HL Deb 24 February 1988 vol 493 cc1265-82

7.36 p.m.

Baroness Ewart-Biggs

rose to ask Her Majesty's Government whether they are satisfied with the effectiveness of the arrangements for representing the consumer interest in the telecommunication and gas industries since privatisation.

The noble Baroness said: My Lords, I have tabled the Question about the arrangements made for representing consumer interests in telecommunications and the gas industry since privatisation because I believe it to be timely. I am grateful to those noble Lords who are taking part in the debate. By way of background I should like to remind your Lordships of the arrangements and also to comment on how the structures are working from my own investigations and research.

Noble Lords will remember that in August 1984 British Telecom became a public limited company. The regulatory body, Oftel, was established at the same time as the National Advisory Committee on Telecommunications in Scotland, Wales and Northern Ireland. The Director General of Oftel also set up two further committees to advise him on telecommunications matters relating to small businesses and elderly people. In 1986 the Gas Act set up British Gas. The independent regulatory body, Ofgas, was established, as was the Gas Consumers' Council to deal with complaints.

The arrangements for the protection of consumers against monopolies were different for each industry. For British Telecom there was a solo model afforded by Oftel. For the gas consumer there was a twin model of the Ofgas regulator and the Gas Consumers' Council. In looking at the performance of the two different systems the first question is directed to which has been the most effective.

Dealing first with British Telecom, I should like to consider the problems suffered by consumers and how well Oftel has succeeded in dealing with them. I believe it is generally agreed that professor Bryan Carsberg has given Oftel excellent leadership. However his dual role of regulating the industry while at the same time dealing with complaints has been impossible. How can a regulator show that he is pro-consumer and at the same time hold the reins? From the point of view of the consumer it appears that Oftel has not been entirely successful. For a start, it is reported that few consumers even recognise that Oftel champions their cause and in many cases they do not know how to contact Oftel.

What is the nature of the complaints about this particular service? First, one must mention price. In July last year a MORI survey showed that over 50 per cent. of consumers thought telephone charges were unreasonable. When asked whether British Telecom's performance had improved since privatisation they said that they were more dissatisfied with British Telecom than they were with gas, water or electricity. Therefore, that already shows a high level of dissatisfaction.

I now turn to the second area; namely, that of contract. As the National Consumer Council has pointed out, British Telecom, like other private sector companies, is free to impose any contract terms it likes. However, what is not so good is that, as it has a monopoly for many of the services it provides, consumers are a captive market and have no option but to accept the conditions imposed by British Telecom or go without those services. Therefore, the potential for abuse is obvious and it is clearly demonstrated in the terms set out to customers by British Telecom. For example, quality of service standards should be set; a fixed period for faults to be repaired and soon should be included. The urgent repair service has been abolished and customers whose telephone represents a living—and that is very often those small businesses which are so admired by this Government—suffer very much indeed. They have no redress. There is an increasing number of self-employed people who depend on an answering service for their living and when the telephone is out of order, their living is very seriously affected.

The third area I have to mention is call boxes. Here again Oftel's own figures show that as many as 48 per cent. of people wanting to use a call box were unable to find one that worked. That is quite a remarkably high rate of failure.

On all three counts—price, contracts and call boxes—so far British Telecom has a pretty dismal record. Indeed, it reflects how badly and unfairly the consumer can be treated when an essential service is in the hands of a private monopoly.

There is no doubt that Oftel is engaged in a series of actions aimed at removing the cause of such a high level of complaints. The introduction of competition in call boxes from Mercury might help in that particular area, but we must bear in mind that telephones are not there only for social reasons. When they represent one arm in the creation of a living then it is very worrying indeed that at present dissatisfied customers have no redress and no way of improving that service.

To move to gas consumers, Ofgas and the Gas Consumers' Council are complementary in a number of ways. Ofgas deals with gas up to the outlet of the meter and the Gas Consumers' Council takes over from that point dealing with service, complaints, appliances and so on. Ofgas has legal powers and the Gas Consumers' Council has none. Ofgas, whose contact with British Gas is described as one of "creative tension", deals with matters such as information provision, meter break-ins, tampering, tariff rates, connection charges, prepayment meters, and so on. The Gas Consumers' Council represents the interests of 17 million domestic, commercial and industrial consumers and one of its responsibilities is to monitor gas disconnections; it also monitors adherence to the code of practice.

The statistics published yesterday by the council were very alarming. Between 1985 and 1986 the rate of disconnections increased by 25 per cent. However, this upward trend showed a marked acceleration during 1987 when in the first nine months there was a further 35.3 per cent. increase in domestic disconnections when compared with the same period in 1986. That percentage represents 45,263 customers disconnected and that is a most terrifying figure when related to the anxiety and anguish that the family or the individual suffer.

It is quite clear that the proportion of disconnections varies in different areas. Before I say anything else, it must be remembered that this very great increase coincides with a downturn of disconnections in electricity. British Gas say that this has nothing to do with privatisation. Indeed, they blame poverty, the growing problem of debt and the effect of unemployment as being major causes of disconnection. I believe there are signs that they play a very great part.

Perhaps I may mention one or two other pointers which show why disconnections have gone up. First, in the past few months the number of prepayment meters has been reduced so fewer customers have prepayment meters. Another area is the repayment of arrears arrangements which do not seem to be very effective. Repayment arrangements break down because they are set at levels which the customer cannot afford. They are described by the Gas Consumers' Council as being a waste of time and money for British Gas and being of no help at all to the customer.

The major statistic which I find really disconcerting is that half of the disconnections happen when there has been no contact between British Gas and the customer. I can imagine the scene of a husband walking out and leaving the wife holding the baby and, in this case, the gas bill. She is quite terrified when the doorbell rings. It may often be a representative of British Gas who will try to work out some system but she is too frightened to open the door. There is no communication and the matter ends not only with disconnected gas but a broken door. Therefore, there seems to be a very great urgency to create better communications with the customer and to create better communications with British Gas and families that are obviously hard-pressed.

I must admit that a few minutes before I came into the Chamber I was given a letter from British Gas which states that British Gas is launching a major new advertising campaign dealing with customer service which it hopes will help set up better communications between itself and those families who find it difficult to pay their bills.

The last matter I mention is that the Gas Consumers' Council has changed very much since privatisation. As noble Lords know, before privatisation it was a very broadly-based organisation. It had district and council members, watchdogs and a code of practice and indeed, there was communication between the gas service and the customer. Perhaps I may just give an example of obvious reductions. In the North Thames area there used to be a district office with 80 council and district members who could be contacted independently as their names were published. There now remain only 18 panel members to serve the same number of customers and, furthermore, the names of those 18 panel members are not displayed in the showrooms. That means that all complaints are channelled through the council. That very often means that the telephone is blocked and that a panel member will not receive details of the problem until a few days later by which time there has been a great deal of suffering. Therefore, although British Gas says that it is adhering to the code of practice for domestic consumers, I feel that there are not enough volunteer watchdogs to monitor that this is the case.

The noble Baroness, Lady Masham, wanted to speak in this debate but is unable to do so. She asked me to inquire whether British Gas offers special help for disabled people. The noble Baroness has suffered a number of problems with the gas supply to her home, and she asked me to put that question to the Minister.

I conclude by making the following points. First, it would seem that the structure of dual bodies set up for the gas consumer is more effective than the single body for British Telecom; except of course for the unacceptably high rate of disconnections which have taken place. Secondly, there should have been real safeguards in the legislation governing both industries which could be said to protect the quality of service given to customers. As your Lordships know, there is no reference to quality of service in the licence conditions. Thirdly, both regulatory bodies do not have enough teeth. The Gas Consumers' Council needs a larger and more wide-ranging network of volunteer watchdogs to keep in contact with consumers.

Finally, I believe that in the light of the plans for privatisation of the water and electricity industries the experience of consumer representation in the telecommunication and gas industries should be examined in detail. I suggest that the Government should, as a matter of urgency, undertake a comprehensive study of how complaints are administered by those bodies which I have mentioned and that such a study should encompass the effectiveness of complaints procedures, the level of satisfaction achieved and perhaps, very importantly, the degree of awareness among consumers of where to go with a complaint.

As I said at the beginning of my speech, I am very grateful to noble Lords who are speaking in this debate. This is an important moment when the Government are clearly looking forward to further privatisation, and they should not make the same mistakes concerning consumer interests as they have in the two services covered by the debate.

7.52 p.m.

Lord Ezra

My Lords, we are indebted to the noble Baroness, Lady Ewart-Biggs, for introducing this debate at this time, particularly as there has been a great deal of publicity concerning the service from both industries. As she rightly said, we are entering an entirely new era in certain basic industries. The privatisation of telecommunications and gas, creating either monopolies or virtual monopolies in the private sector, has raised in a new form the ways in which consumers should be protected.

The issues of regulation and consumer protection are interlinked; it is very difficult to consider the one without the other. The first question that is bound to be raised is how the right balance will be achieved? For telecommunications, as the noble Baroness rightly stated, a particular solution has been tried whereby the regulatory body is also the consumer complaint body.

I was interested to learn from information provided by Oftel that the number of complaints received by the previous consumer organisation—the Post Office Users National Council—amounted to 6,000 in 1983. In 1987 Oftel received 24,000 complaints. Whether that is due to the fact that more publicity has been given to the whole issue or whether it is due largely to the increased amount of dissatisfaction with the service is, of course, difficult to ascertain. I imagine that it is a mixture of both. However, it indicates that there is a problem connected with consumer dissatisfaction in this area. Therefore, it suggests that the whole question of dealing with these matters should be looked at again, following the experience we have had since 1984.

I join with the noble Baroness in paying tribute to the work of Professor Carsberg and his team. There is not the slightest doubt that Oftel has vigorously identified and brought to the notice of the public a number of major issues. For example, it has drawn attention to the callbox question, to which the noble Baroness referred. It has examined the directory inquiry service. It has drawn attention to the whole range of services in general. More recently it has intervened in the teenage talkabout service, to major effect.

Therefore, I believe that we must accept with satisfaction that the regulatory body is doing a good job within the limits of the powers conferred upon it. The question, as the noble Baroness rightly stated, is whether it should also be dealing with complaints. I believe that there is an opportunity for reviewing this because the BT licence comes up for renewal in the middle of next year. Already a consultative document has been issued by Oftel drawing attention to the various issues involved. It has raised some valuable points in relation to services. As the noble Baroness rightly pointed out, in the existing licence there is no obligation relating to service. Oftel has raised the question of whether there should be, but I believe that at the same time as the renewal of the licence is being considered the whole issue of how consumer complaints are dealt with could be reconsidered.

The noble Baroness was right to point out that for gas the situation concerning complaints is different. At least the two systems have the merit of enabling one to make a comparison between their relative effectiveness. I have no doubt that the Government will be carefully considering the experience of the two sorts of consumer bodies in advance of further privatisation of essential services.

In the gas industry we have a situation that is not only different from telecommunications in that the two aspects are separated—that is, the regulatory and the consumer aspects—but we have a much lighter regulatory system. That is a point to which attention was drawn during debates which took up a considerable amount of your Lordships' time during the Committee stage of the Bill.

One aspect which must be considered seriously when the licence is due for renewal is whether there should be more powers for the regulatory body. The powers of the regulator in the case of gas are effectively limited to the domestic market which we are, of course, primarily concerned with. But there are also industrial consumers—the so-called contract market. There has been mounting dissatisfaction in that market. I have found it odd that complaints in that market, instead of going to the regulator—Ofgas—go to the Office of Fair Trading and, through it, to the Monopolies Commission for investigation. That seems a rather odd arrangement. Perhaps that matter could be considered when the licence is renewed.

In the case of the domestic market, the complaints procedure is very carefully and clearly laid out in the first annual report of the new Consumer Council. That report explains that the council has tried hard to deal quickly with complaints and to obtain action on an effective basis.

One of the main problems, as the noble Baroness rightly said, is the question of disconnections. I had the opportunity of talking to some of the officials of British Gas today in advance of this debate because I thought it would be helpful if I were to hear directly from them how they viewed this problem which has excited a certain amount of public disquiet. They explained to me that they are very concerned about the difficulties they have with certain customers who have problems over payment and who fail to make contact with them. I am convinced that British Gas generally wants these people to talk to it. The purpose of the campaign to be mounted from next Monday aims to do that. I very much hope that British Gas is successful and that it will find ways of dealing sympathetically and effectively with these cases so that people are not deprived of essential supplies of energy.

The effectiveness of the procedures for protecting consumers in both these industries raises the underlying question of whether it is right that we should have essential services transferred to the private sector in this form. I do not believe that it is going to be possible to get effective protection with, on the one hand, a very powerful monopolistic or near-monopolistic supplier having enormous resources at its disposal and, on the other hand, what are bound to be relatively limited regulatory and consumer protection organisations.

I conclude by saying that I believe this to be the underlying issue of the whole problem. With the noble Baroness, I very much hope that the Government will seriously reflect upon this aspect of the problem before proceeding with the further privatisation of essential services.

Lord Taylor of Blackburn

My Lords, before the noble Lord sits down, may I ask him to go back a little. He used the word "complaint" on two occasions in relation to both British Gas and British Telecom and the various services. I am the former chairman of a consumer council. We would differentiate between the person who had a genuine grievance or complaint and the person who was making a genuine inquiry. In the figures that the noble Lord has given, is there any breakdown between the two, or have all the figures been lumped together?

Lord Ezra

My Lords, there is a breakdown in the annual report prepared by the Gas Consumers Council. It gives a breakdown and of the total figures quoted about half are general inquiries and the rest are detailed complaints.

8.5 p.m.

Lord Ferrier

My Lords, as I sat here I kept thinking of the Harrow song "Forty Years On", where the lines occur: Being feeble of foot and rheumatic of shoulder, Shorter in wind as in memory long". Well, I have a long memory. I am short of wind, so I shall not be long. The fact is that I have considerable concern over this matter. I was encouraged to jump in by the noble Baroness.

Years ago, telegrams were abolished and the telemessage was substituted. It seemed to me that the telemessage as defined and as used in practice was something which was discriminatory. It is very difficult for poor people to manage. If your Lordships recall, the telemessage costs £4 for 50 words. As you know, in the good old days you could go into the post office and send a telegram for a bob. I started asking questions, and I apologise to my noble friend who is going to reply. I pestered him like anything. Nothing really happened because—if my noble friend will forgive me—this was at a time when there was a period of transition after my noble friend Lord Lucas of Chilworth was speaking from the Front Bench defending the Post Office.

As time went by, the Post Office was hived off and my noble friend found himself in the position of having to attack the Post Office. This is the case today. I feel that one of the few constructive ways in which I can contribute to this debate is to say that we in this House should realise that we are the public supporters against the private authorities. We do not want to support them. We want to tell them what they are doing and what they ought to do. When the matter was reduced to a number of Starred Questions which my noble friend had to answer, he gave replies which were really rather old hat dating back to the time when this Front Bench was defending the Post Office.

I tabled a Motion in the short debates list on 24th July last year. The months have rolled by and the ballots have rolled by. In my recollection, there were five or six of them, but my Motion has never come out of the hat. I do not conceal from your Lordships that I have been quite dismayed because it seems to me that this House ought to be in a position, as the noble Lord, Lord Ezra, said, to refer to some regulatory body which one can get hold of. I believe the noble Baroness made that point. What do you do about it? I put down a Motion about telemessages in July last year but it has not come out of the hat yet.

I do not complain now because I am well informed that the authorities are looking into it. That is nonsense. I feel that the Back-Benchers in this House ought to be in a position to do something about these matters. I have been asked, "Why don't you put down an Unstarred Question?" I have been had like that before. Once I put down an Unstarred Question to come on at half-past eight. There was a Statement in the middle of the day. There were 10 Peers who were going to support me but the Unstarred Question did not come up until 10.15, by which time my 10 Peers had disappeared. What would have happened today? Suppose there had been a good, rousing Statement in the middle. The noble Baroness was able to rise somewhere near eight o'clock. If there had been a Statement, the time would have been more likely to be near nine o'clock. It makes a nonsense of it, and I appeal to your Lordships to bear this in mind. As I say, I have reason to believe that the matter is being looked into.

Among the replies I received about this enormous charge of £4 for 50 words, I received a great deal of support from the other side of the House. The best support I had was from the noble Lord, Lord Glenamara, who pointed out that the telegram used to be used for a simple social message; for example, "Auntie died yesterday; funeral Wednesday". That is the kind of message that "Grannie up the glen" wants to send. It is no use talking about sending a telemessage at £4 for 50 words when we only want to use 11.

Your Lordships may remember that in the old days I was always on about "Grannie up the glen" and the absence of the ability to communicate without telephones. I was asked, "Why don't people go to the telephone box?" Many of the telephone boxes are vandalised. Few of them have slots for a pound coin, and in order to send a telemessage you have to put in four quid. That is all very well, but I remind your Lordships that the pound coin is not common currency in Scotland. My local postmaster says that if he gives pound coins in change people say, "No thanks; give me a pound note". It is not possible for people to send telemessages from call boxes. That is out in Scotland.

When I put down my Unstarred Question ten months ago I felt that it would be an opportunity for suggesting that the balance of the telemessage would be greatly improved if the charge was £1 for 20 words so that ordinary poor people who do not have a telephone could afford it. At the moment only people with telephones can send telemessages. "Granny up the glen" cannot go to the post office and say that she wants to send a telemessage. People will ask why she cannot use the coin box. She cannot use the coin box because it has been vandalised.

I think that I have said as much as I can say to contribute to the noble Baroness's debate. What the noble Lord, Lord Ezra, said is right. We must have a better regulatory body. I wrote a long letter to Professor Carsberg. I had an acknowledgement, although I do not think I had a reply. I asked him the very questions which I have been putting to your Lordships, and they are jolly difficult to answer.

I have been in touch with POUNC. I understand from my local sub-postmaster that an enormous number of sub-postmasters—and there are 4,000 of them—would be glad to have money coming in from people who go into the post office to send a short telemessage. I have never heard a roar of laughter in this House like the one that went up when I read to your Lordships a letter from the Post Office which said: This is not a matter for us. This is a matter for British Telecom". I wrote to British Telecom and I received a letter back saying: This is not a matter for us. Apply to the Post Office". It has been going on like this since time immemorial. Let us hope that my Motion will be successful at the next ballot. I have given up hoping. Indeed, I say. shorter in wind as in memory long". I support everything that the noble Baroness has said and I hope that I have been able to express my concern that the difficulties of poor people are not properly realised. It is all very well to pick up the telephone and send a telemessage to Australia. However, if you do not want to send a telemessage to Australia but you want to send a telemessage to Paisley, it costs four quid for 50 words.

8.13 p.m.

Lord Peston

My Lords, I should like to thank noble Lords who have taken part in the debate and especially my noble friend Lady Ewart-Biggs for introducing it. I begin with some of the general principles. We must all agree that, ultimately, in judging the performance of any industry the consumers' interests must be dominant. Even where the industry's customers include firms, the cost of overcharging such firms or providing them with poor service will be passed on to their customers as well. It is entirely right to take the consumer's attitude as central to this matter.

Secondly, it is my view, and the view of most people who have looked at these matters, that regulation or not, that whether or not we have the Office of Fair Trading, the Monopolies and Mergers Commission, or what have you, the best protection for the consumer is competition, by which we mean an alternative source of supply. A great problem arises here because in the two cases we are discussing there is not in most activities an alternative source of supply.

In my view—and this follows from what has already been said—in the case of British Telecom it is not to late to reduce its monoply power. One obvious area is in the provision of call boxes. There is absolutely no reason why British Telecom should have anything resembling monopoly power in the provision of call boxes. The noble Lord, Lord Ezra, and my noble friend Lady Ewart-Biggs have reminded us that the licence is coming up for renewal. In the case of British Telecom it is time to scrutinise all its activities to see whether the provision of call boxes could be, as it were, partially or wholly taken away from it so that competition could be introduced.

In the case of gas it is quite clear that at the time of privatisation insufficient thought was given to the way in which it would be done. It was my view, and it still is, that it could have been privatised on a much more competitive basis and a great many of the problems would not have emerged. I do not know whether it is too late to do anything about British Gas but it is not too late—and this is where the noble Lord, Lord Ezra, and my noble friend have guided us—to learn lessons for the future. I do not want to introduce a political element into the debate but the lesson I learnt from this is that we should not privatise electricity. Equally, if one is determined to privatise it, one really has to give overwhelming weight to consumer protection and competition.

As regards the position of British Telecom with Oftel, one may want to say that Professor Carsberg is doing as good a job as he can. I shall come to the point of the noble Lord, Lord Ferrier, in a moment. An examination of costs with, one hopes, full access to data, and an examination of pricing policy to see that it is non-discriminatory and that the prices are not excessive in relation to cost and matters of that kind fall quite reasonably within Professor Carsberg's ambit. However, when it comes to dealing with complaints it is much more sensible to have a separate body. In regard to complaints two matters must be looked at. First, there is what the individual person feels when making a complaint; namely, is his complaint being dealt with; is he being fairly treated; when he rings up to say that his telephone is not working, is he getting a courteous reply and some encouragement that something will be done about it reasonably rapidly? Then there is the general principle of consumer complaint in regard to what will happen to call boxes in general. What will happen on directory inquiries? It may well be that these general questions could still be dealt with by the regulatory body but it is not obvious to me that such a body is suited to dealing with the individual.

I shall deal in a moment with gas, but the noble Lord, Lord Ezra, raised the privatisation issue in an important way. He said, looking at the underlying forces, that he is pessimistic and that, although we can think up imaginative schemes about how to protect the consumer, in the end he was doubtful whether they would work. He said that we have to go back and look at privatisation on that basis, and he may well be right. This leads us to the issue of the national interest. When the noble Lord, Lord Ferrier, and others have introduced subjects such as telemessages and call boxes being out of order and they are told that it is the business of the individual enterprise—British Telecom or the Post Office—to deal with it, we have to ask, "Is there no national interest here?"

As regards the telegram, what has always worried me is that everyone, but especially poor people, has an interest in having a reliable means of rapid communication. As I understood it, that is the point that the noble Lord, Lord Ferrier, was making. It may of course be argued that he was a little outside the central issue of this debate, but I am bound to say that I agree with him on the general principle of what ought to be done. We are indebted to him for introducing the matter.

I turn now to the subject of gas. Here I join with others in my concern about the disconnection problem, but I can see both sides of the argument. Clearly, a nationalised industry or a private enterprise must behave in a businesslike manner and would obviously like to receive the sums that it is owed. There is no doubt about that. We do not suggest that the wrong is all on the side of the gas industry or that, when it was disconnecting—even though there were fewer disconnections when it was nationalised—it was entirely erroneous to say that people ought to pay for what they had taken.

Nonetheless I have been bothered for many years, and the latest report bothers all of us a great deal, about the damage that is done to deserving, as opposed to undeserving, cases. It is hard, however, to distinguish between the two in practice. I am not sure whether my noble friend Lady Ewart-Biggs was saying that she was reassured by the letter she received from British Gas, but I did not feel reassured, because I did not hear anything practical. British Gas merely said that it would like to do something and sought to blame all the social and economic forces that we discussed in the earlier debate this afternoon for causing the problem. Therefore, I think we have a difficulty there.

To conclude, my view is that the twin regulatory bodies—Ofgas, and the Gas Consumer Council—are probably the way to deal with the matter if we are going to do it at all. However, my worry is, first, whether that is particularly reassuring and, specifically, whether Ofgas has enough powers, or access to sufficient information, to exercise such powers. Secondly, I wonder whether the Gas Consumer Council is independent enough and confident enough to carry out the tough job of protecting consumers' interests. Those who represent consumers must be cordially disliked by the industry with which they are dealing. They must not be in the pocket of that industry. In my view they must not even be in the same building as the industry about which they are complaining. They must be demonstrably independent, and financed separately from the industry. It is not obvious to me that that is the situation in this case.

My final comment is more general. Consumer issues are not confined, and should not be, to the cases that we have mentioned. They apply to British Telecom. telemessages, the Post Office, gas and onwards to electricity and, finally, to water, when the time comes.

There are at least two other consumer bodies in society. The NCC seems to me to have gone extremely quiet of late. One would like to feel, since it is a public body, that it would be taking a rather more active interest in those matters. The other is the Consumers' Association, which does take a positive and active interest, but one would like to see it pressing rather more in those areas.

I repeat that this is an extremely serious matter. We look forward to hearing from the Minister on the points raised and we shall return to the subject in the future.

8.25 p.m.

Lord Beaverbrook,

My Lords, let me say to the noble Baroness, Lady Ewart-Biggs, at the outset that the Government have given high priority in ensuring that adequate arrangements exist to protect the consumer interest in privatised industries which have monopoly of power. However, there is no single pattern which can be applied in all cases, and the needs vary from industry to industry. For example, the problems faced by gas consumers are of a different nature from those faced by telephone users.

I should like, first, to deal with telecommunications and the arrangements set in place under the Telecommunications Act 1984. This Act, which provided for the privatisation of British Telecommunications, also established the office of the independent Director General of Telecommunications. Professor Bryan Carsberg, the director general, and his staff at Oftel play a crucial role in considering the consumer interest in telecommunications.

The role and duties of the director general have formed a key feature of the new telecommunications regime since 1984. Essentially, the director general is responsible for the monitoring and enforcement of the public telecommunications operators' (PTOs) licences. These were granted by the Secretary of State for Trade and Industry. The main PTOs are British Telecommunications and its competitor, Mercury Communications Ltd. BT's licence includes a number of detailed conditions relating to, for example, the provision of public call boxes, 999 services and the price formula governing some of BT's prices. The licence also contains more general provisions of key interest to the consumer, such as universal service and general business practice. The Director General is responsible for ensuring that BT lives up to those requirements.

In exercising his functions, the director general must take into account his duties, which are set out in Section 3 of the 1984 Act. These duties include in particular the promotion of the interests of consumers, purchasers and other users in the UK (including those who are disabled or of pensionable age) in respect of the prices charged for, and the quality and variety of, telecommunication services provided and telecommunication apparatus supplied. I know that the director general considers his duty towards consumers to be of major importance.

In carrying out his functions, the director general has powers which are independent of Ministers and exclusive to the director general. In particular, those powers give the director general the right to require information from BT and other telecommunications operators and the power to seek amendments to their operating licence. These amendments can be made either by agreement with that operator or by referring the matter to the Monopolies and Mergers Commission. The director general has not asked for any further powers and I believe that he is content with the powers he has to perform satisfactorily his functions of monitoring and enforcing the licences, to the benefit of the consumer.

In his work, the director general is aided by the work of the Advisory Committees on Telecommunications (ACTs), which were established under Section 54 of the 1984 Act. Those ACTs are established both on a geographical basis, where there are separate committees for Scotland, Wales, Northern Ireland and England, and also for particular groups of consumers: thus there are separate ACTs for small businesses and for the disabled and elderly people. All those committees meet quarterly to consider representations in their particular area and they also meet bi-annually with the director general in order to provide feed-back on problems that may have arisen.

The director general is further assisted by local telecommunications advisory committees which exist to deal with complaints locally and to provide a "grass roots" input to the director general on telecommunication matters. There are about 200 such committees in the United Kingdom which have been established for that purpose.

In addition to these statutory committees, the director general has also established a non-statutory telecommunications forum which meets bi-annually and which provides an opportunity for an exchange of views between Oftel, all sides of the telecommunications industry and the user groups to exchange views. That, then, is the underlying structure for representing consumer interests. How does it work in practice? It may be helpful if I take some specific examples.

Given that one of the director general's duties is to promote the interests of all consumers, the director general is careful to consult as widely as possible before taking major decisions. Earlier this year he issued, for example, a consultative document on BT's pricing formula, the RPI-3. The formula, whereby prices are not allowed to rise higher than three percentage points below the retail prices index, applies to exchange line rentals and direct dialled calls in the UK. That formula lapses in 1989, if it is not replaced or extended, and the director general has now widely issued a consultative document to gauge consumers' views of how long any new rules should last, whether the services covered by this formula should stay the same, and, if the formula should remain as a percentage link between the retail prices index and prices, what that linkage should be. I should add that since privatisation, that so-called basket of prices has fallen by 14.5 per cent. in real terms.

The director general's consideration of consumer complaints is a great help in the exercise of his functions. When several complaints are received on one issue, the director general can consider whether the long-lasting remedy lies in a licence modification or in persuading the operator to change his ways. For example, the largest category of complaints received by Oftel concern bills issued by BT. Customers who receive itemised bills seldom have similar complaints. The director general therefore pressed BT for the early introduction of itemised billing and eventually, in December last year, BT announced a rolling programme starting last month for its introduction—well ahead of its original plans.

Those are just two examples of the work the director general carries out in support of the consumer and in response to consumer representations. The Government's view is that the functions and duties of director general, as set out in the 1984 Act, provide for an independent statutory body with wide-ranging powers to ensure that the consumer interest is best served. As I have said, the director general has not expressed any need for greater powers in this area, and the Government's view is that this watchdog, as it is popularly known, has plenty of teeth to tackle any difficulties that arise.

I welcome the recognition by the noble Lord, Lord Ezra, of the good job that Oftel does in its regulatory role. The expertise gained by the director general and his staff in enforcing and monitoring operator licences is of great value in his consideration of consumer representations. His wide knowledge of the quality, variety and prices of services and apparatus from his contacts with companies provides a valuable industry-wide view which helps the director general more effectively to consider complaints by consumers. Because of his regulatory functions, the director general also has a more active role with consumers, as shown by the consultative document that he has issued on the RPI-3 price formula. Finally, because of his wide-ranging powers, the director general can take action himself when a specific problem is raised by a number of consumers.

I should make it clear to the noble Lord, Lord Ezra, that BT's licence does not come up for renewal next year; it is the RPI-3 formula which is time-limited and expires in 1989 if not extended, as I have already said.

Where a problem has arisen which is of concern to consumers, the director general may propose an amendment to the licence. Such an amendment must be agreed with the operator, in this case BT; or, if that is not possible, the director general may refer the matter to the MMC. That indicates the strength of his powers and his ability to support consumers. I should tell the noble Baroness, Lady Ewart-Biggs, that I understand the concern over the introduction last year of charges for priority fault repairs. New charges are never welcome, but previously the service was not without cost. It was available to particular organisations or individuals only, but everyone had to foot the bill. Those who require the option of a quicker response can now subscribe to the enhanced level of service. I know that the director general has been keen to establish with BT that those extra services will not affect the level of the standard fault repair service. Furthermore, he is examining the level of the charges to see that it is justified by the costs that BT incurs.

I say to the noble Baroness and to the noble Lord, Lord Peston, that in common with many members of the public the director general became concerned last summer that too many of BT's public payphones were out of order. In addition to requiring BT to improve its service, the director general concluded that the consumer would be best served by the introduction of competing services offering a choice of facilities, tariffs and locations. He has granted Mercury the determination it needed to allow it to provide a public callbox service, and that is expected to start in the summer. That indicates the speed with which the director general has responded to the many complaints that have been raised in your Lordships' House and outside.

Oftel is determined that the general public, as well as industry, should be aware of its role and powers within the liberalised telecommunications regime. Oftel seeks to reach the ordinary telephone customer by maintaining a high profile on all telecommunications issues, especially those which affect the generality of users. Reports in the media on telecommunications issues frequently refer to Oftel's role in the matter.

Where complaints and inquiries about specific problems are concerned, Oftel seeks to ensure that the customer knows when and how to contact it. For example, those details are contained in the code of practice for consumers which is printed in all BT's telephone directories. The growth in the number of representations made to Oftel from about 14,000 in 1986 to over 24,000 in 1987, shows that those measures are succeeding in raising the general level of the public's awareness of Oftel.

Finally on telecommunications. I think that I should make the point that Oftel should be the last resort for complaints. Oftel is not a surrogate for British Telecom. BT should operate an efficient consumer service which deals with its customers' problems. Only if BT's arrangements fail should Oftel be brought in. A company should be capable of dealing satisfactorily with its customers. If BT's procedures appear to be failing consistently in any respects, the director general will press BT to improve the arrangements.

I shall now turn to the gas industry, where the domestic consumer is protected by clear, objective regulatory arrangements and by an independent Gas Consumers' Council, both of which were set up under the Gas Act 1986. The regulatory arrangements, which in themselves create strong pressures for efficiency to the benefit of customers and shareholders alike, are policed by the Director General of Gas Supply, Mr. James McKinnon, and his team at Ofgas. The price formula came into full operation last April, and the first price change under it was the 4.5 per cent cut in tariffs, which took place last July.

The independent Gas Consumers' Council complements the work of Ofgas to protect the consumers' interests. It is a unitary body with Miss Sheila Black as its chairman and a current membership of 18. It is supported by professional staff, the majority of whom are regionally based in the 11 regional offices located throughout Great Britain.

As with telecommunications, importance is attached to arrangements for grass-roots liaison and voluntary participation, and under the terms of the Act the council has powers to appoint persons in particular localities to assist it in the fulfilment of its duties. I must emphasise that those arrangements for local representation are for the council to decide and, while the existing arrangements are only in their second year, I believe that the council is satisfied that they are working well.

Following privatisation, the council has been given a specific duty to investigate complaints, and has powers to obtain the information from British Gas necessary for that function. Those are set out in Condition 8 of the British Gas authorisation. With Ofgas, the GCC monitors the code of practice on disconnections and has a right to make representations to British Gas about its operation.

Since privatisation, the Gas Consumers' Council has also been given a role in looking after the interests of industrial gas customers who buy from British Gas on negotiated contracts. The GCC was responsible for submitting evidence to the Office of Fair Trading before the pricing policies of British Gas were referred to the MMC. Your Lordships will however understand that I cannot anticipate the outcome of the MMC inquiry and it would be wrong for me to express a view on how British Gas has conducted its industrial sales until the MMC has reported.

I would say to the noble Baroness that I am aware that domestic gas disconnections in the first nine months of 1987 increased by more than 35 per cent. over the same period in 1986. The Gas Consumers' Council which has a responsibility for monitoring the code of practice on disconnections has carried out an investigation into this increase; it published its findings yesterday. The council, while expressing concern about the rate of increase, could not identify any single explanation for it but pointed to a number of possible contributing factors. For example, the council found that disconnections were taking place in respect of smaller debts and after a shorter length of time in arrears.

The council acknowledges that it is beneficial to speed up the debt collection process so as to minimise the size of debt before it becomes unmanageable. I agree with the noble Baroness that other possible factors are the gradual phasing out of coin payment meters except in cases of hardship and the failure of the customer to make contact with British Gas. This obviously is a difficulty and British Gas is fully aware of that. The council has suggested measures on how these problems may be overcome. When the noble Baroness suggests that unemployment is a factor in the increasing number of disconnections, I would say to her that statistically the unemployment figures are going down while the number of disconnections is going up.

Baroness Ewart-Biggs

My Lords, that was not my statement. It was the Gas Consumers' Council which said that unemployment might have been one of the reasons for the disconnections. That appeared in its statement yesterday.

Lord Beaverbrook

My Lords. I am grateful to the noble Baroness. I was pointing out that there seems to be some inconsistency; whether it is right or wrong is probably a matter of opinion.

I would say to the noble Lord, Lord Ezra, that the reason for the complaints by contract customers going to the Office of Fair Trading and the MMC is that contract customers, at the time when the Gas Act 1986 was being passed, opted to stay out of the regulatory system and to deal with British Gas direct. It was a decision those customers took. It is not a position forced upon them.

Lord Ezra

My Lords, if the noble Lord will permit me to intervene, perhaps he could indicate in what form that was done. Was it done through the CBI, or were all contract customers consulted? I must say that although I sat through the Committee stage of the Bill. I was not aware that that had emerged.

Lord Beaverbrook

My Lords. I cannot tell the noble Lord tonight. He may have sat through the Committee stage of the Bill. It was before I came to your Lordships' House so I do not have knowledge of that. But I shall find out and let him know.

I was about to say to the noble Baroness that the Gas Consumers' Council has only recently completed its first full year of operation. We are currently reviewing that first year to try to estimate how successful the council has been. I accept that some concern has been expressed at the extent of local representations. This is one of the matters we shall consider in our review.

Finally, I should like to say to the noble Baroness that the Government have made clear that consumer protection will be a top priority in a privatised electricity industry. In deciding on the most appropriate consumer arrangements, the Government will certainly look at the experience of gas and telecommunications. I hope that I have been able to assure the noble Baroness and all noble Lords that the arrangements introduced to protect the interests of gas consumers and telecommunications users are appropriate to the industries to which they relate and, more importantly, they are effective.