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Post Office

– in the House of Commons at 12:00 am on 15th July 1975.

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7.0 p.m.

Photo of Mr Tom King Mr Tom King , Bridgwater

I beg to move, That this House notes with deep concern the announcement of an estimated £300 million deficit for the Post Office in the current year, only three months after the Chancellor's budget estimate was a deficit of £70 million; deplores the failure of Ministers to advance any coherent strategy to meet the critical situation of the Post Office, or to exercise any effective financial control over it; and calls upon the Secretary of State for Industry immediately to set up an independent inquiry to identify the options for the future operation of the Post Office and to make recommendations.

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

I have selected the amendment in the names of the Prime Minister and his right hon. Friends, to leave out from 'House' to the end of the Question and to add instead thereof: 'regrets that the actions of the previous Administration in imposing artificial restrictions on the development of the nationalised industries created severe financial problems for the Post Office; and endorses the Government objective of phasing out the deficits of the nationalised industries and restoring them to profitability'.

Photo of Mr Tom King Mr Tom King , Bridgwater

This is the latest chapter in the very sad and clearly quickening saga of the problems of the Post Office. Public confidence in what used to be one of the prides of our nation—the efficiency and economy of the Post Office—was undoubtedly enormously weakened by the price increases and problems of last March, and that weakened confidence has had no chance to re-establish itself before this latest bombshell—one can use no lesser word—has broken on the British people. Charges are to be yet further increased. To many people, it seems that the Post Office's financial system is out of control and that the Government and the management are at a loss to know what to do about it.

Our Post Office can still stand comparison on an international basis, but anyone who looks further than the present situation recognises that the trends are extremely worrying. The service is deteriorating, and costs are rocketing. It is right that we should address ourselves to this situation.

On 15th April the deficit was indicated by the Chancellor of the Exchequer as £70 million. A hint appeared in The Guardian of 29th April, which reported: The Post Office yesterday denied reports that its published estimates for a 1975–76 deficit of £50 million relied on faulty arithmetic and that a more recent assessment of the sums produced a loss figure of about £300 million.The Guardian also included a statement from the Post Office that no further price increases were envisaged for the present calendar year. We see a story in the Daily Express today, however, which alleges that the Treasury has claimed that the Post Office gave false figures about its profits this year and that part of the Chancellor's Budget Statement was based on these figures. The report says: Senior Treasury officials claim that Mr. Healey had not tried to disguise the corporation's financial plight, but that the Post Office had hidden the truth, hoping that there would be a further State aid later this year. That is a very serious allegation indeed. It is not for us to enter into inter-governmental arguments of this nature but obviously the House must be concerned that within a week of the Chancellor of the Exchequer's statement I was told in a Written Answer that the Chairman of the Post Office had been to see Ministers to inform them that the expected loss would be rather greater than the Chancellor of the Exchequer had anticipated. What is the House and the country to think when within three months of the statement by the Chancellor—who presumably has access to the best information—that the loss was to be £70 million it becomes clear that the deficit is £300 million? What confidence can we have that it is now £300 million if within three months £230 million is added to the first forecast? This is the acute worry of those of us who are concerned about the problems of inflation and the Government's own finances. The Government amendment regrets that the actions of the previous Administration in imposing artificial restrictions on the development of the nationalised industries created severe financial problems for the Post Office. That might have been a good amendment if it had been tabled 12 months ago. It is not so good now that the Chancellor has assessed the total liability of such financial limitations as might have been responsible for the present situation at £70 million. Where has the further £230 mil- lion come from? I can understand the Government's difficulty in trying to find an amendment which would command some sort of support in the House but I hope we will not face the problems of the Post Office by looking backwards. If this is going to degenerate into a "Yah boo, it was your fault, no, it was yours" sort of argument we shall never tackle the real problems which everyone in the Post Office recognises it is facing.

In the second half of the Government's amendment, reference is made to the objective of phasing out the deficits of the nationalised industries and restoring them to profitability. I do not think anybody would seriously challenge that objective, but we are bound to consider the Government's strategy, and whether it is likely to work. Our motion deplores the failure of Ministers to advance any coherent strategy to meet the critical situation of the Post Office or exercise any effective financial control over it, and when one looks at the size of the deficit one sees that no further illustration is needed to explain what is meant by the exercise of effective financial control.

The objective of phasing out the deficit is extremely worthy, but it is to be met by enormous price increases. When we talk of a coherent strategy, we mean that the Government should speak with one voice. In the Second Reading debate on the Statutory Corporations (Financial Provisions) Bill on 9th June, the Chief Secretary to the Treasury said: The alternative of large price increases can be self-defeating in some industries. We are seeing signs of it in the postal services, where large price increases result in falling sales, making it even more difficult for the industry to pay its way, and, in the longer term, it must affect employment prospects."—[Official Report, 9th June 1975; Vol. 893, c. 56.] That is precisely right. There is every evidence that the strategy followed in the March round of price increases is having exactly that effect. Rising prices are causing a rapid decline in traffice. I was told in a Written Answer yesterday that first-class traffic had fallen by 26·2 per cent. over the corresponding period last year. In reply to a similar question a month after the price increases, I was told that the fall in first-class traffic had been 25 per cent. The evidence therefore is that there is an increasing shift away from first-class traffic.

There has been no information from the Minister on metered traffic, so we still do not know what is actually happening to business metered traffic. My understanding is that a tremendous number of businesses which are acutely conscious of the costs they face in all directions, have taken tough action on the procedures they follow over mail. When the metered figures come through I think we shall see that they are substantially down.

I turn now to the telephone service. A lot of people do not appreciate the interaction of the changes in the unit time and unit cost. Since 1970 the charge for a six-minute local call at peak time will, following these increased charges, have gone up by 600 per cent. I know of businesses where the staff are not permitted to post a first-class letter without the authority of the manager. I know of instances where similar controls are exercised over telephone calls. It was not until the last round of telephone increases that many people realised that it was cheaper to telephone in the afternoon than in the morning, and that a number of actions to reduce costs were open to businesses.

The Government are embarking on a strategy of yet further price increases as though they are confident that that is the way to solve the deficit. Yet they admit, and the Minister of State admitted it in his answer to me yesterday, that they do not yet know what the effect of the last round of price increases has been.

I have referred on the postal side to the absence of any evidence on the effect on metred traffic. Such evidence as we have points to a drop of 26.2 per cent. on first-class traffic and a drop of 8½ per cent. on the estimate of total traffic. On telephones, I asked what evidence there was of a reduction in telephone usage, and I was given a remarkable answer which said We have spoken with the Post Office, which points out that it is too early to judge the impact of the recent tariff increases". There is then another paragraph and the answer then goes on to say that the judgment is that the impact of the tariff increases has been substantially as was assumed when the increases were proposed."—[Official Report, 14th July, 1975; Vol. 895, c. 364.] I am prepared to believe the first answer, which is honest and right. What evid- ence is there that the drop is not substantial?

It is worth considering how some of these price increases are being proposed. In the latest POUNC letter to people asking for a comment on the telephone tariff increase it is stated that the Post Office has chosen to increase charges because that will enable people to mitigate their cost by reducing their usage. What would the Price Commission say to a bread manufacturer who said, "You cannot complain about the price increase because people can eat less if they do not like the higher price." One needs to look carefully at the figures in the POUNC report. The report has not been widely circulated. It estimates that average increase in cost for a business in terms of telephone calls will be from £155 to £262 in a year. That is obviously quite a small business. Other businesses with substantial telephone usage will suffer equivalent very substantial increases.

We therefore face a situation in which the increase in postal charges will have gone up this year from 4½p first class to 8½p, and in which telephone charges will have risen 600 per cent. since 1970. One can see just how far price escalation has gone. The last round of increases evoked an enormous storm. POUNC said that it had never before had such a substantial number of protests. I wonder what the impact of this increase will be, and I wonder whether Ministers have estimated what is likely to happen to some of the essential traffic elements. Take mail order, for example. I have seen figures quoted which show that following the latest increase in March, mail order companies arranged to avoid sending 20 per cent. of their traffic through the post, relying instead on alternative arrangements. It is now estimated that as much as 50 per cent. of this traffic may be sent by alternative means.

The Minister of State will be aware of the reports made by mail order publishers and publishers in general who were faced with tremendous increases in costs at the previous round and for many of whom the present increase will spell disaster. I wonder what the increases will do to the Christmas card trade. It is ironic that in the mail today I should have received a note about the House of Commons Christmas card issue. I hope that there will not be too big a print order, under your guidance, Mr. Speaker, because it will cost 6½p to send cards and this is bound to have a serious effect on the numbers posted.

I was advised that the previous increases made a considerable amount of direct mail more marginal and put a lot of it out of court. These increases will certainly kill a substantial amount of valuable traffic which the Post Office has been trying to develop through its marketing departments. In its last report POUNC drew attention to the value of the commercial and business traffic to the Post Office, and how this very important part underpinned a lot of overheads and general costs. If there is a substantial fall in that traffic the implications are obviously extremely serious.

The other aspect—and this is what worries me about the Government's strategy—concerns telegrams. In March it was possible to send a 10-word telegram for 60p. If these increases go through the minimum charge will be £1·40p. Many people think that the minimum charge is 70p but it is, in fact, 70p plus 7p for each word. One can send a telegram for 70p, but if one wants to put anything in it the cost will be £1·40p.

Is the Post Office trying to price itself clean out of the market? In my constituency telegrams are very much a life-line for poor members of the community, particularly for those who cannot afford a telephone. How are they to manage if the cheapest way of making urgent contact with a member of their family will cost £1·40p or more? What concerns me is that what is happening with the telegram may be carried through into the postal side.

There are various items on which I should like the benefit of the Minister's advice. One of the things the Post Office is worried about is the pension fund. On 9th June the then Minister of State, Treasury said: the circumstances surrounding the deficiency are complex and we are still discussing with the Post Office the best way to deal with it." —[Official Report, 9th June 1975; Vol. 893, c. 152.] Has there been any resolution of that problem yet?

Secondly, I presume that the costs, charges and estimates were worked out on the basis of the on-going wage commitments of the Post Office. I understand that one of those commitments is a form of cost of living adjustment of 1 per cent. for every 1 per cent. rise in the cost of living index. Under the Government's anti-inflation policy, will that cost of living bonus be controlled, and will it affect the amount that the Post Office will have to pay out in the present year? I understand from page 5 of the White Paper that this will be one of the contractual obligations that the Post Office will be entitled to terminate.

Thirdly, on the particular provision regarding the cuts in services and the changes in services, the newspaper account said that it was proposed to delay second class mail to the third day. Is it intended to delay all second class mail to the third day, so as to try to ensure some advantage for first class post and to try to prevent any further deterioration in traffic? Further, the Minister of State refused on an earlier occasion to give me an undertaking, in view of the financial situation of the Post Office, that there will be no further proposal from the Government to extend any further public ownership into telephone manufacturing and to extend the Post Office's activities in that area. Is it not clear that in the present situation, given the problems that management so clearly faces in the Post Office, it would be sheer lunacy to try to expand the Post Office's remit yet further into telephone manufacturing?

Our motion calls for an independent inquiry. I appreciate that my hon. Friend the Member for Leeds, North-West (Sir D. Kaberry) is present and that he is chairing a Select Committee on this very subject. I think that my hon. Friend will accept the magnitude of the problem and the scale of the public's concern over a situation which calls for something even more wide-ranging than the remit of a Select Committee. Obviously we shall look with great interest at the Select Committee's report. It will be most valuable material for an independent inquiry. There is also need for something more than a view by POUNC, I am not surprised that Lord Peddie said how appalled he was at the way in which events have proceeded. On the 3rd January the council was sent some urgent representations regarding the largest increases ever. It was told that its answers had to be received by the end of January. Apologies were made and it was said that that situation would never be repeated. What happened? On 16th July the council received further urgent representations regarding further increases and the council has to make its representations by early August. In other words, the council received the same three weeks' notice in which to consider massivley important and far-reaching proposals for the future of the Post Office.

The situation that I have described puts the council in an impossible situation. We believe that an inquiry must consider the options that are now facing the Post Office. It will have to consider whether the management set-up and the organisation of the Post Office in its present structure is right, or whether it should be divided into two separate corporations. It will have to consider whether it is realistic to have a chairman and chief executive doubling in the same rôle—one man doing the two jobs. What is the scope for reductions in manning?

The POUNC Report in paragraph 22—this was a prelude to the March increases—stated: We are convinced that in the Post Office, as in most large organisations, there is considerable scope for cost reductions which would not prejudice quality of service or employment. We were disappointed to find no evidence of realisation by the Post Office of the vital need for such action. That is a very serious charge to make, but unfortunately that is the belief that many members of the public share. Against that background it is clear that if the public are to recognise the problems faced by the Post Office and the options that are before it, and if they are to have any confidence that the Government, the Post Office management, the unions and the House are taking any interest in these problems, an urgent independent inquiry should be held in order to report on the problems.

If we do not proceed with an inquiry, it seems that the Government strategy will be a steady deterioration of service, and a rapid increase in price. There will then not be minor changes on the margin—for example, no second rural deliveries and other rural services being cut—but the whole national service will be rapidly taken outside the range of a considerable number of people. Anyone who has read the Age Concern pamphlet will know that that is a real problem—namely, that Post Office services are being priced out of people's pockets. People are asking whether there is any price level at which the Post Office can provide an acceptable service and still make a profit.

That is why we welcome the opportunity that this debate provides. That is why we censure the Government for their lack of any coherent strategy. That is why we call for an urgent and immediate independent inquiry into the future of the Post Office.

7.26 p.m.

Photo of Mr Gregor Mackenzie Mr Gregor Mackenzie , Rutherglen

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: 'regrets that the actions of the previous Administration in imposing artificial restrictions on the development of the nationalised industries created severe financial problems for the Post Office; and endorses the Government objective of phasing out the deficits of the nationalised industries and restoring them to profitability'. I always listen with considerable interest to the speeches of the hon. Member for Bridgwater (Mr. King). I know that the hon. Gentleman speaks with considerable authority on the Post Office. Indeed, he worked closely with the former Minister of Posts and Telecommunications in the first few years of the life of the Post Office as a public corporation when the working relationship between it and the Government was being established. However, I am a little disappointed having heard the hon. Gentleman's speech tonight. It was less constructive than I had hoped. It was less constructive than the speeches and debates which we have had in the House over the past few years. During that time I think that genuine attempts were made by both sides of the House to put forward constructive proposals to the Government of the day.

I know that the hon. Member for Henley (Mr. Heseltine) does not see it ever as his duty to put anything constructive before the House. Perhaps the hon. Gentleman is afraid that he is storing up hostages for the future. It is unfortunate that perhaps the hon. Member for Bridgwater is following his example. From our point of view, and from the point of view of those who have taken part in Post Office debates over many years, the hon. Gentleman's speech was not what we expected from him.

Before I discuss the motion and the amendment I shall make a few general observations. It is obvious, yet none the less necessary to make the point, that we are discussing the Post Office against the background of an unprecedented rate of inflation in this country, at least in modern times, and a rate higher than that of many Western European countries. Until we get inflation under control—and our White Paper published last week shows we are determined to do so—the difficulties being faced by the Post Office will continue.

Inflation hits hard all nationalised industries, but the Post Office, with its very large number of employees and its high wage bill, is perhaps more vulnerable than most. I have no doubt that this evening many criticisms will be made. But it is part of the value of a debate such as this that it gives the House of Commons an opportunity to bring to the attention of the Chairman and the Board of the Post Office how public opinion sees the organisation for the management of which they are responsible. However, criticisms which ignore the high inflation in which the Post Office has to operate would be unconstructive and unfair.

The second point I want to make is that though I am happy to come to the Dispatch Box to answer questions and to defend the Post Office so far as the Government's responsibilities are involved—that is my job—I do not run the Post Office. There is no longer a Postmaster-General. If Conservatives want me to defend every dot and comma of the Post Office's proposals or to justify every action the corporation has taken the implication is that they want the Post Office reconstituted as a Government Department. But they cannot have it both ways. They cannot expect Ministers to accept responsibility for everything a nationalised industry does and at the same time criticise them for excessive intervenion in its affairs.

It is not many weeks ago that my right hon. Friend the former Secretary of State for Industry was loudly criticised by the Opposition when he sought to comment on the loss of jobs in the steel industry. This is a matter that concerned a great many of us at that time.

Another fundamental question is whether the Post Office is to be run as a social service or as a commercial organisation. The statute that made the Post Office an independent corporation provided for the latter and I believe that to be right. The Post Office has its social obligations under the Act and it takes them seriously. But this does not relieve it of its statutory obligations to pay its way. The corporation the unions and the Government are united in the belief that this should be so.

Another question I want to pose is how far the taxpayer or the consumer should pay for the Post Office services bearing in mind that the taxpayer is the man in the street. We believe that the consumer should pay—and pay according to the use he makes of the service. Industry and commerce are the main users of the Post Office and I do not see why the taxpayer should subsidise their telephone calls or their mail. We have never concealed the fact that getting the nationalised industries back to realistic prices will be painful. My right hon. Friend the Chancellor of the Exchequer has made that clear. But we are determined to phase out these subsidies and we are ready to accept the consequences.

The hon. Member for Bridgwater was at pains to say that in a debate such as this we should not look to the past, but since the Conservatives were in charge of Post Office affairs for four years out of the five years since 1970, we are entitled as a House to look critically at what happened over that four-year period. I remind the House that the basic reason why the Post Office—this also applies to other nationalised industries—has had to make a succession of price rises is that the previous Government artificially held their prices down from 1971 onwards.

Let us remember that the Post Office Corporation in the first years of its existence made a modest profit—as the old Post Office did. In 1971–72 its profit was £36 million. But the imposition by the Conservative Government of price-controls immediately put them into a deficit situation. In 1972–73 that deficit was £64 million and in 1973–74 it had reached £128 million. Furthermore, the corporation's difficulties were sharpened by the increasing rate of inflation. As a result, the Post Office deficit in 1974–75 exceeded £300 million and it was estimated at the beginning of this calender year that, if no remedial action were taken, it could reach £700 million in 1975–76.

Tariff increases, which were implemented in the spring, were designed to reduce the 1975–76 deficit to £50 million at 1974 prices—or £70 million at current prices. The hon. Gentleman quoted from the Daily Express. I had my attention drawn to that matter, and I am sure the hon. Gentleman will not be surprised to hear that I do not believe everything I read in the Daily Express. Furthermore, I hope that the House will not accept the hon. Gentleman's comments on that piece. However, the deficit is now estimated at £300 million. This must be a matter of great concern to each and every one of us.

In explanation, let me first say that when the Post Office prepared the forecasts on which its spring tariff increases were based, the board assumed a narrower interpretation of the social contract than proved to be the case. It also assumed a rate of inflation for 1975–76 which proved optimistic. In the event, wage increases were higher than had been allowed for.

These higher levels of payment, along with their internal consequences for pensions, added £137 million to the estimated deficit. Secondly, the growth of the telephone business has—because of the downturn in the economy—been slower than the Post Office expected. This might have added as much as a further £50 million to the estimated deficit. The remainder is made up chiefly of general cost increases arising from the high rate of inflation.

In this situation there were three practical choices—first, increasing the subsidy, which would in turn have increased public expenditure and the public sector borrowing requirements; secondly, accepting a large deficit which also would have increased the public sector borrowing requirement; or thirdly, having sought all due economy, increasing tariffs. The last was the only one consistent with the Government's general policy for the management of the economy—the objective of phasing out nationalised industry deficits in 1976–77. It was also the only course consistent with encouraging the proper commercial outlook in the Post Office.

Nothing has been more damaging to efficiency in nationalised industries than the continual run of large deficits. That is why the Post Office is putting forward these proposals for tariff increases. At the same time on telecommunications it is taking an opportunity to seek not just to break even but to earn the 2 per cent. on turnover permitted under the Price Cede. One important effect which this will have will be to increase the proportion of the telecommunication investment programme which is internally financed. The programme is a massive one amounting to £810 million in 1975–76.

In the face of all these difficulties the Government have taken positive steps to restore the situation. First, we are determined to restore financial disciplines—disciplines which the payment of continual subsidies has eroded. Secondly, earlier this year we strengthened the Post Office Board through the appointment of a Finance Director and of four distinguished part-time members. Thirdly, we are securing an improved flow of information from the Post Office to the Government on lines recommended by Sir Henry Benson.

The proposals include the provision of corporate plans for each of the main businesses, an annual budget and quarterly return of performance against budget on both finance and physical indicators. They are designed to recognise the legitimate interest of Government in the long-term strategy and efficiency of the Post Office without our getting involved with day-to-day management. All these proposals closely accord with the recommendations on corporate planning made at the end of 1973 by the Select Committee on Nationalised Industries.

Fourthly, whilst we appreciate the savings to be effected by the Post Office, with the help of the trade unions concerned, we as a Government will continue to encourage and support the Post Office in measures to reduce costs. My right hon. Friend the Secretary of State has made it very clear to the Post Office Board that the Government are looking for the most rigorous economies in the future.

Photo of Mr Arthur Lewis Mr Arthur Lewis , Newham North West

Will my hon. Friend make inquiries to see whether there is any truth in the report that £100,000 has been spent on the venetian blind escapade, to which no doubt he has had his attention drawn?

Photo of Mr Gregor Mackenzie Mr Gregor Mackenzie , Rutherglen

I have heard about the venetian blinds, and my hon. Friend the Under-Secretary of State for Industry will take that point on board in his reply.

Photo of Mr Arthur Lewis Mr Arthur Lewis , Newham North West

I asked that question of my hon. Friend the Minister of State, not of my hon. Friend who is to reply. If there is any truth at all in the story, he must be able to give some answer. I do not know whether the figure involved is £100,000, £10,000 or £1,000. Is it true that these people are spending thousands of pounds of taxpayers' money to install electrically-operated venetian blinds in their building?

Photo of Mr Gregor Mackenzie Mr Gregor Mackenzie , Rutherglen

I am concerned about the matter, but at present I am seeking to deal with the broader strategy of the Post Office. I take my hon. Friend's point and I shall see that it is dealt with by my hon. Friend the Under-Secretary of State.

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

The hon. Gentleman has been given a reply by the Minister

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

If the hon. Gentleman wants to pull up the blinds, he can do so at some other time.

Photo of Mr Gregor Mackenzie Mr Gregor Mackenzie , Rutherglen

My hon. Friend has made his point about venetian blinds and I am sure that those who are concerned with Post Office affairs will put that item high on their list of priorities.

I have to ask the House to recognise that some of the changes which may have to be introduced in the services may not be palatable. However, it is no good complaining, on the one hand, about the deterioration of the Post Office's financial position, and on the other refusing to entertain the possibility of cost savings through reductions in the services provided.

The motion moved by the hon. Member for Bridgwater calls for an independent inquiry into the affairs of the Post Office. We do not reject in principle the idea of independent inquiries into the nationalised industries. Indeed, we have appointed a committee under Lord Plowden which has conducted such an inquiry into the electricity industry.

We do, however, believe that such inquiries must be set up only when they can make a positive long-term contribution to the development of the industry. We reject entirely their use as some kind of political gimmick, particularly when the proposals come from those whose contribution, when they had power, was far less than ours and who bear the greater part of the responsibility of the problems of the Post Office.

Photo of Mr Tom King Mr Tom King , Bridgwater

Will the Minister reconsider that last statement? He has accused me of not making constructive suggestions. The Post Office is a very complex business and it would be a presumptuous hon. Member who gave a blueprint on how it should operate. Moreover, the Minister commenced his remarks by making the point that he does not run the Post Office. Then he accused my hon. Friends and myself of failing to run the Post Office properly—he recognises that there is a difference. Wherever the suggestion comes from, he knows that it also comes from outside bodies. Therefore, will he give it serious consideration?

Photo of Mr Gregor Mackenzie Mr Gregor Mackenzie , Rutherglen

I said that we do not reject in principle the proposition of setting up inquiries into any of the nationalised industries. I was simply pointing out to the hon. Gentleman that I should like to have heard from him—in addition to just putting this forward—some kind of contribution about the affairs of the Post Office as a whole, because he is as aware of them as any Conservative Member.

In this connection the House will not wish me to ignore the important contribution made by the Post Office Users' National Council and hon. Members will know that a Select Committee on Nationalised Industries is currently examining an important aspect of Post Office work.

I do not claim—nor does the Post Office Board—that all is perfect in the Post Office. We know that, as in any other large organisation, there are problems to be solved. But I believe that the Post Office is conscious of them and with the help of the trade unions therein is seeking to resolve them. Post Offices throughout the world and certainly all countries in Western Europe are in difficulties as of this moment in time. We all realise that. There are no easy options. I am willing—as is the Secretary of State—to listen to any positive and constructive suggestions which may be put to us from time to time. Having heard the speech of the hon. Member for Bridgwater I find it difficult to accept suggestions from an Opposition which, when they were the Government, saw the first major strike in the Post Office and caused the first major deficit. In contrast this Government are taking constructive steps to help the Post Office and it is in that spirit that I ask the House of Commons to accept the amendment to the Opposition motion which has been tabled tonight.

7.44 p.m.

Photo of Mr Richard Wainwright Mr Richard Wainwright , Colne Valley

The Government's amendment speaks of their objective of phasing out the deficits. I had hoped that the Minister would tell us something of the strategy for phasing out the deficits. However, we have not heard this at all.

It seems strange for a Minister who has just delivered this speech to be complaining about a lack of constructive suggestions, because he has not regaled the House, as was his duty, with any suggestions either from the Government or, presumably, from the Post Office, that could be labelled constructive. Unless the statement about the Government's objective of phasing out deficits is substantiated or some effort is made to clothe it with credible plans, we must suppose that the Government are putting over a confidence trick on the nation.

My hon. Friends and I are not satisfied that the elimination of the Post Office deficit is attainable unless there is legislation to remove the Post Office mono- poly on letters and to alter the whole strategy of the Post Office in relation to charges. The situation is a spiralling one, and not a word that the Minister has said indicates that the spiral can be cut off. So far, the message to the public from this debate is that they face an endless series of hopeless, overall, ham-handed price increases, none of which will succeed in making the Post Office break even.

This leads me back to the letter monopoly.

Photo of Mr Tom King Mr Tom King , Bridgwater

The hon. Gentleman referred to an endless spiral. In my researches for today's debate the most chilling remark I found was a statement apparently made by the Post Office that it could not rule out further price increases this year.

Photo of Mr Richard Wainwright Mr Richard Wainwright , Colne Valley

Indeed, that is an approach to honesty to which the Minister did not refer, which is significant. If the House of Commons is to fulfil one of its main functions, namely, to be a forum to which the nation can look for enlightened information, it is important that Ministers should come clean on this matter. If it is the fact, as I believe, that no phasing out of the deficit is in sight, this should be plainly admitted.

The Post Office monopoly in letters is enormously important because it is the most pervasive monopoly in the land. People can even obtain an alternative water supply if they are resourceful, and thus circumvent the otherwise natural monopoly in water.

However, this is not the case with letters, perhaps except in the case of a gigantic corporation, because in that respect size is quite undeservedly rewarded. For instance, other nationalised industries show little spirit of brotherhood or sisterhood towards the Post Office. Because of their size they often deliver their own missives to their customers. However, the ordinary medium-sized or small business is in the grip of the Post Office letter monopoly, and the individual citizen even more so.

Therefore, in supporting the Conservative amendment, as I intend to recommend my right hon. and hon. Friends to do, I hope that we shall hear from the Opposition spokesman at the conclusion of the debate that the inquiry that they propose does not necessarily start from the assumption that the monopoly must be retained. Nor, I hope, will it start from the position that letter rates must be identical throughout these islands, irrespective of the distance the letter has to travel or the complications of is journey.

My hon. Friends and I do not believe there will be any salvation for the Post Office by simply adding to the overall standard of tariffs for first and second-class mail.

The monopoly does not extend to parcels and newspapers. I have never been able to understand why there should be a monopoly in letters when it is not thought necessary to extend to the carriage and delivery of valuable parcels. I am not suggesting any sudden plunge into a completely new system or structure for the carriage of mail, nor, indeed, necessarily a sudden nation-wide plunge into differential rates for the carriage of letters by the Post Office. However, I believe that pilot experiments are urgently necessary and I hope that they can be woven into the inquiry which is proposed in the motion before us tonight. Until properly-mounted pilot experiments have been made, no one can tell what is the best arrangement for Post Office finances.

For instance, there are rural communities, one of which is in the constituency of my hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel), where the Post Office has abandoned responsibility for the daily delivery of mail. The people who are thus suffering are never given the opportunity to say whether they would be willing to pay a higher price for mail to be assured of a daily delivery. That option is not put before them.

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Teesside Thornaby

Have any of the constituents of the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) written to the Scottish Post Office Users' Council about the matter?

Photo of Mr Richard Wainwright Mr Richard Wainwright , Colne Valley

My hon. Friend's constituents have done that, but the answer is that under present legislation the option is not available to them.

I should like to see two experiments carried out locally. I have to be realistic, and I admit that both experiments would have to be carried out initially in urban areas. The first experiment should be in differential charges in favour of local mail. The imposition of the 8½p first-class rate for carrying a letter from a housebound invalid to a relative on the other side of a small town is an intolerable charge. The Post Office cannot get out of it by saying that it would be cheaper to telephone, because the telephone service is still not available to a vast section of the population.

Photo of Mr Arthur Lewis Mr Arthur Lewis , Newham North West

Is the hon. Gentleman aware that the Post Office collects local mail, puts it on a train, sends it 50 miles away to be sorted, brings it back and delivers it?

Photo of Mr Richard Wainwright Mr Richard Wainwright , Colne Valley

That was not known to me, but it is an interesting addition to the dossier. There is no doubt that for delivery in the same average-sized town a great many of the charges borne by longer-distance letters are virtually eliminated—the station services, conveyance by contractors and, no doubt, a considerable part of the cost of inward and outward sorting. I should look to a reduction of about 25 per cent. as a guess if the true cost of local mail were applied to the first-class rate.

Secondly, I should like to see a local pilot experiment in competition. Until there is competition, the true facts of the situation will never be known. If in the past the theoretical calculations of the Post Office, without the benefit of practical experiment, had been reasonably accurate, I would not raise the question of experiments in other ways of dealing with the mail but, as we are confronted with such a series of gigantic errors in the theoretical calculations, it seems to me that the empirical approach is necessary.

There is some support for that view in the report of the Post Office for the year ended 31st March 1974, one sentence of which reads as follows: The only sound basis for Post Office operations is the provision of services which the customer wants and for which he is prepared to pay the true cost. If the customer wants to have a letter delivered by breakfast-time across his home town, the Post Office is saying in its report that it should be able to charge him the true cost. Manifestly, the Post Office does not do so at present. It charges him what it estimates in a purely theoretical way to be his share of the overall cost of delivering letters throughout the kingdom. That is not the true cost of which the Post Office speaks in its most recent report.

The true cost can never be accurately decided unless, at any rate in some parts of the country, there is competition by which to test the Post Office estimates of true cost. We cannot establish the true cost unless a competitive situation exists somewhere at some time. That is why I hope that either with an inquiry, or as an early result of an inquiry, pilot experiments of this kind will be conducted.

I have confined myself to the letter service because that is the monopoly aspect which I want to stress. One result of the introduction of pilot experiments, and of notice being served on the Post Office that the old ways are no longer sacrosanct, is likely to be a great deal more freedom, incentive and local accounting for local managers. The local managers of the Post Office—the head postmasters, and so on—in spite of certain improvements in their lot, are still the interpreters of the rule book rather than the local entrepreneurs of the Post Office.

Any chamber of commerce or chamber of trade which has had regular interviews with head postmasters usually ends up by feeling sympathetic with the poor chap who is not allowed to follow up his own ideas or ideas fed to him by his local community, but is mainly there to quote the rule book to those who have complaints or grievances. If there were an atmosphere of loosening up the ancient structure of the Post Office we could achieve a greater degree of incentive or even some autonomy for local managers of the postal services.

If we can be assured at the end of the debate that the inquiry which the Conservatives seek will not start with certain sacred assumptions and will include the possibility of experiments being recommended on a pilot and local basis, I shall recommend my right hon. and hon. Friends to support the Opposition motion.

7.58 p.m.

Photo of Mr Arthur Lewis Mr Arthur Lewis , Newham North West

I feel sorry for my hon. Friend the Minister of State because I appreciate that what he did was to read, very ably, the brief which had been prepared for him, no doubt by the Post Office—by those who had been accused and found guilty—without commenting upon the obvious stupidity of the brief which he read.

Photo of Mr Gregor Mackenzie Mr Gregor Mackenzie , Rutherglen

Having sat up until 3 o'clock in the morning and having risen by 7 o'clock, to write the speech myself, I take exception to the comments made by my hon. Friend.

Photo of Mr Arthur Lewis Mr Arthur Lewis , Newham North West

I withdraw what I said completely, Mr. Deputy Speaker. If my hon. Friend sat up until 3 o'clock in the morning writing his speech and if he drew all the facts and figures from his own mind, I must attack him and not the Post Office.

My hon. Friend told the House that the Post Office made a mistake in its budgeting and the £70 million should have been £300 million. If my hon. Friend says that he and not the Post Office made that mistake, I accept his word. I thought that the Post Office had made that little mistake between £70 million and £300 million because it did not know that there was inflation.

It reminds me of that old story of the pianist in the four ale bar saying that he did not know what was going on upstairs. Everybody else in the bar knew, including the boys and girls who were going upstairs, but not the pianist.

Did not the Post Office know that there was not merely inflation but rampant inflation? Did not it know that Post Office workers were asking for increases? One could understand if it were a small difference but here we have a budgeting difference between £70 million and £300 million. There is far too much of Parkinson's Law rampant among the top executives in the Post Office.

I have never dealt with any organisation in 40 years in public life—30 years in his House—which has so rapidly deteriorated and is so shockingly difficult to get to. It is almost impossible to get to anyone concerning these difficulties. When I write to my right hon. Friend or to any of the other people concerned they keep it or play about with it and eventually they tell me to take it up with the Post Office. I have written to Sir William Ryland but I can never get a reply from him. It is always the assistant managing director or deputy managing director or a chief executive or some other highly paid person. What one eventually receives is the kind of formal acknowledgment that could have been sent within a few days but it takes weeks to get anything back from the Post Office. I have tried month after month and year after year to get legitimate complaints dealt with but have not been able to get them dealt with satisfactorily at all.

We know that members of the public do not usually go to their MPs unless they have themselves first tried to get matters resolved at local level. It is because they have been frustrated and cannot get satisfaction that they come to their MPs. If an MP finds that he and his constituents have reason to regard the services as shocking, at least the head of the concern ought to be able to deal with some of these problems.

The trouble has increased almost annually since the setting up of the so-called Post Office Corporation. Dare I mention that it was at the behest of the right hon. Member for Miami—or should I say Australia?—that this was set up? I opposed him at the time. I said then that I did not want to give up the opportunity of day-to-day questioning and day-to-day debates and arguments. I thought it would land us in trouble and it has, because the service is deteriorating with every price increase that is imposed.

You, Mr. Deputy Speaker, like me, can remember that 40 or 50 years ago one could pay a penny—a half-penny at the present rate—and post a letter in any part of London, up till about 9 o'clock at night, and it would be delivered without fail the next day, possible even by the first post. There were eight or nine collections during the day and three or four deliveries. That was at a time before we had fast trains, before we had fast motor cars, and before we had electronic aids and sorters. Now we have not only fast trains and electronic sorters but an 1,800 per cent increase in price, and the prices are still going up even further.

If one does not get a letter into the first-class post by about 4 o'clock in the afternoon, one cannot expect to have it delivered the next day from one borough in London to another. The Post Office knows about this because it has piles of correspondence from me. I have had to deliver my own mail from Westminster to Stratford, just down the road, because I could not be sure of getting it there if I posted it after 5 p.m., even with first-class priority. Indeed, I had one case—this is in the 1970s, not the 1870s—of a letter posted at County Hall, London SE1, not County Hall, Buckingham, marked "urgent" and posted first class, with priority, at County Hall. It was from the Clerk to the County Council and it took exactly a week to get from one side of Westminster Bridge to the other. I am still waiting for an explanation from the Post Office why this delay should occur. I repeat that this is in the 1970s, not the 1870s.

I challenge anyone to say that he can post a letter from one part of London to another and be sure of having it delivered next day. I am talking about letters not to the wilds of Scotland but to other parts of London.

Last year, on 13th September, I suddenly remembered my wife's birthday and that I had not sent her a card. Realising that it was midday on the day before her birthday, I immediately rushed out and bought a card. I was going to put a first-class stamp on it and post it at the post office. The sorting office is at the top of my road. Just as I was putting it in the box, the chap came to collect the mail at 1.30 p.m. I told him that it was a card for my wife's birthday and that it must get there first thing in the morning. I asked him if it would be all right. He said that I could not rely on it. I pointed out that the address was only just down the road. He told me: "What happens is that we collect it now, we take it all the way up to Mount Pleasant where it is sorted and then it comes all the way back." This is a farcical situation.

That is not the worst of it. I read a letter, which has not been disproved, stating that a person in the Norwich area posted a letter for local delivery in Norwich. It was put on the train and sent to Norwich, and then from Norwich to Peterborough and back from Peterborough, before it was delivered locally in the Norwich area. Well might the cost be excessive when this sort of thing goes on.

This is not the fault of the postman who does the work. This is the fault of the £27,000-a-year people. When I went to see Sir William Ryland, because I could not get satisfaction locally, I was met at the door by one flunkey, taken to another flunkey, and then to another flunkey at the lift. Eventually I went up to the people who were expecting me. I was met by a large number of top executives. The Post Office is overstocked with over-paid top people who should be getting down to the job of ensuring that the service gets back at least to the efficiency of 50 years ago.

Is it too much to ask for that on a day when there is a link-up in space between the Americans and the Russians, and when people are able to go to the moon? Today one cannot be sure of getting a letter delivered on time, no matter what one pays, even 1,800 per cent. extra. I do not think that the ordinary Post Office workers are getting 1,800 per cent. more than they used to get. No doubt that is what Sir William is getting. But still one cannot get a letter from one London borough to another the following day or be sure that it will be delivered.

When one turns to the telephone service it is almost the same. It is quite right, as has been said, that old-age pensioners cannot now afford the telephone, which for many of them is their only means of contact with their friends or relatives. Many old people have bad legs and cannot walk well enough to get out. Some cannot afford to send letters. Some cannot write. Now things are getting to the stage when they cannot afford to telephone. This state of affairs should not be allowed to continue.

I am a great supporter of the Post Office worker and I think he does a good job in difficult circumstances, but there is an urgent need for some inquiry to be made into the administration—I should probably have said maladministration—of the top people.

I resent the attitude of mind resulting in the appointment of what are called part-time members. What on earth are we coming to in this respect? I read recently of a well-known figure who is violently opposed to wage increases—wages, not incomes—and who is much in favour of wage restraint and wage reduction. He is always attacking the trade unions. He writes articles at £300 and £400 a time and is well paid for appear- ing on radio and television, where he is always saying that wages should be cut down. Then I pick up a newspaper and I discover that his wife has been made part-time chairman of a board at a salary of £7,000 a year. How much will these part-timers get? Probably more than the postmen. That is very good. But I should prefer to see people doing a job and getting paid for it, which is not the case now.

I am afraid that I cannot support the Government amendment. I have not seen any improvement. I cannot see any improvement being made until someone kicks in the pants those top executives in the Post Office Board. If that does no good, they should be kicked out and replaced by others who can do the job.

8.10 p.m.

Photo of Mr Philip Goodhart Mr Philip Goodhart , Beckenham

I very much enjoyed the speech calling for a return to the good old days from the Conservative Member—for this evening—for Newham, North-West (Mr. Lewis). I am not sure whether there will be room for the hon. Gentleman permanently on the Opposition benches, but at least he pointed out that progress does not always bring improvement with it. Certainly that seems true of the Post Office.

I never believed that the Minister of State had not written his own speech. From time to time, we are amused by his turn of phrase. This evening, he said that he did not always read what he believed in the Daily Express. But I was surprised by some of his remarks yesterday afternoon when he replied to a Question of mine about the increase in postal charges for books and magazines. If prizes were awarded to Ministers for odd statements, I would enter into the contest the remark that he made about it not being the job of the Post Office to subsidise our industries when it came to postal charges for books and magazines. Far from being subsidised, in 18 months our publishers have had to face increases in some charges of 200 per cent., and some increases have amounted to 400 per cent. since 1971.

It was not so very long ago that Sheikh Yamani said that it was not the job of Saudi Arabia to subsidise the industries of the West. This is the kind of subsidy that we are getting from the Post Office. Increases in postal charges of this kind can be compared only with the increases that we have experienced in the price of oil. No other commodity has gone up in price so much as the postal charges on books and magazines. Once upon a time it was said that trade followed the book overseas. Once upon a time postal rates for books going abroad were cheaper than in other countries. Today the reverse is true. Our overseas postal rates for books and magazines are rocketing ahead of those of our competitors.

Some publishers of magazines and books will be able to defend themselves. I sit on the council of one of the largest consumer magazines the magazine Which? published by the Consumers Association. We shall have to think of new ways of delivering our magazine. Reader's Digest is already implementing its own self-delivery service. We may have to go in with it. A lot of magazine producers will have to look to some kind of self-delivery service, which will reduce the revenue of the Post Office still further. But many magazines will not be able to defend themselves. These crushing increases will mean the end of 100, 100 or perhaps even 500 of the smaller specialist magazines in the course of the next year or so. They will not be able to defend themselves.

I turn now to another section of the community which cannot defend itself—the pensioners. As the hon. Member for Newham, North-West pointed out, they are very hard hit by these increases. Many of them cannot move about as freely as can younger members of the community. It is an imposition and a burden for them to go down the street to visit their nephews and nieces. It is infinitely easier for them to make a telephone call or to post a letter. This section of the community will find it increasingly hard to keep in touch with friends and relatives living across the other side of their towns.

For some people, it will be even worse. The telephone is not just a means of easy social communication. It is a real social lifeline which people need to link themselves to the rest of the community. If they cannot afford to use the telephone, they are cut off completely from the community.

Old people are also more dependent on television for their entertainment. The increases in television licence fees have also been a severe burden on many of them.

I suggest to the Government that they should consider the introduction of a postal voucher system for retirement pensioners. I suggest that, once a quarter, every pensioner should be given a £1 postal voucher to be exchanged for stamps, to pay telephone bills or to be used towards the fee for a television licence. We have 8 million retirement pensioners. If every pensioner were given one of these vouchers once a quarter, the total cost would come to only 4 per cent. of the annual wage bill of the Post Office as it is running at the moment.

There are ample precedents. We have had beef vouchers, butter vouchers, and reduced rates for pensioners on public transport during off-peak hours. I ask the Government to look seriously and sympathetically at this proposal. Pensioners need postal services to keep them in touch with the rest of the community. The present proposed swingeing increase in costs will cut their lifeline.

8.20 p.m.

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

I must first declare my interest as an assistant secretary of the Post Office Engineering Union.

All those who work in Post Office telecommunications must be concerned about the massive financial deficit. They will be particularly concerned, because it overshadows the substantial progress made by the Post Office and its staff over recent years. In the last 10 years, the telecommunications system has more than doubled in size. A good start has been made on modernisation, and the quality of service has improved. This has been made possible by massive increases in productivity. While the size of the system has increased by 104 per cent. the number of staff engaged on the system has increased by only 24 per cent.—a saving in manpower of 78,000 engineering and 12,400 other staff.

As I have said before, had this productivity record been equalled in private industry there would by now have been talk of an economic miracle rather than a crisis. There have been smaller price increases for telecommunications than for the generality of goods and services. By the end of the year the price index probably will have gone up by over 250 per cent. since 1964. At the present level, telecommunications tariffs will have gone up by 191 per cent. Even if the proposed price increases are taken into account, the tariff increase, comparable with the 250 per cent. for general prices, will still be only 222 per cent. The general level of increases in telecommunications has been lower than that of prices in the private sector.

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

I listened with disgust to the contribution of the hon. Member for Newham, North-West (Mr. Lewis) and I certainly do not intend to give way to him this evening. Certainly, those who have seen the television advertisements will agree that telecommunications gives real value for money.

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

Why, then, the present Post Office crisis? It stems initially from the fact that for a long time under the last Government Post Office prices were not allowed to rise at the same rate as other prices; and while the Post Office has had to pay more in wages and for equipment, in line with general inflation, it has not been allowed to recover this extra expenditure from its customers. Consequently and naturally, deficits have piled up. This policy, which was pursued so ruthlessly by the last Tory Government, was absolutely disastrous. If prices do not increase again this year the telecommunications side will have to borrow to cover its deficit. This is a burden which it should not have to bear—and neither should taxpayers, many of whom, such as widows, are too badly off to be able to afford telephones, have to subsidise telephone customers.

My view is that that is economic nonsense and a social injustice. There should be special provision for those who need the telephone as a lifeline, particularly the house-bound and disabled. But we should not leave this to local authorities because the provision is so different from one authority to another; and neither should it be a responsibility of the Post Office Corporation. The responsibility should be taken over fairly and squarely by the Government and particularly by the Department of Health and Social Security.

Although the initial and basic cause of the financial crisis was the policy of Tory Ministers, it has to be acknowledged that there has been an error of judgment this year. My guess is that the error—or rather errors, for there were two—were made against a general optimism supported by the Treasury, that there would be a slackening of inflation. The level of inflation was underestimated and the level of business activity, and, therefore, of demand for Post Office services, was overestimated.

The Government have done well to recognise this and to state bluntly that the last increases should have been greater than they were. We are now correcting the decision, which erred on the side of optimism. It must be said that the financial crisis facing the Post Office has been heightened by the reluctance of the Treasury to meet the pre-1969 pension fund deficit of £55 million for telecommunications and £35 million for posts, although it came ill from the hon. Member for Bridgwater (Mr. King) to criticise, because I believe he is the only hon. Member to speak in this debate tonight who was a party to the decision at that time, in that he took part in the debates on the 1969 Act and had subsequently—

Photo of George Young George Young , Ealing Acton

Does not the hon. Member recall voting for the Act which set up the Post Office Corporation, which included specific provisions for the pension fund about which he is complaining?

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

I would have hoped that the hon. Gentleman would do his homework rather better. I entered Parliament in 1969—two weeks after the Act was implemented, so that it would not have been possible for me to vote for that Act. But it is now a matter of very great concern to the Post Office unions that the Treasury should assume the full responsibility for these old Civil Service pensions. We feel very strongly on that. The language of the original motion is that of an intemperate and irresponsible Opposition. I would never wish to express myself in terms so extravagant but perhaps I may in a more moderate manner echo one of its underlying sentiments.

The Government must pay careful attention to the need to take a fresh look at the future of telecommunications. My hon. Friend the Minister of State, of whose promotion certainly those in Post Office Engineering were delighted to hear —and I was personally particularly delighted to hear of it—will not be surprised to hear me say once again that there is a need for a national telecommunication policy which will lead to the integration of telephony, data transmission and broadcasting. He will know, too, of my view that the private manufacturers, who have so failed the Post Office and its customers, should be taken into public ownership. Most important, however, is the need for the Government not only to stick firmly to their present policy towards prices, enabling a higher level of self-financing of investment, but also to bring about a greater certainty of stability in investment.

Part of the present problem stems from the stupid Barber cuts of December 1973. Unfortunately, the present Government have not yet removed the uncertainty about investment that both management and staff would wish and which is essential for the efficient running of the industry. My hon. Friend must persuade the Treasury to announce the abandonment of "stop-go" policies for nationalised industry investment. It is essential that approval be given as quickly as possible to the 1976–77 investment programme.

I reject the call for an inquiry. The management and staff in telecommunications are highly competent. In parenthesis I should say that the Post Office Union leadership has a great deal of confidence in Sir William Ryland and his board. All in the Post Office must be allowed to get on with their jobs without constant interference from outside. In the past three years there have been 10 Post Office Users' National Council reports on the Post Office. We have had internal Post Office inquiries in addition to the Hardman Inquiry and Prices and Incomes Board studies. Since the last major inquiry into the Post Office in 1966–67 I have sat on at least three parliamentary inquiries into the Post Office—into its consumer relations, its investment procedures and, at present, its letter service.

What the Post Office needs more than anything else is not another inquiry and another period of uncertainty; it needs to know where it stands on pricing and investment, so that it can get on with the job. It must be given freedom to fix economic prices and stability in planning and executing its investment policy. With these, assured as it is of the support of a loyal and efficient staff, it will surmount its present difficulties.

8.32 p.m.

Photo of George Young George Young , Ealing Acton

Apart from the political rhetoric which the hon. Member for Newcastle-under-Lyme (Mr. Golding) felt obliged to include in his speech, I agree with most of what he said. In my remarks I hope to cover some of the main points he outlined. I belatedly congratulate him on his timely arrival in this House, which was just late enough to spare him the embarrassment of voting against the Act to which he now takes exception.

I suspect that I should declare an interest. Until February of last year I was an economic adviser to the Post Office Corporation, and had been for the past four and a half years. I am now on leave—unpaid, the hon. Member for Newham, North-West (Mr. Lewis) will be pleased to know—and I have an option to return to the Post Office should my constituents unwisely transfer their allegiance elsewhere. My remarks about the Post Office will therefore be tinged with humanity, although I am bound to say that its financial affairs seem to have deteriorated since I left. I also have a sizeable stake in that popular investment medium, the Post Office Pension Fund.

Having worked for nearly five years at the Post Office gives me the advantage, denied to my colleagues, of being able to see the problems of that organisation from the inside as well as from the outside. The first thing I must say is that there are simply no easy solutions to the problems confronting the Post Office. Over the weekend a Labour Member called for the resignation of the chairman. If anyone believes that that is a solution to the problems facing the Post Office he has failed to understand the nature of the problem.

Such a step would create problems that do not exist now, because the chairman is a hard-working and intelligent man who has spent the whole of his working life in the Post Office and who enjoys the confidence and support of the staff at all levels. To seek to use him as a scapegoat for the problems would aggravate staff relations and would not get anyone anywhere. In all the correspondence that I have had with the Post Office I have received prompt and courteous replies and have not undergone the experiences mentioned by the hon. Member for Newham, North-West.

Nor is there any advantage in criticising the staff of the Post Office at a lower level. My experience was that the engineers and the postmen had a loyalty to their employer which is not found in many institutions these days. I found that they had a genuine pride in discharging their duties cheerfully and efficiently. Some hon. Members believe that there are political solutions which could help the Post Office. Labour Members have from time to time advocated that one of the manufacturers of switching equipment should be nationalised or bought by the Post Office because they believe it would help the Post Office if it owned such a supplier.

That suggestion is basically irrelevant. The current position is that the Post Office defines in fairly broad terms the specification of the equipment it wishes to buy and gets the benefit of the technology and expertise of a range of manufacturers. It also gets the benefit of competitive tendering. If it were to supply and manufacture its own equipment it would forgo both of those advantages. Further, it would be a consequence of its buying up a supplier that it would have that much less money of its own to invest. An immediate consequence of the Post Office "nationalising" a supplier of switching equipment would be a fall in its investment programme. Under Section 13 of the Act the Post Office has the powers to manufacture equipment, but has never chosen so to do, presumably because it believes that the balance of advantage lies with the existing system.

Some Opposition Members, particularly the spokesman for the Liberal Party, believe that the Post Office monopoly is at the root of the problem and that there is some advantage in doing away with it. There is not much joy in pursuing that solution. It is quite true that if, for example, we offered to a London entrepreneur the letter collection and delivery service within London, he would be able to undercut the Post Office because the cost of collecting, sorting and delivering a letter in London is less than 5½p.

Of course, any Government would insist that a national delivery service be retained. However, the corollary of hiving-off to private enterprise the profitable section of the postal system would be that the Post Office would be left with all the unprofitable sections.

An immediate consequence of breaking the Post Office monopoly would be to increase the subsidy paid by the taxpayer to the Post Office, which is exactly the opposite solution to that which we all wish to see.

A further consequence would be a complication for the public who would have to decide which of the two systems it wished to use for its letters. There would probably have to be two sources or supplies of stamps, perhaps two sets of letter boxes and there might have to be two postmen walking the same street.

The answer lies not in breaking the monopoly but in using the resources within the monopoly more efficiently and ensuring that the Post Office has a sensible and adequate financial framework within which to operate.

Having issued that vigorous defence of various Aunt Sallies, I am bound to say that everything is not well with the Post Office. One can find the reason for the trouble in a White Paper, dealing with the Nationalised Industries, published by the Government in November 1967 called "A Review of Economic and Financial Objectives". I am referring to Cmnd. 3437. In paragraph 33 it says, Clear financial objectives will continue to be necessary so that the industries know what is expected of them by the Government…The alternative would be an indefensible lack of control over the return achieved on a very substantial public investment. That is the alternative that has happened. Both parties share the guilt of allowing that situation to arise.

The investment programme of the Post Office, which, I believe, is some £4 billion spread over five years, has continually been used by the Treasury as a tool for economic management. The Post Office has been asked at the beginning of a financial year to cut back its investment programme and half way through that very same financial year it has been asked by the Treasury to expand. Of course, the investment programme of the Post Office spans some 20 years which is the lead time in telecommunications.

We cannot fool around with an investment programme such as that with the short-term measures that the Treasury has insisted upon. If we treat an investment programme in that way, we shall pay very severe penalties indeed, because the suppliers of the equipment that the Post Office is buying know that the Post Office may be forcd to axe its commitment, and as a result they will build into the price they quote a premium for the uncertainty that surrounds the whole investment programme. Neither the Post Office nor the industry know how much they will spend even next year on telecommunications equipment. This is not the right climate in which the country's largest investor should operate its investment programme. There must be a greater air of certainty surrounding the decisions which it makes.

It is not only the investment programme but tariffs which have been continually interfered with. Tariffs have been kept artificially low by price control, and again the Post Office is paying a very heavy price for that. It has made losses for the past two years, which means that the country is getting a negative return on one of its biggest investments. That has made that much more difficult the inevitable catching-up exercise that we are now going through. Keeping tariffs at an artificially low level stimulates demand which makes it that much more difficult for those inside the Post Office to forecast future demand and to reach a sensible investment policy. The losses have demoralised management. They have reduced the incentive to cut waste and led to the inefficient use of resources.

The hon. Member for Newham, North-West pointed out that the losses incurred by the Post Office are not socially justifiable because the main consumers of its services are businesses and better-off individuals who use the telephone system. Therefore, there is no social justification whatsoever for subsidising the Post Office.

The point that I wish to make from those two illustrations is that Parliament or Governments have created some of the Post Office's problems and that it is no good looking within the Post Office to identify the cause of the problems.

Not only have Governments committed various sins, but there have been sins of omission. The board of the Post Office does not know the social and economic framework within which it has to manage its affairs.

In the 1960s there was a series of Command Papers and Select Committee investigations and a report by the National Board for Prices and Incomes. Those reports identified relevant and attainable targets at which the Post Office could aim. Throughout the 1960s the Post Office met its targets and, although there was public criticism—there always will be—that criticism never reached the volume that it is now experiencing.

It was in the early 1970s, when financial disciplines were relaxed, that the problems began. The Minister, in winding up the debate, may refer to the target in the Government's amendment—namely, to break even. But before he does, he should re-read the Labour Government's White Paper, Cmnd. 3437, which criticised this kind of target, because it prescribes only a minimum standard of financial performance. The Government must refine and clarify the financial objective of the Post Office, not leave it as a vague obligation to break even.

In addition to asking what the Post Office can do for Parliament, we should also ask what Parliament can do for the Post Office. The clear answer is that the Post Office should be given definite objectives. One of the results of the public inquiry for which my hon. Friends are calling would be the setting of realistic targets for the Post Office.

It is high time that the problems of the Post Office and the options available to it were exposed to public gaze. One of the hangovers from the Civil Service days of the Post Office is that everything is shrouded in secrecy—that anything that is official is therefore secret.

The public have no chance whatsoever in the few weeks which elapse between the announcement of increases and their implementation of making any constructive suggestions. Nor has the Post Office Users' National Council. Within the existing framework there is no question but to let the Post Office have the increases that it wants, although Parliament usually manages to insist on cosmetic alterations from time to time. We need to take a leisurely look at the framework of the Post Office without a pistol being pointed at our heads relating to specific increases in the pipeline.

It is no secret that, not so long ago the Post Office prepared a document setting out the options confronting the postal service. If it was a secret, it no longer is. The paper set out the implications for the postal service in a clear way. If one insisted that the postal service should break even, it set out the consequences in terms of quality of service. Alternatively, if one said that a certain quality of service was needed, it set out the financial implications. It also set out a range of radical proposals relevant to the solution of the Post Office's problems on which I believe the public are entitled to comment. I suspect that that report is gathering dust in some pigeon hole in Whitehall and that it has never seen the light of day.

A Green Paper on the postal service or a public inquiry, such as is called for by my hon. Friends, would be of enormous interest. It would educate not only the public about the problems of the Post Office but the Post Office about the public's expectations of the service.

Another decision which is shrouded in secrecy concerns the future switching equipment—known anonymously as System X—to be bought by the Post Office. That decision is being taken within the Post Office, but a large number of engineers in this country who do not work for the Post Office could contribute to the important decisions which are about to be taken. The Post Office has no monopoly of wisdom in this matter, having made a particularly serious error of judgment in the 1950s when it decided to move far too quickly from mechanical to electronic equipment.

I welcome the call made by my hon. Friends for a public inquiry as that is an essential prelude to giving the Post Office relevant commercial obligations.

The search for economies is urgent. If worthwhile economies are to be made, radical and unpopular decisions must be taken. Perhaps we must take a second look at the manning levels of the postal services. For example, the bulk of the work on the postal service is done between 6 a.m. and 10 a.m. and between 6 p.m. and 10 p.m. In both cases full-time postmen do the work. The work of the postmen is amplified to bring up their hours to full-time levels. In practice the work could be done by two sets of part-timers, each working four hours. That step would pose enormous problems for the Post Office and for the morale of those working in the postal service. I do not say that we should necessarily move in that direction. There are no easy solutions. However, we must take radical steps if we wish to obtain worthwhile economies in the system and if the deterioration in the financial position is to be arrested.

While there is a case for the Post Office to have a monopoly of the telephone network, I do not see why it should have a monopoly of the telephone instruments. The public would welcome a choice of instruments and the chance to obtain different kinds of equipment of different specifications from various suppliers. The Post Office could reserve the right to make sure that the equipment was up to the standards required by the network. That would relieve the Post Office of the need to tie up capital in telephone instruments. In other countries a much wider range of instruments is available. A public inquiry could usefully look at that issue.

The liabilities of the Post Office pension fund are not those of the Post Office Corporation. Those liabilities were incurred by the Civil Service before the Post Office was established, and relate to the pensions of those employed by the Civil Service. When the Post Office Corporation was set up, the Government Actuary worked out the liability and the Government credited the new pension fund with the amount of money in question, which was invested notionally in 21 per cent. Consols—a well-known hedge against inflation. The Corporation was lumbered with this notional stock, which it could not have sold even if it had wanted to do so. It found itself in the indefensible position of a pension fund having all its assets in one fixed-interest stock which it could not sell.

The Labour Party was responsible for this arrangement, which was included in the 1969 Act. The consequences of that decision have dogged all Post Office debates ever since. It will not be satisfactory if every debate on the Post Office —up to the time when the last civil servant concerned dies in the year 2000 and odd—is to be dogged by the question of who is responsible for the pension fund. The Government must sort out this question. I imagine that there is an element of flexibility in the Post Office. I am sure that it is prepared to discuss a settlement. We must remove this consideration from Post Office debates, as it has an artificial effect on the tariff.

My hon. Friend the Member for Bridgewater (Mr. King) asked a question about the White Paper "The Attack on Inflation"—although I believe that it is more of an interference with inflation than an attack on it. That document refers to a £6 limit. The Post Office workers recently concluded a settlement under which they will be entitled to a 1 per cent. increase in wages for every 1 per cent. increase after an 11 per cent. increase in the retail price index. If inflation is not abated within a year the postal workers' may be owed money by the Post Office if the agreed increases take their wages over the £6 limit. Will the Minister say what the Government policy will be if that situation arises? Will he acknowledge that the postal workers agreed to go without a higher increase in pay in return for this arrangement, which links their future pay to the cost of living index? The postal workers would have settled for a much higher figure if the thresholds had been excluded from the agreement.

I think that I can end by quoting paragraph 8 of the previous Labour Gov. ernment's White Paper: Increases in costs should wherever possible be absorbed by greater efficiency rather than being passed on to the consumer, and price increases should be capable of being publicly justified". Those were their own remarks the last time they were in office when dealing with the nationalised industries.

It is in that spirit that I support the motion and condemn the inadequate and complacent amendment that the Government have moved.

8.50 p.m.

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Teesside Thornaby

I rather feared that the debate would be what was described earlier as a "yahboo" debate. However, I must congratulate the hon. Member for Ealing, Acton (Sir G. Young) on bringing it up to a very serious level—a level which will be helpful to the House and the Post Office. I say that not because the hon. Gentleman is an ex-colleague of mine—I must declare the same vested interest as he has, as a former Post Officer employee, and as a parliamentary adviser to the Civil and Public Services Association, which has members in the Post Office.

I think it is wrong that this House, politicians generally and members of the public should use an enormous corporation, so vital to this country—a corporation with a record of tremendous service over years and years—as a political football. I shall not repeat many of the very good points that have been made, particularly by my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) and the hon. Member for Ealing, Acton. I want to emphasise three areas of general interest that need to be put clearly in the debate at a very serious level.

The Minister began very well by pointing out that he does not run the Post Office. That is one of the most important things that hon. Members must take on board. I fully appreciate, as a new Member, that people in this House who had been used to getting the Postmaster-General to the Box for detailed questioning and getting detailed answer to letters on all sorts of operational matters of the Post Office, take hard the getting used to the fact that the Minister is now responsible at arm's length for the Post Office. However, it has clearly been shown in one report after another that there is no other way to run a corporation of this size—indeed, no other way to run any of the public corporations—but to allow it, within certain guidelines, to get on with the job and not have the Minister dabbling in every little detail of the operational matters of the corporation.

In the House we have not only the Minister, with responsibility, as has been pointed out. We have a Select Committee, of which I was a member in the previous Parliament, which is at present investigating a certain aspect of Post Office affairs and which has investigated other aspects of Post Office affairs in the past. We have the Price Comission, to which the Post Office must submit its applications for price increases. We have the House itself taking an interest in Post Office affairs. We have the Post Office Users' National Council, and the other national councils to which matters are referred and to which the public can go with their criticisms and suggestions. In the past we have had interdepartmental committees looking into various aspects of Post Office affairs. We have had indepent inquiries.

We really must allow businesses to get on with the job they have been established to do. We must not plant seeds and then dig them up every five minutes to see whether they are growing, because we shall kill them. I fear that that is what has happened with the Post Office, certainly over the last five or six years, and possibly longer than that.

The Post Office staff, from top to bottom, have become demoralised and disheartened. They have no clear sense of direction, because all the time their investment programmes, pricing policies, pay policies and the whole of their organisation are being interfered with, inspected and pulled out in public view by the House and its Select Committees, interdepartmental inquiries and the whole range of other bodies I have mentioned. This goes too far, at times, and this fact needs to be stated clearly in the House.

The Post Office must be given the chance to run its business as a commercial enterprise, and it cannot do that if it is being hauled over the coals every five minutes to account for everything it does.

We have heard too much criticism in the debate and too many comparisons with the Post Office's services in the past. The Post Office has a staff of 420,000. It is the largest employer in this country. One could hardly get on a bus anywhere in this country without finding a member of the Post Office staff on board. The Post Office provides 24,000 sub-post offices from Land's End to John o'Groats and it processes 11 billion letters a year. Scarcely any family in the land does not use at least one of its services every week. It may be the collection of a pension, the purchase of postage stamps, the sending of a telegram, the making of a phone call, or any other of a whole range of services.

It is understandable that with 11 billion letters being processed every year, mistakes will be made from time to time, but hon. Members like my hon. Friend for Newham, North-West (Mr. Lewis) should remember that many letters do get to their destination on time, many telephone calls are made efficiently and cheaply, and many other services are provided day in and day out, for 365 days a year, quite successfully and efficiently to the satisfaction of everybody. Of course, people do not come to our surgeries or write to us about services that are provided efficiently and well.

I post letters to my constituency every day and, since I came to this House in February last year, I have not had a single complaint about any letter I have sent. I posted some letters tonight at 7 p.m. and I can almost guarantee that they will be in my constituency on Teesside first thing in the morning. This is a marvellous service, and I have never had cause to complain about it. We must keep the criticisms in perspective. It is unfair to demoralise the staff, from top to bottom, because of mistakes that are made. Mistakes are inevitable in an organisation of this size and too many people never give praise for the marvellous work the Post Office is doing.

Photo of Mr Arthur Lewis Mr Arthur Lewis , Newham North West

I did not attack Post Office workers; I attacked the regular cases in which the Post Office cannot deliver a letter from Stratford to the House of Commons within a couple of days. If my constituents cannot get their letters of complaint here and think I am holding them up, I am not going to take the blame. I tell them it is the fault of the Post Office. If Sir William Ryland cannot put it right, I am entitled to complain.

Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Teesside Thornaby

One way in which Sir William Ryland could put it right is to get more staff in the London area, but that is very difficult, as the Post Office has discovered to its cost. When my hon. Friend compares the situation today with the situation which existed many years ago, he forgets the changes in society that have affected all our lives in that time. In this day and age it is virtually impossible to get staff who will, on a postal worker's pay, go to work at four or five o'clock in the morning in central London, where there is less and less housing available. It is more and more difficult to get staff to perform work that formerly they were willing to do for a much lower rate of pay. This is one of the causes of the difficulties to which my hon. Friend referred.

I was disappointed that the hon. Member for Ealing, Acton was in favour of a public inquiry. He said that the Post Office had dealt secretly with some of the issues he had mentioned and that there should be more public debate. I challenge him on that. One has only to read through the evidence that has been provided by the public on previous surveys and through the reports of the Post Office Users' National Council, where a detailed inquiry has been carried out into the different options open to the Post Office, such as cutting services and using marketing services to bring more business in, to see that quite enough information has been gained for well-informed public debate, and certainly for an adequate debate in this Chamber.

I do not think that yet another inquiry into the Post Office would serve any good to anyone. That does not mean that I disagree with the hon. Member about the need for clear guidelines and secure targets. I agree with him very much about that. That is one of the vital matters to which the Government must pay attention. The Post Office must have clearly-laid-down, positively-agreed targets on the basis of corporate plans and strategies which have been settled with the Post Office, and those agreed targets must be maintained. The Government must stop using the Post Office as an instrument of economic policy on pay, prices and everything else in the short term; they must give it a long-term aim, so that it knows exactly where it is going and can plan ahead in the way it has been unable to do hitherto—a situation which has lead to this debate.

The Government must, as they are vigorously trying to do, contain inflation. The effect of inflation on a business of this size is staggering. Its effect on pay, prices and supplies for an organisation with this many staff and with this size of business is tremendous. The Post Office, in co-operation with the unions—I am sure that in the present difficult conditions the unions would be only too pleased to comply—must achieve greater productivity. This probably applies to the postal service more than anything else. There have been enormous increases in productivity on the telecommunications and Giro services, but great advances are yet to be made on an increase in productivity on the postal service.

It may be that the Post Office, with the Government, will in the near future have to take some hard decisions about the future quality of services. We should not delude ourselves that there are any easy solutions. A public inquiry would not be an easy solution. Recommendations would have to be made and acted upon. When we study the situation we find that it is necessary either to put up the price or to cut the services. Obviously the public will never be in favour of doing either of those things. The Government and the Post Office will have to take some hard decisions, and in doing so I think they deserve our support in the House.

9.5 p.m.

Photo of Mr Timothy Renton Mr Timothy Renton , Mid Sussex

I followed with great interest the speeches made by the hon. Member for Thornaby (Mr. Wrigglesworth) and my hon. Friend the Member for Ealing, Acton (Sir G. Young). It is clear that both the hon. Gentleman and my hon. Friend have a deep knowledge of Post Office affairs. I take on board the point made by the hon. Member for Thornaby that we, as politicians, should not try to interfere too often with the nationalised industries and that we should not be continually pulling up young plants to look at the roots to see how they are getting on. I made much the same point myself in a debate on the Statutory Corporations (Financial Provisions) Bill, in which I said, in effect, that the least interference with the nationalised industries by politicians the better.

But I think that the hon. Member for Thornaby must take on board the fact that we are here considering a special case. The Post Office has recently received a subsidy of £300 million. A few weeks ago the deficit forecast for the current year was approximately £70 million, but now we are told that it is likely to be £300 million. The charge for first class mail will be increased from 3½p a mere 13 months ago—what a long time ago that now seems—to 82p in the near future. That is an increase of 150 per cent. It is the general feeling of outrage against the extent of the rise in charges which necessitates this debate.

My hon. Friend the Member for Ealing, Acton declared an interest, in that he worked for five years in the Post Office. I worked for approximately the same number of weeks in the Post Office, many years ago, as a temporary Christmas postman. I do not know whether that qualifies me to declare an interest, but knowing how prickly the Under-Secretary of State for Industry is on this subject I must make haste to declare that interest.

During the time that I was working in the Post Office I was greatly impressed by the cheerfulness and good humour of the postmen who arrived at work at 5 or 5.15 in the morning. At that hour I was usually in a filthy temper. I was also impressed by the kindness that they showed on their rounds. For example, one old lady complained that neither her three grandchildren nor she were likely to receive any Christmas cards. In a remarkably short time all the Christmas cards that were for one reason or another non-deliverable were smartly readdressed and shoved through her letter box. I do not suppose that she has ever had such a bumper Christmas.

I am sure that every hon. Member has experienced through the years great demonstrations of kindness and helpfulness by members of the Post Office, on whom we are dependent. I make it clear that my complaint is not against the postmen themselves—of course, in such a large organisation there are inevitably some laggards—but against the system.

We can judge an industrialised country today by the efficiency of its mailing and telecommunications services. I am afraid that by such yardsticks we are rapidly falling behind other Western industrialised nations.

Yesterday morning I received a letter from the local branch of the National Union of Railwaymen in my constituency. It was sent to me first class so as to get to me in good time for the debate. I have the permission of the local branch of the NUR to quote the letter. It reads: My members and I, wish to make a very strong protest against the very high increase in charges as proposed by Mr. Ryland Post Office chairman. If those proposed are allowed to go through they will put a very heavy financial burden on everybody. It appears so chronic that when the Post Office was run by Whitehall it was the cheapest, and most efficient service in the world. Since it has been run by a board it has gradually deteriorated. We would suggest that an inquiry should be set up to look at the running of the industry, because as a monopoly it should not show such tremendous losses. Second-class post should be done away with. We never used to have it. Everyone believes it is ridiculous to hold mail 'back'. We suggest one class to be delivered anywhere in Great Britain the next day, as we did in the said 'horse and cart' era. We hope that you will be able to do something in this serious matter. Hon. Members may think it surprising to find the work force of one nationalised industry writing in this vein about another nationalised industry. That letter was of course unsolicited, but the fact that the NUR wrote in that way demonstrates how many people are angry at the extraordinary rise in Post Office charges, and at the bland assumption that all that Post Office management needs to do is to put up charges and the organisation will be back in the black. Surely a further rise in charges will mean that the Post Office will do even less business. Therefore, an increase in prices is not the answer. The Post Office must seek means to cut costs and to reduce expenses. If the present Chairman of the Post Office does not go down in history for any other reason, he will certainly go down as an experiment of Ryland's Law of diminishing returns. That law may be briefly stated as follows: If one subsidises prices, one rapidly reaches the position where it is impossible to put them back up to an economic level. The rise needed is too great for the customer to accept. It is clear that at present the Post Office is suffering inexorably from that law of diminishing returns. People are now carrying out their own local deliveries of cheques, bills, and so forth. I know a charity close to my constituency where supporters are recruited to deliver letters three or four times a year. About 30 per cent, of all deliveries go by hand. This year that organisation will attempt to make two-thirds of its deliveries by hand because it feels that it cannot afford the postal costs involved.

It is right in this debate to search for some tentative solutions. I agree that there are no easy solutions to the problem, but we should search for some answers. I found the speech of the Minister of State somewhat disappointing in that respect. He did an admirable job of stonewalling, but he hit nothing to the boundary in the form of solutions. I wish to put forward, with a good deal of humility, one or two thoughts on the subject.

The service which we receive in this country is archaic in the sense that it is so very good in the way in which the postman delivers mail, parcels and other literature right up to one's doorstep. I am sure that most hon. Members have had experience of delivering election literature, and they will appreciate the time-consuming difficulties experienced by postmen. We know what it means having to negotiate long garden paths, or having to climb to the top floor of blocks of flats, or of having to cope with letter boxes which appear to have been invented for dwarfs with double-jointed fingers. Unfortunately, this is one luxury that we must now try to do without.

Has not the time come when we have to move to a system of garden-gate boxes, stationed along the pavement, and with suites of individual mail boxes next door to each other on the ground floor of blocks of flats, as is done in the United States and Canada? If such a system were adopted in this country, it would substantially reduce the time spent on delivery services, and this would lead to a reduction in the manpower needed in the Post Office. We must also consider the suggestion of doing away with separate first and second class mails and of returning to a single mail system. The only justification for having two mail deliveries is to have one ultra fast system and one normal system, but at the present time we have one normal system and one slow system. The result is that everyone, whenever he possibly can, makes use of the slow service in order to save money, and when he wishes something to be known and passed on with speed he makes a telephone call. This clearly is leading to a substantial downturn in the overall volume of mail. There was a reduction of 26·6 per cent. as my hon. Friend the Member for Bridgwater (Mr. King) said in first-class mail between the last quarter and the comparable quarter in the past year. That is a staggering reduction.

I suggest that the answer is to revert to one-class mail and to pitch the price of that at a level at which it is competitive with the average cost of a standard telephone call made during working hours. In this way mail could be attracted back to the Post Office again.

However, the most important point made in the letter from the NUR was the suggestion that an inquiry should be set up to examine the running of the industry because as a monopoly it should not show such a tremendous loss. Many hon. Members have different ideas about what a nationalised industry that is a monopoly should do. There are those—and I am one—who think that overall a nationalised industry should strive for a profit out of which it can fund its future capital investment. Others, particularly Labour Members, believe that monopolies in the nationalised industries should run at a loss because of the industries' social service objective. Then there was the Morrisonian principle, namely, the compromise of trying to break even taking one year with another. It is in this that the whole problem of the nationalised industries is encapsulated. They have always suffered from a confusion of social and commercial objectives, and this is a good argument against any further nationalisation.

However, the essential point in relation to the Post Office must be to discover where the monopoly can be broken and where forces of competition can be allowed to enter. I strongly support the suggestion for an inquiry, in which postal users will have a voice, to discuss how the services can be run more efficiently, whether the Post Office is not now too big and too centralised and should be split into two separate, independent divisions—one for telecommunications and the other for mail services—and to examine ways in which private companies can be introduced to compete with the Post Office and thus sharpen the Post Office's commercial edge.

Without such an objective look, as sure as night follows day the Post Office's finances will go from bad to worse and in no time we shall be faced with either a 10p first-class mail stamp or a 15p first-class mail stamp. That stamp from the very first will be a collector's item because no one will be able to afford to use it. The Post Office has to come to its senses, and an independent inquiry is the first step in that process.

9.18 p.m.

Photo of Mr Max Madden Mr Max Madden , Sowerby

It is surely to be expected that any debate in this Chamber on the Post Office will be riddled with highly subjective tales about the inefficiency of the Post Office. None of us has been disappointed tonight because there have been many such tales.

However, we have had an extremely thoughtful and well-informed debate with particularly interesting contributions from the hon. Member for Ealing, Acton (Sir G. Young) and my hon. Friend the Member for Thornaby (Mr. Wrigglesworth). It has also been a controversial debate and has highlighted the problems that confront the Post Office at present.

It would be quite wrong if we were to mislead the public into thinking tat these are new problems. They are problems that the Post Office has faced for a considerable period and they have been intensified by inflation and other factors.

The Minister highlighted the central problem facing the Post Office and other public sector industries, which is how they and we reconcile the need for them to act commercially and at the same time recognise their community importance and their social service function. That is the nub of the problem facing the Post Office and other public sector industries, and it is one which we cannot dodge. We must attempt to devise policies which reconcile those two demands which are imposed on the public sector.

We need to put the problems of the Post Office in perspective. As Members of Parliament, we all rely heavily on the Post Office in our day-to-day work and recognise its general efficiency. I pay personal tribute to the service which the Post Office provides for hon. Members. In recognising that general efficiency, we must make it clear that the Post Office is not perfect. How many of us are perfect? How many of us operate at 100 per cent. efficiency every day of the week?

My hon. Friend the member for Thornaby spelt out the scale of operations of the Post Office. He told us how many thousands of individuals worked for it and the extraordinary range of services and individual transactions which it carried out on a day-to-day basis. If the Post Office worked at 99 per cent. efficiency an enormous number of individual errors and complaints would still come to us in our constituency work.

Therefore, we must put the efficiency of the Post Office in perspective. Of course there are serious things wrong with the operations of the Post Office, but we would be wrong to criticise the Post Office in completely black terms. The Post Office is tackling its problems and, although it may not be doing so quickly enough or in a way we endorse, that is another matter from condemning the Post Office as a completely inefficient organisation.

In recognising the problems of the industry we must take fully into account the genuine hardship which is imposed upon many people whom we represent by the substantial price increases. It would be wrong for us to ignore those problems in putting the general problems of the Post Office into perspective.

I should like to comment in more detail on the operation of sub-post offices. Those of us who represent rural constituencies will appreciate the tremendous importance of sub-post offices, of which there are more than 20,000 throughout the United Kingdom. In my constituency I have been concerned at the threatened closure of two sub-post offices. One threatened closure has not come about because the sub-postmistress has decided to withdraw her resignation and to continue to run the office. That is somewhat surprising, because she enjoys the lavish income of under £12 a week for operating the sub-post office and performing a valuable service for the community. The other sub-post office seems destined to be closed very shortly.

I enjoy a good relationship with the post office in my area and I have been in correspondence with the head postmaster on this matter. He has written to me as follows: The conclusions reached after this consideration is that the Bridge End Post Office is not economical and the people who transact business there have regularly to go into towns where adequate postal facilities are already existing, so the inconvenience caused will be minimal. Taking into account all the circumstances the office is no longer warranted. I know the disappointment that this decision will mean to you and all other people affected, we would all like postal facilities near to our residences or places of business but unfortunately the Post Office cannot afford to be so generous. I would not expect it to be that generous, but I would remind the Post Office that this particular sub-post office caters for the needs of more than 100 pensioners and a number of industrial concerns in that locality. To close that office would mean that a number of these people, in a district not blessed with good transport, would have a very steep, hilly area to climb in order to reach the post office in the town centre.

This story could be duplicated in many other areas in the country, and I ask the Minister to resassure me and my constituents, and other hon. Members who rely on sub-post offices in their area, to say that, whatever the problems of the Post Office, they will not be dealt with by some Beeching-type axeing operation of sub-post offices and other facilities which are important to constituents living in rural areas. I believe that that would be a fundamental error. Not only do the sub-post offices provide an important service. They are more than just post offices. They are manned by men and women who have a very close and intimate knowledge of the problems and circumstances of the people using their offices. They act as advice centres and as very important links with the outside world and with relatives and friends who can act in these times of stress and difficulty.

Therefore I urge the Minister, whatever the Post Office may be planning to do, to make a very strong appeal that these sub-post offices shall not be axed in the way that I fear may be likely in view of the Post Office's desire to act commercially. I think this would be a quite disastrous policy.

Until recently, when I was given the sub-postmaster's handbook, which spells out the very Victorian terms of employment under which these people are condemned to work—one could hardly imagine that they enjoy the work—I did not know much about the conditions of sub-postmasters. Their conditions have to be looked at, and their incomes. They have suffered recently by a reduction in their income through the withdrawal of national savings stamps, and also by the fact that football pool companies are employing private agents, so that the number of postal orders purchased has been reduced considerably. There needs to be some interim relief for sub-postmasters to compensate them for the loss in their incomes which has come about as a consequence of this.

I also believe that the Post Office must look to the matter of pensions for these people, for at the present moment there are no pensions whatsoever. They receive retirement gratuities which are given only after five years' service to people who have put in 18 hours' personal service a week. After 29 years and seven months this gratuity amounts to just over £1,000. Frankly, I do not think this is good enough. There is no security of tenure for these individuals after a period of service. This is quite wrong in a period when security of tenure has been given to many other people. There is no compensation for loss of appointment. Also, I believe that they are treated very shabbily when it comes to providing substitutes during the holiday period.

I again urge the Minister to say something on this in winding up the debate, because I believe that it is not only important to constituents who live in rural areas but a matter of deep concern to sub-postmasters themselves.

I conclude by asking the Minister to make a very clear statement tonight. If he is not in a position to answer in detail, I hope he will ensure that the Post Office gives urgent reassurance to sub-postmasters and to individuals living in these areas that the services will remain in being.

9.30 p.m.

Photo of John Stanley John Stanley , Tonbridge and Malling

I agree that this has been a debate which has seen many constructive contributions from back benchers on both sides of the House. My hon. Friends the Members for Mid-Sussex (Mr. Renton), and Ealing, Acton (Sir G. Young), and the hon. Members for Thornaby (Mr. Wrigglesworth), and for Sowerby (Mr. Madden) have contributed in a most thoughtful and constructive way to our debate. I thought that the contribution by my hon. Friend the Member for Ealing, Acton was especially valuable, and his first-hand, long experience of the Post Office has been of benefit to both sides of the House.

My hon. Friend the Member for Beckenham (Mr. Goodhart) rightly drew attention to the considerable plight of the publishers of magazines and books, facing, as they are, recurrent increases in postal charges, and many hon. Members on both sides of the House referred to the plight of pensioners who are probably the hardest hit amongst the whole community by increased postal charges. My hon. Friend the Member for Beckenham referred to their predicament, as did the hon. Member for Newcastle-under-Lyme (Mr. Golding) and the hon. Member for Newham, North-West (Mr. Lewis) before he left the Chamber apparently disgusted by the contributions of his hon. Friends.

I refer briefly to the speech by the hon. Member for Colne Valley (Mr. Wainwright). I give him the assurance that he sought that the Conservative Party would see it as one of the principal benefits of the independent inquiry that we have in mind that it would be able to make his recommendations enabling a greater degree of experimentation and pilot study work to take place in various parts of the country. What is more, we see no reason why an independent inquiry should not reappraise the statutory monopoly position of the Post Office. Similar questions are at the moment being asked by a Select Committee of this House.

However, I endorse what my hon. Friend the Member for Ealing, Acton said. If the statutory monopoly is to be breached in any way, a condition of that must be that the new competitors of the Post Office should be able to compete on a fair and all-fours basis with the Post Office.

I turn to the opening speech by the Minister of State. I can appreciate that he found himself in considerable difficulty. It must be embarrassing if not awkward to have to come to this House to say that the deficit of the nationalised industry for which he has responsibility has rocketed from £50 million to £300 million in just six months. However, I found it strange that at no point did the hon. Gentleman feel it appropriate to express any regret or apology for what had happened, and I endorse fully what my hon. Friend the Member for Mid-Sussex said about there being a real sense of anger and outrage to see the Post Office coming back for a new increase in prices and with a sixfold increase in its forecast deficit only six months after making its original forecast. It appeared from the Minister's speech that he was oblivious of that. His view seemed to be that the Post Office had got its sums wrong and that this was a regrettable internal difficulty in the Post Office. But we are talking about what is by any stretch of the imagination a colossal sum. We see an increased deficit of a quarter of a billion pounds. Surely some expression of regret is due from the Minister to the users and the taxpayers who will have to foot this considerable bill.

The Minister's attitude to what by any standards is a financial debacle seemed to be to take refuge in the statement: I do not run the Post Office.' However, I do not believe that it is reasonable or proper for a Minister to shuffle off responsibility for what has happened. The Government accepted what subsequently appeared to be the very inadequate inflation assumption which the Post Office used when it forecast in January of this year that the deficit for 1975–76 would be only £50 million. The Government failed to exercise any degree of influence and constraint over the Post Office pay settlement in April which was a major factor responsible for knocking the finances of the Post Office sideways.

If the Minister claims that he has no legal power to intervene, I refer him to Section 11 of the previous Labour Government's Post Office Act of 1969. In subsection (2), clear powers are given to Ministers to make directives to the Post Office If it appears to the Minister that there is a defect in the general plans or arrangements of the Post Office for exercising any of its powers… Clearly there have been major defects here, and it was open to Ministers to intervene and to give directives if they chose. They failed to do so, and that means that there is certainly a major degree of responsibility for the £300 million deficit with which we are being faced on Ministers as well as on Post Office management.

The Minister, in his opening remarks, and the Government in their amendment, have sought to suggest that the responsibility for the present financial position of the Post Office lies with the previous Conservative Government and the statutory price restraint policy of that Government. While I would acknowledge that a statutory price restraint policy was pursued—it would be difficult to say otherwise—I would make clear the financial perspective. The total amount of the Post Office's deficit, as achieved and as is forecast, covering the first two financial years of the present Government, comes to £620 million, and that is nearly five times greater than the total amount paid to the Post Office for price restraint compensation during the period of the last Conservative Government. If, therefore, the Minister hopes to attribute a measure of blame and responsibility to the last Conservative Government, all I would say is that the present Government's degree of responsibility is already nearly five times greater.

I turn to the very important point raised by a number of hon. Members, including my hon. Friend the Member for Ealing, Acton and the hon. Member for Newcastle-under-Lyme, regarding the Post Office pension fund. This is a very disturbing position. We believe that the actuarial deficit of the Post Office pension fund must be in excess of £800 million. It is notable that of the £290 million deficit now being forecast by the Post Office for 1975–76, £90 million is attributable to the deficit on that fund.

I agree with hon. Members on both sides that it is not now particularly productive to try to suggest where the blame for that lies. Certainly the previous Conservative Government found themselves in difficulty over this, as have the present Labour Government. But I must set the record straight in view of the comments of the Minister of State at the Treasury during the Second Reading of the Statu- tory Corporations (Financial Provisions) Bill—because during that debate the Minister seemed to be under the impression that it was the previous Conservative Government who were responsible for this deficit on the Post Office pension fund.

As has been admirably drawn out by my hon. Friend the Member for Ealing, Acton, the deficit is principally attributable to pre-1969 liabilities of those who were working in the Post Office service. Their liabilities were discharged and funded in the Labour Government's Post Office Act of 1969. They were funded solely and wholely in 2½ per cent. Consols, which have clearly in no way matched the level of inflation which has subsequently taken place. But this 2½ per cent. Consols funding arrangement was made during the last Labour Government. That is down in black and white in Section 47 of the Post Office Act, 1969. I am afraid that the root source of all this is in that piece of legislation.

I turn to the important question to be dealt with by the Parliamentary Secretary in winding up the debate. Clearly there is a fundamental choice to be made. Is it right that this enormous deficit on the fund should continue to be discharged by making massive drawings on the revenue account of the Post Office, thereby charging it to the Post Office users and consumers, or should it be met by the general body of taxpayers? That is an important question. I believe that both sides would agree that it is quite wrong for there not to be made in the Post Office accounts a clear distinction between the operational losses of the Post Office and, on the other hand, the quite extraordinary provision being made against the Post Office revenue account for the pension fund.

I turn to what we would regard as being the major cause of the deficit which has arisen. It has been said by the Minister of State that it is due to inflation, which would appear to be a thoroughly nebulous explanation, and that nobody in particular is responsible.

The basic reason for this deficit is undoubtedly the fact that the Post Office failed in the first place accurately to calculate the loss of revenue which it would suffer as a result of the last round of price increases. In addition to that, and very much more seriously, there has been the settlement made to the Post Office workers in the spring of this year. That represented an average increase to postal workers of 24·2 per cent. to which was coupled a cost-of-living payment totalling 1 per cent. for every 1 per cent. increase in the retail price index above 11 per cent.

What has happened is that the horrifying rate of inflation and the acceleration in that rate has dragged up the Post Office deficit with it to its present astronomic heights. The point we make about the settlement and the way it has affected the Post Office's finances is that this seems to be an extraordinary situation whereby the Post Office entered into a pay settlement solely on its own authority knowing that it had not, under any circumstances, the revenue to pay for that settlement. This is a clear case of a nationalised industry going deeper into deficit without any degree of direct control and involvement by a Minister even though internal funds were not there to meet the settlement.

My hon. Friend the Member for Bridgewater has developed forcibly our case for setting up an independent inquiry into Post Office affairs. It is notable that while this has not had the support of the Government Front Bench, it has received support elsewhere. It was supported by the hon. Member for Colne Valley on behalf of the Liberal Party, and Mr. Tom Jackson said on the radio this morning that he was in no way averse to a public inquiry. My hon. Friend the Member for Mid-Sussex has said that his local branch of the NUR has also said that an independent inquiry would be justified.

We say that there is a widespread feeling that the Post Office is not the best judge as to how it should proceed. This is a most important nationalised industry currently consuming an enormous amount of the nation's resources. It is a nationalised industry on which every family and firm is to a greater or lesser extent dependent. We believe that there is a profoundly strong case for establishing an independent inquiry to look at the long-term future of the Post Office and the options open to it.

There has inevitably been a measure of criticism directed against the Post Office by a number of hon. Members. It must be said that the breakdown of financial control in the Post Office has to a large extent been a reflection and a product of the calamitous national economic policy pursued by the Government. The crippling impact on the Post Offices's finances of this year's pay settlement for Post Office workers is in turn a direct reflection of the crippling impact on the economy as a whole of the disastrous delusion of the social contract.

We have seen a six-fold increase in the Post Office's deficit in six months. That, too, is a direct reflection of the way in which public sector expenditure as a whole has increased and is still increasing when it ought to be diminishing. We have seen, too, the way in which the Government have failed to ensure that there is any proper financial discipline in this segment of the public sector. This is a reflection of the general relaxation and abandonment of financial discipline over the whole public sector.

The sad and painful message that comes from this debate is that just as every taxpayer and consumer will have to shoulder the horrifying increase in the Post Office's deficit this year, so, too, every taxpayer and consumer will have to shoulder the heavier and more painful burdens created by the Government's lamentable economic irresponsibility.

9.45 p.m.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

During the past three hours the House has witnessed two separate and very different debates. From the Government back benches we have heard constructive speeches reflecting the very serious concern throughout the country about the disturbing and escalating Post Office deficit which led to last week's proposals by the Post Office for steep increases in charges. We have also heard from my hon. Friends speeches which reflect the problems. For example, my hon. Friend the Member for Sowerby (Mr. Madden) rightly drew attention to problems in his constituency—problems to which I assure him I shall certainly draw the attention of the Post Office.

From the Conservative Opposition we received, right from the tabling of their spurious motion through to the winding up stage, yet another dosage of the shoddy opportunism which is the only contribution that that once great party can now make to political debates. I should exclude the hon. Member for Ealing, Acton (Sir G. Young) from those remarks, because he did point out to us that if he loses his seat he will have to go back to work for the Post Office. His majority is 808.

No one can fail to be disturbed at the sharply rocketing cost of posting a letter or making a telephone call. Hon. Members have rightly called for all possible further economies that can reduce costs. As my hon. Friend the Minister of State pointed out in his opening speech, such economies are being urgently sought, in addition to those already made.

We have asked the chairman to try to find further reductions in costs for 1975–76. He has offered a saving of £24 million over and above savings of about £33 million agreed before the beginning of the financial year. We have asked him to look around further, in conjunction with the unions, to see whether this figure can be increased to £50 million.

Even the smallest sums are important when we look for economies. I should like to take up the point made by my hon. Friend the Member for Newham, North-West (Mr. Lewis) who drew attention to the newspaper story last week about the possibility of electronically operated venetian blinds being installed in the projected new Post Office headquarters. When I read the article I was highly disturbed at this idea. I have caused inquiries to be made and I assure my hon. Friend and the House that we shall request from the Post Office an assurance that such expenditure, as projected will bring about a commensurate saving if it is to go ahead, otherwise we shall ask the Post Office to reconsider this project.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

I shall give way to my hon. Friend later. I appreciate his point.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

I shall give way later, if I have time.

We must not deceive ourselves into believing that economies of more than tens of millions of pounds can be achieved in the Post Office's total turn- over of £2,000 million without a further serious deterioration in services. Hon. Members have pointed with justification to the deterioration that has already taken place in recent years, even though lately some small improvement has been achieved.

However, let us not fool ourselves. The superb postal service that this country has been used to was based on a plentiful supply of cheap labour. Those days are over—over for good. Opposition Members may pine for the days when the butler brought in the Sunday evening delivery on a silver tray prior to discovering the body in the library.

Photo of Mr Tom King Mr Tom King , Bridgwater

Will the hon. Gentleman give way?

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

Not at this stage. I shall be coming to the points made by the hon. Gentleman. Those days are over—over for good, not just in Britain, but throughout the world. All over the world postal services are operating with heavy deficits. Even in the United States a Government subsidy is needed for the maintenance of a postal service which is inferior to ours. What is more, even with the deterioration in service that we all sadly acknowledge, the British postal service still offers better value for money than do many other services. We can all make our own criticisms, born of bitter experience, but in cost, in frequency of collection and in regularity of delivery, our postal service still compares favourably with most others. While we rightly complain, we should recognise that fact. Especially in door-to-door delivery, on a universal basis, our service is pretty well unique, contrary to the contention of the hon. Member for Mid-Sussex (Mr. Renton).

It is significant that last week the Daily Mail and the Daily Express—themselves outstanding examples of efficient management and profitability—ran articles which aimed to attack the Post Office but in the end had to acknowledge its comparative merits.

The Daily Express, speaking about the American system, said: There it is common practice in rural areas for people to pick up their own mail from the Post Office. It is a fact that in the United States 18 per cent. of all letter mail is collected by the addressees from private boxes in Post Offices.

The Daily Mail—another highly efficient organisation—said: Britain … is the only country in the world where the postal service has a statutory obligation to put a letter through your letter box rather than leaving it in a box at the farm gate or in a personal box at the Post Office itself.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

Certainly not. Their proposed new postal rate for a letter, first-class, goes up 1p to 8½p … but that is for a 2 oz. letter against a 0·7 oz. letter which is the limit for the price on the Continent where the postal service is subsidised. …Against our proposed 8½p here are comparative costs: West Germany 9·7p; Belgium 8·1p; Denmark 7·5p; Eire 7p; France 9p; Italy 7·2p; Luxembourg 5·2p; Netherlands 9·4p. Our service is worse than we would like, but in an inflationary world no labour-intensive service can be run on the cheap with maximum efficiency. Yet we have been expecting the Post Office to provide a flawless service at rock-bottom prices when no less than 72 per cent. of the total labour effort is concerned with the letter post. For every 4p. spent, 3p goes on wages and salaries.

The Tory Opposition know this very well. Indeed, the hon. Member for Ton-bridge and Mailing (Mr. Stanley) acknowledged the problem last month, when he posed the question: Can the existing level of postal services be justified if they require continual subsidisation from one year to another?"—[Official Report, 9th June 1975; Vol. 893, c. 122.] That was the hon. Gentleman who has just wound up for the Opposition on this censure motion. That is why their motion and speeches tonight have been calculated exercises in opportunistic hypocrisy.

After all, just what are they complaining about? Are they complaining that the Post Office is in deficit at all? Even they could not have that much cheek—not with their record. When they came into office five years ago the Post Office was running a surplus of more than £20 million. When they left office last year the Post Office was facing a deficit of nearly £307 million. It was their own policies which were directly to blame. The price restraint policies imposed under their counter-inflation legislation cost the Post Office over £500 million, much of it as subsidy by a nationalised industry to private industry, for, taking the letter post alone, about 80 per cent. is sent or received by business users.

The hon. Member for Ealing, Acton, in the only honest speech from the Opposition, pointed out that the main consumers of postal services are businesses and better-off individuals. Therefore, the Opposition are the last people with the right to complain that the Post Office is in deficit.

The hon. Member for Tonbridge and Mailing asked for our regret at that deficit. It is the Opposition's regret. It is the regret of the legacy that they left us this massive deficit. It is the burden placed upon the Post Office by their counter-inflation legislation. It is they who should express regret.

Photo of John Stanley John Stanley , Tonbridge and Malling

Will the Minister acknowledge that the figures he gave were fraudulent, as they attributed deficits for the financial year 1974-75, when the Labour Government were in office, to the last Conservative Government? The £300 million deficit for the period 1974-75 is wholly the responsibility of the Labour Government.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

The hon. Gentleman should go back to his logarithms if he expects us to take that seriously. Are the Oppositon horrified and surprised by the size of the deficit, which is so much greater than the Chancellor forecast in his Budget Statement? They lack even that excuse.

Five weeks ago in the debate on the Second Reading of the Statutory Corporations Bill, they were hawking around a prospective deficit figure for the Post Office of £300 million and my right hon. Friend the Chief Secretary, while unable to confirm the precise figure, made no bones about the situation when he spoke of A substantial deterioration, mainly due to higher inflation."—[Official Report, 9th June 1975; Vol. 893, c. 48.] They even knew the reasons for that deterioration, due to higher inflation—most notably the UPW pay settlement, to which reference was made tonight. That settlement, as the House will recall, was criticised by my right hon. Friend the Secretary of State for Employment as outside the social contract guidelines. But that settlement drew no comment at all from the Tory Opposition. How could it, since the inflationary element built into this settlement was the threshold which was the special inflationary legacy that the Tory Government handed over to us?

Were the Tories shocked that the Post Office had decided that it had no alternative but to pass on this greatly increased deficit in higher prices to the consumer?

How could they be shocked? They knew that it was the policy of this Government, announced as soon as we took office, to phase out subsidies and go for realistic pricing, even though this year we are still subsidising the Post Office to the tune of £70 million. But this is their policy as well. The hon. Member for Tonbridge and Mailing himself, speaking in this House on 9th June, described complete price freedom for the Post Office as a welcome policy.

The hon. Member for St. Ives (Mr. Nott), speaking from the Opposition Front Bench in the same debate, seemed concerned that the Government have still given themselves powers to subsidise in the future. So the Opposition, least of all, can complain if their deficit, exacerbated by their policies, is turned into the price increases that they advocate. So what conceivable basis can they have for the demand in this motion for an inquiry into the Post Office as a prelude to increased Government intervention?

It cannot be because they have always been advocates of Government intervention in nationalised industries, and, in particular, the Post Office. Indeed, when the Post Office Bill, setting up the present corporation, was going through

this House, the right hon. Member for Chesham and Amersham (Mr. Gilmour), as their spokesman, was perfectly revolted by the idea. He denounced any scope for political meddling. He was repelled by the thought of backstairs influence and interference by the Minister.

Maybe, then, while opposed to Government interference in general, the Opposition believe in it in this particular case because of the unique incapacity of the management of the Post Office. That would be the strangest situation of all. Because of course the man who runs the Post Office is the man they put in charge. They put him in charge on a very controversial occasion that this House remembers. And in case anyone forgets, let me remind the House of how Mr. Christopher Chataway, as Minister of Posts and Telecommunications, described the situation when he sacked Lord Hall, and appointed Sir William Ryland in his place. The decision was made, Mr. Chataway said, in the interests of the efficient management of the Post Office. They appointed Sir William to secure efficient management, and Sir William is still in charge. Has Sir William changed, or have they? No, Mr. Speaker. Hon. Members are right to express misgivings about the serious state of the Post Office's finances—but not the Opposition. This is not a genuine censure motion. This is the criminal revisting the scene of his crime. He has been caught red handed. We ask the House to vote this motion down.

Question put, That the amendment be made:—

The House divided: Ayes 286, Noes 260.

Division No. 283.]AYES[10.00 p.m.
Abse, LeoBooth, AlbertCohen, Stanley
Allaun, FrankBoothroyd, Miss BettyColeman, Donald
Anderson, DonaldBottomley, Rt Hon ArthurConcannon, J. D.
Archer, PeterBoyden, James (Bish Auck)Conlan, Bernard
Armstrong, ErnestBradley, TomCook, Robin F. (Edin C)
Ashley, JackBray, Dr JeremyCorbett, Robin
Ashton, JoeBrown, Hugh D. (Provan)Cox, Thomas (Tooting)
Atkins, Ronald (Preston N)Brown, Robert C. (Newcastle W)Craigen, J. M. (Maryhill)
Atkinson, NormanBrown, Ronald (Hackney S)Crawshaw, Richard
Bagler, Gordon A. T.Butler, Mrs Joyce (Wood Green)Cronin, John
Barnett, Guy (Greenwich)Callaghan, Jim (Middleton & P)Crosland, Rt Hon Anthony
Barnett, Rt Hon Joel (Heywood)Campbell, IanCunningham, G. (Islington S)
Bates, AlfCanavan, DennisCunningham, Dr J. (Whiteh)
Bean, R. E.Cant, R. B.Davidson, Arthur
Benn, Rt Hon Anthony WedgwoodCarmichael, NeilDavies, Bryan (Enfield N)
Bennett, Andrew (Stockport N)Carter-Jones, LewisDavies, Denzil (Llanelli)
Bidwell, SydneyCartwright, JohnDavies, Ifor (Gower)
Bishop, E. S.Castle, Rt Hon BarbaraDavis, Clinton (Hackney C)
Blenkinsop, ArthurClemitson, IvorDeakins, Eric
Boardman, H.Cocks, Michael (Bristol S)Dean, Joseph (Leeds West)
Delargy, HughKaufman, GeraldRodgers, George (Chorley)
Dell, Rt Hon EdmundKelley, RichardRodgers, William (Stockton)
Dempsey, JamesKerr, RussellRooker, J. W.
Doig, PeterKilroy-Silk, RobertRoper, John
Douglas-Mann, BruceKinnock, NeilRose, Paul B.
Duffy, A. E. P.Lambie, DavidRoss, Rt Hon W. (Kilmarnock)
Dunn, James A.Lamborn, HarryRowlands, Ted
Dunnett, JackLamond, JamesRyman, John
Dunwoody, Mrs GwynethLeadbitter, TedSandelson, Neville
Eadie, AlexLee, JohnSedgemore, Brian
Edelman, MauriceLestor, Miss Joan (Eton & Slough)Selby, Harry
Edge, GeoffLewis, Ron (Carlisle)Shaw, Arnold (Ilford South)
Edwards, Robert (Wolv SE)Lipton, MarcusSheldon, Robert (Ashton-u-Lyne)
English, MichaelLitterick, TomShore, Rt Hon Peter
Ennals, DavidLoyden, EddieShort, Rt Hon E. (Newcastle C)
Evans, Ioan (Aberdare)Luard, EvanShort, Mrs Renée (Wolv NE)
Evans, John (Newton)Lyon, Alexander (York)Silkin, Rt Hon John (Deptford)
Ewing, Harry (Stirling)Lyons, Edward (Bradford W)Silkin, Rt Hon S. C. (Dulwich)
Faulds, AndrewMcCartney, HughSillars, James
Fernyhough, Rt Hon E.McElhone, FrankSilverman, Julius
Fitch, Alan (Wigan)MacFarquhar, RoderickSkinner, Dennis
Flannery, MartinMcGuire, Michael (Ince)Small, William
Fletcher, Raymond (Ilkeston)Mackenzie, GregorSmith, John (N Lanarkshire)
Fletcher, Ted (Darlington)Mackintosh, John P.Snape, Peter
Foot, Rt Hon MichaelMaclennan, RobertSpearing, Nigel
Ford, BenMcMillan, Tom (Glasgow C)Spriggs, Leslie
Forrester, JohnMadden, MaxStallard, A. W.
Fowler, Gerald (The Wrekin)Magee, BryanStewart, Rt Hon M. (Fulham)
Fraser, John (Lambeth, N'w'd)Mahon, SimonStoddart, David
Freeson, ReginaldMallalieu, J. P. W.Stott, Roger
Garrett, John (Norwich S)Marks, KennethStrang, Gavin
Garrett, W. E. (Wallsend)Marquand, DavidStrauss, Rt Hon G. R.
George, BruceMarshall, Dr Edmund (Goole)Summerskill, Hon Dr Shirley
Gilbert, Dr JohnMarshall, Jim (Leicester S)Swain, Thomas
Ginsburg, DavidMaynard, Miss JoanTaylor, Mrs Ann (Bolton W)
Golding, JohnMellish, Rt Hon RobertThomas, Jeffrey (Abertillery)
Gould, BryanMendelson, JohnThomas, Mike (Newcastle E)
Gourlay, HarryMikardo IanThomas, Ron (Bristol NW)
Graham, TedMillan, BruceTierney, Sydney
Grant, George (Morpeth)Miller, Dr M. S. (E Kilbride)Tinn, James
Grant, John (Islington C)Miller, Mrs. Millie (Ilford N)Tomlinson, John
Grocott, BruceMitchell, R. C. (Soton, Itchen)Tomney, Frank
Hamilton, James (Bothwell)Molloy, WilliamTorney, Tom
Hardy, PeterMoonman, EricTuck, Raphael
Harper, JosephMorris, Alfred (Wythenshawe)Urwin, T. W.
Harrison, Walter (Wakefield)Morris, Charles R. (Openshaw)Varley, Rt Hon Eric G.
Hart, Rt Hon JudithMorris, Rt Hon J. (Aberavon)Wainwright, Edwin (Dearne V)
Hattersley, Rt Hon RoyMoyle, RolandWalden, Brian (B'ham, L'dyw'd)
Hatton, FrankMurray, Rt Hon Ronald KingWalker, Harold (Doncaster)
Hayman, Mrs HeleneNewens, StanleyWalker, Terry (Kingswood)
Healey, Rt Hon DenisNoble, MikeWard, Michael
Heffer, Eric S.Ogden, EricWatkins, David
Hooley, FrankO'Halloran, MichaelWatkinson, John
Horam, JohnO'Malley, Rt Hon BrianWeetch, Ken
Howell, Denis (B'ham Sm H)Orbach, MauriceWeitzman, David
Huckfield, LesOrme, Rt Hon StanleyWhite, Frank R. (Bury)
Hughes, Rt Hon C (Anglesey)Ovenden, JohnWhite, James (Pollok)
Hughes, Mark (Durham)Owen, Dr DavidWhitehead, Phillip
Hughes, Robert (Aberdeen N)Padley, WalterWhitlock, William
Hughes, Roy (Newport)Palmer, ArthurWilley, Rt Hon Frederick
Hunter, AdamPark, GeorgeWilliams, Alan (Swansea W)
Irvine, Rt Hon Sir A. (Edge Hill)Parker, JohnWilliams, Alan Lee (Hornch'ch)
Irving, Rt Hon S. (Dartford)Parry, RobertWilliams, Rt Hon Shirley (Hertford)
Jackson, Colin (Brighouse)Pavitt, LaurieWilliams, W. T. (Warrington)
Jackson, Miss Margaret (Lincoln)Peart, Rt Hon FredWilson, Alexander (Hamilton)
Janner, GrevillePendry, TomWilson, Rt Hon H. (Huyton)
Jay, Rt Hon DouglasPerry, ErnestWilson, William (Coventry SE)
Jeger, Mrs LenaPhipps, Dr ColinWise, Mrs Audrey
Jenkins, Hugh (Putney)Prentice, Rt Hon RegWoodall, Alec
Jenkins, Rt Hon Roy (Stechford)price, William (Rugby)Woof, Robert
John, BrynmorRadice, GilesWrigglesworth, Ian
Johnson, James (Hull West)Richardson, Miss JoYoung, David (Bolton E)
Johnson, Walter (Derby S)Roberts, Albert (Normanton)
Jones, Alec (Rhondda)Roberts, Gwilym (Cannock)TELLERS FOR THE AYES
Jones, Barry (East Flint)Robertson, John (Paisley)Mr. J. D. Dormant and
Jones, Dan (Burnley)Roderick, CaerwynMr. John Ellis.
Judd, Frank
NOES
Adley, RobertAwdry, DanielBell, Ronald
Aitken, JonathanBain, Mrs MargaretBennett, Dr Frederic (Torbay)
Amery, Rt Hon JulianBaker, KennethBennett, Dr Reginald (Fareham)
Arnold, TomBanks, RobertBenyon, W.
Atkins, Rt Hon H. (Spelthorne)Beith, A. J.Berry, Hon Anthony
Biffen, JohnHarrison, Col Sir Harwood (Eye)Percival, Ian
Biggs-Davison, JohnHavers, Sir MichaelPeyton, Rt Hon John
Blaker, PeterHawkins, PaulPink, R. Bonner
Body, RichardHayhoe, BarneyPrice, David (Eastleigh)
Boscawen, Hon RobertHeath, Rt Hon EdwardPrior, Rt Hon James
Bottomley, PeterHeseltine, MichaelPym, Rt Hon Francis
Bowden, A. (Brighton, Kemptown)Higgins, Terence L.Raison, Timothy
Boyson, Dr Rhodes (Brent)Holland, PhilipRawlinson, Rt Hon Sir Peter
Brittan, LeonHordern, peterRees, Peter (Dover & Deal)
Brotherton, MichaelHowe, Rt Hon Sir GeoffreyRees-Davies, W. R.
Brown, Sir Edward (Bath)Howell, David (Guildford)Reid, George
Bryan, Sir PaulHowell, Ralph (North Norfolk)Renton, Rt Hon Sir D. (Hunts)
Buchanan-Smith, AlickHowells, Geraint (Cardigan)Renton, Tim (Mid-Sussex)
Buck, AntonyHunt, JohnRidley, Hon Nicholas
Budgen, NickHurd, DouglasRidsdale, Julian
Bulmer, EsmondHutchison, Michael ClarkRifkind, Malcolm
Burden, F. A.Irvine, Bryant Godman (Rye)Rippon, Rt Hon Geoffrey
Butler, Adam (Bosworth)Jenkin, Rt Hon P. (Wanst'd& W'dt'd)Roberts, Michael (Cardiff NW)
Carlisle, MarkJessel, TobyRoberts, Wyn (Conway)
Chalker, Mrs LyndaJohnson Smith, G. (E Grinstead)Rodgers, Sir John (Sevenoaks)
Channon, PaulJopling, MichaelRoss, Stephen (Isle of Wight)
Churchill, W. S.Joseph, Rt Hon Sir KeithRossl, Hugh (Hornsey)
Clark, Alan (Plymouth, Sutton)Kaberry, Sir DonaldRost, Peter (SE Derbyshire)
Clark, William (Croydon S)Kellett-Bowman, Mrs ElaineRoyle, Sir Anthony
Clarke, Kenneth (Rushcliffe)Kershaw, AnthonySalnsbury, Tim
Clegg, WalterKimball, MarcusSt. John-Stevas, Norman
Cockcroft, JohnKing, Evelyn (South Dorset)Scott, Nicholas
Cooke, Robert (Bristol W)King, Tom (Bridgwater)Scott-Hopkins, James
Cope, JohnKitson, Sir TimothyShaw, Giles (Pudsey)
Cordle, John H.Knight, Mrs JillShelton, William (Streatham)
Corrie, JohnKnox, DavidShepherd, Colin
Costain, A. P.Lamont, NormanShersby, Michael
Crawford, DouglasLane, DavidSilvester, Fred
Critchley, JulianLangford-Holt, Sir JohnSims, Roger
Crouch, DavidLatham, Michael (Melton)Skeet, T. H. H.
Crowder, F. P.Lawrence, IvanSmith, Cyril (Rochdale)
Davies, Rt Hon J. (Knutsford)Lawson, NigelSpeed, Keith
Dean, Paul (N Somerset)Lester, Jim (Beeston)Spence, John
Dodsworth, GeoffreyLewis, Kenneth (Rutland)Spicer, Jim (W Dorset)
Douglas-Hamilton, Lord JamesLloyd, IanSpicer, Michael (S Worcester)
Drayson, BurnabyLoveridge, JohnSproat, Iain
du Cann, Rt Hon EdwardLuce, RichardStanbrook, Ivor
Durant, TonyMcAdden, Sir StephenStanley, John
Dykes, HughMacCormick, IainSteel, David (Roxburgh)
Eden, Rt Hon Sir JohnMacfarlane, NeilSteen, Anthony (Wavertree)
Edwards, Nicholas (Pembroke)MacGregor, JohnStewart, Donald (Western Isles)
Elliott, Sir WilliamMacmillan, Rt Hon M. (Farnham)Stewart, Ian (Hitchin)
Emery, PeterMcNair-Wilson, M. (Newbury)Stokes, John
Eyre, ReginaldMcNair-Wilson, P. (New Forest)Stradling Thomas, J.
Fairbairn, NicholasMadel, DavidTaylor, R. (Croydon NW)
Fairgrieve, RussellMarshall, Michael (Arundel)Taylor, Teddy (Cathcart)
Farr, JohnMarten, NeilTebbit, Norman
Fell, AnthonyMates, MichaelTemple-Morris, Peter
Finsberg, GeoffreyMather, CarolThomas, Dafytdd (Merioneth)
Fisher, Sir NigelMaude, AngusThomas, Rt Hon P. (Hendon S)
Fletcher, Alex (Edinburgh N)Maudling, Rt Hon ReginaldThompson, George
Fletcher-Cooke, CharlesMawby, RayThorpe, Rt Hon Jeremy (N Devon)
Fookes, Miss JanetMaxwell-Hyslop, RobinTownsend, Cyril D.
Fox, MarcusMayhew, PatrickTrotter, Neville
Fraser, Rt Hon H. (Stafford & St)Meyer, Sir AnthonyTugendhat, Christopher
Freud, ClementMiller, Hal (Bromsgrove)van Straubenzee, W. R.
Fry, PeterMiscampbell, NormanVaughan, Dr. Gerard
Galbraith, Hon. T. G. D.Mitchell, David (Basingstoke)Viggers, Peter
Gardiner, George (Reigate)Moate, RogerWainwright, Richard (Colne V)
Gardner, Edward (S Fylde)Monro, HectorWakeham, John
Gilmour, Rt Hon Ian (Chesham)Montgomery, FergusWalker, Rt Hon P. (Worcester)
Gilmour, Sir John (East Fife)Moore, John (Croydon C)Wall, Patrick
Glyn, Dr AlanMore, Jasper (Ludlow)Walters, Dennis
Goodhart, PhilipMorgan, GeraintWarren, Kenneth
Goodhew, VictorMorgan-Giles, Rear-AdmiralWatt, Hamish
Goodlad, AlastairMorris, Michael (Northampton S)Weatherill, Bernard
Gorst, JohnMorrison, Charles (Devizes)Wells, John
Gow, Ian (Eastbourne)Morrison, Hon Peter (Chester)Wiggin, Jerry
Gower, Sir Raymond (Barry)Mudd, DavidWigley, Dafydd
Gray, HamishNelson, AnthonyWilson, Gordon (Dundee E)
Grieve, PercyNeubert, MichaelWinterton, Nicholas
Grimond, Rt Hon J.Newton, TonyWood, Rt Hon Richard
Grist, IanNott, JohnYoung, Sir G. (Ealing, Acton)
Hall, Sir JohnOppenhelm, Mrs SallyYounger, Hon George
Hall-Davis, A. G. F.Page, John (Harrow West)
Hamilton, Michael (Salisbury)Page, Rt Hon R. Graham (Crosby)TELLERS FOR THE NOES:
Hampson, Dr KeithPardoe, JohnMr. Spencer Le Marchant and
Hannam, JohnPenhaligon, DavidMr. Cecil Parkinson.

Question accordingly agreed to.

Main Question, as amended, put and agreed to.

Resolved,That this House regrets that the actions of the previous Administration in imposing artificial restrictions on the development of the nationalised industries created severe financial problems for the Post Office; and endorses deficits of the nationalised industries and the Government objective of phasing out the restoring them to profitability.