HL Deb 20 February 1984 vol 448 cc460-515

3.1 p.m.

The Chancellor of the Duchy of Lancaster (Lord Cockfield)

My Lords, I beg to move that the House do once 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.]

Lord Bruce of Donington moved Amendment No. 62: After Clause 4, insert the following new clause:

("Telecommunications Council.

.—(1) The Secretary of State shall appoint a Council known as the Telecommunications Council (in this Act referred to as "the Council").

(2) The Director shall refer to the Council for decision in any matters in which disputes have arisen or appear likely to arise relating to the administration and performance of the functions assigned or transferred to him under this Act.

(3) In addition to the Director, who shall he the Chairman of the Council, the Council shall consist of not more than six persons of which two shall be members of Trade Unions recognised as closely associated with the telecommunications industry.

(4) The appointment of a person to the Council shall be for a term not exceeding four years.

(5) In relation to any matter which is referred to the Council, the Council shall consider whether any licence or agreement concerning any United Kingdom consumer or United Kingdom operator or foreign user or associations of such consumers, operators or users may effect the prevention, restriction or distortion of competition between United Kingdom operators in the United Kingdom or in markets outside the United Kingdom.").

The noble Lord said: Your Lordships' Committee will recall that an earlier amendment which was introduced by the noble Lord, Lord Lloyd of Kilgerran, sought to establish a council or an authority which would have the responsibility of appointing the Director General of Telecommunications. The debate went very wide, and ultimately the Committee rejected the amendment.

The amendment now before the Committee seeks to do something a little different. It seeks to create a council, within the terms that are set out in detail in the amendment itself and upon which I shall not elaborate, which shall be appointed by the Secretary of State himself. The council's main purpose will be to resolve disputes between licensed telecommunications operators and the director of Oftel. If the machinery were established, disputes referred to the council would be settled openly and in an accountable way. As I say, that is the main purpose.

From lengthy discussion of earlier clauses of the Bill it became quite clear that an enormous responsibility will rest upon the director himself. The very length of the debates on the individual duties and guidelines to be laid down for the director, in particular under Clause 3 of the Bill, made it quite clear that the responsibility will be a very onerous one for him to discharge alone. Therefore, the amendment seeks to establish other functions for the council. First, the proposed council would be a body with which the director himself could discuss matters of any kind of dubiety; and if we go through all the clauses of and schedules to the Bill, it must I think be generally conceded that there are quite a number of grey areas. At the same time the council would provide a valuable forum in which those within the industry and those affected by it could discuss recent developments in the telecommunications field. In this respect the council could take over from the rather ad hoc Department of Trade and Industry consultative committee on telecommunications a number of the functions that it has performed.

The council would also be an ideal organisation to co-ordinate the activities of the advisory bodies that are to be set up under Clause 52(2) of the Bill. So in this respect the council itself, which it is to be hoped would be widely representative, would absorb some of the activities of the Post Office Users' National Council, which, as the Committee knows, under Clause 51(4) it is proposed to abolish.

Bearing in mind the whole nature of this public utility—a public monopoly that is in effect to become a private monopoly—I should have thought that there is an overwhelming case for the appointment of a council of this kind. At present the Secretary of State is not an entirely uncontroversial person. He has many decided views on the future of most matters with which he comes into contact. I consider that it would not be wise for there to be nothing in between the Secretary of State and the director. There ought to be a body that can provide some degree of balance and possibly on occasions give reassurance to the director of Oftel himself.

I do not propose to enlarge on this matter very much further because I believe that the advantages of such a body are self-evident. In their way the Government can, if they wish, exert their power and reject the amendment, preferring matters to remain firmly in the hands of the Secretary of State because they cannot brook anything which approaches a body of the type of, say, the Independent Broadcasting Authority, and cannot brook any interference with whatever instructions are passed on by the Secretary of State to the director.

I believe that, during the next few years, resolving the lobby pressures of the various interests involved (whose influence has not been wholly absent from some of the amendments that have been proposed and some of the arguments that have been preferred) will possibly take up a good deal of the director general's time. It would I think be reassuring for the public at large, as well as in the interests of good, ordinary administration within a democracy, that that should occur. Government by democracy is very often defined as government by discussion, and indeed that it ought to be. There ought to be the widest possible ventilation of the differences that arise from time to time and of the injustices or unfairness that are alleged to be committed by one side against another, and I cannot help but feel that this very moderate amendment is worthy of the general support of your Lordships' Committee. I beg to move.

Lord Lloyd of Kilgerran

I strongly recommend this amendment to the committee. The creation of a consultative body of this kind would protect—I emphasise this—Oftel's impartiality and credibility. There is a second minor but personal reason why I recommend and support the amendment. The noble Lord, Lord Bruce of Donington, has phrased the amendment in exactly the same words that I used in an amendment that I put down to the 1983 Telecommunications Bill. That ran very well. I hope that this amendment also runs very well in the Committee today. This kind of council would surely be helpful as a watch dog. In fulfilling that role, it would surely increase the confidence of public operators and potential foreign investors who will be affected by the decisions of the director. As he would be the chairman of the proposed council, his standing and status would be unaffected.

The director has a tremendously difficult task. He has to deal with complicated procedures as well as fundamental questions of policy. A council of this kind to which he could refer would surely be of some help. In most amendments, and indeed in any matters, the sting is usually in the tail. I should like to draw the attention of the Committee to the fifth part of the amendment. It is similar to an earlier amendment that I moved for the purpose, as I thought, of helping the Government to make clear their policy in regard to competition, particularly as it affects other countries. I do not know whether it is known to the Government but it is known to me informally that a number of foreign companies and institutions are following the debate in the House for a variety of reasons to see what is the actual policy of the Government in regard to competition.

It would therefore be helpful if the Government were to include some general words somewhere in the Bill—I think that this amendment would be most appropriate—to say that they are not taking actions that are deliberately intended to infringe, say, the United States anti-trust laws or the EC competition laws under Articles 85 and 86 of the Rome Treaty. When I raised this matter earlier in Committee on another amendment, the noble Lord, Lord Glenarthur, was good enough to say, in replying to the words that the noble Lord, Lord Bruce of Donington, has included in subsection (5) of this amendment, namely, that the action of British Telecom, when it is privatised, should not distort competition or prevent competition to this wide extent: Therefore, while I appreciate the noble Lord's concern, I can assure him that the Government are doing a great deal both to introduce more competition and to take steps under the Bill, and under existing competition legislation, to ensure that there is fair competition in the telecommunications market. Clearly the Secretary of State and the director would note the effect on other countries of the market and competition generally". [Official Report, 16/2/84: cols. 358–359.] I should therefore like to ask whether the Government can be more explicit as to the steps that they are taking to introduce under this Bill and under existing competition legislation matters to ensure that there is fair competition, particularly abroad. Your Lordships will know that when it comes to litigation in this country on the interpretation of an Act of Parliament, it is not appropriate to cite Hansard in order to understand the kind of argument that may or may not have affected the Government. But, when it comes to foreign territories, Hansard will be widely examined and possibly widely quoted. My purpose therefore in strongly supporting the amendment, particularly the last part of it, is to provide an opportunity for the Government to give some clearer view as to the width of competition, particularly in the export trade.

3.15 p.m.

Lord Taylor of Gryfe

The Committee will recall that the first amendment to this Bill some days ago was one proposed by the noble Lord, Lord Lloyd of Kilgerran, suggesting that an authority be set up to perform some of the functions outlined in the proposals before us today to set up a council. That amendment was defeated by four votes. It contained certain proposals that Members of the Committee may have found difficult to support. One proposal was that the new authority would appoint the chairman of Oftel. It was a proposal about which I had some doubts myself. In the amendment now proposed, your Lordships will see that there is a different relationship between the council suggested by the noble Lord. Lord Bruce of Donington, and the proposal of the noble Lord, Lord Lloyd of Kilgerran, that was so narrowly defeated. In this case, there would be a perfect liaison between the chairman of Oftel and the new body since he would be the chairman of the council.

I should like to say from these Benches that amendments proposed to the Bill are not designed to frustrate or impede the new organisation in discharging its responsibilities. We argued on Second Reading that this is a bad and unnecessary Bill. We still believe that to be true. However, since the principle is approved, it is not our intention to frustrate or impede. The amendment now being discussed is not designed to make life difficult for the new board of BT. It is designed to help the new board and to help the smooth operation of these proposals.

First, the suggestion is that there should be two trade unionists on the council. In the debates last week, great anxieties were expressed on the part of trade unionists with regard to the future operation of British Telecom. I believe that the presence of two trade unionists on the council would help the whole industrial relations picture of the new organisation. It is not an unusual suggestion. The involvement of employees in consultative bodies in industry is fairly well accepted in modern and progressive industrial organisations. We are therefore suggesting that there should be two trade unionists.

When you read the clauses it is clearly a complex Bill. On top of that, there are 44 separate clauses in the licence itself governing the operations of this business. Here you have a very complex organisation responsible for a service that enters the homes of millions of people in this country. Yet that important economic and social responsibility is discharged by a very cosy arrangement between the Secretary of State and the chairman of BT.

Those members of the public who are getting this service want to feel that there is some body which is responsible. On the last occasion I quoted the example—which appealed to the noble Baroness, Lady Macleod of Borve—of the experience of the IBA. That is another service that enters the homes of millions of people, just like the telephone service. But the people who enjoy the services of independent television feel that there is somebody that keeps an eye on whether the conditions of the licence and the responsibility assumed by the television companies are fully and adequately discharged.

I suggest that the telephone is no less important to the consumers, and that the council would add to the credibility of the organisation. After all, it is a new organisation. People have been accustomed to the Post Office, as such, for their telephone services. This is a new organisation and it would add to its credibility and acceptability if there was some body of this kind rather than some remote civil servant or a Minister a long way away. If there were a group of people, in which trade unionists and other people were represented, to help to air the difficulties and to consult as regards the application of a very complex business that affects millions of people, it would add to its credibility and acceptability. For that reason, we very much support the amendment and hope that the Government will find it acceptable.

Lord Morris

Despite the fact that I found the advocacy of the noble Lord. Lord Lloyd of Kilgerran, positively seductive, this amendment, if it becomes a law, would cause a number of problems. It would, among other things, create yet another tier of Government in the planning and administration of the telecommunications future of this country. The noble Lord, Lord Lloyd, argued by way of analogy that the council would act as a type of watchdog. One of the problems with watchdogs of course is that they take a lot of kennelling and a lot of feeding, and that again would create a considerable amount of expense.

Indeed, the noble Lord, Lord Lloyd, reiterated the vitally important fact that the role of the director general will be an extremely difficult one. The noble Lord referred to the director general's task as being a terribly difficult task. I believe that this amendment would make his task even more difficult. In addition to that, the provisions of Clauses 27 and 52 give the director general the powers to seek whatever advice and assistance he will need—and he will undoubtedly need it—to do his job in an effective way. To impose this amendment upon the Secretary of State will make life more difficult rather than easier in the future.

Lord Ezra

I should like to say in answer to the points just raised by the noble Lord, Lord Morris, that we are here talking not about a tier of Government or a tier of an executive nature; but about a regulatory body. If this regulatory body is to have the credibility which I believe will be very necessary in this major change in the running of a big organisation like the telecommunications industry, then it must be seen to be credible. One of the weaknesses in the organisation of this regulatory body is that so much is concentrated in one man—everything centres on the director. If there were a council of the sort so ably recommended by the noble Lord, Lord Bruce of Donington, I cannot personally see how it would do otherwise than strengthen the nature of this body.

We are aiming here to ensure that we shall continue to have—as we have had in the past—an effective service from the telecommunications industry of this country. It has hitherto been a public corporation and any complaints of individuals or of organisations have been channelled through the public system. It is now moving into the private system; but it will retain its existing size with a very limited measure of competition—at any rate in the initial years. We must be convinced not only in this Committee but in the country that the regulatory system will be an effective one. I believe that it could be very strongly reinforced by the council which has been recommended.

Lord Shaughnessy

With some misgivings about the specifics of the amendment proposed by the noble Lord. Lord Lloyd of Kilgerran, I think that the intention of the proposal to establish a council would have two beneficial results. One of the problems that the director general of Oftel is bound to encounter is that he will be so involved in administrative and monitoring duties that he will not be accessible by the public—and by that I mean the consumer, the subscriber or the supplier to British Telecom or any other company operating where complaints can be brought forward. Therefore, a mechanism such as the council proposed in this amendment would provide that access and be a support to the director general in dealing with the mass of administrative and consultative problems that will inevitably be brought before him.

Lord Fraser of Kilmorack

I had no intention of intervening. However, the word "watchdog" brought me to my feet because every time I hear the word "watchdog" I feel the same as I do in economic debates when people say, "There is light at the end of the tunnel". Although I would be the first to admit that there have been some notable and good exceptions to the rule, in my experience when the word "watchdog" is applied to committees, councils and other bodies of that kind, they have usually either been asleep on the job or biting the hand that fed them. One way and another I do not think that this is quite the right answer. There may he a need for something, but I would not support the amendment.

3.28 p.m.

Lord Cockfield

I am in some difficulty in dealing with the arguments that have been advanced in favour of this amendment because the noble Lord, Lord Bruce of Donington, went to great lengths to explain that his amendment was different from Amendment No. 1 which had been moved by the noble Lord, Lord Lloyd of Kilgerran, and which was rejected by your Lordships last week. But the noble Lord, Lord Lloyd of Kilgerran, went to great lengths to explain that the amendment of the noble Lord, Lord Bruce of Donington, was precisely the same as the one that he himself had moved.

Lord Lloyd of Kilgerran

Will the noble Lord the Minister allow me to intervene?

Lord Cockfield

Yes, of course.

Lord Lloyd of Kilgerran

The noble Lord the Minister has a complete misunderstanding of this situation—as he has, if I may say so, of many others. The amendment to which this is identical was the one that I moved in the 1983 Telecommunications Bill. I then moved in this Bill—in fact, I batted first—another quite different amendment. So the noble Lord the Minister is wrong in referring to the fact that the amendment moved by the noble Lord, Lord Bruce of Donington, is the same as the amendment that I moved in this Bill.

Lord Cockfield

In substance the two amendments are the same. They endeavour to set up a council or a body above the director general to whom the director general stands in some sort of relationship—let me put it like that—and the arguments for or against the creation of a body of that nature are very much the same in both instances. There are differences in the detail of the two proposals, but so far as the substance of the two proposals is concerned, it is essentially the same. In fact, the drafting of subsection (5) of the proposed new clause of the noble Lord, Lord Bruce, is almost identical to that of Amendment No. 33, which was moved by the noble Lord, Lord Lloyd of Kilgerran. Let me put it like this. There is, therefore, a degree of similarity between the two. I was making my point, not as a controversial one—I do not know why both noble Lords are so sensitive about the parentage of their amendments—

Lord Bruce of Donington

We are not sensitive at all.

Lord Cockfield

The noble Lord supports me in his interruption. I was merely drawing attention to what I thought was a fairly obvious point, that both amendments were intended to cover much the same ground. With that restatement, and not wishing in any way to drive a wedge between the noble Lord, Lord Lloyd of Kilgerran, and the noble Lord, Lord Bruce of Donington, perhaps we might agree that both amendments were designed to set up a new body which would stand in a position of adviser, assistant or helper to the director general.

The first point of substance that I wish to make is as follows. The noble Lord, Lord Bruce of Donington, said that it was the Government's policy that matters should remain firmly in the hands of the Secretary of State. That is not the basis on which the Bill is constructed; in fact, the contrary is true: that the director general is put in as an independent person and most of the powers are vested in him. He is not answerable for his decisions to the Secretary of State. Therefore, from that point of view the argument that what one is doing is protecting the director general from the Secretary of State is not in any sense a valid argument.

The basis on which the regulatory system has been constructed is that in Clause 3 and elsewhere—for example, in Clause 7—the Bill sets out very clearly what are the duties which bind the director general in the performance of his functions. If the director general fails to carry out his duties, he can be challenged in the courts. Indeed, one of the reasons why the Bill specifies matters in detail instead of conferring general and ill-defined powers is to ensure that the director cannot act arbitrarily. It would, of course, be quite exceptional for anyone to challenge the director in the courts, but the fact that he can be so challenged is a very effective sanction and, if I may say so, a more effective sanction than the appointment of a council which is given powers to consider disputes but no power to do anything about them.

There are other provisions of the Bill which are relevant to the present discussion. Thus the Monopolies and Mergers Commission will deal with disputes as to whether or not a licence should be amended, and the advisory bodies to be established under Clause 52 of the Bill will help and advise the director, particularly in relation to disputes between British Telecom and consumers.

Perhaps I may now turn to the detail of the proposed new clause. One of the criticisms of the telcommunications authority—that is, the body to which Amendment No. 1 related—was that the amendment gave the authority no guidance as to how it was to consider disputes referred to it. In the case of the council proposed by the present new clause, it is given guidance in subsection (5) of the clause, but subsection (5) relates only to the promotion of competition. This is obviously important but, as your Lordships will appreciate from our discussions on Clause 3, there are other factors to be considered when determining telecommunications policy, and it would be wrong to ignore them. For example, there is the universal service, the 999 service, services to rural areas and so on, and nowhere are these mentioned in the proposed new clause.

If the noble Lord, Lord Lloyd of Kilgerran, would forgive me, I wonder whether at this stage I might divert to deal with a specific and very technical point that he raised on subsection (5) of the proposed new clause. The Bill itself lays down very clearly indeed in Clause 3(2)(b) that one of the duties of the director is: to maintain and promote effective competition". Then later on, in paragraph (h) of the same subsection to the same clause, another duty is: to maintain and promote outside the United Kingdom competitive acivity", and so on. One of the main purposes of the Bill is to promote competition. I entirely understand the specific point which the noble Lord, Lord Lloyd of Kilgerran, has in mind—namely, the question of conflict of laws and extra-territoriality—and that is why I describe this as being a highly technical area.

As he knows, the position here is that we do not accept that other people are entitled to interfere in the domestic affairs of the United Kingdom. Nevertheless, conflicts do arise and have arisen because the laws of one country differ from those of another. While the director general would obviously pay regard, and would need to pay regard, primarily to the law of the United Kingdom, the question of the impact of foreign law is something that he would need to have in his mind. Indeed, later in the Bill at Clause 47(1) there are provisions which state: It shall be the duty of the Director, so far as it apppears to him practicable from time to time, to keep under review the carrying on both within and outside the United Kingdom of activities connected with telecommunications". The object of that clause is to ensure that the director general recognises that one of his functions is to know what is going on overseas. Therefore, the answer on this technical point is that we are fully aware of the implications of extra-territoriality. The purpose of the Bill is to promote competition, and that is stated in a number of places in the Bill.

Having said that, perhaps I might now return more generally to the proposed new clause. There are further defects in the clause, in addition to those to which I have referred. If the council is to act, in effect, as an appeal body, sitting in judgment on the performance or administration of the director's functions, it would be quite wrong for him to he chairman. This would make him judge and jury as well as defendant.

Secondly, the amendment enables the director to refer disputes to the council for decision, but an aggrieved party has no such power. The clause as drafted, therefore, fails to meet the objectives which have been put forward in the debate which has taken place in your Lordships' Committee.

Having said that, I appreciate the general feeling which exists on all sides of the Committee, a feeling expressed both today and in the debate on the amendment moved last Monday by the noble Lord, Lord Lloyd of Kilgerran, that a body should be appointed by the Secretary of State which should in effect be as guide, philosopher and friend—if I may use the words of Pope—to the director general. I would suggest that the right course is to build on Clause 52 and get that right rather than introduce a new concept into the Bill.

If it is acceptable to the Committee, I propose two things. First, that the advisory bodies should be appointed not by the director but by the Secretary of State. This would give them greater status. It would emphasise their independence from the director, and this was a point on which I understood the noble Lord, Lord Bruce of Donington, to place great weight. It emphasised their independence from the director, and underlined the fact that they are there to help and advise the director from an independent standpoint.

Secondly, I would propose that the terms of reference of the advisory bodies should be amended—or perhaps a better term would be extended—to underline the fact that the advisory bodies will be concerned with the interests of consumers as well as of users generally. There are amendments relating to Clause 52 on the Marshalled List and what I am saying to some extent anticipates those amendments; but I felt that your Lordships would like to know the full extent of the proposals of the Government at this stage in our proceedings.

I believe that the suggestions I have made fully meet the point of substance in the amendment of the noble Lord, Lord Bruce, and also the point of substance in the original amendment, Amendment No. 1, of the noble Lord, Lord Lloyd of Kilgerran. It is a real attempt on the part of the Government to meet what we feel are genuine arguments, even though we believe they could be met perhaps in a more elegant and effective way than do these particular amendments. I very much hope that on the basis of the offer I have made, the noble Lord, Lord Bruce, would feel it possible to withdraw his amendment.

Lord Bruce of Donington

I am most grateful to the noble Lord, Lord Cockfield, for the very substantial concession he has offered the Committee in relation to this particular aspect of the matter. It rather seems to me that after having made a very gallant effort to shoot down the arguments put forward by the noble Lord, Lord Lloyd of Kilgerran, and myself, he then proceeded to support them and admit their validity by the very extent of the concession that he had granted. This does not in any way diminish our appreciation that the noble Lord should see fit to take account of what he must know is a very widespread feeling in the Committee, and possibly also in the country. We shall of course take a very close look indeed at the proposals when they materialise at a later stage in the Bill to see whether they meet substantially the points made by this amendment, including one specific point which is referred to in the amendment itself and to which the noble Lord. Lord Taylor of Gryffe, addressed himself, about the desirability of trade union representation at some point or other.

Subject to that, and in the hope that the noble Lord will be able to produce—and will in fact produce—something that is generally acceptable on the lines of the amendment at present before your Lordships, I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 agreed to.

Clause 6—[Exceptions to section 5]:

3.45 p.m.

Lord Mottistone moved Amendment No. 63: Page 7, line 14, leave out from ("system") to end of line 16.

The noble Lord said: My noble friend Lord Orr-Ewing has asked me to move this amendment on his behalf. Clause 6 of this Bill repeats a lot of the trends in Clause 13 of the 1981 Act and in effect places various sorts of limitations. Basically, the liberalisation of telecommunications as a whole, which we see as being the main point of the Bill, is seriously undermined without the right to use apparatus or to rent its transmission capacity without restriction. We see these paragraphs in subsection (4) to be such restrictions. Accordingly, we believe that the principles of the Bill would be better realised if the paragraphs were struck from it. I beg to move the amendment.

The Countess of Mar

I wish to speak very strongly against this amendment, because if these provisions were struck out of the Bill it would provide what is called a "by-passer's charter". People could have unlicensed point-to-point circuits, which means a company in Glasgow could have a circuit operating from its head office in Glasgow to somewhere in London. Someone could make a local call in Glasgow, be connected to the London Office and then be reconnected into the network. British Telecommunications at present relies for one-third of its revenue from 300 big customers which are likely to have point-to-point circuits. It would be disastrous for the revenue base of British Telecommunications if this was carried through; and not only disastrous for them, but also for all the other customers in the country.

The Lord Advocate (Lord Mackay of Clashfern)

This amendment is intended to introduce wider freedom from licensing into telecommunications, to release from licensing controls those businesses which run their own telecommunications system, and to give them freedom to provide telecommunications service to others. My noble friend has referred to the desirability of businesses being free to resell capacity on the circuits they lease. The Government share many of the noble Lord's objectives. We want a liberalised telecommunications market. We want businesses to be as free as possible to run their own systems and to provide services to others. We are moving quickly—some might suggest too quickly—towards that end. We intend to make a statement to the House at a later stage of the Bill outlining the steps that we propose to take to permit wider resale of circuits leased from BT.

The Government cannot however accept the approach that my noble friend is suggesting in his amendments, since they would undermine the foundations of the Government's telecommunications policy. The basic result of the amendment is to produce an exemption so that any system can be run by a business without a licence if it is run for the purpose of the business and if it is not connected with another system. These two simple tests could largely be met by a company which set up a complete national network in competition with BT and Mercury. It would be in the business of providing services to others so it would meet the first test, and provided it was not connected to the BT or Mercury systems it would meet the second test. There would therefore be almost free market entry for those wanting to supply telecommunication services, and the Government's policy in relation to Mercury would be destroyed.

The amendments would also destroy our prospects of moving towards arrangements where BT was compelled to permit the resale of private leased circuits. At present a large number of British Telecom's leased circuits fall within the first two tests that I have described; they and the apparatus at each end are run by BT for the purpose of its business and they are not connected to another system. So the leased circuits would, if my noble friend's amendment is accepted, be exempted from licensing.

If they were exempted, the Secretary of State would not have the power to impose licence conditions on the running of such circuits, for example, to require British Telecom to connect such lines to other systems and to permit other persons to resell capacity over the leased circuits. It is only Clause 6(4), which my noble friend wishes deleted, which subjects the provision of telecommunication services to licensing controls and thereby ensures that British Telecom's private leased circuits are subject to licensing controls. I hope, therefore, that the noble Lord will feel that, while we share his objectives, the method that he has adopted for seeking to promote them is not appropriate, and that he will be able to withdraw the amendment.

Lord McIntosh of Haringey

The noble and learned Lord has made it clear that the amendment is technically defective and would not meet the requirements of the movers, but in doing so he has made what at first sight seems to be an alarming concession, or has anticipated an alarming concession. He said, if I understood him rightly, that at a later stage in the Bill he is going to make a statement about the resale of leased circuits. That presumably presages some sort of liberalisation of the resale of leased circuits, some sort of release from licensing. It is going to affect not only amendments of this sort but also the whole question of access charges, the whole question of the profitability of British Telecommunications, and indeed it is going to affect the purchase price for British Telecom on flotation.

If the noble and learned Lord is to make an important statement in the future he ought to make it as soon as possible because it is going to affect a large number of parts of the Bill, and those who are considering the Bill now ought to be able to see what it is that the Government are proposing. As the position stands it looks as though it could be a severe threat to the profitability and independence and even the viability of British Telecom, and I would urge the Government to make the statement they are anticipating as soon as possible.

Lord Somers

I must confess to being an ignoramus about such things, but take for instance the circuit within your Lordships' House, within the Houses of Parliament. Presumably that is a private circuit, but with one important exception and that is that by keying nine you can connect yourself to the main circuit outside. It would lose a great deal of its usefulness if one could not do that. Surely the element of competition would also be reduced a great deal.

Lord Boyd-Carpenter

I found myself, rather embarrassingly, in a measure of agreement with the noble Lord, Lord McIntosh of Haringey. I was interested in what my noble and learned friend said about an important statement being made. I should like to press him a little as to when we are to have the advantage of hearing this. It is a little unsatisfactory to discuss amendment after amendment of a detailed character to a Bill of this character when it may well be that the statement which my noble and learned friend is going to make would make a good deal of that discussion unnecessary.

If, as I hope, the statement is going to indicate a greater degree of liberalisation than is to be deduced from the Bill itself as it stands, I should have thought that that would undoubtedly cause some of my noble friends not to feel it necessary to move some of their amendments further on in the Marshalled List. However that may be, I am sure that my noble and learned friend will agree that it is difficult to go on discussing in detail a Bill when it may be that that Bill is in some respects going to be quite substantially altered as a result of a statement.

I hope that my noble and learned friend will be able to be a little more precise. Will this statement be made during the Committee stage? Is it anticipated holding it up until Report? Is he indeed going to hold it up till Third Reading? My noble and learned friend is normally so helpful. Perhaps he would show his helpfulness by being a trifle more precise.

Lord Mackay of Clashfern

First, I should say that, as I have sought to explain, the provisions of the Bill relating to licensing which are affected by this amendment would not, as I have suggested, be removed from the Bill. What I am suggesting is that, as soon as we are in a position to make it, a statement will be made which I would anticipate at a later stage in the Bill—that is to say, not on Committee stage, at Report or Third Reading—upon the way in which this policy will apply. The need for the licensing appears to us, on the basis of these amendments, to be required, and I certainly undertake that we shall make the statement as soon as we are in a position to do so.

Lord Alport

May I follow my noble friend Lord Boyd-Carpenter by saying that I find it extraordinary that we should be going through day after day of telecommunications Committee stage under the threat that a statement on the way in which it is going to be carried out is going to be made at Third Reading. Surely if there is an explanation of the Government's policy in relation to this, it should be made as early as possible in the Committee stage so that we know exactly where we are.

Lord Bruce of Donington

Your Lordships will be aware that this Bill was under considerable discussion in another place, and so far it has gone through Second Reading and part of its Committee stage here. The Committee well knows that the amendments so far made, or proposed, in Committee by the Government and their supporters vastly exceed those put up by Her Majesty's Opposition and by the Liberal and Social Democratic Parties in this House.

This Bill seems to be under a state of perpetual amendment by the Government themselves and their supporters. We do not object to that when it comes to constructive amendments, to amendments which take account of the views of the Committee, or amendments required for drafting or correcting purposes, or which express the intentions of the Bill more accurately. All these are permissible and indeed it is part of the functions of this House to consider them. But here we are considering something that was not in anticipation when the Bill entered the Committee stage.

It seems unreasonable that the Government now say that they are going to make a statement of importance at some later stage of the Bill which may well have a considerable influence on the amendments still to be considered by your Lordships and might, if it had been made before, have had a significant effect on the Committee's attitude towards amendments which have already been discussed in this Committee. This is not satisfactory. I must, on behalf of Her Majesty's Opposition, protest strongly against this kind of treatment of the Committee.

Earl De La Warr

I wonder whether my noble and learned friend can help us? I hope he will be able to tell me that I was wrong, but it seemed to me that the statement he made about what is to come later was used to some extent in rebuttal of my noble friend's amendment. If it was, then that is serious because he has used an unknown as an argument. Perhaps he could help the Committee to the advantage of us all by telling me that that was not so, and that nor will he be using the fact of his coming statement in rebuttal of any further amendments.

Lord McIntosh of Haringey

Before the noble and learned Lord replies, may I particularly draw his attention to the words he used about a statement being made on Report or Third Reading. If a statement is made at the time of Third Reading that leaves no opportunity whatsoever for the House to consider what consequential amendments may be required from the Government's own amendments. That surely would be a serious abuse of the purpose of this House as a revising Chamber. If amendments come from the Government at such a time that the House does not have a chance to consider them, or to consider what to do about them, or what its attitude should be to them, what are we revising?

Lord Mackay of Clashfern

I am sure it must be my fault that your Lordships may have a somewhat different impression of what I am seeking to say from what I intend. What I seek to do is to maintain the position that licensing should be required to cover the areas covered by this amendment. My noble friend has indicated that he would like to see the area covered by this amendment liberalised. What I say is that to achieve that to any extent it is proper that this area should continue to be covered by licensing. That is my answer to the amendment. What I said is that we shall take account of what my noble friend is saying in considering what we can say in amplification of the policy which will determine how these licence powers shall be used in relation to the area with which he is concerned.

This is not a question of amending the Bill or anything of that kind. It is an endeavour to amplify and to respond more fully that I can today to what my noble friend has put forward. All I am seeking to anticipate is a somewhat more detailed statement than has yet been made upon the way in which the Government see this power in its application being developed. In my submission there is nothing improper about that. It is a continuing consideration of these matters, taking into account what we hear from all sides. We shall make a statement about this as soon as we are in a position to do so. It is not in the nature of a statement which would propose amendments or bring amendments from the Government. It is in the nature of explaining how we propose, in a little more detail than we have been able to say so far, what the policy will be in relation to this matter.

Lord Bruce of Donington

The noble and learned Lord cannot have it both ways. Either the matter is, as the noble Lord stated, of some significance—and this was the way the noble and learned Lord conveyed it to the Committee; "an important statement"—or it is not important. If it is important it does not defy either the great departments of state or their parliamentary counsel to be able to incorporate the appropriate qualifications and clarity into the Bill. The noble and learned Lord only has himself to blame, or his department, if the Bill is so ambiguous or it leaves so much grey area that it has to be clarified at a later stage by an important statement. This is not a very courteous way to treat your Lordships' Committee.

Lord Ezra

Is the noble and learned Lord indicating that this future statement will deal with the whole issue of licensing? In that event, would it not make our work on a number of amendments now coming up on the subject of licensing somewhat unproductive?

Lord Mackay of Clashfern

What I indicated was that we would hope to amplify what has already been said in relation to the policy that will apply to the use of circuits leased from British Telecom. It is only the use of leased circuits that is in question. What we hope to be able to do is to be a little more detailed than has yet been possible in relation to the policy that will apply in exercising the powers which the Bill gives us in this connection.

That is a perfectly reasonable response to the amendment which my noble friend has put forward; saying that we are considering how far in the nature of things the policy which we adopt in this matter will meet his requirements.

Lord McIntosh of Haringey

I am afraid that this matter is going from bad to worse. As I understand from the noble and learned Lord's most recent words, this proposed statement is intended to affect his noble friend. It is seeking to get Lord Mottistone to withdraw the amendment. In other words it is seeking to change the course of the Committee procedures on the Bill. We are now told that the statement to be made is not itself to be incorporated into the Bill. That makes me wonder whether the Government really understand the financial importance of the resale of leased circuits. The basis on which leased circuits can be resold is absolutely critical to the financial viability of British Telecom. If British Telecom is to be forced to sell circuits in bulk and to allow other people to cream off the profits by selling them at a higher price broken up, the whole basis on which the prospectus is to be made to the public at the time of flotation is changed. I suggest to the noble and learned Lord and to the Government that the problem that the Government have about flotation will be immeasurably worse if any real change is proposed in this statement.

As my noble friend Lord Bruce of Donington said, in his characteristically moderate way, either this is an important statement, in which case it should be made now and it certainly ought to be made before Third Reading, or it is of no significance, in which case the noble Lord, Lord Mottistone, ought to ignore it.

The Countess of Mar

I find myself increasingly amazed as we go on through this Bill, particulary at the financing of the new set-up which is airy-fairy. Would it not have been better for the Government to have put their policies on a solid basis before they presented the Bill to the House?

Lord Mottistone

Perhaps I should now come in. My thoughts when I heard my noble and learned friend were that I welcomed his support for the general approach of encouraging liberalisation and on the whole I thought what he had to say was encouraging. I was going to say to him that I would read with great care what he had to say. The statement is of interest to us all, whatever view we may take about the Bill and whatever effect it may have. Though I shall withdraw the amendment, I think the Government must take note of the fact that we require to have this policy statement as soon as is practicable. It could, as the noble Lord, Lord Ezra, said, affect the amendments we are about to come to about the licence, and I suspect that the policy will be deeply related to the licence. One of the things that we shall all be saying when we come to debate the licence is that we want to see the final licence good and early and the policy which goes with it. But, having said that, I beg leave to withdraw Amendment No. 63.

Lord Bruce of Donington

The noble Lord, Lord Cockfield, must have heard the exchanges across the Committee on this matter over the last 20 minutes. In view of the fact that there is a possibility that the attitude taken by his noble and learned friend to the amendment moved by the noble Lord, Lord Mottistone, may affect other amendments that are down in the name of the noble Lord, may I ask the noble Lord, Lord Cockfield, whether he would consider the advisability of asking the Committee to adjourn for an hour while the Government make up their mind about what they propose to do with the Bill? They are evidently in some confusion. I think the noble Lord owes it to the Committee to say, after due consideration with his officials and colleagues, how they propose to proceed. I suggest that he considers asking for the adjournment of the Committee for an hour and then comes back to make the statement, so that noble Lords on all sides of the Committee know exactly how we shall proceed hereafter.

Lord Boyd-Carpenter

I put to my noble friend Lord Cockfield a suggestion rather less drastic than that of the noble Lord, Lord Bruce of Donington, despite the habitual moderation which his noble friend rather startlingly attributed to him. I feel that it would not be treating the Committee fairly or properly to defer this statement—which was obviously referred to here by the noble and learned Lord the Lord Advocate as having some relevance to the amendment we are discussing—to Third Reading. Will my noble friends seriously consider before we go over this course again on Report—no doubt the Report stage, judging from experience at the Committee stage, will not be unduly brief—getting the statement here either before or at the beginning of the Report stage? Otherwise, I am bound to say that the position of your Lordships' House as a revising Chamber has not been properly respected.

Lord Mackay of Clashfern

The situation certainly is that we shall give the further detail as soon as we are able to do so. I should certainly hope that we shall be in a position to do that in time for the Report stage. The situation is that further detail has been under consideration for some time, and that what we are intending by the statement to which I have referred is simply to fill in some further details on the aspects of licensing of private systems. I certainly undertake —and I am grateful to my noble friend Lord Boyd-Carpenter for his intervention—that we shall do it at the earliest possible moment, and I hope that we shall be in a position to do it for the Report stage.

So far as concerns the conundrum of classifying statements as of relative importance, the situation is that what I am saying is that we hope to be in a position here—as on many other matters that are from time to time considered—where the thinking will develop between one stage and another. As far as this particular matter is concerned, what I indicated was that we hope to be in a position to give further details on the policy raised by this amendment, and I hope that we shall be in a position to do so by the Report stage of the Bill.

Lord Ezra

May I ask the noble and learned Lord whether the proposed statement is likely to refer to other amendments which we have already discussed, or might be likely to discuss, or is it solely related to the amendment that we have just been discussing?

Lord Mackay of Clashfern

The matter that I have in mind is that of giving further details in relation to the policy that we expect to be pursued in relation to the use of leased circuits. It does not directly affect the terms of any of these amendments. All it does is to indicate, in a little more detail than we have yet been able to state it in relation to that particular matter, the policy that would be pursued.

Lord Bruce of Donington

This Bill has been in gestation for well over a year. There has been plenty of opportunity to consider these matters. If the noble and learned Lord's Government had made up their minds what they were going to do, the statement could be made now. I still think that the needs of your Lordships should be considered. I beg to move that the House do now resume.

Moved, That the House do now resume.—(Lord Bruce of Donington.)

4.13 p.m.

On Question, Whether the Motion shall be agreed to?

Their Lordships divided: Contents, 93; Not-Contents. 109.

Ailesbury, M Delacourt-Smith of Alteryn, B
Airedale, L
Amherst, E Denington, B.
Ampthill, L Diamond, L
Ardwick, L Donaldson of Kingsbridge, L
Attlee, E Donnet of Balgay, L
Aylestone, L Elwyn-Jones, L
Banks, L Ennals, L
Beswick, L Ewart-Biggs, B
Birk, B Ezra, L
Bishopston, L Fisher of Rednal, B
Blyton, L Gaitskell, B
Boston of Faversham, L Gallacher, L
Bottomley, L George-Brown, L
Briginshaw, L Graham of Edmonton, L. [Teller.]
Brockway, L
Brooks of Tremorfa, L Grimond, L
Bruce of Donington, L Hampton, L
Burton of Coventry, B Hanworth, V
Caradon, L Henderson of Brompton, L
Carmichael of Kelvingrove, L. Hunt, L
Cledwyn of Penrhos, L Jacques, L
Collison, L Jenkins of Putney, L
Cooper of Stockton Heath, L John-Mackie, L
Dacre of Glanton, L Kearton, L
David, B Kilmarnock, L
Dean of Beswick, L Lawrence, L
Leatherland, L. Ross of Marnock, L.
Listowel, E. Seear, B.
Llewelyn-Davies of Hastoe, B. Sefton of Garston, L.
Lloyd of Hampstead, L. Simon, V.
Lloyd of Kilgerran, L. Stallard, L.
Longford, E. Stewart of Alvechurch, B.
McIntosh of Haringey, L. Stewart of Fulham, L.
MacLeod of Fuinary, L. Stoddart of Swindon, L.
McNair, L. Stone, L.
Mar, C. Strabolgi, L.
Mayhew, L. Strauss, L.
Milverton, L. Taylor of Gryfe, L.
Molloy, L. Taylor of Mansfield, L.
Mulley, L. Tordoff, L.
Nicol, B. Underhill, L.
Oram, L. Wallace of Coslany, L.
Paget of Northampton, L. Wedderburn of Charlton, L
Peart, L. White, B.
Ponsonby of Shulbrede, L. [Teller.] Wigoder, L.
Wootton of Abinger, B.
Rathcreedan, L. Young of Dartington, L.
Abercorn, D. McAlpine of Moffat, L.
Adeane, L. McAlpine of West Green, L
Airey of Abingdon, B. Mackay of Clashfern, L.
Alexander of Tunis, E. Macpherson of Drumochter, L.
Auckland, L.
Avon, E. Mancroft, L.
Belhaven and Stenton, L. Mansfield, E.
Bellwin, L. Margadale, L.
Belstead, L. Marley, L.
Blake, L. Maude of Stratford-upon-Avon, L.
Boyd-Carpenter, L.
Bruce-Gardyne, L. Merrivale, L.
Caithness, E. Mersey, V.
Campbell of Croy, L. Middleton, L.
Carver, L. Molson, L.
Clitheroe, L. Morris, L.
Cockfield, L. Mottistone, L.
Cottesloe, L. Mowbray and Stourton, L.
Craigavon, V. Munster, E.
Daventry, V. Murton of Lindisfarne, L.
De Freyne, L. Northchurch, B.
De La Warr, E. Nugent of Guildford, L.
Denham, L. [Teller.] Onslow, E.
Drumalbyn, L. Orkney, E.
Duncan-Sandys, L. Pender, L.
Effingham, E. Plummer of St. Marylebone, L.
Ellenborough, L.
Elliot of Harwood, B. Porritt, L.
Elphinstone, L. Portland, D.
Elton, L. Rankeillour, L.
Faithfull, B. Rodney, L.
Fraser of Kilmorack, L. St. Davids, V.
Glanusk, L. Saltoun, Ly.
Glasgow, E. Sempill, Ly.
Glenarthur, L. Shaughnessy, L.
Glenkinglas, L. Skelmersdale, L.
Gormanston, V. Soames, L.
Gray of Contin, L. Somers, L.
Gridley, L. Spens, L.
Hailsham of Saint Marylebone, L. Strathspey, L.
Sudeley, L.
Halsbury, E. Suffield, L.
Harvey of Prestbury, L. Swansea, L.
Hawke, L. Swinton, E. [Teller.]
Henley, L. Terrington, L.
Home of the Hirsel, L. Teynham, L.
Hornsby-Smith, B. Thorneycroft, L.
Howard of Henderskelfe, L. Torphichen, L.
Hylton-Foster, B. Trefgarne, L.
Ilchester, E. Trenchard, V.
Killearn, L. Trumpington, B.
Kinloss, Ly. Vaux of Harrowden, L.
Kinnaird, L. Vickers, B.
Lane-Fox, B. Vivian, L.
Lauderdale, E. Waldegrave, E.
Long, V. Wise, L.
Lyell, L.

Resolved in the negative, and Motion disagreed to accordingly.

4.23 p.m.

Lord Mottistone

I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendment No. 64 not moved.]

Clause 6 agreed to.

Clause 7 [Power to license systems]:

Lord Bruce of Donington moved Amendment No. 65: Page 8, line 10, after ("Director") insert ("and subject to approval by a resolution of each House of Parliament")

The noble Lord said: I beg leave to move the amendment standing in my name and in those of my noble friends. It may be for the convenience of your Lordships if Amendments Nos. 65 and 66 are discussed together. Amendment No. 66: Page 8, line 13, after ("Director") insert ("and subject to approval by a resolution of each House of Parliament")

The events of the last half-hour or so, if they have done nothing else, have certainly demonstrated the need for a rather firmer accountability to Parliament on these very crucial matters under discussion. Your Lordships will be aware that under Clause 7 licences may be granted by the Secretary of State after consultation with the director and, with the consent of or in accordance with a general authorisation given by the Secretary of State, by the director himself.

What this amendment seeks to do is to subject both these options to the final approval of both Houses of Parliament. As I say, I think the events of the last half-hour have shown how very necessary this is. At the moment, we have only one licence, and that is not a licence. We have one licence which was issued on 25th October 1983, is labelled "draft", and is headed: Licence granted by the Secretary of State for Trade and Industry to British Telecommunications". It is admitted by the Government that this is not yet finalised.

One thing is perfectly clear: the contents of this licence governing the relationship between the Secretary of State for Trade and Industry and British Telecom and also the director himself are of the utmost importance, because even though the outlines and decisions in principle are made by the Bill the detail, of course, is in the licence. Efforts to bring matters that are in the licence into the Bill have so far been very fiercely resisted by the Government, and therefore we wish that when the final licence has been determined—and let us hope that it will not take very much longer—and before it is finally made, Parliament shall have an opportunity to consider it. What is wrong with that?

Noble Lords opposite, when they are talking on party platforms—and I would not wish to deny them the pleasure: we all do it in one way or another—preach the virtues of open government. They are in effect saying to the public, "Look, we have nothing up our sleeves at all". Then why is it that at one stage during the passage of this Bill through another place, depending as it did to a very large extent on the contents of the licence, even copies of the draft licence were not available? It was only with some difficulty that one obtained it here, thanks to the courtesy of your Lordships' Library and the copying facilities that are so fortunately made available in the Palace of Westminster.

I do not want to go through the contents of the licence, and the noble Lord, Lord Mottistone, can be relieved that I am not going to make another Second Reading speech. However, for the edification of your Lordships, in regard to last Thursday's proceedings may I point out that 57.8 per cent. of the time on that day was occupied by the Government and their supporters; 11.8 per cent. by the Alliance; 7.1 per cent. by the Cross-Benches; and 27.3 per cent. by Labour. So I hope that the noble Lord, before he starts reflecting on the evils of Second Reading speeches, will bear in mind that, so far, on a Government Bill the Government have done about twice as much talking as everybody else. Therefore, in this particular case perhaps I may be forgiven for insisting, even though it may not be palatable, even though some may call it a Second Reading point, and particularly in the light of the confusion the Government have apparently got into in regard to their own Bill, that Parliament ought to have an opportunity of approving the licence.

Major licences will not be granted, so it is no good the noble Lord coming back and saying that there will be scores of important licences granted over the next few years, which would impose too much demand on parliamentary time and would become boring to another place or to your Lordships' House. That is not the case at all. We have an undertaking by the Prime Minister, no less—and those undertakings are presumably important—that, in any event, there will be only one major licence. In a letter to Mr. Richard Shepherd, the Conservative MP for Aldridge-Brownhills, the Prime Minister said: An open and unregulated market would inevitably lead to a concentration on the lucrative business market at the expense of the less profitable domestic rural services, public call boxes and the emergency services which run at a loss. I am determined to protect these services, which is why we took the decision that Mercury should be the only national network provider to compete with British Telecom. So the noble Lord cannot get up and say that there will be lots of licences granted and that there would he an undue imposition on parliamentary time.

Ultimate parliamentary approval by affirmative resolution of this vital licence, when it is finalised, is essential to secure any kind of parliamentary control. I shall say no more upon the subject, save to commend the amendment with confidence to all your Lordships who believe in the proper exercise of parliamentary democracy, free from the diktat of an Executive which apparently cannot make up its mind on a whole series of matters in regard to this Bill. I beg to move.

Lord Mottistone

I do not know how the Government would like to play this. My Amendment No. 71 could be said to be vaguely connected with this amendment, but I would rather move it separately. Do the Government wish to take these amendments together in one monster debate, or would it be better to deal with this as a separate issue?

Lord Cockfield

As the point of principle raised in Amendment No. 71, in the name of my noble friend Lord Mottistone, is the same as the point of principle raised in this amendment, it would certainly be, in my opinion, for the convenience of your Lordships to talk about both of them.

Lord Bruce of Donington

I should like to be of as much assistance to the noble Lord as possible. But in view of the remarks that have fallen from the noble Lord, I am bound to say that the principles are not the same, since the amendment proposed by the noble Lord, Lord Mottistone, seems to enshrine a principle of 25 per cent., which has nothing to do with the amendment which we are now discussing. We on this side do not wish to be a party to the passing of an amendment which, on the face of it, gives consent to the 25 per cent. principle.

Lord Cockfield

Perhaps I did not make myself clear. There can be no question of the amendments being voted on or moved together. It is simply that I think it would be for the convenience of the Committee, because I should like to make certain suggestions in this field which I hope will be helpful. It would be more convenient if I could make them in response to the views of your Lordships on the whole of the field. I am simply trying to be helpful in this instance—not to make any specific point.

Lord Mottistone

With that in mind—and I trust that the noble Lord, Lord Bruce, does not object too much—perhaps I may comment on both his amendment and my Amendment No. 71, which I shall naturally move separately when the time comes, depending on how the debate has gone.

The difference between these two amendments, as the noble Lord made clear, is that we seek to have the licence laid before Parliament only for those companies in the telecommunications field which are themselves monopolies, and the figure of 25 per cent. is one that is derived from the guidance notes on the Competition Act 1980. To mention the proposal of the noble Lord, Lord Bruce, I think that it would be unreasonable to have all licences laid before Parliament, because in the passage of time there would be a very great number of them and, quite apart from the fact that, in the nature of things, parliamentary time would be wasted, they would probably get a cursory glance and it would therefore be a waste of time. Therefore, I would strongly resist the amendments of the noble Lord, Lord Bruce.

However, the licences of monopolies need to be debated before ratification, and I shall be very interested to hear if my noble friend has another way of doing it. But just to have a licence placed before us—and we are a little worried as to when we will see the licence; whether we will see it in time for parliamentary comment or whether it will suddenly appear in its final form just after we have gone into the Summer Recess, or something of that nature—would be a great worry.

I am concerned only about the licence of vast monopolies and, currently, British Telecom is the only one in this field before us. I suggest that the views of customers—that is, the users—and of competitors are crucial to ensure a reasonable and cost-effective service to customers and fair competition to competitors, particularly the smaller ones. This is absolutely essential. The whole worry on my part, and on the part of others of your Lordships who have the same view, is that there is a risk that the large monopolist will exercise powers, possibly even unwittingly, which he should not.

I suggest that the large monopolist and the naturally uncommercial Oftel cannot be sure of arriving at a fair balance in deciding on the licence. Of course, the same would apply in the interim, before Oftel gets going, to the department concerned, because, once again, it is not in the business of being commercial, and people who are not in the business of being commercial will not necessarily be able to arrive at a fair conclusion when the other person debating the licence is the vast monopolist.

Apart from the many concerns on the part of business about many of the conditions in the current draft licence that we have before us, to which I shall return, it is also a fact that the POUNC, as representing the ordinary user, has comments—and very valid comments, in many respects—on a vast number of the conditions. So there is not only concern among the users as to whether they will get value for money and be fairly treated from their end, but there are also the strong views of business, which not only fears anticompetitive practices in the future, but has many examples of anti-competitive practices at this very moment. I shall not weary your Lordships with details of those, but there are many right across the board.

Therefore, it is important that the licences of large monopolies should be debated. I am not altogether happy about my amendment in this respect, because it refers to a statutory instrument—as, indeed, did one of the amendments of the noble Lords opposite. A statutory instrument cannot be amended by both Houses of Parliament. I suspect that in the case of a licence Parliament needs both to examine and amend the licence, if that is what Parliament believes would be a good plan. If, therefore, my noble friend could indicate to the Committee how he visualises this problem being met and could let us know the views of the Government, I should be grateful. I have it in mind to press my amendment if the Government cannot give me a satisfactory reply, but that is for the future as there are other amendments to be dealt with first.

4.41 p.m.

Lord Cockfield

This is a matter of great importance because it touches upon the proper role of Parliament. I hope, therefore, that I shall be forgiven if I speak at considerable length upon it. It would only be right for me to analyse the background situation in order to indicate why we have come to certain conclusions.

In this country, as opposed to the United States, there is no formal separation of powers between Legislature and Executive, between Ministers and Parliament. The division of responsibility and of power rests upon practice and precedent. Indeed, the balance of power is shifted from time to time. Sometimes one is in the ascendant, sometimes the other. But wherever lies the balance of power, the two are bound together in an indissoluble partnership. In recent years, Parliament has sought to increase its powers over the Executive, to expand the area of scrutiny and examination. But no Parliament has sought, still less succeeded, in extending its powers to the extent that noble Lords opposite have sought to do in the amendments they have tabled to the Bill. The noble Lord, Lord Stoddart of Swindon, has argued that there must be a first time for everything. That is a nice philosophical point—as, no doubt, the chicken would have said to the egg. But be that as it may, there is nothing worse than adopting a bad proposition on the argument that it will enable you to create a bad precedent for the future.

The broad dividing line which has always been drawn is that Parliament lays down the rules, and within those rules the administration deals with individual cases. That is precisely what the present Bill does. It defines the duties of the Secretary of State and of the director general in Clauses 3 and 7 of the Bill and elsewhere, and within the ambit of those duties it is for the Secretary of State and the director general to issue the licences and determine the terms of' the licences. That is entirely right and proper. The regulatory system established by the Bill is designed to be free from political interference so that those responsible for the management and direction of firms in the telecommunications industry can plan ahead on the basis of a stable environment. This is why the Bill creates the office of Director General of Telecommunications at the head of his own non-ministerial department and why the role given to the Secretary of State is limited in the way that I shall describe.

Once the Secretary of State has issued a licence, the monitoring, the enforcement and, where necessary, the modification of licences becomes the responsibility of the director. Enforcement is entirely a matter for the director. He has powers to make orders requiring compliance with licence conditions, and he has powers, if necessary, to enforce such orders through the courts. Licence modifications are also a matter for the director. He may, after public consultation, agree, licence modifications with the licensee or, in the event of a failure to agree, refer the matter for independent assessment by the Monopolies and Mergers Commission.

The Secretary of State's only general powers in relation to licence modifications are that he may insist on a Monopolies and Mergers Commission investigation before the director makes a particular change. In the very special circumstances where he judges that it will be against the interests of national security or our relations with the government of another country, the Secretary of State may also veto a licence modification. The director general's independence is central to the structure of the Bill and to the Government's proposals for the regulation of telecommunications. The amendments, as drafted, would strike at the heart of his independence.

The amendment in the name of the noble Lord, Lord Bruce of Donington, would require every licence to be approved by both Houses of Parliament. The later amendment, in the names of my noble friend Lord Mottistone and other noble Lords, would require "the particulars of the … licence" to be embodied in an order or statutory instrument where the licensee controlled more than 25 per cent. of the market. Perhaps I might comment first on this amendment. A statutory instrument of the kind contemplated could be modified only by another statutory instrument made by Parliament. This would end the director's independence, would render a great part of the director's activities subject to direct parliamentary control, and would strike down the carefully prepared arrangements for the modification of licence conditions set out in Clauses 12 to 15. The procedure would also reintroduce short-term political considerations into telecommunications when it is one of the prime aims of privatisation and of the Bill to insulate from such considerations those who undertake the long-term work of planning and building telecommunications networks.

At the practical level and leaving political considerations on one side altogether, all in telecommunications have told us that we need swift-acting procedures to deal with any problems that may emerge, particularly when British Telecom itself, or another licensee, engages in anti-competitive practices. In contrast, the preparation of statutory instruments is necessarily slow and cumbersome. This consideration is important, not just to enable prompt action to be taken on anti-competitive practices but also because telecommunications are developing rapidly and licences may need to be amended to take account of changing circumstances. If amendment could be made only by statutory order it would introduce great rigidity into the system and inhibit changes which ought to be made.

There is the further objection that Parliament cannot amend a statutory instrument. It can only approve or reject. This would be a further element of inflexibility. Clearly Amendment No. 71 could not be accepted in the form in which it has been proposed. I suspect that it will come as no great surprise to the noble Lord, Lord Bruce of Donington, if I say that I cannot accept his amendment, either, in the form in which it has been proposed. Apart from the considerations I have already mentioned, it would, require every single licence issued to be approved by Parliament. Thousands of licences have been issued by British Telecom for private telecommunications systems under the existing legislation. All of these will require to be re-cast and re-issued to accord with the new legislation. I do not believe that Parliament would seriously he interested in these documents. But I ask the noble Lord, Lord Bruce of Donington, not to abandon hope. I think that his interest, as well as mine, really rests in the much smaller number of licences which, if I may use the phrase, set the tone. Indeed there was one phrase that he used in the course of his own speech which led me to believe that.

It is with this group of key licences that Amendment No. 71, in the names of my noble friend Lord Mottistone and the noble Lords, Lord Taylor of Gryfe, Lord Lloyd of Kilgerran and Lord Spens, to which I have already referred, is also concerned. I have explained in some detail why I do not think that actually incorporating the licence in a statutory order is the right approach. Nevertheless, I recognise, and indeed share, the view that Parliament should have the opportunity of scrutinising the British Telecom licence and certain other key licences. I acknowledge, too, the fear which is held in some quarters that the Secretary of State might issue a licence substantially different from the draft which is now the subject of public consultation. While, as I have explained, I could not accept the amendments as drafted, there is an alternative and more effective route to solving the problem. The key lies in Clauses 8 and 9.

Clause 9 provides that the Secretary of State may by order designate as a public telecommunications system any system the running of which is authorised by a licence to which Clause 8 applies. By virtue of Clause 92, the Secretary of State's order has to be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament. By building on Clauses 8, 9 and 92 we can devise a procedure which will involve Parliament in a way which will meet the points which have been raised while avoiding the objections. Designation of a system as a public telecommunications system is not a formality. It makes the operator a public telecommunications operator and is essential for the running of a public system. Without public telecommunications operator status an operator cannot enjoy most of the privileges and protections afforded by Clauses 31 to 46 of the Bill.

The grant of a public telecommunications operator licence—that is, a licence to which Clause 8 applies—is necessary before the provisions of the telecommunications code contained in Schedule 2 to the Bill can be applied to an operator. British Telecom could not operate without a public telecommunications operator licence, and the Government intend to confer similar licences on Hull, Mercury and the two cellular radio companies. This point is important because it illustrates the ambit of the proposals that I am making. They will apply to all operators licensed under Clause 8.

Clause 9 therefore provides a way for Parliament to consider, and if it wishes to vote against, the designation of an operator like British Telecom as a public telecommunications operator. What I now propose is that I should table an amendment on Report providing that before any order made under Clause 9 enters into force, the text of the licence authorising the running of the system to which the order relates shall have been laid before both Houses of Parliament for not less than 28 days. This means that order and licence would he laid together at the same time. If Parliament was not satisfied with the licence in the form it was made, Parliament could pray and vote against the order designating British Telecom, or the other licensee concerned—because these proposals apply to all Clause 8 licensees; we are not singling British Telecom out specially—as a public telecommunications system. If this happened, the licensee would not be able to run its business. The Government would then have to come back to the House with a new order and a new licence meeting the objections which had been raised. If however Parliament was satisfied with the licence as granted, it need take no action and the Clause 9 order would stand unannulled.

I am very conscious of the strong view held on all sides of the Committee that Parliament should not stand completely aside: indeed, I share those views. The arrangements that I have suggested combine parliamentary scrutiny with arrangements to preserve the independence of the director and the swift and flexible licence amendment procedures which are central to the regulatory process. They avoid the serious difficulties which would arise if the licence were actually itself incorporated in a statutory order. This is a genuine attempt to meet what I accept is a genuine concern. I hope that on the basis of the offer I have made that the noble Lord, Lord Bruce of Donington, will feel able to withdraw his amendment, and that my noble friend Lord Mottistone will take the same view.

Lord Bruce of Donington

I am greatly obliged to the noble Lord for his very constructive responses to the amendments that we have ventured to put down. They show a willingness; I am glad to have it confirmed that the Government are sensible of the very widespread view that Parliament should be more intimately involved. We should of course like to take a look at the amendment that the noble Lord proposes to introduce on Report. May I tell him how much we would appreciate it if he were constrained to adopt the affirmative procedure rather than the negative; that would sweeten it for us. But in general, and certainly without in any way committing ourselves to the principle enshrined in Amendment No. 71, in the name of the noble Lord, Lord Mottistone, we appreciate the concession, and I ask the leave of the Committee to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 66 to 68 not moved.]

Lord Somers moved Amendment No. 69: Page 8, line 33, leave out ("may") and insert ("shall").

The noble Lord said: This amendment and the one following, Amendment No. 70, hang together, since one of course affects the other. It was only I think a fortnight or so ago that we had a considerable discussion on the relative merits of "shall" as compared with "may". These licences, which I think we have all agreed are going to be very important, are to be issued by the Secretary of State. But I must point out that in our present political system Secretaries of State come and Secretaries of State go. One Secretary of State may have very satisfactory and certain opinions on the matter. Another may have entirely different ones. I do not think that in that case one can just leave it to his decision. We must have compulsion and that, of course, will be provided by Amendment No. 70, which I shall leave to my noble friends to discuss. Their knowledge on this subject is rather more extensive than mine. I certainly think that a compulsory licence which must—not "may"—contain certain features is essential. I beg to move.

Lord Ezra

I should like to support the noble Lord, Lord Somers, in this proposition. It seems to me that, if one of the objectives is to ensure that the director and the Secretary of State conform, and to make sure that there is conformity with the important Clause 3, the word "shall" is much more appropriate than "may". For that reason alone, the amendment is worthy of support.

5 p.m.

Lord Mackay of Clashfern

I understand perfectly from what has been said the objective of the noble Lord, Lord Somers, in moving this amendment and the noble Lord, Lord Ezra, in supporting it. As Clause 7(5) is drafted, the Secretary of State has discretion as to whether or not he includes in a licence that he is granting conditions of the sort described in Clause 7(5)(a), (b) or (c). It is important to notice that this change would affect not only (a) but also (b) and (c).

I believe it is important that the Secretary of State should retain such discretion. There has already been mentioned the vast number of licences that are likely to he issued under the Bill. We tend to concentrate on the major ones—those to British Telecom, Mercury, Hull, the cellular radio companies and the cable companies. But there are very many others besides. Indeed, we expect that there may be some 3,000 licences to be granted. Obviously the vast majority of these will not be of any great public interest and there may well be cases where it would not be appropriate to impose all the conditions listed in Clause 7(5).

I should perhaps point out in this context that a licence is essentially a permission to do something that would otherwise be unlawful, and does not as a matter of course have to include conditions. An example may help. Entry phone systems for blocks of flats are telecommunication systems and as such will require a licence under the Bill. The most sensible way to do this is by a general licence but I doubt whether the Secretary of State necessarily wishes to charge for such a licence. But if he were obliged to, as he would be if this amendment were accepted, then the director could he in the nonsensical position of having to chase up the owner of every entry phone system in the country to ensure that he had paid the fee. I am sure that this is not what the noble Lord had in mind.

It seems to me that the concern is that the Secretary of State may not include conditions of the sort described in Clause 7(5)(a); namely, conditions to ensure that his Clause 3 duties are fulfilled. But this represents a misunderstanding of the nature of the duty in Clause 3. Whenever the Secretary of State, or the director, exercises any of his functions under the Bill which includes the issue of licences then he is bound by his Clause 3 duties. In other words, Clause 3 imposes a duty when he is exercising any of these functions. If, in the light of these duties, conditions should be included in a licence when he is granting it—and in the great majority of cases I accept that this is likely to be so—then they will have to be in the licence by virtue of the duty which flows from Clause 3. I hope I have satisfied the noble Lord's concern and that he will accept that, in the circumstances we are dealing with here, the power is appropriate in Clause 7(5), with the underlying duty coming from Clause 3.

Lord Ezra

Would the noble and learned Lord perhaps consider separating Clause 7(5)(a) and (b) and (c)? From what he said, he fully accepts that the Secretary of State and the director are bound to ensure that the duties imposed on them by Clause 3 are carried out. This does seem to weaken that responsibility as the clause is at present worded.

Lord Mackay of Clashfern

With great respect, I do not feel able to accept that last contention because the fundamental duty is in Clause 3 and it pervades all the Bill. To seek to make apparent strengthenings in some places might well weaken its full effect. Clause 3 imposes that duty and it is for the Secretary of State or the director to see whether conditions are necessary under Clause 7(5)(a) to implement that duty. I certainly appreciate, as I sought to point out, that (b) and (c) are in a somewhat different situation from (a). But the fundamental point remains that the underlying duty—the compulsitor, as it were—to put in such conditions as are necessary comes from Clause 3 and is clearly set out. It would damage the structure of the Bill to interfere with the way in which this is expressed. The clause gives the Secretary of State and the director all the necessary powers to ensure that they can properly comply with their duties in this direction.

Lord Molloy

Following the noble and learned Lord's submissions, can he explain this to me and to the Committee? It seems to me that if Clause 3 is the fundamental clause and everything laid down must be adhered to, then there is a slight deviation if the word "may" remains, because in law, as I understand it, above "will" a powerful word is "shall". Therefore, what the amendment submits is that there shall be total adherence to the initial clause which the noble and learned Lord quoted and that there shall be no deviation. Therefore, the amendment appears to assist the Government in maintaining regularity in the presentation of the Bill.

Lord Somers

I am most grateful to the noble and learned Lord hut, before withdrawing my amendment, may I point out that he referred several times to the Secretary of State. I think we can all have perfect confidence in the present Secretary of State, but what about in 20 years' time? We do not know who the Secretary of State will be and what he will be like. However, let us hope for the best. Meanwhile I beg leave to withdraw the amendment.

Lord Bruce of Donington

May I offer the noble Lord a way out of the difficulty, if he is so disposed? I suggest that he retains "shall" in subsection (5)(a) and tables a further amendment inserting "may" in (b) and (c). That would appear to overcome the objection of the noble Lord, Lord Ezra, with which I entirely agree. If the noble Lord will give an undertaking that on Report he will reproduce his evident agreement with the noble Lord, Lord Ezra, in amendment form he will make the Committee much happier. The Committee will not then resist any withdrawal of the amendment.

Lord Milverton

I support my noble and learned friend the Minister and the Government. I think the clause is satisfactory as it is now. If the amendment were pushed to a Division, I should support Her Majesty's Government.

Lord Mackay of Clashfern

I am extremely grateful for that support. I certainly wish to do what I can to please the Committee, as I was perhaps not particularly successful earlier. I feel that the correct structure is to have Clause 3 as imposing the duties and then confer in this clause the powers which are necessary to enable that duty to be carried out. To put the sort of distinction which the noble Lord, Lord Bruce of Donington, suggested between (a) on the one hand and (b) and (c) on the other is an unnecessary complication. I believe that the noble Lord, Lord Somers, has taken that point and appreciates that the duty in Clause 3 would apply to the Secretary of State and the director whoever they were.

Amendment, by leave, withdrawn.

5.10 p.m.

Lord Taylor of Gryfe moved Amendment No. 70:

Page 8, line 34, leave out paragraph (a) and insert— ("(a) conditions requiring any person who is authorised by the licence to run a telecommunications system to agree to submit to arbitration any dispute relating to such systems and arising between such systems and a user of such systems if the user so chooses, the rules and procedure of such arbitration being those as may he approved by the Chartered Institute of Arbitration and the Director General;")

The noble Lord said: I am moving the amendment following representations from the Post Office Users' National Council which points out that in the event of a dispute all telecommunications users should have access to arbitration as an inexpensive alternative to taking action through the courts. It also points out that, while there is provision for arbitration in the licence—and, as one noble Lord pointed out last week, the licence has not yet been approved—there is no clause in the Bill which would enable users of services provided by any telecommunication operator to have access to arbitration. It is for that very good reason that the amendment is moved.

Lord Mackay of Clashfern

As your Lordships have just heard, the first part of the amendment is to leave out paragraph (a). I did not really understand the noble Lord, Lord Taylor of Gryfe, to explain that. I do not know whether that is necessary at all. I suspect that perhaps it is some kind of clerical inadvertence. I therefore go to the second part of the amendment, to which the noble Lord has spoken, which is the insertion.

That is designed to impose an obligation on the Secretary of State to include in licences conditions of the sort described in this amendment—that is, conditions which allow users to take disputes they have with the operator to arbitration. I fully appreciate the value of such conditions and will say a little more about them in a moment. However, I believe that it would be quite wrong to impose a requirement that all licences should contain these conditions. As I explained on the earlier amendments there will be a vast number of licences to be granted under the Bill—perhaps 3,000 or so—ranging from large licences such as British Telecom's, which are of great public importance, to many minor licences such as those for entry phones. I think it would be wholly inappropriate for all these licences to have to include conditions of the sort described in this amendment, and I do not think that this is what noble Lords have in mind.

Nevertheless, the Government fully appreciate the importance to consumers of having access to arbitration to settle minor disputes. This is why, as the noble Lord said, a condition to this effect has been included in the draft British Telecom licence in Condition 28. There is no need to have a specific provision in the Bill to enable such conditions to be included, since the combined effect of the duty in Clause 3(2)(a) to promote the interests of consumers and the power in Clause 7(5)(a) as the Bill stands already achieve this. In other words, if the Secretary of State and the director are satisfied that this is an appropriate thing to put in in the interests of consumers, these two clauses together achieve this.

The effect of the duty in Clause 3(2)(a) to promote the interests of consumers is that, where the Secretary of State in issuing licences believes such a condition is necessary, then it will be included. As I have said, such a condition will certainly he included in the British Telecom licence and it is the intention that a similar condition should also he included in the new licence to be issued to Mercury under the Bill.

Having regard to the vast range of possible licences, I would suggest to your Lordships that this is an appropriate way to proceed rather than by attempting to do it in the primary legislation itself. I hope that with that explanation the noble Lord will feel able to withdraw the amendment.

Lord Bruce of Donington

I hope that the noble and learned Lord will think again. As he says, a large number of licences may be granted. As he well knows, I do not mean what he would term the key or very important licences. But the fact that an individual licence includes an arbitration clause on the lines set out here does not mean that arbitration will arise in every case. We have numerous forms of contract; for example, the RIBA contract in the building and construction industry. The number of cases that go to arbitration is very small indeed. In some agreements the Institute of Chartered Accountants is very often designated as the arbitrator. The amendment would not expose anybody to considerable trouble. I think that the condition should go in the Bill in order to ensure that this is accomplished.

The noble and learned Lord says that the provision could go into the principal licence. The difficulty is that in later stages in the Bill the director general has powers, with the Secretary of State, to amend the terms of licences. We do not know how far licences will be amended. The Secretary of State might find certain sections of the licence inconvenient to him. He might therefore decide to ask for amendment to the licence. Indeed, there are powers later in the Bill to amend licences. Is it not far better to have a moderate and innocuous clause carrying no political overtones whatsoever? I suggest that it is far more satisfactory to have the provision in the Bill for the avoidance of doubt. I do not think that it will cause any extra disputes or arbitrations. On the rare occasions when they take place, the Bill will make the position unambiguous. I should have thought that that was in everybody's interests.

Lord Campbell of Alloway

I wonder whether my noble and learned friend could possibly think again. As has been pointed out, and as indeed is quite apparent, the option to arbitrate is exercisable only at the choice of the user. This is a useful provision which could do no mischief and could conceivably do good to the consumer. I have not heard the reasons for the objections of my noble and learned friend the Minister. I have an open mind until I hear them; but it seems a reasonable proposal.

Lord Morris

I am concerned about the necessity for the amendment. The Government's intention is made quite clear in Condition 28 of the draft licence, if the draft licence is anything to go by, whereby: The licensee shall include in the standard terms and conditions an inexpensive arbitration procedure". This is extremely important. The noble Lord, Lord Bruce of Donington, and indeed the noble Lord, Lord Lloyd of Kilgerran, will recall the sandwich board man who used to parade outside the Law Courts. He was obviously a disgruntled litigant. The instruction read: "Arbitrate; don't litigate". Rumour had it that the Law Society and the Inns of Court paid his wages. They knew very well that in an arbitration there are no rules of procedure whatsoever and to the delight of all lawyers it becomes an extremely expensive operation. A great deal of care must be taken in putting a provision of this kind into statute. I am not really surprised that the noble Lord, Lord Lloyd of Kilgerran, did not speak to the amendment.

Lord Ezra

I should like to support those in favour of the amendment. If it is thought desirable to introduce it into the licence, if it is conditional and if it provides on the face of it an additional safeguard for users, it seems to me to be wholly in the spirit of the Bill and it is desirable to introduce it.

The noble Lord, Lord Morris, spoke of the possibility of arbitration being a very expensive process. If there is an argument against arbitration as such, arbitration should not figure in the licence at all. The fact that it is in the British Telecom licence, and in all probability it will be in all other major licences, seems to me to justify giving the provision the force of law as something which is desirable at any rate in these major licences.

Lord Mackay of Clashfern

In my submission to your Lordships, the way to have the provision in the major licences is that it be in the licences. The idea of putting it into the general provisions of the primary legislation would make it appear that it was appropriate for all licences. In view of what I have said about the great variety of types of licence, it would be inconceivable that one would have arbitration clauses of this kind in a good number of them. I hope that in the light of that the noble Lord, Lord Taylor of Gryfe, will feel able not to press the amendment.

Lord Taylor of Gryfe

I know that the noble and learned Lord is a very persuasive Minister and I am inclined to accept his argument. Considering the fact that already this afternoon the Government have made substantial concessions in the Bill, I do not feel like pressing the amendment to a Division, though to be honest I am not fully persuaded of the logic of the Minister's statement. If the point applies to 3,000 licences, it is unlikely that there will be 3,000 cases, but this provision is necessary in contracts and is frequently used in commerce. Quite frankly, I cannot see the undesirability of having that overall provision in the law just as a contingency. As the noble Lord, Lord Ezra, has said, if it is logical to have the provision in the licence, it seems logical to have it in the law. However, as I say, I have made my point and I do not feel like pressing it to a Division. I must consult other noble Lords who are interested in the amendment, but I should be prepared to withdraw it.

Amendment, by leave, withdrawn.

5.21 p.m.

Lord Mackay of Clashfern moved Amendment No. 72ZA: Page 9, line 9, leave out from ("of") to first ("a") in line 10 and insert ("paragraph (a) of subsection (5) above, conditions included by virtue of that paragraph in")

The noble and learned Lord said: In moving Amendment No. 70ZA, perhaps I may speak also to Amendment 70ZB: Amendment No. 70ZB: Page 9, line 11, leave out ("include conditions requiring") and insert ("require") These are technical amendments. Clause 7(5)(a) limits the content of licence conditions to matters which appear to the Secretary of State or the director to be requisite or expedient having regard to the duties under Clause 3. Clause 7(6) describes the form that conditions must take. However, it is intended that the limitation on the content of Clause 7(6) conditions should not be any different from that of conditions imposed under Clause 7(5)(a). As the Bill is drafted, that is not the case, and these amendments put the matter correctly. I beg to move.

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendment No. 70ZB:

[Printed above.]

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendment No. 70A: Page 9, line 26, leave out subsection (8).

The noble and learned Lord said: In moving Amendment No. 70A, perhaps I may speak also to Amendment No. 150B:

Amendment No. 150B: Clause 94, page 83, line 30, at end insert— ("( ) For the purposes of any licence granted, approval given or order made under this Act any description or class may be framed by reference to any circumstances whatsoever.") These are tidying up amendments and I believe that it would be useful to introduce them. Amendment No. 150B introduces into Clause 94 a new subsection to bring together in a single place all references to descriptions or classes being framed by reference to any circumstances whatsoever and therefore enables the earlier clauses to be reduced in size. I beg to move.

On Question, amendment agreed to.

Lord Mottistone moved Amendment No. 71:

Page 9, line 30, at end insert— ("( ) Before granting a licence under this section to any telecommunication company with more than 25 per cent. of a particular market, the Secretary of State shall lay an order embodying the particulars of the proposed licence for the approval of both Houses of Parliament.").

The noble Lord said: I am very grateful to my noble friend for the remarks that he made on this amendment when we debated it earlier and I greatly appreciate the distance he moved to accommodate the principle behind my amendment. I should like to put two questions to my noble friend. First of all the noble Lord. Lord Bruce, made the point that affirmative procedure would be welcome. I think that I would support that view because there could be an occasion when the provisions of Clause 9 were about to be put into effect just as a Recess was starting and we should then find ourselves unable to handle the statutory instrument because the negative procedure would be involved. So I hope that my noble friend will give special thought to that question.

I turn to the other point which occurs to me. Elsewhere in the Bill there is provision for modifying licences. As I understand it, when the Clause 9 procedure is instigated, the order relating to the licence will be placed before both Houses of Parliament. What happens thereafter to amendments and modifications to the licence? I ask that because presumably the order under Clause 9 will not be retabled each time there is a modification. Some of the modifications might be rather important. Would there be a system to take account of that? If my noble friend does not have an immediate answer, it would be helpful to know that he is giving thought to the matter with a view possibly to returning to the Chamber with a statement at some future date. I beg to move.

Lord Cockfield

With regard to the first question raised by my noble friend, we have of course met this point on almost every single occasion upon which either this or any other Bill provides for a statutory instrument to be made, and invariably the Government have proposed the negative procedure and invariably the Opposition have proposed the affirmative procedure. The time may come when we have to fight this one out. We ourselves believe that the negative procedure is the correct procedure in a case of this kind. So far as the 28 days are concerned, perhaps I may write to my noble friend to elucidate the particular point that he raises.

On the question of the modification of licences, I would suggest that my noble friend reads very carefully the statement that I have made because the point that he now raises was in fact covered in that statement. A very careful regime is set out in Clauses 12 to 15 of the Bill, which deal with the procedure to be adopted in the case of modifications. It is important to make the point that the Secretary of State does not come into that procedure. The modifications may be made by the director by agreement with the licensee, but, if there is no agreement, they must be referred to the Monopolies Commission, and the Bill then goes on to provide that a recommendation by the Monopolies Commission must be carried out by the director. So we believe that we have that point properly tied up. However, if after he has read what I have said my noble friend wishes to come back on any other point, I shall be only too pleased to try to clarify it.

Lord Bruce of Donington

The noble Lord has shown a most constructive attitude towards this amendment and the earlier one which I had the honour of moving on behalf of myself and my noble friends. The noble Lord touched on the question of modifications and it would be most helpful to the Committee if he could deal with a situation where the licence modifies itself in the passage of time.

I have in mind, for example, Condition 24, which refers to the most important RPI minus X formula, which has been sold to the general public very largely as being one of the reassurances that the Government have no evil intention in regard to the consumer. It will be observed that in Condition 24.1 the RPI minus X percentage is due to expire on 31st July 1989. That has nowhere been explained in the political observations made not only by noble Lords opposite, but also by Members in another place. If any fortification of that point is required, I would say that the noble Lord will doubtless be well aware of the letter which Mr. Baker contributed in October last to the Economist, in which he made no mention of this limitation. Even though the public may to some extent have severe misgivings, which I am sure is the case, they have been partially reassured by the RPI minus X percentage factor by which charges are prevented from rising by more than a certain percentage in relation to the retail price index. What the public have not been told, and what they must be told, is that this undertaking applies for five years only.

I wish to ask the noble Lord how this situation is dealt with vis-à-vis parliamentary control. Here, in Condition 24.1, is a licence that modifies itself by excluding the provisions of its own clause after a period of time. How will Parliament take control of that? Perhaps the noble Lord will be able to reassure the House, and I am sure the country, by saying that, as this is only a draft licence and not yet in its final form, the time limitation, when it comes to the final form, will he eliminated. If the noble Lord can say that, we shall all be reassured and even happier than we have been made by the noble Lord on a number of other matters on which he has been most constructive this afternoon.

Lord Cockfield

The noble Lord is entirely correct in so far as he says that the RPI minus X formula is written in for a period of five years. This, I understood, was fully known. We would hope that, at the end of that period, competition would have developed in such a way that the formula was no longer necessary. But the Bill contains provisions to deal with such a contingency. The director is put in with a duty—it is important to stress this—to protect, inter alia, the interests of consumers. If, therefore, he felt, in pursuance of his duty, there should be some continuation of the RPI minus X formula, then it would be his duty to suggest a modification of the licence procedure accordingly. If the licensee refuses to agree, the next provision comes into effect; namely, Clause 13 of the Bill which we shall be discussing in due course. If the licensee refuses to agree, the director may then refer the matter to the Monopolies and Mergers Commission. If the commission comes to the conclusion that some such provision should be continued or inserted in the licence and recommends to that effect, then, under Clause 15, the director shall make such modifications as appear to him requisite for the purpose of remedying the adverse effects specified in the report. I think, therefore, that we have dealt with this contingency very fully.

Lord Mottistone

Once again, I thank my noble friend for his great concession. I beg leave to withdraw the amendment.

Lord Weinstock

In view of the earlier tenor of discussion in Committee, I have been agreeably surprised by the atmosphere of light and constructiveness that has pervaded the Committee's deliberations today. I hope that your Lordships will grant me indulgence in that my lack of experience in parliamentary affairs does not leave me entirely clear whether the assurance given by the noble Lord, Lord Cockfield, means that the licence will be laid before Parliament and will be discussed and approved by Parliament before it becomes effective and that the terms of the licence will not be settled between BT and the Secretary of State in any way that will affect the placing of shares in British Telecommunications plc until that has happened.

Amendment, by leave, withdrawn.

[Amendment No. 72 not moved.]

On Question, Whether Clause 7, as amended, shall be agreed to?

Lord Bruce of Donington

I speak on clause stand part if only to give the noble Lord an opportunity of replying to the point put by the noble Lord, Lord Weinstock. The noble Lord, Lord Weinstock, may not have been aware of the precise terms of the debate in which the point of the earlier amendment in the name of myself and my noble friends was concluded.

There is another point that I should like the noble Lord to explain. If the licence of British Telecom was incorporated in the Bill, it is the position, according to my understanding, that the Bill, being in favour of a specific institution, would automatically be made into a hybrid. I should like confirmation formally on that point. Otherwise, there are reasons why the licence, before it is granted, should be subject to Parliamentary debate. I believe that the assurance so far given by the noble Lord amounts to the fact that on Report stage an amendment will be introduced that will result in the licence to BT being debated when it is finalised and put formally to the House for confirmation. So there will be some debate on it even though, by its particular structure, the House will not be able to amend it. Perhaps the noble Lord will confirm that.

Lord Cockfield

May I first reply to the noble Lord, Lord Weinstock. I would ask the noble Lord to read the statement that I made. This is a very complex and difficult matter. The statement was very carefully considered. The short answer to his point is that the licence, which will be made at the same time as the order, is, in its final form, a signed licence. That is essential if we are to meet a criticism that the Secretary of State might alter the terms of the licence between the time that Parliament saw it and the time that it was granted. If Parliament does not like the licence in the form that it has been granted, it then votes against the statutory order. If it strikes down the statutory order, then de facto, not de jure, it strikes down the licence as well. You have therefore this complete flexibility which means that all the points that have been raised are met. It is because the legal position is such an intricate one that I would ask the noble Lord to read the statement that I have made. If there is any point on which he feels that further elucidation is required I would be glad to give it.

On the point of hybridity, this matter, as the noble Lord, Lord Bruce, will be well aware, is one of great complexity. I think that I am not wrong in saying that a ruling on this point is more a matter for the House authorities than for me. Nevertheless, we were acutely aware of the risks of hybridity. That is why we proceeded by taking Clause 9 as the basis. Clause 9 relates to a class or group. I endeavoured in my statement to indicate the people who were likely to be within that class or group. All of us know who the important ones are going to be. However, because it is a class or group covered by a clause in the Bill, it does not get into difficulties on the hybridity point.

Lord Morris

Before we leave Clause 7, I wish only to draw attention to the penultimate word on page 8 in subsection (5)(b). I feel sure that officials have picked up this mis-spelling although I will be rather sad to see it go as it conjures up a delightful picture of the Secretary of State considering fees in a most exotic and aromatic atmosphere.

Lord Cockfield

I am sure that the point has been noted and will he dealt with in the appropriate fashion.

Clause 7, as amended, agreed to.

[Amendment No. 73 not moved.]

5.40 p.m.

Lord Campbell of Alloway moved Amendment No. 73A: Alter Clause 7, insert the following new clause:

("Procedural measures of safeguard.

.—(1) A decision to grant, vary, or refuse a licence under the provisions of this Act or of the Cable and Broadcasting Act 1984 shall not be made unless and until—

  1. (a) consultation shall have ensued between the Director and the Cable Authority;
  2. (b) written observations as to terms and conditions of grant, variation, or grounds of proposed refusal shall have been exchanged between the Director and the Cable Authority;
  3. (c) a copy of such written observations shall have been supplied to the applicant; and
  4. (d) the applicant shall have been afforded an opportunity of making written and oral representations on such observations in support of his application.

(2) The decision mentioned in subsection (1) above shall be a reasoned decision in writing.").

The noble Lord said: I beg to move the new clause, Amendment No. 73A, which stands in the name of the noble Lady, Lady Saltoun, my noble friend Lord Mottistone, the noble Lord, Lord Spens, and myself. This amendment is not concerned in any way with designation under Clause 8 to which, as I understand it, my noble friend the Minister intends to introduce an amendment on Report. This amendment is concerned with something quite different.

The origin of the clause was in Amendment No. 108B of the Cable and Broadcasting Bill, and its sister amendment—Amendment No. 73—to this Bill. During the Committee stage the amendment, in its original form, was found by the noble Lord, Lord Mishcon, in particular, to be open to three objections. The first was that the drafting was too detailed. The second was that the drafting could involve possible disclosures of confidential documents and legal arguments. The third objection was that the full review procedure of such a decision was not appropriate.

I took full note of those objections and I am indebted to the noble Lord for his reasoned analysis which appears at cols. 838 and 839 of the Official Report for 2nd February. I have sought to defer to the reasoning of his analysis in drafting Amendment No. 73A which I move before your Lordships at this time, it being in the same terms—and this is important—as the sister amendment already tabled for Report on the Cable and Broadcasting Bill.

To use the words and the concept (if I may borrow them) of the noble Lord, Lord Misheon, I have tried to secure that all applicants for licences have a fair deal; to secure a minimum requirement within the basic principles of natural justice; and to provide a safeguard against abuse of administrative discretion. There must surely be consultation between these two bodies before the grant, the variation or the refusal of a licence by either. Of course, I take on board the fact that variation is expressly covered by Clauses 12 to 15.

However, that, on an analysis in depth—in which I shall certainly not seek to indulge in opening this amendment—is hardly sufficient. It is hardly sufficient because in any event an applicant should be entitled to know the provisional objections which he has to face after consultation between these two bodies has ensued. The applicant must be entitled to make representations in support of his application and he must be entitled to a reasoned decision which must be handed down. It is suggested that such are the minimum procedural measures of safeguard and that is precisely what this and its sister amendment seek to achieve—minimum procedural measures of safeguard requisite to reflect the requirements of natural justice and to secure a fair deal for all applicants. On the previous occasion at the Committee stage of the Cable and Broadcasting Bill, the noble Lord, Lord Harris of Greenwich, strongly supported this concept and again I acknowledge my indebtedness to him for his support.

In conclusion, were this amendment to be adopted it will only be possible for the courts to interfere with the licensing decision on grounds of want of due administration in the exercise of the general supervisory jurisdiction which the High Court exercises over all inferior tribunals. There can be no question under this amendment of the court substituting its own decision for that of the licensing authority. There is to be no full review; there is to be no appeal, and there is to be no hearing de novo. But the absolute discretion of the Executive will be mitigated by the provisions of this amendment which require compliance with natural justice and the handing down of a reasoned decision. If this is done, then the courts will have no jurisdiction, indeed no reason to interfere. This is put forward as a minimum safeguard. On behalf of the other noble Lords and the noble Lady whose names are associated with this amendment. I beg to move.

Lady Saltoun

The object of this amendment is to bridge the gap which yawns between Oftel and the Cable Authority. In view of the fact that different Government departments are not noted for cooperating with one another—to put it mildly—and that with both present and future developments such as Prestel, telebanking and teleshopping, cable and telecommunications are inextricably entwined, it is essential, whether the Government like it or not, that the duty of Oftel and the Cable Authority to cooperate should be clearly written into both this Bill and the Cable and Broadcasting Bill, because ministerial assurances, however sincere, have no legal force. Moreover, I believe that the bridging of the gap between Oftel and the Cable Authority will be welcomed by British Telecom who, because of the interplay between the two technologies, are not at all happy with the proposed dichotomy.

Earl De La Warr

I am extremely grateful to my noble friend Lord Campbell of Alloway for moving this amendment. Before I talk to it, I must declare my interest as a director of one of the new cable companies. I drew attention to the question of dichotomy of control as long ago as the debate on the cable White Paper in July, and I have talked to it whenever appropriate ever since.

The cable operators—both the present ones and those to come—are extremely concerned about the fact that this new, high-risk industry is to be controlled under two separate Acts of Parliament and administered by two separate authorities which will be under the aegis of two separate departments of state. I believe, with them, that, not only at the granting of the licence but right throughout the length of the cable operators' tenure, there is a danger of muddle.

The noble Lady, Lady Saltoun, referred to the fact that there was not always agreement between the two departments concerned. I do not want to go into the history of the matter, but when it became clear that this new industry was to be thus controlled, it immediately became as clear that there must be a statutory linkage between the two departments. Let me give your Lordships an example. Both Bills require that before licences are issued—the one by the Cable Authority and the other by Oftel—there shall be consultation and the receipt of representations from local authorities and from the public. Will these two authorities, which are quite distinct from each other, consult together? Will they go to the public together and present the case, and together receive representations? Of course, in all good sense they must.

However, like my noble friend and the noble Lady, I am deeply concerned to make sure that the two authorities work together, and I shall remain concerned until something is included in both Bills which links them together by statute. I do not ask my noble friend to take exactly the wording which appears in this amendment and which will, as he says, appear in exactly the same form in an amendment to the cable Bill. I do not want to hear detailed comments about exactly how we have dealt with it, although I believe that my noble friend has it exactly right.

I want an assurance from the Government that they have taken the point of the statutory need for consultation—one between the other, as equals—and that they will accept an amendment of this type, embodying all these principles, so that, when we come to the other Bill, we may see the two running alongside each other. That will go a very long way to mitigate the inherent difficulties that the industry must face in having to deal with two departments. Anything less than that will leave us very worried and will leave our supporters in this high-risk industry much less willing than they would otherwise have been to support this brave new experiment.

Lord Milverton

I should like to support my noble friend's amendment and I hope that Her Majesty's Government will be able to accept it or, as my noble friend Lord De La Warr has just said, give us an assurance that the principles behind it will be included in the Bill. I hope that the Government will either accept my noble friend's amendment or give an assurance that the principles behind it will be brought into the Bill.

Lord Howard of Henderskelfe

Like the noble Earl, I do not trust assurances. Governments change, different parties come to power, and the assurances of one Government are as nothing to the next. We are already in a thorough organisational muddle over cable. This has recently been enhanced by the transfer of the radio regulatory department—which one might think has nothing to do with cable whatever but which, in fact, does—from the Home Office to the department. At times one is tempted to ask: is this a private fight or can anyone else join in?

I believe that the various forms of consultation which are to be pursued in the future must be laid down very strictly in the Bill, because if they are not, there will be the muddle at the edges which some people erroneously think is the genius of British democracy, and I believe that we shall he asking for trouble in the future. This is not an easy Bill to understand; nor is the Cable and Broadcasting Bill. Let us do our best to ensure that with identical words in both Bills relating to consultation, there is no room for doubt whatever.

5.55 p.m.

Lord Mackay of Clashfern

Perhaps I may deal with the first aspect of the amendment—that is to say, consultation between the director and the Cable Authority—and then come to the more detailed aspects of it later. First, may I start with what is perhaps a truism, but nevertheless an important one. Cable systems are telecommunication systems in just the same way as is the telephone network. They are no different from other broad-band systems and the only reason that they have become generally known as cable systems is that it is proposed to send over them cable programme services, defined in both Clause 54 of the Bill and Clause 2 of the cable Bill.

In fact local cable telecom systems have an importance greater than simply the entertainment services that they will provide. They are expected to develop into major local telecom systems which in due course could come to rival the British Telecom local network. The Government have made it clear that they also wish them to offer services quite different from what we have defined as cable programme services. For example, the applicants for the pilot cable licences will be required to indicate what interactive services they would provide—services such as telebanking, teleshopping, and so on. Some applicants have also outlined their plans for two-way telecommunication services, including the provision of voice telephony services.

I hope that I have explained that the licensing of a cable telecommunication system involves much wider considerations than simply what I shall term, for the sake of brevity, "broadcasting considerations". Nor are the considerations simply those of setting the technical standards. There are vital economic and commercial considerations to be taken into account as well as the need to protect the physical requirement. These matters are not the concern of the Cable Authority. This is why the two licensing functions—that under this Bill and that under the cable Bill—are distinct.

Quite simply, there are different factors which are relevant to the issue of each licence which grants permission for different activities. These different factors and considerations are clearly set out in the two Bills. Under this Bill, in deciding whether or not to grant a licence, the Secretary of State will be bound by the duties set out in Clause 3. These we have already discussed and they represent the national telecommunications objectives. Similarly, in deciding whether to grant a cable programme licence, the Cable Authority must also have regard to statutory criteria set out in Clause 6 of the cable Bill.

As far as the running of a telecommunications system is concerned, the primary licensing authority is the Secretary of State. This is because the Government consider that telecommunications is too important for licensing to he given to an authority not directly responsible to Parliament. Of course, the Secretary of State may delegate this licensing function to Oftel, but he does not intend to do so in respect of important licences, and this includes those for wide-band cable telecommunications systems.

So far as cable programme services are concerned, the primary concern is the content of the messages that are sent, and the Government believe it right that judgments on such matters should not be taken by the Secretary of State but by an independent authority. This aspect of the amendment which we are considering has two aims. The first is to require the Secretary of State to consult with the Cable Authority before he issues a licence; and the second is to require him to take into account the Cable Authority's views on both the terms of the licence and how he is to interpret his Clause 3 duties. It may be more convenient if I take the second aim first because I think it is more easily dealt with.

I hope that I have shown your Lordships that there are different criteria and considerations which are relevant to the grant of each licence. Quite simply, matters such as the content of cable programmes, their quality and their origin are not relevant to the consideration of whether or not a telecommunications licence is to be granted. What is important in this connection is the duties in Clause 3. To require the Secretary of State to take account of the opinions of the Cable Authority would, in effect, mean that the appointed Cable Authority would be in a position to suggest to the Secretary of State, who is responsible to Parliament, how he should exercise his powers in relation to peforming the duties that Parliament has set upon him under Clause 3. In our view, it is for the Secretary of State and the director to make judgments in this area, guided by Clause 3, just as it is for the Cable Authority alone to make judgments in its area of responsibility.

However, this is not to say that both licensing authorities will operate without any regard for the other. This would not be a sensible way to proceed, and I am sure there will be close co-ordination. It is this close co-ordination that I think my noble friends and others who have supported this amendment are seeking to achieve by imposing a statutory requirement on the Secretary of State. As my noble friend Lord Elton explained in the earlier debate on the Cable Bill, such a requirement is unnecessary because there is already a requirement on the Cable Authority to consult. Noble Lords may well ask, "Even if it is unnecessary, what is the harm?" I shall try to explain why a requirement in this form would be inappropriate.

First of all, many telecommunication systems are capable of conveying cable programmes, not just those being run solely for the purpose of providing programme services: but the Cable Authority will have no interest in these systems, so it would be quite wrong for the authority to be consulted when these systems are licensed under the Telecommunications Bill.

Secondly, precisely because telecommunication systems can be run otherwise than for the provision of cable programmes, it is quite possible that when the runner of this system applies for a licence to the Secretary of State he does not intend that cable programmes requiring a Cable Authority licence shall be provided over it. This may come much later. Therefore, a requirement to consult at the initial licensing stage would be inappropriate. The only cases where a requirement to consult is sensible are those where a system has to be installed and operated for the primary purpose of providing cable programmes, but in this case there is already a requirement to consult through the obligation on the Cable Authority. I hope that I have said enough to convince your Lordships that a blanket requirement of the Secretary of State to consult in relation to each telecommunication licence would he unworkable and inappropriate.

Nevertheless, I am aware of the views of noble Lords and I accept that there will be merit in the Secretary of State, the director and the Cable Authority keeping in close touch about developments within each other's sphere of responsibility. Therefore, I undertake to consider further with my right honourable friends this aspect of the amendment to see whether we can devise an appropriate requirement which should be placed on the Secretary of State and the director for consultation.

I now turn to the other aspect of this amendment: the requirement to send written representation to the applicant and to enable him to make representations on them. I do not believe this is either necessary or desirable. First, in the case of variation of a licence, this Bill already provides for notice to be given by the director of any variations he proposes to make, and for representations to be made which the director must consider. These are in Clauses 12 and 15, and my noble friend Lord Campbell of Alloway has already referred to that aspect.

As regards the issue of licences, I do not think that giving written observations to the applicant and allowing him to make representations is an appropriate way to proceed. First of all, it would be quite impracticable in view of the large numbers of licences—perhaps 3,000—to be granted under the Bill. The licensing process would probably grind to a halt under the weight of the bureaucracy created. This would be a long way from the streamlined and efficient licensing procedures that the Government are trying to achieve under both this Bill and the cable Bill. It is not in the interests of either the telecom or the cable industry to have a highly bureaucratic licensing regime, but there are also objections in principle.

Where there are competing applications for a particular area, it will generally be the case that only one will be selected. Applicants therefore may be rejected for no reason other than that there was another application considered to be superior in the particular circumstances that I figured. To give each applicant access to written observations and associated correspondence would result in the licensing authorities having no alternative but to supply details of the commercial arrangements of the competitors. This is the point that the noble Lord, Lord Mishcon, made in relation to the same consideration when it was being discussed in connection with the cable Bill. The applicants would then be at liberty to make representations not just on their own case, but on those of the competing applicants; but in each case the duty which lies upon the Secretary of State and the director will be the duty imposed on him under Clause 3. If the Secretary of State and the director do not perform that duty of course they can be challenged in the courts in the normal way. In cases of maladministration it can be taken up with the ombudsman, whose ambit is extended to include the director by Schedule 1 of this Bill.

I hope in the light of the undertaking I have been able to give to your Lordships, my noble friend will feel able to withdraw this amendment, which we have certainly considered very carefully.

6.6 p.m.

Earl De La Warr

Before the debate comes to an end, may I say that I find myself very confused by much that the noble and learned Lord has said, because for about nine-tenths of his speech he did not appear even to have taken the point about what it is we were asking for. He referred constantly to the Secretary of State. We are asking for it to be written into statute that Oftel and the Cable Authority consult each other on the granting or modification of any licence. From hearing the noble and learned Lord, it seems that between us we have failed to make our point.

Here is a cable consortium which is able to lay the wire, it is able to put down, if you like, television programmes; it is able to produce the interactive service that he referred to. It is all one body. I must make the point quite clear that what is splitting this into two is the fact that the two great departments of state found themselves unable to come to any accommodation. The reason they found themselves unable to come to any accommodation—and I hope I am not teaching my grandmother to suck eggs because I must tell my noble friend a little history—is because for the past five years an argument has been raging between the Home Office and what we call the Ministry of Technology as to who should control broadcasting. There have been some very weighty arguments by senior statesmen of great weight. They have fought each other along with their civil servants and they have used—perhaps I should not refer to knives in this Committee. Right in the middle of this argument, which was nearly lost by the Home Office some 3J, years ago, and to my certain knowledge was nearly lost by them last year, cable comes in to complicate this argument still further.

They have therefore arrived at a political compromise and they have done so by the most extraordinary means. My noble friend would need to refer to the wording on the notes to the cable Bill in order to see how they have done it. They have said: For the purposes of this clause it must be accepted that the act of sending and the act of conveying are conceptually distinct". That is how the two departments have got out of their dilemma.

Now, for my noble friend to take the line he has and pretend everything is perfect, and that it can be assumed by cable operators—whether they be operating already or whether they be applicants—that the way will be made easy because automatically these two authorities, bossed by these two warring departments, will consult with each other, is simply to take an attitude which I can only describe as living in cloud cuckooland. It is for this reason that we are pretty well convinced that the cable industry is unlikely to get off the ground as the Government as a whole intended —not just one department—if we do not get the assurance from the Government that these two authorities will have to consult with each other.

My noble and learned friend referred to the fact that in the Cable and Broadcasting Bill, I think under Clause 5(4), the Cable Authority was required to consult with Oftel along with local authorities. It was put in as almost a throwaway in one line. There is nothing in the Telecommunications Bill which says the same thing; nothing at all. It is what I called in another debate a universal blank. My noble and learned friend has talked as though he did not appreciate any of these things about which we are so anxious on behalf of a brand new industry.

At the end he has given what he regards as some sort of an undertaking to take a point which, by his speech, he clearly had not taken. He seems to expect us now to be satisfied. Of course we are not satisfied. We shall no doubt study what he has said, and I must leave the matter there to my noble friend, who will doubtless give the Committee the benefit of his views on what has been said.

Lord Ardwick

I have a good deal of sympathy with the words that the noble Earl has just uttered, and a good deal of sympathy too with the first part of the amendment. It seems to me obvious that there have to he legislative arrangements for collaboration. In the Cable and Broadcasting Bill these arrangements are most perfunctory. They have to be made specific. I hope that when the noble and learned Lord and his colleagues are looking at this—if they look at this question again—they will refer back to the White Paper because they have gone away from it in their answers this afternoon.

Lord Campbell of Alloway

I should like to thank all noble Lords, who have spoken from all sides of this Committee, who have shared my concern. I have absolutely no interest whatever to declare other than that of an ordinary lawyer who wants to see fair play done, and reasonable protection for the Queen's subjects in a statute. In that vein, I should like to say in particular to my noble and learned friend, speaking only for myself, that I am terrified not only at what I see in this Bill but at what I understand his attitude, with his ministerial hat on, appears to be.

On the first issue, the issue of consultation, my noble and learned friend produces a most interesting and most erudite deployment of the many considerations involved, entirely missing what I understood to be my main point. Why? With respect, I think it is because—and this shows this curious defect, this perishable thread, which the Ministry do not appreciate—the noble Lord, Lord Elton, on 2nd February at column 817, expressly recognised that it was requisite to have a degree of commercial compatibility between the two sets of licences. But my noble and learned friend today does not recognise that necessity. Hence the first aspect of genuine concern, without seeking to make too much of it or to repeat myself, but just to say that I am sure that from the Front Bench there will be close co-ordination, but what on earth does that mean? What safeguard does that give the subject? What is its value? None.

On the second point, which is that it is neither necessary nor desirable in any way to seek to curb the absolute exercise of discretion by the ministry, I for one will have none of it. I do not believe in absolute administrative discretion. Anyone who has been subjected to it either personally (which fortunately is not my case) or professionally (which often is) would have none of it, either. I once more ask my noble and learned friend to think again. This is not a tease of the Front Bench; this is not a political stance; it is an expression of genuine and real concern.

To talk about the ombudsman is wholly inappropriate, but time prevents me from saying why on this occasion. It is essential that the applicant should have a fair deal, and these are the minimum requirements by which he can be provided with a fair deal. In the battle of the civil servants to which my noble friend Lord De La Warr referred, what does it matter who are the Roundheads and who are the Cavaliers? We have now the conceptual distinction of the indivisible, which satisfies both sides.

This distinction is the distinction between the desire or facility to send a message and its actual conveyance by cable, and in that way everybody appears to be satisfied. But I hope not. This gap to which the noble Lady, Lady Saltoun, has spoken is real. It ought to be faced; it ought to be bridged; it ought to be dealt with sensibly. There should be, as the noble Lord, Lord Ardwick, has just observed, some form of mandatory statutory consultation between these two bodies. Those were not his terms, but I hope I do justice to his thought. Indeed, there must be this other aspect of natural justice.

I find myself in a difficulty. I would really wish, my concern being such, to divide your Lordships' Committee, but I do not think that would be prudent because it gives my noble and learned friend no fair opportunity to consider whether the concern expressed by your Lordships from all sides of the Committee is reasonable, is fair, and whether it ought to be met. It is in that vein that I would wish to give the Front Bench, my noble and learned friend the Minister, a further opportunity. But if that opportunity is not taken I reserve the right, with the other noble Lords who supported this amendment by tabling their names to it and who have spoken tonight in support, to bring this matter again before your Lordships on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 [Special provisions applicable to certain licences]:

The Deputy Chairman of Committees (Baroness Wootton of Abinger)

I have to point out to your Lordships that if Amendment No. 74 is agreed to I shall not be able to call Amendments No. 74A, No. 75 or No. 75ZA.

[Amendment No. 74 not moved.]

6.20 p.m.

Lord Morris moved Amendment No. 74A: Page 10, line 8, after ("system") insert ("of any other systems licensed under section 7 above and").

The noble Lord said: On behalf of my noble friends Lord Trenchard and Lord Mottistone I move this amendment, which stands in my name as well. The purpose of the amendment is solely probing. In so moving, I wish to point out at the outset that it is not so much that I ask for a detailed statement on policy from my noble friends on the Front Bench, for I believe that would be quite wrong. However, if they determine that they would prefer to let me and my noble friends know in writing that we may have some grain of comfort in this regard, that would be of great help.

As your Lordships are well aware, Clause 8 places a duty on the director to publish, in certain instances, the fact that he proposes to grant a licence by virtue of Clause 7, the reasons why he proposes to grant the licence and, in so doing, he shall give enough time on the granting of this licence for consideration of any representations or objections to that licence.

To put it in the vernacular, this will only apply to those licences which, for want of a better term, may be called the big licences. That is my understanding of the clause. That Her Majesty's Government, in tabling the Bill, are determined to grant licences to legal persons to connect to any system is quite clear as we know from the powers to licence systems under Clause 7. As to the application of Clause 8, it is clear from Clause 8(1)(b) that Her Majesty's Government will, in due course, be licensing corporations to connect systems and such apparatus in the future. Still further, if one looks to that draft licence, which does not exist, at Condition 13.1 it is even clearer; namely, the Licensee"— the major licensee which we all know is the major operator of the public switched telephone network— shall … connect and keep connected to any Applicable System … any other Connectable System whenever the person running that system so requires". Indeed, he must, provide other such telecommunications services as the Operator may reasonably require to secure that such connection is effected and maintained".

My reason for tabling the amendment is my concern that, by virtue of those same condition, there are considerable—to use the vernacular term—"copouts", by virtue of Conditions 13.3, 13.4 and 13.5. There will he no duty to connect any other system if that system were seen by the licensee—not by Her Majesty's Government—to impair the quality of any telecommunications service provided by the licensee.

The licensee shall have no obligation to do anything under that duty, to which I earlier referred in Condition 13.1, unless the relevant conditions and terms have been complied with". The licence goes on to spell out in detail a whole series of conditions, terms and matters that have to be complied with. In other words—I may be quite wrong about this—the old system, whereby the tempo of change lies with the major operators of the public switched telephone network, and may be controlled by them rather than by Government or an independent body, seems to have been paid service to within the conditions of a licence, although if one looks at the Bill without considering the licence, as we have heard today, that is not the case.

Lord Somers

I am sorry to interrupt the noble Lord, but surely it is in the interests of any small system to provide an interconnection because that will greatly increase its use.

Lord Morris

One would certainly have thought so, but practice in the past has not necessarily proved that. Because of the timing, a person wishing to provide a value added service to the existing network may he prepared so to do and ready to do it, but the partner who is needed to supply this service may not he ready, willing or able to provide that service.

With those remarks, I beg to move the amendment standing in my name and in the name of my noble friends.

Lord Mackay of Clashfern

This amendment raises quite an important matter in the way that my noble friend has moved it. Perhaps I could concentrate on one aspect of the matter. As I understand it and the way he has explained it, this amendment would require British Telecom to connect each and every system which was licensed under Clause 7, to take British Telecom as an example. If we were to do this the Secretary of State or the director would have to do one of two things. The first would be to write into all the licences for telecommunications systems granted under Clause 7 the rules that would have to be met, if they were to be connected to carry traffic to and from any of the public networks. This would not be right because there is an increasing number of systems which are licensed under Clause 7 but which are not connected to the public network or which serve specialist functions where connection is not wanted. There is no point in having in such telecommunications licences conditions which would make them compatible with connection to the public system. The operators of these systems clearly do not have to meet, and do not want to have to meet, unnecessary and expensive rules.

The second course would he to abandon all standards so that anyone could connect any system to the British Telecom and Mercury networks. I am sure your Lordships appreciate that that would rapidly bring about a reduction in the quality of the public telecommunications service. As a recent Which? report shows, there is wide criticism of the quality of the service which British Telecom provides and the technical advice I have been given is that the connection of systems which do not comply with standards would increase the noise on some circuits, would make many calls inaudible, would cause increasing numbers of calls to fail to get through and would cause many lines and even whole exchanges to appear to be engaged when they were not.

I feel sure that the Government share the same aims as my noble friend in connection with this amendment. We have thought about the issues carefully and we think the best course is to say to British Telecom and to public telecommunications systems' operators that the Government require them to connect other systems but that this requirement should apply only when the other systems are constructed, maintained and operated according to the rules laid down in their licences. The amendment would prevent us from writing the rules into the licences or will require us to apply the rules to all systems licensed under Clause 7; and for the reasons which I have explained this does not appear to be appropriate to achieve the aims which the amendment sets out. I hope that in the light of this explanation my noble friend will feel able to withdraw the amendment.

Lord Morris

I am grateful to my noble and learned friend the Lord Advocate for his explanation. I accept entirely from what he has said that the amendment is highly defective, not only in its position in the Bill but no doubt in its wording as well; but I made it clear at the outset that it was a probing amendment. If, between the two stages of the Bill, he could give me some assurance as to the fears of many with regard to the intent of Her Majesty's Government over encouraging as hard as possible the connection to any licensee's network of value added services and encouraging this position, I would he very much obliged to my noble and learned friend. I beg leave to withdraw—

Lord Torphichen

Before the amendment is withdrawn, may I ask my noble and learned friend the Lord Advocate whether the advice that he has had concerning attachments choking up the system and leaving extensions apparently engaged referred to illegal connection and apparatus? Or was the reference to the connection of some legally allowed apparatus and its misuse?

Lord Mackay of Clashfern

I was referring to the technical incompatibility of the one system with the other. The point that I am making is that if you allowed a complete free-for-all you would have a situation where people might attempt to interconnect incompatible systems. On the other hand, if you wanted to permit interconnection you would have to lay down the correct technical standards; but you would not wish to impose these technical standards on systems which do not want to interconnect. The imposition of the standards and the desire to interconnect require themselves to be properly related (I was about to say "connected"). You must relate them properly. That is the point I was seeking to make.

Lord Bruce of Donington

I sincerely hope that the noble and learned Lord will not be in a position to give his noble friend Lord Morris the assurance that he requires. Otherwise, we on this side of the Committee will feel constrained to oppose the amendment.

Lord Morris

I do not think it matters. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.34 p.m.

Lord Mottistone moved Amendment No. 75:

Page 10, line 20, leave out ("and") and insert— ("( ) to provide the connections in paragraph (b) above at an interconnection level that is appropriate to the needs of the person or persons in paragraph (d) above and fully automatic where requested and under fair and reasonable contract conditions: and").

The noble Lord said: I have been asked to move this amendment on behalf of the noble Earl, Lord Halsbury. The terms "preference- and "discrimination" in Clause 8(1)(d) are relative to the service provided to others and therefore may not apply in all cases. It has not been unknown (and can easily be imagined) that a monopoly carrier forced by statute to connect a competing system to its own system, might find it more convenient to provide that connection at a lower standard or at a lower grade of service than the competing network requires; or to make the terms and conditions of the connection very unfavourable. In this connection it must be understood that the systems to be connected will range from Mercury at the big end, so to speak, to a small private exchange with only two exchange lines which might not be purchased from British Telecom. The purpose of this amendment is to provide positive protection for the applicant system against a reluctant monopoly if this becomes necessary. I beg to move.

Lord Bruce of Donington

I trust that, when the noble Lord replies to this amendment, he will bear in mind his observations about needs which are incorporated in the amendment and his reaction to needs when it came to consider early amendments to Clause 3 which referred to the needs of people as distinct from the demand.

Lord Mackay of Clashfern

Obviously, I should have regard to what was said before about needs in what I am now going to say. So far as this amendment is concerned, and as my noble friend has explained the amendment, the Government share my noble friend's objectives. I would wish to explain briefly how we intend to achieve them. The Government have already set out their policy on high-level interconnect. Condition 13 of the draft British Telecommunications licence lays down the principles on which the Government intend interconnect to take place. Our aims were underlined on 17th November 1983, when my right honourable friend the Minister of State for Industry and Information Technology said in another place: We intend any person connected to any public telecommunications system to be able to call any person connected to any other public telecommunications system. That is our firm aim. I should like your Lordships to be in no doubt that we intend not only to achieve this but also to achieve it as soon as this Bill is enacted and gives us the necessary powers.

I should also say that much has already been achieved on the road to interconnection. Your Lordships will know that there is a full automatic dialled connection between British Telecom and the Hull system and between British Telecom and the host of private branch systems in offices and factories throughout the country. There is also a low level of interconnection between British Telecom and the Mercury system: but I would ask your Lordships to excuse me from dealing with the detail of this subject because of the present pending litigation. Air Call has also secured arrangements for the automatic connection of its radio paging system to British Telecom. Arrangements for the automatic interconnection of its radio message handling system with British Telecom are being delayed by the lack of agreed technical arrangements for such interconnect and by lack of agreement on charging protocols et cetera. But the principle of automatic dialled interconnect between private mobile radios and the British Telecom systems is, I understand, accepted by all concerned.

We have drafted this Bill not only to ensure that dialled high-level interconnect does take place but also to ensure that the Secretary of State and the director have no alternative but to use their licensing enforcement powers to achieve this objective. This is achieved, we believe, by Clauses 3, 4 and 7 as drafted. Clause 3(1)(a) lays down that it is the duty of the Secretary of State and the director to exercise their functions in the manner they think best calculated to secure that there are provided such telecommunication services as satisfy all reasonable demands. There can be no doubt that there is a demand for the type of interconnection I have just described, which means that the Secretary of State and the director will be obliged to exercise their functions to secure the provision of that interconnection, subject only to the limitation of what is practicable and whether their actions may damage the viability of those who provide telecommunication services generally. The Secretary of State proposes to use the powers conferred on him under Clause 7 to include what is now draft Condition 13 in the British Telecom licence.

I should like to say in conclusion that the Government do not feel it appropriate to refer to interconnection levels in the Bill. These concepts are apt to be ill-defined and relate to the existing analogue technology. I am advised that digital technology will radically alter the position and will probably render obsolete the existing concept of levels. Having said this and sought to explain the Government's commitment in the matter, I hope that the noble Lord will feel able to withdraw his amendment.

Lord Mottistone

I thank my noble friend for that very full reply. I shall read it carefully, and in the meantime I beg leave to withdraw the amendment.

Lord McIntosh of Haringey

Before your Lordships give leave for the amendment to be withdrawn, apologise for intervening at this stage but I had not realised that it would be withdrawn so rapidly. When I come to read the reply of the noble and learned Lord, I hope it will not be as favourable to the noble Lord, Lord Mottistone, as the noble Lord seems to think. This is a much more serious matter than would appear from the technicalities of levels of communication. This is not the case of one telecommunications operator dealing with another on equal terms. It is a question of the way in which British Telecom deals with other licence holders, and they are by no means on equal terms.

In one sense it might he thought that the power of BT is very great under the provisions of this Bill, and I agree that is the case; but if the Government go too far along the roads being so seductively proposed by the noble Lord, Lord Mottistone, and his noble friends, the possibility is that BT will land up with all the obligations and the other operators will land up with all the advantages. That is a serious possibility if we go too far towards this amendment. There is a possibility that if British Telecom no longer has the power to control the method by which other operators connect with its own system it will be left providing the basic and not necessarily profitable system, which includes the obligation to supply residential households, for example, and the other operators will simply come in at whatever level they choose and skim offall the cream. That, as I say, is a serious possibility, as I am sure the noble Lord, Lord Mottistone, knows. Indeed, I am sure it is in his mind in moving the amendment, but it is one which will have to be resisted by the Government, and if there is any move in that direction we shall have to take a part in resisting it.

Lord Mottistone

The whole point is to get this fair. You have one vast company and a lot of little ones. Our amendment is intended to try to tip the balance not all the way but part of the way towards the smaller companies so that they have a fair and equal chance. I quite understand what the noble Lord, Lord McIntosh, has to say: he has said it many times before on other amendments. Of course this is serious, and no doubt he will say the same thing again. But the fact is that British Telecom does not really need to be cossetted: it needs to be controlled. That is where the difference lies between us: but do not let us go on and on with that argument. I again beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

6.44 p.m.

Viscount Trenchard moved Amendment No. 75ZA:

Page 10, line 28, at end insert— (";and to maintain accounting records in such a form, that the activities of the licensee which are of a similar nature to activities of other licensees, whether particular person or class of persons, to whom licences have been granted under section 7 above, are separately identifiable or separately attributable in the books of the licensee. Provided that this condition shall only apply if the licensee is in a monopoly situation; and for the purposes of this paragraph, a monopoly situation shall he as defined by sections 6 and 7 of the Fair Trading Act 1973.").

The noble Viscount said: I tabled this amendment of course before I heard the helpful statement from my noble friend in relation to Parliament's at least getting a look at the licence. I realised that to require in a Bill a form of accounting in an individual company, albeit in the accounts of a company in a very monopolistic position, was a rather exceptional thing to do. I had also taken note of Condition No. 20 in the draft licence, which requires a degree of separation of British Telecom's accounts and, indeed, businesses. But what I felt was that it did not cover the number and kind of separations that certainly a director of Oftel, I believe, would wish to see if he is to discharge his duties in ensuring fair competition. I therefore put down this amendment in the terms of maintaining accounts in a form which are of a similar nature to activities of other licensees. I had in mind not only the various parts of the networks, national and regional, and not only apparatus (which is covered in Condition 20) and the manufacture of apparatus, but the international area and, even more particularly, the value added services, which are not mentioned.

I am aware that the value of splitting accounts, when a number of overheads are arbitrarily allocated to the distinct trading operations, remains an arbitrary judgment. It is one that has to be made in the management of many large private and public enterprises. It cannot be done perfectly but it can be a big help to British Telecom itself in the management of its enterprise, and I think that is important. During Second Reading we heard certain reports on the state of accounting in British Telecom at the moment. I have already said that I think it would be a great help to the director and to Oftel. I feel that it could even be a help in relation to the flotation of British Telecom, because would-be investors are bound to want to be able to see an estimate at least of the results of each section of this huge business.

So, for all those reasons, I tabled this amendment. I have been reflecting since my noble friend made his very helpful statement in relation to the licence as a whole whether it would he adequate, and whether my noble friends would regard it as adequate, simply to request that he asks the Secretary of State, before the licence is finalised, to consider whether we have enough separation in the conditions in the licence and in particular in Condition 20, and whether it would not be appropriate to push for substantially more.

I am also aware that there are later amendments which bear on this question in relation to some parts of the industry, but it is particularly the value added services that I feel British Telecom should be required to show a trading account for, even though it is on an arbitrary basis. I beg to move.

Lord Bruce of Donington

I read through this amendment with some amazement. Your Lordships will observe that in the last four lines of the amendment it says: Provided that this condition shall only apply if the licensee is in a monopoly situation: and for the purposes of this paragraph, a monopoly situation shall he as defined by sections 6 and 7 of the Fair Trading Act 1973". The noble Viscount knows perfectly well that British Telecom will be in a private monopoly situation more or less indefinitely, unless of course the noble Viscount repudiates the undertaking given by the Prime Minister, to which I referred earlier on in the Committee stage when he may not have been there. If the noble Viscount will allow me to complete the point I am making I shall be happy to give way to him, The only competitor, according to the Prime Minister, who impinges in any way on the position of British Telecom for the foreseeable future—and I am relying upon the Prime Minister and not upon the noble Viscount—will he Mercury. That means, for all practical purposes, that this amendment is designed to ensure that the accounting records of British Telecom—I will quote the amendment and then I will give way to the noble Viscount—will be in such a form, that the activities of the licensee"— and they are the only effective licensee— which are of a similar nature to activities of other licensees, which in this case is Mercury, whether particular person or class of persons, to whom licences have been granted under section 7 above, are separately indentifiable or separately attributable in the books of the licensee. What does that really mean? The noble Viscount knows perfectly well that the accounts of British Telecom are presented by one of the most reputable firms of chartered accountants in the United Kingdom. The accounts are very easily understood. Why does the noble Viscount want further information of a character comparable to that of Mercury to he supplied by British Telecom? Why can he not put it the other way and require the accounts of Mercury to conform to the standards of British Telecom?

Viscount Trenchard

I thank the noble Lord for giving way. The competition in the basic network is, as he described it, Mercury only. The competition in apparatus, in value added services and probably in international services is quite different. The problem is as the noble Lord stated it—and I am only amazed at his amazement—namely, that British Telecom will be in an enormously strong monopolistic position for a long while to come in the basic network. It is also involved in the other areas where large numbers of firms, big and small, are also involved. Unless it separates its accounts for its businesses properly, it will be extremely hard for the director of Oftel to ensure what is and what is not a fair or unfair competitive position outside the basic network operation. It is in the interests of British Telecom itself that it should be able to justify before Oftel its pricing in these other areas. It is therefore to its advantage to be able to separate these accounts. I hope that I have satisfied the noble Lord's mind.

Lord Bruce of Donington

Yes, the noble Viscount does, in part, satisfy my mind. All I can say, as one who has had some experience in the preparation and presentation of accounts, is that I sincerely hope that the accounts of the other licensees to whom he referred are of the same high standard as those published by British Telecom.

Viscount Trenchard

The reason why I would not concern Parliament with that point is that it is not in a very strong monopolistic position. In many cases, it will have extreme difficulty in being able to get fair competition.

Lord Bruce of Donington

But is the noble Viscount aware that the auditors of British Telecom are entrusted with a very considerable responsibility? Is the noble Viscount suggesting that the accounts as audited by an extremely renowned firm of auditors, whoever they may be—I think that the present ones are probably likely to continue—will do anything other than present a true and fair view of the affairs of British Telecom as required by the Companies Act?

6.54 p.m.

Viscount Trenchard

So far as I can remember, it is not a condition of any Companies Act that accounts be kept for certain separated parts of the business. So I am not impugning any auditor about anything. I am merely pointing out that this very large public monopoly in one area of the telecommunications world will continue, as the noble Lord himself said, to be a near monopoly in a private sense, and that in that situation it is very difficult, even by accident, not to price unfairly a small section of your business which is completely lost in the total acounts of this huge enterprise. It is also extremely hard, even if you try not to do so, to avoid conditional selling.

We are speaking to an amendment on the Bill and the last thing I want to do is encourage the noble Lord to go a back to a Second Reading speech criticising the Bill as a whole. For his information, I have some sympathy with some of his criticisms, but in the Bill as written I believe that it would be an improvement, and a help to a lot of companies whom we want to see expand in this area, if the British Telecom accounts were split in the way I have mentioned, particularly in areas which are not of the main network.

Lord Bruce of Donington

I am most grateful. Would the noble Viscount, being a very fair-minded person—as I am sure from my own personal experience of him he is—support an equal insistence that Mercury, which will also be one of the licensees for a long time, shall show the precise advantage that it obtains in financial terms, so far as that is ascertainable, in battening like a leech on the whole system as established by British Telecom?

Viscount Trenchard

I must not detain the Committee but I would not suggest making that a statutory provision unless and until it had reached the strength of a monopoly position in any important part of this field. There would be the question of good management and advice, which I think the noble Lord may wish to give Mercury on how to run its accounts. But, in terms of possible abuse, I do not see the necessity for legislation until such time as a monopoly has been reached.

Lord Taylor of Gryfe

I wonder whether it is necessary to build this into the Bill. We are talking about the procedures to be carried out by a public limited company which will have a board of directors who will represent the interests of shareholders. The point that is being made, which relates to some subsequent amendments, is that there is a great danger of this company exercising that monopoly purchasing power by supporting its own additional production capacity—be it telephone instruments or whatever —and because it has a monopoly power it will be able to concentrate on purchasing within its own business, to the exclusion of other competitors.

But I should imagine that, in any company which has a subsidiary undertaking within its business and which is tempted to do some cross-subsidation, as suggested by the noble Viscount, it is not in the interests of the company, nor of the shareholders, to maintain a production unit, even if it is exercising its monopoly power, that is not producing as efficiently or as attractively as a competitor. I should have not have thought it was necessary to put this into the statute. With the protections that we have from the Office of Fair Trading against the abuse of a monopoly, I think that we have adequate protection against the kind of abuse that the noble Viscount has in mind.

Lord Mackay of Clashfern

From my noble friend's introduction, I took it that he was finding the situation a little different from what it was when the amendment was put down, in respect of what my noble friend Lord Cockfield said earlier about the chance to look at the licence before the public telecommunications system was licensed—

Viscount Trenchard

If it helps my noble and learned friend, perhaps I can speed things up and make up for a little of the time that the noble Lord, Lord Bruce, and I have used. If he were able to assure me that he would draw to the Secretary of State's attention this exchange today, and ask whether there is a possibility of the conditions in the licence—Condition No. 20 in particular—being drawn slightly differently to include the value added services, I should be prepared to withdraw the amendment today and wait upon his reply as to whether it is possible.

Lord Mackay of Clashfern

I am greatly obliged to my noble friend. I shall be very happy to draw to the attention of my right honourable friend the Secretary of State all that has been said in this exchange. There are a number of conditions in the draft licence which bear on this problem, apart from Condition 20.

Viscount Trenchard

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Mackay of Clashfern moved Amendment No. 75A: Page 10, line 36, leave out from ("shall") to ("notice") in line 37 and insert ("give").

The noble and learned Lord said: I beg to move Amendment No. 75A, and with leave I shall speak to Amendments Nos. 78A, 81A, 96C, 98A, 99A, 99D, 99K and 99M.

Amendment No. 78A: Page 10, line 47, at end insert— ("( ) A notice under subsection (3) above shall be given by publication in such mariner as the Secretary of State or the Director considers appropriate for bringing the matters to which the notice relates to the attention of persons likely to be affected by them."). Amendment No. 81A: Clause 10, page 13, line 7, leave out from ("matters") to end of line 17 and insert ("to which the notice relates to the attention of persons likely to he affected by them"). Amendment No. 96C: Clause 12, page 14, line 33, after ("appropriate") insert ("for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be affected by them"). Amendment No. 98A: Clause 13, page 16, line 6, after ("appropriate") insert ("for the purpose of bringing the reference or variation to the attention of persons likely to be affected by it"). Amendment No. 99A: Clause 15, page 19, line 17, after ("appropriate") insert ("for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be affected by them"). Amendment No. 99D: page 20, line 18, after ("appropriate") insert ("for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be affected by them"). Amendment No. 99K: page 21, line 40, after ("appropriate") insert ("for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be affected by them"). Amendment No. 99M: page 22, line 5, leave out from ("or") to ("and") in line 7 and insert ("persons likely to be affected by it"). These amendments are intended to introduce a minor improvement into the various requirements for the publication of notices under Part II of the Bill and, in so doing, to introduce consistency between the different provisions. It has always been the intention that, when licences are issued which contain conditions of the kind envisaged in Clause 8(1), when the Secretary of State is considering whether or not to apply the powers of the telecommunications code to a particular operator and when the Director General of Telecommunications proposes either licence modifications or the enforcement of particular licence conditions, there should be an opportunity for those likely to be affected by the outcome to be able to make representations.

It has been pointed out that, as drafted, some of the requirements to publish do not make it absolutely clear that publication will be in a manner appropriate for the purpose of bringing the relevant matters to the attention of those likely to be affected. We think it right therefore to bring forward these amendments. They introduce consistency between the various notification provisions; and, more important, they remove any doubt about the manner in which notices will be published. I hope that your Lordships will agree to support these modest improvements. I beg to move.

Lord McIntosh of Haringey

We entirely support the amendments.

On Question, amendment agreed to.

Lord Denham

This is probably the moment when we should have the adjournment. I am not sure how long the intervening business will take, but for the sake of those noble Lords who are interested in the Committee stage of the Telecommunications Bill may I say that we shall not resume the Committee stage before a quarter to eight. I beg to move that the House do now resume.

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

House resumed.