My Lords, it is my sad duty as Leader of the House to pay a brief tribute to Lord Rea, who died last week at the age of 81. He was a member of a leading Liberal family and succeeded to the Peerage in 1948. Within only two years he had become Chief Whip of the Liberal Party; and from 1955 to 1967 he was the Liberal Party Leader in this House. Also from 1950 to 1977—a period of 27 years—he was a much-valued member of the Deputy Chairmen's panel.

Lord Rea also had many interests outside this House. He was a member for many years of his family banking firm and during the Second World War he gave outstanding service in the organisation of resistance movements in enemy occupied territories. In later years he sat on the BBC Advisory Council, and on the Political Honours Scrutiny Committee from 1962 to 1977. Lord Rea had ceased to play a leading part in the House by the time I entered it; but I have it from the best authorities on all sides of the House that his modesty, his firmness and his good sense made a most important contribution to the conduct of business during his 17 years' service as Leader and Chief Whip of his party.

I know that Lord Rea will be remembered with great affection not only by those who sit on the Liberal Benches opposite but also by the many other Members of your Lordships' House who I know will wish to join me in sending our sympathy to his family.

My Lords, I am grateful to the noble Lord for paying tribute in the way that he has. I am sure that all our Liberal colleagues in the House will feel very sad at the loss of a most distinguished Liberal politician. The noble Lord, Lord Soames, mentioned Lord Rea's fine war record in the last war in his organisation of resistance. I believe that he also participated in the war before that as a guardsman.

Lord Rea had a tremendous record and I am very proud that the part of the world in which he loved best to stay was Cumbria. He will be missed there by many people. He was a Deputy Lieutenant there and played a major part in the life of the community. He loved Cumberland, which he regarded latterly as a home. Therefore, on behalf of Her Majesty's Opposition, I should like to be associated with the remarks of the noble Lord, Lord Soames. I realise that for the Liberal Peers it must be a very sad occasion.

My Lords, we on these Benches are particularly appreciative of the tributes paid to our late colleague and former Leader, Lord Rea, by the two noble Lords, as I know will be his family and very wide circle of friends.

I knew Philip Rea from long before the Second World War. He was a person of infinite charm, with a nice turn of wit and a graciousness which won him many friends in and outside political life. His life was characterised, as both noble Lords have said, by the public service which he rendered in so many different ways. I am particularly glad that mention was made of his remarkable war record in the Special Operations Executive. The importance of service to his country and to the resistance movement in Europe was recognised by the decorations which were awarded to him by our own Government and by the Governments of other countries in Europe. His service to the Liberal Party was long and distinguished. He did a great deal for his old school, Westminster, of which he was for many years a governor. He was particularly interested in maintaining strong links between Westminster School and the Houses of Parliament.

He served this House—for which he had great affection—in many different capacities and many will remember the beautifully phrased speeches which he often delivered from this Bench. My Lords, we have lost a valued friend and the House has lost a highly respected Member.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

My Lords, the Government will be spending, from next November, over £250 million a year to help some 2¼ million poor fuel consumers. Most of this aid is given in the form of heating additions to supplementary benefit claimants. Working families on low incomes also benefit from the increase given to family income supplement to assist with heating costs. This is the most generous fuel assistance programme ever. Supplementary benefit heating additions became, from last November, a matter of legal entitlement rather than discretion and many heating additions are now made automatically without the claimants having to ask for them. These changes will go a long way towards ensuring that those entitled to help will get it. There are two leaflets available on heating costs: Help With Heating Costs on the supplementary benefit position and Winter Heating Costs published by the Department of Energy.

My Lords, I am most grateful to my noble friend for that informative reply. Naturally one would like to feel that this very large sum is sufficient and well spent. May I ask my noble friend two brief questions? First, can he say whether these hardship payments have in fact been more than sufficient to keep pace with the very steep increases in fuel prices which have taken place over the past few years, and the expected increases between now and the end of the year? Secondly, the noble Lord will be aware that the Policy Studies Institute have suggested in their interim report that among those who have had their fuel supplies cut off could be found a considerable number of disabled people, including the blind and the seriously ill. If that is indeed the case and the Government accept it, would my noble friend say what has been done to meet this problem?

My Lords, on the first of my noble friend's supplementaries, the heating additions were boosted substantially, more than the rise in fuel prices in November 1979, when the basic rate heating addition was put up 47 per cent. and when the RPI fuel component rose by 28 per cent. The next up-rating will actually maintain this position as the rise will take into account the forecast rise in fuel prices.

With the regard to the second supplementary, the Policy Studies Institute is currently reviewing the operation of the code of practice by the fuel industries and they are expected to report finally by the end of this year. The interim report emphasised the need for greater availability of pre-payment meters and to include the blind, the severely sick and disabled in the group given 14 days' grace before disconnection. Your Lordships will be aware that certain groups have 14 days' grace to get in touch with their local DHSS office for assistance. These are being implemented and the industries also promise to ensure that their staff fully observe these provisions.

My Lords, may I ask the noble Lord the Minister whether I am right in saying that the yardstick by which financial help in this matter is given depends upon individuals being able to satisfy the Supplementary Benefits Commission that they are entitled, by virtue of their income, to supplementary benefit? If that is so, then they are all genuine cases and there are not, as the Question implies, people receiving this financial help who are not genuine.

Then, my Lords, they are all genuine cases, and in the case of people receiving supplementary benefit they automatically get the increase.

My Lords, may I ask my noble friend whether he is aware that in the 10 months up to January 1981 British Gas referred 3,600 potential cases to the various social services, and that out of that number 600 received financial help?

My Lords, I was not aware of those figures, but I am grateful to my noble friend for having made them available.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

My Lords, I understand from the corporation that they have not placed a contract for the construction of a rig but have chartered one from Dyvi Drilling of Norway. The details are a matter for the management of the corporation and are commercially confidential.

My Lords, I am most grateful to my noble friend for that information. May I ask whether he is entirely satisfied, bearing in mind the fact that some 2,000 jobs would have been available if the £50 million contract had been awarded to a British firm?

My Lords, as I say, it was not a question of a contract; it was a question of a chartering. But I can say to my noble friend that I am not satisfied that British industry is taking all the opportunities available to it in offshore technologies regarding these very considerable opportunities at home and abroad, and one must hope that British industry will wake up.

My Lords, will my noble friend perhaps tell the House whether British Shipbuilders had been advised that BNOC were contemplating chartering rather than building a rig and, if that knowledge was available, whether British Shipbuilders or one of their companies had an opportunity of chartering a rig after constructing it?

My Lords, my information is that the corporation approached a number of drilling contractors, including British companies, and that no British companies were able to meet their requirements either for construction or for charter.

My Lords, can my noble friend look into the circumstances whereby this French company already had a rig available? Was it built on spec, like so many other French projects? They build ships on spec and then either sell them to their customers or incorporate them into their Navy. They do this in many other respects. Does this make competition fair? Ought the BNOC to consider the vast numbers of unemployed in Birkenhead, where this work would not only have benefited 2,000 people directly for two years but would have benefited a further 10,000 people in the sub-contractors, particularly in the steel industry, which is badly in need of work of this type?

My Lords, I altogether share my noble friend's views on the desirability of fair competition and of British industry meeting that competition. I do not think this was a question of French industry undercutting British industry on speculation. As I said in my earlier answer, I understand that the needs of the corporation could not be fulfilled here. As a result rather than commission a construction abroad, they chartered one from Norway.

My Lords, would my noble friend revert to his comment on the need for British industry to wake up? Would he not agree that we have had a very sad record of delivery dates being overshot in the case of a number of platforms and drilling rigs, with the result that the weather window has been missed and a whole year's extra cost has been incurred, thanks to such delays?

My Lords, it is very important for British industry to feel that this technology and this activity is not restricted only to the North Sea—it is now international—and certainly there will be great opportunities both here and in other offshore areas for the rest of this century. So I agree with my noble friend.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

My Lords, as Leader of the House I am naturally concerned about any factor which may prolong Question Time unduly and it is always necessary for the House to exercise restraint and to respond to collective discipline. But I am not certain that the situation at present is such as to warrant my intervention as Leader of the House in support of the suggestion made by my noble friend. However, if he wishes himself to raise the matter with the Procedure Committee, he is, of course, free to do so.

My Lords, may I ask my noble friend whether it is not against the practice of the House and Standing Orders that a Starred Question should become a dialogue between the Peer asking it and the Minister concerned, when so very often it appears that the questioner is more anxious to impart information than to receive it?

My Lords, perhaps I may take advantage of my noble friend's supplementary question—which I am sure he is going to ask only one of—to remind the House of the guidance on Starred Questions, which is, first, that Questions should be asked for information only and not with a view to making a speech or raising debate; secondly, that their purpose is to elicit information from the Government and so should not incorporate statements of opinion and, thirdly, that Question Time should normally be concluded in 20 minutes. We do our best to hold to that.

My Lords, I wonder whether the noble Lord would agree that, sometimes, it is necessary to have two supplementary questions in order to elicit the necessary information? Furthermore, many of us feel that the practice now prevailing in another place, of limiting supplementaries to one, is detrimental to parliamentary proceedings.

My Lords, I should have thought that the key to this was common sense and judgment, from time to time. But it would be wrong to think that it would be in the best interests of the House that every noble Lord should automatically be enabled to ask more than one supplementary question. Equally, it would be wrong to suppose that any noble Lord could never ask more than one supplementary question.

My Lords, I understand that no amendments have been put down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I propose to move that the Order of Recommitment be discharged.

My Lords, I beg to move that this Bill be now read a second time. I am bringing before your Lordships today a Bill which concerns the whole future of the communications industry in this country. In a sense, we are debating the development of something like the motor-car industry in 1911. This is an industry whose efficient and rapid development and growth is seen by virtually everyone as essential for our manufacturing industry, for the business community and for employment, as well as for the services used by the general public. The Bill contains proposals designed to stimulate just such efficient and rapid development. It allows a more flexible approach to postal and telecommunications services by both the public and private sectors leading, it is hoped, to the provision of greatly improved services for everyone and increased opportunities for those involved with the industries.

Telecommunications are developing at an enormous rate and demand for these services already outstrips supply; and that is talking at the height of a major recession. We hear, it seems almost daily, of new methods of information retrieval, electronic communication and other computing developments in which telecommunications play a vital role. These are developments which could only have been dreamed of a few years ago, but which are likely to be at the forefront of our entire industrial and commercial progress from now on; because, of course, these technologies are highly pervasive and affect the development of industries other than their own.

It would be difficult for anyone present in this House today to dispute that there has been widespread, and often justified, public dissatisfaction with the service currently provided by British Telecommunications in respect of these forms of communication. We hear daily of delays in the installation and maintenance of equipment all over the country. I am not sure if it is altogether relevant whether this is caused by poor management, by restrictive labour practices or by lack of investment; and I shall return to questions of investment in a moment. The fact is that, despite the sterling efforts being made by British Telecommunications to improve matters, the service to the consumer and the community is not as good as it should be; and, moreover, it is provided in a way which effectively prevents others—prevents the private sector—from making enterprising improvements and innovations.

Thus the Government believe that the introduction of competition into this industry will act as a needed stimulus for improvement in services generally, and especially for the introduction of a more diverse range of equipment which can become available to the customer. We cannot afford to maintain the same rigid monopoly structure that has existed in this field for so many years now. This is certainly not a new idea; the report of the Carter Committee suggested that the boundary of the telecommunications monopoly should be redrawn. That is primarily what the Bill is doing.

When we look to foreign experience in this field, particularly to the United States where, over the last 15 years, steps have been taken to reduce the hold of local and national monopolies, we find that the fact that entrepreneurs are able to enter the market and provide new services and new equipment has turned out to be of enormous benefit to the industry as a whole, to employment and to the needs of the consumer. So we in this country want private enterprise to participate to a much greater extent than hitherto in this exciting industry, both by offering new services to people and by creating new jobs for people.

While British Telecommunications will continue to provide the basic network, we want to break down the barriers between the public and private sectors, allowing greater co-operation for the benefit both of those working in the industry in the form of an increase in the number of jobs, and for the consumer in the form of improved and diverse services. The Bill should make this possible. In addition, the Bill provides opportunities for a rather more flexible approach towards the postal services, while, of course, maintaining the basic monopoly of the Post Office over our national letter services.

Essentially, the Bill has to it four main parts, or four main parcels, so to speak. There is, first, the split of the Post Office and the establishment of British Telecommunications as a separate corporation; secondly, there is the provision to liberalise the telecommunications monopoly; thirdly, similar provisions which relate to the postal monopoly and, fourthly, the extension of the 1969 Post Office Act to enable the Treasury to dispose of their shares in Cable and Wireless Limited. If I may, I shall deal with these briefly in turn.

The decision to split the Post Office was announced by my right honourable friend the Secretary of State for Industry last summer. This gave effect to the recommendation of the Carter Committee, under the last Government in 1977, which argued that the two businesses are completely different; one is, clearly, highly capital intensive while the other is, of course, highly labour intensive. This view is shared by the Post Office Board and by many—though, I must say, not by all—of the unions. I believe that both sides of this House will accept that the split is a sensible and practical move, and that it is an advantage for each business to have its own board able to concentrate exclusively on its own affairs. In fact, most of the practical arrangements for the separation have now been carried out and, indeed, some have been in effect for many years now. If this Bill is passed, the separation will be formalised and complete.

Much of Part I of the Bill therefore is taken up with the statutory provisions necessary for the establishment of the new public corporation and the transfer to it of the statutory rights and liabilities of the Post Office in respect of telecommunications. In this respect it is simply repeating existing Post Office legislation, but in respect of British Telecommunications it also includes new provisions which enable my right honourable friend to liberalise the telecommunications monopoly and to ensure that the corporation competes on a fair basis under the new régime by setting up separately accounting subsidiaries. These provisions, which are contained in Clauses 15 to 19 of the Bill, together with my right honourable friend's powers in respect of the corporation in Clause 6, are of course a key part of the Bill.

I must hasten to say that the Bill does not attempt to lay down a detailed régime for relaxation of the telecommunications monopoly because of the need for us to retain flexibility in order to take account of very rapidly changing technologies. Telecommunications technology is developing at such a bewildering speed for many of us that any detailed competitive régime that we, either here or in another place, enshrined in statute would, I believe, run the risk of being left high and dry, giving rise to the need for renewed primary legislation at possibly quite frequent intervals. I do not think that that would be satisfactory from a legislative point of view.

The Bill therefore provides general enabling powers which will allow the Government to introduce competition in ways that take full account of the current state of technology and which can be modified flexibly as needs arise. Of course, this places a very considerable onus upon the Government to make progress and to steer the intended development of competition in the provision of equipment and services. However, it does not therefore follow that these changes, once they are achieved, will not be permanent. For one thing, the proposed licensing power will enable licences derogating from the monopoly to be irrevocable, and I am advised that "irrevocable" in parliamentary terms means that primary legislation would be required to withdraw them. Secondly, and, to my mind at least, this is certainly the more important point, I am convinced that the benefits of competition will be sufficiently clear to all, and the growth of activity and the improvement in the range and availability of services so readily apparent to all, that once this process has begun it would in practice be quite impracticable for any Government to reverse it, even if they wished—foolishly in my view—to do so.

The target timescale for the liberalisation of individual types of equipment is currently under discussion with the interested parties, but for the four main types of equipment which are at present exclusively supplied by British Telecommunications the Government have in mind broadly the following programme. First, modems—the device necessary to connect computers to the network—will be liberalised as soon as possible after the coming into effect of the Bill, should it receive Royal Assent later this year. Secondly, the approval of the first types of telephone instruments for competitive supply will follow soon afterwards, with liberalisation being progressively extended to other types as the necessary technical standards become available. Thirdly, teleprinters will be liberalised in something over a year's time. Finally, we envisage that private automatic branch exchanges—known in the trade jargon as PABXs—which give rise to somewhat greater complexities, should be liberalised towards the end of the transitional period which I mentioned.

In the meantime we are exploring whether, in the interests of users, some degree of choice of supplier can be introduced for already approved equipment in advance of this general liberalisation policy which I have outlined. Recently there was an interesting debate in your Lordships' House on standards, and I can say that all equipment to be attached to the network will have to receive technical approval from an independent body appointed by the Secretary of State—this will be the British Electro-technical Approvals Board—and will therefore have to comply with the standards set by the British Standards Institution and approved by the Secretary of State. All such equipment will also have to be marked to show that it has been approved for attachment to the network. Clauses 17 to 19 of the Bill make provision for these requirements to become statutory. These measures are extremely important and will ensure the continuing safety and integrity of the network.

Secondly, we intend to liberalise the use of the network for third party services. This will certainly extend to the provision of services not already provided by the corporation. Going beyond that, your Lordships may know that the Government have recently published a study which my right honourable friend commissioned from Professor Beesley of the London Business School to look into the economic implications of full liberalisation of the use of the network for this purpose. I shall see that copies of the study are placed in the Library. My right honourable friend has invited comments on the report before the Government reach any final conclusions on the report's recommendations.

The third area of possible liberalisation is in the provision of transmission services in competition with British Telecommunications. My right honourable friend announced last July that he was exploring the scope for this, particularly in relation to the very exciting possibility of satellite business systems. A number of organisations have since been exploring the market possibilities. No decision has yet been made, but my right honourable friend intends to make a statement on this subject shortly.

Licensing procedures to implement this liberalisation policy will not require an extensive bureaucratic organisation, since it will be apparent that for the most part licences will be of a pretty general nature, covering whole categories of equipment, and will not relate to specific individuals. The Secretary of State may not exercise his licensing power without first consulting British Telecommunications, so there is no question of the arbitrary issuing of licences which might seriously damage the corporation's interests. Indeed, the corporation will be given every opportunity to put forward its views. Moreover, under Clause 15(1)(b), the corporation itself will have the power to issue licences and we envisage that it will continue to play an important role in this area. So we believe that the powers are drawn in such a way as to allow maximum flexibility to enable this industry to take account of changing technologies.

Some concern has been voiced about the danger that this liberalised régime will lead to a takeover of the United Kingdom telecommunications network and equipment market by foreign imports. I do not believe this need be so. Indeed I am confident that the stimulus of competition will help British industry to keep in the international forefront of the new technologies. But the Government do of course recognise that our telecommunications manufacturing industry must be given time to adjust to the new competitive conditions. For this reason we intend to phase the liberalisation programme for attachments to the network over a period of about three years. In addition, we shall be very vigilant in ensuring that our manufacturers obtain reciprocal trading opportunities with countries which will be exporting their products to us. Those who wish to maintain the open system in world trade must also be vigilant in guarding the principle of reciprocal treatment.

It is true that our international obligations under the Community treaty and under GATT do not permit us to discriminate against the purchase of equipment by private customers on the basis of its country of origin, even where the supplies from that country in one way or another enjoy a protected home market. We are, however, engaged in bilateral discussions with the main trading countries concerned, as well as in talks at Community level, and our object is to obtain a satisfactory assurance that our manufacturers will have similar trading opportunities in those countries as their manufacturers will have here in the United Kingdom. The Government will take account of the extent to which satisfactory assurances are received in deciding upon the timing and extent of our liberalisation policy where attachments are concerned. But it is up to British industry to react to the freedoms which we are proposing. Nevertheless, we can as a Government ensure that fair time is given within which British industry can react. So the message of this Bill to industry is quite clear: we, the Government, are breaking into hallowed monopolies in order to give you, in industry, a chance to create more wealth, more jobs and more products. It is industry itself that must now get going.

So far I have concentrated on the private sector, but BT of course will have a crucial role to play and a strong, financially healthy BT is vital for the full development of communications in this country. The new corporation will have responsibility for providing a modern, efficient network and for applying the new technologies. Far from losing out because of liberalisation, it will benefit from the increase in traffic which will be generated by the growth in new services which it will help to provide. Moreover, it will be able to compete in these areas; Clause 2 of the Bill gives it powers to supply telecommunications equipment which also provides other services, such as data processing, and it will be able to extend its activities into new technologies such as fibre-optic electronics. May r say, in parenthesis, that anyone interested in this field and its possibilities for expansion should study the excellent special supplement in the Financial Times on this industry which was printed only today.

Fibre-optics is the technology of using pulses of light rather than electrical current to transmit information. It has already been applied to telecommunications in the development of optical fibre for transmission systems. In the future it is likely to be applied to telecommunications switching—or exchanges, for short—among many other possible uses. Where the new corporation does compete, however—for example, in the provision of terminal equipment—it must do so on a fair basis. It is for that reason that Clause 6(6) gives the Secretary of State the power to require BT to set up separately accounting subsidiaries. This will ensure that there will be no hidden cross-subsidising of the corporation's competitive activities by its monopoly. Further checks will be provided by the Director General of Fair Trading who will monitor the new competitive régime and look out for evidence of any unfair trading practices, both in the public and private sector.

I have already stressed the Government's commitment to a financially healthy British Telecommunications. The Government endorse the importance of investment in posts and telecommunications. At present we have a system which contains much equipment which is now out-of-date. We need to modernise it; for instance, by introducing the new electronic switching system which allows the transmission of signals in digital form. We need to expand the system to cater for customer demand, which is still growing despite, as I said earlier, the recession and we need to use the system to introduce new services to the customer.

Perhaps I may illustrate the need here with a few figures. After its high levels of the early 1970s, investment in the telecommunications system was reduced to a low point of the still high figure of £1·4 billion in 1977–78. It has since climbed, in adverse conditions, to £1·5 billion in 1978–79, £1·6 billion in 1979–80 and an estimated £1·7 billion in 1980–81, and a further increase in investment levels is planned for 1981–82. The figures I have given are all in terms of constant 1981–82 out-turn prices. For short, they discount inflation. They illustrate the magnitude of the investment programme with which we are here concerned.

Of course pushing ahead with an investment programme on this scale at a time of economic difficulties is not an easy task. A major part of the programme can be financed from the cash flow from BT's large depreciation provisions, but in addition of course the corporation needs to make profits and it needs to borrow. The Government, for our part, have increased BT's external financing limit in the financial year which has just ended to £223 million. Though less than BT would have liked, this marks a significant increase on recent years, when net repayments by the corporation have been required.

We are also concerned to do what we can to increase the finance available for telecommunications investment in this year and subsequent years. In our view, the best route lies through the introduction of private capital outside the constraints of the PSBR. We would like to see BT forming joint ventures in partnership with the private sector, for instance, in the supply of attachments and the provision of services auxiliary to the main network. Provided that the corporation did not control such joint ventures they would be genuinely private sector concerns whose borrowing would lie outside the PSBR constraint.

The House may know that Clause 26 of the Bill has been amended in another place so that British Telecommunications would have the power, if the Government so permit, to borrow directly in the money markets for long-term capital needs. As the Government indicated at the time, this is a permissive provision which will enable the corporation to raise finance directly from the market if suitable arrangements can be made. What we are seeking to develop is a new form of financing, involving a genuine element of risk for the investor which would bring pressure for improved performance to bear on the telecommunications business. Your Lordships will be aware that simultaneously we also need to take care to avoid excessive monetary growth.

Before leaving Part 1 of the Bill, I must quickly mention the provisions concerning the pension fund in Clauses 32 to 34. These clauses are necessary to allow the present Post Office Pension Fund trust deed to be amended to take account of the creation of BT. The Post Office trade unions and the trustees of the fund have expressed concern that the pension fund might be split. They feel that the fund, which is after all the largest in the country, has been very successful and that decisions about its future should not be taken arbitrarily. They have asked that a decision be deferred for two or three years. Your Lordships will be used to my frequent strictures in this House that capital in this country is now corporate. I must emphasise, therefore, that no decision as to the future of the pension fund has yet been taken. Ministers in the Department of Industry are undertaking a series of meetings with all the interested parties, the unions, the trustees and the pensioners themselves, to discuss what the future might be. No final decision will be made until these meetings are complete.

Turning finally to Part II of the Bill, this provides for a flexible approach to the postal services similar to that in Part I for telecommunications. As I have said, the basic monopoly for our national postal service for letters will remain in the hands of the Post Office. Nevertheless, we propose that the Secretary of State shall have power to make derogations from the monopoly in certain circumstances. The changes proposed in this Bill have resulted for the most part from the review of the monopoly which was undertaken by the Department of Industry following the general dissatisfaction in the postal services which arose during the summer of 1979. During that review a very wide range of interests was consulted and the general feeling was that while the basic letter monopoly should remain, there was room for some flexibility in respect of certain types of service. This view is reflected in our proposals in this Bill, which also take account of the views expressed by the Monopolies and Mergers Commission in their report on the Inner London letter post, which your Lordships will remember was published last year.

I think the House will also have noticed that the Bill contains, for the first time, the definition of a letter in Clause 66. This defines the scope of the postal monopoly, while Clause 68 allows the Secretary of State to issue licences for services which would otherwise fall within the monopoly. Clause 69 enables him to suspend the monopoly, either nationally or in a particular area and either in respect of all letters or only certain categories. Certain changes to the exclusive privilege have already been decided upon and as soon as possible after Royal Assent the powers in Clauses 68 and 69 will be used to allow the carriage of mail in bulk between document exchanges and to allow charities to deliver Christmas cards. We have had many debates on that subject in your Lordships' House, so I hope that at least will he warmly welcomed.

Clause 58 of the Bill extends the Post Office's powers to allow it to provide electronic mail services which incorporate what is called a "hard copy" stage—a print out; this will enable it to continue to be at the forefront of the development of this type of business communication. This clause also lets the Post Office provide a wider range of services over its counters than at present. This power has an important bearing on the sub-post offices which, as many noble Lords will be acutely aware, are a crucial element in rural communities, enabling post offices to undertake a wider range of counter services and thus providing a potential for an increased volume of business, which many of them badly need.

This part of the Bill also contains provisions similar to those in Part I, enabling the Post Office to establish self-accounting subsidiaries, and empowering the Secretary of State to direct the establishment of such subsidiaries. Once again I should like to emphasise that these are not new powers; they have precedents in several other nationalisation statutes, including some put forward by Governments led by noble Lords on the other side, for instance, aircraft and shipbuilding legislation. At present we do not have plans to exercise these powers but we are looking into the possibility that some post office activities may more appropriately be undertaken by the private sector. I believe that all these measures taken together will help to encourage the Post Office to improve its efficiency and help it to provide a better service to the customer, which is, after all, the Government's prime aim.

Finally, I come to the provisions concerning Cable and Wireless Limited. The Bill includes a clause which broadens the Treasury's existing powers under the 1969 Post Office Act to dispose of shares in Cable and Wireless. The clause is therefore quite at home in this Bill. The measure proposed is part of our overall policy to dispose of public sector assets. As was announced to both Houses on 9th March, the Government have decided to make a public offer of just less than 50 per cent. of its shares, subject to obtaining the necessary powers. There has been a lively debate about this clause in another place, and I imagine it will also be of interest to noble Lords, in particular to the noble Lord, Lord Glenamara, who was, as the House will be aware, chairman of the company until last October.

Noble Lords may recall what I told the House on 9th March, that the Government's proposal for Cable and Wireless has the agreement of the company's court of directors and has been cleared with all the Governments of the 31 countries where Cable and Wireless operates under a franchise. The proposed sale of shares will create a partnership between the public and private sectors which will give the company the benefit of increased commercial flexibility and will include arrangements for employees to acquire shares.

I would repeat that this is a very important Bill for a great industry at the threshold of what will probably be the most rapid form of industrial development all over the world in what remains of this century. I believe it will lead the way to great new opportunities throughout the industry, opportunities which cannot but help benefit all those working in the industry, and indeed the economy as a whole. Above all, they will lead to a vastly improved service to the customer whether as business or as individuals. I commend the Bill to the House.

My Lords, as the noble Earl said in introducing the Bill, this Bill has four objectives: to separate the Post Office into British Telecom and the Post Office as a separate entity; secondly, to give the Secretary of State power to introduce the sweeping changes the Government wish to see to the telecommunications monopoly; thirdly, to introduce parallel powers to reduce the Post Office monopoly and a new power to suspend that monopoly at any time he wishes; and finally, to give the Treasury power to sell shares in Cable and Wireless.

At the Second Reading of the Bill in another place the Secretary of State said:

"I commend the Bill to the House without hesitation as a substantial measure likely to bring noticeable and worthwhile benefit to those who work in the public and private sectors connected with telecommunications and to the public generally as consumers and users of telecommunications".—[Official Report (Commons), 2/12/80, col. 205.]

We do not see the Bill like that at all. We see it as a Bill which could have a very detrimental effect to the public generally as customers and users of telecommunications and postal systems. The outward purpose of the Bill is to split the Post Office into two sections. However, with that purpose comes the hidden purpose of the Bill; that is, to enable the Secretary of State to use his own powers, as he has put it, to privatise national assets. I would say "piratise", and in using this word I have specially in mind the Government's recent undue haste in selling the shares of British Aerospace. Those shares today, only a few months after their market flotation, are worth many millions more than the public paid for them, millions which have been lost to the nation because the Government were not prepared to wait for the right moment to market those shares.

This Bill gives the Secretary of State powers, under subsection (6) of Clause 6, to direct the corporation to dispose of its assets or any of them and to ensure that its subsidiaries or any of them dispose of their assets or any of them. The power is universal. If British Telecommunications is doing better than some other organisations the Secretary of State may stop it doing so well and take away its assets. Clause 62 gives the Secretary of State the same powers in relation to the Post Office. And of course, as has already been mentioned, Clause 79 gives the Secretary of State power to dispose of some or all of his interests in Cable and Wireless Limited. These are very wide powers, too wide powers, for the Secretary of State to have, and I should stress that he does not have to come back to Parliament before he exercises them. The Bill gives him virtual power to sell off the whole of British Telecommunications, the Post Office and Cable and Wireless—not, I should hasten to add, that he has declared his intention of doing any of these things.

These powers enable the Secretary of State to threaten to require British Telecommunications to set up special Companies Act subsidiaries in areas in which it is in competition with the private sector. It wishes to do this in order to "make transparent" any flows of funds from British Telecommunications' monopoly services to competitive services. However, none of British Telecommunications' private sector competitors will be prevented from cross-subsidisation between products or from "loss-leader" type market strategies. The threat to direct British Telecommunications to set up subsidiaries is unnecessary, as adequate mechanisms already exist under previous legislation and previous arrangements to ensure that British Telecommunications does not take unfair advantage of its position in any new markets. The Competition Act 1980 adequately covers this point.

The Bill as at present drafted will allow the Secretary of State to interfere with the corporation's pricing policies for as small a category of assets as practical considerations allow, even, for example, between one competitive product and another. This is obviously inappropriate and should be amended. This is the most worrying aspect of this Bill, as I hope I have made clear—because it leaves unfettered powers in the hands of any Secretary of State for which there is no provision for parliamentary scrutiny. I am bound to ask myself whether it is right that these powers should be in this Bill, which is essentially—as the Explanatory and Financial Memorandum points out to your Lordships—about the creation of a new public corporation, namely British Telecommunications.

The proposals in the Bill fundamentally alter the basis on which telecommunication services are to be provided in the United Kingdom. Although the Government have agreed that British Telecommunications will retain the monopoly of the provision of the first telephone in a customer's premises, so far as all other terminal apparatus is concerned the supply, installation and maintenance will be opened up to competition. This so-called liberalisation will be phased out over a 3-year period, which is intended to allow manufacturing industry to gear up for what is undoubtedly the major threat of substantial imports of equipment from abroad.

I am glad that when introducing the Bill the noble Earl, Lord Gowrie, appeared to be slightly flexible about the 3-year period because I believe there is great concern that it is much too short. Originally, as the Bill was first published, British Telecommunications was to be left with the monopoly of maintaining private automatic branch exchanges. Again, I am glad that in moving the Bill, the noble Earl, Lord Gowrie, spelt out the PABX synonym for your Lordships. This was in recognition of the fact that such exchanges form an integral part of the network and that problems in one exchange can infect the quality of service and the provision of services to other customers. But as I have said, the Minister of State, Mr. Kenneth Baker, has stated that the maintenance of PABXs is also to be opened up to competition in the future.

One even more recent threatening development to the future of telecommunications in this country than the steps announced in the debate has been the publication of the Beesley Report. Unfortunately, your Lordships did not have the benefit of hearing the Secretary of State's Statement on that report before your Lordships rose for the Easter Recess. This was because the Statement was made in another place an hour or two after this House had risen for the recess. Professor Beesley was asked by the Government last year to undertake a study of the possibility of liberalising the supply of what are called value-added network services. These services occur when someone hires a complete private circuit from British Telecommunications and uses it to sell telecommunication services to third parties. Professor Beesley recommended that the free use of the value-added network services should be allowed. He also recommended that the use of international value-added network services should be allowed, as should be the development of private transmission services.

In making these recommendations Professor Beesley was, in the words of Sir George Jefferson, the chairman of British Telecommunications, going far beyond his terms of reference and, more particularly and pointedly, beyond the scope of the evidence submitted to him. Not surprisingly, the report's arguments and assumptions are especially questionable when it comes to dealing with these areas. However, the Secretary of State has agreed to undertake consultations before coming to any decisions on the proposals in the report later this year.

I believe one must say that if the Beesley recommendations are accepted, British Telecommunications faces the prospect of very substantial revenue losses as private companies will be interested only in the provision of alternative transmission facilities or value- added network services on the most profitable routes. Professor Beesley has estimated the loss of potential revenue to British Telecommunications as a result of his proposals at around 2 per cent. However, this figure has been hotly disputed by British Telecommunications, and its chairman, Sir George Jefferson, said on the day after the publication of the Beesley Report that the implementation of its proposals could lead to an increase of 50 per cent. in the ordinary domestic customer's bill over and above anything due to inflation.

I should now like to pass on to the question of the quality of the service currently provided. One must agree with the noble Earl, Lord Gowrie, when he said that no one would claim that the telecommunications service provided at the present time is perfect. However, we should not blind ourselves to such reasons as there are for it not being a perfect service—if indeed it is ever possible to achieve absolute perfection. One of the major reasons is the constraints over the past 10 years which have restricted investment in the network. Without sufficient funds for investment British Telecommunications cannot provide additional exchange capacity, replace old and deteriorating underground cable, take on the staff needed for maintenance and for the provision of services, or pursue as fast as it would like the modernisation of its switching equipment from old, fault-prone electro-mechanical devices to modern, fast electronic equipment.

I do not believe we should let our natural British modesty prevent us from highlighting some of the achievements of British Telecommunications. I know that some of your Lordships feel that anything which British Telecommunications does, Bell does better. But what are the facts? In Britain, some 98·6 per cent. of all subscribers can dial direct to 106 countries. In the USA the figure is 50 per cent. because the network there is not as good in the rural areas as is our network; we enjoy a first-class network throughout the country. Bell has to pay 43 per cent. of its revenue from trunk usage to pay for local lines, so the point is quickly made that the trunk routes are paying for the local services. If the trunk routes are to be privatised, British Telecommunications is bound to have to drop its charges for trunk use and to increase charges to the individual householder. Indeed, Britain's potential prosperity and economic recovery in every part of the country can depend on us having a first-class telecommunications system. Such facilities are the nerve centre of a modern society. Service industries are being set up in areas of unemployment and will need these facilities to ensure their success. I can only refer back to the Beesley Report itself, which pointed out in paragraph 103:

"Despite exchange rate strength, in late 1980 BT still had low charges relative to most Europeans. In the transatlantic market to US, in a range of 11 European countries, prices for a 1 minute telephone call ranged from 92p (UK) to £1·93 (Belgium), with Sweden being the nearest to UK at 99p".

At paragraph 105 the report goes on to say:

"So UK is, in general, a most favourable place from which to conduct international business, as well as being a favourable location through which to route international calls from locations elsewhere".

One can only say that it is no wonder that nine out of 10 of the top Japanese multinational firms have decided to establish their European hub base in the United Kingdom.

I think that the test of the Government's proposals must be whether they are likely to improve service to the customer. The whole package will have an effect—and probably a very substantial effect—on the revenues of British Telecommunications. At the same time, there is no sign of any end to the cash limit system under which British Telecommunications is prevented from finding the sums needed for investment. Inevitably, therefore, costs to the ordinary residential customer will rise and the service will deteriorate. That is likely to be particularly true in the rural areas outside the cities, which to date have been subsidised by the profitable businesses in the cities and by commercial and industrial customers. This is very much the same philosophy as the Government have adopted with regard to the British Airports Authority: today's customers pay for tomorrow's services; tomorrow's customers should pay for tomorrow's services.

I find that a very odd philosophy. For example, nobody would suggest that the users of an existing mode of river crossing—say, a ferry—should pay for a new mode of crossing—say, a bridge. Money would be borrowed for the bridge and the users of that bridge would be charged a toll. This is exactly what is proposed for the new Humber Bridge. I am quite certain that that bridge would not be being built today if the customers of the existing ferry services were having to find the money. The philosophy that future services should be paid for by existing customers places an intolerable burden on those existing users, and British Telecoms should not have its borrowing powers restricted in this way.

The issue of borrowing powers is a major consideration for the future. British Telecoms is not alone in viewing with dismay the Government's continued refusal to allow it access to private sources of finance. The manufacturers are equally concerned. Indeed, the managing director of Plessey Telecommunications was recently quoted in Engineering Today as pointing to the stupidity of the Government's decision. Engineering Today stated that he is concerned that there is a fundamental paradox involved:

"The Government is saying that the UK must modernise its telecommunications networks and yet at the same time liberalisation could lead to a diminution of revenues, and so of capacity to invest.".

Plessey is right in stressing the investment aspect of the need to allow British Telecommunications greater financial freedom; for increased funds for British Telecommunications would be spent on British goods and equipment, thus safeguarding and creating employment in British manufacturing industry. Indeed, it is surely absurd that, at a time when the Government expect manufacturers to be gearing themselves up to face competition, they are reducing their work by failing to allow them to invest adequately and thus to order new equipment.

We should remember that in real terms the investment of British Telecoms has been static for the past 10 years, and that at the current time for every £18 per head of the population that the United Kingdom invests in telecommunications each year the United States invests £36, France invests £51, Japan invests £32 and West Germany £36. Those are the latest figures which have been made available to me and, of course, they will vary from day to day as exchange rates fluctuate. I know that the Government will answer this by pointing to the potential for raising additional sums provided under Clause 2 of the Bill, which allows the company to enter into joint ventures. Indeed, in introducing the Bill, the noble Earl mentioned this point. However, this argument should not be allowed to go unchallenged. For elsewhere the Bill prevents British Telecommunications from engaging in joint ventures in the main network area. Yet it is in the main network area that the vast majority of investment is required. Therefore, potentially, joint ventures can raise sums which are trivial in comparison with British Telecommunications' investment needs and are peripheral to its major activities.

The overall effect of this is that the customer is not only likely to have to pay higher prices for services, but he is also likely to be faced with having to pay higher prices for poorer services than he has received in the past; for if British Telecommunications' income is squeezed and it is allowed no substantial relief from the cash limit on its borrowing, it will simply not be able to afford to maintain existing standards, both for the provision and quality of service. It is the customers in the least profitable sectors, like the rural areas, who are likely to suffer most.

The Bill lays a duty on British Telecommunications to provide a first telephone for any customer. So customers having additional terminal apparatus will be confronted with a variety of problems as a result of divided maintenance responsibilities. If the private sector supplies an additional piece of terminal apparatus, like a telephone, and maintains it whenever a fault occurs, a potential problem arises in establishing whether the fault is on the apparatus or in the exchange connection. In real life the problem is not likely easily to be tracked down. The private sector is likely to blame the network and several visits could be involved in establishing where the fault lies. Inevitably, British Telecommunications will be forced in the direction of charging for maintenance visits separately on a cost basis, whereas at present, of course, charges are included in the rental. The private sector will doubtless also charge. Customers, therefore, face not only a delay in establishing and correcting the fault, but will also have to pay heavily in two directions to get it sorted out.

As I have said—and I see that time is moving on—many British manufacturers are greatly concerned about the rush of imports. I think that it is very important that in Committee we should look at the proposed timing of this. It is not only British Telecoms but also British industry which could be very adversely affected if this is rushed into at too great a speed. The Government have stated that they wish to ensure that all equipment is certified by an independent body which has been Government appointed. Clearly it is right that this should be done, but there are a number of areas where this needs to be clarified. It is not, for example, clear how compliance with the orders which will come from the licensing of equipment will be enforced. This is something which we need to ensure is done.

The present standards ensure that existing equipment such as Prestel sets keeps high and low voltages separate. Indeed, there would be a lot to be said in many fields here for there to be international standards. If there were international standards for the manufacture of equipment it would make it much easier for British exporters to penetrate overseas markets instead of meeting with a situation where the sort of standards laid down overseas are different from the standards laid down in the United Kingdom, with the effect that equipment may meet one set of standards and not another. From the point of view of British manufacturers the international standards become something of great importance here.

I should like to turn quickly to Part II of the Bill, which deals with the Post Office. We are totally opposed to any interference with the letter monopoly, be it a relaxation or its abolition. Although the Bill has sensibly retained the basic letter monopoly, the derogations under Clauses 68 and 69 could lead over time to drip-by-drip breaches of the monopoly resulting in its effective collapse. The letter monopoly has existed for over 300 years and was updated and confirmed by Parliament in 1953. During these years the monopoly has been criticised on many occasions but there has never been any significant change or relaxation in its application.

The postal service is a part of the basic infrastructure of our society, touching on the daily lives of all. The Post Office delivers mail to every home in every city, town and hamlet in Britain. The postal service must always be in the public eye, but also it is ever open to criticism. It is judged both by the quality and reliability of its services and by its prices. Like many other public services, its successes go unremarked but its failures hit the headlines.

Any relaxation of the monopoly would lead to a drastic worsening and eventually to the wholesale withdrawal of certain services. The original concept of Rowland Hill was that the cost of conveying a letter varied so little that it was pointless to reflect distance travelled in the price, and acceptance of this principle and the introduction of uniform inland postal services has enabled remote rural areas to receive the same services as the towns and cities at the same cost.

The social objective of maintaining services at reasonable prices to rural communities is only possible if average unit costs are spread out over the broadest possible traffic. In other words, the pre-sorted bulk postings for local deliveries in town centres in a sense subsidise the "one-off" letter for some remote area. The loss of this bulk traffic could mean either the reduction or abolition of rural deliveries or a drastic increase in price. A relaxation in the monopoly would undoubtedly lead to this situation by making it possible for private operators to cream off the profitable traffic, leaving the uneconomic traffic for the Post Office to handle. Indeed, the commercial operator would offer services only in town centres and densely populated areas.

It has been suggested that if this sort of situation evolved and there were inroads in the Post Office share of the market and 12 per cent. of letter traffic was transferred to other carriers, the real price of a letter would rise by more than 20 per cent. This would have the effect of a reduction rather than a creation of wealth in the community. Of course the letter monopoly is common throughout the world, and those who want to abolish it must therefore be doing so for dogmatic and extreme political reasons to satisfy their friends in private business, regardless of the public interest. Apart from the bad effect on individual citizens, the effect of that abolition on the Post Office would be disastrous. Private profiteers would cream off the lucrative inter-city traffic and the Post Office would be left bearing the burden of the universal door-to-door delivery service, which would quickly slide into deficit.

I think I have made it quite clear that we are against any interference with the monopoly of the Post Office here. I now move on to other sections of Part II of the Bill. I should like to deal briefly with Clause 68, to which the noble Earl, Lord Gowrie, referred. Clause 68 provides that the Secretary of State may, after consultation with the Post Office, grant licences, other than a licence to all persons, for the doing of anything falling within the postal monopoly. Such licences may be granted unconditionally or subject to any conditions specified in them; they may be irrevocable or subject to revocation as therein specified.

As the noble Earl, Lord Gowrie, has said, the Government do not envisage that they will use these powers frequently but hope that their existence will keep the Post Office on its toes and thus obviate the need for using them. However, the Government have already declared their intention—which the noble Earl reiterated this afternoon—of using these powers as soon as the Bill is enacted for the grant of general licences covering the ability of charities to deliver Christmas cards, and of document exchanges to transfer mail in bulk.

Although the Government have said that the licences could be revoked by the Secretary of State for breaches of conditions imposed in them, there is no requirement in the clause for the Secretary of State to impose any conditions on the licences when granting them. Surely, with the powers of granting licences the Secretary of State should have a responsibility to ensure that the activities of the licensees are controlled. Control should include the registration of licensees; a requirement that all items carried by a licensee bear an endorsement which identifies it; provision for all licences to be revocable; and publication annually of lists of licences issued, or revoked, or ceased, so that both the public and we know who these people are. This is a matter which we shall have to deal with in Committee.

The further point on Part II of the Bill to which the noble Earl, Lord Gowrie, referred is the question of the pension fund. He said that the Minister of State, although he has had a recommendation from the chairman of the Post Office and British Telecommunications that the superannuation fund should be split, has agreed to undertake consultations with the relevant parties before coming to a decision on this. I hope it will be possible at some later stage in the progress of the Bill for us to know how those consultations are proceeding.

Clause 79 gives the Government powers to dispose of all or any of the shares of Cable and Wireless. If the Government were to use those powers, it would be an act of commercial vandalism. None of the justifications that noble Lords opposite put forward for dismantling, fettering or emasculating publicly-owned industry can apply here. As the noble Earl, Lord Gowrie, pointed out, my noble friend Lord Glenamara was, until last October, chairman of Cable and Wireless, and in his final annual report he said that Cable and Wireless had had to compete hard for international markets and that, outside Britain, the fact that the company was owned by the British Government could be an asset. The company could be trusted to be impartial when given the sensitive task of running other countries' telecommunications projects or systems. I hope that the House will heed those remarks, and when he winds up for the Opposition no doubt he will go into that aspect of the Bill in more detail than I can at this time.

The Government have described the measure as "the Bill of the decade", although the noble Earl, Lord Gowrie, slightly downgraded it by referring to it as a "very important Bill". While it may be important and could be the Bill of the decade, it threatens to be disaster of the decade. The Government have continually pointed to the success of de-regulation in the United States as a justification for their approach. But that process was carried out over a period of 20 years; the Government plan to phase out the monopoly in the United Kingdom in only three years. The Government are taking an enormous gamble with a major potential growth sector of the economy. We believe they have got it wrong and that the results will be very serious for the future of British manufacturers. On Second Reading the Secretary of State said there were three main objects behind the Bill:

"first, to protect the interests of consumers; secondly, to stimulate the United Kingdom industry; and, thirdly, to promote the greater flexibility of telecommunications systems".

I believe that the Secretary of State has got it quite wrong and that it will achieve none of those things.

My Lords, I must tell the noble Lord, Lord Ponsonby, that 38 minutes is a very long time for an Opposition Front Bench speech on Second Reading. I can only reflect that the noble Lord should count himself lucky at not being charged by the minute!

My Lords, we on these Benches welcome the objectives of the Bill in so far as it will allow users to be offered a wider range of attachments and services. I hope it will stimulate suppliers to develop innovative and competitive systems both for the domestic and for the export markets. I agree with the noble Earl, Lord Gowrie, that we are about to witness a technological explosion in the field of telecommunications in this decade and that we must make the most of it.

In Britain, the importance of the telecommunications industry to the recovery of the economy and for the generation of new jobs cannot be over-stressed. The development of information technology is vital to our future, and therefore anything which encourages that is to be warmly welcomed. Having said that, we nevertheless have certain important reservations about the methods outlined in the Bill. There does not appear to be a clear structure or framework in which the British telecommunications industry as a whole can develop with confidence, and confidence will play a major part in the development of this industry in the future.

I do not object to British Telecom having a monopoly of the basic network but I do not think it is a wise concept that British Telecom should manage the whole telecommunications environment when it must inevitably be in competition with private sector organisations in that same environment. To my mind, it is the equivalent of British Airways being given the power to decide whether or not Laker should have a certain route or a particular licence, rather than leaving that to the Civil Aviation Authority. In our view it would be far better to vest the exclusive privilege of telecommunications in the Crown, as was the case until 1969, and that would put British Telecom on an equal footing with other private sector companies in terms of the licensing of certain services.

I believe that a more useful and viable concept would be to establish an independent telecommunications authority representing users, suppliers and British Telecom. That would enable the Secretary of State, through that management authority, to licence British Telecom, and others, to supply on subscribers' premises equipment which would conform to independently-defined and monitored standards to ensure safety and compatitibility with other network users. There would be no need for such an authority to be a bureaucratic regulatory body like the Federal Communications Commission in the United States. I would see it more like a licensing and strategic planning authority, as I said, vaguely on the lines of the Civil Aviation Authority. No more staff would be needed than is already provided in the Bill and an important merit of my proposal would be that the decisions would be seen to be fair because they would come from a body which had technical competence, a competence it would be quite wrong to expect from the civil servants at the Department of Industry.

The next major flaw in the Bill is the wrong-headed thinking about the need to constrain British Telecom's investment to protect that sacred cow, the public sector borrowing requirement. Maybe I have misunderstood it, but I cannot see the logic of it. I believe Professor Beesley is right; it is illogical to place these restrictions on the capital investment budget of a corporation whose aim it is to be viable and profitable. We should not forget that first-class communications are the nerve system of a modern society, and we have a lot of catching up to do against the competition of industrialised nations which are ahead of us.

Our communications system needs massive investment starting now and it needs to be assured of a stable climate in which to invest. We in this country have a legacy of under-investment which we must overcome quickly. In my view, it all points to the need for a flexible investment policy unrelated to the public sector borrowing requirement. If British Telecom is left free to find its own money for capital investment in the private market, I am certain it will be able to do so. Indeed, it should be encouraged to do so because then the need for cash limits and placing a burden on the PSBR would be avoided. In my view the same goes for any nationalised business which can persuade the market to fund it. What has to be done is to negotiate the terms on which the cash is to be found. The real test is whether the capital market is prepared to do the underwriting and is prepared to risk its money on the prospectus put to it by British Telecom or any other nationalised industry.

What I do not understand is why British Telecom, in trying to raise money from the private sector, must apparently team up with some private-enterprise organisation. Why is that necessary and why can it not do it on its own? After all, if BP wants to borrow money, does that count against the public sector borrowing requirement? Does the same apply in respect of British Aerospace? If you can raise the money on the market, I cannot see how it can affect the PSBR. In my view, there is a clear need to differentiate between commercially viable capital investment which will bring profits into the company eventually, and current expenditure on public service. The same principle, as I say, should apply in other areas of the public sector. I should have thought it would not be difficult to raise, from pension funds and other institutions, loans and debentures with or without warrant to get equity, and to negotiate something which would not in any way be a burden but which would enable us to increase the budget for capital investment in a field in which it is greatly required.

There is only one other point that I want to make. I have not referred, nor has anyone today, to the vital question of privacy and the safeguarding of data and other information, because the Home Secretary has made it clear that the Government intend to introduce legislation very much in line with the proposals of the Younger Committee, of which I was a member about 12 years ago. However, I would welcome from the Government an indication as to when we may expect to embark on this sort of legislation, which is now overdue by a decade. In the meantime, we support the Bill in principle. We shall have other things to say at the Committee stage, but we wish British Telecom a bright future.

My Lords, I warmly support the Bill and what the noble Earl, Lord Gowrie, has said about it. I thought that he made a very good case; and indeed he expressed the Government's appreciation of both the vital importance of these services to our industries and of the progress that is needed. I propose to restrict my remarks this afternoon to the telecommunications issue. As has been said, telecommunications are at the moment the scene of a real scientific and industrial revolution. The silicon chip and new techniques of data processing, new techniques of storing and retrieving veritable libraries of information, have revolutionised the requirements which the telecommunications network itself must meet. I am sure that many of your Lordships will have consulted, or at least will have experimented with, the absolutely amazing Prestel terminal in our Library.

In order to deal with these new requirements, on which it is truly essential for this country to keep up-to-date, a whole range of new possibilities is opening up, and in research at least this country seems to me to be very well forward. There are the satellite communications, affecting all kinds of telecommunications, even those involving weather reports. There are new ideas for telephone exchanges, especially System X. There is a whole range of audio and video appliances which will be usable at ordinary domestic telephone terminals, and there is the remarkable new system of using laser light passed down narrow glass fibres to carry telecommunications. The Parliamentary and Scientific Committee had a most eye-opening discussion about that last summer.

The excellent British industries, including Telecom, which are developing these methods and processes seem to be well up in the race. They will indeed be vitally affected by the Bill. I believe that, as the Bill recognises, it will be necessary to have very close co-operation with leading companies here—not only competition, but co-operation—including some very go-ahead international companies with British subsidiaries. I have always thought that international companies and groups which bring into our country new technologies, new processes, new ideas and new training really ought to be encouraged; and that is certainly the view of OECD. But it is also quite essential that our own companies, including the new Telecommunications Corporation, should be enabled and helped—and I say "helped"—to compete effectively and to co-operate, where that is desirable, for instance, by forming joint subsidiaries for specific purposes, and in general to operate effectively. Successive Governments have in fact done much to promote this industrial research and development, and I am sure that the Department of Industry is at present well placed to help.

However, I have some more awkward and more specific things to say about the Bill, which in general I support. You see, my Lords, we have previously been very good at research; we have often led the world in research. We have not been good at applying it in industry and at commercialising its use, and I hope that the Government are going flat out—I repeat, flat out—to see that our failures in the past are not repeated on this occasion.

These new industries require continuity of policy and continuity of support if they are to make the grade and compete effectively with the very go-ahead industries overseas. I am sure that they will need help in obtaining planning permission and that kind of thing. The usual form is that one applies for planning permission, and it takes two years to get a "No". One then engages a QC and applies to the Ministry, and after a year one gets a "Yes". Three years have passed and by then the market has disappeared. This is the kind of way in which we fail. We simply have to streamline planning procedures. I know that the Government have made some changes, but I am not aware what the practical effect on the ground has yet been. Businesses cannot invest safely or effectively without continuity of conditions.

Clauses 4 to 8 of the Bill give the Secretary of State for Industry very extensive powers of control over how the new corporation may act and what it may produce. I just hope that these powers will always be used in a way which will be conducive to production and to effective competition with our competitors abroad, and not merely in a way which suits the ideologies of some Minister or party, or which yield to some political pressure group but which would not help the desperately needed advance of British industry. I am not at all thinking of our present Minister of Industry, or the present members of the Department of Industry. But I think that there is here a danger that we must watch in the future, and reading the Bill I do not really see what the answer ought to be.

The mere failure to take decisions, or mere procrastination while committees haggle or Ministers hesitate, or while the Treasury has to be squared—I say that with feeling can deal a fatal blow to the placing or securing of contracts. If the Government were to deal with telecommunications in the way in which they have dealt with the fast-breeder reactor at Dounreay—which has poured electricity into the grid for 21 years, and has been the subject of endless procrastination by Governments—we should inflict on our budding industries in the telecommunications field a similar fatal blow, and once more we should lose our lead to overseas competitors. From listening to the speech of the noble Earl, Lord Gowrie, for whom I have great admiration, I know that he would share my views about that, and that he is just as anxious as I am to see everybody get on with it.

This is not just an internal matter. I am sure that these new products and processes can lead to extensive exports, which would give much extra employment. However I can assure your Lordships that if we do not ourselves invest money and buy and install the products and methods, it will be almost impossible to get foreign Governments and foreign authorities to buy them. When one tries to sell something abroad the first thing they ask is, "What is your own Post Office or Government doing about it?" That applies to all kinds of things, including ships, guns and torpedoes.

That brings me to the point about stability of interest rates, which is really vital to investment, and preferably interest rates should be lower than they now are. This is very important for young expanding industries, such as we are concerned with in telecommunications. The bankers, and indeed many Governments, as we now see, are often providing loans at preferential rates, or with special terms of repayment, for overseas countries in need of aid. Indeed, they are now thinking of doing it for Poland. I should like the Government to find a further means of helping in this way young, progressive industries with enterprise, a great future, and new ideas, such as those concerned with telecommunications.

I know that the Government give a certain amount of development assistance already, and I should like to see more of that. It would be a bigger help to these industries if there were a preferential rate of interest applied in some way than it would be a real charge on the Treasury. There is no stability for the industrialists when interest rates go up and down like a yo-yo. It is worse in America than it is here, but it is still very embarrassing here. High interest rates are a fearful burden on development. Also, an extension of these very progressive industries will certainly help to reduce unemployment, and to some extent, therefore, will help with the PSBR. I hope that the Government will look at this suggestion that I have made.

This brings me to the problems of investment, in Clauses 26 to 29 of the Bill. I suppose it is right to give the Secretary of State and the Treasury these very extensive controls over the new corporation's activities, which really are of great national importance. But I hope that Parliament will somehow record the view that these extensive powers should be used to aid investment and not to hamper and restrict it. I agreed with a great deal of what the noble Lord, Lord Byers, said about this. I fully understand the very difficult position of the Treasury having to meet an expanding PSBR without increasing the money supply. I think that to some degree the Government are in competition with every sort of organisation in borrowing money. They have to borrow enormous sums, and if other people borrow enormous sums there is less for the Government, which, of course, puts up the rates of interest.

But about 95 per cent. of British Telecom's investment is spent in the United Kingdom, as the noble Lord, Lord Byers, said. Their investment means more jobs and more ability to produce and create wealth; it means the improvement of services to industry and to the whole community, and in many cases the production of goods for export. It really is short-sighted and counter-productive to set narrow cash limits which prevent this. British Telecom finances most of its investment needs from internally-generated finance, but it needs to borrow about 25 per cent. to cover the rest. This year it has been allowed to borrow only about 15 per cent. I really think that, given the importance of encouraging progressive industries rather than bolstering up unprogressive ones, we must all express the hope that the Government will find some means to use the financial powers in this Bill to help promote investment in the electronics industry generally.

My Lords, I personally think that it is better to do this in a time of recession, because it is going to have to be done anyhow. If it is done now, it will help employment more and tend eventually to reduce pressure on the PSBR; if it is done later, it will increase pressure in the economy and there will be objections of another sort raised against it. I realise that that is a somewhat Keynesian remark, but Keynes was not entirely wrong and it has yet to be proved that the other side of economics is always right. Surely, with all the oil money pouring in, an exception should be made here; and, as I was saying the other day, I want to see "a régime of intelligent exceptions"—I repeat, intelligent exceptions. However, I know well that in all these matters it is vital that Ministers and civil servants should be extremely wise. When I look at the enormous powers given to Ministers in this Bill, I repeat the hope that they will really be as wise as they possibly can. It used to be said that no Victorian architect was safe within reach of a pile of bricks and mortar. I earnestly hope that successive Governments will be safe within reach of this enormous industrial power. I hope your Lordships will take a really good, hard look at the relevant clauses in Committee.

To conclude, I support this very important Bill. Let us take this opportunity to help to make the great leap forward into prosperity which our country so sorely needs, and may other new industries follow the example.

My Lords, I am going to try to be as crisp and as brief as the noble Lord, Lord Byers. I doubt whether I shall quite succeed in either. About half of my business life was spent in putting electronic signals down cables to television sets at the other end. This we did under licence from the Post Office, with whom we had close commercial and technical relations. In addition to that, we were involved in the manufacture of a wide range of electronic equipment, both television sets and computers, and equipment for the cables. It is because of this that I am speaking to your Lordships today—but on Part I of the Bill only.

My Lords, this Bill marks the starting point of a brave experiment. The risks will be great, but so, too, will be the rewards. The explosion in telecommunications comes, I believe, at the right time in the development of this country's economy. Like other countries, we are moving into service industries. Sixty per cent. of our workforce is now employed in services; and in the United States it is 70 per cent. The growth of telecommunications, therefore, is an essential ingredient of future wealth-creation. Work patterns are going to change. They have got to if we are going to deal with the present appalling geo-graphical imbalance between jobs that are available, or will be available, and the people who are available to fill them. So I believe that in many ways the new information technology can play a vital part in creating new work and new jobs.

The Government's chosen way to help the growth of the industry is to liberalise the present monopoly of the Post Office. It is, of course, a way that is politically inspired. It is not the way that most European countries are going: it is the way that the Americans have already gone—a point which has been made before. But I, for one, do not find that it is a way that is rooted in dogma. I find that it is by far the best way and by far the likeliest way—provided only that the Government have a commonsense and business-orientated approach to those whose job it is to run the network and to make and use the terminal equipment.

I believe that the Bill itself sets exactly the right legislative background. I believe that it does all that primary legislation should set out to do. I fully support it, and shall continue to do so in every way throughout its passage through your Lordships' House—but I must put down two markers. First of all, I am very concerned to see that the corporation shall have the same freedom as any private company to set its own prices, and, where necessary, to invest, as any other business does, in new growth sides of its business—such as, for instance, Prestel and Datasell. I am not at all convinced that there is any change necessary in the Bill in order to achieve this, but I choose to make the point at this stage. I also want to see the penalty of imprisonment for certain offences, which crept in at the Report stage in another place, disappearing altogether. It is totally inappropriate, and I hope that the Government will take the initiative in having it out.

I want to make three broad comments and I emphasise that nothing that T say implies a desire to change any part of the Bill. The first concerns finance; and here I echo what has been said from all sides of the House. British Telecommunications needs to spend during this year at least £2 billion on investment and most of it is needed for updating its main exchanges in order to enable them to increase capacity and to process digital information. To do this, they will need to borrow £500 million this year, and probably more in future years, to top up their very substantial cash generation; and somehow a way must be found to enable them to do it. Private sector money is available; we know that. A real rate of return of 8 per cent. is assured. But much more important, capital investment in the network lies at the very heart of the growth of the whole industry. Four square in their way stand the Treasury who are saying, in effect, "Never mind that British Leyland borrowings do not count against the PSBR. This lot does!"

My Lords, I am pleased to be corrected. I probably could have chosen a better example. The Treasury approach, as things now are, is not good enough by half—and half is almost exactly correct in the arithmetical sense, too.

My noble friend Lord Gowrie has referred to the possibility of raising money by joint ventures with private enterprise companies. That may come in due course, but I doubt that it will be anything like enough, and I know that that is the very firm opinion of British Telecommunications themselves. On this point I want to join with the noble Lord, Lord Byers, and other noble Lords in pressing my noble friend Lord Trefgarne and pressing him hard. I hope that he will say just two things: "Yes, this order of expenditure is absolutely necessary", and, "Yes, somehow we will make this borrowing possible even if we do not yet quite know how".

Secondly, this Bill does nothing to spell out the strategy and how it is to be approached; and nor should it. It is there to provide the legislative framework and no more. But we know that all sides of the industry are keenly awaiting the issue by the Secretary of State of the rules on such things as licensing, leasing and resale. I should like to take this opportunity of saying how glad I was to have some guidance from my noble friend Lord Gowrie on these points. We have heard that the Secretary of State has just released a report by Professor Beesley, with a statement made by the Secretary of State himself. This report, which I have read four times in the last few days, ranges far and wide over the whole spectrum of liberalisation. I commend it to those of your Lordships who are interested in these matters because it is an extremely interesting and effervescent document. It was compiled in only three months—a very creditable effort considering that it was compiled by only one man. But I am hound to say, having read it very carefully, that I suspect that the professor had arrived at many of his conclusions before he started to consider the arguments. His conclusions about the leasing of circuits, about resale and about royalties are imprecise; and so, too, are his suggestions about the corporation's international business and about competitive trunk networks at home.

I hope that this report will be regarded as a useful contribution to the working out of the strategy and not as the base document from which all else will stem. I assure your Lordships that it is certainly not of sufficient calibre for that sort of treatment. If the Secretary of State needs this sort of advice—and I think that he does; and I think that he is wise to need it —then I suggest that he needs a proper working party made up of consumers, of British Telecommunications and of the trade, and followed by very mature consultation. I regret to have to say this because I know that my right honourable friend the Secretary of State is very keen on this report, but this is something on which I feel very strongly and which I must say to your Lordships today.

The third and final point concerns the powers of the Secretary of State over the corporation. Here I echo words that have been used before this afternoon and, I dare say, will be used again. The Bill is unusual in this one respect. On the one hand, the powers taken by the Secretary of State to achieve this resolution are such that they could result in the re-creation in all but name of the office of Postmaster-General. I am certain that this is very far from being his intention, but it could happen. I understand why the Secretary of State has taken these powers and I think that he was right to do so. He is intent, and correctly so, on ensuring that the necessary growth takes place and with an increasing momentum. But we must remember that whether it takes place and how quickly it takes place will in very large measure depend upon the efficiency of British Telecommunications, the corporation. That in turn will depend upon the retention of an entrepreneurial style of management. So that the chairman, managing director and his hoard of directors must be left, as much as in any private enterprise company, with the powers themselves to direct the running of their own ship. I am certain that the Secretary of State appreciates this and is aware of the need to treat his powers, in so far as he possibly can, as reserve powers to be used only in the last resort. Very much will depend upon that.

My Lords, I wonder if the noble Earl would give way. It is always worth listening to the noble Earl, but I should have liked him to point out in passing what we are lacking. There is the management, and the know-how; but after cutting down our educational and technical colleges' approach, and with this Government cutting back on education, shall we have the skills available? It is a real problem for people with the knowledge that the noble Earl has of this industry.

My Lords, I take the noble Lord's point, but it is a point which I feel that my noble friend Lord Trefgarne would rather deal with himself. That is the soft way of saying that I am not going to be caught by that one. Nevertheless, quite seriously, I am grateful to the noble Lord for his intervention. I want to end the way I started by applauding the Secretary of State's brave endeavour, for so much in terms of the re-creation of wealth and prosperity in this country depends upon its successful outcome.

My Lords, I must first apologise to the noble Earl, Lord Gowrie, for the fact that I was not in my place for his speech. As the House knows, I am engaged in a long-running Select Committee, which is now in its 36th day. I have no doubt that the noble Earl has painted with his usual progressive outlook a very encouraging picture of the developing British Telecommunications and Post Office businesses.

However, in my view this is a disastrous Bill. It could be disastrous for both British Telecommunications and the General Post Office, for our manufacturers and for the consumers which are the users of both services. As with other measures brought forward by this Government, a great deal of parliamentary time will be spent upon it but it will have very little effect upon our ailing economy. I am not arguing against the proposed split of Telecom and the Post Office, although I must say in passing that not all countries have thought it advisable to make such a split. I believe that there are actually four within the European Community which do not think such a split is essential. But we are not arguing on that particular point.

This Government claim to have been elected to minimise intervention in industry; but they are seeking in this Bill massive interference with two services of a great industry and, in doing so, they propose to give sweeping powers to the Secretary of State. I have been able to listen to other noble Lords refer to these sweeping powers and therefore I shall not go through them in detail. But I doubt whether any Government have introduced so many Bills which create such powers for Secretaries of State to make them great, powerful barons. This has happened in one Bill afteranother. It would appear that the Government have been influenced by the position in the United States. This I would suggest has resulted from a rather superficial look at what is taking place.

Clause after clause of the Bill is directed towards enabling private interests to come in and provide profitable services which can only be done to the detriment of the remainder of the network and thereby of the users. In America it is generally understood that Bell Telephones, the AT & T, said to be the largest private undertaking in the world, have in effect a monopoly exercised through a number of regional bodies on somewhat similar lines to our Telecom. Other companies have similar facilities in other states. Admittedly, there are other services in which there is competition but it must be emphasised in connection with this that over a very long period of years the USA has established an extensive machinery of regulation which inevitably must entail a considerable amount of bureaucracy. There is very little in this Bill proposing any regulating machinery on the lines operating in the USA.

It would seem that the Government have been guided in their attitude by the report from Professor Beesley, to which reference has already been made by other noble Lords. This report, to say the least, would appear to have been compiled from a very limited and hurried survey of the situation. One hates to be suspicious, but the impression is given that the Government wanted additional background in order to justify some of the features in this Bill. This report was brought forward after the Bill had left another place to come to this House.

The noble Earl, Lord De La Warr, has referred to licences already existing under the Post Office arrangements. I am not an expert in these matters but they are just common-sense works. The things that we are concerned with are granting licences which will use the actual transmission network of British Telecom. Can there be many who would not be fairly confident that concerns will come in to provide these additional services only where there is an opportunity for the most remunerative return? I am certain that no concern will come in for a licence to provide any additional service unless there is a good possibility of a return. Therefore there must be some effect in the rural areas. Noble Lords opposite are always very concerned about what takes place in the rural areas. Such additional services could I believe be supplied by British Telecom itself, providing that it was enabled to make the necessary investment. Some other noble Lords have referred to that and, before I close, I shall say a few more words upon it.

The Secretary of State is to have under the Bill practically unfettered powers for the issue of licences for these competing services. He will be able to issue them himself or he will be able to direct British Telecom that it shall do so. It may be argued that revenue from these licences would be a great asset to British Telecom. But British Telecom will only receive revenue by use of its own circuits. Money from licences is not going to go to British Telecom but into the Consolidated Fund.

The Bill will also prevent British Telecom from using profits from one subsidiary in order to encourage development in another. On the discussions during the passage of the Transport Bill we heard a lot about cross-subsidisation. It would appear that the Government are determined that in this Bill this will not be a facility available to British Telecom. However, there is nothing to prevent competitors to British Telecom doing the self-same thing. They could decide that in order to get a foothold on a service, they would run it temporarily at a loss or in order to provide another service. Therefore fair competition, it would seem to me, is such that British Telecom will be meeting competitors with its hands tied behind its back. There are also increased powers for British Telecom to manufacture and produce various items; but in later clauses of the Bill we find that this power is taken away, for the Secretary of State in certain circumstances will have to approve such manufactures.

The day before the Report stage in another place, the Minister of State dealing with information technology announced that the monopoly for the use of additional equipment would be broken by the issue of licences. We are rather surprised that this is now to be extended to private branch exchanges. I am no telecommunications engineer, but I wonder whether the Government have realised the situation that there can be with two engineers entering the same premises in order to trace a fault. Whatever criticisms there might be of Post Office telecommunications up to now, I have always been pleased to note the attention given to tracing faults. We are now going to have an engineer coming into premises to trace a fault up to the end of the telecommunications responsibility and there will be subsequent tracing of the fault.

Sections of the equipment manufacturing industry have already expressed great concern at the proposals in the Bill to provide for the supply of equipment. think that it is well known that there are concerns in America which are looking with delight at the opportunity of penetrating the United Kingdom market. Is it sufficient that the Government are giving British manufacturing industry nearly three years in order to get itself acclimatised to this situation? As other noble Lords have stressed, at present British Telecom obtains its supplies 95 per cent. from British suppliers.

My Lords, will the noble Lord give way? Would he not agree that this can be a two-way affair and that System X, for instance, the grand new Post Office exchange, can be exported very widely indeed and that the two things can at least counter each other?

My Lords, there is a possibility, in the same way as I shall mention later—of the development of Prestel by the present British Telecommunications, without requiring any Bill of this kind. There are also powers in the Bill given to the Secretary of State to determine the financial objectives of British Telecommunications. I was pleased to note that the noble Earl, Lord De La Warr, referred to the power in the Bill whereby the Secretary of State may interfere with the charging, if he so desires, in certain circumstances. Yet we are told that it is the aim of the Bill that British Telecom and its subsidiaries shall act in a commercial manner. When a competitor seeks to provide a value-added service using British Telecom circuits, will the charge to that concern take into consideration the very heavy cost that Telecom will have to meet in order to provide the national network which is so essential to the whole apparatus?

The Government also seem to have the view that monopoly stifles growth and development of new equipment, but surely no one will deny that Post Office Telephones—and the new corporation, when it is set up—does carry out effective research. The Post Office led the world with Prestel, the first ever view data system. Why does the Bill provide that British Telecom must obtain the approval of the Secretary of State for any programme of technological research? Surely that is a power which is absolutely unnecessary. In addition to launching Prestel, British consumers have direct dialling at present to some one hundred countries. There is no other telephone service in the world which can equal it. Equally, every one of Telecom's consumers has the facilities of STD and there are very few telephone services which are able to compete with that.

I was very pleased, on entering the Chamber, to hear the noble Lord, Lord Byers, refer to the powers of British Telecom. A massive concern such as that must have adequate investment and I should like to support the noble Lord's view that they should be able to borrow on the open market. Frankly, I just cannot understand how it is argued that it is wrong for a body such as British Telecom, which is expected to act commercially, to borrow on the open market. In another place the Minister said that money for investment could come not only from self-financing and the cash limit system but also from the disposal of assets and the introduction of private capital into subsidiaries set up by British Telecom for that purpose. British Telecom wants powers to develop its own network, not to break it down by selling parts of it off. That seems to be a crazy way to suggest that British Telecom might raise additional income.

I should like to say just a few final words on the position of the Post Office, to which no reference has been made in the speeches which I have heard. The service developed in this country so long ago by Rowland Hill has been copied throughout the world. The basic feature is the provision of national services at a common price. As with Telecom, the Secretary of State is to be given considerable powers to interfere with the running of the new Post Office. The monopoly of the Post Office is to be confined to the actual conveyance of letters, but the Secretary of State is to be empowered to withdraw the monopoly in whole or in part according to his discretion. As with British Telecom the Secretary of State is to have powers to grant licences to any person in any way he chooses to do things which are at present within the Post Office monopoly. It may be argued that the Secretary of State, either now or in the future, will be a wise and intelligent man who will use these powers intelligently; but this is the power given in the Bill to a Secretary of State. In fact, under Clause 68 he can make licences for any period of time and they may be irrevocable. I did not know there was any legislation which could grant anything irrevocably but, unless I have misread the clause, that is there. If these powers are to be used, as with British Telecom, there will be a creaming off of profitable parts. Who will want to deliver post in the far-flung and sparsely-populated areas such as the Highlands and Islands? Anybody who wants to get a licence would only wish to come into the profitable big cities. I hope the Government are not going to say that this could never happen, because the power is there in the Bill for the Secretary of State to take.

The Bill may present opportunities but if it is misused it could present grave threats to two great public services, with almost unequalled powers given to the Secretary of State to interfere in what are now supposed to be public concerns run with a commercial outlook. Most of these extensive powers do not require parliamentary orders. Even where orders are required, in most instances—there are some exceptions—the negative procedure will follow. I would suggest that unless the Government think again we could have a situation where the Secretary of State, either the present one or a future one, uses these powers so arbitrarily that instead of helping the development of British Telecom and the Post Office we could find it affecting both.

My Lords, I think we would like to compliment my noble friend on his initial introductory speech and perhaps sympathise with the noble Lord, Lord Ponsonby, not because of the length of his speech, but because he had to pronounce from that Front Bench that everything we were doing would lead to gloom, doom, bankruptcies and poverty of service. It has not been so in the past. The Post Office have had, and perhaps rightly in the past, a hundred years' start. I believe they are so good that they will compete. Let us remember that every new facility and every new service which comes forward will make use of the public Post Office network and thereby benefit with extra services, extra charges and extra revenue coming from the additional apparatus which is attached to that network.

I should like also to compliment in all humility, if I may, the noble Lord, Lord Byers, not only because I agree with every single word of what he said on finance and the management structure and on the need for a telecommunications authority, but also because he was able to put it in such succinct words that those of us who came later particularly appreciated his constricted and constructive approach.

I support the Bill, not least because it makes one small reduction in the very large public sector from which we in this country suffer. As I have said before in this House, we have a 50 per cent. larger public sector than any of our competitors, and this is a great burden on the country and its competitive position. Here we are making a marginal reduction in the public sector. We are allowing competition to come in and we are making a marginal reduction in the monopoly. Also, of course, I welcome the recommendation, which originated with the Carter Committee, that we should separate these two very different industries: the postal industry and the telecoms industry. They are different types of industries, as many people have said in the past. I think it is regrettable that the Labour Government did not feel able to accept that and perhaps move towards this position in the two years which elapsed after that Carter Report. It is particularly unfortunate that we have not been given all the facts and figures about pricing and profits, and about how the performance of our Post Office compares with overseas competitors. Those facts were recommended by the Carter Committee. After all, it is the fourth largest telecoms network in the world. On the whole, it is pretty good, but I believe that it will be a good deal better with the competition that we are going to introduce.

It is true to say that, with the new services of information which can be provided, the sky is literally the limit. I only wonder whether the human brain will be able to absorb all this information. It is all very well being master-minds in their own fields, but it is no good absorbing information if we cannot turn it into some beneficial action for ourselves, our companies and our country. That will be the difficulty with the amount of information that could come forward as a result of new inventions and technology.

With this Bill, Parliament is laying the foundations for the next 30, 40 or 50 years—certainly, well into the next century—and the best possible stimulus in these conditions is competition. You need competition in experimentation, in innovation, in investment, in production, in marketing and in supplying new services. I was influenced by the Economist article in a recent edition, which said:

"Customers certainly are fidgeting. The long delays in getting telecommunications equipment—whether switchboards, telex machines or ordinary telephones—delivered and installed is at present the biggest single barrier to letting commercial premises in and around London".

Most of us know of examples where people have examined premises, have found that they had to wait many months or even a year before they could get the necessary PABXs and have gone elsewhere. It is fair to say that the end of that article said that British Telecom's London management is briskly reducing those delays. That is possibly easier to do in a recession, but when the economy turns up, as it now shows signs of doing, the demands and queues may build up again if we do not have some competition.

My first criticism of the Bill as it stands is that too large a part of telecoms is left in the monopoly hands of British Telecommunications. Of course, I accept, as others have done, that the main network must remain a British Telecom monopoly. That monopoly remains in respect of most private homes. I believe that over 90 per cent. of these have only one telephone and, at present, the provision of that telephone, its installation and its servicing will remain in the hands of BT. So we are really only nibbling at the monopoly in the private area, though not in the business sector.

I cannot understand why my noble friend did not go further and ordain that the Post Office should provide a network termination and test point at the entrance to a house, and thereafter leave it to anyone to attach apparatus, provided that the apparatus did not interfere with other network functions. "Integrity of the network" is a kind of "bogy boy" that is raised every time. It was said, in an article which I read very recently, that it is about as outmoded as virginity. I certainly am bored with the idea that, because you want to attach apparatus, you cannot have a proper inspection, a proper set of standards. Other nations do not insist that their Post Offices have to do everything.

My second criticism is in two parts. First, there is the proliferation of management functions and I have tried to draw these out. I find that this is a very woolly and diffuse management and I suggest that we might do better than this. The Secretary of State himself—and I agree that too much power is in his hands—and the Department of Industry have responsibility for the overall management, for the licensing, for the policing and, I suppose, via the Board of Trade, for the export potential, because overseas trade comes under the Board of Trade.

Then he has many bodies to consult. He has the Consultative Committee on Telecoms; he has the Sub-Committee on Standards of Telecoms; he has the Post Office Users' National Council and, presumably, he will consult representatives of other outside interests as well. Then there is the BSI to be considered, who will lay down the definition of standards. Then there is the BEAB, which stands for the British Electrotechnical Approvals Board. Then there is the Office of Fair Trading, who are to do some of the policing and to ensure fair competition.

I wonder whether that is the right set-up. I have found the Office of Fair Trading good, but desperately slow. You have to wait six months for a report and such a delay is important when you believe that you have a strong case. I have seen competition from the BSC in the last two years. They have started—using taxpayers' money, because they are making such losses—buying themselves into steel stockholders and there is some very unfair competition there. Certainly, British Shipbuilders have been bidding against the private sector and quoting prices which are only half the proper and economic prices; and, again, they are propped up by the taxpayers. It is not easy to ensure fair trading conditions between the private sector and a huge ex-monopoly, however well-meaning that monopoly may be.

Then there is British Telecoms. They have the management of the monopoly services. They have to advise on licensing, since they have to be consulted by the Secretary of State; they have interface definitions to consider; they have network integrity to consider; they have type approval, except on the digital stored programme controlled PABXs, which is a new concession; and I suppose that they take some responsibility at international conferences on telecommunications. The drawback of this set-up is that it is diffuse; the responsibility is not pinned. I therefore suggest that some of these ambiguities, uncertainties and complications are better met by a single, permanent expert body to foster enterprise and drive growth in United Kingdom telecoms.

My second point is that I do not like the tremendous powers which are given to the Secretary of State. He is responsible for licensing, for delicensing or for stalling. I recall that one of the previous occupants of this office was the right honourable Anthony Wedgwood Benn. He had this responsibility. If a Labour Government ever came to power, it could be that someone of the Left again had responsibility in this field. It is unwise to put all that in the political field and make his responsibilities so great. Therefore, I suggest that we appoint a statutory telecoms authority.

The Liberal Party proposed this in another place. I do not know whether it was the right formula, but if they decide to put down something in this House at the Committee stage we should like to hear the Government argue the case; and it would certainly merit some argument. When it was discussed in another place on 10th February this year in Standing Committee B, the Government's reply was, I thought, rather lighthearted and did not really meet the case. Mr Kenneth Baker is a very good friend of mine, but on that occasion he was in a frivolous and jocular mood and he shrugged off the suggestion with a number of excuses which do not stand up to examination.

We need a telecoms authority to be responsible to the Secretary of State. Of course, he must have residual powers; if he did not have them, we should not be able to put down PQs, and it is an important freedom for Parliament to be able to question these matters. Secondly, I should like a telecoms authority to coordinate all the management functions and all these loose separate bodies. Thirdly, it should be fully representative, not just of the manufacturers but of private users, of industrial users, of service industries, of British Telecoms itself and probably—and absolutely essentially—of the unions.

My noble friend may argue when he winds up that I am advocating, as have others, the creation of another Quango. Yes, I am, but it would be similar to the Civil Aviation Authority or to the IBA. It would be ridiculous for us not to do something which is logical just because we have a feeling against Quangos. I should like to show just what has happened to Quangos since this Government came to power. On 15th May there were 2,117 Quangos. Up to 23rd February we had abolished 430. However, we have created 23 new Quangos, so that, when there is a need, this Government can create a Quango.

My noble friend also argued that a Select Committee could look at this matter. Those noble Lords who were in the other place will remember that in the old days a Select Committee was not attached to or monitoring every Ministry. There is now. There is one Select Committee which looks after both the Ministry for Industry and the Ministry for Trade. What a tremendous scope they have to cover. The Ministry for Industry has a staff of between 9,000 and 10,000, with regional offices all over the place, while the Ministry for Trade has a staff of 7,300. The Ministry for Industry covers BNOC, British Leyland, the NEB, British Steel, British Aerospace and a lot of sponsored industries. There is industrial sponsorship of electrical engineering and a host of other sponsorships.

My argument is that no Secretary of State, or his agents, can possibly be professionals in this highly technological and evolving and changing industry. Nor can a Select Committee adequately cover all his responsibilities. Admittedly there are five Ministers who are trying to deal with departmental responsibilities within the Ministry for Industry but I suggest that what is wanted is a self-contained body. I am a believer in "small is beautiful". I should like there to be a succinct professional body sweeping up these many responsibilities and advising the Secretary of State. That body would do the monitoring.

I am advocating something which would possibly create another Quango. No Quango is perfect, but I believe that Quangos are a hell of a lot better than a bad Minister. Every Government in their time have some bad Ministers. With a Minister as politically motivated as was Mr. Benn, it would seem to me to be very unwise for a Mr. Benn and his department ever to be responsible for such an immense undertaking and for so many decisions as I have enunciated and as at present intended under this Government's scheme.

Therefore, I would ask the Government to look again at this matter and see whether or not we ought, on the lines suggested by the Liberals, to set up an authority which would sweep up these responsibilities so that we create a management which is more in accord with what all the business schools are now advocating and which is not the type of dog's breakfast that is now being offered to us in this Bill.

My Lords, when this House last met, on the day it rose for the Easter Recess, the noble Lord, Lord Denham, in response to an inquiry by my noble friend Lord Wells-Pestell, referred to two Statements which were about to be made in another place. One of these, as has already been mentioned this afternoon, was a Statement on telecommunications monopoly, in which the Secretary of State talked about the competitive arrangements covering apparatus which could be linked to the telecommunications network and the removal of British Telecommunications' monopoly on giving their approval of such apparatus. He went on to point out that he was that day publishing the Beesley Report, welcomed its "free market" recommendations, as one might expect, and, as one might equally expect, threw cold water on Professor Beesley's, to me, more important recommendation that the restraints on British Tele- communications' capital investment should be relaxed.

Cautiously, if the word has any meaning other than a purely political one in this context, the Secretary of State announced that he was inviting views on the subject before coming to detailed decisions in two months, although how this relates to the legislation, once it has been passed, is something on which the Minister can perhaps enlighten the House in his summing up. No doubt it was understandable—it was certainly in accord with the way the Government are treating the matters contained in the Bill we have before us today—that this House did not stand upon the order of its going, to wait for the Statement to come from the other place, but went. Today, the first time we have met since the Statement, we find ourselves launched into the Second Reading of a major piece of legislation vitally affecting the future of British Telecommunications.

Let us consider the complexities of the subject we are talking about. I wish to address myself specifically to the telecommunications aspects of the Bill. We are not just talking about telephone lines and handsets, although they are critically important in terms of service to the customer and finance to British Telecom. We are talking about a vast range of developments in telecommunications technology: video-conferencing, viewdata, communicating word processors, fast facsimile transmission, rapid data exchanges, electronic transfer of business funds, the use of microwave transmission and communications satellites. The list of telecommunications possibilities seems to grow almost daily as the technologists storm ahead. Those members of your Lordships' House who are also members of Sub-Committee F of the Select Committee on the European Communities, as I am, have been taking evidence on this very subject in EEC terms and surveying the tremendous range of opportunities which exist, and we have some appreciation of what is involved.

It is essential that this country should benefit in every way possible from this technological revolution, just as I believe, as a member of the sub-committee, that the EEC should also benefit and not allow itself to be sold out to manufacturers in the United States and Japan.

The Government have referred to this Bill as "the Bill of the decade", although as my noble friend Lord Ponsonby of Shulbrede pointed out, the noble Earl, Lord Gowrie, has this afternoon reduced it somewhat to "a very important Bill". That may be so. It may be the Bill of the decade, but if it means that the Government reach the wrong decisions in planning for the future of British Telecommunications, then it could turn out that they have presented us with another sort of Bill altogether: an ecomomic and social Bill for which we shall be paying for decades to come.

I am not one for endless discussion or allowing a complex problem to paralyse the will, but a matter as vitally important as the one before us must be given the consideration necessary for reaching proper decisions and avoiding potential disasters. I find it hard to believe, therefore, that the Government are prepared to stomp ahead, with the intention of using parts of the analysis contained in Professor Beesley's report, which I understand he had just three months to com- plete and the outside views they are able to gather and assess between now and July.

I appreciate that a great deal has been said and written on the subject of the future of telecommunications and I hope that the Post Office itself has made a constructive and not solely defensive contribution to the dialogue. But this Bill proposes massive changes which will affect not only customers, which in one way or another really means the whole of the nation, but a vast potential growth sector of our economy. It is not enough to put a guillotine on a public debate of such fundamental importance, just as it is not enough in the Bill itself to propose de-regulation of the Post Office within a period of three years. The Government seem constantly, though in the minds of many people with insufficient justification, to be looking to the example set by the United States, ignoring the fact which other noble Lords have referred to this afternoon that ending AT & T's monopoly over there took place during a period of 20 years.

It has been pointed out that "there is no real strategy behind the legislation" and it would be hard to avoid and support that conclusion were one unaware of the Government's prime strategy to pursue a monetarist course and save money wherever they can, at whatever cost to sensible, long-term planning. However, if they are looking to America as the model for the British plan, the Government might also consider that over the decades America has consistently invested more in its telephone system, and it is this which has led to a better and more varied service there. Incidentally, as everyone knows who uses postal services in the States, the letter service is, by and large, appalling. It is, of course, the service on which million of Americans depend but it offers few compensations other than a willingness to provide service rather than the prospect of glittering profits. Presumably, if we are following the Americans, we, too, can expect a continually deteriorating postal service.

The point, however, is that while American investment is high, their telecommunications system is not all that superior to ours, as my noble friend, Lord Ponsonby, has indicated, and, so far as electronic exchanges, optical fibre routes, shared lines, public telephones, overseas dialling, and increasingly, maintenance facilities and so on, are concerned, we have the edge on them. The edge we do not have but which British Telecom desperately need is that of investment. British Telecom stated only last week that they will have to spend at least £2 billion a year over the next five years to create the sort of network we need to become a competitive trading nation. Having been consistently starved of funds for many years, they now find themselves facing even more stringent Government controls and I doubt very much if the pundits in the Treasury—who will one day, I hope, he made publicly accountable for their role in steering our economy on to the rocks—will accede to British Telecom's request to be made exempt from the limits of the public sector borrowing requirement and be given the means by which they may raise money on the open market.

It seems anachronistic for the Government to call for "a strong and successful British Telecom" and to hope that some magic change will take place because of the privatisation or as my noble friend Lord Pon- sonby said, "piratisation" of what British Telecom themselves refer to as their "peripheral activities", while they deprive British Telecom of the borrowing powers which Sir George Jefferson, British Telecom's chairman, has said are needed "to sustain the very minimum programme necessary to avert serious damage to our supply industries and avoid a disastrous telecommunications situation developing over the next few years".

The simple result of the Government's privatisation plans will be to further undermine our economy and our competitiveness. It is little wonder that the Government's plans have caused a rush of blood to the head of British manufacturers. At present British Telecom buys over 95 per cent. by value from British suppliers, as the noble Lord, Lord Byers, has pointed out, and they and the people who work for them will have to bear the brunt of what will follow if there is an influx of cheap and inadequate American, Japanese and other foreign equipment, in terms of workers being laid off, the cutting back of R and D and the loss of a great opportunity to develop and build on technical skills. For, make no mistake, my Lords, in spite of the assurances given by the noble Earl, Lord Gowrie, it is clear that American and Japanese companies have their eyes on the telecommunications equipment market over here and are laying their plans to take over a significant proportion of it once this Bill comes into effect. Other overseas companies will doubtless follow their example and make use of the golden opportunities this Bill will open up to them.

I hold no special brief for the Post Office and, when they fail to provide service of the standard I think we are entitled to expect, I am as critical of them as anybody else. I am not wholly opposed to certain aims represented by this Bill. What I am very concerned about is that the Government are proposing massive changes, which they intend to introduce as rapidly as possible in the interests of freeing so-called "market forces" and saving money on yet another vital social service, without adequate consideration of all that may be involved as a result of those changes. If the complex and long-term implications of this Bill have not been thought through properly before it is implemented and the Secretary of State can use the enormous powers he will have secured for himself, then it will not only further erode the base on which a competitive British telecommunications industry may be built, add to our already disastrous and long-term problem of unemployment and create a messy and degraded system which will subsequently have to be sorted out and integrated—but it will also leave this country with postal and telecommunications systems which, particularly for the ordinary user, will have become worse rather than better.

My Lords, I must first, at the outset, declare an interest as President of the Telecommunications Council. I suppose at this Second Reading of a liberalising measure it is appropriate that I have never felt quite so liberal for I agree with every single word spoken by the noble Lord, Lord Byers. In a way much more important I enjoyed every moment of his speech and it is a nice irony that by far the shortest contribution should have been the one that I longed to continue further.

Turning to the speech made by the noble Lord, Lord Ponsonby of Shulbrede, he drew attention to the fact that private sector competitors of British Telecommunications have more freedom of operation under this Bill than would British Telecommunications themselves. I feel sure that I am not alone in feeling weary of noble Lords opposite drawing analogies between private sector companies and public corporations, for they always choose to forget that it is the taxpayer who "carries the can" for public sector corporations. Public sector corporations are trustees of taxpayers' funds and the Government have a duty of care to ensure that proper control is exercised, particularly where the public corporation is placed in a monopolistic trading position and is not directly answerable to Parliament.

In addition, I am astonished that he should complain that this Government should provide three years for converting the mess that we have in this country as a result of the opportunity that the Socialist Government missed under the Stonehouse Bill to do in 1969 what the Americans did some 15 years earlier. Also to suggest that the sale of British Aerospace was a loss to the nation solely because the price of the shares went up after acquisition is, with respect, nonsense. The only reason why the price of the shares went up was (a) that it was privatised and (b) it should never be forgotten that one of the major investors in aerospace as a result of the increased confidence after privatisation was, of course, the pension funds, and far from the nation losing, it has manifestly gained.

I welcome this Bill for it is a legislative expression of a liberalising intent to return to freedom, providing as it does a unique opportunity to create a healthy environment to serve the economic and social needs of the United Kingdom at least until the turn of the century. Some might consider this Bill a dry piece of administrative law. That could not be further from the truth. This Bill reflects the exciting and welcome fact that Her Majesty's Government recognise that the industrial and commercial future of these islands lies in the exploitation of the commercial opportunities present as a result of the revolution in information technology and that of telecommunications transmission systems.

Consider also Her Majesty's Government's awareness in appointing a Minister of State with sole responsibility for information technology and related subjects. Consider also that in September 1980 Her Majesty's Government transferred some £9 million of taxpayers' money for information technology education directly. Consider also that the Prime Minister herself was present at the initiation of micro-processing hardware at a comprehensive school. All this and other facts to my mind demonstrate a keen awareness by Her Majesty's Government that they at least understand to the full the social and economic potential for change as a result of the micro-chip and other technological innovations. The impact of these innovations can only be compared to the impact that the railways made both nationally and internationally over 140 years ago, and believe me, my Lords, I in no way exaggerate.

Bear in mind that (leaving aside manufacturing applications of this technology) the workaday function of hundreds of thousands of people in this country consists solely in communicating with their colleagues, customers, suppliers, and their files, synthesising this information, coming to a conclusion and then acting upon it. The action normally also takes the form of yet more communication. Give a man the opportunity of easy and rapid communication and retrieval and input of information on file and you destroy, in part, the expensive, time-wasting, energy-wasting, necessity to travel to a centre. Your Lordships will readily appreciate that there lies therein the potential to revolutionise the way we work, the way we live, the way we learn. Indeed, it will even affect our human relations in that the burden of absence from the family—the nuclear family—could, in part, be relieved to the greater good of all. In other words, the quality of life in the next 25 years could possibly take an enormous leap forward.

This awareness is reflected in 10 seemingly innocent words in Clause 15(1) of the Bill; the words are, "A licence may be granted by the Secretary of State". In so saying the Government are shown to be fundamentally aware of the reality that it can only be the role of government to gear the tempo of change, not the dead hand of a monopolistic trading organisation. If we are too slow the United Kingdom telecommunications and related industries will be taken over by the French, the Germans, the Americans, the Japanese. If we are too swift to change such disruption could be caused that in the long run it will be politically unacceptable to change, and furthermore create even more delay for change. It is for this reason that so many are puzzled that Her Majesty's Government have seen fit to recreate a monopoly in the hands of a state trading corporation in one breath and taken on itself powers to erode that monopoly in another.

Looking at this matter in a somewhat cynical way, that part of the Bill which concerns itself with the whimsically described 19th century phrase of "exclusive privilege" can best be described as good politics and bad law; bad law in that it is not straightforward—I will not go so far as to say it is dishonest, but it is not straightforward; bad law because it has the capability of setting a government department on a war footing with a public corporation. Surely after 112 years the exclusive privilege, the monopoly to gear the tempo of change, should not lie with a trading corporation but should lie with Government. In this, of course, I am reflecting entirely the view of the noble Lord, Lord Byers.

Furthermore, in maintaining the monopoly it can be argued—and I do assure your Lordships it will be argued in Committee—that Her Majesty's Government are placing themselves in danger of flouting treaty obligations under the Treaty of Rome. We shall hear the arguments later on that. May I ask my noble friend whether Her Majesty's Government are aware that no harm would befall the corporation if the Government were to take upon themselves the monopoly and license the corporation as they would any other trading corporation?

There is also deep concern voiced in that the uncertainty felt by those in the telecommunications industry, and indeed by British Telecommunications, itself, has in no way been lessened by the provisions of this Bill. I believe this is understandable. Bearing in mind that the lead-time for major investment must be at least five years, how can any corporation, any company, in the private or public sector, properly plan unless Government make known their policy in more detail? Here I agree with my noble friend Lord Gowrie; I do not think a statute is the right vehicle to do it. But they must make their policy known as soon as possible and in as much detail as possible. Also I vigorously believe that it would be of great benefit to the Department of Industry if they were very seriously to take up the position so ably argued, again by the noble Lord, Lord Byers, and my noble friend Lord Orr-Ewing with regard to a Telecommunications Authority. This makes eminent good sense. The anti-quango dogmatic stance of this Government per se just does not bear examination at all.

Notwithstanding the fact that this is the only occasion that I know of when a Government has commissioned a quasi-White Paper after publication of the relevant Bill, I most warmly welcome Professor Beesley's report. However, I do most strongly support the view that Her Majesty's Government cannot in one breath demand that British Telecommunications be sensible of market forces and then not allow them to borrow on the private market in another. This just does not make sense. I entirely endorse the view of Sir George Jefferson, chairman of British Telecommunications, when he said:

"The fact that we will be facing an increasingly competitive environment is highlighted in the Beesley Report. Whatever decisions are taken on Beesley, British Telecommunications must have the same freedom as its competitors to raise capital for profitable and wealth-creating investment".

That must be so.

The only thing about Beesley is that I wish he had gone a little bit further. His major recommendation was that in the home market there should be no restriction on the freedom to offer services to third parties. I would have preferred him to take a leaf out of the book of the German monopolies commission, who were extremely firm on this point. Their major recommendation was that the German Federal Post Office should be totally excluded from selling, leasing and servicing all other telecommunications end user equipment and to let private industry deal exclusively with these jobs. They believed this because they thought that true competition was impossible between private sector enterprise and the German Federal Post Office as a public enterprise which also holds the network monopoly and licenses end user equipment. The Commission is convinced that controlling the German Federal Post Office market conduct would be inefficient to guarantee private enterprise equal opportunity in end user equipment markets.

There is one other aspect of the Bill which concerns me very much indeed. I entirely endorse Her Majesty's Government's attempts to encourage British Telecommunications to create subsidiary companies—I repeat, wholly-owned subsidiary companies—in order to stop cross-subsidisation. But I feel I must point out that through the vehicle of this Bill they have given British Telecommunications the perfect opportunity to drive a horse and cart straight through this good intention. It only affects wholly-owned subsidiaries and yet in the powers sections of Clause 2 they have the perfect right to promote, run, and set up partly-owned subsidiaries. God forbid, but if I was the chairman of British Telecommunications I would not set up wholly-owned subsidiaries; I would set up 99 per cent. subsidiaries and so avoid the difficulty of having the Secretary of State breathing down my neck at every decision I had to take. I do hope that Her Majesty's Government will look at this point particularly carefully.

My last point concerns the order of consideration of the clauses at Committee stage. I have been empowered by the noble Lord, Lord Lloyd of Kilgerran, who will be handling this on behalf of the Liberal Party, to mention his support for this. Indeed, Her Majesty's Loyal Opposition have also agreed to this point, and I only mention it now because it is very much for the Government to raise an Order of Business Motion. I am convinced that it would help the House in the logical progression of debate on the Bill at Committee stage if the Bill was taken out of order in part. This is for the very good reason that the fundamental part of the whole Bill is the creation of the monopoly and the riders against the monopoly by the Secretary of State; that is, Clauses 12 to 15, Clause 2 being the powers and Clause 3 the duties.

If one discusses the powers of the corporation before looking at the scope—the power to control and the caveats of that control—it is going to make life very difficult indeed. The Minister will only say, "We will deal with that when we come to it". In addition, if Parliament in its wisdom grants a monopoly the quid pro quo for that monopoly is the obligation and the duty to provide and have regard to. Flowing from that the corporation should be then granted the powers to implement that duty. If the Bill is debated in that order I believe it will assist the progress of the Bill and it will certainly assist the progress of debate generally. I do hope that my noble friend the Minister will consider this very carefully indeed; it is solely a suggestion to help the progress of his Bill, which I warmly welcome.

My Lords, I have to admit that this Bill is a much better Bill than I thought at first sight. In fact, looking at it carefully, I have to say that really it is a good Bill. It is quite a good Bill because it sets out to do a number of things; to separate telecommunications from the postal services and to liberalise the telecommunications industry. All these are excellent things to do, especially if one happens to be a big manufacturer of equipment; they are excellent for every purpose for which the Conservative Party stands. Therefore, it is a good Bill for the Conservative Party to put forward; it is an excellent Bill because it shows quite clearly what the Conservative Party wants to do with all our national industry. The Conservative Party has already started this with the aerospace industry. Now it moves on to telecommunications. I do not disagree with what the Conservative Party is doing. If I were of the Conservative Party's point of view and was concerned about large manufacturing countries, particularly America and Japan, I should applaud this Bill. That is why I said that it is a good Bill. But is it a good Bill for the rest of us? Is it a Bill that does anything for the ordinary user of telecommunications?

Yes, it is, my Lords!

"Yes", says the noble Lord on the Front Bench, my Lords. No doubt it will be of considerable value to him in his horticultural interests to have some better means of communication—and no doubt he would prefer to buy it from a cut-price firm rather than go to the Post Office. There is no doubt at all that many people will find that there is a certain advantage to them, but the question is, is it of overall advantage to the people of the country? That is what matters. And clearly it is not in their interests. It is not in their interests because it removes the common carrier responsibility, which is that of the Post Office, and it allows competition. Competition sounds a beautiful word. We all like competition. We agree with competition, but, if competition crushes the very thing one is aiming at, then it does no good at all.

I can remember only too clearly the time when, back in the 1930s, there was cut-throat competition in transport in this country. I can remember when I was living at Reading and the return railway fare—and forgive me for quoting figures which sound meaningless today—was 9/-. The bus service cut the fare to 6/-, whereupon the railway cut the fare to 7/6d. Forgive me for using antique language! Then another bus company came along and cut the fare to 4/- and another bus company dropped the fare to 3/-. Finally the biggest bus company said that if anyone else dropped their fares they would fix the fare at 2/-—and they killed all the opposition. All the other companies, which had flourished like mushrooms, went out of existence because they were unable to face the competition which they themselves had created. Today the same thing is tending to happen in the aero industry, with airlines reaching the point where competition is making things unprofitable for them and where one will find that instead of having cheaper transport, fares will end up by being more expensive.

Now let us take the case of telecommunications. I was talking today to someone who has recently been in Dallas—a place which I believe is known to people for odd reasons nowadays. He said that the firm he was visiting had decided not to accept an offer on very favourable terms of property in a certain part of Dallas because in Texas there are apparently 400 different communications companies. They have shared out the territories among one another and if the firm had moved into a particular part of Dallas then the Bell Telephone Company—which they regarded as the best—could not serve them there because there was an underground agreement between the telephone companies under which the Bell Telephone Company had a circumscribed area within the City of Dallas. So the firm concerned remained where they were rather than take cheaper accommodation elsewhere in the city. Is that the sort of competition one is talking about? Is that the sort of thing that noble Lords on the Government side want done?

If one looks at Canada, one finds that Canada does not have the same sort of competition as there is in America. Why is that? It is for the very simple reason that Canada's population density is less and consequently one does not have numerous companies flooding across Canada and making a profit there. The whole of the Arctic region of Canada has a population of something like 40,000 people. They have an excellent national telephone service. Would they have a telephone service at all if this were left to private competition? We know perfectly well that they would not. We know quite well that the inevitable result of cut-throat competition will be that the consumer in less favoured parts will suffer. I do not say more favoured parts—he may get off quite well—but I say that the consumer in the less favoured parts will suffer.

Furthermore, the industry which we have in this country today, closely linked to the Post Office and supplying to the Post Office's specifications, will be crushed out of existence by American and Japanese competition. This would have happened in this country as regards our computers; IBM would simply have crushed ICL if ICL had not been guaranteed contracts by our Government—and I include the present Government. One can be absolutely certain that the net result of this beautiful Bill, put forward in order to press the particular dogmatic interests of the Conservative Party, will be to crush our telecommunications fabricating industry.

My Lords, we have had a very useful short debate on this important Bill. Many important points have been raised and we shall wish to pursue many of them at the Committee stage. But what a foolish, irresponsible Bill this is. Sir Keith Joseph called it "the Bill of the decade". It is a Bill which risks irreparable damage to two great and cherished British institutions, one of which has existed since the 17th century and the other for well over a century.

The British Post Office, as well as being one of our major businesses, is indeed a great and cherished British institution. But this Bill, of course, is in the tradition of recent Conservative Government Bills or perhaps I should say in the tradition of Bills of recent Conservative Governments. Your Lordships may remember that the Heath Government, from 1970 to 1974, reorganised local government; "disorganised" would have been a much better word. They bureaucratised it as never before, and this, of course, from a party which does not believe in bureaucracy. Now they are having to take draconian measures to control the monster that they created in that reorganisation.

Then the author of this Bill—Sir Keith Joseph—reorganised the Health Service and he reversed the order of creation by creating chaos out of order. Can any noble Lord really say that the Health Service or local government were improved by those two massive upheavals under recent Conservative Governments?

Now they are at it again and this, perhaps, is not surprising because most of the senior members of this Government were, of course, also loyal members of the Heath Government. This time it is the dear old British Post Office and magnificently successful Cable and Wireless. What have those two bodies done to deserve the fate of local government and of the National Health Service? I have some little knowledge of these two bodies for, I think uniquely in your Lordships' House, I happen to have been both Postmaster General and chairman of Cable and Wireless, so I speak with a little knowledge.

With all its faults—and it has many—I believe that today the British Post Office is the most efficient post office in the world. I shall mention some of its faults, as I see them, later; but taking those into account, its efficiency is much greater than the American, French, German or many other post offices. I very much regret that Sir Keith Joseph and today the noble Earl who opened the debate had not a word of praise for but a great deal of ill-informed, niggling, carping criticism of the Post Office. There is nothing at all in the performance of the Post Office to justify the re-organising attentions of this Government. On the contrary, in spite of the Government's ludicrous application of the external financing limits policy to what is a thoroughly successful and viable business which, as the noble Lord, Lord Byers, said could raise money for investment without any difficulty, if allowed to do so, and in spite of having to organise on a nationwide basis what is probably the most capital-intensive business in the economy, it has achieved quite commendable results in both sides of its business.

Why did not the Secretary of State in his Second Reading speech, to which I listened, and why did not the noble Earl, Lord Gowrie, today mention some of the successes of the Post Office? Why did not they tell us that 90 per cent. of telephone subscribers in this country can dial directly over 100 countries abroad? Why did not they tell us that the view data system, Prestel, is streets ahead of any United States system or any other system, and take a little pride in that? Why did not they tell us that 90 per cent. of first-class letters are delivered next day and that that is better than any other post office in Europe, and take some pride in that? Why did not they tell us that in recent years the rate of growth of postal business has been twice that of the gross national product, and take some pride in that; or that the productivity of Post Office engineers has doubled over the last decade.

I am sorry that in introducing the Bill today the noble Earl, Lord Gowrie, repeated the tired old arguments of six months ago which took no account of the total transformation in quality of the service given by British Telecommunications in the City in the last six months. The noble Lord, Lord Orr-Ewing, mentioned this and, of course, he said that it may have been due to the recession, which may well be true because there is a close correlation between telephone business, traffic and the economy. But this year work in hand has been cut by 45 per cent.; British Telecommunications is now providing international private circuits in 13 weeks; and in the City of London British Telecommunications is now providing new telephone lines in one to two weeks. The quality of international and inland automatic services is now the best in British Telecommunications' history.

Recession or no recession, these are real achievements. These are only some random statistics, and I could quote many others, to illustrate the real context as opposed to the mythical context in which this third Tory reform of a great national institution is being launched. So, in the name of Heaven, why this great upheaval in the Post Office? It has nothing to do with efficiency. On any objective assessment of its effects it will make British Telecommunications less efficient than it is today. It certainly has nothing to do with achieving a tidy structure. I believe that five years from now the British Post Office, if it is not repealed in that period, will look like a Heath-Robinson creation at its uproariest best. It will be a ramshackle, inefficient structure; it will be a hotchpotch of an inefficient, impoverished British Telecommunications, and an impoverished British Post Office with a penumbra of subsidiaries all competing with dozens of private enterprise firms, many of them almost certainly owned by large electronics firms of Japan, the United States of America and Germany. In five or six years' time that will be the pattern in this country. It has nothing to do with efficiency; it has nothing to do with a tidy structure; so why this? We have to look at the nature of this Government to find out why they are doing this; why they are introducing this extraordinary Bill.

The noble Earl, Lord De La Warr, said that it had nothing to do with dogma. I am sorry, but I take exactly the opposite view to the noble Earl. I am forced to conclude that it is motivated entirely by Tory theology.

My Lords, will the noble Lord bear in mind that I did say that it was of course politically inspired? I then went on to say that I did not find it rooted in dogma.

My Lords, I do not think that there is much difference between what I have said and what the noble Earl has said. The Secretary of State who is the author of this Bill is the Government's number one theologian. He is to the British Cabinet what Mr. Suslov is to the politburo in Moscow. There never was a Government more bound up, more enmeshed in their own theology than this Government. It is rather like that poor old mummy in Bristol University. Layer after layer of ideology. You cannot see the real chaps under it all, they are so bound up in their own theology.

My Lords, would the noble Lord allow me to intervene? I am most grateful to him. Could the noble Lord perhaps have an instance where we have totally nationalised and de-nationalised an entire industry? Every time they come to power they nationalise something extra and add to the burden of the public sector. We have only nibbled at the fringes and tried to introduce an element of competition. Is this not reasonable?

My Lords, this Bill enables the Secretary of State to take a number of major bites at it, not a number of nibbles. In the case of Cable and Wireless to de-nationalise it completely. The noble Lord says so he should. He is making the point for me. I am not complaining about a Government having principles or a philosophy, but the tragedy is that this Government apply their principles to every situation irrespective of the facts of the situation. One would have thought that a party so obsessed with defence matters would have adopted the military technique of making a thorough appreciation of the problem, of each situation confronting them and then, and only then, making a plan to meet the situation. But not on your Nelly. This Government do no such thing. They simply apply their prejudices about competition; about the superiority of private over public enterprise; about the evils of trade unionism. They apply their prejudices to every situation that comes along whether they are relevant or not. Elijah, Elisha, and all the Old Testament prophets were much more pragmatic than this Government.

This Bill broadly does three things. First, it divides the Post Office into two separate corporations. Secondly, it gives the Secretary of State power to diminish considerably both the postal and telecommunications monopolies of the Post Office by ministerial edict—a device beloved by the Secretary of State, who has used it in almost every Bill he has introduced into Parliament. Thirdly, and sneaked in at the end in Clause 76, power to sell the shares in Cable and Wireless.

First a few words on dividing the corporation. Already this is virtually done. The noble Earl, Lord Gowrie, remarkably today told us that this was so. I noticed an advertisement in The Times last week advertising for solicitors for the Post Office. This is what it said:

"British Telecommunications will require separate legal services and in preparation for the proposed division, the Solicitor's Office has been divided".

I thought that this division required parliamentary approval. A very large amount of money has been spent on this. I should like to know from the noble Lord, Lord Trefgarne, who authorised it. It is to treat Parliament with something like contempt simply to ask us to approve something that requires parliamentary approval when the noble Earl tells us that it has already been done, and this advertisement put in The Times by the Post Office tells us that it has already been done. I shall return to this in a minute because it applies to Cable and Wireless as well. There is a rather important principle being breached here.

I return to the question of why is this being done. Sir Keith Joseph told us in the Second Reading debate. He said this, and only this:

"I come to the split of the Post Office into separate corporations for the postal services and telecommunications".

He tells us that it has been under consideration for some time.

"Its argument was "—

that is, the Carter Committee—

"that the two businesses are markedly different, one being capital-intensive and the other labour-intensive. Each needs its own board to concentrate on running its business".—[Official Report, Commons, 2/12/1980; col. 207.]

That is all we are told. The noble Earl repeated that today.

What an extraordinary argument in this day of the large conglomerates who very often own a large number of quite disparate companies. I happened to come across the annual report of Thomas Tilling. It has just been published. It sets out their interests: builders' merchanting; construction materials, equipment and services; energy equipment; industrial equipment distribution; insurance;manufacturing engineering; medical supplies; furniture; publishing; textiles; tiles and pottery; vehicle distribution. It is quite common in this day and age for large companies to have quite different interests. Anyhow, as I shall mention shortly, I contest the view that nowadays the postal side and the telecommunications side are all that different.

Then we are told that the Post Office has become too big to manage. Here again this is demonstrably untrue. Demonstrably by reference to many quite brilliantly managed large firms throughout the world. When I was Postmaster General I had McKinsey in the Post Office surveying the management. They did not recommend a division, but they recommended a different management structure for the Post Office. When the Director General of the Post Office retired I did not appoint a successor from the civil service. I think for the first time ever, I invited a businessman—who until he died a few weeks ago was a Member of your Lordships' House—to take over and head the Post Office. He was then Mr. John Wall.

After he had been there a month he came to me and said two things. First, "The Post Office is under-managed", and secondly, "the Post Office has got the wrong management structure". I said, "Well, your remit is to put that right". Mr. Wall, as he was then, met, as everybody did in the Post Office then, great kindness but he also met resistance from ingrained civil service attitudes in the Post Office. The structure needed changing, not duplicating. Above all it needed, and I think still does, new attitudes which graft a sharp commercial edge on to the quite laudable but in itself inadequate public service attitude of the civil servants.

Splitting the corporation as this Bill proposes does mean duplicating the management structure—I quoted this Times advert—and particularly in the matter of buildings. Any of your Lordships who is associated with businesses which have large head offices in London will know just how important those buildings are in the balance sheet nowadays. If this had happened under a Labour Government, I am sure the party opposite would have accused us of doubling the bureaucracy. At grass roots level the postal side and the telecommunications side, as everybody knows from their own localities, are so intertwined, sharing buildings, sharing counters, that it seems nonsense to extricate one from the other when they have lived happily side by side for so very long. But the major point about this division is not any of these points. It is that if ever there has been a case for it, it is less today, and it is getting less all the time because of the developments in the technology of telecommunications. The growth of electronic transmission of mail is quite remarkable. In the same issue of The Times that I took that advertisement from there was an article headed:

"British Telecom to start high-speed desk-to-desk message service".

The article stated:

"A high-speed desk-to-desk message service is to be started early next year by British Telecom, the telecommunications arm of the Post Office. Users of the service will be able to type letters, internal memoranda and other messages on their terminals as if the terminals were ordinary typewriters, and then send the correspondence directly to the recipient over the telephone network".

That says it all; electronic mail will probably replace at any rate inter-business written correspondence and telex within a very few years. It is a convergence, a coming together, of the postal service and telecommunications, and at the very time when that is happening, this wonderful reforming Government of ours decide to separate the two. To confuse matters even further, they propose to give the new Post Office power to provide electronic mail.

Having said all that, I recognise that there are two views about splitting the corporation. I do not think all my noble friends behind me would agree with what I am saying. I am expressing my own view based on a little knowledge both of the Post Office and telecommunications. I understand that the two major Post Office unions are divided on this matter. They are a little like the two women before Solomon, only this time the sword will fall. Indeed, it has already fallen and the unfortunate babe has been rent in twain.

Parliament is being asked to authorise something which requires parliamentary approval but which the British Post Office, presumably with the approval of the Government, has in fact already done, and, as I said, that is not the way to treat Parliament. Why has this extraordinary procedure been allowed? Considerable expenditure has been incurred by the Post Office. The same thing, as I pointed out, has happened in the case of Cable and Wireless; selling the shares requires parliamentary approval—the passage of this Bill—yet considerable fees have been paid or incurred in preparation for that sale without parliamentary approval. Strictly speaking, there should be no expenditure before Royal Assent, but it has become the custom that expenditure can be incurred after Second Reading. However, this Bill is having its Second Reading in your Lordships' Chamber only today. If the councils of Lambeth or Camden incurred expenditure which they had no legal right to incur, the district auditor would surcharge them. Will anyone surcharge the board of the British Post Office for this advertisement and for all the other expenditure they have incurred? Will anyone surcharge Sir Keith Joseph for the expenditure so far incurred in preparation for the sale of the shares in Cable and Wireless?

I come to the second proposal in the Bill, the monopoly to British Telecommunications. Clause 15 enables the Secretary of State to grant licences derogating from that monopoly. It also enables British Telecommunications to do so with his consent and it enables the Secretary of State to direct British Telecommunications to grant licences. In passing, I would contest the view of the noble Lord, Earl Gowrie, that these orders are irrevocable except by legislation. I should need to take advice on the matter, but on the face of it that cannot be true; what is done by Ministerial order surely can similarly be undone, unless the Act specifically says otherwise.

Similarly, Part II of the Bill enables the Secretary of State to derogate from the postal monopoly. As I pointed out, if the Secretary of State's ministerial record for the past two decades is looked at, this technique of omitting the really important details from legislation, leaving the Minister enabling powers to fill in the details, appears time and again. He is a great one for asking Parliament to give him enabling powers—in this case very considerable enabling powers—but of course in this case we have a pretty good idea of what he intends to do with them, and from his reaction to the Beesley Report. Noble Lords should ask themselves two simple questions: first, will these powers which the Secretary of State is taking—he has told us how he intends to use them and the noble Earl filled in the details a bit today—improve the service; and, secondly, will the proposals help or hinder the United Kingdom's ability to exploit the potential growth in the world telecommunications market?

First, what about the customer? As a number of noble Lords have said, the Post Office runs the world's fourth largest communications network. For the past decade it has grown at approximately 8 per cent. a year—rather more because it has doubled in a year—without any increase in staff. That has represented a massive increase in productivity. It provides a truly national service, not only to commerce and industry but to almost every remote farm and hamlet in the country. The charge for a call from a remote house in the Cumbrian mountains or on the Caithness coast is exactly the same as from an office in London. How is that done? It is done by extensive cross-subsidisation, as in the case of almost every telecommunications authority in the world. That allows national charging for telephones. For example, the cities subsidise the rural areas and long-distance and international calls subsidise local calls. Almost every national telephone system does that, and so the existence of a monopoly permits a national system of charging for the telephone.

It is often said that monopoly reduces sensitivity to customer needs by stifling innovation. Let us look at a few of the innovations for which the Post Office has been responsible. Prestel I have already mentioned. The noble Lord, Lord Hankey, mentioned optical fibres; they were largely the work of two British scientists and they offer enormous increases in capacity for traffic and reductions in cost. About 450 kilometres will be fully operational by next year, I understand, and that will be the most comprehensive network yet for optical fibres. Incidentally, Cable and Wireless are also introducing them in Hong Kong. I take pride in that, and I hope the Government do as well.

Then we have System X, which is a potential world-beater. The United States, which the Government never cease to quote, has produced nothing to equal System X. I have mentioned overseas direct dialling; more countries can be dialled from this country than from anywhere in the world.

My Lords, with great respect to the noble Lord, he really must not talk as if the Government were abolishing all those admirable institutions. We are talking about restructuring arrangements, introducing some element—not an extensive but some element—of private competition to add to them. The whole thrust of the noble Lord's rhetoric for the last 26 minutes has been as if the Government were somehow divesting themselves of those admirable institutions.

I listened to the noble Earl make his speech in silence, my Lords, and I hope he will listen to mine. I am talking only about the innovations because it is said that monopoly stifles innovation. For example, on the question of shared lines, in the United Kingdom 10 per cent. have two-party lines and there is a programme to phase them out. In the United States, taking one sector, GTE, 17 per cent. share their lines with up to eight other subscribers.

What about the United States' system, my Lords?

My Lords, in some ways the United States system is superior to ours. There is a quicker provision of service there with a slightly lower fault rate and a much wider range of equipment. We do not have to look far to find the reason for that. Indeed, my noble friend gave it by quoting two figures: the investment rate in Britain is £18 per head per annum whereas in the United States it is £36, or double. The real value of investment in British telecommunications has fallen each year since 1973. A 20-year comparison of investment in telecommunications in the United Kingdom and the United States shows higher investment in the United States over the whole period. That is the reason for the quicker installation rate, the lower fault rate and quicker services in the United States.

My Lords, would the noble Lord give way?

Time is getting on, my Lords, and I hope the noble Lord will forgive me if I do not give way. The reason for the difference has nothing to do with poor management, poor industrial relations, or lack of competition. It is simply due to the Government's cash limit restrictions on investment. That is the cause of the shortage of exchange equipment, with too much old electromechanical equipment, Strowger equipment, and too little electronic equipment. That is the cause of the shortage of stores to provide services. That is the cause of the shortage of staff to install and maintain equipment, and that is the cause of the slow replacement of out-of-date equipment. That, not the lack of competition, is the cause of the shortcomings in British Telecommunications.

If Beesley is implemented, it will allow a private circuit to be leased from British Telecommunications and then used to sell to third parties services which are now being provided by British Telecommunications. Furthermore, going outside his remit, Beesley recommended that similar arrangements be allowed in international services as well. BT, like other telecommunications authorities, makes the bulk of its profits on trunk and international services, and so the inevitable result of implementing the Beesley recommendations would be a loss of British Telecommunications revenue, and therefore higher prices for residential and rural customers and poorer services because British Telecommunications would be forced to phase out subsidising of local calls and rural areas. BT has put the possible increase at between 50 and 60 per cent. Sir Keith Joseph has put it at 20 per cent. Even today's Daily Telegraph, which is a great friend of the Government, put it at between 20 and 25 per cent.

So, as one of my noble friends asked, who will serve the rural customer if the Bill becomes law?—and the Secretary of State certainly can then implement the Beesley recommendations under Clause 15. There British Telecommunications' only duty will be to provide the first telephone. So why should it provide other services at a loss? Incidentally, and interestingly, a similar point arises in the case of Cable and Wireless. Why should it provide communications for, say, St. Helena, or the Falkland Islands, at a loss? Exactly the same point arises there. Who will supply the services in rural Devon, Norfolk, Caithness, Cumbria? As my noble friend said, British Telecommunications will almost certainly have to charge for maintenance. The noble Lord, Lord Wynne-Jones, said that a small handful of large business users will benefit, but the vast majority will be faced with higher costs. So the answer to that question is that the customer most certainly will not gain.

Now what about British Industry? I shall not quote my own views, but I shall quote the views of a number of very reputable journals. Business Week published in July an article, which stated:

"US makers of telecommunications equipment may stand to gain the most from Britain's July 21st decision to rescind the state monopoly of telecommunications equipment".

The Economist, on 6th December, stated:

"The General Telephone and Electronics Company hopes to have 15 per cent. of the market for British PABX equipment within five years".

Engineering Today, on 6th April this year, stated:

"There could be a cheap overseas invasion".

Electronic Times, in January this year, stated:

"Vako Electronics were eager last year to tell Electronic Times of its plans to set up a telephone assembly facility in the UK. Parts for the telephone will be imported from Taiwain, while the electronics would be developed and manufactured by Vako. The company is now just importing the readily assembled equipment from Taiwain. It is then being sold through an agent in the UK and Vako has no further interest in the business".

That is exactly what is going to happen.

Sir Keith Joseph has spoken rather airily of making reciprocal trading arrangements with foreign manufacturers, and the noble Earl did so today. But those remarks really are meaningless. At best, they can be nothing more than gentlemen's agreements, and when it comes to national commercial interests, there is not much gentlemanly conduct about, I fear. Anyhow, the agreements are no guarantee of access to markets. If your Lordships think that the penetration of the United Kingdom market by Japanese, German, and French cars is fairly dreadful—and it is—well, all I can say is, "You ain't seen nothing" compared with what will happen when this telephone bonanza is opened up.

Finally, and very briefly, I should like to say a few words about Cable and Wireless. If the Government's treatment of BPO is difficult to justify, their proposal for Cable and Wireless, which is probably the most consistently successful publicly-owned industry, is sheer industrial sabotage. Cable and Wireless has existed in one form or another for over 100 years. It pioneered the first submarine cables in the British Empire and across the Atlantic. In the 1920s the submarine cables were being rivalled by the new wireless companies, and sensibly the two came together and formed Cable and Wireless. Some of your Lordships might remember sending cables by the old Imperial—Imperial Communications Limited—before the Second World War.

After the Second World War, there was an Imperial Conference and it was decided that each Commonwealth country should take over its own external telecommunications. The Dominions and the bigger colonies did so, but Cable and Wireless, as it was then called, was left operating the external telecommunications, and sometimes the internal telephone system as well, of many Colonial territories and some foreign countries. It was believed that those countries as they reached independence would want to own and run their own external telecommunications. But in most cases that has not happened. On the contrary, in the past four years, for example four independent Commonwealth countries have come to Cable and Wireless and asked it to run their external telecommunication, and in one case, that of Botswana, its internal telephone system as well.

That has happened for two reasons. The first reason has been the sheer competence and integrity of Cable and Wireless. The second reason has been that the countries know that the British Government stood behind the company—it was wholly-owned by the Government. So at a time when British influence has receded, for example in the Indian Ocean, this great British publicly-owned company owns and operates the most sensitive public utility for most of the Gulf States, and in the case of Bahrain the telephone system, too; for Oman, North Yemen, for the Maldives, the Seychelles, and Mauritius. It is the most sensitive of their public utilities, in terms of their economies and their defence, as well as politically. In the Pacific Cable and Wireless operates for the Solomons, for Vanuatu, (in co-operation with a French company, which is not going to be denationalised), for Tonga, the Cook Islands, and Fiji. It also does so for most of the Caribbean Islands.

In addition, the company has a fleet of modern, sophisticated cable ships, which guard and maintain the world's cables, which are now tremendously important. Ships are permanently stationed in Vigo, (in Spain), in Singapore, Suva, Honolulu and Bermuda. As well as guarding the cables, it lays most of the new submarine cables. In this field we are beating the world, including the Japanese. In recent years Cable and Wireless has developed a contracting business and is now, for example, carrying out a defence contract, worth hundreds of millions of pounds, in Saudi Arabia.

I apologise for talking for so long, but so little is known about Cable and Wireless, and what I have said all adds up to a major British influence in the world at a time when we could do with much more of this kind of thing. The Government are proposing to dissipate it, to flog it for a one-off financial gain, and so put it all at risk. Why? Make no mistake, my Lords—if Cable and Wireless is denationalised (and the Bill gives the Government the power to do that) the independent countries where it operates may well nationalise its operations there and buy the expertise needed to operate it from the USA, France, Germany, or Japan.

The noble Earl, Lord Gowrie, said that all the countries where Cable and Wireless operates had been consulted and none of them had opposed the proposal. Will the noble Lord, Lord Trefgarne, confirm that the Government of Hong Kong, where Cable and Wireless earns the bulk of its profits, is insisting on a joint company with the Hong Kong Government? Will he also confirm that a similar kind of arrangement will probably be insisted upon in Bahrain, the next biggest earning area for Cable and Wireless? Of course some countries have taken over the operations of Cable and Wireless in the past few years—and they paid only book value for the assets. So anybody who proposes to buy the shares of Cable and Wireless should bear that in mind.

We have been given no reason at all from anybody in the Government for this body blow at a vital and successful British industry. What an appalling disgrace this is! They simply cannot abide seeing a successful publicly-owned company, a company owned by the whole British people, and they insist on its being owned by some of the British people—the ones who have money to buy shares in it. Of course, nationalisation overseas is not the only danger. The other—and it is a very serious danger—is that it is going to end up in foreign hands. When the shares are marketed you can ensure that they go only to British nationals, but who knows in whose hands they will end up in, say, five years' time? I can tell the noble Lord that Siemens, an EEC company, would dearly love to own Cable and Wireless, and so would a number of other electronics companies throughout the world.

What the Government are proposing to do with this great company is a sheer disgrace. This Bill is not only irresponsible; it is ill-informed. It tampers with two great and successful British institutions. It will create chaos in what is, as I have said, the most sensitive of public utilities. It will weaken our national economic effort, for good communications are now the lifeblood of the economy. It will deal a colossal body blow to our own electronics industry. It will result in higher charges for residential subscribers and rural subscribers. Even the Secretary of State agreed with that. In three years' time the then Labour Government will have to unscramble it and restore sanity, but I fear that before then very great harm will have been done. What a foolish, what an inept, measure it is!

My Lords, this, as was to be expected, has been an important and interesting debate. It has been concerned with the future, for this Bill is designed to open the way to opportunities which as a nation we cannot afford to let slip. Nobody can forecast these opportunities in detail at the present time, and therefore the Bill is bound to be permissive and open-ended, rather than restrictive and minutely prescriptive. It gives the Secretary of State the powers to respond to changes as they occur in a field which is likely to see changes over the coming years greater, perhaps, than any other. We have heard about a number of products and services for which the technology is already known and available. What is needed is the spur of competition and the freedom for British companies to go out and meet the demand for new services from businessmen and consumers. This is why this is an exciting Bill and one which points the way to innovation and growth—and so to creating new jobs.

May I turn now to some of the points that have been raised during the course of the debate—and, indeed, there were a great number. Perhaps I may first refer to the question of finance in British Telecoms. There is no dispute whatever about the need for telecommunications investment. The Government are reviewing every possible means of financing that investment within the constraints imposed by the need to control interest rates for the benefit of private sector investment generally, as the noble Lord, Lord Hankey, recognised, and particularly for the smaller and progressive enterprises.

But let us not lose sight of two things. First, a programme in 1981–82 of around £2 billion is a very substantial programme indeed compared with recent years, particularly in the present economic circumstances. It represents an increase in real terms of several hundred million pounds. The financing of the bulk of that programme is not at issue, and the remaining gap of some £300 million or so is under urgent consideration. Secondly, your Lordships will recognise that British Telecoms itself must do all in its power by productivity improvements and high efficiency to play its part in increasing its revenue and to ensure the cost-effectiveness of its investment. In particular, it is essential to ensure that any increases in British Telecoms' borrowing are genuinely devoted to increasing investment, and do not, for existence, find their way into excessive pay settlements.

The claim by the noble Lord, Lord Glenamara, that cash limits are the cause of lower investment in recent years, including waiting lists and lack of spares, et cetera, does not, I think, bear examination. British Telecoms themselves have never claimed any such thing. On the contrary, both British Telecoms' investment and its external financing limits have been increasing in real terms in each year since this Government came to office.

Let me now refer to the point made by several noble Lords about the application of British Telecoms' borrowings to the public sector borrowing requirement. Several noble Lords from all sides of the House have suggested that some way ought to be found of removing these borrowings from the PSBR. I would not want to venture into a formal definition of the PSBR, which is something for wiser heads than mine, but it is perhaps worth pointing out that those who lend money to public sector organisations do so in the informal expectation, at least, that the Government stand behind those borrowings. That is why, in the eyes of the Government, all such borrowings have to form part of the so-called PSBR, because in the last resort the Government stand behind the borrowers should the unthinkable happen to any of these organisations.

Several noble Lords also raised the question of the powers of the Secretary of State as defined in this Bill. I would remind your Lordships, if that were necessary, that British Telecoms is working now at the very limits of technology in some areas. I cannot forecast precisely how or when this technology will develop, and it is for that reason that the powers have been taken in the Bill as they have. We see it as vitally necessary to ensure that the Government have the power to respond to technical and scientific progress. In any event, I think it is most important to distinguish between positive and negative powers. The enabling powers given to the Secretary of State in this Bill are essentially to divest or de-regulate monopolies, and to introduce competition at an appropriate place, and that is far from an interventionist posture.

The noble Lord, Lord Hankey, my noble friend Lord De La Warr and, I think, some other noble Lords referred to the question of joint ventures, and in particular to the use of powers under Clauses 4 to 8 of this Bill. The Government will most certainly welcome partnerships with private capital in subsidiaries formed by British Telecoms. There are a number of obvious advantages to be gained from such arrrangements. British Telecoms would gain access to and be able jointly to develop the business and technical skills, expertise and organisation of private sector firms in areas such as marketing, research and development, shared distribution networks and so on; in other words, the normal factors which bring commercial organisations together jointly to exploit new opportunities. British Telecoms would also gain access to private sector finance as a means of maintaining and increasing investment in telecommunications outside the constraints that inevitably arise from the need to contain public sector borrowing, to which I referred a moment ago.

It has been suggested that these powers might be used to secure the total disposal of British Telecoms' subsidiaries. This seems to be most unlikely. In all the areas that I can think of where a joint venture with British Telecoms would be attractive to the private sector, it would be precisely because British Telecoms had a substantial stake in the enterprise concerned. It would make no kind of sense in these circumstances to try artificially to force the private sector to go it alone, without British Telecoms' participation.

The noble Lord, Lord Byers, and other noble Lords referred to the admirable succinct nature of the noble Lord's speech and referred to the vesting of monopoly in Government and the licensing of British Telecoms as well as other operators. This point was raised by at least one other noble Lord. I can see that this would be a possible alternative approach, but it would have meant considerably more administrative disruption that the method we are proposing since it would have been necessary to define the precise nature of and extent of British Telecoms current services in order to licence them ab initio. In practice, I am doubtful whether the overall effect of our proposals will be any different since, under the Bill as drafted, we shall have full powers to license other operators to carry out any activity coming within British Telecoms exclusive privilege.

The noble Lord, Lord Ponsonby, referred to the wide-ranging nature of Professor Beesley's findings. The noble Lord should know that it is impossible to draw rigid boundaries to any aspect of telecommunications. Professor Beesely has been right, in the Government's view, to draw attention to questions outside his formal remit which he considers to have important implications for the main substance of his study. As regards international services, Professor Beesley's main recommendations are confined to the use of the network within the United Kingdom because international services are subject to agreement between the various administrations involved. British Telecoms will remain the operating entity for the United Kingdom's international telecommunications, but, as now it will have power to license independent operators where appropriate within the terms of international agreement. I hope that British Telecoms will give careful consideration to Professor Beesely's constructive suggestions for the leasing of international circuits.

The noble Lord, Lord Ponsonby, and the noble Lord, Lord Underhill (who told me that unfortunately he would not be able to remain in the Chamber), asked about divided maintenance responsibilities. I think this was referred to by at least one other noble Lord. The Government's intended prime instrument policy, to which my noble friend Lord Gowrie referred in his opening speech, is specifically designed to meet this problem. British Telecoms will remain fully responsible for subscribers' first telephone instruments and will thus be able to maintain a satisfactory end-to-end telephone service in performance of its statutory duty.

The noble Lord, Lord Byers, and my noble friend Lord Orr-Ewing referred to the possibility of an independent telecommunications authority. I had expected them to liken that to the Federal Communications Commission of America but, in fact, they drew greater similarity to the United Kingdom's Civil Aviation Authority—of which I do have some knowledge—rather than the American FCC. The Government, however, have been concerned to avoid the creation of a new bureaucratic organisation where we believe the functions concerned can be equally well carried out by existing bodies. In the case of technical standards for attachment to the network, it is general Government policy where standards are referred to in legislation to look to the British Standards Institution to carry out the standards writing function. That has been well established over the years. Similarly, for the authentication of equipment to the required standards, the British Electro-Approvals Board (the BEAB) have extensive experience of this field. Taking over the authentication function on a self-financing basis will be transferring it from the public to the private sector.

It is true that telecommunications licensing will be a new activity for the department itself. I believe, however, that there are advantages in the licensing function being exercised by the Secretary of State accountable directly to Parliament. It is intended, so far as possible, to proceed by means of general licences which, once issued, will create conditions of open competition in telecommunications similar to those now being created in the United States. The noble Lord, Lord Byers, also asked me about data protection. The noble Lord asked when legislation will be introduced to deal with this issue. As my right honourable friend the Home Secretary has made clear, the Government have decided in principle to introduce legislation on this subject when an opportunity offers. I am afraid that I cannot at the present time be more specific about the timetable.

The noble Lord, Lord Davies of Leek, asked through my noble friend Lord De La Warr about the supply of qualified engineers and my noble friend suggested that I might be better placed to answer it than he himself. British Telecoms provide many trade courses, but I take the point that even these courses need a supply of entrants holding the necessary basic qualifications, for example, O-levels, A-levels, City and Guilds, et cetera. I hope the noble Lord will forgive me if I do not develop that point, because that is perhaps rather wide of the subject of our debate this afternoon, save to say that the system also requires an adequate supply of young people willing and able to embark upon a career of the kind envisaged. I believe that that may be the first requirement if we are to solve the shortage, if shortage there be.

My noble friend Lord Orr-Ewing also asked why the prime telephone itself should not be liberalised as part of this policy. The prime telephone policy requires that where a telephone terminates a direct exchange line, British Telecoms will continue to be responsible for the telephone instrument as well as the direct exchange line. This policy does have a number of advantages. First, it will enable British Telecoms to ensure a high standard of end-to-end service to which I have referred already. Secondly, it will enable customers to determine whether a fault lies in British Telecoms equipment or a privately-supplied attachment since the British Telecoms telephone will always be available to test the line. This should avoid unnecessary visits by British Telecoms engineers. Disputes between the telephone company and subscribers about responsibility for faults has been a problem in the United States. Indeed, other countries in their liberalisation programmes, including, for example, France and Canada, have adopted a prime instrument policy. One noble Lord—I think it was Lord Glenamara—referred to the Canadian experience in particular. Contrary to what has been said or implied during the course of this debate, I should say that the Canadian authorities are liberalising their telephone telecoms règime. I might only add that there was widespread support for the prime telephone policy, as it is called, and the Government are satisfied that this is the right way to proceed.

My noble friend Lord Orr-Ewing also referred to the management structure of the new règime. Once the main licensing decisions have been made the structure will be really very simple. As far as possible, the Government are aiming at a deregulated position with the Government having reserve powers used as infrequently as possible.

At the same time, existing organisations such as the British Standards Institution and the BEAB, to which I have already referred, both private sector bodies, will have a role to play. We do not wish to see a new monolithic regulatory body in the public sector where export bodies already exist. My noble friend Lord Morris also referred to the need, as he saw it, for British Telecoms to be able to compete. The Government's policy is that British Telecoms should indeed be free to compete in the provision of telecommunications equipment and services, provided that such competition is on a fair basis. We are supported in this view by the report last year of the Advisory Council of Applied Research and Development (ACARD) which specifically considered this question and recommended that British Telecoms should be free to supply terminal equipment and information technology services for use with the network without having an exclusive right to do so and that it should not be the approving authority for terminal equipment and IT services provided by others. The Government's proposals are in line with the ACARD recommendations.

My noble friend Lord Morris also asked me about the order of consideration of amendments and clauses at the Committee stage. I would tell my noble friend that this is a matter for the authorities of the House, and of course the usual channels, to which I suggest he addresses his request. The noble Lord, Lord Wynne-Jones, seems anxious to leave, I think. I am sorry if that is the case because I am just coming to the remarks that he made.

My Lords, I can assure the noble Lord that I am anxious to stay.

I hope that the noble Lord will not be disappointed. My Lords, the noble Lord referred to Texas and what he saw as an unsatisfactory situation in a particular city there. I understand that the state of Texas has now regulated local monopolies such as the one to which the noble Lord referred; they are supervised by state regulatory bodies. The Government have no proposals for a similar system here, which will not I think be necessary. I referred earlier to Canada, to which the noble Lord also referred.

My Lords, would the noble Lord permit me to make one comment on that? Surely, what he has just said shows that the more one tries to liberalise, the more one has to regulate.

I do not think that is the case at all, my Lords. There was a clear abuse of the legal position in Texas which the local authorities there saw fit—quite rightly—to correct, and naturally abuses of the position need to be corrected all the time in every règime that exists.

My Lords, before my noble friend moves on to the next point, I did approach his—and indeed my—noble friend Lord Gowrie on this point in detail. I also spoke to the Liberal Party and the official Opposition, as I said in my speech. It was suggested that this point should not be addressed to him but should be dealt with through the usual channels: would my noble friend be kind enough to advise me what I should do now?

My Lords, I suggest that my noble friend should go to see the Chief Whip. The principle of the split was raised by a number of noble Lords. The idea of this split did not originally start in the mind of my right honourable friend the Secretary of State, who came in for such criticism at the hand of the noble Lord, Lord Glenamara. The separation of the Post Office has been under consideration for many years. The Carter Committee, which was set up at the end of 1975 by the previous Administration, recommended firmly in favour of separating Posts from Telecoms all those years ago. No decision was made by the last Government and soon after we came into office we decided to end the uncertainty. Extensive consultations with the chairman of the Post Office, the Post Office Users' National Council and other interested parties, including the trade unions, showed a broad measure of support for the separation. In the light of these consultations, my right honourable friend the Secretary of State announced last year the decision in favour of implementing the Carter Committees recommendation.

I do not think that I need to go further about the principle of separation, which of course lies at the heart of this Bill, except to deal with the specific point about timing which was raised by the noble Lord, Lord Glenamara, who particularly referred to the advertisement that he had seen in The Times recently. Splitting the administration of the Post Office does not require legislation. As the last Government's White Paper on the Post Office (Cmnd. 7292) said:

"Whether or not there is eventual separation, each business in the Post Office must be and already is self-reliant and to a large extent self-contained".

Most of this happened under the previous Administration. As my noble friend Lord Gowrie reminds me, it is therefore not Tory theology, admirable though that may be from many points of view.

This has been an important and interesting debate. There is no doubt that the communications industries are entering a new era. It is essential that as our postal and telecommunications businesses move into that era they are in a position to meet the challenge and provide the country with efficient and effective services. The debate has made crystal clear the importance attached by everyone in the House tonight to this principle, which is indeed at the root of this Bill. The Bill creates the necessary radical new framework for the two businesses, smaller operating units, individual profit centres, competition, improvements in consumers' rights. All these will help contribute to the achievement of this end. When the monopolies are in the interests of the country they will remain; but if they run counter to those interests, then this Bill will allow the necessary changes to be made. The consequences of the Bill which we have been considering today will reach well into the next century. They will go a long way to determining the competitiveness of our industries in the future, and particularly the service industries.

The City is already crying out for these services. The Bill seeks to release the energies, skills and financial resources of the private sector into a field which has so far been dominated by state monopoly. The objectives of the Bill are strongly supported by the business community as a whole and will bring great benefits to consumers. It is an important Bill—as has already been said, perhaps one of the most important measures of this Parliament. I hope that your Lordships will now agree to give it a Second Reading.

rose to ask Her Majesty's Government whether they will give very serious con- sideration to the appointment of a Minister whose sole duty would be to look after and to co-ordinate the needs of children.

My Lords, I should like to thank my noble friend Lord Vaux very much for giving us the opportunity to speak on his Unstarred Question this evening. There are so many aspects of this Question that one could tackle but I hope I have never been guilty of the crime of going on at great length in this Chamber and I do not intend to spoil my own record.

It is interesting, looking through the debates we have had in this House, even during this year, to see that there have been debates on industry, on inflation—interminably—and we have had debates on housing, transport, food, pensions, forestry and, as the noble Lord said, wildlife and all kinds of animals. We do not at any stage, as far as I can see, appear to have had during this Session a debate on children.

When we talk about wealth nowadays we talk about oil—that wretched black stuff for which wars are fought and all kinds of terrible crimes are perpetrated—or we talk about gold. But the real wealth of any nation is its citizens and the wealth we are bound to consider, if we are sensible at all, is represented by the children. You have to find a definition for children and I think it is fairly safe to say, rather like the Children and Young Persons' Act, "under 16".

I get the feeling occasionally that, as a society, we do not even like children. We certainly do not make any provision for them in our normal lifestyle. If you are a young mother with two small children, trying to travel across London, you would soon see how much provision is made to assist you to do so. You are very lucky if anyone even helps you on to a bus or gets you up an escalator on the Underground. Try to get a meal for children in a commercial restaurant; they act as if you have brought them some kind of inconvenience. And while they will find you doggie bones and even a lead for your dog to be in a room at the side, it is quite unlikely that they will make any accommodation available for children.

A certain commercial firm have captured the market. Why?—because they have recognised that there are actually millions of these very important small creatures, and they have offered them the kind of service many mothers and fathers have been looking for. Try to travel, even on British Rail: they may give you a half-fare but they do not give you much else. I recall many years ago trying through a women's organisation to get some consideration for women with small babies. We were promised a special coach. Whatever happened to that? So I think that in Western society, and particularly in this country, we do not pay enough attention to our children.

It has been said all too often that we have a National Society for the Prevention of Cruelty to Children but we have a Royal Society for the Prevention of Cruelty to Animals. This flows over naturally into the attitudes of Government, both at central and local levels. If you have a pre-school child or a child at school you will probably have to go to the Department of Education and Science. If you have a sick child it may well come under the Department of Health and Social Security. If you have a deprived child it may well come under the same department, and if it is in trouble it may well come under the Home Office. In Scotland or Wales it may come under either of those departments irrespective of whether it is sick, deprived, healthy or indeed in any other condition.

It seems to me that in our Acts of Parliament we have mainly considered our children in a negative sense. The moment the child is in trouble, for some strange reason it becomes a consideration to Governments and to people generally. For example, juvenile crime is constantly debated and we now have a department in a university which is concerned with youth, crime and the community. How much better it would be if that money were spent on considering youth, children and the enjoyment of life: that would probably prevent them from committing crimes, as the noble Lord, Lord Vaux, has said. The negative approach is the one that we almost invariably tackle when we talk about children. We talk about children having accidents and the accident rate and we talk about vandalism. Incidentally, I tried to find some figures on juvenile crime. The one which seemed to me very relevant to the whole series was that in 1978—the last year I have figures for—56,000 offences were committed by young males between the ages of 10 and 14. That is a very serious thing which we should all be looking at it, particularly in the context of a Minister concerned with this age group.

Inevitably, of course, there are several negative Acts concerning children. There is the Children and Young Persons' Act, the Childrens' Act 1975, and of course children are mentioned in the Criminal Justice Act. Here there was a suggestion that there should be an incorporation of a duty on the Secretary of State for Social Services at given times to lay before Parliament a report on the operation of the Act, and that referred to the Children and Young Persons' Act. I am not sure whether we have had any kind of report. My noble friend nods her head. Whichever Act of Parliament we were supposed to have a report on I cannot recall one coming forward, so it was one of the other Acts and the same question still applies.

I notice that in one report called Fit for the Future in 1976 all sorts of recommendations were made. There it did actually suggest that there should be some kind of co-operation and co-ordination between departments dealing particularly with children. They specified there the Department of Education and the Home Office and I think I am right in saying this was to be laid before Parliament every three years. As it did not start till 1979, the Minister has a very nice get-out there and can say that they are certainly going to do it by 1982.

What is it that we need for our children? First, we need consideration of the fact that they are very much here. We are in the middle of a school holiday—again, my noble friend says not, but this applies in London where they are, in many cases, having a longer holiday—and I notice this because I travel on buses which are frequently filled with these small people going to school. For the past two weeks, the buses have not been filled with these small people. The question that arises is: Where are they? if they are in school, they are at least occupied and their energies are taken up. If they are not in school, what kind of out-of-school projects do we offer them?

There are far too few play centres and playing fields which are open. Indeed—I hate to suggest this to my noble friend on the Front Bench—I have heard wind that Government cuts will affect these adventure playgrounds and some of the other centres, and there will be fewer of them. But what is certainly true is that modern planning of some of the inner city centres does not include the consideration that there was originally for leisure and play centres. If children are left alone—and this is no criticism of the fact that many mothers have to work—the children are there, but their energies are not taken up and there are not the play centres for them.

The movement Fair Play for Children has presented some amazing statistics which show that there are commercial playing fields, schools and all kinds of halls which are closed for more hours in the year than they are open. I should like to suggest that all football clubs and racecourses should be required to offer space for children. Why should all these places be shut up, while children are left to roam the streets? When I was a small girl in London we could play in the streets, but that is not true any more. It would be far too dangerous for children to play in the streets now.

So we have to recognise the fact that we have a number of these small beings who are about in great numbers, which will lead ultimately—as the noble Lord, Lord Vaux, said in opening—to mischief, if their energies are not taken up and occupied. It is always better to take the constructive point of view, rather than wait until children get into trouble. Incidentally, if the Government say that they cannot afford these things, I would remind them that the figures for keeping a child in borstal are extremely high, and a great deal higher than occupying them so that they do not get into trouble.

The noble Lord, Lord Vaux, quoted the declaration of the International Year of the Child. I should like to remind your Lordships that in that declaration Governments were urged to expand their efforts at national and community levels to provide lasting improvements for the well-being of their children, with special attention to those in the most vulnerable and particularly disadvantaged groups. I am delighted that we now have an all-party children's group in the House. This is our heritage and if we do not do more for children we shall certainly live to regret it. I do not expect that the Minister will lift all our hearts by saying that he will appoint a Minister for Children. I can only say to him that we shall certainly return to this subject again and again, because it is something which is very near to the hearts of many of us.

My Lords, I am most grateful to the noble Lord, Lord Vaux, for asking this fascinating Question. I am grateful to him for the clarity of his speech, and I am particularly grateful to him and to the noble Baroness, Lady Phillips, for the brevity of both of their speeches. I only hope that I can be both as clear and as brief. I find being brief on something which interests me as much as this a little difficult, but I will do my best. I must correct one point which the noble Lord made in his opening speech..Animals are not controlled by one ministry, but by two—the Ministry of Agriculture and the Home Office—and exactly the same problems arise there as arise whenever there are two Ministries. I just throw that in in passing.

The objective behind the noble Lord's speech is clearly right. My own view is that we want not a new Minister, but a Minister with specific duties to coordinate certain things. If you started with that, you would go a long way. For example, education is, or should be, the positive side that the noble Baroness, Lady Phillips, was talking about of looking after children. I do not think there is very much of a failure of co-ordination between education and the other ministries. But the DHSS and the Home Office are dealing with two quite separate troubles which children get into. One is through bad homes and parents in difficulties, and the other is through the child itself breaking the law. I shall give some examples of this in a minute or two, to show that there is a real need here for co-ordination which, at the moment, does not exist.

It is nice to follow the noble Baroness, Lady Phillips, who always takes such a positive line. It is also nice to be followed by the noble Baroness, Lady Faithfull, who knows a great deal about this subject and who tells me that she is not going to touch on the point that I shall try to make. So I shall confine myself to that, which is children in trouble through no fault of their own, who are the responsibility of the DHSS; and children in trouble through their own fault, who are the responsibility of the Home Office.

There has always been a certain amount of difficulty between these two departments. The worst example, I suppose, was, I think, 15 years ago when a very important report on alcoholism came out, saying that there should be drying-out centres in every area. That was passed from the Home Office to the DHSS and at the end of 15 years there are three centres, one of which is being closed. This is because they were done far too elaborately. What was wanted was something very simple. A co-ordinating Minister, with absolute responsibility for seeing that these things made sense, could have helped there.

When I was in Northern Ireland, my colleague Roland Moyle and I were responsible for instigating the Black Report on legislation and services for children in Northern Ireland. It is a most progressive report. I shall not give details of it here, but it has really been very important. It took the line, in which I think nearly all of us believe, that in the case of children brought before the court for breaking the law there must be a definite element of punishment for persistent or serious young offenders. They should have only determinate sentences—at the moment, borstal sentences are indeterminate—and a determined effort should be made to commit far fewer young offenders to institutional care. That report was made to the present Government after we had gone out of Government, and my successor in the same job, the honourable gentleman Mr. Alison, has accepted that report in its entirety for Northern Ireland. It is high time that something of the kind was introduced here and nothing of the kind has been introduced; I am not aware that there is any serious thinking about it.

I should like to give two examples to illustrate my point and I need not do it at great length. In the Inter-Parliamentary Penal Affairs Committee, of which the noble Baroness, Lady Faithfull, the noble Baroness, Lady Trumpington, and I are members, we are getting a lot of information about this element, and the first example which I want to talk about is intermediate treatment schemes. These schemes are financed by local authorities. But central Government, in the form of the Home Office, finances borstals and detention centres. This must mean that if a local authority can push somebody off to a borstal it saves the cost of that child in its intermediate treatment centre. So long as one department can say, "No, it's yours" and the other department can say, "No, it's yours", you have a very difficult situation.

At the moment it is patchy and inadequate. As a result, in the last decade there has been a big rise in the number of youngsters sent to borstals and detention centres. The Prison and Borstal Governors branch and the British Association of Social Workers have both gone so far as to suggest that local authorities should be required to pay for the upkeep of juveniles who, in order to avoid this cost, are sent from their areas to penal establishments. This is a clear case of conflict of interest where the child can be a shuttlecock and where the people concerned have no direct right to do one thing or the other.

The next problem is that of care orders. As noble Lords know, care orders are available in both civil and criminal proceedings. A care order commits a child to a local authority in loco parentis. The local authority then has to decide how to deal with the child. The choices are, roughly speaking, supervision at home, fostering, a community home, or a community home with education—what are called CHEs. In civil proceedings many children are supervised at home. In criminal proceedings nearly all are residential care orders. The latest figures, which are two years old how, show that 6,700 young people were in community homes and 1,700-odd in borstals or detention centres. The figures are very much the same today. Borstal sentences usually last nine months and detention centre sentences six weeks, but care orders for a criminal offence may last for over a year. Those orders are not ended on a determinate basis. They are ended when somewhere else which seems to be suitable is found for the child. The child inevitably misunderstands that and thinks that he is getting a worse sentence than his colleague who goes to a detention centre and comes out after six weeks.

Not much more discussion is needed to show that this is a very unsatisfactory situation. It can be effective only if somebody at the very top is supervising these orders case by case. What would satisfy us would be if the noble Lord who is to reply could give a promise that something of this kind can be done. The most important point of all, which all of us here believe in, is not to break up families if we can avoid doing so. Residential care orders should be made very rarely indeed. In the case of ethnic minority families, particularly Caribbean or African families which have, very largely, sanctions within their own groups, residential care orders should be used extremely sparingly. However, I am not sure that this is what happens.

I have already spoken for longer than anybody else, which is humiliating. However, I have mentioned two cases where, in the interests of the child, it is perfectly clear that more co-ordination is required between the Department of Health and Social Security and the Home Office. I hope we shall hear that something positive can be done about it.

My Lords, the noble Lord, Lord Vaux of Harrowden, is to be congratulated for giving thought to the needs of children and for bringing this matter before your Lordships' House. Indeed, in so doing, he is almost unique.

It is a sad reflection on our country that, as has been said by other speakers—notably the noble Baroness, Lady Phillips—in the House of Westminster we give so little thought to the needs of our children as compared with other sectors of our society, not to speak of the birds and the beasties and things which go bumpety-bumb in the night. I refer to the Wildlife and Countryside Bill, which was of absorbing interest. I only wish that the interests of children could arouse such commitment. No political party at the last election mentioned the needs of children in its manifesto. The Conservative Party manifesto did mention the needs of the family, but in their latest publication, Care in Action, which is a handbook of policies and priorities for health and personal social services in England, no mention is made of families or children. Both major parties had a section on animal welfare.

During the International Year of the Child, there were 5,000 oral Questions and 30,000 written Questions in another place. Among those questions there were no significant questions on the well-being of children other than questions on child benefits, immigration, lead in petrol and population control. These figures are to be found in the book published by the International Year of the Child Trust, The Continuing Challenge, by Helen Holden. Therefore, we are grateful that the noble Lord, Lord Vaux, has shown regard for children. He made his maiden speech in the debate on the International Year of the Child, and I am glad that he is a member of the newly formed all-party Paliamentary group for children to which the noble Baroness, Lady Phillips, referred.

I agree with the spirit in which the Question is asked, but I am not quite sure of the practicality of a Minister for Children. I would, however, say that members of the public and organisations have great difficulty in knowing to whom they can appeal, particularly when their concern is the responsibility of one or more ministries. It seems that there needs to be, as the noble Lord, Lord Donaldson of Kingsbridge, has said, a monitoring system.

Children have been discussed under the heading of education and we are particularly glad that the Special Educational Needs of Children Bill is now before another place. Children are discussed under the heading of social services, but obliquely. Housing and supplementary benefits play their part. As Children's Officer for Oxford city, I remember the members of the Seebohm Committee visiting Oxford and the late town clerk of Coventry saying at that time, "We want to see that as good a service is given to the elderly and disabled as is given to children". In those days there was a children's department at the Home Office, with an inspectorate, and there were children's departments in local authorities. I am not suggesting, however, that we should return to that structure, because I support the social services departments of local authorities which were set up as a result of the Seebohm Committee Report.

What are the concerns today in child care? They are, sadly, too numerous to list. I list but a few. First, we in this country have no policy for the care of our children under five. A book has been written which is called The Great Under-Five Muddle, based on a piece of research which was carried out at Bath University. I suggest that the reason for this is that the responsibility falls between the Departments of Health and Social Security, Education and Employment. Then there has been failure to implement the Children Act 1975. We are thus depriving a number of children, many of them handicapped, of the opportunity of being placed for adoption. This cannot be right, not only in terms of compassion for these children throughout their childhood and into their adult lives, but also for financial reasons. It has been reckoned that 100 children placed for adoption at the age of seven can save the country £2 million. On two counts, therefore, the Act should be fully implemented.

The noble Lord, Lord Donaldson, has referred to the number of children in custodial care and he referred particularly to those children who are offenders. I would suggest that also there are a number of children in care for social reasons, for reasons of poverty, for reasons of poor housing, and these are the children known as the fourth world children about whom the noble Baroness, Lady Trumpington, will speak later. These children are in care through poverty and poor housing and social deprivation. Why has this country more children in custodial care than any other country in the EEC? Can this be right? Then we have low foster parent payments. We ask foster parents to care for children at a low cost but we are prepared to pay £100, £150 or £250 for them to be in residential care.

In the arena of the needs of children there are the inevitable dual responsibilities which were referred to by the noble Lord, Lord Donaldson. They are overlapping and interlinking. Furthermore there needs to be a positive awareness of the needs of children. May I ask Her Majesty's Government to consider the present administrative confusion? I suggest two models: either that at the Department of Health and Social Security there should be a children's branch staffed by social workers experienced in child care, and that in that branch there should be a co-ordinating committee on which there would be representatives from other relevant ministries and from the voluntary sector.

Alternatively, would Her Majesty's Government consider the Swedish system which is being researched at present by the Children's Legal Centre? As I understand it, Sweden has a children's ombudsman who is independent of the Government and who has statutory powers to look at and investigate all bureaucratic decisions at national and local level. Under Swedish law an investigation can be as a result of either open information or complaint. Furthermore—and most important—the Swedish children's ombudsman can initiate inquiries and submit and offer recommendations which will benefit the well-being of children, and the Swedish children's ombudsman works outside the bureaucratic system. Could not Her Majesty's Government give thought to an administrative structure which would be of positive benefit to children? If this is done and acted upon then the Question tabled by the noble Lord, Lord Vaux of Harrowden, will not have been in vain.

My Lords, over the weekend I received my local inspector's report from the National Society for the Prevention of Cruelty to Children—that is for the Burton-on-Trent branch for the period 1st December 1980 to the end of February, 1981. During that period from December to the end of February, 120 new cases were reported to him, involving 298 children of whom 118 were under the age of five years. So, as your Lordships can imagine, I, too, favour any initiative which will promote the interests of children and at first glance the concept of a co-ordinating Minister seems attractive. But let us look for a moment at the present position.

In the Home Office Circulars 238 and 294 of 1970, ministerial responsibility for child care services was transferred from the Home Office to the Department of Health and Social Security and to the Welsh Office taking effect from the 1st January 1971. These arrangements have worked quite well. They mean that the criminal parts of the law remain in the Home Office, but the caring parts are now largely in the hands of the DHSS. Before this change, health and subnormality were the concern of one Ministry but care and protection proceedings, including the assumption of parental rights, which often involve the question of the mental health of parents and children, were the concern of another Ministry. Thus this change in 1971 removed the disadvantages of the involvement of two Ministries. Is a further sub-division of ministerial responsibility within the DHSS envisaged, so that instead of two Ministers of State there would be three operating under the Secretary of State? It would certainly be a step forward to have a Minister whose function was solely to consider the problems of children.

But there is also the question of expense. This might be quite considerable in setting up Civil Service backup and to some extent possibly overlapping within the DHSS. If there were to be a third Minister of State he would have to step outside the DHSS altogether in order to maintain contact with, or supervision of, education, in which after all normal children spend a large part of their childhood.

There is at the moment some concern about the possible lack of integration between health and education in the grey area dealing with sub-normal children. This problem has been looked at recently by both the DHSS and the Department of Education and Science. I should like your Lordships to consider whether, if money is limited, it might not be better spent in implementing further parts of the Children Act 1975 on which we spent many hours and which is already on the statute book. There is concern over the complete failure (with one small exception) to implement Section 64 of the 1975 Act, which deals with the representation of children in care proceedings where there is, or may be, a conflict of interests between the parents and the child.

The failure to activate most of Section 65 dealing with legal aid for parents in care proceedings and the failure to activate most of Section 58 dealing with guardians ad litem and reports in care proceedings. There is of course also the whole area of the 1975 Act dealing with custodianship, which is totally dormant. In my view, the implementation of Sections 58, 64 and 65 should take priority over custodianship because these are areas in which children are at greatest risk. All things considered, I feel that more individual children would benefit more immediately from the further activation of the 1975 Children Act than from the creation of a new Ministry.

My Lords, we are discussing children tonight and before starting my few remarks I feel that I must say how delighted and indeed relieved I am—and I am sure all your Lordships are—that the five children on Dartmoor have been found safe and well. Some of us perhaps have had sleepless nights on their behalf. I am delighted to thank my noble friend Lord Vaux for his speech and for bringing this subject to the attention of the House tonight and also for repeating once again the children's rights—the Charter for Children—so ably put forward during the Year of the Child.

Although at first thought a Minister in sole charge of children would seem to be a good idea, when I came to list the Ministries with which a Minister would have to deal, it was quite clear to me that it would not work. Children are the most important people in our country. Their welfare, their training, their happiness and wellbeing must be the primary concern of the older generations. I have chosen four Ministries—although of course there are others, including that of Environment—to speak about tonight very briefly.

The first is education. I am not going to speak about education itself, but about the problems which I have heard about only too frequently recently of children getting into trouble when they are at school: namely, the escalation of drugs, the escalation of loose living, the escalation of violence in the classrooms and the escalation of truancy. But all these come under the local authority for education.

The second Ministry is the Ministry of Health and Social Services. They look after first of all the disabled children, those children suffering from mental illness and those children suffering fron incurable diseases. Modern medicines have meant that these children live longer and they need special care. Much is done by the Government and by voluntary agencies, but I submit that more needs to be done.

The second facet of the Ministry for Social Services concerns those children to whom other noble Lords have referred, those children in care. This is perhaps the main area in which more help is needed. I am going to ask my noble friend the Minister if he and his department will do all in their power to encourage fostering of children. Some authorities call it boarding out. I have had the opportunity of talking to the head people in two London boroughs. The first is a suburban borough which has at the present time 350 children in care, 40 per cent. of which are fostered; that is 4.67 per 1,000 children. The second borough, which is co-terminous with the first one, has 714 children in care but has 46 per cent. fostered to families, which is 11.92 per 1,000 children in the borough. I was also able to talk today to the head of the Church of England Children's Society, which everyone will know was called the Waifs and Strays. They have just under 60 children in residential care. They have found 297 permanent foster homes for children, long-term permanency; 52 of those children they have placed on behalf of the local authorities.

The increased number of home-finding teams for fostering and adoption is part of the forward-thinking planning of the Church of England Children's Society. These teams, as I understand it, will work with the local authorities for children for whom they can find homes. All the people that I have spoken to have the same goal, to find foster parents for the children who need homes. One officer said to me today that even if the arrangement of fostering broke down the experience, even for a short time, of family life, personal care and individual affection was of incalculable value to each and every child. But this comes under social service departments of local authorities and under the Ministry of Health and Social Services.

The fourth Ministry is transport, because I believe that bad drivers are made, not born, and the earlier we can teach the older children good manners on the road, road sense and the Highway Code, the fewer accidents shall we have involving young people. If in more areas young people could also have a go on a motor-bike or a car on waste ground, under the auspices of those who are interested in the prevention of accidents, I feel sure that their early tuition would also prevent accidents. But, as I say, this comes under the Ministry of Transport.

The next Ministry is the Home Office. Children come under the Home Office if they break the law and come before either a police officer or the juvenile courts. I know that the juvenile bureaux do an excellent job in warning children and their parents of the problems of infringing the law and the consequences of so infringing. I think that the younger children aged between 10 and 12 could benefit more from a wigging by a police officer than from an appearance in court. Juvenile courts have to adjudicate upon those children under 17 who are alleged to have broken the law. It often occurred to me that they did not know what the law was. If we could encourage more police officers to visit schools and communicate with the young before they offend we may see fewer children before us in the courts. But the police come under the Home Office.

In short, my Lords, there are so many Ministries already involved with children and their needs, there are also many voluntary societies who work exclusively for children and their needs, and there are many millions of families who are bringing up their children with love and care, that in my view a Minister whose sole duty would be to look after and co-ordinate the needs of children would seem to be unnecessary.

My Lords, I share the feelings of gratitude already expressed to my noble friend Lord Vaux for giving this House the opportunity to discuss the many problems concerning the needs of children. Let me say straight away that I am not in favour of creating a new Ministry. I know that a Minister exists for the family and for women in Belgium, France and Germany, but I believe that we could achieve much that my noble friend and other speakers, such as my noble friend Lady Macleod, have in mind by the less costly process of making one department of one Ministry responsible for children. I entirely agree that the public are at present confused as to which Ministry is responsible for any particular problem or set of problems concerning children. They do not know with whom they should communicate. My noble friend Lady Faithfull has suggested an alternative idea, which I support wholly, which might be to create—as already exists in Norway and Sweden—an Ombudsman for children. I shall be interested to hear from the Minister whether these suggestions, and those of other noble Lords, are possibilities.

I wonder how many of your Lordships present today visited the impressive exhibition sponsored by the International ATD Fourth World Movement in Westminster Abbey earlier this month. The Fourth World was identified in the early 'sixties by the International ATD Fourth World Movement as being those parts of any national population that are victims of hard-core and persistent poverty, excluded from their society—be it an industrial, developing or traditional so-called third world society—from generation to generation. Incidentally, just to be helpful, ATD stands for Aide á Toutes Dètresses. The exhibition to which I have already referred consisted of photographs of children in the really bad slum areas of Naples, parts of France, and in England and Scotland. They were marvellous photographs, excellent examples of that old saying, "Every picture tells a tale".

What made the whole exhibition so impressive, moving or pathetic according to one's point of view was that no matter how squalid the surroundings or how ragged the clothes, all the children were smiling—not because they rejoiced in their situation but because, of course, one's natural reaction to having one's photograph taken is to smile. In reality, those children and many others have little to smile about.

The International Year of the Child has drawn the attention of the world to the disparity between the ideals contained in the Declaration of the Rights of the Child and the failure of even our most sincere efforts to implement those ideals for so many of our children who continue to live in persistent poverty and exclusion. Today in Britain, thousands of children continue to exist, as did their parents and grandparents before them, in slum housing bordering factories and rubbish dumps. How many children do we oblige to grow up in concrete housing blocks; in high-rise developments where their games—because they have nowhere else to go—and their laughter become a nuisance to be suppressed? What right to childhood do any children have in the promiscuity of crowded appartments, where they are bound to share too early their parents' preoccupations?

Last night I watched Esther Rantzen's show on television, "That's Life". One item concerned some council flats in Liverpool which were sodden with condensation, rotten with water, with leaky plumbing and with fungus all over the walls; they were really disgusting. One of the occupants was a mother living with her small daughter who suffered from asthma. The answer given by the council to the request made both by the mother and Esther Rantzen for alternative accommodation, on the grounds that the child's health was deteriorating due to the unhealthy conditions in the flat, was that the occupants were not high enough on the priorities list to be moved. Is this the way our caring society works in 1981?

May I commend to your Lordships an excellent booklet prepared by the ATD Fourth World. In it the children speak for themselves. Get hold of a copy and read the chapter on the child and the environment. Read what the children themselves say in answer to the question, "What would happen if some of the 'rich people' were to move into the homes of the poor?" Read the chapter on holidays—which are, of course, dreams—and those on education and health. It is difficult to speak briefly on such an enormous subject. I have tried to stick to the subject of housing and where it affects children. Therefore, let me stick to the recommendations of the Fourth World White Paper and plead that all family housing, however temporary, should provide adequate standards of space and equipment (in terms of sanitation, lighting, heating, et cetera) and that the right to these basic standards should not be lost in any circumstances—that all temporary accommodation for homeless and evicted families should be equipped with the staff and resources necessary for providing support and practical help with the object being to find a permanent solution to the families' housing needs. Sheltered housing communities should be set up and offered to those families whose difficulties call for long-term and sometimes permanent support. My Lords, I realise that we have a long way to go before we reach Utopia, but it is obvious that even in these difficult times we must press for an improvement in the present unacceptable situation.

My Lords, I join in the tributes paid to my noble friend Lord Vaux of Harrowden for raising this important problem this evening. I believe that the real problem here is that some of us are tempted to think that the majority of children today are either in care or are going into care, or have problems. In fact, there are a large number of children who are very human and whose behaviour, on the whole, is most acceptable. I am a little sad that there are no representatives on the Bishops' Benches here this evening because I believe the Church has enormous responsibility here and in many cases the Church—and here I speak of all denominations—discharges its responsibilities very well.

If I may quote from another television programme, one has only to watch "Songs of Praise" on Sunday evening and, whether it is being broadcast from a church in Northern Ireland or from one in Cornwall, one sees children's choirs—be they children from state schools, from private schools or representing other organisations—singing quite beautifully and beautifully dressed, really giving a great deal of pleasure to the public at large. This is not to say that all these children come from ordered homes. Some may come from homes in which the parents have split up or where there are other problems of the kind which your Lordships, with far greater experience than I of these problems, will have noticed.

I mention this only because, despite the many problems of the day—one of which is too much watching of the media at times instead of getting out into the fresh air—there is a risk that such problems can be over-magnified. Certainly there are some problems and I want to say just a word or two about the problem of the mentally handicapped. I have not given my noble friend notice of this, but I hope that he would give consideration to this point; there are many children in hospitals of this kind who are not being put to good use. I put that rather crudely and perhaps I should have said that their talents are not being put to sufficiently good use. The provision of a bus or of more wheelchairs for those who suffer from such horrible diseases as muscular dystrophy are being handicapped very often by the lack of central funds. One of the problems about the re-organisation of the National Health Service has been the fact that the general public at large in the areas where these hospitals exist are not sufficiently involved with these children. I mention this in connection with this question because I believe there are so many children who are badly handicapped but who could nevertheless play a much more important role in society if the situation existed where there were the funds and the wherewithal to enable them to use the talents which they undoubtedly have.

The children co-operate considerably in a great number of charitable organisations and activities. In particular I mention sponsored walks for all kinds of worthy causes. I think that too little is made of this and that too little publicity is given to it. Two of my own daughters, at the age of about nine, walked 30 miles for a British Legion cause to raise funds for our county British Legion service. Ours were certainly not the only children; there were children from many walks of life who walked, if not the full 30 miles, a number of miles

Therefore, there is a danger that we tend to regard all children as needing care. There are undoubtedly those who need care, and I think that the question is what should happen here. I have far fewer qualifications to offer a solution here than some other noble Lords and Baronesses who have spoken. But it is probably the Department of Health and Social Security which is the most concerned with children, particularly those who suffer any handicap or those who, in their early lives at any rate, need some kind of care.

I join with those who expressed the view that another Ministry as such is not needed, but I believe that within the DHSS one of the Ministers could have far more delegation and discretion as regards the needs of children. By those means I think that we could—and, of course, it will obviously need more Government funds at such time as this can be afforded—overcome many of the problems which exist at present.

My Lords, I welcome this chance to speak on the Question skilfully introduced by my noble friend Lord Vaux on the need for the appointment of a Minister to look after and co-ordinate the needs of children. Although I am not convinced that the actual appointment of a Minister is required, I strongly believe in the need for some liaison between the Ministry concerned and the parent who needs help, guidance and advice from that Ministry. For example, we have seen in the past, and I am afraid even now, the confusion and contradiction between the medical profession and the Department of Education over the subject of dyslexic children, their recognition and the special needs that they have in the field of education.

I am sure that we are all keenly awaiting the Bill, which is coming to us from another place, concerning children with special educational needs. The Warnock Report, which I have here, recommends that these children suffering from specific learning difficulties in reading, writing and spelling, should be given special consideration in early assessment and in devising programmes to meet their requirements. I hope that this Bill will highlight the need of the dyslexic child and once and for all recognise that these children are in great need; that the past difficulties between ministries will eventually fade away, and that the need for liaison between the DHSS and the Department of Education will no longer remain. Perhaps I am over-optimistic, but I live in hope in this particular case that the forthcoming Bill will make their position clear at last. I have banged on on this particular subject before, but I have a special reason for doing so; I happen to be a dyslexic myself.

My Lords, my contribution to this debate will be brief, but I hope that it will be useful, because I wish to raise an important question, to which I hope that the Minister can provide an answer when he sums up this very interesting debate, for which we are greatly indebted to the noble Lord, Lord Vaux. Noble Lords may recall that in 1977 I introduced in your Lordships' House a debate on the Report of the Committee on Child Health Services, chaired by Professor Donald Court. I should like to draw your Lordships' attention to two recommendations from the Court Report, both of which were discussed in that debate. The first is the setting up of a children's committee; the second is the publication of a triennial report.

Both these recommendations were made as a consequence of the Court Committee's very careful examination of the best possible ways of representing the interests of children. That is what we are discussing today. If we believe, as I do, that children have special needs which they cannot articulate for themselves, how are we to ensure that those needs are identified and represented?

The Court Committee identified the following fundamental needs: first, to keep under critical review the needs of children and the adequacy of the services provided by both voluntary and statutory bodies to meet them; secondly, to co-ordinate the work of existing bodies to prevent unnecessary duplication and omissions; thirdly, to respond to and to influence public opinion in the interests of children and to press for the fulfilment of their needs to be accorded due priority; fourthly, to disseminate advice on good practice, the recommendations of official committees and the results of research, both in this country and abroad; and, fifthly, to ensure implementation by the responsible authorities of all such recommendations and advice.

If a Minister for Children could fulfil all these needs, there might be a case for pushing for such a Minister, but even then I fear that the post would most likely be made a junior one in a large Government department, carrying little prestige, and the Minister would be impotent to achieve the scale of improved co-ordination that is required. The idea of a Minister for Children was not favoured by the Court Report, which recommended the setting up of a children's committee to represent the views of children.

Three years ago the Government set up the Children's Committee to advise the Secretary of State for Social Services and the Secretary of State for Wales on the co-ordination and development of health and personal social services as they relate to children and families with children. Anyone who has read the recently published second annual report of the Children's Committee will realise that it is beginning to get into its stride and to establish links with national and local organisations, and it is producing valuable work. The future of the committee is due for review; indeed, only two more meetings are scheduled, the last being in June.

It seems to me that this committee, if it were reconstituted to have direct links with Ministers other than simply those at the DHSS—in particular with the Department of Education and Science—could provide an overall view of provision for children and their families, become a forum for the discussion of inadequate and inappropriate provision, and focus attention on the children who make up a quarter of our population. I was particularly heartened to note the setting up of the All-Party Parliamentary Group, and I think that the Children's Committee could work well in conjunction with the new group.

I now come to the question of the triennial report. This was a recommendation of the Court Committee which the Government did not accept. Any committee or, for that matter any Minister, needs to have some sort of machinery which directly relates to monitoring services at national level. At present, several Acts concerning children—for example, the Criminal Justice Act 1961, the Children and Young Persons Act 1969, and the Children Act 1975—have incorporated a duty for the Secretary of State for Social Services, at given times, to lay before Parliament a report on the operation of the Act. Such reports are at present not synchronised and relate only to their own limited area of children's welfare.

All these duties could be brought together to lay upon the Secretary of State for Social Services in England, or the Secretary of State for Wales, in Wales, a statutory duty to publish a single report on all aspects of their responsibilities for children, together with the relevant aspects of DES interests and Home Office interests. This report could be laid before Parliament every three years, and it would review progress and impose upon the departments concerned a more concerted view of their combined responsibilities.

This triennial report, the new all-party Parliamentary Group for Children, and a reconstituted Children's Committee could, together, prove much more effective than a Minister for Children. I hope that the noble Lord, Lord Cullen of Ashbourne, will be able to give a considered reply on both these proposals, the triennial report and a reconstituted Children's Committee. If he cannot do so, then I shall be grateful if he will ensure that the suggestions contained in my question are brought to the notice of his right honourable friends.

My Lords, the first thing I must do is to explain to your Lordships that I do not speak for the Opposition. I do not think that we can claim to have a particular view so far as this particular matter is concerned. Therefore, I speak as an individual and do not commit my noble friends behind me. I think that the noble Lord, Lord Vaux, if he has done one thing at all—and I do not say that disparagingly for one moment—it is to show in a comparitively short space of time how complex this particular problem is.

His Question refers to,

"the appointment of a Minister whose sole duty would be to look after and to co-ordinate the needs of children".

What we have had is a series of contributions dealing with the problem child, the maladjusted child, or the disabled child, but that is not all that the noble Lord had in mind. He was talking about children as a whole. If there is one other thing he has done tonight, it is to make us think. While I sat listening to him I was saying to myself, "What is the problem? Or what are the problems? Do we really know what is needed?" Are we not really like a vast army locked in battle, so busily engaged in the battle that we do not have time to disengage ourselves and see what we are achieving, if anything at all, or what is happening on our left flank or on our right flank?

I have listened with some interest to this idea of having a Minister for children. At this point I would say to the noble Lord that we have no Minister for wildlife or the countryside. It is a function of a number of Ministers within the Department of the Environment. There is no specific Minister. If wildlife and the countryside came before the House again at some later time we may well find ourselves listening to an entirely different Minister on the subject. It is not a question of passing the buck by Government departments. With the exception perhaps of the Ministry of Defence and the Treasury—and I suppose they come into it as they provide the money—every government department in some way or another is doing something for the family, and the family consists of mother and father and children.

It is difficult to have a Minister who is going to co-ordinate this. He cannot co-ordinate anything unless he knows what the problems are. I do not think that any one individual could find out what are the problems of children because you have to see them in the setting of the family. You have to find out what the family problems are. The noble Baroness, Lady Faithfull, quite rightly deplored the absence of interest in children. It is deplorable, but we are faced as a society with: What is the problem? Each of us knows something about children who are mentally ill, physically disabled, maladjusted, or needing this or that kind of help. But the noble Lord, Lord De Freyne, pointed out to us that there are a large number of ordinary children who need to be taken into consideration.

I do not think that an Ombudsman would be of any help at all. We should need thousands of them to deal with the kind of problems thrown up by different sections of children within our society. I do not think that one or two people even with a large staff could do it. That is really out. What we have to do as a society is try to find out what the problems are; what do children really need? It is not just physical things; it is not just money. It is a whole combination of these things.

I remember that in June 1976 the immediate past Archbishop of Canterbury, Dr. Coggan, initiated in your Lordships' House a debate on the family. At the end of his speech he made a strong plea for the appointment of a Minister for the family. As the departmental Minister concerned, I then being a junior Minister in the Department of Health and Social Security had to reply. While I was sincerely sympathetic, I had to point out that it was not in my view in general a practical idea. I pointed out, as I have said this evening, that every government department has something to do with the family, either directly or indirectly.

The Minister for the Disabled has been mentioned. There was a Minister for the Disabled but there is no longer a Minister for the Disabled, and I am not criticising that at all. But you can define disability. You can even get to the point of knowing how many people come within the definition of disability. We had then, and I believe we have now, a Minister for Sport. That is easily definable. But how do you define the needs of children? How do you begin to talk about the problems of children? The then Government spent several months considering the possibility of having a Minister for the family, and reluctantly came to the conclusion that it would be difficult to arrange. I was in correspondence with the then Archbishop of Canterbury for a long period of time; it was something like a year. I think that he recognised the problems, and I think that we have to look for something else.

What I want to do is draw your Lordships' attention to a piece of research done fairly recently by a close friend of mine. We worked together for 15 years in the National Marriage Guidance Council, he then being the general secretary. He was, until he retired about two years ago, secretary of the Magistrates' Association. I am referring to Mr. A. J. Brayshaw. He undertook some research into the problems of children and the family, and his report became known as Public Policy and Family Life. I wish to refer to a number of the points he made because it would be a mistake if we went away feeling that there were only certain groups—delinquents and others—with whom we need concern ourselves. Mr. Brayshaw pointed out that the education system was not dealing well enough in certain respects with children in that, for example, secondary education

"should expressly cover the responsibilities of sex and marriage".

He asked what we were doing by way of producing suitable films to be shown to children in schools and whether it would be advisable to select suitable teachers to give such education. Many noble Lords will agree with Mr. Brayshaw that it is not within the competence of everyone to do this sort of work for children. The younger generation must be brought up to understand what life is all about and what it is likely to involve them in. To give teaching at that level, teachers must be specially selected and prove themselves to be temperamentally suited to do that sort of work in schools. Indeed, teachers themselves say, "We are not all cut out to do it".

Mr. Brayshaw also thought we should consider the responsibilities of doctors and that the relationship between doctors and girls under 16 should be legally defined in regard to contraception and abortion. These are all matters which are of importance to children and to which we must face up. Indeed, many problems are being thrown up of which some of us are aware while others are not. For example, the Matrimonial Causes Act 1947 increased the grounds for divorce and the Divorce Reform Act 1971 provided for divorce by consent; so there is now in this country divorce by consent. Whereas in 1938 there were 7,000 divorces, in 1977 there were 170,000. I do not have later figures, but I am sure the figures were even higher in 1978 and 1979.

Such developments produce a considerable number of social problems. After all, 170,000 divorces in one year mean about 340,000 children being involved, for good or bad, in those divorces. Society could do a number of things for those children which it does not do because to come within, say, the responsibility of the social worker, there must be some kind of deprivation or anti-social behaviour. That is not to say that the others—those who do not come within that category—do not need some kind of help. Today, about 30 per cent. of marriages involve the remarriage of one or both of the partners who have been divorced. Thus, we are moving towards a society in which, in about another decade, we may have almost as many marrying a second time as are marrying a first time, not because of the death of one of the partners but because there has been a divorce.

Developments of that kind are throwing up a great many problems. That being so, the noble Lord who made the point was right to say that we have never had in your Lordships' House a full-length debate on this subject. I am not sure that such a debate would serve a useful purpose—because we should talk about all the problems with which we are familiar and could not come up with the answers—and therefore the easy answer is not to have a Minister or ombudsman. We need something much more effective, and I think my close friend Mr. Brayshaw has the answer. Like him, I do not think a children's department attached to the DHSS or any other Government department would be able to come to grips with the problem until we know what the problem is.

Mr Brayshaw made 32 recommendations and the 32nd could be put into operation without any cost, although it would be time-consuming for a group of people. What we need is something equivalent to the Law Commission. I do not think any noble Lord would question the important contribution the Law Commission has made. True, it consists of very learned judges, but we could obtain the services of learned people in other walks of life. Mr. Brayshaw suggested:

"The government should establish a permanent, independent Family Commission of high standing, with expert support, to watch the interest of family life. It should have the power and duty (wherever possible) to examine government and other proposals which it considers likely to affect marriage or family life, and to make and publish representations about them, as well as power to initiate proposals and research".

Until we obtain a group of people who are competent in this sphere to investigate what the family and children need, we shall not have a policy which will deal with the issue.

Such a group could investigate the various avenues and fields in which there should be Government help and intervention, and for that matter intervention by voluntary organisations. I hope the Government will look into that proposal. It could be done and it would be to the lasting credit of the Government who did it. As I say, it would be virtually costless to do. I am sure the people could be found. It would be a continuing activity, the group issuing guidance, advice and reports on what needs to be done in this area. I must repeat, probably for the third time, that we do not know the extent of the problem. We do not know which road to go down, and there are so many roads that need exploring.

My Lords, the noble Lord, Lord Vaux of Harrowden, has raised an issue of great importance, and we have had an extremely interesting debate, with very thoughtful speeches containing much for my right honourable friends to study. No speech was more important, or more interesting, than that of the noble Lord, Lord WellsPestell, whom I always think of as my noble friend. We have been friends for many years, and I believe that this is perhaps the last time that he is speaking from the Front Bench in one of these debates. That is a great sadness to me and I am sure to many Members of this House.

It has been pointed out by everyone the importance of children as our heritage, hope and future. We all see this in exactly the same way. We are talking about a non-party matter, and the more that ideas can be pooled, as we have tried to do this evening, the better the chances that we make some progress.

The question raised by the noble Lord, Lord Vaux, is whether a Minister appointed

"to look after and to co-ordinate the needs of children"

will help us to achieve this aim. I am sure that it would be unfair to imply that those who, like the noble Lord, desire the creation of such a post, see it as a sort of magic wand with which all the many needs of children could be met overnight. Rather, I assume that they believe that a Minister for Children could provide both a focus and an impetus for action. I am bound to say that the Government are not persuaded that that is necessary and, indeed, they see considerable practical objections to it. Many of your Lordships have this evening come to the same conclusion.

There is also a more fundamental difficulty. As noble Lords know, government in this country is organised along functional lines. Each department is set up to deal with one area of activity as it affects the whole community, from the very young to the very old. It would, of course, be possible in theory to reorganise the responsibilities of departments, so that they were responsible for particular groups; for example, children, or the elderly. Successive Governments, however, have taken the view that the present pattern of responsibilities should be retained. In this way policies can be co-ordinated for the community as a whole and each department can contain the expertise necessary to deal with a whole range of related subjects. The current arrangements recognise, for instance, that the medical care of children is closely tied to the medical care of their parents, and, similarly, that further education must be linked to secondary and primary education, and that in turn to pre-school education.

Let us now examine the practical objections. First of all, a choice would have to be made. Are we talking about a Minister with his own department, or a Minister in an existing department being given special responsibility for children? At a time when we are striving to reduce the numbers of civil servants it would be very difficult to defend the setting up of a whole new department. And bureaucracies, once established, inevitably manage to expand themselves!

We are therefore thrown back on the second alternative: designating a Minister to have special responsibility for children, which was supported by the noble Lord, Lord Donaldson of Kingsbridge. But here, too, there are problems. At the simplest level there is the question of which department the Minister should be in. Should it be the DHSS (as has been recommended by the noble Baroness, Lady Faithfull) the Department of Education and Science, or where? And what about children in Scotland, Wales and Northern Ireland?

The present pattern of organisation does not prevent the creation of ministerial posts with responsibilities for a particular group. Indeed, there is the example of my honourable friend the Minister for the Disabled. But this approach obviously could not be adopted for every single identifiable group within the community as a whole. It is desirable only where the particular group is well-defined and has its own individual and distinct needs and problems. The difficulty about centralising responsibilities for children in this way is that their needs very often arise out of the needs of the family, or of society as a whole, and solutions must be found within this wider framework. To try to isolate the problems of children, to attempt to make one Minister responsible for all policies concerning them, would therefore mean making a totally artificial division between children, families and the community.

Perhaps I should now give some examples of what the Government have done for children since returning to office. Parents have been given greater statutory rights in their choice of schools and have the right to representation on school governing bodies. The fostering of children in care (referred to by my noble friend Lady Macleod of Borve) rather than placing them in institutions, has been encouraged, and will be further encouraged, and the numbers are increasing. Supplementary benefit rates for children under five and for those aged 11 to 12 were substantially increased last November. The basic heating addition is now paid automatically to supplementary benefit households with children under five. The maternity grant will be made non-contributory in 1982, to benefit 60,000 additional mothers. Last November child benefit was raised by 75p to £4·75 per week, and will be raised to £5·25 next November.

We have also very considerably helped single parents not only in making them eligible for the long-term rate of supplementary benefit after one year, instead of two, but in disregarding more than half their earnings between £4 and £20 for supplementary benefit purposes. And the one-parent benefit has been substantially increased from £2 per week when we came into office to £3·30 from next November.

The Government are not the sole, nor perhaps the most important, body concerned with children. Major responsibilities fall to health and local authorities, and there are also large numbers of voluntary agencies active both nationally and locally. A Minister for children, if he is to be effective—and there is no point in having him otherwise—must have some control, or at the very least some influence, over all these bodies and activities. This has been pointed out by several noble Lords this evening. So what we find ourselves contemplating is not just a change within Government, but a change outside, too—and a big one at that! I wonder whether even those who advocate a Minister for Children would wish to go so far.

So for all those reasons the Government do not accept that there is a case for a Minister for children. In our view the way forward does not lie in making organisational changes, but in ensuring that there is effective co-ordination not merely between the different Government departments, but also between the various statutory and non-statutory bodies, at both national and local levels. I appreciate that, as most noble Lords have said, that is the most important point. A number of suggestions have been made, and they will all be studied very carefully. There are many differences involved in what noble Lords have suggested, but there is certainly much food for thought, and it is co-ordination between departments and co-operation with voluntary bodies that we must try to get right.

Within the Government themselves there is already close co-ordination, and our concern is that it should be even closer. For example, there are regular meetings between my noble friend the Minister of State at the Department of Education and Science and my honourable friend the Parliamentary Under-Secretary for Health and Personal Social Services to discuss issues relating to children. There are also meetings between the Permanent Under-Secretaries and senior officials of the two departments. These are supplemented by, for example, a special interdepartmental group on children under five, containing members of seven interested Government departments which, in addition to its own meetings, has regular meetings with representatives of the local authority associations, the NHS and the voluntary bodies. Another interdepartmental group exists to co-ordinate policies on the prevention of juvenile delinquency and the treatment of young offenders. On top of these examples of formal liaison arrangements, there is, of course, a vast amount of contact at all levels between Government departments on specific issues.

But co-ordination at national level is not just the preserve of central Government; nor should it be. Of the many voluntary organisations actively concerned with children, there are several which perform a valuable co-ordinating role. I think, for example, of the National Council of Voluntary Child Care organisations, VOLCUF, the National Children's Bureau, the Family Forum, the Maternity Alliance and the Child Accident Prevention Committee. I do not think I need continue with the list in order to make my point.

My Lords, if co-ordination is an important part of good administration at the national level, it is very much more than that at the local level. The basic services for children—health, education and social services—are all provided by local agencies, and their efficient functioning depends crucially on close cooperation between the different authorities involved. But effective co-ordination between these authorities and also with the voluntary bodies can be literally vital when one comes to the difficult and often tragic field of child abuse.

I was asked one or two questions, and there are one or two points to which I should like to refer. If I miss some out, I will write to the noble Lord concerned, if I may. The noble Lord, Lord Donaldson, was very right, I thought, in stressing the need for coordination between the Government departments concerned with the problem of juvenile delinquency. But I am happy to assure him that an interdepartmental group for this purpose already exists, and meets monthly under the chairmanship of the DHSS. Its purpose is to co-ordinate policies on the prevention of juvenile delinquency and the treatment of young offenders. Its membership includes officials from the DHSS, the Home Office, the DES and the Welsh Office. There is also a regular meeting between officials of the DHSS, the DES and the local authority associations to review the delivery of services at the local level.

My noble friend Lady Faithfull made a number of suggestions in her speech which I am sure my right honourable friend will wish to consider very seriously. I should like to reassure her on a couple of points. First, in the handbook Care in Action there is a section, running to nearly two pages, on services to children. She will find it in the chapter on priority groups in services, which I am sure she would agree is where it should be. Secondly, there has for the past six years been a children's division in the DHSS. Perhaps it is not organised in precisely the way my noble friend wishes, but I am sure that it is well served by professional officers experienced in social work as well as in child health generally.

Several noble Lords have urged the need for further progress in implementing the Children Act 1975. I can assure your Lordships that this Government are no less firmly committed than their predecessor to implementing the further provisions of this Act as soon as financial resources are available. But the burden would in the main have to be carried by local authorities, and the previous Government gave them an assurance, by which the present Government stand, that they would not have expensive new provisions wished on them without the additional resources required. I am happy to tell your Lordships that we hope soon to make a further modest step forward in agreement with the local authority associations, and have now decided to implement, if possible by the end of next year, all the remaining provisions of the 1975 Act which have only minor financial implications. As my honourable friend the Parliamentary Secretary for Health and Personal Social Services announced in another place, we intend to introduce these provisions in two steps, completing the first stage by the end of this year.

The noble Lord, Lord Lovell-Davis, asked the Government for a statement on the future of the Children's Committee, which was set up in July 1978 to advise my right honourable friends the Secretaries of State for Social Services and for Wales on the coordination and development of health and social services as they relate to children and families with children. The committee was set up initially for a period of three years, and my right honourable friends are currently reviewing its future and will make a statement in due course. The noble Lord's suggestion of a triennial report on children certainly has its attractions, but I have to say that in the Government's view, as in that of its predecessor, the publication of yet another regular Government report would not be justified bearing in mind the cost and the staff time involved.

My Lords, in conclusion I should like to thank my noble friend Lord Vaux for raising this subject. As I have explained, it is the Government's view that the interests of children can best be safeguarded, not by the creation of a Minister for children but by seeking to achieve an ever-greater degree of collaboration and co-operation among those who work with and for children. I hope that my noble friend will realise from what I have said that the Government are as eager as he is to strengthen the role of the family.

My Lords, before the noble Lord sits down, may I ask him whether he would be prepared to give the House an assurance that he will ask his right honourable friend the Secretary of State to look at this idea of a family commission? I think really it would be of extreme value to society. As I say, I think it could be done without any cost, but I should like to feel that the Secretary of State would give it serious consideration. May I ask the noble Lord to do that?

My Lords, I apologise to the noble Lord for not having made particular mention of that question. I thought that many excellent suggestions were made. I do not know which is the one that is most likely to appeal to my right honourable friend, but I am personally very much attracted by the noble Lord's suggestion, and I shall certainly have it put forward.