Internet Access Pricing (Hansard, 23 February 2000)

HL Deb 23 February 2000 vol 610 cc232-4 232

§ 11.22 a.m.

§ Baroness O'Cathain asked Her Majesty's Government:

§ Whether the intervention by the Chancellor of the Exchequer on pricing of access to the Internet constituted market abuse under the terms of Clause 109 of the Financial Services and Markets Bill.

§ Lord McIntosh of Haringey
No, my Lords. The proposed regime in the Financial Services and Markets Bill is designed to tackle three types of behaviour: broadly speaking, dealing on the back of information unavailable to the rest of the market; giving a false or misleading impression of supply or demand; and behaviour which distorts the market, such as squeezes on the supply of an investment. The Chancellor's remarks on Internet access pricing fall into none of those categories.

§ Baroness O'Cathain
My Lords, I thank the Minister for his Answer but beg to disagree with him. The statement by the Chancellor of the Exchequer in an interview with the Financial Times on 16th February caused much confusion in the market and resulted in a 7 per cent (£5 billion) drop in the value of British Telecom shares. Does the Minister agree that that must be categorised as "misleading" and that, according to various categories in the Financial Services and Markets Bill, it would be an abuse?

§ Lord McIntosh of Haringey
My Lords, the noble Baroness is entitled to her opinion about legislation which is before Parliament. No doubt she will express that view as we proceed with the Financial Services and Markets Bill. Certainly, there was nothing misleading about the Chancellor's statement. What he said was legitimate comment given his responsibilities. Competitive telecommunications are essential for the development of the knowledge economy in the United Kingdom. If the Government were not to say anything that might under any circumstances affect market prices, they would say nothing at all.

§ Lord Davies of Oldham
My Lords, does my noble friend agree that it would be a singular misfortune for this country as the development of the Internet proceeds apace if the price of access to it was significantly higher than in other countries?

§ Lord McIntosh of Haringey
My Lords, my noble friend is entitled to hold that view. The Chancellor said that to promote competition Oftel would ensure that other operators were prepared to provide their own 233 broadband services over BT's local loop by July 2001. That is a statement of fact, and I imagine that it attracts the approval of my noble friend.

§ Lord Razzall
My Lords, as someone who agrees with the thrust of the remarks by the Chancellor of the Exchequer, does the Minister accept that, nevertheless, where there is a system of regulation this is more a matter for the regulator than the Chancellor?

§ Lord McIntosh of Haringey
My Lords, that is entirely right. If, as seems highly unlikely, anyone considered this to be a case of market abuse, it would be a matter for the Financial Services Authority, and the House would not expect me to express a view on it.

§ Baroness Hogg
My Lords, can the Minister confirm that the Chancellor of the Exchequer has added the regulation of utilities to his already substantial Whitehall responsibilities?

§ Lord McIntosh of Haringey
My Lords, there has been no change in the responsibilities of the Chancellor of the Exchequer. Like other Ministers, he expresses views on a wide range of issues, not all of which are his responsibility. It is entirely proper that he should do so; otherwise, one would not have joined-up government.

§ Baroness Gardner of Parkes
My Lords, does the Minister agree that, in the guise of protecting the public, there is a tremendous amount of interference in all areas, even in supermarket prices? Does the noble Lord also agree that to say that all financial decisions should be made for us is to go too far?

§ Lord McIntosh of Haringey
My Lords, I cannot imagine on what basis the noble Baroness draws those conclusions from the statement of the Chancellor which made no reference to supermarket prices or to decisions about pricing being taken for us.

§ Baroness Gardner of Parkes
My Lords, my question was a follow-up to the question about the various regulators.

§ Lord McIntosh of Haringey
My Lords, my response to the noble Lord, Lord Razzall, was that market abuse was a matter for the regulator, not for us. The Question is about market abuse, and I am not aware that any reference has been made to supermarket prices.

§ Lord Mackay of Ardbrecknish
My Lords, does the Minister accept that, as a result of the Chancellor's statement, some £5 billion was wiped off the value of BT's shares? Does he also agree that if a person had read the interview with Gordon Brown in the first edition of the Financial Times and had sold shares short because the market had not yet been adjusted, that would be market abuse in the terms of the Bill now being considered on the basis that he would be using information not generally available to those in the 234 market as only very few people would be likely to read the first edition? Is not the problem how the Chancellor let people know what he thought?

§ Lord McIntosh of Haringey
My Lords, there are two answers to that. First, it is apparent that the noble Lord has not read the formal correction published in yesterday's Financial Times which said: The Treasury has asked us to point out that in last week's Financial Times interview the Chancellor said that it was David Edmonds, the telecoms regulator, who had put forward the view that unbundling the local loop could happen sooner than July 2001". In those circumstances, we are not responsible for what appeared in the first edition of the Financial Times. Secondly, even if there had been anything in any way dubious about it, which there certainly was not, the London Stock Exchange published, via its own regulatory news service, the Chancellor's speech at the same time as it was issued to the press. Every single practice was correct.