Competition and Service (Utilities) Bill

HL Deb 05 March 1992 vol 536 cc1053-98

House again in Committee on Clause 1.

Lord Williams of Elvel moved Amendment No. 24: Page 3, line 17, at end insert: ("( ) having determined the standards of overall performance under paragraph (a) above, give due regard to the price regime which he or she approves to assess whether that price regime is appropriate in relation to the provision of the standards of overall performance; and that he or she will have power to require the operator to change that price regime to one which is commensurate with the standards of overall performance which are met and the cost structure of the operator in meeting those standards,").

The noble Lord said: In moving this amendment, which was tabled also by my noble friend Lord Desai, it may be for the convenience of the Committee if I speak also to Amendment No. 25.

Amendment No. 24 seeks to establish a relationship between the standards of overall performance which are to he set by the director and the price regime. It is our belief that, as I said on Second Reading, the only way in which one can successfully ensure that a standard of performance is observed is by affecting the profit and loss account of the operator. It seems to us that that is a perfectly proper way of going about things. It should not be considered so much in the nature of a fine, and it certainly should not be considered a subsidy. But if there is a failure to meet the standards of overall performance, it seems to us that the designated operator should suffer where it hurts most—in his profits. That is the point of Amendment No. 24.

Amendment No. 25 is somewhat different although it relates to the price regime. There is a sometimes rather worrying tendency for operators to avoid what is known as "cross-subsidisation". In general, cross-subsidisation is not necessarily a desirable phenomenon, but there are occasions when it is so difficult to allocate the overheads between different services and to decide the result of certain services that are perhaps given for free that cross-subsidisation is desirable and, indeed, justified.

Perhaps I may cite directory inquiries as an example to the Committee. At the moment, the directory inquiries service that is managed by BT costs an inordinate sum of money. I believe that it costs 43.5p per inquiry. In the United States, directory inquiries cost nothing provided that a call is put through immediately afterwards. That is the important point about directory inquiries—they generate calls. It seems to me that the United States system, which is a form of cross-subsidisation, is one that we should permit and, indeed, encourage here. However, it is not only the United States that practises that system. Directory inquiries are free in Canada. In the United States, directory inquiries without a subsequent trunk call are charged at about 15p. In France, Australia and Spain directory inquiries are free. In Germany, directory inquiries cost 7.6p and in Belgium 8.5p. All those figures show that there is some measure of cross-subsidisation in all the countries that I have cited. That seems desirable when the point is to try to encourage business for the designated operator.

I have accepted the grouping of the two amendments because both relate to the price regime. The point is that the director should not only have responsibility for operating the price regime as set out in the Telecommunications Act and in subsidiary legislation but should also link the standard of performance to the price regime. Within the standards of performance, an efficient directory inquiries system should take account of the prices charged to the end user. I beg to move.

Lord Reay

Amendment No. 24 would require the director to ensure that the price regime was appropriate to the overall standard of service provided by the designated operator and the operator's cost structure.

The regulator will clearly set standards against the background of the currently agreed price regime. The Bill provides effective measures for preventing a reduction in standards of services so as to achieve a hidden price rise by providing for compensation for failure to meet individual standards and for enforcement of compliance with overall standards.

In addition, the Director General of Telecommunications has general duties under Section 3 of the Telecommunications Act 1984 which are relevant. The Act already requires him to secure that those providing telecommunication services are able to finance the provision of those services. He must also promote efficiency and economy on the part of service providers. He must exercise his functions in the manner best calculated to promote the interests of consumers, purchasers and other users in the United Kingdom in respect of the prices charged for, and the quality and variety of, telecommunication services provided and telecommunication apparatus supplied. There are similar provisions relating to the other regulators.

There can therefore be no question but that the regulators will take due account of all relevant factors, including the achievement of overall standards and the cost structure of the operators, in exercising their functions, including when they review the price caps.

One thing I would like to mention while we are on the subject of standards and prices is that Sir Bryan Carsberg has recently issued a consultation paper on this subject which can be obtained from the Office of Telecommunications. Customers, including any noble Lords, have the opportunity to respond to this and to express their views on BT's standards of service and their relation to prices. Any comments on the consultation paper should be submitted to Oftel by 27th March.

For the reasons I have given, I consider that the issues raised by the amendment are already adequately covered by the Bill.

Amendment No. 25 would allow the director to require a designated operator to provide free information and advice services, paid for by the users of other services. BT is required by its licence to provide a free directory inquiry service to the blind and others who have a disability which makes them unable to use the normal phone book.

Any information and advice services which BT provides must be funded from somewhere. If a service is provided free of charge or at a price below what it costs to provide, the cost will inevitably have to be recovered through higher call charges for all customers. We believe strongly that it is only right and fair that those who use a service should in general pay for it rather than the cost being borne by every customer whether they use the service or not.

Lord Williams of Elvel

The point I was trying to make was that by having a cheap directory inquiry service, BT, or any designated operator, would generate a higher volume of business rather than merely spread the cost over the same volume of business.

Lord Reay

I see the noble Lord's point, but when BT started to charge for directory inquiries at the same time it cut the price of national calls by 7.3 per cent. If BT were required to provide a free directory inquiry service, that would be unfair competition for those other companies, including some which are not telecommunication operators, which provide similar services; so I cannot accept the amendment.

Baroness Oppenheim-Barnes

Surely, my noble friend will agree that this is a business judgment for BT to make. If it were to think that it would generate a greater volume of calls as a result of having a free directory inquiry service, that would be a judgment it could make and act upon. I hope that it would not be prevented from doing that because it represented unfair competition. As a telephone user, I should hope not to be subsidising free directory inquiry calls. I saw tremendous abuse of the service when it was free. I have seen secretaries and other people sitting at desks with a pile of telephone directories in front of them. It was easier for them to pick up the telephone and call directory inquiries than to look up the number in the directory.

There are two conflicting arguments. I am sorry to make the matter more complicated. The first is that I hope my noble friend will confirm that BT could make that business judgment, if it wanted to. Secondly, I should like it on the record that I do not believe that the service should be free and subsidised by other telephone users.

Lord Reay

I am sure that my noble friend is right in saying that there can be abuse of the service. She is right when she draws attention to the fact that the noble Lord is raising commercial matters which, in the first instance, must be for BT.

Lord Williams of Elvel

Will the Minister also respond to the noble Baroness's other point? Is BT at the moment at liberty to offer a free directory inquiry service?

Lord Reay

The agreement reached was that BT should introduce charges, which it did in April 1991. At the same time, the price of national calls decreased by 7.3 per cent.

Lord Williams of Elvel

That is the true answer: under its licence, BT does not have the power to agree a free directory inquiry service. I believe that the director general has laid down that there should be no cross-subsidisation within BT, and I believe that he sticks to that ruling.

I apologise for interfering in what is perhaps a private dispute on the other side, but it is something at which the Government should look. Perhaps it is more properly looked at in respect of the licence for designated operators than it is in the Bill. I accept that. As we are dealing with what is essentially a privatised monopoly—BT is still a privatised monopoly—it is a matter for regulation rather than pure competitive factors. If there were five operators in the market, which could knock out BT's monopoly once and for all, I would accept the noble Baroness's argument about commercial competition.

I am grateful to the Minister for telling me that Amendment No. 24 is unnecessary. I am glad about that because it is important to get that point on the record. We have a difference of opinion about Amendment No. 25. I suspect that it is a difference of opinion that will continue and one that cannot be resolved across the Floor of this place. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 25 and 26 not moved.]

Clause 1 agreed to.

[Amendment No. 27 not moved.]

Clause 2 [Information with respect to levels of performance]

Lord Williams of Elvel moved Amendment No. 28: Page 3, line 28, leave out ("levels") and insert ("standards").

The noble Lord said: It may be for the convenience of the Committee if I speak also to Amendments Nos. 92 and 107. This is not really an amendment. I am merely trying to find out whether the language is right. On reading the Bill, I did not quite appreciate and understand the difference between "levels of overall performance" and "standards of overall performance." It seemed to me that different words were used at different times in the Bill. For instance, on page 3 we have, the levels of overall performance", but if we turn to Amendment No. 92, which takes us to page 13, we see that it relates at line 25 to determine such standards of overall performance", as opposed to "levels of overall performance". I then turn to Amendment No. 107, which takes us to Clause 20, and the wording is, that supplier's level of performance as respects each of those standards".

I merely ask the Minister to comment upon the language to see whether, in the Government's view, it means the same in all parts of the Bill. There may be some draftsman's error here. I beg to move.

Lord Reay

I was not certain what the amendments were intended to achieve. The noble Lord explained that they are in the nature of probing amendments to discover the meaning of the words that we have adopted in the Bill. The Bill refers to performance in two ways. When it refers to the director general setting targets for performance it uses the term "standards of performance"; when it refers to how well a company has measured up to those targets, it talks about "levels of performance" that the company has achieved against the standards that have been set for it. In other words, for every target there is one standard to be achieved, but there may be many levels of performance against that target. That use of the words is consistent throughout the Bill. As the clause refers to collecting information about performance against targets that have been set, the word "level" is appropriate.

Lord Williams of Elvel

I am most grateful to the Minister who has reassured me. Will he now tell me what "overall performance" means? What is the definition of "overall"?

Lord Swinfen

While my noble friend is thinking, I should have equated the meaning of "levels" with quantity and that of "standards" with quality. Somehow, to my way of thinking, my noble friend's explanation does not add up. We attended the same school many, many years ago. We were both taught by the same English teachers. I doubt somehow that we can both be right in this matter. One of us—probably me—must have failed the examinations.

Lord Reay

The noble Lord, Lord Williams of Elvel, asked me what "overall" means. He appeared to be satisfied with my explanation of the use of the words "level" and "standards." Overall performance is the performance which the company must achieve; for example, 95 per cent. of telephone boxes have to be working. That would be an overall standard. I cannot improve upon the explanation I have given. The best I can propose is that the noble Lord read the explanation in Hansard tomorrow.

Lord Williams of Elvel

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 29 to 31 not moved.]

Clause 2 agreed to.

8.30 p.m.

Lord Williams of Elvel moved Amendment No. 32: After Clause 2, insert the following new clause:

("Advisory body for premium rate services

—(1) The Director General of Telecommunications shall, in consultation with the Secretary of State, establish a further advisory body under section 54 of the Telecommunications Act 1984 (power to establish advisory bodies) for matters relating to premium rate services, and that section shall he amended in accordance with the provisions of this section. (2) In subsection (4), after paragraph (b) there shall be inserted— and (c) an advisory body for premium rate services. (3) After subsection (6) there shall be inserted— (6A) In the case of the advisory body for premium rate services, the body shall, in addition to its duties under subsection (6) above, have the duty of advising the Director whether any premium rate service should, in the opinion of the advisory body, be discontinued. (4) After subsection (8) there shall be inserted— (9) For the purposes of this section a premium rate service is a telecommunications service made available by a public telecommunications operator on the basis that a payment will be made to the person providing the service which represents the whole or part of any sum charged to a consumer using the service".").

The noble Lord said: On behalf of my noble friend Lord Morris of Castle Morris, I beg to move Amendment No. 32 and it may be for the convenience of the Committee if I speak also to Amendment No. 62 in the name of the noble Lord, Lord Ashbourne.

We are dealing here with premium rate services. The purpose of my amendment, which requires the setting up of an advisory body for premium rate services, is to explore with the Government exactly where we are in relation to premium rate services; that is, after the announcement by the director general that chat lines would in some way be prohibited or that the code of practice would be removed and therefore they could not operate.

There are many problems with premium rate services. Some messages have been offensive and there are problems of advertising and costs and of their impact on families. We believe that there has been progress in controlling the services, but it is important in our view, that there should be some statutory arrangement that would replace the non-statutory body which supervises these matters at the moment. The Independent Committee for the Supervision of Standards of Telephone Information Services is, I believe, the full name. That would imply that there would be a power to ban services completely.

The lesser alternative is the one in my Amendment No. 32 which is to have an advisory body for the services. It would have the duty of advising the director general whether any given premium rate service should be discontinued. The director general would obviously have the power to require the operator to discontinue the service.

The problem is complicated. One does not wish to restrict proper initiative but, on the other hand, we do not wish to see the telephone network used for what might be regarded as improper purposes. I beg to move.

Lord Ashbourne

At Second Reading I said that I favoured the replacement of ICSTIS, the Independent Committee for the Supervision of Standards of Telephone Information Services, by a statutory body to give it teeth. That is what Amendment No. 32, cogently moved by the noble Lord, Lord Williams of Elvel, does. As both Amendment No. 32 and Amendment No. 62 are concerned with the regulation of telecommunications, with the leave of the Committee I shall take it that any decision on Amendment No. 32 will be binding on Amendment No. 62, which will not then be moved separately.

Amendment No. 62 is an enabling amendment to help deal with the problems and suffering caused by premium rate services. The amendment would give the Director General of Telecommunications a new power to provide that a category of premium rate services or 0898 numbers should be available only at the explicit request of the telephone subscriber. He can reach his decision having taken the advice of a statutory committee such as that proposed by the noble Lord, Lord Williams, in his amendment, or he can do so at the request of a telecommunications operator like British Telecom.

I have the highest regard for the way in which the present Director General of Telecommunications, Sir Bryan Carsberg, has conducted his responsibilities. I know that he has been profoundly worried about the problems of premium rate services from their inception. I am sure that if this new power were available to him, he would not hesitate to use it if he believed that certain services were causing such problems that they should be available only on request.

Before I tell the Committee why I believe that opting in is a good idea, I wish to respond to the Minister's comments on my speech at Second Reading when I briefly mentioned the need for opting in. In essence, the Minister said that this idea had been considered by the Monopolies and Mergers Commission and had been rejected. But that seems a poor reason for rejecting the concept of opting in.

The Monopolies and Mergers Commission became involved in the issue because it has a role under the Telecommunications Act 1984 to consider matters referred to it by Oftel where it appears that some aspect of the monopoly in the provision of telephone services is acting against the public interest. In my view, the MMC's expertise lies in economic regulation. It was not well placed to consider this kind of social problem. Its report now looks like a dated, historical document. The worsening problems on premium rate services and the huge growth in the market have occurred since it reported.

Some of the MMC's recommendations caused real difficulties. For example, on chat lines which showed serious problems at the time it argued that the adverse effects did not justify the virtual cessation of the services. Since that time British Telecom stopped chat lines for a period, then they came back and now the Director General of Telecommunications announced only last Monday that they should stop. All that stop-go could have been avoided if the director general's advice had been taken in the first place.

The same is true of opting in, where the Director General of Telecommunications went on public record to the MMC as strongly arguing that this should be introduced for certain categories of service. The MMC perversely rejected his view. The director general has not changed it and I have seen a letter from Oftel as recently as last December confirming that he would prefer to see what I describe as opting in. I therefore believe that we should not be over-persuaded by what the MMC said three years ago. We need to deal with the situation now and with the expert view of the Director General of Telecommunications.

The present situation is that anyone who has access to a telephone can make premium rate calls unless the telephone subscriber specifically requests otherwise. The operation is described as call barring and it is to stop the use of 0898 calls from a certain number. I have gone through the process for my flat, about one mile from here, and for a house in Hampshire. The reason I did it is that I do not wish to be faced suddenly with a telephone bill for, say, £1,000 a month, whereas previously it had only been £100. I do not think that this is likely to happen to me. But I ask Members of the Committee to reflect on whether they believe it will happen to them. I suspect that most of them probably think that it will not and they may be right, but the point is that it happens to some people. It comes as an unpleasant shock.

The present regulation is rather like locking the stable door after the horse has bolted. I support the amendment because it would lock the stable door before the horse has bolted. The amendment seeks to make it necessary to opt in. It must be done in writing before premium rate calls can be made from the telephone in question. Thus the subscriber must make a conscious decision to opt in to premium rate services if he wishes to make 0898 calls. Opting in is strongly favoured by the Director General of Telecommunications. I commend both amendments to your Lordships.

Lord Reay

Amendment No. 32 would oblige the director general to set up an advisory body on premium rate services (PRS). The advisory body would have a duty to advise the director if in its opinion a particular premium rate service should be discontinued. However, the amendment fails to take account of the arrangements which are already in place to control premium rate services. There already exists an Independent Committee for the Supervision of Standards of Telephone Information Services, known as ICSTIS, which is an effective independent watchdog. As a result of its efforts, 350 services were removed or amended in 1990. Last year it recommended the removal of 255 recorded message services, amendment of nearly 200 others and amendment of over 235 advertisements. That is evidence of its effectiveness in controlling the excesses of the industry.

This week's news provides further evidence of the strength of the regime which we already have. The Director General of Telecommunications has publicly stated his intention to revoke the code of practice. The result of that will be that in one month from now these chatline services will cease to exist. As noble Lords will have gathered from the press, this is because the chatline service providers have failed to keep their compensation fund at an adequate level. I understand that BT has offered to make funds available for any outstanding claims from those who have suffered as a result of chatline use. I would argue that this week's events show very clearly that the powers of Oftel and ICSTIS are very effective.

I have two further difficulties with the amendment. It gives no indication of the grounds on which the proposed new body might recommend disconnection of a premium rate service. I should also point out that the effect of subsection (4) as drafted would be to include within its definition of a premium rate service virtually all telecommunications services, including ordinary voice telephony. We believe that the present watchdog already provides an effective safeguard for the user of premium rate services and that experience so far supports this.

Amendment No. 62 would enshrine in statute the idea of opting in to premium rate services: that is to say that they would be provided only to customers who specifically ask (in writing) to have the possibility of calling such numbers. Opting-in was given thorough consideration by the Monopolies and Mergers Commission in 1988 and rejected by it. Instead it recommended a range of measures to protect customers, most of which have already been implemented by BT.

These measures add up to a strong package of safeguards which are already in place and in the pipeline. Among these I would draw the Committee's attention in particular to call barring, which is a means of preventing premium rate services from being dialled from a subscriber's number. It is now available, free of charge, to 50 per cent. of BT's customers and should be available to over 90 per cent. by the end of 1995. Another way the customer can keep track of calls and their costs is by requesting itemised billing. This is available to 75 per cent. of BT's customers and all of Mercury's and Vodafone's. These and the other measures recommended by the MMC, in our view, provide adequate safeguards for the customer.

There is an additional aspect of this amendment which raises an important issue of principle: it seeks to introduce a new way of modifying a public telecommunications operator licence, which is currently possible only by agreement between the operator and the director general or upon reference to the MMC. To add a new power for the director general to change the licence unilaterally seems to me to open up new uncertainties for telecommunications operators and place them in a significantly weaker position than they have hitherto had in the regulatory system.

In the light of the safeguards which already exist which flow directly from the Monopolies and Mergers Commission's consideration of this very question in 1988, I consider that the proposed amendments are unnecessary.

Lord Williams of Elvel

I am most grateful to the noble Lord for his full response. This is a complicated subject and we shall certainly have to read what he has said. I must say that I am not entirely convinced by the noble Lord's response, but I shall have to study it with greater care and consider what to do after that. In the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 [Information to be given to customers about overall performance]:

Lord Williams of Elvel moved Amendment No. 33: Page 4, line 26, after ("inform") insert ("free of charge").

The noble Lord said: In moving Amendment No. 33 it may be for the convenience of the Committee if I speak also to Amendment No. 112. These amendments are self-explanatory. As in the case of Amendment No. 33, I assume the consumer will be informed about the material in question without having to pay for that. I beg to move.

Lord Reay

I have some sympathy with Amendment No. 33 and agree that it is important that customers are fully informed about the standards they should expect and whether they are being achieved. I do, however, feel that this extra requirement is not needed. The way in which a designated operator disseminates information on overall performance is already subject to the agreement of the director general and in almost every conceivable circumstance I believe the director general would stipulate that the information should be provided free of charge. I say almost every conceivable circumstance advisedly. It is an important consideration that, in setting up independent regulators, we do not tie their hands in such a way as to impinge on their effectiveness. It is feasible that sometime in the future circumstances may change, for example the director general might see a need for a newly designated operator to recoup postal charges in some way. It is difficult to prejudge entirely future circumstances and I would argue that the discretion of the director general is the best safeguard rather than detailed requirements of the type proposed.

As regards Amendment No. 112, part of Clause 22 requires an electricity supplier who intends to take a customer to court to recover money owed for the provision of electricity supply services to give the customer at least 28 days' notice and to inform him of his rights under this clause to have any dispute over the amount owed to be determined by the director or an arbitrator. The amendment would mean that under no circumstances could the customer be charged for action the supplier had to take to fulfil this duty. The Secretary of State may prescribe the manner in which the supplier must inform customers about possible court action. This will enable him to ensure that the way customers are informed will in practice avoid customers incurring a charge.

I have some sympathy with the thrust of the amendment as I do not believe that in general customers should be charged for being informed of their rights and given a chance to settle a dispute without going to court. But the requirement to inform also covers the small minority of customers who have no dispute but simply refuse to pay. This is as it should be—even such people have the same rights to be informed as those involved in a genuine dispute. It may, however, be appropriate to make different arrangements over paying for action the supplier has had to take in relation to such customers. If after consultation the Secretary of State believes this to be necessary, he should have the power to make those arrangements.

Lord Williams of Elvel

I am grateful to the noble Lord for that response. It seems to me that he sympathises with my amendments but refuses to put them on the face of the Bill. That seems to me a rather perverse attitude, but there is nothing much I can do about it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 agreed to.

Clause 4 [Procedures for dealing with complaints]:

Lord Williams of Elvel moved Amendment No. 34: Page 4, line 45, leave out ("him") and insert ("the Director").

The noble Lord said: Surely in the new Section 27E to be inserted in the Telecommunications Act 1984 it should be the director who decides who should be representative rather than the operator. Is that not right? I beg to move.

Lord Reay

This amendment would require the director to lay down the persons and bodies to be consulted by a designated operator on its proposed complaints procedure. The establishment of a procedure for handling complaints is principally a matter of day to day management for the designated operator. In order to ensure that the interests of customers are properly protected, the Bill requires the operator to consult customer representatives and to get the director's approval for the procedure. Since it is for the designated operator to undertake the consultation, in our view it would be an unusual and unnecessary interference in the operator's business for the director to dictate who should be consulted.

The Bill requires a designated operator to have a complaints handling procedure, but the operator cannot establish such a procedure without the director's approval. If the director considers that there are deficiencies in the proposed procedure as a result of inadequate consultation, it is open to him to withhold his approval.

I consider that these arrangements provide adequate protection for customers and that there is no justification for the interference in the operator's business which would result from the amendment.

Lord Williams of Elvel

In practice, therefore, the noble Lord is saying that the operator will decide who he consults, but, if the operator does not consult the people the director thinks he ought to consult, then the director can tell him to change his procedures. Is that right?

Lord Reay

The operator cannot establish a complaints procedure without the director's approval. If the director is not satisfied with the procedure which the operator has used and considers that the consultation has been inadequate, it is open to the director to withhold his approval.

Lord Williams of Elvel

Then that meets my point that the director has the final say on consultation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 agreed to.

Clause 5 [Disputes about discrimination etc. in fixing charges]

[Amendments Nos. 35 to 38 not moved.]

Clause 5 agreed to.

Clause 6 [Billing disputes]

[Amendment No. 39 not moved.]

Lord Allen of Abbeydale moved Amendment No. 40: Page 7, line 9, after ("which") insert ("in all the circumstances is fair and reasonable for").

The noble Lord said: In moving Amendment No. 40, I should like to speak also to Amendment No. 41. I shall go further and point out that something has gone wrong and that Amendment No. 41 should read: leave out ('is entitled')", rather than just "entitled".

I welcome the clause giving Oftel the power to determine billing disputes, which make up such a large proportion of complaints. However, I remain uneasy about the limitation of the power to determine disputes only in accordance with the contract. That is a point I made at Second Reading.

It is reasonable enough that an operator should be able to recover payment for calls which its equipment shows as occurring on a certain line, but trouble arises because of the insecurity of the network. When I tried to explain the problem at Second Reading I failed to make myself clear because the Minister, when responding to the debate, did not answer the point I had tried to make. He said: If a telephone line is tampered with—and that occurs outside the customer's premises,—then British Telecom is only entitled to the cost of calls that have been legally made". —[Official Report, 14/2/92; col. 960.] I am not absolutely sure that the note which the Minister received from the Box about legality was quite right. As I understand it BT undertook last March not to press customers on calls which did not cross the network terminating point, but the changes to the contract have still not been made so that in contractual terms the customer is still liable for calls which do not cross the network terminating point.

More important than that, I venture to think that the Government's response, both here and in another place, has paid insufficient regard to reality. In the end it comes down to problems of proof and in any dispute the operator has all the big guns.

Perhaps I may take as an example the case of a member of the Consumers' Association. He was baffled when he was woken up by his telephone ringing during the night. It rang three times between 2 o'clock and 4 o'clock in the morning. It was his BT call-back facility informing him of the cost of the last call he had made. That is a useful service for people who work from home. The individual took the matter up with BT and was told to ignore the problem as the facility was obviously not functioning properly. However, when his bill came it showed the 0898 numbers which matched the times of the calls which had woken him up. He then wrote to BT, who said that their print-out showed that the numbers were used during the period of monitoring and that there was no reason to doubt the charges. The matter was taken up with Oftel, which in its turn said that there was nothing it could do. No one seems to have taken any account of the extraordinary surrounding circumstances. In the end, instead of taking the matter to arbitration—as he could have done then but will not be able to do once this Bill is passed—the customer paid up, as is the normal solution in such disputes, rather than face the risk of disconnection.

Clause 6 will give the regulator new powers to demand information from the operator but in the end, as I understand it, he will still be bound by the strictures of the operator's contract. The amendment suggests that he should be given a specific power enabling him to look beyond the contract and to determine a case according to what is in the circumstances fair and reasonable.

From what the Minister has been saying I have a fair idea of what the Government's answer to that may be, but it seems to me only right that, if the regulator is to be given new responsibilities, he should be given the power to carry out those responsibilities effectively and fairly. As we were reminded earlier, he is judge and jury where billing disputes are concerned, and he should have the power to look at all the circumstances where there is a dispute. I beg to move.

Lord Swinfen

When responding to the amendment, will my noble friend let the Committee know how accurate the telephone companies' metering equipment is? If it is inaccurate that could lead to many disputes, particularly with some of the more modern systems where a call which one makes from a number other than one's own can be charged to the account for one's own number.

Lord Reay

This linked pair of amendments would give the Director General of Telecommunications a very wide power to assess the amount which a customer should pay when a bill is in dispute. The present wording of the Bill allows him to determine only what the designated operator is "legally entitled" to recover.

The clause as it stands is intended to enable the director general to determine cases where the customer is questioning the accuracy of the bill. It includes a power for the director general to obtain such information as he may require from the designated operator in order to arrive at his decision on the case. That could well include requiring evidence which would satisfy him that the customer's line had not been tampered with.

The amendments, however, would enable customers to try to persuade the director general that he should consider other matters such as their ability to pay. In other words, it would give the director general far wider discretion and it could potentially deprive the operator of payment for units used on the subscriber's premises. That would take away from the consumer the responsibility for paying bills legally incurred. We believe that that is a principle which should be retained.

The noble Lord raised the matter of unauthorised calls. At the end of the duopoly review the director general announced that he would be asking British Telecom to agree that customers would not be liable for calls made outside their premises. The formal amendment to BT's contract with its customers has still to be finalised but BT assure me that its staff has been instructed to interpret the existing contract in that way and similar instructions have gone to the Chartered Institute of Arbitrators, which is responsible for BT's arbitration scheme for settling disputes.

I recognise that there may be difficulties in some cases in providing evidence of what has gone on. That point was taken up by my noble friend. But BT will still be in the position of trying to obtain payment and therefore it will have to provide evidence sufficient to satisfy the director general that the meter has recorded accurately the units used and that network security has not been violated.

Finally, I should like to take this opportunity to say to the noble Lord, Lord Allen of Abbeydale, that the Bill takes away no existing rights to go to arbitration.

9 p.m.

Lord Swinfen

Before my noble friend sits down, perhaps he will clarify a point with regard to the metering equipment. If a customer is in dispute, is there any way in which he can make an independent check on that equipment or are all checks carried out by British Telecom or Mercury, as the case may be?

Lord Reay

The amendments to BT's licence, which was agreed last year, require meters to be approved to a designated standard of accuracy.

Lord Allen of Abbeydale

I am grateful for the information about arbitration. Obviously I misread the Bill. For the rest, I am afraid that I am not very satisfied with the reply. The amendment has nothing whatever to do with disputes about the ability to pay. It was directly concerned with the question of whether a charge had been wrongly made. The illustration that I gave was intended to demonstrate that point.

It may be that the amendment ought to be drafted in a different way. As I said at the beginning, it is defective as it appears on the Marshalled List. In the light of what the Minister said, I should like to think again about the matter and perhaps return to it at a later stage. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 41 to 46 not moved.]

Clause 6 agreed to.

[Amendment No. 47 not moved.]

Clause 7 [Deposits]:

Lord Desai moved Amendment No. 48: Page 8, line 27, at end insert ("and (c) the conditions under which a deposit shall be returned in a single payment to the customer.").

The noble Lord said: This amendment stands in my name and that of my noble friend Lord Williams of Elvel. The straightforward point is that, in as much as Clause 7 lays down the conditions under which a designated operator will require deposits, we want to add the condition that the deposit will be returned to the customer in a lump sum. The current practice is to deduct the deposit from future bills.

There is a certain amount of evidence from citizens advice bureaux in many parts of the country that customers find that method both surprising and inconvenient. It is surprising because it has not been made clear to them that the deposit will not be returned in a lump sum. But also there is a delay of about four to five quarters before the amount is even credited to their account.

The amendment seeks to ensure that the deposit is returned in a lump sum and in one fell swoop. If there were to be any delay it would be ideal that the lump sum should be repaid with interest. I beg to move.

Lord Swinfen

I support this amendment. There are many people who have small incomes and find considerable difficulty in paying the deposit at all. I have in mind in particular disabled or elderly people. If they are told that the deposit will be returned to them after a year, they may well rely upon that sum and be put to considerable financial inconvenience if the deposit is not returned as a whole.

Perhaps my noble friend can enlighten me on another point. Years ago, when I was managing rented property, the question arose of deposits in respect of rent. I was told that there was never any point in taking a deposit in respect of rent because it counted as rent in advance. Therefore until the deposit was used up, the tenant need not pay that rent. I wonder whether the same position applies to deposits on telephone and power accounts and whether a deposit, which after all is a sum against non-payment of the account when the account is due, is legally payment in advance for those supplies and services.

Lord Reay

This amendment relates to the process whereby the director general and the designated operator agree upon criteria for the requirement to pay a deposit. The effect of the amendment would be to ensure that the criteria included provision for the customer to be given back the deposit in one lump sum under certain conditions.

I understand that BT's practice has usually been to credit, against the fifth quarterly bill sent to the customer, the amount of any deposit it has held. That has worked to the disadvantage of customers who only incur very low bills. We have challenged BT on this question and it recognises the force of the argument that those customers should not have to wait until another quarter has passed before they are reimbursed. Accordingly, I am very happy to be able to tell the Committee that BT has agreed to change its procedure, so that any customer whose fifth bill does not cover the return of the full deposit will automatically be sent a cheque for the remaining sum with interest. The new procedure will require some programming and organisational changes for BT but we expect it to come into effect in May.

My noble friend asked me a specific and separate question, to which the answer is that the deposit is not a payment in advance in the case of a BT bill.

Given that the problem which this amendment seeks to solve by legislation has now been overcome by negotiation, I have no doubt that the noble Lord will wish to withdraw it.

Lord Williams of Elvel

Perhaps we may clarify the matter. The issue has been resolved by negotiation with BT. However, does it mean that it will be resolved with all designated operators? I presume that it is an assurance; it is not legally binding. Alternatively, is it part of the conditions of licence? If it is not, it would be better to put the matter on the face of the Bill. We are pleased with the news that the noble Lord gives us but we are not sure of its status.

Lord Reay

There are only two designated operators. The noble Lord wonders whether the matter has been pursued in the case of Kingston upon Hull. It has not yet been pursued in that case.

Lord Williams of Elvel

Since it is such a desirable objective, should it not be put on the face of the Bill with the agreement of all sides of the House?

Lord Reay

The noble Lord asks for too much. I believe that I gave a satisfactory answer to the amendment. The matter which the amendment seeks to put in the Bill has been dealt with and the outcome that he wishes has been produced. I believe that that is a very satisfactory situation for all concerned.

Lord Swinfen

I am sorry but I am not satisfied with what my noble friend said. I believe that the noble Lord, Lord Williams, is not satisfied. There is nothing to guarantee that British Telecom will not go back on the current suggested agreement. I gather that so far it is only a suggested agreement. There is no guarantee that the other operators will come up to scratch. It would do absolutely no harm whatever to put the issue on the face of the Bill. It is a matter of good faith. I see absolutely no reason why my noble friend should decline to do that. He may not like the exact wording. However, since he is agreeable—he says that people wish to make such a change—there is no reason why at the next stage he should not bring forward an amendment to the same effect with wording that suits him.

Lord Reay

Kingston is a small operator compared with BT. It is not a matter that has yet been pursued with it, but it will be. BT was challenged by us on this question. There is no question of BT not yet having agreed. It has agreed to change its procedure. The arrangement which the noble Lord seeks to achieve by legislation has already been achieved. Therefore I see no reason why a provision should be put on the face of the Bill. However, since noble Lords are so insistent, I am willing to consider the matter further without any commitment.

Lord Desai

I thank the Minister for that clarification and concession. If BT has agreed to change its procedures, it will help BT if everyone else does so too. BT may welcome the fact that if it has decided to behave, everyone else ought to be made to behave too and the matter not left to chance. However, in the circumstances I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 49 not moved.]

Lord Reay moved Amendment No. 50: Page 8, line 29, at end insert: ("(2A) Before settling, or varying, the criteria the designated operator shall consult persons or bodies appearing to him to be representative of persons likely to be affected. (2B) The designated operator shall—

1. (a) prepare a summary of the criteria, with the agreement of the Director;
2. (b) publicise it in such manner as may be approved by the Director; and
3. (c) send a copy of it, free of charge, to any person who asks for one.").

The noble Lord said: The noble Lord, Lord Allen of Abbeydale, and my noble friend Lord Swinfen put down an amendment which I liked and was disposed to accept. However, there were difficulties with the precise wording chosen. I have therefore put down an amendment which seeks to carry out the proposal of the two noble Lords.

The effect of the amendment is to require a designated operator to consult customer representative bodies before setting the criteria for charging a deposit. It also requires that the criteria be publicised and sent free of charge to anyone who requests it in a similar manner to the way in which performance standards are to be publicised. I believe that it will be of considerable benefit to customers to make the practice on deposits more transparent. I recommend the amendment to the House.

Lord Swinfen

I thank my noble friend. I am delighted that I was not called upon to move my Amendment No. 49 and for once to be in total agreement with my noble friend.

On Question, amendment agreed to.

Lord Reay moved Amendment No. 51: Page 8, line 32, at end insert: ("(3A) Subsection (2A) above does not apply to any variation made in compliance with a direction under subsection (3) above.").

On Question, amendment agreed to.

9.15 p.m.

Lord Swinfen moved Amendment No. 52: Page 8, line 32, at end insert: ("( ) The criteria shall provide that disabled people shall be exempt from the requirement to pay a deposit.").

The noble Lord said: The effect of the amendment would be to exempt disabled people—

Lord Williams of Elvel

I am sorry to interrupt the noble Lord so early. Is he speaking also to Amendments Nos. 54, 55 and 59?

Lord Swinfen

I was not but I should be delighted if the noble Lord would like to speak to them once I have moved the amendment. At this hour of the night I am not always as awake as I ought to be.

The effect of the amendment would be to exempt disabled people from the requirement to pay a lump sum security deposit as a condition of receiving a telephone service. Although the exemption will apply to all disabled people without the necessity of a means test, it is likely that many people in this category will either already have a telephone service or will not be required to pay a deposit under existing criteria because they have already established a satisfactory payment record. It is anticipated, therefore, that the majority of beneficiaries of the exemption will be new subscribers who are likely to be on a low income and have not previously had the opportunity to establish any telephone payment record.

Most disabled people are receiving below average incomes. The OPCS survey The financial circumstances of disabled adults living in private households (1988) showed that 75 per cent. of disabled people depend on benefits as their main source of income. Under the Government's community care policies many more vulnerable disabled people can be expected to be living alone or with carers in the community. Access to a telephone will be vital to facilitate their care and their ability to remain independent for as long as possible.

Evidence from citizens advice bureaux, however, indicates that the requirement to pay a deposit is a major obstacle to many disabled people wishing to obtain a telephone service and in some instances a complete barrier preventing them from obtaining any service at all. For many of these people the telephone is an essential service and a lifeline.

A CAB in Merseyside reports the case of a client with severe angina, living alone and receiving invalidity benefit and income support. His doctor says that he needs a telephone. The CAB has successfully helped him to appeal against the refusal of a budgeting loan from the social fund to pay for the cost of installation. But the client now has a letter from British Telecom requiring £125 security deposit. He cannot afford this and cannot see how he can obtain a telephone.

A CAB in Cheshire reports the case of a client with two dependent children who was terminally ill with cancer, separated from her husband and in receipt of income support. She had recently had an operation and was advised by her consultant that she must have a telephone. She received from a charity £150 to have the telephone connected but BT demanded £350 deposit. British Telecom would not move when approached by the CAB. It was determined to get its deposit, showing absolutely no compassion. The CAB was in the process of obtaining another donation from a charity when the client died.

I welcome Clause 7 which will require the telephone companies to establish criteria for deposits, subject to the agreement of the regulator, and provide a right of appeal against deposit decisions to the director. I also welcome the recent change in policy by British Telecom, following intervention by the regulator, which has resulted in a new ceiling on deposits of £150. This will undoubtedly be of considerable assistance to customers in such a position. However, the requirement to raise a lump sum of up to £150 in order to gain access to a telephone service will still prove to be a barrier to many would-be customers. I beg to move.

Lord Reay

I have some sympathy with the effect of this amendment, which would relieve the disabled of the need to pay a deposit and thus ease access to a service which they might need. The Government are similarly concerned that the system shall be fair to those who are disadvantaged, such as the disabled, and Clause 7 of the Bill will ensure that the system is fair, by making the setting of criteria on deposits subject to the scrutiny of the director general.

However, I do not think a blanket exemption from deposits is in fact the right solution. There is already considerable general protection for the disabled under existing legislation and the licence conditions of BT. The director general has a duty to promote the interests of consumers, including, in particular, those who are disabled or of pensionable age. That is laid down under Section 3 of the Telecommunications Act. The director also has a specific body, the Advisory Committee on Telecommunications for Disabled and Elderly People, set up under the Telecommunications Act 1984, to advise him on matters affecting the disabled and elderly.

Clause 7 already provides a check on the criteria for determining whether a deposit should be paid, and if so at what level, by requiring designated operators to seek the director general's approval. The director general can also, under subsection 3, require the operator to modify the criteria. In addition, where a customer is unhappy at a request to pay a deposit, he will be able to appeal to the director general to decide whether the criteria have been properly applied. The director general will have the authority to decide, for instance that it is inappropriate, in a particular circumstance, for a disabled customer to pay a deposit even though he has not previously been a customer.

In addition, BT already pays special attention to the disabled. The needs of disabled and elderly persons are specifically covered in BT's general code of practice and a Guide to Service for the Disabled has also been published. BT's licence requires them to consult the director general from time to time about the supply and connection of apparatus for the disabled. Furthermore, BT provides a wide range of other services helpful to the disabled, including the Supportline Scheme, and has established an Action for Disabled Customers department to help it meet the needs of the disabled.

However, I can assure the Committee that neither the Government, Oftel nor BP are complacent about the issue. Conscious of the anxieties expressed during the passage of the Bill in another place, BT was asked to look again at its policy on deposits with regard to the elderly and disabled. As a result, BT now propose to lift the standard credit vetting of these groups in cases where the customer has applied for the Supportline Service or where the local authority is providing assistance to the customer with the cost of having a telephone under the Chronically Sick and Disabled Persons Act 1970. Where those conditions apply BT will not require a deposit unless the customer has a recent history of default with BT.

That policy will be introduced on a trial basis to iron out any problems which may arise, but the intention is to continue with the policy after the trial. It is a further step in the right direction and serves to show that the combination of existing arrangements and the new provisions in the Bill is robust enough to ensure that the elderly and disabled are properly catered for. I therefore hope that my noble friend will agree that his amendment is not necessary.

Lord Swinfen

I thank my noble friend for his response, particularly the last part, which I found to be of considerable interest. To a large extent the first part of his reply was irrelevant. The amendment deals solely with deposits and not with other services for disabled people. However, the last part was of considerable interest. I should like to read it carefully when it is published in Hansard and consider it further. I shall then decide what I wish to do at a later stage of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Ezra moved Amendment No. 53: Page 8, line 32, at end insert: ("(4) The criteria settled shall provide that the amount of the deposit required shall be reasonable with regard to the customer's ability to pay, where the customer consents to a means enquiry.").

The noble Lord said: This amendment too deals with the question of deposits. Its intention is to ensure that any potential telephone customers who may experience difficulty in paying a deposit are offered the option of making a declaration of their means and of having the amount of deposit fixed with regard to those means.

It is not the intention that all new customers should submit to a means inquiry. A great many customers will not be asked to pay a deposit at all. Of those who are required to pay, many will have no difficulty in meeting the request or will not wish to reveal their means to the telephone company. The deposits will be fixed according to the criteria settled under the present clause as just amended. But the amendment that I am proposing is aimed at those who, because of low income, are at risk of being barred from access to a telephone service altogether by the request for a deposit which is out of proportion to their means.

Evidence from the citizens advice bureau indicates that the requirement to pay a deposit is a major obstacle for low income clients wishing to obtain a telephone service. In some cases it acts as a complete barrier preventing the would-be customer from getting any service at all. I beg to move.

Lord Reay

The effect of this amendment would be to make the criteria set for seeking a deposit take account of the customer's ability to pay for the service, provided that the customer agrees to some assessment of his ability to pay. I can understand the concern that a low income customer regarded as a potential credit risk should not be charged the same deposit as a wealthy customer similarly regarded as a risk. However, I would be surprised if many customers in either category would be prepared to undergo any form of means test.

I appreciate the sad fact that many of those customers on low incomes come into the category of credit risk. However, if BT was not able to require a deposit commensurate with the risk of non-payment, the cost of default would fall on creditworthy customers who were paying their bills and some of these would be on low incomes. I remind the Committee that the cost of customers defaulting on BT bills was £170 million in the financial year 1990–91.

The new provisions of Clause 7 of the Bill will aid the position of all customers regarding deposits. The right of appeal to the director general is provided where customers are unhappy at a request to pay a deposit. The director general will be able to look at whether the deposit criteria have been applied correctly or whether they are inappropriate in the particular case. In the case of someone with a low income, the director general will be able to consider whether there are particular circumstances which should be taken into account. If he decides the criteria have been applied incorrectly or are inappropriate in that case, he can direct the designated operator to reduce the amount of the deposit or lift the requirement to pay any deposit at all. In the light of that reply I hope that the noble Lord will therefore agree that the customer is protected under this Bill and that he will agree to withdraw his amendment.

Lord Ezra

I thank the noble Lord for those explanations. However, I am sorry that he has not been prepared to accept the amendment. It has been proposed by the citizens advice bureaux after a great deal of experience encountered at its various locations. In its opinion it would considerably ease the problem of many who turn to the CAB. Nonetheless, I shall consider carefully what the noble Lord has had to say. In the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 54 not moved.]

Lord Brightman moved Amendment No. 55: Page 9, line 3, leave out ("may") and insert ("shall").

The noble and learned Lord said: This amendment arises on Clause 7 which deals with disputes about pre-telephone connection deposits. At page 8, line 21 of the Bill, it is provided that a telephone company shall settle criteria by reference to which the obligation of an intending telephone user to pay a deposit is to be determined. Subsection (3) at the top of page 9 reads: If the Director or arbitrator (or arbiter) considers that the criteria have not been correctly applied, or that they are inappropriate in the particular case, he may determine—

1. (a) whether the person concerned is to be required to pay a deposit, and
1074
2. (b) if so, the amount which he is to be required to pay, and"—

I add the word "may"— give the appropriate direction to the designated operator". Surely, if the director or arbitrator considers that the criteria have not been correctly applied, or are inappropriate, he should be under an obligation to give the appropriate direction to the telephone company. Surely "may" in line 3 should read "shall". The Committee will note by contrast that in other cases of dispute the director or arbitrator is bound to make the appropriate order. Page 2, line 39, reads, shall be determined by order". On page 6, lines 6 to 8, we see the words: shall … make such order as he considers appropriate —not "may".

I cannot understand why, in the case of a deposit dispute where it is determined that the criteria have not been correctly applied, there is no obligation to give an appropriate direction. I beg to move.

9.30 p.m.

Lord Reay

Under the provisions of Clause 7 the director general, or his appointed arbitrator, can consider complaints from customers about deposits. Subsection (3) of that clause then states that the director general "may" make a determination on the appropriateness of a deposit. The effect of this amendment would be to state that the director general "shall" make such a determination. It seems it is intended to remove any discretion of the director general to do otherwise.

I sympathise with the concept that the director general must make a decision on such a dispute referred to him by a customer, but in practice the director general could be open to judicial review if he refused to do so. It would only be in a very exceptional circumstance that the director might need the discretion not to proceed—perhaps if a customer withdrew a complaint—but in our view it would be unnecessarily restrictive to prevent any flexibility in the Bill. We should like to keep this discretion in existence. I hope therefore that the noble and learned Lord will not press the amendment.

Lord Brightman

I thank the noble Lord for his reply, but I must say that I cannot understand it. The scenario is that the director has decided that the criteria have not been correctly applied, or he has decided that they are inappropriate. The Bill states that in those cases, where he has made his determination, he still has a discretion on whether he gives effect to it. I must confess that to me it is a total nonsense.

Lord Williams of Elvel

I agree with the noble and learned Lord, Lord Brightman. If a complainant withdraws his complaint then there is no reference; the reference is withdrawn under subsection (2). So there is no question of whether the criteria are appropriate, inappropriate, or correctly applied. But once they go through with the reference—that means that the complaint has not been withdrawn—and the director has to determine, as the Bill states and as the noble and learned Lord quotes, where the criteria have not been correctly applied, or are inappropriate, then it must follow that the director or the arbitrator, or arbiter, must take action. It does not seem to me that there is any discretion allowable in the matter at all.

Lord Swinfen

As the Bill is drafted the director or arbiter is allowed to leave everything up in the air; it is just nebulous, and it makes absolute nonsense. My noble friend should reassess his position and give an undertaking that he will consider very seriously what the noble and learned Lord said.

Lord Ezra

I should like to support what other noble Lords have said on this matter. It seems to me the most extraordinary inconsequential use of language. If the director decides that the criteria have not been correctly applied he must determine whether or not certain action has to be taken. There seems to be no point in leaving the rest of the sentence conditional.

Lord Hacking

I should like to join with other noble Lords and ask the Minister to reconsider this point.

Lord Reay

In the light of the strong arguments deployed by noble Lords around the Committee I am willing to look at this matter again. However, I cannot give any commitment.

Lord Brightman

I am most grateful to the noble Lord. In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 56 to 59 not moved.]

Clause 7, as amended, agreed to.

Clause 8 [Disconnections]:

Lord Williams of Elvel moved Amendment No. 60: Page 9, line 40, at end insert ("and any power of that designated operator to discontinue the provision of that service shall be exercised only in accordance with a code of practice on disconnections approved by the Director.").

The noble Lord said: As the Committee will be aware, the gas, water and electricity utilities have statutory codes of practice on disconnections included in their licences. For some reason telecommunications does not. It is not apparently considered to be an essential utility. Indeed British Telecom, so far as I am aware, does not publish its disconnection figures.

Noble Lords will be in no doubt that the telephone is an essential means of participating in modern life and in some cases it is a means of survival. There are particular groups such as elderly people and people with disabilities for whom the telephone can be neither more nor less than a lifeline. Social services departments increasingly rely on telecommunications for successful implementation of community care policies. The telephone is a vital part of modern life. It seems to us that the telecommunications business should be brought into line with gas, water and electricity. That is what we intend to achieve by this amendment. I beg to move.

Baroness Oppenheim-Barnes

I hope that my noble friend will not accept this amendment. I entirely understand the point about people for whom the telephone is a lifeline and of vital importance but for most other people the telephone is not vitally important. There are more telephone boxes situated up and down the country, and in working order, than there have been for many years. It is perfectly right that the disconnection rule has been made with regard to gas, electricity and water. I cannot accept that people who are in good health and are able to go out to a telephone box should have this special consideration.

Lord Reay

This amendment would compel designated operators to agree a code of practice on disconnections with the director. BT has already established procedures so that customers are not disconnected for debt unless they have been given every opportunity to pay their bill or contact the company to discuss the problem. Its policy is to try and come to an arrangement with customers who are experiencing difficulties, and as a result the number of people actually disconnected is a small proportion of those initially warned about disconnection.

BT also has special arrangements for the disabled, such as the protected service scheme, which enables "at risk" customers to nominate a friend or relative as guarantor. If the subscriber does not pay the bill BT will contact the guarantor who may then pay instead. This can provide a good deal of peace of mind as it helps avoid the possibility of disconnection as a result of bills being inadvertently left unpaid, for example, during an extended stay in hospital.

The director recently issued a consultative document on the future of BT's price caps. In that document he acknowledged that there is public concern about the company's policy on disconnections. In recognition of this concern the director has said that he intends to review BT's disconnections policy. He will do this after the passage of the Bill so that he can conduct his review in the context of the new regulatory framework which is being laid down. I welcome this review.

The director general already has the power to seek amendments to BT's licence if he sees the need to establish a more formal code of practice on disconnections. We must wait and see the outcome of his review. I hope that the noble Lord will be prepared to allow the director to come to a judgment after assessing all the facts and that he will not press his amendment.

Lord Williams of Elvel

I am glad to hear that the director general is making this review. I believe that that is very important. I hope very much that, as a result, there will be a code of practice on disconnections. I am afraid that I fundamentally disagree with the noble Baroness, Lady Oppenheim-Barnes; where I come from in mid-Wales, telephone boxes are situated about five miles apart and there are many sick, elderly and disabled people in the area. If the gas, water and electricity utility codes of practice apply to the well off, I do not see why a telephone disconnection code of practice should not also apply to them.

Baroness Oppenheim-Barnes

We are not talking about well-off people. I made it perfectly clear that there should be a no-disconnection policy in relation to elderly and disabled people. I made the distinction quite clear. I was speaking about people who are healthy and quite capable of walking five miles.

Lord Williams of Elvel

To my mind that constitutes a code of practice. However, let us not argue about definitions. I thank the Minister for his response. We shall certainly wait to see what the director general brings forward after the review. I am glad that he is taking such matters into consideration. In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 agreed to.

9.45 p.m.

Clause 9 [Enforcement of standards of performance, etc.]:

Lord Hacking moved Amendment No. 61: Page 10, line 1, leave out ("achieve") and insert ("conduct his business in such a way as can reasonably be expected to lead to his achieving").

The noble Lord said: I should point out to Members of the Committee that I intend to speak just to Amendment No. 61. Amendment No. 63, which is also tabled in my name and grouped with this amendment, covers a different matter. Amendment No. 113 which is tabled in the name of the noble Lords, Lord Williams of Elvel and Lord Desai, has, so far as I can ascertain—although the noble Lords will no doubt put me right if I am wrong—no connection whatever with the amendment now before the Committee. The amendment is of considerable importance to the telecommunications industry.

Lord Williams of Elvel

I am sorry to intervene. But do I take it that the noble Lord is to speak separately to Amendment No. 63 and therefore allow us to speak separately to Amendment No. 113?

Lord Hacking

I can only speak for myself. As I said, I intend to speak separately to Amendment No. 63. The amendment is of considerable importance to the telecommunications industry. It seeks to relieve the industry of the absolute duty in the enforcement of the new overall standards of performance. That is fair; the industry is rightly worried about matters beyond its control. For example, as was cited on Second Reading by the noble Baroness, Lady Gardner of Parkes—who, alas, is not present in the Chamber—the extensive damage to the overhead cabling in the 1987 hurricane fell into the category of events over which British Telecom had no control.

I thought it right to investigate this matter further and inquire of the circumstances in more detail. I learnt that no degree of reasonable planning and forethought could have enabled British Telecom to tackle the damage caused by the storm so quickly and efficiently that there would have been no decline in overall performance. Yet, in the Bill, any failure to meet the overall standards will be treated as if British Telecom has breached its licence so enabling the director to take enforcement action.

On Second Reading, as some Members of the Committee may recall, the noble Baroness, Lady Gardner of Parkes, cited other examples of deliberate action to vandalise and put pay phones out of action. When I raised the matter on that occasion, I argued that not only was it unfair and impractical but that it also displayed an unevenhandedness by the Government towards the regulation of the utility industries. I drew attention to the equivalent position for the gas industry which is covered in Clauses 11 and 12 of the Bill and in the new Section 33C(3) of the Gas Act 1986.

I also drew attention to Clause 23 of this Bill and to the new proposed subsection (3) of Section 40 of the Electricity Act. Therefore it appears that the telecommunications industry is being paired off with the water industry, which is under an absolute standard under the Water Industry Act 1991.

As the Minister was unable to give me an answer when he replied to the Second Reading debate, I pressed him on whether he would write to me. The Minister was kind enough to write to me on 28th February giving a reply that I can only describe as a bit "Delphic". In his letter the Minister stated: We have sought in the Bill to build on the regulatory frameworks which already exist for each utility. He then cited the public electricity supply licence where the performance standard is monitored under a reasonability clause but pointed out that the test of reasonability was now shifting from the company to the regulator. Having referred to the gas industry, his letter continued: There is no equivalent provision in licences issued to designated telecommunications operators so the enforcement provision in Clause 9 of the Bill is based instead on the powers in the Water Industry Act 1991". There is an immediate and simple answer—that when the Telecommunications Act of 1984 was passed and the conditions of the licences were agreed—the Citizen's Charter had not been invented and there were no standards of performance!

However, as I thought that the matter should be checked in a little more detail, I looked at the public electricity supply licence and was able to confirm that what the Minister had told me in his letter concerning that licence was correct. I then looked at a number of the provisions of the licence that was granted to British Telecommunications on 22nd June 1984 by the then Secretary of State for Trade and Industry, the right honourable Norman Tebbit. On examining the provisions of Schedule 1, I found that the Minister's letter to me was not exactly correct. Condition 1, relating to the universal provision of telecommunications services, applies a general "reasonable" standard. In condition 5, on international services, one finds the words, necessary to satisfy all reasonable demands for such Services". Condition 6, on the terms for the public emergency call services, again applies a practical test. The words used are "as swiftly as practicable". Under condition 11, on public call box services, one sees that the duty on BT relates to the continued provision of the service being practical—and so forth as the conditions continue. Therefore, it would be more accurate to say that the reasonability test applies under the actual conditions of this licence.

However, we must approach this logically. Surely it is not a question of what the existing licences contain but of what the correct position should be and, above all, of whether the application of regulations on all the utility industries should be even-handed. Questions therefore arise such as, "Why not one test for all the utility industries? Why different treatments for electricity and gas on the one hand and for water and telecommunications on the other? What features of supply are common to the water and telecommunications industries?".

I then focused on an important aspect of the supply of water. I thought about the issue of contamination and poison and concluded that a special or absolute duty might perhaps be reasonably applied to the water industry. Then I recalled my grandmother talking to me about the introduction of telephones at the end of the last century and about how her family, believing the medical evidence of the time, thought that she would be in grave danger of catching measles if she spoke over the telephone to a cousin who was suffering from them. I wondered for a moment whether the Minister was in possession of new medical knowledge and that now contagious or infectious diseases can be passed down telephone lines. If that is not the case, can we have a logical even-handed approach to this matter? Will the Minister therefore give the amendment favourable consideration? I beg to move.

Lord Reay

Amendment No. 61 would have the effect of changing the duty which the Bill currently places upon designated telecommunications operators to achieve standards of overall performance to a duty to conduct their business in such a way as could reasonably be expected to lead to the achievement of those standards. The amendment would therefore weaken the duty on designated operators to achieve overall standards.

The reason we have adopted a different approach for gas and electricity than for telecoms and water is that we have sought to build on the regulatory frameworks which already exist for each utility. For electricity, therefore, the enforcement provision in Clause 23 is based on a condition in the public electricity supply licence. It significantly strengthens the licence conditions so that the director general, rather than the company, is the judge of whether the company has made reasonable efforts to achieve the standards set. A similar enforcement provision is included in Clause 11 for gas, the other energy utility.

There is no equivalent provision in licences issued to designated telecommunications operators so the enforcement provision in Clause 9 is based instead on the powers in the Water Industry Act. That is because we decided, in the absence of any existing regulatory mechanism for telecommunications, that it would be appropriate to place the same requirement to achieve overall standards on designated operators as already exists for water and sewerage companies.

The key points to note are, first, that as a result of the Bill powers will exist for all the regulators to set overall performance standards to protect the consumer and there will be a clear discipline on each of the utilities, enforced by the regulator, to comply with the standards set. Secondly, the requirement to comply with overall performance standards will be enforceable for all the utilities by order as if it were a licence condition.

Ensuring that those broad provisions are common to all the utilities is more important than the exact replication of detailed enforcement powers. The existing regulatory framework for electricity, under which the Director General of Electricity Supply has already set and is monitoring overall performance standards, is working well and we believe that it is sensible to build upon this. I suggest that the amendment proposed is not desirable and I ask the noble Lord to withdraw it.

Lord Hacking

I can hardly be satisfied by that reply. I rehearsed the Minister's arguments when I read extracts from his letter. All he has done is to repeat his previous argument that I was challenging in my address to the Committee. I was seeking a logical answer to the points I was making. The Minister has not attempted to answer the points that I made. I remain dissatisfied.

Lord Reay

That points to the Government's consistency. I have been repeating the arguments I put in the letter that I wrote to the noble Lord.

Lord Hacking

I am arguing about the Government's inconsistency—their inconsistent treatment in the application of regulations to different industries for no good reason, or at least for no reason that the Minister or the Government have cared to advance. I shall not divide the Committee at this stage. I express great dissatisfaction. I remind the Minister, in case he has forgotten, that I remain anxious that this place may not be considering this matter again in full during the Bill's next stages. Nonetheless, with the concern that I express again, and with my dissatisfaction, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 9 agreed to.

[Amendment No. 62 not moved.]

Lord Hacking moved Amendment No. 63: After Clause 9, insert the following new clause: (" . In section 16(5) of the Telecommunications Act 1984 there shall be inserted after paragraph (a)— (aa) that the telecommunications operator has agreed to take and is taking all such steps as it appears to the Director for the time being to be appropriate for the operator to take for the purpose of securing or facilitating compliance with the condition in question." ").

The noble Lord said: I shall speak to this amendment and not to Amendment No. 113 which is in the names of the noble Lords, Lord Williams and Lord Desai. The amendment deals with the licence enforcement order; in other words, the power of the regulator to order anyone who has breached conditions of licence to remedy that breach. The current position concerning the telecommunications industry is to be found in Section 16(5) of the Telecommunications Act 1984. In subsection (5) there are two circumstances under which the regulator can desist from the order of compliance. One is when the duties imposed on him under Section 3 preclude him from making the order. The second is when, the contraventions or apprehended contraventions are of a trivial nature".

However, what about when the licensee has agreed to take the necessary action to ensure compliance and is doing so? When this comes up in other industries, there is a simple and sensible solution. I refer, for example, to Section 25(5) (b) of the Electricity Act 1989. It is held that the director can desist from making the enforcement order when, the licence holder has agreed to take and is taking all such steps as it appears to the Director for the time being to be appropriate for the licence holder to take for the purpose of securing or facilitating compliance with the condition or requirement in question". We can then turn to the water industry where a similar situation arises. Once again the Secretary of State or director can desist from making the enforcement order when—I quote from Section 19(1) (b) of the Water Industry Act 1991— the company has given, and is complying with, an undertaking to take all such steps as it appears to him for the time being to be appropriate for the company to take for the purpose of securing or facilitating compliance with the condition or requirement in question". One goes then to the water industry, the next main industry which is the subject of the Bill. Again, one finds the matter being dealt with in a way which applies the same test. I am sorry; I am misleading the Committee. I am now referring to the gas industry. In the Bill Clause 44 adds to subsection (5) of Section 28 of the Gas Act the provision which your Lordships will find on page 40.

With that background, the question has to be asked: why not the same even-handed treatment for the telecommunications industry? It stands alone and separate from the other three industries. I wish to press the Minister to reply to that. Why the difference? I beg to move.

Lord Reay

If a telecommunications operator contravenes a licence condition—something which is in practice extremely rare —the director general is currently obliged to take enforcement action to remedy the situation. The effect of the amendment would be to remove or relax that obligation where the operator had subsequently agreed to take action to correct the contravention. In that case, enforcement action might not then be taken.

In practice, however, under the Telecommunications Act 1984, the director general already has flexibility over the application of enforcement action. He has discretion to make a provisional rather than a final enforcement order and then, if that has the desired effect and the operator takes steps to correct the contravention, no final order need be made. The director general also has discretion not to take enforcement action if the breach of a licence condition is of a trivial nature.

At present, the enforcement regulations are straightforward and clearly understood by all operators. The amendment would create uncertainty over the circumstances in which enforcement action would be taken and so detract from this position. It should be borne in mind that the regulator is overseeing a large number of telecommunications operators, not just the designated operators. He oversees some 130 operators in all. I can confirm that the regulator is content that the existing provisions work well and he would not wish to see them relaxed. Therefore I cannot accept the amendment.

Lord Hacking

The ball is on the other foot now. I have heard what the Minister said and I shall wish to consider that. On that basis I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

10 p.m.

Lord Ezra moved Amendment No. 64: After Clause 9, insert the following new clause:

("Referrals

("( ) In section 49 of the Telecommunications Act 1984 (investigation of complaints) the following paragraph shall be inserted in subsection (1) after paragraph (b)— ;or (c) is referred to him by the Council under subsection of section ( ) below."").

The noble Lord said: In moving Amendment No. 64, I wish to speak also to the amendments that are grouped with it on the groupings list: that is, Amendments Nos. 65 to 71, 75 to 81, 90, 91, 94 to 98, 101—

Lord Williams of Elvel

I am sorry to interrupt the noble Lord but I am afraid that the noble Baroness, Lady Gardner of Parkes, wished to take Amendments Nos. 81 to 119—those are her amendments—outside the group on the groupings list. The noble Lord is absolutely right in saying that he is speaking to Amendments Nos. 64 to 71. He is also speaking to Amendments Nos. 75 to 80 rather than to Amendment No. 81.

Lord Ezra

I thank the noble Lord for that information, as it alleviates my task. In any event I wish to speak specifically on Amendments Nos. 64 to 71. We now reach the important issue of the consumers' councils. In the course of our Second Reading debate a number of noble Lords, including myself, spoke about the unevenness of the consumers' councils as regards the four utilities with which this Bill is concerned.

It was pointed out that only one of the four utilities—namely, the gas industry—has a powerful, strong and well constituted council. As regards the other utilities, the councils vary considerably. There is no common practice. Perhaps the weakest utility of all in this regard is the telecommunications industry. I introduce these amendments to strengthen that council. It seems appropriate in a Bill of this kind which is concerned with strengthening the position of the consumer that the consumers' councils should form a significant part of the provision.

At present in the telecommunications sector there are four territorial committees with two specialist committees. It is felt that the specialist committees work pretty effectively but that the four territorial committees do not play a role which is in any way similar to the role exercised by the gas consumers' council. It is that deficiency which the amendments seek to put right. This matter is a real test of the seriousness of the Government in concerning themselves with safeguarding the interests of the consumer in these important industries. If they are serious about that, they should put right this anomaly.

It has always seemed to me difficult to understand why we should have these different consumers' council regimes. The utilities all provide essential services. The interests of the customers are fully taken into account and it would appear that in all cases there was justification for powerful consumer bodies. The task of the director is to ensure that operators adhere to the conditions of their licences in providing a service. But there must be relatively independent consumer bodies to safeguard the interests of consumers. Those bodies must work alongside the important work of the director. I await with great interest the Minister's reply so that I may discover the views of the Government on the amendments. I very much hope that this will be among the proposals which the noble Lord, Lord Reay, will take away with him and ponder upon until we come back to the matter at a later stage. I beg to move.

Baroness Oppenheim-Barnes

I have a good deal of sympathy with the point made by the noble Lord, Lord Ezra. I do not know that I would go the whole way and would want to set up the panoply of a telecommunications consumers' council. However, I should like to take this opportunity to say for the record that from the consumers' point of view the status quo is not satisfactory.

Oftel is not readily accessible to the ordinary consumer. It is not easy for a consumer in any part of the country to find the telephone number of Oftel nor to get in touch with it. If consumers write to Oftel they may not receive a response for a considerable period of time. The absence of such a body means that there is no consultative procedure, which would be of benefit to the director general. Therefore I hope that my noble friend will consider putting it to the director general that there might be a review of consumer representation so far as concerns telecommunications.

Lord Desai

In rising to support the amendment in the names of the noble Lord, Lord Ezra, my noble friend Lord Williams and myself, I should also like to speak briefly to Amendments Nos. 65 to 71 and 75 to 80.

As the noble Lord, Lord Ezra, said, the purpose of the amendments is to strengthen consumer representation in the telecommunications field on the lines of the Gas Consumers' Council. In other words there would be a properly financed and staffed body which would be accessible to consumers—both individuals and businesses—and which would report regularly and take up complaints.

Since the noble Lord, Lord Ezra, has already spoken about the proposed telecommunications consumers' council perhaps I may point out that the Gas Consumers' Council, which is the model in this instance, currently cannot deal with complaints concerning supply matters. Given the lateness of the hour I wish to say only that the main purpose of Amendments Nos. 75 to 80 is to enable the Gas Consumers' Council to deal with supply matters as well. The amendments also concern many other smaller matters, all of which are designed to strengthen the accountability of the Gas Consumers' Council and the proposed telecommunications consumers' council.

Lord Reay

Did the noble Lord speak to all the amendments through to Amendment No. 80?

I shall speak first to the amendment moved by the noble Lord, Lord Ezra, and the other amendments in the group comprising Amendments Nos. 64 to 71. That series of amendments would scrap the existing structure of national and local telecommunications advisory committees and replace them with a single body analogous to the Gas Consumers' Council.

As the law stands the prime responsibility for protecting the interests of consumers lies clearly with the director general. That is his function. He has the necessary powers for that, enshrined in statute and in the public telecommunications operators' licences.

As the noble Lord explained, the telecommunications industry already has four national advisory committees, one each for Scotland, Wales, England and Northern Ireland. In our view the committees do a good job. They have a good track record in helping consumers to resolve problems. They have been in existence since before the 1984 Telecommunications Act. The members of each national advisory committee are appointed by the Secretary of State, not by the director general. Therefore, any fear that they are not sufficiently independent is unfounded.

In addition to the four national bodies, there are 160 local telecommunications advisory committees, either voluntary or sponsored by an organisation such as a chamber of commerce or local authority. They know what their responsibilities are and how to discharge them properly.

There exists then, in our opinion, a perfectly good statutory regime under which the director general has clear duties to promote the interests of consumers and clear powers to discharge those duties. He is able to draw upon the advice of the advisory committees in doing so, and all except the committees for England handle customer complaints in the first instance as well. All that is well established and would in my view only be harmed by what would amount to an upheaval which would follow from adopting the noble Lord's amendment.

Another problem raised by these amendments is that they would divide the responsibility for investigating customer complaints from the power to resolve them. In our view, that could cause confusion and delay to the customer. The proposed new council would be able to investigate complaints but not settle them by a legal determination. In order to have effective regulation there has to be one person or one body to make the decisions, with power to settle complaints in the interests of either the consumer or the business, based upon a fair judgment of the legitimacy of those complaints. Oftel has both the power and the independence to deal with consumers' problems with telecommunications operators.

The noble Lord has implicitly endorsed our view that the regulator should remain the only person with the power to determine disputes. But I seriously question the benefit of a new organisation existing alongside the regulator to investigate disputes. Therefore I cannot accept the amendments.

My noble friend Lady Oppenheim-Barnes raised a very interesting and important question which certainly deserves to be looked into. As she suggested, I am willing to ask the director general to consider whether a review of the existing structure is needed.

I turn to the amendments to which the noble Lord, Lord Desai, spoke. The effect of Amendment No. 75 is to oblige the Secretary of State to take into account relevant experience of people he is considering for appointment to the Gas Consumers' Council (GCC). The Secretary of State will take into account a great many factors in deciding whom to appoint as a member of the council. Experience or knowledge of the subject are naturally factors which would be considered, but to place one of those factors on the face of legislation would implicitly reduce the scope to take others into account. Therefore we would not consider it desirable to oblige them by law to do so.

Amendment No. 76 would have two effects. It would oblige the director general to take up cases where the GCC has not been able to resolve a dispute; and it would remove the existing requirement for the GCC to refer "enforcement matters" to the director general. In our view this amendment would confuse the legal responsibilities and powers of the director general and the GCC with no advantage accruing to the customer. Indeed, I would argue that the result could be a less useful system for resolving customer complaints.

With regard to Amendment No. 77, we consider that where the director general has statutory responsibility for something it is only right that he should control the handling of it. The amendment would cause confusion between the responsibilities of Ofgas and the GCC in a way which seems to us to be at the very least unhelpful.

The provisions relating to written reports would be particularly harmful. The GCC, having investigated a complaint which only the director general can resolve, can draw up a written report and, if it wishes, send copies to all sorts of people. This report can recommend that the gas supplier reconsiders the matter. Alternatively, or presumably once the supplier has refused, another report can be drawn up and copied to those people again recommending that the director general should consider exercising his enforcement functions. At this point we would finally have arrived at where we would have been at the outset if the director general had been allowed to deal with the matter himself.

This amendment sets up in statute the untried mechanisms that I have described. What we believe we want is a customer complaint handling system which is quick, clear and decisive. I do not feel that the amendment is the route to that.

On Amendment No. 78, the GCC is already free to offer advice on such matters to the Secretary of State. My understanding is that it corresponds with and calls upon the Secretary of State and that he considers its advice. The amendment seems to place an unnecessary new statutory duty on the GCC. I therefore cannot agree to it.

Amendment No. 79 seems to impose a very open-ended and onerous requirement. I cannot understand it as being right that Ofgas should be obliged to pass on all information to the GCC whether or not the GCC has a specific use for it. Some information will be commercially confidential or otherwise sensitive and the director general is required to bear that in mind in any publication that he makes based upon it. However, the new clause fails to cater for that possibility and leaves the director general with no choice but to pass such information outside his control. One result of that risk could well be that gas suppliers would supply the director general only with information which they felt could safely be published without their permission. Therefore the quality and depth of information available to the director general would be considerably less than we had envisaged.

Amendment No. 80 is consequential upon Amendment No. 78. I argue that it is not necessary.

10.15 p.m.

Lord Ezra

Will the noble Lord elucidate something that he said at the beginning of his remarks in response to his noble friend Lady Oppenheim-Barnes? Did he say that he would be asking the director general to conduct a review of consumer representation within the telecom sector?

Lord Reay

I said that I would ask the director general to consider whether a review of the existing structure is necessary.

Lord Ezra

That is half a crumb. I remind the noble Lord of one of the wider issues raised at Second Reading. A number of noble Lords believed that the time had come to have a more clearly defined separation of the economic regulation function of the director general; the regulator on the one hand, and the consumer protection function on the other. It was not suggested that the two be entirely separated. Nonetheless it was felt that consumer representation should be strengthened and become the function of an at least quasi-independent body. I hope that that will be borne in mind.

In view of the fact that that approach will be made to the director general, I am ready to withdraw the amendment at this stage and to return to the matter at a later stage.

Amendment, by leave, withdrawn.

[Amendments Nos. 65 to 71 not moved.]

Clause 10 [Interpretation]:

Lord Reay moved Amendment No. 72: Page 10, line 38, leave out ("operators") and insert ("operator").

The noble Lord said: This is a drafting amendment. Its effect is to correct a wrong definition of designated operator which is currently defined in the Bill only in the plural.

The amendment does not signify any change of policy. As currently printed, it would operate in the plural. The definition means that every reference in the Bill to a designated operator can only be taken to mean all designated operators. That is not our intention. We wish "designated operator" to be capable of meaning one designated operator. The amendment enables different standards to be set for different operators if that is desirable. I trust that the Committee will find the amendment acceptable.

On Question, amendment agreed to.

Lord Williams of Elvel moved Amendment No. 73: Page 11, line 4, leave out ("25") and insert ("35").

The noble Lord said: It may be for the convenience of the Committee if I speak also to Amendment No. 74. Both amendments have more or less the same purpose. My amendment is interrogatory in the sense of asking why the figure of 25 per cent. is used and not, say, 35 per cent. The amendment tabled by the noble Lord, Lord Hacking, goes into a little more detail but I shall leave it to him to explain. I beg to move.

Lord Hacking

I wish to address the Committee on my Amendment No. 74 at this stage. Like that tabled by the noble Lord, Lord Williams, it is directed to the definition of market share. The Bill will apply to an operator who provides 25 per cent. of the voice telephony services in his licensed area. I believe that if the citizen is to have rights as regards the quality of his or her telephone service enshrined in legislation those rights should be available whatever company is supplying the relevant services. Thus my preference would be for no qualifying threshold.

However, if there is to be such a threshold it needs to be expressed more precisely than as, 25 per cent. of the voice telephony services in his licensed area". Nowhere does the Bill define what is meant by that phrase. The proportion of the services could be calculated in a number of ways; for instance, call volume, exchange line provision, call revenue, combined call and exchange line revenue and so forth. The definition is crucial since it determines to whom the legislation may apply, yet the Bill is silent on it.

British Telecom has approached me. It believes that Clause 10, which covers interpretation, should be amended to indicate that an operator provides 25 per cent. of the service when calls over exchange lines installed by that operator account for 25 per cent. of the call revenue generated over all exchange lines (by whomsoever supplied) in that operator's licensed area.

I suggest that call revenue responds best to market power because of the scope for cherry-picking customers who make the most intensive use of telephone services. I can see no good reason why the market should not be defined now. Doing so would have the advantage that all the players, including the new entrants, would know exactly where they stood. That is the reason for tabling my amendment.

Lord Reay

The effect of the amendment, tabled by the noble Lord, Lord Williams, appears to be to increase the level of market share at which a designated operator comes under the jurisdiction of the director general.

The object of the Bill is to provide the regulators with the powers to ensure improved services for utility customers where competition is too limited to provide the stimulus of good service. For that reason the Bill concentrates on areas where utilities still have an effective monopoly; in the case of telecommunications, where a company has 25 per cent. of voice telephony services. The figure of 25 per cent. is not an arbitrary figure plucked out of the air but is based on the definition of 25 per cent. of a market which constitutes a monopoly under the Fair Trading Act.

I believe, therefore, that it would be wrong to depart from what is a soundly-based definition and I would resist the amendment.

Lord Williams of Elvel

In what respect does the noble Lord believe that it is soundly based? It has come under heavy criticism.

Lord Reay

It is the figure drawn from the 25 per cent. of the market which constitutes a monopoly under the Fair Trading Act.

Lord Williams of Elvel

Perhaps I did not make myself clear. The Fair Trading Act definition of monopoly as 25 per cent. of the market has come under heavy criticism.

Lord Reay

We believe that it is a sound reason for why the figure should be 25 per cent. in this case. It supplies the reason why we have adopted 25 per cent. in this case.

I turn to Amendment No. 74, tabled by the noble Lord, Lord Hacking. Its effect would be to enable the Secretary of State to designate for the purposes of the Bill an operator with more than 25 per cent. of the voice telephony market judged as a percentage of call revenue. It appears to be aimed at trying to include Mercury within the Bill's scope, since Mercury tends to operate mainly in the market of more expensive calls.

The Government's policy is that the Bill should apply only to those operators who can exercise a dominant influence over the market. Operators such as Mercury are competing for market share with BT in selected markets such as international calls, and consumers are reaping the benefits in terms of competition over service and price.

We consider competition to be working and believe that we do not need to use the Bill to try to increase the regulator's role in relation to those operators. BT still has a virtual monopoly in the provision of a number of services and the Bill is therefore necessary to ensure high standards of service. I therefore cannot agree with the amendment.

Lord Hacking

I raised a number of technical points. It is a question of definition, and I shall be grateful, if the Minister cannot agree with me on his feet, if he will do me the courtesy of reading my speech again. I presented the points as precisely as I could.

Lord Reay

I am happy to give an assurance that I will read the noble Lord's speech in Hansard. I will study further the technical points that he made and, if necessary, reply to him.

Lord Williams of Elvel

I am grateful to the noble Lord for his replies. I am bound to say, as I did when intervening, that the figure of 25 per cent. of a market in the Fair Trading Act 1973 has come under considerable criticism, not least by the Monopolies and Mergers Commission. As the noble Lord knows, it is difficult to define a market and to say whether or not 25 per cent. is a dominating position. It depends on what percentage other people have in the same market, however one defines it.

However, if because it's there, because it's there, because it's there, is the reason that 25 per cent. appears in the Bill, which the noble Lord seemed to imply, there is nothing much more I can say. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 74 not moved.]

Clause 10, as amended, agreed to.

[Amendments Nos. 75 to 80 not moved.]

Clause 11 [Standards of performance]:

Baroness Oppenheim-Barnes moved Amendment No. 81: Page 12, line 14, at end insert: ("( ) the Council; and").

The noble Baroness said: In moving Amendment No. 81 on behalf of my noble friend Lady Gardner of Parkes, who apologises for her absence, I shall speak also to Amendments Nos. 90, 94 to 98, 101, 104 and 119.

These amendments are simple, clear and extremely modest. Each one adds the word "Council" and, as in the Gas Act, it means the Gas Consumers Council. If the Government accept the amendments, as I believe they should, it means that the Gas Consumers Council will be entitled to be consulted as of right. It is widely acknowledged that the Gas Consumers Council is unique; that it is effective, efficient and held in high regard. If these minor amendments are not added to the Bill, the position of the Gas Consumers Council will be undermined at a time when the Government have committed themselves, through the Citizen's Charter, to a better deal for consumers.

The regard in which the Gas Consumers Council is held owes a great deal to the brilliance of its former chairman, Sheila Black, and of course to its present chairman. I have a letter from Sheila Black, in which she says, As former chairman of GCC, I well recall how we worked alongside Ofgas on monitoring disconnections, helping to shorten the time on collecting data for that project, eventually of benefit to everyone—Ofgas, British Gas and consumers. The work on Standards of Service produced a real Citizen's Charter from British Gas, was also to the benefit of companies and consumers". Continued consultation, therefore, is of the greatest importance to everybody concerned, and I very much agree with those sentiments.

My noble friend has been extremely courteous, patient and acute at this late hour, but I hope that he will not argue that these consultations will not be required because it is a matter of course that the council is likely to be consulted. That is not good enough. The requirement to consult the Gas Consumers Council is something which, in view of its stature and standing, the work it has done and the benefits it will bring, is important enough to write into the Bill. I hope also that he will not argue that he cannot do it because the other utilities do not have consumer councils. That is an area into which we do not want to stray at this time of the night.

I hope my noble friend will consider these modest amendments favourably.

10.30 p.m.

Lord Williams of Elvel

I would like to support the noble Baroness, Lady Oppenheim-Barnes, in this group of amendments. I believe that we all admire the work of the Gas Consumers Council and would wish it to be reinforced. Indeed, part of the amendment which we have just discussed was designed to reinforce, perhaps over-reinforce, the powers of that consumer council. But I stray into territory that the noble Baroness has warned me against. It is because the Gas Consumers Council is so successful that we on this side of the Committee would like to see consumer councils of a similar nature for the other utilities. I see that the noble Baroness is waving me down and I do not want to offend her.

I very much hope that the Government will accept these amendments because they mark an important step in consumer protection.

Lord Ezra

I would also like to support this series of amendments. They are modest, as the noble Baroness said when introducing them, but they are of great importance. We are here concerned with strengthening the position of the consumer and of the councils wherever appropriate. It is appropriate in these cases because the director is having to make consultations in every one of these cases. In the normal course of events, as the noble Baroness surmised, he will probably approach the consumers council anyway, but I agree with her that that is not good enough and that the council should be designated as such in order to give it increased status and position in these matters.

Lord Reay

The amendments to Clauses 11, 15 and 17 introduce a specific requirement on the director to consult the Gas Consumers Council where there is currently a general requirement to consult consumer representatives when setting guaranteed standards, overall performance standards and standards for the promotion of the efficient use of gas. It is not the case that this Bill undermines the position of the Gas Consumers Council.

In this Bill we have extended the role of the Gas Consumers Council. We have extended it by involving it in complaints handling and the determination of disputes. In Clause 14, which relates to complaints handling procedure, and Clause 16 on the determination of disputes, the director is specifically required to consult the council because the council will have an active role in dealing with complaints and disputes. It is therefore appropriate in those cases that the requirement to consult should actually go so far as to specify the council.

The clauses which these amendments seek to change are different. They relate to the setting of standards which will affect large numbers of consumers whose interests may be represented by a wide range of different organisations. The director is therefore required to consult persons or bodies likely to be representative of persons likely to be affected. That could cover a whole range of bodies as diverse as the National Consumer Council and Age Concern. Any reasonable person would include the Gas Consumers Council in this definition and I do not see the need to name it specifically when there is such a wide-ranging obligation to consult. Beyond that, to refer specifically only to the Gas Consumers Council would detract from the standing of other bodies whose views may be equally valid.

As regards Amendment No. 94, that would introduce a new requirement on the director general to consult the council before he publishes information on performance against standards that he has set and compensation paid when those standards are not met.

Although we have taken steps in this Bill to extend the role of the council, we did not believe that publication of information was an area where it was appropriate to involve the council.

The director has to strike a delicate balance between passing on information he has obtained which may be of interest to customers and retaining information which might damage individuals or companies. An example might be where information on standards of performance reveal that British Gas had consistently failed to maintain a supply to a business. That business may have made great efforts to ensure that its customers are not inconvenienced by the failure of British Gas and would, understandably, not wish existing or potential customers to discover its difficulties.

The responsibility for achieving that balance should clearly lie with the director who has been given a duty to collect such information. By requiring the director to consult the council the amendment would dilute the director's sole responsibility for deciding what information to publish on standards of performance and compensation paid. Therefore, I do not think that the amendment is suitable.

I turn now to Amendments Nos. 96, 97 and 98. These amendments introduce new requirements for a public gas supplier to consult the Gas Consumers Council if he has been ordered by the director to carry out a review of his complaints handling procedure. The clause strengthens the role of the council by requiring a public gas supplier to consult the council when it establishes a complaints handling procedure. The director general may order a review of complaints handling procedures once they have been established. If he does so he has a general power to specify the manner in which the review is to be undertaken. This could include a requirement that the council be consulted.

It is therefore not necessary to include a specific requirement that the supplier should consult the council during a review of its complaints handling procedure if such a review is ordered by the director. The place for consultation is during the review and the director has the power to require that it takes place. Once the director has the report of the review it is his responsibility to decide what action to take and these amendments would make that responsibility less clear.

Finally, I turn to Amendment No. 119. The Bill provides for the abolition of British Gas's monopoly of supply to customers using less than 25,000 therms a year. I expect an initial reduction of the monopoly threshold to a level not less than 2,500 therms to take place in the next Parliament. The director general is responsible for promoting competition in gas supply and has considerable expertise and knowledge in this field. The Secretary of State is therefore obliged to consult the director before reducing the therm monopoly threshold. The Secretary of State may also consult a range of other people. I believe that this requirement to consult strikes the right balance and I therefore urge that this amendment should not be pressed.

Baroness Oppenheim-Barnes

I am grateful to my noble friend for his courteous reply. On reflection, I agree with him that the Bill does not undermine the Gas Consumers Council, but neither does it reinforce it very much. It is a body which is worthy of reinforcement. I also agree that some of the later amendments in the group to which I was speaking may not be as appropriate as some of the earlier ones.

I should like also to say to the Minister that requiring the director to consult the Gas Consumers Council is not exclusive. It does not mean that if he consults the Gas Consumers Council he cannot, or may not, consult any of the other excellent bodies where appropriate, including those that my noble friend mentioned.

In view of these lingering doubts I ask the Minister to reconsider the matter as my noble friend Lady Gardner may wish to raise the matter again at a later stage. Under the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 82 to 84 not moved.]

Lord Williams of Elvel moved Amendment No. 85: Page 12, line 31, at end insert: ("( ) prescribe that, before a public gas supplier exercises his power to cut off supply under Schedule 5, paragraph 7(5), he shall make contact with the customer and provide a written statement of the options by which the customer can pay the charges due to him in respect of gas supply. This statement shall include information with respect to—

1. (a) a payment arrangement to pay by instalments, and
2. (b) the installation of a coinless pre-payment meter, and
3. (c) a direct payment arrangement with the Department of Social Security for customers who are in receipt of income support or other state benefits.

The statement shall ask the customer to indicate the preferred payment method.").

The noble Lord said: This is a relatively simple amendment. It has the purpose of requiring a gas supplier to seek methods of repayment for cutting off supplies to a customer. It also has the purpose of requiring a supplier to offer different payment options before disconnection. We believe that this amendment makes it easier for those on low incomes to re-budget in order to pay their debts and take away some of the unnecessary stress, if it is unnecessary, of disconnection. I beg to move.

Lord Reay

This amendment would require British Gas to inform customers of alternatives to lump sum payment arrangements and give them a chance to respond before cutting off supply.

British Gas's licence obliges the company to draw up a code of practice which includes guidance to domestic customers if they have difficulty paying their bills. British Gas is also obliged to distinguish between customers who have difficulty in paying and others in default and to adopt methods for dealing with customers who have difficulty in paying.

To comply with these licence conditions British Gas takes a series of steps. It encourages customers in debt to make contact as soon as possible to discuss ways of paying off the debt. A copy of the code of practice is sent to every customer who is sent a second reminder of an outstanding bill. The code encourages customers to contact British Gas but also lists other sources of help and advice—the Gas Consumers Council, citizens advice bureaux, local authorities and the DSS.

It sets out the different ways in which payment can be made—by instalments, savings stamps, token meters or coin meters.

If the customer fails to contact British Gas, debt collection staff will always visit the customer and either discuss the problem or leave a "Helpline pack", which includes a further copy of the code of practice, and a Helpline card. The Helpline card again encourages the customer to contact the company, the DSS or an advice agency and sets out the methods of payment available. The company will take no further action for 21 days if the case is under consideration by the DSS. If British Gas wishes to proceed with disconnection it must obtain a warrant of entry. It will again write to the customer informing him of this action, referring to the code of practice and offering a pre-payment meter (token-operated where feasible) if it is safe and practical to fit one. These arrangements are working very well: gas disconnections are at an all time low (18,161 or 0.11 per cent. of domestic credit customers in the year to June 1991, compared with a peak of 61,796 or 0.4 per cent. in the year to 31st March 1988).

I am sure that the noble Lord will accept that the amendment is not necessary. British Gas's current arrangements are broadly similar—and in some ways go further—than what the amendment proposes and are enforceable as licence conditions. Furthermore, they have the advantage that they can be adapted to changing circumstances, which would not be possible if the requirements were prescribed on the face of the Bill. In view of those considerations, I hope that the noble Lord will not feel it necessary to press the amendment.

Lord Williams of Elvel

I am most grateful to the Minister. The reply is absolutely satifactory. I am grateful to him for spelling out in detail and for the record exactly what the situation is. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 86 to 93 not moved.]

Clause 11 agreed to.

Clause 12 [Information with respect to levels of performance]:

[Amendments Nos. 94 and 95 not moved.]

Clause 12 agreed to.

Clause 13 agreed to.

Clause 14 [Procedures for dealing with complaints]:

[Amendments Nos. 96 to 98 not moved.]

Clause 14 agreed to.

Lord Williams of Elvel moved Amendment No. 99: After Clause 14, insert the following new clause:

("Accountability of the regulator

.—(1) In section 34 of the Gas Act 1986 (General Functions of Director), after subsection (3) there shall be inserted the following subsection— (3A) The Secretary of State may, after consultation with persons or bodies appearing to him to be representative of persons likely to be affected, give directions prescribing the standards of performance which ought to be achieved by the director in carrying out his functions under the Act". (2) In section 39 of the Gas Act 1986 (Annual and other reports of Director) in subsection (2), after the words "under section 34(3)" insert "and (3A)". (3) In section 39 of the Gas Act 1986, at end of subsection (2), after the word "above" insert— and his performance in carrying out his functions in relation to standards set by the Secretary of State in directions under section 34(3A) above".").

The noble Lord said: I shall not be speaking to Amendment No. 117 in the name of the noble Baroness, Lady Gardner of Parkes, which was originally grouped with this amendment. The noble Baroness wishes to speak to it herself on the next day of Committee.

At Second Reading a number of noble Lords referred to the accountability of the regulator. The amendment seeks to address the problem raised by noble Lords on Second Reading. As a result of the Bill, I believe that public awareness of the role of the regulators in relation to privatised utilities is now becoming much more generally recognised. The Bill extends the existing powers of the Director General of Gas Supply to include adjudication on disputes in a number of areas. The expanded role will increasingly bring the director into a direct service relationship with the public. No doubt the various organisations will be called upon to assist individual customers in pursuing grievances.

As I said, concern was expressed on Second Reading—and, indeed, in another place—about the lack of requirement in the Bill for the directors to give reasons for their decisions. We discussed that aspect earlier today. But the question which now arises is the role of the Director General of Gas Supply and whether his performance—that is, the performance of the regulator himself—in carrying out his functions in relation to the standards set by the Secretary of State (under directions in the section referred to in the amendment) should be measured and, finally, whether the Secretary of State should set standards which the regulator ought to live up to.

The method is just one way of regulating a regulator. It may not be the only method. Indeed, the noble Baroness, Lady Gardner of Parkes, will be seeking to produce another one. However, it is a problem that will not go away. As the regulators become more powerful, there will need to be some mechanism for ensuring that they perform as they are meant to perform. This is only one suggestion; I put it forward as such. I beg to move.

Lord Reay

The amendment would enable the Secretary of State to set performance standards for the Director General of Gas supply. I entirely agree that the director should be accountable for his performance: he is already accountable to the Secretary of State, to Parliament and, through the system of judicial review, to the courts. However, if he is to perform his duties effectively, the director must, in our view, retain his independence of the political process. For the Secretary of State to set performance standards for the regulator as the amendment envisages would involve him in second-guessing the director and would compromise that independence.

I do not, therefore, think that the Secretary of State should be involved in setting performance standards for the director. The director is appointed by the Secretary of State and, if he does not carry out his duties satisfactorily, he can be replaced.

Lord Williams of Elvel

As always, I am grateful to the noble Lord for his response. I believe that we shall have to return to the matter at the next sitting of the Committee, when the noble Baroness, Lady Gardner of Parkes, will move her amendment. I put the method forward as one alternative. I do not say that it is the only alternative; indeed, it may be that a direct relationship between the regulators and a parliamentary committee of some sort would be preferable. However, I give notice to the noble Lord that the discussion is not yet finished. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 15 [Promotion of efficient use of gas]:

[Amendments Nos. 100 to 103 not moved.]

Clause 15 agreed to.

Clause 16 agreed to.

Clause 17 [Billing disputes]:

[Amendments Nos. 104 to 106 not moved.]

Clause 17 agreed to.

Clauses 18 and 19 agreed to.

Viscount Astor

I beg to move that the House do now resume.

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

House resumed.