BT is not just Britain’s fixed-line operator and one of the widest held shares among small investors. It was also the favourite of ethical funds until Vodafone took over and BT split with mmO2. Unfortunately, the shares have not done well. Since 1997, for instance, they have underperformed the market average by half.

For Mr Leigh and his colleagues this is not bad enough. Their committee is Parliament’s most senior watchdog against waste and corruption in public spending. In the spring of 2004, however, its prime concern is to make BT lose more custom and profit.

Its latest report, issued this week, reveals attitudes to regulation at their most blinkered. Based on a report by the Comptroller and Auditor General, it lambasts Oftel (now part of the free-spending Ofcom) for being soft on BT. For the MPs, the evidence seemed clear. After 20 years of competition, BT still has two thirds of the market. Many consumers and firms could save money by switching to another supplier but have not done so. The regulator has therefore failed.

Gordon Selfridge thought the customer was always right. This is anathema alike to the nanny state and to those so obsessed with money that they would prefer to use their free time making and keeping as much of it as possible.

Grocery shoppers know that you can save money by comparing prices and offers each week and buying items in different shops to minimise the cost. But most of us do not. Millions buy advertised goods instead of cheaper own brands.

To today’s Scrooges and Gradgrinds, this is irrational behaviour that the state must combat. People make costly calls on mobile phones when they could save money by going to a callbox or waiting until they get home to a landline. Something must be done.

Consumer groups were outraged that millions who buy electrical appliances take out expensive insurance that their betters think they do not need. Some were disappointed that the Office of Fair Trading, after a long inquiry, failed to ban this irrational behaviour.

To Left thinkers, insurance is exploitation because most people do not claim. To rationalists, including the OFT, investment managers waste our money because, on average, they cannot beat the average.

Mr Leigh and his colleagues are annoyed that Oftel does not go out and urge BT consumers to switch supplier. Oftel claimed that, if the regulator ensures that competitors have free rein, BT does not rig the market and tells customers about discount schemes, consumers can make their own choice. That is no way for a regulator to get on.

Ofgem, under Callum McCarthy, told power consumers that they ought to switch from the old monopoly. Mr McCarthy now heads the Financial Services Authority.

The problem, as MPs noted, is that telephone charges are complex. The best buy is different according to how much you use the service, where you call to and for how long. It was Oftel’s job, some said, to tell consumers which was the best buy for them at the moment. One claimed that he did not have time even to work out which of BT’s ever-changing tariffs would minimise his bill. BT should be forced to tell him. Preferably, BT should have to work out after the event which had been the best tariff for him and put him on it retrospectively.

Many of the MPs simply felt that the regulator was failing as long as BT remained profitable. Brian Jenkins, MP for historic Tamworth, had some sympathy for David Edmonds, Oftel’s beleaguered regulator. He said: “Technology has made your job even more difficult because it has reduced the cost to them and they make more profit.”

Regulators in this market, as in others, are caught in a circle of their own making. The old incumbent is not permitted to charge the lowest overall prices in any of its markets because that would be anti-competitive. But that means most consumers pay more than they need. Regulators therefore push competition in order to cut the old monopoly’s market share as fast and as far as possible. But the incumbent does not co-operate and tries to keep its customers by making them satisfied. The regulator forces down the incumbent’s prices to make sure its customers get as fair deal so the average consumer can probably not save a lot by switching to some unknown supplier, most of whom are not even signed up to the industry’s ombudsman scheme.

Those who regulate the regulators therefore push them ever harder to attack the incumbent on all fronts. Ofcom is already undertaking a year-long study to see if BT should be forced to break up.

These MPs press their noses so close to regulatory detail that they do not seem able to see through BT as Goliath-like enemy to BT as a beneficial contributor to the economy, on which millions depend for service, for work, for orders, for technical progress, for sponsorship, for their pensions and to pay off their mortgages.

Shareholders might come bottom of the list but Mr Leigh and his colleagues might even spare a thought even for us. Clearly, we have acted irrationally and should have switched our savings to another company. The Financial Services Authority must surely have failed in its duty to point out a better investment. Call them in.

graham.searjeant@thetimes.co.uk

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