POST OFFICE TELEPHONE FACTORIES (Hansard, 16 June 1959)

§ Mr. Roy Jenkins (Birmingham, Stechford)
The subject I wish to raise tonight is that of the future of the Post Office telephone factories. These factories are owned and operated by the Post Office and deal with telephone, and to a lesser extent telegraph, equipment. They do not provide the bulk of such equipment which is provided by private factories.
There are eight of the factories, three in Birmingham, three in London, one in South Wales and one in Edinburgh. Together they employ between 3,000 and 4,000 people. The biggest centre is in Birmingham, where one of the three factories is very small and the larger of the other two is on the edge of my constituency and employs a fair number of my constituents. Most of the facts I want to give relate to the two larger Birmingham factories.
402 To some extent, the position of these factories has been a problem for some years past. I raised the matter previously in an Adjournment debate in December, 1953. There was then some falling off in the work available and a fear of redundancy among those employed in the factories. That arose at that time because the effect of a policy recommendation by the Select Committee on Estimates in 1950, saying that there should be a return to the pre-war position in which by far the greater part of new work should be sent to outside contractors, was just coming into operation. The immediate fears at that time did not prove as serious as at one time seemed likely.
After 1953 there was an improvement in the position, which lasted for several years. Now, however, there has been a further deterioration. This is indicated by a number of events which have occurred. For instance, when I spoke in 1953 the number of skilled engineers employed in these two Birmingham factories had declined from 150 to 110. Since then the decline has gone on. In February it was down to 90, and there is a further reduction taking place now. The effects are being dealt with in redundancy negotiations between the A.E.U. and the management. I do not want in any way to get involved in those negotiations by raising this matter in this House. What I am concerned to discuss is not how the problem of redundancy is being dealt with—that is a matter for negotiation on the spot—but why redundancy has arisen and the policy which may lead to it arising to an increasing extent in future.
We have had this increasing rundown, and there is every sign of it going on in future. I am informed that since 1953, when we last discussed the matter, a very large amount of plant at these factories, amounting, I am told, to almost two-thirds of the plant which existed, has been disposed of by sale or otherwise. In 1953 75 per cent. of the work in the factories was repair work and 25 per cent. was on new construction. I have been told that the balance since then has been tilted much further away from new construction work and that the factories are allowed only to do a very small amount of work on prototypes and no large-scale new work of any sort, while even repair work to an increasing extent 403 is on types of equipment now becoming obsolete and not on newer types of equipment. By definition, the repair work shows signs of decline.
The question is, what is the future of the Post Office factories? I hope the Assistant Postmaster-General—to whom I am grateful for coming here to answer this debate—will be able to give a fair answer on how the Government see the future of these factories. Is there a future at all, or do the Government unfortunately regard a position possibly arising in which they will not be needed? The difficulty at the moment is that these factories are an island of contraction in a prosperous and expanding industry, a rather depressing position in which to be.
I should have thought there was a rôle for the factories. I do not think anyone would suggest for a moment that there is a whole body of new work which could be done in them. Obviously there are contracts and longstanding arrangements with outside suppliers, but there is a good deal to be said for a certain amount of new work being done by these factories, which to some extent would provide a useful check on the efficiency of the private contractors. The evidence before the Select Committee in 1950 indicated that the Post Office factories, if allowed to compete on equal terms, were financially competitive. If they are not allowed to compete on equal terms obviously there can be no question of their being financially competitive, but there is no indication that when they are allowed to compete on equal terms they are not competitive. They are a rather depressing island of contraction in an expanding industry. Probably some reorganisation is necessary, and I know the trade unions are anxious to co-operate, but it is much more difficult to co-operate and to carry our reorganisation effectively and with good will in a framework which is totally contracting than in an expanding framework. Management is doing a good job in difficult and depressing circumstances.
I hope the Assistant Postmaster-General can give a clear picture of the future of the factories. I hope it will be a reasonably encouraging picture. Even if it is not, it would be better to know what it is, so that those employed in the factories may know to what they can look forward, than to be in the uncertainty which has persisted for a number 404 of years and which inevitably has a bad effect on the workers.

The Rev. Llywelyn Williams (Abertillery)
I wish to say a few words about the Post Office telephone factory in Cwmcarn, which is in my constituency. It was visited by the Minister some time ago, and his visit was much appreciated. I am not aware that there is any redundancy in that factory, so that my words are more in the nature of an exhortation to the Minister to ensure that no tendency towards such a situation shall develop.
I say this because, as the Minister knows, Cwmcarn and the Abertillery constituency generally is in a Development Area. We have suffered during the last two years from rather serious unemployment, usually in the region of 5 per cent. and over, so that this factory, which means so much to the people in the constituency, should be kept working at full capacity. This factory has a good reputation for employing disabled workers who obviously cannot work in the heavy mining industry which is the predominant industry in that valley, and that is a very helpful factor in the economic set-up in that part of the country.
A large proportion of the personnel employed in the factory are girls and, as we have nothing but collieries in the western valley of Monmouthshire, it is important that we have some facilities for the employment of girls in areas near to their homes.
I wish to thank my hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) for introducing this subject, thereby given me the opportunity to appeal to the Minister, when he deals with the larger situation in Birmingham, not to forget this wonderfully valuable factory, the only one of its kind in Wales.

§ The Assistant Postmaster-General (Mr. Kenneth Thompson)
I am grateful to the hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) for giving me an opportunity to say a few words about Post Office factories which are a somewhat unspectacular but vital part of the widely diversified Post Office empire. I should like to assure him on 405 a number of points that he put before the House.
First, I will take the House briefly over the history of the Post Office factories. Their function originally was to repair and renovate telephone and communications equipment of various kinds belonging, to the Post Office so that they could be put back into use again. It has always been the policy of the Post Office that the factories should limit themselves to that kind of work, subject to this qualification that, having at their disposal certain skills and equipment, they should make themselves ready to provide the telephone system with certain kinds of specialist equipment.
That was the function which the Department served until the outbreak of war. When the war came we had to change that for many reasons. The Post Office was able to provide facilities for the manufacture of a wider variety of articles in large quantities.
At one time during the war and immediately afterwards we reached the stage where about half our effort was in the production of new goods and half in repair work of one kind and another. Nevertheless, it was always the policy of the Post Office that we should return to our proper function of repair and renovation of Post Office equipment. The process of turning from wartime conditions to what we were doing before the war has been a long one and has been carried out with a great deal of thought for the wellbeing of those affected by what could be a considerable change in their work and working conditions and in the rewards which they take home for their work. Therefore, we have taken a long time over the process in order to avoid abrupt hardship to those concerned.
That process is now more or less complete, and I should imagine that it is not unreasonable to suppose that the amount of new work now being done in Post Office factories is about what it will continue to be subject always, of course, to the changing demands of the service as a whole. It would be wrong to commit the Department for many years ahead by a statement of what is likely to happen until we know what the conditions will be, because they might change from time to time. That is the position today.
406 The conditions to which the hon. Member for Stechford referred are conditions of uncertainty and, to some extent, disquiet. He said that the low morale in the Birmingham factories is the product of this constant change which has been going on for a number of years accentuated now by an even more important change in Post Office factory processes.
We can only justify repairing and reusing Post Office equipment provided that we can repair it at a price which is economic in comparison with the cost of new equipment. Therefore, we have to set about improving the processes so that they are able to give us an end product which is both efficient in use and competitive in cost.
We have now a flow line method of repair in some of the factories for some of the processes, and we are endeavouring to extend this modern method of handling repairs of often very complicated apparatus so that we may always be able to produce a finished article at a price which is competitive.
The hon. Member for Abertillery (The Rev. LI. Williams) mentioned the factory at Cwmcarn in his constituency. There we have an example of these modern flow line processes of repair being carried out very successfully with the willing and valuable co-operation of the staff and their representatives. I am happy to say that the results have justified all that we hoped for from this change of method. As I say, this is made necessary for economic reasons, but also because of the increasing complexity of modern telecommunications equipment.
The hon. Member for Stechford mentioned that it might be right for the Post Office to enter into large-scale production of some of the equipment needed for the modern telephone and telecommunications industry. The growth and development of new equipment, which is increasingly complicated and of an increasingly technical nature, has challenged the manufacturing industry outside the Post Office to adopt modern production methods. These have involved the industry in the investment of very large sums of money and in very complicated and highly intricate machinery for the cheap production in large quantities of standard parts of equipment.
407 It would not be right, and I am sure the House endorses the view as it has accepted the view in the past, that the Post Office should divert its factories from the hitherto accepted purpose and engage in a vast investment of this kind in a field which is at present capable of producing these things at prices which are highly competitive and which is able to satisfy a very large export demand in a highly competitive market. There is at present excess capacity in the manufacturing industry, and it would be wrong for the Post Office to seek to extend its activities along the lines which the hon. Gentleman has suggested.
As against these changes, which have involved us to some extent in reducing the numbers of people engaged in the factories and have, as a consequence of the development of the modern flow-line techniques, involved us in employing less of the highly-skilled labour to which he referred, we have the increase in the size of the telephone system, which has almost doubled in the last ten years. That means that there are more items coming forward capable of being repaired and re-used.
It is our view that the Post Office factories at about their present size, turning out about their present amount of competitively repaired goods, will be a continuing feature of Post Office life. That means that those who are engaged in this work in the Post Office factories have an assurance that we will be continuing with the Post Office repair processes in the Post Office factories. I have no reason to doubt—though one cannot be sure of this—that as the system continues to grow, as we add into it more important and complicated repair work, for Telex equipment and so on, the work will continue 408 to be varied and will probably tend to grow rather than reduce over the next five or six years.
I am aware, as are the factory management, that it must have been a trying time for those engaged in the factories to see these changes taking place about them, and to see some of the skills which have been employed hitherto no longer needed, and colleagues alongside them placed on other work or asked to retire when they reached retirement age. I hope that what I have said tonight will give an assurance to those engaged in the factories that while we must always be ready to make ourselves competitive and to step in and take advantage of changes and new methods and developing ideas, the Post Office will continue to use its factories for the purpose for which they were established—the repair and maintenance of our equipment—and will do its best to see that whatever changes are necessary are brought into effect with the least possible disruption of the lives of those who work in the factories and without inflicting on them any hardship that is avoidable.
I would pay tribute to the way in which the staffs and their representatives have been willing to sit round the table with us and discuss changes which have had this kind of effect, for it cannot have been altogether welcome to them to try to find the best way of meeting the conditions with which they were called on to deal, and which they have been so successful in bringing into effect with the least possible discomfort to those concerned.