POST OFFICE (BORROWING POWERS) BILL

HC Deb 06 December 1963 vol 685 cc1509-90

Order for Second Reading read.

11.6 a.m.

The Postmaster-General (Mr. Reginald Bevins)

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

This, I think, is the first Post Office debate for many a long year in which the late Mr. W. R. Williams is not taking part, and I hope that the House will think it appropriate if I take this opportunity of saying what great affection he had for the Post Office and all those who worked in it, and that I am sure that hon. Members on both sides of the House will miss him today.

Hon. Members

Hear, hear.

Mr. Bevins

In today's Daily Telegraph there is a picture of the Post Office Tower which is under construction in Tottenham Court Road. I had nothing to do with its publication. When the Tower is completed it will dominate the London scene. With its revolving restaurant and its observation platforms, I am sure that it will give great pleasure to countless numbers of people.

This Tower is primarily a functional thing because it will constitute the nerve centre of the microwave system, which, in turn, will transform our trunk telephone system, and it will be in operation in the autumn of next year. I say that because I believe that the Tower symbolises the Post Office as we should all like it to be.

I want to address myself to the technical aspects of the Bill for only a matter of minutes before I come to the more interesting matters which flow from it. I promise the House that I shall not make a long speech.

The theme of what I wish to say, and, indeed, the theme of the Bill, is expansion, for the Bill paves the way for the largest programme of capital development that the Post Office has ever undertaken. When I became Postmaster-General, in 1959, our capital investment was almost exactly £100 million, and this year it is £164 million. From now on it will rise progressively, and by 1967 it will amount to £250 million. During the next five years we are planning to spend more than £1,000 million on the expansion and improvement of all Post Office services. This compares with a figure of £550 million in the past five years. It is almost double.

This is big money, and the House is entitled to know where it will come from. Hon. Members know that the Post Office finances a great deal of its capital from its own resources—or perhaps I should say from its customers' pockets—by ploughing back depreciations and profits, and I am hoping to finance about three-fifths of the five-year programme in this way. This still leaves large sums to be met by borrowing from the Exchequer, and to do this we must raise the present limit of our borrowing powers, which will be exhausted towards the middle of next year. That is the technical purpose of the Bill and I should like to say a further word or two on it before I come to less mundane things.

The present limit on Post Office borrowing is fixed in terms of the total accumulated debt to the Exchequer which is outstanding at any one time. The present limit is £960 million, and the Bill raises it to £1,120 million, and provides for it to be raised still further, by Resolution, to a sum not exceeding £1,320 million. The intermediate figure corresponds to an increase in borrowing powers of about £160 million, which should cover the next two financial years, and the further increase of £200 million should cover the two years after that.

Investment of this order will enable the Post Office to develop and improve its services on a scale that has so far not been possible, simply because of capital shortages. It will also call for a high and sustained level of profit. I informed the House a month ago that I had agreed, in accordance with the policy set out in the White Paper on the Nationalised Industries, that the financial target of the Post Office should be an average of 8 per cent, on net assets over the next five years. I emphasise that the realisation of this target is the cornerstone of our financial planning. Without it we should not be able to generate sufficient resources of our own, nor could we justify the level of investment now in prospect.

This raises the question whether it is practicable to secure this 8 per cent, return. During the three years 1958–60 the Post Office earned more than 8 per cent, but, because our results reflect the general level of business activity, we have not achieved 8 per cent, during the last year or two. But this year we hope that we shall get about7½ per cent, and, with a bit of luck, nearly 8 per cent. Looking ahead, can we hit the 8 per cent, target without increases in prices? That is an important question.

Hon. Members know very well that our experience of posts and telephones respectively is very different. They have vastly different potentialities, and it would be as well to look at their prospects one by one. I will deal first with posts. Here, expenditure has increased during the last 10 years by £122 million. Expenditure due to business expansion accounted for £27 million, and improvements in pay and conditions in service, plus higher prices—but mostly increases in pay—accounted for £95 million. In the same period additional income from business expansion amounted to £29 million, and so the increase in expenditure exceeded revenue from expansion by no less than £93 million.

During this 10-year period the national growth rate was very much under 4 per cent., although our staff costs were going up at the rate of 6½ per cent, per annum. For the future, if the expansion of the economy is 4 per cent, and the growth of personal incomes is 3¼ per cent., as postulated by N.E.D.C., the outlook will be a good deal better. It still remains the case that there is only limited scope for profitable investment in the postal services. As I see it, even on the favourable postulates to which I have referred, the tendency will be for costs, and especially wages, to outpace improvements in productivity. I am, however, having extensive studies made to see how far the outlook could be improved by the provision of new and profitable services.

Incidentally, some people have recently been speculating about higher postal prices. Without beating about the bush in the least, I want to say that none whatever is contemplated.

Still on the question of posts, there are two points that I want to make in passing, because my hon. Friend the Assistant Postmaster-General takes a very close working interest in this side of the matter, and he will have something to say about it. First, I intend to treble capital spending on the postal services in the next five years, as compared with the last five. Most of this money—four-fifths of it—will be spent on the construction of new postal buildings which are required for the growth of work, and on the improvement of working conditions of our staffs, especially in London and in the big cities, where, all too often, our buildings look either like prisons or mausoleums, or a mixture of the two.

Secondly, I want to refer to the parcels service, about which no one is satisfied, least of all myself. Because we are dissatisfied with this service we tried a road experiment in East Anglia, which has worked very well indeed. I believe that British Railways now appreciate that we simply must have better and swifter service for our parcels, otherwise we shall have no choice but to revolutionise our parcels transits throughout the country. I do not particularly want to offend Dr. Beeching, but still less do I want to offend my many thousands of customers.

By contrast, the financial outlook for telephones is very much brighter. A comparable analysis to the one that I have just given shows that over the same 10-year period expenditure rose by £148 million, of which £60 million was due to business expansion and £88 million to improvements in pay, service conditions and higher prices. The increased income from business expansion came to £99 million, leaving a gap of only £49 million between the increase in expenditure and revenue, so that here the pastures are more lush, growth is more rapid, and there is clearly more scope for higher productivity through automation, and so forth. I am confident that the telephone service will achieve the 8 per cent, target over the next few years without changes or increases in basic prices.

I now want to tell the House something about our investment plans and what they will lead to, and about other developments which are now under way. As hon. Members know, it is on the telephone service that most capital is needed—about 90 per cent, of the total. The recent White Paper gave details of our plan, which I shall not repeat today, except to say that we are embarking upon a massive increase in capital expenditure, of which we shall require every penny if we are to satisfy public demand.

A month or two ago there was a great deal of talk about the telephone service, one way and another, and I shall refer to this in more detail in a moment. Before doing so, however, I want to point to some real achievements of the Post Office in the past decade, about which our armchair critics are so eloquently silent. What are they? To begin with, the average level of earnings of the Post Office since 1951 has been doubled. In real terms—that is, allowing for increases in prices—it has risen by 40 per cent. I am sure that the significance of that will not be lost on the hon. Member for Barnsley (Mr. Mason), who is interested in the pay of some other groups of people.

The standard of building and of decor in post offices has been improved out of all recognition. The standard of service there is very much better than it was. I think that it is true to say that one can get better and quicker service in most post offices now than one can in the average retail shop. The waiting list for telephones has been cut from 418,000 to 48,000. The number of telephones has risen by 70 per cent., and so has the number of telephone calls. The number of old-fashioned manual exchanges has been reduced by two-thirds, and more than one-third of our customers now have S.T.D., and like it into the bargain.

No big organisation, of course, is perfect, and the bigger it is and the more monopolistic it is the more it is exposed to public comment—and rightly so. I do not complain about that because criticism is the corrective to complacency. Nevertheless, I assert that the general picture over the years has been one of progress and of modernisation.

Where there are problems we are acting energetically to solve them. Waiting for a telephone is one of them. I do not think that it is generally known that at present we already have plant for about 90 per cent, of all the telephone applications we receive. But, of course, the remaining 10 per cent, constitute the rub, and for this reason we have decided that we must get rid of the waiting list as quickly as possible, and certainly by 1966 at the latest.

I do not want there to be any misunderstanding about this. What do I mean by getting rid of the waiting lists? I mean that even when, as sometimes happens, special construction work is necessary before a telephone can be installed and connected to the exchange, people should be able to expect telephone service within two months of placing an order. But where such work is not necessary—and this applies in the majority of applications—people will get their telephones within a week or two of giving us their order. This is not pie in the sky; it is something which will be carried out.

Another problem, of course, is that of the trunk system. The number of trunk calls has been more than doubled in the past decade. At present, the rate of increase is about 14 per cent. a year. Here, in London, it is about 17 per cent., and it is still rising. This unprecedented increase, which, of course, in itself is marvellous and which I welcome, is affecting both the S.T.D. service and the service given by our operators. And to solve this the capacity of existing plant is now being increased rapidly.

More cables are being laid and a new microwave system, on which I touched at the start of my speech, is being very rapidly established. Four thousand more circuits will be laid during the present financial year and there will be another large increase in 1964–65. We are building new trunk exchanges, large ones, at Reading, Tun-bridge Wells and Cambridge, to relieve the pressure in London, and these will start to operate next year. These measures will, I believe, produce a progressive and marked improvement in service. The expansion of the trunk system will, of course, continue, and by 1968 there will be about 55,000 trunk circuits as compared with the present figure of 35,000.

Perhaps I might say a word or two about modernisation, which will also continue at an ever-increasing rate. Conversions of manual to automatic exchanges are taking place at the rate of about two a week, which, I realise, is rather a silly thing to say, but less silly is it, perhaps, to say that, by 1968, 98 per cent, of our customers will have automatic service and by 1970 practically all manual exchanges will have disappeared into the limbo.

We now have S.T.D. at more than 600 exchanges serving more than 2 million people, or 38 per cent, of our total customers. So far, it has been put in only at large urban exchanges, but equipment is now being developed to provide it at smaller rural exchanges, and we expect to introduce S.T.D. at this type of exchange in 1965. But it is important when talking of modernisation not to think of it solely in terms of what goes on inside telephone exchanges and post office buildings. It is important, too, that we should look at the modernisation of apparatus in the office and the home—at the customer's end.

The modern telephone is already a fairly familiar feature, though I should like to see far more of the red, white and blue ones about, because they are in good supply, and we now have a new version of the telephone for mounting direct on the wall. Again, modern versions of the popular sizes of small switchboards are now on the market and new designs of the larger switchboards are being developed. We are also introducing a new type of small private automatic branch exchange which will route incoming calls direct to particular extensions, from which they can be transferred if necessary, thereby dispensing with the need for a switchboard operator. And this, I think, will be a boon to the small business firm.

Nor have we forgotten the hectic chap who has his desk positively spattered with telephones. A new telephone will soon be available with a small neon lamp moulded into the hand-set. Whenever the telephone rings this lamp will flash and identify it without any jangling of telephones bells. Then there is the time it takes to find a number and dial it. There, to save time, we are developing repertory diallers which will enable lists of frequently used numbers to be recorded, selected and dialled automatically when needed. I have seen one of these instruments, and although it sounds a bit involved I can assure the hon. Gentleman that they work, and work very well.

Looking further ahead, the development of electronic automatic exchanges will probably enable the dialling signals to be handled more quickly, and this, of course, opens up the possibility of replacing the familiar dial with a set of push buttons which can be operated much more quickly. One will press instead of pulling and waiting. We have already started work on this. I agree that it is not much use introducing these new facilities unless the public are told about them and they have the opportunity of seeing them, and we are taking steps to see that this is done.

In summary, our plans for the inland telephone service provide for the arrears from the past to be overtaken and for future growth to be met head on as it occurs. I believe that this justifies the big increase in capital which we foresee. Some of the newspapers, including the Daily Telegraph, the Guardian and the Financial Times, have argued that this expenditure can only be justified if our sales policy is more vigorous. If, by that, they mean selling the use of the telephone and popularising its use, then I agree with them. I always have. Indeed, the developments and innovations that I have already sketched out are bound to have the effect of encouraging people to use the telephone more.

Of course, I want people to make more calls. Last year more than 5,000 million calls were made in this country, in about four or five years' time, I expect the total to exceed 7,000 million. It is perfectly true, and there is no gainsaying it, that the number of calls per telephone in this country is still low compared with experience abroad. For this, of course, there are many reasons. Communication face to face is much easier in a highly-urbanised country like ours than it is in, say, Canada or many parts of the United States. Communication by ordinary letter post is easier here than in the U.S.A., as the hon. Gentleman well knows. Let us face it, most of our countrymen and even our womenfolk are somewhat less talkative and communicative than hon. Members of this House.

I am, however, constantly on the look out for ideas to stimulate telephone usage. It was for this reason that we recently embarked on a publicity campaign which is designed to stimulate local calling at any time of the day and trunk calling during off-peak hours.

I promised not to make a long speech and I hope that I have kept my word. I hope that I have been able to give hon. Members and the right hon. and learned Member for Newport (Sir F. Soskice), whom I welcome to Post Office affairs, some idea of our plans. The centre piece of this design, this blueprint for the Post Office in an expanding economy, is the massive programme of capital expenditure to which I have referred. What is new and of vital significance to the Post Office is the assurance that we now have, for the first time, that, provided we achieve our financial target—of course, major disasters apart—this programme of expansion and of modernisation will not be frustrated through lack of capital. That is the important thing.

We can now plan ahead the disposition and. deployment of our material and manpower, and I am quite confident that with the co-operation of the trade unions, on whom a great deal will depend, and with the incentive to increased productivity which an expanding programme will bring, we shall achieve our aims.

11.33 a.m.

Mr. Roy Mason (Barnsley)

I should like to associate myself with the right hon. Gentleman's opening remarks. I am personally reminded, most sorrowfully, in opening this debate from the Opposition benches that the duty falls to me because of the loss of our late and respected colleague, Bill Williams. He was an officer of the Union of Post Office Workers for many years and acquitted himself well in Post Office affairs by his considerable personal knowledge and experience. I shall miss him, Mr. Speaker, but, more important, I am certain that during these debates the House of Commons will miss him.

Hon. Members

Hear, hear.

Mr. Mason

I should like first to congratulate the Postmaster-General and the Post Office on the increases that it has gained in its investment programme, especially in planning a five-year programme of telephone development compared with the rather short-sighted annual reviews that we have had in the past. On this side of the House we think that this is absolutely necessary, and we applaud the Postmaster-General for securing this necessary change.

The Bill, as the Postmaster-General said, raises the amount that may be borrowed by the Post Office from a minimum of £880 million to a new minimum of £1,120 million and gives a new ceiling figure of £1,320 million from £960 million. We visualise that this extension of borrowing powers must play a major part in helping to launch this five-year plan for an expanding inland telecommunication service. The Postmaster-General has reason to be pleased with the profits that have been accruing from this aspect of the Post Office, particularly trunk telecommunication, and I think that this is likely to continue. But before we vote the Post Office the right to increase borrowing, I think that we should, and rightly so, query the plans and the uses that it has in mind for this money.

I refer first to the White Paper on The Inland Telephone Service in an Expanding Economy, paragraph 5(b) and also paragraph 8. Paragraph 5(b) states that it is the intention to increase the number of telephones, including extensions, by 2,000,000. Paragraph 8 states, in the last sentence: In the same period the number of telephones (including extensions) will increase from nearly 9 million to more than 11 million. This would indicate that the Postmaster-General is attempting an increase of 25 per cent., 5 per cent, a year for the next five-year period. This is not news. There is no revelation here in the White Paper, because on the 26th June, 1962, the Postmaster-General said: My present plans for capital expenditure include provision for an average rate of growth in the number of telephones of 5 per cent, per annum over the next five years."—[Official Report, 26th June, 1962; Vol. 661, c. 177.] That was in 1962. But of course he failed, as he revealed on 22nd January, 1963, when he stated that the increase in 1962–63 was only 3.6 per cent. He hoped, he said, at that time, still to achieve 5 per cent, over the next five years.

Now we are witnessing a re-phasing of the programme. There is to be, therefore, a great increase in capital expenditure, but not so much in the growth target. Let us analyse this in detail.

First, for subscribers' circuits and local lines, over the next five years the capital expenditure will increase by just over 53 per cent. But the number of telephones added to the system over the same period will be about 24 per cent. This, compared with the figures over the past five years, 1958–59 to 1962–63, is an increase of approximately 21 per cent. In other words, there is a substantial increase in investment, but the figures of telephone growth are not significantly higher. Another example is trunks and junctions. The expenditure on investment is to be almost doubled. It is the intention of the Postmaster-General to increase it by 95 or 96 per cent. The rate of increase in telephones and junctions is to go up from 49 per cent, the figure over the past five years, to 58 per cent, in the coming five years. This again is only a small improvement in relation to an almost doubling of capital expenditure.

The right hon. Gentleman also mentioned the modernisation of the exchanges. During the past five years, 498 manual exchanges have been modernised and in the next five years, according to the White Paper, only 450 will be modernised. It also indicates that by 1968 there will still be 150 exchanges manually operated. Therefore, modernisation is necessary but it is obviously not proceeding as rapidly as it might. On this score, we congratulate the Postmaster-General because within this plan he is attempting a break-through, and we earnestly hope that he succeeds.

I should like to remind him that, on the mechanisation of the telephone service and of automatic exchanges, as the Guardian aptly pointed out on 22nd November, the proportion of British telephones served by automatic exchanges is somewhat below that in Argentina, though a little above Mexico, and even when the five-year plan is completed we shall still be below the present figures for Japan, West Germany, Holland, and Singapore. The right hon. Gentleman tried to explain in some detail some of the reasons why this is happening. I should not like the right hon. Gentleman to adopt as an excuse reasons which might develop into a complacent attitude. Our aim should be to try to get to the position of most of the industrialised countries abroad.

Mr. Bevins

May I say that that remark by the Guardian was rather fatuous when one remembers when the telephone systems in those countries were started.

Mr. Mason

Why should we keep harking back to the past? The right hon. Gentleman said that we are looking to the future. We want to modernise, extend and expand the telephone service. If these comments can be rightly made by newspaper correspondents who want to quip or quibble about the Post Office, it is up to the right hon. Gentleman to try to rectify the situation as soon as possible and to catch up with the industrialised nations, particularly those of Europe.

Another problem is the need to encourage the use of the telephone, as the right hon. Gentleman has recognised. Newspaper correspondents who have been "having a go" at the Postmaster-General recently, have said that on a comparison of the number of calls per head the United States and Canada make five times as much use of the telephone as we do. Sweden and Denmark make three times as much use, and Norway nearly twice as much. If the Postmaster-General can assure us that there is to be a speeding up by automation and more telephone usage—a twin drive—it should not be long before the, right hon. Gentleman can guarantee a fall in telephone call costs, and that should be his ultimate aim.

I turn now to service, because this is a source of major complaint. Paragraph 17 of the White Paper refers to the quality of service. I will not read it, but I mention it so that hon. Members may take note of it. The paragraph is rather optimistic in outlook. The right hon. Gentleman says he hopes that he will be able to give the public a quicker service without frustrations or delays in due course. That is not in keeping with the present position. I blame the Post Office to some extent and particularly the Postmaster-General because of his complacent attitude. He has said that criticism is a corrective for complacency and so I hope that he will accept my criticism in that spirit.

He appeared on the I.T.V. television programme, "This Week" on 17th October, and he said: Well, I should have thought that on the whole the public regard the service as pretty efficient". He ought to do his homework. What is more, members of his Department should have their ears to the phone a little more often and carry out some market research to find out why there are so many complaints and why the number of complaints is increasing. The fault rate is increasing. Complaints are on the increase and the standard of service is declining. For example, call boxes in London are emptied daily and consequently a test call is made daily; but in the provinces the majority of call boxes are tested once a week. Therefore, if there has been a test on one day and the next day a fault develops, that call box will be out of operation for a week, unless some public-spirited person contacts the Post Office and reports the fault. A thorough check is made on call boxes in the provinces only once every 13 weeks. The Postmaster-General knows the main reason for this. It is because of the shortage of staff in the technical grades in the Post Office. This is due to many reasons in- eluding the skimping and saving carried out during the 1957 economy period. But the situation is lamentable and ought to be rectified. Unless the right hon. Gentleman can increase the number of staff in the technical grades in the provinces, he will get a lot more complaints about faults.

Between 1958 and 1962 the number of ineffective calls due to failure on the part of the Post Office increased by one-fifth in respect of those made through non-direct exchanges; by almost one-half in the case of direct exchanges and almost two-thirds through manual exchanges. The Postmaster-General should be concerned about this. These are facts and prove that there is a worsening in the service. The unions, particularly the Union of Post Office Workers and the Post Office Engineering Union, are very perturbed about this. They point out that one of the reasons—they have pointed out this many times to the Postmaster-General—is the inadequate maintenance staffing. This, in turn, is leading to lower standards in the maintenance service to the public. One is led to believe that this is because the Department is bent on an economy drive and is trying to save on staff and money.

The morale of the Post Office workers is being affected and the unions are upset because the morale is not as high as they would like it to be. In the White Paper the Postmaster-General states that most of what he wishes to do is dependent upon the agreement and the full cooperation of the unions. The right hon. Gentleman knows that in the past he has been criticised by hon. Members on this side of the House because he has interfered with rather than co-operated with the unions. They suffered a little at his hands during the period of the wage freeze. Consultation in the recent past has not been of the kind that the unions would have liked. If the Postmaster-General wants their co-operation and support, some of these matters will have to be rectified.

On 17th October the Postmaster-General said, Well, you know, in most parts of Great Britain at the moment you can get a telephone in a matter of a week or two. He has used similar words in this House. The waiting list total at the moment was 150,000, and more than 100,000 of those waiting would be satisfied with a telephone within the matter of a week or two. I questioned the right hon. Gentleman on 18th November and at that time he had the script from his Department. There was a Written Answer to my Question and so the right hon. Gentleman probably never even read it. He stated that of all the applications for telephones received in August of this year, including those met by the transfer of an existing connection, only 55 per cent, were met by the end of September. That is not "a week or two". Only 55 per cent, received telephones after four weeks.

In fact, it is true that over the past year only between 52 per cent, and 55 per cent, of the applications received in any month for which there are figures available have been met by the end of the following month. If one excludes the transferred connections, the picture is even worse, because only 36 per cent, of the applications received in May were connected in June. The statement by the Postmaster-General about "a matter of a week or two" has proved most misleading. A paragraph in the White Paper gives the real meaning where he says † by March 1966 † the overwhelming majority of people will have their telephone within a week or two. That is in 1966—not now. The average waiting time during the past 12 months for applications for which plant and equipment is available—that is, the number of weeks that applications are in the pineline—was 13.7 weeks. So when the Postmaster-General aims at a period of two months, he is, within the five-year plan, going to reduce the waiting time from 13.7 weeks to 8 weeks. Where equipment is not available there will be a very long wait. Applications at 30th September last were 2,888 outstanding for over two years. This year the waiting lists increased in 38 areas. They were reduced only in 15 and remained the same in three. On the question of service, therefore, complaints are on the increase, the fault rate is increasing, the waiting lists are still too high and the length of waiting time is much too long.

Neither is the Postmaster-General paying sufficient attention to the recruit- ment of technicians. There are vacancies in London for 500 in the technical grades, and 500 more are required for maintenance purposes in the provinces. It would appear, therefore, that the Post Office is now paying the price of inadequate investment in past years and particularly the financial trimming which took place in 1957—the "Thorneycroft squeeze", as it became known. The shared line service situation is not very encouraging. There are still nearly 1 million sharing this inconvenient and hated service.

Paragraph 16 of the White Paper states that it is the ultimate aim of the Postmaster-General to abolish it, but in the short term sharing will continue. What does the Post Office mean by "the short term"? The numbers are on the increase; the Post Office is not even reducing them. On 31st March this year there were 994,414 and on 30th September the number had risen to 994,641, an increase of more than 200 in that short period. The Postmaster-General ought to take greater steps to get rid of the necessity for this snared line service.

What about advertising? I understand that in the current year the aim of the right hon. Gentleman is to spend £250,000 on it. That seems to bean increase and we are pleased about it, but what has been the response so far? Is it proving worth while, and is the money spent in the right direction? There is a need to encourage a greater use of the telephone because if the calling rate is increased it can benefit the Post Office immensely. There is a need to advertise telephone facilities more widely. The only profitable ones appear to be "TIM" and the Test Match results service. I hope that profit is not the only guiding principle which the right hon. Gentleman has in mind. He should do a little more market research to see what people want. Probably he could expand many of these services. Would it not be possible for the Post Office to have its own market research department? Is that worth considering? It could help to find where all these complaints come from and to fathom the main reason why they are on the increase.

I am a little worried about the future of some marginal or unprofitable charges. I refer especially to the telegram service and public telephone kiosks. I hope that the Postmaster-General does not intend to kill these services by abolition or high charges. These are the emergency lines for those who cannot afford telephones of their own. I have learned with a little apprehension that the Post Office has set up a committee to study the economics of kiosks. That committee is now sitting. I hope it is not a sign of the Post Office wanting severely to cut back the numbers of kiosks, especially in rural areas.

In his speech the Postmaster-General said that he will spend far more money on the postal side, not only on telephones. No doubt some action has already been taken since he received the Report on Post Office land and buildings. An interim progress report would be welcomed, especially on the sales of Post Office sites and the re-siting and building of new post offices. This development may already be affecting the thinking of the Department when it is pressed, as often it is, to establish new sub-post offices.

The balance between the reasonable needs of the public and the obligation to run Post Office services with economy and efficiency, is important. This always perturbs the right hon. Gentleman when he is speaking at Question Time or in Adjournment debates, but I ask him not to be too rigid in refusing the many requests he has for the siting of sub-post offices. He is causing a great deal of inconvenience in rural areas. By a relaxation of the rules in cases where old-age pensioners and others have to travel long distances on busy roads and up steep hills in conditions of lack of rural transport, the right hon. Gentleman could undoubtedly help.

On the general question of public need it appears that there is a growing desire for the Post Office to introduce the Giro system of banking into its general services, what I might call the working-man's bank. The right hon. Gentleman and the Assistant Postmaster-General will have noticed that sitting beside me is my right hon. and learned Friend the Member for Newport (Sir F. Soskice). If he is fortunate in catching your eye, Mr. Speaker, at the conclusion of the debate he intends to deal in detail with this subject.

I turn to the question of bulk supply agreements. The Postmaster-General stated his intention to spend £1,000 million on Post Office affairs in the next five years, 90 per cent, of which would go on the telephone side. Therefore, £900 million is to be spent on telephone development. The allocation of this vast sum of capital investment is most important. A breakdown of the sum leads me to believe that about £220 million will be spent on telephone exchange equipment. The two bulk supply agreements currently in force relate to telephone apparatus and telephone exchange equipment.

Exchange equipment will take approximately £220 million, all of which, with the exception of 10 per cent, if the Postmaster-General so desires, will go to a small ring of telephone exchange manufacturers. Even if the Postmaster-General allows the 10 per cent, to go out of the ring to other companies, £200 million of all contracts will be cornered by this ring. It has fixed prices and, so far as we know, there is no competition. The five firms—which might as well be put on record—are: Associated Electrical Industries, Automatic Telephone and Electric Company, Limited, Ericsson Telephones Limited, Standard Telephones and Cables, Limited, and the General Electric Company. Hon. Members will have noticed that two of these firms merged with an outside firm at the beginning of this year, so in fact there are only four firms in the ring and £200 million will go to four firms with fixed prices over the next five years.

An agreement was signed in April this year guaranteeing these firms this lucrative market. Apart from a cursory glance by the Post Office in two-and-a-half years' time to look at the cost of raw materials and wages, these firms will be virtually unhampered. This is a disgraceful state of affairs. There is a stronger monopoly position than when the Public Accounts Committee criticised and condemned the practice in 1961. Although the Postmaster-General has relented a little and is allowing up to 10 per cent, of exchange equipment, and 25 per cent, of telephone apparatus to come from outside the ring, we must bear in mind that the prices to be paid by the Post Office for 90 per cent, of telephone exchange equipment and 75 per cent, of telephone apparatus equipment were fixed some years ago.

As well as fixed prices and out-of-date costing, the Post Office will be deprived of any benefits which might accrue from increasing productivity in the coming five years. What else can the Post Office do but make evident to everyone that this is one big fix?

Sir Cyril Osborne (Louth)

Although the hon. Member says that prices are fixed, is there not a clause that the prices can go up if wages go up?

Mr. Mason

The hon. Member should have listened to what I said. Apart from a cursory glance in two-and-a-half years time at raw materials and wages to see how they are affected, the Post Office will not interfere during the next five years. These four firms will enjoy a £200 million contract at fixed prices on which the costings took place some years ago.

The right hon. Gentleman is aware that the Post Office bulk supply agreement system has been strongly criticised time and again by the Estimates Committee and, in particular, by the Public Accounts Committee. The third Report of the Public Accounts Committee—the most recent—when it was published in July again expressed concern about this price fixing. The Committee noted with a degree of pleasure that the Postmaster-General had announced on 24th July, 1962, that the cables and loading coils would now be given out to tender, but these are relatively small matters. It is the telephone apparatus and exchange equipment which are really important, and in paragraph 138 the Committee made a disturbing comment. It said: Your Committee therefore note with concern that the Post Office, on entry on 1st April, 1963, into renewed agreements for telephone apparatus and exchange equipment, would be armed only with the evidence of cost investigations undertaken as long ago as 1955–57 … The Post Office stated that in their negotiation of the.prices to be paid during the first two and a half years of the renewed telephone apparatus agreement they would in fact press for a fair share of any increase in productivity, on the basis of their technical cost officers' knowledge of what was happening at contractors' works. Your Committee do not regard this as an adequate basis for price negotiations. So long as the Post Office continue to obtain supplies of telephone apparatus and exchange equipment under these agreements, Your Committee consider it essential that costs should be investigated before prices are negotiated and that the interval between investigations should not be extended beyond the agreed term. Your Committee therefore recommend that the Post Office undertake fresh cost investigations at the earliest possible opportunity. This is a really preposterous situation. The Post Office is about to purchase from a monopoly—that is what it is, for there are agreed prices between the companies—up to £200 million of equipment, the prices of which were costed between six and eight years ago. The right hon. Gentleman cannot justify this and the House cannot sanction it. I hope that he is already acting upon the recommendation of the Public Accounts Committee, and we look forward to the Assistant Postmaster-General telling us what is being done about this.

Another perturbing feature is that it appears possible for the ring firms still to control prices being quoted by firms outside the ring. This is particularly true if a Post Office supplier of equipment within the ring has a subsidiary outside it, which is getting contracts from the Post Office under the reservation clauses which give part of the orders to outsiders.

I ask the right hon. Gentleman to look at this to make sure that there is no fixing in this respect, otherwise the Post Office will get no benefit from the competition that the reservation clauses should cause and that the Public Accounts Committee has been pressing for.

The Post Office has stepped up its expenditure on research and development. In 1961–62 the figure was £5 million. In the following year this was raised to £5,750,000. In 1963–64 it is pleasing to note that this has been stepped up to £6,500,000. This is all to the good, but only a few designs of equipment are developed by the Post Office alone. Most are developed jointly with the firms which meet the bulk of Post Office equipment needs. This makes one wonder whether the Post Office is getting a fair return for its research and development 'work. As long as this ring system operates, the Post Office is having to buy at fixed prices equipment which it has helped to develop. Perhaps the right hon. Gentleman would make inquiries into this matter also.

Now I wish to deal with submarine cables and satellite communications. The Commonwealth Pacific telephone cable has just been officially opened. It is a great achievement. It is the longest submarine cable in the world, stretching 8,700 miles from Port Alberni in Canada to Sydney, and the Post Office can feel justly proud of this effort. Indeed, it is quite revolutionary.

A partnership between some private firms—and I give credit to them—and the Dollis Hill Post Office engineers has produced a light-weight polythene sheet cable plus a G.P.O. developed repeater which is making cable laying an easier task, enabling longer lengths to be laid, providing stronger boosting of speech and above all a much cheaper operation. Therefore, it may well be responsible for cheaper international telephone calls.

This development comes at a time when the Post Office and Ministries of Communications in Europe and America are probing the possibilities of satellite communications. What are the Government's intentions on the development of a global communications system? The submarine cable development has been remarkable, but I do not want its progress to interfere with or retard the introduction of our contribution to a satellite communications system.

The Government—particularly the Post Office and the Ministry of Aviation—have pondered long enough on this problem and it is now time that some clear indication was given of their intentions. At the moment we are members of the European Space Research Organisation and also are involved in an eight-year programme of space probes which will cost us £27 million out of a total European commitment of £109 million. We have also Joined the European Launcher Development Organisation. The membership also consists of West Germany, France, Belgium, Italy, Holland and Australia. The purpose is to develop and produce launcher systems for satellites. We are not yet certain, however, that all these countries have ratified the agreement, and perhaps the hon. Gentleman will let us know.

The initial programme will cost £70 million and our contribution, again, will be about £27 million. The Government have joined both organisations in the hope that Blue Streak will be used as the initial launcher, but there is no certainty of this. The E.S.R.O. has not agreed yet to base its programmes on Blue Streak and within the E.L.D.O. argument still rages on whether a French rocket should be used first. I mention this because we do not seem to be making progress. The French are making stronger exertions and we are in danger of being swept to one side.

Already, Paris is becoming recognised as the space centre of Europe. The headquarters of both E.S.R.O. and E.L.D.O. are already there and the Committee on Space Research of the International Council of Scientific Unions—the foremost international space science body—has moved its headquarters there as well.

Allied with this, the French Government have already announced their intention to develop and launch an all-French experimental satellite by 1965. This French zeal as compared with our Government's apathy may well result in France taking the initiative in organising and developing European's communications satellite system. If the decision in Europe is to use French launchers and not Blue Streak then once more we shall have missed the boat—or, more appropriately, have failed to get off the ground.

What are we going to do? First, I suggest that we should be making a bigger impact in Europe. We have some developed missiles—Blue Streak, Black Knight and Skylark among them—and we are the biggest single financial investor in both organisations. It is time we took the initiative and started to take the lead in these European space clubs.

Secondly, a statement of the Government's intentions is urgently awaited by many industries, by design and rocket teams in particular. They want to know what part this country is to play in the development of a global communications system. The Post Office engineers have recently spent considerable time, along with experts of the Royal Aircraft Establishment at Farnborough and under the guidance of Dr. M. Light hill, preparing a report for the Government on space communications. This was delivered weeks ago. Is it not time that we knew something about it? The report undoubtedly indicated the urgency of making a decision on the systems that we could develop, their estimated cost, and whether it is feasible to go it alone in space or in concert with Europe, or possibly an Anglo-American partnership. Unless the Government act soon, as well as slipping behind in Europe we shall also be too late to play a major part in a world-wide communication system. The Government have pondered long enough, and for the benefit of British industry and many of the scientists and rocket technologists who are awaiting this decision it is about time that action was.taken.

I could go on and say many things, especially when we are talking generally about Post Office affairs. It is such a fascinating Ministry, covering so many activities. There are many things, especially on the postal side, which have been left unsaid. However, if my hon. Friend the Member for Gateshead, West (Mr. Randall) catches your eye, Mr. Speaker, he will deal particularly with postal affairs. It is a sad state in the House when we have only one Member with any practical knowledge of Post Office working.

In conclusion, in the next decade the Post Office will be one of the most exciting Departments of Government—broadcasting and television developments, the advent of colour television, a possible university of the air, mechanisation in sorting offices, modernisation of Post Offices, and the development of micro-wave and satellite communications. I am worried about just one thing. I say this directly to the Postmaster-General. Control this development of commercialism, or soon it will stifle the public service attitude of the Post Office. Let it be an example to all industries, public and private, and let it show to them that by this planning it is now bent upon it can channel the benefits of all these exciting new techniques to our people as a whole.

12.12 p.m.

Mr. Philip Holland (Acton)

On the last occasion that I spoke in a debate on Post Office affairs I followed immediately a speech by the late Mr. W. R. Williams. I should like, as a back bencher on this side of the House, to associate myself with the remarks of my right hon. Friend and of the hon. Member for Barnsley (Mr. Mason) and to say that especially those of us who take an interest in Post Office affairs feel a real sense of personal loss.

In that debate, I took great pains to explain for the benefit of my right hon. Friend the Postmaster-General the extraordinary difficulties under which the staff at Acton Post Office were working and the considerable inconvenience caused both to them and the general public arising from the totally inadequate and antediluvian building which houses both the sales and sorting offices. Since then a few short-term palliatives, such as additional types of automatic vending machine, have been applied to ease the difficulties. These are very much appreciated, so far as they go. The appalling fact remains that Acton Post Office is still housed in the same overcrowded and unsuitable architectural eyesore.

In that earlier debate I warned my right hon. Friend that I would continue to be a thorn in his side until something drastic was done about this totally unsuitable building. I should like to take this opportunity of reassuring him that this thorn will not be, nor has it been, blunted by the passage of time. In fact, it will tend to become rather sharper.

Today, we are debating the Second Reading of a Measure to extend the borrowing powers of my right hon. Friend so that he may meet expenditure properly chargeable to capital account in addition to providing working capital. It is the first of these two purposes that particularly interests me. I was particularly pleased to note my right hon. Friend's comment on the need to replace old and ugly buildings. If my hon. Friend the Assistant Postmaster-General, in winding up the debate, could give an assurance that some of the capital referred to in the Bill will be used to solve the problem in my constituency, he will be assured of very enthusiastic support from at least one of his hon. Friends.

Having stressed, I hope sufficiently emphatically to stimulate activity, a matter of great importance to me and to my constituency, I should like to move away from the purely parochial note and say a few words about more general matters of Post Office operation. In March last year I referred to the plans for improving the telephone service, and I particularly welcomed the proposal to open up subscriber trunk dialling with Paris. May I remind the hon. Member for Barnsley that Paris is noted for other things than being just a space centre. Two and a half weeks ago this facility was accorded to me when subscriber trunk dialling came to my neck of the woods, as it has been accorded to many thousands of subscribers all over the country.

I congratulate my right hon. Friend on the tremendous strides that are being made in the modernisation of our telephone service throughout the country. I say tills, I hope, without prejudice to the complaints that I bring, and will continue to bring when they arise, regarding deficiencies in service and supply. I do not altogether share the pessimistic view of the hon. Member for Barnsley about the future of the service. I hope and believe that the new borrowing powers proposed in the Bill will enable the Department to go a long way towards improving the service organisation to match the great technical advances so rapidly being effected. Last month's White Paper on the telephone service envisaged the virtual elimination of the waiting list by March, 1966. Today, my right hon. Friend endorsed and amplified this. I wish him every possible success in achieving this target.

In the other main field of Post Office activity, last year's Report and Accounts referred in paragraph 118 to the production of prototype machines by Post Office engineers for sorting mail and cancelling stamps entirely mechanically. I am glad to note that work in this field is now directed towards the simplification and adaptation of such machines to the needs of smaller offices. I hope that, in reply, my hon. Friend will be able to advise me or give me some indication of when we may expect to receive some of these machines in Acton sorting office. I am sure that he will recognise the justification of helping first those offices that have been working longest under the most adverse and trying conditions, while, at the same time, taking every possible step to improve the service in the most thickly populated urban districts, of which Acton is one. Any effective action that he takes on this score would be most warmly welcomed by Acton.

One of the most attractive and beguiling innovations of the Post Office during recent months has been its advertising campaign to try to persuade even me that somebody, somewhere, would like to receive a letter from me. I am sure that this must be increasing the volume of mail noticeably, and I wonder what thought has been given towards easing the growing strain on postmen in view of the obvious build-up in the handling of mail. On my last visit to our sorting office in Acton I met a member of the staff who has achieved considerable distinction, both nationally and internationally, as an amateur weight-lifter. In view of the growing volume of mail, I am sure that his work is very useful training for his hobby, but can nothing be done to ease the burden on the shoulders of postmen in these highly concentrated urban areas? It may well be that something is being done. If it is, I should like to hear about it, whether it be a redistribution, an increase in staff, or the provision of mechanical carrying aids for postmen.

The Bill will undoubtedly receive general support because of the great strides taken by the Department towards giving the public the service it wants in this modern day and age. On its record since the passing of the Post Office Act, 1961, my right hon. Friend's Department has merited the confidence which can best be demonstrated by the unopposed granting of these new borrowing powers.

12.20 p.m.

Mr. Harry Randall (Gateshead, West)

Perhaps the House will permit a personal note. The very kindly references to my old friend, the late W. R. Williams, have been most touching.

W. R. Williams and I were on the conference floor of the Union of Post Office Workers right back in the 'thirties, as ordinary delegates, and he came to the executive council of the union just before I did. We were elected officers of the union at the same conference. We were elected Members of this House in the same year. We lost our seats at the same time. He came back here a little earlier than I did, but I was very glad to rejoin him. Will Williams was a great character. He loved the Post Office, and his contribution to it has been a very notable one. I thank the right hon. Gentleman the Postmaster-General, and my hon. Friends and hon. Members on both sides of the House, for their tributes to a great man.

I congratulate the hon. Member for Acton (Mr. Holland), who is always with us on these occasions, and I have a special word for my hon. Friend the Member for Barnsley (Mr. Mason), who has acquitted himself excellently today. I was proud of the wide coverage of his speech, which painted on a very wide canvas the problems, the improvements and the triumphs of this great service.

It is quite clear from the debate that no one seeks to object to the Second Reading of the Bill. Everyone is anxious that the Post Office should have the opportunity to carry on with its capital investment. Therefore, we welcome this opportunity to say so, and we welcome also the White Paper, "The Inland Telephone Service in an Expanding Economy. "We on this side certainly welcome any indication of the Government's willingness to contribute to the expanding economy and to ensuring that the Post Office has a proper place in that exercise.

All telephone subscribers will undoubtedly welcome the expansion of that side of the service, and so will the staff. For a long time now the staff have deprecated the absence of the tools necessary to do a first-class job, and it is a great pity that the Government's "stop-and-go" policy has delayed that expansion. My hon. Friend was quite right in saying that there has been a deterioration in the service, and there has been some severe criticism of it. The deterioration has also affected the staff, by sapping their morale. That is not a good thing.

The Postmaster-General referred to the massive capital expenditure there is to be and to the economics of the Post Office. Quite rightly, he said that it had been, and is, the intention of the Government that nationalised industries, including the Post Office, should, as far as possible, deal with their own requirements from their own resources. During the year 1962–63 the Post Office borrowed 28 per cent, of its capital investment. Bearing in mind the Government's desire that, as far as possible, this investment money should come from the Department's own funds, from its own customers, we should be careful to note that in 1963–64 the Post Office plans to borrow about 44 per cent.

Incidentally, I should like to know the percentage paid on borrowing. Perhaps the Assistant Postmaster-General will tell us whether there has been any change in the interest rate. Not only have we still to pay the interest charges on money previously borrowed but, with the 44 per cent, for 1963–64, these charges will increase. The Postmaster-General says that he does not anticipate any increase in charges, but I should not like to hazard a guess as to how long that statement will remain correct. It should be looked at very carefully in the light of the increased interest payments;

I was very glad to hear the Postmaster-General's assurance that in this capital investment programme the needs of the postal service will not be overlooked. There are still far too many areas where the buildings are anything but modern. We want to see better plant and equipment so that the postal staff may the more efficiently carry out their tasks. If it is true that we are in an expanding economy, this provision may become very urgent because, in such an expanding economy, the difficulties confronting the Postmaster-General in recruiting staff will be quite surprising. He may well be facing that position very shortly. Places like Coventry and Birmingham always have problems of recruitment but, if the unemployment position really improves, difficulties of recruitment will become a headache for the right hon. Gentleman in other areas. He should, therefore, now be looking at the possibility of improving postal plant and equipment.

That reminds me that when the present Minister of Transport was Postmaster-General he led the House to believe that there were quite a number of machines coming along. He announced to the House names like "Elsie," "Topsy," "Alf" and "Ernie". What has happened to "Elsie" and "Topsy"? It was very clear from the commercial accounts for 1958–59 that these machines were on the way, but we do not hear a great deal about them now. I hope that the Assistant Postmaster-General will give us some information about them.

I very much hope that this White Paper represents a realistic exercise, and is not just another venture into the world of great promises before a General Election and a breach of them afterwards. I draw attention to the Report on Post Office Development and Finance, 1955—Command 9576. This told us that the prospect was 8 million telephones in March, 1959, but, in fact, that figure was not reached until a year later—primarily because of the "stop-and-go" policy which often appeared to dominate the thinking of hon. Members opposite.

In general, I welcome the White Paper and the advance that is proposed to be made in the telephone service. But I have one mild criticism, to which my hon. Friend the Member for Barnsley has already referred. I refer to the question of the shared services. The White Paper says that sharing will continue. It goes on to say: But the utimate aim is to remove compulsory sharing … I readily admit that priority must be given to the waiting lists, but this statement of ultimate aim is far too loose. It does not mean anything at all. It is nebulous. I believe the right hon. Gentleman would almost agree that it is non-committal anyway.

In the Financial Times of 3rd December, there appeared a letter from a Mr. James Grant, as follows: The day after I read your big news of the £900 million to be spent on telephones, an emissary from Post Office Telephones called at my house to inform me that my telephone line would be reduced to a party line"— That is not very encouraging— whether I liked it or not He goes on to say: I didn't. I have been a subscriber for over 30 years and have had my present number for 23 years, so I am wondering if the £900 million is to go forward or stop the progression backwards. I could perhaps understand it if my line was not in continuous use, but they haven't that excuse. If they are just going to double up on the lines they already have, they shouldn't need £900 million. That is devastating criticism from a subscriber, and it is not a very good start. This is an indication to the Post- master-General of the feeling of some people about shared lines.

With regard to the bulk supply agreements which have been referred to, I hope the Postmaster-General will take note of the criticism which has been expressed in the House. It is most relevant to the present situation and to the massive expenditure that is to take place within the next two or three years. What is the Postmaster-General proposing to do, in the light of the Public Accounts Committee's Report? How will he ensure that his purchasing policies will take account of the new circumstances? Has the cost investigation begun yet? The Public Accounts Committee asked for such an investigation. Will account be taken of the consequences of the increased demand?

I cannot help thinking that these contractors must be rubbing their hands at the thought of what is before them. There must be economies as a result of orders of this size. Why should not these economies accrue to the taxpayer and to the Post Office, as well as to the firms? A very serious criticism has been made this morning, and I hope that we shall have a statement on this matter.

I now want to deal with a matter which arises partly from the White Paper, where reference is made to the increase of the use of the telephone. A Mr. Harold Johnson, of 63, Oxford Street, has got some ideas. The House may ask "Who is this Mr. Johnson?" He is a scoundrel who sends out official-looking letters which are headed in pillar-box red, and the letters start: The Information Exchange for G.P.O. subscribers. It has a Board of Trade number "B.N.A. 196, London Headquarters."

I have a photostat copy of the letter with me, and I can assure hon. Members that if they saw this letter they would themselves imagine that it was an official letter from the Post Office. It reads: The Telephone Secured Income Policy.

Dear Subscriber,

H.M. Postmaster-General has now officially confirmed that he is promoting additional services with the aim of getting private subscribers to use their telephones more, and probably your own telephone is somewhat non-productive.

In this connection, if you can use your spare time in your own home for the reception of incoming calls only, you can benefit financially as you will see as follows:—

The need is to supply important information to many thousands of people (by telephone only) every week, but this cannot be done quickly enough unless hundreds of telephonists are engaged at a fixed salary. The alternative is to seek the co-operation of a few G.P.O. telephone subscribers in each exchange area to receive some calls at peak periods on Friday evenings as explained in the Policy.

It can be quickly arranged that 10s. is paid to you re each call you answer. Thus, for example, if you answer 10 calls weekly, you receive £5 per week, and if you answer 20 calls weekly you receive £10 per week etc.

People in all walks of life now benefit from this most important new telephone service, such as: Housewives, Teachers, Cashiers, Shopkeepers, Newspaper Reporters, Telephonists, Artists, etc.

You may have to answer as many as 20 calls within two hours on Friday evenings whenever you are free to do so (but always without obligation) each call taking less than a minute to answer.

However, if you wish to participate in this most exciting and rewarding spare time occupation, you must apply at once, otherwise you may be too late because only several subscribers are needed in each exchange area.

Yours faithfully,

The Information Exchange."

This really is a scandal. The Postmaster-General knows about it. Questions have been asked in the House, and I have had correspondence on the subject with the Assistant Postmaster-General. This is a clever, cruel, calculated swindle, craftily devised to deceive innocent people.

I happened to come upon it through a retired pensioner who wanted a spare-time job. He wanted to occupy his time and he thought that this would help him to pay his telephone account. He was, not unnaturally, attracted to this proposal. Very innocently, he sent along £5, because to join the scheme one has to pay £5 first of all. Later, he learned that it was only a racing tip service. This retired pensioner has very strong views on gambling, and he immediately asked for his money back. He has never had it, and he is still waiting.

Even if he had participated in the scheme, it is very doubtful indeed, from further information that I have had, whether he would have had any return on his outlay, because this is a swindle. It is a dirty little racket. It just keeps within the letter of the law. It is run by the wily Mr. Johnson from a seedy cubby-hole in Oxford Street. I put it that way because the News of the World one Sunday published an article which attempted to expose this artful dodger. His activities are not confined only to the south of England. They go even further

I put it to the Postmaster-General: is it not possible to stop this racket? Is there not a case here for helping the subscribers? It is not a bit of good telling them that they can go to their local head postmaster or telephone manager and get him to answer all the inquiries. They do not go to the head postmaster or the telephone manager until they find that they have been" had," and then it is too late.

I make the suggestion—I do not know whether it would be possible—that a slip be put in the next telephone account drawing attention to this matter. I do not think that the Postmaster-General has any doubt at all about the integrity of this person. If the man is what I have said he is, why not take action at least to inform subscribers about him before they pay any money? He gets the names from the telephone directories and sorts them out according to districts. What about Scotland Yard? Can the police be put on to it? Surely, something can be done to protect subscribers. I hope that, as a result of my raising the subject this morning, action will be taken to safeguard telephone subscribers against being treated in this way.

I turn now to one or two other matters. First, a word about the expected surgical amputations in our railway services. I am fairly sure that these will play havoc with some of our Post Office services. They will certainly involve a number of complications in the transport of mail, particularly on the delivery side. As I see the future, there will inevitably be a much greater volume of correspondence and mail going by road than now goes by rail. The Postmaster-General has been good enough to tell us about the experiment in the Eastern Counties, in which mails are now transported via the trunk roads. I understand that mails are fed into the centres and they are thence distributed into the road feeder services.

I gather that this experiment has been successful. Is it to be extended nationally? In view of the problems which the Post Office will face as a result of the Beeching proposals, is it proposed to have the Eastern Counties experiment extended nation-wide, or is it intended to apply it only in particular areas? We ought to be told something about this very soon, because the procedures which will flow from it will be rather different from those which have been used over a long period. For over a century, mails have been transported by rail, and the new method of transport by road will undoubtedly raise important questions, and it is essential that we should know how far it is intended to go.

My hon. Friend the Member for Barnsley referred to the siting of sub-offices. I have raised this matter on earlier occasions. I cannot understand why there should be all this difficulty about the resiting of sub-offices nowadays. I am not concerned here with the Crown offices and the tussle which goes on behind the scenes of Crown offices versus sub-offices. I know all the difficulties there and I leave it alone. I am concerned now with the siting of sub-offices having regard to the changes taking place in the towns where people live.

I am not critical of the siting of sub-offices in the rural areas. Broadly speaking, I think that they are probably in the right places, because the countryside has not altered for a long time, and an excellent service is given. In the urban areas, on the other hand, where our towns are beginning to spread and change, we find that the sub-offices are not sited to meet the requirements of the residents. As my hon. Friend reminded us, great inconvenience and difficulty is often caused thereby to older people, old-age pensioners, young mothers with little children, and so on, and, moreover, there is the new legislation which calls for more business to be transacted at sub-offices. Our Order Paper shows, by the number of Questions from hon. Members on both sides, that there is a general feeling that greater attention should be given to this whole subject.

Two years ago, when I raised the matter, the hon. Lady who was then Assistant Postmaster-General was good enough to tell me, in response to my plea, that there would be an inquiry. How far has this inquiry gone, and what is it proposed to do now?

I return to the White Paper. In the penultimate sentence of its conclusion we read: It calls for the co-operation and support of the Trade Unions, which will undoubtedly be forthcoming. I say quite deliberately to the right hon. Gentleman that it is not enough to say "will undoubtedly be forthcoming" and leave it at that. Co-operation implies a joint effort. This can never be a one-sided obligation. Active support for the plans means that the Government and the Postmaster-General must be prepared to take positive steps to win this co-operation.

I should be less than honest if I did not tell the right hon. Gentleman that some of us are dismayed at the way things are going. I never like referring to predecessors, but the present Minister of Transport, when he was Postmaster-General, issued a White Paper, Cmnd. 303, on the automation programme in 1957, and this dealt in a much more robust and positive way with the desire to get the co-operation of the staff side. Here is part of what was said: The Post Office intends that full automation shall be undertaken with the good-will of the staff". That is much more positive, much more robust.

Am I right in inferring that the different wording of the present White Paper today reflects a weakening will on the part of the Postmaster-General to encourage full co-operation? I said that a number of us were becoming dismayed. Over the last two or three years, we have seen not the destruction but the deterioration of the results of the patient work which has gone into building up staff co-operation on both the Whitley side and the joint production side.

I am one who is proud—I am sure that there are others in the House who feel the same—of the part that the trade unions have played. I remember that, when I was a branch secretary, I would go to see my divisional controller and, almost as my first words to him, I would say, "Sir, there is the problem in the middle of the table. You sit the other side. It is our job together to try to find a solution". That has been the spirit in the Post Office for a number of years.

During the past two years, however, the good relationships are showing signs of not being as firm as they were. It started, as the right hon. Gentleman will remember, during the work-to-rule over the rejected pay claim, and, of course, that work-to-rule need not have happened, as we found out afterwards, if the claim by the Union of Post Office workers had been looked at sympathetically. Eventually, it had to go to arbitration. What did the Arbitration Court do? It doubled the offer which the Postmaster-General had made. That was two years ago.

There has been bad feeling for a very long time. Are we heading for trouble again. It looks very much like it. The question of adequate pay for Post Office workers is still unresolved. It is still much below the pay of people in manufacturing and other industries. Immeasurable harm was done last April. I just do not understand the staff policies which, apparently, percolate from the political head.

I wish to refer to a couple of communications. One was in answer to a wage claim put forward by the Union of Post Office Workers. The letter from the Post Office said that the P.R. surveys of workers doing comparable work in outside occupations showed workers in the Post Office to be overpaid. Fancy putting in a letter to the Postmaster-General's staff that surveys showed that his staff was being overpaid. I can think of other language to use, but I should have thought that that was the sort of language that should never have been used concerning a staff such as that of the Postmaster-General.

There was an additional observation, that they are not seeking reductions on this occasion. If the Department wanted to rub it in, that was surely the way to do it. Is it any wonder that at the union's annual conference which followed there was strong criticism of what had been written in this letter? It provoked and incensed the delegates at the conference, for they regarded it as an insulting and intolerable declaration by their employer.

Once again, the case went to arbitration. What view did the Arbitration Court take of the assessment that Post Office workers were being overpaid? Against an alleged over-payment of 11s., the postmen were awarded an increase of 4s. 6d. a week. Against an alleged over-payment of 14s. 5d., the telephonists were awarded an increase of 3s. 6d. The Postmaster-General then stepped in. He did not want the telegraphists to go to the Arbitration Court; he had probably had enough. In subsequent negotiations, the telegraphists received an increase of 10s. 6d. against an alleged overpayment of 3s. 8d.

The bad feeling which has been engendered need not have happened; it should not have happened. This is not the way to promote good staff relations. It is out with the elementary principles of good management. I am satisfied that no good employer would have behaved in that way and allowed himself to be placed in that situation.

I said earlier that there are those of us who value highly the co-operation which has taken place in the Post Office between the staff side and the official side for so long. We witnessed the development of this. We are the envy of many industries. I could give a number of examples of employers in outside industry who have been almost transfixed by the joint working which takes place in the Post Office. As I say, we shall be very dismayed if there is any deterioration of this feeling between the Postmaster-General and the staff.

If this debate achieves anything, I trust that the excellent work of the unions and the administration will go on unhampered and assisted by good staff relations. I want to see that. I do not want a repetition of what has happened over the last two or three years. The Postmaster-General has a part to play in this, and, if I may refer again to the White Paper, the last sentence of it I hope typifies the approach of the Postmaster-General to staff relations in the future. The sentence states, "This challenge will be met." I very much hope that the right hon. Gentleman will have another look at this and will ensure that staff relations improve.

12.55 p.m.

Sir Cyril Osborne (Louth)

I hope that the House will forgive me if I inject a rather different note into the debate. I should like to speak from the taxpayer's point of view, the man who has to foot the bill and find the money, if necessary. I wish to ask some critical questions, although I hope that my right hon. Friend understands that they are not necessarily hostile questions.

Before I do that, I should like to refer to two points made by the hon. Member for Bamsley (Mr. Mason). First, I support his plea to my right hon. Friend that there should be no cutting down of the number of kiosks in rural areas. There are about 70 or 80 villages in my constituency, and it would be a tragedy if the kiosks were to be reduced or cut down in any way.

Secondly, the hon. Member said that in the great contracts, to which I will return later, there was a fixed price for five years. I asked him a question which did not bring quite the answer that I hoped to get. If there is a fixed price for five years with no escalator clause, the Minister must have made a fine bargain. I wish that I could find that in ordinary industry. If my right hon. Friend can get firm supplies for five years ahead at a fixed price with no escalator clause, he is the best business man in the country. I should like to know what the escalator clause was. There is no such thing as a fixed price.

The Bill gives the Postmaster-General power to borrow another £360 million. The objects for which the money is to be borrowed have the support of all of us. We want a better policy and better services.

The two questions that I want to ask from the taxpayer's point of view are these. First, how will the money be spent? Will the taxpayer get good value for money? Secondly, can we afford it?

In Cmnd. 2211, issued only last month, it was said that the inland telephones will cost £900 million, of which £550 million will come from internal resources and £350 million will be borrowed. How much of that £900 million will be spent on things like cables and equipment? What proportion of the national output of those cables and equipment will this take? How will this affect our export market? Will my right hon. Friend be sucking into the easy guaranteed home market supplies of equipment which we should be exporting? This is a vital consideration for the general economy and from the taxpayer's point of view. If it results in a material reduction of the amount of goods available for the export market, then it amounts to inflation. May we have some figures on that, because this programme cannot be treated in isolation? It must be looked at against the background of the White Paper entitled "Public Investment in Great Britain, October, 1963", Cmnd. 2177.

I remind my right hon. Friend and the House that if his policy will cause inflation, we shall run into a lot of trouble which we have tried to avoid. Inflation is about the most pernicious sin of democracy. It is the hardest and most unpopular to cure. In recent years, we have lost two very good Chancellors of the Exchequer, one from either side of the House—the late Sir Stafford Cripps in the Labour Government and my right hon. and learned Friend who is now Leader of the House—merely because they tried unsuccessfully to get the nation to accept sensible economic policies. Nobody wants to live within his income and I do not want my right hon. Friend the Postmaster-General to force a policy that will cause more inflation.

In the last three months, capital investment programmes have been issued for the year 1964–65 amounting to £2,505 million as against £1,795 million two years earlier. Of the latest figure, the Post Office is to take £180 million, as against only £119 million before. The important point is that it is said that these estimates are at March, 1963, prices. Can we be told with what certainty my right hon. Friend believes that the contracts which people place under his £900 million programme will be possible at 1963 prices or how far the escalator clauses to which I have referred will operate and will make it necessary for him to have to come back again to the House of Commons, as he is doing now after the failure of his previous plan, which, though planned for a four-year period, has lasted only two years, and say that he has not asked for enough money and needs more? As representing the taxpayer, and the only Member here so far who has spoken on behalf of the taxpayer—

Mr. Mason

What does the hon. Member think I was doing?

Sir C. Osborne

—and it is the taxpayer who has to find the money—I want to know whether the money now being asked for will be sufficient. I do not think so. In view of the experience of the last two years, when the 1961 policy was brought forward and the estimates were supposed to be adequate for four years but have proved to be not enough for more than two years, I want a lot more reassurance from the taxpayer's viewpoint that the money now being asked for, which is based on 1963 prices, will give the results for which my right hon. Friend hopes.

If, because of policies like this—and this is only one of the many public expenditure policies to which the Government have pledged themselves in the last few months—we suck more and more labour and materials into the home market, it will be difficult for us to export the 30 per cent, of our total manufactures which we must send abroad to keep solvent. That is the side of the problem which worries me.

As far as I can make out, the 1961 provisions proved inadequate for the reason that the profitability of the Post Office was not as good as had been anticipated. It is nice to read the word "profit," even if in public accounts it does not mean what I understand it to mean in private accounts. I understand that the profit in 1960–61 was £24 million. In the following year it was down to £13 million and in 1962–63 it was down to £12 million. Why did the profitability fall during those years? Before we as taxpayers are asked to provide another £360 million, we are entitled to know why the results have proved so disappointing.

The estimated profit for the current year, 1963–64, is put as high as £30 million. Why does the declining trend, from £24 million to £13 million and then £12 million, suddenly go up to £30 million? If I were to have figures of this kind put before me from one of my companies, I should want to a lot of explanation from my managing direc- tor. So far, we have not had it. I wonder whether this estimate will prove to be at all well-founded at the end of 12 months.

Let me remind my right hon. Friend the Postmaster-General of what his right hon. Friend the Chancellor of the Exchequer said only two days ago to the National Economic Development Council. This will affect the cost of my right hon. Friend's policy, which we as taxpayers are being asked to underwrite. The Chancellor said that we were in danger of another bout of wage inflation. If that comes about, the Post Office cannot separate itself from it. The Chancellor said that wages were again pushing up prices and outstripping productivity. How far will that warning—and the Chancellor does not speak without good reason—affect the estimates upon which this borrowing is to be justified?

At the National Economic Development Council, the trade union representatives turned back and said that they could not consider wage restriction apart from profits. As we understand them, however, there are no real profits in the Post Office. Therefore, the demand for higher wages will not easily be put on one side. If what the Chancellor said is true, I should like to know how much of the £900 million which is to be spent on telephones in the next five years will ultimately be paid in wages and how far out my right hon. Friend's estimates will be if those wages increase.

There is another pertinent question. My right hon. Friend has referred to the fact that the return on net assets has been about 8 per cent, and that it is hoped to keep the return at about 8 per cent. I hope that my right hon. Friend succeeds; I hope that he gets more. In 1958–59, the return on net assets was 8 per cent. In 1959–60 it was 8.6 per cent.; in 1960–61, 8.5 per cent.; in 1961–62 it fell to 6.5 per cent., and this year it has fallen to 6.2 per cent. This was before interest was charged. How much interest should be charged, at what rate has it been paid and how would the profitability figure be affected if interest had been paid? These returns on net assets, it is said, were before supplementary depreciation. What is supplementary depreciation? How much does it cost and how much would it affect the figures which have been given to us?

From time to time, profitability comparisons are made between the Post Office and other nationalised industries. The 1962–63 profitability figure of 6.2 per cent, for the Post Office compares with 5 per cent, for the National Coal Board, 4.7 per cent, for gas, 6.1 per cent, for electricity, a minus figure of 3.5 per cent, for the Transport Commission, 2.3 per cent, for British European Airways and a loss of 10.3 per cent, for B.O.A.C. These figures, however, are misleading, because some of them do not include even gross depreciation. None of them includes interest. No business can be run unless it pays its interest charges. If it does not pay its interest charges then it has to be subsidised by the taxpayer in a hidden manner, and I think that before the taxpayer is asked to put up another £360 million he is entitled to know the full facts. I am speaking for the poor devil who has to provide the money, the taxpayer.

For example, the gross return of the other nationalised boards, before even gross depreciation, on the figures given as to the so-called profit they have made, is quite wrong as compared with private industry where we have to find our own finance, pay interest on the money we borrow, find depreciation, and on the net results then pay 55 per cent, to the Government to maintain the Welfare State—without which the Welfare State could not manage.

The nationalised industries so far have not paid one brass farthing. These are facts we must face. If I may say so in passing, if the rest of British industry were nationalised and were to produce nothing for the Welfare State then it would be a case of heaven help us.

Now I want to ask two questions. I have been very concerned about the security of the Post Office workers who have been subject to many brutal attacks, and not least that of those in places such as I represent, the rural areas. Now the Postmaster-General is going to spend £1,000 million in providing services. Will he find any of that money to help protect the men and women who loyally work for him? In a village where the postmistress is doing a part-time job she is open to all kinds of attack. Can nothing further be done for her protection? Will any of this money which the Postmaster-General is asking for be used on such big issues as the prevention of mail train robbery—cases like that? Or to prevent such a case as, it will be remembered, occurred some five years ago when I think something like £250,000 was stolen in the very centre of London and has never been traced? So far as I know, no one has ever been accused in connection with that. Will my right hon. Friend be able to provide greater security for the people who work for him so loyally?

My second question is on automation. The hon. Gentleman spoke very feel-ingly and with great knowledge about the Post Office workers, but, as my right hon. Friend knows, the Leader of the Opposition has warned his own party, warned the nation, that in the next decade 10 million jobs, will be lost through automation. Whether we like it or not, this is happening the world over, and will happen in the Post Office as it will happen elsewhere. We can no more turn our back on the effects of automation than we can stop breathing. Therefore, I want to ask my right hon. Friend, for the Post Office workers, how far is automation going to affect their jobs? Will they be given reasonable notice that their jobs are likely to be affected? What protection will they get? What is he going to do? Is he going to stop recruiting, or is he going to reduce the age limit?

Lastly, I ask this question. The Postmaster-General said that there will be no increase in charges in the immediate future. How far is the immediate future? For what this nation wants above all things are lower charges. We want a cheaper way of living. My right hon. Friend could play his part to help in that. I remember when a letter could be sent for Id. and a postcard for ½d. Now we pay 3d. and 2½d. I hope to goodness the rates are not going up to 6d. and I would beg of my right hon. Friend to do all in his power to see that there is no increase in charges at all, and, if possible, that there is a reduction in them.

1.15 p.m.

Sir Barnett Janner (Leicester, North-West)

I should like to apologise to the House for not having been present for the start of the debate. There are just a few points I want to make, and if T repeat anything I hope that the House will forgive me for intruding and elaborating on what has already been said.

First, I should like to say that in my view this is an important Bill. I do not want to be over-critical about the very long delay in bringing it. I cannot understand the apprehensions of the hon. Member for Louth (Sir C. Osborne). I do not intend to enter into any argument with him over the position of the nationalised industries, but I think that much too much is made by way of party propaganda on issues in which the point does not really arise, and I think it is high time that the people of this country realised that that kind of thing is happening all too often, and quite uselessly, particularly on a Bill of this nature.

There is no doubt at all that the Post Office has served and is serving a very valuable and important function for the country, and in many respects is performing that function in a way which is admired in other parts of the world. I will not say in all respects, for we have fallen behind in certain aspects of the activities of the postal service, but I think that what I have just said ought to be said.

I also think that the Minister at long last is realising—I am sorry that he has gone away—that from the point of view of the taxpayer the proposals contained in the Bill are long overdue, because if the telephone system is not properly attended to and is not properly installed business concerns, as well as private individuals, are adversely affected. It is a public service which has to be put on a basis on which it can be used to fullest advantage.

Let me give an illustration which may perhaps interest the hon. Gentleman, who is so anxious about the business aspects of these matters. I received a letter from a firm in my own constituency, Leicester Printers Limited, of Church Gate, Leicester. That firm needs telephone facilities very badly and wrote to me as follows: I do not know whether anything can be done to expedite the installation of telephones for business purposes"— I am sure that the hon. Gentleman will be most interested in this—"but if it can be done"— Then it says something complimentary about me which I will not read, and then goes on: We have just appointed a new sales representative to operate in the West Midlands area, Mr. G. P. Law, 38 Summer House Grove, Newport, Salop, and obviously quick and convenient telephone contact between him and this office is imperative. That applies to business firms throughout the length and breadth of the country and affects the economy of the country very much indeed. It is just one example of what I am sure are the many examples which both the hon. Gentleman opposite and I, and, indeed, other hon. Members, could quote if we were to choose to do so. The writer of the letter goes on to enclose a copy of a letter received by the company secretary from the G.P.O. indicating that there would be a delay of four to five months before installation could be effected for the firm.

At the moment, I am not talking about private convenience, which is extremely important, although I shall speak about that in a minute, also. This is a business firm which has to suffer a delay of from four to five months before the installation can be effected between the firm's head office and its sales representative. It is absurd. I gather that the provisions of the Bill will enable the Post Office to deal with such a situation.

Sir C. Osborne

As the hon. Gentleman keeps referring to me, may I say that his experience seems to have been somewhat unfortunate. For more than 18 years I have dealt with the telephone manager in Lincoln. He has always been extremely helpful, and I have never been kept waiting for anything like the time referred to by the hon. Gentleman.

Sir B. Janner

I am not blaming the local people. If the hon. Gentleman waits a moment, he will hear the rest of the story, and he will realise that what I am saying is correct. The hon. Gentleman does not think along quite the same lines as I do, and he is not, therefore, always right, but in this case I think that he will agree that I am making a proper point.

The letter to which I am referring has been written by a reasonable person. This is proved by the fact that he says: I realise that there must be problems involved and that we have no right to any priority over other business houses already on the order list at the time of our application. However, I would suggest that business telephone requirements should necessarily take priority over private applications—should any of the latter be holding up business installations. I may or may not agree with that, because I think that both business and private installations should be provided as soon as they are requested. We have been told that the delay in installing telephones will now be a matter of weeks and not months, so I suppose that we ought to be grateful.

The writer of the letter received the following reply: I am sorry that we are having to keep Mr. Law waiting for a telephone but the trouble is that there is no spare equipment in Newport Exchange." I do not know what happens in Lincoln. If the hon. Member for Louth represented the district in which the exchange to which I am referring operates, no doubt he would change his opinion. The letter continues: Work is in progress to provide additional equipment but I am afraid that we are unlikely to give him service before February next year. The Telephone Manager has a very full programme of work in the Newport Wellington district to meet the unexpectedly high rate of growth and it is for this reason that we are unable to complete the job earlier. New Business and Residence applications are equally affected and as soon as the equipment is available we will be able to connect both categories with equal expedition. Naturally my constituent was not satisfied. Who would be? I gather, however, that something is to be done about it—I do not know whether this was the result of my tabling a Question in the House. I am pressing this point because I think that we ought to try to improve the present unfortunate state of affairs by approving the proposals in the Bill.

I am worried about the proposals for shared telephone lines. I know that some people have no objection to sharing lines, but, if an individual is not prepared to share one, it should be possible for him to get a private line. No doubt hon. Members have had experience of the difficulties which can arise from shared lines.

I wonder whether the Post Office has considered introducing into schools a system for training telephonists? The difficulty that one often experiences in business is that a new entrant to a business requires a long time in which to be trained to use the telephone system in operation in that firm. If such a person had been given at least some training while at school, it would not take long to train him to use the firm's equipment. At present when a youngster comes into a business it often takes a long time to get him accustomed to the type of telephone equipment being used.

I ask the Minister to take heed of what was said by my hon. Friend the Member for Gateshead, West (Mr. Randall). The greatest care must be taken to ensure that the best possible relationship exists between the men in the Post Office, the unions, and the Postmaster-General. I do not know where the fault lies for the present state of the relationship, but the men who work in the Post Office are dedicated to their jobs and we should make sure that a good relationship exists between all sections of this great service.

The Post Office must take account of the movement of population that is taking place now, not only from one town to another, but into new areas. It must also take into consideration the fact that elderly people are moving into some of the new areas. For a long time I have been trying to explain to the Postmaster-General the necessity for making sub-post offices accessible to elderly people and to younger people who have children. It is a question of convenience. In one part of my constituency, after a long time it was conceded that this was necessary.

I submit that in all circumstances, whenever a new building area is created, the Postmaster-General and his Department should establish close contact with their own people in the adjoining areas in order to make sure that facilities are granted for the new building area by way of sub-post offices, kiosks and so on. If a person does not have a telephone he cannot be expected to have to run perhaps a quarter of a mile to summon a doctor, even if the question of pain is not involved.

With respect to the hon. Member for Louth, I would point out that we have all the Government on our payroll in some way or another, and they know it. We have the Post Office on our pay roll. So if we are paying the piper, let us call the tune, by making sure that we have the necessary facilities provided. I agree that the provision of such facilities in new areas can be a costly matter, but it must be remembered that it is essential for business houses to keep in contact with their employees. I therefore strongly recommend that a constant watch should be kept on these developments.

We are glad that this money is being asked for. I am glad, because it means that the Postmaster-General will no longer have an excuse; he will no longer be able to say, "We have not got the equipment, and we just cannot act, because we cannot find the funds for the purpose." The funds will be there. I want to know whether he is satisfied that the amount for which he is asking will be sufficient to cover all claims and to deal with all the complaints that have been made hitherto. I believe that in the long run, if a satisfactory service is provided, the profits will be there.

1.33 p.m.

Mr. W. R. van Straubenzee (Wokingham)

The House always enjoys listening to the hon. Member for Leicester, North-West (Sir B. Tanner), but he will forgive me if I do not attempt to follow the points he made, with one exception. There is nothing controversial about this; it is merely a question of fact. Until he spoke, I was of the opinion that there was a training scheme for telephonists in the Post Office which could be made available to outside persons. In fact, I was almost certain that in my office there are persons who have had the advantage of Post Office training.

Such training is directly to the benefit of the Post Office. It is in everybody's interest that a person who works a switchboard should be able to do so efficiently. In the circumstances, it would be helpful if my hon. Friend the Assistant Postmaster-General would say a word or two authoritatively on the matter, so that we could know where we stand.

I am sorry that the hon. Member for Barnsley (Mr. Mason) is not here at the moment—although he has been present almost throughout the debate—because I want to support one of the points he made. It was very helpful of him to widen our horizons, and try to get us to look into the future from the point of view of space communications, and the part that the Post Office had to play in them. I have little technical knowledge of the matter, but I have always sensed that one of this country's difficulties arose from the fact that responsibility in this matter is spread over a number of different Ministries, and that my right hon. Friend has only one segment of responsibility.

I am not sure that that is good enough for the second half of the twentieth century, and I therefore support the urgency of the hon. Member's plea that we should not allow anything to cause us to fall behind in this effort. With our Commonwealth links, let alone some of the small colonial territories which may remain in the future, we are peculiarly well placed against any other possible competitors in the matter of providing the ground stations for so much of the space communications system.

I feel considerable anxiety when I read of our American friends making arrangements for ground stations in Commonwealth countries. This nation built much of its greatness upon its speed of and efficiency in communication. We did it in former centuries, and it would be a tragedy if we did not do it in the present century. I therefore welcome the way in which the hon. Member for Barnsley broadened our horizons in the matter. Incidentally, I join with others in congratulating him on his leading from the Opposition Front Bench.

The whole question of the Post Office is essentially one in respect of which hon. Members inevitably regard matters from a domestic point of view. I do not want to follow the hon. Member for Leicester, North-West—who has already been spirited from us—in dealing with a specific application for a telephone. I want to stress to my right hon. Friend the problem of hon. Members who represent exceedingly fast-growing areas. Berkshire, part of which I represent, is the second fastest-growing county—I believe that Hertfordshire is the fastest—and die area that we deal with for telephone purposes is centred on Reading.

I have said before, and I willingly say again, that I have dealt with no more helpful public servants than the telephone manager and the staff of that area. That is not said as "a bit of flannel", for the purpose of debate. I mean every word of it. I was impressed beyond measure when, less than a year ago, I spent the best part of the day trying to get under the skin of the organisation. It was fascinating to learn about many features of the work, of which I had no appreciation until I went to spend a day there.

In the hopeful forecast which my right hon. Friend gave us in the White Paper, "The Inland Telephone Service in an Expanding Economy," I hope that he paid special regard to areas represented by people like my hon. Friend the Member for Reading (Mr. Peter Emery) and myself. I understand that in spite of improved allocations our area is still what I may loosely call a black spot for the telephone service.

There are aspects of the matter which the general public do not always appreciate. The first is the sheer cost of installations. I do not want to weary the House with lengthy details, but a very small addition which was made to the local manual exchange two years ago cost £7,000. It has been utilised fully, and my right hon. Friend's Department has had to use mobile equipment even there, to extend the number of available lines. It cost £215,000 for the new automatic exchange in the new town of Bracknell, with 6,800 lines.

That is an area where quick communication is an essential requirement for modern expanding industry. The sums involved are really considerable. We should break them down into the sort of sums ordinary persons can understand, for we ordinary mortals are not used to dealing in millons and find it difficult to take in the many millions involved.

The second factor about it which makes it so difficult in an area like mine—and I delight at the reason for it—is the shortage of manpower. We are a county with a very high rate of employment, I am delighted to say. I hope that it long continues. But in an area like ours it is not always the case of sheer money for the Post Office. It is a question of providing the men to carry out the work which the money is there to back. As I have said, this is a very real problem in an expanding area like ours. I only hope that these sort of factors have been taken into account. I say that respectfully, because I naturally hope that they have been.

Of course, it is a wonderful target to place before us. The Postmaster-General has said that he hopes, for all practical purposes, to have abolished the waiting list for telephones by March, 1966. I mean no disrespect to my right hon. Friend or to anybody, or to any Government of whatever colour, but I am a cautious person and I think that I. shall wait until I get to March, 1966, and believe it when I see it. However, I think that we have far more chance of achieving it with the present Postmaster-General than we are likely to have in the future—[An Hon. Member: "No."]My right hon. Friend, or his Conservative successor, will be doing the task for as long as we can foresee.

I want now to make some suggestions of, I hope, a practical nature. First, in any business or set-up, if we have resources unused in the sense of equipment which is not actually in service, or buildings which are taking a long time to complete, we automatically have inefficiency. I must confess that I am profoundly bothered at the time it is taking apparently for us actually and physically to build automatic exchanges. It is taking not far short of four or five years to build, and, of course, to equip, an automatic exchange. While I know that I have not the necessary knowledge, I find it very difficult to accept that so long a time is necessary.

It is not fair to criticise my right hon. Friend the Postmaster-General entirely for this, because, I think I am correct in saying, the Ministry of Public Building and Works is, as it were, his agent for the purpose of building. However, I have consulted one or two friends in this kind of field abroad, that is to say, they export technical equipment of this kind to other parts of the world, and they snort at the length of time which this takes at home and tell me that in Eastern countries they would not get the contracts if they took as long.

I hope that my right hon. Friend is satisfied that this long-drawn-out period for the building and equipping of an automatic exchange is really necessary and that we are not being fobbed off by the boffin who can so easily mislead the non-technical by the use of long phrases and by saying that it cannot be done.

The second suggestion I want to make very earnestly to my right hon. Friend concerns informing the public about the reason for delays, particularly delays in being connected with the telephone service. I have referred already to the day I spent at Reading, trying to get under the skin of the telephone service and when I learned of problems and difficulties of which I had never had the smallest conception before. I also began to understand why it is that the ordinary subscriber, seeing a perfectly good telegraph pole, or knowing that there is a telephone cable under his house and that it passes within a few feet of his door, cannot understand why he cannot be connected.

One obvious example of the problems which arise. When a housing estate is being developed the telephone service lines are laid and then the thing is clawed up by a ham-handed excavator and one has to go miles to find the break. There are innumerable problems of this kind. At present, we have nothing which, as far as I know, is succinct, easily understood and well written and which tells the ordinary man and woman what the difficulties are. There is a small leaflet entitled "Installing the Telephone—What it Means" which is quite effectively done, but I am advised that it is now out of print.

I think that there is very great need—I mentioned this to my right hon. Friend before as a result of the talk I had at Reading and subsequent ones—for a simple, well produced, and perhaps slightly humorous, leaflet which would go to all people who have applied for a telephone and cannot instantly have one. I am a tremendous believer in telling people the facts.

The fact is that the modern generation—and this is a very good thing—are utterly unsympathetic to arguments of delay and restriction of any kind. For them the telephone in the 1970s, and certainly in the second half of the 1960s, is an essential feature of modern life and they are impatient at the difficulty in obtaining it. For them it means practically nothing to say that since the war, this, that or the other. For very many of them the war is not a point in their life which makes any sense. Therefore, the more we can inform people in simple ways the better, until the red letter day comes when the whole of the waiting list has gone.

Thirdly, and very briefly, I wish to make three short suggestions for improving income. First, my right hon. Friend wants to improve the sums which the Post Office takes from the telephone service, and I am sure that he is right. In some areas, we can, but in a great many we cannot, make use of the speaking clock. I am surprised to learn that the speaking clock is one of the best investments of the Post Office. I am told in Reading that if one wants to ring it up one has to dial 431808. If one can remember that number, by the time one has dialled it, it is often quicker to walk round the corner and ask a neighbour the time. I hope that we may see a very great extension of the speaking clock which seems to me to be a very good investment for the post office.

Secondly, I hope, too, that we shall see an extension of the "What's On?" service. Very many people buy an evening paper to find out what is going on in the evening. The "What's On?" service is very good and I have listened to it with great interest, although one's work in the House means that one cannot enjoy the lovely things going on in the evenings. I wonder whether there is any room here for that Post Office service to be extended to the public in substantial areas of population, of which I would classify Reading as one.

The third suggestion I wish to make—there is nothing original about this—is that I am sure there is room for an extension of the classified directory concept. It has good potential advertisements and it is very convenient for the subscriber to have it quickly and easily available by his telephone. It could well be produced in a modern and attractive way. In a provincial area there is no need for it to be a substantial document. There could be something in it for the Post Office and something for local businesses. That would be a happy combination. I do not think that any of these three ideas are urgent, but this seems to be the sort of occasion on which to bring them up again and to impress them on my right hon. Friend, while realising, of course, that they are being constantly watched.

In conclusion, I join with others in paying very warm tribute to what the Post Office has achieved so far in the matter of telephones, whilst making it quite clear to the Postmaster-General that he has a group of friendly, but firm, watchers of the progress in a service which the modern generation regard as an essential way of life. I believe that the story he has to tell is a very satisfactory one, and that the programme he lays out for us is extremely hopeful. That it depends on the economic climate of the country, as stated from the benches opposite, cannot for one moment be denied, but, personally, I hope that we shall so keep an even keel as to achieve it.

1.51 p.m.

Mr. H. Hynd (Accrington)

Li the spirit of "Grievance before Supply", I hope that the House will bear with me while I put one or two points to the Postmaster-General. In doing so I should like to be associated with other hon. Members who have expressed their admiration of the work of the Post Office. I think that nowadays, particularly when they are going in for such things as communication by satellite, it must be quite exciting to be a Postmaster-General, and certainly the general level of the service is extraordinarily good. It has always been a wonder to me that the Post Office can take a letter containing printed matter for 2½d. to the other end of the world. It certainly serves the public in a very good way indeed. But the Postmaster-General will be the first to admit, I am sure, that things can be improved. Things do go wrong from time to time, and it is in that spirit that I should like to bring to his notice one or two matters particularly affecting my constituency.

My hon. Friend the Member for Leicester, North-West (Sir B. Janner) made a plea that I should like to sup- port wholeheartedly, namely, that there should be generosity in providing telephones and post office facilities particularly for old people. From time to time, I get complaints from constituents along those lines. I submit them to the Post Office and receive a very convincing-looking reply to the effect that there is a telephone box or a sub-post office within, say, a quarter of a mile.

Unfortunately, I find it difficult to convince my constituents about this because the quarter of a mile is apparently measured as the crow flies. I do not know what old-age pensioners are like in other constituencies, but in mine they cannot fly like crows. To tell an old-age pensioner that there is a telephone box, or a sub-post office, a quarter of a mile up the hill is not very much comfort to him. So I support the plea of my hon. Friend the Member for Leicester, North-West that the Post Office should be rather generous in providing these facilities, even if they do not show a financial profit.

After all, every telephone box is an advertisement for the Post Office. It is helping not only to advertise the Post Office but to inculcate the telephone habit, which the Post Office wants to inculcate, amongst the general public. So I think that the Post Office should not look too closely at the financial returns when asked to provide facilities of that kind.

It was admitted, in reply to a Question I asked the other day, that there is delay on the railways bringing mails to North-East Lancashire. I gather that the delay is somewhere around Crewe, but, where-ever it is, the Post Office has admitted, and the Minister of Transport has admitted, that there is delay in mails to and from London and that area somewhere around Crewe. I hope that this is being closely looked into because there is no doubt that there is cause for complaint. I know that from my own postbag and from the verbal complaints that I get.

Some time ago, the Post Office had a reorganisation of the services in my area and it took the sorting, for example, away from Accrington to Blackburn. I hope that the Postmaster-General will not misunderstand me. I am not against modernisation and cutting out unnecessary services or centralising the services if that can lead to economy with efficiency, but unless it leads to more efficiency, I think that it is a mistake.

I treated the first complaints that I received with a great deal of caution. I went to the post office to see the arrangements for myself. From what I was shown and told, I came to the conclusion that the new system ought to work better. But I must say that it does not. In practice, there is undoubtedly more delay now in the delivery of letters and parcels in the Accrington area since the changeover to Blackburn than there was before. Without attempting to put my finger on to the real spot of trouble, I ask the Postmaster-General, as I have asked him in correspondence, to have a very special look at this, because it really is causing discontent in my area.

There is one other associated matter that I want to mention. The greatest delivery delay now is to the 2½d. packet which is posted on a Friday. Because 2½d. packets are not delivered by first post and there is no second post on a Saturday, those packets posted on a Friday are delivered some time on Monday. That may not sound very serious until we realise that many of these 2½d. packets contain birthday cards, condolence cards, congratulations on weddings and that sort of thing. It is not very nice to get a birthday card two or three days late. People do not always realise that a 2½d. packet posted on a Friday will not get to its destination until Monday.

In the official reply that I have had the Postmaster-General says, very reasonably, "If you want to be quite certain that a birthday card or a condolence card arrives on a Saturday, all you have to do is put an extra ½d. stamp on the envelope". But everyone does not know that. I am sure that if they did, they would probably put the extra stamp on.I do not want this to come back on me with the accusation that I want the postmen to be employed for a special second delivery on Saturday. That is not my intention at all.

I think that there is a fairly simple solution. Admitting that a 2½d. stamp does not entitle packets to be delivered normally by the first post, could there not be an exception on Fridays, so that although the packet has only a 2½d. stamp instead of a 3d. stamp it can be delivered by first post on Saturday? I cannot see that that would "gum up" the works of the Post Office too much. It appears to be a simple solution which I hope that the Postmaster-General will examine.

Having got off my chest one or two grievances, may I repeat my expressions of admiration for the general standard of efficiency displayed by the Post Office? I hope that that standard will be increased to 100 per cent, by the remedying of the points which I have mentioned.

2.0 p.m.

Mr. Peter Emery (Reading)

I know that the House has some more importantbusiness to discuss this afternoon, so I will be brief.

I was interested in the speech of my hon. Friend the Member for Wokingham (Mr. van Straubenzee) because, although it may not be apparent from its title, his constituency includes one-thirteenth of the Borough of Reading and, therefore, in connection with the Post Office problems we come much together. I can assure the Minister that any criticisms are not from Berkshire and nowhere else in the country, because we believe that my right hon. Friend is doing a difficult job extremely well, and are grateful to him for the pressure which he exerts to keep advances in the Post Office organisation in time with the pace of modern life.

Sir B. Janner

Will the hon. Gentleman kindly give way?

Mr. Emery

Certainly.

Sir B. Janner

I gather that his hon. Friend said that I had been "spirited away". I notice that the hon. Member for Wokingham (Mr. van Straubenzee) has also been "spirited away" from the Chamber. I offered my apologies before leaving the Chamber, but apparently the hon. Gentleman's hon. Friend did not.

Mr. Emery

Anyone who has been in this House long would know that the hon. Member for Leicester, North-West (Sir B. Janner) is too solid a figure to be spirited anywhere.

Sir B. Janner

Perhaps the hon. Gentleman would explain that to his hon. Friend.

Mr. Emery

Before he left the Chamber my hon. Friend gave me a message to deliver, Mr. Deputy-Speaker He apologised and explained that he had been sitting in the Chamber since eleven o'clock. He has now dashed out to get a sandwich before returning to hear the speeches which will wind up the debate. I am sure that we would all approve of any hon. Member who adopted that course. Too often hon. Members, having made a speech, leave the Chamber and do not return to hear the winding-up speeches. I admire my hon. Friend for his intention.

I wish to refer to those on the waiting lists for telephones. My hon. Friend the Assistant Postmaster-General will recall only too well that I have been urging him to exert pressure to secure a solution to the problem in Reading. There is a report in the Reading Standard today of a speech made by the deputy regional director of his Department who said that the waiting lists in Reading would be wiped out within two years. That is 20 per cent, better than the figure in the White Paper, which refers to the early part of 1966. A period of two years would bring us to the last months of 1965.

I was concerned to read in the report of the speech that the deputy regional director said that Reading had been referred to as a "black spot". I have found that it is not so black.

Mr. H. Hynd

Except politically.

Mr. Emery

I have known the hon. Member for Accrington (Mr, H. Hynd) in local government circles and he fought exceedingly well in local elections in the Borough of Hornsey. Eventually, he left that area and I stayed on. He need have no fears about political "black spots" in Reading, which will stay the same sort of Parliamentary complexion as it is at the moment

Sir B. Janner

After Marylebone?

Mr. Emery

Obviously, members of the party opposite have to find something to raise their spirits, after proof of the pressure of the electorate back towards the Conservative Party which has been seen in the by-elections recently.

Sir B. Janner

At Marylebone?

Mr. Emery

I come back to the "black spot"—

Mr. Deputy-Speaker (Sir Robert Grimston)

Order. I think that we had better get back to the Post Office.

Mr. Emery

The report of the speech of the deputy regional director states that Reading has doubled its size during the last 10 years and is the fastest growing telephone area in the country. There is nothing very "black" about that. I hope, however, that that statement does not represent the logic of the Post Office Department. Because the size is double, frequently problems are increased. It is because of the increase, which has been greater in Reading than anywhere else in the country, that the problems of Reading are worse than anywhere else; and it is no use trying to avoid a problem by saying that an area has expanded much more than was expected.

I hope that my right hon. Friend will support the members of his Department and better the aims which he has set. In addition to those on the waiting list for telephones being supplied within the next 24 months I hope that anyone else whose name is added to the list will be provided with a telephone. It is no use my right hon. Friend believing that the degree of expansion in Reading will remain the same. It will increase and there will be a greater demand for telephones. His planners have been confronted with this increase in the past, and have not made the necessary judgments about it. I hope that the same mistake will not occur again.

Flexibility is necessary in the Post Office Department in two ways. It should relate to repair services and equipment. There are more modern telephone instruments, and that we applaud. But when I moved to a new office, I found that people from the Post Office Department came to make estimates and then went away, and other people came to measure up the rooms and to do things like that. Three or four visits by different people had to be made before the arrival of the man who got on with the job of installing a telephone.

I do not say that such a thing never happens in private industry. But the private industrialists who make the profit are those who get on with the job. I appreciate that in the case of larger firms, where the responsibility and measure of control is greater, there may be difficulties, and that is why I stress the need for flexibility. If my right hon. Friend would ensure flexibility in relation to maintenance and the installation of new equipment I am sure that a greater percentage of profit would result for the Post Office than even he has considered.

The pattern of standardisation of equipment is admirable, but that does not mean to say that only one sort of coloured instrument may be provided which can be placed on a desk or a table. Why not. have receivers which can hang from the wall? This sort of flexibility in the use of equipment is part of the service which subscribers have come to expect, and I hope that pressure will be exerted to ensure that this sort of flexibility is provided.

There is need also for flexibility in relation to people. I have visited the Post Office at Reading during the Christmas peak rush, and I cannot speak too highly of the way in which the people in the Reading area carry a burden, which includes part of the work of the London Post Office—because that is sent to Reading to be dealt with during the Christmas period. They do it because of flexibility and because everyone is able to get on without necessarily having to worry about the standard pattern. They are given the deadline of 24th December and everything must be cleared by that date. I am delighted to pay tribute to the Postmaster in Reading for achieving that last year, the year before, and the year before that. I have no doubt that the same will be achieved again this year.

One criticism which I voice concerns staff. It has come to my attention that certain exchanges in the London area which have a problem of staffing are unwilling to release certain personnel to go to other areas of the country, one of which is Reading, because it is considered that their position would be made very much worse if that personnel were released. I accept that argument if the man concerned is to be transferred to an area where there is no pressure of work nor great demand on the Post Office Department, but I cannot accept it if there is a similar demand for labour in the area to which the man wants to be transferred.

It is absolutely crazy that a Post Office administrator has to travel from Reading to a Central London exchange and back to Reading when the demand in the Reading area is as great as in certain areas of London. The unwillingness of the Department to authorise such a transfer makes a man's working day probably three hours longer than that of his colleagues in the same exchange. This is what I mean when I talk about flexibility of manpower. My right hon. Friend must ensure that this sort of thing is not allowed to continue.

The last matter to which I refer also concerns employees of the Post Office. I am delighted to see them come forward to play their part in local government and civic administration. This is nowhere more evident than in Reading. I am more than pleased to be able to tell my right hon. Friend that the present Mayor of Reading is a Post Office employee. He is doing an admirable job as first citizen of the borough.

Mr. H. Hynd

Labour, I hope.

Mr. Emery

He is a Labour man and all credit to him. He is doing a first-rate job. I have said so in Reading and I am quite willing to say so on the Floor of the House today.

This is not a matter of politics and I did not intend to mention his politics because, as first citizen, he is independent of politics and has proved that, but I have been forced into mentioning his politics. Irrespective of politics, it seems very wrong that a man who has given such service for many years to a local authority, as happens in many authorities, sometimes has to leave a civic function at 11 p.m. or midnight, and then, having represented the borough, to go back to the telephone exchange to put in hours of work when most of us hope to be in bed, merely to make up his pay for the week.

There is something very wrong if we are not able to devise a better system than that, which makes a man go back to work very strange hours so that he may serve his fellow citizens in the borough. I am not suggesting that every time an employee becomes a mayor the Post Office should pay him for the whole year and expect no work out of him. Obviously, that would be wrong, but I suggest that there should be greater flexibility of control to allow people who have proved their worth both to the Post Office and to local government over many years to be encouraged to take on the responsibility of a chief citizen without having to suffer financial hardship.

Many Conservative mayors of Reading—and this is my experience in other local authorities—have been able to get leave of absence with pay and to have their pay made up while engaged on civic duties. Surely the Post Office should be just as good an employer as a private industry. I am certain I should have the support of hon. Members on both sides of the House for suggesting that.

In welcoming the Bill and congratulating the Post Office and those associated with it on the job that they are doing, I ask my right hon. Friend to pay particular attention to the points I have made. Those points concern the problem of the expanding areas being planned for and understood as having a greater demand than others, and flexibility in the requirements as to manpower, particularly so that a man serving the public shall not be held to account because he works for the Post Office.

2.17 p.m.

Sir Frank Soskice (Newport)

It certainly behoves me, speaking from the place from which the late Mr. Williams so often addressed this House, to re-echo the tributes to his memory which have been paid today. He was an hon. Member who was well beloved on both sides of the House. Hon. Members interested in the particular topics which are the subject of our discussion today will long remember the informative speeches he so often delivered. The richness of his wisdom on these matters will stay with us. I feel a particular sense of humility when, as it were, standing in his shoes to address myself to topics which very much interested him.

I was grateful to the Postmaster-General for his somewhat ironic welcome of me to these dangerous fields in which he observed with obvious pleasure that I should find it difficult to tread. I acknowledge that this is dangerous ground and that I might easily tread on a land mine as I try to pick my way over it. The service rendered by the Post Office of this country is accepted on both sides of the House to be a high one. We are discussing a Bill which enlarges the borrowing powers of the Department. A programme of £1,000 million of investment is impressive.

As to the Postmaster-General's personal performance, I am sure he will not mind my saying that the outline of this image was somewhat blurred as it was subjected to the incandescent heat and penetrating, lucid criticism addressed to it by my hon. Friend the Member for Barnsley (Mr. Mason) and other hon. Members. However good the service, obviously it must always have its defects and it is our duty, which hon. Members are discharging today, to probe to see that we constantly try to improve it. But I do not speak controversially when I say that it is a great public enterprise in a sphere of activity which affects every citizen in the land.

One of the reasons why I stand on this, to me, somewhat alien territory is that it is my task, not to seek to go over the whole terrain which has been traversed in the debate and to comment on and rehearse all the points of criticism and congratulation which have been voiced today by hon. Members on both sides of the House. It is my task and desire to address the attention of the Ministers responsible, and of the House in general, to a particular topic in which the late Mr. Williams was especially interested. That is the question of the Giro system. I think that the right hon. Gentleman knows that it is for that purpose, largely, that I am venturing to address the House, and I want to put certain considerations before the House and seek to ascertain the Government's intentions and whether any progress has been made since this matter was last raised.

When I speak of the Giro system to be operated by the Post Office in its administration on behalf of the Treasury and the Post Office Savings Bank, I am not speaking of a new-fangled idea. Every hon. Member knows that this has been the subject of consideration and controversy for years back in our history. One can go back in recollection to a milestone in its history before the First World War, when the Post Office Association launched a campaign in its favour in 1912. The then Postmaster-General, Sir Herbert Samuel, intervened and forbad it. It was then the subject of acute controversy and a good deal of opinion was solidly behind it.

A further milestone in the history of the subject was in 1928, when was published the famous report by the Post Office Advisory Council's sub-committee, which recommended even then that steps should be taken—though not on the full scale on which they were sometimes advocated—to afford, through the Post Office Savings Bank and the Post Office, cheques facilities for the benefit of savings contributors.

The system was proposed in some truncated form but the idea was that the cheques should be limited to specific maximum amounts, although even then one of the three members of the subcommittee who signed the report was in favour of cheques of unlimited amount and the provision of a full service. As far back as 1931, the Post Office took a fairly big step in the direction of providing such a service. It introduced a system whereby withdrawals in favour of third parties could be made by crossed warrant, and that system operates today.

So it is not as if we are approaching a topic which is new or unexplored, or with which the country and, indeed, many other countries, is unfamiliar. Nor is it even a system which has not to some extent already been tried. As I have pointed out, in 1931 the subject was taken towards its implementation but that progress suddenly ceased.

The last step in the consideration of this matter perhaps can be said to be the recommendation contained in the Radcliffe Report published in 1958. Lord Radcliffe and his colleagues, reporting on currency, explored the topic whereby an easy and cheap system for transfer of money was to be devised through the medium of the Post Office or the Trustee Savings Banks or whatever was the appropriate organism for the purpose, and they recommended that the Giro system should be explored again and steps taken to implement it.

The Report examined and represented clearly the considerable advantages which would accrue if there were such a system, and I will, if I may, in a moment refer to some of them. Since then, the matter has been raised in this House, particularly by the late Mr. Williams. There was an Adjournment debate on 4th March, 1963, and there have been Questions to the right hon. Gentleman since. They were answered by the Assistant Postmaster-General.

What is the case for the system? I think that it can be put fairly simply. There are large numbers of contributors to Post Office Savings Banks who do not need the more elaborate and expensive cheque system provided and made available by the joint stock banks. They do not need the elaborate services these banks provide and expect to be paid for. They do not need the credit facilities or substantial overdraft facilities. They do not need facilities whereby large amounts can be transferred by banker's order. They do not need the collection facilities or the safe custody facilities.

When the joint stock banks provide these services, they naturally expect to be paid a reward for their services, and this is reflected in charges debited to the accounts of their customers. Very large numbers of persons—million of contributors—do not, however, need these services and do not want to pay for them, and there is no reason why they should. They need a far simpler and cheaper form of transfer of money arrangements.

They wish to do in effect what is the writing of cheques one to another and wish to have a facility which will enable that to be done, quickly, simply and intelligibly from the point of view of the ordinary customer and without having to pay too much for it. It is for that reason that the Giro system is devised. It is a simple system whereby transfers of money can be effected by simple direction for payment between one number in the Post Office Savings Bank, or whatever other bank one is using, in favour of another numbered account. The direction simply includes the number of the accounts from which money is to go and the number of the account into which it is to go, and next day notification can arrive by post stating that the transfer has been effected.

It could be done cheaply. The Radcliffe Report pointed out that it could be financed in a simple way by the Post Office Savings Bank no longer paying a deposit interest on those portions of a savings account set aside for the purpose of the user for current account transactions. It pointed out also that not merely could the system—it does not say that it certainly could, for this would depend on developments and to what extent the system was indulged in—be effective but that, if deposits exceeded the amounts normally necessary for the purposes of current transfers and cash transactions, the extra over that amount, which would remain in deposit account, would grow over the years and would, in effect, represent an interest-free loan to the Treasury. There is, therefore, that advantage from the purely financial point of view. It could cost nothing, or very little, and probably one could go further and claim that it could constitute an interest-free loan to the Treasury.

One could hinge on to that, as the Report points out, other services which could easily be worked with it. For example, a firm with 10.000 employees could pay the lot by using the Giro system, by paying the money to the numbered accounts of its employees. Not so long ago, we amended the Truck Acts legislation whereby, with the consent of an employee, his wages could be paid by Cheque. So far, although this has been done, it has not been implemented in practical realisation to the full extent it might be. It is still contended, so I am informed, that about half of the wage earners have not yet got accustomed to the banking habit.

They have accounts neither in the joint stock banks nor in the Post Office Savings Bank. The Radcliffe Report points out—and it is a matter of common sense—that it is desirable that our citizens should resort more to the use of banking facilities and the Giro system would encourage the spread of the habit of opening and using bank accounts. There is that advantage.

The hon. Member for Louth (Sir C. Osborne) asked if protection could be devised to prevent robberies. The Radcliffe Report points out that firms, instead of having to carry large sums in cash, which are exposed to the deprada-

tion of thieves, could pay the whole of their weekly wages by a simple credit operation through the Post Office Savings Bank. There could be a simple transfer to the numbered account of the employee of the appropriate amount of his weekly remuneration.

In addition, there is the advantage which it has. been pointed out could be annexed to the system of paying accounts. A debtor, a person who has a bill presented to him for his ordinary household accounts, could go to the Post Office Savings Bank and say, "Here is a bill. Pay the amount into the numbered account of my creditor". The Post Office Savings Bank representative at the counter could stamp the bill as paid, and the debtor need bother himself no further. He could, if he was unfortunate enough to be faced with five or six bills, pay them in that way if he had the money.

Mr. Norman Cole (Bedfordshire, South)

Is not the right hon. and learned Gentleman aware that all the facilities which he is suggesting should be made available by the Post Office are already available through the trustee savings banks, and in many cases are made use of? Would not this be duplication?

Sir F. Soskice

The hon. Gentleman puts a point to me which I can only contradict. I certainly did not think that the full range of these services was available. Even if they are already provided by the trustee savings banks—the hon. Gentleman may be right; I apologise if I contradict him wrongly—my argument is that they should be made available also through the medium of the Post Office Savings Bank. They are specific advantages which I venture to point out could accrue from extending the services via the Post Office Savings Bank.

Mr. Cole

I know of a case where a very large firm makes an acknowledgment in its annual report of the facilities provided to it and its employees by a trustee savings bank.

Sir F. Soskice

I am extremely grateful. This shows that I am absolutely right in saying that such a service is not only perfectly practicable but also very useful. The hon. Gentleman's intervention therefore reinforces my argument. The payment of bills, the payment of wages, and the safeguarding of the transfer of large sums of money could be effected in the way I suggest.

What are the objections? Why has it not been tried? It was not tried in the early years, way back in the 1920s, because it was then said that the facilities offered by the joint stock savings banks were so adequate that there was no room for the development of Post Office Savings Bank facilities. It was pointed out in return that some continental countries had already begun to develop systems like the Giro system. The answer was made that there were not available on the Continent the equivalent of the joint stock savings banks providing the same services as the British banks provided.

So far as that answer is valid today, I would point this out. In Sweden facilities exist at least equivalent to those provided by our joint stock banks. I should have thought that this applies to other countries also. There is no difficulty about writing a cheque in France if one has an account and has the money. This applies also to West Germany. I am not an expert in this field, but I should have thought that one cannot any longer say that other countries, notably Sweden, have not caught up with us in this regard. To this extent, the argument is invalid. In Continental countries, with the sole exception of Spain and Portugal—we thus stand in a trio with Spain and Portugal—the system has been widely developed and I believe that the figures show that it is rapidly expanding. I have not the up-to-date figures. Earlier figures I have seen show that it was rapidly expanding on the Continent.

Why can we not follow suit? What reasons are now given against it? An attempt was made to say that there would be a difficulty about obtaining references, but this cannot be an objection which is seriously pressed. I will bring the controversy up to the present day and tell the House what is now said. As I understand it, it is accepted—my reason for saying so is that I quote from the speech of the Assistant Postmaster-General in the Adjournment debate on 4th March, 1963—that there would be great advantages in it. The hon. Gentleman said this: A Giro would have the advantage of speed of transaction, longer opening hours and, very likely, cheapness."—[OFFICIAL REPORT, 4th March, 1963; Vol. 673, c. 174.] I wholly agree with that sentence, but what was behind it? By "longer hours" what the Assistant Postmaster-General meant, perfectly rightly, was this. All the 23,000—that, I believe, is the right figure—Crown post offices and sub-offices all over the country, which stay open longer than the joint stock banks, could be used for this purpose. It could be done over the counter at all those offices.

There would thus be that very considerable advantage over the joint stock banks. I have tried to find out how many branches of the joint stock banks there are today. I think—I dare say I am wrong; perhaps the Assistant Postmaster-General will be able to tell me—that there are 13,000 branches of the joint stock banks, as against 23,000—not far short of double the number—post offices which could be used for this purpose. No great capital expenditure would be involved to put the system into operation.

There is a further consideration. I think I am right in saying that generally speaking in rural areas, where there is nearly always a sub-office which could be used, there often is not a branch of a joint stock bank. This is also the case in some areas where there is very concentrated labour. To emphasise the point, post offices are available in places where there are no joint stock bank branches. Further, there are far more post offices which could be used. Very little capital expenditure would be necessary to introduce the system.

What is the other objection raised? I turn again to the Adjournment debate on 4th March of this year. In effect saying that he could not say either "Yes" or "No" to the system because he wanted to think about it further, the Assistant Postmaster-General said this: … a Giro which handled 1 million accounts would need the backing of balances totalling about £200 million, averaging about £200 per account. If we got up to 5 million accounts, the average amount required per account would be about half as much."—[Official Report, 4thMarch, 1963; Vol. 673, cc. 173–4.] I tried to obtain some figures about the present number of Post Office Savings Bank accounts. I believe I am right in saying—no doubt I shall be corrected—that in 1963 there are about 22 million live Post Office Savings Bank accounts. It seems an enormous number, but I am told that that is the figure. I agree that the figure must be viewed with reserve, because a large number of the accounts must be very small, insufficient to serve for current account purposes. Nevertheless, the disparity between the figure of 22 million accounts and the figure which the Assistant Postmaster-General took as an example of 5 million accounts is very striking. Once the system became well known, I would have thought that one could quite easily get up to 5 million accounts, if not more.

I went on to try to discover the average amount per account which in any recent year has been on deposit at the Post Office Savings Bank. These are the figures: 1959, £491 million; 1960, £508 million; 1961, £526 million, and 1962, £538 million. On the basis that one has a million accounts, a very small estimate, the Assistant Postmaster-General said that he would want a total backing of balances of £200 million. There is now £538 million on deposit with the Post Office Savings Bank, on an annual average, so I am told, so I should not have thought it too ambitious to expect to get a backing—once the system was publicised, and understood in practice—substantially in excess of what the hon. Gentleman said was necessary.

Let us see how the controversy has since developed. On 23rd July last, the hon. Member for Weston-super-Mare (Mr. Webster) asked the Assistant Postmaster-General in a Parliamentary Question, what the existing situation was. He was referred to what the Assistant Postmaster-General had said in the Adjournment debate in March, the reply being … that the door was not closed but that there were certain things which had to happen and that we had to be certain that this was going to be a real proposition before we were prepared to bring the scheme into operation."—[Official Report, 23rd July, 1963; Vol. 681, c. 1253.] Everyone will agree that that statement is admirable as an example of an elegant piece of circumlocution; it sounds terrific, but it means precisely nothing. Translated into plain English, it means, "I have done nothing about it, and I propose to do nothing about it unless you keep on prodding me". That is what I am now trying to do.

The House is very generous to Ministers. We all recognise that every Minister is entitled to a certain ration of that sort of language. It might happen to anyone—one cannot do everything at once—and we must give Ministers a breathing space, but the time really has come when the Ministers have used up their ration. I ask them now to look at the considerations of the Radcliffe Report. This proposal is favoured by the unions, and by the Radcliffe Committee, the members of which were the highest possible experts one could have. It is obvious from the Assistant Postmaster-General's speech in March that he agrees that there are great advantages in this system. What is there against it? It is simply a question of how many accounts one would get, but how is one ever to know how many accounts will be opened unless one tries the system? I beg the Ministers to consider this matter carefully. If it is an excellent system, if it is practised abroad, if we stand out on a limb with Spain and Portugal as the only other European countries that do not practise it, why do we not seriously consider it?

When the late Mr. Williams asked the Assistant Postmaster-General whether the door was any more open than it had been on 4th March, the answer was: I think it is just about the same."—[Official Report, 23rd July, 1963; Vol. 681, c. 1253.] That is a little discouraging. Let us try to push the door open a little further. After all, Japan operates the system on a large scale.

I am sorry to devote so much of my speech to this aspect, but today we are discussing large-scale investment. The Minister justified the Bill on the basis that he - was speaking of an area of expansion. This system is just the sort of thing that would provide a great service to our citizens at a very low cost. I ask the Ministers to say that they will be able to give somewhat more assurance that they are making progress with the scheme than they have been able to give hitherto.

2.45 p.m.

The Assistant Postmaster-General (Mr. Ray Mawby)

We have all been happy to listen to the right hon. and learned Member for Newport (Sir F. Soskice), because he has obviously given the Giro system a great deal of thought. I shall deal with that first, because it is one of the matters to which I, too, have given a great deal of thought.

The Adjournment debate to which the right hon. and learned Member refers took place on the first day of my appointment as Assistant Postmaster-General, and I confess that I was attracted by what Giro meant. Since then, I have done a great deal of investigation. During the Recess I specially went to some of the European countries for discussions, to find out whether there was something in the system, and, from their experience, what the real position was.

I must again make quite clear that what the Radcliffe Report actually said was: … in the absence of an early move on the part of existing institutions to provide … a simple system for the transfer of payments. There were "ifs" and "buts" attached to the Radcliffe proposals.

As the right hon. and learned Member has said, this system is not new. It has already been tried in continental countries, and there are many people here and elsewhere who do not necessarily need all the services that a joint stock bank can operate.

It is important to keep the whole subject in perspective. It is quite true that the present state of the law allows employers, with the co-operation of their employees, to pay all their employees in some way other than by cash. There is no question, in theory, that, by agreement, this could be done. But the situation is that while many employees receive their wages in other than cash, the first thing they want to do is to convert this piece of paper into real money. That is their attitude. We are, therefore, confronted with the great problem of converting people to a system to which they have never been accustomed and which, at present, they are not prepared to accept.

I found that that position particularly affected the European Giro systems. In Holland, West Germany and Switzerland I was told that very few of the normal fortnightly-paid wage earners were Giro account holders. My right non-Friend reminds me that a very similar situation exists in France. Obviously, there are fortnightly wage earners who pay certain accounts by purchasing at the nearest post office the equivalent of a Giro cheque, but they have to pay for that service and, in the main, they do not themselves take out Giro accounts.

The right hon. and learned Member mentioned the number of accounts, and the total amount of money invested year by year in the Post Office Savings Bank. It is important to point out that the whole of that investment is interest drawing. Is it suggested that a contributor to the Post Office Savings Bank would be prepared to allow, say, £100 of his invested capital to be treated as non-interest-bearing money purely for the right of being allowed to use the service which, at the moment, he does not understand—and in any case does not want to use?

There is a great deal of conjecture in the whole question of how many account holders would change over, and, certainly, how much of their capital they would agree to have changed from an interest-bearing to a non-interest-bearing investment to allow them to indulge in paying their accounts in ways other than by cash.

This is a very important point. As to the actual basis of my calculation which I gave in the Adjournment debate, I have not seen anything to change the view that, even if one got more than 5 million account holders, there would still need to be about £100 per account left there and not drawing interest, to enable us to invest that amount of money to pay for the cost of running the service.

Do not let us run away with the idea that this service will be cheap. My experience on the Continent is that the administration of this system, if it is to work properly, is expensive. It uses a great deal of manpower. Obviously, anyone using this system would want to know that the account had been cleared within a reasonable time. On the Continent it is reckoned normally that an account ought to be cleared within 24 hours and notification given to the payee of the completion of the transaction. It has been shown on the Continent that a great problem is having the manpower available.

It has certainly been found that there cannot be a central clearing office. This idea of having one central clearing office does not work, and in each of the countries the general attitude has been to regionalise the schemes, thus necessitating liaison arrangements. The decision on the Continent at the moment is to use the computer type of memory store, which is very expensive in its initial capital investment. That is a point that we must take into account.

The right hon. and learned Gentleman rightly said that we ought to learn from the experience of others. While I was on the Continent I looked particularly at the profitability of Giro. In Switzerland, there was a loss of over £800,000 last year. The Dutch system made a loss of nearly £300,000, and a further loss is expected in 1963. In Germany, I was not given any detailed figures, but I gathered that there, too, Giro was not a profitable service. Therefore, where these systems have been operating for many years, where normal private bank accounts are not so widely held as they are in this country, the evidence suggests that in terms of profitability Giro would certainly not be a winner in this country.

There is another important point in connection with Giro. When the Giro system is operated, the cost of the system is expected to be covered by the interest gained from the money which is invested and which remains there all the time. Any change in interest rates at any time can obviously change the whole atmosphere of the organisation. Certainly, if we suddenly went in for a cheap money policy, the whole system would go into the "red", even if we had evolved as efficient a system as possible.

Certainly, no one suggested to me that the system ought to be financed by making charges for the transactions. In the absence of any charges for the service offered, which, I think, would immediately put it outside all prospect of consideration, I believe that there is no indication that we would be able to attract to this new scheme present Post Office Savings Bank contributors or people who have never used a banking system before, even if they are now paid their wages in a form other than cash; and in addition, we should bear in mind that the capital requirements and the running of the service would be extremely expensive.

The right hon. and learned Gentleman referred to the "door". My present view of the matter is that, if anything, the door is a little more closed than it was before.

I hope that the House will forgive me if my reply is "bitty". Obviously, the point of a winding-up speech is to answer the questions that have been asked during the course of the debate.

Mr. Cole

May I offer a further point against the present introduction of the scheme? It would inevitably result in a loss of revenue in other directions, on money order and postal order poundage, most of which goes to the upkeep of the various post offices.

Mr. Mawby

Yes, that is quite true. Obviously, there would be gains on one side and losses on the other. All these matters should be considered. How-over, I felt that I ought to give as short an answer as possible, because time is going on and quite a number of points require to be answered.

The hon. Member for Barnsley asked about the standard of the telephone service. This is a very important point, and my answer covers the questions which have been asked about the Post Office's need to spend large sums of money. It is important not only that a person should have an instrument installed, but also that he should be able to get in touch with another subscriber when he wishes to do so. There is not much understanding of the terrific amount of work and money involved in providing that little bit of connection between a subscriber and the man at the end of the line.

As to the time taken to answer, we are doing a great deal. We have achieved an improvement in the time of answering in the London area. It is nothing great, but this improvement has been achieved in spite of very high traffic levels. In October, total trunk traffic was 14.9 per cent, above the figure for the same month last year. In London the increase was 17.6 per cent. The average yearly increase has been running at 14 per cent. This indicates the problem that has to be faced, particularly in the fast growth areas.

Mr. H. Hynd

Would it be anything to do with the new betting offices?

Mr. Mawby

That I would not know. All we are interested in is making certain that we do business and that, whoever the customer is, he gets a first-class service. Extra trunk lines are being provided as quickly as possible. In fact, between now and the end of March next year 2,000 will be installed, about half of which will be to or from London.

My hon. Friend the Member for Wokingham (Mr. van Straubenzee) spoke about the fast growth areas. We are bringing in new trunk service exchanges at Cambridge, Tunbridge Wells and Reading to relieve London of much of its through traffic. When the Post Office tower comes into service, early in 1965, a vast new circuit capacity will be added to the network.

On the auto-service side, vigorous action is in hand to improve the figures for technical failures, and programmes are under way locally for overhauling the automatic networks and finding and clearing faults. In some cases faults are being traced by means of "flood" tests in which large numbers of test calls are made by teams of operators and failures are held for tracing. Efforts to improve the customer failure figure are taking place on a large scale.

It is important to remember, in this connection, that it is not always the Post Office which is wrong. All sorts of things can happen. We do an extensive follow-up of "number engaged" and "no reply" failures, particularly when these occur on business lines. In many cases, this results in customers renting more lines because, of course, if all the lines are taken up and it is a busy place, there will be "number engaged" unless the people concerned are prepared to instal more lines. Sometimes this results in their making an overhaul of their own internal telephone arrangements, which is a benefit to them as well as to us. We are also following. up misdialling failures to find out why they occur and what can be done to help customers to avoid making them.

Earlier this year, we debated the subject of satellite communications. The Post Office is looking ahead to the time when an operational satellite communi- cations system will be an economic proposition. We are fully co-operating in discussions with European countries about the possibility of a future global system. My people are also in close touch with other European countries on the purely technical side, and contact is being maintained with the United States. The Commonwealth is being informed of all developments.

It is important to realise that the development of satellites must go hand in hand with other forms of communications. I was glad that the hon. Gentleman mentioned the new type of transoceanic cable, in which we have made such terrific developments. It is obvious that satellite development must be closely linked with developments in submarine cables, repeaters and so forth. In these developments, we have been foremost in the field, and it is certainly not our intention to be left behind in the race in any branch of communications, whether internal or international.

Mr. Mason

In view of the Lighthill Report, the Government must have some idea now of what they intend to do about global satellite communications. Do they intend to have an all-British effort, a Commonwealth effort, an Anglo-American partnership or a joint venture with Europe? The hon. Gentleman has had three or four hours' notice of the questions which have been raised. Can he tell the House what the Government's views are?

Mr. Mawby

The probability is that we shall co-operate in a universal system. With the amount of money and effort involved, this is not the sort of activity in which a number of competing systems can be in operation at the same time because none of them would be profitable. We are particularly interested in a universal effort, and this is the sort of line which we are following.

Mr. Mason

What does the hon. Gentleman mean by a universal effort? Does that mean that we are to engage in an international satellite communications and space research organisation together with France, Germany, our Commonwealth partners and America?

Mr. Mawby

We should like to see a world system, and this is what we are actively engaged in trying to bring about. Anyone spending large sums of money and effort for purely prestige reasons in satellite communications is wasting resources and not using the sort of co-operation which can bring benefit from developments with all the countries with which we have relations.

Mr. Mason

Does the hon. Member exclude the Russians?

Mr. Mawby

I said, a universal system. It all depends what interpretation the hon. Member puts on the word "universal".

My hon. Friend the Member for Acton (Mr. Holland) raised particularly the question of a new Post Office in Acton. As he knows, we have a possibility very much in view, but as legal negotiations have not yet been finally completed he will not expect me to give more details now. If all goes well, as I have every reason to hope, the new office should be opened for service in the latter half of next year. I will get in touch with my hon. Friend as soon as I can give him definite information.

The hon. Member for Gateshead, West (Mr. Randall) raised a number of points. In particular, he raised the question of postal mechanisation. This is something on which I could say a great deal. However, I will just try to give some of the bare bones of what is happening. We are experimenting with a new technique of automatic letter sorting. At the office where the letter is posted an operator will mark the letter with a pattern of phosphorescent spots—code marks which a machine can read—corresponding to the address written on the envelope. The code-marked letter can then be sorted automatically at all the subsequent stages.

Tests of this technique have been made at Luton and new prototype machines of an advanced design have now been ordered from manufacturers. Coding equipment, a high speed automatic sorter, and a low speed automatic sorter, based on the original E.L.S.I.E. design, are included in the contracts. Much work has to go into the development and design of the new machines, and we expect the manufacturers to give us delivery towards the end of 1964. Laboratory tests and field trials will follow, and if all goes well we should be in a position to order production models for installation in sorting offices.

Mr. Marcus Lipton (Brixton)

Can the hon. Gentleman say how things are going with this new development at Luton?

Mr. Mawby

I was there last week, and things are going quite well. The machine is quite adaptable. It can be used at one part of the day for routing letters out of Luton to different parts of the country and during the evening, by changing over the translators, one can direct the in-coming mail to street locations. It therefore has a very wide application and we are extremely interested in the development. We hope that we have most of the bugs out of the system. That is obviously a problem with these things.

Five years or so ago we decided to carry out trials of four different kinds of parcel sorting equipment. Those trials have now reached a stage where it is clear that one type, known as the tilted belt machine, has substantial technical and operational advantages over the others, and it is cheaper. This type of machine was installed at Preston and Worcester this year and it is working very successfully. Plans are being made to install this new machine in many other offices.

We have the segregating and facing machine. Production models of machines which separate packets from letters and long letters from short letters and then put the short letters in stacks with the stamps facing the same way and in the same corner of the stack have now been installed in London, Liverpool and Glasgow. This sort of equipment is suitable only for the largest offices, but a smaller version of segregator for use in medium-sized offices is now undergoing engineering testing.

Regions have power to install proved mechanical aids wherever they can be justified and they are making good use of those powers. For example, over 50 chain conveyors are already, in use and more are planned. One of the problems of mechanisation, as the hon. Member knows only too well, is the different sizes of envelope. Leading postal administrations have agreed that some measure of envelope standardisation is essential if mail-handling machinery is to be used with full efficiency and economy.

An international committee, of which we are a member, has recently made some basic proposals for envelopes, including a new minimum size, a preferred size range, a new shape requirement and a minimum quality of paper, which is extremely important, particularly because all sorts of problems occur when a low standard of flimsy paper upsets all our machine arrangements and so holds everything up.

We expect these requirements to be approved by the Congress of the Universal Postal Union at Vienna, in June next year. Discussions- have already been held with British trade interests and with the manufacturers' associations concerned. We hope that the new specification will be adopted voluntarily by envelope makers, so that envelopes of the wrong sizes, shapes and quality will have disappeared from stationers' shops long before Post Office regulations have to be altered to make the proposals mandatory.

The hon. Member for Accrington (Mr. H. Hynd) spoke of the delays to things going in a particular direction. It is not only that direction with which we are concerned. The problem is a little wider than that. As to parcel mail, the Post Office is not satisfied with the service which it gets from British Railways for parcel mails and it is urgently discussing with the Railways Board ways and means of improving it, including, possibly, some changes in the responsibility for handling the mails at railway stations.

I was also asked what we intend to do as a result of the East Anglian scheme. We are reaching a position where we can measure what sort of advantages there are in using the scheme. It is obvious that throughout the rest of the country, certain parts of the scheme would be an advantage. I believe that we shall come to a stage at which there will be a marrying together of the different forms of transport. In some cases, this may mean that the mail travels the long distance by rail, the shorter distances between change over points in articulated vehicles and then the short distances by smaller mail vans. It will represent a general getting together, linking up and co-operative effort.

That is what we want to happen and that is why we are in constant dis- cussion with British Railways to ensure that this can be a completely cooperative effort and that we can make certain also that alternative arrangements are made in advance so that none of the mail suffers as a result of any changes which occur in future concerning British Railways.

The bulk supply agreement has, obviously, concerned the House for a considerable time. Up to the end of March this year, there were bulk supplies agreements for cable and loading coils as well as for telephone apparatus and exchange equipment. In accordance with my right hon. Friend's statement to the House in July, 1962, the agreements for cables and loading coils were not renewed and under the apparatus agreement the proportion of business which the Post Office is free to place with outside firms was increased from 10 to 25 per cent. My right hon. Friend is continually looking for ways of introducing further measures of competition, but in the present stage of technical development, particularly as we enter the era of electronic exchanges, the bulk supply agreements provide means of ensuring the pooling of resources under Post Office leadership which is vital to progress and exports.

The so-called ring in the exchange equipment field represents practically the whole of the industry qualified in this very complex product. In the field of telephone apparatus there is more outside competition. That is why we have been able to increase the percentage of reserved business. It is true that current prices stem from somewhat old costings. The Post Office is well qualified to take a view on the main elements of change since they were made. The prices for apparatus are, in fact, a little lower than those under the old agreements and those for exchange equipment are only a little higher.

The reason why costings are not up to date is that investigation at firms' works had necessarily to be suspended when the whole system was under review. The prices paid are, in fact, stringently controlled by the Post Office. Costings, now in progress with a view to fixing prices in two and a half years from now, are not "cursory" but a full-blooded investigation. In research and development, the Post Office's own research is pooled along with that of the industry, with advantage to the Post Office. If the Post Office made no contribution the contractors would have to do more, and we, naturally, would have to pay more.

The hon. Member for Gateshead, West asked me about interest on the money which we borrow. In fact, the average rate on the debt outstanding at 31st March this year was 4.71 per cent., and the current borrowing rate is 5½per cent. My hon. Friend the Member for Louth (Sir C. Osborne) was particularly concerned with whether our White Paper would be inflationary. In fact, we have emphasised all the way through that the programme itself and our financial expectations are all geared to the ideas which are put forward by N.E.D.C., that is, the basis of a growth of 4 per cent, in the national economy and of 3 per cent, to 3½ per cent, in private incomes, and, on that basis, of course, it is not inflationary.

My hon. Friend also asked for a breakdown in what we were actually spending, and I can tell him that the breakdown is as follows: trunks and junctions, £158 million; subscribers' circuits, £196 million; local lines, £188 million; exchange equipment, £219 million; buildings, etc., £127 million. That, I think, covers the particular points which he was concerned about, but, of course, it is important to remember that while he said that this sort of thing would be inflationary and would upset exports, the hon. Member for Leicester, North-West (Sir B. Janner) pointed to the other side of the coin, that unless there is an efficient telephone system exports can be held up considerably. I shall not deal with the particular point he raised about a particular person, except just to say that I have taken note of it. Indeed, it is one of the main reasons why we need this extra capital—to make certain that we can give this aid to the export field.

As to the training of telephonists, for those in private branch exchanges we have training schools in London and other big cities which specialise in the training of operators employed on the switchboards of outside Arms. Train- ing courses are followed by instruction on the subscriber's premises by our travelling supervisors. Outside the big cities our training staff visit private firms to train operators on the spot. This service is given free, and we encourage our staff in the field to offer it to all firms employing switchboard operators at their private exchanges.

I believe that I have held the House for as long as it is prepared to listen. If there are any points to which I have not replied, I hope that hon. Members will forgive me, because I think that this is the point at which I ought to resume my seat. From what my right hon. Friend said, it can be seen that it still continues to be our aim to make certain that we use all our facilities. We shall keep up the good name which the Post Office has always enjoyed and continue to give as high a standard of service as possible in all the departments of the Post Office.

Question put and agreed to.

Bill accordingly read a Second time.

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

Committee upon Monday next.