Blair seals the pact with BT chief

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The Independent Online

Political Editor

Tony Blair and Sir Iain Vallance last night sealed Labour's information superhighway pact with British Telecom after Lord Tebbit, the former Tory chairman, forsook his party loyalties and went out of his way to praise the Labour Party leader.

Mr Blair and Sir Iain met privately in the leader's Brighton hotel suite to discuss the plan on a day of high political drama on which the intervention of Lord Tebbit, a non-executive director of BT, overshadowed a ferocious ministerial attack on Mr Blair led by Ian Lang, the President of the Board of Trade. As ministers continued to excoriate Mr Blair for allowing his announcement on Tuesday to be presented as a "deal" which no opposition party had the power to make, Lord Tebbit said that Mr Blair had "recognised the commercial needs of British Telecom" by agreeing the access in return for free connection of schools colleges, hospitals and libraries to the information superhighway.

Sir Iain last night issued only the tersest of statements after his meeting with Mr Blair saying that while there was no deal there was an "understanding" with the Labour Party. Mr Lang said the two men had confirmed their "agreement" and that if Labour took power it would adopt the "unanimous recommendations" of the Commons Trade and Industry Select committee. These would allow BT progressively to enter the cable entertainment market in competition with cable companies in the period up to a total lifting of market restrictions in the year 2002. He said the company would respond by "some acceleration" of its broadband investment programme-estimated at around pounds 15bn - and by "offering in principle free connection to schools hospitals colleges and libraries." Sir Iain, who has been criticised by ministers who want him to reject the Labour proposal, left without answering reporters questions.

A furious Mr Lang wrote to Mr Blair yesterday saying that Sir Iain had assured him personally that no "deal" had been done and warned that any move to allow BT to connect with existing cable companies would require a change in BT's licence conditions which would be a matter for the Director General of Communications. Adding that the Director General would be obliged to hold public consultations, Mr Lang demanded: "What consideration have you given to this?

Mr Lang said in his letter that many other telecommunications companies had entered the market in good faith "against the background of public undertakings, investing billions of pounds so that already almost a third of the households have had access to this service."

Their "exclusion" implicit in the "alleged deal" with BT would create a monopoly and he asked: "How can this be reconciled with the public interest? After all the work is already being done to bring the benefits you seek, to our schools our hospitals and our universities."

But despite his open commercial interest in the offer to BT, Lord Tebbit went a long way yesterday to undermine the public relations impact of Mr Lang's onslaught. In Brighton to fulfil his duties as a Sky TV presenter and appear on BBC Question Time, Lord Tebbit said that what Mr Blair had said was "just a matter of fact." He said: "Usually he gets it right about five to eight years after the Conservative Party does. On this occasion he seems to be slightly ahead."

He declared: "What Tony Blair has done is to accept the recommendations of the House of Commons Select Committee and say that the Government should, and if he were to be in government he would, allow BT to compete with the American-owned cable companies.

"I think it's time we were allowed to compete with them," Lord Tebbit told BBC Radio 4's World At One. "What I'm saying is that on this occasion Mr Blair is proposing to do something which I think is correct and in the interests of the country as a whole, not just of BT.

Lord Tebbit added: "It's to the credit of Tony Blair that he's recognised that it would be an advantage overall to the country to get that network down. I just wish it had been Ian Lang who was saying it or Michael Heseltine when he was doing the job a few years ago."

Mr Blair also rejected the word "deal" but reaffirmed that the text of his speech had been agreed with BT and added: "I find the intervention of Conservative ministers absolutely extraordinary, quite inept and if anything indicated how they are now behaving as if they were in opposition rather than in government this is it."

The Brighton conference is the first in living memory in which the leadership has suffered no defeats by the delegates. Yesterday, as it was even suggested that the Daily Mail might swing behind Labour, the party passed another milestone when the conference ditched the last vestiges of its unilateralist nuclear defence policy.