British Telecom: Price Changes (Hansard, 23 October 1989)

§ The Minister of State, Department of Trade and Industry (Lord Trefgarne)
My Lords, there is no simple measure of the average change in all of the charges made by British Telecom. For the most commonly used services, which are controlled under British Telecom's licence, prices are now about 17 per cent. less in real terms than they were at the time of privatisation.

The Viscount of Oxfuird
My Lords, I thank my noble friend for that Answer. The figures given prior to privatisation show that the average increase in charges for residential telephones was well above 13 per cent. In the light of the new user rebates, can my noble friend say what benefits residential users can expect?

§ Lord Trefgarne
My Lords, British Telecom has been revising its low-user rental rebates. It has recently made further improvements to the scheme which I am pleased to be able to say will especially help the disabled and elderly.

§ Lord Peston
My Lords, I did not understand the Minister's Answer. Can he tell the House simply how much prices have risen for the typical business and household users?

§ Lord Trefgarne
My Lords, the calculation is not as simple as the noble Lord may imagine, but I do not criticise him for that. Since privatisation there has been a reduction in the prices which are controlled under British Telecom's licence of about 17 per cent. in real terms.

§ Lord Peston
My Lords, I hate to be a nuisance, but I do not believe that the question has yet been answered. It was: what has been the average price change and how much extra does it cost in ordinary, everyday money? It cannot be a difficult question, because "real terms" means the actual increase minus the increase in inflation. I do not believe that the answer will be embarrassing to the Government and I wonder what it is.

§ Lord Trefgarne
My Lords, the answer is not embarrassing to the Government but is rather difficult to arrive at in precise terms. BT is allowed different rates of increases for different services and 1136 therefore I cannot give the simple answer which the noble Lord requests. I should be happy to do so if my mathematics were sufficiently sophisticated. However, if the noble Lord wishes I shall write to him giving more detail.

§ Lord Grimond
My Lords, can the Minister tell the House what has been the increase in the cost of an ordinary local call?

§ Lord Trefgarne
My Lords, as regards BT's latest proposals, the unit charge, which falls within the RPI minus 4.5 per cent. formula agreed with the Director General of Telecommunications, remains the same but there will be a small increase due to a shorter time allowance. Other charges within the same bracket will be treated differently, so, again, the calculation is not straightforward. Needless to say, all the charges have been agreed with the director general.

§ Lord Hailsham of Saint Marylebone
My Lords, is not the expression "average" sensibly applicable only to sets of figures which relate to a single comparable series; and unless that is so is it not a totally meaningless figure?

§ Lord Trefgarne
My Lords, I do not for one moment suggest that my noble and learned friend's question is meaningless. However, given the wording it is difficult to arrive at a precise answer. Since privatisation the charges to residential customers have been reduced by about 10 per cent. in real terms, and that is of considerable benefit to them.

§ Lord Mulley
My Lords, since the noble Lord has difficulty with his arithmetic I shall give him a simple problem. Can he tell the House how the cost of long-distance calls compares as between BT and Mercury? My experience is that Mercury is much cheaper.

§ Lord Trefgarne
My Lords, the noble Lord is correct; Mercury's charges for long-distance calls are significantly cheaper. My department makes substantial use of the facilities provided by Mercury simply because of the better value for money that they represent. Indeed, I have a Mercury telephone on my desk.