British Telecom: System Y Purchases (Hansard, 29 October 1985)

§ Lord Orr-Ewing
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)
My Lords, we welcome the report as a close and detailed study of the issues by the director general in fulfilment of his statutory duties. The director general, who is to keep British Telecom's buying policy under review, has concluded that BT's decision need not impair the basis for the success of System X. It could have a beneficial effect if it includes further improvements in System X's development, marketing and manufacture.

§ Lord Orr-Ewing
My Lords, does my noble friend recall that, in that report, the director general of Oftel recommended that, other than the present ones, no further orders for System Y be placed overseas and that this recommendation could not be accepted by BT? When the licence was discussed in this House during debates on the subject, we were assured that if we had not provided Oftel with enough teeth the licence could be adjusted in accordance with any recommendations that might come from the Monopolies and Mergers Commission. Is that still the position? If it is necessary to adjust the licence and give Oftel more teeth, can this be done with expedition?

§ Lord Lucas of Chilworth
My Lords, certainly, under the terms of the Act, the director general of Oftel has the opportunity to say whether or not he thinks his functions and duties are sufficient. If they are not, he may make a reference to the MMC which will then give consideration to the licence conditions. I have 1451 little doubt that, if such a reference was made—there is no indication that the director general feels this to be necessary—the MMC would deal with the matter expeditiously.

Lord Bruce of Donington
My Lords, the noble Lord's noble friend has given the House an example of Oftel recommending one thing and the firm concerned declining to comply with the recommendation. Can the noble Lord give some enlightenment as to what action the Government propose to take when there is a conflict in a matter of this kind?

§ Lord Lucas of Chilworth
My Lords, my noble friend did not in fact do as the noble Lord suggests. May I draw to the attention of the noble Lord opposite the conclusion in paragraph 40, in which the director general says: In my view BT's action in looking to non-System X suppliers for a second digital switch manufactured in the United Kingdom, in effect to enable BT to secure the modernisation of its network to meet competitive pressures and user requirements, need not destroy the basis for the success of System X". As to the second question, your Lordships will recall that, during the passage of the Bill, Oftel was set up to be an independent body—that is, independent both of Government and BT—to ensure that the terms of the licence, which were made available to both Houses of Parliament during the course of the Bill, would not be breached.

Lord Winstanley
My Lords, will the noble Lord confirm that Oftel now has the duty of fulfilling all the functions on behalf of the users which were formerly the responsibility of POUNC before privatisation? If that is the case, will the Government take steps to inform the public and telephone users in general of the new role of Oftel so that telephone users can be entirely clear on how they should take their complaints to Oftel and how they should make comments to that body?

§ Lord Lucas of Chilworth
My Lords, the Advisory Committee on Telecommunications which has taken over substantially the role of POUNC acts on behalf of consumers and advises the director general of Oftel in these matters.

§ Lord Taylor of Gryfe
My Lords, is the noble Lord aware that the decision of British Telecommunications in this case has caused redundancies in areas of high unemployment in the telecommunications industry in this country? Is he also aware that, according to the Oftel report, the placing of this order in Sweden will mean that new research and development in this field will be conducted in Sweden and not in this country?

§ Lord Lucas of Chilworth
My Lords, so far as the first question is concerned, the noble Lord, Lord Taylor of Gryfe, will recall that he addressed the same question to my noble friend Lord Brabazon of Tara about a fortnight ago. My noble friend answered saying that the redundancies to which the noble Lord referred are only in small part due to this. The reason is the running down of that existing factory in Scotland and the products which that factory made.
1452 As to his second question the noble Lord will recall that Thorn Ericsson, the company to which he refers, is 51 per cent. United Kingdom owned, has a substantial building plant in Scunthorpe employing 300 people and has declared that some parts of its work will be undertaken in that factory, so securing employment for those employees and possibly, in the fullness of time, extending that employment.

§ Lord Annan
My Lords, does the noble Lord imagine that in any of our partner and competitor countries in Europe, such as France and Germany, an order of this kind would not have been placed in the home country? Will he obtain from the CBI some evidence of the degree to which our competitors subsidise in one form or another their main industrial concerns? Lastly, does he not think it odd that the Government should be so totally nescient and uninterested in this problem?

§ Lord Lucas of Chilworth
My Lords, I do not allow my imagination to run riot, as perhaps the noble Lord opposite does.

Noble Lords
Oh!

§ Lord Lucas of Chilworth
My Lords, on the point about taking the advice of the CBI, perhaps I may say that the CBI continually puts submissions to us and they are considered by my department. In regard to subsidy, I am not able to comment on what it is reputed that others do. I can say that the Government stand with all the support services that are available, not only for the telecommunications industry but all industry in the furtherance of their activities, particularly in overseas countries.

Lord Bruce of Donington
My Lords, is the noble Lord aware that he is being a trifle discourteous—to put it at its lowest—in accusing the noble Lord of allowing his imagination to run riot on matters of this kind? Is he not aware that one of the characteristics that has now become obvious in the new privatised British Telecom plc is a shortfall in the regard for the public interest that was not the case before British Telecom was privatised?

§ Lord Lucas of Chilworth
My Lords, the noble Lord opposite will recall that Parliament decided during the passage of the Telecommunications Bill, which effectively brought about privatisation, that the Government should stand apart from the activities of that company unless the national security or international events forced the Secretary of State to take powers. Those duties are set out in Part I of the Bill. Parts II and III of the Bill leave the director general of Oftel with the functions that he should undertake; and Parliament gave him those functions.