Telecommunications Bill

HL Deb 29 March 1984 vol 450 cc349-411

3.47 p.m

The Chancellor of the Duchy of Lancaster (Lord Cockfield)

My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales that they, having been informed of the purport of the Telecommunications Bill, have consented to place their prerogative and interests, so far as they are concerned on behalf of the Crown and the Duchy of Cornwall, at the disposal of Parliament for the purposes of the Bill.

Bill read a third time.

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

Baroness Macleod of Borve moved Amendment No. 1:

Page 3, line 15, after ("disabled") insert ("or of pensionable age").

The noble Baroness said: My Lords, this amendment asks your Lordships to agree that in Clause 3, after the word, "disabled", there should be added the words, "or of pensionable age". This is only a tidying-up measure to bring the point into line with the amendment with which my noble friend the Minister agreed at an earlier stage in the passage of the Bill. The amendment brings the matter into line with Clause 54, subsection (4)(b) and subsection (5). I beg to move.

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

My Lords, my noble friend has been a tireless advocate of the needs of both the disabled and the elderly, or, to be absolutely correct, persons of pensionable age. Without further ado I can say that the Government are happy to accept the amendment.

On Question, amendment agreed to.

Lord Cockfield moved Amendment No. 2:

Page 3, line 37, leave out ("providing") and insert ("producing").

The noble Lord said: My Lords, this is little more than a drafting amendment. The word "providing" could have been interpreted as including imports. That is not what was intended. The word "producing" is not open to that misinterpretation. I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendment No. 3:

Page 4, leave out lines 7 and 8.

The noble Lord said: My Lords, if it is convenient to your Lordships, I should like to take with this amendment Amendments Nos. 17, 18, 19 and 55.

Amendment No. 17: Clause 8, page 11, line 18, at end insert—

("(1A) Where a licence granted under section 7 above to a particular person includes a condition requiring that person to provide such directory information services to which this subsection applies as are specified in the licence or are of a descrip-tion so specified, subsection (1) above shall have effect as if the conditions there mentioned included a condition requiring that person to provide without charge for subscribers who are blind or otherwise disabled such directory information services to which this subsection applies as are appropriate to meet the needs of those subscribers and are specified in the licence or are of a description so specified. (1B) Subsection (1A) above applies to any directory informa-tion service which is provided for the purpose of facilitating the use of a voice telephony service and in that subsection "blind or otherwise disabled" means so blind or otherwise disabled as to be unable to use a telephone directory."). Amendment No. 18: Clause 8, page 11, line 19, leave out ("subsection (1)") and insert ("subsections (1) and (1A)"). Amendment No. 19: Clause 8, page 11, line 22, leave out ("paragraphs (a) to (e) of that subsection") and insert ("those subsections"). Amendment No. 55: Clause 107, page 97, line 16, at end insert— (" "directory information service" has the meaning given by section 4(3) above;").

It is to one of the amendments to Clause 8, Amendment No. 17, that I wish primarily to speak. I hope that this amendment will find favour with your Lordships, as I believe that it meets the concern expressed on Report from all sides of the House. This was that there should be protection in the Bill for all those who, by reason of disability, cannot use the ordinary printed telephone directory. As explained at Report stage, we have already put such protection in the draft BT licence through Condition 34, which ensures that, if BT does introduce charges for its directory inquiry service, then those who do not have the alternative of printed directories will not be put at a financial disadvantage. However, we understood the concern expressed then that there should be something in the Bill as well, and this is what this amendment achieves.

The wording in the new subsection (1A) may be a little obscure so I will try to explain what it means as succinctly as I possibly can. Its broad effect is to ensure that, in the case of the major systems providing voice telephony to the public—BT, Mercury and Hull—before the operators of these systems can be designated as public telecommunications operators under Clause 9, their licences must include a condition requiring them to provide, without charge for subscribers who are blind or otherwise disabled such directory information services … as are appropriate to meet the needs of those subscribers".

The new subsection (1B) clarifies the precise information service that is to be required. It must be information, for the purpose of facilitating the use of a voice telephony service".

This covers not only telephone numbers but also other information such as STD codes, which are essential for making a telephone call. Subsection (1B) gives some further clarification into which I do not think I need necessarily go now. I hope that what I have already said is sufficient to explain the amendments.

I should like briefly to turn to the other amendments in the group which are largely consequential to the main amendment. The amendment to Clause 3 simply deletes words that are now unnecessary by the inclusion, via Amendment No. 55, of a reference in Clause 107 to directory information services. The other two amendments to Clause 8, Amendments Nos. 18 and 19, are simply drafting consequentials. I beg to move.

Lord McIntosh of Haringey

My Lords, it will come as no surprise to the Government that we welcome these amendments. They will know that we had already considered putting down an amendment to achieve very much the same effect although with nothing like the complexity and skill of the Government, and indeed, lacking the help of the resources available to the Government, in moving such amendments. I have to confess that the amendment appears to us very much a second best. It had been our wish throughout that there should be directory inquiry services of the type described by the noble Lord available free of charge to all subscribers as they have been made available historically by British Telecommunications and, I assume, by the Hull telephone undertaking.

The difficulty that we saw at earlier stages of the Bill in the procedures proposed by the Government is not really overcome by the wording that they have proposed. It is, of course, possible for legislation to define what is meant by blind and disabled for the purpose of the Bill. What is much more difficult is for it actually to be carried into effect by telecommunications organisations. How, in practice, will it be possible to say who is blind and who is disabled without setting up a register?

My expectation and, indeed, my hope is that by moving this much more restricted amendment, the Government have paved the way for free directory inquiry services for all. I believe that telecommunications operators, looking coldly at the amount of bureaucracy and inquiry, the keeping of a register and the checking of credentials that would be required by the amendment that the Government have proposed, will say to themselves that the game is not worth the candle and that it is much more economical for them to continue to provide directory inquiry services free to all. In that way, I believe that the objectives that the Opposition and other noble Lords have put forward throughout consideration of the Bill will in the end be achieved. I therefore welcome the amendment more warmly and widely than I believe the Government would wish me to do.

Baroness Macleod of Borve

My Lords, having received much correspondence, as I am sure many other noble Lords have done, from the Royal National Institute for the Blind, I thank the Minister most warmly for inserting Amendment No. 17 to Clause 8. I am sure that it will be warmly received by the blind, not only those who earn their living but also those blind people who have so many problems in their own homes.

Lord Lloyd of Kilgerran

My Lords, I welcome these amendments as making considerable progress towards the objectives that we had in mind. I have in my hand a letter from the Royal National Institute for the Blind expressing some unhappiness and unease on one point. I should like with the leave of the House to refer to Amendment No. 17 to which the noble Lord spoke. The letter states: Various assurances have been given that if charges were introduced for directory information services British Telecom would make special arrangements for blind people. However, no one has produced a satisfactory system for doing this. My criticism is to ask what kind of system is envisaged in order to deal with this very real problem. The letter goes on to give instances of the difficulties that would arise. According to the letter, it would be necessary to distinguish the blind user of the enquiry service from his colleagues at work; the blind person at home from, say, his sighted wife". These are practical difficulties that must arise in not having free directory information services. Although the theme of Amendment No. 17 is laudable in many respects, its practical application seems to me to be very difficult indeed. Perhaps, if not today, at some other time, we may have some explanation from the Government as to the scheme that they will adopt or will advise should be adopted to deal with this real problem.

Earl Attlee

My Lords. I welcome the amendment. I should like to ask three questions. Would those who are dyslexic be included in the group of "otherwise disabled"? Would people who cannot read be in that group? Thirdly, may I ask whether foreigners who cannot read English will also be included in the group?

Lord Glenarthur

My Lords, with the leave of the House, perhaps I may reply first to the noble Earl, Lord Attlee. Subsection (1B) clarifies among the other points that I made when I spoke earlier exactly to whom subsection (1A) applies. They are those who are, so blind or otherwise disabled as to be unable to use a telephone directory. This seems to me to cover fully all the groups of people we are concerned about and whom the noble Earl is concerned about. Not only does it include the blind who, for obvious reasons, cannot read a printed directory, but it will also cover the dyslexic who cannot read a directory because of what is known, I understand, as word blindness. It will also cover those who, through physical handicap, cannot use a telephone directory. As to the question of those who cannot read English, I am not clear on that point. I shall certainly let the noble Earl know what the answer is.

As to the points raised by the noble Lord, Lord Lloyd, exactly how the condition will be implemented will not be decided until BT has concluded that it wishes to levy charges for the directory inquiry services. When and if it does, then the licence conditions will be drafted so that it must agree with the director how subscribers covered by subsection (1A) are to be identified before it can introduce any charges. I have no doubt that the director's special advisory group on matters affecting the disabled will have a valuable role to play in this respect.

Lord Lloyd of Kilgerran

My Lords, before the noble Lord sits down, do I therefore understand him to say that this very important matter will be left entirely to the discretion of the director of Oftel? If that is so, it would seem to me that this is not a matter which should be left to the discretion of the director, and that somehow it should be put into the Bill, perhaps in the other place.

Lord Glenarthur

My Lords, I will certainly note what the noble Lord says rather than go into it any more now. If it needs to be in any way amended at a later stage I will see whether that is possible. But at the moment all I can say is that I am happy that the main intention behind the amendment as proposed meets the concern which has been expressed on all sides of the House.

On Question, amendment agreed to.

Clause 4 [Meaning of "telecommunication system" and related expressions]:

Lord Lloyd of Kilgerran moved Amendment No. 4:

Page 4, line 15, after ("conveyance") insert ("or switching").

The noble Lord said: My Lords, considerable concern has been expressed by large institutional and industrial users that the Bill in its present form would enable BT successfully to oppose the operation of what is known as "switching in systems" by present and future licence holders known as VAN licence holders. That is the technical term for those who use value added network systems, and the words "value added network" give the generic term "VAN". They are very important licences commercially, and I should like briefly to mention the kind of use which is envisaged and which takes place with them. They operate in telephone answering systems, view data arrangements and many others.

In the early hours of 13th March I discussed this matter with many noble Lords who were present on that occasion, and the noble and learned Lord the Lord Advocate (who, as well as being a very distinguished advocate, is a very kindly man) said that as his answer would be rather long would I mind if he wrote to me about it. Noble Lords agreed with that suggestion, and the noble Lord, Lord McIntosh, and the noble Lord, Lord Mottistone, asked to be sent copies of that letter. In due course a two-page letter was received, carefully drafted by parliamentary counsel, dealing with this matter. It seemed to me and to my advisers in this matter that this was rather a complicated way of dealing with it, even if the letter did address itself to the problem that we had in mind. Consequently there have been very useful discussions—for which I and my advisers are very grateful—particularly with a Mr. Ellison, as to how more easily to solve this question. It was considered that the word "switching" should somehow be introduced into the clause in order to clarify the way in which the system was operated.

With the leave of the House I should like to refer briefly to Amendment No. 14, which has been put forward by the Government and which deals with this question. In that amendment the Government have said that the word "switching" or "switch" can be included everywhere after the word "convey" appears. So it will be "convey or switch" everywhere except in subsection (1). My purpose in addressing your Lordships is to clarify the position as to why there has been this limitation in regard to the use of the word "switching" in subsection (1). I rather gather that the broad reason for reserving the position with regard to subsection (1) is that in subsection (1) the Government are concerned also with communications as regards satellites. If that is the position I am prepared to accept it, and a brief reply from the Minister, even a "Yes", would enable me to withdraw the amendment.

Lord Mackay of Clashfern

My Lords, the point which is raised in Amendment No. 4 by the noble Lord is the point which, as he says, is dealt with primarily in Amendment No. 14, because we accepted the reasoning behind the noble Lord's Amendment No. 4 and tabled Amendment No. 14, which deals with exactly the same point in a slightly different way. Amendment No. 14: Page 5, line 46, at end insert— ("(7) In this section, except subsection (1) above "convey" includes transmit, switch and receive and cognate expressions shall be construed accordingly."). Let me explain how we understand it to work. The problem arises when apparatus is connected to a system and provides a service but does not itself actually convey a message. We ourselves attempted to deal with the problem originally by including a tailpiece to subsection (1) of Clause 4, which was criticised by my noble friend Lord Mottistone, my noble friend Lord Campbell of Alloway and the noble Lord, Lord Spens, for its complexity. We have since introduced subsection (2) as now printed in the Bill, but we have realised in the light of the discussions to which the noble Lord has referred that when a system is regarded as a system under subsection (2) it may not convey messages but may only switch them. However, we have also realised that such a system might receive messages without conveying them, or might transmit messages without conveying them.

To deal with this we considered the option of adding the word "switching" after "conveyance" in subsection (1), as the noble Lord has proposed, but thought it best not to do so because this would have cast doubt on the position of apparatus which received or transmitted without conveying. Also, we were influenced by the natural or dictionary meaning of the term "telecommunications system", which is, after all, an assembly of component parts which conveys sounds, visual images or signals from one place to another, and not a single piece of apparatus. We thought it best to stick with the natural meaning of the term "telecommunication system" as we have done in subsection (1), and to make it clear that if an item of telecommunication apparatus is connected to a telecommunication system so that it switches, receives or transmits messages it should be regarded as if it were a telecommunication system. Amendment No. 14 therefore clarifies that when a single item of apparatus is connected to a system so that it transmits, switches or receives messages conveyed by the system or systems to which it is connected it is treated as itself conveying the messages. It achieves the result which the noble Lord seeks in a way which we think prefer-able to the one which he has chosen.

Amendments Nos. 6 to 12 relate to the same topic, so perhaps I can say now that they merely delete the word "switched" or "switching" in seven places where those words become redundant as a result of Amendment No. 14.

Amendment No. 6: Page 5, line 3, leave out ("or switched") Amendment No. 7: Page 5, line 5, leave out ("or switching") Amendment No. 8: Page 5, line 10, leave out ("or switching") Amendment No. 9: Page 5, line 27, leave out ("or switching") Amendment No. 10: Page 5, line 29, leave out ("or switched") Amendment No. 11: Page 5, line 35, leave out ("or switched") Amendment No. 12: Page 5, line 37, leave out ("or switching") I hope that this meets the point that the noble Lord has made.

Lord Lloyd of Kilgerran

My Lords, I am much obliged to the noble and learned Lord for his full and careful explanation of this very important matter for certain institutional and industrial organisations. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Mackay of Clashfern moved Amendment No. 5:

Page 4, line 40, leave out ("for supply or export of such apparatus") and insert ("of such apparatus for supply or export")

The noble and learned Lord said: My Lords, this amendment is a purely drafting amendment. I beg to move.

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendments Nos. 6 to 12:

[Printed above.]

The noble and learned Lord said: My Lords, with the leave of the House I should like to move Nos. 6 to 12 en bloc. I have given the explanation that these amendments leave out words which are now surplusage. I beg to move.

On Question, amendments agreed to.

Lord Mackay of Clashfern moved Amendment No. 13:

Page 5, line 43, leave out ("be disregarded for the purposes of this Act if it") and insert ("not be regarded as a connection for the purposes of this Act if that other telecommunication system or that apparatus")

The noble and learned Lord said: My Lords, this is a drafting amendment. It makes no change of substance, but as it was referred to earlier, perhaps I ought to say a little about it.

Subsection (6) of Clause 4 provides that indirect connection is not to be regarded as a connection for the purposes of the Act. Thus the telecommunication system in Hull, for example, is not to be treated as connected to the telecommunication systems in, say, America if the connection is made indirectly via the British Telecom or Mercury system. Under the Bill only the direct connections between the Hull and BT systems and between BT and the American systems are to be treated as connections for the purposes of the Bill.

The drafting of subsection (6) was criticised by my noble friend Lord Campbell of Alloway at the Committee stage, and I think my noble friend indicated that he had asked some others for their views and they had tended to agree with him. The amendment will, we hope, clarify the meaning of subsection (6), but it also avoids the implication that indirect connection must be disregarded completely for other purposes of the Bill. If the amendment is adopted it will, for example, be possible to insert one set of conditions into the licences for private systems which are connected to leased circuits which themselves are connected at the far end to the public switched telecommunication networks, and another set of conditions when the leased circuit connects to another private system. I beg to move.

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendment No. 14:

[Printed earlier: col. 354.]

The noble and learned Lord said: My Lords, I have already spoken to this amendment when I explained our attitude to the amendment moved by the noble Lord, Lord Lloyd of Kilgerran. I beg to move.

On Question, amendment agreed to.

Clause 6 [Exceptions to section 5]:

4.11 p.m.

Lord Mottistone moved Amendment No. 15:

Page 8, line 27, at end insert— ("(4A") In the case of businesses and systems described in subsection (3) above, section 5(1) above is not contravened when the systems described are interconnected for the purpose of transmitting between the systems messages relating to the affairs of the businesses.").

The noble Lord said: My Lords, in moving Amendment No. 15, it might be for the convenience of the House if, at the same time, I speak to Amendment No. 16.

Amendment No. 16: Page 9, line 14, after ("specified") insert— ("including systems described in sections 6(3) and 6(4A) above and public telecommunication systems").

Both these amendments are concerned with encouraging greater efficiency for business users. It is important to emphasise that business users are concerned only with making their own businesses more effective. They are not in the least concerned with trying to make profits by selling telephone calls or circuits to third parties.

Business accepts that British Telecom will require time to adjust itself to the new regime, and business also accepts that Mercury will require time to become firmly established. Through these amendments business seeks the assurance that it can be neither delayed nor otherwise hindered from improving its own communications while public systems sort themselves out. The two amendments, in fact, deal with slightly different points, and briefly I should like to describe each of them to your Lordships.

The first amendment, No. 15, is designed basically to enable business to communicate more efficiently with those businesses with which it has close and mutual interests by linking their systems together. If they do not have significant interests in common, businesses will certainly not go to the bother and expense of linking their systems together. The amendment is designed to allow related businesses, such as a retail chain and its suppliers or a motor manufacturer and its dealers, to operate more efficiently by routing messages rapidly from any point on one system to any point in another system. This operation does not involve the public switched telecommunications systems, and allows the individ-ual business to optimise the systems they own and rent. By improving business efficiency, these interconnections will: promote the interests of consumers, purchasers and other users in the United Kingdom

as required of the Secretary of State under Clause 3(2)(a).

I need hardly add at this stage that in this informa-tion age more efficient communication is a vital ingredient of more efficient operation, which, in turn, is good not just for the United Kingdom customers of the business, but also good for its export performance.

I now turn to Amendment No. 16. This amendment is designed to ensure that businesses can optimise the systems that they have purchased and rented by transmitting messages both between interconnected business systems and between any such business system and the public switched telecommunications systems. Such interconnections will allow messages entering business systems to be routed to the addressee, whether he is at his desk and on his system or out of his office, at home, or otherwise away from his system. They will also allow incoming callers to be connected and transferred by the business to the appropriate points on its own system. The basic principle of this amendment is the desire of business to communicate even more effectively by providing better communications into its business from the world outside, and by communicating quickly and directly with its staff, wherever they happen to be. These can both be achieved by connecting business systems to the public systems. I beg to move Amendment No. 15.

Lord Lloyd of Kilgerran

My Lords, may I intervene briefly to say that it seems to me that Amendment No. 15 is a very useful amendment for clarifying the position. I entirely agree with the noble Lord, Lord Mottistone, when he says that it would appear to assist in the more efficient operation of these systems. Therefore, I support this amendment.

Lord McIntosh of Haringey

My Lords, in most of what he said, the noble Lord, Lord Mottistone, appears to be referring to systems of electronic mail. I may have misunderstood him, and if so I shall gladly give way. But in so far as he is talking about systems which provide messages for individuals—

Lord Mottistone

My Lords, certainly that would be included; but it is not mainly for electronic mail.

Lord McIntosh of Haringey

My Lords, in that case, I shall withdraw the guarded welcome that I was about to give to the amendment. If it is to be concerned primarily with electronic mail, I do not think anyone could have any objection. After all, electronic mail systems operate primarily through data networks. It is not my understanding—and here I would be glad of the Government's confirmation—that they would be considered to be part of telecommunications systems.

However, the noble Lord made two other points which I think deserve comment. First, he is saying that businesses in general are not interested in making money from the switching of messages. I had thought that a large part of our consideration of this Bill had been because a large number of noble Lords were speaking on behalf of businesses which want to make a great deal of money out of add-on services to the British Telecommunications network. I thought that they had achieved a certain measure of success. Therefore, I am surprised that the noble Lord, Lord Mottistone, should be giving us that blanket assurance.

Secondly, the noble Lord said that it was necessary for this provision to be made while British Telecom and Mercury "sort themselves out". British Telecom does not need to sort itself out. British Telecom is providing an effective service for business which is only being delayed and hindered by the unnecessary intervention of Government into the provision of its services by way of this Bill. If it were not for this Bill, there would be no question of British Telecommunications sorting itself out. It is because of the privatisation and the liberalisation—and I use the two words separately—that there is any possibility of any problem between British Telecom and its business customers.

Lord Mackay of Clashfern

My Lords, as my noble friend has said, it might be convenient to deal with Amendments Nos. 15 and 16 together. The Government sympathise entirely with the general aims which I understand underlie these two amendments. As I understand them, both seek to ensure that the Bill makes proper provision to ensure that businesses can use leased circuits provided by British Telecom or Mercury to improve their internal business communications and to communicate with other firms with which they have close links. I can assure my noble friend that, although I have to resist the amendments, we do in fact support that aim. I should also like to thank my noble friend for the trouble he took earlier in explaining to me at some length exactly what his amendments are aiming at, and on that account perhaps I am able to give him a fuller answer than might otherwise have been the case.

As he has explained, Amendment No. 15 seeks to insert in Clause 6 a new provision about the interconnection of business systems. It provides that when one business system is connected to another the interconnected systems would be exempt from licensing. The amendment would, however, cover two completely different sets of circumstances. One of these causes no difficulty for the Government and it is already dealt with by Clause 6. But the other causes great difficulties and would have to be resisted. I think that these difficulties arise from the drafting of the amendment rather than from any difference of principle.

The first way in which the amendment can be read is to apply to different systems run by the same business. An example would be where a company had two different locations which each had a private switchboard and these switchboards were not connected to the public networks or to any other system. The firm concerned might then want to install its own circuit between the two locations, and might want to purchase the circuit itself, arrange all the installation work and then to control or run the link itself. The two switchboards in the different locations would then become a single system connected together by the privately-supplied private circuit.

This arrangement is already covered by Clause 6, just as it has been covered by Section 13 of the British Telecommunications Act. Any firm can provide its own connections between its own different offices or factories and does not need any licence to do so. It must, however, observe all the conditions set out in Clause 6(3) and (4) and in particular must not be connected to any system run by any other person including in particular systems run by British Telecom or Mercury. So long as the systems are entirely private and self-contained they are covered by Clause 6.

The second way Amendment No. 15 can be read is to apply to different systems run by different businesses. This would permit, for example, firm A to connect up to firms B, C and D, while firm B could connect up to firms E, F and G and firm G could connect up to firms H, J and K. Under the amendment all this would be done under an exemption from licensing. The result would be, or might be, to permit, without any licensing control whatsoever, the creation of an independent business telecommunications network providing widespread trunk by-pass facilities. This could seriously damage the economics of the public networks and could impair their ability to finance the present universal service. The Government could not contemplate this, and I believe that my noble friend did not intend to cover that situation. The mischief is in the use of the word "businesses" in the amendment. So much for Amendment No. 15.

Amendment No. 16 is partly consequential on 15, but, as I understand it, my noble friend is seeking reassurance that there are sufficient powers in the Bill to oblige British Telecom to provide circuits to connect different firms together. I can give him that reassurance. I think from the explanation that my noble friend has given that possibly he is concentrating on things as they are now, where British Telecom is in complete control of the matter and, because it owns its own systems, can decide what can and what cannot be connected to them.

May I ask my noble friend to look at the future, when, as I confidently expect, the Bill has become law and has done two important things? First, it will bring to an end British Telecom's role in licensing; all licensing functions and the decisions on who does what will pass to the Secretary of State (or to the Director General of Telecommunications). Secondly, the Bill creates an unambiguous power to ensure that, when the Secretary of State licenses someone to run a system and to connect it to British Telecom's systems, then British Telecom will be obliged to make the connection.

I shall explain how these powers will work. Clause 7(1) empowers the Secretary of State to license any person to run any telecommunication system specified or described in his licence. Clause 7(4) empowers the Secretary of State to say in each person's licence which other systems the licensee is authorised to connect to his own system. My noble friend will see that sub-paragraph (a)(i) of subsection (7) uses the words, "any other telecommunication system". I should explain that the word "system" applies not only to the public switched telephone network run by British Telecom which is a single giant system but also to the switched telex and packet switched networks. Moreover, each of the different forms of leased circuit run by British Telecom, including those known as external extensions, private circuits and inter PBX extensions, can be treated individually as a separate system in its own right. Put another way, there are no exceptions to what connections may be authorised by Clause 7(4), and the Secretary of State can license any form of connection of a private system to any leased circuit run by BT.

I turn now to the other side of the equation and British Telecom's obligations towards those who are licensed to connect to its systems. Clause 7(5) authorises the inclusion in licences of such conditions as the Secretary of State thinks requisite or expedient having regard to his Clause 3 duties. Clause 3(l)(a), for example, requires the Secretary of State to exercise his licensing functions in the way he thinks best so that, if someone demands a telecommunications service, like the conveyance of messages over a British Telecom leased circuit, and if the other requirements of Clause 3 are met, that service may be provided. This means that the Secretary of State can include in British Telecom's licence the condition now numbered as Condition 13 in the published draft licence, which obliges British Telecom to provide connections to any person who is licensed to connect to its systems. Clause 8(l)(b) makes this doubly sure by specifying that British Telecom cannot be designated as a public telecommunications operator unless its licence includes a condition like draft Condition 13.

But British Telecom cannot be left in a position where the Secretary of State can authorise any system, without any conditions, to connect to the public networks or to leased circuits. Technical standards must be imposed on those who run private systems connected to the British Telecom systems and there must be arrangements to ensure that private operators are not able to exploit the use of leased circuits so as to damage the revenues British Telecom needs to finance its universal service. The way we intend to secure both these very necessary objectives is to say in British Telecom's licence that it must connect its systems—leased circuits and public switched circuits alike—to systems run by other persons under licences authorising the connection of their systems to the British Telecom system.

We shall then include in the licences for private operators conditions, for example, about technical standards and provisions specifying the telecommunication services (including those involving third party use of leased circuits) which the private operator may provide. If we are to do this, we cannot go down the route suggested by the amendment. If we are to oblige British Telecom to provide connections between private systems on the one hand and leased circuits or the public switched networks on the other, it is essential that the private systems are subject to licensing controls for the two reasons that I have specified.

I hope that what I have said—and I have gone into fairly full detail on this matter—reassures those who have expressed an interest in the matter, and perhaps also enables me to take some comfort from the support of the noble Lord, Lord McIntosh of Haringey, in respect of these amendments.

Lord Mottistone

My Lords, I am indeed grateful to my noble and learned friend not only for his clear explanation but for the time and trouble he spent before we got to this stage of the Bill to make sure that we understood these points. What comes out of the amendment is that it is going to be important, in order to get this efficiency which underlies both these amendments, that the licences that are given to the non-public networks are given swiftly and not delayed one bit once this Bill becomes law. I hope that both the director, when he is set up, and the Secretary of State perhaps even before then, will give great attention to the swift granting of licences when they are applied for. At this stage, I beg leave to withdraw Amendment No. 15.

Amendment, by leave, withdrawn.

[Amendment No. 16 not moved]

Clause 8 [Special provisions applicable to certain licences]:

Lord Glenarthur moved Amendment No. 17:

[Printed earlier: col. 350.]

The noble Lord said: My Lords, this was spoken to with Amendment No. 3. I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendments Nos. 18 and 19:

[Printed earlier: col. 350.]

The noble Lord said: My Lords, Amendments Nos. 18 and 19 were also spoken to with Amendment No. 3. I beg to move the amendments en bloc.

On Question, amendments agreed to.

Clause 10 [The telecommunications code]:

4.29 p.m.

Lord Glenarthur moved Amendment No. 20:

Page 13, line 19, at end insert— (" ( ) A licence under section 7 above which applies the telecommunications code to any person in relation to any part or locality of the United Kingdom shall include a condition requiring that person to cause copies of—

1. (a) the exceptions and conditions subject to which the telecommunications code has effect as so applied; and
2. (b) every direction given in a manner specified in any such condition by a person so specified or of a description so specified,

to be open for inspection by members of the public free of charge at such premises in that part or locality as are specified in the licence or are of a description so specified.")

The noble Lord said: My Lords, at the Report stage the Government gave various assurances about amendments that they would be willing to bring forward in response to what were then Amendments Nos. 80B, 80C, and 129A, and it might be for the convenience of your Lordships if I speak together to the amendments we now propose to Clause 10 of the Bill and to paragraph 24 of Schedule 2; that is to say, Amendments Nos. 71 and 72.

Amendment No. 71: Page 131, line 22, at beginning insert— (" (1) Any notice required to be given by the operator to any person for the purposes of any provision of this code must be in a form approved by the Director as adequate for indicating to that person the effect of the notice and of so much of this code as is relevant to the notice and to the steps that may be taken by that person under this code in respect of that notice.") Amendment No. 72: Page 132, line 4, at end insert— (" ( ) In any proceedings under this code a certificate purporting to be signed by the Director and stating that a particular form of notice has been approved by him as mentioned in sub-paragraph (1) above shall be conclusive evidence of the matter certified.")

In commenting on Amendment No. 80C at Report stage my noble and learned friend the Lord Advocate said that we thought that the kind of arrangements it envisaged were, on the whole, eminently sensible. In essence those arrangements were that details of licences and related documents applying the telecommunications code to an operator should be available for inspection by members of the public free of charge at places convenient for individuals who may be affected.

This is what the amendment to Clause 10 is intended to achieve. It places a duty on the Secretary of State to include in any licence which applies the telecommunications code a condition requiring the licensee to make available a copy of the exceptions and conditions subject to which the code has been applied and a copy of any direction given under such a licence condition for inspection by the public free of charge. What this means in practice is that operators who have the privilege of installing their apparatus under the telecommunications code powers will have to take steps to ensure that the provisions of the part of the licence which are relevant to the application of the code and any relevant directions including for example a direction to follow a code of practice, are easily accessible to those who may be affected. In BT's case this will be achieved by including a provision in part 5 of its licence equivalent to the existing Condition 16(3)(b) which requires its standard charges et cetera to be published and made available in a publicly accessible part of every one of its major offices.

As far as other operators are concerned the precise requirements will be the subject of consultation under Clause 10 along with all the other code related licence conditions and exception. But the intention is clear from the drafting, namely, that the relevant documents will be easily accessible in such premises as are specified in the licence.

May I turn now to the amendments to paragraph 24 of the code which deal with a closely related subject? Paragraph 24 sets out the procedures to be followed when, under one of the provisions of the code, an operator serves a notice, for example a notice under paragraph 5 of the code requiring the agreement of a landowner to the installation of apparatus on private land. The principal objective of the amendment to Clause 10 to which I have just spoken is to ensure that people face no difficulty in establishing whether or not an operator is complying with the terms of his licence or any code of practice to which the licence refers. Expressed another way, our aim is to ensure that people know what are the limits of the code powers conferred by the licence.

The amendments to paragraph 24, of which the first is the substantive one, serve a similar purpose. We have drawn heavily on the earlier amendment 129AA which was put down by the noble Lords opposite at Report stage. The amendment would require the operator to seek the director's approval of the form of notices issued by operators under the relevant provisions of Schedule 2. And the amendment gives the director clear guidance as to what his task is. It is to ensure that the people who receive notices from telecommunications operators are informed of their rights under the code so that they can take whatever steps are necessary (for example by issuing a counter-notice objecting to an operator's proposals) to protect their position. This amendment would also, I think, meet the anxieties of the noble Lord, Lord Stoddart of Swindon, who gave the example of an elderly person who received a notice abut tree lopping. In response, my noble friend Lord Lyell said that we would envisage dealing with the matter via licence conditions. On reflection, we think that this amendment will achieve precisely the effect we intend without the need for individual conditions in each licence. I beg to move.

On Question, amendment agreed to.

Clause 11 [Provisions supplementary to section 10]:

Lord Glenarthur moved Amendment No. 21:

Page 16, line 10, at end insert—

("`(d) provide for the purposes of any provision contained in the scheme by virtue of paragraph (a), (b) or (c) above for such questions arising under the scheme as are specified in the scheme, or are of a description so specified, to be referred to, and determined by, the Director.").

The noble Lord said: My Lords, this is an amendment to clarify the effect of Clause 11 (4) of the Bill. Clause 11(4) gives the Secretary of State a power to make a scheme giving effect to transitional provisions in circumstances where the telecommunications code ceases to apply to an operator because his licence expires or is revoked. The Secretary of State can only make a scheme by means of an order which is subject to the negative resolution procedure. Within that framework of parliamentary control the Secretary of State is given a power by subsection (4) to make whatever transitional provision he thinks necessary.

Subsection (5) of Clause 11 then goes on to specify some of the things that he may need to provide for in such a scheme, for example requirements on the former code operator to remove particular pieces of apparatus and authorisations for certain apparatus to remain lawfully installed pending its being taken over by a future licensee. However, we have concluded that the clause is insufficiently clear about how these objectives are to be achieved. As it is currently drafted the Secretary of State appears to have two choices. Either he could frame a very general scheme which would require detailed matters to be referred back to him for decision (for example, whether the telegraph poles in a particular street were to be removed) or he could attempt to draw up a very detailed scheme covering all the issues which might conceivably arise during the transition.

In practice he might very well want to involve the director in detailed decisions and make provision in the scheme for the director's involvement. The purpose of the amendment to subsection (5), is therefore, to make clear that he can do this. The drafting follows the precedent set by Clause 109(5) and there are no substantive policy implications. I hope that on that basis your Lordships will accept that this is a modest improvement in the Bill. I beg to move.

On Question, amendment agreed to.

Clause 12 [Modification of licence conditions by agreement]:

Lord Lloyd of Kilgerran moved Amendment No. 22:

Page 17, line 14, after ("sections") insert ("8 above and").

The noble Lord said: My Lords, this is a small but very significant amendment. It is to include Clause 8 into the list of clauses which cannot be modified once they have had included in the licences the special provisions referred to in Clause 8. Clause 8 is an extremely important clause because the Government have set out time and again that there need be no anxiety about the problems of rural areas on the question of service, charges and things like that. The special provisions which Clause 8 will put into the licences will meet that point. I. and members of the official Opposition, have many times put forward the problems dealing with rural areas. They are so important that I do not apologise for taking up your Lordships' time in this matter.

I want now to read to your Lordships the answer given to me by the noble Lord the Chancellor of the Duchy of Lancaster on 19th of March at col. 1065 of the Official Report. In reply to my amendment suggesting there should be some safeguards about the position in rural areas, he started off: I think that most of your Lordships will feel as I do, that we have been here not once but many times before".

That was a mild and charming reproval for my previous persistence. Then he went on to say: Your Lordships at the Committee stage passed an amendment specifically designed to achieve the objectives set out in the noble Lord's latest amendment".

In response to that I moved two amendments at the beginning of Report stage. Those amendments were accepted on a Division, and they referred mainly to Clause 8. He went on to say, at the end: Briefly, I would sum up the position like this. There is nothing between the noble Lord and the Government on the desirable objectives to be achieved. It is simply that we feel that we have done it in a rather more effective way than the noble Lord has succeeded in doing it".

At some stage the point was taken by the noble Lord, Lord Spens, and the noble Lord, Lord Bruce of Donington. I have not got the reference, but I see that the noble Lord, Lords Spens, is nodding his head in agreement with my general observation that he did raise some point.

Clause 12 deals with modifications of the licence conditions by agreement. Subsection (7) says: References in this section and in sections 13 to 15 below to modifications of the conditions of a licence do not include references to modifications of conditions relating to the application of the telecommunications code".

As I read that subsection it means, as it stands before my amendment is introduced, that, talking loosely, one cannot interfere with the conditions in Clauses 13 and 15.I am submitting that there should be inserted in that subsection a reference to Clause 8, saying, therefore, that Clause 8 and Clauses 13 and 15 are the clauses selected in relation to which no conditions to the licence should be modified.

The Government have been most helpful in this matter and most reassuring to people in rural areas. They have told us explicitly, "Do not worry about the conditions arising in rural areas now"—the difficulties on charges in rural areas that we on this side of the House have emphasised so frequently. "Do not worry about that; we have Clause 8. We have done it for you; we have brought in Clause 8 to deal with these problems far better than you on that side of the House have by means of your own amendments". Therefore, I want to enshrine Clause 8 among the clauses as to which, once conditions have been inserted under them, they should not be modified.

To deal with the points raised by the noble Lords, Lord Spens and Lord Bruce of Donington, some argument was raised on this point by the noble Lord, Lord Cockfield. I have read it with great care, and I do not think that that answer is appropriate in this case. Therefore, I beg to move that Clause 8 be enshrined in Clause 12(7) to safeguard the position of the rural areas.

Lord McIntosh of Haringey

My Lords, I have no intention of wearying the House by repeating the arguments made on this at Report stage, particularly as the arguments have been made so effectively and freshly by the noble Lord, Lord Lloyd of Kilgerran, in his admirable and quite ingenious amendment. It seems that this Bill has various layers of protection moving down from the first part of Clause 3 to the second part of Clause 3, a long way down to Clause 8 and way beyond that to unprotected licence conditions. The amendment moved by the noble Lord would give effect to the assurances given by the Government when they rejected the amendment which we moved at Committee stage. It would seem logical and rational for them to accept the amendment which is now proposed.

Lord Spens

My Lords, I should like to support what has been said by the noble Lord, Lord Lloyd of Kilgerran, because I agreed with and supported him previously. I hope that Clause 8 will now be brought in with Clauses 13 and 15 to become a clause which cannot be altered in the licence.

Lord Mackay of Clashfern

My Lords, my first difficulty is to relate the excellent speech which the noble Lord, Lord Lloyd of Kilgerran, made to the amendment which he has moved. If your Lordships will look with me at Clause 12(7) and the place into which he proposes to insert his amendment, as I understand it—there may be something wrong with my understanding, and I should be glad to be corrected—Clause 12(7) at present says: References in this section and in sections 13 and 15 below to modifications …do not include". Before that makes sense we require to find in the sections listed a reference to "modifications". I do not think there is any reference to modifications in Section 8, and therefore the proposed amendment appears to be utterly devoid of effect.

That seems to dispose of the amendment fairly effectively. However, the noble Lord has asked a more general query which I should like to deal with, because I believe it is covered. He wants to be assured that under Clause 12 the director general could not modify out conditions which are imposed on the basis of Clause 8 from a public telecommunications systems operator's licence. In my view, on the terms of the Bill as drafted that would not be possible for this reason. Clause 9(1) permits designation as a public telecommunications system: any telecommunication system the running of which is authorised by a licence to which section 8 above applies". In other words, there cannot be a public telecommunications system unless it is authorised by a licence to which Clause 8 applies. It goes on in the tailpiece (and I think this helps us further) to say: any reference in this Act to a public telecommunication system is a reference to a telecommunication system which is so designated"— that is, under Clause 9— and the running of which is so authorised"— that is, under Clause 8.

Clause 8 describes the licence by reference to "conditions", and if the conditions which are specified in Clause 8 are not to be found in the licence at any time then it is not a licence to which Clause 8 applies, because the necessary conditions are not in the licence—that is, the necessary conditions in order that Clause 8 should apply to it. The consequence is that if the licence were to be modified by way of removing any of the Clause 8 conditions it would immediately preclude that system from being described from then onwards as "a public telecommunication system". It is the public telecommunication system that is at the root of this matter.

In the light of that argument, which I hope is plain to the noble Lord and to others who have raised this, the result which the noble Lord seeks to achieve by his amendment is achieved in the Bill as it stands, whereas, as I have pointed out, his amendment, with the greatest possible respect, does not really go in that direction at all. I hope that in the light of this explanation the noble Lord may feel able to withdraw his amendment.

Lord Lloyd of Kilgerran

My Lords, I am grateful to the noble and learned Lord for his courtesy in explaining that to your Lordships in the way he has. In fairness to myself, I must put another point to him, though I do not preface my points by saying anything rhetorical or anything about the noble and learned Lord's argument, as he did in relation to mine. I look at it in this way. Clause 12(1) says: Subject to the following provisions of this section, the Director may modify the conditions of a licence granted under section 7 above". The licence is granted under Clause 7, and special conditions are put into that licence under Clause 8. The conditions with which I am concerned are conditions which will be helpful and which will relieve the anxieties of users in rural areas.

Clause 12(1) says that the director can modify the conditions of a licence granted under Clause 7, and therefore Clause 8 above. Clause 12(7) goes on to say: References in this section and in sections 13 to 15 should not, in effect, be modified. All that I am saying on this kind of argument is that Clause 8 should be included to ensure that there is no argument to say that the conditions in Clause 8 can be altered.

The other answer of the noble and learned Lord to me is, "Don't worry. Read Section 9(1). Read the definitions of 'telecommunications systems' or what-you-will in other parts of the Bill. Therefore, it is clear that the special conditions included in the licence under Section 8 cannot be modified". Therefore, if the licences have these conditions to help the people in rural areas, he says that the Bill itself says that they cannot be modified.

It seems to me that if that is the position—and I am not arguing with the noble and learned Lord so far as that position is concerned—and the conditions of Section 8 cannot be amended under any circumstances, then I should have thought that the noble and learned Lord would have accepted an amendment which enshrines Section 8 in the way that I have suggested. It should be made clear that once the special conditions in Section 8 have been introduced they cannot be altered and they should not be amended. Unless the noble and learned Lord wishes to make any further correction to my submission—I give way to the noble and learned Lord.

Lord Mackay of Clashfern

My Lords, before the noble Lord sits down, in order that I may understand the sense of his proposed amendment, can he refer me to the reference in Clause 8 to a modification?—for that is the only way his amendment would make sense as I would understand it.

Lord Lloyd of Kilgerran

My Lords, you have a clause with terms in it. Clause 12(1) says: Subject to the following provisions of this section, the Director may modify the conditions of a licence granted under section 7 above". It is quite simple. Therefore, Clause 8 does not have to have the word, "modifications" or the words, "alleged modifications" in it. There is no need for the word "modification" to be included in the way that the noble and learned Lord has submitted. I know that the noble and learned Lord disagrees with me, but this is a very fine point. There are other provisions of the Bill that I could call in aid, but I do not propose to do so at this stage.

4.52 p.m.

On Question, Whether the said Amendment (No. 22) shall be agreed to?

Their Lordships divided: Contents, 87; Not-Contents, 111

DIVISION NO.1
CONTENTS
Airedale, L.	Jacques, L.
Allen of Fallowfield, L.	Jeger, B.
Amherst, E.	Jenkins of Putney, L.
Ardwick, L.	John-Mackie, L.
Attlee, E.	Kagan, L.
Aylestone, L.	Kaldor, L.
Banks, L.	Kearton, L.
Beswick, L.	Kilmarnock, L.
Birk, B.	Lawrence, L.
Bishopston, L.	Leatherland, L.
Blease, L.	Listowel, E.
Bottomley, L.	Llewelyn-Davies of Hastoe, B.
Bowden, L.	Lloyd of Kilgerran, L.
Briginshaw, L.	[Teller.]
Brockway, L.	Lockwood, B.
Bruce of Donington, L.	Longford, E.
Caradon, L.	Lovell-Davis, L.
Carmichael of Kelvingrove, L.	McIntosh of Haringey, L.
Cledwyn of Penrhos, L.	Mais, L.
Collison, L.	Milford, L.
Cooper of Stockton Heath, L.	Molloy, L.
David, B.	Monson, L.
Dean of Beswick, L.	Mulley, L.
Delacourt-Smith of Alteryn,	Oram, L.
B.	Phillips, B.
Denington, B.	Pitt of Hampstead, L.
Elwyn-Jones, L.	Prys-Davies, L.
Elystan-Morgan, L.	Rathcreedan, L.
Ennals, L.	Rochester, L.
Ewart-Biggs B	Ross of Marnock, L.
Fisher of Rednal, B.	Seear, B.
Fitt, L.	Serota, B.
Gaitskell, B.	Shaughnessy, L.
Gallacher, L.	Spens, L.
Graham of Edmonton, L.	Stallard, L.
[Teller.]	Stamp, L.
Grimond, L.	Stedman, B.
Hale, L.	Stoddart of Swindon, L.
Hampton, L.	Stone, L.
Hanworth, V.	Strabolgi, L.
Harris of Greenwich, L.	Underhill, L.
Houghton of Sowerby, L.	Wallace of Coslany, L.
Hughes L.	Wedderburn of Charlton, L.
Ilchester, E.	White, B.
Jacobson, L.	Wootton of Abinger, B.

NOT-CONTENTS
Ailesbury, M.	Carnegy of Lour, B.
Airey of Abingdon, B.	Cathcart, E.
Alexander of Tunis, E.	Chelwood, L.
Annan, L.	Clitheroe, L.
Avon, E.	Cockfield, L.
Bauer, L.	Cox, B.
Belhaven and Stenton, L.	Cromartie, E.
Bellwin, L.	Cullen of Ashbourne, L.
Beloff, L.	Daventry, V.
Belstead, L.	De Freyne, L.
Caithness, E.	Denham, L. [Teller.]
Campbell of Alloway, L.	Digby, L.

Dormer, L.	Mowbray and Stourton, L.
Eccles, V.	Murton of Lindisfarne, L.
Ellenborough, L.	Newall, L.
Elliot of Harwood, B.	Nugent of Guildford, L.
Faithfull, B.	Onslow, L.
Fanshawe of Richmond, L.	Orkney, E.
Fortescue, E.	Orr-Ewing, L.
Fraser of Kilmorack, L.	Pender, L.
Gardner of Parkes, B.	Penrhyn, L.
Gisborough, L.	Peyton of Yeovil, L.
Glanusk, L.	Porritt, L.
Glasgow, E.	Portland, D.
Glenarthur, L.	Rawlinson of Ewell, L.
Gormanston, V.	Reigate, L.
Gray of Contin, L.	Renton, L.
Greenway, L.	St. Aldwyn, E.
Gridley, L.	St. Davids, V.
Hailsham of Saint	Sandford, L.
Marylebone, L.	Savile, L.
Hawke, L.	Selkirk, E.
Henley, L.	Sempill, Ly.
Hives, L.	Somers, L.
Home of the Hirsel, L.	Stathcarron, L.
Hood, V.	Strathcona and Mount Royal,
Hylton-Foster, B.	L.
Kitchener, E.	Strathspey, L.
Lane-Fox, B.	Sudeley, L.
Long, V.	Suffield, L.
Lucas of Chilworth, L.	Swansea, L.
Luke, L.	Swinton, E.[Teller.]
Lyell, L.	Teviot, L.
Mackay of Clashfern, L.	Teynham, L.
Macleod of Borve, B.	Thomas of Swynnerton, L.
Mancroft, L.	Thorneycroft, L.
Margadale, L.	Torphichen, L.
Marley, L.	Trefgarne, L.
Maude of Stratford-upon-	Trenchard, V.
Avon, L.	Trumpington, B.
Merrivale, L.	Vaux of Harrowden, L.
Mersey, V.	Vickers, B.
Milverton, L.	Ward of Witley, V.
Molson, L.	Westbury, L.
Montgomery of Alamein, V.	Whitelaw, V.
Morris, L.	Wise, L.
Mottistone, L.	Young, B.

On Question, amendment agreed to.

Clause 16 [Securing compliance with licence conditions]:

5 p.m.

Lord Mackay of Clashfern moved Amendment No. 23: Page 21, line 38, leave out ("is likely") and insert ("has contravened and is likely again").

The noble and learned Lord said: My Lords, with the leave of the House, I should like to move Amendments Nos. 23, 24, 25, 26, 27, 28 and 29 en bloc.

Amendment No. 24: Page 21, line 41, leave out from ("securing") to ("that") in line 42 and insert ("compliance with"). Amendment No. 25: Page 22, line 3, leave out ("is likely") and insert ("has contravened and is likely again"). Amendment No. 26: Page 22, line 5, leave out from ("securing") to end of line 6 and insert ("compliance with"). Amendment No. 27: Page 22, line 12, leave out from ("if') to end of line 13 and insert— (" (a) he is satisfied that the telecommunications operator is contravening, or has contravened and is likely again to contravene, any of the conditions of his licence; and (b) the provision made by the order (with any modifications) is requisite for the purpose of securing compliance with that condition."). Amendment No. 28: Page 22, line 31, leave out ("and"). Amendment No. 29: Page 23, leave out lines 3 to 5.

These amendments give effect to an undertaking I gave at the Report stage that we would reconsider the amendments which we then introduced to deal with the problem of intermittent breach of licence conditions.

The Bill, as introduced, empowered the director general to make an enforcement order only when an operator, is not complying with any of the conditions of his licence".

As explained at Report, this gave rise to problems where an operator committed an intermittent breach of his licence conditions, since an enforcement order could not be made when the operator had put matters right for the time being but was likely to commit a similar breach of his licence conditions in the future. This would expose those who depend on tele-communications to unnecessary uncertainty; they would need to be damaged again by a second breach of the relevant licence condition before they could obtain redress.

On Report we replaced the original formula, is not complying with any conditions of his licence

by the words is contravening or is likely to contravene any of the conditions of his licence".

These new words are at line 38 on page 21 of the current print of the Bill but there is a printing error: the word "is" is omitted before "contravening".

It has been pointed out to us that some regard the words "is likely to" as going too far the other way. I think the noble Lord, Lord McIntosh, and others suggested that to us when we put the amendment forward. There could be circumstances where the operator had not breached his licence conditions and had no intention of doing so, but the director thought it a good idea to make an order. This would have enabled the director to interfere unduly in the day-to-day management of an operator's system. That was the concern. We did not intend this; interference in commercial affairs should certainly be limited to circumstances where there is a need for it.

We therefore propose by these amendments that an enforcement order should be made either where an operator is contravening any of the conditions of his licence or has contravened such a condition and is likely again to contravene any of these conditions. This is an amalgam of what we originally proposed with what was then Amendment 116 on the Marshalled List at Report stage and which was removed in the light of our amendment. In our view, this will deal adequately with the problem of intermit-tent breaches of licence conditions by limiting the circumstances where the director can intervene to those where there has been an actual breach of the licence conditions.

This change has another desirable result. It makes it possible to revert to the drafting of the rest of Clause 16 which was originally introduced and which said that an order could make such provision as is requisite for the purpose of securing compliance with a condition that had been breached. The formula we introduced at Report, securing that the operator does not so contravene or continue so to contravene that condition, is suitable only for circumstances where there had not been a breach and one was thought likely to occur.

Amendments Nos. 23 and 25 remove the words "is likely" and replace them by the words "has contravened and is likely again" to contravene. Amendments Nos. 24 and 26 delete the cumbersome formula to which I have just referred. Amendments Nos. 27 and 29 simplify subsection (4) by removing the complication of a relevant purpose which is currently defined in subsection (7) by referring to subsections (1) and (2). Amendment No. 28 merely deletes an unnecessary "and". I hope that this explanation gives your Lordships a clear impression of what we intend and that these amendments will be found acceptable. I beg to move.

The Deputy Speaker (Earl Cathcart)

Amendments Nos. 23 to 29 have been moved en bloc. I will, however, deal with Amendment No. 23 in the usual way and then call Amendments Nos. 24 to 29.

Lord McIntosh of Haringey

My Lords, we are grateful to the noble and learned Lord not only for the amendments but for the very clear way in which he moved them. I cannot avoid noting that on 22nd March the noble and learned Lord wrote to the Society of Telecom Executives, using the words with which he now proposes to amend the Bill, and in that sense I suspect he was rather jumping the gun on the position as it stood at that time. But these are improvements. They overcome some of the difficulties that we foresaw with some of the Government amendments when they were moved earlier; and we indicated that we did not think the Government were making these difficulties intentionally. We are glad to have it confirmed that this is indeed the case.

Lord Mackay of Clashfern

My Lords, I beg to move Amendments Nos. 24 to 29 en bloc.

[Printed earlier: col. 369.]

Clause 18 [Validity and effect of orders]:

Lord Morris moved Amendment No. 30: Page 25, line 2, leave out from ("actionable") to the end of line 4 and insert ("at the suit or instance of any person aggrieved by that contravention to the extent that the contravention continued after he had served a notice of complaint in respect of it upon the Director and the telecommunications operator in accordance with subsection (6A) below and he has suffered loss or damage thereby.").

The noble Lord said: My Lords, I believe it would be for the convenience of the House if I were to speak to Amendments Nos. 31 and 32 with this amendment. Amendment No. 31: Page 25, line 4, at end insert—

(" (6A) A notice of complaint under subsection (6) above shall take such form and contain such information and be served in such manner as the Director may from time to time specify for the purposes of that subsection."). Amendment No. 32: Page 25, line 5, leave out subsection (7) and insert— (" (7A) If, in any proceedings brought against any person in pursuance of subsection (6) above, it appears to the court that, having regard to all the circumstances of the case, he ought reasonably to be excused, the court may relieve him, either wholly or partly, from his liability on such terms as the court may think fit.").

In moving an amendment to this same clause at an earlier stage—that is the amendment which now comprises Clauses 86 and 87—my concern was that the principle of the right to sue for damages suffered as a direct result of a breach of a licence condition should be enshrined in this Bill. I am most grateful to those of your Lordships who supported that principle. I was not a little sad that I had to divide the House at that time in order to attempt to persuade Her Majesty's Government on this issue. I had hoped that my noble friends would accept the principle and would have agreed to table their own amendment at this stage of the Bill. They did not; and, as a result, I felt it would have been irresponsible for me not to put the amendment to the House.

When moving that amendment, I had satisfied myself that all possible care had been taken to ensure that the amendment was neither defective in its drafting nor would have any undesirable consequences. Your Lordships can imagine my surprise when my noble friend Lord Peyton of Yeovil, whose support I highly value and who made a witty and trenchant speech on that particular occasion, had the temerity to suggest that the amendment might be faulty in its drafting. Not for the first time, my noble friend was absolutely right, and hence these amendments.

I listened with great care also to the reply made by my noble and learned friend the Lord Advocate, and to other noble Lords who spoke at that time. I was convinced then, and I remain convinced, that the principle of a right of action in relation to damage arising out of a breach of a licence condition rather than a breach of an order must stand. However, I am most grateful to my noble and learned friend Lord Mackay of Clashfern and to the noble Lord, Lord Elystan-Morgan, who made the very important point at Report stage that they felt it was possible that the amendment which is now Clause 18(6) might have a retrospective effect.

I myself cannot see how Clause 18(6) can give rise to retrospective action, because liability only arises from the point at which a licensee breaches a licence condition and causes damage to another. It was to ensure that licensees had a good commercial incentive to take care to adhere to their licences that Clause 18(6) is now in the Bill. That was one reason.

Nevertheless, I now see one difficulty that might arise. It stems from the contention of my noble and learned friend the Lord Advocate that it may not be possible in all cases to frame the licence conditions in very precise terms. There may inevitably be some uncertainty as to how exactly they might be interpreted. Circumstances may arise in which a telecommunications licensee is pursuing a policy that he believes is wholly consistent with the conditions of his licence, and he may even have consulted the director, who at the time may have concurred with the licensee's judgment. But it may subsequently emerge that the case is established that the action is not consistent with the intention of the licence conditions, and the director may then be bound to issue an order.

The licensee would be liable for damages from when he first unwittingly breached his licence conditions, not only to somebody who complained to the director but to all and sundry who, until that point in time, were unaware that they were being damaged, and who may then wish to jump on the bandwagon. In these circumstances, I now believe that an element of retrospection would exist.

The clause attempts to deal with the problem by placing in the hands of the director the power to deny access to the courts in these and similar circumstances. However, I am now advised that the law with respect to ministerial discretion has changed in recent years, inter alia as a result of the principle of judicial review as applied to administrative law. It is doubtful whether this point would have any practical effect. I am therefore persuaded to put forward this alternative draft for the director's fiat. The amendment does not alter or weaken the principle of Clause 18(6), but it does prevent the potential incidental consequences of the original drafting.

Moreover, on further consideration I felt that there should be a trigger from which damage as a result of a breach of a licence condition should arise. The trigger would be that point in time at which a person who has evidence that he has suffered damage as a result of a contravention of a licence condition makes a complaint to the director. At the same time the licensee will be informed of the complaint, and he can take what steps he deems necessary to protect himself from the potential liability. Damages will only be owed to the person making the complaint. This would not preclude any other persons from lodging a complaint subsequently and thus entitling him to a suit if he can prove damage.

I should also point out to your Lordships that I had originally based the defence offered to the licensee on the words used by Her Majesty's Government as a defence to a breach of an order. Upon further consideration, I feel that that defence is too severe on the licensee in the circumstances of a breach of a licence condition open to interpretation, as I have outlined, as opposed to a breach of a precisely defined order. I therefore suggest to your Lordships that it will be preferable to replace this defence with the amendment in the Marshalled List, which follows very closely the wording in Section 48 of the Companies Act 1948 and Section 6(1) of the Trustee Investments Act 1961. The defence places greater discretion on the courts, and I believe your Lordships will agree that that is desirable in the circumstances.

These amendments are wholly consistent with the spirit of the issue fully debated and decided upon at Report stage, and I respectfully commend them to your Lordships as an improvement to the Bill as currently drafted. I hope that they will find favour with my noble friends on the Government Front Bench as well as with noble Lords opposite. I am confident that if your Lordships accept these amendments the Bill as amended will find even more favour in another place. I beg to move.

5.16 p.m.

Lord McIntosh of Haringey

My Lords, the noble Lord persuaded the House at Report stage that it was desirable that there should be this possibility of civil action. But I have to say that he did so on the basis of the wording of his amendment. That provided for very strict restraints on the litigation that might otherwise be possible. The first of those restraints was that the consent of the director should be required before any action was taken. The second was that in subsection (7) it was a defence for the licensee to prove that he took such reasonable steps and exercised all due diligence as to avoid contravening the conditions.

The noble Lord is claiming that the amendments which he is now moving are merely drafting amendments. I suggest that they are no such thing. In removing the two constraints which were absolutely essential, in my view, to obtaining the consent of the House to the noble Lord's previous amendment, he has created a litigants' charter. It would be possible for anybody, without doing any more than notifying the Office of Telecommunications and the licensee concerned, to take civil action for breaches which have already taken place—albeit that they took place after an order under subsection (16) had been issued. The noble Lord is greatly extending the possible use of the civil courts from matters primarily concerned with trade disputes into the area of employment legislation.

I suggest to the House that that would represent a thoroughly undesirable and unprecedented in-novation. I hope that the Government will resist it.

Lord Torphichen

My Lords, I cannot see that this will apply mainly or only to trade disputes; there are many other reasons why litigation might be needed.

Lord Mackay of Clashfern

My Lords, as I understand the original Amendment No. 78, which is now incorporated in the Bill, and these amendments, then my noble friend Lord Torphichen is right when he says that they would cover quite a large variety of matters. The three amendments to which my noble friend Lord Morris has spoken seek to alter the effect of Amendment No. 78, which he successfully moved at Report stage. The deletion of the requirement to have the prior consent of the director general would open up a fairly free field for litigation. This is particu-larly the case where, because of the nature of things, the licence conditions will be imprecise.

To take an example, British Telecommunications has some 19 million subscribers. It is impossible to devise a licence in reasonable terms which looks after all of them in their individual circumstances in a precise way. All that can be done is to lay down the broad rules; and the types of conditions which are specified in subsection (8) illustrate that. In such a situation, the result of creating such a free field of litigation would, in our view, be to create complete uncertainty—uncertainty that would be inimical to investment and consequent commercial activity.

The second point, which I made earlier, was that the original amendment introduced the idea of damages from the time before the order, and this involved retrospection. The amendments proposed today introduce the idea of damages flowing from the time when a notice is served on the director and the operator. This may avoid damages being paid retrospectively over a long period of years, but it still involves retrospection. I can illustrate this in a practical way. An operator could have a licence condition which was imprecise; for example, an obligation not to show undue preference and not to exercise undue discrimination. He could discuss with the director how this applied to particular circumstances. After careful thought the director could decide that a particular practice did involve some discrimination but that this was not in the particular circumstances undue and that he would review the matter, perhaps in a year's time, in the light of the circumstances as they developed.

An individual could then serve a notice, say a week later, to which the director would respond explaining what the position was but at the end of the year he might want to make an order requiring the operator to change the practice; perhaps substantially or only slightly. The notice would then come into operation and the individual who served it could obtain damages against an operator who had been acting in accordance with the understanding reached with the director. In my view, that would be a serious injustice. The retrospective element would still exist even if my noble friend's amendment is agreed; and this point of retrospection was the point made by the noble Lord, Lord Elystan-Morgan, if 1 properly understood it, on Report in the amendments which were proposed. The fact that a notice had been served might also complicate the director's decision on whether or not to make an enforcement order.

Clause 16(5) gives the director a discretion not to make an order if he is satisfied that the making of the order is precluded by his Clause 3 duties. These duties include securing that operators can finance the services they are obliged to provide and the director might realise that, once notices had been served, the making of an enforcement order would seriously harm the operator and prevent his continuing these services. In those circumstances the existence of a notice might act as a positive deterrent to enforcement action.

The notice giving procedure, as my noble friend envisages it in these amendments, would confer a right to damages only on the person who gave the notice. It would leave unprotected those who did not give notice but who might have suffered harm. This seems to create a differentiation which may not be particularly attractive. If this system proposed today by my noble friend was introduced it seems to me that an operator or a person who is dependent on telecommunications systems might be well advised to serve a notice as soon as possible in respect of every conceivable contravention by every operator on whom he depends in order to maximise the possibility of damages in the event of a dispute arising.

To summarise the position, I very much appreciate the effort that my noble friend Lord Morris has put into seeking to meet the difficulties which I raised on Report on his original amendment. What he has done would, I acknowledge, improve the situation in which the Bill would be left in some respects, such as limiting the possibilities of retrospection, while dropping the requirement for the director general's consent would throw up other difficulties. As I see the matter at present, the truth is that the fundamental problem lies in the original amendment and that the only answer is to allow damages to be claimed only from the date when the director general's order takes effect.

The views which noble Lords expressed on that in the Division on Amendment No. 78 obviously require very careful consideration because this is a very fundamental matter to the whole structure of the Bill and the arrangements for enforcement by means of the provisional order and the final order at the instance of the director general.

My noble friend's present amendment goes some way to meet some of the difficulties which I raised, but, as I said, unfortunately they do not appear to us to meet all the problems to which I drew attention. May I therefore suggest to my noble friend that it might be desirable for him to withdraw these amendments, and the whole matter will of course receive very thorough further consideration.

Lord Morris

My Lords. I am most grateful to my noble and learned friend Lord Mackay of Clashfern for his suggestion. I am happy to withdraw the amendment. I think that it is extremely important that the most serious consideration should be given to this point, and I am most grateful to my noble and learned friend.

Amendment, by leave, withdrawn.

[Amendments Nos. 31 and 32 not moved.]

Lord Bruce of Donington had given notice of his intention to move Amendment No. 33: Page 25, line 9, at end insert—

("( ) In any proceedings against any person (which, for the avoidance of doubt, includes a trade union) in pursuance of subsection (6) above, it shall be a defence for that person to prove that he acted wholly or mainly in contemplation or furtherance of a trade dispute.").

The noble Lord said: My Lords, I am advised that this amendment is out of order. I have reviewed the circumstances very thoroughly and I dissent from that view. Nevertheless, in view of the advice that has been given, I think that it would be in the tradition of this House if I said that I do not propose to move it.

[Amendment No. 33 not moved.]

5.27 p.m.

Lord Mackay of Clashfern moved Amendment No. 34: Page 25, line 12, after ("duty") insert ("which causes that person to sustain loss or damage").

The noble and learned Lord said: My Lords, I think it would be convenient for your Lordships if I speak to Amendments Nos. 34 and 35 together.

Amendment No. 35: Page 25, line 13, leave out from ("which") to ("and") in line 14 and insert (", by inducing a breach of that duty or interfering with its performance, causes that person to sustain loss or damage").

As your Lordships will appreciate, the first of these amendments, Amendment No. 34. merely paves the way for the second. It brings the drafting of paragraph (a) of Clause 18(8) into line with the paragraph (b), which is to be amended. I shall therefore concentrate on explaining the effect of the second amendment—the one to paragraph (b)—and our reasons for bringing it forward.

As I explained during the Committee stage and on Report the Government start from the basic proposi-tion that the users of telecommunication services are entitled to special protection for their security of supply. It was only on that basis that we were prepared to consider deleting the offence in Clause 45 of the Bill, as it came before this House, of interfering with a public telecommunications system. I make no apology for referring to that point again; it is essential to the perspective with which we approach this problem.

I have also already sought to explain the effect of the Bill as it stands; but, if I may, I should like to do so a little more fully in order to explain the effect of the amendment. The Bill as it stands seeks to make it an actionable wrong to interfere with the performance of an enforcement order or induce its breach. However, it does so not in all circumstances but only if that result is the defendant's purpose, or part of his purpose. I should stress that for something to be in law a person's purpose or part of his purpose it is not, in our view, enough that he merely intends it in the sense that he knows that that thing is the inevitable or likely result of what he is proposing to do; for a thing to be a person's purpose it must be the thing or one of the things which that person is setting out to do. So the effect of the Bill as it stands is that for a person to be liable he must, in ordinary language, deliberately set out to bring about a breach in an enforcement order or to interfere with its performance and that must be the result he has in view.

In the debate at Report stage a number of anxieties were raised as to whether this basis of liability was sufficiently narrow to provide a proper level of protection for trade unions and their members, and indeed for employees generally in the area of industrial disputes. In particular, the noble Lord, Lord Donaldson of Kingsbridge, and the noble Lord, Lord Tordoff, as well as noble Lords immediately opposite, suggested, as I recall, that in some circumstances it might be very difficult to separate out the purpose of disrupting the employer's business which, however much it may be regretted, is frequently a part of serious industrial action, from the ultimate purpose of achieving whatever industrial objective is in view—improved terms and conditions of employment, the avoidance of redundancies, or whatever might be the immediate matter of concern. The Government bring forward these amendments in order to meet those difficulties.

Before I go on to explain what I believe to be the effect of the amendments, I should say that this is a very delicate area. There is a balance to be preserved. Enormous harm can be done to particular members of the public, particularly in the business community, by interference with their telecommunication service. Any narrowing of the range of the liability imposed by this clause has to be scrutinised most carefully to ensure that we do not go too far. On the other hand, the Government recognise that within the appropriate limits the freedom of trade unions as representatives of employees, and indeed of employees themselves, to engage in industrial action against their employers ought not to be, within these proper limits, inhibited. So although we did not entirely share the anxieties expressed in the debate, we have attempted to meet them, while preserving what we regard as the essential balance in this highly delicate and difficult area, with this amendment.

The effect of the amendment is to change the basis of liability for the actionable wrong of inducing the breach or interfering with the performance of an enforcement order. The actionable wrong will exist not where the defendant merely has as his purpose or part of his purpose the bringing about of the breach or interference, but only where he has as his purpose or part of his purpose the causing of damage or loss to the person affected by the breach or interference. Paraphrasing the amendment in ordinary language, to establish that there is a liability under this provision, the plaintiff (and I emphasise that it is the plaintiff or the claimant who will have to prove this) will have to establish that the defendant deliberately set out to cause damage or loss to the plaintiff by inducing a breach of a licence enforcement order imposed by the director. There can be no question of liability arising merely because the defendant sought to bring about the breach, which may be a necessary part of his tactics in harassing his employer; he must also have sought to damage the other party—the plaintiff—by means of the breach.

I hope that this explanation will be enough to convince your Lordships that we have gone as far as we can to ensure that there is scope under the Bill for legitimate pursuit of industrial action. But it is not acceptable that in this highly sensitive field a trade union, or indeed employees generally, should be free deliberately to set out to bring about a breach of an enforcement order for the purpose of causing loss or damage to customers of telecommunication operators by depriving them of the service to which they are entitled and which has been guaranteed to them by an order of the director. An enforcement order will have been made by the director under all the controls and subject to all the constraints imposed by this Bill. It will in a very real sense be the law of the land.

Your Lordships will remember that these amendments and the basic clause with which we are now dealing on this aspect was introduced in substitution for criminal sanctions which have been in the law in roughly equivalent form for a very long time. We consider that we are making a very substan-tial advance by the change which we originally made. We are endeavouring to adjust the balance as finely as we can in this area, and this is the purpose of these amendments. I beg to move.

Lord Wedderburn of Charlton

My Lords, as the noble and learned Lord has explained so very carefully the nature of these amendments, it is perhaps not improper to relate them to the amendment which it was not proper for my noble friend to move. Very briefly, perhaps the noble and learned Lord can clarify two points further to his very profound clarification so far. First, it still is a little difficult for my noble friends and I to understand the distinction that he makes concerning the need for liability under this subsection. The case that he made, if I have not misunderstood it, was that a defendant (who of course will normally be a trade union or a trade union official) will be liable if he induces a breach of the duty as part of his purpose. That at least is the beginning point before the amendments come into play. It is not enough, he says, that he intends to do that. It must be one of the things that he is setting out to do.

With great respect, there has always been a misapprehension on the Government's part as to this matter. Industrial action is of course taken primarily normally to improve the conditions of those who are taking it. It is, however, always part of the consequence of that action that it interferes with the business in question, and it must lead in the majority of the cases which by hypothesis we are discussing to a non-performance of the relevant duty under the order. Therefore to say that someone must set out to induce a breach of the order rather than intend to do it seems very strange. I suggest that you set out to do what you intend to do and you intend to do what you set out to do, at any rate in industrial action in the normal case.

It is just not the case that the courts would take the view that the noble and learned Lord proposes, in my submission. If one looks at the analogous case law concerning the liability for inducing a breach of contract (which is of course the parallel in industrial action), the test of intention (which is surely the one that the courts will use to test purpose) is that set out in the judgment, for example, of the noble and learned Lord, Lord Diplock—Lord Justice Diplock as he was in 1966—when he stated that: The element of intent needed to constitute the tort of unlawful procurement of a breach of contract is, in my view, sufficiently established if it be proved that the defendants intended the party procured to bring the contract to an end by breach of it if there were no way of bringing it to an end lawfully. A defendant who acts with such intent runs the risk that if the contract is broken as a result of the party acting in the manner in which he is procured to act by the defendant, the defendant will be liable in damages to the other party to the contract". The principle that a defendant is taken to intend, and to have the purpose of intending, the natural consequences of his acts has been applied by the courts in those cases, and would it not be applied here? As the clause stood, and as it was to be confronted by the amendment to which we could not address ourselves, it still seems to my noble friends and to myself to be very unsatisfactory; which leads to the second and the third point, very briefly.

The Government—presumably acknowledging that it is unsatisfactory, as the noble and learned Lord suggested—now come to the matter by a different route and attempt to cure the difficulty by introducing, as I understand it, the new test of liability: that the defendant will be liable only if in organising his industrial action he deliberately intended damage to the plaintiff—almost a test of malice. That of course is an entirely new test. It is profoundly different from anything put forward before. It is very unsatisfactory to have such a profound change brought forward on a Third Reading. It rests entirely on subjective purpose and presumably it rests upon predominant purpose. To say now that someone wholly or partly intends damage for the plaintiff raises the issue of how far the part must go. In other words, the "wholly" or "partly" now relates not to an objective matter but to a subjective one. I was not clear from the noble and learned Lord just in what way he expected the courts to judge whether there was a sufficient partial malice or intent to do damage to create liability, because of course that would be a matter of very great import to those who wish to maintain the liberty of withdrawing their action collectively when they might be said to be intending damage to the employer in a way which the new amendment requires for liability.

The third thought, in a sentence, is simply this: is not that difficulty further proof of the fact that it would have been better for the Government to accept the time-honoured way of dealing with this matter; namely, to allow for the normal law of trade union immunities—or such as are left and such as will be left after the next Bill on the matter and no doubt the next Bill after that—to apply to workers in this area as they apply to workers in other areas, by accepting that there would be no liability in contemplation of furtherance of a trade dispute? I do not ask the noble and learned Lord to agree with me immediately; but I wonder whether, on further reflection, he would not feel that the new test of malice will be an unfortunate one to have to apply in trade disputes and that the old wisdom of the test of furtherance of trade dispute defence would not perhaps have been better.

Lord Mackay of Clashfern

My Lords, I think that the situation so far as I am concerned is that this amendment is put down by us in order to deal with questions that were raised on the preceding occasion. In considering this matter I have had particularly in mind the way in which these questions were dealt with in this House, sitting in its judicial capacity, in the Crofter Hand Woven Harris Tweed case with which the noble Lord, Lord Wedderburn of Charlton, will be extremely well acquainted.

A noble Lord

It is a Scottish case.

Lord Mackay of Clashfern

As the noble Lord observes, it is a Scottish case—and from my point of view all the better for that! Lord Simon, who again perhaps had qualities that were relating to that particular situation, said in that case: In some branches of the law, intention may be understood to cover results which may reasonably flow from what is deliberately done, on the principle that a man is to be treated as intending the reasonable consequences of his acts. Nothing of the sort appears to be involved here. It is much safer to use a word like 'purpose' or 'object'. He then said, what is the reason why they did it? I am not quoting fully. Passing on to another relevant passage, he said: The test is not what is the natural result to the plaintiffs of such an action or what is the resulting damage which the defendant realised or should realise will follow but what is in truth the object in the minds when they acted as they did. It is not consequence that matters but purpose. That is the reason that we have used this expression and then emphasised the purpose of damage to the other party. That is the reason that I consider that these amendments do make plain the correct balance in this very difficult area.

Lord Wedderburn of Charlton

Before the noble and learned Lord sits down, would he agree that if he reads on in the relevant passage of Lord Simon, we will find that the noble and learned Lord said: The analysis of human impulses soon leads us into the quagmire of mixed motives, and even if we avoid the word 'motive', there may be more than a single 'purpose' or 'object'. It is enough to say that, if there is more than one purpose actuating a combination, liability must depend on ascertaining the predominant purpose. It was precisely that passage that I had precisely in mind in wondering whether the noble and learned Lord was going to say that it was now the predominant purpose which would create liability. I do not think he answered that question.

Lord Mackay of Clashfern

I think as the noble Lord will appreciate as he reads the clause as amended by amendments that we are proposing, that the result is to test the question of whether the act which induces a breach of duty or interferes with its performance causes that person to sustain loss or damage and is done wholly or partly for the purpose of achieving that result. In other words, if part of the purpose is the achieving of the result of damage to the plaintiff, then liability would be established. But of course it would be for the plaintiff or the claimant to prove that.

5.48 p.m.

Lord Mackay of Clashfern moved Amendment No. 35:

[Printed earlier: col. 376.]

Lord Bruce of Donington moved Amendment No. 36:

After Clause 45, insert the following new clause:

("Disclosure of information

—(1) A person who otherwise than in the course of his proper duty as an employee of a telecommunications operator licensed under section 7 above—

1. (a) intentionally discloses information relating to the destination, duration or cost of a user's use of a telecommunication system licensed under section 7 above; or
2. (b) instigates any person engaged in the business of a licensee to disclose information relating to the user's destination, duration or cost of a user's use of a telecommunication system licensed under section 7 above,

except at the request of the said user, or unless acting in obedience to a warrant issued pursuant to the following provisions of this section, shall be guilty of an offence and liable on conviction on indictment to a fine not exceeding £5,000 or to imprisonment for a term not exceeding three years or to both.

(2) Proceedings for an offence under subsection (1) above shall not be instituted in England or Wales except by or with the consent of the Attorney General, or in Northern Ireland except by or with the consent of the Attorney General for Northern Ireland.

(3) The Secretary of State may, on the application of a chief officer of police or the Commissioners of Custom and Excise, issue a warrant for the disclosure of information, if he is satisfied that—

1. (a) it would assist in the detection of a serious offence;
2. (b) normal methods of investigation have been tried and have failed or from the nature of things are unlikely to succeed if tried; and
3. (c) there is a good reason to think that the disclosures would result in a conviction for that offence.

In this subsection "serious offence" means—

1. (i) an offence for which a person not previously convicted could reasonably be expected to be sentenced to imprisonment for a term of three years: or
2. (ii) an offence in which either a large number of people is involved or there is good reason to apprehend the use of violence or the financial rewards of success are very large.

(4) The Secretary of State may. on the application of a Chief officer of police or the Director General of the Security Service issue a warrant for the disclosure of information if he is satisfied that—

1. (a) it would assist in the detection of a major subversive, terrorist or espionage activity giving rise to external or internal danger to the Defence of the Realm; and
2. (b) normal methods of investigation have been tried and have failed or from the nature of things are unlikely to succeed if tried.

(5) An application for a warrant under this section shall be made in writing and shall specify—

1. (a) the person about whom the information is sought, and the nature of the information in question; and
382
2. (b) the facts and circumstances in support of the application.

But the Secretary of State may allow any information required under paragraph (b) above to be provided orally and not in writing in respect of an application for a warrant under subsection (4) above.

(6) Except in case of an emergency any warrant under this section shall be issued only under the hand of the Secretary of State; and, in any such case, shall be confirmed under his hand as soon as reasonably practicable after issue.

(7) Any warrant issued under this section should carry a time limit not exceeding two months from the date of issue and may be renewed for not more than one month at a time in the case of an application of the police, not more than two months at a time in the case of an application of the Customs and Excise, and not more than six months at a time in the case of an application of the Security Service.

(8) In this section "disclose" includes the doing of any act designed to enable a disclosure to take place, and "disclosure" and "discloses" shall be construed accordingly.

(9) Nothing in this section shall prevent a telecommunications operator licensed under section 7 above to collect and publish statistics on the operation of his telecommunication system.").

The noble Lord said: My Lords, I beg to move the amendment standing in my name. Your Lordships will recall that this question relating to the disclosure of information was dealt with in part by an undertaking given by the Leader of the House in respect of the intention to introduce specialist legislation in dealing with the whole question of telephone tapping. Your Lordships will recall that the noble Lord, Lord Mishcon, on our behalf, withdrew the amendment at a later stage when the original text of the Bill was reintroduced on Report. The noble Viscount, in the course of his undertaking, mentioned that it was his intention, when bringing proposals to deal with telephone tapping, to deal also with disclosure of information, which is of course the subject of the next amendment.

I said that in those circumstances I would not move the amendment at that stage and wait for discussions through the usual channels. Discussions have taken place, and I should like to inform the noble and learned Lord just where our anxieties are in connection with this whole question of disclosure, as distinct from telephone tapping. Interception itself implies the deliberate act of interception of matters that are normally confidential between the person making the call and the person receiving it. This particular clause, which is the subject of this amendment, deals with a slightly different circumstance. It is designed to protect the public in circumstances where there is, as distinct from deliber-ate interception, automatic monitoring; and it is the disclosure of information that can be derived from automatic monitoring about which we are concerned.

The noble and learned Lord will be aware, and his advisers will have told him, that the Miracle apparatus, for example, enables the monitoring of the duration of calls, their origin and all the rest of it, as described in this amendment itself. There are further technical developments on course now which may result in that being done, even more efficiently and even more automatically. Quite clearly, information of that nature will arise from the introduction of the apparatus—in the case of Miracle, its progressive introduction—and at a later stage by means of more efficient methods that are already in contemplation.

If the noble and learned Lord can inform us that the Government are already seized of the essence of the problem and that steps can be taken to deal with it at the same time as the whole interception business is dealt with, we shall to some extent be reassured, because we do not want automatic monitoring to replace or to supplement direct interception. We do not mind the monitoring taking place for the ordinary purpose of measuring the duration of a call and for charging purposes, and so on, but information will be derived from that which ought to be confidential, save in the performance of the operator's normal course of duty. Perhaps the noble Lord can give an indication of which area the Government's mind is covering on this particular point, as well as a rough indication of how it is proposed to deal with it in the legislation to which the noble Viscount. Lord Whitelaw, referred. I beg to move.

Lord Mackay of Clashfern

My Lords, this amendment seeks to establish a statutory procedure for the disclosure of information about a customer's use of the telephone system. It does so in a way which closely mirrors the arrangements described in the White Paper, The Interception of Communications in Great Britain, for the authorisation of interception by warrant under the hand of the Secretary of State. These arrangements were discussed by your Lordships during the Committe stage of the Bill and, as has been mentioned, my noble friend the Lord President gave an undertaking on Report that the Government would bring forward legislation on the interception of communications in the next Session of Parliament. It was recognised in the debate that took place that interception is an exceptionally difficult and sensitive subject. The Government took careful note of the genuine concerns expressed in your Lordships' House and responded with what I think the whole House recognised as an exceptionally clear and firm undertaking.

The drafting of the present amendment suggests that there is a close similarity between the disclosure of information about a customer's use of the telephone system, and interception, and that the two ought to be regulated in much the same way. There are of course circumstances in which the disclosure of information about a subscriber's use of the telephone system can be an intrusion into the privacy of the subscriber, who may well not wish a third party to know with whom he has been in communication. But I do not believe that this disclosure of metering information raises quite the same acute questions of personal privacy as does interception, nor, therefore, that we should automatically assume that it must be regulated in the same way as interception.

We are talking here about information derived from the metering of telephone lines primarily for account-ing purposes. The information concerned is therefore a matter between the subscriber and the telecommunications operator and does not involve any disclosure of the content of the subscriber's conversations with other subscribers. One might perhaps draw an analogy with a travel agent, one of whose clients has bought a ticket to travel to a certain destination. The travel agent might in certain circumstances consider it his duty to disclose that fact to the police if it turned out, for example, that the client was a fugitive from justice.

There are of course a variety of circumstances in which an individual or organisation may be able to assist the police with information about the movements or whereabouts of a wanted person. The disclosure of metering information by a telecommunications operator is a similar instance where the public good may override the duty to preserve the privacy of information that has been obtained about a client's contacts or movements. One certainly does not wish to deny that some issues of privacy are involved, but that is the case with almost any form of investigation that the police may undertake and the issues are not, I would suggest, nearly so sensitive as those connected with interception.

The disclosure of information derived from metering is one of the issues that has been raised in the Malone case, which is presently before the European Court. The Government's submissions to the court have made clear the distinction which the Government see between the disclosure of metering information and interception. We recognise, however, that the court may conclude that metering raises issues under the European Convention and that its findings might include criticisms of our present arrangements.

In his speech during the Report stage of the Bill my noble friend the Lord President indicated that the Government would consider the implications of any such findings in the context of the legislation on interception which he undertook would be brought forward in the next Session. It may help your Lordships if I expand slightly on his remarks.

We cannot at the moment tell what, if any, the court's findings will be in relation to metering. The Government would of course have to take steps to respond to any criticisms that were made, and depending on the nature of the criticisms, legislation might be needed. The Government intend to look at the relevant findings in the context of the forthcoming legislation on interception, and if the Government judge that the best way to deal with the matter is to include provisions in the Bill on interception, that is how it will be dealt with. On the other hand, when we actually see the court's findings we might find that if there are any findings relevant to this matter, it would be more appropriate to deal with them in some other way, and as I have indicated, this may mean using some other legislative vehicle.

I hope that in the light of what I have said so far your Lordships' House will agree that it will be better to wait and see what the court has to say before we introduce new statutory provisions on this subject. Meanwhile, in our view the position is quite adequately covered in Clause 45(2) of the Bill, which already provides important new safeguards over the disclosure of the contents of statements of account.

There are also difficulties with the new clause which is now before us which would make it inappropriate even as an interim provision. For example, the new clause would mean that there could be no disclosure to the police, Her Majesty's Customs and Excise, or the Security Service, except under a warrant issued under the hand of the Secretary of State. Parliament rightly expects the Secretary of State himself to exercise personal control over interception, and his ability to do this effectively will inevitably suffer if we add further categories of case which he must supervise personally.

There are other difficulties with the clause as tabled. A significant one is that it makes no provision for the disclosure of metering information in criminal cases, except where serious crime is involved. But the great majority of meter check prints (other than in cases where there is a dispute over charges) are used to help identify the source of malicious or indecent calls, which were a subject of concern to my noble friend Lord De La Warr at an earlier stage. These do not qualify as serious crime, as we shall see if we compare the penalties provided in Clause 43 for this kind of offence with the definition of "serious offence" that is given in subsection (3) of the proposed new clause. But, as I am sure your Lordships appreciate, this is something that can cause great distress to the victims, and I am sure that your Lordships' House would not want to close off an important means by which the telecommunications operator and the police can co-operate to put a stop to the activities of such callers. As your Lordships will appreciate, this is not covered by the exception which the clause provides for metering with the subscriber's consent, because it is the subscriber at the other end of the call one wants to find out about.

Perhaps I may summarise the position in the following way. In our view, the disclosure of informa-tion about a customer's use of the telephone does not raise precisely the same issues as does interception, and I do not believe that it would be appropriate to decide now anything about the introduction of provisions going beyond what we already have in Clause 45. Even if a case for further provisions were made out, the clause which is now before us (that is to say, the clause proposed in the amendment) has a number of serious drawbacks which we do not have the opportunity properly to discuss or correct at this stage in the passage of this Bill, and therefore it would be far better to judge the need for, and scope of, any additional measures in this area when we have received the judgment of the European Court. I hope that, in the light of those observations, the noble Lord will feel able to withdraw the amendment and that his purpose in putting it forward and moving it on this occasion has been served.

Lord Bruce of Donington

My Lords, I am greatly obliged to the noble Lord for his very full statement. In the light of what he says, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 47 [General functions]:

Lord Lyell moved Amendment No. 37: Page 45, line 40, leave out from ("any") to end of line 41 and insert ("matter in respect of which any function of the Director is exercisable").

The noble Lord said: My Lords, this is drafting and I assure your Lordships is designed to aid general understanding of the Bill. Your Lordships will see that, as it stands, Clause 47(4), at the bottom of page 45 of the Bill before us today, places a duty on the director to give, as can be seen in line 38, information, advice and assistance to the Secretary of State".

as regards any of the matters in respect of which the Director has a duty under this section".

What we intended by this was that the director should give advice on all matters coming within his functions. We had thought previously that the duties in Clause 47(1) and (2) were widely drafted, indeed so widely drafted, to cover this point. But, on reflection, we have decided, for the removal of all doubt, that it would be helpful to spell out this intention more clearly. That is the entire purpose of the amendment. I beg to move.

Clause 52 [Investigation of Complaints]:

Lord Lyell moved Amendment No. 38: Page 50, line 37, after ("if) insert ("he is required to do so or if).

The noble Lord said: My Lords, for the convenience of your Lordships, I should like to speak also to Amendment No. 39.

Amendment No. 39:Transpose Clause 52 to after Clause 48.

These two amendments are designed to improve and to help the understanding of this clause which, as your Lordships will see, places a duty on the director to consider complaints and representations made to him. This is, as we have found going through the Bill, a very important clause since such complaints and representations will be one of the main routes by which the director will be informed of all those matters in respect of which he should exercise his functions under the Bill.

One of the most important of these functions is to ensure compliance with licence conditions under his powers that we have always found in Clause 16 and shall continue to find them there, we hope. Your Lordships will see that Clause 16 places a duty—I stress the word "duty"—on the director to act where he is satisfied that there has been, or is likely to be, a breach of a licence condition. One of the ways in which he will become aware of possible breaches is by complaints and representations made under Clause 52. Therefore, since he has a duty to act under Clause 16, we think it appropriate to make reference to this requirement to act in subsection (3) of Clause 52. That is what Amendment No. 38 does. It inserts the words, he is required to do so or if.

Amendment No. 39 simply moves Clause 52 from its present position in the Bill to a place earlier in Part III. We think that this is appropriate in view of the importance of the clause, particularly in informing the director of matters relevant to the exercise of his functions. I give one example. The director is likely to exercise his functions under Clause 49 after he has received a complaint under Clause 52. We therefore think it sensible to bring Clause 52 forward. I beg to move.

Lord Lyell moved Amendment No. 39.

[Printed above.]

Clause 54 [Power to establish advisory bodies]:

Lord Lloyd of Kilgerran had given notice of his intention to move Amendment No. 40: Page 52, line 22, at end insert ("and who, not being employees of British Telecommunications nor of its successor companies, are members of trade unions.").

The noble Lord said: This proposed amendment was set down as another attempt to persuade your Lordships that members of trade unions as such should be considered for membership of the advisory bodies now to be set up by the Secretary of State under Clause 54.I have considered carefully what the noble Lord the Chancellor to the Duchy of Lancaster said on 19th March, at column 1078 of Report stage, and in view of the advice I have been given that this amendment it is not in order for Third Reading, I do not propose to move it.

[Amendment No. 40 not moved. ]

Clause 60 [Vesting of property etc. of British Telecommunications in a company nominated by the Secretary of State]:

Lord Stoddart of Swindon moved Amendment No. 41: Page 57, line 6, after ("appoint") insert ("which shall not pre-date the publication of the findings of a Committee of Inquiry appointed by Her Majesty's Government to examine all aspects of UK telecommunications policy").

The noble Lord said: My Lords, noble Lords will recall that we had a previous debate that suggested some delay on 20th March, the final day of the Report stage. Our proposal then was to defer the operation of Part V of the Bill until after 9th June or not before 9th June 1988.I had not intended that amendment to be a wrecking amendment. But having read the debate, and read it pretty thoroughly, I can understand why many noble Lords saw it as such. However, it is clear from the debate that there remain, in spite of the doubts about its being a wrecking amendment, considerable worry and doubt about the implications of Part V of the Bill and its likely effects.

The noble Lord, Lord Lloyd of Kilgerran, for example, in a most apposite speech, recorded in columns 1112 to 1115, made a penetrating analysis of Part V. Although he expressed himself as not being enamoured of the interval of time proposed in the amendment, he nevertheless believed that it was desirable that there should be some postponement for further thoughts on the likely consequences of Part V and to allow British Telecom time to adjust to the changes that would be brought about by this part of the Bill.

The noble Lord, Lord Somers, understandably expressed the view that the amendment moved at Report stage had been made the occasion to convert the whole matter into an election issue. It was perfectly reasonable that he should object to the amendment on that basis. Nevertheless, he made clear that he had objections to the Bill of a similar sort to those which I had expressed in my speech. The noble Lord, Lord Diamond, although opposing my previous amendment, nevertheless believed that there may be some merit in delaying the Bill for perhaps 12 months on the basis, for example, that the Stock Exchange is at present suffering from indigestion.

The amendment I am proposing takes into account all these views and recognises the considerable opposition to Part V during all stages of the Bill. It certainly cannnot be described and should not be taken as a wrecking amendment. It is a genuine attempt to get some period of delay while other thoughts that have been put forward from all parts of the House are taken into account. Indeed, there is every reason to have a quick inquiry into telecommunications policy before Part V is brought into operation. The Government themselves have been unable to show the way forward clearly and precisely. That is important. The Government should be leading on this and showing Parliament and the people the way forward in telecommunications policy.

There is, for example, confusion about objectives. On the one hand, Government Ministers laud the benefits of free competition and, on the other hand, seek to persuade Parliament that it is a necessary prerequisite of free competition to convert a public monopoly into a private one. That really is a paradox. A committee of inquiry could give attention to this apparent paradox and would be able to establish whether the Government guarantee not to licence other competitors to British Telecommunications for seven years had any other purpose than to protect Mercury from competition outside British Telecom itself.

An inquiry could also establish whether competition was desirable or undesirable in itself, and might well suggest ways and means as to how competition, if it were felt desirable, could be best achieved. An inquiry would also be expected, I imagine, to consider the financial implications of the proposed flotation of BT shares, and the effect it would have on the stock market itself as well as on other financial institutions. Certainly I would expect—and Parliament ought to consider this to be essential—that a committee of inquiry would want to consider the possibility, or perhaps even the probability, that foreign countries would gain a significant slice of British Telecom shares and therefore ownership and control of the British telecommunications service and of future telecommunications policy.

I believe that this amendment is helpful. I hope that it is helpful to the House; I hope that it is helpful to the telecommunications industry generally; and, indeed, I also hope that the Government will consider it helpful as well. They have been going through a pretty rough patch lately, and it seems to me that if they were to accept this amendment it would give them a short breathing space to reconsider the matter that I have mentioned. Indeed, it might prevent further mistakes from being made which would attract public attention and, perhaps, under certain circumstances, public condemnation.

The delay that would be engendered by a short inquiry would not really hurt the Bill; nor, in fact, would it conflict with the Government's objectives. Therefore, I hope that the Government will accept this amendment from us tonight. But I should like to consider what they have to say before deciding whether to press it to a Division.

Lord Cockfield

My Lords, hope springs eternal, and nowhere more than in the breast of the noble Lord, Lord Stoddart of Swindon. The noble Lord went to considerable length to try and explain that this was not a wrecking amendment. I entirely accept that his motives are pure, but I regret to say that I cannot say the same for his amendment.

The amendment is, at best, a dilatory amendment designed to hold up the process of privatisation while this particular body pontificates upon the issue. We all know what happens when we refer matters to committees of inquiry, to Royal Commissions or to bodies of that type. But quite apart from that, the amendment in fact cuts across the whole purpose of one of the main provisions in the Bill.

When we discussed this issue before I said that we had a manifesto commitment on this matter in the most specific terms. I read the words out then, and perhaps 1 might read them out again: 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.—[Official Report, 20/3/84: col. 1117.] That was an absolutely specific commitment. There is no reference in it to committees of inquiry; there is no reference in it to delays while committees of this type sit on the matter. We won the general election, as the noble Lord well knows, and we have a mandate for this major part of the present Bill.

There is sometimes an argument for setting up a committee of inquiry when one knows that there is a problem but one does not know the answer to that problem. Therefore, instead of making up one's own mind one delegates it to a body or a committee or a commission. But that is not so in the present case. There is undoubtedly a problem, but the answer to that problem we have incorporated in this Bill. The Government's views on this are absolutely clear, absolutely specific, and there is no purpose whatever in appointing a committee of inquiry.

There is another aspect of this matter. I am quite sure that the noble Lord, Lord Stoddart of Swindon, did not intend it, but in some ways I find this amendment rather derogatory of your Lordships. I do not know a Bill which has been examined in greater detail than this one. I do not know a Bill where every single provision has been looked at, considered and, in many instances, amended. In fact, from time to time there have been complaints about the very large number of amendments that the Government themselves have moved. But whatever complaint there may be on that score, at least it disposes altogether of any suggestion that the provisions of this Bill have not been examined with the utmost care by your Lordships. Where it has been the wish of the House that amendments should be made, I have always done my best on behalf of the Government to meet the wishes of your Lordships. I feel, therefore, that for us now to say that all of these efforts have been of no avail and that what we need is a committee of inquiry to go over everything that we have done, and to tell us whether what we have done is right or wrong, is something that I find not only unnecessary but faintly objectionable.

The noble Lord, Lord Stoddart of Swindon, referred to the speech made by the noble Lord, Lord Diamond. I am very sorry that the noble Lord, Lord Diamond, is not here this afternoon because I thought that his speech was a very statesmanlike one. and a speech which showed great penetration. It is important to make the point that the noble Lord, Lord Diamond, of course was opposed to the principle of the Bill. Therefore, I am not quoting something said by somebody who was in favour of the Bill; I am quoting something said by somebody who was opposed to the Bill. The noble Lord, Lord Diamond, said: 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". I shall then leave out a few additional words. The noble Lord went on to say: 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",—[Official Report, 20/3/84; col. 1122.] That is what the noble Lord, Lord Diamond, said. I personally believe that he was entirely correct in what he said. This amendment is both unnecessary and also wrong in the sense that it is endeavouring to strike down one of the major provisions of the Bill which was approved by your Lordships on Second Reading. On those grounds I hope that your Lordships will decisively reject the amendment.

Lord Stoddart of Swindon

My Lords, with the leave of your Lordships I should like to reply briefly to one or two of the points that were made by the noble Lord, Lord Cockfield. Of course one understands that political parties put forward manifestos at a general election, and one also understands that they may very well wish to put, and, indeed, perhaps should put those manifesto commitments into operation. But I am sure that the noble Lord was not suggesting that the Conservatives won the general election on the basis that they had gone to the country with the proposition to privatise BT and to sell 51 per cent. of the shares on the market. I feel quite sure that, had he put that proposition to the electorate—and that was the only proposition—the Government would probably have lost, and we should now be sitting on their side of the House. The general election was fought on quite different matters and the electorate made their decision on quite different grounds from the privatisation or otherwise of British Telecom.

The noble Lord, Lord Cockfield, also suggested that I was being derogatory to your Lordships. That is the last thing that I would do; I have far too much respect for your Lordships than to try to do that. Our reason for proposing that there should be a committee of inquiry is not to suggest that your Lordships have not examined the Bill in Committee, on Report and, indeed, at this stage in the most intensive way. Your Lordships have. I have been very impressed, very pleased and, in fact, proud to be a member of a body that does it so well.

However, we are circumscribed by our own rules and constitution. We cannot at any stage, for example, examine witnesses. We cannot move around the country. We cannot go into BT's headquarters or Mercury's headquarters and talk to Sir George Jefferson. A committee of inquiry would, in fact, be able to do those things, whereas your Lordships in a Committee stage or a Report stage of the Bill cannot. That is the difference between this House and a committee of inquiry. That is why we have suggested a committee of inquiry—not to be derogatory to your Lordships, but because we feel that it would be ancillary to what has already been done, and been done so well, in the hours of debate which we have had in this House.

Finally, I should like to refer to the speech which was quoted by the noble Lord, Lord Cockfield, which was made by the noble Lord, Lord Diamond, on 20th March on the subject of the previous amendment. I should like to point out that the noble Lord, Lord Diamond, was not commenting upon the present amendment; he was commenting upon the previous amendment, which he believed was designed to put off the operation of this Bill until after a general election.

This present amendment does not seek to do that under any circumstance at all. I think that the noble Lord, Lord Diamond, may have a very different view on this amendment. I believe that what he said on that ocassion had great merit, and I read very thoroughly what he said. As I explained at the beginning, it was after reading the debate that I felt that perhaps I had been mistaken in moving the previous amendment which could be described, and was so described, as a wrecking amendment. However, the remarks of the noble Lord, Lord Diamond, were related to that amendment, and not to this amendment. I have heard what the noble Lord, Lord Cockfield has said and I have heard the remarks of your Lordships. Under all the circumstances, I shall not press this amendment today. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 70 [Application of law in relation to offer of shares or debentures of the successor company]:

6.25 p.m.

Lord Bruce of Donington moved Amendment No. 42: Page 65, line 12, leave out from ("offer") to end of line 13 and insert ("the successor company's activities, its business, trading, financial and technical position; its trading record during the preceding 5 years and its profit forecast").

The noble Lord said: My Lords, I beg to move the amendment standing in my name and the names of my noble friends. This amendment and the following ones concern, of course. Clause 70, which was briefly discussed by your Lordships on Report. Your Lordships will recall that the terms of Clause 70, which relates to the: Application of law in relation to offer of shares or debentures of the successor company",

were on the footing that, in view of the fact that the application forms for shares would be sent to a very large number of people—possibly including subscribers but by no means confined to them—it was desirable that there should be a shorter form of prospectus. To this argument I, on behalf of my noble friends, dissented. But that was the footing on which the clause itself was discussed.

It was on the footing that a full prospectus would be available and would be advertised in at least four national newspapers; that a full prospectus would be filed with the Registrar of Companies so that, even though the large number of people to whom applica-tion forms were sent would only have a brief, abbrevi-ated prospectus, nevertheless the full prospectus would be available for inspection and would be available to those who had received a short form of description with the application form and who would probably wish to discuss the matter with their legal advisers, who might then wish to peruse the full prospectus.

It was nowhere anticipated that there would be any question but that the full prospectus would be embarked upon. I am, of course, referring to the full prospectus in accordance with the provisions of the Fourth Schedule to the Companies Act 1948 and, of course, in compliance with Sections 37 to 41 of the Act itself.

If your Lordships look at Clause 70 itself you will observe that "prospectus", described in one form or another, abounds. There are five mentions of the simple word "prospectus" there are four mentions of the words "full prospectus"; and there are two mentions of the words "the offer prospectus". I am quite sure that the noble Lord's advisers have meant this clause to be extremely clear, but I must say that it is far from clear and, if the noble Lord will permit me, I should like to address this question to him.

On the assumption that the clause becomes operative, is it the Government's intention that, in addition to the abbreviated form which will go with the application forms, the full prospectus as required by the Stock Exchange will in fact be published and will in fact be available? I ask the question because, although no indication was given to us in the course of the debate in this House, in another place in answer to a Written Question on 27th March concerning exemptions from the rules, at col. 106 Mr. Kenneth Baker said this: Exemptions from the prevailing rules would be sought if necessary but whether such exemptions would indeed be needed will not be clear until closer to the offer for sale".

Your Lordships will be aware that under Section 39 of the Companies Act 1948 there is provision for the exclusion of the more rigid rules relating to prospec-tuses in the circumstances outlined. I have to read Section 39 to your Lordships because it is of a little importance. It says: Where—

1. (a)it is proposed to offer any shares in or debentures of a company to the public by a prospectus issued generally (that is to say, issued to persons who are not existing members or debenture holders of the company); and
2. (b)application is made to a prescribed stock exchange for permission for those shares or debentures to be listed on that stock exchange;

"there may, on the request of the applicant, be given by or on behalf of that stock exchange a certificate of exemption, that is to say, a certificate that, "having regard to the proposals (as stated in the request) as to the size and other circumstances of the issue of shares or debentures and as to any limitations on the number and class of person to whom the offer is to be made, compliance with the requirements of the Fourth Schedule to this Act would be unduly burdensome."

This is the first indication, on 27th March, that there is any intention by the Government to seek exemption in any way from the full prospectus requirements. For that reason I set down an amendment, which has been ruled as being out of order and therefore which I do not pursue, to leave out the whole clause, because, as your Lordships will appreciate, in the normal way unless it is intended to do something a little out of the ordinary there is of course no need for Clause 70 at all. If Clause 70 were not in the Bill the issue of the shares, the issue of the prospectus, and everything else would take place according to the provisions of the Companies Act 1948. This is evidently not to be the case.

Irrespective of that argument, and on the assumption that the original intentions, as we understood them, apply we consider that it is necessary for the abbreviated prospectus to contain rather more, and to be required to have, more information with it than is described in subsection (2) of the present Clause 70. Subsection (2)(a) at the moment reads: a brief description of the shares or debentures offered, the terms of the offer, the successor company's business and its financial position".

That does not cover very much.

What we should like to do is to ensure that if the people who are the recipients of invitations to subscribe for shares in the successor company are to be denied the full prospectus, they should at least be informed of the successor company's activities, its business, trading, financial and technical position—these are well-known business terms with which the noble Lord will be familiar, and are certainly familiar to accounting circles—and its trading record during the preceding five years, and its profit forecast. Those particular requirements are far less exacting than are those of the Stock Exchange, which require full prospectuses to go into much greater detail than that. But we think it fair on this side of the House that before subscribers, or anyone else, are going to be invited to subscribe they ought to have this minimal information.

On the assumption that a full prospectus is somewhere available and is in fact going to be made available, we feel that subsection(2)(b) ought further to be amended to specify the places where the prospectus should go. We therefore think that the full propectus should go to every post office or sub-post office in the United Kingdom where it can easily be inspected. Then we think also that it should be prominently stated, and should be known by the people to whom the invitations to subscribe for shares are sent, that the full prospectus has first been returned to the Registrar of Companies in accordance with Section 41 of the Act of 1948; secondly, that it is a prospectus for the purposes of Sections 37 to 41 of the Companies Act 1948; and, thirdly, complies with the Fourth Schedule to the said Act of 1948; and that the application for full listing submitted to the Stock Exchange has been accepted. We think that that would be reassuring to the general public to whom invitations are sent to subscribe for the shares or debentures in the successor company, and that it is the minimum assurance that they should get.

The next amendments, Nos. 46 and 47, which insert the word "full" in front of "prospectus" are for the avoidance of doubt. It may be that they are unneces-sary. I am sure that the noble Lord understands Clause 70 far better than I, because I find the greatest difficulty with it (and I am not entirely unaccustomed to reading law) and it may be that the word "full" before "prospectus" in the lines I have indicated is not necessary, and that it is the intention that the term "prospectus" used there refers to full prospectus. If that is so, then of course those amendments will be completely unnecessary.

It has always been our understanding that whatever shortened form of "prospectus" or description be issued to the subscribers, by advertising in the four national newspapers, by filing with the Registrar of Companies, and by placing it where the prospectus should be placed, it would in fact be a full prospectus. If the noble Lord gives me that assurance, then the word "full", as set out in Amendments Nos. 45, 46 and 47, becomes unnecessary. However, on the assumption that I am right, the amendments may be fairly helpful to the Government in clarifying their true position.

Many of us feel that governments should not use their position and their powers of persuasion to seek to induce the Stock Exchange to depart from the high standards which they have adopted, and which have similarly been adopted by the accountancy profession by reporting accountants who perform the various functions assigned to them in the drawing up of a prospectus. We feel that there is no cause for exemption, particularly in the light of the fact that, as the noble Lord well knows, the accounts for the last two years have in any event been subject to severe audit qualifications. I hope that the Government and the House will give these matters their earnest consideration because they raise fundamental questions of principle. I sincerely hope therefore that the noble Lord will find himself able to accept the amendments. I beg to move.

The Deputy Speaker (Lord Jacques)

Amendment proposed, page 65, line 12, leave out from ("offer") to the end of line 13 and insert the words as printed on the Marshalled List. I should point out a printing error in line 1 of the Marshalled List. Line "15" should read line "13".

6.40 p.m.

Lord Mackay of Clashfern

My Lords, the noble Lord, in moving his amendments—and I think he has moved all the amendments in relation to Clause 70 with which he wished to deal—suggested that the principal concern was with respect to whether or not a full prospectus would be issued. I think he was particu-larly concerned whether or not there had been resort to some very short form of prospectus. The situation is, as your Lordships will see, that in this section "full prospectus" means a prospectus which complies, or is deemed to comply, with the requirements of Schedule 4 to the Companies Act 1948.

The question was asked, "Is it the Government's intention that, as well as the notice, the full prospectus will in fact be published and available?" The answer is, yes. The answer given in another place to which the noble Lord, Lord Bruce, referred I think mentioned the possibility that some exemptions might be asked for from the Stock Exchange. That, of course, would be a matter for the Stock Exchange. Exemptions are given by the Stock Exchange if they are satisfied that a proper case for it has been made out, and there is no suggestion of any shortening of the prospectus in respect of any basis except that. There is nothing unusual or dubious about a matter of that kind being referred to the Stock Exchange.

As my right honourable friend's answer indicated, and as the noble Lord read it, a decision about that matter would be required to be made nearer the time. So far as that is concerned, the Government's case would be dealt with under the section in the usual way. I emphasise that we intend that there shall be a full prospectus published in the normal way and very widely circulated.

I pass from that, which is the basic question, to the amendments. So far as Amendment No. 42 is concerned, in our view, speaking generally, the phrase already in the Bill would cover sufficient of this material to make this amendment unnecessary. There are certain aspects of the matter which this amendment might render rather difficult to fulfil in the circumstances of British Telecom. For example, the proposal requires the notice to include a profits forecast. The question of whether or not one has a profits forecast depends on the precise circumstances in which the prospectus is issued, and what the people who subscribe to the prospectus are prepared to say. It is a matter, therefore, of complying with the conditions in Schedule 4. In our view, to try to narrate the detail of what should go in the notice, as proposed in this amendment, is rather counter-productive.

Amendment No. 43 indicates the desire to mention every post office or sub-post office so far as the publica-tion of the prospectus is concerned. In this connection it is our intention that the prospectus should be made as widely available as possible to ensure that members of the public who receive the notice provided for in the clause should have ready access to the full prospectus. This is certainly our intention, and we are very firm that the full prospectus should be available extremely widely

We think, for example, that a very wide degree of access to the full prospectus is both necessary and desirable. The amendment might take us beyond what is reasonable and into unnecessary extremes. It would require the full prospectus to be available at each of the 1,500-odd main post offices in the country and in all of the 20,000 sub-post offices, as I understand it. It would be difficult and costly to provide a prospectus for every sub-post office in the country, and the task of ensuring that there was a prospectus in every sub-post office in good time would certainly complicate the logistics of the circulation of the prospectus, quite possibly to the detriment of our efforts to make the prospectus available elsewhere.

It would also, I suggest, be unnecessary to place a prospectus in every post office in situations where post offices happen to be close together and where there might perhaps be a number of other more suitable outlets, such as banks. Accordingly, making this a legal requirement would, it seems to us, put us into an unnecessary legal straitjacket, whereas the need to distribute the prospectus widely is clearly recognised and is our firm intention.

Amendment No. 44 suggests that statements to the effect there set out should go into the notice. It does not seem to me that it would be of any assistance to the people getting the notice. It is clear that the prospectus would require to conform with the legal requirement which were then in existence, and to put something in the notice about that is really putting it in an inappropriate place.

Amendments Nos. 45, 46 and 47 are seeking to put the word "full" into the conditions. The noble Lord, Lord Bruce, will see. I think, that the places in which he wishes to put the word "full" in subsection (3) of the clause are all conditions which require to be satisfied by the full prospectus. Subsection (3) is introduced by subsection (2): If the shares or debentures are offered by a full prospectus as respects which the conditions mentioned in subsection (3) below are fulfilled"— and then the rest follows. The conditions in subsection (3) are conditions which the full prospectus is required to satisfy if one reads it straight through. Accordingly, the words which he proposes are not required in subsection (3); they are already in the phrase "full prospectus" in the first line of subsection (2). I hope that in the light of what I have said the noble Lord will feel able to withdraw his amendments.

Lord Bruce of Donington

My Lords, I am very disappointed indeed that the noble and learned Lord the Minister has not felt himself able to accept immediately Amendments Nos. 42, 43 and 44. In his observations on Amendment No. 42 the noble and learned Lord seemed to gib at making a profits forecast. As I understand it, it is the Government's intention to apply to the Stock Exchange for a full listing. After all, if it does not get a full listing there will be no extensive market in its shares. Is the noble Lord aware that a profits forecast is a requirement of the Stock Exchange? Any profits forecast which is included in a prospectus document is to be examined by independent accountants, and it requires the accountants' report to be published in the prospectus.

Does the noble Lord really think that he is going to issue a prospectus without any profits forecast at all? Is that his intention? I venture to suggest that if that is his intention there will be more than one raised eyebrow in the City. Presumably there will be a statement of the profits for the past five years suitably adjusted to ensure continuity in accounting practice. A statement by the directors that there are adequate working capital requirements will be required, and a statement which has to be stated by the directors and for which others have a responsibility. It is impossible to be able to assess the working capital requirements without arriving at some estimate of profit forecast because both are linked, as the noble and learned Lord knows. Is it the noble and learned Lord's intention to omit profit forecasts from the full prospectus? If they are included in the full prospectus is it not vital for the small investor, whose investment is being sought, to be taken into the Government's and the successor company's confidence about what profit it expects to make in the future? Is that asking too much and, if so, why should that not be put into the Bill? For that matter, why mention anything in the Bill? The words, the successor company's business and its financial position are not really enough. I do not see any reason why, dealing with the next amendment, the noble and learned Lord should not stipulate the posting of the full prospectus in all post offices and sub-post offices.

The noble and learned Lord complains about the expense of printing 30,000 prospectuses or thereabouts. The noble and learned Lord is already paying sums of over £1 million—in fact the total cost of the flotation will be £7 million—which will be spent in commission and other fees. Will he jib at the extra cost of printing 20,000 more prospectuses? It really does not make sense.

If the noble and learned Lord is to be frank with the public, why should not the abbreviated notice or circular to go round with the form of application not state, "on the authority of the directors" and, presumably, on the authority of the Secretary of State that all the legal require-ments have been complied with", otherwise all kinds of circulars can be sent out. The noble and learned Lord is being unreasonable about this. He could have accepted these amendments without any injury to the Government's policy. He could have accepted them as a matter of sheer practicability, and he should have accepted them as an earnest of his frankness in the matter. I beg to move.

The Deputy Speaker

My Lords, Amendment No, 42 was moved some time ago.

Lord Denham

Put the question, my Lords.

6.53 p.m.

On Question, Whether the said amendment (No. 42) shall be agreed to?

Their Lordships divided: Contents, 51; Not-Contents, 87.

DIVISION NO.2
CONTENTS
Airedale, L.	Jacobson, L.
Amherst, E.	Jacques, L.
Ardwick, L.	Jeger, B.
Attlee, E.	Jenkins of Putney, L.
Bishopston, L.	John-Mackie, L.
Boston of Faversham, L.	Kaldor, L.
Bowden L.	Kilmarnock, L.
Brockway, L.	Lloyd of Kilgerran, L.
Bruce of Donington, L.	Lockwood, B.
Carmichael of Kelvingrove, L.	Lovell-Davis, L.
Cledwyn of Penrhos, L.	McGregor of Durris, L.
Collison, L.	McIntosh of Haringey, L.
Darling of Hillsborough, L.	Mackie of Benshie, L.
David, B.	Molloy, L.
Dean of Beswick, L.	Mulley, L.
Delacourt-Smith of Alteryn,	Oram, L.
B.	Phillips, B.
Denington, B.	Pitt of Hampstead, L.
Elwyn-Jones, L.	Ponsonby of Shulbrede, L.
Elystan-Morgan, L.	[Teller.]
Ennals, L.	Ross of Marnock, L.
Foot, L.	Segal, L.
Gallacher, L.	Stallard, L.
Graham of Edmonton, L.	Stoddart of Swindon, L.
[Teller.]	Stone, L.
Houghton of Sowerby, L.	Underhill, L.
Hughes, L.	White, B.

NOT-CONTENTS
Alexander of Tunis, E.	Marley, L.
Auckland, L.	Masham of Ilton, B.
Avon, E.	Massereene and Ferrard, V.
Bauer, L.	Maude of Stratford-upon-
Belhaven and Stenton, L.	Avon, L.
Bellwin, L.	Merrivale, L.
Belstead, L.	Mersey, V.
Boardman, L.	Morris, L.
Brabazon of Tara, L.	Mottistone, L.
Brookes, L.	Mowbray and Stourton, L.
Campbell of Alloway, L.	Murton of Lindisfarne, L.
Carnegy of Lour, B.	Norfolk, D.
Carrington, L.	Nugent of Guildford, L.
Cathcart, E.	Orkney, E.
Cockfield, L.	Orr-Ewing, L.
Craigavon, V.	Pender, L.
Denham, L. [Teller.]	Penrhyn, L.
Dormer, L.	Peyton of Yeovil, L.
Eccles, V.	Portland, D.
Faithfull, B.	Reay, L.
Glanusk, L.	Reigate, L.
Glenarthur, L.	Renton, L.
Gormanston, V.	St. Aldwyn, E.
Gray, L.	St. Davids, V.
Gray of Contin, L.	Savile, L.
Greenway, L.	Selkirk, E.
Hailsham of Saint	Somers, L.
Marylebone, L.	Spens, L.
Hemphill, L.	Strathcarron, L.
Henley, L.	Strathspey, L.
Hives, L.	Sudeley, L.
Home of the Hirsel, L.	Suffield, L.
Howard of Henderskelfe, L.	Swinfen, L.
Hylton-Foster, B.	Swinton, E. [Teller.]
Killearn, L.	Teviot, L.
Kinnoull, E.	Trefgarne, L.
Kitchener, E.	Trenchard, V.
Lane-Fox, B.	Trumpington, B.
Lawrence, L.	Vaux of Harrowden, L.
Long, V.	Vickers, B.
Lucas of Chilworth, L.	Ward of Witley, V.
Lyell, L.	Whitelaw, V.
Mackay of Clashfern, L.	Wise, L.
Mackintosh of Halifax, V.	Young, B.
Macleod of Borve, B.

On Question, amendments agreed to.

7.1 p.m.

[Amendments Nos. 43 to 47 not moved.]

The Lord Chancellor

My Lords, Amendment No. 48, Lord Bruce of Donington.

Lord Bruce of Donington

Out of order, My Lords.

The Lord Chancellor

Out of order, My Lords. I am so glad to be told that. It is the first time that I have been allowed to say that from the Woolsack.

[Amendment No. 48 not moved.]

Lord Lyell moved Amendment No. 49: Transpose Clause 91 to after Clause 89.

The noble Lord said: I move this amendment in the name of my noble friend, Lord Cockfield. This is a technical amendment and I beg to move.

Clause 95 [Power of Secretary of State to make orders under Fair Trading Act 1973 etc.].

Lord Mackay of Clashfern moved Amendment No. 50: Page 88, line 6, leave out ("necessary to give effect") and insert ("requisite to give effect to")

The noble and learned Lord said: My Lords, this is a drafting amendment. I beg to move.

Clause 96 [Prohibitions and restrictions applying to lessees with respect to telecommunications]:

Lord Glenarthur moved Amendment No. 51: Page 88, line 37, leave out ("public telecommunication") and insert ("telecommunications")

The noble Lord said: My Lords, if I may speak to Amendments Nos. 51, 52 and 53 together, Amendment No. 51 is basically a drafting amendment to improve the Bill as it stands and the other two are consequential. I beg to move.

Amendment No. 52: Page 89, line 37, after ("system") insert ("or a telecomunication system specified for the purposes of this section in an order made by the Secretary of State") Amendment No. 53: Page 89, line 39, after ("system") insert ("or to a system so specified")

Lord Glenarthur moved Amendment No. 52:

[Printed above. ]

Lord Glenarthur moved Amendment No. 53:

[Printed above.]

Clause 103 [Application to territorial waters and the Continental shelf etc.]:

Lord Cockfield moved Amendment No. 54: Transpose Clause 103 to after Clause 107.

The noble Lord said: My Lords, this is a minor rearrangement. I beg to move.

Clause 107 [General interpretation]:

Lord Glenarthur moved Amendment No. 55:

[Printed earlier: col. 350.]

The noble Lord said: My Lords, I spoke to this with Amendment No. 3. I beg to move.

Clause 109 [Amendments, transitional provisions and repeals]:

Lord Lyell moved Amendment No. 56: Page 100, line 27, after ("right") insert ("which is or may be").

The noble Lord said: My Lords, this is a drafting amendment. I beg to move.

Schedule 2 [The telecommunications code]:

Lord Glenarthur moved Amendment No. 57: Page 108, line 36, leave out ("and which, by virtue, of any") and inset ("under any enactment and which, by virtue of that").

The noble Lord said: My Lords, this is also a drafting amendment which clarifies another drafting amendment. I beg to move.

Lord Glenarthur moved Amendment No. 58: Page 111, line 35, at end insert ("to persons who occupy, own interests in or are from time to time on the land in question").

The noble Lord said: My Lords, Amendment No. 58 is an improvement to Amendment No. 86CA that we spoke to earlier on Committee. I think it helps the provisions for the code when expressed to that amendment. My noble friends Lord Kinnoull and Lord Caithness will be pleased by the amendment which helps them in what they tried to put forward earlier. I beg to move.

Lord Glenarthur moved Amendment No. 59: Page 112, line 29, leave out from beginning to third ("the") in line 31 and insert—

(" (3) In any case where it is shown that a person with an interest in the land was entitled to require the removal of the apparatus immediately after it was installed").

The noble Lord said: My Lords, I can speak to Amendments Nos. 59, 60 and 61 together. They are clarificatory and also drafting amendments. I beg to move.

Amendment No. 60: Page 112, line 33, leave out ("any telecommunication") and insert ("the"). Amendment No. 61: Page 112, line 34, leave out ("any") and insert ("the").

Lord Glenarthur moved Amendment No. 60:

[Printed above.]

Lord Glenarthur moved Amendment No. 61:

[Printed above.]

Lord Glenarthur moved Amendment No. 62: Page 113, line 7, after ("above") insert ("for")

Lord Glenarthur moved Amendment No. 63: Page 113, line 18, after ("above") insert ("for")

Lord Glenarthur moved Amendment No. 64: Page 115, line 38, after ("keep") insert ("installed")

The noble Lord said: My Lords, this is drafting. I beg to move.

Lord Glenarthur moved Amendment No. 65: Page 116, line 41, at end insert—

(" (5A) The Secretary of State shall not approve a plan submitted to him under sub-paragraph (3) or (4) above unless he is satisfied that adequate arrangements have been made for compensating any perosn appearing to him to be owners of interests in the tidal water or lands in question for any loss or damage sustained by those persons in consequence of the execution of the works to which the plan relates.")

The noble Lord said: My Lords, this amendment is also drafting. It improves a point foreshadowed by the noble Lord, Lord Grimond. I beg to move.

Lord Lloyd of Kilgerran

My Lords, I am sorry to interrupt the noble Lord's peroration. My noble friend Lord Grimond asked me to thank the noble and learned Lord the Lord Advocate for having prepared this amendment and to thank him for the letter of 16th March that he wrote to him.

Lord Glenarthur moved Amendments Nos. 66 to 70:

Page 129, line 25, at end insert— (" (2A) Sub-paragraph (2) above shall not apply in relation to any emergency works of which the relevant undertaker gives the operator notice as soon as practicable after commencing the works") line 26, leave out (" (1) ") and insert (" (2) ") line 47, leave out (" of or") nd insert ("and") Page 130, line 19, leave out ("other than emergency works") line 20, leave out ("this paragraph") and insert ("sub-paragraph (2) above")

The noble Lord said: My Lords, with the permission of the House, I move Amendments Nos. 66 to 70 en bloc. They all clarify the Bill and improve the drafting. I beg to move.

Lord Glenarthur moved Amendments Nos. 71 and 72:

[Printed earlier: col. 362. ]

Schedule 4 [Minor and consequential amendments]:

Lord Lyell moved Amendments Nos. 73 and 74:

Page 143, line 22, at beginning insert ("(1)").

line 27, at end insert— ("(2) This paragraph does not extend to Northern Ireland.").

The noble Lord said: My Lords, I beg to move Amendments Nos. 73 and 74, with the permission of the House, en bloc. They deal with the Cinematograph Act of 1909 and they exclude this provision for Northern Ireland.

Schedule 7 [Repeals]:

Lord Lyell moved Amendments Nos. 75 and 76:

Page 220, line 5, column 3, leave out ("by").

column 3, leave out line 9 and insert (" "the tribunal" ").

The noble Lord said: My Lords, with the leave of the House, I beg to move Amendments Nos. 75 and 76 en bloc.

7.9 p.m.

Lord Cockfield

My Lords, I beg to move that this Bill do now pass. On an issue as important as this, views are strongly held and forcefully expressed but that stage is now behind us. As a House we have carried out our traditional duty with a degree of application and thoroughness rarely matched. The Bill leaves us a better Bill than it was when we received it. We have reinforced and entrenched the role of Parliament; we have added further protection for the consumer and user; we have given clearer recognition to the role of the manufacturers; we have provided for the voice of the consumer to be more clearly heard and more effectively deployed; we have stressed the need to safeguard the position of the disabled and the elderly and of small businesses. We have protected the position of rural areas and written into the statute the requirement that there should be no undue discrimi-nation in relation to charges of all kinds.

We have provided for free directory inquiry services for the blind and the disabled. We have been even-handed in ensuring that the rights of the owner are protected when lines or apparatus are installed, at the same time ensuring that the tenant who wants a telephone cannot be frustrated by his landlord. We have made many other improvements; and should anyone be tempted to question what useful function your Lordships perform or what justification there is for your continued existence, the history of this Bill provides a convincing answer.

I would now make only two points. First, the battle has been strenuously fought, but always fairly so. Our proceedings have been marked by disagreement but a complete lack of acrimony. I pay tribute to those who have led from the other side of the House—the noble Lords, Lord Bruce of Donington, Lord Stoddart of Swindon and Lord McIntosh of Haringey—to the noble Lord, Lord Lloyd of Kilgerran, who led for the Liberals; to the noble Lord, Lord Donaldson of Kingsbridge, who led for the Social Democrats; to distinguished Cross-Benchers like the noble Lord, Lord Somers, the noble Lord, Lord Spens, and the noble Lord, Lord Weinstock, all of whose wit, wisdom and understanding have enlivened our proceedings; and to those of my noble friends, particularly Lord Orr-Ewing, and Lord Mottistone, as well as my noble friends Lord Boyd-Carpenter, Lord Peyton of Yeovil, Lady Macleod of Borve and Lord Morris, who both encouraged and at times admonished us. So many of your Lordships participated in our debates that the list would be too long for me to repeat, but I hope those whom I have not been able to mention by name will accept that their contributions have been both valuable and valued.

Secondly, now that the parliamentary battle is behind us we would all wish British Telecom—those who work in it, those who manage it and those whom it serves-—a successful and progressive future; and to all those in this rapidly-developing field of telecommunications, whether they are manufacturers, operators or service providers, we would wish success in taking advantage of the wider opportunities that are now open to them. I beg to move that the Bill do now pass.

Moved, That the Bill do now pass.—(Lord Cockfield.)

Lord Weinstock

My Lords, as Machiavelli lay on his death bed (from a condition possibly brought on by a protracted legislative procedure) a priest came to administer the last rites. "My son", said the priest, "you must renounce the Devil and all his works". "My father", replied Machiavelli, "this is not time for me to be making new enemies". Although I hope the allegory is not too close to home, I seem to hear an echo down the centuries of that priest's words. I should like to believe that I do not take too much of a risk today in not responding to them in the same way as did Machiavelli.

I do not like this Bill, and whether or not it is in my best material interests (those interests having been duly declared) I am bound to say so. I do not speak on behalf of GEC, and my views are certainly not derived from GEC's membership of any "charmed circle", as was predictably alleged in another place. Neither is it true that I am part of an unholy alliance with the Labour party and the trade unions; although if such an alliance had existed it would not necessarily be unholy to share the view of those two institutions that the Government are mistaken in what they are doing.

Your Lordships' House has given this Bill long hours of thorough consideration. Noble Lords have tried to be helpful to the Government, while at the same time protecting the public interest. I congratulate noble Lords on the Government Front Bench who have handled these debates with skill and courtesy. I welcome their agreement to place the draft licences before Parliament, and I welcome the handsomely-made concessions of the noble Viscount the Leader of the House with regard to telephone tapping. These are by no means the only matters in which the Government have accommodated the feelings of this House. Another example was the acceptance by the noble Lord, Lord Cockfield, of the amendment to take account of the interests of United Kingdom telecommunications manufacturers.

I mention this particularly because of an article which appeared in the Economist on 21st October 1983 in which it was stated that the noble Lord had, at a Cabinet meeting, delivered his view that the sooner Britain ceased to be a manufacturing country the better". I do not believe that the noble Lord thinks any such thing, and I hope he will reaffirm to your Lordships today that the Government do not think so, either.

The changes undergone by the Bill in its passage through your Lordships' House are not by any means unimportant; but they are not fundamental. The basic fact remains that this legislation is meant to transfer a national monopoly service to private hands, in the belief that this will further the cause of competition and of a free market in telecommunications services. Several noble Lords referred to this delusion during the Second Reading and subsequently, and I will not weary your Lordships with repetition of what was said then and what is anyway so obvious to an objective observer. Ministers have frequently asserted that British Telecom PLC is to be "a normal commercial company", essentially like any other commercial company. It will be no such thing. A normal commercial company does not need an Act of Parliament to make its existence possible, or a complicated and lengthy licence to lay down rules as to how it is to operate, or the appointment of an official watchdog to see that the rules are kept.

The Minister for Information Technology said in another place at column 479 on 10th November 1983 that the draft articles of association of BT PLC, differ materially from what might be expected in the articles of a major telecommunications company". Of course they do; for the simple reason that BT has an immutable grip on more than 90 per cent. of the market.

The last published accounts of BT, for the year 1982–83, are heavily qualified by its auditors. We are given by the press to understand that the accounts for the following year are undergoing treatment, presumably a course of what is these days called "creative accounting" in the profession.

The terms of the licence and the regulatory procedure contained in the Bill amount to what the Minister for Information Technology described in another place as a formidable array of protection for the consumer and the customer after privatisation [which will] be reinforced by the licence, the licence conditions and the powers of the Director General". That appeared at column 405 on 8th November 1983 in another place.

These matters, among others, will have a material, and exceptional, bearing on the value of the shares of BT. It will be of considerable interest to see how they are dealt with in the prospectus; but it is disturbing that the Government propose to take short cuts under Clause 70 of the Bill and to give the Secretary of State a unique exemption from the normal requirements of the law with regard to the placing of shares as it applies to everybody else. When it is all done, the Government will still be the owner of 49 per cent. of the share capital of BT PLC, with certain entrenched powers under the articles of association. The noble Lord, Lord Cockfield, said in Committee that the Government's 49 per cent. holding will have the same shareholders' rights as everyone else's, but that they did not intend to use their rights.

Other noble Lords may have shared my impression that the noble Lord did not deal with this issue with his usual incisive clarity. But what is clear, since no-one else will be allowed to hold more than 15 per cent. of the equity, is that the Government's share of 49 per cent. will constitute effective control of the company, and therefore any future Government will be free to rule BT without resort to renationalisation or other legislation.

Those who contemplate investing in BT PLC will no doubt take these matters into account. But it is less obvious that the apparent concessions to potential competition—partly offered by the Government and partly wrung out of them—will stand in danger of becoming worthless. Imagine that all the ministerial fantasies come to pass and that competitors to BT rise like mushrooms in the night. What will happen to their investments in the cold dawn of a different Administration? The risks are not confined to those who invest in BT. They encompass all who put capital into telecommunications services in the belief that the structure of the Government's policy is durable.

The noble Lord, Lord Cockfield, said in Committee that the Government intended to rescue BT from the ownership of '"an amorphous state corporation". In his own words, he wants, the British people themselves to own an industry of this kind". That is what the noble Lord said, and that is more or less what has been said on other occasions by the Secretary of State and by other Ministers. Why, then, do the Government retain an American banking house to advise on the placing of BT shares in the United States? Are the British people to be found standing around on Wall Street? And how strange was the Department of Trade and Industry's note of the meeting held in Tokyo on 20th and 21 st June 1983 to which the noble Lord, Lord Stoddart of Swindon, referred during Report stage. It records that officials of the department suggested that the Japanese public and large Japanese firms might provide a market for BT shares—a suggestion, incidentally, which was received by the Japanese authorities with incredulity.

The sale of these shares at a proper price will present considerable difficulties. Indeed, to achieve the issue on any terms which can be called reasonable will not be easy. The newspapers say that the Government propose to spend £8 million on promotional material alone in respect of the share placing. This will be only the canap'e—not even the hors d'oeuvre—of what will most certainly be a most expensive feast; including among its courses bankers' fees, brokers' commission and advisory fees, underwriting commissions, overriding commissions, legal fees, accountants' fees, public relations fees, printing costs, and Heaven knows what else. It sounds rather like the aptly-named Dr. Blind in the first act of "Die Fledermaus"—although perhaps a more appropriate theme song would be "Hello Folly" (and I hope that the Official Reporter will remember to write "Folly" with a capital F). But we are not in your Lordships' House today producing an agreeable entertainment—at least not intentionally. We are concerned with a serious matter.

No responsible body of opinion believes that BT PLC will constitute other than a monopoly or that its monopoly powers can be kept under control by Oftel through the proposed licence. If, as Ministers say, competition and liberalisation are their main aims, there is no reason why those aims could not have been achieved without altering the ownership of BT and by enforcing BT's assistance in the developing needs of potential competitors.

No—except for fleeting references to the PSBR, the reasons your Lordships have been given in support of this Bill do not bear the weight of close examination, and it is no wonder that the Bill seems to command so little enthusiasm among Government supporters. What is needed to improve and enhance communications services and to promote competition to that end is a coherent idea of how we can meet our evolving requirements in future years, and to make the best use of our national resources. That is not the route the Government have chosen.

We have not achieved the establishment of technical standards for connections to the main network. The plans for inter-active cable services—at least for the short and medium term—have already degenerated for all practical purposes into no more than cable television installations. In cellular radio, there is little prospect of meeting the target set for a national system under the existing arrangements and the promise of the creation of many thousands of new jobs is already clearly seen to be illusory. And every piece of apparatus so far ordered for cellular radio has been bought from abroad.

In satellite broadcasting, the official plans for Unisat are in disarray and those who relied upon them are at risk for substantial sums. In contrast to their substan-tial achievements in other fields, the Government are making a pig's ear of these matters. Ministers have said that once liberalisation is accepted, privatisation of British Telecom inevitably follows. This proposition is nonsensical. The object of privatisation, in a single step and at a proper price, is in blatant conflict with the objective of promoting competition. The Government's answer to this dilemma is the regulatory procedure and Oftel. British Telecom themselves appear to be in favour of privatisation if the regulatory procedure is not onerous; they do not expect Oftel to bother them unduly. But if the regulatory procedure is not onerous, it will not work to bring about effective competition—even if that was a practical possibility under the terms of this Bill.

This Bill will not fulfil the Government's stated objectives, but it will no doubt go through all the same and we will all have to do as best we can with it. For the director genera! of Oftel, however, it will impose an horrific burden, requiring the qualities of a quite senior deity. Where is such a paragon to be found? Who better for the Government to turn to than one who understands this matter so thoroughly and whose experience as a senior officer in the Inland Revenue and as chairman of the Price Commission makes him uniquely qualified? In the unlikely event that the post is indeed offered to the noble Lord the Chancellor of the Duchy of Lancaster, I am prepared to lay, for those of your Lordships who like a wager, considerable odds against his accepting it.

7.27 p.m.

Lord Spens

My Lords, I hope that I can now sign off as the chairman of our liberalisation group. In doing so I should like to thank the members of our group for the help and support they have given. Sixteen members have contributed to our debate—and that is not including the noble Lord, Lord Weinstock, with whom we have kept in close touch. I want to thank also the Ministers on the Front Bench for their acceptance of some of our requests and their forbearance— particularly towards me in my anxiety to ensure that the director general of Oftel shall have a positive duty to tackle anti-competitive practices.

I must particularly thank the noble and learned Lord the Lord Advocate for his detailed letter to my colleague the noble Lord, Lord Mottistone, which has since been published as a Written Answer in the Official Report of 22nd March. That Answer sets out in great detail how this business of tackling anti-competitive practices may be achieved. I suggest that all noble Lords should read that Written Answer.

There are three matters which still worry me. The first concerns the question of flexibility. Will the Bill prove sufficiently flexible to cope with the speed of development, new inventions and technological change? I raised this point in my very first amendment in Committee and was told that the Secretary of State could not be given such wide powers as would allow him to create new functions for the director to cope with situations which may come upon us in the future. I am a little worried now because is that not something of what we shall be asked to do in relation to the rates Bill? Although I am not saying that I am opposed to the rates Bill, it is a pity that we could not have something of that kind in this Bill, to enable flexibility to be carried on.

Secondly, who is going to plan the strategy for future developments in the industry? Is this just to be left to the market place? If so, it will be dominated by British Telecom and we shall not get very far. I should like to suggest to the noble Lord that he consider possibly linking up with the Alvey directorate some form of body which can study the future strategy for this industry, which is going to be involved so much with information technology and its conveyance to commerce and industry.

Thirdly, the licence. We have to wait to see what is going to be in that and I hope we shall be given the opportunity of having a good debate on its contents. With that, I wish the Bill well and again thank the Front Bench Ministers for what they have done.

Lord Lloyd of Kilgerran

My Lords, in the spirit of bonhomie which descended on the Chamber when the noble and learned Lord the Lord Chancellor took his seat on the Woolsack, may I thank the noble Lord the Chancellor of the Duchy of Lancaster for his kind reference to myself. I should like to thank him and the noble and learned Lord the Lord Advocate for their constant patience and courtesy, coupled with the assistance, of course, of their colleagues the noble Lords, Lord Glenarthur and Lord Lyell.

May I say to the noble Lord the Chancellor of the Duchy of Lancaster that I shall remember with increasing delight how he often supplemented his rather inadequately drafted replies with his charming, piquant and even Victorian form of rhetoric. Referring to drafting replies reminds me, and I hope it is not considered inappropriate, that I would personally like to thank those silent members behind the scenes who, often at short notice, prepared replies to our amendments; many of us have been sometimes surprised at the speed with which they have passed written notes to welcoming Ministers in this House.

In conclusion, we on these Benches have spoken sincerely, mostly in the spirit of constructive opposition, and I think I agree with the words of the noble Lord the Chancellor of the Duchy of Lancaster, which I paraphrase, that at least one thing is clear arising out of your Lordships' proceedings: this Bill will leave your Lordships' House a far better Bill than it was when it came to us.

Lord Molloy

My Lords, may I briefly say a word of thanks on behalf of the various associations for the disabled and, indeed, for the disabled themselves, for the magnificent support I had from this side of the House and for the generous response from the Government Front Bench. May I in particular mention the noble Lord. Lord Lyell, for the extraor-dinarily good speech which he made and which gave a vast amount of contentment to the blind as well as to the hard of hearing. I thought it was a remarkable response to my submission. It was so good that I am doubtful whether I ought to make submissions which I know he is to answer. Nevertheless, on behalf of the various associations for the disabled in our country and, as I said, for the disabled themselves, I thank all noble Lords in all parts of the House, and the Government Front Bench in particular, for the generous and kind review which they gave of our submissions and for the help we had from them.

Baroness Macleod of Borve

My Lords, as I was mentioned by my noble friend Lord Cockfield, I should like to thank him and the whole of his team very sincerely, and not only to thank them but to congratulate them on getting this splendid and important Bill through your Lordships' House. The noble Lord, Lord Molloy, mentioned the disabled but I should like to mention those in rural areas, the disabled, the blind, and those of pensionable age, to all of whom the Government have given way, perhaps due to persuasion from all sides of the House and have acceded to our requests on amendments. I should like to thank my noble friend for mentioning me and for all the work he has done on our behalf.

Lord Campbell of Alloway

My Lords, very briefly, may I thank my noble friend the Minister for such measure of flexibility as he was able to afford having regard to the rigidity of the drafting structure of the Bill. May I also thank him for his free dispensation of indulgences for those afflicted with spasms of heresy and to welcome the spirit of this Bill.

May I raise three short questions? They are matters that have been canvassed during the pasage of this Bill but have not been resolved. The first is: how shall my right honourable friend proceed to secure that there is real competition, and how shall would-be cable operators be safeguarded against their manifest fears of abuse in the licensing procedures? Secondly, as this question that I have raised impinges on the concept of justice between man and an agency set up by the state, is it not essential that a code of practice should be prepared and issued prior to Royal Assent? Finally, is it not a matter of concern to Her Majesty's Government that as regards due administration, in this regard justice should not only be done but be seen to be done? Perhaps my noble friend the Minister might make some valedictory signal.

Lord Bruce of Donington

My Lords, at this late hour it would not be appropriate for me to ask the noble Lord, Lord Cockfield, a series of rhetorical questions which the traditions of this House would prevent him from answering at this stage of the Bill. What I wish to do is associate myself with the remarks that he made about the very fine job of work that all Members of this House have sought to do on this Bill. I have always held the view that the main function of the House of Lords, on the assumption that it concedes that the will of the other place must always prevail, is to act as a revising Chamber. I am bound to say, although I have not been altogether satisfied with the response that has been available to some of the amendments that I and my colleagues have put forward, that in my view the House has done a very good job indeed, of which it can be very proud. It has given this Bill sustained attention over a period of about 10 working days and it must have been very tiring not only for the noble Lord but also for the staff who have supported him throughout.

I come to the other function of your Lordships' House, to which I have always paid public tribute. It is the second forum in the United Kingdom in which public debate on matters of national issue may take place. There is, of course, the other place, which is one forum, and the other forum is this House. It is my hope that this House will continue to be one of the two national forums in which public debate takes place. It would be a great shame if either of these two national forums was to disappear.

In that spirit, and on the basis that I am now in the arena of the forum, I am bound to tell the noble Lord that this is a very bad Bill. It is very much better than when it entered, but it is still a bad Bill. It was badly motivated; the political motivation was wrong; even the financial motivation was wrong. But there it is. We have done our best to improve it. To end on a spirit of concord with the noble Lord opposite, and in order that I shall not disappoint him, may I say that immediately we are returned to office we shall undo all the good work he has performed on the Bill.

Lord Orr-Ewing

My Lords, I add my feelings to the euphoria and wish to thank everyone for their courtesy and patience. With the help of the Public Bill Office I counted that we have passed 300 amendments. That is a formidable array, and must be close to a record for this House on a major Bill. If I could add one group of people to those who should be thanked, it would be the Public Bill Office. They have shuffled all these amendments, and many more, into order and presented them to us very punctually. I must add one caveat. The trouble is that we have really not had much manoeuvring space. The Government had made certain patterns of near monopoly in both the network and in cellular radio, and there was nothing that we could do to change that. It is sad that we have not made the situation more competitive.

We as a group—and I speak as the honorary secretary, Lord Spens being our chairman—have concentrated on three or four areas. Briefly, we have tried to give the regulating authority rather more power, because while so much power is concentrated in BT it means that more power must also be in the regulatory authority. Secondly, we have tried to ensure that the DTI makes better use of the scarce frequencies which exist. Clever designers go on being able to sandwich more information down the same radio channel as compared with 10 or 20 years ago. You get more and more information down, but one still has to make the optimum use of the channels. Up till now that has not been done within the DTI. We have also made efforts to move some of the liberalisation measures out of the proposed licence and into the Bill, but we have not succeeded in that area.

During the passage of this Bill we have looked at one of the judgments that the Office of Fair Trading has produced over the past three years on one area within British Telecom's remit. I shall not go into the details now, but I hope that Oftel will be more circumspect and much quicker acting, because this took three years to investigate. Three years is a long time, and during that period BT increased its market share from 10 per cent. to 75 per cent. What is sad—and this is typical of an investigation—is that we have no facts to know why it found that there had been no cross-subsidisation. A huge amount of money was spent on television and on other publicity media. We see that every weekend on our television; but I do not know whether that was taken into consideration. Last year £2.4 million was spent just on advertising its paging. Normally, if one has 75 per cent. of the market one does not advertise with that sort of money, because it is very expensive to take a larger share.

I mention this only because we would wish that Oftel will be powerful and manned by people of the right calibre and resolve. The Office of Fair Trading has not quite matched up in speed, economy or findings. I have here a long list of dirty tricks that BT has been up to—20 of them, I think. I am sure that this is not the right place or the right moment to publish them—

Noble Lords

Hear, hear!

Lord Orr-Ewing

—but they exist. I am glad that that is recognised. Later on some of them may be put straight in front of Oftel, which is exactly what it is there to deal with—dirty tricks, or anti-competitive practices.

I want to say one thing about frequencies. I made the case in the Official Report at Vol. 449, cols. 579–580. I shall not repeat it here. I hope that my noble friend will see that the very small private sector which is left to compete gets a fair share of what is available.

I finish on a sad note. I think that the Government have been unwilling to undertake much genuine liberalisation and to create much genuine competition. They have been deliberately preserving, and even strengthening, the BT monopoly. We now learn that it is likely to have about 98 per cent. of the market, leaving only 2 to 3 per cent. for the beloved network, Mercury. No competitors will be allowed in until 1990, so BT has a very long run. One very large consortium was going to apply, spend £500 million and create all the jobs that went with that, with a very advanced technology. It has gone overseas, and, of course, the jobs have gone there with it.

The Government are willing to secure assets and frequency channels—and have been over the past 25 years—for the 47 or so companies which have pioneered and made the pace. What is sad is that when the Bill is through, complaints are likely to go to the EEC courts and perhaps even to the United States courts. We must remember that BT has now entered the United States and is working there. Therefore, it will be subject to all the very powerful anti-monopoly legislation of the United States. It will be more difficult to market its shares if it has a lot of court cases hanging over its head.

It is sad that British technology will not be given the opportunities that it might have been given. It is sad that the private sector companies which have pioneered for 25 years have not been given the chance. This has not been written in. I can only hope that the jobs that go with them will be given an opportunity by this Government. Administration can do what this Bill has failed to do. I therefore wish all those who are working in British Telecom—and there are 250,000 people—well for the future. May they succeed in the private sector. When the monopoly is broken, they will have the opportunity at least of sacking their boss and of going to work for someone else. That is one of the freedoms which is essential.

Lord Cockfield

My Lords, I value and appreciate the tributes which have been paid, not just to myself but, more importantly, to my noble friends who have shared the Front Bench with me. I am precluded, as the noble Lord. Lord Bruce of Donington, said, from replying to Second Reading speeches which have been made, including the relevant portion of the noble Lord's own speech. I shall study everything that has been said and on specific points I shall write to the noble Lords who raised them.

On Question. Bill passed, and returned to the Commons with the amendments.