Orders of the Day — Post Office Bill

Part of the debate – in the House of Commons at 12:00 am on 11 November 1968.

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Photo of Mr Paul Bryan Mr Paul Bryan , Howden 12:00, 11 November 1968

May I start by thanking the Postmaster-General for his very full and lucid explanation of the Bill. He has said on past occasions, if he did not say it today, that this is the biggest reform ever undertaken in the history of the Post Office. We are, therefore, fortunate that never before has there been so much preparation for the reform.

Over the last few years we have had a Select Committee, a White Paper, a P.I.B. Report, an I.R.C. Report, a probe by McKinsey, and recently the Brookings Institute has had its turn on the Post Office. We could hardly have had more investigation than has taken place over the last few years. In the Conservative Party and. I expect, in the Labour Party, we have been thinking a lot about this matter, too. Out of all these investigations has come one common point of agreement—that the Post Office must turn itself into something more commercial, something more like a business.

But before we debate the Bill, the public ought to be told how much has already been accomplished over the last two years on the ground towards this goal, what changes of organisation have taken place and what physical changes have been made in the various post offices throughout the country. The main change which is the separation of the Post Office, or the main parts of it, into two divisions—telecommunications and the postal services. I should like to congratulate the Post Office on the speed at which this has been achieved. It is only 14 months ago, I imagine under the influence of Sir John Wall, that "Preparing for Corporation Status" was published. Much of that which was proposed in that pamphlet is already in being. May I read one or two passages to show the extent to which division of the Post Office was proposed.

First: The Post Office needs to be reconstructed quickly into two separate businesses—post and telecommunications—because each has widely different operating characteristics and problems; each is growing at a different rate and must be free to develop at its own pace; and each therefore has its own requirements for successful management which demands the concentration of attention Later, the pamphlet reads: In applying the above principles, each business must have responsibility for the conduct of its operations and be provided with the 'support' functions essential to efficiency. Thus posts and telecommunications must each have control of its buildings, establishments, and personnel, finance and motor transport. Thus, even the common services are being divided to provide two entirely separate functions.

I imagined, when that pamphlet first came out, that there would be considerable local physical difficulties in making the changes in the postal buildings, but on visiting post offices I have found that postmasters have welcomed them and that the fact that telecommunications has moved out of a post office building has almost always been a blessing. The building was bursting at the seams anyway and warranted division. Strangely, too, the postmasters say that they now have very little business communications with their opposite numbers at the telecommunications end.

I have said all this because it leads me to my first question: as, in reality, the Post Office has become virtually two organisations, and plans to become completely divided, why, in the Bill, do we theoretically and in law pretend that they are one organisation when, in fact, they are ending up as two, with just a flimsy legal bridge, and no more, to join them? In addition to the admirable reasons given in the pamphlet for two divisions, I could add several more. As a start, this enormous business employing 2 per cent. of the working population of the country, is too big in itself for efficiency. In these days of takeovers, one must remember that size in itself is no virtue. It can be a positive vice when, as in this case, size is due to the fact that two entirely diverse businesses have been joined together.

To illustrate how diverse they are, their almost every characteristic is not merely different, but in utter contrast. Telecommunications are capital intensive and the postal services labour intensive. The one division is highly technical, needing a highly specialist and qualified staff, whereas for the other, far more general abilities are required. One is rapidly growing—almost the fastest growing industry that we have—where as it is conceivable that the postal service in the years ahead could contract. Telecommunications have endless, unknown possibilities. The future of the postal service is less mysterious. Telecommunications are profitable and could be made highly profitable. The postal service is less profitable. That last factor creates the danger, if they are to be kept together, of cross-subsidisation.

Having said all that, I can think of only one reason why they are being kept together, and that is the bad reason of cross-subsidisation. I cannot help wondering whether the reason their accounts have been kept more or less similar is that the profitable service can help the less profitable service when it comes to fixing charges in the years to come. That would be a very retrograde step to take now that we are moving towards a commercial pattern.

I am aware that the Select Committee came down—but only just came down—on the side of one Corporation, but wonder whether, when it came to its conclusion, the Committee realised the extent to which these departments would be separated physically. I doubt whether even the Post Office realised it at that time.