§ Mr. Latham
asked the Secretary of State for Industry to what causes he attributes the fact that telephone charges increased by 24 per cent. between July 1980 and July 1981, at a time when the retail prices index rose by 10.9 per cent.; and whether he will ensure that charges dc not increase in excess of the rate of inflation in the current financial year.
§ Mr. Butcher
The increases in charges between July 1980 and July 1981 followed four years of price restraint, during which the charges for many services became out of line with their operating costs, jeopardising the flow of funds for investment. Even so, in 1981–82 the average cost of telecommunications services was some 25 per cent. lower in real terms than in the early 1970s. Furthermore, British Telecom is seeking savings in its running cost of about 25 per cent. over the next three years. Its recent proposals for an average increase of 3.3 per cent. in charges on 1 November 1982 are within the expected rate of inflation in the 1982–83 financial year.