
Diamond, L. Segal, L.
Donaldson of Kingsbridge, L. Stallard, L.
Elwyn-Jones, L. Stedman, B.
Ewart-Biggs, B. Stewart of Alvechurch, B.
Fitt, L. Stewart of Fulham, L.
Gaitskell, B. Stoddart of Swindon, L.
Gallacher, L. Stone, L.
Gardiner, L. Strabolgi, L.
Gormley, L. Taylor of Blackburn, L.
Graham of Edmonton, L. Taylor of Gryfe, L.
Grey, E. Taylor of Mansfield, L.
Grimond, L. Tordoff, L.
Hale, L. Underhill, L.
Hall, V. Wallace of Coslany, L.
Hampton, L. Wilson of Rievaulx, L.
Harris of Greenwich, L. Winterbottom, L.
Hunt, L. Wootton of Abinger, B.
Hutchinson of Lullington, L.
Abercorn, D. Denham, L. [Teller.]
Ailesbury, M. Drumalbyn, L.
Alexander of Tunis, E. Duncan-Sandys, L.
Allerton, L. Eccles, V.
Alport, L. Edmund-Davies, L.
Avon, E. Effingham, E.
Belhaven and Stenton, L. Ellenborough, L.
Bellwin, L. Elliot of Harwood, B.
Belstead, L. Elphinstone, L.
Bruce-Gardyne, L. Elton, L.
Caccia, L. Enniskillen, E.
Caithness, E. Fanshawe of Richmond, L.
Campbell of Croy, L. Glanusk, L.
Carnegy of Lour, B. Glasgow, E.
Clitheroe, L. Glenarthur, L.
Cockfield, L. Gormanston, V.
Cottesloe, L. Gray of Contin, L.
Craigton, L. Gridley, L.
Crawford and Balcarres, E. Hailsham of Saint Marylebone, L.
Daventry, V.
Davidson, V. Halsbury, E.
De La Warr, E. Hampden, V.
Hawke, L. Onslow, E.
Hill of Luton, L. Orkney, E.
Hives, L. Orr-Ewing, L.
Home of the Hirsel, L. Peyton of Yeovil, L.
Hood, V. Porritt, L.
Hornsby-Smith, B. Portland, D.
Howard of Henderskelfe, L. Rankeillour, L.
Hylton-Foster, B. St. Aldwyn, E.
Ilchestcr, E. St. Davids, V.
Jessel, L. Saint Oswald, L.
Killearn, L. Saltoun, Ly.
Kimberley, E. Sempill, Ly.
Kinloss, Ly. Shaughnessy, L.
Kinnoull, E. Sherfield, L.
Lane-Fox, B. Shrewsbury, E.
Lauderdale, E. Skelmersdale, L.
Long, V. Somers, L.
Lovat, L. Spens, L.
Lucas of Chilworth, L. Stamp, L.
Lyell, L. Strathcarron, L.
McAlpine of West Green, L. Strathclyde, L.
Mackay of Clashfern, L. Strathspey, L.
Macleod of Borve, B. Swansea, L.
Mar, C. Swinton, E. [Teller.]
Margadale, L. Terrington, L.
Marley, L. Teviot, L.
Maude of Stratford-upon-Avon, L. Thorneycroft, L.
Torphichen, L.
Mersey, V. Trefgarne, L.
Middleton, L. Trenchard, V.
Mills, V. Trumpington, B.
Milne, L. Vaux of Harrowden, L
Molson, L. Vickers, B.
Morris, L. Vivian, L.
Mottistone, L. Weinstock, L.
Mowbray and Stourton, L. Whitelaw, V.
Northchurch, B. Wynford, L.
Nugent of Guildford, L. Young, B.
O'Neill of the Maine, L.

Resolved in the negative, and amendment disagreed to accordingly.

3.33 p.m.

Lord McIntosh of Haringey moved Amendment No. 24: Page 2, line 43, after ("services") insert ("at charging rates to the customer for installation, maintenance and usage which do not discriminate between any customers on the basis of the geographical location of the installation").

The noble Lord said: We have tried to do it the easy way; now we shall have to do it the hard way. We tried to make it easy for the Government to concede the justice of the demands of the minorities in rural areas, of the disabled, and of all those who may suffer from the provisions of the Bill as it now stands. We tried to eliminate the equivocal words "reasonably practical" in order that the Government might have a better chance of defending the Bill as it stands and defending the needs of these minority groups. The Government have rejected those overtures. We shall now have to take each of those minority groups one by one, and we start with the needs of telephone and telecommunications subscribers in rural areas.

The Committee may think it strange that I, a dyed-in-the-wool metropolitan, should be pleading the cause of rural areas. I am a Londoner born and bred and I do not think I would ever willingly live the rest of my life anywhere else. But I shall hope to propose to other metropolitans that there are parts of urban areas which also need the protection of the amendment which is being proposed.

The amendment proposes to include charges for installation, maintenance and usage—in other words. all charges which do not discriminate between any customers on the basis of the geographical location of the installation. The Government's first line of defence against that will be that there is provision in line 3 of page 3 for services, including services in rural areas. The first problem with that answer is that the Government themselves do not know what is meant by a rural area. In Hansard for another place, at Column 809, the Minister of State said: However, I still do not know how to define the word 'rural'. That is important, because we have made considerable play of the fact that we want to ensure that services are continued in rural areas". The Minister can say that again. If he cannot define it, how is it that he is going to protect the subscribers in rural areas?

The second problem with the Government's defence comes back to the issue which I raised on the last amendments, that is, the question of the 100 man-hours. I accept, as the noble Lord, Lord Glenarthur, has said, that the 100 man-hours definition is about charging rather than about the actual physical supply, but of course to most people charging is indistinguishable from supply. If the telecommunications operator is allowed the possibility of discriminatory charging against those in rural areas then it is possible for that operator to set the scale of charges so high as to say that he is prepared to supply telephony or telecommunications services, but to do so at such a price that no such subscriber can possibly afford to take advantage of that offer; in other words, one cannot distinguish between charging and supply.

That is confirmed in the intentions of the Bill by the other fact which I referred to when speaking to the last amendment, which is that the standard national pricing policy, which is an essential part of the public service that British Telecom supplies at present, is to be replaced after 1989 by a scale of charges. I do not know what that scale of charges is going to be. I do not think the Government know what that scale of charges is going to be. I will listen very carefully if the Minister is prepared to assure me that there is nothing sinister intended in the use of the phrase "scale of charges" and the abandonment of the standard national pricing policy. If he can assure me, then, of course, one of the fears which not only noble Lords in this Committee but also many pressure groups throughout the country have expressed is not justified. As I say, I shall listen carefully to see whether that is the case.

The next problem about which the Government have to reassure us before we are going to be content to withdraw an amendment of this kind is what is going to be meant by telephone as opposed to telecommunications services and whether there is not the distinct possibility that there will be one service for people living in metropolitan areas, in urban areas, and another service for those in the less accessible, less remunerative areas. The fear that we have, and the fear that people living in rural areas have, is that there will be a first-class service for the few and a second-class service for the many.

I quote from the Guardian of last November, which in turn quoted from a confidential paper which, it claimed, came from senior officials in the department: By 2000, wideband services are likely to be available to perhaps half the population, mainly in urban areas. The rest will have to rely on the ISDN (Integral Switched Digital Network) and broadcasting—which together will provide more than today but which must be limited by the radio spectrum. But the inequality will remain and Governments will have to decide how important it is to them to secure the introduction of the basic infrastructure into all areas on a uniform basis—as a PTT operating in the traditional way might do.

That puts in the mouths of the officials responsible for the legislation—and, again, if the Government choose to deny that, that will affect our judgment, though it has not been denied so far—the issue whether there is to be a first-class service for approximately 50 per cent. living within reach of cable services, in effect, as against a second-class service which will be available to the rest. I shall listen with great interest to the answer of the noble Lord the Minister on that point.

The next point is that which was raised by my noble friend Lord Bruce of Donington, when he quoted Condition 42.2(b) of the licence. It is quite true that that does not refer to all services, and telephony services are already excluded. But in our view it remains the right of those living in rural areas to have access to the full range of services, as would have been provided, as the Guardian suggested, by a PTT of the traditional kind. It will be necessary for the Government to assure us that not merely telephony services of the kind envisaged in Condition 42.1 of the licence, but all services, are to be available in rural areas.

It is not enough to be technical about this matter. It is necessary to say that the whole principle of a telephony service, which has been built up well over 100 years, is gravely at risk in the present legislation. It is at risk because the Government have resolutely refused to pay any regard to the representations which have been made to them by the various bodies represented, for example, in Rural Voice. Rural Voice has among its subscribers organisations representing over a million people, including the National Farmers' Union and the Country Landowners' Association, to name only two bodies which may strike a chord with your Lordships.

We have here the possibility of a turning point in the provision of public services in this country. We have maintained, and the Government to their credit have maintained, the principle that in many social services, including the National Health Service, there should be no discrimination against any group on the basis of geographical location. Yet why are the Government in this legislation so ready to remove the protection from those who are most in need? It is not as though the need for a telephone service was less important in rural areas; on the contrary, in rural areas it is more important to have a telephone service. People in rural areas are more isolated, and are more at risk from natural disasters and from inaccessibility to medical services and to help of all kinds.

I should have thought that, if any group were to be discriminated against, it should be those who have alternative sources of help. For people in rural areas a telephone is not a pleasant luxury, as it was in the early days. For people in rural areas, a telephone is now an absolute necessity, as is transport. Some tune ago your Lordships told the Government that you would not tolerate abolition of school transport in rural areas. To their credit the Government accepted that that not only represented the opinion of your Lordships, but also reflected the view of the country: that those who live in rural areas, those upon whom we rely for a large part of our agricultural supplies—quite apart from any of the other reasons—should not be discriminated against in this way. Surely when it comes to telephone services the same argument applies as applied to school transport.

I said that I would refer to the matter as it affects urban areas as well. It seems that on grounds of geographical location there could be equal discrimination against some parts of urban areas. If one visits the more desolate parts of the city of New York, for example, one will find that there are no public telephone boxes. It is argued by the Bell Telephone Company that it is not economic to provide telephone services in those areas because of the threat of vandalism. Yet it is in those areas, where considerably fewer people have their own private telephones, that public telephone boxes are most needed. That kind of situation could apply in our cities. A private telecommunications operator could argue that because of the risk involved, as well as the financial loss, such services should not be provided in the more deprived areas. It is to protect those most in need in our cities, as well as those most in need in the rural areas, that we are moving this amendment. I beg to move.

Earl De La Warr

Before the noble Lord sits down, I should like to mention that he started talking about rates and charges, and I understand that that is what the amendment is about. He then strayed into the provision of broad band services, and he seemed to imply that those ought to go right through the country; and at that point I failed to follow his argument. Perhaps he can make quite clear what he was getting at.

Lord McIntosh of Haringey

I thank the noble Earl, and I apologise for not having made myself clear. I thought that I had said quite explicitly that it was not possible to distinguish between access and charges. It is possible by a policy of high charges for an operator in effect to deny access to services, even though the operator may not have the legal right to deny it. One cannot distinguish between charges and the legal right regarding provision. Both must be protected if, in turn, the subscriber is to be protected.

Lord Molloy

I think that the quintessence of the argument has been submitted by my noble friend Lord McIntosh, but I should like the Committee to examine a similar though not identical situation that existed just before the war. It was extremely serious, and it involved the supply of electricity to farmers, in particular hill farmers. For years they had asked for an electricity supply, but had had to manage on their own. Suddenly, as is always the case in times of great stress, in particular during wartime, the farmers became most important. The then private owners of the electricity industry argued, quite rightly, that from a profitability point of view they could not supply farmers with electricity. Of course, that could not be very well argued in wartime, just as one could not allow a private soldier or a sapper to say, "It is not profitable for me to go and pick up a gun and defend my country". That would be an absurdity.

After the war the electricity boards were established, and places such as Battersea and the great Tir John power station in South Wales supplied lots of electricity, and power supplies were extended all over the country. The gravamen of my submission is that if one argued that under the law of diminishing returns electricity generated in Battersea should be very much cheaper for people living in Battersea than for those living in, for example, Ealing, an enormous bureaucracy would be needed to work it all out, and the whole affair would be an absurdity.

During my life I have noticed what has happened when services of national importance have been provided for every member of our island race. What would happen, for example, if the costs had to be worked out because someone who went into hospital with a broken leg had to pay for treatment, while someone who went in with cancer did not have to pay? That would be ridiculous. Instead, we have the great National Health Service. I believe that there lies the analogy with the present amendment.

My noble friend Lord McIntosh of Haringey has made the poignant point that the telephone is a lifeline. Of course it is. It is also not unreasonable to say that people living in rural areas have just as much right to be able to telephone friends and colleagues in other parts of the country as people living in the great urban areas of our land. The main submission made by the Opposition is that this Parliament where humanly possible should commit itself. One has to bear in mind that there will be all sorts of developments in telecommunications. The miracles that have occurred over the past 20 years will not stop in 1984. I hope therefore that the Government will take their courage in both hands and accept the amendment which means that they will not be able to abandon those Britons who live in rural areas. I would have thought that such a recommendation would be acceptable to this Chamber.

3.51 p.m.

Lord Somers

I sympathise with a great deal of what the noble Lord, Lord McIntosh of Haringey, said in regard to discrimination. I cannot help feeling, however, that the amendment, as it stands, might run us into difficulties owing to the fact that it includes the word "installation". Let us suppose that someone was to buy a remote island off the Orkneys. I happen to know a couple who have done that very thing. I do not know whether they already have a telephone. Let us suppose however that there was no telephone. Would they be able to claim that a telephone line should be run across from the mainland at no extra charge? That would be asking rather a lot at the public expense.

Baroness Macleod of Borve

I should like to follow the noble Lord, Lord Somers, down the road that he was taking. As we know, the Government have said they will give an assurance—the problem is that it is not in the Bill—that rural areas will not face higher charges than urban and suburban areas. Perhaps the Government are therefore able to accept this amendment dealing with charging rates which I would have thought is the same thing. I agree with the noble Lord, Lord Somers, that installation is a problem. Where I live, there is a driveway about a mile long. I would not expect the telecommunications people, if I was without a telephone, to erect telephone poles to connect my home to the outside world completely free of charge. I would expect to pay a reasonable charge. However, I feel strongly, like the noble Lord, Lord McIntosh of Haringey, about maintenance and usage.

I have been a rural person all my life. I have never wished to live in London. I am aware of the problems of people who live in remote areas. They need a telephone service. It is a service, as this part of the Bill mentions five times. It is vital that such people should be able to contact the police, doctors and any available shops at no extra charge than those living in suburbia or the great metropolitan areas. It is important that this proposal on charging rates, other than for installation—that is where I quarrel with the amendment—should be accepted by the Government. I hope that they will accept it.

Lord Alport

I hope that the Minister will consider this amendment, in spirit at any rate, carefully. Those of us, as my noble friend Lady Macleod has mentioned, who live in country areas know of the great concern now building up within those areas regarding the dangers that seem to be ahead of us when this Bill goes through Parliament. If those fears are realised, it will be greatly to the disadvantage of people living in the remoter parts of the country. This is not merely a party political criticism of the Bill. It is not a fear drummed up by the propaganda of any particular organisation. It is something very real that is felt in the villages, certainly in my part of Essex. I hope that my noble friend will take the matter carefully into consideration.

If the Government find the amendment as it stands is not acceptable, I hope that they will consider putting down something on these lines at the next stage in the passage of the Bill through the House. I would have thought that the point made by the noble Lord, Lord Somers, whould be covered by the fact that it is probably not practicable, or at any rate reasonably practicable, to install a single line between let us say the west of Scotland and some remote island. If that is not the case, some wording might at least be introduced to make clear that this would not be envisaged. I hope that my noble friends concerned with the conduct of the Bill through the House will take this matter very much into consideration and will try to meet what I know are the wishes not only of many Members of the House but also large numbers of people who live in the country districts of these islands.

Lord Spens

I am sympathetic towards the amendment. It establishes, or attempts to continue, a fine principle that was established many years ago with the introduction of the penny post. The penny post was the only charge irrespective of distance. We need something of that kind in the Bill because, as the noble Baroness, Lady Macleod, said, there is no mention of charges in the Bill.

Lord Edmund-Davies

Some of us regard this amendment as a most attractive one. I confess my complete ignorance of the present situation in relation to installation charges. Can we be told? Is there any difference in installation charges? If there is none now, I would want that perpetuated.

Viscount Trenchard

I wonder whether my noble friend, in replying to the amendment, can provide any information about the accuracy of the assumption that rural areas are perhaps the most uneconomic places for the extension of lines and the installation of call boxes as well as the other matters mentioned in the paragraph to which the amendment relates. I have in mind the appalling degree of vandalism in the towns. I have a feeling that, although the lines are longer, the actual economics relating to rural areas may not be as bad as so many of your Lordships fear.

I wonder also whether my noble friend can cover the financial arrangements envisaged in the licence following upon Clause 3(1)(b) which again assumes I think that there will be a strong economic bias against providing these sevices. I am not sure that that is accurate. I believe that if the Government carry through the licensing provisions that they have in mind, in the light of the draft licence, the incentive will not be so much against these services.

I believe that many technical improvements are possible and planned especially in relation to kiosks which can lead to a great lowering of costs. This will make it easier for the Government to meet the great sentiment, clearly expressed in the House, that these services should continue. I am fairly satisfied, with the Bill as it is and the licensing that is proposed, that these services will be maintained in the way that all of us want.

Lord Morris

I find it astonishing that the noble Lord, Lord McIntosh of Haringey, should have prayed in aid the fact that there has been, by means of a public service, a telephone system for over 100 years. When one considers that there are still people without a telephone; and that this is the only means of communication for the vast majority, I find it nothing other than a disgrace. This is precisely what the Bill is all about, to try to put that position right.

Lord Taylor of Gryfe

I hope that the Minister will respond to the anxieties that have been expressed from all parts of the Committee. If the amendment is perhaps either weak or defective in its drafting, at least the sentiment expressed in this Committee this afternoon is quite clear. A fundamental difficulty of the Bill is that we have lived within the tradition of a public service in the Post Office which, on the whole, has been found to be acceptable and we are now going to create a company which is to be floated on the market and which must attract shareholders on the basis of a prospectus which promises a certain return in profits. That profit-earning aspect of the successor company is where the problem arises.

Let us take Mercury as an example. It is operating only in areas of concentration of population and consequently it invites investors to invest in Mercury because, by operating such a tight arrangement, it hopes that it will be able to generate profit. But we are now considering the 97 per cent. of the telephone service which will be in the hands of the successor company and, naturally, with that 97 per cent., anxious to make profits for their shareholders, there will be pressure on them all the time. There will be pressure on them, to be more efficient, which I accept is desirable. However, they will also be carrying a lot of other costs: they will be carrying a good deal more than their current borrowing from the Government; they will be paying the market rate for finance.

So there will be pressures on the company—considerable pressures—which may influence the board of directors of the new company to sacrifice some of the essential elements which have been part of a public service. I live in Scotland and I can speak with some authority about the importance of the telephone service to the outer islands and to the remote communities. I was for some time chairman of the Forestry Commission and I had some involvement in retaining a balance, a reasonable economy and a reasonable life-style in the rural areas. I suggest that, if this amendment is not accepted, there will be great anxiety that some of these elements of the public service will be sacrificed in the interests of the returns to the investors who are good enough to put the £4 billion or £5 billion into this share issue. I appeal to the Minister: please give us some reassurance in this regard.

Lord Glenarthur

The question of prices for rural services in the future is clearly a matter which particularly exercises many of your Lordships. The noble Lord, Lord McIntosh, described himself as a "dyed-in-the-wool inhabitant of the metropolitan area"—I think, that that is roughly right—and I suppose that I ought to declare myself as a dyed-in-the-wool inhabitant of a rural area. However, I hope that I shall be able to explain the proposals that are contained in the Bill a little more fully.

As I have said, the Government appreciate that there is genuine concern that people living in rural areas feel that they might be worse off as a result of the enactment of the Bill, and that prices of telecommunication services in rural areas will rise substantially—much more so than prices in urban areas. But I hope that I can explain that that fear is in fact unfounded. First, the value of British Telecom's network depends on the number of people connected to it and the use they make of their telephones. This was a point that was made by my noble friend Lord Trenchard just now. At present a vast number of people are connected—some 151 million residential subscribers—but in point of fact they make little use of their telephones. The Committee might be interested to know that the average telephone is used for less than 10 minutes a day. Therefore, it is clearly not in the interests of British Telecom to increase charges so as to discourage people from making telephone calls. Indeed, I should have thought that rather the reverse would be true.

Secondly, there is no evidence that the costs of providing services in rural areas are higher than those in urban areas, because at present British Telecom simply does not have the accounting information. Indeed, it is quite possible that in some rural areas costs are lower than in towns where cables cannot be strung overhead but must be laid underground. London is a case in point. It is reasonable to believe that the costs of providing services in London, where cables must be laid under the streets, are much higher than in rural ares where wires can be "flown"—which I understand to be the technical term.

Thirdly (but by no means last), in due course the competition, which we are endeavouring to encourage by the Bill, will provide the best safeguard of all to customers. Competition is an effective means of encouraging better quality and variety of services and of restraining prices. However, because this will take some time to develop in all areas and we know that there is genuine uncertainty about the future, the Government intend to include conditions in the British Telecom licence to provide reassurance to customers in rural areas. The draft licence contains two conditions to which reference has already been made—Conditions 25 and 26—which are specifically designed to ensure uniform charges throughout the country for the next five years for two very important services to which my noble friend Lady Macleod referred; namely, maintenance and installation. Condition 25 is concerned with the maintenance charges. This term may have a slightly unfamiliar ring to it and so I shall explain it briefly.

At present, customers' bills have one charge for rental which at present stands at £14.15 per quarter for domestic users. This rental charge covers not only the supply and maintenance of the telephone instrument, but also the supply and maintenance of an exchange line and dedicated exchange equipment. The supply of apparatus is now open to others apart from British Telecom, and in order to ensure fair competition, the charges for telephone rental must be separate from the charges for the provision of the exchange line and equipment. So in due course customers' bills will show these charges for apparatus and exchange lines and equipment separately. I should like to emphasise that maintenance charges are not new charges; they have always been paid as part of rental charges.

As regards charges for apparatus, the level of prices will be set according to market forces brought about by the significant competition in this area. Nor are there any grounds for fearing higher prices for apparatus in rural areas. British Telecom will be required to supply a standard service on standard terms and conditions. If British Telecom tried to charge customers in, for example, rural areas more than those in urban areas for the same item of apparatus, it is likely that the director would consider this unfair discrimination; and that of course is prevented by Condition 17 of the licence.

Lord Molloy

Will the noble Lord allow me to intervene for a moment? He has just said that it is likely that the director will ensure that many parts of the British Isles will not suffer. I suggest that it is his responsibility and Parliament's responsibility to see that people are in no way disadvantaged. It surely must not be left to one man to make that decision—that is why Parliament exists.

Lord Glenarthur

If the noble Lord reads the Bill he will see that Clause 3 imposes a duty upon the Secretary of State and that duty is far stronger than anything which has existed hitherto. That was the point that I was going to make at the end of my remarks, but I have now made it rather sooner.

Concern has been expressed about maintenance charges, particularly by people who live in rural areas where lines may be knocked down in a storm—and I have seen plenty of evidence of that in the course of the past 48 hours—and clearly to put them up can be an expensive business. Therefore we have included Condition 25 which ensures that all customers, whether they live in a remote rural area or inner cities, will pay the same charge for maintenance. British Telecom will not be allowed to charge those who live in high cost areas more for the same basic service of maintaining their exchange line and exchange equipment. Similarly, Condition 26 provides for the continuation of uniform charges for installation. This is something to which I referred when speaking to an earlier amendment. As I think the Committee will be aware, at present British Telecom makes a standard charge for all installations throughout the country that take up to 100 hours to complete. This has generally been accepted as a reasonable arrangement, and Condition 26 ensures its continuance for the next five years.

The noble Lord, Lord Somers, referred in particular to the Orkneys. There are many examples—I do not have them to hand but I could easily produce them—of where there have been substantial charges to British Telecommunications for the provision of services in very difficult parts of the country. However, in fact, the charges which have actually been made to the customer have been extremely low in proportion to the actual cost of providing the service.

On the question of call charges and "usage charges", which is the actual phrase used in the amendment, I should point out that these are not standard now, even though they may appear so. The local call unit charge at off-peak rate is 5p for two minutes, but the size of the local charge unit—that is, the distance over which one can make a call at the local rate—differs in different parts of the country. For example, the local call area is larger in London than it is in many other areas. I do not see why variations similar to this should not continue.

Similarly, British Telecom has recently introduced lower unit charges on the most used trunk routes, which I also think is reasonable. I would not like to see such practices prevented, which is what this amendment would achieve. However, as with other charges, the variations in price across the country cannot be unreasonable or else the prohibition on undue discrimination comes into play.

I hope that I have said enough to convince noble Lords opposite why this amendment is unacceptable. I should also like to explain, briefly, why I believe it would be positively damaging. It seeks to ban all discrimination. Although we are opposed to undue discrimination, which will be prohibited under the terms of BT's licence, some discrimination is, indeed, quite reasonable. For example, the low-user rebate scheme is quite clearly discriminatory in that some customers pay a lower charge. But I think that all of us welcome that sort of help for, for example, the elderly who use their telephone only a little. I certainly should not wish to see such a rebate prohibited, which is what the amendment, if accepted, would do.

I return to what I said in answer to the noble Lord, Lord Molloy. Clause 3 of the Bill imposes a duty to provide a service. This service has not been entrenched in a duty before, and that is why I ask your Lordships to reject this amendment.

4.13 p.m.

Lord Donaldson of Kingsbridge

I did not want to interrupt the noble Lord in his eloquence, but I should like to make a point about prices. At the beginning the noble Lord made a very curious remark. He said that British Telecom could not afford to increase prices because it would lose custom. Did I misunderstand the noble Lord? Because, if that is what he said, I would point out that every time anybody puts up prices anywhere—and this is a calculated risk—it is almost inevitable that for a short period that person does lose custom. One thinks it is worth doing in the end and so one does it. Therefore, as a description of why BT would not do it, with respect, that seems to me to be quite meaningless.

The noble Lord spoke about the value of competition in keeping down prices. Of course, there is no competition at all in the rural areas, with only 3 per cent. competition outside the rural areas.

Lord Glenarthur

On the first question which the noble Lord, Lord Donaldson, raised, the fact is that at the moment the service as such is under-used. I hope that I made that plain in my opening remarks in answering the amendment. At the moment telephones of residential subscribers are not used a great deal, and therefore it would not help BT, or anyone else, to increase charges in such a way that the system is used even less. I hope that that makes sense. Perhaps the noble Lord could remind me of the other point he raised because I have forgotten it.

Lord Donaldson of Kingsbridge

It concerned competition in rural areas.

Lord Glenarthur

The question of competition in rural areas is a matter on which I touched. The fact remains that, certainly for the foreseeable future, British Telecom will be the main provider of services, and competition will emerge in due course.

Lord Edmund-Davies

I would welcome enlightenment from the noble Lord in relation to his opposition to part of the amendment—the non-discrimination part. The noble Lord cited an example of a rebate. That has no relevance to the suggested amendment, which relates to discrimination on the basis of "geographical location of the installation".

However, the question which hangs over the whole opposition to the amendment is as follows. If what the noble Lord says is right—and naturally one imputes the utmost good faith in the matter—what is the real basis of opposing the amendment? Why not make points upon which people of varied political opinions are troubled? Why not make the matter beyond doubt by accepting the amendment en bloc?

Lord Hawke

I should like to ask my noble friend a question before we decide this matter. It seems to me that any safeguards which can he put in the Bill would make the Bill extremely difficult to work and would possibly hamper its operation. The ultimate safeguard is a Question in Parliament. Once upon a time when we had a Postmaster General, such as the father of my noble friend Lord De La Warr, we used to be able to ask a Question if our mail was delayed. That was a wonderful means of keeping the Post Office on its toes. If a Question could be asked in Parliament to the effect that this organisation is exceeding the powers of its charter, that would greatly satisfy many people. If, on the other hand, we have to rely on one of the consumer councils—which, in the case of the nationalised industries, appear to be completely toothless and worthless bodies—then obviously we have to put more into the Bill.

Lord Glenarthur

Perhaps I may answer the noble and learned Lord, Lord Edmund-Davies, on his point about general discrimination. I would hesitate to argue if it is a very technical, legal point, but, as I understand it, in this amendment we are talking about general discrimination. I am advised that the amendment as written would have the effect that I described. For that reason, apart from anything else, I do not think that it would be sensible to allow the amendment in the form suggested. My noble friend Lord Hawke cited an example of being able to complain to the Postmaster General in the case of post not arriving. When this Bill becomes an Act my noble friend will have a contract of service, and I submit to him that that will be much more effective than what exists at the present.

Lord Alport

If my noble friend argues that in the future it will be counter-productive for British Telecom to raise prices because it will lose customers, why has the contrary happened when it has consistently raised prices over the last many years?

Lord Glenarthur

I think that the question of charges as they stand at the present time is a matter for British Telecom and not for me. But the principle of extending the use of a system in order to derive the best financial benefit from it is a perfectly sound one, and that is what the Bill will achieve.

Lord Stoddart of Swindon

What about electricity?

Lord Glenarthur

The question of electricity is entirely different and not a matter upon which I shall get drawn now.

Lord Bruce of Donington

I have been trying to follow what the noble Lord has been saying in reply to the debate. I found it difficult to discern when he was not supporting the amendment that is put forward. He seemed to be indicating that all the safeguards are perfectly satisfactory and that the aims that are implicit in the amendment are, in fact, his own aims. That being so, there would seem very little reason for his being unable to accept the amendment.

The noble Baroness, Lady Macleod, raised the matter of installation charges. The abuse of that part of it is surely covered by the fact that the Committee only a few minutes ago decided to retain the words "not reasonably practicable" in the Bill. Consequently, any kind of extraordinary expenditure that was not reasonably practicable would of course now be out automatically in any event.

What we are dealing with is a question of geographical discrimination. The noble Lord has in many ways fogged the issue here. What we want to see, and I think what the Committee wants to see as well, is that regardless of the geographical location, leaving aside questions of crossing miles of water by cable or some other means—and even there probably a reasonably practicable case can be made—there should be no discrimination in these matters between those living in the rural areas and those living in the town areas. I should have thought that that principle would be generally acceptable.

The noble Lord has said, "Of course, it is the intention to put it in a licence if it is not already there, but in any case it is the Government's intention to ensure that this kind of thing happens in any event". Once again, if this be the case there can be no argument against the amendment itself. There is some difficulty because if the noble Lord will refer to Schedule 5 to the Bill—and I am sorry to have to bring him to this provision because there is the question of the variation of charges here—he will find, for example, in paragraph 12(3): British Telecommunications may make, as respects any of the services provided or apparatus supplied by it, a scheme for determining the terms and conditions which are to be incorporated in the contracts which, by virtue of sub-paragraph (1)(a) above, are to be deemed to have been made". The Committee will recall that this matter was referred to by the noble and learned Lord, Lord Mackay, in the concluding stages of the debate last Thursday when we learnt that in place of the general scheme there was to be a contract in effect in law between each user and British Telecom.

The interesting thing is that Schedule 5 paragraph 12(5) says: A scheme made under this paragraph may—

  1. (a) make different provision for different cases or classes of cases determined by, or in accordance with, the provisions of the scheme; and
  2. (b) revoke or amend any scheme made under section 21 of the 1981 Act".
Therefore, the Government have retained power in the schedule to make variations in contract. It is no good saying that it is all going to be in the licence. The power is in the schedule here. I should have thought, that being so, the easiest way out of the difficulty in order to clear all reasonable doubts is to accept the amendment as it stands.

It is all very well for the noble Lord to try to extend it beyond the point we would wish. He tried to extend the discrimination into fields which, as the noble Lord was kind enough to point out, go right outside the ordinary definition of geography. The amendment means what it says: no discrimination on grounds "of the geographical location" of the subscriber. That is clear enough, and I do not think those in your Lordships' House in the legal profession would easily be able to dispute that.

It would be much safer for the noble Lord to accept the amendment. Everybody would be satisfied. But if the noble Lord declines to do so the Committee will have the clearest possible indication that it lies in the back of his mind that the independent successor company which takes over from British Telecom will ultimately find commercial pressures upon it to pay dividends upon the subscribed capital, and so to reduce those losses already incorporated in the 1983 accounts, so to cut its costs and increase its revenue, as to do exactly the same as they have tried to do in the United States; that is to say, make discriminatory charges on a geographical basis, which are already causing widespread distress there.

The noble Lord, Lord Spens, referred to Rowland Hill and the original concept of the postal service. This in the United Kingdom should be our aim. Our aim should be to achieve in the shortest possible time, bearing in mind technological advances and the fortunes of our people, a situation in which the telephone in an ordinary home will be just as usual as having water and electricity laid on. This is why I invite the Committee to support this amendment.

4.26 p.m.

Viscount Trenchard

Am I right in assuming that the amendment as written would mean that it would literally have to be penny post: that is, that a trunk call would have to cost exactly the same as a local call? I am not a lawyer, but I would think that that could be an interpretation of this. I further should like to re-emphasise once again that we have not got a shred of evidence that, with growing automation in all areas, rural calls are going to be a greater cost. Finally, we have been assured on installation and maintenance that for the first five years the licence will make sure that there is no discrimination. I doubt whether we could press the Government to go further than that.

Lord Morris

My noble friend made clear in his original answer that the charges—I shall mention just one item of charge—for maintenance will be uniform. Paragraph 25.1 of the draft licence does not quite say that. It says: that scale of charges shall he uniform throughout the Licensed Area. There is no reference within the draft licence as to precisely what "Licensed Area" means. Could my noble friend expand on that and let me know how many licensed areas there are going to be?

Baroness Phillips

May I point out to the noble Lord the curious argument he brought forward when he spoke about the outgoing calls. Surely the telephone is a means of communication, and if you live in a rural area it is your incoming calls which are of the greatest importance. I recall living on a farm for six years in the bad old days when it was under the Post Office when we had the telephone and no electricity, no water services, and certainly no gas services, but we were in direct communication, which was vitally necessary on a farm that was seven miles from the nearest town and two miles from the nearest village.

It was the proud boast of the Post Office in those days that anyone could have a telephone installed at the same price. If we are going to drive all our people into the conurbations because that is the only place where they are going to get the services, we are doing a great dis-service to the general population.

The Countess of Mar

I am concerned that in this discussion we do not seem to have made much distinction between the telephone service and the telecommunications services. We seem to have been talking just about the telephone service. In rural communities there are farmers who need to have special data-communication links, perhaps to measure milk and butter fats, for feeding their cattle, and that sort of thing. Another thing that comes to mind is water boards who use telephony circuits for measuring the level of dams, which can be extremely remote.

I am concerned that we have been talking only about telephone instruments and not the other services to do with telecommunications, and that perhaps the charges will be increased on these other services which are just as essential to the economic welfare of the community.

Lord Lloyd of Kilgerran

May I presume to follow the really devastating criticisms of the last part of the Minister's speech which came from the lips of the noble and learned Lord, Lord Edmund-Davies, and for a few moments try to analyse, for the benefit of all of us who have anxiety in this matter, what the noble Lord the Minister is really saying, because basically he is coming towards us on this side on certain aspects. He started by expressing genuine concern at this general anxiety, an anxiety which most noble Lords share. What were his arguments to satisfy us that there was no real anxiety worth talking about? His words were: "There are no unfounded fears", and he followed that with three points in support. One of them was that of course there is no incentive to increase costs, because that will only reduce the number of people using the services. The noble Lord, Lord Taylor of Gryfe, dealt with that adequately when he referred to the fact that in the future we shall be dealing with a public liability company out to get a certain amount of profit.

The second reason for supporting the fact that there was no unfounded fear was the most extraordinary that I have heard. He said, "There is no evidence that the cost of installations and all that kind of thing in the rural areas differs very much from that in the urban areas". He gave as his reason that the accounting system of British Telecom was in such a mess that one could not find out what was the difference in pricing. On reflection, I do not think that the noble Lord will wish to hang very much on that answer.

His third answer was that there would be competition. As has been pointed out, there is no real competition at the moment. He said "Competition will come". They are merely words and there is no real satisfaction to be earned from the words "competition will come" and that therefore there will be no discrimination between customers on the basis of geographical location.

The anxiety is based on this fact. The anxiety is that for various reasons, presumably commercial reasons, there will be discrimination between customers on the basis of geographical location. That is all we are talking about: the anxiety based on discrimination due to geographical location. He concluded by referring to Conditions 25 and 26 in the licence. Again he reiterated that on the basis of that, there is no justification for this anxiety. I ask your Lordships to consider carefully that kind of argument. There is real anxiety. I wonder whether the Government might now consider taking back this amendment and saying that they will think about it so that the matter can be brought forward by the Government at the Report stage.

Lord Glenarthur

Your Lordships have raised a number of points. Perhaps I may start with the easy one first. My noble friend Lord Morris asked about the licensed area. I should refer him to Condition 44 of the licence where the interpretation is: the United Kingdom other than … Hull". Incoming calls, to which the noble Baroness, Lady Phillips, referred, of course are important, because incoming calls generate income for British Telecom just as much as outgoing calls generate charges for the person making them. It is six of one and half a dozen of the other. It is the use of the system which is important. That was the point that I made earlier when answering my noble friend Lord Alport. I do not think that I can amplify much of what I have said.

There is one key point to which I shall come in a moment; but the fact is that BT will be free to introduce variations in charges after the five-year period is up, according to the costs of providing those services. However, there will be no sudden change. Any variation will be brought in gradually, because it is not in the interests of British Telecom to discourage the use of its network. The director will of course keep a close watch on matters in accordance with the duty imposed by Clause 3(2)(a) which I described earlier. If he thought that consumers were not being charged reasonable prices, it would be open to him to seek modification of the licence, for example, to impose a limit on the variation in prices throughout the country. The main objection to the amendment is the fact that it would prohibit discrimination totally, as my noble friend Lord Trenchard described. That is the effect of the amendment. If the amendment were to be agreed by your Lordships, the beneficial discrimination which I described earlier would be lost as well.

Lord Weinstock

I wonder whether other noble Lords are as puzzled as I am at the general drift of the argument that the Committee is taking. As I understood him, the noble Lord, Lord Glenarthur, accepted as valid the objects which the amendment strives for, and rejected it only on the ground that in some cases there was justification for discrimination. Does not the noble Lord consider that the Government are better placed to accept the principle put forward in the amendment and to consider altering the Bill in due course rather than drive noble Lords, who otherwise might vote against the amendment, to vote for it?

Lord Glenarthur

What I said when I started to speak earlier was that the Government recognise the concern that people have about the effects of the Bill on rural areas. What I have tried to do—and I may not have done it as successfully as I might have done—was to explain that they need not be concerned because, for the first time in legislation, Clause 3 imposes a duty to look after those, like myself, who live in rural areas. I am as concerned as anybody to make sure that my telephone services are not made more complicated by the passing of the Bill. But the point is that that is a duty. There has been no duty up to now, and I hope that will reassure the noble Lord.

Lord Weinstock

With due respect to the noble Lord, I am sure his concern is very real; but some practical expression of it in the form of an undertaking that the Government will cover it in the Bill in due course would be very welcome.

Lord McIntosh of Haringey

I shall be very brief. I have listened with great care, particularly to the contributions from the Cross-Benches and from the Conservative Benches. I would be the first to acknowledge that the concern expressed by many noble Lords does not amount to 100 per cent. support for the wording of the amendment. That is quite clear from the words of the noble Lord, Lord Somers, who said that we were talking about charging rates and raised the question whether it would be right to have extremely isolated areas paying the same. It is clear from the words of the noble Baroness, Lady Macleod of Borve, who asked for Government assurances that there would be protection for rural reas. The noble Lords, Lord Alport and Lord Spens, and the noble and learned Lord, Lord Edmund-Davies (who asked about the existing position on charges, and so on), were asking for assurances from the Government that the well-meaning intentions which have been expressed in ministerial statements should be expressed in a way that could not be denied or got round. I have to say this: the Government have given us no indication whatsoever that they are prepared to make any significant concession on the amendment. We are not talking about a change in all licences. When we suggested that the British Telecom licence ought to be given statutory authority, the answer given by the Government was that there would have to be 3,000 of them. That is not the case here. Nobody except British Telecom will provide these services to the rural areas. It is therefore only the British Telecom licences that we are talking about.

If we are told that Conditions 17, 25 and 26 of the licence provide the protection that is required, why cannot that protection he written into the Bill? That is what noble Lords were asking for and that is what the Government should concede. If they gave any indication of that, I should be the first to say, "Let us consider the Government's own proposals at Report stage". Failing that I fear that I have no alternative but to ask the Committee to support the amendment.

4.40 p.m.

On Question, Whether the said amendment (No. 24) shall be agreed to?

Their Lordships divided: Contents, 118; Not-Contents, 106.

Adean, L. Ardwick, L.
Allen of Fallowfield, L. Attlee, E.
Alport, L. Auckland, L.
Amherst, E. Aylestone, L.
Ampthill, L. Belhaven and Stenton, L
Beswick, L. Kearton, L.
Birk, B. Kinloss, Ly.
Bishopston, L. Lawrence, L.
Blyton, L. Leatherland, L.
Boston of Faversham, L. Llewelyn-Davies of Hastoe, B
Briginshaw, L. Lloyd of Hampstead, L.
Brockway, L. Lloyd of Kilgerran, L.
Brooks of Tremorfa, L. Lockwood, B.
Bruce of Donington, L. Longford, E.
Burton of Coventry, B. Lovell-Davis, L.
Caccia, L. McCarthy, L.
Caradon, L. McIntosh of Haringey, L.
Carmichael of Kelvingrove, L. Macleod of Borve, B.
Cledwyn of Penrhos, L. Mais, L.
Collison, L. Mar, C.
Cooper of Stockton Heath, L. Mayhew, L.
Darling of Hillsborough, L. Milne, L.
David, B. Mishcon, L.
Davies of Penrhys, L. Molloy, L.
Dean of Beswick, L. Molson, L.
Delacourt-Smith of Alteryn, B. Mulley, L.
Oram, L.
Denington, B. Peart, L.
Donaldson of Kingsbridge, L. Phillips, B.
Edmund-Davies, L. Pitt of Hampstead, L.
Ellenborough, L. Plant, L.
Elwyn-Jones, L. Ponsonby of Shulbrede, L.[Teller.]
Ennals, L.
Ewart-Biggs, B. Prys-Davies, L.
Fisher of Rednal, B. Rathcreedan, L.
Gaitskell, B. Rochester, L.
Gallacher, L. Ross of Marnock, L.
Gardiner, L. Seear, B.
George-Brown, L. Seebohm, L.
Graham of Edmonton, L. [Teller.] Shaughnessy, L.
Somers, L.
Grey, E. Spens, L.
Grimond, L. Stallard, L.
Hale, L. Stamp, L.
Hall, V. Stedman, B.
Halsbury, E. Stewart of Alvechurch, B.
Hampton, L. Stewart of Fulham, L.
Harris of Greenwich, L. Stoddart of Swindon, L.
Hayter, L. Stone, L.
Houghton of Sowerby, L. Strabolgi, L.
Howard of Henderskelfe, L. Strathcarron, L.
Hughes, L. Taylor of Blackburn, L.
Hunt, L. Taylor of Gryfe, L.
Hutchinson of Lullington, L. Taylor of Mansfield, L.
Hylton-Foster, B. Tordoff, L.
Jacques, L. Underhill, L.
Jeger, B. Wallace of Coslany, L.
Jenkins of Putney, L. Weinstock, L.
John-Mackie, L. Wilson of Rievaulx, L.
Kagan, L. Wootton of Abinger, B.
Kaldor, L.
Abercorn, D. Eccles, V.
Alexander of Tunis, E. Elliot of Harwood, B.
Allerton, L. Elphinstone, L.
Avon, E. Elton, L.
Bellwin, L. Enniskillen, E.
Belstead, L. Fanshawe of Richmond, L.
Boyd-Carpenter, L. Fortescue, E.
Caithness, E. Gibson-Watt, L.
Campbell of Croy, L. Glanusk, L.
Carnegy of Lour, B. Glasgow, E.
Clitheroe, L. Glenarthur, L.
Cockfield, L. Glenkinglas, L.
Coleraine, L. Gormanston, V.
Cottesloe, L. Gowrie, E.
Cox, B. Gray of Contin, L.
Craigton, L. Gridley, L.
Crathorne, L. Hailsham of Saint Marylebone, L.
Croft, L.
Cullen of Ashbourne, L. Hampden, V.
Daventry, V. Harmar-Nicholls, L.
Davidson, V. Hawke, L.
De La Warr, E. Hemphill, L.
Denham, L. [Teller.] Hives, L.
Drumalbyn, L. Holderness, L.
Home of the Hirsel, L. Onslow, E.
Hood, V. Orkney, E.
Hornsby-Smith, B. Orr-Ewing, L.
Kimberley, E. Pender, L.
Kinnaird, L. Peyton of Yeovil, L.
Lane-Fox, B. Portland, D.
Lauderdale, E. Rankeillour, L.
Long, V. St. Aldwyn, E.
Lucas of Chilworth, L. St. Davids, V.
Lyell, L. Saint Oswald, L.
McAlpine of Moffat, L. Saltoun, Ly.
McAlpine of West Green, L. Sempill, Ly.
Mackay of Clashfern, L. Shrewsbury, E.
Malmesbury, E. Strathclyde, L.
Mancroft, L. Strathspey, L.
Margadale, L. Swinton, E. [Teller.]
Marley, L. Terrington, L.
Maude of Stratford-upon-Avon, L. Teynham, L.
Thorneycroft, L.
Melville, V. Torphichen, L.
Merrivale, L. Trefgarne, L.
Mersey, L. Trenchard, V.
Mills, V. Trumpington, B.
Morris, L. Vaux of Harrowden, L
Mottistone, L. Vickers, B.
Mowbray and Stourton, L. Vivian, L.
Murton of Lindisfarne, L. Whitelaw, V.
Northchurch, B. Windlesham, L.
Nugent of Guildford, L. Wynford, L.
O'Neill of the Maine, L. Young, B.

Resolved in the affirmative, and amendment agreed to accordingly.

4.48 p.m.

Lord McIntosh of Haringey moved Amendment No. 25: Page 2, line 43, after ("reasonable") insert ("needs and").

The noble Lord said: I think, after that, I can afford to be very brief on this amendment. I would simply ask whether, in the light of the text of Clause 3 as it now stands, the Government would feel that it was worth their while to resist this simple and non-controversial amendment, which simply seeks to take account of subscribers' needs as well as of their demands. Now that we have the principle of equality for all subscribers, whatever geographical area they live in, enshrined in the legislation, would it not be fair for the Government to accede gracefully to this minor further change? I beg to move.

Lord Glenarthur

This amendment would alter the duty imposed on the Secretary of State and the director under Clause 3(1) in a subtle but important way. The demand for telecommunication services can be measured with reasonable precision. For example, one can identify how many people are prepared to meet the extra cost of a more sophisticated and versatile domestic telephone. Our intention is that those licensed to run telecommunication systems should respond vigorously and efficiently to the demands of the market.

The need for telecommunication services cannot be measured in the same objective way. It is much more a subjective test. Of course, need can be assessed, but the assessment will always depend upon the person who carries out the assessment. It would be reasonable to predict that the Secretary of State, the director and the licensee of a telecommunication system would have different views of the need for telecommunication services although they could be expected to come to agreement on the demand for those services. If this amendment were to be accepted, someone would have to judge the need for telecommunication services. If that judgment were made by the Secretary of State, he could impose his views on licensees only at the cost of considerable day-to-day interference with their activities, which is just the sort of interference that the Government are trying to avoid. If, on the other hand, the judgment of need was made by the licensee under the terms of his licence, the result could be an unsatisfactory service with many frustrated customers.

I think we all agree that telecommunications are essential to the future prosperity and well-being of our society. That is the fundamental reason why the Government embarked on this policy. The Government recognise that, because telecommunication services are so important, all people throughout the country should have access to them, including low-income users, about whom there has been certain comment from time to time. That is why Clause 3 of the Bill ensures that all persons throughout the country will continue to have access to a telephone. Clause 3(1)(a) imposes a duty which I described at length a few moments ago, and I do not think it is necessary to repeat it now. Under these arrangements, everyone who wants a telecommunication service will be able to obtain one, provided that the demand is reasonable and the provision is not impracticable. I hope that, without further ado, and in view of the short time that it took the noble Lord to explain his amendment, that will satisfy the noble Lord and that he will withdraw his amendment.

Lord Bruce of Donington

The reply given by the noble Lord exposes the whole weakness of this Bill. He referred to demand being essentially the demand of the market place; in other words, those who can afford to have it are going to have it. The whole concept of a public service is essentially to supply reasonably the needs of the people. This is exactly what the National Health Service was founded for and exactly the same principle was involved. The noble Lord is quite correct in saving that anybody can assess a subjective need, but the words "reasonable need" would be there. That is what the remainder of the Bill and certain of the amendments seek to do—to specify areas of need.

The noble Lord is trying to marry two things together and is finding it very difficult to do so. He is trying to combine the harsh reality of the market place with the necessity of providing a service for the population, and all that his arguments prove is the incompatibility of one with the other. Surely, it would be far better for the noble Lord to give up at this point and say, "We will try within this Bill to do progressively what British Telecom, under the normal British Telecommunications Act 1981, would have done had it been allowed to continue without this wretched drive to privatisation for the purpose of raising revenue for the Chancellor of the Exchequer", because there is nothing more in it than that. It would be far better if the noble Lord accepted that, because that is the way in which things would have developed had the British Telecommunications Act 1981 been allowed to continue undisturbed. It is the wretched drive for privatisation that is giving the noble Lord the hiccups here. He might as well give up and accept the amendment.

4.54 p.m.

Lord Alport

I must ask my noble friend again whether he will consider this amendment. I suppose that I must declare an interest, because I imagine that I am almost the last of the lowest form of ministerial life which in past days was the Assistant Postmaster-General. In those days, we were greatly concerned with the efficiency of the telephone service, and I emphasise the word "service" because that is essentially what it was. It was intended to be providing for all sections of the community, so far as possible, through the public callbox and also the private telephone, a service. Need was very much taken into consideration at that time.

My noble friend has said that the criterion which will be used is demand, but, as the noble Lord, Lord Bruce of Donington, has pointed out, there is a fundamental difference between demand and need. Therefore, one must assume that if demand is to be the criterion, then it will not be considered as a service which responds to the needs of the communities, whether they be rural or urban. If this amendment is accepted and put in, then a further criterion will have to be considered by those concerned and it will bring the matter into the realms of being a service and not merely a commercial transaction. I think that the people in this country as a whole will be very worried and anxious, when the time comes, to find that the service to which they have been accustomed over many years is no longer a service, or considered in that shape, but is something which is merely provided by a commercial organisation on that basis of exigencies of the market place.

Lord Donaldson of Kingsbridge

The difference between "reasonable demand" and "need" is extremely narrow. I think that it would be wrong of the Government, having won an important amendment in our last session by four votes, and having lost this one by 12 votes, not to be a little gracious here. I cannot think of single case where the difference between "reasonable demand" and "need" would involve a major decision. I suppose that one could consider an old man living alone in a cottage miles from anywhere, with his friends and relations thinking that he ought to ask for a telephone but he is not taking the trouble to do so, although he clearly needs one. I suppose that that would be an example, but then I think that he should probably have it. So I am rather distressed at this rigid attitude over a difference which is so fine between the two, when so much opinion within the Committee has shown that this kind of change, this kind of emphasis on the service part in the future, is very deeply felt throughout.

Lord Boyd-Carpenter

I think that the noble Lord, Lord Donaldson, unusually for him, was guilty of a little confusion of thought with his reference to the lonely old man in the cottage. Of course I agree with him, and I think all your Lordships will agree with him, that that lonely old man should have a telephone. But you still come back to the question of how, and at whose expense, it should be provided.

There is always a temptation, with these and analogous subjects, to suggest that the supplier of the service should carry the cost of providing it for those unable to pay for it. As one who was once responsible for social security administration, I have, in general, been against that view. If someone is in need, it is the function of the social security services to provide him with the means of paying for the service, and not, I suggest to the noble Lord, Lord Donaldson, for the supplier of the service to do so. We get into the most terrible muddle if the idea of dealing with poverty by the provision of free services, as opposed to dealing with it by providing proper financial means, is adopted.

I should also like to take up the real confusion of thought of the noble Lord, Lord Bruce of Donington, when he compared the telephone service with the National Health Service. The National Health Service is a free service, providing a free medical service for the population as a whole. It has been accepted as such for very many years and many of us are very proud of it. The telephone service is not such a free service, though the word "service" is used. It provides, on commercial terms, a useful amenity; indeed, perhaps, a necessary help for life. But it is not and never has been a free service in the sense that the National Health Service has been free, which leads me to exactly the same point as I was dealing with in respect of the noble Lord, Lord Donaldson of Kingsbridge: that if we are going to deal with the need of people for a telephone—most of us, from our own experience, know of cases where a telephone is a necessity—we must face up to whether we are going to try to put the cost of providing the telephone on to the new British Telecom or whether we are going to do what I suggest is correct and ensure that the provision of "needs" stays where it should—with the Department of Health and Social Security.

Lord Alport

I have listened with great care to my noble friend's speech and comments. There is perhaps a good deal of confusion of mind in the Committee generally on this point. I myself may be confused. I did not regard the meaning of the word "needs" in this case as dealing with the question of the financial situation of the person who requires the telephone. I assumed that in this case the word "needs" was intended to cover the requirements of a scattered rural area as compared with the requirements of a high demand, highly congested urban area. I do not believe that the old gentleman to whom the noble Lord, Lord Donaldson of Kingsbridge, referred is the object of this amendment. Its object is generally to ensure that the policy contains some equity as between those who require the service but who do not provide the same volume of demand and those who provide a greater volume of demand but whose requirements are not so urgent as they would be, for instance, in rural areas.

Lord Boyd-Carpenter

If the word "needs" were as my noble friend Lord Alport interprets it, there might be somewhat less objection to the amendment, but I am waiting to hear my noble friend the Minister. It seems to me that when you put the two words against each other—"demands", which to any economist has a perfectly clear meaning (meaning the capacity to demand a service for which you are prepared to pay) and "needs", which, if you have been involved, as I have, in social security administration, means, simply, the physical needs, the intellectual needs, the social needs either of an individual or of a community—there is a clear contrast. It would be very dangerous, with no more than the possibility of ambiguity at which my noble friend hinted, to put the word "needs" into the Bill. "Demands" is the effective word.

Lord Donaldson of Kingsbridge

It may be that before long I shall have to demand an apology from the noble Lord, but I shall not ask for payment. I do not expect to pay for it.

Lord Boyd-Carpenter

I am sure that I shall not need it.

Lord Kaldor

May I ask the noble Lord, Lord Boyd-Carpenter, whether he assumes that in a place where the provision of a service such as a call box is far more expensive than in some other place—say, in a village rather than in a town—that service should be provided only if a correspondingly higher charge is made for calls from expensive call boxes than is made for calls from less expensive call boxes? Otherwise it is not a question of whether people can or cannot afford to pay. It is simply a question of whether the new telecommunications service, under private ownership, should provide services which are necessarily loss-making because the cost to them is so much greater than the average cost of providing such services over the country as a whole.

Lord Boyd-Carpenter

The noble Lord is going back to the previous amendment which we considered at not inadequate length: whether there should be charges which vary in accordance with geographical locality. If the noble Lord wants to open up that question on a later amendment, I shall he very happy to express views which I suspect may not be those of the noble Lord. With respect, it has nothing whatever to do with this amendment.

Lord Kaldor

I am merely suggesting that the addition of the word "needs" is consequential upon the earlier amendment which the Committee adopted.

Lord Glenarthur

I shall be the first person to endorse everything which my noble friend Lord Boyd-Carpenter said in response to the noble Lord, Lord Bruce of Donington, and his comparison of this service with the National Health Service. I do not think I can add a word to what my noble friend said; he made the point admirably. I must also disappoint the noble Lord, Lord Bruce of Donington, and say that I am not going to give up; I am going to continue with it. Although the noble Lord, Lord Donaldson of Kingsbridge, referred to the difference between "needs" and "reasonable" as being very narrow, again that makes the case for not accepting the amendment very strong. In that case, I cannot see what is the point of pushing the amendment in the way in which noble Lords opposite seek to do. The fact remains that "demands" is measurable. "Needs", in the way that the noble Lord, Lord Bruce of Donington, and others have described it, effectively means an open-ended demand. It could go on for ever; there would be no limit. This takes us back to the National Health Service question to which the noble Lord referred.

The fact remains that access generally to the telephone will in future be considerably strengthened. It is for British Telecom now to decide what is and what is not reasonable and practicable. In future, any customer who is denied service will be able to take up the matter with the director who will judge, guided by Condition 42 of the licence, whether or not British Telecom is under an obligation to provide service.

So far as Lord Kaldor's point about call boxes is concerned, it is another point which will come up again in due course. It is also germane to the last amendment, as my noble friend Lord Boyd-Carpenter said. This is an important and subtle amendment and it would have a very serious effect on the Bill if it were agreed to. Therefore, I must ask your Lordships to reject it.

Lord McIntosh of Haringey

I agree with the Minister that it is an important amendment. I owe an apology to the Committee for having moved it so briefly. I thought that the Government might be willing to consider it and place upon it the same value as I, my noble friends and other members of the Committee place upon it. We find ourselves in the position that "needs" is in some way an alternative to the subsequent amendments which relate to the top of page 3 of the Bill. They provide specific protection for directory inquiry services, telephone directories and so on. If the Government had been prepared to accept the amendment, their case for opposing the subsequent amendments would have been that much greater. If the Government are not prepared to accept the word "needs" as a criterion which the Secretary of State must take account of, we shall have to press each of these amendments which relate to the protection of individual services for the blind, the disabled and so on. We shall have to vote the Government down, as we voted them down half an hour ago. I regret it. I would rather have this dealt with in a tidy and logical way.

I would remind the Minister that the clause is already very adequately worded so as to provide the protection which the Government need. Let me remind the Minister that line 39 refers to the manner which the Secretary of State considers is best calculated to achieve these objectives. Let me also remind the Minister that at line 42 the Government have succeeded in persuading your Lordships to retain the phrase "or not reasonably practicable". What threat, then, does the addition of the word "needs" provide to the Government? What it does is to give statutory effect to the well-meaning statements which Ministers have made both here and in another place—not so much to the Members of the Opposition but to their noble friends and to noble Lords on the Cross-Benches who have expressed concern.

In the absence again of any movement of any kind towards acceptance of the principle behind the amendment, I am afraid that I have no alternative but to ask your Lordships to divide.

5.10 p.m.

On Question, Whether the said amendment (No. 25) shall be agreed to?

Their Lordships divided: Contents, 92; Not-Contents, 124.

Allen of Fallowfield, L. Jeger, B.
Alport, L. Jenkins of Putney, L.
Amherst, E. John-Mackie, L.
Ardwick, L. Kaldor, L.
Attlee, E. Kearton, L.
Aylestone, L. Kilmarnock, L.
Beswick, L. Leatherland, L.
Birk, B. Llewelyn-Davies of Hastoe, B
Bishopston, L. Lloyd of Hampstead, L.
Blyton, L. Lloyd of Kilgerran, L.
Boston of Faversham, L. Lockwood, B.
Briginshaw, L. Longford, E.
Brockway, L. Lovell-Davies, L.
Brooks of Tremorfa, L. McIntosh of Haringey, L.
Bruce of Donington, L. Mayhew, L.
Carmichael of Kelvingrove, L. Mishcon, L.
Chitnis, L. Molloy, L.
Cledwyn of Penrhos, L. Mulley, L.
Collison, L. Ogmore, L.
Cooper of Stockton Heath, L. Oram, L.
Darling of Hillsborough, L. Paget of Northampton, L.
David, B. [Teller.] Peart, L.
Davies of Penrhys, L. Phillips, B.
Delacourt-Smith of Alteryn, B. Pitt of Hampstead, L.
Ponsonby of Shulbrede, L. [Teller.]
Denington, B.
Diamond, L. Prys-Davies, L.
Donaldson of Kingsbridge, L. Rathcreedan, L.
Elwyn-Jones, L. Rochester, L.
Ennals, L. Ross of Marnock, L.
Ewart-Biggs, B. Seear, B.
Fisher of Rednal, B. Stallard, L.
Gaitskell, B. Stedman, B.
Gallacher, L. Stewart of Alvechurch, B.
Gardiner, L. Stewart of Fulham, L.
Graham of Edmonton, L. Stoddart of Swindon, L.
Grey, E. Stone, L.
Grimond, L. Strabolgi, L.
Hale, L. Taylor of Blackburn, L.
Hall, V. Taylor of Gryfe, L.
Hampton, L. Taylor of Mansfield, L.
Harris of Greenwich, L. Tordoff, L.
Hayter, L. Underhill, L.
Howie of Troon, L. Wallace of Coslany, L.
Hughes, L. Wedderburn of Charlton, L.
Hunt, L. Wigoder, L.
Jacques, L. Young of Darlington, L.
Adeane, L. Craigton, L.
Alexander of Tunis, E. Crathorne, L.
Allerton, L. Croft, L.
Avon, E. Cullen of Ashbourne, L.
Belhaven and Stenton, L. Daventry, V.
Bellwin, L. Davidson, V.
Belstead, L. De La Warr, E.
Bessborough, E. Denham, L. [Teller.]
Boyd-Carpenter, L. Drumalbyn, L.
Caccia, L. Eccles, V.
Caithness, E. Ellenborough, L.
Campbell of Alloway, L. Elliot of Harwood, B.
Campbell of Croy, L. Elphinstone, L.
Carnegy of Lour, B, Elton, L.
Carrington, L. Enniskillen, E.
Cockfield, L. Faithfull, B.
Coleraine, L. Fanshawe of Richmond, L.
Cork and Orrery, E. Fortescue, E.
Cottesloe, L. Gardner of Parkes, B.
Cox, B. Gibson-Watt, L.
Glanusk, L. Melville, V.
Glasgow, E. Merrivale, L.
Glenarthur, L. Mersey, V.
Glenkinglas, L. Milne, L.
Gowrie, E. Morris, L.
Gray of Contin, L. Mottistone, L.
Gridley, L. Mowbray and Stourton, L.
Hailsham of Saint Marylebone, L. Murton of Lindisfarne, L.
Northchurch, B.
Halsbury, E. Nugent of Guildford, L.
Hawke, L. Onslow, E.
Hemphill, L. Orkney, E.
Henley, L. Orr-Ewing, L.
Hives, L. Pender, L.
Holderness, L. Peyton of Yeovil, L.
Home of the Hirsel, L. Porritt, L.
Hood, V. Portland, D.
Hornsby-Smith, B. Rankeillour, L.
Howard of Henderskelfe, L. St. Davids, V.
Hylton-Foster, B. Saint Oswald, L.
Kagan, L. Saltoun, Ly.
Killearn, L. Seebohm, L.
Kilmany, L. Sempill, Ly.
Kimberley, E. Shaughnessy, L.
Kinloss, Ly. Spens, L.
Kinnaird, L. Strathcarron, L.
Lane-Fox, B. Strathclyde, L.
Lauderdale, E. Strathspey, L.
Lawrence, L. Swinton, E. [Teller.]
Long, V. Terrington, L.
Lucas of Chilworth, L. Teynham, L.
Lyell, L. Thorneycroft, L.
McAlpine of Moffat, L. Torphichen, L.
McAlpine of West Green, L. Tranmire, L.
Mackay of Clashfern, L. Trefgarne, L.
Macleod of Borve, B. Trenchard, V.
Malmesbury, E. Trumpington, B.
Mancroft, L. Vaux of Harrowden, L.
Mar, C. Vickers, B.
Margadale, L. Vivian, L.
Marley, L. Whitelaw, V.
Maude of Stratford-upon-Avon, L. Wynford, L.
Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

5.19 p.m.

Lord McIntosh of Haringey had given notice of his intention to move Amendment No. 26: Page 3, line 2, after second ("services,") insert ("enquiry services, services providing information assistance,").

The noble Lord said: As a result of that vote, I shall not start in quite the same tone as that which I used when moving the last amendment. Amendment No. 26, now that I see the Marshalled List, seems to cover very much the same ground as the amendment proposed by the noble Lord, Lord Lloyd of Kilgerran, which is next on the Marshalled List. The amendment to which I am speaking now is, if anything, somewhat wider. On reflection, it occurs to me that one might run the risk of seeking to protect not only the most important information services, such as directory inquiries, but also the weather or (and dare I suggest that these are not of the utmost social significance?) test match scores. I believe it would be better to seek your Lordships' permission not to move this amendment.

[Amendment No. 26 not moved.]

Lord Lloyd of Kilgerran moved Amendment No. 27: Page 3, line 2, after second ("services") insert (", directory enquiry services").

The noble Lord said: The purpose of this amendment is to insert the words "directory enquiry services" into the statements about the general duties of the Secretary of State and the director. In Clause 3(1)(a) there is a reference to the services which should be provided in satisfying demands for them. Then, at the top of page 3 of the Bill, the subsection goes on to particularise certain services which certainly should be given as follows: including, in particular, emergency services, public call box services, maritime services and services in rural areas". As a matter of law, as a matter of construction of the Act, when you particularise items in a clause there is the danger that they may he excluding certain other very important matters. I would say with the greatest respect that the directory inquiry services are of the utmost importance not only in the rural areas but in town areas, and of the utmost importance not only for the people living in the rural areas, but for everybody: business people, for instance, in a hurry to get to an appointment find their car breaks down and they find a telephone box; they have not got the number with them. Therefore the directory inquiry service is of the utmost importance to business people as well as to the ordinary citizen. Accordingly, I would ask, in view of the importance of this service to industry and to the public generally, that these words be included in the particularisation which occurs at the top of page 3 in dealing with the general duties of the Secretary of State and the director.

Baroness Lane-Fox

As your Lordships are, I am certain, aware, directory inquiry services are especially necessary to people with impaired sight, also to those who are dyslexic and others whose physical handicaps make it very hard for them to use the dial or even the push button system. That the telephone is invaluable to such people I am sure is very well known, particularly to those of your Lordships who have ever been immobilised, and to make use of the telephone the directory service is all-important to the groups of people I have described. They are the ones who really rely on the telephone to keep them in touch. I know this may be asking a lot, but I regard it as so important that I very much hope the Government will be able to accommodate the gist of the amendment in the Bill.

Lord Somers

This amendment, which is perfectly logical, will not make the slightest difference to the character of the Bill or to its nature or purpose. I cannot see any reason at all why the Government should refuse it, except of course that it is not one of their own, which I think is an extremely unhappy and unsatisfactory reason. So I sincerely hope they will have second thoughts.

Baroness Macleod of Borve

I also should like to support this amendment. There are hospitals with telephones going from bed to bed, as I know very well, where they have not got telephone books. There are also, unfortunately, very many in our society who are still completely illiterate on leaving school. There are also those who come to our country and cannot speak or read our language adequately enough. They simply must have the directory services. I hope the Government will accept this amendment.

Lord Kaldor

May I say that this has two aspects—namely, the directory inquiry service concerning the United Kingdom and the service concerning foreign countries. At present the telephone system provides both services. Providing the service of finding the numbers of people in overseas countries, whether in Europe or elsewhere, is from a national point of view a very important matter. I hope we may have an assurance that the words "directory services" cover both aspects, national and international.

Lord Ardwick

I wish to support this amendment also. The service should not only be continued under the new system but should be very much improved. Perhaps because it is rather costly, it is the worst of the telephone services. One rings and then waits for a long time and one is lucky to get an answer; then there seem to be people of no very great skill at the other end. Furthermore, the directory inquiry service is concealed by the Post Office as much as possible. If you look through the books you find it very difficult to discover what number you should ring for these services. I think it is essential that these services should be continued and should be substantially improved.

The Countess of Mar

It is quite interesting that the following amendment is to provide free directories to all subscribers. I think if this amendment were not agreed to, everyone would want all the directories. Directory inquiries do generate their own calls; people ring the directory inquiry number and then they ring someone else and are charged for the call. The noble Baroness, Lady Lane-Fox, has already mentioned the disabled and people with difficulties. There are an awful lot of people who cannot read and people who cannot retain numbers, and they find directory inquiries very helpful.

Lord Peyton of Yeovil

Perhaps I may venture to say this. I was sorry to hear the noble Lord, Lord Ardwick, passing such adverse comments on the present service offered by directory inquiries. My recent experience has been that it has improved enormously—indeed, out of all recognition from the very moderate standards of only a few years ago.

If I may now address my noble friend the Minister, I would say this. I do very much wonder whether the successor to British Telecom would not want to make its services available as easily as possible to the largest number of people. I cannot believe that it is not now in their contemplation to offer this service free. I would be rather surprised, I must say, if the Government did not feel inclined at least to take this amendment away and give it careful thought. I cannot think that it would add to the load on the successor, those who are going to operate the telephone services in this country, if an undertaking were given in their name now by the Government and even put into the Bill to offer such a service as directory inquiries free of charge.

I am sure that Ministers in this place suffer from serious inhibitions as to the advice that they receive from government departments, but may I just put in a plea that not all the advice emanating from Whitehall is beyond blemish and that perhaps a suspicion of that may enter into my noble friend's mind before he replies to this debate?

Lord McIntosh of Haringey

The case has been very well put, and I am confident that the Government will respond sympathetically. I only want to ask the Minister one question referring to the British Telcom draft licence. It is true that the draft licence for BT does say that Oftel will require BT to continue to provide a service for people recognised by the director as being prevented by reason of blindness or other disability from using paper directories. But is it not true that the draft licence says that it shall be a free service or a service provided in return for appropriate and reasonable compensation? If that is the case, is not even the licence defective in protecting the needs of the blind and the disabled and the other groups to which this amendment refers?

Lord Torphichen

I fully appreciate why noble Lords would want this amendment, but the trend is away from using paper directories and manual means, and the voice at the end of the telephone. The French telephone authorities have tried it, and so, I am sure, have the Americans. The trend is towards supplying directory assistance through Prestel-type keyboard attachments. That is fine for the people who can read and whose sight is good but obviously if one cannot read a telephone directory neither can one read a computer attached to a telephone. The trouble with the amendment is that it only refers to "directory enquiry services". In due course a directory inquiry service might be quite a different animal from the one we are trying to protect today.

5.30 p.m.

Lord Lyell

I think it is rare in my career in your Lordships' House to have heard so many interesting points raised so swiftly and succinctly in the course of a mere 12 minutes, according to the clock—although it did not seem to be 12 minutes. Many interesting points were raised, possibly with justification. Indeed, I listened to all the points raised by my noble friends and from all sides of your Lordships' Committee. The noble Lord, Lord Lloyd of Kilgerran, in moving the amendment, spelt out very closely what he sought from the directory inquiry service and how important he felt this service was. Many noble Lords expressed their opinion on how vital and necessary are these services. I am not in a minority of one: I totally agree, and I shall seek to prove to your Lordships that in this instance we believe that its importance is recognised in the Bill as it stands.

Although we are on Clause 3, I draw the attention of your Lordships—and I am sure this will find favour with everyone who has spoken—to Clause 4. Clause 4 specifically mentions the directory inquiry service as falling within the definition of a telecommunication service. Indeed, your Lordships will find that contained in subsection (2)(b) on page 4 of the Bill. Perhaps your Lordships can study that at leisure while I continue to try to explain why we believe that the amendment is unnecessary. Directory inquiries are already covered by the duty in subsection (1)(a) of Clause 3. This requires the Secretary of State and the director general to exercise their functions so as to secure that all reasonable demands for telecommunication services—which, as I have already explained, includes directory inquiries—are satisfied. In fulfilment of this duty the Government included Condition 3 in the draft licence for BT, which obliges BT to provide directory information, to facilitate these to the telephone service. In this way we believe that the directory inquiry service is secured even though I think that in reality there is very little likelihood that BT would wish to stop providing such a service, which encourages use of the network.

Very many noble Lords—indeed, I think every one of the first five speakers after the noble Lord, Lord Lloyd of Kilgerran—referred to the blind and the disabled. We fully appreciate how vital is a directory inquiry service for people such as the blind and, indeed, the dyslexic, who are unable to use the alternative of printed directories. I have mentioned that we have already taken steps in the draft BT licence to ensure that this service continues to be provided. I also draw your Lordships' attention to Condition 34 of the draft licence. This provides that should BT decide to introduce charges for the directory inquiry services, those people such as the blind or the dyslexic, who cannot use printed directories, should not be put at a financial disadvantage. Put simply, this means that either they will not have to pay a charge or an appropriate means of compensating them will be established. I hope that answers the concern that has been expressed by your Lordships, particularly by the noble Lord, Lord Lloyd of Kilgerran.

My noble friend Lady Lane-Fox, my noble friend Lady Macleod of Borve and the noble Lord, Lord Somers, asked me to confirm that the needs of the disabled are covered. I draw their attention to Clause 3(2)(a) on page 3 of the Bill. This states: Subject to subsection (1) above, the Secretary of State and the Director shall each have a duty to exercise the functions assigned or transferred to him … to promote the interests of consumers, purchasers and other users… (including, in particular, those who are disabled)". Turning then to Clause 94(1) on page 82, we find that "disabled person" also covers the blind. My noble friend Lady Lane-Fox covered the problem of those consumers who are dyslexic. I hope that this brief explanation will show that the Secretary of State and the director general do have a duty to take particular care for the disabled.

The noble Lord, Lord Kaldor, asked about overseas directory inquiries. I am advised that this matter is covered in the same way as British directory inquiries are covered. The noble Lord, Lord Ardwick, said that it was fine to use directory inquiries once one knew which number to ring. Certainly as a consumer I very much agree with him. I will take that point on board, because the number is not always easy to find. In the printed booklet it states that the number for directory inquiries in the London area is 142 and for outside London it is 192—at least, it used to be, although I may be out of date. Once one has found what one thinks is the relevant number, one is then told, "No, you must ring another number". I agree with the noble Lord, Lord Ardwick, that there may well be a point there.

I agree with the point raised by the noble Countess, Lady Mar. As for my noble friend Lord Peyton of Yeovil, I take on board his views that the advice given to those of us speaking here is not always perfect. He should know, with his considerable experience in another place. My noble friend also referred to directory inquiries. Perhaps I may provide a brief illustration. I understand that directory inquiries these days are not necessarily carried out using easily traceable books. Indeed, one night when I was trying from Scotland to ring my noble friend Lord Campbell of Croy it took 22 minutes to find my noble friend's number since the operator who was helping me with my inquiries informed me that the information was carried on sheets which I think she called microfiches. Therefore, already the nightmare of my noble friend Lord Torphichen seems to have come to pass; certainly for some of us.

I hope I have assuaged some of the fears raised by my noble friends and by noble Lords in all parts of the Committee. I hope that in my first remarks I have set at rest the fears of the noble Lord, Lord Lloyd of Kilgerran, that directory inquiries and the services of directory inquiries to the disabled, the blind and the dyslexic are covered in the Bill as it stands.

The Countess of Mar

The Minister said that the licence will give British Telecom the power to charge, if it wishes, for its directory inquiries service. Can he tell me whether there has been a survey on the practicality of deciding who is sufficiently blind not to be able to read a directory; who is dyslexic; and what the cost would be of either certifying them so that they get their calls free in the first place, or giving them a refund, as opposed to having the directory inquiry service free as it is at present?

Lord Weinstock

As noble Lords will have noticed, in making his answer the Minister leaned heavily upon the licence or what he called the licence. I ask your Lordships to remember that there is no licence; there is only a draft licence. In the explanatory notes on the draft licence one reads that the draft is not the final text of the licence. I hope noble Lords will bear this in mind when we come to consider later amendments.

Lord Taylor of Gryfe

I am surprised that the Government should be resisting this amendment. The noble Lord, Lord Glenarthur, said earlier that the success of the company would depend on the extent to which people use the service, so that the whole purpose of a well-managed company will be to encourage people to make calls. One of the reasons that perhaps prohibits people from making calls is that they do not have the number and want to use directory services. Surely directory services are an aid to sales which would normally generate traffic for the successor company. Consequently I am surprised that this is not accepted as a reasonable proposition.

The noble Countess, Lady Mar, raised a point about the licence providing for taking care of the disabled, the blind, the dyslexic and so on. How does one discriminate at that stage? Have they to reclaim? How does one establish who are the people to get this special right to which they are entitled? Would it not make sense in any well-managed company to make it easier for people to make telephone calls? That is their revenue, that is their business, and the directory services are part of that service.

Lord Lyell

I should like briefly to answer the noble Lord, Lord Taylor. In the course of my remarks, which were long enough although I tried to keep them down, I stressed that we regard the directory inquiry service as being of particular importance. I do not think there was anything in my remarks which in any way discouraged the use of directory inquiries. The noble Lord is making a mild protest—perhaps I may be able to give way to him in a minute. I hope that nothing I said in the course of my remarks would in any way discourage people from using the directory inquiry service. I drew an example from my own activities of how difficult it was to use the new directory inquiries; things are not yet perfect. But I am sure that, notwithstanding the problems that have been expressed by my noble friend Lord Torphichen, the directory inquiry services will be able to provide the information which the noble Lord, Lord Taylor, and indeed all consumers, are seeking and that it will assist in greater utilisation of the telephone service.

The Countess of Mar

Will the noble Lord kindly answer the questions I asked about the practicality and the cost of reimbursing?

Lord Lyell

I am sorry; I am afraid I have no instructions at all as to how blind or how dyslexic one has to be, or any definition of disablement in these two particular areas, further than is set out in the definition clause which I invited your Lordships to look at. But I think we had better not go back to it at this stage. I will make inquiries and I would ask the noble Countess to raise it at a later state. I am sorry that I am unable to say at what stage one is blind or is classified as disabled by reasons of sight impairment or dyslexia. I am not able to help her any further this evening.

Baroness Fisher of Rednal

If the Minister asked one of the Ministers in another department he would learn that a clear definition of partially sighted and blindness is already laid down by the Government in relation to all kinds of allowances that are paid. So the information is there for the asking if he talks to one of his noble friends.

Lord Lyell

I am grateful to the noble Baroness. I will not tempt her further this evening, but I wonder if I am partially sighted since I simply cannot see without glasses car numbers from 25 yards or whatever is now the appropriate distance. Am I or am I not partially sighted for the reasons the noble Baroness explained? For one section of the law I am partially sighted. I have been given some instructions. I understand the licence will stop charges for directory inquiries until the director is satisfied about the refund arrangements.

Baroness Seear

Does the Minister, as a spokesman for the Government, receive instructions?

Lord Lyell

Strictly speaking, I am not a Minister, so I do receive instructions.

Lord Kaldor

Are we to understand from the noble Lord, Lord Lyell, that directory services have not been included among the services particularised in Clause 3(1)(a) only because they are so obviously covered that it is unnecessary to specify; or is it because they do not fall into the same category? I am not quite clear why this amendment is being resisted at all. From what the noble Lord, Lord Lyell, has said, it seems obvious that the Government are aware of the importance of providing directory inquiry services because they mention them again particularly in relation to overseas subscribers. No United Kingdom business could be expected to keep a full list of telephone directories, and surely no business could be expected to keep telephone directories for the 155 sovereign states of which this globe consists. Therefore, it is very much in the national interest that this should be provided. If it is not mentioned here, is it because it is so obvious that it does not need to be mentioned?

Lord Lyell

I hope the noble Lord, Lord Kaldor, will not classify me as being impudent, but I would say it is reasonably obvious. On page 4 of the Bill, Clause 4(2)(b) says that directory information for the purpose of facilitating the use of a service". et cetera, is classified under "telecommunication service". Telecommunication service is already in Clause 3(1)(a), and everything I have said about the importance of directory inquiry services is included in the phrase "telecommunication service".

Lord Lloyd of Kilgerran

In his charming and eloquent speech the noble Lord the Minister has agreed with me and other noble Lords how terribly important are directory services. He has recounted how important they are to the blind and the disabled and he has taken us through this terribly complex Bill to explain that simple fact. He has found it necessary to quote from the Bill to justify that simple point on which we are all agreed, but he has missed entirely the main point of my argument. This is the whole thing. He tells us that directory services are mentioned in the Bill. How does he do this? He takes us very quickly to page 4, but I am used to people taking things quickly.

If I may say so with respect, I am sure a number of your Lordships may be a little confused about his argument. I do not want to be unkind to the noble Lord, but for him to say that directory services are mentioned in the Bill is really something of a gobbledygook. He starts off at the bottom of page 4 and says that here we have a definition of a telecommunication service and that it means: the provision by means of a telecommunication system of directory information for the purpose of facilitating the use of a service falling within paragraph (a) above". We have only got the words, "directory information". Directory services may not be exactly the same as directory information. However, I shall not indulge in any semantics at this time of the evening.

Let us go up the page to paragraph (a). If we can find it—it is a little higher up—we see that it says, the conveyance or switching by means of a telecommunication system of anything falling within paragraphs (a) to (d) of subsection (1) above". So we have not quite got there yet. We now have to go a little higher up the page, and in subsection (1) we find that it is stated: In this Act 'telecommunication system' means"— and it goes through a number of points, such as: the agency of electric, magnetic, electro-magnetic, electro-chemical or electro-mechanical energy, of", and then we come to paragraphs (a) to (d). We see that directory information is to facilitate the use of a service falling finally into paragraphs (a) to (d), covering, speech, music and other sounds …visual images … signals serving for the impartation of this, that and the other, and, signals serving for the actuation or control of machinery or apparatus". I apologise for reading that list so quickly; but it does not come down to directory services as such.

However, let us suppose that the noble Lord the Minister is right when he says that directory services are included in all that mass of words which I have read out. Let us suppose that he is right—and he may be. What is significant is that directory services are of great importance. Therefore as a matter of pure drafting directory services ought to be included in Clause 3, at the top of page 3, where the Bill particularises the important services.

The Government have already admitted that directory inquiries are of vital importance. I am not going to question whether they are more vitally important than the services which are particularised. The Bill particularises emergency services—obviously they are of great importance; public callbox services—which are of great value; maritime services—which are also of great value; and then services in rural areas. I would submit to the Committee that in their importance directory services fall in line with most of those other services particularised. All I am asking the Government is kindly to consider adding to the particularised list in the third line on page 3 the important service of directory inquiries.

I am prepared to say that perhaps as the result of all that the Minister read out from Clause 4 directory services may be included. That is not the point. The noble Lord the Minister has directed himself to a point that is totally irrelevant to my argument. My submission is simply that it is agreed that directory services are of such importance that they, too, should be particularised on page 3 at the end of the list of services that are already particularised. That is all I am asking. The noble Lord, Lord Peyton, expressed that view, and many noble Lords cannot understand why, having regard to the vital importance of this service, it should not be included. In a splendid, emotional speech the noble Baroness, Lady Lane-Fox, referred to the service, and I also draw attention to what the noble Countess, Lady Mar, said. The noble Lord, Lord Weinstock, pointed out that as yet there is no licence and said that we cannot rely on the point being included in some future licence. All I am asking for is greater particularity of the term "directory services", so that it becomes one of the items particularised.

Lord Lyell

In view of the tremendous eloquence displayed by the noble Lord, Lord Lloyd, I would say that my case rests. I believe that my case is fully justified. The noble Lord took us right up the page when he did not need to do so, since he will find "telecommunication service", which is what I was defining, at the bottom of page 4. Perhaps the noble Lord would not agree—but he is a lawyer. If I may finish my remarks, I would say that before there is any further comment we should agree to consider the amendment.

Lord Lloyd of Kilgerran

I wish that the Ministers on the Government Bench would lift their visors just a little, perhaps take off their helmets and sheath their swords, which have been somewhat blunted this afternoon, and adopt a more human, practical view of some of the amendments. I say to them that we are not trying to catch you out; we are not trying to trip you up. We are just asking on this occasion for a simple reference to directory services in the particularised list. I beg to move.

The Deputy Chairman of Committees (Lord Nugent of Guildford)

The Question is that this amendment be agreed to. As many as are of that opinion will say, "Content"?

Noble Lords


The Deputy Chairman of Committees

To the contrary, "Not-Content"?

Noble Lords


Noble Lords


Lord Lloyd of Kilgerran

It seems that my amendment has been agreed to by the Government.

Lord Donaldson of Kingsbridge

The noble Lord the Minister said quite clearly that he would consider it. I think that the noble Lord did not hear correctly.

Lord Lloyd of Kilgerran

I apologise to the noble Lord the Minister. In the general excitement of the praise that he was giving to my speech I missed the fact that he was going to take the matter back. I thought I heard him say that he was going to stand fast on something or other, but perhaps he is not standing so fast as I thought he was. I shall be very grateful to the noble Lord the Minister if he is going to take hack the matter. Clearly on the understanding that on this occasion I am right and that he will be taking back the matter, I shall not press the amendment, hut instead beg leave to withdraw it.

Amendment, by leave, withdrawn.

5.56 p.m.

Lord McIntosh of Haringey moved Amendment No. 27A: Page 3, line 2, after second ("services") insert ("the provision of free telephone directories to all subscribers.").

The noble Lord said: I think that perhaps this amendment might be dealt with relatively speedily since, I would suggest, the undertaking of the Minister to reconsider the preceding amendment might, without undue pain to the Government, be extended to this amendment. There is one particular reason why it should be given further consideration, and that is that the reference on page 4 which the noble Lord, Lord Lyell, found in regard to the preceding amendment, does not, as I understand it, apply to this amendment. Clause 4(2), in relation to the definition of telecommunication service, refers to: a telecommunication system of directory information for the purpose of facilitating the use of a service". Amendment No. 27A refers to free telephone directories, which it is our understanding—and the Government will correct me if I am wrong—means paper telephone directories, and therefore not a telecommunication system. But if the Minister is as understanding of the principle of free telephone directories as he is of a directory inquiry service, it will not be necessary for me to press the amendment. However, I ask the Minister to reply before I consider my position. I beg to move.

Lord Mottistone

Perhaps, briefly, I may say that surely noble Lords opposite do not really mean free. Nothing is free; somebody has to pay for it. We have to pay for the telephone directories which are at present issued to us without our being asked whether we want them. They are part of the automatic charge made to us, and this will happen again. So I think that the word "free" would be misleading to the public. The directories are not free; they have to be paid for by one's ordinary subscription. I believe that from that point of view the amendment does not deserve to be considered by the Government, nor by the Committee.

Lord Morris

The Americans put it even more succinctly than my noble friend Lord Mottistone: "There ain't no such thing as a free lunch".

Lord Howard of Henderskelfe

May I inquire whether this means that we are going to get—I am not sure how many telephone directories exist for the country—perhaps 157 directories each? If so, I suspect that the majority of subscribers will not have the shelves to sustain the great weight of these directories. If the amendment was confined to local telephone directories, there might perhaps be more reason to support it.

Lord Bruce of Donington

The real purpose of the amendment is to ensure that the practice that is now in force so far as British Telecom and its subscribers are concerned is continued under the new regime. It is possible that the wording needs to be changed in order to accomplish this. But there have been reports in the press which your Lordships may have seen—they may not be accurate—stating that the Government will hive off the printed directory service as something separate and distinct from the telephone or telecommunications system itself. I do not wish to give credence to those reports. I am not putting myself behind the assertion. But those reports have appeared. We want to be sure that the practice at present carried out by British Telecom of providing printed telephone directories to subscribers, probably on a local basis or whatever it may be, continues in the future. The Bill, at the moment, contains no provision for that. We should like to be reassured that the practice will continue without any extra charge to the subscriber. That is the purpose of the amendment.

Lord Lyell

I should like to reply briefly to the last point of the noble Lord, Lord Bruce of Donington. When he and I took our chartered accountants exams, we were always told that it was essential that candidates read the question. On reading the amendment, it seems in two major areas not to set out what was in the mind either of the noble Lord, Lord Bruce of Donington, or, possibly, the noble Lord, Lord McIntosh of Haringey. I think that those noble Lords who have spoken and indeed your Lordships generally would agree that this amendment hangs together with the provision of directory inquiry information already dealt with in Amendment No. 27. The amendment that we are now discussing is, I believe, designed to ensure the continuation of printed directories or at least directories printed, computerised or otherwise produced, but, above all, provided free. We accept the concern behind this wish, but I do not necessarily believe that the amendment is appropriate and that it will achieve what the movers hope. I shall try to explain why we believe the amendment will not meet the case.

As I pointed out on Amendment No. 27, the duty in Clause 3(1)(a) is confined to telecommunication services. These are defined in Clause 4. The provision of telephone directories is not a telecommunications service. We believe therefore that it is inappropriate to include it in Clause 3. Secondly, the amendment refers to all subscribers. In practice this would mean that in carrying out functions under the Bill, including the issue of licences, the Secretary of State would have to require all licensees to provide printed telephone directories. I do not think that that is what the noble Lord who moved the amendment had in mind. It would also mean that all BT subscribers, even those to the telex network, had to receive copies of telephone directories. I do not really think that this appears entirely sensible either. Thirdly, we note that the amendment refers to free telephone directories. As my noble friends Lord Mottistone and Lord Morris have pointed out, we do not deceive ourselves that the telephone directories are free now. There is no explicit charge for them but they are paid for out of the revenue received from other services.

Fourthly, I do not think that we want to constrain technology by the provision of printed telephone directories. Technology is advancing very fast. Who is to know what might happen in 10 to 15 years' time? By that stage, we might all have Prestel sets as a matter of course. It might be more convenient to provide directory information by that means. What we have done, as I hoped I had explained in our earlier discussion on Amendment No. 27, is to ensure that those who cannot use the printed word, such as the blind, the dyslexic and other disabled people, will be safeguarded by the continuation of the directory inquiry service. It would be wrong to constrain the printed directories.

Finally, but not least important, it is obvious that the provision of telephone numbers and directory information is a commercial service. No operator in his right mind would wish to deny subscribers the opportunity of being able to use the network to dial other subscribers. To do this, he must have access to a directory in some form. It is inconceivable that BT or any other operator would not wish to provide it. What we should not do, and I seek to persuade your Lordships of this, is to seek to constrain unduly the way in which such information is provided. I thank my noble friends Lord Mottistone and Lord Morris for their interest in the matter. The noble Lord, Lord Howard of—I was going to say Hendershelfe, but that is a little naughty!—Henderskelfe, suggested that a fairly large area was involved. The noble Lord clearly knows of the 175 directories available in your Lordships' House. This point was covered I think by the noble Lord, Lord McIntosh, who suggested that we might receive the directories as we receive them now. As to the remarks of the noble Lord, Lord Bruce of Donington, about comments in the press, I am sorry to say that I did not see them, and I cannot therefore follow him down that avenue.

Lord Taylor of Gryfe

I hope that this amendment will not be pressed. I had the experience the other day of requesting a telephone directory. I live on the outskirts of the city of Glasgow. I am provided with a telephone directory for the city but I requested one for the surrounding area and was duly charged £1 for the area directory. So, if you request another directory, you are charged under the present system. I am afraid that in our anxiety sometimes in the Bill we are trying to lay down the practice for the board of the successor company in too direct and minute a manner. I would imagine—I have stated this previously—that if the board is to maximise its revenues, it must provide the facilities to the subscriber to make telephone calls as easily and cheaply as possible. I regard the provision of a telephone directory as essential in the chain between the consumer and the provider of the service. Under these circumstances, I would tend to leave it to the good sense of the commercial board to decide that a telephone directory is an essential element in selling its particular product.

Lord McIntosh of Haringey

I owe the Committee and particularly the Lord Chairman an aplogy for the confused manner in which I sought to introduce the amendment. Secondly, I accept that there are deficiencies in the wording of the amendment. The noble Lords, Lord Mottistone, Lord Morris, and others, have pointed out what is well known: that nothing is free. The question only is whether an extra charge should be made. I suggest that the question of telephone directory availability without additional charge is a matter of great public concern. Your Lordships may remember that some time ago British Telecom tried to reduce the availability of telephone directories in London by restricting them to the borough in which the subscriber lived rather than having the whole of the London postal area available to all subscribers in the area. It may be necessary to provide rather more protection than the noble Lord, Lord Taylor of Gryfe, in his wise speech seemed to think was necessary. Nevertheless, in view of the deficiencies of the amendment as now worded, I beg leave to withdraw it.

Amendment, by leave, withdrawn.

[Amendment Nos. 28 and 29 not moved.]

6.11 p.m.

Lord McIntosh of Haringey moved Amendment No. 30: Page 3, line 7, at end insert ("on a stable and long term basis").

The noble Lord said: I do not think that we need detain ourselves for very long on this amendment. We are talking here not only about the first few years of the telecommunications service under the new regime, but also about a longer period. The reason why it is necessary to move that the service should be provided: on a stable and long term basis is that there is provision in the Bill for a five-year introductory period and for a period after that when the rules of the game—if I may so describe them—will be changed.

What we are seeking in the amendment are assurances, which are not at the moment couched in statutory form or even in the form of the draft licence, as to the continuing restrictions which will exist after 1980 and how the consumer and the other subscribers, whom we are seeking to protect in amendments to this legislation, will continue to be protected. At the moment this is a probing amendment to discover the Government's intentions after 1989. I beg to move.

Lord Lyell

I thank the noble Lord, Lord McIntosh, for his brief, succinct and relevant explanation of the amendment. To summarise the position, we understand that the purpose of the amendment is to ensure that those who provide the telecommunication services under licences issued by the Secretary of State should be able to finance the long term provision of such services. The Government agree with that aim, but I hope I can explain to your Lordships that we believe that it is already covered by Clause 3.

The words "stable" and "long-term" which are contained in the amendment are implicit in the drafting of subsection (1)(b) in just the same way as they are implicit in subsection (1)(a), which concerns the provision of services. No one has suggested that the duty in subsection (1)(a) refers only to the initial provision of services and that the continued provision of services is not covered, because I think we have all understood that the duty is a continuing duty. We believe that the same argument applies to subsection (1)(b).

The drafting of Clause 3(1)(b) imposes a duty on the' Secretary of State and the director to secure the financing of services by those who provide them. This duty takes effect as soon as the Act comes into force and it continues for so long as the Act remains in force—indeed, that might be even after 1989 or the date that was mentioned by the noble Lord, Lord McIntosh. This in itself provides the stability which we believe the noble Lord's amendment seeks. For that reason we believe that the amendment is superfluous and, therefore, we would not agree to it this evening.

Lord Stoddart of Swindon

I have listened to the explanation given by the noble Lord, but we remain a little concerned about it. Our amendment seeks to add the words: on a stable and long term basis". and we have moved that amendment for a particular reason; namely, that later on in subsection (2)(b) a duty is laid upon the Secretary of State and the director: to maintain and promote effective competition between persons engaged in commercial activities connected with telecommunications in the United Kingdom". We were concerned about that paragraph because there are times when there are "winds of change" and so on, and a great pressure to have competition or, perhaps, public ownership for their own sakes. We wanted to be absolutely sure that the Secretary of State and the director were under an absolute duty to see that those who engaged in telecommunication operations, were people of the highest order who had the financial resources not only to be able to maintain telecommunications, but to develop them technically and financially as well.

Telecommunications is an infrastructure industry. It is not like, for example, an airline or the aircraft industry where an apparently reasonable type of fellow like Freddie Laker goes in, apparently financially quite strong, but nevertheless collapses. In the case of the airline industry it would not particularly matter. But in the case of an infrastructure industry it could matter a great deal. That is the reason why we felt that the addition of the words set out in the amendment would give additional protection to the telecommunications industry and the infrastructure throughout the country. I do not know whether the noble Lord would like to comment on that?

Lord Lyell

I shall certainly accept the noble Lord's invitation to comment, albeit briefly. I hope that I was right in thinking that he included subsection (2)(b) in his justification for this amendment. I also hope he will agree that the whole of subsection (2), and especially subsection (2)(b), is subject to subsection (1) where we find the paramount duty of both the Secretary of State and the director "to exercise the functions" et cetera and to provide the services. On that score the noble Lord, Lord Stoddart, and ourselves are very much on the same side.

However, I am advised that the duty to promote competition in Clause 3(2)(b), which was referred to by the noble Lord, is subordinate to the paramount duty in Clause 3(1)(a) and (b). Therefore, the Secretary of State cannot licence so many competitors as to put at risk the provision of services which are described in Clause 3(1)(a) and, indeed, the other services which are in Clause 3(1)(b). All the time it is the paramount duty to see that the telecommunications services are as healthy as they can be.

We accept the point which has been expressed by the noble Lord, Lord Stoddart, and the noble Lord, Lord McIntosh, but we believe that it is covered in Clause 3(1)(a).

Lord Kaldor

Since reference has been made to subsection (2)(b), can the noble Lord explain the meaning of "effective competition" as regards telecommunication services? Does it mean that we shall have half a dozen different companies serving London and that some subscribers will belong to one system and other subscribers will belong to another system? Does it mean that we will have to subscribe to various telephone companies in order to get connections? I can see that there may be different telephone companies for different areas of the country as in the days when the railways were privately owned. For example, we had the Great Western Railway serving the west and there was also the London, Midland and Scottish Railway. But that does not mean that there was effective competition between these railways, because they served different areas. Similarly, in America, when the monopoly of AT & T was broken up there were different companies serving local customers, and different companies owning trunk lines. But as these are complementary services and not competitive, there is no sense in speaking of effective competition between them. I simply do not understand what this is all about.

Viscount Trenchard

It seems to me that we are making a mouthful of this. Subsection (2) starts with the words: Subject to subsection (1) above". Subsection (1)(a) and (b) make no mention of the director or the Secretary of State ensuring these matters on an unstable or short-term basis. They are charged to make sure that the services are provided, and it is not qualified by subsection (2). As I understand it, they are charged as long as this Act remains in force. Therefore, I suggest to noble Lords opposite that this amendment is not necessary.

Lord McIntosh of Haringey

The Minister has given us a great deal to think about. The relationship between the two subsections in this clause is complex and requires further thought. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No. 31: Page 3, line 7, at end insert ("and also the research, development, supply and use of new technology and new techniques")

The noble Lord said: I think there is a substantial point here which is not covered in subsection (2) of Clause 3. The point is: who will be responsible for the research, development, supply and use of new technology and new techniques? I am sure that the Government do not wish there to be any diminution in the research, development, supply and use of new technology and new techniques. It would be quite fatal for any Government, operator or telecommunications system not to be continually looking for new technological advance. However, as the Bill is drafted, the reference to the research and development of new techniques in paragraph (d) of subsection (2) of Clause 3 is not an obligation on the operators who are providing the services, as it would be in subsection (1)(b).

It seems to us that it would be very undesirable indeed if the taxpayer were to take all the responsibility for the costs of research and development and for technological advance, either directly through Government grants or indirectly through participation in British Telecom as the only operator required to undertake research and development, and other operators were then to take advantage of this research and development without making a reasonable contribution towards the costs. This is a straightforward capitalist principle with which I am sure the Government will have sympathy.

Those of your Lordships who were present last Friday during the debate on advanced research and development will have heard from the Government Benches and from the Cross-Benches much insistence that research and development should be undertaken with industry, and that it is a responsibility of industry itself to decide on priorities for research and development. I believe that the amendment now proposed would achieve that by ensuring that the individual operators who are granted licences for the provision of services have that responsibility for research and development, and are not simply slipstreaming expenditure by the taxpayers. I beg to move.

Lord Molloy

I believe that the Government ought to accept this amendment because it is in the spirit of the entire Bill. I am sure that the Government do not want any stalling or hold-up of research in the telecom industry because previous debates have outlined the remarkable new inventions and new techniques which have been developed for the disabled and others, and for purposes of business efficiency. Therefore, in so far as the spirit of this Bill is that there shall be more private endeavour—and that is what it is really all about—I am sure that from a national point of view the Government will want to be concerned that there is no slacking on research and development in this particular industry and that it maintains the standards that have hitherto been achieved under public ownership. That is not only wise and necessary for those who will become shareholders, but it is also wise and necessary for consumers, and I believe that it is wise and necessary for the country as a whole. In that spirit I hope that Her Majesty's Government will be prepared to accept this amendment.

Lady Saltoun

Perhaps I am being very stupid, but is this amendment really necessary? I ask that because I thought it was already written into the Bill in subsection (2)(d) of this clause.

Lord Glenarthur

There is certainly no disagreement between us over the need for telecommunications operators to research into and apply new techniques. We all know that telecommunications is an extremely fast-changing technology, and it is essential for United Kingdom operators to keep in the forefront of technological developments and to reflect these in their services and apparatus. This is why subsection (2)(d) imposes a specific duty on the Secretary of State and the Director: to promote research into and the development and use of new techniques by such persons"; that is, by United Kingdom operators. However, I do not accept that there is any need to include financing of such activities in the paramount duty in subsection (1)(b). First, this subsection is concerned with the provision of the services mentioned in subsection (1)(a), but the noble Lord's amendment goes rather wider than this. Even if it were drafted more appropriately, I have to tell him that in our view it would still be unnecessary.

The duty in subsection (1)(b) covers the need for operators to be able to finance the services in subsection (1)(a) on a continuing basis, which implicitly covers future development of these services. There are those who indicate that the new competitive world of telecommunications will concentrate on short-term profits. That is not true, either. Just like any large company, BT will, of course, need to look ahead. It will not just concentrate on, so to speak, the few inches in front of its nose, but will look to the future and possibly new avenues and techniques to explore.

At present it has a research establishment of the very highest calibre at Martlesham, which I visited last year, and I am quite convinced that it will want to continue with the excellent work that goes on at Martlesham. The amendment is unnecessary, and I hope that the noble Lord will not press it.

6.28 p.m.

Lord Bruce of Donington

The purpose of introducing this amendment at this stage is, as the noble Lord correctly apprehended, in order to ensure that the Secretary of State and the director: secure that any person by whom any such services fall to be provided is able to finance the provision of those services and also the research, development, supply and use of new technology and new techniques". This is necessary because the history of private enterprise has not always been quite satisfactory in this regard. In fact, if I may say so that statement is one of the utmost moderation of which I am capable at this time.

One only has to cast one's mind back to the time when it became necessary for the nation to take national control and ownership of British Leyland. Those who have read the Ryder Report will know exactly to what I am referring. Little or no investment was made over a period of about seven years; everything was paid out by dividend; and the whole of British Leyland fell into a disastrous state. That was precisely because, out of £77 million profit that was made in some seven years, no less than £74 million was paid out in dividends to keep up share prices and to keep the shareholders satisfied, whereas the whole of the equipment fell into disuse and obsolescence, and that situation had to be rectified.

I do not want to rake over old sores about that, but we have a more recent example not on the same scale but embodying the same principle. At the time that British Aerospace was privatised the whole impulse behind it—and I have given the quotations to the House many times—was to free it from Government shackles to enable it to obtain the finance it needed on the free and open market without coming to the Government, and within the past four or five weeks it has been obvious that British Aerospace is now looking to the Government—precisely what privatisation ought to have prevented it from doing.

What we seek here, in the interests among other things of national security, is that the research processes that were commenced earlier in Dollis Hill and later at Martlesham—and I know the military value of some of those that were carried on at Dollis Hill prior to, during, and immediately after the war—are continued to some extent regardless of immediate commercial considerations and immediate commercial profitability.

Optical fibres, for example, were developed at Martlesham. They took a long time to develop and there was a certain degree of dubiety as to whether they were going to be commercially viable. I wonder whether if Martlesham had been privatised those developments would have taken place; or would they have been regarded as something else that the privatised company ought to have gone knocking at the doors of the state for? We want to ensure that technology is carried out; that the development of new techniques continues with the same impetus as before; and we want to be doubly certain that those people who ultimately take over British Telecom—if the Bill ultimately results in that, which I doubt, but on the assumption that it does—are financially capable of sustaining the same degree of development in technique and technology that has been the case so far.

That is what the amendment is about. If the noble Lord tells me that the wording of the amendment is wrong, or needs to be reshaped, then we are of course quite willing to raise the matter again at Report. But I should have thought that it would be in the immediate interests of the Government to accept this without any difficulty whatsoever as not impinging on any vital principle on which the Government have set so much store up to now.

Viscount Trenchard

Would not the noble Lord agree that the noble Countess is absolutely right? Subsection (2)(d) requires the director and the Secretary of State: to promote research into and the development and use of new techniques by such persons". which means those engaged in commercial activities. This is in the Bill already. Would the noble Lord comment on that?

Lord McIntosh of Haringey

It is not in the Bill in quite those terms. What we are seeking, in trying to amend subsection (1)(b) rather than accepting the assurance of (2)(d), is that those persons by whom any such services fall to be provided should be responsible for this research and development. That is not achieved directly in the way that the noble Viscount thinks.

Viscount Trenchard

The words, "persons engaged in commercial activities" must include that category of person.

Lord McIntosh of Haringey

There are other people engaged in commercial activities related to telecommunications. There are the telecommunications apparatus manufacturers, for example. I hope that they will continue to take the responsibility for research and development that they do now. What we are seeking here is something precise. We are seeking the continuance of Martlesham Heath on the same terms, with the same abilities to undertake fundamental research, with a longer period of payback than might be possible in commercial establishments in the future.

To that extent the Minister, in his reply, has paid tribute to the work of Martlesham Heath. He has to that extent reassured us, and I do not think it would be our intention to press this amendment, but the concern that we have arises from the pressure on Martlesham Heath now and in the recent past to take a lower payback period, a lower horizon: to undertake, as Mr. Peter Benton, recently the deputy chairman of British Telecom said, projects which have to be paid back within 18 months.

That is too short a period, and the history of Martlesham Heath shows that there have been many projects such as, for example, work on optical fibres which did not have a payback period of 18 months, but which ultimately produced work of great profitability for British Telecom and the telecommunications industry. We shall carefully read the friendly words of the Minister about Martlesham Heath and consider whether any further strengthening of the position in the long-term future of Martlesham Heath is necessary in legislation. Meanwhile, I seek leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Bruce of Donington moved Amendment No. 32:

Page 3, line 7, at end insert— ("; and ( ) to ensure that the United Kingdom consumer is charged, in respect of any installation, rental, call or other charges made upon him, at rates which show no increase on those previously obtaining beyond that calculated by reference to the Retail Price Index at the relevant dates minus an amount to be determined by the Secretary of State and incorporated in a regulation made for this purpose.")

The noble Lord said: This is an important amendment designed to put into the statute in clear form, and to commit the Government to, the carrying out of their own promises in this regard. Your Lordships will remember that one of the most considerable anxieties about the privatisation of British Telecom lay in the fact that up until now British Telecom has operated as a public service, and has not been required to make profits of more than a stipulated return on net assets employed—the figure is approximately 6 per cent.—which it has consistently done over the last seven years, and the undoubted fact, which I think is not at all contested, that if this public utility, now turning into a private monopoly, is to operate on a basis where it can pay a satisfactory dividend to its new shareholders it would have to increase its charges; or, alternatively, would have so to restructure (I believe the delicate term is) its balance sheet, either by a mass write-off of assets or a diminution of liabilities, as to make its acquisition by investors a profitable operation.

The anxiety was expressed that this could not be done without increasing the charges to subscribers. On Second Reading I gave some quotations from the published accounts of 31st March 1983, which I shall not seek to repeat now, which suggested that British Telecom would have to raise charges in order to get the appropriate profit yield. This is even more important when one has to consider later in the Bill that it will be clear that British Telecom will be denied some other revenues.

For the moment, however, we shall take the Government at their word. They said in reply that they would have provision made that the charges to the consumer would not increase by more than a factor determined by reference to the retail price index less an X factor which can be determined from time to time by the Secretary of State. This means of course that they wish to convey to the people at large that, as a result of all this, nobody's telephone charge is going to rise unduly, and if it does rise it will rise by significantly less than determined by the retail price index.

We on this side of the Committee venture still to express some scepticism; but who are we to question the assurances of the Government? When this was originally announced by the then Secretary of State—I believe Mr. Baker—in the course of reiteration of the Government's promise in the columns of the Economist, he did not say that this was to be only for a period of five years. Originally it was an open-ended commitment. Now it has become limited to five years and the Government say that it is all dealt with in the licence which, as the noble Lord, Lord Weinstock, has reminded us, is still in draft form and the Government are still not finally committed to it.

This is an important undertaking. In addition to making sure that there is no discrimination against subscribers on a geographical basis, the British public will not be satisfied with this act of privatisation of a public service unless they are convinced that the Government will be bound by their promises that charges will not be increased above what they themselves stipulated in their undertaking.

For this purpose it will not be sufficient merely to have assurances to that effect or merely have it put into a licence which is still in the draft. If the Government wish to be quite frank with the people of the country and the subscribers, there is no reason why they cannot put this into the Bill. It will then represent a formal statutory commitment upon which, if there are any variations, they will have to come back. I do not see any reason why they should not do it, if they mean what they say. If they prevaricate and go back on their original undertaking, if they try to limit it to five years (which was not the original undertaking) the British public will have every reason to be highly suspicious as to the whole purpose of the Bill and as to what will happen to subscribers after the Bill has been passed.

One way in which the Government can allay the considerable suspicions among the population at large—noble Lords opposite will bear in mind that there is not popular demand for this privatisation at any rate; it is one of the most unpopular things that the Government propose to do, as the Minister well knows—is to accept the amendment that will be more acceptable to the British public at large. I hope therefore they may feel disposed to agree.

Lord Boyd-Carpenter

In those parts of his speech in which the noble Lord, Lord Bruce of Donington, was referring to the amendment rather than to Second Reading—I believe they were a minority part of his speech—he showed, for him, unwonted tenderness for the consumer. I am sure that all of us welcome this, particularly from the noble Lord.

However, if the noble Lord is really concerned for the consumer the amendment is incomplete. If a statutory provision of this sort were to be imposed, it would be essential to have a parallel clause dealing with the remuneration of those employed in the industry. Your Lordships know well that organisations in the public sector have on the whole increased their prices to a far greater extent than those in the private sector. This has been due to the fact that they have conceded very large wage increases—a good deal higher, in general, than those in the private sector. Therefore, if the noble Lord is really sincere, and wishes to pin by statutory provision the new telecommunications body or bodies to this kind of restraint, it will be essential that they should be similarly protected by a similar clause dealing with the remuneration of those in the industry. If your Lordships will allow yourselves a moment of slightly nostalgic reflection, it would be interesting to reflect on what might have happened if such a provision had been inserted in the statutes which nationalised the coal industry and the railways.

Lord Kaldor

I wonder whether the noble Lord would not object if some such clause were inserted in the Bill that would limit the rate of profit that the privatised telecommunication company is allowed to earn, similar to the legislation concerning the public utilities in the United States. The noble Lord has a point that if wages rise in the telecommunications services out of line with all other wages, one cannot expect that a private company will provide the service even though it makes a loss. However, at the same time, being a monopoly, surely there must be some restraint that it would not exploit the public and that that restraint can perfectly well take the form where a licensee, or whoever it is, is obliged to reduce prices whenever the rate of return on the capital invested exceeds X per cent. or whatever is considered a normal rate of return.

Lord Boyd-Carpenter

I am very much obliged to the noble Lord, Lord Kaldor, because he has taken my argument further. I argued that the amendment was incomplete because it did not include the provision in respect of wages, to which I referred, and which seemed to be quite attractive to the noble Lord, Lord Kaldor. He makes a reasonable point that it might also be a sensible provision to include yet another clause limiting the return to the shareholders. Whether that is a wise thing to do is a matter that we might debate on another occasion; but it is highly relevant to my submission to your Lordships that this amendment is hopelessly unsatisfactory because it is hopelessly incomplete.

Lord Bruce of Donington

If I may reply to the noble Lord, Lord Boyd-Carpenter, I am surprised that he should have criticised his Government so vigorously, because it is precisely his Government that have produced this proposal in the licence. When the Government gave the undertaking that prices would not increase except within this particular format, they made no such stipulation that the noble Lord may have in mind. They should perhaps have considered this prior to making the undertaking that they gave. All the noble Lord is now saving is that, in effect, the promise at the moment is only in the licence. After considering the remarks of what the noble Lord, Lord Boyd-Carpenter, may have thought wise, they make take it out of the licence. This is precisely why we want it in the Bill so that there can be no reneging on the promise.

Lord Boyd-Carpenter

The noble Lord, Lord Bruce of Donington, cannot get away with that, even with that delightful appearance of frankness with which he comes to the Dispatch Box which always to me indicates that he realises he is on a thoroughly bad horse. The noble Lord is moving from the general indications of Government policy, to which my noble friend the Minister may refer if he wishes, into the position of a statutory provision. The only point of my speech was to point out that if it were thought right to translate general policies into a statutory provision of this sort, the particular statutory provision contained in the amendment is incomplete. I was reinforced in this view most agreeably by the noble Lord, Lord Kaldor.

Lord Glenarthur

This amendment is as the noble Lord, Lord Bruce of Donington, has described, an attempt to put into the Bill the RPI-minus-X limitation on price increases. I think that your Lordships will be familiar with the principle of this which the noble Lord, Lord Bruce, described, However, I shall repeat it: prices shall not be increased in any year by more than the increase in the retail price index less a certain amount known as X. This idea was first proposed by Professor Littlechild in February 1983. When his report was published, the Government announced that in principle they accepted his proposal. As a result, the RPI-minus-X limitation has been included in the draft licence in Condition 24, to which the noble Lord referred. I believe that the licence and not the Bill is the appropriate place for such a limitation, and for that reason and others I cannot accept the amendment.

However, I think I ought to take this opportunity to explain a little of our thinking behind Condition 24 in the draft licence. As I said earlier, a most efficient method of price restraint is the force of competition. Competition and the consumer choice it brings is the best way to increase efficiency, quality and variety and to restrain prices. However, we realise that competition will take time to develop in the supply of telecommunications services. In particular, for some time ahead the ordinary consumer will have no alternative but to use British Telecom. So in order—

Lord Kaldor

Can the noble Lord explain what he means by "competition"? What is the meaning of competition in telephone services? Will there be a large number of telephone companies offering alternaative systems to the subscriber? What does it mean, "competition"?

6.50 p.m.

Lord Glenarthur

I am absolutely certain that the noble Lord, Lord Kaldor, knows quite well what competition means, and I do not propose to be drawn into a lesson on economics with him when he knows far more about economics than I do. He knows, and so do his noble friends opposite, in general what will be achieved by the Bill.

Condition 24 of the draft licence sets out the obligation. It is necessarily written in rather complicated terms, as the noble Lord, Lord Bruce, will be aware, but the essential points are these. BT will be required to pass on to subscribers the benefits from lower costs that are expected in the future through the improvements in efficiency that BT are making and as a result of the continued modernisation of their network. Where there is competition, the subscriber will benefit anyway. However, where there is no immediate prospect of effective competition, as with local services, subscribers will have an assurance that lower costs will be passed on. The effect of the limitation is to give an assurance to the average domestic telephone user that the charges for his basic services—rental plus call charges—will decrease in real terms for the next five years. That is a point that I am sure noble Lords opposite will approve of.

The services to which the draft condition refers—that is, the installation of the standard line to the customer from the local telephone exchange, the maintenance of that line, local calls and local calls made from a public call box—are all services provided by the local network, where there is unlikely to be any competition for some time. However, Mercury may take some time to bring into full operation its alternative national network, thereby introducing competition into trunk calls; and so the Government are also considering including trunk calls. I should—

Lord Molloy

I am grateful to the noble Lord for giving way. Can he indicate to us just who will be in competition with whom and in what parts of the country?

Lord Glenarthur

In due course, after a period of time other competitors may be licensed to take part in telephone communications throughout the country. That is the whole purpose of the Bill, and I am sure the noble Lord is fully aware of it.

Lord Kaldor

How can you assure that one subscriber who uses a telephone from company A can have access through his telephone to some other subscriber in another system? If you have a parallel system of telephones it will lead to the most terrible chaos. The telephone is a natural monopoly because all the lines have to go through some centre in order to be able to connect any person on any terminus with any other terminus.

Lord Glenarthur

This is a matter of a fundamental difference in approach as regards economics in general between the Government and the noble Lord opposite, so I do not really think we are going to get very far on the particular amendment which is before us now.

Lord Kaldor

That is why I asked the noble Lord (though I did not get any satisfaction) what the Government themselves mean by the word "competition". I know perfectly well what competition means and I know that with a natural monopoly there cannot be competition. If you maintain that there can be, we have every right to have explained to us what it is and how it works.

Lord Glenarthur

The noble Lord asked me whether I could tell him what competition is. Perhaps I may ask him whether he has read the Bill, because the parts with which he is concerned are perfectly adequately covered later in the Bill, and no doubt we shall reach them in due course.

Lord Molloy

I hate to interrupt the noble Lord again: I can see what he is driving at. Many of us have assumed that when these organisations are established under British Telecom there will be certain areas of the country which, for example, as in regard to Mercury, would be their particular concern. Is it not a fact that what the Government are really doing has nothing to do with competition? They are constructing a number of privately-owned monopolies.

Lord Glenarthur

I think the noble Lord is now embarking upon a subject which is so general that it ought to have been part of a Second Reading speech, but it is certainly wide of the amendment on the Marshalled List. Competition will be provided by Mercury, by cellular radio and by local cable systems. They will be interconnected and will not go through a central exchange. We shall be dealing with a separate amendment relating to that specific subject in due course. I should like to concentrate on the amendment tabled by noble Lords opposite.

I want to contrast the list of services in Condition 24 with those proposed in this amendment. As I explained, we intend the RPI-minus-X limitation to be a substitute for competition, but the effect of this amendment is quite different. As drafted, it would mean that all providers of all services would be subject to the limitation—not just BT but Mercury, Hull, the new radiotelephone companies and even the providers of value added network services. Moreover, that limitation would apply to all services—not just those to the domestic consumer but to businesses as well. It would apply not just to the voice telephony services but to the most advanced data telecommunication services also.

The result, quite simply, would be devastating. Telecommunications would become the most rigidly controlled market in the economy. Far from being the engine for growth, it would stagnate; innovation would be stifled and the benefits that it could bring could not materialise. If the noble Lord would like to intervene, I will give way.

Lord Kaldor

If all these horrors to which the noble Lord refers come about—the thing would stagnate and the service would be unsatisfactory—I would say that we have a telephone service now. It has worked reasonably satisfactorily. It is not perhaps the best service in the world but it is certainly not the worst. Why did these things not happen up to now? Why is he afraid of them for the future?

Lord Glenarthur

We are dealing with a specific amendment and not the general effect of the Bill, which is what the noble Lord seems to be dealing with. The noble Lord, Lord Kaldor, is prolonging this discussion unnecessarily I think when we are shortly to change to another topic. I hope that what I have said has at least helped to explain how the RPI-minus-X formula will work. I have already said that we find this proposal unacceptable because it covers all operators and all services. I cannot accept that to put the RPI-minus-X formula into the Bill or into regulations would be satisfactory. To do so would make the formula inflexible and unresponsive to market conditions. As I explained, the formula is intended as a substitute for competition, and as this develops, the need for the formula will lessen. I think it is far preferable to put the formula in a licence condition, which would give the necessary flexibility and which also ensures that in proposing any changes the director is bound by the duties in Clause 3. I hope that the noble Lord will not press this amendment.

Lord Bruce of Donington

The Government in their reply have been most obliging. They have revealed to the public at large that the undertakings they gave in regard to this matter, which have been freely interpreted and which have been repeated many times, are not sufficiently reliable for them to be put into a statute. They still want some elbow room. The noble Lord has qualified many times what he has said. He has referred to a draft licence which has not yet been finalised. The public will understand from the Government's declining to accept this amendment that the promises which they made in far more generous terms are quite baseless, and that they have no intention, ultimately, of carrying them out. On those lines, I propose to divide the Committee and to ask noble Lords to support this amendment.

7.1 p.m.

On Question, Whether the said amendment (No. 32) shall be agreed to?

Their Lordships divided: Contents, 61; Not-Contents, 106.

Ardwick, L. Kearton, L.
Beswick, L. Kinloss, Ly.
Birk, B. Lawrence, L.
Bishopston, L. Llewelyn-Davies of Hastoe, B
Blyton, L. Lockwood, B.
Boston of Faversham, L. Lovell-Davis, L.
Brockway, L. McCarthy, L.
Brooks of Tremorfa, L. McIntosh of Haringey, L.
Bruce of Donington, L. Mar, C.
Carmichael of Kelvingrove, L. Milner of Leeds, L.
Cledwyn of Penrhos, L. Mishcon, L.
Collison, L. Molloy, L.
Darling of Hillsborough, L. Oram, L.
David, B. Paget of Northampton, L.
Davies of Penrhys, L. Phillips, B.
Dean of Beswick, L. Pitt of Hampstead, L.
Denington, B. Ponsonby of Shulbrede, L. [Teller.]
Elwyn-Jones, L.
Ennals, L. Prys-Davies, L.
Ewart-Biggs, B. Rea, L.
Gallacher, L. Ross of Marnock, L.
Gardiner, L. Segal, L.
Graham of Edmonton, L. Stallard, L.
Houghton of Sowerby, L. Stewart of Alvechurch, B.
Hughes, L. Stewart of Fulham, L.
Jacques, L. Stoddart of Swindon, L.
Jeger, B. Stone, L.
Jenkins of Putney, L. Strabolgi, L.
John-Mackie, L. Taylor of Blackburn, L.
Kagan, L. Taylor of Mansfield, L.
Kaldor, L. Underhill, L. [Teller.]
Airey of Abingdon, B. Bellwin, L.
Alport, L. Belstead, L.
Auckland, L. Bessborough, E.
Avon, E. Boyd-Carpenter, L.
Belhaven and Stenton, L. Broadbridge, L.
Broxbourne, L. McAlpine of West Green, L
Bruce-Gardyne, L. Mackay of Clashfern, L.
Caithness, E. MacLehose of Beoch, L.
Campbell of Alloway, L. Macleod of Borve, B.
Campbell of Croy, L. Malmesbury, E.
Carnegy of Lour, B. Mancroft, L.
Cockfield, L. Margadale, L.
Coleraine, L. Marley, L.
Colville of Culross, V. Massereene and Ferrard, V.
Cox, B. Maude of Stratford-upon-Avon, L.
Craigavon, V.
Craigton, L. Merrivale, L.
Croft, L. Mersey, V.
Davidson, V. Molson, L.
De La Warr, E. Morris, L.
Denham, L. [Teller.] Mottistone, L.
Drumalbyn, L. Mountevans, L.
Elliot of Harwood, B. Mowbray and Stourton, L.
Elphinstone, L. Munster, E.
Elton, L. Murton of Lindisfarne, L.
Enniskillen, E. Northchurch, B.
Faithfull, B. Onslow, E.
Feversham, L. Orkney, E.
Fortescue, E. Orr-Ewing, L.
Gainford, L. Pender, L.
Gibson-Watt, L. Peyton of Yeovil, L.
Glanusk, L. Portland, D.
Glenarthur, L. Rankeillour, L.
Gowrie, E. Saint Oswald, L.
Gray of Contin, L. Saltoun, Ly.
Gridley, L. Sandys, L.
Grimston of Westbury, L. Shaughnessy, L.
Hailsham of Saint Marylebone, L. Sherfield, L.
Skelmersdale, L.
Halsbury, E. Somers, L.
Hayter, L. Spens, L.
Hemphill, L. Strathclyde, L.
Henley, L. Swinton, E. [Teller.]
Hives, L. Thorneycroft, L.
Holderness, L. Torphichen, L.
Hornsby-Smith, B. Tranmire, L.
Hylton-Foster, B. Trefgarne, L.
Killeam, L. Trenchard, V.
Kilmany, L. Trumpington, B.
Lane-Fox, B. Vaux of Harrowden, L.
Lindsey and Abingdon, E. Vickers, B.
Long, V. Whitelaw, V.
Lucas of Chilworth, L. Wynford, L.
Lyell, L. Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

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