HL Deb 21 February 1984 vol 448 cc651-97

4.29 p.m.

House again in Committee.

Clause 47 [General functions]:

Lord Mottistone moved Amendment No. 111:

Page 43, line 30, at end insert— ("( ) It shall be the duty of the Director to administer, regulate and allocate numbering plans and access codes for public telecommunication systems.")

The noble Lord said: The noble Earl, Lord Halsbury, kindly agreed that I should move this amendment. I am delighted to see the noble Earl in his place again. I should explain to your Lordships the technical terms of this amendment. Numbering plans are plans of numbers which include the telephone numbers of ordinary citizens, private branch exchanges and, in more recent times, the sophisticated computer applications which are required by other kinds of telephone user. Ordinary numbers and access codes are accessed into all public telecommunication systems, as defined in Clause 9 of the Bill.

It is necessary for the common facilities needed by all users to be administered by an impartial body. This argument is very similar to that which I advanced in respect of Amendment No. 56 on 16th February at col. 442 with regard to frequencies. In that case, I was delighted that my noble friend Lord Glenarthur said at col. 443: We also recognise that in allocating frequencies between different types of radio service and between different users there is a need to avoid appearing to favour one above another for no good reason". My noble friend went on to say at col. 444: I should like to take this possibility away for thought and discussion with a view to tabling an amendment on Report". One of the problems about numbering plans at the moment, particularly for people with the new type of equipment, is that users are quite often told by British Telecom, who currently have the total duty of allocation, that there are not enough numbers. In many cases, that is due to the fact that, for administrative reasons, numbers are put into blocks. There is no reason to suppose that there could be many more numbers available at any one time than appears to be the case.

The main point is the question of having a common resource which may at times, perhaps, be scarce, being allocated by an impartial body. Oftel is an ideal body for that purpose, and I hope that my noble friends on the Front Bench will be able to give a similar answer to that given by my noble friend Lord Glenarthur in answer to Amendment No. 56. I beg to move.

The Countess of Mar

I wish to speak against this amendment, for I suggest that it is totally impracticable. For every telephone area, there are at least four people dealing with number allocation. It is a very complex business. The noble Lord, Lord Mottistone, does not realise—perhaps understandably—that certain numbers are allocated in blocks because of the type of equipment used. There are special relay sets for big business users, and their numbers come in blocks—and they cannot be split up. Business users are allocated a certain group of numbers to allow them to grow. The other problem with number allocation is that one quite often has a number that cannot be used, perhaps because it is a recently-ceased business number. It would not be good business practice to issue that number again to someone who is in business and who may be in competition with the person who had that number before.

Lord Mottistone

Such as the Foreign Office?

The Countess of Mar

Giving this duty to the director of Oftel, who would have a staff of 50, would be totally impracticable. I see no reason why British Telecom should not continue with the issue of numbers, with the allocation of numbers, and with the access codes—allowing it to negotiate with other companies or with other cable providers, as it does now.

Lord Lyell

My noble friend referred to helpful comments which had been made by my noble friend Lord Glenarthur at an earlier stage in our proceedings on the Bill now before us. I only hope that my noble friend Lord Mottistone will be able to bear with me while I attempt to answer the amendment he has moved.

I will stress at the outset that the Government support the general aim of the amendment moved by my noble friend. Indeed, we intend to include a condition in the BT licence, and in other licences, giving the director ultimate control over numbering arrangements. We believe the amendment to be unnecessary because the Bill as it is drafted gives the Government all the powers needed to exercise ultimate control over numbering arrangements.

The method of control suggested in the amendment—which is direct administration by the director—would be costly in terms of public service manpower and involve an unnecessary degree of interference in what are essentially commercial arrangements. So while the broad aim of the amendment is acceptable, its detailed approach gives rise to a few problems. The Government hope that British Telecom, Mercury and the cellular operators will be able to agree on such arrangements as they may wish to make, and on long-term numbering agreements for the new digital exchanges of the future.

So far as regulations are concerned, we intend to adopt the same approach we have taken regarding the interconnection of the public networks. We believe that it is right to leave to the operators the mutual negotiations which will give acceptable numbering arrangements. It is the operators—and I am sure my noble friend agrees—who have the technical expertise and a commercial interest in the outcome; so we believe that it is the operators who are more likely to get it right than the Government. But if the operators fail to agree, the Government intend the director to have powers to intervene and to specify what the national numbering arrangements should be. We intend to achieve this result by including a new condition in British Telecom's licence, and we are now discussing its precise terms with British Telecom.

I hope that I have gone some way to show why it is that, since the powers to regulate numbers are already contained in the Bill—and since the British Telecom licence will contain a new condition on numbering—I have to advise my noble friend that we cannot accept his amendment today.

Lord McIntosh of Haringey

The Government will have to make up their minds whether they are making real concessions to the noble Lord, Lord Mottistone, or whether they are cosmetic concessions which the Minister is making. Part III of the Bill is perfectly clear in its intention. It says that there is the right of appeal to the director against any abuse of the powers and responsibilities of operators. That, surely—as I thought was implied by the Minister's statement—is a clear enough defence of the rights of subscribers. It is clear enough that they have a right of appeal to the Director General of Telecommunications.

The noble Lord, Lord Lyell, has made it clear that it would be inappropriate to accept this amendment and to transfer to the director responsibility for the actual operation of the numbering plans. The noble Countess, Lady Mar, made it clear how totally impracticable that would be with a staff of 50 in Oftel. If that is the case, it would surely be equally wrong to insist on writing into British Telecom's licence a further guarantee which simply duplicates that which appears already in Part III of the Bill. The proposed amendment is simply a recipe for duplicate bureaucracy. The Minister's statement gives me no confidence that the Government are setting themselves firmly enough against such duplicate bureaucracy.

Lord Somers

I cannot help feeling that the noble Lord, Lord Lyell, missed out the one essential point in the amendment—and I am not sure that it was even mentioned by the noble Lord, Lord Mottistone. It is, that there must be a single, central authority for the allocation of numbers. Otherwise, there is likely to be confusion and overlapping between various authorities and various operators. There must be a single, central authority for the entire country.

Lord Spens

Are not the Government providing British Telecom with a very easy method of discriminating against smaller users of specialist groups of numbers? It is so easy for British Telecom to say that no numbers are available. I understand that is something which they are already doing. So I hope that the noble Lord will think again on this one.

4.40 p.m.

Lord Lyell

First of all I am very flattered to be elevated in rank; I think that the noble Lord, Lord McIntosh, was referring to me as the Minister of State, or possibly he meant the Minister in the other place. Well, I am not there yet, but I live in hope! I would stress to the noble Lord, Lord McIntosh—and indeed to the noble Lords, Lord Somers and Lord Spens—the key point of my reply. We believe that this problem of numbers and numbering and access to networks is something for the commercial interests and the operators to mutually negotiate an acceptable solution. I stress that to the noble Lord, Lord Spens. If they fail to agree, the Government intend the director to have powers to intervene and he will be the ultimate authority; he will be able to specify what the national numbering arrangements should be.

If there are problems, I hope that these will be minimised as the networks grow. I am sure even the noble Lord, Lord Spens, would agree that with advancing technology there might well be problems with numbers not being available yet to satisfy the demands. But as far as this amendment is concerned, the Government believe that it is for the commercial operators to come to an agreement. We believe they will be able to do it, but the ultimate sanction will be with the director.

Lord Spens

I understand that there are 999 million numbers which could be made available. I cannot believe that there could be any shortage of groups of numbers.

Lord Kaldor

I do not know whether the question I want to ask is pertinent to the amendment. Is there any chance of our going over to the system which exists in other countries by which the code number of a single locality is the same wherever that particular locality is telephoned from? In England, apart from larger towns, the code number varies according to whether you are ringing from London or Cambridge or Oxford or various other places. It would be a great simplification if each town or locality had one code number for the whole country.

Lord Lyell

If I may briefly reply to the noble Lord, Lord Kaldor, it is something that has always fascinated me. If I may take one example, I think what the noble Lord is seeking does work, not just in England—I say this as a Scot, and it works in Scotland too, and Northern Ireland and Wales. I am not too sure about the Republic of Ireland, but I will leave that for the moment. The noble Lord mentioned Cambridge, which I think is his home town, if I can call it that. As I understand it, if the noble Lord is ringing a number fairly near to Cambridge the code number might be a little different. But if the noble Lord is ringing my home in Scotland from Cambridge I can assure him that the number is the same code from Cambridge as it would be from London. I think these codes tend to vary in the immediate vicinity.

I have been given some more detailed advice: I am told that the numbers are wired into the exchanges and they cannot be changed cheaply. So there might be a shortage. I am advised that area codes will be possible with digital technology, but not yet. But on Lord Kaldor's point, as far as I am aware, the code numbers are the same for a given locality, but possibly not within the immediate environs of that locality.

Lord Kaldor

I do not want to hold up the proceedings, but this is not my experience, except for the code numbers for major towns which are printed in the little book which gives the trunk dialling numbers. If what the noble Lord says is correct, why it it that a different small book is produced as regards telephone numbers from each locality? I have one in Cambridge and it is quite different from the one issued in London.

Lord Lyell

If I may reply briefly, if the noble Lord looks in his Cambridge book he will find a fascinating number, which has the name of one of my noble friends: he will find Trumpington. Whether it has an exchange, I do not know. Possibly if we looked in a book at my home or in London we would find a different number from Trumpington, but this is because Trumpington or its local exchange is immediately within the Cambridge area where the noble Lord lives. I would have thought that this anomaly would not apply outwith a radius of from 15 to 20 miles or something like that. If I am wrong, perhaps we may pursue this further by letter; but it is an interesting point and I promise to take it up.

The Earl of Halsbury

My noble friend Lady Mar threw the Government a lifeline which they grasped with great speed. She pointed out that this amendment could not be carried if the staff were limited to 50. But of course 50 is not a magic number, it is only a number referred to in the preamble to the Bill as it was originally conceived. It would be a non-sequitur to say that we cannot increase it. If we assign a fresh duty to Telecom the staff to discharge that duty must be increased, too.

Lord Torphichen

I think that the point the noble Lord, Lord Kaldor, has introduced is a very valid one. The Post Office, when it designed the subscriber trunk dialling system in the 1950s, allocated two types of number, a first-class service for those in the major city areas whose codes were the same whether they were dialled from outside that area, outside the country or whatever, and those outside the major city areas, who in general end up with a telephone number which is preceded by one of three possible codes; first, a very short code for local exchanges to dial; secondly, a slightly longer code for dialling that particular exchange from anywhere in this country, usually different from the last digit of the first prefix; and, thirdly, you may find that you have yet a third prefix which people dialling from outside the country must use.

If you are running a business in competition with somebody next door to you and you are outside the major city area and your competitor is inside the major city area, as far as the telephone numbering system goes you have a second-class service. You cannot put your full telephone number on your letter heading either for people within this country or for people dialling from abroad. This is one very good reason why British Telecom should be overseen in their allocation of numbers, the fact that they so totally ruined the system when they designed it in the 1950s for subscriber trunk dialling.

Lord Mottistone

I am sure we are most grateful to those noble Lords who have introduced technicalities into this. Perhaps I could return to my noble friend the Minister's remarks. I am grateful to him for coming some way towards me in saying that the director will be the ultimate source of administration of these numbering plans and access codes. That I think satisfies the immediate point. The important thing is that there should be an impartial ultimate source. The noble Lord, Lord McIntosh, says there are parts of the Bill which allow appeal, but I think it is also necessary that there should be in the administrative sense somebody who is keeping an eye on it all to make sure that impartiality rules the day now that British Telecom is to be made part of the competitive market, albeit with too large a share of it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Spens had given notice of his intention to move Amendment No. 112:

Page 43, line 30, at end insert— ("( ) It shall be the duty of the Director to administer, regulate and allocate the use of cable and broadcasting systems for the transmission of telecommunication messages.").

The noble Lord said: The next six amendments have been put down by our liberalisation group. I think we raised all the matters covered by them during our discussion on Clause 3. We received some sympathy from Ministers over some of them and not so much over others. But I do not think it is really worth while entering into detailed discussions on them again this time. Therefore, I shall not move this amendment or the following five amendments.

[Amendment No. 112 not moved.]

[Amendments Nos. 113, 114, 115, 115A and 115AA not moved.]

Clause 47 agreed to.

Clauses 48 and 49 agreed to.

4.52 p.m.

The Countess of Mar moved Amendment No. 115B: Alter Clause 49, insert the following new clause:

("Illegal installations.

.—(1) It shall be the duty of the Director to investigate all written complaints from any public telecommunications operator of the attachment to a telecommunication system of equipment the public telecommunications operator believes is not approved for attachment under section 22 of this Act.

(2) The Director may investigate any complaints concerning the attachment of apparatus believed by the complainant not to be approved for connection to a telecommunication system under section 22 of this Act.

(3) Following investigations under subsections (1) or (2) of this section, the Director may institute criminal proceedings against the person or persons complained of.

(4) Any person who attaches to a telecommunication system any apparatus for which approval has not been granted under section 22 of this Act shall be guilty of an offence and liable—

  1. (a) on summary conviction, to a fine not exceeding the statutory maximum;
  2. (b) on conviction on indictment, to a fine.").

The noble Countess said: At present British Telecom is empowered under the telecommunications schemes, Section 12.1, to terminate service to any customer who fails to observe the provisions of the schemes under which service is provided. We have given the director a great many duties, including the issue of licences and the approval of apparatus for connection to telecommunication systems. However, the director has been left powerless to investigate any illegal attachment or, in a serious case, to take any proceedings. Since it is chiefly the operators who will be concerned about illegal attachments and who are likely to discover them in carrying out their operations, this seems to be the most sensible way to proceed.

There is nothing in the amendment that would prevent the director from investigating an illegal attachment on his own initiative or as the result of a complaint or tip-off from someone other than the operator. This is the purpose of subsection (2).

The Minister may say that there is adequate provision in the Bill to prevent the sale or advertisement of non-approved apparatus, but the British race is very ingenious. If there is no legal safeguard, there could be serious damage to, or a total breakdown of, a part or parts of the system. I beg to move.

Lord Lyell

We certainly fully understand the intention behind the amendment moved by the noble Countess, but hope that we can reassure her that the Bill already contains the safeguards that she is seeking. First of all, subsection (1) of the amendment seeks to impose a duty on the director to investigate written complaints from public telecommunication operators; but we believe that this is already covered by Clause 51, which places a duty on the director to counter any representation made to him relating to telecommunication services and apparatus. This is a wide-ranging duty, and includes complaints made by public telecommunication operators about the connection of apparatus. This new clause also seeks to make connection of unapproved apparatus a criminal offence and to give the director power to institute proceedings. But here again we believe that the Bill already contains provisions which meet what we believe are the aims of this amendment.

I should like to draw the Committee's attention to Clause 5 of the Bill, which makes it a criminal offence to connect or permit the connection of unauthorised apparatus to any licensed telecommunication system. Part 4 of the draft licence for British Telecom makes it clear that British Telecom is authorised to connect to its system only apparatus approved under Clause 22. Therefore, connection of unauthorised—that is, unapproved—apparatus will be a criminal offence under the Bill as drafted, and the director already has powers under Clause 5(7) to institute proceedings in respect of any offence under Clause 5.

It is also the Government's intention to include in the licences for the public telecommunications systems to be run by Mercury, Hull and the cellular radio companies similar provisions to those in British Telecom's draft licence authorising only the connection of apparatus approved under Clause 22.

I hope that this short explanation meets the noble Countess's concern. But there is one feature which we think is really undesirable. This new clause would make it an offence not only to connect unapproved apparatus to systems whose licences forbid it but to any telecommunication system. I do not think this would be appropriate, because in practice there will be many private telecommunication systems, including both systems exempt under Clause 6 and licensed systems, where there is no reason whatever for regulatory control over what apparatus may and may not be connected. This is why Clause 22 applies only to those systems whose licences specifically refer to it.

But this amendment would require approval of apparatus to apply to all systems, including the private systems I have mentioned, and would make a criminal offence any infringements of such rules. We do not believe it should be an offence to attaach an unapproved telephone to a private intercom system, and, indeed, I do not think that in fact this is what the noble Countess is seeking. What we want to do is to prevent unapproved apparatus from being attached to the major public systems, and I hope I have gone some way to explain how this will be achieved by the Bill as it stands.

The Countess of Mar

I thank the noble Lord the Minister for answering my worries so succinctly. It really was a probing amendment. I think he has covered everything, and I wish to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 116 not moved.]

Clause 50 agreed to.

Clause 51 [Investigation of complaints]:

Lord Bruce of Donington moved Amendment No.117: Page 47, line 1, leave out subsection (4).

The noble Lord said: The intention behind this amendment is to frustrate the Government in their desire to get rid of the Post Office Users' National Council. I am in some difficulty owing to the benevolence of the noble Lord, Lord Cockfield, yesterday, who indicated that he was going some way towards establishing an authority to advise the director. He said that he would introduce an amendment at a later stage which would incorporate his proposals, which he was not able to detail. I can quite understand the reason for that; amendments take time to formulate. They have to go through parliamentary counsel, and all the rest of it.

I think that POUNC served a very useful purpose indeed. It most certainly monitored the system as such and handled expeditiously—and, for that matter, continues to do so—complaints against the public monoply that subscribers make from time to time. Most noble Lords on all sides of the Committee regard its departure with some anxiety.

When he spoke yesterday the noble Lord, Lord Cockfield, mentioned the position of POUNC. It seemed to us that he had in mind the establishment of an authority which at any rate embraced some of the functions now carried out by POUNC. I do not know whether the noble Lord would wish to enlighten us further. I certainly should not wish to respond to his very considerate offer of yesterday by presuming to try to slap him in the face today. That would be most discourteous, and politically it would not be very sound, either. I wonder whether the noble Lord is yet in a position to give us some further information without committing himself to the text of the amendment which he himself will later propose, so that we can see whether or not it will be necessary for us to press this amendment in its present form. I beg to move.

Lord Cockfield

I entirely appreciate the point that the noble Lord, Lord Bruce of Donington, is making. I shall endeavour to table the amendments at the earliest possible date. I should think that the right course would be for the noble Lord to study the amendments after I have tabled them and if there is then any point that he wishes to raise on them, we can come back to them at the Report stage. I hope that that meets the very legitimate point that he is raising.

Lord Bruce of Donington

I am happy to accept the assurance of the noble Lord, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 51 agreed to.

Clause 52 [Power to establish advisory bodies]:

5.1 p.m.

Baroness Macleod of Borve moved Amendment No. 117A: Page 47, line 9, at end insert ("(a)")

The noble Baroness said: We now reach Clause 52, which deals with the power to establish advisory bodies. In moving Amendment No. 117AI wish at the same time also to speak to Amendments Nos. 118A, 118C, 119, 120A, 121A and 122. Amendment No. 118A: Page 47, line 10, after ("for") insert ("matters affecting") Amendment No. 118C: Page 47, line 11, at end insert ("and (b) an advisory body for matters affecting persons who are disabled or of pensionable age")

Amendment No. 119: Page 47, line 11, at end insert— ("(2A) The Director shall, as soon as practicable after the appointed day after consultation with the Secretary of State, establish an advisory body for the elderly and people with disabilities.") Amendment No. 120A: Page 47, line 13, leave out ("for any part of the United Kingdom") Amendment No. 121 A: Page 47, leave out line 16 and insert ("the part of the United Kingdom concerned or persons who are disabled or of pensionable age, as the case may require")

Amendment No. 122: Page 47, line 16, at end insert— ("( ) In establishing an advisory body under subsection (2A) above, the Director shall have regard to the desirability of having members who are familiar with the special requirements and circumstances of the elderly and people with disabilities.") These amendments relate to a request to the Minister to set up an advisory body specifically to look after the welfare and problems of the elderly and people with disabilities. The first two amendments, Nos. 117 A and 118A, are paving amendments. Like the noble Lord, Lord Bruce of Donington, I am emboldened by the words of my noble friend Lord Cockfield yesterday to ask for this matter to be included in view of the fact that the Minister's own amendment relating to small businesses is to come up later.

During the Committee stage of the Bill much has been said about these special cases, and it is I believe very obvious to all of us in all parts of your Lordships' Chamber that the Government are not only fully aware of the problems of these people, but are also very willing to help. It follows that if the Government agree to this important advisory body, it should comprise members who are familier with the special requirements and circumstances of the elderly and the disabled and who can represent them. This is provided for in Amendment No. 122.

Amendments Nos. 120A and 121A are designed to tidy up subsection (3) in order to ensure that in setting up the advisory body the director recruits people who have knowledge of circumstances in all parts of the United Kingdom, or of problems which face the disabled and those of pensionable age. Although what we are asking for is contained in Conditions 31 and 32 of the licence, we are all very anxious that the provision should be included in the Bill. Therefore, I beg to move.

Lord Cockfield

I wonder whether it would be for the convenience of the Committee if I speak not only to Amendment No. 117A, but also to the batch of related amendments, which in fact are Amendments Nos. 118A, 118C, 120A, 121AandNo. 123AA. [Amendment No. 123AA: Clause 53, page 47, line 39, after ("functions") insert ("(including, in particular, those affecting persons who are disabled or of pensionable age)"). I am happy to say that I am able to accept all these amendments of my noble friend. I think that if we accept them, two other amendments, Nos. 119 and 122, fall by the wayside. This is purely a matter of drafting.

The Government are fully committed to protecting the interests of the disabled. These amendments will further strengthen the safeguards in the Bill. They will also ensure that in addition to the disabled, the interests of the elderly—or in legal phraseology, persons of pensionable age—are looked after. Concern about this matter was expressed in the Second Reading debate.

The obligation imposed by the amendments to set up an advisory body especially for the disabled and the elderly will ensure that the director is kept fully informed of the needs and requirements of two very important groups of people. The advisory body will be required to make an annual report to the director, and this in turn will be published in the director's annual report. The positive requirement on the director to include in his own report a review of developments and activities in telecommunications in so far as they affect the disabled and the elderly is also to be welcomed.

I should like to express my appreciation of the part played by my noble friends Lady Macleod of Borve and Lady Lane-Fox in taking the initiative to improve the Bill in this way. I am sure that the amendments will meet with the universal approval of your Lordships' Committee.

On Question, amendment agreed to.

Lord Somers moved Amendment No. 118: Page 47, line 10, after ("bodies") insert ("representing users").

The noble Lord said: Speaking as a person of pensionable age, perhaps I may say that I was extremely comforted by the words of the noble Lord. In moving this amendment, which is a very simple one, I can say only that if the Government do not feel that they can accept it, I shall inevitably be driven to the conclusion that they feel that the users do not really matter very much. In regard to a body that is to be a commercial one and which will, I suppose, seek more users in order to make it flourish, such a feeling on the part of the Government would seem to represent a peculiar outlook, but I sincerely hope that the noble Lord may be able to disillusion me in that respect. I beg to move.

Lord Taylor of Gryfe

I should like to support the amendment. A subsequent amendment in my name not only encourages the participation of users as consumers of the service; it also encourages the users to become shareholders in the new company under preferential terms which would ensure a wide distribution of share ownership. However, the present amendment prefers simply that the advisory body should have consumer representation. That seems to me to be logical and I hope that unless the point is to be covered in some of the proposals that will be brought forward in connection with the consultative council which is planned, the Government will feel able to accept the amendment.

Lord Spens

I think that at this stage I can refer to my Amendment No. 121, which also asks for the advisory bodies to represent users. If we agree to Amendment No. 118B, as I hope we shall, there will be an advisory body for small businesses, but that will not cover all the users who are small in comparison with British Telecom, but large in comparison with the normal small business. I should therefore like to see this amendment carried.

Lord Lyell

I do not think that there is any difference between what we have in our minds and what the noble Lords, Lord Somers and Lord Spens, have in their minds over what we believe to be the purpose of Amendments No. 118 and 121. Both seem to us to wish to ensure that the advisory bodies established under Clause 52(2) will be concerned with consumer matters. My noble friend Lord Cockfield made clear earlier to the Committee that he accepts that this clause needs amending to strengthen the role of the national advisory bodies. In our earlier debate, I think on Amendment No. 62, my noble friend proposed two changes: first, that the national advisory bodies should be appointed not by the director but by the Secretary of State in order to emphasise their independence; and, secondly, that the terms of reference of the national advisory bodies should be extended to underline the fact that these bodies would be primarily concerned with the interests of consumers. These two concessions, I believe, go a long way to meeting the understandable concern of the noble Lords and also of the noble Lord, Lord Taylor of Gryfe, underlined in this amendment as well as in Amendment No. 121.

Lord Mottistone

My noble friend has emphasied "users". It depends what you mean by users. POUNC talks about users, you and I. But there is also the question of business users. The noble Lord, Lord Spens, will, I think, agree with me that Amendment No. 121 which I, too, believe should be discussed now, really refers to business users. May I ask the Government, when they are rethinking this clause, to give thought to that fact, recognising that business users represent 85 per cent. of the telecommunications revenue and are therefore very important. Indeed, their strength in using the modern technology and the communications is vital to the wellbeing of the country. If our businesses are not successful, we have no money to live on. It is important that business users of all sorts should not be overlooked in any recasting of Clause 52. I go only that far. The Government can perhaps take what I say into account in any re-wording that they have in mind.

Lord Lyell

We are grateful to be reminded by my noble friend of the wide definition of the word "users". We shall study closely what he said and bear his comments in mind.

Lord Somers

I am grateful to the noble Lord and for the support of all my noble friends on whatever Benches they may sit. They are my noble friends. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Macleod of Borve moved Amendment No. 118 A:

[Printed above.]

On Question, amendment agreed to.

Lord Cockfield moved Amendment No. 118B:

Page 47, line 11, at end insert— ("(aa) anadvisorybody for matters affecting small businesses").

The noble Lord said: With this amendment, I should also like to associate Amendments Nos. 121B and 123AB.

Amendment No. 121B: After ("concerned") insert (", small businesses").

Amendment No. 123AB: After ("affecting") insert ("small businesses or").

Your Lordships will remember that on Thursday, 16th February, in reply to an amendment tabled by the noble Lord, Lord Spens, I promised to bring forward amendments to Clauses 52 and 53 to meet his concerns that small businesses should be properly recognised in the Bill. The amendments that I am now moving give effect to this undertaking.

As your Lordships will appreciate, they are very similar to the amendments tabled by my noble friends Lady Macleod and Lady Lane-Fox on the disabled and the elderly to which your Lordships have just agreed. Briefly, Amendment No. 118B requires the director to set up an advisory body specifically on small businesses and Amendment No. 121B ensures that in appointing members to this body the director has regard to the desirability of members who are familiar with the special requirements and circumstances of small businesses. In this way the director will be kept fully informed of the needs and requirements of small businesses with a view to exercising his functions as appropriate.

Under Clause 53(5) this advisory body will make an annual report to the director who will include it in his own annual report which will be published. In addition, Amendment No. 123AB ensures that the director himself must include in his own report a review of developments and activities in telecommunications insofar as they affect small businesses.

Your Lordships will recall that in our earlier discussions I reminded the House of the very considerable contributions that have been made by Members on both sides of the House and by Governments of both complexions in helping and assisting small businesses. I pay tribute to the extremely important part played in his day by my most distinguished predecessor in my present office, the noble Lord, Lord Lever of Manchester. I hope therefore that these amendments will commend themselves to your Lordships.

Lord Spens

I am most grateful to the Minister for tabling these amendments. They satisfy our worries very well. I support them wholly.

On Question, amendment agreed to.

Baroness Macleod of Borve moved Amendment No. 118C:

[Printed above.]

On Question, amendment agreed to.

Baroness Macleod of Borve moved Amendment No. 119:

[Printed above.]

The noble Baroness said: I thought that I had spoken to this amendment but if your Lordships want to hear me again, I should like formally to beg to move it. I have already spoken to the effect that there should be an advisory body for the elderly and people with disabilities. I think that my noble friend the Minister kindly agreed that this would be so. I formally beg to move.

Lord Cockfield

I hope that my noble friend will forgive me if I say that this has been covered in the other batch of amendments. It is simply the way in which the amendments have been drafted. Amendment No. 119 and Amendment No. 122 fell by the wayside to use the particular phrase that I had adopted. They are subsumed in the other group of amendments, Nos. 117A, 118A, 118C, 120A, 121A and 123AA. I wonder whether, with that explanation, my noble friend would see her way to withdrawing this amendment. Otherwise, it is simply duplication.

Baroness Macleod of Borve

Before withdrawing the amendment, may I thank my noble friend the Minister for so graciously helping us in this regard. It will be widely appreciated throughout the country by those people affected now and in the future. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Somers had given notice of his intention to move Amendment No. 120:

Page 47, line 12, leave out subsection (3) and insert— ("(3) Without prejudice to his power under subsection (1) above, and in addition to his duty under subsection (2) above the Director shall establish as soon as practicable after the appointed day an advisory body representing users for the United Kingdom as a whole The Chairman of the advisory bodies for England, Scotland, Wales and Northern Ireland shall have automatic membership of the advisory body for the United Kingdom.").

The Deputy Chairman of Committees (Lord Nugent of Guildford)

I should explain to the noble Lord, Lord Somers, that if this amendment was agreed to it would conflict with some of the amendments already agreed to.

Lord Somers

In that case I shall not move the amendment.

[Amendment No. 120 not moved.]

Baroness Macleod of Borve moved Amendment No. 120A:

[Printed above.]

On Question, amendment agreed to.

[Amendment No. 121 not moved.]

Baroness Macleod of Borve moved Amendment No. 121A:

[Printed above.]

Lord Cockfield moved, asanamendmentto Amendment No. 121 A, Amendment No. 121B:

[Printed above.]

On Question, amendment to the amendment agreed to.

On Question, amendment, as amended, agreed to.

The Deputy Chairman of Committees

The next amendment is Amendment No. 122, which has already been spoken to.

Baroness Macleod of Borve moved Amendment No. 122:

[Printed earlier: col. 660.]

Lord Spens

I think that Amendment No. 122 has to be withdrawn.

The Deputy Chairman of Committees

Does the noble Baroness wish to withdraw Amendment No. 122?

Baroness Macleod of Borve

Yes: with the leave of the Committee, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.22 p.m.

Lord Somers moved Amendment No. 123: Page 47, line 18, after ("Director") insert ("and to give public comment").

The noble Lord said: This is merely an amendment to make quite certain that the public know what the director is doing. It is very often the case that the public are not informed of what goes on behind the scenes and, in my view, when something is going to affect everybody—which, after all, is what this Bill is going to do—it is an important point. I beg to move.

Lord Lyell

As your Lordships will be aware, we have already spent some time on Clause 52 and therefore I hope that I can be reasonably brief in trying to explain what is in our mind so far as the amendment is concerned. We are not entirely sure what it is trying to achieve, but what we think it does is to place a duty on the advisory bodies, whenever they offer advice to the director, to "give public comment". We are not quite sure of the precise meaning of those words, but they seem to require the advisory bodies to publish comments on their advice to the director. We do not think that this is entirely what noble Lords would wish to do, because this would surely destroy the nature of the relationship between the director and the advisory bodies. Also, what if the bodies wanted to give advice of a confidential nature to the director? If it were to be published it would harm the relationship between the bodies and the director.

We believe that the Bill is right as it stands. Each of the advisory bodies will have an opportunity to make their views and findings more widely known in the annual report which they are required to make. These reports will be included in the director's annual report which will be published and will also—and I stress this to the noble Lord, Lord Somers—be laid before Parliament.

However, there may be instances where an advisory body wishes to bring something to public attention sooner than by its annual report. In such circumstances there is already a duty on the body to advise the director on this. Depending on what the matter is, the director will take the appropriate action. For example, if it concerns a matter on which he—that is, the director—thinks there should be a licence condition, he may seek to impose one. Alternatively, he may consider that it is not a matter for a licence, but should be drawn to the attention of consumers. In this second case he can use his powers under Clause 48 to publish information and advice. In this way it can become known not only to consumers in, for example, Scotland, but throughout the United Kingdom. I hope that with that brief explanation I have been able to satisfy the fears which were expressed by the noble Lord, Lord Somers.

Lord Somers

I am most grateful to the noble Lord for that very long and clear reply, and I beg leave to withdraw the amendment.

Lord Bruce of Donington

Before the Committee gives the noble Lord leave to withdraw his amendment, I should like to say that I am still not satisfied with the Minister's reply. One of the virtues of POUNC is that from time to time it is able to pass public comment upon various aspects of the service that is provided.

I do not really follow the reference to confidentiality to which the noble Lord, Lord Lyell, has referred. I was rather hoping that, living as we do—or as we are supposed to do—in an era of open Government, if a body of this kind feels that it has public comment to make, there is no reason why it should not be allowed to make it. Indeed, I see no reason why a duty should not be laid upon it to do so, otherwise one gets a very cosy little relationship—if one can describe it thus—between the Secretary of State; the new director of Telecom; possibly the managing director of the new successor company to British Telecom; the residual manager of British Telecom that will remain there until it is finally extinguished; and also the various advisory bodies. I am all for an air of easy informality to govern the relationship of these various interests together, and would not wish to encourage anything that would inhibit that. But every now and again I think that it is wise that an advisory body should be able to pass public comment without fear or favour.

Comments very often are embarrassing to Ministers and they may indeed irritate Ministers. Ministers in recent times have shown an increasing irritation at any kind of criticism against their divine judgment—"my mother, the Almighty and me", to repeat the phrase of the Prime Minister. I should have thought that, on the whole, it is in the public interest that advisory bodies ought to be able to do this, and I cannot understand, following the benevolent interest which the noble Lord, Lord Cockfield, has shown in these proceedings, why the noble Lord cannot accommodate himself as regards what I feel quite sure is the feeling of the Committee as a whole.

Lord Somers

The last thing that I would want to do is to irritate a Minister and so I still beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Bruce of Donington moved Amendment No. 123A:

Page 47, line 26, at end insert— ("and such report shall include a statement on matters relating to disabled people.").

The noble Lord said: I hope that the noble Lord will immediately accept this amendment and thus avoid the necessity for me to talk on it at all and, therefore, to detain the Committee. It seems to me to be so much in line with the satisfactory co-operation that he has been able to show to noble Lords on his side of the Committee. The amendment that I am venturing to lay before your Lordships is so much in tune with the various other amendments which have been so rapturously received by the noble Lord, Lord Cockfield, that perhaps he might feel constrained to render it unnecessary for me to speak any further and will accept the amendment without any further ado.

Lord Lyell

Of course, we appreciate the purpose of this amendment. I stress to the noble Lord, Lord Bruce, that this is no party matter. Indeed, I had the privilege of making two fairly lengthy statements from this Dispatch Box on Amendments Nos. 37 and 82 which gave rise, I regret to say, to a great deal of hilarity, as regards the inductive coupler. So I have expressed my views on that matter at considerable length. The noble Lord, Lord Bruce, may not have been in his place at the time, but certainly too many people were! Anyway, he does not need one today because we are speaking very close to one another.

However, I appreciate the noble Lord's concern, but I should stress to him and to the Committee that we think that the amendment has been overtaken by the amendments which have been proposed by my noble friend Lady Macleod and my noble friend Lady Lane-Fox, to which we have just agreed. These ensure that there is a separate advisory body for the disabled and the elderly which will make its own annual report. The noble Lord, Lord Bruce, will see that under Clause 52(5). Therefore, there is no need for the national advisory bodies to include any mention of the disabled.

5.30 p.m.

On Question, Whether the said amendment (No. 123A) shall be agreed to?

Their Lordships divided: Contents, 94; Not-Contents, 118.

Airedale, L. Boston of Faversham, L.
Ardwick, L. Bottomley, L.
Attlee, E. Bowden, L.
Aylestone, L. Bruce of Donington, L.
Barnett, L. Caradon, L.
Bernstein, L. Carmichael of Kelvingrove, L.
Beswick, L. Chitnis, L.
Birk, B. Cledwyn of Penrhos, L.
Bishopston, L. Collison, L.
Blyton, L. Darling of Hillsborough, L.
David, B. Mackie of Benshie, L.
Dean of Beswick, L. McNair, L.
Delacourt-Smith of Alteryn, B. Melchett, L.
Molloy, L.
Diamond, L. Nicol, B.
Donnet of Balgay, L. Northfield, L.
Ennals, L. Ogmore, L.
Ezra, L. Oram, L.
Gaitskell, B. Peart, L.
Gallacher, L. Pitt of Hampstead, L.
Galpern, L. Ponsonby of Shulbrede, L. [Teller.]
Gladwyn, L.
Graham of Edmonton, L. [Teller.] Prys-Davies, L.
Raglan, L.
Grimond, L. Rathcreedan, L.
Hale, L. Rhodes, L.
Hampton, L. Rochester, L.
Hanworth, V. Ross of Marnock, L.
Harris of Greenwich, L. Seear, B.
Hatch of Lusby, L. Shackleton, L.
Houghton of Sowerby, L. Shinwell, L.
Hughes, L. Stallard, L.
Irving of Dartford, L. Stedman, B.
Jacques, L. Stewart of Fulham, L.
Jeger, B. Stoddart of Swindon, L.
Jenkins of Putney, L. Stone, L.
John-Mackie, L. Strabolgi, L.
Kagan, L. Taylor of Blackburn, L.
Kaldor, L. Taylor of Gryfe, L.
Kearton, L. Taylor of Mansfield, L.
Kilmarnock, L. Tordoff, L.
Kirkhill, L. Underhill, L.
Leatherland, L. Wallace of Coslany, L.
Listowel, E. Wedderburn of Charlton, L.
Llewelyn-Davies of Hastoe, B. White, B.
Lloyd of Hampstead, L. Willis, L.
Lloyd of Kilgerran, L. Wilson of Rievaulx, L.
Longford, E. Wootton of Abinger, B.
McIntosh of Haringey, L.
Abercorn, D. Gainford, L.
Airey of Abingdon, B. Glanusk, L.
Allerton, L. Glenarthur, L.
Auckland, L. Halisham of Saint Marylebone, L.
Avon, E.
Bauer, L. Halsbury, E.
Bellwin, L. Harmar-Nicholls, L.
Belstead, L. Hayter, L.
Bessborough, E. Henley, L.
Brookes, L. Home of the Hirsel, L.
Broxbourne, L. Hornsby-Smith, B.
Bruce-Gardyne, L. Hunter of Newington, L.
Buckmaster, V. Hylton-Foster, B.
Caithness, E. Ingrow, L.
Caldecote, V. Kinloss, Ly.
Campbell of Alloway, L. Lane-Fox, B.
Campbell of Croy, L. Lauderdale, E.
Carnegy of Lour, B. Long, V.
Chelmer, L. Loudoun, C.
Cockfield, L. Lucas of Chilworth, L.
Coleraine, L. Lyell, L.
Colville of Culross, V. McAlpine of West Green, L.
Crawshaw, L. Mackay of Clashfern, L.
Cullen of Ashbourne, L. MacLehose of Beoch, L.
Daventry, V. Macleod of Borve, B.
De La Warr, E. Mancroft, L.
Denham, L. [Teller.] Mansfield, E.
Dilhorne, V. Mar, C.
Drumalbyn, L. Margadale, L.
Dudley, E. Marley, L.
Dundee, E. Maude of Stratford-upon-Avon, L.
Ebbisham, L.
Ellenborough, L. Merrivale, L.
Elliot of Harwood, B. Middleton, L.
Elphinstone, L. Milne, L.
Elton, L. Milverton, L.
Enniskillen, E. Monk Bretton, L.
Faithfull, B. Montgomery of Alamein, V.
Ferrier, L. Morris, L.
Fraser of Kilmorack, L. Mottistone, L.
Mowbray and Stourton, L. Skelmersdale, L.
Murton of Lindisfarne, L. Somers, L.
Northchurch, B. Spens, L.
Nugent of Guildford, L. Stodart of Leaston, L.
O'Neill of the Maine, L. Strathcarron, L.
Onslow, E. Sudeley, L.
Pender, L. Suffield, L.
Peyton of Yeovil, L. Swansea, L.
Portland, D. Swinton, E. [Teller.]
Rankeillour, L. Terrington, L.
Ridley, V. Teviot, L.
Rochdale, V. Thorneycroft, L.
Romney, E. Tranmire, L.
St. Davids, V. Trenchard, V.
Sandford, L. Trumpington, B.
Sandys, L. Ullswater, V.
Seebohm, L. Vaux of Harrowden, L
Selkirk, E. Weinstock, L.
Sempill, Ly. Whitelaw, V.
Sharples, B. Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

5.40 p.m.

On Question, Whether Clause 52, as amended, shall stand part of the Bill?

Lord Lloyd of Kilgerran

May I briefly intervene on Clause 52 because, if I remember rightly, when Amendment No. 62, dealing with the formation of a council, was raised, I believe that it was withdrawn on the understanding that there would be some modifications to Clause 52 by way of an amendment at the Report stage. I merely want to clarify whether the noble Lord the Minister has that in mind.

To explain a little further, this clause deals with advisory bodies; and the noble Lord, Lord Bruce, and I concurred in the withdrawal of the amendment which was to set up a telecommunications council. I think the noble Lord the Minister very kindly suggested there should be some amendments to Clause 52. I merely rise to clarify the matter, to ask whether or not it is true, and, if so, whether we could have these amendments fairly soon, at least some considerable time before Report stage, because this raises important matters.

Lord Cockfield

I confirm the understanding of the noble Lord of the position that we shall be building on Clause 52. I will use my best endeavours to ensure the amendments are tabled as promptly as possible.

Lord Lloyd of Kilgerran

I am very grateful to the noble Lord the Minister.

Clause 52, as amended, agreed to.

Clause 53 [Annual and other reports]:

Lord Bruce of Donington moved Amendment No. 123AA:

[Printed earlier: col. 661.]

Lord Lyell moved, as an amendment to Amendment No. 123AA, Amendment No. 123AB:

[Printed earlier; col. 663.]

On Question, amendment to the amendment agreed to.

On Question, amendment, as amended, agreed to.

Clause 53, as amended, agreed to.

Clause 54 [Cable programme service]:

Lord Lyell moved Amendments Nos. 123B, 123C and 123D: Page 48, line 18, after ("both") insert ("either—(a)") Page 48, line 19, leave out ("either—(a)") Pages 48, line 22, at beginning insert ("for reception, by whatever means,")

The noble Lord said: With the permission of the Committee, for convenience I should like to speak to and move together Amendments Nos. 123B, 123C and 123D, all of which are contained in Clause 54. They have a simple purpose: to bring Clause 54 into line with the equivalent provision in the Cable and Broadcasting Bill. The equivalent provision is Clause 2 of that Bill, and during its Committee stage that Clause 2 was slightly amended. The amendments I am moving today repeat those changes to Clause 54.

Perhaps I may go though why we put the equivalent provisions in the two Bills. Part IV of the Bill before the Committee today updates and replaces the existing provisions in the Post Office Act 1969 on the licensing of cable programme services. These new licensing arrangements contained in Part IV are an interim measure because in due course these functions will be taken over by the new Cable Authority set up under the Cable and Broadcasting Bill. However, it is necessary to amend the Post Office Act in the Bill before us today rather than await the Cable Bill, so that all BT's exemptions from licensing end on the same day in accordance with the policy of the Government to place BT on an equal footing with its competitors. If I may move the three amendments together, Nos. 123B, 123C and 123D, I hope that will meet the approval of the Committee.

On Question, amendments agreed to.

Clause 54, as amended, agreed to.

Clauses 55 to 57 agreed to.

Clause 58 [Vesting of property, etc. of British Telecommunications in a company nominated by the Secretary of State]:

Lord Mottistone moved Amendment No. 124: Page 51, line 22, at end insert ("or companies")

The noble Lord said: With the leave of the Committee, with this amendment I should like to take Nos. 125, 127, 128, 130 and 150. Amendment No. 125: Page 51, line 24, after ("company") insert ("or companies") Amendment No. 127: Page 51, line 32, leave out second ("the") and insert ("any") Amendment No. 128: Page 52, line 12, after ("company") insert ("or companies") Amendment No. 130: After Clause 58, insert the following new clause:

(" Powers to dispose of British Telecommunications by separate companies

—(1) The Secretary of State may by order dispose of British Telecommunications by authorising the sale of separate subsidiary companies each so organised as to have not more than 25 per cent, of its particular market.

(2) An order under section 67 of this Act shall not be made unless an order under this section has first been made.") Amendment No. 150: Clause 92, Page 81, line 22, after ("(3)") insert (", 58A")

The first four are paving amendments to No. 130 which is the substantive amendment. Amendment No. 150 is consequential. I could have put down many more amendments on the lines of the first four to bring the various parts of Part V of the Bill into line with the sense of Amendment No. 130, but I did not do so because I merely wanted to show the way as to the sense of the amendments.

The point of Amendment No. 130 is to give the Government the opportunity, if they wish, to split up BT so that it becomes properly competitive. Many people are concerned that the provisions of this Bill, with the oversight of the Directer General of Telecommunications in effect trying to manage an artificially competitive situation, will not be good enough. They are concerned that the Government may well find during the course of the next two or three years that they will need to expedite matters to ensure proper competition, both for the benefit of BT's customers, who at present are not getting the full value for money they should, and also, and more importantly, to allow the development of its very small competitors. There is a view that it is too difficult to do this and that it would take a long time. But there is another view which puts a rather different slant on it. The main thing is that we are not seeking to do this immediately: we are merely seeking to give the Secretary of State the necessary power.

The only other point I think I should make (because people have often questioned it) is how it might initially be split up. For instance, there might be a company for systems, which would be sold off separately, and another company for the supply of apparatus; and yet another for, perhaps, the production of apparatus. There might be another company for international systems and another for value-added services; and as a further step, which might take rather longer, there is no really good reason in the long run why the various telephone areas we have now should not themselves all be split off, one by one, as is Hull at this very moment. There would be proper competition.

I was talking to a friend of mine at lunchtime—a businessman—who has a house in Scotland and who would appreciate, by dialling appropriately, being able to route his call to Scotland either up the west coast or up the east coast, as he can if he uses the railways—and why not? If he were getting a better service up the west coast, why should he not be able to dial that way? Or if he felt he was getting a better service up the east coast, the same thing. It is strange because we have never had it this way in this country, but it is becoming practicable, and more so as electronic developments go ahead.

I think it would be wise of the Government to have an amendment like Amendment No. 130. I fully admit the wording is probably absolutely hopeless, but it is the sense that matters. The sense of Amendment No. 130 should be in the Bill to give the necessary flexible power to the Secretary of State when, as I believe, the facts of life show that this is truly necessary. I beg to move.

Lord Bruce of Donington

I am not sure whether, from some perverse political motive, I ought not to support the noble Lord opposite in these amendments, because, of course, nothing would be more calculated to make British Telecommunications a completely unmarketable commodity in the City of London than carrying these amendments. Even as BT is now, and after suitable restructuring of its balance sheet by the Government in terms which I shall hope to be talking about later at another stage in this Committee, it is very doubtful whether British Telecommunications is capable of being marketed unless there is a very considerable restructuring.

If on the appointed day, "On such day as the Secretary of State may by order appoint for the purpose of this Part" of the Act "all the property, rights" and so on, should be distributed over a number of companies, this would accomplish my purpose, which is virtually to eliminate for all practical purposes the effectiveness of Part V of the Bill. Clearly it would never be privatised under those circumstances because nobody would buy it.

In a perverse way I am almost tempted to support the noble Lord. But I am dealing with the noble Lord, Lord Cockfield, who, as is well known, always deals with these matters seriously on their merits. I would not pre-empt the eloquence with which the noble Lord will undoubtedly deliver his reply to his noble friend, but I think that he is bound to refuse the amendment. Nobody in the Cabinet would dare to dishonour the pledge already given by the Prime Minister that there is going to be only one competitor, and that is Mercury. I do not think that the noble Lord will feel constrained at this stage to go against that dictum.

It is an interesting thought as to whether the liberalisers—I do not know whether I embrace some of the noble Lords on the Liberal and SDP Benches, possibly not, but they will dissociate themselves if they wish—would really like the whole of British Telecom's system to be fragmented in the way that the noble Lord implies. May I put it to the noble Lord, although perhaps on a modest scale, as one businessman to another that if you are going to have a public utility functioning in a world which actually comprises other public or private monopolies of a similar size and character, it has to have a certain amount of power. It has to have a certain amount of size. To fragment that size would be essentially to weaken it, aside from the impracticability of it.

Lord Mottistone

Would the noble Lord allow me to intervene?

Lord Bruce of Donington

I shall give way to the noble Lord in a moment when I have finished my sentence. If the noble Lord thinks otherwise, then I do not think he is conversant with the basic canons of monopoly business, and the effect that large undertakings have both upon the price structure and on the internal battle that goes on internationally between monopolies.

Lord Mottistone

It is not a question of power, it is a question of having too much power. I refer the noble Lord to the Competition Act 1980, and all that stems from that.

Lord Lloyd of Kilgerran

I am certainly not going to follow the noble Lord, Lord Bruce, in being perverse We have a certain amount of sympathy for Amendment No. 130. As your Lordships know, we on our Benches think that this is a bad Bill and that it is not necessary, but if you are going to have privatisation then it seems to me that the way in which the noble Lord, Lord Mottistone, has presented Amendment No. 130 together with its associated amendments would be a better way of having privatisation. As a matter for clarification, I assume that the noble Lord, Lord Mottistone, has included 25 per cent, in his proposed amendment—that the subsidiary companies shall each be "so organised as to have not more than 25 per cent, of its particular market"—because he had in mind the competition laws of this country.

Lord Donaldson of Kingsbridge

I should like to agree with my noble friend in principle, particularly because of the opportunity of regionalisation and regional command, which is the kind of thing that this might develop into quite well, and I should like to see the Bill at least make that possible.

Lord Spens

May I draw the attention of the Committee to the reply given by the noble and learned Lord, Lord Mackay of Clashfern, to Lord Mottistone when he was debating Amendment No. 79 at col. 529 of yesterday's Hansard. The noble and learned Lord said: The Government therefore believe that apparatus manufacture by any public telecommunications operator should be in a different company from that which runs the network with a different management and different accounts". This amendment has only been put down in order to enable that not only to happen but in the future to enable British Telecom to sell off its subsidiaries if it wants to do so.

Lord McIntosh of Haringey

I want just a point of clarification before the Minister replies. I wonder whether he has formed an impression of what the amendment means by "25 per cent, of its particular market"? The noble Lord, Lord Mottistone, referred to one possible formulation of one of these companies to whom British Telecom should be devolved as being Hull. There is no competition in Hull. Hull is a monopoly telephone company within its particular geographical area. Are the Government satisfied that the breaking up of a national monopoly into a series of regional monopolies is going to achieve the liberalisation which the noble Lord, Lord Mottistone, desires?

Lord Mottistone

May I clarify that issue? I apologise to the Committee for not making it clear in the first instance. The 25 per cent, of a particular market is a direct reference back to the guidelines of the Competition Act 1980, which said that this is the size above which a monopoly starts to become seriously anti-competitive. A "particular market" is designed to cover different markets because British Telecom is not the only company that would be affected by this. There are certain specialised markets in which there would be other companies which currently have more than 25 per cent. In the case of Hull, I threw in the idea of competition between the areas because my great aim, regardless of the technicalities, is to make people compete. It is only by being competitive that they are efficient and give good service to their customers.

Lord McIntosh's question is answered by saying that in the case of Hull it is providing the same sort of service as, for instance, Reading. What you may find is that if you dial through to Hull you might have a better directory inquiry service than, say, Reading. In this case, if you were competitive, you would always be dialling to Hull and the money would go there. We all know that the directory inquiry service is the most miserable part of all the services provided by British Telecom, and I just choose that as an example. If your Lordships open your minds and are imaginative instead of working within the close confines of a philosophy started in the last century, then you might begin to understand my amendment.

Lord Brookes

To we natural "free enterprisers" Lord Mottistone's suggestions are naturally persuasive; but if they were adopted we should be in danger of addressing ourselves to the plausible attractions of competition in terms of the service to our domestic market, and of disregarding the tremendous significance of the telecommunication supply industries in this country, which I submit will need the concentrated purchasing power of British Telecom if they themselves are to address world markets on this frontier of technology which is concentrated in the new telecommunications situation, and positively and advantageously expressed by System X, so excellently developed by the Post Office, British Telecom, and British suppliers.

It is of vital importance to our new industries and new technologies engaged in this industry that if they are to survive we have to recognise that the British market will not be sufficient. Something like not less than 5 per cent, of the United States market must be conquered if we are to have the volume in order to design, research, and produce efficiently and effectively. We have to lift our eyes beyond the restrictions, confines and limitations of—dare I describe it?—our parochial market and look behind Telecom itself to the supply industries where at this point in time we are equal to the best in the world. Our disadvantage is that we do not have the market. Therefore, please let us not at this stage fragment our purchasing power and fragment the possible co-ordination of onward design into the future.

6 p.m.

Lord Cockfield

My noble friend Lord Mottistone has explained clearly that the purpose of these amendments is to divide British Telecom into its component parts, each organised with a separate subsidiary, and then to privatise each part separately.

The most interesting thing to have emerged from the debate is that it is perfectly clear that reputable alternative routes are available; some are supported by some noble Lords, others by other noble Lords. If faced with alternatives of this kind one has to make a choice. The Government have decided, for good and sufficient reasons, to go down one route. We adhere to that decision. I will explain why in some detail.

The Government's policy on this matter was set out fully by my right honourable friend the then Secretary of State for Trade and Industry in the statement he made on Second Reading in another place on 18th July. We wish to move ahead as quickly as possible to the flotation and to the disposal of a controlling interest in British Telecom plc. The amendments proposed would all result in a significant delay before privatisation could take place. One reason for this is that it could take years to put British Telecom's accounts into a form which would make piecemeal disposal possible. This is not a technical quibble. In selling something, one has to be able to show precisely what is being sold and proper accounts are needed to be able to do that.

There is also an important point of real substance. British Telecom has been developed in terms of management structure in the engineering of its network as a highly integrated company. The physical separation of its manpower and of its other assets could not be achieved quickly. Indeed, no credible case for a division of its network operations has been advanced, thus to separate local services from trunk services, as has sometimes been proposed, would be immensely complex and costly.

I am fully aware of the fact that real fears exist that BT might abuse its dominant market position and that these fears underlie some of the proposals for splitting British Telecom into its component parts. We have taken steps to ensure that the licensing arrangements, as exemplified by the draft British Telecom licence and the monitoring and enforcement procedures set out in the Bill, will provide an adequate guarantee of fair competition. What we intend is that British Telecom will have to conduct its network operations, its apparatus supply activities and apparatus manufacturing business on an arm's-length basis. It will be required under the terms of the licence to establish a separate subsidiary company for its apparatus manufacturing business and to adopt open tendering procedures in relation to it. This is the point to which the noble Lord, Lord Spens, referred.

The licence will also require separate accounting and reporting arrangements for its systems business and its apparatus supply business. There is also an explicit prohibition on any cross-subsidies from British Telecom's business to its apparatus supply or manufacturing business. There are other more general conditions which deal with other kinds of potential anti-competitive practices. Should it happen—and we do not expect this—that the initial conditions are shown to have a weakness which needs to be remedied, the director will be able to take action to modify them, if necessary, with the support of the Monopolies and Mergers Commission.

For all these reasons, the Government consider that there is an overwhelming case in favour of a unitary sale; a case which rests not only on the delay inherent in any alternative, but on the need to put British Telecom in the position where it can compete effectively internationally against giants such as AT & T. This is a very valid point that my noble friend Lord Brookes raised. There is also a need to provide a sound financial basis for the modernisation of the whole network and a need to maintain management morale within British Telecom, if it is to get off to a sound start as a public limited company. In the light of the full explanation that I have given, perhaps I might invite my noble friend to withdraw his amendment.

Lord Weinstock

I find myself in agreement with a great deal of what the noble Lord, Lord Cockfield, had to say in reply to the amendment. Those noble Lords who have referred to the system in Hull would find themselves restricted to local calls from Hull if it were not for the BT network. The noble Lord referred to a statement made by his right honourable friend in another place and himself pointed out the difficulties in trying to sell the separate parts of British Telecom because of administrative problems, accounting problems and so on. Does the noble Lord think that those difficulties will not arise in fulfilling the requirements of Conditions 18 and 20 of the licence which refer to cross-subsidy and the keeping of separate accounts for the separate activities of BT?

Lord Cockfield

The noble Lord is entirely correct. Complying with these requirements poses a problem, but the essential difference is that in wishing to privatise British Telecom these problems would need to be solved before one could privatise. That is why there is the delay. If British Telecom is sold as a single unit, as we propose, these problems can then be solved properly in due time, and we would hope as quickly as possible.

Lord Lloyd of Kilgerran

In view of the fact that on many occasions during the Committee stage, I have been rather chasing the noble Lord the Minister (if that is the correct expression) about the difficulties there may be in relation to the export trade, in all fairness I should now like to say that much of what the noble Lord has just said in dealing with the main parts of the amendments may be a great help not only to British industry but to the Government. His statement followed the speech of the noble Lord, Lord Brookes, who emphasised how essential it was to compete outside the United Kingdom. He said that a target of 5 per cent, in the American market would be something that should be sought. I intervened merely to say that the noble Lord, Lord Cockfield, has gone some some way to deal in general terms, though perhaps not as specifically as I should like, with the criticisms I made of the Bill in relation to the export trade.

Lord Mottistone

I thank my noble friend for his very full remarks. There is one point that he did not seem to cover. The point of the amendment was not to have the Bill implement this splitting up, merely to put the powers at the disposal of the Government in the event that perhaps in two or three years time they might find the course that they had followed was not the correct one and they might like to do this and it would be useful for them to have this advantage in the background. Would my noble friend like to comment on that?

Lord Cockfield

I started by saying that this was one of those areas where one had to make a choice and adhere to it. One could not possibly privatise British Telecom and then a few years afterwards say that it could have been a great deal better had it been privatised in a series of separate companies rather than as a unit. This is a major kind of decision that one has to take ab initio, and, as I have said, for good and sufficient reasons the Government have decided to go down the path of unitary disposal of the company.

Lord Mottistone

I thank my noble friend. I will not delay the Committee. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 125 not moved.]

6.11 p.m.

The Earl of Halsbury moved Amendment No. 126:

Page 51, line 24, at end insert— ("( ) References in this Act to the "successor company" shall include wholly owned subsidiary companies designated by the Secretary of State. Such subsidiary companies shall be registered under the Companies Act 1948 to 1983 and shall not have directors in common with other subisidary companies.").

The noble Earl said: This amendment endeavours to avoid cross-subsidisation and anti-competitive practices and to ensure that separate subsidiaries publish separate audited accounts and have no common directors. The general thought of it, first, is that whatever constraint this Bill when enacted will impose on the successor company shall be a constraint on the subsidiaries as well; so that they cannot play hide-and-seek or hide behind a smokescreen or anything like that. Neither can they get into cahoots, as it were, by having a lot of cross-linking directorships who can get up to things that the parent company might not know about. I think this is fairly straightforward stuff and I do not need to make a long speech about it.

I should be very interested if the noble Lord, Lord Weinstock, wanted to comment on it from the standpoint of practicality. I know that it is common practice for parent companies to have (as it were) a travelling director, someone very often on the financial side, who goes round from board meeting to board meeting of the subsidiaries keeping them in line with main board practice. That would be prohibited under this provision. I beg to move.

Lord Lloyd of Kilgerran

I am glad to see the noble Earl, Lord Halsbury, in his place and that he has recovered from his illness of yesterday because I have been asked by the noble Lord, Lord Spens, to intervene since this is a simple amendment dealing with anti-competitive practices. The noble Earl has explained the purpose of what I understand to be a probing amendment so as to get the attitude of the Government in this matter. I would support the general theme of this amendment.

Lord Weinstock

I do not think that the noble Lord, Lord Cockfield, will need a great deal of further explanation as to the relevance of the amendment and we shall hear from him shortly whether the Government are sympathetic to it or not. I wanted to raise a subsidiary point, really, to get information. Under the provisions of this clause, Clause 58, and of Clause 66, the Government will undertake and underwrite very considerable financial obligations; and they will do so on an open-ended basis. There is no indication of the amount of the continuing liability involved. What is more, that liability can be increased by decisions made by the successor company after the transfer to BT plc has taken place, for example, to wage increases and to other variations in terms and conditions of employment. Surely, this represents an element of subsidy although it may well enable the Government to raise more money from the sale of BT shares.

Being less reluctant than the noble Lord, Lord Somers, to irritate Ministers, may I ask noble Lords on the Government Front Bench if they do not think that it distorts the market to do this in telecommunications equipment and services to the detriment of competition?

Lord Cockfield

May I take the specific amendment raised by the noble Earl? To a very large degree, I dealt with this point when I was talking about the previous amendment moved by my noble friend Lord Mottistone. We appreciate that problems can arise in relation to the wide spread of activities undertaken by British Telecom and the importance that its apparatus-supply activities, its apparatus manufacturing business and its network operations should all be conducted on an arm's-length basis. The route that we have chosen to deal with this particular problem is to insert terms in the licence under which a separate subsidiary company would be established for the apparatus manufacturing business and open tendering procedures in relation to it would be adopted. The licence also requires separate accounting and reporting arrangements. I think that in practice, therefore, we have very fully covered the point which the noble Earl raised.

The only question is whether or not the conditions to which I have referred should be written into the Bill itself. Our view is that to attempt to do that would give a very misleading impression. It would suggest, for example, that, despite the decision which has been made and announced very clearly that we propose floating British Telecom as a unitary company, there was a prospect that we might be contemplating dividing it before the flotation took place. We have no such intention at all in our minds. We feel that the right course to adopt is the one that we have followed; namely, to put these conditions in the licence. I hope that that will satisfy the noble Earl on the point raised in his amendment. The points raised by the noble Lord, Lord Weinstock, did not, in fact, relate to the amendment. They related perhaps to a discussion that we will have at a later stage on whether this or other clauses should stand part of the Bill.

Lord Bruce of Donington

I am still a little mystified by the observations of the noble Lord on the amendment because Clause 58(1) provides for the transfer of all the property rights and liabilities, other than the excepted liabilities, to which British Telecom was entitled (or was so immediately before that date) which by virtue of those provisions become the property of the successor company. The subsidiaries which are described in the amendment as "wholly owned" are part of the property and assets of British Telecom and with the other assets automatically pass to the successor company, anyway. In that sense, I should have thought, looking at it in completely legal terms, the amendment is wholly unnecessary because the subsidiary companies belong already to British Telecom and go over to the successor company in any event.

Lord Cockfield

The position, in fact, is that British Telecom at present has no subsidiary company and, from that point of view, therefore, one could say that the amendment does not arise. But I well understand what the noble Earl had in mind. I assumed that this amendment flowed on from the previous amendments which we had been looking at where the proposal was that British Telecom should be divided into a number of subsidiary companies. But there is a considerable overlap between this amendment and the previous one, which is why it was necessary for me to delay your Lordships by repeating many of the observations that I had made on the previous amendment. I hope very much that that explanation satisfies the noble Earl.

The Earl of Halsbury

It will have to; because I am not the first person to move an amendment and to be told that it will be in the licence and I must be content with that. A lot of us have tried, as it were, to tighten up the structure a bit by putting into the Bill what I agree could be in the licence, and on the whole we have not seen much progress made in this direction. We have not really seen the licence in its final form and all this phasing of the passage of the Act and the publication of the licence in its final form is something which leaves everybody a little restive. But, restive or not, I beg your Lordships' leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 127 and 128 not moved.]

Clause 58 agreed to.

6.21 p.m.

Lord Stoddart of Swindon moved Amendment No. 129: After Clause 58, insert the following new clause:

("Duties of successor company.

.The successor company shall satisfy the Secretary of State that it will—

  1. (a) establish adequate consultative procedures including provisions for industrial democracy;
  2. (b) negotiate terms and conditions of employment including pay, promotion, job security and pensions;
  3. (c) promote and encourage satisfactory levels of recruitment, training, safety, health and welfare, for its employees.").

The noble Lord said: I beg leave to move this amendment which stands in my name and the names of my noble friends. Your Lordships will note that the amendment seeks to ensure that, (".The successor company shall satisfy the Secretary of State that it will—

  1. (a) establish adequate consultative procedures including provisions for industrial democracy;
  2. (b) negotiate terms and conditions of employment including pay, promotion, job security and pensions;
  3. (c) promote and encourage satisfactory levels of recruitment, training, safety, health and welfare, for its employees.").

Your Lordships will be aware that the Post Office—and indeed British Telecom as it now is—have had good arrangements for consultation and negotiation about salaries and conditions of service. Indeed, they have had decent arrangements for discussing matters such as pension arrangements with their staff", and the staff have been involved in all aspects relating to safety, health and welfare.

Our desire—and I am sure the desire of all your Lordships—is that such arrangements should continue. In an industry of this sort—and here I refer in particular to the first paragraph—that is, to establish adequate consultative procedures including provisions for industrial democracy"— it really is essential that people working there feel that they are part of that industry. They should feel that they have something to contribute to it, and that there are ways and means by which they can make that contribution in a real and positive way; that they can offer advice to the management and have at least some say in the new technologies which are so important to this industry; that they can have something to contribute about the future investment levels on which their jobs and livelihoods—and indeed the well-being of the telecommunications system—depend.

It is also essential that people who at present feel threatened—and I ask your Lordships to make no mistake about it: they feel threatened with massive job losses, because a number of 45,000 has been mentioned—should have confidence in the new organisation and confidence that they will be taken into consultation, not only about small matters but about all the large matters which will affect them, their jobs, their families and their livelihoods.

I should have thought that every person in this Chamber would want to establish such relationships right from the start. If British industry, whether it be British Telecom or any other industry, is to succeed, it is essential that we should have a contribution—and a large contribution—from the people working in those industries at every level. Therefore I hope that the Government will very seriously consider this amendment. If they cannot accept it at this stage, I at least ask them for assurances that the people working in British Telecom will not be in any way disadvantaged and that the arrangements which they have had hitherto for consultation and for settlement of disputes, for consultations on wages and pensions, and so on, will continue as hitherto or perhaps be improved. I beg to move, and I look forward to hearing the noble Lord's reply.

Lord Rochester

I should like to say a few words in support particularly of paragraph (a) of the suggested new clause concerning the establishment of adequate consultative procedures in the successor company. The Committee may recall that, first, your Lordships and, later, the Government accepted an amendment to the 1982 Employment Bill which I moved and which in its final form as Section 1 of the Act has meant that every United Kingdom company employing more than 250 people will from the beginning of this year have to include in its annual report a statement describing the action taken during the previous year to introduce, maintain or develop arrangements aimed at furthering employee involvement in a number of ways. These include consulting employees or their representatives on a regular basis so that the views of employees can be taken into account in making decisions which are likely to affect their interests.

I have an uncomfortable feeling that when the Minister comes to reply to this amendment he will say that the successor company, like any other company, will be obliged to fulfil the requirement I have referred to but that in the Government's view no company should be compelled actually to establish consultative procedures where these do not already exist.

My amendment to the 1982 Employment Bill was deliberately framed in such a way that it had a good chance of gaining majority support among your Lordships. In moving it, I acknowledged that I was once altogether a voluntarist on the question of employee participation, but I added that the trouble about voluntarism is that there have to be volunteers. I said that exhortation concerning the need for speedier progress in the matter had in the past proved largely fruitless and that the Liberal Party had for the last 50 years wished to go much further in this direction. For my part, I had reached the conclusion that the time had come to make it a statutory requirement that in every company employing more than a certain number of people there should be consultative bodies of some kind.

I continue to hold that view and therefore I support in principle the amendment which has just been moved by the noble Lord, Lord Stoddart of Swindon. I do so not simply to conform to a particular long-held tenet of Liberal Party policy but because first-hand experience has led me to feel that the establishment of adequate consultative procedures on a countrywide basis would result in a significant improvement in the motivation of British working people generally in our industrial performance and in our international competitiveness. In my view, the Committee will be well advised to see that progress towards that end is made now by accepting this amendment to the Bill.

Lord Morris

I believe that I am not alone in thinking that it is really an abuse of the statute law to use a statute as a means of declaring that a company should fundamentally be good managers. This is precisely what this amendment appears to do, and as such it is totally unnecessary.

Lord Cockfield

As the noble Lord, Lord Stoddart of Swindon, will be aware, a new clause in the same terms was twice moved in another place and was twice defeated on a Division. The noble Lord will not be surprised, therefore, if I say that I could not accept the clause. The reason, quite simply, is that a statutory provision of this kind would be out of keeping with the relationship between the Government and British Telecom as a private sector company. This is not to say that we are out of sympathy with the spirit of the provision. What we believe is wrong is its incorporation in statute.

So far as employee consultation and industrial democracy are concerned, the Government are firmly committed to the principle that employees should be involved with their place of work. But we do not consider that the Government should impose particular arrangements for employee consultation on any undertaking through legislation. Suitable arrangements are best left to employers and employees to pursue voluntarily, taking into account their particular circumstances. So it will be for the successor company and its employees to take this up, without Government coercion or interference.

I well remember the debates in your Lordships' House on the provision in the 1982 Employment Act, to which the noble Lord, Lord Rochester, referred. But it was of the essence of that proposal that what was required was that the company should state in its annual report what it had in fact done. There was no coercion placed on the company to take any particular action. I entirely accept that it was a valuable pointer in the right direction, and that is why I say that, in spirit, we are entirely in support of employee consultation and industrial democracy.

Our policy towards terms and conditions of employment in the private sector is aimed at establishing the framework necessary to protect the rights of employers and employees. Where legislated, this framework applies to companies generally, though it allows for employers and employees to develop arrangements suited to their particular circumstances. Employees' welfare, health and safety and training and recruitment fall very much into the same category. A legislative framework lays down requirements where necessary and, subject to this, reponsibility for all these subjects is then placed on those running the companies concerned.

This is explicitly recognised in the Companies Act 1980, to which my noble friend Lord Glenarthur referred, and that includes the phrase, the interests of the company's employees in general as well as the interests of its members", among the matters to which the directors of a company are to have regard in performing their functions. So there is a general framework for private sector companies to operate in. If there are any gaps in this framework, these should be tackled by general legislation, not by enactments aimed at particular private sector companies. While, therefore, we entirely appreciate the spirit behind the amendment, we do not think that this is a matter which should be covered by legislative provision in this Bill, and it is on this ground that I would oppose the amendment.

Lord McIntosh of Haringey

I wonder whether I am alone in remarking upon the amazing contrast between the Government's reaction to previous amendments concerning the successor company and their view on this amendment. On countless occasions during this Committee stage the Government have acceded to requests to tighten the control on the successor company through additional conditions in the British Telecom licence. Admittedly, on a number of occasions this has been in response to suggestions from other parts of the Committee that there should be controls in a statutory form. But, even so, with what the draft licence already contains and with the many additions which the Government have continually been undertaking to add to the draft licence, to call this private sector company tout court, as if that were enough to dismiss the purpose behind this amendment, is quite staggering.

This is not a private sector company in that sense. This is a private monopoly established by extremely detailed legislation and established under the conditions of a licence which, in turn, depend on extremely detailed legislation. It is, as the Government have confirmed in their reactions to recently proposed amendments, to be a public monopoly and not a liberalised telecommunications industry. It is therefore, in very many important ways, different from the private sector company which is the subject of the 1982 Employment Act. Indeed, if that were not enough, the continuing responsibilities of the Government to employees of the present British Telecom corporation would surely be enough to tip the balance.

It has been said, perhaps sometimes with more piety than conviction, that the future of the telecommunications industry in this country depends on the people who work in it. These people who work in the telecommunications industry have not only had a history of co-operation, of consultation, of involvement in the management of British Telecom. They have had that tradition enshrined as recently as 1981 in the British Telecommunications Act, in which provisions are made under statute by this Government for the kind of consultation which this amendment now requires. The complete volte-face which the Government are now doing, away from the conditions of the British Telecommunications Act, on the totally spurious ground that this is a private sector company, is not acceptable and I cannot believe that my noble friends would wish to be reassured by the response that the Government have given.

Lord Auckland

Before my noble friend replies, I wonder whether the Government could have another look at paragraph (c), particularly on the question of safety. May I ask my noble friend whether the Health and Safety at Work Act will apply to this new organisation and whether the Royal Society for the Prevention of Accidents has been consulted? Bearing in mind the large number of accidents which are taking place in industry at the present time, I think that, while paragraphs (a) and (b) of this amendment appear somewhat superfluous, paragraph (c) needs looking into, and I ask my noble friend whether that can be done.

Lord Bruce of Donington

I ask the noble Lord the Minister to be a little more considerate about this amendment. The welfare of the employees of British Telecom is of enormous importance, and the character of the administration to which they will be subjected by the successor company—a management with which I hope they will be able to co-operate as fully as they can—is a matter of enormous importance.

Your Lordships will recall that last night, when we were discussing the code part of the Bill, which appeared to impinge upon the interests of landlords, the Benches behind the noble Lord opposite filled up very considerably. There was a very considerable debate lest landlords, who were not in occupation of a particular part of land which was going to be overlaid by apparatus, should lose their right to compensation. That is all very well, but—

Lord Morris

Would the noble Lord—

Lord Bruce of Donington

I shall allow the noble Lord to intervene presently, because his attitude of arrogant indifference to the matter completely encapsulates the attitude of his party. Even the noble Lord, Lord Cockfield, has rather more sensibility than that. I issue a warning to the Government: if they proceed in their arrogant fashion and assume, even subconsciously, that the ordinary worker in this country is no longer of any account whatsoever, that his rights need not be safeguarded and that all he has to do is to endure the lash of fear which the Government's unemployment policy has subjected him to, they are making a very grave mistake. I sincerely hope that the Government will not keep it up.

One of the principal reasons for the success of German industry, which noble Lords opposite have very often justifiably praised and commented upon, is the policy of mitbestimmung—the policy of consultation—which, oddly enough, was firmly established by Her Majesty's Government in Germany after the war when laying down the procedure for industrial relations. For noble Lords opposite to continue to decry the importance of full consultative procedures and the bringing into line of firms which do not adopt them is a great mistake. They would lose nothing at all but would reassure the employees of British Telecom, comprising some of the most skilled and dedicated people in the telecommunications industry throughout the world, if they abandoned their stubbornness and gave way, even though they might not feel it in their hearts, in order at least to give those employees the impression that the party opposite might, after all, have a human face.

Lord Morris

Quite clearly the noble Lord opposite has totally misunderstood the point. It is nonsense to suggest that noble Lords on this side of the Committee have no sympathy with the underlying point. All we are suggesting is that it is totally unnecessary to have it in a statute. The noble Lord referred to the support and the interest of noble Lords on this side of the Committee when certain matters were discussed yesterday. May I ask whether there were so many noble Lords supporting his side of the Committee as there are sitting behind the noble Lord at this moment?

The Countess of Mar

I have a very great deal of sympathy, understandably, for this amendment. Right the way through the Committee stage I have made my position very clear. One point about which I am very concerned is that the negotiating procedures appear to have broken down a little between British Telecom and their employees. I am anxious that this should not be carried into the new private business. In April 1983, British Telecom unilaterally abrogated, after due notice, the agreement under which either they or the unions could institute mandatory arbitration, which has been the main mechanism by which the unions have sought to resolve disputes over many years. Recently they have also sought to deny the mechanism by which disputes could be escalated to high levels within the organisation for resolution. No disputes procedure is now incorporated, and the unions, which have traditionally sought to resolve their disputes by peaceful means, are finding that their only defence now is industrial action. I am very concerned that it should not be carried through; that there should be some resolution of the situation before privatisation.

Lord Donaldson of Kingsbridge

I should like to support the noble Countess, Lady Mar. It seems to me that the approach of the noble Lord, Lord Bruce of Donington, to the noble Lord, Lord Cockfield, is hardly likely to be very effective, though that of the noble Countess, Lady Mar, might be more effective. We have heard from the noble Lord that the Government agree with the points in the amendment. The question is whether or not they should be put into the Bill. I believe that the unhappiness and uneasiness of the staff would be eased if this were to be achieved without breaking a fundamental principle. No fundamental principle is, I believe, involved. This provides an opportunity for the noble Lord to do what he has done once or twice before in the Bill, though in a rather different way; namely, to do something with the deliberate intention of reassuring the majority of the people who are concerned about their future in this monopoly. Though a 3 per cent, differentiation may end one day by becoming competitive, it is certainly not competitive now. I appeal to the noble Lord on quite different grounds from my colleagues on the Labour Front Bench. It is worth asking him to think again about whether or not a little more could be done to meet the point.

Lord Peyton of Yeovil

I should like to make two short points. The first relates to the language used by the noble Lord, Lord Bruce of Donington. I have only just arrived in this place. One of the most acceptable and notable changes that one observes here is that noble Lords do not make a habit of imputing either silly or malicious motives to others. When the noble Lord stands up and says that we on this side of the Committee conduct ourselves as though the ordinary worker is of no account, he descends, I believe, to something very near idiocy. I want to be very careful, because I realise that the noble Lord, Lord Bruce of Donington, has a right which is not, apparently, shared by others: to use violent language. I do not want to trespass on his preserve.

Secondly, I see absolutely no objection to the contents and meaning of the proposed new clause. I just question the need to put it into an Act of Parliament, or the effectiveness of doing so. We are all greatly given to pieties. We are on the side of the old, the young and the disabled, as of habit. I very much doubt whether those categories whom we most seek to help benefit very greatly from our custom of inscribing these pieties in Acts of Parliament. I have seen Ministers of both Governments in another place rushing to the statute book and emptying their slop pails thereupon, with a whole range of nonsensical results. If my noble friend, following his usual acumen and judgment, supports on this occasion the cause of economy in statutes and does not follow the habit of increasing their verbiage, then I, for one, will applaud him.

Lord Cockfield

First may I thank the noble Lord, Lord Donaldson of Kingsbridge, and my noble friend Lord Peyton of Yeovil for their personal support. The noble Lord, Lord Bruce of Donington, dons the cloak of indignation like a well-worn garment. It does, of course, keep him warm, if it serves no other purpose. Turning to the amendment, all of us agree with the sentiments expressed in it; there is no question about that. We all recognise the immensely important part which the management and the workers in British Telecom play in the success of that business. We hope that the business will go from success to success and that it will continue to provide good employment, good working conditions and job satisfaction—and be an organisation in which people are happy and proud to work. The experience of companies which have been privatised is very good in those respects. We see no reason to suppose that the same will not be true in the case of British Telecom.

Where we part company is on the question of whether one writes all this, not into law but into this particular statute. I have said already that if there were a feeling that the law generally needed strengthening, that is a matter which can very properly be discussed in the context of other legislation. Indeed, the noble Lord, Lord Rochester, has very much to his credit the success of incorporating the particular provision to which he referred in the Employment Act 1982. That is the correct way of proceeding. What I believe to be wrong is writing conditions of this kind into a specific statute relating to a particular company. It is on those grounds that I oppose the proposed new clause, not because we in any way dissent from the quite admirable expression of goodwill which it contains.

Lord Rochester

Before the noble Lord sits down, is he saying, then, that if some means could be found of introducing a statute which obliged companies generally to adopt consultative procedures, that would have his sympathy? If that is so, it is very reassuring and comforting to a number of us on this side of the Committee.

Lord Cockfield

No. As the noble Lord will really realise, I was saying that if such a statute were introduced, it would be a subject for legitimate debate in your Lordships' House.

Lord Stoddart of Swindon

This has been a most interesting debate—spirited at times. I am not satisfied with the answer given by the noble Lord, Lord Cockfield. It is a simple amendment. We are merely asking that the successor company shall satisfy the Secretary of State that it will do these things. It is not a question of writing something further into the statute book. It is merely asking the Secretary of State to reassure himself that these things will be done.

The noble Lord said that he was with us in spirit. We propose to put some body on that spirit, and I therefore beg to move the amendment.

6.53 p.m.

On Question, Whether the said amendment (No. 129) shall be agreed to?

Their Lordships divided: Contents, 90; Not-Contents, 110.

Airedale, L. Attlee, E.
Ardwick, L. Aylestone, L.
Barnett, L. Kilmarnock, L.
Bernstein, L. Kirkhill, L.
Beswick, L. Lawrence, L.
Birk, B. Leatherland, L.
Bishopston, L. Listowel, E.
Boston of Faversham, L. Llewelyn-Davies of Hastoe, B
Bottomley, L. Lloyd of Kilgerran, L.
Bowden, L. Lockwood, B.
Briginshaw, L. Longford, E.
Bruce of Donington, L. McIntosh of Haringey, L.
Carmichael of Kelvingrove, L. Mackie of Benshie, L.
Chitnis, L. MacLeod of Fuinary, L.
Cledwyn of Penrhos, L. Mar, C.
Collison, L. Melchett, L.
Darling of Hillsborough, L. Milner of Leeds, L.
David, B, [Teller.] Molloy, L.
Dean of Beswick, L. Nicol, B.
Delacourt-Smith of Alteryn, B. Northfield, L.
Oram, L.
Diamond, L. Peart, L.
Donaldson of Kingsbridge, L. Pitt of Hampstead, L.
Ennals, L. Ponsonby of Shulbrede, L. [Teller.]
Ewart-Biggs, B.
Fitt, L. Prys-Davies, L.
Gaitskell, B. Raglan, L.
Gallacher, L. Rea, L.
Galpern, L. Rochester, L.
Gladwyn, L. Ross of Marnock, L.
Glenamara, L. Shackleton, L.
Graham of Edmonton, L. Stallard, L.
Gregson, L. Stedman, B.
Grimond, L. Stewart of Alvechurch, B.
Hale, L. Stewart of Fulham, L.
Hampton, L. Stoddart of Swindon, L.
Hanworth, V. Strabolgi, L.
Harris of Greenwich, L. Taylor of Blackburn, L.
Houghton of Sowerby, L. Taylor of Mansfield, L.
Hughes, L. Tordoff, L.
Irving of Dartford, L. Underhill, L.
Jacques, L. Wedderburn of Charlton, L.
Jeger, B. Whaddon, L.
Jenkins of Putney, L. White, B.
John-Mackie, L. Wilson of Rievaulx, L.
Kaldor, L. Winterbottom, L.
Airey of Abingdon, B. Fraser of Kilmorack, L.
Allerton, L. Glanusk, L.
Avon, E. Glenarthur, L.
Bellwin, L. Gowrie, E.
Belstead, L. Gray of Contin, L.
Boyd-Carpenter, L. Grimston of Westbury, L.
Brookes, L. Hailsham of Saint Marylebone, L.
Brougham and Vaux, L.
Broxbourne, L. Halsbury, E.
Bruce-Gardyne, L. Harmar-Nicholls, L.
Caithness, E. Hayter, L.
Campbell of Croy, L. Henley, L.
Carnegy of Lour, B. Hives, L.
Cathcart, E. Home of the Hirsel, L.
Chelmer, L. Hornsby-Smith, B.
Cockfield, L. Hunter of Newington, L.
Coleraine, L. Hylton-Foster, B.
Colville of Culross, V. Ingrow, L.
Colwyn, L. Kilmany, L.
Cork and Orrery, E. Kimberley, E.
Cornwallis, L. Kinloss, Ly.
Craigavon, V. Lane-Fox, B.
Crawshaw, L. Lindsey and Abingdon, E.
De La Warr, E. Long, V.
Denham, L, [Teller.] Loudoun, C.
Dilhorne, V. Lucas of Chilworth, L.
Drumalbyn, L. Lyell, L.
Ellenborough, L. McAlpine of West Green, L.
Elliot of Harwood, B. Mackay of Clashfern, L.
Elphinstone, L. Macleod of Borve, B.
Elton, L. Mancroft, L.
Enniskillen, E. Mansfield, E.
Faithfull, B. Margadale, L.
Ferrier, L. Marley, L.
Marshall of Leeds, L. Sandford, L.
Maude of Stratford-upon-Avon, L. Sandys, L.
Shannon, E.
Merrivale, L. Skelmersdale, L.
Milne, L. Somers, L.
Milverton, L. Spens, L.
Monk Bretton, L. Stodart of Leaston, L.
Montgomery of Alamein, V. Strathcona and Mount Royal, L.
Morris, L. Sudeley, L.
Mottistone, L. Suffield, L.
Mowbray and Stourton, L. Swansea, L.
Swinton, E, [Teller.]
Murton of Lindisfarne, L. Teviot, L.
Nugent of Guildford, L. Thorneycroft, L.
O'Neill of the Maine, L. Tranmire, L.
Onslow, E. Trenchard, V.
Pender, L. Trumpington, B.
Peyton of Yeovil, L. Tryon, L.
Plummer of St. Marylebone, L. Ullswater, V.
Vaux of Harrowden, L.
Rankeillour, L. Vickers, B.
Rochdale, V. Whitelaw, V.
St. Davids, V. Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

7.1 p.m.

[Amendment No. 130 not moved.]

Clause 59 [Initial Government holding in the successor company]:

Lord Rochester moved Amendment No. 130A:

Page 52, line 29, at end insert— ("or unless he is satisfied that the successor company has established, or is about to establish, one or more employees' share schemes which will enable all full-time employees in the United Kingdom of the successor company and of every subsidiary thereof to acquire securities of the successor company on advantageous terms both upon the occasion of the issue of any prospectus relating to the successor company and otherwise.").

The noble Lord said: The purpose of this amendment is to ensure that when the successor company is floated, and thereafter, adequate arrangements will be made for employee participation by means of share ownership. It may be for the convenience of the Committee, because Amendments Nos. 143B and 143C are simply consequential on this one, that I should speak to them now.

Amendment No. 143B: Page 60, line 14, at end insert— (" "employees' share scheme" bears the same meaning as in the Companies Act 1980."). Amendment No. 143C: Page 60, line 20, leave out ("has the same meaning") and insert ("and "prospectus" bear the same respective meanings").

It seems to us important that in this instance, as in previous cases of so-called privatisation, the Government should encourage participation by employees in the ownership of share capital. If the diffusion of ownership is to mean anything, then individual share ownership is needed to counterbalance the weight of institutional holdings, and, above all, the workforce needs to feel a sense of involvement in the affairs of their employing company.

In this amendment we are asking for no more than has already happened in the case of British Petroleum, British Aerospace, Cable and Wireless, Amersham International. The amendment is deliberately flexible as to the precise form of the scheme or schemes that might be used, provided that they are one of the broadly based schemes, in other words, one of the schemes capable, if approved by the Inland Revenue, of conferring tax advantages on participants, and, by virtue of such approval, are bound to be extended to all full-time United Kingdom employees, subject only to any requirement as to length of service imposed by the scheme concerned.

The Committee may already know of some of the successes of these broadly based schemes. The first category are those which were introduced under the provisions of the 1978 Finance Act, itself a product of the Lib-Lab pact. The title given to such schemes in the legislation was "profit sharing". We prefer the term "employee share ownership" schemes. These schemes, which the present Government have made more attractive, I acknowledge, by raising the annual individual limits for participation, have had a remarkable effect on the pattern of individual share ownership in this country. Over 380 have been approved by the Inland Revenue, and the number of participants in them, how well over 300,000, is estimated to have raised the number of people of employment age directly owning shares in British companies by over one-third.

The second type of scheme which is available is the savings related share option scheme, introduced under the provisions of the Finance Act 1980. While this has by definition not yet made any impact on the pattern of actual ownership of shares, the earliest options granted not yet having run their five-year course, it is nevertheless encouraging that 280 such schemes have already been approved.

As I have said, the amendment does not seek to lay down the precise way in which either or indeed both of these schemes can be operated in relation to British Telecom on the occasion of the flotation or subsequently. Nor does it specify in the case of an employee share ownership scheme whether the funds are to be provided by the successor company or by the Government or even both. Indeed, it is surely best that actual detail should be tailored to the particular circumstances. I commend this amendment to the Committee, and in view of the flexible way in which it is drafted we hope that the Government will be able to accept it, or at the very least give us sufficient assurances to ensure that we do not feel obliged to press it further at this stage.

Lord Grimond

If I may very briefly intervene, I would wish to support the amendment moved by my noble friend. I ought I suppose to confess to an interest in that I am chairman of an organisation called Job Ownership Limited which exists to promote co-operatives, management buy-outs and the like. I think everyone would agree that the wider ownership of shares is highly desirable in this country, and also greater participation by the workers in the management of the companies in which they work.

I believe there are two or three special arguments in relation to this particular company. First of all, many of us believe that privatisation by turning public monopolies into private monopolies is not the only way forward and that the expansion of worker controlled companies offers a third and very useful path for industry. Secondly, there are many signs that the gap between rich and poor in this country is increasing, and as the technological revolution proceeds there are going to be enormous profits of capital and a lot of capital invested in such areas as telecommunications, while the demand for labour will fall. The best way, it would seem to me, of reinstating the balance and enabling people at large to take part in the advance of technology is to give them a share in ownership.

In addition to those cases mentioned by my noble friend, of course there was the great success of the National Freight Consortium bought over by its management. I imagine that one of the difficulties here is the sheer size of British Telecom. In the case of the National Freight Consortium the banks, I think, put up £10 for every £1 put up by the participants who bought it. In this case the banks would have to put up very much more to approach anything like a manageable buy-out. Indeed, when we come to the provisions of the Finance Acts which have already been mentioned, to give a significant shareholding to the people working in British Telecom would require a very large amount of money.

Whether the City would accept that is questionable; it would go far beyond what are at present guiding lines of the City as to what they think is supportable in the way of taking advantage of the Finance Acts. Whether they would support it or not I do not know. But I would urge the Government at least to make their view clear that what has been done in the case of British Aerospace and other cases of privatisation should be repeated here.

Finally, I should like to put two or three possibilities to the Government. First, they should extend what has been done in recent Finance Acts to encourage not only share ownership but also the control of companies by workers. They might at least indicate that they think it would be a good thing if the eventual directors of British Telecom got together with the unions and the City to see how much loan capital could be raised, so that it becomes feasible for more shares to be taken up by the people working in the business. I hope, too, that the City institutions will not attempt to lessen the effect of the Finance Acts by resisting the operation of the share schemes.

There is also the point that interest reliefs are available only for the first 12 months. To gain the full effect of the present Acts, in many cases a great many of the shares must be held by trusts. I would have thought that the 12-month period should be greatly lengthened so that people who come into British Telecom later can take advantage of the interest relief on the money they have to borrow to buy shares. I would also have hoped that the interest reliefs could then themselves be extended. There is of course the possibility which was mentioned earlier that British Telecom might be split up. We have dealt with that matter for the time being. If it were to be split up in the future, it would make it much more feasible to introduce a genuine co-operative principle into some of the component parts and to follow the example of the National Freight Corporation and possibly make it a genuinely worker-controlled company.

I hope that the Government will look favourably upon this, and even if they do not accept the wording of the amendment will indicate that they think the example of British Aerospace should indeed be followed in this case.

Lord Weinstock

The noble Lord, Lord Grimond, has shot my fox and mown down a great many other animals at the same time. There is widespread support for the idea of wider share ownership. The trouble is that this amendment applies to a particular company. I hope that the noble Lords on the Government Front Bench will think it worth while referring their right honourable friend the Chancellor of the Exchequer to this widespread feeling in support of wider share ownership in the hope that he may in his next Budget do such things as may make this possible for a great many other companies besides British Telecom.

Lord Donaldson of Kingsbridge

I intervene only to say from these Benches that we support our noble friends immediately in front of us.

7.12 p.m.

Lord Cockfield

The noble Lord, Lord Rochester, has played a prominent and valuable part in the encouragement of wider share ownership. In their turn, the Government have taken important steps to encourage share ownership by employees, particularly in the tax field. The noble Lord, Lord Grimond, made a number of very helpful suggestions. I shall most certainly refer what he has said to my right honourable friend the Chancellor of the Exchequer. I have also noted what the noble Lord, Lord Weinstock, said, and I shall draw the attention of my right honourable friend to his remarks as well.

I come now specifically to the amendment. We intend to fulfil the spirit of the amendment at the time of the flotation. The Government are considering a free and matching share offer for employees along the lines of those in past privatisations. The pattern we are following is, therefore, broadly the same as on previous privatisations. The free and matched shares would be vested in a profit-sharing scheme which would benefit from tax concessions under the Finance Act 1978. So employees would have an opportunity to acquire shares on advantageous terms during the initial flotation; and, if I may say so, the amendment is therefore unnecessary in this respect.

The Government's involvement in employee shareholdings must necessarily be limited to the initial flotation. The profit-sharing scheme established at the time of the flotation would continue in being, but the actual conditions for further share purchases by employees—for example, whether a matching contribution is required from employees and whether there is sufficient profit in any particular year or at any particular level to do this—will clearly be a matter for the successor company to decide. These are matters which need to be left to the successor company to determine in consultation with its employees. It will also be for the successor company to decide whether to set up a savings-related share option scheme or any other type of scheme aimed at encouraging employee shareholdings.

We agree, therefore, with the spirit underlying the amendment, and indeed in practice we shall go a long way to meet it. However, the amendment does not allow the element of flexibility and discretion which ought to be accorded to the new company. I have always been a strong supporter of shareholder participation. There is nothing between us on principle. It is simply that I do not think that legislating in this Bill is the right way to deal with this particular issue.

With this explanation, and with the indication that in practice on the flotation we will make provision of the kind which has been customary in the past, I hope that the noble Lord will feel able to withdraw his amendment.

Lord Rochester

I am most grateful to those noble Lords who have spoken. My noble friend Lord Grimond has very considerable knowledge of and sympathy with the whole concept of employee share ownership, as he made abundantly plain. As was perhaps apparent from his remarks, I know that knowledge extends particularly to what is aimed at in the case of co-operatives. I also thank the noble Lord, Lord Weinstock, for the degree of support that he felt able to give to this amendment. I am grateful in particular to the noble Lord, Lord Cockfield, for what he has said, and for his agreement, as I understood it, not simply with the spirit of this amendment but that it should be possible on the flotation of the company, at least, for effect to be given to something on the general lines of this amendment.

My noble friends and I will naturally wish to study a little more closely what it is that the noble Lord, Lord Cockfield, has just said to us, but we are satisfied that he has said sufficient to enable me to withdraw the amendment at this stage. Again, I express my gratitude to him.

Lord McIntosh of Haringey

Before leave is given for the amendment to be withdrawn, may I remedy an error of silence on our part? From these Benches we should have said that we support the amendment and think that the noble Lord, Lord Rochester, has achieved something quite considerable in the response of the noble Lord, Lord Cockfield. We join in thanking him for it. We believe that this debate has been worth while.

Amendment, by leave, withdrawn.

Lord Bruce of Donington moved Amendment No. 131: Page 52, line 43, at end insert ("which shall be given only after approval by resolution of each House of Parliament").

The noble Lord said: Your Lordships will be aware that Clause 59 of the Bill gives the successor company the right to: issue such securities of the company as the Secretary of State may from time to time direct—

  1. (a) to the Secretary of State; or
  2. (b) to any person entitled to require the issue of the securities following their initial allotment to the Secretary of State".

On the face of it that appears to be quite an innocuous power, until one goes a little lower down Clause 59, to subsection (5), which states: The Secretary of State may not exercise any power conferred on him by this section, or dispose of any securities issued or of any rights to securities initially allotted to him in pursuance of this section, without the consent of the Treasury". Your Lordships' Committee will be aware that the amendment that I present for consideration proposes the addition of the words: which shall be given only after approval by resolution of each House of Parliament".

The Committee may wonder why in these circumstances I attach such importance to both Houses of Parliament having to approve the disposal, because "dispose" does not necessarily mean to dispose of for value. If it were a question of disposing for value, totally different considerations would arise. Unless when he replies the noble Lord cares to correct me, I would say that in this particular case "to dispose of means to dispose of by gift.

Noble Lords, will be aware that among the present liabilities of British Telecom—I am not going to speak in precise figures—there is £2,700 million-odd worth of loans made to British Telecom by the Secretary of State. They are a liability, and over the period of time of repayment they would in principle and interest bring about £6,000 million into the Treasury. The Bill provides that in regard to the arrangement whereby British Telecom is responsible by way of instalments over 20 years (as is stated in the notes to its accounts) there will be an issue of debentures. In general that means—and I am indebted to the notes on this point supplied by the noble Lord—that the Government would be entitled to the same amount of capital in debenture capital terms, and the interest burden of British Telecom payable to the Government or to the debenture holder would be equalised over the period of time during which the debentures were termed.

In short, the financial provisions of the Bill provide for the conversion of the loans by the Secretary of State, which are repayable to him over a period of years, to be changed into debentures. So far so good, because that would mean that the Secretary of State would be owed his money in debenture form as distinct from loan form. But it is an asset in the hands of the state, in the hands of the Treasury.

The Committee will have noted that when, under an earlier clause of the Bill, the assets and liabilities of British Telecom are transferred to the successor company, one of the important liabilities of British Telecom, shown in its balance-sheet at £1,250,000, is transferred to another company altogether. The liability is transferred so that the new subscribers for the share capital of the successor company will not be encumbered by a liability of £1,250,000 which is already in British Telecom's balance-sheet.

On initially looking through that provision I wondered to myself how can a liability be transferred to another company unless assets are transferred with it, since otherwise the company would be immediately insolvent, having all the liabilities but no assets. The way in which I apprehend the Government are to proceed in this particular matter is that they will make a gift back to British Telecom of the debentures that have been issued to the approximate amount needed to enable the liability that has been transferred to be extinguished. In that way the Treasury, which is the taxpayer, is that amount worse off. Moreover, if the amount of the debentures disposed of is to be sufficient to cover any indexation rights attaching to pensions, the amount of debentures that will be given back as a direct gift by the Government, or disposed of by them, will be very much larger.

This is not the time to go through the detailed implications of this matter, though I have already worked them out; they are hardly appropriate to this amendment. All I am saying is that if debentures are disposed of in this way for the purpose of the extinguishment of a liability which will not be borne by those who invest in the new successor company to British Telecom, then at the very least Parliament should know the value of what has been transferred or disposed of. For that reason, I venture to move this amendment.

It may be that I have misinterpreted the very full notes with which the noble Lord so kindly provided me last week; but I think that the general picture I have given is, broadly speaking, correct, though we may have to argue more upon it at a later stage when the full financial implications of the privatisation of British Telecom come to be considered. However, for my immediate purpose I ask the Committee to accept the amendment proposing that disposals of securities in this sense should first of all receive the approval of both Houses of Parliament. I beg to move.

Lord Lloyd of Kilgerran

Before the noble Lord the Minister replies, I should like to ask what are the notes which the noble Lord, Lord Bruce of Donington, is relying upon. It would seem to me that there is far closer collaboration between the Government Front Bench and the Opposition Front Bench than there is with these Benches, because we have had no notes at all in regard to this matter. I am sure that it is just one of those accidents of fortune or misfortune which befall some of us sometimes.

Lord Bruce of Donington

In fairness to the noble Lord. Lord Cockfield, I would point out that the notes were provided to me after I had made an urgent request through the usual channels, in order to facilitate my study of the particular financial clauses of the Bill. I am, of course, very happy to supply the noble Lord with a copy and I have already mentioned this to him.

Lord Lloyd of Kilgerran

I hope that the noble Lord, Lord Bruce of Donington, is not suggesting that we are not interested in the financial parts of the Bill. We are as interested—although we are perhaps not quite so eloquent about it—as he is. We would have liked to have the notes in order to consider this matter intelligently.

7.30 p.m.

Lord Cockfield

I should like first to deal with the point raised by the noble Lord, Lord Lloyd of Kilgerran. The intention was that these notes should be generally available. That is the normal, common practice when notes of this sort are prepared. If something has gone wrong with the distribution arrangements I can only apologise to the noble Lord, Lord Lloyd. I shall have urgent measures taken to ensure that the matter is put right.

Lord Lloyd of Kilgerran

I am very grateful to the noble Lord.

Lord Cockfield

The comments made by the noble Lord, Lord Bruce of Donington, in proposing the amendment, went much wider than the amendment itself. They extended over the whole field of the structure that was to be adopted for privatisation. I can perhaps deal with that at a rather later stage. So far as the amendment itself is concerned, the noble Lord expressed some surprise at the inclusion of the phrase, "without the consent of the Treasury" in Clause 59(5). I thought that he would have realised by now that the Treasury keeps a very firm grip on what everyone does where money is involved.

Lord Bruce of Donington

I should like to put on record that I did not intend to query the consent of the Treasury in any way. It was the words, "dispose of that were the centre of my attention.

Lord Cockfield

The point here is that the word "dispose" includes gift as well as sale. The reason for the gift is precisely the point raised by the noble Lord, Lord Rochester—that some free shares will be made available to employees. We want to ensure that the legislation is drafted in a form that enables that to be done. So far as the great mass of shares is concerned, the obvious intention is to get full value for them. One reason for including the consent of the Treasury is to make certain that this is done.

On the broad question of the approval of Parliament, I would make the point that the question of whether or not BT is to be privatised is the whole substance of the present Bill. Once a Bill is enacted it has received the approval of Parliament. A second approval is a quite unnecessary complication. There is no reason for it whatever. If the Bill is passed by both Houses, that is a clear authority for the initial flotation. If we wished to sell more shares subsequently, we would give Parliament adequate forewarning of our intentions, as we have done in the past. It is unnecessary and it is not possible on such an occasion to seek specific approval for the actual details of the flotation.

I am not in any way detracting from Parliament's authority in resisting these amendments. The Government are not seeking any extra discretion here beyond what has been conferred by past privatisation legislation. The flotation itself will be a most public act, so that the Government's performance will be before Parliament. Accordingly, if I may say so, the amendment is unnecessary. I hope that the noble Lord will not pursue it.

Lord Bruce of Donington

I am obliged to the noble Lord. Perhaps he will clarify the point that I raised. It is important at this stage that it is not lost. Am I to take it from his reply that the debentures, which are issued to him in lieu of the loan liability by British Telecom to the Secretary of State, will not be alienated from the Secretary of State's ownership in order to satisfy other excepted liabilities of British Telecom? This is most important. It is very important indeed. If the noble Lord is able to answer the point, I shall be greatly obliged.

Lord Cockfield

The issue of the debentures is necessary to avoid a tax consequence that would arise if the National Loans Fund advances were simply repaid in the ordinary way. The intention is not in any way to relieve the successor company of the debt burden it inherits from British Telecom. We are really talking about Clause 60 in this respect. The clause is necessary to close off a potential tax gain on the early repayment of National Loans Fund loans. This gain would not be available to the successor company on loans taken out from the private sector. It would be wrong to allow such a tax advantage to the successor company when it is privatised.

The clause therefore provides for the National Loans Fund loans to be translated into debentures which will not have the same terms of early repayment. The clause will also allow, with the agreement of BT, the other terms and timing of repayment of the debt to be made more suitable to the successor company's start in the private sector. Clause 59 itself provides for the issue to the Secretary of State for securities in the form of equity. That equity in due course will constitute the shares that will be sold as part of flotation.

Lord Bruce of Donington

I am sorry to press the noble Lord further. I am grateful to him for his reply. I am fully seized of the fact that the loans will be converted into debentures and that there are tax advantages to that. I accept that. I understand that the debentures will be so conditioned that the payment of interest to the debenture holders will be more amenable and more evenly spread for the purposes of the successor company. All this I understand. What concerns me is the ownership.

At present British Telecom is indebted to the tune of £2,703 million worth of loans. These are assets. Instead of those loans being expressed in whatever form loans normally are—loan notes or otherwise—they will now be translated into debentures. So the Secretary of State now has debentures in his hands as distinct from having loan notes or whatever was the case previously. Can the noble Lord give an assurance that these debentures which he holds in his hands will remain assets in his hands and, through him, in the nation's hands? They are the nation's assets held through the Secretary of State. Or will these debentures be used in another way altogether to liquidate other liabilities, the excepted liabilities, that British Telecom will not continue to bear because of the provisions of Clause 58?

Lord Cockfield

The debentures, as I have explained, will be issued in place of NLF loans. They will remain in being as a liability of the successor company. They will be subject to whatever may be the appropriate repayment terms. Privatisation will be carried out by the issue by the new company to the Secretary of State of securities. Those securities will form the foundation of the flotation. The excepted liabilities as they are called are quite a separate issue.

Lord Bruce of Donington

I should like to go on record as saying that the noble Lord has not given a categorical answer to the categorical question that I put to him on at least two occasions. However, I shall return to the matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Denham

It seems to be for the convenience of your Lordships that we should now resume for the dinner adjournment. In moving that the House do now resume, let me tell your Lordships that we will not revert to this particular Bill until 8.40 p.m.

I beg to move that the House do now resume.

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

House resumed.