POST OFFICE TELEPHONE AGREE- MENT.

HC Deb 09 August 1905 vol 151 cc821-65

MR. LOUGH (Islington, W.)

said he wished to propose the Motion which stood in his name with regard to the agreement between the Post Office and the National Telephone Company, and he thought it would be better if, in the first place, he stated briefly the effect of the agreement. Its object was to extend the provisions of an agreement made some years ago in regard to London to the whole country, so that the plant, buildings and business of the National Telephone Company might be transferred to the State in the year 1911. The public would receive certain benefits during the next six years owing to the action of the Postmaster-General in entering into the agreement now, and the price which the State was to pay for the undertaking was to be settled by agreement or fixed by arbitration. It came out in the course of the inquiry before the Select Committee that the undertaking included something like 250,000 telephones with all their accessories, and that the sum of nine or ten millions might have to be paid under the agreement. After considering that agreement very carefully the Committee came to the conclusion that, under certain circumstances, and provided certain recommendations that they made were carried into effect, the agreement was one which might be beneficial to the State.

Now, the purpose of the Resolution he had placed upon the Paper for that day was to secure a promise from the Postmaster-General that the recommendations of the Committee should be carried into effect. He thought that the noble Lord the Postmaster-General would admit that he stood in a somewhat peculiar position in regard to those recommendations, for he had given definite pledges to the House in respect of them. There had been a good deal of conversation in the House during the session on the subject, and on May 22nd the noble Lord, stated that he had not the slightest pride in the matter, and that, if he found that his judgment was wrong, or if the Committee found that he was wrong, he would not hesitate to say so to the House of Commons, and would allow the agreement to be dropped. Now, the Select Committee did not suggest that the agreement should be dropped, but still it was quite true that there was plenty of time to commence de novo if the Postmaster-General found that he was not in a position to carry out the recommendations of that Committee. In May, in the course of the discussion on the functions of the Committee, the Postmaster-General agreed that the Committee should consider whether it was— desirable in the public interest that the agreement should become binding with or without modification. He thought that quotation proved that the noble Lord largely placed himself in the hands of the Committee, for his statement went far in the direction of suggesting that the reasonable recommendations of the Committee should be accepted. He was bound to say that, in his opinion, the House of Commons treated undertakings of this kind which came before it in a very generous and just spirit, and he did not believe that the recommendations of this Committee would be found to be an exception to that general rule. He considered that the Committee had dealt very generously with the National Telephone Company, and that company ought to respond in a similar spirit, and ought to assist the Postmaster-General to carry out the comparatively small and trifling alterations of the agreement which were suggested by the Committee.

Practically the recommendations of the Committee touched only three points. The first, however, dealt with a very large issue which might to some not appear to form part of the agreement. It was the position of the municipal telephonic installations throughout the country. When they looked at the agreement they saw no reason why these municipal undertakings should be dealt with by it, and, indeed, they were not dealt with by it, but undoubtedly the susceptibilities of the municipalities in regard to their telephonic undertakings had been raised by the action of the Government while the agreement had been under consideration. For instance, on March 23rd, 1904, the Postmaster-General said he would be only too glad to help in every way any municipality which wished to start its own telephone service, and he hoped that the present difficulty by which a municipality could not get an extension beyond 1911 might be overcome when they came to a general agreement. Now, that embodied in a nutshell the whole difficulty; it raised the whole question of municipal telephonic development. The noble Lord had written a letter to the Glasgow Corporation in regard to their undertaking in which he stated that he did not anticipate any prolongation of the existing licence, and surely that was in direct conflict with the policy which he stated in that House. Sir George Murray had expressed a similar opinion. The matter had not been discussed in the House of Commons, but it was one of the very greatest importance, and no action ought to be taken without the consent of Parliament. He did, however, think that at this late hour in the session it was not a question which ought to be raised, and that they should confine themselves strictly to the business bargain between the Postmaster-General and the National Telephone Company.

On May 2nd the municipality of Hull held an inquiry with a view to obtaining sanction to their request that they might borrow a sum of £20,000 in order to extend their telephone service. On May 9th a similar inquiry was held at Portsmouth with a view to a loan of £21,800, and on May 11th there was still another inquiry at Brighton, also with a view to raising a loan for the same purpose. These inquiries took place three months ago, but up to the present the municipalities had not been able to obtain any answer to their question whether or not the loans would be sanctioned. In each of these cases the application of the municipal authority was opposed by the National Telephone Company. He did not know what right that company had to appear at the inquiries at all. The question was one simply between the Local Government Board and the municipal authority, and although the municipalities, had repeatedly asked whether the necessary sanction was to be given, they had been put off with evasive replies with a view to the present debate. This question of municipal telephonic development was of the greatest importance. It was recognised that the means of inter - communication could not be supplied except by trunk lines, which might be under the control of the State, but surely the local business ought to be left in the hands of the municipal authorities. It might be said that the Post Office would be as well able to manage the local business, but he would not stop to argue that question. His only desire was that the point should not be prejudiced now, and that the House should leave itself open to consider the reasonable claims of the various municipalities. In fact, he thought that while the Postmaster-General had practically agreed that nothing should be done to prejudice the position of those municipalities, the Committee had found great difficulty in reconciling the noble Lord's statement with the delay of the Department in sanctioning the loans which had been applied for.

THE POSTMASTER-GENERAL (Lord STANLEY,) Lancashire, Westhoughton

The hon. Member must not mix up two things. The Post Office has nothing whatever to do with loans, which are dealt with by the Local Government Board.

MR. LOUGH

But there has been some mysterious force at work which has prevented the Local Government Board giving an answer to these applications.

LORD STANLEY

I assure the hon. Member that, so far as my Department is concerned, absolutely no action whatsoever in that direction has been taken.

MR. LOUGH

said it was quite impossible for them to leave out of consideration the most important recommendation of the Report that nothing should be done to prejudice municipal telephonic development.

There were one or two matters of detail in regard to which he hoped the noble Lord would express his willingness to afford protection to the municipal authorities. For instance, in regard to the purchase of the company's undertaking in London. In 1902 there was a schedule provided, and he understood that in the opinion of the municipalities that schedule was less liberal than the schedule which was attached to the present agreement, and therefore the municipalities asked that, if any question of purchase arose in regard to their undertakings, it should be governed by the schedule of the present agreement. Another request arose from the fact that it was anticipated that one of the great advantages to be derived from purchase by the State would be an improvement of the means of inter-communication in all parts of the country, and the municipalities desired that such means of inter-communication should also be secured within their areas. The Committee further suggested that special consideration should be given to the circumstances of Hull and Glasgow in regard to their installations. These were, no doubt, small points, and they would probably be covered by the Answer of the noble Lord, who, he hoped, would do something to reassure the municipalities that their interests would be studied in this regard.

The noble Lord had told them that the terms of purchase were to be what were known as "tramway terms." Well, the Committee had looked into that matter, and they had found that, although the principle of "tramway terms" was fully embodied in the agreement, yet the words used were not the words which were settled by high judicial authority when that idea was embodied in the tramway terms, and they, therefore, hoped that the Postmaster-General would secure the inclusion of the words that had obtained such high judicial sanction

The third of the series of recommendations made by the Committee dealt with the position of the servants of the company. He must say lie thought there were some grounds for the recommendations of the Committee in this respect. In Clause 8 of the agreement it was said that the Postmaster-General would be prepared on the transfer of the company's undertaking to take into his service a considerable proportion of the officers of the company on terms to be arranged between himself and them, but that he would not accept any obligation to employ them. Those were really cold and hard words which the noble Lord might feel justified in modifying. This was a matter which affected something like 14,000 employees, and that number would probably be largely increased during the next six or seven years. He hoped the noble Lord would see his way to accept the recommendations of the Committee in regard to those employees. He did not think it could be suggested that the recommendations of the Committee were marked by other than the greatest moderation. They looked to him as very much like the minimum of what could be recommended, and he hoped the Postmaster-General would take the opportunity at once of relieving the minds of that vast body of public servants of the fears which they were not unnecessarily entertaining. Undoubtedly the development of the telephonic service would be very rapid in the future, and it would be quite possible for the noble Lord to make whatever modified arrangements he liked in regard to new employees, but, at any rate, he ought to respect the bargain made with those whom he was taking over. Practically those three recommendations constituted the whole of the Report, and he thought the House of Commons would feel that he did not exaggerate one iota when he said it was a most moderate Report.

The final part of his Resolution dealt with the question of the purchase of the plant of the company. He took it from a Report submitted to the Select Committee by his hon, friend the Member for Devonport, and defeated by the casting vote of the Chairman. He thought there was a good deal to be said for the suggestion that complete discretion should be left to the Department in regard to the purchase of the plant. The agreement as it at present stood amounted to a premium on the maintenance of bad and unsuitable plant. If the recommendation of the Committee were acted upon he did not think it would involve any injustice to the company, because they were given sufficiently long notice under which to use up their plant. There was a great deal to be said for the suggestion that more complete discretion should be left to the Post Office than was left by the agreement as it stood. On the whole, the action of the Postmaster-General had been very sympathetically received by the Committee, and, judging from the Report, the noble Lord, in carrying out this purchase, had done a very great service to the State. He appealed to him to meet the Report of the Committee in a generous spirit.

*MR. CHANNING (Northamptonshire, E.)

in seconding the Motion, associated himself with all that his hon. friend had said in regard to the energy, capacity, and foresight of the noble Lord in dealing with this matter. He thought that everyone who had considered this question and had read the Report of the Committee must feel that its recommendations were not only moderate, but would tend to smooth and facilitate the operation of the transfer and of the reforms which the Postmaster-General had in view. He thought the interests of the general taxpayer should be safeguarded, not only in the direction indicated by the Committee in the 18th paragraph of their Report, but also by the suggestions made in the latter part of the Motion of his hon. friend. The arrangements made with the company were more than fair. But he felt that the most important issue involved was the continance of the rights of municipal bodies to carry out local work, and that licences should continue to be issued to them as most strongly recommended by the Committee in Paragraph 28. It surely was but a very small request that the rights and interests of the municipalities should be safeguarded, and he felt, too, that the claims of the employees of the National Telephone Company could not be lightly set aside.

Motion made, and Question proposed, "That the sanction of this House shall not be given to the proposed Purchase Agreement between the Postmaster-General and the National Telephone Company, Limited, unless the various recommendations of the Select Committee are embodied therein, and that words should be inserted in the Agreement to provide that the decision of the Postmaster-General as to the suitability of any plant, land, or buildings for the requirements of the telephonic service of the Post Office shall be final, and that he shall not be bound to buy any such plant, land, or buildings, any other provision of the Agreement to the contrary notwithstanding."—(Mr. Lough.)

LORD STANLEY

said that it would probably facilitate the discussion if he stated at once what were the intentions of the Government with regard to the Report of the Committee. Hon. Members had been good enough to make kind references to himself and to ask him to give generous consideration to the proposals made by the Committee. He was glad to say that he was able to do so. At the same time, he would point out that this was not a Bill into which a clause could be inserted by the House and which afterwards became law. It was an agreement, and any alteration made in it must be assented to by both sides. Therefore, it was not entirely in one's power to say that one would accept a certain recommendation when one knew that that recommendation would not be assented to by the other party to the agreement.

The Committee's Report might be divided into two parts, one of which was practically a corollary to the agreement concerning the relations of the Government as employers and the employes of the telephone company who would come into their employment in December, 1911. He associated himself with both the hon. Members who had said that they thought the Report of the Committee was not at all extreme, and he was glad to be able to give a consent, modified only by certain alterations which were absolutely necessary to make the scheme workable, to their recommendations. In making statements on such matters there was risk of using words which afterwards might be made the ground of charges of breach of faith, and he would, therefore, with the indulgence of the House, read out the terms which the Government were prepared to give to the employes who came into their service, so that there might be no mistake. They were as follows —

1. "(1) Subject to the other provisions of this Memorandum the Postmaster-General will take into the service of the Post Office the servants and officers of the company who have been not less than two years continuously in the service of the company on December 31st, 1911, and such officers and servants shall enjoy the advantages and be subject to all the conditions of the rank or grade to which they are admitted in the same manner as other officers and servants of the Post Office in that rank or grade. This undertaking does not apply to the general manager or to officers of the company in receipt of £700 per annum or upwards.
2. "(2) The Postmaster-General has already by his Agreement with the company conceded that officers or servants who have been continuously in the service of the company from August l5th, 1904, until December 31st, 1911, and who then become established servants of the Post Office entitled to pension, shall be so entitled, though they may retire before they have served ten years under the Crown.
3. "(3) He is also willing, in the case of officers who do not participate in the pension scheme of the National Telephone Company, and who on the transfer of the company's business become established servants of the Post Office entitled to pension, to allow them to count for purposes of pension their continuous service with the company subsequent to December 31st, 1909, as servants under the Crown.
4. "(4) As regards medical examination, the Postmaster-General cannot undertake to examine candidates for the telephone company's service, but he is willing to dispense in 1912 with the medical examination of any officer or servant, if such officer or servant has been in the service of the company continuously for two years on December 31st, 1911, and has had no abnormal amount of sick leave during that time.
5. "(5) The pension fund of the company is in the hands of trustees and its administration depends upon a private trust deed. The provisions of the deed are so different from the conditions of the Civil Service pension system that (apart from other difficulties) it would be impracticable for the Postmaster-General to administer the fund or to continue the same system for individuals. For instance, under the trust deed no pension can be granted to an officer who retires under the age of sixty-five, whereas under the rules of the Civil Service an officer may be called upon to retire at sixty, and if retiring at sixty, either compulsorily or voluntarily, is entitled to a pension. The fund must, therefore, be closed, and officers and servants entering the Post Office must be subject to the Civil Service rules as to pensions (subject to the provisions of this Memorandum). 830 If, however, it be shown that by the closing of the company's pension fund and the substitution of the system of Civil Service superannuation the general body of the participants in the pension scheme of the company will be placed in a substantially less favourable position, the Postmaster-General will consider the expediency of adding a period (not exceeding in any case two years) to the service which under the rules of the Civil Service the officers affected are entitled to count for purposes of pension.
6. "(6) These arrangements cannot be fully carried out without the authority of an Act of Parliament, and this declaration is made subject to the passing of such an Act. An Act will be necessary to provide the money for the purchase from the company, and provisions on this subject will be included in that measure."

He thought hon. Members would see that the Government had very fairly and generously met the whole of the suggestions with regard to employés made by the Committee.

He would turn to the other recommendations of the Committee. The terms which the Department proposed the Committee held did not fully carry out what were known as "tramway terms," and they had proposed an alteration. Both the company and the Department looked upon this as a matter of no importance, and they had agreed to accept the recommendation of the Committee, and adopt what the Committee believed to be a better exposition of "tramway terms."

The next point was whether they would give the municipalities the choice of taking the new specifications in preference to their own as existing in their present licences. To that they were perfectly ready to accede. As far as the Government were concerned the municipalities could take whichever specification they liked. The next point was the question as to the granting of municipal licences exceeding the length of the period still left for the telephone company. The Committee urged that no corresponding extension should be granted to the company. The company would not agree to that, and he was bound to say he thought their refusal was justified. What were the circumstances? The agreement of the Act of 1898 was that, when a municipality obtained a licence and was in competition with the National Telephone Company, a licence extending to the same period should be granted to the company. It was the late Mr. Hanbury, who was always quoted as a friend of the municipalities, who imposed this condition, and in doing so, he declared that if an extension beyond 1911 were given to a municipality it would be monstrously unfair not to grant a similar extension to the company. The proposal of the Committee was a practical infringement of a statutory right. There was a further condition—that there should be intercommunication at once and without charge between the municipalities, to whom was granted a licence, and the company. That meant that if the company had worked up a business of, say, 300 subscribers in a town, a municipality entering the field would at once enjoy the advantage of having these 300 members, not, indeed, as subscribers, but as communicants. He thought that a most unfair condition, and he was not surprised that the company would not agree to it. If the House insisted on that condition, the agreement fell to the ground.

If the hon. Member's Motion were carried, the agreement would cease to exist. He thought hon. Members ought to think twice before they sacrificed the advantages that would come from the agreement. In the first place, they would sacrifice in country districts where the Post Office and the National Telephone ran side by side those very advantages which were enjoyed in London—the advantages of free intercommunication. The instant the agreement became law there would be free intercommunication without charge throughout the whole of the United Kingdom. Then there was the security for an efficient service to be taken into account. The Government reserved to themselves the right, where it was reported that the National Telephone Company did not give an efficient service, of themselves stepping in to do the work. There was also a maximum and minimum of rate; and there was the prohibition of favour and preference. Those were the advantages which would be sacrificed unless hon. Members refused to accept the proposal of the hon. Member for Islington. But, even if the House accepted the Motion, would the object of the hon. Member opposite be gained? Would from that moment licences be granted to municipalities? He said at once there was no Postmaster-General in his senses on either side of the House who would between now and 1911 give a single licence to a municipality. They were all absolutely agreed upon one thing. It was that the company's licence must come to an end in 1911. Supposing the agreement fell to the ground, every single municipal licence they gave extended in the district in which it was given the company's licence for so many more years. That was most undesirable, and he was perfectly certain those standing in his place would between now and 1911 never for one moment think of granting a municipal licence.

Supposing they did not come to this agreement, what were the two-alternatives? There was one alternative proposed, which was to leave it until 1911, and then the company would be forced to sell at the Government's price. But already the Committee had stated what they considered to be a fair price in 1911, and already that had been agreed to on both sides. And the question arose, would the company go on with their system and in 1911 sell for whatever the Government chose to give? Not at all; if he were in their place, at all events, he would not. The first thing he would do would be to raise the rates, which the company could do, and in the second place he would decrease the efficiency, and endeavour so far as he possibly could to put aside a reserve against his expenditure. In 1911 what would be the position of the Government if they did not come to terms with the company? The company would be able to sell to the Government at whatever price it liked, because nobody could intend for one moment that this country should go on without its telephone communication, and in 1911 the Government would either have to buy a deteriorated and depreciated company's service for the price they liked to put upon it or go without. There was another alternative, which he did not think the House would for one moment consider, of a new and alternative plant. That would mean the sinking of a huge amount of capital between now and 1911, for which no return would be made. Of course the telephone business was increasing by leaps and bounds, and would increase much more between now and 1911. Taking what they believed to be the amount of telephone business for which provision would have to be made in 1911, the engineer to the Post Office had calculated that the amount that would have to be spent between now and 1911 was no less a sum than £13,250,000. The price the House would have to pay for rejecting this agreement would be that between now and then they would have to pay no less a sum than £1,480,000 interest on capital, for which there could be absolutely no return whatever.

MR. BENN (Devonport)

That is with absolutely three times the efficiency.

LORD STANLEY

said he believed the present system was very efficient. It was three times the size they were calculating on.

MR. KEIR HARDIE (Merthyr Tydvil)

And part of the new works would be earning a profit.

LORD STANLEY

Oh, no. You would get no communication in those towns where the National Telephone Company already existed, and where they are already bound by contract with their subscribers until the end of their licence.

MR. WHITLEY (Halifax)

Is that a higher or lower price than was anticipated?

LORD STANLEY

said he would not be drawn into giving any forecasts as to what they would have to pay to the company. Why should he? If the House agreed with this, they were only paying the actual worth of the goods they were taking over, and not a shilling for goodwill, and that was all the House or anybody else could expect.

Supposing these advantages were sacrificed, and the House would not accept the agreement, for whom would the sacrifice be made? It would be made on behalf of those various municipalities who wished to compete and who had competing systems. The figures with regard to those bodies were really worth con- sideration by the House. After the Act of 1899 was passed it was open to any municipality or urban district council to apply for a licence. There were no less than 1,334 bodies who could have taken out such a licence. Out of these fifty-five wrote to the Post Office, thirteen took out a licence, only six out of the thirteen set up a telephone service, and one of these promptly sold it to the National Telephone Company. So that out of a possible 1,334 bodies who could have a competing telephone system there were at the present moment only five who were running one. With regard to Glasgow, he might point out that Glasgow came to see him, and, at the instance of the leading members of the deputation, he wrote a letter, which had brought Glasgow and the National Telephone Company into communication as to whether they should not drop their present cut-throat rates and come to an agreement. If they did, he had no doubt it would be to the advantage of both. It had been quoted against him that in 1904 he said he was in favour of municipal telephones. Among his many stupid remarks, he had never made one half so stupid as that.

MR. WHITLEY

You are the frankest man on that bench.

LORD STANLEY

said he had since then gone most carefully into the matter. He was absolutely convinced that he was entirely wrong, and that in the future the telephone service must be as completely in the hands of the State, if it were to be thoroughly efficient, as was the telegraph or the postal service. He was not altogether unsupported in that view. The Association of Municipal Corporations in 1898 adopted a resolution to the effect— That, in the opinion of this council, the subject of telephone supply in this country should be treated as an Imperial undertaking, not as a local one, and that the Postmaster-General should have sole control of the telephone system. In 1904, at a conference of local authorities, at which the London County Council were represented, the following resolution was passed— That this conference is of opinion it would be inexpedient for the Government to acquire the undertaking of the National Telephone Company on other terms than those set out in the agreement between the company and the Postmaster-General of November. Both these resolutions agreed that the right policy was to buy, and on the very terms which they were now proposing to the House. It was not for him now, whatever might be his private and personal opinion, to give a pledge that, after 1911 there should be a cessation of municipal telephones, and that the whole system should be invested in the hands of the Postmaster-General. His one idea in making this agreement was that in 1911, when the licence came to an end, his successor should be absolutely free to adopt whichever system the Government of the day might think most desirable. If they gave, between now and 1911, municipal licences, which must be met under the statute by corresponding extensions to the National Telephone Company, they would be hampering his successor in any determination he might make for bringing the system to an end. It was because he believed they would, under this agreement, get a much more efficient system than at the present moment, that he would, in 1911, be able to see his successor taking over at its proper value the plant of the National Telephone Company, and that he would see him able with a perfectly free hand to deal with the situation as it then appeared to the Government of the day, and because he believed the agreement was in the best interests of the community as a whole and also of the great and growing body of the telephone users, that he would ask the House now to negative the Motion of the hon. Member for Islington.

MR. BENN

said the speech of the noble Lord had left him in some confusion. He was not quite clear whether the noble Lord was prepared to accept or reject the recommendations of the Committee which he set up. Some of them were under the impression that the noble Lord, with one or two trifling exceptions, had said that he was prepared to accept the recommendations of that Committee. If he understood the Postmaster-General correctly, he now repudiated altogether those recommendations with regard to preserving the municipal telephones, and he had set up a claim on behalf of the company which altogether destroyed any hope of the municipalities enjoying those licences in the future which they had hitherto enjoyed with the sanction of Parliament. If he was wrong he hoped the noble Lord would correct him.

LORD STANLEY

The hon. Member is absolutely wrong. I have said I would not give a licence between now and 1911; but, after then, my successor will have a perfectly free hand to deal with this question of State and municipal licences as he may think fit.

MR. BENN

thought the House would see that the Postmaster-General took up this attitude for the first time. Did the noble Lord recant what he said twelve months ago?

LORD STANLEY

Absolutely.

MR. BENN

said the question was difficult to deal with because they did not know what portion of his remarks might be recanted at an early date, or which portion was likely to survive twelve months.

LORD STANLEY

With the best intention in the world, I do not think I shall be in my present office in 1911.

MR. BENN

remarked that that would be to the general regret of the House; they had never had a more popular Postmaster-General.

He wished to direct the attention of the noble Lord to the fact that this agreement was only agreed to by the casting vote of the Chairman of the Committee which the Government set up. There was an alternative Report which declared that in view of the whole circumstances of the case it was undesirable in the public interest to proceed with this, agreement at the present time, and but for the casting vote of the Chairman that View of the position would have been carried. Therefore, he submitted to the House that before they proceeded to vote in favour of the view stated by the noble Lord this question should receive further and most careful examination.

This question of the telephone had a previous history. He was not going into the story of the company, which had succeeded in absorbing every other company, which had paid dividends on watered capital, and which charged a telephone rate prejudical to the commercial interests of the country. The users of the telephone were paying £5 more per annum than they would have had to pay if the telephone service had been taken up years ago by the Post Office or the municipalities. He was not there to say a word against the telephone being in the hands of the State. He thought it was proper that that should be so, but he did think, especially after the evidence which had been given upstairs, that there was great advantage in the Post Office using the municipality as a sort of local centre for the development of the local service. When they remembered that 98 per cent, of the messages were merely local, to the "butcher, the baker, and the candlestick-maker," and that only 2 per cent, were on the national system, they would understand the importance to the localities of developing the local telephones, seeing that there was no difficulty in working the local telephones with the national service.

He thought the opinion of the Committee in this regard should be attended to by the House. He desired to impress on the House the recommendations of the Committee for the protection of the municipalities. He ventured to say with regard to the municipal portion of the Report that the whole of that section came from the wisdom and experience of the hon. Member for Renfrewshire. When the Committee heard the evidence of the municipalities it was perfectly clear to them that it would be an unwise thing to destroy these local telephones, and that the Post Office might derive great benefit from them in view of the great success in Glasgow, Hull, Brighton, and other parts of the Kingdom. If the Postmaster-General after due consideration threw over his declaration of twelve months ago, and stated that the Post Office would not grant a licence to a municipality, he thought there was a grave issue raised, which he hoped the House would decide in favour of the existing policy. The noble Lord said that after 1911 the position of the municipalities was not prejudiced, but the House would see that if he was not prepared to grant licences the Post Office would be installed, and it would be ridiculous to suggest that if the Post Office set up a service in a town it would also grant a licence to the municipality of that town. When the Postmaster-General declined to grant municipal licences he gave the death sentence to all further hope of a municipal telephone system. He hoped that an assurance would be given to the House of Commons that this would be left an open question. The Chairman of the Committee was present, and he would listen with great interest to his observations on this subject.

He was sure the House must regret the loss which they had sustained by the death of Mr. Hanbury, who devoted so much attention to this subject and brought to bear upon it such rare experience. He would remind the House that Mr. Hanbury endeavoured to protect the State against paying an inflated price for the property they were now asked to purchase. The price they were called upon to pay was out of all proportion to the value of the property. The terms of agreement would enable the company to unload upon the State a lot of old material. The Postmaster-General had sacrificed his opportunity of saying, "I will not buy that.' They knew perfectly well that in the case of arbitration a great deal of advantage must be given to the company. That was not his opinion only. It was the opinion of a much greater authority, namely, the Stock Exchange. It was very curious that shortly after the decease of Mr. Hanbury and when this policy of purchase was renewed, the stocks of this company commenced to rise.

THE CHANCELLOR OF THE EXCHEQUER (Mr. AUSTEN CHAMBERLAIN,) Worcestershire, E.

Does the hon. Member make the same allegation with regard to the London Telephone Agreement, which was supported by Mr. Hanbury?

MR. BENN

said he was extremely obliged to the right hon. Gentleman for the interruption. The distinction would be obvious to the right hon. Gentleman when he said that the policy of Mr. Hanbury was to protect the State and that if they wanted to protect the State they must set up genuine and effective competition. Mr. Hanbury commenced by setting up in London an alternative system, so that when the period for purchase came the Postmaster-General might have the option of selecting that portion of the plant of the National Telephone Company which was most suitable for his purpose. That was the policy which had obtained throughout the Kingdom, and they should not be called upon to pay today what he called a monopoly price for this property. No sooner was Mr. Hanbury's policy set aside than the stocks of the company began to rise. Since December 31st, 1903, the deferred or ordinary stock of the National Telephone Company had increased 33 per cent. When it was a question of millions that meant a very large sum. Since negotiations for the present agreement had been in progress— that was to say, from May 31st last year to May 31st this year—the appreciation in the stocks of the Company reached the sum of £592,000. That was something which required no comment. There was no other explanation possible. The only assets of this company were the plant, material, and buildings, which they could sell to the State.

LORD STANLEY

There was no agreement on May 31st last year. The agreement was not signed until February, this year.

MR. BENN

said if they consulted any public record they would find that when the negotiations became known—and the Stock Exchange had a remarkable way of getting early and accurate information —the stocks of the company commenced to rise.

MR. AUSTEN CHAMBERLAIN

Perhaps the hon. Gentleman will permit me to say that the terms did not leak out because the terms were not then settled. Therefore, it was not these terms that affected the price of the stocks.

MR. BENN

No, but once the decision to purchase became known, the effect was seen on the Stock Exchange. If the Chancellor of the Exchequer could suggest any other explanation he would be quite ready to accept it. His contention was that a lot of old rubbish would be unloaded on the State, and that they would have to pay a monopoly price for the property. It was perfectly clear that the Stock Exchange took the same view as Mr. Hanbury. The noble Lord endeavoured to persuade the House that it was an unreasonable suggestion that the company should be called upon to waive their rights with regard to goodwill. Before the present purchase was contemplated, under the Telegraph Act of 1898, the company had a right, if a licence were granted to a municipality for an extended period, to ask for a like extended period, it was perfectly right that the company should say, "If you give a renewal to a municipality we should have the same." But here was a proposal to buy up the whole thing, and why on earth an extended goodwill should be granted to the company he could not understand. He had thought it would be much better to develop the Hanbury policy, but he was in a minority, and he, therefore, joined in trying to make this Report acceptable to the House. The Report was before the House, and he believed it was a matter of grave concern. He was bound to say that he thought the proposal of the hon. Member for Islington as to the terms which should be made with the National Telephone Company should be accepted by the House, but if after deliberation, the House should determine that the decision of the Committee should be maintained, he looked forward to a useful State development of the telephonic service, worked in connection with the municipalities of the country, which would largely assist the commercial interests of the country.

MR. STUART WORTLEY (Sheffield, Hallam)

said that as Chairman of the Select Committee he might be allowed to say a few words as to why the recommendations of the Committee ought to be accepted. There was no alternative before the House, he held, but to negative the Motion of the hon.

Member for Islington. That hon. Gentleman was pressing a very different proposal to that which the hon. Member for Devonport had put forward. The hon. Member for Devonport wished to condemn the entire policy, and in doing so he stood almost alone in the House. The hon. Member for Islington had adopted a much more moderate course. It really only remained to him to explain the circumstances under which the Amendment to his draft Report was accepted by the hon. Member for Renfrewshire. The latter pointed out that under Clause 2 of the agreement the public, through the Postmaster-General, would have to buy as part of the assets of the National Telephone Company the goodwill of that company in 1911, after the date of signing the agreement; and he held, and rightly held, that that would operate in the direction of municipalities being granted licences which would prejudice the decision as to whether the service should be national or not. That was his view also. It was on account of these and other varying motives that the Committee agreed to that Amendment. He believed the Member for Renfrewshire desired that the hands of Parliament should be left free. Later he agreed to the Amendment, and there was no division on it. But this present Amendment would really tie the hands of the House in the opposite direction. He wanted, and he believed the majority of the Committee wanted, to leave the hands of the Postmaster-General free, not only for the whole of the intervening period but until the end of 1911. To bind the Postmaster-General now to grant these licences to municipalities was practically to hang up for what must be a considerably longer period the ultimate decision on a very important question—whether the telephonic system in the future should be municipal or national. The hon. Member had forgotten to draw attention to the very important words in the Report— "Unless by a vote of the House it has been otherwise determined." These were the words which saved the freedom of the House of Commons and presented an opportunity to the House of delivering itself from having its hands tied in either one direction or the other. The only way these words could be given effect to was by negativing the Motion before the House. That would leave the hands of the House or of a future Parliament perfectly free.

The Postmaster-General had pursued a course of great wisdom in the line he had taken up. He had acted with great generosity towards the staff, and the right hon. Gentleman had not really gone, as respected the taking over of the staff, a step further than he went by previous verbal declarations in the House. He was not sure that he ought to deal with the allegations made by the hon. Member for Devonport. That hon. Gentleman came from an atmosphere of pious suspicion. In fact, the London County Council seemed to live in an atmosphere of a sort of nightmare which he certainly did not suffer from. It was almost absurd to bring into debate such matters of prejudice as had been dealt with by the hon. Member for Devonport. Unless the House was prepared to negative entirely the whole policy of purchase it was absolutely imposible to accept the Motion before the House, because really the provisions in the agreement itself and the important concessions made by the Postmaster-General carried with them all the wishes of the Committee. What the House had to consider was whether they ought to lose this very valuable agreement. He noticed that the hon. Member for Islington had called it a valuable agreement. The result of the Motion of the hon. Gentleman would be to tie the hands of the House more than was suggested in his draft Report as Chairman of the Committee. If the Motion was carried, it would be imperative on the Postmaster-General to grant licences to run municipal installations to any municipalities applying for them between now and 1911. That must in itself postpone for a very long period, probably for twenty-five years, the decision as to the future telephonic service of this country becoming a national service.

SIR JAMES JOICEY (Durham, Chester-le-Street)

said he was very glad to associate himself with the hon. Gentleman who had said that this was not a Party question. He had been very much interested in the debate, and especially in the speech of the noble Lord who represented the Post Office. As one who had always held that this service should be national, like the telegraph, he was glad that the noble Lord had come to an agreement with the Telephone Company. He sat on the Committee in 1898, when Mr. Hanbury was alive, and at that time he was in favour of granting licences to municipalities. He hesitated to sign the Committee's Report, but Mr. Hanbury said his view was just the same as his, though he wanted to be on good terms with the Telephone Company. Mr. Hanbury said he hoped that would take place in the course of the winter; but when he found that it did not take place he twitted Mr. Hanbury in that House with having misled him and induced him to sign the Report, Of course, Mr. Hanbury did not reply, but he felt sure that Mr. Hanbury was perfectly in favour of a national service. Of course, he and all those associated with commercial matters knew that two parties to a bargain could never get all they wanted; but on the whole he thought that the Post Office had not made a very bad bargain. The municipalities got licences because there was a strong feeling against the National Telephone Company at the time, and the municipalities were very anxious to compete with them to bring down their prices. He had thought that the municipalities would have rushed to have a telephone service when they had the opportunity, and he was surprised to find that out of 113 urban district councils and local authorities only six had set up a service of their own. One of these was Tunbridge Wells, whose representative was the strongest advocate for a municipal service, and was the most bitter opponent of the continuance of the Telephone Company.

He hoped those who succeeded the Postmaster-General would pursue the same policy, and that in 1911 we should have the telephone service placed on a satisfactory footing, and worked as cheaply and as economically as the postal and telegraph services now were. There was as much to be said, in his judgment, for municipal post offices as could be said in favour of municipal telephones. Many of our municipal districts could carry on a postal service mo[...]e economically than the Post Office, because the Post Office had to provide for the poor districts as well as the rich, and took the revenue derived from the latter to provide for the former. There were disadvantages, no doubt, with a national service, but there were disadvantages with every service. What they wanted was a good and economical, service, and that could only be obtained, by having a national service.

*MR. KEIR HARDIE

said he agreed with what had fallen from the hon. Member as to the desire of the Postmaster-General to meet the recommendations of the Committee. He was glad that the noble Lord had so far agreed to modify the terms of the agreement as to accept very largely the spirit and the letter of the recommendations made for dealing with the staff, but there were two points upon which he would like to have an assurance from the noble Lord before he agreed to the suggestion in the Treasury Minute. He understood that it was agreed, that the employees of the Telephone Company were to be taken over by the Post Office and were to receive the same terms of service in the Post Office as those now in a similar grade had received, but the Postmaster-General gave no assurance that the employees of the Telephone Company would be transferred to an equivalent grade in the Post Office when taken over. That was a very important point. It was not enough to say that the telephone employees should receive the same emoluments as those employed in the department to which, they were transferred. It was important that the servants of the Telephone Company should not be put in a lower grade and receive lower pay when taken over. When the noble Lord received a deputation of the employees of the Telephone Company on May 18th he did give an assurance that they should not receive less salary or inferior conditions of service than they now enjoyed, and what he (Mr. Keir Hardie) desired to ask the Postmaster-General and the Chancellor of the Exchequer was this: Was it intended to keep to that promise? The demand was a fair one, and no one could desire that the employees of a private company should suffer when the concern was transferred to the State and they were transferred with it to the service of the State. An assurance on that point from the Treasury Bench would relieve a good deal of anxiety.

With regard to the medical examination, the recommendation of the Committee was that in 1911 all the staff should be taken over who had had two years continuous service with the Telephone Company. He understood that the Postmaster-General did not object to that, subject to the condition that if any member of the staff had had abnormal leave of absence for sickness during the two years preceding 1911, that member of the staff would require to undergo a medical examination before being taken over by the Post Office. That seemed to him to impose a very considerable hardship upon some of the old members of the company's staff, and if that condition was insisted on it would entail considerable anxiety among those members between the present date and the date of the agreement coming into force. He asked the Postmaster-General to accept the Committee's recommendation in full, and to say that all members of the staff who had two years continuous service at the end of 1911 should be taken over by the Post Office.

LORD STANLEY

I think the hon. Gentleman misunderstands the terms of my proposal. If anybody in the service of the Telephone Company has not had abnormal leave of absence on the ground of sickness, we will accept that as a guarantee of good health and he will be taken over. If he has had abnormal leave on account of sickness he will have the right to appeal for a medical examination. If that examination is favourable he will be taken over. If it is not favourable we do not say he will not be taken over, but we will not take him on the established list. It does not follow that he will not be employed by us.

*MR. KEIR HARDIE

said he was glad to know that even if the examination was unsatisfactory such a man would be taken over.

LORD STANLEY

We will endeavour to take them over.

*MR. KEIR HARDIE

I think we ought to have a definite assurance. The number of cases may be small, but the anxiety is very great, and I hope the noble Lord will go further.

LORD STANLEY

I think we are giving easier terms than the hon. Member supposes. I believe we are giving the fairest terms that could be possibly given. Believing as I do that they are generous terms, I must ask leave to adhere to my decision.

*MR. KEIR HARDIE

hoped the Postmaster-General would see his way to give a definite assurance on the matter, as there was a great deal of anxiety among the telephone employees. The House should not overlook the fact that the Post Office had never considered any alternative scheme to that of acquiring the surrender of the present company. They had made up their minds from the beginning that the easiest way would be to take over the present system, instead of putting themselves in a position to bargain efficiently with the company by proposing an alternative proposal.

With regard to municipalities he regretted that the Postmaster-General had not seen his way to accept the recommendation of the Committee. He was really tying his own hands and doing a serious injustice to municipalities which owned telephones by declaring that no licence should be granted between now and 1911. Having granted licences to Glasgow, Brighton, Hull, and other towns, the noble Lord should have protected his own licensees from unfair competition, and that could only be done by reserving to himself a free hand to grant licences to those localities where they were desired to bring the holders into efficient competition with the National Telephone Company, thus preventing that company from exploiting one part of the country in order to enable it to fight municipalities in some other part of the country.

MR. JOHN BURNS (Battersea)

desired to associate himself with all the cordial and well-deserved thanks and recognitions that had been given to the Chairman and the excellent Committee for their persistent labours and valuable services in this matter. He thanked the Postmaster-General, although he had not secured the assent of all in the House to what had been done, for having brought about an agreement which if he (Mr. Burns) had had his way, would have been brought about by some Postmaster-General ten or twelve years ago. They were now met to decide by vote between the Government and the Postmaster-General and the Telephone Company on the one side and the hon. Member for Islington on the other. In the abstract he agreed with much that had been said by the hon. Member for Islington, and if he thought by so doing he would not vitiate this agreement which had been arrived at between the Postmaster-General and the Telephone Company he should vote for the irresponsible Motion of the hon. Member.

The hon. Member for Hallam was quite wrong as to what was done at Spring Gardens; they were not manufacturers of mare's nests, neither did they live in an atmosphere of suspicion. The councillors there were practical business men, and drove harder bargains for the ratepayers than they would probably drive on their own behalf. If this agreement was not carried out now they would not be able to get another for three or four years at least, and for his part, with regard to telephones, he thought the nation had been humbugged too long, and he was not disposed to say they should go on any longer in the condition of hugger-mugger in which they had been. He should, therefore, vote for the agreement being carried out. He thought the company should be bought out, and there was not a Member of the House now present who did not agree that purchase was essential. The company should be turned out either by compulsion or agreement next year, if possible, in order that there might be a cheap unified telephone system, a thing that had been too long delayed.

With regard to the agreement, it was presumably against the public interest, as all agreements of this kind always were, but he was prepared to vote for the Telephone Company in this case, because the increment which would accrue to the nation for the next twenty years after the telephones were taken over would be more than enough to cover the loss which would be made now in purchasing the company's undertaking, and, being a moderate and generous man, he was prepared to let the company off lightly

Then as regarded the municipalities. No one could accuse him of lack of sympathy with the municipalities. He did his best to defend their interests on every occasion when they were in the right, and some hon. Members opposite did him the injustice to say that he defended them when they were in the wrong, but that was not so. The fact that out of 1334 local authorities capable of owning telephone services only five did own them disposed of any serious claim on the part of the municipalities to compete either with the Telephone Company or the Post Office, or possibly both, between now and 1911. In this particular sphere of public enterprise, municipalities had not established their claim to the consideration and treatment asked for by one or two hon. Members in that debate. His own view was that the telephone was not a local but a national service, which ought, as soon as science permitted, to be made an international service, and that in this matter they should "think Imperially," not parochially. He was in favour of national monopolies being owned by the State and local monopolies by the municipalities. The larger the unit, the cheaper would be the service, the greater the use, and the lower the cost, and the overlapping and duplication both of method and of staff would be prevented. But there was no reason whatever why the municipalities should not receive fair and sympathetic consideration from the Government. Why could not the Postmaster-General tell them that on terms to be arranged their services should be at once absorbed? The municipalities were not in a position to resist such a proposal; if they did they would damage the public interest of the localities they sought to serve and of the coterminous areas which had a right to be considered and which could be served properly only by a national service. If terms not less generous than were being given to the company were offered, there was no reason whatever why the municipal services should not be at once absorbed by the State.

LORD STANLEY

I may say at once than I am perfectly ready to enter into negotiations with any of the municipalities that wish to do so.

MR. JOHN BURNS

I am glad to hear it. "We are all Socialists now."

The next point was that of labour. In his judgment the Postmaster-General, in the Memorandum he had read to the House, had treated the "appropriated" employees in as fair, generous, and sympathetic a manner as could be reasonably expected. Personally, he would rather that individual, class, or sectional complaints were not raised at this particular stage, but that the Postmaster-General should be left to carry out his fair proposal of May 18th in the spirit of the Memorandum he had read that afternoon; and then if any of the girls or women were handicapped, their claims when preferred could be considered in a broad, generous, and gallant spirit. He had told a number of the company's officials that their fears as to what would happen under the Postmaster-General's regime were absolutely groundless. They were perfectly within their rights in preferring their claims, but his own experience was that when a public body took over the employees of a private concern those employees were invariably the gainers in hours, wages, treatment, pension, status, and emoluments. He was glad the right hon. Gentleman refused to be driven into a pledge to take over all the employees, particularly the highly-placed ones. He had not a word to say against any of them. That they were efficient and deserved high salaries from the company's point of view this agreement was a conclusive demonstration. But without making any insinuation or suggestion against anybody he would only say that there might be some whom it would not be in the public interest to take over. As Members of Parliament they had to drive the best bargain possible for the taxpayers as a whole, and it was quite conceivable that some directors might have put their butlers or brothers-in-law into positions where they did nothing, and did it badly, receiving extravagant salaries for which there was no justification whatever.

He welcomed the fact that the State were taking over 12,000 employees, believing it to indicate the transfer of a private monopoly which had not been well worked to public ownership under which it would be better administered in the interests of the State. The rapid growth of the telephone business presupposed increment of salary, improved status, and chances of promotion, which would not be similarly possible under company rule. But the men and women who were being transferred should be told that the change was not being made merely for their personal benefit or sectional aggrandisement. He would be delighted to hear that their position was considerably improved, but the employees, after all, were secondary to the State as a whole, and when they advanced their rights they should be reminded also of their duties. The position of these people would, he believed, be much better under the State than it had been under the company, but the country had a right to ask that they should reciprocate the kindliness embodied in the right hon. Gentleman's agreement, and return the assurances of the Postmaster-General by loyal, sober, devoted, and disinterested service to the State. He believed they would. If the Postmaster-General kept his word to them, he had not the least doubt the staff would reciprocate his consideration, and that by bringing to an end, through this agreement, the sad muddle of the last twelve years in telephone affairs, industry and commerce would be improved, and 12,000 loyal and devoted servants added to the service of the State.

MR. BOND (Nottingham, E.)

understood that if the Motion of the hon. Member for Islington were rejected the Postmaster-General would be perfectly free to go on with the agreement as it stood, and that that agreement could be set up in its entirety. He wished to know whether in that event the declaration of the right hon. Gentleman with regard to the employees of the Telephone Company would be in any way affected.

LORD STANLEY

If the Motion of the hon. Member is carried the whole thing falls to the ground, because there will be no transfer of any sort.

MR. LOUGH

There is no necessity for such an interpretation of my Motion. It is a deliberate Motion in support of the agreement, and it is only by going outside the agreement that this Motion is necessary.

MR. BOND

said he understood that if the noble Lord occupied that position of freedom he would still carry out the recommendations in regard to the employees and in reference to those matters in which he had said that he accepted their view. Would it only be on the point of granting licences to municipalities during the intervening period that he would depart from the recommendations?

LORD STANLEY

said that if the Motion of the hon. Member for Islington was defeated that would bring the agreement into operation. The agreement would be modified to the extent he had mentioned with regard to specifications and with regard to "tramway terms." The actual terms between the Government and the employees taken over were not embodied in the agreement, but it only affected them after the company had surrendered its licences, and it would be necessary to put that into an Act. That Act would be brought in coupled with provisions for providing money for the purchase of the company. If the hon. Member's Motion was defeated then the hon. Member for Nottingham could rest assured that all the pledges he had given as regarded the employees would be carried out in their entirety.

*MR. HELME (Lancashire, Lancaster)

said that public necessity and the requirements of the commercial world demanded that permanency should be given to their system of telephonic communication, and therefore he looked with approval upon the proposal which the Postmaster-General had made to purchase the National Telephone Company's undertaking. Of course the question of terms would have to be looked at, and the reference to the Committee had been carefully dealt with, and in fact the Report was now before the House. The Committee endeavoured to harmonise the interests of the public on the one hand with an equitable treatment on the other hand of the shareholders of a company which had done so much to develop telephonic communication throughout the country. The claim of the municipalities was also considered in the recommendations which the Select Committee made, and, the nature of the pledge the Committee asked the Government to give, was a very important question, seeing that the Government refused to give that pledge.

The Committee of which he was a member inquired whether the agreement, as drawn, carried out the intention of the Postmaster General himself. He believed that the Postmaster-General's intentions were more in harmony with the public interest than the words of the agreement proved the situation to be. He wished to call the attention of the House to the fact that in regard to the question of the suitability of plant the Postmaster-General, in the statement which he included in the Memorandum with which he prefaced the agreement, specified that certain powers of objecting to plant deemed unsuitable for purchase, was reserved to the Postmaster-General, but this was overridden. It was admitted by members of the Post Office staff that the judgment that would be formed as to suitability was certainly most important, and it was more likely to be in the interests of the public if it were left to the decision of the Postmaster-General than if it were left to an arbitrator. As Englishmen they recognised that arbitration would be conducted upon fair and equitable lines, and he hoped that the decision of the arbitrator would confirm the view of the Post Office officials in regard to the suitability of the plant. In regard to the price to be paid, that rightly should be left to be determined by arbitration.

The object of the Motion they were considering was to strengthen rather than to weaken the hands of the Postmaster-General in his endeavour to carry out the successful purchase of so large an undertaking. He wished to point out that the Committee had not asked the House of Commons to decide that day as to the position that the municipalities must hold in relation to Parliament. He was rather afraid that the House had been taken away from that important point. The Post Office Department in adopting an anti-municipal policy had no right to vary a policy adopted by Parliament except by consent. By the debate today and the vote which would be taken, he held that Parliament would not be committed to an anti-municipal policy. The municipalities had rendered great service to the country in regard to telephones, because it was through their efforts that they now had a much lower scale of charges for the telephone service, practically one-half where there was competition. There had always been a laudable ambition in this country that the telephone system should be largely extended, so as to be a matter of household convenience open to those of small means and small establishments.

When they compared the position of other countries with that of England they saw how far they were behind at the present moment. Municipalities by their enterprise in five places had secured a more effective service from the National Telephone Company than they would otherwise have given. In Sweden the charges for the telephonic service were £2 15s. 6d. for a private service with an entrance fee for business purposes. Mr. Stevenson, of Glasgow, in his evidence before the Committee, pointed out that in Stockholm they had a service available within a radius of forty-three miles throughout a circle eighty-six miles in diameter at £5 per annum with no trunk charges whatever. When they looked at the position of telephonic communication in England they ought to expect that very great reductions in charges would be made. He felt confident that the Post Office would do its best to reduce the price in the future, but there was a danger that the profits resulting from the undertaking might be swept into the National Exchequer and so give relief to the taxes of the country instead of being utilised for the provision of a cheaper service. It would be very necessary, if the Post Office became the absolute owners of the telephones, to press that point upon the Government.

It had been urged that it was not equitable or right that the National Telephone Company should forego their rights for extended licenses beyond 1911 under the Act of 1898. The public had a right to claim this. It would be no longer a private company competing in the ordinary way with other institutions. It would be rather in the position of a very large undertaking selling its business on the principle of deferred payment, having for five or six years the opportunity of receiving moneys that were paid for its services, and dividing among its shareholders a certain measure of profit on the whole of the National Telephone Company's business. Therefore, he thought, there was no unfairness whatever in asking that the rights of the public should be maintained in this matter on that account. Whatever the Department might do, it was quite possible that before the agreement was completed, in 1911, Parliament might instruct the Department to open negotiations on the principle of devolution to the municipalities with a view to the administration of the telephone system. Was it not possible that the details of management should be left to the local authorities rather than that the whole of the service should be managed by a central authority? He proposed that an inquiry should be held before a final decision was come to. The House would, therefore, be perfectly justified in accepting the Motion of his hon. friend.

He desired to recognise the very generous spirit shown by the Postmaster-General in dealing with the various other suggestions made. In their treatment of the employees of the company, the Government had gone a long way to meet the necessities of the situation. The point raised by the hon. Member for Merthyr Tydvil was one which they could leave to the noble Lord with full confidence that he would see justice done to all the interests involved.

MR. AUSTEN CHAMBERLAIN

said that neither his noble friend the Postmaster-General nor the Government had any reason to complain of this debate, or of the opinions generally expressed in regard to the agreement. Indeed, he thought the Postmaster-General deserved the congratulations which had been offered from both sides of the House, and in particular from the opposite side, on his success in concluding this agreement. In saying that he had been asked by his noble friend to say how much he was indebted to his principal advisers, and in particular to the secretary and the solicitor of the Post Office. His own official life had brought him into connection with the Post Office, and especially with the telephone question, on more than one occasion, and he knew how much they were aided in the earlier negotiations with the company by the officials of whom the present solicitor was one. He had seen enough of the present negotiations to know how ably the Government's case had been argued by the principal permanent official on whom the Postmaster-General was bound to rely.

There had been a general agreement among all who had spoken that it was desirable to bring to an end what the hon. Member for Battersea called the hugger-mugger system of telephone exploitation under which they had suffered up to the present time. No one who had followed the telephone development of this country could escape the conviction that a great mistake was made when telephones were first invented and the system was first introduced. Through many weary years their principal object had been to escape from the situation so created, and once again to secure for the Postmaster-General, and through him for the country, a free hand in the matter of telephone development throughout the United Kingdom. When the telephone undertakings were first started in this country it was the impression of the then Postmaster-General that competition was as good for telephones as for all other forms of adventure, and that the way to obtain cheap and efficient service was to encourage competition as much as possible. And. above all, what he was anxious to avoid was that the State should itself undertake the duty. All that had happened since had gone to show that competition did not secure a cheap or efficient service, and, in fact, that the telephone enterprise was perhaps the least suited for competition of almost any service which could be imagined. Before the State really actively stepped into the field the different competing companies were by the force of circumstances obliged to be absorbed into one gigantic monopoly, and whatever might be said of that monopoly, and its service had often, been open to criticism, he thought it had provided a much better service and a much greater development than would have been possible had all those competing companies remained in existence. In his opinion the experience of the past had shown that just in proportion as they had different and competing systems so they increased the expense, lessened the value which each subscriber got for his subscription, increased the difficulty of tracing to its source any imperfection in the service, and rendered the service less generally useful and less effective than it might otherwise have been. Accordingly they had come in the light of experience to hold that there must be one central control for the whole telephone system of the country.

There had been for many years past, as long as he had been in connection with the service—and his connection dated from the time when he was Secretary to the Treasury — a generally-expressed desire that the Postmaster-General should once again come into the rights of which he had, so to speak, deprived himself of the full use by granting these licences, that he should resume the powers which he had conferred by licence to the company, and that they should thus have in a reasonable time a real national telephone system. That was the object aimed at in this agreement. With the modifications which his noble friend had explained to the House it did, he thought, meet all the objections which the Committee of the House had laid before them in the Report they had made. The object of his noble friend had been to accept the suggestions of that Committee as far as he could do so, as far as practicable, as far as they could possibly be embodied in the agreement, or as far as he himself could attach conditions to the agreement, as in the case of taking over the employees.

The only serious point which had arisen on the agreement in the course of the discussion was the question of the exact treatment of municipalities between the present time and 1911. It was quite true that the Government had not seen their way to adopt the exact recommendation of the Committee in the terms in which it was made. To do so would, of course, be to negative the agreement between the Postmaster-General and the company. It would be to demand of the company a modification of the agreement which would have to take the form of the company abandoning its statutory rights. The company were naturally unwilling to do that, and the Government did not think it right that they should be asked to do it.

MR. LOUGH

Surely terms might be arranged?

MR. AUSTEN CHAMBERLAIN

Oh, yes, Sir, you might at once buy out the statutory rights certainly. But that is only paying for them in a different form and at a different time. If that is all, I cannot see why the hon. Member objects to the agreement.

MR. LOUGH

I only want to secure freedom for municipalities, and if granting that would infringe on the rights of the company surely an arrangement might be made on that point.

MR. AUSTEN CHAMBERLAIN

said the hon. Gentleman recognised the company had certain rights, and that those rights must be paid for in meal or malt. The Government had chosen to pay for them in meal while the hon. Member would have preferred to pay for them in malt.

What was the principal object of the Committee in making this recommendation? Enough attention had not been paid to what they said in paragraph 28, which was partially quoted to the House by the Chairman of the Committee. In paragraph 28 of their Report the Committee expressed the desire that nothing should be done by the Government between now and January, 1912, whereby the question of future ownership and management of local telephone installations might be prejudiced. Was anything done by this agreement which prejudiced the future of these establish- ments when they came into the possession of the Postmaster-General in 1911? No. If they licensed municipalities now to conduct this business after 1911, they did prejudice the future and hampered the Postmaster-General of that date. Instead of his having, and the House of Commons having, free hands to deal with those matters their hands would be tied as to an indefinite number of districts for a further indefinite number of years. If they passed the agreement in the form in which his noble friend had submitted it to the House they did secure a free hand for the Postmaster-General and the House of Commons in 1911 to deal with the question as they pleased. No municipality which was not mad would start a new telephone system in 1906 to terminate in 1911.

The object of the agreement was to secure a free hand for the Government of 1911. When the whole telephone system of the country was in the hands of the Postmaster-General the Parliament and the Government of 1911 could deal with it as they thought fit. In 1911 Parliament might decide that the telephone system should be worked locally throughout the country by the municipalities or other local representative bodies, and the Postmaster-General might sell or rent the plant in each local area to the municipality or other local representative body. But, in his opinion, it would be very unwise for Parliament to take any such course. He had said already that if they multiplied the telephone systems they would enormously increase the difficulty of tracing defects to their source. When he was at the Post Office one of his greatest troubles was the tracing of faults when the message passed over part of, the company's system and part of the Post Office system. It was difficult with one service, but the difficulty was infinitely increased when the fault might have arisen in either of the two systems. Naturally enough each would defend its own servants, and assume that if anything had gone wrong the fault must have occurred on the other system.

But that was not all. The hon. Member for Devonport had argued that the telephone was essentially a matter suitable to be controlled locally by local bodies.

MR. BENN

said that what he had intended to say was that local systems might be worked in connection with the national system with advantage to the community. He found that 98 per cent, of the messages were purely local.

MR. AUSTEN CHAMBERLAIN

said he did not know whether the hon. Gentleman's figures were accurate. Of course nobody imagined that the corporation of Birmingham or Liverpool, or any other large city, could manage a telephone system strictly confined to its own area. What did the hon. Gentleman mean by a local system? It did not mean a system confined to the area covered by the municipal boundaries. He would take it from the hon. Gentleman that 2 per cent, of the messages went over another system, and that 98 per cent, passed locally. But at any rate the messages of which he spoke were not local in the sense that they were confined to the area of the municipal authority. For instance, 99 out of every 100 messages which he sent from his house just outside Birmingham would be called local messages. But every one of them passed from outside the municipal boundary to within the municipal boundary; and therefore they were not local in the sense that they were confined within the jurisdiction of the local authority. Any municipal authority which desired successfully to establish a telephone system and exchange must go outside its own boundaries and break up the roads of another municipal authority, who would regard it as a foreign body over which they would have less control than over the Postmaster-General. For his part, he hoped they were now emerging from the muddle to which they had been brought by allowing universal competition in telephones, and that when once again the Postmaster-General came into the possession of his rights, of which he ought never to have been deprived, the mistakes of past years would be avoided, and a national telephone system established which would be a credit to the country and a real assistance to its industry and commerce.

Only one Member challenged the agreement on its merits. That was the hon. Member for Devonport, who thought it was a bad agreement. But the hon. Gentleman took a very different line from the hon. Member for Islington. The hon. Member for Devonport thought that the agreement was a bad one, that it was a departure from the policy of the late Mr. Hanbury, and had led to a great inflation in the value of the stocks of the company, which would be forced on the country at a high monopoly value; and that the Post Office would be obliged to buy up old rubbish which they would be better without. Those views found not one atom of support in the Report of the Committee. On the contrary, the Committee said that the agreement provided that no more than a reasonable price should be paid for the property taken over. The only precaution which the hon. Gentleman could suggest in order to secure that the Post Office should not pay more than its fair value for the property of the Telephone Company was that the Post Office should themselves fix the value of what they took over. That would make the Post Office judge and jury in their own case. The Post Office agreed to buy on the terms which were known as "tramway terms," which were the fairest terms that had yet been devised to meet the case of a transfer of private property to the public. Those terms provided that the Post Office should pay only on the value of the property as it existed at the transfer. Less than those terms would not be fair to the company; and therefore less than those terms they ought not to ask the company to accept. They were the fairest terms that the Post Office could possibly secure.

The Member for Devonport regretted the abandonment of what he called the Hanbury policy. But what was the latest embodiment of that policy? It was the London agreement. That agreement was attacked in the House, when it fell to his lot to defend it. A Resolution against it was moved, which was rejected by the House, although a large number of Members on both sides thought that the Government had made a bad bargain. But when the representatives of the City Corporation and the London County Council —the two bodies on whose behalf that Resolution was moved—came to consider. In conference, the terms which the Postmaster-General ought to embody in the present agreement, they passed a resolution declaring that it would be inexpedient for the Government to acquire the National Telephone Company on any terms other than those set out in the London agreement. The present agreement did follow on the l[...]nes of the London agreement. The fame principles were applied to the transfer of the property of the company in the country as had been applied to the transfer of their property in London.

He had only a word to say with regard to the Question of the hon. Member for Merthyr Tydfil. With regard to the staff, it had been admitted that the terms of the document read out by the noble Lord ware certainly fair and even generous, and they were the terms which, on behalf of the Government, the Postmaster-General was prepared for himself and his successors to undertake should be submitted to the House. The agreement had not called forth any serious criticism from any quarter. The debate had shown that the agreement had the support of a great number of Gentlemen on both sides of the House.

MR. FIELD (Dublin, St. Patrick)

said he would not detain the House more than a few minutes, but he had been asked to say a few words in connection with the staff. In his opinion the only mistake made by the Government was that they had not taken this step long ago. They had allowed a private company to carry on a work of public utility, and had to pay monopoly prices when they took it over, but it was better late than never. He regretted that the noble Lord had not given the Amendment of the hon. Member for Islington full consideration, because, in his opinion, municipalities ought to he allowed on fair terms to start telephonic facilities in their own locality, and he was sure that some arrangement could be come to to enable them to do so. This agreement meant that for the next six years they were preventing any urban district council or corporation from starting a telephone system, and he thought arrangements might be made to allow municipalities to start these systems under certain conditions. He trusted that this point would be considered by the noble Lord, as it was a most important one. This country was a hundred years behind Denmark, France, Belgium, and other countries in this matter. In this country we had the worst telephonic system of the whole world, the reason being that instead of its being taken over by the State, private individuals were allowed to control it. Those who disagreed with the details of the agreement would have an opportunity of opposing it when a Bill was brought in. At the present time they were only laying down the principle, and for his part he hoped the Postmaster-General would keep to the policy he was now pursuing, and if in the future any change took place, then the details could be modified according to the spirit of the times. He was entirely in favour of this agreement, because he believed that all works of public utility should be worked by the State for the benefit of the people.

MR. CORRIE GRANT (Warwickshire, Rugby)

expressed a wish to know whether he had placed a correct interpretation upon paragraph 31 of the Memorandum, which said that all officers and servants who had not been less than two years continuously in the employ of the company should from 1911 become the servants of the Postmaster-General on the terms of service of the grade they occupied. Reading that paragraph he did not understand it to imply that they were going to be transferred to the same grade which they now occupied, but, reading it with the next paragraph, that was clearly the intention. A statement upon this and the question of pensions by the Postmaster-General would greatly relieve the minds of the employees, who were in some doubt with regard to those matters.

LORD STANLEY

said that the employees would be transferred to equivalent work for equivalent pay. With regard to the question of pensions, they would come under the Treasury rules. If the hon. Member looked at the Memorandum itself, he would find that these employees were being very fairly treated.

MR. LOUGH

thought that the Postmaster-General had treated both himself and the Committee very hardly in this matter. All that he desired to do by his Amendment was to prevent the House refusing to accede to what had been the practice in the past with regard to municipal telephones. The company would no doubt have a right to complain if new competition was started, but he thought municipal authorities might be allowed to start a telephone system by an arrangement to which the company could agree, and which should be sanctioned by the Postmaster-General. He appealed to the House not to initiate a policy now which the noble Lord admitted was the absolute reverse of the policy he

pursued a year ago. Let them deal with the company and also leave the field free to municipal telephones. He did not suggest competition, he only wanted to reserve the right of local areas, with the assent of the noble Lord, to start systems of their own. On that sole ground he was bound to press the Motion to a division, but he could not do so without thanking the noble Lord for the way in which he had met him with regard to all the serious points he had raised.

Question put.

The House divided:—Ayes, 110; Noes, 187. (Division List No. 363.)