§ 19. Mr. Lubbock
asked the Postmaster-General what additional income from the telephone services he estimates will arise from the expenditure of £250,000 in the current year on advertising specifically intended to encourage traffic; and what increase in profit this income will show.
§ Mr. Bevins
As I said to the hon. Member on 17th July, this publicity campaign is a calculated commercial risk but if, as I hope, it produces extra revenue of about £1½ million, the profit will be £600,000.
§ Mr. Lubbock
When the right hon. Gentleman says that it is a calculated commercial risk, does not he think that he should also give us a little more of the background to his reasoning? Is he further aware that these figures are not justified in any way in "Post Office Prospects", which was published quite recently? Will he also say why the marginal rate of profit he has assumed on the extra telephone calls which will result from this expenditure is so very much different from the average rate, which would require another 6¼ million calls? How does he justify this expenditure?
§ Mr. Bevins
I will answer the last point first. Quite clearly, if there were to be a large increase in telephoning during off-peak hours the cost of carrying the traffic would be relatively very small. Therefore, the profit would be very large. As to the rest of the hon. Gentleman's supplementary question, this is a matter of commercial judgment and I am sure my judgment will prove to be correct.