§ Considered in Committee.
§ (IN THE COMMITTEE.)
§ [Mr. EMMOTT in the Chair.]
§ 4.0 P.M.
§ The POSTMASTER-GENERAL (Mr. Herbert Samuel) moved, "That it is expedient to authorise the Treasury to advance out of the Consolidated Fund—
- (a) Such sums as may be necessary for paying the cash portion of the purchase money of the Undertaking of the National Telephone Company, and a sum, not exceeding £4,000,000, for the further development of the telephone system;
- (b) To issue terminable annuities or Exchequer Bonds for paying off that portion of the purchase money which is not payable in cash, and to borrow by means of terminable annuities for the purpose of providing the money necessary for any advance out of, or in payment to, the Consolidated Fund;
- (c) To provide for the payment of superannuation allowances to transferred officers out of moneys provided by Parliament, and for the payment of terminable annuities and the principal of and interest on any Exchequer Bonds out of moneys provided by Parliament for Post Office services, and if these moneys are insufficient, out of the Consolidated Fund."
§ In 1896 the Post Office purchased all the trunk wires provided for the joining of the various great towns of the country together by the National Telephone Company, and has since that time exclusively worked them. In 1899 Parliament authorised such municipalities as desired to do so, to compete in the telephone business and start systems of their own. In 1902 the Post Office opened exchanges in a large part of London, which have since had very considerable development. In the year previous to that the Post Office had agreed with the National Telephone Company that at the end of that com- 47 pany's licence, that is on 31st December of this year, the Post Office would purchase the company's plant in London on certain terms. That agreement was discussed in the House of Commons and was approved. In 1905 an agreement was made on the same lines covering all the rest of the country, and it is that agreement which now comes to be consummated. At that time, in 1905, there were various alternatives before the Government of the day and before Parliament. Things could not possibly have been left precisely as they were. The company's licence running out in six years, it was necessary to provide against the events which would occur when the licence terminated. One alternative would have been to leave the service in the hands of the company, and to promise them an extension of their licence when their original licence terminated, but it was held, and I feel convinced for my own part, it was wisely held, that it would be wrong to leave a service which had become so essential to the social and commercial life of the country in private hands, uncontrolled—a service which in its nature is a monopoly, which can be most conveniently and economically worked as a monopoly in any district in the hands of one authority. The second alternative would have been for the Post Office from that time forth, during the intervening six years, to create a great alternative plant of its own throughout the country, and at the end of the company's licence, to use that plant in lieu of the company's plant, the whole of the company's plant being thrown aside and discarded and not purchased by the State. It was felt that that would be a great waste of what is, in fact, a valuable national asset, and that, if that were done, there would be no inducement of any kind to the company to keep its plant up to date, to provide for development during the interval, and to arrange for continuity of service at the end of the company's licence. Consequently the Government of that time entered into a draft agreement with the company to purchase the plant on equitable terms, a course allowing for the development of the system meanwhile, and for continuity of the service to the public on the occasion of transfer.
§ The substance of that agreement was as follows, that on the date of the termination of the licence, that is 31st December next, unless the Postmaster-General fixes 48 a later date, and I may say there is no intention of fixing a later date, when the business of the company came to an end, and when it legally could not carry on its business any longer, the Postmaster-General should purchase the plant, which includes land and buildings, at its value in situ, no payment being made for goodwill, no payment being made for past or future profits, and no payment being made in respect of compulsory purchase. These were the provisions inserted, because the company's business, as I say, existed solely by virtue of the licence held from the Postmaster-General, and if things were left to take their course, the whole business would come to a sudden stop on 31st December, 1911. Therefore, it was by no means inequitable that the plant should be purchased on what is generally known as tramway terms. The Postmaster-General was given, by the agreement, the right to object to any portion of the plant on one of two grounds, either that it had not been provided according to agreed specifications, or that it was unsuitable for the actual requirements of the Post Office system on 31st December of this year. The precise interpretation of these words is now under consideration by the courts. Goodwill payments, however, under the agreement had to be made in respect of private wire service provided by the company which was not provided by virtue of any licence of the Postmaster-General— that is to say, wires connecting premises, or parts of premises, belonging to the same parties. Goodwill payment has to be made in respect of this equal to the profits of the last three years. Also there-is the special case of Portsmouth and Brighton, where the company's licence under the Act of 1899 had to be extended till 1926, and goodwill payments may be claimed in respect to that period.
§ Mr. AUSTEN CHAMBERLAINI suppose these extensions were because the municipality was given a licence running over the term?
§ Mr. HERBERT SAMUELYes, it was because the municipalities of Brighton and Portsmouth had started systems of their own with licences terminable in 1926. The Act passed in 1899 provided that where municipal licences were granted to run beyond the year 1911, the licence of the company was also to be extended for an equal period, and that on the occasion of the purchase goodwill payments could be required in respect of that period of exten- 49 sion. That applies only to these two cases. The value of the plant was to be ascertained by agreement, or, failing agreement, by the Railway and Canal Commission. This draft document was presented to the House by the then Postmaster-General, and was referred by the House to a Select Committee in that year, 1905, which carefully investigated the whole question, heard evidence from the Post Office, the company, and other parties, and ultimately presented to the House a report approving the agreement, with some slight modifications, which were thereupon embodied in the agreement. The question was debated in the House of Commons in that year on the report of the Committee, and the House acquiesced in the terms of the agreement. Recently preparations have, of course, been made between the company and the Post Office for carrying this agreement into effect, according to the letter and the spirit of its provisions. A joint inventory has been proceeding for some time of the plant of the company—a vast undertaking, as the Committee will understand—but there is, I regret to say, little or indeed no prospect of an agreement being arrived at between the two parties as to the value to be attached to the plant. The divergence of view between the company and the Post Office is so great that no negotiation is likely to bridge the gulf, and it is fully anticipated that the matter will have to be referred —as provided in the agreement—to the Railway and Canal Commission to determine the precise amount of money to be paid to the company for its plant, on tramway terms. Clause 1 of the Bill which I shall introduce if this Resolution is accepted will authorise the Treasury to borrow to pay the sum awarded by the Railway and Canal Commission, as the amount due to the National Telephone Company in accordance with the agreement which was sanctioned by the House of Commons six years ago.
There will also be a provision in the Bill relating to a sum, which amounts to about £1,600,000, which is in the hands of the National Telephone Company, and which represents subscriptions paid in advance by telephone subscribers. This sum has been gradually accumulating year after year, and has been invested by the company in its own business, and, of course, it has paid for part of the plant which we shall purchase. This sum of £1,600,000 must be handed over by the company in cash to the Post Office on the occasion of the transfer, and it is proposed 50 that the Post Office shall do as the company has done, that is to say, use this. sum of money as part of the capital invested in the business, and thereby save borrowing on the market to an equal extent, and save interest and sinking fund on the amount. This will be a benefit to the subscribers of the National Telephone Company, whose money it will really be; strictly speaking, which is being so used; because pro tanto it will cheapen the cost of running the service by reducing the amount payable on interest and sinking fund and will thereby pro tanto enable subscriptions to be lower. The agreement requires that one-fourth of the purchase money shall be paid in cash by the Postmaster-General to the company, and this sum of £1,600,000 will be used as a set off against the sum payable in cash to the company. It is necessary that a Clause dealing with this particular point should appear in the Bill, and that is why I mention it at this stage. The Post Office has been taking very active steps for some time past with a view to equipping itself for the conduct of this great addition to its existing business. It is, of course, highly essential in the interest of the commercial community, and, indeed, in the interest of the whole community, that our telephone service should be managed as efficiently and as economically as it conceivably can be. In spite of some little irritation which occasionally attaches to the use of the telephone, I think that very few of us would desire to be without the telephone altogether. Its value can best be gauged by imagining the extreme inconvenience which would be caused if it were absent. It shows the rapidity with which our civilisation advances on the mechanical side that an equipment which thirty years ago was unknown is now considered to be absolutely indispensable.
The Post Office has had considerable experience for some years past in the management of the telephone through the development of its own system. When the trunk wires were bought from the company in 1896 they were purchased for the sum of £450,000. The Post Office has invested in the development of trunk wires an additional sum of nearly £5,000,000, and, although I am far indeed from claiming that the trunk wire system is by any means perfect—I look to a very large development, extension, and quickening of the trunk wire system—still I think there will be a general consensus of opinion that in the last few years it has shown considerable improvement on the system as it previously 51 existed. It is frequently the custom to compare our trunk wire system with that of the United States, and it must be admitted that between some of the large cities of the United States there is a rapidity of service which has not yet been attained in the United Kingdom. But, on the other hand, it should be remembered that the charge made for the use of the trunk wire service in the United States varies between 250 and 300 per cent. more than the charge made in this country, and that it would be easy for us to give a service as rapid—or what is called a no delay service—in the United Kingdom if we were allowed to charge 5s. a call between London and Liverpool, which would be more or less equivalent to the American charge. Another £5,000,000 has been spent by the Post Office on the rest of the Post Office telephone system in London and the provinces. We have now over 100,000 telephones connected with the Post Office system. Again, though there is much room for improvement in the future, there has been a degree of improvement in the past, and especially in the recent past, which holds out the hope that further improvement will accrue in years to come. The number of telephones belonging both to the Post Office and the Company ten years ago was 200,000. There are now 600,000, but this number is quite inadequate to our population. The telephone system in my view and in the view of my Department can be considered as being in little more than its infancy, and we look forward to multiplying the existing number two, three, or four-fold in the not distant future. We are providing for a very large development subsequent to the transfer. The Treasury is already empowered under existing statutes to spend another £2,000,000, which has not yet been borrowed—that is to say, there are £2,000,000 of unexhausted borrowing powers remaining. In the Bill I propose to ask for power being given to the Treasury to raise as occasion requires an additional sum of £4,000,000, over and above what is required to purchase the National Telephone Company's plant, for future developments of the trunk service and the local service where it may be found that profitable extensions can be made.
We have been very closely watching the development of the telephone system in the United States—the country which was its original home, and where it has 52 reached its highest development. For many years representatives of my Department have been visiting the United States in order to acquire information there. The head of the telephone branch of the Post Office has been to the United States, and the chief engineer has also made an exhaustive study of the telephone system there. The telephone traffic managers have only just returned. We have established a system of travelling scholarships for Post Office engineers which will enable them to go over to the United States for considerable periods in order to make a minute study of the telephone in that country. The Secretary of the Post Office recently visited Sweden, and we are contemplating visits by other officers to that country where telephony is so widespread and provided at remarkably cheap rates. We are also going to experiment with automatic and semi-automatic exchanges. We recognise in this work that this is a highly specialised business which certainly cannot be conducted on routine methods, and we are very much on our guard against the possibility of the future progress of telephony in England being hampered by what may be called the dead hand of the State. Certainly the system will not be thrown into the routine of the Post Office Department. We are on our guard against over-centralisation. The responsible officers in the districts will be given a large measure of local control, and we mean to use to the full the experience and capacity of the company's staff in connection with work in which they are experts. The company's managers will be kept at telephone work, and they will be given a very large measure of discretion in their own sphere.
It has been said that the Post Office is not to be trusted with the management of this business, because Post Office inefficiency has been proved by the fact that our telegraphs are worked at a loss which now amounts to about £1,000,000 a year. If there was anything in that doctrine by itself, it could be easily countered by the argument that Post Office efficiency is proved by the fact that our postal service is conducted at a profit of about £5,000,000 a year. As a matter of fact neither is inefficiency proved in the one case nor efficiency in the other if the results are merely viewed from the point of view of total figures. There are other factors of great importance which have to be taken into account in forming an estimate of that character. The loss on the telegraphs is 53 due to four causes. In the first place there are the low Press rates which are quite unremunerative, and which were granted by Act of Parliament at the time of the transfer of the telegraph business to the State. These very low Press rates account for a loss of about £200,000 a year, and it is sometimes amusing to read newspaper articles asserting that the inefficiency of the Post Office is proved by the telegraph loss, and that therefore the telephones ought not to be entrusted to our hands, when the fact is that under Parliamentary pressure we gave unduly low Press rates. These same newspapers are at this moment enjoying the unremunerative rates which they would be very unwilling to surrender.
§ Mr. HERBERT SAMUELI could give sheaves of cuttings.
§ Mr. HERBERT SAMUELMany newspapers have taken the course of arguing that the telephones ought to be transferred to something in the nature of a telephone authority instead of the Post Office, as a telephone authority would be less amenable to Parliamentary pressure, whereas the Post Office is amenable to such pressure, the result of which has been a loss of £1,000,000 a year on the telegraphs. Secondly, we have deliberately extended the telegraph system in the rural districts for general purposes of national development in a way that a commercial company would not have done. It has been done with the sanction of Parliament and by various Governments with their eyes open, knowing that a loss would accrue, but believing that it was well to spend some part of our postal surplus in incurring that loss rather than leave the rural districts unprovided with telegraphic facilities. Thirdly, when the telegraphs were on the point of paying their way, and when the earlier deficits were being made good, the House of Commons stepped in and rejected, a good many years ago, the advice of the Postmaster-General of that day, and insisted on a system of sixpenny telegrams which are in very many cases unremunerative, and which account for a considerable portion of the loss. But even sixpenny telegrams might have been made to pay in the course of time if it had not been for the intervention of the fourth consideration, namely, the development of 54 the telephone itself, which has been actively fostered by the Post Office, and the effect of which has been to take away a most remunerative part of the business— the short distance telegrams between different parts of the same towns.
Telegraphy has completely altered its character in recent years. The bulk of the telegrams used to be telegrams despatched short distances, but now the bulk of telegrams are becoming more and more telegrams which are sent over long stretches of the country, and which are not of a remunerative character at the sixpenny rate. When the average cost of dealing with a telegram now as compared with twenty years ago is considered, you find that a telegram dealt with now is a different thing from what it was twenty years ago owing to the advent of telephony. The fact that there has been a loss on the telegraphs is not due to inefficiency, but it is owing to the operation of these four reasons. While the telegraph system does not pay, I think the House of Commons would prefer that there should be a loss paid out of the postal surplus than that either the Press rates should be raised or that the country districts should be without facilities, or that the sixpenny rate should be increased, or that the substitution of telephony for telegraphy should be hampered.
I am, however, now being pressed to promise immediate reductions in the existing telephone rates, and those who complain that the Post Office is not to be trusted to manage the telephones in a business-like way because it is too much open to pressure are often themselves the first to bring political and other pressure to bear in order to secure an immediate reduction to rates which might be of unremunerative amounts. I have also been asked to refer this question of rates, prior to the transfer, to a Select Committee of the House of Commons in order that the existing rates might be examined and a new scale devised. There is one objection to that course which, I am sure, every Member of the House will agree is a conclusive objection, and it is that we do not know what the cost of the telephone company's plant will be. It has to be determined by arbitration by the Railway and Canal Commissioners. The capital cost of the plant will, of course, be a predominant factor in fixing the rates to be charged. In connection with this exceedingly expensive plant the capital investment is a most important factor in the balance-sheet, and it would be perfectly impossible at the present 55 moment, when the value of the plant is undetermined, to fix what should be charged for the use of that plant. If a Select Committee were appointed this Session there would be no data to place before it on which it could act, and I venture to say that the Committee would have no course open but to report to the House that it was unable to consider what were the proper rates to be charged for the telephone service as it had no estimate of the capital value of the telephone system and of what would have to be charged year by year for interest and sinking fund.
Therefore I propose to make no general change of any kind in the rates charged for the use of telephones now, and to leave the matter over until after the award of the Railway and Canal Commission. Subsequently a revision of existing rates will be necessary for two reasons. One is that at present there is inequality. Two different men in the same town are paying different rates for the same services, because one man may happen to have had his telephone before a certain date and another has had his telephone after that date. Those who had what is called a flat rate, a single sum paid for an unlimited service, have their telephones at one price. Those who have come on at a measured rate, that is to say a rate which is in proportion to the use that is made of the telephone, have to pay at a different rate, and they have, in most cases, no alternative open to them. Therefore inequality exists, and one man may find his neighbour paying a considerably less sum than himself for precisely the same service. That cannot continue indefinitely, and if, for that reason alone, it will be necessary to have a general revision of telephone rates. In the second place a considerable number of subscribers are receiving their services at below cost price under the old unlimited service rate.
I had shown to me the other day the record of one particular subscriber at Newcastle who makes on the average 160 calls a day on his telephone, for which he-is paying £7 10s. a year, or a rate of about twenty-five calls for a penny, which is, of course, exceedingly unremunerative to the Telephone Exchange, and also results in the line being almost continually engaged, with the consequence that there are many ineffective calls, and that other people's time is wasted, and the time of the Exchange is wasted as well. Although that is an extreme case, there are many cases 56 in which subscribers are receiving a service below cost price, and the consequence of the continuation of that must be either that the loss must be made good by the State when the service is taken over, which I think we shall all agree is a most undesirable consummation, or else that the large user must be subsidised by the small user being charged an unduly high rate for his measured service. Therefore it will be necessary to have a general revision of rates after the valuation of the company's plant has been completed, and I hope that after these unremunerative agreements are terminated the present measured rates may be reduced because they are undoubtedly higher than they need otherwise be on account of the existence of the unremunerative flat rate agreements.
When that revision comes, the rates should, I think, be fixed in accordance with three principles. First, the chief essential of telephone service is efficiency. Speed and accuracy are essential, and it would be very false policy to put the rates so low that the maintenance of high efficiency of the service would be impossible. Subject to that condition, the second principle, I think, would be that it is to the interest of the State and the community at large to encourage a very wide use of the telephone by great numbers of small users, because the more persons have telephones in their houses or places of business the more value is the telephone to each one of the subscribers. The third principle is that the telephone should pay its own way, and should not require any subsidy from the taxpayer; while, on the other hand, it should not be required by the Exchequer to contribute any large surplus in relief of general taxation. Telephone users ought to have the benefit of their own subscriptions, and the telephone system should pay its working expenses, should pay interest on the capital invested, and should pay Sinking Fund charges and a margin of profit, and if there is any surplus that surplus should be used in lowering the rates or in giving other advantages to the subscribers. I propose, therefore, that when the valuation is completed a revision of rates should be undertaken on those lines by the Post Office, and I propose also that if that revision is not generally acceptable—and one can hardly be sanguine enough to expect that everyone will agree to any proposal, no matter what it is—that the question should then be submitted to a committee of inquiry for examination, which should either be a Select 57 Committee of this House or else a Committee consisting of representatives of the chief commercial bodies of the country, and of others who have great interest in the efficient conduct of the telephone service.
One or two suggestions have been made as alternatives to the transfer of the telephone system to the State. When this subject was discussed by the House very thoroughly in 1905 municipal telephones were then being advocated by many people, and, previous to that, in 1899, there was a considerable movement in favour of municipal telephones. For my own part I favour thoroughly the policy of municipal trading, and the ownership of monopolies by municipalities, where it can be shown that they can be set up and efficiently managed by local public bodies. But after very careful study of this subject I have myself come to the conclusion, which I submit to this Committee, that the management of telephones is not really a suitable enterprise for a local body to conduct. In the first place the local service is being more and more connected with the trunk service, and probably in years to come the custom of communication by telephone from town to town will be very largely and very rapidly increased. If you have the trunk system in the hands of the Post Office while the local exchanges are in the hands of the municipalities of the various towns, then you will inevitably have friction and difficulty in arriving at a system of speedy communication between the various towns of the country. If the whole system is in one hand then it is easy to investigate complaints and easy to detect faults. The Post Office is not able to escape from its responsibility by putting the blame on the local authorities, and there is no local authority which is able to escape responsibility by putting the blame for inefficiency of service on the Post Office.
Nor is the municipal area the natural telephone area. The natural telephone area has a town for its centre, and all the suburbs and surrounding villages, whose economic life centres round that town, should be connected with the exchange in that town. These areas frequently, one might almost say usually, are not all comprised within the municipal area, and difficulties would consequently arise and did arise when municipalities engaged in this business—difficulties of service to surrounding districts, and difficulties arising from questions of rates, of finance, of way-leaves. Next, there are all the economies in conducting the business of telephony to 58 be gained by management on a large scale. A Government Department which will at once have over 600,000, and may very shortly have a million telephone subscribers, can place its contracts to much greater advantage than a municipality which may have perhaps ten, fifteen, or twenty thousand subscribers, or even a smaller number. Not only that, the Government Department has at its command highly skilled, and therefore necessarily highly paid expert advisers, always watching new developments, always experimenting, always looking out for possible improvements in the telephone service. Municipalities, even the greatest municipalities, cannot cope with the expense of having skilled experts of that character. Again, a Government Department can easily obtain capital, if the House of Commons gives its sanction, for its needs in advance of requirements, which is most necessary in developing the telephone service, while the municipalities are not nearly so well situated in that regard. It may be said that businesses conducted by Government Departments have the disadvantage that comes from the lack of private profit, and therefore the lack of public interest; but if there is a disadvantage from that point of view it equally attaches to municipalities, who are no better situated in that respect.
This proposal of municipal management of telephones has been the subject of experience. As I have said, in 1899 Parliament authorised municipalities which desired to do so, to undertake the business of telephony, and it was announced that the Postmaster-General would grant licences freely to any municipal body which desired to set up a telephone system. There are several hundred local authorities which were in a position to undertake this work if they so desired. Of those hundreds it is known that about sixty considered the advisability of setting up municipal systems. Thirteen did actually apply to the Post Office for licences, and all were granted those licences. Of the thirteen, six actually set up municipal services. Of those six only two now survive, two of them having been sold to the Post Office, and two having been sold to the National Telephone Company. So that so far as the experience of the past has gone, it seems to show that telephony is not a very profitable or desirable sphere for municipal enterprise. With regard to the two corporations which still retain the telephone system, those of Portsmouth and 59 Hull, the licence of the Portsmouth district extends to the year 1926. I have offered to purchase, if they so desire, their system on terms similar to those which we are paying the National Telephone Company, or alternatively, I have offered to sell to them the National Telephone Company's plant in Portsmouth for what we are paying for it. But neither offer has been accepted by the Corporation, and therefore in Portsmouth both the Post Office and the Corporation systems will be in existence. With regard to Hull, I am still in communication with the Corporation, but in any case it is not proposed that the service in Hull shall be worked by the Post Office from the end of the year. There is no demand from any municipality elsewhere for municipal telephone service. Some individuals and associations in Glasgow advocate it, though no official request has, I think, been made by the Glasgow Corporation itself. I think, therefore, that it may be generally assumed that municipalisation as an alternative policy is now generally abandoned.
More recently a suggestion has been made, which has been supported by the London Chamber of Commerce and one or two others, that a Telephone Authority should be created on the lines of the Port of London Authority, which should, without the control of the House of Commons or any Government Department, conduct the whole business of telephony. I am myself opposed to this suggestion on several grounds. One is that such an Authority could not be fully representative without being too large to be workable. You have to consider in this matter every interest in the country. You have to consider every district in the country. It is not like the Port of London, which affects directly only one locality. The system of national telephony affects every portion of the whole of the United Kingdom. It would be necessary that small users should be represented as well as large users, and that rural districts should be represented as well as town districts. I see no prospect that any Board could be created which would fully represent all the various interests and districts that would be entitled to representation, and I feel convinced that the excluded interests would very soon begin to complain of this despotic authority which would be subject to no control from any quarter. The House of Commons is, in my opinion, the only sufficiently representative body to have the ultimate control over so wide- 60 spread and so important a service as the National Telephonic service. There is the question of wayleaves. Unless special statutory authority were given, the new body would not enjoy the wayleave rights possessed by the Postmaster-General, and Parliament might hesitate before conferring such rights on an authority under no form of public control. Again, the telephones are inextricably connected with the telegraphs. Underground cables have been laid all over the country, and thousands of miles of poles have been erected for the support of wires, some used for the telephone service, and some for telegraphy. It would be a most unbusinesslike and most uneconomical proposal to endeavour to set up new poles everywhere, to lay new underground cables, and also to have separate buildings for the telephone system and the telegraph system. An alternative proposal might be that the telephone authority should also have the telegraphs, but then they should also, of course, take over the telegraph loss of a million a year, and that is not contemplated by those who advocate this proposal. It would also totally break up the whole organisation of the Post Office system. On the other hand if it were not the telegraph authority, we would have the telephone system in one hand and the telegraphs in another. This would result in so wasteful a system, and cause so much friction among the officers who have to deal with the two services, that the proposal would be found to be utterly impracticable in its working. This proposal is advocated partly on the ground that an authority of this character would be able to secure cheaper labour than would a Government Department. I think in all probability that, to some extent, is true, but, on the other hand, if the employés are paid at a lower rate, such an authority would pay more for capital borrowed from the public than a Government Department would pay when borrowing on the security of the State. As I pointed out before, capital expenditure is a most important item in connection with telephones, far more so than with telegraphs, and undoubtedly an increase of half per cent. or even one per cent. in the rate of interest would more than counterbalance any saving in the cost of labour employed. Of all the various proposals for the control of the telephone system, this proposed telephone authority seems by far the worst and most impracticable.
61 I come now to the provisions which will be included in the Bill with respect to the transfer of the Telephone Company's staff to the employment of the State. It is, of course, very desirable and necessary that the company's employés should foe taken over by the Post Office. Not only would it be exceedingly unjust, after all their years' service, to deprive them of their existing employment, but, also, I think the Post Office would be very glad to have their services to cope with the enormous increase of business which will accrue with the transfer. Lord Stanley, in the year 1905, proposed that these employés of the Telephone Company who received less than £700 a year salary, and had more than two years' service, should be taken over by the Post Office, unless there was unfortunately shown an abnormal sick leave rate in any particular case. I propose to redeem that promise, but to extend it further, and not only to take over those who have more than two years' service, but to take over the whole staff, no matter what their length of service may have been. The pay which they are to receive from the Post Office will be in very many cases greater than they are now receiving from the National Telephone Company, and in no case will it be less, unless their rate of pay has been abnormally raised by the company within the last few years in view of, or in connection with, the transfer. But in no case will the pay be less than the normal rate of payment of the Telephone Company's system. The conditions with regard to leave, and with regard to sick pay in the Post Office service will certainly be better than those of the company. Both with respect to leave and sick pay the company's servants will very considerably benefit by the change. With respect to their position as regards seniority when they are members of the Post Office staff, that is a question which has caused great difficulty; it will take some time to adjust, and it may be necessary in some cases to have separate seniority lists; but in no case will the years of service with the company be left out of account in regard to seniority, and the present officers of the company will have the full benefit to which their years of service entitle them.
The question of qualification in the various grades of Post Office employés is also one of great importance both to the officers and the Department, and a departmental committee is now investigating the subject. The matter is so important that I think I must trouble the House with 62 some details. I am sure the hon. Members have had representations from some of the 18,000 members of the Telephone Company's staff, and I make no apology for dealing with the subject. The company's servants are divided into two classes, those that are pensionable and those who are not. In 1896 the company established a pension fund to which all the officers receiving over £100 a year salary, roughly more than £2 a week, paid 2½ per cent. from their wages by way of contribution to that fund, and an equal amount was added by the company. The Post Office, on the other hand, has two classes of servants, but they are not divided in that way. We have our established staff, and our unestablished staff. The established staff get various rights and privileges, and are entitled to pension; the unestablished class are paid a gratuity on leaving the service. The existing pension system under the company cannot be combined actuarily with the conditions which obtain in the Post Office, and therefore it will be wound up on the transfer of the company to the State. Of the two classes of the company's servants I take first those who are pensionable, who are now contributing to the company's pension fund and who are entitled to pensions. On leaving the company's service they will have two options: They can either take their share, whatever it may be, of the pension fund into their own pockets, and then come to the State, starting afresh to qualify for pension in the Post Office service; and then we say, "There will be added to your service to the State an additional two years as pensionable service in respect of your past service with the company." The officers take whatever right they have in the existing pension fund, and then qualify for pension in the Post Office, getting two years' additional service. That is in accordance with Lord Stanley's policy.
But it has now been decided to give them an alternative option, which, I think, will be found probably far more advantageous from their point of view. They may surrender to the Postmaster-General, that is to the Exchequer, whatever sum their share of the company's pension is worth. They assign it to the Postmaster-General, and in exchange they will be given State pension rights in the offices to which they will be appointed, counting the whole of their past service as though it had been with the State, and not with the Telephone Company—that is 63 to say, that their past service with the company during which they contributed to the pension fund will be counted as service rendered to the State. If they were original members of the pension fund, established in 1896, then the whole of their past service with the company will count as service to the State for pension purposes in the offices to which they are transferred. Almost the whole of the pensionable officers of the company will be transferred to established posts in the Post Office, and therefore pensionable posts. They will receive as pension more than was provided by the company's scheme, and they will no longer be liable as previously to a deduction of 2½ per cent. from their salaries. A very small number who are now pensionable will be transferred to offices in the Post Office service, such as the Solicitor's Department, which cannot be established without disturbing arrangements which are uniform throughout the Civil Service. But with respect-to them, I am most anxious that they should not be made to suffer any inequality or injustice, and I am arranging that they should be given an allowance in addition to their salary which will be an equitable-equivalent for the pension rights which they would have had if they had been placed upon the Government establishment, but which they are not going to have. I think that probably will be a satisfactory solution to all parties. It is a somewhat difficult problem which, fortunately, affects only a handful of men.
5.0 P.M.
With regard to the other and larger class of servants of the company who are not subscribers to the company's pension fund, and who are not regarded by them as pensioners, a very large number of them will fall within the class of established Civil servants, although they do. not correspond to the pensionable class when they come to the Post Office. In fact, fully four times as many of the company's servants will be placed on the establishment of the Civil Service as have hitherto been in the pensionable class while with the company. These officers have desired that all their back service with the company should count for pension as service with the State, although they were not pensionable under the company, and although they paid no contribution for pension rights, and they ask that the State should assume the obligation of paying pensions with respect to services which it has not had, while not receiving in exchange an accumulated pension fund 64 from the company. The others will hand over to us their share of the pension fund. These servants have nothing to hand over, and the company in the past made no accumulation to provide them with pensions. Yet we are asked to pay pensions without any equivalent being given to us in respect of the whole back service of these officers. The cost of this has been calculated, and I find that it would involve, if these pensions were paid, a bonus of £700,000 for those servants of the Telephone Company. There is only one instance in which such a course has been taken in the past, and that was when the original telegraph companies were transferred to the State, a transaction which has ever since been recognised as having been conducted on most extravagant and wasteful lines, when vast sums of public money were given with both hands in order to settle difficult problems which had arisen at the moment, with the result that the telegraphs have been charged ever since with excessive liability in respect of these transactions. There was the precedent of the Sub-Marine Telegraphs Company, in which certain officers were transferred, and of officers of local authorities transferred to the county councils on their formation, and of the officers of the water companies transferred to the Metropolitan Water Board; but if those cases are examined, it will be found that the pension rights of the officers concerned were always safeguarded as existing rights and those precedents did not create new rights. There is no precedent, therefore, except that of the transfer of the original telegraph companies to the State, for counting for pension on the transfer to the public authority service which was not regarded as pensionable by the previous employers. This matter was referred to the Select Committee which sat in 1905 to consider the purchase agreement, and the whole subject was carefully investigated by that Committee of this House. The same claim was made by the staff for all back service to count for pension when they were taken over by the State, and the Select Committee reported against that demand. But we do not propose to stand upon the strict letter of justice. We propose to give those officers not only better pay, not only better leave conditions, not only better conditions with regard to sick pay, not only new pension rights which they have not had before, charging for those pension rights no 2½ per cent. as they 65 would have been charged by the Telephone Company, but, in addition, we propose to add two years to their service with the State as a bonus qualifying for pension in the Civil Service. That is in accordance with the recommendation of the Select Committee.
§ Mr. JOYNSON-HICKSAnd all pensionable?
§ Mr. HERBERT SAMUELNot only those who are pensionable under the Telephone Company, but all those who are not pensionable, and they are a very much larger number of people, including almost all the operating class, but who will be pensionable when transferred to the State and when they come upon the established Civil Service I think the Committee may feel that in taking over the telephone staff we shall be acting not merely with equity towards them, but even with generosity. With respect to the details of the Bill, I shall be most happy to consider any representations which may be made either from Members of this House or persons outside interested in the matter. I trust that the Committee will forgive me for having detained it at such great length with a statement which is in lieu of a statement introducing the Bill itself. I trust that the acceptance of this Resolution and of the Bill founded upon it may be the precursor of the successful accomplishment of the great undertaking with which my Department is being charged. I beg to move.
§ Mr. AUSTEN CHAMBERLAINThe right hon. Gentleman certainly need have made no apology for the length of his statement. It was a very businesslike statement, and he has not occupied time with matter which is irrelevant to the subject which we have under consideration. On the contrary, if I have any complaint of the right hon. Gentleman's statement at all, it is that he did not tell us a little more. I do not find fault so much with what he has said, as that he did not tell us a little more about the financial arrangements. I gather from the Resolution you, Sir, have just read, though I do not think the Postmaster-General mentioned it, that as regards the portion of the purchase price of the Company's plant which is not to be paid in cash, that the Bill will propose to raise the money in terminable annuities.
§ Mr. HERBERT SAMUELOr exchequer bonds.
§ Mr. AUSTEN CHAMBERLAINI do not know why exchequer bonds are introduced. I should have thought on the whole, that terminable annuities were eminently the right form of financial weapon with which to deal with a situation of this kind. You would thus fix the date by which the capital liability would be extinguished. I do not know whether the Postmaster-General in the course of any reply he may make to critisisms which may be raised, will be able to tell us anything about the currency of those terminable annuities or of the exchequer bonds which he proposes to issue, or whether he will be able to give us any further details as to the raising of the fund. I am quite certain not merely the small number of people represented actually in this House, but also the larger public outside will be interested to know how what is a very large financial transaction, and the provision of a great sum of money is to be carried through with the lest inconvenience to the money market and with the least expense to the Government. The character of the right hon. Gentleman's survey of the proceedings in connection with the telephone system, really relieves me of the necessity of travelling over the ground. I have a special interest in it because although I was not Postmaster-General either at the date of the agreement for the purchase of the London Telephone Company, or at the date when that agreement was extended to the whole of the country, I was connected with both those agreements, first, as Financial Secretary to the Treasury, and afterwards, as Chancellor of the Exchequer. I am glad to find, after the speech of the right hon. Gentleman, that some of the rather fierce controversies which raged round those two agreements, and especially the first of them, are now definitely closed, and that the Government which made those agreements is justified alike by subsequent experience and by the verdict of their successors.
I remember for instance, as the Postmaster-General has reminded us, that a very strong claim was made at that time that municipalities were the proper people or the proper authorities to work the telephone system. I entirely agree with what the Postmaster-General has said upon this subject. I am not quite certain whether I go as far as he does in regard to municipal enterprise generally, but if the telephone system of the country is to be worked by a public authority at all, and I agree it must, 67 then every reason which brings you to the conclusion that it must be worked by a public authority will bring you also to the conclusion that it must be worked by a national authority. No other authority can deal with the whole country, can reconcile all the interests that have to be reconciled, or can make a system which is not a sectional system, but a thoroughly national system. Let me say that I am not quite certain that if we had a free slate, the Postmaster-General's would be the best Department for a national authority. The right hon. Gentleman dismissed with a few sentences of criticism the suggestion that you might have a special telephone authority. He said that he thought no such body could be created sufficiently representative of the various interests that are concerned. I agree that that would be so if you constituted your authority out of representatives chosen from particular interests, but I am not certain that if we had a perfectly free slate, and a perfectly free hand to do as we pleased, that it would not be wise for the House of Commons, even at this stage, to create a telephone authority, national in character, acting for the whole nation under powers conferred by Parliament, but not subject to the same kind of perpetual pressure to which the Postmaster-General, and every Postmaster-General, is exposed in this House. No doubt this House is the most representative assembly we have in this country, and if it always remembered that it represented the country and public interests as a whole, perhaps there would be no better control over the Postmaster-General when he controls telephones. But we all know that this House represents not only the country but every kind of little sectional and personal interest, and that it is very difficult for Members of this House in the consideration of such questions as arise from time to time, always to disentangle and keep clear national interests from the smaller local or personal interests, and to maintain the supremacy of the whole interests of the country over those local and personal interests.
I believe in some of the Dominions, and notably, I think, in Australia, having tried Parliamentary control through Ministers of their national railway systems, that they have decided that it does not work well, and that it is better to have an independent railway authority which relieves Members of the excessive pressure of such small interests as those of which I 68 have spoken, and relieves their time for Parliamentary work, and sometimes frees the controlling powers of their railway systems from pressure to which it is not in the public interest to give way. But though I differ in the abstract from the Postmaster-General, I do not think I differ very much as to the practical question with which he is now concerned. I do not think, having our telegraph system as it is, that you could disentangle that from the telephone system, or could possibly set up a separate authority to work the telephone system from that which now works the telegraph system. If that be true of the telegraph and telephone systems, it is only one degree less true of the telephone and Post Office systems, which often have grown up side by side in the same buildings. That therefore, is not a question of practical politics, as far as I am concerned. All that I desire to do is to support the Postmaster-General, and whoever is Postmaster-General, in creating, first of all, an official public service, and then in maintaining it on the highest level of public utility.
The Postmaster-General laid down three principles by which he proposed to act. I heartily accept two of them. I differ from the third. Let me say at once that I do not pretend to be speaking for a party or for anyone except myself. I think it is quite possible that I may find hon. Members on the opposite side who agree with me, and I am quite certain some hon. Members on my own side disagree with me. In any circumstances this is not a party question, and is not going to become so. I speak as a Member of Parliament on my own responsibility, committing no one but myself. I agree that the first thing is that the service should be efficient, and that to seek cheapness at the expense of efficiency is a foolish policy which could lead to nothing but disaster. I agree in the second place that it must be the first object to encourage the wise use of the telephone, even if that involves the maintenance of rates at a higher figure than would be necessary if engaged in only doing a paying business. Users who may be asked to pay a little more than they would otherwise, in order that the telephone might be carried more widely into scattered districts and country places, get after all their compensation in the fact that their own powers of using the telephone are extended with every fresh subscriber brought on to the system. With those two considerations, those two principles laid down by the Postmaster-General, I am therefore in hearty accord. Where I 69 differ from him is, when he says that the system is not to be worked for profit. I am glad that he lays it down that it is not to be worked at a loss. There are systems of public utility which must be worked even at a loss which cannot be avoided, but this is not one of them. Nor in my opinion is this one of those public services which ought to be provided at the expense of the State as regards capital, at the risk of the State as regards the conduct of the whole business, and at the cost of the State as regards the amount of time and labour and responsibility for its officials which is involved, without the State getting an adequate monetary return for the services which it renders.
§ Mr. HERBERT SAMUELI said there should be a moderate profit.
§ Mr. AUSTEN CHAMBERLAINI misunderstood the Postmaster-General; I am very glad.
§ Mr. AUSTEN CHAMBERLAINThe Member for West Islington asks what is a moderate profit. Five per cent. on the capital, I think, would be a moderate profit. I do not think that under any circumstances it should be allowed, if we can do it, to sink below that level. It may be higher, it ought not to be less. I do not want to be dogmatic about the exact profit that should be derived. May I take an illustration from municipal affairs. I remember many years ago when the Birmingham Corporation did a thing which has become very much more common since, and it brought out the gas and water undertakings and carried them on thenceforward as public services. They drew a distinction between the two. They said, "A free and plenteous water supply is necessary to the health of the community, and we will not take for that any more than the cost of the service. We will never seek to make a profit, and if we make a profit, as soon as that profit is secured and assured we will give it back in reduced rates to the consumers, and we shall get the advantage in the better health of the community." But with the gas undertaking they decided to put it upon a different footing. "There," they said, "it is the citizens generally who find the money and take the risk through the corporation, and they are entitled through the corporation to a return upon that money," and from the gas undertaking they expected to get, and they have got something like £25,000 70 a year in relief of the rates. They have not asked, and I do not say the Postmaster-General should ask that all the growing profit, if growing profits there are, and I hope they may come from, the telephone system, should be shared. I think they should not always, as a matter of course, go to the telephone system, but a portion ought to be reserved for the benefit of the taxpayers as a whole, at whose risk and through whose Government, the service is provided and carried on. I am glad I misunderstood the Postmaster-General. If he will take care that there is a moderate profit I do not think we will differ very much as to what a moderate profit is.
There are two other considerations that I wish to bring before the House and one is with regard to the charges. I think the House will readily accept the statement that the Postmaster-General is not yet in a position to make any definite change in the rates charged or chargeable for the telephone service. But whenever the time comes I hope that the Postmaster-General is going to bear in mind the case of the small user. I have received representations from my own constituency and elsewhere which sometimes overlook the case of the small user in their anxiety about the case of the big user. I am not here to say for a moment that you cannot fairly do in your telephone system what is done in so many other cases, and make some reduction in the charges to the man who is a large customer. But I am here to say that the appeal which has been made to me, and which I think has been sent to many public authorities and accepted by them with too little consideration, means an appeal for an unlimited use for a limited payment, and that it is not in the interest of the telephone system and the vast number of its users. It means, as the Postmaster-General has said, that the little user has got to pay more to give the very big user the advantage of the system at a charge below cost price. That is not a system that ought to be adopted, and, for my own part, whether speaking as a Member of Parliament or as an ex-Postmaster-General, or as a subscriber to the telephone exchange system, the Post Office system, I say I think that the fairest and best charge is that of the London Post Office system—a minimum charge for a minimum use, and a measured rate thereon, subject to such qualifying conditions as you like to make in regard to large users, but never giving them a ser- 71 vice at less than cost price, and at the expense of the small users who certainly are not those who can best afford to pay it. The more people you will be able to induce to take the telephone the better, and therefore your object ought to be to have as many users as possible and to have a lower minimum rather than a lower maximum charge.
The only other observation I wish to make is one of very general application. The only thing I regret about the assumption by the State of the whole of the telephone system is the great addition which it makes to the number of public employés. No man can look political facts in the face without seeing that it is a danger, a possible danger, in our public life, and a very great danger to our children and those who come after us. Whether we ward off these dangers or not depends upon the ability of this House to remember, as I said at the beginning, that it is the guardian of the interests of the nation, and must not sacrifice the interests of the nation to the interests of individuals, however well organised or clamorous they may be. I am quite certain that the State will always desire to be fair with its employés and even generous to them, and I think the Postmaster-General has shown by the terms which he has sketched to-day for the taking over of the staff, and on which so far as I am able to form an opinion whilst listening to him I congratulate him, the State will always desire to act fairly by its employés, but there is a growing danger, from the political pressure put upon Members in this House, in the enlargement of the number of employés in the public service. That is a danger which Members of this House always have in their minds, and it is upon the courage and resolution and public spirit of individual Members that our success in coping with the danger depends. I do not believe any Member who will take the trouble to inform himself of a case, and having got that case made up, meets a public official in his division—a question say whether he has not carried out the wishes of the local people or given what they wanted— has, as a rule, anything to suffer from. For myself, speaking as one who was a Postmaster-General a little time before the General Election, at which there was a very strong opinion opposed to me, when I had no choice but to stand by my guns, and defend the action of the Postmaster-General, and my colleague, a later Postmaster-General who was responsible. I do 72 not believe that the Post Office officials in that case in my own Constituency were affected in the political vote they gave by their position as postal servants. I believe they voted like other citizens upon public grounds, and I believe, if we are true to ourselves, they will do so in future, but unless we have courage to tell them when they are in the wrong, when the public interests are against theirs or their interests and the public interests are not the same, every fresh addition to the number of employés in the public service will be a danger to the State, and must in the long run prove disastrous.
§ Mr. LOUGHI was not privileged to hear the full statement of the Postmaster-General as I would have liked to have done, but I was engaged in introducing a deputation to another Minister at the same hour, and perhaps I ought to apologise for intruding, even for a few minutes, upon this discussion. There is one point upon which I feel very strongly, and in which I took the keenest interest in days gone by, and I hope the House will forgive me for referring to it. I was glad to hear that the right hon. Gentleman, and I congratulate him upon it, is giving the cold shoulder to this presumptuous idea which has been started in some quarters that we should create a new telephone authority. As one who has gone through the whole fight against the existing company in Parliament, I say it is amazing that this idea should be started and favoured by such a pretentious body as the London Chamber of Commerce, just at the time when the State is taking over the telephones. I listened with the greatest interest to the right hon. Gentleman who has just sat down, and I hope he will forgive me for saying that he is getting very well into the habit of the Front Bench of being very clever in skating over thin ice, and I must say he dealt with this matter very nicely. He gave it a certain amount of approval and then drew back, and would not say any more than that when circumstances were so and so, then perhaps a new authority might be created and that probably that new authority might be a better than the State, and then he turned off to some more safe ground. I congratulate him upon the discretion which he showed in dealing with this very delicate matter, but I desire to say to my right hon. Friend the Postmaster-General that if he has any truck with these people—and they are rather influential and rather good at getting up an agitation, and I have found that things they have started sometimes 73 go a long way—if he has any truck with them he will get into trouble. He will take a retrograde step, into a position from which many of us thought we had finally extricated the Government. It is all very well to speak about the increase of the number of public servants, but we who have followed that question, especially in connection with the telephones, know that whatever the advantages or disadvantages in the number of public servants may be they are tolerable compared with the burden of a monopoly in connection with a thing like the telephone service which is a far greater curse to the State, and I am, therefore, glad that the Postmaster-General has stated, as I understand, that he will give no favour to an idea of that kind in any way.
If I may say so, he made a most excellent speech, although I am dealing with it at second hand, and his second point, I understand, dealt with the question of making a profit. I can hardly believe that the right hon. Gentleman said he would work the thing without making a profit on the working so long as he got his expenses paid. He spoke of a moderate profit, but that is a vague expression. It all depends upon who estimates the moderate profit. Over in Ireland, for instance, a moderate profit would be a very small profit indeed, and nobody over here would be satisfied; they would not call it a profit at all in some parts of this country. But there are other countries in which a moderate profit is estimated in a different way. This matter ought to be dealt with. The right hon. Gentleman who has just sat down, when asked by me what did he mean by a moderate profit, said 5 per cent. Of course, 5 per cent. charged for interest and depreciation. Something which would just clear the State. Quite so; but I would not agree to it if he means 5 per cent., after interest and depreciation have been provided for, to go to the taxpayer in the same way as the ratepayer gets it in some municipalities. I should say that so long as the expenses are paid, and there is a certain margin for depreciation and interest, the remainder should be spent upon the proper working and the improvement of this great concern.
I hope my right hon. Friend will bear in mind the necessity of development, especially in agricultural districts. We in cities are disposed to think, owing to the great use we make of the telephone, that we are a sort of monopolist of the service. 74 May I remind my right hon. Friend that in country districts, even if there be only a small user of the telephone, it is extremely useful. It saves long journeys of ten or twenty miles, that use the whole day of a man, being made, A single message saves the journey. Therefore, I hope, that in considering the possible development of the system my right hon. Friend will do all he can to favour the rapid development of the telephone in agricultural districts in all parts of the country. This is a matter which I believe is more closely connected with the agricultural development of this country than we often think. If we assist those who are engaged in this great industry, and if their methods were more up to date, I believe our agriculture would be in a much more prosperous condition. I do not think that on the whole my right hon. Friend need be frightened with regard to the question of increasing the number of public servants. The only thing needed is for us in this House to have a little courage in dealing with these sort of agitations. I believe we shall be able to develop some little courage of that kind, or more of it, when we get salaries paid to us. Our work is done rather badly now, because we are only amateurs. When we recognise that we have a duty to do, and that we have a business to attend to, in regard to these things, then I believe this House will be able to develop a system of resisting all unfair pressure, which will not then be nearly so serious an evil as at the present time. At any rate it will not grow into a thing that we may view with any great alarm. I am delighted that my right hon. Friend will not look with favour upon a new telephone authority, I venture to assure him with long experience in regard to this matter that such a step would be looked upon with great disfavour.
§ Mr. JOYNSON-HICKSI do not want to follow the right hon. Gentleman who has just sat down into a discussion on the payment of Members, but he must not take it that we in any way agree with him that the payment of Members will make it any easier to resist pressure—rather we think it will make it more difficult. I entirely wish to associate myself with the words of my right hon. Friend the Member for East Worcestershire (Mr. Austen Chamberlain) with regard to the possibilities of trouble in regard to the increased number of public servants we are taking on. The more so, Mr. Emmott, because I am going to venture to put before the 75 Committee the case and position of these public servants. I am bound to say that this is not the first time I have put the case of the telephone staff before the House. Some two years ago, when there were wholesale dismissals on the part of the National Telephone Company, I had the honour of putting the views of the telephone staff before the House. I found the staff most reasonable. I should like to say publicly to-day that having been in communication with them a good deal during the last few weeks, and having received a deputation last week, I found the representatives of the telephone staff exceedingly reasonable and exceedingly desirous of meeting what I think are the wishes of the House in regard to their position under the Government. After all it is of benefit not merely to the Members of this House, but to the public service generally, that its public servants should be satisfied as to their position. We are going to take over some 18,000 new public servants, to take them from a service where they have perhaps been in more close touch with their employers than they will be under the State. It is essential in the interests of the State that we should not merely have them contented and working well, but I think we ought to lay down in this House definitely, once for all, the conditions upon which they are to be taken over, and upon which their position, their pay, their pensions, and their seniority are to be worked. Of course it is exceedingly difficult to deal with a Bill, or what one believes to be the proposals of a Bill, without seeing it. I rather gather that this discussion is to more or less take the place of a First Reading of the Bill; that then the First Reading itself will be taken as a formal act, and that the next opportunity we shall have of discussing this Bill will be on the Second Reading. I should hope that the Postmaster-General will at least give two or three weeks after the printing of the Bill before the Second Reading comes on in order that these staffs who are affected may have the opportunity of thoroughly considering the Bill. I think, then, it may save the time of the House if the position of the telephone staff is explained so that it may not take up so much time as otherwise later. The Postmaster-General has told us in effect the lines of the Bill in regard to the staff, but I have a letter in my hand from the Postmaster-General's private secretary (Mr. 76 A. S. King) received on 24th April. In that the right hon. Gentleman says that:
the Bill will empower the Postmaster-General to admit into established service any member of the company's staff!on certain terms. That Bill empowers the Postmaster-General not merely to do this or that, but the whole position is to be left entirely to the discretion of the Postmaster-General.That was not the decision of the Committee of this House in 1905. That was not the position of Lord Stanley—as he then was—in the speeches which he made to this House later in 1905. I do not propose at this juncture—I do not think it is necessary—to call the attention of the House either to the position in detail of the Committee or the speeches of Lord Stanley. It may be necessary possibly to do that later in the course of the Debates on this Bill and in Committee. Suffice it at present to say that the Committee of 1905, and Lord Stanley himself, distinctly laid down certain lines upon which the staff would be taken over, upon which the staff should work, and through me the staff now ask—and I think they are entitled so to do—that those lines should be definitely included in the Bill, and that the whole thing should not be left solely to the discretion of the Postmaster-General. I have no quarrel with the discretion of the Postmaster-General. I am quite sure he would exercise it admirably. But the right hon. Gentleman will remember that in a recent speech he himself told the public and the staff that the Postmasters-General were a fleeting race. I hope— political changes apart—that the present Postmaster-General will not be so fleeting as his predecessors; and that he will not go till he flies with his colleagues of the Cabinet—a consummation, from our side of the House, devoutly to be wished. I venture to remind him that he himself having, as I believe, the best intentions and the best desires in the world to deal fairly with the staff, may not be Postmaster-General when the staff come to be dealt with at the end of 1911–12. Therefore it would only be right and fair that the Bill should include definitely—in order that we, the Members of this House may express our opinion upon them—all the conditions upon which the members of the staff are to be taken over. I say that the more because I think in one respect at least the Postmaster-General has mis-misunderstood, quite unwillingly, I know, and has exaggerated to this House, the attitude taken up by the staff.
77 I assume the Postmaster-General will in his Bill include all those matters that were included in Lord Stanley's Memorandum in 1905? I will not trouble him therefore to-day, but I would like to ask him whether he is going to include in the Bill those questions of waiver of Civil Service examinations, waiver of medical examinations, etc., upon which I think there is no dispute, no difference of opinion whatever, between the Postmaster-General and the staff, but which the staff do certainly hope and expect will be included in the Bill and laid down definitely so that there shall be no possibility of error upon that point? What I should like to point out with regard to the speech of the Postmaster-General this afternoon is the hardship that I think is bound to occur to those members of the staff performing similar duties who are not under his suggestion going to be put upon the established staff of the Post Office. The Postmaster-General told us that there are many, or a very large proportion, of the staff of the National Telephone Company who will become established with the staff of the Post Office. But upon what basis is he going to differentiate —and I think the House is entitled to know—between those members to be put upon the establishment and those members who are not? I understand the Post Office puts upon its established staff—the Postmaster-General will correct me if I am wrong—those members of the staff who are reasonably reckoned as being members of the permanent staff. So soon as a class of men, or a man, is regarded as on the permanent staff, they or he are put upon what is called the established staff. I believe I am right in saying that some 60,000 or 62,000 Post Office servants are to-day what is called "established." I want to put to the right hon. Gentleman that almost the whole of the telephone staff can to-day be put upon the established staff, because the Telephone Company's staff has been enormously reduced during the past few years. To be more strictly accurate, I should say it has not been increased as much as it otherwise would have been increased if this agreement with the Post Office had not been entered into. I believe the Telephone Company's staff in 1905 numbered 14,000. When the agreement was made it was reckoned that by 1911 that staff would have risen to 23,000 or 24,000. Owing to dismissals and the lack of constructive work during 1907–8–9, that staff is now at a figure pretty well known, and, therefore, the Telephone Com- 78 pany have worked with a minimum staff. It will therefore be simple justice to the staff, and no detriment to public service, to put them upon the established staff of the Postmaster-General. May I put very shortly—because I do not want to go to-day into details—the claim for establishment of the Telephone Company's staff? I give it at the earliest possible moment in order that the Postmaster-General may consider the matter between now and the Second Reading of this Bill. I think the desire of the staff is not quite so extreme as the Postmaster-General put before us this afternoon. I gather his idea of the wishes of the telephone staff is this: that everybody, irrespective of their service, should be taken into the staff of the Postmaster-General; and, irrespective of whether they had contributed to the pension fund or not, should have their years of service counted for pension purposes? That, I think, is what the Postmaster-General said this afternoon.
§ Mr. HERBERT SAMUELIf put into an established class?
§ Mr. JOYNSON-HICKSIf put into an established class, yes. I thought the right hon. Gentleman put before us this afternoon that it was the desire of all the members of the staff, irrespective of whether they are put upon the established class or not, to have their service counted for pension purposes.
§ Mr. HERBERT SAMUEL dissented.
§ Mr. JOYNSON-HICKSThen I think there is not much between the Postmaster-General and myself upon that point. May I then put what I consider the claims of the telephone staff? I think the Members of the House, when they come to consider it, will not feel the demand unreasonable. Members of the company's pension fund— that is, that those 2,000 of the company's staff who have been continuously in the office for at least two years, ask that they should be transferred to pensionable offices in the service of the Postmaster-General. I do not use the word "establishment" there, because so far as I can make out, this mysterious word "establishment" has different meanings—one from a pension point of view and the other from the general service point of view. Therefore the first point those members who to-day are members of the pension fund wish is that they should be transferred to offices in the Post Office, or a 79 class of office in the Post Office which carry with them pensions, so that a man or woman who is now working for his pension, paying money for it, may go on from the moment of transfer working for a pension under the Postmaster-General. The Select Committee of 1905 recommended that, and it was enforced by Lord Stanley. I feel that there there will be no difference between the Postmaster-General and his new staff upon that point.
Secondly, that the members of the staff who have been pensionable in the company's service for at least two years, and who, if in the Postmaster-General's service would have been in a pensionable position, shall be transferred to a pensionable position. To that I am not quite sure the Postmaster-General would at the first blush agree, but I think the House will see that it is a reasonable proposition. It has not been declined by the Postmaster-General, and I understand it is still open to discussion between the Postmaster-General and his advisers in the Post Office on the one hand and the telephone staff on the other. I trust he will see that those of the staff who are now in a non-pensionable office, but doing work which will be pensionable work in the Post Office, will be put in a pensionable office as soon as they go over to the service of the Postmaster-General.
§ Mr. HERBERT SAMUELThey are a very large number.
§ Mr. JOYNSON-HICKSThirdly, that members of the staff performing duties similar to those performed by members of a pensionable office should be transferred to a pensionable office. That is practicably the same point. The Postmaster-General told us that with the National Telephone Company the pension service began at £100 a year. There are to-day a considerable number of operators who are earning upwards of £90 and getting near to the point when they would get into the pensionable service. With probably the next rise of salary they will become members of the pensionable staff. Those operators when taken over should be put into the pensionable service. I come, lastly, to a point dealing, not merely with pensions, but with the whole question of past services. The National Telephone Company's employés ask that the whole of their past service when they are taken over by the Post Office shall be counted as if it 80 were service in the Post Office. That does not involve that everybody who is to-day working with the National Telephone Company should have his past service counted for pension purposes. What it involves is that a worker who to-day is working in a pensionable office for the National Telephone Company should have his past services counted for pension purposes, but if he is not working for a pension his past services should still be counted for everything other than a pension—for the purpose of seniority, for the purpose of holidays, sick leave, and so forth. There are rules in our Civil Service relating to matters apart altogether from the question of pension. I make that suggestion I think rightly on behalf of those 18,000 persons who are being taken over by the State, and who have been working for what is practically a national service all those years. The Postmaster-General has never suggested that they ought not to be taken over. He has spoken in the very highest terms of the work and capacity of the 18,000 employés of the National Telephone Company, and in common justice, when they are taken over they should be put on exactly the same footing as if their past years of service had been service for the State instead of service for the National Telephone Company. That is not an unreasonable demand, and is not a demand without precedent. It is a demand which this House has recognised on many occasions. When the Water Board was constituted in 1902 the whole of the past services of the employés of the different water companies were counted by the new Water Board. Then there was the case of the Port of London Authority, created three years ago. When the Chancellor of the Exchequer made that bargain with the dock and port authorities the whole service of the employés of Docks and Port Authorities in London was counted as service under the new Port of London Authority. Then, as the Postmaster-General said, there is the precedent when the telegraph service was taken over.
But there is a more important precedent still, and I call attention very especially to it. It is the precedent of the submarine companies who were taken over in 1889. When these companies were taken over by the Post Office this Clause was not given to their employés. What was the result? The result was continuous agitation amongst those who were becoming, and did become, servants of the State. The continued unrest of those servants of the 81 submarine cable companies taken over continued until 1897 when this House passed somewhat tardily an act of justice, giving those persons exactly what they asked in 1889, and what I am asking for the servants of the National Telephone Company—the right of counting their past services with the private company when they are taken over by the State. I venture to suggest that unless that right is conceded to the Telephone Company's employés exactly the same position of affairs will arise as occurred in the case of the submarine telegraph employés in 1887. You have 18,000 people going over to the service of the State, with many of their points granted by the Post Office I admit, but without having had settled the great point as to past service, which does not mean only pensions but which means seniority, sick leave, holidays, and in effect, their position in the public service. You will have 18,000 men and women with that grievance. You will have, I do not like to say discontented servants, but servants not as contented and as loyal as you would otherwise have. I venture to submit it would involve no additional cost, or a very small additional cost indeed, to remedy the grievance. I suggest to the Government that we should grant this act of justice, an act which I have shown the Committee is entirely in accordance with recent precedent, and which would I think make the 18,000 additional servants of the State thoroughly contented and thoroughly satisfied with their position.
§ 6.0 P.M.
§ Mr. HELMEWe have listened with sympathetic interest to the lucid statement of the Postmaster-General, and I think he may be congratulated on the fact that he has carefully considered the various points that have been pressed upon him and his predecessors during the past six years, since the time that the Select Committee recommended to this House the purchase of the National Telephone Company's system. Having served upon that Select Committee I would just like to press upon the Government one or two points which were carefully considered by that Committee, namely, that we should under the Post Office develop a system of the highest level of efficiency at the lowest possible cost, and thereby give to the public the opportunity of extended use of the telephone, which is so essential to the national and domestic interests of everyday life. When evidence was brought before the Committee it was urged that munici- 82 pal management would secure cheaper and at the same time as effective a service as could be desired, and it was with regret that some of us heard from representatives of the Post Office the opinion expressed that the extension of the system under the Post Office would not necessarily lead to a reduction of charges. Evidence was brought that on the Continent lower rates were charged than had been adopted by the National Telephone Company, and it was pointed out that if Sweden could have a subscription rate of £2 15s. 6d. per annum for a private service, extended to those requiring it for business purposes with the addition of a small entrance fee, surely we might hope that in England a service could be developed that would allow domestic interests of life to be further considered. Then, again, we had evidence that in Stockholm they had a service radius of forty-three miles—eighty-six miles in diameter — for which the annual charge of only £5 a year was made, including trunk charges. A very important principle lies in the question of whether the flat rate shall be charged or the measured rate. I venture to urge that it is not the dislike of the measured rate system that has caused such strong expressions of opinion to be brought before the Government as the fear that the charges shall not be at the lowest reasonable cost. It is, therefore, with great satisfaction we have heard the statement of the present Postmaster-General confirming the statement made by his predecessor to a deputation that waited upon him that the Government would, when taking over this great undertaking, make it, as has been expressed to-day, their first object to develop the department for the advantage of the subscribers in the first instance, having regard to the commercial and financial interests of the undertaking, rather than make it a profit-raising department for the relief of the charges of the State and the reduction of taxes. I have been a party to the consideration of the matter by representatives of municipalities and Chambers of Commerce on various occasions, and I was glad to hear the promise given by the Postmaster-General this afternoon that after he had taken over the undertaking and worked it for some time and formed a correct judgment as to its cost he will then in facing the arrangements of charges, if they are proved not to be satisfactory, call to his assistance in these matters the representatives of Chambers of Commerce and other public authorities of the country. The one feeling held by the commercial 83 classes was in favour of a flat rate. It was stated in evidence before the Select Committee that in Glasgow a flat rate of £5 5s. provided all that was necessary for the ordinary commercial subscriber under the unlimited system. If the Postmaster-General can work out a system that will allow the subscription to be reduced it will be welcome news to the commercial classes in face of the fear that is so firmly held that the rates are going to be increased to a prohibitive amount. If the interest upon the invested capital and a sum sufficient to cover the sinking fund, if that is arranged for, then, after all, due regard will have been given to the solid financial interests of the country for advancing and securing the money. I think the users of the telephone system have the right to expect lower rates.
No one is prepared now to advocate the development of the municipal management of telephones. Years ago that view was strongly held on the ground of economy, but it is expected now, under the capable administration of the Post Office Department, we shall have the advantage of a system which will give the highest possible results at the lowest possible cost. Therefore, I think, the Postmaster-General is justified in rejecting the proposal of the Select Committee that nothing should be done in regard to purchase between 1905 and 1912 to prejudice the ownership and management of any telephone installation. We are justified now in giving up the principle of municipal exchanges, and I think the Government is right in refusing to hand over to any other authority the management of this great and important Department, seeing that it is so interwoven with the telegraph system. The Postmaster-General has referred to the interchange-ability of the system in regard to wires and the use of poles and subways, and evidently he is justified in embarking upon this scheme. I think he has fully considered the public interest in all its bearings, not only with regard to general management, but in regard to the treatment of the officers of the National Telephone Company, who will no doubt feel that the Government intend to give them just and sympathetic consideration in regard to any claims they may fairly make upon the Government.
§ Mr. STUART-WORTLEYI have one or two questions which I wish to ask the 84 right hon. Gentleman. Probably he will remember I was the Chairman of the Select Committee on the agreement of 1905. I wish to ask when shall we have the advantage of seeing the Bill in print, and is there likely to be any long delay in circulating the Bill in its printed form? Perhaps the right hon. Gentleman will also state in his reply how he proposes to deal with the recommendations about medical examination of the staff. That is one of the principal subjects for which members of the stall have shown anxiety in their correspondence with me. The decision of the Select Committee was that consideration should be shown to municipal telephones, although that was a decision in which I did not personally concur. I am glad that the Postmaster-General has taken a bold course, and has done what was foreseen by those who had carefully considered the matter would be the right course, and has decided to make a uniform system. It is obvious the service must be uniform all over the country; it must have the support of the public, and as it will be financed by public money, it must be under the direct management and control of a Minister responsible to this House, who must ask for and receive from time to time a renewal of the confidence of this House. I think on the whole the policy which the Postmaster-General outlined in his speech, from the point of view of the public, is satisfactory. I hope when we see the Bill we shall find that a full measure of justice has been done to the servants of the National Telephone Company, whose rights ought to be fully safeguarded, and who ought to have secured for them the rights they had under the agreements sanctioned by Parliament and recommended by the Select Committee.
§ Mr. MORTONI am glad to know that the Postmaster-General practically proposes to take over the whole of the staff of the National Telephone Company. With regard to superannuation and pensions the right hon. Gentleman has sketched out to-day a fair offer. Something has been said about the establishment of a telephone authority. I can quite understand there is a great deal to be said in favour of a municipal authority for telephones. Up to the year 1905 there was a strong feeling in this country—especially in the London telephone area, where we had a number of meetings in the City of London, representing the local authorities of that area—in favour of the establishment of a municipal authority. There is a 85 great deal of difference in a municipal authority and the authority which has been suggested in this Debate. The municipal authority usually sits with open doors, and they have to go to their constituents now and then. In the City we have to go to our constituents every year. I have watched some authorities like those which have been suggested, and the first thing they do is to shut the door to the public and the Press, and keep everything as dark and secret as possible.
There is no comparison between an authority of that kind and the Post Office Department under the control of the House of Commons. Under the system suggested by this Bill we can, by questions, and occasionally by debates on the Postmaster-General's salary and other occasions, actually bring to bear upon any particular case everything that is necessary, but we should have no such power with the authority which has been talked of, and I am glad the Postmaster-General has satisfactorily disposed of this question. I am quite in favour of the right hon. Gentleman making a profit out of this business if he can, and there certainly ought not to be a loss. There is a general feeling that the cost of using the telephone might be considerably reduced. No doubt the City of London was in favour of a flat rate, and we think in the London telephone area we ought to have an unlimited user for a rental of not more than £10 per annum. That would probably pay the Postmaster-General as well as anything else. I know the charge must depend upon the purchase price, and that has got to be settled. We all know that the enormous purchase price of the telegraph system ruined the whole affair. I have hopes that the settlement of this question will show that we have not paid too much for this undertaking.
There are two other questions which I desire to put to the Postmaster-General. In the first place, I wish to know what Committee he proposes to send this Bill to? Some questions have been raised by those interested in the City of London in regard to easements, and unless there is some means other than a Committee of the whole House we shall have no means of bringing these matters forward. What Committee does the right hon. Gentleman propose to send this Bill to? The Postmaster-General stated that the Department had spent £5,000,000 since 1905 on the construction of telephone exchanges in 86 London and elsewhere. Will the right hon. Gentleman tell me how much has been spent of that total in the London telephone area as distinct from any other area? I recognise that Parliament has already settled that the telephone system should be bought, and we are only settling to-day the question of how to find the money. I know we could stop the whole business by refusing to find the money, bur we are not likely to do that after the long discussions which have taken place upon this question.
The question of easements and the position of the telephone users after the system has been taken over by the Postmaster-General are questions which we ought to have an opportunity of discussing before this matter is quite settled. I have spent a great deal of time with the local authorities who have been considering this question during the last fifteen years, and there is no doubt that the telephone system should be developed in the best interests of the people. The Government must settle this question as soon as possible. I hope it will be settled, not in the interests of speculators and adventurers, but in the interests of the business of the country. I am sorry to hear to-day that the Americans are so far in advance of us in this matter of the telephone. We pride ourselves, I suppose, on being as much advanced as other people, but it is worth while bearing in mind, now we are told that the Americans are a long way in advance of us in their telephone service, that the service there is under a private company and that they are obliged to look after their customers better than a Government Department. I congratulate the Postmaster-General on having nearly completed this purchase, and I hope he will satisfactorily settle all the details, and that he will not be obliged to pay too much for his whistle.
§ Mr. PETOI want to point out two or three things which the Postmaster-General omitted altogether from his speech. He referred to the experience of the Post Office in the management of telephony since 1896, and he admitted the trunk wire system was not perfect. He went on to refer to the main allegation that the Post Office authorities would probably make a failure of the management of the telephones, because the telegraph system was at present run at a loss. The Postmaster-General did not refer to an argument which is very much stronger than any 87 analogy. I understand the proportion of running expenses to revenue of the telephone business they had managed since 1896 is 74.4 per cent., whereas the proportion of running expenses to revenue of the National Telephone Company is only 58 per cent. Another point which seems to me more important than the loss of £1,000,000 a year on the telegraph system is the question of what profit these two telephone managements have made. We have had a little discussion as to what is a reasonable profit. I understand the profit on the telephone system managed by the postal authorities have been on an average 3½ per cent., whereas, leaving out of account the payment of royalties by the postal authorities, the profit made by the National Telephone Company is very nearly 9 per cent. That seems to me very much more to the point than the question of the loss on the telegraph system.
There is one point to which I should like to call attention with regard to the loss on the telegraph system. The Postmaster-General gave four reasons why that loss was annually incurred. They were very excellent reasons. He laid stress and emphasis on the fourth. I took a note of it. The principal and fourth reason he gave why the telegraphs did not pay any longer was the great telephone development in the country, and he especially pointed out that the telephones were taking up all the short telegraph business. That seems to me a fairly strong reason why the huge future development of the telephone system should not all be put in charge of the postal authorities of this country. They are running the telegraph business of the country, one of the principal handicaps of which is the competition of the telephone. If we are to have a vastly more efficient and extended telephone system, the telegraph business of the country will be worse and worse, because the two are obviously in competition with each other. Every hon. Member knows perfectly well there are many old-fashioned people, apart from business people, who will not be bothered with a telephone, and who prefer to send a telegram, and, of course, when you look up your Exchange Book, you find a great many of your correspondents are not on the Exchange at all. The Postmaster-General proposes an enormous development of this system, which is probably going, in a large measure, to kill the telegraphs. Therefore, if only for that reason, 88 I should like to see a telephone authority set up in this country whose sole business it would be to watch over the development of the telephone system and to bring it up to a standard of efficiency similar to that which obtains abroad and make it of the same amount of use to the people as the telephone system is, for instance, in the United States of America.
I want to say a word or two about the comparison with the United States of America, which is constantly made by the Post Office in their literature. I understand in America there are seventy-six telephone subscribers per thousand of population whilst in this country there are only fifteen per thousand. It is obvious we have a great deal of leeway to make up before we arrive at that standard. The Postmaster-General, in addressing a deputation on 27th February—I was pleased to note he said the same thing to-day—said he looked forward to a development in the telephone system, two, three, or fourfold. I do not think the Committee ought to leave the subject altogether before they have a definite idea of what the development of our telephone system four-fold really means. The Postmaster-General told us we have 638,000 telephone exchanges at present in this country. If you multiply that by four it means over two-and-a-half million telephone exchanges, and, even if we have two-and-a-half millions, we should not have anything like the number they have in the United States of America in proportion to our population. We should require to have 3,192,000 telephone exchanges in this country to arrive at the same stage of development as the United States have arrived at to-day. I emphasised the word "to-day" because we have had no indication from the Postmaster-General as to how many years this multiplication by four in our telephone service is going to take. That is an important point, and one which I think will interest the hon. Baronet the Member for the City of London (Sir F. Banbury).
The Committee ought to realise the capital expenditure involved. If we are to have two-and-a-half million telephone exchanges it will mean an investment of £75,500,000 sterling, and if we are to get up to the United States standard it will mean an investment of a long way over £100,000,000. Therefore, the question of what is a reasonable amount of interest or profit is one eminently to the point, and I want to carry the Committee back to the comparison I gave between the rate of profits earned by the National Tele- 89 phone Company, a private company, on its undertaking, and the rate of profit earned on the relatively small capital now invested by the Post Office in their part of the undertaking. A private company that can show a record of management yielding nearly 9 per cent. of profit is an authority, or company, or whatsoever it may be, that is most likely to be easily able to raise a huge capital of seventy-six-and-a-half millions or a hundred millions. Those are points which certainly ought to be considered in authorising the expenditure. I notice Mr. Faithfull Begg said he did not believe the Postmaster-General had any real conception of the magnitude of the undertaking. He quoted the case of one of the officials of the Post Office, a Mr. Lee, who said at Liverpool:—
It is almost appalling to think that the trunk service, purchased in 1896 for £450,000, now stands at £5,500,000 of capital.The development in fourteen years so far is a mere flea bite to the development we are to go in for if we are to come up to modern requirements or the telephone service of the United States of America. I now want to deal more with a detail point. Everybody admits that the success of the telephone system of this country must depend upon its efficiency and upon the degree with which it meets the popular demand. I want to see what indication we have of the Post Office conception of efficiency, and of meeting the popular demand from what the Postmaster-General held out as one of the great improvements he is going to bring into force in the present year. I refer to the Farmers' Telephones. By the courtesy of the Assistant-Postmaster-General, I have received one of the green circulars sent out, and I must admit the advantages set out in that green circular to farmers and residents in rural districts are really most attractive. The farmers understand they can get a telephone for £3, provided, among other conditions, there are five subscribers, and the advantages set out in the circular include latest information of market prices, the opportunity of making arrangements for the sale of their produce and stock, calling in the doctor, calling in the veterinary surgeon, calling in the fire engine in case of a fire, arranging with the railway company as to sending off their produce, and, finally, making arrangements with their friends and neighbours when their work is over, I suppose of a social character.I want to take a concrete case. We all want this thing to be a success, and I 90 take a concrete case to see how many of these advantages held out in the green paper the farmer will get for his £3 a year, and I find the sole advantage in the ease of Ramsbury, a village about which I have had a good deal of correspondence lately, will be the last one, the opportunity of communicating with his friends and neighbours. I have had a letter from there. They perfectly understand the point, and they say, if they want to communicate with their friends and neighbours, they can open the window and shout across the street, and they do not, therefore, want a telephone for that purpose. They do want a telephone, however, to call the fire-engine, the doctor, or the veterinary surgeon, and they do want to communicate about market prices and the sale of their stock and all the other things. There is not yet a telephone exchange at Ramsbury. It is proposed to form one, and I received a letter the other day in which the Assistant-Postmaster-General said a sufficient number of subscribers has been obtained, and a telephone exchange will shortly be arranged. Ramsbury lies about four and a-half miles from the railway station at Hungerford, and six miles from Marlborough, the nearest market town. The nearest firestation and the nearest veterinary surgeon are at Hungerford. All these are outside the range of the exchange to be instituted. I mention that, although it may appear to be a matter of detail, because I want to appeal to the Postmaster-General to introduce a more liberal, and, I think, a more business-like system in starting these farmers' exchanges. The Postmaster-General, in his speech, said the telephone area ought to have a town for its centre. That is exactly my complaint. It is true, in the case of Ramsbury you can exchange one call to Hungerford, the nearest place, for two calls, to which you are entitled for your subscription. In the case of Marlborough it costs more.
I say the telephone will be practically of no use to the farmer at this £3 subscription unless it puts him into communication with his nearest market town, the nearest railway station, the place where are to be found the veterinary surgeon and the fire engine; in communication indeed with all the people who he is likely to have to call up in the course of his business. He would not be satisfied to pay the £3 a year if the only privilege will be communicating with his immediate friends in the neighbourhood; the system must be made more generally adaptable for the use 91 of farmers. The Postmaster-General said that as soon as they knew what they were going to pay for the National Telephone Company's system they would go into the question of the revision of rates. He quoted an example, I believe it was in Liverpool, where a man got telephone calls at the rate of twenty-five for a penny. I quite appreciate the point he desired to make, but what I want him to make clear is this: When the Post Office takes over the telephones are we to understand that existing agreements will be allowed to run out their full period, or will it be necessary, in the case of subscribers, say, for one year, to have their contract terminated on 31st December and to enter into a fresh agreement on 1st January? The same question also applies to deposits for calls which have to be paid in advance. I desire to ask whether these will automatically and smoothly transfer themselves from the National Telephone Company to the postal service? Whether we are likely to get this huge development of the telephone system of this country or not is quite open to doubt. We are asked to compare ourselves with the United States. I do not suppose any hon. Member of this House would think that that was necessarily an absolutely perfect comparison. Nearly all the conditions of trade in America run on exactly opposite lines to those in this country. Personally I believe the Postmaster-General is a very good prophet. I believe we shall have a development of agriculture and trade in the near future which will admit of a huge development of the telephone system because we shall, in the very near future, get rid of a fiscal system which atrophies all agricultural development.
§ Mr. FALLEI have listened with great interest to a speech which seems to me to be generous, if I may say so, inasmuch as the Postmaster-General appears to be willing to treat the employés of the National Telephone Company generously. If we wish to have good servants we must make them happy and contented. I trust, when we come to read the speech and when we see the Bill, that this impression will re main. When the right hon. Gentleman spoke of the pensions that these officials will take up, he said there were two alternatives. He said they might either take their share — I suppose that means cash value with interest—and then start afresh with two years' credit to their service, or that they might surrender their share and 92 get a State pension. Of course that State pension would not be less than the pension they would enjoy under the National Telephone Company. He also said they would be taken on as Civil servants; that they would not lose their seniority, and that they would not be placed in a position in any way inferior to the one they occupied under the National Telephone Company. That is all I wish to ask in regard to the National Telephone Company's servants. Now I want to inquire as to municipal rights in telephones. I want to know as to their rights in regard to trunk calls, and as to the upkeep of the telephone poles. It would be an advantage to Portsmouth if it were allowed to purchase the Government system of telephones and work it especially to the island of Guernsey, where the rates are very much cheaper than on this side. If Portsmouth thinks it can run the telephones cheaper than the Post Office, I do not see why it should not have the right to do so. I should like to ask the right hon. Gentleman to give me some idea of the terms on which he would be prepared, first of all, to allow Portsmouth to buy the rights in the Post Office telephone there, and, secondly, what he would be prepared to pay for the municipal rights?
§ Mr. DAVID MASONI wish to ask the Postmaster-General: (1) Is the Postmaster-General aware that the National Telephone Company refuse to increase the number of exchange lines connected with subscribers' inter-communication switch-beards in the country unless these subscribers are willing to change their old "unlimited" rate system to the new "measured rate" system while allowing same to their London subscribers? (2) Whether the coercion of subscribers in this way, which, if successful, would largely increase the cost of the installation, would have any effect on the price the Government is ultimately called upon to pay the company? The right hon. Gentleman has told us it is a very expensive matter. Naturally if you cut down the unlimited rate and put people on the measured rate system it will increase the cost. If the cost is increased now it will probably lead to an increased price under the arbitration when the whole plant is taken over. Perhaps the Postmaster-General will be able to answer these questions. I wish to congratulate him on the very admirable and businesslike statement in which he has placed his resolution before us.
§ Mr. SNOWDENI rise simply for the purpose of associating myself with the remarks which have been made by hon. Members on behalf of the staff of the National Telephone Company. I had not, the privilege of hearing the Postmaster-General's statement, but I am given to understand that in this matter it was very satisfactory. I certainly hope he will give the servants of the National Telephone Company not only justice, but that he will, as he can afford to do, treat them generously. I wish to raise one question with regard to a certain class of National Telephone employés—the contract managers—who are very much disturbed by a rumour which has been circulated to the effect that they are not to be taken on to the established staff. These are men with positions and salaries ranging from £150 to £300 a year. They are positions of considerable responsibility. The holders are in contact with the public and have the supervision of the commercial side of the business. They are men who have been promoted from positions which are to be placed on the established class, and they consider it would be very unfair if, in consequence of having some special aptitude they are to be made to suffer in this way. I hope the Postmaster-General will be able to give me some assurance that their claims will be considered.
§ Mr. HERBERT SAMUELA considerable number of questions have been asked by various hon. and right hon. Gentlemen, and I will endeavour to answer them seriatim. The right hon. Gentleman the Member for East Worcestershire inquired as to the form of securities to be issued by the Treasury in payment to the National Telephone Company where it is to be otherwise than in cash. The original agreement between the Postmaster-General and the National Telephone Company was that these payments should be made in the form of annuities. The Company has since made representation to the Treasury that these annuities are not of a character easily marketable, and that they would prefer payment in the form of exchequer bends. If the company treat the Post Office well in regard to the transfer we shall be prepared to meet their views in regard to the security. There is a very small question of money involved. We take power in the Bill for the Treasury to issue annuities, or in lieu thereof exchequer bends repayable in a period of not more than twenty years. A number of hon. Members have raised questions 94 in regard to the staff, and before I proceed to answer them I should like to make one point clear. I said that in certain circumstances employés of the company would have two years' service added to their service to the State to qualify for pensions. I should have mentioned that that, of course, only applied to those who had been in the service of the Company for two years or more. If a person cornea into the service only a week or month before the transfer obviously he or she would not be entitled to add two years to the State service, but any less period than two years will be added to the service in that case. If such a person has been in the service of the company one year one year will be added, but if he or she has been in the service two years or more then the full benefit of the bonus will be receivable.
The hon. Member for Brentford (Mr. Joynson-Hicks) suggested that all these undertakings which I have given should be embodied in the Bill, and not rest merely upon the basis of a Parliamentary statement. Many of them are of a character which it would be exceedingly difficult to put in the form of a Clause in an Act of Parliament without making it a very long Bill. We are putting into the Bill all that requires legislation, and with regard to the rest in Parliament a Minister's word is as good as his bend, and just as I am honouring all Lord Stanley's promises and going somewhat beyond them, I have no doubt that any successor of mine would fulfill any undertaking given by me across the floor of the House. It is the practice for the Ministers of the day to give undertakings without it being thought necessary that those undertakings should be embodied in an Act of Parliament. I can assure the hon. Member, however, that they will receive equal attention.
The hon. Member asked which of the company's servants will be established when they are transferred to the State, and the answer to that is those of the company's servants who will be doing work which is being done by classes already established, that is the obvious line of distinction— those who are doing the same work as classes already established. When employés come into the service to do the work of a class already established, then they will be established. He put forward some claims on behalf of the staff. The first is that those members of the staff who are now pensionable by the company should be pensionable when they are taken over 95 by the State. The hon. Member for Blackburn also raised this point. I made it clear in my speech, or I endeavoured to do so, that almost all those who will be pensionable under the company will be pensionable under the State, and those who are not will receive an equitable addition to their salaries, which will compensate them for not having pension rights. In one way or another they will be fairly and equitably treated. It is impossible to put the solicitors and their clerks upon the establishment. If it were done it would be necessary to put all the Post Office solicitors on the establishment, then other Departments which have got solicitors must also have all their solicitors and all their staff put on, and the Treasury, for various reasons, object to that. There was a rule established after very full consideration a few years ago, for various reasons into which I need not now enter, to the effect that the clerks of the solicitors of the departments should be regarded as unestablished. Those clerks who are taken over will receive conditions which will compensate them as individuals for not being established officers of the Crown, and the same will apply to any other individuals. I may say in regard to some of them these conditions have not already been decided, but in one way or the other they will receive favourable treatment.
§ Mr. JOYNSON-HICKSAre the solicitors and their clerks the only officers who will not be put on the establishment?
§ Mr. HERBERT SAMUELIt is in question whether certain classes which are not now established in the Post Office might not be brought within the established system. That is not yet decided in two or three cases, and therefore it is undesirable for me to mention particular classes, because it is possible that one or two classes not yet established may be established. On the other hand it is conceivable they may not. This is a matter which is still under deliberation, but if they are not placed on the establishment those particular offices will receive a compensatory allowance. The hon. Member also asked if men doing work for the company which would be established if in the Post Office, will be established when they come into the Post Office. I have already made it clear that they will be. Then Tie raised the question that all past service should count as Government service, whether a man is on the pension fund or 96 not. That I dealt with fully in my speech, and I stated that it is argued that the State should pay pensions in respect of service which is not theirs and which is not pensionable under the company.
§ Mr. JOYNSON-HICKSThat is a point I may have misunderstood in the right hon. Gentleman's speech, and my point was not that past services should necessarily count for pension, but that past service, if it were pensionable service, should count in regard to a pension.
§ Mr. HERBERT SAMUELI will deal with that, but I think the hon. Member was also dealing with the position, so far as length of service is concerned, and so far as privileges are concerned which depend upon length of service—seniority, amount of annual leave, and so on—and was asking that service with the company will be regarded as though it had been service with the State. It will so count for those purposes. The right hon. Gentleman opposite the Member for Sheffield asked when, the Bill will be introduced. It will be formally introduced as soon as I get this Resolution, and I hope that may be to-morrow. Then the right hon. Gentleman also raised the question of medical examination. There will be no medical examination for the servants of the company, and neither will there be any literary examination of the type which is demanded before entrance into the Civil Service. Persons who have got a very unsatisfactory sick leave record' in the immediate past will, of course, be exceptionally treated. The hon. Member for Sutherlandshire asked me what Committee this Bill would be sent to, and in reply I may say that I was hopeful that it might be taken in Committee of the Whole House. With regard to that, however, my right hon. Friend the Patronage Secretary will undoubtedly consult the convenience of Members of the House. I understood the hon. Member to ask one particular question as to assessments in the City. I am discussing that question to-morrow with a deputation of City proprietors and owners and possibly some decision may be arrived at. That and other points of a minor character can, of course, be better and more expeditiously settled behind the scenes than in the House or in a Standing Committee. The hon. Member asked me how much was spent by the Post Office on London exchanges. Up to 31st March, 1910, the amount was £3,630,000. By far the greater part of the expenditure 97 of the Post Office on local exchanges was in London. The hon. Member also commented upon the fact that the Americans were so much in advance of us in respect to telephony, but I ought to have mentioned that there are several particulars in regard to telephones in which we are ahead of them, such as sending express messages by telephone and telegrams. There are many matters in which they would be able to profit by our example, and do contemplate profiting by it, so that the comparison is not entirely against us.
§ Mr. MORTONWill the right hon. Gentleman allow me to say that I sent a message across to Detroit only last autumn and it was telephoned to the man.
§ Mr. HERBERT SAMUELThe hon. Member for Devizes raised a point as to the amount of our profits compared with those of the company, but he should remember that so far as the local provincial exchanges are concerned the company had the whole of the cream of the country and the Post Office starting later secured only the inferior districts. Many of them the company would not take, and if we were to consider commercial profit alone the Post Office would not deal with these districts. But we have to consider the public interest and whether we can by making some sacrifice at the beginning develop a good and useful service in years to come. I am not quite sure that I accept the figures given as accurate, and I shall therefore enter a caveat in respect to them. Again the hon. Member raised the contention that because the Post Office was interested in the telegraphs, which are contrary to the interests of the telephone system, therefore it may be expected to hold back telephones so as to prevent their interference' with the maintenance of telegraph revenues. That is a contention which has been already advanced in a pamphlet which has been circulated to Members of this House, but I am quite convinced that the idea is wholly unfounded. It makes not the smallest difference to the Post Office whether telegraphs or telephones are most useful. Our sole interest is to serve the public. I protest against the idea that the Post Office cannot be trusted to do justice to the telephones on account of a desire to protect the interests of the telegraphs. The hon. Member for Devizes asked me how many years it would be before we secured the full development of telephones to which we 98 looked forward. That must, of course, depend upon two things—upon the rates to be charged for telephones and upon the efficiency of the service. The rates to be charged depend a good deal upon what we shall have to pay the Telephone Company, and, therefore, we have every reason to hope that the price will not be an excessive one. The lower the price is the more cheaply shall we be able to supply the service to the subscribers and the more rapid will telephone development be. It is impossible for me to give any accurate forecast in regard to any particular number of years when one is dealing with conditions so uncertain.
§ Mr. HERBERT SAMUELWe anticipate that there will continue to be satisfactory development in trade, industry, and manufactures so long as we maintain our existing Free Trade system. The hon. Member also inquired whether existing agreements would be allowed to run out, or whether there was any prospect of their being suddenly cut short, if there is a revision of the rates. There is no power to terminate an agreement which has been made for a term of years, and we do not propose to take any new powers. An agreement will run out its natural period; most of them are terminable on a notice which is brief. I am also asked if new agreements will be necessary after 31st December. No, they will not be necessary, but will continue on the same terms. The hon. Member for Portsmouth asked with regard to pensions. He said he assumed that the pensions which would be received by the employés of the company would not be less than what they would receive if they remained with the company. The general system of pensions by the State is considerably more generous than that of the company, and, further, we make no deduction of 2½ per cent. as the company does. I am not in a position to say that no case would occur in which a man may not lose by sacrificing his existing pension rights and taking State pension rates, but then he is not obliged to do that. It is left to his own decision whether he will retain his share of the existing fund or transfer it in exchange for the State rates. The hon. Member asked me a question with regard to the details of the terms on which I have offered to 99 purchase the corporation system in Portsmouth. The matter is exceedingly detailed, and I think perhaps he has not seen the correspondence. I will send him a copy rather than endeavour to deal with the matter across the floor of the House in minute detail. In answer to the hon. Member (Mr. D. M. Mason), the profits earned by the company have no relation to the sum which will be paid to the company. The company will be paid simply for the value of their plant, including land and buildings—so much for poles, insulators, and so on per thousand or million, as the case may be, and the amount which they receive from their subscribers will not have any bearing on the price which we pay. The scale of pensioned rates was settled before my time in an agreement between the Post Office and the company, and I am afraid I am not acquainted with the reasons why a preference was given to London, but I will inquire into the matter. I have not gone into it closely, because I decided some time ago that it is quite impossible to disturb existing rates until we know what the general scheme is to be. It will not do to make a small change on 1st of January next year, and then perhaps within a few months to make a second change and put people on another scale of rates. It is necessary to make one alteration at one time, therefore I have not gone closely into the point about which the hon. Member asked me. It only remains for me to thank the Committee very cordially for the reception which they have given to this Resolution.
§ Mr. PETOCould the right hon. Gentleman say something in regard to the small rural areas and the use of the telephone by farmers, and whether they can communicate with the nearest market town and the nearest railway station?
§ Mr. HERBERT SAMUELThe question is what is to be the area of the exchange— that is a question which must be decided on merits in the particular case. If the village is a very long way off from the town it will not be reasonable for the farmer to pay £3 a year to have connection with a distant town. It must depend to some extent on the situation of the particular village. We cannot lay down any definite rule. We cannot say that every farmer shall have a telephone to a fire engine. It must depend where the fire engine is. In the hon. Member's case I understand they have arrangements already made by which 100 they can communicate without extra charge to the market town, one call to the town being regarded as equivalent to two local calls.
§ Mr. HERBERT SAMUELI do not think it is possible to lay down any universal principle, but I will look closely into the matter, with special reference to the case that the hon. Member has mentioned. I quite see that facilities are desirable if the exchange is situated in a village, but even if it costs 2d. I should think it is worth while to telephone to the fire engine or to inquire the market rate of the day.
§ Mr. JOYNSON-HICKSI should like to ask whether, in regard to this question of the staff, the right hon. Gentleman will circulate with his Bill a memorandum stating exactly what their position is. At present the staff has to pick out, partly from the right hon. Gentleman's speech at a dinner, partly from the letters of his secretary, partly from Lord Derby's speeches, and now from his speech to-day, exactly what their rights are to be. That is, of course, unsatisfactory.
§ Mr. HERBERT SAMUELI am much obliged to the hon. Member for his suggestion, and I will gladly adopt it.
§ Question put, and agreed to.
§ Resolved, "That it is expedient to make provision for other matters in connection with the transfer to the Postmaster-General of the property of the National Telephone Company."
§ Resolution ordered to be reported to the House to-morrow (Tuesday).