TELEPHONE CHARGES

HC Deb 23 May 1949 vol 465 cc893-962

3.38 p.m.

Captain Crookshank (Gainsborough)

May I raise a point of Order with you, Major Milner, before I start; and that is to express the hope that you will find it possible to allow a rather wide Debate on this Vote, not so much on the Post Office side—because this is not a regular Past Office Supply Day—but on the general financial side, as we are proposing to discuss the increased charge announced by the Chancellor in the Budget statement. Therefore, there are certain reactions with regard to the national finances as opposed to the administrative business of the Post Office.

The Lord President of the Council (Mr. Herbert Morrison)

I rather think the problem is solved in the direction that the right hon. and gallant Gentleman would wish. The House will remember that we were intending to proceed by Bill so far as the rentals were concerned. We have examined the matter further, and we find that it will be preferable, for various reasons, to proceed with it administratively, because contracts are involved. Therefore, the Bill will not be proceeded with, and so far as that aspect of the matter is concerned the consideration for ruling this matter out from the Debate on the ground that legislation is pending will no longer apply.

Captain Crookshank

That was not the point I was making at all. I happened to be aware of that fact and what I wanted to point out was that we desired to discuss the general effect of these charges on the general financial situation; indeed I warned the Treasury that that was our intent. I hope therefore that it will be possible to roam over a larger area than if the matter were a Post Office one.

The Chairman

In reply to the right hon. and gallant Gentleman, I would point out that this is an Opposition day and I understood that their wish was to discuss the question of telephone charges and rentals. It is true that the whole of the Post Office Vote is down and hon. Members would be strictly in Order in raising other matters. I hope the Debate will be restricted to the matter of telephone rentals and charges, and I must reserve the discretion of the Chair with regard to any substantial widening of the Debate although perhaps the Chair would not be too pernickety.

Captain Crookshank

We shall do our best. Before I start I should like to make it clear—

Mr. Scollan (Renfrew, Western)

May we have a point cleared up by the Leader of the House?

The Chairman

There really is no point of Order arising out of this. There had been some doubt as to the procedure by which the telephone charges and rentals were to be brought into force—whether it was by legislation or not—and that point has been disposed of.

Mr. Scollan

These increases are to be absorbed in the Measure we are dealing with today?

The Chairman

We are not dealing with any Measure today.

Captain Crookshank

I should like to make it clear why we have put down this Vote for discussion today. It is because this is the only opportunity that the House or a Committee of this House has got for taking a specific vote on the issue of the increased telephone and postal charges announced by the Chancellor of the Exchequer. To that extent, therefore this is not a Post Office Debate at all. It is incidental that these charges are on the Post Office services, but this Debate has nothing to do with the Post Office. It is really a Debate on part of our national finances for the year for which the Chancellor of the Exchequer took responsibility in his Budget Statement.

I must say that I am rather distressed not to see any of the Treasury Ministers present, because I specifically asked that one at least should be in attendance. Indeed, this is their business and not that of the Postmaster-General. I hope that I am not in any way derogating from the position of the Postmaster-General, but I am perfectly certain that an increase of the charges of the nature proposed in the Budget is something completely contrary to the normal policy of the Post Office.

I can say that with all the more authority having been four years at the Treasury and two and a half years at the Post Office. Therefore, I have some considerable background information of Post Office views in matters of this kind which I do not suppose have been completely revolutionised under the present administration. I do not promise it to the right hon. Gentleman here and now, but it may very well be that during the remaining Supply Days we might want a general Debate on the Post Office, though that is not in issue today. I do not propose to discuss, for example, salaries, wages and all the other problems which one would discuss on such a Debate.

I want to limit myself to a discussion why these very heavy increases are to be made. I take as my text, which one ought to start with, words in column 2102 of the OFFICIAL REPORT for 6th April. They are from the Budget statement of the Chancellor of the Exchequer who, having described various other changes, such as those on light wines, matches and football pools, then went on to say: I"— That is the operative word— I have also come to the conclusion that there should be an increase in the charges for the telephone service. The right hon. and learned Gentleman says, "I, the Chancellor, have come to the conclusion." Then he said: The Committee is aware of the great pressure there has been, and is, upon this service. Then he added: The Postmaster-General has agreed to assist me by making an increase in charges."—[OFFICIAL REPORT, 6th April, 1949; Vol. 463, c. 2102.] That may mean much or little. In fact, the Postmaster-General must agree to assist because the charges can only be made by the Postmaster-General's order under the authority of his warrant. It is for that reason that we must discuss this matter in this rather cumbersome, technical, Parliamentary form today. The changes in the telephone charges did not appear as a Resolution on Budget Day. Even if they had done, under the new procedure we could not have amended or discussed them. The orders which the Postmaster-General lays are not Statutory Instruments. We cannot discuss them either. In fact, the only way in which we can get at the Government at all on this problem is to put down the Vote of the unfortunate Postmaster-General and ask for decision upon that. Anyone will realise that in doing so we are not tilting at the Postmaster-General at all. It is merely that he is the instrument by which this particular financial action has to be taken. Says the Chancellor: I have … come to the conclusion. He has to rely on the assistance of the Postmaster-General to make the increases because that is the only way in which they can be made.

The increases are very great. There has been much discussion about other parts of the Budget, but this is the only occasion on which we can discuss this part. The changes, which represent an increase in a full year on the telephone charges of £8,100,000, are not nugatory. On top of that there are changes which I will refer to later in postal charges amounting to £600,000, making a grand total of £8,700,000, though in point of fact in this year, owing to the various delays which are administratively impossible to avoid, the extra receipts will only be £3 million. That is a very big increase upon what is a national service.

I suppose that it has always been a matter of argument how far one could, or could not, call the Post Office a nationalised industry or a nationalised service. In point of fact, unlike some of the more recently nationalised industries, the Post Office has recently been showing an operational surplus of considerable magnitude. We are fortunate enough to have got back to a period of commercial accounts which give one some idea of the best estimates and details which can be made up for so complicated a matter. We can get a very good idea of how things have been going. Of course, they are a year late, but I do not suppose that the trend has altered very much in the case of income from telephones since the conclusion of the year 1947–48. If they have, no doubt we shall be told, but I must assume something for the purpose of my argument. Therefore, I base my remarks upon the 1947–48 figures in the commercial accounts.

There one finds on page 29 that the operating profit for telephones alone was £19 million. A figure is worked out on the capital invested in the business, and the final result shows a telephone account surplus for 1947–48 of £10,500,000. Some may object because I have merely picked out telephones from the general accounts of the Post Office. Some may say that we must consider the Post Office as a whole. They may say, "We know quite well that the telephones have done well; we know equally well that the telegraphs have, as usual, lost." I do not use the words "as usual" in a derogatory sense. It is inevitable in the nature of the service. If that argument is to be taken, let us look at the complete general account which is on page 17. That gives the operating profit for the whole of the postal services as £28,250,000. Removing the interest charges, the notional charges, and so on, the whole Post Office surplus for the year was £19,500,000.

One can either argue from the basis of a £10,500,000 surplus for telephones alone or a £19,500,000 surplus for the whole postal service. These are very big figures. Surely, in the case of services such as are rendered by the Post Office, the indication is that they would lead to some reduction in charges to the people—to the consumers—unless the Postmaster-General or the Government foresaw something dreadful. It is only through this House that the consumers case can be put in regard to Post Office matters. There is here no series of consumers' councils, not that they prove very effective in other cases which have arisen during the lifetime of this Parliament; but there is nothing of that sort so far as Post Office matters are concerned.

When one sees an overall surplus of £19,500,000, and a surplus on telephones of £10,500,000, I think anyone is entitled to say to the Post Office that, somehow or other, they should reduce their charges. They may have decided to reduce telephone charges or postal charges. They may have done a whole lot of things, but what they, or rather the Government, ought not to do is to come along and say, "That is all right; we are now going to increase the charges still further, because I"—that is, the Chancellor—"have decided that we must get another £8,700,000 from the Post Office in the full year."

It strikes me as very strange, when I remember what the Chancellor was saying only last Wednesday night in the most extraordinary speech he has given us so far. Whether it was the Dr. Jekyll or the Mr. Hyde who was speaking I do not know, but when speaking that night he expressed a great number of extraordinary views. One of the things he did say was this: It is quite a false conception to consider that it is necessary to make a profit out of any industry, except under a capitalist system."—[OFFICIAL REPORT, 18th May, 1949: Vol. 465, c. 572.] I suppose that that is a reply to the criticism of the great losses which have been accumulating in the nationalised industries. If it is not necessary to make a profit in these nationalised industries, I ask the Chancellor why it is necessary to add to the charges in an industry which, as I have shown from the commercial accounts for the last year for which figures are available, has an actual surplus of £19,500,000. It seems to me to be a most extraordinary line to take, because I imagine that this must be considered as forcing a still higher profit out of the service of the Post Office.

It is quite true that this has been done before. It was done indeed in 1940, when I was Financial Secretary to Lord Simon, but it was quite clearly laid down at that time that it was done for war purposes alone, and it was not only this item that was picked out, but there was a general increase in charges practically over the whole field of Post Office affairs. If anybody cares to look up the reference, as I have done, they will find that the then Chancellor was saying: It should be made quite clear that these increases are forced upon us solely as a means of supplementing wartime revenues."—[OFFICIAL REPORT, 23rd April, 1940; Vol 360, c. 73.] That is a different picture, and I may add that there is a further reason, which is not a confidential reason, because it is in fact referred to in the Comptroller and Auditor-General's statement on last year. It is that a number of the charges were definitely made in order to deter unnecessary private use in war-time. Everybody can remember that, because of the great pressure on the telephones at that time. It was desirable as far as possible that mere chit-chat conversations should be cut down, and that was one of the ways envisaged in both wars—to raise charges in order to counter-balance the cheap and free postages which were available for the troops. It was for that reason that it was decided to raise the ordinary postage rates for letters and in order to try to reduce their volume.

But that was quite a different position to this position today, and I may add that the scale of the thing was entirely different too, because what Lord Simon was dealing with was an increase of the surcharge to 15 per cent., while here we are talking about a 50 per cent. surcharge. If the Government bring forward the idea that they are doing it because it has been done before, that will not carry very much conviction with the ordinary users of the telephone and postal services. It will not do merely to say that it happened in 1940, because, as I remember perfectly well, it was done then specifically for the reason that it was war-time, to act as a deterrent and to increase wartime revenue. As a matter of fact, the proposal went through with comparatively little criticism.

On this occasion, however, I must point out a rather curious statement made by the Chancellor in his Budget statement, and I am not going to try to remember all the Chancellor said in that speech. He did say: The Committee is aware of the great pressure there has been and is, upon this service. That is, the telephone service. Then the Chancellor referred to the Postmaster-General having agreed to assist him in increasing the charges, and he added the words: which may also help to reduce the pressure of demand."—[OFFICIAL REPORT, 6th April, 1949; Vol. 463, c. 2102.] I hope we shall be told on which horse the Government are really riding this time. Are they trying to make some gesture which is going to deter people from using the telephones or from applying for telephones, or are they merely after the money?

If it is the Postmaster-General's desire that people should not use the telephone or apply for new telephones, it seems to me to be a very odd way of going about it. Like most other things, it is a question of the law of supply and demand. It is quite true that the increase in telephones—I take the official figures—in 1947–48 was 330,000, which is a very big figure on the achievement of which, in the difficulties in which we live, I congratulate the Post Office but, at the end of the war there were still outstanding 440,612 applications, to which one is entitled to add the additional number of applications coming from those people who were temporarily using shared telephones. In that way, one might get a figure of anything like 500,000 applications outstanding. That is very inconvenient for the Minister and his Department, and it is very inconvenient for Members of Parliament, because they are constantly being asked whether they can do anything with the Government to get telephones for their constituents.

Is it the policy of the Minister that this pent-up demand is out of the reach of his Department, because if so it seems to me to be a most extraordinary policy for a nationalised State industry. I should have thought he would want to spread his good service as far as he could, and of course by spreading it to increase the general turnover. We know quite well that the demand for telephones has gone up. There is nothing very mysterious about it, because it is one of the modern conveniences which an increasingly large number of people find it necessary to have, and the demand is developing in a number of industries, such as agriculture. It is also due to the changing way in which business is done, the decreasing use of local markets and the increasing demand by messages and orders from a distance, and all that kind of thing, quite apart from the telephone habit which must have been engendered in hundreds and thousands of people through their military service, where everything was done on the telephone. Therefore, these people had the idea that if they could afford it they would have a telephone in their own homes when they returned.

The policy of the Minister ought to be to try, as far as possible, to meet that demand and not place a deterrent on the use of the telephone. Let him overcome his difficulties, and not clamp down enormously increased charges on this service. Again, I am sorry that there is no Minister from the Treasury present, because it seems to me that the Chancellor has suddenly realised the figures of the commercial accounts—probably he had not thought of them before, because they were published a little while ago—and thinks that here is another golden goose. But these golden geese are not laying all the eggs that had been hoped for, and it may be that this is a very bad mistake.

I wish to say a word or two on the other changes because they are of importance—the increase in the postal charges to the value of some £600,000 in the full year. Of course, that is a very much smaller affair than this big increase in the telephone charges. The Chancellor announced them as two minor adjustments; one was an increase in the registration charges for letters and parcels by a penny, and, the other, an increase in the charge for printed papers for overseas destination of a halfpenny for the first weight step. What does that mean? On the first adjustment, that concerning registered letters and parcels, I should like to say that I know what a difficulty the tremendous increase in the registration of letters and parcels has been in recent years. I may say, in parenthesis, that I am extremely obliged to the Financial Secretary to the Treasury—one of the three Ministers concerned, and who has just come into the Chamber—for coming along, but I am sorry he has missed the best things I have to say; best, because they were the first, and I do not propose to repeat them all now. I do not know whether he has come by registered parcel post this afternoon, whether he got lost on the way, or whether no one could be found to give a receipt for him. For long there has been increasing difficulty about the volume of registered post. I know that. It may be that this is meant to check it to some extent. If that is so, I should not think that it was enough; I should have thought it just a tiresome addition.

With regard to the second increased charge, that on overseas destination papers, I should have thought that a very foolish way of making money. It is a very nugatory sum to start with, and I should have thought it ought to be our endeavour as a nation to try to send overseas as many of our printed papers as we could, because, whatever they refer to technically, maybe it is something which is of use to us if the right things are written on the printed papers. I doubt whether that small increase will necessarily have much effect in reducing the volume of the registered letter and parcel services. I would hazard the guess that to make two such little increases must be, administratively, extraordinarily inconvenient, because it means that every person at every counter in this country has to bear in mind two changes. The people who work at the counters have to work hard in order to keep the enormous amount of facts and figures at their finger tips, and, unless one is going to make something useful out of it, it seems to me unnecessary. But I suppose it is the desire of the Chancellor to get some more money.

I ask the Government to say definitely whether the object of all these three changes—I have purposely not dealt with the details of the telephone ones—is to reduce the user. Are these really deterrent charges as they were at the time of the increases in 1940? Of course, if they are, we shall have an argument to make about that, but if that is not in mind, if it is merely a desire—Oh, the right hon. Gentleman has gone again; it is very difficult to address an argument to the Treasury when one does not know where it is at a given moment, but I assume that it will return. I repeat that if the argument is that this is a deterrent in order to reduce the user, we shall know how to face that one. If, on the other hand, it is to get more revenue, as I imagine it must be from the words of the Chancellor. I have also come to the conclusion that there should be an increase … then I, and I am sure my right hon. and hon. Friends, protest most vigorously against it. The modern doctrine is that taxation ought to be raised by increased charges for basic services. No one can deny that the telephone today is a basic and essential service to commerce, to industry, to the professions, and, indeed, to great masses of private individuals who are still allowed and entitled to deal with their own private affairs by themselves. Let them pay their way, certainly; let us not take any action, as in the case of coal and those other nationalised industries, which is going to mean a charge on the taxpayer because those nationalised industries cannot pay their way. I am not suggesting anything of that sort, but I am suggesting that in that account (the amount which it has long been decided should remain in Post Office hands for their own development, having been dealt with) roughly speaking outgoings and income should be somewhere near equal.

If there are any losses, that is another matter, but we are not dealing with losses; at least, the Chancellor did not justify his proposals on the grounds that there was going to be a great loss of Post Office revenue and that, therefore, it was necessary, here and now, to increase it in order to face that difficulty. But when there is a surplus, and one of such a magnitude as I have indicated, then I affirm that it ought to go in relief of charges, or, if there is a bad time coming, let us do what prudent industries do and put it to reserve for use when the bad time comes, but do not let us increase charges now for purely fiscal reasons. I suppose the Chancellor cannot help himself for the reason that he has got this enormous total tax revenue of £3,632 million. That is what he wants, so he thinks he has to clutch at the Post Office to get some £8 million out of that huge sum.

We have said over and over again that that figure ought to be cut down. We say that expenses must be cut rather than new burdens added. It is no accident that the second part of today's Debate will be devoted to the expenses of the C.O.I., the information services, because I think it will be quite clear to anybody who attends to what is said then that the £3 million, which is all that is expected this year from these high charges, could well be saved on the bill which is to be presented later this afternoon. If the Government were to cut down to the extent of £3 million or £4 million on the fantastic expenditure of the Central Office of Information, then these increases would not be necessary and we would not be putting this extra burden on industry, on finance, on the professional man, on the doctor, and on the private citizen; there would be more than enough in that Estimate in which to make cuts sufficient to prevent these increases for which, as I see the picture, I cannot blame the Postmaster-General. We have to reduce his Vote on this—or try to—because that is the only way in which we can make our protest. Because it is the Government's foolish policy to hamper this vital service, we deliberately move to reduce the Vote, and so we point the moral; the tale need not be further adorned.

I beg to move, "That Subhead A, Salaries, etc., be reduced by £100."

4.10 p.m.

Mr. Ernest Davies (Enfield)

I find myself in some embarrassment in catching your eye, Major Milner, because I am in agreement with a great deal of what has been said by the right hon. and gallant Member for Gainsborough (Captain Crookshank). At the same time, as we have before us the accounts of a nationalised industry which has succeeded in making a substantial profit during the year, I think the right hon. and gallant Gentleman might have had the grace to congratulate my right hon. Friend the Postmaster-General on the result. So often have we had from the other side attacks upon the nationalised industries because of their failure to make a profit, or on the supposition that they will not make a profit, that when the occasion for congratulation arises I think it might be forthcoming.

I share the right hon. and gallant Gentleman's view when I tell the Postmaster-General that anything I may say in criticism of the policy which the Government propose in connection with the raising of the telephone charges is no criticism of him or of his administration of the Post Office which he has so ably handled and which has brought about such successful results. However, I do attack the decision of the Chancellor of the Exchequer to seek the consent of the Postmaster-General to raise the telephone charges, because I think it is wrong in principle.

It is wrong in principle on two grounds. If the purpose of raising these charges is, as was intimated by the Chancellor of the Exchequer, although not definitely stated by him as being the sole reason, to prevent the further expansion or to slow down the further extension of the telephone service, then the principle is certainly wrong, because here is a tax being imposed to restrict consumer use, and that, surely, is wrong in principle. If that is not the reason, and if the purpose is simply to bring in revenue to the Treasury, then the principle is wrong because it is one of milking a nationalised industry to swell revenue at the expense of the consumer. I am thoroughly opposed to that principle, and fortunately it is one which by the legislation concerning other nationalised industries is prevented from occurring.

As to the first principle, surely it is a retrograde step. Here we have had a reasonable expansion in the telephone service since the war. The extension, as far as local calls are concerned, is something in the neighbourhood of 30 per cent. compared with pre-war, which, in view of the expansion of production in this country, does not seem to be an outstanding development or one which requires having a brake applied. Even with this expansion, I think I am correct in saying that this country is still a long way behind many other countries in the development of telephone use. That is certainly the case when we compare this country with the Scandinavian countries and the United States of America.

There are other ways of putting the telephone service at the disposal of those who at the moment are unable to obtain the telephone. The Postmaster-General, quite rightly, is endeavouring to popularise the sharing of the telephone service. That could be expanded to a considerable extent. As far as I am aware, in this country at the moment, sharing the telephone involves two subscribers using one telephone. As the Postmaster-General is well aware, in the United States there are often five, six or seven people sharing the same telephone line. I should have thought that we could extend the telephone service considerably on that basis, particularly in the rural areas.

I should add that from the capital investment point of view, surely there must be other services which could have been tackled before the normal development of the telephone service was attacked. I think it is a mistaken approach by the Chancellor of the Exchequer. It seems that he has a mistaken idea that this is a luxury and not a necessity, that this is something which can be cut down without affecting the industry of the country or the welfare of the community as a whole. Today the telephone is a necessity and not a luxury. It may be more of a nuisance, particularly to Members of Parliament, than a pleasure, but it is a nuisance which we have to tolerate.

There is a danger that once these charges are increased they will never come down. All our experience of taxation is that once taxation is increased for the purpose of bringing in revenue, or even to prevent consumer use, it is never reduced. We have had that experience with the Purchase Tax which, in the first place, was imposed not as a revenue producing tax but to prevent the consumption of consumer goods. We have had the experience with the Road Fund for which hon. Members opposite were responsible, and we have had other experiences with the Post Office. During the war the postage was increased, and even before the war postal charges were increased, but I have never known them to be reduced. Therefore, I fear that this increase in telephone charges, for whatever reason, will become a permanent increase and the present users of the telephone can have very little hope of a reduction in the charges in their lifetime.

Surely, from the financial point of view this increase is not necessary. As the right hon. and gallant Member for Gains-borough pointed out, the profits of the Post Office last year were extremely good. They were in the neighbourhood of £19 million, the telephone service itself bringing in a surplus of some £10 million. I would add that in some respects the Post Office can be accused of profiteering.

I should like an explanation from my right hon. Friend on this point; I see in the commercial accounts of the Post Office that in accordance with arrangements the Post Office deduct 6 per cent. from the wireless licence revenue for the expense of issuing wireless licences and other work which the Post Office carry on in connection with the B.B.C. In the accounts £670,000-odd is credited to the Post Office, but of this sum more than half, £362,000, is included as expenses of local post offices to cover the issue and renewal of wireless licences. Taking into account that there are some 11 million wireless licences and that their issue costs £363,000, on my calculation it means that to issue and to renew each wireless licence the Post Office are charging 7¾d. In other words, they claim that it costs almost 8d. to issue a wireless hence. I cannot believe that it costs the Post Office that amount to issue a reminder and to renew a wireless licence or to issue a new one. Either the Post Office are overcharging the B.B.C. or they are inefficient in carrying out this service. I hope the Postmaster-General will correct me if I am wrong, but so far as I am able to work it out from these accounts, that is the correct figure, although I hope that I am wrong in my mathematics.

It seems to me that the B.B.C. and the Post Office have both become victims of raids on their finances by the Treasury. As I said earlier, that is not possible with other nationalised industries, but it seems to me that we might warn the other nationalised industries that it would be better for them not to make a profit because, once they do make a profit, it looks as though the Treasury will be after their revenue. It will be far better for them, before making profits, to reduce their charges and to give the benefit to the consumers in order to prevent the Treasury from milking them of the profits.

I want to tell my right hon. Friend that, personally, I shall find it very difficult to justify this increase in my constituency, Enfield. I say that because Enfield happens to have one of the worst telephone services in the country. That is because it still has a manual exchange. As far back as October, 1946, I ask my right hon. Friend's predecessor when work would be started on the conversion of the Enfield Telephone Exchange from manual operation to automatic operation and I was then informed that the work would start in 1948. In March of this year I again asked when the work would be undertaken and I was informed that work was already proceeding, so far as enlarging the building was concerned, but that it was impossible for my right hon. Friend to state when the conversion to the automatic system would take place and that the present building operations would not be completed until the end of next year. Can he tell me when the conversion will be completed?

Recently I received a letter from one of my constituents, a local parson, who wrote to me as a result of the increase in the telephone charges. He wrote as follows We have lived here 18 years. When we came from Hampstead we were surprised to find that Enfield was still on the old system of the telephone. We were told that the automatic system was about to be introduced. Yet after so many years we appear no nearer to this improvement. Instead, we still have long delays, ear-splitting noises while 'they are trying to connect you,' and then often you take a long time to get the exchange to understand that you cannot wait. Now the already heavy charges are to be increased. Should not those who suffer such inconveniences be differentiated from those who enjoy the automatic system? Charge those who are on the automatic the increased amount if you must; which contention is by no means granted, seeing the great profits the Post Office makes. That is a letter which reached me during the weekend and it is typical of others which I have received from my constituents on this matter.

I feel that until we have succeeded in completing the conversion of the local telephone exchanges from manual to automatic—and there are not a great number left unconverted—it is unfortunate to raise the charges as is now proposed. Certainly I feel that the Postmaster-General has no right to charge anybody in Enfield more for the use of the telephone. It has been suggested that it will be a deterrent to the installation of more telephones and, so far as that is concerned, I can assure my right hon. Friend that, in view of the poor service there, due to no fault of the operators but to the old-fashioned equipment, nobody in Enfield dreams of installing a telephone unless he has to have one installed for business or other reasons. It is no pleasure to use the telephone in Enfield. Of course, it is an absolute necessity for a great number of people, and that is why there is a long waiting list.

I ask my right hon. Friend, are there not other ways of reducing the use of the telephone, if that is the purpose of raising the telephone charges? Could he not bring about some diminution of the use of local calls, if the postal services themselves were improved and cheapened? I welcome the improvements which have taken place in the working conditions in the Post Office since the present Government came into power and I welcome the steps that have been taken to make many long-needed improvements in many directions, but at the same time I deplore the deterioration in certain of the postal services which have probably been made necessary because of the shortage of manpower or the desire not to increase the numbers employed by the Post Office.

I think if there were better collections and delivery services it would be possible for many people to make use of the postal services rather than to resort to the telephone. They could be encouraged to do so. Let me put this example to the Postmaster-General, and again I refer to my own constituency of Enfield, which has a population of over 100,000. Industrially and commercially it is part of Greater London and the urban district extends as far as Enfield. For the purpose of the telephone, Enfield is in the London postal district. For the purpose of the postal services, however—and by that I mean mail deliveries and collections—Enfield is outside the London postal district. The result is that in Enfield there are only two deliveries a day, by comparison with the three deliveries a day in the rest of London. It seems to me that if the London postal district were extended to Enfield it would be possible for persons to be sure that correspondence sent in a morning would at least be delivered the same day. At the moment it is not possible to write any correspondence in Enfield or outside Enfield which will be delivered the same day; it is not delivered until the following day. In other words, although Enfield is less than 15 miles from Charing Cross the postal service in effect is a 24-hour service—or at best an overnight service—instead of a service providing for delivery the same day.

As my right hon. Friend knows, he has received representations on this matter from the local Chamber of Commerce and the Federation of Enfield Ratepayers' Associations. I ask him to reconsider this question of improving the postal services in these areas; it would benefit both business and the community as a whole and might also bring about the desired result of reducing the use of the local telephone services, if, in fact, that is the purpose he has in mind.

I apologise for raising these points in this critical vein this afternoon. If these charges are necessary obviously we shall accept them but I do not feel that the Chancellor has yet sufficiently succeeded in explaining to us the reason for these increases. I hope that when my right hon. Friend replies to this Debate he will be able to explain clearly to us the purpose of these increases and that he will be able to convince us of the necessity for them. For the moment, I must say that I do not feel they are necessary. I regret this retrogressive action—for that is what I consider it—which it has been found necessary to take. It is unfortunate that a Government which all the time is attacking restrictive policies and endorsing expansionist policies should, on this occasion, itself embark on a restrictionist policy.

4.28 p.m.

Mr. Hopkin Morris (Carmarthen)

I agree with practically the whole of the speech of the hon. Member for Enfield (Mr. Ernest Davies) and I am quite sure that hon. Members in all parts of the Committee will also agree with him. He will not be alone in finding it difficult to justify in his Division this additional impost upon the taxpayer. Every hon. Member will find it difficult. I think even the right hon. and learned Gentleman the Chancellor of the Exchequer will find it a little difficult to go to his Division and support these increased charges.

The form of this Debate is very curious. There we see the right hon. Gentleman the Postmaster-General, sitting on that bench, quite satisfied with the profits of the Post Office. After all, he has made £10 million. He does not want to add to the charges; he will find it as difficult to explain as the hon. Member for Enfield, who sits behind him, and he does not want to go to the country in an attempt to justify the addition of £3 million. He already has £10½ million profits. More than that, he knows perfectly well that there is plenty of work for that money to do; he knows there are plenty of applications from rural areas, which are badly in need of a telephone, clamouring for telephones. Every division is alike. The right hon. Gentleman has many applications from my own division. He is quite ready and willing to listen but he cannot supply the telephones. Could not some part of that profit be devoted to supplying telephones in the rural areas?

The hon. Member for Enfield claims that we have an expansionist Government. I do not agree with him that they are, and certainly this is a case of restriction. The Minister of Agriculture wants every assistance given to agriculture, and I have no doubt that the Postmaster-General himself is willing to assist but the Chancellor of the Exchequer puts on this £3 million more as a handicap to the rural areas—for it is the rural areas that will feel this handicap first. It is not only agriculture that will feel it, but the medical services in the rural areas. They will feel this additional impost on telephones, and it will affect them far more than the medical services in the towns.

It would be interesting to know on what principle the Chancellor of the Exchequer imposes this additional burden. What is the principle of this taxation? Does he wish to get more money? As the right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank) pointed out, we are to have before us another Vote later on tonight, involving a huge sum of money which is being literally wasted, out of which far more than £3 million could be saved, without any additional burden on a much needed service. What kind of service does the Chancellor think he is rendering the country? I agree with the hon. Member for Enfield that if we support the Vote, it will be difficult to justify our action to our constituents.

4.32 p.m.

Mr. Frederic Harris (Croydon, North)

I too am puzzled by this proposed additional charge. I am particularly disturbed about its general effect on the whole of industry. All additional and increased costs of this sort, and they are numerous, will have a disastrous effect in the long run on the export trade. Everybody connected with business knows that it is becoming increasingly difficult, at an alarmingly fast rate, to obtain export business, and statements by Members of the Government show that they know it, too. Although this is a small increase of charge, nevertheless, it is one more of the numerous increases in costs that have to be met, and manufacturers are finding all these increased costs ever more difficult to meet. If the Government expect manufacturers in the British Isles to obtain essential export markets, which we vitally need, they should do their utmost to see that increased charges of this type are not imposed on industry as a whole. Such an increased charge has a very serious effect indeed.

Apart from that, however, the telephone service is a necessity in modern conditions. The Government have a monopoly of the provision of this service, and they are taking advantage of their monopoly in a way not foreseen years ago, and they are able to do so because they have no competitors. This proposed increased charge will put up the cost of living, precisely because the telephone service is a necessity. At the same time, by increasing costs to manufacturers, the Government are making difficulties themselves in achieving what they say must be achieved—increased production at lower costs. I feel, as others do, that the Post Office, instead of considering putting up charges, should consider reducing charges. It is realised by hon. Members in this Committee that it is necessary that even under nationalisation there should be a margin of profit. We, on this side of the Committee, do not disagree with that. However, the Post Office, so far as the margin of profit is concerned, is today in a very sound position.

One cannot understand at all how anybody in present conditions can possibly justify such an increased charge. What is the purpose behind it? Is anybody going to gain by it? The increased revenue will be some £8 million, which represents only about 0.25 per cent. of taxation and expenditure in a year. That revenue could be obtained by a reduction in general expenditure in other services. If we were to put the comb through much of our general expenditure, we could easily save £8 million in no time. There is no gain to the country of any kind in putting up the telephone charges to obtain a revenue of a mere £8 million. There are many expenditures that should be reduced; there is one that we shall be discussing later on tonight, and there are others. So it is difficult to understand how the Post Office can justify all the upheaval that is to be caused to manufacturers and others by putting up the telephone charges, which will only make things more difficult yet for the trading community of the country. To a business of a normal size this extra charge will amount to another £500 a year on expenditure. That is a tremendous amount.

The Assistant Postmaster-General (Mr. Hobson)

It can be met out of profits.

Mr. Harris

The hon. Gentleman can hardly say it comes out of profits. The Socialists all the time say that increased charges can be set against profits, but no Government with any commonsense can fail to see that unless we get the prices down we cannot increase our export trade, and that prices will not come down if basic costs continue to go up. Manufacturers are selling their goods abroad at under cost today to try to obtain markets abroad and to keep them. Cannot the Government realise that somebody has to pay these costs they suggest imposing, and that it is not a question of profits? How can the Government justify this profiteering on their part by increasing their profits? They are proposing to double the profits the Post Office has made on this service. If private enterprise, upon which this country flourishes today, makes a profit the Government think charges can go up, but with their own nationalised undertakings they are prepared to make more and more profits. I cannot see how anybody can justify this increase of charge.

However, apart from all that, one of the excuses given for this increase is that it will restrict use of the telephone. Are we in a modern world today or are we not? Are the Government suggesting that in their monopoly business of the telephone service they propose to stop people using the telephone? Is it practicable for people not to use the telephone? Are not all Members of this Committee cluttered up with complaints from people who want the telephone and cannot get it? We all know that people want the telephone because they need the telephone. The telephone service is a part of ordinary everyday life. People want the telephone for private and personal life and they want it for business. The Post Office, however, want to restrict the use of the telephone.

Mr. Hobson

Does the hon. Member realise that one in three of the telephones which have been placed in the homes and businesses of Great Britain has been provided since the end of the war?

Mr. Harris

I am the first to congratulate the Post Office on what has been achieved, but in saying that the Government justify the proposed increased charge because it will restrict the use of the telephone, I am repeating only what the Chancellor of the Exchequer has said, and his excuse.

The Government propose to put up the charges to cut down applications for the telephone. How can it be justified? If the suggestion is to put up costs in order to reduce the number of applicants for telephones, that is a rather peculiar twist of thought. I feel that there can be no justification for that when the Government have a flourishing business in the monopoly of the Post Office service today. By increasing these charges they are making a handsome profit out of the public, and they are not giving any better service in return. One excuse that could be given for these increased charges would be a better telephone service—

Mr. Hobson

A reduction of time in answering telephone calls and an improvement in trunk services have been going on continuously since the end of the war.

Mr. Harris

One is not denying that certain improvements have taken place, but there is not a Member of the Government, I suggest, who has not suffered from time wasted in trying to put through telephone calls. Time is vital to trade, and this service of the Post Office could be much improved and much time saved. I say that the only justification for the increased charges would be a better service, and the Government cannot give a better service.

Mr. Daines (East Ham, North)

Is the hon. Gentleman aware that when I put through a call to this House from the Inland Revenue Department, I was actually answered before I had dialled the final number?

Mr. Harris

The answer to that is that the Government were probably anxious to obtain the taxation provided by the hon. Member and were only too anxious to take his message. I defy the Government to oppose the suggestion that the only justification for increasing the telephone charges to the people of this country and to the manufacturers of the country would be to give them a better telephone service and save time now wasted. I realise that the Government have a difficult job to defend these increased charges, which, I am sure, the Postmaster-General himself does not really believe should be imposed upon the people. It is a ridiculous mistake. Why, therefore, do the Government not put the mistake right?

4.43 p.m.

Mr. Viant (Willesden, West)

I think that the right hon. and gallant Gentleman (Captain Crookshank), who opened this Debate, is to be congratulated. We are all labouring this afternoon under a great handicap because we have had no reasons advanced for these increased charges. The opener of the Debate, as he was entitled to do, has hazarded a few guesses why the increase has to be brought into operation. I intervene because I shall be pestered by constituents, and more especially by the chamber of commerce, about these increased charges. I happen to be situated in a constituency where one exchange is obsolete. That does occur in various parts of London. On the other hand, we have an exchange which is entirely up-to-date. I can well imagine that those who are on the old exchange will be protesting vigorously about these increased charges. Even had we an improved service throughout London, I should very much doubt the justification for these charges.

Unfortunately, since I have been in the House, I have noticed frequent increases in charges placed upon the Post Office by Chancellors of the Exchequer. Far too many Chancellors have treated the postal system of this country and the Post Office as being something like a much cow. They have been prepared to look upon the Post Office as a means of raising revenue. I would prefer it to be looked upon more as a service to the community. I have not the least doubt that protests will be raised. I well remember when I was sitting on the Front Bench partly responsible for the Department, entreaties being made from all sides of the House for a policy to be adopted by the Department to educate the general public on the advantages that would accrue from the installation of the telephone. A considerable amount of education has been done by the Department in that respect. At the moment the general public are somewhat telephone conscious. Now they will be made doubly conscious in the sense that they are going to be compelled to pay an additional charge for that service.

At the same time, the Government have been entreating each and all, and especially business people, to speed up in every way possible their business methods. When I was in the postal Department, we were using as one of the arguments for the installation of the telephone the speeding up of business as a means of effecting economies. We all know that the advantages of the telephone far outweigh the disadvantages. I deplore the Government's policy in increasing the charge of the telephone service. Furthermore, I deplore the fact that the Postmaster-General has to accept responsibility.

Unfortunately, successive Ministers at the Post Office in turn have become painfully aware of the fact that they can in no sense of the word determine policy. Policy in the main is determined by the Treasury. That is not helpful to any concern which is nationalised or which is accepted as a national service. It is true that the Post Office has more freedom today as the result of the findings of the Bridgeman Committee but, nevertheless, the Department is to a certain extent ham-strung. This is well brought out today by the decision of the Chancellor of the Exchequer and not the Postmaster-General to increase charges.

I speak as one who was in the Department and who smarted on many occasions because I had to carry out a policy with which I was not entirely in agreement, and which I did not feel was in accordance with the desires or the interests of the general public. I think that this decision is a bad one, and I make no apology for saying so. Every inducement should be given to people to instal the telephone. I appreciate the difficulties from the point of view of material and labour today, but they are temporary, and the more conscious we can make our business people of the value of the telephone service, the better it will be for the country in general.

I hope that it is not too late for this to be reconsidered, and I make an appeal that it should be reconsidered. I shall listen with considerable interest to the reasons advanced in justification of this increase. I think that the disadvantages from this increased charge will outweigh the financial advantage the Chancellor assumes he will obtain. We have not as yet, in any sense of the word, reached the limit of the demand for the telephone; there are great possibilities to be expected from the installation of this service. We were aiming at its installation in four out of every six households. We wanted to copy what has been done in America and in some of the Scandinavian countries, but this increased charge will be a deterrent. Once the labour and materials difficulties are overcome, the possibilities are good, because we have already made the general public telephone conscious, and the demand is going up in leaps and bounds.

4.52 p.m.

Lieut-Colonel Sir Cuthbert Headlam (Newcastle-upon-Tyne, North)

I doubt whether there is one hon. Member who, given a free vote, would vote in favour of this increased telephone charge. It is an unjustifiable imposition. The charges are already extremely high, and we know that they were made so high only because of war conditions. If there was one thing which appeared absolutely clear to almost everybody, it was that one of the first concessions made by the Government would be a reduction in the charge for the telephone service. Instead, the Government have increased the charge. Far more than the sum the Chancellor will get out of this, could be obtained, as no doubt will be shown in a later Debate today, more easily and effectively by reducing the expenses of another service.

I speak tonight because I am continually being asked by my constituents to get them put on to the telephone. Unfortunately, I have consistently failed in doing so. Not very long ago I, as I suppose did every hon. Member, received from the Postmaster-General an interesting brochure explaining very clearly why he was unable to compete with the demand made upon him for telephones. In that brochure there was nothing to suggest that the best way of effecting his purpose would be to increase the charge. I never heard a more absurd proposal than the one now being made by the Chancellor, and his defence of it has certainly not been very effective so far. In the interests of the whole community—businessmen, private persons, professional men, and more especially the doctors—I trust that this charge will not be increased.

I know from painful experience what an enormous expense the telephone is nowadays, and I have no wish to see that expense nearly doubled, as it would be by this proposed charge. I am certain that it is not in the interests of the country to make this increase at the present time, and I trust that hon. Members, on the Government side at least, will succeed in inducing the Chancellor to withdraw this proposal.

4.55 p.m.

Mr. Harry Wallace (Walthamstow, East)

I should like to begin by adding my congratulations to the Postmaster-General for the development which has taken place in the Post Office since the war, not excluding the development there has been on the telephone side. At the same time, I must also express my sympathy with him that he should have to come to the Committee and advocate a policy of this kind. I agree with the right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank), that it is unsatisfactory to discuss this policy question under these conditions, because we cannot demand from the Postmaster-General an explanation or a justification for this increase, feeling that he is solely responsible for this policy.

I, like the right hon. and gallant Gentleman, am very glad that the commercial accounts have appeared. I cannot say that I regard them as satisfactory; I do not think they are as complete as they might be; I still regret the absence of the Postmaster-General's annual report, and I still hope we shall get it. I mentioned those two items because I want the House of Commons to have a day set aside for the full discussion of the report and the accounts of the Post Office, so that we have an opportunity of expressing our opinion on general policy.

Captain Crookshank

And of all nationalised industries.

Mr. Wallace

I want it for all. I think this House of Commons has a duty to the consumer, and we on these benches would not hesitate to accept our responsibility to the consumer, even under the nationalised industries. I accept nationalisation because I think that in the end it gives and will give the consumer a better service. At least, that is one of my tests for it.

While I congratulate the Postmaster-General, I am sure he will pay tribute to the staff for the part they have played in maintaining and developing the ser- vices since the war, under very great difficulties. During the week-end one of my constituents said to me: "Is it beer or telephones?" I found some difficulty in answering. Let the Government be quite clear that there is great dissatisfaction with the Purchase Tax and with this proposal to increase the telephone charge. This is not a question of the profits of big business. There are 13 million householders in this country, and I hold the view that there ought to be a telephone in each household. I want each busy mother to have a telephone; she needs it. I am hoping to see a great extension of this service; I am sure my right hon. Friend shares my aspiration, and I shall be glad to hear from him today that this proposal will not restrict his plans for a wide development and extension of Post Office services. On the other hand, I must admit that if the desire is to extend the telephone service, then the imposition of this increase is a queer way of encouraging that extension.

I say that this increase for the telephone service is not justified. Perhaps I shall be told that it is. I will deal with that later. If the increase is made solely in order to increase the revenue of the Chancellor of the Exchequer, who is using this service as an instrument for fiscal policy, then I dislike it and am opposed to it. [HON. MEMBERS: "Hear, hear."] I am glad to hear that agreement from hon. Members opposite. This is not the occasion upon which to go back into the past, but I must observe that that is a view the party opposite has not always held. If the Opposition have been converted by the opinions expressed on this side, then I am glad. I hope the process of conversion will be rapid so that by 1950 they will be quite clear where they stand when we go to the electorate.

I want to be clear on this. Will this help expansion of the service, or is it designed not only to reduce the number of applicants but to make people give up the telephone who are already enjoying it. Make no mistake, this will press very hard upon many ex-Service men who have opened up new businesses since the way. Their margin is very small; it is no use talking of big profits in this connection because they do not exist. This increased charge may mean giving up the telephone, and giving up the telephone means loss of business for some of these men. My right hon. Friend knows that what I say is correct, because I have submitted cases to him, and he and the administration have been helpful.

The Chancellor of the Exchequer has made many speeches in the last 12 months, and I do not think I misrepresent him when I say that he has asked industry to reduce profits and prices and the workers not to press general wage demands. At the same time he has appealed for an increased output. An extension of the telephone service today for many small businesses would help in increasing the output of the country. This is a curious way it seems to me of encouraging people outside to adopt the policy advocated by the Chancellor of the Exchequer on general economic considerations. The Chancellor puts up his prices and asks other people to reduce theirs. He asks labour not to press their demand but he presses his. We really ought to have a clear statement. Is there to be a reversal of policy, or what is the consideration? I take the view that this money could have been found in other ways.

I would remind my right hon. Friend that he told the Post Office workers he regretted he had to reject their wage demands because of the wage policy of the Government as set out in the White Paper. Those demands went to arbitration and we are waiting the results. Is this increase in charges in contemplation of an adverse verdict? The right hon. Gentleman knows that there are real grievances in the service, and Members opposite who have been associated with the Post Office know that I speak the truth. The long incremental scales are a cause of discontent. To the young men and women who are being asked to give fully qualified service for much below the maximum, all this is meaningless. These young men cannot keep a home on such low rates.

I could have suggested where some of the Post Office surplus might have been usefully used to provide an incentive and encouragement, and to promote that good will and understanding we want to see in the industry. There are other services which the country wishes to see improved. I have no doubt that my right hon. Friend has them under consideration, and I expect they have given him a headache or two. This surplus might have been used in many ways to improve the service and overcome the difficulties which might arise with irksome attendances and so forth.

I shall continue to press for the Postmaster-General to have full freedom of control in his Department. I shall not be satisfied until he produces his accounts and report to this House and the House does not have to depend upon the Opposition for a discussion on the Post Office. Members opposite will not misunderstand me when I say that, because we cannot have a Debate unless the Opposition ask for a day's Debate on the Estimates. I regard that as completely unsatisfactory, and I do not think the country will like it either as a satisfactory method for discussing a nationalised industry.

We have to face the position that circumstances have changed and that we have been the instrument in changing them. I do not think the Chancellor would come along and say that for his purposes there must be an increase in the price of gas, coal, transport or electricity. That would not be advisable, and I do not think it is advisable on this question. I want my right hon. Friend to have more freedom, and until the House has an opportunity to discuss the reports and accounts for each nationalised industry, I for one shall not be satisfied. I hope that when my right hon. Friend replies he will tell us the precise reason for this increase, and will relate it to the general policy of the Government now being advocated in regard to profits, prices, wages and output. As far as my constituents are concerned, this increase is very unpopular. The only explanation is that it is a measure to increase the revenue of the Chancellor of the Exchequer, which will be as unpopular as other elements of the Budget.

5.7 p.m.

Mr. Henry Strauss (Combined English Universities)

The hon. Member for East Walthamstow (Mr. H. Wallace) has said that if this proposal is put forward as a method to promote the demand for telephones it is a very odd way of proceeding. I do not think there is any Member who would differ from him in that statement. But we have from the lips of no less a person than the Chancellor of the Exchequer the exact reason why this proposal has been put forward. I shall read only three sentences of the Chancellor's speech. Far from it being an odd way of achieving a greater supply of telephones, it is expressly designed to stop the pressure of demand. These are the Chancellor's words: I have also come to the conclusion that there should be an increase in the charges for the telephone service. The Committee is aware of the great pressure there has been, and is, upon this service. The Postmaster-General has agreed"— I do not suppose he could help it— to assist me by making an increase in charges, which may also help to reduce the pressure of demand."—[OFFICIAL REPORT, 6th April, 1949; Vol. 463, c. 2102.] That is the precise and express reason why these charges are being increased; in order to be a deterrent tax on the supply and use of the telephone.

I wonder what Members opposite would have said if a Government of any other Party had proposed a great increase in a tax on communications. It is obvious that they would have condemned it. A tax on communications for the reasons that have been given on both sides is a bad tax. Not only is this a monstrous tax for the reasons that have been given, but there are one or two matters which I want to bring to the notice of the Committee which, in my view, make it worse. The telephone constitutes one of the earliest examples of nationalisation and the obtaining of a Government monopoly. I hope, in fact, I know, that the country will observe what happens with such a monopoly.

The policy of the Government is first to make the telephone a necessity and then to tax it as a luxury. In regard to making it a necessity, some of my hon. Friends and I were worried about developments in the Summer of 1946, and we put certain Questions to the then Postmaster-General or Assistant Postmaster-General. I will mention one of the Questions which I myself put in a moment, but the reason why I put this Question was that I was alarmed by some of the very strange letters appearing in the Press from the acting General Secretary of the Union of Post Office Workers, who expressed the view that there should not be any late collections.

The Question I put to the Assistant Postmaster-General at that time, who was the hon. Member for Burnley (Mr. Burke), will interest the Committee as a whole. I asked: whether he will give an assurance that the hours of collection and delivery of letters will be determined solely by the convenience of the public. The answer—and it is only fair that I should quote it in full—was: My noble Friend's policy is, with due regard to the wider interests of the community, to strike a fair balance between the convenience of the public and the interests of the postal staff. In a supplementary question I asked: Is there not a very obvious distinction between the question of hours and wages, on which the union is very properly consulted, and the question of what facilities should or should not be given to the public, on which the public and the Government alone are concerned?"—[OFFICIAL REPORT, 18th July, 1946; Vol. 425, c. 1361.] One of the things which has made the telephone a far greater necessity than ever before is the distressing absence of late collections and early deliveries. I remember very well, when I was living in the Temple, that I could post a letter up to 12.15 a.m. which would be delivered early the following morning in any part of London. That ability to post letters late was of the greatest use to industry and commerce. Let me mention another thing, the question of early deliveries in the morning. That service, likewise, is not nearly as good as it was. As a result, the telephone has been made much more of a necessity than it ever was before. Now, just at the moment when it is being made an absolute necessity by the policy of the Post Office, it is taxed as the greatest luxury. How can that possibly be justified by any principle of taxation?

I am glad that objections to this tax have been raised from both sides of the Committee, and I hope and believe that the country will draw the lesson of what happens when a Government secures a monopoly and has immense power to raise prices, against which there is no remedy whatever, and then pursues a policy, which cannot be disputed, of making a thing a necessity and then taxing it as a luxury.

5.15 p.m.

Mr. Peter Roberts (Sheffield, Ecclesall)

I congratulate my hon. and learned Friend the Member for the Combined English Universities (Mr. H. Strauss) on the speech he has just made because it brings out, once again, some of the fundamental dangers which are inherent in a monopoly. We have heard a series of interesting interventions from Members on both sides of the Committee, and I think I am right in saying that every Member has asked the Government to reconsider their policy on this matter. I, too, want the Government to think again.

We have heard that there is a surplus of £10½ million, and that the Government should reduce their charges. I want to put forward an alternative suggestion, and that is that the Post Office should provide better service for this extra money. If we are to vote this extra money the Postmaster-General should tell us that he will see that when he gets it he will use some of it to provide better service for people already on the telephone or awaiting a telephone. I think the right hon. Gentleman would be entitled to say that he intends to keep this matter within the control of his own Department, to say, "If I get this money I will undertake to provide better service."

I wish to give some instances of complaints about the telephone service which I had from Sheffield, and to assure the right hon. Gentleman that none of his letters to me—and I have a considerable number—gives a really satisfactory answer. My hon. Friend the Member for North Croydon (Mr. Frederic Harris) emphasised the need for industry to have an efficient and cheap telephone service of which people can take advantage at night. If the Postmaster-General thinks that business stops at five o'clock, and that people do not do any business at their own homes, he is wrong. For instance, it is vitally necessary for the manager of a cutlery firm in Sheffield to have a telephone in his own house. He works not only in his office, but also at home, after office hours. Indeed, many people are working seven days a week to further the cutlery export drive. The argument to me has been, "There is a telephone in the business, and there is no need for a telephone at home." That is entirely wrong—

Mr. Hobson

We have not said that it is wrong to have a telephone in the house, but merely that it was impossible to provide one because there was not sufficient equipment available.

Mr. Roberts

I do not wish to go through every letter I have received from the hon. Gentleman's Department. I am coming to the arguments about materials and labour in a few moments. There is priority for business purposes, and I say that it is equally important for a business man to have a telephone not only in his office, but also in his house. It was to that argument that I was particularly referring.

I wish to come now to the complacency of the Assistant Postmaster-General. The only words spoken so far in this Debate have been by the Assistant Postmaster-General, and some of the interventions which he made earlier suggest that he is viewing this matter with a certain amount of complacency. In some of the letters I have written to him I have pointed out the considerable delay that has arisen after the application for the installation of a telephone. There is the case of a man who applied for a telephone, first in March, 1941, while another wanted one installed on his business premises in January, 1940. Another with numerous associations applied in 1939, another with engineering connections in agricultural matters applied in 1940, and the manager of a cutlery firm has been waiting since 1943.

The Assistant Postmaster-General told us that one in three applications had been met since the war. It seems to me that there is a very serious time lag if people are still waiting for the installation of a telephone from as long ago as 1940 or 1943. My request to the Postmaster-General is to use some of this money to give us a better service, and I would suggest that that can be done, particularly in Sheffield where there is a great deal of discontent with increased labour. That labour, in point of fact, is available for this type of work, particularly signals, line laying and installation. The Post Office Committee, with which the Chamber of Commerce are actively associated, protested to the Postmaster-General when the labour force was cut down nearly two years ago. So far as I can see there is no reason why that labour should not be put back, at any rate in the Sheffield area, to deal with these applications. There is a certain amount of material available, but what is missing at the moment is the labour to deal with that material. In certain areas there is switchboard space available but the difficulty is labour. The Parliamentary Secretary has told us about the difficulty of labour, but that is a difficulty with labour on its present quota.

Mr. Hobson

The hon. Gentleman is segregating the different letters. If there has been a shortage of labour, that has been stated, but in most cases to which the hon. Gentleman referred in his correspondence the shortage has been that of equipment and particularly of cable.

Mr. Roberts

I am referring to the shortage of labour. Let me assure the hon. Gentleman that there is a large number of cases where there is a shortage of labour but not of materials, which I understand are available in addition to switchboard space. What I am suggesting is that in the Sheffield area the labour quota should be restored to what it was two years ago before it was cut down, and in that event a great deal of this work could be done. There is no reason why the Postmaster-General should not allow that quota level to be restored. I am not saying anything about arguments in favour of increasing it, but only of restoring it to the figure it was two years ago. He will have a very difficult task overcoming discontent if he puts up the charges in the Sheffield area and still keeps the low labour quota. I hope we shall have an answer on this matter when the right hon. Gentleman replies.

There is a great deal of discontent, as has been said in all parts of the Committee. The service is not nearly as good as the Assistant Postmaster-General seems to think, although one would not blame the present staff who are operating it. I think they are doing a remarkably fine job, particularly in the Sheffield area, where they have always been most courteous. The whole of the restriction comes from the right hon. Gentleman opposite, who will not provide the labour and materials which are necessary to carry out some of this essential work.

With regard to materials—a point to which I wish to give some attention—we all realise that the Ministry of Supply enters into the matter, and it is difficult in a Debate of this character to reconcile the claims of exports, on the one hand, with the demands for home consumption, on the other. I would point out, however, that one of the serious bottlenecks— if I may use an awkward expression—is being overcome, and supply is becoming easier. The prices of lead and copper have both gone down considerably in the last six months.

Mr. Godfrey Nicholson (Farnham)

Only on the world market.

Mr. Roberts

That brings in the iniquities of bulk purchase, and I will content myself with saying now that these materials are becoming available to those who are planning sufficiently far ahead. It is disgraceful that at the moment we should have such a restricted service from the centre apart from any increase in charges. I seriously ask the Postmaster-General to give full attention to the remark of the Assistant Postmaster-General in the Debate this afternoon,—"If you want better service let it come out of the profits." The Postmaster-General should give a better service out of the profits which he has already. In passing may I say, that remark was about the only sensible one made by the Assistant Postmaster-General this afternoon.

I shall wind up by saying we have heard very little from the Government Benches to defend this increase in Government charges. We have had no reply to the excellent speech made by my right hon. and gallant Friend the Member for Gains borough (Captain Crookshank). It would have been easier in this Debate if we had had a reply earlier so that, instead of asking all these questions, we could have by our arguments nailed the fallacies which the right hon. Gentleman no doubt will put forward. We have to wait, and, like all the others who have spoken this afternoon and who are not satisfied with the position, I shall go into the Lobby against the Government unless very good reasons are given in explanation of the present unsatisfactory position.

5.28 p.m.

Mr. Sydney Smith (Hull, South-West)

I want to reply to one point made by the hon. and learned Member for the Combined Universities (Mr. H. Strauss) that this was an example of what inevitably happens under nationalisation. If any service justified nationalisation surely it has been the telephone service. It appears to have escaped the recollection of the hon. and learned Member that the telephone service of this country was nationalised, not by a Labour Government, but by one who shared the opinions of hon. Gentlemen opposite. Why was it necessary for that Government, which was hostile to public ownership, to nationalise the telephone service? It was inevitably driven to take that course because of the overcharging and the sacrificing of the interests of the business community by the private company which was in control or the service at one time. There was widespread dissatisfaction with the old National Telephone Company, and despite the Government's hostility to public ownership, that step had to be taken. The telephone service in Britain today is a considerable monument to the efficiency of public ownership.

It has perhaps been overlooked that the Government telephone service does not enjoy a complete monopoly in this country. I am proud to be a member of an authority that has its own telephone service, and that service was initiated by the business people and commercial leaders of the City of Hull in hostility not to any Government service, but to the old private National Telephone Company. The introduction of the public service met with the approval of all sections of the community long before there was a Labour majority in this House or in the country. That authority was continued, by arrangement with the Government of the day from time to time, as an independent unit, operating in its own area.

There have been similar local services in Southampton and, I believe, Glasgow. The Hull service is in the happy position of having ploughed back its margins and its profits. It has developed the service out of revenue and is therefore in a very strong financial position. I submit that there is an unanswerable case for the Minister. The locally-owned telephone service in Hull is in precisely the same position as the service run by the Minister at this time. The Hull service has been developed by the use of its resources and reserves, and it has avoided an increase in tariffs. Today, confronted with increasing costs on every hand, the Hull service is compelled to give attention to increasing its tariff. If a prosperous and go-ahead local authority which has strengthened its telephone service by the use of its margins for capital development finds that it must increase its tariff, surely we ought not to complain if the Government service finds itself in a similar position. There is an unanswerable case, because of increases on every hand, why that should be done.

Mr. H. Strauss

I am grateful to the hon. Member for South-West Hull (Mr. S. Smith) for giving way to me. The case that he is now putting, as I understand it, is that increased charges would be justified on account of increased costs, but that is not the case which was put by the Chancellor of the Exchequer. The case put by the right hon. and learned Gentleman was that the charges were to be increased to reduce the pressure of demand. That is a totally different matter, as I am sure the hon. Member would agree.

Mr. Smith

It has been recorded in HANSARD in a spech from the Postmaster-General that increasing costs would involve additional charges. I would take my stand with my colleagues here, if this were an impost for a revenue purpose, a general excise purpose, instead of for the telephone service. When one has in mind the generally increased charges of materials and components in every direction, one cannot avoid the acceptance of the case that an increased charge is justified. I submit to the hon. and learned Member for the Combined English Universities that where a local authority has found itself in that position, having used its reserves for expansion and finding that it must now ask for additional revenue because of additional costs, that is a good example, and that the Minister finds that he must follow that example.

How many things today have not increased charges attached to them? There are one or two directions where there is no increased charge, in particular, controlled rents. I am assailed almost daily by those who are interested in the increasing of rents because of increased costs. If there is a warrant for an increase in that direction, why not in the direction of the telephone service? Certainly the City of Hull have found it essential to move in that direction.

5.34 p.m.

Sir William Darling (Edinburgh, South)

We are having a very interesting discussion. I should like to follow the suggestion which was made by my hon. and learned Friend the Member for the Combined English Universities (Mr. H. Strauss). How is it that the Chancellor of the Exchequer tells the business community, who are in his opinion engaged in the making of large profits, that they must reduce their profits to give the public better value, yet when he has an enterprise under his own direction, the Post Office, it is not supposed to reduce its profits to give the public better value but to increase its charges? It seems a little difficult to understand. I am one of those clumsy people who heavily follow the instructions of the Chancellor of the Exchequer. I am seriously contemplating cutting my profits and giving the public better value, but I am greatly discouraged when the Postmaster-General puts his thumb to his nose and spreads his fingers out. That is an unparliamentary gesture, but it is the position which I understand he takes up this afternoon. I feel disconcerted.

The argument is that telephones cannot be extended to the public and to the business community at their desire, for a number of reasons. One of those reasons is shortage of materials and another is shortage of labour. I am able to say that there are more than 50,000 persons unemployed in Scotland. Perhaps the Minister will direct his attention in that direction. There are no functions of the Post Office, except those of Postmaster-General and Assistant Postmaster-General, that could not be discharged by ordinary men. There are scores and scores of thousands of men who in the Army learned to lay a telephone line, learned to work a switchboard, and to put a line from pole to pole or from roof to roof. They can fit the necessary wires to houses or factories. There is no shortage of labour. The labour there could easily be instructed and taught this art if the Postmaster-General were willing.

Instead of this, we in the City of Edinburgh are being offered what are called party lines. They are very disagreeable to the parties. Good neighbours who hitherto got along in peace, harmony and felicity, are now listening to each other's gossip and chat on the Postmaster-General's party lines, and that does not add to the harmony and good nature which would otherwise prevail. Has the Minister considered looking at the enterprise described by his hon. Friend the Member for South-West Hull (Mr. S. Smith)? The hon. Member spoke very modestly about the small but well-organised monopoly in that area, which produces a higher standard of efficiency than does the right hon. Gentleman with his nation-wide monopoly. Will not the Minister look at the possibilities of decentralisation? Is there not something to be learned even from the tepid commendations of the hon. Member?

Mr. Hobson

Is the hon. Member familiar with the rural areas of Hull?

Sir W. Darling

No, I am not. I must direct the hon. Gentleman to his hon. Friend who made the speech and who is fully informed on that matter. The hon. Member for South-West Hull said sufficient to raise doubts in the minds of the Minister as to whether the efficiency of the Post Office telephone service is as high as it might be.

I have no doubt that the Minister is also in close contact with the Bell service of the United States, who have to cope with infinitely more difficult circumstances but are expanding their service and increasing their efficiency over an immense continent. That service is being made available at decreasing prices. I will check my figures with any hon. Member who care to do so, but I think I am right in saying that the private enterprise Bell Telephone Service is unique in the world. It is supplying a telephone service to millions of people at a lower rate than is the State monopoly which is saddled upon us.

The Postmaster-General is one of those men who attempt to do too much. Speaking as a shopkeeper I must say that I think the Postmaser-General tries to do too much in the shops which he conducts in this service. The Post Office has a different type of shop from any other shop. The public are barred off from the staff by wire grilles. There is a grid in front of every assistant and the customer is prevented in a very remarkable way from getting into close contact with the servants of the right hon. Gentleman. There is the Zoo, but there are no other shops built on this remarkable principle. This ought to be looked at very closely. We have had no advance in the design of Post Offices since the late Sir Kingsley Wood who made a very very remarkable démarche in the improvement of Post Office design. Since then little has been done to improve the style and character of these important businesses.

No wonder! The Postmaster-General lays upon himself amazing responsibilities. He will do anything. He is the whipping boy of His Majesty's Government. Whatever they want him to do, he will do it. It is the Postmaster-General who, in his greed for gain—it can be no other reason—runs about in every Post Office collecting the money for dog licences. I have always thought it absurd that it should be the Postmaster-General, who does nothing to deal with mad dogs—the police do that—and nothing to deal with dirty dogs—the local cleaning department does that—who should do this. Is there any justification for his issuing dog licences? For years I have tried to get dog licences issued by local authorities or the police, but the Postmaster-General takes the money from the city of Edinburgh to St. Martin le Grand and no doubt banks it there for the Chancellor of the Exchequer. He is extending the departmentalisation of his business and he should consider divesting himself of some parts of his business which are not necessary for the purpose of the Department and which are anti-social in their effect.

Why should the Postmaster-General issue B.B.C. licences? Is there any reason why when I go to draw my old-age pension or to buy some stamps I should be held up by people buying licences for dogs or broadcasting? The efficiency of the Post Office is impaired by the Postmaster-General taking upon himself burdensome tasks which he has not the necessary skill to discharge. Why should not the B.B.C. licence be sold with the broadcasting machine and paid for at the time of purchase as with Purchase Tax? Why should the Postmaster-General have the trouble of writing to me about the renewal of the licence? Why should not the man who sold me the broadcasting machine come to me a year later and say, "I have come for your licence and I want to sell you a new machine"?

Mr. Orbach (Willesden, East)

Suppose one did not want to buy a new machine?

Sir W. Darling

He would collect it much more cheaply and efficiently. The present position has arisen because the Postmaster-General is a busybody and because he persists in attending to what is not his own business.

For many years Edinburgh has been the capital city of Scotland and we have had there a Controller of Post Offices, a modest enough title. His Majesty's Government do not approve of the eminence of that great capital city and the Controller has been removed and now, like Carlisle, Derby or Banff, we have a Head Postmaster. We think this is hardly in keeping with the national dignity and we suggest that the Postmaster-General should look into the matter of the proper title. We do not want a Controller for Scotland but a Controller for the city of Edinburgh. "Head Postmaster" is not a sufficiently high dignity to be associated with the city.

The estimates refer to life insurance business. For many years under many Governments the Post Office stumbled and fumbled and tried to conduct life insurance. It is not generally known that the Post Office entirely failed in doing that. I believe that it is no longer doing it. That is one form of State trading which has been abandoned. The life insurance fund is still in existence because there are claims against it. I should like to know the cost of running this closed fund, in what the money still due to policy holders is being invested and what staff is concerned.

Savings comes in the same category. In a clumsy lumbering way the State has tried to organise the savings of the people. Although there is a branch in every village with facilities for saving and withdrawing, it has done it extremely badly. Proof of that can be found in the saving banks of the country. Without the facilities which the Post Office has, the great savings movement goes on at no cost to the ratepayer and no cost to the taxpayer. The Postmaster-General and his predecessors have engaged in a piece of busybodyism in trying to organise the savings of the people and they have done it very badly. I believe that there are more cases of fraud in connection with Post Office Savings accounts than with any other banking transactions in the country. With his elaborate detecting system with official stamps and initials, the Postmaster-General tries to prevent this but is not very successful. I should like to know to what extent the common funds have suffered through the many frauds.

This is not a business which the Postmaster-General is wise to follow. I would recommend the Postmaster-General or anyone else who takes on his office to examine very closely what should be his function in the State. It is to collect and deliver letters and to establish communications by telephone, and anything which detracts from those occupations will confuse and militate against the efficiency of the Department. Will the Postmaster-General consider reducing his activities to those which the public requires of him?

As my hon. and learned Friend the Member for the Combined English Universities (Mr. H. Strauss) said, the collection and delivery of letters has now become a farce. The risk as to whether one's letter will be delivered is almost the same as when making an investment in some of the gambling pools. Letters posted in Edinburgh sometimes take three days to reach London. The posting of letters in pillar boxes is one of the most chancy and adventurous transactions today.

Mr. Orbach

Is that the excuse which the hon. Member gives his constituents for not replying to them?

Sir W. Darling

The moveable label is usually obscure or chipped, and one drops the communication into the letter box with a prayer hoping against hope that it will be delivered, and often it is not. The delivery and collection of letters is not a difficult task and it ought to be done efficiently. In this House some time ago one of my hon. Friends was bold enough to say that the removal of the Post Office from its present management to private hands would add enormously to its profits and efficiency.

This adventure of State shopkeeping in selling stamps, dog licences and B.B.C. licences, transmitting telegraphs and managing telephones is not a well-managed business although it shows a surplus. That surplus ought to be put back into the business to increase efficiency. I am gravely disappointed, for from time to time I have said that where there is a positive monopoly the State should manage it. Here is a positive monopoly, but owing to the diversity of the talents and the inclination of mind of the Postmasters-General, what should be a clear-cut well-managed public service is just an increasing and expanding muddle with inefficiency at the rim and discouragement at the centre.

5.48 p.m.

Mr. John E. Haire (Wycombe)

The Committee will be delighted that the nationalised Edinburgh express got in ahead of time today so that we could have from the hon. Member for South Edinburgh (Sir W. Darling) his usual midnight frolics at teatime. When we mentioned "disagreeable parties" I detected a casual glance at his hon. Friends beside him, but nobody can say that he is disagreeable in himself and we have all enjoyed his speech. It will not have passed without notice that 10 of the 11 speeches we have heard have been opposed to this increase in telephone charges. Before I put my cards on the table I want to say that there has been a certain measure of congratulation to my right hon. Friend for what has been achieved though hon. Gentlemen opposite appear to have praised with faint demurs. On this side of the Committee we recognise that a remarkable achievement has been made. In an intervention my hon. Friend pointed out that one in every three telephones in service has been supplied since the end of the war.

It is only fair to recognise that considerable progress has been made in the Post Office during the term of the present Government. We certainly have a long way to go before we can catch up on the excellent service given in United States of America which I have set as my target for this country, but I do not agree with the hon. Member for South Edinburgh that the service there is cheaper. If the hon. Gentleman investigates the telephone charges he will find that they are considerably in excess of ours, and that is particularly so in the case of long distance calls and telegrams. I feel that my right hon. Friend the Postmaster-General must be aware of that, and he must have set a high target for the improvement of our service. In his term of office he must have been thinking, "To what extent do I wish the telephone service in this country to expand?" Has he had that long-term programme, and is he now a disappointed man? Has it been curtailed? I know that in our telephone service, particularly in the rural areas, there is a great deal still to be achieved.

I am an unhappy man at the imposition of this new tax, because I believe it is a tax which will curtail the development of our telephone service. I agree with most hon. Members who have spoken this afternoon that it will curtail the business use of telephones and that it will curtail the private user of the telephone. If my right hon. Friend can say that he does not think it will curtail the use of the telephone, that it will not cut down on the long-term programme which he must have planned, then I might be encouraged to think again.

I want particularly to refer, because only one hon. Member so far has done so, to the rural areas. Many hon. Members who are familiar with our rural areas will be aware that the population there has increased since the war because many city dwellers evacuated themselves to the rural areas and have remained there. In many cases they are being denied the use of a telephone with which they were familiar before the war. I sincerely hope that those who have been waiting, in some cases in my constituency for two or three years, will soon be connected, if they have not been put off by this increase in charges.

At the same time, I would hand out a meed of praise to my right hon. Friend that the service which I have received from him and his officials in my own constituency has been excellent. In those cases where I was able to show that there was a priority, or a good reason for the installation of the telephone, or that there was a long delay, when it came to the notice of my right hon. Friend I am happy to say that in nearly every case it received the attention with which I was pleased. At the same time he has made progress in the installation of kiosks in our rural areas. That is an improvement upon which I would congratulate him, but I should like him to go further and, now that there has been an imposition of an increased charge on telephone users in the country, perhaps he will find it possible to increase the number of kiosks available?

I would add a word on a slightly different note about the efficiency of our rural exchanges. I am not satisfied that as yet they are nearly as efficient as they might be. In my own local village we have a long way to go before we can achieve the efficiency of the urban automatic exchange or of our London service. Not that I am in a position to give that full marks on my own London exchange. We have frequent wrong numbers. To give one illustration, it often happens that the Flaxman Exchange gets tied up with the Frobisher Exchange, so that I find myself frequently apologising to somebody, or being apologised to, for having the wrong exchange. Could I ask my right hon. Friend to give his urgent attention to that point? There is a further point which my right hon. Friend might note. In the new towns there will be many people who will be moved out of the cities and will find that they may have to wait for telephone service for a considerable time. What will he do in the case of subscribers who, in some cases, may find themselves moved somewhat involuntarily to a new town area? Are they to have to wait for a long time?

I agree so much with hon. Members on both sides of the Committee that this extra charge is retrogressive. I had hoped that we might reach the stage soon when every new house built had included among its fitted furniture a telephone. Indeed. I hope that the time is not far distant when we may achieve that because, as one of my hon. Friends said, every working woman, indeed every home, deserves a telephone. A telephone is no longer a luxury, it is a necessity. So can my right hon. Friend set this as one of his targets. Does he think that this extra charge is the way to achieve it? If, in fact, he finds himself with the Treasury revolver at his head, might I make a suggestion? Would he agree to cast his mind over this problem again to see whether it would not be possible to introduce differential rates as between the rural areas and the urban areas? He himself said that the telephone service is much more desired in rural areas, so might there be differential rentals which would give the rural areas a slight advantage?

I hope that when my right hon. Friend replies tonight, he will have some concession to announce to the Committee because it must be clear to him and to the front bench now that there is a good deal of opposition to this increase.

5.57 p.m.

Mr. Niall Macpherson (Dumfries)

As this Debate has proceeded it has become apparent that the only support which the right hon. Gentleman has received has come from the hon. Member for South-West Hull (Mr. S. Smith) who, I see, is just leaving the Chamber, and whose division is in a city which, it appears, is the least affected by the charges we are now discussing, of any in the country. There is no doubt at all that the increase of charges is operating as a tax. It may seem to the Chancellor a good idea to squeeze out revenue wherever he can, so long as the pips do not squeak loud enough for them to grow into an election cry, but when any increase of this kind is suggested, we naturally have to ask two questions. First, is it sound policy in itself? Secondly, is it timely; does it fit in with the general policy that is being pursued? As services become more and more widely used they should certainly become cheaper, but here we have what has rightly been called a retrogressive step because the service is now actually to be made more expensive

I shall try to anticipate some of the arguments that may be put up, because we must be quite clear what arguments we shall not accept from the right hon. Gentleman; the more so as he has chosen to reserve his speech until the end of the Debate instead of putting up his arguments, like ninepins, to be knocked down. Just as electricity charges are increased in the winter months in order to discourage use, so it might be said, telephone charges should also be raised to discourage the use of the telephone because of the alleged overloading of the service. Thus the Postmaster-General might go and ask leave of the Cabinet to raise his charges so as to discourage people from applying for the telephone. That certainly would be a retrogressive step but, because of the shortages of material and labour, it would at least be understandable.

But if that is so, surely the right thing to do would be not to penalise existing users, but to put an additional charge upon new installations. I am not arguing in favour of that; I am merely trying to present what is the logical attitude to adopt. If we are to regard shortage of labour and materials as temporary, the additional charge would be temporary and of a "once for all" character. That is done in certain countries, including, I am told, in Sweden. Alternatively, the Postmaster-General might ask the Cabinet for leave to increase charges in order to reduce the load on existing exchanges. To do that he might try to reduce either the number or the duration of calls. I once knew a lady who, on getting into her bath at 8.15 each morning, invariably followed a routine of plugging in her portable telephone in the bathroom and ringing up her friends and relations more or less at random.

Mr. Drayson (Skipton)

Was the hon. Gentleman included amongst them?

Mr. Macpherson

Yes, sometimes; but I do not suppose that kind of thing happens very often now, for people do not telephone except for a definite purpose.

If the right hon. Gentleman sought to increase charges with a view to reducing either the number or duration of calls, it would be logical, surely, to increase the costs where the increase in load has been heaviest. The commercial accounts of the Post Office show that the increase in calls has been heaviest in trunk traffic, which is now 100 per cent. higher than it was before the war. But trunk calls—again, I am not arguing this but am merely putting forward what seems the logical course—are not being increased at all. It has been recently observed in the House, and has been the subject of Questions, that once people pick up a telephone they use it for far too long. Therefore, any increase which is sought should be one which would make people pay for the length of time of their calls, especially in public call boxes. The right hon. Gentleman has told us that at present he lacks the technical machinery with which to do that. Is he taking any steps to provide that technical machinery?

It appears that it is not the right hon. Gentleman who has approached the Cabinet or anybody else to obtain an increase in charges; it was the Chancellor who had this big idea. As has been quoted already, the Chancellor said in his Budget statement: The Postmaster-General has agreed to assist me.…"—[OFFICIAL REPORT, 6th April, 1949; Vol. 463, c. 2102.] I must make it clear to the Committee, therefore, that it is not open to the Postmaster-General to argue that he is putting forward these charges because he wishes to reduce the load on the telephone—on his administrative machinery, lines, exchanges and so forth; this is purely a budgetary measure put forward by the Chancellor in order to get £8 million more revenue.

Is that sound policy? Is it right that a public service—a public monopoly at that—should be exploited to obtain revenue for the State? Ought not the public service to be supplied as cheaply as possible in the public interest? The Minister of Health has lately been telling us that housing has become a service—a social service, I think he called it. He does not make a profit out of it; on the contrary, he gives a big subsidy. Telephones, on the other hand, make a very substantial profit; in 1947–48 it was £19 million, and there is the surplus of £10½ million to which hon. Members have referred. The right hon. Gentleman may say, "But in 1948–49 we do not anticipate that the profits will be as big, and the Chancellor exacts that we shall pay him so much each year."

If that is what the right hon. Gentleman is to say, it is very difficult to reconcile such a policy with the principles on which a public service should be run. As other hon. Members have said, a case could be much more easily made out for a reduction of charges in view of the substantial profits now being made. The right hon. Gentleman might be able to argue that such a course would not be timely in view of the shortage of material and labour. But is the present the right time to increase the charges? Any increase must mean not only increasing the costs of commerce and industry but of agriculture also.

An unfortunate habit has lately emanated from the Government Front Bench of reaching agreement on certain points—for example, on guaranteed prices in agriculture—on the basis of ascertained cost, and then increasing the costs arbitrarily on Government initiative. That is already happening in water supplies; I do not speak for England, but that is what is to happen in Scotland. We now see that the same thing is happening with the telephone service, and, as my hon. Friend the Member for North Croydon (Mr. Frederic Harris) has pointed out, it is no small matter, but one involving additional expenditure of hundreds of pounds to some users.

I should like the Postmaster-General to answer this question. Are telephone charges taken into account in calculating the cost of living, or does the Chancellor look around and say, "I wonder what is not taken into account in calculating the cost of living"; then, when he finds it, he say, "Ah! We will put that up." Is that what he says, pretending that there has been no increase whatever in the cost of living? There can be no question of the extra charges mopping up any surplus spending power. No such claim could possibly be made. This is an obvious increase in charges at a time when everybody recognises that on the whole prices have tended to turn in the opposite direction.

It was the hon. Member for East Walthamstow (Mr. H. Wallace), who remarked that the increased charges seem to be designed to make people give up the telephone. I doubt whether that was the intention; but that it will have that effect is quite clear and ought to have been clear to our planners. In consequence of the almost universal attitude which the Committee has shown, I hope that the right hon. Gentleman will tell us he is prepared to withdraw the agreement which he gave the Chancellor to these advances in cost and that he is now prepared to tell the Chancellor to go and find his £8 million elsewhere.

6.8 p.m.

Mr. Godfrey Nicholson (Farnham)

I am very sorry indeed for the Postmaster-General. He has had a very rough ride today, and any remarks I offer him are of the mixture of sympathy and congratulation. I sympathise with him for being put in an utterly false position by the Chancellor of the Exchequer. There is no conceivable defence of these charges except that they will yield roughly £8½ million to the Revenue. I do not think that the head of a Department, especially a Department with such an honourable history and tradition as the Post Office, should allow himself to be put into such a false position. I offer the right hon. Gentleman my sincere sympathy.

At the same time, I congratulate the right hon. Gentleman upon providing the Opposition with one of the best minor pieces of propaganda that could have been devised. There is a lot to be said for private enterprise and, where necessities are involved, for monopolies, which cannot be said for a State monopoly. In private enterprise, if materials or services are in short supply and it is natural that prices should rise, competition is intro duced and as a result the required service is provided. It is quite natural that in the case of a necessity a good argument can be made for a monopoly in that the State can afford, or does afford, to provide the required service in areas which do not show an immediate return by reason of the nature of the particular public need and services involved. To combine the worst of both those theories in one act, has been reserved for the Postmaster-General and he deserves our congratulations and, to some extent, our thanks.

I rose because of the profound dissatisfaction amongst my constituents at the way in which the few telephones there are are allocated. Quite rightly, priority is given to offices of party organisations, but no priority is given to party agents in their own homes. That partly nullifies the concession given to the offices, as a party agent conducts a lot of his business from his own house. The same applies to many other forms of business in which priority is given. I could also give concrete examples of minor civil servants of a Department in London living in the same street, sometimes next door, for whom priority has been obtained. I ask the right hon. Gentleman very seriously to overhaul the system of priorities and recognise that not only are the Government—which does not matter very much—but the whole service, of which he should be proud to be in charge, falling very much in public estimation because of the present application of priorities. Again, I offer my sympathy, and my advice to him would be not to stand it any more from the Chancellor of the Exchequer.

6.12 p.m.

Mr. Wilson Harris (Cambridge University)

With the sympathy which the hon. Member for Farnham (Mr. Nicholson) has offered to the Postmaster-General, I associate myself to the full; with the congratulations and the reasons for them I have no concern. There seemed to me to be two flaws in an otherwise excellent Budget. One was the penny off beer, which I do not think will result in the consumption of an extra half pint, at the sacrifice of £18 million, and the other was this tax on telephones, the iniquity of which seems to be emphasised by its juxtoposition with the tax on beer. What appears to me even worse is the reason, or rather, the excuse the Chancellor of the Exchequer put forward for levying it. I hope it was his excuse and not the Postmaster-General's. The excuse was that it would relieve the pressure of demand. That can mean nothing more than that fewer people would go on the telephone because fewer would be able to afford it. What is that but rationing by price, instead of rationing by need, against which hon. Members opposite have protested rightly again and again?

It is not the people who need the telephone urgently for the conduct of their business but those who are able to purchase it at the enhanced price who will get the telephone more easily. I sympathise greatly with the Postmaster-General because obviously this step was not taken on his initiative. The hon. Member for Dumfries (Mr. N. Macpherson) was a little beside the point because he was putting a logical case to the Postmaster-General and the Postmaster-General cannot argue on the basis of logic at all, but has to make the best case he can for what is imposed on him by the Chancellor of the Exchequer.

I want to emphasise the hardship which this will cause in individual cases, and to appeal more particularly for my constituents who represent perhaps rather wider and different classes from those which the hon. Member for Farnham mentioned. Consider the position of the small country clergyman. He must have a telephone to maintain his position in the parish. He must be constantly using it, yet who of all persons in the community can afford the increased telephone charge less than this almost always underpaid country clergyman? Doctors have to use the telephone constantly and they find it a heavy charge on them. Dentists are in the same position and teachers, particularly teachers in schools and universities—not so much those at such universities as Oxford and Cambridge, as those in the "Red Brick" or newer universities, who need the telephone because they are scattered over a wider area and are not in close touch with their colleagues and headquarters. They will feel the increased impost very much. They will be told by the Chancellor, "You will not be able to have a telephone, not because you do not need it—we recognise you need it—but because you will not be able to afford it." That appears one of the most unsocial actions of any Minister. It is imposed on the right hon. Gentleman, but it is not worthy of the Chancellor.

If there is to be this increased charge, I urge that it should not be levied on private subscribers. It is easy to draw a distinction between private subscribers and others because some time ago we were told that free telephone directories could not be given to private subscribers but only to businesses and offices. I suggest that the class of persons who did not get the free directories should be freed from the new tax. It would not make a tremendous difference—I imagine it would not be 50 per cent. of the increased cost—but, as the whole 100 per cent. is iniquitous, I suggest that the right hon. Gentleman should consider the possibility of freeing private subscribers from this unjustifiable tax on the telephone rental.

6.17 p.m.

Colonel J. R. H. Hutchison (Glasgow, Central)

This has been a most curious form of Debate, first because, as the hon. Member for Cambridge University (Mr. Wilson Harris) said, we are discussing a most illogical action. The next curious feature is that there has been no reply from any of the arch conspirators whose action we have been criticising, although we have had the benefit of the occasional presence of the Financial Secretary to the Treasury. We have to wait until the end of the Debate to hear a reply to our criticisms and then we have no further chance of discussing the matter. I keenly suspect that this is because there is no reply and that the Debate has been run in this way for that reason.

What has been significant to me is the fact that not a single voice has been raised on the other side of the Committee in support of the Government. Occasionally there has been a little lip service to the hard time the right hon. Gentleman has had and to what has been done, but the main burden of the speeches has been criticism of what we also are seeking to criticise. I hope that the criticism which has been levelled by the hon. Members for Willesden, West (Mr. Viant), Enfield (Mr. Ernest Davies), Walthamstow, East (Mr. H. Wallace) and Wycombe (Mr. Haire) will not end in their joining the ranks of the purged. The procession of pseudo penitents is already impressive, but one who seems seriously in danger is the hon. Member for South West Hull (Mr. S. Smith). He seems to have vitiated two of the doctrines of the party. First he eulogised private enterprise and the system of telephones in Hull, which must have greatly incensed the Lord President of the Council and then he gave a diametrically different reason for the increase from that given by the Chancellor of the Exchequer. I conceive that he will be in very great danger.

A series of objections have been outlined in considerable detail by hon. Members on this side of the Committee. The first thing to which I and my right hon. and hon. Friends object is the system of using Government trading Departments for feeding money into the Treasury. The Government have recognised that that is a vicious principle because in one nationalisation Measure after another that principle is expressly excluded, and it is laid down that taking one year with another ends must be made to meet. Yet we have this reactionary example of the Post Office, which made a profit of £10½ million last year, now being called upon by the Chancellor of the Exchequer to raise its charges by another £8 million. We now have three forms of taxation—direct, indirect and now subterranean or most indirect taxation.

One hon. Member after another has asked what is the real reason. What was the procedure which took place? Can it have been that the Postmaster-General dialled "O" and heard the silvery voice of the Chancellor of the Exchequer saying "Can I help you? Chancellor of the Exchequer speaking." Or, as is much more likely, I imagine, that the Chancellor of the Exchequer dialled "O" and the Postmaster-General replied "Postmaster-General speaking. Can I help you?" Because it is the Postmaster-General who is being called upon to come to the assistance of the Chancellor. All this other talk about the demand for services and for instruments is, in my view, camouflage for using the Post Office in order to feed money into the Treasury.

Freedom of speech is a doctrine and theory to which the Party genuflect but every now and then, when it is inconvenient to them, they kick it out of the way. Thus we have, in the Committee stage of one Bill after another, curtailment of speech. So far as freedom of speech by telephone is concerned here is another attempt to cut it down; it is to be discouraged by charges which are already grossly extravagant being raised still further.

It would not be so bad if the system and the service which is in existence, at any rate in the city which I know well and have the honour to represent—Glasgow—were better. Even then, the existing charges are inordinately high, and there should be no question of further increases. I have a telephone instrument which is as temperamental as a prima donna, or perhaps one should now say as temperamental as a telephone. One can dial "O" or any number one requires, and it is a complete toss up whether one gets whatever number one has been intending to dial. In the paraphrase of the old song about the bran pie: You may get 'Inquiries,' You may get stuck. You may get your connection, You never know your luck. That happens time and time again in Glasgow, and Glasgow is by no means unique in that respect.

So I cannot join in the testimonials about what has been done by the right hon. Gentleman's Department. I can see nowhere in what has so far transpired any hint of an improved service, and an improved service is desperately needed. Yet, while the shortage of telephones exists, and while enormous numbers of people are queuing up for telephone installations, and while the Assistant Postmaster-General says there is a shortage of cables and instruments, what do we find? In 1947 telephone plant to the value of £140,000 was exported; in 1948 such plant to the value of £340,000 was exported. Perhaps these are not terrific figures, and I appreciate the Government's difficulty in discriminating between one form of export and another.

But the telephone is a necessity in commercial life today, and by the same token, or to the same amount that telephone facilities are cut down, so we cut down the possibility of competing in the export market. We require all the many facilities that go to make up successful competition. If this export of telephone equipment is really the reason why we have 400,000 applicants, or whatever the number is, waiting to have telephones installed, the Postmaster-General and the Government are doing a disservice to the country by exporting this equipment for the very small return which these figures must represent in the great national accounts.

Telephones are absolutely necessary in modern commercial life; it would be as reasonable to try to cut out the telephone from commerce today as to tell businesses to drop the use of typewriters and go back to writing letters by hand. Not only are telephones essential, but so is an efficient and quick service. How often have hon. Members had the experience of waiting, of getting a wrong number, of being cut off during their call? Has any hon. Member ever had the experience of being cut off during a call, and of being told by the operator "Sorry, I cut you off"? It is always the person at the other end who does the cutting off. There should be no cutting off in a properly conducted telephone service, efficiently manned and run.

We have heard a little today about the Scandinavian telephone systems. I would like to ask the Postmaster-General whether any close study has been made of the system in operation in Sweden, which seems to be cheaper, more flexible and more popular than ours. In large areas in that country, each on average comprising 1,750 square kilometres, or about 25 by 25 miles, there is no extra charge at all for making a call. Subscribers' stations per thousand of the population which have been installed since the beginning of the war in Stockholm proper represent a rise from 382 per thousand of the population in January, 1939, to 528 per thousand of the population. Those are extraordinary figures.

Mr. Hobson

The hon. and gallant Member is forgetting that Sweden has not been involved in two world wars. She was neutral.

Colonel Hutchison

World wars or not, the contrast between the figures for Sweden and this country is so striking that that cannot be the whole explanation. One could give further figures for the other towns and the country. Taking the average figures of telephones per thousand of the population, in Sweden at the present time they are 194.3 as against what I understand is our 93; they are just double.

Mr. Skeffington-Lodge (Bedford)

Will the hon. and gallant Member tell us what Government has been responsible for that wonderful situation in Sweden?

Colonel Hutchison

I must leave the hon. Member to fight that out with the Assistant Postmaster-General who invoked war as being the cause. Now the hon. Member is trying to insinuate that it was the Socialist Government of Sweden that was responsible. At all events, can our Socialist Government not do as well? In Sweden, for example, where there is a population of 8 million, the number of calls in 1947–48 was 1,870 million. In Great Britain, with a population of 50 million, calls in 1946–47 numbered 2,897 million. Thus for a very much smaller population the number of calls was about half the number made in our country. I suggest that the right hon. Gentleman should closely examine the system in operation there of areas of free calls. Whether it is due to the Socialist Government or to the non-interference of the war, something has been produced with which the Swedish population is at least much more satisfied that we appear to be in this country, judging by the speeches we have heard.

The telephone and telephone apparatus are, for ordinary members of the public, more than a convenience, and for the commercial world they are an absolute necessity. It must be realised that to the extent that telephones are denied to industry or to the extent that the telephone system is inefficient, so industry will be hurt and yet another small burden to be carried on its back will be added. We cannot, therefore, accept these charges because they are a vicious form of taxation. They are another straw—admittedly only a straw—for the back of industry; but it must be remembered that the burden which broke the back of the camel was made up of hundreds of straws and it was the last one which finally broke it. We cannot accept the theory of checking the demand made by industry for an essential service and essential equipment by means of taxation of this kind, and so we must press this question to a Division.

6.30 p.m.

Sir Stanley Reed (Aylesbury)

I listened with great respect to the speech of the hon. Member for Enfield (Mr. Ernest Davies) which I think was one of the most closely reasoned speeches I have ever heard in this House. I hope I do not misinterpret him if I say that one of the great points in that speech was that in a public service which was a national monopoly the prices charged went up, but they very rarely went down. With that doctrine I am in complete agreement. We who hold quite different views on the subject of public monopolies can welcome the most conclusive and devastating condemnation of them ever heard in this House of Commons.

Mr. Ernest Davies

The hon. Member will excuse me, but I should like to get the record straight. My argument was that where charges are put up for revenue purposes, for taxation purposes, they are never taken off, because they are producing money for the Treasury.

Sir S. Reed

That is precisely my point. All these postal charges have been put up for taxation purposes or administrative convenience. Why are we paying 2½d. for a 1d. stamp? Because that charge was introduced by taxation. Why are we paying 2d. for a ½d. postcard? Because we are paying to a monopoly. Why are we paying 1s. for a 6d. telegram? For precisely the same reason, the reason which the hon. Member has stated with his clear and emphatic logic. Very much we have suffered, and we shall continue to suffer, because as surely as night follows the day there is not the slightest possibility of these and other illegitimate charges coming down, because it is a national monopoly.

Why are these telephone charges going up? The hon. Member for Cambridge University (Mr. Wilson Harris) said they were illogical. No, they are inexorable. With the fantastic scale of expenditure forced on this country by hon. Members on the other side of the Committee—and a few misguided souls on this side—we have reached that stage of taxation when the Chancellor of the Exchequer must claw revenue from wherever he may get it. With this prodigal expenditure today and the tenuous surplus shown in the Budget Statement—which will entirely disappear at the least whiff of adverse current—he dare not avoid any possible source of raising revenue. He has gone to the Post Office because it is a monopoly, because every charge they levy must be paid. There can be no law of diminishing returns here, because this is a service which no one can do without. The gravamen of this charge is not that the Chancellor has put up these charges, but that this House has consented to a colossal expenditure which makes them inevitable. There will be no relief from this and other charges from national enterprises and in other forms until the national expenditure is reduced.

The hon. Member for Enfield said he would be very much put to it to defend this charge in his division. I will make an offer to him, and I warn him to be careful because he may resile from the idea of invoking Satan to rebuke sin; but I will come down to his division at any time he may desire and justify these charges up to the hilt because they are forced upon us. The scale of expenditure is now such that no source of revenue can possibly be neglected or avoided. That is the position which we have to face today. It is beating the air to talk of improvements here and there until we have so reduced the scale of national expenditure that we can press on the Chancellor the wisdom and justice of greatly reducing these and other charges which rest on the community.

We cannot have our cake and eat it. We cannot have this expenditure for which this House of Commons is responsible—that side in particular and this side in part, let us take our share of the responsibility—without those charges going on indefinitely. They are bound up with the colossal administrative burden which we have accepted, or which has been foisted upon us.

6.36 p.m.

The Postmaster-General (Mr. Wilfred Paling)

In quite a number of speeches made today, including the last one, there have been criticisms of the high expenditure in this country at the present time. That is more to do with the Chancellor of the Exchequer than with me—

Captain Crookshank

We asked him to come.

Mr. Paling

—and I do not propose to take part in that side of the question. I shall try to confine myself to my own Department.

Before I come to the question of telephone charges, I wish to answer a few questions put to me about postal matters. Hon. Members have referred to late collections and early deliveries. This matter has cropped up in the House on a good many occasions at Question Time, and I have referred to it before on Supply Days. It is true that the number of collections and deliveries are less now than before the war. That is due mainly to the problem of manpower. Whether we shall ever get back to the early deliveries as they were pre-war I do not know. There are two sides to that question. We could have deliveries so early that the people themselves would think it a nuisance, particularly if they had to get out of bed very early in the morning to take charge of a postal packet which cannot be put through the letter box.

It is however a fact that deliveries are slightly later, but the main grouse is that there is no late post. To illustrate what I mean, take the example of a man in London, or some great city, who is at work until perhaps 5 o'clock, 5.30, or 6 o'clock. He comes home and has a meal and finds letters waiting for him which he would like to answer, and the last post probably leaves at 6 o'clock. He would like something done about that. It is true that at the head post office he can post up until 8 o'clock; but in some cases the head post office is quite a distance away, and he does not like having to do that. I frankly admit that that state of affairs exists. I should like to alter it and give some of these extra services, but it is entirely a question of manpower.

Colonel Hutchison

Can the right hon. Gentleman give the Committee any figures to show what is the manpower now, as compared with before the war? It is the pre-war services which people are so anxious to get re-established.

Mr. Paling

No. I could not give that particular figure without notice.

Mr. Sutcliffe (Royton)

Was not that point satisfied in part before the war by the provision in most of the large towns of letter boxes on the late buses?

Mr. Paling

Yes, I believe that was done to some extent; and the matter has been raised on a few occasions in this House to see whether something could be done in that way, but I doubt whether small improvements of that kind would deal with the main problem—

Mr. H. Strauss

Do I gather from the right hon. Gentleman that he expressly disagrees with the view publicly expressed in 1946 by the acting General Secretary of the Union of Post Office Workers that a late collection was undesirable?

Mr. Paling

I am sure that hon. Gentlemen would not expect me to enter into that controversy.

Mr. P. Roberts

Why not?

Captain Crookshank

Is it desirable or not?

Mr. Paling

The hon. Member for Eccleshall (Mr. P. Roberts) also raised a point about the position in Sheffield. He said that the trouble there was labour, and that labour could be got. I do not know whether that is so. One of our troubles is that of labour and another is that of materials both in telephone exchange equipment and in cables.

Mr. Roberts

Would the right hon. Gentleman be prepared to give orders enabling the man in charge of the Sheffield area to recruit labour, if he can get it, in order to help with this matter? Will the right hon. Gentleman allow some local powers to be delegated to the area so that we can see what they can do?

Mr. Paling

It is more than a question of labour. It is equally often a question of shortage of materials. In any event, we could not deal with this business in patches.

Mr. Roberts

Will the right hon. Gentleman give an undertaking to look into the difficulties at Sheffield for a start? Let us make a start somewhere and then we can go on to other places. Will he decentralise responsibility for getting labour to the people who have to do the job?

Mr. Paling

I am always willing to look into any problem which hon. Members put to me.

The hon. Member for South Edinburgh (Sir W. Darling) made one of his usual lively speeches. I think he said that efficiency is impaired because in the Post Offices we try to do too many jobs. I think he referred to the Postmaster-General as a "busy-body." It is true that we are doing a tremendous number of jobs at present. The work at the counters has increased out of all proportion. It is indeed very heavy. But if we took away from the Post Office and put somewhere else the issuing of dog licences, I doubt whether the majority of the hon. Gentleman's constituents would thank him for having made the suggestion. I do not think that there is any place in the Kingdom to which the population goes so willingly as they go to the Post Office. They think that the Post Office is the right place for this kind of service and they go there.

Sir W. Darling

Do I understand that in the right hon. Gentleman's view the public have a passion to buy their dog licences from the Post Office rather than from the police?

Mr. Paling

It is my view that the public would rather go to the Post Office than to many other places I could mention.

The hon. Member for Farnham (Mr. Nicholson) complained about the way in which the allocation of telephones is made. I think he said that in some cases party agents suffered because they could not always get a phone in their homes as well as a phone in their offices. Whenever anyone makes an application for a phone, if they have one in their office and want another at home, that fact must be taken into consideration.

I do not think that anybody could have given more attention to the question of allocation than we did when the number of applicants became so large. We had a huge waiting list and we had to do something about it. We went into the matter most carefully and we gave it a lot of consideration. I think that probably we have worked out the fairest possible method. It is inevitable that the fellow who does not get a phone is a little dissatisfied, but in view of the fact that we have about 500,000 on the waiting list someone is bound to be dissatisfied. On the other hand, most people who know anything about the principles of the system of allocation that we have laid down agree that it is about as fair a method as could be devised.

The junior Burgess for Cambridge University (Mr. Wilson Harris) discussed the suggestion that we should not increase charges to private subscribers. The residential subscriber has the opportunity of 200 free calls a year. He has the advantage over the businessman who must pay for all calls. If we were to liberate the private subscriber from the extra charge, that would put the businessman at a bigger disadvantage than he is at present by virtue of the fact that he receives no free calls. If I tried to follow the hon. Gentleman's suggestion, I doubt whether I should be met with general acclamation by hon. Members or by businessmen.

Mr. Wilson Harris

In the case of the businessman this is part of his general expenses and he can pass the amount on, but the private subscriber cannot.

Mr. Paling

Yes—and I heard an argument recently that any increase resulted in higher charges for other things, but I do not want to enter into a discussion about that.

The hon. Member for Enfield (Mr. Ernest Davies) referred to the fact that there was a manual exchange in his neigh-bourhood and that people wished that it could be made automatic. The development of automatic exchanges was stopped by the war. But for the war, manual exchanges might have been abolished. The hon. Member also mentioned the question of 7½d. on the issue of wireless receiving licences. This figure includes not only all costs at the counter but also the cost of keeping a register of live licences so that a postcard reminder may be sent to every licence holder. Often a second reminder has to be sent. The figure also includes additional costs where a licence holder renews his licence in another area and entries have to be made in the appropriate register.

The right hon. and gallant Member for Gainsborough (Captain Crookshank) also raised a point about the printed paper rate and asked why a change had been made. The main reason is that there was an anomaly. The first step of the foreign rate was ½d. for two ounces which was less than the inland rate. The figures were adjusted to make them equal. The right hon. and gallant Gentleman asked a question about the registered post and he also gave the answer. It is true that the volume of registered letters has increased enormously since the war. We do not want it to increase any further. The right hon. and gallant Gentleman realises what has happened in the Post Office and he stated the answer to his own question very well indeed.

On the general telephone situation, I was asked whether or not this is a fiscal matter. Naturally, I do not want to enter too much into a discussion about that. The Post Office has always been used for this purpose. Since I first came to this House, a long number of years ago, I must have heard this matter raised on at least a score of occasions. There have been many occasions when hon. Members have debated whether or not the Post Office should be used in this way. Since I went to the Post Office, I have had about two years' experience. I have some ideas on the subject, but it is not for me to express them in this Debate. The fact is that the Post Office has been used in this way. In 1934, I think it was, the Bridgman Committee was set up, and as a result of their recommendations about £10,750,000 was paid annually by the Post Office to the Exchequer. That was in time of peace. Conditions are very different today. Although there may be some controversy about this issue, it is not a new one. I do not think hon. Members opposite ought to be unduly surprised from that point of view.

Another point raised was that the surcharge on rentals is to be increased to 33⅓ per cent. A surcharge of 15 per cent. was imposed in 1940, and that goes up to 33⅓ per cent. It represents an extra charge now of only about 18 per cent. of the basic rental, that is, adding it to the 15 per cent., and taking all the war-time and post-war increases of rentals together, 33⅓ per cent. If we contrast that with the increases in charges made in private industry, it will compare very favourably. Prices in private enterprise industry—and I am not entering into the merits of private enterprise here—have in the main been increased much more than that; it is a very low figure compared with prices that could be quoted from private industry. With regard to the charges for calls, admittedly they are higher. They were increased by 15d. for local calls, and are now to be 1.5d. Where it was 1d. before the war, the charge is now 1½d., and that represents on pre-war charges an increase of 50 per cent. I claim again that it is not too big when compared with charges in private industry, and most of the prices which have to be paid at present.

Now let me come to the other point. It is stated that we have got an annual profit, and that the last published figure is one of £10,500,000, and it is argued that, because of this, we ought not to increase these charges. The figure is quite right, but, in the accounts for the year just ended at the beginning of April, that £10,500,000 profit will be down to about £6 million. For the year which we have just started, from the beginning of April to April, 1950, the profits will probably be down to about £3 million. In the past, when the Post Office saw its profits going down like that, they did not wait until they had actually suffered a loss, but took time by the forelock in order to do something about it. It is true that we are showing a £10,500,000 profit in this year 1947–48, but it is equally true that the profits are going down, and that, at the end of the present financial year, are more likely to be £3 million rather than £10 million.

Mr. P. Roberts

Would the Minister allow me? Where is this responsibility coming from? Is it the Postmaster-General himself, who is taking time by the forelock in order to do away with a possible loss, or is it the Chancellor of the Exchequer, who is wanting to collect taxation? He must make that point clear.

Mr. Paling

I have said that the fiscal question had always been a matter of controversy in this House. Some of the increase is fiscal, and there is no doubt about that. I am trying to prove that, in addition, there is some case for an increase in telephone charges and rentals on the merits of the Post Office itself.

Mr. Peter Thorneycroft (Monmouth)

Will the right hon. Gentleman forgive me? He must come down on one side or the other. He is trying to justify the increased profit on the basis of action by a business man who sees his profits declining. Is that the case, or is the case that it is needed for taxation? If the Minister says that it is a mixture of both, then how much is one and how much the other?

Mr. Paling

The hon. Gentleman says that I must come down on one side of the fence or the other. Presumably, he wants me to come down on his side. I am concerned in giving my answer in my own way according to how I wish it to be given, and the fact is that these profits are declining in the way which I have indicated.

Regarding the question of outstanding applications for telephones, it was suggested that these charges might make people hesitate and might have some effect upon them. I do not know whether they will or not. All I can say is that they have not had much effect yet. One or two people have withdrawn their names, but they are a very small number indeed, and the arrears remain at a very high figure.

Mr. Wilson Harris

Does not the right hon. Gentleman realise when talking about reducing the pressure of demand that he is proved to be completely wrong, because it has not reduced the pressure?

Mr. Paling

No, I think it is too early to say yet whether the charges to be imposed will have that effect or not, I do not know, but up to the moment, they have not had that effect.

The next point is on the question of the extension and development of the telephone service, and in this connection the question of kiosks was raised. We are doing a tremendous lot in the Post Office in this direction by providing more kiosks throughout the country, and we have this year got a programme bigger than that of any previous year. The people of the country take the view that the kiosk should be installed in every hamlet throughout the country in order to provide an emergency service for the people there.

When I looked into this matter a few months ago, I did not regard the position as satisfactory. Then, it was largely a question of payment, and those places which wanted a kiosk were asked to pay £4 per year for five years. That system worked out with some measure of success, but, from my angle, it was not a fair measure of deciding whether a kiosk should be placed in a particular place or not. So we have abolished that system and what we are doing now is quite different. At present, we are asking the rural councils to decide this matter for their own area, so that each county will be allocated a certain number of kiosks, and the rural councils will have to say which places should have them first.

I come to the question of farmers' lines. We have done a pretty good job in this matter, in addition to trying to meet the terrific demand for increased telephones by the population of the country generally. This demand has probably increased more amongst the farmers than anywhere else. Before the war, when our salesmen used to go round the country trying to sell telephones and asking the farmers to have them—and we had to do it in those days, as opposed to the things we have to do today—some of them used to look at the telephone as a new-fangled instrument, and we were not always successful. Since the war, the attitude of the farmers has completely changed, and they are now exceedingly anxious to get telephones. In view of the contribution which they are making to the food production of the country, we are most anxious that they should have them and we are using labour and materials to instal farmers' telephones which, if it were used in the urban districts, would provide many more telephones.

My last point on this matter, and it has been raised several times in the Debate, concerns the question whether we ought to haxe extended our exports as much as we have done. Complaint has been made that, while we have not enough materials to supply the needs of the people of this country we have been exporting more materials than we ought to have done, and that we should have used them for supplying the home demand first. That is a matter for debate, but we all know that the export business of this country has been exceedingly important since the war, and, to the extent that we have been able to help the export drive in the telephone business, we may have done the best service for the country, even though many people are still wanting telephones at home.

My last point is this, and this refers to the question of the rentals, that is the increase in the contract charge for the use of the telephone. So far as this is concerned, it has been decided that, contrary to what the Chancellor of the Exchequer said in his Budget speech, it would, on the whole, be better to deal with this matter by administrative action rather than by legislation, as the latter course might not be appreciated by subscribers and might lead to some misunderstandings. This means that an individual notice will be required to be sent in each case, and it will not be possible to make the new charge effective before 1st January next at the earliest. This would reduce the contribution to this year's revenue from the £1 million estimated to about £400,000.

The sending out and serving of the notices would be a very considerable administrative undertaking, and would require the taking on of very considerable extra staff for some months. In view of this and the reduced yield, my right hon. and learned Friend is looking into the matter again to see whether it will be possible to obviate this change in the contractual relationship at the present time.

Captain Crookshank

Does that mean that you are withdrawing it?

7.2 p.m.

Mr. Oliver Stanley (Bristol, West)

In view of the complete inadequacy of the reply, my right hon. and hon. Friends must press this matter to a Division. It was perfectly clear beforehand that we wished this Debate to range, not as some subsequent Debate may, over the detail of Post Office administration, but over the really important question raised by the Budget speech as to whether this increased charge, which will bear heavily on certain sections of the population, was necessitated by fiscal requirements or by the business requirements of the Post Office. We have had no definite answer to that at all. The Financial Secretary

to the Treasury has come in as a sort of belated watchdog to see that in no way should the Postmaster-General place the responsibility where it lies. If I may say so without offence, because, indeed, it is a compliment, so naive and open in his appearance is the Postmaster-General that even when he was refusing to tell us what the answer was, the answer was obvious to all of us.

We believe that the service rendered by the Post Office, not only to business people to whom after all, it is an integral part of the cost of production, but to professional people and to the vast majority of residential subscribers, is a service which ought not lightly to be increased merely to provide a small additional sum of revenue. As for the partial effort of the right hon. Gentleman to explain this away as something which any prudent businessman will do, I hope the Financial Secretary will call to the Chancellor's attention what the Postmaster-General thinks a prudent businessman ought to do, that is, as soon as the abnormal profits which he has been earning during the war begin to fall, raise the price to all consumers in order that whatever happens profits may be maintained.

Question put, "That Subhead A, Salaries, etc., be reduced by £100."

The Committee divided: Ayes, 118; Noes, 196.

Division No. 145.]	AYES	[7.5 p.m.
Baldwin, A. E.	Fyfe, Rt. Hon. Sir D. P. M.	Maclean, F. H. R. (Lancaster)
Beamish, Maj. T. V. H.	Gage, C.	Macpherson, N. (Dumfries)
Birch, Nigel	Galbraith, Cmdr. T. D. (Pollok)	Maitland, Comdr J. W.
Boles, Lt.-Col. D. C. (Wells)	Gates, Maj. E. E.	Marshall, D. (Bodmin)
Boothby, R.	George, Lady M. Lloyd (Anglesey)	Marshall, S. H. (Sutton)
Bossom, A. C.	Gridley, Sir A.	Mellor, Sir J.
Bowen, R.	Grimston, R. V.	Molson, A. H. E.
Bower, N.	Harden, J. R. E.	Morris, Hopkin (Carmarthen)
Boyd-Carpenter., J. A.	Hare, Hon. J. H. (Woodbridge)	Neven-Spence, Sir B.
Bracken, Rt. Hon. Brendan	Harris, F. W. (Croydon, N.)	Nicholson, G.
Braithwaite, Lt.-Comdr. J. G.	Harris, H. Wilson (Cambridge Univ.)	Nield, B. (Chester)
Bromley-Davenport, Lt-Col. W.	Headlam, Lieut.-Col. Rt. Hon. Sir C.	Noble, Comdr A. H. P.
Buchan-Hepburn, P. G. T.	Hinchingbrooke, Viscount	Osborne, C.
Butcher, H. W.	Hogg, Hon. Q.	Peake, Rt. Hon. O.
Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n)	Hope, Lord J.	Peto, Brig. C. H. M.
Carson, E.	Howard, Hon. A.	Pickthorn, K.
Challen, C.	Hudson, Rt. Hon R. S. (Southport)	Poole, O. B. S. (Oswestry)
Clarke, Col. R. S.	Hulbert, Wing-Cdr. N. J.	Price-White, Lt.-Col. D.
Crookshank, Capt. Rt. Hon. H. F. C.	Hutchison, Col J. R. (Glasgow, C.)	Reed, Sir S. (Aylesbury)
Crosthwaite-Eyre, Col O. E.	Jeffreys, General Sir G.	Renton, D.
Darling, Sir W. Y.	Keeling, E. H.	Roberts, Emrys (Merioneth)
Davies, Rt. Hn. Clement (Montgomery)	Kendall, W. D.	Roberts, P. G. (Ecclesall)
De la Bère, R.	Lambert, Hon. G.	Roberts, W. (Cumberland, N.)
Dower, Col. A. V. G. (Penrith)	Langford-Holt, J.	Robertson, Sir D. (Streatham)
Drayson, G. B.	Legge-Bourke, Maj. E. A. H.	Ropner, Col. L.
Drewe, C.	Lindsay, M. (Solihull)	Ross, Sir R. D. (Londonderry)
Eccles, D. M.	Linstead, H. N.	Sanderson, Sir F.
Eden, Rt. Hon. A.	Lloyd, Selwyn (Wirral)	Savory, prof. D. L.
Elliot, Lieut.-Col. Rt. Hon. Walter	Lucas-Tooth, Sir H.	Shepherd, W. S. (Bucklow)
Fletcher, W. (Bury)	Lyttelton, Rt. Hon. O.	Smithers, Sir W.
Foster, J. G. (Northwich)	MacDonald, Sir M. (Inverness)	Spearman, A. C. M.
Fraser, M. C. P. (Stone)	Macdonald, Sir P. (I. of Wight)	Stanley, Rt. Hon. O.
Fraser, Sir I. (Lonsdale)	Mackeson, Brig, H. R.	Stoddart-Scott. Col. M.
Strauss, Henry (English Universities)	Thorp, Brigadier R. A. F.	Wheatley, Colonel M. J. (Dorset, E.)
Stuart, Rt. Hon. J. (Moray)	Touche, G. C.	White, J. B. (Canterbury)
Studholme, H. G.	Turton, R. H.	Young, Sir A. S. L. (Partick)
Sutcliffe, H.	Tweedsmuir, Lady
Taylor, C. S. (Eastbourne)	Wakefield, Sir W. W.	TELLERS FOR THE AYES:
Thomas, J. P. L. (Hereford)	Walker-Smith, D.	Major Conant and
Thorneycroft, G. E. P. (Monmouth)	Ward, Hon. G. R.	Mr. Wingfield Digby.
Thornton-Kemsley, C. N.	Webbe, Sir H. (Abbey)
NOES
Adams, Richard (Balham)	Haire, John E. (Wycombe)	Paton, Mrs. F. (Rushcliffe)
Albu, A. H.	Hale, Leslie	Paton, J. (Norwich)
Allen, Scholefield (Crewe)	Hall, Rt. Hon. Glenvil	Pearson, A.
Alpass, J. H.	Hamilton, Lieut.-Col. R.	Popplewell, E.
Attlee, Rt. Hon. C. R.	Harrison, J.	Porter, E. (Warrington)
Austin, H. Lewis	Hastings, Dr. Somerville.	Proctor, W. T.
Ayles, W. H.	Henderson, Rt. Hn. A. (Kingswinford)	Pursey, Comdr. H.
Ayrton Gould, Mrs. B.	Herbison, Miss M.	Ranger, J.
Balfour, A.	Hewitson, Capt. M.	Rees-Williams, D. R.
Barstow, P. G.	Hobson, C. R.	Reeves, J.
Barton, C.	Holman, P.	Reid, T. (Swindon)
Battley, J. R.	Holmes, H. E. (Hemsworth)	Robens, A.
Bechervaise, A. E.	Horabin, T. L.	Roberts, Goronwy (Caernarvonshire)
Benson, G.	Houghton, A. L. N. D. (Sowerby)	Robertson, J. J. (Berwick)
Berry, H.	Hoy, J.	Robinson, Kenneth (St. Pancras, N.)
Binns, J.	Hughes, Emrys (S. Ayr)	Ross, William (Kilmarnock)
Blackburn, A. R.	Hughes, Hector (Aberdeen, N.)	Royle, C.
Blenkinsop, A.	Hughes, H. D. (W'lverh'pton, W.)	Scollan, T.
Boardman, H.	Hynd, J. B. (Attercliffe)	Scott-Elliot, W.
Bowden, Fig. Offr. H. W.	Irvine, A. J. (Liverpool)	Shawcross, C. N. (Widnes)
Braddock, T. (Mitcham)	Irving, W. J. (Tottenham, N.)	Shawcross, Rt. Hn. Sir H. (St. Helens)
Brook, D. (Halifax)	Isaacs, Rt. Hon. G. A.	Silkin, Rt. Hon. L.
Brooks, T. J. (Rothwell)	Janner, B.	Silverman, S. S. (Nelson)
Brown, T. J. (Ince)	Jeger, G. (Winchester)	Skeffington-Lodge, T. C.
Bruce, Maj. D. W. T.	Jeger, Dr. S. W. (St. Pancras, S. E.)	Skinnard, F. W.
Burke, W. A.	Jenkins, R. H.	Smith, H. N. (Nottingham, S.)
Callaghan, James	Jones, Elwyn (Plaistow)	Smith, S. H. (Hull, S. W.)
Chamberlain, R. A.	Jones, P. Asterley (Hitchin)	Snow, J. W.
Chetwynd, G. R.	Keenan, W.	Sorensen, R. W.
Cocks, F. S.	Kinley, J.	Soskice, Rt. Hon. Sir Frank
Collindridge, F.	Lawson, Rt. Hon. J. J.	Sparks, J. A.
Collins, V. J.	Lee, F. (Hulme)	Stewart, Michael (Fulham, E.)
Corbet, Mrs. F. K. (Camb'well, N. W.)	Leslie, J. R.	Stokes, R. R.
Cove, W. G.	Lewis, A. W. J. (Upton)	Swingler, S.
Daggar, G.	Lewis, J. (Bolton)	Taylor, R. J. (Morpeth)
Daines, P.	Longden, F.	Taylor, Dr. S. (Barnet)
Dalton, Rt. Hon. H.	Lyne, A. W.	Thomas, D. E. (Aberdare)
Davies, Ernest (Enfield)	McAdam, W.	Thomas, I. O. (Wrekin)
Davies, Haydn (St. Pancras, S. W.)	McGhee, H. G.	Thomas, John R. (Dover)
Davies, R. J. (Westhoughton)	Mack, J. D.	Thurtle, Ernest
Deer, G.	McKay, J. (Wallsend)	Tomlinson, Rt. Hon. G.
de Freitas, Geoffrey	Mackay, R. W. G. (Hull, N. W.)	Viant, S. P.
Delargy, H. J.	Macpherson, T. (Romford)	Walkden, E.
Dodds, N. N.	Mainwaring, W. H.	Walker, G. H.
Driberg, T. E. N.	Mallalieu, E. L. (Brigg)	Wallace, G. D. (Chislehurst)
Dugdale, J. (W. Bromwich)	Mellish, R. J.	Warbey, W. N.
Dumpleton, C. W.	Messer, F.	Weitzman, D.
Dye, S.	Mikardo, Ian	Wells, W. T. (Walsall)
Ede, Rt. Hon. J. C.	Millington, Wing-Comdr. E. R.	Wheatley, Rt. Hon. John (Edin'gh, E.)
Edwards, Rt. Hon. N. (Caerphilly)	Mitchison, G. R.	White, H. (Derbyshire, N. E.)
Ewart, R.	Moody, A. S.	Whiteley, Rt. Hon. W.
Farthing, W. J.	Morley, R.	Wilcock, Group-Capt. C. A. B.
Fernyhough, E.	Morrison, Rt. Hon. H. (Lewisham, E.)	Wilkins, W. A.
Follick, M.	Moyle, A.	Willey, F. T. (Sunderland)
Foot, M. M.	Murray, J. D.	Willey, O. G. (Cleveland)
Fraser, T. (Hamilton)	Naylor, T. E.	Williams, Rt. Hon. T. (Don Valley)
Ganley, Mrs. C. S.	Neal, H. (Claycross)	Wills, Mrs. E. A.
Gibbins, J.	Nichol, Mrs. M. E. (Bradford, N.)	Wilmot, Rt. Hon. J.
Gibson, C. W.	Noel-Batter, Rt. Hon. P. J. (Derby)	Woods, G. S.
Glanville, J. E. (Consett)	Oliver, G. H.	Wyatt, W.
Greenwood, A. W. J. (Heywood)	Orbach, M.	Yates, V. F.
Grenfell, D. R.	Paget, R. T.	Younger, Hon. Kenneth
Grey, C. F.	Paling, Rt. Hon. Wilfred (Wentworth)
Griffiths, D. (Rother Valley)	Palmer, A. M. F.	TELLERS FOR THE NOES:
Griffiths, Rt. Hon. J. (Llanelly)	Parker, J.	Mr. Joseph Henderson and
Guest, Dr. L. Haden	Parkin, B. T.	Mr. Hannan.