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Telecommunications Bill

Volume 448: debated on Thursday 16 February 1984

The text on this page has been created from Hansard archive content, it may contain typographical errors.

3.22 p.m.

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—( Lord Cockfield.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 3 [ General duties of Secretary of State and Director.]:

Page 3, line 7, at end insert—

(": and
( ) to secure that any licence or agreement concerning any United Kingdom consumer or United Kingdom operator or foreign user or associations of such consumers, operators or users shall not prevent, restrict or distort competition between United Kingdom operators in the United Kingdom or in markets outside the United Kingdom.").

The noble Lord said: There is real anxiety about the present position of the Bill relating to future competition policy which could lead to serious litigation in the United Kingdom and in many countries abroad against the privatised British Telecom and its licensees unless the duties of the Secretary of State and the proposed director general are clarified under Clause 3 in regard to this matter of competition policy. We are told by the Government and their supporters that the main objective for the privatisation of British Telecom, to quote from the opening words of the noble Lord the Chancellor of the Duchy of Lancaster when opening the Second Reading debate, is,

"greatly to improve competition to the universal benefit".— [Official Report, 16/1/84; col. 841.]

In pursuing that objective it seems to me that the Secretary of State and the director general may be, unwittingly no doubt, entering on a marketing course which, it could be said in some quarters and is being said in some quarters in this country and abroad, will be found to be contrary to laws and regulations relating to unfair trading, unfair competition and antitrust in the United Kingdom and many countries abroad.

I refer, if I may, to Amendment No. 42, which has been tabled by the noble Earl, Lord Halsbury, and the noble Lord, Lord Spens. It is an amendment to prevent anti-competitive practices by British Telecom and the director general as defined in Section 2(1) of the Competition Act 1980, or restraint of trade. Therefore, there is a general anxiety in this country that there may be potential litigation unless there is some amendment to passages in the Bill relating to competition policy.

It has also been said from America that the Bill as at present drafted may be contrary to the anti-trust regulations in the United States. It will be very sad if, on privatisation, British Telecom and some of its licensees were faced by anti-trust proceedings in America, particularly at this time when the Secretary

of State for Trade and Industry has been doing so well in his negotiations with Americans, inter alia, in this field.

The object of my amendment is to suggest to the Government that they should at least prepare for difficulties ahead, even if they cannot avoid them completely, and should put into the clause dealing with the general duties of the Secretary of State and the director general some form of safeguarding measure on the lines of my amendment. I agree that the words of my amendment are certainly not perfect, but may I take a few minutes to analyse its purpose? It is to be inserted in Clause 3 of the Bill, which covers the general duties of the director and the Secretary of State. The object is that they should operate in such a way as,

"to secure that any licence or agreement concerning any United Kingdom consumer or United Kingdom operator or foreign user or associations of such consumers, operators or users shall not prevent, restrict or distort competition between United Kingdom operators in the United Kingdom or in markets outside the United Kingdom."

Quite simply, it is a general clause indicating quite clearly that the Government consider that the Secretary of State should not enter into any kind of relationship with licensees which will prevent, restrict or distort competition either inside or outside the United Kingdom.

It may be said that this kind of amendment is more appropriate elsewhere in the Bill. I do not think it should he included merely in the clause dealing with licences, because it is a general cautionary measure indicating the policy of the Secretary of State and the director in regard to competition. I beg to move.

The Parliamentary Under-Secretary of State, Department of Health and Social Security
(Lord Glenarthur)

I have listened with care to the explanations given by the noble Lord, Lord Lloyd of Kilgerran, on his amendment. Despite the way he has expressed his views, I confess that there are certainly problems with the drafting of the amendment, as well as with its substance. He particularly referred to the matter of American anti-trust laws, and I am most grateful to him for giving us a warning on a matter that involves considerable legal complexity.

The noble Lord indicated that there might be difficulties with British Telecom PLC facing competition regimes in other countries. I cannot do anything now other than respond in general terms to his concern. The Government do not envisage any problems arising in that area as a result of the Bill or Government policy. As my right honourable friend the Secretary of State for Trade and Industry said in another place, the Government have taken liberalisation in telecommunications further than any other Government. We have been the first to license a nationwide alternative telecommunications network with international access and the first to license two competing cellular networks with national coverage. We were the first in Europe to establish independent standards and approval arrangements, and the United Kingdom is the country with the most liberal arrangements in the world for value-added network services. Therefore, while I appreciate the noble Lord's concern, I can assure him that the Government are doing a great deal both to introduce more competition and to take steps under the Bill, and under existing competition legislation, to ensure that there is fair competition in the telecommunications market.

Clearly the Secretary of State and the director would note the effect on other countries of the market and competition generally; it would be part of their remit. I hope that that covers the main points which the noble Lord intended by his amendment. If he wishes, I could go a little further and explain why the drafting is wrong, but I hope that the explanation I have given will enable him to withdraw the amendment.

I agree with the Minister that the drafting is not perfect; I said so in my speech. But the main theme of the reply is simply that the Government do not envisage any of the problems which I have presumed to put before your Lordships today. I agree with him also that it is a legal matter. It involves legal matters with which I have been concerned professionally for years. Therefore, it comes down to this—the Government lawyers do not think there are any problems but certain lawyers outside consider there may be problems and are trying to help by putting forward an amendment of this kind. If the noble Lord takes the view that there are no problems, at any rate the matter has been aired. When Hansard is published I will read what the noble Lord has said and consider raising the matter again at Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

3.32 p.m.

moved Amendment No. 34:

Page 3, line 10, leave out ("Part II or Part III of").

The noble Lord said: This is quite a small point which comes about in this way. Under Clause 3(2) the Secretary of State and the director have a duty to exercise the functions assigned or transferred to them under Part II or Part III of the Bill. Why is it that we want to limit the functions assigned or transferred to them as being only under Part II and Part III? The director is referred to in Part VII, in Clause 88. The Secretary of State's functions are referred to in Part V, in Clauses 52, 61 and 62. Consequently I should have thought that it would he better if Part II and Part III were cut out so that this clause dealt with his functions throughout the Bill rather than in a limited area. He must consider matters which are best calculated to do certain things, but so far I cannot understand why those functions should be limited to Part II and Part III when the Secretary of State and the director have functions in other parts of the Bill. It is a very small point. I suggest that Part 11 and Part III be eliminated so that the whole Bill can be considered in relation to the matters with which he has to deal. I beg to move.

Those for whom I speak on this side of the Committee wish to associate themselves with the amendment moved by the noble Lord, Lord Lloyd of Kilgerran. As he has said, Clause 3(2) purports to give authority to the Secretary of State and the director to do all kinds of desirable things—to promote the interests of the consumer; to maintain and promote effective competition; to promote efficiency and economy; to promote research, et cetera; to encourage major users of telecommunications services; to promote the provision of international transit services, and so on. It is on the basis of objectives of these kinds that the Bill as a whole has been publicised by the Government for the commendation of the country. Therefore, of course, these objectives are all-pervasive.

Are we to assume that the contents of Part V of the Bill, which deals with the sordid financial details of this whole matter, are not in conformity with the objectives of the Secretary of State and the director? Surely if the contents of Subsection (2) mean anything at all, if they are designed for the protection and comfort of the consumer, if they are designed to promote the interests of the telecommunications industry and all the rest of it, then these are all-embracing and all-pervasive objectives. It is very difficult to understand why they should be confined to Part II and Part III.

I will not disguise from noble Lords the fact that on my interpretation of Part V of the Bill—I am most grateful to the noble Lord, Lord Cockfield, for having supplied me with further and better particulars of the Bill than those contained in the explanatory memorandum—I am constrained to believe that in many respects the financial provisions of the Bill, the financial constraints that it is going to place on those who run British Telecom under the new regime, will run completely counter to the objectives as set out in Clause 3(2). I can understand, therefore, the Government's reluctance not to have Part V in particular—there are other parts as well—related to this part of the Bill. I think it strikes right to the root of it.

If these objectives and these responsibilities are going to be as they are stated, they should govern every aspect of this Bill. If all parts of the Bill are not consistent with benefits to the nation and to the consumer, then the Bill means nothing. To confine it to Part II and Part III may possibly be interpreted as a rather cynical restriction on the Government's part. They may be seen as saying, "Well, of course, in certain respects we are going to follow these, but in the other parts of the Bill with financial implications we prefer not to commit ourselves".

Since this is a very small amendment I should have thought it does not put any great strain on the Government draftsmen; certainly it places none on the printers and very little upon the intellectual perceptions of noble Lords in all parts of the Committee. It would be far more satisfactory to omit these particular words as comprised in the amendment so that the interpretation of the matters dealt with in subsection (2) becomes all-pervasive and penetrates to every part of the Bill, whatever action is taken, in order to ensure that the interests of the consumer and the nation shall remain the paramount consideration throughout the Bill.

The noble Lord, Lord Bruce of Donington, has pointed out that he would wish this amendment to go very wide. I am sure the Committee will bear with me if I suggest to him and the noble Lord, Lord Lloyd of Kilgerran, that the amendment would require the Secretary of State and the director to exercise all the functions which were assigned or transferred to them under the Bill in the manner best calculated to secure the various duties which your Lordships will find in Clause 3(2). I am not sure whether the noble Lords would appreciate all the various functions that are sssigned or transferred to the Secretary of State or to the director under the various parts which they would wish to include. These are Part I, Part IV, Part V, Part VI and Part VII of the Bill.

I suggest to the Committee that a blanket amendment of the type that has been proposed would he apt to produce unforeseen and probably undesirable consequences—

If the noble Lord thinks that this is "funnies time", I shall produce one or two examples for him, and I am sure that we shall agree at least on that, whatever might happen later on in the day. Whatever might be the case for bringing particular functions in other parts of the Bill within the scope of Clause 3, I hope to show by quoting examples that it would be inappropriate to seek to achieve that result by way of the amendment.

Under Part IV of the Bill—to take one example—the Secretary of State has a licensing function in relation to such matters as cable programme services, and as those of your Lordships who sit in the Chamber on other measures at varying times will appreciate, those are quite distinct from telecommunication services. That is clear from the respective definitions set out in the Bill. In granting licences for the provision of cable programme services it will be for the Home Secretary, not my right honourable friend the Secretary of State for Trade and Industry, to take decisions in the light of broadcasting policy and criteria. We do not think that it would make any sense to subject the Home Secretary to the duties that are in Clause 3 of the Bill, which effectively define the public interest in relation to telecommunications, when he (the Home Secretary) is deciding whether or not to license the provider of cable programme services.

If I may give one more example, I would point out that the amendment would cause a different type of difficulty in relation to Part VI of the Bill which, as the Committee will be aware, modifies some of the provisions of the Wireless Telegraphy Acts; I stress some of the provisions, but not of course all of them. Thus under those provisions modified by Part VI of the Bill my right honourable friend the Secretary of State for Trade and Industry would be bound to act in conformity with his Clause 3 duties. Leaving aside the question of whether it would be appropriate for the functions assigned to him by Part VI of the Bill to be subject to the Clause 3 duties, that would create the anomaly that on a quite arbitrary basis some of his wireless telegraphy functions would have to be carried by reference to the Clause 3 duties, whereas others—those not modified by Part VI—would not.

In his very succinct moving of the amendment, the noble Lord, Lord Lloyd, asked why were the Clause 3 duties limited to Parts II and III of the Bill. I should like to stress that the Clause 3 duties were designed to ensure that in the licensing and regulating of telecommunications under Parts II and III of the Bill certain important objectives were secured. I hope that I have said enough to convince Members of your Lordships Committee that much further thought would be needed before the influence of the duties was extended to other parts of the Bill.

I should like briefly to attempt to reply to the noble Lord, Lord Bruce. The noble Lord referred to Part V and used some quite interesting and emotive terms about the financial aspects. The noble Lord will see, and the Committee will appreciate, that Part V of the Bill gives the necessary statutory hacking for the disposal of shares in British Telecom. Broadly speaking, the Secretary of State has two sets of functions in this context. First, there are those which are necessary to make the flotation possible; for example, authorising the vesting of BT's assets in a company which is subject to the Companies Acts. Secondly, there are those which are related to the Government's continued ownership of shares in BT PLC.

We think that it would be wholly inconsistent with both the Government's announced time scale for the flotation and the desire to set BT free to act as a normal commercial company, subject to the new regulatory arrangements, for the Secretary of State to carry out his functions under Part V in the manner best calculated to secure the Clause 3 objectives. In practice that would lead to continuing interference in the affairs of BT PLC on the part of the Government, and that is certainly something that we should not wish to see. Following that explanation, which I fear was rather lengthy, I hope that the Committee will see fit not to accept the amendment.

May I take up the noble Lord on one point. As I see it, the amendment seeks to bring the activities of only the Secretary of State in regard to Parts IV, V, VI and VII under the scope of the clause. It does not at any point seek to bring in the actions of the Home Secretary. It refers solely to the Bill and only to those parts of it in which the Secretary of State has a responsibility. I was most interested to observe that it is admitted that for the Secretary of State to operate under Part V of the Bill, which deals with the privatisation of British Telecom, would be considered repugnant in the context of Clause 3(2), in that that would not be consistent with promoting the interests of the consumer. Therefore I can quite understand why the noble Lord wishes to remove Part V from the ambit of the objectives set out in Clause 3(2). I do not know what the noble Lord, Lord Lloyd of Kilgerran, proposes to do with his amendment, but if he is constrained to divide the Committee, we on this side will support him.

I understand that the noble Lord the Minister says that as drafted Parts IV and VI have nothing to do with the Secretary of State. I do not quite understand why the noble Lord should take such a positive view that the Secretary of State has nothing to do with Parts IV and VI of the Bill. They are quite brief parts, dealing with cable and wireless matters, and I should have thought that they would come within the jurisdiction of the Secretary of State.

But when it comes to Part V, the noble Lord's reply is even less easy to understand because Part V includes Clause 62, which is concerned with:
"Exercise of Secretary of State's functions through nominees".
Clause 3 of the Bill, with which we are concerned, sets out how:
"The Secretary of State and the Director shall each…exercise the functions assigned or transferred to him…in the manner which he considers is best calculated"—
There is then given a whole list of ways in which the Secretary of State and the director should operate. Is the noble Lord the Minister saying that when Clause 62 states that the Secretary of State must exercise his functions through nominees they are functions other than those that are already listed in Clause 3(2)? That seems to me incredible.

I could go on. There is a provision which may bring a certain amount of delight to the noble Lord, Lord Bruce of Donington. It is Clause 67, which deals with the dissolution of British Telecommunications. When it comes to dealing with that particular matter are the functions of the Secretary of State not to be as are set out in Clause 3(2)? Unless the noble Lord the Minister requires more time to look at this matter, I fear that I shall have to test the temperature of the Committee on it. But perhaps the noble Lord will have something to say in reply to what I have said.

3.50 p.m.

There is one small point. As I read the Cable and Broadcasting Bill, Part IV would be repealed by the Bill. It is not therefore relevant to the argument. I do not think that it is important. With the greatest respect to the noble Lord, Lord Lloyd of Kilgerran, I would not have thought that the amendment raises a terribly important issue. Secondly, I suggest to him that the Government's explanation was perfectly satisfactory. Thirdly, I think that the noble Lord, Lord Bruce of Donington, made a tremendous meal out of it, but perhaps he had another purpose in doing so. Altogether, I would have thought that this is not the sort of amendment upon which the time of the Committee should be spent in dividing.

The noble Lord, Lord Mottistone, says that this is not terribly important. I would have thought it was reasonably important to consider what part of the Secretary of State's duties should be exercised not in the interests of the consumer. Time and time again, I have heard Ministers from the Dispatch Box argue against an amendment that endeavours to put down particulars to strengthen duties in particular circumstances. The argument from the Government Dispatch Box is always: "Don't particularise because it weakens the case in other areas". Here, it would seem, at any rate, that while the Secretary of State and the director have a duty to exercise their functions in the interests of consumers and other users in these two Parts, a normal reading would suggest that in other Parts they do not have that duty—that they are not intended to, or they are under not obligation to, promote the interests of consumers and other users.

The one case given by the noble Lord as an explanation of why it would be unwise to take out Parts II and III was that of the Home Secretary who has the duty in respect of cables. However, as we are talking about the Secretary of State and the director who:
"shall each have a duty to exercise the functions assigned or transferred to him"
if he has no duties transferred or assigned to him in relation to cables, it does not apply in that case. I would have thought that the noble Lord could accept this. It would strengthen the Bill and make it look more sensible.

May I express my gratitude to the noble Lord, Lord Mottistone, for pointing out the position as regards Part IV. I was surprised to hear the Minister laying his argument on Part IV when the noble Lord, Lord Mottistone, says that Part IV might be rejected altogether and eliminated from the Bill. I understand that that is right. Perhaps the Minister would like to comment. Is the noble Lord, Lord Mottistone, correct in saying that Part IV in the future will be taken out of the Bill? Therefore, in so far as his argument rests on Part IV, it is resting on sand and is of no consequence.

The noble Lord, Lord Lloyd, and other noble Lords, have raised various points expressing their dissatisfaction with my explanation. I stress to the Committee that the duties of the Secretary of State and the director general set out in Clause 3(2) are specifically related to the provision of telecommunication services in Part II and related functions in Part III. Part V of the Bill, which relates specifically to privatisation, is, I think the Committee will agree, a different issue. The duties in Clause 3(2) are not necessarily or specifically related to privatisation.

Your Lordships gave the Bill a Second Reading and endorsed the principle of privatisation. I would go further and say that Part V should not be covered by the Clause 3 duties. The Secretary of State, in so far as Part V is concerned, is a shareholder. He cannot, as a shareholder, favour competitors over the business that he owns or, put customers before everything else. If he is covered by Clause 3, as the noble Lords, Lord Lloyd, and Lord Bruce—and perhaps also the noble Lord, Lord Beswick—would wish, he will have to cut prices and carry out other duties that he may not necessarily wish to do. I am afraid that I could not go further than the explanations I have already given.

I believe that the amendment, as drafted, is flawed. If it was passed, it would cause considerble chaos, as suggested by my noble friend. However, it is clear to me that the Government have not really been bothered to draft this part of Clause 3(2) properly. It is clear, for instance, if you look at the miscellaneous and supplementary parts of the Bill in Part VII that there is a specific function upon the director who:

"may for any relevant purpose, by notice in writing signed by him, require any person to produce—any documents"
Any relevant purpose is a relevant purpose for the whole of this Bill. There is no question that if Her Majesty's Government were to take this away and redraft Clause 3(2) to say "under Part II and Part III and Section this and Section that of the Act", they will get it right. That is all that they have to do.

The noble Lord the Minster made no comment to me. Perhaps, when he has consulted his notes, he will be able to listen. I am in no hurry, although I thought that the Government was. I do not want to delay the Committee. I only want to ask one simple point. That is to ask what he has to say about what Lord Mottistone stated—that Part IV is to be eliminated from the Bill. His initial argument—he has had some help since then—based on Part IV is really totally irrelevant. I have always been brought up on the understanding that when a clock strikes 13, I get very suspicious of its mechanism. When therefore the noble Lord rests his case on Part IV, and that is not going to be in the Bill, I get a little suspicious that his argument in relation to Part V and even Part VI may not be so sound as it appeared.

May I give the Minister 15 seconds more respite? I noted carefully and wrote down the words that he used in his first speech on the amendment. The noble Lord said: "Whatever might be the case for bringing particular functions in other parts of the Bill under this Clause 3(2)". In his response to his noble friend Lord Morris, the noble Lord will perhaps consider the justice of what he has said and whether he has not already conceded the case.

So far as the noble Lord, Lord Lloyd, is concerned, this is the easiest part of the Bill. The noble Lord referred to clocks striking. Neither has struck. They are both ticking. Perhaps the noble Lord, Lord Lloyd, may not appreciate it but certainly I do—

Perhaps the noble Lord will allow me to finish this sally. The noble Lord has taken two or three stabs at me, and I have sat patiently. The noble Lord says that the clock has struck. The noble Lord may not be aware but I think the rest of your Lordships will be aware that the Cable and Broadcasting Bill is still going through your Lordships' House. My noble friend Lord Mottistone may have some opinions, but what I have said about Part IV of the Bill before us today is not necessarily irrelevant yet. So far as the noble Lord, Lord McIntosh of Haringey, is concerned, I am afraid that there is nothing I can add. I am told that Part IV will only be repealed when the cable Bill becomes law.

Paper has been flowing backwards and forwards from the Government Front Bench to dark corners of your Lordships' House for some time. I shall not delay the Committee any longer or cause more confusion between the noble Lord, Lord Mottistone, and the Minister on this question. I shall read what has been said today and see whether something can be sorted out for another occasion. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4 p.m.

moved Amendment No. 35:

Page 3, line 12, after ("promote") insert ("and protect").

The noble Lord said: All the amendments which stand in my name are those proposed by the Post Office Users' National Council. This one pretty well speaks for itself. It emphasises something that is sometimes overlooked in the process of this Bill, and that is that the consumers' interest must come first. There are those who may say that the inclusion of these words are unnecessary since "to promote" might also include "to protect". However, the amendment emphasises the sense of the provision, and I do not think that it would do any harm to include it. Many of your Lordships perhaps know my opinion on the making of Second Reading speeches as regards amendments, so I shall say no more. I beg to move.

This amendment is not purely semantics. It is designed to strengthen the commitment. Your Lordships will recall that during the discussion on the first amendment in this marathon debate, we expressed anxieties on the part of consumers and others at the immense power that was being concentrated on the Minister and the director, and the diminished power of the Post Office Users' National Council, which at present is the watchdog of consumer interests.

I took the trouble to look up the words "promote" and "protect" in the dictionary in the Library. There is no doubt that "to protect" is a much more positive commitment than "to promote". "To promote" is to further the growth and development; but "to protect" is to defend or guard from any danger. I suggest that in this case we are entitled to a firm commitment of this kind.

Some of your Lordships will recall the distinguished chairmanship of the Post Office Users' National Council by the late Lord Peddie. Lord Peddie did something quite unique as the chairman of a consumers' council. When the Post Office proposed certain changes in charges, Lord Peddie was good enough to employ consultants and accountants on behalf of POUNC in order to check whether the case was justified. To that extent he was exercising his positive power in protecting consumer interests.

For the benefit of those noble Lords who do not have a copy of the Bill at hand, Clause 3(2)(a) says:
"to promote the interests of consumers, purchasers and other users in the United Kingdom (including,"
and so on. What is intended is simply "to promote", but also "to protect". I suggest that, since the power of consumer protection is diminished by this proposed legislation, we are entitled to ensure that that commitment is retained. I support the amendment.

Like the noble Lord, Lord Somers, I do not wish to make a Second Reading speech on this issue. The noble Lord, Lord Somers, and the noble Lord, Lord Taylor of Gryfe, have already put the point very adequately. I do not propose to add to what they have said, save to say that if the noble Lord is constrained to bring this matter to a Division—as I sincerely hope he will do if the Government do not accept the amendment—we on this side of the Committee shall most certainly support him.

I believe that this amendment is asking Her Majesty's Government to do the impossible—namely, to push and pull at the same time. The promotion of the interests of some consumers, purchasers and users could be against the interests of other consumers, purchasers and users. They are being asked to protect them on the one hand, and to promote the interests of other users on the other hand. I believe that this is almost incapable of legal definition.

Does not the whole of the Bill make the poor director and the Secretary of State push and pull?

The noble Lords who have proposed and supported this amendment have put forward a convincing case as to why the interests of consumers must be safeguarded. I quite agree that they should be safeguarded. But I suggest to the Committee that they already are, and I should like to explain how.

This Bill contains a great deal more to safeguard and promote interests of consumers than there is under present legislation. First, there are the safeguards for the essential services—public call-boxes, the 999 service, services to rural areas—in Clause 3(1)(a). This is the first time that these services have been mentioned in telecoms legislation.

Secondly there is the appointment of the director. The Post Office Users' National Council, to which the noble Lord who moved the amendment referred, has done a good job and it has had a very good reputation. But there is no denying that its effectiveness has been limited by its lack of enforcement powers. It can take up complaints with BT, but it has to rely entirely on persuasion. The result has been that many consumers feel that they are confronted by a giant organisation, in the form of British Telecommunications, which can act with little regard to the interests of consumers. But all this will change when the Bill is enacted. BT's operations will be constrained by the conditions of the licence and many of these conditions will be concerned entirely with consumer matters. And not only will the director have a duty to examine complaints, but he can use his licence enforcement powers to oblige BT to correct matters which are working against consumers' interests.

If I may briefly anticipate provisions elsewhere in the Bill that we have not yet discussed, there are also other improvements for consumers. For example, there is the establishment of national advisory bodies not only as at present for Scotland, Wales and Northern Ireland but also for England as well. This is again an extension of consumer interests. Further, BT have up until now had immunity from being sued. But in future customers will have a contract—and this is something to which I referred the other day—in the same way that they have a contract for any service provided to them. Again this is a substantial improvement in the rights of consumers.

It has been said that the director has so many functions that he may lose sight of the interests of consumers. But this will not be the case. Not only will he have the national advisory bodies to which I have referred, which will be primarily concerned with consumer matters and which will ensure that he is kept fully up to date and aware of developments affecting consumers, but the duty in Clause 3(2)(a) which we are discussing will ensure that consumers' interests are not overlooked.

From the short speeches which we have heard in support of this amendment, one might take the view that it could be argued that even if the amendment is unnecessary it might just as well be included. I think I must explain that, as well as being unnecessary, the inclusion of this amendment would have some very undesirable effects. For example, Clause 3 is carefully constructed so that the duties in subsection (1) have precedence over those in subsection (2). This is because the Government believe that the provision of a universal service and of the essential social services is of overriding importance. But this amendment would alter the balance—and I think that this is really the point that my noble friend Lord Morris was making. For example, if the director was under a duty to "protect" the interests of consumers, but only to promote effective competition under (b); to promote efficiency and economy under (c); and to promote research and development under (d); there would most clearly be a conflict. For example, it might be in the interests of consumers to have very low prices at the present, at the expense of making a sufficient return to invest in services for the future. I hardly think that the noble Lord who proposed the amendment would think that that was desirable.

The position is that the director must take into account all the various factors and give each one due prominence in making decisions. We do not want to weight the scales unduly in favour of one interest alone. To do so would create just the sort of imbalance to which my noble friend referred. For that reason it would be totally inappropriate, and I hope that the noble Lord will not press the amendment.

The noble Lord is quite right when he says that a body such as the Post Office Users' National Council has no powers except that of persuasion. He did not add "persuasion of the Government", which is a Herculean task which only a superman could possibly achieve. I am not a superman, so I beg leave to withdraw the amendment.

Is it your Lordships' pleasure that this amendment be withdrawn?

With due respect to the noble Lord, Lord Somers, my name is also down to this amendment and I propose to divide the Committee on this.

4.11 p.m.

On Question, Whether the said amendment (No. 35) shall be agreed to?

Their Lordships divided: Contents, 103; Not-Contents, 119.

Aberdeen and Temair, M.Ardwick, L.
Allen of Fallowfield, L.Attlee, E. [Teller.]
Ampthill, L.Aylestone, L.

Banks, L.Kennet, L.
Beaumont of Whitley, L.Kilmarnock, L.
Beswick, L.Lawrence, L.
Birk, B.Leatherland, L.
Bishopston, L.Listowel, E.
Boston of Faversham, L.Lloyd of Hampstead, L.
Bottomley, L.Lloyd of Kilgerran, L.
Bowden, L.Lockwood, B.
Brockway, L.Longford, E.
Bruce of Donington, L.Lovell-Davis, L.
Buckmaster, V.McIntosh of Haringey, L.
Burtonof Coventry, B.McNair, L.
Carmichael of Kelvingrove, L.Mar, C.
Chitnis, L.Masham of Ilton, B.
Cledwyn of Penrhos, L.Mayhew, L.
Collison, L.Mishcon, L.
Cooper of Stockton Heath, L.Molloy, L.
Darling of Hillsborough, L.Monson, L.
David, B.Mulley, L.
Dean of Beswick, L.Nicol, B.
Denington, B.Plant, L.
Diamond, L.Ponsonby of Shulbrede, L.
Elwyn-Jones, L.Rathcreedan, L.
Ennals, L.Roberthall, L.
Ewart-Biggs, B.Rochester, L.
Ezra, L.Seear, B.
Fisher of Rednal, B.Sefton of Garston, L.
Foot, L.Shackleton, L.
Fulton, L.Shaughnessy, L.
Gaitskell, B.Simon, V.
Gallacher, L.Somers, L.
Galpern, L.Spens, L.
Gladwyn, L.Stallard, L.
Graham of Edmonton, L.Stamp, L.
Grimond, L.Stedman, B. [Teller.]
Halsbury, E.Stewart of Alvechurch, B.
Hampton, L.Stoddart of Swindon, L.
Hooson, L.Stone, L.
Houghton of Sowerby, L.Strauss, L.
Hughes, L.Taylor of Blackburn, L.
Hunt, L.Taylor of Gryfe, L.
Irving of Dartford, L.Tordoff, L.
Jacobson, L.Underhill, L.
Jacques, L.Wallace of Coslany, L.
Jeger, B.Wedderburn of Charlton, L
Jenkins of Putney, L.White, B.
John-Mackie, L.Winstanley, L.
Kagan, L.Wootton of Abinger, B.
Kearton, L.


Adeane, L.Elliot of Harwood, B.
Airey of Abingdon, B.Elphinstone, L.
Alexander of Tunis, E.Elton, L.
Alport, L.Enniskillen, E.
Avon, E.Fortescue, E.
Belhaven and Stenton, L.Fraser of Kilmorack, L.
Bellwin, L.Gainford, L.
Belstead, L.Glanusk, L.
Bessborough, E.Glasgow, E.
Boyd-Carpenter, L.Glenarthur, L.
Broxbourne, L.Glenkinglas, L.
Caithness, E.Gormanston, V.
Carnegy of Lour, B.Gray of Contin, L.
Cathcart, E.Gridley, L.
Chelmer, L.Hailsham of Saint Marylebone, L.
Cockfield, L.
Coleraine, L.Hampden, V.
Cork and Orrery, E.Hawke, L.
Cornwallis, L.Hemphill, L.
Cottesloe, L.Henley, L.
Croft, L.Hives, L.
Cullen of Ashbourne, L.Home of the Hirsel, L.
Daventry, V.Hood, V.
De La Warr, E.Hornsby-Smith, B.
Denham, L. [Teller.]Hylton-Foster, B.
Drumalbyn, L.Ilchester, E.
Ebbisham, L.Ingle wood, L.
Eccles, V.Killearn, L.
Effingham, E.Kinnaird, L.
Ellenborough, L.Lane-Fox, B.

Lauderdale, E.Porritt, L.
Long, V.Portland, D.
Lucas of Chilworth, L.Rankeillour, L.
Lyell, L.Rodney, L.
McAlpine of Moffat, L.St. Aldwyn, E.
McAlpine of West Green, L.Saltoun, Ly.
Mackay of Clashfern, L.Sandford, L.
Macleod of Borve, B.Sandys, L.
Mancroft, L.Seebohm, L.
Marley, L.Sempill, Ly.
Massereene and Ferrard, V.Skelmersdale, L.
Maude of Stratford-upon-Avon, L.Strathclyde, L.
Strathspey, L.
Merrivale, L.Sudeley, L.
Mersey, V.Suffield, L.
Milne, L.Swansea, L.
Molson, L.Swinton, E. [Teller.]
Morris, L.Teviot, L.
Mountgarret, V.Teynham, L.
Mowbray and Stourton, L.Thomas of Swynnerton, L.
Munster, E.Thorneycroft, L.
Northchurch, B.Torphichen, L.
Nugent of Guildford, L.Trefgarne, L.
O'Brien of Lothbury, L.Trenchard, V.
Onslow, E.Trumpington, B.
Orkney, E.Vaux of Harrowden, L.
Pender, L.Vickers, B.
Pennock, L.Vivian, L.
Peyton of Yeovil, L.Whitelaw, V.
Plummer of St. Marylebone, L.Wise, L.
Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

4.19 p.m.

moved Amendment No. 36:

Page 3, line 12, after ("consumers,") insert ("manufacturers,").

The noble Lord said: I beg to move the amendment standing in my name and those of my noble friends. If noble Lords will look at Clause 3(2) of the Bill as it now is, they will find that the Secretary of State and the director have a duty to do a number of functions, including the promotion of the interests of consumers, purchasers and other users, and they have a series of other responsibilities with which, in the main, we entirely concur. They have even got in subsection (2):

"(c) to promote efficiency and economy on the part of such persons;
(d) to promote research",

and to encourage competition, and a whole series of things. It seems odd that the United Kingdom manufacturers of telecommunications equipment have been left out. Everybody else's interests seem to have come under favourable review by the Government.

Perhaps I may take the liberty of reminding noble Lords that British Telecom as it has operated over the past few years has conceived it to be its duty, with or without pressure from the Government—and as we all know pressures from governments vary both in direction and intensity—in what we can broadly call the national interest, to promote the interests of manufacturers.

I do not propose to speak on this amendment at length, because there will be other amendments which deal with the protection of British manufacturers on which I may venture to address your Lordships slightly more comprehensively than on this. It seems that the word "manufacturers" ought to go in. Perhaps it was omitted by error. Perhaps it was assumed and more or less taken for granted that it would be the natural duty of British Telecom under any regime to look after the interests of manufacturers. Possibly it was omitted through inadvertence, in which case the Government have the easy remedy of accepting the amendment.

There are many noble Lords who for perfectly proper reasons from time to time speak in the interests of the City, of finance, of manufacturers, of operatives, of the professions, and so on. All these activities are perfectly proper, and I would assume that there are noble Lords here who have an identity of interest with, for example, the Confederation of British Industry. It is suitable that they should support an amendment of this kind, and in the hope that we shall receive a considerable amount of support from those who believe in promoting the interests of manufacturers I shall refrain from addressing your Lordships any further on the matter.

I wonder whether it would be for the convenience of your Lordships if I intervened now, because I suspect that the noble Lord's amendment and what he has said are based on an understandable failure to follow through the particular way the statute is drafted. If the noble Lord turns over the page he will find in Clause 4(2) the words:

"commercial activities connected with telecommunications' means any of the following…and the production, supply and export of telecommunication apparatus".
If the noble Lord then turns hack to Clause 3(2) he will find that that definition is carried through into the various parts of paragraphs in subsection (2). The Greeks, of course, had a word for it. It is what they call the hrsteron proteron, which translated into the vernacular means putting the cart before the horse, but that is the traditional way that statutes tend to be drafted. I hope that with this purely technical explanation the noble Lord will feel satisfied.

I am glad to hear the noble Lord, Lord Cockfield, concede the principle that the interests of manufacturers, even if it has not been included in the Bill, could have been properly included. But I am afraid I cannot follow him in his reading of Clause 4 with reference to Clause 3, unless he be referring to subsection (2)(h), which I find a most extraordinary provision. It says that the Secretary of State has his duties.

"to maintain and promote outside the United Kingdom competitive activity on the part of persons providing telecommunication services"—
which means, among others, manufacturers—
"or producing telecommunication apparatus in the United Kingdom".
That is to say that anybody producing telecommunication apparatus or services within the United Kingdom is entitled to the protection or the support of the Secretary of State only outside the United Kingdom, and such persons inside the United Kingdom need not be United Kingdom persons at all.

If the Nippon Electric Company set up manufacture in the United Kingdom the Secretary of State would be obliged to support them outside the United Kingdom when they are in competition with United Kingdom companies, which I find a bizarre activity for a Minister of the Crown. This is not quite so impossible as it sounds. I read this morning that British Telecom, in pursuit of its licence for cellular radio, has placed its first order for communication equipment with the Nippon Electric Company and not with any British concern. This follows the placing by the Racal Company of orders for all its equipment outside the United Kingdom with respect to cellular radio without a British company—the one for which I work—having been given any opportunity to tender, notwithstanding assurances from the Minister concerned that the business would be open to competitive tender, and that the licence granted would not be allowed to act in a monopolistic way.

I cannot see that the explanation given by the noble Lord, Lord Cockfield, covers the interests of British manufacturers, and I think that the proposal of the noble Lord, Lord Bruce of Donington, should be supported by a Government and a Secretary of State which have the interests of British manufacturing at heart. In this respect I draw attention to Part II (there are so many paragraphs and subparagraphs in this wretched Bill) paragraph 3 of the draft licence explanatory notes to the duty put upon the Secretary of State, which reads that he must enable British firms—British firms, not persons manufacturing in the United Kingdom—
"to establish and maintain a leading role in telecommunications".
With those words in those explanatory notes the absence of "manufacturers" under Clause 3(2)(a) in the sense suggested by the noble Lord, Lord Bruce, is extraordinary.

It would be a great help, with the greatest respect to the noble Lord, Lord Weinstock, if Clause 3(2) (b) were read with care. It simply says that there is a duty lying in the breast of the Secretary of State and the director

"to maintain and promote effective competition between persons engaged in commercial activities".
My noble friend drew our attention to the definition of "commercial activities connected with telecommunications" in Clause 4. It is those who provide
"telecommunication services and the production, supply and export of telecommunication apparatus".
Subsection (2) (h) does nothing other than require the Secretary of State and director to promote exports. It means nothing more and nothing less than that.

Before the noble Lord sits down, may I draw his respectful attention to the fact that this amendment is not designed to amend subsection (2) (h) but subsection (2) (a), and that it is not possible to relate the clause back—the noble Lord, Lord Cockfield, has referred to this—to subsection (2) (a), which I am trying to amend.

I am well aware of that. Of course, the noble Lord has this particular amendment, if he wishes it, in totally the wrong place, because he is putting manufacturers together with consumers, which must necessarily be in conflict from the start. The amendment is totally unnecessary for the reasons I have just pointed out.

With due respect to the noble Lord. Lord Morris, the Government have already conceded that the parties designated as the recipients of the benefits of the promotion of the Secretary of State are in conflict with each other; that is, that consumers, purchasers and other users cannot all have exactly identical interests. While I concede that there is greater conflict if one includes the term "manufacturers" in that context, the Bill is remarkably deficient in mentioning the interests of British manufacturers and I do not see that the reference in Clause 3(2)(b) covers the point.

I felt that as a matter of law the point was so plain and obvious that I would try to save your Lordships' time, but as it is obviously not as clear as I assumed it was I need to go into it in greater detail. The points raised by the noble Lord, Lord Weinstock, arise on later amendments which we shall be discussing in detail. But let me take the specific amendment tabled by the noble Lord, Lord Bruce of Donington. As he says, it is an amendment to Clause 3(2)(a). I ask him to read the whole of paragraph (a) and not stop half way down, because paragraph (a) says:

"in respect of the prices charged for, and the quality and variety of".
Manufacturers are interested in all those subjects. I agree with the noble Lord, Lord Bruce of Donington, that manufacturers are interested in prices. They are interested in the quality and variety, but they are interested either in their capacity as consumers (because manufacturers are consumers) or they are interested in their capacity as purchasers (because manufacturers are purchasers); or they are interested in these matter as users, which is a basket phrase that appears at the end of so many lists of categories. Therefore, manufacturers, in common with virtually anybody else one could think of, are adequately covered by paragraph (a) in respect of the specific matter of,
"prices charged for, and the quality and variety of".
That is the amendment which appears in the Marshalled List.

I then went on, mistakenly, to try to be helpful. I entirely agree with the noble Lord, Lord Bruce of Donington, and with the noble Lord, Lord Weinstock, that the interests of manufacturers are greatly important. There is no difference between us on that at all. I was trying to be helpful because I was going outside the ambit of the noble Lord's amendment. In paragraph (b) there is the reference,
"to maintain and promote effective competition between persons engaged in commercial activities".
Those "persons engaged in commercial activities" are then defined in subsection (2) of Clause 4 in a way which includes manufacturers.

In paragraph (c) it says:
"to promote efficiency and economy on the part of such persons".
The words, "such persons" hark back to,
"persons engaged in commercial activities",
which in turn are defined in Clause 4(2) to include persons who are manufacturers. I am sure that the noble Lord, Lord Weinstock, would think that it is important to encourage efficiency and economy on the part of such persons.

We then come to paragraph (d), which says:
"to promote research into and the development and use of new techniques by such persons";
that is, such persons as manufacturers. Later we have, in paragraph (h), the words "to maintain and promote" to which my noble friend Lord Morris referred. In effect, the purpose there is to maintain and promote exports.

It seems to me that the interests of manufacturers, which I entirely accept are of paramount importance—I am not arguing either with the noble Lord, Lord Bruce, or with the noble Lord, Lord Weinstock—are very fully covered by the clause as it is drafted. I accept that certain noble Lords believe that other provisions should be inserted relating to manufacturers, and we shall be debating those in due course. I hope that with this rather fuller exposition of the legal position the noble Lord will he prepared to consider whether his amendment is really necessary, or whether we have fully met his concern in the way the clause has been drafted.

I am grateful to the noble Lord, Lord Cockfield, for that detailed exposition of the exact meaning of the words in the proposed legislation, all of which I think I understand and appreciate. But it seems to me that the noble Lord has missed the point of my interjection, which was that it is not enough to talk about manufacturers as persons engaged in manufacture in the United Kingdom because there are such persons operating in the United Kingdom, frequently with a subsidy from the British Government to back their actitivities, merely as assembly units or as arms of foreign firms seeking entry into either the United Kingdom market or the European Community. The reference that I understand the noble Lord, Lord Bruce, was seeking through his amendment and the reference that I am seeking is some commitment in respect of British manufacturers as distinct from foreign manufacturers with operations, be they large or small, in Britain.

I hesitate to prolong this discussion, but the noble Lord the Minister has frequently referred to the legal position. He has developed the most convoluted argument to show that the term "manufacturers" must be understood by looking through about two pages of words to decide that "manufacturers" are in it. As he has said that manufacturers are so important and everybody agrees about that, I should have thought that he could have put the word "manufacturers" after the word "consumers", as suggested in the amendment and as supported by the noble Lord, Lord Weinstock. It would save all this discussion in such a convoluted way.

To a lawyer as distinguished as the noble Lord, Lord Lloyd of Kilgerran, I should have thought that the statute was plain in the extreme.

This statute will not always he directed to lawyers. If we were discussing whether this was perfectly plain to lawyers, then perhaps I might agree with him; but this is a statute for the public, for members of the industry. We want to avoid them having to go to lawyers to decide whether "manufacturers" are here. The Government should apply their minds with far more human interest to the problems of people who have to read this document. I agree with the noble Lord the Minister that lawyers will find their way through it, but we hope that this Bill will be available and will be able to he read and understood simply by the ordinary man in industry and the ordinary member of the public.

I am grateful to the noble Lord who has deployed his legal skills to such effect in explaining the precise legal significance. I must say that I find his legal logic irrefutable; so much so that it will be necessary, particularly after having listened to the noble Lord, Lord Weinstock, probably at Report stage, to provide a far more precise definition than the mere word "manufacturers" which has been inserted here. I am grateful to the noble Lord for the time and trouble that, as a lawyer, he has spent in explaining to a mere accountant exactly what this Bill means in this respect. With those pleasantries, which I hope will continue, I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.41 p.m.

moved Amendment No. 37:

Page 3, line 13, after ("users") insert ("(including, in the case of persons who are disabled, any person who is a user in the course of his employment)")

The noble Lord said: In moving this amendment I want to state quite clearly and immediately that in another place the Under-Secretary of State, Mr. Butcher, has stated quite categorically that Condition 17 of the licence prohibited undue discrimination in the prices charged for specially-adapted equipment. This followed the very telling speech made by Mr. Alf Morris in another place on the Third Reading of the Bill, when he spoke of the unsuitability of some new telephone equipment.

What this has to do with the amendment I am moving is simply as follows. Many noble Lords will remember that just after the last war, when we started to count the cost in addition to the dead, there were tens of thousands of men returning to these islands from overseas who had lost limbs and eyes, and whose hearing was grieviously impaired. The then Labour Government set about examining the plight of these disabled men not merely to express compassion or pity but in an effort to understand, and there was established the great experiment of Remploy—an experiment in which my noble friend Lord Wilson of Rievaulx played such an important part. This made a massive contribution to those men regaining their self-respect and, indeed, a new courage to face life, and to helping them earn a living so that they did not have to be dependent on any form of charity.

There is something similar to this in what I am asking the Government to accept today. In those days (as I feel quite sure that my noble friend Lord Wilson of Rievaulx will recall) there was massive co-operation from manufacturers and massive co-operation by the National Coal Board (when it was established) and the steel industry. There was also remarkable cooperation from what was then the General Post Office with particular relation to those who had no hands, in teaching them to use machinery and to use telephones and switchboards; and, if they were blind, in teaching them to use their ears because they were not able to use their eyes. Realising that there are five million of our fellow countrymen and women who have impaired hearing, we can apprecicate how lonely life can be for them and also how totally isolated sometimes they would be if it were not for the telephone. The telephone then becomes a lifeline and can represent the difference between a lonely life and a full life.

Furthermore, what a remarkable and wonderful thing it would be, paradoxical though it may sound, if those whose hearing is impaired, those whose sight is impaired or those who are blind could make a contribution within the organisation of British Telecommunications so that those who are not necessarily directly employed in British Telecommunications can live a fuller life! The General Post Office, shortly after the war, saw to it that any large organisation in industry prepared to have a telephone switchboard of a special character was enabled to employ a British soldier who had been blinded. I am positive that there is not one voice in this Chamber that will say that that was a dreadful thing to do because it did not make money and when, perhaps, instead, a more efficient switchboard could have been put in. Perhaps that is a mark of the greatness of this realm.

It was not merely a question of phones in homes but of the ability of people who were savagely and severely handicapped to use phones and similar equipment in the Post Office. And that is what my amendment is about. I do not wish to go into too much technical detail in putting the argument because, quite frankly, I do not understand some of these wonderful things. All I know is that when I see a blind person in an office anywhere in the country working such equipment, or a deaf person doing so, that is good enough for me. I hope it will be good enough for your Lordships.

One example I have been given is the need to see that everywhere there is an inductive coupler. This is a hearing aid, very cheap to instal, which can allow a person hard of hearing to do a job as well as one with good hearing. The point that I am making is that it might he a good thing (and should he a good thing) to instal these in the homes of the hard of hearing. But what a remarkable thing it would be, and an even better thing, to a degree, to have them installed in factories (as I am sure so many manufacturers would agree) so that there could be employed as telephonists, perhaps, or in some other occupation, people to whom this special aid can be of assistance. Notwithstanding what Mr. Butcher has said in another place, it seems to me that the associations for the disabled and the hard of hearing, in particular, are not satisfied with assurances. Neither am I.

I hope that I will have the support of every noble Lord in saying that Government's assurances in this particular poignant matter are not enough. They should make it absolutely clear beyond all peradventure by accepting the words of the amendment. I should like to see, ultimately, all telephones constructed in such a way as able to be used by those who are hard of hearing or who have no arms, or who have to use some remarkable device to assist them. I hope that these things will be taken into consideration, as they have been taken into consideration (in my view not fast enough) over the years. I think that I ought to mention at this point that many of the aids that now help enormously the disabled were developments by British Telecom itself from the ideas of engineers working and talking together in their lunchtime break, as men do. With respect, I ask noble Lords not to get too worked up over the words "trade unionism". If you have seen such men or listened to them digging coal underground and talking of a better way to do this, of an easier way to do that or of a less dangerous way to do it, so, in British Telecommunications, they have talked about how they could help the blind, the disabled and those who were savagely hurt and disfigured.

Two of these remarkable characters were Mr. John Hart and Mr. Ron Collett, who are recognised almost throughout the world as having made a massive contribution in the field of telecommunications to aid the disabled. They are both members of the Post Office Engineering Union, and later became members of the British Standards Institute.

Research in this field, by and large, has been magnificent. I believe that our country possesses the brains; we have proved that in the past. We have provided some amazing technical devices capable of transforming the lives of the hard of hearing and enabling them to live in a new world. I hope that we shall have a united Chamber this afternoon in support, and that your Lordships will agree with the words of this amendment. They are simply in favour of this: that manufacturers will not be placed at a disadvantage because they have to pay perhaps excessive charges for having British Telecom equipment installed in their manufacturing businesses to enable them to employ the hard of hearing and other disabled people.

I think that the Government ought to write into this Bill quite clearly that decent employers ought not to be penalised and placed at a disadvantage by their competitors who are not concerned about the hard of hearing and the disabled. That is the quintessential of what my amendment suggests, and I hope very sincerely that it will have the support of noble Lords on all sides of the Chamber this afternoon.

Before we launch into a long discussion about this amendment, may I suggest that the noble Lord, Lord Molloy, is probably knocking on a door that was opened a number of years ago. I think I am right in saying that the Manpower Services Commission will grant-aid employers to make alterations to premises in order to help to accommodate particular disabilities of people working for them. It is unlikely that any disabled person would find that he or she could not be accommodated in this way. I think that is already available; but of course I agree with everything that the noble Lord has said.

I am very grateful to the noble Baroness for raising that point. The voluntary organisations, the national organisations for the blind, the purblind, the deaf and the hard of hearing have all heard that argument. They have examined it; they have rejected it. How do we know that within a year or two the Manpower Services Commission might not exist any more? Of course, I accept what the noble Baroness says; but it is not a 100 per cent. guarantee, and I am not asking this Chamber to give an assurance to the effect that the Manpower Services Commission will look after this. However, let us look after it by putting this specifically into the words of an Act of Parliament. That is my submission.

I disagree with the amendment. I think this is already quite clear in Clause 3(2)(a), where it says:

"including in particular those who are disabled."
I also think that perhaps it is unnecessary that we should take 10 minutes in moving an amendment like this. We know that this Bill is going to go through the House; we know that it has some very poor qualities, and most of us are sitting here waiting to put things right. We want to do that quickly, carefully and thoroughly; and I hope that the rest of your Lordships will agree.

4.45 p.m.

As we have heard from the passionate speech of the noble Lord, Lord Molloy, the subject of this amendment is a matter of great concern to all of us, including the Government: namely, the interests of the disabled. We have mentioned the disabled in our discussions on directory information; but this is the first opportunity that we have had to look at the provisions and the safeguards for the disabled. I am sure that we shall have not only this opportunity but also a further chance to discuss this very important matter on later amendments, which will be of interest to my noble friends Lady Macleod and Lady Lane-Fox.

I hope that your Lordships will agree that I should take this opportunity, especially after the moving speech of the noble Lord, Lord Molloy, to explain not only the intentions of the Government but also the provisions which are in the Bill. This amendment concerns primarily the blind. The noble Lord, Lord Molloy, mentioned briefly the fascinating device, with which unfortunately I am not acquainted, the inductive coupler, and we shall have a full discussion on that in connection with Amendment No. 82 That amendment deals with the hard of hearing. However, may I concentrate on the disabled now, and especially on the blind, and leave reference to the hard of hearing until we reach Amendment No. 82.

First, I should like to explain what the Bill does for the blind, and above all for the disabled. May I make it clear that the Government are committed to ensuring that the disabled are looked after: and, as the noble Countess, Lady Mar, mentioned, provisions for helping such people are contained in Clause 3(2)(a). We are determined to ensure that the disabled should continue to be able to obtain telecommunications equipment adapted to their needs. We have included provisions in the Bill and the licence to achieve that.

I should like to give a little further explanation, in view of the concern expressed by the noble Lord, Lord Molloy. Clause 3(2)(a) requires the Secretary of State and the director, whenever they carry out their functions under the Bill, to act in a way that they think is calculated to:
"promote the interests of consumers, purchasers and other users—(including, in particular, those who are disabled) in respect of the prices charged for, and the quality and variety of, telecommunication services provided",
and apparatus.

This is the first time that the interests of the disabled have been recognised in legislation. This means that when the Secretary of State grants a licence to a company such as, for example, British Telecom to run a telecommunication system and he decides on the conditions of the licence, he must take full account of the interests of the disabled. The director must also take full account of the interests of the disabled when he checks that telecommunication operators are obeying the conditions in their licences. The Secretary of State must also take into account the interests of the disabled when he sets the standard for telecommunication equipment and when making the arrangements for it to be approved.

For these reasons, the duty laid down in Clause 3(2)(a) is a wide-ranging one and I do not see any need to add to it. It covers the interests of all disabled persons, both at work and at home, and it does not single out any particular group. We intend that the duty laid down in this clause will be fulfilled in particular through the conditions of the draft BT licence. Concern has been expressed that once BT becomes a public limited company it will no longer wish to supply apparatus for the disabled to use, because this will no longer be profitable.

I want at the outset to allay that concern. I say quite categorically that BT will continue to look after the needs of the disabled. BT itself has given clear and public assurances on this point and has recently announced a special programme of action in the interests of the disabled to co-ordinate all the considerable work which it does at present. In any case, we have included conditions in the licence which will oblige BT to do so.

May I draw the Committee's attention to these conditions. First, Condition 1 obliges BT to provide throughout the country all telecommunications services for which there is a reasonable demand, and of course it includes demand by the disabled both at home and at work. Condition 2 applies the same obligation in rural areas. Condition 6 ensures that the emergency 999 service is provided free of charge to all, including those who are disabled and who may need to summon assistance.

In addition to these general conditions, there are also conditions which are specifically for the disabled. Condition 31 covers the general needs of the disabled at large, and requires BT to consult with the director about the arrangements which it makes to provide telecommunications apparatus to meet all reasonable demands by disabled persons. BT has said that it will continue to supply a range of apparatus at least as wide as its present range. Under this condition, the director will be able to influence just what apparatus is provided.

In order to assist the director in finding out the requirements of disabled persons—be it the blind, the deaf, the impaired in speech, the physically handicapped or others who are disabled—he is likely to set up an advisory group for this purpose under Clause 52, which we shall be discussing in due course. My noble friends Lady Macleod and Lady Lane-Fox will be seeking to add their weight to the discussion on that clause. Condition 31 ensures that BT will participate in the work of any such group.

Conditions 32 and 33 are specifically for the hearing-impaired. Condition 32 obliges BT to continue to make available telephones which incorporate the device mentioned by the noble Lord. Lord Molloy—the inductive coupler. It also covers telephones with amplifiers, which are just a little different from the inductive coupler, enabling people with impaired hearing but without hearing aids to use the telephone. Condition 33 of this little group requires BT to work towards installing in all public call boxes apparatus—for example, the inductive coupler—to enable the impaired of hearing to use public telephones.

Having said that I should not discuss that aspect till we reach Amendment No. 82, I am afraid that I have strayed a little. But we shall be able to discuss it much more widely when we come to that amendment. Condition 34, which I mentioned earlier in our discussion on directory inquiries, ensures that the blind and other disabled persons who, because of disabilities such as dyslexia, purblindness and other problems of sight cannot use printed directories, can obtain directory inquiries free of charge.

I turn briefly to the employment of blind persons. The concern about the employment of blind persons underlies this amendment and it also probably touches Amendment No. 40. There are about 1,200 blind telephonists in the United Kingdom who will be covered by the provisions of the Bill. These blind telephonists use private exchanges which are already specifically modified to suit their needs. What happens, in practice, is that the visual signals which are usual with private exhanges are replaced by tactile and silent signals which are perceptible to blind people. The Government want this very valuable source of employment to continue. We want to preserve the existing job opportunities and, if possible, to create new ones in this field.

As my noble friend Lady Carnegy, who has considerable experience in this field, pointed out so succinctly, public funds are already available. I think that my noble friend pointed out the practical aspect of these public funds which are available through the Manpower Services Commission to assist in the purchase of specially adapted apparatus which will enable a blind person to be employed.

We all realise, and the provisions of the Bill recognise, that technology is changing and new models of private exchanges are coming on to the market. The organisations representing the blind want to ensure that these new models which are now being developed are designed so that they are capable of being adapted for use by blind persons. The Government accept the importance of this objective, and the Department of Trade and Industry has had constructive discussions with both the manufacturers and the Royal National Institute for the Blind as to the best way forward in this area of the advance of technology.

As a result of those discussions, it has been agreed that from a date to be decided all new operator-controlled private automatic branch exchanges will be required to be adaptable for use by blind operators. This we believe—and I hope that the noble Lord, Lord Molloy, and your Lordships will agree—will be a major step forward in this area. It will safeguard existing job opportunities in this area for the blind and it is a better safeguard than is given to blind operators at present. A consultant is being appointed to work on drawing up a list of what are named call features—this technology is a little beyond me; the noble Lord, Lord Molloy, nods and I shall seek an explanation from him later—and functions for private branch exchanges which are necessary for these exchanges to be able to be used by blind operators.

I have gone on at some length but I think, after the speech of the noble Lord, Lord Molloy, and because of the interest expressed—which we always find all round the House when we are discussing the needs of the disabled, of whatever impairment—that your Lordships will forgive me. I hope that the explanation which I have given has enabled your Lordships to have a better understanding of how we intend to protect the interests of the disabled, in fulfilment of our specific duty which is set out in Clause 3(2)(a). We believe that the duty is fully adequate and that Amendment No. 37 is not necessary. Amendment No. 40 is attached to that amendment and we believe that No. 40 might be counter-productive, because by focusing on one particular group it could also focus on others. I hope that I have been able to show that the Government have taken on board everything that the noble Lord, Lord Molloy, has said and the concern which is felt, not just by the noble Lord himself but by all of your Lordships, and that they take very seriously the duty to protect the interests of the disabled and their continued employment.

5.8 p.m.

I am sure that the Committee has listened with great interest to my noble friend's general dissertation on the care which the Government are taking of the interests of the disabled in relation to this Bill. But I should like to ask him a much smaller and narrower question, which relates very directly to the amendment moved by the noble Lord, Lord Molloy. Clause 3(2)(a), to which he quite rightly referred several times, imposes a duty on the director of providing for the interests of consumers, purchasers and other users and then goes on to specify particularly those who are disabled. The amendment relates to disabled people who are in employment and the question I want to ask is this. For the purposes of Clause 3(2)(a), where a blind person or a disabled person is employed by a company—and it is the company that rents or hires the apparatus from British Telecom or somewhere else that is the user, because the disabled employee is obviously neither the purchaser nor the consumer—does the word "user" in Clause 3(2)(a) cover not only the company which employs the disabled person but also the disabled person himself who is an employee? It is simply a question of the construction of subsection (2)(a). If there is any difficulty over this, perhaps the noble and learned Lord the Lord Advocate can help us.

I believe that the noble Lord's mind has been very clearly read by my advisers, because I am informed that disabled persons in employment are classified as "users" of the apparatus, as my noble friend suggested. I hope that his doubts on that particular score are removed. A blind person operating a specially-adapted PABX will be, for the purposes of Clause 3(2)(a), a "user" of the apparatus—even if somebody else (such as the company, British Telecom or another supplier) owned that apparatus. If the blind person was operating it, he or she is qualified as a "user" under Clause 3(2)(a).

I thank the noble Lord the Minister for his explanations and for the categorical assurances he has given. We on this side of the Committee were certainly very concerned with the employment aspects of blind people in particular. I would really be carping if I did not accept the noble Lord's assurances—his categorical assurances—as being very welcome indeed.

I was also interested to hear the noble Lord commend to us—or I thought he was commending—Amendment No. 82. Before we pass from this amendment, will the noble Lord tell us whether that was in fact the case and that he will be accepting Amendment No. 82?

As far as Amendment No. 37 is concerned, the Minister has gone very far along the road to giving the assurances which are necessary not only to this side of the Committee but to many people and organisations outside. In the circumstances, it may very well be that my noble friend Lord Molloy will consider whether he should withdraw the amendment.

Perhaps I may briefly stress to the noble Lord, Lord Stoddart of Swindon, that I hope I did not indicate that we will be accepting Amendment No. 82. I hope I said that we would if we could leave the discussion of inductive couplers and various other apparatus which may be used for those who have hearing impairments, and the discussion concerning the advancing technology of such apparatus, until we come to Amendment No. 82.

If it is I who deals with Amendment No. 82, I hope that I shall receive the same reception which I have obtained from the noble Lords, Lord Molloy and Lord Stoddart of Swindon, but we shall have to wait to see. I have not commended Amendment No. 82; I have just held out further bait until we listen to the debate on Amendment No. 82.

I am most grateful, as I am sure the national associations will be, for the very fulsome way in which the noble Lord, Lord Lyell, has responded to my supplications. He went into great detail, which must have been the result of much research and for which we are all deeply grateful.

If I appear to feel very strongly about these matters, it is because I was involved in trying to find work for soldiers after the war who had lost their hands or legs, or who had one eye missing, or whose hearing had gone. I still have the great privilege of being a national vice-president of the Disabled Drivers' Association. One of the finest honours I have ever received in my life was to be able to work in another place (as I still do whenever I can) for the British Limbless Ex-Servicemen's Association. I am therefore more than grateful for the detail which the noble Lord has given this afternoon. We shall compare what he has said with the words in the Bill. There will be a Report stage, and on the basis of that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

had given notice of his intention to move Amendment No. 38:

Page 3, line 14, after ("disabled)") insert ("and without discrimination against customers on the basis of geographical location").

The noble Lord said: I believe this concerns the battle which has already been won in this Committee. In view of the reminder given by the noble Lord, Lord Glenarthur, this afternoon that subsection (1) takes precedence over subsection (2), I do not propose to move this amendment.

[ Amendment No. 38 not moved.]

had given notice of his intention to move Amendment No. 39:

Page 3, line 16, after ("provided") insert ("and existing telephone operator services, including the directory enquiry service").

The noble Lord said: The position here is not quite so satisfactory. We received an assurance from the Government that they would consider this matter when it arose under Amendment No. 26, moved by the noble Lord, Lord Lloyd of Kilgerran. On the basis of that assurance, however—to which the Government may be sure they will be held—I will not move Amendment No. 39.

[ Amendment No. 39 not moved.]

5.16 p.m.

Page 3, line 17, at end insert—

("( ) to promote the interests of blind employees in the United Kingdom by making provision for apparatus to be readily adaptable for their needs;")

The noble Lord said: Most of the arguments for this amendment have been made in the debates on previous amendments. What really concerns us is that privatisation should not mean a sort of Gresham's Law, whereby lack of concern will drive out understanding and compassion. From what the noble Lord, Lord Lyell, said on the previous amendments, I hope that British Telecom will co-operate with the national institutions for the blind and disabled: that they will consider the fact that digital switchboards can be installed without any charge to manufacturers; that the Kinsman Console, which provides synthesised voices, will be made available at no extra charge; and all the other matters which can help blind people.

I believe that we should bear in mind the blind man's prayer, which says:

"Light—the prime work of God—to me is denied,
And all the various objects of delight annulled".

We can nevertheless try to restore some of the faculties and delights which the author of that beautiful poem had in mind when it was written, and it will be a great honour for us to be able to do so. I hope that will be the spirit in which the Government will approach this amendment.

We are very grateful for that quotation from poetry or literary flowery language presented by the noble Lord, Lord Molloy, in moving this amendment. The noble Lord himself suggested that I covered most of the ground with which this amendment concerns itself in the remarks I applied when speaking to Amendment No. 37. I am afraid that I do not have much more to say in reply to this particular amendment. I will stress that the Government certainly accept the importance of the objective set out in Amendment No. 40.

Indeed, the Department of Trade and Industry has had, and is continuing to have, constructive discussions with manufacturers and with the Royal National Institute for the Blind. As I have explained, and as the noble Lord is aware, technology is improving and pushing into new frontiers. I believe your Lordships will agree that that is the best forum at which to ensure that the interests of the blind are represented, particularly so far as the employment of blind persons in private exchanges is concerned.

In view of the noble Lord's comments, there is some encouragement for the national associations. We only want to make very certain that the Government make sure that the blind are always provided with encouragement as well as practical innovation in maintaining their dignity, by allowing them to earn their living. That is not too much to ask. I have to tell the Committee that at the moment they are apprehensive as to whether or not the Bill really means to do this. It may be that the licence does.

I accept what Lord Lyell has said. I think that in this particular instance also the Government's heart—there is not much of it, I admit—is in the right place. I hope as the Bill proceeds, and when the words of the licence are examined, if necessary they will be prepared to see the national association to clear up any points of apprehension they might have. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 41:

Page 3, line 18, leave out paragraph (b).

The noble Lord said: This amendment is essentially put down to obtain a little more information from the Government. Your Lordships will recall that this particular subsection (2)( b) enjoins the Secretary of State and the director

"to maintain and promote effective competition between persons engaged in commercial activities connected with telecommunications in the United Kingdom".

As the noble Lord, Lord Cockfield, has already reminded us, under subsection (2) of Clause 4 of the Bill,

"'commercial activities connected with telecommunications' means any of the following, that is to say, the provision of telecommunication services, and the production, supply and export of telecommunication apparatus".

This is a responsibility. I want to know, and I am sure the Committee would be interested to know, just how the Secretary of State and the director are going to go about this maintenance and promotion of effective competition. I would be most grateful to know what is in the Government's mind on this. How much time do they expect them to devote to this; what priority do they propose to give to it, and, as I say, what methods do they propose to adopt? How many people do they propose to employ upon this particular part of the project? I am sure it would he for the advantage of the Committee if the noble Lord would enlarge on this a little so that he can expand on the bald legalities of the Bill.

I hope the noble Lord when he replies will give some sort of assurance that this desire for competition, which to the Government seems a sort of magic that is a cure for all evils, will not be pressed at the expense of service to the individual subscriber. That is, after all, the main object of the Bill, and I hope that this idea of competition will not interfere with it.

Now that I see that Lord Bruce's amendment is by way of being a probing one, would the Government like to combine this with my Amendment No. 42, or would the noble Lords on the Front Bench care to answer Lord Bruce and come later to No. 42?

I think it might be convenient to take Lord Bruce's amendment first and then look at the amendment proposed by my noble friend. First of all, may I say in answer to the point made by the noble Lord, Lord Somers, that of course the structure of Clause 3(2) shows that this matter of competition is one matter to be taken into account along with others. We have had a fair discussion in relation to Clause 3(2)(a) already. So there is no question of 3(2)(b) riding roughshod over anything else.

Having said that, I have to say that we believe that subsection (2)(b) and the matters there dealt with have a very important part to play in improving service to the subscriber and making certain that the subscriber gets a better service than he would if the competition to he maintained and promoted were allowed to die away.

We believe—and this is central to the policy of this Bill—that the people of this country should be given the opportunity to exercise a choice when they buy telecommunication apparatus or telecommunication services. If consumers cease to be captive of a single monopoly supplier they can buy the apparatus and the services they themselves want and not what the monopolist decides to give them; secondly, they will be able to choose apparatus and services which are cheaper or of better quality, or which have any special features they want. I doubt if this aim would be challenged anywhere. Our view is that competition is the best way to widen customer choice, to lower prices and charges, to increase efficiency and to improve quality. Monopolies are very apt to produce restricted choice, higher prices, poor quality and inefficency. I know very few who can see no scope for improvement in British Telecom's present services.

So far as the future is concerned, it is important to see how matters have developed so far. The Government are already permitting competition, and this, I believe, is having a measurable and beneficial effect. First of all, so far as telecommunication apparatus is concerned it is quite apparent that a much bigger range of apparatus is available now than was, and we believe that this process will continue. So far as telecommunication services and the running of the telecommunication systems needed to provide these services are concerned, also we have here licensed Mercury. This development has never been attempted before, and we are moving very cautiously to ensure that British Telecom's ability to provide a universal service is not damaged and to give British Telecom time to adjust to the competition. Noble Lords will know the features that have been built into the arrangements for that purpose.

Since the licensing of Mercury we have seen two visible benefits: first, on the busiest trunk routes and on international routes where Mercury will compete with it, British Telecom has been able to reduce its call charges; secondly, waiting lists are now down to some 1,500, almost negligible compared with the total demand. There are other areas in which competition may be developed, which will lead in our view to a check on prices and to an improvement in the quality and efficiency of the service. Accordingly, we believe that this part of Clause 3(2) is an important one, and I understand from what the noble Lord said that he does not intend to press this amendment.

I listened with great interest to what the noble and learned Lord the Lord Advocate said. I must say, however, that I was not entirely convinced by his argument, because as far as we are concerned subsection (2)(a) is not really compatible with subsection (2)(b). We do not believe that you can properly promote—unfortunately not protect, but promote—the interests of consumers and at the same time insist that there shall be competition in the telecommunication network itself, which is what is in fact being proposed. Indeed, it is difficult at this stage to understand why subsection (b) should he there at all, bearing in mind that the Government said that they will not interfere with the monopoly enjoyed by British Telecom for, I think, between seven and nine years. Therefore, it seems to me that paragraph (b) is not necessary for the time being.

It may become necessary if the Government wish to proceed with introducing competition into the network itself, but that is not what they are proposing now. Their present proposal is to convert a public monopoly into a private monopoly. Therefore, having said that, how on earth are they proposing to introduce competition into the private monopoly that they are creating? Paragraph (b) needs further thought. We are not happy about it at all.

The Lord Advocate mentioned competition from Mercury. Of course, there is competition from Mercury, but it is artificial competition arranged for by the present Government in the 1981 Act. But whether it has improved to date, and whether it will improve in future, the total telecommunications service and network throughout the country is open to doubt. Indeed, it is open to doubt because it will injure British Telecom itself; it will perhaps injure its ability to invest in the future and it may well hurt the telecommunications industry in this country. What Mercury intends to do is not for the sake of the public good or to improve the telecommunications network. Its intention is to make profit. It will do so at the expense of British Telecom and, therefore, at the expense of the consumer. What Mercury is doing and will do in the future is to take the cream off the commercial service and leave British Telecom with the skimmed milk.

For the ordinary domestic subscriber, and some business subscribers, that means a worse service and very likely higher charges as well. It will also make it far more difficult for the new company to discharge the duties which the director will be putting upon it to provide certain services such as the emergency services, services for the blind which we have just discussed, and so on. Therefore, we are very worried about this paragraph (b), which in our view conflicts with the duties placed on the director in paragraph (a) to promote the interests of consumers. I certainly would like to hear more from the Lord Advocate before I would be happy about withdrawing the amendment.

The noble Lord, Lord Stoddart of Swindon, said something which I think crystallised the difference of view between the two sides of the Committee on this issue. He said—and he will correct me if my recollection is imprecise, but I do not think it is—that Mercury would take some business and some profit away from British Telecom and that that, therefore, would take some benefit away from the consumer. That seems to me to encapsulate the total difference of view between the two sides on the background to this amendment. If your Lordships think about it, Mercury will only take business from British Telecom if it provides a service which is more attractive in one way or another—be it price, service or efficiency—than that provided by British Telecom. Otherwise the consumer will not go to it. Therefore, if it takes some business from British Telecom it will be giving a better service to the consumer, and therefore benefiting the consumer. That summarises the complete difference of view.

Those of us on this side of the Committee on the whole believe that competition breeds efficiency and good service to the customer. We believe that if one knows that one's job, the value of one's shares or the success of one's company depends on providing for the customer something that the customer is prepared to pay for, that is one of the most powerful stimuli for efficiency, hard work and good service. Noble Lords opposite, on the other hand, tend to have in many of these directions a hankering for the rather cosy comfort of monopoly. Indeed, the only criticism that I personally have—if I may be allowed to go wider than the provisions of this Bill for a moment—is that it does not seem to me to go sufficiently far in securing competition. The noble Lord referred to seven or nine years before anything of substance happens. The figure of 97 per cent. of telecommunications business remaining with British Telecom has been quoted. I find it a little difficult to see how there can be any great measure of competition between 97 per cent. and 3 per cent.

However, this paragraph in the Bill is at least an indication of the good intentions, as I see it, of Her Majesty's Government and that the Government do feel that one of the methods to be used—not necessarily the exclusive method—to promote greater efficiency and greater prosperity in the telecommunications industry is the promotion of competition. I therefore regard paragraph (b) as one of the most important provisions in the Bill.

I am afraid that I have no technical knowledge of telephony but I must say that I find it extremely difficult to understand how one will get competition in a system which is entirely automatic, as we now have in this country. I am not talking of business firms, or anything like that, but of the ordinary private subscriber. When there is only one network one must connect oneself to that network and must do so via the local automatic exchange. Until we have either a separate network with its own automatic exchanges or a separate instrument in everyone's house, how do we get competition?

Much of what I was about to say has just been said by the noble Lord, Lord Somers, so I shall be brief. I wish to answer the noble Lord, Lord Boyd-Carpenter, and his general approach to this side of the Committee. He quite naturally and properly eulogised competition and told us all what a wonderful thing competition is. However, a few things slipped his mind. Since this Government of competition came into office unemployment has become the highest it has ever been since records were kept. Bankruptcies are at the highest level since records have been kept. In short, what competition generally has produced for this nation up to now has been nothing but wretched misery for millions of our fellow-countrymen.

I have a good deal of sympathy with the view expressed by the noble Lord, Lord Boyd-Carpenter. As I said on Second Reading—and I hope we do not go into Second Reading again on this amendment—

May I intervene for a moment? If I strayed for a moment into Second Reading matters I think the noble Lord will agree that I was subjected to great temptation from the Front Bench opposite.

I am sorry I cannot respond to the temptation offered to me by the noble Lord. I said on Second Reading that the economies of Eastern Europe are a demonstration of the weaknesses of state monopoly over the entire economy. I do not believe that monopolies are good for economic growth. However, if we make that general principle and reach that general agreement, we now have to apply it to this particular occasion and this particular instance.

As has been pointed out, if Mercury were offering a national service in competition with British Telecom, there might be competition in the sense that one understands it. But if one is creating in this Bill a private monopoly with 97 per cent. of the network in its hands, and one has an agreement that one's major competitor will get only 3 per cent. for the next seven years, one can hardly say that one is creating the ideal conditions of monopoly that one seeks. This is the difficulty about applying these general principles to this Bill. I agree that it will be possible to introduce a greater degree of competition, and I hope this will happen in the provision of apparatus for the telecommunications industry. I hope that the consumer will benefit from that degree of competition.

Regarding the network, the noble and learned Lord the Lord Advocate knows very well—because like me he lives in Scotland—that the degree of competition from Mercury which is going to emerge in Scotland in our life-time is very remote. Mercury have said they will concentrate on the areas of high population and cheap service and for the next seven years at least will not undertake any expansion beyond Birmingham, Manchester, London, et cetera; so that the kind of competition which the noble Lord, Lord Boyd-Carpenter, wishes to see applied—I support him in this connection—is not applicable under the Bill before us.

I should like to reinforce what the noble Lord, Lord Somers, has said. I was rather saddened to hear the noble and learned Lord the Lord Advocate, whom I admire so much, once again enunciate this magic virtue of competition. As a mere consumer suffering from the appalling effects of several competitive firms who have tried to do some building work for me, I can say that this is an example of the most highly competitive and the most inefficient industry there is. Let us get right away from this strange idea that competition brings efficiency, cheapness, and the best thing for the consumer; certainly this is not proven.

I am tempted to prolong this debate, perhaps unnecessarily. The noble Lord, Lord Stoddart of Swindon, appears to pin his faith on a monopoly for protection of the consumer. Whatever experiences the noble Baroness, Lady Phillips, has had of difficulties arising for the consumer in certain types of competitive business, I strongly suggest that consumers have a good deal of experience of not getting the best service from monopolies. All that we are saying in this clause is that along with other duties the Secretary of State and the director have to exercise the functions which they have under this Bill in a manner in which he—in the case of the director—and he—in the case of the Secretary of State—considers is best calculated to promote the interests of the consumer, and so on, and then:

"to maintain and promote effective competition between persons engaged in commercial activities connected with telecommunications in the United Kingdom;"
That is by no means restricted to the network. I have already mentioned the point in relation to apparatus, that it covers all aspects. What I have said about the network is that maintaining and promoting effective competition is not the only thing to which one has to have regard. My noble friend Lord Boyd-Carpenter indicated that perhaps this had not gone far enough. I can see that that point of view is perfectly possible; but in the remarks I made earlier I sought to explain that in this area one has to move forward cautiously. It is perfectly possible that the noble Lord, Lord Taylor of Gryfe, notwithstanding that like myself he has the privilege of having his home in Scotland, would benefit from the existence of Mercury in that occasionally, even from Scotland, he may make a trunk call on the route which has had its rates affected by the existence of Mercury. One need not necessarily have a Mercury telephone at one's bedside to get the benefit of some competition in the system.

One cannot achieve everything overnight in this kind of business. The monopoly has been built up over quite a long period—70 years or so. It would be utterly stupid to try to change the whole situation overnight, but on the other hand it is equally wrong to neglect the benefits that have already come. They should be seen as benefits which can develop in the future.

I am very sorry that the noble and learned Lord has not been able to enlarge on this matter to explain just how these efforts are going to take place. All he has really done is repeat the sort of magic formula that competition itself takes care of all these problems. The noble and learned Lord is rather less perceptive than his right honourable friend the Prime Minister and his right honourable friend the Chancellor of the Exchequer, who want to make money out of this deal of privatisation. They have been selling the prospective investors the advantages of taking shares in a private monopoly in succession to a public monopoly which already has produced astonishingly good financial results, has produced an astonishingly good performance, and has given the consumer charges on a scale significantly less than those of most of their competitors in the West. It has provided one of the most efficient telephone services in the world.

The Prime Minister and the Chancellor of the Exchequer want to encourage private investment into British Telecom on the basis that they are not going to have a public monopoly, which then becomes a private monopoly, interfered with unduly. Unless the noble and learned Lord is very careful he is going to cause a flutter in the dove-cotes in the city. If he is going to say that the private monopoly will not be as effective as it has been held out to be, he is not doing his right honourable friend the Prime Minister any kind of service at all. He knows perfectly well that all this talk about the promotion of competition within the network itself is so much hogwash; it means nothing at all.

He has given no indication, either, as to how he proposes to wave this magic wand of competition over the other activities that are defined in the definition section of Clause 4(2). He has done none of these things. All he has done is wave the word again. This is not satisfactory and I think we must have an opportunity of taking this much further.

I do not regard it as too harsh a criticism for the noble Lord to say that I am less perceptive than my right honourable friend the Prime Minister or the Chancellor of the Exchequer.

Before we vote on this amendment I must say a few words in reply to the disagreement voiced over my previous remarks. The noble Lord, Lord Boyd-Carpenter, is a great exponent of private enterprise and he implied that I was a monopolist. Nothing could be further from the truth; I am not, especially since at one time I myself engaged in small business. But there are certain things that are natural monopolies. One of them is a telecommunications service, and therefore I believe that for the consumer it is better to retain that monopoly but to retain it under public ownership. That has been our stance and will remain our stance. We shall return to it after the next general election, when a Labour Government is elected, to ensure that it reverts to a public monopoly; make no mistake about that.

So far as Mercury is concerned, we must understand that it is not real competition. Mercury is not a real competitor. It is a privileged competitor, because it is being allowed to cream off the congested services and yet has none of the liabilities that British Telecom has. That is why it is not real competition. It is induced competition, and it is induced in order that certain people, certain organisations, can make profits at the expense of the public monopoly, British Telecom. We must bear in mind those points when talking about competition, and that is why I am glad that my noble friend Lord Bruce has decided to press the amendment.

5.51 p.m.

On Question, Whether the said amendment (No. 41) shall be agreed to?

Their Lordships divided: Contents, 63; Not-Contents, 126.



Ardwick, L.Jacobson, L.
Beswick, L.Jacques, L.
Birk, B.Jeger, B.
Bishopston, L.Jenkins of Putney, L.
Bowden, L.John-Mackie, L.
Bottomley, L.Leatherland, L.
Briginshaw, L.Lockwood, B.
Broadbridge, L.Longford, E.
Brockway, L.Lovell-Davis, L.
Bruce of Donington, L.McIntosh of Haringey, L.
Caradon, L.Molloy, L.
Carmichael of Kelvingrove, L.Mulley, L.
Cledwyn of Penrhos, L.Nicol, B.
Collison, L.Peart, L.
Cooper of Stockton Heath, L.Phillips, B.
Darling of Hillsborough, L.Pitt of Hampstead, L.
David, B. [Teller.]Ponsonby of Shulbrede, L [Teller.]
Dean of Beswick, L.
Denington, B.Sefton of Garston, L.
Elwyn-Jones, L.Shackleton, L.
Ennals, L.Shinwell, L.
Ewart-Biggs, B.Stallard, L.
Falkender, B.Stewart of Alvechurch, B.
Fulton, L.Stewart of Fulham, L.
Gaitskell, B.Stoddart of Swindon, L.
Gallacher, L.Stone, L.
Galpern, L.Strabolgi, L.
Graham of Edmonton, L.Underhill, L.
Hall, V.Wallace of Coslany, L.
Houghton of Sowerby, L.White, B.
Hughes, L.Wilson of Rievaulx, L.
Irving of Dartford, L.Wootton of Abinger, B.


Airedale, L.McAlpine of West Green, L
Airey of Abingdon, B.Mackay of Clashfern, L.
Alexander of Tunis, E.Macleod of Borve, B.
Attlee, E.Mancroft, L.
Auckland, L.Mar, C.
Avon, E.Marley, L.
Aylestone, L.Marsh, L.
Belhaven and Stenton, L.Massereene and Ferrard, V.
Bellwin, L.Maude of Stratford-upon-Avon, L.
Belstead, L.
Bessborough, E.Mayhew, L.
Boyd-Carpenter, L.Merrivale, L.
Brougham and Vaux, L.Mersey, V.
Broxbourne, L.Milne, L.
Carnegy of Lour, B.Molson, L.
Cathcart, E.Monk Bretton, L.
Cockfield, L.Monson, L.
Cork and Orrery, E.Montagu of Beaulieu, L.
Cottesloe, L.Morris, L.
Craigavon, V.Mottistone, L.
Croft, L.Mowbray and Stourton, L.
Cullen of Ashbourne, L.Murton of Lindisfarne, L.
Daventry, V.Newall, L.
De La Warr, E.Nugent of Guildford, L.
Denham, L. [Teller.]Ogmore, L.
Diamond, L.Onslow, E.
Drumalbyn, L.Orkney, E.
Ellenborough, L.Pender, L.
Elliot of Harwood, B.Peyton of Yeovil, L.
Elphinstone, L.Portland, D.
Elton, L.Rankeillour, L.
Enniskillen, E.Rochester, L.
Ezra, L.Rodney, L.
Ferrers, E.St. Aldwyn, E.
Feversham, L.St. Davids, V.
Fortescue, E.Saltoun, Ly.
Fraser of Kilmorack, L.Sandford, L.
Glanusk, L.Shannon, E.
Glenarthur, L.Shaughnessy, L.
Gormanston, V.Sherfield, L
Gowrie, E.Skelmersdale, L.
Gray of Contin, L.Somers, L.
Gridley, L.Spens, L.
Grimond, L.Stamp, L.
Hailsham of Saint Marylebone, L.Stedman, B.
Strathclyde, L.
Halsbury, E.Strathspey, L.
Henley, L.Sudeley, L.
Hertford, M.Suffield, L.
Hives, L.Swinton, E. [Teller.]
Home of the Hirsel, L.Taylor of Gryfe, L.
Hornsby-Smith, B.Terrington, L.
Hunt, L.Teynham, L.
Hylton-Foster, B.Thomas of Swynnerton, L.
Killearn, L.Thorneycroft, L.
Kilmarnock, L.Tordoff, L.
Kinnaird, L.Torphichen, L.
Lane-Fox, B.Trenchard, V.
Lauderdale, E.Trumpington, B.
Lindsey and Abingdon, E.Vaux of Harrowden, L.
Lloyd of Kilgerran, L.Vickers, B.
Long, V.Vivian, L.
Lucas of Chilworth, L.Wardington, L.
Lyell, L.Whitelaw, V.

Resolved in the negative and amendment disagreed to accordingly.

5.59 p.m.

moved Amendment No. 42:

Page 3, line 18, after ("competition") insert ("and prevent anticompetitive practices as defined in section 2(1) of the Competition Act 1980 or restraint of trade")

The noble Lord said: My noble friend Lord Orr-Ewing has invited me to move this amendment on his behalf. The amendment is one that might have been debated with the last one, but judging by the way that that amendment was put by the noble Lord, Lord Bruce of Donington, I thought it was a probing amendment. However, it seems that it was not treated in that way. I also thought that it was a Committee stage amendment and not one that would lead to a repetition of Second Reading speeches from practically every side of the Chamber. I thought that on an earlier amendment the noble Lord, Lord Stoddart of Swindon, expressed urgency to get to Amendment No. 82. If we spend a long time on amendments such as the last one, we shall not reach Amendment No. 82 with the speed which we, as well as perhaps the noble Lord, Lord Stoddart, would wish. So let us have a little less of these Second Reading speeches and let us have a little less duplication from noble Lords opposite.

Very briefly, because a lot of the relevant remarks were made in the last debate, the object of this amendment is not to remove Clause 3(2)( b); it is to strengthen it. It is to strengthen it because we believe strongly that the director must be given the greatest possible powers to ensure, among other things, that there is fair competition. Fair competition is fair for the competitors—we, in the market—and fair for the customer. To be fair to the competitors in the market is not easy to achieve, as many noble Lords have said, when one competitor is so much more vast than the others.

We have a great deal of evidence, although I shall not bore your Lordships with it now (I could well introduce it at a later stage if necessary), of misuse of monopoly power by British Telecom, particularly in recent months—some of it extremely unprincipled—which has prevented smaller rivals from becoming established in the market. I think, in fairness to British Telecom, that a lot of it is inadvertent in the sense that it knows not what it does. British Telecom is so big that it does not understand the effects of the actions that it takes. The purpose of the amendment is to protect the small competitor.

I shall not spend long explaining the other purpose of the amendment because it was well argued on the last amendment. It is to protect the customer. I was interested to hear the implication made by the noble Lord, Lord Stoddart, that providing for the care of the customer was somehow at variance with competition. The complete reverse is true. The fact is that we, as customers, particularly over the past 20 years, have suffered badly from the inefficiencies inadvertently created by the large monopoly that is British Telecom. There are many examples in the electronics field, but, again, I shall not bore your Lordships with detail. Colour television is an instance where competition has meant that prices have gone right down and people have obtained value for money. It is not just a question of choice, as my noble and learned friend the Lord Advocate said. It is one of value for money. This comes about only through competition.

I am sorry that the noble Lord, Lord Somers, said that he could not understand how it was possible to have competition in this area. I shall not bore your Lordships by dealing with that matter now. I shall be dealing with it under Amendment No. 130. I hope we shall get to the amendment nice and quickly.

I would be grateful if the noble Lord would wait for one minute. I should like the Committee to consider this amendment with care. It is a strengthening of paragraph (b) which is thoroughly necessary. I hope that my noble and learned friend on the Front Bench will see his way to agree to it. I beg to move.

I wish merely to remark that I have nothing whatever to say against competition. I am as much in favour of it as the noble Lord. I was merely puzzled to know how it would be achieved with a single network.

This is the first of the telecom liberation front amendments to which I have put my name. I wish to reinforce what the noble Lord, Lord Mottistone, has said. I feel that there is an element of undisclosed self-interest on the part of the Government in removing competition. When you nationalise something or denationalise it, you have to carry on with the same managerial levels as existed originally. They have a natural background of the career structure in which they have been brought up. Those within British Telecom have been brought up in a monopoly and will remain monopoly-minded for a long time. The Government have some self-interest in leaving them a little monopoly-minded. The more monopolistic they are, the higher the price they will fetch in the open market. This could be a kind of unholy alliance. I do not attribute it to a consciously unholy alliance. It is one of those things that happen when the left hand does not quite perceive what the right hand is doing.

The fact that British Telecom quite likes the Bill, and has publicly said so, would indicate that in the dialectic between the Government and British Telecom it must have got its own way on a number of talking points. I am therefore on the side of stiffening it all along the line. There is a residue of this undisclosed self-interest to lead it. It is rather like the old story of the woman who had an illegitimate baby and said, "Oh! but it's only a very little one". There will be only little bits of monopoly left in the structure of the Bill. I want to see them removed altogether. I therefore support the amendment.

The position, as I think my noble friend appreciates, is that Clause 3(2)(b) puts the Secretary of State and the director under a duty to maintain and promote effective competition. The director cannot promote effective competition if he condones anti-competitive practices. Therefore, I suggest that the provision to which we were referring in the last amendment indicates that the particular amendment now before us, with which I shall deal a little more fully than just saying what I am saying now, is not necessary. I accept, however, that it is not sufficient to condemn anti-competitive practices in general terms. It is necessary to have powers of investigation and then powers to cure.

We have already provided the director with specific powers. We believe that under the Bill taken as a whole the director is really a strong policeman to ensure that the duty mentioned in Clause 3(2)(b) is effectively carried out. Under Clause 7(5) he can fix licence conditions to deal with anti-competitive practices by licensees, and under Clause 16 he can issue orders requiring licensees to stop breaching such licence conditions. Under Clauses 12 and 15, he can modify licences to deal with newly discovered anticompetitive practices.

In addition, under Clause 49 of the Bill the director is given powers to investigate anti-competitive practices under the Competition Act and to cure them either by accepting undertakings or by making references to the Monopolies and Mergers Commission which can lead to orders. He will also have powers to make references under the Fair Trading Act where anti-competitive practices are engaged in by a monopolist or by a group of bodies acting in the same way.

The amendment is, I suggest, not necessary. As drafted, it would also, I think, be inconsistent with the structure of the legislation. My noble friend and the noble Earl, Lord Halsbury, will see that Clause 3(3)(b), in effect, disapplies Clause 3 where the director is carrying out his functions under Clause 49, that is, when he is, among other things, investigating or seeking to cure anti-competitive practices under the Competition and Fair Trading Acts. This is because such investigations are carried out against the wider criteria defining the public interest which are set out in the Fair Trading Act. This amendment would not, therefore, affect the way in which the director will deal with anti-competitive practices under the Competition Act of the Fair Trading Act.

There is the point that, as a matter of principle—and I do not deal with the detail of the drafting—the draft suggests that anti-competitive practices should be prevented. In practical terms such an operation has to be carried out by watching to see whether anticompetitive practices have developed and then, after investigation, taking steps to cure them. Let me give an example. If a small firm engages in selective price-cutting to capture new business from a big firm, that is a pro-competitive action. But if a monopolist like, for example, British Telecom were to engage in selective price-cutting to block a small firm from entering the market, that would be an anti-competitive practice. In such circumstances all that can be done is to investigate and identify the anti-competitive practice and to stop it once it has been identified. Of course, thereafter action will be taken to prevent that particular practice recurring. But the use of the word "prevent" is perhaps a little difficult in the circumstances.

However, I hope that I have said enough to indicate to my noble friend and to the noble Earl, Lord Halsbury, that we have made very considerable provision in the Bill to carry out what this amendment seeks to strengthen.

Can the noble and learned Lord tell me whether his interpretation of what would be a normal competitive act by a small firm and an anticompetitive act by a big firm is somewhere defined in law? Or is he merely giving us his personal interpretation of what the words mean? Clause 49 does not seem specifically to support him in that regard.

I gave an illustration of the reason why one must look at the circumstances to see whether any particular act is an anti-competitive act. It is not easy to tell simply from looking at the act in isolation whether or not it is so. One must look at the circumstances. One must look at how it is practised and by whom it is practised. I am not suggesting that this particular example is enshrined in the legislation. In fact, Clause 49 brings in the criteria from the Fair Trading Act, which are fairly general in character.

I should like to support the amendment. Surely most of us, whatever our political affiliation or lack of affiliation, would endorse the maxim, "If there is one thing worse than public monopoly, it is private monopoly". If this amendment, or something very like it, is not agreed to, then I fear that a private monopoly or, at best, a private duopoly is what we are likely to end up with in the long term at the expense of the consumer.

6.14 p.m.

I have looked at Clause 49, and I do not think that it meets our point in any way. It says:

"If and to the extent that he is requested by the Director General of Fair Trading to do so, it shall be the duty of the Director"
to investigate these matters. However, he shall do so only.
"to the extent that he is requested"
to do so by the Director General of Fair Trading. We want to make this a function; we want to make quite certain that the Director General of Telecommunications will be aware of his duty to make sure that these anti-competitive practices are stopped. They have to be stopped fairly quickly; otherwise, the small firm which might be subject to those practices will be put out of business. Therefore, we want to make it a duty.

I should like to remind the noble Lord, Lord Cockfield, of the reply he gave to the first amendment which I moved, which was Amendment No. 5. He said at column 1316 on 9th February:
"My noble friend Lord Mottistone indicated that there might well be developments which he had in mind which ought to be performed by the director."
This is one of those developments. The noble Lord, Lord Cockfield, went on to say:
"If there are such fields of activity, the right thing is to include them in the Bill. Having done that, they would then be covered by the specific phrase in the Bill: 'assigned or transferred to the Director by or under this Act' ".
That is exactly what we want to do. We want to make quite certain that it is an additional function of the Director General of Telecommunications to make sure that anti-competitive practices do not occur.

During the debate on the previous amendment there seemed to be the idea that there was not any competition around. Perhaps I might point out to noble Lords that our liberalisation group has been in discussion with seven or eight different trade associations, all of whom are competitors in one way or another and are subject to this Bill, and in particular they are worried about the situation of "big brother"—British Telecom. We want to make certain that the situation is put under the control of the Director General of Telecommunications so that he can protect the interests of the small maufacturers and the small users who are in competition.

I wonder whether I could venture a comment here. While I understand very well what the noble Lord, Lord Spens, has just said, I wonder whether—and this also applies to my noble friend Lord Mottistone—he is falling into the habit, which has afflicted a number of speakers in the debates on this Bill, of saying something twice and believing that as a result of repetition he makes it stronger.

I personally believe that the words in subsection (2)(b) make the Government's intention reasonably clear. I can understand that there may be some who suspect that the Government have included those words for purely cosmetic purposes. I am not one of them. I always put a very great deal of effort into putting the most favourable construction upon anything that a Government say they want to do. Even in the case of the last Labour Administration I frequently did my best, but it was a very great effort. However, in this case let us suppose that the Government's purpose in putting these words into the Bill was not merely cosmetic but that they genuinely wanted to inspire as much competition as possible. If that is the case, I would be satisfied. But to those who say that the purpose is purely cosmetic, I would say that it would not matter what words we put into the Bill—for example, the words put forward in the amendment—they would still achieve nothing, I believe.

While I am on my feet I should like to take the opportunity to say that I am the chairman of a subsidiary of a multi-national company which makes components here and sells them to all and sundry. I am not in the least influenced by that fact in the views which I hold about this Bill. But lest I be thought to conceal something, I would prefer to reveal that information now. However, I hope that my noble and learned friend the Lord Advocate, when he comes to reply, will not be pushed either by his noble friends or by anybody else into introducing words into the Bill for purely cosmetic purposes. There are enough there already.

While I have every sympathy with the noble Lords who have put forward the amendment and I am very much for small businesses, I think that perhaps their fear of "big brother"—British Telecom—is a little dwarfed by what should be their real fear; namely, competition from abroad. We have AT & T sitting on the doorstep, and the Japanese market sitting on the doorstep. Unless we have a relatively strong British Telecom, there will he no room for small businesses or, for that matter, British Telecom.

I believe that this amendment is unnecessary because by virtue of the provisions of Clause 49 the director general of Oftel in effect embraces the Director General of Fair Trading.

Clause 49(3) clearly says that:
"sections 2 and 10 and 16 of the Competition Act 1980"
are effectively taken over by him. If one reads this clause further, it is clear that the Competition Act covers this very point. Of course, I appreciate that the Government are on the horns of a dilemma here in that in a way the very issue of a licence is in itself an anti-competitive practice.

However, this is purely an enabling Bill and the Government cannot definitely specify within the Bill, or indeed within licence conditions, how they see the future because, precisely like everybody else, they are not readers of crystal balls, and nor should we expect them to be.

I fully take the point made by the noble Lord, Lord Morris, and I wonder whether, arising out of the noble Lord's reference to Clause 49(3), the noble and learned Lord the Lord Advocate would tell me where the compelling element is in the Bill or in the 1980 Act, to which reference has been made, which requires the transferred powers to be used?

First, it is worth noticing that under the statute the words of Clause 3(2) impose a duty on the director, and of course the Secretary of State:

"to maintain and promote effective competition".
These seem to be very clear statutory words to carry a duty to have that in mind in discharging the functions which the director has in the Bill. I believe that that is as strongly put as it could be.

To deal with the intervention by the noble Lord, Lord Spens, as I understood him, he did not get past the first words of Clause 49(1), but even in this Bill, clear as it is, it is necessary to read the rest of the provision before concluding what its scope is properly to be. If one looks at Clause 49(2) it says:
"There are hereby transferred to the Director (so as to be exercisable concurrently with the Director General of Fair Trading).—(a) the functions of that Director under sections 44 and 45 of the 1973 Act".
Subsection (3) again begins with the words:
"There are hereby transferred to the Director (so as to be exercisable concurrently with the Director General of Fair Trading) the functions of that Director under sections 2 to 10 and 16 of the Competition Act 1980 … so far as relating to courses of conduct which have or are intended to have or are likely to have the effect of restricting, distorting or preventing competition in connection with the production, supply or acquisition of telecommunication apparatus or the supply or securing of telecommunication services; and references in those sections and in section 19 of that Act to that Director shall be construed accordingly".
Therefore, in relation to this subject matter these functions are transferred to the director of Oftel so as to be exercisable concurrently by him and by the Director General of Fair Trading. So I venture to suggest that the point which the noble Lord, Lord Spens, was putting is not applicable in this situation.

I find it hard to see what further powers could properly be given to the director of Oftel to deal with this particular problem. The general principle is stated in Clause 3(2)(b) and then all the necessary powers are given to him under Clause 49. As I said, this particular amendment does not do anything at all in relation to these particular powers because of the provisions of Clause 3(3)(b). Having said all that, we believe that what my noble friend seeks to achieve is very fully achieved by the provisions that we have.

It is becoming a little indelicate for the Opposition to interfere in the lengthy argument that has suddenly broken out on the Government Benches and which so far has taken 25 minutes, of which not one minute of time has been occupied by this side of the Committee. May I quickly remind the noble Lord, Lord Mottistone—who preceded his second Second Reading speech by an admonition against those who would venture to embark on such a task—that the matter was covered by Clause 49—a fact that the noble and learned Lord the Lord Advocate was good enough to confirm when he spoke. We on this side have no interest in this dispute that has broken out between supporters of the Government, and we should like to get on with the business.

The reason that I do not think that Clause 49 is satisfactory is that it does not give any duty to the director. The duties are conferred by Clause 3, and that is why we should like to see this amendment agreed to.

To noble Lords opposite I would say, "touché!"; but at least my Second Reading speech was not as long as theirs! I entirely understand what my noble and learned friend has said. I think that he has made it very clear and I am delighted with what he has had to say. Perhaps my noble friend Lord Peyton would agree that sometimes it is worth tabling an amendment which says a little more in order to get something from the Government. With those words, may I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.28 p.m.

Page 3, line 20, at end insert—

("( ) to promote the interests of small and emerging businesses providing multifarious services associated with telecommunications;").

The noble Lord said: I beg to move Amendment No. 43 which is to promote the interests of small and emerging businesses and to have that as a duty for the director of Oftel. This is the other half of the protection which unfortunately we were not able to achieve on the previous amendment on the anti-competition practices. However, we believe that we should give the director of Oftel a positive duty to look after the interests of small and emerging firms and to protect them in the face of the privileged positions which this Bill will give to British Telecom, to Mercury, to Racal, and to one or two other firms. We believe that there should be an additional duty to do this, and I hope that the Minister will agree that this is a suitable amendment to be included in the Bill. I beg to move.

I should like to say a few words at least in support of the spirit of this amendment. Whether it is essential or correctly drafted, I do not know. However, I fully realise that the amendment is concerned with promoting the interests of small businesses which are engaged in providing services in connection with telecommunications. But I do not think it is going too far outside the amendment also to draw attention to the immense importance which the revolution in communications can have for small businesses in general.

We are now reaching the end of the time when it is necessary to have large conglomerations of businesses and huge concentrations of workers and machinery. With new telecommunications, small groups of workers can provide very useful services and production. We should emphasise the obligations—as I should like to call them—of the director and the Secretary of State to ensure that small businesses are encouraged and helped by contracts from the main company and that they also undertake various services which they may be well equipped to perform. I should also like to think that it is a duty of the director to ensure that training, where possible, is encouraged.

I have some experience of representing rather remote areas, and the new telecommunication revolution should have great possibilities for such areas. One of the great difficulties of getting businesses to go up to the islands of Scotland is, for instance, the immense cost of transport, travel and freight. Therefore, you want services or products which have a low transport cost compared with the value of the ultimate product. That is exactly what many of the new services and products connected with electronics have.

Already in one of the islands of Orkney there is a small electronics business which so far has managed to keep going and even make a profit. But there is a wide feeling still that industry must be concentrated in the old industrial areas or the South of England, or in the valleys of Fife, when this revolution should make it possible to spread it all over the country and into the islands. I think, in passing, that Parliament so far has been a little complacent about the costs of the Falkland Islands. It is difficult enough to pay for freight and transport in Shetland and Orkney, but the subsidies that are going to have to be paid to keep the Falklanders going are terrifying.

I hope that anyway the spirit of this amendment will be accepted. Perhaps I should say, as scrupulous honesty is expected, that I even hold some shares in this electronics company, but not enough, I fear, to make a fortune. But it is significant that there is an electronics company in Orkney, although very small, and just below my house there is the house of a man who made a certain amount of money as an ordinary fisherman. He is among the few genuine entrepreneurs whom this country produces. If you go down and have a cup of tea with him you will find all sorts of mysterious screens showing the price of silver in New York, and what is happening in the Gulf, because he has interests in the Gulf and in New York. He has interests in oil in Canada. He is able to keep in touch with all this from Orkney.

I know that this is not directly what this amendment is about, but there are two sides to this. There is the possibility of making the high cost components or offering high cost services with little handicap of freight, and on the other hand there is the spread of information which makes it possible to run things in places which a few years ago would have been thought impossible. I hope that now we are entering a new industrial era we shall heed the views of Henry Ford, who wanted the technology of the motor-car spread as widely and as cheaply as possible, and not the views of some of the directors of the national airlines who seem only to require the largest and most expensive aircraft that they can lay their hands on, which can only possibly be available to those who can command expense accounts, Therefore, I support this amendment in the name of small businesses.

I trust that the noble Lord who moved this amendment and the noble Lords supporting him will bear in mind that businesses are comprised of persons, and the persons appear to be covered by Clause 3(2). notably at paragraphs (a), (b) and (c). It would appear on the face of it that the amendment is quite unnecessary. With that brief intervention, I would invite the Government to explain further.

I like this amendment a little, but only a little. Perhaps I might be allowed to hang some comments and a couple of questions on it which would not sit very well elsewhere. The amendment seeks,

"to promote the interests of small and emerging businesses providing multifarious services".
et cetera. By that I take it not really to mean any manufacturing concern hut purely businesses which will earn their living by providing value-added network services, or something similar.

If your Lordships look at Clause 5 you will find that any of these small businesses which wish to try to provide such services are damned three ways from the middle and hack to each end until they have a licence if they so much as attempt to provide any sort of telecommunication service. There are some good reasons historically why Clause 5 has been written to prohibit the provision of telecommunication services, rather than to prohibit specific acts such as misuse of the radio spectrum, or draping wires across a road, which it effectively does but which it does while encompassing almost every other possible thing one can do or would wish to do with a telephone.

In the first place, the wording of Clause 5 which would obstruct this amendment and probably keep it from having any effect whatsoever was derived from the earlier Telegraph Acts and earlier Post Office Acts which were intended to protect the Post Office monopoly, and the easiest way to do that was in the wording of Clause 5, which prevented one from running any sort of communication service, no matter what. The Government must of course prevent people from misuse of the radio spectrum. They must of course prevent people from stringing wires across the road or other people's properties without their permission, but they do not need to do it by covering not only the specific mischiefs to which I have referred but a wide wasteland of possible business opportunities which these many services proposed in this amendment may provide. I am sorry, I have lost myself slightly on the wording there. The Government wish to prevent misuse of the radio spectrum. They wish to prevent physical obstruction or misplacements of plant. Also by the wording of Clause 5 they prevent the whole range of legitimate business opportunities which this amendment seeks to promote.

If one were to amend Clause 5 sufficiently to unleash these possible business opportunities, one would have to chew it up in small pieces, mix it up, and spit it out in a completely different form. That would be taken by the Government as a hostile act towards this Bill. Therefore, one cannot do that. The only thing one could do is to ask the Government for a promise that when this Bill is law they will set about writing some classes of licence which will, while staying outside the prohibited areas of misuse of the radio spectrum and the like, legitimise all the opportunities that this amendment seeks to promote.

If they were to set about re-writing those class licences in the form of a licence that anyone might use, not through some licensing procedure whereby one would apply to Swansea or the Post Office to ask for one's licence but simply by means of writing a class licence which would then be used freely by the businesses concerned, then effectively Clause 5 would have been re-written in regard to those class licences.

I suggest, therefore, that the correct thing for me to ask the Government to do is to take note of this amendment and its intended effect, and perhaps in five years' time, when they have learned better, rewrite Clause 5 in terms of prohibition of misuse of the radio spectrum and prohibition of misuse of public land or private land for laying telephone lines or the like, and hence achieve the same effect through law and not through vague promises as in this amendment.

I do not think that there is any conflict between Clause 5 and my amendment because Clause 5 is confined to telecommunications systems which are defined in Clause 4 and which are limited to the system,

"for the conveyance, through the agency of … energy, of sounds"
and other things.

If I may come back briefly, to run almost any of the services I envisage are promoted by this amendment one would almost certainly have to make some form of attachment to the British Telecom system. I am not talking about physical attachments, but Clause 5 does not permit any form of attachment and use of the system without a licence.

As far as small businesses are concerned, this is one of those fortunate matters on which harmony rather than discord prevails. The noble Lord, Lord Stoddart of Swindon, admits that he was once a small businessman. It would be unkind of me to ask whether it was a competitive or a noncompetitive business that he ran. My most distinguished predecessor in my present office, Lord Lever of Manchester, introduced a large number of measures to assist small businesses. My Government have introduced more than a hundred such measures, and when I was a Minister at the Treasury I was a member of a team which tried to carry on that extremely good work. So we all start, therefore, from the point of view of goodwill towards small businesses.

I hope that my noble friend Lord Torphichen will not mind if I say that I will study his speech very carefully. He said that it went rather outside the ambit of the amendment. I will write to him. I note what the noble Lord, Lord Bruce of Donington, says. The important question we now have to face is not whether we ought to do something about small businesses, but what is the most effective, practical way of doing it. I should like to suggest that the best course would be to build upon Clauses 52 and 53.

The noble Lord, Lord Grimond, is well aware of the fact that Clause 52 already provides for the establishment of an advisory body for Scotland, which will, no doubt, be only too happy to consider the numerous and interesting problems that he raised related to the Highlands and Islands. I should like to suggest that we establish such a body relating to small businesses under Clause 52. It will be the duty of such a body to advise the director on any matter, first, in respect of which any of the director's functions are exercisable; and, secondly, which is referred to it by the director or on which it considers it should offer its advice. It is, therefore, a very broad canvas. If we establish such a body it will enable representatives of small businesses to be right in there at the centre where they can exercise their influence most effectively.

Clause 52 goes on to provide that an annual report shall be produced, and Clause 53 says that the director shall deal with such a report in his annual report to the Secretary of State, which is a document that in due course can be considered by Parliament. If the noble Lord, Lord Spens, would agree to pursue the matter along these lines, and if he would care, after the very interesting debate we have had, to withdraw his amendment, I will table amendments myself before Report stage to deal with the matter in the way that I have suggested.

I am most encouraged by the speech of the noble Lord the Minister, and I am very pleased that he is prepared to table these amendments himself. The reason I say that is because I have seen a draft of them but it has been spirited away to the Bahamas and I would have had to ask the noble Lord to send me another copy. In any event, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.46 p.m.

moved Amendment No. 44:

Page 3, line 21, after ("efficiency") insert (", innovation").

The noble Lord said: The intention of this amendment is to introduce the word "innovation" into Clause 3(2) where it says:

"to promote efficiency and economy on the part of such persons".

I am submitting that it should read:

"to promote efficiency, innovation and economy".

I did not think that I would have such great support in seeking to amend a Bill as having before me the words of the Prime Minister, who, if I may say so, has made such splendid statements from time to time about the great importance of innovation. I am the president of the Institute of Patentees and Inventors. We have always maintained that "innovation" is a word that should be brought out as clearly as possible on every occasion, in order to bring it to the notice of the public and industry so that innovation can exist.

In my hand I have a Green Paper that was presented to Parliament by the Prime Minister in December last. It is a most valuable and splendid document which I, as president of this institute, support strongly. It is entitled Intellectual Property Rights and Innovation. The introduction to this report, which was produced by the chief scientific adviser to the Cabinet Office, was written by the Prime Minister. In that she refers to the desirability of creating new and successful businesses on a sufficient scale so that they will solve the present problems to a great extent. She goes on to say:

"The application of innovative new techniques to their processes, designs and administration is vital to survival and expansion".

I ask rhetorically: what could be more positive than that in encouraging the use of innovation in a Bill of this kind? It is not implicit in the Bill; it is not sufficient for the Government to say that it is implicit in words such as "research", and so on, later, because innovation, as the Prime Minister understands so well, involves not only dealing with new techniques and their processes and designs, but also with administration.

I do not want to delay the Committee much longer, but your Lordships will be aware also, in view of the debate last week introduced by the noble Lord, Lord Sherfield, of the first joint report by the chairmen of the Advisory Council for Applied Research and Development, affectionately know as ACARD, and the Advisory Board for the Research Councils, going under the title ABRC. There are many indications in this report of the desirability of having innovation, of introducing innovation, and also of creating a climate for innovation. Indeed, a section of this report is headed, "The right climate for innovation". It states:

"While it is encouraging to see a wider understanding of the importance of innovation, the ability of companies—particularly the small ones—to innovate at the present time is seriously inhibited"—

by world recession. Then, in paragraph 4.29 it says:

"Nothing, of course, will influence innovation more than the prospect of a receptive market".

It goes on to say how important it is,

"establishing the right fiscal, financial and regulatory climate for innovation".

I hope the Government will consider that in view of the emphasis which the Prime Minister and so many other people have put on the desirability of innovation in its widest sense, including not only research and development but administration, they will be kind enough to allow this amendment to proceed. I beg to move.

I rise briefly to express, I am sure on behalf of all noble Lords on this side of the Committee, our very great gratification that the noble Lord, Lord Lloyd, should number himself among the warmer admirers of the Prime Minister. While we would not challenge his wisdom in espousing and giving voice to her views, nevertheless I wonder whether the Prime Minister herself would advocate the inclusion of hunks of speeches in statutes. Merely because she has happened from time to time to bless the word "innovation" does not seem to me to be an immediate command which we must all obey to insert the word in the first available Bill to come before us. I very much hope that your Lordships will throw out neck and crop, this unnecessary amendment. It will add nothing. Efficiency depends upon innovation, and for us all to be seeking, as we constantly are during these proceedings, for yet another word to add to the verbiage of these Bills is an unacceptable practice.

I agree with my noble friend who has just spoken. I hesitate to argue with so elegant an advocate as the noble Lord, Lord Lloyd of Kilgerran. However, if one looks at the Bill itself one sees perhaps the most perfect definition of "innovation"; namely,

"the development and use of new techniques".
If that is not innovation, I should like to know what is! I suggest that Clause 3(2)(d) is in the Bill for that reason.

If the accusation is one of selective quotation, there are very few of us in your Lordships' House who would be absolved from having done so at some time or another in our careers. I rise briefly to support the noble Lord, Lord Lloyd. I quite understand that it is not possible in legislation to have every nuance of every word written into the clauses and phrases that are used in legislation. It seemed to me that he made an effective point in saying that the need for innovation goes beyond the question of research and techniques into the way in which businesses are run. On the previous amendment noble Lords were all falling over each other to show how sympathetic they were to small businesses—and many of your Lordships from personal experience. I am a small businessman, as well, and I appreciate the necessity for innovation in the running of a business as well as in the research and technical side. For that reason, we support the amendment.

I think it is clear that everybody who has spoken supports the idea of innovation. The noble Lord, Lord Lloyd of Kilgerran, has certainly quoted amply from my right honourable friend the Prime Minister showing how wisely she supports this particular idea. I think that the observation that my noble friend Lord Peyton of Yeovil made a little earlier about the desirability of not saying everything twice would apply here. What we have done is to go so far with the noble Lord, Lord Lloyd of Kilgerran, as to go well beyond what he wants. We have spelt out in very clear and full terms exactly the need to go in for innovation and we have used these words to describe it:

"to promote research into and the development and use of new techniques by such persons".
There is no suggestion there that the new techniques are to be related only to telecommunication apparatus or things of that kind. It is sufficiently general to cover every aspect of the person's business and includes administration and anything else that such persons might use which would be advantaged by having new techniques applied. I say to the noble Lord that we have entirely agreed with his sentiment and have expressed it even more fully than he would have done so himself. In the light of that, I hope that he may be able to withdraw his amendment.

I thank the noble and learned Lord, I anticipated getting a reply of that kind indicating to me that it was implicit that the word "innovation" was there in its general spirit. But I want something more than that. I want to see the word "innovation" stressed wherever possible. Of course, I anticipated—and I am very grateful to the noble Lord, Lord Peyton, for his speech—that he would point out that he was so happy to see me supporting the Prime Minister. My support of the Prime Minister is only limited; but it is nevertheless very sincere in the views that she has about the encouragement of small businesses, the encouragement of innovation and the desirability of protecting inventions by intellectual property, as will be dealt with in the next amendment. Although the spirit of the answer from the Government goes quite a long way, in my view it is not adequate to rely on innovation being implicit in the words of a Bill of this kind. I shall test the feeling of the Committee.

6.55 p.m.

On Question, Whether the said amendment (No. 44) shall be agreed to?

Their Lordships divided: Contents, 60: Not-Contents, 100.



Airedale, L.Kilmarnock, L.
Ardwick, L.Lloyd of Kilgerran, L. [Teller.]
Attlee, E.
Aylestone, L.Lockwood, B.
Beswick, L.Lovell-Davis, L.
Birk, B.McIntosh of Haringey, L.
Bishopston, L.Milverton, L.
Bowden, L.Molloy, L.
Bottomley, L.Mulley, L.
Bruce of Donington, L.Nicol, B.
Carmichael of Kelvingrove, L.Pitt of Hampstead, L.
Collison, L.Ponsonby of Shulbrede, L
Crowther-Hunt, L.Rochester, L.
David, B.Sefton of Garston, L.
Dean of Beswick, L.Segal, L.
Denington, B.Shackleton, L.
Diamond, L.Spens, L.
Elwyn-Jones, L.Stallard, L.
Ezra, L.Stedman, B.
Falkender, B.Stewart of Alvechurch, B.
Fulton, L.Stewart of Fulham, L.
Gaitskell, B.Stoddart of Swindon, L.
Gallacher, L.Stone, L.
Galpern, L.Strabolgi, L.
Hunt of Fawley, L.Taylor of Gryfe, L.
Irving of Dartford, L,Tordoff, L.
Jacques, L.Underhill, L.
Jeger, B.White, B.
Jenkins of Putney, L.Wilson of Rievaulx, L.
John-Mackie, L.[Teller.]Wootton of Abinger, B.
Kearton, L.


Airey of Abingdon, B.Cockfield, L.
Auckland, L.Colwyn, L.
Avon, E.Cork and Orrery, E.
Belhaven and Stenton, L.Cottesloe, L.
Bellwin, L.Craigavon, V.
Belstead, L.Croft, L.
Bessborough, E.De La Warr, E.
Boyd-Carpenter, L.Denham, L. [Teller.]
Brougham and Vaux, L.Ellenborough, L.
Campbell of Alloway, L.Elphinstone, L.
Carnegy of Lour, B.Elton, L.

Enniskillen, E.Merrivale, L.
Ferrers, E.Mersey, V.
Forteseue, E.Molson, L.
Fraser of Kilmorack, L.Monk Bretton, L.
Glanusk, L.Morris, L.
Glenarthur, L.Mottistone, L.
Gormanston, V.Mountevans, L.
Gowrie, E.Mowbray and Stourton, L.
Gray of Contin, L.Murton of Lindisfarne, L.
Greenway, L.Newall, L.
Gridley, L.Onslow, E.
Hailsham of Saint Marylebone, L.Orkney, E.
Pender, L.
Halsbury, E.Peyton of Yeovil, L.
Hanson, L.Portland, D.
Harmar-Nicholls, L.Rankeillour, L.
Henley, L.Rodney, L.
Hives, L.St. Aldwyn, E.
Home of the Hirsel, L.Saltoun, Ly.
Hornsby-Smith, B.Shaughnessy, L.
Hylton-Foster, B.Skelmersdale, L.
Inglewood, L.Soames, L.
Killearn, L.Somers, L.
Kinnaird, L.Stamp, L.
Kinnoull, E.Strathclyde, L.
Lane-Fox, B.Sudeley, L.
Lauderdale, E.Suffield, L.
Lawrence, L.Swinfen, L.
Lindsey and Abingdon, E.Swinton, E. [Teller.]
Long, V.Teynham, L.
Lucas of Chilworth, L.Thomas of Swynnerton, L.
Lyell, L.Thorneycroft, L.
McAlpine of West Green, L.Torphichen, L.
Mackay of Clashfern, L.Trenchard, V.
Macleod of Borve, B.Trumpington, B.
Mar, C.Vaux of Harrowden, L.
Marley, L.Vickers, B.
Massereene and Ferrard, V.Wardington, L.
Maude of Stratford-upon-Avon, L.Whitelaw, V.
Windlesham, L.

Resolved in the negative, and amendment disagreed to accordingly.

I believe it has been agreed through the usual channels that this will he a convenient moment for the Committee to break for a short period, which this evening I understand will be 55 minutes. I therefore beg to move that the Committee stage be now adjourned until eight o'clock.

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

[ The Sitting was suspended from 7.5 until 8 p.m.]

[ Amendment No. 45 not moved.]

Page 3, line 26, at end insert—

("( ) to enable, by licensing and radio frequency allocation, private sector service providers, to establish and maintain new advanced technology terrestrial and satellite radio telecommunication systems;").

The noble Lord said: This amendment is making the point that with new technology we must have the flexibility for new ideas to be introduced and for radio frequencies, in particular, to be freed for use by private sector companies of which there are a growing number and which are currently particularly starved of radio frequencies. It is not entirely a radio frequency matter, but that is the most important aspect of it, because that is where the shortage applies.

It has been suggested that one megahertz of radio spectrum equals about 10,000 jobs. That may sound rather strange to your Lordships, but if you take into account manufacture and service providers that is the sort of order of what might come about if we had the necessary freedoms which, we hope, would be generated by adding a new paragraph to subsection (2). There are other factors, but at this stage of the game I shall rest my case on that. I beg to move.

I had not intended to intervene on this amendment; but, surely, one of the very considerable problems that we face in discussing radio frequency allocations in particular—and these problems are allegedly enhanced by satellite frequency allocations—is that these are agreed at international conferences. One of the very real problems which we have faced in this country is that at one stage we were—dare I say it?—not as forcefully represented in these international conferences as we ought to have been. We asked only for what we needed, instead of what every other country in the world did which was to ask for three times as much as it needed, with the result that we had only one-third of what we needed, on the usual principle of scaling everybody down. Thereafter, until recently, it has been up to the Home Office to allocate those frequencies in the appropriate quarters.

The trouble was that the allocation was not made in accordance with international decisions, particularly over the frequencies which were available for radio broadcasting on VHF, and the frequencies up to 108 were not available for radio broadcasting to enable a sensible allocation to both the BBC and the ILR stations. This has caused considerable problems in the past, because people who should not be there at all had been sitting on frequencies from which they should have been moved years ago. As it is, it looks as if we shall not get a reasonable allocation of frequencies in the radio spectrum until 1990 or perhaps even thereafter.

I have always been told that it is impossible to move these because of the very high cost of doing so. I think that I was able to surprise people in a certain department by informing them that the Metropolitan Police had suddenly moved all their frequencies outside this radio spectrum, without any problems at all and at very little cost, if you assess the cost of replacement of the equipment over a period. So this is not a simple matter and it is one which I hope the Government will consider. I also hope that the amendment will not be pressed, because it oversimplifies a highly complex problem which will bcome an even more complex problem when we come to the gigahertz involved in satellite broadcasting generally.

The Committee will be indebted to the noble Lord, Lord Howard, who has very considerable specialist knowledge of these matters, for his intervention in the debate. It is unfortunate that more energetic efforts were not made in the past to obtain a greater allocation at the various Berne conferences that have taken place. But we are faced with the present position. I do not know how, on the assumption that this amendment were carried, the noble Lord would be able to increase the allocation that we already have, and I do not know how he would be able to reapportion the small amount of the radio spectrum that we are allocated. I shall be glad to have his views on that.

The noble Lord will correct me if I am wrong, but I was under the impression that these were matters for the Home Office and that it was the Home Office which in the past has been responsible for our representation at Berne. I certainly feel that we ought to provide an adequate amount of frequency bands to meet our requirements, although I am not at all sure how this could be done, with particular reference to the private sector providers, without interfering with the very essential services that have to be accommodated within the existing bands. I am not talking only of BT; I am talking of the various defence services and so on.

Could the noble Lord give me some indication of what the prospects are of increasing our allocation internationally? If he does not think that feasible or possible within the foreseeable future, can he say what avenues are open to enable him to satisfy the requirements of this amendment, even on the assumption that it is socially desirable, which at the moment I am not at all sure that it is? Perhaps the noble Lord can enlighten us a little further.

Two noble Lords have spoken to the effect that at times the Home Office has not sufficiently fought our case in the international arena for allocations of frequencies. That is probably not really true to say. The fact is that—as in a number of other international bodies with one vote per nation—as the number of third world small nations has grown, the "one nation, one vote" principle has become less sensible and less effective and has militated against the interests of industralised Western countries. But that is not at all part of this amendment.

The amendment appears to be asking the Government to favour the mobile radio suppliers and the like. Their problem is that that part of the Home Office which controls the allocation of frequencies is a very small department with a very important job to do—and perhaps not sufficient prestige with which to do that job. The interest groups ranged against it are large and powerful. If the Radio Regulatory Department to whom the job falls wishes to take a bite out of the BBC, the BBC is a much larger animal than the regulatory department. If it wishes to give British Telecom a lesser allocation than British Telecom would like for their mobile radio frequencies, then, again, British Telecom is a larger animal than the Radio Regulatory Department. The department is also in the position that it can never please everybody. Everybody wants a share but the department can provide it to only a limited number of people and organisations.

This amendment might possibly push the Government in the right direction, but as with all vaguely worded promises made by amendments, it will take more than that. It will take some fairly active intervention by the Government to give the people responsible for allocation the necessary political muscle to override the trivial uses of the radio spectrum which have more clout. I am thinking of senile and dying uses such as the 405 line television service which, after 40 years, will still be using frequencies, until the end of this year at any rate, which could well be used for better purposes. It is up to the Government to take administrative action and to push a bit after this Bill has gone through.

8.13 p.m.

After listening to the supporters of this amendment, I perhaps ought to start by saying that this amendment (or at least remarks made by members of the Committee) impinges to some extent on amendments which are to follow. I am thinking particularly of Amendment No. 56; that might provide a more appropriate opportunity to talk about the role of the Radio Regulatory Department than this amendment does. I hope that when I have spoken to this amendment, other noble Lords will feel that also. I should also like to say to my noble friend Lord Torphichen that the Radio Regulatory Department has now been transferred from the Home Office to the Department of Trade and Industry.

Having listened to my noble friend move this amendment, I note that he wishes to achieve two aims. First, it seems that he wishes to combine the function of granting telecommunication licences under this Bill with the function of wireless telegraphy licensing under the Wireless Telegraphy Acts. Secondly, he wants the combined licensing function to be used so as in some way to facilitate the establishment of advanced technology terrestrial and satellite systems. I must tell the Committee that the amendment will do nothing to achieve the first objective, and it is not necessary to achieve the second.

With respect, I believe that my noble friend misunderstands the purpose of Clause 3. It does not confer any functions on the Secretary of State or the director in the sense of enabling them to do anything. What it does is set out the considerations which it is their duty to have regard to when exercising the functions specifically transferred or assigned to them under Parts II and III of the Bill. If my noble friend wishes to make changes to the Wireless Telegraphy Acts so as to confer new functions on the Secretary of State or the director, it will he necessary for him to put down detailed and specific amendments to the Wireless Telegraphy Acts to enable them to do the things he wants them to do. I should add in passing that the amendment to Clause 47 which has been put down does not achieve this effect; it merely declares that the director has a duty without giving him the function.

I have to say that, if the noble Lord were to put down amendments to Part VI of the Bill so as to amend the Wireless Telegraphy Acts, the amendments themselves would need to be of very great complexity. Furthermore, as I have said, the Government have recently transferred responsibility for regulation of the radio spectrum. This transfer ensures that responsibility for licensing telecommunications and the radio spectrum is held by one Secretary of State and by one Government department. The Government do not see any merit in splitting apart responsibilities which have so recently been joined.

Turning to the second purpose of my noble friend's amendment, I find it very difficult to establish precisely what he is trying to achieve. He seeks to confer some special advantage on "private sector service providers" but, once we have privatised BT, that term will cover all telecommunication operators except, perhaps, Government departments, local authorities and the nationalised railway, gas and electricity undertakings—which have their own telecommunication systems, but not for the purpose of providing services to others. He refers to new advanced technology terrestrial and satellite systems without specifying what is meant.

The Government are already working hard to promote the provision of advanced services. In these debates there will be frequent references to cellular radio in due course, which is the most advanced form of terrestrial radio telecommunications system now available, and one which is more efficient in its use of radio frequencies than existing private mobile radio systems. The Government have made special arrangements to ensure that small private operators have access to these systems to provide advanced data transmission and other value added services.

The Government are also working to ensure the rapid development of satellite radio services. As the Committee will know, we have licensed Mercury to provide the full range of domestic and international conveyance services including those involving satellites. This is a radical departure in the direction of both competition and private sector involvement in satellite communications; none of our European partners and no government outside North America has gone anywhere near as far as we have done already.

One problem with satellite communictions in a small country like ours is that any satellite service is automatically one which spills overseas to other countries. Satellite services automatically become international services and we need to take account of the views of other governments. We are, for example, working hard to ensure that Mercury gains recognition by overseas administrations. But this will be a long process and we do not plan to license any other satellite services until at least 1990, when the policy of licensing only two major national carriers will be reviewed.

Clause 3 of the Bill already contains provisions requiring the Secretary of State and the director to have regard to the matters which appear to cause my noble friend concern. Clause 3(1)(a) ensures that they both exercise their function to secure that telecommunication services are provided to meet all reasonable demands, which extends to cover terrestrial and satellite radio services. Under Clause 3(2)(a) the Secretary of State and the director have a duty with regard to the promotion of the use of new techniques, which must mean the same things as advanced techniques.

I hope that my noble friend will agree that the amendment does not achieve its objectives and is itself unnecessary. The amendment itself is also seriously defective in attempting to use Clause 3 to confer a function. I hope that my noble friend will not press his amendment.

Before the noble Lord sits down, I wonder whether he will clarify one point for me. I have a note here about the RRD, which started at the Post Office, went to the Home Office, and is now at the DTI—and I am not sure whether it will be transferred to BT under this Bill. In any case, Amendment No. 56 on page 5 of the Marshalled List appears to transfer the function of the RRD to the director of Oftel. Can the noble Lord tell me whether when we come to Amendment No. 56 he is going to say that this matter has already been dealt with in the debate on Amendment No. 45A? If so, we ought to take the two together to some extent. I may have my facts wrong; I am not sure.

8.20 p.m.

As I understand it, that is not the whole purpose of Amendment No. 56. We shall be taking this matter quite a lot further on Amendment No. 56 and I think things will be revealed to him then.

I thank my noble friend for his very full reply, and I thank other noble Lords who have spoken, even though the noble Lord, Lord Howard, appeared to me to support me but said in the end that he did not. I was not seeking to embark on a long frequency battle; it is perhaps unfortunate that I quoted that example, but they were the first papers that came to hand. I fully take my noble friend's point about the unsuitability of the presence of it. A lot of what he said is of great interest, in particular his encouragement to amend the Wireless Telegraphy Acts even though he says it is extremely difficult. I think we might have a good look at these and see if we cannot use them to better advantage than is presently the plan. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The noble Lord said: Amendment, No. 46, is a paving amendment, and with the leave of the Committee I wish to discuss Amendments Nos. 46, 47 and 48 together.

Amendment No. 47: Page 3, line 37, at end insert ("; and").
Amendment No. 48: Page 3, line 37, at end insert—
("( ) to satisfy demands for public call boxes without regard to their profitability and only with regard to social needs, especially in areas of social deprivation and in rural areas.").

In particular, I would wish to discuss Amendment No. 48, which enjoins the insertion in subsection (2) of Clause 3 the function to satisfy demands for public call boxes without regard to their profitability and only with regard to social needs, especially in areas of social deprivation and in the rural areas. For a large part of the Committee's time we have been discussing the point of view of the ordinary consumer, and we have had in our minds in the main the ordinary telephone subscriber. In our country at the moment there are some 4 million people unemployed. There are in total nearly 7 million people living at a level determined by supplementary benefit. In short, a very substantial proportion of our population are not blessed with the means to enable them to subscribe for and pay for a telephone.

I suppose that most of us in your Lordships' House, are so used to the easy facility afforded by the telephone that we tend to take it for granted. But there are millions of our citizens outside the network altogether who have no facility in their homes to make calls or to receive them, which from our point of view is a convenience—something, as I say, we tend to take for granted. For people such as these, the deprived section of the population, the public call box, or occasionally the call box in places of refreshment of a suitable character, represent their only means of entry into the network. And that is only one way, because they cannot be expected to hang around existing call boxes in the hope of receiving a call from somebody at a time of which they are unaware.

May I intervene? I wonder where the noble Lord gets the figure of millions of people. It has been established in your Lordships' House during the course of this Bill that 80 per cent. of all households in this country have a telephone.

I should not like to put a figure on the number of individuals. As the noble Baroness says, there are about 80 per cent. of households with telephones, but that still leaves 20 per cent. of the households without any kind of installation at all. The figures are not of vast importance. If there are 20 per cent. of the households without a telephone, that still implies a very considerable number of people without facilities. They are not the only people who are deprived. The ordinary citizen, even though he may have a telephone in his own home, very often wishes to use a call box, and particularly in case of emergency: for example, if he is stranded in a rural area or in an area in which it is difficult to obtain access to an ordinary private subscriber. The public telephone call box is a most important installation from the point of view of accessability to the network.

What this amendment seeks to do is to make quite sure that the economic criterion taken by itself is not the sole criterion by virtue of which telephone boxes are established. It has been estimated, I believe, that about £750 worth of calls have to be taken in order to permit a call box to break even. That is on the system of accounting that is already installed in British Telecoms. I understand, though by what mysterious means I am not quite sure, there is a proposed revision of the way in which BT does its accounting, and in particular the way in which it allocates its costs. What impact this would have on the ascertained profits or losses of call boxes I do not know and I am unable to quantify. However, I think for the time being we can assume that that is the figure which is required. I am given to understand it equates roughly to twenty 10p calls a day. Other figures can be supplied, but that is the figure with which I have been provided.

Quite clearly, if public call boxes are only installed as and when they yield a profit, there are not going to be any more installed; and if the number of call boxes that make a loss—and most of them do—are going to be sharply reduced, it means that the public are going to suffer. There have been cases where call boxes have been removed even under the present regime.

Moreover, there is the whole question of the emergency use of telephone boxes. They are vital in some cases, particularly in sparsely populated areas, or in deprived areas without existing telephone facilities readily available. They are required in emergencies of all kinds—accident, fire, or whatever it may be. In short, the public call box is a very important facility indeed, a very important installation as part of the network, and we want to see that this demand is properly satisfied. The existing arrangement—and this is largely confirmed by what is laid down in Condition No. 11 of the draft licence—will permit the new company, or will require British Telecoms, to remove any kiosk that takes less than a minimum figure, which is to be ascertained by BT in collaboration or otherwise with Oftel. The suggestion at the moment is—and the noble Lord can dispel it if he wishes—that the limit has been fixed so that if the total takings fall below some £750 per annum then, prima facie, British Telecoms and/or the successor company will be permitted to remove that call box.

We do not think that is satisfactory. We are, of course, well aware that the existing regime in British Telecom has been operating under financial constraints. We are also aware, however, that the existing set-up in British Telecom is susceptible, through the Secretary of State or even direct, to public pressure. Therefore, had things remained as they were, as the fortunes of BT prospered, as they have been doing increasingly over the past six years, so progressively the financial pressures inhibiting them from installing further call boxes would have been removed. We could have looked forward if it had not been for this somewhat ridiculous Bill, on the assumption it is carried, to an era of progress in this field. We could have looked for the installation of far more public call boxes for the convenience of the deprived areas and for the greater convenience of the rural areas, as well as to a very much larger number of paying subscribers.

That was the vista based on any impartial examination of the progress as shown in the BT accounts and looking at the matter purely from a financial standpoint over the past six years. That vista has now changed. The main drive, the principal propellent, of the new BT set-up when it is privatised will be to yield dividends to its shareholders and achieve, in terms of financial growth, a figure which, combined with its prospective yield on shares, will make it an attractive proposition to the investment institutions, insurance companies and likewise who may he persuaded to invest in acquiring shares in British Telecom. The drive will be to make a profit. The drive to make a profit is not always (and it is often completely opposite to) a genuine social endeavour to satisfy public need.

Those are the constraints within which the new setup will have to operate. The only way of preventing this will be to insert provisions in the Bill that make it necessary, whatever the result may be in terms of loss to the new company, for call boxes to receive the priority which is determined by the real local need. We are well aware of course that needs are very difficult to assess. We are well aware that in the extreme there could be demands that would put telephone boxes where, strictly speaking, they were not absolutely necessary. That may well be so; but these are always subject to the social disciplines which are implicit in the ordinary democratic process, whether at local or at national level. Therefore, when one says "regard to social needs" one means those needs that are agreed by most reasonable people as being needs that are appropriate to the requirements of the local population, both in ordinary social terms and in terms of providing emergency communications in times when they are necessary, whether for fire or for violence, or for whatever it may be.

We hope, therefore, that within this perspective it will be possible to add this to the clause, laying down not a fixed marker which would impose unreasonable obligations on any company or monopoly, whether private or public, but a certain minimum requirement of reasonableness in making sure that throughout our country there are sufficient call boxes to enable all reasonable needs to be met. I beg to move.

8.35 p.m.

To make a 13-minute Second Reading speech on a simple, not to say facile, amendment is an abuse of the Committee stage. I will avoid that temptation myself. One of the joys of this Bill is that it will speed the promotion, production and supply of wireless telephony, and thus free the poor subscriber from the necessity of having to use these hideous and smelly telephone boxes. Anyone who encourages the growth of what the noble Lord called "progress in this field"—the growth of more telephone boxes—is, if anything, doing the subscriber a disservice. The sooner we get away from being dependent upon the call boxes the better, as far as I am concerned.

I support this amendment because I believe that in an area such as that of the telecommunications service there is an element of social obligation, just as there is an element of social obligation in the supply of railway and other basic services. The noble Lord, Lord Bruce of Donington, in moving the amendment, has made it quite clear that care will have to be exercised in determining what "need" is. There can be circumstances in rural and remote areas, and areas of social deprivation as indicated in this proposal, where there is a need for having telephone boxes which might not necessarily be profitable. So I hope that the spirit of this amendment will be accepted and that it is also accepted that there is an element of social obligation in the provision of such a basic service as telecommunications.

I rise to support the spirit of the amendment tabled by the noble Lord, Lord Bruce of Donington. If one is living in a rural area, and has been for any amount of time, one knows that there is a need for these call boxes. There are people who need them because they do not have a private telephone. My noble friend spoke as if the fact that they were vandalised was a reason for not having them. The fact that they are vandalised is not the fault of British Telecom. That is no reason to stop having them. They should be available because there are people who need them in rural areas and, no doubt, in urban or built-up areas. Therefore, in spirit—and more than in spirit—I support the amendment. I hope that the Government will see how they can meet it to ensure that we have call boxes and that they are not slowly phased out.

I shall speak very briefly because I do not want to intervene at this late hour. Although I should have thought everyone in the Committee would support the principle of the amendment, surely it is covered in subsection (1)(a). Perhaps the Minister will confirm that.

May I say at the outset that the Government are fully aware of the concern expressed about the continued provision of public call boxes. We, too, are determined that call boxes shall continue, and Clause 3 as drafted, and as my noble friend Lady Macleod of Borve says, together with the draft BT licence, contains very clear provisions to achieve this.

Before turning to the detail of the amendment, perhaps I can explain how these provisions will work. Firstly, Clause 3(1)(a), which has just been mentioned and which we have discussed, imposes a duty on the Secretary of State and the director to carry out their functions in the best possible way to secure that public call boxes are provided throughout the United Kingdom, so far as is practicable, to satisfy all reasonable demands for them. This is the first time that public call boxes have specifically been mentioned in the British Telecom legislation.

Obviously the words "throughout the United Kingdom" include rural areas. This duty will be fulfilled by the inclusion of a condition in BT's licence to oblige it to provide the call box service. This is condition 11 in the draft BT licence and it will oblige BT to continue to provide a network of public call boxes throughout the United Kingdom. I should like to stress that the duty on the Secretary of State and the obligation on British Telecom continue, regardless of whether or not the call box service makes a loss.

I should now like to turn to the question of the withdrawal of loss-making call boxes, which the noble Lord. Lord Bruce of Donington, laboured fairly heavily. He and other noble Lords claimed that after privatisation BT will be under pressure to reduce loss-making services and will want to withdraw many call boxes. Certainly we hope British Telecommunications will try to improve efficiency and cut costs. But BT will simply not be allowed to withdraw call boxes when and where it wishes. Instead, withdrawal will be governed, through the condition in the licence, by guidelines agreed between BT and the director. These guidelines will specify a minimum figure for the annual revenue of a call box, below which it may be withdrawn. This is similar to the present voluntary agreement between BT and POUNC. In future, BT will not be allowed to withdraw a call box unless it is in accordance with these guidelines. This is a very important strengthening of the consumers' position.

The noble Lord, Lord Bruce of Donington, touched on the minimum figure. I cannot say with any precision what it will be because it will be determined by the director; but what I can say is that in setting the figure the director will be bound by his duty under Clause 3 to secure the provision of public call boxes throughout the United Kingdom so as to satisfy all reasonable demands for them, as I have already said. I have no reason to believe that the director will set a figure which is significantly out of line with the present figure of £185. I can say quite categorically to the noble Lord, Lord Bruce, that £750, which is the figure he referred to, is excessively wide of the mark; I hope he will accept that.

I think it is also worth pointing out at this stage that in any case the number of withdrawals has been particularly low. In 1982–83 only 66 were withdrawn, and of those only 29 came from rural areas. It is also worth stressing at this stage that in addition to the roughly 77,000 call boxes which exist at the moment there are some 300,000 pay-phones in existence; the noble Lord did not mention that. Of course, those strengthen very much the opportunity for people in rural areas and all over the place to have access to a telephone.

In moving his amendment the noble Lord hinted that the duty in Clause 3 to secure call boxes to satisfy all reasonable demands for them could mean that the demand of an isolated village was not reasonable and therefore it had no right to have a call box. I hope I can reassure him on this point. What is a reasonable demand will be decided in the first instance by the director, who will be guided by condition 42 of the licence. This makes it quite clear that BT's obligation to provide a voice telephonist service continues, regardless of whether or not the demand for that service in a particular area is sufficient to be commercial.

We have been asked about how a call box service which at present loses about £77 million a year is to be financed. This was really the noble Lord's theme in moving his amendment. It has been argued that it is an unfair obligation on BT. I hope I can reassure him on this. First of all, I should like to point out that we should not necessarily take the figure of £77 million at face value. The public call box service generates more revenue than the bare figure indicates, for example, through reverse charge calls and in some cases through incoming calls as well. In addition, there is considerable scope for improved efficiency through better pay-phone units, as I have described, and the new design of public access telephones to help contain maintenance costs as well.

Nevertheless, we accept that for some time to come the call box service will probably run at a loss. That is why the Government have decided to permit BT to levy what are known as access charges. These will both secure the provision of the loss-making services and prevent BT, who will be obliged to provide them, from being placed at a competitive disadvantage. Perhaps I can explain how access charges will work. An access charge will have a specific charge over and above the direct cost of inter-connection, payable by all operators of telecommunications systems which interconnect with BT's system. Access charges will also be payable by the relevant part of BT's own system. For example, if the charge is for inter-connecting with BT's local networks, BT's trunk and international systems must also pay the access charge.

Access charges are intended to be a safeguard for BT and it will be up to BT to decide whether or not to levy them. It will also be up to BT to decide how access charges will work, But BT's licence, Condition 19, will set out the basic principles of any method. First, access charges must be applied in a non-discriminatory way to all inter-connecting systems; and, secondly, the charges must relate solely to the cost incurred in providing the eligible services. These will be set out in the BT licence and will be the public call box service which we are discussing, the 999 service, the supply of apparatus and services designed for the disabled, and any losses incurred on services to rural areas. Before any access charge is introduced the method of its calculation must be approved by the director. I hope that in describing how we propose to secure these loss-making services, particularly in relation to public call boxes, I have been able to satisfy your Lordships that there is no intention to allow the wholesale withdrawal of public call boxes. They will continue and they will be safeguarded. I hope the noble Lord will not press his amendment.

The noble Lord was very persuasive in what he said. He has told us a good deal about the guidelines, but I am sure he appreciates that really we cannot discuss the guidelines. We do not know them; we have not read them; we have not got them at our disposal. What we are concerned with here is the proposed legislation—what goes into the Bill.

If I may say so, the noble Lord spelt out most convincingly what he wanted to do. He assured us that there will be a continued obligation on British Telecom to provide the services which we require. But if all that is implicit in subsection 2(a), what is the objection to stating it explicitly in this short amendment?

The noble Lord must understand that the figure could not necessarily be laid down. The point is that it is for the director to decide what the figure should be.

I should like to thank the noble Lord for his explanation and reply. But I do not think we can be satisfied with it; in a moment I will say why.

I very much regret the remarks which were made by the noble Lord, Lord Morris, about the speech of my noble friend Lord Bruce of Donington, who took 12 minutes to move a very important amendment which will affect many people. I would point out to him that over the last hour and a half the Opposition have said very little in debate in this Committee because the amendments have been coming from other noble Lords, including the noble Lord, Lord Mottistone, who earlier made a complaint about Second Reading speeches.

This is an important amendment. It involves millions of people up and down the country. May I say to the noble Baroness, Lady Macleod, that there are 56 million potential users of telephone boxes? It is not the 20 per cent. who have not private telephones who are affected; it is all 56 million of us, and if one is stuck in a car break-down miles out in the country and there is no telephone within a reasonable distance, then, by heaven, one will feel deprived! I have myself felt deprived, even in ordinary circumstances, when I have had to walk a long way to a telephone. If I had to walk even further, I should feel even more deprived. That is why I think it is an important amendment, which I am glad to see has support from all sides of the Committee.

The noble Lord, Lord Glenarthur, has referred to licence Condition 11, and he feels that that safeguards the public telephone boxes. But it is clear that no kiosk will remain in service unless its takings are above the key minimum figure. The noble Lord pooh-poohed the idea that that figure would be £750, but that figure was quoted as a result of a newspaper report. I shall be very brief in reading the report, which relates to the present British Telecom. It states:
"British Telecom has rejected a plea from Aspatria Town Council to instal a telephone in an old folks' estate.
"It says the phone would not he able to pay for itself and suggests that the council rent one.
"Alan Brant, a Telecom official, told the council there wasn't a 'cat in hell's chance' of a kiosk being provided at Brayton Park.
"'To provide a telephone box we would need to get back £750 a year to break even and there's no chance of it taking that sort of money'."
That is where the figure of £750 came from, and I think it was fair that we should quote it.

If the noble Lord, Lord Glenarthur, is saying that under the new licence British Telecom will have to have a very much lower figure than that, we shall be very happy to hear of it, and to have it confirmed. Does the noble Lord wish to intervene?

8.52 p.m.

Perhaps I may briefly intervene and say that the figure of £185, which is the figure at the moment which dictates whether or not a telephone is to be, or could be, removed, subject to POUNC's views on it, is not in any sense meant to be a break-even figure. That is a totally different thing. A break-even figure and a minimum figure under which a telephone box might be withdrawn are not the same.

Perhaps I can help the Committee a little. In my days in British Telecom we had to be careful about providing new kiosks. Before we put in a new one we had to be fairly sure that it would pay its way; but we very rarely took out an old one, even if it was in an extremely remote rural community. I think that we used to leave them even when they were taking only £10 a year. There was one instance when an Irishman tried to raid the cash box and found that there was only fourpence in it. So we took that one away; but it was the only one that was taken away during my seven years.

I find both interventions extremely helpful, in particular that by the noble Countess, Lady Mar, who, as I understood it, was telling the Committee that under the present regime kiosks are almost never removed. I think that that was what she said. I wonder whether the noble Lord the Minister is assuring me that that position will continue, or even be improved. If that is so, I should be very happy to hear it.

The noble Lord, Lord Glenarthur, also mentioned access charges. He said that private operators—operators other than British Telecom—would be paying their way and paying for part of the services, such as telephone kiosks and rural facilities, through the access charges; that they would be made to bear their part of the burden. But is it not the case that British Telecom itself will be trying to keep access charges as low as possible? Will not British Telecom be doing that? If it does, then the amount of revenue which will come from the private concerns will consequently be reduced, and under those circumstances they will not be paying their proper whack towards the provision of uneconomic services.

Is it not also a fact that if British Telecom made access charges which covered the cost of the unremunerative services, the private operators, such as—for example, Mercury—would merely by-pass the British Telecom system and perhaps use some peripheral service? Those are questions that need answering before we can decide whether or not to press the amendment—in particular the question on access charges.

I understood the noble Lord to say in his answer to me that the Government could not accept the amendment, though they agreed with it in spirit, because they could not accept a figure. Is that what he said? In which case, what is the figure in the amendment?

What I hope I said to the noble Lord was that the figure would be decided by the director and that it was up to him to decide. The figure could not be put in the Bill because, apart from anything else, the director might want to change it, and if the figure were in the Bill, the Bill would then have to be changed.

I am sorry if I misunderstood the noble Lord; but I thought that that was the point he was making.

If I may now revert to the remarks of the noble Lord, Lord Stoddart, the director will have the powers to enforce the retention of a kiosk in a particular area if he thinks that it is not in the interests of the public in the area that the kiosk should be removed, whatever might be its takings. I think it is also worth pointing out that local authorities have a right to susbsidise—

So far they have made little contribution, but it is a fact that they can subsidise, and Clause 84 expands on that.

In his exposition of the figure of £750, which he quoted from a newspaper article—which I must confess I have not seen—the noble Lord was I think confusing the existence of established boxes and the provision of new ones. Of course in providing a new kiosk it is to some extent a different matter. Then British Telecommunications will want to see that it is worthwhile; but I do not think that anyone is at all suggesting that the present network of 77,000 to which I referred is in any way inadequate.

To turn to access charges, it does not matter if BT wants to keep them lower. Access charges are a safeguard for British Telecommunications. BT will itself pay by far the largest proportion of access fees. The question of by-passing is, I believe, to some extent a red herring. I think that it stems from experience in the United States, where access charges are indeed very high. In the United Kingdom they will be a tiny fraction of what they are in the United States.

I hope that I have been able to explain that there are very strong safeguards built into the Bill to continue to provide just the kind of facilities which noble Lords on all sides of the Committee are so keen to see maintained. We believe that they are strong safeguards. I hope that in view of the way in which I have described access charges and the important role that they will play in financing those call boxes which make a loss, the noble Lord will see fit to withdraw the amendment.

Despite what the noble Lord, Lord Glenarthur, has said, there seem to be some areas of uncertainty in this issue. For one thing it appears that the director has to use his judgment as to whether the facilities should be maintained or left in place. Secondly, the level of access charges seems to be a matter determined by the company. I would have thought that it would be best for all concerned, for the companies, for the director and for the public, if this whole issue was clarified more than it is at present in the legislation.

The objective of the amendment proposed by the noble Lord, Lord Bruce, seems to stem from the belief that the present arrangements are intrinsically satisfactory. I have not heard expressed by noble Lords opposite the Government any view that they are not. It seems to me that noble Lords proposing the amendment have overlooked the fact that the removal of telephone boxes will be quite expensive. It is a disincentive for companies seeking to he profitable to do it. Even if the amendment is carried, I am afraid that the fears of the noble Lord, Lord Ezra, are unlikely to be satisfied since it would merely substitute one set of words for another.

We have here another example of the situation with which the Government are faced in putting through legislation to place in private hands what has hitherto been a public service. Your Lordships' House is trying, by forms of words, to safeguard the elements of service which it fears will be lost. It is a very difficult job for your Lordships to accomplish. I do not believe that there is too much point in your Lordships pressing this amendment merely for the sake of exchanging forms of words one for another. It will make no basic difference to the Bill.

I am naturally disappointed with the reply of the noble Lord. One matter struck me as very significant. The financial point below which a call box will be removed differs very sharply from the conditions under which a call-box would be installed. I have heard nothing so far that disputes the prospect of £750 a year still remaining the operative figure for the installation of a new call-box. Perhaps the noble Lord can query that.

Throughout the debate and during discussion of numerous amendments we have heard references to the draft licence. I must remind your Lordships that this is still only a draft licence and that it remains to become finalised in its ultimate form. I sincerely trust therefore that the Government will take steps to ensure that time is provided for a full debate in both Houses on the licence when it is finalised, or preferably before it is finalised. There has been no adequate opportunity of debate so far.

I am not satisfied with the response of the Government to the amendment and the whole purpose behind it. I think that there is still considerable cause for anxiety and that the country has every right to be anxious. Nevertheless, I agree with the noble Lord, Lord Weinstock, in his rather pessimistic assumptions concerning the whole future of the Bill and its prospects. The noble Lord possibly shares my view that the main purpose of the Bill is not concerned with the telecommunications system but with the raising of money. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[ Amendments Nos. 47 to 48 not moved.]

9.6 p.m.

Page 3, line 37, at end insert—

("( ) to promote the need to protect the wellbeing of employees in the telecommunications industry.").

The noble Lord said: As drafted Clause 3(1) and (2) requires the Secretary of State and the director to have a duty to look after most of the those with a direct interest in telecommunications. For example, consumers are protected. Purchasers, users, the disabled, those living in isolated areas and even manufacturers are protected under the Bill. I might add that many of the protections have been put into the Bill—this Bill, not the first one that Parliament had before it—because of much pressure put on the Government by many organisations, not least the trade unions in the industry which were very conscious of the need to protect the telephone subscriber whether he be a private subscriber or a business subscriber.

Bearing in mind what they have done, the staff feel that they have been singularly left out of the Bill. They are not covered by the general duties that employers have towards people under the Bill. The staff have noted in particular, with some alarm, the absence of any specific provision for them in the form of a general duty. If, in Clause 3, everyone else is included, why have the staff been left out? Not surprisingly, they feel that there is some underlying motive in this omission which will be used against them by the Government at some future stage.

There has been a long tradition in telecommunications of statutory recognition of the right at least to consideration of the needs of employees. All that this amendment seeks is to continue that recognition. I should add that this amendment would not cover only the employees of British Telecom. It might, in the general sense, also cover the employees in manufacturing industry whose jobs may very well be at risk due to other provisions in the Bill.

Noble Lords might feel this is something we should not write into legislation. However, there are some precedents, not necessarily for writing in conditions of service but for laying down certain conditions under which staff will be consulted. I think, if I am not mistaken, that there was provision in the 1949 Coal Industry Act for proper consultation and proper machinery for consultation to take place with the miners. In the 1947 Electricity Act there was certainly provision for proper consultation with employees. Indeed, I worked within that particular statute in that industry and found that it gave very good protection and a good opportunity for the staff to take a role and to have a role in the running of the industry. So there are precedents for referring in legislation to staff and for giving staff certain protections.

It is quite true, of course, that in those nationalisation Acts the staff did not need the same type of protection as the staff who will go into the privatised British Telecommunications service may need, because they were being transferred from private industries into a publicly-owned industry. Therefore, they had the benefit of the public service ethos which then was that the public service would be in the first flight of good employers. I am not at all sure whether that still appertains. Nevertheless, in 1947 and 1949 it certainly did appertain.

Therefore, as I say, there is precedent for giving certain rights, certain protections, to employees in a statute. I would certainly do no harm, and may very well do a lot of good, if we wrote the provisions of the amendment into the Bill.

The amendment is totally inadequate for the purposes which the noble Lord has in mind. Nevertheless, the sentiment expressed should get some response from the Government as to what enlightened personnel policies they have in mind in the new company. The terms of the amendment almost suggest that there should be a cosseted relationship between the company and the employees. But that is not what is sought. I think that the noble Lord, Lord Stoddart, is seeking to maintain some of the traditions of good personnel policies that exist at present in the organisation.

I should like to refer to the Financial Times and to an article this week headed, "BT plans radical reorganisation", in which it is indicated that that reorganisation is proceeding now. Indeed, this proves that point that it was not necessary to privatise to secure efficiency and reorganisation. Indeed, Sir George Jefferson says in his statement that the plans for the existing reorganisation were thought of long before the Government thought of plans for privatisation. So they are not a result of the pressure of the Bill. However, in the statement in the Financial Times they have agreed with the unions to accept 15,000 redundancies in the industry by negotiation and by agreement. It suggests that under the present arrangements there is a perfectly satisfactory relationship—not necessarily a cosseting relationship, but a satisfactory relationship—as regards negotiation and agreement such as exists in any enlightened company, state or privately owned.

Sir George Jefferson, when questioned on this subject in the excellent interview which he gave on the reorganisation of BT, said:
"I see the people we have as a very substantial asset, and one of our tasks is to manage the transition in a way in which we exploit all our assets as best we can".
We are suggesting that this important asset in the business should be recognised somewhere in the legislation, and that there should be some statement of rights and provisions for an enlightened personnel policy. It does not militate against the proposed efficiency of the company. I sincerely hope that the company will be efficient and well-run, and, if Sir George Jefferson is in command, I suspect that it will be.

What we want is some provision in the legislation which covers the employee situation and which would enable the Minister perhaps to say a word about the obligations of the new company to the employees. This point also arises on Amendment No. 51 as regards retraining, and later on Amendment No. 130 on the subject of employee shares and participation. So the provision of adequate employee welfare (if I may so describe it) or of a deep concern for enlightened personnel policies does not militate against the efficiency.

I noticed the other day in the annual statement of Marks and Spencer's that this year they will pay £22 million on employee benefits out of their profits. That indicates an enlightened business. The provision for employees in a progressive way is a contributor to efficiency. I hope that the Minister will give us some indication of how he sees the role of employees in the new situation. This amendment provides him with that opportunity.

I, too, should like to support the motion. I have been seriously concerned all the way along that there has been no mention at all of the staff or employees of British Telecom or of any of the other people involved in the industry. Even before I left there were rumours flying around that 15,000 people might have to lose their jobs, that 45,000 people might have to lose their jobs or that 65,000 people might have to lose their jobs. I understand that the staff still do not know what the position is, and are extremely unhappy about it. There has been a very big reorganisation in the regions in particular, and nobody knows quite whether they are coming or going.

British Telecommunications has had an excellent staff record. There have been one or two strikes but, on the whole, the unions have not been militant. They have accepted that new technology has meant that there must be some redundancies, but not on the scale which they anticipate with this Bill.

I fully accept that the telecommunications industry needs to attract and retain able and dedicated employees. I would certainly join with the noble Countess, Lady Mar, in paying tribute to those hard-working members of British Telecom, as it is at the moment. But I also understand the very real fears that many people have about potential job losses. I certainly have very grave doubts about whether this amendment would assist in achieving the noble Lord's objective. Is it right that the Secretary of State or the director should be under a duty:

"to promote the need to protect the wellbeing of employees in the telecommunications industry"?
Quite apart from the vagueness of the wording, the Government certainly take the view that these matters are much better dealt with by the employers and the employees themselves. There is already a legislative provision to support such an approach.

In moving his amendment, the noble Lord referred to the Coal Industry Act and the Electricty Act. I should like to draw his attention to Section 46 of the Companies Act 1980. Among the matters to which the directors of a company are to have regard in the performance of their functions are the interests of the company's employees in general as well as the interests of its members. So I do not see what positive actions the Secretary of State and the director could take to fulfil the duty proposed in the amendment without either interfering quite unnecessarily and unjustifiably in the internal affairs of the companies involved or upsetting the existing statutory obligation in the Companies Act.

So far as consultation in British Telecommunications itself is concerned, to which the noble Lord, Lord Taylor, drew attention, we touch on these matters in amendments later on. If the noble Lord is happy with that, I should prefer to leave that discussion until then. I do not think that anyone can seriously argue that this Bill, which is designed to set the framework for the future of telecommunications, is the right place to introduce further legislation in the field of employer and employee relationships. I hope that the noble Lord will accept that and not press his amendment.

The noble Lord seems to have the impression that this is a soft-hearted amendment. May I assure him that it is by no means a soft-hearted amendment? It is intended as a totally hard-headed approach to the whole range of obligations of the director general and the Secretary of State. We are not here talking only about British Telecom: we are talking about all the employees in the telecommunications industry, and I would imagine that the noble Lord, Lord Weinstock, would come under this heading. It is not only in their interests that their welfare should be protected; it is in the interests of all of us.

The fact of the matter is that in the international telecommunications industry there is the possibility of an extremely open market if we allow it to be one where our competitors do not allow it. Unless we have the interests of those who work in the telecommunications industry at heart and we enable them, together with government and together with the companies for which they work, to compete effectively in international markets, not only will the telecommunications industry be the poorer but the country as a whole will be the poorer.

Unfortunately, those noble Lords who do not like collectivism may not like amendments of this kind, but collectivism is to be found in the international telecommunications business, and it is to say the least odd, having accepted so many obligations for the Director General of Telecommunications and for the Secretary of State in Clause 3, to exclude this particular group, who are of great importance to all of us.

I should have thought that the existing law fully protects employees, for there are a great many statutes on this subject. There is the Employment Protection Act and various other statutes; there are industrial tribunals and trade unions. I should have thought that there were plenty of laws to protect employees. Most employees receive very large redundancy payments in accordance with their length of service. Personally, I should have thought that employees are protected by all the various statutes on this subject which are on the statute book.

On Question, amendment negatived.

9.20 p.m.

Page 3, line 37, at end insert—

("( ) to make the importation into the United Kingdom of telecommunications equipment and apparatus conditional on the establishment of reciprocal telecommunications export agreements with the countries of origin of such goods").

The noble Lord said: This amendment is of a non-controversial nature and I trust that the Government will find themselves able to accept it without any great difficulty. At the moment British Telecom are spending about £1,250 million per annum on telecommunication equipment made by manufacturers in this country. Some 95 per cent. of their requirements come from the United Kingdom. This is part of a deliberate policy of British Telecom that has been followed up to now.

It may be interesting to realise that United Kingdom manufacturers exported only £118 million worth of telecommunication equipment in 1983, and in that field, taking into account imports of telecommunication equipment, we had a deficit amounting to £148 million on our trade in telecommunication equipment overseas during the year 1983. The reason why this amendment is moved is because we wish the new company, in conformity with what we hope will be this amendment, to continue to act wherever practicable in the interests not only of the consumer in the United Kingdom but also of the manufacturers themselves.

It is not generally realised that most other telecommunication systems in the Western world outside those in the United States are state-owned telecommunication systems. They insist on the indigenous supply from their own manufacturers of telecommunication equipment made in their country. In other words, there is already a positive discrimination in most of the western countries for telecommunication equipment to be supplied by the manufacturers in the countries concerned where the state telecommunication system is.

What we are afraid of is that there might be a tendency in the interests of free competition—or what is euphemistically referred to as such—to lower the barriers in the United Kingdom without the prospect of any reciprocal action at all in the remainder of the western world. This is what this amendment is designed to prevent. We are afraid—and we have good reason to be afraid on the basis of some of the statements that have been made—that following the passing of this Bill and the privatisation of British Telecom, and in the interests of so-called free competition, British Telecom, for the private interests of its shareholders, for the financial return they require, will find it necessary to import as cheaply as possible regardless of the country of origin, and regardless of whether or not they have a reciprocal arrangement with us.

We know quite well that telecommunication equipment is manufactured on quite a large scale in some of the newly-industrialised countries—I am talking in particular of places like Korea, Taiwan, and so on—where the wage levels are about 30 per cent. of those obtaining in western Europe. Consequently, it is very easy and much cheaper in many instances to import into this country goods which are in effect dumped into this country because of quite significantly lower costs, in social as well as in money terms, in the countries from which they come. This is a policy which has been followed in relation to shipping. Regardless of the consequences to British manufacturers, the goods come in from anywhere, where they are cheaper, disregarding any reciprocal arrangements, dumping considerations or anything of that kind. We want to prevent this happening in telecommunications. If the Government intend that British manufacturers should be treated just as fairly as the remainder, they will have no difficulty in supporting this amendment. I beg to move.

I have some sympathy with some of the thoughts of the noble Lord, Lord Bruce of Donington, on this subject. I feel that he has not got off his pram, but he has gone a little over the top. I will reserve my main remarks for an amendment that, among others, is down in my name, Amendment No. 52. I do not think I could support the noble Lord's amendment because it is phrased so deliberately anti-import, and the practicality of exact reciprocal agreements between different countries is something that no Secretary of Trade under either Government has ever been able completely to achieve.

While I have a great deal of sympathy with the concept of getting as close to fair competition as possible and although I realise that we shall be told that many aspects of international competition are covered in the Bill—we have had some discussion on that already—I feel that the way to treat it is in a more general way. I shall be interested to hear what my noble friend says when I come to propose Amendment No. 52.

The amendment gives the Minister the opportunity of saying once more, what he anticipates will be the practice in this important area which affects employment substantially in the United Kingdom and the welfare of some of our prestigious companies in this field. I hope he will take that opportunity as it affects the whole purchasing policy of the new company if restrictions of imports of this kind are imposed. The amendment says that the restrictions on imports are in relation to companies that do not exercise reciprocity. That seems to me to be a reasonable proposition.

We should think carefully about this amendment. It is important. I again quote Sir George Jefferson on this subject of future purchasing policy of the company. He says that he hopes they will depend on United Kingdom suppliers substantially in the future but he says:
"I make the proviso that those suppliers have got to satisfy us that they can provide internationally competitive products."
That is a pretty wide statement and it suggests that some of the dangers quoted by the noble Lord, Lord Bruce of Donington, are real dangers. They are dangers in two directions: one is from the newly developing countries with their cheap wage bills and their ability to manufacture mass production items which are sometimes required in this industry. There is also the danger that companies such as AT & T who have suffered from the deregulation of the telephone system now decide as a matter of strategy that they will concentrate on developing not the internal telephone system of the Unted States, but the manufacture of supplies in an international market. AT & T could he welcome in this country; but the tendency would be, in the case of AT & T and other European suppliers, that in order to get within the prohibition situation they can set up, like Nissan, an assembly plant for goods that are manufactured elsewhere and assembled in this country in order to qualify.

I suspect that as soon as this Bill goes through there will be massive intention on the part of international companies to get into this market; because the supplying industry in this country (about which the noble Lord, Lord Weinstock, will know a great deal more than I) has been tied to the specifications of British Telecom—and this will be a good deal less cosy, as Sir George Jefferson quotes, in future. There is a real concern about the future of the industry and the future of jobs. While the amendment may be defective to some extent and may contravene some EEC regulations or international GATT arrangements it gives the opportunity to the Minister to tell us a little about how he sees the purchasing policy in relation to the supply industry in the future strategy of the successor company.

9.32 p.m.

This is an important matter and one on which I think everyone would share the general aspirations underlying the amendment; namely, that we all want to see an efficient, progressive and profitable industry in this country. The noble Lord, Lord Bruce of Donington, has said that British Telecom at present obtains 95 per cent. of all its supplies from United Kingdom sources. That is entirely true. He went on to say that in future there is a risk that as a private company they might wish to buy more from abroad. Perhaps I ought to start by saying that there is no formal control of British Telecom at present, and we see no good reason why there should be formal control in the future. I am sure that the close relationship between British Telecom and its United Kingdom suppliers will continue in future.

United Kingdom manufacturers are in a very advantageous position. They have a long history of supplying British Telecom; and British Telecom's network has grown and developed in close collaboration with them. United Kingdom manufacturers therefore are ideally placed to producing equipment to meet the particular requirements of the British Telecom network. It is therefore in British Telecom's own interest to foster a strong, home-based manufacturing industry. Indeed, the chairman of British Telecom has recently stated publicly that British Telecom intends to stick by its traditional suppliers and that he does not expect in the immediate future any significant increase in the amount of equipment that British Telecom purchases from abroad. When I saw him a few days ago he repeated those assurances. There is good reason therefore to be assured about the situation.

The other main concern that has been expressed relates to apparatus for attachment to the network. Substantial progress has been made in liberalising this market. Over 300 products are now available for competitive supply. There has been concern that liberalisation would result in a flood of imports. But that has not happened. Of course, there have been imports because this is what opening up the market means; but United Kingdom manufacturers are proving equal to the challenge of competition. For example, some 63 models of telephones have now been approved with an average United Kingdom manufacture content of 70 per cent.; four repertory dialers have been approved with an average United Kingdom content of 50 per cent. The same figure applies to modems where 108 models have been approved. As regards telex four models have been approved with 100 per cent. United Kingdom content. If all the 309 products so far approved as a result of liberalisation are taken together, the best available estimate for their average United Kingdom content is 74 per cent. I think these figures speak for themselves.

Perhaps I might now deal specifically with the question of reciprocal agreements, to which the amendment is directed. There are obvious difficulties in the context of this Bill in placing such a duty on the Secretary of State and the director. Clause 22, which provides for the standards and approvals regime, applies only to equipment for attachment and not to equipment which forms part of the network itself. Neither in that clause nor elsewhere are powers given to the Secretary of State or the director to impose import controls. To give them such powers—they are not in the Bill at present—coupled with this duty, would contravene our international obligations such as, for example, the General Agreement on Tariffs and Trade and the EEC rules.

There is always an apparent attraction in a reciprocal agreement but too often such agreements prove to be a device to restrict trade. Exports frequently are obstructed by non-tariff barriers such as technical requirements, which are difficult or time consuming for exporters to meet. The right way to approach this problem is by removing non-tariff barriers and not erecting new ones of our own. That in the end is to the advantage of users and manufacturers alike. Our policy is to press vigorously in the appropriate international bodies such as the GATT and the EEC for the liberalisation of trade, for the removal of barriers and for the harmonisation of standards and approvals arrangements. That will serve our best interests both in this field and generally.

I have no doubt whatever that in the competitive climate this Bill is intended to produce our own industry in this country will rise successfully to the challenge. I would hope and expect that it will do better in the export markets than it has done in years before. Our share of world trade in apparatus has fallen from 20 per cent. to 6 per cent. I would now expect and hope that in the more vigorous atmosphere which will now exist our manufacturers will prove more successful than they have been in recent years; and that was the general tenor of the intervention made by the noble Lord, Lord Weinstock, on our earlier discussions.

In brief, therefore, the position is that we could not impose restrictions of the kind proposed by this amendment in view of our international obligations. We could not do that without being in breach of those international obligations, and I am sure that nobody would want us to do that. Secondly, British Telecom is in an ideal position to maintain its share of the United Kingdom market, and is determined to do so. Thirdly, we have a vigorous industry of our own, which I would hope will take full advantage of the opportunities both at home and in the export markets.

I could not support the amendment put down by the noble Lord, Lord Bruce, simply because I do not think reciprocal agreements have necessarily any practical effect. It is one thing to make reciprocal agreements between nations or governments: it is quite another to get people to buy as much from you as you are buying from them. There is a subsequent amendment, No. 52, which I will support and to which I will speak, which I think deals with the situation more appropriately.

I am sorry that the noble Lord, Lord Weinstock, will not support this amendment but will support Amendment No. 52, as I believe the noble Viscount, Lord Trenchard, said he would do. But I would point out that Amendment No. 52 will cost the Exchequer money, whereas our amendment will cost the Exchequer nothing except good negotiation with other countries and with other suppliers. In those circumstances, I would have hoped that it would be their wish to save the taxpayer money and to achieve the same objective.

It seems that everyone is agreed that there should be a good market for British equipment, and at the present time British manufacturers have a very good relationship with British Telecom. In fact, some people think that the relationship is too cosy. I very much doubt that, but nevertheless the relationship is good. We seemed to get an assurance from the noble Lord, Lord Cockfield—I do not know whether it was an assurance, or whether he had been taking Sir George Jefferson gently by the shoulder—that this relationship would continue, and that British Telecom will continue to buy virtually the same proportion of its goods in the future, when it is privatised, as it has done in the past. I hope that that is what the noble Lord was telling us and that that assertion will be borne out by the facts in future.

I have a press cutting here from Technology magazine, dated 9th January 1984, which does not appear to bear out what he said. It is headed:
"System X loses phone monopoly"—
and it goes on to say—
"British Telecom will break the System X monopoly on digital switching within two to three years for up to 20 per cent. of its network. Up to £400 million worth of contracts will go to suppliers other than Plessey and GEC, who supply System X. Thorn-Ericsson, STC and Cit-Alcatel may be among the likely beneficiaries. 'It is our firm intention to seek and alternative source' says David Pentecost, British Telecom's director of major systems procurement. 'It is just a question of timing"'.
I think that the noble Lord, Lord Cockfield, might wish to comment on that, because it certainly appears to show that already British Telecom is moving away from its traditional suppliers and trying to find new suppliers, and that it does not very much care whether those suppliers are in this country or abroad.

It may very well be that we should honour our international obligations. Who does not want to honour our international obligations? But the fact of the matter is that, all too often, this country is taken advantage of by other countries who will not, and do not intend to, honour their obligations. I am afraid that this country is a sucker in many respects in its relationships with other countries. We do the right and gentlemanly thing and they stab us in the back. It is about time that this country began looking after its own interests, the interests of its manufacturers and the interests of its people.

I have to say—this has to be said time and time again—that the future of this country, without a very strong, large manufacturing base, will be very bleak indeed, because North Sea oil is a finite commodity. When that runs out, as it will begin to run out towards the end of this decade, we shall rue the day when we allowed a flood of imports in from other countries, very often highly subsidised, while our home firms have been allowed to collapse around us. This has been the history of the past 15 or 20 years, or perhaps even longer. The time is coming when, whether we like it or not, we shall have to take action to protect our home-based industries.

We ought to start by ensuring that the privatised telephone system—if that is what is is, and, frankly, I do not know what it is, because I am confused about what the Government are trying to do in this Bill—will continue to keep British manufacturers and British workers at work on telecommunications equipment.

I must confess that I do not quite follow the reasoning of the noble Lord, Lord Weinstock. If he thinks that he is going to get much support from Amendment No. 52, with,

"the reflection of the support given by foreign network operators to their indigenous communications manufacturing industry",
then I will not say that he is fooling himself because I know that he never does fool himself; but the noble Lord is expecting a good deal from the director general, or whoever will exercise the discrimination, if he is going to measure,
"the reflection of the support given by foreign network operators".
In pursuing the objective we all have in common, I believe we would do better to look a little more carefully at this point about reciprocity. The weakness of the amendment which my noble friends have moved is in the implication that there has to be a national reciprocity agreement. I agree with the noble Lords, Lord Weinstock and Lord Cockfield, that there would be some difficulty in achieving a national agreement, but I would not seek a national agreement; I would seek an executive decision in those cases where it is proposed to buy from a country where we have no chance of selling. That, I think, is wrong. One could deal with that situation by a decision of the director general, or whoever will have authority in these matters.

The noble Lord, Lord Cockfield, stressed the need for being equal to the challenge of foreign competition. He has no need to say that, because we all agree that we wish to be equal to foreign competition. But if one is attempting to compete against a foreign company which is supported by its own Government and into which country one cannot oneself export, I do not see how you can criticise United Kingdom manufacturers for not being equal to foreign competition. This is not a situation where equality of challenge comes into the argument at all.

The noble Lord talked about the difficulty of contravening international obligations; but if we have a situation where we are prepared to import but the other countries are not prepared to import, are we contravening international obligations if we say, "Until such time as you enable us to sell to you, we are not prepared to buy from you"? Would that be to contravene our international obligations? The noble Lord said that the answer is to remove tariff barriers. In a perfect world, that is of course the answer. I know that either through Europe or by our own national action we are trying to do certain things in that respect, but the fact remains that there are countries which are impervious to the argument about removing tariff barriers.

I would have thought there was an obligation to impose, either on British Telecom or on whoever is governing the affairs of British Telecom—be it the Secretary of State or the director general—a requirement not to import or to override United Kingdom manufacturers in those cases where the goods which it is proposed to buy come from countries which are supported by their own national Governments and into which countries we are unable to export.

There are a great many things in this world which one does better without legislation—and I believe this is one of them. Everybody has a great deal of sympathy with what was said by the noble Lord, Lord Bruce of Donington, and with the aims he has. Certainly I do, because I, too, am a Post Office supplier. A great many people—and certainly all suppliers—share a good number of the anxieties which the noble Lord quite properly expressed.

I am sure that the noble Lord, Lord Weinstock, is right when he says that one cannot achieve anything with this clause—and I believe that the noble Lord, Lord Bruce of Donington, probably knows that perfectly well. One cannot really protect the suppliers of British Telecom through arrangements of this kind, which flaunt in the face of all our competitors overseas in other nations what our international obligations are. If you want to do these things, if you want to maintain good relations between British Telecom and their suppliers, for God's sake keep quiet and let them get on with it. They get on very well at the present time. The suppliers are very able, British Telecom is very sensible: British Telecom is very anxious that we should have a strong supplying industry in this country. Those things are known and they are well understood, and raising them in legislation in clauses of this kind, which raises enormous complications in international trade, is really not the right approach.

9.51 p.m.

The point raised by the noble Lord, Lord Thorneycroft, does not anticipate the change in the general attitude within British Telecom as a state owned organisation with some responsibility for the welfare of British industry in general and some responsibility as a nationalised business. If you change that and create a private monopoly whose concern is to realise the profits envisaged in the prospectus, then they have to give that precedence in their thinking. Sir George Jefferson has said, "All right, we will buy from British companies". I welcome very much the assurance that he has given to the noble Lord, and I will be happy to see that in Hansard because it does represent a commitment on the part of Sir George Jefferson in the future. He said, "Yes, I want to see a healthy British industry and in my buying policy I will buy British where internationally competitive". That is a quotation from his own statement, which rather qualifies the commitment to a 95 per cent. United Kingdom supply which is the present position.

Keep in mind that the market will be invaded by companies that are backed by very highly developed sophisticated technology and based on economies of scale providing for markets like the Japanese market and the American market. So it is a real matter of concern where you have a different type of owner in charge of the company. I accept that within the GATT provisions and the EEC provisions we cannot discriminate, but I do hope that there will be some provision for a transition to enable British industry to get into the position of being internationally competitive. At the moment the British supplying industry is linked to the Post Office or British Telecom with its very exacting specifications, and these are not necessarily internationally applicable. There must he some provision, I hope, in the thinking of Sir George Jefferson, or whoever runs the successor company, there must be some concern for the future of the British supply industry. I am delighted with the assurances that has been given to the noble Lord, Lord Cockfield.

I should like to add a few remarks to what my noble friend Lord Taylor of Gryfe has said. While I was with the National Coal Board I played a fairly considerable part in introducing the concept of positive purchasing within the nationalised industries, and we achieved a very high level of home purchasing on a competitive basis. The question which arises which my noble friend touched on, as did other noble Lords, in this very important issue, is what is going to happen in the new framework within which this major enterprise is going to operate? Sir George Jefferson has given these assurances; but he said, if I am quoting the noble Lord correctly, in the immediate future. Sir George Jefferson of course will be moving on in due course and no doubt taking up other jobs. The question arises on this major Bill which is to transform a vast basic industry from the public to the private sector: what is going to be the long-term attitude towards purchasing?

Your Lordships may feel that this amendment has received adequate consideration from all sides of the Committee. Speaking for my noble friends, I have no wish to protract the discussion further. We are not satisfied with the decision as it is now left and we shall probably return to this issue on Report.

Before the noble Lord withdraws his amendment, the noble Lord, Lord Stoddart of Swindon, endeavoured to widen the debate on to import controls. Let me say this to the noble Lord. The economic policies of the Labour Government were disastrous for Britain. They ended up by being disastrous for the Labour Party—but that, of course, was a good thing.

May I reply to the noble Lord that we did not impose import controls, and that is perhaps why we did not succeed.

Amendment, by leave, withdrawn.

Page 3, line 37, at end insert—

("( ) to take all necessary measures to secure and sustain a stable level of employment throughout the telecommunication industry, where necessary making special provision for the re-training of personnel, in new technological developments and innovations as and when such developments and innovations are introduced;")

The noble Lord said: This amendment has been discussed with an earlier amendment, and I do not propose to repeat what I said on the subject of personnel policies and re-training. I do not propose to move the amendment.

[ Amendment No. 51 not moved.]

Page 3, line 37, at end insert—

("( ) to ensure a fair international competitive position for the United Kingdom telecommunications manufacturing industry including the reflection of the support given by foreign network operators to their indigenous communications manufacturing industry;")

The noble Viscount said: I have been asked by other members of the Committee whether they may speak to Amendments Nos. 54 and 58A at the same time. I am not sure how complicated that will be, and I will be guided by my noble friend. In a sense, my belief is that Amendment No. 54 and, to a degree, Amendment No. 58A would be covered by this rather wider-phrased Amendment No. 52.

May I say at the outset that the purpose of this amendment—I see the noble Lord, Lord Beswick, has left his seat—is to encourage the Secretary of State as well as the director, who are mentioned at the beginning of Clause 3, to act in a manner that either of them consider best calculated,

"to ensure a fair international competitive position for the United Kingdom telecommunications manufacturing industry including the reflection of the support".

I am not suggesting that British industry be protected. I am suggesting—and I realise how hard it is—that those responsible, including a member of the Cabinet, should try to achieve a fair competitive position, bearing in mind all our international obligations.

There is an obvious danger in liberalising here and not abroad, particularly against a background of the history which the noble Lord, Lord Weinstock, referred to the other day and which I have a feeling he may quickly touch on when he speaks, so I will leave it to him with his much greater knowledge of this area than mine. A 74 per cent. figure, as my noble friend Lord Cockfield mentioned in relation to telephone equipment supplied in the British market, does not give British manufacturers the same volume as a 100 per cent. market if that is the position, and remains the position, in France, Germany or other countries. Volume is pretty important to costs and efficiency.

I noted the words, quoted by my noble friend, of Sir George Jefferson, who does not expect a big increase in purchases from abroad, or words to that effect. We have to make sure, if we possibly can, that our manufacturing industry is not in an unfair competitive position. We have to do so in relation to subsidy; we have to do so in relation to compatibility, which can be used as an excuse even if foreign regimes start to follow our general direction. We have to make sure that we have a relatively fair competitive opportunity in relation to standards, which can also be used very easily to keep our equipment out of other people's markets.

I accept what my noble friend Lord Cockfield said about removing non-tariff barriers. This is obviously the far preferable route. So be it. As written, this amendment would merely require the Secretary of State to remove them or to do his very best to remove them. If he failed then he should consider how else he can give a broadly fair competitive opportunity to British industry. Our share of international markets has declined, and not entirely because of the faults of our manufacturing industry. We now have, for the first time, the opportunity to build our share again. We need a fair competitive opportunity.

It is true to say that in Clause 3(2)( b), ( e) and ( h), together with the definitions in Clause 4(2) of commercial activities which include export, we have already had our attention drawn by the Front Bench to the fact that part of the problems that I foresee are dealt with specifically. But my own belief is that in the world as it is we need a general duty for the Secretary of State particularly, and the director, to try to ensure a fair competitive opportunity and to look at all the factors I have mentioned. I beg to move.

If I heard him correctly, the noble Viscount, Lord Trenchard, suggested that we might consider the next amendment, Amendment No. 54, which is on the same lines. Is that correct?

I am sorry; I did not get it through to my noble friend Lord Trenchard. I do not think that Amendments Nos. 54 and 58A do fit with this amendment, and I think we should take them separately and briefly when their turn comes.

In generally supporting what the noble Viscount, Lord Trenchard, has said, I want to say that I think Amendment No. 52 is especially important. I apologise for detaining your Lordships at such a late hour, but this is the only place I can identify in the Bill where the position of manufacturing industry can be mentioned specifically to be falling within the general responsibilities of the Secretary of State and the director general, under Clause 3. It is rather important, therefore, that it should be considered seriously.

In this country there is a tendency to regard manufacturing industry as something of declining importance. I have forgotten what is the exact percentage said to be now employed in manufacturing industry, but it is of the order of 20-something per cent. That indicates that 70-something per cent. is employed in other industries, said to be mostly service industries. Servicing what? The insurance companies, the banks, the stockbrokers, the pension funds are providing services to industry. At the base of all this great service industry activity in which we place so much hope for the future lies manufacturing industry. I fear that if manufacturing industry fails, unless we become merely a country entertaining tourists, the service industries, or a large part of them, will go with it.

Therefore, I think that to omit from the Bill any specific reference to the British telecommunications manufacturing industry would be a quite remarkable omission which would not be in the best interests of economy, nor even of the telecommunications industry.

I accept what has been said about the support for the manufacturers by British Telecommunications and by Sir George Jefferson himself, who, after all, has been connected with the industry for only three years. Since he went to BT there have been quite remarkable changes and, it would be quite wrong to deny, very great improvements in attitudes. It would also be wrong not to have observed a very considerable toughening up in the attitude of BT towards the British manufacturers.

For decades the manufacturers have been led by the nose by BT, and in the past two years BT has suddenly come to recognise the necessity of designing and manufacturing telephone exchanges capable of being exported and has taken an objective view about specifications. Whereas in the past it was satisfied with less than was justified, it is currently insistent on a great deal by way of performance from the manufacturers; and I have to tell your Lordships' Committee that that has been rather good for the manufacturers, no less so for my own company than for others. I hope that partly as a result of this inspiration—shall we call it?—or certainly stimulus our chances of breaking back into the international business in telephone exchanges will have been increased, provided the support continues. While Sir George has been at pains to make statements such as that he is buying 95 per cent. of his communications requirements from Great Britain and intends—I think that the words he used were—"in the immediate future" to continue to do so, we have heard from the noble Lord, Lord Stoddart, a quotation to the effect that Mr. Pentecost, a senor official of British Telecommunications, has said that he will buy 20 per cent. of its requirements from elsewhere. That statement has not been confined to Mr. Pentecost; it has been contained in other communications from very senior officials in British Telecom.

There is some uncertainty in the procurement of telephone exchanges because British Telecom, if it relies entirely on the British industry, will have System X and System X only. System X is not yet in great abundant supply, and perhaps BT has certain apprehensions. Those matters can best be worked out between the industry and British Telecom, of whose goodwill I think we must be reasonably confident. It is I believe in the interests of British Telecom to have a strong British industry, and British industry cannot manage without the support of British Telecom. It is plain and true and generally accepted that in every country where there is an indigenous industry the local network authority gives full support. There are one or two exceptions to the general rule that they buy exclusively from their own manufacturers; but they are not important exceptions, and where they exist there are other arrangements which invalidate any bad effects that they may have on the home industry.

No one can run a telecommunications industry without the basic support of the network operator. The best guarantee in the long term—I think that the noble Lord is indicating to me to hurry up. I shall be as quick as I can, but had the noble Lords accepted some of our earlier suggestions, there would be no need to be going on at this time of the night. As I was saying, the best guarantee in the long term for the success of the British industry is its own competence. But I do not think it is right that there should be no mention of manufacturing industry in the Bill, and I do not think it is right that the British industry should stand in a worse position than its foreign competitors. I commend Amendment No. 52 to the Committee as achieving both of those objectives to some degree.

10.10 p.m.

The noble Lord, Lord Thorneycroft, as usual, put his finger on the nub of the whole question when he said that it was of course far better that these matters are left out of legislation. The obvious advantage of leaving matters of this kind out of legislation is that your foreign competitors in the EC countries cannot indict you before the European Court or anywhere else on the basis of your legislation. It means that it is very difficult for your competitors to do anything about it so long as it is done as a matter of understanding. So long as British Telecom was run as a public utility, this was perfectly possible. The aims of British Telecom, as a public utility, were to provide services to the customer, to run a public service.

The reason for the misgivings that now arise is the abrupt change from the impelling objectives of the public utility to an organisation whose main purpose is to provide profits for its shareholders. Of course, the inducements behind that are to economise wherever possible, including economies of purchase. Hence, the anxieties of the noble Lord, Lord Weinstock, and, to some extent, the noble Viscount, Lord Trenchard, and I think probably widely shared throughout the Committee.

The noble Lord, Lord Cockfield, if I may say so, is astonishingly naive about international relations within the EC and the attitude of the EC countries in this matter. Does he imagine for one moment that most of the EC countries that have their own state telecommunications system do anything other than prefer their own manufacturers? They do not put it into legislation which would immediately attract legal attention, including the legal attention of the noble Lord—

If I may interrupt the noble Lord, why, then, is he advocating that we put it in the legislation?

Yes, precisely so. We can then expose the humbug of the other EC countries which, as we all know, do precisely the same whether or not it is in the EC legislation. We always comply with it. But we do not insist on anyone else complying with it. However, that raises a wider issue. I have no desire to prolong discussion on this, but we shall return to it again. I quite understand the attitude of the noble Lord, Lord Weinstock. I share his anxieties. I do not think that the expressions that have so far emanated from both Sir George Jefferson and indeed from the Government will materialise in practice in what we shall term for the moment the post-immediate future.

Rarely have I listened to such intellectual muddle as that displayed by the noble Lord, Lord Bruce of Donington. He says that the reason we cannot catch out the Europeans in unfair practices is that they do not put it in the legislation, whereupon he advocates that we put it in the legislation, no doubt to enable the Europeans to catch us out—

I am trying to answer this point. The noble Lord has spoken at quite excessive length with very little enlightenment in what he says. He will perhaps enable me to complete what I want to say.

Most of the debate has been a re-run of the one that we had a few minutes ago except for the remarks of the noble Lord, Lord Weinstock, which were a re-run of the discussion we had earlier this afternoon. It is quite untrue that there is no mention in the Bill of the interests of manufacturers. They appear in many instances, as I have explained at great length.

There is nothing whatever to prevent the noble Lord, Lord Bruce of Donington, buying a British motor-car. There is nothing whatever to prevent the noble Lord, Lord Weinstock, buying a British motor-car, and I hope that he does. There is nothing to prevent British Telecom buying British equipment, and they do; and I hope that they will continue to do so. But the dividing line is whether or not people support their own manufacturing industry because it is a good and efficient manufacturing industry. I hope that, under the leadership of the noble Lord, Lord Weinstock, it is a good and efficient manufacturing industry and will continue so to be. The question is whether that is the situation or whether we write obligations into the law which are clearly and obviously in conflict with our international obligations.

What I am putting to your Lordships is that however much we all share the same aspirations—we all want to see a prosperous, efficient and progressive manufacturing industry in this country—we must go about it in the right way. I regret to say that trying to do it by inserting legislative provisions which are contrary to our international obligations is not the right way of doing it.

Does the noble Lord insist that Amendment No. 52 is contrary to our international obligations? Does the noble Lord realise that the monopoly purchaser buying from more than one supplier when he has the opportunity to import, is entirely different from somebody buying motor-cars where there is a multiplicity of suppliers and a multiplicity of buyers?

This is an obligation. The Bill itself says: that is shall be a duty. This amendment says that it shall be the duty of the director general and the Secretary of State to do certain things. I am prepared to accept an assurance from my noble friend Lord Trenchard that his amendment is meaningless—indeed, that might be so—in which event it is difficult to see why it should be put into the Bill. But if it has any meaning it can only have a meaning in the sense that it imposes an obligation on the director general and the Secretary of State to take action which was contrary to our international obligations.

With due respect to the noble Lord, Lord Cockfield, can it be against our international obligations to legislate to ensure a fair international competitive position?

Before my noble friend answers, I must direct his attention to the wording at the beginning of Clause 3 where it says:

"The Secretary of State and the Director shall … [act] in the manner which he considers is best calculated [to ensurer]".
I made it very clear that I realised that those words meant that we could not ensure the Secretary of State's success on every occasion.