Telecommunications Bill

HL Deb 20 March 1984 vol 449 cc1109-78

3.2 p.m.

Further considered on Report.

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

Lord Stoddart of Swindon moved Amendment No. 111: Page 53, line 5, after ("day") insert (" which shall not be earlier than 9th June 1988").

The noble Lord said: My Lords, this amendment stands in my own name and that of my noble friends Lord Bruce of Donington and Lord McIntosh of Haringey. As your Lordships will see, the amendment seeks to defer vesting day for the new company until a date following the next general election. I realise of course that the next general election might conceivably come after the fifth anniversary of the last election, but this would be unprecedented and the most likely date in my view for the next election is October 1987, but that is not my decision. If it were it would come a lot sooner. But it is my view that it will not be held until October 1987.

Some may see this amendment as a wrecking amendment. If that were so, it would be legitimate to criticise it on those grounds, but it is not. Indeed there is good precedent for delaying the Bill beyond the date of the next general election because when the Government introduced the original Telecommunications Bill in 1982 they said that it would not become operative until after the last general election, which need not have taken place until May this year. As it happens the first Bill fell because the Prime Minister decided to scurry to the country a year before it was necessary to do so.

It is interesting to note that during the interval between the demise of the first Bill and the introduction of the present Bill the Government made significant alterations. During the passage of the present Bill through Parliament the Government have made countless amendments, and additionally have had other amendments imposed on them by this noble House. I discovered that in Committee in this House the Government moved no fewer than 75 amendments to the Bill. On Report stage they have moved 145 amendments. In the House of Commons, when I attended in the Gallery, I counted 130 amendments on Report stage; but due to the guillotine the Government amendments were not properly discussed. Most of them were voted upon without discussion. Furthermore, a huge number of Opposition amendments simply fell without discussion or votes. We can see that in the timescale of two years the Government have altered the Bill very substantially indeed, and many other alterations which perhaps should have been made were not made because this very important Bill was guillotined in another place.

The passage of time has therefore had a significant effect on Government thinking—it must have done—and on opinion generally, not least in this noble House. The passage of time has been beneficial. As the Bill has proceeded through this House, there has been increasing unease here and in the country generally. The Opposition parties are opposed to the Bill in principle and they have made no secret of that. But criticism of and unhappiness with the Bill is not confined to the Opposition parties. Criticism and opposition to significant parts of the Bill have come from all parts of the House. The noble Lord, Lord Weinstock, for example, has on many occasions voiced his outright opposition to this part of the Bill in particular, which he believes merely turns a public monopoly into a private monopoly and is therefore against the whole ethos of free competition which the Government pretend to embrace. Only yesterday, during our deliberations the noble Lord, Lord Weinstock, described the Bill in scathing terms as a ridiculous Bill.

The unease about the Bill has been shown by noble Lords opposite through the large number of amendments that they moved during Committee stage—relevant amendments. In this present stage they have come to realise that this Bill has nothing whatever to do with free competition and the free play of market forces, and that the outcome will be a more rigid, inflexible, bureaucratic regime than has ever existed under either the Post Office or British Telecom. It is clear that this Bill is simply not acceptable as it stands. There is need for widespread public consultation, and following that, the consent of the British people, who remain opposed to the Bill in principle, at a general election.

I repeat that this amendment is not a wrecking amendment—how could it be? The Bill is already wrecked not least by the amendment moved yesterday, not by the Opposition parties, but by the noble Lord, Lord Morris, and passed by your Lordships with a comfortable majority against the advice of the Government.

So the Bill has few friends outside the Government. The consuming public are against it. They think it a daft measure. The trade unions are against it, not only because they believe it will adversely affect their jobs and conditions of service, but because they believe that the Bill will harm the telecommunications industry itself. Manufacturers are against the Bill because they see no merit in converting a public monopoly into a private one and because they believe, with every justification, that their industries will be hurt by an influx of foreign equipment, especially from Japan. The City is certainly doubtful about the wisdom of the Bill and fearful of the effect on the market of an issue of BT shares amounting to some —4,000 million. It is believed that the stock market and the financial markets simply will not be able to absorb the shock of such a mammoth issue and that the Government will be forced to sell huge chunks of stock to foreign buyers.

In relation to the sale of BT shares to foreigners, I was interested to read a note of a meeting in Tokyo on 20th and 2Ist June 1983 between the DTI and MPT of Japan when this subject came up during discussions. I will quote the relevant paragraph which noble Lords will find interesting, and in some senses perhaps amusing. I quote paragraph 8 which says: We took the opportunity to make the point to the Japanese side that it was possible that Ministers might decide to seek to sell shares in BT plc outside the UK and that Japan might be one possible market in which shares would either be sold to the public or placed with individual large firms. The Japanese found it difficult to believe that we were serious in suggesting a Japanese shareholding in BT and pointed out that in Japan there was a law preventing any foreign shareholding in Japanese communications companies".

In fact it would appear that the Government are already making soundings about selling off part of British Telecom to foreign countries, notably Japan.

The press, too, has not been over-enamoured of this Bill and there has been much critical comment about it in several leading newspapers. I will not weary your Lordships with a multitude of newspaper quotes, but there was an article in the Financial Times on 7th March this year which I thought was particularly pertinent and succinct and I will read a couple of relevant passages from the article, which was written by Mr. Alex Henney, who has been a temporary civil servant, is chairman of the London Electricity Consultative Council and last year visited the USA to study utility regulation. So his views are of some import. This is what he said: The ill-considered regulatory proposals reflect the main objective of disposing of BT for as high a price possible to reduce the PSBR. They also reflect our political and social values. The U.S. is a society where customers count, where individuals have their say, and where people get cross about poor performance. Despite the rhetoric, in its dealings with (nationalised) industries post-Thatcher Whitehall is often producer-dominated and distrustful of consumers, secretive and suspicious of individualist grit in the corporate state's smooth, and too often slovenly, operation. We are setting up an enormous private monopoly that is unaccountable, under-regulated and largely unassailable. It will take several years"— and I will repeat that: "It will take several years"—

"to tell whether there is anything in it for the public at large—but several years are an eternity in politics".

That really puts the whole Bill in proper perspective and sums up the views of so many people who have fears about the future effects of the Bill. Since being elected, this Government have slipped on many banana skins, they have lost credibility and electoral support. This amendment, if accepted, may very well prevent the Government from tripping over telephone wires as well as slipping on financial banana skins.

I hope, therefore, that noble Lords will join us in the Lobbies to save the country and, indeed, the Government from the folly of this Bill as it presently stands; because, if this amendment is supported, it will, as I said earlier, give the Government, give the country and give the people concerned with telecommunications a breathing space in which the Bill can be improved, and improved to the benefit of the Government and the country as a whole.

3.14 p.m.

Lord Lloyd of Kilgerran

My Lords, I think it was the Economist which recently paid a great tribute to your Lordships' powers of revision of Bills when it stated that your Lordships' House offered the last chance before the monster of British Telecom escaped untamed into the private sector. The article went on to say something to the effect that, unless your Lordships can exercise some control on this monster, all that will be achieved will be rather cheaply to set free a large predator on to the industrial market without achieving the financial benefits hoped for by the Government.

The Telecommunications Bill, so far as I can understand it, has two objectives. It is to restructure BT, it is to remove from BT certain monopoly powers that it has at present and it is to make it subject to a licence, with a director of telecommunications appointed to ensure that this and other licences are effective. Once that has been done, then there is a second main objective: to provide a private company in which all the assets of BT shall be vested. When that is done, this Government-owned company will go to the market in order to sell part of its equity.

The second objective of privatisation, of going to the market, can be contemplated only after BT has been properly reconstructed. Therefore, the first objective of this Bill can stand even if there is a postponement of the forming of the company into which the assets are to be vested and, certainly, even if the privatisation aspect is to be postponed. Therefore, on that argument, I personally take the view that to some extent it is not a wrecking amendment merely to seek to postpone the vesting of the assets of BT into a private company and its sale thereafter.

However, I am not enamoured of the interval of time which this amendment suggests. As your Lordships know, British Telecom has been restructured lately. Over the past few years, dramatic changes have been taking place in its structure. So a restructuring of BT is nothing new in basic principle, but I am not going to take up your Lordships' time by referring to the 1981 Act.

This Bill first of all proposes further major changes in the modus operandi of British Telecom. It seems to me that it is in the interests of British Telecom and certainly in the interests of customers and competitors that it should have time to adjust to these major changes. Yet the Government are determined, it seems, to impose on it within a matter of weeks perhaps, but certainly of months, the further upheaval of this privatisation and sale to the market.

In connection with this amendment, I should like to put to your Lordships what I understand is a simple question you have to answer this afternoon. Are your Lordships satisfied that, in all the circumstances, the structure of BT can be adequately modified and tested so that it is appropriate to vest its property in the company nominated by the Secretary of State under Clause 38 as quickly as the Government desire? And I understand that that is to happen very quickly. I also submit that some delay until the structure of BT has been tested for a reasonable period in the market would be a good preparation for a more successful flotation.

It is perfectly clear that the huge and difficult task of modifying the structure of BT has not been achieved by a long way. That the structure has not been finalised, let alone tested, is apparent from the attitude of the Government. The Government themselves in this House have tabled over 200 amendments and, what is more, your Lordships have been promised more amendments at Third Reading. Today, we have in the Marshalled List pages of amendments, not merely consequential ones but amendments occupying whole pages.

My Lords, I do not propose to take up your time by referring to the amendments that have been accepted, sometimes in whole and sometimes in part, as moved from the Benches of this side of the House. A large number of amendments have been withdrawn, and many were put forward by Members on this side of the House, for which the Ministers concerned have expressed great sympathy. On many occasions Ministers have said that they agree with the objectives we have in mind on these amendments; it is not the method of achieving those objectives on which there can be agreement.

It is also very significant that in this House amendments are being dealt with by senior Ministers of the Government. As members of the Cabinet, the noble Lord the Chancellor of the Duchy of Lancaster and the noble and learned Lord and Lord Advocate have both taken the brunt of the more serious amendments put forward. Even what happened in this House yesterday shows that both these Ministers are themselves not wholly satisfied with certain amendments which they themselves have submitted to this House. They are not satisfied that they can in practice achieve the desired results, so complicated are the problems to be dealt with. I think it is fair—certainly I think it is my duty—to refer briefly to what happened yesterday in order to illustrate the point I have made. I have already given notice to the two Ministers concerned that I propose to refer to their speeches of yesterday.

My first reference is at column 979 of your Lordships' Hansard for yesterday. The noble and learned Lord the Lord Advocate, in dealing so fairly as he does with his own amendments, said this—and if noble Lords wish me to read more than I am reading, then I am quite prepared to do so in order that the whole story shall be displayed, and to illustrate the doubt that is in the minds of senior Ministers in regard to certain aspects of this restructuring of British Telecommunications. The noble and learned Lord said: Perhaps I might add that since seeing Amendment No. 66 we have been reconsidering our own approach because it might well be sensible to seek a remedy in relation to a prospective breach of a licence condition by reference to something that has happened which shows evidence of the probable contravention. We are considering, therefore, what may be needed as an amalgam of the two approaches, and as I indicated in my opening remarks we certainly had this in mind with a view to considering what improvements might be made on these amendments at Third Reading". The noble and learned Lord was introducing a package of amendments—about ten or a dozen—at that time.

As might be expected, I took him up on that point and at column 981, if I may paraphrase to some extent, I said that the noble and learned Lord referred to a very serious commercial and legal problem and that he did not seem to be satisfied with all these amendments, clustered together as they were and as spoken to so clearly by him, because I understood him to say that the Government were proposing to bring in other amendments allied to this group. In view of the anxiety of the noble and learned Lord as to whether the amendments were accurate, I tried to tempt him perhaps to withdraw them.

Something similar happened again when the noble and learned Lord presented amendments at column 989 of yesterday's Hansard. Very fairly, the noble and learned Lord confessed: We have had a serious difficulty in formulating these amendments". If I may jump a few lines to the next complete paragraph, the noble and learned Lord goes on: The Government will certainly listen to any views expressed on this point; but in our view what is proposed in these amendments appears desirable".— "appears desirable"— I wished to have that aspect of the matter drawn to your Lordships' attention, in case it was a matter on which your Lordships wanted to express a view which we would certainly find helpful"—[Official Report, 19/3/84; col. 989]. I then took him up gently but rather firmly because I found it difficult to understand, after the noble and learned Lord had made a speech which rather indicated that further amendments were to be moved, why he could not take the matter back; but he felt he could not do so.

Now I come to the noble Lord the Chancellor of the Duchy of Lancaster. This was a very surprising experience for me. At column 1064 I presented an amendment designed to maintain uniformity of certain charges. At this stage we wished to be assured that these charges would be kept constant. The noble Lord, Lord Cockfield, reproved me gently in his charming and attractive manner on the grounds that this was a matter which had been considered on several occasions before. But if I may say so in fairness to myself it was considered in a different context, with different amendments and in different circumstances, although I agree that the theme was generally the same.

I need not read it all out in detail, but in column 1065 the noble Lord, Lord Cockfield, instead of dealing with my amendments in pieces, asked me six or seven questions. He asked, did I think this would take place? Did I think that would take place? I do not want to do any injustice to the noble Lord the Chancellor of the Duchy of Lancaster, but I want to be fair about the atmosphere in which he as a member of the Cabinet approaches the matter. He asked me, the mover of the amendment, to answer all these questions. So my main submission is therefore that even at this stage, on certain very difficult matters there is some doubt in the minds of senior members of the Government.

My general submission is that British Telecommunications is not ready for Clause 58 to operate—that is, not ready yet. It seems to me unlikely that it will be ready for some time before the powers of Clause 58 can operate to vest all the assets and property of BT in the private company. In my view, a period of time should be allowed to elapse before vesting in this private company occurs, and before privatisation. On that argument I say that this is not a wrecking amendment. On these Benches we have said over and over again that we think this is a bad and unnecessary Bill, but we do not wish to take a course which will wreck all the basic reasons for this Bill.

I would ask the Government therefore whether, even at this stage, they can give some assurances to the House that there will be a reasonable interval—it is for them to define what is meant by "reasonable interval"—before this vesting takes place, and certainly before the sale of the equity in the market takes place. It seems to me that it is in the interests of the Government, and certainly those of its customers and competitors, to adjust themselves to all the changes proposed in BT. That, in my view, would react favourably to the Government if something similar to what I have adumbrated can take place.

3.29 p.m.

Lord Boyd-Carpenter

My Lords, the noble Lord, Lord Stoddart of Swindon, I hope will not be offended if I say he made what would have been really a most admirable Second Reading speech on the general merits—or, as he sees it, demerits—of this Bill. He devoted practically the whole of his time, save for his concluding remarks, to indicating how critical he was of the Bill as a whole and only referred in his concluding moments to the amendment which he was in point of fact moving.

I found his argument that, because a very large number of amendments had been accepted, the operation of the Bill should therefore he postponed for four years, rather a curious one. I would have thought that the fact that my noble friends on the Front Bench have accepted, with greater or less degrees of willingness, a great many amendments in the course of this Bill was not only a good vindication of the parliamentary process and of the functions of this House as a revising Chamber but also some assurance that this was a Bill which had been very greatly improved during its passage through this House as a result of the contributions of noble Lords in all parts of the House; in other words, that it was a better and more acceptable Bill that it was when it arrived here. It did not seem to me that the argument about the acceptance of a large number of amendments led anywhere near to supporting the proposition which this amendment proposes; that is, that the whole measure should be put into cold storage for four years.

As to the noble Lord on the Liberal Benches, I am not at all sure what he was driving at. He referred to the need for a further reasonable interval for yet further consideration of the Bill: but as I understood him he did not suggest that four years was the necessary interval that he was contemplating, and I certainly understood him to be talking in terms of months. Be that as it may, that is not what this amendment proposes.

I should like to ask the House to consider what would be the effect of accepting this amendment. It would mean that for the next four years all those concerned in the operation of this great and very important organisation would live in an atmosphere of uncertainty. They would not know what was going to happen to them or their organisation at the end of the four years. You would be presenting those who were against further investment and further development with the classical argument, "We had better wait and see what happens"; and that, in this area of all areas—this area of fast-moving technology, when we want to see all the amazing developments that are taking place in this field put quickly into use in the field of British communications—would really be a most damaging thing to do.

Equally, the people in the organisation would have to think of themselves. Would it be wise, perhaps, to accept a tempting appointment elsewhere if you do not know whether at the end of the four years you are going to be a company in the private sector or remain a nationalised industry? What about people who are approached to join the organisation, not only on the board but in senior technical levels? What prospects can you offer with certainty when you are trying to recruit staff? I cannot think that anyone who has had responsibility for running a large organisation could conceivably want to do to British Telecom what this amendment would do, and induce an artificial period of four years during which it would be excessively and exceedingly difficult to take long-ranging decisions and even personal appointments and movements in and out of the unit itself would become doubtful and uncertain.

It is perfectly possible to believe, as I know noble Lords opposite do believe passionately, that these proposals are bad. It is perfectly possible to believe, as my noble friend does, that they are very good. It is possible to believe, as some others do, that they are fairly good. But there can surely be no case—and that is why the noble Lord. Lord Stoddart, did not try to make it—for saying that the whole thing should be frozen for four years and that four years' time should be lost in the development of one of this country's major national assets.

Lord Somers

My Lords, your Lordships will realise that I am in no position to speak on behalf of my noble friends on these Benches. We have the rare privilege in Parliament of speaking for ourselves and voicing our own personal opinions. That has one disadvantage, of course, in that we are bound to think for ourselves; but that, I think, is probably quite a good exercise.

I should like to say, as regards the merits of this Bill, that I agree with every single word that was voiced by the noble Lord, Lord Stoddart. I do not, however, agree that this is an occasion to be made into an election issue. I know, of course, that it is an opportunity which is leapt upon by any professional politician with the greatest of eagerness, but I think that before we do that we should stop to think of what the record of the present Government is in other directions. In my opinion, I think it is very good. That may not be everybody's opinion but that is my personal opinion, and I therefore sincerely hope that we shall not take one solitary Bill, which I consider extremely bad, as an opportunity for making it an election issue.

Lord Spens

My Lords, when I introduced the liberalisation group to your Lordships on Second Reading I think I made it clear that we did not necessarily support everything that every member of the group wanted to see happen. But what we did was to work on amendments to try to get more competition into the Bill on the basis that, as regards time, the Bill was going to go through in the way it had been drafted. I do not think I could possibly support the noble Lord, Lord Lloyd of Kilgerran, who was a very useful member of our group, in his statement now that we ought to delay the vesting of the interests of the present British Telecom in the new company.

The Chancellor of the Duchy of Lancaster (Lord Cockfield)

My Lords, I was greatly touched by the solicitude shown by the noble Lord, Lord Stoddart of Swindon, for the Government and their fortunes. I shall in due course reciprocate that solicitude. The privatisation of British Telecom was specifically included in our election manifesto. The manifesto reads as follows: We shall transfer more state-owned businesses to independent ownership. Our aim is that British Telecom, where we will sell 51 per cent. of the shares to the private sector,"— and there then follows a list of other state industries— shall become private sector companies". Nothing could be plainer or more specific than that. We won the general election. Had we not won the general election we would not have had the company of the noble Lord, Lord Stoddart of Swindon, in your Lordships' House. I do not know whether during the election he deployed the arguments that he has deployed in your Lordships' House this afternoon, or whether those arguments, if he did deploy them, contributed to the result. But the result was that we did win the election, and we won it handsomely.

Perhaps at this stage I might pay a tribute—and it is a sincere tribute—to the persistence, the courtesy and the good humour with which the noble Lord, Lord Stoddart of Swindon, has always put his arguments forward. We have therefore a mandate for this Bill and we are carrying out an election commitment. To propose deferring the matter until after the next general election would be to defeat the main purpose of the Bill and frustrate the wishes of the electorate. This, therefore, is indeed a wrecking amendment and about that there can be no doubt at all.

The 1982 Bill stood in quite a different category. It was introduced shortly before an election and it was perfectly proper, therefore, that its implementation should be delayed—as a practical matter it had to be, anyway—until after the following election. The present Bill has been introduced just after a general election. In substance, the Bill remains the same as the original 1982 Bill. The changes which have been made, important though they are—and they are important—are peripheral to the main purpose of the Bill and the main structure of the Bill remains unaltered.

The noble Lord, Lord Lloyd of Kilgerran, pleads his case with conviction and fervour but, frankly, it is special pleading. I share the view of my noble friend Lord Boyd-Carpenter, that it really is a most unconvincing argument that, because the Government have shown flexibility and have been willing to meet the wishes of the House, the Bill must therefore be a bad one and its operation should be postponed. I have met some pretty leaky arguments in my time, but this one is as leaky as a colander which consists entirely of holes with nothing in between—

Lord Lloyd of Kilgerran

My Lords, it is fitting that the noble Lord should have mentioned "leeks" in the context of referring to me.

Lord Cockfield

My Lords, I entirely appreciate the noble Lord's point and he carries his leek with great distinction. My noble friend Lord Boyd-Carpenter very properly drew attention to the very serious damage which would be done to the organisation, and to all those who work in it, by a protracted period of delay such as the present amendment proposes. Noble Lords opposite have shown throughout our debate great and proper solicitude for the people working in British Telecom. Why, therefore, they would wish to inflict this damage upon them is something which I do not understand.

It would be quite out of order for me to make a Second Reading speech on this amendment. I shall not be tempted to follow the noble Lord, Lord Stoddart of Swindon, down that path. He said, "This Bill is not acceptable as it stands", but it was accepted by your Lordships on Second Reading and that is the simple answer to that argument. I was greatly impressed by what the noble Lord, Lord Somers, said, because he took a statesmanlike attitude towards the Bill. He said that he did not at all agree with it, which is a perfectly reasonable point of view for him to take, but nevertheless he accepted that, in the circumstances, the Bill ought to be allowed to go forward. I resist the amendment on the simple ground that it is a wrecking amendment designed to frustrate the main purpose of the Bill. On that basis, I ask your Lordships to reject the amendment.

3.44 p.m.

Lord Bruce of Donington

My Lords, those of us who have had some experience of parliamentary life are well aware of the phenomenon that, if your opponent makes a speech that is very severely critical of certain aspects of the legislation that has been laid before Parliament, the first epithet that can be levelled against it is that it is a Second Reading speech. I do not propose to make a Second Reading speech, but I do propose to address myself to the amendment itself, which relates to the operation of Clause 58 of the Bill and to the date on which, as the noble Lord, Lord Boyd-Carpenter, is aware, the assets and liabilities—save for the excepted liabilities—will pass over to the successor company.

We have to deal with practicalities. If it were the case that within a matter of months this transaction could take place, and it was perceived generally by the public that it could take place around, perhaps, September or October of this year, then, quite clearly, any amendment postponing it beyond what would appear on the face of it to be a practicable date would amount to a wrecking amendment. But the practicalities are entirely different. There is already very considerable doubt in the City itself, as anybody who moves in the City knows quite well, as to whether this transfer can take place, and the privatisation aspect of it can be consummated, within the next two years—and for a very good reason.

I should just like to read one excerpt from a feature that appeared in last week's New Statesman under the authorship of Mr. Philip Geddes. The New Statesman may not be everybody's cup of tea. There may be violent disagreement with the political angle that it takes from time to time. Nevertheless, your Lordships may find that there is an element of truth in what it says, as I shall seek to prove. It says this: The rules of the Stock Exchange state that any company seeking a full Stock Exchange listing in Britain has to produce properly and professionally audited accounts going back over at least five years so that investors can make a real judgement of the company's performance. On top of that companies must have complied with various accountancy standards—for example, on depreciation rules for the cost of capital investment". I shall not read it all, but there is a further observation which, with your Lordships' leave, I propose to produce as evidence to show that it has validity. It continues: Either BT has to produce properly audited and prepared accounts for the past five years—a gargantuan (probably impossible) task which would take several years and employ thousands of chartered accountants—or the rules have to be changed". I do not associate myself with the element of exaggeration that has crept into that observation. But I can tell the House—and any members of the Stock Exchange who are also Members of your Lordships' House will not, I think, dissent from what I have to say—that the rules of the Stock Exchange are very strict indeed. It would not be safe for anybody to assume—because the Government themselves, for reasons of their own, have recently been very accommodating towards the Stock Exchange and have passed certain budgetary measures that have met with large-scale Stock Exchange approval—that the Stock Exchange would for one moment abandon those high standards which it has insisted upon, and which are indeed enshrined in its yellow book, Admission of Securities for Listing.

One of the requirements of the Stock Exchange is that to the company concerned—in this case British Telecom—there have to be joined reporting accountants. Reporting accountants are required, by their own standards of auditing and accounting practice, to comply with certain rigid professional requirements. There can be no doubt that a reporting accountant, in conjunction with the auditors in this case, would have very great difficulty in producing the accounting statements which are required for incorporation in the prospectus issued by any company seeking a listing on the Stock Exchange.

The noble Lord, Lord Orr-Ewing, will recall that in Committee he complained of accounting standards when he discussed one of the relevant matters. Nor is it any answer for the Government to say, "British Telecom have not kept proper accounts; this is one of the reasons for privatisation". In fact, when it was under direct Government control the Post Office did not keep accounts that would stand up to the normal standards required by commercial firms. Nor, indeed, do Her Majesty's Government. In fact, Her Majesty's Government's own standards of accounting are abysmal. Everybody knows that they consist merely of cash-in and cash-out. The question is whether it will be possible within the next foreseeable period of time for a listing to be obtained.

May I give some examples in support of what I have said and in support of the generality contained in the New Statesman article from which I have quoted. The first point to be borne in mind is that the accounts for the year ended 31st March 1982 and the accounts for the year ended 31st March 1983 both contain auditors' qualifications. These qualifications are significant. I have not had time to examine the accounts for the years 1980, 1979 or 1978. But this much I do know: that changes have in fact taken place of which reporting accountants are bound to take notice and which are bound to cause them a very considerable amount of work before they can produce a reporting accountant's report of the standard required by the London Stock Exchange.

May I quote a passage from the report of the chairman which accompanied the accounts for the year 1981–1982: The cost of installing equipment in customers' premises, including the wiring, are now charged against profits at the time the expenditure is incurred rather than being charged over a number of years, as has been the practice in the past. These costs are now fully recovered in the connection charges made to customers". The report continues Most types of small value plant and equipment are also being charged directly against profit. These changes have had the result that costs of —847 million, which had been capitalised in previous years, have been eliminated from the fixed asset figures in the accounts and charged against reserves. May I also read to your Lordships an additional observation which is contained in the chairman's statement accompanying the accounts for the year 1982–83. The chairman referred to the decline in absolute profits during the year and said: This arises in large part from a further re-assessment of asset lives and reflects a continuation of the process which I described in my report last year of adapting our accounts to reflect more accurately the new competitive and technical environment in which we are now operating. I am not querying the rectitude of the chairman in this respect. I admire his frankness. But what he has said, and the qualifications contained in the auditor's report, mean that the reporting accountants will have enormous difficulty in producing the appropriate adjustments to the accounts for the last five years in order to arrive at a true figure of the fair and reasonable profit for each year, so that the prospective investor may be able to arrive at that degree of objective judgment which he is required to exercise, and which he desires to exercise when he considers investing in any public company. In other words, in order to achieve an accurate prospectus, without which there can be no consent to the issue by either the reporting accountants or the auditors of the company, a very considerable amount of work will have to be done. In some quarters in the City not a period of months but possibly years will be taken in order that Stock Exchange and professional standards can be achieved. This is one difficulty which the noble Lords eloquence cannot wish away.

Now let me consider the position if the Bill ultimately receives Royal Assent. After Lords amendments have been considered in another place and the Bill has been returned to your Lordships and duly passed into law, what will happen if, month after month (and I say it will be a matter of years, if Stock Exchange standards are adhered to) the company is still not privatised? The noble Lord, Lord Boyd-Carpenter, referred to uncertainty. That is undoubtedly the case. I well remember how that argument was pooh-poohed by the Conservative Party when the Shipbuilding Bill was held up by your Lordships' House. The argument about the uncertainty for employees was given a very scant response.

In this case the House should be well aware that what is at stake here is a change in ownership, not necessarily a change in management. If the shares in the new company are held in the fragmented form which the Government affects to wish to happen, the effect of the very wide shareholding outside the shareholding held by the Government will be marginal upon the structure of the board or upon the structure of the management. I do not believe that any period of uncertainty would arise for the workers and management in British Telecommunications. There might be ushered in an era of hope. But, leaving that completely aside, this amendment asks the House to face up to the facts as they are. And the fact of the matter is—and I invite the noble Lord to disprove it—that the issue cannot take place within months, and possibly years, owing to the precise defects to which I have referred.

Lord Cockfield

My Lords, before the noble Lord sits down, I wonder whether he would permit me to put one single point to him. Your Lordships' debates are widely reported outside this House, and great attention is paid to the noble Lord. I can tell him that the very firm intention of the Government is that privatisation should take place this year.

Lord Bruce of Donington

My Lords, I am grateful to the noble Lord. May I just say to him, as kindly as I can, that not even the noble Lord, and all the power that he and his Government can carry behind them, are likely to be able to shift a professional resolve, firmly held in the Stock Exchange and in the accountancy profession, to insist on the maintenance of accounting and prospectus standards which they have always insisted upon in the past.

Lord Diamond

My Lords, I will delay your Lordships for the minimum time but I think it is right that we on these Benches—by which I mean the two participating parties in the Alliance—should make our position clear. We regard this as an unfortunate amendment. This amendment, as has been made clear by the mover and seconder, and by all who have spoken in favour of it, goes to the heart of the Bill. Every speech that has been made from the Labour Front Bench has been a Second Reading speech; it had to be, because if one puts down an amendment that goes to the heart of a Bill and one is speaking relevantly to the amendment, then it has to be a speech which is in effect a Second Reading speech.

It is clear to everybody in this House, I hope, that we on these Benches are wholly opposed to this Bill. That has been made clear by all my colleagues—both Liberal and SDP—who have spoken on this Bill, and by statements made in another place and outside this House. I have no need to waste your Lordships' time because I am sure that everyone throughout the House knows our views on this Bill. They are the same as those expressed by the noble Lord, Lord Somers, for his part. He and I must be affected by the astrology of the matter because we were both born on the same day in the same year.

We in this House have a responsibility and a duty. We have to recognise what happens in elections—especially in regard to clearly-defined mandates and clearly-defined majorities. Unfortunate as that majority is—and those of us who find ourselves in a party where every supporter had in effect one-tenth of a vote are particularly disinclined to accept the result of the general election—we have to take the rules as they are.

Also, we must have regard to our relationship with the other House, which has passed this Bill on to us. We have approved it, or we have not opposed it, at Second Reading. We do not want a confrontation with the other House. That would have the most damaging effects. Those of us who are seeking to become the next Government do not wish to establish a precedent which the Opposition party of the day can quote to demonstrate that one need not pay any regard to a mandate or to a decision of the other House, or to a decision on Second Reading, but that one can do what one thinks best to upset that Second Reading by means of an amendment.

We consider that to do that is not to be thinking of the future in very clear terms. The difference will be simply this: whereas all of us sitting on this side of the Chamber might decide to oppose this amendment, we should fail to carry our opposition. If the position were reversed and the same precedent was quoted, then of course a Tory opposition would be in a position in this House, for a very long time ahead, to carry that opposition into effect, if they so desired. To establish a precedent of that kind would be both unconstitutional and extremely unwise for any party that is pretending—and I use that word in its old sense—to form the Government in the future.

Therefore, although my noble friend Lord Lloyd of Kilgerran has made it quite clear that the date is an unfortunate choice and can only refer to a general election—as the noble Lord, Lord Somers, has said—and cannot refer to any argument about whether the Stock Exchange is suffering from indigestion and ought to wait a second year or another 12 months beyond that, all the other arguments about intervening dates are irrelevant. The date in this amendment is a date chosen simply having regard to the date of the last general election. In those circumstances, as we cannot possibly support the Bill and as to oppose this amendment might be read as supporting the Bill, we shall all abstain.

Lord Stoddart of Swindon

My Lords, since we have had a long debate on this amendment, I will not seek to delay the House further by summing up. I wish to press the amendment.

4.5 p.m.

On Question, Whether the said amendment (No. 111) shall be agreed to?

Their Lordships divided: contents, 75; Not-Contents, 168.

DIVISION NO. 1
CONTENTS
Ampthill, L.	Jeger, B.
Barnett, L.	Jenkins of Putney, L.
Bernstein, L.	John-Mackie, L.
Birk, B.	Kearton, L.
Bishopston, L. [Teller.]	Kirkhill, L.
Blease, L.	Leatherland, L.
Blylon, L.	Listowel, E.
Boston of Faversham, L.	Llewelyn-Davies of Hastoe, B.
Bottomley, L.	Lovell-Davis, L.
Brockway, L.	McIntosh of Haringey, L.
Brooks of Tremorfa, L.	MacLeod of Fuinary, L.
Bruce of Donington, L.	Milford, L.
Carmichael of Kelvingrove, L.	Mishcon, L.
Cledwyn of Penrhos, L.	Molloy, L.
Collison, L.	Oram, L.
Cooper of Stockton Heath, L.	Peart, L.
Darling of Hillsborough, L.	Phillips, B.
David, B. [Teller.]	Plant, L.
Davies of Penrhys, L.	Ponsonby of Shulbrede, L.
Dean of Beswick, L.	Prys-Davies, L.
Delacourt-Smith of Alteryn, B.	Rhodes, L.
	Ross of Marnock, L.
Denington, B.	Sefton of Garston, L.
Donnet of Balgay, L.	Serota, B.
Elwyn-Jones, L.	Shackleton, L.
Ennals, L.	Shinwell, L.
Ewart-Biggs, B.	Stallard, L.
Fisher of Rednal, B.	Stewart of Alvechurch, B.
Fitt, L.	Stewart of Fulham, L.
Gaitskell, B.	Stoddart of Swindon, L.
Gallacher, L.	Stone, L.
Glenamara, L.	Strabolgi, L.
Graham of Edmonton, L.	Taylor of Blackburn, L.
Gregson, L.	Underhill, L.
Hatch of Lusby, L.	Wells-Pestell, L.
Houghton of Sowerby, L.	White, B.
Howie of Troon, L.	Wilson of Rievaulx, L.
Jacques, L.	Wootton of Abinger, B.

NOT-CONTENTS
Adeane, L.	Craigmyle, L.
Ailesbury, M.	Cranbrook, E.
Alexander of Tunis, E.	Cullen of Ashbourne, L.
Allerton, L.	Daventry, V.
Alport, L.	De Freyne, L.
Atholl, D.	Denham, L. [Teller.]
Auckland, L.	Digby, L.
Avon, E.	Drumalbyn, L.
Baker, L.	Duncan-Sandys, L.
Bauer, L.	Dundonald, E.
Belhaven and Stenton, L.	Effingham, E.
Bellwin, L.	Ellenborough, L.
Beloff, L.	Elliot of Harwood, B.
Belstead, L.	Elton, L.
Berkeley, B.	Enniskillen, E.
Bessborough, E.	Faithfull, B.
Birdwood, L.	Fanshawe of Richmond, L.
Bolton, L.	Feversham, L.
Boyd-Carpenter, L.	Forte, L.
Brabazon of Tara, L.	Fortescue, E.
Broxbourne, L.	Fraser of Kilmorack, L.
Bruce-Gardyne, L.	Gainford, L.
Caithness, E.	Gardner of Parkes, B.
Campbell of Alloway, L.	Gibson-Watt, L.
Campbell of Croy, L.	Gisborough, L.
Cathcart, E.	Glanusk, L.
Chelwood, L.	Glasgow, E.
Clitheroe, L.	Glenarthur, L.
Cockfield, L.	Gormanston, V.
Coleraine, L.	Gowrie, E.
Cork and Orrery, E.	Granville of Eye, L.
Cottesloe, L.	Gray of Contin, L.
Craigavon, V.	Greenway, L.

Gridley, L.	Mountgarret, V.
Hailsham of Saint Marylebone, L.	Moyne, L.
	Murton of Lindisfarne, L.
Halsbury, E.	Newall, L.
Harvington, L.	Northbourne, L.
Hawke, L.	Northchurch, B.
Hayter, L.	Nugent of Guildford, L.
Henley, L.	Onslow, E.
Hill of Luton, L.	Orkney, E.
Hives, L.	Orr-Ewing, L.
Home of the Hirsel, L.	Pender, L.
Hornsby-Smith, B.	Peyton of Yeovil, L.
Hylton-Foster, B.	Porritt, L.
Ilchester, E.	Portland, D.
Inglewood, L.	Rankeillour, L.
Kaberry of Adel, L.	Reay, L.
Killearn, L.	Redesdale, L.
Kimberley, E.	Reilly, L.
Kinloss, Ly.	Renton, L.
Kinnaird, L.	Rochdale, V.
Kitchener, E.	Rosslyn, E.
Lane-Fox, B.	Saint Oswald, L.
Lauderdale, E.	Saltoun, Ly.
Lawrence, L.	Sandys, L.
Lloyd of Hampstead, L.	Selkirk, E.
Long, V.	Sempill, Ly.
Loudoun, C.	Sharpies, B.
Lucas of Chilworth, L.	Shaughnessy, L.
Luke, L.	Skelmersdale, L.
Lyell, L.	Somers, L.
McAlpine of Moffat, L.	Spens, L.
McAlpine of West Green, L.	Stamp, L.
McFadzean, L.	Stodart of Leaston, L.
Mackay of Clashfern, L.	Strathspey, L.
Macleod of Borve, B.	Suffield, L.
Mancroft, L.	Swinton, E. [Teller.]
Margadale, L.	Terrington, L.
Marley, L.	Teviot, L.
Marshall of Leeds, L.	Thomas of Swynnerton, L.
Masham of Ilton, B.	Thomeycroft, L.
Maude of Stratford-upon-Avon, L.	Todd, L.
	Torphichen, L.
Melville, V.	Tranmire, L.
Merrivale, L.	Trumpington, B.
Mersey, V.	Tweedsmuir, L.
Middleton, L.	Vaux of Harrowden, L.
Minto, E.	Vickers, B.
Molson, L.	Westbury, L.
Monson, L.	Whitelaw, V.
Montgomery of Alamein, V.	Windlesham, L.
Morris, L.	Wynford, L.
Mottistone, L.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

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

4.15 p.m.

Lord Stoddart of Swindon moved Amendment No. 112: Page 54, line 27, leave out ("not") and insert ("subject to an affirmative resolution of both Houses of Parliament").

The noble Lord said: My Lords, I move this amendment formally at this stage, I beg to move.

Lord Bruce of Donington

My Lords, both this and the next amendment are concerned with the operation of Clause 59, which describes the procedure by which the initial Government holding in the successor company is established. The decisions here are of some importance, and very considerable sums are involved. It is not merely the issue of shares that is involved but also that of securities; and securities, as the noble Lord knows, include debentures. Under later clauses of the Bill the debenture position will be discussed when the extinguishment of loans by the Secretary of State to British Telecom is debated.

We do not consider it wise that these should be left purely as they are. We do not consider it wise that these should be left entirely to the Secretary of State. The sums of money involved will be very considerable, and the issues involved will be very important indeed. We consider it vital that these arrangements are subjected to the scrutiny of Parliament, not merely by the negative procedure but by the affirmative procedure, so that any disposal of the securities is laid fully in the open and both Houses of Parliament know exactly what is happening.

Clause 59(5) states that the Secretary of State can exercise a power conferred on him by the section to dispose of any securities. This right of disposal becomes a little more apposite when one considers the provisions of paragraph 39 of Schedule 5 when certain debentures are to be transferred, or power is taken to transfer debentures, back to British Telecom. These are all matters of considerable importance, and over a period of four years may involve sums of well over —1,000 million, or their equivalent value. As I said, for this reason we think that it would be wise if both Houses of Parliament were kept precisely informed as to exactly what is happening.

Lord Cockfield

My Lords, when a similar amendment was tabled in Committee, I assured your Lordships that we were not seeking any discretion here beyond what had been conferred in past privatisation legislation. Parliament's broad authorisation for the privatisation is being sought through this Bill itself. It would be impracticable and inappropriate to have to seek specific approval for the details of issues of securities and share sales in advance, though the details will in fact emerge in a most public way on the occasion of British Telecom's flotation. On these grounds I suggested in Committee that the amendment was unnecessary and could obstruct the flotation. I have heard nothing since to change that view.

The noble Lord, Lord Bruce of Donington, has touched upon the question of the assignment of debentures to the statutory corporation to enable it to discharge the "excepted liabilities", as they are described—that is the sums due under British Telecom's deed of covenant to the BT and Post Office pension funds—and these liabilities are not to be transferred to the successor company. There are, as the noble Lord himself indicated, amendments on this particular issue which we shall come to later—possibly much later—tonight. Perhaps it would be more appropriate to go into that very complex subject on that occasion. It requires explanation in some detail. I shall endeavour to do that when we come to the amendments, and I think that the noble Lord would not want me to go through the same explanation twice. I am perfectly willing to do so if he so wishes, but I think that it would be more appropriate to do it on Amendment No. 135 when we come to it.

So far as the general powers of Clause 59 are concerned, they are fundamental to the establishment of a correct capital structure for the successor company's start in the private sector. The clause is widely drafted to allow the Secretary of State to require the issue of "securities", a term which includes all types of stock within the definition in Clause 71. This flexibility is essential for two reasons.

First, the British Telecom package will consist of a number of interrelated elements. The capital structure of the successor company will be just one element in this package, and it will itself reflect a number of complex issues, including the business future needs, the need not to give the company any unfair advantage in relation to its competitors and the taxpayers' interest in both the equity which will be sold and the debt still owed to the Secretary of State. So the BT package and the uses of the general powers under Clause 59 will depend on a complicated interweaving of issues. There can he no set formulae incorporated in the Bill, and there must be discretion to move away from BT's present capital structure simply because this may not be appropriate to the successor company's start in the private sector. It would not be in accordance with precedent or desirable in itself for Parliament to be involved in this level of detail.

The second reason for retaining flexibility is that the elements of the BT package will only be brought together much closer to the time of the flotation—for example, we shall need to see BT's most up-to-date forecasts for the successor company's capital structure, and gauge the state of the market right up to the last minute for share placing. This does not make parliamentary approval over each and every use of the powers in Clause 59 feasible.

So with the issue of securities, as well as their disposal under Clause 59, the Government must retain flexibility and a degree of discretion. Parliamentary approval would be impracticable, as indeed has been recognised in past privatisation legislation. For these reasons I hope very much that the noble Lord will not press this amendment.

Lord Bruce of Donington

My Lords, I am most indebted to the noble Lord for his reply. Of course I am not asking that at this stage he should embark on more detailed explanations of the application of paragraph 39 of Schedule 5 and various associated matters which are the subject of later amendments. My concern here is with the magnitude of the operation that is to take place. It is one thing to privatise an organisation or a conglomerate with assets of up to —500 million. It is another thing altogether to embark on the privatisation of a company or corporation which, after taking credit for the excepted liabilities, will have a net equity in book value terms of something approaching —6,000 million. This is a very large operation indeed.

I do not think that the noble Lord's argument about flexibility entirely holds good. It is true that the company's directors, legal advisers, accountants, stockbrokers and hankers reserve to the last possible moment the placing value in order to fix the correct price at which the shares should be put on the market. But these are matters associated not with information already in their possession but with the developing state of the market, which, as the noble Lord will apprehend, varies from day to day. There may be certain overseas developments, financial catastrophies or a whole series of things which up to the last moment may affect the judgment of the issuing company's bankers, auditors, stockbrokers, and so on, as to what the placing price should be. But the other matters which relate to forecast will not change.

As the noble Lord will be aware, the forecast of the company's future prospects is subject to the oversight of the reporting accountants who have to satisfy themselves that the forecasts are based upon certain sound criteria, even though of course nobody can peer into the future. In short, all the structural factors which go into the prospectus are well known for quite a time before the issue takes place. The real question is whether, in view of the magnitude of this operation—and it is very large indeed—Parliament should be involved in it.

The noble Lord has from time to time delivered himself of observations concerning the ability of Whitehall to deal with matters of this kind. Many of the arguments for privatisation have centred on the business of removing the dead hand of Whitehall from the control of an enterprise. Is that same dead head capable of making the flexible decisions to which the noble Lord refers? I have not the slightest doubt that if it were in the noble Lord's hands his judgments would be of tremendous significance and validity. Apart perhaps from having a marginal argument with him, I would not presume in any way to question his ability to deal with that situation. But this does not mean that Parliament itself should not have an opportunity to consider this matter. There are people with tremendous day-to-day business and professional experience in another place. It is well known that your Lordships' House is not without its experts in practically every field. Surely therefore it is right that with an issue of this kind, of the magnitude we are now talking about, running into thousands of millions of pounds—not merely 10 millions or 100 millions—where the nation's assets, the public assets, are being transferred supposedly for value—hopefully for value—into the hands of the rentier, surely Parliament ought to be consulted before any final formulations take place. I have no desire to prolong the arguments indefinitely but I can assure the noble Lord that these are not items which I am raising in any fractious or purely party spirit.

They seem to me to be a matter of securing proper parliamentary control. The noble Lord has very often paid some tribute to the advantages of having parliamentary control. As I say, I cannot see why, with an operation of this magnitude, Parliament should not be involved in the manner suggested by this amendment. Therefore, although I do not wish to cross swords too often with the noble Lord—I am most anxious to accommodate myself to his wishes wherever I can possibly do so—I do not think that I can do so on this amendment and I regret that I have to press it to a Division.

Lord Peyton of Yeovil

My Lords, I recognise that this is a day dedicated to the exhibition of the talent which exists on the Front Benches of your Lordships' House. I hope that it will not be regarded as grossly indelicate if therefore I intervene very shortly on this particular amendment. It is to say this. I can conceive of no possible element of helpfulness which would be generated by the kind of parliamentary intervention suggested by the noble Lord.

4.31 p.m.

On Question, Whether the said amendment (No. 112) shall be agreed to?

Their Lordships divided: Contents, 102; Not-Contents, 152.

DIVISION NO. 2
CONTENTS
Airedale, L.	Kirkhill, L.
Amherst, E.	Leatherland, L.
Aylestone, L.	Listowel, E.
Barnett, L.	Llewelyn-Davies of Hastoe, B.
Bernstein, L.	Lloyd of Kilgerran, L.
Birk, B.	Lovell-Davis, L.
Bishopston, L.	McIntosh of Haringey, L.
Blease, L.	MacLeod of Fuinary, L.
Blyton, L.	Mais, L.
Boston of Faversham, L.	Mayhew, L.
Bottomley, L.	Mishcon, L.
Brockway, L.	Molloy, L.
Brooks of Tremorfa, L.	Mulley, L.
Bruce of Donington, L.	Oram, L.
Carmichael of Kelvingrove, L.	Peart, L.
Chitnis, L.	Perry of Walton, L.
Cledwyn of Penrhos, L.	Phillips, B.
Collison, L.	Plant, L.
Cooper of Stockton Heath, L.	Ponsonby of Shulbrede, L. [Teller.]
Darling of Hillsborough, L.
David, B. [Teller.]	Prys-Davies, L.
Davies of Penrhys, L.	Raglan, L.
Dean of Beswick, L.	Rathcreedan, L.
Delacourt-Smith of Alteryn, B.	Rochester, L.
Diamond, L.	Ross of Marnock, L.
Donaldson of Kingsbridge, L.	Sainsbury, L.
Donnet of Balgay, L.	Seear, B.
Elwyn-Jones, L.	Sefton of Garston, L.
Ewart-Biggs, B.	Serota, B.
Ezra, L.	Shackleton, L.
Fisher of Rednal, B.	Shinwell, L.
Fitt, L.	Simon, V.
Gaitskell, B.	Stallard, L.
Gallacher, L.	Stedman, B.
Gladwyn, L.	Stewart of Alvechurch, B.
Glenamara, L.	Stewart of Fulham, L.
Graham of Edmonton, L.	Stoddart of Swindon, L.
Gregson, L.	Stone, L.
Grimond, L.	Strabolgi. L.
Hampton, L.	Strauss, L.
Hanworth, V.	Taylor of Blackburn, L.
Hatch of Lusby, L.	Tordoff, L.
Hooson, L.	Underhill, L.
Houghton of Sowerby, L.	Whaddon, L.
Howie of Troon, L.	White, B.
Jacques, L.	Wigoder, L.
Jeger, B.	Willis, L.
Jenkins of Putney, L.	Wilson of Rievaulx, L.
John-Mackie, L.	Winstanley, L.
Kearton, L.	Wootton of Abinger, B.
Kennet, L.	Young of Dartington, L.
Kilmarnock, L.

NOT-CONTENTS
Adeane, L.	Bolton, L.
Alexander of Tunis, E.	Boyd-Carpenter, L.
Allerton, L.	Brabazon of Tara, L.
Alport, L.	Broxbourne, L.
Atholl, D.	Bruce-Gardyne, L.
Auckland, L.	Caccia, L.
Avon, E.	Caithness, E.
Bauer, L.	Campbell of Alloway, L.
Belhaven and Stenton, L.	Campbell of Croy, L.
Bellwin, L.	Cathcart, E.
Beloff, L.	Chelwood, L.
Belstead, L.	Clitheroe, L.
Berkeley, B.	Cockfield, L.
Bessborough, E.	Coleraine, L.

Congleton, L.	Marshall of Leeds, L.
Cork and Orrery, E.	Masham of Ilton, B.
Cottesloe, L.	Maude of Stratford-upon-Avon, L.
Craigavon, V.
Craigmyle, L.	Melville, V.
Cranbrook, E.	Merrivale, L.
Daventry, V.	Mersey, V.
Denham, L.	Middleton, L.
Digby, L.	Minto, E.
Dilhorne, V.	Molson, L.
Drumalbyn, L.	Monson, L.
Eccles, V.	Montgomery of Alamein, V.
Ellenborough, L.	Morris, L.
Elton, L.	Mottistone, L.
Enniskillen, E.	Mountgarret, V.
Faithfull, B.	Moyne, L.
Fanshawe of Richmond, L.	Murton of Lindisfarne, L.
Forte, L.	Newall, L.
Fortescue, E.	Northchurch, B.
Fraser of Kilmorack, L.	Nugent of Guildford, L.
Gainford, L.	Onslow, E.
Gardner of Parkes, B.	Orkney, E.
Gisborough, L.	Orr-Ewing, L.
Glanusk, L.	Pender, L.
Glasgow, E.	Peyton of Yeovil, L.
Glenarthur, L.	Rankeillour, L.
Gormanston, V.	Reay, L.
Gowrie, E.	Redesdale, L.
Gray of Contin, L.	Renton, L.
Greenway, L.	Rochdale, V.
Gridley, L.	Romney, E.
Hailsham of Saint Marylebone, L.	St. Davids, V.
	Saint Oswald, L.
Halsbury, E.	Saltoun, Ly.
Hampden, V.	Sandford, L.
Harvington, L.	Sandys, L.
Hawke, L.	Selkirk, E.
Henlev, L.	Sempill, Ly.
Hill of Luton, L.	Sharpies, B.
Hives, L.	Shaughnessy, L.
Hornsby-Smith, B.	Skelmersdale, L.
Hylton-Foster, B.	Somers, L.
Ilchester, E.	Spens, L.
Kaberry of Adel, L.	Stamp, L.
Kimberley, E.	Stodart of Leaston, L.
Kinloss, Ly.	Strathspey, L.
Kinnaird, L.	Suffield, L.
Lane-Fox, B.	Swinton, E. [Teller.]
Lawrence, L.	Terrington, L.
Lloyd of Hampstead, L.	Teviot, L.
Long, V. [Teller.]	Teynham, L.
Loudoun, C.	Thomas of Swynnerton, L.
Lucas of Chilworth, L.	Thorneycroft, L.
Luke, L.	Todd, L.
Lyell, L.	Torphichen, L.
McAlpine of Moffat, L.	Trumpington, B.
McAlpine of West Green, L.	Tweedsmuir, L.
McFadzean, L.	Vaux of Harrowden, L.
Mackay of Clashfern, L.	Westbury, L.
Macleod of Borve, B.	Whitelaw, V.
Mancroft, L.	Windlesham, L.
Margadale, L.	Wynford, L.
Marley, L.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendment No. 113 not moved.]

4.40 p.m.

Lord Stoddart of Swindon moved Amendment No. 114: Page 54, line 33, leave out ("the Consolidated Fund") and insert ("a Communications Industry Fund, to be used for the development of the United Kingdom communications industry including telecommunications, micro-electronic and satellite technology; this fund shall be administered by the Secretary of State, who shall take account of the views of the Director, and of a Communications Industry Council set up specifically to advise the Secretary of State on the use of the Communications Industry Fund.").

The noble Lord said: My Lords, I beg to move this amendment, which stands in my name and in the names of my noble friends Lord Bruce of Donington and Lord McIntosh of Haringey, and the noble Lord, Lord Lloyd of Kilgerran. If it is convenient to the House, I think that this amendment can be taken together with Amendment No. 115. Amendment No. 115: Page 54, line 34, at end insert ("and used specifically for the further development of communications especially telecommunications, space communications and information technology.").

These amendments seek to set up a communications industry fund, for the development of the United Kingdom's communications industry, including telecommunications and microelectronic and satellite technology. The fund would be administered by the Secretary of State and he would be advised by a council. The purpose of the amendments is radically to change the use to which the proceeds of the sale of British Telecom would be put, rather than to have the money simply transferred to the Consolidated Fund to be used in the main on current expenditure. We have talked about this point many times before in your Lordships' House. We think it quite wrong for capital receipts to be used for current expenditure or for tax hand-outs to suit the Government's particular political purposes at any given time. We believe that such receipts should be used for the future development of our industry; in particular, the telecommunications industry and the other industries that I have mentioned.

The proceeds of the sale would go instead into a special fund which would be used and administered in the interests of the United Kingdom's sunrise industries—industries which, incidentally, the Government very much favour; though I am sorry to say that they seem to favour them to the detriment of some of the basic and heavy industries, which I and my noble friends believe is a mistake. Indeed, we are in good company, because I notice that yesterday in another place Mr. Edward Heath thought it was complete and utter folly to neglect our industries, such as shipbuilding, steel and coal, and rely merely on the City and other sectors to bring about the recovery in the economy that is so necessary.

As I have said, under the amendment there would be a new council, which would have the job of advising the Secretary of State on the use of the fund. I would envisage that members of the council would include people of great expertise in the new sunrise industries, which find favour with the Government and indeed with ourselves.

I believe that the amendment recognises a basic truth. If the United Kingdom is to develop an economy capable of competing in high technology, the state must be prepared to step in with financial assistance and some strategic, nationally planned guidance. To leave it all to the banks and finance houses and to the invisible hand of the free market, rather than to have some form of indicative planning, is a recipe for confusion as well as, I believe, disaster. The market has proved quite unable to meet the needs up to the present time and there is no indication at all that it will meet the needs of the future. Therefore the amendment is necessary to ensure that there is some public intervention and guidance in bringing this country into the field of advanced technology, high technology, information technology and so forth.

That point is particularly true when seen against the level of involvement in assisting sunrise industries in other advanced, capitalistic societies. Even in the United States (not to mention Japan) where Ronald Reagan rules, 50 per cent. of research in the giant Bell laboratories, which is A T & T's research and development arm, is Government funded. That is the kind of thing we want to see happen here, and the proceeds of the sale of British Telecom would provide welcome funds for the development of these advanced technology industries.

I am not suggesting that the amendment is precisely worded. I think perhaps it could be improved, but I believe that it is one that the Government should accept for their own sake, as well as for the sake of the country. The amendment provides a vehicle with which to develop the principle of state assistance for research and development, for pioneering new techniques and products, and for developing existing inventions into marketable commodities. As I undersand it all of those are the aims of the Government; they are certainly the aims of the Opposition, and the aims of every noble Lord in this House. Indeed, I believe that they are the aims of the whole of the country, and that is why I consider that the amendment is relevant and should be very seriously considered by, and we hope accepted by, the Government.

The great advantage of using the proceeds of the sale of BT in this way is that over a period of time as much as £4 billion of public money could be pumped into the sunrise industries without any increase in planned public expenditure, unless of course the Chancellor last Tuesday was taking advance account of the £4,000 million proceeds of the sale of British Telecom. Perhaps the Chancellor was doing that; I have not gone into his Budget accounts in detail. But I sincerely hope that he did not take that into account, for it really would be counting his chickens before they were hatched and it could be disastrous for him in the long term. What we suggest would provide a fund of money for these new industries, which we shall need if we are to compete in the markets of the world.

As I have said, the amendment provides a useful vehicle for the Government and one which I hope they would welcome, so that they can show that they want to be involved in the rebuilding of Britain through the sunrise industries, as well as of course through the heavy industries that I have mentioned. If they want to do that, I feel sure that they will wish to accept the amendment. If they do not, I sincerely hope that noble Lords in all parts of the House will vote in the Division which would follow. I beg to move.

Lord Ezra

My Lords, I should like to support the amendment so ably moved by the noble Lord, Lord Stoddart. As he stated in moving the amendment, it is common ground in this House that we should be supporting, by all the means at our disposal, the development of our communications industry. What more appropriate means could be devised than to use all, or at least a major part, of the proceeds from the sale of the telecommunications industry to the public for the further development of the industry it represents?

We are increasingly likely to be at the mercy of competition from vast countries like the United States or the concentrated resources of Japan, in this very field. As the noble Lord clearly pointed out, in both of those countries a very substantial amount of public funding is made available in the crucial field of industrial development. There is nothing wrong with dedicating certain portions of public funds for particular purposes. It has not been the practice in this country but it is being developed increasingly in other countries. In the United States more and more dedicated funds are being established and in Canada, in the Province of Alberta, they have dedicated substantial funds from the proceeds of their raw materials for the development of their industry.

Therefore, I can see no reason why there should not be embarked upon in this Bill—which after all is a momentous development in our industrial life—a new venture which would provide resources very relevant to the purpose of the Bill for the further promotion of the communications industry and of all the knowledge and research which lie behind it. I very strongly recommend that this amendment be adopted by the House.

Lord Weinstock

My Lords, I apologise to the noble Lord, Lord Stoddart of Swindon, and the noble Lord, Lord Ezra, for appearing to bite the hand which is attempting to feed me. But I see no particular reason why the proceeds of any particular measure—the sale of Government assets or of state-owned assets—should be applied to any particular purpose. While I hope that the Government will support in the future, as they have (I must acknowledge) in the past, these new industries and the development of new technologies which will come in the future at an ever-increasing rate, I do not think that this amendment is an appropriate way in which to secure that object. As much as I sympathise with its aims and the desire of noble Lords to see that our industry is kept up to date with such financial help as would be appropriate from the Government, I do not consider that this amendment is the proper means to achieve those objectives.

4.53 p.m.

Lord Cockfield

My Lords, a similar amendment was moved in Committee and I then said that it would run contrary to our general policy towards industry. This still holds despite the change in prospective beneficiary under the present amendment from manufacturing industry to the communications industry. It would be inconsistent with our general approach to use the proceeds of sale to set up a fund to hand out money to a particular sector as an addition to the existing instruments of regional and industrial policy. The noble Lords sponsoring this amendment have switched from manufacturing industry to the United Kingdom communications industry. It would be interesting to know just why. One might ask, for example, why they have left out biotechnology, which is another important new technology, or the robotics industry, which will have much to contribute to the future.

The noble Lord, Lord Stoddart, displayed in his speech a degree of schizophrenia in these matters. After talking about the immense importance of new technologies, he then said that it would be a mistake to favour new technology and he quoted with approval a speech made in another place by one of my right honourable friends. A boatman, as the noble Lord knows, is somebody who faces one way and proceeds in the opposite direction. The noble Lord gave a remarkably good impersonation of a boatman.

There is neither rhyme nor reason in the blanket assistance that is implied by this amendment. Also, on this point, the noble Lord, Lord Weinstock, is entirely right: the amendment is a recipe for duplication with existing schemes. Where the need is demonstrated and where there is an opportunity, we have shown a willingness to assist new technologies. Perhaps I may refer in particular to the announcement made yesterday by my right honourable friend the Secretary of State for Trade and Industry of a —120 million extension to the micro-electronics industry support programme which will be aimed at encouraging the production and use of micro-electronics components in United Kingdom industry.

I covered the general issue very fully in our debate in Committee and I then said that we did need to take a view about all the calls made upon the public purse together, in order to arrive at a properly determined list of priorities. This amendment ignores these extremely important considerations.

The noble Lord, Lord Stoddart of Swindon, is a firm advocate of a planned economy. We on this side of your Lordships' House do not believe in a planned economy. It is something which has been tried and it is something which has been demonstrated to fail. It has never produced as good a standard of living for our people as an open, freely-operating market economy. Our policy towards British Telecom and towards the privatisation of British Telecom is aimed at allowing market and competitive forces to come into play, subject always, of course, to the protection for consumers which we have discussed elsewhere in the Bill. It would be a distortion of this purpose and a misuse of the present Bill, to give the Government the sort of role envisaged in the present amendment. For all those reasons, I must resist the amendment.

Lord Stoddart of Swindon

My Lords, I am most unhappy that the noble Lord, Lord Cockfield, should resist this amendment because I believe that it is a good amendment and, indeed, a forward-looking amendment.

I know that previous Governments have frowned upon the hypothecation of revenues; that has always been the case. I well understand the arguments which have been put up by Government and, indeed, which appear to be being put up by the noble Lord, Lord Cockfield, this afternoon, but I read the Budget speech of Mr. Lawson and there, for the first time, we had a Chancellor of the Exchequer actually envisaging that some revenues might have to be hypothecated. Therefore, in fact, we have a clear lead from the Chancellor of the Exchequer that the hypothecation of revenues may now be legitimate. That of course is what we seek to do in this amendment. The noble Lord, Lord Cockfield, need not be worried any longer that his friend the Chancellor will jump on him if he dares to accept something which would hypothecate revenues.

The noble Lord also asked why we switched our amendment from manufacturing industry to the communications industry. We thought about this very deeply and, I hope, very clearly and we decided to switch because as this money was coming from the communications industry we felt that perhaps it ought to be used exclusively for the future development of the communcations industry and associated industries. That is one of the reasons why we changed the direction of the amendment, albeit the basis of the use of funds is still the same.

Secondly, I have to confess that we changed the amendment because we thought that it would be more acceptable to the noble Lord, Lord Cockfield. Because this amendment is so specific, we thought that it would commend itself to him. I am sorry that it has not.

The noble Lord also implied that I was speaking against the new technological industries. If I did that, I certainly did not mean to. Let me clarify what I said. When North Sea oil runs out, I do not believe that we can exist as a nation simply on the new technological industries. We need the traditional heavy industries, like steel, shipbuilding and coal, just as much as we need the industries of the new technologies, and we must have both. That is why we believe that this fund of money which will become available should be used for the development of new technology.

The noble Lord also mentioned (I shall not say boasted) the measures announced by Mr. Tebbitt in another place yesterday, which are to help new technology. But that was a drop in the ocean of investment money that is needed to develop new technology if we are to compete with other countries like Japan and the United States, as was mentioned by the noble Lord, Lord Ezra, when he made his admirable speech a few moments ago. It represents about 0.003 per cent. of our total GDP. That simply is not good enough. It will not wash, and it will not bring about the improvement in and the expansion of new technology that we need.

Finally, I think that the noble Lord was teasing me a little when he said that a planned economy had never benefited the people of this country or their standard of living. I am surprised that he should have said that because in this country we had a planned economy under Clement Attlee from 1945 to 1951; we had a planned economy under Mr. Winston Churchill from 1951 to 1954; we had a planned economy under Mr. Anthony Eden from 1954 to 1958; we had a planned economy under the noble Earl, Lord Stockton, from 1958 to 1962; and, indeed, we had a planned economy under the right honourable Edward Heath from 1970 to 1973, and he is regretting that we do not still have a planned economy because he believes that the capitalist monetarist theories of this present Government have been a disaster for this country.

Under all those circumstances, and bearing in mind what I have said and what other noble Lords have said, I hope that the noble Lord will accept this amendment. If not, I shall certainly press it.

Lord Peyton of Yeovil

My Lords, what strange debates we are having this afternoon! We have just had a rather brief, misleading and inaccurate history lesson from the noble Lord, Lord Stoddart; before that there was an effort to wreck this Bill, and also an effort to amend the Conservative Party's manifesto at the last election, which I should have thought was a very odd thing to try to do in your Lordships' House.

We now have a specific amendment in front of us which apparently has two purposes. One is to change the basis of Government accounting. I would agree with anyone who suggests that the system of Government accounting is not wholly deserving of praise. It could, indeed, attract almost any adjective from "informal" to "awful", but this surely is hardly the place to change it. I am sure that the noble Lord, Lord Stoddart, will recall that it has existed in its strange state under many successive Administrations.

The second thing which the noble Lord evidently seeks to do is to foist upon us a council for the communications industry. If your Lordships will reflect, of the councils which Parliament in its wisdom has set up, not all of them—and I do not wish to go into their records in detail—have had very happy records and few of them have earned the gratitude of their country. I very strongly believe and fear that if a council for the telecommunications industry were set up, far from being a gathering of experts who would show this country the way into the new world of high technology, it would be a council largely composed of people who did not have very much else to do, who could easily be spared to attend meetings of the council and who, in attending meetings of that council, would take up the time of those who could not be spared. I very much applaud my noble friend's rejection of such a silly idea.

5.7 p.m.

On Question, Whether the said amendment (No. 114) shall be agreed to?

Their Lordships divided: Contents, 92; Not-Contents, 140.

DIVISION NO. 3
CONTENTS
Airedale, L.	Elwyn-Jones, L.
Amherst, E.	Ennals, L.
Aylestone, L.	Ewart-Biggs, B.
Bernstein, L.	Ezra, L.
Birk, B.	Fisher of Rednal, B.
Bishopston, L. [Teller.]	Fitt, L.
Blease, L.	Gaitskell, B.
Blyton, L.	Gregson, L.
Boston of Faversham, L.	Grimond, L.
Bottomley, L.	Hampton, L.
Brockway, L.	Hanworth, V.
Brooks of Tremorfa, L.	Hatch of Lusby, L.
Bruce of Donington, L.	Hooson, L.
Carmichael of Kelvingrove, L.	Houghton of Sowerby, L.
Chitnis, L.	Howie of Troon, L.
Cledwyn of Penrhos, L.	Irving of Dartford, L.
Collison, L.	Jeger, B.
Darling of Hillsborough, L.	Jenkins of Putney, L.
David, B.	John-Mackie, L.
Davies of Penrhys, L.	Kaldor, L.
Delacourt-Smith of Alteryn, B.	Kearton, L.
	Kilmarnock, L.
Diamond, L.	Kirkhill, L.
Donaldson of Kingsbridge, L.	Leatherland, L.
Donnet of Balgay, L.	Listowel, E.

Llewelyn-Davies of Hastoe, B.	Serota, B.
Lloyd of Hampstead, L.	Shackleton, L.
Lloyd of Kilgerran, L.	Shinwell, L.
Lovell-Davis, L.	Simon, V.
McGregor of Durris, L.	Stallard, L.
McIntosh of Haringey, L.	Stedman, B.
Mayhew, L.	Stewart of Alvechurch, B.
Mishcon, L.	Stewart of Fulham, L.
Molloy, L.	Stoddart of Swindon, L.
Mulley, L.	Stone, L.
Northfield, L.	Strabolgi, L.
Oram, L.	Strauss, L.
Peart, L.	Taylor of Blackburn, L.
Perry of Walton, L.	Tordoff, L.
Phillips, B.	Underhill, L.
Ponsonby of Shulbrede, L. [Teller.]	Whaddon, L.
	White, B.
Prys-Davies, L.	Wigoder, L.
Rathcreedan, L.	Willis, L.
Rochester, L.	Winstanley, L.
Ross of Marnock, L.	Wootton of Abinger, B.
Sefton of Garston, L.	Young of Darlington, L.
NOT-CONTENTS
Ailsa, M.	Halsbury, E.
Alexander of Tunis, E.	Hampden, V.
Allerton, L.	Harvington, L.
Alport, L.	Hawke, L.
Atholl, D.	Henley, L.
Auckland, L.	Hill of Luton, L.
Avon, E.	Hives, L.
Bauer, L.	Hylton-Foster, B.
Belhaven and Stenton, L.	Ilchester, E.
Bellwin, L.	Kaberry of Adel, L.
Beloff, L.	Killearn, L.
Belstead, L.	Kinloss, Ly.
Bessborough, E.	Kinnaird, L.
Bolton, L.	Lauderdale, E.
Brabazon of Tara, L.	Lawrence, L.
Broxbourne, L.	Long, V. [Teller.]
Bruce-Gardyne, L.	Loudoun, C.
Caccia, L.	Lucas of Chilworth, L.
Caithness, E.	Luke, L.
Caldecote, V.	Lyell, L.
Campbell of Alloway, L.	McAlpine of West Green, L.
Cathcart, E.	McFadzean, L.
Chelwood, L.	Mackay of Clashfern, L.
Cockfield, L.	Macleod of Borve, B.
Coleraine, L.	Mancroft, L.
Cork and Orrery, E.	Margadale, L.
Cornwallis, L.	Marley, L.
Cottesloe, L.	Marshall of Leeds, L.
Craigavon, V.	Maude of Stratford-upon-Avon, L.
Craigmyle, L.
Daventry, V.	Melville, V.
Denham, L.	Merrivale, L.
Digby, L.	Mersey, V.
Dilhorne, V.	Middleton, L.
Drumalbyn, L.	Molson, L.
Eccles, V.	Monson, L.
Ellenborough, L.	Montgomery of Alamein, V.
Elton, L.	Morris, L.
Enniskillen, E.	Mottistone, L.
Faithfull, B.	Mountgarret, V.
Fanshawe of Richmond, L.	Murton of Lindisfame, L.
Fortescue, E.	Newall, L.
Fraser of Kilmorack, L.	Northchurch, B.
Gardner of Parkes, B.	Nugent of Guildford, L.
Gisborough, L.	Onslow, E.
Glanusk, L.	Orkney, E.
Glasgow, E.	Pender, L.
Glenarthur, L.	Peyton of Yeovil, L.
Gormanston, V.	Porritt, L.
Gowrie, E.	Rankeillour, L.
Gray of Contin, L.	Reay, L.
Greenway, L.	Redesdale, L.
Gridley, L.	Renton, L.
Grimston of Westbury, L.	Rochdale, V.
Hailsham of Saint Marylebone, L.	Romney, E.
	St. Davids, V.

Saint Oswald, L.	Swinfen, L.
Saltoun, Ly.	Swinton, E. [Teller.]
Sandford, L.	Terrington, L.
Sandys, L.	Teviot, L.
Selkirk, E.	Thomas of Swynnerton, L.
Sempill, Ly.	Thorneycroft, L.
Shannon, E.	Torphichen, L.
Sharples, B.	Trumpington, B.
Skelmersdale, L.	Tweedsmuir, L.
Somers, L.	Vaizey, L.
Spens, L.	Vaux of Harrowden, L.
Stamp, L.	Whitelaw, V.
Stodart of Leaston, L.	Windlesham, L.
Strathspey, L.	Wynford, L.
Suffield, L.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendment No. 115 not moved.]

Clause 60 [Conversion of certain loans transferred to the successor company]:

5.16 p.m.

Lord Bruce of Donington moved Amendment No. 116: Page 55, line 21, leave out lines 21 and 22 and insert— ("(4) For the purposes of subsection (2) above—").

The noble Lord said: My Lords, this amendment is concerned with the operation of Clause 60 of the Bill, which deals with the conversion of certain loans transferred to the successor company. At the end of the financial year ending 31st March 1983 there were loans from the Secretary of State to British Telecom amounting to £2,943.7 million. That was the amount according to the accounts. But of course the accounting period has now ended, and earlier, during last month, I put down a Question to the noble Lord so that we could have the make-up of the amounts of capital and interest receivable by the Secretary of State, both principal and interest, until all the loans were repaid.

The noble Lord was kind enough to oblige me with all the figures for the years 1984–85 right the way through to 2003–04, which showed a schedule of the loans and how they were going to be repaid in terms of both principal and interest. Although the sums involved are rather more than one normally deals with, perhaps it may be for the convenience of your Lordships if I say that the loans and interest repayable by British Telecom back to the Secretary of State over the next 20 years would amount to something like £6,084 million.

Clause 60 seeks to give power for the extinguishment of these loans, and the substitution in place of the loans of debentures in favour of the Secretary of State. There are other matters concerned with the debentures which we shall find it more convenient to discuss at a later stage. However, on the assumption that this operation went through—that is to say, all the loans made by the Secretary of State to British Telecom were in fact converted into debentures—the state would lose nothing.

On the assumption that the terms of repayment and the amount of interest due to the Secretary of State over the period were apportioned over the life of the proposed debentures, once again the Secretary of State ultimately would lose no money. All he would have would be debentures in place of his entitlement under whatever loan documents passed between himself and British Telecom. So far, so good.

The Bill itself in subsection (4) says this: Except as may be agreed between the Secretary of State and the successor company". Then, this is the provision I seek to remove and to replace by the words, "For the purposes of subsection (2) above". It provides: the aggregate of the principal sums payable under debentures issued in pursuance of this section shall be equal to the aggregate of the sums the liability to repay which is extinguished by the order; and (b) the terms as to the payment of the principal sums so payable, and as to the payment of interest thereon, shall be the same as the corresponding terms of the transferred loans specified in the order".

The words that give me some trouble are the words: Except as may be agreed between the Secretary of State and the successor company". Clearly, if the successor company had it in mind it could persuade the Secretary of State to extinguish a greater amount of loan than was covered by the debenture. I know that that is not the noble Lord's intention. I read his explanatory note, which is admirable in its way and deals with certain taxation aspects of the matter which, if my memory serves me aright, are covered by Section 48(10) of the Finance Act 1981, which ensures that there is no taxation disadvantage as a result of this operation. Indeed, that may be necessary, and I am not disputing the necessity for the noble Lord to bring himself within that clause.

What bothers me are the words, "except with the agreement of the successor company." I repeat that if the successor company comes to the noble Lord and says, "It will be convenient for us to have at least half of this loan extinguished because it would help our prospects considerably", and if the company succeeded in persuading the noble Lord about that—and the noble Lord's party is not exactly hardhearted when it comes to the vested interests which sustain it either financially or by their broad and general support at election time—then I seek to prevent the noble Lord from succumbing to that spirited generosity which he might be tempted to exercise in favour of his friends. All this amendment seeks to do is to ensure that the state does not lose any money; that when a debt is extinguished then it is covered by a debenture on the terms substantially as set out in Clause 60(4).

Perhaps I should mention this further point because the noble Lord has been a little silent on it so far. It arises on this clause. I should inform your Lordships that it is not a Second Reading point. It is a point on which possibly the City would desire to have some earnest information. When the Bill says "debenture", what kind of debenture do the Government have in mind? What kind of rights will attach to the debenture? Is the debenture to be redeemable over a period of time, roughly in accordance with the loan schedules of the original loans by the Secretary of State? Is it to be secured by a charge on any of the assets of the successor company to British Telecom? Is there to be a floating charge on the assets for the time being of the successor company? What kind of debenture do we have in mind?

It will be necessary for those who propose, when eventually the prospectus arrives, to invest their money in acquiring the Government's shares to know what claims there are on the business of the company prior to their own equity claims. Perhaps it would be of advantage if the noble Lord took this opportunity, although it does not arise specifically on this amendment, to take us a little more into his confidence and to give us in general terms, without necessarily committing himself—because he may want to consult his stockbroker, his advisers, his accountants, his lawyers, his bankers and everybody else before he commits himself—a rough idea of what he has in mind. That would reassure the City to the extent that it may need to be reassured, as it will have to be reassured because a long time will elapse before the prospectus ever sees the light of day.

I sincerely hope that the amendment will commend itself to the House. I repeat that it does not seek to make any party point. It seeks to close a loophole which exists by virtue of the wording that has been used in the subsection. I repeat that I am sure the noble Lord would not wish to use it in the sense that I have suggested he might be able to use it. I agree that his purpose in introducing this wording may have been totally different. But we are dealing with what will become an Act of Parliament. I should not like it to be said at some later stage, if, for some reason, perhaps, some other Government or some other Minister were to extinguish a loan to the successor company without due consideration, that your Lordships' House, in relying on the good intentions of the Government, left a loophole for a successor Government, of whatever hue it might be, to drive a horse and carriage through the expressed intentions of the noble Lord. I beg to move.

Lord Cockfield

My Lords, this is essentially a technical matter. It does not raise any point of political importance, and perhaps I might discuss it on that basis. I am sure that would be acceptable to the noble Lord, Lord Bruce of Donington, because we should like to allay some of the anxieties that he has expressed. I should start by saying that although Clause 60 is long and complex, its main objective is to close a tax loophole. That is a matter on which there would be no disagreement on any side of the House.

The amendment is directed to a specific point; namely, to prevent the powers in Clause 60 being used to reduce British Telecom's debts to the Government. That is the essential point of it. I must make it clear from the outset that the clause is not intended to be an instrument for reducing the monies due from British Telecom to the Government. An undertaking to this effect was given in another place when the clause was first introduced in the original 1982 Bill. I will repeat that undertaking to your Lordships today. I am quoting from the Official Report of Standing Committee H on 3rd March 1983, column 1390. The undertaking was as follows: We shall not seek to use powers under this Clause either to impose additional debt burdens on the successor company or to relieve it of the burden attaching to the servicing and repayment of NLF debt so transformed"— that is, so transformed into debentures.

The Government have not yet decided the successor company's capital structure. Our aim is to give the successor company a sound capital structure to start off in the private sector. If it was judged appropriate to improve the successor company's debt-to-equity ratio, one way to achieve this would be through Clause 61 which would allow the Secretary of State to subscribe for new shares and offer up debentures in payment for them. This method would not be affected by the amendment. It would not in any case amount to a write off of the public investment in British Telecom since Government loans to British Telecom would be replaced by Government-held equity. So the degree of flexibility provided for in subsection (4) of the clause does not have a sinister intention. Rather it is aimed at allowing British Telecom's debt to be on appropriate terms.

It would allow a different schedule of repayment of the debentures to be adopted. Debentures might need to be re-financed by new borrowing as they are repaid, so that the repayment schedule must take into account both prudent financial planning by the company and the capacity of the market for new borrowings. In the past, when NLF loans were issued to British Telecom, these considerations did not apply because the Government raised the required funds to refinance the NLF loans. The result is that the schedule for British Telecom's NLF finance—and this comes out very clearly in the written reply that I gave to the noble Lord—shows sharp fluctuations from one year to the next and it may well be desirable to smooth out these fluctuations before the successor company is floated.

Such rescheduling of British Telecom's debt might involve a change in the apportionment of payments as between interest and capital which would not necessarily mean any reduction in the overall debt burden. As I have said, Government have other powers to implement the capital structure which they determine as appropriate for the successor company. This is the type of issue which underlies the need for flexibility over the terms of the debenture. I have repeated the undertaking that we will not use the powers under this clause to write off British Telecom's debt. The noble Lord has, of course, a legitimate anxiety on this point. I hope that I have met that anxiety.

Perhaps I might go further and say that under Subsection (3) of Clause 60: The Secretary of State shall not make an order or give a direction under this section at a time when the successor company has ceased to be wholly owned by the Crown.". In other words, the powers under Clause 60 relate to the period when the successor company is still wholly owned by the Crown so that any rescheduling of the debt would accrue to the benefit of the Exchequer and not to the benefit of anybody else. Although our clear intention is that the debt burden should not be altered by virtue of the conversion of the NLF loans into debentures—not by virtue of that—the fact of the matter is that if there were any change, the benefit would accrue to the Crown, to the Exchequer and not to people outside.

I hope very much indeed that on that basis the noble Lord would feel that I have answered the questions that were worrying him—quite legitimately worrying him, I accept. He also asked various questions about the terms of the debentures. This is a matter on which I would not be in a position to give an answer this afternoon. We act on advice from merchant bankers and from leading experts in this field; and the exact terms of the debentures will depend upon the circumstances existing at the time and on the advice that we were given. But as far as this clause is concerned—and there are powers to alter the structure elsewhere in the Bill—it is not intended either to impose an additional burden on British Telecom or to relieve them of a burden. I would hope that this explanation meets the point that the noble Lord raised.

5.35 p.m.

Lord Bruce of Donington

My Lords, I am grateful to the noble Lord for the comprehensive nature of his reply. May I tell him on behalf of those who sit on this side of the House that his explicit undertaking is fully acceptable to us? We are quite sure that he would not have given it without complete authority to put himself in that position. However, it indicates that my anxieties concerning the actual wording of the clause had their validity for otherwise it would not have been necessary to give the undertaking. I quite understand that the noble Lord is not in a position to give us further particulars at this time—not even off the cuff—concerning the debentures. This may have to wait for two or three years' time when the issue becomes feasible.

In the meantime and in a spirit of reciprocity I have endeavoured to do one or two little sums for his assistance. He mentioned that it would be necessary—and I quite accept the point—to smooth out the repayments of principal and the payments of interest over the whole period covered by the loan or, indeed, perhaps over some other period, possibly shorter. If he adopted that course, he ought perhaps to be aware that there are certain disadvantages from the point of view of the cash flow to the Exchequer. We are all concerned with taxpayers' money, and since we are operating within cash limits any money that ought to come into the Exchequer in the normal way which no longer comes into it until a later date means that a fresh pressure is put on the Government and, particularly, on the Government's expenditure limits which are defined presumably on the basis not only of making allowance for the PSBR but also on the basis of the income projected.

If the noble Lord's department issued debentures on a 20-year basis—which covers the life of the present series of loans—and spread the interest over on the principal also spread over, it would mean that they would receive on a 20-year debenture only interest for the first four years. I am dealing with a four-year period because it covers the remaining period of the Government being in office, unless there are any more banana skins. This interest would be of about £681.2 million. If they are a 10-year debenture, the receipts of interest during that four years would be £1,362.6 million. Under arrangements that now exist, assuming that the loans were not disturbed in any way or converted into debentures, the Government would receive over the next four years some £279 million only by way of principal and some £1,048 million in terms of interest, which makes a total of £1,427 million receivable by them in cash over the next four year period. If they converted into a 20-year debenture, there would be a shortfall to the Exchequer of £846 million. If it is on a 10-year debenture (which would imply, obviously, a higher rate of interest) then the shortfall would be only £64.7 million.

The point that I am making to the noble Lord is simply this: privatisation is not without its disadvantages, and if the noble Lord is talking about cash flow—which is what they are fundamentally concerned with—this conversion into debentures, within the context of the noble Lord's remarks, is going to be a pretty costly operation and to some extent will take away the benefit that his right honourable friend the Chancellor of the Exchequer hopes to obtain by the sale of the shares in the successor company, But, that is by way of reciprocity to alert him possibly to an argument that I may embark upon at a later stage on this particular subject. In the meantime, we are glad to accept the noble Lord's assurance and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 63 [Target investment limit for Government shareholding]:

Lord Cockfield moved Amendment No. 116A: Page 57, line 7, leave out ("made by statutory instrument")

The noble Lord said: My Lords, this is simply a tidying-up amendment. The words in question in fact do appear in Clause 97 and it is quite unnecessary for them to be repeated again in this particular clause. It is simply to tidy up the drafting; it has no meaning otherwise.

On Question, amendment agreed to.

Lord Bruce of Donington moved Amendment No. 117: Page 57, line 24, leave out paragraph (a).

The noble Lord said: My Lords, I beg to move the amendment standing on the Order Paper in my name and those of my noble friends; associated with it, of course, and to be read together with it, is Amendment No. 118: Amendment No. 118: Page 57, line 25, leave out ("and (b)").

My Lords, it will be recalled that Clause 63 give the Government power to set a target investment limit for the Government shareholding in the new successor company. Before I proceed with that aspect of the matter, may I recall to the mind of the noble Lord the words that fell from his lips when we were discussing the previous amendment, when he indicated that one of the ways of getting over the debenture difficulty, which we discussed together at some technical length, would be the issue of equity in place of debentures in the new company. I suddenly thought at the time that he was already limiting himself by fixing targets under Clause 63; how does that square with what he has just told me about substituting equity shares for debentures in complying with the previous section? I thought it would he unkind to do it at that stage because he had been so accommodating in his undertaking, but I feel it proper to refer to the point now.

There is nothing to stop the Government from fixing a target investment for a Government shareholding in the successor company. I believe that initially it will be set at 50 per cent. and, according to the provisions of the clause, they can alter this target from time to time. Doubtless the noble Lord will bear in mind that any shareholding above 30 per cent. (or possibly sometimes even lower under conditions where shareholdings are quite widely fragmented) in fact still gives an effective control. Presumably it is with that in mind that the noble Lord has sought the authority of the Bill itself to fix new investment targets, and this one—No. 4—has a ratchet effect. Once a target is fixed, the next target certainly must not be higher than the previous one; in fact it must be lower so there is a ratchet effect downwards. The noble Lord was quite frank about this. His Notes on Clauses expressed the reason quite succinctly.

The reason why this is being done is to make it more difficult for a successor Government to re-nationalise. This is the main purpose. If the Government's holding progressively disappears and disappears to a point where it becomes insignificant in terms of the exercise of any control or the presence of any significant Government stake, in the view of the noble Lord it is unlikely to be easy to renationalise except by having fresh legislation. I hasten to assure him that there are ways which have been thought out to circumvent the noble Lord, but it would not be proper, of course, and it would not be in accordance with party security to inform him what ideas we have in mind to circumvent him.

Nevertheless, it is an undesirable feature in a Bill to build in a ratchet factor of this kind. I was rather hoping that the noble Lord would take the confident view that the benefits of privatisation would be so manifest to all the consumers, to all the manufacturers, to all the politicians and to the whole world that no one would ever dream of wanting to depart from the privatisation of the concern. Evidently the noble Lord is not so confident. He may think that after a while the public will be disenchanted and therefore he has to build something into the Bill to prevent the easy undoing of the evil. I use the word "evil" only in the pejorative sense, not in any sense of real evil, but evil that he has done to the economy. I should have thought his own confidence in the efficiency and attractiveness of what his Government proposes to do would make such a step unnecessary. In any event, if the ratchet effect were put into a Bill of this kind with deliberate intent, regardless of what the consequences would be, this would be very undesirable. I beg to move.

Lord Cockfield

My Lords, may I deal with the technical point before dealing with the political point? The powers in Clauses 59 and 60 are expressed to be usable only in the period before the successor company ceases to be wholly owned by the Crown. That appers in Clause 59(2) and again in Clause 60(3). The target investment limit deals with the situation when and after the successor company is privatised. That is the answer to the preliminary technical point raised by the noble Lord, Lord Bruce of Donington.

Subsection (4)(a) of Clause 63, which is the matter to which the amendment relates, is designed to block a loophole which could have been exploited by a future Labour Government to renationalise British Telecommunications without full and proper parliamentary authority. Therefore, it is a vital element in this Bill. The Government shareholding in normal circumstances cannot exceed the target investment limit. By providing that each new target investment limit must be lower than its predecessor, subsection (4)(a) ensures there can be no increase in the shareholding of the Government by the device of setting a new increased investment limit and then purchasing shares in the market. Therefore, the subsection prevents renationalisation of British Telecommunications by a future Government simply buying shares in the market.

Subsection (4)(a) therefore ensures that primary legislation would be required if a different administration wanted to renationalise British Telecommunications. It is surely right and proper that a privatisation brought about by primary legislation should require fresh primary legislation to reverse it. Indeed, I am very much surprised that the noble Lord, Lord Bruce of Donington, who has throughout advocated greater parliamentary involvement and who advocated the affirmative resolution procedure for the target investment limit during Committee stage, should now be prepared to put forward an amendment which would deny Parliament the right to primary legislation on such an important matter.

I suggest that the purpose of the amendment is simply to undermine the privatisation of British Telecommunications by creating doubt and uncertainty. Privatisation is an integral part of the Bill and is something for which we have an electoral mandate. On this ground alone, quite apart from the other points I have made, I must ask your Lordships to reject the amendment.

5.50 p.m.

Lord Bruce of Donington

My Lords, I am most disappointed with the noble Lord's response. May I point out to him that had he taken the suggestion that all these matters be brought under parliamentary control his anxieties would not have existed, because parliamentary control would have secured the operation of the "ratchet clause" as well as the other clause, so that in rejecting my suggestion that the whole thing should be brought under parliamentary control he has only contributed to the uncertainty.

I still think it is a bad thing to take a specific step of this kind. Governments in the normal way do not, in the absence of legislation, need any particular parliamentary power to invest in ordinary companies today. They already have sufficient powers to do that. I think it is called in some quarters "back-door nationalisation", but there is nothing inherently wrong in any government buying shares in any particular company so long as they can account to Parliament for their money in the usual estimates and eventually on appropriation account, and so on, and also, in important circumstances, by parliamentary debate.

The noble Lord has made quite clear his determination that all possible resistance will be encountered by an incoming Labour Government to do what is the proper thing, and I hasten to assure him that this Bill will be repealed—there is no question about that—and in such a form as to cause the minimum dislocation to any practical steps that have already been taken. But certainly if we have the privatised organisation, together with this terrific machinery of regulation which the noble Lord is establishing, on the assumption that it does not collapse of its own accord, it will certainly be necessary for us to take steps to protect the whole telecommunications industry and to protect the consumer in due course by restoring British Telecom to what it was before: a responsible public service. I am sorry the noble Lord cannot accept the amendment, but I have no desire to ask your Lordships to tramp through the Lobbies on this occasion and I beg to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 118 not moved.]

Lord Stoddart of Swindon had given notice of his intention to move Amendment No. 119: After Clause 66, 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 provision 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: My Lords, I am in some difficulty here and I hope that you will bear with me. I notice that an amendment in identical terms to this was discussed and voted down at Committee stage, but we felt so strongly on the matter, which we felt to be of prime importance, that we put this amendment down for Report stage. However, in our view, it would be an abuse of the procedures of your Lordships' House to move this amendment again, and we do not wish to countenance such an abuse. Therefore, on the basis that perhaps the Government may have some discussions on this before Third Reading, I do not propose to move the amendment.

[Amendment No. 119 not moved.]

Clause 68 [Application of law in relation to offer of shares or debentures of the successor company]:

Lord Bruce of Donington moved Amendment No. 120: Page 61, line 10, leave out ("includes") and insert ("comprises").

The noble Lord said: My Lords, I beg leave to move this amendment and I propose to take Amendments Nos. 120, 121 and 122 together.

Amendment No. 121: Page 61, line 17, at end insert ("and of subsection (6) of section 38 of the Companies Act 1948").

Amendment No. 122: Page 61, line 41, leave out ("any document") and insert ("the notice given by the Secretary of State under subsection (2) above").

The first amendment would take out the word "includes"—a rather ambiguous word—and to insert the word "comprises". The reason is that we are dealing here with a prospectus, except in certain circumstances which are laid down in later parts of the Bill, and in our view it is not desirable that it should go beyond the items that are set out in Clause 68(2)(a), (b) and (c). We have in paragraph (a) the following— a brief description of the shares or debentures offered, the terms of the offer, the successor company's business and its financial position". In paragraphs (b) and (c) we have the following: an addition of the places in the United Kingdom where copies of the offer prospectus are to be available for inspection by members of the public: and (c) a statement of the effect of subsections (4) and (5) below". These lay down various other conditions. We do not think that "includes" is right, because a lot of other documents could be incorporated in the same package.

Amendment No. 121 has the intention that the subsection referred to should also state the requirements of Section 38 of the Companies Act 1948, which are in fact an authentication of everything that is sent out. If the noble Lord refers to Clause 38 of the Companies Act he will find that it requires that the documents be true and fair, and all the rest of it, and we think it would be advisable for that to be included.

Amendment No. 122 refers to subsection (5) in regard to the prospectus and would make it read as follows: (5) Where a form of application is issued without a full prospectus, neither the form of application nor the notice given by the Secretary of State under subsection (2) above which is issued with it shall be regarded"— and so on.

It prevents, therefore, the inclusion of any other documents and in our view makes the matter more precise. At the same time we have to reiterate our own dismay that it should he necessary in this legislation to make a special exemption to British Telecom or to the successor company for the issue of this prospectus. Of course, we do not know how this is going to he done, but we do know that purely because the number of prospective investors is large the normal requirements of the Stock Exchange in regard to the prospectus are not going to be carried out in this particular case. We do not view that with any approval at all.

We may introduce an amendment on Third Reading, unless the noble Lord anticipates us by making it compulsory under this clause to have a copy of the full prospectus available at every Post Office throughout the United Kingdom. That might minimise a certain amount of the damage that is being done by having an abbreviated prospectus in accordance with this particular clause. But that is for later, and I beg to move.

Lord Morris

My Lords, I am concerned about this amendment because the word "includes" is necessarily broad and the word "comprises" would surely mean that those matters which should be included in the notice could comprise these items, to the exclusion of anything else. I think it would be damaging to restrict it in this way. As such it would be damaging to restrict what should go into the prospectus, leave it more open.

The Lord Advocate (Lord Mackay of Clashfern)

My Lords, I am grateful to my noble friend Lord Morris. That is our objection to the first amendment, No. 120. The object of all the provisions with which this part of the Bill is dealing is to provide a minimum standard of protection, and it would seem unwise to provide unnecessarily for a restriction of the information which could be put into the notice.

The second Amendment, No. 121, asks that a statement of the effect of Section 38(6) of the Companies Act 1948 should be put in. As I understand Section 38(6), it provides that nothing in Section 38 will diminish any liability incurred under the general law or under any other section of the Companies Act 1948. I must confess I cannot see the point of putting that kind of observation at the end of the notice, and it does not appear to reflect exactly what the noble Lord. Lord Bruce of Donington, had in mind when he spoke earlier. If I may say so with all respect, I could see much more force in having something in the notice on the lines of what he described in his speech, rather than the provision of the section. It may be that he will want to give some further consideration to that aspect of the matter.

So far as the third amendment, No. 122, is concerned, that is, in effect, to remove the words "any document" from subsection (5). Again, it appears right to preserve flexibility in precisely what one sends out, so long as the Secretary of State is responsible for it, and that is the situation. So long as a proper notice is issued with the application form in circumstances where the full prospectus is very widely available, I can see no reason why additional, helpful information should not be included with the documentation.

There is a more technical reason why the words "any document" should stay. In the very unlikely case that the notice under subsection (2) was not properly issued, and was not a proper notice in the terms of subsection (2), it would not amount to a, notice given by the Secretary of State under subsection (2)". Since this document is issued by the Secretary of State on his sole responsibility, it would not be fair that other persons, such as the directors of British Telecom, should bear any liability for damage caused by that defect.

Such a document should not be regarded as a prospectus or circular, any more than a properly issued notice would be, so far as these other persons are concerned. That is the purpose of the last four lines of subsection (5). Therefore, while I appreciate a good deal of what the noble Lord has said, and, in particular, the indication he gave of what might be his intention at a later stage of the Bill, I hope that in the light of these explanations he may feel able not to press these amendments.

Lord Weinstock

My Lords, before the noble and learned Lord sits down, I must apologise to the noble Lord, Lord Bruce of Donington, for the fact that I did not hear his opening remarks concerning this amendment. I did not know that Amendments Nos. 120 and 121 would be considered with Amendment No. 122, and the annunciator screen outside did not indicate that they were being so considered.

In moving in Committee the amendment which is now Clause 68 of the Bill, the noble and learned Lord the Lord Advocate said that it would permit the Secretary of State to issue application forms for British Telecom PLC shares without a full prospectus. The noble and learned Lord justified this on the ground that it is to meet an exceptional need with an exceptional measure. In other words, the Government have decided to change the normal rules for protecting investors, simply because it suits them to do so. The noble and learned Lord asserted that, far from withdrawing the protection of the law from those investors, the Government are giving them all the protection of the law and more. If this were the case, other companies would presumably be allowed to invite subscriptions from the public for shares, in the same way as the Government here seek to do.

But, of course, that is not the case. The real reason for the clause is that the Government are rushing to remove all obstacles, legal and other, to get their hands on the proceeds of the sale of the BT shares. Clause 68 demonstrates a wanton disregard for the principle of equal treatment under the law. I urge your Lordships to vote in favour of this amendment, which attempts to reduce a thoroughly undesirable deviation from the normal practice. If, on the other hand, the Bill stands as it is at present, I give notice that I intend to refer further to the matter, among others, on Third Reading.

Lord Bruce of Donington

My Lords, I thank the noble and learned Lord the Lord Advocate for the remarks he made in response to the amendment that I moved. I think there was a slight misunderstanding between us. My proposed insertion of a reference to subsection (6) of Section 38 of the Companies Act was to remind the general public that the Secretary of State himself had the same liabilities as directors, under the Companies Act, for any misleading statements that are made. It it rather an obverse way of putting it, but that was my intention.

In regard to subsection (5), the reason for that amendment, as I have already explained, is so that a cascade of documents does not go into the same envelope as any abbreviated form of prospectus that goes out. As the noble and learned Lord knows full well, the normal practice is that when prospectuses are sent out they are accompanied by an application form and that is the lot. There is not a lot of blurb going with it, advertising the virtues of the issue or making any other statements, whether in printed form or otherwise, to persuade investors to invest, notwithstanding the contents of the prospectus. It is with the objective of restricting the material that can be sent to these prospective investors that I am principally concerned.

I am completely at one with the noble Lord, Lord Weinstock, in deploring the fact that there should be this special departure, in this special circumstance, from the law that applies generally to those who issue invitations to the public to invest. But I am bound to accept the Bill as it is now and must try to limit its damage, if that is possible.

If the noble and learned Lord gives me an undertaking that when these documents are issued the Secretary of State will take full personal responsibility that they will be confined to a summary of prospectus—whatever form that may take, and of which I entirely disapprove—and an application form, and will not have any Government blurb offering further inducements to investors, then I shall withdraw the amendment. Is the noble and learned Lord in a position to give that undertaking, that the only departure from the normal issue of a prospectus will by the issue of an abbreviated form of prospectus, rather than a full one, and that no other documents will go out with the application form?

Lord Mackay of Clashfern

My Lords, with the leave of the House, I sought to explain fairly fully in Committee why we wished to make possible this course of action in this case. It appears impracticable to achieve a wide circulation of a prospectus of the size that this one would be in the time that is available from the date at which the price is fixed to the date at which the prospectus has to be issued. As I explained at the Committee stage, and your Lordships accepted my explanation, there is a good reason for doing this. It is highly desirable that the shares of British Telecom should be spread as far as possible.

I understand what the noble Lord, Lord Bruce of Donington, has suggested in his amendments. The point I have made is that the Secretary of State will be responsible for every statement in these documents. I do not consider that the amendments which the noble Lord has put forward are desirable in the interests of the objectives which he has in mind. It does not seem to be right unduly to restrict the way in which these minimum conditions are met in the circumstances with which we are faced. Therefore, as I have already said, it is apparent that the Secretary of State will have responsibility for all that goes into documents issued by him. The purpose of the last part of Clause 5 is to maintain that position, and it seems to me that this is sufficient to meet the point which the noble Lord has made.

On Question, amendment negatived.

[Amendments Nos. 121 and 122 not moved.]

6.12 p.m.

The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur) moved Amendment No. 123: Before Clause 72, insert the following new clause:

("Restriction on revocation or variation of certain wireless telegraphy licences.

. The following section shall be inserted in the 1949 Act immediately after section 3— Restriction on revocation or variation of certain wireless telegraphy licenses.

3A.—(1) Subject to subsection (2) below, this section appies in any case where a wireless telegraphy licence is granted to any person who holds a licence granted under section 7 of the Telecommunications Act 1984 ("the telecommunications licence") authorising the running of a telecommunication system ("the system"), and the wireless telegraphy licence authorises all or any of the following, that is to say—

1. (a) the establishment of stations for wireless telegraphy or the installation of apparatus for wireless telegraphy, being stations or apparatus forming or intended to form part of the system;
2. (b) the use of any such stations or apparatus in running the system; and
3. (c) the installation and use for the purposes of the system (whether by the holder of the licence or by any other person) of any such apparatus connected or intended to be connected to the system.

(2) This section does not apply unless the telecommunications licence is one to which section 8 of that Act applies (licences including conditions imposing certain obligations with respect to the provision of telecommunications services or other matters).

(3) In any case to which this section applies the wireless telegraphy licence may include terms restricting the exercise by the Secretary of State of his power under section 1(4) of this Act to revoke or vary the licence.

(4) Without prejudice to the generality of sub-section

(3) above, the terms that may be included in a wireless telegraphy licence by virtue of that subsection include, in particular, terms providing that the licence may not be revoked or varied except with the consent of the holder of the licence or (as the case may be) in such other circumstances and on such grounds as may be specified in the licence.

(5) Any such circumstances or grounds may relate to matters relevant for the purposes of the Telecommunications Act 1984 as well as to matters relevant for the purposes of this Act (and may, in particular, be dependent upon action taken under that Act in relation to the telecommunications licence).

(6) A wireless telegraphy licence containing any terms included in the licence by virtue of subsection (3) above may also provide that regulations made under section 3 of this Act—

1. (a) shall not apply in relation to any station or apparatus to which the licence relates; or
2. (b) shall apply in relation to any such station or apparatus to such an extent only, or subject to such modifications, as may be specified in the licence.

(7) Notwithstanding any terms or provisions included in a wireless telegraphy licence in accordance with this section the Secretary of State may at any time, by a notice in writing served on the holder of this licence, revoke the licence or vary its terms, provisions or limitations, if it appears to him to be requisite or expedient to do so in the interests of national security or relations with the government of a country or territory outside the United Kingdom.

(8) Expressions used in this section to which a meaning is given for the purposes of the Telecommunications Act 1984 have the same meaning in this section; and section 99(4) of that Act (interpretation of power of Secretary of State to give a direction if it appears to him to be requisite or expedient to do so as mentioned in subsection (7) above) shall apply in relation to the power of the Secretary of State under subsection (7) above to revoke or vary a wireless telegraphy licence as it applies to any power of the Secretary of State under that Act to give such a direction.".")

The noble Lord said: My Lords, at the Committee stage, in response to an amendment tabled by my noble friend Lord Trenchard, the Government undertook to put down an amendment at Report to enable the Secretary of State to grant some security of tenure of wireless telegraphy licences to public telecommunications operators who need such licences to run their systems. This new clause is the result. As I said at the time, the Government agree that there is a need for some security of tenure when wireless telegraphy licences are issued to holders of public telecommunications licences, such as Mercury, the Cellular Radio Consortia and British Telecom. The new clause is designed to ensure that this can be provided.

The amendment will enable the Secretary of State to grant, within certain limits, security of tenure of a wireless telegraphy licence to holders of a telecommunications licence under Clause 7 of the Bill, to which Clause 8 applies. That is subsections (1), (2) and (3). This will cover public telecommunications operators and any other holder of a similar telecommunications licence, even if not yet designated under Clause 9 as a public telecommunications operator.

The provision allows the Secretary of State to provide for revocation or variation only with the consent of the licensee or in such circumstances and on such grounds as may be specified in the licence. That is subsection (4). It does, however, also provide for revocation or variation, notwithstanding that provision, in the interests of national security or relations with a government outside the United Kingdom. That is subsection (7).

The clause also contains a provision to ensure that any regulations made under Section 3 of the Wireless Telegraphy Act 1949—there are none at present—about the use of wireless telegraphy do not impose requirements, in the case of licences containing security of tenure provisions, which conflict with those provisions—subsection (6) refers to that—and one which makes it clear that the circumstances or grounds for revocation or variation can include ones relating to matters relevant to this Bill. That provision is contained in subsection (5). This latter provision is desirable to make it clear that a wireless telegraphy licence can, under this section, be varied or revoked in line with any action taken in respect of the relevant telecommunications licences. This is appropriate because it would be a nonsense if it were not possible to keep the two in line with one another. I hope, after that explanation, that your Lordships will find the new clause to be satisfactory. I beg to move.

Lord Glanusk

My Lords, my name was associated with that of my noble friend Lord Trenchard at the Committee stage. In his unavoidable absence may I thank very sincerely my noble friend Lord Glenarthur for moving this new clause, which fully covers the amendments which we tabled. In subsection (3) we should perhaps have liked to see the word "shall" rather than the word "may", but I do not think that we shall argue over it. I am most grateful.

On Question, amendment agreed to.

Clause 74 [Substitution of new section for section 7 of the 1967 Act]:

Lord Lyell moved Amendment No. 124: Page 65, line 19, at beginning insert ("(1)").

The noble Lord said: My Lords, I beg to move Amendment No. 124, and with your Lordships' permission I should like to speak to Amendment No. 125.

Amendment No. 125: Page 67, line 47, at end insert— ("(2) Any order made under section 7 of the 1967 Act which is in force immediately before this section comes into force shall have effect—

1. (a) as if made under the new section 7 substituted by subsection (1) above; and
2. (b) as if it restricted, in the case of wireless telegraphy apparatus of any class or description specified in the order, the actions

mentioned in subsection (3)(a) and (d) of the new section; (and any such order may accordingly be varied or revoked by an order made under the new section)."). These two amendments are technical and are designed to ensure that orders made under the existing Section 7 of the Wireless Telegraphy Act 1967 are saved, pending the making of fresh orders under the new Section 7 which your Lordships will find in Clause 74 of the Bill.

I should briefly explain that this provision is necessary because the new Section 7 does not simply amend the existing order-making powers. It substitutes different ones. Accordingly, the contents of the orders under the new section will have to be fuller than they are at present. Any existing orders will, I understand, fall once the new section is in force. The amendment, which provides for any existing order to have effect as if it had been made under the new section, is intended to avoid any such situation arising. I beg to move.

On Question, amendment agreed to.

Lord Lyell moved Amendment No. 125: [Printed above.]

The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendment No. 126: After Clause 84 insert the following new clause:

("Wireless telegraphy functions of Director.

. It shall be the duty of the Director—

1. (a) to exercise such functions as may be assigned to him under any enactment relating to wireless telegraphy; and
2. (b) to provide the Secretary of State with such services as the Secretary of State may require him to provide for purposes connected with the exercise by the Secretary of State of the Secretary of State's functions in relation to wireless telegraphy.").

The noble Lord said: My Lords, this amendment was spoken to with Amendment No. 95. I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendment No. 126A: After Clause 86, insert the following new clause:

("Radio interference service.

.—(1) The payment out of money provided by Parliament of any expenses incurred by the Secretary of State in providing a radio interference service is hereby authorised.

(2) In this section "radio interference service" means a service consisting in the giving of advice and assistance (whether free of charge or otherwise) to persons complaining of interference with wireless telegraphy.").

The noble Lord said: My Lords, with the leave of the House, I beg to move Amendment No. 126A. At the same time I should like to speak to Amendment No. 141, the last amendment on the Marshalled List, as the amendments are related. Amendment No. 141: Line 18, after second ("apparatus") insert ("to give statutory authority for the payment out of money provided by Parliament of expenses incurred by the Secretary of State in providing a radio interference service").

Amendment No. 126A, which adds a short new clause to the Bill, is intended to put on a statutory basis the power of the Secretary of State to meet the costs of the radio interference service which is provided on his behalf to investigate complaints of interference to authorised radio services, from whatever source. The related amendment, Amendment No. 141, amends the title of the Bill to take account of this new clause.

The radio interference service originated in the Post Office when the latter had responsibility for radio regulatory matters and there it stayed until the creation of British Telecom in 1981, when it passed to the latter body. Over the years, however, it has had several masters, as responsibility for radio regulation has shifted from one Government department to another. During all this time, however, the service has been funded by Parliament. Currently its costs are split between the Home Office, which pays for the investigation of complaints as to sound and TV broadcasting, and recoups the money from the TV licence fee revenue, and the Department of Trade and Industry. That is on two separate Votes. However, there has never been any express statutory provision for the expenditure. The Government are therefore taking this opportunity to make such provision. The amendment makes clear the Secretary of State's authority to pay for a radio interference service and so removes any doubt regarding the basis of the expenditure on the service. I beg to move.

Lord McIntosh of Haringey

. My Lords, I have no wish to oppose this amendment but merely wish to pay tribute, as one who lives in the lee of a large block of flats which have minicab radio operators' aerials on their roofs, to the work of the radio interference service. I am delighted to see that its financing is being given statutory authority.

On Question, amendment agreed to.

The Deputy Speaker (Baroness Wootton of Abinger)

My Lords, the next two amendments are printed in the wrong order on the Marshalled List. We shall have to take Amendment No. 126C before Amendment No. 126B.

Lord Mackay of Clashfern moved Amendment No. 126C: After Clause 88, insert the following new Clause—

("Power of Secretary of State to make orders under Fair Trading Act 1973 etc.

—(1) Where in the circumstances mentioned in subsection (2) below the Secretary of State by order exercises any of the powers specified in Parts I and II of Schedule 8 to the 1973 Act or section 10(2)(a) of the 1980 Act, the order may also provide for the revocation or modification of licences granted under section 7 above to such extent as may be necessary to give effect or to take account of any provision made by the order.

(2) Subsection (1) above shall have effect where—

1. (a) the circumstances are as mentioned in section 56(1) of the 1973 Act (order on report on monopoly reference) and the monopoly situation exists in relation to a commercial activity connected with telecommunications;
2. (b) the circumstances are as mentioned in section 73(1) of that Act (order on report on merger reference) and the two or more enterprises which ceased to be distinct enterprises were engaged in such an activity; or
3. (c) the circumstances are as mentioned in section 10(1) of the 1980 Act (order on report on completion reference) and the anti-competitive practice relates tothe production, supply or acquisition of telecommunication apparatus or the supply or securing of telecommunication services.

(3) Expressions used in this section which are also used in the 1973 Act or the 1980 Act have the same meanings as in that Act.")

The noble and learned Lord said: My Lords, this is a largely technical amendment. It introduces a new clause which gives the Secretary of State power to modify the provisions of telecommunications licences when he makes orders under the Competition and Fair Trading Acts to the extent necessary to give effect to such an order.

Normally, if it is necessary to modify conditions in telecommunication licences this will be done under the procedures set out in Clauses 12 to 15. These set out precise procedures on how licences can be amended. However, circumstances could arise when the Monopolies and Mergers Commission considered matters relating to telecommunications on a monopoly reference under the Fair Trading Act, or on a competiton reference under the Competition Act.

The commission could recommend that a telecommunications operator should cease engaging in a particular practice, should terminate a particular agreement, or, if there is a merger, that he should not acquire a rival's telecommunications business. The Secretary of State would then be in a position to make a formal order terminating the practice or requiring the agreement to be changed, or controlling the merger. These things would all he done under the Fair Trading and Competition Acts using the powers contained in those Acts.

It is possible that an order made under the Fair Trading or the Competiton Act might be incompatible with a provision in a telcommunications licence. For example, an order under paragraph 12 of Schedule 8 to the Fair Trading Act following a merger reference could prohibit a person who held a telecommunications licence from providing particular telecommunications services but the licence of the person concerned might permit him to provide those services. It is obviously desirable that the licence should be brought into line with the order, and this new clause makes provision for this.

It may be helpful if I emphasised that this power to modify licences is very limited. The power can only be exercised if the Secretary of State makes an order, which is something he has done very rarely—and then its extent is limited to what is necessary to give effect to or take account of any provision made by the order in question. The new clause does not in any way alter the normal procedures which ensure that the modification of licence conditions is carried out independently of Government and under procedures which ensure due process and an opportunity for representations to be made. I beg to move.

On Question, amendment agreed to.

6.25 p.m.

The Deputy Speaker

My Lords, we now return to Amendment No. 126B.

Lord Glenarthur moved Amendment No. 126B: After Clause 88, insert the following new Clause—

("Prohibitions and restrictions applying to lessees with respect to telecommunications.

.—(1) Subject to subsection (4) below, where any provision contained in a lease to which this section applies, or in any agreement made with respect to premises to which such a lease relates, has the effect of imposing on the lessee any prohibition or restriction with respect to any of the matters falling within subsection (3) below, that provision shall have effect in relation to things which are done—

1. (a) inside a building, or part of a building, occupied by the lessee under the lease, or
2. (b) for the purposes connected with the provision to the lessee by any public telecommunications operator of any telecommunication services,

as if the prohibition or restriction applied only where the lessor has not given his consent in relation to the matter in question and as if the lessor were required not to withhold that consent unreasonably.

(2) Where a provision of a lease or agreement imposes (whether by virtue of this section or otherwise) a requirement on the lessor under a lease not to withhold his consent unreasonably in relation to any matter falling within subsection (3) below, the question whether that consent is unreasonably withheld shall be determined having regard to all the circumstances and to the principle that no person should unreasonably be denied access to a telecommunication system.

(3) The matters falling within this subsection are—

1. (a) the running of relevant telecommunication systems;
2. (b) the connection of any telecommunication apparatus to a relevant telecommunication system or of relevant telecommunication systems to each other; and
3. (c) the installation, maintenance, adjustment, repair, alteration or use, for purposes connected with the running of a relevant telecommunication system, of any telecommunication apparatus.

(4) The Secretary of State may by order provide, in relation to such cases, prohibitions or restrictions as are specified in the order, or are of a description so specified, that subsection (1) above shall not apply.

(5) This section applies to any lease for a term of a year or more granted on or after the day on which this section comes into force; by the Secretary of State may by order provide that this section shall apply, subject to such transitional provisions as may be contained in the order, to leases granted before that day.

(6) This section is without prejudice to paragraph 2(2) of the telecommunication code.

(7) In this section— alteration" and "telecommunication apparatus" have the same meanings as in Schedule 2 to this Act; lease" includes any leasehold tenancy (whether in the nature of a head lease, sub-lease or under lease) and any agreement to grant such a tenancy, and cognate expressions, and references to the grant of a lease, shall be construed accordingly; relevant telecommunication system" means a public telecommunication system or a telecommunication system which is, or is to be, connected to a public telecommunication system.").

The noble Lord said: My Lords, it may be for the convenience of the House if I speak also to Amendments Nos. 128BZP and 129AB. Amendment No. 128BZP: Schedule 2, page 103, leave out from beginning of line 38 to end of line 6 on page 104. Amendment No. 129AB: Schedule 2, page 122, line 6, leave out ("8"). As your Lordships will be aware from the Marshalled Lists, we have put forward a significant number of amendments to Schedule 2 to the Bill to meet the concerns expressed at Committee stage about the principle of occupier only consent. I shall comment in detail on the effect of our suggested changes when we reach Amendment No. 128BA, but I should say that this new clause and the deletion of paragraph 8 of Schedule 2 (that is, Amendments Nos. 128BZP and 129AB) are one of the products of our reconsideration of the provisions governing the installation of telecommunication apparatus on private land.

On that issue, I will simply say now that except where apparatus is intended to provide a service to the occupier himself, we are proposing to revert to established procedures so that operators will in practice be required to obtain the consent of the freeholder and any lessee as well as the occupier. I am not proposing that we debate the merits of that policy in relation to these amendments, but that background will help to place them in context.

Perhaps I may comment first on Amendment No. 128BZP, which seeks to delete paragraph 8 of Schedule 2. That paragraph was originally included in order to support the principle of occupier only consent by removing any liability a tenant might have if he gave his consent to the installation of telecommunication apparatus in breach of a provision in his tenancy agreement. Having moved away from the principle of occupier only consent except in relation to what I might conveniently call "service lines", we see no need to retain paragraph 8. As far as "service lines" are concerned, the amendments I shall be moving later make clear that an occupier's consent will bind his landlord, though this new clause could, if necessary, be invoked in support of that principle. The deletion will also remove the difficulty to which Amendment No. 128C addresses itself; namely, that restrictions imposed for the protection of the environment, for example by the National Trust, might be made void by paragraph 8 as it is currently drafted.

The more important reason for bringing forward this amendment is that our re-examination of this whole area has identified a potential gap in the legislative framework governing the installation of telecommunication apparatus. The Telecommunications Code will be applied only to a limited number of operators. These operators will be licensed to run defined systems and to install apparatus under the code for the purposes of their systems. Those systems will end at what we all call the socket into which our telephone is plugged. At present, BT's system—which is run under its exclusive privilege—includes the telephone and any other attachments—for example, a private automatic branch exchange—which lie on the subscriber's side of the socket. In future, this kind of apparatus will not form part of the code operator's system and, as a result of the Government's liberalisation policy, the supply, installation and maintenance of such apparatus will be open to competition from companies having no connection with the relevant code operator. Thus, irrespective of the provisions in the Telecommunications Code, a landlord might have a legal right to use a restrictive term in a lease to prevent a tenant having even a telephone, since even when it is installed by a Telecommunications Code operator it would not be installed under the code. In commercial premises similar problems might arise where a tenant wished to install a private telecommunication system connected to a public system.

This new clause is complex, but its general intention can be simply stated. It is to ensure that landlords cannot use restrictive terms, in leases unreasonably to prevent the installation of telecommunications equipment and the running of telecommunication systems intended for the benefit of lessees in buildings or on land they occupy. The test of reasonableness is an important safeguard because there are circumstances in which it would be quite reasonable for a landlord to withhold his consent; for example, where the fabric of a building has some particular artistic or architectural merit and the installation of wires and so on would do irreparable damage.

There are other safeguards built into the clause. Subsection (5) makes it clear that the clause will bite automatically only on new agreements, and the Secretary of State is given a specific power under subsection (4) to disapply the effect of the clause by order in relation to particular cases or types of restriction where, perhaps for environmental reasons, it may be thought inappropriate to interfere with the terms in leases. This will be accomplished in the order bringing the new clause into effect. As far as existing leases are concerned the clause would only have effect if the Secretary of State exercised his power to apply to them by means of an order subject to the negative resolution procedure.

At its simplest, all we are attempting to do with this clause is to ensure that if in future there are cases of landlords harassing their tenants by obstructing their access to telecommunication systems—as, regrettably, there have been in the past—the necessary statutory provisions are available to prevent such behaviour.

Since we tabled the amendment we have become aware that a slight extension may be necessary to the drafting in relation to systems which are not public telecommunications systems, but this is a matter to which I propose returning on Third Reading. On that basis, and with this rather lengthy explanation, I beg to move.

Lord McIntosh of Haringey

My Lords, again I do not wish to oppose the amendment and I certainly do not want to involve myself any more deeply than I did in Committee in the lengthy debate between the Government and the noble Lord, Lord Howard of Henderskelfe. However, I should like to ask the noble Lord. Lord Glenarthur, before he concludes his remarks on this amendment, to add to the indications he has just given that there will be further amendments on Third Reading. I should like him to confirm that my understanding is correct that the undertakings given to me yesterday by the noble and learned Lord the Lord Advocate are related to these points. I refer to the amendments on Clause 10 that he undertook to consider on Third Reading concerning the register of directions and the conditions to he provided for under the telecommunications code. I do not think it is a controversial point. I just want to be clear about my own understanding.

Lord Glenarthur

My Lords, with the leave of the House, I think the noble Lord is correct. As I said at the end of my speech, we will be looking at this clause to see whether any further change is necessary. I am sure that what my noble and learned friend said yesterday will apply, and I will do just that.

Lord Middleton

My Lords, this amendment is impingeing on the Government's response to the debate in Committee which followed the amendment of the noble Lord, Lord Howard of Henderskelfe, so perhaps it will be better if I reserve what I have to say until we come to Amendment No. 128BA.

On Question, amendment agreed to.

Clause 90 [Use of certain conduits for telecommunication purposes]:

Lord Glanusk moved Amendment No. 126D:

Page 82 line 4, at end insert— ("() Without prejudice to subsections (1) to (4) above, the Secretary of State may by order provide for any local Act under or in accordance with which any conduits (whether or not relevant conduits) are kept installed in streets to be amended in such manner as appears to him requisite or expedient for securing—

1. (a) that there is power for those conduits to be used for telecommunication purposes;
2. (b) that the terms (including terms as to payment) on which those conduits are used for those purposes are reasonable; and
1158
3. (c) that the use of those conduits for those purposes is not unreasonably inhibited (whether directly or indirectly) by reason of the terms of any consent, licence or agreement which has been given, granted or made in relation to any of those conduits for the purposes of that Act.").

The noble Lord said: My Lords, if I may I should also like to speak to Amendment No. 126E. Amendment No. 126E: Page 83, line 2, after (" "alteration" ") insert (", "street" ").

At the end of 1982 in our discussions on the cable and broadcasting White Paper I advocated the use of main drains and sewers for the use of cable companies in the laying of fibre optic cables. I am now informed that there are many miles of other types of conduit and ducting under our city roads which are no longer used. The commonest type of this ducting is that which was laid in the Victorian era for supplying power to the tramways in the cities, much of which still exists but is empty of cabling.

These ductings would be ideal for use by the independent companies who will be seeking licences from Oftel both for telecommunication systems and for cable systems. To start with it will only be Mercury which will be involved but we hope that at a later date there will be other major communication companies, after the duopoly expires. The use of this ducting for this purpose will not only assist the cable laying companies financially but also assist the general public as it will render unnecessary a mass of road digging in our main thoroughfares and avoid considerable disruption to vital traffic. The only difficulty is that some of this ducting in some parts of the country is covered by various 19th century legislation and local by-laws. It is the purpose of this amendment to simplify the complex and cumbersome legal processes required to amend such Acts.

The second amendment, No. 126E, is consequential on the first amendment and merely defines the word "street" in the same way as it is defined in Schedule 2 to the Bill. I beg to move.

Lord McIntosh of Haringey

My Lords, I believe that there is a kernel of good sense in this amendment in that it is undesirable to have unnecessary ducting or cabling beneath our streets or anywhere else. It is desirable to secure that there is efficient use of the transmission facilities available. However, I should like to ask the Government in their reply to the amendment to make clear whether the amendment actually achieves that more limited objective. It seems to me from reading the wording of the amendment that there is the possibility of extending the permission for public telecommunications operators—those who I understand from Clause 9 have wayleave rights—to install new conduits and to go against the objective which I understand the noble Lord, Lord Glanusk, is looking for. If that is the case, and there is the possibility of having more and more operators gaining access underneath our streets and in other areas where this access would cause damage, I hope it will be discouraged and resisted.

Lord Glenarthur

My Lords, I do not think I need respond at great length to this amendment and the amendment that is consequential to it. As my noble friend said, it would enable the Secretary of State to amend by order, subject to the negative resolution procedure, local Acts under or in accordance with which conduits are kept and stored in the streets so that they can be used for telecommunications purposes. As your Lordships know, we are keen to encourage the use of the existing duct systems wherever possible so that telecommunication operators can have the opportunity of undergrounding (that is not a word I particularly like) their apparatus without the expense and disruption inevitably associated with the installation of new techniques.

This is not about new conduits but is concerned more with the use of existing conduits, and I hope that that answers the noble Lord, Lord McIntosh of Haringey. On the basis that the Government are willing to accept these amendments, if that is the wish of your Lordships, subject only to the qualification that we might want to make some very minor drafting changes on Third Reading, I hope that the House will be satisfied with that reply.

Lord Morris

My Lords, I support this amendment in principle. However, I should like to ask my noble friend for clarification on one point. I am referring, to use another horrible word, the overground conduits, of which there are now many unused along the railway lines. Is there provision in the Bill for the use of such conduits on the property of British Rail? There are many that could well be used.

Lord Glenarthur

My Lords, with the leave of the House, I am afraid I do not know the answer to that point, but in any case it is wide of this particular amendment.

Lord Mottistone

My Lords, I support the amendment of my noble friend Lord Glanusk without qualification for the reasons he most sensibly put forward. I hope that the House will give the support that has been recommended by my noble friend on the Front Bench.

On Question, amendment agreed to.

Lord Glanusk moved Amendment No. 126E:

[Printed above]

The noble Lord said: I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

6.39 p.m.

Lord Mackay of Clashfern moved Amendment No. 126F: After Clause 90, insert the following new Clause:—

("Power of Post Office to provide telecommunication services etc.

.—(1) In section 7(1) of the Post Office Act 1969 (powers of the Post Office) after paragraph (b) there shall be inserted the following paragraph— (bb) to provide, in such parts of post offices as are open to the public (whether for the transaction of postal business or otherwise), such services provided by means of telecommunication systems as it thinks fit;".

(2) In section 29(1) of that Act (exclusion of liability of Post Office etc. in relation to telepost services) paragraph (c) shall he omitted.

(3) In section 86(1) of that Act (interpretation of Part III), for the definitions of "telecommunication system" and "telepost services" there shall be substituted the following definitions— telecommunication system" has the meaning given by subsection (1) of section 4 of the Telecommunications Act 1984 (read with subsection (1A) of that section); telepost service" means a service whereby the Post Office does all or any of the following things, namely—

1. (a) receives or collects in whatever form communications which are to be sent by means of a telecommunication system;
2. (b) sends or receives by means of such a system communications which have been received or collected, or are to be delivered, by it in whatever form; and
3. (c) delivers in whatever form communications which have been sent by means of such a system." ").

The noble and learned Lord said: My Lords, with this amendment I should like to speak also to Amendments Nos. 128ZA, 131ZB, 131ZA, 137, 138 and 139. Amendment No. 128ZA: Clause 192, page 91, line 20, at end insert ("and (Power of Post Office to provide telecommunication services etc.)"). Amendment No. 131ZB: Schedule 4, page 148, line 18, leave out from beginning to ("(powers") in line 20 and insert ("In section 7(1) of the Post Office Act 1969"). Amendment No. 131ZA: Schedule 4. page 148, line 24, leave out sub-paragraph (3). Amendment No. 137: Schedule 7, page 204, line 37, column 3, at end insert— ("Section 29(1Xc)."). Amendment No. 138: Schedule 7, page 206, line 9, column 3, at end insert— ("Section 58(4)."). Amendment No. 139: Schedule 7, page 206, line 16, column 3, leave out ("51(9)") and insert ("51(2) and (9)").

The effect of the amendments is to empower the Post Office to provide certain services using telecommunications systems and an extended range of telepost services. The Government have taken the view that the Post Office's current powers contained in Section 7 of the Post Office Act 1969, as amended by the British Telecommunications Act 1981, unduly restrict the Post Office's ability to adapt the services which it offers to reflect changes in technology.

Advances in technology offer both a threat and an opportunity to the Post Office no less than other organisations. The threat is to the traditional paper-based mails service and comes from alternative forms of communications—from the telephone to the more sophisticated systems which enable machines to talk to each other. The opportunity is for the Post Office itself to adapt to this new technology both by improving existing services and by developing new ones to complement and, to some extent, in the longer term replace its traditional business.

The 1981 Act enabled the Post Office to provide telepost services, a term which covers activities which are sometimes described as electronic mail and involve messages being communicated part of the way via telecommunications systems. However, as defined in the 1981 Act, telepost services require the message to be in material form at some stage in the process of transmission.

The Government consider that this restriction should be removed. With changes in technology, users of this service are likely more and more to move to wholly electronic message communication. The Government would wish the Post Office to be able to respond to such technological changes and to continue to be able to compete with BT and other organisations providing these services. The new powers, like the existing telepost services, will confer no monopoly privilege on the Post Office.

The Post Office also runs the largest retail network in the country through its 22,000 Crown and sub-post offices. The main business of these offices is handling money—Government money for paying pensions and other benefits; Girobank money; bill payments and the like. This clause will ensure that the Post Office has the powers to automate this cash issuing operation and indeed to automate many of the other services currently available at Post Office counters. I am sure that your Lordships do not need me to convince you of the valuable role played by post offices in the local communities which they serve. The successful introduction of automated facilities at post offices will provide a further valuable service and the additional business generated will help the Post Office to maintain a widespread and viable counter network.

The extended powers do not permit the Post Office to provide telephone services and thus recreate the old General Post Office system. They are designed to help the Post Office look forward to improve the efficiency of its operations and to offer customers attractive and up-to-date services. It will be up to the Post Office to compete effectively and develop services which customers will want to use.

Because of the special circumstances of the business, the Post Office has traditionally enjoyed certain limitations to its liability in tort—in delict. These were transferred to the Post Office Corporation from the Postmaster General in 1969. The Telecommunications Bill repeals Section 23 of the 1981 Act which limits British Telecom's liability in tort in relation to telecommunications and the Post Office will be treated in the same way in relation to the services which the new clause will permit it to provide using telecommunication systems.

The Government have also decided that the present limitation to Post Office liability in tort in respect of postal and telepost services which is contained in Section 29 of the Post Office Act 1969 should be amended, and the new clause removes the statutory exclusion from telepost service. This will ensure that the Post Office will enjoy no special advantage vis-à-vis competitors providing telepost services, but the position with regard to ordinary postal services is unaffected.

I have spoken to Amendment No. 126F presently before your Lordships. In moving that amendment, I listed a number of others covered by what I have now said. I should like to add to that list Amendment No. 140. Amendment No. 140: In the Title, line 6, after ("services") insert ("and certain related services").

I beg to move.

On Question, amendment agreed to.

Clause 92 [Power of Secretary of State to give directions]:

Lord Mackay of Clashfern moved Amendment No. 126G:

Page 84, line 27, leave out from beginning to ("is") in line 30 and insert— ("(5) A person shall not disclose, or be required by virtue of any enactment or otherwise to disclose, anything done by virtue of this section if the Secretary of State has notified him that the Secretary of State is of the opinion that disclosure of that thing").

The noble and learned Lord said: My Lords, this amendment is designed to make a small change to Clause 92, but it is a change of some importance. Clause 92 enables the Secretary of State to give directions to the director, to public telecommunications operators and to approved contractors if he thinks it necessary in the interests of national security or relations with the Government of a country or territory outside the United Kingdom.The need for this power of direction is well established, but I should perhaps remind your Lordships' House that the nation depends on British Telecommunications for virtually all its defence communications. It is essential that these communications should be safeguarded and that secret communications should be kept secret.

Subsection (5) enables the Secretary of State to direct that any direction he gives shall not be disclosed if he thinks disclosure would be against the interests of national security or relations with an overseas Government. The need to avoid disclosure of directions is again well established; if matters are to remain secret they need to be known only by those who actually need to know about them.

Subsection (5) as drafted does not fully achieve this result. Companies are placed under various duties to disclose information under other Acts of Parliament and subsection (5) does not override these duties to disclose. Amendment No. 126G repairs this deficiency. It provides that, if the Secretary of State gives a direction that national security requires that information should not be disclosed, then the recipient of the direction is excused any duty to disclose information which is imposed on him by any other Act or otherwise.

As I am on my feet, perhaps I may also speak to Amendment No. 126H. Amendment No. 126H: Transpose Clause 92 to after Clause 88.

This amendment simply moves Clause 92 to a more appropriate place in the Bill. I beg to move.

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendment No. 126H:

[Printed above.]

On Question, amendment agreed to.

Clause 93 [Power of Director to require information etc.]:

Lord Lyell moved Amendment No. 126J: Page 85, line 10, leave out from beginning to ("or") in line 12 and insert ("arc in that person's custody or under his control").

The noble Lord said: My Lords, with this I should also like to take Amendment No. 126K. Amendment No. 126K: Transpose Clause 93 to after Clause 51.

Amendment No. 126J is purely drafting. We hope that it both improves the grammar and omits some unnecessary words. Amendment No. 126K fulfils a commitment that I gave on the first day of the Report stage to look carefully at the individual clauses in Part VII of the Bill to see whether any of these could be moved into Part III. I suggested at that time that Clause 93 was an obvious candidate for such a move. The noble Lord, Lord Lloyd of Kilgerran, and my noble friend Lord Morris brought this to my attention. We are very grateful to them. Amendment No. 126K achieves this object.

On Question, amendment agreed to.

Lord Lyell moved Amendment No. 126K:

[Printed above.]

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendment No. 127: After Clause 95, insert the following new clause:

("Application to territorial waters and the continental shelf etc.

.—(1) An Order in Council under section 23 of the Oil and Gas (Enterprise) Act 1982 (application of civil law) may make provision for treating for the purposes of this Act and subordinate legislation made under it

1. (a) any installation in waters to which that section applies and with respect to which provision is made under that section; and
2. (b) any waters within five hundred metres of such an installation,

as if they were situated in such part of the United Kingdom as may be specified in the Order; and different provision may be so made for different purposes.

(2) In section 6 of the Continental Shelf Act 1964 (which makes, in relation to the Wireless Telegraphy Act 1949 and regulations made under it, provision corresponding to that made by subsection (1) above) for the words "an area or part" there shall be substituted the words "waters to which that section applies and".

(3) In relation to any time before the coming into force of the said section 23, subsection (1) above shall have effect as if—

1. (a) for the words "section 23 of the Oil and Gas (Enterprise) Act 1982" there were substituted the words "section 3 of the Continental Shelf Act 1964"; and
2. (b) for the words "waters to which that section applies and" there were substituted the words "an area or part".

(4) In this section— installation" includes any floating structure or device maintained on a station by whatever means; subordinate legislation" has the same meaning as in the Interpretation Act 1978.").

The noble and learned Lord said: My Lords, at present the Bill covers the United Kingdom, but this does not include the continental shelf or territorial waters. However, circumstances may arise when it may be desirable to extend the Bill's powers to these areas. For example, we might want to licence the running of a telecommunication system on an oil rig. This new clause therefore enables the provisions of the Bill to be extended by an Order in Council to United Kingdom territorial waters and to the continental shelf. I beg to move.

On Question, amendment agreed to.

Clause 97 [Orders and schemes]:

Lord Glenarthur moved Amendment No. 127A: Page 88, line 1, after ("102(5)") insert ("or paragraph 1 of Schedule 5").

The noble Lord said: My Lords, this is an amendment to tidy up the drafting. I beg to move.

On Question, amendment agreed to.

Clause 99 [General interpretation]:

6.50 p.m.

Lord Glenarthur moved Amendment No. 128:

[Printed earlier: col. 604].

The noble Lord said: My Lords, this is consequential. It was spoken to yesterday on an earlier amendment. I beg to move.

Lord McIntosh of Haringey

My Lords, I think it would be a kindness to pause for a moment to allow the noble Lord to find to which amendment he spoke yesterday, to which this is consequential.

Lord Mottistone

My Lords, my notes say Amendment No. 129 was the one he spoke to yesterday.

Lord Glenarthur

I am grateful to my noble friend.

On Question, amendment agreed to.

Clause 101 [Amendments, transitional provisions and repeals]:

Lord Glenarthur moved Amendment No. 128ZE: Page 90, line 44, leave out from beginning to end of line 4 on page 91.

The noble Lord said: My Lords, it might be for the convenience of the House if I spoke to Amendments Nos. 128ZE, 128ZD and 128ZC.

Amendment No. 128ZD: Page 91, line 10, at end insert— ("(5D) If it appears to the Secretary of State requisite or expedient to do so in order to secure that telecommunication services provided before the appointed day by means of any existing apparatus continue to be available after the appointed day, he may by order make provision with respect to the terms on which existing apparatus is kept installed on any premises; and such an order may, in particular—

1. (a) provide for the terms of agreements in pursuance of which existing apparatus is kept installed on any premises to have effect with such modifications as may be specified in the order;
2. (b) impose obligations in relation to existing apparatus on persons who own or use such apparatus or who own interests in, or occupy, premises where such apparatus is kept installed; and
3. (c) provide, for the purposes of any provision contained in such an order by virtue of paragraph (a) or (b) above, for such questions arising under the order as are specified in the order, or are of a description so specified, to be referred to, and determined by, the Director.").

Amendment No. 128ZC: Page 91, line 14, at end insert— (("(7) In this section— existing apparatus" means any telecommunication apparatus (within the meaning of Schedule 2 to this Act) which—

1. (a) was installed on any premises before the appointed day, and
2. (b) cannot, after the appointed day, be kept installed there by virtue of any right conferred by or in accordance with the telecommunications code;

local telegraph Act" means a local Act which incorporated a telegraph company or the Bill for which was promoted by such a company; and subordinate legislation" has the same meaning as in the Interpretation Act 1978.").

In the interests of brevity may I merely say that these amendments provide the Secretary of State with powers to make orders to ensure that telecommunications services, which are provided by means of apparatus installed before the appointed day when the main provisions of the Bill enter into force, continue to he provided in circumstances where any person seeks to have the apparatus removed. So the amendments deal with what is a hypothetical problem which we hope will not arise in practice. I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendment No. 128ZD.

[Printed above].

On Question, amendment agreed to.

Lord Glenarthur moved Amendment No. 128ZC.

[Printed above.]

On Question, amendment agreed to.

Clause 102 [Short title, commencement and extent]:

Lord Lyell moved Amendment No. 128ZB.

Page 91, leave out line 20 and insert— ("Sections 88 and (Power of Secretary of State to make orders under Fair Trading Act 1973 etc.); sections 89 and 90;").

The noble Lord said: My Lords, this is consequential. It follows from amendment 126C. I beg to move.

On Question, amendment agreed to.

Lord Lyell moved Amendment No. 128ZA:

[Printed earlier.]

The noble Lord said: My Lords, I beg to move. This is consequential. It follows from amendment No. 126F.

On Question, amendment agreed to.

Schedule 2 [The telecommunications code]:

Lord McIntosh of Haringey moved Amendment No. 128A:

Page 95, line 4, at end insert— (" "the physical environment" includes— () the architectural, archaeological or historic character of any building, structure, feature or area, () the natural beauty and amenity of the countryside or an open space or garden, and () the conservation of wild life or any physiographic feature;").

The noble Lord said: My Lords, in rising to speak to this amendment, let me first of all pay tribute to the veritable deluge of amendments which the Government have tabled on Schedule 2, which, to the best of my limited understanding, seem genuinely designed to meet a large number of the points, and appear to meet a large number of the points which were raised by other noble Lords and myself in Committee. That means that I shall be able not to move a large number of the amendments which are down in my name and that of my noble friends.

That is not the case, however, for Amendment No. 128A, because I read very carefully the reply which the noble Lord, Lord Glenarthur, gave when I moved the same amendment—and I apologise for it being the same amendment; that is because I think the wording is right—at the Committee stage. The noble Lord said in response to the amendment that what was proposed—and I am referring to column 146 of Hansard—was a third avenue which amounts to a planning control for the telecommunications code itself. If that had in any way been the case with the Bill as drafted at that time, it certainly will not be the case after the amendments to Schedule 2, which the Government are proposing, have taken effect. As I understand it, it is now proposed that both in the licensing procedure, in the telecommunications code itself and in the register, there shall be full recognition of the rights and duties of local authorities, in relation to the enforcement of the protection of the physical environment. That points up what I was trying to argue at the Committee stage, which is that the purpose of this amendment and related amendments is to seek redress in the county courts rather than to create a third avenue amounting to a planning control for the telecommunications code.

The noble Lord then went on to use what I believe to be the weakest of all arguments for spelling things out in legislation, which is that it appears likely to exclude those areas not specifically mentioned. If that were the case, it would apply with much greater force to the definition of the physical environment which appears in Clause 10 of the Bill. What we are proposing to do here is actually to reduce the risk that the definition should be weakened by appearing to exclude those areas not specifically mentioned by reducing the number of areas not specifically mentioned and covering the architectural, archaeological or historical character of buildings, structures features or areas, the natural amenity and the conservation of wild life and physiographic features.

I put it to the Government that since they have already attempted a much simpler definition of the physical environment for the purpose of the Bill as amended, and for the purpose of the many amendments on this subject which are going to come before the House, that it would be graceful and not at all inconsistent with their objectives if they were now to accept this amendment. I beg to move.

Lord Morris

The noble Lord, Lord McIntosh of Haringey, referred in moving this amendment to related amendments. I suspect I understand by that, that he is speaking to these related amendments as well. I am thinking in particular of Amendment No. 128L on page 19 of the revised Marshalled List which hangs on No. 128A. I think it may be of convenience if I speak to that amendment now.

Lord McIntosh of Haringey

With your Lordship's leave, nothing would have pleased me more than to do the House the courtesy of referring to as many amendments as possible and curtailing the speeches. The problem is that the amendments to which I would wish to refer include some of my own, as the noble Lord has indicated, but also include many more of the Government's amendments. I think it would be quite unusual for me to seek to refer to amendments which have not yet been moved or not yet been spoken to by those under whose name they appear. I hope that the House will accept that explanation of the difficulty I have in being precise about what future amendments could actually be referred to when I spoke on No. 128A.

Lord Morris

My Lords, if I may just say, with the leave of the House, that I do believe that this amendment really is wholly unnecessary, although I do of course sympathise with intentions behind it. The major reason is that the concern with regard to the environment is more than well covered in two respects. One is by virtue of the provisions of Clause 10(4)(a) which says, Without prejudice to the generality of subsection (3) …conditions there mentioned may include et cetera— that the physical environment is protected and, in particular, that the natural beauty and amenity of the countryside is conserved.". This fundamental principle is covered very fully indeed, as the noble Lord, Lord McIntosh, is well aware, in the draft—I repeat, draft—licence of British Telecommunications with regard to conservation areas, national parks and maintainable highways. But, above all, I draw your Lordships' attention to one particular item in the draft licence, which reads: The licensee"— and this would, of course, in practice be all other major licensees— shall prepare, in consultation with the Secretary of State, a code of practice on the installation of telecommunications apparatus"— and that, of course, would include poles, lines, dishes or any apparatus— not contained in a building and shall comply with a direction given to him in writing by the Secretary of State, which requires him to follow that code of practice.". So it is inconceivable that the Secretary of State would not follow the guidelines laid down by virtue of Clause 10 of the Bill, given the drafting of the code of practice which is to be brought forward at a future date. On those grounds, among many others—which I shall not mention, since I have no wish to delay the house—I believe that the amendment is totally unnecessary.

Lord Boyd-Carpenter

My Lords, may I ask the noble Lord who moved the amendment something for my own information and perhaps for that of your Lordships. It concerns the reference to "any physiographic feature". That is not a formula that I am accustomed to reading in statutes and perhaps the noble Lord can tell us what it means and maybe illustrate the answer by giving an example.

7 p.m.

Lord Glenarthur

My Lords, I am sorry that the noble Lord, Lord McIntosh, feels unable to move quite as speedily with this amendment as he hoped to do with others, and I am afraid that as a result I shall have to explain my point at rather greater length. When we previously considered this amendment I indicated that the Government would be willing to consider an amendment to Clause 10 of the Bill to refine the existing description of the physical description in subsection (4). I should like to explain in a little more detail than I did on that occasion why we think that that would be a more appropriate course than to adopt the present amendment and those for which it is intended to provide a base.

I hope that I may be forgiven for a somewhat lengthy exposition because I want to demonstrate that there is absolutely no difference in objective between the Government and the noble Lord who has put forward the amendment. I hope that your Lordships will acknowledge the truth of that observation, given our readiness to accept the noble Lord's amendment to Clause 10, which now places an unambiguous statutory duty on the Secretary of State to include in licences which apply to the telecommunications code conditions designed to secure the protection of the physical environment. Where we differ is in relation to the means, not the ends.

As I understand it, the main argument put forward in favour of the approach which is inherent in this amendment and related amendments is that the environmental protection applying to the exercise of telecommunications code powers and rights should be easily accessible in one place; namely, in the code itself. However much one might endorse the desire for simplicity, it is just not realistic to have a single guide to the installation of telecommunications apparatus.

Telecommunications development has to be seen in the context of development generally, the principal legislative arrangements for which, as I said when we previously debated this matter, are to be found in the Town and Planning Acts. British Telecom at present enjoys a special statutory exemption from the need to obtain planning permission, but because of its change in status, and because of the arrival of other apparatus, we have reached the conclusion that telecommunications development must in future be brought squarely within the ambit of planning controls. Hence the proposals in the recent consultative document on the revision of the general development order which describes the circumstances in which, in the Government's view, it would be reasonable for operators to whom the powers of the telecommunications code have been granted to install minor apparatus without the need to obtain specific planning permission for every individual wire or pole.

No doubt if we were envisaging a requirement that every single piece of apparatus should be specifically approved, we might not be having this debate today. But that, as I am certain we all recognise, is not a practicable proposition. The planning system simply could not cope and there would be intolerable delays in the provision of service. So the question arises as to how any potential abuse or any damaging side effects of this necessary freedom are to be avoided. The noble Lord opposite seems to be suggesting that the telecommunications code itself should contain vague statutory duties, which we shall be debating in the context of later amendments. But, if I may comment on the general approach, it seems to me quite inappropriate, since the code is concerned with conferring particular rights and powers within the existing framework of planning legislation. To add another avenue of planning or environmental protection could well, therefore, create confusion instead of introduce clarity.

We have, therefore, devised a regime under which the telecommunications code will be applied by means of a licence granted by the Secretary of State. The licences applying code powers will be framed under Clause 10, which now makes clear that the Secretary of State will include within them exceptions and conditions qualifying their use—conditions and exceptions designed to secure the protection of the physical environment. Exceptions limit the extent to which code powers may be used. Conditions qualify the way in which they may be used. The exceptions will set precise limits, as, for example, in the British Telecom draft licence, which indicates by way of illustration that in its case code powers may be used to install apparatus in conservation areas in only very limited circumstances, and that certain consultation procedures must be followed before installation work is undertaken in other specified areas, such as areas of outstanding natural beauty. If British Telecom, or any other licensee, fails to observe one of its licence conditions, it will be in the position of using its code powers unlawfully and therefore will be subject to legal challenge.

I suspect, however, that a good deal of the very genuine concern that exists in this area arises not so much from the continuing activities of British Telecom, but from the advent of new operators whose track records are unknown. That is why we have provided for full public consultation under Clause 10 of the Bill before the Secretary of State applies code powers. The Secretary of State has to publish a notice stating that he proposes to grant code powers to a particular operator, and setting out the conditions and exceptions he considers it appropriate to include in the licence. He must publish the notice in a manner which will bring it to the attention of persons likely to be affected, and he must reconsider his proposals in the light of any objections or representations received. Having done that, he must publish a further notice stating what he has done and setting out the conditions and exceptions subject to which the code is to he applied.

I believe that in practice this approach will offer far more effective safeguards than the approach which has been suggested by the noble Lord—more effective because they will be more easily comprehended by both operators and the public, and more effective also because their precision will mean that they can be enforced much more easily. In that sense it is also fairer to operators in that it will offer clearer guidelines as to what is, and is not, permissible.

But I see another great virtue in the Government's approach in that it offers a measure of flexibility. What may be environmentally acceptable to the residents of one area, may be quite unacceptable somewhere else, and the system we are proposing allows for that. It is also flexible in another sense. In the light of the amendments to Clause 10 which were agreed by your Lordships, licence conditions and exceptions can now be modified if, in the light of experience, the Secretary of State is convinced that the protection of the physical environment demands some strengthening of the initial safeguards. This I think is a very significant improvement in the Bill.

Perhaps in conclusion I may summarise our basic objection to the approach of the noble Lord's amendment and related amendments. It is that the telecommunications code is essentially concerned with land law. It confers certain privileges on telecommunications operators to whom it is applied. The code then sets out to ensure that the exercise of the various powers takes place within a framework designed to protect the rights of landowners and their tenants. The code has nothing whatsoever to do with planning law and the protection of the environment. That is a matter for planning legislation. As I have already indicated, the effect of planning law in this context has to be looked at against the background of the conditions and exceptions that we propose to include in licences under Clause 10 of the Bill—conditions and exceptions designed to qualify the way in which code powers may be exercised. To attempt to achieve in Schedule 2 itself what are, I would emphasise, our common aims would at best be ineffective and at worst result in a great deal of confusion and duplication. I hope, therefore, that the noble Lord will not press the amendment.

Lord McIntosh of Haringey

My Lords, I am most grateful to the Minister for his explanation and in particular for the last part of it, which I think epitomises very clearly the attitude of the present Government to a large number of social issues. The noble Lord says, quite rightly—I do not disagree with him—that the telecommunications code is concerned primarily with land law. It is concerned with landowners and tenants, and it is only the interests of landowners and tenants or occupiers which are considered important enough to be included in legislation in this way. Indeed, much time has been spent, in particular in Committee, and much time could be spent if all the amendments were debated this evening, in protecting the interests of landowners and occupiers. But when it comes to the general public, those who have a concern for the physical environment, those who seek to enjoy the countryside and those who are landless—whom I dare to say we perhaps represent more adequately than noble Lords on the Government Benches—their interests are not to be protectd by legislation; they are to be protected in a much less secure way by means of the licence.

I do not accept the arguments of the noble Lord, Lord Morris, that it is adequate to say that there is provision—and he quoted from the British Telecom draft licence—in the licences of any operators, even including the public telecommunications operators. The fact of the matter is that the licence is a very insecure protection. A licence granted under the provisions of the Act may be modified with the agreement of the director without reference to the general public. There is no necessary or clear protection for those who do not have the kind of resources that landowners and land occupiers have to ensure that their rights are maintained. It is not good enough to say that these are provided for in the licence. What must be provided for is a means of access, a means of control, a means of appeal and a means by which the rights of the unprotected are more adequately protected than they are at present.

I do not deny that the Government have made and are proposing to make some significant concessions towards my point of view. I listened very carefully to the noble and learned Lord the Lord Advocate yesterday when he undertook to make further amendments at Third Reading to strengthen Clause 10 in the direction that I wanted him to do. I appreciate that the amalgamation of subsections (4) and (5) of Clause 10 is an improvement because it increases the scope of the definition of the physical environment contained in subsection (4). I appreciate that by reading together Clause 10 and Clause 19 it is possible to see protections which might not be apparent from reading the Bill seriatim. I appreciate that amendments already made to Clause 10—in addition to Amendment No. 53, to which I referred—improve the situation.

Therefore, I am not in that sense, strictly speaking, accusing the Government of bad faith; but I am saying that in their whole attitude towards this matter they are revealing a sense of priorities which I do not believe reflects the view of the general public as between those who wish to preserve the physical environment and the countryside but have no status to do so, and those who are so fully protected in the Bill—the landowners and the land occupiers.

Therefore, it is only because this matter has been given a very full going over both in Committee and now, that I will seek leave to withdraw the amendment. I have a duty towards the noble Lord, Lord Boyd-Carpenter. The noble Lord has, not for the first time, taught me a lesson, which is not to take wording from other legislation when you do not have officials in a Box and somebody to run backwards and forwards with notes. As I understand it, the wording comes from the Countryside Act 1968. I confess that when I read it in great detail I can find no more plausible explanation than that physiographic features must be those which are not included in paragraphs (a) and (b) of the definition. But in the absence of greater expert and legal help I can do no better than that in response to the noble Lord. However, with those very strong provisos against the attitude of the Government to this whole matter, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 128E not moved.]

7.15 p.m.

Lord Glenarthur moved Amendment No. 128BA:

Page 96, line 3, at end insert— ("1A) A person who is the owner of the freehold estate in any land or is a lessee of any land shall not be bound by a right conferred in accordance with sub-paragraph (1) above by the occupier of that land unless—

1. (a) he conferred the right himself as occupier of the land; or
2. (b) he has agreed in writing to be bound by the right; or
3. (c) he is for the time being treated by virtue of sub-paragraph (2) below as having so agreed; or
4. (d) he is bound by the right by virtue of sub-paragraph (3) below.").

The noble Lord said: My Lords, it might be for the convenience of your Lordships if I speak to a whole long list of amendments together. Amendment No. 128BA is the primary amendment, hut the associated amendments are: Amendment Nos. 128BB; 128BC; 128B0; 128BZG: 128BZD: 128BZE; 128BZF; 129ZA; 128BD; 128BW: 128BX; 128BY; 128BZB: 128BZM; 128BE; 128BF; 128BL; 128BM; 128BP; 128BR; 128BZC: 128FA:

Amendment No. 128BB: Page 96, line 5, after ("land") insert— ("for purposes connected with the provision, to the occupier from time to time of that land, of any telecommunication services")

Amendment No. 128BC: Page 96, leave out lines 14 to 18 and insert— ("then, subject to paragraph 4 below, that right shall (as well as binding the person who conferred it) have effect, at any time when the person who conferred it or a person bound by it under sub-paragraph (1A)(b) or (3) of this paragraph is the occupier of the land, as if every person for the time being owning an interest in that land had agreed in writing to the right being conferred for the said purposes and, subject to its being exercised solely for those purposes, to be bound by it.").

Amendment No. 128B0: Page 98, line 24, leave out from beginning to ("sub-paragraph") in line 30 and insert— ("(2) Where a right has been conferred in relation to any land in accordance with paragraph 2 or 3 above and anything has been done in exercise of that right, any person who, being the occupier of the land, the owner of the freehold estate in the land or a lessee of the land, is not for the time being bound by the right shall have the right to require the operator to restore the land to its condition before that thing was done. (3) Any duty imposed by virtue of").

Amendment No. 128BZG: Page 101, line 44, at end insert— ("(8) Except in the case of apparatus installed in pursuance of a right which by virtue of paragraph 2(2) above bound every person with an interest in the land at the time it was installed, the court shall, in determining for the purposes of paragraph 5 above whether any telecommunication apparatus should continue to be kept installed on, under or over any land, disregard the fact that the apparatus has already been installed there.").

Amendment No. 128BZD: Page 101, leave out line 30 and insert— ("Acquisition of rights in respect of aparatus already installed

5A.—(1) The following provisions of this paragraph apply where the operator gives notice under paragraph 5(1) above").

Amendment No. 128BZE: Page 101, line 39, at beginning insert ("(2").

Amendment No. 128BZF: Page 101, line 42, leave out ("this paragraph") and insert ("paragraph 5 above").

Amendment No. 129ZA: Page 117, line 24, leave out ("paragraph") and insert ("paragraphs 5A(3) and").

Amendment No. 128BD: Page 96, line 23, after ("shall") insert ("(except in so far as the contrary intention appears)").

Amendment No. 128B W: Page 100, line 36, leave out ("an") and insert ("that person or any").

Amendment No. 128BX: Page 100, line 43, leave out ("an") and insert ("any person or any").

Amendment No. 128BY: Page 101, line 13, at end insert ("person or any").

Amendment No. 128BZB: Page 101, line 24, at end insert ("person or any").

Amendment No. 128BZM: Page 102, line 23, at end insert— ("() In determining what amount shall be specified in a term of an order under paragraph 5 above the court shall take into account any compensation paid under paragraph 4(5A) above.").

Amendment No. 128BE: Page 96, line 34, leave out sub-paragraph (4).

Amendment No. 128BF: Page 96, line 49, after ("sub-paragraphs") insert ("(1A)").

Amendment No. 128BL: Page 97, line 28, after ("tenancy") insert ("but not a mortgage by demise or sub-demise").

Amendment No. 128BM: Page 98, line 11, leave out from beginning to ("shall") in line 12 and insert— ("(4) Sub-paragraphs (1A) to (7) of paragraph 2 above, except sub-paragraph (2)").

Amendment No. 128BP: Page 98, line 36, leave out ("or 3").

Amendment No. 128BR: Page 99, line 9, leave out head (b) and insert— (b) the owner of the interest becomes bound by the right or variation by virtue only of paragraph 2(2) above.").

Amendment No. 128BZC: Page 101, line 27, leave out ("that person") and insert ("the person the need for whose agreement is dispensed with").

Amendment No. 128FA: Page 111, line 4, leave out ("paragraph 2(3)") and insert ("paragraph 2(1A)(b) or (d)").

This long sequence of amendments represents our response to the criticism that was made by the noble Lord, Lord Howard of Henderkelfe, and others at the Committee stage about the provisions in Schedule 2 to the Bill relating to the installation of telecommincations apparatus on private land. I need hardly remind your Lordships that it was the principle that became known as "occupier only consent" which was the chief cause of concern. In view of the concern that was expressed I hope that I might be forgiven if I explain what we propose in some detail.

As the telecommunications code is currently drafted, an operator may go ahead and install his poles and wires. et cetera, with the occupier's agreement provided that the occupier is himself the freeholder or a tenant with a lease for a year or more. The noble Lord, Lord Howard, and others advanced powerful arguments against the Government's approach, not least of which was that the inability of landowners, particularly in the counytryside, to influence the way in which apparatus was installed, would have detrimental consequences for the environment.

In the light of that debate, we have looked again very carefully at the provisions of the telecommunications code to see whether amendments could be made. In doing so we began from what I think is a shared assumption among your Lordships; namely, that where a tenant merely wishes to consent to the installation of apparatus for the purpose of providing a service to himself on the land which he occupies, he should be free to instruct the operator to go ahead without having to seek his landlord's permission. But beyond what is loosely termed the "service line case" we now accept that operators should in general be required to seek the agreement of the owner of the land and any superior lessee as well as the occupier before any installation takes place.

We have chosen a very different approach, however, for the one proposed earlier, by the noble Lord, Lord Howard, and I should like to explain why. The noble Lord drew a distinction between rural and urban areas by reinstating the full range of consents in relation to certain defined types of rural land and by introducing what amounted to a prior notification procedure elsewhere. One major drawback if we were to adopt this course would be that there would be arbitrary lines on the map on either side of which there would be quite different regimes governing the installation of apparatus. A further difficulty of the prior notification procedures suggested in the second half of the noble Lord's amendment was that it would sit very uneasily with the objection procedures already contained in paragraph 17 of the code.

The conclusion we have reached therefore is that in order to respond fully to the noble Lord we need to go considerably further than the compromise which he proposed. We take the view that in the long run it will be better for telecommunications operators to have a single procedure which applies everywhere and which can be translated into straightforward working instructions for their employees. What we propose therefore is that in all cases, except those involving service lines, operators will be put into a position where they will feel obliged—except where it is wholly impracticable—to seek the consent of the freeholder and any superior lessee as well as the occupier before installing their apparatus.

Your Lordships will not find that stated explicitly in the amendments that we are now considering, as those amendments are designed to fit into the existing structure of the code, which, as your Lordships will he aware, is long and complex in any case. But I can assure your Lordships quite categorically that what I have described will indeed be their effect. It will be achieved as follows. Amendment No. 128BA introduces a new sub-paragraph into paragraph 2 of Schedule 2, which provides that, except in a service line case, an occupier's consent will not bind a freeholder or a superior lessee unless, to use the language of the draftsman, that other person "has agreed in writing" that he should be bound.

The consequences for the operator of not obtaining those agreements are set out in Amendments Nos. 128BO and 128BZG. Amendment No. 128BO modifies paragraph 4 of the code so that a freeholder or superior lessee who was not bound—that is, a freeholder or superior lessee whose agreement was not obtained—would, immediately he discovered that the installation had taken place, have a right to require the apparatus to be removed and the land to be made good. This contrasts with the position under the code as currently drafted, which provides such a right only when the owner or superior lessee reoccupies the land.

The proposed new right would be exercisable from the outset, and if the operator declined to comply with a request to remove his apparatus, the question of whether the apparatus should stay in place would fall to be determined by the court. Amendment No. 128BZG provides that in such a case the court will disregard the fact that the apparatus has already been installed. In other words, the court will ignore the inevitable expense incurred by the operator if he has to remove his apparatus and restore the land to its former condition and put the apparatus somewhere else. In such circumstances the landlowner's rights will be just as much protected as if the hearing had been convened before the installation took place by an operator seeking a court order to dispense with the agreement of someone whose consent had been refused.

I might mention one further incentive on the operator—and I shall speak to it separately in due course—not to rely simply on the occupier's consent. Amendment No. 128BM is designed to take away from the operator the ability under paragraph 4(1) of the code to claim a defence of statutory authority against actions for damages by freeholders or superior lessees whose agreement has not been sought.

As I have already indicated, these provisions do go further than the earlier amendment that we considered at the Committee stage. As I have also said, there is no explicit statement that the full range of consents are required before the operator can go ahead. But, faced with the prospect of a landlord, whose agreement had not been obtained, requiring the immediate removal of his apparatus and a court hearing in which no account will be taken of the expense falling on the operator as a result of a decision in favour of the landlord, it would be a very foolish operator indeed who did not make sure that he obtained the full range of consents before he began the installation.

At the same time we believe that this structure overcomes a significant difficulty which arises under the Telegraph Acts and which would continue to be faced in future if we tried to replicate them. The difficulty is: what should an operator do when, particularly in urban situations, there is a complex chain of ownership and it is simply not practicable to identify all the superior interests? The Telegraph Acts do not contain any indication as to what is reasonable or practicable in this context. One of the reasons why the Government originally decided to adopt the principle of occupier-only consent in the telecommunications code was that it was not possible to devise a legislative definition of the circumstances in which it would be reasonable to waive the requirements for the full range of consents on the grounds of impracticability.

Under the scheme in our amendment this problem is resolved by leaving the decision with the operator, who will, in the light of the very strong incentives which exist, have to make a rational judgment to obtain the full range of consents which I have just outlined. I fully realise the strength of feeling which lay behind our earlier discussion and the amendment of the noble Lord, Lord Howard of Hcnderskelfe. That is why I have explained at some length how we see these amendments giving effect to the policy objective that the agreement of landowners and superior lessees should be obtained before telecommunications apparatus is installed on their land. I have indicated the main amendments which will achieve that result.

As your Lordships will appreciate, a change of this significance involves this very large number of consequential amendments. I hope that, if the principles which I have just outlined are acceptable, I can move the consequential amendments formally and, where possible, en bloc. I am advised that I did not mention Amendment No. 128BQ. Amendment No. 128BQ: Page 99, line 3, leave out ("or 3"). I should have spoken to Amendment No. 128BQ in addition to the others which I read out. I beg to move.

Lord Middleton

My Lords, as my noble friend has just reminded us, in Committee the noble Lord, Lord Howard of Henderskelfe, drew your Lordships' attention to the shortcomings of the Schedule 2 code which governs the acquisition by licensed operators of rights over land. As my noble friend has also just reminded us, in doing so the noble Lord, Lord Howard, received strong support from all sides of the Committee. He withdrew his amendments on a promise by my noble friend Lord Glenarthur that the Government would try to improve the code in order, so far as possible, to meet our objections. This long series of amendments is the result.

The first objection was that the Bill broke entirely new ground by introducing occupier-only consent for works, and this was acknowledged at the time by my noble friend Lord Glenarthur. Under previous legislation—much of it introduced by the party opposite—virtually all other undertakers, whether they seek wayleaves for electricity lines or for oil or gas pipelines, require owner consent. The result of this well-tried statutory procedure has led to a very sensible series of arrangements and terms negotiated and agreed between, on the one hand, the operators and, on the other hand, the owners and farmers' organisations acting for all their members. Standardised terms have greatly speeded up the acquisition of rights over land, and in all cases these procedures seem to be working very well.

There were also strict conservation and aesthetic reasons for owner consent, and we have heard examples given in Committee. Yet all the weight of this legislation and practical experience was ignored when Schedule 2 was originally written. There was some acknowledgment of an owner's rights because under paragraph 4, as it then was, the owner, on resuming occupation—whatever that might be—was given the right to demand that the apparatus to which a tenant had consented could be removed and the land restored. There were, of course, certain safeguards built in for the operator under paragraph 21. But we were edging into the world of Alice in Wonderland.

The other objection—and to my mind it is a serious one—where there is an important principle at stake was as follows. Paragraph 8 of Schedule 2 could render unenforceable between the original parties an existing contract. The idea was to indemnify a tenant where, as was frequently the case, his tenancy agreement forbade him from creating a wayleave agreement that would bind the owner's land without the owner's consent. Already there are too many examples of legislation which nullifies existing contractual arrangements freely entered into, but this is the first time that I have seen such a thing proposed by a Conservative Government.

Therefore, to what extent do these Government amendments meet our objections? Since the Committee stage the Government have gone to considerable pains to meet them. My noble friend has just explained how this has been done. I am sure that the noble Lord, Lord Howard, if he had been able to be here tonight would have joined me in expressing his appreciation for what the Government have done. I am sure that our gratitude will be shared by all who are concerned by these strange aberrations by a Conservative Government.

As my noble friend explained, the effect of this series of amendments will be to create powerful disincentives for an operator to fail to get an owner's consent in writing at the time an operator grants installation rights. At the same time the occupier who merely wishes to have his own premises connected is treated as a special case, as we have always agreed that he should be, and the owner does not have to come into it. In all other cases if an apparatus is constructed to which an owner objects, then not being bound by the occupier's consent he can right away apply to the court for its removal and the court will look objectively at whether or not the apparatus should be installed, and if so whether it is being installed in the right place, and the court must disregard the fact that it has actually been installed. If so the operator, as my noble friend said, will in practice make every attempt to get it right first time and to seek prior consent from the owner. Furthermore, the offending paragraph 8 is removed so that a tenant would be at risk now if he grants rights without first obtaining consent under his agreement.

I hope that these amendments will be agreed to. If they are, then telecommunication operators will have in practice to proceed in just the same way as other utility undertakers. Occupier-only installations will not be hindered because service lines, as I read it, are provided for under the amended sub-paragraph (2). I understand the drafting difficulties which have led the Government to write into Schedule 2 what virtually amounts to owner consent by such a roundabout route. We shall still have a schedule that is convoluted and by no means easy to interpret. Nevertheless, by these amendments it will be greatly improved.

I am grateful to the Government, and perhaps my noble friend on the Front Bench will forgive me if I put in a slightly sour note. It would have been much better if they had started down the right road—which is the road that is signposted "owner consent"—in the first place. It would be wrong for the code in this Bill to be used as a precedent for acquisition of rights over land. Having said that, I support my noble friend and I commend this series of amendments.

7.32 p.m.

Lady Saltoun

My Lords, I should like to join the noble Lord, Lord Middleton, in thanking the Government—and the noble Lord, Lord Glenarthur, in particular—for the trouble they have taken over this group of amendments which are much more important than many people realise. The principle of occupier only consent not only undermines the rights of property owners in rural areas and the rights of big land owners, but it undermines the rights of every owner of his own house and garden in an urban area who lets that house and garden and who, had the Bill passed in its original form, could no longer have prevented the occupier agreeing to the placing of telecommunication equipment on, or through, his land by a clause in his lease.

It seemed a strange thing for a Government committed to private ownership to do. Although I could not understand these amendments until the noble Lord, Lord Glenarthur, explained them, and I am not quite sure that I do now, I am assured by clever people who do that they are all right and do in fact, in the most extraordinary "upside down, Looking Glass land" way, do exactly what we wanted. I am therefore obliged to the Government for them and for being saved, I hope, another battle and a division.

Lord McIntosh of Haringey

My Lords, I shall not attempt to follow the passion with which the landowners and their representatives treat this matter.I may even be out of order because the noble Lord read the amendments to which he was speaking so rapidly—and sometimes not in the order in which they appear on the Marshalled List, to make it even more difficult—that I am not certain that he is speaking to the two to which I wish to refer, which are Amendment No. 128BE, which removes subparagraph (4), and No. 128BN.

My question is a naive one about No. 128BE. If the exception of apparatus exceeding 15 metres in height is removed here, where is it preserved? My question on 128BN relates to my own subsequent Amendment No. 128C. Does the covenant to which this amendment refers cover the covenants "imposed by or for the benefit of the National Trust, the National Trust for Scotland, local authority or any other body for the protection of the physical environment"? In other words are the Government able to tell me that in the course of these amendments there is an amendment which makes my subsequent amendment unnecessary?

Lord Glenarthur

My Lords, with the leave of the House may I respond briefly to the noble Lord, Lord McIntosh? I did not speak to No. 128BN. I could do so in a moment. The second half of No. 128BN is addressed to a concern raised by both the noble Lord and the noble Lord, Lord Howard; namely, that bodies like the National Trust having the benefit of certain types of covenants or agreements, the object of the amendment is to avoid any possibility that a defence of statutory authority could be invoked by an operator relating to the inaction over agreements of this kind that might be designed to protect the environment. I hope that is some reassurance.

As to No. 128BE, that amendment deletes subparagraph 2(4) which provides that in a case of apparatus over 15 metres high the operator needs to obtain the agreement of the occupier, lessee, and freeholder. This sub-paragraph is now redundant following the amendments to paragraph 2 which will in practice require the consents of those individuals to be sought. I hope that, with that explanation, the noble Lord is satisfied.

On Question, amendment agreed to.

Lord Glenarthur moved Amendment No. 128BB:

[Printed earlier: col. 1171.]

The noble Lord said: My Lords, I beg to move Amendments Nos. 128BB, 128BC, 128BD, 128BE and 128BF en bloc. I beg to move,

[Printed earlier: cols. 1171 and 1172.]

On Question, amendments agreed to.

Lord Glenarthur moved Amendment No. 128BG: Page 97, line 7, after ("paragraph") insert ("and paragraphs 3 and 4 below").

The noble Lord said: My Lords, I beg to move Amendments Nos. 128BG, 128BH, 128BJ and 128BK, en bloc. They are all drafting amendments. I beg to move. Amendment No. 128BH: Page 97, line 9, leave out ("the application of this paragraph") and insert ("relation"). Amendment No. 128BJ: Page 97, line 14, leave out ("the application of this paragraph") and insert ("relation"). Amendment No. 128BK: Page 97, line 19, leave out ("the application of this paragraph") and insert ("relation").

On Question, amendments agreed to.

Lord Glenarthur moved Amendment No. 128BL:

[Printed earlier: col. 1172.]

The noble Lord said: My Lords, I beg to move Amendment No. 128BL right through to 128BR en bloc. They all refer to the earlier one. I beg to move.

[Above amendments printed earlier, except Amendment No. 128BN col. 1172.] Amendment No. 128BN: Page 98, line 23, at end insert ("except as against—

1. (a) a person who, being the owner of the freehold estate in that land or a lessee of the land, is not for the time being bound by the right; or
2. (b) a person having the benefit of any covenant or agreement which has been entered into as respects the land and which, by virtue of any enactment, binds, or will bind, persons deriving title or otherwise claiming under the covenantor or, as the case may be, a person who was a party to the agreement.").

On Question, amendments agreed to.

Lord Denham

My Lords, we have now reached the point where it is generally agreed that we should adjourn for dinner. In moving that further consideration on Report be now adjourned, I think it is fair to inform your Lordships that the Report stage of the Bill will he resumed at 8.40, giving exactly an hour, if the intervening business has been concluded in the meantime. I beg to move that further consideration on Report be now adjourned.

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