POST OFFICE AND TELEGRAPH (MONEY) BILL (Hansard, 28 January 1958)

§ The Assistant Postmaster-General (Mr. Kenneth Thompson)
I beg to move, That the Bill be now read the Third time.
This Bill has already been fully explained in the earlier stages, and the House has been good enough to give it unanimous support. At this stage, therefore, I do not think I need bother the House with more than a brief summary of its main provisions. The object of the Bill is to provide money to meet part of the capital expenditure of the Post Office during the next two years. It authorises the Treasury to issue for that purpose sums up to a total of £75 million and defines the ways in which the Treasury may borrow the sums. Provision is made for repayment to the Exchequer of the sums issued.
The Post Office will be spending on capital expenditure during the next two years not only the £75 million mentioned in the Bill but a total of £180 million, of which £105 million will be found from internal sources and not from borrowing. This is a change in practice which we have introduced this year. By ploughing depreciation charges back into the Post Office, we are putting our arrangements for borrowing on a more realistic basis, and I am sure that the House will approve.

§ Mr. Ness Edwards (Caerphilly)
I am sure that the hon. Gentleman has discharged the responsibility of moving the Third Reading with his usual competence in these matters, but I did not agree with him when he said that on Second Reading the Bill was fully explained. I have read the debate and I do not think that the Assistant Postmaster-General replied to the whole of it. That is quite natural in the circumstances because the debate ranged widely. It is equally true that my hon. Friend the Member for Keighley (Mr. C. R. Hobson) and my hon. Friend the Member for Kilmarnock (Mr. Ross) raised matters of substance which were not dealt with in the Assistant Postmaster-General's reply.
314 I am not complaining, because I know how difficult it is to reply to such a wide-ranging debate in a comparatively short time, and the hon. Gentleman, if I may say so without patronage, is always courteous and helpful in the House about Post Office matters. This Third Reading debate gives us another chance to obtain the information which we feel we ought to have in much more detail about the way in which this money is to be spent.

§ Mr. Deputy-Speaker (Sir Charles MacAndrew)
The Bill does not deal with the spending of the money but with raising the capital. If questions are raised on that line I do not think that I can allow them to be answered.

§ Mr. Ness Edwards
I quite understand your Ruling, Mr. Deputy-Speaker, but we are concerned in the Bill with the amount of capital to be raised, whether the amount is really necessary, and whether we should allow the Government to have it or not. The Government still have to make their case for having the money under the Bill. Anything relating to the purposes for which this money is required is certainly in order, Mr. Deputy-Speaker.

§ Mr. Deputy-Speaker
Perhaps I am wrong, but I was under the impression that all this Bill did was to allow the money to be raised, and that the spending of it comes within the Estimates, and not here. I am open to correction, but that is what I understood.

§ Mr. Ness Edwards
If you will allow me to go on, Mr. Deputy-Speaker, I think you will find that I shall not be straining the rules of order in what I have to say about the information for which we are asking the Postmaster-General.
I can make this point, as the Assistant Postmaster-General made it in moving the Third Reading, that this is the first money Bill since the alteration of the relations between the Post Office and the Treasury. What this money Bill proposes to do is to find the difference between the depreciation fund and the capital programme of the Post Office over the next two years. We have been told that this is why the money is required, and that is the point I am seeking to make. In my view, the Post Office has had to pay very highly for this kind of financial liberty from the Treasury. If the money that had been earned by the instruments 315 which are now to be replaced had been put to the credit of the Post Office, it would not have been necessary for it to ask for this £75 million.
We have been told by the Assistant Postmaster-General that this expenditure will be based upon a two-year programme of £180 million. We understand that £105 million will come from the Post Office depreciation fund and that the £75 million provided for in the Bill will be on loan from the Treasury. We also understand that the £75 million is supposed to carry the Post Office on for the next two years.
We want to know whether all this money will be required. During the last few weeks there has been much controversy about cutting Estimates, about cutting capital investment. If the Estimates are to be cut, this amount of money will not be required. We want to know from the Postmaster-General whether or not he has Treasury consent for his two-year development programme which requires the £75 million provided for by this Bill. I hope that we shall get a categorical answer to that.
The Assistant Postmaster-General referred to the fact that the money is to be repaid to the Treasury. Since the right hon. Gentleman has been at the Post Office, he has introduced a number of innovations. I am prepared to give him credit for those which have been beneficial, although we shall criticise him for those which we think are not beneficial, but that is as it should be. Will the right hon. Gentleman devote his attention, and apply his energy, to the method by which this money is to be repaid?
Clause 2 provides for it to be repaid on the basis of 20-year annuities. This is the only nationalised undertaking which is to repay on a 20-year basis. I believe that the National Coal Board has a 60-year basis. Some of the others have shorter periods, but the Post Office is, and has been all along, during my time as well as that of the right hon. Gentleman, treated unduly harshly by the Treasury.
Many of the materials and the constructions upon which the money is to be spent will last for much longer than twenty years—some, unfortunately, for one hundred years—and I should have thought that the current burden on the Post Office would have been decreased if that period could 316 have been extended. I ask the Postmaster-General to consider that, and to say something about it when he replies.
We have had no indication of the manner in which the money is to be spent. We were told in the Second Reading debate that £167 million of the £180 million—a vast proportion—would be spent on telecommunications, £6 million on telegraphs, and £7 million on postal services. The Estimates will tell us what is to happen this year, but we have had no information about the two-year programme.
If I remember rightly, when we discussed automation, the right hon. Gentleman said that the Post Office ought to have a three-year programme for its general planning and yet we find financial planning is to be on a two-year basis. How can there be a three-year plan for the development of Post Office services on a two-year financial basis? That is a matter calling for comment by the right hon. Gentleman and something on which there might be some innovations.
The right hon. Gentleman knows that he will probably get the best results of his capital investment programme from automation. Can he tell us whether any of this money will be required for applying automation to the trunk system? What programme for automation for the trunk system does he have? Can he tell us how many more telephone exchanges there are to be, what his building programme is, and what he is doing about sorting offices? All these are matters on which it is said the money is to be spent, but we have not been told how the right hon. Gentleman will spend the money when he gets it.
On Second Reading, the Postmaster-General told us that he intended to set up a number of committees to advise him on spending this money. I think that it is appropriate to refer to that. He said: As a matter of principle, the Post Office will have to consider the appointment of a committee of business people and representatives of the public to advise the Postmaster-General of the day, and when the information has been assembled the Postmaster-General will know what to do. What is the right hon. Gentleman doing about that? Is the Post Office Advisory Committee to be replaced. 317 That Committee, established by our predecessors a long time ago, has been functioning for many years. It is a responsible body and representative of very substantial sections of the community, including, I believe, Members of Parliament from both sides of The House. When I held office I always found it a very useful instrument. Does the right hon. Gentleman propose to abolish it and set up a new committee?
The Minister said that the question of telegraph service was a very difficult one, and that he proposed to spend £6 million on it. He said that he would set up a new committee, presided over by Sir Leonard Sinclair, Chairman of Esso Petroleum Company. Has that committee met? Who are its members? What sort of advice will it give? Shall we have its report? Is he asking for money for two years for the telegraph service? The committee may tell him that some of this money is unnecessary. It is for him to make out a case on that matter.
In referring to another committee he said: I hope to meet the chairmen and technicians of various firms during the next week or so—certainly before Christmas…"—[OFFICIAL REPORT, 5th December, 1957; Vol. 579, c. 642–3.] I thought that that was in connection with the application of electronics to the Post Office. Has that committee met? If so, what has it said? Those are some of the matters upon which we should like to have some information.
One other point. Last year, the right hon. Gentleman raised telephone rentals for private subscribers very substantially, and on 1st January he reduced the charges for calls. That substantially benefited business people, but it did not take away the harshness of the rental increase. What effect has that alteration had up his revenue?

§ Mr. Deputy-Speaker
If the Postmaster-General tries to answer that question I shall rule him out of order. It does not come within the terms of the Third Reading debate on the Bill.

§ Mr. Ness Edwards
With respect, Mr. Deputy-Speaker, the revenue which the Post Office gets determines the amount which it must borrow, under the new arangement, from the Treasury, so that anything relating to the revenue has an 318 effect upon the amount of money which has to be obtained from the Treasury. We are talking about an entirely different financial relationship between the Post Office and the Treasury from that which existed prior to the new White Paper concerning that relationship. Anything which is likely to increase the surplus of the Post Office, therefore, has a bearing upon the amounts to be raised from the Treasury, and in that sense is in order. That is my submission.

§ Mr. Deputy-Speaker
I may be wrong, but that is not what Erskine May says, and I must be guided by its ruling. It points out that on the Third Reading the debate is restricted and limited to matters contained in the Bill. Although all these matters may be interesting on other occasions, they do not arise on this occasion. The Bill deals with the raising of money, and how it should be spent.

§ Mr. Ness Edwards
The amount of money asked for in the Bill is determined by what happens inside the Post Office, and if the House feels that because of certain circumstances the amount of money required by the Bill is not necessary it is surely entitled to discuss the matter, and, if necessary, to vote against the Bill. To prove that the amount is too large we must argue about the internal finances of the Post Office.

§ Mr. Deputy-Speaker
That might be in order in a Second Reading debate, and it certainly would be in order on Supply.

§ Mr. Ness Edwards
I must accept your Ruling, Mr. Deputy-Speaker. I have put certain points to the right hon. Gentleman and I hope that he will be able to answer them, in so far as he has to justify the demand for the £75 million that he is making in the Bill. Unless he can give a satisfactory reply to justify his demand, I shall divide the House.

§ The Postmaster-General (Mr. Ernest Marples)
I am confused as to which questions raised by the right hon. Member for Caerphilly (Mr. Ness Edwards) I can answer and which I cannot. As I understand it, I should be in order only in discussing the total volume of money which the Post Office is trying to raise. For the next two years the Post Office estimates that its requirements on capital account will be £180 million. For the 319 last two years in the Money Act which was passed they were £185 million. So £180 million is devoted, as the right hon. Gentleman correctly analysed it, between the telephone, postal and telegraph services, the bulk of which will go to the telephone service and will be devoted to automation, new equipment, new telephones and so on.
Of the £180 million, £105 million, as the right hon. Gentleman said, will be provided by Post Office revenue under the depreciation provisions, and under this Bill we ask for only £75 million from the Treasury to be drawn as and when the Post Office asks for it for capital purposes. This money is being raised by the Treasury for and on behalf of the Post Office so that when the Post Office asks for it for a particular development it can get it and pay the necessary interest on it. In the Post Office—in fact if it were a private business I should say the same thing—it would be very difficult for any Postmaster-General to say what precise sum of money he would draw in April, 1959, or at any other time, from the Treasury on capital account. The main point is that it is estimated as the overall provision that the Post Office will need.
The right hon. Gentleman asked some questions which I should like to answer if possible. If you, Mr. Speaker, rule me out of order, I shall accept your Ruling with good grace, although I should like to answer the questions in order to help the right hon. Gentleman. He asked a number of things about the committees we were going to set up. He asked about the committee on telegraphs. The terms of reference as announced to the House first on 5th December, 1957, were to advise the Postmaster-General on the future place of the inland public telegraph service as part of the communication facilities of the United Kingdom. The Chairman is Sir Leonard Sinclair, who is also Chairman and Managing Director of Esso Petroleum Company Ltd. The members of the Committee—this is the first time they have been announced in alphabetical order—are Mr. W. B. Beard, O.B.E., General Secretary of the United Pattern Makers Association—

§ Mr. C. R. Hobson
And a good man, too.

§ Mr. Marples
I am glad that the hon. Gentleman approves. Dame Frances Farrer, D.B.E., General Secretary of the National Federation of Women's Institutes; Sir Norman Kipping, J.P., M.I.E.E., M.I.P.E., Director-General of the Federation of British Industries, and Professor F. W. Paish, M.C., Professor of Economics at the University of London. The Committee has already met. It asked me when I should expect a report, would I set a date or leave it to the Committee, and I have left the whole matter to the Committee.

§ Mr. Speaker
I think that the right hon. Gentleman should leave it at that. This has nothing to do with the Third Reading of this Bill. Although I am interested in hearing the views of the right hon. Gentleman's Department, I am afraid that I must stop him at this stage.

§ Mr. Marples
I agree, Mr. Speaker. I was merely trying to be courteous to the right hon. Member for Caerphilly. I have said all that I can say within the rules of order, and therefore I am afraid that I cannot answer most of the questions put by the right hon. Gentleman. However, I will take a note of them and answer them by letter so that the right hon. Gentleman will not be without an answer.

§ Mr. C. R. Hobson (Keighley)
When moving the Third Reading, the Assistant Postmaster-General stated that provision was being made to provide £150 million from the Post Office's own resources. How is the Post Office to be financed from its own resources? Is this a resuscitation of the Post Office Fund?
There used to be a fund into which some of the Post Office surplus was transferred for the capital development of the Department. The new idea in the Bill is that the Post Office is to be self-financing. What does this mean? Does it mean that part of the surplus of the Post Office is to be earmarked as a special fund for capital development?
We are told that £75 million is to be raised from the Consolidated Fund. What rate of interest is to be paid? That is a very relevant question in view of the present practice of Her Majesty's Government of increasing interest rates and of putting an incubus of cost on the people who use the Post Office services.

§ Mr. Marples
Rates of interest are dealt with on page 27, paragraph 5, of the Posy Office Commercial Accounts and Reports, published last year. It states that rates of interest are prescribed by the Treasury and are those ruling when the debt was incurred. The interest paid in 1956–57 represented 4 per cent. on outstanding capital. The average interest payable on new capital was 5.1 per cent. at the time of the Report. At the moment, we borrow from the Treasury at about 6 per cent. The rate varies, as it does with the Public Works Loan Board.
My hon. Friend the Assistant Postmaster-General did not say that £150 million was to be provided, but £105 million. That is the ordinary prudent commercial practice of charging depreciation in the commercial accounts which form the basis on which Post Office charges are made. If an allowance is made for depreciation, the sum of money which is earmarked can be spent first of all on new assets whether they be replacements or entirely new equipment. Anything wanted over and above that will come from borrowing from the Treasury.

§ Mr. William Ross (Kilmarnock)
There is not an awful lot to quarrel with in the Bill, which is an enabling Bill. It certainly enables the Post Office to borrow up to £75 million from the Treasury. It may be that the sum will be only £50 million or £60 million, dependent upon something that happens within the Post Office, or upon something laid down by the other signatory to the Bill, the Treasury, about the capital development permitted to the Post Office.
One question which was in order and could have been answered now is whether or not it is likely that £75 million over the next two years will be necessary or can be lowered. The House will only give a Third Reading to the Bill if it is satisfied that up to £75 million is necessary. What has gone on in previous stages of the Bill confirms our view that the Postmaster-General and his assistants are not to be trusted. Nothing has been said tonight that justifies their demand for unanimous confidence of the House of Commons in handling this vast amount of money.
322 What is the purpose for which it is to be borrewd? We can give the Government the right to borrow money only if they tell us the purpose for which it is to be borrowed. Admittedly it has to be borrowed for the development of the Post Office. [Interruption.] If the Law Officer for England wishes to intervene I will gladly give way, but, despite his high legal standing, I do not think he has any right to usurp the authority of the Chair. You, Mr. Speaker, will quickly, call me to order if I go beyond the rules.
The Postmaster-General and the Assistant Postmaster-General have not the confidence of the people of Scotland because they see that the Post Office is not in the hands of people other than those prejudiced in respect of one aspect of business, the borrowing of money for the necessary purpose of capital development within the Post Office. If they have not got the confidence of the people of Scotland I am entitled to express the view on Third Reading of this Bill that we should reject the Bill. I think I am entitled to say that and to invite the House to reject the Bill and say exactly why we should reject it. The right hon. Gentleman and his hon. Friend have been questioned by a very considerable number of people in Scotland in respect of development within the postage service of the Post Office which may well entail a considerable sum of money.

§ Mr. Speaker
There is nothing in this Bill about the services for which the money is to be spent. That does not come into the Third Reading. The question is whether the Post Office shall have this money advanced to it in the way set out in the Bill. That is the only question before the House on Third Reading. On Second Reading, it is customary to have a general debate on the services of the Post Office so that these matters can be discussed, but not on Third Reading. This is not the first time the Bill has been before the House; the House has had it before.

§ Mr. Ross
I admit that, but because we got such unsatisfactory answers on that occasion this matter is being raised once again and is likely to be raised many more times. That is the matter on which Mr. Speaker says I am out of order.

§ Mr. Speaker
It can be raised on occasions when it is in order, when I shall 323 listen to it with great pleasure, but I am not allowed to listen to it on the Third Reading of the Bill.

§ Mr. Ross
I think what you mean, Mr. Speaker, is that you will listen to one side of it with great pleasure.

§ Mr. Speaker
No, I shall listen to both sides of it with great pleasure.

§ Mr. Ross
I shall be interested, Mr. Speaker, in your private views on the reaction of the Postmaster-General to the suggestion. So far it cannot have given great pleasure to anyone at all in Scotland.
There is only one other point in respect of this matter. Obviously in the expenditure of this £75 million and the development of the Post Office which will be made possible by it the Postmaster-General is going to take advice. He has a Committee which has been acting in respect of this for quite a long time, the Post Office Advisory Committee, of which I have been a member for a considerable time. I think this is in order from the point of view that that Committee has dealt with questions of development in the Post Office on which, without this Bill, there could be no development.

§ Mr. Speaker
There is no mention of that Committee in the Bill. If he wishes to make a speech, the hon. Member must confine himself to the matters of finance laid down here. We are not dealing with the purposes for which the money is to be spent; there is no mention of that.

§ Mr. Ross
May I ask whether or not the Postmaster-General has discussed with that Committee this way of raising this money?

§ Mr. Speaker
That would be quite irrelevant to discussion on Third Reading. 324 It is a question for the House to decide, and not for any committee.

§ Mr. Ross
The point is that this Committee has not met for quite a long time—

§ Mr. Marples
I think that that is not true. The Committee has met—

§ Mr. Speaker
It may be true or false, but it is quite irrelevant on the Third Reading of this Bill.

§ Mr. Marples
The hon. Member did not turn up.

§ Mr. Ross
If the right hon. Gentleman wishes to make a point of this, I can tell him quite frankly that the Committee only meets when he decides to raise charges.

§ Mr. Speaker
The hon. Member should not persist on this matter.

§ Mr. Ross
I would not have raised the matter at all if I had been allowed to make my short intervention, and I would not have mentioned the Committee at all but for the fact that you yourself, Mr. Speaker, allowed the Postmaster-General to read out a whole list of names.

§ Mr. Speaker
That was just after I came in and before I had grasped the enormity of the crime which was being perpetrated against the rules of the House.

§ Mr. Ross
I have made the point which I wished to make. However, I cannot see any reason why we should entrust the raising of this possible £75 million to the Postmaster-General and Assistant Postmaster-General so long as they in their prejudice deny the people of Scotland their desired use of some of it.