Sir Iain Vallance, chairman of BT, will meet Tony Blair, the Labour leader, in Brighton today amid mounting signs of Tory unease over the corporation's offer to connect schools, hospitals and libraries to the information superhighway if the party takes power.
The announcement by Mr Blair on Tuesday that he had reached agreement with BT for the free connection in return for being allowed to enter the cable entertainment market after 2002 is said to have angered ministers.
According to one source in the telecommunications industry, Ian Lang, President of the Board of Trade, telephoned Sir Iain personally yesterday to question the terms of BT's offer to Labour.
But amid reports that the full board had not approved the offer, BT last night emphatically denied that there was any "backtracking" on the offer it had made in intensive discussions with senior Labour figures.
A senior BT executive said: "There is no backtracking. We are delighted that Mr Blair has accepted the recommendations of the Trade and Industry Select Committee."
The committee proposed that the Government lift the restrictions stopping BT and Mercury competing with mainly US cable companies to provide entertainment but the Government has so far steadfastly refused to commit itself to lifting the restrictions.
The passage referring to the agreement in Mr Blair's speech was shown to a senior director of BT fully authorised by the chairman before he made his keynote leadership speech on Tuesday. BT said it was "nonsense" to suggest that there was any question of rescinding or modifying the offer.
Business Comment, page 23