Minister 'in cahoots with mobile phone firms on price fixing'

A minister has been drawn into an embarrassing row with Europe over claims that the Government conspired with mobile phone companies to fix high call charges.

Culture Minister Margaret Hodge was last night accused of being in cahoots with the mobile industry amid allegations that one of her aides suggested a champagne celebration with Vodafone after the company defeated moves to cut its charges.

Viviane Reding, the European Union's telecoms commissioner, said she warned Mrs Hodge that the British people would be "very upset indeed ... if they found out what was happening behind closed doors".

Her claims, revealed in a Channel 4 Dispatches programme to be broadcast tomorrow, are likely to infuriate consumer groups who have campaigned to reduce the cost of making and receiving calls while out of the UK.

Ms Reding said she had spoken with Mrs Hodge in the run-up to an EU decision in May last year on how much mobile operators could charge for 'roaming' calls.

At the time, Mrs Hodge was an industry minister with responsibility for the telecoms sector. Brussels had demanded that the charges be capped at 27p for making international calls and 10p for receiving calls abroad.

But in the face of intense lobbying from the phone companies, the EU agreed to rates of 34p and 17p - charges which still allowed them to make large profits.

Throughout the lobbying process, Ms Reding claimed Mrs Hodge "was playing 100 per cent the role of the spokesperson for the mobile phone industry".

By her estimation, the cost to the consumer before the deal, at up to 94p a minute, was 400 per cent higher than the cost to the operators.

The programme also quotes the minutes of a confidential meeting in November 2006 between Mrs Hodge and senior executives of Orange.

During the meeting, phone bosses asked for her help in preserving the "important source of income" that roaming charges provided.

It also gives details of emails sent by Nigel Hickson, one of Mrs Hodge's officials, to a contact at Vodafone.

In one, sent on the day a deal was reached, Mr Hickson wrote: 'Get that ice!' - interpreted as a reference to a champagne celebration.

A spokesman for Mrs Hodge's former department said it was wrong to suggest officials had been in cahoots with the mobile industry.

"The department's aim was to strike a balance that would benefit mobile users without stifling competition and innovation," he added.

"To do this we had to work with industry to understand the issues."