POST OFFICE AND TELEGRAPH (MONEY) BILL

HC Deb 11 November 1955 vol 545 cc2129-87

Order for Second Reading read.

11.5 a.m.

The Postmaster-General (Dr. Charles Hill)

I beg to move, That the Bill be now read a Second time.

This Bill falls into a long series of Post Office Money Acts, the purpose of which has been to provide the authority from time to time for the sums required for the expansion and development of the Post Office system. As the House will appreciate, it deals, not with replacements, but solely with new developments. This Measure provides for the issue of £175 million.

Mr. C. R. Hobson (Keighley)

This is important. The right hon. Gentleman says that the Bill does not deal with replacements, but after five and a half years' experience in the Department my understanding is that replacements rank as capital expenditure, because they can be stores and so on. I would draw the Postmaster-General's attention to the White Paper.

Dr. Hill

If the hon. Member will wait for a moment, I shall develop the distinction between the provisions in the Bill and what is contemplated in the White Paper. I can assure him that the money which it is sought, by this Bill, to raise is for new development, and does not include the renewals and replacements that he has in mind. Indeed, if he makes a contrast between the figure of £175 million referred to in the Bill, and the average rate of £100 million contemplated for the three-year programme outlined in the White Paper which is expected to last for two years, or rather more, he will see a substantial difference between the probable average rate. The difference between those two sets of figures is due to the fact, to which I have drawn attention and to which the hon. Member has referred, that this Bill deals with new development, and the fuller programme—the White Paper programme—which we shall be discussing on Monday, includes replacements.

The £175 million which it is sought to issue is for postal, telegraph and telephone services, roughly in the proportions of 3 per cent. for postal services, 4 per cent. for telegraph services and 93 per cent. for telephone services. The methods of meeting the capital requirements of the Post Office as authorised in this Bill are precisely those which were authorised in the Post Office and Telegraph (Money) Act, 1953. That Act, which passed into law on 18th December, 1953, authorised the issue of £125 million, the sum estimated at that time to meet the requirements of the Post Office for two years from January, 1954. As this Bill seeks to raise a sum of £175 million, the question will immediately arise in the minds of hon. Members, "Why the increase?"

Perhaps I may first recite the figures for annual expenditure on capital account for the last five or six years. In 1950–51. the figure was £30 million; in 1951–52, £38 million; in 1952–53, £51 million; in 1953–54, £56 million; in 1954–55, £59 million, and the estimated figure for 1955–56 is £73 million. Some reasons for the increase will be apparent to the House. They include the rise in the cost of telecommunications plant and buildings, due to increased costs of raw materials, increased wages, the need to overtake arrears in plant provision, defence needs and, not least. the expansion of plant to meet the ever-growing public demand on the telephone services.

Now a word on defence. The Post Office is responsible for providing communications for the Fighting Services and for Civil Defence and for making preparations to safeguard those communications and to maintain essential communications generally in the event of an attack. About 10 per cent. of the capital provided by the Bill will be spent on defence purposes of this kind. I saw in the Manchester Guardian this morning an estimate of 30 per cent. The figure is around 10 per cent. As the right hon. Member for Caerphilly (Mr. Ness Edwards) will recall, the big year in defence expenditure was 1953 when the proportion was in the region of 30 per cent. It is 10 per cent. now. It is expected that the £125 million authorised by the Act of 1953—

Mr. Ness Edwards (Caerphilly)

If I may interrupt the right hon. Gentleman for a moment, in discussing the Money Bill in 1953 we were told by the then Assistant Postmaster-General that one-quarter of the amount then voted was for defence purposes. Am I to take it that the 10 per cent. refers to the prospective investment?

Dr. Hill

I am giving an estimate of the proportion of the amount, the authority for which is now sought, which is to be spent on defence. There has been a fall, as the figure shows. It is expected that the £125 million in the 1953 Act will be exhausted by the end of the year, and that the capital expenditure for 1956–57 will be about £80 million and for 1957–58 about £83 million.

I would now like to draw attention to a modest but sensible change in the law which is conveyed in Clause 2. At present, where property owned by the Post Office is sold before it is used for Post Office purposes, the proceeds go to the loan account, so restricting the drawing under the Act. That is reasonable enough. But where the Post Office sells premises which it has used for Post Office purposes, obviously, as a rule, it will be to build other and better property. Where it does that, the law at present requires that the proceeds should go as Appropriations-in-Aid, unless the sum is a very large one, over £50,000, when it goes to Exchequer Extra Receipts.

Mr. Frank Tourney (Hammersmith, North)

Can the right hon. Gentleman say whether the property to which he has referred includes requisitioned property, including land and sites?

Dr. Hill

I am referring generally to what is owned and used as Post Office property and sold. It is the receipts of that sale which are at present required to go to what seems to be an inappropriate place. The appropriate place for those proceeds is the loan account so that they make their contribution to the cost of any new properties which are bought. Admittedly the sum involved here is very small. In the last three years the amounts so credited to Appropriations-in-Aid have not amounted to £10,000. But the present position is an anomaly, and it seems sensible to take this opportunity to put it right.

I now pass to the purpose to which the money authorised under the Bill is intended to be put. I have dealt with the point of renewals and replacements and have suggested the reason for the difference between the figures. On Monday we shall be discussing the White Paper figures and the figures here. The capital raised under this Bill will, of course, go to the development of Post Office services, including sites and buildings, but the bulk of it is for telephone services.

Once the issue of the loan is authorised, the outgoings will be subject to Treasury scrutiny. This has always been the case in the Post Office. As the House will recall, since 1947, public authorities, including the Government Departments and nationalised industries, have been required to submit to the Treasury each year their capital proposals for the following and the two subsequent years.

Our investment—here I speak both of new development and replacements—has been substantially curtailed since the outbreak of the war. True, our loan expenditure has increased in recent years—£50 million in 1952–53 to £73 million in the current year. Similarly, our capital investment—that figure including replacements—has grown from £64 million in 1952–53 to £92.5 million, the estimated figure for the current year. As outlined in the White Paper, after making allowance for the restraint which is in line with current Government policy, our average capital investment—the figure including replacements—for the next three years will be of the order of £100 million a year.

The figure which concerns us today is the figure of £175 million, the figure for new development. May I break down that figure as best I can? New plant accounts for £148 million of that figure. Broken clown further, trunk lines account for £42 million, local lines £27 million. subscribers' circuits £31 million, exchange equipment £36 million, Transatlantic cable £3 million, other telephone development £4 million, and postal and telegraph services £5 million. Those figures add up to the £148 million for new plant. The remaining £27 million is for sites and buildings, roughly two-thirds of it for telephone buildings and one-third of it for postal and telegraph buildings, including wireless buildings. Thus it will be seen that the bulk of the money is for new telephone development in respect of both plant and buildings.

Mr. W. R. Williams (Manchester, Openshaw)

How does this £9 million compare with the amount in the last Measure two years ago, with particular reference to sites and buildings?

Dr. Hill

I shall be coming to that a little later in terms of new starts on building.

May I deal, first of all, with the lesser item—lesser in terms of money—new buildings? New civil building was suspended during the war and has been restricted since the war, with the result that, following the growth of business and growth of demand, the capacity of many existing Post Office buildings has been outrun. All too often our buildings, both telephone and postal, are outmoded and worn out, some of them decrepit, with consequent loss of efficiency and worsening of working conditions, and all too many of our vehicles have to stand out in the open because of lack of garages.

We plan a large increase in building starts in 1956–57. This will mean a start being made on 200 telephone buildings, mainly exchanges, and 100 postal buildings in 1956–57. On the telephone side we shall concentrate on new exchanges to overtake the growing demand and to replace exchanges which are nearly worn out, and on the postal side we must provide relief for a number of sorting offices which are so deficient as to endanger the proper handling of traffic.

With regard to the total investment laid down for the next three years, as stated in the White Paper, we expect to maintain the rate of new starts on both telephone and postal buildings at the rate that I have given for 1956–57, and possibly to improve on it, if circumstances permit.

Mr. Tom Brown (Ince)

Will any of this money be spent in improving the facilities and amenities of sub-post offices in the rural areas?

Dr. Hill

Most certainly, not through the deliberate selection of rural areas, but, in so far as money is available for new starts for postal buildings, they will not be confined to urban areas. As the hon. Member appreciates, the bulk of our important postal buildings are in the urban areas and the centres of those urban areas, but, answering the precise question, there will not be exclusion of rural or semi-rural areas.

Mr. Ness Edwards

Perhaps the right hon. Gentleman will permit me to intervene, for on these occasions we have a certain amount of enlightenment and of "free and easy." I am sure he does not wish to mislead my hon. Friend; he does not mean in his reply that sub-offices which are scale offices will have anything out of this money.

Dr. Hill

I am grateful to the right hon. Gentleman for making the point clear in relation to sub-offices.

Nearly 380,000 people are waiting for telephones. I cannot claim to have done the arithmetic myself, but that is the figure with which I am supplied—nearly 380,000 are waiting for telephones.

Mr. Ness Edwards

I listened to the Government spokesman yesterday in another place and he said that it was over 380,000 in September and that the number was increasing. What is the figure today?

Dr. Hill

I think it will serve the purpose of the House, the right hon. Gentleman and myself if we settle for 380,000. Clearly the number is changing from week to week, but if we can agree on 380,000, I think we can also agree that it is a formidable figure.

Mr. A. E. Hunter (Feltham)rose—

Dr. Hill

I suggest that hon. Members might allow me to proceed with what is inevitably rather formidable stuff.

Mr. Hunter

Was there a waiting list for telephones before the war?

Dr. Hill

There was, although it depends on the years before the war which the hon. Member selects. In some of the years immediately before the war there was no waiting list in general, although in the telephone service there are always patches where, for local reasons, there is difficulty. I will refer to pre-war figures in a moment.

Nearly 1½ million applications have been met in the last four years. There has been a net increase of over a million in the number of telephones in the last four years. There are more than 6½ million telephones today, compared with just over 3 million before the war. Nevertheless, we have a waiting list of 380,000 and the demand is still rising, particularly in the residential areas.

Mr. Hobson

It will not do so now.

Dr. Hill

The hon. Member must not be too prophetic, because we all know how dangerous a business that can be.

As a result of our three-year plan for increased investment, and taking into account that restraint on investment already imposed, we aim to reduce the outstanding applications for telephone service to manageable proportions as quickly as possible. For example, we expect to make half-a-million new exchange connections in 1956–57, the rate of installation increasing somewhat in the following two years. After allowing for the telephones given up, this should bring the figure up to about eight million telephones in service in March, 1959. This will not prove a complete solution to the problem but in most areas it should make a very substantial contribution.

The House may be interested in one or two figures about demand in helping it to judge the net effect of the new capital development. Of the 380,000 people on the waiting list, about a quarter are business applicants; 36 per cent. are waiting for lines in cables; 11 per cent. are waiting for exchange equipment; and about 16 per cent. are waiting for both lines and equipment. I mention this in order to bring out the point that once the capacity in an area is reached either in exchange equipment or cable, a substantial new capital investment is needed before the customer can get what he wants.

The number of new applications is breaking all previous records. There were over half-a-million new applications during the twelve months ended September, 1955. The rate of demand is nearly two-thirds greater than it was two years ago and well over twice what it was before the war. Residential applications have risen by nearly 80 per cent. in the last two years. Business applications have remained fairly steady in the last year or two—about 15,000 a year.

It is interesting to compare the rate of connecting new subscribers with the rate before the war—and here I come to the question put by the hon. Member for Feltham (Mr. Hunter). In the year before the war 240,000 new subscribers were connected, and in the year ended September this year more than 436,000 subscribers were connected. There has been a steady increase in the rate of connecting new subscribers in the last four years. Giving the figures in round thousands, there were 324,000 new telephone connections in 1952 and 436,000 in the year ended September of this year.

About two-thirds of the applicants today get their telephones in less than three months. Obviously the time taken to satisfy an application must depend on local conditions. It may be that all the wires in the cable are fully used, in which case new cables must be laid before service can be given, or a new exchange or an expanded exchange may be needed.

I turn now to the number of subscribers who are on shared service. Since 1948, all new and removing residential subscribers have been required to accept the liability, if called upon, to share and, incidentally, many subscribers, although not so required, in fact have shared. At present one in three of residential subscribers, roughly speaking a million of the three million residential subscribers, are sharing. It is interesting that that compares with two in three in the United States.

I know that there are misgivings about sharing. Every Post Office Minister meets them, but I have found—and I suspect that my predecessor and the right hon. Member for Caerphilly found it, too—that the misgivings are greater before the sharing begins than after the experience of it has been gained. We must face the fact that because of shared service half a-million people are getting a telephone service which would otherwise be denied to them. It is our intention to abolish compulsory sharing as soon as circumstances permit, but let us face the fact that much remains to be done before we can expect to achieve that ideal.

There are 66,000 public telephone call offices, 20,000 of them being kiosks in rural areas. There has been an increase of 50 per cent. in the number of rural kiosks in the last six years. As hon. Members know, those rural kiosks are now mainly provided under a scheme worked out in association with the rural district councils. Incidentally, we lose an average of £40 a year on every rural kiosk.

So far, I have said nothing about trunk telephone development, yet it is in this field that the great development has taken place since the war. In the last two years trunk traffic has risen by 20 per cent. Two years ago the weekly rate was 5.3 million calls and today the weekly rate is 6.3 million trunk calls, which is an increase of 20 per cent. in the last two years.

Since 1939, the Post Office has been gradually mechanising the trunk service. The first phase has been to enable the first operator to set up the direct call, rendering it unnecessary for any operator subsequently to intervene. The further phase of that same system has been to enable operators to dial through automatic intermediate exchanges and so greatly to extend the field of the one-operator system. I should add that within the next four years further automatic trunk exchanges will be brought into operation in Birmingham, Bristol, Carlisle, Chester, Leicester, Manchester, Middlesbrough, Nottingham, Portsmouth and Swansea.

Looking ahead—I am now referring to something which successive Postmasters-General have contemplated—on the horizon is the mechanisation of the trunk services so as to enable the subscriber to dial his trunk calls everywhere; the subscriber of course dialling a code to route a call to a distant exchange, followed by the number. I am glad to say that this equipment is now being designed, and, in a foreseeable time, we hope to see its introduction. It will involve a number of changes, including mechanical account keeping, but it will bring an immense increase in the efficiency of the service.

The initial installation will be at Bristol, and it is planned to bring it into service in the spring of 1959. I mention that as bringing a little more definite prospect to what has been a general prospect for so long. The ultimate objective is to enable all subscribers to dial all their inland numbers, although it will be many years before we reach that position.

To deal with the subject of trunk lines generally, those familiar with Post Office techniques will know of the immense advances that have been made possible by the development of the co-axial cable, a development, which we in this country were the first to use in this connection-600 messages on the one tube at the same time. That is an over-simplified expression of what the co-axial cable means.

Four thousand new public trunk circuits will be added in the next three years. A start is being made with a chain of radio stations running along a backbone from South to North, a chain that will have a total capacity for more than 1,000 telephone circuits and a number of television channels. This is not our first use of radio in the public telephone system, for calls to some islands and kiosks in remote spots pass over radio links today.

I will say a word on the important subject of overseas communications. In 1945 there were 200 circuits to the Continent; there are more than 1,000 today. On the longer cables in the North Sea the new amplifiers have added greatly to capacity and efficiency. The new Rugby radio, recently opened, has meant an immense improvement in our overseas communications. I have not mentioned the Atlantic cable because I made a full statement on the subject in the House a week or so ago. These developments, with the Telex service, which is forging ahead, explain the reference to telegraph services in the breakdown which I gave earlier. Where new capital is involved in the telegraph service it relates to new automatic switching, which saves labour and contributes to economy.

The House will expect me to say a word about the inland telegraph service. Traffic in 1954–55 at 25.7 million telegrams, represents a reduction of nearly 26 per cent, on the figure of 34 million for 1953–54. Perhaps more significant is the figure for the first twelve months of the increased tariffs traffic, which was 34 per cent. lower than in the corresponding period under the old tariffs.

Lastly I come to the postal services, in so far as it is in order to refer to them. I have referred to the new starts—

Mr. W. R. Williams

Before the right hon. Gentleman leaves the question of the telegraph service, is he to say anything at all in this connection about negotiations and discussions taking place with reference to redundancy in the service, or is he leaving that matter until Monday?

Dr. Hill

I think that would be more appropriate on Monday. As we have these two days, I think it would be generally agreed that today we should adhere to new developments, leaving the other issues to be discussed on Monday. That seems to me a sensible thing to do, and I suggest that that matter may be raised on Monday.

Mr. Speaker

Not only would it be the sensible thing to do, but it is the only course which would be strictly in order. We must not anticipate Monday's debate today.

Dr. Hill

Thank you, Mr. Speaker.

I now wish to say a word about the postal services. I am very anxious that a greater part should be played in the postal services by mechanical aids. Conveyers have been used in certain offices for many years and a new type of mail conveyor is now being tried out. I think we must give more attention to the problem of the mechanical sorting of letters, to the mechanical and photoelectric devices which will enable the process of facing letters to be mechanically undertaken. Those who have visited sorting offices know that of all tedious tasks the facing of letters is one of the greatest. I am convinced that more could be done in that direction.

I will now refer to research, that important element in Post Office development. Every Postmaster-General and Assistant Postmaster-General learns to be proud of what is being done at Dollis Hill in the Post Office's own research station. There research is initiated and conducted, and collaboration is maintained with the manufacturers of telecommunications equipment. Improved instruments, transmission techniques, research on thermionic valves, application of electronic techniques to telephone exchanges, the rôle of the transistor in place of the valve—these are some of the researches done at Dollis Hill.

Let us not forget what research can do to bring greater economy. In 1935 a 100-mile trunk circuit, say from London to Birmingham, cost more than £8,000. Today, as a result of research, such a circuit can be provided for less than £1,000. That expresses the results of the development of the co-axial cable in simple terms. I think that everyone will agree that one of the most interesting of the problems is the development of electronic techniques for the telephone system. A private electronic exchange is actually in use at the research station at Dollis Hill, and so far the prospects are promising.

Before finishing, there are two more things that I should like to say. One is that any hon. Member who becomes a Post Office Minister is immediately struck by the morale, the loyalty, the efficiency and the sense of belonging to a great organisation which is evinced in the staff. In these developments that lie ahead, I know that that will continue. I wanted to say what I know you, Mr. Speaker, felt, and what my right hon. Friend the Leader of the House, the right hon. Member for Caerphilly, and the hon. Member for Keighley (Mr. Hobson) all felt; that one cannot be long at the Post Office as a Minister without feeling an immense pride in the Post Office and its organisation.

Secondly, I have not attempted to cover the whole field of Post Office work, for as you, Mr. Speaker, have pointed out. that would not be in order. I have confined myself to new capital development, and have not dealt with the issues which properly fall to be dealt with on Monday. The bulk of the money with which the Bill is concerned relates to telephone development. We cannot do all that we would wish to do but the increased investment now to be authorised will enable us to make a determined effort to bring the problem to manageable proportions. I am fully aware of the deficiencies and the criticisms but I know the critics will realise that the problem can be solved only by substantial new development, and that is what the Bill authorises.

11.42 a.m.

Mr. Ness Edwards (Caerphilly)

We have heard from the Postmaster-General his maiden speech on authorisation of capital in the Post Office. Like his predecessors, having gone to the Post Office, the right hon. Gentleman partakes of some of the enthusiasm which surrounds that very great establishment. I was very pleased to hear him say what he did in his last sentences when he referred to the impression that the Post Office had made upon him. It appears to have effected a conversion similar to the conversion in the case of his hon. Friend the Assistant Postmaster-General.

The Bill purports to authorise the Treasury to raise £175 million to cover the next two years. It is very interesting to see how the Treasury looks after its own prize milch cow, for that is what the Post Office is. As the right hon. Gentleman said, it is a profound task to overcome the mysteries of Post Office finance, to explain the cash accounts with the commercial accounts and to distinguish between renewals, replacements and capital development. To me, it looks very often like financial bedlam. I remember the late Sir Herbert Williams, who thoroughly enjoyed himself in confusing the House about the finances of the Post Office when he used to compare the commercial accounts with the cash accounts and then worked it all into this type of Money Bill when dealing with capital development.

I must take up the point made by the right hon. Gentleman about the money being required, not for capital replacement, but for new capital construction. He seemed to indicate that replacements and renewals were not to be provided for by this money. Surely he was in error, because the White Paper, when it refers to capital development in the Post Office, includes replacements and renewals; and that is part of the capital development of the Post Office and has always been, and is still proposed to be, credited to capital development.

Dr. Hill

The right hon. Gentleman has stated the point clearly but has added a confusion which does not exist. The White Paper does refer to capital investment in its widest sense, including replacements and renewals. For that reason the sum is larger. The express purpose of the Bill is to raise money in respect of new development, and new development only.

Mr. Ness Edwards

I am afraid that the right hon. Gentleman has not read his own White Paper. On page 6 it speaks about capital development and, under the item "Capital Development" replacements and renewals are included. However, we will leave the point. I know how difficult it is to plough through all this. It took me quite a long time to understand these mysteries of Post Office accounting, and if a slip occurs it is understandable.

The money which is to be found under the Bill is to be repaid over a period of 20 years: they are 20-year annuities. Is it not rather remarkable that the money which is raised by the Treasury for the Post Office has to be repaid on a basis of 20 years, whereas in other public corporations the repayment is over as long as 50 years or more? I take the classic case of the mining industry and the National Coal Board. The money that it raises for capital development has to be repaid over 60 years—and this in the case of a wasting industry with a wasting asset. In the case of the Post Office, however, the money has to be repaid over 20 years. This will have some relation to what we have to say on Monday, but I raise the point now as it is provided for in the Bill. I am sure that, haviing gone through it yourself, Mr. Speaker, you must have some sympathy with us in dealing with these difficult financial mysteries relating to the Post Office.

The Financial and Explanatory Memorandum indicates that £345 million is now outstanding, but what the note to the Bill does not say is that there is a notional depreciation fund in the Treasury, which is a Treasury liability, of over £200 million. When the Treasury in this special provision owes over £200 million to the Post Office, one asks why it is necessary for the Post Office to come here and borrow £175 million from the Treasury.

The rate of repayment over 20 years means that the Post Office pays to the Treasury, into the notional depreciation fund, some £29 million a year. That £200 million is lying, or is supposed to be lying, in a fund that does not exist, but a cash contribution is to be made to a non-existent fund every year for the purpose of providing depreciation.

One notes that in the Bill it is proposed to provide roughly £81½ million a year for telephone development. It is said that of the £175 million, £163 million will be required for the telephone service—not for capital development, but for the service. That represents £81½ million a year over the next two years. This is all rather confusing, for we are told in paragraph 21 of the White Paper that the telephone capital expenditure during the present year is £87.7 million. For next year, according to the Bill, it is to be £81½ million pounds. Does that mean that we shall spend £6 million less next year on the telephone service than we shall have spent this year? I know the answer already, but I want the Assistant Postmaster-General to give the House a lecture upon these apparent contradictions in the use of financial terms in both the White Paper and the Money Bill before us.

All this relates to capital development. In the White Paper on Post Office Development and Finance, we are told that the telephone investment this year is £70.1 million. So we have three figures: £81½ million in the Bill, £87 million to be spent this year on capital investment, according to the White Paper, and then another £70 million. How does the Assistant Postmaster-General explain all this?

We are told in the White Paper that Post Office capital development—and I am applying my remarks to capital development—can be planned only on a three-year basis and that any term of less than three years is of no use. So we have a two-year Money Bill—a three-year development plan and a two-year Money Bill. One would have thought that we should have had at least a three-year Money Bill. But no. Although it is imperative, according to the White Paper, that the capital development of the Post Office, if it is to be properly carried out, should be on a three-year basis, we have a two-year financial provision. What we shall get in the third year of the development plan no one knows. The right hon. Gentleman must go to the Treasury and ask for the money. [Interruption.] The hon. Gentleman says that he comes to the House. The right hon. Gentleman does not come to the House. He goes to the Treasury. He asks the Treasury, "Please could I have some more money?" The Treasury is authorised to raise money for the Post Office.

The Bill provides for two-year development and £175 million. That is the new capital, but the White Paper says the new capital actually is £160 million for three years. Which is right? I ask the Assistant Postmaster-General, when he replies to the debate, to tell us exactly how he ties up all these figures.

Dr. Hill

My hon. Friend will, no doubt, make his reply, but it would be a mistake to allow the right hon. Gentleman to get away with such financial acrobatics. We have made plain that the set of figures in the White Paper relates to new capital development and renewals. Then the right hon. Gentleman finds a figure of £160 million. He ought to have explained to the House, because it is clear in the paragraph, that the amount is £300 million for three years, and that it is depreciation at the new rate which leads to the figure of £160 million. He understands these things perfectly well. He is not really succeeding in persuading us that he is as confused as he would appear.

Mr. Ness Edwards

I am delighted that the Postmaster-General has risen to the bait. I trailed it long enough. I thought he would succumb to the temptation.

What happens is this. No matter how much the Post Office makes, it hands it to the Treasury. Its depreciation fund contribution is a cash contribution to a non-existent fund. It is a notional fund. The Treasury says, "We shall, nominally, credit you with £300 million over the next three years, but we shall actually give you £160 million, but we shall charge you for £300 million." That is the point I wanted to bring out and that I wanted the Postmaster-General to admit, and I am very grateful to him for having assisted in bringing it out. That is why I say that the Post Office is the prize milch cow of the Treasury. Here we are going through this farce of providing finance by the Bill so that the Treasury can lend back to the Post Office money it has taken from the Post Office.

Let me come to much more mundane points, although I am sure that the Postmaster-General must feel about all this what others of us feel about it. I was at the Post Office for less than eighteen months, but I came to the conclusion that, of all the public corporations in this country, the Post Office gets the worst deal by this financial manipulation. I am astonished that those who work in the Post Office, and those who represent the Post Office, should allow the fat to be taken off in this way by the Treasury in relief of taxation, and then say that, because of the paucity of the Post Office funds, it cannot afford to treat the men who work at the Post Office decently.

That was the conclusion I came to, and I am sure that the Postmaster-General will come to the same conclusion—if his affection for the Post Office lasts so long. I believe that in what I have said there is an echo of what you, Mr. Speaker, said yourself way back in 1942. I am referring to an intervention by Mr. Speaker in a debate in 1942, when he made a speech on this very subject. I was echoing his sentiments that he expressed on that occasion.

We have been told how much of this money is required for defence purposes. I want the House to realise that of the amount raised by the 1953 Money Act—it is all extremely important—one-quarter was for purposes not associated with the Post Office. It was for defence purposes. One-third of the capital provided in the 1952 Money Act for the Post Office was used for defence purposes. Now we are told that 10 per cent. of the present money is not required for Post Office purposes but is required for defence purposes, for purposes that have nothing at all to do with the business organisiation of the Post Office. It is a defence liability and not a Post Office liability.

What I want the House to realise is that we are fastening on to the Post Office in terms of costs, in terms of interest, a burden which ought to be borne on the national Exchequer. This is an extremely serious matter. Let me give a classic example. It arose in one year. I think it was 1952. The Post Office carried a financial burden of £600,000 for defence in that year. It was money provided by a Post Office Money Act, and that was the Post Office liability that year, the proportion of the capital it did not want for its own purposes. This is an extremely serious matter, and I hope that the Assistant Postmaster-General will give us figures showing how much of the money that was voted in the two previous Post Office Money Acts each year has been spent on defence purposes. What is the financial burden of both depreciation and interest which the Post Office has had to shoulder in connection with those purposes?

The Assistant Postmaster-General (Mr. David Gammans)

I know the right hon. Gentleman does not want to mislead the House, and I gather from what he said that he was assuming that these defence works were paid for on Post Office account. In fact, the Defence Departments pay the full economic price for the services they get under these works.

Mr. Ness Edwards

The hon. Gentleman should remember his own speeches when he interrupts. He said on the last occasion we debated this matter that they did not pay an instalment charge like the ordinary telephone user. No, they pay only when they use the service, but the capital is borne by the Post Office entirely and all the servicing of the repayment is a charge on the Post Office and not on the Defence Services. Perhaps, in view of what he said, the hon. Gentleman will be good enough to tell us how much the Services pay for the special services provided by the Post Office. Perhaps he will tell us whether it is in cash or in notional pay, what they pay to the Post Office for all the services rendered.

When we talk about the cost of t tinning the Post Office and we have regard to the cost of the services and the size of the charges, the House should realise that all that is related to the way in which we handle the capital. I want an assurance that we shall have a far different method of accounting for any money that we vote in the Bill than we had in relation to money that was voted in the other Bills. Some of the money which we are now voting will be used to provide co-axial cables connecting commercial television stations, this new radio system set up through the backbone of England, as the Postmaster-General describes it. How much of the money will be used?

Dr. Hill

In round terms £1 million, and that includes the I.T.A. and the B.B.C.

Mr. Ness Edwards

I am obliged to the right hon. Gentleman for telling me that. At Question Time on Wednesday, I asked him how much of the money which we are now asked to vote would be used in servicing commercial television and I referred to a plan, which the right hon. Gentleman said would be given the closest possible scrutiny when it was submitted by the I.T.A. I see that the Director-General of the I.T.A. gave an interview on 31st October, which is reproduced in the Star newspaper. The Postmaster-General need not worry. Some of the money voted in the Bill will be used to service this great programme.

This is the plan according to the interview in the Star: The next steps are new stations: the Midlands in February, Lancashire in May, Yorkshire in the autumn, Scotland and Wales early in 1957, Hampshire (South of England) and the North-East later in 1957, and then the South-West, Northern Ireland, and East Anglia in very late 1957 if we can manage it. or else early in 1958. Let the House compare the expansion programme for commercial television with the measly expansion programme for telephones.

It will be easier to get commercial television in one's home in the future than it will be to obtain a telephone. I am trying to help the Postmaster-General. The Government ought to stop this nonsense and give the Post Office these facilities, the electronic equipment and other capital, to meet much more quickly the enormous, growing demand for telephones.

We have nothing to be proud of in this matter. Despite all the praise that has been given and all the self-satisfaction that has been expressed, we are still the slowest country in the industrial world in the provision of telephones. If it is said that the telephones cannot be provided, we are now able to prick that bubble. The great job which the House thrust upon the Post Office from 1945 until I left the Department was the provision of a completely new radar system.

The choice was put to the House whether it would have a completely new radar defence system at the expense of telephones or whether it would prefer to do without that defence. During all that period the Post Office was engaged in completely remodelling and rebuilding our radar defences on a scale which was never dreamed of before the war. That was why the Post Office was unable to get on with its own job of providing those services which the Post Office is obliged to provide.

We must keep that in mind. We must remember that the slowness in development—and relatively it was slow—during that period was due to the demands of national defence, which were openly accepted by the House as of being of a much higher priority than the provision of telephones. The decision was right, but that does not explain our slow progress in 1953–54. In respect of those two years, we are the slowest country in the world at providing telephones. I am not blaming the Post Office for it. I am blaming Government policy.

Where does the fault lie? I am satisfied that the defence programme which was thrust upon the Post Office is in part responsible, but the Postmaster-General and his Government have a specific responsibility in another direction. The right hon. Gentleman has well said that when one reaches capacity in an area it means building a new telephone exchange, laying new cables and starting a new system, but the right hon. Gentleman and his Government stopped building new telephone exchanges. In 1952, the Assistant Postmaster-General had to inform the House that there would be no new building that year. I believe that that was after some conference in Blackpool.

The normal development of the Post Office was thwarted and stopped by the decision to sacrifice all building in order to reach a political target for housing. I tried to point out then the evil consequences of that policy. I tried to point out that to stop building telephone exchanges—and building was suspended for 18 months from 1952—would subsequently have a bad effect on the provision of telephones.

The right hon. Gentleman has given us some more cheerful news today. The one cheerful note in his speech was the announcement that next year a start will be made on 200 new telephone exchanges. Some of the money provided by the Bill will be spent on that purpose. I wish he had told us how many potential subscribers are now being denied telephones as a consequence of the decision to stop building exchanges in 1952.

I should like to carry this matter a little further. The Post Office is now in a position to surge forward. Materials are now plentifully available. The defence programme has been reduced by 10 per cent. The Post Office has the men and plenty of electronic equipment. In fact, last year at this time the then Postmaster-General talked about "a great surge forward," that now they would really get on with the job of providing more telephones. Now, however, the White Paper says: A three-year plan is indispensable for ordered telephone development, but, in common with other bodies, the Post Office must accept that the economic situation demands some slowing-up in the immediate future of the expanding development programme could otherwise undertake. Accordingly, the programme has been cut. Obviously the Post Office submitted its capital development programme. What was the size of it? By how much was it cut? We know it was the Treasury that cut it, but we are entitled to have this information because here again we have the old conflict of the Post Office anxious and willing to develop its organisation and the Treasury stepping in and saying, "No, you will not be permitted to continue on the scale which you are now able to undertake." In 1952 the Post Office was hampered and hindered by the decision that there was to be no new building and now, in 1955, the Post Office, which is anxious to do its job, is told that the programme has to be cut. What sort of development can be obtained in those circumstances?

Despite all the boasting, the waiting list is bigger today than it was in 1953. Despite all that has been done, the right hon. Gentleman knows that in the development areas, which ought to have been serviced much more quickly than they have been, people have been waiting three years and there is no possibility of some of them getting their telephones until 1960. Part of this stems from the silly decision to stop building telephone exchanges, so these are the evil consequences of an extremely bad policy.

I was glad to hear what the right hon. Gentleman said about a development which everybody who goes to the Post Office wants to see progress, and that is automation, for which the telephone service offers great scope. This is the place where we can get far greater rewards for capital development than in probably any other economic activity in this country. Yet the Treasury says we must not go too quickly. I should have thought that here is a case of where relatively small capital development can produce results out of all proportion to the capital involved.

Having heard the speech of the right hon. Gentleman today, however, I have great sympathy with him. He went to the Post Office with a reputation for drive and for being rather rough-shod in his methods, but he will find the leading strings of the Treasury holding him back, and holding back the development of this great institution.

12.14 p.m.

Sir Robert Grimston (Westbury)

I agree with my right hon. Friend the Postmaster-General that anybody who has served in this Department in a Ministerial capacity, whether for a short or long period, comes away with an affection for it. I believe that applies to both sides of the House so that, when we come to discuss the affairs of the Post Office here, to some extent it is shadow boxing. I do not propose to follow the right hon. Gentleman the Member for Caerphilly (Mr. Ness Edwards) in his remarks about the Post Office accounts, because I can leave that point to be dealt with faithfully by my hon. Friend the Assistant Postmaster-General who will speak later.

I want to make two points, the first of which is on the note of real controversy which the right hon. Member for Caerphilly skillfully—because it is difficult to do it within the bounds of order—tried to resuscitate, namely, the difference of opinion over the introduction of commercial television. By a side-wind the right hon. Gentleman endeavoured to resurrect that issue by saying, in effect, that many more telephone subscribers could be connected if work were to stop on providing facilities for links for commercial television and the B.B.C. Let us look at that as a proposition. My right hon. Friend said that the expenditure for both the B.B.C. and the I.T.A. was to be £1 million—

Dr. Hill

Over a two-year period.

Sir R. Grimston

If we look at page 6 of the White Paper, we shall see that the expenditure for telephones in one year is to be £87.7 million, so that a quarter of a million pounds spread over two years for the I.T.A. in providing links is less than a drop in the ocean in the cost of providing telephones. So that point is irrelevant. I cannot go beyond that, because I should be introducing a controversy which would not be allowed in this debate by you, Mr. Speaker.

I therefore pass to the other point which I want to raise with my right hon. Friend. It is on the question of research. When I had the honour to be in the Post Office some years ago, the first researches were being made into the development of the under-water repeater. Those went on during the time that the right hon. Member for Caerphilly was in office, and I for one was pleased to hear the announcement of my right hon. Friend that the first transatlantic cable had been laid by "Monarch," that a second will be laid next year, and that there have been further developments in the North Sea with the under-water repeater. This is a development of the greatest importance, both strategicaly and commercially.

Having by way of illustration pointed out the value of the research carried out by the Post Office in this regard, I pass to another sphere where research is equally important. I am referring to the application of the electronic technique to telephone exchanges, to which my right hon. Friend referred. As I see it, we are embarking on colossal capital expenditure on the expansion of the telephone service by the present methods, and I am afraid that, with the development of electronic techniques, we may in a short time find that this enormous capital expenditure is out of date.

This is a serious problem, because obviously we cannot hold up the expansion of the telephone service while research is taking place in electronics. I want to know what steps my right hon. Friend is taking to speed up that research. He mentioned that there is a private electronic exchange already in operation in Dollis Hill, but is he in close touch with industry, and having discussions with it, on the rapid development of this research? I fear that we may be committing ourselves to enormous capital expenditure now on equipment which in a comparatively short time may become obsolete. That is a point which I wish to raise with my right hon. Friend. I think that it is obviously not the sort of problem that can divide the House, but it is a very serious problem from the national point of view. If at the conclusion of the debate the Assistant Postmaster-General can say something about this, I shall be greatly obliged to him.

12.20 p.m.

Mr. Gerald Williams (Tonbridge)

We have heard a great deal of interesting information from the experts today. I do not want to enter into any argument with the Postmaster-General or any exPostmaster-General. I have never been connected with the Post Officein any way, but I use the telephone a great deal both for business and pleasure; so I want to say a few words on telephones alone.

I was very encouraged by what the Postmaster-General told us. He is developing quickly and he is spending a lot of money. Under this Bill a very large percentage of the money voted is to be used for telephones, but to my mind the amount is not nearly enough. I hope that what he intends to spend he will spend quickly, because we want quick results but we have heard mention today of a slowing up in expenditure.

Every million pounds we spend on the telephone system is money well spent, and it will bring in a return and an economic return. At the moment we have two problems facing us. We are spending too much at home and we are not exporting enough. The Chancellor of the Exchequer is looking after the first one. He has taken steps to see that we do not spend quite so much, but I am not very pleased with him for having put up the rentals and rates on telephones. I think that we can help our exports by having more telephones and a more efficient telephone service. I would even encourage the Civil Service to use the telephone a great deal more, instead of writing long letters with very long references, and I think it would save a good deal of "buck-passing" if they used the telephone instead of writing letters.

Mr. W. R. Williams

I hope that the hon. Gentleman has not forgotten the exhortation from the top levels of the present Government that, where civil servants can write a thing down they should do so instead of sending telegrams or using the telephone.

Mr. G. Williams

I do not always agree with what all my hon. Friends say on this side of the House. I like the telephone for efficiency and quickness, and I think that the Civil Service should make more use of it than it does.

Business done on the telephone is very considerable, and if this could be speeded up it would not only increase efficiency but cut the cost as well. This means spending more money. I wonder whether the Postmaster-General thinks that we are spending enough at the present time. Money spent on telephones is different to money spent on other things. It will bring in a return straight away. It is not like throwing money down the drain; it is money well spent.

If we spend more money on telephones, we will get greater goodwill between ourselves and the people to whom we export, and we shall also put up the value of our exports. It will also help the home market. Our exports are, of course, based on a healthy home market. It stands to reason that when one wants greater production one spends more money. A farmer who wants more work out of his horse gives it more oats. If the horticulturalist wants a bigger and better crop, he gives it more fertilisers. If we want more efficiency, we have to spend more money on telephones.

The Chancellor of the Exchequer is always telling us to modernise our plant, renew our machinery, and bring ourselves up-to-date. The telephone is probably the most important of the whole lot. That is why I urge on the House that we are not spending enough on telephones, and we are not spending quickly enough. The service is a monopoly, and the Postmaster-General has a public duty to see that the money is well spent, which I am sure he is doing; but I ask him: why cannot he spend more money?

I have never ceased to wonder at the efficiency of the postal services and the way in which they deliver our daily letters without fail and almost without anything ever going wrong. When it comes to the telephone, all hon. Members have experienced the exasperation of dialling TOL. They have also had plenty of delays on local calls. They have heard when they have wanted a trunk call that there is no line available. So it is quite obvious that we want more lines, more staff and more instruments. The lines give us quicker communication, the staff give us quicker service, with this we would be encouraged to have more calls, and eventually the rate of the calls would become cheaper if more calls were made. The more instruments there are, the more people will be using them and the greater the revenue will be to the Post Office.

I am speaking in general terms today, but the slowness of calls does cause exasperation, and there is a great loss of business. We cannot blame the staff; there are not enough of them. They do their best in difficult conditions. The Postmaster-General will again make a name for himself in another direction if he will spend more money on improving the efficiency of the telephone service, which is something we have been waiting for him to do for a very long time.

I hope that when the Postmaster-General does spend more money on improving the telephone service, he will not be unmindful of Tonbridge and Tunbridge Wells, where quite a lot remains to be done to improve the service. I do not know why it is that we can ask Questions whenever we want to do so of the Postmaster-General but we cannot ask Questions about the railways and their operation. I do not know what is the difference, but there is a difference in what we see as a result. The Post Office is thoroughly efficient, but the railways are not everything that is to be expected. I think that the reason for that is that Members can ask Questions of the Postmaster-General. I intend to go on asking Questions about the telephone service until he brings it up to that state of efficiency to which we are accustomed in the postal services.

I support the Bill, and I end by saying what I said when I started, that there is not enough money being spent. [An HON. MEMBER: "Quite a lot."] If we spend more money, we shall increase our trade and the exports which are wanted so much; and we shall get the money back in no time.

12.29 p.m.

Mr. A. E. Hunter (Feltham)

I intervene in the debate for a few minutes to draw attention to one of the items which the Postmaster-General dealt with in his very interesting and illuminating survey of the postal and telegraph services. I cannot claim to be an expert, like my right hon. Friend the Member for Caerphilly (Mr. Ness Edwards) or the Postmaster-General, but as a lay person and a Member of Parliament, I think that delay in the telephone service causes a great deal of correspondence between a Member of Parliament and his constituents.

The Postmaster-General paid a great tribute to the postal services in this country. I am very pleased indeed that he is proud of this great nationalised service. I am quite certain that during the period he has been at the Post Office, he, like my right hon. Friend the Member for Caerphilly, has grown a great affection for that Department.

The Postmaster-General stated that the waiting list for telephones was 380,000. Before the war there was practically no waiting list. That brings home to me very clearly that the people in this country have become telephone-minded. There used to be a slogan "Be electrically-minded." It seems to me, now that we have an enormous waiting list of nearly 400,000, that the people of the country are becoming telephone-minded, realising the great importance of the telephone service and the great help that it can give them.

I want to draw the Postmaster-General's attention to the newly built-up areas. Speaking about the waiting list, he said that 80 per cent. of applicants get their telephones within two or three months. In my constituency, which covers Feltham and part of Hounslow, people have been waiting two or three years, and they inform me that the Post Office tells them they will probably have to wait for another two or three years. I imagine that there are nearly 2,500 people in Feltham and Hounslow waiting for telephones.

I have recently received correspondence from a constituent whose mother, aged 87, was ill, and his only means of communicating with her was by telephone. He was unable to obtain a telephone, and had to go out in the middle of the night to a call box. One can imagine the great help that a telephone would have been to him in those circumstances. His mother, unfortunately, is now dead. My constituent emphasised in his letter to me what a great help a telephone would have been.

There are new areas like Feltham which have been built up in the last fifteen or twenty years. New towns are to be found in parts of Kent, Middlesex, Essex and Hertfordshire. In such places people are unable to obtain telephones within two or three months. I urge the Postmaster-General, when he goes forward in the months ahead with a great development of the telephone service, to pay special attention to the places which, during the last twenty or thirty years, have developed from villages into towns. The people on the waiting lists in those areas total many thousands, and they have been told that they will have to wait at least another two or three years for telephones. I appeal to the Postmaster-General to pay great attention to the telephone needs of our newly built-up areas.

12.32 p.m.

Captain L. P. S. Orr (Down, South)

I thought the right hon. Member for Caerphilly (Mr. Ness Edwards) was particularly happy when he was dealing with the complexities of the Post Office accounts and financial position. Before the debate, I thought I was beginning to achieve some faint glimmer of understanding of them, but since the right hon. Gentleman's speech I find myself completely befogged by the idea of notional funds for depreciation and one thing and another. I do not propose to follow that argument.

The right hon. Gentleman referred to the need for a greater proportion of the capital for new development being devoted to Development Areas. I thought there was something in that argument. When we talk about Development Areas, I have particularly in mind the position in Northern Ireland.

I should like to have followed the right hon. Gentleman in his interesting argument about commercial television. However, I thought it was very near the edge of the rules of order, and I think I should find myself going over the edge if I were to endeavour to follow him. I will merely say that I hope my right hon. Friend has in mind that the Post Office, in its allocation and renting of fixed links—co-axial cables—as between the B.B.C. and the I.T.A., should observe the strictest possible impartiality, and that no exclusive arrangements should be made with either body.

What I want to talk about is, I believe, very relevant to the debate—there are many other matters which can arise, and will be more in order, in our debate next week—and that is the provision of capital equipment in the telephone service, the object of the bulk of the money we are today providing for in the Bill. The right hon. Member for Caerphilly referred to the great importance of the development of electronics in relation to co-axial cables. I want to address myself to that aspect of development because it is of some importance to the country's finances.

It is difficult to talk about these matters without being too complex or too technical, and if I am guilty of some oversimplification it is merely because I want to try to get my colleagues who may not be so closely interested in the matter to understand what I am talking about.

I wish to refer to the development of carrier telephony. That is perhaps the most important of all the developments which have taken place in respect of the telephone. The old notion of a telephone service was of having an instrument at either end with a wire or two wires in between and one conversation taking place. Carrier telephony is a device whereby, as my right hon. Friend said, up to 600—possibly more in future—conversations can take place along the same line. If that development had not come about, one could imagine what the position would be upon, say, the trunk line between London and Liverpool and could visualise the enormous number of wires which would be necessary to carry the immense number of messages which pass backwards and forwards. My right hon. Friend said that it was a British development in the first place.

Recent information reaching me about the position in the United States tends to show an extraordinary disparity in the cost of providing such capital equipment as between the United States and this country. For the channelling gear which is necessary for the provision of this service in this country I have been given the figure—I am open to correction upon this because it is difficult to obtain precise figures—of about £2,000 to make one channel effective. I find that the Bell Telephone Company in the United States is providing similar equipment at about £200 per channel.

It occurred to me that was a matter of very considerable significance when considering the provision of capital equipment for the Post Office, and I made further inquiries. I found that in relation not only to carrier telephony but also to the provision of telephone equipment generally for the Post Office, there is a rather extraordinary situation in this country in respect of the companies which supply the equipment. I find that one company, which is foreign-owned, has practically a monopoly in the provision of equipment. Whether or not that is the cause of the extraordinary disparity in cost of equipment I do not know. I am putting this matter forward so that my right hon. Friend and any other hon. Members who are interested may examine the position.

Before I proceed further on that point, I should like to say something about the significance of the difference in costs. If the cost per channel could be reduced from £2,000 to £200, that would mean that the gear could be used to provide carrier telephony at economical distances about one-tenth of the distances which are at present economical. The extraordinary saving in the amount of cable used would be very significant indeed. It is obviously worth considering whether the position could in any way be improved.

I am only beginning my researches into this matter, but it is alarming to find that there appears to be a grave lack of healthy competition in the provision of equipment for the Post Office. In fact, the provision of this particular carrier equipment is entirely in the hands of no more than two companies. It is in the hands of a tight ring which is dominated by a company which is wholly American-owned. I refer to the position of Standard Telephones and Cables. The position of that company is quite astonishing.

It is foreign-owned. Not only is it owned by a parent company in the United States, but has permission—I am open to correction if I am wrong—from the Treasury to export all its profits in dollars to the United States. Furthermore, I am told that the magnitude of those profits exceeds the total exports of the whole of the electronics industry of this country to the United States. If I am wrong, I shall be very happy to be corrected, but that is my impression at the moment and I hope that my right hon. Friend will look into the position.

I am not supporting any restrictive attitude towards foreign-owned enterprises in this country. If they have a contribution to make to our economy, they must be welcomed, but when a foreign-owned company reaches a position of domination in one of our most vital industries it is time to examine the basis of its operation. I have heard it suggested that the parent company of Standard Telephones and Cables in the United States does not permit S.T. & C. in this country to trade in dollar areas.

I have made some researches, and I have been unable to find any worthwhile evidence of any substantial dollar exporting by Standard Telephones and Cables. If that is the case, the argument for maintaining such companies in a privileged position falls to the ground, and the sooner the G.P.O. comes out to open tender on the widest possible basis, the better it will be for our telephone and telegraph services, and indeed for the whole future of the export position of our electronic industries. That is really the only point which I wanted to make at this stage. I hope that my right hon. Friend will examine it, because I am sure the House will agree that it is exceedingly important.

12.43 p.m.

Mr. W. R. Williams (Manchester, Openshaw)

I am afraid I am not sufficiently competent or well versed in these things to follow the argument of the hon. and gallant Gentleman the Member for Down, South (Captain Orr) about the activities of the Standard Telephones and Cables Company. I do know that for a very long period the association between that company and the Post Office has been very close and that whatever benefits have accrued to the company have benefited the Post Office, because the company has given the Post Office the best standards of work on all occasions when it has been called upon to provide equipment.

Of course, if any company is becoming so monopolistic as to remove any possible competition, especially by our own people if there are any firms capable of doing it—and that is an important aspect; if there are any firms capable of squaring up to the large demands of the Post Office—then the position should be studied. Without disclosing anything of a particularly secret character, I know, in connection with another type of instrument required in the telegraphs not many years ago, we found that we had to go to the Creed Company, which at that time was Canadian.

Captain Orr

I understand that Creed is a subsidiary wholly owned by Standard Telephones and Cables.

Mr. Williams

I do not know what the present position is, but at that time it was of Canadian origin and to a large extent of Canadian direction as well. We were very dependent on them for the development of the Creed instrument, which became very important in the development of the telegraph service in those days. I will leave it at that, because I am not competent to pass judgment without making more inquiries.

I am very glad once again to be able to congratulate yet another Postmaster-General. I do not know how many I have seen passing through the portals of St. Martin's le Grand in the course of my fairly long connection with the Post Office. Some have been big and some small; some have left their mark on the Post Office, and it is equally true that by and large the Post Office has in some form or another left its mark on them. It is an experience from which most Ministers might very well benefit, because if there is one Government Department which is very closely allied through its staff relationship to the political head of the Department, it is the Post Office.

I am certain that the tribute which the right hon. Gentleman has given to the Post Office staff and administration today is as sincere as that which you, Mr. Speaker, paid years ago and which many of my right hon. and hon. Friends have since paid. We ought to be very proud of the fact that the Postmaster-General gave us a very serious lecture immediately he took office. I for one was delighted with the broadcast he made in which he taught us how to write on our letters. As an old sorter of many years standing, it was very nice to know that it should be Newcastle-upon-Tyne and not Newcastle-on-Tyne. We have all learned our lesson, and that broadcast proved to me that even in the small detail the Postmaster-General intended to be on top of his job.

The right hon. Gentleman said that he has already appreciated the tradition and the good relationship between himself and the staff and the staff associations in the Post Office. I do not think that there is a better relationship between art administration and a staff in any industry in this country. It has been growing over a long period, to my knowledge for at least 25 to 30 years. There has been a great development in the science of the relationship between an administration and a staff. But, to ride a hobby horse of mine, that relationship exists only after a decision has been made by the administration and generally when policy has been decided at a level higher than that of the staff.

That is one of the inherent weaknesses in the present set-up at St. Martin's le Grand. It is right that we should have representatives of this House, representatives of industry and representatives of commerce on the Post Office Advisory Committee. The Post Office caters for the needs of all those people. But I cannot understand why representatives of the workers, with their collective experience of many years, are not entitled also to be represented. I have made this point many times. It is only a preliminary step in the relationship, which, as a new entrant, the Postmaster-General might like to consider. I am sorry, Mr. Speaker, if I have digressed slightly from the real purpose of the debate in giving expression to those few points. I will not develop the subject of relationships with the Treasury until the wider debate which may come along on Monday.

On the question of new buildings, the Postmaster-General told us that attention was to be given to about 100 postal buildings. I am very disappointed. He knows very well that since the war very little has been done by way of accommodation in the Post Office. When I go round Manchester, where my constituency now is, I look at magnificent buildings put up by Lewis's, other big commercial undertakings, banks, insurance companies, chain stores and even by the football pool people, and I cannot understand why employees of the Government and of the country have what can only be regarded as hovels unfit to work in. That describes the conditions in which men in the sorting offices have been working for many years. Many sorting offices were made almost uninhabitable during the war, and a large amount of money ought to be spent on them, not only in the interests of the staff, but in the interests of efficiency. Work is duplicated unnecessarily in many sorting offices because we are not in a position to expand and mechanise to the degree that is possible.

I am sorry that the Postmaster-General did not tell us that he realised the extent and seriousness of this problem and that he intended to go to the Treasury and say that he would not tolerate loyal servants of his Department working in the conditions that exist in many sorting offices. If what he told us is the extent of what is to be done, I imagine that those loyal servants will be very disturbed and disappointed when the disclosure is made to them.

I am not blaming the Postmaster-General for the present position. He can spend only what he is permitted to spend, and he has to assign it in accordance with the needs of the service as a whole; but I am perturbed, because we did expect a first priority to be given to this matter. I have pressed as much as anybody in this House for more telephones, which also have a high priority, but staff accommodation is a serious matter, which the Postmaster-General might wish to discuss seriously with the associations concerned, particularly in connection with sorting offices.

I wish to pay my tribute to the work which has been done at the research station at Dollis Hill. I remember that when the present Lord Chandos was in this House we had some very interesting discussions on the development of this very great institution, which was possibly the forerunner of many private research departments in this country and has possibly contributed more than any other establishment to the development of electronics and related matters. The House does well to pay this tribute to a very fine research station.

I can understand hon. Gentlemen re-referring to wasteful processes, when we are engaged in research. I well remember how much we had to spend on manual through-switching as a forerunner to automatic through-switching. Many people asked, "Why are you wasting time, energy and money in using your people on manual through-switching?" We spent hours discussing the introduction of these things in the Post Office, and it was obvious that we had to take things in their proper order. Even if we wasted a little money, and sometimes quite a lot of money, we had to follow the procedure. If we had waited for the full development of automatic through-switching, we should not now be anywhere near the point we have reached in the efficiency of the whole of the telegraph service. The same thing is true of the telephone service.

I agree that if, by increasing the money available for research, we can cut out a few intermediary stages, it is worth while to do so. I am sure that the Post Office has not overlooked such a simple thing. I imagine there are many difficulties to be overcome before we can by-pass a preliminary stage in a big scheme.

I am very glad to hear that in three or four years the mechanisation of the telephone service, through the medium of a pilot scheme, will be completed, so that we can dial from home to any part of the country. I never thought completion was so near. This must be another tribute to the research at Dollis Hill. Many of us, in spite of our optimism, never thought that within 15 or 20 years of the end of the war this position would be reached. It is a matter of great congratulation to the Postmaster-General.

Captain Orr

It is already in operation in the United States.

Mr. Williams

I could not say to what extent it has been developed there, but that point in no way detracts from anything I said about Dollis Hill research station.

In what I regarded as a very fine speech from this side of the House, my right hon. Friend the Member for Caerphilly (Mr. Ness Edwards) said there was ground for further expansion and expenditure on mechanisation. He will know, as I do, that that is nothing new in the Post Office. There has been expansion, mechanisation and reorganisation in some form or another ever since I remember the Department. I agree that in the old days some of us had difficulty in convincing the workers in the Post Office that mechanisation and specialisation would be in the interests of the staff as well as of the service, because the spectre of unemployment was outside their door. I must pay a further tribute to the Post Office; I never knew anybody to deal more generously, kindly or humanely with redundancy than the Post Office. There was always the danger and anxiety of unemployment looming large behind any schemes of mechanisation that were put before us.

The situation is better, although the old fears still hang around in some areas. My old colleagues in the Post Office well know my view that we cannot hold back the advance of scientific knowledge and that it is most unwise to try to do so, because in the long run we lose valuable years of effort. I have never believed in being a Luddite of any kind. Although it has not been easy to advocate some of the policies in the past, I still feel that, in the long run, science is a good servant to humanity if well guided and properly controlled. Any mechanisation we get will be a good thing. Not only is the efficiency of industry involved in the official telecommunication services, but our new way of life demands that we should have telephones as well as radios and television.

That brings me to the expansion of the telephone programme. I always laugh to think of our present paradoxical situation. In the period between the two world wars, the Post Office spent millions of pounds to make the people telephonically minded—that was the phrase. That was quite right because that was about the only service which was likely to expand over the years. The Department got the people telephonically minded. But times have changed. I think all hon. Members will agree that, after getting a house, a man's next problem has been to get a telephone. It is a very natural consequence. People first get somewhere to live and then want in it all the amenities that are possible.

Now, having got them absolutely crazy to get telephones, the Post Office has to tell them to wait, not because the Postmaster-General or the administration does not want to expand the service, but because the Chancellor of the Exchequer—who has nothing to do with the day-to-day working of the Post Office—says "I will not allow you to spend the money." I may be able to develop that argument a little further on Monday—although, after my earlier digression today, it may not be very easy to catch Mr. Speaker's eye.

If I may be excused the metaphor, we are making an Irishman's progress in the telephone service. We are progressing so well that we now have a longer waiting list than we had years ago. Not only is that so, but we are likely to have a longer waiting list in the years to come. I say that, because I do not agree with my hon. Friend the Member for Keighley (Mr. Hobson). I do not think that nowadays, to increase charges and so on does of necessity stop consumption or the desire to purchase things. I may be wrong—I do not pretend to be an economist of any sort—but what governs people's buying is the amount of money they have and the amount of freedom they have to buy what they want. I believe that there will still be a growing demand for telephones.

I suggest that the Postmaster-Genera] should go to the Chancellor of the Exchequer and tell him that an efficient, up-to-date telephone system is essential to industry and to the social life and morale of the people. He should ask for the outlay of £100 million to £200 million over a short period in which to make a mass attack on this shortage. This nibbling at it leaves us worse off at the end of one year than we were at the beginning of the previous one, and will not resolve the problem at all. The research developments which have been mentioned may help us at a future date but not in the next ten years. If the difficulty is not overcome within the next ten years, both the Government and the country will inherit an unwelcome legacy.

My right hon. Friend has endeavoured to show that the Post Office has not had all the credit due to it in connection with defence. In my opinion, the Post Office will always form an integral part of defence. My great complaint has always been that, when the Post Office, and the Government made their decision on telegraphs—after spending millions of pounds on all sorts of automisation and mechanisation, and now by increased charges—they made of the inland telegraph service a puny and innocuous thing. As a result that service within the next few years will have no tradition at all, and those serving in it will have little interest or morale, because it will be a dead-end industry with no prospects of expansion or promotion.

Then there is recruitment. We are providing for various technical and mechanical advances, building sites and so on, but they will be of no use at all if the men are not there. I cannot say that the situation is absolutely desperate yet—that would be an exaggeration, and I do not wish to exaggerate—but I know from my experience that in some of the highly-industrialised places such as Manchester there is great agitation among the postmen about their conditions and wages. That applies also to Birmingham, and, I believe, to Glasgow and to all the large cities and towns. There is a great contrast between the wages of postmen—especially those in the lower and middle incremental scales—and the wages of people in outside industry, particularly in the engineering industry—

Mr. Deputy-Speaker (Sir Charles MacAndrew)

I was very patient before, but I do not think that I can go on being patient.

Mr. Williams

I appreciate that, Mr. Deputy-Speaker—I know that you have been very good.

I believe that there are opportunities for the Postmaster-General to discuss with representatives of the staff and their association, methods to overcome the difficulties of basic recruiting into the service. There I must leave it—it is quite obvious that I cannot take further liberties with you, Mr. Deputy-Speaker—but I may return to the subject on an occasion not very long deferred.

Before I finish, I should like to offer my best wishes to the Postmaster-General and to the Assistant Postmaster-General. Perhaps if they have time they will look at a difficulty I am experiencing in connection with the expansion of a building in Herne Street, Bradford, Manchester. I would not have mentioned this now if I had had a reply earlier. There are difficulties there, and I would ask them to have regard to the effect of some of the official proposals upon the conditions of those who live adjacent to the building. No doubt the Postmaster-General will look into it. I wish him and the administration every success. I only wish they had more money, because I know they would use it in a very effective way—a way which would be of great benefit to our economy and our social life.

1.10 p.m.

Mr. James Johnson (Rugby)

In view of the keen competition on both sides of the House to speak, perhaps I may be allowed just two minutes in which to say a kind word about the Postmaster-General, particularly as he was knocked about earlier by my right hon. Friend the Member for Caerphilly (Mr. Ness Edwards)?

Earlier this year the Postmaster-General and I spent a pleasant day together in my constituency on the occasion of his opening of the extension to the Empire radio station. We had a pleasant time there with the Mayor of Rugby and other officials. My constituency is world-famous, not only for its public school, football and B.T.H., but also for its radio station—of which we are proud.

I want to mention the work that is done there. We must be grateful not only for the devoted work of the technologists and their inventive genius but also for the day-by-day loyalty and hard work of the humbler Post Office worker in keeping these technical devices going. I must admit that the Postmaster-General and I were baffled by the intricacies of the higher mathematics that were explained to us by our guide. Nevertheless, it was a wonderful day for the town, the United Kingdom and the Commonwealth at large.

Having said that, may I now ask the right hon. Gentleman a question and also say something perhaps not quite so pleasing. There are many in Rugby, including businessmen, councillors, school teachers, trade union officials and others, waiting for telephones. I was told earlier this year by the Financial Secretary to the Treasury, in answer to a Question, that new cables would be provided in parts of the town. I mention this because it may apply to many more towns as well as my own, and they may be told that their telephone waiting list problems will be solved by the installation of new cables in parts of their towns.

I wonder. I went over my local telephone exchange by courtesy of the head postmaster. It is working most efficiently, and there are some first-class girls there, all of school certificate and higher education standard. But the exchange is completely saturated at the moment. It badly needs an extension. With the capital investment programme being cut, and with the economy campaign foreshadowed by the Budget and in other statements in the House, how can we give satisfaction to those who are still on the waiting lists?

I echo the words of my hon. Friend the Member for Openshaw (Mr. W. R. Williams) that we shall not see a satisfactory state of affairs in this respect, for the waiting list is getting longer and longer as time goes on. With the Minister of Education and the Minister of Health, the Postmaster-General is being sacrificed on that altar of Moloch which is the Ministry of Housing.

1.14 p.m.

Mr. C. R. Hobson (Keighley)

The brief of the Postmaster-General has provided the material for a very adequate discussion on the Post Office and we are, indeed, grateful to him for the courtesy with which he gave way to many interventions, particularly those dealing with Post Office telephones.

I want to take up one point that the right hon. Gentleman made. I referred to it by way of intervention, and I think it is only fair that I should now develop it, as it represents an entirely new departure. A Bill providing the necessary capital for the development of Post Office services has usually provided for the inclusion of capital required for stores. In a Department like the Post Office, stores are multifarious. It has been the practice heretofore for them to be charged against the capital allocation of the Post Office which is included in this Money Bill.

When I intervened, the Postmaster-General said, in defence of his statement, that this matter was covered in the White Paper. In fact, this debate cannot anticipate the White Paper, although the Money Bill has done so. It would seem that if there is to be this very important departure we ought to have had a debate on the White Paper before having a debate on this Bill. If the right hon. Gentleman has succeeded in getting the Treasury to agree to the fact that stores must not be charged against capital in the Money Bill, that is all to the good, and we wish him well. But this is a new and important development, and I should like the Assistant Postmaster-General to tell us a little of the history of this change of policy.

I want to ask one or two questions about the global sum of £175 million. I should like to know what rate of interest is to be paid for the amount of money which is sought in this Bill. It is an important factor. The interest has to be met, and if interest rates are increasing there will be fewer telephones and postal facilities provided. It has been the normal practice to borrow this money at a rate appertaining to that charged on the Consolidated Fund, which I think is about 4½ per cent. or 4¾ per cent.

I should also like to know the rate of interest in so far as part of this money can be raised by the Treasury by way of the National Loan. This is an important matter, particularly in view of the doctrinaire approach of Her Majesty's present advisers to the credit squeeze via higher interest rates. The Post Office, like other nationalised bodies, and, indeed, like the private sector of industry, will be hurt by this high rate of interest.

I could support with greater enthusiasm this capital allocation of £175 million if there were to be no cuts. But it is competent for the Chancellor of the Exchequer to make cuts any time he likes. In fact, as has been pointed out by my right hon. Friend the Member for Caerphilly (Mr. Ness Edwards), after the last Money Bill there were cuts in so far as a statement was made by the Chancellor—though not by the Postmaster-General—to the effect that there would be no further telephone exchange building. I feel that we are entitled to an assurance on that point.

At present £163 million is required for the telephone service, the three main reasons being shortage of line plant, shortage of cables and the fact that the exchanges are full. That is a serious consideration, particularly in view of the Government's past policy. The areas with the greatest telephone shortage are the industrial areas where exchanges are full up. Even given the available capital, it will be some years before the exchanges can be built, and in the meantime many people who have already waited many years will still be waiting. I did not know the position in Rugby, but I assume that the situation described by my hon. Friend the Member for Rugby (Mr. J. Johnson) is due to precisely that fact. In my constituency nothing further can be done until a new exchange is built.

The temptation will be for the Department to concentrate on wiping out first the waiting lists in those areas where it is only necessary to lay new cables or where the exchanges have available accommodation for line plant, and I cannot blame the Department for taking that attitude. The real problem is that as a result of the policy of discontinuing the building of new exchanges, there will be a great shortage of telephones in those areas where the exchanges are full up.

A statement was made in another place that there will be 1,500,000 new telephone installations in the next three years. I should like to know if we really shall get that number of new telephones in that time, in view of the fact that one in five of the exchanges in this country is full up. Is that statement not rather too optimistic? It seems to me to be somewhat disingenuous. We were told about the electronic development of the telephone service—the one exchange in Bristol. I think that is right, or possibly it was merely the trunk switching which is to take place there. It is time we had an electronic exchange.

Dr. Hill

The electronic exchange is the one at Dollis Hill, an experimental station.

Mr. Hobson

Then it was the automatic trunk switching at Bristol to which the right hon. Gentleman referred. That makes the position somewhat worse. I know the difficulties of the Post Office and the tremendous amount of defence research at Dollis Hill—and the less said about that the better; but we are somewhat behind other countries in the development of electronic exchanges, and I point particularly to South Africa and the United States. Something ought to be done about that, and it ought now to assume a position of priority.

Nothing has been said about whether there is to be separate accounting for shared services. I know there have been developments, and progress has been made in that matter, but we have surely reached a stage where there could be separate accounting for people enjoying a shared service. That is something which ought to be done, and I hope the Assistant Postmaster-General will refer to it in his reply.

As a result of these developments, there has been a big development in the speed of answer. Nevertheless, there are many black spots, and I want to raise this question again, as I have repeatedly raised it. This was a matter which gave me concern in the five and a half years I was at the Post Office, and not only in the exchange of the hon. Member for Hornsey (Mr. Gammans), where Tudor was always a pain in the neck, although I believe it is better now. The question concerns the delay in getting a reply from the phonograms department. The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) used periodically to raise this question. He seems to be slipping since this Government came into power. Nevertheless, the phonograms section is very slack in answering, and must be speeded up.

The next question concerns directory inquiries. I know the problem; I know the references which have to be made when a demand is received for a number. I can understand the delay. Nevertheless, the time that service takes to answer after the dialling signal has been given must be improved, and I hope that the Postmaster-General, who is new in the office, will look at the position in respect of directory inquiries and see whether replies cannot be speeded up.

I turn next to the telegraph service. We are not informed what the capital expenditure is to be on that service. Is the through switching now complete? I presume we may relate telegraph expenditure to the marine services of the Post Office, although very little has been said about that. The hon. Member for Westbury (Sir R. Grimston) referred to the cable services which are provided by the Post Office. We have four ships, one of which is very old and which we took from the Germans in circumstances which I ought not to describe now. The "Iris" and the "Ariel" are nearly twenty years old. The question of renewal is coming up. Are the Post Office to continue with their old cable ships or is the service to be handed over to Cable and Wireless? We should like some definite information about that.

May I pay my tribute to the crews of those vessels, who provide a very important social service? That is particularly the case in the provision of communications with the Outer Hebrides, the Isle of Man, the Continent and Ireland. Those men are ready at any time of the day, under fire-float service almost, to go out and keep the communications of these islands intact. It is well to remember that this is a most important service, in war and peace. It is with some humility that I refer to the work of those men during the war, when they suffered the highest casualty rate of any service in Britain, including the Air Force, for 25 per cent. of them were casualties. They must not be forgotten. Perhaps the Assistant Postmaster-General can tell us the position about the Atlantic cable. We are not quite clear about it and I think that a further statement should be made.

I come next to a point raised by my hon. Friend the Member for Openshaw (Mr. W. R. Williams). The provision of £12 million to be spent on the postal services is not enough, for there are many old offices. We know the reasons, but a little more capital ought to have been made available. The old office at White-haven is the worst I have ever seen. We should like to know what offices are likely to be rebuilt.

Indeed, I am surprised that the right hon. Gentleman's brief made no reference to the new Western District office. How is that proceeding? Have the shafts been sunk for the connections to the Post Office underground railway? When is the building likely to be completed? The present Western District office in Wimpole Street is very ineffective because of the transfer of business from the City to the West End, and because there is no provision for the parking of vehicles. That adds to the congestion in that part of London. In view of the fact that we had to have a Hybrid Bill to deal with the new office—I had the honour to be Chairman when the Bill was considered in Committee—I expected that we should have had some reference to the development which has taken place there.

Is any capital available from this £175 million for the factories? That is an important branch of the Post Office, which has factories at London and Birmingham. What are they doing now? Are they to be given any new work? These are all things we should like to know. What about Yeading? Is any money to be spent on the motor repair depot at Yeading which saves the Post Office thousands of pounds a year by the centralised overhaul of transport? I should like an answer on that point, in particular.

I come to the general question of the protection of the capital. What about the I.B. branch? Can we have some reference to their work? They are playing a very important rôle in protecting the property of the Post Office and, indeed, in protecting some of the potential capital expenditure which we are discussing today. This is important now, when there seems to be a revival of the raiding of motor vans. I was informed that the reason it had stopped was that all the "boys" were inside, but they all seem to be out now, in view of what happened at Stroud. We must protect not only the vehicles but also the men. Perhaps the hon. Gentleman will make some reference to the work of that important branch.

Next, I turn to the question of wireless detection. The Post Office is often wrongly criticised about its failure to detect people who have not television or wireless licences. Is any capital available here for the strengthening of that service, because it is most important that it should be strengthened, particularly from the revenue point of view.

I was very impressed by the speech of the hon. and gallant Member for Down, South (Captain Orr) about Standard Telephones. This caused us some concern while we were in office. Is Standard Telephones and Cables quite a monopoly? I know the safeguards which exist in the Post Office, for which I have a high regard; there is the Contracts Committee, of which the Assistant Postmaster-General is Chairman, and there is cost investigation, but I think we must sometimes review the situation in the light of asking for competitive tenders. The question of who owns the capital in Standard Telephones and Cables must be answered. Is it quite a monopoly for the provision of the telephonic requirements of the Post Office? If it is, then it is a point which ought to be considered. I know that Standard Telephones does a very good job; it is an excellent firm, and I am not complaining about the staff conditions or anything of that sort, but of course where there is great agglomeration of capital this monopolistic tendency occurs and it must be borne in mind.

In the speech of the Postmaster-General there was what I thought an amazing statement with regard to the 20 per cent. growth of trunk traffic. I shall have a little more to say about trunk traffic on Monday, when we discuss the White Paper, but in the last published commercial accounts of the Post Office we were informed that trunk call traffic has increased by 5 per cent. over 1952–53. The normal rate of growth has been between 5 per cent. to 8 per cent. Are we now to understand that trunk traffic is developing at the rate of 20 per cent.? If so, I question very much, even granted the co-axial cables—it is very important to have the co-axial cables installed in the trunk network—whether there is sufficient capital provision to meet that traffic: That is a very important point.

I want to reiterate the kind words which the right hon. Gentleman used about the staff, and perhaps I may conclude on that note. I think that the best tribute one can pay to the staff of the Post Office is this. It may be a small matter, but they never say that they are "going to work" but that they are "going on duty." That is an indication of the devotion of all grades to the work of this great British institution, the Post Office, which, despite the criticism which is occasionally levelled at it, is still the finest of its kind in the world. I am sure it will be the first and last intention of the right hon. Gentleman that it shall always continue to be so for as long as he is Postmaster-General.

1.32 p.m.

The Assistant Postmaster-General (Mr. David Gammans)

May I first correct a small slip of the tongue which my right hon. Friend has asked me to mention? He said that business applications had remained fairly steady in the last year or two at about 15,000 a year. The figure should have been 150,000. He has asked me to make that clear to the House.

The right hon. Member for Caerphilly (Mr. Ness Edwards) appeared to set out to amuse us. Whether he set out to do so or not I do not know, but he certainly succeeded in amusing us. He spoke as though he had never been in the Post Office himself, in fact, rather as if he had never heard of the place. He tried to pretend that he did not understand the difference between capital for capital replacements and the cost of replacement plus renewals. I am sure that he understands that very clearly—much better than most hon. Members in this House—and was only trying to pull our legs in the most delightful way.

The right hon. Member also gave us a lot of the old hackneyed phrase about the Post Office being the mulch cow of the Treasury. The right hon. Member knows far too much about Post Office finance ever to believe that. Perhaps on Monday, when we are discussing the matter further, he will be the very first to congratulate us on succeeding in doing what he did not succeed in doing—restoring the basis of Post Office finance by means of the Bridgeman Formula.

Mr. Ness Edwards

Perhaps, instead of using the phrase "milch cow of the Treasury" I might use the phrase of the present Speaker of the House when he was Postmaster-General, "this engine of taxation."

Mr. Gammans

I hope that if the right hon. Member takes part in the debate on Monday, as I hope he will, he will be satisfied that the new arrangement—which it would be quite out of order for us to discuss now—certainly offers a better basis for Post Office finance than the basis he had to put up with, I am sure most unwillingly.

The right hon. Member also said that the repayment of this loan was over 20 years. That is as it has always been. I wondered why he did not tell us why he did not succeed in altering it when he had charge of Post Office affairs. He also asked why there was not a three-year Bill instead of a two-year Bill. That is a good point, but it is enshrined in history, both political and otherwise.

Another point made by the right hon. Member was in regard to the cuts in capital expenditure in 1952. If I remember aright, he said that the Chancellor had imposed a cut on Post Office capital expenditure for new buildings for 18 months. That is not so; it was not for 18 months but was a partial cut for a comparatively few months. There we took the attitude, with which perhaps he would disagree, that it is far more important to build houses than provide telephones. I do not know whether he would go round South Wales suggesting that houses are less important than telephones.

Mr. Ness Edwards

Let us get the facts right. Did not the hon. Gentleman himself announce in this House, when we were discussing the 1952 Money Bill, that for that year no new buildings would be started? That is the point I want to establish.

Mr. Gammans

I cannot remember the exact words I used, but I think I said that in 1952—the last Money Bill was in 1953—there were no new telephone buildings to be put up for a number of months.

A further point raised by the right hon. Member was in regard to the Defence Departments. I feel that he left the impression in the minds of many hon. Members that the Post Office was having a rather raw deal over this matter. I do not think he meant to convey that impression, but to imply that the Post Office was not being paid for what it was doing. In point of fact the Defence Departments in their relation to the Post Office are in exactly the same position as any private subscriber. They have to pay the cost of their services, the cost of replacement and so on.

Therefore there is no reason whatever why those defence lines, which, as I have told the House before, are being put in rather more early than otherwise they would be, should not be a charge on the Post Office in its current account. We always have anticipated that, even if they were not required for defence purposes, they would be required for civilian purposes. It is perfectly fair to say that if we did not get the defence requirements we would not put these lines in the particular places in which they are being put at this juncture. In the meantime, so far as they are used by the defence Departments, the Departments pay for them.

Mr. Ness Edwards

The hon. Gentleman will at least admit that where they are not used but left in situ we get no payments at all?

Mr. Gammans

No, any lines put in for defence are paid for and they are not put in in places where the Defence Departments do not use them.

Now I come to my hon. Friend the Member for Westbury (Sir R. Grimston), who speaks with great sympathy for the Post Office and a great knowledge of it. He asked a very good point about the development of electronics. He asked whether, with the possibility of electronics round the corner, we are at the moment spending money on traditional forms of telephone exchange when we ought to be spending it on electronics. The difficulty, of course, is to know when the development at the experimental stage has reached a point at which it can be put into mass production. I can assure my hon. Friend that that is a matter of very great concern. The last thing on earth we want to do is to put in equipment which in a comparatively few years may be out-of-date. I can give my hon. Friend one assurance, namely, that there is no delay whatever in the development. We are pressing ahead as hard as possible. I hope that the time is not far distant when this will be the traditional form for new telephone exchanges.

My hon. and gallant Friend the Member for Down, South (Captain Orr) raised the question of the Standard Telephones and Cables Company, and, I thought, made certain allegations about it. I will certainly look into that matter and let my hon. and gallant Friend know whether his fears have any basis of fact behind them. There is one point, however, which was referred to by the hon. Member for Keighley (Mr. Hobson), with regard to contracts.

Mr. Hobson

This interruption may save the hon. Gentleman from saying what he may contemplate saying in reply to me on the question of the Standard Telephones and Cables Company. I thought "allegations" was a strong term. When the hon. Gentleman makes inquiries into the statements, perhaps the reply could be to a sponsored Question.

Mr. Gammans

Certainly. Perhaps the hon. Member will put down a Question. I thought that my hon. and gallant Friend intended it as an allegation and said that the company was in a somewhat privileged position in the sense that it was sending all its profits out of the country in dollars.

Captain Orr

I was not accusing it of any improper practice, but I do not object to the word "allegation."

Mr. Gammans

I will certainly find that out. When I have sent my hon. and gallant Friend an answer, perhaps he will put down a Question so that the House can know the facts.

With regard to contracts generally, as the hon. Member for Keighley (Mr. Hobson) said we have bulk agreements with regard to certain types of equipment. In 1950, the agreements were examined by a Select Committee of the House of Commons and were given a completely clean bill. In 1952, however, the Monopolies Commission looked at the cable contracts and suggested that a proportion of them should be made available to firms who were not covered by the bulk agreement. We have done that and, for the moment, we have set aside an empirical amount of 10 per cent. for which outside firms can tender. One of the curious things we have discovered is that in many directions we cannot get outside firms to tender. But it is a useful safeguard and safety valve, and I think it is necessary to protect a great buying department like the Post Office from any charge that it is conniving in monopolistic practices. Therefore, for that reason, we are setting aside the 10 per cent.

I always like to hear the hon. Member for Openshaw (Mr. W. R. Williams), because he speaks not only with great knowledge of the Post Office in all sides of its administration, but with great sympathy. I thought his remarks regarding mechanisation were very appropriate. In his forthright way, he said that he had not always had an easy path to persuade his colleagues that mechanisation was for their benefit in the long run and also for the benefit of the Post Office. I am sure that the hon. Member is very pleased with what my right hon. Friend was able to say about postal buildings. I know this has been a bee in the hon. Member's bonnet and in a good few other people's bonnets. For long years postal buildings have needed renewal and, year by year, the hon. Member has seen an overwhelming percentage of the money going to telephones, and he must have been wondering whether the postal buildings would ever be dealt with. As my right hon. Friend said, in the coming year 100 postal buildings of various descriptions are to be rebuilt or renewed all over the country. The figure for the current year is only 60 and two years ago it was only 16. This shows that we are now able to get on with this urgent and necessary task.

The hon. Member for Keighley raised the question of stores and how they are charged. Stores are charged to capital account when they are used for development and they are charged against the Vote when they are simply for current use. That is the ordinary practice which has been in force for many years.

Mr. Hobson

There is no alteration?

Mr. Gammans

No; it is the same practice.

The hon. Member also asked for separate accounting for shared service. I am glad to be able to tell him that this is now overwhelmingly the normal practice. Nothing leads to more annoyance than when two people are on the same telephone and sharing the same meter. It is like two women trying to share a kitchen; there are bound to be squabbles about salt and sugar and odd things like that. On the whole, we have had very little complaint.

The hon. Member asked also what capital we were spending on the telegraph service. He raised a reasonable point in asking whether we were spending vast sums of capital on a telegraph service which was going down the hill. The amount spent on the telegraph service also includes what we are spending on submarine cables, as the hon. Member said, and also what we are spending on radio. He raised the interesting point which is seldom mentioned in the House about the Post Office cable ships, and I am glad that he did, because in the war they had, I agree, a gallant and unexampled record. What is more, they are doing an extraordinarily useful job of work all over the world. In fact, it is true to say that the British lead the world in cable-laying. No one else, apparently, can lay cables in quite the same way as we can, and I hope that that is a reputation that we shall maintain.

Four cable ships are owned by the Post Office and eight by Cable and Wireless. As the hon. Member quite rightly said, one of our four cable ships is 40 years old. It was built in 1915 and was taken from the Germans after the First World War. The other three are the "Ariel," built in 1939, the "Iris," built in 1940, and the "Monarch," built in 1944. Three of the four, therefore, are modern or relatively modern. As regards the fourth, we are getting out plans for the renewal of this gallant old ship which has been at sea now for 40 years.

The hon. Member asked also about the Atlantic cable. My right hon. Friend made a statement about this during the last week or so and I have nothing to add. The laying of the cable is proceeding very satisfactorily and when it is completed it will be a great engineering and imaginative triumph in which all of us in the House will take great pride.

The hon. Member asked about the new Western District Office, which will interest also the hon. Member for Openshaw. The Western District Office is going on all right. It is an enormous job, including the clearing of the old site, the building of tunnels into the Post Office railway, and so on. All I can say is that the schedule which I set out to the House when I introduced the Bill is being maintained. There is no question of its falling behind.

The other thing about which the hon. Member for Keighley asked was Post Office factories. There are eight of these, three in London, three in Birmingham, one in Wales and one in Edinburgh. They employ roughly 3,000 operatives. The function of the factories is the repair of Post Office work and not bulk contracts for manufacture. The only thing other than repairs that we do in the factories is to make prototypes and to do a certain amount of experimental work. The factories are not often referred to in the House but they are an interesting side of the development of the Post Office, and anybody who visited them would come back with great sense of satisfaction.

Mr. Hobson

Is the retreading of tyres being done at Yeading?

Mr. Gammans

I am almost sure that it is, but I cannot be sure offhand. The Yeading depot is going on all right.

Mr. H. Hynd (Accrington)

Has the success of these factories converted the hon. Gentleman to the principle of direct labour?

Mr. Gammans

The hon. Member raises a large question. Whether one could take a general question from a specific case is a different point. I am satisfied with the Government's factories run by the Post Office—I will say that to the hon. Member; but whether I would care to apply that to the building industry or a few other things is an entirely different question and one which it would be out of order to discuss in this debate.

The hon. Member asked for a statement about the Investigation Branch. I am sure he would be the first to appreciate that the work of an investigation branch and its methods and successes and failures—

Mr. Hobson

It is more successful than the Foreign Office.

Mr. Gammans

—is not a matter that we should discuss in the House. I can give him the assurance that the general standard of the investigation branch is extremely high, and I am personally—and I know my right hon. Friend is, too—very satisfied with what is being done in what is, after all, a not very easy task.

As the House is aware, our chief problem, which has been referred to time and again in the debate, is to catch up with the lists of people waiting for telephones. The problem is not merely that of trying to catch up with a high but fixed level of demand. The level itself has increased to such an enormous extent in the past two years. I do not think that anyone would have dared, when we considered the last Money Bill two years ago, to have said that the demand for private telephones would go up by two-thirds within two years.

What will be the effect on the demand for private telephones of subscribers having to pay for them, or nearly to pay for them, instead of getting them at half price, it is impossible for anybody to say. The hon. Member for Keighley thinks that will have an effect. The hon. Member for Openshaw does not.

I should like to tell the House not only of what has been done about reducing the telephone waiting list itself but about those who are referred to in G.P.O. jargon as the "long waiters"—the people who have been waiting for some considerable time. Four years ago there were 120,000 people who had been waiting for three years or more, and were, therefore, qualified for the unenviable title of long waiters. We have managed to reduce that number to one-third, and it is still falling.

Mr. J. T. Price (Westhoughton)

The hon. Gentleman looks to this side of the House for approval of the Government's work and of the work of the Post Office, and so I must ask him, although I do not wish to be unreasonable, what has been done about the long waiting list in my constituency in Lancashire. I do not suppose he has the figures with him, but perhaps he could tell us what is being done for small places, small urban districts such as Blackrod and Hyndley, where people have been waiting for three or four years and cannot get any satisfaction—

Mr. Deputy-Speaker (Sir Rhys Hopkin Morris)

I do not think that this matter arises on this Bill.

Mr. Ness Edwards

With great respect, Mr. Deputy-Speaker, the Assistant Postmaster-General is talking about reducing the number of telephone waiters by the spending of the money we are to vote by the Bill, and so surely my hon. Friend is entitled to ask him to be more explicit and to say where the reduction in the waiting list is to take place—in what areas? I should have thought that if my hon. Friend was out of order—although I do not think for a moment that he was—the Assistant Postmaster-General must have been miles out of order.

Mr. Price

Further to that point of order. As we are being asked to approve capital expenditure for all the services the Post Office renders, am I not entitled to ask how priority will be established between one type of area and another, between town and rural areas, for example?

Mr. Deputy-Speaker

I think a general reference may be made to that, but to go into it in the detail the hon. Member was would not be in order.

Mr. Gammans

I am afraid I cannot on the nod give the hon. Gentleman figures for which he asks, but if he cares to put down a Question or to write to me about the position in certain places in his constituency. I shall be glad to try to answer him.

I am often asked in the House, or I used to be, why we do not deal with applicants necessarily in the order of their applications. An applicant is likely to say, "I have been waiting for so long and another man has been put on the telephone before me." The answer is this. If we were to try to deal with the applications in the exact order of the applications we should not make the best use of our men and of our equipment. If we put in a telephone here, and then pack up all the equipment and go to another part of the town to put in another telephone there, we do not make the best use of our resources. The best thing to do is to put in all the telephones in a given area, before packing up all the equipment and moving on to another area. That is the reason why some people see that others who applied for the telephone after them get the telephone before them.

There is the very difficult question of the priority of the rural applicants. For example, a man applies for a telephone in the country, and it may mean putting in fifty poles to connect him, requiring as much labour and equipment as connecting a dozen or more people living in a congested area. For that reason I hope that it will be appreciated that a strict order of priority is necessary.

A word on the subject of the self-help scheme for farmers. There are not many farming Members here today, but perhaps they will read the Report of the debate. The results of that scheme have been very disappointing. As the right hon. Gentleman will remember very well, farmers used to come to the Post Office and say, "If you cannot put up fifty poles to put us on the telephone, why not let us do it?" So this self-help scheme for farmers was devised, by which they put up the poles themselves, and put the wire along the top, or else lay the wire along the hedgerows. The Post Office connects up both ends. It is a provision which can last quite a number of years, certainly until we are in a position to make a better job of it. The Post Office sells the farmers wire and makes a rebate on their rentals for the work done. I think it is a very fair offer. I had expected, in view of the things farmers used to say about not getting their telephones, that it would have been taken up to a much greater extent than it has. Only 140 farmers in the whole of the United Kingdom have taken advantage of the self-help scheme.

Mr. Ness Edwards

Since when?

Mr. Gammans

Since it came in.

Mr. Ness Edwards

When?

Mr. Gammans

In 1952, I think it was.

A big effort has been made to help the farmers in the past few years. The number of farmers now waiting for lines is about 11,000; 5,000 less than it was four years ago. During the past 12 months 9,000 farmers have been put on the 'phone by the G.P.O.

A word about what I would call the black spots. The hon. Member for Rugby (Mr. J. Johnson) mentioned this, and so did the hon. Member for Feltham (Mr. Hunter). I know that, with the best will in the world, hon. Gentlemen have difficulty in explaining to their constituents why they cannot come on the 'phone. It is all the more annoying when someone else is put on the 'phone who applied for it later. The explanation was given by my right hon. Friend, namely, that it is quite impossible to put a man on the 'phone unless there is a cable near him and a place for him in the exchange or an extension planned.

Circumstances vary between one exchange area and another. A man who lives in, say, a London suburb where the exchange is full and the cables overloaded cannot come on the telephone; he has a friend who lives in another part of London where the opposite conditions prevail, he hears that his friend has gone on the 'phone, and cannot understand it. Hon. Members write to me complaining about that sort of thing, and suggesting that the G.P.O. exercises some sort of differentiation. It is not that at all, and I hope that I shall have succeeded now in obtaining the help of hon. Members in explaining to their constituents what is a very difficult problem, which we feel as keenly about as they.

Mr. J. Johnson

Is there much point in telling the House that new cables will be laid in a particular town, such as Rugby, when we all know there that the exchange is full to capacity and that the answer is not in laying new cables but in extending the exchange?

Mr. Gammans

We try to keep a balance between the two things. If the problem is exchange and cables there is no point in laying cables and leaving the exchange alone. Therefore, if the hon. Member has been told that new cables are being laid he can take it that it is with the expectation that there will be the telephone equipment at the exchange to receive it.

Mr. H. Hynd

The chicken and the egg.

Mr. Gammans

Exactly.

Another aspect of the telephone business which may be of interest to hon. Members is the extent to which telephones contribute to the export trade. It has often been argued in the past in debates on Money Bills that because we must export equipment for the sake of the general balance of trade we must be a little slower in developing telephones here in this country. Telephones have a very high conversion value in the sense that we are taking raw materials and by means of traditional skill making them into something far more valuable. The export trade in telephones remains pretty steady and is now running at the rate of about £15 million a year.

There are two special difficulties on the postal side. The hon. Member for Openshaw referred to one of them just before he was ruled out of order and obviously I cannot deal with that matter today. I may be able to refer on Monday to the problems that arise over staffing in certain places. The other difficulty is the provision of buildings and that is very relevant to the Bill, for we are here providing the necessary capital.

The number of postal buildings for which we are making provision has gone up to 100 a year, that is 100 will be provided in the next year. It is not often realised that the extent of the Post Office problem in providing new buildings has been aggravated by the increase in business. The business of the Post Office has not only increased in volume but has changed considerably in character.

Mr. W. R. Williams

The hon. Gentleman said that 100 buildings are estimated to be erected next year. How many remain to be erected?

Mr. Gammans

I could not say offhand, but if the hon. Member puts a Question on the Order Paper I will certainly give him the information. The total capital value of our arrears of building work is about £50 million.

The type of business transacted in a post office today is often quite different from the type of business for which the building was originally designed. People do not go to the post office today merely to buy stamps and postal orders. They go there for their children's allowances, old-age pensions, refunds of prescription charges, and a number of other things in respect of which, over the years, duties have been laid on the Post Office. That is why we so often see overcrowding in post office buildings. I hope that all parts of the House will agree with me about the type of buildings that the Post Office has erected, and not only since the war. I am sure that most hon. Members agree that we have managed to harmonise our type of building with the local architecture and have erected buildings which are a credit to the towns where they are to be found.

I hope that the right hon. Member for Caerphilly is satisfied about the amount of money that is being spent on links for the I.T.A. and the B.B.C. Except for the provision of these links, the subject of television is outside the scope of the Bill and I hope that the right hon. Member does not wish to revive the controversy over the Television Act in which he played so large a part two years ago.

It is pleasing to me to find the general attitude of good feeling on all sides of the House towards an institution which goes back a long time in history for its growth and inspiration, and we all spontaneously pay general tributes to the staff. I have thoroughly enjoyed my four years in the Department and what pleases me most is the good feeling and sense of loyalty that one automatically expects and receives from all members of this vast organisation.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Legh.]

Committee upon Monday next.