POST OFFICE DEVELOPMENT AND FINANCE

HC Deb 14 November 1955 vol 546 cc48-159

4.18 p.m.

The Postmaster-General (Dr. Charles Hill)

I beg to move, That this House approves the Report on Post Office Development and Finance (Command Paper No. 9576). On Friday last—

Mr. Ness Edwards (Caerphilly)

On a point of order, Mr. Speaker. The right hon. Gentleman is moving a Motion to approve the White Paper. Do I take it that it will be in order to discuss, at the same time, the Prayer which stands on the Order Paper in the name of my right hon. Friend the Leader of the Opposition: That an humble Address be presented to Her Majesty, praying that the Telephone Amendment (No. 1) Regulations, 1955 (S.I., 1955, No. 1622), dated 24th October, 1955, a copy of which was laid before this House on 27th October, be annulled? We might then have one discussion, although it would be possible to have two votes at the end of the proceedings.

Mr. Speaker

If the House agrees to that course, I think it would be very convenient, because if the Motion were taken with the Prayer still to come as a separate Order it might involve the House in difficulties as to the rule against anticipation. If the House agrees to have one discussion covering both the Motion which the right hon. Gentleman is moving and the Prayer standing in the name of the Leader of the Opposition, I think that that would be a good course. At the end, we could have one Division or two Divisions, as the House determines.

Mr. C. R. Hobson (Keighley)

Further to that point of order. In view of the suggestion which has been made, which I think is a very good one, do I take it that we should be committed to the Ten o'clock Rule as regards the Prayer and the discussion on the White Paper?

Mr. Speaker

The position would be that the Motion would be subject to the Ten o'clock Rule. If it were desired to take a decision on the Motion, we would have to have the Division before ten o'clock. But, on the other hand, the Prayer is exempted business and provided it complies with the Sessional Order and is moved before eleven o'clock, that would be all right. However, the Chair and the House would be placed in difficulty if there were to be a subsequent discussion supporting the Prayer, because that would mean that speeches on the Motion dealing with telephone charges would, strictly speaking, be out of order because of anticipation. Therefore, the course I suggest to the House, if it meets with the approval of both sides, is that we should have a general discussion as wide as possible and including the subject matter of the Prayer and the whole of the White Paper up to ten o'clock and then the Prayer can be formally moved, if it is desired to take a decision of the House upon it.

Dr. Hill

I am glad that that suggestion has been made and that you, Mr. Speaker, have approved it, because it will permit a discussion on the postal charges involved in the general proposition outlined in the White Paper which would not otherwise have been possible.

Last Friday, in moving the Second Reading of the Post Office and Telegraph (Money) Bill, I made a general statement about the telephone position, about the prospects of increased telephone development, about the technical developments of one kind and another and about research, and so on. I am sure that the House will not wish me now to repeat those general statements and arguments, so I will not refer to the first 20 paragraphs of the White Paper which substantially cover those topics, although, in replying to the debate, my hon. Friend will be glad to answer questions put to him about them.

I will merely say that whereas the Post Office and Telephone (Money) Bill deals with new development and authorises the issue of £175 million estimated to last two years or rather more, that Bill related only to new developments, whereas the general financial scrutiny and programme contained in the White Paper relate both to new development and to renewals and replacements. In fact, the whole picture of capital development is presented. It will be seen that what is contemplated, even after the modifications in programme which have been made at the Chancellor's request in relation to the general policy of restraint in capital development, is a three-year programme of capital development costing slightly more than £300 million.

It may be useful, in order to get a measure of the increased capital development involved in that figure, to remind the House that the corresponding figure for the current year is £92.5 million; for 1954–55, £74.7 million; and for 1953–54. £71.2 million. So the rising figures for the last few years should be compared with a three-year figure of rather more than £300 million.

Mr. Hobson

The right hon. Gentleman is now making a very important statement. We have had today the Third Reading of the Post Office and Telegraph (Money) Bill, which sanctioned the expenditure of £175 million over a period of two years. He is now talking about capital development at the rate of £300 million over three years. Is there to be capital development which the House has not yet sanctioned, or a further Post Office and Telegraph (Money) Bill? That is rather important.

Dr. Hill

The hon. Gentleman will recall from his years with the Post Office that new development is financed by Money Bills. Replacements and renewals are financed out of revenue. In the White Paper itself we are dealing not merely with the capital development made possible by the Post Office and Telegraph (Money) Bill providing £175 million over two years, but also with renewals and replacements. We are so brought to the larger figure of rather more than £300 million in a three-year programme.

While that programme is not all that we need, we hope by it to reduce the telephone problem to manageable proportions in the next three years. We hope in the first of those three years to increase the number of telephones by about half a million. We hope that in the second and third years it may be possible to improve on that figure. Indeed, whereas today the number of telephones in use is about 6,500,000, we hope that by March, 1959, the number will be about 8 million. If we examine the White Paper as a three-year programme, we see a good prospect, within the inevitable limits of the situation, of making a determined attack on a problem which has grown—as a result of the cessation of development in the war years and of the restricted developments in the post-war years—to one of great size and great difficulty.

As I explained to the House last Friday, the waiting list today is about 380,000. The demand has risen steeply. It is one and a half times what it was in 1952. The increase is primarily in the residential demand. The business demand has remained fairly steady at the rate of 150,000 applications a year. That is the main problem, although on the postal side, as I explained last Friday, there are other and considerable problems. In approaching the problem, the White Paper deals with three main issues which lie at the basis of the reconstruction in Post Office finance which is propounded in the White Paper.

The first of these is the so-called return to self-contained finance. In 1933, the Bridgeman Committee, which studied Post Office structure and function in great detail, brought out as its main proposals, first, the reorganisation of the Post Office on a regional basis and, secondly, an arrangement by which the Post Office would pay a fixed annual sum to the Treasury, moneys remaining after the payment of that sum being used by the Post Office to improve services or to reduce charges.

From 1933, the Bridgeman arrangement under both headings, regional organisation and self-contained finance, came into operation. Between 1933 and 1939, the annual amount fixed for payment by the Post Office to the Treasury was £104 million. It is interesting to recall that my right hon. Friend, who is now the Leader of the House, commented at the time that that £10¾ million, which began to be paid in 1933, was calculated as the average of the surplus of the previous three years. It seems as if the figure was calculated in order to absorb the surplus which might reasonably be expected to happen in the years that follow. The Leader of the Opposition, speaking then as a former Postmaster-General, criticised that aspect of the matter. It is worth noting that in present-day money values that £10¾ million would be about £25 million.

Mr. Ness Edwards

rose—

Dr. Hill

Perhaps I may continue a rather difficult exposition. The right hon. Gentleman will no doubt have an opportunity to speak later.

The proposal today is that we should return to the Bridgeman principle of self-contained finance, and that the annual payment to the Treasury should be £5 million a year compared with the annual £10¾ million between 1933 and 1939. In the years since the war all the surplus of the Post Office has passed to the Treasury —very considerable sums—the Bridgeman arrangement being in suspension. In view of the delicate reference made by the right hon. Gentleman to the Post Office as a milch cow, let me observe that in the six years during which the party opposite was in power—and I state this not as a criticism, but for the record—£15 million a year, on the average, went from the Post Office to the Treasury.

Mr. Edwards

I presume that the £5 million which is to be paid to the Treasury will be in lieu of taxation.

Dr. Hill

indicated assent.

Mr. Edwards

What was the size of the Post Office Fund as such at the end of the Bridgeman period and before the new arrangements took place during the war?

Dr. Hill

I cannot give that off the cuff, but I will get the figure for the right hon. Gentleman.

How has the £5 million been calculated? This time, a rough calculation—it can be no more than rough—has been made of the amount which the Post Office would pay in taxation if it were not exempt from taxation under a number of headings. I do not pretend that it is a precise calculation of the taxation commitments of the Post Office which would otherwise exist.

The return to the Bridgeman arrangement means greater freedom for the Post Office, a less amount for the Treasury than obtained in the years before the war, and a reasonable payment in relation to taxation which would otherwise be due. I believe that the House, all politics apart—and much of our Post Office business is outside the field of party politics—will welcome this reversion, whatever the views may be on later parts of the White Paper, to a situation in which the Post Office will have the greater incentive and freedom which come from a fixed, limited, modest annual payment to the Treasury, the remainder of the surplus, if any, being available to the Post Office for the improvement of facilities or the reduction of charges.

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

I agree with those wishes, but will the Postmaster-General tell me what greater freedom will be afforded to the Post Office under these proposals?

Dr. Hill

Under the present system the Treasury collects all the surplus and accordingly has a detailed interest in all the Post Office work. In future, the Treasury will get its £5 million, come what may, for the five-year period for which, in the first instance, this arrangement will operate, and the Treasury's interest will be limited to that £5 million.

Mr. Gerald Nabarro (Kidderminster)

While I entirely support from a personal point of view what my right hon. Friend has said, may I ask him to explain, if the Treasury's interest is limited in future to the fixed sum of £5 million per annum, whether that will not lead to a larger retention by the Post Office and diminish the sums under future Money Bills?

Dr. Hill

I am not sure that I appreciate my hon. Friend's point. The raising of money under Money Bills is limited to new capital development. Whatever temptations may exist for Postmasters-General or Chancellors of the Exchequer, I cannot see that this situation creates any new temptation. The Post Office will need a reasonable surplus in its budget in relation to its vast turnover. It is proposed that the surplus, apart from the £5 million which is to be paid to the Treasury, should be about £5 million a year.

This brings me to the second factor in estimating the bill which the Post Office has to meet, that of rising costs, including wages. In the past four years the wages bill of the Post Office has increased by £42 million a year. The increase in cost of materials has been about £8 million a year. Against that increased cost of £50 million for wages, raw materials and the like, the sum added to the tariffs has been £31 million. Part of the rest has been absorbed in the form of increased efficiency and increased business. Some of it has been met by increased charges to other Government Departments for agency services. By and large, a figure of £50 million represents the increased charges of the past four years, and the charges have found expression in tariff increases of about £31 million.

As from the beginning of the next financial year, wages awards recently made will involve the Post Office, over and above the figures I have given for the past four years, in an increased wages bill of £14 million a year and increased cost for raw materials and the like of £3 million. Therefore, the second fact to be faced is that £17 million represents our increased charge for wages and costs, in the comparison between the last financial year and the next financial year. I should tell the House that in the calculation we eventually make of the total bill, there will be included, not the full £17 million for increased wages and costs, but a lesser amount of £8 million, because part of the increase is absorbed by increased efficiency, increased business and, again, increased charges to other Government Departments for agency services.

Our first factor, therefore, is Bridgeman, which means £10 million—£5 million in the form of the fixed payment to the Treasury and a £5 million surplus. Our second factor is £8 million, the expression of the increased wages and costs for next year over this year amounting to about £17 million. The third factor is depreciation. Hitherto, it has been almost the invariable practice—I will come to the exception in a moment—for the Post Office to set aside as depreciation an amount calculated in relation to the historic costs of the system. It has now been decided that this ought to be replaced by a system in which the Post Office sets aside the proper amount which any prudent company should set aside, the amount by which the plant runs down in the year.

This is not a new principle. In 1943, I believe it was, when Lord Listowel was Postmaster-General—I may have got the Postmaster-General's name wrong, but it was in 1943 or 1944—the system was varied to the extent that in addition to the depreciation on the basis of historic costs, there was set aside an additional amount. A quarter of the telephone surplus was, I believe, the basis of this calculation. An additional amount for depreciation was set aside which, over the years since its introduction, has amounted to a £17 million increase in the depreciation calculated on the basis of historic costs.

Some may say that this should have happened years ago, and that may or may not be true. But the Government have thought it right to put the Post Office depreciation figure on a proper basis of replacement, of bearing the cost of what is now wearing out in present use; even though it involves an addition in the amount of depreciation of about £12½ million a year. On the basis of historic costs, the figure this year would have been £29 million. On the basis of replacement, the figure is £43 million, an increase of £14 million. But after making allowance for the longer life of some equipment, a figure of £12½ million is thought to be an appropriate additional amount necessary to bring the figure for depreciation up to a proper replacement level. The first phase of the White Paper is concerned with expounding those three factors and building up from them the amount of additional revenue needed by the Post Office.

If we take these three figures: first, the figure in respect of Bridgeman—the return to self-contained finance—amounting to £5 million; the second of £8 million, deriving from the increased costs and charges, and the third of increased depreciation, which is £12½ million, and consider them in relation to the present estimated surplus, we reach the conclusion—as is argued out in the White Paper—that what is needed is an increased income for the Post Office next year of about £25½ million.

The figure subsequently becomes £25¾ million, because there are one or two modest, but useful improvements to the service—for example, the abolition of the porterage charge for telegrams in rural areas; the development, where reasonable and practicable, of a second parcels service and the extending of the last time for overnight telegrams at the cheap rate from 10.30 p.m., as at present, until midnight. Taking those three modest improvements in the service into account, the three main factors which I have outlined to the House lead to this need for £25¾ million in increased income.

Mr. John Edwards (Brighouse and Spenborough)

Before the right hon. Gentleman leaves that point, will he say a little more about the surplus of £5 million for which he is now budgeting, and which he has included in the overall figure of £25½ million? Having regard to the size of the Post Office, does he consider that a revenue reserve of that order is adequate?

Dr. Hill

We have given a good deal of thought to it and have reached the conclusion that it is sufficient as a working surplus in budgeting for the year. This is a matter of judgment and opinion, and events may subsequently demonstrate that it was inadequate. But we think it likely to be sufficient.

Having reached a figure of £25½ million, or £25¾ million with the cost of improved services, the question arises: how is the increased revenue to be obtained; how should it be obtained from telephone, telegraph and postal services? On studying the White Paper, hon. Gentlemen will notice that in paragraph 36 there is a breakdown of this figure of nearly £26 million. It is demonstrated that it is appropriate that £19 million should be obtained from the telephone side and the remainder from the postal side. If it be accepted that £19 million should be obtained from the telephone side, the question immediately arises, what is the best and fairest way to obtain that money by increased charges?

Mr. William Ross (Kilmarnock)

Will the right hon. Gentleman tell us why the whole £12½ million supplementary depreciation is to be on the telephone and telegram side? Secondly, will he tell us what percentage of the annual income of the telephone system will have to be laid aside for depreciation alone?

Dr. Hill

It is not the case that the whole depreciation will fall on the telephone side.

Mr. Ross

Telephone and telegram.

Dr. Hill

The hon. Gentleman will appreciate that in so far as there is plant depreciating, and replacements involving considerable expense, it is essentially a telephone problem—

Mr. Ross

It is a depreciation problem.

Dr. Hill

It is essentially a telephone problem.

I now turn to the case for increasing rentals and other charges, which is set out in the White Paper. The principle which I have sought to apply is that, in general, the increases should go where the losses are greatest. There have been prepared analyses of the costs and receipts of the various elements which make up the telephone and postal services, and the principle which is applied, and which I have just referred to, leads one inevitably to rentals as being the main source of increased income on the telephone side.

If hon. Members study the White Paper they will find, in Table VIII on page 11, an analysis of the losses on rentals which are now being incurred under the various headings. This matter of telephone rentals is a complicated one. For the purpose of administration the country is divided into three parts: London, four of the main provincial towns—Glasgow, Liverpool, Manchester and Birmingham—and the rest of the country, which, perhaps, I may call the provinces, in order to save words. Taking the business rentals first, the figures are, respectively: London, £11; the four provincial cities, £10; and the provinces, £9. In other words, there is a differential of £1 between each of those three kinds of areas.

The residential telephone rentals are £3 less in each case, namely, £8 in London; £7 in the four provincial cities, and £6 in the provinces. In the case of a shared service, the rental is 30s. less, whether it be business or residential and, in the case of the residential subscriber, 100 free calls are permitted, which is a further differential.

We must examine the rentals problem in the light of that rather complicated existing structure. Hon. Members will see from Table VIII that we are making a profit on business rentals in London and in the four large cities, and a loss on business rentals in the provinces, and also on residential rentals everywhere; indeed, the provincial residential rental is about half the cost of the provision of the service.

Mr. Hobson

Does that include rural areas?

Dr. Hill

Yes, it includes the rest of the country outside London and the four large cities.

In view of the fact that these losses exist, especially in the residential and provincial categories, it seems right to reexamine the basis of the existing rental structure. The £1 differential as between London, the four cities and the provinces has some basis in fact, in relation to the service rendered. In London, a circle of five-miles radius is treated as a single spot for the purpose of judging the distance of a call; in the four large cities a circle of two-mile radius is treated as a single spot for that purpose, and for the rest of the country the distance is judged from the local exchange. The differential of £1, however, is far too large to represent the difference of service in terms of cost. That differential is therefore to be reduced from £1 to 10s.

The second differential is that which exists as between the business and the residential subscriber. That has its roots not in costs but in history, and I believe it was the noble Lord Listowel, in another place, who suggested that all the differentials—geographical, business and residential—should be swept away. I was attracted by the idea at one time, but when one works it out one finds it means that the rate for everybody would be £10, with 30s. less for a shared service—which I will leave out of account in order to keep the issue clear. In other words, the London business man would have a cheaper service; there would be a reduction from £11 to £10. The business man in any of the four cities would remain where he was, and the provincial residential subscriber would have his rental increased from £6 to £10 instead of £9 as is proposed in the White Paper.

I admit that it could be logically argued that the business residential differential—a large one of £3—should go, and I have decided that we should reduce it, to begin with, from £3 to £2. To take account of the overall loss on rentals there is an increase of £1 in all rentals. Applying those three changes—an overall increase of £1 in the rental; a reduction in the geographical differential of 10s., and a reduction in the business residential differential from £3 to £2—the result is the new scale of charges put forward in the White Paper. I recognise that for the provincial residential subscriber this involves an increase from £6 to £9 a year. Even so, the residential subscriber has a concealed differential of 100 free calls, and we could have reduced the rental by abolishing those free calls, which would have meant a mere book-keeping change, without any real effect upon what subscribers paid.

Applying those changes, the House will see the profit or loss in relation to the various kinds of subscriber set out in Table IX. In the provincial areas, under the headings of business, residential, exclusive and shared, the rental is still less than the cost to the Post Office of providing the apparatus. I hope the House will agree that, however painful it may be, it is a sound and sensible principle, when we are compelled to raise income, to search out those services which are being provided at substantially less than cost, there to place the increases which the circumstances demand.

We must bear in mind the fact that the average number of calls per day by the provincial residential subscriber is slightly more than one. The Post Office income from the provincial residential subscriber, on average, is 1½d. per day at the present rate. On average, it costs £100 to install the equipment, not including the exchange equipment. What will now be the charges? In the case of the provincial residential subscriber, there will be a rental of £9 a year, plus a call charge of 2d. in place of the 1½d. charge now in operation.

Mr. William Shepherd (Cheadle)

Is it not the case that the cost of a call in the provinces is higher to the Post Office in the same way as the rental is a higher cost?

Dr. Hill

We are getting to the situation—and in years to come we shall no doubt arrive there—where the cost is related much less, if at all, to the distance that the message or the conversation travels and almost wholly to the equipment at the ends, if I may so express it.

The rental proposals increase the income by £9.75 million. I now come to the second item. Not every subscriber could tell one what the call charge is at present. It is 1½d. As far as we can judge, the cost of it is rather more than 2d., and it is proposed to raise the subscriber's call charge to 2d. The call box charge of 3d. will remain the same. This second change will bring in £7 million, so bringing us to nearly £17 million of the £19 million which it is estimated should properly fall on the telephone service.

There is set out in the White Paper the other minor, yet for some not unimportant, changes which have been made in order to raise the £2¼ million which has still to be raised to bring the increase on the telephone side up to £19 million. Under the heading at the top of page 13 of the White Paper, there is set out: Extension rentals, Advice of Duration and charge, Reversed charge fee, Connection charges. I have no doubt that later in the debate hon. Members will express their views on individual items under that heading.

I do not pretend for one moment that there are not other ways of doing this thing, but if the House, in following the argument which I have sought to put to it, reaches the conclusion that £25¾ million should properly be raised, with £19 million of it falling on the telephone service, it is clearly a matter of judgment as to where best to place those increased charges knowing that wherever they are placed some people will feel unhappy at the result.

I pass now to the postal services, and it is proposed that £7 million of the £25¾ million should fall on those services. Again, they have been examined in relation to cost. One thing stands out clearly, and that is that on the parcels side, both inland and overseas, the charges of the Post Office must rise as the charges for freight, both railway and steamship, rise. As far as the inland parcels are concerned, we have a contract with the railway companies by which we pay them 40 per cent. of our receipts from parcel post. As their charges have gone up, so it has been necessary for ours to go up.

It will be seen by hon. Members, of course, that as we pay only four-tenths of what we receive to the railways, for us to put up our rates in proportion to railways charges will leave us with a little in hand—£1.7 million. That, again, is to meet the loss of rather more than that which is incurred on the inland parcels service.

Secondly, printed papers and samples. Both at home and overseas, we are losing money on printed papers and samples, and the logic of the argument which I have put to the House, that we should deal with losses where we find them, would lead one to put up the rate for printed papers and samples going overseas. Yet I believe it would seem to hon. Members on both sides of the House that at a time when we are pressing for a development in our overseas trade, it would hardly be appropriate to put up the cost of a service which is so intimately related to our overseas trade.

For that reason, there are no increases for printed papers and samples going overseas. At home, the losses on printed papers are considerable. They approach £2 million. I am confronted with the unpleasant task of seeking to reduce those losses, and the increases set out under this heading in the White Paper will recover £1.7 million.

I must here mention a topic which I know is of concern to a number of hon. Members. It is that we have left the newspaper rate unchanged at its former cheap rate—four ounces for 1½d. and ½d. for each four ounces thereafter. I should be grateful if the hon. Member for Keighley (Mr. Hobson) would not mutter away. I will gladly give way if there are sensible interjections, but I am seeking fairly and clearly to put the position to the House.

Some have said that this increase in inland printed papers at the higher rates is harsh—as indeed it is—for certain periodicals, particularly monthly periodicals. I am bound to say that printed papers up to 2 oz. in weight have since before the war gone up by 200 per cent., whereas printed papers over 2 oz. in weight have gone up by 150 per cent.

On the second criticism, that the disparity between the newspaper rate and the printed paper rate generally is now so gravely widened, I would tell the House that I have given careful thought to the newspaper rate. Hon. Gentlemen will recall that the newspaper rate began a long time ago when it was believed right to ensure that the cheapest possible rate should be charged for the dissemination of the paper dealing with current political and other topics, and for this purpose the paper was defined as one which was published at intervals of not more than seven days. I felt—I may be wrong in this, and no doubt hon. Members will tell me if they think I am—that the original consideration should obtain, and that it was right to maintain that cheaper rate for this kind of newspaper.

Mr. Nabarro

Would my right hon. Friend answer one question? How do football pools come into this? Are they letter rate or printed paper rate, and, if my right hon. Friend is going to put up certain charges, what increased revenue will be derived from the pools?

Dr. Hill

Football pools come under the printed paper rate, and I cannot off the cuff give the revenue which the Post Office derives from their conveyance except to say that it is substantial.

Mr. Douglas Houghton (Sowerby)

Presumably the Post Office is making a loss on the printed paper rate in regard to football pools, in common with all the other printed paper rates?

Dr. Hill

if the lion. Gentleman will study what is set out in the White Paper, he will find that the loss is largely on the rather heavier weights than on the modest weight which is involved by the document which, it seems, comes through one's letter-box whether one wants it or not. There are certain other services, some of them antiquated services—

Mr. John Dugdale (West Bromwich)

I was going to ask, Mr. Deputy-Speaker, whether the Postmaster-General was at any time going to address you, because he does not seem to have addressed you at any time during the proceedings.

Mr. Deputy-Speaker (Sir Charles MacAndrew)

I recall his doing so.

Dr. Hill

There are certain other increases which relate to the express services, and, in general, they are based on an increased charge per messenger mile from 6d. to 1s.

If I may broadly summarise what the effect is in the increased costs, as compared with those before the war, it emerges that the subscribers' average payments for telephones will, by the increased charges, be about 80 per cent. up on prewar, and the average payment for letters and printed paper will be 98 per cent. up. When we compare this with the 150 per cent. increase in plant costs, 175 per cent. increase in Post Office wage rates and 195 per cent. increase in the earnings of Post Office workers, I believe that it will be seen that the Post Office is not content to pass on increases to the public. It has sought by increasing efficiency, as well as welcomed increased business, to absorb some of the increases itself.

I have not dealt with all the issues and items because that would mean delaying the House for far too long, and my hon. Friend the Assistant Postmaster-General will seek, at the end of the debate, to answer any questions which hon. Members may raise.

I want to say, in conclusion, that I believe that the three main changes—one inevitable—the increased wage rates, the Bridgeman basis, and the increased allowance for depreciation, to be inevitable in a sound and developing Post Office system. I believe that it is right to do these things now, when we are beginning a new drive, within the limits which I have mentioned, in order to develop and extend our telephone service. If one accepts that contention, the task of distributing the £25,750,000 among the many services becomes one of difficulty and unpleasantness, but I believe that it is right to seek out the places where losses are incurred.

There is an exception to that rule I should mention, as I undertook to do earlier, in the case of the postal services. Having increasing the parcel rate, having dealt with printed papers and having decided not to increase the rate for printed papers overseas, there is still left some £2 million to find. I considered whether to find that £2 million by an increase in Money Order rates, because there are losses there, and by an increase in the registered post service, but I decided, although it departs from the basic principle, that it would be simpler and cleaner to place it on the letter post over the first 2 ounces. The 2½d. letter remains, like the threepenny call box telephone call. Apart from that, I have sought to base the increases on the principle that each part of the service should pay its way.

As the Economist said recently: A telephone in every home was a fine slogan. A telephone at a loss in every home is another matter. In seeking to do that, I realise that criticism must come from those whose judgment would lead them to deal with the matter in other ways. But I have tried faithfully to observe realistic economic principles both in the estimate of the amount and the allocation of the increases to the various parts of the services.

5.13 p.m.

Mr. Ness Edwards (Caerphilly)

We have listened to a fairly lengthy exposition of the White Paper. The Postmaster-General has my sympathy in having to plough through all this mass of detail. I have had to do it before, and I appreciate that he has had a fairly hard task this afternoon. The right hon. Gentleman started off well by chastising me for describing the Post Office as the Treasury's milch cow. He has said nothing this afternoon to prove that it is not. Every penny that he receives as a result of the White Paper goes, not to the Post Office, but to the Treasury.

Let us examine the White Paper carefully and see what is left to the Post Office. I have this other comment to make on his speech, and that is that he should look at his brief a little more closely. He has repeatedly said, "Let us get the money from where the loss is occurring; let us make each section of the Department pay for itself." I would invite the House to look at page 9 of the White Paper. Table IV shows that there is no loss upon the telephone service. The loss on the postal service is £2 million. When we turn to Table V we see how it is proposed to raise the money—£6½ million from the service that loses most, the postal service, and £19 million from the service that is making a profit. I would suggest to the House that if the right hon. Gentleman can make a capital mistake of that sort, he is not really entitled to the respect of the House for what he said subsequently.

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

Surely that takes into account the question of depreciation of £12½ million.

Mr. Edwards

I took the two tables. In Table IV the profit on the telephone service is £1 million and the loss on the postal service is £2 million. In Table V, which sets out the way in which the money is proposed to be obtained, it is true that the £12½ million supplementary depreciation is placed wholly on the telephone service, as if there was no postal property, and as if all the postal arrangements had no contribution at all to make. I should have thought that was one of the matters in respect of which the right hon. Gentleman fell down very badly.

Today the discussion, so far as it has gone, has been on one of the emergency Budget proposals. That was mentioned by the Chancellor of the Exchequer as an emergency matter—that he was going to get £26 million from the Post Office. That did not emanate from the Post Office; it emanated from the Treasury. The Chancellor described it himself when he said we are going to take … further and more direct, measures, designed to restrain demand in both the public and the private sectors of the economy, and to reduce expenditure on both investment and personal consumption. In that part of his Budget speech dealing with the Post Office the Chancellor set out what he proposed to do or authorise to be done. He said, first of all, that there must be a reorganisation of Post Office finances: secondly, that there must be a restraint in its rate of investment. Thirdly, he said: The adjustments which my right hon. Friend is proposing will bring us nearer to a position in which the waiting list consists of persons who are prepared to pay the economic price for the service. In other words, he seeks to attack the waiting list—which today is greater than it was in 1953—by putting the telephone out of the reach of many of those who would otherwise have it.

Of course, the last objective which he stated—though, I imagine, the first to him —is contained in these words: … these changes will produce no less than an extra £26 million a year."—[OFFICIAL REPORT, 26th October, 1955; Vol. 545, c. 210 and 219.] I am afraid that the voice today is the voice of the Postmaster-General, but the hand is the hand of the Chancellor. It is not proposed to impose these charges in the interests of the Post Office—the charges are concealed taxes which the Chancellor is compelling the Post Office to collect.

Mr. Shepherd

How is the right hon. Gentleman able to talk about concealed taxes when a very large number of people using the telephone services are getting a subsidy?

Mr. Edwards

Some people in every service attached to the Post Office are being subsidised by those who are paying more. After all, the Post Office has a common rate and, as it has a common rate, some are getting the service at a rate cheaper than the cost while others are paying more than the cost, but, on an average—according to the White Paper—the telephone services as a whole made £1 million. [An HON. MEMBER: "There cannot be an average rate."] If we do not have an average rate then we must have a different charge in each district, and a stamp costing 2½d. in London may cost 4d. in Cardiff.

Mr. Shepherd rose—

Mr. Edwards

No, that kind of nonsense cannot appeal to the House. It cannot appeal even to hon. Members opposite and, least of all, to the Postmaster-General.

Last Friday the Postmaster-General spoke in the debate on the Post Office and Telegraph (Money) Bill. That Bill has now passed all its stages and the necessary money is authorised. We put certain points to the Assistant Postmaster-General, and, as they are relevant to this debate also, I should like to put them again. In the last sentence of paragraph 21 of the White Paper these words appear: … net borrowing from the Exchequer would be about £160 million"— that is, over three years. But, as the right hon. Gentleman said, the capital programme will be £300 million over the next three years.

In other words, the Post Office will be charged on an annuity basis for £300 million, but the net amount it will get from the Treasury is £160 million. I ask the Assistant Postmaster-General to deal with that point—a point with which he failed to deal on Friday. It is relevant to this argument. My only comment is that it is typical of the commercial accounts of the Post Office that the Department can be charged capital repayment on a basis of £300 million when the actual amount it will get from the Treasury is £160 million.

There is another point with which we should like the Assistant Postmaster-General to deal. Buried in these accounts —since 1952—there is a sum of £91 million for defence expenditure. Of all the money that has been authorised to the Post Office on capital account in Friday's Bill, £91 million has been for defence purposes and not for those of the Post Office. How did the Assistant Postmaster-General refer to that money? He said: It is estimated that for the next three years one-third of the total Post Office capital expenditure will come on the defence programme. Some of this plant"— let the House mark this— will be useful later for civilian purposes, but for the time being the money spent on defence purposes will be of very little use to the Post Office for ordinary civilian needs."—[OFFICIAL REPORT, 31st March, 1952; Vol. 498, c. 1188.] I asked on Friday, and I ask again: Does the Post Office have to pay a contribution to the Treasury to service this capital which has been spent on non-Post Office purposes and for depreciation? All this money has to be paid back by the Post Office on the basis of a 20-year annuity, but here we have £91 million buried in the Post Office accounts and spent as capital out of moneys advanced to the Post Office. Where, on the credit side, are the amounts to repay the annuity that has been paid to the Treasury for that money spent on defence needs? How much of the new depreciation is calculated in relation to the defence expenditure undertaken by the Post Office?

Now let me come to what in the White Paper is called "the nub" of the question—quite an un-Civil Service use of the word, I think. As the right hon. Gentleman said, up to paragraph 22 the White Paper consists of the usual brief that the Postmaster-General gets about the progress of Post Office work. We really come to the heart of the White Paper when we reach paragraph 22. It is from this point onwards that I hope to prove that the Treasury is getting from the Post Office nearly £23 million, and then manipulating the books—fiddling with the accounts. These are accounts; they do not mean a thing. They are all notional accounts. The whole commercial account of the Post Office is notional, not cash. It is by playing about with these notional accounts that we arrive at this marvellous situation where the residential telephone subscriber, who is to pay £3 a year more in rental, pays £2 as concealed tax and £1 for Post Office purposes. I will explain that as I proceed.

It is suggested in Section V of the White Paper that these proposals will put the Post Office on its own feet; in other words, that the Post Office will cease to be—to use the words of the White Paper— a revenue-producing instrument for the Exchequer.

Dr. Hill

The words in the White Paper are: … involving a limit on the use of the Post Office as a revenue-producing instrument for the Exchequer.

Mr. Edwards

I am very pleased that the right hon. Gentleman has said that. We shall see what are the limits on the use of the Post Office as a revenue-producing instrument. The right hon. Gentleman, in his interjection, has conceded the point that the Post Office is still to continue to be a revenue-producing instrument.

Mr. Nabarro

Surely the Post Office pays no taxation. Any commercial enterprise pays half of its profits in taxation. Why should not the Post Office make a contribution to the Treasury in lieu of taxation?

Mr. Edwards

I wish the hon. Gentleman would allow me to make my speech first. He can make his speech later if he catches the eye of Mr. Speaker.

I will come to that point and will deal with it faithfully, but let me make this other point first. The Exchequer is giving up its right to the Post Office surplus or profit. Since 1944 that has been £160 million. What is the price that the Post Office is going to pay for this so-called independence? First, as the hon. Member for Kidderminster (Mr. Nabarro) mentioned, there is the £5 million in lieu of taxation, licences on cars, Purchase Tax and so forth. I should have thought that £5 million was about right as an annual contribution to the Treasury for exemption from those types of taxation that an ordinary commercial undertaking has to pay.

Secondly, it is suggested that the Post Office should budget to have a surplus or profit on its commercial accounts of, say, £5 million a year. But the Post Office is not going to have the £5 million a year. The Treasury is going to have it, for the purpose of insuring against any loss. It is not for Post Office capital purposes. Paragraph 25 says: If a surplus then remains it may be carried forward in the Balance Sheet as a revenue reserve and used, if necessary, to offset any deficit subsequently occurring. It is the Treasury which holds it. It is not money which has been saved up for Post Office purposes. This money is to insure the Treasury against a loss.

Dr. Hill

I am sure that the right hon. Gentleman would not wish to mislead the House. This is a working surplus of £5 million which the right hon. Gentleman can compare with the working surplus for which he budgeted when he held my office of £7,500,000.

Mr. Nabarro

A very satisfactory riposte.

Mr. Edwards

It is now claimed that this arrangement is putting the Post Office on the Bridgeman basis. This is a reorganisation, of which the right hon. Gentleman is proud. But it is not building a physical fund at the Post Office at all. The control of the £5 million is in the hands of the Treasury and not in the hands of the Post Office.

Dr. Hill

Nonsense.

Mr. Edwards

The right hon. Gentleman says "Nonsense". The Assistant Postmaster-General will, no doubt, be able to deal with that point later.

There is the £10 million to be budgeted for—£5 million in lieu of taxation and £5 million surplus. Then there is the £3 million which the Post Office will be "in the red," and that makes £13 million. I thought, if I may say so—and I am not saying this offensively—that the right hon. Gentleman rather camouflaged that position by referring to the increase in wages and prices. Let me say quite frankly—and in this I speak for all my hon. Friends—that any charges that are to be increased for the purpose of paying decent wages in the Post Office will have support from this side of the House. If the reason for increasing the charges was to meet wage demands and rising prices alone, we on these benches would not oppose these Regulations. But the contrary is the position.

We are now in this position. The right hon. Gentleman has now got to find some cover under which he can raise the rest of the money. Besides the £13 million to which I have referred, there is the balance of £12,500,000. That is proposed to be found under the depreciation proposition which is put forward in paragraphs 28, 29 and 30. The historic cost of the telephone system is £700 million. The replacement cost is roughly £1,000 million. Those are the figures which appear on the front of the Post Office and Telegraph (Money) Bill.

It is agreed that all the capital advanced to the Post Office is repaid on a 20-year annuity basis. But something that is not in the White Paper is the fact that there is already a notional fund of £200 million of a depreciation liability owed by the Treasury to the Post Office. In other words, the Post Office has built up on a notional basis a credit for £200 million depreciation with the Treasury, and the only outstanding amount of the Post Office capital is £345 million.

Shall I put that as simply as I can once again so that the House may understand it? The historic cost is £700 million. The present replacement cost is £1,000 million. The amount outstanding is £345 million. There is a notional depreciation fund with the Treasury of over £200 million. The depreciation fund has been created on an historic basis by the Post Office making the historic contribution of £29 million a year, except for a few years.

It is suggested that this depreciation contribution should take a new form and instead of being on the historic basis should be upon the replacement basis, and instead of being £29 million—leaving out a few odd years—should be £12½ million a year more, so that the contribution to depreciation, paid to the Treasury and to a fund which physically does not exist, would be increased on present replacement value by £12½ million.

What is the evidence in the White Paper to support a replacement depreciation contribution of that sort? Paragraph 29 says that the excess cost over the last ten years is £60 million, an average of £6 million a year. The right hon. Gentleman, however, is defending a contribution of £12½ million a year more. I ask hon. Members on both sides of the House to consider this point. In imposing the replacement basis for depreciation, the Chancellor of the Exchequer is doing to the Post Office what he is not doing to any other public corporation. In fact, he is imposing upon the Post Office something which he does not allow right hon. and hon. Gentlemen to do in relation to their own works for the purpose of taxation.

Mr. Nabarro

What is that?

Mr. Edwards

He does not allow replacement cost. He allows only historic cost for the purposes of Inland Revenue. My hon. Friend the Member for Sowerby (Mr. Houghton) will be able to make a contribution on that point.

Mr. Nabarro

There is a good deal of dubiety on both sides of the House about exactly what is meant by "historic cost" in the White Paper. Does it mean the figure written on the Post Office account which would be the original cost of the fixed assets less depreciation to date? That is one interpretation of historic cost. Or does it mean the alternative interpretation, which is the original value in terms of prices paid for all Post Office fixed assets without regard to depreciation?

Mr. Edwards

Having used this phrase in the White Paper, it was for the Postmaster-General to explain. It is not my job. Let me deal with it as far as I can. As I understand the historic cost basis, it is that we put in the balance sheet our capital cost and then write it down. As we pay off our annuities on the 20-year basis, we write the capital down. I should have thought that was quite clear.

Dr. Hill

Historic cost is what, as a matter of history, it cost.

Mr. Nabarro

I quite agree that it is what, as a matter of history, it cost, but in the terms of our discussion is it the figure after allowance for depreciation for the period concerned or is it the historic, the actual, cost before any depreciation?

Dr. Hill

It is the second of my hon. Friend's interpretations.

Mr. Edwards

If hon. Members look at the commercial accounts they will see that, first of all, the capital cost, the original cost, is set down. On the other side of the page there is depreciation, and depreciation is supposed to be based upon historic cost. The right hon. Gentleman proposes that we should now have depreciation not on the basis of what the equipment cost but on the basis of what it will cost to replace it. I think that is clear. On the historic cost basis, the depreciation contribution by the Post Office would be £29 million this current year. On the replacement cost it will be £12½ million more.

This is contrary to the practice in each of the other public corporations. The Post Office alone is singled out for this treatment. It is the first time it has been done to any public corporation.

Mr. Bernard Braine (Essex, South-East)

It sets an example.

Mr. Edwards

The British Transport Commission has historic costs, the National Coal Board has historic costs, the British Electricity Authority has historic costs.

Mr. Nabarro

The Electricity Authority has historic costs for the purpose of depreciation per annum, but plus an added depreciation allowance annually in respect of the excess depreciation, taken out of taxed profits.

Mr. Edwards

In the case of the British Electricity Authority I am quoting from the Seventh Report and Statement of Accounts for the year ended 31st March. 1955. It reads: The Authority and Area Boards provide for depreciation by the straight line method based on the original cost of their fixed assets and conservative estimates of their lives. It goes on to say that they made initial contributions to another fund for meeting the situation of having to replace equipment, but the principle is that what they put to the other fund depends upon the size of their surplus and is not included in their current account before arriving at their profit. It is a contribution from their profits and not a contribution included in the current account.

Mr. Nabarro

The bases are no way analogous. The Post Office is not subject to taxation on any surplus it may earn. The British Electricity Authority is so subject to taxation. Those are the controlling factors in annual depreciation.

Mr. Edwards

Under the White Paper the right hon. Gentleman proposes to make the Post Office liable to taxation. He will make it pay £5 million a year. [HON. MEMBERS: "Not taxation."] The right hon. Gentleman has said, and it has been agreed in the House, that the £5 million a year is in lieu of taxation. That makes the two cases analogous.

Mr. Houghton

The sum is less than half what it was; the £5 million represents a form of taxation relief.

Mr. Edwards

We shall see how far the poor Post Office will be relieved of tax.

On this point—which is important—of whether depreciation shall be calculated on an historic basis or on a replacement basis depends whether or not the Treasury gets £12½ million a year more out of the Post Office than it gets now. In this connection I should mention that both the Tucker Committee on the Taxation of Trading Profits and the Royal Commission on the Taxation of Profits and Income rejected the replacement cost method of calculating depreciation.

Mr. Nabarro

For tax purposes.

Mr. Edwards

I agree, but they rejected that method. It does not apply to any other corporation. The Post Office is being selected for the purpose of this treatment in order to justify the Chancellor of the Exchequer getting another £12½ million out of the Post Office accounts.

Mr. Stephen McAdden (Southend, East)

Surely the right hon. Member is wrong in saying that this increase in the depreciation figures is for tax purposes. If he reads paragraph 28 he will see it very clearly set out that it is for rental purposes and to ensure that those who pay for rental equipment pay a charge which covers the rental cost.

Mr. Edwards

I am afraid the hon. Member did not listen to his right hon. Friend's speech.

Mr. McAdden

I have read the White Paper.

Mr. Edwards

The point I want to make is that there is no depreciation fund. The Post Office has no right to use the depreciation fund which is notionally stored up in the Treasury for it. It never has had that right. This £12½ million will not go to a depreciation fund. It will go to the relief of taxation. I make the point again that of the £3 additional rental which the residential subscriber will pay, £2 will be tax and £1 for the purposes of the Post Office.

The position is still worse. During the last ten years, when this exceptional depreciation was taking place, the Treasury took £160 million from the Post Office surplus, and the whole responsibility of replacing the capital which enables the Treasury to have £160 million now has to be placed on the Post Office and Post Office users. I should have thought that was a very bad deal indeed for the Post Office and a much worse deal for those who want telephones.

The upshot of all this "phoney" camouflage is that the Treasury is to get £23 million a year more. It does not mean that the Post Office is to be any better off at all. The Chancellor, not the Post Office, will get this money. The secondary purpose is being served by attacking the waiting list and putting telephones out of reach of many on the waiting list, or who want to be on the waiting list. On the basis of all this the new charge is calculated.

Having increased the cost by these methods, we are then told, "Unless you put the charges up the Post Office will be run at a loss; the Post Office will be 'in the red.'" I say to the right hon. Gentleman that if he dropped the proposals in this White Paper, the Post Office would probably not be "in the red." If he dropped the proposals relating to relations between the Post Office and the Exchequer it might not be necessary to make an increase in the charge.

If the Exchequer had due regard to the liabilities of the Post Office and investments and wanted to keep down costs and not put them up it might be possible, with a speedier application of automation inside the Post Office, very quickly to get results which would enable a risk to be taken for twelve months. I do not carry it so far as that. I concede that if these proposals were not adopted the Post Office would be "in the red" to the tune of £3 million. But, it is one thing to raise charges to meet £3 million to make the working of the Post Office solvent and an entirely different thing to raise £26 million, all of it going into the Treasury.

For those reasons, we shall vote against the Motion which the right hon. Gentleman has moved. The right hon. Gentleman has not been long in the Post Office. This is the worst deal I have ever known the Post Office to get, and the Postmaster-General who stands for this deal is not fit to hold his job. The Chancellor of the Exchequer who puts across this con cealed taxation under the cloak of Post Office reorganisation is not entitled to the confidence of the nation.

5.56 p.m.

Mr. Bernard Braine (Essex, South-East)

I do not intend to follow the tortuous argument adduced by the right hon. Member for Caerphilly (Mr. Ness Edwards) except to say that I was completely unconvinced by it. I do not believe that any reasonable man can dispute the case for bringing Post Office charges into line with real costs, especially when the adjustments are to be made against the background described in some detail by my right hon. Friend, in what I thought was a completely convincing speech—except in one small particular to which I shall refer—the background of an expanding service which will provide better facilities for the nation as a whole.

What is proposed in the case of telephones seems to me to be eminently fair. How anyone can argue against the details given in paragraphs 48 to 50 of the White Paper defeats me. I have always subscribed to the view that the strong should help the weak. I cannot see any case—certainly not in this context—for continuing an indiscriminate subsidy to telephone subscribers. I congratulate my right hon. Friend on bringing realism into the picture, but if there is a case for raising charges I suggest that the burden should be spread as fairly and equitably as possible.

As I have indicated, I was very impressed by my right hon. Friend's speech, except in one particular. He was not so convincing, however, when he got on to details of changes in Inland postal charges. I observe that from 1st January the present charges for printed papers of 1½d. for 4 oz. and ½d. for the next 2 oz. are to be increased, and increased quite substantially. I submit that this is both unfair and badly timed. I am surprised that the right hon. Member for Caerphilly did not fasten upon the point, because I am completely convinced that it is the most important charge which can be levied against these proposals.

I am going to make the case which the right hon. Member should have made if he were attacking these proposals on the grounds of the public interest. The classification of "printed papers" excludes newspapers which, in the latest Post Office Guide, are defined as follows: The publication must consist wholly of political or other news, or articles relating thereto or to other current topics, or mainly of such news or articles and partly of advertisements. … It must be published … at intervals of not more than seven days. The effect of my right hon. Friend's proposals is that daily and weekly publications will escape, but all fortnightlies and monthlies will be caught. I say that this discrimination is unfair and inequitable.

My right hon. Friend may seek to shelter behind the definition. If so, it is high time that the definition was changed. For the life of me I cannot see why journals which devote only a small proportion of their space to genuine news and informed comment—I mention no names, but hon. Members can think of plenty of examples—and which emphasise the sensational and the morbid to the detriment, or even the exclusion, of the important and the normal, should escape while, on the other hand, papers which happen to appear at a frequency of less than seven days, and which are devoted to presenting the news in an objective way and providing informed comment upon matters of importance, are included.

Mr. Hector Hughes (Aberdeen, North)

Is it the hon. Member's argument that the Postmaster-General should read all these periodicals to decide which are morbid and which are not and which are instructive and which are not? How could the Postmaster-General discharge such a duty?

Mr. Braine

I am surprised that the hon. and learned Member should waste the time of the House with such a frivolous interruption. I am making no such suggestion. If he hears my argument to its conclusion, the hon. and learned Member will know that I am merely saying that the discrimination that these proposals will make weighs heavily upon that section of the Press which, I should have thought, any Government should be most. careful to preserve. Indeed, I am wondering whether my right hon. Friend will seek to defend this part of his proposals, because he did not do it very convincingly in his speech. Moreover—and this is the point that the hon. and learned Member ought to bear in mind—these are the publications which, in the main, can least bear the burden of increased costs. Many of them are experiencing financial difficulties now and not a few have died in recent years.

It may not be appreciated that postage is an important item in the budget of these worth-while periodicals. I have in mind one publication with a modest circulation of 25,000 to 30,000 copies a month. Its printing bill is about £600 a month and its postage bill is at present about £40 a month, or about 7 per cent. of its printing costs. The printing costs do not. of course, include paper and blocks, but they exceed the whole of the editorial costs of the journal.

Those who are interested in this trade know that it is faced with heavy wage demands. If current wage demands are conceded printing costs will rise substantially and the publication which I have in mind will have to meet a printing bill of £700 a month as from 1st January. If postage charges go up also, as my right hon. Friend intends, expenditure on postage costs would go up to £70 a month, which represents about 10 per cent. of a greatly increased printing bill.

I want to make two points of importance. The first is that, by and large, monthly publications and some fortnightlies are heavier in weight than weeklies. In other words, not only will they have to bear an increased cost, because technically these are not newspapers, but they will bear a cost out of all proportion to those which escape these new charges because they are weightier.

My second point, to which I ask my hon. Friend the Assistant Postmaster-General to give very careful thought before he replies—is that the timing of these proposals is most unfortunate. Most periodicals are now engaged in the middle of their Christmas sales promotion. Indeed, a good many subscriptions for 1956 have already been received. It is quite impossible to adjust accounts at this stage. If the increases had been made last April, it would have been possible to do something about them, possibly by increasing the cost of the publication; at least, periodical proprietors could have made some kind of adjustment. Indeed, if there was postponement of these proposals until next April, it would be possible for them to make some adjustment. But for these changes to come now is a most embarrassing situation to have to face and the effect upon some publications may be quite disastrous.

For some the burden will be intolerable. It is certainly unfair. It is badly timed and, in my view, it is incredibly short-sighted. I hesitate to say this, but I think that it constitutes a tax on straight thinking and informed opinion. The cheap and the nasty in the newspaper and periodical world—

Mr. Nabarro

Tribune.

Mr. Braine

I should not rush in with names. What constitutes the cheap and the nasty may be a matter of opinion, but, broadly speaking, the cheap and the nasty, that which panders to the worst of popular taste, can always find a ready market because of its relatively large circulation. Certainly, if such papers did not survive, democracy would be the cleaner. But to tax—and that is what these proposals do—useful quality and technical publications which seek to place a balanced and informed opinion before the reading public is wholly inequitable.

It is not for me to suggest to my right hon. Friend what he should do. I am aware that to extend the definition might be costly. My right hon. Friend indicated in answer to a Question last week that it would cost about £1 million; I do not know about that, but I have two suggestions to make. The first is that if this extra money must be found, it might be possible to spread the burden more fairly by increasing the rate of the extra charges for all publications. My other suggestion is that the very least my right hon. Friend can do is postpone the introduction of the charges on 1st January, to permit proprietors to make their budget adjustments next year.

I apologise for detaining the House on merely one point among many which can be raised. All I would say is that it is not an unimportant point. Anything which taxes or makes more difficult the exercise of freedom of expression and of opinion is something which this House ought to watch very closely indeed. On these grounds, therefore, I urge my right hon. Friend to bear these considerations in mind and to make adjustments if he can.

6.9 p.m.

Mr. John Edwards (Brighouse and Spenborough)

If the hon. Gentleman the Member for Essex, South-East (Mr. Braine) will forgive me, I shall not follow him into the details of any charges in particular. My right hon. Friend the Member for Caerphilly (Mr. Ness Edwards) has made the general case, and, doubtless, my hon. Friend the Member for Keighley (Mr. Hobson) will also deal in detail with the matter of the charges. I am concerned with the relationship of the Post Office to the Treasury as it will be when this plan is in operation. It is possible that there will be no change, but perhaps that will be revealed later.

First, however, I would say a few words about wages and the financial matters mentioned in the White Paper. The White Paper, in paragraph 48, says: Since 1939 the average wage paid by the Post Office to its employees has risen by about 175 per cent.; earnings have risen by approximately 195 per cent. That is somewhat loosely worded. I should be very glad if the Assistant Postmaster-General would tell us, when he replies to the debate, what is meant by that passage.

Does the "average wage paid" mean the average rate of pay? When the White Paper talks about earnings having risen by approximately 195 per cent. does it mean that average earnings have risen by that? If so, it may be interesting to the House if I put alongside those figures a few other figures. It is generally known. I think, that for ten years I was an executive officer of the Post Office Engineering Union.

I am informed that the Post Office engineering grades represented by the P.O.E.U. have since the beginning of the war had an increase in their average rates by about 145 per cent. That excludes the effect of the recent increase awarded by the arbitration tribunal. If that is included, it is 157 per cent. The increase in the average earnings of the engineering grades since before the war is about 176 per cent.; or, if we include the recent award, 187 per cent. The interesting thing is that over roughly the same period the average earnings in industry as a whole have increased by 215 per cent. for adult men alone, and by 242 per cent. for all workers.

The Postmaster-General may say that he has to do certain things because wages have gone up, but nobody can say that the Post Office has been extravagant in the matter of wages. It has been relieved of the full burden of the average increase that has been borne by industry. The burden the Post Office has borne in this respect has been smaller.

It is important to bring into consideration of wages any increase in productivity. It is notoriously difficult to measure productivity, but the late Dr. L. Rostas, whose early death was such a great loss to those interested in these questions, and who knew more about the measuring of productivity than anybody else, found a system which he used in his book, The Comparative Productivity of British and American Industry, and, using the quite simple comparison of the number of telephones in the service and the change in the number of staff since 1948 he found that the increase in productivity had been about 20 per cent. I would say to the Postmaster-General that I think it is unfortunate that the Post Office seems never to have accepted that increased productivity in the telephone service has anything to do with wages. I think that that is a pity.

I remember that the last settlement I negotiated was a settlement for a shorter working week. I did not sign the agreement because I went into the Government before the agreement was signed, but the agreement contained a provision that the union itself would do what it could to make up for the loss of production occasioned by the shorter working week. I thought that that was a thoroughly good pattern to follow, and I think it is a pity that in recent years the Post Office, for reasons which, no doubt, the Assistant Postmaster-General may care to tell us, has not followed it.

I have now no executive responsibility in these matters, but I follow with great interest the progress of the negotiations, and my general view is that they seem to move very slowly, and that claims, which I should have thought ought to have been susceptible to settlement by negotiation, seem now to go to arbitration, and that the arbitration tribunal always awards rather decisively against the Post Office. What the moral of that is I do not say, but I would say to the Postmaster-General that I think it is tremendously important that at the earliest possible moment productivity and remuneration should be wedded. That view would not be contested in any other undertaking, yet in the Post Office, largely, I think, because it is a matter dealt with by the Royal Commission, it has not so far been found possible to apply it.

I come to the financial proposals in the White Paper, and first to the proposal in paragraph 21 for a three-year plan of capital development. If the Post Office is able to work to a three-year plan for capital development, that will be a very good thing. Previously, the Post Office has had its capital allocations for the succeeding year reduced, sometimes at very short notice. As the evidence of Sir Ben Barnett to the Select Committee on Estimates in 1950 shows, that clearly makes life more difficult for those who are trying to plan the Department's work.

I should say, however, that the time proposed, three years, is not long enough for all purposes. The provision of buildings, the provision of equipment, the surveying of localities, the laying of cables, the training of staff are all jobs which necessarily take up much time when any big developments are under way, and I am myself inclined to the view that there is need for the Post Office to be granted even longer security in which to lay its development plans. For some purposes three years is not long enough.

The right hon. Gentleman will recollect that he was good enough to give way during his speech, and he said that he thought that a surplus of £5 million was likely to be adequate. I wonder why it is that the attitude of the Post Office has changed towards this matter. I call to mind Sir Ben Barnett's evidence to the Select Committee on Estimates in 1950. He was asked this question: Have you any idea as to the size of the fund which you would like to see in the altered circumstances of these days? His reply was: I think that if I could have the pre-war fund brought up to modern costs I would not complain; that is to say, add on 140 per cent. to what we had before the war. I think that would bring us up to something like £12 millions. Of course, the figure would be higher now than that. It seems as though the right hon. Gentleman has revised his views, or that something has gone wrong somewhere. I ask the Assistant Postmaster-General for further information on this point.

In paragraphs 31 and 32 of the White Paper there are some calculations made. They do not seem to take account of any changes in expenditure or income deriving from the expansion of the services. I shall not argue this in detail. However, if we consider the commercial accounts, particularly for 1952 to 1953 and 1953 to 1954, which show the increase in income accounted for by the growth of business, and so on, and then consider the paragraphs in the White Paper in the light of those figures, it seems as though—I may be wrong about this—the calculations in the White Paper have not taken account of changes in expenditure or income deriving from the expansion of the services. I should be glad if the hon. Gentleman, when he replies to the debate, would deal with that.

I come to the thing which interests me most. I come now to what the Postmaster-General did not say. I mean the return to Bridgeman and all that. The Postmaster-General talked in this strain, "We are really going back to Bridgeman and to implementing the kind of things that Bridgeman recommended." There is a reference to the Bridgeman Committee to justify the proposals for greater financial flexibility. I want to know, as did my right hon. Friend the Member for Caerphilly, something more about this revenue reserve. It is proposed that it should be £5 million. Is this the same kind of thing as the Bridgeman Committee had in mind? Paragraph 64 of the Bridgeman Committee's Report states that the surplus should be made available for the improvement and development of Post Office facilities and services to the public. What this meant in practice was described to the Select Committee on Estimates to which I have already referred.

In explaining the origin of the pre-war Post Office Fund to the Committee, Mr. Anstey, speaking for the Post Office, said then, and I quote his words in full because they are very important: It was introduced as part of the arrangements under what is called Bridgemanism, following the Bridgeman Report. It was arranged that any surplus of the Post Office above a certain figure laid down and agreed with the Treasury should he at the disposal of the Post Office either for the reduction of tariffs or the improvement of services generally, or possibly some improvement in the conditions of service of the staff, and finally it could be used for the purpose of capital expenditure … Later, the answer reads: Quite substantial amounts were credited to the Post Office Fund and used partly for the reduction of tariffs and the improvement of facilities, and not at all for capital purposes, because for one thing I do not think there was enough there for it to make it worth while. That is to say, the pre-war Post Office fund was both in concept and in practice a somewhat wide thing. I do not believe that the new fund can be thought of in the same way. This fund, a general revenue reserve, seems to be designed merely to meet fluctuations year by year.

The White Paper states: If a surplus then remains it may be carried forward in the Balance Sheet as a revenue reserve and used, if necessary, to offset any deficit subsequently occurring. I submit that there is here a difference in concept. This revenue reserve is not what the Bridgeman Committee was talking about when it made its proposals.

Dr. Hill

May I reassure the right hon. Gentleman straight away? This mention of a general reserve account is made in order to explain in simple terms the simplified accountancy. I can assure the right hon. Member that it will be as available for the purposes which he has outlined, relating to the pre-war Bridgeman arrangements, in the future as it was then.

Mr. W. R. Williams

Are we to assume from what the Postmaster-General has just said that the control of that fund will be exclusively in the hands of the Post Office administration?

Dr. Hill

It will be in the hands of the Post Office.

Mr. Edwards

I am much obliged to the Postmaster-General because, as I understand him, he has said that in all respects this so-called revenue reserve is to be treated exactly as was the surplus in the pre-war Bridgeman days. That is extremely important, because the uses to which such a fund might be put, especially if it were bigger than it is now proposed to be, would be considerable.

I turn now to the question of the relationship between the Treasury and the Post Office. I do not know whether hon. Members have generally appreciated the subtle change in the Explanatory Memorandum to the Money Bill. Previously, this Memorandum contained the words: The detailed programme of expenditure and the works to be carried out each year are subject to the approval of the Treasury. This year, the Explanatory Memorandum reads: The programme to be carried out in each year is subject to the approval of the Treasury. I should be grateful to the Assistant Postmaster-General if he would explain what is to be understood by the omission from the Memorandum of the word "detailed" and how much greater freedom this means to the Post Office.

It appears from paragraph 7 of Appendix 2 of the White Paper as though greater flexibility and freedom is in mind. It states that: The Post Office will continue to have both a general obligation to consult the Treasury on all financial matters which raise novel or important issues and a particular obligation to do so in cases where only a limited financial power has been formally delegated. I wish that the Postmaster-General had said something about that part of the Appendix, because it is of the greatest significance if one thinks in terms of the capacity of the Post Office to take its own decisions without the kind of detailed regulation that has hitherto been received from the Treasury. I should like to know from the Assistant Postmaster-General, therefore, a little more of what is involved in the change of powers relating to the expenditure of capital moneys.

Will the Post Office also have more freedom from the Treasury in determining the wages of its employees than it has had in the past? This is a simple question which should be susceptible to a relatively simple answer. Hitherto, all changes in the pay of Post Office employees have had to receive Treasury authority. The Fourth Report of the Committee on Public Accounts states that, The Treasury exercises complete control over all Departments in the salaries and members of their staff. Will this continue to be the case?

I am not suggesting that there should be no general Treasury control over wages, but I should like to know whether there will be any relaxation in the very tight, very detailed Treasury control over Post Office wages which has been exercised up to now. I hope so. It is an embarrassment to the Post Office and something worse than an embarrassment to the negotiating unions, and I doubt very much, in the new situation which we are supposed to have under the White Paper, whether it is necessary any longer for the Treasury to have that kind of detailed control in this sphere.

I should also like to know whether, in these circumstances, we can hope that productivity will be taken into account by the Post Office when it becomes less of a revenue-earning Department and more of a commercial one. Will the Post Office also continue to be restrained by the Treasury standard that Government Departments are entitled to no more than their fair share of the available labour on the market? This is particularly important in view of paragraph 8 of the White Paper. Some of these things are bound to be involved in the Report of the Royal Commission on the Civil Service, publication of which, I gather, will be soon.

My general conclusion is that while the Postmaster-General has been very informative on some aspects of the White Paper, on that part of it in which I am most interested, namely, how much control the Treasury will have and whether the Post Office will really be able to take its own decisions—and not only on wages—he has been singularly quiet. That alarms me, because I am sure that if he could have been forthcoming he would have been.

6.29 p.m.

Mr. William Shepherd (Cheadle)

I have listened with great interest to the speech of the right hon. Member for Brighouse and Spenborough (Mr. J. Edwards). He was a little more helpful than his right hon. Friend the Member for Caerphilly (Mr. Ness Edwards), who has disappeared from the scene since he made his oration.

The debate has shown that Post Office accounts are by no means clear to hon. Members or even to former Postmasters-General. It might well be a good idea for the Postmaster-General to produce a small White Paper in which he could explain in clear and simple terms exactly what the Post Office accounts are, because it was perfectly obvious that the right hon. Member for Caerphilly did not really understand the accounts, and that he got himself into a fearful muddle over many issues. For my own part, although I have tried to understand them, I must say that they are of great complexity and that some elucidation for the benefit of hon. Members would be valuable.

We really need more than elucidation of the accounts. We should go a step beyond trying to get the Post Office to be an independent trading concern. I see no reason why it should not borrow its money on the open market. I have grave objections to the borrowing of money on the open market where there is no revenue return ascertainable, because therein lies a great risk. The Post Office, however, is a commercial undertaking and there is no reason why its capital should not be borrowed on the ordinary money market and repaid in the usual way if that is necessary. We must move from the present stage where the Post Office carries the trappings of Treasury control and the hampering of its commercial activities to a situation where it is freer to operate as an ordinary commercial undertaking.

As regards the telephone service and the increases in price, I do not think that the increased revenue is excessive. Indeed, for a concern with an annual turnover of £314 million to budget for a surplus of £5 million is hopelessly inadequate. My right hon. Friend said that he had taken a realistic and economic view of things, but if I were running a business with a turnover of £314 million, and I calculated that my profit was to be £5 million at the end of the year, I should feel in a very uncertain state. There is room for the view that the Post Office is not getting sufficient revenue in relation to the services it performs and the amount of business involved.

So far as telephones are concerned, I cannot accept the view of my right hon. Friend that it is realistic to charge the residential user in the provinces £3 6s. per annum less than the service costs. It seems to me the oppsite of realism in economic affairs, and I am fortified in this view by the fact that today we are anxious to conserve skilled labour and materials and to increase our exports. What are we doing here? In providing this service for residential subscribers at £3 6s. less than it costs, we are encouraging and subsidising people to use skilled labour and to take plant and equipment which we could readily sell overseas.

I cannot see that this policy is in accord with the interests of the country or in accord with what the Chancellor has recently been trying to do. I cannot see why a flat charge of £10 per annum is not an acceptable price to the Post Office, even though it does not completely meet the subsidy for the residential subscriber. I hope, therefore, that my right hon. Friend has not closed his mind finally to other changes which would enable the charges to the residential subscribers to be somewhat nearer to the cost than they are at present.

I turn from that to the postal services, which are to have some welcome improvement in their tools of trade. Having from time to time looked at some of the buildings, I must agree that they are in a bad state. Some of these buildings are ancient, some of the canteens would be refused by workers in ordinary industry, and it is about time, in the interests of postal efficiency, that we provided better buildings for the men to work in.

As for criticisms of the postal services, which have been rather prevalent of late, while there is no reason why one should not criticise them when they are inadequate, and while it is good for people to work knowing that they will be criticised if they are not doing what they should do, there is a limit to the criticism in which we ought to indulge, especially when we are dealing with a national service. In recent years there has been much unjustified criticism of the postal services. I am a substantial user of our postal services and of those of other countries and I know that the British services are the best and the cheapest in the world. We want to get something better, but we should not be too critical of what we have.

The Post Office is an unusual kind of service and it is important that those who work in it should not be discouraged by unreasonable criticism. For instance, there was a leader in the Manchester Guardian a short time ago which showed complete ignorance of the service. I am afraid that if this welter of criticism continues we shall tend to demoralise the men in that service. Morale is most important to the Post Office. I do not pretend to know why people work in a specific job, but I do know that money is not always the sole consideration. If it were, the ranks of the Post Office would be thinner than they are today.

It is pride in the service which is a powerful factor in keeping the Post Office in the state it is and in which it has been, and if we indulge in too much reckless criticism we are likely to damage that morale which is vital to the maintenance of the service. I therefore urge hon. Members and people outside this House, when they criticise the Post Office, to be mindful of the difficulties under which it is working and of the fact that we have here the best and the cheapest postal service in the world.

Often the criticisms addressed to Post Office workers are not attributable to them. I would like to see much more co-operation with the Post Office by railway servants. One of the reasons why the post sometimes goes wrong is that the Post Office workers do not today get the same help from the railway workers as they got before the war, and often when people criticise the former they are really blaming them for something for which they are not responsible.

Hon. Members of this House often stand on railway platforms late at night and see the difference in the assistance given by railwaymen to Post Office workers now as compared with before the war. I urge upon those who are apt to criticise this service to remember that it is high morale and the belief that they are working for a good show which are two of the most important assets the Post Office has, and that if we do anything to destroy those we are damaging a valuable national service.

I end by turning for a moment to the question of the contribution which the Post Office will make to the Exchequer. I could not follow the argument of the right hon. Gentleman the Member for Caerphilly and I do not think anybody else did. I believe that my right hon. Friend has a surprisingly good bargain from the Treasury. I only hope that his bargain lasts. It may be too good to last. It may be that another Chancellor, more avaricious than my right hon. Friend—[HON. MEMBERS: "Impossible."] Yes, it is possible to get a Chancellor less responsive to the needs and wishes of industry than my right hon. Friend. When hon. Members saw this figure of £5 million most of them were surprised at the modesty of the Treasury.

I should like the whole thing to be put on a commercial basis, the Post Office paying tax in the ordinary way, so that we had something related to an ordinary commercial undertaking. I congratulate my right hon. Friend upon being successful with the Treasury. The £5 million is an extraordinarily modest sum. I hope there will be no change, except one which will put the Post Office in the position of a commercial undertaking.

I am very glad to have been able to say these brief words about the Post Office. Although it is a nationalised industry, it is, at the same time, a national asset. All hon. Members on both sides of the House take a real interest in its welfare. We have appreciated its difficulties during the past five or ten years, and we hope that this will be the beginning of better times for the Post Office.

6.41 p.m.

Mr. Frederick Lee (Newton)

I agreed with the hon. Member for Cheadle (Mr. Shepherd) when he reminded us that irresponsible statements made outside or even inside the House are not good for the morale of people employed in industry. In the past, some of the nationalised industries have suffered from a surfeit of unjustifiable criticism not unconnected perhaps with some who are members of the hon. Member's political party.

I believe that the basis of what the Postmaster-General has said today leads us to suppose that he is now trying to run the Post Office as a unit which must be capable of paying its way in every one of its sectional activities. To me, that would constitute a great revolution. It would presuppose that much of the development work which the Post Office has done for many years must now terminate, for large proportions of its activities have never been capable of paying their way, and I think they never will be capable of doing so.

My right hon. Friend the Member for Caerphilly (Mr. Ness Edwards) referred to defence work. I do not know how one could determine the way in which the Post Office could begin to make profits on the work which it does for national defence. The same applies to the provision of telephone facilities in rural areas. The right hon. Gentleman knows far better than I do what a vital issue that is now, especially with mechanised farming and the possibility of breakdown of mechanical equipment. It is becoming most vital that more and more telephone facilities should be made available to the farming community, and especially to those who live in the very rural areas.

I cannot believe that it will ever be possible for essential national work of that kind to be done without the Post Office incurring a loss. On the Second Reading of the Telegraph Bill, in March, 1954, the Assistant Postmaster-General said: There has never been any suggestion that each service of the Post Office must actually balance. We are under an obligation to provide a universal service throughout the country and that is one of the prices of doing it."—[OFFICIAL REPORT, 30th March, 1954; Vol. 525, c. 1858.] Therefore, when the Postmaster-General argues that his job is to increase prices wherever a deficit shows, I hope that he is not thinking universally from the point of view of the whole of the work of his Department, for otherwise much of the progress which has been made in the provision of telephone services in rural areas will undoubtedly come to a full stop.

The hon. Member for Essex, South-East (Mr. Braine) argued that here we have a situation in which, as long as there is a great loss on the telephone service, poor people are subsidising the telephone service for those who are better off. I get very suspicious when I hear that argument these days. The campaign to eliminate food subsidies started in precisely the same way. The campaign waged against council house tenants began by pointing out that poor people living under bad conditions are subsidising people who drive away in limousines from council house estates.

The argument which is advanced every time there is an attempt to justify an increase in costs for ordinary people is having a most deleterious effect on national unity. My hon. Friends and I are getting to the point that whenever that argument is advanced from the Government benches we look for the snag. It is invariably the case that an attempt is being made to segregate different types of people, whether they are people in council houses, people enjoying food subsidies or people obtaining telephones. This argument is then adduced so that in the fullness of time it will be possible vastly to increase the cost of living of these people.

I was interested in what the Postmaster-General said about the losses incurred on printed papers. The hon. Member for Kidderminster (Mr. Nabarro) made a very relevant point about the football pools. We all know what tremendous aspects the football pool business now assumes. It must occupy a tremendous proportion of the time of many Post Office employees at certain periods of the week. Can we have an analysis of the Post Office's trading position in relation to the pools?

In reply to an hon. Member, the Postmaster-General said that the main losses were in respect of the bigger printed papers and parcels. That may well be, but in view of the huge amount of work done by the Post Office in relation to football pool business, I should have thought that his Department would have been entitled to charge a good rate. The football pool proprietors are making a very large percentage of profit, and I should have thought that they could very well stand the increases now to be imposed on people in respect of telephone charges, and so on.

The right hon. Gentleman would be rendering a service to the House if he could give us a detailed statement, in a White Paper or in some other form, about the activities of the Post Office on behalf of the football pool proprietors. It is something which ought to be analysed. My impression of the profits being made by the football pools being what it is, I cannot believe that it is equitable to increase charges in respect of one of the Post Office's activities—charges which will entail great hardship in many cases—when other clients are apparently using the Department at very great profit to themselves without the right hon. Gentleman being able to show much of a return for it. I should like some more information about it.

My right hon. Friend also referred to the wages position in the Post Office. Some time ago some hon. Members from both sides of the House interviewed the then Postmaster-General on this subject. I will not repeat the figures which my right hon. Friend gave. I am fairly sure that there is a time-lag between people outside the Post Office getting increases and their opposite numbers in the Post Office obtaining increases. It is generally accepted that the Post Office waits until it can see what is happening outside before it thinks about agreeing to increases demanded by the Post Office unions. That has been very aggravating for Post Office employees. But the gravamen of the charge, which, along with my colleagues from both sides of the House, I took to the right hon. Gentleman's predecessor, was that the machinery for negotiation in the Post Office is not being adequately used.

I have in my hand a document which the Post Office Engineering Union supplied at the time and which will need a lot of refuting if it is not true. It contains information which has led me to believe that far too great a reliance is placed by the Post Office on the arbitration tribunal machinery. I know that arbitration machinery is very important and is becoming increasingly so. I regret that, because I am not a great lover of arbitration. It leads to slipshod negotiations. At times, those people on both sides of industry who ought to take responsibility for results know full well that if they fail to agree the dispute will go to arbitration anyway, with possibly a better result.

I do not like this constant tendency, both in outside industry and in the Civil Service, to place so much reliance on arbitration. It relieves negotiators of responsibilities which they ought to accept. The facts I have seen lead me to suppose that since 1948 there has been no large-scale negotiation in the Post Office which has come to a successful termination without appeal to arbitration. If that is not true, I should like it contradicted. If it is the case, I put it to the right hon. Gentleman that not only is it an abuse of tribunal machinery, but it is something which cannot help but lead to bad relations between himself and Post Office employees. Relations will not be improved if there is an interminable waiting for negotiations to go through and if it is felt that negotiations are a farce because neither side will concede anything. There is a time-lag which must occur before the arbitrators can meet and then there is the submission of evidence and all the rest of it.

As I understand, invariably it is the case that considerable increases have, in fact, been granted by arbitrators—at least as far as the Post Office Engineering Union is concerned—when they have finally announced their decision. As the arbitrators are not "softies" by any means, that presupposes that there must have been a fairly substantial case made out by the trade unions in their negotiations with the right hon. Gentleman's advisers. I ask the right hon. Gentleman in good faith to have a look at this position. I think that it is very serious. As I have already intimated, I do not like this passing of the buck to the arbitrator.

It is not fair to the arbitration tribunal. It cannot help but lead to strained relationships inside the Department when the men compare their lot with that of outside people and when they compare the time-lag before they can hope to get redress when they have a genuine grievance and the time lag with outside industry. This good relationship in industry on which we depend if we are to make progress will necessarily become strained. I shall not repeat the figures, which my right hon. Friend the Member for Brighouse and Spenborough (Mr. John Edwards) gave, showing rates in the Post Office and those for comparable employees outside. I am sure that there is not a lot on which we can congratulate ourselves when we compare the two rates of pay.

Another topic of considerable importance is mentioned in paragraphs 9 to 14 of the White Paper. Those paragraphs refer to the relationship between the Post Office and the ring of telecommunications manufacturers. I want the Assistant Postmaster-General when he replies to tell us what progress has been made since the publications of the Monopolies Commission's Report on the Supply of Insulated Electric Wires and Cables. The Commission made a string of recommendations most of which the Government accepted. To quote from the Report: … the G.P.O. should leave itself free in future to place a proportion of orders for land telephone cable with independent concerns … and should take appropriate steps to ensure the protection of the public interest for all its purchases of telephone cable outside the bulk orders. The Government accepted that.

Is the right hon. Gentleman in a position to tell the House of any action which the Government have taken after having accepted that recommendation? Can he tell us what progress has been made as a consequence of the Government's acceptance of that recommendation? In most of what was said by the Government subsequently, procrastination seemed to be the order of the day. The time has now arrived when the right hon. Gentleman should tell us what steps are being taken as the result of the Commission's Report.

It would be a great disadvantage to the Post Office and the nation as a whole if we were to try to bring into the Post Office the idea that every one of its activities must be segregated, analysed and made to pay irrespective of the harm that might do. I am not asking for any cover of any inefficiency. In my own small way I have tried, in my contacts with industry, to emphasise the need for efficiency. I have tried to get my own people to accept the basis that only by increased efficiency in our industry can we enjoy the high standard of life which is the criterion we all want.

I hope that the right hon. Gentleman will not be pushed around. The Treasury has been mentioned and I will refer to it again. I hope that the Postmaster-General will try to be master in his own house in negotiations with the trade unions and in concluding those negotiations. So much depends on that, not only his own prestige, but the stability of his Department. If the trade unions can make out a case deserving of his consideration, the Postmaster-General should not then merely have to argue the same case with the Treasury before he can give the union what is just.

I do not know whether the relationship which the right hon. Gentleman outlined will mean greater independence for the Post Office. If it does, then employees will benefit accordingly. I am not asking for any soft stuff. I am not asking for charity. We do not want that, but we do want what is right and just. Several grades of the Civil Service feel that they are not getting justice and that the tight strings of the Treasury and the economic position of the country and not the justice of their case will determine its outcome. That is bad. I hope that in the new policy there will be that independence in each Department that will ensure that when the trade unions and the right hon. Gentleman are satisfied that a case has been made out, then it should be met instead of then being referred to the Treasury.

7.0 p.m.

Mr. Gerald Nabarro (Kidderminster)

At the outset, I congratulate my right hon. Friend the Postmaster-General upon the very lucid fashion in which he threaded his way through the somewhat complex finances of the General Post Office.

During the last hour or two the debate appears to have taken a somewhat startling and unexpected turn. My hon. Friend the Member for Cheadle (Mr. Shepherd) perhaps crystallised matters when he said early in his speech that the General Post Office should, in future, go to the money market for such finances as it required. The hon. Member for Newton (Mr. Lee), in his plea for trade union negotiation in a more vivacious fashion—if I interpret him correctly—really, in effect, supplemented what my hon. Friend had said.

The whole basis of the conduct of the affairs of the General Post Office, its finances, its wage structure, and its Parliamentary accountability, are long overdue for change. For example, the National Coal Board is responsible for mining and supplying coal on a monopoly basis, and is required to pay its way, taking year with year in accord with the statute, and to publish full commercial accounts. The Central Electricity Board, the Gas Council, the British Overseas Airways Corporation and the British European Airways Corporation are all required to pay their way, within the statute, taking year with year and to publish commercial accounts each year. I see no reason why that principle should not be extended now to the General Post Office.

The General Post Office, though it is a State monopoly, provides certain vital services, such as the telegraph, telephone and postal services, and many more. The argument of my hon. Friend the Member for Cheadle, in connection with recourse to the money market for capital finances required, the argument of the hon. Member for Newton in regard to trade union negotiations for diverse scales of pay, and the argument of the right hon. Member for Caerphilly (Mr. Ness Edwards) in regard to depreciation on the fixed assets of the General Post Office would all be simplified if the finances of the General Post Office, subject to Treasury guarantee for capital sums and the accounts of the General Post Office, were, on a strictly commercial basis, approximately analogous to the arrangements that we have for the other State corporations.

At present, the accounts of the General Post Office are framed and its finances are evolved in a fashion identical to the arrangements in pre-war years, when there were no nationalised industries of the kind I have been talking about. Though the Parliamentary accountability of the nationalised industries is not by any means perfect as yet, at least Members of Parliament are in a position to examine the commercial processes of those industries, year by year, because those industries publish full accounts.

I want to pass quickly from that general expression of view about nationalised concerns to what was said by the right hon. Member for Caerphilly. I consider that the whole of the passage of his speech dealing with depreciation was totally irrelevant. He referred, reading from a brief, to the Report of the Royal Commission's inquiries into profits and taxation. The Report has recently been published. There can be no analogy between the contents of that Report, which relates to profit-earning commercial concerns all of which are assessable to taxation in its various forms, and the General Post Office which is not so assessable.

The £5 million which has been bandied around the House in speech after speech, is a means of replacing in the coffers of the Treasury the sum which might otherwise be paid in the form of taxation of profits or otherwise. If the system I advocated earlier were taken as a basis of conducting the finances and accounts of the General Post Office, that Department would pay taxation upon profits. It is desirable that it should pay taxation. If it did, the arguments of the right hon. Member for Caerphilly about depreciation allowances year by year would be valid. As the General Post Office does not pay taxation, such arguments are totally invalid.

In the terms of the White Paper, the General Post Office has to find an additional income of approximately £25¾ million during the forthcoming year. The depreciation item of £12½ million, representing almost 50 per cent. of it, is clearly most important. Where the right hon. Member for Caerphilly went wrong was, in my view, in seeking to attack the reassessment of the basis of depreciation that is enunciated in paragraph 30 of the White Paper.

I should like to remind the House of what paragraph 30 says and then to seek in my own words to justify it. I hope that, in so doing, I shall reveal the inadequacies of the argument of the right hon. Gentleman. The paragraph says: The total provision on a historic basis in the coming year will be over £29m. Basing depreciation on current replacement costs, an amount of over £43m. would have to be provided. To place the system on a sounder economic footing it is thus necessary to budget for a supplementary provision of £14m. After deducting £1½m. saved by obtaining longer life from existing equipment it is still necessary to raise about £12½m. more revenue than if the present arrangements had continued in all respects unchanged. The Government's view is that from 1956–57 onwards provision should he made accordingly, subject to annual review by the Post Office of the amount required. The effect will be that the Post Office will reduce by £12½m. a year its draft on the nation's reserves for capital development. That is irrefutable logic. Any commercial profit-earning concern, paying taxes to the Inland Revenue—Income Tax, Profits Tax and the remainder—is allowed a depreciation allowance year by year. When the fixed asset is scrapped there is an obsolescence allowance, in finality. Invariably, that annual depreciation allowance, based on the historic cost, that is, the original cost of the asset, is inadequate, because of the circumstances of the business, the production arrangements of the firm or other factors. What, therefore, does the commercial concern do? It makes an additional depreciation allowance from net taxed profits, over and above the notional sum allowed as a charge against the assessed profits of the concern by the Inland Revenue. In making that additional or excess depreciation allowance, any prudent firm and its board of directors would always have their eye on a distant horizon, namely, the ultimate cost of replacement of the asset.

I claim that what is written in paragraph 30 of the White Paper is irrefutable logic and sound business practice which we all, irrespective of the side of the House on which we sit, should support in its application to the accounts of the General Post Office, as I hope every hon. Gentleman would support the application of the same principles to the finances of a private business.

Mr. Hobson

May I draw attention to paragraph 29, where the hon. Gentleman will see that the excess cost of replacing the assets of the Post Office involves a depreciation allowance of £60 million over 10 years, that is £6 million per year. Why, then, make the £6 million into £12½ million, which is further added to the figure of £29 million?

Mr. Nabarro

Because there is always, especially in times of incipient inflation, such as we all have experienced since 1945, a wide and growing difference, between historic cost and replacement cost. That is the reason the £6 million per annum based on historic cost now becomes converted, for depreciation purposes, into £12½ million per annum, based upon replacement cost. I hope that when my hon. Friend replies to this debate he will readily confirm my interpretation.

Mr. J. T. Price (Westhoughton)

In completing that argument, and the analogy between the Post Office and private business, would not it be fair also to say that in those circumstances a private commercial business has facilities for writing up the value of equities by issuing bonus shares? Such a feature does not come into the Post Office accounts.

Mr. Nabarro

I think that argument somewhat irrelevant, because in the case of a private business there is no statutory requirement to the effect that the value of the fixed assets should be related to the paid-up capital of the business, irrespective of the capital structure and formation, of the company.

I wish to say an addition word about my right hon. Friend's capital investment programme at the rate of £100 million, as an average, during each of the next three years. A good deal of criticism has been levelled against this programme, both during the debate last Friday and this afternoon. I think that it should be put into correct perspective. The right hon. Member for Caerphilly, in his condemnation of many of the arrangements now being made by my right hon. Friend, omitted to quote what was the level of capital investment in the years since 1950, and how it has been steadily rising in the case of the General Post Office, even after due allowance is made for inflation during the last few years.

For example, in 1950–51 the figure of capital investment was only £30 million. In 1951–52, it was £38 million; in 1952–53, it was £51 million; in 1953–54, it was £56 million; in 1954–55, it was £59 million; in 1955–56 it was £73 million and now, for each of the next three years, the figure will be £100 million. I calculate that after making due allowance for the change in the value of money, and comparing 1950–51 with 1956–57, my right hon. Friend's policy—the present Government's policy—will result in a rate of investment in all postal, telegraphic and telephonic services more than two-and-a-half times as great as that of five years ago. That is two-and-a-half times as great in terms of real values, after adjustment for the change in money values. Surely, that should be a source of satisfaction to every hon. Member.

Finally, in this connection, I must reply to what I think a most invidious and unfair comparison made by the right hon. Member for Caerphilly. In a comment on my right hon. Friend's speech he said that the problem of outstanding applications for telephones at the moment was greater than in 1953. What he ought to have added, of course, was what it was in October, 1951, and what it was in October, 1955, as a true measure of comparison of Tory policy and Socialist policy.

Mr. Hobson indicated dissent.

Mr. Nabarro

Certainly. The right hon. Gentleman was anxious to talk party politics, and here is the answer.

In October, 1951, there were more than half-a-million outstanding applications for telephones. In October, 1955, that figure had been brought down to 380,000. And see here, in consonance with the rising scale of capital investment in postal, telegraphic and telephonic services, how the number of telephone installations year by year has steadily been mounting. In the year ended 30th September, 1952, there were 324,000 new connections. In the year ending 30th September, 1953, the figure had grown to 346,000, in the year to 30th September, 1954, the figure was 379,000 and to 30th September, 1955, it was 436,000. Now, in each of the next three years it will be no less than 500,000. Can any hon. Member deny that that is a very satisfactory rate of progress?

I wish to say a word on the subject of rural telephone arrangements. I represent, as indeed do you, Mr. Speaker, a widespread and scattered rural constituency. In the last few years there have been great difficulties in securing rural telephone connections and very often the capital investment required for one connection is totally disproportionate to the value of the revenue which the General Post Office will derive from it. Often, in the case of my own constituency, dozens and dozens of poles and hundreds of yards of cable are required to secure one telephone connection, the revenue from which is no more than a few pounds per year.

The hon. Member for Newton talked about self-contained finance. I do not believe that my right hon. Friend—certainly not with my support—has ever suggested that there should be self-contained finance for each individual rural telephone connection. That would be grossly unfair. He has said that there should be self-contained finance, service by service within the General Post Office arrangements, but not that every individual telephone connection should financially stand on its own feet.

Mr. Lee

Is it not the fact that the right hon. Gentleman made as his case that he had examined where losses were occurring and attempted to increase charges in order to meet those losses? If that is to be extended to the whole of the services of the Post Office, inevitably rural telephone communications will suffer as one of those services which will always show a loss.

Mr. Nabarro

I am grateful to the hon. Gentleman; he was very fair in his speech. If that point could be replied to at the end of the debate, it would settle doubts which may be in the minds of many hon. Members.

The point I was endeavouring to make is that we are all keenly aware of the migration of agricultural workers to the towns. In Worcestershire and the adjoining counties we are losing hundreds upon hundreds of skilled agricultural workers who are moving into the towns, in virtue, I suppose, of the opportunities for higher wages in the factories and often because of better conditions.

Rural piped water supplies, rural electrification and rural transport are important amenities for the countryside. I claim that rural telephone connections are of equal importance.

My right hon. Friend will undoubtedly reply to the general effect that rural telephone connections are extremely expensive. I would reply, yes, they are, but largely because we in the United Kingdom neglect to observe the much more economic fashion in which foreign countries, often with much more widely scattered populations, deal with the evolution and the development of rural electrification in conjunction with rural telephones. We, in this country are erecting countless steel pylons to carry rural electricity supplies hundreds of miles across country; and then, pari passu with that, we are extending telephone cables on telephone poles often along main roads and across country. Rarely or never in the United Kingdom do we find telephone cables attached to electricity pylons and poles. Why not?

Committee after committee has sat upon this problem in the last few years. Yet, here are these two great nationalised concerns, both voracious of capital moneys, the General Post Office on the one hand, and electricity supply on the other, still pursuing their independent and parallel lines, still duplicating much capital expenditure, with little or no regard for economy in costs. I maintain that were this matter handled intelligently on a national scale, the capital cost of rural telephone connections could be reduced by as much as one-third, and there would be a reciprocal benefit in capital cost for electricity connections in rural areas. I see no technical or practical reason why Continental and North American practice should not be adopted in this country, whereby telephone cables are attached to the same pylons and poles as the network of the electricity supply system. Let us be guided and derive benefit from the best practices of the foreigner.

In every other respect I commend the White Paper. I believe that it enunciates a policy which is vastly superior to anything we had in postal, telephone or telegraph services, prior to 1951, and, with two-and-a-half times greater capital investment over the next few years, reflects the improved and improving social and living standards of our people.

7.20 p.m.

Mr. William Ross (Kilmarnock)

In presenting his idea of the problems facing the Post Office, the Postmaster-General sought to be calm, reasonable and factual, but I am afraid that at times—despite the fact that my temper is not improved by the possession of a heavy cold—I found him pontifical, ponderous and, too often, begging the whole question.

The first point which we have to take into account about this White Paper is its timing, and the way in which it was introduced. It was not the Postmaster-General who introduced us to it; it was the Chancellor of the Exchequer, and he did so after Parliament had been in recess for many months. He waited until October. If anyone reads the Budget speech of the Chancellor of the Exchequer in October he will find that the Chancellor introduced the White Paper, and the changes proposed in it, as having some relation to our current economic difficulties. He introduced it as a matter for restraint in capital development.

Let us consider how true that is. The Chancellor having introduced a special programme of restraint, one would have expected that there would be little hope of improving the chances of people waiting for a telephone, but paragraph (8) of the White Paper says: About 200 new telephone buildings will be started in 1956–57, more than three-quarters of which will be exchanges. This is an increase of about one-third over the present year's programme. We are to have an increase of 33 per cent. at a time when local authorities are being told to keep down to their current capital expenditure. Paragraph (11) says: The Post Office is also starting a build a chain of radio stations—a radio relay system—extending from South to North through the centre of the country. When completed in about four years' time, the chain will have an ultimate capacity for several thousand telephone circuits and a number of television channels for the transmission of B.B.C. and I.T.A. programmes. Remembering that the Chancellor introduced the White Paper into his Budget speech in October, upsetting many of our business houses—if we recall the speech made by the hon. Member for Essex, South-East (Mr. Braine) on that occasion—one would have expected that the White Paper would have had something to do with restraint; but it has nothing to do with it. The Postmaster-General should be congratulated, not upon the bargain he made in connection with the £5 million, but upon the overall capital development bargain which he has made with the Treasury.

In the House, matters relating to the Post Office are generally treated objectively and not politically. We are proud of the service. There was only one thing to which I objected in the speech of the hon. Member for Cheadle (Mr. Shepherd), and that was his strange use of the conjunction "though"—"though it is a nationalised industry." He should have said, "because it is a nationalised industry." It is one of the premier examples of nationalised industries throughout the world, and it is because of the way in which it has conducted itself since its inception that we are justly proud of it and of the men who work in it. It is unjust to them and to the great service which employs them to make it a political pawn.

The Postmaster-General, considering the provision of an extra £14 million for depreciation, and the fact that it has been reduced to £12½ million by extending the life of certain apparatus, said, "It is obvious." Is it obvious? If so, why was it not done before? The right hon. Gentleman cannot say that it has not been considered before; he has only to examine the Post Office accounts for last year to find that Sir Frank Tribe, the Comptroller and Auditor-General, had something to say about the matter. He reminded us that in addition to ordinary depreciation there was a supplementary depreciation, and by 1948–49 the formula agreed was to take 25 per cent. of the telephone surplus. This year that means about £1.6 million. It has amounted to £17 million since its inception. The Comptroller and Auditor-General said: In agreeing to this basis of provision in 1949 the Treasury stated that in order to arrive at a permanent solution of the problem a complete revaluation of plant and a reassessment of plant lives would be necessary. I inquired as to progress in this matter and was informed in October, 1953, that the question of depreciation provision was so closely linked with wider policy questions that it could not be considered in isolation. It would have its place in discussions with the Treasury on various aspects of financial policy in the coming months. This matter, which the hon. Member for Kidderminster (Mr. Nabarro) said was a matter of sheer prudence for any wise and careful board of directors, has been a matter for examination—indeed, I would suggest it has been a matter for battle—between present and past Postmasters-General and the Treasury, not just upon the question of depreciation but on the questions of surpluses, revenues and everything else. The hand of the Treasury is evident all through this document. It has nothing to do with our current economic burdens.

I recently asked the Postmaster-General if this matter had been placed before the Post Office Advisory Council. As I am a member of that Council, he may have thought that I should not have put down such a Question. I did it for historic reasons—to use a word which has been bandied about in this debate. Post Office charges are being increased rather frequently; indeed, we have not had a year without an increase since 1952. We have come round in a circle. We have had a go at all the Post Office services, and we have now come back, for the second time, to telephones.

When we dealt last year with telegraphs, and the then Postmaster-General doubled the cost of the telegram, an hon. Member on the benches opposite asked whether the matter had come to the attention of the Post Office Advisory Council. The Assistant Postmaster-General will remember that he said, "Yes." I thought that we might as well get on the record whether on this occasion this matter had gone to the Advisory Council, and if so, when. The answer was given in the OFFICIAL REPORT.

This matter, with these proposals which now appear in the White Paper, issued in October, was dealt with by the Advisory Council in February last. Why have we had to wait until October? We have been told that there were such matters as wage claims to consider, but they were not entirely unexpected. I still have not got an answer to the question why there has been that delay of nearly nine months between the Post Office making up its mind and the decision to introduce this proposal. Was it a coincidence that there was a General Election in May?

That is why I state that this matter has nothing to do with the current economic problems facing the country. The introduction of this proposal by way of the supplementary Budget, which everyone expected would be unpopular, was in order to put into operation a piece of unpleasantness arising, not from the current economic difficulties of the country, but as a consequence of past Government policy which should have been dealt with in April.

The discussions about the final casting of the Post Office finances have been going on since 1953. They had gone on long enough for the Comptroller and Auditor-General to ask what was happening, and he was told that the final result would be obtained in a few months' time. We are entitled to be told when this decision was taken and the reason for the delay.

I now come to the decision itself. This matter of depreciation is not quite so easy as the hon. Member for Kidderminster says.

Mr. Ness Edwards

He knows that.

Mr. Ross

Of course, he knows it. If he examines most of the accounts of the public companies in this country, he will find that very few of them are applying this principle.

This question of replacement and, indeed, whether the replacement will ever be necessary and what the cost will be if the replacement is made, is a matter of crystal gazing. The possibility is that the Post Office is wrong. It is not always right. The Post Office estimated on the last occasion that there would be a surplus of about £4.4 million, and I think the surplus was £7.3 million. I do not think that the case has been made out for this increase of £12,500,000 for capital depreciation.

I think, too, that the Postmaster-General was very unconvincing when he dealt with the question whether or not that additional depreciation payment should be spread over the three sections of the service. Admittedly on mathematics the telephone service should certainly bear a high proportion, but I do not see why the whole should be put on to the telephone account. Remember, there is no fixed bargain about this matter. If the hon. Gentleman who said that this is a great bargain had read the White Paper properly, he would realise that this is a matter which has got to be bargained about annually. It is not fixed. The only thing that is fixed is the £5 million surplus. The question of what the depreciation will be year in and year out has to be settled annually. It may well be that next year the Treasury will say, "That is all very well for the telephones, but what about giving us some more depreciation on the postal side?"

We have to appreciate that when the Treasury made this decision, it did so, as the Comptroller and Auditor-General said, not in considering only one single item, but taking the whole lot together. If we take the whole lot together, my right hon. Friend the Member for Caerphilly (Mr. Ness Edwards) is right in saying that the Postmaster-General has not had quite such a good bargain, and that he has not limited the liabilities of the Post Office. The White Paper says that the effect will be that the Post Office will reduce by £12,500,000 a year its draft from the nation's reserves for capital development, which means that that £12,500,000 will be spent just the same. There is no reduction in capital development, but instead of the Chancellor paying the money out of depreciation, we have a wonderful piece of mathematical intricacy whereby it appears that the Post Office is getting £5 million, whereas it has got to pay considerably more to the Treasury.

I asked the Postmaster-General, when he was speaking, how much was being paid at present in the depreciation accounts of the telephone service. The only available figure that we got for last year was, I believe, £24.4 million, which amounts to as much as 21.2 per cent. of the annual income of the telephone service, so that when we add this other £12,500,000 we shall have the astounding position whereby the telephone service will be paying over 30 per cent, of its annual income in depreciation. I do not know how that can be justified. That is why I said that the right hon. Gentleman was far too glib and too keen to say that something is nonsense—just as the Minister did on the question of newspapers, when he said that the newspaper rates would not be increased for some historic reason. As the Postmaster-General knows, the whole picture of newspaper transport, delivery and so on has been changed. He selects his historical facts and ignores all historic change.

The Postmaster-General does not want someone to write a history of the Post Office "From Rowland to Charlie—from 1d. to 3d." He does not want to raise the cost of the letter post to 3d. That is what he is fighting against. He has based all his mathematical changes and formulae on the protection of the 2½d. post. He tells us that he has looked for the loss and has stopped the gap. But he has done nothing of the sort. The loss on the telegraph service remains; the loss on the printed paper rate remains, though part of it has been met. The same applies to the postal service. I do not think that the Government have a case. They have engaged in a piece of political chicanery, and what is happening does not in any way meet the current needs of the nation.

We must regret these changes from the point of view of the Post Office, but we are meeting the consequences of the action of the Postmaster-General when he was administering the Ministry of Food. We see the hand of death again. If hon. Members opposite want to kill a Department they send the right hon. Member for Luton (Dr. Hill) to it. The Ministry of Food has gone, and I am sure that many people in the Post Office headquarters are wondering how long they will last.

The excuse which the right hon. Gentleman gave was rising costs. That is what we hear from a Tory Minister after four years of Toryism. In four years wages have risen by £42 million. That is the high cost of Toryism and the Tories' failure to keep down the cost of living, despite the fact that it was on that pledge that they won the 1951 Election. The cost of materials has risen by £8 million. The story has not finished yet. The Tories are just getting into their stride on the cost of living. The right hon. Member has departed from the Ministry of Food and that Ministry has disappeared, but the melody lingers on. This year wages will rise by another £14 million to try once again to keep pace with the right hon. Gentleman's administration and its failure to hold down the cost of food. The cost of materials is to rise by another £3 million.

We heard a strange argument from the hon. Member for Kidderminster, who talked about the changing value of money and its effect on depreciation. He said that these decisions were prudent and right, and that the cost of materials had risen so much that the previous figure of £6 million per year was equal nowadays to £12–14 million a year. Yet when the hon. Member dealt with the amount of capital development under Labour and Tory Governments his formula seemed to work the opposite way.

No matter how we look at the White Paper—from the point of view of its timing or of the Post Office having to face the miserable economic consequences, not of the nation's difficulties, but of the Tory Government—it is a castigation of the right hon. Gentleman and his friends.

7.43 p.m.

Sir Austin Hudson (Lewisham, North)

If he will not think it discourteous, I do not propose to follow the remarks of the hon. Member for Kidderminster—

Mr. Ross

I must protest on behalf of the premier carpet-making town in the country. I am the hon. Member for Kilmarnock.

Sir A. Hudson

I apologise to both hon. Members; I was confusing the names of two towns, each beginning with a "K."

I want to plead once more the case of some monthly periodicals which are covered by paragraph 46 and Appendix 6, of the White Paper, particularly those in the trade and technical sections. I was somewhat hesitant in rising to speak, although I have been here throughout the debate, first because I thought the matter would probably be covered by another hon. Member and, secondly, because I have a personal interest to declare. My hon. Friend the Member for Essex, South-East (Mr. Braine), however, dealt more with reviews and similar publications and not with the trade and technical Press.

I should tell hon. Members that I am a director of a family business, started by my grandfather, which runs trade and technical papers. Two of these are monthly papers. I will not give their names, but one is an export paper and the other deals with electronics, so hon. Members will see that they are not "horror comics" but are, we think, papers of value to the nation.

As my hon. Friend the Member for Essex, South-East said, newspaper rates remain unchanged but, as they do not count as newspapers but as printed papers, for postal purposes, the monthly papers will suffer a fairly considerable increase in rates. Hon. Members have mentioned the football pools. I think that the Post Office must be very glad that there are football pools. I do not do football pools nor have I had anything sent to me about them, I am glad to say.

Mr. Houghton

Lucky man.

Sir A. Hudson

I do not think that their postal rates are increased; I imagine they come under the rate of 1½d. for 2 oz. Obviously, the trade and technical journals for which I speak are much heavier and will have to pay the extra 1d. for 2 oz. instead of ½d. for 2 oz. I hope that my right hon. Friend will reconsider this matter.

I have written to the Post Office about it because we maintain that these papers are of great value to the export trade and that, if possible, special consideration should be given to them. Every trade has had heavy increases in costs, and we have had ours in printing, paper and salaries. We do not print our own papers and therefore we have not had the big wage increases of a factory, of course. If this postage is increased we can bear it, but it will not help in what I think is a valuable type of industry.

New papers are started quite frequently in the trade and technical section and they nearly always start as monthlies. One has to try out a paper as a monthly. If it is successful one makes it into a fortnightly paper, and if it is still successful one makes it into a weekly paper. I think newspaper proprietors will ponder deeply before starting newspapers if too much additional expenditure is put upon them.

I do not want to put the case too high because the weekly papers are not touched at all and the amount to be increased elsewhere is not large. Moreover, I think the Postmaster-General would have considerable difficulty if he tried to divide papers in any way. The House will probably agree that trade and technical papers and others are valuable and that some other monthly papers are not quite as useful, but we should not want to put the business of praising one paper and condemning another on the Postmaster-General. A deputation from the people who understand these things, the Periodical Proprietors' Association, is going to the Post Office to go into the detail of this question. I put this plea before the House as I think it is something which might be looked into.

I heartily agree with what was said by my hon. Friend the Member for Cheadle (Mr. Shepherd) about how good our postal services are compared with foreign services. I cannot help thinking of an experience I had between the wars with a French post office. I wonder how many hon. Members have been to a French post office in a small town. This one had a postmistress who had to be seen to be believed. My friend said to her, Vous êtes, bête et diable, which is not very good French, but hon. Members will know what he meant. This lady was not going to stand for that sort of thing. As a junior Minister, I used to have enormous packages sent to me. She used to cut the stamps off before the packages were sent to me on the ground that her little nephew wanted them. When my friend went to her with a letter for London she sent it to London. Ontario, on the ground that she had never heard of London, England. That shows, perhaps, that we in this country are lucky not to have bête et diable of that kind in charge of a post office.

Every hon. Member wants to see the list of people waiting for telephones reduced. I wonder whether everyone on that list is entirely necessary. I do not know what experience other hon. Members have had, but I do know that a certain number of what I might call "prestige telephones" are asked for and go on the list. That may happen in regard to a person who wants a telephone in a house, but it is more so with the type of business man who feels he must have four or five telephones on his desk when one would do. If we could cut down some of the telephones which are not really required, and which I call prestige telephones, that would be a good thing when it is necessary to make the supply of these complicated instruments go as far as possible.

I plead once more for monthly publications, and I apologise for taking up time in this debate.

7.49 p.m.

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

I have listened with much interest to what was said by the hon. Member for Lewisham, North (Sir A. Hudson). The three points which he raised must be of great importance to him, I should imagine. The hon. Member's question about the discrimination the Postmaster-General has shown against newspapers can be answered very quickly. If the Postmaster-General wanted to do anything in this matter he should have gone after the big newspapers, and not have tinkered with small journals of the kind to which the hon. Member referred. Then more revenue would have been obtained and the action would have been more just and equitable. I will leave the rest of the hon. Member's speech for the Assistant Postmaster-General to answer.

Because of my lack of practical knowledge of French, I cannot say what the hon. Member's friend said to the French girl. My experience of what Englishmen have said to French girls is confined to the 1914–18 war and I should not like to repeat those phrases in this House. It must have been something very nice, but I am satisfied that if the hon. Member wants to see very nice post office girls he will see them in post offices all over the country, especially in the Openshaw constituency.

I had the privilege, on Friday, of dealing with some aspects of the debate which has been going on today and it would be invidious for me to waste time repeating what I said on Friday. Already, in part, it has been repeated by my right hon. Friend the Member for Caerphilly (Mr. Ness Edwards) and other hon. Members. Nevertheless, there are one or two points arising out of today's debate upon which I should like to comment. A great deal has been said by hon. Members opposite about making the Post Office a commercial undertaking and what would accrue in one way or another if we did so. What we have to remember in these debates is that, first and foremost, the Post Office is a public service. The Post Office was intended as a public service and it should make sure that people all over the country, whether in isolated parts of Northern Scotland or in the populous Metropolis, should be given reasonable facilities for communication by post, telegram, or telephone.

If we depart too far from that basic conception of the Post Office we shall get into difficulty. We have to make up our minds that the Post Office is either one thing or the other. The hon. Member for Kidderminster (Mr. Nabarro) and the hon. Member for Cheadle (Mr. Shepherd) cannot have it both ways. We cannot legislate on a sort of commercial, private enterprise basis if, at the same time, we are to accept the liability of a £40 loss in respect of every telephone kiosk in a rural area.

My quarrel with hon. Members opposite is that they are trying to force the Post Office into a position in which it can pay but not to accept the Post Office as a whole entity or organisation. We are making a mistake when we dissect the Post Office into three parts, postal, telegrams and telephones, because these things are intermixed and interdependent on one another to such an extent as to make comparison impossible.

I objected most strongly to the increase in telegram charges. Whether it is admitted or not, there is no doubt at all in the minds of many people—the people who go to post office counters and want to send telegrams and are told that they must pay 3s. for doing so—that they cannot afford the increase. We have penalised not the business firm, not the people who can afford to send greetings telegrams, but the ordinary fellow in the street who cannot afford the charge and, therefore, cannot send a telegram. The Post Office ought to stand or fall as an entity and we ought to judge its accomplishments on that basis.

I should be deceiving myself and the House if I pretended that I was able to follow my right hon. Friend for Caerphilly in everything he said this afternoon. I have already admitted that to him, so there is no mystery about it. Equally, I should be wrong if I thought I could follow the hon. Member for Kidderminster or the hon. Member for Cheadle. Unfortunately, up to the present the Postmaster-General has not given us a great deal of information which would make it easy for us to follow the argument about depreciation.

I cannot for the life of me see that my right hon. Friend can be wrong all along the line. As an amateur in this question of high finance, it seems to me that there must be some connection between the Chancellor of the Exchequer and the Budget with this depreciation account. I agree entirely with a noble Lord who said, in another place, that it has been most unfortunate in its timing and in the way in which it was presented to Parliament. I believe that if the Postmaster-General had come here, and made a full and detailed statement based on the requirements and accounts of the Post Office, we would not have found ourselves in this difficulty in trying to trace the origin of the question of depreciation.

However, I shall leave that question, because after the challenges to the Government Front Bench from this side of the House concerning what happens to the £12½ million which is to be put to the depreciation reserve fund, there is an obligation upon the Assistant Postmaster-General to devote a good deal of time tonight in satisfying the House that this is not a form of concealed taxation, as my right hon. Friend went to some length to try to establish. Therefore, we will give the Assistant Postmaster-General plenty of time to explain in great detail the situation in connection with this depreciation fund.

The point has already been made that a £5 million surplus is very small on a turnover of more than £300 million. That is so, and I think that the Post Office is very optimistic about the claims that will be made upon it in the near future. If the cost of living continues to rise at the present rate, I feel certain that there is bound to be a substantial claim from the trade unions representing the workers in the Post Office. If I correctly understood the Postmaster-General, he put forward a figure of about £8 million as his estimate for this purpose in the next period. Would the right hon. Gentleman like to confirm that?

Dr. Hill

If the hon. Member is referring to the wages element, the wages element is £14 million and the other costs £3 million. It is this total of £17 million which after adjustments and economies is represented as £8 million in the total of £25¾ million.

Mr. Williams

I thought I was right and I based my argument on that interpretation. I doubt very much, however, whether when the increased costs arising from the higher costs of material, labour and other things come along, that will be an adequate figure for the right hon. Gentleman's current estimate.

I base my remarks on something which has been brought to my notice forcibly in the last few weeks. I am extremely doubtful whether the present recruitment situation in the Post Office is satisfactory. Even in some of the top manipulative grades, there is a good deal of difficulty in recruiting into the postal and telegraph officer grade and into the postman higher grades. I am satisfied that recruitment into the basic grade of postman is very poor in many areas. I speak with some knowledge of the situation in Manchester, of which Openshaw forms part.

The situation there is very bad. A large number of postmen in the area are very much opposed to the introduction of certain methods of recruitment simply because they believe that the male postman grades are very inadequately paid. They believe that their wages compare most unfavourably with the wages of people in factories and works in the vicinity. It is becoming increasingly difficult in Manchester, Glasgow, Birmingham and other areas to obtain adequate and suitable personnel to fill the postman grades.

I attach great importance to that, for this reason. Under the recent reorganisation scheme in the Post Office, the basic grade of postman is the common pool for all other grades. In other words, it supplies the postman, higher grade, and it supplies the needs of the postal and telegraph officer grade. Indirectly, through the postman, higher grade, it also supplies the future supervisory staff of the postal side right up to the grade of superintendent. Unless, therefore, we get the most suitable material in the basic grade, we will not only suffer in the collection and delivery and other services in the Post Office, but the Post Office will suffer adversely in regard to the next grade—the indoor sorting grade—and in the supervision of that grade and even in the postal and telegraph officer grade in the years to come. Even now, I understand, there are difficulties in recruiting from outside in the open competition for the postal and telegraph officer grade.

It all boils down to the fact that people are not prepared to accept the responsibility of work in the Post Office, with its awkward hours and various shifts, with Saturday working and a liability for Sunday working, at the rates at which they are now paid, which in many cases are much worse than people are paid for straight shift working in a factory, where in many cases there is no responsibility for Sunday work and people get their Saturday half holiday, when they can attend a football match. On the question of wages, therefore, I doubt very much whether the Postmaster-General's provision is adequate having regard to the increases that must come in connection with the cost of living and the demand for higher wages because of the nature of the work and the duties to be performed.

Mr. Houghton

My hon. Friend may be interested to know that we shall expect authoritative comment on Post Office wages from the Royal Commission on the Civil Service, whose Report, we understand, is likely to be available this week.

Mr. Williams

I dare say; but unfortunately, from my point of view, the Report is not available now. Therefore, all I can do is to put before the House the situation as I see it and as I am informed it is likely to develop in the near future.

I shall not develop what I said on Friday concerning the extension of telephone installation. I repeat that a special effort is required if we are not to have the dreadful legacy of thousands of people applying for telephones and waiting three, four and, in some cases, five years for them. I do not deny that we have done wonderfully well in the last year or two, but the problem is becoming worse. As I said to the hon. and gallant Member for Down, South (Captain Orr), we are making Irish progress in that in clearing the arrears we are getting into worse arrears than before. We ought to be making a major effort to overcome the big arrears.

This is not a matter which affects only the efficiency of the nation. People are entitled to telephone service because of the new way of life. The telephone, television and other things are part and parcel of the new way of life that our people insist upon getting in these days as the result of their own efforts.

I should like to say a word about expenditure on research. On Friday, I referred to the excellent services rendered by Dollis Hill to the Post Office and, through the Post Office, to the nation. I do not detract one iota from the tribute I paid on Friday, but I was a little disturbed by what the hon. and gallant Member for Down, South said. He said that America had reached a much further stage of progress in connection with electronics than we have done. I am sorry to hear that.

Captain Orr

I was speaking about carrier telephony.

Mr. Williams

I gathered that it was in connection with telephony. I shall be very sorry indeed if we lag behind the U.S.A. in this respect, because I believe that the more efficient we are through mechanisation the more quickly we shall be able to meet all the demands of our people.

I know that there are problems relating to staff, but we have had to face problems like those in the past, and in a period of full employment some of the problems at least should not present the same difficulties as they did in a period of underemployment.

I come to the claim that the proposals will give greater freedom to the Post Office in its new relationship with the Treasury. For years I have been one of those who have advocated the greatest possible measure of freedom for the Post Office in carrying out its responsibilities and doing its work. However, I cannot go the whole hog with the people who say that the Post Office should break altogether from Treasury control. I think that once it did that it would cease to be a Government Department—if it became completely independent of the Treasury. I do not advocate that complete isolationism, but I have said many a time and I say again that it is a great pity that whenever a scheme of any value is proposed to be undertaken by the Post Office, whenever the Post Office wants to pay reasonable wages, whenever it wants to raise the wages it pays, the ghost of the Treasury should always threaten it.

As one hon. Member has said, the Post Office has had to suffer the indignity of going to arbitration at the instance of the Treasury even when the Post Office itself knew that the claimants for increased wages had a first-class case. There has always been the influence of the Treasury skeleton in the cupboard. At the arbitration court there has always been a spectre from the Treasury, dumb, saying nothing, but exercising an evil influence all the time. If we can remove that ghost, that skeleton in the cupboard, and its influence on the Post Office, I for one shall be very happy indeed.

I intervened during the speech of the Postmaster-General to ask him what was the freedom which he was going to get. I do not know whether other hon. Members were satisfied with his answer, but I was not, for it seemed to me he did not say anything to answer that question. I hope that the Assistant Postmaster-General will answer it specifically.

This freedom should mean at least that the Post Office, within its allocation, can do what it likes with its money, that it can dig into its reserves and spend them on putting right bad buildings, 200 or 300 or 400 of them in a year, that it can undertake a scheme if it wants to, perhaps for the welfare of the staff, perhaps for the improvement of postal, telephone or telegraphic facilities. If this freedom is to mean anything it should be possible for the Post Office to be able to do such work without the permission of the Treasury. Does it mean that? If it does not, this so-called offer of freedom is an empty gesture.

I say advisedly that there is a case for the increase of charges for Post Office services. There is no doubt at all about that. We have no right to ask the Post Office to try to carry on its services without allowing it to make reasonable increases in charges to meet the costs of labour and materials. It looks as though the charges are to be increased to 80 per cent, above their pre-war level; that is, about 62 per cent. of the general increase outside in the costs of materials and labour.

After the question of depreciation, which was mentioned by my right hon. Friend the Member for Caerphilly, the only major question is that of the allocation of the charges, whether they should be borne by the residential or by the commercial subscribers, by those in the wilds or by those in congested areas. I have argued for many years that we should break down as many of the differentials as we can. Rowland Hill was right: a 1d. stamp whether the letter is to go from London to Aberdeen or from one part of London to another. The Post Office services are public services, and they should have a common standard and a common efficiency.

I do not want to take any more of the time of the House, but there is one other matter I would draw to the Postmaster-General's attention. I want to put in a word for those who work in the post offices in Scotland. I do not see many Scotsmen here, but I see my hon. and learned Friend the Member for Aberdeen, North (Mr. Hector Hughes) here.

Captain Orr

He has a Welsh name.

Mr. Williams

He has an Irish name. Anyhow he represents a Scottish constituency.

These new charges are to be introduced as from 1st January, 1956. Anybody who knows Scotland will also know that in Scotland they are not completely responsible on 1st January of any year. Hogmanay cannot be the date on which to ask people to attend post offices to deal with such mundane matters as an increase in the price of telephone calls. Therefore, on behalf of a large number of people who work in Scottish post offices, I ask that whatever the right hon. Gentleman does he will not call upon them to attend in their offices on 31st December and 1st January to collect any arrears. Let them get away with that, otherwise there will be a revolution in the offices above the Tweed.

Mr. Hector Hughes

I should like to tell my hon. Friend that he is spoiling an otherwise good speech by embarking on an irrelevant attack upon the Scottish people.

Mr. Williams

I am trying to defend the interests of Scotland and my hon. and learned Friend does not understand what I am doing. I sincerely hope that the hon. Gentleman the Member for Aberdeenshire, East (Sir R. Boothby), who is sitting opposite me, will be more sympathetic to my intention. However, I hope that the point of this plea will not be forgotten by the Postmaster-General. It may be thought a small matter, but it is of some interest to a large number of our people employed in the post offices in Scotland.

8.19 p.m.

Brigadier Terence Clarke (Portsmouth, West)

The Postmaster-General has, on the whole, made a very good bargain with the Treasury in letting the Treasury have £5 million and taking the balance year by year, putting his profit, when he has one, to the Department's balances, and, when he shows a loss in future years, writing it off against previous profits. However, I am surprised, after all these years during which the Post Office has been making profits, that there should be any necessity to increase the charges as is proposed.

The hon. Member for Openshaw (Mr. W. R. Williams) said he has no quarrel with the fact that the charges are going up. I have never known the Socialists have any quarrel because charges were going up. They have enjoyed that for many years, and they expect them to go on going up, but I expect charges to come down, and I see no reason whatever why, in this service, they should continue to go up.

I am quite prepared to allow that wages have increased and I think that the postal workers deserve additional wages. I am not quarreling with that. I know that the costs of some materials have gone up, but the efficiency of the Post Office should also have gone up. Much of the working of the Post Office is automatic. A new man is not needed every time a new line is put in or every time a hundred new subscribers are connected. Judging by the White Paper, every time the Post Office puts up a few hundred more kiosks or telephone lines it seems to be believed that it is necessary to increase the number of postal workers in the same proportion.

Mr. Houghton

Somebody has to put them up.

Brigadier Clarke

I think that the hon. Member has already had an opportunity to make a speech.

I am surprised that today, with the progress in this country in electronics and signals generally, we should expect to see telephone and telegraph charges increased. I believe that when the Chancellor of the Exchequer sees the amount of money which the Postmaster-General will make, he will seize it with both hands. I do not think that the Postmaster-General has succeeded in concealing the profits or getting his hands on them. Therefore, he would have been more sensible if he had kept the charges as they are at present and still promised the Chancellor his £5 million. I believe that he could easily have made that £5 million on the basis of the present charges. Why must these charges continue to increase?

As the first nationalised service, the Post Office ran very well for many years but, having been given the example of the other nationalised services, the Post Office now thinks that, every time it wishes, it should increase charges in case there should be a loss. So far as I can see, there has not been a loss. The other nationalised services put matters right by increasing charges. Let us not follow that example. Let us improve the efficiency of the Post Office and reduce the charges. There is every opportunity, with the introduction of automation and the reduction in the number of workers, of ensuring that the Post Office works more efficiently.

The Post Office services are very much more inefficient today than they were before the war. I hope that the Postmaster-General, who has plenty of energy, and the Assistant Postmaster-General, will direct their minds to improving efficiency. Before the war, when one made a trunk call, one could put the receiver down and expect to be called in a few minutes. If one puts the receiver down nowadays, nothing happens. The telephone exchange does not ring back. When one pays the present exorbitant charges for telephoning one ought to be able to expect some service.

Nowadays, accounts are submitted half-yearly, instead of monthly or quarterly, and if one wishes to check the account one has to pay a charge based on the number of calls made. I advise anybody who considers asking for a check not to do so, because the Post Office is always right. One never finds a wrong charge being admitted. One will be merely spending 5d. to find out that the account is correct, since the Post Office will not admit a mistake.

One cannot now reverse a charge without paying 3d. This seems to me an unnecessary curtailment of a service which we enjoyed in the past. My children could ring up from school and transfer the charge to daddy. Now I have to pay an extra 3d. to find out what my children are saying. These things are not what one would expect from a Conservative Government who do not like nationalised industries. I suggest that if the Postmaster-General cannot run the service efficiently he should pass it over to private enterprise. Since Rowland Hill's day, the Postmaster-General has organised the delivery of letters very well, but in more technical matters I believe that private enterprise could show him a good deal in doing the job much more cheaply than it is done nowadays.

Previously, the temporary disconnection of a telephone cost nothing, but now it is to cost 5s. It seems to me that the Post Office is applying many extra pinpricks and obtaining a great deal of extra revenue. I hope that when he receives the money the Postmaster-General will see that some of the people who have been waiting for telephones will have the telephone installed more quickly. The Postmaster-General has made a big profit on postal, telegraph and telephone services in the past, and I should have thought that he would have wanted everybody to have a telephone or to send a telegram so that he could make a profit in the future.

I know that the Assistant Postmaster-General will say that it costs a great deal more to send a telegram than the average 3s. that is now charged, but I say that that is entirely due to the inefficiency of the Post Office. Boys sit outside post offices on high-powered motor cycles waiting to deliver a telegram. That is very inefficient. Something could be done to remove that inefficiency. The telegrams could be centralised to one or more places instead of being decentralised to the smallest telegraph offices anywhere in the country.

I am not interested in whether a telegram is delivered in five minutes or in thirty minutes but I am interested in sending a telegram. As long as it gets there, I am not interested in how long delivery takes, within an hour or so. The telegram will not reach its destination any sooner by having a boy sitting outside every telegraph office in the country.

The Assistant Postmaster-General (Mr. David Gammans)

Does my hon. and gallant Friend not realise that telegraph boys do not sit outside every telegraph office in the country? In recent years we have centralised telegrams to an enormous extent and have provided the boys with motor cycles.

Brigadier Clarke

I am glad that my hon. Friend is taking the advice which I gave him two years ago, because until very recently boys were sitting on motor cycles outside telegraph offices. I have noticed that the practice seems to have come to an end.

I would also point out that up to two months ago I had my morning letters delivered at 7 a.m. They came in a motor-van. Now they are delivered by a man on a push-bike and I do not receive them until I reach the House of Commons. I am not grumbling about that, but we are not getting any improvement in the postal services and yet we are being asked to pay more for them. [HON. MEMBERS: "Tory Government."] I am coming to that in a minute. I have left it to the end because there were certain things I wanted to say before the not started.

My chief reason for supporting the Postmaster-General tonight is because I think that my right hon. Friend is a great improvement on any previous Postmaster-General, including the Socialist one. My right hon. Friend made an extremely good job of stopping rationing. I reckon that we should still be rationed today if we had the party opposite in power. At least my right hon. Friend did that job for us, and I hope that he will devote as much energy to the Post Office as he did to his job at the Ministry of Food. If he does so, I can look forward to seeing my telephones and telegrams decreasing in cost, and perhaps my letters arriving at a more reasonable hour.

8.29 p.m.

Mr. Hector Hughes (Aberdeen, North)

The speech to which we have just listened dealt with a number of day-to-day problems in the Post Office which, in my opinion, are unsuitable for this debate. But the complaints made by the hon. and gallant Gentleman the Member for Portsmouth, West (Brigadier Clarke) at least show that the supporters of the Government are dissatisfied with the present administration of the Post Office, and I am not surprised having regard to the Postmaster-General and Assistant Postmaster-General who grace the benches opposite.

Brigadier Clarke

Is the hon. and learned Gentleman in order in calling me a figure, Mr. Deputy-Speaker?

Mr. Hughes

If the hon. and gallant Gentleman wishes me to give way so that he may say something articulate, I will do so, but that remark was incomprehensible.

The hon. and gallant Member, like many speakers on the opposite side of the House, did not attempt to analyse this White Paper on sound principles or, indeed, on any principles at all. The hon. and gallant Gentleman, like other speakers, contented himself with making petty points about the administration of the Post Office, and it seems to me that the careful, diligent and indefatigable workers in the Post Office are having an uphill job in carrying out their duties in face of the incompetent lead they get from the Postmaster-General and the Assistant Postmaster-General.

I do not intend to go into that aspect of the matter, however. I do not pretend to be an expert on Post Office matters but there are one or two points which I want to put because they arose between the Postmaster-General and myself by Question and Answer in this House, and by correspondence. The answers to my Questions were all unsatisfactory and a letter which I wrote to the right hon. Gentleman has not been answered.

I asked why the Postmaster-General would not use postage stamps in a way that would greatly increase their sales, not only in the ordinary way of business, but also to philatelists and others. This may seem a small matter to the House but it is by no means small, because it would involve many millions of pounds. I suggested to the Postmaster-General that he might use the postage stamps to celebrate anniversaries and centenaries and to celebrate distinguished scientists, literati and artists, but the right hon. Gentleman refused. I put it pointedly in the case of Rabbie Burns, the poet, asking the Minister whether he would celebrate the bi-centenary of the poet Burns. His answer was a categorical no. [HON. MEMBERS: "Shame."] He was not at all constructive or helpful, although that suggestion, if adopted, would have resulted in millions of pounds for the Post Office.

I then wrote to the right hon. Gentleman, as far back as 26th October, and asked him a number of questions which still, like the letter, remain unanswered, and so I shall put the questions to him now in the hope that I shall get an answer tonight. The questions were:

1. "(a) What is the general tradition and practice as to limitations in the design of British Postage stamps?
2. (b) On how many occasions and in what manner have these traditions and practice been departed from?
3. (c) Is it not a fact that some high value British Stamps include scenery and other designs? If so, which values are they and cannot this exceptional practice be extended to other values and in other ways such as that which my Question suggests?
4. (d) Do you appreciate the advantage that such commemorative stamps might be in a cultural way to the public in general and to the Post Office in particular by encouraging the sale of stamps to collectors and others?
5. (e) What specific objections are there to stamps commemorating distinguished literary, historic and scientific persons?"

That letter remains unanswered.

Hon. Members

Shame.

Mr. Hughes

I cannot understand why the Postmaster-General could not see his way to answer those questions in a constructive way which would benefit the nation. That was on 26th October. On 9th November I asked him this Question in the House: …if he is aware that British postage stamps could be improved by including in their designs the faces of famous literary, scientific and historic persons; that such inclusions would benefit the taxpayers and the Post Office by increasing the sales of such postage stamps to philatelists and others; and if he will consider issuing such stamps in the future. His reply was his characteristic monosyllabic one. Therefore, I asked him this supplementary question: Is there any immutable rule which prevents this being done in Britain? Is the Minister aware that no terrible catastrophe has followed the adoption of the practice which I recommend in other parts of the British Commonwealth? Why should Britain lag behind? To that, the Postmaster-General gave something more than a monosyllabic answer. His answer was quite unsound. It was this surprising one: It is traditional … We all know the meaning of "tradition" and how long it takes to build up a tradition. We all know that Sir Rowland Hill, the namesake of the present Postmaster-General, introduced his postage system as recently as 1840. It is a question for the House as to whether a tradition can be built up in that short space of time. The right hon. Gentleman's answer was: It is traditional in this country that the head of the reigning monarch should be the basic feature of all our stamps, and I think that there is no desire to depart from that"— [OFFICIAL REPORT, 9th November, 1955; Vol. 545, c. 1831.] Other parts of the Commonwealth have departed from it. South Africa has animals on its stamps and Canada has scenery on them. Many other parts of the Commonwealth have departed from what the Postmaster-General wrongly alleges is a tradition. There is no such tradition. "Tradition" is a big word, and it goes back a long time, but, as I have said, the postage system goes back only to 1840. There was no such tradition in 1840, and I submit that there is no tradition now. Anyway, if such a tradition exists, it is a bad one and should be departed from.

It is not commonly recognised that in Britain, where certain denominations have symbols upon them, we could do exactly the same thing as others are doing. I challenge the Postmaster-General to give chapter and verse for his allegation that there is any such tradition. In other countries there are different types of stamps. All I can say to the right hon. Gentleman, if I might put it into rhyme, is this: Said Rowland Hill to Dr. Hill, 'You serve your Sovereign very ill By putting Royal portraits where They're blotted out, I do declare.' Said Dr. Hill to Rowland's ghost, This is tradition of our post. Although—'

Mr. Deputy-Speaker (Sir Rhys Hopkin Morris)

I suppose that this dissertation upon tradition is in some way related to the finances and revenue of the Post Office?

Mr. Hughes

I submit, Mr. Deputy-Speaker, that I am not committing a breach of any regulations of the House by quoting the name of a right hon. Member. If I were using his name instead of his constituency in the course of my speech—

Mr. Deputy-Speaker

I made no reference to that at all. What I understand the hon. and learned Gentleman to be doing now is developing an argument upon tradition and the style of stamps. Provided that is related to the revenue and finances of the Post Office, well and good.

Mr. Hughes

Let me make it perfectly plain, Mr. Deputy-Speaker, that I had departed from that part of my argument dealing with tradition. I am now arguing that it was very wrong of the Postmaster-General to drag the Sovereign into this matter at all. He said that it is tradition in this country that the Sovereign's head should be on the stamp and I say that he should not have dragged the Sovereign into the discussion. He is extremely wrong to have done that.

If you will allow me, Mr. Deputy-Speaker, to complete the second verse: Said Dr. Hill to Rowland's ghost, 'This is tradition of our post. Although our Sovereign we revere. To this tradition we adhere.' I object, on three grounds, to what the Postmaster-General has done in this matter. First, there is no such tradition; second, if there exists such a tradition, it is a bad tradition; third, he has done a very wrong thing in dragging the Sovereign into the debate. On all those grounds I say that it is the right hon. Gentleman's duty now to make a full explanation to the House, and to climb down as gracefully as he can and agree to the alteration in our stamps which I have suggested.

8.41 p.m.

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

The last time I followed the hon. and learned Gentleman the Member for Aberdeen, North (Mr. Hector Hughes) in a debate was about three years ago, when I had the temerity to refer to him as a diminutive Demosthenes. I think that perhaps that judgment stands good after the delightful speech which he has just made. I shall not follow him about the merits of whether we should have the head of someone other than the Sovereign on stamps, because the relative merits of Rabbie Burns and William, Prince of Orange, may cause us to fall out. That would be a sad thing, and I should regret it.

Mr. David Jones (The Hartlepools)

Why not compromise with the "Radio Doctor?"

Captain Orr

If we may return to Post Office finances and policy for a minute, the hon. Member for Openshaw (Mr. W. R. Williams) in an exceptionally thoughtful speech—it was the sort of speech which we have come to expect from him in our Post Office debates; he speaks with great authority and we respect what he says—drew the distinction between treating the Post Office as a public service and treating it as a commercial concern. It would be a pity if we were to become doctrinaire about it, because to some extent there are elements of both in the Post Office and the two notions do not necessarily conflict.

Like the hon. Member for Openshaw, I found myself completely bewildered by the argument of the right hon. Member for Caerphilly (Mr. Ness Edwards). It was an extremely difficult argument to follow for anyone who has not spent a lot of time examining this position of the depreciation of the relations between the Post Office and the Treasury in the matter. On balance, I prefer to accept what my hon. Friend the Member for Kidderminster (Mr. Nabarro) called "the irrefutable logic" of paragraph 30 of the White Paper. I should have thought that, basically, it was reasonably fair that the Treasury—I am not in the habit of trying to be fair to the Treasury, because, broadly speaking, I detest it—as far as the historic cost is concerned should keep what they have got. We had a lone series of definitions of historic cost early in the debate. The notion that the Treasury should keep that is not unreasonable, because one can imagine an appalling cataclysm taking place and all the Post Office assets being completely destroyed in a flood or something. It would then fall upon the Treasury to rebuild the whole thing. Therefore, I should have thought it not unreasonable, when one is making an increase on what should be put for depreciation to cover the cost of replacement, that the Post Office should reduce its draft on the nation's reserves for capital development.

Mr. Ness Edwards

That would be quite true if this were a physical fund, but it is a fund which does not exist and to which the Post Office has to contribute £12₽; million cash.

Captain Orr

It may be true that the fund does not exist, but one must also bear in mind that even though it does not exist it might have to be drawn upon in some circumstances. [Laughter.] I may be naive about the matter, but I think that that statement roughly expresses what is involved.

Let me come back to the question of the Post Office being a public service. I want to do a little special pleading in respect of what was said by the hon. Member for Openshaw. Let us look at the total amount which it is required to raise. I would ask my right hon. Friend a question about the first £5 million that is to go to the Treasury in lieu of tax. Presumably it is for five years and is fixed at £5 million annually. What happens at the end of five years, or in the interim if there is a substantial change in the rates of taxation?

Dr. Hill

It may be useful to tell my hon. and gallant Friend that the £5 million is fixed for a period of five years, whatever happens to the rates of taxation in the meantime. The Bridgeman arrangement was fixed for a period of three years, but it continued at the rate of £10¾ million from 1933 until the war, when it was abolished.

Captain Orr

I am very much obliged to my right hon. Friend. What happens if there is a substantial change in the rates of taxation at the end of five years? Are we precluded from discussing that point? If so, perhaps my right hon. Friend will answer it, like Gladstone, in distant futurity if he is not prepared to commit himself now.

We could accept the £12½ million depreciation allowance and see how it is proposed to raise the amount, and then examine the matter in detail. There is something in the argument of the right hon. Member for Caerphilly about placing all this solely upon the telephone and telegraph service, although he grossly overstated his case. There is bound to be some element of depreciation in the postal services and in the buildings. Is it really fair to put the £12½ million upon the telephone and telegraph service and nowhere else? I see that my right hon. Friend is preparing to interrupt me again.

Dr. Hill

My hon. and gallant Friend appreciates that we are dealing with the additional £12½ million depreciation and not with the £29 million based upon historic cost. At a time when we propose special steps to increase telephone provision, and bearing in mind our capital investment in that field, it seems reasonable that the additional depreciation should be placed on the telephone account.

Captain Orr

I quite understand that and I am much obliged to my right hon. Friend for his explanation. Is he saying that there is no element of extra depreciation involved on the postal service or the new building sites? There may be other examples which will spring to mind. I should have thought that, on balance, a very modest proportion of the £12½ million might have been placed on the postal services. I can see that, from my right hon. Friend's point of view, perhaps it is a tidier and an easier thing to put it all on one service. However, I am not making much of that point, because no doubt the amount which should fall on the postal service is very small, and I do not agree with the right hon. Member for Caerphilly that it would materially affect the position.

The one point of criticism which I have is about the removal of the differential. My right hon. Friend approached it by saying that, in general, it was desirable that where the cost appeared to be high, and the greater losses were being made, should be the point at which to attack. I am not sure that that is entirely sound. Suppose one were to apply that, we will say, to the postal service, or to the parcels service. We have the standard rate throughout the country, and suppose it were found that the postal services began to make a loss and it was decided to attack where the loss was greatest. It would, of course, be found that the loss was greatest on the long journeys to Scotland and Northern Ireland. I think I am being logical about this.

In my opinion, in the idea of a standard charge for postal and parcel services one must accept that there must inevitably be an amount of cross-subsidy. I cannot see why we must necessarily abandon that idea when it comes to telephone rentals, and I should think it not unreasonable to keep the differential. I do not quarrel with my right hon. Friend when it comes to the overall raising of charges. I believe that a case for that has been fairly made out. Indeed, I very much question whether the right hon. Member for Caerphilly honestly, in his heart of hearts, thinks that the case has not been made out.

Mr. Ness Edwards

That is a very ungallant suggestion. I wish to be absolutely clear about this. I believe that this White Paper is the means of getting £23 million a year out of the users of postal facilities as concealed taxation—I honestly believe that. I think that the Post Office has had a bad deal.

Captain Orr

If the right hon. Gentleman says that that is his honest belief, of course I accept it. But I wonder whether he really thinks that, for instance, he and his hon. Friends would be justified in dividing on the Prayer. How does he suggest we should get the £8 million for wages?

Mr. Edwards

The hon. and gallant Gentleman has asked me a question. I agree that wages ought to be increased by £3 million a year. That is the amount that the Post Office would be "in the red." But I do not believe that we should refrain from voting against the Prayer in order to allow the Treasury to get away with £23 million.

Captain Orr

Is the right hon. Gentleman really telling the House that he does, not think that there should be any surplus budgeted for? What sort of surplus would he budget for, were he the Postmaster-General? How would he meet the extra £8 million for wage claims?

Mr. Edwards

This is very unfair of the hon. and gallant Gentleman. I have no right at all to be addressing the House two or three times, but he has put a specific question to me. I say that all the additional depreciation now being put on the Post Office should be recovered from the £160 million that the Treasury has taken from the Post Office services during the period when the depreciation has occurred.

Captain Orr

When the right hon. Gentleman reads what he has said he may think it was a little facile. I do not think that he has made out a case against the increases. I plead with my right hon. Friend, however, not to be led too far along the road of reducing the differentials. That action will fall very hardly upon Northern Ireland, for instance. Here I am guilty of special pleading, and I make no apologies for it. In an area which has tremendous difficulties because of the lack of differentials in transport charges and the like, the removal of this differential in the telephone services will fall very hardly upon Northern Ireland. A great proportion of the calls made within a radius of 40 miles of Belfast are necessarily overseas calls, along the trunk cables. I hope that my right hon. Friend will look at the special position of Northern Ireland to see whether a special arrangement can be made to help it in the matter of compensation.

The White Paper, as a whole, is an excellent document. It is sound policy to put Post Office finances upon a reasonable and sensible basis. The right hon. Member for Caerphilly has not made out a reasonable case for dividing upon the Prayer, and I hope that if it is moved and divided upon it will be overwhelmingly defeated.

8.57 p.m.

Mr. C. R. Hobson (Keighley)

It is apparent that the hon. and gallant Member for Down, South (Capt. Orr) has not read the whole of the White Paper. If he had done so he would know that it is cheaper to send an 8 lb. parcel to the Irish Republic than to Northern Ireland. That is one reason why he should vote with us against the Motion this evening.

The Postmaster-General gave a very lucid explanation of these difficult provisions, but it was obvious that he was not very comfortable in doing so. He seems to have been given the role of doing all the unpopular work for the Government. When he was Parliamentary Secretary to the Ministry of Food he had to state that price controls were to be removed, and that there were to be reductions in the subsidies. His actions then were so unpopular that he was the object of quite a lot of opprobrium from hon. Members on this side of the House and also from the people. The cost of living soared while he held that office.

The right hon. Gentleman has now had the unpleasant duty of asking the House to agree to increased telephone rental charges. If there is any trouble in Downing Street it seems that the Government say, "Is there a doctor in the House? Let us fetch Charlie." The right hon. Gentleman first made his name in public life upon the radio, as the "Radio Doctor," but if he goes on doing these unpopular things he will finish up as the undertaker. He should not be allocated all the unpopular tasks.

The White Paper and the Regulations have been introduced as though they were something new and sensational, but there is nothing new in them, and the only sensation lies in the actual increase in charges and their unfair application, about which I shall have something to say later on. The right hon. Gentleman has compared the White Paper to the Bridgeman Report, but there is no similarity between the two, except for the contribution from the Post Office to the Treasury. It is interesting to recall the terms of reference of the Bridgeman Committee. To enquire and report as to whether any changes in the constitution, status or system of organisation of the Post Office would be in the public interest. Those were the terms of reference. There is no question in the Bridgeman Report about tariff increases.

I suggest to the right hon. Gentleman that it would have paid him to have looked at the organisation of the Post Office. He might have been in a position to have effected some savings in the organisation of the Post Office, and I am going to tell him why and how.

The Bridgeman Report dealt essentially with organisation, and it recommended that there should be regionalisation of the Post Office. Is the right hon. Gentleman satisfied with the working of regionalisation? Is he sure that there is no duplication of work between the regions and headquarters? How often are queries sent out to the regions and then sent back to the head office for decision? It seems to me that there is definitely duplication.

The right hon. Gentleman may ask why we did not look into this matter when we were in office. In fact, the implications in the Bridgeman Report had not been completely fulfilled when we were in office. There was an interval during the war when reorganisation had ceased. The Postmaster-General ought to look at the working of regionalisation and consider particularly whether it tends to "empire building." I think he will find that it does.

The White Paper tells us that the tariffs are to be increased and it gives reasons. This White Paper shares the increases most inequitably, as I hope to show later. We are to have many more telephones, but at increased cost. The charges will be higher, but the rate of demand will be less. If the right hon. Gentleman looks at the White Paper, and particularly at a graph of the demand for telephones, he will see that before the announcement of these increased rentals and charges, the demand had actually fallen. It is provided that there will be no cuts in capital expenditure, but the right hon. Gentleman is not in a position to give that guarantee at all.

Dr. Hill

The hon. Gentleman says that if I look at the White Paper—and I assume that he refers to Appendix 1—I shall find that the demand had already fallen before the announcement of the increased charges. But I am looking at it, and I can tell the hon. Gentleman that the demand always falls in the second quarter of the year. If he compares the second quarter of this year with the second quarter of last year and of previous years, he will see a steady increase in applications in the second quarter, quite apart from any prospect of increased charges.

Mr. Hobson

Taking comparable periods, I agree, but the fact cannot be denied that the demand is dropping.

There is also the question whether there are to be further cuts in capital expenditure. The right hon. Gentleman is not in a position to inform the House that there will not be further cuts in capital expenditure. Since the Money Measure of 1953, there have been cuts in capital expenditure. The Chancellor of the Exchequer himself announced that there would be no further building of telephone exchanges. Now there has been a reversal of policy. There are to be new telephone exchanges, but they will be built at far greater cost than they would have been had there been no ban. It is part of the result of this policy of stopping the building of telephone exchanges that there will be a greater demand on the capital available to the Post Office.

Throughout this White Paper the datum line taken is 1951. In 1951 there was a change of Government. During his speech the right hon. Gentleman expressed the hope that the Post Office would not be thrown into the turmoil of party politics. Yet there has been the insinuation throughout that since the present Government came into office things have been better. That was particularly so in the speech made by Lord Chesham in another place, who, while not a member of the Government, replied on behalf of the Government, and said: …it is now possible to make a firm plan for three years ahead, and is much better than the present rather hand-to-mouth existence."—[OFFICIAL REPORT, House of Lords, 9th November, 1955; Vol. 194, c. 468.] In fact, there has always been a plan. I remind the right hon. Gentleman what was done when we on this side of the House were the Government. One in three of the telephones in Britain was installed under the Labour Government between 1945 and 1951. More than 66,000 rural telephones were provided. We introduced the shared service, which the right hon. Gentleman is now quite rightly trying to sell. Indeed, that is one of the ways in which he will be able to connect more subscribers.

It is as well to bear in mind that in the United States there are not only two subscribers on one pair of wires but in many cases as many as ten or twelve subscribers. Despite all the difficulties of the immediate post-war situation we did not stop building telephone exchanges, and as a result of our completion of exchanges the right hon. Gentleman is able to reduce the waiting list substantially.

The White Paper contains many descriptive passages about the work of the Post Office. Reference is made to the through switching—the trunk switching—of telephones and telegrams; to co-axial cables; radio links; and submarine repeaters. All that work was started under the Labour Government, except for that on the submarine repeaters which was started during the Coalition Government. Yet the present Government refer to it in the White Paper as though it were something entirely new. It was the natural development of the Post Office as a result of the research taking place, and to include all these descriptive measures in the White Paper, as though they were something new, is mere padding. The right hon. Gentleman claims credit for all of it. I remind him that in presenting the White Paper he has to answer to the House of Commons and he is not speaking on the wireless, where he cannot be answered back.

The right hon. Gentleman is providing £50 million more over two years: that is the extra money in the Post Office and Telegraph (Money) Bill. It is interesting to note that the Consolidated Fund now carries an interest rate of 5 per cent. compared with 4 per cent. when we formed a Government. Taking the increased interest rates into consideration, the right hon. Gentleman, as a result of Government policies, will be unable to provide the same number of telephones for a given amount of capital as we provided when we formed the Government.

The right hon. Gentleman is to provide a million more telephones. Where are they to be provided? The areas where there is the greatest shortage are largely the industrial areas where it is impossible to install new telephones because the exchanges are full. That is entirely a result of the Government's policy in preventing the building of new exchanges.

Inter-town direct dialling is to be introduced. Where is that to be done—only at Bristol? Is it fair to let the people believe that inter-dialling of trunks can take place in all the cities of Britain? Can it be done technically in London, with all the various exchanges, the combinations of numbers and letters, which are involved? This junction switching will be impossible in the London system, and the scheme can be introduced only in very few towns.

I had expected the White Paper to make greater reference to electronic exchanges because, as the hon. and gallant Member for Down, South pointed out, it seems that the development of the Post Office telephone service is likely to take place along those lines. I am not sure that we are not lagging behind both South Africa and the United States in that work, and I ask the Assistant Postmaster-General to tell us whether he thinks it wise to spend this £163 million on the development of the telephone service through the traditional co-axial network rather than on the development of electronics. It seems to be a case in which we should have further information.

There is to be modernisation of the Post Office, but not much modernisation can be done with £12 million, particularly in view of the capital development taking place in the Western District office, and the extension of the underground railway at the moment.

In the White Paper a beautiful mirage has been conjured up, but what is the reality? There is to be a £5 million contribution to the Treasury. We do not quibble about that at all. In fact, as my right hon. Friend said, we consider there should be a contribution from the Post Office to the Treasury in lieu of Income Tax repayments and in lieu of Purchase Tax. It is right and proper that the Post Office should make its contribution. We are perfectly in agreement with the statement in the White Paper that anything in excess of £5 million should be used for the purposes of the Post Office Fund. My right hon. Friend the Member for Dearne Valley (Mr. Wilfred Paling) has advocated the resuscitation of the Post Office Fund because of the obvious advantage that if we are able to effect capital development out of earnings which we are able to put on one side we should effect considerable saving in interest charges.

The increased depreciation contribution of 12½ million makes a depreciation contribution total of £43 million instead of £29 million. In our view the depreciation contribution should be increased, but we are not in agreement that there should be a further increase of £12½ million. We consider that is far too much.

Dr. Hill

I should be grateful if the hon. Member would elucidate this point. He says that he agrees about the wages element, which amounts to £8 million. He says he agrees about the Bridgeman element, which is £5 million plus £5 million surplus. Now he says he agrees about some of the increase in depreciation to be set aside. Is he not showing an utter conflict with his right hon. Friend the Member for Caerphilly (Mr. Ness Edwards), who agreed with not one of those things?

Mr. Hobson

Not at all; it was with the amount that my right hon. Friend was quarrelling.

Obviously, if the price of replacement of telephone apparatus is very high, the cost is great, and it is only right and proper that in accounting the depreciation should be written off. New plant in itself can effect savings. With reference to co-axial cables the right hon. Gentleman said in his statement on Friday: 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."—[OFFICIAL REPORT, 11th November, 1955; Vol. 545, c. 2146.] We have to take into consideration the fact that we can get more revenue with less expenditure. Therefore, to write up arbitrarily the figure of £12½ million is altogether wrong. Perhaps in his reply the Assistant Postmaster-General will tell us on what basis that £12½ million is founded.

There is the further fact, on the subject of the tariffs, that to provide the £5 million which has to be contributed to the Exchequer, plus the outstanding wages award, plus the fact that the Post Office has had to provide about £50 million since the end of the war for increased wages, increased costs and prices, there obviously has to be some revision of an upward trend in the price of certain services, but we should make our position clear on that.

We certainly would have maintained the 2½d. post, and the right hon. Gentleman is entitled to do that. Having said that, however, I would add that it is fairly obvious that he has scraped the barrel. Since 1951, every charge as gone up, with the exception of the 2½d. post. Let us review them. There has been the increase in the poundage on money orders and postal orders and the increased charges for registered post, parcels and telegrams. Now, even the express letter, which hitherto was priced at 6d. a mile, is to go up to 1s. We were quite aware of that anomaly but it was one of those prices that we kept in the "ice box." No longer will the express letter delivered by hand share the same distinction as the platform ticket in keeping its pre-war price.

Our real quarrel with the right hon. Gentleman is on telephone rentals. There is to be a 25 per cent. increase in London, a 50 per cent. increase in the provinces and a 30 per cent. increase in the four large cities. This will result in a profit of 18s. per annum on each installation in London, a loss of £3 16s. in all the provincial areas and a profit of 6s. in the four large provincial cities. We consider that to be unfair to the large cities. It is unfair that there should be this redistribution to such an extent that London and the large cities have to bear the burden. There would be nothing wrong in evening it out. Postage rates, whether for letters or parcels, are evened out. It is quite normal for profits which are made in some areas to be allocated to those areas which sustain a loss. The right hon. Gentleman cannot expect every area to pay for itself.

What is the profit on the trunk service? It is the most profitable service of the Post Office, but we have not been given the figure. That service is considerably cheaper to install than before the war. It is certainly neither fair nor equitable that every section should pay for itself. By the right hon. Gentleman's own reasoning, because of the profit that accrues from the trunk network and the fact that it is cheaper to install, it is only fair to say that part of the profit from the trunk service should be allocated to the residential subscriber.

After all, the telephone service is not incurring a loss, nor, according to the forecast, will it make a loss in 1955–56. We are not prepared to accept a situation in which the trunk service makes tremendous profits but none of that profit is to be allocated to the private residential subscriber. By applying the right hon. Gentleman's same argument that every service in the Post Office must pay its way, there should be a reduction in trunk charges, because the trunk service is highly profitable.

Granting the necessity for an increase in the telephone rental, although, for the reasons I have given, we think that the increase is being unfairly distributed, could there not be some arrangement to increase the number of free calls to the residential subscriber? Why cannot the present number of 100 free calls per annum be increased to 150? If the calling mechanism is not being used, it is idle, and it might as well be used. Its wear and tear would not be very great, it is automatic. The right hon. Gentleman should address himself to this aspect. His doctrinaire approach in making every section of the service pay its way is tantamount to grave injustice.

There are one or two questions I desire to ask about the charges. Why are we now to be charged for refusing overseas calls? Could the right hon. Gentleman inform me under which Schedule to the Regulations that is to be done? That is an entirely new departure. It is quite new to charge for such a refusal, and I should like to know where the authority for that is in the Regulations.

In the Seventh Schedule to the Regulations is stipulated the amount of cable that can be provided free. We should like to know whether the amount of cable at present provided free has been reduced or not. It is apparent from a scrutiny of the Regulations that the charge for every single item has been increased, and increased considerably.

In the Third Schedule there is described seriatim every part of the telephone apparatus and the price that has to be paid, but we are not told the existing prices, and so we cannot make a comparison. That is the unfortunate position in which the right hon. Gentleman has placed us. I said, when speaking of the charges for the general services, that the right hon. Gentleman had scraped the barrel. He has certainly scraped the barrel in making the charges for spare parts for telephone equipment.

A matter which has not been sufficiently discussed, and which, perhaps, has not been sufficiently understood is that certain services of the Post Office still bear a subsidy, and I am thinking of MacBrayne's contract, for which there is a heavy subsidy. We have always supported it, but it is an example of certain sections of the Post Office services which are not paying and cannot possibly pay.

We cannot accept the right hon. Gentleman's doctrinaire approach. It is a fact, as we have said, that had we on this side of the House been the Government we should have had to face a similar problem to that which the right hon. Gentleman has to face because of the increases in costs, but for some of those increases the Government are directly responsible. There would have had to be some increase in prices. We cannot expect the Post Office to be in a position entirely different from that of private industry or of the other nationalised industries. However, we think that the way in which the right hon. Gentleman has gone about the task is very unfair, and unfair in particular to the private subscribers.

It is no use the right hon. Gentleman saying that the telephone is a luxury. It is not. It is a facility. It is thoroughly unfair that a profit should be made out of London and the four large provincial cities and out of the trunk services, instead of the burden being spread more widely and equitably. Had that policy been followed the right hon. some would have been able to some extent to have cut the increase in the charges. The figure is far too high. It could have been very much less.

The right hon. Gentleman, I am sure, has not scrutinised these increased charges as thoroughly as he ought to have done. He has been concerned with making money as quickly as possible. I urge him to consider the matter again. If he does so he will agree, I think, that his proposals are unfair to the private residential subscribers. It is unfair that they should bear such a proportion of the burden. In view of this "historical" White Paper we shall have to watch the right hon. Gentleman's actions in future very carefully indeed. Clearly, they will call for the closest investigation.

9.25 p.m.

The Assistant Postmaster-General (Mr. David Gammans)

This has been a useful and very pleasant debate. Criticisms and suggestions have been made from all sides of the House. I shall do my best to deal with some of the points that have been raised. When the right hon. Member for Caerphilly (Mr. Ness Edwards) makes one of his famous speeches, I am not quite sure how far he has his tongue in his cheek, because he always tries to pretend that he does not understand matters.

If the right hon. Gentleman does not understand, I must remind the House that the right hon. Gentleman was Postmaster-General for some years and that the basis of Post Office finance is exactly the same today as it was in his day. If the right hon. Gentleman says that he does not understand Post Office finance now, I must assume that he did not understand it then, but I am sure that the right hon. Gentleman does not mean that. I am sure that he puts up these points only to try to befuddle some of his hon. Friends. The hon. Member for Keighley (Mr. Hobson) was certainly not befuddled on the question of replacements and replacement costs, on which he spent so much time.

We have heard the old story about the Post Office being the milch cow of the Treasury. If it is the mulch cow, all I can say is that the Treasury is getting less milk out of it now than it did in the days of the right hon. Member for Caerphilly. The Treasury then obtained £15 million a year and I do not remember the right hon. Gentleman at that time objecting to the milch cow or anything to do with it. The right hon. Gentleman talks about the Treasury and contributions to the Treasury as though we were talking about reparations to a foreign Power and as something over which we have no control whatsoever. Even if the Treasury obtains a contribution from the Post Office, the Treasury is at least a national organisation from which all of us benefit in some way or another.

Mr. Ness Edwards

Does the hon. Gentleman now say, "It does not matter what you pay for Post Office facilities and how high the charges are, because you have the consolation that you pay to the Treasury"?

Mr. Gammans

I am not suggesting that at all, but the right hon. Gentleman spoke about the Treasury as though it were a foreign Power to which we were paying reparations.

The next point with which the right hon. Gentleman dealt was the timing of the charges. He said that they had been brought forward by the Chancellor of the Exchequer. I do not know whether the right hon. Gentleman was in the House when his hon. Friend the Member for Kilmarnock (Mr. Ross) was speaking. If he was, the hon. Member for Kilmarnock answered him. These matters were discussed by the Post Office Advisory Council as early as last February. They were discussed in general and now we have come along with our exact details.

Mr. Ross

No. My own memory of that occasion is probably a little better than that of the Assistant Postmaster-General. We discussed, purely, particular problems.

Mr. Gammans

I am prepared to admit that they were discussed in some detail, but I am refuting the point made by the right hon. Member for Caerphilly when he suggested that telephone charges were brought forward by the Chancellor of the Exchequer in his autumn Budget because they were not thought of before. That is factually not true.

The right hon. Member for Caerphilly made terrific play of one point when he pretended that he did not understand the difference between £160 million and £300 million. I cannot imagine that he could ever have studied Post Office finance or anybody else's finance. The difference is between new capital on the one hand and new capital and renewals on the other, but the right hon. Member pretended that in some mysterious way the Treasury had walked off with £200 million from the Post Office. I do not pretend to follow his reasoning. He said that £200 million was "filched" by the Treasury from the Post Office.

I must try to explain this, because it is the basis of the point that was raised by the hon. Member for Openshaw (Mr. W. R. Williams). This £200 million is the depreciation fund which remains in the hands of the Treasury from which the Post Office draws funds when it requires them for renewal of plant. While it is in the hands of the Treasury it pays to the Post Office the current rate of interest. The extra f12½ million to which the right hon. Gentleman referred will go into that Fund in order to increase the accounts for depreciation, and on that as well interest will be paid. So there is no question of the Treasury walking off with Post Office money and filching money from the Post Office and not paying interest on it.

Mr. Edwards

Will the hon. Gentleman tell us in which year since he has been Assistant Postmaster-General the Post Office has drawn any money from the notional depreciation account?

Mr. Gammans

It has drawn it every year. Really, if the right hon. Gentleman does not know where the Post Office gets its renewal fund from he had better think about it again.

Mr. Edwards

The Assistant Postmaster-General cannot get away with that. The commercial accounts have been published. I ask him to show me in those accounts where it is.

Mr. Gammans

All renewals in respect of the Post Office are paid for out of this renewal fund which is kept by the Treasury. That is the explanation of the alleged £200 million which the right hon. Gentleman thinks has been filched from us.

The right hon. Gentleman's next point was about the £5 million working balance. He seemed to think that this was another charge by the Treasury; in fact, I think he said it was. This £5 million is a working balance which an organisation of the size of the Post Office must keep. If it can be criticised at all it can be criticised as being on the low side, certainly not for being on the high side. Whatever the sum is that we put aside as a working balance goes into our accounts with the Treasury and can be drawn on by the Post Office the following year. It does not disappear down a drain, as the right hon. Gentleman suggested.

Lastly, we come to the question of what the Post Office spends on defence. I thought that when the right hon. Gentleman raised this matter last Friday I satisfied him on it.

Mr. Ness Edwards indicated dissent.

Mr. Gammans

The right hon. Gentleman should read HANSARD.

Whatever is expended by the Post Office on defence is chiefly in respect of private lines which are hired by the defence Departments and paid for in exactly the same way as everybody else would pay for a private line. So there is no loss whatever on the Post Office Account in respect of the defence expenditure. If there is a loss, it is not a financial loss. The loss is the cost of the need for the defence of the country. We are doing capital works which we should not do in that order if it were not for the defence needs.

What I cannot understand is that the right hon. Gentleman, who was responsible in his day for the biggest defence programme the Post Office has ever carried out, does not understand the way in which the business is financed.

Mr. Edwards

The Assistant Postmaster-General had this question put to him on Friday. He was asked specifically then, he was asked again tonight, to show in the commercial accounts what is paid on account of defence expenditure. All he has done is to dismiss it in an airy-fairy way.

Mr. Gammans

When we are discussing the commercial accounts of the Post Office I shall be pleased to deal with this point. Meanwhile, I am trying to explain to the right hon. Gentleman the basis upon which the defence expenditure is met, in which he himself played a most prominent part.

I will now deal with the points raised by my hon. Friend the Member for Essex, South-East (Mr. Braine) and the hon. Member for Lewisham, North (Sir A. Hudson). I thought my right hon. Friend had dealt with the point about the printed paper rate.

Mr. Austen Albu (Edmonton)

Before the hon. Gentleman leaves the question of the additional cost put on the Post Office, will he say something about additional provision for pension liability and why it is considered necessary for the Post Office to have to bear charges for any ascertained deficiency in its provisions,amounting to more than £80 million, when there is nothing but a purely hypothetical fund?

Mr. Gammans

If the hon. Gentleman will wait, I shall deal with that later. I do not think the hon. Member was present for most of the discussion.

Mr. Albu

I was here for the whole of the Postmaster-General's speech.

Mr. Gammans

Perhaps I may deal with the question of the printed paper rate. Both hon. Gentlemen regretted that the rate has had to go up. We also regret it. The fact is that we are losing £2 million per year on it, and when one is looking around for sources of additional revenue that is one of the items which must be tackled. My hon. Friend the Member for Essex, South-East said that we were also losing money on newspapers. [AN HON. MEMBER: "And on football pools."] No, we are not losing money on football pools; we are making money on them.

My right hon. Friend dealt with the point about the newspapers and made it clear that there is no real fundamental justification for not raising the additional money from the newspapers. The only justification is an historic one, namely, that it has always been the attitude of the House that people, especially those living in remote country districts, should get newspapers as cheaply as possible. It would be a break with our tradition if we departed from that.

Mr. Braine

Will my hon. Friend make allowance for the fact that my charge was that discrimination was being made against a particular kind of newspaper, namely, one that does not fall within the definition in the Post Office Guide? Will he say how that can be justified?

Mr. Gammans

It is true that a discrimination is being made against any periodical which is published only at longer periods than seven days. My right hon. Friend gave an explanation for that. My hon. Friend raised another point which I thought was even more important. He thought that the timing of this was unfortunate. I will have another look at it and see whether it is possible to do anything about it.

The right hon. Member for Brighouse and Spenborough (Mr. J. Edwards) raised the question of the difference between wages and earnings. I think he meant the difference between wage rates and what we regard as earnings, which is wage rates plus what men might make in overtime. He also asked whether the Post Office regarded increased efficiency as justification for raising wages. That matter is under consideration by the Royal Commission, and until it has reported it would be improper for me to make any statement about it. I can reassure the right hon. Gentleman on one point. He asked whether there was any difference between "programme" and "detailed programme." I can assure him that there is none, except that I think "programme" means slightly more freedom for the Post Office.

Mr. J. Edwards

I asked a specific question. Actually, it was not I who was confused about wage rates. The document talks about "average wages." Is that to be understood as "average rates"? On the question of earnings, I asked whether it was average earnings. Those are two simple questions to which I should like answers.

Mr. Gammans

The right hon. Gentleman is correct; "average rates" means "average wage rates."

The right hon. Gentleman's third point was that the Post Office should have more freedom in wage negotiations than it has had in the past. I would remind the right hon. Member that we have to keep in step with the Civil Service, if for no other reason than that many of our servants are under Civil Service regulations.

I am very grateful to my hon. Friend the Member for Cheadle (Mr. Shepherd) for what he said about the Post Office services. He paid the best tribute in the House today to the Post Office services when he said that they were the best and cheapest in the world. That is true; they are the best and the cheapest. He went on to ask why we did not borrow money in the open market. If we did, we should not get it more cheaply. In fact, it would cost the Post Office more, because we would have to bear brokerage and other charges. At present, we borrow money at the cheapest possible rate. My hon. Friend thought that charges, especially to residential subscribers, were still low. He pointed out that we were still subsidising residential subscribers to a very considerable extent and said that there was no justification for that.

The hon. Member for Newton (Mr. Lee) thought that the Post Office had too many disputes settled by arbitration and said that none of our disagreements with the staff had been settled, except by arbitration. That is not so, because of 16 disputes since the war, four were settled by agreement and 12 by arbitration. The fact that 12 have been settled by arbitration is no disgrace to the Post Office or union concerned. There is nothing wrong with arbitration.

Mr. Lee

Does the hon. Member think that it is normal industrial procedure to have only four out of 16 disputes settled by negotiators while 12 are taken completely out of the hands of the negotiators and taken to arbitration?

Mr. Gammans

I do not want to argue with the hon. Member, especially about industrial disputes in general, but I can see nothing derogatory to either side if a case goes to arbitration.

Mr. J. Edwards

In the case of two awards for the engineering grades earlier this year, when the tribunal gave substantial awards, was it right that the Post Office made no offer at all to the unions?

Mr. Gammans

The right hon. Member for Brighouse and Spenborough has reminded me of a case which I cannot now recollect. However, I am referring only to the point raised by the hon. Member for Newton, who suggested that there was something derogatory in submitting a case to arbitration. I cannot accept that.

The last point which the hon. Member for Newton made was about the exclusive arrangements with certain contracting firms. This point was raised on Friday and was answered fairly fully. If the hon. Member cares to look it up in the OFFICIAL REPORT, I think that that reply will satisfy him.

Mr. Lee

I was particularly concerned with firms outside the ring. Is the Post Office now contracting with them?

Mr. Gammans

Yes, we are offering 10 per cent. to firms outside the ring, but we have found in many cases that we cannot get tenders from such firms; but the offer is open and I hope that more firms who are outside the ring will tender for the opportunities for contracts which the Post Office is prepared to offer.

My hon. Friend the Member for Kidderminster (Mr. Nabarro) referred to telephones in the countryside and asked why we did not attach telephone cables to electric pylons. We have agreed with the Central Electricity Authority to utilise one pole for the two services to a far greater extent than ever before. My hon. Friend will realise that almost every rural telephone is installed at very great loss. My right hon. Friend mentioned the amount which we lose on rural kiosks. The fact is that there has been tremendous rural telephone development in the past few years. As I told the House on Friday, a very large number of farmers have been put on the telephone in the past few years.

The hon. Member for Openshaw raised the question of telegraph charges. The reason we put those charges up is that we were losing 3s. on every telegram. We are still losing 1s. 9d. on every telegram sent. He spoke about people in trouble sending telegrams; I can assure the hon. Member that only 1 per cent. are what we may call "life-and-death" telegrams.

Mr. W. R. Williams

I said that people were not sending telegrams because of the price. The hon. Gentleman cannot have it both ways and include that fact on the other side as well.

Mr. Gammans

We simply cannot go on losing 3s. on every telegram that we send. The Post Office used to get 2s., and the telegram cost 5s. to send.

I come to the remarks of the hon. Member for Keighley. He asked whether we were satisfied with the reorganisation of the Post Office and whether "empire building" was still going on. No, we have no reason to suppose that it is. We regard the regional type of organisation of the Post Office as having fulfilled the purpose of those who recommended it. The hon. Gentleman came to the £12½ million based on the cost of renewal, and asked why, since co-axial cables were cheaper, it was necessary to put aside £12½ million. Unfortunately, co-axial cables are the only things which are cheaper. Everything else—instruments, wire, repeaters—is much dearer and has gone up very considerably in price. Merely because one item has become cheaper is no justification for cutting out the cost of depreciation.

Mr. Ross

rose—

Mr. Gammans

I must ask the hon. Gentleman to let me proceed. I have given way to every interrupter up to now and I must make my point.

There are two questions which the debate has to decide. One is whether the House accepts the necessity for the Post Office to raise more revenue to meet its higher charges. I gather that the right hon. Member for Caerphilly is prepared to accept in part the increased cost of wages, but not anything else. I am not quite sure whether or not I have convinced the right hon. Gentleman that the Treasury has not walked off with £200 million.

The second thing that has to be decided is whether the method that we have suggested to the House for raising the additional revenue is fair and equitable. The necessity for raising more revenue comes under the headings of the higher wages and the additional charges which the Post Office has to bear for depreciation. We could have taken the easy way out in the past when faced with additional charges and have laid them on the public. It is to the credit of the Post Office—I am sure every part of the House will agree—that we have not laid them on the public but have managed to absorb some part of the increased costs by internal economies and by the increased traffic which the Post Office attracts to itself every year.

Before I deal with whether or not we have the proper basis for increasing the charges, I hope that the House is satisfied with the new arrangements under the Bridgeman formula for the £5 million to the Treasury. Before the war the amount was £10 million or more, and it was based upon a far smaller turnover and a far different ratio of prices to cost. I regard the present proposal as satisfactory, and I hope that the House does so, too.

May I deal with the comparison in charges between ourselves and other countries? I know that there are some hon. Members who think that we have the highest telephone charges of any country. I am glad to say that that is not true. It was not true before, and it will not be true under the new rates. It is not easy to make an exact comparison between foreign countries, because few countries compute their telephone charges on the same basis. For example, some do not have any free calls at all. I was asked why we do not have more free calls. If we did have more, we should have to have higher rentals. Other countries have a greater allowance of free calls for a correspondingly higher rental.

In some countries both residential and private subscribers pay the same, but a residential subscriber in a large provincial town in this country who, for example, had 500 calls a year, would pay £12 6s. 8d. In Philadelphia, in the United States of America, he would pay £17.

Mr. Herbert Morrison (Lewisham, South)

That is under private enterprise.

Mr. Gammans

I am not making a case either for or against private ownership.

In Sweden such a man would pay £9 8s., but, apart from that, it would cost him £14 to have his telephone installed. In France, the annual cost would be £18 and the installation charge would be £12. Another example is that of a business man having 2,000 calls a year. He would pay just over £27 in this country; £37 in America; £15 in Sweden and £40 in France. Against that there would be heavy installation charges. It boils down to this: although we have had to increase the telephone charges in this country to meet the increased costs arising from wages and depreciation costs, our telephone service is, by and large, among the cheapest in the world.

If I may summarise, we are faced with the problem of raising £25¾ million from various sources. That figure includes £8 million for wages; £12½ million additional depreciation on telephones; and £5 million to cover contributions to the Exchequer. It is always unpalatable to have to raise charges on anything, but I hope that this debate will have convinced the House of three things. First, that in spite of rising costs, we have managed to conduct our affairs with reasonable efficiency and economy. Secondly, we should not be doing our duty if we did not put the telephone and postal services nearer to a self-supporting basis than they have been over late years. Thirdly, that by the creation of the new Bridgeman formula of £5 million a year contribution to the Treasury, we have secured an arrangement which will not only conduce to keenness on the part of our staff, but will also remove any feelings or misgivings that we in the Post Office are acting as tax collectors for the Government.

Mr. Albu

Would the hon. Gentleman say what is the contribution to the past efficiency of the hypothetical pensions fund?

Question put:—

The House divided: Ayes 274, Noes 225.

Division No. 39.]	AYES	[9.55 p.m.
Agnew, Cmdr. P. G.	Ashton, H.	Baxter, Sir Beverley
Aitken, W. T.	Atkins, H. E.	Beamish, Maj. Tufton
Alian, R. A. (Paddington, S.)	Baldock, Lt.-cmdr. J. M.	Beattie, C.
Alport, C. J. M.	Baldwin, A. E.	Bell, Philip (Bolton, E.)
Amery, Julian (Preston, N.)	Balniel, Lord	Bevins, J. R. (Toxteth)
Amory, Rt. Hn. Heathcoat (Tiverton)	Banks, Col. C.	Bidgood, J. C.
Anstruther-Gray, Major W. J.	Barber, Anthony	Biggs-Davison, J. A.
Arbuthnot, John	Barlow, Sir John	Birch, Rt. Hon. Nigel
Armstrong, C. W.	Barter, John	Bishop, F. P.
Black, C. W.	Hill, John (S. Norfolk)	Orr, Capt. L. P. S.
Body, R. F.	Hinchingbrooke, Viscount	Orr-Ewing, Charles Ian (Hendon, N.)
Boothby, Sir Robert	Hirst, Geoffrey	Page, R. G.
Bossom, Sir A. C.	Holland-Martin, C. J.	Pannell, N. A. (Kirkdale)
Boyd-Carpenter, Rt. Hon. J. A.	Hope, Lord John	Partridge, E.
Boyle, Sir Edward	Hopkinson, Rt. Hon. Henry	Peake, Rt. Hon. O.
Braithwaite, Sir Albert (Harrow, W.)	Hornsby-Smith, Miss M. P.	Peyton, J. W. W.
Brooke, Rt. Hon. Henry	Horobin, Sir Ian	Pickthorn, K. W. M.
Brooman-White, R. C.	Horsbrugh, Rt. Hon. Dame Florence	Pilkington, Capt. R. A.
Browne, J. Nixon (Craigton)	Howard, Hon. Greville (St. Ives)	Pitman, I. J.
Bryan, P.	Howard, John (Test)	Pott, H. P.
Bullus, Wing Commander E. E.	Hudson, Sir Austin (Lewisham, N.)	Powell, J. Enoch
Burden, F. F. A.	Hughes Hallett, Vice-Admiral J.	Price, Henry (Lewisham, W.)
Butcher, Sir Herbert	Hughes-Young, M. H. C.	Prior-Palmer, Brig. O. L.
Campbell, Sir David	Hulbert, Sir Norman	Profumo, J. D.
Carr, Robert	Hurd, A. R.	Raikes, Sir Victor
Cary, Sir Robert	Hutchison, James (Scotstoun)	Ramsden, J. E.
Channon, H.	Hylton-Foster, Sir H. B. H.	Rawlinson, P. A. G.
Clarke, Brig. Terence (Portsmth, W.)	Iremonger, T. L.	Redmayne, M.
Cole, Norman	Irvine, Bryant Godman (Rye)	Rees-Davies, W. R.
Cooper, Sqn. Ldr. Albert	Jenkins, Robert (Dulwich)	Remnant, Hon. P.
Cordeaux, Lt.-Col. J. K.	Jennings, J. C. (Burton)	Renton, D. L. M.
Corfield, Capt. F. V.	Johnson, Dr. Donald (Carlisle)	Ridsdale, J. E.
Craddock, Beresford (Spelthorne)	Johnson, Eric (Blackley)	Rippon, A. G. F.
Crookshank, Capt. Rt. Hn. H. F. C.	Jones, A. (Hall Green)	Roberts, Peter (Heeley)
Crosthwaite-Eyre, Col. O. E.	Joynson-Hicks, Hon. L. W.	Robertson, Sir David
Crowder, Sir John (Finchley)	Kaberry, D.	Robinson, Sir Roland (Blackpool, S.)
Crowder, Petre (Ruislip—Northwood)	Keegan, D.	Rodgers, John (Sevenoaks)
Cunningham, Knox	Kerby, Capt. H. B.	Roper, Sir Harold
Currie, G. B. H.	Kerr, H. W.	Ropner, Col. Sir Leonard
Dance, J. C. G.	Kershaw, J. A.	Schofield, Lt.-Col. W.
D'Avigdor-Goldsmid, Sir Henry	Kirk, P. M.	Scott-Miller, Cmdr. R.
Deedes, W. F.	Lagden, G. W.	Sharpies, Maj. R. C.
Digby, Simon Wingfield	Lambert, Hon. G.	Shepherd, William
Dodds-Parker, A. D.	Lancaster, Col. C. G.	Simon, J. E. S. (Middlesbrough, W.)
Donaldson, Cmdr. C. E. McA.	Langford-Holt, J. A.	Smithers, Peter (Winchester)
Doughty, C. J. A.	Leavey, J. A.	Smyth, Brig. J. G. (Norwood)
Drayson, G. B.	Leburn, W. G.	Soames, Capt. C.
Duthie, W. S.	Legge-Bourke, Maj. E. A. H.	Spearman, A. C. M.
Eccles, Rt. Hon. Sir David	Legh, Hon. Peter (Petersfield)	Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Eden, J. B. (Bournemouth, West)	Lindsay, Hon. James (Devon, N.)	Stevens, Geoffrey
Elliot, Rt. Hon. W. E.	Linstead, Sir. H. N.	Steward, Harold (Stockport, S.)
Emmet, Hon. Mrs. Evelyn	Lloyd, Maj. Sir Guy (Renfrew, E.)	Steward, Sir William (Woolwich, W.)
Errington, Sir Eric	Lloyd-George, Maj. Rt. Hon. G.	Stewart, Henderson (Fife, E.)
Farey-Jones, F. W.	Lucas, Sir Jocelyn (Portsmouth, S.)	Storey, S.
Fell, A.	Lucas, P. B. (Brentford & Chiswick)	Summers, G. S. (Aylesbury)
Finlay, Graeme	Lucas-Tooth, Sir Hugh	Sumner, W. D. M. (Orpington)
Fisher, Nigel	McAdden, S. J.	Taylor, William (Bradford, N.)
Fleetwood-Hesketh, R. F.	Macdonald, Sir Peter	Teeling, W.
Fletcher-Cooke, C.	Mackeson, Brig. Sir Harry	Thomas, Rt. Hn. J. P. L. (Hereford)
Foster, John	McKibbin, A. J.	Thomas, Leslie (Canterbury)
Fraser, Sir Ian (M'cmbe & Lonsdale)	Mackie, J. H. (Galloway)	Thomas, P. J. M. (Conway)
Freeth, D. K.	Maclay, Rt. Hon. John	Thompson, Kenneth (Walton)
Galbraith, Hon. T. G. D.	Maclean, Fitzroy (Lancaster)	Thompson, Lt.-Cdr. R. (Croydon, S.)
Gammans, L, D.	McLean, Neil (Inverness)	Thorneycroft, Rt. Hon. P.
Garner-Evans, E. H.	Macleod, Rt. Hn. Iain (Enfield, W.)	Thornton-Kemsley, C. N.
Glover, D.	MacLeod, John (Ross & Cromarty)	Tiley, A. (Bradford, W.)
Godber, J. B.	Macmillan, Maurice (Halifax)	Touche, Sir Cordon
Gough, C. F. H.	Maddan, Martin	Turton, Rt. Hon. R. H.
Gower, H. R.	Maitland, Cdr. J. F. W.(Hornoastle)	Tweedsmuir, Lady
Graham, Sir Fergus	Manningham-Buller, Rt. Hn. Sir R.	Vaughan-Morgan, J. K.
Grant, W. (Woodside)	Markham, Major Sir Frank	Vickers, Miss J. H.
Grant-Ferris, Wg Cdr. R. (Nantwich)	Marlowe, A. A. H.	Vosper, D. F.
Green, A.	Marples, A. E.	Wakefield, Edward (Derbyshire, W.)
Gresham Cooke, R.	Marshall, Douglas	Walker-Smith, D. C.
Grimston, Hon. John (St. Albans)	Mathew, R.	Wall, Major Patrick
Grimston, Sir Robert (Westbury)	Maude, Angus	Ward, Hon. George (Worcester)
Gurden, Harold	Maudling, Rt. Hon. R.	Ward, Dame Irene (Tynemouth)
Hall, John (Wycombe)	Mawby, R. L.	Waterhouse, Capt. Rt. Hon. C.
Hare, Hon. J. H.	Maydon, Lt.-Comdr. S. L. C.	Watkinson, H. A.
Harris, Frederic (Croydon, N.W.)	Milligan, Rt. Hon. W. R.	Whitelaw, W. S. I. (Penrith & Border)
Harris, Reader (Heston)	Molson, A. H. E.	Williams, Gerald (Tonbridge)
Harrison, A. B. C. (Maldon)	Moore, Sir Thomas	Williams, Paul (Sunderland, S.)
Harvey, Ian (Harrow, E.)	Mott-Radclyffe, C. E.	Williams, R. Dudley (Exeter)
Harvey, John (Walthamstow, E.)	Nabarro, G. D. N.	Wills, G. (Bridgwater)
Harvie-Watt, Sir George	Nairn, D. L. S.	Wilson, Geoffrey (Truro)
Hay, John	Neave, Airey	Woollam, John Victor
Head, Rt. Hon. A. H.	Nicholson, Godfrey (Farnham)	Yates, William (The Wrekin)
Heald, Rt. Hon. Sir Lionel	Nicolson, N. (B'n'm'th, E. & Chr'ch)
Heath, Edward	Nield, Basil (Chester)	TELLERS FOR THE AYES:
Henderson, John (Cathcart)	Nugent, G. R. H.	Mr. Studholme and
Hicks-Beach, Maj. W. W.	Nutting, Rt. Hon. Anthony	Colonel J. H. Harrison.
Hill, Rt. Hon. Charles (Luton)	Oakshott, H. D.
Hill, Mrs. E. (Wythenshawe)	O'Neill, Hn. Phelim (Co. Antrim, N.)

NOES
Alnsley, J. W.	Griffiths, David (Rother Valley)	Pargiter, G. A.
Albu, A. H.	Griffiths, Rt. Hon. James (Llanelly)	Parker, J.
Allaun, Frank (Salford, E.)	Grimond, J.	Parkin, B. T.
Allen, Arthur (Bosworth)	Hale, Leslie	Paton, J.
Allen, Scholefield (Crewe)	Hall, Rt. Hn. Glenvil (Colne Valley)	Peart, T. F.
Anderson, Frank	Hamilton, W. W.	Plummer, Sir Leslie
Attlee, Rt. Hon. C. R.	Hannan, W.	Price, J. T. (Westhoughton)
Awbery, S. S.	Harrison, J. (Nottingham, N.)	Price, Philips (Gloucestershire, W.)
Bacon, Miss Alice	Hastings, S.	Probert, A. R.
Baird, J.	Hayman, F, H.	Proctor, W. T.
Bartley, P.	Healey, Denis	Pursey, Cmdr. H.
Bellenger, Rt. Hon. F. J.	Henderson, Rt. Hn. A. (Rwly Regis)	Rankin, John
Bence, C. R. (Dunbartonshire, E.)	Herbison, Miss M.	Reeves, J.
Benn, Hn. Wedgwood (Bristol, S.E.)	Hewitson, Capt. M.	Reid, William
Benson, G.	Hobson, C. R.	Roberts, Albert (Normanton)
Bevan, Rt. Hon. A. (Ebbw Vale)	Holman, P.	Robinson, Kenneth (St. Pancras, N.)
Blackburn, F.	Holmes, Horace	Rogers, George (Kensington, N.)
Blenkinsop, A.	Houghton, Douglas	Ross, William
Blyton, W. R.	Hoy, J. H.	Royle, C.
Boardman, H.	Hughes, Cledwyn (Anglesey)	Shinwell, Rt. Hon. E.
Bottomley, Rt, Hon. A. G.	Hughes, Emrys (S. Ayrshire)	Short, E. W.
Bowden, H. W. (Leicester, S.W.)	Hughes, Hector (Aberdeen, N.)	Shurmer, P. L. E.
Bowen, E. R. (Cardigan)	Hunter, A. E.	Silverman, Julius (Aston)
Bowles, F. G.	Hynd, H. (Accrington)	Silverman, Sydney (Nelson)
Boyd, T. C.	Hynd, J. B. (Attercliffe)	Simmons, C. J. (Brierley Hill)
Braddock, Mrs. Elizabeth	Irving, S. (Dartford)	Skeffington, A. M.
Brockway, A. F.	Isaacs, Rt. Hon. G. A.	Slater, Mrs. H. (Stoke, N.)
Broughton, Dr. A. D. D.	Janner, B.	Slater, J. (Sedgefield)
Brown, Rt. Hon. George (Belper)	Jeger, George (Goole)	Smith, Ellis (Stoke, S.)
Brown, Thomas (Ince)	Jenkins, Roy (Stechford)	Snow, J. W.
Burke, W. A.	Jones, Rt. Hon. A. Creech (Wakefield)	Sorensen, R. W.
Burton, Miss F. E.	Jones, David (The Hartlepools)	Sparks, J. A.
Butler, Herbert (Hackney, C.)	Jones, Elwyn (W. Ham, S)	Steele, T.
Butler, Mrs. Joyce (Wood Green)	Jones, Jack (Rotherham)	Stewart, Michael (Fulham)
Callaghan, L. J.	Jones, J. Idwal (Wrexham)	Stokes, Rt. Hon. R. R. (Ipswich)
Carmichael, J.	Jones, T. W. (Merioneth)	Stones, W. (Consett)
Champion, A. J.	Kenyon, C.	Strachey, Rt. Hon. J.
Chapman, W. D.	Key, Rt. Hon. C. W.	Strauss, Rt. Hon. George (Vauxhall)
Chetwynd, G. R.	King, Dr. H. M.	Stross, Dr.Barnett(Stoke-on-Trent,C.)
Coldrick, W.	Ledger, R. J.	Summerskill, Rt. Hon. E.
Collick, P. H. (Birkenhead)	Lee, Frederick (Newton)	Swingler, S. T.
Collins, V. J.(Shoreditch & Finsbury)	Lever, Leslie (Ardwick)	Sylvester, G. O.
Corbet, Mrs. Freda	Lewis, Arthur	Taylor, Bernard (Mansfield)
Craddock, George (Bradford, S.)	Lindgren, G. S.	Taylor, John (West Lothian)
Cronin, J. D.	Lipton, Lt.-Col. M.	Thomson George (Dundee E.)
Crossman, R. H. S.	Logan, D. C.	Thornton, E.
Cullen, Mrs. A.	MacColl, J. E.	Timmons, J.
Daines, P.	McGhee, H. G.	Tomney, F.
Dalton, Rt. Hon. H.	McInnes, J.	Turner-Samuels, M.
Davies, Ernest (Enfield, E.)	McKay, John (Wallsend)	Ungoed-Thomas, Sir Lynn
Davies, Stephen (Merthyr)	McLeavy, Frank	Viant, S. P.
Deer, G.	MacMillan, M. K. (Western Isles)	Wade, D. W.
de Freitas, Geoffrey	Macpherson, Malcolm (Stirling)	Warbey, W. N.
Delargy, H. J.	Mahon, S.	Watkins, T. E.
Dodds, N. N.	Mallalieu, E. L. (Brigg)	Weitzman, D.
Donnelly D. L.	Marquand, Rt. Hon. H. A.	Wells, Percy (Faversham)
Dugdale, Rt. Hn. John (W. Brmwch)	Mason, Roy	Wells, William (Walsall, N.)
Dye, S.	Mayhew, C. P.	West, D. G.
Ede, Rt. Hon. J. C.	Mellish, R. J.	Wheeldon, W. E.
Edelman, M.	Messer, Sir F.	White, Mrs. Eirene (E. Flint)
Edwards, Rt. Hon. John (Brighouse)	Mikardo, Ian	White, Henry (Derbyshire, N.E.)
Edwards, Rt. Hon. Ness (Caerphilly)	Mitchison, G. R.	Wilkins, W. A.
Edwards, Robert (Bilston)	Monslow, W.	Willey, Frederick
Edwards, W. J. (Stepney)	Morris, Percy (Swansea, W.)	Williams, Ronald (Wigan)
Evans, Albert (Islington, S.W.)	Morrison,Rt.Hn.Herbert(Lewis'm,S.)	Williams, W. R. (Openshaw)
Evans, Edward (Lowestoft)	Moss, R.	Williams, W. T. (Barons Court)
Fernybough, E.	Moyle, A.	Willis, E. G. (Edinburgh, E.)
Fienburgh, W.	Mulley, F. W.	Wilson, Rt. Hon. Harold (Huyton)
Fletcher, Eric	Neal, Harold (Bolsover)	Winterbottom, Richard
Forman, J. C.	Noel-Baker, Francis (Swindon)	Woodburn, Rt. Hon. A.
Fraser, Thomas (Hamilton)	Oswald, T.	Yates, V. (Ladywood)
Gaitskell, Rt. Hon. H. T. N.	Owen, W. J.	Younger, Rt. Hon. K.
Gibson, C. W.	Paget, R. T.	Zilliacus, K.
Gooch, E. G.	Paling, Will T. (Dewsbury)
Gordon Walker, Rt. Hon. P. C.	Palmer, A. M. F.	TELLERS FOR THE NOES:
Grey, C. F.	Panned, Charles (Leeds, W.)	Mr. Pearson and
		Mr. James Johnson

Motion made, and Question proposed, That an humble Address be presented to Her Majesty, praying that the Telephone Amendment (No. 1) Regulations, 1955 (S.I., 1955, No. 1622), dated 24th October, 1955, a copy of

which was laid before this House on 27th October, be annulled.—[Mr. Ness Edwards.]

The House divided: Ayes 224, Noes 273.

Division No. 40.]	AYES	[10.5 p.m.
Ainsley, J. W.	Gordon Walker, Rt. Hon. P. C.	Oswald, T.
Albu, A. H.	Grey, C. F.	Owen, W. J.
Allaun, F. (Salford, E.)	Griffiths, David (Rother Valley)	Paget, R. T.
Allen, Arthur (Bosworth)	Griffiths, Rt. Hon. James (Llanelly)	Paling, Will T. (Dewsbury)
Allen, Scholefield (Crewe)	Grimond, J.	Palmer, A. M. F.
Attlee, Rt. Hon. C. R.	Hale, Leslie	Pannell, Charles (Leeds, W.)
Awbery, S. S.	Hall, Rt. Hn. Glenvil (Colne Valley)	Pargiter, G. A.
Bacon, Miss Alice	Hamilton, W. W.	Parker, J.
Baird, J.	Hannan, w.	Parkin, B. T.
Bartley, P.	Harrison, J. (Nottingham, N.)	Paton, J.
Bellenger, Rt. Hon. F. J.	Hastings, S.	Peart, T. F.
Bence, C. R. (Dunbartonshire, E.)	Hayman, F, H.	Plummer, Sir Leslie
Benn, Hn. Wedgwood (Bristol, S.E.)	Healey, Denis	Prioe, J. T. (Westhoughton)
Benson, G.	Henderson, Rt. Hn. A. (Rwly Regis)	Price, Philips (Gloucester, W.)
Bevan, Rt. Hon. A. (Ebbw Vale)	Herbison, Miss M.	Probert, A. R.
Blackburn, F.	Hewitson, Capt. M.	Proctor, W. T.
Blenkinsop, A.	Hobson, C. R.	Pursey, Cmdr. H.
		Rankin, John
Blyton, W. R.	Holman, P.	Reeves, J.
Boardman, H.	Holmes, Horace	Reid, William
Bottomley, Rt. Hon. A. G.	Houghton, Douglas	Roberts, Albert (Normanton)
Bowden, H. W. (Leicester, S.W.)	Hoy, J. H.	Robinson, Kenneth (St. Pancras, N.)
Bowen, E. R. (Cardigan)	Hughes,Cledwyn (Anglesey)	Rogers, George (Kensington, N.)
Bowles, F. G.	Hughes, Emrys (S. Ayrshire)	Ross, William
Boyd, T. C.	Hughes, Hector (Aberdeen, N.)	Royle, C.
Braddock, Mrs. Elizabeth	Hunter, A. E.	Shinwell, Rt. Hon. E.
Brockway, A. F.	Hynd, H. (Accrington)	Short, E. W.
Broughton, Dr. A. D. D.	Hynd, J. B. (Attercliffe)	Shurmer P. L. E.
Brown, Rt. Hon. George (Belper)	Irving, S. (Dartford)	Silverman, Julius (Aston)
Brown, Thomas (Ince)	Isaacs, Rt. Hon. G. A.	Silverman Sydney (Nelson)
Burke, W. A.	Janner, B.	Simmons, C. J. (Brierley Hill)
Burton, Miss F. E.	Jeger, George (Goole)	Skeffington, A. M.
Butler, Herbert (Hackney, C.)	Jenkins, Roy (Stechford)	Slater, Mrs. H. (Stoke, N.)
Callaghan, L. J.	Jones, Rt. Hon. A. Creech (Wakefield)	Slater, J. (Sedgefield)
Carmichael, J.	Jones, David (The Hartlepools)	Smith, Ellis (Stoke, S.)
Champion, A. J.	Jones, Elwyn (W. Ham, S.)	Snow, J. W.
Chapman, W. D.	Jones, Jack (Rotherham)	Sorensen, R. W.
Chetwynd, G. R.	Jones, J. Idwal (Wrexham)	Sparks, J. A.
Coldrick, W.	Jones, T. W. (Merioneth)	Steele, T.
Collick, P. H. (Birkenhead)	Kenyon, C.	Stewart, Michael (Fulham)
Collins, V. J.(Shoreditch & Finsbury)	Key, Rt. Hon. C. W.	Stokes, Rt. Hon. R. R. (Ipswich)
Corbet, Mrs. Freda	King, Dr. H. M.	Stones, W. (Consett)
Craddock, George (Bradford, S.)	Ledger, R. J.	Strachey, Rt. Hon. J.
Cronin, J. D.	Lee, Frederick (Newton)	Strauss, Rt. Hon. George (Vauxhall)
Crossman, R. H. S.	Lever, Leslie (Ardwick)	Stross,Dr.Barnett(Stoke-on-Trent,C.)
Cullen, Mrs. A.	Lewis, Arthur	Summerskill, Rt. Hon. E.
Daines, P.	Lindgren, G. S.	Swingler, S. T.
Dalton, Rt. Hon. H.	Lipton, Lt.-Col. M.	Sylvester, G. O.
Davies, Ernest (Enfield, E.)	Logan, D. G.	Taylor, Bernard (Mansfield)
Davies, Stephen (Merthyr)	MacColl, J. E.	Taylor, John (West Lothian)
Deer, G.	McGhee, H. G	Thomson, George (Dundee. E.)
de Freitas, Geoffrey	McInnes, J.	Thornton, E.
Delargy, H. J.	McKay, John (Wallsend)	Timmons, J.
Dodds, N. N.	McLeavy, Frank	Tomney, F.
Donnelly, D. L.	MacMillan, M. K. (Western Isles)	Turner-Samuels, M.
Dugdale, Rt. Hn. John (W. Brmwch)	MacPherson, Malcolm (Stirling)	Ungoed-Thomas, Sir Lynn
Dye, S.	Mahon, S.	Viant, S. P.
		Wade, D. W.
Ede, Rt. Hon. J. C.	Mallalieu, E. L. (Brigg)	Warbey, W. N.
Edelman, M.	Marquand, Rt. Hon. H. A.	Watkins, T. E.
Edwards, Rt. Hon. John (Brighouse)	Mason, Roy	Weitzman, D.
Edwards, Rt. Hon. Ness (Caerphilly)	Mayhew, C. P.	Wells, Percy (Faversham)
Edwards, Robert (Bilston)	Mellish, R. J.	Wells, William (Walsall, N.)
Edwards, W.J. (Stepney)	Messer, Sir F.	West, D. G.
Evans, Albert (Islington, S.W.)	Mikardo, Ian	Wheeldon, W. E.
Evans, Edward (Lowestoft)	Mitchison, G. R.	White, Mrs. Eirene (E. Flint)
Fernyhough, E.	Monslow, W.	White, Henry (Derbyshire, N.E.)
Fienburgh, W.	Morris, Percy (Swansea, W.)	Wilcock, Group Capt. C. A. B.
Fletcher, Erlo	Morrison,Rt. Hn.Herbert(Lewis'm, S.)	Wilkins, W. A.
Foreman, J, c.	Moss, R.	Willey, Frederick
Fraser, Thomas (Hamilton)	Moyle, A.	Williams, Ronald (Wigan)
Gaitskell,Rt. Hon. H. T. N.	Mulley, F. W.	Williams, W. R. (Openshaw)
Gibson, C. W.	Neal, Harold (Bolsover)	Williams, W. T. (Barons Court)
Gooch, E. G.	Noel-Baker, Francis (Swindon)	Willis, E. G. (Edinburgh, E.)
Wilson, Rt. Hon. Harold (Huyton)	Yates, V. (Ladywood)	TELLERS FOR THE AYES:
Winterbottom, Richard	Younger, Rt. Hon. K.	Mr. Pearson and Mr. James Johnson.
Woodburn, Bt. Hon. A.	Zilliacus, K.
NOES
Agnew, Cmdr. P. G.	Foster, John	Lucas, Sir Jocelyn (Portsmouth, S.)
Aitken, W. T.	Fraser, Sir Ian (M'ombe & Lonsdale)	Lucas, P. B. (Brentford & Chiswlck)
Allan, R. A. (Paddington, S.)	Freeth, D. K.	Lucas-Tooth, Sir Hugh
Alport, C. J. M.	Galbraith, Hon. T. G. D.	McAdden, S. J.
Amery, Julian (Preston, N.)	Gammans, L. D.	Macdonald, Sir Peter
Amory, Rt. Hn. Heathcoat (Tiverton)	Garner-Evans, E. H.	Mackeson, Brig. Sir Harry
Anstruther-Gray, Major W. J.	Glover, D.	McKibbin, A. J.
Arbuthnot, John	Godber, J. B.	Mackle, J. H. (Galloway)
Armstrong, C. W.	Cough, C. F. H.	Maclay, Rt. Hon. John
Ashton, H.	Gower, H. R.	Maclean, Fitzroy (Lancaster)
Atkins, H. E.	Graham, Sir Fergus	McLean, Neil (Inverness)
Baldock, Lt.-Cmdr. J. M.	Grant, W. (Woodside)	Macleod, Rt. Hon. Iain (Enfield, W.)
Baldwin, A. E.	Grant-Ferris, Wg. Cdr. R. (Nantwich)	MacLeod, John (Ross & Cromarty)
Balniel, Lord	Green, A.	Macmillan, Maurice (Halifax)
Banks, Col. C.	Gresham Cooke, R.	Maddan, Martin
Barber, Anthony	Grimston, Hon. John (St. Albans)	Maitland, Cdr. J. F. W. (Horncastle)
Barlow, Sir John	Grimston, Sir Robert (Westbury)	Manningham-Buller, Rt. Hn. Sir R.
Barter, John	Gurden, Harold	Markham, Major Sir Frank
Baxter, Sir Beverley	Hall, John (Wycombe)	Marlowe, A. A, H.
Beamish, Maj. Tufton	Hare, Hon. J. H.	Marples, A. E.
Beattie, C.	Harris, Frederic (Croydon, N.W.)	Marshall, Douglas
Bell, Philip (Bolton, E.)	Harris, Reader (Heston)	Mathew, R.
Bevins, J. R. (Toxteth)	Harrison, A. B. C. (Maldon)	Maude, Angus
Bidgood, J. C.	Harrison, Col. J. H. (Eye)	Maudling, Rt. Hon. R.
Biggs-Davison, J. A.	Harvey, Ian (Harrow, E.)	Mawby, R. L.
Birch, Rt. Hon. Nigel	Harvey, John (Walthamstow, E.)	Maydon, Lt.-Comdr. S. L. C.
Bishop, F. P.	Hay, John	Milligan, Rt. Hon. W. R.
Black, G. W.	Head, Rt. Hon. A. H.	Molson, A. H. E.
Body, R. F.	Heald, Rt. Hon. Sir Lionel	Moore, Sir Thomas
Boothby, Sir Robert	Heath, Edward	Mott-Raclyffe, C. E.
Bossom, Sir A. C.	Henderson, John (Cathcart)	Nabarro, G. D. N.
Boyd-Carpenter, Rt. Hon. J. A.	Hicks-Beach, Maj. W. W.	Nairn, D. L. S.
Boyle, Sir Edward	Hill, Rt. Hon. Charles (Luton)	Neave, Airey
		Nicholson, Godfrey (Farnham)
Braithwaite, Sir Albert (Harrow, W.)	Hill, Mrs. E. (Wythenshawe)	Nicholson, N.(B'n'm'th, E. & Chr'ch)
Brooke, Rt. Hon. Henry	Hill, John (S. Norfolk)	Nield, Basil (Chester)
Brooman-White, R. C.	Hinchingbrooke, Viscount	Nugent, G. R. H.
Browne, J. Nixon (Craigton)	Hirst, Geoffrey	Nutting, Rt. Hon. Anthony
Bryan, P.	Holland-Martin, C. J.	Oakshott, H. D.
Bullus, Wing Commander E. E.	Hope, Lord John	O'Neill, Hn. Phelim (Co. Antrim, N.)
Burden, F. F. A.	Hopkinson, Rt. Hon. Henry	Orr, Capt. L. P. S.
Butcher, Sir Herbert	Hornsby-Smith, Miss M. P.	Orr-Ewing, Charles Ian (Hendon, N.)
Campbell, Sir David	Horobin, Sir Ian	Page, R. G.
Carr, Robert	Horsbrugh, Rt. Hon. Dame Florence	Pannell, N. A. (Kirkdale)
Cary, Sir Robert	Howard, Hon. Greville (St. Ives)	Partridge, E.
Channon, H.	Howard, John (Test)	Peake, Rt. Hon. O.
Clarke, Brig. Terence (Portsmth,W.)	Hudson, Sir Austin (Lewisham, N.)	Peyton, J. W. W.
Cole, Norman	Hughes Hallett, Vice-Admiral J.	Pickthorn, K. W. M.
Cooper, Sqn. Ldr. Albert	Hughes-Young, M. H. C.	Pilkington, Capt. R. A.
Cordeaux, Lt.-Col. J. K.	Hulbert, Sir Norman	Pitman, I. J.
Corfield, Capt. F. V.	Hurd, A. R.	Pott, H. P.
Craddock, Beresford (Spelthorne)	Hutchison, James (Scotstoun)	Powell, J. Enoch
Crookshank, Capt. Rt. Hn. H. F. C.	Hylton-Foster, Sir H. B. H.	Price, Henry (Lewisham, W.)
Crosthwaite-Eyre, Col. O. E.	Iremonger, T. L.	Prior-Palmer, Brig. 0. L.
Crowder, Sir John (Finchley)	Irvine, Bryant Godman (Rye)	Profumo, J. D.
Crowder, Petre (Ruislip—Northwood)	Jenkins, Robert (Dulwich)	Raikes, Sir Victor
Cunningham, Knox	Jennings, J. C. (Burton)	Ramsden, J. E.
Currie, G. B. H.	Johnson, Dr. Donald (Carlisle)	Rawlinson, P. A. G.
Dance, J. C. G.	Johnson, Eric (Blackley)	Redmayne, M.
D'Avigdor-Goldsmid, Sir Henry	Jones, A. (Hall Green)	Rees-Davies, W. R.
Deedes, W. F.		Remnant, Hon. P.
Digby, Simon Wingfield	Joynson-Hicks, Hon. L. W.	Renton, D. L. M.
Dodds-Parker, A. D.	Kaberry, D.	Ridsdale, J. E.
Donaldson, Cmdr. C. E. McA.	Keegan, D.	Rippon, A. G. F.
Doughty, C. J. A.	Kerby, Capt. H. B.	Roberts, Peter (Heeley)
Drayson, G. B.	Kerr, H. W.	Robertson, Sir David
Duthie, W. S.	Kershaw, J. A.	Robinson, Sir Roland (Blackpool, S.)
Eccles, Rt. Hon. Sir D. M.	Kirk, P. M.	Rodgers, John (Sevenoaks)
Eden, J. B. (Bournemouth, West)	Lagden, G. W.	Roper, Sir Harold
Elliot, Rt. Hon. W. E.	Lambert, Hon. G.	Ropner, Col. Sir Leonard
	Lancaster, Col. C. G.	Russell, R. S.
Emmet, Hon. Mrs. Evelyn	Langford-Holt, J. A.	Schofield. Lt.-Col. W.
Errington, Sir Eric	Leavey, J. A.	Scott-Miller, Cmdr. R.
Farey-Jones, F. W.	Leburn, W. G.	Sharples, Maj. R. C.
Fell, A.	Legge-Bourke, Maj. E. A. H.	Shepherd, William
Finlay, Graeme	Lindsay, Hon. James (Devon, N.)	Simon J. E. S. (Middlesbrough, W.)
Fisher, Nigel	Linstead, Sir H. N.	Smithers, Peter (Winchester)
Fleetwood-Hesketh, R. F.	Lloyd, Maj. Sir Guy (Renfrew, E.)	Smyth, Brig. J. G. (Norwood)
Fletcher-Cooke, C.	Lloyd-George, Maj. Rt. Hon. G.	Soames, Capt. C.

Spearman, A. C. M.	Thompson, Kenneth (Walton)	Ward, Hon. George (Worcester)
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)	Thompson, Lt. Cdr.R.(Croydon, S.)	Ward, Dame Irene (Tynemouth)
Stevens, Geoffrey	Thorneycroft, Rt. Hon. P.	Waterhouse, Capt. Rt. Hon. c.
Steward, Harold (Stockport, S.)	Thornton-Kemsley, C. N.	Watkinson, H. A.
Steward, Sir William (Woolwich, W.)	Tiley, A. (Bradford, W.)	Whiteiaw,W.S.I.(Penrith & Border)
Stewart, Henderson (Fife, E.)	Touche, Sir Gordon	Williams, Gerald (Tonbridge)
Storey, S.	Turton, Rt. Hon. R. H.	Williams, Paul (Sunderland, S.)
Summers, G. S. (Aylesbury)	Tweedsmuir, Lady	Williams, R. Dudley (Exeter)
Sumner, W. D. M. (Orpington)	Vaughan-Morgan, J. K.	Wills, C. (Bridgwater)
Taylor, William (Bradford, N.)	Vickers, Miss J. H.	Wilson, Geoffrey (Truro)
Teeling, W.	Vosper, D. F.	Woollam, John Victor
Thomas, Rt. Hn. J. P. L. (Hereford)	Wakefield, Edward (Derbyshire, W.)	Yates, William (The Wrekin)
Thomas, Leslie (Canterbury)	Walker-Smith, D. C.
Thomas, P. J. M. (Conway)	Wall, Major Patrick	TELLERS FOR THE NOES:
		Mr. Studholme and Mr. Legh

Question put and agreed to.