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Column 944agreement under section 2(3) of the European Communities Act 1972 to authorise payments, because it already has power under section 1 of the Overseas Development and Co-operation Act 1980. With that power to make payments to the development fund, it simply was not necessary to use the other powers. As our memorandum states, that seems to destroy the ODA's case for designating the treaty as a Community treaty. We therefore felt that the matter was of sufficient general importance to warrant being brought to the attention of the House.
We have the right to report something to the House on the basis of an unusual use of powers. I believe that the matter falls under that heading. However, our adviser suggested that, as the power had been used on three previous occasions, this could not be regarded as an unusual use of powers. However, that is a matter of debate. On the three previous occasions when the powers were used in that way--in 1975, 1979 and 1985--I was not the Committee Chairman. They must have crept by during one of the Committee's weak moments.
I place the Committee's concern on record, and I hope that the Minister can assure us that she will find some other way of bringing these important treaty arrangements to the attention of the House. I do not deny their importance or the valid criticisms made of them by my hon. Friend the Member for Cynon Valley (Mrs. Clwyd). This is not a satisfactory way of using unnecessary powers to incorporate something into the schedule of a statutory instrument. It would be at least as good to use the record of the proceedings of this place to explain the internal workings, instead of using what appears to be an abuse of the Minister's powers against which our Committee was established to safeguard.
Mr. John Battle (Leeds, West) : On every occasion that the Lome convention has been up for renewal since it was first signed in 1976, the situation facing the African, Caribbean and Pacific countries has proved to be bleaker in terms of development. My main job between 1979 and 1983 was to monitor the implementation of the Lome convention. The task now facing the convention and the burden that is must bear is much greater than it has ever been. The debt burdens have increased, prices for key exports have been falling and there has been an increasingly unfavourable imbalance in trade with the European Community.
The fourth Lome convention was signed in December 1989 and at last included a chapter on the environment. However, it took a year to negotiate between the member states and the 68 ACP countries. Although it will last for 10 years, as the Minister explained its financial package will be split and renegotiated after five years. We must put pressure on the convention now to ensure that it fulfils some of its original intentions. Within the context of the fourth Lome convention, I want to refer, as a case study, to Namibia--the newest ACP member.
At the time of negotiating membership of the ACP, the focus was on Namibian beef. Although Namibia must still sort out who benefits internally from the beef quota, I want to draw the attention of the House to the current key issue--that of fishing.
Column 945On 11 March, Namibia will begin negotiating with the Community for an agreement on EC access to fishing. In the debate on Second Reading of the Namibia Bill, the Minister for Overseas Development acknowledged :
"Namibia's fisheries programme is of great importance because it will provide a major source of income, as long as the fish are not stolen away the area will then need the policing that it has not enjoyed until now. The income that Namibia will derive from that sector will be enhanced once a fisheries agreement is reached with the European Community."--[ Official Report, 5 February 1991 ; vol. 186 c. 256.]
While I welcome that statement, the problem is that Namibia's fishery resources have been plundered by illegal overfishing in both the in-shore waters and off-shore. An estimated minimum of 300,000 tonnes of the offshore hake resources are taken by overseas fleets, which amounts to a not insubstantial amount in monetary terms. There have recently been local accounts of Spanish boats plundering those resources. When approached by the coastguard patrols, they have fled into Angolan territorial waters, taking with them 500 tonnes of hake fillets.
However, there is not only a problem with illegal plundering activities ; there is also a problem of rebuilding the fish stocks that have been depleted under South African occupation. Furthermore, there is the question of the development of an integrated industry, which involves both the offshore and inshore fishing industries through the development of an indigenous fleet. If Namibian fish stocks were allowed to recover, there would be sufficient to enable the indigenous fleet to work in harmony and co-operation with the European Community fleet.
However, that objective might not fit so neatly with the current European Community objective, because the point of the European Community's fisheries agreement has been to secure access for EC fisheries fleets to fishing grounds in ACP countries. In other words, the developmental objectives have tended to play a secondary role and to take a back seat.
Despite the reluctant concessions that have been built in with financial compensation in return for EC access, the pattern has been one of dominance rather than of genuine mutual integration for the purpose of development. In other words, the key aim of the EC has been to secure long-term access to internal fishing grounds for EC fleets. However, if that objective is to be faithful to the spirit and purpose of the original Lome convention, it should be blended with the need for Namibia to develop its own fishing industry in a spirit of genuine partnership and co-operation.
I hope that the Government will support Namibia's need for immediate effective conservation measures that will allow full stock recovery. That may mean minimal or no legal access to Namibian waters for the rest of this year. It will certainly mean backing Namibia's method of stock conservation through the establishment of low total allowable catches.
There will be a need to assist Namibia's ability to monitor and control fishing activities in its own economic exclusion zone, as the Minister acknowledged in the debate on the Namibia Bill. There is also a need to maximise local processing and the development of an indigenous fleet, which would mean the transfer of technological resources and the provision of capital goods, going beyond mere financial assistance.
However, it is also politically important to put pressure on South Africa to withdraw from its continued illegal
Column 946occupation of Walvis bay, which is Namibia's only deep-water port. Namibia needs its main port. I hope that the Government will recognise the need for an early integration of Walvis bay into Namibia, and that the Minister will confirm that that will take place before the end of this year, and that it will include the 12 islands.
In conclusion, to ensure that positive support to the newest member of the ACP--and in the spirit of the Minister's backing for Namibia's entry into membership of the Commonwealth, which was welcomed on 5 February--we need to ensure that there will be an increase in the allocation of overall resources that will take account of Namibia's membership. Or will Namibia be effectively locked out from that five-year budget and depend upon waiting for EDF VIII to arrive later, when it is renegotiated?
Some have spoken in the past of the lost spirit of Lome . It is true that the convention could be described as a story of missed opportunities to change the unjust balance of relationships between the north and south worlds, which has undermined development in the past. Attempts have been made to establish rules that would have helped to establish what was referred to in the preamble to the Lome convention as
"a new more just and more balanced world order."
But in practice, the EC has tended to sign and then later undermine the realities of the agreement. For example, in the past, the European Community countries have used the loopholes in the international law of the sea to protect their fishing markets, rather than give the ACP fisheries fair treatment.
Lome set out a model for new relations between rich and poor countries. Tonight, the Minister referred to it as the cornerstone. The European Community needs radically to improve the performance of the Lome convention in Africa. It could start by treating the Namibians as real partners in the fisheries negotiations. The Minister spoke of the testing early stages of independence and democracy for Namibia and of the liberal trading opportunities for the ACP. I hope that the British Government's and her voice will be heard when those negotiations open in March as it is a vital, practical test of the future effectiveness of the Lome convention. 1.21 am
Mr. Mike Watson (Glasgow, Central) : I cannot share the Minister's enthusiasm for the fourth Lome convention. I recognise that parts of it are welcome, but when it was finally agreed in December 1989 after more than a year of negotiations, there was a feeling, particularly in the European Parliament, that the negotiations had been rather half-hearted. The way in which they progressed leads one to agree with that view.
The manner in which the EC countries approached the negotiations illustrated a thinly veiled scepticism about the problems and needs articulated by the African, Caribbean and Pacific states. It seems that the EC countries effectively put negotiating the new agreement on the backburner. They were more concerned with their own economic restructuring and intent on overcoming the many difficulties in completing the internal market for 1992. There were the further distractions of the GATT Uruguay round talks and the needs--which, I acknowledge, were legitimate--of the emergent democracies of eastern and central Europe.
Column 947It seems that many EC member states give higher priority to bilateral aid than to increased co-operation at EC level. In part at least, it is possible that that is due to the unconvincing nature of the first three Lome conventions and their failure significantly to alter the north-south balance in terms of development.
As I said, I welcome some aspects of the new agreement. In particular, the link between development and human rights and the commitment to the environment and the needs of women are welcome. However, it has to be said that they are offset by shortcomings, especially on trade, where the concessions made by the EC countries fell far below what the ACP group sought. One instance of that is that the ACP countries' request for an increase of 30,000 tonnes of husk rice. They received an increase of only some 3,000 tonnes. The agreement also fails to provide the ACP with a preferential trading regime for agricultural products that would allow many ACP exporters to invest in substantial production and distribution units or replace expensive subsidised EC products with competitive ACP products. Equally important, no provisions were made to stop EC dumping on ACP markets where it is a disincentive to local production.
On the crucial matter of debt, the agreement contains only a miserable few measures. They aim to avoid a worsening of ACP debt under the new convention and to give technical assistance for debt management and capital flows. But the EC refused initially to include the debt issue in the negotiations on the new convention. That ignored the fact that most ACP debt is owed to EC Governments and to private banks in the Community. However, Lome IV contains no European commitment to take concerted action in international establishments or to establish an overall framework for bilateral arrangements that could assist the ACP in restoring their capacity to service their debt. Even the small debt to the Community was not written off.
Negotiations on Lome IV failed to get to grips with the fundamental problem of previous conventions--the disappointing level of implementation and the poor results which emanated from it. It seems inconceivable that only 20 per cent. of the funds of Lome III were spent during its five-year duration. That shows an endemic problem in the relationship between north and south. The EC countries still do not seem to have grasped the scale of the structural problems facing ACP countries, particularly in Africa, where there are desperate problems.
The serious deterioration of circumstances in ACP countries since the Lome conventions began in the mid-1970s is also revealed. There was a fall of 64 per cent. in purchasing power of the convention's signatories in the five years of Lome III alone. Lome IV failed to address that problem also. The distribution of the resources and wealth produced in the developed world must be complemented by maximising the contribution which can be made by the underdeveloped world, if given the chance. Until debt cancellation and the real encouragement of preferential trade agreements are pursued by the EC with conviction, something which has not been shown in the negotiations or in the final document of Lome IV, the
Column 948status of Lome will be further downgraded so that it becomes perhaps just one donor among others. Surely the ACP countries deserve better.
I had hoped that the hon. Member for Bradford, South (Mr. Cryer), who chairs the Joint Committee on Statutory Instruments, might have been able to join us again, but perhaps I had better put these remarks on the record. What he said was important, following the consideration of the documents by the Committee.
I want to assure the hon. Member, as I think he recognises, that in tagging the document on the internal financing agreement on to the debate, I do not believe that we have set a precedent in any way. As I said in the early part of my opening speech, I had intended this to be a belt and braces exercise, to make sure that, when the House discussed Lome IV, hon. Members would have full knowledge of all its aspects.
The worry of the hon. Gentleman about a transfer of moneys to a putative central bank would be more realistic if I had hidden my intention. My aim was exactly the opposite--to get everything on the record and to discuss everything together. I hope that the hon. Gentleman, who has rejoined us, will read in Hansard my first remarks in reply to the debate.
In order to permit Lome IV to become operational, member states must ratify both the Lome convention and the internal financing agreement. It is for us to determine how in the United Kingdom we should do that. That is why I recommended to Parliament the procedure for full consideration of all the elements making up the convention. Lome is unique. The member states and the European Community are partners to the convention, whereas only the member states contribute to its funding by virtue of the internal financing agreement. The agreement is a separate treaty and could, of course, have been laid alone before the House to satisfy the Ponsonby rule, but that would have deprived the House of the opportunity to consider the internal financing agreement in its proper context and would have denied the intrinsic link between it and the Lome convention. We adopted the unusual course of bringing it before the House so as to be as open and consultative as possible.
Mr. Cryer : While I am grateful to the Minister for her response, I suggest that when in future she wants to make an explanation of that sort, she should include it in the memorandum submitted to the Joint Committee on Statutory Instruments. We did not have any idea of the reason she has given.
Mrs. Chalker : Given the number of explanatory memoranda that I am signing, I did not think that the hon. Gentleman would have wanted more from me. I shall ensure that they are as full as I can make them, keeping him up till even later hours considering such matters. I shall, so far as I am able, provide the fullest possible explanations.
A number of hon. Members expressed concern today about what they see as the loss of the spirit of Lome . I hosted a visit during the past week by Dr. Bahane, the secretary-general of the ACP countries. He believes that
Column 949Lome IV represents a significant step forward and acknowledges the important role that the United Kingdom has played in bringing that about--a subject to which I shall return.
In this short debate, we had a rather one-sided view from the hon. Member for Cynon Valley (Mrs. Clwyd). I have always seen the 1990s as an opportunity for Lome countries. They can participate in 1992 and I have particularly argued with the European Commission that they should be helped to benefit from it. I believe that Lome IV can help to stimulate growth for their products in the European Community market.
The 1990s provide an opportunity to conclude and implement GATT properly, and the hon. Member for Cynon Valley will recall my saying on 14 December how important a successful end to the GATT negotiations was for the ACP countries. But above all, we can build on the special ACP-EC partnership which has developed in implementing the wide-ranging and increased Lome IV.
I said that Opposition Members had been characteristically negative in their remarks. That goes for the hon. Member for Glasgow, Central (Mr. Watson). There was nothing half-hearted about the long and detailed debates which led up to Lome IV--the largest ever commitment of the EC countries, and rightly so, to the ACP countries. When I visit ACP countries and discuss the detail of it with them, we talk about how they can better use EC assistance, and they talk about that with enthusiasm.
None of those ACP countries would recognise the image that the hon. Member for Cynon Valley painted of Lome IV. I assure her that nothing is collapsing and that we are increasingly working together. That applies to the member states and the Commission, the Community and the international financial institutions, and the Community and the ACP countries.
The hon. Member for Cynon Valley and my hon. Friend the Member for Hertford and Stortford (Mr. Wells) spoke about effectiveness, and my hon. Friend spoke of the need for donor co-ordination and the need for links between bilateral donors and EC delegates. Regarding effectiveness, the Commission is looking to the United Kingdom's knowledge and experience of aid planning to help it in the future programming of European development fund funds. It is also looking to us for evaluation methods of project proposals, and the new EDF rules will permit member states to evaluate effectiveness. Hon. Members will know that for a long time I have believed that to be necessary. I am glad to say that the Commission now has a new evaluation unit and that a much fuller use of evaluation work is planned. It is also important that the Court of Auditors, which carries out annual reviews of aid implementation and makes recommendations for improving value for money, should be able to refer to such evaluation plans. That is why member states are considering the improvements suggested in the auditors' report for 1989, and that could prove valuable.
The hon. Member for Cynon Valley spoke of the slow disbursement rate of EDF VI. The Commission is aware of the problem. We would not have allowed it not to be aware of that. The main sector for aid under Lome III, as the hon. Lady will recall, is agriculture and rural development. Both are inevitably rather slow in disbursing parts of the programme. It is not justifiable to steer away from these identified priorities simply to speed up disbursement. However, measures must be taken to speed it up, and we
Column 950are encouraging that with the European Commission. The sectoral import programmes under the structural adjustment facility are fast disbursing and they will help to step up the disbursal rate of EDF VII. They will be able to give the balance of payments support that so many of those countries badly need.
My hon. Friend the Member for Hertford and Stortford asked about donor co- operation. He will probably be aware that British high commissioners and ambassadors in ACP countries are encouraged to call together ambassadors from Community countries, and frequently from other countries, to discuss with the EC delegates what they are doing and how they can reinforce programmes of economic reform and structural adjustment, health care and education, and the other matters that we most value in the programmes in which we are involved.
I am glad to say that co-operation is working rather better than it did a few years ago. Nevertheless, there is a long way to go, and one of the frequent topics of conversation when I meet the Commissioner and his senior staff is how to get better co-ordination on future projects between EC partners and other main donors and EC delegates. We shall set about that with great enthusiasm in the years ahead. The hon. Member for Cynon Valley implied that there was some secret about ACP debt and our discussions on the subject. I assure her that that is not so. When Commissioner Marin first presented his proposals to the Development Council on 5 November, I willingly undertook to consider them carefully. It is my view, and the view of other member states, that the proposals need a good deal of further work to ensure that the poorest countries benefit--exactly what the hon. Lady asked for--and that the current arrangement for dealing with debt are not undermined.
The poorest and most debt-distressed countries which are following economic reform programmes deserve the encouragement that we can give through the structural adjustment measures which are included in Lom e IV for the first time. Every donor country agrees that we must be sure that the proposals do not cut across the current international machinery for dealing with debt. No decisions have been taken. As I reported to the House after the Development Council meeting, consideration continues, and we intend to see that this is made to work.
Britain has forgiven official aid debt to the poorest in our aid programme, and we aim to view the Commission's proposals in exactly the same policy context of helping those countries to help themselves. The debt under Lom e conventions covered by the new debt proposal is about 3,900 million ecu over 50 years. The United Kingdom's share of that is estimated at about £500 million. The hon. Member for Cynon Valley referred several times to structural adjustment. She seemed to imply that the Community would be able to work independently of the World bank and the IMF. There is no merit in the European Community, the World bank and the IMF having competing policies. We should work together to reinforce each other's efforts in these countries. As the hon. Lady may know, the Bretton Woods institutions, with their special expertise, play a special role. That means that the Commission, like bilateral donors, should play a supporting role, and we hope that it will do that.
Column 951The EC decisions on debt followed consultation with individual ACP countries, so it has not been a matter of the Community going off on its own and not consulting.
The hon. Lady also referred to the lack of staff to implement Lome IV. Expertise is gradually being built up in DG8. I fully accept that there are insufficient specialists in certain areas. That is why Britain has seconded environment specialists to the Commission to work in DG8 and link up with the environment directorate-general. We have also just seconded a United Kingdom economist to DG8, to deal particularly with structural adjustment, and other staff are going to build up exactly the work that has to be done under Lome IV. The United Kingdom is committed to a liberal stance on trade because we believe that to be to the benefit of all ACP countries. We have been leading the call for CAP reform. The solution to unfair Community exports in third countries is not to commit them to aid but to tackle the unfair export competition by the EC, and that is exactly what we are doing in GATT.
One hon. Member--the House will forgive me, but I do not remember who--was rather confused by the EC tropical products offer. That has been widely recognised as a good contribution to the needs of developing countries, but like the hon. Member for Cynon Valley I would have liked more trade concessions. We fought hard for greater trade concessions, but sadly not all my colleagues in the negotiations were as willing as I to see greater trade concessions to ACP countries. However, I must exonerate the Dutch from that blame, as they were extremely helpful in trying to open up more trading possibilities for the ACP countries.
This has been a short but good debate. We see the chances of 1992 for the Lome countries as an opportunity. A single market of more than 320 million consumers, only
Column 952one external barrier and one set of standards, must make it easier for ACP countries to export to us. The benefits of going to the international trading system which are generated by the Community's new economic dynamism will be a major force for a general liberalisation. We shall go on pressing the Commission to take account of 1992, in all its programming of Lome IV.
I will repeat something that I said briefly at the beginning about bananas- -a very special commodity for our Caribbean friends. Our long-standing commitment to the traditional banana suppliers in the Caribbean will not be changed. We fought hard in the Lome renegotiations to ensure that effective preferential access arrangements were maintained for the traditional suppliers. The commitments are enshrined in a protocol to the convention, and I assure the House that we shall uphold those commitments when we consider what arrangements should apply to bananas in the single market after 1992.
As I said earlier, the Commission has still to come forward with its proposals, but the arrangments must take account of our commitments to our Commonwealth Caribbean suppliers, of the trade policy considerations, the interests of consumers and the competition and efficiency objectives of the single market initiative. We are committed to getting on with the job and to ensuring that Lome IV is even more effective than Lome s I, II and III and the Yaounde conventions before them. I am convinced that the Commission has the will. It may need a few good ideas from its member countries about how best to act, but together we can deliver a much better deal in the 1990s than we were able to achieve in the 1980s.
Question put and agreed to .
That the draft European Communities (Definition of Treaties) (Fourth ACP- EEC Convention of Lome ) Order 1991, which was laid before this House on 29th January, be approved.
Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Goodlad.]
Mr. George Howarth (Knowsley, North) : In this Adjournment debate, I represent only my constituents, the town of Prescot in which I live and the work force of and all those dependent on the BICC works there, which is of vital significance to the town. I do not speak for BICC when I say that, nor for British Telecom, Mercury, or any of the other commercial concerns which obviously have an interest in this matter.
The BICC company has been vital to the town of Prescot for the past 100 years. In the past few years, the company has shrunk as an employer, from employing about 10,000 people at its peak to under 2, 000 now. Several weeks ago, the closure of the copper refinery in Prescot was announced--its timing is still open to discussion--and a further 230 jobs were lost.
I make those few introductory remarks about BICC because there is a problem. The development of optical fibre cable and the development and implementation of the broad band system offer considerable potential to the company. It is estimated that, if such developments were allowed to go ahead pretty quickly in this country, about 800 jobs could be created within the borough of Knowsley, part of which I have the honour to represent in the House. When one considers that my borough is in the top 10 constituencies for unemployment, which is not a statistic that I am boasting about, but a fact of life, those 800 jobs would certainly be most valuable.
Similarly, in the north-west of England, where the cold wind of recession is blowing and scarcely a day goes by without the loss of manufacturing capacity and jobs, it is estimated that about 4,000 jobs could be created as a result of such developments.
Naturally, the estimate which is most commonly used by commerical interests is that, taking into account the multiplier effect provided by any manufacturing industry--jobs rippling through into other parts of the economy--there is potential for about 30,000 jobs. That potential, nationally, in the north-west and within my constituency is all too plain and welcome in the context of an economy which has been shrinking drastically during the past few years.
However, there are constraints upon that development. The Minister is considering the duopoly review, commissioned by the Government to study all these matters. If they accept the duopoly review's recommendations, it will prevent the development of the broad band system in the United Kingdom, in particular by preventing British Telecom and Mercury--the two operators capable of producing a system of that kind--from carrying entertainment for between seven and 10 years. That is the profitable part of the operation, which would act as a spur to the development of home computers, video phones and so forth, so that would prevent the industry from taking off. I do not decry the Japanese Government, Japan's industry or its people--far from it--but by contrast, in Japan, through the Nippon Telegraph and Telephone Company, decisions have already been taken to invest £12 billion to create a broad band national network, which will put the company in a strong position to take
Column 954advantage of any developments that are then allowed, in seven to 10 years, as a result of the delays caused by the duopoly review. I simply wish to urge the Government to consider the prospects involved in allowing British Telecom and Mercury to develop a broad band system, and, in particular, allowing them to carry out entertainment operations. It is possible that an industry in which we already have a technological leading edge, and in which we are now a world leader, will simply slip through our fingers, and the potential jobs in my constituency and in the nation as a whole will be lost. In the 1988 Mountbatten memorial lecture, Sir William Barlow, the distinguished chairman of the BICC group of companies, said : "In so many scientific and technological enterprises, Britain has frequently led the world as inventors or in research and development--only to lose the final race in terms of commercial application and market exploitation.
We are on the threshold of a revolution in communications and we should grasp the opportunity to be a world leader."
That potential already exists--the potential for this country to move heavily and dramatically into the technological revolution. It is a matter of developing a formidable, highly technical communications network, and of Britain's getting back into the driving seat to deal with the technology and manufacturing of the 21st century. The opportunity must not be constrained for the next seven to 10 years : we must grasp it fervently now. Even if questions are posed about competition, let the existing companies get on with the job ; and let us hope that, in seven to 10 years' time, the opportunity has not slipped through our fingers. It should be a matter of British national pride that we were there first, and that we are doing it.
The Minister for Corporate Affairs (Mr. John Redwood) : I congratulate the hon. Member for Knowsley, North (Mr. Howarth) on raising such an important subject. I was sorry to hear of the recent job losses at BICC ; I hope that the plans that I hear are being discussed for development on an alternative site can bring some extra jobs and prosperity to his part of the world--assuming that the planning authorities consider them satisfactory.
I agree with the hon. Gentleman : over the next few years, the development of broad band networks and opto-electronic technologies will be important, and I hope that his constituency will benefit from that as the demand comes through : 1 million km of fibre highway are already in place for trunk calls, and more will be sold as needed. There will also be new opportunities for the suppliers. The use of fibre allows more signals to be sent along a given route. Broad band systems allowing television programmes to be sent by cable require either fibre optic capacity or thicker copper cables in the home. The Government are keen to promote the right environment for those developments, so that British companies across all industries can benefit from them and gain an international competitive advantage. I think that Opposition Members and I can agree on that.
The hon. Gentleman asked me about the duopoly review. I am sure that he will understand that I cannot predict the results of the Secretary of State's deliberations tonight ; however, we stated in the document that British Telecom was already allowed to convey entertainment
Column 955services to the home as the agent of a cable company. BT has also been free to apply for cable franchises through a subsidiary, in its own right, on the same basis as any other applicant. BT is, however, now disposing of all its cable interests. Those matters will be covered when we present the findings of the review. We have been delighted by the range and quality of the representations received on those and other issues.
Although the hon. Gentleman and I can agree on the importance of cable networks, I do not think that I have always found myself in agreement with Opposition Members about the best ways to achieve that. Labour wants the Government to make BT install a national broad band grid.
The Labour party's document "Meet the Challenge--Make the Change" stated :
"BT must be empowered and directed to undertake this major investment programme."
That seemed to be reaffirmed in Labour's latest industry document, published this week. But who should pay the taxpayer or BT's customers? Moreover, why should cable be laid before there is a need for it? What possible advantages are there in returning to a monopoly provider? The Labour party's plans have been costed at an additional £20,000 million --a very considerable sum.
We say that as people demand cable TV or video conferencing, so more fibre will be used to link trunk routes--eventually into homes or businesses. Informed estimates suggest that, under our policies, the United Kingdom will spend more than £60,000 million on the technology as demand builds up. It will be a huge and important investment. By adopting our approach, the United Kingdom has already become one of the most intensive users of optical fibre for communications in the world. We use more fibre for trunk communication than France or Germany--both considerably larger countries.
Cable television companies are using fibre increasingly for trunk circuits. It is also being installed in the premises of major users of telecommunications, such as those in the City and other business centres. In the centre of London, more than 1,300 buildings are directly connected by Mercury alone, and BT accounts for more. There are also local fibre networks in Manchester, Birmingham, Bristol, Leeds, Reading, Edinburgh and Glasgow.
It does not yet pay to install fibre for smaller and residential customers, because the opto-electronic components needed to convert from optical to electronic signals are still expensive. The price of the components will doubtless come down, and as they come down, fibre to the home can become a reality if people want the sort of new services that fibre links can provide.
British Telecom has undertaken extensive research and development into fibre optics and opto-electronics--much of it in collaboration with leading United Kingdom companies. Last autumn, BT, GPT, and BICC started a two-year "field trial" of new fibre technologies in Bishop's Stortford, in which telephone calls, television pictures, text and data all travel over a single optical fibre cable. The trials are both technological and commercial. Their results will help decide when and if it will be commercial to offer such a service more widely.
The Government's role in encouraging such developments is threefold. First, we help to fund research, both in
Column 956the United Kingdom and on a European basis. There is the £800 million EC RACE programme, which I expect to be followed up shortly by RACE II.
Domestically, research is also supported under the LINK programme : in opto -electronics and in advanced semiconductor materials, vital for the components in any fibre network. That involves an additional £27 million of public money over a period of five years.
Secondly, the United Kingdom played a leading role in the establishment of the European Telecommunications Standards Institute, which now undertakes most of the work in establishing standards in Europe, which can stimulate marketplace activity.
Thirdly, the United Kingdom's approach to new services in the market provides a great incentive. The success of the United Kingdom's liberal regime towards service provision has led many of our European partners to copy it. By allowing anyone with a service to test it in the market, we have enabled the United Kingdom to become the leading provider of value added network services of all types in Europe. As broad band technology develops, we shall be in a strong position to exploit what it can offer.
British Telecom and Mercury are not the only players. Cable operators already bring broad band network to the home and they do not offer television alone. They represent one of the best chances for effective competition to BT for residential phone links as well. Some 135 cable franchises were awarded by the Cable Authority before its functions were incorporated into the ITC at the beginning of the year. It is still early days for most of the operators, but 30 of them are offering service to their customers, and many more have started to install their networks. Successful operations already provide services to more than one in five of the households they can reach. In the United States--a more mature market-- penetration reaches one in two.
The next two or three years will be critical for the broad band cable industry. Cable operators make very heavy investments at the beginning of their lives, and they need to penetrate the market rapidly to get payback. If the operators stick to their plans, they will reach half of Britain's homes by the mid-1990s, and two thirds by the end of the century. They have the opportunity to bring advanced telecommunications to their customers on the back of the cable television market. Data transfer services are already being widely used by businesses, and there are niche markets for services such as video conferencing. There are plenty of other uses yet to be thought of.
The United Kingdom has the leading position in both the technology and the use of fibre optics and broad band services, and undoubtedly will be amongst the pioneers of those new uses. British Telecom and Mercury have already switched to fibre for almost all their trunk cable network. Many individual large customers now have fibre to their premises. It may well be only a question of time before it will be economic for British Telecom, Mercury and their competitors, such as the cable companies, to supply all customers.
But it must be an economic decision--not a Government command. Only in that way will customers get in service a broad band system they want, rather than a speculative white elephant at someone else's expense. In
Column 957they way, Britain is likely to be in the lead and is likely to provide a good market for fibre optics and cable technology. I agree with the hon. Member for Knowsley, North, who has raised this vital issue, that the development of
Column 958these services is necessary. I believe that the Government are pursuing policies that will definitely have that effect, and that we are in the lead in western Europe.
Question put and agreed to.
Adjourned accordingly at Two o'clock.
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